TABLE OF CONTENTS Majority Voting Standard for Director Elections and Director Resignation Policy 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. 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 Nasdaq and SEC independence requirements for such committees.  2022 Proxy Statement 15 2023 Proxy Statement 13
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TABLE OF CONTENTS 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 in 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 | | | Yes | | | | | | | | | | Leela Srinivasan | | | Yes | | | | | | | | | | Gary Steele | | | Yes | | | | | | | | | | Anilu Vazquez-Ubarri | | | Yes | | | | | | | | | |
 Chair Member Financial ExpertAudit, 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 Ms. Nelson and Mr. Gretsch both 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, our internal audit function, and our cybersecurity, data privacy, and other information technology controls and procedures; reviewing material related party transactions, including those that require disclosure; reviewing legal, regulatory, financial, technology, payment, and enterprise risk exposures and compliance and the steps management has taken to monitor and control such exposures and compliance; and approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm. 14 2023 Proxy Statement |
TABLE OF CONTENTS Compensation Committee Our compensation committee is composed of Mr. Gretsch, who is the chairperson of the committee, Mr. Steele, and Ms. 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. 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. 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 our Code of Business Conduct and Ethics 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. 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 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 2023 Proxy Statement 15
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TABLE OF CONTENTS 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 2022 were Mr. Gretsch, Ms. Nelson (until April 2022), Mr. Steele, and Ms. Vazquez-Ubarri (beginning April 2022). None of the members of our compensation committee in 2022 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 2022, 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 2022, our board of directors met six times and also acted by unanimous written consent. During 2022, 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 2022, our audit committee met eight times, our compensation committee met six times, and our nominating and governance committee met two 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 2022 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. 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 16 2023 Proxy Statement |
TABLE OF CONTENTS 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 in 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. ESG Strategy and Notable Accomplishments 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 independent 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 our ESG risks and opportunities. To help identify ESG-related topics that are most important to our business and stakeholders, we conducted our first ESG materiality assessment in 2020 and will be updating the assessment in 2023. These assessments help us identify, assess, and prioritize sustainability topics that impact Upwork’s enterprise value as well as those that affect society at large. In addition to assessing the perceptions of key stakeholders, including employees, executives, stockholders, talent, and clients, the 2023 assessment will also measure the degree to which ESG topics have or are expected to financially and strategically impact Upwork. We are committed to continued engagement with our key stakeholders going forward and ensuring our practices and disclosures align with evolving ESG-related priorities. 2023 Proxy Statement 17
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TABLE OF CONTENTS The following table sets forth the key focus areas for our ESG strategy and our notable ESG accomplishments in 2022: | | | Economic Opportunity | | | • Helping independent talent unlock their potential by connecting professionals with a range of clients along with resources to support career independence
• Building an inclusive work marketplace by developing programs and features that enable our diverse users to thrive
• Supporting our community through charitable giving programs and partnerships with organizations that align with our impact goals
• Building the future of work by providing thought leadership and resources to independent talent and companies of all sizes
• 2022 notable accomplishments in this area:
• In response to the war in Ukraine, launched Opportunity Unlimited to help displaced professionals find work and procure the resources they need to prepare for, conduct, and get paid for their work, no matter their location
• Provided coaching to more than 7,000 independent professionals through Upwork Academy, hosted over 180 events and webinars reaching more than 28,000 people, and launched more than 100 community groups to help talent on Upwork connect and learn from one another
• Granted $1.68 million through The Upwork Foundation5 to 12 nonprofits serving immigrants, refugees, and asylum seekers
• Upwork and its employees contributed $183,000 through our matching gifts program to nonprofits supporting diversity, inclusion, and belonging and those addressing humanitarian crises | | | | Workforce Innovation and Wellbeing | | | • Growing a hybrid workforce that is defined not only by combining in-person and remote work but also by engaging both employees and independent talent whenever possible
• Implementing leading strategies to support remote organizational effectiveness
• Building out a new workforce research and engagement program that supports dynamic, holistic, and continuous learning
• Offering tools such as Textio U certification in support of an equitable performance review process
• Continuously evaluating our workforce benefits to support the full range of employees’ mental health, wellbeing, and growth
• 2022 notable accomplishments in this area:
• Built a team to focus on remote organizational effectiveness
• Increased short-term disability pay for employees to 100% of salary for the first four weeks and modified our time-off policy for domestic payrolled hybrid team members to include 20 paid days off
• Built out a more robust workforce survey strategy and set new engagement targets for 2023 |
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TABLE OF CONTENTS | | | Diversity, Inclusion, and Belonging (DIBs) | | | • Dedicating strategic investment in DIBs and integrating DIBs into all of our people programs
• Creating a suite of programs to support women and people of color, including GlowUp and Our boardPlace
• Fostering a sense of directors recognizes that oneworkplace belonging through Upwork Belonging Communities
• 2022 notable accomplishments in this area:
• Launched McKinsey’s Leadership Essentials, a program designed for individual contributors to sharpen core business acumen and self-leadership tools in preparation for leading teams and larger projects/initiatives
• Evolved our GlowUp program to be an always-on community for Upwork’s leaders of itscolor, enabling them to foster camaraderie and explore shared leadership experiences, opportunities, and challenges throughout the year
• Continued supporting Our Place, an immersive membership community for Upwork’s 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 Officersenior Black women employees, UPstanders, a program offering workshops to the compensation committeebuild inclusive practices and advance a collaborative culture at Upwork, and the chairpersonMcKinsey Management Accelerator, a 16-week program for early- to mid-career Black, Asian, and/or Latinx leaders | | | | Environmental Sustainability | | | • Reducing our environmental footprint, including our Scope 1, 2, and 3 emissions
• Enabling our users to reduce work-related commutes through the use 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 continueswork marketplace
• Committing to regularly evaluate its succession planning to ensure that we are well positioned to continue to execute on our corporate strategy. Oversight of Corporate StrategyOur 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 transparency of our corporate strategy. The independent membersgovernance practices around environmental risks and opportunities and methodically assessing, reporting, and verifying our environmental performance data on an annual basis
• Connecting clients and talent focused on sustainability
• 2022 notable accomplishments in this area:
• Verified our Scope 1, 2, and 3 emissions and maintained carbon-neutral6 operations for the fourth consecutive year
• Submitted our CDP Climate Change questionnaire, earning a B score
• Expanded our Scope 3 emissions analysis to include remote work, all supply chain emissions, employee commuting, and business travel
• Maintained our Global Environmental Policy and E-waste Policy | | | | 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 human rights by enforcing our board of directors also hold regularly scheduled executive sessions at which strategy is discussed. Compensation Committee InterlocksGlobal Human Rights Policy and Insider ParticipationThe members of our compensation committee during 2021 were Mr. Gretsch, Ms. Nelson, and Mr. Steele. None of the members of our compensation committee in 2021 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 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 AttendanceOur 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 2021, our board of directors met six times and also acted by unanimous written consent. During 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 2021, our audit committee met four times, our compensation committee met four times, and our nominating and governance committee met two times, and each committee also acted by unanimous written consent.
Board Attendance at Annual Meeting of StockholdersOur policy is to invite and encourage each member of our board of directors to be present atupdating our annual meetings of stockholders. All members of our board of directors attended our 2021 annual meeting of stockholders in their capacity as directors of our company.Modern Slavery and Human Trafficking Statement
Communication• Working with DirectorsStockholders and interested parties who wish to communicatesuppliers that align with our boardmission and inclusive sourcing goals
• 2022 notable accomplishments in this area:
• Updated our Privacy Policy and launched a security operations and response product to automate threat investigations and analysis
• Maintained our SOC 2 Type II, PCI DSS Level 2, and ISO 27001 and 27018 certifications and achieved SOC 3 certification
• Audited 22 Trust and Safety enforcement areas as part 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 addressedan ongoing effort to ensure greater consistency and fairness across the attention of our Corporate Secretary.platform
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 |
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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
Code of Business Conduct and EthicsWe 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 • Maintained our Code of Business Conduct and Ethics, by posting such information onGlobal Human Rights Policy, Supplier Code of Conduct, and Terms of Service
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More details on our ESG materiality assessment are included in our 2021 Impact Report, published in March 2022, which is available at our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub. The information contained in our 2021 Impact Report is not intended to be incorporated into this2023 Proxy Statement. Our 2021 Impact Report also includes quantitative disclosures on our workforce diversity. We are committed to continued engagement with our key stakeholders going forward and ensuring our practices and disclosures align with evolving ESG-related priorities. 2022 Proxy Statement 17Statement 19
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TABLE OF CONTENTS | | | Economic Opportunity
| | | • Helping independent talent unlock their potential by connecting professionals with a range of clients along with resources to support career independence
• Building an inclusive work marketplace by developing programs and features that enable 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 and 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
| | | | Diversity, Inclusion & Belonging (DIBs)
| | | • Dedicating strategic investment in DIBs
• Launched GlowUP, an enrichment program crafted by and for our leaders of color
• Fostering a sense of workplace belonging through Upwork Belonging Communities
| | | | Environmental Sustainability
| | | • Reducing our environmental footprint and enabling our customers to reduce theirs through use of our work marketplace
• Committing to transparency of 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 talent focused on sustainability
| | | | 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 sustainable business practicesFor more information regardingBoard 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 | ESG Program Office
Our ESG Program Office, which comprises our ESG programsSenior Program Manager and performance, includingother members of the legal department, drives our workforce diversity datacompany-wide strategic approach to ESG and annual emissions figures, seeupdates our 2021 Impact Report, whichnominating and governance committee on progress, risks, and ongoing strategy at least biannually | ESG Task Force
Our ESG Task Force, a committee made up of senior leaders and subject matter experts across Upwork, is available on ourresponsible for developing and implementing ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub. 18 2022 Proxy Statement |
20 2023 Proxy Statement |
TABLE OF CONTENTS | | | “With over 2,500 team members in more than 90 countries around the world, at Upwork we are intentionally designing our people processes with independent talent at our core. As pioneers of the future of work, we are committed to delivering a world class experience to the workforce of the future.”
| | | “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
Sunita Solao
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, emphasis is put on their contributions to our overall culture. Our Team and 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 for whom we are proud to offer a remote-first work model, which has environmental, as well as other, benefits. Our team consists of corporate employees, independent talent that we engage through our work marketplace, corporate employees, and 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 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. Our People Our mission not only drives the creation and continuous development of our work marketplace, butmarketplace; it is also integral to how we engage our employees and our approach to creating and fostering an inclusive environment that promotes and encourages diversity, inclusion, belonging, career development, and wellness. As of December 31, 2021,2022, we had approximately 650850 employees, and throughout 2021,2022, we engaged approximately 1,8001,950 independent team members through our work marketplace to provide services to us on a variety of internal projects. We believe the positive relationship between us and our team members and our unique, strong culture differentiate us and are key drivers of our business success. Diversity, Inclusion, and Belonging We put our people and their experiences first. 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 that build empathy and promote 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-dimensionalmultidimensional 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 conduct an internal review to facilitate 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 belongs. 2023 Proxy Statement 21
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TABLE OF CONTENTS Training and Development 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 training sessions and workshops. 2022 Proxy Statement 19 |
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Benefits and Competitive Compensation Beyond our training and development efforts, we take pride in offering competitive, market-basedWe strive to offer market-competitive compensation and benefits to our employees.attract and retain employees for the long term. We engage compensation consultants to benchmark our employee compensation with external sources to ensure fair and equitable pay practices,practices. We provide total rewards that attract and utilize equity grantsretain world-class employees through a total compensation package that includes equity-based awards to align employee compensation with stockholder interests. Merit increases and promotions are awarded 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 expandedcomprehensive benefits and services to those eligible, which include core benefits such as medical, dental, vision, and disability 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. We offer a health savings account with company contributions, family and medical leave, flexible working schedules, paid holidays and flexible vacation policies. We sponsor a 401(k) plan that includes a matching contribution, offer financial coaching through a third-party provider, and maintain an employee stock purchase plan that enables eligible employees to purchase shares of our stock at a discount through payroll deductions.
Team Member FeedbackOrganizational Wellbeing
We engage our workforce in meaningful ways and take timely action in response to their feedback. WhileResearch into workforce experience begins during onboarding and is sustained throughout a team member’s tenure at Upwork. This “life cycle” approach to workforce research affords our culturesenior leadership 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 ourhuman resources team members on a regular basisongoing and real-time insight into critical moments of worker experience and productivity. The collection of such data allows leadership, line managers, and our human resources team to gather feedback. In 2021, our average employee response rate was 86%,identify successes and we received notably high scores with respect to our leadership and purpose, with the survey results reflecting that manyopportunities at myriad levels, including for individual team members, feel invested in our futurecompany-wide programs, and continuelarger organizational units. Over time, the aggregation and analysis of such data enables us 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 surveysoptimize for those workforce factors that drive crucial people and other employee 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 lead our company and successfully execute our corporate strategy.business outcomes. Employee Wellness Employee safety and well-beingwellbeing is of paramount importance to us in any year and continued to be of particular focus in 2021 in light of the COVID-19 pandemic.us. We provide productivity and collaboration tools and resources for employees, including training and toolkitstool kits to help leaders effectively lead and manage remote teams. In addition, we enhanced and promotedpromote programs to support our employees’ physical, financial, and mental well-being.wellbeing. For example, we regularly conduct internal surveys to assess the well-beingwellbeing and needs of our employees, and we significantly expandedoffer employee assistance and mindfulness programs to help employees and their families manage anxiety, stress, sleep, and overall well-being.wellbeing. 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-beingwellbeing a priority, we provide company-wide “ChargeUp Days”—unlimited paid time off in addition to our company-recognized holidays. 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. Based solely on our review of the forms filed with the SEC 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, 2022, with the following exceptions: (i) Ms. Brown filed a Form 4 on February 23, 2022 that inadvertently omitted the grant of 121,765 restricted stock units, which was corrected with the filing of an amended Form 4 on February 24, 2022; (ii) Mr. Gilpin filed a Form 4 on February 23, 2022 that inadvertently omitted the grant of 62,785 restricted stock units, which was corrected with the filing of an amended Form 4 on February 24, 2022; and (iii) Mr. McCombs filed a Form 4 on February 23, 2022 that inadvertently omitted the grant of 114,155 restricted stock units, which was corrected with the filing of an amended Form 4 on February 24, 2022. 20 202222 2023 Proxy Statement |
TABLE 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. With respect to disclosure requirements, nominees for director nominated by a third party are not expected to provide additional disclosure compared to nominees for director nominated by the nominating and governance committee. 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 “Frequently 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 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. 2023 Proxy Statement 23
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TABLE OF CONTENTS 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. 2022 Proxy Statement 21 |
TABLE OF CONTENTS
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 to 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. 22 202224 2023 Proxy Statement |
TABLE OF CONTENTS 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 III will stand for election at the Annual Meeting. The terms of office of directors in Class IIIII and Class IIII do not expire until the annual meetings of stockholders held in 20232024 and 2024,2025, respectively. At the recommendation of our nominating and governance committee, our board of directors proposes that each of the Class III nominees named below, each of whom is currently serving as a director in Class I,II, be elected as a Class III director for a three-year term expiring at the 20252026 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. 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”“FOR” a director nominee must exceed the votes cast “AGAINST”“AGAINST” that nominee (with “abstentions” and “broker non-votes” not counted as a vote cast either “for”“FOR” or “against”“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 threetwo 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, 2022,2023, are provided in the table below and in the additional biographical descriptions set forth in the text below the table. Leela Srinivasan
Former Chief Marketing Officer, Momentive Global Inc. (maker of SurveyMonkey) | | | 49 | | | July 2019 | | | Yes | | | Audit | Gary Steele
Chief Executive Officer, Splunk Inc. | | | 60 | | | August 2018 | | | Yes | | | Compensation |
2023 Proxy Statement 25
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TABLE OF CONTENTS | | | Committees: audit
Other Public Company Boards: none
Experience: Leela Srinivasan has served as a member of our board of directors since July 2019. Ms. Srinivasan is an experienced Chief Marketing Officer with specific expertise in the human resources technology sector. Most recently, Ms. Srinivasan served as Chief Marketing Officer of Checkout Ltd, a global payments provider also known as Checkout.com, from September 2021 to March 2023. Previously, Ms. Srinivasan served as Chief Marketing Officer of Momentive Global Inc. (formerly known as SurveyMonkey), an online agile experience management company, from April 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 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 is a member of the Board of Advisors.
Relevant Expertise: Ms. Srinivasan brings to our board of directors her extensive leadership, executive, and business-to-business marketing experience gained across multiple organizations, including Momentive Global Inc., 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 and has relevant experience in the payments sector. | Leela Srinivasan
Former Chief Marketing Officer, Momentive Global Inc. (maker of SurveyMonkey) | |
| | | Committees: compensation
Other Public Company Boards: Splunk Inc.
Experience: 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 Splunk Inc., a data platform for security and observability, since April 2022. Mr. Steele also currently serves on the board of directors of two privately held companies. Prior to joining Splunk Inc., 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.
Relevant Expertise: Mr. Steele brings 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 Inc. | |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE TWO NOMINATED DIRECTORS 26 2023 Proxy Statement |
TABLE OF CONTENTS The directors who are serving terms that end following the Annual Meeting and their age, occupation, and length of service on our board of directors as of March 31, 2023, are provided in the table below and in the additional biographical descriptions set forth in the text below the table. Class III Directors | | | | | | | | | | | | | Hayden Brown
President and Chief Executive Officer, Upwork Inc. | | | 41 | | | December 2019 | | | No | | | — | Gregory C. Gretsch
Founding Partner and Managing Director, Jackson Square Ventures | | | 56 | | | March 2014 | | | Yes | | | Compensation and Audit | Anilu Vazquez-Ubarri
Board Member and Chief Human Resources Officer, TPG Inc. | | | 46 | | | November 2020 | | | Yes | | | Compensation | Class I Directors | | | | | | | | | | | | | Kevin Harvey
Founder and General Partner, Benchmark Capital | | | 5758
| | | March 2014 | | | Yes | | | Nominating and Governance | Thomas Layton
Former Chief Executive Officer, OpenTable, Inc. | | | 5960
| | | March 2014 | | | Yes | | | Nominating and Governance | Elizabeth Nelson
Former Executive Vice President and Chief Financial Officer, Macromedia, Inc. | | | 6162
| | | February 2015 | | | Yes | | | Audit and Nominating and Governance |
| | | Committees: nominating and governance
(Chair)
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 board 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.
| Kevin Harvey Founder and General Partner, Benchmark Capital.
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2022 Proxy Statement 23 |
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| | | Committees: nominating and governance (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, Inc. | |
| | | 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
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OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE THREE NOMINATED DIRECTORS
2023 Proxy Statement
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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.
Name & Experience
| | | Age
| | | Director Since
| | | Independent
| | | Committee
Memberships
| 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.
Relevant Expertise: Ms. Brown brings to our board of directors her extensive leadership experience, including as our Chief Executive Officer, and her institutional knowledge of our company, understanding of our company culture, and familiarity with developing and executing our strategic priorities. | Hayden Brown
President and Chief Executive Officer, Upwork Inc. | |
| | | 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.
Relevant Expertise: Mr. Gretsch brings to our board of directors his significant entrepreneurial, management, and leadership experience as a former founder and executive of several startup technology companies, and his background analyzing, investing in, and serving on the boards of directors of other technology companies. | Gregory C. Gretsch
Founding Partner and Managing Director, Jackson Square Ventures | |
| | | 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 board 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. | Kevin Harvey Founder and General Partner, Benchmark Capital | |
202228 2023 Proxy Statement 25 |
TABLE OF CONTENTS | | | Committees: audit
(Chair) and nominating and governance
Other Public Company Boards: none
PhenomeX Inc.
Experience: Leela SrinivasanElizabeth Nelson has served as a member of our board of directors since February 2015. Ms. Nelson currently serves on the board of PhenomeX Inc., a functional cell biology company, as well as several private companies. Ms. Nelson’s public company board of directors service includes serving as a director of Virgin Group Acquisition Corp. II from March 2021 to June 2022, Nokia Corporation from 2012 to 2021, Zendesk, Inc. from 2013 to 2019, and Pandora Media, Inc. from July 2019.2013 to June 2017. From 1996 through 2005, Ms. Srinivasan hasNelson served as the Executive Vice President and Chief MarketingFinancial Officer of Checkout Ltd, a global payments providerMacromedia, Inc., where she 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, from April 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 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 Corporationdirector from January 20102005 to May 2014.December 2005. Ms. Srinivasan also spent three yearsNelson holds a B.S. in management consultingForeign Service from Georgetown University, an M.B.A. in Finance from the Wharton School 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 EdinburghPennsylvania, and also earned an M.B.A. from the Tuck School of Business at Dartmouth, where she serves on the M.B.A. Advisory Council.
NACD’s CERT Certificate in Cybersecurity Oversight.
Relevant Expertise: Ms. SrinivasanNelson brings to our board of directors her extensive leadership, executive,experience in advising technology companies and business-to-business marketing experience gained across multiple organizations including Momentive, a publicly traded company. Ms. Srinivasan’s experience spans multiple relevantdeep understanding of the financial, accounting, and operational aspects of marketing including field marketing, online/digital marketing, corporate communications, global customer programs, advertising, campaigns, events,executive management from her prior experience as an executive of numerous public and corporate and employer branding. She has also spent multiple years in the human resourcesprivate technology sector.companies. | Leela Srinivasan
Elizabeth Nelson
Former Executive Vice President and Chief MarketingFinancial Officer, Checkout.comMacromedia, Inc. | |
| | | Committees: compensation
Other Public Company Boards: Splunk Inc.
Experience: 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 Splunk Inc., a data platform for security and observability, since April 2022. Mr. Steele also currently serves on the board of directors of three 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.
Relevant Expertise: Mr. Steele brings 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 since 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 the 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 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 Inc. | |
26 20222023 Proxy Statement
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TABLE OF CONTENTS Director Expertise, Experience, and Attributes Our board of directors comprises 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. Demographics and Board Diversity Matrix11
202230 2023 Proxy Statement 27 |
TABLE OF CONTENTS 11
8
| Age and tenure is as of March 31, 2021.2023. Tenure does not include service on the board of directors of Elance or oDesk prior to the combination of the two companies in March 2014. All other demographics are based on each director’s self-identification. |
28 20222023 Proxy Statement
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TABLE OF CONTENTS 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, 2022)2023). 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 of our directors bring unique experiences and backgrounds to Upwork. 202232 2023 Proxy Statement 29 |
TABLE OF CONTENTS 20212022 Director Compensation The following table provides information for 20212022 regarding all compensation awarded to, earned by, or paid to each person who served as a director for some portion or all of 2021,2022, 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 2021.2022. The compensation received by Ms. Brown as an employee is shown in the “Executive Compensation—20212022 Summary Compensation Table” below. Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | Total ($)(2) | | Name | | | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2) | | | Total ($)(2) | Thomas Layton(3) | | | 30,250 | | | 309,299 | | | 339,549 | | | 8,250 | | | 329,218 | | | 337,468 | Gregory C. Gretsch(4) | | | 22,500 | | | 262,626 | | | 285,126 | | | 28,750 | | | 263,382 | | | 292,132 | Kevin Harvey(5) | | | 3,250 | | | 262,626 | | | 265,876 | | | 4,150 | | | 263,382 | | | 267,532 | Elizabeth Nelson(6) | | | 70,750 | | | 198,445 | | | 269,195 | | | 87,275 | | | 203,025 | | | 290,300 | Leela Srinivasan(7) | | | 55,000 | | | 198,445 | | | 253,445 | | | 68,750 | | | 203,025 | | | 271,775 | Gary Steele(8) | | | 5,750 | | | 262,626 | | | 268,376 | | | 7,000 | | | 263,382 | | | 270,382 | Anilu Vazquez-Ubarri(9) | | | 48,250 | | | 198,445 | | | 246,695 | | | 61,375 | | | 203,025 | | | 264,400 |
(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 elections to receive fees or awards in cash or equity or based on additional fees payable on account of committee membership, as further described in “Non-Employee Director Cash Compensation Arrangements.” |
(2)
| The amounts reported in this columnthese columns represent the aggregate grant date fair value of RSUs awarded to directors in 20212022 computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718, which we refer to as ASC 718. The 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. |
(3)
| As of December 31, 2021,2022, Mr. Layton held 5,20613,360 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, 2021,2022, Mr. Gretsch held 4,72711,707 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 Director Compensation Arrangements.” |
(5)
| As of December 31, 2021,2022, Mr. Harvey held 4,72711,707 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 Director Compensation Arrangements.” |
(6)
| As of December 31, 2021,2022, Ms. Nelson held 4,06910,192 unvested RSUs, which represented the Annual Award, and options to purchase 295,000 shares of common stock. The RSUs are further described in (and vest in accordance with the vesting schedule described under) “Non-Employee Director Compensation Arrangements.” The stock option was fully vested and exercisable as of December 31, 2021,2022, and expires 10 years after the date of grant.on February 25, 2025. |
(7)
| As of December 31, 2021,2022, Ms. Srinivasan held 10,52910,192 unvested RSUs, which included both the Initial Award granted to Ms. Srinivasan upon her appointment to our board of directors in July 2019 andrepresented the Annual Award, as further described in (and which vest in accordance with the vesting schedule described under) “Non-Employee Director Compensation Arrangements.” |
(8)
| As of December 31, 2021,2022, Mr. Steele held 4,72711,707 unvested RSUs, which included both the Annual Award and the Fee (RSU), and options to purchase 150,527 shares of common stock. The RSUs are further described in (and vest in accordance with the vesting schedule described under) “Non-Employee Director Compensation Arrangements.” The stock option was fully vested and exercisable as of December 31, 2021,2022, and expires 10 years after the date of grant.on August 19, 2028. |
(9)
| As of December 31, 2021,2022, Ms. Vazquez-Ubarri held 13,57914,947 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 Director Compensation Arrangements.” |
2023 Proxy Statement 33
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TABLE OF CONTENTS Non-Employee Director Compensation Arrangements In April 2021,order to remain competitive in an increasingly challenging landscape for recruitment of non-employee directors, our board of directors approved an amended and restated non-employee director compensation program.program in April 2022. Under thesuch amended and restated non-employee director compensation program, non-employee directors were entitled to receive an increase in the amount of certain compensation. The following changes were made to the program: (i) an increase to the Annual Award (as defined below) from $170,000 to $185,000, (ii) an increase to the Chairperson Fee (as defined below) from $40,000 to $60,000, and (iii) an increase in the following cashannual committee chair and equity compensation:member fees: (A) audit committee chair fee from $20,000 to $35,000 and audit committee member fee from $10,000 to $17,500, (B) compensation committee member fee from $6,500 to $7,500, and (C) nominating and governance committee chair fee from $8,000 to $8,500 and nominating and governance committee member fee from $4,000 to $4,300. Our current amended and restated non-employee director compensation program is as follows: 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 $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 |
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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 followingthe one-year anniversary of 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). 34 2023 Proxy Statement |
TABLE OF CONTENTS Cash or Equity Compensation Election—Annual Award Each non-employee director will automatically be entitled to an annual award of a $170,000$185,000 cash payment or RSUs with a total value of $170,000$185,000 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,settled, 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 $55,000, which we refer to as the General Board Service Fee, (ii) the non-executive chairperson as a chairperson fee is $40,000,$60,000, 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 |
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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. 2023 Proxy Statement 35
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TABLE OF CONTENTS 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$35,000 Audit committee member: $10,000$17,500 Compensation committee chair: $15,000 Compensation committee member: $6,500$7,500 Nominating and governance committee chair: $8,000$8,500 Nominating and governance committee member: $4,000$4,300 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. 2022 Amended and Restated Non-Employee Director Compensation ProgramIn order to remain competitive in an increasingly challenging landscape for recruitment of non-employee directors, in April 2022, our board of directors approved an amended and restated non-employee director compensation program, to take effect 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 $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 $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: (1) audit committee chair fee of $35,000 and audit committee member fee of $17,500, (2) compensation committee chair fee of $15,000 and compensation committee member fee of $7,500, and (3) nominating and governance committee chair fee of $8,500 and nominating and governance committee member fee of $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.
32 202236 2023 Proxy Statement |
TABLE OF CONTENTS 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, 2022,2023, 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, 2022,2023, requires the affirmative vote of a majority of the voting power of the shares present or represented by proxy at the Annual 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, 2021.2022. 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, 20202021 and 2021.2022. 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, 20202021 and 2021,2022, fees for services provided by PricewaterhouseCoopers LLP were as follows (in thousands): Fees Billed to Upwork | | 2020 | | 2021 | | | 2021 | | | 2022 | Audit fees(1) | | | $2,168 | | | $2,623 | | | $2,623 | | | $2,913 | Audit-related fees | | | — | | | — | | | — | | | — | Tax fees(2) | | | — | | | 35 | | | 35 | | | — | All other fees(3) | | | 3 | | | 4 | | | 4 | | | 4 | Total fees | | | $2,171 | | | $2,662 | | | $2,662 | | | $2,917 |
(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)
| “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. |
(3)
| “All other fees” include fees for annual subscription services for access to online accounting research and disclosure checklist software applications. |
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TABLE OF CONTENTS 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” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2022.2023. 34 202238 2023 Proxy Statement |
TABLE OF CONTENTS Advisory Vote on the Compensation of Our Named Executive Officers In accordance with Section 14A of the 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”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”“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”FOR” APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. 20222023 Proxy Statement 3539
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TABLE OF CONTENTS Approval of Restated Certificate of Incorporation We are proposing to amend and restate our current restated certificate of incorporation to make the changes described below. Section 102(b)(7) of the DGCL was amended effective August 1, 2022 to permit a Delaware corporation’s certificate of incorporation to include a provision that limits or eliminates (i.e., exculpates) the monetary liability of certain officers for breaches of the fiduciary duty of care as officers in certain actions. This exculpation would not protect officers from liability for breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Nor would this exculpation shield such officers from liability for claims brought by or in the right of the corporation, such as derivative claims. In addition, only certain officers may be exculpated from liability: (i) a corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer, or chief accounting officer; (ii) an individual identified in public filings as one of the most highly compensated executive officers of the corporation; and (iii) an individual who, by written agreement with the corporation, has consented to be identified as an officer for purposes of Delaware’s long-arm jurisdiction statute. The amendment to our current restated certificate of incorporation proposed in this Proposal 4 would eliminate the liability of these statutorily defined officers as described above, but the amendment will not have retroactive effect and will not apply to any act or omission occurring prior to the effectiveness of the amendment. The amendment is not being proposed in response to any specific resignation, threat of resignation, or refusal to serve by any officer. Our board of directors believes it is necessary to provide protection to officers to the fullest extent permitted by law in order to attract and retain highly qualified senior leadership. The nature of the role of directors and officers often requires them to make decisions on crucial matters in time-sensitive situations, which can create substantial risk of investigations, claims, actions, suits, or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. We expect competitor companies will likely adopt exculpation clauses that limit the personal liability of officers in their charters, and failing to obtain approval of the Restated Certificate of Incorporation could negatively affect our ability to recruit and retain high-caliber officer candidates. This protection has long been afforded to directors, and our board of directors believes that extending similar exculpation to its officers is fair and in the best interests of our company and our stockholders. In addition to the changes to permit officer exculpation described above, the amendment would make technical and administrative changes to the choice of forum provision in our current restated certificate of incorporation in order to (i) clarify that the federal district court for the District of Delaware shall be the sole and exclusive forum for certain claims in the event the Court of Chancery does not have jurisdiction, (ii) add a provision that all “internal corporate claims” (as defined in Section 115 of the DGCL) be brought exclusively in Delaware courts, and (iii) clarify that we shall be entitled to equitable relief to enforce the choice of forum provision. Our board of directors has unanimously approved the Restated Certificate of Incorporation, in the form attached to this proxy statement as Appendix A-1, and recommends that our stockholders vote “FOR” the approval of the Restated Certificate of Incorporation. For convenience of reference, a copy of the Restated Certificate of Incorporation showing the changes from our current restated certificate of incorporation, with deleted text shown in strikethrough and added or moved text shown as underlined, is attached to this proxy statement as Appendix A-2. The affirmative vote of the holders of a majority of the outstanding shares of our capital stock entitled to vote generally in the election of directors is required to approve the Restated Certificate of Incorporation. Shares that are voted “abstain” are treated the same as shares voting “against” this proposal. 40 2023 Proxy Statement |
TABLE OF CONTENTS If our stockholders approve the Restated Certificate of Incorporation, our board of directors has authorized our officers to file the Restated Certificate of Incorporation with the Delaware Secretary of State, to become effective upon acceptance by the Delaware Secretary of State. Our board of directors intends to have that filing made if, and as soon as practicable after, this proposal is approved at this annual meeting. However, even if our stockholders adopt the Restated Certificate of Incorporation, our board of directors may abandon the Restated Certificate of Incorporation without further stockholder action prior to the effectiveness of the filing of the Restated Certificate of Incorporation with the Delaware Secretary of State and, if abandoned, the Restated Certificate of Incorporation will not become effective. If the board of directors abandons the Restated Certificate of Incorporation, it will publicly disclose that fact and the reason for its determination. OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE RESTATED CERTIFICATE OF INCORPORATION. 2023 Proxy Statement 41
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TABLE OF CONTENTS 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, 2022,2023, 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. 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 129,651,218133,464,264 shares of our common stock outstanding as of March 31, 2022.2023. The table below does not include Ms. Gessert, as her employment with the Company began after March 31, 2023. Shares of our common stock subject to stock options that are exercisable as of and within 60 days of March 31, 2022,2023, or RSUs that may vest and settle within 60 days of March 31, 2022,2023, 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 (%) | | | Number of Shares
Beneficially Owned | | | Percentage of Shares
Beneficially Owned (%) | Named Executive Officers and Directors:
| | | | | | | Named Executive Officers and Directors:
| Hayden Brown(1) | | | 1,030,782 | | | * | | | 1,269,331 | | | * | Jeff McCombs(2) | | | 16,126 | | | * | | | 97,264 | | | * | Eric Gilpin(3) | | | 235,787 | | | * | | | 290,373 | | | * | Gregory C. Gretsch(4) | | | 2,819,798 | | | 2.2 | | | 2,826,468 | | | 2.1 | Kevin Harvey(5) | | | 2,537,004 | | | 2.0 | | | 2,609,502 | | | 2.0 | Thomas Layton(6) | | | 4,110,828 | | | 3.2 | | | 4,120,216 | | | 3.1 | Elizabeth Nelson(7) | | | 675,027 | | | * | | | 679,096 | | | * | Leela Srinivasan(8) | | | 22,385 | | | * | | | 29,018 | | | * | Gary Steele(9) | | | 180,552 | | | * | | | 187,222 | | | * | Anilu Vazquez-Ubarri(10) | | | 10,104 | | | * | | | 18,928 | | | * | All executive officers and directors as a group (10 persons)(11) | | | 11,638,393 | | | 8.9 | | | 12,127,418 | | | 9.0 | Other 5% Stockholders:
| | | | | | | Other 5% Stockholders:
| The Vanguard Group, Inc.(12) | | | 10,760,274 | | | 8.3 | | | 11,105,458 | | | 8.3 | T. Rowe Price Associates, Inc.(13) | | | 10,043,245 | | | 7.7 | | BlackRock, Inc.(14) | | | 8,189,754 | | | 6.3 | | BlackRock, Inc.(13) | | | | 8,750,581 | | | 6.6 | Capital International Investors(14) | | | | 7,150,413 | | | 5.4 | Baillie Gifford & Co.(15) | | | | 6,807,024 | | | 5.1 |
(1)
| Consists of (i) 796,920964,430 shares of common stock, (ii) 216,007261,709 shares of common stock subject to options that are exercisable within 60 days of March 31, 2022,2023, and (iii) 17,85543,192 shares of common stock subject to RSUs that vest within 60 days of March 31, 2022.2023. |
42 2023 Proxy Statement |
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| Consists of 97,264 shares of common stock. |
(2)
(3)
| Consists of (i) 6,788 shares of common stock and (ii) 9,338 shares of common stock subject to RSUs that vest within 60 days of March 31, 2022. |
(3)
| Consists of (i) 19,34251,188 shares of common stock, (ii) 205,000220,000 shares of common stock subject to options that are exercisable within 60 days of March 31, 2022,2023, and (iii) 11,44519,185 shares of common stock subject to RSUs that vest within 60 days of March 31, 2022.2023. |
(4)
| Consists of (i) 222,229228,899 shares of common stock held of record by Mr. Gretsch, (ii) 716,795 shares of common stock held by a trust for the Gregory C. Gretch Trust, UAD 1/28/00,benefit of which Mr. Gretsch, is trustee, (iii) 723,238 shares of common stock held byof record in a trust for the Gretsch Revocable Trust DTD 5/30/2008,benefit of which Mr. Gretsch is trustee,and his spouse, (iv) 25,944 shares of common stock held of record by a trust for the benefit of Mr. Gretsch's children, and (v) 1,131,592 shares of common stock held of record by Martis Creek Investments, L.P. The Gretsch Revocable Trust, the general partner of Martis Creek Investments, L.P., has sole voting and dispositive power over such shares, and voting decisions with respect to such shares are madea limited partnership controlled by Mr. Gretsch. The address of Martis Creek Investments, L.P. is 727 Sansome Street, Suite 300, San Francisco, California 94111. |
36 2022 Proxy Statement |
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(5)
| Consists of (i) 37,52544,195 shares of common stock held of record by Mr. Harvey, (ii) 748,164813,992 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. |
(6)
| Consists of (i) 2,94212,330 shares of common stock held of record by Mr. Layton, (ii) 3,971,975 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 the Thomas H. Layton Separate Property Trust dtd 11/29/99, of which Mr. Layton serves as trustee. |
(7)
| Consists of (i) 380,027384,096 shares of common stock held of record by the Nelson Family Trust and (ii) 295,000 shares of common stock subject to stock options held by Ms. Nelson that are exercisable within 60 days of March 31, 2022.2023. |
(8)
| Represents 22,38529,018 shares of common stock. |
(9)
| Consists of (i) 30,02536,695 shares of common stock and (ii) 150,527 shares of common stock subject to options that are exercisable within 60 days of March 31, 2022.2023. |
(10)
| Represents 10,10418,928 shares of common stock. |
(11)
| Consists of (i) 10,733,22111,137,805 shares of common stock, (ii) 866,534927,236 shares of common stock subject to stock options that are exercisable within 60 days of March 31, 20222023 held by our executive officers and directors as a group, and (iii) 38,63862,377 shares of common stock subject to RSUs that vest within 60 days of March 31, 20222023 held by our executive officers and directors as a group. Does not include Ms. Gessert, as her employment with the Company began after March 31, 2023. |
(12)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on February 10, 2022,9, 2023 by The Vanguard Group, Inc.Group. The Schedule 13G/A indicated that The Vanguard Group Inc. had shared voting power over 203,757 shares, sole dispositive power over 10,432,67310,787,378 shares, of our common stock, shared voting power over 223,667 shares of our common stock, and shared dispositive power over 327,601318,080 shares of our common stock. The address of The Vanguard Group Inc. is 100 Vanguard Blvd., Malvern, PA 19355. |
(13)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on February 14, 2022, by T. Rowe Price Associates, Inc. The Schedule 13G/A indicated that T. Rowe Price Associates, Inc. had sole voting power over 3,574,809 shares of our common stock and sole dispositive power over 10,043,245 shares of our common stock. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. |
(14)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on February 8, 2022,1, 2023 by BlackRock, Inc. The Schedule 13G/A indicated that BlackRock, Inc. had sole voting power over 8,031,3608,612,405 shares of our common stock and sole dispositive power over 8,189,7548,750,581 shares of our common stock. The address of BlackRock, Inc. is 55 East 52nd52nd Street, New York, NY 10055.
|
(14)
| Based solely on information contained in a Schedule 13G filed with the SEC on February 13, 2023 by Capital International Investors. The Schedule 13G indicated that Capital International Investors had sole voting and dispositive power over 7,150,413 shares of our common stock. The address of Capital International Investors is 333 South Hope Street, 55th Fl, Los Angeles, CA 90071. |
(15)
| Based solely on information contained in a Schedule 13G filed with the SEC on January 23, 2023 by Baillie Gifford & Co. The Schedule 13G indicated that Baillie Gifford & Co. had sole voting power over 5,345,049 shares of our common stock and sole dispositive power over 6,807,024 shares of our common stock. The address of Baillie Gifford & Co. is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, UK. |
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TABLE OF CONTENTS Executive Officers and Key Employees The names, ages, and positions of our executive officers and key employees their ages as of March 31, 2022, and their positions2023 (except as otherwise indicated) are shown below. Executive Officers:
| | | | | |
| Hayden Brown | | | 4041
| | | President, Chief Executive Officer, and Director | Jeff McCombsErica Gessert(1)
| | | 5048
| | | Chief Financial Officer | Eric Gilpin | | | 4344
| | | Chief Sales Officer | Key Employees:
| Brian Levey | | | | | | | Saty Bahadur
| | | 4955
| | | Chief TechnologyBusiness Affairs and Legal Officer & Secretary | Sam Bright
| | | 38
| | | Chief Product & Experience Officer
| Zoë HarteSunita Solao(2)
| | | 47 | | | Chief People Officer | Brian Levey
| | | 54
| | | Chief Business Affairs and Legal Officer & Secretary
| Melissa Waters | | | 4546
| | | Chief Marketing Officer |
(1)
| Ms. Gessert’s employment with the Company began on April 25, 2023. |
(2)
| Ms. Solao’s employment with the Company began on April 25, 2023. |
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 1 above. | | | Jeff McCombsErica Gessert has served as our Chief Financial Officer since August 2020.April 2023. Prior to joining us, Mr. McCombsMs. Gessert served as the Chief Financial Officerin a number of Doctor On Demand,senior executive finance roles for PayPal Holdings, Inc., a virtual care provider, from October 2018 to August 2020. Prior to that, Mr. McCombs serveddigital payments and commerce company, including as Chief FinancialTransformation Officer of OpenTable, Inc., an online restaurant reservation company, from January 20162022 to March 2023, Senior Vice President of Finance & Analytics from June 2019 to January 2022, and Vice President of Finance & Analytics from March 2017 to June 2018, and as Chief Financial Officer of Flipboard2019. Before joining PayPal Holdings, Inc., a news and social network aggregation company, from May 2014 to May 2015. Mr. McCombs also previously in 2015, Ms. Gessert served as Head of Global Business Operations for the Ads business of 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!for Sprint Corporation, a communications company, from 2009 to 2014, including as Vice President of Finance Operations, Postpaid Marketing and Chief Financial Officer, Sprint Prepaid from 2013 to 2014 and as Director of Investor Relations from 2011 to 2013. From 2007 to 2009, Ms. Gessert served as Director of Investor Relations for Virgin Mobile USA, Inc., including Senior Vice President, Business Operations, Vice President, Business Managementa wireless communications company. Ms. Gessert studied Economics 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.Philosophy at Reed College.
| Jeff McCombsErica Gessert
| |
| | | Eric Gilpin has served as our Chief Sales Officer since February 2022. Prior to that, Mr. Gilpin served as our Senior Vice President, Sales from April 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 202244 2023 Proxy Statement |
TABLE OF CONTENTS | | | Saty Bahadur has served as our Chief Technology Officer since July 2021. Prior to joining us, Mr. Bahadur served in a variety of roles at Amazon.com, Inc. from September 2017 to July 2021, including leading the team responsible for preventing worldwide fraud and abuse on Amazon.com and leading the Alexa artificial intelligence group. Prior to Amazon, Mr. Bahadur served in a variety of leadership roles at Microsoft Corporation from June 2007 to October 2017, including Director of Engineering, and a variety of engineering roles at Intel Corporation from 1996 to 2007, including Engineering Manager. Mr. Bahadur holds a B.E. from Birla Institute of Technology and Science, Pilani and an M.S. in Computer Science from Clemson University.
| Saty Bahadur
| |
| | | Sam Bright has 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 a member of the Board of Trustees of the Teachers Insurance and Annuity Association of America (TIAA) since 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. Mr. Bright holds a B.A. from Taylor University and an M.B.A. from Harvard Business School.
| Sam Bright
| |
| | | Zoë Harte has served as our Chief People Officer since October 2020. Prior to that, Ms. Harte served as our Senior Vice President, Human Resources and Talent Innovation from September 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 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 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 | |
| | | Sunita Solao has served as our Chief People Officer since April 2023. Previously, she served as Vice President, People at Convoy, Inc., a digital freight network company, from October 2020 to May 2022. Prior to Convoy, Ms. Solao led the People team for Airbnb, Inc.’s Homes Business Division. Ms. Solao was at Airbnb, Inc. from May 2014 to September 2020. Before joining Airbnb, Inc., Ms. Solao was at eBay Inc., a global ecommerce company, from 2009 to 2014 where she held several human resources leadership roles. Ms. Solao holds a B.E. in Chemical Engineering from the Birla Institute of Technology and Science, Pilani, an M.B.A. in Human Resource Management from the University of Wisconsin-Madison, and an M.B.A. in Human Resources Management from Symbiosis International University. | Sunita Solao | |
| | | 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 | |
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TABLE OF CONTENTS Compensation Discussion and Analysis This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 20212022 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, our former principal financial officer, and the executive officer (other than our principal executive officer and former principal financial officer) who was our most highly compensated executive officer at the end of 2021,2022, whom we refer to collectively as our Named Executive Officers. For 2021,2022, our Named Executive Officers were: Hayden Brown, our President and Chief Executive Officer;Officer, who we refer to as our CEO; Jeff McCombs, our former Chief Financial Officer; and Eric Gilpin, our Chief Sales Officer. Executive Transitions During 2022 Mr. McCombs’s final day as our Chief Financial Officer was December 31, 2022. On September 21, 2022, we entered into a Transition and Separation Agreement with Mr. McCombs, which is described in more detail below. 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 20222023 | | | | Other Compensation Elements
Information on employee arrangements, additional policies, and tax and accounting considerations | | | |
Who We Are We operate the world’s largest work marketplace that connects businesses with independent talent from across the globe, as measured by GSV. During the year ended December 31, 2021,2022, our work marketplace enabled $3.5$4.1 billion of GSV. For talent, weWe serve as a powerful marketing channel todiscovery engine for talent, helping independent professionals and agencies find rewarding, engaging, and flexible work.work, as well as market their services and build their book of business. Talent benefitsbenefit from access to quality clients simplified invoicing, and secure and timely payments while enjoying the freedom to run their own businesses, create their own schedules, and work from their preferred locations. Moreover, talent have real-time visibility into opportunities that are in high demand so that they can invest their time and focus on developing sought-after skills. For clients, our work marketplace offersprovides fast, secure, and efficient access to high-quality talent with overmore than 10,000 skills across more than 90125 categories. Talent includes independent professionals and agencies of varying sizes and is an increasingly sought-after, critical, and expanding segment of the global workforce. 46 2023 Proxy Statement |
TABLE OF CONTENTS Key 20212022 Business Highlights In 2021,2022, we generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights from 20212022 include: Performance Highlights Growing Our Work Marketplace | | | GSV grew to over $3.54.1 billion, a 41%16% year-over-year increase | Generating Strong Growth | | | Generated more than $503618 million of revenue, a 35%23% year-over-year increase | Expanding Our Active Client Base(1) | | | Expanded the number of active clients by 22%6% year-over-year to approximately 771,000814,000(2) while increasing GSV per active client15% 10% year-over-yearto $4,599(2)5,045 in the fourth quarter of 2022 |
(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 |
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(2)
| As of December 31, 2021.2022. |
Strategic Highlights Launching a New Generation of Leadership | | | Continued to invest in the top talent necessary to drive our long-ternlong-term success including hiring a new Chief Technology Officer and Chief Marketing Officer | Innovating the Work Marketplace | | | Developed an end-to-end solution that makes full-time hiring easily available to all clients
Launched Project CatalogTM (pre-defined, ready-to-purchase projects), Talent ScoutTM (a data-science-driven hiring solution), Consultations and Virtual Talent BenchTM (enables clientsProject Tiers, Contract Workroom, MyStats, a Rate Calculator, enhancements to establishour Enterprise Suite, and paid promotional products such as Availability Badges and Boosted Proposals
Announced a network of talent)
We also announced partnershipspartnership with Catch,Credly, a leading benefits company dedicateddigital credential platform, to expand the needsnumber and breadth of independent talent, and Loom, the industry-leading communication toolcertifications that allows our users to simultaneously record themselves and their computer screen and share these recordings with their teams and customerscan be verified on Upwork
| Evangelizing the Work Marketplace | | | Increased our investment 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 prioritiesmeaningfully. In 2023, we plan to reduce our investment in brand marketing given our efforts to become more efficient in the current macroeconomic environment
Launched our new campaign, “This Is How We Work Now,” with the goal of helping companies realize that “whom” you work with is a much more powerful work transformation than “where” work gets done
Also launched Upwork Academy to help improve and businesses grapplediversify the skill set of talent on the platform and announced Opportunity Unlimited to connect professionals displaced from Ukraine 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 projectsremote work opportunities
| Scaling the Work Marketplace | | | Announced that we are growing the enterprise sales team and expect to doubleIncreased the number of account executives ofclients spending $1 million or more on our “land” teamwork marketplace by the end of 2022
By doing this, we are establishing a strong foundation on which45% compared to capture the long-term value opportunity of enterprise sales and will continue to invest wisely and strategically to capitalize on that opportunity2021
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2023 Proxy Statement 47
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TABLE OF CONTENTS 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. 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 competitors and is aligned to our strategic focus on growth objectives. 2022 Proxy Statement 41 |
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The following charts show comparisons from October 3, 2018 (the date our common stock commenced trading on The Nasdaq Global Select Market), through December 31, 2021, and from January 1, 2020 (the date on which Hayden Brown became our President and Chief Executive Officer), through December 31, 2021, of the cumulative total returns for our common stock, the NASDAQ-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-Technology Sector Index assume reinvestment of any dividends.
Our Demonstrated Value Creation
20212022 Core Compensation Elements
42 2022 Proxy Statement |
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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
• Compensation Program Revenue performance metric aligns
compensation with strategic growth |
48 2023 Proxy Statement |
TABLE OF CONTENTS Long-Term Equity Incentives | | | • Time-based restricted stock unitRSU awards, which we refer to as RSUs, vest over four-year period
• PSU awards, which are subject to both performance-performance-based and time- basedtime-based vesting requirements | | | • 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
• Compensation Program Revenue performance metric aligns
compensation with strategic growth |
2021 Chief Executive Officer Performance Award
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 “Chief Executive Officer Performance Award” below.
2022 Proxy Statement 43 |
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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 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“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 | Maintain a compensation recoupment and forfeiture, or clawback, policy | Ensure succession planning |
Do not use “single-trigger” change in control benefits for our Named Executive Officers | Do not offer executive retirement plans | Prohibit hedging of our equity securities by our employees, including our Named Executive Officers, and the 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 20212022 annual meeting of stockholders, we held a non-binding, advisory Say-on-Pay vote on the compensation of our 2021 Named Executive Officers, which we refer to as a “Say-on-Pay” vote, and approximately 96.3%Officers. Approximately 70.9% of the votes cast (for and against) approved our Say-on-Pay proposal for the 2021 fiscal year. Our board of directors noted that stockholder support for such Say-on-Pay vote was substantially lower than the 96.3% support for the Say-on-Pay vote at our annual meeting of stockholders in 2021. 2023 Proxy Statement 49
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TABLE OF CONTENTS In response to the decline in support, our board of directors and management team led a dedicated effort in the second half of 2022 to engage with our largest stockholders to discuss topics related to our executive compensation program and their votes on our Say-on-Pay proposal. Our strategy, the composition of the board of directors, corporate governance, and environmental and social practices were also discussed. The compensation committee chair and the audit committee chair participated in select meetings and engaged directly with stockholders about the foregoing topics. A summary of such stockholder outreach and engagement efforts is included in the graphic below. Stockholder Engagement Source: Capital IQ; representing percentage of outstanding shares as of January 17, 2023, based on the latest ownership filings. Overall, the feedback we heard from our stockholders was supportive of our broad executive compensation practices and such stockholders did not request any significant changes to our ongoing compensation program. Nearly all of the stockholders with which we spoke that voted against our Say-on-Pay proposal in 2022 attributed their votes to the CEO Performance Award that the compensation committee granted in 2021. A summary of the CEO Performance Award can be found under the heading “Chief Executive Officer Performance Award” in our 2022 proxy statement filed with the SEC on April 19, 2022. However, most stockholders noted that they understood and supported the compensation committee’s rationale for 2020.the award: to retain and motivate our CEO amid a very competitive market for executive talent in the technology industry. Furthermore, stockholders recognized the performance criteria associated with the CEO Performance Award were very rigorous and that the award would result in realized compensation for our CEO only if stockholders also realized significant value in the form of stock price appreciation. Stockholders were clear that they did not expect us to revisit or revise the CEO Performance Award; however, some stockholders inquired about whether this type of award would be granted as a regular feature of our ordinary-course executive compensation program, noting their general opposition to one-time awards and their expectation that they be used only in rare circumstances where the compensation committee has a compelling rationale. Stockholders also expressed support for our increase in the percentage allocation of PSU awards in our long-term incentive compensation program in 2022. This change had been made, in part, in response to stockholder feedback. In February 2023, the compensation committee increased the percentage allocation of PSUs that comprise Mr. Gilpin’s long-term incentive compensation opportunity. The compensation committee believes this helps incentivize long-term value creation and strong financial performance and further align Mr. Gilpin’s compensation with the interests of our stockholders. Beginning in 2023, all of our Named Executive Officers' target PSU allocations will make up at least half of their overall goal long-term incentive opportunity. 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.stockholders’ opinions. 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 a 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 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 202250 2023 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.
○ | 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).
○ | This change was well received by stockholders, who encouraged us to provide relevant disclosure in future proxy statements. |
○ | 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: We aim to attract, motivate, incentivize, and retain employees at the executive level who contribute to our long-term success | We provide competitive compensation packages to our executives | We reward the achievement of our business objectives | We effectively align theiremployee 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 |
We structure the annual compensation of our Named Executive Officers using three principal elements: annual base salary, annual performance 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 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 plan or, in the case of Mr. Gilpin, a sales compensation plan. The annual 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 the compensation committee. The sales compensation plan for Mr. Gilpin provides payments as described in “Sales Compensation Plan for Mr. Gilpin” below. In addition, we grant PSU awards and RSU awards to our Named Executive Officers, the value of which depends on both our short-term and long-term financial performance, which influences the value of our common stock, thereby incentivizing our Named Executive Officers to build sustainable long-term value for the benefit of our stockholders. 2022 Proxy Statement 45 |
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Through the use of these variable pay elements, 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” alignment with an emphasis on long-term stockholder value creation. We have not adopted policies or established 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 5449 of our 20212022 Impact Report, which 2023 Proxy Statement 51
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TABLE OF CONTENTS 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. The information contained in our 2022 Impact Report is not intended to be incorporated into this Proxy Statement. 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 | | | Our 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 | | | Our 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
CompensationThe compensation consultant attends the meetings of the compensation committee as requested
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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 onin the “Investor Relations” section of our website, which is located at 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 |
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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 performance 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, as the case may be. 52 2023 Proxy Statement |
TABLE OF CONTENTS 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’sCEO’s compensation relative to that of our other 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 OfficerCEO 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 overreliance on benchmarking can result in compensation that is unrelated to the value actually 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 executive compensation program. Role of Management In discharging its responsibilities, the compensation committee works with members of our management, including our Chief Executive Officer.CEO. 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’sCEO’s proposals with respect to program structures, as well as our Chief 20222023 Proxy Statement 4753
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TABLE OF CONTENTS Executive Officer’swell as our CEO’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’sCEO’s evaluation of their performance for the prior year.
At the beginning of each year, our Chief Executive OfficerCEO 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 OfficerCEO and the Named Executive Officers and are also reviewed with our board of directors. The compensation committee reviews and discusses our Chief Executive Officer’sCEO’s recommendations and considers them as one factor in determining and approving our Named Executive Officers’ compensation. Our Chief Executive OfficerCEO 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 2021,2022, the compensation committee used the compensation peer group set forth below to analyze the compensation of our Namedthen-Named Executive Officers and make its initial compensation decisions for the year. This compensation peer group, which was developed in July 20202021 with the assistance of Compensia after conducting a thorough review of our then-compensation peer group, was comprised of publicly-tradedpublicly 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 and Public Company Status | | | Publicly-tradedPublicly 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 0.4x0.5x to approximately 2.5x2.0x our revenue (based on the then-last four fiscal quarters) of approximately $315$404 million (approximately $125$200 million to approximately $790$810 million) | Market Capitalization | | | Similar market capitalization to ours–within a range of approximately 0.2x0.33x to approximately 5.0x3.0x our then 30-day market capitalization of approximately $1.4$6.7 billion (approximately $285 million$2.2 billion to approximately $7.1$20.1 billion) |
54 2023 Proxy Statement |
TABLE OF CONTENTS As a result, the compensation committee approved an updated compensation peer group consisting of the following companies: AppFolio
| | | Fiverr International
| | | Redfin
| Appian
| | | LivePerson
| | | Shutterstock
| Benefitfocus
| | | Magnite(1)
| | | Stamps.com
| CarGurus
| | | Pluralsight
| | | TechTarget
| Cars.com
| | | Quotient Technology
| | | TrueCar
| Eventbrite
| | | The RealReal
| | | Yext
| EverQuote
| | | | | | |
(1)
| Magnite was formerly named The Rubicon Project prior to its merger with Telaria in April 2020. |
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The following companies were removed from our peer group: Care.com and Etsy.
The following companies were added to our peer group: Eventbrite, EverQuote, Fiverr International, The RealReal, and Magnite.
Total Revenue ($ 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 $20.1 billion).
Based on a review of the analysis prepared by Compensia, the compensation committee approved a revised compensation peer group for the remainder of 2021 consisting of the following companies:
Alteryx | | | Chegg | | | Q2 Holdings | Anaplan | | | Everbridge | | | Redfin | AppFolio | | | Fastly | | | Revolve Group | Appian | | | Fiverr International | | | Shutterstock | Asana | | | LivePerson | | | Smartsheet | BlackLine | | | Magnite(2) | | | Stamps.com | CarGurus | | | Paylocity | | | |
(1)
| This peer group was approved in July 2021 but was not used as a factor by the compensation committee when making compensation decisions for our Named Executive Officers in 2021. |
(2)
| Magnite was formerly named The Rubicon Project prior to its merger with Telaria in April 2020. |
Seven companies, Benefitfocus, Cars.com, EverQuote, Quotient Technology, The RealReal, TrueCar, and Yext, were removed from our compensation peer group because their market capitalization was no longer within our targeted market capitalization range; two companies, Eventbrite and TechTarget, were removed because their revenue was no longer within our targeted revenue range; and one company, Pluralsight, was removed because it had been acquired. Eleven The following 11 companies were added to our peer group:group on the basis of their similarity to us in size, revenue, market capitalization, and industry sector: Alteryx, Anaplan, Asana, BlackLine, Chegg, Everbridge, Fastly, Paylocity, Q2 Holdings, Revolve Group, and Smartsheet.
Total Revenue ($ millions)(1) | | | 404 | | | 422 | Market Capitalization ($ millions)(2) | | | 6,687 | | | 6,020 |
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| Total revenue measured as of June 2021 and reflects the most recently reported four fiscal quarters. |
(2)
| Market capitalization measured based on the average of the 30 trading-day period ended July 13, 2021. |
The compensation committee used data drawn from the companies in our compensation peer group, as well as data from a custom data cut of 68 U.S.-based software companies with revenues ranging from approximately $200 million to approximately $810 million and market capitalizations ranging from approximately $2.2 billion to approximately $20.1 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 performance bonus opportunities, and long-term incentive compensation opportunities. All of the compensation peer group companies that participate in the Radford Global Technology survey were included in the custom data cut.
This compensation peer group was used by the compensation committee for most of 2022 as a reference for understanding the competitive market for executive positions in our industry sector.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 2021,2022, the compensation committee again engaged Compensia to serve as its compensation consultant to advise on executive compensation matters. 2023 Proxy Statement 55
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TABLE OF CONTENTS During 2021,2022, 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 assessment of the risk profile of our executive compensation program; an analysis of a competitive market strategy and the development of equity award guidelines for our broad-based employee population; an executive compensation program overview; a review of compensation for the audit committee; an evaluation of compliance with the CEO pay ratio and the new pay versus performance disclosure requirements; 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; a review of competitive practices for stock ownership guidelines; an update on regulatory developments and market trends; and review of best practices in equity compensation, practices, including astrategies to mitigate the equity burn rate analysis and multi-year estimate;reduce dilution and an analysis of various performance-based better utilize equity award designs for our executives.to execute on Upwork’s equity compensation goals.
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 2021,2022, 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 2021.2022. 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. 56 2023 Proxy Statement |
TABLE OF CONTENTS Annual Base Salary 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 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 |
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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, 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 OfficerCEO (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 February 2021,2022, the compensation committee reviewed the annual base salaries of our Namedthen-Named Executive Officers after considering a competitive market analysis prepared by Compensia and the recommendations of our Chief Executive OfficerCEO (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 adjustincreased the annual base salary of each of our Namedthen-Named Executive Officers, to bring their base salaries to a level that targets the 50th percentilelargely in recognition of the highly competitive and challenging marketplace for skilled and was comparable to that of similarly situated executives at the companies in our compensation peer group.seasoned executive officers. Our Namedthen-Named Executive Officers’ base salaries were as follows: Hayden Brown | | | 500,000 | | | 550,000 | | | 10.0 | Jeff McCombs | | | 415,000 | | | 500,000 | | | 20.5 | Eric Gilpin | | | 365,000 | | | 412,000 | | | 12.9 |
The 2022 Base Salary rates set forth in the table above were determined in February 2021, were as follows: Hayden 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 increases were2022 but retroactively effective January 1, 2021.2022.
The base salaries paid to our Named Executive Officers during 20212022 are set forth in the “20212022 Summary Compensation Table” below. Annual Performance Bonus We use an annual performance bonus plan to motivate our employees, including our Named Executive Officers (other than Mr. Gilpin, our Chief Sales Officer, who participates in a separate sales compensation plan)plan described in “Sales Compensation Plan for Mr. Gilpin” below), 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, during the first quarter of the year. In February 2021,2022, the compensation committee approved the 20212022 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 20212022 Performance Bonus Plan, to provide annual bonus awards for our employees, including certain of our Named Executive 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 20212022 Performance Bonus Plan. 2023 Proxy Statement 57
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TABLE OF CONTENTS The compensation committee served as the administrator of the 20212022 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 In February 2021,2022, the compensation committee reviewed the target annual bonus opportunities of our Named Executive Officers who were participants in the 20212022 Performance Bonus Plan after considering a competitive market analysis prepared by Compensia and the recommendations of our Chief Executive OfficerCEO (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. Following this review, the compensation committee determined to adjustmaintain the percentage target annual bonus opportunity of eachopportunities of our Named Executive Officers who was a participant inat their 2021 levels. Recognizing that the combination of maintaining Named Executive Officer 2021 Performance Bonus Plan to bring their target annual bonus opportunities (as a percentage of eachopportunity percentages and increasing base salaries positioned Named Executive Officer’s annual base salary) to a levelOfficer target total cash compensation opportunities at levels that were in the top quartile of the competitive marketplace, the compensation committee determined that this result was comparable to that of similarly situated executives atappropriate given the companies in our compensation peer group.highly competitive and challenging marketplace for skilled and seasoned executive officers. 2022 Proxy Statement 51 |
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Our Named Executive Officers’ target annual bonus opportunities (other than Mr. Gilpin), as determined in February 2021,2022, were as follows: Named Executive Officer | | 2021 Target Annual Bonus Opportunity
(as a percentage of base salary) | | 2021 Target Annual Bonus Opportunity ($) | | | 2022 Target Annual Bonus Opportunity
(as a percentage of base salary) | | | 2022 Target Annual Bonus Opportunity ($) | Hayden Brown | | | 100% | | | $500,000 | | | 100% | | | 550,000 | Jeff McCombs | | | 80% | | | $332,000 | | | 80% | | | 400,000 |
These target annual bonus opportunities were effective January 1, 2021.2022. Corporate Performance Criteria In February 2021,2022, the compensation committee selected revenueCompensation Program Revenue as the performance measure for the 20212022 Performance Bonus Plan. For this purpose, “revenue”“Compensation Program Revenue” meant the sum of (i) our revenue“managed services revenue” for 2021 as reported to our board of directors followingthe fiscal year 2021 under the then-applicable Financial Accounting Standards Board,ending December 31, 2022, which we refer to as FASB, Accounting Standards Codification guidance, exceptthe Performance Period, less the “costs of talent services to deliver managed services” for the Performance Period plus (ii) “marketplace revenue” for the Performance Period, in each case as otherwise determined byreported in our board of directors orAnnual Report on Form 10-K filed with the compensation committee.SEC for our fiscal year ending December 31, 2022. The computation of the revenueCompensation Program Revenue target achievement was to be determined in our sole discretion, as approved by our board of directors or the compensation committee. We used Compensation Program Revenue as the performance measure for the 2022 Performance Bonus Plan to account for clients that may switch mid-year to utilizing our managed services offering so that the achievement of bonus opportunities under our bonus plan are not impacted by the differing GAAP reporting standards for our marketplace offering, which are reported on a “net” basis under GAAP, and our managed services offering, which are reported on a “gross” basis under GAAP. As a result, participants are not able to achieve performance levels under the 2022 Performance Bonus Plan solely as a result of a client changing from our marketplace offering to managed services offerings mid-year. Compensation Program Revenue is not a financial measure prepared in accordance with generally accepted accounting principles, which we refer to as GAAP. For more information on how we compute this non-GAAP financial measure and a reconciliation to the most directly comparable financial measure prepared in accordance with GAAP, please refer to “Appendix B: Reconciliation of Non-GAAP Financial Measures” in this Proxy Statement. 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 revenueCompensation Program Revenue as the sole performance measure for the 20212022 Performance Bonus Plan because, in its view, it was most consistent with our near-term objective of driving 58 2023 Proxy Statement |
TABLE OF CONTENTS revenue growth. In 2020,2021, we used revenue as the sole performance measure for our bonus plan because revenue growth was the primary focus of our 20202021 annual operating plan. Similarly, the compensation committee believed that our revenueCompensation Program 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.2022. For purposes of the 20212022 Performance Bonus Plan, the compensation committee set the following performance levels for our revenueCompensation Program Revenue performance for 2021:2022: If our revenueCompensation Program Revenue for 20212022 was at or below $429,640,000,$538,600,000, there would be no payout under the 20212022 Performance Bonus Plan; If our revenueCompensation Program Revenue for 20212022 equaled $466,400,000,$588,600,000, our eligible Named Executive Officers would be eligible to receive a bonus payout equal to 100% of their target annual bonus opportunity under the 20212022 Performance Bonus Plan; If our revenueCompensation Program Revenue for 20212022 equaled or exceeded $503,160,000,$638,600,000, our eligible Named Executive Officers would be eligible to receive a bonus payout equal to 200% of their target annual bonus opportunity under the 20212022 Performance Bonus Plan; and Between the threshold Compensation Program Revenue performance level of $429,640,000$538,600,000 and the maximum performance level of $503,160,000,$638,600,000, bonus payouts for our Named Executive Officers under the 20212022 Performance Bonus Plan would be determined on a straight linestraight-line basis. The target level for revenueCompensation Program Revenue under the 20212022 Performance Bonus Plan was greater than the revenueCompensation Program 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 for the 2022 Performance Bonus Plan represented approximately a 15%14% year-over-year revenueCompensation Program Revenue growth figure, which the compensation committee determined was appropriate for there to be any payout under the 20212022 Performance Bonus Plan. In the event of an acquisition the bonus payout percentage was to be determined using the most recent revenueCompensation Program Revenue forecast for 2021,2022, as approved by theour board of directors, and the amount of the bonus was to be pro ratedpro-rated based on the amount of base salary actually paid to a particular participant between the first date of fiscal year 20212022 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 20212022 Performance Bonus Plan: Bonus Payment | | | = | | | 20212022 Base Salary
| | | × | | | 20212022 Target
Annual Bonus
Opportunity | | | × | | | Revenue
Achievement
Percentage |
For purposes of the 20212022 Performance Bonus Plan: 52 2022 Proxy Statement |
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“20212022 Base Salary” meant the amount of base salary actually earned and paid to the participant during 2021,2022, 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 revenueCompensation Program Revenue target for 20212022 expressed as a percentage calculated by measuring our 2021 revenue2022 Compensation Program Revenue on a straight linestraight-line basis between the threshold performance level of $429,640,000,$538,600,000, where the Revenue Achievement Percentage would be zero, and the maximum performance level of $503,160,000,$638,600,000, 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. 2023 Proxy Statement 59
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TABLE OF CONTENTS Annual Bonus Payments In February 2022,2023, the compensation committee approved annual bonus awards to the participants in the 20212022 Performance Bonus Plan, including our Namedthen-Named Executive Officers (other than Mr. Gilpin). Based on the 20212022 performance criteria established by the compensation committee in February 2021,2022, the compensation committee determined we achieved revenueCompensation Program Revenue of $502.8$580.6 million, which resultedwas adversely affected by Russia’s invasion of Ukraine and our resulting decision to cease operations in Russia and Belarus early in the year, contributing to a Revenue Achievement Percentage of 199%84%. While this impact to our Compensation Program Revenue was significant and outside of management’s control, the compensation committee determined not to adjust the Compensation Program Revenue performance criteria under the 2022 Performance Bonus Plan or otherwise adjust the payments under the 2022 Performance Bonus Plan. Based on this Revenue Achievement Percentage, the following bonuses werebonus was payable to Ms. Brown, who was our only Named Executive OfficersOfficer who were participantswas a participant in the 20212022 Performance Bonus Plan:Plan at the time the annual bonus awards were paid. Mr. Gilpin was not a participant in the 2022 Performance Bonus Plan as he participates in a separate sales compensation plan, which is described below, and Mr. McCombs was not eligible to receive an annual bonus award because his final day as our Chief Financial Officer was December 31, 2022, which was prior to the date on which the annual bonus awards were paid. Named Executive
Officer | | Target Annual Bonus (as a percentage of base salary) | | Target Annual
Bonus ($) | | Earned Annual
Bonus Award ($) | | Earned Annual Bonus Award (as a percentage of Target Annual Bonus) | | | Target Annual Bonus (as a percentage of base salary) | | | Target Annual
Bonus ($) | | | Earned Annual
Bonus Award ($) | | | Earned Annual Bonus Award (as a percentage of base salary) | Hayden Brown | | | 100% | | | 500,000 | | | 995,000 | | | 199% | | | 100% | | | 550,000 | | | 462,000 | | | 84% | Jeff McCombs | | | 80% | | | 332,000 | | | 660,680 | | | 199% | |
Sales Compensation Plan for Mr. Gilpin As our Chief Sales Officer, Mr. Gilpin’s annual cash incentive for 20212022 was based on his ability to manage our sales organization to (i) achieve our annual enterprise revenue quota and reward him for growing our enterprise accounts for the year and to(ii) 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 20212022 annual cash incentive. In 2021,2022, Mr. Gilpin was eligible to earn anGilpin’s target annual cash incentive payment of up to $365,000,opportunity was $412,000, which was equal to 100% of his 20212022 annual base salary. In addition, each performance incentive included an additional multiplier if either 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 quarterly payment was capped at 120% of his target incentive payments in the first through third quarters, with no cap on his payments for the fourth quarter. 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 increased from the target performance level from the prior year, 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. 60 2023 Proxy Statement |
TABLE OF CONTENTS For purposes of his annual cash incentive, Mr. Gilpin’s payments were calculated based on the total revenue attributable to his enterprise accounts compared to the applicable year-to-date quota and the total enterprise bookings compared to the applicable year-to-date quota. For this purpose, achievement of the quota for each quarterly measurement period (ending March 31, June 30, September 30, and December 31, 2021,2022, respectively) meant the enterprise revenue or enterprise bookings actually attributable to the period calculated as a percentage of the quota for the period. The paymentMr. Gilpin’s year-to-date total quota attainment was required to be determined on a straight line basis of the cumulative targetgreater than 50% in order to be eligible for each performance incentive, with no cap on the percentage 2022 Proxy Statement 53 |
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of the year-to-date target that could be paid for a given period.payment. 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 generatedten times (10x) attainment over the quota for 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 was payable after the end of the year) in addition to the quarterly cash incentive payments. Further, in the event that the sales organization attained between 50% and 100% of our annual enterprise revenue quota or annual enterprise bookings quota, as the case may be, Mr. Gilpin’s payment was subject to a decelerator equal to two times (2x) of each dollar not generated toward the applicable annual enterprise revenue or enterprise bookings quota, as the case may be. In 2021,2022, Mr. Gilpin earned an annual cash incentive payment under his sales compensation plan in the aggregate amount of $520,739,$269,568, 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 2021. This amount included an Accelerated Payment in the amount of $167,787.2022. Mr. Gilpin’s annual cash incentive payment equaled 142.67%approximately 65% of his 20212022 target annual bonuscash incentive opportunity. The annual bonuses and sales compensation awarded to our Named Executive Officers for 20212022 are set forth in the “20212022 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 2021,2022, the compensation committee sought to retain, motivate, and reward our Named Executive Officers for 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 and because they have value to the recipient even in the absence of stock price appreciation. In 2021,2022, we also granted PSU awards to our Named Executive Officers to enable them to earn shares of our common stock based on certain pre-established revenueCompensation Program Revenue targets in respect of our year ended December 31, 20212022, as described below in the section titled “2021February 2022 Equity Awards,” as 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. Instead, in making these decisions, the 2023 Proxy Statement 61
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TABLE OF CONTENTS compensation committee has exercised its judgment as to the amount and form of the awards. 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 OfficerCEO (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 exercised 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. 2021February 2022 Equity Awards
In February 2021,2022, the compensation committee approved long-term incentive compensation opportunities in the form of equity awards for our Named Executive Officers in amounts that it considered to be consistent with our compensation philosophy and its desired market positioning. The number of shares of our common stock subject to the RSU awards and the target number of shares subject to the PSU awards granted to our Named Executive Officers (viewed in the aggregate by value) was determined by the compensation committee based on its consideration of the factors described 54 2022 Proxy Statement |
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above. In 2021,2022, the target number of PSUs comprised 50%60% of the total long-term incentive compensation opportunity of our Chief Executive Officer (excluding her CEO Performance Award, described below) and 20%40% of the total long-term incentive compensation opportunities of Messrs. McCombs and Gilpin. The equity awards granted to our Named Executive Officers in February 20212022 were as follows: Hayden Brown | | | 121,765 | | | 182,648 | | | 365,296 | Jeff McCombs | | | 114,155 | | | 76,103 | | | 152,207 | Eric Gilpin | | | 62,785 | | | 41,856 | | | 83,713 |
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.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, 2021,2022, 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, 2025.2026. The RSU awards are subject to acceleration as described in “Potential Payments upon Termination or Change in Control” below. PSU Awards.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 revenueCompensation Program 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 only to the extent vested in accordance with the time-based vesting requirement described below. The various performance levels for our 2021 revenue2022 Compensation Program Revenue and the number of PSUs earned at each performance level were as follows: Threshold | | | $538,600,000 and below | | | 0% | Target | | | $588,600,000 | | | 100% | Maximum | | | $638,600,000 and above | | | 200% |
62 2023 Proxy Statement |
Threshold | | | $429,640,000 and below | | | 0% | Target | | | $466,400,000 | | | 100% | Maximum | | | $503,160,000 and above | | | 200% |
TABLE OF CONTENTS Between revenuesCompensation Program Revenues of $429,640,000$538,600,000 and $503,160,000,$638,600,000, the number of Earned PSUs were to be determined on a straight linestraight-line basis. For purposes of the PSU awards, “revenue” means“Compensation Program Revenue” meant the sum of (i) our revenue“managed services revenue” for 2021 under the then-applicable FASB Accounting Standards Codification guidancePerformance Period, less the “costs of talent services to deliver managed services” for the Performance Period plus (ii) “marketplace revenue” for the Performance Period, in each case as reported toin our board of directors followingAnnual Report on Form 10-K filed with the 2021SEC for our fiscal year exceptending December 31, 2022. This is the same definition of “Compensation Program Revenue” as otherwise determined by the compensation committee.used to determine bonuses under our 2022 Performance Bonus Plan, as described above. The computation of revenuethe Compensation Program Revenue target achievement was to be determined in theour sole discretion, of the company, as approved by the compensation committee. Compensation Program Revenue is not a financial measure prepared in accordance with GAAP. For more information on how we compute this non-GAAP financial measure and a reconciliation to the most directly comparable financial measure prepared in accordance with GAAP, please refer to “Appendix B: Reconciliation of Non-GAAP Financial Measures” in this Proxy Statement. Under the time-based vesting requirement, 25% of the Earned PSUs vest on the one yearone-year anniversary of the February 18, 2022 vesting commencement date February 18, 2021, and thereafter an additional 1/16th16th 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, 2022,18, 2023, which we refer to as the Certification Date, the compensation committee determined and certified in writing that we had attained revenueCompensation Program Revenue for 20212022 in the amount of $502.8$580.6 million (as calculated consistently with the terms of the PSU awards in the manner described above), which was adversely affected by Russia’s invasion of Ukraine and our resulting decision to cease operations in each NamedRussia and Belarus early in the year. Based on such Compensation Program Revenue performance, 84% of the target PSUs were eligible to become Earned PSUs. Each then-Named Executive Officer earningearned the number of Earned PSUs set forth next to their name in the following table, and with one-quarter25% of such Earned PSUs vesting and being settled in the number of shares of our common stock set forth next to their name in the following table):February 2023: 2022 Proxy Statement 55 |
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Named Executive Officer | | Earned PSUs
(number of shares) | | Shares Settled for Shares of Our Common Stock on February 18, 2022 | | | Earned PSUs
(number of units) | | | Units Settled for Shares of
Our Common Stock on
February 18, 2023 | Hayden Brown | | | 81,590 | | | 20,398 | | | 153,424 | | | 38,356 | Jeff McCombs | | | 11,715 | | | 2,927 | | | — | | | — | Eric Gilpin | | | 4,183 | | | 1,045 | | | 35,159 | | | 8,790 |
Each Named Executive Officer was required to be in continuous service with us on the Certification Date in order for thehis or her PSUs to become Earned PSUs. If their service terminated for any reason prior to the Certification Date, all such PSUs would have been forfeited.be forfeited, as was the case for Mr. McCombs. With respect to the PSUs granted to Ms. Brown’s PSUs,Brown, the acceleration provisions set forth in Ms. Brown’s change in control and severance agreement, which we refer to as the CICher Severance Agreement (as defined below) do not apply to the PSUs. However, in the event of a termination of Ms. Brown’s employment either 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 CICher Severance Agreement (as described in “Potential Payments upon Termination or Change in Control” below). With respect to the PSUs granted to Messrs. McCombs andMr. Gilpin, the acceleration provisions set forth in their change in control and severance agreementshis Severance Agreement do not apply. However, in the event of a termination of Mr. McCombs’s or Mr. Gilpin’s employment either by us without “cause” or a resignation by Mr. McCombs or Mr. Gilpin for “good reason” within 12 months following or within 3three months preceding a “change in control,”control” of the company, 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 agreementshis Severance Agreement (as described in “Potential Payments upon Termination or Change in Control” below). Chief Executive Officer Performance Award
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. Following significant discussion among its members and review of a competitive market analysis prepared by Compensia, the compensation committee determined 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 to 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.
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TABLE OF CONTENTS August 2022 Equity Awards Russia’s invasion of Ukraine had a significant impact on our workforce. Upwork has historically engaged independent talent from Ukraine, Russia, and Belarus on our work marketplace to perform services for us. The CEO Performance Award is structuredinvasion created an immediate threat to protect stockholder intereststhe lives and has a Performance Vesting Requirement that requires achievementsafety of extremely rigorous stock price hurdles, which promotesmany of these individuals and their families. The danger, dislocation, and disruption experienced by our colleagues required our senior leaders to take extraordinary steps to serve and support our workforce and deliver business continuity, including assisting and paying for team members to relocate out of the alignmentimpacted region. In recognition of their extraordinary leadership in navigating the crisis resulting from Russia’s invasion of Ukraine and its impact on our workforce, in July 2022, at the recommendation 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 believesapproved long-term incentive compensation opportunities in the ambitious stock price targets will create significantform of one-time RSU awards with a value for our stockholders through 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$250,000 each to the exercise pricemembers of the CEO Performance Award,our leadership team, including Messrs. McCombs and the majorityGilpin (but not Ms. Brown), and granted them effective August 18, 2022. The number 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 four-year period, which increases the retention value of the award. Award Structure Promotes Outperformance and Retention
✔
| 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. The shares of our common stock subject to these RSU awards was determined by dividing $250,000 by the CEO Performance Award are eligible to vest with respect toaverage of the Performance Vesting Requirement to the extent the volume-weighted average per share priceclosing sale prices of our common stock measured over any consecutive 90-day period, withas quoted on the last 90-day measurement periodNasdaq Global Market for the 30 calendar days ending on the 90thlast trading 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:
$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 CEO 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:
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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,” 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 service with us is 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 ofAugust 18, 2022, the date of such terminationgrant of service will be forfeited.the RSU awards.
Service Vesting Requirement.The CEO Performance Award is also subjectequity awards granted to our Named Executive Officers on August 18, 2022 were as follows:
Hayden Brown | | | — | | | — | Jeff McCombs | | | 250,000 | | | 12,171 | Eric Gilpin | | | 250,000 | | | 12,171 |
The RSU awards vest in equal installments of 25% of 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 1/16th of each tranche of shares subject to the CEO Performance Awardaward 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),vesting commencement date, August 18, 2022, subject to Ms. Brown’sthe Named Executive Officer’s continuous service towith 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 todate, as described in the Service Vesting Requirement, but notapplicable restricted stock unit award agreement, such that the Performance Vesting Requirement,RSU award will vest in full on the first anniversary of the vesting of the shares of our common stockcommencement date. The RSU awards are subject to the CEO Performance Award will accelerateacceleration as follows: (a) as set forth in the CIC Agreement (as described in “Potential Payments upon Termination or Change in Control” below), and (b) inbelow. The unvested portion of the event that Ms. Brown is terminated or resignsRSU awards are subject to forfeiture upon the recipient’s termination of service with Upwork. Mr. McCombs forfeited 9,129 shares subject to his RSU award upon his separation 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 would apply proportionately to each tranche of shares of our common stock. As ofUpwork on 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.2022.
The equity awards granted to our Named Executive Officers during 20212022 are set forth in the “20212022 Summary Compensation Table” and the “20212022 Grants of Plan-Based Awards Table” below. Executive Compensation Program Changes for 20222023 To incentivize 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 promote retention of our Named Executive Officers, the compensation committee determined that the target number of PSUs granted in 2023 to our Named Executive Officers should represent at least half of their total target long-term incentive opportunity. As a result, in February 2022,2023, the compensation committee increased the percentage allocation of PSUs that comprise each of our Named Executive Officers’Mr. Gilpin’s long-term incentive compensation opportunity. The target number of PSUs for 2022 will comprise 40% of the total long-term incentive opportunity issued to Messrs. McCombs and Gilpin, increased from 20% in 2021, andAccordingly, the target number of PSUs for 2022granted to Mr. Gilpin in 2023 will comprise 50% of 60% of thehis total target long-term incentive opportunity, issued to Ms. Brown, increased from 50%40% in 2021 (excluding2022. Ms. Brown’s target number of PSUs granted in 2023 will remain 60% of her CEO Performance Award).total target long-term incentive opportunity. 58 202264 2023 Proxy Statement |
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 or post-tax contributions to the Section 401(k) Plan, from their eligible earnings upsubject to the statutorily prescribed annual limitlimits 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 or post-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 2021,2022, 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. 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 Mr. 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 Mr. Gilpin reaffirmed the terms and conditions of the employee invention assignment and confidentiality agreement and the employee dispute resolution agreement that she or he 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.Offer Letter. 2023 Proxy Statement 65
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TABLE OF CONTENTS These Offer Letters also provide that each Named Executive Officer will be eligible to enter into a change in control and severance agreement, which we refer to as a 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. 2022 Proxy Statement 59 |
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Post-Employment Compensation We have entered into change in control and severance agreementsa Severance Agreement with each of our Named Executive Officers, which provideprovides for certain protections in the event of certain involuntary terminations of employment, including a termination of employment in connection with a change in control, 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 agreementSeverance 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 agreementsSeverance 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,Severance Agreements, all payments and benefits in the event of a change in control 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 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, 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. 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. We believe that having in place reasonable and competitive post-employment compensation arrangements, including in the event of a qualifying termination in connection with or within specified periods before or after a change in control, are essential to attracting and retaining highly 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. 66 2023 Proxy Statement |
TABLE OF CONTENTS Transition and Separation Agreement with Mr. McCombs In September 2022, Mr. McCombs, our former Chief Financial Officer, was notified that he was being terminated from his position. In order to facilitate a smooth transition of his responsibilities, Mr. McCombs continued service as our Chief Financial Officer through December 31, 2022, which we refer to as the Separation Date. On September 21, 2022, we entered into a transition and separation agreement with Mr. McCombs, which we refer to as the McCombs Transition Agreement. The amounts payable thereunder were generally consistent with Mr. McCombs’s offer letter and Severance Agreement that Mr. McCombs executed when he joined Upwork. The McCombs Transition Agreement set forth the terms of his continued service to us through the Separation Date as well as his severance compensation and certain releases and covenants that the compensation committee believed were valuable to Upwork. Pursuant to the McCombs Transition Agreement, subject to his execution of an effective general release and waiver of claims and covenant not to sue, Mr. McCombs became entitled to certain payments and benefits, including (i) a lump sum payment equal to six months of his annual base salary, (ii) vesting of a certain RSU award as described in greater detail below, and (iii) the full amount of insurance premium payments to continue health benefits, for him and his covered dependents under COBRA, through the earlier of (A) the effective date on which he became covered by a substantially equivalent health insurance plan of a subsequent employer, (B) six months following the Separation Date, and (C) the date he was no longer eligible for COBRA benefits. As of the date of the McCombs Transition Agreement, and consistent with the terms of his offer letter, the RSU award granted to Mr. McCombs pursuant to the Restricted Stock Unit Award Agreement dated August 4, 2020, which we refer to as the Initial RSU Award, was deemed vested with respect to 137,174 shares of our common stock. Further, upon execution of the McCombs Transition Agreement and contingent upon his remaining continuously employed with us through November 18, 2022 and delivery of an effective general release and waiver of claims and covenant not to sue executed no earlier than the Separation Date, the Initial RSU Award was deemed vested with respect to an additional 17,146 shares of our common stock. The deemed vesting of the 137,174 shares upon execution of the McCombs Transition Agreement and the additional 17,146 shares following November 18, 2022 were consistent with the terms of Mr. McCombs’s offer letter, which provided for such vesting of the Initial RSU Award after one year if Mr. McCombs were to be terminated without cause or resigned for good reason. Pursuant to the McCombs Transition Agreement, Mr. McCombs was not eligible to receive an annual bonus or any other incentive compensation, including under the terms of our 2022 Performance Bonus Plan. The foregoing description of the McCombs Transition Agreement is qualified in its entirety by reference to the full text of the McCombs Transition Agreement, which is filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC for the quarterly period ended September 30, 2022. For detailed descriptions of the post-employment compensation arrangements with 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 |
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Other Compensation Policies Stock Ownership Guidelines Our Stock Ownership Guidelines are designed to encourage our Chief Executive Officer and other executive officers and 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. 2023 Proxy Statement 67
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TABLE OF CONTENTS Our Chief Executive OfficerCEO and other executive officers and the members of our board of directors are expected to accumulate shares of our common stock towardstoward 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 according to the retention ratio described below. Currently, the market value of the qualifying shares that each executive officer or member 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 directors* |
*
| Excludes any additional cash retainer paid as a result of service as our chairperson, lead independent director, committee chair, or committee membermember. |
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 number 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, 2021,2022, 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 whichthat is equal to 50% of the “net profit shares” 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-vestednewly 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. Clawback Policy In April 2021, our board of directors approvedWe maintain a compensation recoupment and forfeiture 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 whichwhom we refer to as a 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 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 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 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 |
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In determining whether to require recoupment or forfeiture and, if so, the amount of such recoupment or forfeiture, the compensation committee or our board of directors shallwill take into account such factors as it deems appropriate, including, without limitation, the requirements of applicable law, and stock exchange 68 2023 Proxy Statement |
TABLE OF CONTENTS listing requirements;requirements, the extent to which the current or former executive officer participated in 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 the compensation committee or our board of directors or the compensation committee determines such disclosure is appropriate or otherwise as required by applicable law. We intend to adopt a general compensation recovery policy (or modify our existing Clawback Policy) covering our short-term and long-term incentive award plans and arrangements in compliance with the listing standards adopted by The Nasdaq Stock Market LLC prior to the date that we are required to do so. 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. 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. In 2023, we revised our Insider Trading Policy to ensure that Rule 10b5-1 plans entered into by our executive officers, non-employee directors, and other employees are eligible for an affirmative defense in accordance with new SEC rules regarding Rule 10b5-1 plans. 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 the 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 20222023 Proxy Statement
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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 Topic 718, the standard whichthat governs the accounting treatment of certain stock-based compensation. Among other things, ASC Topic 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 arebeing subject to the achievement of financial performance metrics and offeroffering upside leverage that is within reasonable market norms and provide for uncapped payouts. 202270 2023 Proxy Statement 63 |
TABLE OF CONTENTS 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 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. Submitted by the Compensation Committee
Gregory C. Gretsch, Chair
Gary Steele
Anilu Vazquez-Ubarri
Gary Steele
64 20222023 Proxy Statement
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TABLE OF CONTENTS 20212022 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 2019, 2020, 2021, and 2021:2022: Name and Principal
Positions | | | Year | | | Salary
($) | | | Bonus
($) | | | Stock
Awards
($)(1) | | | Option
Awards
($)(1) | | | Non-Equity
Incentive Plan
Compensation
($)(2) | | | All Other
Compensation
($) | | | Total
($) | | | Year | | | Salary
($) | | | Bonus
($) | | | Stock
Awards
($)(1) | | | Option
Awards
($)(1) | | | Non-Equity
Incentive Plan
Compensation
($)(2) | | | All Other
Compensation
($) | | | Total
($) | 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 | | | 2022 | | | 550,000 | | | — | | | 7,455,075(3) | | | — | | | 462,000 | | | 7,652(4) | | | 8,474,727 | | | 2020 | | | 480,000 | | | — | | | — | | | — | | | 365,760 | | | 2,652(6) | | | 848,412 | | 2021 | | | 500,000 | | | — | | | 4,626,440(5) | | | 28,780,212(6) | | | 995,000 | | | 7,652(7) | | | 34,909,304 | | | 2019 | | | 437,250 | | | — | | | 11,089,217(7) | | | — | | | — | | | 4,425(8) | | | 11,530,892 | | 2020 | | | 480,000 | | | — | | | — | | | — | | | 365,760 | | | 2,652(8) | | | 848,412 | 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 | | Jeff McCombs
Former Chief Financial Officer | | | | 2022 | | | 500,000 | | | — | | | 4,885,312(9) | | | — | | | — | | | 284,675(10) | | | 5,669,987 | | | 2021 | | | 415,000 | | | — | | | 1,660,779(11) | | | — | | | 660,680 | | | 9,586(12) | | | 2,746,045 | | | 2020 | | | 165,000 | | | 100,000(13) | | | 4,803,833(14) | | | — | | | 125,730 | | | — | | | 5,194,563 | Eric Gilpin
Chief Sales Officer
| | | 2021 | | | 365,000 | | | — | | | 593,087(13) | | | — | | | 520,739 | | | 7,775(14) | | | 1,486,601 | | | 2022 | | | 412,000 | | | — | | | 2,788,552(15) | | | — | | | 269,568 | | | 7,871(16) | | | 3,477,991 | | | 2020 | | | 335,000 | | | — | | | 990,296 | | | — | | | 306,202 | | | 7,489(15) | | | 1,638,987 | | 2021 | | | 365,000 | | | — | | | 593,087(17) | | | — | | | 520,739 | | | 7,775(18) | | | 1,486,601 | Eric Gilpin
Chief Sales Officer | | | 2020 | | | 335,000 | | | — | | | 990,296(19) | | | — | | | 306,202 | | | 7,489(20) | | | 1,638,987 |
(1)
| The amounts reported represent the grant date fair value calculated in accordance with ASC 718. See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021,2022 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). The Company estimated the fair value of the CEO Performance Award using a Monte Carlo simulation including dividend yield, risk-free interest rates, and expected volatility. Each of Ms. Brown and Messrs. McCombs and Gilpin was granted RSUs and PSUs in 20212022 as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity AwardsCompensation.” In addition, Ms. Brown was granted the CEO Performance Award in 2021, see2021. A summary of the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—2021 Equity Awards—ChiefCEO Performance Award can be found under the heading “Chief Executive Officer Performance Award.”Award” in our 2022 proxy statement filed with the SEC on April 19, 2022. For PSUs granted in February 2022, the maximum performance shares payable and corresponding maximum aggregate value based on the grant date fair value of such awards are (i) 365,296 shares and $8,946,099 for Ms. Brown; (ii) 152,207 shares and $3,727,549 for Mr. McCombs; and (iii) 83,713 shares and $2,050,131 for Mr. Gilpin. |
(2)
| The amounts reported represent incentive bonuses actually earned pursuant to our 2019, 2020, 2021, and 20212022 performance bonus plans, except for Mr. Gilpin, whose amount reported represents incentive commissions actually earned pursuant to his Sales Compensation Plan. Payments for 20212022 are described in greater detail in the section titled “Compensation Discussion and Analysis—Compensation Elements.” |
(3)
| The amount reported represents (i) $4,473,050 aggregate grant date fair value for PSUs and (ii) $2,982,025 aggregate grant date fair value for RSUs. |
(4)
| 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. |
(5)
| 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)
(6)
| The amount reported represents the aggregate grant date fair value for the CEO Performance Award. |
(5)
(7)
| 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)
(8)
| The amount reported represents payments to our disability insurance plan. |
(7)
(9)
| The amount reported represents (i) $11,020,059$1,863,762 aggregate grant date fair value of an RSU award granted to Ms. Brown in connection with her appointment as our President and Chief Executive Officerfor PSUs and (ii) $69,158$3,021,550 aggregate grant date fair value of an RSU award granted to Ms. Brown pursuant to our 2019 Performance Bonus Plan.for RSUs. |
(8)
(10)
| The amount reported represents (i) our matching contribution of $647 on Ms. Brown’s behalf$5,000 under our 401(k) Plan, (ii) $2,431$6,115 paid to our disability insurance plan, and (iii) $1,347 in parkingconnection with Mr. McCombs’s termination, a severance payment in the amount of $250,000 and commuting costs paid by us.COBRA reimbursement of $23,560. A summary of the McCombs Transition Agreement can be found under the heading “—Transition and Separation Agreement with Mr. McCombs.” |
(9)
(11)
| The amount reported represents (i) $332,144 aggregate grant date fair value for PSUs and (ii) $1,328,635 aggregate grant date fair value for RSUs. |
(10)
(12)
| The amount reported represents (i) our matching contribution of $5,000 under our 401(k) Plan and (ii) $4,586 paid to our disability insurance plan. |
(11)
(13)
| The amount reported represents a signing bonus paid to Mr. McCombs in connection with his appointment as our Chief Financial Officer. |
(12)
(14)
| The amount reported represents the grant date fair value for an RSU award granted to Mr. McCombs in connection with his appointment as our Chief Financial Officer. |
(13)
(15)
| The amount reported represents (i) $1,025,053 aggregate grant date fair value for PSUs and (ii) $1,763,499 aggregate grant date fair value for RSUs. |
(16)
| The amount reported represents (i) our matching contribution of $5,000 under our 401(k) Plan and (ii) $2,871 paid to our disability insurance plan. |
(17)
| The amount reported represents (i) $118,595 aggregate grant date fair value for PSUs and (ii) $474,492 aggregate grant date fair value for RSUs. |
(14)
(18)
| The amount reported represents (i) our matching contribution of $5,000 under our 401(k) Plan and (ii) $2,775 paid to our disability insurance plan. |
(15)
(19)
| The amount reported represents the grant date fair value for an RSU award granted to Mr. Gilpin. |
(20)
| The amount reported represents (i) our matching contribution of $5,000 under our 401(k) Plan and (ii) $2,489 paid to our disability insurance plan. |
202272 2023 Proxy Statement 65 |
TABLE OF CONTENTS 20212022 Grants of Plan-Based Awards Table The following table provides information concerning each grant of an award made in 20212022 for each of our Named Executive Officers under any plan. This information supplements the information about these awards set forth in the Summary Compensation Table. Name | | | Type of
Award | | | Grant
Date | | | Approval
Date | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(2) | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | | | All Other
Option
Awards:
Number of
Shares of
Stock or
Units
(#) | | | Exercise
Price of
Stock
Options
($/share) | | | Grant
Date Fair
Value of
Stock and
Option
Awards
($)(3) | | | Type of
Award | | | Grant
Date | | | Approval
Date | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(2) | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | | | All Other
Option
Awards:
Number of
Shares of
Stock or
Units
(#) | | | Exercise
Price of
Stock
Options
($/share) | | | Grant
Date Fair
Value of
Stock and
Option
Awards
($)(3) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | 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 | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 550,000 | | | 1,100,000 | | | — | | | — | | | — | | | — | | | RSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 41,000 | | | — | | | — | | | 2,313,220 | | RSU | | | 2/18/2022 | | | 2/16/2022 | | | — | | | — | | | — | | | — | | | — | | | — | | | 121,765 | | | — | | | — | | | 2,982,025 | | | PSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | 41,000 | | | 82,001 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,313,220 | | PSU | | | 2/18/2022 | | | 2/16/2022 | | | — | | | 182,648 | | | 365,296 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,473,050 | Jeff McCombs | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 332,000 | | | 664,000 | | | — | | | — | | | — | | | — | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 400,000 | | | 800,000 | | | — | | | — | | | — | | | — | | | RSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 23,549 | | | — | | | — | | | 1,328,635 | | RSU | | | 2/18/2022 | | | 2/16/2022 | | | — | | | — | | | — | | | — | | | — | | | — | | | 114,155 | | | — | | | — | | | 2,795,656 | | | PSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | 5,887 | | | 11,774 | | | — | | | — | | | — | | | — | | | — | | | — | | | 332,145 | | PSU | | | 2/18/2022 | | | 2/16/2022 | | | — | | | 76,103 | | | 152,207 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,863,762 | Jeff McCombs | | | RSU | | | 8/18/2022 | | | 7/19/2022 | | | — | | | — | | | — | | | — | | | — | | | — | | | 12,171 | | | — | | | — | | | 225,894 | | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 365,000 | | | N/A | | | — | | | — | | | — | | | — | | | Cash | | | — | | | — | | | — | | | — | | | — | | | 1 | | | 412,000 | | | N/A | | | — | | | — | | | — | | | — | | | RSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,410 | | | — | | | — | | | 474,492 | | RSU | | | 2/18/2022 | | | 2/16/2022 | | | — | | | — | | | — | | | — | | | — | | | — | | | 62,785 | | | — | | | — | | | 1,537,605 | | | PSU | | | 2/17/2021 | | | 2/17/2021 | | | — | | | 2,102 | | | 4,205 | | | — | | | — | | | — | | | — | | | — | | | — | | | 118,595 | | PSU | | | 2/18/2022 | | | 2/16/2022 | | | — | | | 41,856 | | | 83,713 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,025,053 | Eric Gilpin | | | RSU | | | 8/18/2022 | | | 7/19/2022 | | | — | | | — | | | — | | | — | | | — | | | — | | | 12,171 | | | — | | | — | | | 225,894 |
(1)
| These columns show a range of payoutsoutcomes possible under the PSU awards granted in 2021.2022. The amount shown in the “Target” column for each award represents 100% of the PSUs granted, which equals the number of unitsPSUs that would vestbecome Earned PSUs if the “Target”“target” level of performance level were achieved.was achieved for our 2022 Compensation Program Revenue. The amount shown in the “Threshold” level iscolumn represents the number of PSUs that would become Earned PSUs if the minimum level of performance that must be metwas achieved for our 2022 Compensation Program Revenue before any payout may occur.PSUs are eligible to become Earned PSUs. The amount shown in the “Maximum” column is 200%represents the number of PSUs that would become Earned PSUs if the Target” payout amount.maximum level of performance was achieved for our 2022 Compensation Program Revenue. Further information about these awards is provided in the section titled “—Compensation Discussion and Analysis—Compensation Elements—20212022 Equity Awards.” |
(2)
| Reflects target bonus amounts for 2021 performanceThese columns show a range of possible payouts under our 20212022 Performance Bonus Plan (except with respect to Mr. Gilpin), as described in “Compensation Discussion and Analysis—Compensation Elements—Annual Bonuses.” 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, $995,000;$462,000; Mr. McCombs, $660,680;$0; and Mr. Gilpin, $520,739.$269,568. The amount shown in the “Target” column represents the amount payable if the “target” level of performance was achieved for our 2022 Compensation Program Revenue. The amount shown in the “Threshold” column represents the amount payable if the minimum level of performance was achieved for our 2022 Compensation Program Revenue before any amounts become payable under our 2022 Performance Bonus Plan. The amount shown in the “Maximum” column represents the amount payable if the maximum level of performance was achieved for our 2022 Compensation Program Revenue.
|
(3)
| The amounts reported represent the grant date fair value calculated in accordance with ASC 718. See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, for a discussion of the relevant 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 20212022 as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—20212022 Equity Awards.” In addition, Ms. Brown was granted a CEO Performance Award in 2021, 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 vesting of these stock and option awards is detailed in the “Outstanding Equity Awards at 20212022 Fiscal Year-End” table below. |
66 20222023 Proxy Statement
|
TABLE OF CONTENTS Outstanding Equity Awards at 20212022 Fiscal Year-End Table The following table presents, for each of the Named Executive Officers, information regarding outstanding stock options, RSUs, and PSUs held as of December 31, 2021.2022. | | | Option Awards | | | Stock Awards | | | Option Awards | | | Stock Awards | Name | | | Grant
Date(1) | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of
Shares or
Units of Stock
That Have
Not Vested
(#) | | | Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)(2) | | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#) | | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units, or
Other Rights That
Have Not Vested
($)(2) | | | Grant
Date(1) | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of
Shares or
Units of Stock
That Have
Not Vested
(#) | | | Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)(2) | | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units, or Other
Rights That Have
Not Vested
(#) | | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units, or
Other Rights That
Have Not Vested
($)(2) | Hayden Brown | | | 9/26/2017(3) | | | 158,881 | | | 102,828 | | | — | | | 3.68 | | | 9/25/2027 | | | — | | | — | | | — | | | — | | | 9/26/2017(3) | | | 261,709 | | | — | | | — | | | 3.68 | | | 9/25/2027 | | | — | | | — | | | — | | | — | | | 2/11/2019(4) | | | — | | | — | | | — | | | — | | | — | | | 10,341 | | | 353,249 | | | — | | | — | | 5/3/2019(4) | | | — | | | — | | | — | | | — | | | — | | | 3,860 | | | 40,298 | | | — | | | — | | | 5/3/2019(5) | | | — | | | — | | | — | | | — | | | — | | | 19,300 | | | 659,288 | | | — | | | — | | 12/12/2019(5) | | | — | | | — | | | — | | | — | | | — | | | 217,581 | | | 2,271,546 | | | — | | | — | | | 12/12/2019(6) | | | — | | | — | | | — | | | — | | | — | | | 435,161 | | | 14,865,100 | | | — | | | — | | 1/18/2021(6) | | | — | | | — | | | 1,500,000 | | | 38.80 | | | 1/17/2031 | | | — | | | — | | | — | | | — | | | 1/18/2021(7) | | | — | | | — | | | 1,500,000 | | | 38.80 | | | 1/17/2031 | | | — | | | — | | | — | | | — | | 2/17/2021(7) | | | — | | | — | | | — | | | — | | | — | | | 45,896 | | | 479,154 | | | — | | | — | | | 2/17/2021(8) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 41,000 | | | 1,400,560 | | 2/17/2021(8) | | | — | | | — | | | — | | | — | | | — | | | 23,063 | | | 240,778 | | | — | | | — | | | 2/17/2021(9) | | | — | | | — | | | — | | | — | | | — | | | 33,313 | | | 1,137,972 | | | — | | | — | | 2/18/2022(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 182,648 | | | 1,906,845 | 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 | | | — | | | — | | Hayden Brown | | | | 2/18/2022(10) | | | — | | | — | | | — | | | — | | | — | | | 98,935 | | | 1,032,881 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | 4/20/2016(13) | | | 170,000 | | | — | | | — | | | 3.23 | | | 4/19/2026 | | | — | | | — | | | — | | | — | | 4/20/2016(12) | | | 170,000 | | | — | | | — | | | 3.23 | | | 4/19/2026 | | | — | | | — | | | — | | | — | | | 2/6/2018(14) | | | 26,667 | | | 23,333 | | | — | | | 4.04 | | | 2/5/2028 | | | — | | | — | | | — | | | — | | 2/6/2018(13) | | | 46,667 | | | 3,333 | | | — | | | 4.04 | | | 2/5/2028 | | | — | | | — | | | — | | | — | | | 2/18/2020(15) | | | — | | | — | | | — | | | — | | | — | | | 60,614 | | | 2,070,574 | | | — | | | — | | 2/18/2020(14) | | | — | | | — | | | — | | | — | | | — | | | 33,675 | | | 351,567 | | | — | | | — | | | 2/17/2021(16) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,102 | | | 71,804 | | 2/17/2021(15) | | | — | | | — | | | — | | | — | | | — | | | 2,353 | | | 24,565 | | | — | | | — | | | 2/17/2021(17) | | | — | | | — | | | — | | | — | | | — | | | 6,834 | | | 233,449 | | | — | | | — | | 2/17/2021(16) | | | — | | | — | | | — | | | — | | | — | | | 4,731 | | | 49,392 | | | — | | | — | | | 2/18/2022(17) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 41,856 | | | 436,977 | Eric Gilpin | | | | 2/18/2022(18) | | | — | | | — | | | — | | | — | | | — | | | 51,013 | | | 532,576 | | | — | | | — | | | 8/18/2022(19) | | | — | | | — | | | — | | | — | | | — | | | 9,129 | | | 95,307 | | | — | | | — |
(1)
| Outstanding equity awards with a grant date 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, 2021,2022, based on the closing price on Nasdaq of our common stock on December 31, 2021,30, 2022 (the last day of business of 2022), which was $34.16$10.44 per share. |
(3)
| The stock option becomeswas fully exercisable at a rateas of 1/60th of the shares of our common stock underlying the stock option each month following September 26, 2017, 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.” December 31, 2022. |
(4)
| The RSUs will vest at a ratein equal installments of 1/12th16th of the sharestotal number of our common stock underlyingRSUs on each quarterly anniversary after May 18, 2019, over 16 quarters of continuous service, such that the RSUs each quarter beginning on JanuaryRSU award shall vest in full four years from May 18, 2020.2019, subject to Ms. Brown’s continued service. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(5)
| The RSUs will vest at a ratein equal installments of 1/16th of the sharestotal number of our common stock underlyingRSUs on each quarterly anniversary after December 18, 2019, over 16 quarters of continuous service, such that the RSUs each quarter beginning on JuneRSU award shall vest in full four years from December 18, 2019.2019, subject to Ms. Brown’s continued service. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(6)
| 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 Payments upon Termination or Change in Control.”
|
(7)
| The stock option vests as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—20212022 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.” |
(7)
| The earned PSUs will vest 25% on the first 18th of the month following the one-year anniversary of the date of grant and thereafter 1/16th of the earned PSUs shall vest on each quarterly anniversary thereafter, subject to Ms. Brown’s continued service. The PSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(8)
| The RSUs will vest in equal installments of 1/16th of the total number of RSUs on each quarterly anniversary after February 18, 2021, over 16 quarters of continuous service, such that the RSU award shall vest in full four years from February 18, 2021, subject to Ms. Brown’s continued service. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(9)
| The PSUs vest as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—20212022 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 Payments upon Termination or Change in 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.”
|
202274 2023 Proxy Statement 67 |
TABLE OF CONTENTS (12)
(10)
| The RSUs will vest at a ratein equal installments of 1/16th of the sharestotal number of our common stock underlying the RSUs on each quarter beginning onquarterly anniversary after February 18, 2021,2022, over 16 quarters of continuous service, such that the RSU award shall vest in full four years from February 18, 2022, subject to Mr. McCombs’sMs. Brown’s continued employment on each vesting date.service. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.Control.” |
(13)
(11)
| On September 21, 2022, we entered into the McCombs Transition Agreement with Mr. McCombs, and Mr. McCombs’s last day of employment was December 31, 2022. Accordingly, we determined that Mr. McCombs’s awards that were forfeited in connection with his departure on December 31, 2022 were not outstanding at fiscal year end and are therefore excluded from the Outstanding Equity Awards at Fiscal Year End table. |
(12)
| The stock option was fully exercisable as of December 31, 2021.2022. |
(14)
(13)
| 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. The stock option is subject to acceleration upon certain events as described in the section titled “Potential Payments upon Termination or Change in Control.” |
(15)
(14)
| 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 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.” |
(15)
| The earned PSUs will vest 25% on the first 18th of the month following the one-year anniversary of the date of grant and thereafter 1/16th of the earned PSUs shall vest on each quarterly anniversary thereafter, subject to Mr. Gilpin’s continued service. The PSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(16)
| The RSUs will vest in equal installments of 1/16th of the total number of RSUs on each quarterly anniversary after February 18, 2021, over 16 quarters of continuous service, such that the RSU award shall vest in full four years from February 18, 2021, 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.” |
(17)
| The PSUs vest as described in the section titled “—Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation—20212022 Equity Awards.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“Potential Payments upon Termination or Change in Control.Control.” |
(17)
(18)
| The RSUs will vest at a ratein equal installments of 1/16th of the sharestotal number of our common stock underlying the RSUs on each quarter beginning onquarterly anniversary after February 18, 2021,2022, over 16 quarters of continuous service, such that the RSU award shall vest in full four years from February 18, 2022, subject to Mr. Gilpin’s continued employment on each vesting date.service. The RSUs are subject to acceleration upon certain events as described in “Potential Payments upon Termination or Change in Control.” |
(19)
| The RSUs will vest in equal installments of 1/4th of the total number of RSUs on each quarterly anniversary after August 18, 2022, over 4 quarters of continuous service, such that the RSU award shall vest in full one year from August 18, 2022, 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.” |
20212022 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 20212022 and the aggregate value realized upon the exercise of stock options and the vesting and settlement of RSUs. | | | Option Awards | | | Stock Awards | | | | | | 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
($)(2) | | | Number of Shares
Acquired on
Exercise
(#) | | | Value Realized
on Exercise
($) | | | Number of Shares
Acquired on
Vesting
(#) | | | Value Realized
on Vesting
($)(1) | Hayden Brown | | | 600,105 | | | 25,726,159 | | | 251,049 | | | 11,388,599 | | | — | | | — | | | 312,135 | | | 5,443,130 | Jeff McCombs | | | — | | | — | | | 4,415 | | | 183,474 | | | — | | | — | | | 189,776(2) | | | 2,766,993 | Eric Gilpin | | | — | | | — | | | 28,516 | | | 1,285,133 | | | — | | | — | | | 45,686 | | | 805,096 |
(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 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 vesting date. Amounts shown are presented on an aggregate basis for all vesting and settlement that occurred during 2021.2022. |
(2)
| Pursuant to the terms of the McCombs Transition Agreement, Mr. McCombs’s Initial RSU Award was deemed vested with respect to 137,174 shares upon execution of the McCombs Transition Agreement on September 29, 2022 and an additional 17,146 shares following November 18, 2022. The deemed vesting of the 137,174 shares upon execution of the McCombs Transition Agreement and the additional 17,146 shares following November 18, 2022 were consistent with the terms of Mr. McCombs’s offer letter, which provided for acceleration of the Initial RSU Award after one year if Mr. McCombs were to be terminated without cause or resigned for good reason. |
2023 Proxy Statement 75
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TABLE OF CONTENTS We have entered into offer letters with Ms. Brown and Messrs.Mr. Gilpin, and we had entered into an offer letter with Mr. McCombs and Gilpin.prior to the termination of his employment in December 2022. Each of these offer letters provides (or provided, in the case of Mr. McCombs) 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(other than Mr. Gilpin who participates in a separate sales compensation plan,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.” In March 2023, we entered into an offer letter with Ms. Gessert in connection with her appointment as our Chief Financial Officer, a copy of which will be filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. Potential Payments upon Termination or Change in Control We have entered into change in control and severance agreementsa Severance Agreement with each of our Named Executive Officers, which provideprovides for the following benefits if the Named Executive Officer is terminated by us without “cause”cause (as defined in the Severance Agreements) or, with respect to our President and Chief Executive Officer only, by the Named Executive Officer for “good reason”good reason (as defined in the Severance Agreements), outside of a change in control (as defined in the Severance Agreements) 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)Severance Agreements) or by the executive for good reason (as defined in the change in control and severance agreements)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)Severance 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 agreementsSeverance 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;opportunity on a pro-rated basis; (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 agreementSeverance 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 agreementsSeverance 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,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. 76 2023 Proxy Statement |
TABLE OF CONTENTS 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, 2021,2022, and the price per share of our common stock was the closing price on Nasdaq as of December 31, 2021,30, 2022 (the last day of business of 2022), which was $34.16.$10.44. There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments or benefits, any actual payments and benefits may be different. | | | Qualifying Termination - No Change in Control | | | Qualifying Termination - Change in Control | | | Qualifying Termination - No Change in Control | | | Qualifying Termination - Change in Control | Name | | | Cash
Severance
($)(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 ($)(2) | | | Total ($) | | 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 | | | 500,000 | | | 30,915 | | | 11,475,480 | | | 12,006,395 | | | 750,000 | | | 500,000 | | | 46,372 | | | 22,950,960 | | | 24,247,332 | | | 550,000 | | | 33,585 | | | 2,833,202 | | | 3,416,787 | | | 825,000 | | | 550,000 | | | 50,378 | | | 5,666,404 | | | 7,091,782 | 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 | | | 206,000 | | | 14,808 | | | — | | | 220,808 | | | 412,000 | | | 412,000 | | | 29,616 | | | 1,441,798 | | | 2,295,414 |
(1)
| The severance amount related to base salary was determined based on the base salaries in effect on December 31, 2021.2022. |
(2)
| The value of accelerated vesting is calculated based on the per share closing price on Nasdaq as of December 31, 2021,30, 2022 (the last day of business of 2022), which was $34.16,$10.44, less, if applicable, the aggregate exercise price of each outstanding unexercisableunvested stock option. TheFor PSUs, assume the maximum achievable amount reported is based on a reasonable estimate of the applicable performance conditions (i.e., based on 200%84% 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, 2021.30, 2022 (the last day of business of 2022). |
(3)
| The value of the bonus payment was determined based on the full amount of the target bonuses in effect on December 31, 2021.2022. |
(4)
| On September 21, 2022, we entered into the McCombs Transition Agreement with Mr. McCombs, and Mr. McCombs’s last day of employment was December 31, 2022. Accordingly, we determined that Mr. McCombs was not entitled to any estimated payments and benefits that would be provided in the circumstances described above at fiscal year end and such amounts are therefore excluded from the Potential Payments upon Termination or Change in Control table. |
In April 2023, we entered into a Severance Agreement with Ms. Gessert in connection with her appointment as our Chief Financial Officer, a copy of which will be filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. 2023 Proxy Statement 77
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TABLE OF CONTENTS Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid, which we refer to as CAP, and certain financial performance of our company and peers. For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with our performance, refer to “Executive Compensation—Compensation Discussion and Analysis.” 2022 | | | 8,474,727 | | | (25,586,673) | | | 4,573,989 | | | (3,208,186) | | | 98 | | | 108 | | | (89,885,000) | | | 618,318,000 | 2021 | | | 34,909,304 | | | 29,693,025 | | | 2,116,323 | | | 1,991,129 | | | 320 | | | 178 | | | (56,240,000) | | | 470,925,703 | 2020 | | | 848,412 | | | 25,983,464 | | | 2,441,919 | | | 4,223,757 | | | 324 | | | 140 | | | (22,867,000) | | | 344,924,258 |
(1)
| Hayden Brown served as our principal executive officer, which we refer to as our PEO, for the entirety of 2020, 2021 and 2022, and our non-PEO named executive officers, which we refer to as our Non-PEO NEOs, for the applicable years were as follows: (i) for 2022: Eric Gilpin and Jeff McCombs; (ii) for 2021: Eric Gilpin and Jeff McCombs; and (iii) 2020: Eric Gilpin, Jeff McCombs, and Brian Kinion. |
(2)
| Amounts reported in these columns represent (i) the total compensation reported in the Summary Compensation Table for the applicable year for our PEO and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year for our Non-PEO NEOs. |
(3)
| Amounts reported in this column represent CAP to Hayden Brown as our PEO in the indicated fiscal years, as calculated per Item 402(v) of Regulation S-K. Such calculations are based on Ms. Brown’s total compensation reported in the Summary Compensation Table for the indicated fiscal years and adjusted as shown in the table below. In making each of these adjustments, the “value” of an option or stock award is the fair value of the award on the applicable date determined in accordance with FASB ASC Topic 718 using the valuation assumptions we then used to calculate the fair value of our equity awards. For more information on the valuation of our equity awards, please see the notes to our financial statements that appear in our applicable Annual Report on Form 10-K and the footnotes to the Summary Compensation Table that appears in our applicable definitive proxy statement. The dollar amounts do not reflect the actual amount of compensation the Company considers to be earned by or paid to Ms. Brown during the applicable year. There were no dividends paid and no changes to the value of pension benefits as we do not provide pension benefits. |
78 2023 Proxy Statement |
TABLE OF CONTENTS Summary Compensation Table—Total Compensation | | | (a) | | | 848,412 | | | 34,909,304 | | | 8,474,727 | Subtract Amounts Reported Under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable Fiscal Year | | | (b) | | | — | | | (33,406,652) | | | (7,455,075) | Add Fair Value of Awards Granted During Applicable Fiscal Year that Remain Unvested as of Applicable Fiscal Year End, Determined as of Applicable Fiscal Year End | | | (c) | | | — | | | 23,631,900 | | | 3,178,100 | Add/Subtract Awards Granted During Prior Fiscal Years that were Outstanding and Unvested as of Applicable Fiscal Year End, Determined Based on Change in Fair Value from Prior Fiscal Year End to Applicable Fiscal Year End | | | (d) | | | 22,547,000 | | | (190,309) | | | (25,451,923) | Add Fair Value of Awards Granted During Applicable Fiscal Year that Vested as of Applicable Fiscal Year End, Determined as of Applicable Vesting Date | | | (e) | | | 69,150 | | | 319,445 | | | 748,542 | Add/Subtract Awards Granted During Prior Fiscal Years that Vested During Applicable Fiscal Year, Determined Based on Change in Fair Value from Prior Fiscal Year End to Vesting Date | | | (f) | | | 2,518,902 | | | 4,429,337 | | | (5,081,044) | Subtract Fair Value of Awards Granted During Prior Fiscal Years that were Forfeited During Applicable Fiscal Year, Determined as of Prior Fiscal Year End | | | (g) | | | — | | | — | | | — | Compensation Actually Paid | | | | | | 25,983,464 | | | 29,693,025 | | | (25,586,673) |
(a)
| Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. |
(b)
| Represents the aggregate grant date fair value of the stock awards and option awards granted to Hayden Brown during the indicated fiscal year, computed in accordance with FASB ASC 718. Amounts shown are the amounts reported in the Summary Compensation Table. |
(c)
| Represents the aggregate fair value as of the indicated fiscal year-end of Hayden Brown’s outstanding and unvested stock awards and option awards granted during such fiscal year, computed in accordance with FASB ASC 718. |
(d)
| Represents the aggregate change in fair value during the indicated fiscal year of the outstanding and unvested stock awards and option awards granted in prior fiscal years and held by Hayden Brown as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718. |
(e)
| Represents the aggregate fair value at vesting of the option and stock awards that both were granted to Hayden Brown and vested during the indicated fiscal year, computed in accordance with FASB ASC 718. |
(f)
| Represents the aggregate change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award and option award held by Hayden Brown that was granted in a prior fiscal year and vested during the indicated fiscal year, computed in accordance with FASB ASC 718. |
(g)
| Represents the aggregate fair value as of the last day of the prior fiscal year of Hayden Brown’s stock awards and option awards that were granted in a prior fiscal year and failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with FASB ASC 718. |
(4)
| Amounts reported in this column represent the average CAP to our Non-PEO NEOs in the indicated fiscal year, as calculated per Item 402(v) of Regulation S-K. Such calculations are based on the average total compensation for such Non-PEO NEOs reported in the Summary Compensation Table for the indicated fiscal year and adjusted as shown in the table below. In making each of these adjustments, the “value” of an option or stock award is the fair value of the award on the applicable date determined in accordance with FASB ASC Topic 718 using the valuation assumptions we then used to calculate the fair value of our equity awards. For more information on the valuation of our equity awards, please see the notes to our financial statements that appear in our applicable Annual Report on Form 10-K and the footnotes to the Summary Compensation Table that appears in our applicable definitive proxy statement. The dollar amounts do not reflect the actual amount of compensation the Company considers to be earned by or paid to our Non-PEO NEOs during the applicable year. There were no dividends paid and no changes to the value of pension benefits as we do not provide pension benefits. |
2023 Proxy Statement 79
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TABLE OF CONTENTS Summary Compensation Table—Total Compensation | | | (a) | | | 2,441,919 | | | 2,116,323 | | | 4,573,989 | Subtract Amounts Reported Under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable Fiscal Year | | | (b) | | | (1,931,376) | | | (1,126,933) | | | (3,836,932) | Add Fair Value of Awards Granted During Applicable Fiscal Year that Remain Unvested as of Applicable Fiscal Year End, Determined as of Applicable Fiscal Year End | | | (c) | | | 4,164,286 | | | 579,986 | | | 538,543 | Add/Subtract Awards Granted During Prior Fiscal Years that were Outstanding and Unvested as of Applicable Fiscal Year End, Determined Based on Change in Fair Value from Prior Fiscal Year End to Applicable Fiscal Year End | | | (d) | | | 467,619 | | | 62,360 | | | 507,769 | Add Fair Value of Awards Granted During Applicable Fiscal Year that Vested as of Applicable Fiscal Year End, Determined as of Applicable Vesting Date | | | (e) | | | 158,029 | | | 124,483 | | | 345,331 | Add/Subtract Awards Granted During Prior Fiscal Years that Vested During Applicable Fiscal Year, Determined Based on Change in Fair Value from Prior Fiscal Year End to Vesting Date | | | (f) | | | 178,525 | | | 359,630 | | | (1,988,433) | Subtract Fair Value of Awards Granted During Prior Fiscal Years that were Forfeited During Applicable Fiscal Year, Determined as of Prior Fiscal Year End | | | (g) | | | (1,255,245) | | | — | | | (2,332,916) | Compensation Actually Paid | | | | | | 4,223,757 | | | 1,991,129 | | | (3,208,186) |
*
| Please see footnote 1 above for the Non-PEO NEOs included in the average for each indicated fiscal year. |
(a)
| Represents the average Total Compensation as reported in the Summary Compensation Table for the Non-PEO NEOs in the indicated fiscal year. |
(b)
| Represents the average aggregate grant date fair value of the stock awards and option awards granted to the Non-PEO NEOs during the indicated fiscal year, computed in accordance with FASB ASC 718. Amounts shown are the amounts reported in the Summary Compensation Table. |
(c)
| Represents the average aggregate fair value as of the indicated fiscal year-end of the Non-PEO NEOs’ outstanding and unvested stock awards and option awards granted during such fiscal year, computed in accordance with FASB ASC 718. |
(d)
| Represents the average aggregate change in fair value during the indicated fiscal year of the outstanding and unvested stock awards and option awards granted in prior fiscal years and held by the Non-PEO NEOs as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718. |
(e)
| Represents the average aggregate fair value at vesting of the stock awards and option awards that were both granted to the Non-PEO NEOs and vested during the indicated fiscal year, computed in accordance with FASB ASC 718. |
(f)
| Represents the average aggregate change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award and option award held by the Non-PEO NEOs that was granted in a prior fiscal year and vested during the indicated fiscal year, computed in accordance with FASB ASC 718. |
(g)
| Represents the average aggregate fair value as of the last day of the prior fiscal year of the Non-PEO NEOs’ stock awards and option awards that were granted in a prior fiscal year and failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with FASB ASC 718. On September 21, 2022, we entered into the McCombs Transition Agreement with Non-PEO NEO Jeff McCombs, and Mr. McCombs’s last day of employment was December 31, 2022. Accordingly, we determined that Mr. McCombs’s awards that were forfeited in connection with his departure on December 31, 2022 were not outstanding at fiscal year end and are therefore included in this calculation row. |
(5)
| Pursuant to rules of the SEC, the comparison assumes $100 was invested in our common stock on December 31, 2019, using the closing stock price of the end of the last day that was prior to the beginning of our fiscal year 2020. Historic stock price performance is not necessarily indicative of future stock price performance. There were no dividends or other earnings paid in the covered fiscal years. |
(6)
| The TSR Peer Group consists of the Nasdaq 100 Technology Index which we also use in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2022. This column assumes $100 was invested in this peer group on December 31, 2019 (same period as used for footnote 5 above). |
(7)
| The amounts shown in this column are also included in our audited financial statements. |
(8)
| Our compensation committee determined Compensation Program Revenue to be the most important financial performance measure used to link company performance to CAP to our PEO and Non-PEO NEOs for 2022 because, in its view, it was most consistent with our near-term objective of driving revenue growth. Compensation Program Revenue achievement was the sole driver of payouts under our 2022 Performance Bonus Plan and was the sole performance metric underlying the PSUs granted to our PEO and Non-PEO NEOs in 2022. Compensation Program Revenue is not a financial measure prepared in accordance with GAAP. For more information on how we compute this non-GAAP financial measure and a reconciliation to the most directly comparable financial measure prepared in accordance with GAAP, please refer to “Appendix B: Reconciliation of Non-GAAP Financial Measures” in this Proxy Statement. |
80 2023 Proxy Statement |
TABLE OF CONTENTS Relationship Between Pay and Performance CAP, as calculated per Item 402(v) of Regulation S-K, reflects cash compensation actually paid as well as adjusted values to unvested and vested equity awards during the years shown in the table based on year-end or vesting date stock prices, various accounting valuation assumptions, and projected performance modifiers. Due to how CAP is calculated, the CAP as reported for each year does not reflect the actual amounts earned by our NEOs from their equity awards. CAP generally fluctuates annually due to the change in our stock price from year to year as well as varying levels of actual achievement of performance goals. Because CAP does not reflect the actual amount of compensation earned by our PEO and Non-PEO NEOs, we do not use this measure for understanding how NEO pay aligns with our performance. For a discussion of how our compensation committee assessed “pay-for-performance” and how our executive compensation program is designed to link executive compensation with the achievement of our financial and strategic objectives as well as stockholder value creation each year, see “Compensation Discussion and Analysis” in this Proxy Statement and in our definitive proxy statements filed with the SEC on April 20, 2021 and April 19, 2022. Below are graphs showing the relationship of CAP to our PEO and Non-PEO NEOs for our fiscal years 2020, 2021 and 2022 to (1) TSR of both our common stock and the Nasdaq 100 Technology Index, (2) our net loss, and (3) our Compensation Program Revenue (as described in footnote 8 above). 2023 Proxy Statement 81
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TABLE OF CONTENTS Tabular List of Financial Performance Measures for 2022 The following table contains the most important financial measures used to link CAP, for the year ended December 31, 2022, to the Company’s performance. No other financial performance metrics were used by us to link CAP to our PEO or Non-PEO NEOs in 2022 to company performance.
Compensation Program Revenue(1) | Annual enterprise revenue quota (with respect to Mr. Gilpin)(2) | Annual enterprise bookings quota (with respect to Mr. Gilpin)(2) |
(1)
| Compensation Program Revenue is the primary financial performance metric used to link CAP to our PEO and Non-PEO NEOs in 2022 to company performance. Compensation Program Revenue achievement was the sole driver of payouts under our 2022 Performance Bonus Plan and was the sole performance metric underlying the PSUs granted to our PEO and Non-PEO NEOs in 2022. |
(2)
| Mr. Gilpin’s annual cash incentive under the sales compensation plan for performance in 2022 paid out based on achievement of annual enterprise revenue quota and annual enterprise bookings quota. |
82 2023 Proxy Statement |
TABLE OF CONTENTS 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. 2022 Proxy Statement 69 |
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Further, if the Restated Certificate of Incorporation described in Proposal 4 is approved by our stockholders, we will provide for the exculpation of officers, to the fullest extent permitted by law, including for personal liability for breach of fiduciary duty. This exculpation would not protect officers from liability for breach of the duty of loyalty, acts, or omissions not in good faith or that involve intentional misconduct or a knowing violation of law or any transaction in which the officer derived an improper personal benefit. Nor would this exculpation shield such officers from liability for claims brought by or in the right of our company, such as derivative claims. Our current 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 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. 2023 Proxy Statement 83
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TABLE OF CONTENTS 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 2021:2022: The annual total compensation of our Chief Executive Officer, Ms. Brown, was $34,909,304,$8,474,727, 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;$300,716; and The CEO Pay Ratio was 15928 to 1. This ratio is a reasonable estimate calculated in a manner consistent with SEC rules. 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 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 elected 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 |
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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 20212022 Summary Compensation Table 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. 202284 2023 Proxy Statement 71 |
TABLE OF CONTENTS Equity Compensation Plan Information The following table presents information as of December 31, 2021,2022, 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)) (#) | | | 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) | | (a) | | | (b) | | | (c) | Equity compensation plans approved by security holders | | | 8,847,891(1) | | | 16.29(2) | | | 25,283,698(3) | | | 11,765,632(1) | | | 17.58(2) | | | 26,617,736(3) | Equity compensation plans not approved by security holders | | | _ | | | N/A | | | _ | | | — | | | — | | | — | Total | | | 8,847,891 | | | 16.29 | | | 25,283,698 | | | 11,765,632 | | | 17.58 | | | 26,617,736 |
(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)performance for PSUs). |
(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 22,250,29722,823,608 shares of our common stock available for issuance under the 2018 Plan as of December 31, 2021,2022, and 3,033,4013,794,128 shares of our common stock available for issuance under the 2018 ESPP as of December 31, 2021.2022. 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, 2021,2022, 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 6,456,5236,618,413 shares on January 1, 2022,2023, and will increase automatically on the first day of January of each of 20232024 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 1,033,0431,058,946 shares on January 1, 2022,2023 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. |
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TABLE OF CONTENTS Certain Relationships and Related Party Transactions A “related person transaction” is a transaction, arrangement, or relationship in which we or any of our subsidiaries was, is, or will be a participant, the amount of which exceeds $120,000, and in which any related person had, has, or will have a direct or indirect material interest. A “related person” means: any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of our company or a nominee to become a director; any person who is known by us to be the beneficial owner of more than 5% of our voting securities; and any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of a director, director nominee, executive officer, or beneficial owner of more than 5% of our voting securities, and any person (other than a tenant or employee) sharing the household of such director, director nominee, executive officer, or beneficial owner of more than 5% of our voting securities. In addition to the executive officer and director compensation arrangements discussed above under “Executive Compensation” and “Proposal 1—Election of Directors—20212022 Director Compensation,” respectively, since January 1, 2021, the following indemnification agreements with each of our directors and Named Executive Officers are theour only related person 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.since January 1, 2022. 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.the DGCL. 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 anyboard of directors has adopted a written related party transaction policy that must be reported under applicable rulessets forth policies and procedures for the review and approval or ratification of related person transactions. These policies and procedures are designed to minimize potential conflicts of interest arising from any dealings we may have with our related persons and to provide appropriate procedures for the SEC must be reviewed and approveddisclosure of any real or ratified by ourpotential conflicts of interest that may exist from time to time. Specifically, the audit committee has the responsibility to review related person transactions, unless the related partyperson 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. The audit committee (or nominating and governance committee, if applicable), in approving or rejecting the proposed transaction, may consider the relevant and available facts and circumstances, including the terms of the transaction and the impact on a director’s independence in the event the related person is a director or immediate family member or affiliate of a director. 202286 2023 Proxy Statement 73 |
TABLE OF CONTENTS 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, 2021.2022. 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, 2021,2022, for filing with the SEC. Submitted by the Audit, Risk and Compliance Committee
Elizabeth Nelson, Chair
Gregory C. Gretsch
Leela Srinivasan 74 20222023 Proxy Statement
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TABLE OF CONTENTS Frequently Asked Questions Proxy Materials 1.
| Why did I receive these proxy materials? |
We have made these materials available to you or, if requested, delivered paper copies by mail in connection with the Annual Meeting, which will be held exclusively online via live webcast on Thursday,Friday, June 2, 2022,9, 2023, at 8:00 a.m. Pacific Time. As a stockholder, you are invited to participate 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 provide to you under SEC rules and is intended to assist you in voting 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 the Annual Meeting; and Our Annual Report on Form 10-K for the year ended December 31, 2021.2022. 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 some 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 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 conservingconserve 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/| • | 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. |
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TABLE OF CONTENTS 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 |
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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/www.us.computershare.com/investor with questions about electronic delivery. 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 Annual Meeting on the internet; and 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 conservingconserve natural resources. This year, a number of brokers with account holders who are our stockholders will be “householding”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”householding communications to your address, “householding”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 20222023 Proxy Statement
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| 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 threetwo Class III 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 20222023 | | | For, Against, or Abstain | | | | | | Majority of the votes cast | | | No effect | 3 | | | AdvisoryNon-binding advisory vote on named executive officerNamed Executive Officer compensation (“say-on-pay”)(Say-on-Pay)
| | | For, Against, or Abstain | | | | | | Majority of the votes cast | | | No effect | 4 | | | Approval of Restated Certificate of Incorporation | | | For, Against, or Abstain | | | FOR | | | Majority of voting power of outstanding shares entitled to vote | | | Same effect as a vote against |
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 90 2023 Proxy Statement |
TABLE OF CONTENTS 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 |
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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, 2022,2023, 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.upon, except with respect to Proposal 4, for which a broker non-vote is counted as a vote against the proposal. 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”“FOR” the election of each of the Class III directors named in this Proxy Statement, which we refer to as Proposal 1, “FOR”“FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2022,2023, which we refer to as Proposal 2, and “FOR”“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 3.3, and “FOR” the approval of the Restated Certificate of Incorporation, which we refer to as Proposal 4. 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 Proposal 4, and, with respect to Kevin Harvey, Thomas Layton,Leela Srinivasan and Elizabeth Nelson,Gary Steele, 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 129,651,218133,466,746 shares of our common stock outstanding and entitled to vote. For 10 days prior toa 10-day period ending the day before the Annual Meeting date, 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,UPWK2023, where stockholders may vote and submit questions during the meeting. The meeting starts at 8:00 a.m. Pacific Time on Thursday,Friday, June 2, 2022.9, 2023. 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;card. Votes submitted by telephone or through the internet must be received by 8:59 p.m. Pacific Time on June 8, 2023; 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 2023 Proxy Statement 91
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TABLE OF CONTENTS 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 |
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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)2023), 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, 92 2023 Proxy Statement |
TABLE OF CONTENTS 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 (i) communicate your voting decision to your broker, bank, or other nominee before the date of the Annual Meeting, or to(ii) 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 theour 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 |
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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 onin the “Investor Relations” section of our website. 2023 Proxy Statement 93
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TABLE OF CONTENTS 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.UPWK2023. 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,Friday, June 2, 2022.9, 2023. 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.UPWK2023. 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.Meeting. Our virtual meeting format helps us engage with all stockholders—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’stockholders time and money, and reduces our environmental impact. 80 2022 Proxy Statement |
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23.
| 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,UPWK2023, 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-publicnonpublic information of theabout our company, derogatory or in bad taste, in furtherance of the stockholder’s personal or business interests, related to pending or threatened litigation;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 directorsthe Annual Meeting or our Corporate Secretary in their reasonable discretion)sole judgment). 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.UPWK2023. 94 2023 Proxy Statement |
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| What is the deadline to propose actions for consideration at the 20232024 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 20232024 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, 2023,10, 2024, and not later than 2:00 p.m. Pacific Time on March 3, 2023.11, 2024. 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 20232024 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, 2022,30, 2023, and no later than 2:00 p.m. Pacific Time on December 20, 2022,30, 2023, 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, 2023.10, 2024. Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 20232024 annual meeting of stockholders must be received by us not later than December 20, 2022,30, 2023, 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,”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 2023 Proxy Statement 95
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TABLE OF CONTENTS Corporate Governance Documents Our Corporate Governance Guidelines, charters of ourthe principal committees of theour 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 (650) 316-7500, or by email at investor@upwork.com. Communicating with the Board of 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. 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 82 202296 2023 Proxy Statement |
TABLE 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 |
20222023 Proxy Statement 8397
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TABLE OF CONTENTS  * * * * * * * * * * * UPWORK INC.
RESTATED CERTIFICATE OF INCORPORATION ARTICLE I: NAME The name of the corporation is Upwork Inc. (the “Corporation”). ARTICLE II: AGENT FOR SERVICE OF PROCESS The address of the Corporation’s registered office in the State of Delaware is 9 E. Loockerman Street, Suite 311, Dover, DE, 19901, Kent County. The name of the registered agent of the Corporation at that address is Registered Agent Solutions, Inc. ARTICLE III: PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”). ARTICLE IV: AUTHORIZED STOCK 1. Total Authorized. The total number of shares of all classes of stock that the Corporation has authority to issue is five hundred million (500,000,000) shares, consisting of two classes: four hundred and ninety million (490,000,000) shares of Common Stock, $0.0001 par value per share (“Common Stock”), and ten million (10,000,000) shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”). 2. Designation of Additional Series. 2.1. The Board of Directors of the Corporation (the “Board”) is authorized, subject to any limitations prescribed by the law of the State of Delaware, to provide for the issuance of the shares of Preferred Stock in one or more series, and, by filing a Certificate of Designation pursuant to the applicable law of the State of Delaware (“Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, powers (including voting powers), preferences and relative, participating, optional or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof, and, except where otherwise provided in the applicable Certificate of Designation, to thereafter increase (but not above the total number of authorized shares of the Preferred Stock) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series. The number of authorized shares of Preferred Stock may also be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of two-thirds of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the Preferred Stock, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation; provided, however, that if two-thirds of the Whole Board (as defined below) has approved such increase or decrease of the number of authorized shares of Preferred Stock, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock (unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation), shall be required to effect such increase or decrease. For purposes of this Restated Certificate of Incorporation (as the same may be amended and/or restated from time to time, including pursuant the terms of any Certificate of Designation designating a series of Preferred Stock, this “Certificate of Incorporation”), the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. 2023 Proxy Statement A-1-1
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TABLE OF CONTENTS 2.2 Except as otherwise expressly provided in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article IV, any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and any such new series may have powers, preferences and rights, including, without limitation, voting powers, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, any series of Preferred Stock or any future class or series of capital stock of the Corporation. 2.3 Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation. ARTICLE V: AMENDMENT OF BYLAWS The Board shall have the power to adopt, amend or repeal the Bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “Bylaws”). Any adoption, amendment or repeal of the Bylaws by the Board shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser or no vote, but in addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws; provided further, that, in the case of any proposed adoption, amendment or repeal of any provisions of the Bylaws that is approved by the Board and submitted to the stockholders for adoption thereby, if two-thirds of the Whole Board has approved such adoption, amendment or repeal of any provisions of the Bylaws, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws. ARTICLE VI: MATTERS RELATING TO THE BOARD OF DIRECTORS 1. Director Powers. Except as otherwise provided by the General Corporation Law or this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board. 2. Number of Directors. Subject to the special rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution adopted by a majority of the Whole Board. 3. Classified Board. Subject to the special rights of the holders of one or more series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “Classified Board”). The Board may assign members of the Board already in office to the Classified Board. The number of directors in each class shall be as nearly equal as is practicable. The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the closing of the Corporation’s initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, relating to the offer and sale of Common Stock to the public (the “Initial Public Offering”), the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the closing of the Initial Public Offering and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the closing of the Initial Public Offering. At each annual meeting of stockholders following the closing of the Initial Public Offering, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office expiring at the third succeeding annual meeting of stockholders after their election. A-1-2 2023 Proxy Statement |
TABLE OF CONTENTS 4. Term and Removal. Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Subject to the special rights of the holders of any series of Preferred Stock, no director may be removed from the Board except for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class. In the event of any increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the classes of directors so as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board shall shorten the term of any director. 5. Board Vacancies and Newly Created Directorships. Subject to the special rights of the holders of any series of Preferred Stock, any vacancy occurring in the Board for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned expires and until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. 6. Vote by Ballot. Election of directors need not be by written ballot unless the Bylaws shall so provide. 7. Preferred Directors. If and for so long as the holders of any series of Preferred Stock have the special right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly. ARTICLE VII: DIRECTOR AND OFFICER LIABILITY 1. Limitation of Liability. To the fullest extent permitted by law, neither a director nor an officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director or officer, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended. 2. Change in Rights. Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director or officer of the Corporation existing hereunder with respect to any act or omission occurring prior to such amendment, modification or repeal. ARTICLE VIII: MATTERS RELATING TO STOCKHOLDERS 1. No Action by Written Consent of Stockholders. Subject to the rights of any series of Preferred Stock then outstanding, no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by the stockholders of the Corporation by written consent in lieu of a meeting. 2023 Proxy Statement A-1-3
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TABLE OF CONTENTS 2. Special Meeting of Stockholders. Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director (as defined in the Bylaws), the President, or the Board acting pursuant to a resolution adopted by a majority of the Whole Board and may not be called by the stockholders or any other person or persons. 3. Advance Notice of Stockholder Nominations and Business Transacted at Special Meetings. Advance notice of stockholder nominations for the election of directors of the Corporation and of business to be brought by stockholders before any meeting of stockholders of the Corporation shall be given in the manner provided in the Bylaws. Business transacted at special meetings of stockholders shall be limited to the purpose or purposes stated in the notice of meeting. ARTICLE IX: CHOICE OF FORUM Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), to the fullest extent permitted by law, shall be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, stockholder, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders; (c) any action asserting a claim against the Corporation arising pursuant to any provision of the General Corporation Law, this Certificate of Incorporation or the Bylaws or as to which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; (d) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws; (e) any action asserting a claim against the Corporation governed by the internal affairs doctrine; or (f) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the General Corporation Law. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX. Failure to enforce the foregoing provisions of this Article IX would cause the Corporation irreparable harm, and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. ARTICLE X: AMENDMENT OF CERTIFICATE OF INCORPORATION If any provision of this Certificate of Incorporation shall be held to be invalid, illegal, or unenforceable, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Certificate of Incorporation (including without limitation, all portions of any section of this Certificate of Incorporation containing any such provision held to be invalid, illegal, or unenforceable, which is not invalid, illegal, or unenforceable) shall remain in full force and effect. The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote (but subject to Section 2 of Article IV hereof), but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal any provision of this Certificate of Incorporation; provided, further, that if two-thirds of the Whole Board has approved such amendment or repeal of any provisions of this Certificate of Incorporation, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class (in addition to any other vote of the holders of any class or series of stock of the Corporation required by law of by this Certificate of Incorporation), shall be required to amend or repeal such provisions of this Certificate of Incorporation. * * * * * * * * * * * A-1-4 2023 Proxy Statement |
TABLE OF CONTENTS Appendix A-2: Marked Copy of Restated Certificate of Incorporation * * * * * * * * * * * UPWORK INC.
RESTATED CERTIFICATE OF INCORPORATION ARTICLE I: NAME The name of the corporation is Upwork Inc. (the “Corporation”). ARTICLE II: AGENT FOR SERVICE OF PROCESS The address of the Corporation’s registered office in the State of Delaware is 9 E. Loockerman Street, Suite 311, Dover, DE, 19901, Kent County. The name of the registered agent of the Corporation at that address is Registered Agent Solutions, Inc. ARTICLE III: PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”). ARTICLE IV: AUTHORIZED STOCK 1. Total Authorized. The total number of shares of all classes of stock that the Corporation has authority to issue is five hundred million (500,000,000) shares, consisting of two classes: four hundred and ninety million (490,000,000) shares of Common Stock, $0.0001 par value per share (“Common Stock”), and ten million (10,000,000) shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”). 2. Designation of Additional Series. 2.1. The Board of Directors of the Corporation (the “Board”) is authorized, subject to any limitations prescribed by the law of the State of Delaware, to provide for the issuance of the shares of Preferred Stock in one or more series, and, by filing a Certificate of Designation pursuant to the applicable law of the State of Delaware (“Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, powers (including voting powers), preferences and relative, participating, optional or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof, and, except where otherwise provided in the applicable Certificate of Designation, to thereafter increase (but not above the total number of authorized shares of the Preferred Stock) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series. The number of authorized shares of Preferred Stock may also be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of two-thirds of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the Preferred Stock, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation; provided, however, that if two-thirds of the Whole Board (as defined below) has approved such increase or decrease of the number of authorized shares of Preferred Stock, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock (unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation), shall be required to effect such increase or decrease. For purposes of this Restated Certificate of Incorporation (as the same may be amended and/or restated from time to time, including pursuant the terms of any Certificate of Designation designating a series of Preferred Stock, this “Certificate of Incorporation”), the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. 2023 Proxy Statement A-2-1
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TABLE OF CONTENTS 2.2 Except as otherwise expressly provided in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article IV, any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and any such new series may have powers, preferences and rights, including, without limitation, voting powers, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, any series of Preferred Stock or any future class or series of capital stock of the Corporation. 2.3 Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation. ARTICLE V: AMENDMENT OF BYLAWS The Board shall have the power to adopt, amend or repeal the Bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “Bylaws”). Any adoption, amendment or repeal of the Bylaws by the Board shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser or no vote, but in addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws; provided further, that, in the case of any proposed adoption, amendment or repeal of any provisions of the Bylaws that is approved by the Board and submitted to the stockholders for adoption thereby, if two-thirds of the Whole Board has approved such adoption, amendment or repeal of any provisions of the Bylaws, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws. ARTICLE VI: MATTERS RELATING TO THE BOARD OF DIRECTORS 1. Director Powers. Except as otherwise provided by the General Corporation Law or this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board. 2. Number of Directors. Subject to the special rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution adopted by a majority of the Whole Board. 3. Classified Board. Subject to the special rights of the holders of one or more series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “Classified Board”). The Board may assign members of the Board already in office to the Classified Board. The number of directors in each class shall be as nearly equal as is practicable. The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the closing of the Corporation’s initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, relating to the offer and sale of Common Stock to the public (the “Initial Public Offering”), the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the closing of the Initial Public Offering and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the closing of the Initial Public Offering. At each annual meeting of stockholders following the closing of the Initial Public Offering, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office expiring at the third succeeding annual meeting of stockholders after their election. A-2-2 2023 Proxy Statement |
TABLE OF CONTENTS 4. Term and Removal. Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Subject to the special rights of the holders of any series of Preferred Stock, no director may be removed from the Board except for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class. In the event of any increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the classes of directors so as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board shall shorten the term of any director. 5. Board Vacancies and Newly Created Directorships. Subject to the special rights of the holders of any series of Preferred Stock, any vacancy occurring in the Board for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned expires and until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. 6. Vote by Ballot. Election of directors need not be by written ballot unless the Bylaws shall so provide. 7. Preferred Directors. If and for so long as the holders of any series of Preferred Stock have the special right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly. ARTICLE VII: DIRECTOR AND OFFICER LIABILITY 1. Limitation of Liability. To the fullest extent permitted by law, noneither adirector nor an officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director or officer, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended. 2. Change in Rights. Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director or officer of the Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provisionhereunder with respect to any act or omission occurring prior to such amendment, modification or repeal. ARTICLE VIII: MATTERS RELATING TO STOCKHOLDERS 1. No Action by Written Consent of Stockholders. Subject to the rights of any series of Preferred Stock then outstanding, no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by the stockholders of the Corporation by written consent in lieu of a meeting. 2023 Proxy Statement A-2-3
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TABLE OF CONTENTS 2. Special Meeting of Stockholders. Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director (as defined in the Bylaws), the President, or the Board acting pursuant to a resolution adopted by a majority of the Whole Board and may not be called by the stockholders or any other person or persons. 3. Advance Notice of Stockholder Nominations and Business Transacted at Special Meetings. Advance notice of stockholder nominations for the election of directors of the Corporation and of business to be brought by stockholders before any meeting of stockholders of the Corporation shall be given in the manner provided in the Bylaws. Business transacted at special meetings of stockholders shall be limited to the purpose or purposes stated in the notice of meeting. ARTICLE IX: CHOICE OF FORUM Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), to the fullest extent permitted by law, shall be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, stockholder, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders; (c) any action asserting a claim against the Corporation arising pursuant to any provision of the General Corporation Law, this Certificate of Incorporation or the Bylaws or as to which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; (d) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws; or(e) any action asserting a claim against the Corporation governed by the internal affairs doctrine; or (f) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the General Corporation Law. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX. Failure to enforce the foregoing provisions of this Article IX would cause the Corporation irreparable harm, and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. ARTICLE X: AMENDMENT OF CERTIFICATE OF INCORPORATION If any provision of this Certificate of Incorporation shall be held to be invalid, illegal, or unenforceable, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Certificate of Incorporation (including without limitation, all portions of any section of this Certificate of Incorporation containing any such provision held to be invalid, illegal, or unenforceable, which is not invalid, illegal, or unenforceable) shall remain in full force and effect. The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote (but subject to Section 2 of Article IV hereof), but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal any provision of this Certificate of Incorporation; provided, further, that if two-thirds of the Whole Board has approved such amendment or repeal of any provisions of this Certificate of Incorporation, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class (in addition to any other vote of the holders of any class or series of stock of the Corporation required by law of by this Certificate of Incorporation), shall be required to amend or repeal such provisions of this Certificate of Incorporation. * * * * * * * * * * * A-2-4 2023 Proxy Statement |
TABLE OF CONTENTS Appendix B: Reconciliation of Non-GAAP Financial Measures This Proxy Statement includes references to Compensation Program Revenue, which is a non-GAAP measure of financial performance. This non-GAAP measure is not prepared in accordance with, and is not an alternative to financial measures prepared in accordance with, GAAP. There are material limitations associated with the use of non-GAAP financial measures as an analytical tool, and non-GAAP financial measures should not be considered in isolation or as substitutes for analysis of financial results as reported under GAAP. The non-GAAP financial measure may be different from non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from the non-GAAP financial measure. A reconciliation of the non-GAAP measure to its most directly comparable GAAP financial measure has been provided in the financial statement table below, and stockholders are encouraged to review the reconciliation. Reconciliation of Revenue to Compensation Program Revenue Marketplace revenue | | | $566,623 | | | $462,340 | | | $338,152 | Managed services revenue | | | 51,695 | | | 40,457 | | | 35,476 | Total revenue | | | $618,318 | | | $502,797 | | | $373,628 | Less: | | | | | | | | | | Cost of talent services to deliver managed services | | | (37,749) | | | (31,871) | | | (28,703) | Compensation Program Revenue | | | $580,569 | | | $470,926 | | | $344,924 |
2023 Proxy Statement B-1
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