DEF 14A of Consensus Cloud Solutions, Inc.
Filed Apr 24, 2025 · FY20240001140361-25-015404
Our Strategy
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | | Douglas Bech | 100,000 | 199,994 | 299,994 | | Elaine Healy | 80,000 | 199,994 | 279,994 | | Stephen Ross | 70,000 | 199,994 | 269,994 | | Nathaniel (Nate) Simmons | 50,000 | 199,994 | 249,994 | | Pamela Sutton-Wallace | 70,000 | 199,994 | 269,994 |
Our Strategy
| (1) These amounts represent the grant date fair value calculated in accordance with FASB ASC Topic No. 718, Compensation – Stock Compensation (“ASC 718”) for restricted stock units granted in 2024, excluding the effect of estimated forfeitures. For additional information regarding the assumptions underlying the value of equity awards, see Notes 2(p) and 14 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024. As of December 31, 2024, each non-employee director held 7,987 unvested restricted stock units. |
Our Strategy
| PROPOSAL 1 | | Election of Directors There are two Class I directors whose term of office expires at the Annual Meeting. Our ESG Committee has recommended, and our Board has approved, Nathaniel Simmons and Douglas Bech as nominees for election as Class I directors at the Annual Meeting. If elected at the Annual Meeting, each nominee will serve until the 2026 Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Class II directors, which consist of Stephen Ross and Elaine Healy, were elected at the 2023 Annual Meeting of Stockholders and will serve until the 2026 Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Class III directors, which consist of Pamela Sutton Wallace and Scott Turicchi were elected at the 2024 Annual Meeting of Stockholders and will serve until the 2026 Annual Meeting of Stockholders or until his or her successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Beginning at the 2026 Annual Meeting of Stockholders, all of our directors will stand for election each year for annual terms, and our Board will thereafter no longer be divided into three classes. Information concerning these nominees and our continuing directors appears below. Each of the nominees has consented to serve as a director, if elected, and all of the nominees are currently directors. We have no reason to believe that any of the nominees will be unavailable or, if elected, will decline to serve. If any nominee becomes unable or unwilling to stand for election as a director, proxies will be voted for any substitute as designated by the Board, or alternatively, the Board may reduce the size of the Board. | | Our Board recommends a vote “FOR” the election of each nominee. |
Our Strategy
Director Nominees For each of the two director nominees standing for election, as well as the four other directors with terms expiring at future annual meetings, the following describes certain biographical information and the specific experience, qualifications, attributes or skills that qualify them to serve as our directors and, as applicable, the Board committees on which they serve. Nominees for Election to a One-Year Term Expiring at the 2026 Annual Meeting of Stockholders
Our Strategy
| | Nathaniel Simmons DIRECTOR SINCE: 2021 | | COMMITTEES • Environmental, Social and Governance | | | BACKGROUND Nathaniel (Nate) Simmons (age 48) has served as a director of Consensus since October 2021. Mr. Simmons has served as President of the Cybersecurity and Martech division (formerly the Cloud Services division) at Ziff Davis, Inc. (formerly J2 Global, Inc.) since September 2019. Before joining Ziff Davis, Mr. Simmons was Senior Vice President and Chief Operating Officer of Norton LifeLock, the Consumer Division of Symantec Corp, from 2017-2019. He also served as Norton’s Senior Vice President and Chief Marketing Officer from 2015-2017. Prior to Symantec, Mr. Simmons was Senior Vice President of Consumer Marketing at Time Inc., where he held a variety of leadership positions. Mr. Simmons began his career as a consultant at McKinsey & Company. Mr. Simmons’s extensive experience in subscription-based technology businesses and familiarity with the Historical Consensus business provides valuable insight to the Board. | |
Our Strategy
| | Douglas Bech CHAIRMAN OF THE BOARD AND DIRECTOR SINCE: 2021 | | | COMMITTEES • Compensation • Environmental, Social and Corporate Governance • Executive | | OTHER PUBLIC COMPANY BOARDS • Create Media & Community | | BACKGROUND Douglas Y. Bech (age 79) has served as a director of Consensus Cloud Solutions Inc. since October 2021. He previously served as a director for J2 Global Inc., the former parent company of Consensus Cloud Solutions, Inc., from November 2000 - October 2021. From August 1988 through November 2000, he served as a director of eFax.com, a company J2 Global, Inc. acquired in November 2000. Since August 1997, Mr. Bech has served as Chairman and Chief Executive Officer of Raintree Resorts International, a company that owns and operates vacation ownership resorts throughout North America. Mr. Bech practiced securities and corporate finance law from 1970 until 1997. Mr. Bech also served as independent presiding director of HollyFrontier Corporation (now HF Sinclair) from July 2011 to May 2021 and was a director of Frontier Oil Corporation from May 1993 until it merged with Holly Corporation in July 2011. Mr. Bech has also been serving as an independent director of Creative Media & Community Trust since March 2014. Mr. Bech’s previous work as a securities and corporate finance lawyer, as a director of other public companies and his current experience as a chief executive officer of a private enterprise engaged in hospitality, resort management services, and sales and marketing in three different countries, provide expertise on corporate governance and a unique perspective to the Board of Directors. | | |
Our Strategy
Directors Continuing in Office Until the 2026 Annual Meeting of Stockholders
Our Strategy
| | Elaine Healy DIRECTOR SINCE: 2021 | | | COMMITTEES • Audit (Chair) • Compensation • Executive | | OTHER PUBLIC COMPANY BOARDS • OFS Capital Corp. • Hancock Park Corporate Income | | BACKGROUND Elaine Healy (age 62) has served as a director of Consensus since October 2021 and is chair of the Audit Committee. Ms. Healy is Co-Founder and CEO of NexGen Venture Partners, LLC, dba Aura, a provider of wireless infrastructure technology. Prior to co-founding NexGen, Ms. Healy was Co-Founder, President and Chief Operating Officer of Accel Networks, LLC, a fixed wireless broadband service provider featuring patented technology founded in November 2002 and acquired in June 2015. Prior to becoming an entrepreneur in 2002, Ms. Healy spent 18 years as a private equity manager during which time she gained a broad background investing in operating companies ranging from start-ups to emerging growth to publicly traded entities and serving as a director of companies in a wide range of industries. Ms. Healy is currently Chair of the Audit Committees and Lead Director for OFS Capital Corp, and Hancock Park Corporate Income. Ms. Healy’s background has enabled her to cultivate an enhanced understanding of operations and strategy with an added layer of risk management. Ms. Healy graduated from Florida State University in 1984 with a Bachelor of Science in Finance. | | |
Our Strategy
| | Stephen Ross DIRECTOR SINCE: 2021 | | COMMITTEES • Audit • Compensation (Chair) | | | BACKGROUND Stephen Ross (age 77) has served as a director of Consensus since September 2021. Mr. Ross served as a director of J2 Global Inc. from July 2007 through October 2021. From 1989 to August 31, 2017, he served in various positions with Warner Bros Entertainment, Inc., a broad-based entertainment company (“WBE”). His last position with WBE was Executive Vice President – Recreational Enterprises. Until 2009, Mr. Ross also served as a director of Grill Concepts, Inc., a restaurant company. Mr. Ross’ more than 20 years of broad experience with one of the world’s premier entertainment companies provides the Board a unique perspective. | |
Our Strategy
| | Pamela Sutton-Wallace DIRECTOR SINCE: 2021 | | COMMITTEES • Audit • Environmental, Social and Corporate Governance (Chair) | | | BACKGROUND Pamela Sutton-Wallace (age 55) has served as a director of Consensus since October 2021. Ms. Sutton-Wallace served as a director of J2 Global, Inc. from October 2020 through October 2021. Since February 2024, Ms. Sutton-Wallace has been serving as President of Yale-New Haven Health (YNHH), where she began working in July 2022 as the Chief Operating Officer. Prior to her appointment at YNHH, Ms. Sutton-Wallace served as President of New York Presbyterian (NYP) from May 2021 to July 2022, and served as its Senior Vice President and Regional Chief Operating Officer at New York Presbyterian (NYP) from November 2019 to April 2021. Prior to her appointment at NYP, Ms. Sutton-Wallace served as the Chief Executive Officer for the University of Virginia (UVA) Medical Center in Charlottesville, Virginia from 2014 through 2019. Prior to that, Ms. Sutton-Wallace served as Senior Vice President of Hospital Operations at Duke University Hospital, where she also held several leadership positions across the Duke University Health System over a 17-year time span. Ms. Sutton-Wallace has also held positions in the pharmaceutical and insurance industries at Pfizer and Blue Cross & Blue Shield of North Carolina, respectively. She received her undergraduate degree in Political Science and African-American Studies from Washington University in St. Louis, MO. She later graduated from Yale University with a Master of Public Health (MPH) degree. With her 27 years of healthcare experience at some of the world’s most renowned health systems, Ms. Sutton-Wallace brings valuable expertise and perspective to the Board. | |
Our Strategy
| | Scott Turicchi CHIEF EXECUTIVE OFFICER AND DIRECTOR SINCE: 2021 | | COMMITTEES • Executive | | | BACKGROUND Scott Turicchi (age 61) was appointed as a director of Consensus in September 2021 and the Chief Executive Officer in October 2021. He also served as Consensus’s Interim Chief Financial Officer from October 2021 through January 2022. Prior to joining Consensus, Mr. Turicchi held various positions at J2 Global Inc. from March 2000 - October 2021, including serving as the President and Chief Financial Officer from August 2014 to October 2021. Mr. Turicchi also served as a member of the J2 Global, Inc. Board of Directors from 1998 through 2000. From 1990 to 2000, he was with Donaldson, Lufkin & Jenrette Securities Corporation’s investment banking department, holding various positions, including Managing Director. Mr. Turicchi is a member of the Board of Directors of Greenhills Software, Inc., a privately held company that develops real-time operating systems. He is Chairman of the Board of Governors of Thomas Aquinas College. Mr. Turicchi also serves as a Chair of the Board’s Finance and Facilities Committee for the Lumen Christi Institute and is a board member of Sanctuary of Culture. Mr. Turicchi’s extensive management experience and familiarity with the company provides valuable insight to the Board. | |
Our Strategy
ENVIRONMENTAL SUSTAINABILITY Consensus is a cloud solution-based business and our direct operations generate relatively light greenhouse gas emissions. Nonetheless, we strive further to create a climate friendly culture at our headquarters in downtown Los Angeles (“HQ”). We are mindful of our carbon footprint and strive to make choices to lessen our impact on the environment. Our HQ is within a Leadership Energy Environmental Design (“LEED”) building. LEED, sponsored by the United States Green Building Council (“USGBC”), is a globally recognized symbol of sustainability and the most widely used green building rating system in the world. Further, we are located within walking distance to a primary downtown Los Angeles Metro Center to encourage use of public transportation, which we further emphasize by offering monthly stipends for those employees who elect this method of transportation. Additionally, we continue to evaluate the need for airline travel and encourage virtual meetings whenever possible. We will continue to find ways to be environmentally responsible. The Company has also transitioned all but 2 of its co-location data centers to the cloud with AWS. Cloud based products offer greater energy efficiency when compared to onsite data centers. HUMAN CAPITAL MANAGEMENT The Chief People Officer reports directly to the CEO and partners with the Executive Team and the Board of Directors to focus on the strategic direction necessary to attract qualified candidates on a global scale and develop and retain our current global workforce. As of December 31, 2024, we had 518 employees, with just less than a quarter of the employees located outside of the United States. We are committed to driving strong employee engagement to motivate our highly qualified workforce as we believe their professional development and success is key to our Company’s continued success. Our Culture We have a strong enterprise-wide culture that focuses on our core values – strive for excellence, demonstrate empathy, embrace innovation, foster open communication, focus on solutions, and be driven by data as we make decisions, and in turn, deliver solid business results. Our mission is to be the trusted global source for the transformation, enhancement and secure exchange of digital information. Our vision is to deliver life’s essential data when, where and how you need it. We recognize that each employee’s unique experiences, perspectives and viewpoints add value to our ability to create and deliver the most innovative work environment for our employees and the best possible service to our diverse customers. To this effect, we promote and implement trainings and events to foster a respectful, collaborative, and professional workplace environment where each employee feels they can contribute to the overall success of the Company. We reinforce our culture and our values by seeking out qualified candidates who align well with our organizational priorities and values. We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe are essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration. Employee Compensation & Benefits Compensation is an important consideration for all of our employees and we strive to pay competitive compensation packages that reflect the success of the business and the individual contributions of each colleague. We are committed to fair pay practices and roles are periodically benchmarked to help inform where adjustments may be needed. We provide our employees with benefits we believe will optimize the talent critical for our success and promote day to day well-being. Our benefits include comprehensive health insurance coverage covering 85% of health insurance premiums for covered U.S. employees and their families, a 401(k) plan with company matching contributions, an employee stock purchase program, share-based compensation, flexible time off, sick time off, up to 6 weeks of paid pregnancy leave, up to 10 weeks of paid parental leave and 24 hours annually of fully paid volunteer time off. Talent Pipeline Strategy We source for evergreen positions within our Technology, Sales and Customer Support families to build a pipeline of qualified candidates as we cultivate relationships with prospective candidates. We have a robust employee referral program, an internal mobility program and continue to source candidates through various specialized groups and programs which provide an opportunity to cultivate networking relationships. We continue to have our hiring managers network and post jobs via multiple social media outlets. We also continue to review job requirements and reach out to qualified candidates within our competitive landscape. Employee Development The Company continues to work with employees on their professional development. As part of the onboarding program, there is a 30-60-90 day feedback tool to assist the employee and their manager to determine the milestones necessary for success. The Company invested in a people success platform which includes survey tools, goal setting, manager performance reviews, self-evaluations and upward manager feedback. From these semi-annual reviews, employee training programs are developed including employee coaching, manager training, presentation skills training and other skill-based learning tools. Additionally, an Employee Tuition Reimbursement Program encourages ongoing education for our employees to assist in their professional development. Health and Wellness Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission. We continue to evolve our programs to meet our colleagues’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration. Wellness resources are provided through our medical carriers - Kaiser Permanente and Cigna, including Ginger, Calm, Happify, Recovery One and Omada. Additionally, we held multiple wellness related seminars, including seminars related to financial wellness, and multiple 401(k) seminars on a variety of topics for our employees. We also launched an internal wellness website focused on employee mental health and we participate annually in a Company-wide wellness challenge. Community Outreach The Company provides 24 paid hours per calendar year for our employees to volunteer their time to support their communities. We launched Consensus Cares which is a global volunteer program and aligns initiatives of community outreach. We also coordinate an annual Do Good Challenge to encourage participation in making a difference in our local communities, and in 2024 our employees contributed over 500 volunteer hours through this challenge. DATA PRIVACY & CYBERSECURITY As noted in the Risk Oversight section above, the Company has a Cybersecurity and Governance Council that meets regularly to oversee the Company’s privacy program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments relevant to privacy and data security matters on a global scale. The Company is also engaged with a third-party Data Protection Officer to oversee and ensure compliance with the General Data Protection Regulation (GDPR) and third-party auditors for HITRUST, ISO 27001, PCI, and SOC 2 Type 2, as further detailed below. The Consensus Cloud Solutions security platform is a key focus of the Company. Our Company’s cybersecurity practices include programs for HIPAA compliance, HITRUST, ISO 27001, PCI, FedRAMP, SOC2, and GDPR.
Our Strategy
The Company uses the HITRUST Common Security Framework (CSF), an externally audited solution, to manage its HIPAA compliance. HITRUST has more than 500 different controls to ensure that your system is as secure and protected as possible. The Federal Risk and Authorization Management Program (“FedRAMP”) has a risk profile standard featuring three levels of security impact: low impact, moderate impact and high impact. FedRAMP high impact has more than 400 different controls. Consensus Cloud Solutions has been certified FedRAMP High. Our systems are SOC2, Type Two certified. There are trust principles that the SOC2 system embodies having to do with data privacy, security, integrity, and confidentiality. All of those trust principles are what we are externally audited on an annual basis and certified. In addition, the Company is certified for PCI compliance (the payment card industry compliance standards) on an annual basis by an external auditor as a merchant. We’re evaluated at level one because of the size and scope that we operate at, which is the highest of levels. All Company employees must complete trainings at least annually on various kinds of security threats and best practices including but not limited to trainings on: the Company’s Information Security Policy; Information Security Incident Response Plan; HIPAA, PCI Compliance; GDPR and CCPA; Security Awareness and Incident Response Training covering Social Engineering Phishing (identification and common red flags), Social Media safety best practices, Internet Security best practices, and Incident response training for end-users; and Phishing. In addition, our developers must complete Secure Code / Secure Application Development Training based on OWASP top 10 standards.
Our Strategy
| PROPOSAL 2 | | Ratification of Appointment of Independent Registered Public Accounting Firm Deloitte & Touche, LLP (“Deloitte”) has served as the Company’s independent registered public accounting firm since June 2023. Representatives of Deloitte are expected to be present at the Annual Meeting online and will have an opportunity to make a statement if they wish and be available to respond to appropriate questions from stockholders. We are asking stockholders to ratify the Audit Committee’s selection of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2025. While such ratification is not required, the Board is submitting the selection of Deloitte to our stockholders for ratification as a matter of good corporate practice. If stockholders do not ratify the selection of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2025, our Audit Committee may reconsider the selection of Deloitte as our independent registered public accounting firm. Even if the selection is ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. | | Our Board recommends a vote “FOR” the ratification of the selection by the Audit Committee of Deloitte as our independent registered public accounting firm. |
Our Strategy
Independent Public Accountant The following is a summary of fees paid or to be paid to Deloitte for services rendered for the Company in fiscal 2023 and 2024. All such services were pre-approved by our Audit Committee in accordance with the “Pre-Approval Policy” described below.
Our Strategy
| | FOR THE YEAR ENDED December 31, 2023 | FOR THE YEAR ENDED December 31, 2024 | | Audit Fees(1) | $2,225,619 | $2,788,600 | | Audit-Related Fees(2) | $0 | $0 | | Tax Fees(3) | $23,129 | $17,930 | | All Other Fees(4) | $0 | $0 | | Total | $2,248,748 | $2,806,530 |
Our Strategy
| (1) Audit Fees included amounts billed or to be billed for professional services rendered for the audit of the annual consolidated financial statements and the review of financial statements included in quarterly reports for the applicable year. Fiscal year 2024 includes fees related to our response to an SEC comment letter. |
Our Strategy
| (2) Audit Related Fees included amounts billed for assurance and related services. |
Our Strategy
| (3) Tax Fees, if any, consist of professional services rendered for tax compliance and tax planning for each applicable year. |
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| (4) All Other Fees, if any, include amounts billed for all other fees not related to the categories presented above. |
Our Strategy
Additional Information Regarding Change of Auditor As reported on the Company’s Current Report on Form 8-K, dated June 5, 2023, BDO served as the Company’s independent registered public accounting firm until May 30, 2023, when the Audit Committee dismissed BDO. In consideration of a potential audit firm rotation, the Audit Committee conducted a competitive process to determine the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023. The Audit Committee considered multiple registered public accounting firms to participate in this process. On May 31, 2023, following the review and evaluation of the proposals from the participating firms, the Audit Committee selected Deloitte as the Company’s new independent registered public accounting firm for the Company’s fiscal year ending December 31, 2023. BDO’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2021 and December 31, 2022 did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2021 and December 31, 2022, and in the subsequent interim periods through May 30, 2023, there were no (1) disagreements (within the meaning of Item 304(a)(1)(iv) of Regulation S-K (“Regulation S-K”) of the rules and regulations of SEC) with BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which if not resolved to BDO’s satisfaction, would have caused BDO to make reference to the subject matter of such disagreement in connection with its report, or (2) reportable events (within the meaning of Item 304(a)(1)(v) of Regulation S-K of the rules and regulations of the SEC), except for the material weaknesses disclosed in Item 9A of the Company’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2022 and 2021 relating the Company’s internal control over financial reporting. For the fiscal year ended December 31, 2022, these material weaknesses related to (1) entity-level controls impacting the control environment and monitoring of controls; (2) accounting for revenue recognition and related controls; (3) accounting for significant unusual transactions; (4) balance sheet account reconciliations; and (5) user access and segregation of duties related to systems that track employee related costs. For the fiscal year ended December 31, 2021, the material weakness related to accounting for certain elements of the spin-off transaction. During the Company’s fiscal years ended December 31, 2021 and December 31, 2022, and for the subsequent interim periods through May 31, 2023, neither the Company nor anyone on its behalf consulted Deloitte regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Deloitte concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions; or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K. Pre-Approval Policy The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy, under which the Audit Committee annually reviews and pre-approves the services that are expected to be provided by the outside auditor. Any engagement to provide audit or non-audit services that has not been pre-approved through that process must be specifically pre-approved by the Audit Committee if it is to be provided by the outside auditor. The Audit Committee may delegate its pre-approval responsibilities to one or more subcommittees as the Audit Committee may deem appropriate, provided that any pre-approval of services by such subcommittees pursuant to this delegated authority must be presented to the full Audit Committee at its next scheduled meeting. Audit Committee Report* The Audit Committee has reviewed and discussed our audited financial statements with management, and has discussed with our independent registered public accounting firm the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and SEC. Additionally, the Audit Committee has received the written disclosures and the letter from our independent registered public accounting firm, as required by the applicable requirements of the PCAOB, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. Based upon such review and discussion, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the last fiscal year for filing with the SEC. Submitted by: Audit Committee of the Board of Directors
Role of Compensation Committee and Third-Party Compensation Consultant in Establishing Compensation
Role of Compensation Committee and Third-Party Compensation Consultant in Establishing Compensation The Compensation Committee engaged a third-party compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”) to prepare a competitive analysis and benchmarking of executive compensation programs for the Compensation Committee to consider in establishing and awarding its executive compensation (“FW Cook Executive Pay Benchmarking and Analysis”). Specifically, our Compensation Committee worked with FW Cook to review competitive market data and analysis, including information about current market practices and trends, compensation structures and compensation ranges of a comparison group selected by FW Cook for fiscal 2024 (the “2024 Peer Group”), which, other than the removal of two companies, is the same comparison group selected by FW Cook for 2023. The 2024 Peer Group was comprised of the following companies that have a revenue and market capitalization that is roughly (1)∕3 to 3 times the size of the Company and operate in the application and system software services, health care technology and other related technology services:
Role of Compensation Committee and Third-Party Compensation Consultant in Establishing Compensation
| • Box | • OneSpan | | • Commvault Systems | • Phreesia | | • True Bridge Inc. (f/k/a Computer Programs & Systems, Inc.) | • Progress Software | | • Ebix, Inc. | • SecureWorks | | • Evolent Health | • Verint Systems | | • HealthStream | • Yext, Inc | | • Omnicell | |
Role of Compensation Committee and Third-Party Compensation Consultant in Establishing Compensation
Based on the FW Cook Executive Pay Benchmarking and Analysis, the Compensation Committee established the base salary, target bonus, and stock award detailed below for the NEOs.
Performance Incentive Compensation (“PIC”)
Performance Incentive Compensation (“PIC”) The annual bonus program, also known as Performance Incentive Compensation (“PIC”), for our NEOs is intended to reward strategic deliverables, drive organic revenue growth, minimize expenses and align the interests of our NEOs with the interests of our stockholders. The PIC is earned based on achievement of goals with respect to two performance metrics: Organic Revenue and Non-GAAP Net Income. The plan has been designed with insight from FW Cook and reviewed against the Company’s 2024 Peer Group based on guidance from the Chairman of the Compensation Committee and management. The Organic Revenue and Non-GAAP Net Income targets are reviewed and approved by the Compensation Committee in conjunction with the Board’s approval of the annual budget. For 2024, 33% of the PIC payout is based on level of achievement with respect to the Organic Revenue performance metric. Below 95% of target-level attainment, there is no payout. At 95%, the plan will pay 15% of target payout; this payout accelerates to 100% when the Organic Revenue is achieved at target level. Above 100% achievement, there is linear interpolation between 100%-104% attainment of the target level achievement which pays out between 100%-200%. By way of example, if we attain 102.5% of targeted Organic Revenue, payout for this component would be 158%. Organic Revenue is defined as revenues, as calculated on a GAAP basis, exclusive of revenue contribution from acquisitions made within the fiscal year. For 2024, the Organic Revenue target for purposes of the PIC was set at $345,088,000. For 2024, 67% of the PIC payout is based on level of achievement with respect to the Non-GAAP Net Income performance metric. Below 90% of target-level attainment, there is no payout; between 90%-110%, there is linear interpolation which pays out up to a maximum of 200% of target. By way of example, if we attain 102% of targeted Non-GAAP Net Income, payout for this component would be 120%. Non-GAAP Net Income for the purposes of the PIC is defined as revenues less cost of revenues, operating expenses, income taxes, and interest expenses, excluding expenses related to share-based compensation, amortization of patents and acquired intangible assets, and other non-recurring expenses related to operation of the business. For 2024, the Non-GAAP Net Income target for purposes of the PIC was set at $100,621,000. The 2024 PIC payment calculation was based on the achievement percentage with respect to the budgeted Organic Revenue and Non-GAAP Net Income for the 2024 fiscal year. Based on the calculations, the payout percentages are noted as follows:
Performance Incentive Compensation (“PIC”)
| • | 33% Organic Revenue - 2024 achievement was 101.53% overall (within the targeted range of 95% - 104%). Consequently, the payout for Organic Revenue was 133.82%. |
Performance Incentive Compensation (“PIC”)
| • | 67% Non-GAAP Net Income - 2024 achievement was 108.48% (within the targeted range of 90-108.5%). Consequently, the payout for Non-GAAP Net Income was 184.76%. |
CEO Long-Term Equity Incentive Compensation
CEO Long-Term Equity Incentive Compensation In connection with his appointment as Chief Executive Officer of the Company, Mr. Turicchi was awarded an upfront long-term equity award (“Long Term Equity Award”) on December 15, 2021 (“Grant Date”) under the Consensus Cloud Solutions, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”). It is the Compensation Committee’s current intent that this upfront, Long Term Equity Award will be the only stock based compensation awarded to Mr. Turicchi over the five years following the Grant Date, or, if later, until the awarded stock units have substantially vested. The Compensation Committee, with the assistance of FW Cook, emphasized long-term performance and retention by weighting the compensation of Mr. Turicchi toward long-term equity incentives. Mr. Turicchi received 266,667 performance-based restricted stock units (“PSUs”) and 80,000 time-based restricted stock units (“RSUs”). The RSUs vest over a five-year vesting period, vesting with respect to 25% of the RSU award on the first anniversary of the Grant Date and the remaining 75% of the RSU award ratably over the remaining 4 years, subject to continued employment except as described below. The PSUs vest in one-fifth increments only if the Company’s common stock price remains at or above the following five stock prices for at least 20 trading days in any 25 consecutive trading day period: $62.87, $69.15, $76.07, $83.67, and $92.04; provided that no PSUs may vest before the first anniversary of the Grant Date. The stock price thresholds were based on the compounded annual growth rate in the Company’s common stock price from the date of its initial public offering until the Grant Date, as applied to each of the five successive stock price thresholds. The recipient has a total of six years to achieve the performance targets with respect to the PSUs. Any unvested PSUs generally are forfeited upon termination of employment except as described below. The RSUs and PSUs are otherwise subject to the terms and conditions of the 2021 Equity Incentive Plan, and the individual award agreements thereunder corresponding to the awards.
Equity Grant Practices
Equity Grant Practices The Compensation Committee generally approves the target value of Annual Equity Awards for the Company’s executive officers, including the NEOs (other than Mr. Turicchi), at its meeting in November or December of each year. Additionally, employees may enroll to purchase shares of the Company’s common stock under the terms of the Consensus Cloud Solutions, Inc. 2021 Employee Stock Purchase Plan. In special circumstances, including the hiring or promotion of an individual or where the Compensation Committee determines it is in the best interest of the Company, the Compensation Committee may approve grants of equity awards at other times. The Company did not grant any stock options in fiscal 2024. The Company did not time the disclosure of material nonpublic information for the purpose of affecting the value of any executive compensation awarded during fiscal 2024.
Tax and Accounting Considerations
| Name and Principal Position | Year | Base Salary ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Scott Turicchi Chief Executive Officer | 2024 | 750,000 | — | 1,384,188 | 36,541 | 2,170,729 | | | 2023 | 750,000 | — | 372,529 | 33,922 | 1,156,451 | | | 2022 | 750,000 | — | 166,125 | 32,045 | 948,170 | | Jim Malone Chief Financial Officer | 2024 | 375,000 | 2,010,311 | 377,506 | 26,377 | 2,789,194 | | | 2023 | 375,000 | 1,233,563 | 101,599 | 24,810 | 1,734,972 | | | 2022 | 336,539 | 1,418,167 | 46,515 | 23,600 | 1,824,821 | | Vithya Aubee Chief Legal Officer | 2024 | 360,000 | 1,257,165 | 362,406 | 8,115 | 1,987,686 | | | 2023 | 360,000 | 781,550 | 97,535 | 7,014 | 1,246,099 | | | 2022 | 300,000 | 533,140 | 39,870 | 6,719 | 879,729 | | Jeffrey Sullivan Chief Technology Officer | 2024 | 375,000 | 1,626,923 | 377,506 | 18,010 | 2,397,439 | | | 2023 | 375,000 | 973,700 | 101,599 | 16,676 | 1,466,975 | | | 2022 | 350,000 | 872,475 | 46,515 | 8,001 | 1,276,991 |
Tax and Accounting Considerations
| STOCK AWARD POTENTIAL PAYMENTS UPON TERMINATION DUE TO DEATH OR DISABILITY | | | | | | NAME | OUTSTANDING RSUs AS OF DEC 31, 2024 (#) | MARKET VALUE OF OUTSTANDING RSUs AS OF DEC 31, 2024 ($)(1) | OUTSTANDING PSUs AS OF DEC 31, 2024 (#) | MARKET OR PAYOUT VALUE OF OUTSTANDING PSUs AS OF DEC 31, 2024 ($)(2) | | Scott Turicchi | 46,048 | 1,098,705 | 281,301 | 0 | | Jim Malone | 94,421 | 2,252,885 | 45,303 | 0 | | Vithya Aubee | 40,954 | 977,162 | 46,911 | 0 | | Jeffrey Sullivan | 54,839 | 1,308,459 | 67,304 | 0 |
Tax and Accounting Considerations
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Turicchi, as computed in accordance with Item 402(v) of Regulation S-K, and do not reflect the total compensation actually realized or received by Mr. Turicchi. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted in accordance with these rules, as shown below for 2024. Equity values are calculated in accordance with ASC 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
Tax and Accounting Considerations
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Scott Turicchi), as computed in accordance with Item 402(v) of Regulation S-K. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted in accordance with these rules, as shown below for 2024. Equity values are calculated in accordance with ASC 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant. |
Tax and Accounting Considerations
| COMPENSATION ACTUALLY PAID TO PEO | 2024 ($) | | Summary Compensation Table Total | 2,170,729 | | Less, value of “Stock Awards” reported in Summary Compensation Table | 0 | | Plus, year-end fair value of outstanding and unvested equity awards granted in the year | 0 | | Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | (737,090) | | Plus (less), change in fair value from prior year end to the vesting date of equity awards granted in prior years that vested in the year | (363,555) | | Less, prior year-end fair value for any equity awards forfeited in the year | (667) | | Compensation Actually Paid to Scott Turicchi | 1,069,417 |
Tax and Accounting Considerations
| AVERAGE COMPENSATION ACTUALLY PAID TO NON-PEO NEOs | 2024 ($) | | Average Summary Compensation Table Total | 2,391,440 | | Less, average value of Stock Awards reported in Summary Compensation Table | (1,631,466) | | Plus, average year-end fair value of outstanding and unvested equity awards granted in the year | 1,553,458 | | Plus (less), average year over year change in fair value of outstanding and unvested equity awards granted in prior years | (103,483) | | Plus (less), average change in fair value from prior year to the vesting date of equity awards granted in prior years that vested in the year | (30,681) | | Less, prior year-end fair value for any equity awards forfeited in the year | 0 | | Average Compensation Actually Paid to Non-PEO NEOs | 2,179,267 |
Description of Certain Relationships between Information Presented in the Pay versus Performance Table
Description of Certain Relationships between Information Presented in the Pay versus Performance Table As described in more detail in the section entitled “Compensation – Discussion and Analysis” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.