One of our Board’s key functions is providing oversight of our risk management process. Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board 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 is responsible for monitoring and assessing strategic risk exposure and other risks not covered by our committees.

The full Board (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 ~~CEO~~Chief Executive Officer 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~~chairperson of the relevant committee reports on the discussion to the full Board during ~~the committee~~that committee’s reports portion of the next Board meeting. However, it is the responsibility of the committee chairs to report findings regarding material risk exposures to our Board as quickly as possible.

Our Corporate Governance, Nominating and Compensation Committee is responsible for identifying potential nominees to our 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 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 also seeks members from diverse backgrounds so that our Board 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.

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 ~~Chairman~~Chairperson 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:

A Tucows’ shareholder who wishes to communicate with our Board 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 ~~Chairman~~Chairperson of the Board, the ~~chairman~~Chairperson of the appropriate committee, or the appropriate individual director, as applicable.

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 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.~~Plan (the “1996 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 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 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 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.

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

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 shares of our common stock. The initial grant is set at 3,750 options. Each non-employee member of the Board will receive $30,000 annually, the Chairperson of the Board will additionally receive $15,000; each Chair of the Audit Committee and Corporate Governance, Nomination and Compensation Committee will additionally receive $7,500; and each member of the Audit Committee and Corporate Governance, Nomination and Compensation Committee will additionally receive $12,000.

We also purchase ~~directors’~~directors and ~~officers’~~officer's 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 or its committees.

The table below shows all compensation paid to each of our non-employee directors during ~~2019.~~2022. Each of the directors listed below served for the entire year.

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

Allen Karp	$	76,500	$	54,038	$	130,538	$	54,000	$	60,549	$	114,549
Rawleigh Ralls		57,000		54,038		111,038
Brad Burnham								30,000		60,549		90,549
Erez Gissin		42,000		54,038		96,038		42,000		60,549		102,549
Jeffrey Schwartz								61,500		60,549		122,049
Marlene Carl								30,000		60,549		90,549
Robin Chase		42,000		54,038		96,038		64,500		60,549		125,049
Jeffrey Schwartz		61,500		54,038		115,538
Brad Burnham		30,000		54,038		84,038
Total	$	309,000	$	324,228	$	633,228
							$	282,000	$	363,295	$	645,295

(1)

On September ~~9, 2019~~8, 2022 under the 2006 Plan, our non-employee directors were awarded these automatic formula option grants. Under the 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 ~~$53.93.~~$44.13. All these options remained outstanding as of December 31, ~~2019~~2022 and have a five-year term. The aggregate grant date fair value of the option grants was calculated in accordance with the ~~Financial Accounting Standards Board (“FASB”)~~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 1415 – Stock Option Plans” of the Notes to the Consolidated Financial Statements including Part II, Item 8 of ~~the 2019~~this Annual 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 standards and grow our business for the future. As such, we aim to provide competitive compensation packages for all our key positions, including our 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,~~Fiscal 2022, our ~~NEO’s include~~NEO's included Messrs. Noss, Singh, Reilly, Woroch ~~Liem~~ and Fausett.

This Compensation Discussion and Analysis (“CD&A”) provides comprehensive information about our executive compensation program for our ~~fiscal 2019~~Fiscal 2022 NEOs, who are listed below, and provides context for the decisions underlying the compensation reported in the executive compensation tables in this ~~proxy statement and our 2019~~ Annual Report. Our NEOs are:

Elliot Noss	President and Chief Executive Officer, Tucows Inc. and Ting (“CEO”)
Davinder Singh	Chief Financial Officer (“CFO”)
Justin Reilly	Chief Executive Officer, Wavelo
David Woroch	Chief Executive ~~Vice-President,~~Officer, Tucows Domains ~~(“EVP, Domains”)~~
~~Hanno Liem~~	~~Chief Technology Officer (“CTO”)~~Services
Bret Fausett	Chief Legal Officer & General Counsel (“General Counsel”)

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’ compensation is performance-based to ensure the actual compensation paid to our executives is appropriately aligned with our Company’s performance, and ~~our shareholders’~~shareholder long-term interests. Beginning in Fiscal 2023, to better link individual compensation to Company performance, the Company will determine variable compensation based on a scorecard of organizational targets that are specific to each executive's business segment performance. In addition, we also link individual compensation to Company performance by virtue of the parent company or subsidiary 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; 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, financial growth and operational efficiency without encouraging excessive risk taking;

	•	target compensation at the 50th percentile of market levels, as measured by Payscales; 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:

PayElement	Characteristics	CompensationPhilosophy and Objectives	Factors Consideredto DetermineAwards
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, for Fiscal 2022, these were based on parent company Adjusted EBITDA for Compensation and starting Fiscal 2023, these will be based on balanced scorecards for each business which include a mix of performance measures tailored to each business segment	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~~similarly-situated and comparably skilled executives at peer companies	• Company performance measures • Service performance measures
Stock Options Grants	Annual long-term equity awards, which can be in our Company ("Company Options") that vest over ~~four~~4 years or non-recurring options in one or more of our subsidiaries of Wavelo or Ting ("Subsidiary Options") that vest over 3 years	Provides variable compensation that helps to retain executives and ensures our executives’ interests are aligned with those of shareholders to grow ~~long- term~~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 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 on executive compensation, or a Say-on-Pay proposal. At our annual meeting of stockholders held on September ~~5, 2017, 98%~~8, 2020, 96% 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 NEOs, as described in the proxy statement for the ~~2017~~2020 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~~have been made to such policies and practices as a result of our Say-on-Pay proposal and voting results in 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 to address market developments.September 2020.

At the ~~2014 annual meeting,~~2020 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 NEOs every three years. Our Board believed that this frequency iswould be 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. ~~The next stockholder advisory (non-binding) vote on executive compensation will be held at this 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

With respect to each NEO, in determining total compensation, the Corporate Governance, Nominating and Compensation Committee considers the Company’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 (i) reviews and considers the performance of each NEO, and (ii) considers, for each NEO, the estimated amount of total compensation:

	●	we would be willing to pay to retain that person;
	●	we would ~~be willing~~have to pay to ~~retain that~~replace the person; and
	●	~~we would have to pay to replace the person; and~~
	●	the individual could otherwise command in the employment marketplace.

Our ~~Chief~~ People ~~Officer~~Team leadership reviews comparative data derived from market research and publicly available information for each of the NEOs and then recommends compensation levels for all employees to our CEO. The CEO then, after consultation with ~~the Chief~~our People ~~Officer~~Team, makes recommendations to the Corporate Governance, Nominating and Compensation Committee regarding total compensation for each ~~NEO other than the CEO; that recommendation is sent to the Corporate Governance, Nominating and Compensation Committee directly by the Chief People Person.~~NEO. 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’s total compensation is determined by the Corporate Governance, Nominating and Compensation Committee outside the presence of the CEO. The 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 ~~shareholders’~~shareholder’s Advisory Vote on Executive Compensation.

Base Salary

We provide a base salary to our 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 connection with the Corporate Governance, Nominating and Compensation Committee’s annual review process, ~~each of~~the Committee approved a new targeted total compensation structure for our NEOs, ~~were awarded merit increases effective January 1, 2019.~~including an increase to base and incentive bonus compensation. The ~~recommendations were implemented for all Executive Officers and Key Employees~~Committee approved the increase in compensation in a phased approach with 50% of the ~~Company, including~~increase implemented in 2020 and 50% of the ~~NEOs.~~increase implemented in 2021 and 2022, respectively.

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 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.

As a result of the Corporate Governance, Nominating and Compensation Committee's assessment and the re-alignment of Tucows' operating segments in 2022, starting in Fiscal 2023, our annual cash incentive bonuses will be based on a balanced scorecard for each business which include a mix of performance measures tailored to each business segment.

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. ToIn Fiscal 2022, to ensure that our annual target ~~remains~~remained the primary consideration, ~~and to mitigate the risk of overpayment of bonuses,~~ any quarterly payments ~~are~~were subject to a discretionary holdback percentage, which has historically been set at 25% ~~but may~~. For Fiscal 2023, semi-annual payments will not be subject to a discretionary holdback percentage of 25%. The future holdback percentage could be adjusted for each ~~quarter~~semiannual period should circumstances warrant it. 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~~semi-annual rights our NEO’s and senior officers may have up to the date of the change.

The ~~annual bonuses~~performance goals under our management incentive compensation plan consists of two 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’s actual performance exceeds the Company’s targets, which was Adjusted EBITDA in 2022 or each individual business' balanced scorecard for ~~Compensation~~2023 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 P~~rogram~~program

The table below summarizes the ~~2020~~2022 and ~~2019~~2023 incentive bonus opportunities for our NEOs.

				2023			2022
Named Officer	Target incentive Bonus Opportunity⁽¹⁾		Basis for Target incentive Bonus	Target incentive Bonus Opportunity(1)		Basis for Target incentive Bonus for 2023	Target incentive Bonus Opportunity(1)		Basis for Target incentive Bonus for 2022
	2020	2019
Elliot Noss	$209,693	$154,735	100% Corporate Adjusted EBITDA for Compensation⁽²⁾	$	362,858	50% Ting targets, 30% Wavelo targets and 20% Tucows Domains targets	$	281,452	100% Consolidated Adjusted EBITDA for Compensation(2)
Davinder Singh	$84,076	$39,665	100% Corporate Adjusted EBITDA for Compensation⁽²⁾	$	153,276	50% Ting targets, 15% Wavelo targets and 35% Tucows Domains targets	$	137,816	100% Consolidated Adjusted EBITDA for Compensation(2)
Justin Reilly				$	347,344	100% Wavelo targets	$	361,818	100% Consolidated Adjusted EBITDA for Compensation(2)
David Woroch				$	157,064	100% Domain Services targets	$	144,308	100% Domain Services targets
Bret Fausett	$86,520	$63,000	100% Corporate Adjusted EBITDA for Compensation⁽²⁾	$	158,828	50% Ting targets, 15% Wavelo targets and 35% Tucows Domains targets	$	120,578	100% Consolidated Adjusted EBITDA for Compensation (2)
Hanno Liem	$68,802	$44,011	100% Corporate Adjusted EBITDA for Compensation⁽²⁾
David Woroch	$123,894	$101,422	100% Domain Services targets

	(1)	All dollar amounts below are shown U.S. dollars. Amounts payable in Canadian dollars for ~~2020~~2022 have been converted into U.S. dollars based upon the exchange rate of ~~1.3067~~1.300 Canadian dollars for each U.S. dollar, the average OANDA exchange rate for 2022 as at December 31, ~~2019.~~2022. Amounts ~~that were~~ payable in Canadian dollars during the ~~2019~~2023 fiscal year have been converted into U.S. dollars based upon the exchange rate of ~~1.3633~~1.354 Canadian dollars for each U.S. dollar, which represents the ~~OANDA~~year-end exchange rate ~~for 2019~~ as at December 31, ~~2018.~~2022

(2)

Adjusted EBITDA for Compensation ~~is a non-GAAP measure~~excludes depreciation of property and ~~excludes depreciation,~~equipment, amortization of intangibles, income tax provision, interest expense, interest income, stock-based compensation, accretion of contingent consideration, asset impairment, ~~net deferred revenue, which comprises~~loss on the ~~change in deferred revenue, net~~disposal 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,~~Ting Mobile customer assets, gains and losses from unrealized foreign currency transactions and infrequently occurring ~~items.~~items including acquisition and transition costs. 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 ~~generally accepted accounting principles (“GAAP”)~~GAAP financial measures if Adjusted EBITDA for Compensation is presented in connection with disclosure of target levels in ~~connection with disclosure of target levels in~~ the CD&A.

Our Corporate Governance, Nominating and Compensation Committee met in February ~~2020~~2023 and determined the achievement of the financial objectives applicable under the management incentive compensation plan for ~~2019, i.e., the Company’s Adjusted EBITDA budget as approved by the Board,~~2022 had ~~not~~ been ~~fully~~partially achieved. As the Company ~~did not meet~~only partially met its Adjusted EBITDA for Compensation targets for the fiscal year ended December 31, ~~2019,~~2022, the Corporate Governance, Nominating and Compensation Committee assessed that ~~70%~~80% of the incentive bonuses for all our NEO’s ~~except for Mr. Woroch~~ was payable. All NEO’s bonus, with the exception of Mr. 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 88% of his targeted bonus, and all other bonuses were assessed at 70% of target.

~~2019~~ 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 Fiscal 2023 and decided not to increase the incentive bonus target opportunity for our NEOs.

Overachievement Bonus Program

The ~~overachievement bonus program~~Overachievement Bonus Program is designed to further incent our employees, senior management and NEOs to exceed the Company’s Adjusted EBITDA for ~~Compensation~~compensation goals. In assessing our overall performance for ~~2019,~~Fiscal 2022, the Corporate Governance, Nominating and Compensation Committee deemed that no overachievement bonus should be payable for ~~fiscal 2019.~~Fiscal 2022.

~~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 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. The equity awards can be Company Options and Subsidiary Options. 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,~~Company 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 ~~such NEO’s~~the NEO's specific position. For subsequent equity grants to our NEOs, our Corporate Governance, Nominating and Compensation Committee receives input from our CEO and ~~Chief~~the People ~~Officer.~~Team leadership.

In Fiscal 2022 the Company issued Subsidiary Options for Wavelo in addition to the Company Options. Please see Note 15– Stock Option Plans” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for a detailed description of these plans. In Fiscal 2023 the Company issued Subsidiary Options for Ting. The Company granted Subsidiary Options in Ting to certain NEOs on January 16, 2023. The Ting Equity Compensation Plan (ECP) includes private subsidiary stock which have been established for the benefit of the employees, officers, directors and certain consultants of Ting. The Ting stock options were introduced in order to provide variable compensation that helps retain executives and ensures that our executives' interests are aligned with those stakeholders of the business to grow the long-term value. The maximum number of Ting common units that have been set aside for issuance under the plan is 10 million units, currently there are 100 million common units outstanding. Generally, options issued under the ECP vest over a four-year period and have a term not exceeding ten years. Compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of share-based instrument at the time of the grant and are recognized as expense over the vesting period of the share-based instrument. No Company Option grants have yet been awarded for Fiscal 2023.

In connection with its annual review process, the Corporate Governance, Nominating and Compensation Committee ~~(the “Committee”)~~ approved, effective ~~May 28, 2019,~~June 17, 2022, the following Company Option awards to our NEOs. These 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. In addition, we granted Subsidiary Options in Wavelo on November 9, 2022.

The following table sets forth the number of Company Options granted and their corresponding aggregate grant date fair value as of December 31, 2022.

Name	Number of Company options		Aggregate Grant Date Fair Value (US Dollars)
Elliot Noss		5,000	$	73,781
Davinder Singh		5,000	$	73,781
Justin Reilly		5,000	$	73,781
David Woroch		10,000	$	147,561
Bret Fausett		5,000	$	73,781

On June 29, 2023 the Corporate Governance, Nominating and Compensation Committee approved 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.

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

Elliot Noss		4,500	$	95,760		5,000	$	57,542
Davinder Singh		2,250	$	47,880		5,000	$	57,542
David Woroch						5,000	$	57,542
Bret Fausett		2,250	$	47,880		3,500	$	40,279
Hanno Liem		2,250	$	47,880
David Woroch		2,250	$	47,880

The following table sets forth the number of Wavelo Subsidiary Options granted and their corresponding aggregate grant date fair value as of December 31, 2022.

Name	Number of Subsidiary options		Aggregate Grant Date Fair Value (US Dollars)
Elliot Noss		1,000,000	$	487,761
Davinder Singh		150,000	$	73,164
Justin Reilly		4,500,000	$	2,194,926
Bret Fausett		150,000	$	73,164

The following table sets forth the number of Ting Subsidiary Options granted and their corresponding aggregate grant date fair value, as of January 16, 2023:

Name	Number of Subsidiary options		Aggregate Grant Date Fair Value (US Dollars)
Elliot Noss		2,000,000	$	201,700
Davinder Singh		50,000	$	5,042
Bret Fausett		50,000	$	5,042

During Fiscal 2022 options exercised and vested for our named executive officers were as follows:

Name	Company options exercised during Fiscal 2022		Company options vested during Fiscal 2022		Subsidiary options exercised during Fiscal 2022		Subsidiary options vested during Fiscal 2022
Elliot Noss		10,000		4,625		-		-
Davinder Singh		7,000		2,938		-		-
Justin Reilly		-		3,813		-		-
David Woroch		5,000		2,688		-		-
Bret Fausett		-		2,657		-		-

Severance and Change of Control Benefits

Our Board 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 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 in Control."

Perquisites

We do not provide any significant perquisites or other personal benefits to our NEOs.

Benefits

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

	•●	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.

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.~~shareholders. 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.

~~For years prior~~In designing our compensation programs, the Corporate Governance, Nominating and Compensation Committee considers the financial accounting and tax consequences to ~~2018,~~ 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.

Section 162(m) of the Internal Revenue Code generally ~~disallowed~~disallows a federal income tax deduction to public ~~corporations~~companies for annual compensation ~~greater than~~over $1 million (per individual) paid ~~for any fiscal year~~ to ~~the corporation’s Chief Executive Officer~~their chief executive officer, chief financial officer and the next three ~~other~~ most highly compensated executive officers (as well as certain other officers who were covered employees in years after 2016). As a result, most of the ~~end of any fiscal year, other than the Chief Financial Officer. However, certain types of performance-based~~ compensation were excluded from the $1 million deduction limit if specific requirements 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 paidpayable to our ~~covered executive officers~~NEOs in excess of $1 million per person in a year 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.

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). Our Corporate Governance, Nominating and Compensation Committee has not adopted a formal policy regarding tax deductibility of compensation paid to our NEOs. We believe it is important and in the best interests of our shareholders 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 NEOs, our Corporate Governance, Nominating and Compensation Committee may exercise discretion to pay non-deductible compensation if following the requirements of~~under 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 program~~Executive Compensation Program to ascertain any potential material risks that may be created by 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:

~~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 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~~2023 were Ms. Chase (Chair) and Messrs. Karp ~~(Chair), Schwartz~~ and ~~Ralls and Ms. Chase.~~Schwartz. To ensure that our compensation policies are administered in an objective manner, our Corporate Governance, Nominating and Compensation Committee is ~~comprised~~composed 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

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

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

Robin Chase (Chair)

Allen Karp ~~Chair~~

~~Rawleigh Ralls~~ Jeffrey Schwartz

~~Robin Chase~~

Summary Compensation Table

The following Summary Compensation table provides a summary of the compensation earned by our NEOs, including our Chief Executive Officer, our Chief Financial Officer, and our next three most highly compensated executive officers for services rendered in all capacities during ~~fiscal 2019.~~2022. 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 ~~fiscal 2019~~Fiscal 2022 were converted into U.S. dollars based upon the exchange rate of ~~1.3273~~1.300 Canadian dollars for each U.S. dollar, which represents the average ~~OANDA~~Oanda exchange rate for ~~2019.~~2022.

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	2019	$	321,932	$	111,252	$	—	$	95,760	$	7,911	$	536,855	2022	$	409,156	$	281,452	$	—	$	73,781	$	495,571	$	1,259,960
President and Chief Executive Officer	2018		320,587		141,359		—		105,930		8,111		575,987	2021		397,112		242,240	��	—		125,719		8,379		773,450
	2017		319,797		123,853		—		-		8,091		451,741	2020		359,143		204,713		—		90,315		7,845		662,016

Davinder Singh(4)	2019		205,643		28,519		—		47,880		6,781		288,823
Davinder Singh														2022		269,447		137,816		—		73,781		176,012		657,056
Chief Financial Officer	2018		229,915		34,254		—		52,965		6,953		324,087	2021		260,840		112,162		—		125,719		7,182		505,902
	2017		170,687		31,748		—		42,240		6,935		251,610	2020		234,511		82,077		—		45,158		6,724		368,470

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
Justin Reilly (4)														2022		603,031		361,818		—		73,781		2,196,080		3,234,710
Chief Executive Officer, Wavelo														2021		317,128		114,166		—		100,575		1,197		533,066
														2020		291,371		96,152		—		45,158		1121		433,802

David Woroch	2019		216,453		91,673		—		47,880		6,781		362,787	2022		282,553		144,308		—		147,561		6,701		581,124
Executive Vice President, Domains	2018		215,473		99,041		—		52,965		6,953		374,432
Chief Executive Officer, Tucows Domains Services														2021		269,165		134,584		—		100,575		7,182		511,506
	2017		208,677		106,549		—		—		6,935		322,161	2020		246,838		120,950				45,158		6,724		419,670

Bret Fausett														2022		286,436		120,578		—		73,781		73,164		553,959
Chief Legal Officer														2021		274,461		98,806		—		125,719		-		498,985
														2020		254,846		44,100		—		47,880		-		346,826

(1)	Represents bonus earned under our incentive programs during the fiscal years ended December 31, ~~2019, 2018~~2022, 2021 and ~~2017 and bonus earned under our overachievement bonus program during the fiscal year ended December 31, 2017.~~2020.

Of the ~~2019~~2022 amount, the following amounts were paid in February ~~2020:~~2023

Elliot Noss	$	54,037	$	107,611
Davinder Singh	$	13,852	$	50,389
Justin Reilly			$	233,839
David Woroch			$	57,441
Bret Fausett	$	21,420	$	45,773
Hanno Liem	$	15,370
David Woroch	$	42,450

Of the ~~2018~~2021 amount, the following amounts were paid in February ~~2019:~~
2022

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

Elliot Noss	$	104,902
Davinder Singh	$	48,646
Justin Reilly	$	49,233
David Woroch	$	59,539
Bret Fausett	$	43,403

Of the ~~2017~~2020 amount, the following amounts were paid in February ~~2018:~~2021

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

Elliot Noss	$	89,561
Davinder Singh	$	35,909
Justin Reilly	$	42,066
David Woroch	$	52,916
Bret Fausett	$	37,582

(2)

Represents the aggregate grant date fair value of such ~~awards,~~Company Options, calculated in accordance with FASB ASC ~~718 and excludes the impact of estimated forfeitures.~~718. Please see “Note ~~14 –~~15– Stock Option Plans” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of ~~the 2019~~this Annual Report, for a discussion of the assumptions underlying these calculations.

(3)	Amounts reported in this column are comprised of the ~~assumptions underlying these calculations.~~following items:

~~(3)~~

~~Amounts reported in this column are comprised of the following items:~~

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.~~

		Additional
		Health		Car		One-Time		Subsidiary		All Other
		Spending		Allowance		Payment		Stock Options (2)		Compensation
	Year	Credits ($)		($)		($)		($)		($)
Elliot Noss	2022	$	1,154	$	6,656	$	—	$	487,761	$	495,571
	2021		1,197		7,182		—		—		8,379
	2020		1,121		6,724		—		—		7,845

Davinder Singh	2022		1,154		5,547		96,147		73,164		176,012
	2021		1,197		5,985		—		—		7,182
	2020		1,121		5,603		—		—		6,724

Justin Reilly	2022		1,154		—		—		2,194,926		2,196,080
	2021		1,197		—		—		—		1,197
	2020		1,121		—		—		—		1,121

David Woroch	2022		1,154		5,547		—		—		6,701
	2021		1,197		5,985		—		—		7,182
	2020		1,121		5,603		—		—		6,724

Bret Fausett	2022		—		—		—		73,164		73,164
	2021		—		—		—		—		—
	2020		—		—		—		—		—

~~CEO~~Executive 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~~2022 for our PEO was ~~$527,319,~~$1,259,960, and for the median employee was ~~$36,836.~~$56,193. The resulting ratio of our PEO’s pay to the pay of our median employee for fiscal year ~~2019~~2022 is 1422 to 1.

The measurement was prepared as of December 31, ~~2019~~2022 based on active employees as at that date and total compensation for the annual period then ~~ended.~~ended, consistent with the methodology used to prepare the measure in Fiscal 2021. 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.~~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.~~Employee, consistent with the methodology used in 2021. The Median Employee’s ~~fiscal 2019~~Fiscal 2022 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 NEOs in ~~2019:~~2022:

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 Company options		Exercise or base price of option awards		Grant date fair value of option awards (1)
Elliot Noss	5/28/2019		4,500	$	62.12	$	95,760	6/17/2022		5,000	$	41.97	$	73,781

Davinder Singh	5/28/2019		2,250	$	62.12	$	47,880	6/17/2022		5,000	$	41.97	$	73,781

Justin Reilly								6/17/2022		5,000	$	41.97	$	73,781
David Woroch								6/17/2022		10,000	$	41.97	$	147,561
Bret Fausett	5/28/2019		2,250	$	62.12	$	47,880	6/17/2022		5,000	$	41.97	$	73,781

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

David Woroch	5/28/2019		2,250	$	62.12	$	47,880

~~(1) Represents the grant date fair value of such awards, calculated in accordance with FASB ASC 718. Please see “Note 14 “Stock~~
(1)
Represents the grant date fair value of such awards, calculated in accordance with FASB ASC 718. Please see “Note 15 – 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.

The following table sets forth information concerning Subsidiary plan-based awards granted to our NEOs in 2022:

Name	Grant date	All other option awards: Number of shares underlying Subsidiary Options		Exercise or base price of Subsidiary Option awards		Grant date fair value of Subsidiary Option awards (1)
Elliot Noss	11/9/2022		1,000,000	$	1.27	$	487,761
Davinder Singh	11/9/2022		150,000	$	1.27	$	73,164
Justin Reilly	11/9/2022		4,500,000	$	1.27	$	2,194,926
Bret Fausett	11/9/2022		150,000	$	1.27	$	73,164

(1)

Represents the grant date fair value of such awards, calculated in accordance with FASB ASC 718. Please see “Note 15 – Stock Option Plans” of Notes to Consolidated Financial Statements included in Part II, Item 8 of this 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 ~~our NEOs~~the named executive officers as of December 31, ~~2019:~~2022:

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

Elliot Noss		6,250		—		10.16	11/11/2013		11/10/2020		4,500		—		64.10	6/4/2025
		10,000		—		19.41	01/02/2015		12/31/2021		3,375		1,125		62.12	5/27/2026
		7,500		2,500		21.10	01/04/2016		12/31/2022		2,250		2,250		60.01	5/27/2027
		1,125		3,375		64.10	06/05/2018		06/04/2025		1,250		3,750		79.44	5/11/2028
		—		4,500		62.12	05/28/2019		05/27/2026		—		5,000		41.97	6/16/2029
		24,875		10,375							11,375		12,125

Davinder Singh		2,000		—		19.95	02/12/2016	*	02/11/2023		2,000		—		55.65	7/23/2024
		3,750		1,250		19.95	02/12/2016		02/11/2023		2,250		—		64.10	6/4/2025
		1,000		1,000		55.65	07/24/2017		07/23/2024		1,687		563		62.12	5/27/2026
		562		1,688		64.10	06/05/2018		06/04/2025		1,125		1,125		60.01	5/27/2027
		—		2,250		62.12	05/28/2019		05/27/2026		1,250		3,750		79.44	5/11/2028
		7,312		6,188							—		5,000		41.97	6/16/2029
											8,312		10,438

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
		1,250		3,750		58.65	01/08/2018		01/07/2025
Justin Reilly											4,500		2,250		55.19	9/15/2026
		187		563		64.10	06/05/2018		06/04/2025		1,125		1,125		60.01	5/27/2027
		—		2,250		62.12	05/28/2019		05/27/2026		1,000		3,000		79.44	5/11/2028
		6,437		6,563							—		5,000		41.97	6/16/2029
											6,625		11,375

David Woroch		6,250		—		10.16	11/11/2013		11/10/2020		2,250		-		64.10	6/4/2025
		5,000		—		19.41	01/02/2015		12/31/2021		1,687		563		62.12	5/27/2026
		3,750		1,250		21.10	01/04/2016		12/31/2022		1,125		1,125		60.01	5/27/2027
		562		1,688		64.10	06/05/2018		06/04/2025		1,000		3,000		79.44	5/11/2028
		—		2,250		62.12	05/28/2019		05/27/2026		—		10,000		41.97	6/16/2029
		15,562		5,188							6,062		14,688

Bret Fausett											10,000		—		53.20	9/4/2024
											1,125		—		64.10	6/4/2025
											1,687		563		62.12	5/27/2026
											1,125		1,125		60.01	5/27/2027
											1,250		3,750		79.44	5/11/2028
											—		5,000		41.97	6/16/2029
											15,187		10,438

* These grants vest 100% six months after issuance.

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 primarily vest over a period of four years and have a ~~seven-year~~7-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.

The following table sets forth information concerning subsidiary stock options held by the named executive officers as of December 31, 2022:

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

Elliot Noss		—		1,000,000		1.27	11/8/2029
		—		1,000,000

Davinder Singh		—		150,000		1.27	11/8/2029
		—		150,000

Justin Reilly		—		4,500,000		1.27	11/8/2029
		—		4,500,000

Bret Fausett		—		150,000		1.27	11/8/2029
		—		150,000

The stock option grants listed in the above table were issued under the Wavelo, Inc. 2022 Equity Compensation Plan ("Wavelo ECP") adopted in 2022.

Under the Wavelo ECP, these options primarily vest over a period of three years and have a 7-year term. For the initial grants under the plan, the first 25% became exercisable within three months and vesting ratably monthly thereafter, after the third year.

Potential Payments on Termination or Change In Control

We have certain agreements that require us to provide compensation to our 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 NEO upon various triggering events. Actual amounts can only be determined upon the triggering event.

Elliot Noss ₍₁₎		Termination		Change in			Termination		Change in
	2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)		2022	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance ₍₂₎		$	643,863	$	2,643,863		$	910,796	$	2,910,796
Bonus Plan ₍₃₎			317,863		317,863			626,520		626,520
Acceleration of Unvested Equity Awards ₍₄₎			101,700		101,700			—		—

Benefits ₍₅₎
Car Allowance			13,562		13,562			13,312		13,312
Healthcare Flexible Spending Account			2,260		2,260			2,308		2,308

		$	1,079,248	$	3,079,248			1,552,936	$	3,552,936

Davinder Singh ₍₁₎		Termination		Change in			Termination		Change in
	2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)		2022	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance ₍₂₎		$	154,232	$	—		$	290,299	$	—
Bonus Plan ₍₃₎			30,555		—			148,482		—
Acceleration of Unvested Equity Awards ₍₄₎			55,353		—			-		—

Benefits ₍₅₎
Car Allowance			4,238		—			5,547		—
Healthcare Flexible Spending Account			848		—			1,154		—

		$	245,226	$	—		$	445,482	$	—

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
Bret Fausett (1)							Termination		Change in
	2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)		2022	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance ₍₂₎		$	104,115	$	—		$	291,184	$	—
Bonus Plan ₍₃₎			26,369		—			122,577		—
Acceleration of Unvested Equity Awards ₍₄₎			3,913		—			-		—

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

		$	135,056	$	—		$	413,761	$	—

David Woroch ₍₁₎		Termination		Change in
Justin Reilly (1)							Termination		Change in
	2019	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)		2022	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance ₍₂₎		$	432,909	$	432,909		$	452,273	$	—
Bonus Plan ₍₃₎			208,346		208,346			271,364		—
Acceleration of Unvested Equity Awards ₍₄₎			50,850		50,850			-		—

Benefits ₍₅₎
Car Allowance			11,302		11,302			—		—
Healthcare Flexible Spending Account			2,260		2,260			865		—

		$	705,667	$	705,667		$	724,502	$	—

David Woroch (1)		Termination		Change in
	2022	without Cause (Dollar amounts in U.S. dollars)		Control (Dollar amounts in U.S. dollars)
Compensation
Base Salary/Severance (2)		$	594,945	$	-
Bonus Plan (3)			303,857		-
Acceleration of Unvested Equity Awards (4)			-		-

Benefits (5)
Car Allowance			11,094		-
Healthcare Flexible Spending Account			2,308		-

		$	912,204	$	-

(1)

For the purpose of the table we assumed an annual base salary at the executive’s level as of December 31, ~~2019~~2022.

(2)

Severance for Mr. Noss is compensation for one year plus one-month additional compensation for each completed year of 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. Singh, Fausett, ~~Liem~~Reilly and Woroch, severance compensation is for six months plus 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, ~~2019~~2022 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. Singh, Fausett, ~~Liem~~Reilly and Woroch, their options continue to vest through any severance period. On a change in control we have assumed that all unvested options for Mr. Noss vest automatically and that for Messrs. Singh, Fausett, ~~Liem~~Reilly and Woroch, 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, ~~2019,~~2022, 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, ~~2019~~2022 was ~~$61.78.~~$33.92.

(5)

~~(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.

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 ~~our~~the 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 ~~our NEOs~~the named executive officers in the event of termination without cause or termination for good reason.

Upon termination without cause, Messrs. Woroch, Singh, ~~Liem~~Reilly and 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. Messrs. Woroch, Singh, ~~Liem~~Reilly and Fausett are each bound by a standard non-competition covenant for a period of twelve months following their termination.

Mr. Noss’s employment agreements is subject to early termination by us due to:

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

For purposes of the employment agreements, “cause” is defined to mean the executive’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.

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

Under his employment agreements, Mr. Noss 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’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 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 for Mr. Noss. In addition to the lump sum payments, all stock options held by 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 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’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’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,~~control; or ~~he is assigned duties inconsistent with his position;~~
	●	we fail to obtain a satisfactory agreement from any successor to assume and agree to perform our obligations to the executive ~~is required to be based at a location in excess of 30 miles from~~under his ~~principal job location or office immediately prior to the change in control;~~employment agreement.
	●	the executive’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.~~

~~Pension Benefits~~

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

~~Non-qualified Deferred Compensation~~

~~The Company does not currently have an executive defined income plan.~~

Pay Versus Performance

The below table and related disclosure is provided in compliance with Item 402(v) of Regulation S-K (the “PvP disclosure rules”), which presents for the previous three fiscal years (i) the total and average total compensation set forth in the Summary Compensation Table (“SCT”) for the Chief Executive Officer and the named executive officers as a group (excluding the Chief Executive Officer), respectively, (ii) the total and average total “compensation actually paid” (as determined in accordance with the PvP disclosure rules) for the Chief Executive Officer (“Compensation Actually Paid to PEO”) and the named executive officers as a group (excluding the Chief Executive Officer) (“Average Summary Compensation Actually Paid to Non-PEO NEOs”), respectively, (iii) the Company’s cumulative Total Shareholder Return (“Cumulative TSR”) and the cumulative TSR (“Peer Group Cumulative TSR”) of our Item 402(v) peer group (“PvP Peer Group”) and (iv) Adjusted EBITDA.

Unaudited

Value of Initial Fixed $100 Investment Based on:

Year ⁽¹⁾

Summary Compensation on Table Total for PEO

Compensation Actually Paid to PEO⁽²⁾

Average Summary Compensation on Table Total for Non-PEO NEOs⁽³⁾

Average Summary Compensation Actually Paid to Non-PEO NEOs⁽²⁾

Total Shareholder Return

Peer Group Total Shareholder Return⁽⁴⁾

Net Income (In Thousands)

Total Adjusted EBITDA (In Thousands)⁽⁵⁾

(A)

(B)

(C)

(D)

(E)

(F)

(G)

(H)

(I)

2022
$
1,306,202
$
967,399
$
1,273,459
$
1,175,500
$
48
$
103
$
(27,571
)
$
37,590

2021

781,236

852,582

518,215

574,633

120

170

3,364

48,821

2020

662,016

727,497

405,934

452,041

105

174

5,775

50,973

(1)	Mr. Noss served as Principal Executive Officer (“PEO”) for all three years. Messrs Singh, Reilly, Woroch and Fausett served as the Non-PEO NEOs for all three years.

(2)

Represents Compensation Actually Paid (“CAP”) for our PEO and average CAP for our Non-PEO NEOs as a group, as computed in accordance with the PvP disclosure rules (determined as set forth below). The dollar amounts do not reflect the amounts of compensation ultimately earned or realized by our NEOs during the covered years.

Adjustment to Determine CAP for PEO

Summary Compensation Table^(a)

2022

2021

2020

SCT Total for PEO $ 1,306,202 $ 781,236 $ 662,016
Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year^(b)
(561,542 ) (125,719 ) (90,315 )
Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year^(c)
525,790 142,214 128,144
Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years^(c)
(197,560 ) 41,789 32,645
Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year^(c)
- - -
Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year^(c)
(105,491 ) 13,062 (4,994 )
Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year^(c)
- - -
Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation
- - -
Total Adjustments (338,803 ) 71,346 65,481
Compensation Actually Paid
$ 967,399 $ 852,582 $ 727,497
(a)
We have not reported any amounts in our Summary Compensation Table with respect to “Change in Pension and Nonqualified Deferred Compensation” and, accordingly, the adjustments with respect to such items prescribed by the pay-versus-performance rules are not relevant to our analysis and no adjustments have been made.
(b)
The amounts reflect the aggregate grant-date fair value reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year, as well as the "Subsidiary Stock Options" column of the Other Compensation table breakdown.
(c)
In accordance with the requirements of Item 402(v) of Regulation S-K, the fair values of unvested and outstanding equity awards to our named executive officers were re-measured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the table above. We approached the determination of fair value in the same way as we historically have determined fair value and fair values as of each measurement date were determined using valuation assumptions and methodologies (including expected term, volatility, and risk-free interest rates) that are generally consistent with those used to estimate fair value at the grant date under U.S. GAAP. See “Stock-based Compensation Expense” in the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K/A for additional details.
32
Adjustment to Determine CAP for Non-PEO Named Executive Officers as a Group

Summary Compensation Table^(a)

2022

2021

2020

Average SCT Total for Non-PEO Named Executive Officers $ 1,273,459 $ 518,215 $ 405,934
Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year^(b)
(677,539 ) (113,147 ) (45,839 )
Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year^(c)
633,373 127,992 64,073
Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years^(c)
(94,589 ) 20,622 27,648
Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year^(c)
- - -
Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year^(c)
40,432 20,950 225
Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year^(c)
- - -
Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation
- - -
Total Adjustments (97,959 ) 56,418 46,107
Compensation Actually Paid
$ 1,175,500 $ 574,633 $ 452,041
(a)
We have not reported any amounts in our Summary Compensation Table with respect to “Change in Pension and Nonqualified Deferred Compensation” and, accordingly, the adjustments with respect to such items prescribed by the pay-versus-performance rules are not relevant to our analysis and no adjustments have been made.
(b)
The amounts reflect the aggregate grant-date fair value reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year, as well as the "Subsidiary Stock Options" column of the Other Compensation table breakdown.
(c)
In accordance with the requirements of Item 402(v) of Regulation S-K, the fair values of unvested and outstanding equity awards to our named executive officers were re-measured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the table above. We approached the determination of fair value in the same way as we historically have determined fair value and fair values as of each measurement date were determined using valuation assumptions and methodologies (including expected term, volatility, and risk-free interest rates) that are generally consistent with those used to estimate fair value at the grant date under U.S. GAAP. See “Stock-based Compensation Expense” in the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for additional details.
(3)
Amounts reflected in this column represents the average “Total Compensation” from the SCT and CAP for our Non-PEO NEOs as a group for the covered years.
(4)
The dollar amounts reported in column (g) represent the cumulative peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: RDG Internet Composite Index.
(5)
We identified Adjusted EBITDA as our Company-Selected Measure that represents, in our view, the most important measure used to link CAP to performance. Adjusted EBITDA is a non-GAAP measure.
Required Tabular Disclosure of Most Important Measures to Determine CAP
The list below includes the one financial performance measure that in our assessment represents the most important financial performance measure used to link compensation actually paid to our named executive officers, for Fiscal 2022, to company performance. There is the only one performance measure included in the below list because our named executive officers’ compensation was only linked to this financial performance measure in Fiscal 2022.
Most Important Performance Measure(s)
Adjusted EBITDA⁽¹⁾
(1) Adjusted EBITDA is a non-GAAP financial performance metric.
33
Narrative to the Pay versus Performance Table
As discussed in our disclosures under the “Incentive bonus program” section of this proxy statement, Adjusted EBITDA was the only performance measure used directly in the calculation of compensation paid for Fiscal 2020, Fiscal 2021 and Fiscal 2022. Beginning in Fiscal 2023, the Company has replaced Adjusted EBITDA incentive bonus targets with segment targets that are more individually aligned to each NEO's ability to impact Company performance and drive long-term EBITDA growth.
The following graphic depicts the relationship of the CAP received by our PEO and other NEOs in Fiscal 2020, Fiscal 2021 and Fiscal 2022 to the Company’s Cumulative TSR. It also compares the Company’s Cumulative TSR with its Peer Group’s Cumulative TSR.
Relationship between CAP, the Company’s Adjusted EBITDA for FY 2020-2022
The following graph demonstrates the relationship of the amount of compensation actually paid to our PEO and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Noss) with the Company’s Adjusted EBITDA over the three fiscal years presented in the table. It should be noted that Adjusted EBITDA targets used to determine CAP in Fiscal 2022 were lowered to reflect the expected impact of accelerated build of our Ting Fiber Network and scaling up of operations on consolidated Adjusted EBITDA.

AUDIT COMMITTEE REPORT

The purposes of the Audit Committee are described on page 1412 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. In fulfilling our responsibilities, the Audit Committee has reviewed and discussed the audited consolidated financial statements contained in our ~~2019~~2022 Annual Report with our management and also with KPMG LLP, our independent ~~auditors.~~auditors until May 23, 2023. 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 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, ~~2019~~2022 with management and KPMG LLP, the Company’s independent registered public accounting ~~firm.~~firm until May 23, 2023. 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 applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”). and the SEC. 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’s internal control over financial reporting as of December 31, ~~2019,~~2022, 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, ~~2019,~~2022, 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 ~~2019~~2022 Annual Report.

Based on the reviews and discussions referred to above, the Audit Committee recommended to our Board that our audited consolidated financial statements be included in our ~~2019~~2022 Annual Report as filed with the SEC.

Audit Committee Members
Jeffrey Schwartz, Chair
Allen Karp
Erez Gissin

32

PROPOSAL No. 2

~~APPROVAL OF PROPOSED AMENDMENT~~ ~~AND RESTATEMENT~~ OF~~THE 2006 EQUITY COMPENSATION~~~~PLAN~~
~~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.~~
~~Share~~~~Reserve~~~~Increase~~~~and~~~~Term.~~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.
33
~~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.
~~General.~~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.
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~~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:~~
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~~options intended to qualify as incentive stock options (“ISOs”) under Internal Revenue Code Section 422;~~
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~~non-qualified stock options that are not intended to qualify as ISOs;~~
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~~stock appreciation rights;~~
●
~~stock awards;~~
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~~restricted stock units;~~
●
~~performance units;~~
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~~dividend equivalent rights; or~~
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~~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.
●
~~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 Requir~~~~ement~~. 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.
~~Adjustment~~~~provisions.~~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 recommends~~a~~vote~~~~FOR~~~~the~~~~adoption~~of~~the~~~~Amendment~~of~~the~~~~2006~~~~Equity~~~~Compensation~~~~Plan.~~
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~~PROPOSAL No. 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. 43 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.2026.

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~~2023 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:~~No. 3

NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF THE VOTE ON EXECUTIVE COMPENSATION

In Proposal No. 32 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 with subsequent votes in 2017 and 2020, 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.

4637

PROPOSAL No. 54

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

As previously disclosed in a Current Report on Form 8-K, filed with the SEC on May 29, 2023, KPMG LLP ~~has served~~resigned as ~~our independent auditor since our merger with Tucows Delaware in August 2001. The Audit Committee of our Board has appointed KPMG LLP as~~ the Company’s independent registered public accounting firm, at the Company's request and as approved by the Audit Committee of the Board of Directors of the Company on May 23, 2023.
The audit reports of KPMG on the consolidated financial statements of the Company as of and ~~our subsidiaries~~ for the years ended December 31, 2022 and December 31, 2021 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.  The audit report of KPMG on the effectiveness of internal control over financial reporting as of December 31, 2021 did not contain an adverse opinion or disclaimer of opinion. The audit report of KPMG dated March 15, 2023 on the effectiveness of internal control over financial reporting as of December 31, 2022 contained an adverse opinion which indicated that the Company did not maintain effective internal control over financial reporting because of the effect of a material weakness and contains an explanatory paragraph that states a material weakness was identified related to the operations of internal controls over the capitalization of certain costs.
During the fiscal years ended December 31, 2022 and 2021 and the subsequent period through May 23, 2023, (i) there were no disagreements between the Company and KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to KPMG’s satisfaction, would have caused KPMG to make reference to the subject matter of the disagreements in connection with its audit reports on the Company’s financial statements; and (ii) there were no “reportable events” as the term is described in Item 304(a)(1)(v) of Regulation S-K, except for the disclosure of material weaknesses in the Company’s internal controls over financial reporting as disclosed in Part II, Item 9A of the Company’s Form 10-K for the year ended December 31, 2022, pertaining to capitalization of certain costs were inadequate to ensure that i) a technical accounting assessment was completed related to secondary accounting implications of the Redeemable Preferred Share transaction in the third quarter of 2022 as it related to capitalization of interest on Ting assets under construction and ii) the accuracy of labor cost inputs used to determine the capitalization costs of internal efforts for the build and installation of Ting fiber network.
The Company provided KPMG with a copy of this report on Form 8-K in accordance with Item 304(a) of Regulation S-K prior to its filing with the Securities and Exchange Commission and requested that KPMG furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements and, if it does not agree, the respects in which it does not agree. A copy of the letter from KPMG is filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on May 29, 2023.
On May 23, 2023, following the completion of a competitive process with several independent registered public accounting firms, the Audit Committee appointed Deloitte LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, ~~2020.~~ 2023.
During the fiscal years ended December 31, 2022 and 2021 and subsequent interim period from January 1, 2023 to May 23, 2023, neither the Company nor anyone acting on its behalf consulted Deloitte with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, nor the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice provided that Deloitte concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement or a “reportable event” as described in Items 304(a)(1)(iv) and (v), respectively, of Regulation S-K.
Although shareholder approval is not required, our Board desires to obtain shareholder ratification of this appointment. If the appointment is not ratified at the Annual Meeting, our Board will review its future selection of independent registered public accounting ~~firm.~~firms. A representative of ~~KPMG LLP~~Deloitte is expected to be present at the 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.

Recommendation of the Board of Directors
The Board unanimously recommends a vote FOR ratification of the appointment of ~~KPMG~~Deloitte LLP as our independent registered public accounting firm for the year ending December 31, ~~2020.~~2023.

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AUDIT FEES AND ALL OTHERFEES

All services provided by KPMG LLP, our independent registered public accounting firm for ~~2019,~~2022, 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, ~~2019~~2022 and ~~2018~~2021 are set forth below:

2019 Fees

2018 Fees

2022 Fees

2021 Fees

Audit Fees (1)
$ 566,000 $ 515,000 $ 789,000 $ 633,000
Audit-Related Fees ~~(2)~~
- - - -
Tax Fees ~~(3)~~(2)
91,000 70,000 74,000 59,000
All Other Fees(3)
- - 32,000 59,000
Total Fees
$ 657,000 $ 585,000 $ 895,000 $ 751,000

(1)
Consists of fees and expenses for (a) the annual audits of our consolidated financial statements and the accompanying attestation report regarding our ICFR contained in our ~~2019~~ Annual Report ,on Form 10-K, (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, and (c) audit services 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 compliance and advisory services.
(3)
All other services not included in the above.

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 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 (the “CFO”).~~Officer. 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, our ~~CFO~~Chief Financial Officer will submit the request to the ~~Chairman~~chairperson of the ~~Audit Committee~~audit committee for consideration and approval, and the engagement may commence upon the approval of the ~~Chairman.~~chairperson. The ~~Chairman~~chairperson 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 ~~CFO~~Chief Financial Officer 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 the full Audit Committee.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Review, Approval or Ratification of Transactions with RelatedParties

The Audit Committee of the Board 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. 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. The Audit Committee and the Board 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.

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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 are described in this proxy statement. If any matters properly come before the 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~~2022 Annual Report may have been sent to multiple shareholders in your household. If you would prefer to receive separate copies of a proxy statement or ~~2019~~2022 Annual Report 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 at the address set forth on the first page of this proxy statement, or via telephone to ~~our Secretary at (416) 538-5493,~~866-648-8133, with the control number from your proxy, and we will promptly provide separate copies of the ~~2019~~2022 Annual Report and/or this proxy statement. Shareholders sharing an address who are receiving multiple copies of this proxy statement and/or ~~2019~~2022 Annual Report 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 20212024 AnnualMeeting

If you would like to submit a proposal for inclusion in the proxy materials for our annual meeting of shareholders in ~~2021~~2024 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 ~~26, 2021,~~30, 2024, and must comply in all material respects with all applicable rules and regulations of the SEC.

If you would like to ~~present a proposal~~bring business before the 2024 annual meeting outside of Rule 14a-8, or to nominate candidates for election as directors at the ~~2021~~2024 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 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 a proposal for the ~~2021~~2024 annual meeting no earlier than April ~~24, 2021~~29, 2024 and no later than May ~~24, 2021.~~29, 2024. The notice must also meet other requirements set forth in the Bylaws.

If we do not receive notice of such proposals by May ~~24, 2021,~~29, 2024, 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.

In order for stockholders to give timely notice of nominations for directors for inclusion on a universal proxy card in connection with the 2024 annual meeting, notice must be submitted by the same deadline as disclosed above under the advance notice provisions of our Bylaws and must include the information in the notice required by our Bylaws and by Rule 14a-19(b)(2) and Rule 14a-19(b)(3) under the Exchange Act.
Eligible International Interlisted Issuer

As an “Eligible International Interlisted ~~Issuer”,~~Issuer,” the Company is exempt from The Toronto Stock Exchange’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 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~~2022 Annual Report to the beneficial owners of record 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~~10-K/A

A copy of our ~~2019~~2022 Annual Report 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.~~Secretary, or by Telephone at 866-648-8133, with the control number from your proxy,

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

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~~APPENDIX A~~
~~TUCOWS INC.~~
~~2006 EQUITY COMPENSATION PLAN~~
~~(As Amended and Restated May 22, 2020)~~

52
40
~~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.
65
~~(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.
66
~~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.
67
~~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.
68
~~(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.
70

☒	No fee required.
☐	~~Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.~~
	~~(1)~~	~~Title of each class of securities to which transaction applies:~~
	~~(2)~~	~~Aggregate number of securities to which transaction applies:~~
	~~(3)~~	~~Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):~~
	~~(4)~~	~~Proposed maximum aggregate value of transaction:~~
	~~(5)~~	~~Total fee paid:~~

☐	~~Check box if any part of the fee is offset as provided~~Fee computed on table in exhibit required by Item 25(b) per Exchange Act ~~Rule 0-11(a)(2)~~Rules 14a-6(i)(1) and ~~identify the 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.~~0-11
	~~(1)~~	~~Amount Previously Paid:~~
	~~(2)~~	~~Form, Schedule or Registration Statement No.:~~
	~~(3)~~	~~Filing Party:~~
	~~(4)~~	~~Date Filed:~~

	Beneficial Ownership of Common Stock
Name	Common Stock Beneficially Owned Excluding Options			Stock Options Exercisable within 60 Days of July 10, 2023		Total Common Stock Beneficially Owned		Percent of Class(1)
Elliot Noss		705,603	(2)		25,875		731,478		6.7	%
96 Mowat Avenue Toronto, Ontario, Canada
Davinder Singh		7,080			20,562		27,642		*
Justin Reilly		-			12,249		12,249		*
David Woroch		124,856	(3)		20,312		145,168		1.3	%
Bret Fausett		30,255			25,937		56,192		*
Robin Chase		16,672			15,000		31,672		*
Erez Gissin		17,887			15,000		32,887		*
Jeffrey Schwartz		12,375			15,000		27,375		*
Brad Burnham		26,112			7,500		33,612		*
Allen Karp		18,014	(4)		15,000		33,014		*
Marlene Carl		18			4,375		4,393		*
All directors and executive officers as a group (12 persons)		1,011,255			263,518		1,274,773		11.7	%

	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

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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

Investmentaktiengesellschaft für langfristige Invetoren TGV		1,712,539	(2)		15.9	%
Ruengsdorfer Str. 2e
53173 Bonn, Germany

Edgepoint Investment Group, Inc.		1,666,019	(3)		15.5	%
150 Bloor Street West, Suite 500
Toronto, Ontario, Canada, M5S 2X9

Blacksheep Fund Management Ltd.		981,230	(4)		9.1	%
Rock House, Main Street
Blackrock, Co ,Dublin, Ireland A94 YY39

BlackRock, Inc.		668,308	(5)		6.2	%
55 East 52nd Street
New York, NY 10055

The Vanguard Group		615,568	(6)		5.7	%
100 Vanguard Blvd.
Malvern, PA 19355

Board Diversity Matrix (As of July 15, 2022 and July 10, 2023)
Total Number of Directors	8
	Female	Male	Non- Binary	Did Not Disclose Gender
Part I: Gender Identify
Directors	2	5	0	0
Part II: Demographic Background
African American or Black	0	0	0	0
Alaskan Native or Native American	0	0	0	0
Asian	0	0	0	0
Hispanic or Latinx	0	0	0	0
Native Hawaiian or Pacific Islander	0	0	0	0
White	2	5	0	0
Two or More Races or Ethnicities	0	0	0	0
LGBTQ+	0
Did Not Disclose Demographic Background	0

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

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

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	$	—

Unaudited
									Value of Initial Fixed $100 Investment Based on:
Year ⁽¹⁾	Summary Compensation on Table Total for PEO		Compensation Actually Paid to PEO⁽²⁾		Average Summary Compensation on Table Total for Non-PEO NEOs⁽³⁾		Average Summary Compensation Actually Paid to Non-PEO NEOs⁽²⁾		Total Shareholder Return		Peer Group Total Shareholder Return⁽⁴⁾		Net Income (In Thousands)			Total Adjusted EBITDA (In Thousands)⁽⁵⁾
(A)	(B)		(C)		(D)		(E)		(F)		(G)		(H)			(I)
2022	$	1,306,202	$	967,399	$	1,273,459	$	1,175,500	$	48	$	103	$	(27,571	)	$	37,590
2021		781,236		852,582		518,215		574,633		120		170		3,364			48,821
2020		662,016		727,497		405,934		452,041		105		174		5,775			50,973

Adjustment to Determine CAP for PEO
Summary Compensation Table^(a)	2022			2021			2020
SCT Total for PEO	$	1,306,202		$	781,236		$	662,016
Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year^(b)		(561,542	)		(125,719	)		(90,315	)
Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year^(c)		525,790			142,214			128,144
Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years^(c)		(197,560	)		41,789			32,645
Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year^(c)		-			-			-
Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year^(c)		(105,491	)		13,062			(4,994	)
Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year^(c)		-			-			-
Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation		-			-			-
Total Adjustments		(338,803	)		71,346			65,481
Compensation Actually Paid	$	967,399		$	852,582		$	727,497

Adjustment to Determine CAP for Non-PEO Named Executive Officers as a Group
Summary Compensation Table^(a)	2022			2021			2020
Average SCT Total for Non-PEO Named Executive Officers	$	1,273,459		$	518,215		$	405,934
Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year^(b)		(677,539	)		(113,147	)		(45,839	)
Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year^(c)		633,373			127,992			64,073
Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years^(c)		(94,589	)		20,622			27,648
Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year^(c)		-			-			-
Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year^(c)		40,432			20,950			225
Subtract Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year^(c)		-			-			-
Add Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation		-			-			-
Total Adjustments		(97,959	)		56,418			46,107
Compensation Actually Paid	$	1,175,500		$	574,633		$	452,041

~~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%~~

☐	Definitive Additional Materials

	2019 Fees		2018 Fees		2022 Fees		2021 Fees
Audit Fees (1)	$	566,000	$	515,000	$	789,000	$	633,000
Audit-Related Fees ~~(2)~~		-		-		-		-
Tax Fees ~~(3)~~(2)		91,000		70,000		74,000		59,000
All Other Fees(3)		-		-		32,000		59,000
Total Fees	$	657,000	$	585,000	$	895,000	$	751,000

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

	By Order of the Board of Directors,

	Davinder Singh
	Chief Financial Officer andSecretary