| (1) | On May 1, 2015, Mr. Copeland, Mr. Kauffman, Mr. Kirby and Mr. Simon each received a grant of 3,570 restricted shares or restricted stock units under the 2011 Stock Incentive Plan. The amount in this table reflects(1)
On June 14, 2022, Ms. Barshefsky, Ms. Rogers, Mr. Samaha, Mr. Simon, Mr. Slater and Mr. Vaughan each received a grant of 21,008 restricted shares and Mr. Oosterman received a grant of 21,008 restricted stock units. As of December 31, 2022, these were the only unvested restricted shares and restricted stock units held by our non-management directors. The amounts in this table represent the aggregate grant date fair value of such grants as computed in accordance with FASB Topic 718, excluding the effect of estimated forfeitures during the applicable period. For a discussion of the assumptions relating to these valuations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates — Stock-Based Compensation” in our Annual Report on Form 10-K for the year ended December 31, 2022. (2)
Mr. Gross is not entitled to any compensation for his service on the Board in accordance with the terms of the purchase agreement with Goldman Sachs. Information About the Board and Corporate Governance The Board has established guidelines for determining director independence, and all current directors, with the exception of Mr. Penn, have been determined by the Board to be independent under applicable Nasdaq rules. The Company has also adopted a written Code of Conduct in order to help directors, officers and employees resolve ethical issues in an increasingly complex business environment. The Code of Conduct applies to all directors, officers and employees, including the Chief Executive Officer, the Chief Financial Officer, the Chief Accounting Officer, the General Counsel and any other employee with any responsibility for the preparation and filing of documents with the SEC. The Code of Conduct covers topics including, but not limited to, conflicts of interest, confidentiality of information and compliance with laws. The Code of Conduct also satisfies the requirements for a code of ethics, as defined by Item 406 of Regulation S-K promulgated by the SEC. The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, certain provisions of the Code of Conduct that apply to its principal executive officer, principal financial officer and principal accounting officer by posting such information on its website, at the address and location specified below.
In addition, the Board has adopted a set of Corporate Governance Guidelines as a framework within which the Board and its committees conduct business. The Company’s Corporate Governance Guidelines contain a majority voting policy, which requires a director nominee who receives, in an uncontested election, a number of votes “withheld” that is greater than the number of votes cast “for” his or her election to promptly offer to resign from the Board. The Board will accept the resignation absent exceptional circumstances. Unless the Board decides to reject the offer, the resignation will become effective 60 days after the date of the election. In making a determination whether to reject the offer or postpone the effective date, the Board of Directors will consider all factors it considers relevant to the best interests of the Company. A director who tenders a resignation pursuant to the Corporate Governance Guidelines will not participate in any meeting of the Board at which the resignation is considered. The Company will promptly issue a news release with the Board’s decision. Copies of the charters of the Audit Committee, the Human Resources and Compensation Committee and the Nominating and Corporate Governance Committee, as well the Code of Conduct and Corporate Governance Guidelines, are available free of charge at the Company’s website located at https://www.stagwellglobal.com/investors/corporate-governance. Copies are also available to any shareholder upon written request to One World Trade Center, Floor 65, New York, NY 10007, Attn: Investor Relations. Meetings The Board met or acted by written consent 9 times in 2022. The various Board committees met or acted by written consent the number of times shown in parentheses: Audit Committee (6); Human Resources and Compensation Committee (8); and Nominating and Corporate Governance Committee (3). Each incumbent director that served as a director during 2022 attended 75% or more of the aggregate of the meetings of the Board and each committee on which they served during such period. The Company has a formal policy regarding attendance by directors at its annual meeting of stockholders which states that all directors are expected to attend, provided that a director who is unable to attend such a meeting is expected to notify the Chairman of the Board in advance of any such meeting. Each member of the Board serving as a director at the time of the 2022 annual meeting of stockholders attended the meeting. Membership on Standing Board Committees | Director | | | Audit Committee | | | Human Resources and
Compensation Committee | | | Nominating and Corporate
Governance Committee | | | Charlene Barshefsky | | | ✓ | | | | | | | | | Bradley J. Gross | | | | | | ✓ | | | | | | Wade Oosterman | | | Chair | | | | | | | | | Mark J. Penn | | | | | | | | | | | | Desirée Rogers | | | | | | Chair | | | ✓ | | | Eli Samaha | | | ✓ | | | | | | | | | Irwin D. Simon | | | | | | ✓ | | | ✓ | | | Rodney Slater | | | | | | | | | Chair | | | Brandt Vaughan | | | | | | | | | | |
| | Audit Committee | | | The Audit Committee is currently composed of three members, all of whom are considered to be “independent” according to the applicable vesting period. For a discussionrules of Nasdaq and the Securities and Exchange Commission. The Audit Committee reviews all financial statements, annual and interim, intended for circulation to stockholders and reports upon these to the Board. In addition, the Board may refer to the Audit Committee matters and questions relating to the financial position of the assumptions relating to these valuations, please see “Management’s DiscussionCompany and Analysisits affiliates. The Audit Committee is also responsible for, among other things, selecting and approving the terms of Financial Conditionengagement and Resultscompensation of Operations — Critical Accounting Policiesour independent auditor for each fiscal year, reviewing the performance of the independent auditor, overseeing and Estimates — Stock-Based Compensation” set forthreviewing with management and the independent auditor the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures; risk oversight matters; reviewing with management its compliance with prescribed policies, procedures and internal controls; and reviewing with management and the independent auditor their reports on internal controls, as presented in our annual reportItem 9A (Controls and Procedures) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
| (2) | During 2015,2022. While the Company did not grant any option awards to non-employee directors. The following directors heldAudit Committee has the following number of options as of December 31, 2015: Mr. Copeland — 37,500;duties and Mr. Kauffman — 37,500. |
| (3) | This table only reflects compensation paid to Mr. Kauffman in his capacity as a non-management director during the period of January 1, 2015 through July 20, 2015. Amounts paid to Mr. Kauffman in his capacity as CEO of the Company during the period of July 20, 2015 through December 31, 2015 areresponsibilities set forth above, the Audit Committee is not responsible for planning or conducting the audit or for determining whether the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management has the “Summary Compensation Table”. |
| (4) | In connection withresponsibility for preparing the financial statements and implementing internal controls and evaluating their roleeffectiveness, and extensive service commitment asthe independent auditor has the responsibility for auditing the financial statements and effectiveness of internal controls over financial reporting.The current members of the SpecialAudit Committee are: Wade Oosterman (Chair), Charlene Barshefsky and Eli Samaha. Each of the members of the Audit Committee is “financially literate” as required by applicable SEC rules. The Board has determined that Mr. Oosterman qualifies as an “audit committee financial expert” under the Sarbanes-Oxley Act of 2002 and applicable Nasdaq and SEC regulations. Mr. Oosterman has experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions. | | | | Nominating and Corporate Governance Committee | | | The Nominating and Corporate Governance Committee is currently composed of three members, all of whom are considered to be “independent” according to the applicable rules of Nasdaq. The Nominating and Corporate Governance Committee is responsible for, among other things, reviewing and making recommendations to the periodfull Board with respect to developments in the area of December 3, 2014 through July 19, 2015, eachcorporate governance and the practices of Mr. Simonthe Board. The Nominating and Mr. Kauffman were paidCorporate Governance Committee is also responsible for evaluating the performance of the Board as a one-time feewhole and for reporting to the Board with respect to appropriate candidates for nominations to the Board. Pursuant to its charter, the Nominating and Corporate Governance Committee may conduct or authorize investigations or studies into matters within its scope of $75,000 in July 2015, which is reflected in these amounts.responsibilities and may retain, at the Company’s expense, such independent counsel or other consultants or advisers as it may deem necessary from time to time. The Nominating and Corporate Governance Committee has the sole authority to retain or terminate any search firm to be used to identify director candidates, including the sole authority to approve its fees and terms, with the Company bearing the cost of such fees. The Nominating and Corporate Governance Committee will formally meet and deliberate on the qualifications of specific candidates prior to recommending their appointment to the full Board. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. | |
| | | | | The current members of the Nominating and Corporate Governance Committee are: Rodney Slater (Chair), Desirée Rogers and Irwin Simon. | | | | Human Resources and Compensation Committee | | | The Human Resources and Compensation Committee is currently composed of three members. All of the members of the Human Resources and Compensation Committee are considered to be “independent” according to the applicable rules of Nasdaq, and non-employee directors within the meaning of Rule 16b-3 under the Exchange Act. The Human Resources and Compensation Committee makes recommendations to the Board on, among other things, the compensation of senior executives. The Human Resources and Compensation Committee discusses personnel and human resources matters including recruitment and development, management succession and benefits plans and grants awards under the 2016 Stock Incentive Plan. Salary, bonus or other payments for senior management are reviewed and approved by the Human Resources and Compensation Committee. The Human Resources and Compensation Committee may delegate any of its responsibilities to a subcommittee composed of one or more of its members, or to other members of the Board qualified to perform such responsibilities in accordance with the applicable rules of Nasdaq and any other applicable law, as appropriate. The current members of the Human Resources and Compensation Committee are: Desirée Rogers (Chair), Bradley J. Gross and Irwin Simon. For further information about the Human Resources and Compensation Committee’s processes and procedures relating to the consideration of executive compensation, see “Executive Compensation — Compensation Discussion and Analysis.” | |
Board Leadership, Executive Sessions, Risk Oversight and Communications with the Board Currently, Mr. Penn is the Chairman of 5 Years’ Cumulative Total Return among MDC Partners,S&P 500 Index, the Russell 2000 IndexBoard. The Board does not require the separation of the offices of Chairman of the Board and Peer GroupSet forthChief Executive Officer. All of the Company’s directors, whether members of management or not, have a fiduciary duty to exercise their business judgment in the best interests of the Company. The Board believes separating the roles of Chairman of the Board and Chief Executive Officer would not diminish or augment these fiduciary duties. The Board deliberates and decides, each time it selects a Chairman of the Board, whether the roles should be combined or separate, based upon the then current needs of the Company and the Board. The Board believes that the Company is currently best served by having Mr. Penn hold the positions of both Chairman and Chief Executive Officer, and by having a separate independent director (currently Mr. Simon) serve as “Lead Independent Director.” In the Board’s view, the current leadership structure facilitates strong communication and coordination between management and the Board and enables the Board to adeptly fulfill its risk oversight responsibilities.
Non-employee directors may meet in executive sessions without management in conjunction with each regularly scheduled Board meeting. The Company’s Lead Independent Director has the primary responsibility to preside over these sessions of the Board. The current Lead Independent Director is Irwin Simon. Stockholders or other interested parties who wish to communicate with the Lead Independent Director or any other member of the Board may do so by mail or courier to Stagwell Inc., c/o Corporate Secretary, One World Trade Center, Floor 65, New York, NY 10007. Mail sent to this address will be forwarded, unopened, by the Corporate Secretary to the Lead Independent Director. To facilitate a response, in appropriate circumstances, stockholders are asked to provide the following information: (i) their name; (ii) an address, telephone number, and e-mail address at which they can be reached; and (iii) the number of shares or aggregate principal amount of debt that they hold, and the date those securities were acquired. The Board has extensive involvement in the oversight of risk management related to us and our business. The Board accomplishes this oversight both directly and through its committees, each of which assists the Board in overseeing a part of our overall risk management and regularly reports to the Board. The Audit Committee represents the Board by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. Through its regular meetings with management,
including the finance, legal and compliance and risk management functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the Board all areas of risk and the appropriate mitigating factors. The Human Resources and Compensation Committee considers, and discusses with management, management’s assessment of certain risks, including whether any risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us. The Nominating and Corporate Governance Committee oversees and evaluates programs and risks associated with Board organization, membership and structure and corporate governance. With respect to cybersecurity risk oversight, our Board of Directors and our Audit Committee receive periodic reports from the appropriate managers on the primary cybersecurity risks facing the Company and the measures the Company is taking to mitigate such risks. In addition to these periodic reports, our Board of Directors and our Audit Committee receive updates from management as to changes to the Company’s cybersecurity risk profile or significant newly identified risks. Report of the Audit Committee of the Board The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2022 with management. The audit committee has also reviewed and discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022, the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence and has discussed with Deloitte & Touche LLP the accounting firm’s independence. Based on the foregoing, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and filed with the SEC. Audit Committee of the Board
Wade Oosterman (Chair)
Charlene Barshefsky
Eli Samaha The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
PROPOSAL 2
APPROVAL OF 2023 EMPLOYEE STOCK PURCHASE PLAN On March 1, 2023, our Board approved and adopted, subject to stockholder approval, the Stagwell Inc. 2023 Employee Stock Purchase Plan (the “Plan”). Accordingly, the Plan is being submitted to our stockholders for their approval. The Board recommends that stockholders of the Company approve the Plan. The following summary of the Plan is qualified by reference to the full text of the Plan, which is attached as Appendix A to this Proxy Statement and incorporated by reference into this proposal. The Plan is not tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. The purpose of the Plan is to assist employees of the Company and certain of its affiliates and subsidiaries that have been designated by the Administrator (as defined below) to participate in the Plan (the “Designated Companies”) in acquiring a stock ownership interest in the Company at a discount through rights to purchase shares of Class A Common Stock (“Options”) in successive offering periods (“Offering Periods”). The Board believes that the adoption of the Plan will promote the interests of the stockholders of the Company by incentivizing talented employees to join or remain with the Company and the Designated Companies and provide a means to acquire an ownership interest in the Company. The Plan authorizes the issuance of awards with respect to 3,000,000 shares of the Class A Common Stock (subject to adjustments for changes in capitalization). We anticipate that approximately 6,800 employees of the Company and the Designated Companies will be eligible to participate in the Plan, including all executive officers of the Company, except for Mark Penn, our Chief Executive Officer and Chairman. The initial Offering Period (as defined below), which will last from May 16, 2023 to July 15, 2023, will begin prior to the vote of our stockholders on this Proposal 2, and the exercise of outstanding Options for such Offering as described below will take place only if stockholder approval is obtained. If this Proposal 2 is approved by the stockholders of the Company, the Plan will become effective immediately as of the date of the Annual Meeting. If the stockholders of the Company do not approve this Proposal 2, the Plan will not become effective and outstanding Options will be forfeited, with payroll deductions returned to participants as soon as practicable, without any interest thereon. Summary of the 2023 Employee Stock Purchase Plan Administration The Human Resources and Compensation Committee (or any agent or employee to whom the Human Resources and Compensation Committee has delegated authority to participate in the administration of the Plan) (the “Administrator”) will administer the Plan. The Administrator will, consistent with the terms of the Plan, have the power to establish and terminate Offerings, determine when and how Options will be granted and the provisions and terms of each Offering (which do not have to be identical), to select Designated Companies and to construe and interpret the Plan and the terms of any Option. In addition, the Administrator may from time-to-time delegate administrative tasks under the Plan to an agent or employee of the Company, subject to such restrictions and limitation as the Administrator may specify. With respect to the Section 423 Component (as defined below), the Administrator may correct any defect, omission or inconsistency in the Plan. The Administrator may also correct any Offering or any Option, in a manner and to the extent it deems necessary or expedient to administer the Plan, subject to Section 423 of the Code for the Section 423 Component. The Plan Components The Plan consists of two components: (i) a component that is not intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “Non-Section 423 Component”); and (ii) a component that is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “Section 423 Component”). Since the Plan does not currently qualify as an “employee stock purchase plan” under Section 423 of the Code, all Options that may be exercised during an Offering Period (“Offerings”) will be made under the Non-Section 423 Component until the Administrator determines that the Plan does
qualify as an “employee stock purchase plan” under Section 423 of the Code, at which point all Offerings will be made under the Section 423 Component, unless otherwise determined by the Administrator. Shares Reserved Under the Plan, 3,000,000 shares of Class A Common Stock will be reserved for issuance. The shares of Class A Common Stock reserved for issuance under the Plan may be authorized but unissued shares of Class A Common Stock, treasury shares of Class A Common Stock or shares of Class A Common Stock acquired on the open market. The 3,000,000 shares of Class A Common Stock represent approximately 2.3% of the Company’s issued and outstanding shares of Class A Common Stock as of the date of this Proxy Statement. There is no evergreen provision, meaning the share limit allowed under the Plan will not increase without the approval of stockholders of the Company. Eligibility The Plan provides that all employees of the Company and the Designated Companies are eligible to participate, (each an “Eligible Employee”). However, the Administrator may exclude any or all of the following classes of employees of the Company and the Designated Companies, unless prohibited by applicable law: (i) any employee who is customarily scheduled to work 20 hours or less per week; (ii) any employee whose customary employment is not more than five months in a calendar year; (iii) any employee who has been employed less than two years; (iv) any employee who was not employed by the Company or a Designated Company prior to the first day of the applicable Offering Period (each such date, the “Grant Date”); (v) any employee who is a line graph comparing“highly-compensated employee” within the cumulativemeaning Section 414(q) of the Code, or is such a “highly compensated employee” (a) with compensation above a specific level, (b) who is an officer or (c) who is subject to the disclosure requirements of Section 16(a) of the Exchange Act; or (vi) any employee who is a citizen or resident of a jurisdiction outside of the United States if either (a) the grant of Options is prohibited under local law or (b) if the Plan is operating at the time under the Section 423 Component, compliance with local law would violate the requirements of Section 423 of the Code. Notwithstanding the foregoing, any employee who, following participation in the Plan, owns or would be deemed to own (through applicable stock attribution rules) stock constituting 5% or more of the total shareholder returncombined voting power or value of MDC Partners commonall classes of stock of the Company or any of its subsidiaries will not be eligible to participate in the Plan. With respect to the Non-423 Component, the Administrator may limit eligibility further within a Designated Company so as to only designate some employees of a Designated Company as Eligible Employees and to the extent any restrictions are not consistent with applicable local laws, the local laws will control. Such Offerings may be administered through separate sub-plans, appendices, rules or procedures designed to achieve tax, securities laws or other objectives for Eligible Employees in locations outside of the United States. In addition, with respect to the Non-Section 423 Component, the restriction in the previous paragraph regarding employees who are deemed to own more than 5% of the total combined voting power of the Company or any of its subsidiaries will only apply to employees who are also subject to Section 16 of the Exchange Act or as otherwise required by Section 16. Offering Period The Plan provides for successive three-month Offering Periods during which Eligible Employees who elect to participate in the Plan (“Participants”) may purchase shares of Class A Common Stock at a discount. Except for the last five yearsinitial Offering Period which will commence on May 16, 2023, the Offering Periods will begin on each April 16, July 16, October 16 and January 16. The Plan gives the Administrator the power to change the duration and timing of any Offering Period in its sole discretion, provided that no Offering Period may exceed 27 months. Each Offering Period may consist of one or more purchase periods (“Purchase Periods”). The initial Offering Period is expected to consist of a single Purchase Period, commencing on May 16, 2023 and ending on July 15, 2023. Each Participant will be granted an Option with respect to an Offering Period on the Grant Date of the Standard & Poor’s 500Offering Period. Payroll Deductions Eligible Employees may enroll in an Offering Period by electing, in the manner and within the time periods prescribed by the Administrator, to authorize payroll deductions ranging from 1% to 15% of their
eligible compensation to be accumulated to purchase shares of Class A Common Stock Index, Russell 2000 Indexduring such Offering Period. For this purpose, “compensation” means the regular earnings or base salary paid to the Eligible Employee and excludes (i) bonuses and commissions, (ii) overtime, shift differentials, vacation pay, salaried production schedule premiums, holiday pay, jury duty pay, funeral leave pay, paid time off, military pay, prior week adjustments and weekly bonuses, (iii) education or tuition reimbursements, (iv) imputed income arising under any group insurance or benefit program, (v) travel expenses, (vi) business and moving reimbursements, including tax gross ups and taxable mileage allowance, (vii) income received in connection with any stock options, restricted stock, restricted stock units or other compensatory equity awards and (viii) all contributions made by the Company or any Designated Company for the Eligible Employee’s benefit under any employee benefit plan now or hereafter established. Such compensation will be calculated before deduction of any income or employment tax withholdings but will be withheld from the Eligible Employee’s net income. All payroll deductions will be implemented before taking into account any deduction for any salary deferral contributions under any tax-qualified or nonqualified deferred compensation plan, including for example, under Section 401(k) of the Code. The Administrator may also establish a different definition of “compensation” for any Offering under the Section 423 Component, provided that it is applied on a non-discriminatory basis. Unless otherwise determined by the Administrator, following at least one payroll deduction, a Participant may decrease (to as low as zero) the amount deducted from such Participant’s eligible compensation only once during a Purchase Period upon at least 10 calendar days’ written notice to the Company (or such other time period as prescribed by the Administrator). A Participant may not increase the amount deducted from such Participant’s eligible compensation during an Offering Period. Upon the completion of an Offering Period, each Participant in the Offering Period will automatically participate in the immediately following Offering Period at the same payroll deduction percentage as in effect at the termination of such Offering Period, unless such Participant delivers to the Company a different election form with respect to the successive Offering Period in accordance with the procedures established by the Administrator, or unless such Participant becomes ineligible for participation in the Plan. Notwithstanding any provision in the Plan to the contrary, in non-U.S. jurisdictions where participation in the Plan through payroll deductions is prohibited or otherwise problematic under applicable local laws (as determined by the Administrator in its sole discretion), the Administrator may provide that an Eligible Employee may elect to participate through contributions to the Participant’s Plan account in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that for any Offering under the Section 423 Component, the Administrator must determine that any alternative method of contribution is applied on an equal and uniform basis to all Eligible Employees in the Offering. Purchase of Shares On the last day of the applicable Purchase Period (the “Exercise Date”), each Participant’s Option will be automatically deemed to be exercised and the Participant’s accumulated payroll deductions will be used to purchase shares of Class A Common Stock at the Option Price. The Option Price will equal either 92.5% of the fair market value per share of Class A Common Stock on the Exercise Date or such other price designated by the Administrator. The “fair market value” will generally be determined as the closing trading price per Share on the applicable date. The deemed exercise will cover the largest number of whole shares of Class A Common Stock which can be purchase with the accumulated payroll deductions in the Participant’s account as of the applicable Exercise Date. Unless otherwise determined by the Administrator, any remaining balance of accumulated payroll deductions will carry over into the next Offering Period unless (i) the Participant has elected to withdraw from the Plan, (ii) the Participant is no longer an Eligible Employee or (iii) the applicable limitations to payroll deductions would prevent the Participant from being granted Options in the next Offering Period. Any balance not carried forward to the next Offering Period will promptly be refunded to the Participant. Following each Exercise Date, the number of shares of Class A Common Stock purchased by the Participant will be delivered (either in share certificate or book entry form), at the Company’s sole discretion, to either the Participant or an account established in the Participant’s name at a stock brokerage or other financial services firm designated by the Company. The Company may require that shares of Class A Common
Stock be retained with such brokerage or firm for a designated period of time and may establish procedures to permit tracking of disqualifying dispositions of the purchased shares of Class A Common Stock. As of April 19, 2023, the fair market value of a Share was $6.50, the closing price on such date; and if that date had been an Exercise Date, the purchase price per Share would have been 92.5% of $6.50, which amounts to $6.013. Notwithstanding anything to the contrary, a Participant participating under the Section 423 Component may not accrue the right to purchase shares of Class A Common Stock at a rate that exceeds $25,000 in fair market value of shares of Class A Common Stock (determined as of the Grant Date) for each calendar year an Offering Period is in effect (as determined in accordance with Section 423 of the Code). Withdrawal A Participant may cease payroll deductions during an Offering Period and elect to withdraw from the Plan by delivering written notice of withdrawal to the Company in the manner prescribed by the Administrator. Any amounts then credited to such Participant’s account will be returned to the Participant in one lump-sum payment in cash within 30 days after such withdrawal election is received by the Company, without any interest thereon (except as may be required by applicable local laws). A Participant who ceases to contribute during any Offering Period may not be permitted to resume contributions during the same Offering Period. A Participant’s withdrawal from the Plan during any Offering Period will have no effect on his or her eligibility to participate in any similar plan which may be later adopted by the Company, or to participate in any subsequent Offering Periods under the Plan. Corporate Transactions •
In the event of any increase or decrease in the number of issued shares of Class A Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the shares of Class A Common Stock, or any other increase or decrease in the number of shares of Class A Common Stock effected without receipt of consideration by the Company, the aggregate number of shares of Class A Common Stock offered under the Plan but not yet placed under an Option and the number and price of shares of Class A Common Stock which any Participant has elected to purchase under the Plan covered under an Option that has not yet been exercised will be proportionately adjusted by the Administrator, whose determination will be final and binding. •
In the event of a proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a new Exercise Date (the “New Exercise Date”) which will be the day before the proposed dissolution or liquidation, and the Offering Period then in progress will terminate immediately prior to the consummation of the dissolution or liquidation, unless otherwise determined by the Administrator. The Administrator will notify each Participant of the changed Offering Period and the New Exercise Date at least 10 business days prior to the New Exercise Date. On the New Exercise Date, all Options held by a Participant will be exercised automatically, unless the Participant has withdrawn from the Offering Period, or ceased to be an Eligible Employee. •
In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding Option will be assumed or substituted by the successor corporation or a parent or subsidiary of the corporation. If the successor corporation refuses to assume or substitute such rights, any outstanding Offering Periods will be shortened and a peer groupNew Exercise Date will be set, with the Offering Period ending on the New Exercise Date. The Administrator will notify each Participant of publiclythe changed Offering Period at least 10 business days prior to the New Exercise Date. On the New Exercise Date, all Options held media, corporate communicationsby a Participant will be exercised automatically, unless the Participant has withdrawn from the Offering Period, or ceased to be an Eligible Employee. Rights as a Stockholder A Participant will not have any rights or privileges as a stockholder as to the shares of Class A Common Stock covered by an Option until the Participant becomes the record owner of such shares of Class A Common Stock.
No Rights as Employee Nothing in the Plan will give any person any right to continue in the employ of the Company or any of its affiliates or affect the right of the Company or any of its affiliates to terminate the employment of any person at any time, with or without cause. Transferability of Awards Options under the Plan are not transferable, other than by will or the laws of descent and marketing service companies. distribution, and are otherwise exercisable during a Participant’s lifetime only by the Participant. Options, interests or rights to an Option cannot be used to pay off any debts, contracts or engagements of a Participant or a Participant’s successors in interest and cannot be subject to disposition by pledge, encumbrance, assignment or any other means whether such disposition is voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempt at a disposition of an Option will have no effect. Tax Withholding At the time of any taxable event that creates a withholding obligation for the Company or any parent, affiliate or subsidiary, the Participant will be required to make adequate provision for any applicable U.S. and non-U.S. federal, state and/or local taxes (including any income tax, social insurance contributions or employment tax). In its sole discretion, and except as otherwise determined by the Administrator, the Company or the Designated Company that employs or employed the Participant may satisfy its obligation to withhold applicable taxes by (i) withholding from the Participant’s wages or other compensation, (ii) withholding a sufficient whole number of shares of Class A Common Stock otherwise issuable following exercise of the Option having an aggregate value sufficient to pay the applicable taxes, or (iii) withholding from proceeds from the sale of shares of Class A Common Stock issued upon exercise of the Option, either through a voluntary sale or a mandatory sale arranged by the Company. Equal Rights and Privileges All Eligible Employees granted Options pursuant to an Offering under the Section 423 component will have equal rights and privileges under the Plan such that the Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code and if any employee who is subject to Section 16 participates in any Offering, all Eligible Employees granted Options pursuant to such Offering will have equal rights and privileges. Any provision of the Section 423 Component that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company or the Board, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. Amendment and Termination The graph assumesBoard may, in its sole discretion, at any time amend, suspend, revise or terminate the Plan; provided that the Company will be required to obtain stockholder approval of any amendment to the extent necessary to comply with Section 423 of the Code or as otherwise required by applicable law, regulation or stock exchange rule. US Tax Consequences of the 2023 Employee Stock Purchase Plan The following is a general summary under current law of the material federal income tax consequences to Participants, including a summary of the U.S federal income tax consequences. This summary deals with the general tax principles that apply and is provided only for general information. Some kinds of taxes, such as state and local income taxes, are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. The summary does not discuss all aspects of income taxation that may be relevant to Participants in light of their personal investment circumstances. This summarized tax information is not tax advice, and each Participant is advised to consult his or her tax advisor for details about his or her personal tax consequences in order to comply with any applicable federal, state, local or foreign law that may arise from, or be related to, the benefits granted under the Plan.
Non-Section 423 Component U.S. taxpayers participating in the Non-Section 423 Component will recognize U.S. ordinary income equal to the excess of (i) the fair market value of the shares of Class A Common Stock on the Exercise Date over (b) the purchase price paid for the shares of Class A Common Stock. U.S. taxpayers who reside in a foreign country may owe taxes in the country in which they reside as well as in the U.S. in the year of purchase. The Company or Designated Company may be obligated to withhold U.S. federal income taxes on the amount by which the shares of Class A Common Stock were discounted at the time of the purchase or in some cases, as the right to purchase shares of Class A Common Stock is outstanding (e.g., during the Offering Period), in each case depending on the Participant’s U.S. tax status, whether the Participant is also subject to withholding tax in a non-U.S. country of residence, and whether the Offering Period spans more than one tax year. The Company or Designated Company may also report this income to the U.S. Internal Revenue Service. Section 423 Component With respect to the Section 423 Component, there is no taxable income in the U.S. to the Participant upon being granted an option to purchase shares of Class A Common Stock on the Grant Date or when shares of Class A Common Stock are purchased on the Exercise Date. Generally, the Participant will recognize taxable income in the U.S. in the year in which there a sale or other disposition of the purchased shares of Class A Common Stock. Qualifying Disposition The federal income tax liability on disposition of the purchased shares of Class A Common Stock will depend on whether the disposition is a “qualifying disposition”. A qualifying disposition will occur if the disposition is made after the Participant has held the shares of Class A Common Stock for (i) more than two years after the Grant Date and (ii) more than one year after the Exercise Date. In the event of qualifying disposition, the Participant will generally recognize ordinary income equal to the lesser of (a) the difference between the fair market value of the shares of Class A Common Stock on the date of disposition and the purchase price on the Exercise Date and (b) 7.5% of the fair market value of the shares of Class A Common Stock on the Grant Date. Any additional gain recognized will be a long-term capital gain. The Company will generally not be entitled to any corresponding tax deduction. If the fair market value of the shares of Class A Common Stock on the date of the qualifying disposition is less than the purchase price on the Exercise Date, there will be no ordinary income, and the Participant may generally recognize a long-term capital loss equal to the difference between the fair market value of the shares of Class A Common Stock on the date of disposition and the purchase price on the Exercise Date. Disqualifying Disposition If the minimum holding periods are not satisfied, the Participant will have a disqualifying disposition. The Participant will recognize ordinary income in the year of the disqualifying disposition to the extent that the fair market value of the shares of Class A Common Stock on the Exercise Date was greater than the purchase price on such date. The Company is entitled to take an income tax deduction equal in amount to the excess for the taxable year in which the disposition occurs. Any additional gain recognized upon the disqualifying disposition will be capital gain. The capital gain will be long-term if the shares of Class A Common Stock were held for more than 12 months, and short-term if the shares of Class A Common Stock were held 12 months or less. Registration with the Securities and Exchange Commission On March 7, 2023 the Company filed a registration statement with the Securities and Exchange Commission pursuant to the Securities Act covering the shares of Class A Common Stock authorized for issuance under the Plan.
New Plan Benefits Participation by Eligible Employees in the Plan is voluntary. The number of shares of Class A Common Stock that may be purchased under the Plan in any particular Offering Period is dependent on a multitude of factors, including each Participant’s election as to the level of payroll deductions and the purchase price for each applicable Offering Period. Accordingly, the number of shares of Class A Common Stock expected to be purchased under the Plan in any Offering Period (in general, or as to any particular Participant) is not determinable. However, no Eligible Employee may, under the Plan, use payroll deductions to purchase shares of Class A Common Stock at a rate that exceeds $25,000 in fair market value in any calendar year. Equity Compensation Plan Information. As background information for Proposal 2, please consider that Company stockholders have approved other compensation plans prior to the request for approval of the Plan. The following table lists as of December 31, 2022 the number of securities to be issued upon the exercise of outstanding stock appreciation rights (“SARs”) and the vesting of outstanding restricted stock units, the weighted average exercise price of outstanding SARs and the number of securities remaining available for future issuance under the Company’s equity compensation plans. | | | | Number of
Securities to be
issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights | | | Weighted
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights | | | Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column(a)) | | | | | | (a) | | | (b) | | | (c) | | Equity compensation plans approved by stockholders:(1) | | | | | 2,991,499(2) | | | | | | 3.23(3) | | | | | | 15,506,533 | | | Equity compensation plans not approved by
stockholders: | | | | | 1,284,420(4) | | | | | | 2.60(3) | | | | | | — | | | | Total | | | | | 4,275,919 | | | | | | 2.86(3) | | | | | | 15,506,533 | | |
(1)
The Company currently grants equity awards under the Amended and Restated 2016 Stock Incentive Plan. (2)
As of December 31, 2022, the Company had reserved 645,347 shares of Class A Common Stock in order to meet its obligations under 1,344,834 outstanding SARs granted under equity plans approved by stockholders. The number of shares issuable upon exercise of the SARs is based on the closing price of our Class A Common Stock on December 31, 2010, $100 was invested2022. In addition, the Company had reserved 2,346,152 shares of Class A Common Stock issuable upon vesting of the same number of restricted stock units granted under equity plans approved by stockholders. (3)
The weighted average exercise price does not include the restricted stock units. (4)
As of December 31, 2022, the Company had reserved 1,134,420 shares of Class A Common Stock in order to meet its obligations under 1,950,000 outstanding SARs granted as equity inducement awards to Messrs. Penn and Lanuto, which were not required to be approved by stockholders. For a description of the material terms of these inducement grants, see “Executive Compensation.” The number of shares issuable upon exercise of the SARs is based on the closing price of our Class A Common Stock on December 31, 2022. In addition, the Company had reserved 150,000 shares of Class A Common Stock issuable upon vesting of the same number of restricted stock units granted as an equity inducement award to an employee. The Resolution; Required Vote The resolution approving the Stagwell Inc. 2023 Employee Stock Purchase Plan requires the affirmative vote of a majority of the voting power of our common stock present in person or represented by proxy and entitled to vote at the Annual Meeting. The Board therefore seeks your approval and support for the following resolution:
RESOLVED: THAT the Stagwell Inc. 2023 Employee Stock Purchase Plan attached hereto as Appendix A be approved. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
APPROVAL OF THE 2023 EMPLOYEE STOCK PURCHASE PLAN
PROPOSAL 3
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION The guiding principles of the Company’s compensation policies and decisions include aligning each executive’s compensation with our business strategy and the interests of our stockholders and providing incentives needed to attract, motivate and retain key executives who are important to our long-term success. Consistent with this philosophy, a significant portion of the total incentive compensation for each of our executives is directly related to the following: MDC PartnersCompany’s earnings and to other performance factors that measure our progress against the goals of our strategic and operating plans, as well as performance against our peers. Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, as well as the Summary Compensation Table and other related compensation tables and disclosure, which discuss how our compensation design and practices reflect our compensation philosophy. The Human Resources and Compensation Committee and the Board of Directors believe that our compensation design and practices are effective in implementing our guiding principles. In accordance with Section 14A of the Securities Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following non-binding resolution: “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the 2022 compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2023 Annual Meeting of Stockholders pursuant to the disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table, and other compensation tables and disclosure.” The approval of this non-binding proposal requires the affirmative vote of a majority of the voting power of our common stock present in person or represented by proxy and entitled to vote at the S&P 500 Stock Index,Annual Meeting. Since this proposal is an advisory vote, the Russell 2000 Index,result will not be binding on our Board of Directors or Human Resources and Compensation Committee. However, the Board of Directors and the peer group (and that all dividends were reinvested).The peer group consistsHuman Resources and Compensation Committee value the opinions of Arbitron, Central European Media, Dreamworks Animation, John Wiley & Sons, Lee Enterprises, Morningstar, Scholastic Corporation, EW Scripps, The New York Times Co., Belo Corp., Cumulus Media, Harte-Hanks, Lamar Advertising, Meredith Corporation, National CineMedia, Sinclair Broadcast Group, The McClatchy Companyour stockholders and Valassis Communications. Total shareholder return forwill review and consider the peer group is weighted according to market capitalization at the beginning of each annual period. Note that certain companies within this peer group (including Arbitron, Belo Corp. and Valassis Communications) have recently been acquired and their stock is no longer publicly traded. Accordingly, these acquired entities are included in the peer group but only up through the closing date of the respective acquisition.
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voting results when making future decisions regarding our executive compensation program.  | | | | | | | | | | | | | | | 2010 | | 2011 | | 2012 | | 2013 | | 2014 | | 2015 | | MDC Partners | | | 100.00 | | | | 81.08 | | | | 72.37 | | | | 252.47 | | | | 232.47 | | | | 231.29 | | | S&P 500 Index | | | 100.00 | | | | 100.00 | | | | 113.40 | | | | 146.97 | | | | 163.71 | | | | 162.52 | | | Russell 2000 Index | | | 100.00 | | | | 94.55 | | | | 108.38 | | | | 148.49 | | | | 153.73 | | | | 144.95 | | | Peer Group | | | 100.00 | | | | 87.12 | | | | 98.06 | | | | 183.23 | | | | 159.34 | | | | 185.38 | |
ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis (or “CD&A”“CD&A”) section outlines our compensation philosophy and describes the material components of our executive compensation practices for Mr. Kauffman (our CEO), Mr. Nadal (our former CEO and President) and our other named executive officers (or “NEOs”). or “NEOs” in 2022:| | MARK PENN | | | Chairman & Chief Executive Officer | | | | JAY LEVETON | | | President | | | | FRANK LANUTO | | | Chief Financial Officer | | | | RYAN GREENE | | | Chief Operating Officer | | | | VINCENZO DIMAGGIO | | | Chief Accounting Officer | |
Business Combination On August 2, 2021, we completed the Business Combination of MDC achieved alland the operating businesses and subsidiaries of Stagwell Media. At the same time, we added former Stagwell Media executives to our management team, including Jay Leveton, our President, and Ryan Greene, our Chief Operating Officer. As described more fully below, following the Business Combination, the Human Resources and Compensation Committee reviewed the compensation of our NEOs in light of the change in size and competitive position of the Company. Aligning Pay with Performance While approving changes to our NEO compensation for 2022, the Human Resources and Compensation Committee remained committed to its compensation strategy of appropriately linking compensation levels with shareholder value creation by: •
Aligning pay with financial performance as a meaningful component of total compensation; •
Providing total compensation capable of attracting, motivating and retaining executives of outstanding talent; •
Focusing our executives on achieving key objectives critical to implementing the Company’s business strategy and achieving financial performance goals; and •
Safeguarding the Company’s business interests, including protection from adverse activities by executives. Stockholder Approval of our NEO Compensation Our Board, our Human Resources and Compensation Committee, and our management value the opinions of our stockholders. At our 2022 Annual Meeting, the Company submitted its executive compensation program to an advisory vote of its strategic and financial performance targets in 2015, despitestockholders (also known as the substantial challenges created by the ongoing review“say-on-pay” vote). This advisory vote received support from approximately 97% of the Securities and Exchange Commission (the “SEC”) described in last year’s CD&A. Specifically,total votes cast at the annual meeting. Our Board and management oversaw a comprehensive remediation plan that included the implementation of new policies and improved internal controls and procedures; the stabilization of key client relationships; and the extension of contractual relationships with our largest partner agencies. Moreover, and as detailed below, MDC’s Board effectively addressed all shareholder concerns relating to historical compensation practices involving our former CEO.Improvements to GovernanceHuman Resources and Compensation Practices in ResponseCommittee reviewed the vote results and we did not make any changes to Shareholder Feedback:
In our annual “Say-on-Pay” advisory vote in 2015, approximately 53% of the votes cast voted in favor of our executive compensation program. In response, management and the Board undertookprogram as a concentrated effort to focus on shareholder outreach and solicitation of feedback during the course of 2015 and in the first quarter of 2016. Based on shareholder feedback, and as partresult of the Company’s continuous efforts to implement executive compensation programs that align the interests of management with shareholders, the Board adopted several governance and compensation-related changes.
These governance and compensation initiatives followed a number of senior management changes in 2015, including the replacement of Miles Nadal as CEO following his resignation on July 20, 2015. Through December 31, 2015, Mr. Nadal repaid the Company for the improper expenses for which the Company sought reimbursement, in an aggregate amount of $11,285,000. Mr. Nadal further agreed to repay the Company $10,581,605 in connection with prior cash bonus awards that contained claw-back provisions.
In addition, MDC’s Board and management team implemented several governance and compensation-related remedial measures in response to the matters identified by the SEC review. These measures focused on improved internal controls and corporate governance initiatives. Each of the remedial measures and improved compensation practices summarized below was consistent with the changes suggested by our largest shareholders and identified by Institutional Shareholder Services (ISS) in 2015.
| • | Termination of Former CEO Compensation and Perquisite Amounts That Were Considered Excessive. Several institutional shareholders noted that the total compensation paid in 2014 to the Company’s former CEO was more than four (4) times the peer median, including a $500,000 annual perquisite allowance. In response, and following the July 2015 resignation of our former CEO, the Compensation Committee retained Mercer Consultants to ensure that the total compensation package payable to Mr. Kauffman, the Company’s new CEO, was within an appropriate benchmarked range of compensation among a peer group of competitors, as described in more detail below. The new compensation arrangements for Mr. Kauffman included the elimination in 2016 of any perquisite allowance, and represent a substantial reduction in total CEO compensation as compared to compensation paid to our former CEO in 2014 and prior years. |
| • | Prohibition of Pledging or Hedging of the Company’s Stock. Given the Board’s desire to reflect strong corporate governance, the Board adopted a policy to prohibit any pledge or hedging of the Company’s stock by officers and directors of the Company. Currently, no stock is pledged or hedged by any of the Company’s directors or officers. |
| • | Implementation of “Pay for Performance” Measures; 2015 Incentive Awards Based on Financial and Individual Performance Metrics. For 2015 incentive awards, the Compensation Committee affirmed its commitment to using “pay-for-performance” incentive arrangements by paying annual incentive amounts to its NEOs based solely on the achievement of financial and individual performance targets. The Company’s overall financial performance for 2015 exceeded the financial targets established by the Compensation Committee. |
results.
| • | Grants of Equity Awards with Vesting Based Solely on Financial Performance. All new grants to executive officers in 2016 and subsequent years will contain financial performance-based vesting requirements, and will not just be subject to time-based vesting. In 2015, the only equity grants made to executive officers were in connection with inducement grants under new executive employment agreements and changes in our senior management. |
| • | Enforcement of Claw-back Agreements. In connection with the 2015 annual incentive awards paid to each of the named executive officers, each such officer will be required to repay a pro rata portion of this award in the event that he or she resigns or is terminated for cause prior to December 31, 2017. The Compensation Committee believes that this claw-back requirement will appropriately promote the retention of its NEOs. In 2015, enforcement of this claw-back requirement resulted in the Company recovering $10.58 million in prior incentive awards from its former CEO (Miles Nadal) and $208,000 from the Company’s former Chief Accounting Officer (Michael Sabatino). |
| • | Greater Majority of Board of Directors Currently Independent. Several institutional shareholders suggested that a greater percentage of the Company’s Board of Directors should be independent. As part of the Board’s commitment to stronger corporate governance initiatives announced in June 2015, the Board is currently composed of five (5) independent directors and one (1) management director. Accordingly, 83% of the current Board of Directors is independent, as compared to April 2015, when only 57% of the Board was independent. Mr. Kirby is retiring from the Board at the end of his current term on June 1, 2016. Mr. Copeland intends to continue to serve as a director until such time as the Board identifies and appoints a successor, independent director to the Board who is also a Canadian resident and citizen (as required by applicable Canadian law). |
Strong Financial Results in 2015 and Superior Stock Price Performance over Three-Year Period
For the three (3) year period ended December 31, 2015, MDC achieved total shareholder return of 219.6%. The average total shareholder return for the same period achieved by MDC’s peer group (as described below) was 64.4%. As a result, MDC significantly outperformed this peer group by 155.2%. The peer group used for these purposes, as suggested by the Compensation Committee’s independent compensation consultant, was made up of the following publicly-held media, corporate communications and marketing services companies: Arbitron, Central European Media, Dreamworks Animation, John Wiley & Sons, Lee Enterprises, Morningstar, Scholastic Corporation, EW Scripps, The New York Times Co., Belo Corp., Cumulus Media, Harte-Hanks, Lamar Advertising, Meredith Corporation, National CineMedia, Sinclair Broadcast Group, The McClatchy Company, and Valassis Communications. These entities were determined to be relevant and appropriate peers given the applicable marketing and/or media industry in which they each operate, as well as their relative enterprise value, revenues and number of employees.
In addition to its total shareholder return performance over the past three (3) years, MDC delivered strong overall financial results for 2015. The Company achieved its financial guidance for 2015, with industry-leading performance across many key metrics. Organic revenue growth outpaced the industry at 7.1%, and Adjusted EBITDA grew by 10.2% with Adjusted EBITDA margins expanding 20 basis points to 14.9%. This financial performance was accomplished while achieving a significant level of net new business wins, which validate the Company’s expansion strategy into emerging areas of growth.
The chart below summarizes the key financial results for 2015 as compared to 2014:
| | | | | | | | | 2014 | | 2015 | | % Change | | Revenue | | $ | 1.22 billion | | | $ | 1.33 billion | | | | 8.4 | % | | Adjusted EBITDA | | $ | 179.4 million | | | $ | 197.7 million | | | | 10.2 | % | | Adjusted EBITDA Margin | | | 14.7% | | | | 14.9%
| | | | 20 basis points | | | Organic Revenue Growth | | | | | | | | | | | 7.1 | % | | 3-Year Total Shareholder Return – MDC Partners | | | | | | | 219.6%
| | | | | | | 3-Year Total Shareholder Return – Peer Group | | | | | | | 64.4%
| | | | | |
As used in this Proxy Statement:
“Adjusted EBITDA” is a non-U.S. GAAP measure that represents operating income (loss) plus depreciation and amortization, stock-based compensation, acquisition deal costs, deferred acquisition consideration adjustments, distributions from non-consolidated affiliates, and other items, adjusted for certain items at the discretion of the Compensation Committee. A reconciliation of “Adjusted EBITDA” to the U.S. GAAP reported results of operations for the year ended December 31, 2015 is provided in the Annex to this proxy statement.
“Adjusted EBITDA margin” is equal to the quotient of Adjusted EBITDA (as defined) divided by revenue.
“Organic Revenue Growth” is a non-U.S. GAAP measure that refers to growth in revenues from sources other than acquisitions or foreign exchange impacts.
We firmly believe that the implementation of the foregoing improvements to our governance and compensation practices described above has appropriately addressedALL of our key shareholders’ concerns.
When casting your 2016 Say-on-Pay vote, we encourage you to consider the Company’s financial results in 2015 despite the challenges of the ongoing SEC investigation; the elimination of excessive compensation and perquisite amounts; the Compensation Committee’s commitment to pay-for-performance based on objective financial criteria; the prohibition of pledges and hedging of stock; the enforcement of repayment requirements and claw-back agreements resulting in the recovery of more than $22 million from former senior executives; and our direct and constructive engagement with our shareholders.
OVERVIEW OF OUR 2022 COMPENSATION PROGRAM FOR NAMED EXECUTIVE OFFICERSPROCESS Primary Compensation Elements The Company traditionally uses a mix of short- and long-term and fixed and variable elements in compensating the NEOs: base salary;salary, annual cash bonus incentives;or stock incentives and long-term incentive awards. In prior years, long-term incentive awards often included equity-based awards that vested based solely on continued employment. However, as described in more detail below, theThe Human Resources and Compensation Committee redesignedadministers the long-term incentive program for our NEOs sowith the goal that future annual equity-basedall long-term equity awards granted to NEOs will also generallyeither be subject to performance-based vesting requirements.Compensation Philosophy
In 2015,requirements or will have value only to the Compensation Committee reaffirmed its compensation strategy to appropriately link compensation levels with shareholder value creation by:
Aligning pay with financial performance as a meaningful component of total compensation;
Providing total compensation capable of attracting, motivating and retaining executives of outstanding talent;
Focusingextent that our executives on achieving key objectives critical to implementing the Company’s business strategy and achieving financial performance goals;
Imposing, and enforcing, appropriate “claw-back” or repayment requirements for executives’ resignation or termination for cause; and
Safeguarding the Company’s business interests, including protection from adverse activities by executives.
Risk Assessment
The Compensation Committee reviews with management the design and operation of the Company’s performance goals and metrics used in connection with incentive awards and determined that these policies do not provide the Company’s executive officers or other employees with incentive to engage in behavior that are reasonably likely to have a material adverse effect on the Company. As discussed below in greater detail, the principal measures of our business performance to which named executive officer compensation is tied are adjusted EBITDA (as defined below), organic revenue growth and, in the case of equity incentive awards, the value returned to shareholders as measured by stock price appreciation and dividends,increases following the grant date, in addition to continued employment conditions. In limited situations, such as compared to a specified peer group of companies.
inducement grants, awards may include equity-based components that vest based solely on continued employment.| Pay Element | | | Description | | | Link to Business &
Strategy | | | BASE SALARY | | | •
Fixed cash compensation recognizing individual performance, role and responsibilities, leadership skills, future potential and internal pay equity considerations •
Set upon hiring or promotion, reviewed as necessary based on the facts and circumstances and adjusted when appropriate | | | •
Competitive base salaries help attract and retain key executive talent •
Any material adjustments are based on competitive market considerations, changes in responsibilities and individual performance | | | ANNUAL INCENTIVES | | | •
Performance-based cash or stock compensation dependent on performance against annually established financial targets and personal performance | | | •
Our annual incentives motivate and reward achievement of annual corporate and personal objectives that build shareholder value | | | LONG-TERM INCENTIVES | | | •
Opportunity to earn equity long-term incentive awards, subject to continued employment, if the Company achieves financial performance goals (Adjusted EBITDA) over a three (3) year measurement period following the date of grant | | | •
Like our annual incentives, our long-term incentives encourage senior leaders to focus on delivering on our key financial metrics, but do not encourage or allow for excessive or unnecessary risk-taking in achieving this aim •
The long-term incentives also ensure that executives have compensation that is at risk for longer periods of time and is subject to forfeiture in the event that they terminate their employment •
The long-term incentives also motivate executives to remain with the company for long and productive careers built on expertise | | | INDUCEMENT AWARDS / CASH SIGNING BONUSES | | | •
One-time awards granted to new executives in the form of SARs, restricted stock and/or cash signing bonuses | | | •
Attract talented, experienced executives to join and remain with the Company | |
Process for Determining the Compensation of ourOur Named Executive OfficersOur
The Company’s executive compensation program is administered and overseen by the Human Resources and Compensation Committee. As of March 1, 2016, the During 2022, our Human Resources and Compensation Committee was composed of three independent, non-employee directors. The Human Resources and Compensation Committee oversees the Company’s executive compensation and benefit plans and practices, including its incentive compensation and equity-based plans, and reviews and approves the Company’s management succession plans. Specifically, the Human Resources and Compensation Committee determines the salaries or potential salary increases, as applicable, and the performance measures and awards under the annual bonus incentive program for the Chief Executive Officerour CEO and other executive officers. The Human Resources and Compensation Committee also determines the amount and form of long-term incentive awards, which typically take the form of equity incentive grants, including shares of restricted stock or restricted stock units under the 2011 Stock Incentive Plan and 2008 Key Partner Incentive Plan, and stock appreciation rights (SARs) under the SARs Plan.Engagementawards.
Role of Compensation Consultant. In 2014Consultant For 2022, the Human Resources and 2015, the Compensation Committee retained Mercer, Human Resource Consulting (“Mercer”), a compensation consulting firm, to provide objective analysis, advice and information to the Human Resources and Compensation Committee, including competitive market data and recommendations related to our CEO and other named executive officer compensation.compensation, including recommendations regarding annual and long-term incentive awards. Additionally, Mercer provided feedback to the Human Resources and Compensation Committee related to the compensation terms for our employment agreement with the CEO. Mercer reports to the Human Resources and Compensation Committee ChairmanChair and has direct access to Human Resources and Compensation Committee members. In addition to the advice described above, the Compensation Committee engaged Mercer to assist in designing the new 2014 LTIP Plan to enhance pay-for-performance alignment. In accordance with NASDAQNasdaq listing standards and SEC regulations, the Human Resources and Compensation Committee assessed the independence of Mercer and determined that it was independent.Mercerindependent from management and that Mercer’s work has attendednot raised any conflict of interest.
Benchmarking of Compensation In determining compensation opportunities and payments to executives, the Human Resources and Compensation Committee meetings at the Compensation Committee’s requestmay, from time to time, review competitive opportunities, payments, practices and has also metperformance among a comparator group of companies. For 2022, we engaged in formal benchmarking of NEO compensation. We intend that, if our NEOs achieve individual and financial corporate objectives in a given year, they will earn total direct compensation that compares favorably with the total direct compensation earned by executives performing similar functions at comparator companies. The comparator group of peer marketing service companies used for 2022 was identified by Mercer and approved by the Human Resources and Compensation Committee. The group is comprised of the following publicly-traded companies in the advertising and media industry and ranging in size from approximately $1.0 billion to $5.8 billion in revenue (aligning with the post Business Combination size of the Company): Sinclair Broadcast Group; IAC/InterActiveCorp; Nexstar Media Group Inc.; TEGNA Inc.; Meredith Corporation; Gray Television, Inc.; Criteo S.A.; The E.W. Scripps Company; John Wiley & Sons; The New York Times Company; Clear Channel Outdoor Holdings, Inc.; Scholastic Corporation; and Audacy, Inc. We also considered published surveys and data regarding two of our competitors, Omnicom and The Interpublic Group of Companies, for reference purposes, but did not formally include them for benchmarking purposes given their size compared to the Company. The Human Resources and Compensation Committee considers benchmarking, survey and competitor data, among other factors, in executive session without management present. In
particular, the Compensation Committee worked with Mercer to structure performance-based annual and long-term incentive programs designed to retain the Company’s executive management team and to motivate them to achieve goals that increase shareholder value. The Compensation Committee sought to ensure that its incentive plans properly align management incentive compensation targets with the performance targets most relevant to shareholders. The Compensation Committee also considered recent trends indetermining executive compensation.
The aggregate amount of fees billed by Mercer for services related to designing the 2015 LTIP awards and determining compensation for the Company’s named executive officers was equal to $61,961 for 2015, and $36,708 for 2014.
Role of Named Executive Officers in Compensation Decisions: Input from Senior Management.Decisions The Human Resources and Compensation Committee considers input from senior management in making determinations regarding the overall executive compensation program and the individual compensation of the namedNEOs and other executive officers. As part of the Company’s annual planning process, the CEO, President and CFOChief Financial Officer develop targets for the Company’s incentive compensation programs and present them to the Human Resources and Compensation Committee. These targets are reviewed by the Human Resources and Compensation Committee to ensure alignment with the Company’s strategic and annual operating plans, taking into account the targeted year-over-year improvement as well as identified opportunities and risks. Based on performance appraisals, including an assessment of the
achievement of pre-established financial and individual “key performance indicators,” the CEO and SVP, Talent recommendrecommends to the Human Resources and Compensation Committee cash and long-term incentive award levels for the Company’s other executive officers. Each year, the CEO and SVP, Talent presentpresents to the Human Resources and Compensation Committee theirhis evaluation of each executive officer’s contribution and performance over the past year, and strengths and development needs and actions for each of the executive officers. The Human Resources and Compensation Committee exercises its discretionary authority and makes the final decisions regarding the form of awards, targets, award opportunities and payout value of awards. No executive officer participates in discussions relating to his or her own compensation.
ELEMENTS OF OUR COMPENSATION PROGRAM FOR OUR NAMED EXECUTIVE OFFICERS
The following table detailsidentifies the elementsroles and responsibilities of ourthe Human Resources and Compensation Committee and management in the oversight of the Company’s executive compensation program which are designed to achieve our compensation objectives for the named executive officers: program: | Human Resources and Compensation Committee | | | | | Compensation Program Elements | | Description | | How This Element Promotes Company Objectives | Base Salary
| | Fixed annual compensation that provides ongoing income. | | Intended•
Sets policies and gives direction to be competitive with marketplace. | Annual, Short-Term Cash Incentive Awards; Repayment or “Claw-back” Requirements | | Opportunity to earn performance-based compensation if the Company achieves financial performance goals, and ifmanagement on all aspects of the executive achieves individual “keycompensation program •
Engages and oversees the independent compensation consultant, including determining its fees and scope of work •
Based upon performance, indicators” (KPIs). For 2015, the financial performance goals were based on the Company’s adjusted EBITDApeer group and organic revenue growth. The Company also requiredgeneral industry market data, evaluates, determines and approves compensation (salary, bonus and equity awards) for each executive officer (including each NEO) to agree in writing to repay •
Determines the Company a portionterms and conditions of their respective cash incentive payment if he/she resigned his/her employment or was terminated for “cause” prior to December 31, 2017. | | Motivates and rewards achievement of annual corporate and personal objectives that build shareholder value.
Repayment or “claw-back” requirements encourage executive retention. | At-Risk Equity Incentive Awards (Restricted Stock) | | Opportunity to earn equity incentive awards based upon three-yearfor all award recipients •
Reviews succession planning to mitigate the risk of executive departure and to help ensure individual development and bench-strength through different tiers of Company leadership •
Evaluates and considers regulatory and legal perspectives on compensation matters, rating agency opinions on executive pay, published investor compensation policies and position parameters, and recommendations of major proxy voting advisory firms •
Coordinates with the other committees of the Board to identify, evaluate and address potential compensation risks, where they may exist | | | •
Analyzes competitive information supplied by the independent compensation consultant and others in light of the Company’s financial performance vesting terms. | | Promotes achievement of key multi-year corporate objectives;and operational circumstances •
Considers how other factors may affect pay decision-making, such as the vesting requirements of these incentive awards are designed to motivate executives to achieve goals that align the executive’s interests with shareholders. Long-term vesting promotes executive retention. | 2014 LTIP Plan | | Opportunity to earn performance-based compensation if the Company achieves financial performance goals (adjusted EBITDA) and superior “Relative Total Shareholder Return” (TSR) as compared to a pre-defined industry comparator group over three (3) year measurement period following date of grant. | | Grant and vesting requirements of these long-term incentive awards are designed to motivate executives to achieve stretch goals that align the executive’s interests with shareholders, based on extraordinaryCompany’s targeted earnings, internal pay equity, overall financial performance and relative shareholder value creation over 3-year period as comparedthe Company’s ability to a comparator group. Long term vestingabsorb increases in compensation costs •
Uses the data and continued employment condition also promote executive retention.analysis referenced above to formulate recommendations for the Committee’s review and consideration | |
Risk Assessment
The Human Resources and Compensation Committee reviews with management the design and operation of the Company’s compensation practices and policies, including performance goals and metrics used in connection with incentive awards and determined that these policies do not provide the Company’s executive officers or other employees with incentives to engage in behavior that is reasonably likely to have a material adverse effect on the Company. As discussed below in greater detail, the principal measures of our business performance to which NEO compensation is tied are Adjusted EBITDA (as defined below) and individual key performance criteria.
Base Compensation | | | | | Compensation Program Elements | | Description | | How This Element Promotes Company Objectives | Severance Payments and Benefits | | Payments and benefits upon termination of an executive’s employment in specified circumstances. | | Intended to provide assurance of financial security to attract lateral hires and to retain executives, especially in disruptive circumstances, such as a change in control and leadership transitions; encourage management to consider transactions that could benefit shareholders. | Benefits | | Health and welfare benefits. | | Fair and competitive programs to provide family health care protection, facilitate recruitment and retention. | Perquisites | | Limited personal benefits provided as an element of compensation, including a fixed “perquisite allowance” to named executive officers. Effective as of January 1, 2016, the CEO’s perquisite allowance was terminated. | | Fair and competitive programs to facilitate recruitment and retention. |
In setting policiesWe provide our NEOs and administering the compensation ofother executives with base salaries that we believe enable us to hire and retain individuals in a competitive environment and to reward individual performance and contribution to our overall
business goals. We review base salaries for our named executive officers annually. As described above in “Benchmarking of Compensation” we also take into account the base compensation that is payable by public companies of similar size or that we believe to be our competitors. In August and December of 2021, our Human Resources and Compensation Committee reviewsapproved base salaries, effective January 1, 2022, for our named executive officers as set forth in the following table. | Name | | | Base Salary
Effective
January 1, 2022 | | | Mark Penn, Chief Executive Officer | | | | $ | 1,060,000 | | | | Jay Leveton, President | | | | $ | 725,000 | | | | Frank Lanuto, Chief Financial Officer | | | | $ | 625,000 | | | | Ryan Greene, Chief Operating Officer | | | | $ | 575,000 | | | | Vincenzo DiMaggio, Chief Accounting Officer | | | | $ | 450,000 | | |
Pursuant to the Amended Employment Agreement between Mr. Penn and takes into account all elements of total compensation, benefitsthe Company, Mr. Penn’s base salary increased to $1,260,000 effective January 1, 2023. In February 2023, the Human Resources and perquisites. The Compensation Committee reviews reportsreviewed the base salaries of our NEOs and analysesapproved an increase in Mr. Leveton’s base salary to $800,000 effective April 1, 2023. The Human Resources and Compensation Committee determined not to adjust the base salaries of executive compensation in consultation with its outside consultant, including current practices and trends among peer companies and the advertising and marketing services industry.other NEOs for 2023.
Annual Incentive Awards
2015 INCENTIVE AWARDS BASED ON FINANCIAL AND INDIVIDUAL PERFORMANCE METRICS
Pay-for-Performance Analysis; Achievement of 2015 Financial Targets.The Company’s compensation program is designed to reward performance relative to corporate financial performance criteria and individual incentive criteria.performance. In 2022, each NEO was eligible to earn an annual bonus in an amount equal to a percentage of his base salary plus a potential discretionary adjustment for exceptional performance. The Company’s overall financial performance for 2015 exceeded the financial targets established by theHuman Resources and Compensation Committee. Specifically, the Company’s 2015 financial performance of Adjusted EBITDA ($197.7 million as reported) exceeded the Company’s baseline Adjusted EBITDA target. The Compensation Committee also determined that the Company achieved certain other financial and strategic goals in 2015, including industry-leading organic revenue growth of 7.1%; a significant reduction in corporate expenses; the integration of accretive acquisitions and transactions that expanded and diversified the Company’s portfolio with a strong mobile development platform (Y Media Labs); the successful extension of partnership relationships with key founding partners at several operating agencies; and significant new client wins despite the challenges of the ongoing SEC investigation. The Compensation Committee’s executive compensation decisions in 2015 aligned with this exceptional financial and operational performance.
Calculation of 2015 Annual Incentive Awards; Individual Performance Metrics. In determining the 2015 annual incentive awards to be paid to each of the named executive officers, following the conclusion of fiscal 2015 the Compensation Committee reviewed actual financial and individual performance relative to individual incentive criteria. The Company does not apply a formula or use a pre-determined weighting when comparing overall performance against the various individual objectives, and no single objective is material in determining individual awards. However,In determining the Compensation Committee assessed each executive’s individual performance to determine2022 annual incentive awards, the actual bonus incentive award payable to Mr. KauffmanHuman Resources and each named executive officer, including the following:
Scott Kauffman: For Mr. Kauffman, the Compensation Committee considered the Company’s strong2022 and 2021 Adjusted EBITDA. The Committee also considered that the Company achieved certain other financial and strategic goals and continued new business and operational success following the Business Combination. Based on this exceptional financial and operational performance, the Human Resources and Compensation Committee determined that each of the NEO’s performed at a level that warranted annual incentive compensation at 100% of target value. However, the Human Resources and Compensation Committee determined that it was in the best interests of the Company to compensate the NEOs in the form of additional equity incentives that vest after one year of additional service to the Company, rather than paying cash bonuses for 2022. Accordingly, on February 23, 2023, the Human Resources and Compensation Committee awarded shares of restricted stock in the following amounts: Mr. Penn — 177,951; Mr. Leveton — 90,843; Mr. Lanuto — 72,493; Mr. Greene — 65,816; Mr. DiMaggio — 34,339. Similarly, for 2021 the Human Resources and Compensation Committee determined that it was in the best interests of the Company to compensate Mr. Penn and Mr. Leveton in the form of additional equity incentives rather than paying cash bonuses, to pay a cash bonus to Mr. Lanuto of $446,250, representing 75% of his annual bonus target, and to further compensate him in the form of an additional equity incentive, and to similarly compensate Mr. Greene and Mr. DiMaggio. Accordingly, on February 28, 2022, the Human Resources and Compensation Committee awarded shares of restricted stock in the following amounts: Mr. Penn — 161,765; Mr. Leveton — 47,794; Mr. Lanuto — 21,875; Mr. Greene — 6,596; Mr. DiMaggio — 8,272. These shares of restricted stock vested on February 28, 2023. With respect to Mr. Lanuto, in 2021 the Human Resources and Compensation Committee also acknowledged his efforts, working at the direction of the Special Committee of the Board, in completing the Business Combination and awarded him an additional cash bonus of $400,000.
LTIP Awards 2022 Stock LTIP. On August 15, 2022, the Human Resources and Compensation Committee awarded each NEO restricted stock grants under the Company’s 2016 Stock Incentive Plan as follows: Mr. Penn — 593,031 shares; Mr. Leveton — 144,861 shares; Mr. Lanuto — 149,857 shares;
Mr. Greene — 55,148 shares; and Mr. DiMaggio — 27,694 (the “2022 Stock LTIP Awards”). Vesting for these awards is conditioned upon the Company’s level of achievement of Adjusted EBITDA, excluding the effect of acquisitions, over the performance period commencing on January 1, 2022 and ending on December 31, 2024 and the NEO’s continued employment until March 31, 2025. The cumulative Adjusted EBITDA target for the 2022 Stock LTIP is $1.425 billion. 2021 Stock LTIP. On October 15, 2021, the Human Resources and Compensation Committee awarded each NEO restricted stock grants under the Company’s 2016 Stock Incentive Plan as follows: Mr. Penn — 412,000 shares; Mr. Leveton — 86,000 shares; Mr. Lanuto — 92,000 shares; Mr. Greene — 41,000 shares; and Mr. DiMaggio — 19,000 shares (the “2021 Stock LTIP Awards”). Vesting for these awards is conditioned upon the Company’s level of achievement of Adjusted EBITDA, excluding the effect of acquisitions, over the performance period commencing on January 1, 2021 and ending on December 31, 2023 and the NEO’s continued employment until March 31, 2024. The cumulative Adjusted EBITDA target for the 2021 Stock LTIP is $1.1 billion. 2020 Stock LTIP Awards Granted in 2019. On November 4, 2019, the Human Resources and Compensation Committee awarded each NEO restricted stock grants under the Company’s 2011 and 2016 Stock Incentive Plans as follows: Mr. Penn — 577,500 shares; Mr. Lanuto — 99,000 shares; and Mr. DiMaggio — 33,333 shares (the “2020 Stock LTIP Awards”). Vesting for these awards was conditioned upon the Company’s level of achievement of EBITDA over the performance period commencing on January 1, 2020 and ending on December 31, 2020 and the NEO’s continued employment. These awards were subsequently modified on October 28, 2020 (see “2020 Amendment of Performance Conditions”). Approximately 5% of the 2020 Stock LTIP Awards were forfeited in February 2021 based on the Company’s level of achievement of EBITDA in 2020, with each of Messrs. Penn, Lanuto and DiMaggio retaining 549,051, 94,123, and 31,691 restricted shares, respectively, eligible to vest subject to the service condition. The remaining shares held by Messrs. Penn, Lanuto and DiMaggio vested on January 3, 2023. 2020 Cash LTIP Awards Granted in 2019. In November 2019, the Human Resources and Compensation Committee granted awards under the Company’s 2014 LTIP Plan to each of our NEOs in the following target amounts: Mr. Penn — $1,155,000 and Mr. Lanuto — $198,000. These grants were to vest at the end of the applicable three-year measurement period (January 1, 2020 — December 31, 2022), subject to achievement of financial performance criteria and continued employment (the “2020 Cash LTIP Awards”). The financial performance criteria were based on three-year cumulative EBITDA as measured against the approved annual EBITDA targets for such period. A payout of between 75% and 100% of the target opportunity was to be made if the Company achieved a three-year cumulative EBITDA amount equal to or greater than 90% but less than 100% of the three-year cumulative EBITDA target, based on a straight-line interpolation for actual cumulative EBITDA between 90% and 100% of the cumulative EBITDA target; a payout at the target opportunity was to be made if the Company achieved the three-year cumulative EBITDA target; and a payout of the target opportunity plus an additional amount between 0% and 100% of the target opportunity was to be made if the Company exceeded the three-year cumulative EBITDA target based on a straight-line interpolation for actual cumulative EBITDA between 100% and 105% of the cumulative EBITDA target, subject to a cap of two times the target opportunity. No payout was to be earned in the event the Company failed to achieve three-year cumulative EBITDA at least equal to or greater than 90% of the cumulative EBITDA target. Upon a “Change in Control” (as defined in the Company’s 2014 Long-Term Cash Incentive Compensation Plan) prior to December 31, 2022, the 2020 Cash LTIP Awards were to vest in full, with the amount payable determined by using an EBITDA performance multiplier equal to the greater of (a) one (1) and (b) the EBITDA performance multiplier calculated in accordance with the terms of the 2020 Cash LTIP award; provided, however, that if the price per share paid in such Change in Control was equal to or greater than 175% of the average closing trading price of the Class A Shares during the twenty (20) days preceding the grant date, then the EBITDA performance multiplier was to be two (2). If the Change in Control was not structured as a share acquisition and/or there were no price per share in the Change in Control (as was the case with the Business Combination) then the implied price per share paid in such Change in Control was to be determined by the Human Resources and Compensation Committee in good faith immediately prior to such Change in Control. On October 28, 2020, the Human Resources and Compensation Committee adopted an interpretive standard that the implied price per share paid with respect to the 2020 Cash LTIP Awards in
connection with the Business Combination would be the average closing trading price of the Class A Shares during the five (5) trading days preceding the closing date. The 2020 Cash LTIP Awards for Mr. Penn and Mr. Lanuto vested in full upon the closing of the Business Combination, which constituted a Change in Control of the Company. Since immediately prior to the Business Combination the Human Resources and Compensation Committee determined in good faith that the implied price per share paid with respect to the Class A Shares, which was the average closing trading price of the Class A Shares during the five (5) trading days preceding the closing date, equaled or exceeded 175% of the average closing trading price of the Class A Shares during the twenty (20) days preceding the 2020 Cash LTIP Awards’ grant date, the performance multiplier was two (2) and Mr. Penn and Mr. Lanuto were paid $2,310,000 and $396,000, respectively. 2020 Amendment of Performance Conditions. In October 2020 the Human Resources and Compensation Committee engaged Mercer, a compensation consulting firm, to provide objective analysis, advice and information, including comparative market data, related to potential amendments to the 2020 financial performance targets contained in certain outstanding equity incentive awards, in light of the substantial impact of the global pandemic on the Company’s revenue. Mercer participated in discussions at the Human Resources and Compensation Committee’s request both with and without management present. The Human Resources and Compensation Committee sought to ensure that its incentive plans properly align management incentive compensation targets with the performance targets most relevant to stockholders and determined that, under the circumstances, an adjustment to the minimum 2020 EBITDA targets under the restricted stock awards granted in 2019 was appropriate. Specifically, on October 28, 2020, the Human Resources and Compensation Committee approved modifications of the 2020 Stock LTIP Awards to reduce the 2020 EBITDA threshold from $180 million to $175 million. The 2020 EBITDA target to achieve full vesting eligibility was unchanged at $200 million. The reduction in the EBITDA threshold resulted in an adjusted vesting proration scale for all awards such that, at the time of modification, the expected vesting of the 2020 Stock LTIP Awards increased from 81.5% to 92.5%.
SUMMARY COMPENSATION TABLE | Name and Principal Position | | | Year | | | Salary
($) | | | Bonus
($)(1) | | | Stock
Awards
($)(2) | | | Option
Awards
($)(3) | | | All Other
Compensation
($)(4) | | | Total
($) | | Mark Penn,
Chief Executive Officer and Chairman | | | | | 2022 | | | | | | 1,060,000 | | | | | | — | | | | | | 5,388,179 | | | | | | — | | | | | | 296,559 | | | | | | 6,744,738 | | | | | | | 2021 | | | | | | 833,333 | | | | | | 2,310,000 | | | | | | 3,572,040 | | | | | | 3,455,000 | | | | | | 1,862,648 | | | | | | 12,033,021 | | | | | | | 2020 | | | | | | 750,000 | | | | | | 825,000 | | | | | | 134,673 | | | | | | — | | | | | | 86,008 | | | | | | 1,795,681 | | | Jay Leveton,
President | | | | | 2022 | | | | | | 725,000 | | | | | | — | | | | | | 1,379,188 | | | | | | — | | | | | | 16,359 | | | | | | 2,120,547 | | | | | | | 2021 | | | | | | 275,437 | | | | | | 325,000 | | | | | | 745,620 | | | | | | — | | | | | | 7,027 | | | | | | 1,353,084 | | | Frank Lanuto,
Chief Financial Officer | | | | | 2022 | | | | | | 625,000 | | | | | | — | | | | | | 1,216,967 | | | | | | | | | | | | 31,723 | | | | | | 1,873,690 | | | | | | | 2021 | | | | | | 508,333 | | | | | | 1,242,250 | | | | | | 797,640 | | | | | | — | | | | | | 263,091 | | | | | | 2,811,314 | | | | | | | 2020 | | | | | | 450,000 | | | | | | 495,000 | | | | | | 23,087 | | | | | | — | | | | | | 42,857 | | | | | | 1,010,944 | | | Ryan Greene,
Chief Operating Officer | | | | | 2022 | | | | | | 575,000 | | | | | | — | | | | | | 436,783 | | | | | | — | | | | | | 7,091 | | | | | | 1,018,874 | | | Vincenzo DiMaggio,
Chief Accounting Officer | | | | | 2022 | | | | | | 450,000 | | | | | | — | | | | | | 257,085 | | | | | | — | | | | | | 25,840 | | | | | | 732,925 | | |
(1)
For 2022, the Human Resources and Compensation Committee determined not to award annual discretionary cash bonuses to our NEOs and instead awarded restricted stock. Similarly, for 2021, the Human Resources and Compensation Committee determined not to award annual discretionary cash bonuses to Mr. Penn and Mr. Leveton, and to award a partial annual discretionary cash bonus to Mr. Lanuto, and instead awarded restricted stock. See “Compensation Discussion and Analysis — Annual Incentive Awards.” For Mr. Penn, the amount shown in the column for 2021 reflects a $2,310,000 discretionary long-term incentive cash bonus award that was accelerated in connection with the Business Combination. For Mr. Leveton, the amount shown in the column for 2021 reflects a signing bonus of $325,000 paid upon the commencement of Mr. Leveton’s employment with the Company. For Mr. Lanuto, the amount shown in the column for 2021 reflects (a) a $400,000 bonus paid in connection with the closing of the Business Combination, (b) a $396,000 discretionary long-term incentive cash bonus award that was accelerated in connection with the Business Combination and (c) a discretionary cash bonus of $446,250 granted by the Human Resources and Compensation Committee. For Messrs. Penn and Lanuto, amounts shown in the column for 2020 reflect discretionary cash bonuses granted by the Human Resources and Compensation Committee. (2)
For each of the NEOs, amounts shown in the column for 2022 reflect the grant date fair value of restricted stock awards granted instead of discretionary cash bonuses (see “Annual Incentive Awards”) and the grant date fair value, assuming target (which is equal to maximum) performance, of the restricted stock awards we granted to our NEOs as determined in accordance with FASB Topic 718. See “Compensation Discussion and Analysis — 2022 Stock LTIP.” For Messrs. Penn, Leveton and Lanuto, amounts shown in the column for 2021 reflect the grant date fair value, assuming target (which is equal to maximum) performance, of the restricted stock awards we granted to our NEOs as determined in accordance with FASB Topic 718. See “Compensation Discussion and Analysis — 2021 Stock LTIP.” For Messrs. Penn and Lanuto, amounts shown in the column for 2020 include the incremental fair value of restricted stock awards granted in 2019 that were modified by the Human Resources and Compensation Committee on October 28, 2020 (computed as the fair value of the modified award at the date of modification minus the fair value of the original award at the date of modification). See “Compensation Discussion and Analysis — 2020 Amendment of Performance Conditions.” For a discussion of the assumptions relating to these valuations, please see “Note 2 — Significant Accounting Policies” set forth in our annual report on Form 10-K for the year ended December 31, 2022.
(3)
For Mr. Penn, the amount shown in the column for 2021 reflects the grant date fair value of 1,500,000 stock appreciation rights (“SARs”) granted on December 14, 2021 as determined in accordance with FASB Topic 718. For a discussion of the assumptions relating to these valuations, please see “Footnote 2 — Significant Accounting Policies” set forth in our annual report on Form 10-K for the year ended December 31, 2022. (4)
The components of “all other compensation” for 2022 are set forth in the table below. | Name | | | Perquisite
Allowance
($)(a) | | | Health Benefits
($)(b) | | | Long-term
Disability
Insurance
Premiums
($) | | | Airfare
($)(c) | | | Total
($) | | | Mark Penn | | | | | — | | | | | | 26,721 | | | | | | 513 | | | | | | 269,325 | | | | | | 296,559 | | | | Jay Leveton | | | | | — | | | | | | 16,134 | | | | | | 225 | | | | | | — | | | | | | 16,359 | | | | Frank Lanuto | | | | | 12,500 | | | | | | 18,710 | | | | | | 513 | | | | | | — | | | | | | 31,723 | | | | Ryan Greene | | | | | — | | | | | | 6,866 | | | | | | 225 | | | | | | — | | | | | | 7,091 | | | | Vincenzo DiMaggio | | | | | — | | | | | | 25,327 | | | | | | 513 | | | | | | — | | | | | | 25,840 | | |
(a)
The amounts in the “Perquisite Allowance” column reflect a perquisite allowance paid to Mr. Lanuto. Mr. Lanuto’s perquisite allowance can be used for the following perquisites: automobile expenses and professional dues. (b)
The “Health Benefits” provided by the Company are payment of health insurance premiums for the employee and, as applicable, family members eligible for coverage. (c)
The amount in the “Airfare” column reflects $269,325 reimbursed to Mr. Penn in 2022 for private air travel on Company business.
GRANT OF PLAN-BASED AWARDS DURING 2022 The following table provides information with regard to each restricted stock award granted to each named executive officer under our equity incentive plans during 2022. | Name | | | Estimated Possible Payouts Under Equity
Incentive Plan Awards(1) | | | All Other Stock
Awards: Number of
Shares of Stock or
Units(2) | | | Grant Date Fair
Value of Stock
and Option
Awards ($)(3) | | | | Grant
Date | | | Threshold
(#) | | | Target
(#)(1) | | | Maximum
(#) | | | Mark Penn | | | | | 2/28/22 | | | | | | | | | | | | | | | | | | | | | 161,765 | | | | | | 1,231,032 | | | | | | | 8/15/22 | | | | | | 444,773 | | | | | | 593,031 | | | | | | | | | | | | | | | 4,157,147 | | | | Jay Leveton | | | | | 2/28/22 | | | | | | | | | | | | | | | | | | | | | 47,794 | | | | | | 363,712 | | | | | | | 8/15/22 | | | | | | 108,645 | | | | | | 144,861 | | | | | | | | | | | | | | | 1,015,476 | | | | Frank Lanuto | | | | | 2/28/22 | | | | | | | | | | | | | | | | | | | | | 21,875 | | | | | | 166,469 | | | | | | | 8/15/22 | | | | | | 112,392 | | | | | | 149,857 | | | | | | | | | | | | | | | 1,050,498 | | | | Ryan Greene | | | | | 2/28/22 | | | | | | | | | | | | | | | | | | | | | 6,596 | | | | | | 50,196 | | | | | | | 8/15/22 | | | | | | 41,361 | | | | | | 55,148 | | | | | | | | | | | | | | | 386,587 | | | | Vincenzo DiMaggio | | | | | 2/28/22 | | | | | | | | | | | | | | | | | | | | | 8,272 | | | | | | 62,950 | | | | | | | 8/15/22 | | | | | | 20,770 | | | | | | 27,694 | | | | | | | | | | | | | | | 194,135 | | |
(1)
The amounts in the “Target” column represent the number of restricted shares that will be earned by each NEO under the 2022 Stock LTIP if the Company achieves the specified cumulative Adjusted EBITDA target over the performance period commencing on January 1, 2022 and ending on December 31, 2024 and subject to the NEO’s continued employment through March 31, 2025. None of the 2022 Stock LTIP restricted shares will be earned if the Company achieves less than 90% of the cumulative Adjusted EBITDA target over the performance period. If the Company achieves exactly 90% of the cumulative Adjusted EBITDA target over the performance period, each NEO will earn the number of restricted shares in the “Threshold” column. If the Company achieves actual cumulative Adjusted EBITDA between 90% and 100% of the cumulative Adjusted EBITDA target, then the applicable NEO will earn from 75% to 100% of the number of restricted shares in the “Target” column based on a straight-line interpolation between the amount in the “Threshold” column and the amount in the “Target” column. If the Company achieves actual cumulative Adjusted EBITDA equal to or greater than 100% of the cumulative Adjusted EBITDA target, then the applicable NEO will earn the number of restricted shares in the “Target” column. See “Compensation Discussion and Analysis — 2022 Stock LTIP.” (2)
Indicates number of restricted shares granted on this date, which will vest on the first anniversary of the grant date. (3)
The grant date values are determined in accordance with FASB Topic 718, assuming target (which is equal to maximum) performance for performance-based awards. Additional information regarding awards of restricted shares made to our NEOs in 2022 is contained in “Compensation Discussion and Analysis — 2022 Stock LTIP” and “Compensation Discussion and Analysis — Annual Incentive Awards.” OPTION EXERCISES AND STOCK VESTED IN 2022 During 2022, no option awards were exercised by our named executive officers and no stock awards vested for our named executive officers.
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END | | | | Option Awards | | | Stock Awards | | Name
(a) | | | Number of
Securities
Underlying
Unexercised
SARs (#)
Exercisable(1)(2)
(b) | | | Number of
Securities
Underlying
Unexercised
SARs (#)
Unexercisable(2)
(c) | | | SAR
Exercise
Price ($)
(d) | | | SAR
Expiration
Date
(e) | | | Number of
Shares or
Units of
Stock
that Have
Not
Vested
(#)(3)
(f) | | | Market
Value of
Shares or
Units of
Stock
that Have
Not
Vested
($)(4)
(g) | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
that Have
Not Vested
(#)(5)
(h) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
that Have
Not
Vested
($)(4)
(i) | | | Mark Penn | | | | | 1,500,000 | | | | | | | | | | | | 2.19 | | | | | | 3/18/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 500,000 | | | | | | 1,000,000 | | | | | | 8.27 | | | | | | 12/14/2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 710,816 | | | | | | 4,414,167 | | | | | | 1,005,031 | | | | | | 6,241,243 | | | | Jay Leveton | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 47,794 | | | | | | 296,801 | | | | | | 230,861 | | | | | | 1,433,647 | | | | Frank Lanuto | | | | | 225,000 | | | | | | | | | | | | 2.91 | | | | | | 6/10/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 225,000 | | | | | | | | | | | | 5.00 | | | | | | 6/10/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 115,998 | | | | | | 720,348 | | | | | | 241,857 | | | | | | 1,501,932 | | | | Ryan Greene | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,596 | | | | | | 40,961 | | | | | | 96,148 | | | | | | 597,079 | | | | Vincenzo DiMaggio | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 39,963 | | | | | | 248,170 | | | | | | 46,694 | | | | | | 289,970 | | |
*
Notwithstanding the vesting schedules provided in the footnotes below, as described under “Employment Agreements” and “Potential Payments upon Termination or Change in Control,” the NEOs’ SARs and restricted shares are subject to accelerated vesting in certain circumstances. (1)
For Messrs. Penn and Lanuto represent SARs that have vested but remain unexercised. (2)
Mr. Penn received 1,500,000 SARs that are only exercisable in exchange for cash and that were granted on December 14, 2021 with a base price of $8.27. These SARs become vested and exercisable in full in three equal installments on each of the first three (3) anniversaries of the grant date, subject to Mr. Penn’s continued employment with the Company through each vesting date. (3)
For Mr. Penn, consists of 549,051 restricted shares for which the performance conditions were met in 2021 and that vested in full on January 3, 2023, and 161,765 restricted shares that vested in full on February 28, 2023. For Mr. Leveton, consists of 47,794 restricted shares that vested in full on February 28, 2023. For Mr. Lanuto, consists of 94,123 restricted shares for which the performance conditions were met in 2021 and that vested in full on January 3, 2023, and 21,875 restricted shares that vested in full on February 28, 2023. For Mr. Greene, consists of 6,596 restricted shares that vested in full on February 28, 2023. For Mr. DiMaggio, consists of 31,691 restricted shares for which the performance conditions were met in 2021 and that vested in full on January 3, 2023, and 8,272 restricted shares that vested in full on February 28, 2023. (4)
The amounts shown in these columns are based on the closing price of the Company’s common stock on December 31, 2022.
(5)
For Mr. Penn, consists of a target of 412,000 restricted shares that will vest on March 31, 2024 and a target of 593,031 restricted shares that will vest on March 31, 2025, in each case subject to achievement of performance conditions and continued employment. For Mr. Leveton, consists of a target of 86,000 restricted shares that will vest on March 31, 2024 and a target of 144,861 restricted shares that will vest on March 31, 2025, in each case subject to achievement of performance conditions and continued employment. For Mr. Lanuto, consists of a target 92,000 restricted shares that will vest on March 31, 2024 and a target of 149,857 restricted shares that will vest on March 31, 2025, in each case subject to achievement of performance conditions and continued employment. For Mr. Greene, consists of a target of 41,000 restricted shares that will vest on March 31, 2024 and a target of 55,148 restricted shares that will vest on March 31, 2025, in each case subject to achievement of performance conditions and continued employment. For Mr. DiMaggio, consists of a target of 19,000 restricted shares that will vest on March 31, 2024 and a target of 27,694 restricted shares that will vest on March 31, 2025, in each case subject to achievement of performance conditions and continued employment. CEO PAY RATIO The fiscal 2022 total compensation of our median employee was $92,261, based on compensation of all employees who were employed as of December 31, 2022, “the determination date”, other than our CEO Mark Penn. As disclosed in the Summary Compensation Table, Mr. Penn’s total 2022 annual compensation was $6,744,738. Therefore, the ratio of these amounts (our “pay ratio”) in fiscal year 2022 was approximately 1-to-73. We believe this ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records, using the methodology described below: •
We selected December 31, 2022 as the effective date for identifying our median employee in accordance with applicable SEC rules. •
Base compensation is our consistently applied compensation measure used to identify the median employee. •
We extracted the compensation data above for each employee active as of December 31, 2022 classified as full-time, part-time or intern for the 12-month period beginning January 1, 2022 and ending December 31, 2022. •
We annualized compensation of all newly hired employees based on the compensation they earned from their hire date through December 31, 2022. •
We converted earnings of our non-U.S. employees to U.S. dollars using the average currency exchange rates in effect during the period. •
We did not make any cost-of-living adjustments. •
We used the Summary Compensation Table total compensation for Mr. Penn, and we computed the median employee’s pay based on the same criteria used for determining Mr. Penn’s total compensation in the Summary Compensation Table. The SEC’s rules for identifying the median employee and calculating the pay ratio allow companies to adopt a variety of methodologies. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as each company’s pay ratio is based on its unique employee population, compensation practices and calculation methodology. 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 and certain financial performance of the Company. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Executive Compensation — Compensation Discussion and Analysis section of this Proxy Statement. | Year | | | Summary
Compensation
Table
Total for
PEO
($)(1) | | | Compensation
Actually
Paid to
PEO
($)(2) | | | Average
Summary
Compensation
Table
Total for
Non-PEO
NEOs
$(3) | | | Average
Compensation
Actually
Paid to
Non-PEO
NEOs
($)(4) | | | Value of Initial Fixed $100
Investment Based On: | | | Net
Income
(thousands)
($)(7) | | | Adjusted
EBITDA
(thousands)
($)(8) | | | | Total
Shareholder
Return
($)(5) | | | Peer Group
Total
Shareholder
Return
($)(6) | | | 2022 | | | | | 6,744,738 | | | | | | 2,879,657 | | | | | | 1,436,509 | | | | | | 1,107,663 | | | | | | 223.38 | | | | | | 87.57 | | | | | | 65,842 | | | | | | 451,118 | | | | 2021 | | | | | 12,033,021 | | | | | | 17,568,768 | | | | | | 3,522,493 | | | | | | 4,033,069 | | | | | | 311.87 | | | | | | 144.32 | | | | | | 35,920 | | | | | | 253,652 | | | | 2020 | | | | | 1,795,681 | | | | | | 1,509,786 | | | | | | 1,311,866 | | | | | | 1,232,962 | | | | | | 90.29 | | | | | | 127.97 | | | | | | (207,197) | | | | | | 177,332 | | |
(1)
Represents the amount of total compensation reported for Mr. Penn (our Chief Executive Officer and Chairman) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation — Summary Compensation Table.” (2)
Represents the amount of “compensation actually paid” to Mr. Penn for each corresponding year, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Penn during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Penn’s total compensation for each year to determine the “compensation actually paid”: | Year | | | Reported
Summary
Compensation
Table Total
for Current
PEO
($)(a) | | | Reported
Summary
Compensation
Table Value of
Current PEO
Equity
Awards
($)(b) | | | Adjusted
Value of
Current
PEO Equity
Awards
($)(c) | | | Compensation
Actually
Paid to
Current
PEO
($) | | | 2022 | | | | | 6,744,738 | | | | | | 5,388,179 | | | | | | 1,523,098 | | | | | | 2,879,657 | | | | 2021 | | | | | 12,033,021 | | | | | | 7,027,040 | | | | | | 12,562,787 | | | | | | 17,568,768 | | | | 2020 | | | | | 1,795,681 | | | | | | 134,673 | | | | | | (151,222) | | | | | | 1,509,786 | | |
The formula for the above table is as follows: (a) – (b) + (c) = (d) (a)
Represents the amount of total compensation reported for Mr. Penn for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation — Summary Compensation Table” from the Company’s proxy statement for the applicable year. (b)
Represents the grant date fair value of equity awards granted to Mr. Penn reported in the “Option Awards” and “Stock Awards” columns in the Summary Compensation Table for each year. For 2021, does not include accelerated equity awards on change in control reported in the “All Other Compensation” column. Refer to “Executive Compensation — Summary Compensation Table” from the Company’s proxy statement for the applicable year. (c)
Represents an adjustment to the amounts in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year (a “Subject Year”). For a Subject Year, the adjusted amount replaces the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for Mr. Penn to arrive at “compensation actually paid” to Mr. Penn for that Subject Year. The adjusted amount is determined by adding (or subtracting, as applicable) the following for that Subject Year: (i) the year-end fair value of any equity awards granted in that Subject Year that are outstanding and unvested as of the end of the Subject Year; (ii) the amount of change as of the end of the Subject Year (from the end of the prior fiscal year) in the fair value of any awards granted in prior years that are outstanding and unvested as of the end of the Subject Year;
(iii) for awards that are granted and vest the Subject Year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the Subject Year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in the fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the Subject Year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the Subject Year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the Subject Year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts added or subtracted to determine the adjusted amount are as follows: | Year | | | Year End
Fair Value
of Equity
Awards
Granted to
Current
PEO in
the Year
($) | | | Year over
Year Change
in Fair Value of
Outstanding and
Unvested Equity
Awards at
FYE Granted
to Current
PEO in
Prior Years
($) | | | Fair Value
as of Vesting
Date of Equity
Awards
Granted to
Current
PEO in the
Year and
Vested in
the Year
($) | | | Change in
Fair Value
of Equity Awards
Granted to
Current PEO
in Prior
Years that
Vested in the
Year
($) | | | Fair Value
at the End
of the Prior
Year of Equity
Awards of
Current PEO
that Failed to
Meet Vesting
Conditions in
the Year
($) | | | Total
Adjusted
Value of
Equity
Awards of
Current
PEO
($) | | | 2022 | | | | | 4,687,283 | | | | | | (2,924,185) | | | | | | — | | | | | | (240,000) | | | | | | — | | | | | | 1,523,098 | | | | 2021 | | | | | 7,437,040 | | | | | | 3,382,154 | | | | | | — | | | | | | 1,815,000 | | | | | | (71,407) | | | | | | 12,562,787 | | | | 2020 | | | | | 359,703 | | | | | | (310,925) | | | | | | — | | | | | | (200,000) | | | | | | — | | | | | | (151,222) | | |
(3)
Represents the average of the amounts reported for the Company’s named executive officers as a group (excluding Mr. Penn for each year) in the “Total” column of the Summary Compensation Table in each applicable year. Refer to “Executive Compensation — Summary Compensation Table.” The names of each of the named executive officers (excluding Mr. Penn for each year) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Jay Leveton (our President), Frank Lanuto (our Chief Financial Officer), Ryan Greene (our Chief Operating Officer) and Vincenzo DiMaggio (our Chief Accounting Officer; (ii) for 2021, Jay Leveton (our President), Frank Lanuto (our Chief Financial Officer) and David Ross (our former General Counsel & EVP Strategy and Corporate Development); and for (iii) for 2020, Frank Lanuto (our Chief Financial Officer) and David Ross (our former General Counsel & EVP Strategy and Corporate Development). (4)
Represents the average amount of “compensation actually paid” to the named executive officers as a group (excluding Mr. Penn for each year), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the named executive officers as a group (excluding Mr. Penn for each year) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the named executive officers as a group (excluding Mr. Penn for each year) total compensation for each year to determine the “compensation actually paid”: | Year | | | Average
Reported
Summary
Compensation
Table
Total for
Non-PEO
NEOs
($)(a) | | | Average
Reported
Summary
Compensation
Table
Value of
Non-PEO
NEO Equity
Awards
($)(b) | | | Average
Non-PEO
NEO
Adjusted
Value of
Equity
Awards
($)(c) | | | Average
Compensation
Actually
Paid to
Non-PEO
NEOs
($) | | | 2022 | | | | | 1,436,509 | | | | | | 822,506 | | | | | | 493,660 | | | | | | 1,107,663 | | | | 2021 | | | | | 3,522,493 | | | | | | 514,420 | | | | | | 1,024,996 | | | | | | 4,033,069 | | | | 2020 | | | | | 1,311,866 | | | | | | 111,388 | | | | | | 32,484 | | | | | | 1,232,962 | | |
The formula for the above table is as follows: (a) – (b) + (c) = (d)
(a)
Represents the average of the amounts reported for the Company’s named executive officers as a group (excluding Mr. Penn for each year) for the corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation — Summary Compensation Table” from the Company’s proxy statement for the applicable year. (b)
Represents the average of the total amounts reported for the Company’s named executive officers as a group (excluding Mr. Penn for each year) in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table in each applicable year. For 2021, does not include accelerated equity awards on change in control and accelerated equity awards on termination of employment reported in the “All Other Compensation” column. Refer to “Executive Compensation — Summary Compensation Table” for the Company’s proxy for the applicable year. (c)
Represents an adjustment to the average of the amounts reported for the named executive officers as a group (excluding Mr. Penn for each year) in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table in each applicable year determined using the same methodology described above in Note 2(c). For each year, the adjusted amount replaces the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for each named executive officer (excluding Mr. Penn) to arrive at “compensation actually paid” to each named executive officer (excluding Mr. Penn) for that year, which is then averaged to determine the average “compensation actually paid” to the named executive officers (excluding Mr. Penn) for that year. The amounts added or subtracted to determine the adjusted average amount are as follows: | Year | | | Average
Year End
Fair Value
of Equity
Awards
Granted to
the Non-PEO
Named
Executive
Officers in
the Year
($) | | | Average
Year over
Year Change in
Fair Value of
Outstanding and
Unvested Equity
Awards at
FYE Granted to
the Non-PEO
Named Executive
Officers in
Prior Years
($) | | | Average
Fair Value
as of Vesting
Date of Equity
Awards
Granted to the
Non-PEO Named
Executive
Officers in
the Year and
Vested in
the Year
($) | | | Average
Change
in Fair Value
of Equity Awards
Granted to the
Non-PEO Named
Executive
Officers in
Prior Years
that Vested
in the Year
($) | | | Average
Fair Value
at the End
of the Prior
Year of Equity
Awards to the
Non-PEO
Named
Executive Officers
that Failed to
Meet Vesting
Conditions in
the Year
($) | | | Adjusted
Average
Value of
Equity Awards
to the Non-PEO
Named
Executive
Officers
($) | | | 2022 | | | | | 717,406 | | | | | | (223,746) | | | | | | — | | | | | | — | | | | | | — | | | | | | 493,660 | | | | 2021 | | | | | 514,420 | | | | | | 193,266 | | | | | | — | | | | | | 366,285 | | | | | | (48,975) | | | | | | 1,024,996 | | | | 2020 | | | | | 169,693 | | | | | | (52,677) | | | | | | — | | | | | | (60,207) | | | | | | (24,325) | | | | | | 32,484 | | |
(5)
Represents cumulative Company total shareholder return (TSR). TSR is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for each measurement period (2020, 2020-2021 and 2020-2022), assuming dividend reinvestment, and (ii) the difference between the Company’s share price at the end and the beginning of the measurement period by (b) the Company’s share price at the beginning of the measurement period. (6)
Represents cumulative peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated, and otherwise computed in accordance with Note 5. The peer group used for this purpose is the following published industry index: Vanguard Communications Services Index. (7)
Represents the amount of net income reflected in the Company’s audited financial statements for the applicable year. (8)
Represents Adjusted EBITDA for the applicable year. Financial Performance Measures As described in greater detail in the Compensation Discussion and Analysis section of this Proxy Statement, the Company’s executive compensation program reflects a pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our shareholders. The most
important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows: •
Adjusted EBITDA •
Revenue growth •
Net debt Analysis of the Information Presented in the Pay versus Performance Table As described in greater detail in the Compensation Discussion and Analysis section of this Proxy Statement, the Company’s executive compensation program reflects a pay-for-performance philosophy. [The Human Resources and Compensation Committee remains committed to its compensation strategy of appropriately linking compensation levels with shareholder value creation by: •
Aligning pay with financial performance as well as Mr. Kauffman’s highly effective leadership role ina meaningful component of total compensation; •
Providing total compensation capable of attracting, motivating and retaining executives of outstanding talent; •
Focusing our executives on achieving key objectives critical to implementing the Company’s strategicbusiness strategy and operating plans. Specifically,achieving financial performance goals; and •
Safeguarding the Company’s business interests, including protection from adverse activities by executives.] Compensation Committee recognizedActually Paid and Cumulative TSR The graph below reflects the relationship between the PEO and average Non-PEO NEOs compensation actually paid and the Company’s cumulative TSR (assuming an initial fixed investment of $100) for the fiscal years ended December 31, 2020, 2021, and 2022.
Cumulative TSR of the Company and Cumulative TSR of the Peer Group The graph below reflects the relationship between the Company’s cumulative TSR and the Peer Group’s cumulative TSR (assuming an initial fixed investment of $100 and that all dividends, if any, were reinvested) for the fiscal years ended December 31, 2020, 2021, and 2022. Compensation Actually Paid and Net Income The graph below reflects the relationship between the PEO and average Non-PEO NEOs compensation actually paid and the Company’s net income for the fiscal years ended December 31, 2020, 2021, and 2022.
Compensation Actually Paid and Adjusted EBITDA The graph below reflects the relationship between the PEO and average Non-PEO NEOs compensation actually paid and the Company’s Adjusted EBITDA for the fiscal years ended December 31, 2020, 2021, and 2022. Employment Agreements The Company has entered into employment agreements with each NEO as described below. Mark Penn Employment Agreement The Company entered into an employment agreement with Mr. Kauffman oversawPenn, dated March 14, 2019 (the “Original Employment Agreement”), pursuant to which Mr. Penn was eligible to receive an annualized base salary of $750,000 and managedan annual discretionary cash bonus in an amount equal to up to 100% of his then-current base salary. On September 8, 2021, the successful transitionCompany and Mr. Penn entered into an amendment to the Original Employment Agreement pursuant to which Mr. Penn was eligible to receive an annualized base salary of $1,000,000 and an annual discretionary cash bonus in an amount equal to up to 110% of his then-current base salary. On December 14, 2021, the Company and Mr. Penn entered into an Amended and Restated Employment Agreement (the “Amended Employment Agreement”) pursuant to which Mr. Penn’s annualized base salary increased to $1,060,000 effective January 1, 2022 and increased to $1,260,000 effective January 1, 2023. In connection with the entry into the Amended Employment Agreement, on December 14, 2021, the Company granted Mr. Penn 1,500,000 SARs in respect of the Class A Shares. The SARs are settleable only in cash, have a base price of $8.27 per share and vest in three equal installments on each of the first three anniversaries of the date of grant. On March 11, 2022, the Company and Mr. Penn entered into a Second Amended and Restated Employment Agreement (the “Second Amended Employment Agreement”). Pursuant to the Second Amended and Restated Employment Agreement, Mr. Penn’s annualized base salary and annual discretionary bonus did not change. Mr. Penn is eligible for potential future grants under the Company’s long-term incentive plans with an annual target equal to 350% of his then-current base salary. Mr. Penn is also eligible to receive reimbursement for private air travel in connection with the business of the Company up to an annual amount as determined by the Human Resources and Compensation Committee. He is also entitled to participate in the executive management team followingretirement plans and benefits in accordance with the resignation by our former-CEO,plans or practices of the Company made available to the senior executives of the Company. Under the Second Amended and Restated Employment Agreement, Mr. Penn is subject to restrictive covenants during employment and for one (1) year thereafter, including covenants not to solicit clients of the stabilizationCompany, hire or solicit employees or exclusive consultants of keythe Company, and render services for any client relationships; a significant reduction in corporate expenses, including elimination of duplicative services in the Toronto, Canada office; the successful extension of partnership agreements with some of our largest agency networks; execution of two strategic acquisitions that diversified the Company’s portfolio in mobile development and search marketing; and strong net new business wins despite the challenges posedtype rendered by the ongoing SEC investigation.Company, subject to specified exceptions. Pursuant to the Second Amended Employment Agreement, if the Company terminates Mr. Kauffman therefore received anPenn’s employment without “Cause,” or Mr. Penn terminates his employment for “Good Reason” (each term as
defined in The Second Amended Employment Agreement), then the Company is required to pay Mr. Penn the following severance benefits: (i) his annual bonus for 2015the year prior to his termination, when otherwise payable, but only to the extent it was earned and approved by the Human Resources and Compensation Committee but not already paid; (ii) a pro-rata annual bonus for the year of termination, payable at the time such annual bonus is otherwise payable; (iii) a lump sum severance payment within 60 days of the date of termination equal to $800,000.David Doft: Mr. Doft implemented significant corporate cost reductionsthe product of 1.5 times the sum of (a) his then-current base salary and managed improvements(b) the amount of his annual discretionary bonus paid in respect of the year immediately prior to the date of termination; and (iv) 12 months of reimbursement for COBRA premiums.
Pursuant to the Second Amended Employment Agreement, upon a “Change in Control” (as defined in the Second Amended Employment Agreement) of the Company, all of Mr. Penn’s then-unvested equity awards will accelerate and vest in full. Jay Leveton Employment Agreement The Company entered into an employment agreement with Mr. Leveton, dated September 12, 2021, pursuant to which Mr. Leveton is eligible to receive an annualized base salary of $725,000 and an annual discretionary bonus in an amount equal to up to 80% of his base salary. Effective April 1, 2023, the Human Resources and Compensation Committee approved an increase in Mr. Leveton’s annualized base salary to $800,000. Under the employment agreement, Mr. Leveton was paid a signing bonus of $325,000. Mr. Leveton is eligible for potential future grants under the Company’s working capital processeslong-term incentive plans. Mr. Leveton is also entitled to participate in 2015, resultingthe retirement plans and benefits in achievementaccordance with the plans or practices of the Company made available to the senior executives of the Company. Under his employment agreement, Mr. Leveton is subject to restrictive covenants during employment and for a period of two (2) years thereafter, including covenants not to solicit clients of the Company, hire or solicit employees or exclusive consultants of the Company, and render services for any client of the type rendered by the Company, subject to specified exceptions. Pursuant to his employment agreement, if the Company terminates Mr. Leveton’s employment without “Cause” (as defined in Mr. Leveton’s employment agreement), then the Company is required to pay Mr. Leveton severance benefits in the form of salary continuation of his then-current base salary for six (6) months. Frank Lanuto Employment Agreement The Company entered into an employment agreement with Mr. Lanuto, dated May 6, 2019, pursuant to which Mr. Lanuto was eligible to receive an annualized base salary of $450,000 and an annual discretionary bonus in an amount equal to up to 100% of his base salary. On September 8, 2021, the Company and Mr. Lanuto entered into an amendment to the employment agreement pursuant to which Mr. Lanuto is eligible to receive an annualized base salary of $625,000 and an annual discretionary cash bonus in an amount equal to up to 90% of his then-current base salary. Mr. Lanuto is eligible for potential future grants under the Company’s long-term incentive plans. Mr. Lanuto is also eligible to receive an annual $25,000 perquisite allowance to cover automobile expenses, professional dues and other perquisites. He is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. Under his employment agreement, Mr. Lanuto is subject to restrictive covenants during employment and for a period of two (2) years thereafter, including covenants not to solicit clients of the Company, hire or solicit employees or exclusive consultants of the Company, and render services for any client of the type rendered by the Company, subject to specified exceptions. Pursuant to his employment agreement, if the Company terminates Mr. Lanuto’s employment without “Cause,” or Mr. Lanuto terminates his employment for “Good Reason” (each term as defined in his employment agreement), then the Company is required to pay Mr. Lanuto (i) his annual bonus for the year prior to his termination, when otherwise payable, but only to the extent it was earned and approved by the Human Resources and Compensation Committee but not already paid; and (ii) a lump sum severance payment within 60 days of the date of termination equal to six (6) months’ base salary, which is increased to nine
(9) months base salary if Mr. Lanuto’s termination occurs within one (1) year of a “Change in Control” (as defined in Mr. Lanuto’s employment agreement) of the Company (which occurred upon the Business Combination). Ryan Greene Employment Agreement The Company entered into an employment agreement with Mr. Greene, dated September 12, 2021, pursuant to which Mr. Greene is eligible to receive an annualized base salary of $575,000 and an annual discretionary bonus in an amount equal to up to 75% of his base salary. Under the employment agreement, Mr. Greene was paid a signing bonus of $300,000. Mr. Greene is eligible for potential future grants under the Company’s long-term incentive plans. Mr. Greene is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. Under his employment agreement, Mr. Greene is subject to restrictive covenants during employment and for a period of two (2) years thereafter, including covenants not to solicit clients of the Company, hire or solicit employees or exclusive consultants of the Company, and render services for any client of the type rendered by the Company, subject to specified exceptions. Pursuant to his employment agreement, if the Company terminates Mr. Greene’s employment without “Cause” (as defined in Mr. Greene’s employment agreement), then the Company is required to pay Mr. Greene severance benefits in the form of salary continuation of his then-current base salary for six (6) months. Vincenzo DiMaggio Employment Agreement The Company entered into an employment agreement with Mr. DiMaggio, dated May 8, 2018, pursuant to which Mr. DiMaggio is eligible to receive an annualized base salary of $450,000 and an annual discretionary bonus in an amount equal to up to 50% of his base salary. Mr. DiMaggio is eligible for potential future grants under the Company’s long-term incentive plans. Mr. DiMaggio is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. Under his employment agreement, Mr. DiMaggio is subject to restrictive covenants during employment and for a period of 18 months thereafter, including covenants not to solicit clients of the Company, hire or solicit employees or exclusive consultants of the Company, and render services for any client of the type rendered by the Company, subject to specified exceptions. Pursuant to his employment agreement, if the Company terminates Mr. DiMaggio’s employment without “Cause” or Mr. DiMaggio terminates his employment for “Good Reason” (each as defined in Mr. DiMaggio’s employment agreement), then the Company is required to pay Mr. DiMaggio severance benefits in the form of (i) salary continuation of his then-current base salary for nine (9) months and (ii) six (6) months of reimbursement for COBRA premiums.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL We have entered into an employment agreement with each of our NEOs. Under these agreements, we are required to pay severance benefits in connection with specified terminations of employment, including specified terminations in connection with a change in control of the Company. See “Executive Compensation — Employment Agreements.” In addition, our grants agreements for awards of restricted shares provide for the accelerated vesting of awards in connection with specified terminations of employment, death or disability. Annual Incentive Awards. On February 28, 2022, our Human Resources and Compensation Committee awarded shares of restricted stock to our NEOs (the “2022 Annual Incentive Awards”). The grant agreements for the 2022 Annual Incentive Awards provide that the restricted shares will vest in full on a termination by the Company of its cash management targets. In addition, Mr. Doft assistedthe NEO’s employment without “Cause,” as defined in the remediation of identified internal control issuesapplicable grant agreement, or by the NEO for “Good Reason,” if included in the applicable NEO’s employment agreement. The grant agreements further provide that the restricted shares will vest in full on the NEO’s death or disability. LTIP Awards. The grant agreements for the 2022 Stock LTIP Awards, the 2021 Stock LTIP Awards and the enforcement2020 Stock LTIP Awards (collectively, the “LTIP Awards”) provide that, in the event of new travel(i) termination of the NEO’s employment without “Cause,” as defined in the applicable grant agreement, or by the NEO for “Good Reason,” if included in the applicable NEO’s employment agreement, in each case within one year following a “Change in Control” (as defined in the Company’s 2016 Stock Incentive Plan), or (ii) the death or disability of the NEO, 100% of the target number of restricted shares will vest. In the event that the NEO’s employment is terminated without “Cause” (other than in connection with a “Change in Control”) or the NEO resigns for “Good Reason,” a prorated number of restricted shares will vest, in an amount equal to the product of (x) the number of restricted shares, if any, that would otherwise vest in accordance with the applicable performance conditions and entertainment policies(y) a fraction, the numerator of which will be the number of full months of service completed by the executive officer during the applicable service period as provided in the grant agreement, and proceduresthe denominator of which will be the length in months of the applicable service agreement. The following tables show the benefits each of our NEOs would have received if the NEO’s employment had been terminated as partof December 31, 2022, by us without “Cause,” or by the NEO for “Good Reason” (each as defined in the applicable employment agreement or grant agreement), both within one year following a “Change in Control” (a “Change in Control Period”) and outside a Change in Control Period, as well as the benefits each of our NEOs would have received if the NEO’s employment had terminated upon death or disability. Termination of Employment Not Within Change in Control Period | Name | | | Cash
Severance
($) | | | Healthcare
Benefits
($) | | | Value of
Additional Vested
Equity Awards
($)(1) | | | Total
($) | | | Mark Penn | | | | | 4,406,000 | | | | | | 26,721 | | | | | | 6,268,852 | | | | | | 10,701,573 | | | | Jay Leveton | | | | | 362,500 | | | | | | — | | | | | | 704,394 | | | | | | 1,066,894 | | | | Frank Lanuto | | | | | 312,500 | | | | | | — | | | | | | 1,151,415 | | | | | | 1,463,915 | | | | Ryan Greene | | | | | 287,500 | | | | | | — | | | | | | 221,772 | | | | | | 509,272 | | | | Vincenzo DiMaggio | | | | | 337,500 | | | | | | 11,664 | | | | | | 334,036 | | | | | | 683,200 | | |
(1)
Value is based on the closing price of the Company’s improved corporate governance practicesClass A common stock on December 31, 2022. For each NEO, includes all restricted shares included in response to the internal investigation following receiptAnnual Incentive Awards and a prorated number of shares included in the LTIP Awards as described above. For Mr. Penn, does not include 1,000,000 unvested SARs that vest on termination of employment by us without “Cause,” or by Mr. Penn for “Good Reason,” because the $8.27 base price of the SEC Subpoena. As a result, Mr Doft received an annual cash bonus for 2015 equal to $575,000.Robert Kantor: Mr. Kantor successfully ledSARs exceeded the Company’s new business initiatives, and significantly surpassed targeted performance goals with several global account wins across the Company’s agency network. Mr. Kantor also oversaw the development and roll-out of an online collaboration tool among the Company’s partner agencies to generate new and organic client account activity. As a result, Mr. Kantor received an annual cash bonus for 2015 equal to $600,000.
Andre Coste: In 2015, Mr. Coste transitioned to the role of Chief Operating Officer, and worked closely with senior executives at the Company’s largest partner agencies to achieve targeted performance goals. He helped implement improvements to the Company’s operations and budgeting processes, and assisted in several partner agencies’ global expansion initiatives in 2015. Mr. Coste received an annual cash bonus from the Company for 2015 equal to $500,000.
Lori Senecal: Ms. Senecal successfully transitioned to the operational role of Global Chief Executive Officer of Crispin Porter & Bogusky, oneclosing price of the Company’s largest partner agencies. Ms. Senecal effectively led several client pitches at Crispin Porter,Class A common stock on December 31, 2022.
Termination of Employment Within Change in Control Period | Name | | | Cash
Severance
($) | | | Healthcare
Benefits
($) | | | Value of
Additional Vested
Equity Awards
($)(1) | | | Total
($) | | Mark Penn(2) | | | | | 4,406,000 | | | | | | 26,721 | | | | | | 10,655,410 | | | | | | 15,088,131 | | | | Jay Leveton | | | | | 362,500 | | | | | | — | | | | | | 1,730,448 | | | | | | 2,092,948 | | | | Frank Lanuto | | | | | 468,750 | | | | | | — | | | | | | 2,222,280 | | | | | | 2,691,030 | | | | Ryan Greene | | | | | 287,500 | | | | | | — | | | | | | 638,040 | | | | | | 925,540 | | | | Vincenzo DiMaggio | | | | | 337,500 | | | | | | 11,664 | | | | | | 538,140 | | | | | | 887,304 | | |
(1)
Value is based on the closing price of the Company’s Class A common stock on December 31, 2022. For each NEO, includes restricted shares included in the Annual Incentive Awards and was instrumentalthe 100% of the target number of shares included in helpingeach of the LTIP Awards. For Mr. Penn, does not include 1,000,000 unvested SARs that vest on a Change in Control because the $8.27 base price of the SARs exceeded the closing price of the Company’s Class A common stock on December 31, 2022. (2)
For Mr. Penn, all outstanding equity awards vest on a Change in Control without respect to win key new accountstermination of employment. Death or Disability | Name | | | Value of
Additional Vested
Equity Awards
($)(1) | | | Mark Penn | | | | | 10,655,410 | | | | Jay Leveton | | | | | 1,730,448 | | | | Frank Lanuto | | | | | 2,222,280 | | | | Ryan Greene | | | | | 638,040 | | | | Vincenzo DiMaggio | | | | | 538,140 | | |
(1)
Value is based on the closing price of the Company’s Class A common stock on December 31, 2022. For each NEO, includes restricted shares included in the Annual Incentive Awards and secure several existing client relationships. As a result, Ms. Senecal received an annual cash bonus from the Company for 2015 equal to $750,000.Stock Ownership Guidelines. The100% of the target number of shares included in each of the LTIP Awards. For Mr. Penn, does not include 1,000,000 unvested SARs that vest on death or disability because the $8.27 base price of the SARs exceeded the closing price of the Company’s Class A common stock ownership guidelines requireon December 31, 2022.
OTHER COMPENSATION-RELATED POLICIES Indemnification Agreements We have entered into indemnity agreements with our directors and executive officers which provide, among other things, that each namedwe will indemnify such director or executive officer, own a significant equity stake inunder the Company during their employment. The Compensation Committee believes that stock ownership by senior managers strengthens their commitmentcircumstances and to the futureextent provided therein, for liabilities of any kind that he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, executive officer or other agent of the Company, and further aligns their interests with those of our shareholders. The Board has adopted the following stock ownership guidelines: Chief Executive Officer to own stock with a value of at least five (5) times his base salary; Chief Financial Officer, at least four (4) times his base salary; and each other named executive officer, at least three (3) times their base salary. An executive must reach his target ownership level within four years after becoming subject to the stock ownership guidelines. As of December 31, 2015, the CEO and all other named executive officers were in full compliance with the Company’s stock ownership guidelines.fullest extent permitted by law. Prohibition of Pledging or Hedging of the Company’s Stock.Stock The Board has adopted policies to prohibit any pledge or hedging of the Company’s stock by officers and directors of the Company. Currently, no stock is pledged or hedged by any of the Company’s directors or officers. Employment Agreements. The Company has employment or services agreements with the CEO and all of the other named executive officers. These agreements formalize the terms of the employment relationship, and assure the executive of fair treatment during employment and in the event of termination while requiring compliance with restrictive covenants. Employment agreements promote complete documentation and understanding of employment terms, including strong protections for our business.
Claw-back Agreements. In connection with the payment of cash incentive amounts to the CEO and each of the other named executive officers for 2015, the Company required that each agree in writing to repay the Company a pro rata portion of his cash incentive payment if he resigned his employment or his employment was terminated for “cause” prior to December 31, 2017. These agreements also encourage long term retention of key executives by the Company.
Business Protection Terms.Terms The Company’s named executive officersNEOs are subject to significant contractual restrictions intended to prevent actions that potentially could harm our business, particularly after termination of employment. These business protections include obligations not to solicit clients or employees, not to disparage us, not to reveal confidential information, and to cooperate with us in litigation. Business protection provisions are included in employment agreements and in connection with compliance with the Company’s Code of Conduct. Equity Award Grant Policies. The Board of Directors and the Compensation Committee have adopted policies and procedures governing the granting of any equity incentive awards, including the following:
Equity incentive awards granted to executive officers must be approved by the Compensation Committee or the full Board of Directors, and be made at quarterly in-person meetings and not be made via unanimous written consent. An attorney (who may be an employee of the Company) must be present at each such Compensation Committee or Board meeting.
If grants are required to be awardedPension Benefits in connection with hiring new employees in between quarterly Compensation Committee meetings, such grants may be approved at a special meeting, which may be telephonic or in-person.2022
Options, SARs and other equity incentive awards must be priced at the closing price on the date immediately prior to the date of the Compensation Committee meeting at which the grant is approved.
The Company’s internal audit department performs an audit of equity incentive awards granted during the year to ensure compliance with all policies and applicable rules and regulations.
Comparator Companies. In determining compensation opportunities and payments to executives, the Compensation Committee may, from time to time, review competitive opportunities, payments, practices and performance among a comparator group of companies. Although we do not engage in formal benchmarking of NEO compensation, we intend that, if our named executive officers achieve individual and financial corporate objectives in a given year, they will earn total direct compensation that compares favorably with the total direct compensation earned by executives performing similar functions at comparator companies.
Retirement Programs. The Company offers each U.S.-based executive the opportunity to make individual contributions to a broad-based 401(k) Plan administered by the Company and generally available to the Company’s U.S. employees. However, the Company does not make or match any employee contributions to the 401(k) Plan for the Company’s employees. The Company does not provide any other specific retirement or pension benefits for its named executive officers.
Severance Policies. We provide severance protection to our named executive officers in employment agreements, as detailed below under the caption “Potential Payments upon Termination or Change-In-Control.” As discussed above, this protection is designed to be fair and competitive to aid in attracting and retaining experienced executives. We believe that the protection we provide, including the level of severance payments and post-termination benefits, is appropriate.
Section 162(m). Pursuant to Section 162(m), publicly-held corporations are prohibited from deducting compensation paid to the named executive officers except the Chief Financial Officer, as of the end of the fiscal year, in excess of $1 million, unless the compensation is “performance-based.” Although the Compensation Committee considers the impact of Section 162(m) when making its compensation determinations, the Compensation Committee has determined that its need for flexibility in designing an effective compensation plan to meet our objectives and to respond quickly to marketplace needs has outweighed its need to maximize the deductibility of its annual compensation. The Compensation Committee reviews this policy from time to time.
REPORT OF THE HUMAN RESOURCES &
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources & Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that appears above. Based on this review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company’s 2015 Annual Report on Form 10-K for filing with the SEC.
The Human Resources & Compensation Committee
Clare R. Copeland (Chairman)
Michael J.L. Kirby
Irwin D. Simon
Executive Compensation
This section contains information, both narrative and tabular, regarding the compensation for fiscal 2015, 2014, and 2013 for (1) each person who served as our principal executive officer in 2015; (2) our principal financial officer in 2015; and (3) our three other most highly compensated executive officers who were serving as executive officers as of the end of 2015 (collectively, the “NEOs” or the “named executive officers”). In 2015, Miles Nadal served as CEO from January 1, 2015 until his resignation on July 20, 2015. Scott Kauffman has served as our CEO since July 20, 2015.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary
($) | | Bonus
($)(1) | | Stock
Awards
($)(2) | | Option
Awards
($) | | Non-Equity
Incentive Plan
Compensation
($) | | All Other
Compensation
($)(3) | | Total
($) | Scott L. Kauffman,
Chairman and Chief Executive Officer(4) | | | 2015 | | | | 500,641 | | | | 800,000 | | | | 1,926,000 | | | | 0 | | | | 0 | | | | 34,135 | | | | 3,260,776 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David Doft,
Chief Financial Officer | | | 2015 | | | | 500,000 | | | | 575,000 | | | | 0 | | | | 0 | | | | 0 | | | | 47,687 | | | | 1,122,687 | | | | | 2014 | | | | 441,667 | | | | 566,375 | | | | 142,437 | | | | 0 | | | | 0 | | | | 46,686 | | | | 1,197,165 | | | | | 2013 | | | | 412,500 | | | | 812,500 | | | | 226,721 | | | | 0 | | | | 0 | | | | 53,084 | | | | 1,504,805 | | Andre Coste,
Chief Operating Officer | | | 2015 | | | | 575,000 | | | | 500,000 | | | | 0 | | | | 0 | | | | 0 | | | | 76,045 | | | | 1,151,045 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Robert Kantor,
Chief Marketing Officer | | | 2015 | | | | 500,000 | | | | 600,000 | | | | 0 | | | | 0 | | | | 0 | | | | 38,367 | | | | 1,138,367 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lori Senecal,
President and CEO, The MDC Partner Network(5) | | | 2015 | | | | 1,000,000 | | | | 750,000 | | | | 0 | | | | 0 | | | | 0 | | | | 133,628 | | | | 1,883,628 | | | | | 2014 | | | | 924,000 | | | | 350,000 | | | | 1,115,000 | | | | 0 | | | | 0 | | | | 205,281 | | | | 2,594,281 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Miles S. Nadal,
Former Chairman, Chief Executive Officer and President | | | 2015 | | | | 1,539,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 375,000 | | | | 1,914,000 | | | | | 2014 | | | | 1,850,000 | | | | 9,625,000 | | | | 2,314,530 | | | | 0 | | | | 0 | | | | 926,005 | | | | 14,715,535 | | | | | 2013 | | | | 1,750,000 | | | | 24,057,294 | | | | 4,186,920 | | | | 0 | | | | 0 | | | | 554,172 | | | | 30,548,386 | |
| (1) | Reflects the bonus paid in respect of performance in 2015, which amounts were paid in February 2016. As disclosed in the CD&A, the Company’s practice is to require senior executives to sign Incentive/Retention Agreements in connection with each annual bonus payment, which agreement provide for a pro rata repayment of each bonus paid if he/she resigns or is terminated for cause within two years of the end of the performing year. With respect to each of the NEOs, the amount of the repayment obligations that lapsed and terminated in 2015 with respect to prior bonus awards was as follows: David Doft — $395,188; Lori Senecal — $246,740; Andre Coste — $360,715; and Robert Kantor — $390,446. In prior years, the Company disclosed the actual bonus expense included in the Company’s financial statements rather than the bonus paid for the fiscal year. The bonus reflected in the table for 2013 and 2014 has been restated for consistency. |
| (2) | Reflects the grant date fair value of the equity awards we granted to our NEOs as determined in accordance with FASB Topic 718. For a discussion of the assumptions relating to these valuations, please see “Footnote 2 — Significant Accounting Policies” set forth in our annual report on Form 10-K for the year ended December 31, 2015. |
| (3) | “All other compensation” is composed of the following perquisites, personal benefits and other items for our NEOs in 2015: |
| | | | | | | | | | | | Name | | Perquisite
Allowance | | Housing
Relocation
Allowance | | Health
Insurance
Premiums | | Other
Perquisites | | Total | | Scott Kauffman | | | 34,135 | | | | | | | | — | | | | | | | | 34,135 | | | David Doft | | | 30,000 | | | | | | | | 17,687 | | | | | | | | 47,687 | | | Andre Coste | | | 50,000 | | | | | | | | 17,687 | | | | 8,358 | (a) | | | 76,045 | | | Robert Kantor | | | 18,000 | | | | | | | | 20,367 | | | | | | | | 38,367 | | | Lori Senecal | | | 24,000 | | | | 89,261 | | | | 20,367 | | | | | | | | 133,628 | | | Miles Nadal | | | 375,000 | | | | | | | | — | | | | | | | | 375,000 | |
| (a) | Includes amounts paid for family travel to Mr. Coste’s former home in Paris, France and tax planning advisory fees. |
| (4) | This Summary Compensation Table only reflects compensation paid to Mr. Kauffman in his capacity as CEO of the Company during the period of July 20, 2015 through December 31, 2015. Amounts paid to Mr. Kauffman in his capacity as a non-management director during the period of January 1, 2015 through July 20, 2015, are set forth under “Director Compensation for Fiscal Year 2015.” |
| (5) | Ms. Senecal was not a named executive officer in 2013, and is no longer an executive officer of the Company effective as of December 31, 2015. Ms. Senecal is currently CEO of Crispin Porter & Bogusky LLC, a subsidiary of the Company. |
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2015
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant
Date(1) | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under
Equity Incentive Plan Awards | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | Grant Date
Fair Value
of Equity
Awards | | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | | Scott Kauffman | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | 100,000 | (2) | | | | | | | | | | | 1,926,000 | (3) | | David Doft | | | 1/26/2015 | | | | 175,000 | | | | 250,000 | | | | 625,000 | | | | | | | | | | | | | | | | 0 | | | | | | | | | | | | | | | Andre Coste | | | 1/26/2015 | | | | 175,000 | | | | 250,000 | | | | 625,000 | | | | | | | | | | | | | | | | 0 | | | | | | | | | | | | 0 | | | Robert Kantor | | | 1/26/2015 | | | | 175,000 | | | | 250,000 | | | | 625,000 | | | | | | | | | | | | | | | | 0 | | | | | | | | | | | | 0 | | | Lori Senecal | | | 1/26/2015 | | | | 350,000 | | | | 500,000 | | | | 1,250,000 | | | | | | | | | | | | | | | | 0 | | | | | | | | | | | | 0 | | | Miles Nadal(4) | | | 1/26/2015 | | | | 6,000,000 | | | | 7,500,000 | | | | 15,000,000 | | | | | | | | | | | | | | | | 0 | | | | | | | | | | | | 0 | |
| (1) | Represents awards granted to our NEOs in fiscal 2015 under the Company’s 2014 Long-Term Cash Incentive Plan (the “2014 LTIP Plan”). These grants vest at the end of the applicable three (3) year measuring period (December 31, 2017), subject to achievement of financial performance criteria and continued employment. The financial performance criteria are based on the following two specific metrics that are each given 50% weight: (i) three (3) year cumulative EBITDA growth as measured against the approved annual EBITDA targets for such period; and (ii) relative total shareholder return (“TSR”) based on share price appreciation and dividends as compared to a pre-defined comparator group (“Comparator Group”) over the same three (3) year period. For 2015, the EBITDA target is equal to $198.4 million; and for 2016, the EBITDA target under the 2014 LTIP Plan is equal to $217.3 million. A payout at the target opportunity (50%) for the EBITDA metric will be made if the Company achieves the three (3) year cumulative EBITDA target. Under the 2014 LTIP Plan, total TSR is calculated as A minus B expressed as a percentage, where A is the average per-share price of the applicable company’s stock at the end of the applicable performance period, and B is the average per-share price of stock at the beginning of the applicable performance period. In addition, for purposes of calculations of TSR, cash dividends paid on a share of stock are deemed to be reinvested in the company’s stock on the day they are paid at the average of the high and the low per-share price on that day. A payout at the target opportunity (50%) for the TSR metric will be made if the Company’s TSR is at the 75th percentile relative to the Comparator Group. These awards also vest automatically upon a change in control of the Company, or subject to achievement of financial performance targets on a pro rata basis upon termination of the NEO’s employment without cause. The Comparator Group is comprised of the following publicly-traded companies: Interpublic Group; Omnicom; WPP Plc; Harte Hanks; Clear Channel; Lamar Advertising; National CineMedia; Sizmek; Acxiom; Aimia; and ReachLocal. |
Mr. Kauffman did not receive any award in 2015 under the 2014 LTIP Plan because he was a non-employee director at the time grants were made to other senior executives.
| (2) | Represents restricted stock granted to Mr. Kauffman in September 2015 under our 2011 Stock Incentive Plan. This grant was made pursuant to Mr. Kauffman’s new employment agreement and his appointment as the new CEO, effective July 20, 2015, and vests upon the third anniversary of the grant date subject to continued employment. This award will also vest automatically upon a change of control of the Company, or upon termination of employment without cause. |
| (3) | Reflects the grant date fair value of the equity awards we granted to our NEOs in fiscal 2015 as determined in accordance with FASB Topic 718. For a discussion of the assumptions relating to these valuations, please see “Footnote 2 — Significant Accounting Policies” set forth in our annual report on Form 10-K for the year ended December 31, 2015. |
| (4) | Mr. Nadal received an award under the 2014 LTIP Plan on January 26, 2015. However, the full amount of this award wasterminated and forfeitedin connection with Mr. Nadal’s resignation pursuant to his Separation Agreement with the Company. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
We have entered into employment agreements with all of our named executive officers, as described in more detail below.
Scott L. Kauffman
MDC Partners has an employment agreement with Mr. Kauffman, effective July 20, 2015, pursuant to which Mr. Kauffman serves as our Chief Executive Officer. Mr. Kauffman’s term of employment with the Company is for an indefinite period unless and until either Mr. Kauffman gives to the Company thirty (30) days advance written notice of resignation or the Company terminates Mr. Kauffman’s employment, with or without “Cause” (as defined in his employment agreement).
Mr. Kauffman received an annualized base salary of $1,100,000 during his term of employment in 2015 (increased to $1,200,000 effective as of January 1, 2016), and he is eligible to receive an annual discretionary bonus in a target amount equal to 100% of his base salary, as determined by the Compensation Committee, based upon Mr. Kauffman’s individual performance, the overall financial performance of the Company and such other factors as the Board shall deem reasonable and appropriate, to be paid in accordance with our normal bonus payment procedures. As part of his new employment agreement, Mr. Kauffman received a grant of 100,000 shares of MDC restricted stock on August 26, 2015. In 2015, Mr. Kauffman received a monthly perquisite allowance in an amount equal to $6,250; however, commencing January 1, 2016, Mr. Kauffman no longer receives any perquisite allowance. Mr. Kauffman is eligible, but in 2015 declined to participate, in the Company’s welfare benefit plans and programs including disability and group life (including accidental death and dismemberment insurance). He is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. The employment agreement also provides for severance payments if Mr. Kauffman’s employment is terminated under specified circumstances. The amount and circumstances giving rise to these severance payments are discussed in further detail under the heading “Potential Payments upon Termination or Change in Control.”
David B. Doft
MDC Partners has an employment agreement with Mr. Doft, effective August 10, 2007 (as amended on August 5, 2010), pursuant to which Mr. Doft serves as our Chief Financial Officer. Mr. Doft’s term of employment is subject to automatic renewal for one-year periods, unless either party gives to the other a 45-day advance written notice of his or its intention not to renew. Mr. Doft currently is entitled to receive an annualized base salary of $500,000 (increasing to $650,000 effective as of January 1, 2016), and he is eligible to receive an annual discretionary bonus in a target amount equal to 100% of his base salary, as recommended by our CEO and determined by the Compensation Committee, based upon Mr. Doft’s performance, the overall financial performance of the Company and such other factors as our CEO and the Board shall deem reasonable and appropriate, to be paid in accordance with our normal bonus payment procedures.
Mr. Doft also receives an annual perquisite allowance in an amount equal to $30,000. Mr. Doft is eligible to participate in any welfare benefit plans and programs including disability, group life (including accidental death and dismemberment) and business travel insurance provided by the Company to its senior executives. He is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. The employment agreement also provides for severance payments if Mr. Doft’s employment is terminated under specified circumstances. The amount and circumstances giving rise to these severance payments are discussed in further detail under the heading “Potential Payments upon Termination or Change in Control.”
Andre Coste
MDC Partners has an employment agreement with Mr. Coste, effective August 8, 2013, pursuant to which Mr. Coste currently serves as our Chief Operating Officer. Mr. Coste’s term of employment with the Company is for an indefinite period unless and until either Mr. Coste gives to the Company three (3) months advance written notice of resignation or the Company terminates Mr. Coste’s employment with or without “Cause” (as defined in his employment agreement).
Mr. Coste currently receives an annualized base salary of $575,000, and he is eligible to receive an annual discretionary bonus in a target amount equal to 100% of his base salary, as recommended by our CEO and determined by the Compensation Committee, based upon Mr. Coste’s individual performance, the overall financial performance of the Company and such other factors as our CEO and the Board shall deem reasonable and appropriate, to be paid in accordance with our normal bonus payment procedures.
Mr. Coste also receives an annual perquisite allowance in an amount equal to $50,000. Mr. Coste is eligible to participate in any welfare benefit plans and programs including disability, group life (including accidental death and dismemberment) and business travel insurance provided by the Company to its senior executives. He is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. In addition, Mr. Coste is entitled to receive reimbursement for airplane travel costs for him and his family to visit France once per year, and up to $2,500 for the preparation of U.S. tax returns. The employment agreement also provides for severance payments if Mr. Coste’s employment is terminated under specified circumstances. The amount and circumstances giving rise to these severance payments are discussed in further detail under the heading “Potential Payments upon Termination or Change in Control.”
Robert Kantor
MDC Partners has an employment agreement with Mr. Kantor, effective May 5, 2014, pursuant to which Mr. Kantor serves as our Chief Marketing and Business Development Officer. Mr. Kantor’s current term of employment with the Company is for an indefinite period unless and until either Mr. Kantor gives to the Company six (6) months advance written notice of resignation or the Company terminates Mr. Kantor’s employment with or without “Cause” (as defined in his employment agreement).
Mr. Kantor currently receives an annualized base salary of $500,000, and he is eligible to receive an annual discretionary bonus in a target amount equal to 100% of his base salary, as recommended by our CEO and determined by the Compensation Committee, based upon Mr. Kantor’s individual performance, the overall financial performance of the Company and such other factors as our CEO and the Board shall deem reasonable and appropriate, to be paid in accordance with our normal bonus payment procedures.
Mr. Kantor also receives an annual perquisite allowance in an amount equal to $18,000. Mr. Kantor is eligible to participate in any welfare benefit plans and programs including disability, group life (including accidental death and dismemberment) and business travel insurance provided by the Company to its senior executives. He is also entitled to participate in the retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. The employment agreement also provides for severance payments if Mr. Kantor’s employment is terminated under certain circumstances. The amount and circumstances giving rise to these severance payments are discussed in further detail under the heading “Potential Payments upon Termination or Change in Control.”
Lori Senecal
From May 2015 to December 31, 2015, Lori Senecal held the dual titles of President and Chief Executive Officer of The MDC Partner Network and Chief Executive Officer of the Company’s subsidiary, Crispin Porter & Bogusky (“CPB”). As of January 1, 2016, Ms. Senecal assumed the exclusive role as Global Chief Executive Officer of CPB, and no longer served as an executive officer of the Company after December 31, 2015.
For 2015, Ms. Senecal received an annualized base salary of $1,000,000, and was eligible to receive an annual discretionary bonus in a target amount equal to 100% of her base salary, as recommended by our CEO and determined by the Compensation Committee, based upon Ms. Senecal’s performance, the overall financial performance of the Company and such other factors as our CEO and the Board shall deem reasonable and appropriate, to be paid in accordance with our normal bonus payment procedures. Ms. Senecal also receives an annual perquisite allowance in an amount equal to $24,000. In addition, in 2015 Ms. Senecal was paid a housing allowance of $89,261 in connection with the relocation of her residence to Boulder, Colorado, where CPB’s headquarters are located. Ms. Senecal is eligible to participate in any welfare benefit plans and programs including disability, group life (including accidental death and dismemberment) and business travel insurance provided by the Company to its senior executives. She is also entitled to participate in the
retirement plans and benefits in accordance with the plans or practices of the Company made available to the senior executives of the Company. The employment agreement also provides for severance payments if Ms. Senecal’s employment is terminated without cause. The amount and circumstances giving rise to these severance payments are discussed in further detail under the heading “Potential Payments upon Termination or Change in Control.”
Miles S. Nadal (former CEO)
On April 25, 2007, the Company entered into a Management Services Agreement (as amended and restated on May 6, 2013, the “Services Agreement”) with Miles Nadal and Nadal Management, Inc. to set forth the terms and conditions on which Miles Nadal previously provided services to the Company as its Chief Executive Officer. In connection with Mr. Nadal’s resignation on July 20, 2015, the Company and Mr. Nadal terminated the Services Agreement and entered into a separation agreement (the “Separation Agreement”), dated as of July 20, 2015. Pursuant to the Separation Agreement, Mr. Nadal agreed, among other things, to (1) repay to the Company $1,877,000 in connection with specified amounts paid to or for the benefit of Mr. Nadal and an affiliate; (2) repay to the Company $10,581,605 in connection with cash bonus awards previously paid to Mr. Nadal, with such repayments to be made in five installments, with the last to be paid on December 31, 2017; and (3) customary non-disparagement and confidentiality obligations, reaffirmation of restrictive covenants, and an intellectual property rights assignment. During the period of January 1, 2015 through and including the termination of his employment on July 20, 2015, Mr. Nadal was paid his pro-rated base retainer and perquisite allowance in an aggregate amount equal to $1,914,000. Mr. Nadal was not paid any incentive or severance under the Separation Agreement.
The following table sets forth information regarding the outstanding awards under our equity incentive plans held by our named executive officers at 2015 fiscal year end.
OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | Name | | Option Awards | | Stock Awards | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price
($) | | 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
($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested
(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested
($) | | (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | Scott Kauffman | | | 37,500 | (1) | | | | | | | 5.97 | | | | April 28,
2016 | | | | 117,866 | (1) | | | 2,560,050 | (1) | | | | | | | | | | David B. Doft | | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | Andre Coste | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,963 | (2) | | | 390,156 | (2) | | Robert Kantor | | | | | | | | | | | | | | | | | | | 37,500 | (3) | | | 814,500 | (3) | | | | | | | | | | Lori Senecal | | | | | | | | | | | | | | | | | | | 50,000 | (4) | | | 1,086,000 | (4) | | | | | | | | | | Miles Nadal | | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | |
| (1) | Mr. Kauffman received the following grants in connection with his prior service as a non-employee member of the Board: 9,855 restricted shares granted on March 7, 2013; 4,441 restricted shares granted on May 5, 2014; and 3,570 restricted shares granted on May 1, 2015. Mr. Kauffman also received a grant of 37,500 options in April 2006, which are fully vested. These grants vest upon the third anniversary of the grant date. In addition, pursuant to his new employment agreement to serve as the Company’s CEO, Mr. Kauffman received a grant of 100,000 restricted shares, which will vest on the third anniversary of employment (July 20, 2018). |
| (2) | This grant award was made to Mr. Coste on April, 15, 2013, and vests on March 1, 2016, subject to achievement by the Company of specified financial performance criteria in 2016 and continued employment. |
| (3) | This grant award was made to Mr. Kantor on November, 1, 2013, and vests upon the third anniversary of the grant date, subject to continued employment. |
| (4) | This grant award was made to Ms. Senecal on September, 1, 2014, and vests upon the third anniversary of the grant date, subject to continued employment. |
The following table sets forth information concerning each exercise of stock options, SARs and similar instruments, and each vesting of stock, including restricted stock, restricted stock units and similar instruments, during 2015 for each NEO on an aggregated basis.
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2015
| | | | | | | | | | Name | | Number of Shares
Acquired on
Exercise
(#) | | Value Realized
on Exercise
($) | | Number of Shares
Acquired on
Vesting
(#) | | Value Realized
on Vesting
($) | | (a) | | (b) | | (c) | | (d) | | (e) | | Scott L. Kauffman | | | | | | | | | | | 9,804 | | | | 250,688 | | | David B. Doft | | | | | | | | | | | 5,650 | | | | 143,623 | | | Andre Coste | | | | | | | | | | | — | | | | | | | Robert Kantor | | | | | | | | | | | — | | | | | | | Lori Senecal | | | | | | | | | | | — | | | | | | | Miles S. Nadal | | | | | | | | | | | 91,810 | | | | 2,333,810 | |
We do not provide our NEOs with any defined benefit or defined contribution pension arrangements, andarrangements. Non-Qualified Deferred Compensation In 2022 We do not maintain any non-qualified deferred compensation plans for our NEOs.
Indebtedness of Directors, Executive Officers and Senior Officers
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have entered into employment agreements with eachThere is currently no indebtedness owed to the Company by any of our nameddirectors or executive officers. Under these agreements, we are requiredofficers, and there was no such indebtedness owed to pay severance benefits in connection with specified terminationsus since January 1, 2022. The Company’s Corporate Governance Guidelines prohibit the Company from making any personal loans or extensions of employment, including specified terminations in connection with a change in controlcredit to directors or executive officers of the Company. The employment agreements for each NEO
Adjusted EBITDA As used in this Proxy Statement: “Adjusted EBITDA” is a non-U.S. GAAP financial measure defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other executives require a “double trigger” for any change in control severance payments. In addition, someitems. Other items include restructuring costs, acquisition-related expenses, and non-recurring items. A reconciliation of our equity incentive plans provide for the accelerated payment or vesting of awards in connection with specified terminations of employment or a change in control of the Company. The following is a description of the severance, termination and change in control benefits payable to each of our named executive officers pursuant to their respective employment agreements and our equity incentive plans.Definitions of terms such as “change in control” or “for good reason” vary between agreements, so when a definition is particular to an agreement, it is described for that agreement. For all named executive officers, a “change of control” means the closing of a transaction which results in (1) any person(s) or company(ies) acting jointly or in concert owning equity of the Company representing greater than 50% of the voting power of the Company’s outstanding securities, or (2) the Company selling all or substantially all of its assets (in each instance other than any transfer by the Company or any of its affiliates of their respective interest in the Company to another wholly-owned subsidiary of another MDC Group company).
Scott L. Kauffman
Pursuant to his employment agreement, if MDC terminated Mr. Kauffman’s employment in 2015 without cause, or if Mr. Kauffman terminated his employment for good reason, then MDC was required to pay Mr. Kauffman a severance payment within 60 days of the date of termination of one (1) times Mr. Kauffman’s base salary plus the accrued amount of his annual discretionary bonus as of the termination date. If Mr. Kauffman’s employment had terminated under these circumstances on December 31, 2015, the aggregate cash payment due to him under the agreement would have been $1,100,000. As of December 31, 2015, Mr. Kauffman had 117,866 unvested restricted stock grants that would vest on termination of his employment agreement or change of control, with a fair value equal to $2,560,050.
If Mr. Kauffman’s employment is terminated within one year following the closing of a change in control by MDC without cause, or by Mr. Kauffman for good reason, then Mr. Kauffman will be entitledAdjusted EBITDA to the same severance payments set forth above. In addition, in the event of a change of control, the Compensation Committee may in its sole discretion determine to make an additional payment to Mr. Kauffman. If there had been a change in control of MDC Partners on December 31, 2015 and Mr. Kauffman’s employment terminated in connection with that change in control, the aggregate cash severance payment MDC would have paid him under the contract would be $1,100,000.
David Doft
Pursuant to his employment agreement, if MDC terminates Mr. Doft’s employment without cause, Mr. Doft terminates his employment for good reason, or the company gives a notice of non-renewal of the agreement, then MDC is required to pay Mr. Doft a severance payment within 10 days of the date of termination of one (1) times Mr. Doft’s total remuneration, plus an amount equal to two (2) month’s base salary for each calendar year in which he was employed by the Company, up to a maximum of six months. Total remuneration means the sum of his current base salary, his perquisite allowance, plus the highest annual discretionary cash bonus he earned in the three years ending December 31 of the year immediately preceding the date of termination. If Mr. Doft’s employment had terminated under these circumstances on December 31, 2015, the aggregate cash payment due to him under the agreement would have been $1,592,500. Furthermore, Mr. Doft will also be allowed to continue participating for one year after termination on the same basis as before he was terminated in all benefit plans and, to the extent permitted under law, also in all retirement plans, provided however, that if Mr. Doft becomes entitled to receive coverage and benefits in the same type of plan from another employer, he will no longer be able to participate in these benefit and retirement plans. We will be obligated to pay him the economic equivalent of the benefits in these plans if Mr. Doft is unable to participate in the plans. The aggregate amount of this benefit would have been approximately $17,687 if Mr. Doft’s employment had terminated as of December 31, 2015.
If Mr. Doft’s employment is terminated without cause by the company within one year following the closing of a change in control, by Mr. Doft for good reason, or by the company giving a notice of non-renewal of the agreement, then Mr. Doft will be entitled to a payment of 2.0 times his total remuneration. He will also be eligible to receive a pro rata portion of his annual discretionary cash bonusU.S. GAAP Operating income for the year in which his employment terminates. If there had been a change in control of MDC Partners onended December 31, 2015 and Mr. Doft’s employment terminated in connection with that change in control, the aggregate cash severance payment MDC would have paid him under the contract would be $2,685,000. Furthermore, Mr. Doft will also be allowed to continue participating for one year after termination on the same basis as before he was terminated in all benefit plans. We will be obligated to pay him the economic equivalent of the benefits in these plans if Mr. Doft2022 is unable to participateprovided in the plans. The aggregate amount of this benefit would have been approximately $17,687 if Mr. Doft’s employment had terminated as of December 31, 2015.
Andre Coste
Pursuant to his employment agreement, if MDC terminates Mr. Coste’s employment without cause, then MDC is required to pay Mr. Coste a severance payment over the applicable twelve (12) month severance period, equal to one (1) times Mr. Coste’s base salary. If Mr. Coste’s employment had terminated under these circumstancesCompany’s Annual Report on December 31, 2015, the aggregate cash payment due to him under the agreement would have been $575,000. As of December 31, 2015, Mr. Coste had 17,963 unvested restricted stock grants that would vestForm 10-K filed on termination of his employment agreement or change of control, with a fair value equal to $390,156.
If Mr. Coste’s employment is terminated within one year following the closing of a change in control by the company without cause, then Mr. Coste will be entitled to a payment of 1.5 times his then-current base salary. He will also be eligible to receive a pro-rata portion of his annual discretionary cash bonus for the year in which his employment terminates. If there had been a change in control of MDC Partners on December 31, 2015March 6, 2023.
Human Resources and Mr. Coste’s employment terminated in connection with that change in control, the aggregate cash severance payment MDC would have paid him under the contract would be $862,500.Robert Kantor
Pursuant to his employment agreement, if MDC terminates Mr. Kantor’s employment without cause, then MDC is required to pay Mr. Kantor a severance payment over the applicable twelve (12) month severance period, equal to one (1) times Mr. Kantor’s base salary. If Mr. Kantor’s employment had terminated under these circumstances on December 31, 2015, the aggregate cash payment due to him under the agreement would have been $500,000. As of December 31, 2015, Mr. Kantor had 37,500 unvested restricted stock grants that would vest on termination of his employment agreement or change of control, with a fair value equal to $814,500.
If Mr. Kantor’s employment is terminated within one year following the closing of a change in control by the company without cause, then Mr. Kantor will be entitled to a payment of 1.5 times his total remuneration (increasing to 2.0 times his total remuneration effective May 26, 2016). Total remuneration means the sum of his current base salary, plus the highest annual discretionary cash bonus he earned in the three years ending December 31 of the year immediately preceding the date of termination. He will also be eligible to receive a pro-rata portion of his annual discretionary cash bonus for the year in which his employment terminates. If there had been a change in control of MDC Partners on December 31, 2015 and Mr. Kantor’s employment terminated in connection with that change in control, the aggregate cash severance payment MDC would have paid him under the contract would be $1,412,062.
Lori Senecal
Pursuant to her employment agreement, if MDC terminates Ms. Senecal’s employment without cause, then MDC is required to pay Ms. Senecal severance in an amount equal to her base salary for a period of time commencing on the date of termination and ending at the end of the twelve (12) month period thereafter. If Ms. Senecal’s employment had terminated under these circumstances on December 31, 2015, the aggregate cash payment due to her under the agreement would have been $1,000,000. As of December 31, 2015, Ms. Senecal had 50,000 unvested restricted stock grants that would vest on termination of her employment agreement or change of control, with a fair value equal to $1,086,000.
If Ms. Senecal’s employment is terminated by the company without cause within one year following the closing of a change in control, then Ms. Senecal will be entitled to a payment of two (2) times her base salary. She will also be eligible to receive a pro rata portion of her annual discretionary cash bonus for the year in which her employment terminates. If there had been a change in control of MDC Partners on December 31, 2015 and Ms. Senecal’s employment terminated in connection with that change in control, the aggregate cash severance payment MDC would have paid her under the contract would be $2,000,000.
Miles S. Nadal
On July 20, 2015, Mr. Nadal resigned from his position as CEO and from his position as a member and Chairman of the Board of Directors. Mr. Nadal did not receive any severance or other compensation payments from the Company in connection with his resignation.
Following an extensive review of perquisites and payments made by the Company on behalf of Mr. Nadal during the period 2009 through 2014, Mr. Nadal repaid the Company for the expenses for which the Company sought reimbursement, in an aggregate amount of $11,285,000. These payments included medical expenses, travel and commutation expenses, charitable donations and other expenses that lacked appropriate substantiation, over a six (6) year period.
In addition, Mr. Nadal further agreed to repay the Company $10,581,605 in connection with repayment obligations pursuant to prior incentive/retention agreements. Through December 31, 2015, Mr. Nadal has paid $2.5 million of this amount, and is obligated to repay the remaining balance in three installments, with the last to be paid on December 31, 2017.
Compensation Committee Interlocks and Insider ParticipationMr. Clare Copeland (Chairman), Mr. Scott Kauffman (prior to his appointment as CEO on July 20, 2015), Mr. Michael J.L. Kirby
Desirée Rogers, Bradley J. Gross, and Mr. Irwin Simon served on the Human Resources &and Compensation Committee of the Board of Directors during 2015.2022. None of the persons who served on the Human Resources &and Compensation Committee at the time of such service are, or have been, an employee or officer of the Company or had any relationship requiring disclosure under Item 404 of Regulation S-K. In addition, none of the Company’s executive officers serves, or has served during the last completed fiscal year, as a member of the board of directors or compensation committee of any other entity that has or has had one or more of its executive officers serving as a member of the Company’s Board of Directors. Securities Authorized for Issuance under Equity
Report of the Human Resources and Compensation PlansOn May 26, 2005,Committee of the Board
The Human Resources and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (“CD&A) that is required by Item 402(b) of Regulation S-K with the Company’s shareholders approvedmanagement. Based on this review and discussion, the Company’s 2005 Stock Incentive Plan, which was subsequently amendedHuman Resources and Compensation Committee has recommended to the Board that the CD&A be included in this Proxy Statement and incorporated into our Annual Report on May 30, 2007 and on May, 30 2009. The 2005 Stock Incentive Plan authorizes the issuance of awards to employees, officers, directors and consultants of the Company with respect to 6,750,000 shares of MDC Partners’ Class A Shares or any other security in to which such shares shall be exchanged. On May 30, 2008, the Company’s shareholders approved the 2008 Key Partner Incentive Plan, which providesForm 10-K for the issuance of 900,000 Class A Shares. On May 30 2012, the Company’s shareholders approved the 2011 Stock Incentive Plan, which provides for the issuance of up to 3,000,000 Class A shares. The SARs Plan was initially adopted and approved effective as of January 1, 2003, and was subsequently amended and restated in 2004, 2006 and 2014.
The following table sets out as at December 31, 2015 the number of securities to be issued upon exercise of outstanding options and rights, the weighted average exercise price of outstanding options and rights and the number of securities remaining available for future issuance under equity compensation plans.
| | | | | | | | | Number of Securities to be Issued Upon Exercise of Outstanding Options Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options Warrants and Rights | | Number of Securities Remaining Available for Future Issuance (Excluding Column (a)) | | | | (a) | | (b) | | (c) | Equity Compensation Plans:
| | | | | | | | | | | | | Approved by stockholders:
| | | | | | | | | | | | | | Share options and restricted stock | | | 122,357 | (1) | | $ | 5.28 | (2) | | | 1,123,772 | (3) | | Not Approved by stockholders: | | | — | | | | — | | | | — | |
| (1) | Includes 47,357 restricted stock units (“RSUs”). |
| (2) | The weighted average exercise price relates only to outstanding stock options. The calculation of the weighted average exercise price does not include outstanding equity awards that are received or exercised for no consideration. |
| (3) | Restricted stock, RSUs and other forms of equity awards may be issued under the 2005 Stock Incentive Plan, 2008 Key Partner Incentive Plan, the 2011 Stock Incentive Plan and the Stock Appreciation Plan. |
Indebtedness of Directors, Executive Officers and Senior Officers
There is currently no indebtedness owed to MDC by any of MDC’s Directors, executive officers or senior officers, and there was no such indebtedness owed to MDC as of December 31, 2015. The Company’s Corporate Governance Guidelines prohibit the Company from making any new personal loans or extensions of credit to Directors or executive officers of the Company.
Insurance
MDC holds directors’ and officers’ liability insurance policies that are designed to protect MDC Partners and its directors and officers against any legal action which may arise due to wrongful acts on the part of directors and/or officers of MDC. The policies are written for a limit of $70 million, subject to a corporate deductible up to $250,000 per securities-related claims and up to $100,000 per other indemnifiable claims. In respect of the fiscal year ended December 31, 2015, the cost to MDC of maintaining the policies was $688,525. The twelve-month premium cost2022.
Human Resources and Compensation Committee of the current policy, effective from August 1, 2015 until July 31, 2016,Board Desirée Rogers
Bradley Gross
Irwin Simon The material in this report is equalnot “soliciting material,” is not deemed “filed” with the SEC and is not to $911,672.be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Transactions with Related Persons Review and Approval of Related Party Transactions Related Party Transactions Policy The Board has adopted a written Related Party Transactions Policy to assist it in reviewing, approving and ratifying related party transactions. The Related Party Transactions Policy provides that all related party transactions covered by the policy must be approved in advance by the Audit Committee, except that any ordinary course transaction in which an operating subsidiary of the Company derives revenue from a related party may be approved on an annual basis by the Audit Committee. To facilitate compliance with this policy, Directorsdirectors and executive officers of the Company must notify the Company’s General Counsel and CFO as soon as reasonably practicable about any potential related party transaction. If the Company’s General Counsel and CFO determine that the transaction constitutes a related party transaction, the transaction will be referred to the Audit Committee for its consideration. The In reviewing related party transactions, the Audit Committee will be provided with full details of the proposed related party transaction including: the terms and conditions of the proposed transaction; the business purpose of the transaction; and the benefits to the Company and to the relevant related party.In reviewing related party transactions, the Audit Committee will consider all relevant facts and circumstances, including, among others:
The benefits of the transaction to the Company;
The terms of the transaction and whether they are fair (arm’s-length) and in the ordinary course of the Company’s business; and The size and expected term of the transaction; and other facts and circumstances that bear on the materiality of the related party transaction. Generally, the Related Party Transactions Policy applies to any transaction that would be required by the SEC to be disclosed in which the Company was or is proposed to be, a participant and in which a “Related Party” had, has or will have a direct or indirect material interest. The policy also applies to any amendment or modification to an existing Related Party Transaction,related party transaction, regardless of whether such transaction has previously been approved. Certain
Transactions with Related Party TransactionsThePersons
Since January 1, 2022, the Company engaged in the following related party transactions, in 2015, each of which wasthe amount involved exceeded $120,000. The related party transactions were reviewed and approved by the Audit Committee in accordance with the Related Party Transactions Policy described above: Services Agreement with Former
CEOOn April 25, 2007, the Company entered into a Management Services Agreement (as amended and restated on May 6, 2013, the “Services Agreement”) with Miles Nadal and with Nadal Management, Inc. to set forth the terms and conditions on which Miles Nadal previously provided services to the Company as its Chief Executive Officer. In connection with Mr. Nadal’s resignation on July 20, 2015, the Company and Mr. Nadal terminated the Services Agreement and entered into a separation agreement (the “Separation Agreement”), dated as of July 20, 2015. Pursuant to the Separation Agreement, Mr. Nadal agreed, among other things, to: (i) repay to the Company $1,877,000 in connection with certain amounts paid to or for the benefit of Mr. Nadal and an affiliate; (ii) repay to the Company $10,581,605 in connection with amounts required to be repaid pursuant to cash bonus awards previously paid to Mr. Nadal, with such repayments to be made in five installments, with the last to be paid on December 31, 2017; and (iii) customary non-disparagement and confidentiality obligations, reaffirmation of restrictive covenants, and an intellectual property rights assignment. Mr. Nadal was not paid any compensation payments or severance under the Separation Agreement.
Use of Private Aircraft through July 2015
Beginning in 2014 and during the first six months of 2015, MDC chartered for business purposes an airplane and helicopter (together, the “Aircraft”) owned by entities controlled by Mr. Nadal and leased to an independent corporate aircraft management company. Entities controlled by Mr. Nadal paid for the purchasesDirector Affiliation
Affiliates of the Aircraft and were legally responsible andStagwell Group LLC have paid for all operating, personnel and maintenance costs associated with the Aircraft’s operations. Payments by third parties to charter the Aircraft from the corporate aircraft management company offset a portion of the costs. Payments by MDC for the business use of the Aircraft by Mr. Nadal were made to the corporate aircraft management company at a fixed hourly rate set forthmajority ownership interest in the aircraft service agreement between the aircraft management company and entities controlled by Mr. Nadal. In the first and second quarter of 2015, MDC paid a total of $397,767 for the business use of the Aircraft. Promptly following Mr. Nadal’s resignation on July 20, 2015, the Company prohibited the use of private aircraft travel by its directors and executive officers.Employee Relationships
From May 2015 to December 31, 2015, Lori Senecal held the dual titles of President and Chief Executive Officer of The MDC Partner Network and Chief Executive Officer of Partner Firm Crispin Porter & Bogusky (“CPB”). As of January 1, 2016, Ms. Senecal assumed the exclusive role as Global Chief Executive Officer of CPB. Ms. Senecal’s husband, William Grogan, has been employed by the Company since July 1, 2015 as President of Global Accounts. In 2015, Mr. Grogan’s total compensation from the Company and its affiliate (kbs+), including salary, bonus, and other benefits, totaled approximately $943,000. His compensation is commensurate with that of his peers.
Scott Kauffman is Chairman and Chief Executive Officer of the Company. His daughter, Sarah Kauffman, has been employed by KBS+ since July 2011, and currently acts as Director of Operations, Attention Partners. In 2015, her total compensation, including salary, bonus and other benefits, totaled approximately $125,000. Her compensation is commensurate with that of her peers.
Union Advertising; Peerage Realty and Baker Real Estate
In 2015, Union Advertising Canada LP (“Union”), a Partner Firm, provided certain website development and related marketing services to each of Peerage Realty Partners (“Peerage”) and Peerage’s subsidiary, Baker Real Estate Incorporated (“Baker”). Miles Nadal, the Company’s former CEO,Mark Penn is the majority equity ownerCEO and Chairman of Peerage and Baker. The amount of fees paid by each of Peerage and Baker to Union in respect of these services in 2015 was $130,662, which fees were customary for these types of services.
Other than as described above, no director, officer, principal shareholder or proposed nominee for election as a director of MDC and no associate or affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction since the beginning of MDC’s last completed fiscal year or in any proposed transaction which, in either such case, has materially affected or will materially affect MDC.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
The Audit Committee is responsible for assisting the Board in serving as an oversight to MDC Partners’ accounting, auditing, financial reporting, internal control and legal compliance functions. The Audit Committee has implemented procedures to ensure that during the course of each fiscal year, it devotes the attention that it deems necessary or appropriate to each of the matters assigned to it under its charter including, whenever appropriate, meeting in executive sessions with MDC Partners’ independent auditors without the presence of MDC Partners’ management.
Management is responsible for the financial reporting process, including the system of internal controls, for the preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and for the report on the Company’s internal control over financial reporting. The Company’s independent auditors are responsible for auditing those financial statements and expressing an opinion as to their conformity with GAAP and for opining on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s responsibility is to oversee and review the financial reporting process and to review and discuss the status and completed copy of management’s report on the Company’s internal control over financial reporting.
The Audit Committee reviewed and discussed with management and BDO USA, LLP management’s assessment of the Company’s internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, including the matters more fully disclosed in Item 9A (Controls and Procedures) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
In overseeing the preparation of MDC Partners’ financial statements, the Audit Committee met with both management and MDC Partners’ outside auditors to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with GAAP, and the Audit Committee discussed the statements with both management and the outside auditors.
With respect to MDC Partners’ outside auditors, the Audit Committee, among other things, discussed with BDO USA, LLP matters relating to its independence, and received from BDO USA, LLP written disclosures and a letter from BDO USA, LLP as required by the applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by PCAOB Standard No. 16, “Communications with Audit Committee,” as amended, which includes, among other items, matters related to the conduct of the annual audit of MDC Partners’ financial statements.
On the basis of their reviews and discussions, the Audit Committee recommended to the Board that the Board approve (and the Board has approved) the inclusion of MDC Partners’ audited financial statements in MDC Partners’ Annual Report on Form 10-K for the fiscal year ended December 31, 2015, for filing with the Securities and Exchange Commission and the Canadian Securities Administrators.
Effective April 1, 2006 the Company engaged BDO USA, LLP (“BDO USA”) as its independent registered public accounting firm. The decision to engage BDO USA was made by the Audit Committee of the Board of Directors and the Board of Directors of the Company and is also the manager of the Stagwell Group LLC.
Related Party Transaction A subsidiary of the Company provides polling services to a non-profit client in which the spouse of Mark Penn is the CEO. Under the arrangement, the Company recognized revenue of approximately $379,000 in 2022. A subsidiary of the Company provides polling services to a client that is an affiliate of the majority owner of Stagwell Media LP, which is the majority owner of the Company. Under the arrangement, the Company recognized revenue of approximately $2,365,000 in 2022. A subsidiary of the Company provides creative and media services to Bell Canada. Wade Oosterman, a member of our Board, is Vice Chair of Bell Canada. Under the arrangement, the Company recognized revenue of approximately $1,320,000 in 2022. A subsidiary of the Company purchases media, on behalf of its client, from Bell Media. Wade Oosterman is the President of Bell Media. The Committeetotal of such purchases in 2022 was approximately $365,000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding the beneficial ownership of our shares of Class A Common Stock and Class C Common Stock as of April 19, 2023 by each beneficial owner of more than five percent of each such class of shares known to us, by each of our directors, by each of our named executive officers, and the Board have also approved,current directors and submittedexecutive officers as a group. The address for shareholder approval,persons for which an address is not otherwise provided in the selectionfootnotes below is c/o Stagwell Inc., One World Trade Center, Floor 65, New York, NY 10007. | | | | Voting Shares Beneficially Owned(1) | | | Name | | | Class A
Shares | | | Class A
% | | | Class C
Shares | | | Class C
% | | | Total
Voting
Power
%(5) | | Mark Penn – Direct(2) | | | | | 3,817,924 | | | | | | 2.9% | | | | | | | | | | | | | | | | | | 1.3% | | | – Indirect(3) | | | | | 14,197,837 | | | | | | 10.9% | | | | | | 160,909,058 | | | | | | 100% | | | | | | 60.1% | | | Charlene Barshefsky(4) | | | | | 119,264 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | | Bradley Gross | | | | | — | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Wade Oosterman(5) | | | | | 83,256 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Desirée Rogers(4) | | | | | 118,226 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Eli Samaha – Direct(4) | | | | | 46,008 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | – Indirect(6) | | | | | 7,147,662 | | | | | | 5.5% | | | | | | | | | | | | | | | | | | 2.5% | | | Irwin Simon(4) | | | | | 134,219 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Rodney Slater(4) | | | | | 46,008 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Brandt Vaughan(4) | | | | | 99,508 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Jay Leveton(7) | | | | | 484,285 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Frank Lanuto(8) | | | | | 1,055,604 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Ryan Greene(9) | | | | | 216,370 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | Vincenzo DiMaggio(10) | | | | | 176,383 | | | | | | * | | | | | | | | | | | | | | | | | | * | | | All directors and officers as a group (14 persons) – Direct(11) | | | | | 6,513,619 | | | | | | 4.9% | | | | | | | | | | | | | | | | | | 2.2% | | | – Indirect(3)(6) | | | | | 21,345,499 | | | | | | 16.4% | | | | | | 160,909,058 | | | | | | 100% | | | | | | 62.5% | | | The Stagwell Group LLC(3) | | | | | 14,197,837 | | | | | | 10.9% | | | | | | 160,909,058 | | | | | | 100% | | | | | | 60.1% | | | Goldman Sachs(12) | | | | | 16,980,553 | | | | | | 13.0% | | | | | | | | | | | | | | | | | | 5.8% | | | Hotchkis and Wiley Capital Management LLC(13) | | | | | 19,083,810 | | | | | | 14.6% | | | | | | | | | | | | | | | | | | 6.5% | | |
*
The percentage of BDO USA, LLP as MDC Partners’ independent auditors for the fiscal year ending December 31, 2016.The Audit Committee’s current charter is appended to this Circular as Exhibit A.
Audit Committeeshares beneficially owned does not exceed one percent of the Board
Anne Marie O’Donovan (Chair)
Michael Kirby
Larry Kramer
Clare Copeland
Irwin Simon
outstanding shares.
(1)
ITEM 2 — APPOINTMENT OF AUDITORS
AND AUTHORIZING THE AUDIT COMMITTEE TO DETERMINE ITS REMUNERATION
Subject to the action of the shareholders, upon recommendation of the Audit Committee, the Board has recommended to the shareholders the appointment of BDO USA, LLP, independent registered public accountants, to audit and report on the consolidated financial statements of MDC Partners for the fiscal year ending December 31, 2016 and to perform such other services as may be required of them. BDO USA, LLP has served as independent public accountants for MDC Partners since April 1, 2006. The Board has directed that management submit the appointment of the auditors for approval by the shareholders at the Meeting. Representatives of BDO USA, LLP are expected to be present at the meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.
Unless otherwise instructed,noted, the Company believes that all persons named in the accompanying proxy (provided the same is duly executed in their favor and is duly deposited) intend to vote FOR the appointment of BDO USA, LLP, independent registered public accountants, as auditors of MDC Partners, to hold office until the close of the next annual meeting of shareholders of MDC Partners, at a remuneration to be fixed by the directors of MDC Partners. In addition to retaining BDO USA, LLP to audit MDC Partners’ consolidated financial statements for 2014 and 2015, the Company retained BDO USA, LLP to provide advisory, auditing and consulting services in 2014 and 2015. These services included audit services, audit-related services, tax services and other services. The following tables set forth the aggregate fees billed to MDC Partners by BDO USA, LLP for professional services in fiscal years 2014 and 2015:
BDO USA, LLP
| | | | | | | 2014 | | 2015 | | Audit Fees(1) | | $ | 2,240,753 | | | $ | 2,164,259 | | | Tax Fees(2) | | | 41,847 | | | | — | | | Audit Related Fees(3) | | | 21,040 | | | | 894,309 | | | All Other Fees | | | — | | | | — | | | Total | | $ | 2,303,640 | | | $ | 3,058,568 | |
| (1) | Fees for the annual financial statement audit, including internal control assessment related fees, quarterly financial statement reviews and regulatory comment letters. |
| (2) | Fees for services rendered for foreign tax services. |
| (3) | Fees for services rendered in connection with acquisition due diligence and other services in 2014. In 2015, includes fees for services rendered in connection with the ongoing SEC investigation. |
All fees listedtable above have been pre-approvedsole voting power and dispositive power with respect to all shares beneficially owned by them. For purposes of computing the Audit Committee. The Audit Committee has, however, delegated to the Chairmanpercentage of the Audit Committee the authority to pre-approve permitted non-audit services (as such services are definedoutstanding shares held by the Sarbanes-Oxley Act of 2002) provided that (i) the aggregate estimated amount of such fees will not exceed $25,000 and (ii) the Chairman of the Audit Committee reports any pre-approval so granted at the next scheduled meeting of the Audit Committee.
The Audit Committee Charter provides for the Audit Committee to establish the auditors’ fees. Such feeseach person or group named above, we have been based upon the complexity of the mattersincluded restricted shares in question and the time incurred by the auditors.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” APPOINTMENT OF BDO USA, LLP AS MDC PARTNERS’ AUDITORS
AND AUTHORIZING THE AUDIT COMMITTEE TO DETERMINE BDO USA, LLP’S REMUNERATION.
ITEM 3 — APPROVAL OF THE 2016 STOCK INCENTIVE PLAN
General
The Board has adopted, subject to stockholder approval, the 2016 Stock Incentive Plan (the “2016 Incentive Plan”), a copy of which is annexed hereto asExhibit C. The purpose of the 2016 Incentive Plan is to promote the interests of MDC Partners and its shareholders by providing incentives to the non-employee directors and employees of the Company and its subsidiaries who are largely responsible for the management, growth and protection of the business of the Company. The 2016 Incentive Plan is designed to meet this intent by providing such employees and eligible non-employee directors with a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company.
The Board adopted the 2016 Incentive Plan as a replacement for the Company’s 2011 Stock Incentive Plan, as amended, which was approved by shareholders on June 1, 2011 (the “Prior Plan”). The 2016 Incentive Plan contains terms and conditions that reflect developments in corporate governance and other rules and regulations since the adoption of the Prior Plan and is designed to replenish the number of shares availableoutstanding as of April 19, 2023. In addition, for purposes of computing the percentage of outstanding shares held by each person or group named above, any shares which that person or group has the right to acquire within 60 days of April 19, 2023, is deemed to be outstanding, but is not deemed to be outstanding for the Company.
The 2016 Incentive Plan authorizespurpose of computing the issuancepercentage ownership of awards with respect toany other person or group.
(2)
Includes 1,823,970 unvested restricted shares and a maximum of 1,500,000 shares issuable upon exercise of MDC Partners’ Class A Subordinate Voting Shares or any other security into which such shares may be exchanged (“Shares”). This amount represents approximately 2.98% of the Company’s issued and outstanding shares as of March 31, 2016. As of April 1, 2016, the aggregate number of Shares remaining available under the Prior Plan is 428,507. With respect to the shareholder approval of the 2016 Incentive Plan, approximately 1,300,000 Shares will be excluded from voting on the resolution to approve the 2016 Incentive Plan.The material terms of the 2016 Incentive Plan are summarized below. The summary is not intended to be a complete description of the terms of the 2016 Incentive Plan. The full text of the 2016 Incentive Plan is attached hereto as Exhibit C. In the event of any inconsistency between the summary set forth below and the terms of the 2016 Incentive Plan, the terms of the 2016 Incentive Plan will govern.
Eligible Participants and Types of Awards
The 2016 Incentive Plan provides for the grant to non-employee directors and employees of the Company and, at the discretion of any of the foregoing persons and subject to any required regulatory approvals and conditions, any personal holding company controlled by such person, of non-qualified stock options (“Options”), tandem and stand-alonevested stock appreciation rights (“SARs”).
(3)
Mr. Penn, our Chairman and CEO, is also manager of The Stagwell Group LLC, an affiliate of Stagwell Agency Holdings LLC and Stagwell Media LP. The Schedule 13D/A filed with the SEC on March 14, 2023 by Stagwell Agency Holdings LLC, The Stagwell Group LLC, Mark Penn, Stagwell Media LP and
Stagwell Friends and Family LLC, as such information is updated by the Form 4 filed with the SEC on March 22, 2023 by Mark Penn, reports the number of shares as to which The Stagwell Group LLC has shared voting and dispositive power is 14,197,837 shares of Class A Common Stock and 160,909,058 shares of Class C Common Stock. The address of The Stagwell Group LLC is 1808 I Street, NW, Sixth Floor, Washington, DC 20006. (4)
Includes 21,008 unvested restricted shares. (5)
Excludes 21,008 restricted stock units. (6)
Mr. Samaha is the Managing Partner of Madison Avenue Partner, LP, which manages funds that hold 7,147,662 shares of Class A Common Stock. (7)
Includes 453,426 unvested restricted shares. (8)
Includes 450,615 unvested restricted shares and other stock-based awardsthe maximum of 450,000 shares issuable upon exercise of vested SARs. (9)
Includes 212,109 unvested restricted shares. (10)
Includes 118,459 unvested restricted shares. (11)
Includes 3,297,785 unvested restricted shares and the maximum of 1,950,000 shares issuable upon exercise of vested SARs. (12)
The Form 4 filed with the SEC on March 24, 2023 by The Goldman Sachs Group, Inc., Goldman, Sachs & Co. LLC, Broad Street Principal Investments, L.L.C., StoneBridge 2017, L.P., StoneBridge 2017 Offshore, L.P., and Bridge Street Opportunity Advisors, L.L.C. (collectively, referredthe “Goldman Sachs Parties”) reports that the number of shares as to hereinwhich The Goldman Sachs Group, Inc. and Goldman Sachs & Co. LLC, as “Incentive Awards”). Incentive Awards may be settled in cash or in Shares. Approximately 6,000 persons are currently eligible to participatesuch information is updated by the Form 4 filed with the SEC on March 24, 2023 by the Goldman Sachs Parties, is 16,980,553 shares of Class A Common Stock. The address of each of the Goldman Sachs Parties is 200 West Street, New York, NY 10282. (13)
Reflects (i) sole dispositive power over 17,083,810 shares of Class A Common Stock as of December 31, 2022, as reported in the 2016 Incentive Plan.Shares Available for AwardsSchedule 13G filed with the SEC on February 13, 2023 by Hotchkis and Award Limitations
Shares issued under the 2016 Incentive Plan may be either authorizedWiley Capital Management, LLC (“Hotchkis and unissued Shares or treasury Shares. In addition to the limit on the aggregate number of Shares that are authorized to be issued pursuant to the 2016 Incentive Plan described above, the maximum number of Shares that may be covered by Incentive Awards granted to any single participant in the 2016 Incentive Plan (a “Participant”Wiley”) in any fiscal year shall not exceed 300,000 Shares (representing significantly less than 1% of the current issued and outstanding Shares of the Company), prorated on a daily basis for any fiscal year that is shorter than 365 days, and the aggregate equity awards that may be issued under the 2016 Incentive Plan to executive officers in a given fiscal yearwhich information may not exceed 2%be current as of April 19, 2023, and (ii) an additional 2,000,000 shares of Class A Common Stock purchased in an underwritten public offering on March 14, 2023. The address of Hotchkis and Wiley is 601 S. Figueroa Street, 39th Fl, Los Angeles, CA 90017.
Changes in Control To our knowledge, there are no present arrangements or pledges of the Company’s issued and outstanding Shares. In addition, each independent Director shall not receive Incentive Awards (including option grants) with a current market value in excess of $150,000 or option grants with a current market value in excess of $100,000 in any given fiscal year. There are no other limits on the number of Sharessecurities that may be granted under the 2016 Incentive Plan.Minimum Vesting Period of One (1) Year for all Incentive Awards
In no event shall any new Incentive Award granted under the 2016 Stock Incentive Plan vest or otherwise become payable earlier than one (1) year following the date on which it is granted, other than upon the occurrence of a permitted acceleration event.
Effect of Changeresult in Control
Any new Incentive Award granted under the 2016 Stock Incentive Plan that is subject to time-based vesting terms and conditions shall not become fully and immediately vested and exercisable solely as a result of the occurrence of a change of control, absent a termination of employment without cause or for good reason following any such change of control. In addition, any new Incentive Award granted under the 2016 Stock Incentive Plan that is subject to performance-based vesting terms and conditions shall not become fully and immediately vested and exercisable solely as a result of the occurrence of change of control, absent a termination of employment without cause or for good reason following any such change of control and shall be adjusted on a pro-rata basis as determined by the Committee.
Prohibition on Substitutions and Repricing
In no event will any new Incentive Awards be issued in substitution for outstanding Incentive Awards previously granted to Participants, and no repricing of Incentive Awards is permitted at any time under any circumstances, unless the shareholders of the Company expressly approve such substitution or repricing.
Administration
The 2016 Incentive Plan will be administered by the Human Resources & Compensation Committee of the Company’s Board, or such other committee as the Board shall appoint from time to time (the “Committee”). The Committee shall from time to time designate those persons who shall be granted Incentive Awards and the amount, type and other terms and conditions of such Incentive Awards. All of the powers and responsibilities of the Committee under the 2016 Incentive Plan may be delegated by the Committee, in writing, to any subcommittee thereof. In addition, the Committee may from time to time authorize a committee consisting of one or more Directors to grant Incentive Awards to persons who are not “executive officers” of the Company (within the meaning of such term pursuant to Rule 16a-1 of the Exchange Act), subject to such restrictions and limitations as the Committee may specify.
The Committee will have full authority to administer the 2016 Incentive Plan, including authority to interpret and construe any provision of the 2016 Incentive Plan and the terms of any Incentive Award issued under it and to adopt such rules and regulations for administering the 2016 Incentive Plan, as it may deem necessary. On or after the date of grant of an Incentive Award under the 2016 Incentive Plan, the Committee may (i) extend the term of any Incentive Award, including, without limitation, extending the period following a termination of a Participant’s employment during which any Incentive Award may remain outstanding, (ii) waive any conditions to the exercisability or transferability of any Incentive Award or (iii) provide for the payment of dividends or dividend equivalents with respect to any Incentive Award. Decisions of the Committee shall be final and binding on all Participants. No member of the Committee shall be liable for any action, omission or determination relating to the 2016 Incentive Plan, and MDC Partners indemnifies and holds harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the 2016 Incentive Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the 2016 Incentive Plan, unless, in either case, such action, omission or determination was taken or made by such member, director or employee in bad faith and without reasonable belief that it was in the best interests of the Company.
Incentive Awards That Will Be Granted
The number and type of Incentive Awards that will be granted in the future under the 2016 Incentive Plan, or that would have been granted had the 2016 Incentive Plan been in effect during the Company’s last fiscal year, are not determinable.
Significant Features of Incentive Awards
Options. Each Option shall entitle the holder thereof to purchase a specified number of Shares. The exercise price of each Option will be equal to at least 100% of the fair market value of a Share on the date on which the Option is granted. “Fair Market Value” means, as of the applicable date of determination, the closing sales price of the Shares on the immediately preceding business day as reported on the principal
securities exchange on which such Shares are then listed or admitted to trading. Options will have terms that do not exceed ten years and will have vesting periods of at least one year, except that vesting may occur in less than one year in the event that certain performance conditions attached to the Option (or with respect to other Incentive Awards) are satisfied, there is an increase or decrease in the number of issued Shares resulting from a subdivision or consolidation or the payment of a stock dividend on the Shares or any other increase or decrease in the number of such Shares effected without receipt or payment of consideration by the Company, a merger, consolidation, dissolution or liquidation of MDC Partners, or there is a termination of the employment of a Participant other than for cause or voluntary resignation prior to retirement (“Permitted Acceleration Events”). Each Option shall be subject to earlier termination, expiration or cancellation as provided in the 2016 Incentive Plan or in the agreement evidencing such Option.
Tandem Stock Appreciation Rights. The Human Resources & Compensation Committee of the Company’s Board, or such other committee as the Board shall appoint from time to time, which administers the 2016 Incentive Plan, may grant, in connection with any Option, a tandem SAR (“Tandem SAR”). The exercise price per Share of any Tandem SAR will be equal to at least 100% of the fair market value of a Share on the date on which the Tandem SAR is granted, except that the exercise price of a Tandem SAR that is granted after the grant of the related Option may be less than such amount if it is at least equal to the exercise price of the related Option. In general, the exercise of a Tandem SAR by a Participant entitles the Participant to an amount (in cash, Shares or a combination of cash and Shares), with respect to each Share subject thereto, equal to the excess of the fair market value of a Share on the exercise date over the exercise price of the Tandem SAR. The exercise of a Tandem SAR with respect to a number of Shares causes the cancellation of its related Option with respect to an equal number of Shares, and the exercise, cancellation or expiration of an Option with respect to a number of Shares causes the cancellation of its related Tandem SAR with respect to an equal number of Shares.
Stand-Alone Stock Appreciation Rights. The Committee may grant SARs that do not relate to Options (“Stand-Alone SARs”). The exercise price per Share of any Stand-Alone SAR will be at least 100% of the fair market value of a Share on the date on which the Stand-Alone SAR is granted. In general, the exercise of a Stand-Alone SAR by a Participant entitles the Participant to an amount (in cash, Shares or a combination of cash and Shares), with respect to each Share subject thereto, equal to the excess of the fair market value of a Share on the exercise date over the exercise price of the Stand-Alone SAR.
Other Stock Based Awards. The Committee may grant equity-based or equity-related Incentive Awards other than Options and SARs in such amounts and subject to such terms and conditions as the Committee determines. Each such Incentive Award may (i) involve the transfer of actual Shares, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of Shares, (ii) be subject to performance-based and/or service-based conditions and (iii) be in the form of phantom stock, restricted stock, restricted stock units, performance shares, or share-denominated performance units. No such Incentive Award will vest or otherwise become payable earlier than three years following the date on which it is granted, other than upon the occurrence of a Permitted Acceleration Event.
Performance Based Compensation. The Committee may grant Incentive Awards that are intended to qualify under the requirements of Section 162(m) of the Tax Code as “qualified performance-based compensation.”
The performance goals upon which the payment or vesting of any Incentive Award (other than Options and SARs) that is intended to so qualify will relate to one or more of the following performance measures: revenue growth, achievement of EBITDA targets, operating income, operating cash flow, net income, earnings per share, cash earnings per share, return on sales, return on assets, return on equity, return on invested capital and total shareholder return. In the event that the requirements of Section 162(m) and the regulations thereunder change to permit Committee discretion to alter the performance measures, the Committee will have discretion to make such changes. Performance periods may be equal to or longer than, but not less than, one fiscal year of the Company. Within 90 days after the beginning of a performance period, and in any case before 25% of the performance period has elapsed, the Committee shall establish (a) performance goals and
objectives for the Company for such performance period, (b) target awards for each Participant, and (c) schedules or other objective methods for determining the applicable performance percentage to be applied to each such target award.
The measurement of any performance measure may exclude the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of accounting changes, each as defined by generally accepted accounting principles and as identified in the Company’s audited financial statements, including the notes thereto. Any performance measures may be used to measure the performance of the Company or a subsidiary as a whole or any business unit of the Company or any subsidiary or any combination thereof, as the Committee may deem appropriate, or any of the above performance measures as compared to the performance of a group of comparator companies, or a published or special index that the Committee, in its sole discretion, deems appropriate.
General Plan Provisions
Adjustments Upon Changes in Capitalization. The 2016 Incentive Plan provides for an adjustment in the number of Shares available to be issued under the 2016 Incentive Plan, the number of Shares subject to Incentive Awards and the exercise prices of certain Incentive Awards upon a change in the capitalizationcontrol of the Company, a stock dividend or split, a merger, consolidation, combination or exchange of Shares and certain other similar events.
Tax Withholding. The 2016 Incentive Plan provides that Participants may elect to satisfy certain federal income tax withholding requirements by remitting to the Company cash or, subject to certain conditions, Shares or by instructing the Company to withhold Shares payable to the Participant.
Assignment and Transfer. Options and SARs may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant.
Amendment. The Board may at any time suspend or discontinue the 2016 Incentive Plan or revise or amend it in any respect whatsoever, except that, in general, no revision or amendment may, without the approval of shareholders of the Company, (i) increase the number of Shares that may be issued under the Plan or (ii) materially modify the requirements as to eligibility for participation in the 2016 Incentive Plan. No action may, without the consent of the Participant, reduce the Participant’s rights under any previously granted and outstanding Incentive Award.
Term of the Plan. No grants may be made under the 2016 Incentive Plan after April 22, 2026.
U.S. Federal Income Tax Consequences
The following is a summary of the principal U.S. federal income tax consequences generally applicable to the Company and to participants upon the grant and exercise of Incentive Awards under the Plan under the now applicable provisions of the Code and the regulations thereunder.
Tax Consequences to a Participant. In general, a participant will not be deemed to receive any income nor will he be taxed upon grant of an Option or SAR. Generally, a participant will have ordinary income upon exercise of an Option in an amount equal to the excess of the fair market value on the date of exercise of the shares purchased over the exercise price paid upon exercise. A participant generally will not recognize income at the time a restricted stock award is granted. When the restrictions lapse and the stock vests, the participant will recognize ordinary income equal to the fair market value of the common stock as of that date (less the amount he or she paid for the stock, if any). A participant may make a special election underCompany.
Delinquent Section 83(b) of the Code to be taxed on restricted stock at the time of grant, in which case subsequent appreciation will be taxable at capital gains rates. A participant generally will not recognize income upon grant of the restricted stock unit. Upon issuance of cash or shares of common stock in settlement of a restricted stock unit award, the participant will recognize ordinary income equal to the fair market value of the common stock underlying such award as of that date.16(a) Reports
If the participant surrenders previously-owned shares in payment of any or all of the exercise price of an Option, the shares received upon exercise of such Option equal in number to the previously-owned shares so surrendered would have the tax basis and capital gain holding period applicable to such surrendered shares. The additional shares received upon exercise would have a tax basis equal to the amount taxable as ordinary income upon such exercise (as described in the immediately preceding paragraph) plus the cash paid on exercise (if any) and a new capital gain holding period commencing on the date following the date of exercise.
Tax Consequences to the Company. As a general matter, the Company or an affiliate of the Company that employs a participant will be entitled to take a deduction in an amount equal to the amount of ordinary income recognized by the participant at the time the participant recognizes ordinary income in respect of Incentive Awards. For example, with respect to an Option or SAR, the grant and vesting do not have tax consequences to the Company. The Company or an affiliate of the Company that employs a participant generally will be entitled to a federal income tax deduction in an amount equal to the amount of compensation income, taxable as ordinary income, recognized by the participant as a result of the exercise of an Option or SAR in the year of recognition by the participant, subject to any applicable limitations under Section 162(m) of the Internal Revenue Code.
The Resolution
The resolution approving the 2016 Incentive Plan requires a simple majority of the votes cast at the Meeting, excluding approximately 1,300,000 votes of insiders of the Company who are entitled to participate in the 2016 Incentive Plan and their associates. Broker non-votes are not permitted to be voted on this matter. The resolution is also subject to acceptance by NASDAQ. The Board therefore seeks your approval and support for the following resolution:
RESOLVED:
THAT the 2016 Incentive Plan of the Company, which authorizes the issuance of 1,500,000 Class A Subordinate Voting Shares of the Company, is hereby approved; and
THAT any director or executive officer of the Company be and is hereby authorized to notify and/or to seek approval of NASDAQ if required, of the approval of the 2016 Stock Incentive Plan and to do all such acts and things and to execute and file such other documents, whether under the corporate seal of the Company or otherwise, that may be necessary or desirable to give effect to this resolution.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” APPROVAL OF THE 2016 STOCK INCENTIVE PLAN.
ITEM 4 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
The guiding principles of the Company’s compensation policies and decisions include aligning each executive’s compensation with our business strategy and the interests of our shareholders and providing incentives needed to attract, motivate and retain key executives who are important to our long-term success. Consistent with this philosophy, a significant portion of the total incentive compensation for each of our executives is directly related to the Company’s earnings and to other performance factors that measure our progress against the goals of our strategic and operating plans, as well as performance against our peers.
Shareholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, as well as the Summary Compensation Table and other related compensation tables and narrative, which discuss how our compensation design and practices reflect our compensation philosophy. The Compensation Committee and the Board of Directors believe that our compensation design and practices are effective in implementing our guiding principles.
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a matter of good corporate governance, we are asking shareholders to approve the following advisory resolution at the 2016 Annual Meeting of Shareholders:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion contained in this Proxy Statement, is hereby APPROVED.”
This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee value the opinions of our shareholders and will review and consider the voting results when making future decisions regarding our executive compensation program. The Company currently intends to hold such votes annually. The next such vote will be held at the Company’s 2017 Annual Meeting of Shareholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, each person serving as a director or executive officer during the Company’s directors, executive officerslast fiscal year and any persons holding 10% or more of the common stock are required to report their ownership of common stock and any changes in that ownership to the SEC within a prescribed period of time and to furnish the Company with copies of such reports. To the Company’s knowledge, based solely upon a review of copies of such reports received by the Company which were filed with the SEC for the fiscal year ended December 31, 2015,2021, and upon written representations from such persons that no other reports were required, the Company has been advised that all reports required to be filed under Section 16(a) have been timely filed with the SEC. ADDITIONAL INFORMATION
SEC except for the Forms 4 for Mark Penn filed on August 17, 2022 and December 30, 2022, each with respect to the exchange by Stagwell Media LP and Stagwell Friends and Family LLC of Class C Common Stock for Class A copyCommon Stock and the subsequent distribution of the Class A Common Stock.
PROPOSAL 4
ADVISORY VOTE ON FREQUENCY OF FUTURE VOTES ON EXECUTIVE COMPENSATION Pursuant to Section 14A of the Exchange Act, we are asking stockholders to vote on whether future advisory votes on executive compensation of the nature reflected in Item 4 above should occur every one year, every two years or every three years. After careful consideration, the Board of Directors has determined that continuing its current policy to hold an advisory vote on executive compensation every year is the most appropriate policy for the Company at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every year. While the Company’s executive compensation programs are designed to promote a long-term connection between pay and performance, the Board of Directors recognizes that executive compensation disclosures are made annually. Holding an annual advisory vote on executive compensation provides the Company with more direct and immediate feedback on our compensation disclosures. We believe that an annual advisory vote on executive compensation is consistent with our practice of seeking input and engaging in dialogue with our stockholders on corporate governance matters (including the Company’s practice of having all directors elected annually and annually providing stockholders the opportunity to ratify the Audit Committee’s selection of independent auditors) and our executive compensation philosophy, policies and practices. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board of Directors. Stockholders will be able to specify one of four choices for this proposal on the proxy card: every one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. Although non-binding, the Board and the Human Resources and Compensation Committee will carefully review the voting results. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EVERY “ONE YEAR” WITH RESPECT TO HOW FREQUENTLY FUTURE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION SHOULD OCCUR
PROPOSAL 5
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023 and the Board has directed that management submit the selection of independent registered public accounting firm for ratification by the stockholders at the 2023 Annual Meeting. Representatives of PwC, which we engaged to serve as the Company’s independent registered public accounting firm effective March 16, 2023, are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of PwC as our independent registered public accounting firm. However, the Board is submitting the selection of PwC to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders. Change in Independent Registered Public Accounting Firm As previously disclosed in our Current Report on Form 8-K filed March 21, 2023, on March 16, 2023, following the completion of a competitive selection process conducted by our Audit Committee to determine the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023, the Company selected PwC to serve as the Company’s independent registered public accounting firm, effective immediately, and notified Deloitte & Touche LLP (“Deloitte”) of its dismissal as the Company’s independent registered public accounting firm effective as of that date. Representatives of Deloitte are not expected to be present at the Annual Meeting. The competitive selection process conducted by the Audit Committee involved multiple prominent registered public accounting firms, and the Audit Committee’s decision to approve the selection of PwC and dismissal of Deloitte was taken in order to reduce ongoing costs related to the Company’s annual audit. Deloitte’s reports on the Company’s financial statements for each of the years ended December 31, 2022 and 2021 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that they expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses. During each of the years ended December 31, 2022 and 2021, and the subsequent interim period through March 16, 2023, there were no “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreement in its reports on the Company’s financial statements for such years. There were no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K) during either of the years ended December 31, 2022 and 2021, and the subsequent interim period through March 16, 2023, except that the Company identified material weaknesses in its internal control over financial reporting during each such period. The material weaknesses related to the Company’s failure to effectively select and develop certain information technology general controls related to access and change management controls that led to deficiencies in the design and operation of control activities, including segregation of duties deficiencies as well as deficiencies in the design and operation of account reconciliations. These deficiencies and a lack of sufficient resources contributed to the potential for there to have been material errors in the Company’s financial statements and therefore resulted in the following additional material weaknesses: 1.
Risk Assessment-control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) identifying, assessing, and communicating appropriate objectives,
(ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact the system of internal controls; 2.
Control Activities-control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to: (i) addressing relevant risks, (ii) providing evidence of performance, (iii) providing appropriate segregation of duties, or (iv) operation at a level of precision to identify all potentially material errors; 3.
Information and Communication-control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control; and 4.
Monitoring-control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to monitoring activities to ascertain whether the components of internal control are present and functioning. These material weaknesses were identified and initially reported in the Company’s Annual Report on Form 10-K filed by MDC Partners with the Securities and Exchange Commission for 2015 is available, without charge, to shareholders at MDC Partners’ website atwww.mdc-partners.com, on the Securities and Exchange Commission’s website atwww.sec.gov, on the SEDAR website atwww.sedar.com, or upon written request to 745 Fifth Avenue, 19th Floor, New York, NY 10151, Attention: Investor Relations. Financial information is provided in MDC Partners’ consolidated financial statements and Management’s Discussion & Analysis for the year ended December 31, 2015. A2021, and subsequently reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and have not been remediated as of the date of this Proxy Statement. The Audit Committee discussed the reportable events described above with Deloitte, and the Company has authorized Deloitte to respond fully to the inquiries of PwC concerning these reportable events. The Company had provided Deloitte with a copy of MDC Partners’ most recent consolidated financial statements,its Current Report on Form 8-K filed March 21, 2023 (wherein it first reported the information discussed under this caption) prior to its filing with the SEC and requested that Deloitte furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements; a copy of Deloitte’s letter is filed as Exhibit 16.1 thereto. During each of the years ended December 31, 2022 and 2021, and the subsequent interim period through March 16, 2023, neither the Company nor anyone acting on its behalf has consulted with PwC regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that PwC concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K; or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K. Principal Accountant Fee and Services The following table sets forth the aggregate fees billed to the Company by Deloitte for the fiscal years ended December 31, 2021 and 2022: | | | | 2021 | | | 2022 | | Audit Fees(1) | | | | $ | 7,430,000 | | | | | | 7,578,036 | | | Audit-Related Fees(2) | | | | | ― | | | | | | 545,000 | | | Tax Fees(3) | | | | $ | 3,077,910 | | | | | | 2,034,208 | | | All Other Fees(4) | | | | $ | 3,958 | | | | | | 2,063 | | | | Total | | | | $ | 10,511,868 | | | | | | 10,159,307 | | |
(1)
Consists primarily of fees for the audit of annual financial statements and the audit of the effectiveness of internal control over financial reporting, review of quarterly financial statements, review of SEC registration statements and related consents, and services in connection with statutory or regulatory filings. (2)
Consists primarily of fees for assurance and audit-related services not directly related to the audits.
Audit-Related fees include permissible advisory services related to internal controls over financial reporting and agreed upon procedures related to certain contractual requirements. (3)
Consists primarily of tax compliance and return preparation, and tax planning and advice. Tax compliance and return preparation services consist of preparing original and amended tax returns and claims for refunds. Tax planning and advice services consist of support during income tax audits or inquiries. (4)
Consists of fees for licenses to online accounting information and general education accounting guidance. Pre-Approval Policies and Procedures The Audit Committee approves all audit and non-audit related services provided by our independent registered public accounting firm before the engagement begins. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual, explicit, case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the pre-approval decision must be reported to the full Audit Committee at its next meeting. Prior to the Business Combination, all of the services listed in the table above were pre-approved by Stagwell Marketing in accordance with its policies then in effect. Following the Business Combination, all of the services listed in the table above were pre-approved by the Audit Committee. Vote Required for Approval The affirmative vote of the holders of a majority of the voting power present in person or represented by proxy statement and management information circular may also be obtained by shareholders, without charge, upon written request from the Secretary of MDC Partners or from the Securities and Exchange Commission’s website atwww.sec.gov or the SEDAR website atwww.sedar.com.SHAREHOLDER PROPOSALS FOR 2017 ANNUAL GENERAL MEETING
Under certain circumstances, stockholders are entitled to present proposals at stockholder meetings. The 2017 Annual Meeting of Stockholders is expected to be held on or about June 2, 2017. In accordance with the rules established by the SEC, any shareholder proposal submitted pursuant to Rule 14a-8 of the Exchange Act (“Rule 14a-8”) intended to be included in the proxy materials for the 2017 Annual Meeting of Stockholders must be received by the Secretary of the Company, 745 Fifth Avenue, 19th Floor, New York, NY 10151, by December 23, 2016, in a form that complies with the Company’s Bylaws and applicable requirements. Any proposal submitted after December 23, 2016, will not be considered timely for the purposes of Rule 14a-8.
Moreover, unless a shareholder who wishes to present a proposalvote at the Annual Meeting outsidewill be required to ratify the processesselection of Rule 14a-8 has submitted suchPwC as the Company’s independent registered public accounting firm. Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, then “For” approval of this proposal. Abstentions will be counted toward the tabulation of votes cast on this proposal to us by the close of business on March 8, 2017, subject to applicable rules, weand will have discretionary authoritythe same effect as negative votes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
HOUSEHOLDING OF PROXY MATERIALS The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to vote on any such proposalsatisfy the delivery requirements for Notice of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to all proxies submittedtwo or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies. This year, a number of brokers with account holders who are stockholders will be “householding” our proxy materials. A single Notice of Internet Availability of Proxy Materials or other Annual Meeting 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 they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, please notify your broker. Stockholders who currently receive multiple copies of the proxy statement and annual report at their addresses and would like to request “householding” of their communications should contact their brokers. NO INCORPORATION BY REFERENCE In our filings with the SEC, information is sometimes “incorporated by reference.” This means that we are referring you to information that has previously been filed with the SEC and the information should be considered as part of the particular filing. As provided under SEC regulations, the “Report of the Audit Committee of the Board” contained in this Proxy Statement specifically is not incorporated by reference into any other filings with the SEC and is not deemed to be “Soliciting Material.” In addition, this Proxy Statement includes several website addresses or references to additional company reports or policies found on those websites. These website addresses are intended to provide inactive, textual references only. The information on these websites, including the information contained in those reports and policies, is not part of this Proxy Statement and is not incorporated by reference. ADDITIONAL INFORMATION A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 is available free of charge at the SEC’s website at www.sec.gov, on our website at https://www.stagwellglobal.com/ investors/or upon written request to us even when we do not include in our proxy statement advice on the natureat ir@stagwellglobal.com. OTHER MATTERS The Board of the matter and how we intend to exercise our discretion to vote on the matter.GENERAL
ManagementDirectors knows of no matter to come before the Meeting other than the matters referred to in the accompanying Notice. If any matters which are not now known should properly come before the Meeting, the accompanying proxy instrument will be voted on such matters in accordance with the best judgment of the person voting it.
The contents and sending of this Proxy Statement and Management Information Circular have been approved by the Board as of the date hereof.
By Order of the Board ![[GRAPHIC MISSING]](https://capedge.com/proxy/DEF 14A/0001144204-16-095623/sig_mitchell-gendel.jpg)
Mitchell S. Gendel
of Directors
Edmund D. Graff
Senior Vice President, Deputy General Counsel and Corporate Secretary New York, N.Y.
April 22, 2016NY
May 1, 2023
APPENDIX ACHARTER OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF MDC PARTNERS
STAGWELL INC.
AS ADOPTED AND AMENDED BY THE BOARD
OCTOBER 28, 2015I. AUTHORITY
2023 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1
PURPOSE The Board of Directors (the “Board”) of MDC Partners Inc. (the “Corporation”) has established an Audit Committee (the “Committee”). The Committee shall be comprised of three or more directors, as determined from time to time by resolution of the Board. Consistent with the appointment of other Board committees, the members of the Committee shall be elected by the Board at the annual organizational meeting of the Board or at such other time as may be determined by the Board. The Chairman of the Committee shall be designated by the Board, provided that if the Board does not so designate a Chairman, the members of the Committee, by majority vote, may designate a Chairman. The presence in person or by telephone of a majority of the Committee’s members shall constitute a quorum for any meeting of the Committee. All actions of the Committee will require the vote of a majority of its members present at a meeting of the Committee at which a quorum is present.II. PURPOSE OF THE COMMITTEE
The Committee’sPlan’s purpose is to provide assistance to the Board in fulfilling its fiduciary obligations and oversight responsibilities with respect to (1) the integrity of the Corporation’s financial statements, (2) the Corporation’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, and (4) the performance of the Corporation’s internal audit function and independent auditors. The Committee will also prepare the report that SEC rules require to be included in the Corporation’s annual proxy statement.
The Committee is directly responsible for the appointment (subject to shareholder approval), compensation, retention and oversight of the work of the Corporation’s independent auditor engaged for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for the Corporation. In accordance with the requirements of the Sarbanes-Oxley Act of 2002, the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder by the Securities and Exchange Commission (the “SEC”) and the rules of the Nasdaq, the independent auditor must report directly to the Committee and is accountable to the Committee (as representatives of the shareholders of the Corporation). The Committee’s oversight responsibilities include the authority to approve all audit engagement fees and terms, as well as all permitted non-audit engagements and resolution of disagreements between management and the independent auditor regarding financial reporting.
It is the objective of the Committee to maintain free and open means of communications among the Board, the independent auditor, internal audit and the financial and senior management of the Corporation.
III. COMPOSITION OF THE COMMITTEE
Independence
Each member of the Committee shall be an “independent” director within the meaning of Section 10A(m)(3) of the Exchange Act, Rule 10A-3(b)(1) thereunder, and Nasdaq Marketplace Rule 4200(a)(15) subject to applicable exceptions.
Financial Literacy and Expertise
All members of the Committee must be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. At least one member of the Committee shall be an “audit committee financial expert” as defined in Item 16A of SEC Form 20-F and at least one member shall have accounting or related financial experience as required under applicable Nasdaq rules.
The Committee shall ensure that the Corporation provides to applicable regulatory authorities any required certification relating to adequacy of this Charter and composition of the Committee.
IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
In carrying out its duties and responsibilities, the Committee’s policies and procedures should remain flexible, so that it may be in a position to best react or respond to changing circumstances or conditions. While there is no “blueprint” to be followed by the Committee in carrying out its duties and responsibilities, the following should be considered within the authority of the Committee (it being understood that the Committee may diverge from such matters as considered appropriate given the circumstances):
Selection and Evaluation of Auditors
| (a) | Select the firm of independent public accountants to audit the books and accounts of the Corporation and its subsidiaries for each fiscal year; |
| (b) | Annually review and approve the terms of engagement and approve the remuneration of Corporation’s independent auditor; and |
| (c) | Review the performance of the Corporation’s independent auditor and terminate or replace the independent auditor when circumstances warrant. |
Independence of Auditors
| (a) | Ensure that the Corporation’s independent auditor is independent and capable of exercising impartial judgment on all issues encompassed within its engagement. Regard shall be had to all applicable rules and regulations relating to independence, including those with respect to financial relationships, employment relationships, business relationships, the provision of non-audit services, contingent fees, partner rotation and compensation; |
| (b) | Ensure that the independent auditor delivers to the Committee on a periodic basis a formal written statement delineating all relationships between the independent auditor and the Corporation, consistent with the PCAOB Independence Standards Board Standard 1; |
| (c) | Actively engage in a dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditor; and |
| (d) | Take appropriate action to satisfy itself of the auditor’s independence. |
General Responsibility for Oversight of Auditors
| (a) | The Corporation’s independent auditor shall be ultimately accountable to the Committee and the Committee shall be responsible for the appointment (subject to shareholder approval), compensation, retention and oversight of the work of the Corporation’s independent auditor; |
| (b) | Pre-approve all audit and permitted non-audit services to be provided by the independent auditor. The Committee may approve policies and procedures for the pre-approval of services to be rendered by the independent auditor, which policies and procedures are detailed as to the particular service. All non-audit services to be provided to the Corporation or any of its subsidiaries by the independent auditor or any of its subsidiaries which are not covered by pre-approval policies and procedures approved by the Committee shall be subject to pre-approval by the Committee; and |
| (c) | Resolve all disagreements between management and the independent auditor regarding financial reporting. |
Oversight of Annual Audit and Quarterly Financial Statements
| (a) | Review and approve the annual audit plan of the Corporation’s independent auditor, including the audit and non-audit services that the auditor is providing for the Corporation and its subsidiaries, the level of responsibility assumed by the auditor under generally accepted auditing standards and a summary of the audit approach; |
| (b) | Before the release of annual financial statements, discuss with the independent auditor all matters required by AICPA AU Section 380 (including the independent auditor’s responsibility under GAAP, the selection of and changes in significant accounting policies or their application, management judgments and accounting estimates, significant audit adjustments, the independent auditor’s responsibility for information other than financial statements, disagreements with management, consultation with other accountants, and difficulties encountered in performing the audit) and CICA Handbook section 5751 (which governs the communications between the independent auditors and the Committee); |
| (c) | Receive a report from the Corporation’s independent auditor, prior to the filing of the audit report with the SEC regarding: |
| (i) | all critical accounting policies and practices used by the Corporation; and |
| (ii) | other material communications between the independent auditor and management; |
| (d) | Review and discuss with management the quarterly financial statements. Discuss with the independent auditor the results of its procedures on the statements. |
| (e) | Prior to any disclosure, review and recommend to the Board for approval: |
| (i) | the annual financial statements and related documents (MD&A, AIF, etc.); |
| (ii) | the quarterly financial reports and related documents (including MD&A); and |
| (iii) | other disclosure documents containing financial information that would likely be material to either the quarterly or annual financial statements. |
Oversight and Monitoring of Other Financial Disclosures
| (a) | Review and recommend to the Board for approval all financial information of the Corporation contained in any prospectus, annual information form, information circular or similar document of the Corporation, and any earnings press release to be issued in conjunction with the annual and quarterly results; |
| (b) | Annually or more frequently as required, discuss with management the types of financial and operational information and earnings guidance to be disclosed to credit rating agencies that are subject to confidentiality agreements. The Committee need not discuss in advance with management each instance in which the Corporation gives earnings guidance to credit rating agencies, unless the substance of a presentation to any credit rating agency constitutes a material shift in the Corporation strategy not previously approved by the Board; |
| (c) | Annually or more frequently as required, discuss with management the types of financial and operational information and earnings guidance to be disclosed to analysts or shareholders (in groups or one-on-one) and the processes for ensuring that new material information is first or simultaneously disseminated in the public domain and subsequently included on the Corporation’s website. The Committee need not discuss in advance with management each instance in which the Corporation gives earnings guidance to analysts, unless the substance of a presentation to any analyst constitutes a material shift in the Corporation strategy not previously approved by the Board; and |
| (d) | Review the public disclosure required in connection with the Committee’s pre-approval of audit and non-audit services provided by the independent auditor. |
Oversight of Financial Reporting Processes and Internal Controls
| (a) | Review with management, internal audit and the independent auditor the adequacy and effectiveness of the Corporation’s accounting and internal control policies and procedures, including controls and security of the computerized information systems. |
| (b) | Review with management its compliance with prescribed policies, procedures and internal control; |
| (c) | Review with management, internal audit and the independent auditor any reportable conditions and material weaknesses affecting internal control; |
| (d) | Establish and maintain free and open means of communication between and among the Board, the Committee, the Corporation’s independent auditor, internal audit and the Corporation’s management; and |
| (e) | Review with management major financial and asset related risks and the steps taken to monitor and control such risks. |
Oversight of Internal Audit
| (a) | Review and discuss with the SVP, Compliance & Risk Management the scope of work of the internal audit function, its plans and the issues identified as a result of its work and how management is addressing these issues; |
| (b) | Review the budget, qualifications, activities, effectiveness and organizational structure of the internal audit function; |
| (c) | Review and approve the Internal Audit charter and any proposed amendments thereto; |
| (d) | Review the performance and approve the appointment or dismissal of the SVP, Compliance & Risk Management; |
| (e) | Meet separately with the SVP, Compliance & Risk Management at least quarterly basis; and |
| (f) | Review summaries of significant internal audit reports and management’s responses. |
Other Matters
| (a) | Meet with outside counsel when appropriate, to review legal and regulatory matters, including any matters that may have a material impact on the financial statements of the Corporation; |
| (b) | Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal controls or auditing matters and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters; |
| (c) | Review and approve all related party transactions with any director or nominee, executive officer, holder of more than 5% of any class of the Corporations voting securities or any family member of the foregoing persons, other than those related party transactions in respect of which the Board has delegated review and approval to a special committee of independent directors. |
| (d) | Conduct or authorize investigations into any matters within the Committee’s scope of responsibilities, including retaining outside counsel or other consultants or experts for this purpose. |
| (e) | Discuss with management the Corporation’s policies and processes with respect to risk assessment and risk management, and recommend appropriate modifications (if any); and |
| (f) | Perform such additional activities, and consider such other matters, within the scope of its responsibilities, as the Committee or the Board deems necessary or appropriate. |
With respect to the duties and responsibilities listed above, the Committee should:
| (a) | Report regularly to the Board on its activities, as appropriate; |
| (b) | Exercise reasonable diligence in gathering and considering all material information; |
| (c) | Understand and weigh alternative courses of conduct that may be available; |
| (d) | Focus on weighing the benefit versus harm to the Corporation and its shareholders when considering alternative recommendations or courses of action; |
| (e) | If the Committee deems it appropriate, secure independent expert advice and understand the expert’s findings and the basis for such findings, including retaining independent counsel, accountants or others to assist the Committee in fulfilling its duties and responsibilities; |
| (f) | Provide management and the Corporation’s independent auditor with appropriate opportunities to meet privately with the Committee; and |
| (g) | Review the Charter of the Audit Committee annually and recommend it to the Board. |
V. MEETINGS OF THE COMMITTEE
The Committee shall meet with such frequency and at such intervals as it shall determine is necessary to carry out its duties and responsibilities. As part of its purpose to foster open communications, the Committee shall meet at least quarterly with management, internal audit and the Corporation’s independent auditor in separate executive sessions to discuss any matters that the Committee or each of these groups or persons believe should be discussed privately. The Chairman should work with the Chief Financial Officer, General Counsel and management to establish the agendas for Committee meetings. The Committee, in its discretion, may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. The Committee shall maintain minutes of its meetings and records relating to those meetings and the Committee’s activities and provide copies of such minutes to the Board.
VI. ADVISORS AND FUNDING
The Committee shall have the authority to engage independent counsel and other advisors as it determines necessary to carry out its duties and responsibilities. The Corporation shall provide for appropriate funding, as determined by the Committee, for payment of any compensation (i) to any independent auditor engaged for the purpose of rendering or issuing an audit report or related work or performing other audit, review or attest services for the Corporation, and (ii) to any independent advisors employed by the Committee.
VII. DISCLOSURE AND REVIEW OF CHARTER
The charter shall be (1) published in the Corporation’s annual report or information circular once every three years or following a material amendment to it; or (2) be posted in an up-to-date format on the Corporation’s web site. The Committee should review and reassess annually the adequacy of this Charter as required by the applicable rules of Nasdaq.
While the Committee has the duties and responsibilities set forth in this Charter, the Committee is not responsible for planning or conducting the audit or for determining whether the Corporation’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management has the responsibility for preparing the financial statements and implementing internal controls and the independent auditor have the responsibility of auditing the financial statements. Similarly, it is not the responsibility of the Committee to resolve disagreements, if any, between management and the independent auditor or to ensure that the Corporation complies with all laws and regulations.
EXHIBIT B
CORPORATE GOVERNANCE
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
(CANADIAN NATIONAL INSTRUMENT 58-101)
The directors of MDC Partners Inc. consider good corporate governance to be central to the effective and efficient operation of the Company. The business of the Company is supervised by its Board of Directors, directly and through its committees. The Canadian Securities Administrators require disclosure on an annual basis of the Company’s corporate governance practices in accordance with Form 58-101 — Disclosure of Corporate Governance Practices. The Company’s corporate governance practices are set out below.
The Board of Directors
In determining whether a particular director is independent, the Board examines the factual circumstances in the context of that particular year. The Board proposed for election in this Circular is composed of five (5) members, all of whom are considered to be independent directors with the exception of Mr Kauffman, who is a member of management. The following directors of MDC Partners also serve as directors (or senior executive officers) of companies that are reporting issuers (or the equivalent) in Canada or the U.S.:
Scott L. Kauffman: currently serves as the Chairman and Chief Executive Officer. He is also Chairman of several venture-backed internet companies.
Clare Copeland: currently serves as Vice Chairman of Falls Management Company. He is also a trustee of RioCan Real Estate Investment Trust, Chesswood Income Fund, and Telesat, and a director of Entertainment One Ltd.
Larry Kramer: currently serves as Chairman and Interim Chief Executive Officer of The Street Inc. He is also a director of Gannett and a trustee at both Syracuse University and Harvard Business School Publishing.
Anne Marie O’Donovan: currently serves as President and director of O’Donovan Advisory Services Ltd. She is also a director of Indigo Books & Music Inc.
Irwin D. Simon: currently serves as President, Chief Executive Officer and director of The Hain Celestial Group.
All independent directors frequently meet at the beginning or end of each regularly scheduled quarterly Board or Committee meeting without non-independent directors and management present. The Board has access to information independent of management through MDC Partners’ auditor who reports to the Audit Committee. The specific responsibilities of the Board include reviewing and approving all major strategic decisions, including any change in the strategic direction of MDC Partners and acquisitions and/or divestitures and other matters (such as guarantees) in excess of $5 million; reviewing and approving annual budgets, including capital expenditure plans; reviewing and approving operating results for each quarter and year to date. As part of its ongoing activities, the Board regularly receives and comments upon reports of management as to the performance of MDC Partners’ business and management’s expectations. The Board is therefore of the view that the appropriate structures and procedures are in place to ensure that it can function independent of management.
Effective as of July 20, 2015, the Board appointed Mr. Irwin Simon as the Presiding Director of the Board. Mr. Simon is independent.
Board Mandate
The Board of Directors recently adopted a set of Corporate Governance Guidelines as a framework within which the Board and its Committees will conduct its business. A copy of the Guidelines is available free of charge at MDC Partners’ website athttp://www.mdc-partners.com/#investors/corporate-governance.
Position Descriptions
The Company’s bylaws and the Charters of each Board committee provide a detailed description of the roles and responsibilities of the Board (including the Chairman), management and each committee of the Board and their respective chairs.
The primary functions of the CEO are to lead the management of our businesses and affairs in accordance with the Company’s strategic plan and operating and capital budgets, as approved by the Board.
The Board has developed a written position description and mandate, which sets forth the CEO’s key responsibilities. These responsibilities include the following: (a) develop and recommend to the Board a long-term strategy and vision for the Company that leads to creation of shareholder value; (b) develop and recommend to the Board annual business plans and budgets that support the Company’s long-term strategy; (c) consistently strive to achieve the Company’s financial and operating goals and objectives; and (d) develop the corporate and partner management teams and succession plans.
The Human Resources & Compensation Committee (described below) is responsible for establishing, monitoring and evaluating objectives and standards of performance for the Chief Executive Officer and other executive officers on an annual basis. Salary, bonus, loans or other payments for the benefit of the Chief Executive Officer must be reviewed and approved by the Human Resources & Compensation Committee. Related party expenses for services rendered and in the nature of expense reimbursement must also be approved by the Human Resources & Compensation Committee.
Orientation and Continuing Education
New directors to MDC Partners have generally been executives with extensive business experience and directorship responsibilities on the boards of other public and private institutions. Orientation for these individuals is provided through a review of past Board materials and other private and public documents concerning MDC Partners. In addition, Board members are encouraged to attend (at the cost and expense of the Company) continuing education programs identified by the Nominating and Corporate Governance Committee each year to ensure that they maintain the skills necessary for them to meet their obligations as directors.
Ethical Business Conduct
The Company has adopted a Code of Conduct, which applies to all directors, officers (including the Company’s Chief Executive Officer and Chief Financial Officer) and employees of the Company and its subsidiaries. The Code of Conduct was adoptedDesignated Companies in orderacquiring a stock ownership interest in the Company, and to help directors, officerssuch employees provide for their future security and employees resolve ethical issues. The Code of Conduct covers topics including, but not limited to conflicts of interest, confidentiality of information and compliance with laws. The Company’s policy isencourage them to not permit any waiver of the Code of Conduct for any director or executive officer, except in extremely limited circumstances. The Board, through the Audit Committee, monitors and assesses and claims alleged under the Code of Conduct. Any waiver of this Code of Conduct for directors or officers of the Company must be approved by the Company’s Board of Directors. Amendments to and waivers of the Code of Conduct will be publicly disclosed as required by applicable laws, rules and regulations. The Code of Conduct is available free of charge on the Company’s website athttp://www.mdc-partners.com, or by writing to MDC Partners Inc., 745 Fifth Avenue, 19th Floor, New York, NY 10151, Attention: Investor Relations.
Nomination of Directors
The Nominating and Corporate Governance Committee is composed of three (3) members, all of whom are considered to be independent. The Nominating and Corporate Governance Committee is responsible for reviewing and making recommendations to the full Board with respect to developmentsremain in the area of corporate governance and the practices of the Board. The Nominating and Corporate Governance Committee
is also responsible for evaluating the performance of the Board as a whole and for reporting to the Board with respect to appropriate candidates for nominations to the Board. The current members of the Nominating and Corporate Governance Committee are Irwin Simon (Chairman), Larry Kramer and Anne Marie O’Donovan. The Nominating and Corporate Governance Committee’s current charter is available athttp://www.mdc-partners.com/#/corporate_info/committees. The Company will disclose any amendments to, or waivers of, the charter on its website atwww.mdc-partners.com in accordance with applicable law and the requirements of the NASDAQ corporate governance standards.
The Nominating and Corporate Governance Committee identifies, selects and recommends to the Board individuals qualified to serve both on the Board and on Board committees, including persons suggested by shareholders and others. In identifying candidates for nominations to the Board, the Nominating and Corporate Governance Committee seeks to maintain at all times a Board with a diverse range of experience, talent, expertise and background appropriate for the business of the Company. The Nominating and Corporate Governance Committee does not require any specific minimum qualifications or specific qualities or skills, but reviews each person’s qualifications on the whole, including a candidate’s particular experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, conflicts of interest and such other relevant factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board. Following that review, the Nominating and Corporate Governance Committee then selects nominees and recommends them to the Board for election by the shareholders or appointment by the Board, as the case may be. The Nominating and Corporate Governance Committee also reviews the suitability of each Board member for continued service as a director when that member’s term expires or that member experiences a significant change in status (for example, a change in employment). The Nominating and Corporate Governance Committee has not implemented any particular additional policies or procedures with respect to suggestions received from shareholders with respect to Board or committee nominees.
Pursuant to its charter, the Nominating and Corporate Governance Committee may conduct or authorize investigations or studies into matters with its scope of responsibilities and may retain, at the Company’s expense, such independent counsel or other consultants or advisers at it may deem necessary from time to time. The Nominating and Corporate Governance Committee has the sole authority to retain or terminate any search firm to be used to identify director candidates, including the sole authority to approve its fees and retention terms, with the Company bearing the cost of such fees.
Director Term Limits
The Board believes that the need to have experienced directors who are familiar with the business of the Company must be balanced with the need for fresh perspectives and a proactive approach. The Board has not adopted formal director term limits or other mechanisms of board renewal, in part, because the imposition of director term limits on a board implicitly discounts the value of experience and continuity among board members and runs the risk of excluding experienced and potentially valuable board members as a result of an arbitrary determination. In addition, imposing this restriction means the Board would lose the contributions of longer serving directors who have developed a deeper knowledge and understanding of the Company over time. The Board does not believe that long tenure impairs a director’s ability to act independently of management.
Policies Regarding the Representation of Women on the Board
The Company has not adopted a written policy relating to the identification and nomination of women directors to the Company’s board of directors but rather has an informal, unwritten policy. The Company generally considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for board membership. As evidence of this approach, the Board nominated Ms. O’Donovan to join the Board in 2016.
Consideration of the Representation of Women in the Director Identification and Selection Process
In identifying and nominating candidates for election or re-election to the board of directors, the Board considers the level of representation of women on the board, in addition to the competencies, skills and personal and other diverse qualities required for new directors in order to add value to the Company in light of opportunities and risks facing the Company. Selection of female candidates to the board will be, in part, dependent upon the pool of female candidates with the necessary skills, knowledge and experience. The ultimate decision will be based on merit and contribution the chosen candidate will bring to the board.
Consideration of the Representation of Women in Executive Officer Appointments
In appointing executive officers to the management team, the Company considers the level of representation of women in executive officer positions, and also takes into account the following factors: the competencies, skills and personal and other diverse qualities required for new executive officers in order to add value to the Company in light of opportunities and risks facing the Company.
Issuer’s Targets Regarding the Representation of Women on the Board and in Executive Officer Positions
The Company has not adopted a target for women on the board of directors because the Company does not believe that any director nominee should be chosen nor excluded because of gender. In selecting a director nominee, such as recently appointed Ms. O’Donovan, the Nominating and Corporate Governance Committee focuses on skills, expertise and background that would complement the existing Board. Directors will be recruited based on their ability and potential for meaningful contributions.
Similarly, the Company has not adopted a target for women in executive officer positions because the Company does not believe that any candidate for an executive officer position should be chosen nor excluded because of gender. In selecting candidates, the Company considers the skills, expertise and background that would complement the existing management team. Executive officers will be recruited based on their ability and contributions.
Number of Women on the Board and in Executive Officer Positions
As of the date of this Proxy Statement and Management Information Circular, (i) there is one woman on the Company’s Board of Directors, representing 16.7% of the directors and (ii) six (6) of the Company’s executive officers are women, representing 30% of the Company’s executive officers.
Compensation
The Human Resources & Compensation Committee is composed of four members, all of whom are considered to be independent. The Human Resources & Compensation Committee makes recommendations to the Board on, among other things, the compensation of senior executives. The Human Resources & Compensation Committee discusses personnel and human resources matters including recruitment and development, management succession and benefits plans and grants awards under the 2011 Stock Incentive Plan, the 2005 Stock Incentive Plan and the SARs Plan. Salary, bonus or other payments for the benefit of senior management are reviewed and approved by the Human Resources & Compensation Committee. The Human Resources & Compensation Committee reviews the compensation of members of the Board on an annual basis and makes recommendations to the Board. The Board considers their remuneration appropriate given the time commitment, risk and responsibilities associated with the position. The current members of the Human Resources & Compensation Committee are Clare Copeland (Chairman), Larry Kramer, Anne Marie O’Donovan and Irwin Simon. The Human Resources & Compensation Committee’s current charter is available athttp://www.mdc-partners.com/#investors/corporate-governance. The Company will disclose any amendments to, or waivers of, the charter on its website atwww.mdc-partners.com in accordance with applicable law and the requirements of the NASDAQ corporate governance standards.
Other Board Committees
The Board conducts its business through meetings of the Board and three standing committees: the Audit Committee, the Human Resources & Compensation Committee and the Nominating and Corporate Governance Committee. Copies of the charters of these committees are available, free of charge at MDC Partners’ website located athttp://www.mdc-partners.com/#investors/corporate-governance.
In addition, from time to time, special committees may be established under the direction of the Board when necessary to address specific issues.
Assessments
The Nominating and Corporate Governance Committee is responsible for developing and recommending standards of performance of the Board, its committees and the individual directors through administration of an annual questionnaire. It is the responsibility of the Nominating and Corporate Governance Committee to assess the effectiveness of the Board as a whole and the committees of the Board. Participation of directors is expected at all Board and committee meetings. Directors are asked to notify MDC Partners if they are unable to attend, and attendance at meetings is duly recorded.
EXHIBIT C
MDC PARTNERS INC.
2016 STOCK INCENTIVE PLAN
(As Adopted )
1. Purpose of the Plan
This MDC Partners Inc. 2016 Stock Incentive Plan is intended to promote the interestsemployment of the Company and its shareholders by providingSubsidiaries.
The Plan consists of two components: the employeesSection 423 Component and consultantsthe Non-Section 423 Component. The Section 423 Component is intended to qualify as an “employee stock purchase plan” under Section 423 of the CompanyCode and eligible non-employee directorsshall be administered, interpreted and construed in a manner consistent with the requirements of MDC Partners Inc., who are largely responsible for the management, growth and protectionSection 423 of the businessCode. In addition, this Plan authorizes the grant of Options under the Non-Section 423 Component, which need not qualify as Options granted pursuant to an “employee stock purchase plan” under Section 423 of the Company, with incentivesCode; such Options granted under the Non-Section 423 Component shall be granted pursuant to separate Offerings, which may contain such sub-plans, appendices, rules or procedures as may be adopted by the Administrator and rewardsdesigned to encourage them to continueachieve tax, securities laws or other objectives for Eligible Employees and the Designated Companies in locations outside of the United States. Except as otherwise provided herein or determined by the Administrator, the Non-Section 423 Component will operate and be administered in the servicesame manner as the Section 423 Component. Initially, the Plan is not intended to qualify as an “employee stock purchase plan” under Section 423 of the Company. TheCode and the Section 423 Component will not be utilized, and any Offering that commences prior to the Section 423 Effective Date (as defined below) shall be deemed to be made under the Non-423 Component. From and after such date as the Administrator, in its discretion, determines that the Plan is designedable to meet this intent by providing such employees, consultants and eligible non-employee directors with a proprietary interest in pursuingsatisfy the long-term growth, profitability and financial successrequirements under Section 423 of the Company.2. Definitions
Code and that it will operate the Plan in accordance with such requirements (such date, the “ Section 423 Effective Date”), Offerings shall be deemed to be under the Section 423 Component unless otherwise designated by the Administrator at or prior to the time of such Offering. Unless the Plan is amended pursuant to Section 7.5 hereof, the operative terms of the Plan as in effect on the Effective Date will remain the same on and after the Section 423 Effective Date. For purposes of this Plan, the Administrator may designate separate Offerings under the Plan, the terms of which need not be identical, in which Eligible Employees will participate, even if the dates of the applicable Offering Period(s) in each such Offering is identical, provided that the terms of participation are the same within each separate Offering under the Section 423 Component as determined under Section 423 of the Code. Solely by way of example and without limiting the foregoing, the Company could, but shall not be required to, provide for simultaneous Offerings under the Section 423 Component and the Non-Section 423 Component of the Plan. ARTICLE 2
DEFINITIONS As used in the Plan, the following definitions applywords and phrases have the meanings specified below, unless the context clearly indicates otherwise: 2.1. “Administrator” means the Committee, or such individuals to which authority to administer the Plan has been delegated under Section 7.1 hereof. 2.2. “Affiliate” means any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise. 2.3. “Agent” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an Employee with regard to the terms indicated below: | (a) | “Board of Directors” means the Board of Directors of MDC Partners Inc. |
| (b) | “Change in Control” means the occurrence of any of the following: |
| (i) | Any Person becoming the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act, a “Beneficial Owner”) of fifty percent (50%) or more of the combined voting power of MDC’s then outstanding voting securities (“Voting Securities”); provided, however that a Change in Control shall not be deemed to occur by reason of an acquisition of Voting Securities directly from MDC or by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) MDC or any Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by MDC (the “MDC Group”), (B) any member of the MDC Group, or (C) any Person in connection with a Non-Control Transaction (as such term is hereinafter defined); |
| (ii) | The individuals who, as of April 22, 2016, are members of the Board of Directors (the “Incumbent Board”), cease for any reason to constitute at least a majority of the members of the Board of Directors; provided, however that if the election, or nomination for election by MDC’s shareholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or |
| (iii) | The consummation of: |
| (A) | A merger, consolidation or reorganization with or into MDC or in which securities of MDC are issued, unless such merger, consolidation or reorganization is a “Non-Control Transaction.” A “Non-Control Transaction” is a merger, consolidation or reorganization with or into MDC or in which securities of MDC are issued where: |
| (I) | the stockholders of MDC, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, |
Plan.
| (II) | the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least a majority of the members of the board of directors of the Surviving Corporation, or a corporation beneficially owning a majority of the voting securities of the Surviving Corporation, |
| (III) | no Person other than (1) any member of the MDC Group, (2) any employee benefit plan (or any trust forming a part thereof) maintained immediately prior to such merger, consolidation or reorganization by any member of the MDC Group, or (3) any Person who, immediately prior to such merger, consolidation or reorganization Beneficially Owns twenty-five percent (25%) or more of the then outstanding Voting Securities, owns, directly or indirectly, fifty percent (50%) or more of the combined voting power of the Surviving Corporation’s voting securities outstanding immediately following such transaction; |
| (B) | A complete liquidation or dissolution of the Company; or |
| (C) | The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a member of the MDC Group). |
2.4. “Board” means the Board of Directors of the Company. 2.5. “Code” means the U.S. Internal Revenue Code of 1986, as amended, and all regulations, guidance, compliance programs and other interpretative authority issued thereunder. 2.6. “Committee” means the Compensation Committee of the Board. 2.7. “Common Stock” means the Class A Common Stock of the Company, $0.001 par value. 2.8. “Company” means Stagwell Inc., a Delaware corporation, or any successor. 2.9. “Compensation” of an Employee means the regular earnings or base salary paid to the Employee by the Company or a Designated Company, as applicable, on each Payday as compensation for services to the Company or the Designated Company, as applicable, before deduction for any salary deferral contributions made by the Employee to any tax-qualified or nonqualified deferred compensation plan, excluding (a) bonuses and commissions, (b) overtime, shift differentials, vacation pay, salaried production schedule premiums, holiday pay, jury duty pay, funeral leave pay, paid time off, military pay, prior week adjustments and weekly bonus, (c) education or tuition reimbursements, (d) imputed income arising under any group insurance or benefit program, (e) travel expenses, (f) business and moving reimbursements, including tax gross ups and taxable mileage allowance, (g) income received in connection with any stock options, restricted stock, restricted stock units or other compensatory equity awards and (h) all contributions made by the Company or any Designated Company for the Employee’s benefit under any employee benefit plan now or hereafter established. Such Compensation shall be calculated before deduction of any income or employment tax withholdings, but shall be withheld from the Employee’s net income. The Administrator, in its discretion, may establish a different definition of Compensation for an Offering, which for the Section 423 Component shall apply on a uniform and nondiscriminatory basis. Further, the Administrator will have discretion to determine the application of this definition to Eligible Employees outside the United States. 2.10. “Designated Company” means each Affiliate and Subsidiary, including any Affiliate and Subsidiary in existence on the Effective Date and any Affiliate and Subsidiary formed or acquired following the Effective Date, that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan, in accordance with Section 7.2 hereof, such designation to specify whether such participation is in the Section 423 Component or Non-Section 423 Component. For each Offering, a Designated Company may participate in either the Section 423 Component or Non-Section 423 Component, but not both. Notwithstanding the foregoing, if any Affiliate or Subsidiary is disregarded for U.S. tax purposes in respect of the Company or any Designated Company participating in the Section 423 Component, then such disregarded Affiliate or Subsidiary shall automatically be a ChangeDesignated Company participating in Controlthe Section 423 Component. If any Affiliate or Subsidiary is disregarded for U.S. tax purposes in respect of any Designated Company participating in the Non-Section 423 Component, the Administrator may exclude such Affiliate or Subsidiary from participating in the Plan, notwithstanding that the Designated Company in respect of which such Affiliate or Subsidiary is disregarded may participate in the Plan. 2.11. “Effective Date” means March 1, 2023, the date on which the Board adopted the Plan. 2.12. “Eligible Employee” means any Employee of the Company or a Designated Company, except that the Administrator may exclude any or all of the following unless prohibited by applicable law, Employees: (a) who are customarily scheduled to work 20 hours or less per week; (b) whose customary employment is not more than five months in a calendar year; (c) who have been employed less than two years; (d) who are not employed by the Company or a Designated Company prior to the applicable Grant Date; (e) any Employee who is a “highly compensated employee” of the Company or any Designated Company (within the meaning of Section 414(q) of the Code), or that is such a “highly compensated employee” (i) with compensation above a specified level, (ii) who is an officer or (iii) who is subject to the disclosure requirements of Section 16(a) of the Exchange Act; or
(f) any Employee who is a citizen or resident of a jurisdiction outside the United States (without regard to whether they are also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if either (i) the grant of the Option is prohibited under the laws of the jurisdiction governing such Employee, or (ii) compliance with the laws of the jurisdiction would cause the Section 423 Component, any Offering thereunder or an Option granted thereunder to violate the requirements of Section 423 of the Code; provided that any exclusion shall be applied in an identical manner under each Offering to all Employees in accordance with Treas. Reg. § 1.423-2(e). Notwithstanding the foregoing, any Employee who, after the granting of the Option, would be deemed for purposes of Section 423(b)(3) of the Code to possess 5% or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary shall not be an Eligible Employee. For purposes of the preceding sentence, the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock which an Employee may purchase under outstanding options shall be treated as stock owned by the Employee. Further, with respect to the Non-Section 423 Component, (a) the Administrator may limit eligibility further within a Designated Company so as to only designate some Employees of a Designated Company as Eligible Employees, (b) to the extent any restrictions in this definition are not consistent with applicable local laws, the applicable local laws shall control, and (c) the limitation in the preceding paragraph regarding Employees who are deemed to occur solely because any Person (the “Subject Person”) becomes the Beneficial Owner ofpossess more than the permitted amount5% or more of the outstanding Voting Securities as a resulttotal combined voting power or value shall not apply, except for Employees who are subject to Section 16 of the acquisitionExchange Act. 2.13. “Employee” means any person who renders services to the Company or a Designated Company in the status of Voting Securitiesan employee within the meaning of Section 3401(c) of the Code. “Employee” shall not include any director of the Company or a Designated Company who does not render services to the Company or a Designated Company in the status of an employee within the meaning of Section 3401(c) of the Code. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by the Company or a Designated Company and meeting the requirements of Treas. Reg. § 1.421-1(h)(2). Where the period of leave exceeds three months, or such other period specified in Treas. Reg. § 1.421-1(h)(2), and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period, or such other period specified in Treas. Reg. § 1.421-1(h)(2). 2.14. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended. 2.15. “Exercise Date” means the last day of each Purchase Period, except as provided in Section 5.2 hereof. 2.16. “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (a) If the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange or Nasdaq Stock Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a share of Common Stock as quoted on such exchange or system for such date or, if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (b) If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by reducinga recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a share of Common Stock on such date, the high bid and low asked prices for a share of Common Stock on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (c) If the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.
2.17. “Grant Date” means the first day of an Offering Period. 2.18. “New Exercise Date” has the meaning set forth in Section 5.2(b) hereof. 2.19. “Non-Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which Options may be granted to Eligible Employees that need not satisfy the requirements for Options granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code. 2.20. “Offering” means an offer under the Plan of an Option that may be exercised during an Offering Period as further described in Article 4 hereof. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees shall be deemed a separate Offering, even if the dates and other terms of the applicable Purchase Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Treas. Reg. § 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy Treas. Reg. § 1.423-2(a)(2) and (a)(3). 2.21. “Offering Period” means each consecutive three (3)-month period commencing on each April 16, July 16, October 16 and January 16, and with respect to which Options shall be granted to Participants. The first Offering Period (the “Initial Offering Period”) shall commence on April 16, 2023 and shall end on July 15, 2023. The duration and timing of Offering Periods may be established or changed by the Administrator at any time, in its sole discretion and may consist of one or more Purchase Periods. Notwithstanding the foregoing, in no event may an Offering Period exceed 27 months. 2.22. “Option” means the right to purchase shares of Common Stock pursuant to the Plan during each Offering Period. 2.23. “Option Price” means the purchase price of a share of Common Stock hereunder as provided in Section 4.2 hereof. 2.24. “Parent” means any entity that is a parent corporation of the Company within the meaning of Section 424 of the Code. 2.25. “Participant” means any Eligible Employee who elects to participate in the Plan. 2.26. “Participation Election” has the meaning set forth in Section 3.2(a) hereof. 2.27. “Payday” means the regular and recurring established day for payment of Compensation to an Employee. 2.28. “Plan” means this 2023 Employee Stock Purchase Plan, including both the Section 423 Component and Non-Section 423 Component and any other sub-plans or appendices hereto, as amended from time to time. 2.29. “Plan Account” means a bookkeeping account established and maintained by the Company in the name of each Participant. 2.30. “Purchase Period” means, unless the Administrator provides otherwise, a time period that will have the same duration as, and coincide with the length of, the corresponding Offering Period. The duration and timing of Purchase Periods may be established or changed by the Administrator at any time, in its sole discretion. Notwithstanding the foregoing, in no event may a Purchase Period exceed the duration of the Offering Period under which it is established. 2.31. “Section 409A” means Section 409A of the Code. 2.32. “Section 423 Component” means those Offerings under the Plan that are intended to meet the requirements under Section 423(b) of the Code. 2.33. “Subsidiary” means any entity that is a subsidiary corporation of the Company within the meaning of Section 424 of the Code.
2.34. “Tax-Related Items” means any U.S. and non-U.S. federal, state and/or local taxes (including, income tax, social insurance contributions, fringe benefit tax, employment tax, stamp tax and any employer tax liability which has been transferred to a Participant) for which a Participant is liable in connection with his or her participation in the Plan. 2.35. “Treas. Reg.” means U.S. Department of the Treasury regulations. 2.36. “Withdrawal Election” has the meaning set forth in Section 6.1(a) hereof. ARTICLE 3
PARTICIPATION 3.1. Eligibility. (a) Any Eligible Employee who is employed by the Company or a Designated Company on a given Grant Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of Articles 4 and 5 hereof, and, for the Section 423 Component, the limitations imposed by Section 423(b) of the Code. (b) No Eligible Employee shall be granted an Option under the Section 423 Component which permits the Participant’s rights to purchase shares of Common Stock under the Plan, and to purchase stock under all other employee stock purchase plans of the Company, any Parent or any Subsidiary subject to Section 423 of the Code, to accrue at a rate which exceeds $25,000 of fair market value of such stock (determined at the time such Option is granted) for each calendar year in which such Option is outstanding at any time. The limitation under this Section 3.1(b) shall be applied in accordance with Section 423(b)(8) of the Code. 3.2. Election to Participate; Payroll Deductions (a) Each individual who is an Eligible Employee as of an Offering Period’s Grant Date may elect to participate in such Offering Period and the Plan by delivering to the Company or an Agent designated by the Company an enrollment form including a payroll deduction authorization (which may be in an electronic format or such other method as determined by the Company in accordance with the Company’s practices) (a “Participation Election”) no later than the period of time prior to the applicable Grant Date determined by the Administrator, in its sole discretion. Except as provided in Section 3.2(e) hereof, an Eligible Employee may participate in the Plan only by means of payroll deduction. (b) Subject to Section 3.1(b) hereof and except as may otherwise be determined by the Administrator, payroll deductions (i) shall equal at least 1% of the Participant’s Compensation as of each Payday of the Offering Period following the Grant Date, but not more than 15% of the Participant’s Compensation as of each Payday of the Offering Period following the Grant Date; and (ii) shall be expressed as a whole number percentage. Subject to Section 3.2(e) hereof, amounts deducted from a Participant’s Compensation with respect to an Offering Period pursuant to this Section 3.2 shall be deducted each Payday through payroll deduction and credited to the Participant’s Plan Account. (c) Unless otherwise determined by the Administrator, following at least one payroll deduction, a Participant may decrease (to as low as zero) the amount deducted from such Participant’s Compensation only once during a Purchase Period upon ten calendar days’ prior written notice to the Company. A Participant may not increase the amount deducted from such Participant’s Compensation during an Offering Period. (d) Upon the completion of an Offering Period, each Participant in such Offering Period shall automatically participate in the immediately following Offering Period at the same payroll deduction percentage as in effect at the termination of such Offering Period, unless such Participant delivers to the Company or an Agent designated by the Company a different Participation Election with respect to the successive Offering Period in accordance with Section 3.2(a) hereof, or unless such Participant becomes ineligible for participation in the Plan. (e) Notwithstanding any other provisions of the Plan to the contrary, in non-U.S. jurisdictions where participation in the Plan through payroll deductions is prohibited or otherwise problematic under applicable local laws (as determined by the Administrator in its sole discretion), the Administrator may provide that an Eligible Employee may elect to participate through contributions to the Participant’s Plan Account in a form
acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, the Administrator must determine that any alternative method of contribution is applied on an equal and uniform basis to all Eligible Employees in the Offering. Any reference to “payroll deductions” in this Section 3.2 (or in any other section of the Plan) will similarly cover contributions by other means made pursuant to this Section 3.2(e). ARTICLE 4
PURCHASE OF SHARES 4.1. Grant of Option. The Company may make one or more Offerings under the Plan, which may be successive or overlapping with one another, until the earlier of: (i) the date on which all shares of Common Stock available under the Plan have been purchased or (ii) the date on which the Plan is suspended or terminates. The Administrator shall designate the terms and conditions of each Offering in writing, including, the Offering Period and the Purchase Periods. Each Participant shall be granted an Option with respect to an Offering Period on the applicable Grant Date. Subject to the limitations of Section 3.1(b) hereof, the number of Voting Securities outstanding, increasesshares of Common Stock subject to a Participant’s Option shall be determined by dividing (a) such Participant’s payroll deductions accumulated prior to an Exercise Date and retained in the proportionalParticipant’s Plan Account on such Exercise Date by (b) the applicable Option Price. The Administrator may, for future Offering Periods, establish, in its absolute discretion, the maximum number of shares Beneficially Ownedof Common Stock that a Participant may purchase during any Purchase Periods under such future Offering Periods. Each Option shall expire on the last Exercise Date for the applicable Offering Period immediately after the automatic exercise of the Option in accordance with Section 4.3 hereof, unless such Option terminates earlier in accordance with Article 6 hereof. 4.2. Option Price. The Option Price shall equal 92.5% of the Fair Market Value of a share of Common Stock on the applicable Exercise Date, or such other price designated by the Subject Persons, Administrator; provided that ifin no event shall the Option Price be less than the par value per share of the Common Stock. 4.3. Purchase of Shares. (a) On each Exercise Date for an Offering Period, each Participant shall automatically and without any action on such Participant’s part be deemed to have exercised the Participant’s Option to purchase at the applicable Option Price the largest number of whole shares of Common Stock which can be purchased with the amount in the Participant’s Plan Account, subject to the limitations set forth in the Plan. Unless otherwise determined by the Administrator in advance of an Offering or in accordance with applicable law, any balance that is remaining in the Participant’s Plan Account (after exercise of such Participant’s Option) as of the Exercise Date shall be carried forward into the next Offering Period, unless (i) the Participant has properly elected to withdraw from the Plan, (ii) the Participant has ceased to be an Eligible Employee, or (iii) the maximum limitations set forth in Section 3.1(b) and Section 4.1 hereof would prevent the Participant from being granted any Options for such next Offering Period. Any balance not carried forward to the next Offering Period in accordance with the prior sentence shall promptly be refunded as soon as administratively practicable to the applicable Participant. (b) As soon as practicable following each Exercise Date, the number of shares of Common Stock purchased by such Participant pursuant to Section 4.3(a) hereof shall be delivered (either in share certificate or book entry form), in the Company’s sole discretion, to either (i) the Participant or (ii) an account established in the Participant’s name at a Changestock brokerage or other financial services firm designated by the Company. The Company may require that shares be retained with such brokerage or firm for a designated period of time and/or may establish procedures to permit tracking of disqualifying dispositions of such shares. 4.4. Transferability of Rights. An Option granted under the Plan shall not be transferable, other than by will or the applicable laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. No option or interest or right to the Option shall be available to pay off any debts, contracts or engagements of the Participant or the Participant’s successors in Control would occur (but for theinterest or shall be subject to disposition by pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of this sentence) as a resultlaw by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempt at disposition of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in ControlOption shall occur. | (c) | “Class A Shares” means MDC’s Class A subordinate voting shares, without par value, or any other security into which such shares shall be changed pursuant to the adjustment provisions of Section 10 of the Plan. |
| (d) | “Code” means the Internal Revenue Code of 1986, as amended from time to time. |
| (e) | “Committee” means the Human Resources & Compensation Committee of the Board of Directors or such other committee as the Board of Directors shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and functions assigned to the Committee under the terms of the Plan. |
| (f) | “Company” means MDC and each of its Subsidiaries, collectively. |
| (g) | “Covered Employee” means a Participant who at the time of reference is a “covered employee” as defined in Code Section 162(m) and the regulations promulgated under Code Section 162(m), or any successor statute. |
| (h) | “Director” means a member of the Board of Directors who is not at the time of reference an employee of the Company. |
| (i) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
have no effect.
| (j) | “Fair Market Value” means, with respect to a Class A Share, as of the applicable date of determination (i) the closing sales price on the immediately preceding business day of Class A Shares as reported on the principal securities exchange on which such shares are then listed or admitted to trading or (ii) if not so reported, the average of the closing bid and ask prices on the immediately preceding business day as reported on the National Association of Securities Dealers Automated Quotation System or (iii) if not so reported, as furnished by any member of the National Association of Securities Dealers, Inc. selected by the Committee. In the event that the price of Class A Shares shall not be so reported, the Fair Market Value of Class A Shares shall be determined by the Committee in its absolute discretion. |
| (k) | “Incentive Award” means an Option, SAR or Other Stock-Based Award granted to a Participant pursuant to the terms of the Plan. |
| (l) | “MDC” means MDC Partners Inc., a corporation established under the Canadian Business Corporation Act, and any successor thereto. |
| (m) | “Option” means a non-qualified stock option to purchase Class A Shares granted to a Participant pursuant to Section 6. |
| (n) | “Other Stock-Based Award” means an equity or equity-related award granted to a Participant pursuant to Section 8, including without limitation a restricted stock award. |
| (o) | “Participant” means a Director, employee or consultant of the Company, including any person or company engaged to provide ongoing management or consulting services for the Company and, at the discretion of any of the foregoing persons, and subject to any required regulatory approvals and conditions, a personal holding company controlled by such person, who or which is eligible to participate in the Plan and to whom one or more Incentive Awards have been granted pursuant to the Plan and, following the death of any such natural person, his successors, heirs, executors and administrators, as the case may be. |
| (p) | “Performance-Based Compensation” means compensation that satisfies the requirements of Section 162(m) of the Code for deductibility of remuneration paid to Covered Employees. |
| (q) | “Performance Measures” means such measures as are described in Section 9 on which performance goals are based in order to qualify certain awards granted hereunder as Performance-Based Compensation. |
| (r) | “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Incentive Award that is intended to qualify as Performance-Based Compensation. |
| (s) | “Permitted Acceleration Event” means (i) with respect to any Incentive Award that is subject to performance-based vesting, the full or partial vesting of such Incentive Award based on satisfaction of the applicable performance-based conditions, (ii) the occurrence of a Change in Control or an event described in Section 10(b), (c) or (d) or (iii) any termination of the employment of a Participant, other than a termination for cause (as defined by the Committee) or voluntary termination prior to retirement (as defined by the Committee). |
| (t) | “Person” means a “person” as such term is used in Section 13(d) and 14(d) of the Exchange Act. |
| (u) | “Plan” means this MDC Partners Inc. 2016 Stock Incentive Plan, as it may be amended from time to time. |
| (v) | “SAR” means a stock appreciation right granted to a Participant pursuant to Section 7. |
| (w) | “Securities Act” means the Securities Act of 1933, as amended. |
| (x) | “Subsidiary” means any “subsidiary corporation” within the meaning of Section 424(f) of the Code or any other entity that the Committee determines from time to time should be treated as a subsidiary corporation for purposes of this Plan. |
3.
ARTICLE 5
PROVISIONS RELATING TO COMMON STOCK 5.1. Common Stock Subject to the Plan; Additional LimitationsReserved . Subject to adjustment as provided in Section 10 and the following provisions of this Section 3,5.2 hereof, the maximum number of Class A Sharesshares of Common Stock that mayshall be covered by Incentive Awards grantedmade available for sale under the Plan shall not exceed 1,500,000 Class A Shares. Class Abe 3,000,000 shares. Shares issuedmade available for sale under the Plan may be either authorized andbut unissued shares, or treasury shares of Common Stock, or both, at the discretion of the Committee. In addition, at the discretion of the Compensation Committee, Class A Shares authorized for issuance under this Plan may be issued to employees of the Company to satisfy the exercise of SARS Awards under the Company’s Stock Appreciation Rights Plan, as amended.For purposes of the preceding paragraph, Class A Shares covered by Incentive Awards shall only be counted as used to the extent they are actually issued and delivered to a Participant (or such Participant’s permitted transferees as described in the Plan) pursuant to the Plan. For purposes of clarification, in accordance with the preceding sentence if Class A Shares are withheld to satisfy any tax withholding requirement in connection with an Other Stock-Based Award only the shares issued (if any), net of the shares withheld, will be deemed delivered for purposes of determining the number of Class A Shares that are available for delivery under the Plan.
Subject to adjustment as provided in Section 10, the maximum number of Class A Shares that may be covered by Incentive Awards granted under the Plan to any single Participant in any fiscal year of the Company shall not exceed 300,000 shares, prorated on a daily basis for any fiscal year of the Company that is shorter than 365 days.
| (b) | Prohibition on Substitutions and Repricings |
In no event shall any new Incentive Awards be issued in substitution for outstanding Incentive Awards previously granted to Participants, nor shall any repricing (within the meaning of US generally accepted accounting practices or any applicable stock exchange rule) of Incentive Awards issued under the Plan be permitted at any time under any circumstances, in each case unless the shareholders of the Company expressly approve such substitution or repricing.
| (c) | Annual Limitation on Grants |
The Committee shall limit annual grants of equity awards under this Plan to executive officers of the Company to an aggregate amount equal to not more than two percent (2%) of the number of issued and outstanding shares of the Company’s capital stock at the beginning of the Company’s fiscal year. In addition, each independent Director shall not receive Incentive Awards (including option grants) with a current market value in excess of $150,000 or option grants with a current market value in excess of $100,000 in any given fiscal year.
| (d) | Minimum Vesting Period of One (1) Year for All Incentive Awards |
In no event shall any new Incentive Award granted under this Plan vest or otherwise become payable earlier than one (1) year following the date on which it is granted, other than upon the occurrence of a Permitted Acceleration Event.
| (e) | Effect of Change of Control |
Any new Incentive Award granted under this Plan that is subject to time-based vesting terms and conditions shall not become fully and immediately vested and exercisable solely as a result of the occurrence of a Change of Control, absent a termination of employment without cause or for good reason following any such Change of Control. Any new Incentive Award granted under this Plan that is subject to performance-based vesting terms and conditions shall not become fully and immediately vested and exercisable solely as a result of the occurrence of a Change of Control, absent a termination of employment without cause or for good reason following any such Change of Control and shall be adjusted on a pro-rata basis as determined by the Committee.
4. Administration of the Plan
The Plan shall be administered by a Committee of the Board of Directors consisting of two or more persons, each of whom qualify as non-employee directors (within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act), and as “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3). The Committee shall, consistent with the terms of the Plan, from time to time designate those who shall be granted Incentive Awards under the Plan and the amount, type and other terms and conditions of such Incentive Awards. All of the powers and responsibilities of the Committee under the Plan may be delegated by the Committee, in writing, to any subcommittee thereof. In addition, the Committee may from time to time authorize a committee consisting of one or more Directors to grant Incentive Awards to persons who are not “executive officers” of MDC (within the meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and limitation as the Committee may specify. In addition, the Board of Directors may, consistent with the terms of the Plan, from time to time grant Incentive Awards to Directors.
The Committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and the terms of any Incentive Award (and any agreement evidencing any Incentive Award) granted thereunder and to adopt and amend from time to time such rules and regulations for the administration of the Plan as the Committee may deem necessary or appropriate. Without limiting the generality of the foregoing, (i) the Committee shall determine whether an authorized leave of absence, or absence in military or government service, shall constitute termination of employment and (ii) the employment of a Participant with the Company shall be deemed to have terminated for all purposes of the Plan if such person is employed by or provides services to a Person that is a Subsidiary of the Company and such Person ceases to be a Subsidiary of the Company, unless the Committee determines otherwise. Decisions of the Committee shall be final, binding and conclusive on all parties.
On or after the date of grant of an Incentive Award under the Plan, the Committee may (i) extend the term of any such Incentive Award, including, without limitation, extending the period following a termination of a Participant’s employment during which any such Incentive Award may remain outstanding, (ii) waive any conditions to the exercisability or transferability, as the case may be, of any such Incentive Award or (iii) provide for the payment of dividends or dividend equivalents with respect to any such Incentive Award.
No member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and MDC shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the Plan, unless, in either case, such action, omission or determination was taken or made by such member, director or employee in bad faith and without reasonable belief that it was in the best interests of the Company.
5. Eligibility
The Persons who shall be eligible to receive Incentive Awards pursuant to the Plan shall be those Directors and employees of the Company, including any person or company engaged to provide ongoing management or consulting services for the Company and, at the discretion of any of the foregoing persons, and subject to any required regulatory approvals and conditions, a personal holding company controlled by such person, whom the Committee shall select from time to time. All Incentive Awards granted under the Plan shall be evidenced by a separate written agreement entered into by the Company and the recipient of such Incentive Award.
6. Options
The Committee may from time to time grant Options, subject to the following terms and conditions:
The exercise price per Class A Share covered by any Option shall be not less than 100% of the Fair Market Value of a Class A Shareacquired on the date on which such Option is granted.
open market.
| (b) | Term and Exercise of Options |
| (1) | Each Option shall become vested and exercisable on such date or dates, during such period and for such number of Class A Shares as shall be determined by the Committee on or after the date such Option is granted; provided, however that no Option shall be exercisable after the expiration of ten years from the date such Option is granted; provided, further that no Option shall become exercisable earlier than one year after the date on which it is granted, other than upon the occurrence of a Permitted Acceleration Event; and, provided, further, that each Option shall be subject to earlier termination, expiration or cancellation as provided in the Plan or in the agreement evidencing such Option. |
| (2) | Each Option may be exercised in whole or in part; provided, however that no partial exercise of an Option shall be for an aggregate exercise price of less than $1,000. The partial exercise of an Option shall not cause the expiration, termination or cancellation of the remaining portion thereof. |
| (3) | An Option shall be exercised by such methods and procedures as the Committee determines from time to time, including without limitation through net physical settlement or other method of cashless exercise. |
| (4) | Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the Participant. |
| (c) | Effect of Termination of Employment or other Relationship |
The agreement evidencing the award of each Option shall specify the consequences with respect to such Option of the termination of the employment, service as a director or other relationship between the Company and the Participant holding the Option.
7. Stock Appreciation Rights
The Committee may from time to time grant SARs, subject to the following terms and conditions:
| (a) | Stand-Alone and Tandem; Cash and Stock-Settled |
SARs may be granted on a stand-alone basis or in tandem with an Option. Tandem SARs may be granted contemporaneously with or after the grant of the Options to which they relate. SARs may be settled in Class A Shares or in cash.
The exercise price per Class A Share covered by any SAR shall be not less than 100% of the Fair Market Value of a Class A Share on the date on which such SAR is granted; provided, however that the exercise price of an SAR that is tandem to an Option and that is granted after the grant of such Option may have an exercise price less than 100% of the Fair Market Value of a Class A Share on the date on which such SAR is granted provided that such exercise price is at least equal to the exercise price of the related Option.
The exercise of an SAR with respect to any number of Class A Shares prior to the occurrence of a Change in Control shall entitle the Participant to (i) a cash payment, for each such share, equal to the excess of (A) the Fair Market Value of a Class A Share on the effective date of such exercise over (B) the per share exercise price of the SAR, (ii) the issuance or transfer to the Participant of the greatest number of whole Class A Shares which on the date of the exercise of the SAR have an aggregate Fair Market Value equal to such excess or (iii) a combination of cash and Class A Shares in amounts equal to such excess, as determined by the Committee. The exercise of an SAR with respect to any number of Class A Shares upon or after the occurrence of a Change in Control shall entitle the Participant to a cash payment, for each such share, equal to the excess of (i) the greater of (A) the highest price per share of Class A Shares paid in connection with such Change in Control
and (B) the Fair Market Value of Class A Shares on the effective date of exercise over (ii) the per share exercise price of the SAR. Such payment, transfer or issuance shall occur as soon as practical, but in no event later than five business days, after the effective date of exercise.
| (d) | Term and Exercise of SARs |
| (1) | Each SAR shall become vested and exercisable on such date or dates, during such period and for such number of Class A Shares as shall be determined by the Committee on or after the date such SAR is granted; provided, however that no SAR shall be exercisable after the expiration of ten years from the date such SAR is granted; provided, further that no SAR shall become exercisable earlier than one year after the date on which it is granted, other than upon the occurrence of a Permitted Acceleration Event; and, provided, further, that each SAR shall be subject to earlier termination, expiration or cancellation as provided in the Plan or in the agreement evidencing such SAR. |
| (2) | Each SAR may, to the extent vested and exercisable, be exercised in whole or in part; provided, however that no partial exercise of an SAR shall be for an aggregate exercise price of less than $1,000. The partial exercise of an SAR shall not cause the expiration, termination or cancellation of the remaining portion thereof. |
| (3) | An SAR shall be exercised by such methods and procedures as the Committee determines from time to time. |
| (4) | SARs may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the Participant. |
| (5) | The exercise with respect to a number of Class A Shares of an SAR granted in tandem with an Option shall cause the immediate cancellation of the Option with respect to the same number of shares. The exercise with respect to a number of Class A Shares of an Option to which a tandem SAR relates shall cause the immediate cancellation of the SAR with respect to an equal number of shares. |
| (e) | Effect of Termination of Employment or other Relationship |
The agreement evidencing the award of each SAR shall specify the consequences with respect to such SAR of the termination of the employment, service as a director or other relationship between the Company and Participant holding the SAR.
8. Restricted Stock Awards and Other Stock-Based Awards
The Committee may grant equity-based or equity-related awards not otherwise described herein in such amounts and subject to such terms and conditions as the Committee shall determine. Without limiting the generality of the preceding sentence, each such Other Stock-Based Award may (i) involve the transfer of actual Class A Shares to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of Class A Shares, (ii) be subject to performance-based and/or service-based conditions, (iii) be in the form of phantom stock, restricted stock, restricted stock units, performance shares, or share-denominated performance units and (iv) be designed to comply with applicable laws of jurisdictions other than the United States.
9. Performance Measures
The performance goals upon which the payment or vesting of any Incentive Award (other than Options and SARs) to a Covered Employee that is intended to qualify as Performance-Based Compensation depends shall relate to one or more of the following Performance Measures: revenue growth, achievement of EBITDA targets, operating income, operating cash flow, net income, earnings per share, cash earnings per share, return on sales, return on assets, return on equity, return on invested capital and total shareholder return.
Performance Periods may be equal to or longer than, but not less than, one fiscal year of the Company. Within 90 days after the beginning of a Performance Period, and in any case before 25% of the Performance Period has elapsed, the Committee shall establish (a) performance goals and objectives for the Company for such Performance Period, (b) target awards for each Participant, and (c) schedules or other objective methods for determining the applicable performance percentage to be applied to each such target award.
The measurement of any Performance Measure(s) may exclude the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of accounting changes, each as defined by generally accepted accounting principles and as identified in the Company’s audited financial statements, including the notes thereto. Any Performance Measure(s) may be used to measure the performance of the Company or a Subsidiary as a whole or any business unit of the Company or any Subsidiary or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or a published or special index that the Committee, in its sole discretion, deems appropriate.
Nothing in this Section 9 is intended to limit the Committee’s discretion to adopt conditions with respect to any Incentive Award that is not intended to qualify as Performance-Based Compensation that relate to performance other than the Performance Measures.
In the event that the requirements of Section 162(m) and the regulations thereunder change to permit Committee discretion to alter the Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.
10. Adjustment5.2. Adjustments Upon Changes in Class A Shares
| (a) | Shares Available for Grants |
In the event of any changeCapitalization, Dissolution, Liquidation, Merger or Asset Sale.
(a) Changes in the number of Class A Shares outstanding by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum aggregate number of Class A Shares with respect to which the Committee may grant Incentive Awards and the maximum aggregate number of Class A Shares with respect to which the Committee may grant Incentive Awards to any individual Participant in any year shall be appropriately adjusted by the Committee. In the event of any change in the number of Class A Shares outstanding by reason of any other similar event or transaction, the Committee may, but need not, make such adjustments in the number and class of Class A Shares with respect to which Incentive Awards may be granted as the Committee may deem appropriate. | (b) | Increase or Decrease in Issued Shares Without Consideration |
Capitalization . Subject to any required action by the shareholdersstockholders of MDC, in the eventCompany, the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under Option, as well as the price per share and the number of shares of Common Stock covered by each Option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued Class A Sharesshares of Common Stock resulting from a subdivision or consolidation of Class A Shares or the payment of astock split, reverse stock split, stock dividend, (but only oncombination or reclassification of the Class A Shares),Common Stock, or any other increase or decrease in the number of such shares of Common Stock effected without receipt or payment of consideration by the Company; provided, however, that conversion of any convertible securities of the Company the Committee shall proportionally adjust the numbernot be deemed to have been “effected without receipt of Class A Shares subject to each outstanding Incentive Award and the exercise price per Class A Share of each such Incentive Award.Subject to any required actionconsideration.” Such adjustment shall be made by the shareholders of MDC,Administrator, whose determination in the event that MDCrespect shall be the surviving corporation in any merger or consolidation (except a merger or consolidation as a result of which the holders of Class A Shares receive securities of another corporation), each Incentive Award outstanding on the date of such merger or consolidation shall pertain tofinal, binding and apply to the securities which a holder of the number of Class A Shares subject to such Incentive Award would have received in such merger or consolidation.
| (d) | Certain Other Transactions |
In the event of (i) a dissolution or liquidation of MDC, (ii) a sale of all or substantially all of MDC’s assets, (iii) a merger or consolidation involving MDC in which MDC is not the surviving corporation or (iv) a merger or consolidation involving MDC in which MDC is the surviving corporation but the holders of Class A Shares receive securities of another corporation and/or other property, including cash, the Committee shall, in its absolute discretion, have the power to:
| (i) | cancel, effective immediately prior to the occurrence of such event, each Incentive Award (whether or not then exercisable), and, in full consideration of such cancellation, pay to the Participant to whom such Incentive Award was granted an amount in cash, for each Class A Share subject to such Incentive Award equal to the value, as determined by the Committee in its reasonable discretion, of such Incentive Award, provided that with respect to any outstanding Option or SAR such value shall be equal to the excess of (A) the value, as determined by the Committee in its reasonable discretion, of the property (including cash) received by the holder of Class A Shares as a result of such event over (B) the exercise price of such Option or SAR; or |
| (ii) | provide for the exchange of each Incentive Award (whether or not then exercisable or vested) for an incentive award with respect to, as appropriate, some or all of the property which a holder of the number of Class A Shares subject to such Incentive Award would have received in such transaction and, incident thereto, make an equitable adjustment as determined by the Committee in its reasonable discretion in the exercise price of the incentive award, or the number of shares subject to the incentive award or, if appropriate, provide for a cash payment to the Participant to whom such Incentive Award was granted in partial consideration for the exchange of the Incentive Award. |
In the event of any change in the capitalization of MDC or corporate change other than those specifically referred to in paragraphs (b), (c) or (d), the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Incentive Awards outstanding on the date on which such change occurs and in such other terms of such Incentive Awards as the Committee may consider appropriate to prevent dilution or enlargement of rights.
conclusive. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of MDC or any other corporation. Except as expressly provided in the Plan,herein, no issuance by MDCthe Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Class A Sharesshares of Common Stock subject to any Incentive Award. 11. Rights asan Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Periods then in progress shall be shortened by setting a StockholderNo personnew Exercise Date (the “
New Exercise Date”), and such Offering Periods shall have any rights as a stockholder with respect to any Class A Shares covered by or relating to any Incentive Award granted pursuantterminate immediately prior to the Plan untilconsummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date shall be before the date of the issuanceCompany’s proposed dissolution or liquidation. The Administrator shall notify each Participant in writing, at least ten business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 6.1 hereof or the Participant has ceased to be an Eligible Employee as provided in Section 6.2 hereof. (c) Merger or Asset Sale. In the event of a stock certificateproposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding Option shall be assumed or an equivalent Option substituted by the successor corporation or a parent or subsidiary of the successor corporation. If the successor corporation refuses to assume or substitute for the Option, any Offering Periods then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the Company’s proposed sale or merger. The Administrator shall notify each Participant in writing, at least ten business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 6.1 hereof or the Participant has ceased to be an Eligible Employee as provided in Section 6.2 hereof. 5.3. Insufficient Shares. If the Administrator determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which Options are to be exercised may exceed the number of shares of Common Stock remaining available for sale under the Plan on such shares. ExceptExercise Date, the Administrator shall make a pro rata allocation of the shares of Common Stock available for issuance on such Exercise Date in as otherwise expressly provided in Section 10 hereof, no adjustment of any Incentive Awarduniform a manner as shall be madepracticable and as it shall determine in its sole discretion to be equitable among all Participants exercising Options to purchase Common Stock on such Exercise Date, and unless additional shares are authorized for dividendsissuance under the Plan, no further Offering Periods shall take place and the Plan shall terminate pursuant to Section 7.5 hereof. If an Offering Period is so terminated, then the balance of the amount credited to the Participant’s Plan Account which has not been applied to the purchase of shares of Common Stock shall be paid to such Participant in one lump sum in cash within 30 days after such Exercise Date, without any interest thereon (except as may be required by applicable local laws).
5.4. Rights as Stockholders. With respect to shares of Common Stock subject to an Option, a Participant shall not be deemed to be a stockholder of the Company and shall not have any of the rights or otherprivileges of a stockholder. A Participant shall have the rights for whichand privileges of a stockholder of the record date occursCompany when, but not until, shares of Common Stock have been deposited in the designated account following exercise of the Participant’s Option. ARTICLE 6
TERMINATION OF PARTICIPATION 6.1. Cessation of Contributions; Voluntary Withdrawal. (a) A Participant may cease payroll deductions during an Offering Period and elect to withdraw from the Plan by delivering written notice of such election to the Company or an Agent designated by the Company in such form and at such time prior to the dateExercise Date for such stock certificateOffering Period as may be established by the Administrator (a “Withdrawal Election”). In the event a Participant elects to withdraw from the Plan, amounts then credited to such Participant’s Plan Account shall be returned to the Participant in one lump-sum payment in cash within 30 days after such election is issued.12. No Special Employment Rights; No Rightreceived by the Company, without any interest thereon (except as may be required by applicable local laws), and the Participant shall cease to Incentive Award
| (a) | Nothing contained in the Plan or any Incentive Award shall confer upon any Participant any right with respect to the continuation of his/her employment by or service to the Company or interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Incentive Award. |
participate in the Plan and the Participant’s Option for such Offering Period shall terminate upon receipt of the Withdrawal Election.
(b) A Participant’s withdrawal from the Plan shall not have any effect upon the Participant’s eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the Participant withdraws.
(c) A Participant who ceases contributions to the Plan during any Offering Period shall not be permitted to resume contributions to the Plan during that Offering Period. | (c) | No person shall have any claim or right to receive an Incentive Award hereunder. The Committee’s granting of an Incentive Award to a Participant at any time shall neither require the Committee to grant an Incentive Award to such Participant or any other Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other Participant or other person. |
13. Securities Matters
| (a) | MDC shall be under no obligation to effect the registration pursuant to the Securities Act of any Class A Shares to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, MDC shall not be obligated to cause to be issued or delivered any certificates evidencing Class A Shares pursuant to the Plan unless and until MDC is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which Class A Shares are traded and that the Participant has delivered all notices and documents required to be delivered to the Company in connection therewith. The Committee may require, as a condition to the issuance and delivery of certificates evidencing Class A Shares pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee deems necessary or desirable. |
| (b) | The exercise of any Option granted hereunder shall only be effective at such time as counsel to MDC shall have determined that the issuance and delivery of Class A Shares pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which Class A Shares are traded. MDC may, in its sole discretion, defer the effectiveness of an exercise of an Option hereunder or the issuance or transfer of Class A Shares pursuant to any Incentive Award pending or to ensure compliance under federal or state securities laws. MDC shall inform the Participant in writing of its decision to defer the effectiveness of the exercise of an Option or the issuance or transfer of Class A Shares pursuant to any Incentive Award. During the period that the effectiveness of the exercise of an Option has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto. |
14. Withholding Taxes
Whenever Class A Shares are6.2. Termination of Eligibility. Upon a Participant’s ceasing to be issuedan Eligible Employee, for any reason, such Participant’s Option for the applicable Offering Period shall automatically terminate, the Participant shall be deemed to have elected to withdraw from the Plan, and any balance on such Participant’s Plan Account shall be paid to such Participant or, in the case of the Participant’s death, to the person or persons entitled thereto pursuant to applicable law, within 30 days after such cessation of being an Eligible Employee, without any interest thereon (except as may be required by applicable local laws). If a Participant transfers employment from the Company or any Designated Company participating in the Section 423 Component to any Designated Company participating in the Non-Section 423 Component, such transfer shall not be treated as a termination of employment, but the Participant shall immediately cease to participate in the Section 423 Component; however, any contributions made for the Offering Period in which such transfer occurs shall be transferred to the Non-Section 423 Component, and such Participant shall immediately join the then-current Offering under the Non-Section 423 Component upon the same terms and conditions in effect for the Participant’s participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Company participating in the Non-Section 423 Component to the Company or any Designated Company participating in the Section 423 Component shall not be treated as terminating the Participant’s employment and shall remain a Participant in the Non-Section 423 Component until the earlier of (i) the end of the current Offering Period under the Non-Section 423 Component, or (ii) the Grant Date of the first Offering Period in which the Participant is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between companies participating in the Section 423 Component and the Non-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code. A Participant who transfers employment from any Designated Company participating in the Section 423 Component or the Non-Section 423 Component to an Affiliate and Subsidiary that is not a Designated Company shall be deemed to have elected to withdraw from the Plan, and any balance on such Participant’s Plan Account shall be paid to such Participant or, in the case of the Participant’s death, to the person or persons entitled thereto pursuant to applicable law, within 30 days after such cessation of being an Eligible Employee, without any interest thereon (except as may be required by applicable local laws).
ARTICLE 7
GENERAL PROVISIONS 7.1. Administration. (a) The Plan shall be administered by the Committee, which shall be composed of members of the Board. The Committee may delegate administrative tasks under the Plan to the services of an Agent or Employees to assist in the administration of the Plan, including, determining the Designated Companies participating in the Plan, establishing and maintaining an individual securities account under the Plan for each Participant, determining enrollment and withdrawal deadlines and determining exchange rates. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan. (b) It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with the provisions of the Plan. The Administrator shall have the power, subject to, and within the limitations of, the express provisions of the Plan: (i) To establish and terminate Offerings; (ii) To determine when and how Options shall be granted and the provisions and terms of each Offering (which need not be identical); (iii) To select Designated Companies in accordance with Section 7.2 hereof; and (iv) To construe and interpret the Plan, the terms of any Offering and the terms of the Options and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. The Administrator, in the exercise of anthis power, may correct any defect, omission or inconsistency in the Plan, any Offering or any Option, in a manner and to the extent it shall deem necessary or expedient to administer the Plan, subject to Section 423 of the Code for the Section 423 Component. (c) The Administrator may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding handling of participation elections, payroll deductions, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates which vary with local requirements. (d) The Administrator may adopt sub-plans applicable to particular Designated Companies or locations, which sub-plans may be designed to be outside the scope of Section 423 of the Code. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 5.1 hereof, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan. (e) All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company. The Administrator may employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Administrator, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No member of the Board or Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the grantOptions, and all members of the Board or vestingAdministrator shall be fully protected by the Company in respect to any such action, determination, or interpretation. 7.2. Designation of Affiliates and Subsidiaries. The Administrator shall designate from time to time the Affiliates and Subsidiaries that shall constitute Designated Companies, and determine whether such Designated Companies shall participate in the Section 423 Component or Non-Section 423 Component; provided, however, that an Affiliate that does not also qualify as a Subsidiary may be designated only as
participating in the Non-Section 423 Component. The Administrator may designate an Affiliate or Subsidiary, or terminate the designation of an Incentive Award, MDC shall have the right to require the Participant to remit to MDC in cash an amount sufficient to satisfy federal, state and local withholding tax requirements, if any, attributable to such exercise, grantAffiliate or vesting prior to the delivery of any certificate or certificates for such shares or the effectiveness of the lapse of such restrictions. In addition, upon the exercise or settlement of any Incentive Award in cash, MDC shall have the right to withhold from any cash payment required to be made pursuant thereto an amount sufficient to satisfy the federal, state and local withholding tax requirements, if any, attributable to such exercise or settlement.At the election of the Participant, subject toSubsidiary, without the approval of the Committee, when Class A Shares arestockholders of the Company.
7.3. Reports. Individual accounts shall be maintained for each Participant in the Plan. Statements of Plan Accounts shall be given to be issued uponParticipants at least annually, which statements shall set forth the exercise, grant or vestingamounts of an Incentive Award,payroll deductions, the Participant may tender to MDC aOption Price, the number of Class A Sharesshares purchased and the remaining cash balance, if any. 7.4. No Right to Employment. Nothing in the Plan shall be construed to give any person (including any Participant) the right to remain in the employ of the Company, a Parent or a Subsidiary or to affect the right of the Company, any Parent or any Subsidiary to terminate the employment of any person (including any Participant) at any time, with or without cause, which right is expressly reserved. 7.5. Amendment and Termination of the Plan. (a) The Board may, in its sole discretion, amend, suspend or terminate the Plan at any time and from time to time. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision), with respect to the Section 423 Component, or any other applicable law, regulation or stock exchange rule, the Company shall obtain stockholder approval of any such amendment to the Plan in such a manner and to such a degree as required by Section 423 of the Code or such other law, regulation or rule. (b) If the Administrator determines that have been ownedthe ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may in its discretion modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to: (i) altering the Option Price for any Offering Period including an Offering Period underway at the time of the change in Option Price; (ii) shortening any Offering Period so that the Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and (iii) allocating shares of Common Stock. Such modifications or amendments shall not require stockholder approval or the consent of any Participant. (c) Upon termination of the Plan, the balance in each Participant’s Plan Account shall be refunded as soon as practicable after such termination, without any interest thereon (except as may be required by applicable local laws). 7.6. Use of Funds; No Interest Paid. All funds received by the Participant for at least six months (or such other period asCompany by reason of purchase of shares of Common Stock under the Committee may determine) having a Fair Market Value atPlan shall be included in the tender date determined by the Committee to be sufficient to satisfy the federal, state and local withholding tax requirements, if any, attributable to such exercise, grant or vesting but not greater than such withholding obligations. Such election shall satisfy the Participant’s obligations under Section 14(a) hereof, if any.
At the electiongeneral funds of the Company free of any trust or other restriction and may be used for any corporate purpose (except as may be required by applicable local laws). No interest shall be paid to any Participant subject toor credited under the Plan (except as may be required by applicable local laws).
7.7. Term; Approval by Stockholders. No Option may be granted during any period of suspension of the Plan or after termination of the Plan. The Plan shall be submitted for the approval of the Committee,Company’s stockholders within 12 months after the Effective Date. Options may be granted prior to such stockholder approval; provided, however, that such Options shall not be exercisable prior to the time when Class A Shares are to be issued upon the exercise, grant or vesting of an Incentive Award, MDC shall withhold a number of such shares having a Fair Market Value at the exercise date determinedPlan is approved by the Committee to be sufficient to satisfystockholders; provided, further that if such approval has not been obtained by the federal, state and local withholding tax requirements, if any, attributable to such exercise, grant or vesting but not greater than such withholding obligations. Such election shall satisfy the Participant’s obligations under Section 14(a) hereof, if any.15. Amendment or Terminationend of the Plan
The Board of Directors may at any time suspend or discontinue12-month period (or, if earlier, the Plan or revise or amend it in any respect whatsoever; provided, however, that without approvallast date of the shareholders no revision or amendment shall except as provided in Section 10 hereof, (i) increase the number of Class A Shares that may be issuedInitial Offering Period), all Options previously granted under the Plan shall thereupon terminate and be canceled and become null and void without being exercised.
7.8. Effect Upon Other Plans. The adoption of the Plan shall not affect any other compensation or (ii) materially modifyincentive plans in effect for the requirements as to eligibility for participationCompany, any Parent or any Subsidiary. Nothing in the Plan. Nothing hereinPlan shall restrict the Committee’s abilitybe construed to exercise its discretionary authority hereunder pursuant to Section 4 hereof, which discretion may be exercised without amendment to the Plan. No action hereunder may, without the consent of a Participant, reduce the Participant’s rights under any previously granted and outstanding Incentive Award. Nothing herein shall limit the right of the Company, any Parent or any Subsidiary (a) to payestablish any other forms of incentives or compensation of any kind outside the termsfor employees of the Plan.16. No ObligationCompany or any Parent or any Subsidiary, or (b) to Exercise
The grant to a Participantor assume Options otherwise than under the Plan in connection with any proper corporate purpose, including, but not
by way of an Optionlimitation, the grant or SAR shall impose no obligation upon such Participant to exercise such Option or SAR.17. Transfers Upon Death
Upon the deathassumption of a Participant, outstanding Incentive Awards granted to such Participant may be exercised only by the executors or administrators of the Participant’s estate or by any person or persons who shall have acquired such right to exercise by will or by the laws of descent and distribution. No transfer by will or the laws of descent and distribution of any Incentive Award, or the right to exercise any Incentive Award, shall be effective to bind MDC unless the Committee shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Incentive Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participantoptions in connection with the grantacquisition, by purchase, lease, merger, consolidation or otherwise, of the Incentive Award.
18. Expensesbusiness, stock or assets of any corporation, firm or association.
7.9. Conformity to Securities Laws. Notwithstanding any other provision of the Plan, the Plan and ReceiptsThe expensesthe participation in the Plan by any individual who is then subject to Section 16 of the Exchange Act shall be subject to any additional limitations set forth in any applicable exemption rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan shall be paiddeemed amended to the extent necessary to conform to such applicable exemptive rule.
7.10. Notice of Disposition of Shares. Each Participant shall give the Company prompt notice of any disposition or other transfer of any shares of Common Stock, acquired pursuant to the exercise of an Option granted under the Section 423 Component, if such disposition or transfer is made (a) within two years after the applicable Grant Date or (b) within one year after the transfer of such shares of Common Stock to such Participant upon exercise of such Option. The Company may direct that any certificates evidencing shares acquired pursuant to the Plan refer to such requirement. 7.11. Tax Withholding. At the time of any taxable event that creates a withholding obligation for the Company or any Parent, Affiliate or Subsidiary, the Participant will make adequate provision for any Tax-Related Items. In their sole discretion, and except as otherwise determined by MDC. Anythe Administrator, the Company or the Designated Company that employs or employed the Participant may satisfy their obligations to withhold Tax-Related Items by (a) withholding from the Participant’s wages or other compensation, (b) withholding a sufficient whole number of shares of Common Stock otherwise issuable following exercise of the Option having an aggregate value sufficient to pay the Tax-Related Items required to be withheld with respect to the Option and/or shares, or (c) withholding from proceeds receivedfrom the sale of shares of Common Stock issued upon exercise of the Option, either through a voluntary sale or a mandatory sale arranged by MDC in connection with any Incentive Award will be used for general corporate purposes.19. the Company.
7.12. Governing Law. The Plan and theall rights of all persons under the Planand obligations thereunder shall be construed and administeredenforced in accordance with the laws of the State of New York,Delaware, without regard to itsthe conflict of law principles,rules thereof or of any other jurisdiction. 7.13. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. 7.14. Conditions to Issuance of Shares. (a) Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing shares of Common Stock pursuant to the exercise of an Option by a Participant, unless and until the Administrator has determined, with advice of counsel, that the issuance of such shares of Common Stock is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any securities exchange or automated quotation system on which the shares of Common Stock are listed or traded, and the shares of Common Stock are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Administrator may require that a Participant make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. (b) All certificates for shares of Common Stock delivered pursuant to the Plan and all shares of Common Stock issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with U.S. and non-U.S. federal, state or local securities or other laws, rules and regulations and the rules of any securities exchange or automated quotation system on which the shares of Common Stock are listed, quoted, or traded. The Administrator may place legends on any certificate or book entry evidencing shares of Common Stock to reference restrictions applicable to the shares of Common Stock.
(c) The Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Option, including, a window-period limitation, a holding period requirement or transfer restriction, in each case, as may be imposed in the sole discretion of the Administrator. (d) Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company may, in lieu of delivering to any Participant certificates evidencing shares of Common Stock issued in connection with any Option, record the issuance of shares of Common Stock in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). If, pursuant to this Section 7.14, the Administrator determines that shares of Common Stock will not be issued to any Participant, the Company is relieved from liability to any Participant except to refund to the Participant such Participant’s Plan Account balance, without interest thereon (except as may be required by applicable local laws). 7.15. Equal Rights and Privileges. All Eligible Employees granted Options pursuant to an Offering under the Section 423 Component shall have equal rights and privileges under this Plan to the extent required under Section 423 of the Code so that the Section 423 Component qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code and all Eligible Employees subject to Section 16 of the Exchange Act shall have equal rights and privileges under this Plan to the extent required under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act). Any provision of the Section 423 Component that is inconsistent with Section 423 of the Code shall, without further act or amendment by the Company or the Board, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. Subject to the first sentence of this Section 7.15 and Section 7.9 hereof, Eligible Employees participating in the Non-Section 423 Component need not have the same rights and privileges as each other, or as Eligible Employees participating in the Section 423 Component. 7.16. Rules Particular to Specific Countries. Notwithstanding anything herein to the contrary, the terms and conditions of the Plan with respect to Participants who are tax residents of a particular non-U.S. country or who are non-U.S. nationals or employed in non-U.S. jurisdictions may be subject to an addendum to the Plan in the form of an appendix or sub-plan (which appendix or sub-plan may be designed to govern Offerings under the Section 423 Component or the Non-Section 423 Component, as determined by the Administrator). To the extent that the terms and conditions set forth in an appendix or sub-plan conflict with any provisions of the Plan, the provisions of the appendix or sub-plan shall govern. The adoption of any such appendix or sub-plan shall be pursuant to Section 7.1 hereof. Without limiting the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are non-U.S. nationals or employed in non-U.S. jurisdictions, regarding the exclusion of particular Affiliates or Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, establishment of bank or trust accounts to hold payroll deductions or contributions. 7.17. Section 409A. The Section 423 Component of the Plan and the Options granted pursuant to Offerings thereunder are intended to be exempt from the application of New York law would result in a violationSection 409A as “statutory stock options” within the meaning of Treasury Regulation Section 1.409A-1(b)(5)(ii). The Non-Section 423 Component of the Canadian Business Corporation Act.20. Effective DatePlan and Termthe Options granted pursuant to Offerings thereunder are intended to be exempt from the application of Plan
TheSection 409A as “short-term deferrals” within the meaning of Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding any provision of the Plan was adoptedto the contrary, if the Administrator determines that any Option granted under the Plan may be or become subject to Section 409A or that any provision of the Plan may cause an Option granted under the Plan to be or become subject to Section 409A, the Administrator may adopt such amendments to the Plan and/or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions as the Administrator determines are necessary or appropriate to avoid the imposition of taxes under Section 409A, either through compliance with the requirements of Section 409A or with an available exemption therefrom.
* * * * *
![[MISSING IMAGE: px_stagwellproxy1pg1-bw.jpg]](/files/DEF 14A/0001104659-23-054448/px_stagwellproxy1pg1-bw.jpg) ANNUAL MEETING OF STOCKHOLDERS OFSTAGWELL INC.June 14, 2023INTERNET - Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) inthe United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call.Vote online/phone until 11:59 PM EST the day before the meeting.MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.IN PERSON - You may vote your shares in person by attending the Annual Meeting.GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet.20933040300000001000 2061423THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS, "FOR" PROPOSALS 2, 3 AND 5 AND FOR "ONE YEAR" ON PROPOSAL 4.PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE xFOR AGAINST ABSTAIN 1.Election of Directors:FOR ALL NOMINEES WITHHOLD AUTHORITY NOMINEES:O Charlene BarshefskyO Bradley J. GrossO Wade Oosterman 2.Approval of 2023 Employee Stock Purchase Plan.3.Approval, on an advisory basis, of 2022 compensation of our named executive officers.ONE TWO THREE FOR ALL NOMINEESFOR ALL EXCEPT(See instructions below) O Mark J. PennO Desirée RogersO Eli Samaha O Irwin D. Simon O Rodney Slater 4.Advisory vote on frequency of future advisory votes on executive compensation. YEAR YEARS YEARS ABSTAINFOR AGAINST ABSTAIN O Brandt VaughanINSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: 5.Ratification of selection of PricewaterhouseCoopers LLP as independent registered public accounting firm for the fiscal year ending December 31, 2023.In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. This proxy when properly executed will be voted as directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR ALL NOMINEES in Proposal 1, FOR Proposals 2, 3 and 5 and for ONE YEAR on Proposal 4. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. Signature of Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
STAGWELL INC.Proxy for Annual Meeting of Stockholders on June 14, 2023Solicited on Behalf of the Board of Directors on April 21, 2016, subject to the approvalDirectorsThe undersigned hereby appoints Frank Lanuto and Jay Leveton, and each of the Plan by the shareholders of MDC. No grants may be made under the Plan after April 22, 2026.
FORM OF PROXY — CLASS A SHARES
MDC PARTNERS INC.
FORM OF PROXY
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF MDC PARTNERS INC. (“MDC PARTNERS”) FOR USE AT THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD ON JUNE 1, 2016.
The undersigned, a shareholder of MDC Partners, hereby nominates, constitutes and appoints as his or her nominee Mr. Scott Kauffman, or failing him, Mr. Mitchell Gendel, or instead of any of the foregoing (strike out preceding names and print name of alternative nominee), them,with full power of substitution and power to attend andact alone, as proxies to vote all of the Class A Shares of MDC Partners held byshares ofCommon Stock which the undersigned for and on behalf of the undersignedwould be entitled to vote if personally present andacting at the annual meetingAnnual Meeting of shareholdersStockholders of MDC PartnersStagwell Inc., to be held on Wednesday, June 1, 201614, 2023at 11:30 a.m. at MDC’s Innovation Centre, 745 Fifth Avenue,One World Trade Center, Floor 65 New York, N.Y. commencing at 10:00 a.m. (New York City time) (the “Meeting”)NY 10007, and at any adjournmentanyadjournments or postponementpostponements thereof, in the manner indicated. If no specification is made, the shares represented by this proxy willas follows:(Continued and to be votedFOR each of the matters specified below:
| 1. | The nominees proposed by management to act as directors of MDC Partners, to hold office until successors are elected at the next annual meeting of MDC Partners, or any adjournment or postponement thereof, or until his successor is otherwise elected, are: |
| | | | | | | | | VoteFOR: | | WITHHOLDfrom Voting: | Scott L. Kauffman | | o | | o | Clare Copeland | | o | | o | Larry Kramer | | o | | o | Anne Marie O’Donovan | | o | | o | Irwin D. Simon | | o | | o |
| 2. | to VoteFORo or toWITHHOLDo from Voting on the appointment of BDO USA, LLP to act as auditors of MDC Partners and to authorize the Audit Committee to fix their remuneration. |
| 3. | to VoteFORo orAGAINSTo the approval of the 2016 Stock Incentive Plan. |
| 4. | to VoteFORoAGAINSTo a non-binding advisory resolution on the Company’s executive compensation. |
I HEREBY REVOKE ANY PRIOR PROXY OR PROXIES IN FAVOR OF THE NOMINEE. WITH RESPECT TO AMENDMENTS OR VARIATIONS TO ANY MATTER IN THE NOTICE OF MEETING AND ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING, I HEREBY CONFER DISCRETIONARY AUTHORITY ON THE PERSON WHO VOTES AND ACTS ON MY BEHALF HEREUNDER TO VOTE WITH RESPECT TO AMENDMENTS OR VARIATIONS TO THE ABOVE MATTERS AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, AS HE OR SHE THINKS FIT. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON ANY VOTE OR BALLOT CALLED.
DATED this day of , 2016.
PRINT NAME:
Signature of Registered Shareholder:
Number of Class A Shares Represented Hereby:
INSTRUCTIONS FOR PROXY:
| 1. | This proxy must be dated and signed by a shareholder or his or her attorney duly authorized in writing, or if the shareholder is a corporation, by the proper officers or directors under its corporate seal, or by an officer or attorney thereof duly authorized. When signing in a fiduciary or representative capacity, please give full title as such. |
| 2. | A shareholder has the right to appoint a person to attend and act for him or her and on his or her behalf at the Meeting other than the persons designated in this form of proxy. Such right may be exercised by filling in the name of such person in the blank space provided and striking out the names of management’s nominees. A person appointed as nominee to represent a shareholder need not be a shareholder of MDC Partners.A person appointed as your proxy holder must be present at the Meeting to vote. |
| 3. | If not dated, this proxy is deemed to bear the date on which it was mailed on behalf of the management of MDC Partners. |
| 4. | Each shareholder who is unable to attend the Meeting is respectfully requested to date and sign this form of proxy and return it using the self-addressed envelope provided. |
| 5. | To be valid, this proxy must be received by the proxy department of CST Trust Company, Attn: Proxy Department, not later than 10:00 a.m. (Eastern Daylight Time) on Monday, May 30, 2016, or 48 hours before the time of the holding of any adjourned or postponed Meeting, or delivered to the Chairman on the day of the Meeting or any adjournment or postponement thereof. The proxy cut off time may be waived or extended by the chairman of the meeting without notice. Proxies may be submitted by one of the following alternative methods: |
By Internet: www.cstvotemyproxy.com and enter the 13 digit control number printed on the form of proxy and follow the instructions on screen;
By Phone: 1-888-489-5760 (toll-free in North America) and enter the 13 digit control number printed on the form of proxy;
By Email: proxy@canstockta.com:
By Fax: 416-368-2502 or1-866-781-3111 (toll-free in North America); or
By Mail: CST Trust Company, Attn. Proxy Department, P.O. Box 721, Agincourt, Ontario M1S 0A1.
| 6. | Any of the joint holders of common shares of MDC Partners may sign a form of proxy in respect of such common shares but, if more than one of them is present at the Meeting or represented by proxy holder, then that one of them whose name appears first in the register of the holders of such common shares, or that one’s proxy holder will alone be entitled to vote in respect thereof. |
Any questions and requests for assistance may be directed to the
Proxy Solicitation Agent:
reverse side)![[GRAPHIC MISSING]](https://capedge.com/proxy/DEF 14A/0001144204-16-095623/logo_kingsdale.jpg)
The Exchange Tower
130 King Street West, Suite 2950, P.O. Box 361
Toronto, Ontario
Canada M5X 1E2
Call Toll-Free at: 1-866-228-8614 within North America
Call Collect at: 416-867-2272 outside North America
E-mail: contactus@kingsdaleshareholder.com
Facsimile: 416-867-2271
Toll Free Facsimile: 1-866-545-5580
FORM OF PROXY — CLASS B SHARES
MDC PARTNERS INC.
FORM OF PROXY
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF MDC PARTNERS INC. (“MDC PARTNERS”) FOR USE AT THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD ON JUNE 1, 2016.
The undersigned, a shareholder of MDC Partners, hereby nominates, constitutes and appoints as his or her nominee Mr. Scott Kauffman, or failing him, Mr. Mitchell Gendel, or instead of any of the foregoing (strike out preceding names and print name of alternative nominee), with full power of substitution, to attend and vote all of the Class B Shares of MDC Partners held by the undersigned for and on behalf of the undersigned at the annual meeting of shareholders of MDC Partners to be held on Wednesday, June 1, 2016 at MDC’s Innovation Centre, 745 Fifth Avenue, New York, N.Y. commencing at 10:00 a.m. (New York City time) (the “Meeting”) and at any adjournment or postponement thereof in the manner indicated. If no specification is made, the shares represented by this proxy will be votedFOR each of the matters specified below:
| 1. | The nominees proposed by management to act as directors of MDC Partners, to hold office until successors are elected at the next annual meeting of MDC Partners, or any adjournment or postponement thereof, or until his successor is otherwise elected, are: |
| | | | | | | | | VoteFOR: | | WITHHOLD from Voting: | Scott L. Kauffman | | o | | o | Clare Copeland | | o | | o | Larry Kramer | | o | | o | Anne Marie O’Donovan | | o | | o | Irwin D. Simon | | o | | o |
0000876883 3 2022-01-01 2022-12-31 | 2. | to VoteFORo or toWITHHOLDo from Voting on the appointment of BDO USA, LLP to act as auditors of MDC Partners and to authorize the Audit Committee to fix their remuneration. |
| 3. | to VoteFORo orAGAINSTo approval of the 2016 Stock Incentive Plan. |
| 4. | to VoteFORo orAGAINSTo a non-binding advisory resolution on the Company’s executive compensation. |
I HEREBY REVOKE ANY PRIOR PROXY OR PROXIES IN FAVOR OF THE NOMINEE. WITH RESPECT TO AMENDMENTS OR VARIATIONS TO ANY MATTER IN THE NOTICE OF MEETING AND ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING, I HEREBY CONFER DISCRETIONARY AUTHORITY ON THE PERSON WHO VOTES AND ACTS ON MY BEHALF HEREUNDER TO VOTE WITH RESPECT TO AMENDMENTS OR VARIATIONS TO THE ABOVE MATTERS AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, AS HE OR SHE THINKS FIT. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON ANY VOTE OR BALLOT CALLED.
DATED this day of , 2016.
PRINT NAME:
Signature of Registered Shareholder:
Number of Class B Shares Represented Hereby:
INSTRUCTIONS FOR PROXY:
| 1. | This proxy must be dated and signed by a shareholder or his or her attorney duly authorized in writing, or if the shareholder is a corporation, by the proper officers or directors under its corporate seal, or by an officer or attorney thereof duly authorized. When signing in a fiduciary or representative capacity, please give full title as such. |
| 2. | A shareholder has the right to appoint a person to attend and act for him or her and on his or her behalf at the Meeting other than the persons designated in this form of proxy. Such right may be exercised by filling in the name of such person in the blank space provided and striking out the names of management’s nominees. A person appointed as nominee to represent a shareholder need not be a shareholder of MDC Partners.A person appointed as your proxy holder must be present at the Meeting to vote. |
| 3. | If not dated, this proxy is deemed to bear the date on which it was mailed on behalf of the management of MDC Partners. |
| 4. | Each shareholder who is unable to attend the Meeting is respectfully requested to date and sign this form of proxy and return it using the self-addressed envelope provided. |
| 5. | To be valid, this proxy must be received by the proxy department of CST Trust Company, Attn: Proxy Department, not later than 10:00 a.m. (Eastern Daylight Time) on Monday, May 30, 2016, or 48 hours before the time of the holding of any adjourned or postponed Meeting, or delivered to the Chairman on the day of the Meeting or any adjournment or postponement thereof. The proxy cut off time may be waived or extended by the chairman of the meeting without notice. Proxies may be submitted by one of the following alternative methods: |
By Internet: www.cstvotemyproxy.com and enter the 13 digit control number printed on the form of proxy and follow the instructions on screen;
By Phone: 1-888-489-5760 (toll-free in North America) and enter the 13 digit control number printed on the form of proxy;
By Email: proxy@canstockta.com;
By Fax: 416-368-2502 or1-866-781-3111 (toll-free in North America); or
By Mail: CST Trust Company, Attn. Proxy Department, P.O. Box 721, Agincourt, Ontario M1S 0A1.
| 6. | Any of the joint holders of common shares of MDC Partners may sign a form of proxy in respect of such common shares but, if more than one of them is present at the Meeting or represented by proxy holder, then that one of them whose name appears first in the register of the holders of such common shares, or that one’s proxy holder will alone be entitled to vote in respect thereof. |
Any questions and requests for assistance may be directed to the
Proxy Solicitation Agent:
The Exchange Tower
130 King Street West, Suite 2950, P.O. Box 361
Toronto, Ontario
Canada M5X 1E2
Call Toll-Free at: 1-866-228-8614 within North America
Call Collect at: 416-867-2272 outside North America
E-mail: contactus@kingsdaleshareholder.com
Facsimile: 416-867-2271
Toll Free Facsimile: 1-866-545-5580
|
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