| | Forward-Looking Statements This Proxy Statement for the Annual Meeting, which we refer to as this Proxy Statement, includes forward-looking statements. These statements are not historical facts and are based on current expectations, estimates, and projections about our industry, management’s beliefs, and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict.predict, including but not limited to the ongoing Russian invasion of Ukraine and the effect that it may have on our business, operating results, financial condition, and access to capital. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.2021. TABLE OF CONTENTS PROXY SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. References to our website in this Proxy Statement are not intended to function as hyperlinks, and the information contained on our website is not intended to be incorporated into this Proxy Statement. In this Proxy Statement, we refer to Upwork Inc. as “Upwork,” “we,” or “us.” Proposals to Be Voted Onon and Board Voting Recommendations | No. | Proposal | Board
Recommendation | Page | | 1 | Election of three Class III directors named in the accompanying proxy statement |  FOR
(ALL NOMINEES) | 28 | | | | | | | 2 | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021 | FOR | 39 | | | | | | | 3 | Advisory vote on named executive officer compensation (“say-on-pay”) | FOR | 41 |
1 | | | Election of three Class I directors named in this Proxy Statement | | | | | | | | | | 1a. Kevin Harvey | | |  FOR | | | | | | | 1b. Thomas Layton | | | FOR | | | | | | | 1c. Elizabeth Nelson | | | FOR | | | | 2 | | | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2022 | | |  FOR | | | | 3 | | | Advisory vote on named executive officer compensation (“say-on-pay”) | | | FOR | | | |
Key 20202021 Business Highlights Upwork is
We are changing the way work gets done by placing independent talent at the heart of every business. Upwork operatesWe operate the world’s largest work marketplace that connects businesses which we refer to as clients, with independent talent, as measured by GSV.GSV.5 Despite the challenges of the ongoing COVID-19 pandemic, in 20202021 we launched acontinued to evolve our new generation of executive leadership and generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights include: Performance Highlights Growing Our Work Marketplace | ● | | GSV grew to over $3.5 billion, a 41% year-over-year increase | Generating Strong Growth | | | Generated $503 million of revenue, a 35% year-over-year increase | Expanding Our Active Client Base(1) | | | Expanded the number of active clients by 22% year-over-year to approximately 771,000(2) while increasing GSV per active client 15% year-over-year to $4,599(2) |
(1)
| We define an active client as a client that has had spend activity on our work marketplace during the 12 months preceding the date of measurement. GSV per active client is calculated by dividing total GSV during the four quarters ended on the date of measurement by the number of active clients at the date of measurement. |
(2)
| As of December 31, 2021. |
 2022 Proxy Statement 1 |
TABLE OF CONTENTS Strategic Highlights Launching a New Generation of Leadership— | | | Continued to invest in 2020, Hayden Brown was appointed asthe top talent necessary to drive our Presidentlong-tern success, including hiring a new Chief Technology Officer and Chief ExecutiveMarketing Officer Jeff McCombs joined as our Chief Financial Officer, and Sam Bright joined as our Chief Product & Experience Officer. |
| ● | Growing OurInnovating the Work Marketplace— | | | Launched Project CatalogTM (pre-defined, ready-to-purchase projects), Talent ScoutTM (a data-science-driven hiring solution), and Virtual Talent BenchTM (enables clients to establish a network of talent)
We also announced partnerships with Catch, a leading benefits company dedicated to the needs of independent talent, and Loom, the industry-leading communication tool that allows our GSV grewusers to over $2.5 billion,simultaneously record themselves and their computer screen and share these recordings with their teams and customers | Evangelizing the Work Marketplace | | | Increased our investment in brand marketing, underscoring our conviction that this is a 21% year-over-year increase.moment in time in which we can influence users meaningfully as workers are reconsidering their priorities and businesses grapple with talent shortages exacerbated by the Great Resignation
We also launched Upwork CoLab, an Upwork brand-partnership program that connects talent with exciting brands to collaborate on high-value, relevant, and innovative projects |
Scaling the Work Marketplace | ● | Generating Strong Growth— | Announced that we generated $373.6 million of revenue, a 24% year-over-year increase. |
| ● | Expanding Our Core Client Base1—we expandedare growing the enterprise sales team and expect to double the number of account executives of our core clients“land” team by the end of 2022
By doing this, we are establishing a strong foundation on which to over 145,000, while maintaining client spend retention2capture the long-term value opportunity of 102% as of December 31, 2020.enterprise sales and will continue to invest wisely and strategically to capitalize on that opportunity |
1 We define a core client as a client that has spent in the aggregate at least $5,000 since it began using our work marketplace and also had spend activity during the 12 months preceding the date of measurement.
2We calculate client spend retention by dividing our recurring client spend by our base client spend. We define base client spend as the aggregate client spend from all clients during the four quarters ended one year prior to the date of measurement. We define our recurring client spend as the aggregate client spend during the four quarters ended on the date of measurement from the same clients included in our measure of base client spend.
| ● | Launching and Expanding Initiatives to Drive Growth—we announced Project Catalog (pre-defined, ready-to-purchase projects) and expanded Direct Contracts (enabling invoicing and billing for hourly work). |
| ● | Establishing Strategic Partnerships—among others, we announced a partnership with Zoom that integrates Zoom’s video and voice communication tools into our work marketplace. |
We monitor GSV as a key financial and operational metric to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. We believe GSV is an important metric because it represents the amount of business transacted through our work marketplace. Moreover, we believe revenue is the primary measure of the performance of our business, as it provides comparability against competitorsto other online marketplaces and is aligned to our strategic focus on growth objectives.  2 2022 Proxy Statement |
TABLE OF CONTENTS 
Stockholder Value Creation Driven by our strong financial and operational performance in 2020, we generated stockholder returns significantly exceeding those of the broader market (based on a comparison vs. the NASDAQ Composite Index) and overall technology sector (based on the NASDAQ 100 Technology Index).
The following charts show comparisons from October 3, 2018 (the date our common stock commenced trading on The Nasdaq Global Select Market) , through MarchDecember 31, 2021, and from January 1, 2020 (the date on which Ms.Hayden Brown became our President and Chief Executive Officer) , through MarchDecember 31, 2021, of the cumulative total returns for our common stock, the NASDAQ 100NASDAQ-100 Technology Sector Index, and the NASDAQ Composite Index, respectively. Such returns are based on historical results and are not intended to suggest future performance. The NASDAQ Composite Index and the NASDAQ 100NASDAQ-100 Technology Sector Index assume reinvestment of any dividends. Our Demonstrated Value Creation Stockholder Engagement Source: Capital IQ; representing percentage of outstanding shares as of February 23, 2022, based on the latest 13F filings. Our board of directors and executive management team value feedback from our stockholders. In addition to our normal-course investor relations activities, we initiated a dedicated stockholder outreach program in 2021 to engage with our stockholders on topics including corporate governance, executive compensation, and corporate responsibility and sustainability. 2 2022 Proxy Statement 3 |
TABLE OF CONTENTS In 2021, we contacted stockholders representing approximately 48% of our current shares outstanding and engaged in discussions with stockholders representing approximately 42% of our current shares outstanding. Members of our board of directors and management team participated in these engagements and used feedback heard from stockholders as a key input in deliberations on our strategy, governance, executive compensation, risk management, and environmental, social, and governance, which we refer to as ESG, priorities. Key themes from our engagement with stockholders and the actions our board of directors took in response include: CEO Performance
Award6 | | | • Stockholders were supportive of the structure and timing of the CEO Performance Award, noting our strong performance, the rigorous performance targets, and that the award drives alignment with stockholder interests
• Stockholders requested additional disclosure given such awards are reviewed closely | | | ✔ Added a comprehensive overview of the CEO Performance Award to the 2021 proxy statement Included additional disclosure of the CEO
✔ Performance Award in this Proxy Statement, which we describe in the “Compensation Discussion and Analysis” section below | Long-Term
Incentive
Compensation
(LTI) | | | • Stockholders appreciated the introduction of performance stock units, which we refer to as PSUs, into our long-term incentive compensation program and suggested including relevant disclosure in future proxy statements | | | ✔ Included an overview of 2021 PSU awards in the 2021 proxy statement and provided additional details in this Proxy Statement
✔ Increased the percentage allocation of PSUs that comprise the long-term incentive compensation opportunity of our Named Executive Officers, which we describe in the “Compensation Discussion and Analysis” section below | ESG and
Sustainability | | | • Stockholders were enthusiastic about the progress to date, including our use of the Sustainability Accounting Standards Board (SASB) framework and our disclosure of EEO-1 data
• Stockholders encouraged us to continue to advance our ESG-related disclosures | | | ✔ Continued to publish detailed information on ESG initiatives and efforts, including establishing a new landing page on our website outlining our impact areas of focus, which includes an ESG Reports Hub
✔ Reported in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in our 2021 Impact Report Submitted our first CDP Climate Change Report in July 2021 | Directors’
Outside Board
Commitments | | | • Certain stockholders highlighted that one director was not in compliance with stockholders’ “overboarding” policies | | | ✔ Disclosed in the 2021 proxy statement that the director in question had previously planned, and then announced, that he would reduce his board commitments
✔ In June 2021, the director in question stepped down from one company’s board of directors and stepped down from the board of directors of an additional company in connection with the acquisition of that company in August 2021 | Corporate
Governance | | | • Stockholders were supportive of our adoption of a majority voting standard and proxy access right and wished to see ongoing review of governance structures and practices over time | | | ✔ Continued to assess governance structures in the context of our business strategy and strong performance, as well as against market practices |
4 2022 Proxy Statement |
TABLE OF CONTENTS ESG Oversight and Notable Accomplishments Our mission is to create economic opportunities so people have better lives. We seek to do what is right for our business, stakeholders, and planet. In 2021, we focused on building a robust internal ESG function to proactively manage the key non-financial topics identified in our 2020 ESG materiality assessment. This included hiring a Senior Program Manager of ESG to lead our ESG program and establishing our ESG Program Office, which comprises members of the legal department and is focused on engaging key stakeholders and strengthening our ESG performance. The ESG Program Office is supported by our ESG Task Force, which is a management-level committee made up of senior leaders and subject matter experts across Upwork. Board oversight starts with our nominating and governance committee, which oversees our overall ESG performance and provides input on our management of material ESG risks and opportunities, ESG reporting, and progress against ESG targets. Our ESG Program Office briefs the nominating and governance committee on a biannual basis, which then updates the full board of directors on ESG matters on a biannual basis. In 2021, our notable ESG accomplishments included: | | | Economic
Opportunity | | | • Provided individual coaching to 2,400 new members of our talent community and hosted 245 virtual events and webinars to support over 75,000 members of our talent community
• Granted $800,000 through The Upwork Foundation7 to eight high-impact nonprofits that provide critical workforce training, job placement, and financial support to communities in need
• Contributed over $172,000 through our employee matching gifts program to nonprofits addressing the COVID-19 pandemic or issues important to our Upwork Belonging Communities8 | | | | Health, Safety,
and Human
Rights | | | • Published a Global Human Rights Policy
• Developed the Upwork Playbook 2.0, which outlines best practices for working together as a distributed team
• Through our workforce surveys, saw an employee satisfaction (eSat) score of 73/100, meeting our industry benchmark, and a hybrid workforce eSat score of 79/100 | | | | Diversity,
Inclusion, and
Belonging
(DIBs) | | | • Launched UpMIND, an Upwork Belonging Community focused on mental health and neurodiversity
• Advanced our GlowUP Program designed to support our leaders of color
• Recognition:
• Included in the 2022 Bloomberg Gender-Equality Index
• Included in the 2022 Human Rights Campaign Foundation’s Corporate Equality Index
• Recognized by Parents @ Work as one of the 2021 Best Places for Parents Working Remotely | | | | Environmental
Sustainability | | | • Reported and verified our Scope 1, 2, and 3 emissions and achieved carbon neutrality for the third consecutive year
• Submitted our first CDP Climate Change questionnaire
• Published a Global Environmental Policy | | | | Business
Integrity and
Supplier Engagement | | | • Updated our Code of Business Conduct and Ethics with our enhanced Speak Up program and ethics reporting platform
• Published a Supplier Code of Conduct
• Maintained our SOC 2 Type II, PCI DSS Level 2, and ISO 27001 and 27018 certifications and achieved SOC 3 certification |
Additional information about our ESG programs and performance, including our workforce diversity data and annual emissions figures, are included in our 2021 Impact Report, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub. 2022 Proxy Statement 5 |
TABLE OF CONTENTS Executive Compensation Philosophy Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, whom we identify in the “Compensation Discussion and Analysis” section below, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives while simultaneously creating sustainable long-term value for our stockholders. Executive Compensation Overview Key Components of 2021 Executive Compensation Base Salary | | | • Fixed cash | | | • Attract and retain top talent through market-competitive salary levels that are commensurate with the executive’s role and responsibility | Annual Bonus | | | • Variable payout based on performance against pre-established targets | | | • Incentivize achievement of annual business objectives and reward short-term performance
• Revenue performance metric aligns compensation with strategic growth | Long-Term Equity Incentives | | | • Time-based restricted stock unit awards, which we refer to as RSUs, vest over four-year period
• PSU awards, which are subject to both performance- and time- based vesting | | | • Align the interests of executives with stockholders
• Motivate long-term sustainable value creation
• Promote retention of top talent
• Incentivize achievement of annual business objectives and reward long-term performance
• Revenue performance metric aligns compensation with strategic growth |
Corporate Governance Practices We are committed to effective corporate governance that promotes the long-term interests of our stockholders and strengthens the accountability of our board of directors and management. As we continue to mature as a public company, we are committed to evolving our corporate governance practices in line with our growth. Our board of directors takes a thoughtful approach to our governance structure, regularly assessing a range of factors, including regular stockholder input and feedback. Our board of directors carefully considers each of our corporate governance practices to ensure they are aligned with our state of maturity as a company and the best interests of our stockholders. Key elements include the following: 6 2022 Proxy Statement |
TABLE OF CONTENTS We strive to maintain a diverse board of directors and ensure diversity is a factor when identifying potential new directors; four of our eight directors are women, and three directors are from underrepresented communities39 | | | Independent Board Oversight
Seven of our eight directors are independent, including our chairperson |
Our nominating and governance committee oversees our corporate responsibility and sustainability programs, including environmental, social, and governance matters, which we refer to as ESG | | | We provide a method for stockholders to place their nominees for director on our proxy ballot | Stock Ownership Guidelines
Our executiveExecutive and board of directorBoard Stock Ownership Guidelines, which we refer to as the Stock Ownership Guidelines, establish stock ownership requirements, including 5x base salary for our Chief Executive Officer | | | Our board of directors and the committees of our board of directors conduct self-evaluations at least annually to assess performance | In response to stockholder feedback, in 2021 we have implemented majority voting in uncontested director elections, which will take effect beginning with our 2022 annual stockholder meetingthe Annual Meeting | | | We have adopted a clawback policy for our executive officers that provides for recoupment of incentive-based compensation in the event we adjust or restate our financial statements |
Our board of directors conducts an annual self-evaluation process, which is used, in part, to assess the current composition of the board of directors and its committees relative to the evolving needs of the business. This exercise is conducted with the goal of ensuring we have developed and maintain a diverse, experienced, and highly qualified board of directors that is representative of our key stakeholders and well positioned to oversee corporate strategy and culture. As part of the evaluation and refreshment process, our board of directors has added threetwo new independent directors since our IPOinitial public offering in 2018: Ms. Brown, Leela Srinivasan and Anilu Vazquez-Ubarri.
Vazquez-Ubarri, in addition to Ms. Brown who joined our board of directors when she became our President and Chief Executive Officer. The charts below provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2022). We define tenure as including service on the board of directors of Elance, Inc., which we refer to as Elance, or oDesk Corporation, which we refer to as oDesk, prior to the combination of the two companies in March 2014.  We are committed to creating a diverse and inclusive culture, which starts at the top with our board of directors. Four of our eight directors are women, two directors self-identify as being racially or ethnically diverse, and one director self-identifies as LGBTQ+ , all. All of whomour directors bring unique experiences and backgroundbackgrounds to Upwork. The charts above provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2021). We define tenure as including service on the board of directors of Elance, Inc., which we refer to as Elance, or oDesk Corporation, which we refer to as oDesk, prior to the combination of the two companies in March 2014.
Key Expertise, Experience, and Attributes2022 Proxy Statement 7 |
TABLE OF CONTENTS Key Expertise, Experience, and Attributes | | | | | |  | Technology and Product Development 7/8 Directors
|  | Corporate Governance
|  | Operations
7/8Directors
| | | | | | | |  | CEO and Management Experience
Corporate Governance
8/8 Directors |  | | | | | International
8/8Directors | | | | | | | | | | | | | | CEO and Management Experience
8/8Directors | | | | | |
|  | Risk Management
4/8Directors
| | | | | | | |  | Compensation / Talent Management
Operations
8/8 Directors | | |  | | | | | | | | | | Human Capital Management
8/8Directors | | | | | |
6/8Directors | | | | | | Risk Management
|  | Strategic Planning
8/8Directors
| | | | | | | | | |  | | | Other Public Company Board Experience
5/7/8 Directors
|  | International
| | | | Cybersecurity
4/8Directors | | | | | | Strategic Planning
| | | | | | | | | | | | | | | | Corporate Sustainability and ESG
4/8 Directors | | | | | | | | | | | | |
Stockholder Engagement
Our board of directors and executive management team values feedback from our stockholders. This feedback is a key input in deliberations on our strategy, governance, executive compensation, and other board-level decisions. In addition to our normal-course investor relations activities, we initiated in the past year a dedicated stockholder outreach program to engage with our largest investors on topics including corporate governance, executive compensation, and corporate responsibility and sustainability. From the beginning of 2021 to date, we have contacted stockholders representing approximately 35% of our current shares outstanding and engaged in discussions with approximately 21% of our current shares outstanding. Key themes from our engagement conversations with stockholders include:
5 8 2022 Proxy Statement |
TABLE OF CONTENTS Notice of Annual Meeting of Stockholders Thursday, June 2, 2022
8:00 a.m. Pacific Time Online at www.virtualshareholdermeeting.com/UPWK2022
There is no physical location for the Annual Meeting. Items of Business Primary Themes | | Key Discussion Points and Stockholder Feedback | | | | | | | | | | CEO Performance Award Granted in 2021 | | ●
We discussed the performance award the compensation committee granted Ms. Brown in January 2021, comprised of stock options with both service- and performance-based vesting requirements, which we refer to as the CEO Performance Award, and our board of directors’ goals for the award in the context of Upwork’s strategy and executive compensation program.1.
●
Stockholders generally noted that they review such awards closely and highlighted the importance of clear disclosure. An overview of the CEO Performance Award can be found under the heading “CEO Performance Award for Ms. Brown” below.
●
Stockholders also expressed support for the structure and timing of the CEO Performance Award, noting Upwork’s strong 2020 performance, the rigorous performance targets, and the highly competitive landscape for talented chief executive officers.
| Long-Term Incentive Compensation | | ●
We discussed the introduction of performance stock units, which we refer to as PSUs, into our long-term incentive compensation program, which was well received by stockholders. Stockholders encouraged us to provide relevant disclosure in future proxy statements.
●
An overview of the PSUs can be found under the heading “2021 PSU Awards” below. We will include additional details regarding our 2021 pay program, including the PSUs, in the proxy statement for our 2022 annual meeting of stockholders.
| ESG and Sustainability | | ●
We discussed our ESG-related initiatives and disclosures, including our 2020 Annual Impact Report and Emissions Report (which are available at investors.upwork.com), as well as our people strategy and diversity, inclusion, and belonging initiatives.
●
Stockholders broadly supported these efforts and noted our significant progress to date, particularly as a newly public company.
●
Stockholders noted their support for our current use of the Sustainability Accounting Standards Board (SASB) framework, and some also flagged the Task Force on Climate-related Financial Disclosures (TCFD) framework, which we are considering adopting in the future, as potentially valuable additional disclosure.
●
Stockholders affirmed their support of Upwork’s diversity, belonging, and inclusion, which we refer to as DIB, efforts, including our disclosure of EEO-1 data.
|
Director Outside Board Commitments | | ●
Some stockholders highlighted their policies on “overboarding,” and we discussed our board of directors’ approach to director evaluations and the capacity of individual directors.
●
One of our directors had previously planned, and recently announced that they will reduce the number of boards on which they serve, after which they will be in compliance with the policies of the stockholders who engaged with us on the topic.
| Corporate Governance | | ●
We discussed Upwork’s evolving governance practices given our existence as a newly public company.
●
Stockholders noted their support for our adoption of a majority voting standard in uncontested director elections and proxy access right.
●
Stockholders also encouraged our board of directors to continue its practice of reviewing our governance structures as the business evolves over time.
|
Corporate Responsibility and Sustainability Highlights
Our mission is to create economic opportunities so people have better lives. In line with our recognition that ESG oversight is critical to our ability to implement meaningful long-term ESG strategies, in 2019 our nominating and governance committee began overseeing the review and assessment with management of our performance, risk, controls, and procedures relating to corporate responsibility and sustainability, including ESG matters. Further, Upwork has an ESG task force composed of personnel from various departments that is responsible for developing and implementing ESG programs and disclosures.
During the past year, we undertook an ESG materiality assessment to help identify ESG-related topics and issues that are most meaningful to our business and stakeholders. This assessment was informed by interviews with both internal and external stakeholders, including employees, executives, stockholders, and freelancers and clients on our work marketplace. With their input, we were able to identify and evaluate the areas they view as material to them as stakeholders and to our business success.
More details on our ESG materiality assessment are included in our 2020 Annual Impact Report, published in April 2021, which is available on the “Investor Relations” section of our website located at investors.upwork.com. This year’s Annual Impact Report also includes additional disclosures, including enhanced quantitative disclosures on our workforce diversity. We are committed to continued engagement with our stakeholders going forward and ensuring our practices and disclosures align with evolving ESG-related priorities.
Key Highlights and Achievements from 2020 Include:
Diversity, Inclusion,
and Belonging (DIB)
| Environmental
Sustainability
| The Upwork
Foundation Initiative
| | | | | | |  |  |  | | | | ● Evolved and strengthened DIB infrastructure, such as actively engaging with our employee resource groups, in order to foster a sense of workplace belonging
| ● Achieved carbon neutrality and publicly committed to maintaining carbon neutrality moving forward
| ● Established in 2018 to further our mission—to create economic opportunities so people have better lives—by serving groups at risk of being left behind by the Fourth Industrial Revolution
| | | | ● Committed $200,000 to organizations that support racial justice and the Black community
| ● Reduced our carbon footprint through adoption of remote-first work model
| ● Funds high-performing nonprofits that cultivate inclusive learning and economic opportunities
| | | | ● Surveyed team members to gather feedback and monitor our culture, receiving high response rates and employee satisfaction scores
| ● Published an Emissions Report
| ● Supported Upwork’s award of $1 million in talent grants to 40 organizations working to mitigate the COVID-19 pandemic’s devastating impact
|
For more information on our ESG-related efforts, see the “Corporate Responsibility and Sustainability” section below in this Proxy Statement, as well as our 2020 Annual Impact Report, which is available on the “Investor Relations” section of our website located at investors.upwork.com.
Executive Compensation Philosophy
Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, whom we identify in the “Compensation Discussion and Analysis” section below, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives while simultaneously creating sustainable long-term value for our stockholders.
Executive Compensation Overview
Key Components of 2020 Executive Compensation
Compensation Elements | Key Components | Objective and Alignment to Strategy | Base Salary | ● Fixed cash | ● Attract and retain top talent through market-competitive levels | Annual Bonus | ● Variable payout based on performance against pre-established targets
| ● Incentivize achievement of annual business objectives and reward short-term performance
● Revenue performance metric aligns compensation with strategic growth
| Long-Term Equity Incentives | ● Time-based restricted stock unit awards, which we refer to as RSUs, vest over four-year period
| ● Align the interests of executives with stockholders
● Motivate long-term sustainable value creation
● Promote retention of top talent
|
UPWORK INC.
475 Brannan Street, Suite 430
San Francisco, California 94107
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Time and Date: | | Tuesday, June 1, 2021, at 8:00 a.m. Pacific Time | | | | | Place: | | The meeting can be accessed by visiting www.virtualshareholdermeeting.com/UPWK2021, where you will be able to listen to the meeting live, submit questions, and vote online. | | | | Items of Business: | | 1. | Elect the three Class IIII directors named in the accompanying proxy statement,Proxy Statement, each to serve a three-year term expiring at the 20242025 annual meeting of stockholders and until such director’s successor is elected and qualified. |
| | | | | | 2.
| Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021.2022. |
| | | | | | 3.
| Approve, on a non-binding advisory basis, the compensation paid by us to our Named Executive Officers as disclosed in this Proxy Statement. |
| | | | | | 4.
| Transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
Record Date April 4, 2022, which we refer to as the Record Date
Only stockholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting and any adjournments thereof. Participation in Annual Meeting We are pleased to invite you to participate in our Annual Meeting, which will be conducted exclusively online at www.virtualshareholdermeeting.com/UPWK2022. Please see “Important Information About the Annual Meeting” for additional information. The Annual Meeting will begin promptly at 8:00 a.m. Pacific Time. The virtual meeting room will open at 7:45 a.m. Pacific Time for registration. Voting Your vote is very important to us. Please act as soon as possible to vote your shares, even if you plan to participate in the Annual Meeting. For specific instructions on how to vote your shares, please see “Frequently Asked Questions–Voting Information” beginning on page 75 of this Proxy Statement. | | | | Record Date:Internet
Visit the website on your proxy card | | Only stockholders of record at | | | | By Telephone
1-800-690-6903 | | | | | | By Mail
Mark, sign, date, and return your proxy card in the close of business on April 5, 2021 are entitled to notice of, and to vote at, the meeting and any adjournments thereof. | | | | Voting: | | Each share of common stock that you own represents one vote. For questions regarding your stock ownership, you may contact us through our website at investors.upwork.com or, if you are a registered holder, our transfer agent, Computershare Trust Company, N.A., through its website at www-us.computershare.com or by phone at (800) 736-3001.enclosed envelope |
This notice of the Annual Meeting, proxy statement,Proxy Statement, and form of proxy are being distributed and made available on or about April 20, 2021.19, 2022. Whether or not you plan to attend the virtual Annual Meeting, we encourage you to vote and submit your proxy through the internet or by telephone or to request and submit your proxy card as soon as possible, so that your shares may be represented at the meeting. | | | By Order of the Board of Directors, | | | | | |  | | | | Brian Levey | |
Corporate Secretary
San Francisco, California
April 20, 2021 | | 19, 2022 |
2022 Proxy Statement 9 |
UPWORK INC.
475 Brannan Street, Suite 430
San Francisco, California 94107
PROXY STATEMENT FOR THE 2021 ANNUAL MEETINGTABLE OF STOCKHOLDERSCONTENTS
INFORMATION ABOUT SOLICITATION AND VOTINGThe accompanying proxy is solicited by our board of directors on behalf of Upwork Inc. for use at our 2021 Annual Meeting of Stockholders, which we refer to asImportant Information About the Annual Meeting to be held virtually at www.virtualshareholdermeeting.com/UPWK2021 on Tuesday, June 1, 2021, at 8:00 a.m. Pacific Time, and any adjournment or postponement thereof. The Notice of Internet Availability of Proxy Materials and this proxy statement for the Annual Meeting, which we refer to as this Proxy Statement, and the accompanying form of proxy were first distributed and made available on the internet to stockholders on or about April 20, 2021. This Proxy Statement includes information that we are required to provide to you pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, which we refer to as the SEC, and is designed to assist you in voting your shares. In this Proxy Statement, we refer to Upwork Inc. as “Upwork,” “we,” or “us.”
INTERNET AVAILABILITY OF PROXY MATERIALS
In accordance with SEC rules, we are using the internet as our primary means of furnishing proxy materials to stockholders. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send these stockholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our Proxy Statement and annual report to stockholders, and voting via the internet. The Notice of Internet Availability of Proxy Materials also provides information on how stockholders may obtain paper copies of our proxy materials if they so choose. We believe this means of delivery makes the proxy distribution process more efficient and less costly and helps in conserving natural resources.
GENERAL INFORMATION ABOUT THE MEETING
Record Date; Quorum
Only holders of record of our common stock at the close of business on April 5, 2021, which we refer to as the Record Date, will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, there were 125,962,107 shares of our common stock outstanding and entitled to vote. For 10 days prior to the Annual Meeting, a complete list of the stockholders entitled to vote at the
Our Annual Meeting will be availableconducted online only, via live webcast. Stockholders will be able to access the meeting live by visiting www.virtualshareholdermeeting.com/UPWK2022. We have conducted efficient and effective virtual meetings since 2019. We intend to continue to ensure that our stockholders are afforded the same rights and opportunities to participate virtually as they would at an in-person meeting. We believe the virtual format makes it easier for examination by any stockholder for any purpose relatingstockholders to attend, and participate fully and equally in, the Annual Meeting during ordinary business hoursbecause they can join with any internet-connected device from any location around the world at our headquarters. A listno cost. Our virtual meeting format helps us engage with all stockholders–regardless of stockholders entitled to vote atsize, resources, or physical location, protects the Annual Meeting will also be available for examination on the internet through the virtual web conference during the Annual Meeting.The holdershealth and safety of a majorityattendees in light of the voting power of the shares ofongoing COVID-19 pandemic, saves us and stockholders’ time and money, and reduces our common stock issued and outstanding and entitled to vote at the Annual Meeting as of the Record Date must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This presence is called a quorum. Your shares are counted as present at the Annual Meeting if you are present and vote at the Annual Meeting or if you have properly submitted a proxy.
Voting Rights; Required Vote
In deciding all matters at the Annual Meeting, as of the close of business on the Record Date, each share of common stock represents one vote. We do not have cumulative voting rights for the election of directors. You may vote all shares owned by you as of the Record Date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee.
Stockholder of Record: Shares Registered in Your Name. If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting or vote by telephone, through the internet, or if you request or receive paper proxy materials, by filling out and returning the proxy card.
Beneficial Owner: Shares Registered in the Name of a Broker or Nominee. If, on the Record Date, your shares were held in an account with a broker, bank, trustee, or other nominee on your behalf, then you are considered the beneficial owner of shares held in “street name.” As the beneficial owner, you have the right to direct your nominee on how to vote your shares by following the voting instructions you receive. Your nominee has only limited authority to vote your shares without your instructions, as described below.
If you were a beneficial owner at the close of business on the Record Date, you may attend the Annual Meeting. You will need the 16-digit Control Number found on your Notice of Internet Availability of Proxy Materials, your proxy card, or the instructions that accompany your proxy materials if you wish to attend the Annual Meeting with the right to vote and submit a question. Even if you do not have your 16-digit Control Number or were not a stockholder as of the close of business on the Record Date, you can still access the meeting, but will not be able to vote at the meeting or submit a question.
If your shares are held in street name, follow the voting instructions you receive from your nominee.
Each director will be elected by a plurality of the votes cast, which means that the three nominees receiving the highest number of “FOR” votes will be elected. You may vote “FOR ALL NOMINEES,” “WITHHOLD AUTHORITY FOR ALL NOMINEES,” or “FOR ALL EXCEPT” one or more of the nominees you specify. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021, will be obtained if the number of votes cast “FOR” the proposal at the Annual Meeting exceeds the number of votes cast “AGAINST” the proposal. Approval, on a non-binding advisory basis, of the compensation paid by us to our Named Executive Officers (as defined herein) as disclosed in this Proxy Statement will be obtained if the number of votes cast “FOR” the proposal at the Annual Meeting exceeds the number of votes cast “AGAINST” the proposal. Abstentions (shares present at the Annual Meeting and marked “abstain”) are counted for purposes of determining whether a quorum is present and have no effect on the outcome of the matters voted upon.
Broker non-votes occur when shares held by a broker for a beneficial owner are not voted because the broker did not receive voting instructions from the beneficial owner and lacked discretionary authority to vote the shares. A broker is entitled to vote shares held for a beneficial owner on “routine” matters without instructions from the beneficial owner of those shares. Absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on “non-routine” matters. At our Annual Meeting, only the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021, is considered a routine matter. The proposal for the election of directors and any other proposals presented at the Annual Meeting are non-routine matters. Broker non-votes are counted for purposes of determining whether a quorum is present and have no effect on the outcome of the matters voted upon. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the Annual Meeting.
Recommendations of Our Board of Directors on Each of the Proposals Scheduled to Be Voted on at the Annual Meeting
Our board of directors recommends that you vote “FOR ALL NOMINEES” in the election of the Class III directors named in this Proxy Statement, which we refer to as Proposal No. 1, “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021, which we refer to as Proposal No. 2, and “FOR” the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as disclosed in this Proxy Statement, which we refer to as Proposal No. 3. None of our directors or Named Executive Officers have any substantial interest in any matter to be acted upon, other than, with respect to our Named Executive Officers, Proposal No. 3 and, with respect to Hayden Brown, Gregory C. Gretsch, and Anilu Vazquez-Ubarri, Proposal No. 1.
Voting Instructions; Voting of Proxies
If you are a stockholder of record, you may:
● | vote via the virtual meeting website—any stockholder can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/UPWK2021, where stockholders may vote and submit questions during the meeting. The meeting starts at 8:00 a.m. Pacific Time. Please have your 16-digit Control Number to join the Annual Meeting. Instructions on how to attend and participate via the internet are posted at www.proxyvote.com;
| | | ● | vote by telephone or through the internet—in order to do so, please follow the instructions shown on the Notice of Internet Availability of Proxy Materials or your proxy card; or | | | ● | vote by mail—if you request or receive a paper proxy card and voting instructions by mail, simply complete, sign, and date the enclosed proxy card and promptly return it in the envelope provided or, if the envelope is missing, please mail your completed proxy card to Vote Processing, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717. Your signed and dated proxy card must be received prior to the Annual Meeting in order to be voted. |
Votes submitted by telephone or through the internet must be received by 11:59 p.m. Eastern Time on May 31, 2021. Submitting your proxy, whether by telephone, through the internet, or if you request or receive a paper proxy card, by mail, will not affect your right to vote should you decide to attend the Annual Meeting. If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct your nominee on how to vote your shares. Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted.
All proxies will be voted in accordance with the instructions specified. If you sign a physical proxy card and return it without instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our board of directors stated above.
If you do not vote and you hold your shares in street name, and your broker does not have discretionary power to vote your shares, your shares may constitute “broker non-votes” (as described above) and will not be counted in determining the number of shares necessary for approval of the proposals. However, shares that constitute broker non-votes will be counted for the purpose of establishing a quorum for the Annual Meeting.
If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please follow the instructions included on each proxy card and vote each proxy card by telephone, through the internet, or by mail. If you requested or received paper proxy materials and you intend to vote by mail, please complete, sign, and return each proxy card you received to ensure that all of your shares are voted.
Expenses of Soliciting Proxies
We have retained D.F. King & Co., Inc. to assist us with the solicitation of proxies, for which we will pay an aggregate fee of $15,000, plus reasonable and documented costs and expenses. We will pay the expenses of soliciting proxies, including preparation, assembly, printing, and mailing of this Proxy Statement, the proxy card, and any other information furnished to stockholders. Following the original mailing of the soliciting materials, we and our agents, including directors, officers, and other employees, without additional compensation, may solicit proxies by mail, email, telephone, facsimile, or other similar means, or in person. Following the original mailing of the soliciting materials, we will request brokers, custodians, nominees, and other record holders to forward copies of the soliciting materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, we, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access the proxy materials or vote through the internet, you are responsible for any internet access charges you may incur.
Revocability of Proxies
A stockholder of record who has given a proxy may revoke it at any time before it is exercised at the Annual Meeting by:
● | delivering to our Corporate Secretary by mail a written notice stating that the proxy is revoked; | | | ● | signing and delivering a proxy bearing a later date; | | | ● | voting again by telephone or through the internet; or | | | ● | attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy). |
Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to revoke a proxy, you must contact that firm to revoke any prior voting instructions.
Voting Results
Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. The preliminary voting results will be announced at the Annual Meeting. The final results will be tallied by the inspector of elections and filed with the SEC in a current report on Form 8-K within four business days of the Annual Meeting.
Participating in the Annual Meeting To participate
Instructions on how to attend the Annual Meeting are posted at www.virtualshareholdermeeting.com/UPWK2022. You may log in to the virtual meeting visit www.virtualshareholdermeeting.com/UPWK2021 and enterplatform beginning at 7:45 a.m. Pacific Time on June 2, 2022. The meeting will begin promptly at 8:00 a.m. Pacific Time. You will need the 16-digit Control Number included oncontrol number provided in your proxy card or onmaterials to attend the instructions that accompanied your proxy materials.If you wish to submit a questionAnnual Meeting at www.virtualshareholdermeeting.com/UPWK2022.
Stockholders of record and beneficial owners as of the Record Date may vote their shares electronically during the Annual Meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/UPWK2021, type your question into the “Ask a Question” field, and click “Submit.” If your question is properly submitted during the relevant portion of the meeting agenda, we will respond to your question during the live webcast, subject to time constraints. Questions that are substantially similar may be grouped and answered together to avoid repetition. We reserve the right to exclude questions that are irrelevant to meeting matters, irrelevant to the business of Upwork, or derogatory or in bad taste; that relate to pending or threatened litigation; that are personal grievances; or that are otherwise inappropriate (as determined by the chair of the Annual Meeting). A webcast replay of the Annual Meeting, including the Q&A session, will be archived on the “Investor Relations” section of our website, which is located at investors.upwork.com.If we experience technical difficulties during the meeting (e.g., a temporary or prolonged power outage), we will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via www.virtualshareholdermeeting.com/UPWK2021.Meeting.
If you encounter technicalany difficulties accessing our meeting or asking questions during the meeting,Annual Meeting, a support line will be available on the login page of the virtual meeting website. Additional Information About the Annual Meeting Stockholders may submit questions in advance of the Annual Meeting at www.virtualshareholdermeeting.com/
UPWK2022 before 8:59 p.m. Pacific Time on June 1, 2022, or during the live meeting at www.virtualshareholdermeeting.com/UPWK2022. During the meeting’s live Q&A session, we will answer questions (including those submitted in advance) as time permits. Our rules of conduct and procedure for the meeting generally provide that: We limit each stockholder to one question so that we can answer questions from as many stockholders as possible. Questions should be succinct and cover only one topic per question. Questions from multiple stockholders on the same topic or that are otherwise related may be grouped, summarized, and answered together. In addition, questions may be edited for brevity and grammatical corrections. We do not intend to address any questions that are, among other things: irrelevant to our business; irrelevant to the business of the Annual Meeting; related to material non-public information of the company; related to personal matters or grievances; derogatory or otherwise in bad taste; repetitious or already made by another stockholder; in furtherance of the stockholder’s personal or business interests; related to pending or threatened litigation; or out of order or not otherwise suitable for the conduct of the Annual Meeting as determined by the chairperson of our board of directors or our Corporate Secretary in their reasonable discretion. If there are matters of individual concern to a stockholder (rather than of general concern to all stockholders), or if we are not able to answer all the questions posed, stockholders may contact us separately after the meeting through our Investor Relations department by email at investor@upwork.com. A webcast replay of the Annual Meeting, including the Q&A session, will be available for 90 days following the Annual Meeting on the “Investor Relations” section of our website, which is located at investors.upwork.com. 13 10 2022 Proxy Statement |
BOARDTABLE OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS;CONTENTS CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE
Board of Directors and Committees of the Board of Directors; Corporate Governance Standards and Director Independence We are strongly committed to good corporate governance practices. These practices provide an important framework within which our board of directors and management can pursue our strategic objectives for the benefit of our stockholders. Corporate and Compensation Governance Highlights Corporate and Compensation Governance Highlights | Board Diversity | | | We strive to maintain a diverse board of directors and ensure diversity is a factor taken into account when identifying potential new directors. Four of our eight directors are women, and three directors are from underrepresented communities.communities610 | Independence | | | Seven of our eight directors are “independent” as defined by The Nasdaq Stock Market LLC, which we refer to as Nasdaq, and the Securities and Exchange Commission, which we refer to as the SEC, and we have an independent director serving as our chairperson.chairperson | Proxy Access | | | Our amended and restated bylaws provide a method for stockholders to place their nominees for director on our proxy ballot.ballot | Majority Voting for Directors | | | Beginning with our 2022 annual meeting of stockholders,the Annual Meeting, we are implementing majority voting in uncontested elections of directors.directors | Stock Ownership Guidelines | | | Our Executive and Board Stock Ownership Guidelines, which we refer to as the Stock Ownership Guidelines establish the level of stock ownership and holding requirements expected of our directors and executive officers.officers, including 5x base salary for our Chief Executive Officer | Annual Board Evaluation | | | Our board of directors and the committees of our board of directors conduct self-evaluations at least annually to assess performance.performance | Annual Compensation Evaluation | | | With the help of an independent compensation consultant, our compensation committee conducts annual reviews of the compensation of all our executive officers.officers | Corporate Responsibility | | | Our nominating and governance committee is responsible for reviewing and assessing our performance and procedures relating to corporate responsibility and sustainability, including ESG matters.matters | ESG Task ForceManagement | | | Our ESG Program Office, which comprises members of our legal department and is focused on engaging key stakeholders and strengthening our ESG performance, is responsible for reporting to the nominating and governance committee overseeson a biannual basis. Our ESG Program Office is supported by our ESG task force,Task Force, which comprises personnelis a management-level committee of senior leaders and subject matter experts from various departments and is responsible for developing and implementing ESG programs.programs | Compensation Risk | | | Our compensation committee, on at least an annual basis, evaluates our compensation programs to ensure that they do not encourage our employees, including our executive officers, to take inappropriate or excessive risk.risk | Clawback Policy | | | We have adopted a clawback policy for our executive officers that provides for recoupment of incentive-based compensation in the event we adjust or restate our financial statements.statements |
14 2022 Proxy Statement 11 |
Corporate Governance Guidelines Our board of directors has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions, and other policies for the governance of our company. Our Corporate Governance Guidelines are available on the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking “Documents & Charters” in the “Governance” section of our website. Our nominating and governance committee reviews the Corporate Governance Guidelines annually, and changes are recommended to our board of directors as warranted.
Board Leadership Structure Our Corporate Governance Guidelines provide that our board of directors shall be free to choose its chairperson in any way that it considers in the best interests of our company, and that the nominating and governance committee periodically considers the leadership structure of our board of directors and makes such recommendations to our board of directors with respect thereto as appropriate. Currently, the positions of chairperson and chief executive officer are held by different individuals. Thomas Layton is the chairperson of our board of directors. Mr. Layton has served as a member of our board of directors and chairperson since our inception. Our board of directors believes that Mr. Layton’s historical knowledge, operational expertise, and extensive leadership experience serving as the chairperson of our board of directors since our inception make him well qualified to serve as chairperson of our board of directors. Mr. Layton is an independent director, and accordingly, our board of directors has not designated a lead independent director. Our Corporate Governance Guidelines also provide that, when the positions of chairperson and chief executive officer are held by the same person, the independent directors may designate a “lead independent director.” In cases in which the chairperson and chief executive officer are the same person and a lead independent director has been designated, the chairperson schedules and sets the agenda for meetings of our board of directors in consultation with the lead independent director, and the chairperson, or if the chairperson is not present, the lead independent director, chairs such meetings. The responsibilities of the lead independent director include: calling meetings of the independent directors; presiding at executive sessions of independent directors; serving as a liaison between the chairperson and the independent directors; disseminating information to our board of directors; being available under appropriate circumstances for communication with stockholders; and performing such other functions and responsibilities as requested by our board of directors from time to time.
Our Board of Directors’ Role in Risk Oversight Our board of directors, as a whole, has responsibility for risk oversight, although the committees of our board of directors oversee and review risk areas that are particularly relevant to them. The risk oversight responsibility of our board of directors and its committees is supported by our management reporting processes, which are designed to provide visibility to our board of directors and to our personnel who are responsible for risk assessment and information about the identification, assessment, and management of critical risks and management’s risk-mitigation strategies. These areas of focus include competitive, economic, operational, financial (accounting, credit, investment, liquidity, and tax), legal, regulatory, cybersecurity, privacy, compliance, and reputational risks. Our board of directors reviews strategic and operational risk in the context of discussions, question-and-answer sessions, and reports from the management team at each regular board meeting,meeting; receives reports on all significant committee activities at each regular board meeting,meeting; and evaluates the risks inherent in significant transactions. Our audit, risk and compliance committee, which we refer to as our audit committee, assists our board of directors in fulfilling its oversight responsibilities with respect to risk management. 15 12 2022 Proxy Statement |
Each committee of our board of directors meets with key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus. • Reviews our major financial and other risk exposures, our internal control over financial reporting, our disclosure controls and procedures, and our legal and regulatory compliance and, among other things, discusses with management and our independent auditor guidelines and policies with respect to risk assessment and risk management. Our audit committee also reviewsmanagement
• Reviews matters relating to cybersecurity and data privacy and security and reports to our board of directors regarding such matters. | | matters | | ● | Our compensation committee evaluates | • Evaluates our major compensation-related risk exposures and the steps management has taken to monitor or mitigate such exposures. | | exposures | | ● | Our nominating and governance committee assesses | • Assesses risks relating to our corporate governance practices, reviews and assesses our performance, risks, controls, and procedures relating to corporate responsibility and sustainability, including ESG, reviews the independence of our board of directors, and reviews and discusses the narrative disclosure regarding our board of directors’ leadership structure and role in risk oversight.oversight |
We believe this division of responsibilities is an effective approach for addressing the risks we face and that our board leadership structure supports this approach.
Cybersecurity Risk Oversight Securing the information of our users, team members, vendors, and other third parties is important to us. We have adopted physical, technological, and administrative controls on data security and have a defined procedure for data incident detection, containment, response, and remediation. While everyone at our company plays a part in managing these risks, oversight responsibility is shared by our board of directors, our audit committee, and management. Our Chief Information Security Officer provides regular cybersecurity updates in the form of written reports and presentations to our audit committee at every quarterly meeting. Our audit committee regularly reviews metrics about cyber threat response preparedness, program maturity milestones, risk mitigation status, and the current and emerging threat landscape. Additionally, we leverage the National Institute of Standards and Technology security framework to drive strategic direction and maturity improvement and engage third-party security experts for risk assessments and program enhancements. Majority Voting Standard for Director Elections and Director Resignation Policy Commencing with our 2022 annual meeting of stockholders,the Annual Meeting, our amended and restated bylaws provide for a majority voting standard for uncontested elections of directors and require that stockholder director nominations include a written statement as to whether the nominee intends to tender an irrevocable resignation upon such nominee’s election or re-election. The majority voting standard provides that, in uncontested director elections, a director nominee will be elected only if the number of votes cast FOR the nominee exceeds the number of votes cast AGAINST the nominee. In addition, our Corporate Governance Guidelines require each incumbent nominee to submit an irrevocable contingent resignation letter prior to the annual meeting of stockholders in which such election is to take place. This addresses the “holdover” director situation under the Delaware General Corporation Law, which we refer to as the DGCL, pursuant to which a director remains on the board of directors until such director’s successor is elected and qualified. Such resignation becomes effective only upon (i) such nominee’s failure to receive the requisite number of votes for re-election at any future meeting at which such person would face re-election and (ii) our board of directors’ acceptance of such resignation. If the nominee does not receive the requisite number of votes for re-election, our nominating and governance committee will make a recommendation to our board of directors as to whether to accept or reject the resignation, or whether other action should be taken. Our board of directors will act on the nominating and governance committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. 2022 Proxy Statement 13 |
TABLE OF CONTENTS Independence of Directors The listing rules of Nasdaq generally require that a majority of the members of a listed company’s board of directors be independent. In addition, the listing rules generally require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent. In addition, audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries. Our board of directors conducts an annual review of the independence of our directors. In its most recent review, our board of directors determined that Thomas Layton, Gregory C. Gretsch, Kevin Harvey, Elizabeth Nelson, Leela Srinivasan, Gary Steele, and Anilu Vazquez-Ubarri, representing seven of our eight directors, are “independent directors” as defined under the applicable listing standards of Nasdaq and the applicable rules and regulations promulgated by the SEC. Our board of directors has also determined that all members of our audit committee, compensation committee, and nominating and governance committee are independent and satisfy the relevant SEC and Nasdaq independence requirements for such committees.
Committees of Our Board of Directors Our board of directors has established an audit committee, a compensation committee, and a nominating and governance committee. The composition and responsibilities of each committee are described below. Each of these committees has a written charter approved by our board of directors. Copies of the charters for each committee are available on the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of our website. Gregory C. Gretsch  | | | Yes | | | | | | | | | | Kevin Harvey | | | Yes | | | | | | | | | | Thomas Layton | | | Yes | | | | | | | | | | Elizabeth Nelson(1) | | | Yes | | | | | | | | | | Leela Srinivasan | | | Yes | | | | | | | | | | Gary Steele | | | Yes | | | | | | | | | | Anilu Vazquez-Ubarri(2) | | | Yes | | | | | | | | | |
 Chair Member Financial Expert(1)
| On April 1, 2022, Ms. Nelson stepped down from our compensation committee and joined our nominating and governance committee. |
(2)
| On April 1, 2022, Ms. Vazquez-Ubarri stepped down from our nominating and governance committee and joined our compensation committee. |
14 2022 Proxy Statement |
TABLE OF CONTENTS Audit, Risk and Compliance Committee Our audit committee is composed of Ms. Nelson, who is the chairperson of the committee, Mr. Gretsch, and Ms. Srinivasan. Each member of our audit committee is independent under the current Nasdaq listing standards and SEC rules and regulations. Each member of our audit committee is financially literate as required by the current Nasdaq listing standards. In addition, our board of directors has determined that Mr. Gretsch and Ms. Nelson isboth satisfy the requirements for an “audit committee financial expert” as defined in SEC rules and regulations. This designation does not impose any duties, obligations, or liabilities that are greater than those generally imposed on members of our audit committee and our board of directors. Our audit committee is responsible for, among other things: ● | selecting a firm to serve as the independent registered public accounting firm to audit our financial statements; | | | ● | reviewing the independence of the independent registered public accounting firm; | | | ● | discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results; | | | ● | establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; | | | ● | considering the adequacy of our internal controls, internal audit function, and cybersecurity controls and procedures; | | | ● | reviewing material related party transactions or those that require disclosure; | | | ● | reviewing legal, financial, technology, and enterprise risk exposures and the steps management has taken to monitor and control such exposures; and | | | ● | approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. |
selecting a firm to serve as the independent registered public accounting firm to audit our financial statements;
reviewing the independence of the independent registered public accounting firm; discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results; establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters; considering the adequacy of our internal controls, internal audit function, and cybersecurity controls and procedures; reviewing material related party transactions or those that require disclosure; reviewing legal, financial, technology, and enterprise risk exposures and the steps management has taken to monitor and control such exposures; and approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. Our compensation committee is composed of Mr. Gretsch, who is the chairperson of the committee, Mr. Steele, and Ms. Nelson, and Mr. Steele.Vazquez-Ubarri. The composition of our compensation committee meets the requirements for independence under current Nasdaq listing standards and SEC rules and regulations. Each member of this committee is a non-employee director, as defined in SEC rules and regulations. Our compensation committee is responsible for, among other things: ● | reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; | | | ● | reviewing succession plans for our Chief Executive Officer; | | | ● | reviewing and recommending to our board of directors the compensation of our non-employee directors; | | | ● | administering our stock and equity incentive plans; and | | | ● | establishing our overall compensation philosophy. |
reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers; reviewing succession plans for our Chief Executive Officer; reviewing and recommending to our board of directors the compensation of our non-employee directors; administering our stock and equity incentive plans; and establishing our overall compensation philosophy. Nominating and Governance Committee Our nominating and governance committee is composed of Mr. Layton, who is the chairperson of the committee, Mr. Harvey, and Ms. Vazquez-Ubarri.Nelson. The composition of our nominating and governance committee meets the requirements for independence under current Nasdaq listing standards. Our nominating and governance committee is responsible for, among other things: identifying and recommending candidates for membership on our board of directors; recommending directors to serve on board committees; reviewing and recommending to our board of directors any changes to our corporate governance principles; reviewing proposed waivers of the code of conduct for directors and officers; overseeing the process of evaluating the performance of our board of directors; advising our board of directors on corporate governance matters; and developing and overseeing programs related to corporate responsibility and sustainability and ESG matters, including reviewing and assessing our performance, risks, controls, and procedures relating to corporate responsibility and sustainability. ● | identifying and recommending candidates for membership on our board of directors;
| ● | recommending directors to serve on board committees; | | | ● | reviewing and recommending to our board of directors any changes to our corporate governance principles; | | | ● | reviewing proposed waivers of the code of conduct for directors and officers; | | | ● | overseeing the process of evaluating the performance of our board of directors; | | | ● | advising our board of directors on corporate governance matters; and | | | ● | developing and overseeing of programs related to corporate responsibility and sustainability, including ESG matters.2022 Proxy Statement 15 |
TABLE OF CONTENTS Management Succession Planning Our board of directors recognizes that one of its most important duties is its oversight of succession planning for our Chief Executive Officer. Our board of directors has delegated primary oversight responsibility for succession planning for our Chief Executive Officer to the compensation committee and the chairperson of our board of directors. Our Chief Executive Officer is responsible for identifying, evaluating, and selecting potential successors for our Chief Executive Officer’s direct reports. Our board of directors continues to regularly evaluate its succession planning to ensure that we are well-positionedwell positioned to continue to execute on our corporate strategy.
Oversight of Corporate Strategy Our board of directors actively oversees management’s establishment and execution of corporate strategy, including major business and organizational initiatives, annual budget and long-term strategic plans, capital allocation priorities, potential corporate development opportunities, and risk management. At its regularly scheduled meetings and throughout the year, our board of directors receives information and formal updates from our management and actively engages with the senior leadership team with respect to our corporate strategy. Our board of directors’ diverse skill set and experience enhances our board of directors’ ability to support management in the execution and evaluation of our corporate strategy. The independent members of our board of directors also hold regularly scheduled executive sessions at which strategy is discussed. Compensation Committee Interlocks and Insider Participation The members of our compensation committee during 20202021 were Mr. Gretsch, Ms. Nelson, and Mr. Steele. None of the members of our compensation committee in 2020 was2021 were at any time an officer or employee of ours or any of our subsidiaries, and none had or have any relationships with us that are required to be disclosed under Item 404 of Regulation S-K. During 2020,2021, none of our executive officers served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors or compensation committee.
Board and Committee Meetings and Attendance Our board of directors and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. During 2020,2021, our board of directors met sevensix times and also acted by unanimous written consent. During 2020,2021, each member of our board of directors attended at least 75% of the aggregate of all meetings of our board of directors and of all meetings of committees of our board of directors on which such member served that were held during the period in which such director served. The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest discussion. During 2020,2021, our audit committee met sixfour times, our compensation committee met four times, and our nominating and governance committee met two times.times, and each committee also acted by unanimous written consent. Board Attendance at Annual Meeting of Stockholders Our policy is to invite and encourage each member of our board of directors to be present at our annual meetings of stockholders. All members of our board of directors attended our 20202021 annual meeting of stockholders in their capacity as directors of our company.
Communication with Directors Stockholders and interested parties who wish to communicate with our board of directors, non-management members of our board of directors as a group, a committee of our board of directors, or a specific member of our board of directors (including our chairperson) may do so by letters addressed to the attention of our Corporate Secretary. All communications are reviewed by the Corporate Secretary and provided to the members of our board of directors as appropriate. Sales materials, abusive, threatening, or otherwise inappropriate materials, and items unrelated to the duties and responsibilities of our board of directors will not be provided to directors. 16 2022 Proxy Statement |
TABLE OF CONTENTS The mailing address for these communications is: 655 Montgomery Street, Suite 490, Department 17022
San Francisco, CA 94111-2676 Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics that applies to all the members of our board of directors, officers, and employees. Our Code of Business Conduct and Ethics is posted on the “Investor Relations” section of our website, which is located at investors.upwork.com under “Documents & Charters” in the “Governance” section of our website. We intend to satisfy the disclosure requirement under applicable SEC and Nasdaq disclosure requirements regarding amendments to, or waivers of, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the address and location specified above.
Corporate Responsibility and SustainabilityESG Oversight Our mission is to create economic opportunities so people have better lives. We do this by removing friction in the labor market, allowing clients to hire freelanceindependent talent, and helping global independent talent find better opportunities than those available in their local job markets. We believe that operating in a responsible and sustainable way will drive long-term value creation, and we are committed to managing theour ESG risks and opportunities that arise from ESG issues.opportunities. We recognize that sound ESG oversight is critical to our ability to implement meaningful long-termmeet our ESG strategies. Upwork takes the following approach to managingcommitments and goals. We structure our ESG risks and opportunities:oversight as follows:Board Oversight |
Our nominating and governance committee is responsible for reviewing and assessing with management our performance, risks, controls, and procedures relating to corporate responsibility and sustainability, including ESG matters.matters | Functional Leadership |
Our ESG Program Office, which comprises members of the legal department and is focused on engaging key stakeholders and strengthening our ESG performance, drives our company-wide strategic approach to ESG and each business function is responsible for identifying and delivering on its own ESG objectives. | ESG Task Force | Our cross-functional ESG task force is composed of personnel from various departments and is responsible for developing and implementing ESG programs and disclosures, and our legal team is responsible for updating our nominating and governance committee periodically throughout the year on progress, risks, and ongoing strategy.strategy on a biannual basis | ESG Task Force
Our ESG Task Force, which is a management-level committee made up of senior leaders and subject matter experts across Upwork, is responsible for developing and implementing ESG programs |
During the past year,
In 2020, we undertook an ESG materiality assessment to help identify ESG-related topics and issues that are most important to our business and stakeholders. This assessment was informed by interviews with both internal and external stakeholders, including employees, executives, stockholders, and freelancerstalent and clients on our work marketplace.clients. With their input we were able to identify and evaluate the topic areas that they view as most important to them as stakeholders and to our business success at Upwork.success. More details on our ESG materiality assessment are included in our 2020 Annual2021 Impact Report, published in April 2021,March 2022, which is available at our ESG Reports Hub on the “Investor Relations” section of our website located at investors.upwork.com. This year’s Annualupwork.com/about/our-impact/reports-hub. The information contained in our 2021 Impact Report is not intended to be incorporated into this Proxy Statement. Our 2021 Impact Report also includes additional disclosures new since our 2019 Annual Impact Report, including enhanced quantitative disclosures on our workforce diversity. We are committed to continued engagement with theseour key stakeholders going forward and ensuring our practices and disclosures align with evolving ESG-related priorities. 20 2022 Proxy Statement 17 |
The key focus areas of our ESG strategy are the following:
| Creating | | Economic Opportunity: With users in over 180 countries, we are changing the way work gets done by placing | | | • Helping independent talent at the heartunlock their potential by connecting professionals with a range of every business. We operate the world’s largestclients along with resources to support career independence
• Building an inclusive work marketplace by developing programs and features that connects businessesenable our diverse customers to thrive
• Supporting our community through charitable giving programs and partnerships with organizations that align with our DIBs goals
• Building the future of work by providing thought leadership and resources to independent talent as measured by GSV. Our mission—to create economic opportunities so people have better lives—is integral to how we operate, promote our culture, hiring practices, and talent development, build products, and lead our industry.companies of all sizes | | | | Health, Safety & Human Rights | | | • Published a new Global Human Rights Policy
• Supporting the ILO’s Fundamental Principles and Rights at Work and expecting our team members and business partners to fully comply with all applicable labor and employment laws
• Ensuring the health and safety of our workforce through policies, procedures, and programs | ● | Business Ethics, Integrity, | | Diversity, Inclusion & Belonging (DIBs) | | | • Dedicating strategic investment in DIBs
• Launched GlowUP, an enrichment program crafted by and Governance: Fromfor our boardleaders of directorscolor
• Fostering a sense of workplace belonging through Upwork Belonging Communities | | | | Environmental Sustainability | | | • Reducing our environmental footprint and enabling our customers to every team member, the work we do each day is guided by a robust business ethics and integrity program that encourages everyone to always do the right thing. Integrity is embedded in our culture and something we promote from the top down and throughout our business. These values similarly extend toreduce theirs through use of our work marketplace where we understand there is a certain level
• Committing to transparency of responsibility that comes with connecting independent professionals our corporate governance practices around environmental risks and opportunities and to methodically assessing and reporting our environmental performance data on an annual basis
• Connecting clients and new opportunities through our work marketplace. Through our trust and safety programs, we have developed tools and instituted policies to promote responsible, safe, and transparent interactions between our independent professionals and clients. In compliance with the UK Modern Slavery Act 2015, we publish an annual statement detailing our efforts to combat modern slavery and human trafficking, which is availabletalent focused on our website at upwork.com/documents/uk-transparency-statement.sustainability | | | ● | Our Team: We are | Business Integrity and Supplier Engagement | | | • Following security and privacy best practices to provide a secure, reliable, and compliant work marketplace
• Ensuring ethical business practices and engaging on public policy to maximize opportunity for freelancers and creating a more equitable future of work
• Supporting inclusive sourcing and managing a responsible supply chain, aligned with our mission and committed to creating and supporting an inclusive environment that promotes and encourages diversity, belonging, wellness, and career development. This commitment extends to all aspects of our relationships with our team members, including in the hiring and promotion process, training, benefits, and career development. For more information regarding our efforts to support and engage with our team members, see “Upwork’s Approach to Human Capital Management.” | | | ● | Sustainability: We believe in combating climate change, and we are committed to protecting the environment. By enabling remote work, and through our purchase of carbon offsets and renewable energy credits, we first achieved carbon neutrality for 2019 and are committed to remaining carbon neutral going forward. Oursustainable business model and practices including enabling remote work—which we estimate enabled our team members to avoid one million commuting miles in 2019—have allowed us to reduce our greenhouse gas emissions and carbon footprint. We again achieved carbon neutrality for 2020. |
For more information regarding our corporate responsibilityESG programs and sustainability programs,performance, including our workforce diversity data and annual emissions figures, see our 2020 Annual2021 Impact Report, in the “Investor Relations” section ofwhich is available on our ESG Reports Hub on our website which is located at investors.upwork.com. In the report, which is not part of our proxy solicitation materials, we report in more detail on Upwork’s corporate responsibility and sustainability programs and ESG efforts.upwork.com/about/our-impact/reports-hub. 18 2022 Proxy Statement |
Upwork’s Approach to TABLE OF CONTENTS | | | “At Upwork, attracting and retaining top talent is how we deliver the work marketplace that sparks a global movement to reimagine work. We are committed to constructing a talent-dense hybrid team that is diverse, inclusive, worldly, highly productive, and engaged, and therefore capable of building a truly groundbreaking company and product.”
Zoë Harte
Chief People Officer |
Board of Directors Oversight Our board of directors recognizes the critical importance of our team and the necessity to ensure a diverse, inclusive, and creative work environment that is centered around a values-based culture. Our board of directors meets regularly with management to discuss issues impacting our team members and to focus on ways to support our workforce. Our focus on culture comes from our board of directors and flows throughout our company. In evaluating our Chief Executive Officer and management team, significant emphasis is put on their contributions to our overall culture.
Our mission—to create economic opportunities so people have better lives—is integral to our culture and how we build amazing teams and products to lead our industry. We enable remote work not only through our work marketplace for our users, but also for our own team members andfor whom we are proud to do so, notably for its positiveoffer a remote-first work model, which has environmental, contributions, among a hostas well as other, benefits. Our team consists of other reasons. Our strength is inindependent talent that we engage through our hybrid team approach, consisting ofwork marketplace, corporate employees, and freelancers.advisors. Our team members are distributed around the world, and while we have corporate offices, we do not solely rely on in-person collaboration. Our team works with a variety of tools and has adopted practices to ensure all voices are heard, innovation is fostered, and results are achieved. Our hybrid team, and its belief in our mission, values, and values,vision, is critical to our success. With the consistent investment in the development of our team and our commitment to diversity, inclusion, and belonging, we cultivate an environment where people are able to be themselves at work and perform to the best of their abilities. We
Our mission not only drives the creation and continuous development of our work marketplace, but it is also integral to how we engage our workforce in meaningful waysemployees and take timely action in responseour approach to their feedback.creating and fostering an inclusive environment that promotes and encourages diversity, inclusion, belonging, career development, and wellness. As of December 31, 2021, we had approximately 650 employees, and throughout 2021, we engaged approximately 1,800 independent team members through our work marketplace to provide services to us on a variety of internal projects. We surveybelieve the positive relationship between us and our team members on a regular basis to gather feedback, and in 2020 had an employee response rateour unique, strong culture differentiate us and are key drivers of 86%. Our average employee satisfaction score was 79, which is six points above our industry benchmark.Our company values are:
● | Inspire a boundless future of work; | | | ● | Put our community first; | | | ● | Have a bias toward action; and | | | ● | Build amazing teams. |
business success. Diversity, Inclusion, and Belonging We put our people and their experiences first. In 2020, we took a strong stance internally and externally to reinforce our commitment to being an antiracist company. We view belonging as a feeling, inclusion as a practice, and diversity as an outcome. We foster belonging through our Upwork Belonging Communities—employee resource groups and listening sessions that build empathy and promote skill-building education.inclusive skill-building. We cultivate inclusion by equipping managers with tools to effectively build and lead amazing and inclusive teams that amplify team members’ voices. Additionally, we practice multi-dimensional compensation and mobility reviews during our semi-annual employee performance evaluation process. This is led by a cross-functional team of human resource and legal leaders to help ensure we are fair in our rewards and recognition strategy. To bolster our diversity, inclusion, and belonging efforts, we also utilizeconduct an internal transfer review board to help ensurefacilitate equity in internal mobility practices throughout our company as an ongoing priority. Diversity, inclusion, and belonging is a journey, not a destination, and as such, we will continue to explore ways to cultivate an inclusive culture where every team member feels that they belong.belongs. As an organization built on talent and skills development, we understand the value of providing our employees with ongoing professional development and leadership opportunities so that they can advance their careers. Led by our dedicated learning and development team, we offer our team members an array of learning and development opportunities, including a variety of in-person and online training sessions and workshops. 2022 Proxy Statement 19 |
TABLE OF CONTENTS Benefits and Competitive Compensation Beyond our training and development efforts, we take pride in offering competitive, market-based compensation and benefits.benefits to our employees. We engage compensation consultants to benchmark our employee compensation with external sources to ensure fair and equitable pay practices, and alignment of our executiveutilize equity grants to align employee compensation with stockholder interests. Merit increases and promotions are rewardedawarded based on an individual’s impact within the organization and an established business need, and in consideration with market data. Knowing our employees have diverse needs and life priorities, we also provide expanded benefits to those eligible, which include core benefits such as medical, dental, vision, and visiondisability insurance, in addition to benefits tailored to the specific needs of our employees, such as mental health, fertility, family back-up care, and adoption support. Team Member Feedback We also supportengage our workforce in meaningful ways and encouragetake timely action in response to their feedback. While our employeesculture and engagement process starts during the team member onboarding process, one way we sustain our feedback loop is via an industry-recognized team member engagement platform. Through the platform, we survey our team members on a regular basis to give backgather feedback. In 2021, our average employee response rate was 86%, and we received notably high scores with respect to our communities by giving eachleadership and purpose, with the survey results reflecting that many team members feel invested in our future and continue to regard Upwork as a workplace they would recommend to others. In these surveys, team members also consistently recognize our efforts to cultivate an inclusive workplace. Responses to these surveys and other employee two days a year of “Volunteer Time Off”feedback guide our team engagement efforts. We believe that ensuring that our team members feel valued, supported, and heard helps us attract, retain, and develop the right talent to dedicate to the causes that matter most to them, as well as opportunities to engage in community volunteer efforts both in personlead our company and remotely throughout the year.successfully execute our corporate strategy. Employee Wellness Employee safety and well-being is of paramount importance to us in any year and wascontinued to be of particular focus in 20202021 in light of the COVID-19 pandemic. We provide productivity and collaboration tools and resources for employees, working remotely, including training and toolkits to help leaders effectively lead and manage remote teams. In addition, we enhanced and promoted programs to support our employees’ physical, financial, and mental well-being. For example, we regularly conduct internal surveys to assess the well-being and needs of our employees, and we significantly expanded employee assistance and mindfulness programs to help employees and their families manage anxiety, stress, sleep, and overall well-being. Additionally, we believe that our employees are at their best when they take the time to recharge. In order to encourage our employees to recharge and make their well-being a priority, we provide company-wide “ChargeUp Days”—paid time off in addition to our company-recognized holidays.23 20 2022 Proxy Statement |
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONSTABLE OF CONTENTS Nominations Process and Director Qualifications Nomination to the Board of Directors Candidates for nomination to our board of directors are selected by our board of directors based on the recommendation of our nominating and governance committee in accordance with the committee’s charter, our restated certificate of incorporation and amended and restated bylaws, our Corporate Governance Guidelines, and the criteria approved by our board of directors regarding director candidate qualifications. In identifying and recommending candidates for nomination, the nominating and governance committee considers candidates recommended by directors, officers, employees, stockholders, and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected candidates as appropriate, and, in addition, the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. Stockholders wishing to recommend candidates for consideration by our nominating and governance committee should submit their recommendations to the attention of the Corporate Secretary at our mailing address contained elsewhere in this Proxy Statement. Information regarding the process for submitting stockholder nominations for candidates for membership on our board of directors is set forth below under “ Stockholder Proposals to Be Presented at the Next Annual MeetingFrequently Asked Questions.”
With the goal of developing a diverse, experienced, and highly qualified board of directors, our nominating and governance committee is responsible for developing and recommending to our board of directors the desired qualifications, expertise, and characteristics of members of our board of directors, including any specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on our board of directors and any specific qualities or skills that the committee believes are necessary for one or more of the members of our board of directors to possess. Because the identification, evaluation, and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors and will be significantly influenced by the particular needs of our board of directors from time to time, our board of directors has not adopted a specific set of minimum qualifications, qualities, or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory, and Nasdaq listing requirements and the provisions of our restated certificate of incorporation, our amended and restated bylaws, our Corporate Governance Guidelines, and the charters of the committees of our board of directors. In addition, neither our board of directors nor our nominating and governance committee has a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, the nominating and governance committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, diversity, skills, financial and other expertise, breadth of experience, knowledge about our business or industry, and ability to devote adequate time and effort to responsibilities of our board of directors in the context of its existing composition. Through the nomination process, our nominating and governance committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds, and other characteristics that are expected to contribute to our board of directors’ overall effectiveness. The brief biographical description of each director set forth in Proposal No. 1 below includes the primary individual experience, qualifications, attributes, and skills of each of our directors that led to the conclusion that each director should serve as a member of our board of directors at this time.
We conduct an annual self-evaluation process for our board of directors and its committees. As part of this process, each member of our board of directors individually meets with outside counsel to discuss their assessment of the performance of the board of directors and its committees, their own performance, and the performance of fellow members of the board of directors. The chairperson of our board of directors shares feedback received with individual members of the board of directors, with the nominating and governance committee, and with the full board of directors. Our board of directors then reviews and discusses the feedback. 24 2022 Proxy Statement 21 |
Our board evaluation process is used: ● | by our board of directors and nominating and governance committee to assess the current composition of our board of directors and its committees and make recommendations for the qualifications, expertise, and characteristics we should seek in identifying potential new directors; | | | ● | by our board of directors and nominating and governance committee to identify the strengths and areas of opportunity of each member of our board of directors and to provide insight into how each member of our board of directors can be most valuable; | | | ● | to improve agenda topics of the board of directors and its committees so that information they receive enables them to effectively address the issues they consider most critical; and | | | ● | by our nominating and governance committee as part of its annual review of each director’s performance when considering whether to nominate the director for re-election to the board of directors. | | |
by our board of directors and nominating and governance committee to assess the current composition of our board of directors and its committees and make recommendations for the qualifications, expertise, and characteristics we should seek in identifying potential new directors; by our board of directors and nominating and governance committee to identify the strengths and areas of opportunity of each member of our board of directors and to provide insight into how each member of our board of directors can be most valuable; to improve agenda topics of the board of directors and its committees so that information they receive enables them to effectively address the issues they consider most critical; and by our nominating and governance committee as part of its annual review of each director’s performance when considering whether to nominate the director for re-election to the board of directors. 25 22 2022 Proxy Statement |
PROPOSAL NO.TABLE OF CONTENTS Proposal 1 ELECTION OF DIRECTORS
Election of Directors Our board of directors currently consists of eight directors and is divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Directors in Class IIII will stand for election at the Annual Meeting. The terms of office of directors in Class III and Class IIIII do not expire until the annual meetings of stockholders held in 20222023 and 2023,2024, respectively. At the recommendation of our nominating and governance committee, our board of directors proposes that each of the Class IIII nominees named below, each of whom is currently serving as a director in Class III,I, be elected as a Class IIII director for a three-year term expiring at the 20242025 annual meeting of stockholders and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification, or removal. Shares represented by proxies will
We have a majority voting standard for uncontested elections of directors, which means that to be elected, a director nominee must receive a majority of the votes cast. This means the number of shares voted “FOR” a director nominee must exceed the election of each of the nominees named below, unless the proxy is marked to withhold authority to so vote.votes cast “AGAINST” that nominee (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If any nominee for any reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected. Proxies may not be voted for more than three directors. Stockholders may not cumulate votes for the election of directors.
Nominees to Our Board of Directors The nominees and their age, occupation, and length of service on our board of directors as of March 31, 2021,2022, are provided in the table below and in the additional biographical descriptions set forth in the text below the table. Class III Directors:Kevin Harvey
Founder and General Partner, Benchmark Capital | | | 57 | | | March 2014 | | | Yes | | | Nominating and Governance | Hayden Brown | | 39 | | President,Thomas Layton
Former Chief Executive Officer, OpenTable | | | 59 | | | March 2014 | | | Yes | | | Nominating and Director | | December 2019Governance | Gregory C. Gretsch(1)(2)Elizabeth Nelson
Former Executive Vice President and Chief Financial Officer, Macromedia | | 54 | 61 | Director | | March 2014 | Anilu Vazquez-Ubarri(3)February 2015 | | 44 | Yes | Director | | November 2020 | | | | | | | Audit Nominating and Governance |
(1) | Member | | Committees: nominating and governance
Other Public Company Boards: none
Experience: Kevin Harvey has served as a member of our board of directors since our inception in March 2014. Prior to that, Mr. Harvey served as a member of the audit committeeboard of directors of oDesk from August 2006 to March 2014. Previously, Mr. Harvey served on the board of directors of Proofpoint, Inc. until August 2021. Mr. Harvey is a founder and general partner of Benchmark Capital, a venture capital firm, which he co-founded in 1995. Before founding Benchmark, Mr. Harvey was founder, President, and Chief Executive Officer of Approach Software Corp., a server database company. Before founding Approach Software, Mr. Harvey founded Styleware, Inc., a software company. Mr. Harvey holds a B.S. in Engineering from Rice University.
Relevant Expertise: Mr. Harvey brings to our board of directors his significant experience investing in and serving on the boards of directors of other technology companies, as well as his management and leadership experience as a founder and former executive of multiple startup technology companies. | (2)Kevin Harvey Founder and General Partner, Benchmark Capital. | Member of the compensation committee |
(3)2022 Proxy Statement 23 |
TABLE OF CONTENTS | Member of the | | Committees: nominating and governance committee(Chair)
Other Public Company Boards: none
Experience: Thomas Layton has served as a member of our board of directors and chairperson since our inception in March 2014. Prior to that, Mr. Layton served as a member of the board of directors of oDesk from May 2006 to March 2014 and as chairperson from December 2011 to March 2014. Mr. Layton currently serves on the board of directors of several private companies. Previously, Mr. Layton served in various leadership roles, including as the Chief Executive Officer of OpenTable, Inc., an online restaurant reservation company, from 2001 to 2007 and as the Chief Executive Officer of Metaweb Technologies, Inc., a data infrastructure company, from 2007 to 2010. Mr. Layton holds a B.S. from the University of North Carolina at Chapel Hill and an M.B.A. from the Stanford Graduate School of Business.
Relevant Expertise: Mr. Layton brings to our board of directors extensive leadership experience, gained from his experience advising and managing technology companies. Moreover, he brings historical knowledge, operational expertise, and continuity to our board of directors. | Thomas Layton Former Chief Executive Officer, OpenTable | |
| | | Committees: audit (Chair) and nominating and governance
Other Public Company Boards: Berkeley Lights, Inc. and Virgin Group Acquisition Corp. II
Experience: Elizabeth Nelson has served as a member of our board of directors since February 2015. Ms. Nelson currently serves on the boards of Berkeley Lights, Inc., a digital cell biology company, and Virgin Group Acquisition Corp. II, a blank check company incorporated for the purpose of effecting a business combination, as well as several private companies. Ms. Nelson’s public company board of directors service includes serving as a director of Nokia Corporation from 2012 to 2021, Zendesk, Inc. from 2013 to 2019, Pandora Media, Inc. from July 2013 to June 2017, Ancestry.com Inc. from 2009 to 2012, SuccessFactors, Inc. from 2007 to 2012, Autodesk, Inc. from 2007 to 2010, CNET Networks, Inc. from 2003 to 2008, and Brightcove Inc. from 2010 to 2014. From 1996 to 2005, Ms. Nelson served as the Executive Vice President and Chief Financial Officer of Macromedia, Inc., where she also served as a director from January 2005 to December 2005. Ms. Nelson holds a B.S. in Foreign Service from Georgetown University and an M.B.A. in Finance from the Wharton School at the University of Pennsylvania.
Relevant Expertise: Ms. Nelson brings to our board of directors her extensive experience in advising technology companies, and a deep understanding of the financial, accounting, and operational aspects of executive management from her prior experience as an executive of numerous public and private technology companies. | Elizabeth Nelson
Former Executive Vice President and Chief Financial Officer, Macromedia | |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE THREE NOMINATED DIRECTORS 24 2022 Proxy Statement |
TABLE OF CONTENTS The directors who are serving for terms that end following the Annual Meeting and their age, occupation, and length of service on our board of directors as of March 31, 2022, are provided in the table below and in the additional biographical descriptions set forth in the text below the table. Class II Directors | Leela Srinivasan
Chief Marketing Officer, Checkout.com | | | 48 | | | July 2019 | | | Yes | | | Audit | Gary Steele
Chief Executive Officer, Splunk | | | 59 | | | August 2018 | | | Yes | | | Compensation | Class III Directors | Hayden Brown
President and Chief Executive Officer, Upwork | | | 40 | | | December 2019 | | | No | | | None | Gregory C. Gretsch
Founding Partner and Managing Director, Jackson Square Ventures | | | 55 | | | March 2014 | | | Yes | | | Compensation and Audit | Anilu Vazquez-Ubarri
Board Member and Chief Human Resources Officer, TPG | | | 45 | | | November 2020 | | | Yes | | | Compensation |
| | | Committees: none
Other Public Company Boards: none
Experience: Hayden Brown has served as a member of our board of directors since December 2019. Ms. Brown has served as our President and Chief Executive Officer since January 2020, and previously served as our Chief Marketing and Product Officer from April 2019 to December 2019, as our Senior Vice President, Product and Design from January 2016 to April 2019, as our Vice President, Head of Product, from January 2015 to January 2016, and as our Vice President and Senior Director Marketplace, since our inception in March 2014. Prior to that, Ms. Brown served in numerous product leadership roles, starting when she joined oDesk as a Director of Marketplace in December 2011. Prior to joining us, Ms. Brown was Vice President of Corporate Development at LivePerson, Inc., an online messaging, marketing, and analytics company, from September 2010 to November 2011. Ms. Brown also worked for Microsoft Corporation, a technology company, as Director of Corporate Strategy and M&A from January 2010 to September 2010 and as Senior Strategy Manager from June 2007 to January 2010. Ms. Brown began her career as a Business Analyst at McKinsey & Company, a business management consulting firm, in its New York office. Ms. Brown holds an A.B. in Politics from Princeton University. We believe that
Relevant Expertise: Ms. Brown should serve as a member ofbrings to our board of directors due to the perspective she bringsher extensive leadership experience, including as our Chief Executive Officer, her extensive leadership experience, and her institutional knowledge of our company.company, understanding of our company culture, and familiarity with developing and executing our strategic priorities. | Hayden Brown
President and Chief Executive Officer, Upwork | |
 
Gregory C. Gretsch
| | | Committees: compensation (Chair) and audit
Other Public Company Boards: none
Experience: Gregory C. Gretsch has served as a member of our board of directors since our inception in March 2014 and as a member of the board of directors of oDesk from 2004 to March 2014. Mr. Gretsch is a founding partner and has served as Managing Director of Jackson Square Ventures, a venture capital firm, since 2011. Mr. Gretsch also serves on the board of directors of several private companies, and he served as a director of Responsys, Inc. from 2001 to 2014. Mr. Gretsch has also served as a managing director at Sigma Partners, a venture capital firm, since 2001. Mr. Gretsch holds a B.B.A. in Management Information Systems from the University of Georgia. We believe that
Relevant Expertise: Mr. Gretsch should serve as a member ofbrings to our board of directors based on his significant experience in the venture capital industry analyzing, investing in, and serving on the boards of directors of other technology companies and hisentrepreneurial, management, and leadership experience as a former founder and executive of several startup technology companies. | | | | 
Anilu Vazquez-Ubarri
| | Anilu Vazquez-Ubarri has served as a member of our board of directors since November 2020. Ms. Vazquez-Ubarri has served as Chief Human Resources Officer of TPG Global, LLC, a global private investment firm, since August 2018. She made Partner in 2019. Previously, she served in a variety of roles at The Goldman Sachs Group, Inc., a multinational investment bankcompanies, and financial services company, from 2007 through 2018, including as Chief Diversity Officer and Global Head of Talent beginning in 2014. Prior to that, Ms. Vazquez-Ubarri served as an associate in the executive compensation and employee benefits group at Shearman & Sterling LLP. Ms. Vazquez-Ubarri holds a J.D. from the Fordham University School of Law and an A.B, cum laude, in History and Latin American Studies from Princeton University. We believe that Ms. Vazquez-Ubarri should serve as a member of our board of directors based on her extensive leadership and talent management experience. |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL NOMINEES” IN THE ELECTION OF EACH OF THE THREE NOMINATED DIRECTORS
Continuing Directors
The directors who are serving for terms that end following the Annual Meeting and their age, occupation, and length of service on our board of directors as of March 31, 2021, are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
Name of Director | | Age | | Position | | Director Since | Class I Directors: | | | | | | | Kevin Harvey(1) | | 56 | | Director | | March 2014 | Thomas Layton(1) | | 58 | | Chairperson | | March 2014 | Elizabeth Nelson(2)(3) | | 60 | | Director | | February 2015 | Class II Directors: | | | | | | | Leela Srinivasan(2) | | 47 | | Director | | July 2019 | Gary Steele(3) | | 58 | | Director | | August 2018 |
(1) | Member of the nominating and governance committee | (2) | Member of the audit committee | (3) | Member of the compensation committee |
Kevin Harvey
| | Kevin Harvey has served as a member of our board of directors since our inception in March 2014. Prior to that, Mr. Harvey served as a member of the board of directors of oDesk from August 2006 to March 2014. Mr. Harvey currently serves on the board of directors of Proofpoint, Inc. Mr. Harvey is a founder and general partner of Benchmark Capital, a venture capital firm, which he co-founded in 1995. Before founding Benchmark, Mr. Harvey was founder, President, and Chief Executive Officer of Approach Software Corp., a server database company. Before founding Approach Software, Mr. Harvey founded Styleware, Inc., a software company. Mr. Harvey holds a B.S. in Engineering from Rice University. We believe that Mr. Harvey should serve as a member of our board of directors based on his significant experiencebackground analyzing, investing in, and serving on the boards of directors of other technology companies as well as his management and leadership experience as a founder and former executive of multiple startup technology companies.
| Gregory C. Gretsch
Founding Partner and Managing Director, Jackson Square Ventures | | | 
Thomas Layton
| | Thomas Layton has served as a member of our board of directors and chairperson since our inception in March 2014. Prior to that, Mr. Layton served as a member of the board of directors of oDesk from May 2006 to March 2014 and as chairperson from December 2011 to March 2014. Mr. Layton currently serves on the board of directors of several private companies. Previously, Mr. Layton served in various leadership roles, including as the Chief Executive Officer of OpenTable, Inc., an online restaurant reservation company, from 2001 to 2007 and as the Chief Executive Officer of Metaweb Technologies, Inc., a data infrastructure company, from 2007 to 2010. Mr. Layton holds a B.S. from the University of North Carolina at Chapel Hill and an M.B.A. from the Stanford Graduate School of Business. We believe that Mr. Layton should serve as a member of our board of directors based on his extensive leadership experience. He also brings historical knowledge, operational expertise, and continuity to our board of directors. |
28 2022 Proxy Statement 25 |
Elizabeth Nelson
| | Elizabeth Nelson has served as a member of our board of directors since February 2015. Ms. Nelson currently serves on the boards of Berkeley Lights, Inc., a digital cell biology company, and Virgin Group Acquisition Corp. II, a blank check company incorporated for the purpose of effecting a business combination, as well as several private companies. Ms. Nelson’s public company board of directors service includes serving as a director of Nokia Corporation from 2012 to 2021, Zendesk, Inc. from 2013 to 2019, Pandora Media, Inc. from July 2013 to June 2017, Ancestry.com Inc. from 2009 to 2012, SuccessFactors, Inc. from 2007 to 2012, Autodesk, Inc. from 2007 to 2010, CNET Networks, Inc. from 2003 to 2008, and Brightcove Inc. from 2010 to 2014. From 1996 to 2005, Ms. Nelson served as the Executive Vice President and Chief Financial Officer of Macromedia, Inc., where she also served as a director from January 2005 to December 2005. Ms. Nelson holds a B.S. in Foreign Service from Georgetown University and an M.B.A. in Finance from the Wharton School at the University of Pennsylvania. We believe that Ms. Nelson should serve as a member of our board of directors due to her financial, accounting, and operational expertise from prior experience as an executive and director for numerous public and private technology companies.
| | | | | 
Committees: audit
Other Public Company Boards: none
Experience: Leela Srinivasan | | Leela Srinivasan has served as a member of our board of directors since July 2019. Ms. Srinivasan has served as Chief Marketing Officer of SVMKCheckout Ltd, a global payments provider also known as Checkout.com, since September 2021. Previously, Ms. Srinivasan served as Chief Marketing Officer of Momentive Global Inc. (formerly known as SurveyMonkey), an online survey company, also known as SurveyMonkey, sincefrom April 2018. Previously,2018 to September 2021. Prior to that, she served as Chief Marketing Officer at Lever, Inc., a recruiting software company, from September 2015 to March 2018. Prior to that,Lever, Inc., Ms. Srinivasan served as VP of Marketing at OpenTable, Inc., an online restaurant booking company, from June 2014 to September 2015. Prior to OpenTable, Ms. Srinivasan served in marketing positions at LinkedIn Corporation from January 2010 to May 2014. Ms. Srinivasan also spent three years in management consulting at Bain & Company in San Francisco and London, and five years in sales at Business Wire, a Berkshire Hathaway company. Ms. Srinivasan holds an M.A. in History and English Literature from the University of Edinburgh and earned an M.B.A. from the Tuck School of Business at Dartmouth, where she serves on the M.B.A. Advisory Council. We believe that
Relevant Expertise: Ms. Srinivasan should serve as a member ofbrings to our board of directors based on her extensive leadership, executive, and business-to-business marketing experience gained across multiple organizations including SurveyMonkey,Momentive, a publicly traded company. Ms. Srinivasan’s experience spans multiple relevant aspects of marketing including field marketing, online/digital marketing, corporate communications, global customer programs, advertising, campaigns, events, and corporate and employer branding. She has also spent multiple years in the human resources technology sector. | Leela Srinivasan
Chief Marketing Officer, Checkout.com | | |
| | | Committees: compensation
Other Public Company Boards: Splunk Inc.
Experience: Gary Steele | | Gary Steele has served as a member of our board of directors since August 2018. Mr. Steele has served as the Chief Executive Officer and as a member of the board of directors of Proofpoint,Splunk Inc., an enterprisea data platform for security company,and observability, since 2002.April 2022. Mr. Steele also currently serves on the board of directors of twothree privately held companies. Prior to joining Splunk, Mr. Steele served as the Chief Executive Officer of Proofpoint, Inc., an enterprise security company, from 2002 to March 2022. Prior to that, Mr. Steele served from June 1997 to July 2002 as the Chief Executive Officer of Portera Systems Inc., a software company. Before Portera, Mr. Steele served as the Vice President and General Manager of the Middleware and Data Warehousing Product Group at Sybase, Inc., an enterprise and mobile software company. Mr. Steele’s prior experience includes business development, marketing, and engineering roles at Sun Microsystems, Inc. and Hewlett-Packard Company, computer, computer software, and information technology companies. Mr. Steele holds a B.S. in Computer Science from Washington State University. We believe that
Relevant Expertise: Mr. Steele should servebrings to our board of directors valuable business experience managing a public company, as well as extensive knowledge of advising technology companies. | Gary Steele
Chief Executive Officer, Splunk | |
| | | Committees: compensation
Other Public Company Boards: TPG Inc.
Experience: Anilu Vazquez-Ubarri has served as a member of our board of directors basedsince November 2020. Ms. Vazquez-Ubarri currently serves as Chief Human Resources Officer and is a member of the board of directors of TPG Inc., a global private investment firm, where she made Partner in 2019. Ms. Vazquez-Ubarri also serves on his extensivethe board of directors of Greenhouse Software, Inc., a hiring software company. Previously, she served in a variety of roles at The Goldman Sachs Group, Inc., a multinational investment bank and financial services company, from 2007 through 2018, including as Chief Diversity Officer and Global Head of Talent beginning in 2014. Prior to that, Ms. Vazquez-Ubarri served as an associate in the executive compensation and employee benefits group at Shearman & Sterling LLP. Ms. Vazquez-Ubarri holds a J.D. from the Fordham University School of Law and an A.B, cum laude, in History and Latin American Studies from Princeton University.
Relevant Expertise: Ms. Vazquez-Ubarri brings to our board of directors valuable knowledge of human resources and employment aspects of executive management, as well as operational and leadership experience.risk management experience from her roles at global investment entities. She also brings her experience handling talent and diversity issues directly for multinational organizations. | Anilu Vazquez-Ubarri
Board Member and Chief Human Resources Officer, TPG | |
29 26 2022 Proxy Statement |
Director Expertise, Experience, and Attributes Our board of directors is comprised ofcomprises a diverse mix of directors with complementary expertise, experience, and attributes, as summarized in the table below. Our directors may also have experience or attributes in addition to what is reflected in the table below. |  |  |  |  |  |  |  |  | Summary of Expertise, Experience, and Attributes | Technology and Product Development
Experience in the technology industry and in management of technology companies and/or experience in product development, including engineering and design
|  | | | | | | | | CEO and Management Experience
Experience in executive management positions
| | | | | | | | | Compensation / Talent Management
Experience in compensation, organizational management, leadership, talent development, and identifying, recruiting, and motivating top talent
| | | | | | | | | Other Public Company Board Experience
Experience on other public company boards
| | | | | | | | | Corporate Governance
Experience providing oversight of governance at a public company, including ethics, corporate responsibility, and protection of stockholder interests
| | | | | | | | | Finance
Experience in leadership of a financial firm or management of the finance function of an enterprise
| | | | | | | | | Marketing and Product
Experience in marketing and leadership of corporate marketing functions or experience in product development
| | | | | | | | | International
Experience with global businesses, operations, strategy, and/or customer bases
| | | | | | | | | Operations
Current or former executive with significant operating experience, who is able to provide insight into developing, implementing, and assessing an enterprise’s operating plan, business, and strategy
| | | | | | | | | Risk Management
Experience in overseeing risk management and understanding risks, including, for example, environmental and social risks, faced by enterprise operations
| | | | | | | | | Strategic Planning
Experience in providing insight into developing, implementing, and assessing businesses and strategy
| | | | | | | | |
 Demographics and Board Diversity Matrix11 30 2022 Proxy Statement 27 |
| | | | | | | | | | | Demographics[1] | | Age | | Years | 58 | 39 | 54 | 56 | 60 | 47 | 58 | 44 | | Tenure | | Years | 14 | 1 | 16 | 14 | 7 | 1 | 2 | <1 | | Gender | | Female | | | | | | | | | | Male | | | | | | | | | | Non-Binary | | | | | | | | | | Race/Ethnicity | | Asian (including South Asian) | | | | | | | | | | Black or African American | | | | | | | | | | Hispanic or Latino | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | Native American or Alaska Native | | | | | | | | | | White | | | | | | | | �� | | Did Not Wish to Identify | | | | | | | | |
TABLE OF CONTENTS 7 Age and tenure is as of March 31, 2021. Gender and race/ethnicity is based on each director’s self-identification.
11
| Age and tenure is as of March 31, 2021. All other demographics are based on each director’s self-identification. |
31 28 2022 Proxy Statement |
We also believe that our current board of directors’ composition represents an effective balance with respect to director tenure and age. Recent director additions provide our board of directors with fresh perspectives and diverse experiences, while directors with longer tenure provide continuity and valuable insight into our business and strategy. The matrix above and charts below provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2021)2022). We define tenure as including service on the board of directors of Elance or oDesk prior to the combination of the two companies in March 2014. We are committed to creating a diverse and inclusive culture, which starts at the top with our board of directors. Four of our eight directors are women, two directors self-identify as being racially or ethnically diverse, and one director self-identifies as LGBTQ+ , all. All of whomour directors bring unique experiences and backgroundbackgrounds to Upwork. 
32 2022 Proxy Statement 29 |
2020TABLE OF CONTENTS 2021 Director Compensation The following table provides information for 20202021 regarding all compensation awarded to, earned by, or paid to each person who served as a director for some portion or all of 2020,2021, other than Ms. Brown, our President and Chief Executive Officer. Ms. Brown is not included in the table below, as she is an employee and received no additional compensation for her service as a director during 2020.2021. The compensation received by Ms. Brown as an employee is shown in the “ Executive Compensation—20202021 Summary Compensation Table” below. | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($)(2) | | Thomas Layton(3) | 5,000 | 216,129 | 221,129 | | Gregory C. Gretsch(4) | 20,000 | 195,043 | 215,043 | | Kevin Harvey(5) | 2,500 | 195,043 | 197,543 | | Daniel Marriott(6) | 9,375 | 195,043 | 204,418 | | Elizabeth Nelson(7) | 60,000 | 158,144 | 218,144 | | Leela Srinivasan(8) | 39,375 | 158,144 | 197,519 | | Gary Steele(9) | 5,000 | 195,043 | 200,043 | | Anilu Vazquez-Ubarri(10) | 9,375 | 532,324 | 541,699 |
Thomas Layton(3) | | | 30,250 | | | 309,299 | | | 339,549 | Gregory C. Gretsch(4) | | | 22,500 | | | 262,626 | | | 285,126 | Kevin Harvey(5) | | | 3,250 | | | 262,626 | | | 265,876 | Elizabeth Nelson(6) | | | 70,750 | | | 198,445 | | | 269,195 | Leela Srinivasan(7) | | | 55,000 | | | 198,445 | | | 253,445 | Gary Steele(8) | | | 5,750 | | | 262,626 | | | 268,376 | Anilu Vazquez-Ubarri(9) | | | 48,250 | | | 198,445 | | | 246,695 |
(1)
| The amounts reported in this column for certain members of our board of directors may be lower than those of the other members of our board of directors because of the different compensation arrangements based on committee membership as further described in “Non-Employee Director Cash Compensation.” |
(2)
| The amounts reported in this column represent the aggregate grant date fair value of RSUs awarded to directors in 20202021 computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718, which we refer to as ASC 718. This amount doesThe number of RSUs that a director receives is calculated by dividing the target value of the RSU award by the 30-day trailing average trading price. Accordingly, the amounts reported in this column do not reflect the actual economic value realized by the director, which will vary depending on the performance of our common stock. Members of our board of directors may elect to receive a portion of their compensation in cash consideration in lieu of RSUs, with any such cash consideration having equal economic value on the date of grant as the RSUs that a director would have otherwise received.RSUs. | | | (2) | The amounts reported in this column for certain members of our board of directors may be lower than those of the other members of our board of directors because of their election to receive cash consideration in lieu of RSUs for the components of director compensation for which there is an election. While the actual economic value of any cash received is equal on the date of grant to the RSUs that a director would have otherwise received, the amounts reported above may vary depending on the performance of our common stock, and may be higher in the event our stock price increases leading up to the grant date. | | |
(3)
| As of December 31, 2020,2021, Mr. Layton held 15,3275,206 unvested RSUs, which included the Annual Award, the Non-Executive Chairperson Fee, and the Fee (RSU), as further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee Director Compensation Arrangements.” |
(4)
| As of December 31, 2021, Mr. Gretsch held 4,727 unvested RSUs, which included both the Annual Award and the Fee (RSU), as further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee“Non-Employee Director Compensation Arrangements.Arrangements.” |
(5)
| | (4) | As of December 31, 2020,2021, Mr. GretschHarvey held 14,4634,727 unvested RSUs, which included both the Annual Award and the Fee (RSU), as further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee“Non-Employee Director Compensation Arrangements.Arrangements.” |
(6)
| | (5) | As of December 31, 2020, Mr. Harvey2021, Ms. Nelson held 14,4634,069 unvested RSUs, which included bothrepresented the Annual Award, and the Fee (RSU), asoptions to purchase 295,000 shares of common stock. The RSUs are further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee“Non-Employee Director Compensation Arrangements.” | | | (6) | Mr. Marriott resigned from our board of directors on November 10, 2020. | | | (7) | As of December 31, 2020, Ms. Nelson held 12,952 RSUs, which represented the Annual Award. The RSUs are further described in, and vest in accordance with, the vesting schedule described below under “Non-Employee Director Compensation Arrangements—Annual Award.Arrangements.” The stock option was fully vested and exercisable as of December 31, 2020,2021, and expires 10 years after the date of grant. |
(7)
| | (8) | As of December 31, 2020,2021, Ms. Srinivasan held 25,87210,529 unvested RSUs, which included both the Initial Award granted to Ms. Srinivasan upon her appointment to our board of directors in July 2019 and the Annual Award, as further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee“Non-Employee Director Compensation Arrangements.Arrangements.” |
(8)
| | (9) | As of December 31, 2020,2021, Mr. Steele held 14,463 RSUs. The4,727 unvested RSUs, which included both the Annual Award and the Fee (RSU), asand options to purchase 150,527 shares of common stock. The RSUs are further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee“Non-Employee Director Compensation Arrangements.Arrangements.” The stock option was fully vested and exercisable as of December 31, 2021, and expires 10 years after the date of grant. |
(9)
| | (10) | As of December 31, 2020,2021, Ms. Vazquez-Ubarri held 19,61413,579 unvested RSUs, which included both the Initial Award granted to Ms. Vazquez-Ubarri upon her appointment to our board of directors in November 2020 and the Annual Award, as further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee“Non-Employee Director Compensation Arrangements.Arrangements.” |
Non-Employee Director Compensation Arrangements In July 2019,April 2021, our board of directors approved an amended and restated non-employee director compensation program. Under the amended and restated non-employee director compensation program, non-employee directors receive the following cash and equity compensation:
Equity Compensation—Initial Award Upon initial appointment or election to our board of directors, each new non-employee director appointed or elected to our board of directors will be granted RSUs under our 2018 Equity Incentive Plan, which we refer to as the 2018 Plan, with a total value of $300,000$400,000 based on a 30-day trailing average trading price, which we refer to as the Initial Award. The grant date fair value of the Initial Award shall not exceed $1,000,000 in a calendar year when combined with the aggregate grant date fair value of any other equity award(s) and cash compensation received by such non-employee director for service on our board of directors for such calendar year. The Initial Award will be granted effective on the date of the non-employee director’s initial appointment or election to our board of directors, which we refer to as the Initial Award Grant Date. 30 2022 Proxy Statement |
TABLE OF CONTENTS The Initial Award will vest with respect to one-third of the total number of RSUs subject to the Initial Award each year beginning with the date that is one year following the Initial Award Grant Date, in each case, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The final annual installment of the Initial Award will fully vest on the earlier of (i) the date immediately prior to our annual meeting of stockholders in the last full year of the vesting of the Initial Award and (ii) the date that is the last day of the last full year of the vesting of such grant, in each case, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The Initial Award will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).
Cash or Equity Compensation Election—Annual Award Each non-employee director will automatically be entitled to an annual award of a $150,000$170,000 cash payment or RSUs with a total value of $150,000$170,000 based on a 30-day trailing average trading price, which we refer to as the Annual Award. The Annual Award will be payable in the form of RSUs or, at a non-employee director’s election, in cash. The initial Annual Award, to the extent payable in RSUs and consistent with the applicable election made, will be granted automatically on the date of the non-employee director’s initial appointment or election to our board of directors, which we refer to as the Initial Annual Award Grant Date, and will be pro-rated for partial quarters served. Subsequently, the Annual Award, to the extent payable in RSUs, will be granted automatically on the date of our annual meeting of stockholders for each year thereafter, which we refer to as the Annual Award Grant Date. The Annual Award will fully vest, or in the case of cash will be paid, on the earlier of (i) the date immediately prior to our next annual meeting of stockholders and (ii) the date that is one year following the Initial Annual Award Grant Date or Annual Award Grant Date, as the case may be, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The Annual Award will be paid, in the case of cash, or settle, in the case of RSUs, in the same calendar year in which the Annual Award vests. The Annual Award (regardless of the form of payment) will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).
Cash or Equity Compensation—Annual General Board Service Fee, Board Non-Executive Chairperson Fee, and Board Lead Independent Director Fee Annual compensation payable to (i) each non-employee director as a general board service fee is $35,000,$55,000, which we refer to as the General Board Service Fee, (ii) the non-executive chairperson as a chairperson fee is $20,000,$40,000, which we refer to as the Chairperson Fee, and (iii) the lead independent director as a lead independent director fee is $15,000, we refer to each fee in clauses (i)-(iii), as a Fee, each of which is pro-rated for partial quarters served and payable in cash or, at a non-employee director’s election, in the form of RSUs. If the non-employee director elects to receive the Fee in cash, which we refer to as the Fee (Cash), it will be paid quarterly in arrears (with the first such payment in any event occurring on the last day of the first calendar quarter following the date of the director’s appointment or election to our board of directors), in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date. If the non-employee director elects to receive the Fee in RSUs, which we refer to as the Fee (RSU), the initial Fee (RSU) will be granted automatically on the date of the director’s initial appointment or election to our board of directors and each subsequent Fee (RSU) will be granted automatically on the date of our annual meeting of stockholders for each year thereafter. The number of shares subject to the applicable Fee (RSU) will be based on a 30-day trailing average trading price (which will be pro-rated for partial quarters served in the relevant capacity). The Fee (RSU) will vest and settle quarterly (with the first such vesting and settlement date occurring on the last day of the first calendar quarter following the date of the non-employee director’s appointment or election to our board of directors), in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date. The Fee (regardless of the form of payment) will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan). 2022 Proxy Statement 31 |
TABLE OF CONTENTS The final quarterly installment of each Fee (Cash) or the Fee (RSU), as applicable, will fully vest on the earlier of (i) the date immediately prior to our next annual meeting of stockholders and (ii) the date that is the last day of the last full quarter of the vesting of such grant, in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.
Non-Employee Director Cash Compensation In addition to the General Board Service Fee, each non-employee director is entitled to receive additional annual cash compensation for committee membership as follows: ● | Audit committee chair: $20,000 | | | ● | Audit committee member: $10,000 | | | ● | Compensation committee chair: $10,000 | | | ● | Compensation committee member: $5,000 | | | ● | Nominating and governance committee chair: $5,000 | | | ● | Nominating and governance committee member: $2,500 |
Audit committee chair: $20,000 Audit committee member: $10,000 Compensation committee chair: $15,000 Compensation committee member: $6,500 Nominating and governance committee chair: $8,000 Nominating and governance committee member: $4,000 Chairs of our committees receive the cash compensation designated above for chairs in lieu of the non-chair member cash compensation. The cash compensation designated above will be paid quarterly in arrears, for so long as the non-employee director continues to provide services in the applicable non-employee director capacity to us through such date, and will be pro-rated for partial quarters served. The final quarterly installment of each such annual fee will be paid on the earliest of (i) the date of our next annual meeting of stockholders, (ii) the date immediately prior to our next annual meeting of stockholders if the applicable non-employee director’s service as a director ends at such meeting due to the director’s failure to be re-elected or the director not standing for re-election, and (iii) the date that is the last day of the last full quarter of such installment, in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date. 20212022 Amended and Restated Non-Employee Director Compensation Program
In order to remain competitive in an increasingly challenging landscape for recruitment of non-employee directors, in April 2021,2022, our board of directors approved an amended and restated non-employee director compensation program, to take effect with respect to 2021.as of the date of the Annual Meeting. Under such amended and restated non-employee director compensation program, non-employee directors will be entitled to receive an increase in the amount of certain compensation provided under our current non-employee director compensation program described above. This increase will result in the following: (i) Initial Award with a total value of $400,000 based on a 30-day trailing average trading price, (ii) Annual Award with a total value of $170,000$185,000 (if payable in RSUs, based on a 30-day trailing average trading price), (iii) General Board Service Fee of $55,000 (if payable in RSUs, based on a 30-day trailing average trading price), and (iv) Chairperson Fee of $40,000$60,000 (if payable in RSUs, based on a 30-day trailing average trading price). Additionally, this increase will result in the following annual fees for committee memberships: (i)(1) audit committee chair fee of $20,000$35,000 and audit committee member fee of $10,000, (ii)$17,500, (2) compensation committee chair fee of $15,000 and compensation committee member fee of $6,500,$7,500, and (iii)(3) nominating and governance committee chair fee of $8,000$8,500 and nominating and governance committee member fee of $4,000.$4,300. The increase in annual fees for our audit committee is in particular recognition of our audit committee members’ broad oversight responsibilities and heavy workload as a result, which provide significant value to us.36 32 2022 Proxy Statement |
PROPOSAL NO.TABLE OF CONTENTS Proposal 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ratification of Appointment of Independent Registered Public Accounting Firm Our audit committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm to perform the audits of our consolidated financial statements and our internal control over financial reporting for the year ending December 31, 2021,2022, and recommends that stockholders vote for ratification of such selection. The ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021,2022, requires the affirmative vote of a majority of the voting power of the shares present or represented by proxy at the Annual Meeting.Meeting and voting affirmatively or negatively on the proposal. In the event that PricewaterhouseCoopers LLP is not ratified by our stockholders, the audit committee will review its future selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Further, the audit committee may select a different independent registered public accounting firm at any time if, in the committee’s sole discretion, the committee determines that such a change would be in the best interests of our company and stockholders. PricewaterhouseCoopers LLP audited our consolidated financial statements and our internal control over financial reporting for the year ended December 31, 2020.2021. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, and they will be given an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions.
Independent Registered Public Accounting Firm Fees and Services We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our audit committee annually. In accordance with standard policy, PricewaterhouseCoopers LLP periodically rotates the individuals who are responsible for our audit. In addition to performing the audit of our consolidated financial statements and our internal control over financial reporting, PricewaterhouseCoopers LLP provided various other services during the years ended December 31, 20192020 and 2020.2021. Our audit committee has determined that PricewaterhouseCoopers LLP’s provision of these services, which are described below, does not impair PricewaterhouseCoopers LLP’s independence from us. During the years ended December 31, 20192020 and 2020,2021, fees for services provided by PricewaterhouseCoopers LLP were as follows (in thousands): | Fees Billed to Upwork | 2019 | 2020 | | Audit fees(1) | $ | 3,270 | $ | 2,168 | | Audit-related fees(2) | | 12 | | — | | Tax fees(3) | | — | | — | | All other fees(4) | | 2 | | 3 | | Total fees | $ | 3,284 | $ | 2,171 |
Audit fees(1) | | | $2,168 | | | $2,623 | Audit-related fees | | | — | | | — | Tax fees(2) | | | — | | | 35 | All other fees(3) | | | 3 | | | 4 | Total fees | | | $2,171 | | | $2,662 |
(1)
| “Audit fees” include fees for audit services primarily related to: the audit of our annual consolidated financial statements and attestation services related to compliance with the Sarbanes-Oxley Act of 2002; the review of our quarterly condensed consolidated financial statements; comfort letters, consents, and assistance with and review of documents filed with the SEC; and other services normally provided in connection with statutory and regulatory filings. | | |
| (2) | “Audit-related fees” include fees for financial reporting consultation and research. | | | (3)
| “Tax fees” include fees for tax compliance and advice. Tax advice fees encompass a variety of permissible tax services, including technical tax advice related to federal and state income tax matters, assistance with sales tax, and assistance with tax audits.matters. |
(4)(3)
| “All other fees” include fees for annual subscription services for access to online accounting research and disclosure checklist software applications. |
37 2022 Proxy Statement 33 |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm, the scope of services provided by the independent registered public accounting firm, and the fees for the services to be performed. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. All of the services relating to the fees described in the table above were approved by our audit committee.
OUR BOARD OF DIRECTORS AND AUDIT COMMITTEE RECOMMEND A VOTE “FOR” FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 20212022.38 34 2022 Proxy Statement |
PROPOSAL NO.TABLE OF CONTENTS Proposal 3 ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Advisory Vote on the Compensation of Our Named Executive Officers In accordance with the rulesSection 14A of the SEC,Exchange Act, we are providing stockholders with an opportunity to make a non-binding, advisory vote on the compensation of our Named Executive Officers. This non-binding advisory vote is commonly referred to as a “say-on-pay” vote. The non-binding advisory vote on the compensation of our Named Executive Officers, as disclosed in this Proxy Statement, will be determined by the vote of a majority of the voting power of the shares present or represented at the Annual Meeting and voting affirmatively or negatively on the proposal. Stockholders are urged to read the “ Executive Compensation” section of this Proxy Statement, which discusses how our executive compensation policies and procedures implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of our Named Executive Officers. Our compensation committee and our board of directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving our goals. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers, as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion and the other related disclosures.” As an advisory vote, this proposal is not binding. However, our board of directors and compensation committee, which is responsible for designing and administering our executive compensation program, value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERSOFFICERS.39 2022 Proxy Statement 35 |
SECURITY OWNERSHIPTABLE OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTCONTENTS Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 31, 2021,2022, by: ● | each of our Named Executive Officers; | | | ● | each of our directors; | | | ● | all of our directors and executive officers as a group; and | | | ● | each stockholder known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock. |
each of our Named Executive Officers; each of our directors; all of our directors and executive officers as a group; and each stockholder known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock. We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole dispositive power with respect to all shares beneficially owned, subject to applicable community property laws. Applicable percentage ownership is based on 125,962,107129,651,218 shares of common stock outstanding as of March 31, 2021.2022. Shares of our common stock subject to stock options that are exercisable as of and within 60 days of March 31, 2021,2022, or RSUs that may vest and settle within 60 days of March 31, 2021,2022, are deemed to be outstanding and to be beneficially owned by the person holding the stock options or RSUs for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities listed in the table below is c/o Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 94107. | Name | Number of Shares
Beneficially Owned | Percentage of Shares
Beneficially Owned (%) | | Named Executive Officers and Directors: | | | | Hayden Brown(1) | 889,517 | * | | Jeff McCombs(2) | 1,471 | * | | Brian Kinion(3) | 47,423 | * | | Eric Gilpin(4) | 199,293 | * | | Gregory C. Gretsch(5) | 2,819,895 | 2.2 | | Kevin Harvey(6) | 2,522,309 | 2.0 | | Thomas Layton(7) | 4,314,036 | 3.4 | | Elizabeth Nelson(8) | 695,027 | * | | Leela Srinivasan | 10,173 | * | | Gary Steele(9) | 173,357 | * | | Anilu Vazquez-Ubarri | — | — | | All executive officers and directors as a group (11 persons)(10) | 11,672,501 | 9.2 | | Other 5% Stockholders: | | | | The Vanguard Group, Inc.(11) | 8,828,619 | 7.0 | | T. Rowe Price Associates, Inc.(12) | 6,721,721 | 5.3 | | BlackRock, Inc.(13) | 6,551,245 | 5.2 |
Named Executive Officers and Directors:
| | | | | | | Hayden Brown(1) | | | 1,030,782 | | | * | Jeff McCombs(2) | | | 16,126 | | | * | Eric Gilpin(3) | | | 235,787 | | | * | Gregory C. Gretsch(4) | | | 2,819,798 | | | 2.2 | Kevin Harvey(5) | | | 2,537,004 | | | 2.0 | Thomas Layton(6) | | | 4,110,828 | | | 3.2 | Elizabeth Nelson(7) | | | 675,027 | | | * | Leela Srinivasan(8) | | | 22,385 | | | * | Gary Steele(9) | | | 180,552 | | | * | Anilu Vazquez-Ubarri(10) | | | 10,104 | | | * | All executive officers and directors as a group (10 persons)(11) | | | 11,638,393 | | | 8.9 | Other 5% Stockholders:
| | | | | | | The Vanguard Group, Inc.(12) | | | 10,760,274 | | | 8.3 | T. Rowe Price Associates, Inc.(13) | | | 10,043,245 | | | 7.7 | BlackRock, Inc.(14) | | | 8,189,754 | | | 6.3 |
(1)
| Consists of (i) 465,362796,920 shares of common stock, (ii) 5,147 unvested restricted shares that will be released within 60 days of March 31, 2021, and (iii) 419,008216,007 shares of common stock subject to options held by Ms. Brown that are exercisable within 60 days of March 31, 2021. | (2) | Consists2022, and (iii) 17,855 shares of 1,471 unvested restricted sharescommon stock subject to RSUs that will be releasedvest within 60 days of March 31, 2021.2022. |
(3) | Mr. Kinion served as our Chief Financial Officer until August 2020. | (4)(2)
| Consists of (i) 7,0336,788 shares of common stock and (ii) 7,260 unvested restricted9,338 shares of common stock subject to RSUs that will be releasedvest within 60 days of March 31, 2021, and (iii) 185,0002022. |
(3)
| Consists of (i) 19,342 shares of common stock, (ii) 205,000 shares of common stock subject to options held by Mr. Gilpin that are exercisable within 60 days of March 31, 2021.2022, and (iii) 11,445 shares of common stock subject to RSUs that vest within 60 days of March 31, 2022. |
(5)(4)
| Consists of (i) 944,809222,229 shares of common stock held of record by Mr. Gretsch, (ii) 716,795 shares of common stock held of record by the Gregory C. GretschGretch Trust, UAD 1/28/00, of which Mr. Gretsch is the trustee, (iii) 723,238 shares of common stock held by the Gretsch Revocable Trust DTD 5/30/2008, of which Mr. Gretsch is trustee, (iv) 25,944 shares of common stock held of record by a trust for the benefit of Mr. Gretsch’sGretsch's children, (iv) 266,667and (v) 1,131,592 shares of common stock held of record by Martis Creek Investments, L.P. - Fund 3, (v) 95,000 shares of common stock held of record by Martis Creek Investments, L.P. - Fund 4, (vi) 769,925 shares of common stock held of record by Martis Creek Investments, L.P. - Fund 5, collectively, the Martis Creek entities, and (vii) 755 unvested restricted shares eligible to be released within 60 days of March 31, 2021. The Gretsch Revocable Trust, the general partner of the Martis Creek entities,Investments, L.P., has sole voting and dispositive power over such shares, and voting decisions with respect to such shares are made by Mr. Gretsch. The address of the Martis Creek entitiesInvestments, L.P. is 727 Sansome Street, Suite 300, San Francisco, California 94111. |
(6)36 2022 Proxy Statement |
TABLE OF CONTENTS (5)
| Consists of (i) 22,07537,525 shares of common stock held of record by Mr. Harvey, (ii) 748,164 shares of common stock held of record by the Harvey Family Trust DTD 12/15/2000, of which Mr. Harvey is trustee, and (iii) 1,751,315 shares of common stock held of record by a limited liability company controlled by Mr. Harvey, and (iv) 755 unvested restricted shares eligible to be released within 60 days of March 31, 2021.Harvey. |
(7)(6)
| Consists of (i) 2,3742,942 shares of common stock held of record by Mr. Layton, (ii) 4,174,5643,971,975 shares of common stock held of record by Thomas H. Layton or Gabrielle M. Layton, or their successors, as trustees of the Layton Community Property Trust dated November 29, 1999, as amended, and (iii) 135,911 shares of common stock held of record by Mr. Layton as trustee of the Thomas HH. Layton Separate Property Revocable Trust dtd 11/29/99, and (iv) 1,187 unvested restricted shares eligible to be released within 60 days of March 31, 2021.which Mr. Layton serves as trustee. |
(8)(7)
| Consists of (i) 380,027 shares of common stock held of record by the Nelson Family Trust and (ii) 315,000295,000 shares of common stock subject to stock options held by Ms. Nelson that are exercisable within 60 days of March 31, 2021.2022. |
(8)
| Represents 22,385 shares of common stock. |
(9)
| Consists of (i) 22,83030,025 shares of common stock held of record by Mr. Steele and (ii) 150,527 shares of common stock subject to options held by Mr. Steele that are exercisable within 60 days of March 31, 2021,2022. |
(10)
| Represents 10,104 shares of which 50,176 shares are unvested, but early exercisable within 60 days of March 31, 2021.common stock. |
(10)(11)
| Consists of (i) 10,586,39110,733,221 shares of common stock, (ii) 1,069,535866,534 shares of common stock subject to stock options that are exercisable within 60 days of March 31, 20212022 held by all our executive officers and directors as a group, and (iii) 38,638 shares of which 50,176 are unvested, but early exercisable,common stock subject to RSUs that vest within 60 days of March 31, 2021,2022 held by our executive officers and (iii) 16,575 unvested restricted shares that will be released within 60 days of March 31, 2021.directors, as a group. |
(11)(12)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on February 10, 2021,2022, by The Vanguard Group, Inc. The Schedule 13G/A indicated that The Vanguard Group, Inc. had sole dispositive power over 8,551,85810,432,673 shares of our common stock, shared voting power over 208,597223,667 shares of our common stock, and shared dispositive power over 276,761327,601 shares of our common stock. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355. |
(12)(13)
| Based solely on information contained in a Schedule 13G13G/A filed with the SEC on February 16, 2021,14, 2022, by T. Rowe Price Associates, Inc. The Schedule 13G13G/A indicated that T. Rowe Price Associates, Inc. had sole voting power over 1,544,0243,574,809 shares of our common stock and sole dispositive power over 6,721,72110,043,245 shares of our common stock. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. |
(13)(14)
| Based solely on information contained in a Schedule 13G13G/A filed with the SEC on February 2, 2021,8, 2022, by BlackRock, Inc. The Schedule 13G13G/A indicated that BlackRock, Inc. had sole voting power over 6,452,6448,031,360 shares of our common stock and sole dispositive power over 6,551,2458,189,754 shares of our common stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
41 2022 Proxy Statement 37 |
EXECUTIVE OFFICERS AND KEY EMPLOYEESTABLE OF CONTENTS Executive Officers and Key Employees The names of our executive officers and key employees, their ages as of March 31, 2021,2022, and their positions are shown below. Executive Officers:
| | | | | | | Hayden Brown | 39 | | 40 | | | President, Chief Executive Officer, and Director | Jeff McCombs | 49 | | 50 | | | Chief Financial Officer | Eric Gilpin | 42 | Senior Vice President, | 43 | | | Chief Sales Officer | Key Employees:
| | | | | | | Lars AsbjornsenSaty Bahadur | 56 | Senior Vice President, Marketing | 49 | | | Chief Technology Officer | Sam Bright | 37 | | 38 | | | Chief Product & Experience Officer | Zoë Harte | 46 | | 47 | | | Chief People Officer | Brian Levey | 53 | | 54 | | | Chief Business Affairs and Legal Officer & Secretary | Melissa Waters | | | 45 | | | Chief Marketing Officer |
Our board of directors chooses executive officers, who then serve at the discretion of our board of directors. There is no family relationship between any of the directors or executive officers and any of our other directors or executive officers. For information regarding Ms. Brown, please refer to Proposal No. 1 above. 
| | | Jeff McCombs | | Jeff McCombs has served as our Chief Financial Officer since August 2020. Prior to joining us, Mr. McCombs served as the Chief Financial Officer of Doctor On Demand, Inc., a virtual care provider, from October 2018 to August 2020. Prior to that, Mr. McCombs served as Chief Financial Officer of OpenTable, Inc., an online restaurant reservation company, from January 2016 to June 2018, and as Chief Financial Officer of Flipboard Inc., a news and social network aggregation company, from May 2014 to May 2015. Mr. McCombs also previously served as Head of Global Business Operations for the Ads business of Facebook,Meta Platforms, Inc., a social media conglomerate corporation, from August 2010 to May 2014, as Chief Financial Officer for Tumri Inc., an advertising platform, from March 2009 to July 2010, and in a variety of roles at Yahoo! Inc., including Senior Vice President, Business Operations, Vice President, Business Management and Director, Corporate Finance, from April 2005 to March 2009. Mr. McCombs holds a B.A. in Economics from the University of California, Los Angeles. | Jeff McCombs | |
| | 
Eric Gilpin | | Eric has served as our Chief Sales Officer since February 2022. Prior to that, Mr. Gilpin has served as our Senior Vice President, Sales sincefrom April 2016.2016 to February 2022. Prior to joining us, Mr. Gilpin served in a variety of roles for CareerBuilder, LLC, a human capital software provider and online employment website, including as President of Vertical Sales from September 2014 to March 2016, President of Staffing and Recruiting from November 2009 to September 2014, and Director of National Accounts from April 2004 to November 2009. Mr. Gilpin holds an M.B.A. from the Southern Methodist University’s Cox School of Business. | Eric Gilpin | |
38 2022 Proxy Statement |
TABLE OF CONTENTS | | Key Employees | | | | | | 
Lars Asbjornsen
| | Lars AsbjornsenSaty Bahadur has served as our Senior Vice President, MarketingChief Technology Officer since May 2019.July 2021. Prior to joining us, Mr. AsbjornsenBahadur served in a variety of marketingroles at Amazon.com, Inc. from September 2017 to July 2021, including leading the team responsible for preventing worldwide fraud and business transformationabuse on Amazon.com and leading the Alexa artificial intelligence group. Prior to Amazon, Mr. Bahadur served in a variety of leadership roles for Robert Half International,at Microsoft Corporation from June 2007 to October 2017, including Director of Engineering, and a leading global specialized staffing provider,variety of engineering roles at Intel Corporation from 1996 to 2007, including Vice PresidentEngineering Manager. Mr. Bahadur holds a B.E. from Birla Institute of Digital Marketplace SolutionsTechnology and Science, Pilani and an M.S. in Computer Science from January 2014 to May 2019, Vice President of Marketing Strategy and Technology from 2006 through 2013, and Vice President of Online Marketing and Recruiting from 2004 through 2006. Mr. Asbjornsen holds an M.B.A. from the University of San Diego School of Business.Clemson University. | Saty Bahadur | |
| | 
| Sam Bright | | Sam Brighthas served as our Chief Product & Experience Officer since November 2020. Mr. Bright has served as an Advisory Council Member at the Smithsonian National Postal Museum since August 2019 and as an NACD Governance Fellow ata member of the NationalBoard of Trustees of the Teachers Insurance and Annuity Association of Corporate DirectorsAmerica (TIAA) since July 2019. February 2022. Prior to joining us, Mr. Bright served in a variety of leadership roles at eBay Inc., including Vice President, General Manager from June 2018 to October 2020, and in roles in strategy, business development, and general management from 2012 to 2020.2020. Mr. Bright holds a B.A. from Taylor University and an M.B.A. from Harvard Business School. | Sam Bright | |
| | 
| Zoë Harte | | Zoë has served as our Chief People Officer since October 2020. Prior to that, Ms. Harte has served as our Senior Vice President, Human Resources and Talent Innovation sincefrom September 2017.2017 to October 2020. She previously served in roles as our Vice President and Head of Human Resources from March 2014 to August 2017 and as Head of Human Resources at oDesk from April 2013 to March 2014. Ms. Harte also worked at Rovi Corporation, a digital entertainment company, in senior human resources roles from 2008 to 2012. Prior to Rovi, Ms. Harte spent nine years at Yahoo! Inc. in a progression of human resources and customer care leadership roles. Ms. Harte holds a B.A. in Religion and Women’s Studies from Earlham College and an M.A. in Theology from the University of Exeter. | Zoë Harte | |
| | 
Brian Levey | | Brian Levey has served as our Chief Business Affairs and Legal Officer and Secretary since October 2017. Prior to that, Mr. Levey served as our Chief Financial Officer from June 2015 to October 2017, as well as our General Counsel and Secretary, since our inception in March 2014. Mr. Levey served as Vice President, General Counsel and Secretary of oDesk from June 2013 to March 2014. Prior to joining us, Mr. Levey served in a variety of roles at eBay Inc., including as Vice President, Deputy General Counsel and Assistant Secretary from 2006 to 2013, and, from 2000 to 2006, he served in increasingly senior legal roles at eBay.eBay Inc. He also previously served as Vice President, Legal at Metro-Goldwyn-Mayer Studios. Mr. Levey began his legal career with Latham & Watkins LLP. Mr. Levey holds an A.B. in Economics from Stanford University and a J.D. from Stanford Law School. | Brian Levey | |
| | | Melissa Waters has served as our Chief Marketing Officer since December 2021. Prior to joining us, Ms. Waters served as Global Vice President of Marketing, Instagram, at Meta Platforms, Inc. from June 2020 to December 2021. Prior to joining Meta, Ms. Waters served as Chief Marketing Officer at Hims and Hers Health, Inc., a telehealth company, from April 2019 to May 2020, as VP, Marketing at Lyft, Inc., from October 2016 to November 2018, and a variety of roles in brand and marketing at Pandora Media, Inc., a streaming radio service, from December 2011 to October 2016, including VP, Brand and Product Marketing. Ms. Waters holds a B.A. from the University of Houston and an M.B.A. from Babson College. | Melissa Waters | |
44 2022 Proxy Statement 39 |
EXECUTIVE COMPENSATIONTABLE OF CONTENTS Compensation Discussion and Analysis This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 20202021 and provides an overview of our executive compensation philosophy, including our principal compensation policies and practices. In addition, it analyzes how and why the compensation committee of our board of directors made the specific compensation decisions for our principal executive officer, each individual who served as our principal financial officer, during 2020, and the executive officer (other than our principal executive officer and each individual who served as our principal financial officer) who was our most highly-compensatedhighly compensated executive officer at the end of 2020, who2021, whom we refer to collectively as our Named Executive Officers. For 2020,2021, our Named Executive Officers were: ● | Hayden Brown, our President and Chief Executive Officer; | | | ● | Jeff McCombs, our Chief Financial Officer; | | | ● | Eric Gilpin, our Senior Vice President, Sales; and | | | ● | Brian Kinion, our former Chief Financial Officer. |
Executive Transitions During 2020
In December 2019, our board of directors appointed Ms. Brown, our President and Chief Executive Officer, effective January 1, 2020.
Mr. Kinion resigned asOfficer;
Jeff McCombs, our Chief Financial Officer, effective August 4, 2020. He remained employed with us through October 2020, serving as an advisor toOfficer; and Eric Gilpin, our Chief ExecutiveSales Officer. In July 2020, our board of directors appointed Mr. McCombs as our Chief Financial Officer, effective August 4, 2020.
Compensation Discussion and Analysis Roadmap Executive Summary
Summary of our key business and performance highlights, how we determine pay, stockholder outreach and engagement, and responsiveness to feedback | | | | Executive Compensation Philosophy and Objectives
Description of our compensation philosophy and program | | | | Compensation-Setting Process
How the compensation committee oversees our compensation program | | | | Compensation Elements
Summary of our compensation program components and changes for 2022 | | | | Other Compensation Elements
Information on employee arrangements, additional policies, and tax and accounting considerations | | | |
We operate the world’s largest work marketplace that connects businesses with independent talent, as measured by GSV. During the year ended December 31, 2020,2021, our work marketplace enabled $2.5$3.5 billion of GSV. For freelancerstalent, we offerserve as a powerful marketing channel to find rewarding, engaging, and flexible work. Talent benefits from access to quality clients, simplified invoicing, and secure and timely payments while providingenjoying the freedom to run their own businesses, create their own schedules, and gain visibility into high-demand opportunities.work from their preferred locations. For clients, we offerour work marketplace offers fast, secure, and efficient access to high-quality talent with over 10,000 skills across more than 90 categories. Freelancers on our work marketplace include
Talent includes independent professionals and agencies of varying sizes and areis an increasingly sought-after, critical, and expanding segment of the global workforce. We define freelancers as users that advertise and provide services to clients through our work marketplace, and we define clients as users that work with freelancers through our work marketplace.Key 20202021 Business Highlights Despite the challenges of the COVID-19 pandemic, in 2020
In 2021, we launched a new generation of executive leadership and generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights from 20202021 include: Performance Highlights ●Growing Our Work Marketplace | | | GSV grew to over $3.5 billion, a 41% year-over-year increase | Generating Strong Growth | | | Generated $503 million of revenue, a 35% year-over-year increase | Expanding Our Active Client Base(1) | | | Expanded the number of active clients by 22% year-over-year to approximately 771,000(2) while increasing GSV per active client 15% year-over-year to $4,599(2) |
(1)
| We define an active client as a client that has had spend activity on our work marketplace during the 12 months preceding the date of measurement. GSV per active client is calculated by dividing total GSV during the four quarters ended on the date of measurement by the number of active clients at the date of measurement. |
40 2022 Proxy Statement |
TABLE OF CONTENTS (2)
| As of December 31, 2021. |
Strategic Highlights Launching a New Generation of Leadership—Ms. Brown was appointed as | | | Continued to invest in the top talent necessary to drive our President long-tern success, including hiring a new Chief Technology Officer and Chief ExecutiveMarketing Officer Jeff McCombs joined as our Chief Financial Officer, and Sam Bright joined as our Chief Product & Experience Officer. | Innovating the Work Marketplace | | | Launched Project CatalogTM (pre-defined, ready-to-purchase projects), Talent ScoutTM (a data-science-driven hiring solution), and Virtual Talent BenchTM (enables clients to establish a network of talent)
We also announced partnerships with Catch, a leading benefits company dedicated to the needs of independent talent, and Loom, the industry-leading communication tool that allows our users to simultaneously record themselves and their computer screen and share these recordings with their teams and customers | ● | Growing OurEvangelizing the Work Marketplace— | | | Increased our GSV grewinvestment in brand marketing, underscoring our conviction that this is a moment in time in which we can influence users meaningfully as workers are reconsidering their priorities and businesses grapple with talent shortages exacerbated by the Great Resignation
We also launched Upwork CoLab, an Upwork brand-partnership program that connects talent with exciting brands to over $2.5 billion, a 21% year-over-year increase.collaborate on high-value, relevant, and innovative projects | Scaling the Work Marketplace | | ● | Generating Strong Growth— | Announced that we generated $373.6 million of revenue, a 24% year-over-year increase. | | | ● | Expanding Our Core Client Base—we expandedare growing the enterprise sales team and expect to double the number of account executives of our core clients“land” team by the end of 2022
By doing this, we are establishing a strong foundation on which to over 145,000, while maintaining client spend retentioncapture the long-term value opportunity of 102% as of December 31, 2020. | | | ● | Launchingenterprise sales and Expanding Initiativeswill continue to Drive Growth—we announced Project Catalog (pre-defined, ready-to-purchase projects)invest wisely and expanded Direct Contacts (enabling invoicing and billing for hourly work). | | | ● | Establishing Strategic Partnerships—among others, we announced a partnership with Zoomstrategically to capitalize on that integrates Zoom’s video and voice communication tools into our work marketplace.opportunity |
We monitor GSV as a key financial and operational metric to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Moreover, we believe revenue is the primary measure of the performance of our business, as it provides comparability against competitors and is aligned to our strategic focus on growth objectives.
46 2022 Proxy Statement 41 |
Stockholder Value Creation
Driven by our strong financial and operational performance in 2020, we generated stockholder returns significantly exceeding those of the broader market (based on a comparison vs. the NASDAQ Composite Index) and overall technology sector (based on the NASDAQ 100 Technology Index).
The following charts show comparisons from October 3, 2018 (the date our common stock commenced trading on The Nasdaq Global Select Market) , through MarchDecember 31, 2021, and from January 1, 2020 (the date on which Ms.Hayden Brown became our President and Chief Executive Officer) , through MarchDecember 31, 2021, of the cumulative total returns for our common stock, the NASDAQ 100NASDAQ-100 Technology Sector Index, and the NASDAQ Composite Index, respectively. Such returns are based on historical results and are not intended to suggest future performance. The NASDAQ Composite Index and the NASDAQ 100 Technology100-Technology Sector Index assume reinvestment of any dividends. Upwork’s
Our Demonstrated Value Creation 
2021 Core Compensation Elements 47 42 2022 Proxy Statement |
2020 Compensation Elements
Generally, our executive compensation program consists of three principal elements – elements–annual base salary, annual bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards: Base Salary | ● | | • Fixed cash | ● | | • Attract and retain top talent through market-competitive salary levels that are commensurate with the executive’s role and responsibility | Annual Bonus | ● | | • Variable payout based on
performance against pre-established targets | ●
| | • Incentivize achievement of annual business objectives and reward short-term performance
• Revenue performance metric aligns compensation with strategic growth | Long-Term Equity Incentives | ●
| | • Time-based RSUrestricted stock unit awards, which we refer to as RSUs, vest over four-year period
• PSU awards, which are subject to both performance- and time- based vesting | ●
| | • Align the interests of executives with stockholders ●
• Motivate long-term sustainable value creation ●
• Promote retention of top talent
• Incentivize achievement of annual business objectives and reward long-term performance
• Revenue performance metric aligns compensation with strategic growth |
Executive Compensation Policies and Practices
We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The compensation committee evaluates our executive compensation program on an annual basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following summarizes our executive compensation and related policies and practices:
Our Approach | Practices We Avoid | We maintain an independent compensation committee and advisors. | We do not use “single-trigger” change in control benefits for our Named Executive Officers. | We conduct an annual executive compensation review. | We do not offer executive retirement plans. | We emphasize a pay-for-performance philosophy. | We prohibit hedging of our equity securities by our employees, Named Executive Officers, and our board of directors. | We maintain stock ownership guidelines for our Named Executive Officers and members of our board of directors. | We do not provide reimbursements or gross ups for excise tax payments. | We maintain a compensation recoupment and forfeiture policy, or clawback policy. | We do not provide excessive perquisites for our Named Executive Officers. | We ensure succession planning. | |
2021 Chief Executive Officer Performance Award Our
As disclosed in our 2021 proxy statement, our board of directors and compensation committee determined that Ms. Brown demonstrated outstanding and exceptional capabilities in her first year as President and Chief Executive Officer, including leading our company as our share price appreciated more than 200% in 2020. Accordingly, our board of directors granted Ms. Brown an additional incentive commensurate with the level of achievement and ambition she had demonstrated as President and Chief Executive Officer. The incentive also promotes her retention in a highly competitive market for this level of leadership capability. In January 2021, the compensation committee granted Ms. Brown the CEO Performance Award, which has both service- and performance-based vesting requirements. The CEO Performance Award is structured to protect stockholder interests and has a performance-based vesting component that requires achievement of extremely rigorous stock price hurdles, which promotes the alignment of Ms. Brown’s interests with those of stockholders and underscores our board of directors’ confidence in both Ms. Brown and our company. At the time of the award, our shares were trading near all-time high prices—following significant share price appreciation in 2020 under Ms. Brown’s leadership—and the lowest performance threshold requires an increase in share price of approximately 55% relative to the exercise price of the CEO Performance Award, and the majority of the award’s value will be earned only if the most rigorous goals are achieved. Additionally, achievement of any performance threshold is evaluated based on a 90-day volume-based weighted average price of our common stock to ensure that a short-term increase in share price was not treated as achievement of the intended long-term goals. The service-based vesting requirement provides for vesting of earned awards over a four-year period, which increases the value of the award in supporting retention. The CEO Performance Award is described under the heading “CEOChief Executive Officer Performance Award” below. 2022 Proxy Statement 43 |
TABLE OF CONTENTS Executive Compensation Policies and Practices We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The compensation committee evaluates our executive compensation program on at least an annual basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for Ms. Brown” below.executive talent. The following summarizes our executive compensation and related policies and practices: Maintain an independent compensation committee and advisors | | | Do not use “single-trigger” change in control benefits for our Named Executive Officers | Conduct an annual executive compensation review | | | Do not offer executive retirement plans | Emphasize a pay-for-performance philosophy | | | Prohibit hedging of our equity securities by our employees, our Named Executive Officers, and the members of our board of directors | Maintain stock ownership guidelines for our Named Executive Officers and members of our board of directors | | | Do not provide reimbursements or “gross ups” for excise tax payments | Maintain a compensation recoupment and forfeiture policy, or clawback policy | | | Do not provide excessive perquisites for our Named Executive Officers | Ensure succession planning | | | |
Advisory Vote on Named Executive Officer Compensation and Stockholder Engagement At our 20202021 annual meeting of stockholders, we held a non-binding, advisory vote on the compensation of our Named Executive Officers, which we refer to as a “Say-on-Pay” vote, and approximately 90.8%96.3% of the votes cast (for and against) approved our executive compensation program for 2019. While we also received high levels of support for the other proposals subject to vote, our board of directors also noted that support for Mr. Steele’s re-election was lower than 80% and sought to better understand stockholder views through direct dialogue.2020. Our board of directors and the compensation committee will continue to consider the result of the Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our Named Executive Officers, as we value the opinions of our stockholders. In addition, consistent with the recommendation of our board of directors and the preference of our stockholders as reflected in the non-binding, advisory vote on the frequency of future Say-on-Pay votes held at our 2020 annual meeting of stockholders, we intend to hold an annuala Say-on-Pay vote every year. This policy will remain in effect until the next stockholder vote on the frequency of non-binding, advisory votes on the compensation of our Named Executive Officers, which is expected to be held at the 2026 annual meeting of stockholders. In early 2021, our board of directors and management team led a dedicated effort to engage with our largest stockholders to discuss topics related to our strategy, board of directors composition, corporate governance, executive compensation, and environmental and social practices. The compensation committee chair and the audit committee chair participated in select meetings and engaged directly with stockholders. Stockholder Engagement Source: Capital IQ; representing percentage of outstanding shares as of February 23, 2022, based on the latest 13F filings. 44 2022 Proxy Statement |
TABLE OF CONTENTS Overall, the feedback we heard from stockholders was supportive of our executive compensation practices, and they did not request any significant changes to our ongoing compensation program. An overview of the insights we gathered in our discussions can be found under the heading “ Stockholder Engagement” in the proxy summary above. Specific to our executive compensation program, topics included: The CEO Performance Award (described below), including our board of directors’ goals for the award in the context of our strategy and executive compensation program. ● | The CEO Performance Award, including our board of directors’ goals for the award in the context of our strategy and executive compensation program. | | | | | ○ | Stockholders expressed support for the structure and timing of the CEO Performance Award, which was granted in January 2021, noting our strong 2020 performance, the rigorous performance targets, and the highly competitive landscape for talented chief executive officers. |
| ○ | | We also provided a comprehensive overview of the CEO Performance Award in the 2021 proxy statement and additional disclosure in this Proxy Statement in response to feedback from stockholders that additional detail on the award would be useful. |
Our decision to change the mix of our long-term incentive compensation program beginning in 2021 by switching from entirely RSU awards to a balanced mix of PSU awards (subject to both performance-based and time-based vesting requirements) and RSU awards (subject solely to time-based vesting requirements). ● | Our decision to introduce PSUs into our long-term incentive compensation program beginning in 2021. | | | | | ○ | This change was well received by stockholders, who encouraged us to provide relevant disclosure in future proxy statements. |
Executive Compensation Program Changes for 2021
To incent long-term value creation and strong financial performance, to further align the interests of our Named Executive Officers with those of our stockholders, and to encourage retention, in February 2021, the compensation committee introduced PSUs into our ongoing long-term incentive compensation program. Ms. Brown and Messrs. McCombs and Gilpin received PSU grants in the following amounts:
| Named Executive Officer | Target Number of PSUs | Maximum Number of PSUs | | Hayden Brown | 41,000 | 82,001 | | Jeff McCombs | 5,887 | 11,774 | | Eric Gilpin | 2,102 | 4,205 |
The number of PSUs that will become subject to each award, which we refer to as the Earned PSUs, will be earned based on achievement of revenue targets in respect of our fiscal year ending December 31, 2021, which we refer to as the Performance Period. All Earned PSUs will then be subject to an additional time-based vesting requirement, such that the Earned PSUs will only be settled to the extent vested in accordance with the time-based vesting requirement. Under the time-based vesting requirement, one-fourth of the Earned PSUs vest approximately one year following the date of grant and thereafter the remaining Earned PSUs will vest on a quarterly basis over the following three-year period. In aggregate, the Performance Period and the time-based vesting requirement require four years of service for the Earned PSUs to vest fully.
In 2021, the target number of PSUs will comprise 50% of the total long-term incentive opportunity issued to Ms. Brown (excluding her CEO Performance Award) and 20% of the total long-term incentive opportunity issued to Messrs. McCombs and Gilpin.
Full details on the PSUs can be found in the section “2021 PSU Awards” below.
| ○ | We also increased the percentage allocation of PSUs in our long-term incentive compensation program in 2022, in part, due to feedback from stockholders. |
Executive Compensation Philosophy and Objectives Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives, while simultaneously creating sustainable long-term value for our stockholders. We strive to create an executive compensation program that is competitive, rewards achievement of our strategic objectives, and aligns our executives’ interests with those of our stockholders. Consistent with this philosophy, we designed our executive compensation program to achieve the following primary objectives: ● | Attract,We aim to attract, motivate, incentivize, and retain employees at the executive level who contribute to our long-term success.success |
● | ProvideWe provide competitive compensation packages to our executives.executives | | | ● | RewardWe reward the achievement of our business objectives.objectives | | | ● | EffectivelyWe effectively align their interests with those of our stockholders by focusing on long-term incentive compensation in the form of equity awards that correlate with the growth of sustainable long-term value for our stockholders.stockholders |
We structure the annual compensation of our Named Executive Officers using three principal elements: annual base salary, annual bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards. We design our executive compensation program to balance the goals of attracting, motivating, rewarding, and retaining our Named Executive Officers with the goal of promoting the interests of our stockholders by aligning the interests of our Named Executive Officers and stockholders and linking pay with performance. We therefore seek to ensure that a meaningful portion of our Named Executive Officers’ annual target annual total direct compensation opportunity is “at-risk” and variable in nature. To date, we have emphasized variable “at-risk” compensation through two separate compensation elements. First, we provide the opportunity to earn short-term incentives, either through participation in our annual Performance Bonus Planperformance bonus plan or, in the case of Mr. Gilpin, a sales compensation plan. The Performance Bonus Planannual performance bonus plan provides payments if our Named Executive Officers produce short-term results that meet or exceed certain pre-established annual financial targets in effect as determined from time to time by us and approved by our board of directors orthe compensation committee in connection with our annual budget.committee. The sales compensation plan for Mr. Gilpin provides payments as described in “Sales Compensation Plan for Mr. Gilpin” Gilpin” below. In addition, we grant PSU awards and RSU awards to our Named Executive Officers, the value of which depends entirely on both our short-term and long-term financial performance, which influences the value of our common stock thereby incentivizing themour Named Executive Officers to build sustainable long-term value for the benefit of our stockholders. 2022 Proxy Statement 45 |
TABLE OF CONTENTS Through the use of these variable pay elements, typically a substantial portion of our Named Executive Officers’ annual target total direct compensation varies based on our performance, with the value ultimately received subject to variability above or below target levels commensurate with our actual performance. We believe this compensation program design provides balanced incentives for our Named Executive Officers to meet our business objectives and drive long-term growth. The compensation committee aims to maintain an appropriate pay-for-performance“pay-for-performance” alignment with an emphasis on long-term stockholder value creation. We have not adopted policies or employedestablished guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. As our needs evolve and as circumstances require, we intend to reevaluate our executive compensation philosophy, primary objectives, and program design. Finally, we use equity incentives as part of our broad-based compensation program to foster a culture of ownership and shared success among our employees. Please see page 54 of our 2021 Impact Report, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub, for details regarding the distribution of equity incentives and stock ownership across our employee base. Compensation-Setting Process
The compensation committee conducts an annual evaluation of our executive compensation program and Named Executive Officers’ compensation to determine potential changes for the next fiscal year
Process includes reviewing compensation information for peer companies and broad-based compensation surveys to understand market compensation levels | | | CEO reviews the performance of our other Named Executive Officers based on their performance overall and against business objectives established for them for the prior year, and then shares these evaluations with, and makes recommendations to, the compensation committee
The compensation committee reviews and discusses CEO recommendations and, in consultation with the compensation consultant, sets the compensation opportunity for each Named Executive Officer | | | CEO attends meetings of the board of directors and the compensation committee at which executive compensation matters are addressed, except for discussions involving her own compensation
Compensation consultant attends the meetings of the compensation committee as requested |
Role of the Compensation Committee The compensation committee has the overall responsibility for overseeing our compensation and benefits plans, policies, and practices generally and with respect to our Named Executive Officers. In carrying out its responsibilities, the compensation committee evaluates our compensation policies and practices for alignment with our executive compensation philosophy, develops compensation-related strategies, makes decisions that it believes further our philosophy and/or align with compensation best practices, and reviews the performance of our Named Executive Officers when making decisions about their compensation. Each year, the compensation committee conducts an evaluation of our executive compensation program to determine if any changes are appropriate. The compensation committee also conducts an annual review of the compensation arrangements of our Named Executive Officers, typically during the first quarter of the fiscal year. The compensation committee’s authority, duties, and responsibilities are further described in its charter, which is reviewed annually by the compensation committee and revised as warranted. The charter is available on the “Investor Relations” section of our website, which is located at https://investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of the website. In making its decisions, including with respect to the compensation of our Named Executive Officers, the compensation committee retains a compensation consultant (as described in “Role of Compensation Consultant” below) to provide support in its review and assessment of our executive compensation program. 46 2022 Proxy Statement |
TABLE OF CONTENTS Setting Target Total Direct Compensation Typically, during the first quarter of the fiscal year or more frequently as warranted, the compensation committee reviews the annual base salary levels, annual bonus opportunities, and long-term incentive compensation opportunities of our Named Executive Officers and all related performance criteria. Adjustments are generally effective at the beginning of the fiscal year or at the time of a promotion.promotion, as the case may be. The compensation committee does not establish a specific target for formulating the target total direct compensation opportunities of our Named Executive Officers. Instead, in consultation with its compensation consultant, Compensia, Inc., which we refer to as Compensia, the compensation committee weighs various considerations, including the following: ● | our executive compensation program objectives; | | | ● | our performance against the financial, operational, and strategic objectives established by the compensation committee and our board of directors; | | | ● | each individual Named Executive Officer’s knowledge, skills, experience, qualifications, tenure, and scope of roles and responsibilities relative to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; | | | ● | the prior performance of each individual Named Executive Officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values; | | | ● | the potential of each individual Named Executive Officer to contribute to our long-term financial, operational, and strategic objectives; | | | ● | our Chief Executive Officer’s compensation relative to that of our Named Executive Officers, and compensation parity among our Named Executive Officers; | | | ● | our financial performance relative to our compensation and performance peers; | | | ● | the compensation practices of the companies in our compensation peer group and in selected broad-based compensation surveys and the positioning of each Named Executive Officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and | | | ● | the recommendations of our Chief Executive Officer with respect to the compensation of our Named Executive Officers (except with respect to her own compensation). |
our executive compensation program objectives; our performance against the financial, operational, and strategic objectives established by the compensation committee and our board of directors; each individual Named Executive Officer’s knowledge, skills, experience, qualifications, tenure, and scope of roles and responsibilities relative to other similarly situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; the prior performance of each individual Named Executive Officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values; the potential of each individual Named Executive Officer to contribute to our long-term financial, operational, and strategic objectives; our Chief Executive Officer’s compensation relative to that of our Named Executive Officers, and compensation parity among our Named Executive Officers; our financial performance relative to our compensation and performance peers; the compensation practices of the companies in our compensation peer group and in selected broad-based compensation surveys and the positioning of each Named Executive Officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and the recommendations of our Chief Executive Officer with respect to the compensation of our Named Executive Officers (except with respect to her own compensation). These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each Named Executive Officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable. The compensation committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation decisions with respect to our Named Executive Officers. The compensation committee believes that over-relianceoverreliance on benchmarking can result in compensation that is unrelated to the value delivered by our Named Executive Officers because compensation benchmarking does not take into account the specific performance of the Named Executive Officers or our relative size and performance. Instead, in making its determinations, and in consultation with the compensation consultant, the compensation committee reviews compensation information for a representative group of peer companies to the extent that the executive positions at these companies are considered comparable to our executive officers’ positions and informative of the competitive environment. The compensation committee also reviews broad-based compensation surveys to understand market compensation levels. These principles and processes apply to both cash and equity-based compensation awards granted under our programs.executive compensation program. Role of Management In discharging its responsibilities, the compensation committee works with members of our management, including our Chief Executive Officer. Our management assists the compensation committee by providing information on corporate and individual performance and management’s perspective on compensation matters. The compensation committee solicits and reviews our Chief Executive Officer’s proposals with respect to program structures, as well as our Chief 2022 Proxy Statement 47 |
TABLE OF CONTENTS Executive Officer’s recommendations for adjustments to annual cash compensation, long-term incentive compensation opportunities, and other compensation-related matters for our Named Executive Officers (except with respect to her own compensation) based on our Chief Executive Officer’s evaluation of their performance for the prior year. At the beginning of each year, our Chief Executive Officer reviews the performance of our other Named Executive Officers based on their overall performance and performance against business objectives established for them for the prior year, and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation as described above. The annual business objectives for each Named Executive Officer are developed through mutual discussion and agreement between our Chief Executive Officer and the Named Executive Officers and are also reviewed with our board of directors. The compensation committee reviews and discusses our Chief Executive Officer’s recommendations and considers them as one factor in determining and approving our Named Executive Officers’ compensation. Our Chief Executive Officer also attends meetings of the board of directors and the compensation committee at which executive compensation matters are addressed, except for discussions involving her own compensation. Competitive Positioning The compensation committee believes that peer group comparisons are useful guides to measure the competitiveness of our executive compensation program and related policies and practices. To assess our executive compensation against the competitive market, the compensation committee reviews and considers the compensation levels and practices of a select group of peer companies. This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, and industry focus. The competitive data drawn from this compensation peer group is only one of several factors that the compensation committee considers, however, in making its compensation decisions for our Named Executive Officers. In February 2021, the compensation committee used the compensation peer group set forth below to analyze the compensation of our Named Executive Officers and make its initial compensation decisions for the year. This compensation peer group, which was developed in July 2020 with the assistance of Compensia after conducting a thorough review of our then-compensation peer group, was comprised of publicly-traded technology companies against which we compete for executive talent. In evaluating the companies comprising the compensation peer group, Compensia specifically considered and weighed the following primary criteria, among other factors: Geography | | | Publicly-traded companies primarily headquartered in the United States and traded on a major U.S. stock exchange | Industry | | | Software and internet companies with a focus on online marketplaces | Revenue | | | Similar revenue to ours–within a range of approximately 0.4x to approximately 2.5x our revenue (based on the then-last four fiscal quarters) of approximately $315 million (approximately $125 million to approximately $790 million) | Market Capitalization | | | Similar market capitalization to ours–within a range of approximately 0.2x to approximately 5.0x our then 30-day market capitalization of approximately $1.4 billion (approximately $285 million to approximately $7.1 billion) |
As a result, the compensation committee approved an updated compensation peer group consisting of the following companies: AppFolio | | | Fiverr International | | | Redfin | Appian | | | LivePerson | | | Shutterstock | Benefitfocus | | | Magnite(1) | | | Stamps.com | CarGurus | | | Pluralsight | | | TechTarget | Cars.com | | | Quotient Technology | | | TrueCar | Eventbrite | | | The RealReal | | | Yext | EverQuote | | | | | | |
(1)
| Magnite was formerly named The Rubicon Project prior to its merger with Telaria in April 2020. |
48 2022 Proxy Statement |
TABLE OF CONTENTS The following companies were removed from our peer group: Care.com and Etsy. The following companies were added to our peer group: Eventbrite, EverQuote, Fiverr International, The RealReal, and Magnite. Total Revenue ($ millions)(1) | | | $315 | | | $315 | Market Capitalization ($ millions)(2) | | | $1,424 | | | $1,464 |
(1)
| Total revenue measured as of June 2020 and reflects the most recently reported four fiscal quarters. |
(2)
| Market capitalization measured based on the average of the 30 trading-day period ended June 22, 2020. |
The compensation committee used data drawn from the companies in our compensation peer group, as well as data from a custom data cut of 71 U.S.-based software companies with revenues ranging from $110 million to $900 million and market capitalizations ranging from $300 million to $7 billion (including peer company participants) drawn from the Radford Global Technology Survey database, to evaluate the competitive market when determining the total direct compensation packages for our Named Executive Officers, including annual base salary, target annual bonus opportunities, and long-term incentive compensation opportunities. This compensation peer group was used by the compensation committee for most of 2021 as a reference for understanding the competitive market for executive positions in our industry sector. However, given the significant increase in our market capitalization over the prior 12 months, in July 2021, the compensation committee, with the assistance of Compensia, reviewed and updated our compensation peer group to reflect our market capitalization and to account for merger and acquisition activity of peer companies. In evaluating the companies comprising the compensation peer group at that time, Compensia considered and weighed the following primary criteria, among other factors: publicly-traded companies primarily headquartered in the United States and traded on a major U.S. stock exchange; software and internet companies with a focus on online marketplaces; similar revenue to ours—within a range of approximately 0.5x to approximately 2.0x our revenue (based on the then-last four fiscal quarters) of approximately $404 million (approximately $200 million to approximately $810 million); and similar market capitalization to ours—within a range of approximately 0.33x to approximately 3.0x our then 30-day market capitalization of approximately $6.7 billion (approximately $2.2 billion to approximately $20.1 billion). Based on a review of the analysis prepared by Compensia, the compensation committee approved a revised compensation peer group for the remainder of 2021 consisting of the following companies: Alteryx | | | Chegg | | | Q2 Holdings | Anaplan | | | Everbridge | | | Redfin | AppFolio | | | Fastly | | | Revolve Group | Appian | | | Fiverr International | | | Shutterstock | Asana | | | LivePerson | | | Smartsheet | BlackLine | | | Magnite(2) | | | Stamps.com | CarGurus | | | Paylocity | | | |
(1)
| This peer group was approved in July 2021 but was not used as a factor by the compensation committee when making compensation decisions for our Named Executive Officers in 2021. |
(2)
| Magnite was formerly named The Rubicon Project prior to its merger with Telaria in April 2020. |
Seven companies, Benefitfocus, Cars.com, EverQuote, Quotient Technology, The RealReal, TrueCar, and Yext, were removed from our peer group because their market capitalization was no longer within our targeted market capitalization range; two companies, Eventbrite and TechTarget, were removed because their revenue was no longer within our targeted revenue range; and one company, Pluralsight, was removed because it had been acquired. Eleven companies were added to our peer group: Alteryx, Anaplan, Asana, BlackLine, Chegg, Everbridge, Fastly, Paylocity, Q2 Holdings, Revolve Group, and Smartsheet. 2022 Proxy Statement 49 |
TABLE OF CONTENTS The compensation committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group. Role of Compensation Consultant The compensation committee engages an external compensation consultant to assist it by providing information, analysis, market compensation data, and other advice for our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the compensation committee and its chair, and serves at the discretion of the compensation committee, which reviews the engagement annually. In 2021, the compensation committee again engaged Compensia to serve as its compensation consultant to advise on executive compensation matters. During 2021, Compensia attended the meetings of the compensation committee (both with and without management present) as requested and provided various services, which included the following: consultation with the compensation committee chair and other members between compensation committee meetings; review, research, and updating of our compensation peer group; an analysis of competitive market data for our executive positions, including our Named Executive Officer positions, and an evaluation of how the compensation we pay our executives compares both to our performance and to how the companies in our compensation peer group and/or selected broad-based compensation surveys compensate their executives; review and an analysis of the base salary levels, annual bonus opportunities, and long-term incentive compensation opportunities of our executives, including our Named Executive Officers; an analysis of a competitive market strategy and the development of equity award guidelines for our broad-based employee population; an analysis of competitive market data for the non-employee members of our board of directors and evaluation of how the compensation we pay the non-employee members of our board of directors compares to how the companies in our compensation peer group compensate the non-employee members of their boards of directors; review of market equity compensation practices, including a burn rate analysis and multi-year estimate; and an analysis of various performance-based equity award designs for our executives. The terms of Compensia’s engagement include reporting directly to the compensation committee chair. Compensia also coordinated with our management for data collection and job matching for our executives. In 2021, Compensia did not provide any other services to us. The compensation committee has evaluated its relationship with Compensia to ensure that it believes that such firm is independent from management. This review process included a review of the services that Compensia provided, the quality of those services, and the fees associated with the services provided during 2021. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the Nasdaq Marketplace Rules, and such other factors as were deemed relevant under the circumstances, the compensation committee evaluated Compensia’s independence and determined that no conflict of interest has arisen as a result of the work performed by Compensia. Annual base salary represents the fixed portion of the compensation of our Named Executive Officers and is an important element of compensation intended to attract and retain highly-talentedhighly talented individuals. Generally, we use base salary to provide each Named Executive Officer with a specified level of cash compensation during the year with the expectation that he or she will perform his or her responsibilities to the best of his or her ability and in our best interests. 50 2022 Proxy Statement |
TABLE OF CONTENTS Generally, we establish the initial base salaries of our Named Executive Officers through arm’s-length negotiation at the time of hire, taking into account the individual’s position, qualifications, experience, prior salary level, competitive market data, and the base salaries of our other executive officers. Thereafter, the compensation committee reviews the base salaries of our Named Executive Officers each year as part of its annual compensation review, with input from our Chief Executive Officer (except with respect to her own base salary) and Compensia, and makes adjustments as it determines to be reasonable and necessary to reflect the scope of a Named Executive Officer’s performance, individual contributions and responsibilities, position in the case of a promotion, target total direct compensation opportunity, and market conditions. In December 2019, in connection with her appointment as our President and Chief Executive Officer, the compensation committee, on behalf of our board of directors, entered into an Amended and Restated Offer Letter with Ms. Brown pursuant to which her annual base salary was increased from $462,250 to $480,000, effective January 1, 2020.
In February 2020,2021, the compensation committee reviewed the annual base salaries of our other then-NamedNamed Executive Officers after considering a competitive market analysis prepared by Compensia and the recommendations of our Chief Executive Officer (except with respect to her own base salary), as well as the other factors described in “ Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the compensation committee determined to adjust the annual base salary of Mr. Gilpineach of our Named Executive Officers to bring histheir base salarysalaries to a level that targets the 50th percentile of the competitive marketplace and was comparable to that of similarly situated executives at the companies in the competitive marketplace and to maintain the annual base salary of Mr. Kinion at its 2019 level.our compensation peer group. Our then-NamedNamed Executive Officers’ base salaries, as determined in February 2020,2021, were as follows: | Named Executive Officer | 2019 Base Salary ($) | 2020 Base Salary ($)(1) | Percentage Increase (%) | | Brian Kinion | 364,000 | 364,000 | — | | Eric Gilpin | 300,472 | 335,000 | 11.5 |
(1) | Mr. Gilpin’s annual base salary increase was effective January 1, 2020. |
Subsequently, in connection with his appointment as our Chief Financial Officer in July 2020, our board of directors approved an initial annualHayden Brown | | | 480,000 | | | 500,000 | | | 4.17 | Jeff McCombs | | | 400,000 | | | 415,000 | | | 3.75 | Eric Gilpin | | | 335,000 | | | 365,000 | | | 8.96 |
These base salary for Mr. McCombs of $400,000.increases were effective January 1, 2021. The base salaries paid to our Named Executive Officers during 20202021 are set forth in the “ 20202021 Summary Compensation Table” below. We use an annual bonus plan to motivate our employees, including our Named Executive Officers (other than Mr. Gilpin, our Senior Vice President,Chief Sales Officer, who participates in a separate sales compensation plan), to achieve our annual business goals as reflected in our annual operating plan. Typically, our board of directors or the compensation committee approves our annual bonus plan, including the performance criteria, at the beginning of the year. However, with the onset of the COVID-19 pandemic induring the first quarter of 2020, following extensive discussions with our Chief Executive Officer and after consulting with Compensia, the compensation committee determined that it was in the best interests of our company and our stockholders to reassess the structure of the proposed annual bonus plan for 2020 once we had a better understanding of how the pandemic was likely to affect our business. While the compensation committee approved target annual bonus opportunities for the members of our leadership team, including our Named Executive Officers, inyear. In February 2020, it took no further action on the bonus plan at that time. At its April 2020 meeting, the compensation committee reviewed with our senior management the uncertain impact of the COVID-19 pandemic on our financial performance and, after consulting with Compensia, determined that it continued to be in the best interests of our company and our stockholders to defer any action on the bonus plan until such time as we had more clarity on such impact.Subsequently, in July 2020, following a presentation by our Chief Executive Officer describing the effects of the COVID-19 pandemic on our business and the proposed terms for our performance bonus plan for 2020,2021, the compensation committee approved the 20202021 performance criteria, bonus pool, and other terms under our annual performance bonus plan, the Upwork Inc. Performance Bonus Plan, which we refer to as the 20202021 Performance Bonus Plan, to provide annual bonus awards for our employees, including certain of our Named Executive Officers.
Officers, and set the target annual bonus opportunities for the members of our leadership team, including our Named Executive Officers, who were participants in the 2021 Performance Bonus Plan. The compensation committee served as the administrator of the 20202021 Performance Bonus Plan. Our board of directors and the compensation committee have the authority to amend or terminate the plan at any time and for any reason, provided that any amendment, suspension, or termination of the plan will not, without a participant’s consent, alter or impair any rights or obligations under any earned award of such participant.
Target Annual Bonus Opportunities Bonus opportunities under the 2020 Performance Bonus Plan were set at a specific percentage of each participant’s annual base salary.
Named Executive Officer | Target Bonus Opportunity as % of Salary | Hayden Brown | 60% | Brian Kinion | 40% | Jeff McCombs | 60% |
Ms. Brown’s target annual bonus opportunity was set by the compensation committee at 60% of her annual base salary as part of the arm’s length negotiations of her compensation arrangements upon her appointment as our President and Chief Executive Officer effective January 1, 2020, after considering the competitive market for chief executive officers at the companies in our compensation peer group. As noted above, inIn February 2020,2021, the compensation committee reviewed the target annual bonus opportunityopportunities of Mr. Kinion, our other then-NamedNamed Executive OfficerOfficers who was a participantwere participants in our 2020the 2021 Performance Bonus Plan. After taking into considerationPlan after considering a competitive market analysis prepared by Compensia and the recommendations of our Chief Executive Officer (except with respect to her own target annual bonus opportunity), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above,above. Following this review, the compensation committee determined to maintainadjust the target annual bonus opportunity of Mr. Kinion at 40%each of his annual base salary.
As previously described,our Named Executive Officers who was a participant in connection with his appointment as our Chief Financial Officer in July 2020, our board of directors approved athe 2021 Performance Bonus Plan to bring their target annual bonus opportunity for Mr. McCombs equal to 60%opportunities (as a percentage of hiseach Named Executive Officer’s annual base salary.salary) to a level that was comparable to that of similarly situated executives at the companies in our compensation peer group.
2022 Proxy Statement 51 |
TABLE OF CONTENTS Our Named Executive Officers’ target annual bonus opportunities (other than Mr. Gilpin), as determined in February 2021, were as follows: Hayden Brown | | | 100% | | | $500,000 | Jeff McCombs | | | 80% | | | $332,000 |
These target annual bonus opportunities were effective January 1, 2021. Corporate Performance Criteria In July 2020,February 2021, the compensation committee selected revenue as the performance measure for the 20202021 Performance Bonus Plan. For this purpose, “revenue” meant our revenue for 20202021 as reported to our board of directors following fiscal year 20202021 under the then-applicable Financial Accounting Standards Board, (FASB)which we refer to as FASB, Accounting Standards Codification guidance, except as otherwise determined by our board of directors or the compensation committee. The computation of the revenue target achievement was to be determined in our sole discretion, as approved by our board of directors or the compensation committee. The compensation committee consistently reviews an array of potential performance measures to determine the appropriate metrics to drive and evaluate the strategic success of our business. The compensation committee selected revenue as the sole performance measure for the 20202021 Performance Bonus Plan because, in its view, it was most consistent with our near-term objective of driving revenue growth. In the prior year,2020, we used GSV and adjusted EBITDArevenue as additionalthe sole performance measures inmeasure for our bonus plan. The compensation committee determined not to include these metrics for 2020. Given thatplan because revenue growth was the primary focus of our 2020 annual operating plan,plan. Similarly, the compensation committee believed that our revenue performance alone would be the best indicator of our successful execution of our business plan in 2021 in the continuing volatile environment created by the COVID-19 pandemic. For purposes of the 20202021 Performance Bonus Plan, the compensation committee set the following performance levels for our revenue performance for 2021: If our revenue for 2021 was at or below $429,640,000, there would be no payout under the 2021 Performance Bonus Plan; If our revenue for 2021 equaled $466,400,000, our Named Executive Officers would be eligible to receive a bonus payout equal to 100% of their target annual bonus opportunity under the 2021 Performance Bonus Plan; If our revenue for 2021 equaled or exceeded $503,160,000, our Named Executive Officers would be eligible to receive a bonus payout equal to 200% of their target annual bonus opportunity under the 2021 Performance Bonus Plan; and Between the threshold performance level of $429,640,000 and the maximum performance level of $503,160,000, bonus payouts for our Named Executive Officers under the 2021 Performance Bonus Plan would be determined on a straight line basis. The target level for revenue under the fiscal year at $360.0 million. This target level2021 Performance Bonus Plan was greater than the revenue earned for the prior fiscal year and represented an aggressive level of performance that the compensation committee believed our management team could achieve with diligent effort in the then-existing business environment. Further, the threshold performance level represented a 15% year-over-year revenue growth figure which the compensation committee determined was appropriate for there to be any payout under the 2021 Performance Bonus Plan. In the event of an acquisition the bonus payout percentage was to be determined using the most recent revenue forecast for 2021, as approved by the board of directors, and the amount of the bonus was to be pro rated based on the amount of base salary actually paid to a particular participant between the first date of fiscal year 2021 and the date of the acquisition. Annual Bonus Plan Formula The following formula was used to calculate the annual bonuses paid to participants under the 20202021 Performance Bonus Plan: Bonus Payment |  | 2020 | = | | | 2021 Base Salary |  | 2020 | × | | | 2021 Target
Annual Bonus
Opportunity | | | × | | | Revenue
Achievement
Percentage |
For purposes of the 20202021 Performance Bonus Plan:
● | “2020 Base Salary” meant the amount of base salary actually earned and paid to the participant during 2020, excluding (i) bonuses, commissions, overtime pay, or the value of any equity securities, or any employee benefits or other compensation paid to the participant (for example, the Section 401(k) plan employer match) and (ii) any compensation paid to a participant in respect of inactive employment by our company (for example, a leave of absence); and | | | ● | “Revenue Achievement Percentage” meant the achievement of our revenue target for 2020 expressed as a percentage calculated by dividing (i) the difference between our 2020 revenue, minus $310,000,000 by (ii) $50,000,000; provided, however, that in no event was the Revenue Achievement Percentage to be less than zero.52 2022 Proxy Statement |
TABLE OF CONTENTS “2021 Base Salary” meant the amount of base salary actually earned and paid to the participant during 2021, excluding (i) bonuses, commissions, overtime pay, or the value of any equity securities, or any employee benefits or other compensation paid to the participant (for example, the Section 401(k) plan employer match) and (ii) any compensation paid to a participant in respect of inactive employment by our company (for example, a leave of absence); and “Revenue Achievement Percentage” meant the achievement of our revenue target for 2021 expressed as a percentage calculated by measuring our 2021 revenue on a straight line basis between the threshold performance level of $429,640,000, where the Revenue Achievement Percentage would be zero, and the maximum performance level of $503,160,000, where the Revenue Achievement Percentage would be 200%; provided, however, that in no event was the Revenue Achievement Percentage to be greater than 200% or less than zero. In February 2021,2022, the compensation committee approved annual bonus awards to the participants in the 20202021 Performance Bonus Plan, including our incumbent Named Executive Officers (other than Mr. Gilpin). Based on the 20202021 performance criteria established by the compensation committee in July 2020,February 2021, the compensation committee determined we achieved revenue of $373.6$502.8 million, which resulted in a Revenue Achievement Percentage of 127%199%. Based on this Revenue Achievement Percentage, the following bonuses were payable to our incumbent Named Executive Officers who were participants in the 20202021 Performance Bonus Plan: | Named Executive Officer | Target Annual Bonus
(as a percentage of base
salary) | Target Annual
Bonus ($) | Earned Annual Bonus
Award ($) | Earned Annual Bonus Award
(as a percentage of Target Annual Bonus) | | Hayden Brown | 60% | 288,000 | 365,760 | 127% | | Jeff McCombs | 60% | 99,000(1) | 125,730(1) | 127% |
(1) | Mr. McCombs’s annual bonus award was pro-rated due to base salary payments only being earned during his partial year of employment. |
Hayden Brown | | | 100% | | | 500,000 | | | 995,000 | | | 199% | Jeff McCombs | | | 80% | | | 332,000 | | | 660,680 | | | 199% |
Sales Compensation Plan for Mr. Gilpin As our Senior Vice President,Chief Sales Officer, Mr. Gilpin’s annual cash incentive for 20202021 was based on his ability to manage our sales organization to achieve our annual enterprise revenue quota and reward him for growing our enterprise accounts for the year and to achieve our annual enterprise sales quota and reward him for our sales team’s enterprise bookings efforts for the year. Each of these performance incentives was weighted 50% for purposes of Mr. Gilpin’s 2021 annual cash incentive. In 2020,2021, Mr. Gilpin was eligible to earn an annual cash incentive payment of up to $335,000,$365,000, which iswas equal to 100% of his 20202021 annual base salary. ● | This incentive payment was to be calculated and paid quarterly based on our actual enterprise revenue attainment as measured against the applicable quarterly revenue quota for our sales organization. | | | ● | Mr. Gilpin’s sales compensation plan also included an additional payment if our total enterprise revenue for the year exceeded our annual enterprise revenue quota. | | | ● | To be eligible for any payment under his annual cash incentive, Mr. Gilpin had to be employed on the last calendar day of the month for which the cash incentive payment was calculated. |
In addition, each performance incentive included an additional multiplier if enterprise revenue and/or enterprise bookings for the year exceeded his annual quota. These incentive payments were to be calculated and paid quarterly based on our actual annual enterprise revenue attainment and our actual annual enterprise bookings attainment as measured against the applicable quarterly enterprise revenue and enterprise bookings quotas, respectively, for our sales organization. Mr. Gilpin’s sales compensation plan also included additional payments if our total annual enterprise revenue for the year and total annual enterprise bookings for the year exceeded our annual enterprise revenue and annual enterprise bookings quotas, respectively. To be eligible for any payment under his annual cash incentive, Mr. Gilpin had to be employed on the last calendar day of the month for which the cash incentive payment was calculated. We are not disclosing the target level for our annual enterprise revenue quota and annual enterprise bookings quota because we believe to do so would be competitively harmful, as it would give our competitors valuable insight into our strategic and financial planning processes. However, the target performance level for each performance incentive was greater than our actual performance in the prior year and represented an aggressive level of performance that we believed Mr. Gilpin and our sales organization could achieve with diligent effort. Mr. Gilpin’sFor purposes of his annual cash incentive, payment wasMr. Gilpin’s payments were calculated based on the total revenue attributable to ourhis enterprise accounts compared to the applicable quarterlyyear-to-date quota and the total enterprise bookings compared to the applicable year-to-date quota. For this purpose, achievement of the quota for theeach quarterly measurement period (ending March 31, June 30, September 30, and December 31, 2021, respectively) meant the enterprise revenue or enterprise bookings actually attributable to the period calculated as a percentage of the quota for the period. The payment was to be determined on a linearstraight line basis of thisthe cumulative target for each performance incentive, with no cap on the percentage
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TABLE OF CONTENTS of the quarterlyyear-to-date target that could be paid for a given period. For example, if the enterprise revenue quota for the period was $1,000 and we achieved enterprise revenue for the period of $610, Mr. Gilpin would be considered to have achieved 61% of his quota. The same formula was applicable to his annual enterprise bookings quota. In addition, in the event that the sales organization exceeded our annual enterprise revenue quota or annual enterprise bookings quota, as the case may be, in addition to his quarterly cash incentive payment, Mr. Gilpin was eligible to receive an additional payment equal to 3% of each dollar generated over the applicable annual enterprise revenue or enterprise bookings quota, as the case may be, for each performance incentive, which we refer to as the Accelerated Payment. There was no cap on the Accelerated Payment which(which was payable after the end of the year) in addition to the quarterly cash incentive payment.payments. In 2020,2021, Mr. Gilpin earned an annual cash incentive payment under his sales compensation plan in the aggregate amount of $306,202,$520,739, based on our actual total enterprise revenue performance and our actual enterprise bookings performance as measured against our enterprise revenue and enterprise bookings quotas for 2020.2021. This amount included an Accelerated Payment in the amount of $167,787. Mr. Gilpin received no Accelerated Payments for 2020.Gilpin’s annual cash incentive payment equaled 142.67% of his 2021 target annual bonus opportunity. The annual bonuses and sales compensation awarded to our Named Executive Officers for 20202021 are set forth in the “ 20202021 Summary Compensation Table” below. Long-Term Incentive Compensation We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. We use equity awards to incentivize and reward our Named Executive Officers for long-term corporate performance based on the value of our common stock and, thereby, to align the interests of our Named Executive Officers with those of our stockholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our Named Executive Officers to create long-term value for our stockholders. Equity awards also help us retain and reward qualified executives in a competitive market. Typically, we have granted equity awards to our Named Executive Officers as part of the compensation committee’s annual review of our executive compensation program. For 2020,2021, the compensation committee sought to retain, motivate, and reward our long-term incentive compensation program for all Named Executive Officers consistedfor long-term increases in the value of our common stock and, thereby, to align their interests with those of our stockholders, using both RSU awards with time-based vesting requirements that may be settled for shares of our common stock and PSU awards with performance-based vesting requirements and time-based vesting requirements that, if earned, may be settled for shares of our common stock. We grant RSU awards because they enable us to incentivize and retain our Named Executive Officers using fewer shares of our common stock than would be necessary if we used stock options. In addition,options and because they have value to the potential value of these RSU awards increases with any increaserecipient even in the valueabsence of the underlying shares, RSUstock price appreciation. In 2021, we also granted PSU awards also provide incentives to our Named Executive Officers that are aligned with the intereststo enable them to earn shares of our stockholders. Incommon stock based on certain pre-established revenue targets in respect of our year ended December 31, 2021 as described below underin the headingsection titled “ CEO Performance Award for Ms. Brown,2021 Equity Awards” we issued Ms. Brown the CEO Performance Award and also began granting PSUs to our Named Executive Officers as described below under the heading “2021 PSU Awards.”well as continued service. To date, the compensation committee has not applied a rigid formula in determining the size and form of the equity awards to be granted to our Named Executive Officers as part of our annual focal review of equity awards.Officers. Instead, in making these decisions, the compensation committee has exercised its judgment as to the amount and form of the awards after consideringawards. The compensation committee considers the retention value of the equity compensation held by the Named Executive Officer, the cash compensation received by the Named Executive Officer, a competitive market analysis prepared by Compensia, the recommendations of our Chief Executive Officer (except with respect to her own equity awards), the amount of equity compensation held by the Named Executive Officer (including the current economic value of his or her unvested equity and the ability of these unvested holdings to satisfy our retention objectives), as well as the other factors described in “ Compensation-Setting Process—Setting Target Total Direct Compensation” above. Based upon these factors, the compensation committee has determinedexercised its judgment to determine the size of each award at levels it considered appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value. 2020 Long-Term Incentive for Ms. Brown
Since Ms. Brown had been granted an RSU award covering 870,322 shares of our common stock on December 12, 2019, in connection with her promotion to President and Chief Executive Officer effective January 1, 2020,
In February 2021, the compensation committee determined not to grant her an additional equity award in February 2020, other than the grant of a fully-vested RSU award covering 7,985 shares of our common stock under our 2019 Performance Bonus Plan.2020 Long-Term Incentive for Mr. Kinion
Mr. Kinion did not receive an equity award in February 2020, other than the grant of a fully-vested RSU award covering 5,548 shares of our common stock under our 2019 Performance Bonus Plan.
2020 Long-Term Incentive for Mr. Gilpin
In February 2020, the compensation committee granted aapproved long-term incentive compensation opportunityopportunities in the form of a time-based RSU award covering 107,758 shares ofequity awards for our common stockNamed Executive Officers in amounts that it considered to Mr. Gilpin.be consistent with our compensation philosophy and its desired market positioning. The compensation committee determined the number of shares of our common stock subject to the RSU awardawards and the target number of shares subject to the PSU awards granted to Mr. Gilpin after considering a competitive market analysis preparedour Named Executive Officers (viewed in the aggregate by Compensia,value) was determined by the recommendationscompensation committee based on its consideration of the factors described
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TABLE OF CONTENTS above. In 2021, the target number of PSUs comprised 50% of the total long-term incentive compensation opportunity of our Chief Executive Officer (excluding her CEO Performance Award, described below) and 20% of the total long-term incentive compensation opportunities of Messrs. McCombs and Gilpin. The equity awards granted to our Named Executive Officers in February 2021 were as follows: Hayden Brown | | | 41,000 | | | 41,000 | | | 82,001 | Jeff McCombs | | | 23,549 | | | 5,887 | | | 11,774 | Eric Gilpin | | | 8,410 | | | 2,102 | | | 4,205 |
RSU Awards. The RSU awards will vest in equal installments of 1/16th of the award on each quarterly anniversary of the vesting commencement date, February 18, 2021, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date, as described in the applicable restricted stock unit award agreement, such that the RSU award will vest in full on February 18, 2025. The RSU awards are subject to acceleration as described in “Potential Payments upon Termination or Change in Control” below. PSU Awards. The PSU awards have both a performance-based vesting requirement and a time-based vesting requirement. The number of PSUs that could become subject to each award, which we refer to as the Earned PSUs, were to be earned subject to the achievement of certain pre-established revenue targets in respect of our fiscal year ended December 31, 2021, which we refer to as the Performance Period. Following the Performance Period, all Earned PSUs were then subject to an additional time-based vesting requirement, such that the Earned PSUs would only be settled to the extent vested in accordance with the time-based vesting requirement described below. The various performance levels for our 2021 revenue and the number of PSUs earned at each performance level were as follows: Threshold | | | $429,640,000 and below | | | 0% | Target | | | $466,400,000 | | | 100% | Maximum | | | $503,160,000 and above | | | 200% |
Between revenues of $429,640,000 and $503,160,000, the number of Earned PSUs were to be determined on a straight line basis. For purposes of the PSU awards, “revenue” means our revenue for 2021 under the then-applicable FASB Accounting Standards Codification guidance as reported to our board of directors following the 2021 fiscal year, except as otherwise determined by the compensation committee. The computation of revenue was determined in the sole discretion of the company, as approved by the compensation committee. Under the time-based vesting requirement, 25% of the Earned PSUs vest on the one year anniversary of the vesting commencement date, February 18, 2021, and thereafter an additional 1/16th of the Earned PSUs vest on each quarterly anniversary thereafter, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date. In the aggregate, the Performance Period and the time-based vesting requirement require four years of service for the Earned PSUs to vest fully. On February 4, 2022, which we refer to as the Certification Date, the compensation committee determined and certified in writing that we had attained revenue for 2021 in the amount of equity compensation previously awarded$502.8 million, resulting in each Named Executive Officer earning the number of Earned PSUs set forth next to Mr. Gilpin (includingtheir name in the current economic valuefollowing table and with one-quarter of his unvested equity awardssuch Earned PSUs vesting and the ability of these unvested holdings to satisfy our retention objectives), and the other factors describedbeing settled in “Compensation-Setting Process—Setting Target Total Direct Compensation” above.The time-based RSU award granted to Mr. Gilpin in February 2020 vests over four years, with 6.25% of the number of shares of our common stock subjectset forth next to their name in the following table):
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TABLE OF CONTENTS Hayden Brown | | | 81,590 | | | 20,398 | Jeff McCombs | | | 11,715 | | | 2,927 | Eric Gilpin | | | 4,183 | | | 1,045 |
Each Named Executive Officer was required to be in continuous service with us on the Certification Date in order for the PSUs to become Earned PSUs. If their service terminated for any reason prior to the award vesting on each quarterly anniversary of February 18, 2020,Certification Date, all PSUs would have been forfeited. With respect to Ms. Brown’s PSUs, the vesting commencement date, subject to Mr. Gilpin’s remaining continuously employed by us through each applicable vesting date.2020 Long-Term Incentive for Mr. McCombs
In connection with his appointment as our Chief Financial Officeracceleration provisions set forth in July 2020, the compensation committee granted an RSU award covering 274,348 shares of our common stock to Mr. McCombs on August 4, 2020, his initial date of employment. The RSU award will vestMs. Brown’s change in control and settle as to 75% of the total number of shares subject to the award on the third anniversary of August 18, 2020,severance agreement, which we refer to as the Vesting Commencement Date, and an additional 6.25% of the total number of shares subjectCIC Agreement, do not apply to the award will vest on each quarterly anniversary thereafter such that the award will vest in full on the fourth anniversary of the Vesting Commencement Date, subject to Mr. McCombs remaining employed as our Chief Financial Officer on each such vesting date.
In addition,PSUs. However, in the event Mr. McCombs’sof a termination of Ms. Brown’s employment is terminatedeither by us without “cause” or a resignation of Ms. Brown for “good reason,” the time-based vesting requirement described above will accelerate in a manner consistent with the acceleration provisions set forth in the CIC Agreement (as defineddescribed in Mr. McCombs’s“Potential Payments upon Termination or Change in Control” below).
With respect to PSUs granted to Messrs. McCombs and Gilpin, the acceleration provisions set forth in their change in control and severance agreement) prior to August 18, 2021, and such termination takes place followingagreements do not apply. However, in the event of a termination of the employment of our Chief Executive Officer, the RSU award will be deemed vested with respect to 6.25% of the total number of shares for each quarterly anniversary of the Vesting Commencement Date that has passed as of the date of such termination of employment without “cause”. Further, in the event Mr. McCombs’s or Mr. Gilpin’s employment is terminatedeither by us without “cause” or he resignsa resignation by Mr. McCombs or Mr. Gilpin for “good reason” (as definedwithin 12 months following or within 3 months preceding a “change in Mr. McCombs’scontrol,” the time-based vesting requirement described above will accelerate in a manner consistent with the acceleration provisions set forth in their change in control and severance agreement) after August 18, 2021 and prior to August 18, 2023, the RSU award will be deemed vested with respect to 25% of the total number of shares subject to the award as of August 18, 2021, and an additional 6.25% of the total number of shares subject to the award for each quarterly anniversary of such date that has passed as of the date of such termination of employment without “cause” or resignation for “good reason” (in each case, as defined in Mr. McCombs’s change in control and severance agreement), as applicable. Notwithstanding the foregoing, Mr. McCombs will not be eligible for the benefitsagreements (as described in this paragraph unless he has executed a general release of all claims against us and our affiliates, in the form prescribed by us, and the release has become effective.Compensation Arrangements with Mr. McCombs. In connection with his appointment as our Chief Financial Officer effective August 4, 2020, we entered into an employment offer letter dated July 10, 2020, with Mr. McCombs, pursuant to which our initial compensation arrangements with Mr. McCombs were as follows:
● | an annual base salary of $400,000; | | | ● | eligibility to participate in our annual performance bonus plan with a target annual bonus opportunity equal to 60% of his annual base salary; and | | | ● | a long-term incentive opportunity as described above. |
In connection with his appointment as our Chief Financial Officer effective August 4, 2020, we also entered into a change in control and severance agreement dated August 4, 2020, with Mr. McCombs that provides for certain payments and benefits if his employment is either terminated without cause outside of a “change in control” (as defined in Mr. McCombs’s change in control and severance agreement) or if his employment is terminated without “cause” or by him for “good reason” (in each case, as defined in Mr. McCombs’s change in control and severance agreement) within three months preceding a change in control or within 12 months following a change in control, in each instance subject to certain restrictive covenants and in exchange for a customary release of claims. These payments and benefits and the triggering events providing for such payments and benefits are described in more detail in “Potential Payments Uponupon Termination or Change in Control” below.
Mr. McCombs’s offer letter was approved by our board of directors. In establishing his initial compensation arrangements, we took into consideration the requisite experience and skills that a qualified candidate would need to manage a growing business in a dynamic and ever-changing environment, the competitive market for similar positions at other comparable companies based on a review of compensation survey data, and the need to integrate him into the executive compensation structure that we had developed since our initial public offering, balancing both competitive and internal equity considerations. For a summary of the material terms and conditions of Mr. McCombs’s offer letter, see “Offer Letters” below.
CEObelow).
Chief Executive Officer Performance Award for Ms. Brown Our board of directors and the compensation committee determined that Ms. Brown decisively demonstrated outstanding and exceptional capabilities in her first year as President and Chief Executive Officer. Accordingly,Following significant discussion among its members and review of a competitive market analysis prepared by Compensia, the compensation committee granteddetermined that a supplemental performance-based option award, which could be earned only through the combination of significant stock price growth and long-term continued service, would be appropriate to further incentivize Ms. Brown an additional incentiveto continue delivering on our growth potential while further aligning Ms. Brown’s interests with those of our stockholders. Accordingly, in January 2021, the compensation committee approved the CEO Performance Award commensurate with the level of achievement and ambition she had demonstrated as President and Chief Executive Officer, while also promoting her retention in a highly competitive market for this level of leadership capability. TSR Outperformance Compared to Peers Following Ms. Brown’s Appointment as CEO (1)
| Source: Capital IQ; reflects TSR from January 1, 2020 to December 31, 2021. Peer group reflects 2021 Peer Group, which includes: APPF, APPN, BNFT, CARG, CARS, EB, EVER, FVRR, LPSN, MGNI, PS, QUOT, REAL, RDFN, SSTK, STMP, TTGT, TRUE, and YEXT. |
On January 18, 2021, which we refer to as the Grant Date, the compensation committee granted to Ms. Brown the CEO Performance Award, exercisable for up to 1,500,000 shares of our common stock at a per share exercise price of $38.80, subject to the achievement of certain pre-established per share stock price targets, which we refer to as the Performance Vesting Requirement, and a four-year service-based vesting requirement, which we refer to as the Service Vesting Requirement. For the CEO Performance Award to be exercisable for any shares of our common stock, both the Performance Vesting Requirement and the Service Vesting Requirement must be met with respect to such shares, and the majority of the award’s value will be earned only if the most rigorous of the performance goals are achieved. 56 2022 Proxy Statement |
TABLE OF CONTENTS After significant discussion among its members and review of data prepared by the compensation committee’s independent compensation consultant, the compensation committee determined that the
The CEO Performance Award will serveis structured to strengthenprotect stockholder interests and has a Performance Vesting Requirement that requires achievement of extremely rigorous stock price hurdles, which promotes the alignment of Ms. Brown’s interests with those of stockholders and underscores our board of directors’ confidence in both Ms. Brown and our company. Stock price is the sole performance metric for the award because the compensation committee believes the ambitious stock price targets will create significant value for our stockholders by creatingthrough the share price appreciation required for their achievement. At the time of the award, our shares were trading near all-time high prices—following significant share price appreciation in 2020 under Ms. Brown’s leadership—and the lowest performance threshold requires an increase in share price of approximately 55% relative to the exercise price of the CEO Performance Award, and the majority of the award’s value will be earned only if the most rigorous goals are achieved. The Service Vesting Requirement provides for vesting of the earned portion of the CEO Performance Award over a strongfour-year period, which increases the retention value of the award. Award Structure Promotes Outperformance and direct link between her long-term incentive compensation opportunities and our long-term performance.Retention 59 ✔
| Performance vesting requirement requiring achievement over 90 consecutive days |
✔
| Service vesting requirement supports retention and requires four years of service |
✔
| Change-in-control and termination provisions ensure shares will only vest if they are earned based on disclosed performance criteria |
Performance Vesting Requirement Requirement.The shares of our common stock subject to the CEO Performance Award are eligible to vest with respect to the Performance Vesting Requirement to the extent the volume-weighted average per share price of our common stock measured over any consecutive 90-day period, with the last 90-day measurement period ending on the 90th day following the fifth anniversary of the Grant Date, which we refer to as the Final Measurement Date, equals or exceeds (and not to be determined on a straight line basis) an applicable per share stock price target as set forth in the following table: | Per Share Stock Price | Number of Shares Vested | | $60.00 | 100,000 | | $70.00 | 200,000 | | $80.00 | 300,000 | | $90.00 | 400,000 | | $100.00 | 500,000 |
$60.00 | | | 55% | | | 100,000 | $70.00 | | | 80% | | | 200,000 | $80.00 | | | 106% | | | 300,000 | $90.00 | | | 132% | | | 400,000 | $100.00 | | | 158% | | | 500,000 | Achievement of stock price thresholds is measured based on a 90-day
Volume-based weighted average price for the shares to vest at each respective level |
The performance levels and targets associated with the awardCEO Performance Award are very rigorous and require exceptional stockholder value creation to vest: Stock Price Hurdles and Implied Stock Price Appreciation 
Except as described below, the CEO Performance Award will expire with respect to any shares of common stock that have not satisfied the Performance Vesting Requirement on or before the earlier of: ● | the Final Measurement Date; | | | ● | a “change in control” (as defined in Ms. Brown’s change in control and severance agreement, which we refer to as the CIC Agreement); and | | | ● | the date on which Ms. Brown is no longer serving as our Chief Executive Officer; provided that in the event Ms. Brown no longer serves as our Chief Executive Officer, the CEO Performance Award will remain outstanding and eligible to vest as necessary to give effect to the terms of the CEO Performance Award. |
60 2022 Proxy Statement 57 |
TABLE OF CONTENTS the Final Measurement Date; a “change in control” (as defined in the CIC Agreement); and the date on which Ms. Brown is no longer serving as our Chief Executive Officer, provided that in the event Ms. Brown no longer serves as our Chief Executive Officer, the CEO Performance Award will remain outstanding and eligible to vest as necessary to give effect to the terms of the CEO Performance Award. In the event of a change in control (i) during which Ms. Brown is serving as our Chief Executive Officer, or (ii) within three months following a termination of Ms. Brown’s employment as Chief Executive Officer by us without “cause” or by Ms. Brown for “good reason” (in each case, as defined in the CIC Agreement), then the price per share applicable to the change in control will be applied to determine whether any per share stock price target as set forth in the above table has been achieved, and the number of shares listed directly across from such stock price will vest with respect to the Performance Vesting Requirement. In the event of a termination of Ms. Brown’s employment as our Chief Executive Officer either (x) by us without “cause” or a resignation of Ms. Brown for “good reason”,reason,” or (y) due to Ms. Brown’s death or disability, and such termination takes place on a date on which the volume-weighted average per share price of our common stock for a minimum of 45 consecutive days immediately preceding such termination equals or exceeds an applicable per share stock price target as set forth in the above table, then the number of shares listed directly across from such stock price will vest with respect to the Performance Vesting Requirement. In the event that Ms. Brown’s servicesservice with us areis terminated in a manner that could not give rise to accelerated vesting in accordance with the terms set forth in this description, any portion of the CEO Performance Award that is then-unvested as of the date of such termination of service will be forfeited.
Service Vesting RequirementRequirement.The CEO Performance Award is also subject to a four-year time-based vesting requirement.the Service Vesting Requirement. The shares of our common stock subject to the CEO Performance Award are eligible to vest with respect to the Service Vesting Requirement with respect to 6.25%1/16th of each tranche of shares subject to the CEO Performance Award on each quarterly anniversary of the Grant Date (with each number of shares associated with a specific per share stock price target noted in the above table constituting a separate tranche), subject to Ms. Brown’s continuous service to us as our Chief Executive Officer, Executive Chairperson, or any C-level officer position, each of which we refer to as a Designated Position, on each applicable vesting date. With respect to the Service Vesting Requirement, but not the Performance Vesting Requirement, the vesting of the shares of our common stock subject to the CEO Performance Award will accelerate as follows: (a) as set forth in the CIC Agreement (as described in “Post-Employment CompensationPotential Payments upon Termination or Change in Control” below), and (b) in the event that Ms. Brown is terminated or resigns from a Designated Position due to her death or disability, the CEO Performance Award will accelerate with respect to that number of shares that would have vested in accordance with the Service Vesting Requirement over the 12 months immediately following such termination or resignation, only to the extent that such number of shares have satisfied the Performance Vesting Requirement as of immediately prior to such termination or resignation. Any vesting (including any vesting acceleration) with respect to the Service Vesting Requirement willwould apply proportionately to each tranche of shares of our common stock. As of December 31, 2021, none of the Performance Vesting Requirements had been met. Accordingly, none of the shares of our common stock subject to the CEO Performance Award had vested with respect to the Performance Vesting Requirements. The equity awards granted to our incumbent Named Executive Officers during 20202021 are set forth in the “20202021 Summary Compensation Table” and the “20202021 Grants of Plan-Based Awards Table” below. The stock option granted Executive Compensation Program Changes for 2022 To incentivize long-term value creation and strong financial performance, to Ms. Brown will appearfurther align the interests of our Named Executive Officers with those of our stockholders, and to promote retention of our Named Executive Officers, in the Summary Compensation Table included in our proxy statement for ourFebruary 2022, annual meeting of stockholders.2021 PSU Awards
As described above, the compensation committee approved in February 2021increased the following grantspercentage allocation of PSUs to Ms. Brown and Messrs. McCombs and Gilpin:
| Named Executive Officer | Target Number of PSUs | Maximum Number of PSUs | | Hayden Brown | 41,000 | 82,001 | | Jeff McCombs | 5,887 | 11,774 | | Eric Gilpin | 2,102 | 4,205 |
In 2021, thethat comprise each of our Named Executive Officers’ long-term incentive compensation opportunity. The target number of PSUs for 2022 will comprise 50% of the total long-term incentive opportunity issued to Ms. Brown (excluding her CEO Performance Award) and 20%40% of the total long-term incentive opportunity issued to Messrs. McCombs and Gilpin.
TheGilpin, increased from 20% in 2021, and the target number of PSUs have both a performance-based vesting requirement and a time-based vesting requirement. The PSUs subject to each awardfor 2022 will be earned based on achievementcomprise of revenue targets in respect of our fiscal year ending December 31, 2021. All Earned PSUs will be subject to a time-based vesting requirement, such that the Earned PSUs will only be settled to the extent vested in accordance with the time-based vesting requirement. Under the time-based vesting requirement, one-fourth60% of the Earned PSUs vest approximately one year following the date of grant and thereafter the remaining Earned PSUs will vest on a quarterly basis over the following three-year period. In the aggregate, the Performance Period and the time-based vesting requirement require four years of service for the Earned PSUstotal long-term incentive opportunity issued to vest fully.
The actual number of Earned PSUs will be determined by our performance against certain revenue targets in respect of our fiscal year ending December 31, 2021. We do not disclose the total revenue targets until after the end of the performance period due to competitive concerns; those targets will be disclosed after the 2021 performance period in our proxy statement for our 2022 annual meeting of stockholders.
As soon as reasonably practicable following the completion of the Performance Period, the compensation committee will determine and certify the revenue attained during the Performance Period and the number of Earned PSUs, the date of which we refer to as the Certification Date. Ms. Brown, and Messrs. McCombs and Gilpin must be employed by us on the Certification Dateincreased from 50% in order for the PSUs to become Earned PSUs. If their service terminates for any reason prior to the Certification Date, all PSUs will be forfeited.
One-fourth of the Earned PSUs will then vest approximately one year following the date of grant and 6.25% of the Earned PSUs will vest on each quarterly anniversary thereafter, subject to continuous employment on each vesting date.
In the event of a corporate transaction (as defined in the 2018 Plan) during the2021 (excluding her CEO Performance Period, the number of Earned PSUs will be determined and certified immediately prior to the closing of such corporate transaction by treating our most recent revenue forecast (as delivered and approved by our board of directors) as of the date of the corporate transaction as our revenue for the Performance Period. Furthermore, in the event that a corporate transaction occurs following the Performance Period but prior to the Certification Date, the revenue forecast will be determined and certified immediately prior to the closing of such corporate transaction based on then-actual projections of revenue, as determined by the compensation committee. In the event that (i) Ms. Brown is subject to a qualifying termination (as defined in her CIC Agreement) or (ii) either of Ms. Brown and Messrs. McCombs or Gilpin are subject to a CIC qualifying termination (as defined in their change in control and severance agreements), in each case, the time-vesting requirement of the Earned PSUs will accelerate in a manner consistent with the acceleration provisions (and subject to the same conditions) as provided in their respective change in control and severance agreement.Award).
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TABLE OF CONTENTS Other Compensation Elements Health and Welfare Benefits Our Named Executive Officers are eligible to participate in the same employee benefit plans, and generally on the same terms and conditions, as all other U.S. full-time employees. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, mental health benefits, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, commuter benefits, and reimbursement for mobile phone coverage. We also sponsor a Section 401(k) retirement plan, which we refer to as the Section 401(k) Plan, that provides eligible employees, including our Named Executive Officers, with an opportunity to save for retirement on a tax-advantaged basis. U.S. employees who have attained at least 18 years of age are generally eligible to participate in the Section 401(k) Plan as of the first day of the calendar month. Participants may make pre-tax contributions to the Section 401(k) Plan from their eligible earnings up to the statutorily prescribed annual limit on pre-tax contributions under the Internal Revenue Code, which we refer to as the Code. Currently, we match 50% of a participant’s contributions to the Section 401(k) Plan in cash, subject to an annual maximum limit of $5,000 per employee. An employee’s interest in our match of a participant’s contributions is 100% vested after one year of service. An employee’s interest in his or her pre-tax deferrals is 100% vested when contributed. We design and adjust our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. Perquisites and Other Personal Benefits Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our Named Executive Officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2020,2021, none of our Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, equal to $10,000 or more for any individual. In the future, we may provide perquisites or other personal benefits in limited circumstances, subject to approval and periodic review by the compensation committee.
Role of Management
In discharging its responsibilities, the compensation committee works with members of our management, including our Chief Executive Officer. Our management assists the compensation committee by providing information on corporate and individual performance and management’s perspective on compensation matters. The compensation committee solicits and reviews our Chief Executive Officer’s proposals with respect to program structures, as well as our Chief Executive Officer’s recommendations for adjustments to annual cash compensation, long-term incentive compensation opportunities, and other compensation-related matters for our Named Executive Officers (except with respect to her own compensation) based on our Chief Executive Officer’s evaluation of their performance for the prior year.
At the beginning of each year, our Chief Executive Officer reviews the performance of our other Named Executive Officers based on their overall performance and performance against business objectives established for him or her for the prior year, and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation as described above. The annual business objectives for each Named Executive Officer are developed through mutual discussion and agreement between our Chief Executive Officer and the Named Executive Officers and are also reviewed with our board of directors.
The compensation committee reviews and discusses our Chief Executive Officer’s recommendations and considers them as one factor in determining and approving our Named Executive Officers’ compensation. Our Chief Executive Officer also attends meetings of the board of directors and the compensation committee at which executive compensation matters are addressed, except for discussions involving her own compensation.
Role of Compensation Consultant
The compensation committee engages an external compensation consultant to assist it by providing information, analysis, market compensation data, and other advice for our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the compensation committee and its chair, and serves at the discretion of the compensation committee, which reviews the engagement annually.
In 2020, the compensation committee again engaged Compensia to serve as its compensation consultant to advise on executive compensation matters.
During 2020, Compensia attended the meetings of the compensation committee (both with and without management present) as requested and provided various services, which included the following:
● | consultation with the compensation committee chair and other members between compensation committee meetings; | | | ● | review, research, and updating of our compensation peer group; | | | ● | an analysis of competitive market data for our executive positions, including our Named Executive Officer positions, and an evaluation of how the compensation we pay our executives compares both to our performance and to how the companies in our compensation peer group and/or selected broad-based compensation surveys compensate their executives; | | | ● | review and an analysis of the base salary levels, annual bonus opportunities, and long-term incentive compensation opportunities of our executives, including our Named Executive Officers; | | | ● | an analysis of competitive market data based on compensation arrangements at various technology companies and the broader technology sector for the Chief Product & Experience Officer position; | | | ● | an analysis of competitive market data based on compensation peer group data and the broader technology sector for the Chief Financial Officer position; | | | ● | an analysis of a competitive market strategy and the development of equity award guidelines for our broad-based employee population; | | | ● | review of our executive compensation philosophy and the review and analysis of broad-based compensation guiding principles; | | | ● | an analysis of competitive market data for the non-employee members of our board of directors and evaluation of how the compensation we pay the non-employee members of our board of directors compares to how the companies in our compensation peer group compensate the non-employee members of their boards of directors; | | | ● | review of market equity compensation practices, including burn rate and overhang; | | | ● | advice on the Compensation Discussion and Analysis section of our proxy statement for our 2020 Annual Meeting; | | | ● | an analysis of various performance-based equity award designs for our executives; | | | ● | advice on executive compensation trends within our industry, and an update on corporate governance and regulatory issues and developments; and | | | ● | support on other ad hoc matters throughout the year. |
The terms of Compensia’s engagement include reporting directly to the compensation committee chair. Compensia also coordinated with our management for data collection and job matching for our executives. In 2020, Compensia did not provide any other services to us.
The compensation committee has evaluated its relationship with Compensia to ensure that it believes that such firm is independent from management. This review process included a review of the services that Compensia provided, the quality of those services, and the fees associated with the services provided during 2020. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the Nasdaq Marketplace Rules, and such other factors as were deemed relevant under the circumstances, the compensation committee evaluated Compensia’s independence and determined that no conflict of interest has arisen as a result of the work performed by Compensia.
Competitive Positioning
The compensation committee believes that peer group comparisons are useful guides to measure the competitiveness of our executive compensation program and related policies and practices. To assess our executive compensation against the competitive market, the compensation committee reviews and considers the compensation levels and practices of a select group of peer companies.
This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, and industry focus. The competitive data drawn from this compensation peer group is only one of several factors that the compensation committee considers, however, in making its compensation decisions for our Named Executive Officers.
In February 2020, the compensation committee used the below compensation peer group to analyze the compensation of our then-Named Executive Officers and make its initial compensation decisions for the year. This compensation peer group, which was developed in July 2019 with the assistance of Compensia after conducting a thorough review of our then-compensation peer group, was comprised of publicly-traded technology companies against which we compete for executive talent. In evaluating the companies comprising the compensation peer group, Compensia specifically considered and weighed the following primary criteria, among other factors:
● | publicly-traded companies headquartered in the United States and traded on a major U.S. stock exchange; | | | ● | companies in the broad technology industry with a focus on online marketplaces and software; | | | ● | similar revenue to ours – within a range of ~0.5x to ~2.0x our revenue (based on the then-last four fiscal quarters) of approximately $263 million (approximately $132 million to approximately $526 million); and | | | ● | similar market capitalization to ours – within a range of ~0.2x to ~5.0x our then market capitalization of approximately $1.76 billion (approximately $352 million to approximately $8.8 billion). | | |
As a result, the compensation committee approved an updated compensation peer group consisting of the following companies:
AppFolio | Etsy | Shutterstock | Appian | LivePerson | Stamps.com | Benefitfocus | Pluralsight | TechTarget | Care.com | Quotient Technology | TrueCar | CarGurus | Redfin | Yext | Cars.com | | |
| | Upwork | Peer Group Median | | Total Revenue ($ millions) (1) | $263 | $311 | | Market Capitalization ($ millions) (2) | $1,759 | $1,511 |
(1) | Total revenue measured as of June 2019 and reflects the most recently reported four quarters. | | | (2) | Market capitalization measured based on the average of the 30 trading-day period ended June 12, 2019. |
The compensation committee used data drawn from the companies in our compensation peer group, as well as data from a customized data search conducted from the Radford Global Technology Survey database, to evaluate the competitive market when determining the total direct compensation packages for our Named Executive Officers, including annual base salary, target annual bonus opportunities, and long-term incentive compensation opportunities.
The compensation committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.
Employment Arrangements We entered into written employment offer letters with each of our Named Executive Officers when they joined us, which employment offer letters were amended and restated in May 2018, in the case of Ms. Brown and Messrs. Kinion andMr. Gilpin. Subsequently, Ms. Brown executed an addendum to her amended and restated employment offer letter to reflect her promotion to Chief Marketing &and Product Officer effective April 1, 2019, and thereafter entered into an amended and restated offer letter dated December 8, 2019, to reflect the terms of her employment as our President and Chief Executive Officer effective January 1, 2020. Mr. McCombs entered into a written employment offer letter in July 2020 prior to joining us in August 2020. Collectively, these amended and restated offer letters and Mr. McCombs’s employment offer letter are referred to in this section as the Offer Letters. We believe that these arrangements were necessary to secure the continued service of these individuals in a highly competitive job market. Each of these Offer Letters provides for “at will” employment (meaning that either we or the Named Executive Officer may terminate the employment relationship at any time with or without cause and with or without notice) and generally sets forth the Named Executive Officer’s then-current annual base salary, eligibility for participation in our annual performance bonus plan, and eligibility to participate in our employee benefit plans, including our health insurance plan and disability insurance plan, as established from time to time. In addition, by executing an Offer Letter, each of Ms. Brown and Messrs. Kinion andMr. Gilpin reaffirmed the terms and conditions of the employee invention assignment and confidentiality agreement and the employee dispute resolution agreement that heshe or shehe had previously entered into with us. Mr. McCombs also entered into an employee invention assignment and confidentiality agreement and an employee dispute resolution agreement with us when he accepted his employment offer letter. These Offer Letters also provide that each Named Executive Officer will be eligible to enter into a change in control and severance agreement based on his or her position within our company. These agreements specify the severance payments and benefits that he or she will be eligible to receive in connection with certain terminations of employment from our company. These post-employment compensation arrangements are discussed in “ Post-Employment Compensation” below. For detailed descriptions of the employment arrangements with our Named Executive Officers, see “ Potential Payments upon Termination or Change in Control” below. 66 2022 Proxy Statement 59 |
Post-Employment Compensation We have entered into change in control and severance agreements with each of our Named Executive Officers, which provide for certain protections in the event of certain involuntary terminations of employment, including a termination of employment in connection with a change in control, of us, in exchange for a general release of claims and compliance with a non-disparagement covenant for a period of 24 months following separation from us. Each change in control and severance agreement is in effect for three years, with automatic renewals for new three-year periods unless notice is given by us to the Named Executive Officer three months prior to the date on which the agreement would otherwise renew. We believe these change in control and severance agreements provide reasonable compensation in the form of severance pay and certain limited benefits to the Named Executive Officer if he or she leaves our employ under certain circumstances to facilitate his or her transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing Named Executive Officer to sign a separation and release agreement in a form prescribed by us providing for a general release of all claims as a condition to receiving post-employment compensation payments or benefits. We believe that these agreements help maintain our Named Executive Officers’ continued focus on their assigned duties to maximize stockholder value if there is a potential change in control transaction and mitigate the risk of subsequent disputes or litigation. The terms and conditions of these agreements were approved by our board of directors after an analysis of competitive market data in consultation with Compensia. Under the change in control and severance agreements, all payments and benefits in the event of a change in control of us are payable only if there is a connected loss of employment by a Named Executive Officer (a so-called “double-trigger” arrangement). We use this double-trigger arrangement to protect against the loss of retention value following a change in control of us and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction. In the event of a change in control, of us, to the extent Section 280G or 4999 of the Code is applicable to a Named Executive Officer, such individual is entitled to receive either a: ● | payment of the full amounts specified in his or her agreement to which he or she is entitled; or | | | ● | payment of such amount that is $1.00 less than the amount that would otherwise trigger the excise tax imposed by Section 4999, depending on which results in the Named Executive Officer receiving a higher amount after taking into account all federal, state, local, and foreign income, employment, and other taxes and the excise tax imposed by Section 4999. |
payment of the full amounts specified in his or her agreement to which he or she is entitled; or payment of such amount that is $1.00 less than the amount that would otherwise trigger the excise tax imposed by Section 4999, depending on which results in the Named Executive Officer receiving a higher amount after taking into account all federal, state, local, and foreign income, employment, and other taxes and the excise tax imposed by Section 4999. We are not obligated to provide excise tax payments, which we refer to as gross-ups, to any of our executive officers, including our Named Executive Officers. In connection with her appointment as our President and Chief Executive Officer, in December 2019 Ms. Brown’s CIC Agreement was amended and restated to reflect the terms of her employment as our President and Chief Executive Officer effective January 1, 2020. The CIC Agreement provides for the following payments and benefits if Ms. Brown’s employment is terminated by us without “cause” or by Ms. Brown for “good reason” outside of a “change in control” (as such terms are defined in the CIC Agreement) of us in exchange for a customary release of claims:
| | ● | a lump sum severance payment equal to 12 months of base salary; | | | ● | the payment of premiums for continued medical benefits for up to 12 months; and | | | ● | 50% acceleration of any of her then-outstanding and unvested equity awards (other than equity awards that vest, in whole or in part, upon the satisfaction of performance criteria). |
If her employment is terminated by us without “cause” or by Ms. Brown for “good reason” within the three months preceding a change in control of us (but after a legally binding and definitive agreement for the potential change in control of us has been executed) or within the 12 months following a change in control of us, then Ms. Brown is eligible to receive the following payments and benefits in exchange for a customary release of claims:
● | a lump sum severance payment equal to 18 months of base salary; | | | ● | the payment of premiums for continued medical benefits for up to 18 months; | | | ● | a lump sum payment equal to Ms. Brown’s then-current target bonus opportunity on a pro-rated basis; and | | | ● | 100% acceleration of any of her then-outstanding and unvested equity awards (other than equity awards that vest, in whole or in part, upon the satisfaction of performance criteria). |
This agreement will be in effect for three years, with automatic renewals for new three-year periods unless we give notice to Ms. Brown at least three months prior to the expiration of the agreement.
We believe that having in place reasonable and competitive post-employment compensation arrangements, including in the event of a change in control, are essential to attracting and retaining highly-qualifiedhighly qualified executive officers. The compensation committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining our Named Executive Officers’ compensation. We do believe, however, that these arrangements are necessary to offer competitive compensation packages. Transition Agreement with Mr. Kinion
In connection with his resignation as our Chief Financial Officer effective August 4, 2020, we entered into a transition agreement with Mr. Kinion setting forth the terms and conditions of his separation and transition from our company. In consideration for his execution of a general release and waiver of claims and covenant not to sue in favor of us, we agreed to provide Mr. Kinion with the following payments and benefits:
● | a lump sum cash payment equal to six months’ base salary; | | | ● | reimbursement for any insurance premium payments paid by him to receive coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, through no later than April 1, 2021; and | | | ● | ownership of his company-issued laptop. |
In addition, the transition agreement provided that Mr. Kinion would remain employed as an advisor to our Chief Executive Officer through October 1, 2020. In consideration for the provision of transition and advisory services until October 1, 2020, which we refer to as the Separation Date, Mr. Kinion continued to receive his monthly base salary as in effect on August 4, 2020, his outstanding stock options continued to vest, and he was eligible to participate in our employee benefit plans (provided that he was no longer eligible to receive an annual bonus or any other incentive compensation, including under our 2020 Performance Bonus Plan).
For detailed descriptions of the post-employment compensation arrangements with all of our Named Executive Officers, as well as an estimate of the potential payments and benefits payable thereunder, see “Potential Payments upon Termination or Change in Control” below. Confidentiality, Non-Competition, and Non-Solicitation Agreements Our Named Executive Officers have each entered into agreements containing confidentiality, non-competition, and non-solicitation covenants. Under these agreements, our Named Executive Officers have agreed to refrain from (i) disclosing our proprietary information in perpetuity, (ii) competing with us or soliciting our clients or customers during the period of their employment, and (iii) soliciting our employees or consultants for a period of 12 months following the termination of their employment. 60 2022 Proxy Statement |
TABLE OF CONTENTS Other Compensation Policies
Stock Ownership Guidelines Our Stock Ownership Guidelines are designed to encourage our Chief Executive Officer and other executive officers and the members of our board of directors to achieve and maintain a meaningful ownership stake in our company that aligns their interests with those of our stockholders and promotes a long-term perspective in managing our company. In April 2022, we amended our Stock Ownership Guidelines to remove vested stock options from counting toward satisfaction of such guidelines. Our Chief Executive Officer and other executive officers and the members of our board of directors are expected to accumulate shares of our common stock towards target ownership levels that are based on a multiple of their respective base salary or annual retainer, as the case may be. If any of our executive officers or the members of our board of directors have not satisfied these ownership levels, the Stock Ownership Guidelines require that they retain ownership of shares or shares subject to outstanding stock options according to the retention ratio described below. Currently, the market value of the qualifying shares that each executive officersofficer or membersmember of our board of directors is required to own is as follows: Chief Executive Officer | | | 5x annual base salary | Other Executive Officers | | | 1x annual base salary | Non-Employee Directors | | | 3x annual general cash retainer for service as a member of our board of directorsdirectors* |
*
| Excludes any additional cash retainer paid as a result of service as our chairperson, lead independent director, committee chair, or committee member |
The minimum level of ownership is expected to be achieved within five years of the date the applicable individual becomes covered by the Stock Ownership Guidelines, and each such individual is expected to continuously hold a sufficient equitynumber of shares of our common stock to satisfy the ownership level thereafter for the duration the individual is covered by the Stock Ownership Guidelines. Compliance is evaluated by the compensation committee annually, as of fiscal year-end each year. As of December 31, 2020,2021, each of our executive officers, including our Named Executive Officers, and members of our board of directors was either in compliance with the applicable ownership levels required by the Stock Ownership Guidelines or had not been covered by the Stock Ownership Guidelines for five years. If, following the compliance deadline, an individual covered by the Stock Ownership Guidelines has not satisfied the applicable ownership level called for by the Stock Ownership Guidelines, then he or she must retain ownership of shares based on a retention ratio which is equal to 50% of the net“net profit sharesshares” as follows: each time he or she exercises a stock option, vests in a restricted stock award, or has an RSU award settled for shares of our common stock, he or she is expected to retain 50% of the shares remaining after payment of the option exercise price and taxes owed upon exercise, 50% of the newly-vested shares of restricted stock after the payment of applicable taxes, and 50% of the shares received on settlement of the RSU award after the payment of applicable taxes, in each case until the ownership level called for by the Stock Ownership Guidelines is met. Compensation Recoupment and Forfeiture Policy, or Clawback Policy
In April 2021, the compensation committeeour board of directors approved a compensation recoupment and forfeiture policy, or clawback policy,which we refer to as our Clawback Policy, covering all employees who are officers for purposes of Section 16 of the Exchange Act, including current and former Section 16 executive officers, each of which we refer to as a covered officer,Covered Officer, and which applies to their incentive-based cash compensation and performance-based equity awards. If incentive-based cash compensation or performance-based equity awards are granted or received by a covered officerCovered Officer that are predicated upon us achieving certain financial results, and if the quarterly or annual financial statements (whether audited or unaudited) are adjusted or restated to correct one or more errors that have a material impact on our financial statements and our board of directors determines that a covered officerCovered Officer engaged in fraud or intentional misconduct that materially contributed to the need for such adjustment or restatement, then we may recoup or require forfeiture of any such amounts or any portion of such amounts that are in excess of any compensation that would have been earned by such covered officerCovered Officer based upon the adjusted or restated financial results in the event of any adjustment or restatement of our financial statements during the three-year period preceding the date on which we determined, or if later first disclosed, that we are or will be preparing an adjustment or restatement. 2022 Proxy Statement 61 |
TABLE OF CONTENTS In determining whether to require recoupment or forfeiture and, if so, the amount of such recoupment or forfeiture, the compensation committee or board of directors shall take into account such factors as it deems appropriate, including, without limitation, the requirements of applicable law, and stock exchange listing requirements; the extent to which the current or former executive officer participated or otherwise bore responsibility for the facts and circumstances giving rise to the adjustment or restatement and such other factors as it may deem appropriate under the circumstances. Any recoupment or forfeiture of such amounts will be publicly disclosed to the extent our board of directors or the compensation committee determines such disclosure is appropriate or otherwise as required by applicable law.
Hedging, Derivative Securities Transactions, Short Selling, and Pledging Under our Insider Trading Policy, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from engaging in hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts, and may not contribute our securities to exchange funds that could be interpreted as having the effect of hedging in our securities. Further, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from engaging in transactions involving options or other derivative securities on our securities, such as puts and calls, whether on an exchange or in any other market and from engaging in short sales of our securities, including short sales “against the box.” Also, under our Insider Trading Policy, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from using or pledging our securities as collateral in a margin account or as collateral for a loan unless the pledge has been approved by the designated compliance administrator pursuant to the Insider Trading Policy, which approval is limited to situations where the subject individual has demonstrated the financial capacity to repay the loan without resorting to the pledged securities).securities. Exchange Act Rule 10b5-1 Plans Certain of our executive officers and non-employee directors have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the executive officer or non-employee director when entering into the plan, without further direction from them. The executive officer or non-employee director may amend or terminate the plan in specified circumstances. Tax and Accounting Considerations The compensation committee takes the applicable tax and accounting requirements into consideration in designing and overseeing our executive compensation program.
Deductibility of Executive Compensation Section 162(m) of the Code disallows public companies a tax deduction for federal income tax purposes for remuneration in excess of $1 million paid to certain current and former executive officers who are “covered employees.” The Tax Cuts and Jobs Act of 2017, which we refer to as the TCJA, repealed exceptions to the deductibility limit that were previously available for “performance-based compensation,” including equity awards, effective for taxable years after December 31, 2017, subject to certain grandfathering rules. Prior to the enactment of the TCJA, Section 162(m) included special transition relief rules pursuant to which remuneration paid according to a compensation plan or agreement that existed prior to a company’s initial public offering and had been publicly disclosed was excluded from the $1 million annual deduction limit. This transition relief applied until the earliest of: (i) the expiration of the plan or agreement; (ii) a material modification of the plan or agreement; (iii) the issuance of all employer stock and other compensation that had been allocated under the plan; or (iv) the first meeting of stockholders at which directors are elected that is after the end of the third calendar year following the calendar year in which our initial public offering occurred. While ourthe compensation committee considers the deductibility of awards as one factor in determining executive compensation, our compensation committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) beyond the control of the compensation committee, no assurances can be given that any compensation paid by us will qualify for the transition relief or be deductible under Section 162(m) even if so intended. 62 2022 Proxy Statement |
TABLE OF CONTENTS Accounting for Stock-Based Compensation The compensation committee considers accounting implications when designing compensation plans and arrangements for our executive officers and other employees. Chief among these is ASC 718, the standard which governs the accounting treatment of certain stock-based compensation. Among other things, ASC 718 requires us to record a compensation expense in our income statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.
Compensation Risk Considerations
The compensation committee, with the assistance of Compensia, periodically reviews our various compensation programs and related policies and practices and believes that the mix and design of the elements of such programs do not encourage our employees, including our executive officers, to take, or reward our employees for taking, inappropriate or excessive risks and accordingly are not reasonably likely to have a material adverse effect on us. In particular, in conducting our review, we consider compensation program attributes that help to mitigate risk, including: ● | the mix of cash and equity compensation; | | | ● | the balance of short-term and long-term performance focus; | | | ● | the oversight of an independent compensation committee; | | | ● | our Insider Trading Policy, which prohibits the hedging of the economic interest in our securities; and | | | ● | our annual bonus plans are subject to the achievement of financial performance metrics and offer upside leverage that is within reasonable market norms and provide for uncapped payouts. | | |
the mix of cash and equity compensation; the balance of short-term and long-term performance focus; the oversight of an independent compensation committee; our Insider Trading Policy, which prohibits the hedging of the economic interest in our securities; and our annual bonus plans are subject to the achievement of financial performance metrics and offer upside leverage that is within reasonable market norms and provide for uncapped payouts. 71 2022 Proxy Statement 63 |
REPORTTABLE OF THE COMPENSATION COMMITTEECONTENTS Report of the Compensation Committee This report of the compensation committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statementProxy Statement into any filing under the Securities Act of 1933, as amended, which we refer to as the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement.Proxy Statement. Submitted by the Compensation Committee
Gregory C. Gretsch, ChairElizabeth Nelson
Anilu Vazquez-Ubarri
72 64 2022 Proxy Statement |
2020TABLE OF CONTENTS 2021 Summary Compensation Table The following table provides information concerning compensation awarded to, earned by, or paid to each of our Named Executive Officers for all services rendered in all capacities during 2018, 2019, 2020, and 2020:Name and Principal
Positions | Year | Salary ($) | Bonus ($) | Stock
Awards ($)(1) | Non-Equity
Incentive Plan
Compensation ($)(2) | All Other
Compensation ($) | Total ($) | Hayden Brown President and Chief Executive Officer | 2020 | 480,000 | — | — | 365,760 | 2,652(3) | 848,412 | | 2019 | 437,250 | — | 11,089,217(4) | — | 4,425(5) | 11,530,892 | | 2018 | 365,466(6) | — | — | 105,134 | 7,400(7) | 478,000 | Jeff McCombs Chief Financial Officer(8) | 2020 | 165,000 | 100,000(9) | 4,803,833(10) | 125,730 | — | 5,194,563 | | | | | | | | | Brian Kinion Former Chief Financial Officer(11) | 2020 | 274,379 | — | — | — | 217,829(12) | 492,208 | | 2019 | 364,000 | — | 48,04813) | — | 14,299(14) | 426,347 | | 2018 | 345,000 | — | — | 142,140 | 5,000(15) | 492,140 | Eric Gilpin Senior Vice President, Sales(16) | 2020 | 335,000 | — | 990,296 | 306,202 | 7,489(17) | 1,638,987 | | | | | | | | |
Hayden Brown
President and Chief Executive Officer | | | 2021 | | | 500,000 | | | — | | | 4,626,440 (3) | | | 28,780,212(4) | | | 995,000 | | | 7,652(5) | | | 34,909,304 | | | 2020 | | | 480,000 | | | — | | | — | | | — | | | 365,760 | | | 2,652(6) | | | 848,412 | | | 2019 | | | 437,250 | | | — | | | 11,089,217(7) | | | — | | | — | | | 4,425(8) | | | 11,530,892 | Jeff McCombs
Chief Financial Officer | | | 2021 | | | 415,000 | | | — | | | 1,660,779(9) | | | — | | | 660,680 | | | 9,586(10) | | | 2,746,045 | | | 2020 | | | 165,000 | | | 100,000(11) | | | 4,803,833(12) | | | — | | | 125,730 | | | — | | | 5,194,563 | Eric Gilpin
Chief Sales Officer
| | | 2021 | | | 365,000 | | | — | | | 593,087(13) | | | — | | | 520,739 | | | 7,775(14) | | | 1,486,601 | | | 2020 | | | 335,000 | | | — | | | 990,296 | | | — | | | 306,202 | | | 7,489(15) | | | 1,638,987 |
(1)
| The amounts reported represent the grant date fair value of the RSUs granted to our Named Executive Officers during 2018, 2019, and 2020, as applicable, as computedcalculated in accordance with ASC 718. See Note 119 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, for a discussion of the relevant assumptions used in calculating these amounts. For awards with performance-based vesting conditions, including PSUs and the CEO Performance Award, the amount reported is based on the probable outcome of the applicable performance condition at the time of grant (i.e., based on 100% of performance). Each of Ms. Brown and Messrs. McCombs and Gilpin was granted RSUs and PSUs in 2021 as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards.” In addition, Ms. Brown was granted the CEO Performance Award in 2021, see the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards—Chief Executive Officer Performance Award.” | | |
(2)
| The amounts reported represent incentive bonuses actually earned pursuant to our 2018, 2019, 2020, and 20202021 performance bonus plans, except for Mr. Gilpin, whose amount reported represents incentive commissions actually earned pursuant to his 2020 Sales Compensation Plan. Payments for 20202021 are described in greater detail in the section titled “Compensation“Compensation Discussion and Analysis—Compensation Elements.Elements.” | | |
(3)
| The amount reported represents (i) $2,313,220 aggregate grant date fair value for PSUs and (ii) $2,313,220 aggregate grant date fair value for RSUs. |
(4)
| The amount reported represents the aggregate grant date fair value for the CEO Performance Award. |
(5)
| The amount reported represents (i) our matching contribution of $5,000 under our 401(k) Plan and (ii) $2,652 paid to our disability insurance plan. |
(6)
| The amount reported represents payments to our disability insurance plan. |
| | (4)(7)
| The amount reported represents (i) $11,020,059 aggregate grant date fair value of an RSU award granted to Ms. Brown in connection with her appointment as our President and Chief Executive Officer and (ii) $69,158 aggregate grant date fair value of an RSU award granted to Ms. Brown pursuant to our 2019 Performance Bonus Plan. |
| | (5)(8)
| The amount reported represents (i) our matching contribution of $647 on Ms. Brown’s behalf under our 401(k) Plan, (ii) $2,431 paid to our disability insurance plan, and (iii) $1,347 in parking and commuting costs paid by us. |
| | (6)(9)
| The amount reported represents (i) Ms. Brown’s salary of $340,240$332,144 aggregate grant date fair value for PSUs and (ii) a payment of $25,226$1,328,635 aggregate grant date fair value for accrued paid time off.RSUs. |
| | (7)(10)
| The amount reported represents (i) our matching contribution of $5,000 on Ms. Brown’s behalf under our 401(k) Plan and (ii) $2,400$4,586 paid to our disability insurance plan. |
| | (8) | Mr. McCombs was hired as our Chief Financial Officer in August 2020. | | | (9)(11)
| The amount reported represents a signing bonus paid to Mr. McCombs in connection with his appointment as our Chief Financial Officer. |
| | (10)(12)
| The amount reported represents an RSU award granted to Mr. McCombs in connection with his appointment as our Chief Financial Officer. |
| | (11) | Mr. Kinion served as our Chief Financial Officer until August 2020. | | | (12)(13)
| The amount reported represents (i) a severance payment of $182,000, (ii) COBRA payments of $25,450, (iii) $1,665 in parking costs paid by us, (iv) $3,714 payment to disability insurance plan, and (v) our matching contribution of $5,000 on Mr. Kinion’s behalf under our 401(k) Plan. | | | (13) | The amount reported represents the$118,595 aggregate grant date fair value of an RSU award granted to Mr. Kinion pursuant to our 2019 Performance Bonus Plan.for PSUs and (ii) $474,492 aggregate grant date fair value for RSUs. | | |
(14)
| The amount reported represents (i) our matching contribution of $5,000 on Mr. Kinion’s behalf under our 401(k) Plan and (ii) $4,085$2,775 paid to our disability insurance plan, and (iii) $5,214 in parking and commuting costs paid by us.plan. | | |
| (15) | The amount reported represents our matching contribution of $5,000 under our 401(k) Plan. | | | (16) | Mr. Gilpin was not a Named Executive Officer in 2018 or 2019. |
(17)
| The amount reported represents (i) our matching contribution of $5,000 under our 401(k) Plan and (ii) $2,489 paid to our disability insurance plan. |
73 2022 Proxy Statement 65 |
2020TABLE OF CONTENTS 2021 Grants of Plan-Based Awards Table The following table provides information concerning each grant of an award made in 20202021 for each of our Named Executive Officers under any plan. This information supplements the information about these awards set forth in the Summary Compensation Table. | Name | Type of
Award | Grant Date | Approval
Date | Estimated Future Payouts Under Non-
Equity Incentive Plan Awards(1) | All Other Stock
Awards: Number of
Shares of Stock or
Units (#) | Grant Date Fair
Value of Stock
and Option
Awards ($)(2) | | Threshold ($) | Target ($) | Maximum ($) | | | | | | | | | | | | Hayden Brown | Cash | — | — | 1 | 288,000 | N/A | — | — | | RSU(3) | 2/29/2020 | 2/29/2020 | — | — | — | 7,985 | 69,158 | | Jeff McCombs | Cash | — | — | 1 | 99,000(4) | N/A | — | — | | RSU(3) | 8/4/2020 | 8/4/2020 | — | — | — | 274,348 | 4,803,833 | | Brian Kinion | Cash | — | — | 1 | 145,600(5) | N/A | — | — | | RSU(3) | 2/29/2020 | 2/29/2020 | — | — | — | 5,548 | 48,048 | | Eric Gilpin | Cash | — | — | 1 | 335,000(6) | N/A | — | — | | RSU(3) | 2/18/2020 | 2/18/2020 | — | — | — | 107,758 | 990,296 |
Hayden Brown | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 500,000 | | | 1,000,000 | | | — | | | — | | | — | | | — | | | Option | | | 1/18/2021 | | | 1/18/2021 | | | — | | | 1,500,000 | | | N/A | | | — | | | — | | | — | | | — | | | — | | | 38.80 | | | 28,780,212 | | | RSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 41,000 | | | — | | | — | | | 2,313,220 | | | PSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | 41,000 | | | 82,001 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,313,220 | Jeff McCombs | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 332,000 | | | 664,000 | | | — | | | — | | | — | | | — | | | RSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 23,549 | | | — | | | — | | | 1,328,635 | | | PSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | 5,887 | | | 11,774 | | | — | | | — | | | — | | | — | | | — | | | — | | | 332,145 | Eric Gilpin | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 365,000 | | | N/A | | | — | | | — | | | — | | | — | | | RSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,410 | | | — | | | — | | | 474,492 | | | PSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | 2,102 | | | 4,205 | | | — | | | — | | | — | | | — | | | — | | | — | | | 118,595 |
(1)
| These columns show a range of payouts possible under the PSU awards granted in 2021. The amount shown in the “Target” column for each award represents 100% of the PSUs granted, which equals the number of units that would vest if the “Target” performance level were achieved. The “Threshold” level is the minimum level of performance that must be met before any payout may occur. The amount shown in the “Maximum” column is 200% of the Target” payout amount. Further information about these awards is provided in the section titled “—Compensation Discussion and Analysis—Compensation Elements—2021 Equity Awards.” |
(2)
| Reflects target bonus amounts for 20202021 performance under our 20202021 Performance Bonus Plan (except with respect to Mr. Gilpin), as described in “Compensation“Compensation Discussion and Analysis—Compensation Elements—Annual Bonuses.Bonuses.” Bonus amounts under the 2020 Performance Bonus Plan did not have a stated maximum amount. These amounts do not correspond to the actual amounts that were received by our Named Executive Officers. The actual amounts received by our Named Executive Officers were as follows: Ms. Brown, $365,760;$995,000; Mr. McCombs, $125,730 (which represents a pro-rated amount due to base salary payments only being earned during his partial year of employment); Mr. Kinion, $0;$660,680; and Mr. Gilpin, $306,202.$520,739. |
(3)
| | (2) | The amounts reported in this column represent the grant date fair value of each award, granted under the 2018 Plan, as computedcalculated in accordance with ASC 718. The assumptions used in calculating the grant date fair value of the RSUs reported in this column are set forth inSee Note 119 to the auditedour consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Note that2021, for a discussion of the amountsrelevant assumptions used in calculating these amounts. For PSUs, the amount reported is based on the probable outcome of the applicable performance conditions, which reflects the target level of performance at the time of grant (i.e., based on 100% of performance). Each of Ms. Brown and Messrs. McCombs and Gilpin was granted RSUs and PSUs in these columns reflect2021 as described in the accounting cost for these awardssection titled “—Compensation Discussion and do not correspond toAnalysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards.” In addition, Ms. Brown was granted a CEO Performance Award in 2021, as described in the actual economic value that may be received by our Namedsection titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards—Chief Executive Officers from the awards. | | | (3) | Officer Performance Award.” The vesting of these RSUstock and option awards is detailed in the “Outstanding“Outstanding Equity Awards at 20202021 Fiscal Year-End”Year-End” table below. | | | (4) | Mr. McCombs’s annual bonus award was pro-rated due to base salary payments only being earned during his partial year of employment. | | | (5) | Mr. Kinion served as our Chief Financial Officer until August 2020. Target bonus amount reflects the target amount based on Mr. Kinion’s base salary assuming his continued service as our Chief Financial Officer. | | | (6) | Reflects target bonus amount under Mr. Gilpin’s sales compensation plan, as described in “Compensation Discussion and Analysis—Compensation Elements—Sales Compensation Plan for Mr. Gilpin.” |
74 66 2022 Proxy Statement |
Outstanding Equity Awards at 20202021 Fiscal Year-End Table The following table presents, for each of the Named Executive Officers, information regarding outstanding stock options, RSUs, and RSUsPSUs held as of December 31, 2020.| | | | Option Awards | Stock Awards | | | | | Number of Securities
Underlying Unexercised
Options (#) | Option
Exercise | Option
Expiration | Number of
Shares or Units
of Stock That
Have Not Vested
(#) | Market Value of Shares
or Units of Stock That
Have Not Vested ($)(2) | | Name | Grant Date(1) | | Exercisable | | Unexercisable | Price ($) | Date | | | | | | | | | | | | | Hayden Brown | 12/15/2011 | (3) | 2,375 | | — | 1.52 | 12/14/2021 | — | — | | 4/7/2014 | (3) | 120,597 | | — | 2.76 | 4/6/2024 | — | — | | 9/25/2014 | (3) | 20,965 | | — | 3.04 | 7/24/2023 | — | — | | 12/19/2014 | (3) | 15,642 | | — | 3.67 | 12/18/2024 | — | — | | 4/23/2015 | (3) | 78,114 | | — | 3.58 | 4/22/2025 | — | — | | 12/23/2015 | (4) | 43,334 | | 1,667 | 3.03 | 12/22/2025 | — | — | | 9/26/2017 | (5) | 339,187 | | 239,933 | 3.68 | 9/25/2027 | — | — | | 2/11/2019 | (6) | — | | — | — | — | 20,682 | 713,943 | | 5/3/2019 | (7) | — | | — | — | — | 34,740 | 1,199,225 | | 12/12/2019 | (8) | — | | — | — | — | 652,742 | 22,532,654 | | Jeff McCombs | 8/4/2020 | (9) | — | | — | — | — | 274,348 | 9,470,493 | | Brian Kinion | — | | — | | — | — | — | — | — | | Eric Gilpin | 4/20/2016 | (10) | 153,333 | | 16,667 | 3.23 | 4/19/2026 | — | — | | 2/6/2018 | (11) | 6,667 | | 43,333 | 4.04 | 2/5/2028 | — | — | | 2/18/2020 | (12) | — | | — | — | — | 87,554 | 3,022,364 |
Hayden Brown | | | 9/26/2017(3) | | | 158,881 | | | 102,828 | | | — | | | 3.68 | | | 9/25/2027 | | | — | | | — | | | — | | | — | | | 2/11/2019(4) | | | — | | | — | | | — | | | — | | | — | | | 10,341 | | | 353,249 | | | — | | | — | | | 5/3/2019(5) | | | — | | | — | | | — | | | — | | | — | | | 19,300 | | | 659,288 | | | — | | | — | | | 12/12/2019(6) | | | — | | | — | | | — | | | — | | | — | | | 435,161 | | | 14,865,100 | | | — | | | — | | | 1/18/2021(7) | | | — | | | — | | | 1,500,000 | | | 38.80 | | | 1/17/2031 | | | — | | | — | | | — | | | — | | | 2/17/2021(8) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 41,000 | | | 1,400,560 | | | 2/17/2021(9) | | | — | | | — | | | — | | | — | | | — | | | 33,313 | | | 1,137,972 | | | — | | | — | Jeff McCombs | | | 8/4/2020(10) | | | — | | | — | | | — | | | — | | | — | | | 274,348 | | | 9,371,728 | | | — | | | — | | | 2/17/2021(11) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,887 | | | 201,100 | | | 2/17/2021(12) | | | — | | | — | | | — | | | — | | | — | | | 19,134 | | | 653,617 | | | — | | | — | Eric Gilpin | | | 4/20/2016(13) | | | 170,000 | | | — | | | — | | | 3.23 | | | 4/19/2026 | | | — | | | — | | | — | | | — | | | 2/6/2018(14) | | | 26,667 | | | 23,333 | | | — | | | 4.04 | | | 2/5/2028 | | | — | | | — | | | — | | | — | | | 2/18/2020(15) | | | — | | | — | | | — | | | — | | | — | | | 60,614 | | | 2,070,574 | | | — | | | — | | | 2/17/2021(16) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,102 | | | 71,804 | | | 2/17/2021(17) | | | — | | | — | | | — | | | — | | | — | | | 6,834 | | | 233,449 | | | — | | | — |
(1)
| Outstanding equity awards with a grant date of December 15, 2011, and September 25, 2014, were granted under the oDesk 2004 Stock Plan, which we refer to as the 2004 Plan. Outstanding equity awards with a grant date of April 7, 2014, or after September 25, 2014, and prior to August 30, 2018, the date the 2018 Plan became effective, were granted under our 2014 Equity Incentive Plan, which we refer to as the 2014 Plan. Outstanding equity awards with a grant date after August 30, 2018, were granted under the 2018 Plan. The vesting of all awards is subject to continued service on each vesting date, in addition to any additional vesting terms described below. | | |
(2)
| Represents the fair market value of the shares underlying the RSUs and PSUs as of December 31, 2020,2021, based on the closing price on Nasdaq of our common stock on December 31, 2020,2021, which was $34.52$34.16 per share. | | |
(3)
| This stock option was fully exercisable as of December 31, 2020. | | | (4) | The stock option becomes exercisable at a rate of 1/60th of the shares of our common stock underlying the stock option each month following the January 1, 2016, exercisability commencement date. The stock option is subject to acceleration upon certain events as described in the section titled “Potential Payments upon Termination or Change in Control.” | | | (5) | The stock option becomes exercisable at a rate of 1/60th of the shares of our common stock underlying the stock option each month following the September 26, 2017, exercisability commencement date. The stock option is subject to acceleration upon certain events as described in the section titled “Potential“Potential Payments upon Termination or Change in Control.Control.” |
(4)
| | (6) | The RSUs vest at a rate of 1/12th of the shares of our common stock underlying the RSUs each quarter beginning on January 18, 2020. The RSUs are subject to acceleration upon certain events as described in “—“Potential Payments upon Termination or Change in Control.Control.” |
(5)
| | (7) | The RSUs vest at a rate of 1/16th of the shares of our common stock underlying the RSUs each quarter beginning on June 18, 2019. The RSUs are subject to acceleration upon certain events as described in “—“Potential Payments upon Termination or Change in Control.Control.” |
(6)
| | (8) | The RSUs vest at a rate of 1/16th of the shares of our common stock underlying the RSUs each quarter beginning on March 18, 2020, subject to Ms. Brown’s continued employment as our Chief Executive Officer on each vesting date. The RSUs are subject to acceleration upon certain events as described in “Potential“Potential Payments upon Termination or Change in Control.Control.” |
(7)
| The stock option vests as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards—Chief Executive Officer Performance Award.” The stock option is subject to acceleration upon certain events as described in the section titled “Potential Payments upon Termination or Change in Control.” |
(8)
| The PSUs vest as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards.” The PSUs are represented at the target amount of shares that may be earned under the awards (i.e., based on 100% of performance). The time vesting requirements of the PSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(9)
| The RSUs vest at a rate of 1/16th of the shares of our common stock underlying the RSUs each quarter beginning on February 18, 2021, subject to Ms. Brown’s continued employment on each vesting date. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(10)
| The RSUs vest at a rate of 75% of the shares of our common stock underlying the RSUs on August 18, 2023, and an additional 6.25% of the shares of our common stock underlying the RSUs over the following four quarters. The RSUs are subject to acceleration upon certain events as described in “Potential“Potential Payments upon Termination or Change in Control.Control.” |
(11)
| The PSUs vest as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards.” The PSUs are represented at the target amount of shares that may be earned under the awards (i.e., based on 100% of performance). The time vesting requirements of the PSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(10)2022 Proxy Statement 67 |
TABLE OF CONTENTS (12)
| The stock option becomes exercisableRSUs vest at a rate of 20%1/16th of the shares of our common stock underlying the stock option one year following the April 20, 2016, exercisability commencement date and an additional 1/60th of the shares of our common stock underlying the stock optionRSUs each month thereafter.quarter beginning on February 18, 2021, subject to Mr. McCombs’s continued employment on each vesting date. The stock option isRSUs are subject to acceleration upon certain events as described in the section titled “Potential“Potential Payments upon Termination or Change in Control.Control.” |
(13)
| The stock option was fully exercisable as of December 31, 2021. |
(11)(14)
| The stock option becomes exercisable at a rate of 1/60th of the shares of our common stock underlying the stock option each month following the February 6, 2018, exercisability commencement date anddate. The stock option is subject to acceleration upon certain events as described in “Potentialthe section titled “Potential Payments upon Termination or Change in Control.Control.” |
(15)
| | (12) | The RSUs will vest in equal installments of 1/16th of the total number of RSUs on each quarterly anniversary after February 18, 2020, over sixteen (16)16 quarters of continuous service, such that the RSU award shall vest in full four years from February 18, 2020, subject to Mr. Gilpin’s continued service. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
75 (16)
| The PSUs vest as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards.” The PSUs are represented at the target amount of shares that may be earned under the awards (i.e., based on 100% of performance). The time vesting requirements of the PSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(17)
| The RSUs vest at a rate of 1/16th of the shares of our common stock underlying the RSUs each quarter beginning on February 18, 2021, subject to Mr. Gilpin’s continued employment on each vesting date. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
20202021 Stock Option Exercises and Stock Vested Table
The following table presents, for each of our Named Executive Officers, the number of shares of our common stock acquired upon the exercise of stock options or vesting and settlement of RSUs during 20202021 and the aggregate value realized upon the exercise of stock options and the vesting and settlement of RSUs. | | Option Awards | Stock Awards | | Name | Number of Shares Acquired
on Exercise (#) | Value Realized on
Exercise ($)(1) | Number of Shares
Acquired on Vesting (#) | Value Realized on
Vesting ($)(2) | | | | | | | | Hayden Brown | — | — | 251,346 | 4,417,883 | | Jeff McCombs | — | — | — | — | | Brian Kinion | 700,000 | 13,243,738 | 5,548 | 48,073 | | Eric Gilpin | 100,000 | 2,472,671 | 20,204 | 426,042 |
Hayden Brown | | | 600,105 | | | 25,726,159 | | | 251,049 | | | 11,388,599 | Jeff McCombs | | | — | | | — | | | 4,415 | | | 183,474 | Eric Gilpin | | | — | | | — | | | 28,516 | | | 1,285,133 |
(1)
| The aggregate value realized upon the exercise of a stock option represents the difference between the aggregate market price of the shares of our common stock on the date of exercise and the aggregate exercise price of the stock option. Amounts shown are presented on an aggregate basis for all exercises that occurred during 2020.2021. | | |
(2)
| The aggregate value realized upon the vesting and settlement of an RSU is based on the closing price on Nasdaq of our common stock on the date prior to the day of vesting.vesting date. Amounts shown are presented on an aggregate basis for all vesting and settlement that occurred during 2020.2021. |
We have entered into offer letters with Ms. Brown and Messrs. McCombs and Gilpin, and we had entered into an offer letter with Mr. Kinion prior to the termination of his employment in October 2020.Gilpin. Each of these offer letters provides (or provided, in the case of Mr. Kinion) for at-will employment and generally includes the Named Executive Officer’s initial base salary and an indication of eligibility for an annual bonus award opportunity. In addition, while employed, each of our Named Executive Officers is eligible to participate in our annual performance bonus plan, other than Mr. Gilpin who participates in a separate sales compensation plan, a disability plan, and employee benefit plans, including health insurance, that we offer to our employees. In addition, each of our Named Executive Officers executed a form of our standard confidential information and invention assignment agreement upon the commencement of their employment. Any potential payments and benefits due upon a termination of employment or a change in control are further described in the following section “ Potential Payments upon Termination or Change in Control.” Potential Payments upon Termination or Change in Control We have entered into change in control and severance agreements with each of our Named Executive Officers, which provide for the following benefits if the Named Executive Officer is terminated by us without “cause” or, with respect to our President and Chief Executive Officer only, by the Named Executive Officer for “good reason” outside of a change in control in exchange for a customary release of claims: (i) a lump sum severance payment of six months base salary (12 months for our President and Chief Executive Officer); (ii) payment of premiums for continued medical benefits for up to six months (12 months for our President and Chief Executive Officer); and (iii) in the case of our President and Chief Executive Officer only, 50% acceleration of any then-unvested equity awards (excluding equity awards that vest, in whole or in part, upon satisfaction of performance criteria).
If the Named Executive Officer’s employment is terminated by us without cause (as defined in the change in control and severance agreements) or by the executive for good reason (as defined in the change in control and severance agreements) within the three months preceding a change in control (as defined in the change in control and severance 68 2022 Proxy Statement |
TABLE OF CONTENTS agreements) (but after a legally binding and definitive agreement for a potential change in control has been executed) or within the 12 months following a change in control, the change in control and severance agreements provide the following benefits in exchange for a customary release of claims: (i) a lump sum severance payment of 12 months base salary (18 months for our President and Chief Executive Officer); (ii) a lump sum payment equal to the Named Executive Officer’s then-current target bonus opportunity; (iii) 100% acceleration of any then-unvested equity awards (excluding equity awards that vest, in whole or in part, upon satisfaction of performance criteria); and (iv) payment of premiums for continued medical benefits for up to 12 months (18 months for our President and Chief Executive Officer). Each change in control and severance agreement is in effect for three years, with automatic renewals for new three-year periods unless notice is given by us to the Named Executive Officer three months prior to expiration. An award agreement for equity awards that vest upon satisfaction of performance criteria may provide for acceleration upon a change in control. The benefits under the change in control and severance agreements supersede all other cash severance and vesting acceleration arrangements (excluding equity awards that vest, in whole or in part, upon satisfaction of performance criteria, which will be governed by the terms of the applicable performance-based equity awards). In exchange for the benefits under the change in control and severance agreements, each Named Executive Officer agrees to a general release of claims and compliance with a non-disparagement covenant for a period of 24 months following separation from us. As a result of the termination of his employment, Mr. Kinion is no longer entitled to receive the benefits described above under the change in control and severance agreements.
The following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described above for each of our Named Executive Officers. Except where otherwise noted, payments and benefits are estimated assuming that the triggering event took place on December 31, 2020,2021, and the price per share of our common stock was the closing price on Nasdaq as of December 31, 2020,2021, which was $34.52.$34.16. There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments or benefits, any actual payments and benefits may be different. | | Qualifying Termination - No Change in Control | Qualifying Termination - Change in Control | | Name | Cash
Severance
($)(1) | Continuation
of Medical
Benefits ($) | Value of
Accelerated
Vesting ($)(2) | Total ($) | Cash Severance
($)(1) | Bonus
Payment ($)(3) | Continuation
of Medical
Benefits ($) | Value of
Accelerated
Vesting ($)(2) | Total ($) | | | | | | | | | | | | | Hayden Brown | 480,000 | 31,091 | 15,948,924 | 16,460,015 | 720,000 | 288,000 | 46,636 | 31,897,849 | 32,952,485 | | Jeff McCombs | 200,000 | 13,756 | — | 213,756 | 400,000 | 99,000(4) | 27,512 | 9,470,493 | 9,997,005 | | Brian Kinion(5) | — | — | — | — | — | — | — | — | — | | Eric Gilpin | 167,500 | 13,756 | — | 181,256 | 335,000 | 335,000 | 27,512 | 4,864,664 | 5,562,176 |
Hayden Brown | | | 500,000 | | | 30,915 | | | 11,475,480 | | | 12,006,395 | | | 750,000 | | | 500,000 | | | 46,372 | | | 22,950,960 | | | 24,247,332 | Jeff McCombs | | | 207,500 | | | 13,668 | | | — | | | 221,168 | | | 415,000 | | | 332,000 | | | 27,336 | | | 10,427,545 | | | 11,201,881 | Eric Gilpin | | | 182,500 | | | 13,668 | | | — | | | 196,168 | | | 365,000 | | | 365,000 | | | 27,336 | | | 3,150,456 | | | 3,907,792 |
(1)
| The severance amount related to base salary was determined based on the base salaries in effect on December 31, 2020.2021. |
(2)
| The value of accelerated vesting is calculated based on the per share closing price on Nasdaq as of December 31, 2020,2021, which was $34.52,$34.16, less, if applicable, the aggregate exercise price of each outstanding unexercisable stock option. The PSUs assume the maximum achievable amount (i.e., based on 200% of performance). The CEO Performance Award was not included, as the exercise price for such award was above the per share closing price of our common stock on Nasdaq as of December 31, 2021. |
(3)
| The value of the bonus payment was determined based on the target bonuses in effect on December 31, 2020. | (4) | Mr. McCombs’s annual bonus award was pro-rated due to base salary payments only being earned during his partial year of employment. | (5) | Mr. Kinion’s employment ended on October 1, 2020. The amounts presented for Mr. Kinion reflect the estimated payments and benefits that would be provided to Mr. Kinion assuming the triggering event took place while he was still our Chief Financial Officer.2021. |
Limitations on Liability and Indemnification Matters Our restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the DGCL. Consequently, our directors are not personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:
any breach of the director’s duty of loyalty to us or our stockholders; any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or any transaction from which the director derived an improper personal benefit. ● | any breach of the director’s duty of loyalty to us or our stockholders; | | | ● | any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; | | | ● | unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or | | | ● | any transaction from which the director derived an improper personal benefit.2022 Proxy Statement 69 |
TABLE OF CONTENTS Our restated certificate of incorporation and our amended and restated bylaws require us to indemnify our directors and officers to the maximum extent not prohibited by the DGCL and allow us to indemnify other employees and agents as set forth in the DGCL. Subject to certain limitations, our amended and restated bylaws also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted, subject to very limited exceptions. We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, officers, and our key employees. These agreements, among other things, require us to indemnify our directors, officers, and key employees for certain expenses, including attorneys’ fees, judgments, fines, and settlement amounts actually and reasonably incurred by these individuals in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers, and key employees for the defense of any action for which indemnification is required or permitted. We believe that these provisions of our restated certificate of incorporation, amended and restated bylaws, and indemnification agreements are necessary to attract and retain qualified directors, officers, and key employees. We also maintain directors’ and officers’ liability insurance. The limitation of liability and indemnification provisions in our restated certificate of incorporation and amended and restated bylaws or in these indemnification agreements may discourage stockholders from bringing a lawsuit against our directors and officers for breaches of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted for directors, executive officers, or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. CEO Pay Ratio Disclosure In accordance with Item 402(u) of Regulation S-K, we are providing below disclosure relating to the ratio of the annual total compensation of our President and Chief Executive Officer, Ms. Brown, to the median of the annual total compensation of all of our employees (except for our Chief Executive Officer) ., which we refer to as the CEO Pay Ratio. For 2020: | ● | The annual total compensation of our Chief Executive Officer, Ms. Brown, was $848,412; |
| ● | The median of the annual total compensation of all our employees (except for our Chief Executive Officer) was $193,227; and |
| ● | The ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all our employees (except for our Chief Executive Officer) was 4 to 1. |
2021: The annual total compensation of our Chief Executive Officer, Ms. Brown, was $34,909,304, as reported in the “Total” column of the Summary Compensation Table; The median of the annual total compensation of all our employees (except for our Chief Executive Officer) was $219,635; and The CEO Pay Ratio was 159 to 1. This ratio is a reasonable estimate calculated in a manner consistent with SEC rules. With respect to
Further, the CEO Pay Ratio for 2021 reflects the grant date fair value of the CEO Performance Award computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718. The CEO Performance Award is not part of the standard annual total compensation package of our Chief Executive Officer, Ms. Brown. In addition, none of the Performance Vesting Requirements to which the CEO Performance Award is subject have been met, and accordingly, none of the shares of our common stock subject to the CEO Performance Award are currently exercisable. The CEO Pay Ratio for 2020 was 4 to 1. For purposes of calculating the pay ratio for 2021, we usedelected to use as our median employee the same individual that we originally identified as our median employee for 2020 because there was no significant change to our employee population or compensation arrangements that we reasonably believed would significantly impact our pay ratio disclosure. For a description of our methodology for identifying the median employee, see “CEO Pay Ratio Disclosure” on pages 79 and 80 of our definitive proxy statement filed with the SEC on April 20, 2021. 70 2022 Proxy Statement |
TABLE OF CONTENTS We then calculated the annual total compensation for this individual using the same methodology we use to calculate the amount reported for our CEO in the “Total” column of the 2020 Summary Compensation Table.Ms. Brown was appointed as our President and Chief Executive Officer effective January 1, 2020. In connection with this appointment, Ms. Brown was granted an RSU award in December 2019. Accordingly, Ms. Brown did not receive an equity award in 2020, other than the grant of a fully-vested RSU award issued in February 2020 pursuant to our 2019 Performance Bonus Plan. We expect that the pay ratio disclosed for 2021 will be greater than the pay ratio for 2020. For example, if Ms. Brown’s RSU award granted in December 2019 had been included in the determination of this pay ratio disclosure, such ratio would have been 61 to 1.
To identify our median employee, we took the following steps:
| ● | We selected December 31, 2020, the last day of our 2020 fiscal year, as the determination date for purposes of identifying our median employee. |
| ● | As of December 31, 2020, our employee population consisted of approximately 538 individuals (except for our Chief Executive Officer) working at our parent company and consolidated subsidiaries, which included all employees whether employed on a full-time or part-time basis, including two employees located outside the United States. We did not include any contractors or other non-employee workers in our employee population. |
| ● | Compensation was measured over the 12-month period beginning on January 1, 2020 and ending on December 31, 2020. We selected our median employee using a compensation measure that consisted of actual base salary earned during 2020, actual bonus or commission paid for 2020, and the grant date fair value of equity awards granted in 2020. We selected the foregoing compensation elements because they represented our principal broad-based compensation elements. |
| ● | We annualized the cash compensation for full-time and part-time permanent employees who were hired during 2020, but did not work for us the entire year. |
| ● | All employees except for our Chief Executive Officer were ranked from lowest to highest with the median determined from this list. |
Once we identified our median employee, we determined that employee’s annual total compensation in the same manner that we calculated the total compensation of our Chief Executive Officer for purposes of the 2020 Summary Compensation Table and compared the two to determine the pay ratio.
as set forth in this Proxy Statement. Because SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. 80 2022 Proxy Statement 71 |
EQUITY COMPENSATION PLAN INFORMATIONTABLE OF CONTENTS Equity Compensation Plan Information The following table presents information as of December 31, 2020,2021, with respect to compensation plans under which shares of our common stock may be issued. | Plan category | Number of securities to be issued upon exercise or vesting and settlement of outstanding securities (#) | Weighted-average exercise price per share of outstanding options ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) | | (a) | (b) | (c) | | | | | | | Equity compensation plans approved by security holders | 10,426,815 | (1) | 3.83 | (2) | 20,751,919 | (3) | | Equity compensation plans not approved by security holders | — | | N/A | | — | | | Total | 10,426,815 | | 3.83 | | 20,751,919 | |
Equity compensation plans approved by security holders | | | 8,847,891(1) | | | 16.29(2) | | | 25,283,698(3) | Equity compensation plans not approved by security holders | | | _ | | | N/A | | | _ | Total | | | 8,847,891 | | | 16.29 | | | 25,283,698 |
(1)
| Includes the oDesk 2004 Stock Plan, which we refer to as the 2004 Plan, the Elance 2009 Stock Option Plan, which we refer to as the 2009 Plan, the 2014 Plan and the 2018 Plan. Excludes purchase rights accruing under the 2018 Employee Stock Purchase Plan, which we refer to as the 2018 ESPP. For awards with performance-based vesting conditions, including PSUs and the CEO Performance Award, the amount reported is based on the maximum outcome of the applicable performance condition (i.e., based on 200% of performance). |
(2)
| The weighted-average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs or PSUs, since RSUs and PSUs have no exercise price. |
(3)
| Includes 18,332,76522,250,297 shares of our common stock available for issuance under the 2018 Plan as of December 31, 2020,2021, and 2,419,1543,033,401 shares of our common stock available for issuance under the 2018 ESPP as of December 31, 2020.2021. There were no shares of common stock available for issuance under the 2004 Plan, the 2009 Plan, or the 2014 Plan as of December 31, 2020,2021, but those plans will continue to govern the terms of stock options granted thereunder. Any shares of common stock that are subject to outstanding awards under the 2004 Plan, the 2009 Plan, or the 2014 Plan that are issuable upon the exercise of stock options that expire or become unexercisable for any reason without having been exercised in full will generally be available for future grant and issuance as shares of common stock under the 2018 Plan. In addition, the number of shares reserved for issuance under the 2018 Plan increased automatically by 6,239,7616,456,523 shares on January 1, 2021,2022, and will increase automatically on the first day of January of each of 20222023 through 2028 by the number of shares equal to 5% of the total issued and outstanding shares of our common stock as of the immediately preceding December 31 or a lower number approved by our board of directors or our compensation committee. The number of shares reserved for issuance under the 2018 ESPP increased automatically by 998,3611,033,043 shares on January 1, 2021,2022, and will increase automatically on the first day of January of each year during the term of the 2018 ESPP by the number of shares equal to 0.8% of the total outstanding shares of our common stock as of the immediately preceding December 31 or a lower number approved by our board of directors or our compensation committee. |
81 72 2022 Proxy Statement |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONSTABLE OF CONTENTS Certain Relationships and Related Party Transactions In addition to the executive officer and director compensation arrangements discussed above under “ Executive Compensation” and “ Proposal No. 1—Election of Directors—20202021 Director Compensation,” respectively, since January 1, 2020,2021, the following indemnification agreements with each of our directors and Named Executive Officers are the only transactions or series of similar transactions to which we were or will be a party in which the amount involved exceeds $120,000 and in which any director, nominee for director, executive officer, beneficial holder of more than 5% of our capital stock, or any member of their immediate family, or any entity affiliated with any of the foregoing persons had or will have a direct or indirect material interest.
Indemnification Agreements We have entered into indemnification agreements with each of our directors and Named Executive Officers. The indemnification agreements and our amended and restated bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our amended and restated bylaws also require us to advance expenses incurred by our directors and officers. For more information regarding these agreements, see the section titled “ Limitations on Liability and Indemnification Matters.”
Review, Approval, or Ratification of Transactions with Related Parties Our related party transactions policy requires that any related party transaction that must be reported under applicable rules of the SEC must be reviewed and approved or ratified by our audit committee, unless the related party is, or is associated with, a member of that committee, in which event the transaction must be reviewed and approved by our nominating and governance committee. 82 2022 Proxy Statement 73 |
REPORTTABLE OF THE AUDIT, RISK AND COMPLIANCE COMMITTEECONTENTS Report of the Audit, Risk and Compliance Committee The information contained in the following report of our audit committee is not considered to be “soliciting material,” “filed,” or incorporated by reference in any past or future filing by us under the Exchange Act or the Securities Act unless and only to the extent that we specifically incorporate it by reference.
This report is submitted by the audit committee of our board of directors. The audit committee consists of the three directors whose names appear below. Each member of the audit committee is independent under the current Nasdaq listing standards and SEC rules and regulations. Each member of the audit committee is financially literate as required by the current Nasdaq listing standards.
The principal purpose of the audit committee is to assist the board of directors in its general oversight of our accounting practices, system of internal controls, audit processes, and financial reporting processes. The audit committee also assists the board of directors in fulfilling its oversight responsibilities with respect to legal and regulatory compliance, and among other things, assists the board of directors in fulfilling its oversight responsibilities with respect to risk management, including cybersecurity, data privacy and security, legal, and compliance risks. The audit committee is responsible for appointing and retaining our independent registered public accounting firm and approving the audit and non-audit services to be provided by the independent registered public accounting firm. The audit committee’s function is more fully described in its charter. Our audit committee has reviewed and discussed with our management and PricewaterhouseCoopers LLP our audited consolidated financial statements for the year ended December 31, 2020.2021. Our audit committee has also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (United States) and the SEC. Our audit committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with our audit committee concerning independence, and has discussed with PricewaterhouseCoopers LLP its independence from us. Based on the review and discussions referred to above, our audit committee recommended to our board of directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, for filing with the SEC. Submitted by the Audit Committee
83 74 2022 Proxy Statement |
ADDITIONAL INFORMATIONTABLE OF CONTENTS Stockholder ProposalsFrequently Asked QuestionsProxy Materials 1.
| Why did I receive these proxy materials? |
We have made these materials available to Be Presented atyou or, if requested, delivered paper copies by mail in connection with the Next Annual Meeting, Our amended and restated bylaws provide that, for stockholder nominations to our board of directors or other proposals to which will be consideredheld exclusively online via live webcast on Thursday, June 2, 2022, at an annual meeting, the stockholder must give timely notice thereof in writing to the attention of the Corporate Secretary at our principal executive offices, the address of which is currently Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 95054.
To be timely for our 2022 annual meeting of stockholders, a stockholder’s notice must be delivered to or mailed and received by our Corporate Secretary at our principal executive offices not earlier than 5:8:00 p.m. Eastern Time on February 1, 2022 and not later than 5:00 p.m. Eastern Time on March 3, 2022. A stockholder’s notice to the Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by our amended and restated bylaws.
Additionally, our amended and restated bylaws permita.m. Pacific Time. As a stockholder, or a group of upyou are invited to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three yearsparticipate in the Annual Meeting via live webcast and vote on the business items described in this Proxy Statement. This Proxy Statement includes information that we are required to nominateprovide to you under SEC rules and includeis intended to assist you in ourvoting your shares.
2.
| What is included in the proxy materials? |
The proxy materials include: The Notice of Annual Meeting of Stockholders, which we refer to as the Notice; Our Proxy Statement for director nominees constituting up to the greater of two individuals or 20% of our board of directors, subject to reduction in certain circumstances,Annual Meeting; and subject to the stockholders and the nominees satisfying the requirements specified in our amended and restated bylaws. Our obligation to include director nominees in our annual meeting proxy materials is also subject to certain exceptions as set forth in our amended and restated bylaws. Written notice of the nomination(s)Annual Report on Form 10-K for our 2022 annual meeting of stockholders must be submitted to the attention of the Corporate Secretary at our principal executive offices, the address of which currently is Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 95054, no earlier than 5:00 p.m. Eastern Time on November 21, 2021, and no later than 5:00 p.m. Eastern Time on December 21, 2021, subject to certain exceptions as set forth in our amended and restated bylaws.Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 2022 annual meeting of stockholders must be received by us not later than December 21, 2021, in order to be considered for inclusion in our proxy materials for that meeting. Proposals should be sent to our Corporate Secretary at our principal executive offices, together with proof of ownership of our common stock in accordance with Rule 14a-8 under the Exchange Act. We strongly encourage any stockholder interested in submitting a proposal to contact our Corporate Secretary in advance of this deadline to discuss the proposal.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and any persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file. Based solely on our review of the copies of such forms furnished to us and written representations from our directors and executive officers, we believe that all Section 16(a) filing requirements were timely met in the year ended December 31, 2020, except2021.
If you received a paper copy of these materials by mail, the proxy materials also include a proxy card, or a voting instruction form for the Annual Meeting. If you received a “Notice of Internet Availability of Proxy Materials” (described below) instead of a paper copy of the proxy materials, see the section titled “Voting Information” below for information regarding how you can vote your shares. 3.
| What does it mean if I receive more than one Notice, proxy card, or voting instruction form? |
It generally means that a Form 4 wassome of your shares are registered differently or are in more than one account. Please follow the instructions included on each proxy card and vote each proxy card by telephone, through the internet, or by mail. If you requested or received paper proxy materials and you intend to vote by mail, please complete, sign, and return each proxy card you received to ensure that all of your shares are voted. 4.
| Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials? |
In accordance with SEC rules, we are using the internet as our primary means of furnishing proxy materials to our stockholders. Consequently, most stockholders will not timely filed for Thomas Layton for a pro rata distributionreceive paper copies of common stock from Benchmark Founders’ Fund V, L.P., of which Mr. Layton is a limited partner, on May 19, 2020.Annual Report
our proxy materials. We will mail, without charge, upon written request,instead send these stockholders a copy of our annual report to stockholders, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to our mailing address: Upwork Inc.
655 Montgomery Street
Suite 490, Department 17022
San Francisco, CA 94111-2676
Attn: Investor Relations
Our annual report to stockholders is also available on the “Investor Relations” section of our website, which is located at investors.upwork.com under “SEC Filings” in the “Annual Reports” section of our website, or by following the instructions in the Notice of Internet Availability of Proxy Materials.
Electronic DeliveryMaterials with instructions for accessing the proxy materials, including our Proxy Statement and annual report to stockholders, and voting via the internet. The Notice of Stockholder Communications
Internet Availability of Proxy Materials also provides information on how stockholders may obtain paper copies of our proxy materials if they so choose. We believe this means of delivery makes the proxy distribution process more efficient and less costly and helps in conserving natural resources. We encourage you to help us conserve natural resources, as well as significantly reduce printing and mailing costs, by signing up to receive your stockholder communications electronically via email. With electronic delivery, you will be notified via email as soon as future annual reports to stockholders and proxy statements are available on the internet, and you can submit your votes online. Electronic delivery can also eliminate duplicate mailings and reduce the amount of bulky paper documents you maintain in your personal files. To sign up for electronic delivery: If you are a registered owner (meaning you hold our common stock in your own name through our transfer agent, Computershare Trust Company, N.A., or you are in possession of stock certificates): visit www-us.computershare.com/investor and log into your account to enroll. If you are a beneficial owner (meaning your shares are held by a brokerage firm, a bank, a trustee, or a nominee): please follow the instructions provided to you by your broker, bank, trustee, or nominee. ● | If you are a registered owner (meaning you hold our common stock in your own name through our transfer agent, Computershare Trust Company, N.A., or you are in possession of stock certificates): visit www-us.computershare.com/investor and log into your account to enroll. | | | ● | If you are a beneficial owner (meaning your shares are held by a brokerage firm, a bank, a trustee, or a nominee): please follow the instructions provided to you by your broker, bank, trustee, or nominee.2022 Proxy Statement 75 |
TABLE OF CONTENTS Your electronic delivery enrollment will be effective until you cancel it. Stockholders who are record owners of shares of our common stock may call Computershare Trust Company, N.A., our transfer agent, at (800) 736-3001 or visit www-us.computershare.com/investor with questions about electronic delivery. “Householding”—Stockholders Sharing
5.
| How can I access the proxy materials over the internet? |
The Notice, proxy card, or voting instruction form will contain instructions on how to: View our proxy materials for the Same Last NameAnnual Meeting on the internet; and Address Instruct us to send our future proxy materials to you electronically by email. The Notice, proxy card, or voting instruction form will contain instructions on how you may request access to proxy materials electronically on an ongoing basis. Instead of receiving future copies of our proxy statements and annual reports by mail, stockholders of record and most beneficial owners may elect to receive an email that will provide an electronic link to these documents. Choosing to receive your proxy materials electronically helps us to conserve natural resources and reduces the cost of printing and distributing our proxy materials. If you choose to access future proxy materials electronically, you will receive an email with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to receive future proxy materials by email will remain in effect until you revoke it. 6.
| How may I obtain a paper copy of the proxy materials? |
If you receive a paper Notice instead of a paper copy of the proxy materials, the Notice will provide instructions about how to obtain a paper copy of the proxy materials. If you receive the Notice by email, the email will also include instructions about how to obtain a paper copy of the proxy materials. All stockholders of record who do not receive a paper Notice or email will receive a paper copy of the proxy materials by mail. 7.
| I share an address with another stockholder, and we received only one paper copy of the proxy materials or Notice. How may I obtain an additional copy? |
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report to stockholders and other proxy materials, including the Notice of Internet Availability, unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and postage fees, and helps in conserving natural resources. This year, a number of brokers with account holders who are our stockholders will be “householding” our annual report to stockholders and other proxy materials, including the Notice of Internet Availability. A single Notice of Internet Availability and, if applicable, a single set of our annual report to stockholders and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by calling Broadridge at (866) 540-7095 or writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Upon written or oral request, we will promptly deliver a separate copy of the Notice of Internet Availability and, if applicable, our annual report to stockholders and other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet Availability and, if applicable, annual report to stockholders and other proxy materials, you may contact our Investor Relations department at our mailing address, which is 655 Montgomery Street, Suite 490, Department 17022, San Francisco, CA 94111-2676, Attn: Investor Relations, telephone number (650) 316-7500. 76 2022 Proxy Statement |
TABLE OF CONTENTS 8.
| I share an address with another stockholder, and we received more than one paper copy of the proxy materials or the Notice. How do we obtain a single copy in the future? |
Any stockholders who share the same address and receive multiple copies of our Notice of Internet Availability or annual report to stockholders and other proxy materials who wish to receive only one copy in the future can contact their bank, broker, or other holder of record to request information about householding or our Investor Relations department at our mailing address, which is 655 Montgomery Street, Suite 490, Department 17022, San Francisco, CA 94111-2676, Attn: Investor Relations, telephone number (650) 316-7500. 9.
| Which proposals will be voted on at the Annual Meeting? How does the board of directors recommend that I vote? What is the vote required to approve each of the proposals? What effect will abstentions and broker non-votes have? |
1 | | | Election of three Class I directors named in this Proxy Statement | | | For, Against, or Abstain | | | FOR | | | Majority of the votes cast | | | No effect | 2 | | | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2022 | | | For, Against, or Abstain | | | FOR | | | Majority of the votes cast | | | No effect | 3 | | | Advisory vote on named executive officer compensation (“say-on-pay”) | | | For, Against, or Abstain | | | FOR | | | Majority of the votes cast | | | No effect |
In deciding all matters at the Annual Meeting, as of the close of business on the Record Date, each share of common stock represents one vote. Stockholder of Record: Shares Registered in Your Name. If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting or vote by telephone, through the internet, or if you request or receive paper proxy materials, by filling out and returning the proxy card. Beneficial Owner: Shares Registered in the Name of a Broker or Nominee. If, on the Record Date, your shares were held in an account with a broker, bank, trustee, or other nominee on your behalf, then you are considered the beneficial owner of shares held in “street name.” As the beneficial owner, you have the right to direct your nominee on how to vote your shares by following the voting instructions you receive. Your nominee has only limited authority to vote your shares without your instructions, as described below. If you were a beneficial owner at the close of business on the Record Date, you may attend the Annual Meeting. You will need the 16-digit control number found on your Notice of Internet Availability of Proxy Materials, your proxy card, or the instructions that accompany your proxy materials if you wish to attend the Annual Meeting with the right to vote and submit a question. Even if you do not have your 16-digit control number or were not a stockholder as of the close of business on the Record Date, you can still access the meeting, but will not be able to vote at the meeting or submit a question. If your shares are held in street name, follow the voting instructions you receive from your nominee. Broker non-votes occur when shares held by a broker for a beneficial owner are not voted because the broker did not receive voting instructions from the beneficial owner and lacked discretionary authority to vote the shares. A broker is entitled to vote shares held for a beneficial owner on “routine” matters without instructions from the beneficial owner of those shares. Absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held 2022 Proxy Statement 77 |
TABLE OF CONTENTS for a beneficial owner on “non-routine” matters. At our Annual Meeting, only the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2022, is considered a routine matter. The proposal for the election of directors and any other proposals presented at the Annual Meeting are non-routine matters. Broker non-votes are counted for purposes of determining whether a quorum is present and have no effect on the outcome of the matters voted upon. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the Annual Meeting. Our board of directors recommends that you vote “FOR” the election of each of the Class I directors named in this Proxy Statement, which we refer to as Proposal 1, “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2022, which we refer to as Proposal 2, and “FOR” the approval, on a non-binding advisory basis, of the compensation of our Named Executive Officers as disclosed in this Proxy Statement, which we refer to as Proposal 3. None of our directors or Named Executive Officers have any substantial interest in any matter to be acted upon, other than, with respect to our Named Executive Officers, Proposal 3 and, with respect to Kevin Harvey, Thomas Layton, and Elizabeth Nelson, Proposal 1. 10.
| Who is entitled to vote? How many shares can I vote? |
Only holders of record of our common stock at the close of business on the Record Date will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, there were 129,651,218 shares of our common stock outstanding and entitled to vote. For 10 days prior to the Annual Meeting, a complete list of the stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose relating to the Annual Meeting during ordinary business hours at our headquarters. A list of stockholders entitled to vote at the Annual Meeting will also be available for examination on the internet through the virtual web conference during the Annual Meeting. You may vote all shares of our common stock that you owned as of the Record Date, including (i) shares held directly in your name as the stockholder of record, including shares purchased or acquired through our equity incentive plans, and (ii) shares held for you as the beneficial owner through a broker, bank, or other nominee. 11.
| How can I vote my shares? |
If you are a stockholder of record, you may: vote via the virtual meeting website—any stockholder can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/UPWK2022, where stockholders may vote and submit questions during the meeting. The meeting starts at 8:00 a.m. Pacific Time on Thursday, June 2, 2022. Please have your 16-digit control number to join the Annual Meeting. Instructions on how to attend and participate via the internet are posted at www.proxyvote.com; vote by telephone or through the internet—in order to do so, please follow the instructions shown on the Notice of Internet Availability of Proxy Materials or your proxy card; or vote by mail—if you request or receive a paper proxy card and voting instructions by mail, simply complete, sign, and date the enclosed proxy card and promptly return it in the envelope provided or, if the envelope is missing, please mail your completed proxy card to Vote Processing, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717. Your signed and dated proxy card must be received prior to the Annual Meeting in order to be voted. Votes submitted by telephone or through the internet must be received by 8:59 p.m. Pacific Time on June 1, 2022. Submitting your proxy, whether by telephone, through the internet, or if you request or receive a paper proxy card, by mail, will not affect your right to vote should you decide to attend the Annual Meeting. If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct your nominee on how to vote your shares. Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted. All proxies will be voted in accordance with the instructions specified. If you sign a physical proxy card and return it without instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our board of directors stated above. If you do not vote and you hold your shares in street name, and your broker does not have discretionary power to vote your shares, your shares may constitute “broker non-votes” (as described above) and will not be counted in determining the number of shares necessary for approval of the proposals. However, shares that constitute broker non-votes will be counted for the purpose of establishing a quorum for the Annual Meeting. 78 2022 Proxy Statement |
TABLE OF CONTENTS If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please follow the instructions included on each proxy card and vote each proxy card by telephone, through the internet, or by mail. If you requested or received paper proxy materials and you intend to vote by mail, please complete, sign, and return each proxy card you received to ensure that all of your shares are voted. 12.
| May I change my vote or revoke my proxy? |
A stockholder of record who has given a proxy may revoke it at any time before it is exercised at the Annual Meeting by: delivering to our Corporate Secretary by mail a written notice stating that the proxy is revoked; signing and delivering a proxy bearing a later date; voting again by telephone or through the internet; or attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy). Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to revoke a proxy, you must contact that firm to revoke any prior voting instructions. 13.
| What if I return my proxy card but do not provide voting instructions? |
If you are a stockholder of record and you return your signed proxy card without giving specific voting instructions, your shares will be voted as recommended by our board of directors (see Question 9 above). 14.
| What if I am a beneficial owner and do not give voting instructions to my broker? |
If you are a beneficial owner of shares, your broker, bank, or other nominee is not permitted to vote on your behalf on the election of directors and other matters to be considered at the Annual Meeting, except for Proposal 2 (the ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditor for 2022), unless you provide specific instructions by completing and returning the voting instruction form or following the instructions provided to you to vote your shares on the internet or by telephone. If you do not provide voting instructions, your shares will not be voted on any proposal except for Proposal 2. This is called a “broker non-vote.” For your vote to be counted, you will need to communicate your voting decision to your broker, bank, or other nominee before the date of the Annual Meeting, or to vote during the Annual Meeting. 15.
| Is my vote confidential? |
Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner designed to protect your voting privacy. Your vote will not be disclosed, either within the company or to third parties, except: (i) as necessary to meet applicable legal requirements; (ii) to allow for the tabulation of votes and certification of the vote; and (iii) to facilitate proxy solicitation. To the extent that stockholders provide written comments on their proxy cards, those comments will be forwarded to management. 16.
| What constitutes a quorum? |
The holders of a majority of the voting power of the shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting as of the Record Date must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This presence is called a quorum. Your shares are counted as present at the Annual Meeting if you are present and vote at the Annual Meeting or if you have properly submitted a proxy. 17.
| Who will bear the cost of soliciting votes for the Annual Meeting? |
The accompanying proxy is solicited by our board of directors on behalf of Upwork Inc. We have retained D.F. King & Co., Inc. to assist us with the solicitation of proxies, for which we will pay an aggregate fee of $15,000, plus reasonable and documented costs and expenses. We will pay the expenses of soliciting proxies, including preparation, assembly, printing, and mailing of this Proxy Statement, the proxy card, and any other information furnished to stockholders. Following the original mailing of the soliciting materials, we and our agents, including directors, officers, and other employees, without additional compensation, may solicit proxies by mail, email, telephone, facsimile, or other similar 2022 Proxy Statement 79 |
TABLE OF CONTENTS means. Following the original mailing of the soliciting materials, we will request brokers, custodians, nominees, and other record holders to forward copies of the soliciting materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, we, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access the proxy materials or vote through the internet, you are responsible for any internet access charges you may incur. 18.
| What happens if additional matters are presented at the Annual Meeting? |
Other than the four items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting. If, for any reason, any of the nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by our board of directors. 19.
| Where can I find the voting results of the Annual Meeting? |
Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. The preliminary voting results will be announced at the Annual Meeting. The final results will be tallied by the inspector of elections and filed with the SEC in a current report on Form 8-K within four business days of the Annual Meeting. The Form 8-K can be found at www.sec.gov and on the “Investor Relations” section of our website. Attending the Annual Meeting 20.
| How can I attend the Annual Meeting? |
The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively online via live webcast. You are entitled to attend and participate in the Annual Meeting only if you were a stockholder as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/UPWK2022. You also will be able to vote your shares by attending the Annual Meeting online. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice, on your proxy card (if you requested printed materials), or on the instructions that accompanied your proxy materials. Stockholders who wish to submit a question to us prior to the Annual Meeting may do so at www.proxyvote.com before 8:59 p.m. Pacific Time on June 1, 2022. Stockholders will need the 16-digit control number to submit a question. The online meeting will begin promptly at 8:00 a.m. Pacific Time on Thursday, June 2, 2022. We encourage you to access the meeting prior to the start time. Online check-in will begin at 7:45 a.m. Pacific Time, and you should allow sufficient time for the check-in procedures. 21.
| What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website? |
If we experience technical difficulties during the meeting (e.g., a temporary or prolonged power outage), we will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via www.virtualshareholdermeeting.com/UPWK2022. If you encounter technical difficulties accessing our meeting or asking questions during the meeting, a support line will be available on the login page of the virtual meeting website. 22.
| Why are you holding a virtual meeting instead of a physical meeting? |
We have conducted efficient and effective virtual meetings since 2019. We intend to continue to ensure that our stockholders are afforded the same rights and opportunities to participate virtually as they would at an in-person meeting. We believe the virtual format makes it easier for stockholders to attend, and participate fully and equally in, the Annual Meeting because they can join with any internet-connected device from any location around the world at no cost. Our virtual meeting format helps us engage with all stockholders—regardless of size, resources, or physical location, protects the health and safety of attendees in light of the ongoing COVID-19 pandemic, saves us and stockholders’ time and money, and reduces our environmental impact. 80 2022 Proxy Statement |
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| Can stockholders ask questions during the Annual Meeting? |
Yes. If you wish to submit a question during the Annual Meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/UPWK2022, type your question into the “Ask a Question” field, and click “Submit.” If your question is properly submitted during the relevant portion of the meeting agenda, we will respond to your question during the live webcast, subject to time constraints. Questions that are substantially similar may be grouped and answered together to avoid repetition. We reserve the right to exclude questions that are, among other things, irrelevant to the business of the Annual Meeting, irrelevant to our business, related to material non-public information of the company, derogatory or in bad taste, in furtherance of the stockholder’s personal or business interests, related to pending or threatened litigation; repetitious or already made by another stockholder, related to personal matters or grievances, or out of order or otherwise not suitable for the conduct of the Annual Meeting (as determined by the chairperson of our board of directors or our Corporate Secretary in their reasonable discretion). A webcast replay of the Annual Meeting, including the Q&A session, will be available for 90 days following the Annual Meeting at www.virtualshareholdermeeting.com/UPWK2022. 24.
| What is the deadline to propose actions for consideration at the 2023 annual meeting of stockholders or to nominate individuals to serve as directors? |
Our amended and restated bylaws provide that, for stockholder nominations to our board of directors or other proposals to be considered at an annual meeting, the stockholder must give timely notice thereof in writing to the attention of the Corporate Secretary at our principal executive offices, the address of which is currently Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 95054. To be timely for our 2023 annual meeting of stockholders, a stockholder’s notice must be delivered to or mailed and received by our Corporate Secretary at our principal executive offices not earlier than 2:00 p.m. Pacific Time on February 1, 2023, and not later than 2:00 p.m. Pacific Time on March 3, 2023. A stockholder’s notice to the Corporate Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by our amended and restated bylaws. Additionally, our amended and restated bylaws permit a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials for director nominees constituting up to the greater of two individuals or 20% of our board of directors, subject to reduction in certain circumstances, and subject to the stockholders and the nominees satisfying the requirements specified in our amended and restated bylaws. Our obligation to include director nominees in our annual meeting proxy materials is also subject to certain exceptions as set forth in our amended and restated bylaws. Written notice of the nomination(s) for our 2023 annual meeting of stockholders must be submitted to the attention of the Corporate Secretary at our principal executive offices, the address of which currently is Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 95054, no earlier than 2:00 p.m. Pacific Time on November 20, 2022, and no later than 2:00 p.m. Pacific Time on December 20, 2022, subject to certain exceptions as set forth in our amended and restated bylaws. In addition, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than Upwork nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 3, 2023. Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 2023 annual meeting of stockholders must be received by us not later than December 20, 2022, in order to be considered for inclusion in our proxy materials for that meeting. Proposals should be sent to our Corporate Secretary at our principal executive offices, together with proof of ownership of our common stock in accordance with Rule 14a-8 under the Exchange Act. We strongly encourage any stockholder interested in submitting a proposal to contact our Corporate Secretary in advance of this deadline to discuss the proposal. 2022 Proxy Statement 81 |
TABLE OF CONTENTS 25.
| Where can I find more information about Upwork’s SEC filings, governance documents, and communicating with Upwork and the board of directors? |
SEC Filings and Reports Our SEC filings, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our “Investor Relations” section of our website, which is located at investors.upwork.com, under “SEC Filings,” in the “Financials” section of our website. We will mail, without charge, upon written request, a copy of our Annual Report, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to our mailing address: Upwork Inc.
655 Montgomery Street
Suite 490, Department 17022
San Francisco, CA 94111-2676
Attn: Investor Relations Corporate Governance Documents Our Corporate Governance Guidelines, charters of our principal committees of the board of directors, our Code of Business Conduct and Ethics, and other key corporate governance documents and materials are available at the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of our website. Communicating with Management and Investor Relations Stockholders may contact management or Investor Relations in writing at 655 Montgomery Street, Suite 490, Department 17022, San Francisco, CA 94111-2676, Attn: Investor Relations, telephone number listed above.(650) 316-7500, or by email at investor@upwork.com. Communicating with the Board Stockholders and interested parties who wish to communicate with our board of directors, non-management members of our board of directors as a group, a committee of our board of directors, or a specific member of our board of directors (including our chairperson) may do so by letters addressed to the attention of our Corporate Secretary. All communications are reviewed by the Corporate Secretary and provided to the members of our board of directors as appropriate. Sales materials, abusive, threatening, or otherwise inappropriate materials, and items unrelated to the duties and responsibilities of our board of directors will not be provided to directors. The mailing address for these communications is: Upwork Inc.
c/o Corporate Secretary
655 Montgomery Street, Suite 490, Department 17022
San Francisco, CA 94111-2676 86 82 2022 Proxy Statement |
OTHER MATTERSTABLE OF CONTENTS Our board of directors does not presently intend to bring any other business before the Annual Meeting, and so far as is known to our board of directors, no matters are to be brought before the Annual Meeting except as specified in the Notice of Annual Meeting of Stockholders. As to any business that may arise and properly come before the Annual Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies. | | | By Order of the Board of Directors | | | | | |  | | | | Hayden Brown | |
President and Chief Executive Officer | | |
87 2022 Proxy Statement 83 |
UPWORK INC. 655 MONTGOMERY STREET, SUITE 490 DEPARTMENT 17022 SAN FRANCISCO, CA 94111-2676 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on May 31, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/UPWK2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on May 31, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Your signed and dated proxy card must be received prior to the Annual Meeting in order to be voted. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS D37216-P49965 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY UPWORK INC. The Board of Directors recommends you vote FOR the following: 1. Elect the three Class III directors, each to serve a three-year term expiring at the 2024 Annual Meeting and until such director's successor is elected and qualified. Nominees: 01) Hayden Brown 02) Gregory C. Gretsch 03) Anilu Vazquez-Ubarri The Board of Directors recommends you vote FOR the following proposals 2. Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2021. 3. Approve, on a non-binding advisory basis, the compensation of our named executive officers. NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof. For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. For Against Abstain Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com. D37217-P49965 UPWORK INC. Annual Meeting of Stockholders June 1, 2021 8:00 A.M. Pacific Time This proxy is solicited by the Board of Directors The undersigned hereby appoints Hayden Brown and Brian Levey, or either of them, as proxies, each with the power to appoint her or his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of UPWORK INC. that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on Tuesday, June 1, 2021 at 8:00 A.M. Pacific Time by visiting www.virtualshareholdermeeting.com/UPWK2021, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side
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