Tucows Inc. will hold its 2020 Annual Meeting of Stockholders (“Annual Meeting”) on September 8, 2020 commencing at 1:00 PM Eastern. In light of health, transportation, and other logistical issues raised by the spread of the coronavirus disease (COVID-19), we have decided to hold the Annual Meeting virtually through the Internet rather than in person. You ~~are cordially invited~~ will not be able to attend the ~~2017 annual~~Annual Meeting physically. After the Annual Meeting, please join us for a business update. If you desire to attend the Annual Meeting virtually, you must register for the meeting by emailing the following information to AGM@tucows.com.

You are entitled to register and participate in the Annual Meeting as a shareholder if you were a shareholder on July 14, 2020, the record date of ~~shareholders of Tucows Inc.~~the Annual Meeting. Registration is now open and you must register before 5:00 p.m. Eastern on September 3, 2020 in order to be ~~held~~able to attend the Annual Meeting online. You will receive a confirmation email confirming that we received your registration within 72 hours of our receipt of your properly completed registration.

Shareholders who have registered for the Annual Meeting will receive an email with a live meeting link two hours before the meeting starts that they must use to join the Annual Meeting. Using that link, shareholders will be able to listen to the meeting live, submit questions and vote online. We encourage you to access the meeting prior to the start time. Online access will open approximately at 12:45PM Eastern, and you should allow ample time to log in to the ~~offices of~~meeting and test your computer audio system. We recommend that you carefully review the ~~company, 96 Mowat Avenue, Toronto, Ontario, M6K 3M1, Canada, on Tuesday, September 5, 2017 at 4:30 p.m. (local time).~~procedures needed to gain admission in advance.

The accompanying notice of ~~annual meeting~~Annual Meeting and proxy statement describes the matters we will discuss and vote on at the ~~annual meeting.~~Annual Meeting. You will also have an opportunity to ask questions.

As permitted by the rules of the Securities and Exchange Commission (the “SEC”), we are furnishing proxy materials, including this notice of Annual Meeting, proxy statement, our ~~2016~~ Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and the electronic proxy card for the meeting to our shareholders via the Internet by sending ~~them~~you a Notice of Internet Availability of Proxy Materials (the “Notice”) that explains how to access our proxy materials and how to vote online. If you received the Notice and would like us to send you a printed copy of our proxy materials, please follow the instructions included in the Notice.

Your vote is important. I hope you will join us at the ~~annual meeting.~~virtual Annual Meeting. Whether or not you plan to attend, we encourage you to vote – regardless of the size of your share holdings. Every vote is important, and your participation enables us to listen and act on what matters to you as a shareholder. Please ensure that your shares are represented and voted at the ~~annual meeting~~Annual Meeting in accordance with your instructions by promptly completing, signing, dating and returning the enclosed proxy card in the envelope provided, or by voting your shares over the phone or Internet. Voting via the Internet ~~or by telephone~~ is fast and convenient, and your vote is immediately tabulated and confirmed. Using the Internet ~~or telephone~~ also helps save us money by reducing postage and proxy tabulation costs. ~~You may also be entitled to vote in person at the meeting.~~ Please refer to detailed instructions included in the proxy statement or in the Notice of Internet Availability of Proxy Materials.

The ~~2017 annual meeting~~ 2020 Annual Meeting of shareholders of Tucows Inc. will be held virtually per our President and Chief Executive Officer’s Shareholder Letter at ~~4:30~~1:00 p.m. ~~(local time)~~Eastern on September ~~5, 2017 at the offices of the company, 96 Mowat Avenue, Toronto, Ontario, M6K 3M1, Canada,~~8, 2020, to:

At the ~~annual meeting,~~Annual Meeting, our Board of Directors intends to present Allen Karp, Rawleigh Ralls, Erez Gissin, Elliot Noss, Jeffery Schwartz, Robin Chase and Brad Burnham as nominees for election to the Board of Directors.

Only shareholders of record on the books of the company at the close of business on July ~~10, 2017~~14, 2020 will be entitled to notice of, and to vote at, the ~~annual meeting~~Annual Meeting and any adjournment or postponement thereof. Our Board of Directors is soliciting the enclosed proxy. Please carefully read the accompanying proxy statement for more information regarding the business to be transacted at the ~~annual meeting.~~Annual Meeting. You will also find enclosed our ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the fiscal year ended December 31, 2019.

~~We will make available at the annual meeting a~~A complete list of the shareholders entitled to vote at the ~~annual meeting,~~Annual Meeting is available at the Company’s headquarters in Toronto, will be made available to the inspector of election in connection with the Annual Meeting, and ~~you may examine~~will be available to those who properly register for and attend the ~~list~~Annual Meeting to review for ~~any purpose~~purposes related to the ~~annual meeting.~~Annual Meeting.

~~Your~~ vote is important. Whether or not you plan to attend, we encourage you to vote – regardless of the size of your share holdings. Every vote is important, and your participation enables us to listen and act on what matters to you as a shareholder. Please ensure that your shares are represented and voted at the annual meeting in accordance with your instructions by promptly completing, signing, dating and returning the enclosed proxy card in the envelope provided, or by voting your shares over the phone or Internet. Voting via the Internet or by telephone is fast and convenient, and your vote is immediately tabulated and confirmed. Using the Internet or telephone also helps save us money by reducing postage and proxy tabulation costs. You may also be entitled to vote in person at the meeting. Please refer to detailed instructions included in the proxy statement or in the Notice of Internet Availability of Proxy Materials.

for the ~~Annual~~Annual Meeting of Stockholders to BeBe Held on September ~~5, 2017~~8, 2020:

We are furnishing proxy materials to you via the Internet. The Notice of Internet Availability Proxy Materials will instruct you as to how you may vote your proxy. No printed materials will be available unless you specifically request them by following the instructions in the “Notice of Internet Availability of Proxy Materials.” Printed copies will be provided upon request at no charge.

This proxy statement and ~~the~~ ~~2016~~our Annual Report on Form 10-K for the fiscal year ended December 31, 2019are also available at http://www.tucows.com/investors/filings/ for viewing, downloading and printing. The information on our website is not part of this proxy statement. References to our website in this proxy statement are intended to serve as inactive textual references only.

We are sending this proxy statement to shareholders of Tucows Inc., a Pennsylvania corporation (“Tucows”, the “Company”, “we” or ~~the “Company”~~“our”), in connection with our Board of Directors’ (the “Board”) solicitation of proxies for use at our ~~annual meeting~~Annual Meeting of shareholders to be held virtually per our President and Chief Executive Officer’s Shareholder Letter at 1:00 p.m. Eastern on September ~~5, 2017.~~8, 2020 (the “Annual Meeting”). We have also enclosed our ~~2016~~ Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (“2019 Annual Report”) (which does not form a part of the proxy solicitation material).

The record date for the ~~annual meeting~~Annual Meeting was July ~~10, 2017.~~14, 2020. You may vote all shares of our common stock that you owned as of the close of business on that date. On July ~~10, 2017,~~14, 2020, we had ~~10,553,142~~10,570,610 shares of common stock outstanding. Each share of common stock is entitled to one vote on each matter to be voted at the ~~annual meeting.~~Annual Meeting. This proxy statement or the Notice of Internet Availability of Proxy Materials (the “Notice”) are being mailed or made available on the Internet on or about July ~~25, 2017~~24, 2020 to shareholders of record as of the close of business on the record date.

By mail. If you hold your shares through a securities broker (that is, in street name), you may complete and mail the voting instruction card forwarded to you by your broker. If you hold your shares in your name as a holder of record, you can vote your shares by proxy by properly completing, signing and dating the proxy card and returning it in the enclosed postage-paid envelope. A properly completed and returned proxy card will be voted as you instruct, unless you subsequently revoke your instructions.

~~By telephone.~~ If you hold your shares through a securities broker, you may vote by telephone by following the instructions included with the voting instruction card forwarded to you by your broker. If you vote your shares via telephone, you may incur additional charges.

By Internet. If you hold your shares through a securities broker, you may vote your shares via the Internet by following the instructions included with the voting instruction card forwarded to you by your broker. If you vote your shares via the Internet, you may incur costs such as ~~telephone and~~ Internet access charges. Internet voting is available through 11:59 p.m., prevailing time, on September 7, 2020.

At the ~~annual meeting.~~ Annual Meeting. Submitting your vote by mail or via the Internet does not limit your right to vote ~~in person at~~by attending the annual meeting per our President and Chief Executive Officer’s Shareholder Letter if you later decide to do so. To attend please register by email to agm@tucows.com. If you hold your shares in street name and want to vote ~~in person~~virtually at the ~~annual meeting,~~Annual Meeting, you must obtain a proxy from your broker and ~~bring it~~email a copy of your legal proxy to ~~the annual meeting.~~Angela Lamb at our Share Transfer Agent, Philadelphia Stock Transfer Inc., at alamb@philadelphiastocktransfer.com by 5:00 p.m. Eastern September 3, 2020.

You can revoke your proxy at any time before your shares are voted at the ~~annual meeting.~~Annual Meeting. If you are a shareholder of record, you can send a written notice of revocation to our ~~secretary~~Secretary at our principal executive office (96 Mowat Avenue, Toronto, Ontario, M6K 3M1, Canada) or preferably by email to agm@tucows.com and request another proxy card. If you hold your shares through a broker, bank or other nominee, you can revoke your proxy by contacting ~~the~~such broker, bank or other nominee and asking for a new proxy card. If you submitted your proxy by Internet, ~~or by telephone,~~ you can amend your vote by re-voting over the ~~Internet or by telephone.~~Internet. You can also virtually attend the ~~annual meeting~~Annual Meeting and ~~vote in person.~~vote. Merely virtually attending the ~~annual meeting~~Annual Meeting will not revoke your proxy.

If you return a properly completed, signed and dated proxy card without indicating your vote and do not revoke your proxy, your shares will be voted according to the ~~Board of Directors~~’Board’ recommendations.

On September ~~5, 2017~~8, 2020 we need the presence of, ~~in person~~virtually or by proxy, shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast, on a particular matter to be acted upon at the meeting, in order to constitute a quorum for the purpose of consideration of and action on the matter. If a quorum is present, then the shareholders can continue to do business and vote on other matters until adjournment. Votes withheld in the election of directors are treated as present for purposes of determining a quorum. If your shares are held in “street name” and you do not give your broker voting instructions, your broker generally will have discretion to vote your shares for “routine” matters such as the proposal to ratify KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, ~~2017.~~2020. If your broker votes your shares on this proposal you will be deemed present for purposes of determining a quorum. For more information regarding “routine” and “non-routine” matters and “broker non-votes,” see “Street Name Shares and Broker Non-Votes.”

A plurality of the votes cast is required for the election of directors. Accordingly, the seven nominees for election as directors who receive the highest number of votes actually cast will be elected.

~~Vote Required~~Votes required to ~~Ratify~~Approve the ~~Appointment~~Amendment of ~~KPMG~~ ~~LLP~~our 2006 Equity Compensation Plan

The affirmative vote of a majority of the votes cast by all holders of shares of common stock represented at the Annual Meeting, virtually or by proxy, and entitled to vote is required to approve the amendment of our 2006 Equity Compensation.

Vote Required regarding Advisory Votes on the Compensation of Our Named Executive Officers

The affirmative vote of a majority of the votes cast by all shareholders represented at the ~~annual meeting,~~Annual Meeting, virtually or by proxy, and entitled to vote is required to approve, on an advisory basis, the compensation of our named executive officers.

Vote Required regarding the Frequency of Advisory Votes on the Compensation of Our Named Executive Officers

For the non-binding advisory vote on the frequency of shareholder advisory votes on the compensation of our named executive officers, the frequency receiving the highest number of votes from shareholders represented at the Annual Meeting virtually or by proxy and entitled to vote will be considered the frequency preferred by the shareholders. Because this vote is non-binding, our Board may determine the frequency of future advisory votes on the compensation of our named executive officers in ~~person~~its discretion.

The affirmative vote of a majority of the votes cast by all shareholders represented at the Annual Meeting virtually or by proxy, and entitled to vote is required to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, ~~2017.~~2020.

~~Vote Required regarding Advisory Votes~~If your shares are held in “street name,” you must instruct the broker or such other nominee as to how to vote your shares by following the instructions that the broker or other nominee provides to you. Brokers usually offer the ability for stockholders to submit voting instructions by mail by completing a vote instruction form, by telephone or over the Internet. If you do not provide instructions to your broker or other nominee, your shares will not be voted on ~~the Compensation of Our Named Executive Officers~~any proposal on which your broker or other nominee does not have discretionary authority to vote. This is called a “broker non-vote.”

~~The~~ ~~affirmative~~Brokers will not have authority to vote (i) for the election of ~~a majority~~directors; (ii) to approve the amendment and restatement of the ~~votes cast by all shareholders represented at the annual meeting, in person or by proxy,~~2006 Plan; (iii) to approve, on an advisory basis, named executive officer compensation; and ~~entitled to vote is required~~(vi) to approve, on an advisory basis, the ~~compensation~~frequency of ~~our~~non-binding advisory votes on named executive ~~officers.~~

A “broker non-vote” occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have authority to vote on that particular proposal without receiving voting instructions from the beneficial owner. Under applicable New York Stock Exchange (“NYSE”) rules, brokers cannot exercise discretion to vote shares in an uncontested election of directors or on matters relating to executive compensation (each, a “non-routine” proposal) if the shareholder does not give the broker voting instructions for these matters. To the extent that brokers have not received voting instructions, brokers report such number of shares as “non-votes.” Accordingly, subject to the rules of the NYSE concerning transmission of proxy materials to beneficial owners, and subject to any proxy voting policies and procedures of those brokerage firms, if your shares are held in “street name” and you wish to vote your shares on: ~~(1) the election of directors and (2) approval, in an advisory vote, of our executive compensation, you must give your broker voting instructions for these proposals.~~

~~“Broker non-votes” will have no effect on the votes for (1) the election of~~ ~~directors and (2) approval, in an advisory vote, of our executive compensation because it is not deemed a vote cast.~~officer compensation. “Broker non-votes” will not occur in connection with the proposal to ratify KPMG LLP as our independent registered public accounting firm for the year ending December 31, ~~2017~~2020 because this is a “routine” matter and brokers, banks, trustee and other nominees have discretionary voting authority to vote shares on this proposal without specific instruction from the beneficial owner of such shares.

In the election of directors, you may withhold your vote for any of the nominees. Withheld votes will be excluded entirely from the vote and will have no effect on the outcome. For the other ~~two proposals,~~proposal, you may vote to “abstain.” If you vote to “abstain” for ~~any of these two proposals, you~~the other proposal, your vote will have no effect on the outcome of ~~that~~such proposal because your shares will be excluded entirely from the vote and will not be deemed a vote cast.

If you have already properly completed and returned your proxy and the ~~annual meeting~~Annual Meeting is postponed or adjourned, your proxy will still be valid and may be voted at the rescheduled meeting. You will still be able to revoke your proxy ~~until~~at any time before it is voted.

The following table sets forth the beneficial ownership of our common stock, as of the record date, by our President and Chief Executive Officer and our four other most highly compensated executive officers for the last completed fiscal year (each a “named executive officer” or ana “NEO”), each of our directors and all of our directors and executive officers as a group. The information on beneficial ownership in the table and related footnotes is based upon data furnished to us by, or on behalf of, the persons referred to in the table. Unless otherwise indicated in the footnotes to the table, each person named has sole voting power and sole investment power with respect to the shares included in the table.

The following table sets forth information with respect to each shareholder known to us to be the beneficial owner of more than 5% of our outstanding common stock as of July 14, 2020 except for Mr. Noss, whose beneficial ownership of shares is described in the table above.

(~~1) John H. Lewis, who had shared dispositive power and shared voting power over 527,327~~(1) Based on 10,570,610 shares outstanding as of common stock, is the controlling member of Osmium Partners, LLC, a Delaware limited liability company (“Osmium Partners”), which had shared dispositive power and shared voting power over 527,327 shares of common stock and serves as the general partner of Osmium Capital, LP, a Delaware limited partnership (the “Fund”) which had shared dispositive power and shared voting power over 261,905 shares of common stock and Osmium Capital II, LP, a Delaware limited partnership (“Fund II”) which had shared dispositive power and shared voting power over 112,669 shares of common stock , Osmium Spartan, LP, a Delaware limited partnership (“Fund III”) which had shared dispositive power and shared voting power over 71,513 shares of common stock , and Osmium Diamond, LP, a Delaware limited partnership (“Fund IV”) which had shared dispositive power and shared voting power over 81,240 of common stock (all of the foregoing, collectively, the “Filers”). The Fund, Fund II, Fund III and Fund IV are private investment vehicles formed for the purpose of investing and trading in a wide variety of securities and financial instruments. The Fund, Fund II, Fund III and Fund IV directly own the common shares reported in this Statement. Mr. Lewis and Osmium Partners may be deemed to share with the Fund, Fund II, Fund III and Fund IV (and not with any third party) voting and dispositive power with respect to such shares. Each Filer disclaims beneficial ownership with respect to any shares other than the shares owned directly by such Filer. This information is based solely on a review of an amendment to Schedule 13G filed with the SEC on FebruaryJuly 14, ~~2017 by the Filers.~~2020.

(2~~) Pembroke Management, LTD~~(2) Investmentaktiengesellschaft fuer langfristige Invetoren TGV had sole dispositive power and sole voting power over ~~732,828~~1,605,127 shares of common stock. This information is based solely on a review of ~~an amendment to~~a Schedule 13G filed with the SEC on ~~February 3, 2017~~January 16, 2020 by ~~Pembroke Management, LTD.~~

(3) Each of Renaissance Technologies, LLC (“RTC”), and Renaissance Technologies Holdings Corporation (“RTHC”) which had majority ownership of RTC, have sole voting and dispositive power over 720,051 shares of common stock. This information is based solely on a review of an amendment to Schedule 13G filed with the SEC on February 14, 2017 by RTC and RTHC.

(4) Patrick J. Retzer, had sole dispositive power and sole voting power over 657,680 shares of common stock. This information is based solely on a review of an amendment to Schedule 13G filed with the SEC on February 8, 2017 by Mr. Retzer.Investmentaktiengesellschaft fuer langfristige Invetoren TGV.

Our business is managed under the direction of our Board of ~~Directors.~~Directors (“Board”). Our Second Amended and Restated Bylaws, as amended (the “Bylaws”) provide that our Board ~~of Directors~~ determines the number of directors from time to time, which is currently set at a maximum of seven. ~~On January 12, 2017, our Board of Directors increased the size of our Board of Directors from six to seven members and Mr. Brad Burnham was appointed a director.~~

Our directors are all subject to annual election and serve until the election or appointment and qualification of their successors or their earlier death, resignation or removal. The current term of office of all of our directors expires upon election of their successors at the ~~2017 annual meeting.~~2020 Annual Meeting.

Our Board, ~~of Directors,~~ based on a recommendation from the Corporate Governance, Nominating and Compensation Committee, has nominated each of the existing members of the Board ~~of Directors~~ for re-election. Our Board ~~of Directors~~ proposes that these seven director nominees be elected for a term of one year until the ~~2018~~2021 annual meeting and until their successors are duly selected and qualified. All director nominees have agreed to be named in this proxy statement and to serve if elected.

Our Board ~~of Directors~~ expects that all of the nominees will be available for election and willing to serve as directors. In the event that any of the nominees become unavailable or unwilling to serve as a director, proxies received will be voted for substitute nominees to be designated by our Board ~~of Directors~~ or, in the event no such designation is made, proxies will be voted for a lesser number of nominees.

Set forth below is biographical information for each nominee standing for election at the ~~2017 annual meeting.~~2020 Annual Meeting. The following descriptions also outline the specific experience, qualifications, attributes, and skills that qualify each person to serve on our ~~Board of Directors.~~Board.

Mr. Karp, ~~76,~~79, was with Cineplex Odeon Corporation in various positions ~~since~~from 1986 ~~where he retired~~to 2005, retiring as Chairman and Chief Executive Officer in 2002 and as Chairman Emeritus in 2005. From 1966 to 1986, he practiced law at the law firm of Goodman and Carr LLP, where he was named partner in 1970. Mr. Karp was until recently a ~~Director~~director of Brookfield Real Estate Services Inc., where he also served on the Audit Committee and as the Chair of ~~its corporate governance committee and sat on~~ the ~~audit committee, and~~Corporate Governance Committee. From 2004 to 2014, Mr. Karp was Chairman of the ~~Board~~board of ~~Directors~~directors of IBI Group Inc., ~~and was~~as well as Chairman of the Nominating, Governance and Compensation Committee. Mr. Karp is a past director of the Toronto International Film Festival Group, where he served as Chairman of the ~~Board~~board of directors from 1999 to 2007 and ~~has~~ served as Chairman of its Corporate Governance Committee ~~since 2007. Additionally, Mr. Karp was previously a director of several other public corporations.~~from 2007 to 2012.

Mr. Karp has extensive executive leadership skills, long-standing senior management experience, a strong ethics and compliance focus and audit committee experience. These skills and qualifications, in addition to his recent service on the boards of directors of other public companies, enable him to bring valuable perspectives to our Board, particularly with respect to corporate governance matters, and qualify him to be a director of Tucows.

Mr. Ralls, ~~55,~~57, was a founding partner of Lacuna, LLC, an investment management company focused on both public and private companies, which he formed in October 2006. Prior thereto, from 1999 to 2006, he was Chairman of Netidentity.com, an Internet email and web hosting company, where he led corporate strategy and development until the firm’s sale in 2006. Mr. Ralls currently serves on the ~~Board~~board of ~~Directors~~directors of a number of private companies.

Mr. Ralls has a wealth of industry experience, most notably the experience that he gained through his leadership of ~~Netidentity.com.~~Netidentity.com. In addition, Mr. Ralls contributes a unique perspective to the Board’s discussions and considerations based on the two decades of investing and portfolio management experience. All of these attributes qualify Mr. Ralls to be a director of Tucows.

Mr. Gissin, ~~58,~~61, has served since 2010 as a managing partner in Helios Energy Investment, a ~~Renewable Energy~~renewable energy investment ~~fund, and since~~fund. From 2005 to 2010, Mr. Gissin served as the Chief Executive Officer of BCID Ltd., an investment company focusing on infrastructure development projects in China. From ~~July~~ 2000 to ~~March~~ 2005, Mr. Gissin ~~has~~ served as the Chief Executive Officer of IP Planet Networks Ltd., an Israeli satellite communication operator providing Internet backbone connectivity and solutions to Internet Service Providers. From ~~July~~ 1995 to ~~July~~ 2000, Mr. Gissin was Vice President, Business Development of Eurocom Communications Ltd., a holding company that controls several telecommunications services, equipment and Internet companies in Israel.

Mr. Gissin has a strong background in the internet communications industry and has gained significant institutional knowledge in his long tenure as one of our directors. Mr. Gissin also has significant leadership experience as the Chief Executive Officer of BCID Ltd. and IP Planet Networks Ltd. and has extensive financial acumen derived from his years of executive experience. All of these qualities qualify Mr. Gissin to be a director of Tucows.

Mr. Noss, ~~54,~~57, is our President and Chief Executive Of~~ficer~~Officer and has served in such capacity since the completion of our merger with Tucows Delaware in August 2001. From May 1999 until completion of the merger in August 2001, Mr. Noss served as President and Chief Executive Officer of Tucows Delaware. Before that, from April 1997 to May 1999, Mr. Noss served as Vice President of Corporate Services of Tucows Interactive Ltd., which was acquired by Tucows Delaware in May 1999.

Mr. ~~Noss~~’sNoss’s lengthy service as our Chief Executive Officer has provided him with extensive knowledge of, and experience with, Tucows’ operations, strategy and financial position. In addition, Mr. Noss has widespread knowledge of the internet and software industry generally that, coupled with his operational expertise, qualifies him to be a director of Tucows.

Mr. Schwartz, ~~54,~~57, has served as a director of Dorel Industries~~, a Canadian juvenile products and bicycle company,]~~ since 1987 and as Executive Vice President and Chief Financial Officer since 2003. Mr. Schwartz is a graduate of McGill University in Montreal and has a degree in the field of business administration.

Mr. Schwartz has a significant amount of public-company financial expertise, particularly in his executive experience as the chief financial officer of Dorel Industries, Inc. This executive experience, along with Mr. Schwartz’s service as one of our Audit Committee members (and as Chairman of our Audit Committee since 2005), qualifies him to be a director of Tucows.

R~~obin~~Robin Chase, ~~58,~~61, is a transportation entrepreneur. She is co-founder and former CEO of Zipcar, ~~Inc.,~~founded in 2000, the ~~largest carsharing~~world’s leading car sharing network; as well as co-founder of Veniam, founded in 2012, a network company inthat moves terabytes of data between vehicles and the ~~world; Buzzcar, Inc.,~~cloud. She has recently co-founded her first nonprofit, NUMO, a ~~peer~~global alliance to ~~peer carsharing service in France (now merged with Drivy, SAS);~~channel the opportunities presented by new urban mobility technologies to build cities that are sustainable and ~~GoLoco, Inc., an online ridesharing community. She~~just. Her recent book is ~~currently co-founder~~Peers Inc: How People and ~~board~~Platforms are Inventing the Collaborative Economy and Reinventing Capitalism.

In addition to Ms. Chase’s position as a member of ~~Veniam Inc., a vehicle communications company building~~ the ~~networking fabric for~~Board, she sits on the ~~Internet~~boards of ~~Moving Things.~~

~~Ms. Chase~~World Resources Institute and Future Planet Capital, and serves on the Dutch multinational DSM’s Sustainability Advisory Board. In the past, she served on the boards of Veniam ~~the World Resources Institute,~~ and ~~Tucows. She also served on the board of~~ the Massachusetts Department of Transportation, the French National Digital Agency, the National Advisory Council for Innovation & Entrepreneurship for the US Department of Commerce, the Intelligent Transportations Systems Program Advisory Committee for the US Department of Transportation, the OECD’s International Transport Forum Advisory Board, the Massachusetts Governor’s Transportation Transition Working Group, and Boston Mayor’s Wireless Task Force.

Ms. Chase lectures widely, has been frequently featured in the major media, and has received many awards in the areas of innovation, design, and environment, including the prestigious Urban Land Institute’s Nicols Prize as Urban Visionary, Time 100 Most Influential People, Fast Company Fast 50 Innovators, and BusinessWeek Top 10 Designers. ~~Ms. Chase~~Robin graduated from Wellesley College and ~~MIT's~~MIT’s Sloan School of Management, was a Harvard University Loeb Fellow, and received an honorary Doctorate of Design from the Illinois Institute of Technology.

Ms. ~~Chase~~’sChase’s experience operating companies at the chief executive officer level along with her numerous experiences on these boards and councils qualify her to be a director of Tucows.

Brad Burnham, ~~62,~~64, is the co-founder and a current Partner of Union Square Ventures (“USV”), founded in 2003, an early stage venture capital firm in New York. USV has invested in more than 75 Internet services, including, Twitter, Inc., Tumblr, ~~Inc,~~Inc., Etsy, Inc., Indeed, ~~Inc,~~Inc., Zynga ~~Inc,~~Inc., and Foursqare Labs, Inc. Prior to USV, ~~Brad~~Mr. Burnham was a partner at AT&T Ventures, the venture capital arm of AT&T. AT&T Ventures invested in consumer facing Internet services like Audible, telecommunications technology companies such as Argon, Xedia, and Juniper Networks, and Competitive Local Exchange Carriers (CLECs) such as Knology, and Data Local Exchange Carriers ~~(DLECs)~~ such as Covad. Prior to joining AT&T Ventures, ~~Brad~~Mr. Burnham was the founder and CEO of Echo Logic, a software tools company spun out of Bell Laboratories. Earlier in his career, Brad held a number of management positions in sales, marketing and business development at AT&T Computer Systems. He began his career as a sales representative at New York Telephone.

Mr. Burnham also currently serves on the boards of directors of several ~~non-public~~non-public organizations.

Mr. Burnham has extensive experience in investing in and serving on the boards of numerous internet service companies which qualify him to be a director of Tucows.

TheBoard ~~of Directors~~ unanimouslyrecommendsavoteFORthenomineeslistedabove.

~~Our~~The governance principles of our Board include the charters of our Audit Committee ~~charter,~~(the “Audit Committee”) and our Corporate Governance, Nominating and Compensation Committee ~~charter,~~(the “Corporate Governance, Nominating and Compensation Committee”). Our governing principles also include our Code of Business Conduct and ~~Code of~~ Ethics, ~~are available in the “Investor Relations” section on our website at~~ www.tucows.com. Our Code of Business Conduct sets forth rules of conduct that apply to all of our directors, officers and employees. Our Code of Ethics sets forth additional rules of conduct that apply towhich includes specifics for our senior ~~financial~~ officers, including our Chief Executive Officer, ~~Chief Financial Officer~~principal financial officer, principal accounting officer or controller, or persons performing similar functions. Each of these documents can be obtained without charge from our Internet web site at tucows.com. Amendments and ~~Vice Presidents, Finance. Our Code~~waivers of ~~Business Conduct and Code of Ethics are available in printed form, free of charge, to any shareholder who requests them, by written request to~~ our Secretary at Tucows Inc., 96 Mowat Avenue, Toronto, Ontario M6K 3M1, Canada. We intend to disclose amendments to, or director and executive officer waivers from, the Code of Business Conduct or Code of Ethics, if any,ethics policy for our senior officers will either be posted on our website or ~~by filing a Form 8-K~~filed with the SEC ~~to the extent required by the NASDAQ listing standards.~~on a Current Report on Form 8-K.

Our Board ~~of Directors~~ has determined that Messrs. Karp, Ralls, Gissin, Burnham and Schwartz and Ms. Chase are “independent” as defined under the listing standards of NASDAQ. Our Board ~~of Directors~~ believes that the NASDAQ independence requirements contained in the listing standards provide the appropriate standard for assessing director independence and uses those requirements in assessing the independence of each of its members.

Mr. Karp serves as lead independent director. Our Board currently consists of ~~Directors~~seven directors, six of whom the Board has ~~further~~ determined ~~that each~~are “independent” within the meaning of the ~~members~~independence requirements prescribed by the listing standards of the ~~Audit Committee~~NASDAQ Capital Market. The Board believes that this structure, which provides an overwhelming majority of independent directors, coupled with the Board meeting in executive session without any management directors or non-independent directors present, is an appropriate structure for the Board. We believe that this structure provides appropriate and independent oversight by the Board. The Board regularly consults with our Chief Executive Officer, who is also a director, and our Corporate Governance, Nominating and Compensation Committee ~~are independent within~~to review the ~~meaning~~various types of risk that affect Tucows and the ~~NASDAQ listing standards and meet the additional independence requirements of the NASDAQ listing standards applicable~~strategies to ~~Audit Committee members or Corporate Governance, Nominating and Compensation Committee members, respectively.~~mitigate such risks. The Board believes that this structure has been effective.

Our Board ~~of Directors~~ met ~~eight~~seven times during ~~2016.~~2019. Our Board ~~of Directors~~ also took action by unanimous written consent on ~~two~~six occasions during ~~2016. With the exception of Mr. Ralls and Ms. Chase who attended 68% of meetings, each~~2019. Each director attended at least ~~80%~~75% of the total number of meetings of the Board during fiscal 2019.

A majority of the independent directors meet quarterly in executive sessions without members of our management present. Mr. Karp is responsible for chairing the executive sessions.

Directors are expected, but are not required, to attend board meetings, meetings of committees on which they serve, and shareholder meetings, and to spend the time needed and meet as frequently as necessary to discharge their responsibilities properly. Elliot Noss attended our 2019 annual meeting of ~~shareholders.~~ ~~Mr. Karp attended our 2016 Annual Meeting of Shareholders~~shareholders in person ~~while~~and the ~~remainder~~other members of ~~the~~our Board ~~of Directors~~ were available by teleconference.

~~The independent directors meet without management present at regularly scheduled executive sessions at each quarterly~~ ~~Board meeting and some special Board meetings. Mr. Karp was responsible for chairing the executive sessions for 2016.~~

Our Board ~~of Directors~~ has two committees, anthe Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, and athe Corporate Governance, Nominating and Compensation Committee. Our committees generally meet in connection with regularly scheduled quarterly and annual meetings of ~~our~~the Board, ~~of Directors,~~ with additional meetings held as often as its members deem necessary to perform its responsibilities. From time to time, depending on the circumstances, ~~our~~the Board ~~of Directors~~ may form a new committee or disband a current committee.

The Audit Committee currently consists of Mr. Schwartz (Chair), Mr. Karp and Mr. Gissin, all of whom are independent directors as prescribed by the NASDAQ Capital Market listing ~~standards.~~standards and Rule 10A-3 under the Exchange Act.

The Audit Committee held five meetings during ~~2016.~~2019. The Audit Committee also took action by unanimous written consent on one occasion during ~~2016.~~2019. Each member of the Audit Committee attended at least ~~80%~~75% of the total number of meetings of the committee during ~~2016.~~2019. The Audit Committee’s purposes ~~are:~~are to:

Each of the members of our Audit Committee is an independent director and satisfies the independence standards as prescribed by the listing standards of the NASDAQ Capital Market and Rule 10A-3 under the Exchange Act and is able to read and understand fundamental financial statements including balance sheets, income statements and cash flow statements. Additionally, ~~our~~the Board ~~of Directors~~ has determined that Mr. Schwartz qualifies as an “audit committee financial expert” as defined under Item 407(d)(5) of Regulation S-K. The Board ~~of Directors~~ has adopted a written charter for the Audit Committee, which the Audit Committee has reviewed and determined to be in compliance with the rules prescribed by the listing standards of the NASDAQ Capital Market and which is available at tucows.com.

The Corporate Governance, Nominating and Compensation Committee currently consists of ~~Messrs.~~Mr. Karp (Chair), Mr. Schwartz, Ms. Chase and Mr. Ralls. Each member of our Corporate Governance, Nominating and Compensation Committee is an independent director as defined in the listing standards of the NASDAQ Capital Market and also satisfies the applicable compensation committee member independence standards as prescribed by the listing standards of the NASDAQ Capital Market and Rule 10C-1 under the Exchange Act.

The ~~committee~~Corporate Governance, Nominating and Compensation Committee held ~~four~~seven meetings during ~~2016.~~2019. The Corporate Governance, Nominating and Compensation Committee took action by unanimous written consent on two occasions during ~~2016.~~2019. Each member of the Corporate Governance, Nominating and Compensation Committee attended at least 75% of the total number of meetings of the committee during ~~2016.~~2019. The Corporate Governance, Nomination and Compensation Committee’s purposes ~~are:~~are to:

~~To review employee compensation and benefit~~ ~~programs;~~

To ~~develop and recommend to our Board of Directors a set of corporate governance guidelines applicable to the Company and to periodically review the guidelines;~~

To ~~oversee our Board of Directors’ annual evaluation of its performance and the performance of the other Board committees;~~

~~To advise our Board of Directors regarding membership and operations of our Board of~~ ~~Directors;~~

~~To oversee the Company’s director nominating process;~~

To identify individuals qualified to serve as members of our Board of Directors, to select, subject to ratification of our Board of Directors, the director nominees for the next annual meeting of shareholders and to recommend to our Board of Directors individuals to fill vacancies on our Board of Directors; and

To ~~carry out responsibilities regarding related matters as required by the federal securities laws.~~

The Corporate Governance, Nominating and Compensation Committee may delegate authority to one or more members of the committee or one or more members of management when appropriate, but no such delegation is allowed if the authority is required by law, regulation or listing standard to be exercised by the Corporate Governance, Nominating and Compensation Committee as a whole. The Board ~~of Directors~~ has adopted a written charter for the Corporate Governance, Nominating and Compensation Committee, which the Corporate Governance, Nominating and Compensation Committee has reviewed and determined to be in compliance with the rules prescribed by the listing standards of the NASDAQ Capital Market and which is available at tucows.com.

Our executive officers do not play a formal role in determining their compensation. However, ~~senior HR personnel review~~Jessica Johannson, our Chief People Officer, reviews (i) information the Company purchased from ~~Culpepper Compensation Survey and Services~~Payfactor and (ii) published trends for the year from a variety of public sources, and, after consulting with Mr. Noss, our ~~Chief Executive Officer, provide~~CEO, provides consolidated information outlining management’s recommendation regarding executive officer compensation based on title to the Corporate Governance, Nominating and Compensation Committee. The Corporate Governance, Nominating and Compensation Committee then reviews and discusses the information provided with our CEO and ~~senior HR personnel~~Chief People Officer and then determines the total compensation for each NEO, as it deems appropriate.

Board Leadership Structure and Responsibilities

Our Board ~~of Directors~~ oversees management’s performance on behalf of our shareholders. Our ~~Board of Directors’~~Board’s primary responsibilities are to (1) monitor management’s performance to assess whether we are operating in an effective, efficient and ethical manner to create value for our shareholders, (2) periodically review our long-range plans, business initiatives, capital projects and budget matters and (3) approve compensation for our President and Chief Executive Officer who, with senior management, manages our day-to-day operations.

Our Board ~~of Directors~~ and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The independent directors meet without management present at regularly scheduled executive sessions at each quarterly Board ~~of Directors~~ meeting and some special Board ~~of Directors~~ meetings. Our Board ~~of Directors~~ has delegated certain responsibilities and authority to its Audit Committee and Corporate Governance, Nominating and Compensation Committee. The Audit Committee periodically discusses with management the ~~Company's~~Company’s policies and guidelines regarding risk assessment and risk management, as well as the ~~Company's~~Company’s major financial risk exposures and the steps that management has taken to monitor and control such exposures. The Audit Committee also reviews, evaluates and recommends changes to the Company’s financial reporting policies and procedures. The Corporate Governance, Nominating and Compensation Committee reviews and evaluates the risks underlying the Company’s compensation policies and plans and recommends changes to these policies and plans accordingly. Our Board ~~of Directors~~ believes that risk oversight actions taken by our Board ~~of Directors~~ and its committees are appropriate and effective at this time.

We believe it is beneficial to separate the roles of ~~Chief Executive Officer~~CEO and Chairman to facilitate their differing roles in the leadership of our company. The role of the Chairman includes setting the agenda for, and presiding over, all meetings of our Board, ~~of Directors,~~ including executive sessions of independent directors, providing input regarding information sent to our Board, ~~of Directors,~~ serving as liaison between the ~~Chief Executive Officer~~CEO and the independent directors and directors and providing advice and assistance to the ~~Chief Executive Officer.~~CEO. The Chairman is also a key participant in establishing performance objectives and overseeing the process for the annual evaluation of our ~~Chief Executive Officer’s~~CEO’s performance. In addition, under our Bylaws, our Chairman has the authority to call special meetings of our Board ~~of Directors~~ and shareholders. In contrast, our ~~Chief Executive Officer~~CEO is responsible for handling our day-to-day management and direction, serving as a leader to the management team and formulating corporate strategy.

Currently our ~~Co-Chairmen are~~Chairman is Mr. Karp, ~~and Mr. Ralls,~~ while Mr. Noss serves as our ~~Chief Executive Officer. Both~~CEO. Mr. Karp is an independent director. Mr. Karp has extensive executive leadership skills, long-standing senior management and ~~Mr. Ralls are independent directors.~~board experience, a strong ethics and compliance focus and audit committee experience.

We believe that this leadership structure for our Board ~~of Directors~~ provides us with the most effective level of oversight over the Company’s business operations while at the same time enhancing our ~~Board of Directors’~~Board’s ability to oversee our enterprise-wide approach to risk management and corporate governance and best serves the interests of our shareholders. It allows for a balanced corporate vision and strategy, which is necessary to address the challenges and opportunities we face at this time and demonstrates our commitment to good corporate governance. In addition, it allows for appropriate oversight of the Company by our Board, ~~of Directors,~~ fosters appropriate accountability of management and provides a clear delineation of responsibilities for each position.

Role of the Board in Risk Oversight

One of our ~~Board of Directors~~’Board’s key functions is providing oversight of our risk management process. Our Board ~~of Directors~~ does not have a standing risk management committee, but rather administers this oversight function directly through our Board ~~of Directors~~ as a whole, as well as through Board ~~of Directors~~ standing committees that address risks inherent in their respective areas of oversight. In particular, our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these ~~exposures,~~exposures; our Corporate Governance, Nominating and Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking, monitors our major legal compliance risk exposures and our program for promoting and monitoring compliance with applicable legal and regulatory ~~requirements,~~requirements; and our Board ~~of Directors~~ is responsible for monitoring and assessing strategic risk exposure and other risks not covered by our committees.

The full Board ~~of Directors~~ (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives reports on the risks we face from our ~~Chief Executive Officer~~CEO or other members of management to enable us to understand our risk identification, risk management and risk mitigation strategies. When a committee receives the report, the chairman of the relevant committee reports on the discussion to the full Board ~~of Directors~~ during the committee reports portion of the next Board ~~of Directors~~ meeting. However, it is the responsibility of the committee chairs to report findings regarding material risk exposures to our Board ~~of Directors~~ as quickly as possible.

Director Nomination

Our Corporate Governance, Nominating and Compensation Committee is responsible for identifying potential nominees to our ~~Board of Directors.~~Board. In considering candidates for nomination, our Corporate Governance, Nominating and Compensation Committee seeks individuals who evidence strength of character, mature judgment, career specialization, relevant technical skills or financial acumen, diversity of viewpoint and industry knowledge. As set forth in the charter of our Corporate Governance, Nominating and Compensation Committee, our Board ~~of Directors~~ endeavors to have directors who collectively possess a broad range of skills, expertise, industry and other knowledge and business and other experience useful to the effective oversight of our business. In addition, our Board ~~of Directors~~ also seeks members from diverse backgrounds so that our Board ~~of Directors~~ consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. In determining whether to nominate a current director for re-election, our Corporate Governance, Nominating and Compensation Committee will take into account these same criteria as well as the director’s past performance, including his or her participation in and contributions to the activities of the ~~Board of Directors.~~Board.

Our Corporate Governance, Nominating and Compensation Committee will evaluate and consider recommendations for director candidates from shareholders using the same criteria described above. As set forth in the charter of the Corporate Governance, Nominating and Compensation Committee, recommendations submitted by the Company’s shareholders shall be submitted, along with the following to the attention of the ~~Chairperson~~Chairman of the Corporate Governance, Nominating and Compensation Committee at 96 Mowat Avenue, Toronto, Ontario M6K 3M1 Canada at least 120 days before the first anniversary of the date on which we first mailed our proxy materials for our prior year’s annual meeting of shareholders:

~~the name and address of the recommending~~ ~~shareholder;~~

●

the name and address of the recommending shareholder;

~~the candidate’s name and the information about the individual that would be required to be included in a proxy statement under the rules of the SEC;~~

●

the candidate’s name and the information about the individual that would be required to be included in a proxy statement under the rules of the SEC;

~~information about the relationship between the candidate and the recommending~~ ~~shareholder;~~

●

information about the relationship between the candidate and the recommending shareholder;

~~the consent of the candidate to serve as a director;~~ ~~and~~

●

the consent of the candidate to serve as a director; and

~~proof of the number of shares of our common stock that the recommending shareholder owns and the length~~ ~~of time the shares have been owned.~~

●

proof of the number of shares of our common stock that the recommending shareholder owns and the length of time the shares have been owned.

Communications with our Board of Directors

A ~~Tucows~~’Tucows’ shareholder who wishes to communicate with our Board ~~of Directors~~ may send correspondence to the attention of our Secretary at 96 Mowat Avenue, Toronto, Ontario M6K 3M1 Canada. The Secretary will submit the shareholder’s correspondence to the ~~Chairmen~~Chairman of the Board, ~~of Directors,~~ the chairman of the appropriate committee, or the appropriate individual director, as applicable.

DIRECTOR COMPENSATION

Under the terms of our 2006 Amended and Restated Equity Compensation Plan (the “2006 Plan”), we make automatic formula grants of nonqualified stock options to our non-employee directors and members of committees of our Board ~~of Directors~~ as described below. All stock-based compensation for our non-employee directors is governed by our 2006 Plan or its predecessor, our 1996 Equity Compensation ~~Plan (the “1996 Plan”).~~Plan. All options granted under the automatic formula grants ~~vest after one year,~~, have an exercise price equal to the fair market value per common share as determined by the per share price as of the close of business on the date of grant and have a five-year term. Options are granted to directors under the 2006 Plan as follows:

on the date a non-employee director becomes a director, he or she is granted options to purchase 4,375 shares of our common stock;

on the date a director first becomes a member of the Audit Committee, he or she is granted options to purchase 3,750 shares of our common stock;

on the date a director first becomes a member of the Corporate Governance, Nominating and Compensation Committee, he or she is granted options to purchase 2,500 shares of our common stock; and

on each date on which we hold our annual meeting of shareholders, each non-employee director in office immediately before and after the annual election of directors receives an automatic grant of options to purchase 3,750 shares of our common stock.

Initial option grants become exercisable in full upon the completion of one (1) year of Board service measured from the date of grant. Annual option grants become exercisable in full upon the completion of Board service through the earlier of (i) one (1) year measured from the date of grant or (ii) the date of the annual shareholder meeting following the date of grant. All formula option grants become exercisable on an accelerated basis upon a change of control or the non- employee director’s termination of Board service by reason of death or disability.

Each non-employee member of the Board will also receive $30,000 annually, the Chairman of the Board will receive $15,000, each Chair of the Audit Committee and Corporate Governance, Nomination and Compensation Committee will receive $7,500, and each member of the Audit Committee and Corporate Governance, Nomination and Compensation Committee will receive $12,000. No fees are payable to directors for attendance at regular or specially called meetings of the Board. All annual fees are paid to our directors in quarterly installments.

Directors who are employees receive no additional or special compensation for serving as directors.The Co-Chairmen of our Board of Directors and all non-employee directors receive an annual fee of $15,000. The Co-Chairmen of the Board each receive an additional annual fee of $15,000. Non-employee directors who serve as members of our Audit Committee receive an annual fee of $10,000 and non-employee directors who serve on our Corporate Governance, Nominating and Compensation Committee receive an annual fee of $10,000. The Chairmen of our Audit Committee and our Corporate Governance, Nominating and Compensation Committee each receive an additional annual fee of $4,000. In addition, all non-employee directors receive the following meeting attendance fees:

Director Meeting Attendance Fee
Board Meeting Personal Attendance Fees at our May scheduled Board Meeting (inclusive of May Committee meeting fees)
$ 6,000
Board Meeting Personal Attendance Fees at our November scheduled Board Meeting (inclusive of November Committee meeting fees)
$ 4,000
Regularly Scheduled Telephonic Board Meeting Attendance Fees (per meeting)
$ 750
Regularly Scheduled Telephonic Audit Committee Meeting Attendance Fees (per meeting)
$ 400
Regularly Scheduled Telephonic Corporate Governance, Nominating and Compensation Committee Meeting Attendance Fees (per meeting)
$ 400

~~All annual fees are paid to our directors in quarterly~~ ~~installments.~~

We also purchase directors’ and officers’ liability insurance for the benefit of our directors and officers as a group in the amount of $30 million. We also reimburse our directors for their reasonable out-of-pocket expenses incurred in attending meetings of our Board ~~of Directors~~ or its committees. ~~No fees are payable to directors for attendance at specially called meetings of the Board.~~

The table below shows all compensation paid to each of our non-employee directors during ~~2016.~~2019. Each of the directors listed below ~~with the exception of Mr. Ito who resigned effective March 1, 2016,~~ served for the entire year.

Name

Fees earned or
paid in cash ($)

Option awards
($)⁽¹⁾

Total ($)

Allen Karp

$
66,350

$
61,463

$
127,813

Rawleigh Ralls

52,300

61,463

113,763

Erez Gissin

37,300

61,463

98,763

Joichi Ito⁽²⁾

2,500

—

2,500

Robin Chase

26,500

61,463

87,963

Jeffrey Schwartz

52,100

61,463

113,563

$
237,050

$
307,315

$
544,363

Name	Fees earned or paid in cash ($)		Option awards ($)⁽¹⁾		Total ($)
Allen Karp	$	76,500	$	54,038	$	130,538
Rawleigh Ralls		57,000		54,038		111,038
Erez Gissin		42,000		54,038		96,038
Robin Chase		42,000		54,038		96,038
Jeffrey Schwartz		61,500		54,038		115,538
Brad Burnham		30,000		54,038		84,038
Total	$	309,000	$	324,228	$	633,228

(1)

On September ~~6, 2016~~ 9, 2019 under the 2006 Plan, our non-employee directors were awarded these automatic formula option grants. Under the ~~restated~~ 2006 Plan, these options will vest upon the earlier of (a) one year after the grant date or (ii) September 8, 2020, the date of the annual shareholder meeting following the date of grant and carry an exercise price of ~~$27.53.~~$53.93. All these options remained outstanding atas of December 31, ~~2016~~2019 and have a ~~five year~~five-year term. The aggregate grant date fair value of the option grants was calculated in accordance with ~~FASB ASC~~the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718 and based on the Black-Scholes option-pricing model and used the same assumptions that are set forth in ~~Note 12~~“Note 14 – Stock Option Plans” of the Notes to ~~our audited consolidated financial statements included in this~~the Consolidated Financial Statements including Part II, Item 8 of the 2019 Annual ~~Report on Form 10-K for the fiscal year ended December 31, 2016.~~

~~(2)~~

~~Mr. Ito resigned from our Board of Directors on March 1, 2016.~~Report.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Philosophy

We recognize that our success depends to a great degree on the integrity, knowledge, imagination, skill, diversity and teamwork of our employees. To this end, attracting and retaining the level of executive talent we need to be successful in accomplishing our mission of providing simple useful services that help people unlock the power of the Internet is a key objective of our executive compensation program. Our executive compensation program is designed to ensure we have the talent we need to maintain our current ~~high performance~~high-performance standards and grow our business for the future. As such, we aim to provide competitive compensation packages for all ourour key positions, including our ~~named executive officers~~Named Executive Officers (“NEOs”) that are guided by market rates and tailored to account for the specific needs and responsibilities of the particular position as well as the performance and unique qualifications of the individual employee. For fiscal 2019, our NEO’s include Messrs. Noss, Singh, Woroch, Liem and Fausett.

This Compensation Discussion and Analysis (“CD&A”) provides comprehensive information about our executive compensation program for our ~~2016~~fiscal 2019 NEOs, who are listed below, and provides context for the decisions underlying the compensation reported in the executive compensation tables in ~~the Proxy Statement.~~this proxy statement and our 2019 Annual Report. Our NEOs are:

Elliot Noss	President and Chief Executive Officer (“CEO”)
~~Michael~~ ~~Cooperman~~⁽¹⁾Davinder Singh	Chief Financial Officer (“CFO”)
David Woroch	Executive Vice-President, Domains (“EVP, Domains”)
~~Kenneth~~ ~~Schafer~~⁽²⁾	~~Chief Information Officer (“CIO”~~)
~~Michael Goldstein~~Hanno Liem	~~Vice-President, Sales and marketing~~Chief Technology Officer (“~~VP,~~ ~~Sales”~~CTO”)
Bret Fausett	Chief Legal Officer & General Counsel (“General Counsel”)

~~(1)~~

~~Mr. Cooperman~~ ~~retired from his position as CFO effective April 1, 2017.~~

~~(2)~~

~~Mr. Schafer resigned from the Company effective March 24, 2017.~~

Our philosophy is to provide a mix of compensation that motivates our executives to achieve our short and long- term performance goals in a market-competitive and fiscally responsible way, which in turn will create value for our shareholders. We achieve our objectives by designing our executive compensation program so that a substantial amount of our ~~NEOs~~’NEOs’ compensation is performance-based to ensure the actual compensation paid to our executives is appropriately aligned with our Company’s performance and ~~shareholder~~our shareholders’ long-term interests. In addition, we also link individual compensation to Company performance by virtue of the stock options granted by the Company. More specifically, our executive compensation programs are designed to:

	•	~~provide an appropriate mix of fixed and variable compensation to attract, retain and motivate key executives;~~
	•	provide a substantial portion of our executive compensation that is performance-based, on a company or service basis, to support creation of long-term shareholder value, Adjusted EBITDA for Compensation (as defined below) growth and operational efficiency without encouraging excessive risk taking;
	•	~~target compensation at the 50th percentile of market levels, as measured by Culpepper Compensation Surveys; and~~
	•	~~promote internal equity by offering comparable pay to executives whom we expect to make roughly equivalent contributions, while differentiating executives’ compensation arrangements when appropriate.~~

provide an appropriate mix of fixed and variable compensation to attract, retain and motivate key executives;

provide a substantial portion of our executive compensation that is performance-based, on a company or service basis, to support creation of long-term shareholder value, Adjusted EBITDA for Compensation (as defined below) growth and operational efficiency without encouraging excessive risk taking;

target compensation at the 50th percentile of market levels; and

promote internal equity by offering comparable pay to executives whom we expect to make roughly equivalent contributions, while differentiating executives’ compensation arrangements when appropriate.

Overview of Pay Elements and Linkage to Compensation Philosophy and Objectives

We believe the following elements of our compensation program help us to realize our compensation philosophy and objectives:

Pay Element	Characteristics	Compensation Philosophy and Objectives	Factors Considered to Determine Awards
Salary	Annual fixed cash compensation	Provides a competitive and stable component of income to our executives	• Job responsibilities • Experience • Individual contributions • Future potential • Internal pay equity • Effect on other elements of compensation and benefits including target bonus amounts
Short-Term Incentive Bonus	Annual variable cash compensation based on the achievement of pre- established annual performance measures based on Adjusted EBITDA for Compensation	Provides competitive short- term incentive opportunities for our executives to earn annual cash bonuses based on performance objectives that, if attained, can reasonably be expected to (i) promote our business and strategic objectives and (ii) correspond to those paid to similarly- situated and comparably skilled executives at peer companies	• Company performance measures • Service performance measures
Stock Options Grants	Annual long-term equity awards that vest over four years	Provides variable compensation that helps to retain executives and ensures our executives’ interests are aligned with those of shareholders to grow long- term value	• Job responsibilities • Individual contributions • Future potential • Value of vested and unvested outstanding equity awards • Internal pay equity

The weight of each of these components has to date not been determined by any particular formula, although our overall mix of total compensation has historically emphasized retention value. The specific mix of components has been and will continue to be within the discretion and business judgment of our Board ~~of Directors~~ and the Corporate Governance, Nominating and Compensation Committee, which has placed greater emphasis on considerations specific to the individual holding a particular executive position rather than on general market data.

Role of Shareholder Say-on-Pay Votes

We provide our shareholders with the opportunity to cast a triennial advisory vote onon executive compensation, or a ~~“say-on-pay”~~Say-on-Pay proposal. At our annual meeting of stockholders held on September ~~9, 2014,~~5, 2017, 98% of the votes cast on the ~~say- on-pay~~Say-on-Pay proposal at that meeting were voted in favor of the compensation of our ~~named executive officers,~~NEOs, as described in the proxy statement for the ~~2014~~2017 annual meeting. Accordingly, the Corporate Governance, Nominating and Compensation Committee believes that this affirms stockholder support for our executive compensation policies and practices, and no material changes were made to such policies and practices in ~~2015~~2019. The Corporate Governance, Nominating and Compensation Committee will continue to take into account future shareholder advisory votes on executive compensation and other relevant market developments affecting executive officer compensation in order to determine whether any subsequent changes to our programs and policies are warranted to reflect shareholder concerns or ~~2016 as a result of our say-on-pay proposal and voting results in September 2014.~~to address market developments.

~~In addition, at~~At the 2014 annual meeting, a majority of our stockholders approved, as recommended by our Board, a proposal for our stockholders to be provided with the opportunity to cast a non-binding advisory vote on compensation of our ~~named executive officers~~NEOs every three years. Our Board believed that this frequency is appropriate as a triennial vote would provide the Company with sufficient time to engage with stockholders to understand and respond to the “say-on-pay” vote results and to put in place any changes to the Company’s compensation program as a result of such discussions, if necessary. ~~At this 2017 annual meeting, we will again seek~~The next stockholder advisory (non-binding) vote on executive compensation ~~see “Proposal No. 3 Non-Binding Advisory Vote on Executive Compensation” included in~~will be held at this ~~proxy statement.~~Annual Meeting.

Role of Compensation Consultant and Use of Market Data

Our Corporate Governance, Nominating and Compensation Committee is authorized to retain the services of one or more executive compensation advisors, as it deems appropriate, in connection with the establishment and maintenance of our executive compensation programs and related policies. The Corporate Governance, Nominating and Compensation Committee engaged Integrated HR & Compensation Solutions (“ICS”) to provide compensation advisory services to advise the committee on its executive compensation program for 2019 and make recommendations for any changes needed in order for executive compensation to be at the median of market data.

ICS worked with our Chief People Officer to (i) establish executive compensation benchmarking points, (ii) establish appropriate market-based compensation ranges for executive employees, (iii) provide advice and recommendations related to our long term incentive programs (“LTIPs”) and short term incentive programs (“STIPs”), (iv) analyze and compare to prevalent market practices for comparable roles our total compensation mix (i.e. base salary, LTIPs and STIPs) for our executives and (v) provide a software tool to assist the Company in its executive compensation planning efforts.

In establishing market comparators for the executive team, ICS consulted market data as provided by Mercer’s 2019 Benchmark Database compensation survey and the most recent publicly filed compensation disclosures of companies of comparable size and scope.

In electing to engage ICS, the Committee took into consideration all factors relevant to the Consultant’s independence and concluded that no conflict of interest existed.

Determining Total Compensation

~~Base~~ ~~Salary~~

With respect to each NEO, in determining total compensation, the Corporate Governance, Nominating and Compensation Committee considers the ~~Company~~’sCompany’s compensation philosophy as outlined above, comparative market data and specific factors relative to each NEO’s responsibilities and performance. We do not specifically benchmark compensation for our NEOs in terms of picking a particular percentile relative to other people with similar titles at peer group companies. We believe that many subjective factors unique to each NEO’s responsibilities and performance are not adequately reflected or otherwise accounted for in a percentile-based compensation determination.

In addition, in determining the appropriate level of total compensation for our NEOs, the Corporate Governance, Nominating and Compensation ~~Committee:~~ Committee (i) reviews and considers the performance of each NEO, and (ii) considers, for each NEO, the estimated amount of total compensation:

~~reviews and considers the performance of each NEO~~ ~~and~~

~~considers, for each NEO, the estimated amount of total~~ ~~compensation:~~

a.●

we would be willing to pay to retain that person;

b.●

we would have to pay to replace the person; and

c.●

the individual could otherwise command in the employment marketplace.

Our ~~VP, HR~~Chief People Officer reviews comparative data derived from market research and publicly available information for each of the NEOs and then recommends ~~to our CEO~~ compensation levels for all ~~employees.~~employees to our CEO. The CEO then, after consultation with the ~~VP, HR~~Chief People Officer makes recommendations to the Corporate Governance, Nominating and Compensation Committee regarding total compensation for each ~~NEO.~~NEO other than the CEO; that recommendation is sent to the Corporate Governance, Nominating and Compensation Committee directly by the Chief People Person. The Corporate Governance, Nominating and Compensation Committee reviews and discusses the information and then determines the total compensation for each NEO, as it deems appropriate.

The ~~CEO~~’sCEO’s total compensation is determined by the Corporate Governance, Nominating and Compensation Committee outside the presence of the CEO. The ~~Corporate Governance, Nominating and Compensation~~ Committee’s decision regarding total compensation for the CEO is based on the philosophy outlined above and includes a review of comparative data and consideration of the accomplishments of the CEO in developing the business strategy for the Company, the performance of the Company relative to this strategy and his ability to attract and retain senior management. In establishing the CEO’s total compensation, the Corporate Governance, Nominating and Compensation Committee is also mindful of the prior results of the ~~shareholder’s~~shareholders’ Advisory Vote on Executive Compensation.

Base Salary

We provide a base salary to our ~~named executive officers~~NEOs to compensate them for services rendered on a day-to-day basis during the year and to provide sufficient fixed cash compensation to allow them to focus on their ongoing responsibilities. The base salaries of all executive officers, including our NEOs, are reviewed annually and adjusted when necessary to reflect individual roles and performance as well as market conditions. ~~In January 2016, as a part of the annual review process and to account for increases in costs of living, the base salaries of our NEOs were increased 3%.~~

In connection with the Corporate Governance, Nominating and Compensation ~~Committee's~~Committee’s annual review process, ~~in January 2017, the base salaries~~each of our NEOs were ~~each increased by 3%~~awarded merit increases effective January 1, 2019. The recommendations were implemented for ~~2017, primarily to account for an~~ ~~increase in~~all Executive Officers and Key Employees of the ~~cost of living.~~Company, including the NEOs.

Annual Cash Incentive Bonuses

We use annual cash incentive bonuses to communicate specific goals that are of primary importance during the coming year and motivate our senior officers and NEOs to achieve these goals. Each year, we assess if our corporate financial and strategic objectives are optimally aligned with our management incentive compensation plan to motivate and reward our senior executives, including our NEOs, to attain specific short-term performance objectives that, in turn, further our long- term business objectives. These objectives are based upon corporate or ~~service related~~service-related targets, rather than individual objectives. In setting target payout levels under our management incentive compensation plan, our Corporate Governance, Nominating and Compensation Committee considers historical payouts, the total cost to the company should performance objectives be achieved and our retention needs.

The Corporate Governance, Nominating and Compensation Committee determines the initial level of funding for the annual incentive bonus pools during the annual budgeting process and approves provisional quarterly payments, computed on a pro-rata basis, based on quarterly minimum year-to-date targets for our senior officers, including NEOs, taking into account the Company’s actual performance on a year-to-date basis. To ensure that our annual target remains the primary consideration and to mitigate the risk of overpayment of bonuses, any quarterly payments are subject to a discretionary holdback percentage, which has historically been set at 25% but may be adjusted each quarter should circumstances warrant it. ~~To mitigate the risk of overpayment of incentive bonuses based on a quarterly performance, a 25% holdback of quarterly payments is maintained.~~ The Corporate Governance, Nominating and Compensation Committee retains the right to interpret, rescind, prescribe, amend or suspend payment under our management incentive compensation plan at any time. Changes made by the Corporate Governance, Nominating and Compensation Committee will however, only be on a prospective basis, so will not impact any quarterly rights our NEO’s and senior officers may have up to the date of the change.

The ~~performance goals~~ annual bonuses under our management incentive compensation plan consists of two ~~components~~components; namely, an incentive bonus and an overachievement bonus, each with established thresholds and maximum performance goal achievement levels.

For the incentive bonus component, achievement of established targets for each NEO will equate to 100% of the bonus being paid. Where 75% of an established target is achieved (“floor level”) this will result in 50% of the bonus being paid. Below the floor level no bonus is payable. In those cases, where achievement is between the floor level and the established target, straight-line interpolation is applied from the established target levels.

To further incent our senior management and NEOs to promote our business and strategic objectives; to the extent that the ~~Company~~’sCompany’s actual performance exceeds the Company’s Adjusted EBITDA for Compensation goals (“overachievement target”), the Corporate Governance, Nominating and Compensation Committee sets aside 30% of the overachievement target in an overachievement pool to reward our senior management, employees and NEOs. At the discretion of the Corporate Governance, Nominating and Compensation Committee, approximately 40% of the overachievement pool has been allocated to the NEOs and is shared equally among them.

Incentive Bonus ~~program~~Program

The table below summarizes the ~~2016~~2020 and ~~2017~~2019 incentive bonus opportunities for our NEOs.

Named Officer	Target incentive Bonus Opportunity⁽¹⁾		Basis for Target incentive Bonus	Target incentive Bonus Opportunity⁽¹⁾		Basis for Target incentive Bonus
	2017	2016		2020	2019
Elliot Noss	$149,194	$147,210	100% Corporate Adjusted EBITDA for Compensation⁽²⁾	$209,693	$154,735	100% Corporate Adjusted EBITDA for Compensation⁽²⁾
Michael Cooperman	$89,597	$96,985	100% Corporate Adjusted EBITDA for Compensation
Davinder Singh				$84,076	$39,665	100% Corporate Adjusted EBITDA for Compensation⁽²⁾
Bret Fausett				$86,520	$63,000	100% Corporate Adjusted EBITDA for Compensation⁽²⁾
Hanno Liem				$68,802	$44,011	100% Corporate Adjusted EBITDA for Compensation⁽²⁾
David Woroch	$102,680	$101,315	100% Wholesale Domain Services targets	$123,894	$101,422	100% Domain Services targets
Kenneth Schafer	--	$48,492	100% Corporate Adjusted EBITDA for Compensation⁽²⁾
Michael Goldstein	$37,131	$32,027	25% Corporate Adjusted EBITDA for Compensation⁽²⁾, 75% Ting specific objectives

(1)

All dollar amounts below are shown in U.S. dollars. Amounts payable in Canadian dollars for ~~2017~~2020 have been converted into U.S. dollars based upon the exchange rate of ~~1.3466~~1.3067 Canadian dollars for each U.S. dollar, the ~~Bank of Canada~~OANDA exchange rate as at December 31, ~~2016.~~2019. Amounts that were payable in Canadian dollars during the ~~2016~~2019 fiscal year have been converted into U.S. dollars based upon the exchange rate of ~~1.3250~~1.3633 Canadian dollars for each U.S. dollar, which represents the ~~average Bank of Canada~~OANDA exchange rate for ~~2016.~~2019 as at December 31, 2018.


	(2)	Adjusted EBITDA for Compensation is a non-GAAP measure and excludes depreciation, amortization of intangibles, income tax provision, interest expense, interest income, stock-based compensation, asset impairment, net deferred revenue, which comprises the change in deferred revenue, net of prepaid domain name registry and other Internet services fees, to reflect the material amount of cash we collect and pay for domain registrations and other Internet services at the time of activation, gains and losses from unrealized foreign currency transactions and infrequently occurring items. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars and infrequently occurring items. Under relevant SEC rule, we are not required to present reconciliation of Adjusted EBITDA for Compensation to ~~GAAP~~generally accepted accounting principles (“GAAP”) financial measures if Adjusted EBITDA for Compensation is presented in connection with disclosure of target levels in ~~“Compensation Discussion and Analysis.”~~ the CD&A.

Our Corporate Governance, Nominating and Compensation Committee met in February ~~2017~~2020 and determined the achievement of the financial objectives applicable under the management incentive compensation plan for ~~2016~~2019, i.e., the Company’s Adjusted EBITDA budget as approved by the Board, had not been fully achieved. As the Company ~~exceeded~~did not meet its Adjusted EBITDA for Compensation targets for the fiscal year ended December 31, ~~2016,~~2019, the Corporate Governance, Nominating and Compensation Committee assessed that ~~100%~~70% of the incentive bonuses for all our NEO’s except for Mr. Woroch was payable. ~~With~~All NEO’s bonus, with the exception of Mr. ~~Goldstein, who~~Woroch, are based on Adjusted EBITDA. Mr. Woroch’s is based on Domains related Adjust EBITDA budget as approved by the Board. Therefore, Mr. Woroch earned ~~79%~~88% of his targeted bonus, and all other bonuses were assessed at ~~100%~~70% of target.

~~In connection with the Corporate Governance, Nominating and Compensation Committee~~’s annual review process, the Committee also approved a new set of performance goals under our management incentive compensation plan for 2017 and increased the incentive bonus target opportunity for our NEOs by 3% largely to maintain the incentive bonus at the same percentage of base salary.

~~Overachievement~~ 2019 Overachievement Bonus Program

The overachievement bonus program is designed to further incent our employees, senior management andand NEOs to exceed the Company’s Adjusted EBITDA for Compensation goals. In assessing our overall performance for ~~2016,~~2019, the Corporate Governance, Nominating and Compensation Committee deemed that no overachievement bonus should be payable for ~~2016.~~fiscal 2019.

2020 Compensation

In connection with the Corporate Governance, Nominating and Compensation Committee’s annual review process, the Committee approved a new targeted total compensation structure for our NEOs, including an increase to base and incentive bonus compensation. The Committee approved the increase in compensation in a phased approach with 50% of the increase implemented in 2020 and 25% of the increase being implemented in 2021 and 2022, respectively. The Committee, at its discretion, may accelerate or defer the changes for 2021 and 2022 based on the Company’s performance.

Equity-Based Awards

We believe that equity-based awards encourage our NEOs to focus on the long-term performance of our business. Our Board ~~of Directors~~ grants equity awards to executives and other employees in order to enable them to participate in the long-term appreciation of our stock price. Additionally, we believe our equity awards provide an important retention tool for our NEOs, as they are subject to multi-year vesting. ~~To date, we have not adopted stock ownership guidelines for our NEOs.~~

Historically, we have granted equity-based awards in the form of stock options, including options granted at the commencement of employment and additional awards each year. The size of the initial option grant made to each NEO upon joining our company is primarily based on competitive conditions applicable to ~~the NEO's~~such NEO’s specific position. For subsequent equity grants to our NEOs, our Corporate Governance, Nominating and Compensation Committee receives input from our CEO and ~~VP, HR.~~Chief People Officer.

In connection with its annual review process, the Corporate Governance, Nominating and Compensation Committee~~’s annual review process, the Committee~~ (the “Committee”) approved, effective ~~January 1, 2016,~~May 28, 2019, the following stock option awards to our NEOs. These stock options vest in equal installments on each of the first four anniversaries of the grant date, generally subject to the NEO’s continued employment with us. ~~No grants have yet been awarded for 2017.~~

Name

Number of
stock options

Aggregate Grant
Date Fair Value

Elliot Noss
10,000 $ 136,420
Michael Cooperman
5,000 $ 68,210
David Woroch
5,000 $ 68,210
Kenneth Schafer⁽¹⁾
5,000 $ 68,210
Michael Goldstein
5,000 $ 68,210

~~(1)~~

~~In connection with~~ ~~Mr. Schafer’s resignation effective March 24, 2017, all his non-vested options were forfeited.~~

Name	Number of stock options		Aggregate Grant Date Fair Value (US Dollars)

Elliot Noss		4,500	$	95,760
Davinder Singh		2,250	$	47,880
Bret Fausett		2,250	$	47,880
Hanno Liem		2,250	$	47,880
David Woroch		2,250	$	47,880

Severance and Change of Control Benefits

Our Board ~~of Directors~~ believes that it is necessary to offer senior members of our executive team severance benefits to ensure that they remain focused on executing our strategic plans, including in the event of a proposed or actual acquisition. We have entered into employment agreements with our ~~named executive officers~~NEOs to provide them with ~~additional~~ severance benefits upon an involuntary termination of employment under specified circumstances prior to and following a change of control. The terms of these agreements are described below in "Potential Payments on Termination or Change Inin Control."

Perquisites

We do not provide any significant perquisites or other personal benefits to our ~~named executive officers.~~NEOs.

Benefits

We provide the following benefits, which we believe are typical of the companies with which we compete for employees, to our NEO’s:

	•	healthcare insurance;
	•	life insurance and accidental death and dismemberment insurance;
	•	long term disability insurance;
	•	a registered retirement savings matching program;
	•	a healthcare spending account;
	•	a car allowance;
	•	an annual medical; and
	•	an employee assistance program.

~~long term disability~~ ~~insurance;~~

~~a registered retirement savings matching~~ ~~program;~~

~~a healthcare spending~~ ~~account;~~

~~a car~~ ~~allowance;~~

~~an annual medical~~ ~~assessment; and~~

~~an employee assistance~~ ~~program.~~

Certain Corporate Governance Considerations

We currently do not require our executive officers to own a particular number of shares of our common stock. The Corporate Governance, Nominating and Compensation Committee is satisfied that stock and option holdings among our executive officers are sufficient at this time to provide motivation and to align their interests with those of our stockholders. However, we prohibit all directors and employees from hedging their economic interest in the Company securities that they hold.

Tax Considerations

We do not provide any tax gross-ups to our executive officers or directors.

~~In designing our compensation programs, the Corporate Governance, Nominating and Compensation Committee considers the financial accounting and tax consequences~~For years prior to Tucows as well as the tax consequences to our employees. In determining the aggregate number and mix of equity grants in any fiscal year, the Corporate Governance, Nominating and Compensation Committee and management consider the size and share-based compensation expense of the outstanding and new ~~equity awards.~~2018, Section 162(m) of the Code generally ~~disallows~~disallowed a tax deduction to public corporations for compensation greater than $1 million paid for any fiscal year to the corporation’s Chief Executive Officer and the three other most highly compensated executive officers as of the end of any fiscal year, other than the Chief Financial Officer. However, certain types of performance-based compensation ~~are~~were excluded from the $1 million deduction limit if specific requirements ~~are~~were met. The exemption for qualified performance-based compensation has been repealed and the class of affected executives has been expanded effective for taxable years beginning after December 31, 2017 such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualified for transition relief applicable to certain arrangements in place as of November 2, 2017. Because of the uncertainties as to the scope and application of the transition relief, no assurances can be given that compensation intended to satisfy the requirements for exemption under Section 162(m) will in fact be fully deductible.

~~The Committee considers the impact of Section 162(m) when designing our executive compensation program and structured~~ our Executive Bonus Plan, stock plans and performance share programs so that a number of awards may be granted under these plans and programs in a manner that complies with the requirements imposed by Section 162(m). Tax deductibility is not the primary factor used by the Committee in setting compensation, however, and corporate objectives may not necessarily align with the requirements for full deductibility under Section 162(m). We believe it is important to preserve flexibility in administering compensation programs as corporate objectives may not always be consistent with the requirements for full deductibility. While our Corporate Governance, Nominating and Compensation Committee has not adopted a formal policy regarding tax deductibility of compensation paid to our ~~named executive officers,~~NEOs, our Corporate Governance, Nominating and Compensation Committee may exercise discretion to pay ~~nondeductible~~non-deductible compensation if following the requirements of Section 162(m) would not be in the interests of our shareholders.

Compensation Risk Assessment

The Corporate Governance, Nominating and Compensation Committee oversaw the performance of a risk assessment of our executive compensation ~~programs~~program to ascertain any potential material risks that may be created by ~~the compensation~~this program. Because performance-based incentives are used in our executive compensation program, it is important to ensure that these incentives do not result in our NEOs taking unnecessary or excessive risks or any other actions that may conflict with our long-term interests. The Corporate Governance, Nominating and Compensation Committee considered the following attributes of our ~~executive compensation program:~~Executive Compensation Program:

the balance between short- and long-term incentives;

use of qualitative as well as quantitative performance factors in determining compensation payouts, including minimum and maximum performance thresholds, funding that is based on actual results measured against pre- approved financial and operational goals and metrics that are clearly defined;

incentive compensation that includes a stock component where value is best realized through long-term appreciation of stockholder value; and

incentive compensation components that are paid or vest over an extended period.

The Corporate Governance, Nominating and Compensation Committee focuses primarily on the compensation of our NEOs because risk-related decisions depend predominantly on their judgment. The Corporate Governance, Nominating and Compensation Committee believes that risks arising from our policies and practices for compensation of other employees are not reasonably likely to have a material adverse effect on us.

Compensation Committee Interlocks and Insider Participation

The members of the Corporate Governance, Nominating and Compensation Committee of our Board during 2019 were Messrs. Karp (Chair), Schwartz and Ralls and Ms. Chase. To ensure that our compensation policies are administered in an objective manner, our Corporate Governance, Nominating and Compensation Committee is comprised entirely of independent directors. None of the members of our Corporate Governance, Nominating and Compensation Committee has ever been an officer or employee of the Company or its subsidiaries. None of our executive officers serves as a member of the Board or compensation committee of any entity that has one or more executive officers on our Board or Corporate Governance, Nominating and Compensation Committee.

~~COMPENSATION COMMITTEE~~ ~~REPORT~~Compensation Committee Report

The Corporate Governance, Nominating and Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the Corporate Governance, Nominating and Compensation Committee has recommended to the Board ~~of Directors~~ that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the following members of the Corporate Governance, Nominating and Compensation Committee:

Allen Karp, Chair

Rawleigh Ralls Jeffrey Schwartz

Robin Chase

~~Allen Karp, Chair~~

~~Rawleigh Ralls~~

~~Jeffrey~~ ~~Schwartz~~

Summary Compensation Table

The following Summary Compensation table provides a summary of the compensation earned by our ~~Named Executive Officers,~~ NEOs, including our ~~chief executive officer,~~Chief Executive Officer, our ~~chief financial officer,~~Chief Financial Officer, and our next three most highly compensated executive officers for services rendered in all capacities during ~~2016.~~fiscal 2019. Specific aspects of this compensation are dealt with in further detail in the tables that follow. All dollar amounts below are shown in U.S. dollars. If necessary, amounts that were paid in Canadian dollars during ~~the 2016~~ fiscal ~~year~~2019 were converted into U.S. dollars based upon the exchange rate of ~~1.3250~~1.3273 Canadian dollars for each U.S. dollar, which represents the average ~~Bank of Canada~~OANDA exchange rate for ~~2016.~~2019.

Name and Principal Position	Year		Salary ($)		Bonus ⁽¹⁾ ($)		Stock Awards ($)		Option Awards ⁽²⁾ ($)		All Other Compensation ⁽³⁾($)		Total ($)		Year	Salary ($)		Bonus ⁽¹⁾ ($)		Stock Awards ($)		Option Awards ⁽²⁾ ($)		All Other Compensation ⁽³⁾ ($)		Total ($)
(a)															(b)	(c)		(d)				(f)		(i)		(j)
Elliot Noss	2016		$	304,075	$	147,210	$	—	$	136,420	$	7,924	$	595,629	2019	$	321,932	$	111,252	$	—	$	95,760	$	7,911	$	536,855
President and Chief Executive Officer	2015			305,690		179,281		—		79,720		8,207		572,898	2018		320,587		141,359		—		105,930		8,111		575,987
	2014			343,589		182,754		—		—		9,501		535,844	2017		319,797		123,853		—		-		8,091		451,741

Michael Cooperman	2016			231,321		96,985		—		68,210		9,283		405,799
Davinder Singh(4)															2019		205,643		28,519		—		47,880		6,781		288,823
Chief Financial Officer	2015			232,531		140,505		—		39,860		9,614		422,510	2018		229,915		34,254		—		52,965		6,953		324,087
															2017		170,687		31,748		—		42,240		6,935		251,610

Bret Fausett(5)															2019		254,846		44,100		—		47,880		-		346,826
Chief Legal Officer															2018		250,000		51,660		—		26,483		—		328,143
															2017		81,571		38,845		—		196,300		—		316,716

Hanno Liem (6)															2019		178,483		31,643		—		47,880		1,130		259,136
Chief Technology Officer															2018		174,372		38,007		—		195,150		1,159		408,688
	2014			269,206		128,121		—		—		11,130		408,457

David Woroch	2016			198,415		102,834		—		68,210		6,566		376,025	2019		216,453		91,673		—		47,880		6,781		362,787
Executive Vice President, Domains	2015			199,468		144,859		—		39,860		6,800		390,987	2018		215,473		99,041		—		52,965		6,953		374,432
		2014		224,143		134,834		—		—		7,872		366,849	2017		208,677		106,549		—		—		6,935		322,161

Kenneth Schafer	2016			144,906		36,369		—		68,210		5,207		254,692
Chief Information Officer	2015			194,232		91,746		—		39,860		6,800		332,638
	2014			218,261		49,888		—		—		7,872		276,021

Michael Goldstein	2016			160,226		26,037		—		68,210		755		255,228
Vice President, Sales and Marketing	2015			161,061		68,519		—		39,860		782		270,222
	2014			175,512		56,782		—		—		905		233,199

(1)	Represents bonus earned under our incentive ~~and overachievement bonus~~ programs during the fiscal years ended December 31, ~~2016, 2015~~2019, 2018 and ~~2014.~~2017 and bonus earned under our overachievement bonus program during the fiscal year ended December 31, 2017.

Of the ~~2016 amount, the following~~ ~~amounts were paid in February 2017:~~

Elliot Noss
$ 64,404
Michael Cooperman
$ 42,431
David Woroch
$ 46,605
Kenneth Schafer
$ 18,184
Michael Goldstein
$ 10,118

~~Of the 2015~~2019 amount, the following amounts were paid in February ~~2016:~~2020:

Elliot Noss
$ 96,022
Michael Cooperman
$ 85,652
David Woroch
$ 87,557
Kenneth Schafer
$ 64,320
Michael Goldstein
$ 53,346

Elliot Noss	$	54,037
Davinder Singh	$	13,852
Bret Fausett	$	21,420
Hanno Liem	$	15,370
David Woroch	$	42,450

Of the ~~2014~~2018 amount, the following amounts were paid in February ~~2015:~~2019:

Elliot Noss	$	58,461
Davinder Singh	$	14,986
Bret Fausett	$	22,601
Hanno Liem	$	16,628
David Woroch	$	41,790

Of the 2017 amount, the following amounts were paid in February 2018:

Elliot Noss
$ 89,169
Michael Cooperman
$ 66,466
David Woroch
$ 71,715
Kenneth Schafer
$ 30,620
Michael Goldstein
$ 36,422

Elliot Noss	$	55,347
Davinder Singh	$	14,187
David Woroch	$	49,012

(2)

Represents the aggregate grant date fair value of such awards, calculated in accordance with FASB ASC ~~718.~~718 and excludes the impact of estimated forfeitures. Please see ~~Note~~ ~~12 entitled “Stock Options”~~“Note 14 – Stock Option Plans” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of the ~~notes to our audited financial statements,~~2019 Annual Report, for a discussion of the assumptions underlying these calculations.

(3)	Amounts reported in this column are comprised of the following items:

Year

Additional
Health
Spending
Credits ($)

Car
Allowance
($)

Health Club
Membership
($)

All Other
Compensation
($)

Elliot Noss
2016
$ 1,132 $ 6,792 $ — $ 7,924

2015
1,172 7,035 — 8,207

2014
1,357 8,144 — 9,501

Michael Cooperman
2016
1,132 6,340 1,811 9,283

2015
1,172 6,566 1,876 9,614

2014
1,357 7,601 2,172 11,130

David Woroch
2016
1,132 5,434 — 6,566

2015
1,172 5,628 — 6,800

2014
1,357 6,515 — 7,872

Kenneth Schafer
2016
1,132 4,075 — 5,207

2015
1,172 5,628 — 6,800

2014
1,357 6,515 — 7,872

Michael Goldstein
2016
755 — — 755

2015
782 — — 782

2014
905 — — 905

		Additional
		Health		Car		All Other
		Spending		Allowance		Compensation
	Year	Credits ($)		($)			($)
Elliot Noss	2019	$	1,130	$	6,781	$	7,911
	2018		1,159		6,952		8,111
	2017		1,156		6,935		8,091

Davinder Singh	2019		1,130		5,651		6,781
	2018		1,159		5,794		6,953
	2017		1,156		5,779		6,935


Bret Fausett	2019		—		—		—
	2018		—		—		—
	2017		—		—		—

Hanno Liem	2019		1,130		—		1,130
	2018		1,159		—		1,159

David Woroch	2019		1,130		5,651		6,781
	2018		1,159		5,794		6,953
	2017		1,156		5,779		6,935

(4)	Mr. Singh was appointed to his position as CFO effective April 1, 2017.

(5)	Mr. Fausett joined the Company in October 2017.

(6)	Mr. Liem joined the Company in January 2018.

CEO Pay Ratio

In August 2015 pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (‟PEO”). The Company’s PEO is Mr. Noss. The annual total compensation for fiscal year 2019 for our PEO was $527,319, and for the median employee was $36,836. The resulting ratio of our PEO’s pay to the pay of our median employee for fiscal year 2019 is 14 to 1.

The measurement was prepared as of December 31, 2019 based on active employees as at that date and total compensation for the annual period then ended. The Company utilized tax records to determine the total annual compensation based on gross employment income for each individual Form W-2 or equivalent for our international subsidiaries. Gross employment income includes salaries, bonus, company medical benefits, car allowance and benefits from exercise of stock options. We determined the compensation of our median employee (i) by calculating the annual total compensation described above for each of our employees, (ii) ranking the annual total compensation of all employees except for the PEO from lowest to highest and (iii) determining the Median Employee. The Median Employee’s fiscal 2019 compensation was then determined in a manner consistent with the Summary Compensation Table above and compared to the PEO to derive the ratio.

Grants of Plan-Based Awards

The following table sets forth information concerning plan-based awards granted to our ~~named executive officers~~NEOs in ~~2016:~~2019:

Name	Grant date	All other option awards: Number of shares underlying options	Exercise or base price of option awards	Grant date fair value of option awards ⁽¹⁾	Grant date	All other option awards: Number of shares underlying options		Exercise or base price of option awards		Grant date fair value of option awards ⁽¹⁾
Elliot Noss	01/01/2016	10,000	$21.1	$ 136,420	5/28/2019		4,500	$	62.12	$	95,760
Michael Cooperman	01/01/2016	5,000	$21.1	$ 68,210

Davinder Singh					5/28/2019		2,250	$	62.12	$	47,880

Bret Fausett					5/28/2019		2,250	$	62.12	$	47,880

Hanno Liem					5/28/2019		2,250	$	62.12	$	47,880

David Woroch	01/01/2016	5,000	$21.1	$ 68,210	5/28/2019		2,250	$	62.12	$	47,880
Kenneth Schafer⁽²⁾	01/01/2016	5,000	$21.1	$ 68,210
Michael Goldstein	01/01/2016	5,000	$21.1	$ 68,210

~~(1)~~

~~Represents the gran~~t date fair value of such awards, calculated in accordance with FASB ASC 718. Please see Note 12 entitled “Stock Options” in the notes to our audited financial statements, for a discussion of the assumptions underlying these calculations.

~~(2)~~

~~These options were forfeited upon Mr. Schafer’s resignation from the Company effective March 24, 2017~~

(1) Represents the grant date fair value of such awards, calculated in accordance with FASB ASC 718. Please see “Note 14 “Stock Option Plans” of Notes to Consolidated Financial Statements included in Part II, Item 8 of the 2019 Annual Report, for a discussion of the assumptions underlying these calculations.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning stock options held by ~~the named executive officers~~our NEOs as of December 31, ~~2016:~~2019:

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Grant Date		Option Expiration Date

Elliot Noss		1,875		-		5.52	05/17/2019		6,250		—		10.16	11/11/2013		11/10/2020
		6,250		-		5.76	12/31/2019		10,000		—		19.41	01/02/2015		12/31/2021
		3,125		3,125		10.16	11/10/2020		7,500		2,500		21.10	01/04/2016		12/31/2022
		5,000		5,000		19.41	12/31/2021		1,125		3,375		64.10	06/05/2018		06/04/2025
		2,500		7,500		21.10	12/31/2022		—		4,500		62.12	05/28/2019		05/27/2026
		18,750		15,625					24,875		10,375

Michael Cooperman		1,875		-		5.52	05/17/2019
Davinder Singh									2,000		—		19.95	02/12/2016	*	02/11/2023
									3,750		1,250		19.95	02/12/2016		02/11/2023
									1,000		1,000		55.65	07/24/2017		07/23/2024
									562		1,688		64.10	06/05/2018		06/04/2025
									—		2,250		62.12	05/28/2019		05/27/2026
									7,312		6,188


Bret Fausett									5,000		5,000		53.20	09/03/2017		09/04/2024
									281		844		64.10	06/05/2018		06/04/2025
									—		2,250		62.12	05/28/2019		05/27/2026
									5,281		8,094

Hanno Liem									5,000		—		58.65	01/08/2018	*	01/07/2025
		3,215		-		5.76	12/31/2019		1,250		3,750		58.65	01/08/2018		01/07/2025
		1,562		1,563		10.16	11/10/2020		187		563		64.10	06/05/2018		06/04/2025
		2,500		2,500		19.41	12/31/2021		—		2,250		62.12	05/28/2019		05/27/2026
		1,250		3,750		21.10	12/31/2022		6,437		6,563
		10,402		7,813

David Woroch		7,500		-		5.52	05/17/2019		6,250		—		10.16	11/11/2013		11/10/2020
		6,250		-		5.76	12/31/2019		5,000		—		19.41	01/02/2015		12/31/2021
		4,687		1,563		10.16	11/10/2020		3,750		1,250		21.10	01/04/2016		12/31/2022
		2,500		2,500		19.41	12/31/2021		562		1,688		64.10	06/05/2018		06/04/2025
		1,250		3,750		21.10	12/31/2022		—		2,250		62.12	05/28/2019		05/27/2026
		22,187		7,813					15,562		5,188

* These grants vest 100% six months after issuance.

Kenneth Schafer⁽¹⁾
1,875 - 5.52
05/17/2019
3,125 - 5.76
12/31/2019
1,562 1,562 10.16
11/10/2020
2,500 2,500 19.41
12/31/2021
1,250 3,750 21.10
12/31/2022
10,312 7,812

Michael Goldstein
2,500 - 2.92
08/14/2018
6,125 - 5.52
05/17/2019
2,343 782 8.56
05/12/2020
1,600 1,600 15.93
08/10/2021
2,500 2,500 19.41
12/31/2021
1,250 3,750 21.10
12/31/2022
16,318 8,632

~~(1)~~

~~The 7,812~~ ~~unexerciseable options were forfeited upon Mr. Schafer’s resignation from the Company effective March 24, 2017.~~

The stock options grants listed in the above table were issued under our 2006 Plan.

Option Exercises and Stock Vested

Name	Options exercised during Fiscal 2019		Options vested during Fiscal 2019
Elliot Noss		8,125		6,125
Davinder Singh		-		2,313
Bret Fausett		-		2,781
Hanno Liem		-		1,438
David Woroch		13,750		3,063

Under the 2006 Plan, these options vest over a period of four years and have a 7 ~~year~~seven-year term. These options are not exercisable for one year after the grant. Thereafter they become exercisable at the rate of 25% per annum, becoming fully exercisable after the fourth year.

Potential Payments on Termination or Change In Control

We have certain agreements that require us to provide compensation to our ~~named executive officers~~NEOs in the event of a termination of employment or a change in control of Tucows. These agreements are summarized following the table below and do not include any payment for termination for cause. The tables below show estimated compensation payable to each ~~named executive officer~~NEO upon various triggering events. Actual amounts can only be determined upon the triggering event.

Elliot Noss (1)	2016	Termination without Cause		Change in Control			Termination		Change in
						2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance (2)		$	608,151	$	2,608,151		$	643,863	$	2,643,863
Bonus Plan (3)			294,420		294,420			317,863		317,863
Acceleration of Unvested Equity Awards (4)			263,731		263,731			101,700		101,700

Benefits (5)
Car Allowance			13,584		13,584			13,562		13,562
Healthcare Flexible Spending Account			2,264		2,264			2,260		2,260

		$	1,182,150	$	3,182,150		$	1,079,248	$	3,079,248

Michael Cooperman (1)	2016	Termination without Cause		Change in Control
Davinder Singh ₍₁₎							Termination		Change in
						2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance (2)		$	443,365	$	1,443,365		$	154,232	$	—
Bonus Plan (3)			185,888		185,888			30,555		—
Acceleration of Unvested Equity Awards (4)			32,970		131,879			55,353		—

Benefits (5)
Car Allowance			12,152		12,152			4,238		—
Healthcare Flexible Spending Account			2,170		2,170			848		—
Healthclub			3,471		3,471
		$	680,015	$	1,778,924
							$	245,226	$	—

Bret Fausett ₍₁₎		Termination		Change in
	2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance ₍₂₎		$	171,667	$	—
Bonus Plan ₍₃₎			42,000		—
Acceleration of Unvested Equity Awards ₍₄₎			21,450		—

Benefits ₍₅₎
Car Allowance			—		—
Healthcare Flexible Spending Account			—		—

		$	235,117	$	—

Hanno Liem ₍₁₎		Termination		Change in
	2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance ₍₂₎		$	104,115	$	—
Bonus Plan ₍₃₎			26,369		—
Acceleration of Unvested Equity Awards ₍₄₎			3,913		—

Benefits ₍₅₎
Car Allowance			—		—
Healthcare Flexible Spending Account			659		—

		$	135,056	$	—

David Woroch (1)

2016

Termination
without Cause

Change in
Control

Compensation

Base Salary/Severance (2)

$
363,761

$
363,761

Bonus Plan (3)

188,529

188,529

Acceleration of Unvested Equity Awards (4)

32,970

32,970

Benefits (5)

Car Allowance

9,962

9,962

Healthcare Flexible Spending Account

2,075

2,075

$
597,298

$
597,298

Kenneth Schafer (1)	2016	Termination without Cause		Change in Control
David Woroch ₍₁₎							Termination		Change in
						2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance (2)		$	193,208	$	193,208		$	432,909	$	432,909
Bonus Plan (3)			64,656		64,656			208,346		208,346
Acceleration of Unvested Equity Awards (4)			32,970		32,970			50,850		50,850

Benefits (5)
Car Allowance			5,433		5,433			11,302		11,302
Healthcare Flexible Spending Account			1,509		1,509			2,260		2,260

		$	297,777	$	297,777		$	705,667	$	705,667

	(1)	For the purpose of the table we assumed an annual base salary at the ~~executive~~’sexecutive’s level as of December 31, ~~2016~~2019
	(2)	Severance for Mr. Noss is compensation for one year plus ~~one month~~one-month additional compensation for each completed year of ~~service~~service. Total compensation is capped at 24 months. In the event of a termination in connection with a change in control, Mr. Noss is entitled to receive an additional payment of up to $2 million as more fully described below. For Messrs. ~~Cooperman,~~Singh, Fausett, Liem and Woroch, ~~and Schafer,~~ severance compensation is for six months plus ~~one month~~one-month additional compensation for each completed year of service. Total compensation is capped at 24 months.
	(3)	For the purpose of the table we assumed that the annual incentive bonus target as of December 31, ~~2016~~2019 had been achieved and that no overachievement bonus or special bonuses would be payable. The requirement to pay bonus as part of severance is not in the description below and it is unclear what this amount is.
	(4)	For purposes of the above table, we have assumed that if we terminate Mr. Noss without cause all his unvested options vest automatically and that for Messrs. ~~Cooperman,~~Singh, Fausett, Liem and Woroch, ~~and Schafer, that~~ their options continue to vest through any severance period. On a change in control we have assumed that all unvested options for ~~Messrs.~~Mr. Noss ~~or Cooperman~~ vest automatically and that for ~~Mr.~~Messrs. Singh, Fausett, Liem and Woroch, ~~and Mr. Schafer, that~~ their options continue to vest through and until the end of any severance period. Amounts disclosed in this table equal the closing market value of our common stock as of December 31, ~~2016,~~2019, minus the exercise price, multiplied by the number of unvested shares of our common stock that would vest. The closing market value of our common stock on December 31, ~~2016~~2019 was ~~$35.25.~~$61.78.
	(5)	Pay for unused vacation, extended health, matching registered retirement savings plan benefit, life insurance and accidental death and dismemberment insurance are standard programs offered to all employees and are therefore not reported.

Employment ~~Agreements~~—Agreements—Termination

Employment contracts are currently in place for each of ~~the named executive officers, whose~~our NEOs. These employment contracts detail the severance payments that will be provided on termination of employment and the consequent obligations of non-competition and non-solicitation.

The following details the cash severance payment that will be paid to each of ~~the named executive officers~~our NEOs in the event of termination without cause or termination for good reason.

Upon termination without cause, ~~Mr.~~Messrs. Woroch, Singh, Liem and ~~Mr. Schafer~~Fausett are each entitled to a severance payment in the amount of six months’ compensation plus one months’ compensation for each additional completed year of service. Severance payments can be made in equal monthly installments. ~~Mr.~~Messrs. Woroch, Singh, Liem and ~~Mr. Schafer~~Fausett are each bound by a standard non-competition covenant for a period of twelve months following their termination.

~~Messrs. Noss and Cooperman~~’sMr. Noss’s employment agreements ~~are~~is subject to early termination by us due to:

	●	the death or disability of the executive;
	●	for “cause;” or
	●	without “cause.”

If we terminate Mr. Noss without “cause,” he is entitled to receive 12 months of compensation plus one month of compensation for each year of service, to a maximum of 24 months of compensation.

~~If we terminate Mr.~~ ~~Cooperman’s employment without “cause,” he is entitled to receive six months of compensation plus one month of compensation for each year of service.~~

For purposes of the employment agreements, “cause” is defined to mean the ~~executive~~’sexecutive’s conviction (or plea of guilty or nolo contendere) for committing an act of fraud, embezzlement, theft or other act constituting a felony or willful failure or an executive’s refusal to perform the duties and responsibilities of his position, which failure or refusal is not cured within 30 days of receiving a written notice thereof from our ~~Board of Directors.~~Board.

Employment ~~Agreements~~—Agreements—Change in Control

Under ~~their~~his employment agreements, ~~both~~ Mr. Noss ~~and Mr. Cooperman are~~is also entitled to the change in control benefits described in the following paragraph if:

	●	the executive resigns with or without “good reason” within the 30-day period immediately following the date that is six months after the effective date of the “change in control;” or
	●	within 18 months after a “change in control” and executive’s employment is terminated either:
	●	without “cause;” or
	●	by resignation for “good reason.”

If an ~~executive~~’sexecutive’s employment is terminated following a change in control under the circumstances described in the preceding paragraph, the executive is entitled to receive a lump sum payment based upon the fair market value of the Company on the effective date of the “change in control” as determined by our Board ~~of Directors~~ in the exercise of good faith and reasonable judgment taking into account, among other things, the nature of the “change in control” and the amount and type of consideration, if any, paid in connection with the “change in control.” Depending on the fair market value of the company, the lump sum payments range from $375,000 to $2 million ~~in the case of~~for Mr. ~~Noss, and from $187,500 to $1 million in the case of Mr. Cooperman.~~Noss. In addition to the lump sum payments, all stock options held by ~~the executive officers~~Mr. Noss will be immediately and fully vested and exercisable as of the date of termination.

A “change in control” is generally defined as:

	●	the acquisition of 50% or more of our common stock;
	●	a change in the majority of our Board ~~of Directors~~ unless approved by the incumbent directors (other than as a result of a contested election); and
	●	certain reorganizations, mergers, consolidations, liquidations or dissolutions, unless certain requirements are met regarding continuing ownership of our outstanding common stock.

“Good reason” is defined to include the occurrence of one or more of the following:

	●	the ~~executive~~’sexecutive’s position, management responsibilities or working conditions are diminished from those in effect immediately prior to the change in control, or he is assigned duties inconsistent with his position;
	●	the executive is required to be based at a location in excess of 30 miles from his principal job location or office immediately prior to the change in control;
	●	the ~~executive~~’sexecutive’s base compensation is reduced, or the executive’s compensation and benefits taken as a whole are materially reduced, from those in effect immediately prior to the change in control; or
	●	we fail to obtain a satisfactory agreement from any successor to assume and agree to perform our obligations to the executive under his employment agreement.

~~Option Exercises and Stock~~ ~~Vested~~

~~No stock vested during 2016 and no stock options were exercised by named executive officers during 2016.~~

Pension Benefits

The Company does not currently have a ~~Defined Pension~~ ~~Plan.~~defined pension plan.

Non-qualified Deferred Compensation

The Company does not currently have an ~~Executive Defined Income~~ ~~Plan.~~executive defined income plan.

AUDIT COMMITTEE REPORT

The purposes of the Audit Committee are described on page 1014 of this proxy statement under the caption “Corporate Governance—Committees” and in the charter of the Audit Committee. In particular, it is the Audit Committee’s duty to review the accounting and financial reporting processes of the Company on behalf of the ~~Board of Directors.~~Board. In fulfilling our responsibilities, the Audit Committee has reviewed and discussed the audited consolidated financial statements contained in our 2019 Annual Report ~~on Form 10-K for the fiscal year ended December 31, 2016, as amended,~~ with our management and also with KPMG LLP, our independent auditors. Management is responsible for the financial statements and the reporting process, including the system of internal controls, and has represented to the Audit Committee that such financial statements were prepared in accordance with ~~generally accepted accounting principles.~~GAAP. The independent auditors are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States.

In performing its oversight function, the Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the fiscal year ended December 31, ~~2016~~2019 with management and KPMG LLP, the Company’s independent registered public accounting firm. The Audit Committee also discussed with KPMG LLP all matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight ~~Board.~~Board (“PCAOB”). In addition, the Audit Committee, with and without management present, reviewed and discussed the results of KPMG LLP’s examination of the Company’s financial statements. Furthermore, the Audit Committee discussed with KPMG LLP their independence from management and the Company and the Audit Committee received written disclosures and the letter from KPMG LLP required by the applicable PCAOB requirements regarding the independent accountant’s communications with the Audit Committee concerning independence.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, management is required to prepare a report as to its assessment of the effectiveness of the ~~Company~~’sCompany’s internal control over financial reporting as of December 31, ~~2016,~~2019, and KPMG LLP is required to prepare an attestation report with respect to the effectiveness of the Company’s internal control over financial reporting. The Audit Committee reviewed and discussed with management its report regarding its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2016,~~2019, and reviewed and discussed with KPMG LLP its report as to the effectiveness of the Company’s internal control over financial reporting. Management’s report and KPMG LLP’s report are each included in the ~~Company’s~~2019 Annual ~~Report on Form 10-K for the year ended December 31, 2016.~~Report.

Based on the reviews and discussions referred to above, the Audit Committee recommended to our Board ~~of Directors~~ that our audited consolidated financial statements be included in our 2019 Annual Report ~~on Form 10-K for the fiscal year ended December 31,~~ ~~2016~~ as filed with the SEC.

Audit Committee Members

Jeffrey Schwartz, Chair

Allen Karp

Erez Gissin

PROPOSAL No. 2

APPROVAL OF PROPOSED AMENDMENT AND RESTATEMENT OFTHE 2006 EQUITY COMPENSATIONPLAN

General

At the Annual Meeting, shareholders will be asked to consider and approve a proposal to amend and restate our 2006 Equity Compensation Plan (the “2006 Plan”). The 2006 Plan, as amended and restated, will affect the following changes:

increase the maximum number of shares of our common stock reserved for issuance over the term of the 2006 Plan by an additional 1,525,000 shares for a total of 4,000,000;

extend the term of the 2006 Plan to September 1, 2030; and make certain other technical amendments as appropriate to bring the 2006 Plan into compliance with best practices and current laws to facilitate administration.

The 2006 Plan was adopted by our B on August 8, 2006 and approved by the shareholders on November 22, 2006. The 2006 Plan was amended in July 2010 to increase the share reserve and extend the term of the 2006 Plan; such amendment was approved by the shareholders at the 2010 annual meeting. The 2006 Plan was further amended in July 2015 to increase the share reserve and extend the term of the 2006 to September 1, 2025; such amendment was approved by the shareholders at the 2015 annual meeting.

2,475,000 shares of our common stock are currently authorized to be issued under the 2006 Plan. As of July 14, 2020, there were 897,103 shares subject to outstanding awards under the 2006 Plan and 24,378 shares remain available for future awards.

On May 22, 2020, our Corporate Governance, Nominating and Compensation Committee recommended, and our Board adopted, subject to shareholder approval, an amendment of the 2006 Plan as described in this proposal. The 2006 Plan also reflects the formula equity grant program for our non-employee Board members under the Company’s director compensation plan.

We seek shareholder approval of the amendment and restatement of the 2006 Plan in order to (i) meet NASDAQ listing requirements to obtain shareholder approval and (ii) allow for incentive stock options that meet the requirements of the Internal Revenue Code.

The 2006 Equity Compensation Plan has been attached as Appendix A.

Reasons for the Amendment of the 2006 Plan.

ShareReserveIncreaseandTerm.The Corporate Governance, Nominating and Compensation Committee believes that equity-based incentives have played a pivotal role in our efforts to attract and retain key personnel essential to our long- term growth and financial success. The increased share reserve and extended term under the 2006 Plan will provide us with the continued ability to implement a comprehensive compensation strategy, which is designed to use appropriate and competitive incentives that reward value creation to align our short-term and long-term goals and resulting performance with the interest of our shareholders. We continue to believe that incentive awards are vital to our ability to attract and retain outstanding and highly skilled individuals in the competitive labor markets in which we must compete.

Dilution Analysis. As of July 14, 2020, the Company’s capital structure consisted of 10,570,610 shares of common stock outstanding. The table below shows our potential dilution under the 2006 Plan as a percentage of shares of common stock outstanding, taking into account our request for 1,525,000 additional shares of common stock to be available for grants under the 2006 Plan. The additional 1,525,000 shares represent11.7% of fully diluted shares of common stock, including all shares that will be authorized under the 2006 Plan, as described in the table below. The Board believes that the increase in shares of common stock under the 2006 Plan represents a reasonable amount of potential equity dilution, which will allow the Company to continue granting equity awards.

Potential Overhang with 1,525,000 Additional Shares

Stock Options Outstanding as of July 14, 2020	897,103
Weighted Average Exercise Price of Stock Options Outstanding as of July 14, 2020	$53.41
Weighted Average Remaining Term of Stock Options Outstanding as of July 14, 2020	4.7 years
Shares Available for Grant under the 2006 Plan as July 14, 2020	24,378
Total Shares Requested under the 2006 Plan	1,525,000
Total Potential Overhang under the 2006 Plan (1)	2,446,481
Shares of Common Stock Outstanding as of July 14, 2020	10,570,610
Fully Diluted Shares of Common Stock (2)	13,017,091
Potential Dilution of 1,525,,000 shares as a Percentage of Fully Diluted Shares of Common Stock	11.7%

(1) The Total Potential Overhang under the 2006 Plan in the foregoing table consists of Stock Options Outstanding as of July 14, 2020, plus Shares Available for Grant under the 2006 Plan as of July 14, 2020, plus Total Shares Requested under the 2006 Plan.

(2) The Fully Diluted Shares of Common Stock in the foregoing table consists of the Shares of Common Stock Outstanding as of July 14, 2020 plus the Total Potential Overhang under the 2006 Plan.

Burn Rate. We are, however, committed to using equity incentive awards prudently and within reasonable limits. Accordingly, we closely monitor our stock award “burn rate” each year. The table below sets forth the burn rate for each of the last three fiscal years. Our annual burn rate is determined by dividing the number of shares of our common stock subject to stock-based awards we grant in a fiscal year (excluding the formula option awards to directors) by the fiscal year end basic shares of common stock outstanding.

Burn Rate

2019
2018
2017
Stock Options Granted
180,800
163,266
370,025
Shares of Common Stock Outstanding as of December 31
10,585,159
10,627,988
10,582,879
Burn Rate (1)
1.5%
1.33%
3.26%
(1) The Company granted options in 2017 at a higher rate in order to make up for a lowered grant rate 2016 and 2015.
Based on the annual burn rate, the Company used an annual average of 2.0% of the basic average shares outstanding for awards granted over the past three years under the 2006 Plan. We anticipate that the 1,525,000 share increase will enable us to fund our equity compensation program for approximately five years. While the Company believes this is a reasonable estimate of how long the share reserve would last, the actual period for which the proposed share reserve will fund our equity compensation program may be shorter or longer than five years, depending on changes in our granting practices, stock price and headcount growth.
Description of the 2006 Plan.
The principal terms and provisions of the 2006 Plan are summarized below. The summary, however, is not intended to be a complete description of all the terms of the 2006 Plan and is qualified in its entirety by reference to the complete text of the 2006 Plan which is attached as Appendix A to this proxy statement.

~~Audit Committee Members~~General.
~~Jeffrey Schwartz, Chair~~
~~Allen Karp~~
~~Erez~~ ~~Gissin~~The 2006 Plan provides for grants of options, stock awards, restricted stock units, stock appreciation rights, performance units and dividend equivalent rights to officers, including officers who are also directors, of Tucows or our subsidiaries, other employees of Tucows or our subsidiaries and eligible consultants and advisors. Non-employee directors of Tucows are also entitled to receive formula stock option grants under the 2006 Plan.

34
Administration of the 2006 Plan. The Corporate Governance, Nominating, and Compensation Committee of our Board will have the exclusive authority to administer the 2006 Plan with respect to awards made to our executive officers and will also have the authority to make awards to all other eligible individuals. However, our Board may at any time appoint a secondary committee of one or more Board members to have separate but concurrent authority with the Corporate Governance, Nominating and Compensation Committee to make awards to individuals other than executive officers, or our Board may retain the power to make awards to such individuals. The Board or Corporate Governance, Nominating, and Compensation Committee may delegate to one or more officers the authority to administer awards to eligible individuals other than officers and directors within specified guidelines. The Plan Administrator (as defined below) may determine the persons to whom awards are made, the type, size and other terms and conditions of each award and the other terms and conditions, including vesting schedules and the acceleration of vesting and any other matters arising under the 2006 Plan.
The term “Plan Administrator,” as used in this summary, will mean our Board, our Corporate Governance, Nominating, and Compensation Committee and any secondary committee, to the extent each such entity is acting within the scope of its administrative authority under the 2006 Plan.
Grants. Grants, awards and issuances under the 2006 Plan may consist of:
●
options intended to qualify as incentive stock options (“ISOs”) under Internal Revenue Code Section 422;
●
non-qualified stock options that are not intended to qualify as ISOs;
●
stock appreciation rights;
●
stock awards;
●
restricted stock units;
●
performance units;
●
dividend equivalent rights; or
●
other stock-based awards.

Eligibility for participation. Officers and employees, non-employee members of our Board, as well as eligible consultants and advisors in our employ or service or in the employ or service of our subsidiaries (whether now existing or subsequently established) will be eligible to receive discretionary awards under the 2006 Plan. The non-employee members of our Board will also be eligible to receive non-qualified stock options awarded in connection with the formula stock option provisions described below. As of July 14, 2020, approximately 540 persons, including 9 officers and 6 non- employee Board members were eligible to receive awards under the 2006 Plan.
Securities subject to the 2006 Plan. 4,000,000 shares of our common stock will be reserved for issuance over the term of the 2006 Plan, including the 1,525,000 share increase subject to approval under this proposal.
The shares of common stock issuable under the 2006 Plan may be drawn from shares of our authorized but unissued common stock or from shares of our common stock that we acquire, including shares purchased on the open market or in private transactions.
The maximum number of shares of our common stock that may be issued pursuant to options intended to qualify as ISOs may not exceed 4,000,000 subject to approval of this proposal. In the absence of such approval, the maximum number of shares that may be issued pursuant to options intended to qualify as ISOs will be limited to 2,475,000 shares.
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Shares subject to any outstanding options or other awards under the 2006 Plan that expire or otherwise terminate prior to the issuance of the shares subject to those option or awards or that are paid in cash will be available for subsequent issuance under the 2006 Plan. Any unvested shares issued under the 2006 Plan that are subsequently forfeited or that we repurchase, at a price not greater than the original issue price paid per share (subject to compliance with applicable securities legislation), pursuant to our repurchase rights under the 2006 Plan will be added back to the number of shares reserved for issuance under the 2006 Plan and will accordingly be available for subsequent issuance.
In addition, there are no net counting provisions under the 2006 Plan. Accordingly, the following share counting provisions will be in effect:
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Should the exercise price of a stock option be paid in shares of our common stock, then the number of shares reserved for issuance under the 2006 Plan will be reduced by the gross number of shares for which that option is exercised.
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Should shares of common stock otherwise issuable under the 2006 Plan be withheld by us in satisfaction of the exercise price of an option or withholding taxes incurred in connection with the issuance, exercise or vesting of an award, then the number of shares of common stock available for issuance under the 2006 Plan will be reduced by the gross number of shares, for which that option is exercised or issued with respect to that award.
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Upon the exercise of any stock appreciation right, the share reserve will be reduced by the gross number of shares for which the award is exercised.
Limitations on grants to participants. No participant in the 2006 Plan may receive option grants, stock awards, restricted stock units, performance units, stock appreciation rights, dividend equivalents or other stock-based awards for more than 125,000 shares of our common stock in the aggregate, in any single calendar year, subject to adjustment for subsequent stock splits, stock dividends and similar transactions. In addition, for grants denominated in cash and subject to one or more performance conditions, the maximum dollar amount for which such grants may be made to any individual shall not exceed $2 million for each calendar year within the applicable performance period.
The maximum number of shares of our common stock that may be issued under the 2006 Plan (together with all of our other stock-based compensation arrangements, if any) to “insiders” (as such term is defined in the rules of the Toronto Stock Exchange), within any one-year period, and that may be issuable to “insiders”, at any time, may not, in either case, exceed 10% of the number of shares of our common stock outstanding.
Minimum Vesting Requirement. In order to demonstrate the Company’s commitment to using equity awards as an employee retention tool, and to further align the terms of the 2006 Plan with those of our stockholders, the 2006 Plan imposes a 12-month minimum vesting requirement for awards granted under the 2006 Plan subject to a 5% carve out. Pursuant to the carve out, 5% of the share reserve available for issuance under the 2006 Plan as of the date of this annual meeting (subject to adjustment as described above and including the 1,525,000 share increase under this proposal) may be granted without regard to such minimum vesting requirement. The carve out is intended to enable the Corporate Governance, Nominating and Compensation Committee to exercise its fiduciary duty to fashion equity awards in a manner that is in the best interests of the Company and its shareholders, where granting equity awards with a relatively short or no vesting period is appropriate under the circumstances.
The Corporate Governance, Nominating and Compensation Committee retains the authority to provide for accelerated vesting of an award without regard to such minimum vesting requirement in the event of the award holder’s death, disability or, a change of control or other corporate transactions or events or in other circumstances as the committee deems appropriate.
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Description of Awards.
Options. The 2006 Plan allows the Plan Administrator to grant options to purchase shares of our common stock to eligible participants. The Plan Administrator will have complete discretion to determine which eligible participants are to receive option grants, the time or times when those options are to be granted, the number of shares subject to each such grant, the vesting schedule (if any) to be in effect for the grant, the maximum term for which the granted option is to remain outstanding and the status of any granted option as either an incentive stock option or a non-statutory option under the U.S. federal tax laws.
Each granted option will have an exercise price per share determined by the Plan Administrator which may be equal to or greater than the fair market value of a share of our common stock on the date of the option grant. The term of a granted option will not exceed seven years.
Each option will become exercisable as determined by the Plan Administrator, generally in one or more installments over a specified period of service measured from the grant date. However, one or more options may be structured so that they will be immediately exercisable for any or all of the option shares. The shares acquired under such immediately exercisable options may be subject to repurchase by us if the optionee ceases service prior to vesting in those shares. The Plan Administrator may accelerate the exercisability of any options or the vesting of any shares at any time.
Except as otherwise determined by the Plan Administrator, upon cessation of an optionee’s employment or service, as the case may be, for any reason (whether or not for cause), other than as a result of the optionee’s death or disability, all of the optionee’s options which have vested and are exercisable as of the date of resignation or notice of termination of employment or service (a “Termination Date”), shall be exercisable until the earlier of the expiry date(s) of the options and the date that is three months following such Termination Date.
Except as otherwise determined by the Plan Administrator, in the event of the termination of an optionee’s employment or service as a result of the optionee’s death or disability, all of the optionee’s options which have vested and are exercisable as at the date of death or disability (such date, also the “Termination Date”) shall be exercisable under the earlier of the expiry date(s) of the options and the date that is one year following the Termination Date.
Except as otherwise determined by the Plan Administrator, in the event of the termination of an optionee’s employment or service, all of the optionee’s options which have not vested on or before the applicable Termination Date shall expire and be of no further force and effect as of such date.
An optionee may pay the exercise price of his or her option: (i) in cash, (ii) if permitted by the Plan Administrator and subject to compliance with applicable law, by delivering shares of common stock owned by the optionee and having a fair market value on the date of exercise equal to the exercise price or by attestation to ownership of Tucows common stock having an aggregate fair market value on the date of exercise equal to the exercise price; (iii) if permitted by the Plan Administrator and subject to compliance with applicable law, by the Company’s withholding from shares of common stock otherwise deliverable pursuant to the exercise of the option shares having an aggregate fair market value on the date of exercise equal to the exercise price; or (iv) by such other method as approved by the Plan Administrator.
Stock appreciation rights. The 2006 Plan allows the Plan Administrator to grant stock appreciation rights alone or in tandem with any stock option granted under the 2006 Plan:
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Tandem stock appreciation rights are granted in connection with a stock option and may be granted either at the time of grant of the related option or, in the case of a non-qualified stock option, at any time thereafter while the option remains outstanding and will have a base price per share equal to the per share exercise price of the related option. Tandem stock appreciation rights provide the holders with the right to surrender their options to us and receive in exchange a payment from us in an amount equal to the excess of (i) the fair market value on the exercise date of the vested shares of our common stock subject to the surrendered option over (ii) the aggregate exercise price payable for those shares.
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Stand-alone stock appreciation rights are not associated with any options and may be granted at any time with a base price equal to at least the fair market value per share of our common stock on the date of grant of the right. Upon exercise of a stand-alone stock appreciation right, the holder will be entitled to receive from us a payment in an amount equal to the excess of (i) the fair market value on the date of exercise of the shares of common stock as to which those rights are exercised over (ii) the aggregate base price in effect for those shares.
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No stock appreciation right will have a term in excess of 10 years. The amount payable by us upon exercise of a stock appreciation right will be paid in cash, shares of our common stock or a combination thereof at the Plan Administrator’s discretion. The Plan Administrator has complete discretion to determine any vesting requirements associated with the grant of stock appreciation rights and the treatment of stock appreciation rights in the event of the cessation of a holder’s employment or service with us.
Stock awards. The 2006 Plan allows the Plan Administrator to issue shares of our common stock for cash consideration, or for no cash consideration, in the Plan Administrator’s sole discretion. The Plan Administrator will have complete discretion to determine which eligible participants are to receive such stock awards, the time or times when those awards are to be made, the number of shares subject to each such award, the vesting schedule (if any) to be in effect for the award and the cash consideration (if any) payable per share. The shares issued may be fully and immediately vested upon issuance or may vest upon the completion of a designated service period or achievement of specified performance goals. The Plan Administrator will have complete discretion to determine under what circumstances a participant may retain shares of unvested stock following termination of participant’s cessation of employment or service and the circumstances under which unvested stock may be forfeited.
Restricted stock units. The 2006 Plan allows the Plan Administrator to grant restricted stock units to participants. Each restricted stock unit represents the right of a participant to receive one share of our common stock, or an amount based on the value of one share of our common stock, upon vesting of the restricted stock unit.
Each restricted stock unit will vest in one or more installments based on the achievement of performance goals or satisfaction of a specified term of service measured from the grant date, as determined by the Plan Administrator. Restricted stock units may be paid at the end of a specified vesting or performance period, or payment may be deferred to a date authorized by the Plan Administrator. Payment will be made in cash, in shares of our common stock or in a combination of cash and stock, as determined by the Plan Administrator.
The Plan Administrator will have complete discretion to determine under what circumstances a participant may retain restricted stock units following termination of participant’s cessation of employment or service and the circumstances under which restricted stock units may be forfeited.
Performance units. The 2006 Plan allows the Plan Administrator to grant performance units to participants contingent upon the attainment of written performance goals established prior to a particular performance period. Each performance unit allows the participant to receive an amount equal to the value of the unit, which is to be determined by the Plan Administrator at the time of grant.
At the time of grant, the Plan Administrator will establish a performance period during which the participant’s performance will be measured and will establish in writing performance goals for Tucows and its various operating units.
Each performance unit will have a maximum dollar value established by the Plan Administrator at the time of grant. Payment will be contingent upon the achievement of the pre-established goals by the end of the performance period. The value of a unit may, in the Plan Administrator’s discretion, be equal to the fair market value of our common stock.
In determining the number of performance units to be granted to a participant, the Plan Administrator will consider such participant’s responsibility level, performance, potential, cash compensation level, other incentive awards and such other considerations it deems appropriate.
Upon completion of the performance period, a participant will be entitled to receive payment of an amount, not exceeding the maximum value of his or her performance units, based on the achievement of the performance goals as determined by the Plan Administrator. Payment will be made in cash or, in the Plan Administrator’s sole discretion, in shares of our common stock when such performance units are measured using our common stock. Such payments will be made in a lump sum or in installments and will be subject to other terms and conditions as determined by the Plan Administrator.
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Performance Goals. The Plan Administrator has the discretionary authority to structure one or more such awards so that the shares of common stock subject to those awards will vest only upon the achievement of certain pre-established corporate performance goals based on one or more of the following criteria or such other criteria as the plan administrator determines: (i) cash flow; (ii) earnings (including earnings before interest, taxes, depreciation, amortization, net deferred revenue (as determined under GAAP), impact on earnings of unrealized fluctuations in foreign exchange rates, other infrequently occurring items and charges for stock-based compensation, earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) invested capital, required rate of return on capital or return on invested capital;
(xi) revenue, growth in revenue or return on sales; (xii) income or net income; (xiii) operating income, net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin or gross margin; (xvi) return on operating revenue or return on operating profit; (xvii) market share, (xviii) market capitalization, (xix) application approvals, (xx) litigation and regulatory resolution goals, (xxi) product sales or milestones, (xxii) budget comparisons, (xxiii) growth in stockholder value relative to the growth of a peer group or index; (xxiv) development and implementation of strategic plans and/or organizational restructuring goals; (xxv) development and implementation of risk and crisis management programs; (xxvi) improvement in workforce diversity; (xxvii) compliance requirements and compliance relief; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from GAAP required to determine economic value added performance measures); (xxxi) measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development of marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; (xxxiii) mergers and acquisitions; and (xxxiv) other similar criteria consistent with the foregoing. In addition, such performance criteria may be based upon the attainment of specified levels of the Company’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Company’s business units or divisions or any subsidiary. Each applicable Performance Goal may include a minimum threshold level of performance below which no award will be earned, levels of performance at which specified portions of an award will be earned and a maximum level of performance at which an award will be fully earned. Each applicable Performance Goal may be adjusted for one or more of the following items: (A) asset impairments or write-downs; (B) litigation judgments or claim settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) any extraordinary nonrecurring items; (F) the operations of any business acquired by the Company; (G) the divestiture of one or more business operations or the assets thereof; (H) the effects of any corporate transaction, such as a merger, consolidation, separation (including spin-off or other distributions of stock or property by the Company) or reorganization (whether or not such reorganization is within the definition of that term in Code Section 368); and (I) other adjustment consistent with the operation of the 2006 Plan.
Dividend equivalent rights. When the Plan Administrator makes an award under the 2006 Plan , the Plan Administrator may grant dividend equivalent rights in connection with such award. Dividend equivalents with respect to an award will vest and be paid only if and to the extent the underlying award vests as determined by the Plan Administrator .
Dividend equivalent rights may be paid to participants currently or may be deferred in the Plan Administrator’s discretion. In the event they are deferred, such dividend equivalent rights will be credited to bookkeeping accounts on our records for purposes of the 2006 Plan. Dividend equivalent rights may be accrued as a cash obligation or may be converted into restricted stock units for the participant. Deferred dividend equivalent rights may accrue interest in the Plan Administrator’s discretion.
Dividend equivalent rights may be payable in cash, in shares of our common stock or in a combination of cash and stock, as determined by the Plan Administrator.
Other stock-based awards. The Plan Administrator may grant other awards not described above that are based on or measured by our common stock on such terms and conditions as the Plan Administrator deems appropriate. Such awards may be granted subject to performance goals or other conditions and may be payable in cash or shares of our common stock, or a combination of cash and stock as determined by the Plan Administrator.
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Formula Option Grants to Directors.
Non-employee members of our Board will receive grants of non-qualified stock options pursuant to the formula option grant provisions of the 2006 Plan in connection with their service on the Board or a committee of the Board.
Each individual who first becomes a non-employee Board member will receive an automatic grant to purchase 4,375 shares of our common stock on the date he or she becomes a member of our Board. Each individual who becomes an Audit Committee member will receive an automatic grant to purchase 3,750 shares of our common stock on the date he or she first becomes a member of the Audit Committee. Each individual who becomes a Corporate Governance, Nominating, and Compensation Committee member will receive an automatic grant to purchase 2,500 shares of our common stock on the date he or she first becomes a member of the Corporate Governance, Nominating, and Compensation Committee.
In addition, on the date of each annual shareholders meeting, each individual serving as a non-employee Board member at that time will automatically be granted an option to purchase 3,750 shares of our common stock, provided such individual is a Board member both immediately before and after the annual election of directors at such annual meeting.
All options granted under the formula option grant provisions will have an exercise price per share equal to the fair market value of the option shares on the date of grant and have a five-year term, subject to earlier termination following the director’s cessation of Board service.
Initial option grants will become exercisable in full upon the completion of one (1) year of Board service measured from the date of grant. Annual option grants will become exercisable in full upon the completion of Board service through the earlier of (i) one (1) year measured from the date of grant or (ii) the date of the annual shareholder meeting following the date of grant. All formula option grants will become exercisable on an accelerated basis upon a change of control or the non- employee director’s termination of Board service by reason of death or disability.
General Provisions.
Amendment and termination of the 2006 Plan. Our Board may amend or modify the 2006 Plan at any time, subject to any shareholder approval requirements under applicable law or regulation or pursuant to the listing standards of the NASDAQ or any other stock exchange on which our shares of common stock are at the time primarily traded. Our Board may make such amendments to the 2006 Plan as it deems desirable or necessary, without the approval of the shareholders, except our Board may not amend the 2006 Plan without shareholder approval to:
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change the maximum number of shares of our common stock that may be issued under the 2006 Plan , whether as a fixed number of shares or as a fixed percentage of the number of shares outstanding from time to time (other than to reflect an adjustment for subsequent stock splits, stock dividends or other transactions as described below);
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materially increase benefits to the participants of the 2006 Plan , including any change to permit a repricing or decrease of the exercise price of an option;
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reduce the exercise price or purchase price or extend the term of any award which would benefit one of our insiders or change the limitations on insider participation;
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materially expand the class of participants eligible to participate in the 2006 Plan; or
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expand the types of awards provided under the 2006 Plan.
Subject to shareholder approval of this proposal, the 2006 Plan will terminate on September 1, 2030, unless sooner terminated by our Board or extended by the Board with the approval of the shareholders.
Adjustmentprovisions.In the event of any stock dividend, spinoff, extraordinary distribution (whether in cash, securities or other property), recapitalization, reclassification, stock split, combination of shares, exchange of shares or other change in corporate structure effected without our receipt of consideration, equitable adjustments will be made to: (i) the maximum number and/or class of securities issuable under the 2006 Plan; (ii) the maximum aggregate number of shares which may be issued pursuant to incentive stock options; (iii) the maximum aggregate number and/or class of securities for which any one person may be granted awards per calendar year; (iv) the number and/or class of securities and for which option grants are subsequently made to non-employee directors under the formula option grant provisions; and (v) the number and/or class of securities subject to each outstanding award and the issue price (if any) payable per share. Such adjustments will be designed to preclude any dilution or enlargement of benefits under the 2006 Plan or the outstanding awards thereunder.
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No repricing. The plan administrator may not without obtaining shareholder approval (i) implement cancellation/regrant programs pursuant to which outstanding options or stock appreciation rights under the 2006 Plan are cancelled and new options or stock appreciation rights are granted in replacement with a lower exercise or base price per share, (ii) cancel outstanding options or stock appreciation rights under the 2006 Plan with exercise or base prices per share in excess of the then current fair market value per share of common stock for consideration payable in cash or in equity securities of the Company or (iii) reduce the exercise or base price in effect for outstanding options or stock appreciation rights under the 2006 Plan except pursuant to the adjustment provisions above or in connection with a change of control of Tucows.
Change of control of Tucows. In the event of a change of control of Tucows (as defined under the 2006 Plan ), the Plan Administrator may take any one or more of the following actions with respect to all awards outstanding under the 2006 Plan : (i) determine that outstanding awards will become fully vested on the date of the change of control or at such other time as the Plan Administrator determines; (ii) require participants to surrender outstanding options and stock appreciation rights in exchange for one or more payments by Tucows; (iii) terminate any or all unexercised options and stock appreciation rights at such time as the Plan Administrator deems appropriate; (iv) with respect to participants holding awards other than options or stock appreciation rights, determine that such participants will receive one or more payments in settlement of such awards; (v) terminate all unvested awards and require the surrender of any unvested shares subject to those awards; or (vi) determine that awards that remain outstanding after the change of control shall be assumed by the successor corporation or otherwise continued in effect.
Any such acceleration, surrender, termination, settlement or assumption will take place as of the date of the change of control or such other date as the Plan Administrator may specify.
Withholding taxes. The Plan Administrator may provide a holder of awards with the right to have a portion of the shares otherwise issuable to such holder withheld in satisfaction of the withholding taxes to which they become subject in connection with the taxation of those awards. Alternatively, the Plan Administrator may, to the extent permitted by law, deduct the amount of any withholding tax liability from other wages paid to the holder by Tucows.
Shareholder rights and transferability. No optionee will have any shareholder rights with respect to his or her option shares until such optionee has exercised the option and paid the exercise price for the purchased shares. The holder of a stock appreciation right will not have any shareholder rights with respect to the shares subject to that right unless and until such holder exercises the right and becomes the holder of record of the shares of our common stock distributed upon such exercise, if any.
A participant will have full shareholder rights with respect to any shares of common stock issued to him or her under the 2006 Plan, whether or not his or her interest in those shares is vested. A participant will not have any shareholder rights with respect to the shares of common stock subject to a restricted stock unit or other share right award until that unit or award vests and the shares of common stock are issued to such participant. However, dividend-equivalent rights may be paid or credited, either in cash or in shares of common stock, on outstanding restricted stock units or other share-right awards, subject to vesting and such terms and conditions as the Plan Administrator may deem appropriate.
Except as otherwise provided by the Plan Administrator, awards under the 2006 Plan are not assignable or transferable other than by will or the laws of inheritance following the holder’s death, and during the holder’s lifetime, the award may only be exercised by the holder.
Valuation. For the purposes of the 2006 Plan , “fair market value” means: (i) if our common stock is traded on a securities exchange, the last reported sale price of the shares of our common stock on such exchange or market determined by the Plan Administrator to be the primary market for our common stock, at the close of regular trading hours on the relevant date; (ii) if our common stock is not traded on any such exchange or market, the mean between the last reported “bid” and “asked” prices of our common stock at the close of regular trading hours on the relevant date, as reported on the Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Plan Administrator determines; or (iii) if our common stock is not publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above, the fair market value shall be as determined by the Plan Administrator. On July 14, 2020, the fair market value per share of our common stock based on the last reported sale price of our common stock at the close of regular trading hours on such date on the Nasdaq was $59.00.
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New Plan Benefits.
No stock options or other awards have been or will be made under the 2006 Plan that are contingent upon the share increase subject to approval under this proposal. Because grants are made by the Plan Administrator to those persons whom the Plan Administrator determines in its discretion should receive grants, the benefits and amounts that may be received in the future by persons eligible to participate in the 2006 Plan are not determinable now, except for formula grants described below. However, each of our non-employee directors who is to continue in service will receive formula option grants for 3,750 shares on the date of the Annual Meeting of the Shareholders.
Summary of Federal Income Tax Consequences.
The following is a summary of the Federal income taxation treatment applicable to us and the participants who receive awards under the 2006 Plan.
Option grants. Options granted under the 2006 Plan may be either incentive stock options which satisfy the requirements of Section 422 of the Internal Revenue Code or non-statutory options which are not intended to meet such requirements. The Federal income tax treatment for the two types of options differs as follows:
Incentive options. No taxable income is recognized by the optionee at the time of the option grant, and no taxable income is recognized for regular tax purposes at the time the option is exercised, although taxable income may arise at that time for alternative minimum tax purposes. The optionee will recognize taxable income in the year in which the purchased shares are sold or otherwise made the subject of certain other dispositions. For Federal tax purposes, dispositions are divided into two categories: (i) qualifying; and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two (2) years after the date the option for the shares involved in such sale or disposition is granted and more than one (1) year after the date the option is exercised for those shares. If the sale or disposition occurs before these two periods are satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition, the optionee will recognize long-term capital gain in an amount equal to the excess of: (i) the amount realized upon the sale or other disposition of the purchased shares over (ii) the exercise price paid for the shares. If there is a disqualifying disposition of the shares, then the excess of: (i) the fair market value of those shares on the exercise date or (if less) the amount realized upon such sale or disposition over (ii) the exercise price paid for the shares will be taxable as ordinary income to the optionee. Any additional gain recognized upon the disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the purchased shares, then we will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal to the amount of ordinary income recognized by the optionee as a result of the disposition. We will not be entitled to any income tax deduction if the optionee makes a qualifying disposition of the shares.
Non-statutory options. No taxable income is recognized by an optionee upon the grant of a non-statutory option. The optionee will in general recognize ordinary income, in the year in which the option is exercised, equal to the excess of the fair market value of the purchased shares on the exercise date over the exercise price paid for the shares, and we will be required to collect the withholding taxes applicable to such income from the optionee.
If the shares acquired upon exercise of the non-statutory option are unvested and subject to repurchase by us in the event of the optionee’s termination of service prior to vesting in those shares, then the optionee will not recognize any taxable income at the time of exercise but will have to report as ordinary income, as and when our repurchase right lapses, an amount equal to the excess of: (i) the fair market value of the shares on the date the repurchase right lapses over (ii) the exercise price paid for the shares. The optionee may, however, elect under Section 83(b) of the Internal Revenue Code to include as ordinary income in the year of exercise of the option an amount equal to the excess of: (i) the fair market value of the purchased shares on the exercise date over (ii) the exercise price paid for such shares. If the Section 83(b) election is made, the optionee will not recognize any additional income as and when the repurchase right lapses. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the optionee with respect to the exercised non-statutory option. The deduction will in general be allowed for our taxable year in which such ordinary income is recognized by the optionee.
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Stock appreciation rights. No taxable income is recognized upon receipt of a stock appreciation right. The holder will recognize ordinary income in the year in which the stock appreciation right is exercised, in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the base price in effect for the exercised right, and we will be required to collect the withholding taxes applicable to such income from the holder. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder in connection with the exercise of the stock appreciation right. The deduction will be allowed for the taxable year in which such ordinary income is recognized.
Stock awards. The tax principles applicable to stock awards under the 2006 Plan will be substantially the same as those summarized above for the exercise of non-statutory option grants.
Restricted stock units. No taxable income is recognized upon receipt of a restricted stock unit. The holder will recognize ordinary income in the year in which a payment with respect to the unit, in shares or cash, is made to the holder. The amount of that income will be equal to the amount of the cash payment or the fair market value of any shares issued on the date of issuance, and we will be required to collect the withholding taxes applicable to such income from the holder. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder. The deduction will be allowed for the taxable year in which such ordinary income is recognized.
Performance units, dividend equivalent rights and other stock-based awards. No taxable income is recognized upon receipt of a performance unit, dividend equivalent right or other stock-based award. The holder will recognize ordinary income in the year in which a payment with respect to that award is made to the holder. The amount of that income will be equal to the amount of the cash payment or the fair market value of any shares issued on the date of issuance, and we will be required to collect the withholding taxes applicable to such income from the holder. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder at the time of the payment. The deduction will be allowed for the taxable year in which such ordinary income is recognized.
Deductibility of executive compensation. Prior to 2018, Internal Revenue Code Section 162(m) imposed a $1 million limit on the amount a public company may deduct for compensation paid to a company’s chief executive officer or any of the company’s three most highly compensated executive officers (other than the chief financial officer) who are employed as of the end of the year. This limitation did not apply to compensation that met the tax code requirements for “qualified performance-based compensation.
The performance-based compensation exemption and the exemption of the chief financial officer from Internal Revenue Code Section 162(m)’s deduction limit have been repealed, among other changes, effective for taxable years beginning after December 31, 2017, such that awards paid to our covered executive officers (including our chief financial officer) in excess of $1 million will not be deductible in future years, unless it is grandfathered by qualifying for transition relief applicable to certain arrangements that were in effect as of November 2, 2017 and are not materially modified thereafter.
As in prior years, while deductibility of executive compensation for federal income tax purposes is among the factors the plan administrator considers when structuring our executive compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of the Company.
Accounting Treatment. [Company to Review]
Pursuant to the accounting standards established under the FASB Accounting Standards Codification Topic 718, we will be required to expense all share-based payments, including grants of stock options, stock appreciation rights, restricted stock units and all other awards under the 2006 Plan. Accordingly, stock options and stock appreciation rights that are granted to our employees and non-employee Board members will have to be valued at fair value as of the grant date under an appropriate valuation formula, and that value will then have to be charged as a direct compensation expense against our reported earnings over the designated vesting period of the award. For shares issuable upon the vesting of restricted stock units awarded under the 2006 Plan, we will be required to amortize over the vesting period a compensation cost equal to the fair market value of the underlying shares on the date of the award. If any other shares are unvested at the time of their direct issuance, then the fair market value of those shares at that time will be charged to our reported earnings ratably over the vesting period. Such accounting treatment for restricted stock units and direct stock issuances will be applicable whether vesting is tied to service periods or performance goals. The issuance of a fully-vested stock bonus will result in an immediate charge to our earnings equal to the fair market value of the bonus shares on the issuance date.
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For performance units awarded under the 2006 Plan and payable in stock, we will be required to amortize, over the applicable performance period and any subsequent service vesting period, a compensation cost equal to the fair market value of the underlying shares on the date of the award. For performance units awarded under the 2006 Plan and payable in cash, we will amortize the potential cash expense over the applicable performance period and any subsequent service vesting period. Dividends or dividend equivalents paid on the portion of an award that vests will be charged against our retained earnings. However, if the award holder is not required to return the dividends or dividend equivalents if they forfeit their awards, such dividends or dividend equivalents paid on instruments that do not vest will be recognized by us as additional compensation cost.
The compensation expense accruable for performance-based awards under the 2006 Plan will, in general, be subject to adjustment to reflect the actual outcome of the applicable performance goals, and any expenses accrued for such performance-based awards will be reversed if the performance goals are not met, unless those performance goals are deemed to constitute market conditions (i.e., because they are tied to the price of our common stock) under FASB Accounting Standards Codification Topic 718.
Required Vote and Board Recommendation.
The affirmative vote of the holders of a majority of the shares present, virtually or represented by proxy, and actually cast on Proposal No. 2 is required for approval of the 2006 Plan, provided that such affirmative vote also represents at least majority of the voting power required to constitute a quorum at the Annual Meeting. Should such approval not be obtained, then the share reserve will not be increased and the 2006 Plan term will not be extended; however, the formula grants to directors and committee members described above shall be automatically issued under the existing terms of the 2006 Plan and discretionary awards will continue to be granted from the remaining share reserve until the expiration of the 2006 Plan on September 1, 2025.
Recommendation of the Board of Directors.
The Board believes that Proposal No. 2 is in our best interests and in the best interests of our shareholders and recommendsavoteFORtheadoptionoftheAmendmentofthe2006EquityCompensationPlan.
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PROPOSAL No. 2 3:
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are providing our shareholders with an opportunity to vote, on an advisory, non-binding basis, on the compensation of our named executive officers (“NEOs”) as described in this proxy statement. This proposal, which is commonly referred to as the “say-on-pay” proposal, is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
Our executive compensation program is designed to attract, motivate and retain our executive officers, who are critical to our success. As described in the tables included in the sections above entitled “Executive Compensation - Summary Compensation Table” and “Executive Compensation – Outstanding Equity Awards at Fiscal Year–End” as well as our accompanying narrative disclosure to such tables and in “Executive Compensation – Potential Payments on Termination of Change In Control,” our executive compensation program contains elements of cash and equity-based compensation. Our Board and our Corporate Governance, Nominating and Compensation Committee believe that our compensation programs directly and substantially link rewards to measurable corporate performance and are designed to align the interests of our NEOs with those of our shareholders and to reward our NEOs for the achievement of our near-term and longer-term financial and strategic goals. The process for determining compensation packages requires that our Board and our Corporate Governance, Nominating and Compensation Committee use judgment and experience to determine the optimal components and amounts of compensation for each NEO,
We strongly encourage our shareholders to review this proxy statement, and in particular the information contained in the “Executive Compensation” section, including the tabular and narrative disclosure, for a more detailed discussion of our compensation philosophy, objectives and programs.
The say-on-pay vote gives you as a shareholder the opportunity to express your views regarding the compensation of our NEOs by voting to approve or not approve such compensation as described in this proxy statement. This vote is advisory and will not be binding upon our Board or our Corporate Governance, Nominating and Compensation Committee. However, our Board and our Corporate Governance, Nominating and Compensation Committee value the opinion of our shareholders and will take into account the outcome of the vote when considering future executive compensation arrangements. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our NEOs, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. If Proposal No. 4 below, is approved in accordance with our recommendation, the next say-on-pay vote will occur in 2023.
At the 2017 annual meeting, our stockholders approved, as recommended by our Board, a proposal for our stockholders to be provided with the opportunity to cast a non-binding advisory vote on compensation of our NEOs every three years. The next say-on-pay vote will occur at our 2023 annual meeting of shareholders.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the following non-binding advisory resolution:
RESOLVED, that the compensation paid to the NEOs as disclosed in the Company’s proxy statement for the 2020 Annual Meeting pursuant to Item 402 of SEC Regulation S-K, including the tabular and narrative disclosures and any other related disclosure, is hereby APPROVED.
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PROPOSAL NO. 4:
NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION
In Proposal No. 3 above, we are providing our shareholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our NEOs. In this proposal, we are asking our shareholders to cast a non-binding advisory vote regarding the frequency of future “say-on-pay” votes. Shareholders may vote for a frequency of every one, two, or three years, or may abstain from voting. This proposal, which is often referred to as a “say-on-frequency” proposal, also is required by the Dodd-Frank Act.
Because this proposal calls for a non-binding advisory vote, our Board and our Corporate Governance, Nominating and Compensation Committee may determine to hold “say-on-pay” votes more or less frequently than the option selected by our shareholders (though no less frequently than once every three years). However, our Board and our Corporate Governance, Nominating and Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when determining the frequency of future “say-on-pay” votes. In the future, we will provide a “say-on-frequency” vote at least once every six years as required by the Dodd-Frank Act. The original vote took place in 2014, therefore we now bring the say-on-frequency vote to the stockholders as required by the Dodd-Frank Act.
We believe that every three years is the optimal frequency for our say-on-pay vote for several reasons.  As our compensation program is designed to incentivize performance over not just the short term but also the long term, shareholder input on executive compensation would be most useful if the effectiveness of our compensation program is evaluated and judged over a multi-year period.  Additionally, a three-year vote cycle will provide our Board and our Corporate Governance, Nominating and Compensation Committee with time to consider the results of the advisory vote and to implement any changes to our compensation practices.  By contrast, a more frequent vote might lead to a short-term perspective on executive compensation that is inconsistent with the longer-term approach taken by our Board and our Corporate Governance, Nominating and Compensation Committee and with which we currently view our business.
Before making its recommendation, our Board considered the arguments in favor of more frequent votes, including increased opportunities for stockholder input and the belief that annual votes might promote greater accountability on executive compensation. After considering the alternatives, our Board believes that, on balance, a three-year cycle is most appropriate for us. Our Corporate Governance, Nominating and Compensation Committee intends to periodically reassess this triennial approach and, if appropriate, may provide for a more frequent say-on-pay vote.
Recommendation of our Board of Directors
The Board of Directors recommends that shareholders select “EVERY THREE YEARS” on the proposal recommending the frequency of advisory votes on named executive officer compensation.
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PROPOSAL No. 5

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP has served as our independent auditor since our merger with Tucows Delaware in August 2001. The Audit Committee of our Board ~~of Directors~~ has appointed KPMG LLP as the independent registered public accounting firm of the Company and our subsidiaries for the year ending December 31, ~~2017.~~2020. Although shareholder approval is not required, our Board ~~of Directors~~ desires to obtain shareholder ratification of this appointment. If the appointment is not ratified at the ~~annual meeting,~~Annual Meeting, our Board ~~of Directors~~ will review its future selection of independent registered public accounting firm. A representative of KPMG LLP is expected to be present at the ~~annual meeting~~Annual Meeting and will have the opportunity to make a statement, if he or she desires to do so, and to respond to appropriate questions.

The Board ~~of Directors~~ unanimously recommends a vote FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, ~~2017.~~2020.

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AUDIT FEES AND ALL OTHER FEES

All services provided by KPMG LLP, our independent registered public accounting firm for ~~2016,~~2019, have been reviewed with the Audit Committee to confirm that the performance of such services was consistent with the regulatory requirements for auditor independence and our pre-approval policy.

A summary of the fees of KPMG LLP for the years ended December 31, ~~2016~~2019 and ~~2015~~2018 are set forth below:

2016 Fees 2015 Fees
Audit Fees ⁽¹⁾
$ 311,934 $ 327,264
Audit-Related Fees
— —
Tax Fees ⁽²⁾
110,844 143,725
All Other Fees
— —
Total Fees $
$ 422,778 $ 470,989

2019 Fees

2018 Fees

Audit Fees (1)
$ 566,000 $ 515,000
Audit-Related Fees (2)
- -
Tax Fees (3)
91,000 70,000
All Other Fees
- -
Total Fees
$ 657,000 $ 585,000

(1)
Consists of fees and expenses for (a) the ~~audit~~annual audits of our consolidated financial statements and the ~~reviews~~accompanying attestation report regarding our ICFR contained in our 2019 Annual Report , (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, and (c) audit services ~~associated with registration statements.~~related to mergers and acquisitions.

(2)
Consists of fees and expenses for assurance and related services, such as the review of non-periodic filings with the SEC.
(3)
Consists of fees and expenses for tax ~~consulting~~compliance and advisory services.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors.

The Audit Committee has adopted a pre-approval policy that provides guidelines for the audit, audit-related, tax and other non-audit services that may be provided to us by our independent auditors. Under this policy, the Audit Committee ~~pre- approves~~pre-approves all audit and certain permissible accounting and non-audit services performed by the independent auditors. These permissible services are set forth on an attachment to the policy that is updated at least annually and may include audit services, audit-related services, tax services and other services. For audit services, the independent auditor provides the audit committee with an audit plan including proposed fees in advance of the annual audit. The Audit Committee approves the plan and fees for the audit.

With respect to non-audit and accounting services of our independent auditors that are not pre-approved under the policy, the employee making the request must submit the request to our ~~chief financial officer.~~Chief Financial Officer (the “CFO”). The request must include a description of the services, the estimated fee, a statement that the services are not prohibited services under the policy and the reason why the employee is requesting our independent auditors to perform the services. If the aggregate fees for such services are estimated to be less than or equal to $~~50,000,~~$50,000, our ~~chief financial officer~~CFO will submit the request to the ~~chairman~~Chairman of the Audit Committee for consideration and approval, and the engagement may commence upon the approval of the ~~chairman.~~Chairman. The ~~chairman~~Chairman is required to inform the full Audit Committee of the services at its next meeting. If the aggregate fees for such services are estimated to be greater than $50,000, our ~~chief financial officer~~CFO will submit the request to the full Audit Committee for consideration and approval, generally at its next meeting or special meeting called for the purpose of approving such services. The engagement may only commence upon the approval of full ~~audit committee.~~

~~PROPOSAL~~ ~~No. 3:~~
~~NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION~~Audit Committee.

We are providing our shareholders with an opportunity to vote, on an advisory, non-binding basis, on the compensation of our named executive officers as described in this proxy statement. This proposal, which is commonly referred to as the “say-on-pay” proposal, is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
Our executive compensation program is designed to attract, motivate and retain our executive officers, who are critical to our success. As described in the tables included in the sections above entitled “Executive Compensation - Summary Compensation Table” and “Executive Compensation – Outstanding Equity Awards at Fiscal Year–End” as well as our accompanying narrative disclosure to such tables and in “Executive Compensation – Potential Payments on Termination of Change In Control,” our executive compensation program contains elements of cash and equity-based compensation. Our Board of Directors and our Corporate Governance, Nominating and Compensation Committee believe that our compensation programs directly and substantially link rewards to measurable corporate performance and are designed to align the interests of our named executive officers with those of our shareholders and to reward our named executive officers for the achievement of our near-term and longer-term financial and strategic goals. The process for determining compensation packages requires that our Board of Directors and our Corporate Governance, Nominating and Compensation Committee use judgment and experience to determine the optimal components and amounts of compensation for each named executive officer,
We strongly encourage our shareholders to review this proxy statement, and in particular the information contained in the “Executive Compensation” section, including the tabular and narrative disclosure, for a more detailed discussion of our compensation philosophy, objectives and programs.
The say-on-pay vote gives you as a shareholder the opportunity to express your views regarding the compensation of our named executive officers by voting to approve or not approve such compensation as described in this proxy statement. This vote is advisory and will not be binding upon our Board of Directors or our Corporate Governance, Nominating and Compensation Committee. However, our Board of Directors and our Corporate Governance, Nominating and Compensation Committee value the opinion of our shareholders and will take into account the outcome of the vote when considering future executive compensation arrangements. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC.
At the 2014 annual meeting, our stockholders approved, as recommended by our Board, a proposal for our stockholders to be provided with the opportunity to cast a non-binding advisory vote on compensation of our named executive officers every three years. The next say-on-pay vote will occur at our 2020 annual meeting of shareholders.
~~Recommendation of the Board of Directors~~
~~The Board of Directors recommends a vote FOR the following non-binding advisory resolution:~~
~~RESOLVED, that the compensation paid to the Company~~’s named executive officers as disclosed in the Company’s proxy statement for the 2017 Annual Meeting of Shareholders pursuant to Item 402 of SEC Regulation S-K, including the tabular and narrative disclosures and any other related disclosure, is hereby APPROVED.

~~Compensation Committee Interlocks and Insider Participation~~
The members of the Corporate Governance, Nominating and Compensation Committee of our Board of Directors during 2016 were Messrs. Karp (Chair), Schwartz and Ralls. To ensure that our compensation policies are administered in an objective manner, our Corporate Governance, Nominating and Compensation Committee is comprised entirely of independent directors. None of the members of our Corporate Governance, Nominating and Compensation Committee has ever been an officer or employee of the Company or its subsidiaries. None of our executive officers serves as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers on our Board of Directors or Corporate Governance, Nominating and Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Review, Approval or Ratification of Transactions with Related Parties

The Audit Committee of the Board ~~of Directors~~ is responsible for reviewing and, if appropriate, approving all related party transactions between us and any officer or director that would potentially require disclosure pursuant to the Audit Committee ~~charter.~~charter. We expect that any transactions in which related persons have a direct or indirect interest will be presented to the Audit Committee for review and approval. ~~While neither the~~The Audit Committee ~~nor~~and the Board ~~of Directors~~ have adopted a written policy regarding related party transactions wherein the Audit Committee makes inquiries to our management and our auditors when reviewing such transactions. Neither we nor the Audit Committee are aware of any transaction that was required to be reported with the SEC where such policies and procedures either did not require review or were not followed.

~~SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING~~ ~~COMPLIANCE~~
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~~Section~~ 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the SEC reports of ownership and reports of changes in ownership of our common stock and our other equity securities. These persons are required by SEC regulation to furnish us with copies of all Section 16(a) reports they file.
~~We believe that, under the SEC~~’s rules and based solely upon our review of the copies of the Forms 3, 4 and 5 furnished to us, or written representations from the reporting persons that any such reports have been filed in a timely manner except the following: two reports on Form 4 for Ms. Goetz which were inadvertently filed late reporting two sales of share of common stock and one report on Form 4 which was inadvertently filed late for Mr. Schwartz reporting an exercise of options.
OTHER MATTERS TO BE DECIDED AT THE ANNUAL MEETING

All of the matters we knew about as of the time of the mailing of this proxy statement to be brought before the ~~annual meeting~~Annual Meeting are described in this proxy statement. If any matters properly come before the ~~annual meeting~~Annual Meeting that are not specifically set forth on your proxy and in this proxy statement, the persons appointed to vote the proxies will vote on such matters in accordance with their best judgment.

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HOUSEHOLDING OF PROXY MATERIALS

Certain banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this proxy statement and our 2019 Annual Report ~~on Form 10-K~~ may have been sent to multiple shareholders in your household. If you would prefer to receive separate copies of a proxy statement or 2019 Annual Report ~~on Form 10-K~~ for other shareholders in your household, either now or in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee. Upon written or oral request to our ~~secretary~~Secretary at the address set forth on the first page of this proxy statement, or via telephone to our ~~secretary~~Secretary at (416) 538-5493, we will promptly provide separate copies of the 2019 Annual Report ~~on Form 10-K~~ and/or this proxy statement. Shareholders sharing an address who are receiving multiple copies of this proxy statement and/or 2019 Annual Report ~~on Form 10-K~~ and who wish to receive a single copy of these materials in the future will need to contact their bank, broker, broker-dealer or other similar organization serving as their nominee to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.

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ADDITIONAL INFORMATION

Shareholder Proposals for the ~~2018~~2021 Annual Meeting

If you would like to submit a proposal for inclusion in the proxy materials for our annual meeting of shareholders in ~~2018~~2021 you may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. To be eligible for inclusion, shareholder proposals must be received by the Secretary at Tucows Inc., 96 Mowat Avenue, Toronto, Ontario M6K 3M1, Canada, at any time before March ~~27, 2018,~~26, 2021, and must comply in all material respects with all applicable rules and regulations of the SEC.

If you would like to present a proposal at the ~~2018~~2021 annual meeting, but do not want to include the proposal in our proxy statement, you will have to comply with the advance notice procedures set forth in the Bylaws. The Bylaws require that a shareholder submit a written notice of intent to present such a proposal to our ~~secretary~~Secretary no more than 90 days and no less than 60 days prior to the anniversary of the date on which we first mailed our proxy materials for the preceding year’s annual meeting. Therefore, we must receive notice of such proposal for the ~~2018~~2021 annual meeting no earlier than April ~~26, 2018~~24, 2021 and no later than May ~~26, 2018.~~24, 2021. The notice must also meet other requirements set forth in the Bylaws.

If we do not receive notice of such proposals by May ~~26, 2018,~~24, 2021, the persons named as proxies in the proxy materials relating to that meeting will use their discretion in voting the proxies when these matters are raised at the meeting.

Eligible International Interlisted Issuer

As an “Eligible International Interlisted Issuer”, the Company is exempt from The Toronto Stock ~~Exchange~~’sExchange’s requirement that an annual meeting of shareholders be held within six months of its fiscal year-end, pursuant to Section 401.1 of the TSX Company Manual.

Cost of Proxy Solicitation

We will pay the expenses of the preparation of the proxy materials and the solicitation by our Board ~~of Directors~~ of your proxy. We will make solicitations primarily by mail or by facsimile and our directors, officers and employees may solicit proxies personally or by telephone but will not be specifically compensated for such services. We will ask brokerage houses and other nominees, custodians and fiduciaries to forward proxy soliciting material and our 2019 Annual Report ~~on Form 10-K~~ to the beneficial owners of the shares of our common stock held of record by them, and we will reimburse these record holders for their reasonable out-of-pocket expenses incurred in doing so.

Annual Report on Form 10-K

A copy of our 2019 Annual Report ~~on Form 10-K for the fiscal year ended December 31, 201~~6 as filed with the SEC, except for exhibits, will be furnished without charge to any shareholder upon written or oral request to Tucows Inc., 96 Mowat Ave, Toronto, Ontario M6K 3M1, Attention: Investor Relations, Telephone: (416) 538-5493.

By Order of the Board of
Directors,
Davinder Singh
Chief Financial Officer and Secretary

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APPENDIX A
TUCOWS INC.
2006 EQUITY COMPENSATION PLAN
(As Amended and Restated May 22, 2020)
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TUCOWS INC.
2006 EQUITY COMPENSATION PLAN
(As Amended and Restated May 22, 2020)
1.
Purpose.
The purpose of the 2006 Equity Compensation Plan (the “Plan”) is to provide eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in Tucows Inc. (the “Company”). The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefitting the Company’s shareholders, and will align the economic interests of the participants with those of the shareholders.
2.
Definitions.
Whenever used in this Plan, the following terms will have the respective meanings set forth below:
(a)     “Board” means the Company’s Board of Directors.
(b)     “Change of Control” shall be deemed to have occurred:
(i)     If any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 40% of the voting power of the then outstanding securities of the Company; provided that a Change of Control shall not be deemed to occur as a result of a transaction in which the Company becomes a subsidiary of another corporation and in which the shareholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such shareholders to more than 40% of all votes to which all shareholders of the parent corporation would be entitled in the election of directors;
(ii)     Upon the consummation of (i) a merger or consolidation of the Company with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to more than 40% of all votes to which all shareholders of the surviving corporation would be entitled in the election of directors, (ii) a sale or other disposition of all or substantially all of the assets of the Company, or (iii) a liquidation or dissolution of the Company; or
(iii)     If after the date on which this Plan is approved by the shareholders of the Company, directors are elected such that a majority of the members of the Board shall have been members of the Board for less than two years, unless the election or nomination for election of each new director who was not a director at the beginning of such two-year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.
(c)     “Code” means the Internal Revenue Code of 1986, as amended.
(d)     “Company” means Tucows Inc. and any successor corporation.
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(e)     “Company Stock” means the common stock of the Company.
(f)     “Compensation Committee” means the corporate governance, nominating and compensation committee of the Company.
(g)     “Consultant” means a consultant or advisor of the Company or a subsidiary of the Company, provided that the Company can issue securities to such consultant or advisor under the Plan pursuant to exemptions from prospectus and registration requirements of applicable securities laws.
(h)     “Disability” means the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.
(i)     “Dividend Equivalent” means an amount determined by multiplying the number of shares of Company Stock subject to a Grant by the per-share cash dividend, or the per-share fair market value (as determined by the Plan Administrator) of any dividend in consideration other than cash, paid by the Company on its Company Stock.
(j)     “Employee” means an employee of the Employer (including an officer or director who is also an employee).
(k)     “Employer” means the Company and its subsidiaries.
(l)     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(m)     “Exercise Price” means the per share price at which shares of Company Stock may be purchased under an Option, as designated by the Plan Administrator.
(n)     “Fair Market Value” of Company Stock means (i) if the Company Stock is traded on a securities exchange or AIM, the last reported sale price of Company Stock at the close of regular hours trading on the relevant date on the exchange or market determined by the Plan Administrator to be the primary market for the Company Stock, or (if there were no trades on that date) the latest preceding date upon which a sale was reported, (ii) if the Company Stock is not traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock at the close of regular hours trading on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Plan Administrator determines, or (iii) if the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determined by the Plan Administrator.
(o)     “Grant” means an Option, Restricted Stock Unit, Stock Award, Performance Unit, SAR, Dividend Equivalent or Other Stock-Based Award granted under the Plan.
(p)     “Grant Agreement” means the written instrument that sets forth the terms and conditions of a Grant, including all amendments thereto.
(q)     “Incentive Stock Option” means an Option that is intended to meet the requirements of an incentive stock option under section 422 of the Code.
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(r)     “Insider” means:
(i)     every director or officer of the Company;
(ii)     every director or officer of a person or company that is itself an insider or subsidiary of the Company;
(iii)     every person or company that has beneficial ownership of, or control or direction over, or a combination of beneficial ownership of and control or direction over, directly or indirectly, securities of the Company carrying more than 10% of the voting rights attached to all the Company’s outstanding voting securities, excluding for this purpose any securities held by the person or company as underwriter in the course of a distribution;
(iv)     every “associate” (as such term is defined in the Securities Act (Ontario)) of a person or company that is itself an insider; and
(v)     every “affiliated company” (as such term is defined in the Securities Act (Ontario)) of a person or company that is itself an insider and every other issuer that is similarly related to such person or company, whether a partnership, limited partnership, trust, income trust, investment trust or any other organized entity issuing securities.
(s)     “Non-Employee Director” means a member of the Board who is not an Employee.
(t)     “Nonqualified Stock Option” means an Option that is not intended to meet the requirements of an incentive stock option under section 422 of the Code.
(u)     “Option” means an option to purchase shares of Company Stock, as described in Section 7.
(v)     “Other Stock-Based Award” means any Grant based on, measured by or payable in Company Stock (other than a Grant described in Sections 7, 9, 10, 11 or 12(a) of the Plan), as described in Section 12(b).
(w)     “Participant” means an Employee, Non-Employee Director or Consultant designated by the Plan Administrator to participate in the Plan.
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(x)     “Performance Goals” means the performance criteria upon which the vesting of one or more Grants under the Plan may be based which may include one or more of the following or such other criteria as the Plan Administrator determines: (i) cash flow; (ii) earnings (including earnings before interest, taxes, depreciation, amortization, net deferred revenue (as determined under GAAP), impact on earnings of unrealized fluctuations in foreign exchange rates, other infrequently occurring items and charges for stock-based compensation), earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) invested capital, required rate of return on capital or return on invested capital; (xi) revenue, growth in revenue or return on sales; (xii) income or net income; (xiii) operating income, net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin or gross margin; (xvi) return on operating revenue or return on operating profit; (xvii) market share, (xviii) market capitalization, (xix) application approvals, (xx) litigation and regulatory resolution goals, (xxi) product sales or milestones, (xxii) budget comparisons, (xxiii) growth in stockholder value relative to the growth of a peer group or index; (xxiv) development and implementation of strategic plans and/or organizational restructuring goals; (xxv) development and implementation of risk and crisis management programs; (xxvi) improvement in workforce diversity; (xxvii) compliance requirements and compliance relief; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); (xxxi) measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development of marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; (xxxiii) mergers and acquisitions; and (xxxiv) other similar criteria consistent with the foregoing. In addition, such performance criteria may be based upon the attainment of specified levels of the Company’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Company’s business units or divisions or any subsidiary. Each applicable Performance Goal may include a minimum threshold level of performance below which no Grant will be earned, levels of performance at which specified portions of a Grant will be earned and a maximum level of performance at which a Grant will be fully earned. Each applicable Performance Goal may be adjusted for one or more of the following items: (A) asset impairments or writedowns; (B) litigation judgments or claim settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) any extraordinary nonrecurring items; (F) the operations of any business acquired by the Company; (G) the divestiture of one or more business operations or the assets thereof; (H) the effects of any corporate transaction, such as a merger, consolidation, separation (including spinoff or other distributions of stock or property by the Company) or reorganization (whether or not such reorganization is within the definition of that term in Code Section 368); and (I) other adjustment consistent with the operation of the Plan.
(y)     “Performance Unit” means an award of a performance unit as described in Section 11.
(z)     “Plan” means this Tucows Inc. 2006 Equity Compensation Plan, as in effect from time to time.
(aa)   “Plan Administrator” means the particular entity, whether the Compensation Committee, the Board or other committees or delegate thereof (in the event the Board or Compensation Committee has delegated its authority pursuant to Section 3), which is authorized to administer the Plan with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under the Plan with respect to the persons then subject to its jurisdiction.
(bb)   “Restricted Stock Unit” means an award of a phantom unit representing a share of Company Stock as described in Section 9.
(cc)   “SAR” means a stock appreciation right as described in Section 12.
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(dd)   “Section 16 Insider” means an officer or director of the Company subject to the short-swing profit liability provisions of Section 16 of the Exchange Act.
(ee)   “Stock Award” means an award of Company Stock as described in Section 10.
(ff)   “10% Shareholder” shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary).
(gg)   “Withholding Taxes” shall mean all applicable income and employment taxes, social insurance, payroll taxes, contributions, payment on account obligations or other payments required to be withheld by the Employer in connection with a Grant.
3.
Administration.
(a)     The Plan shall be administered by the Compensation Committee of the Board with respect to grants to Section 16 Insiders. Administration of the Plan with respect to all other eligible persons may, at the Board’s discretion, be vested in the Compensation Committee or another committee appointed by the Board, or the Board may retain the power to administer the Plan with respect to such persons. However, any discretionary awards to members of the Compensation Committee must be authorized and approved by a disinterested majority of the Board. Administration of the formula option grants to Non-Employee Directors under Section 8 shall be self-executing in accordance with the terms of that program, and no Plan Administrator shall exercise any discretionary functions with respect to any award under that program.
(b)     The Board or Compensation Committee may delegate to one or more officers of the Company designated by the Board or the Compensation Committee, the authority to administer Grants to eligible persons other than directors or officers of the Company within specified guidelines established by the Board or the Compensation Committee and subject to applicable law.
(c)     Subject to the provisions of the Plan, the Plan Administrator shall have the sole authority to (i) determine the Participants to whom Grants shall be made under the Plan, (ii) determine the type, size and terms and conditions of the Grants to be made to each such Participant, (iii) determine the time when the Grants will be made and the duration of any applicable exercise or vesting period, including the criteria for exercisability or vesting and the acceleration of exercisability or vesting, (iv) amend the terms and conditions of any previously issued Grant, subject to the provisions of Sections 18 and 20 below, and (v) deal with any other matters arising under the Plan.
(d)     The Plan Administrator shall have full power and express discretionary authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Plan Administrator’s interpretations of the Plan and all determinations made by the Plan Administrator pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Plan Administrator shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated Participants.
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4.
Grants and Vesting.
(a)     Types of Grants. Grants under the Plan may consist of Options as described in Section 7, Restricted Stock Units as described in Section 9, Stock Awards as described in Section 10, Performance Units as described in Section 11, SARs or Other Stock-Based Awards as described in Section 12, and Dividend Equivalents as described in Section 13. All Grants shall be subject to such terms and conditions as the Plan Administrator deems appropriate (but subject to the terms hereof) and as are specified in writing by the Plan Administrator to the Participant in the Grant Agreement.
(b)     Vesting. Grants under the Plan shall vest over a period that is not less than one year from the date of grant; provided however that, subject to any adjustments made in accordance with Section 17 below, up to 5% of the shares of Common Stock available for issuance under the Plan as of May 22, 2020 (including the 1,525,000 share increase) may be granted without regard to the minimum vesting requirement. The Plan Administrator shall have discretion to accelerate vesting in connection with a Participant’s death or disability, or in the event of a Change of Control or a corporate transaction or event described in Section 17 or in other circumstances as the Plan administrator deems appropriate.
5.
Shares Subject to the Plan.
(a)     Shares Authorized. The total aggregate number of shares of Company Stock that may be issued under the Plan is 4,000,000 shares, subject to adjustment as described in subsection (f) below. Such share reserve includes (i) an increase of 1,525,000 shares of Common Stock authorized by the Board on May 22, 2020, subject to shareholder approval at the 2020 Annual Shareholders Meeting and (ii) the increase of 750,000 shares of Common Stock approved by the shareholders at the 2015 Annual Shareholders Meeting.
(b)     Source of Shares; Share Counting. Shares issued under the Plan may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan, subject to compliance with applicable law. If and to the extent outstanding Grants under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered prior to the issuance of shares of Company Stock, the shares reserved for such Grants shall again be available for issuance under the Plan. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Company pursuant to the Company’s repurchase rights under the Plan at a price per share not greater than the original issue price paid per share (subject to compliance with applicable securities legislation) shall again be available for issuance under the Plan. Should the Exercise Price of an Option under the Plan be paid with shares of Company Stock, the authorized reserve of Company Stock under the Plan shall be reduced by the gross number of shares for which that Option is exercised. Should shares of Company Stock otherwise issuable under the Plan be withheld by the Company in satisfaction of the Exercise Price of an Option or Withholding Taxes incurred in connection with the issuance, exercise or vesting of a Grant under the Plan, the number of shares of Company Stock available for issuance under the Plan shall be reduced by the gross number of shares for which that Option is exercised or issuable with respect to that Grant. If SARs are exercised, the gross number of shares for which the SARs are exercised shall be considered issued under the Plan for purposes of this subsection (b). To the extent that Grants are paid in cash, and not in shares of Company Stock, any shares previously reserved for issuance pursuant to such Grants shall again be available for purposes of the Plan.
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(c)     Individual Limits. The maximum aggregate number of shares of Company Stock with respect to which all Grants may be made under the Plan to any individual during any calendar year shall be 125,000 shares, subject to adjustment as described in subsection (f) below. For Grants denominated in cash and subject to one or more performance conditions, the maximum dollar amount for which such Grants may be made to any individual shall not exceed $2 million for each calendar year within the applicable performance period.
(d)     ISO Limits. The maximum number of shares of Common Stock that may be issued pursuant to Incentive Stock Options granted under the Plan shall not exceed 4,000,000 shares, subject to shareholder approval at the 2020 Annual Shareholders Meeting of the 1,525,000 share increase authorized by the Board on May 22, 2020. In the absence of such shareholder approval, the maximum number of shares of Common Stock that may be issued pursuant to Incentive Stock Options shall be limited to 2,475,000 shares of Common Stock.
(e)     Insider Limits. The number of shares of Company Stock issuable, directly or indirectly, to all Participants who are Insiders in the aggregate, under this Plan and all other “security based compensation arrangements” (within the meaning of the rules of the Toronto Stock Exchange) of the Company, may not exceed ten percent (10%) of the outstanding shares of Company Stock and the number of shares of Company Stock issued, directly or indirectly, to all Participants who are Insiders in the aggregate within any one (1) year period, under the Plan and all other security based compensation arrangements of the Company, may not exceed ten percent (10%) of the issued and outstanding shares of Company Stock.
(f)     Adjustments. In the event of a stock dividend, spinoff, extraordinary distribution (whether in cash, securities or other property), recapitalization, reclassification, stock split, or combination or exchange of shares, or any other event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, equitable adjustments shall be made to the maximum number and/or class of securities issuable under the Plan, the maximum number and/or class of securities that may be issued pursuant to Incentive Stock Options, the maximum number and/or class of securities for which any individual may receive Grants in any year, the number and/or class of securities for which option grants are subsequently to be made to Non-Employee Directors under Section 8, the number and/or class of securities covered by outstanding Grants, and the price per share or the applicable market value of such Grants. The adjustments shall be made by the Plan Administrator in such manner as the Plan Administrator deems appropriate in order to prevent the dilution or enlargement of benefits hereunder and such adjustments shall be final, binding and conclusive.
6.
Eligibility for Participation.
All Employees, including Employees who are officers or members of the Board, all Non-Employee Directors and all Consultants shall be eligible to participate in the Plan.
7.
Options.
(a)      General Requirements. The Plan Administrator may grant Options to an eligible person upon such terms and conditions as the Plan Administrator deems appropriate under this Section 7. The Plan Administrator shall determine the number of shares of Company Stock that will be subject to each Grant of Options under the Plan.
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(b) Type of Option, Price and Term.
(i)     The Plan Administrator may grant Incentive Stock Options or Nonqualified Stock Options or any combination of the two, all in accordance with the terms and conditions set forth herein. Incentive Stock Options shall be subject to the provisions of subsection (f) below.
(ii)     Subject to Sections 7(f) and 8, the Exercise Price of Company Stock subject to an Option shall be determined by the Plan Administrator and shall be equal to or greater than the Fair Market Value of a share of Company Stock on the date the Option is granted.
(iii)     The Plan Administrator shall determine the term of each Option, which shall not exceed seven years from the date of grant.
(c) Exercisability of Options.
(i)     Subject to Section 8, Options shall become exercisable in accordance with such terms and conditions as may be determined by the Plan Administrator and specified in the Grant Agreement. The Plan Administrator may accelerate the exercisability of any or all outstanding Options at any time for any reason.
(ii)     Subject to compliance with applicable law, the Plan Administrator may provide in a Grant Agreement that the Participant may elect to exercise part or all of an Option before it otherwise has become exercisable. Any shares so purchased shall be restricted shares and shall be subject to a repurchase right in favor of the Company during a specified restriction period (subject to compliance with applicable law) and such other restrictions as the Plan Administrator deems appropriate.
(iii)     Options granted to U.S. persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such Options may become exercisable, as determined by the Plan Administrator, upon the Participant’s death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).
(d) Termination of Employment or Service. Except as otherwise provided in the Grant Agreement, in the event of the termination of a Participant’s employment or service, for any reason (whether or not for cause) other than as a result of death or Disability of the Participant, the Participant may exercise all of the Participant’s options which have vested and are exercisable on the date of resignation or, in the case of involuntary termination, on the Participant’s last day of active employment or service (the “Termination Date”), as the case may be, until the earlier of the expiry date(s) of the Options and the date that is three (3) months from the Termination Date, or such other date as may be determined by the Plan Administrator, and approved by the stock exchange on which the shares of the Company trade. In the event of the termination of a Participant’s employment or service as a result of the death or Disability of the Participant, all of the Participant’s Options which have vested and are exercisable as at the date of death or Disability (such date, also the “Termination Date”) shall be exercisable until the earlier of the expiry date(s) of the Options and the date that is one (1) year from the Termination Date, or such other date as may be determined by the Plan Administrator, and approved by the stock exchange on which the shares of the Company trade to the extent required by the rules of such stock exchange. Except as otherwise determined by the Plan Administrator and except as otherwise provided in the Grant Agreement, in the event of the termination of the Participant’s employment or service for any reason as contemplated in this Section 7(d), all of the Participant’s Options which have not vested on the Termination Date shall expire and terminate and be of no further force and effect, as of that date.
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(e)    Payment of Exercise Price. The Participant shall pay the Exercise Price for the Option (i) in cash, (ii) if permitted by the Plan Administrator and subject to compliance with applicable law, by delivering shares of Company Stock owned by the Participant and having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price or by attestation to ownership of shares of Company Stock having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price, (iii) if permitted by the Plan Administrator and subject to compliance with applicable law, by the Company’s withholding from shares of Company Stock otherwise deliverable pursuant to the exercise of the Option shares of Company Stock having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price or (iv) by such other method as the Plan Administrator may approve. Shares of Company Stock used to exercise an Option shall have been held by the Participant for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option. Payment for the shares pursuant to the Option, and any required Withholding Taxes, must be received by the time specified by the Plan Administrator depending on the type of payment being made.
(f)    Limits on Incentive Stock Options.
(i)     Incentive Stock Options may only be granted to Employees.
(ii)     Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, as defined in section 424 of the Code, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option.
(iii)     If any Employee to whom an Incentive Stock Option is granted is a 10% Shareholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.
(g)      Shareholder Rights. The holder of an Option shall have no shareholder rights with respect to the shares subject to the Option until such person shall have exercised the Option, paid the Exercise Price and become a holder of record of the purchased shares.
8.
Formula Option Grants to Non-Employee Directors; Grants to Committee Members.
A Non-Employee Director or a Non-Employee Director who is a member of a committee of the Board (a “Committee Member”) shall be entitled to receive Nonqualified Stock Options in accordance with this Section 8.
(a)      Initial Grant. Each Non-Employee Director who first becomes a member of the Board will receive a grant of a Nonqualified Stock Option to purchase 4,375 shares of Company Stock immediately upon the date he or she becomes a member of the Board.
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Each Committee Member who first becomes a member of the audit committee will receive a grant of a Nonqualified Stock Option to purchase 3,750 shares of Company Stock immediately upon the date he or she becomes a member of the audit committee.
Each Committee Member who first becomes a member of the Compensation Committee (or any other separate committee of the Board (other than the audit committee or an ad hoc committee of the Board), including the governance committee and the nominating committee if either of these committees is established as a separate committee) will receive a grant of a Nonqualified Stock Option to purchase 2,500 shares of Company Stock immediately upon the date he or she becomes a member of such committee.
(b)     Annual Grants. On each date that the Company holds its annual meeting of shareholders: (i) each Non-Employee Director in office both immediately before and after the annual election of directors will receive a grant of a Nonqualified Stock Option to purchase 3,750 shares of Company Stock. The date of grant of each such annual Grant shall be the date of such annual meeting of shareholders.
(c)     Option Price. The exercise price per share of Company Stock subject to an Option granted under this Section 8 shall be equal to the Fair Market Value of a share of Company Stock on the date of grant.
(d)     Option Term. The term of each Option granted pursuant to this Section 8 shall be five (5) years.
(e)     Exercisability. Options granted as initial grants under Section 8(a) shall become exercisable in full upon the completion of one (1) year of Board service measured from the date of grant. Annual grants under Section 8(b) shall become exercisable in full upon the completion of Board service through the earlier of (i) one (1) year measured from the date of grant or (ii) the date of the annual shareholder meeting following the date of grant. All Options granted under this Section 8 shall become exercisable on an accelerated basis upon a Change of Control or the Non-Employee Director’s termination of Board service by reason of death or disability.
(f)     Applicability of Plan Provisions. Except as otherwise provided in, and not inconsistent with, this Section 8, the Nonqualified Stock Options granted to Non-Employee Directors and Committee Members shall be subject to the provisions of this Plan applicable to Nonqualified Stock Options granted to other Participants.
9.
Restricted Stock Units.
(a)     General Requirements. The Plan Administrator may grant Restricted Stock Units to an eligible person upon such terms and conditions as the Plan Administrator deems appropriate under this Section 9. Each Restricted Stock Unit shall represent the right of the Participant to receive a share of Company Stock or an amount based on the value of a share of Company Stock. The Plan Administrator shall determine the number of Restricted Stock Units to be granted and the requirements applicable to such Restricted Stock Units. All Restricted Stock Units shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan.
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(b)     Terms of Restricted Stock Units. The Plan Administrator may grant Restricted Stock Units that are payable on terms and conditions determined by the Plan Administrator, which may include payment based on achievement of performance criteria (including pre-established performance objectives based on one or more Performance Goals and measured over the performance period specified by the Plan Administrator at the time of the grant of the Restricted Stock Units) or satisfaction of specified service requirements.
(c)     Payment With Respect to Restricted Stock Units. Payment with respect to Restricted Stock Units shall be made in cash, in Company Stock, or in a combination of the two, as determined by the Plan Administrator. Restricted Stock Units may be paid at the end of a specified vesting or performance period, or payment may be deferred to a date authorized by the Plan Administrator.
(d)     Requirement of Employment or Service. The Plan Administrator shall determine in the Grant Agreement under what circumstances a Participant may retain Restricted Stock Units after termination of the Participant’s employment or service, and the circumstances under which Restricted Stock Units may be forfeited.
(e)     Shareholder Rights. The Participant shall not have any shareholder rights with respect to the shares of Company Stock subject to a Restricted Stock Unit until that award vests and the shares of Company Stock are actually issued thereunder.
10.
Stock Awards.
(a)     General Requirements. The Plan Administrator may issue shares of Company Stock to an eligible person under a Stock Award upon such terms and conditions as the Plan Administrator deems appropriate under this Section 10 subject to the requirements of applicable law. Shares of Company Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration, and subject to such vesting restrictions, as determined by the Plan Administrator. The Plan Administrator may establish vesting conditions on Stock Awards which shall lapse over a period of time or according to such other criteria as the Plan Administrator deems appropriate, including the achievement of specific performance goals. The Plan Administrator shall determine the number of shares of Company Stock to be issued pursuant to a Stock Award.
(b)     Requirement of Employment or Service. The Plan Administrator shall determine in the Grant Agreement under what circumstances a Participant may retain Stock Awards after termination of the Participant’s employment or service, and the circumstances under which Stock Awards may be forfeited.
(c)     Restrictions on Transfer. A Participant may not sell, assign, transfer, pledge or otherwise dispose of an unvested Stock Award except upon death as described in Section 16(a). Unvested shares issued pursuant to Stock Awards may, in the Plan Administrator’s discretion, be held in escrow by the Company until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.
(d)     Shareholder Rights. Subject to the restrictions on transfer under Section 10(c) above, the Participant shall have full shareholder rights with respect to any shares of Company Stock issued to the Participant under a Stock Award, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.
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11.
Performance Units.
(a)     General Requirements. The Plan Administrator may grant Performance Units to an eligible person upon such terms and conditions as the Plan Administrator deems appropriate under this Section 11. Each Performance Unit shall represent the right of a Participant to receive an amount equal to the value of the Performance Unit, determined in the manner established by the Plan Administrator at the time of grant.
(b)     Performance Period. At the time of grant of each Performance Unit, the Plan Administrator shall establish a performance period during which performance shall be measured (“Performance Period”). There may be more than one Grant in existence at any one time, and Performance Periods may differ.
(c)     Performance Goals. Prior to the beginning of a Performance Period, the Plan Administrator shall establish in writing performance goals to be utilized for one or more Performance Units. The Plan Administrator shall also have the discretionary authority to structure one or more Grants of Performance Units so that those Grants shall vest upon the achievement of pre-established corporate performance objectives based upon one or more Performance Goals measured over the Performance Period specified by the Plan Administrator at the time of the Grant.
(d)     Performance Measures. Performance Units shall be granted to a Participant contingent upon the attainment of performance goals in accordance with Section 11(c).
(e)     Performance Unit Value. Each Performance Unit shall have a maximum dollar value established by the Compensation Committee at the time of the grant. Performance Units earned will be determined by the Plan Administrator in respect of a Performance Period in relation to the degree of attainment of specified performance goals. The measure of a Performance Unit may, in the Plan Administrator’s discretion, be equal to the Fair Market Value of a share of Company Stock.
(f)     Grant Criteria. In determining the number of Performance Units to be granted to any Participant, the Plan Administrator shall take into account the Participant’s responsibility level, performance, potential, cash compensation level, other incentive awards, and such other considerations as it deems appropriate.
(g)    Payment. Following the end of a Performance Period, a Participant holding Performance Units will be entitled to receive payment of an amount, not exceeding the maximum value of the Performance Units, based on the achievement of the performance goals for such Performance Period, as determined by the Plan Administrator. Payment of Performance Units shall be made in cash, except that, in the discretion of the Plan Administrator, Performance Units which are measured using Company Stock may be paid in shares of Company Stock. Payment shall be made in a lump sum or in installments and shall be subject to such other terms and conditions as shall be determined by the Plan Administrator.
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12.
Stock Appreciation Rights and Other Stock-Based Awards.
(a)      SARs. The Plan Administrator may grant SARs to an eligible person separately or in tandem with an Option. The following provisions shall be applicable to SARs:
(i)     Base Price. The Plan Administrator shall establish the base price of the SAR at the time the SAR is granted. The base price of each SAR shall be equal to the per share Exercise Price of the related Option or, if there is no related Option, an amount that is at least equal to the Fair Market Value of a share of Company Stock as of the date of grant of the SAR.
(ii)     Tandem SARs. The Plan Administrator may grant tandem SARs either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be granted only at the date of the grant of the Incentive Stock Option. In the case of tandem SARs, the number of SARs granted to a Participant that shall be exercisable during a specified period shall not exceed the number of shares of Company Stock that the Participant may purchase upon the exercise of the related Option during such period. Upon the exercise of an Option, the SARs relating to the Company Stock covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of Company Stock.
(iii)     Exercisability. An SAR shall be exercisable during the period specified by the Plan Administrator in the Grant Agreement and shall be subject to such vesting and other restrictions as may be specified in the Grant Agreement. The Plan Administrator may grant SARs that are subject to achievement of performance goals or other conditions. The Plan Administrator may accelerate the exercisability of any or all outstanding SARs at any time for any reason. The Plan Administrator shall determine in the Grant Agreement under what circumstances and during what periods a Participant may exercise an SAR after termination of employment or service. A tandem SAR shall be exercisable only while the Option to which it is related is exercisable. In no event may an SAR have a term in excess of seven (7) years.
(iv)     Grants to Non-Exempt Employees. SARs granted to U.S. persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may not be exercisable for at least six months after the date of grant (except that such SARs may become exercisable, as determined by the Plan Administrator, upon the Participant’s death, Disability or retirement, or upon a Change of Control or other circumstances permitted by applicable regulations).
(v)     Settlement of SARs. When a Participant exercises SARs, the Participant shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised. The stock appreciation for an SAR is the amount by which the Fair Market Value of the underlying Company Stock on the date of exercise of the SAR exceeds the base price of the SAR as described in subsection (i).
(vi)     Form of Payment. The Plan Administrator shall determine whether the stock appreciation for an SAR shall be paid in the form of shares of Company Stock, cash or a combination of the two. For purposes of calculating the number of shares of Company Stock to be received, shares of Company Stock shall be valued at their Fair Market Value on the date of exercise of the SAR. If shares of Company Stock are to be received upon exercise of an SAR, cash shall be delivered in lieu of any fractional share.
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(b)    Other Stock-Based Awards. The Plan Administrator may grant other awards not specified in Sections 7, 9, 10, 11 or 12(a) above that are based on or measured by Company Stock to eligible persons, on such terms and conditions as the Plan Administrator deems appropriate. Other Stock-Based Awards may be granted subject to achievement of performance goals or other conditions and may be payable in Company Stock or cash, or in a combination of the two, as determined by the Plan Administrator in the Grant Agreement.
13.
Dividend Equivalents.
(a)      General Requirements. When the Plan Administrator makes a Grant under the Plan, the Plan Administrator may grant Dividend Equivalents in connection with the Grant, under such terms and conditions as the Plan Administrator deems appropriate under this Section 13. Dividend Equivalents may be paid to Participants currently or may be deferred, as determined by the Plan Administrator; provided, however, that Dividend Equivalents with respect to a Grant shall vest and be paid only if and to the extent the underlying Grant vests as determined by the Plan Administrator. All Dividend Equivalents that are not paid currently shall be credited to bookkeeping accounts on the Company’s records for purposes of the Plan. Dividend Equivalents may be accrued as a cash obligation, or may be converted to Restricted Stock Units for the Participant, and deferred Dividend Equivalents may accrue interest, all as determined by the Plan Administrator.
(b)    Payment with Respect to Dividend Equivalents. Dividend Equivalents may be payable in cash or shares of Company Stock or in a combination of the two, as determined by the Plan Administrator.
14.
Deferrals.
The Plan Administrator may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares that would otherwise be due to the Participant in connection with any Grant. The Plan Administrator shall establish rules and procedures for any such deferrals, consistent with applicable requirements of section 409A of the Code and applicable provisions of the Income Tax Act (Canada).
15.
Withholding of Taxes.
(a) Required Withholding. All Grants under the Plan shall be subject to satisfaction of all applicable Withholding Taxes. The Company may require that the Participant or other person receiving or exercising Grants pay to the Company the amount of any Withholding Taxes that the Company is required to withhold with respect to such Grants, or the Company may at its sole discretion and to the extent permitted by law, deduct from other wages paid by the Company the amount of any Withholding Taxes due with respect to such Grants.
(b)    Election to Withhold Shares. If the Plan Administrator so permits, a Participant may elect to satisfy the Withholding Taxes with respect to Grants paid in Company Stock by having shares withheld, at the time such Grants become taxable, up to an amount that does not exceed the minimum applicable Withholding Tax rate (or such other rate as determined by the Plan Administrator. The election must be in a form and manner prescribed by the Plan Administrator.
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16.
Transferability of Grants.
(a)      Restrictions on Transfer. Except as described below, only the Participant may exercise rights under a Grant during the Participant’s lifetime, and a Participant may not transfer those rights except by will or by the laws of descent and distribution. When a Participant dies, the personal representative or other person entitled to succeed to the rights of the Participant may exercise such rights. Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Participant’s will or under the applicable laws of descent and distribution.
(b) Transfer of Nonqualified Stock Options to or for Family Members. Notwithstanding the foregoing but subject to applicable securities legislation, the Plan Administrator may provide, in a Grant Agreement, that a Participant may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according to such terms as the Plan Administrator may determine; provided that the Participant receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer.
17.
Consequences of a Change of Control.
In the event of a Change of Control, the Plan Administrator may take any one or more of the following actions with respect to all outstanding Grants, without the consent of any Participant: (i) the Plan Administrator may determine that outstanding Options and SARs shall become fully exercisable, and restrictions on outstanding Stock Awards, Restricted Stock Units, Performance Units and Stock-Based Awards shall lapse so that such Grants shall become fully vested, as of the date of the Change of Control or at such other time as the Plan Administrator determines; (ii) the Plan Administrator may require that Participants surrender their outstanding Options and SARs in exchange for one or more payments by the Company, in cash or Company Stock as determined by the Plan Administrator, in an amount equal to the amount by which the then Fair Market Value of the shares of Company Stock subject to the Participant’s unexercised Options and SARs exceeds the Exercise Price (or the Base Price), if any, payable in accordance with the same exercise or vesting schedule applicable to those Grants and on such other terms as the Plan Administrator determines; (iii) after giving Participants an opportunity to exercise their outstanding Options and SARs, the Plan Administrator may terminate any or all unexercised Options and SARs at such time as the Plan Administrator deems appropriate; (iv) with respect to Participants holding Restricted Stock Units, Performance Units, Other Stock-Based Awards or Dividend Equivalents, the Plan Administrator may determine that such Participants shall receive one or more payments in settlement of such Restricted Stock Units, Performance Units, Other Stock-Based Awards or Dividend Equivalents, in such amount and form and on such terms as may be determined by the Plan Administrator (including payment in accordance with the same vesting schedule applicable to those Grants); (v) the Plan Administrator may terminate all unvested Restricted Stock Units, Performance Units, Other Stock-Based Awards or Dividend Equivalents and require the surrender of any unvested shares subject to Stock Awards; or (vi) the Plan Administrator may determine that Grants that remain outstanding after the Change of Control shall be assumed by the successor corporation or otherwise continued in effect. Such acceleration, surrender, termination, settlement or assumption shall take place as of the date of the Change of Control or such other date as the Plan Administrator may specify.
(a)     Other Transactions. The Plan Administrator may provide in a Grant Agreement that a sale or other transaction involving a subsidiary or other business unit of the Company shall be considered a Change of Control for purposes of a Grant, or the Plan Administrator may establish other provisions that shall be applicable in the event of a specified transaction.
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18.
No Repricing.
The Plan Administrator may not without obtaining shareholder approval (i) implement cancellation/regrant programs pursuant to which outstanding Options or SARs under the Plan are cancelled and new Options or SARs are granted in replacement with a lower exercise or base price per share, (ii) cancel outstanding Options or SARs under the Plan with exercise or base prices per share in excess of the then current Fair Market Value per share of Company Stock for consideration payable in cash or in equity securities of the Company or (iii) reduce the exercise or base price in effect for outstanding Options or SARs under the Plan except pursuant to adjustments under Section 5(f).
19.
Requirements for Issuance of Shares.
No Company Stock shall be issued in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance of such Company Stock have been complied with to the satisfaction of the Plan Administrator. The Plan Administrator shall have the right to condition any Grant made to any Participant hereunder on such Participant’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Plan Administrator shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. No Participant shall have any right as a shareholder with respect to Company Stock covered by a Grant until shares have been issued to the Participant.
20.
Effective Date, Amendment and Termination of the Plan.
(a)     Effective Date. The Plan became effective upon its adoption by the shareholders at the 2006 Annual Shareholders Meeting. The Plan was amended on July 29, 2010 to increase the number of shares of Common Stock authorized for issuance under the Plan by an additional 475,000 shares, extend the term of the Plan to September 6, 2020 and make certain other technical amendments; such amendment was approved by the shareholders at the 2010 Annual Shareholders Meeting. The Plan was amended on July 10, 2015 to: (i) increase the number of shares of Common Stock authorized for issuance under the Plan by an additional 750,000 shares; (ii) extend the term of the Plan to September 1, 2025; (iii) include a list of performance goals that may be utilized to establish vesting for performance-based awards; (iv) amend the terms of the Non-Employee Director grants; (v) require gross counting of the share reserve; (vi) impose a minimum 12-month vesting requirement on Grants; (vii) prohibit repricing of Options and SARs; and (viii) permit the net exercise of an Option; such amendment was approved by the shareholders at the 2015 Annual Shareholders Meeting. The Plan was amended on May 22, 2020 to increase the number of shares of Common Stock authorized for issuance under the Plan by an additional 1,525,000 shares, extend the term of the Plan to September 7, 2030 and make certain other technical amendments subject to shareholder approval at the 2020 Annual Shareholders Meeting.
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(b)     Amendment. The Board may amend or terminate the Plan at any time; provided, however, no amendment or termination of this Plan shall, without the consent of the Participant, materially impair any rights or obligations under any Grant previously made to the Participant under the Plan, unless such right has been reserved in the Plan or the Grant Agreement. In addition, amendments to the Plan shall be subject to approval of the shareholders and regulatory authorities to the extent required by applicable law or regulation or pursuant to the rules or listing standards of any securities exchange (or the Nasdaq National Market or AIM) on which the Company Stock is traded. For greater specificity, the Board may make such amendments to the Plan as it deems desirable or necessary, without the approval of the Company’s shareholders, except any such amendment to: (i) change the maximum number of shares of Company Stock that may be issued under the Plan, whether as a fixed number of shares or as a fixed percentage of the number of shares outstanding from time to time (other than to reflect an adjustment pursuant to Section 5(f), unless otherwise required by any securities exchange or market on which the shares of the Company are listed); (ii) materially increase benefits to Participants, including any change to permit a repricing or decrease of the Exercise Price of an Option; (iii) reduce the exercise price or purchase price or extend the term of any Grant under the Plan which would benefit an Insider; (iv) materially expand the class of participants eligible to participate in the Plan; (v) expand the types of awards provided under the Plan; or (vi) any amendment to Section 5(e) (the insider participation limit) or this Section 20(b). Notwithstanding anything in the Plan to the contrary but subject to this Section 20(b), the Board may amend the Plan in such manner as it deems appropriate in the event of a change in applicable law or regulations.
(c)     Termination of Plan. Subject to shareholder approval, the Plan shall terminate on September 7, 2030, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders. The termination of the Plan shall not impair the power and authority of the Plan Administrator with respect to an outstanding Grant.
21.
Miscellaneous.
(a)     Compliance with Law. The Plan, the exercise of Options and SARs and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to Section 16 Insiders, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive Stock Options comply with the applicable provisions of section 422 of the Code and that, to the extent applicable, Grants comply with the requirements of section 409A of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 422 or 409A of the Code as set forth in the Plan ceases to be required under section 16 of the Exchange Act or section 422 or 409A of the Code, that Plan provision shall cease to apply. The Plan Administrator may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Plan Administrator may also adopt rules regarding the withholding of taxes on payments to Participants. The Plan Administrator may, in its sole discretion, agree to limit its authority under this Section.
69
(b)     Enforceability. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.
(c)     Funding of the Plan; Limitation on Rights. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. Nothing contained in the Plan and no action taken pursuant hereto shall create or be construed to create a fiduciary relationship between the Company and any Participant or any other person. No Participant or any other person shall under any circumstances acquire any property interest in any specific assets of the Company. To the extent that any person acquires a right to receive payment from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.
(d)     Participation Voluntary. The participation of any Participant of the Plan is entirely voluntary and not obligatory and shall not be interpreted as conferring any rights or privileges, other than those rights and privileges expressly provided in the Plan. In particular, participation in the Plan does not constitute a condition of employment, appointment or engagement to provide services, or constitute a commitment on the part of the Employer to continued employment, appointment or engagement to provide services, and neither the Plan nor any Grant under the Plan shall be construed as granting a Participant a right to be retained as an Employee, Non-Employee Director or Consultant or a claim or right to any future Grants under the Plan. Neither the Plan nor any action taken hereunder shall interfere with the right of the Employer to terminate the employment, appointment or provision of services of such Participant at any time. The payment of any sum of money in cash in lieu of notice of termination of employment, appointment or provision of services shall not be considered as extending the period of employment, appointment or the provision of services for the purposes of the Plan.
(e)     No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Grant. The Plan Administrator shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
(f)     Employees Resident Outside the United States. With respect to Participants who are resident in countries other than the United States, the Plan Administrator may make Grants on such terms and conditions as the Plan Administrator deems appropriate to comply with the laws of the applicable countries, and the Plan Administrator may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws.
(g)     Governing Law. The validity, construction, interpretation and effect of the Plan and Grant Agreements issued under the Plan shall be governed and construed by and determined in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the conflict of laws provisions thereof.
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Check the appropriate box:
☐	Preliminary Proxy Statement
☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒	Definitive Proxy Statement
☐	Definitive Additional Materials
☐	Soliciting Material Pursuant to § 240.14a-12

TUCOWS INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒	No fee required.
☐	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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☐	Fee paid previously with preliminary materials.
☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the f~~iling~~filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:
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	Beneficial Ownership of Common Stock
Name	Common Stock Beneficially Owned Excluding Options			Stock Options Exercisable within 60 Days of July 10, 2017		Total Common Stock Beneficially Owned		Percent of Class⁽³⁾
Elliot Noss		688,579	⁽⁴⁾		18,750		707,329		6.7	%
Michael Cooperman⁽¹⁾		204,656	⁽⁵⁾		10,312		214,968		2.0	%
David Woroch		142,272	⁽⁶⁾		22,187		164,459		1.6	%
Kenneth Schafer ⁽²⁾		39,140			--		39,140		*
Michael Goldstein		3,018	⁽⁷⁾		1,582		4,600		*
Allen Karp		13,238	⁽⁸⁾		24,375		37,613		*
Rawleigh Ralls		34,355			22,500		56,855		*
Robin Chase		4,375			7,500		11,875		*
Erez Gissin		3,563			17,887		21,450		*
Jeffrey Schwartz		30,625			7,500		38,125		*
Brad Burnham		26,112			--		26,112		*
All directors and executive officers as a group (14 persons)		1,258,745			154,063		1,412,808		13.2	%

	Beneficial Ownership of Common Stock
Name	Common Stock Beneficially Owned Excluding Options			Stock Options Exercisable within 60 Days of July 14, 2020			Total Common Stock Beneficially Owned		Percent of Class⁽¹⁾
Elliot Noss**		717,803	⁽²⁾		29,625			747,428		7.10	%
Davinder Singh		0			10,187			10,187		*
Bret Fausett		27,777			6,124			33,901		*	%
Hanno Liem		0			8,437			8,437		*
David Woroch		124,856	⁽³⁾		17,937			142,793		1.30	%
Allen Karp		15,142	⁽⁴⁾		15,000			30,142		*
Rawleigh Ralls		2,261			11,250			13,511		*
Robin Chase		4,375			17,500			21,875		*
Erez Gissin		10,387			15,000			25,387		*
Jeffrey Schwartz		8,625			15,000			23,625		*
Brad Burnham		353,982	⁽⁵⁾		15,625	⁽⁶⁾		369,607		3.50	%
All directors and executive officers as a group (15 persons)		1,313,177			203,346			1,516,523		14.1	%

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned			Percent of Class ⁽¹⁾

Investmentaktiengesellschaft fuer langfristige Invetoren TGV		1,605,127	⁽²⁾		15.2	%
Ruengsdorfer Str. 2e
53173 Bonn, Germany

	Sincerely,

	Elliot Noss
	President and Chief Executive Officer

Director Meeting Attendance Fee
Board Meeting Personal Attendance Fees at our May scheduled Board Meeting (inclusive of May Committee meeting fees)	$	6,000
Board Meeting Personal Attendance Fees at our November scheduled Board Meeting (inclusive of November Committee meeting fees)	$	4,000
Regularly Scheduled Telephonic Board Meeting Attendance Fees (per meeting)	$	750
Regularly Scheduled Telephonic Audit Committee Meeting Attendance Fees (per meeting)	$	400
Regularly Scheduled Telephonic Corporate Governance, Nominating and Compensation Committee Meeting Attendance Fees (per meeting)	$	400

Name	Fees earned or paid in cash ($)		Option awards ($)⁽¹⁾		Total ($)

Allen Karp	$	66,350	$	61,463	$	127,813
Rawleigh Ralls		52,300		61,463		113,763
Erez Gissin		37,300		61,463		98,763
Joichi Ito⁽²⁾		2,500		—		2,500
Robin Chase		26,500		61,463		87,963
Jeffrey Schwartz		52,100		61,463		113,563
	$	237,050	$	307,315	$	544,363

Name	Number of stock options		Aggregate Grant Date Fair Value
Elliot Noss		10,000		$ 136,420
Michael Cooperman		5,000		$ 68,210
David Woroch		5,000		$ 68,210
Kenneth Schafer⁽¹⁾		5,000		$ 68,210
Michael Goldstein		5,000		$ 68,210

Elliot Noss	$	64,404
Michael Cooperman	$	42,431
David Woroch	$	46,605
Kenneth Schafer	$	18,184
Michael Goldstein	$	10,118

Elliot Noss	$	96,022
Michael Cooperman	$	85,652
David Woroch	$	87,557
Kenneth Schafer	$	64,320
Michael Goldstein	$	53,346

Elliot Noss	$	89,169
Michael Cooperman	$	66,466
David Woroch	$	71,715
Kenneth Schafer	$	30,620
Michael Goldstein	$	36,422

	Year	Additional Health Spending Credits ($)		Car Allowance ($)		Health Club Membership ($)		All Other Compensation ($)
Elliot Noss	2016	$	1,132	$	6,792	$	—	$	7,924
	2015		1,172		7,035		—		8,207
	2014		1,357		8,144		—		9,501

Michael Cooperman	2016		1,132		6,340		1,811		9,283
	2015		1,172		6,566		1,876		9,614
	2014		1,357		7,601		2,172		11,130

David Woroch	2016		1,132		5,434		—		6,566
	2015		1,172		5,628		—		6,800
	2014		1,357		6,515		—		7,872

Kenneth Schafer	2016		1,132		4,075		—		5,207
	2015		1,172		5,628		—		6,800
	2014		1,357		6,515		—		7,872

Michael Goldstein	2016		755		—		—		755
	2015		782		—		—		782
	2014		905		—		—		905

Kenneth Schafer⁽¹⁾	1,875	-	5.52	05/17/2019
	3,125	-	5.76	12/31/2019
	1,562	1,562	10.16	11/10/2020
	2,500	2,500	19.41	12/31/2021
	1,250	3,750	21.10	12/31/2022
	10,312	7,812

Michael Goldstein	2,500	-	2.92	08/14/2018
	6,125	-	5.52	05/17/2019
	2,343	782	8.56	05/12/2020
	1,600	1,600	15.93	08/10/2021
	2,500	2,500	19.41	12/31/2021
	1,250	3,750	21.10	12/31/2022
	16,318	8,632

David Woroch (1)	2016	Termination without Cause		Change in Control
Compensation
Base Salary/Severance (2)		$	363,761	$	363,761
Bonus Plan (3)			188,529		188,529
Acceleration of Unvested Equity Awards (4)			32,970		32,970

Benefits (5)
Car Allowance			9,962		9,962
Healthcare Flexible Spending Account			2,075		2,075

		$	597,298	$	597,298

		2016 Fees		2015 Fees
Audit Fees ⁽¹⁾	$	311,934	$	327,264
Audit-Related Fees		—		—
Tax Fees ⁽²⁾		110,844		143,725
All Other Fees		—		—
Total Fees $	$	422,778	$	470,989

	2019 Fees		2018 Fees
Audit Fees (1)	$	566,000	$	515,000
Audit-Related Fees (2)		-		-
Tax Fees (3)		91,000		70,000
All Other Fees		-		-
Total Fees	$	657,000	$	585,000

	(1)	Consists of fees and expenses for (a) the ~~audit~~annual audits of our consolidated financial statements and the ~~reviews~~accompanying attestation report regarding our ICFR contained in our 2019 Annual Report , (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, and (c) audit services ~~associated with registration statements.~~related to mergers and acquisitions.

	(2)	Consists of fees and expenses for assurance and related services, such as the review of non-periodic filings with the SEC.

	(3)	Consists of fees and expenses for tax ~~consulting~~compliance and advisory services.

	By Order of the Board of Directors,



	Davinder Singh
	Chief Financial Officer and Secretary