UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.   )

Filed by the Registrant  ☑                                   Filed by a Party other than the Registrant  ☐

Check the appropriate box:

SPS COMMERCE, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

333 South Seventh Street, Suite 1000

Minneapolis, Minnesota 55402

(612) 435-9400

April 6, 20207, 2021

Dear Stockholders:

You are cordially invited to join us for our 20202021 annual meeting of stockholders, which will be held on Monday,Wednesday, May 18, 2020,19, 2021, at 1:8:00 p.m.a.m., Central Time,Time. The meeting will be virtual and can be accessed by visiting the following website and entering your control number: www.virtualshareholdermeeting.com/SPSC2021. Stockholders will have the same opportunities to participate in the meeting as you would at SPS Tower, 333 South Seventh Street, Suite 1000, Minneapolis, Minnesota 55402. an in-person meeting, including having the opportunity to vote and to submit questions during the meeting using the directions on the meeting website. You will not be able to attend the annual meeting physically in person.

The notice of annual meeting of stockholders and the proxy statement that follow describe the business to be conducted at the meeting. Whether or not you plan to attend the virtual meeting, your vote is important and we encourage you to submit your proxy to vote your shares promptly. You may vote your shares by proxy by using a toll-free telephone number, using the internet or you may sign, date and mail a proxy card which can be requested and mailed to you free of charge. Instructions regarding thethese three methods of voting are contained in the proxy materials.

We are pleased to take advantage of Securities and Exchange Commission (“SEC”) rules that allow companies to furnish their proxy materials over the internet. We are mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of our proxy materials and our 20192020 Annual Report to Stockholders (the “Annual Report”). The Notice contains instructions on how to access those documents and to cast your vote via the internet. The Notice also contains instructions on how to request a paper copy of our proxy materials and our Annual Report. All stockholders who do not receive a Notice will receive a paper copy of the proxy materials and the Annual Report by mail. This process allows us to provide our stockholders with the information they need on a more timely basis, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. Please note that the date, time and physical location of the 2020 annual meeting of stockholders have been changed since the proxy card and Notice were printed so please rely on the information in the accompanying Notice of 2020 Annual Meeting of Stockholders and in the “How to Vote” section of the proxy statement regarding the meeting date, time and location and voting deadlines. The proxy card included with the proxy materials may continue to be used to vote your shares in connection with the annual meeting.

We look forward to seeinghaving you atattend the annual meeting.

Sincerely,

SPS COMMERCE, INC.

SPS Commerce, Inc.

333 South Seventh Street

Minneapolis, Minnesota 55402

Notice of 20202021 Annual Meeting of Stockholders

Record Date – You may vote at the meeting if you were a stockholder of record at the close of business on March 25, 2020.24, 2021.

Voting by Proxy – Whether or not you plan to attend the annual meeting virtually, please vote your shares by proxy to ensure they are represented at the meeting. To submit your proxy vote, you may follow the instructions for voting via telephone or the internet as described in the Notice of Internet Availability of Proxy Materials and the following proxy statement. If you received a paper copy of the proxy card by mail, you may sign, date, and mail the proxy card in the envelope provided. Our vote tabulator is Broadridge Financial Solutions, Inc., and no postage is required if the request for a paper copy of the proxy materials is mailed in the United States.

Note – The date, time and physical location of the 2020 Annual Meeting of Stockholders have been updated since the proxy card and Notice of Internet Availability of Proxy Materials were printed so please rely on the information in this Notice of 2020 Annual Meeting of Stockholders and in the “How to Vote” section of the proxy statement regarding the meeting date, time and location and voting deadlines. The proxy card included with the proxy materials may continue to be used to vote your shares in connection with the annual meeting.  As noted above, we intend to hold our annual meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our annual meeting in person or at the scheduled location, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor https://investors.spscommerce.com/ for updated information. If you are planning to attend our meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting.

By Order of the Board of Directors,

SPS COMMERCE, INC.

How to Vote

Whether or not you plan to attend the meeting virtually, please provide your proxy by either using the Internetinternet or telephone as further explained in this proxy statement or filling in, signing, dating, and promptly mailing a proxy card.

All references to the “Plan” are in reference to the SPS Commerce, Inc. 401(k) Retirement Savings Plan.

If your shares are held in an account at a brokerage firm, bank, or similar organization, you will receive voting instructions from the organization holding your account and you must follow those instructions to vote your shares. You will receive a Notice Regarding the Availability of Proxy Materials that will tell you how to access our proxy materials on the Internetinternet and vote your shares over the Internet.internet. It will also tell you how to request a paper or e-mail copy of our proxy materials.

YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.

SPS COMMERCE, INC.

PROXY STATEMENT

proxy summary

This summary highlights information contained elsewhere in this proxy statement. We encourage you to review the entire proxy statement. This proxy statement and our Annual Report for the year ended December 31, 2020 are first being mailed to our stockholders on or about April 7, 2021. Website addresses included throughout this proxy statement are for reference only. The information contained on our website is not incorporated by reference into this proxy statement.

Business Results

We are a technology company with revenue of $279.1$312.6 million in 2019.2020. We are a leading provider of cloud-based supply chain management solutions, providing network-proven integrations and comprehensive retail performance analytics to tens of thousands of customers worldwide.

20192020 was a year of continued execution for SPS Commerce, in an industry and customer base that is inhas seen significant acceleration of transition. We achieved year-over-year recurring revenue growth, customer growth and wallet share growth and deliveredwhile delivering strong revenue and adjustedAdjusted EBITDA growth in 2019.growth. We also executed one strategic acquisition effected a two-for-one stock split of our common stock, authorized a new stock repurchase program to repurchase up to $50 million of common stock, and continued to repurchase shares through our buyback program. Additional information regarding our performance in 2019is as follows.

¹ Adjusted EBITDA, Non-GAAP income and non-GAAP income per diluted share are non-GAAP financial measures. Refer to Appendix A in this proxy statement for a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures.

Voting Matters and Voting Recommendations

The following proposals are included in this proxy statement and are scheduled to be voted on at the meeting. Our board of directors recommends that you vote your shares as indicated below.

Other than the proposals described in this proxy statement, the board is not aware of any other matters to be presented for a vote at the annual meeting. If you grant a proxy by telephone, internet, or by signing and returning your proxy card, any of the persons appointed by the board as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If any of our nominees is unavailable as a candidate for director, the above-named proxy holders will vote your proxy for another candidate or candidates as may be nominated by the board of directors.

Questions and Answers about the Annual meeting and Voting

The board of directors of SPS Commerce, Inc. is soliciting proxies for use at the annual meeting of stockholders to be held on May 18, 2020,19, 2021, and at any adjournment or postponement of the meeting.

At our annual meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting of Stockholders, and management will report on matters of current interest to our stockholders and respond to questions from our stockholders. The matters outlined in the notice include the election of directors, the ratification of the selection of our independent auditor for 2020,2021, and an advisory vote to approve the compensation of our named executive officers, and the approval of an amendment to our Eighth Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock.officers.

Who is entitled to vote at the meeting?

The board of directors has set March 25, 202024, 2021 as the record date for the annual meeting. If you were a stockholder of record at the close of business on March 25, 2020,24, 2021, you are entitled to vote at the meeting. As of the record date, 35,019,09335,861,584 shares of common stock, representing all of our voting stock, were issued and outstanding and, therefore, eligible to vote at the meeting.

What are my voting rights?

Holders of our common stock are entitled to one vote per share. Therefore, a total of 35,019,09335,861,584 votes are entitled to be cast at the meeting. There is no cumulative voting.

How many shares must be present to hold the meeting?

In accordance with our bylaws, shares equal to a majority of the voting power of the outstanding shares of common stock entitled to vote generally in the election of directors as of the record date must be present at the annual meeting in order to hold the meeting and conduct business. This is called a quorum. Shares are counted as present at the meeting if:

What is the difference between a stockholder of record and a “street name” holder?

If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares, while you are considered the beneficial owner of those shares. In that case, your shares are said to be held in “street name.” Street name holders generally cannot vote their shares directly and must instead instruct the broker, bank, trust, or other nominee how to vote their shares using the method described below under “How do I submit my proxy?”

How can I attend the meeting?

All of our stockholders are invited to attend the annual meeting. You may be askedmeeting virtually. The meeting is not being held in person due to present valid photo identification, suchpublic health and travel impacts of the coronavirus (COVID-19) pandemic. In addition, we believe that hosting the meeting online enables increased attendance and participation from locations around the world. The meeting has been designed to provide the same rights to participate as a driver’s license or passport, before being admitted to theyou would have at an in-person meeting. If you hold your shares in

street name,What do I need to attend the meeting?

We will be hosting our meeting via live webcast. Stockholders can attend the meeting online at: www.virtualshareholdermeeting.com/SPSC2021. The webcast will begin at 8:00 a.m., Central Time. We encourage you alsoto access the meeting prior to the start time. In order to participate in the meeting, you will need the 16-digit control number located on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. A replay of the meeting will be publicly available on the Investor Relations page of our website for at least 30 days after the meeting.

How can I submit a question at the meeting?

If you would like to submit a question at the meeting, you may type your question into the dialog box provided at any point during the virtual meeting (until the floor is closed to questions). In order to allow us to answer questions from as many stockholders as possible, we limit each stockholder to one question. Questions and answers may be askedgrouped by topic and substantially similar questions may be answered at once. If we do not have time to present proofanswer all the appropriate questions that have been submitted, we expect to post any additional questions and our answers on the Investor Relations page of ownership toour website promptly following the meeting and retain them for 30 days after the meeting.

What if I have technical difficulties or trouble accessing the meeting?

If you encounter any technical difficulties with accessing the virtual meeting, please call the technical support number that will be admitted toposted on the meeting. A brokerage statement or letter from your broker, bank, trust or other nominee are examples of proof of ownership.meeting website log-in page.

What is a proxy?

It is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. We refer to this as your “proxy vote.” Two executive officers have been designated as proxies for our 20202021 annual meeting of stockholders. These executive officers are Archie C. Black and Kimberly K. Nelson.

If I received a one-page Notice of Internet Availability of Proxy Materials, how can I receive a full set of printed proxy materials?

As permitted by SEC rules, we have elected to provide access to our proxy materials over the Internetinternet to record owners and any beneficial owners of our stock who have not previously requested printed proxy materials, which reduces our costs and the environmental impact of our annual meeting. The Notice of Availability contains instructions on how to request a printed set of proxy materials, which we will provide to stockholders upon request at no cost to the requesting stockholder within three business days after receiving the request. If you would like to request a printed set of proxy materials, please make your request on or before May 4, 20205, 2021 to facilitate timely delivery.

How do I submit my proxy?

If you are a stockholder of record, you can submit a proxy to be voted at the meeting in any of the following ways:

To vote by telephone or the internet, you will need to use a control number that was provided to you by our vote tabulator, Broadridge Financial Solutions, and then follow the additional steps when prompted. The steps have been designed to authenticate your identity, allow you to give voting instructions, and confirm that those instructions have been recorded properly. If you hold your shares in street name, you must vote your shares in the manner prescribed by your broker, bank, trust, or other nominee, which is similar to the voting procedures for stockholders of record. If you request the proxy materials by mail after receiving a Notice of Internet Availability of Proxy Material, you will receive a voting instruction form (not a proxy card) to use in directing the broker, bank, trust, or other nominee how to vote your shares.

What does it mean if I receive more than one printed set of proxy materials?

If you receive more than one Notice of Internet Availability of Proxy Materials or printed set of proxy materials, it means that you hold shares registered in more than one account. To ensure that all of your shares are voted, vote once for each control number you receive as described above under “How do I submit my proxy?”

Who pays for the cost of proxy preparation and solicitation?

SPS Commerce pays for the cost of proxy preparation and solicitation, including the reasonable charges and expenses of brokerage firms, banks, trusts or other nominees for forwarding proxy materials to street name holders. We are soliciting proxies by mail. In addition, our directors, officers, and regular employees may solicit proxies

5

personally, telephonically, electronically or by other means of communication. Our directors, officers and regular employees will receive no additional compensation for their services other than their regular compensation.

How do I vote?

See the “How to Vote” section earlier in this document for instructions on the different options on how to vote.

How does the board of directors recommend that I vote?

The board of directors recommends a vote:

What if I do not specify how I want my shares voted?

If you are a stockholder of record and submit a signed proxy card or submit your proxy by internet or telephone but do not specify how you want to vote your shares on a particular matter, we will vote your shares as follows:

Your vote is important. We urge you to vote, or to instruct your broker, bank, trust, or other nominee how to vote, on all matters before the annual meeting. If you are a street name holder and fail to instruct the stockholder of record how you want to vote your shares on a particular matter, those shares are considered to be “uninstructed.” New York Stock Exchange rules determine the circumstances under which member brokers of the New York Stock Exchange may exercise discretion to vote “uninstructed” shares held by them on behalf of their clients who are

street name holders. Other than the ratification of the selection of KPMG as our independent auditor for the year ending December 31, 2020 and the approval of the amendment to our Eighth Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock,2021, the rules do not permit member brokers to exercise voting discretion as to the uninstructed shares on any matter included in the notice of meeting. With respect to the ratification of the selection of KPMG as our independent auditor for the year ending December 31, 2020 and the approval of the amendment to our Eighth Amended and Restated Certificate of Incorporation,2021, the rules permit member brokers to exercise voting discretion as to the uninstructed shares. For matters with respect to which the broker, bank or other nominee does not have voting discretion or has, but does not exercise, voting discretion, the uninstructed shares will be referred to as a “broker non-vote.” For more information regarding the effect of broker non-votes on the outcome of the vote, see below under “How are votes counted?”

Can I change my vote after submitting my proxy?

Yes. You may revoke your proxy and change your vote at any time before your proxy is voted at the annual meeting, in any of the following ways:

Publicly traded software and technology company

Publicly traded accounting and ERP software provider

Publicly traded automated tax compliance software company was acquired by Microsoft Corporation. Since 2018, Ms. Reller has served as Chairwoman

Primary Nominee Qualifications

Ms. Reller’s qualifications to serve on our board of directors include, among other skills and qualifications, her extensiveExtensive experience steering and managing software companies, her capabilities in financial understanding and auditing review, and her general business knowledge.

Philip E. Soran

Lead Director, Piper Sandler Companies; Director, Foodsby; Director, Spineology; Director, Claros Technologies

Professional Highlights

Publicly traded investment bank and asset management firm on the board of directors for Foodsby, a privately-held food delivery service, on the board of directors of Spineology, a private medical technology company, and on the board of Claros Technologies, Inc., a private advanced materials and environmental company. Mr. Soran was the Executive Chairman and co-founder of

Co-founded education technology software company from 2015 until its sale to Microsoft in 2018. Mr. Soran served as President, Chief Executive Officer, and a director of

Co-founded publicly traded software company which he co-founded in 2002, until its acquisition by Dell Inc. in 2011, after which he served as the President of Dell Compellent from 2011 to 2012. He previously served on the board of directors of Help Systems, LLC, a privately-held software company, from 2012 until its sale in 2018. From 1995 to 2001, Mr. Soran served as President,

Co-founded network storage business

Manufacturing company; publicly traded at the time of director role

Primary Nominee Qualifications

Mr. Soran’s qualifications to serve on our board of directors include, among other skills and qualifications, his experienceExperience as a chief executive officer of a publicly traded company, service on a variety of public and private technology-related company boards, and his experience in founding and building technology companies as well as his corporate vision and operational knowledge, which provide strategic guidance to the board.knowledge.

Sven A. Wehrwein

Independent financial consultant to emerging companies

11

Anne Sempowski Ward

Professional Highlights

Consumer goods provider

Co-founded business consulting group

Media and beauty company

Publicly traded multinational consumer goods provider

Publicly traded multinational consumer goods provider

Mr.Primary Nominee Qualifications

Experience as a chief executive officer and brand builder in the high-growth consumer and retail environment.

Sven Wehrwein has been an independent

Professional Highlights

Primary Nominee Qualifications

Mr. Wehrwein’s qualifications to serve on our board of directors include, among other skills and qualifications, his capabilitiesCapabilities in financial understanding, strategic planning, and auditing expertise, given his experiences in investment banking and in financial leadership positions.                           As chairman of the audit committee, Mr. Wehrwein also keeps the board abreast of current audit issues and collaborates with our independent auditors and senior management team.

INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

The board of directors conducts its business through meetings of the board and the followingestablished standing committees: audit, compensation, governance and nominating, and finance and strategy.committees. Each of the standing committees has adopted and operates under a written charter, all of which are available on our website at www.spscommerce.com. We have adopted a code of business conduct and ethics relating to the conduct of our business by our directors, officers, and employees, which is posted on our website at www.spscommerce.com. Our Corporate Governance Guidelines are also available on our website.

Director Independence

As required under the Nasdaq Global Market rules and regulations, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board. The board of directors consults with our counsel to ensure that the board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the Nasdaq Global Market, as in effect from time to time.

Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and our Company, our management and our independent registered public accounting firm, the board of directors has affirmatively determined that all of our Company’s directors are independent directors within the meaning of the applicable listing standards of the Nasdaq Global Market, except for Mr. Black, our current President and Chief Executive Officer.

As required under the Nasdaq Global Market rules and regulations, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. All of the committees of our board of directors are comprised entirely of directors determined by the board to be independent within the meaning of the Nasdaq Global Market rules and regulations.

Board Leadership Structure

Tami Reller, a non-employee independent director, has served as chair of our board of directors since May 2018, while Mr.Archie Black serves as our President and Chief Executive Officer. Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the chair of the board to lead the board in its fundamental role of providing advice to, and independent oversight of, management. The board of directors recognizes the time, effort, and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our board chair. Our Corporate Governance Guidelines require our board chair and Chief Executive Officer positions to be separate because the board of directors believes that having separate positions and having an independent director serve as chair of the board is the appropriate leadership structure for us and demonstrates our commitment to good corporate governance.

Board Involvement in Risk Oversight

Our management is responsible for identifying the various risks facing us, formulating risk management policies and procedures, and managing our risk exposures on a day-to-day basis. The board of directors’ responsibility is to monitor our risk management processes by informing itself concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks; the board is not responsible, however, for identifying or managing our various risks. The audit committee is primarily responsible for monitoring management’s responsibility in the area of financial risk oversight and the board of directors is primarily responsible for monitoring management’s responsibility in our other areas of risk management. Accordingly, management regularly reported to the audit committee and the board of directors on risk management during 2019. The audit committee, in turn, reports on the matters discussed at the committee level to the full board. The audit committee and the full board focus on the material risks facing us, including financial, operational, market, credit, liquidity, legal and regulatory risks, to assess whether management has reasonable controls in place

13

to address these risks. In addition, the compensation committee is charged with reviewing and discussing with management whether our compensation arrangements are administered consistent with effective internal controls and sound risk management. The board of directors believes this division of responsibilities provides an effective and efficient approach for addressing risk management.

Board Committees

The board of directors has established an audit committee,Audit Committee, a compensation committee,Compensation & Talent Committee, a governance and nominating committeeGovernance & Nominating Committee and a finance and strategy committee.Finance & Strategy Committee. The following sets forth the membership of each of our committees as of March 25, 2020.24, 2021.

The primary responsibilities of each board committee are discussed in turn below.

Audit Committee

Among other matters, our audit committee:Audit Committee:

Each of the members of our audit committeeAudit Committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq Global Market. Our board of directors has determined that Mr. Wehrwein is an audit committeeAudit Committee financial expert, as defined under the applicable rules of the SEC. Each member of our audit committeeAudit Committee satisfies the Nasdaq Global Market independence standards and the independence standards of Rule 10A-3(b)(1) of the Securities Exchange Act.

14Compensation & Talent Committee

Among other matters, our Compensation Committee& Talent Committee:

In 2021, the committee expanded its responsibilities to include its oversight of the talent programs and initiatives impacting our people.

Governance and& Nominating Committee

Our governance and nominating committeeGovernance & Nominating Committee identifies individuals qualified to become members of the board of directors, recommends individuals to the board for nomination as members of the board and board committees and oversees the evaluation of our board of directors.

Finance and& Strategy Committee

Our finance committee was formed in August 2018 to assistFinance & Strategy Committee assists the board of directors in matters involving certain finance and strategic matters, including reviewing and monitoring the management of capital, reviewing dividend and share repurchase policies and practices, and reviewing proposed merger, recapitalization, financing and other similar transactions.

Meeting AttendanceAttendance

Our Corporate Governance Guidelines provide that our directors are expected to attend meetings of the board of directors and of the committees on which they serve, as well as our annual meeting of stockholders. Our board of directors held tenthe following meetings during 2019. Our audit committee met nine times, our compensation committee met nine times, our governance and nominating committee met seven times, and our finance and strategy committee met six times. 2020.

Each of our directors attended at least 75% of the meetings of the board of directors and the committees on which he or she served during 2019,2020, and each of our directors whose service would be continuing after the meeting, attended our 20192020 annual meeting.  

Board Involvement in Risk Oversight

Our management is responsible for identifying the various risks facing us, formulating risk management policies and procedures, and managing our risk exposures on a day-to-day basis. The board of directors’ responsibility is to monitor our risk management processes by informing itself concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks; the board is not responsible, however, for identifying or managing our various risks. The Audit Committee is primarily responsible for monitoring management’s responsibility in the area of financial risk oversight and the board of directors is primarily responsible for monitoring management’s responsibility in our other areas of risk management. Accordingly, management regularly reported to the Audit Committee and the board of directors on risk management during 2020. The Audit Committee, in turn, reports on the matters discussed at the committee level to the full board. The Audit Committee and the full board focus on the material risks facing us, including financial, operational, market, credit, liquidity, legal and regulatory risks, to assess whether management has reasonable controls in place to address these risks. In addition, the Compensation & Talent Committee is charged with reviewing and discussing with management whether our compensation arrangements are administered consistent with effective internal controls and sound risk management. The board of directors believes this division of responsibilities provides an effective and efficient approach for addressing risk management.

Procedures for Contacting the Company, including the Board of Directors

Throughout this proxy statement, we identify reasons stockholders may need or wish to contact the Company.  All of those communications should be directed to the title of the person indicated at the address below.

Stockholders who wish to communicate with the board of directors may do so by writing to the board or a particular director in care of the Secretary of the company.Company. Communications should be addressed to to:

SPS Commerce, Inc.,

Attention: Secretary

333 South Seventh Street, Suite 1000

Minneapolis, Minnesota 55402. 55402

All communications addressed to the board will initially be received and processed by the Secretary of the company,Company, who will then refer the communication to the appropriate board member (either the director named in the communication, the chairperson of the board committee having authority over the matter raised in the communication, or the chairperson of the board in all other cases). The director to whom a communication is referred will determine, in consultation with our counsel, whether a copy or summary of the communication will be provided to the other directors. The board of directors will respond to communications if and as appropriate.

Director Independence

As required under the Nasdaq Global Market rules and regulations, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board. The board of directors consults with our counsel to ensure that the board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the Nasdaq Global Market, as in effect from time to time.

In assessing Ms. Ward’s independence, the board of directors considered that Ms. Ward is the Chief Executive Officer of a company that purchases services in the ordinary course of business from our Company. The board considered that Ms. Ward is not personally involved in the relationship between her employer and our Company, the contract was at terms commensurate with other customers, and contract amount is overall insignificant for each company, including representing less than 1% of our revenue.

Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and our Company, our management and our independent registered public accounting firm, the board of directors has affirmatively determined that all of our Company’s directors are independent directors within the meaning of the applicable listing standards of the Nasdaq Global Market, except for Mr. Black, our current President and Chief Executive Officer.

As required under the Nasdaq Global Market rules and regulations, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. All of the committees of our board of directors are comprised entirely of directors determined by the board to be independent within the meaning of the Nasdaq Global Market rules and regulations.

Hedging, Pledging and Other Restricted Transactions

Our directors, consistent with all of our employees and Section 16 officers, are prohibited from engaging in the following transactions with respect to our securities:

Procedures for Selecting and Nominating Director Candidates

Stockholders may directly nominate a person for election to our board of directors by complying with the procedures set forth in Article II, Section 2.4(a)(2) of our bylaws, and with the rules and regulations of the SEC. Under our bylaws, only persons nominated in accordance with the procedures set forth in the bylaws will be eligible to serve as directors. In order to nominate a candidate for service as a director, you must be a stockholder at the time you give the board notice of your nomination, and you must be entitled to vote for the election of directors at the meeting at which your nominee will be considered. In accordance with our bylaws, director nominations generally must be made pursuant to notice delivered to, or mailed and received at, our principal executive offices at the address above, not later than the 90th day (February 17, 2021)18, 2022), nor earlier than the 120th day (January 18, 2021)19, 2022), prior to the first anniversary of the prior year’s annual meeting of stockholders. Your notice must set forth all

15

information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).

Your notice also must set forth the following information for you and any beneficial owner on whose behalf you make a nomination: (i) the name and address of the stockholder, as they appear on our books; (ii) the class and

number of shares of our capital stock which are owned beneficially and of record, as well as a description of all securities or contracts, with a value derived in whole or in part from the value of any shares of our capital stock, held by you and such beneficial owner or to which either is a party; (iii) a description of all arrangements or understandings between you and any such beneficial owner and any other person or persons (including their names) regarding the nomination; (iv) a representation that you intend to appear in personat the meeting, or by proxy at the meetingthereto, to nominate the persons named in your notice; and (v) a description of any other information relating to you and any such beneficial owner that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies pursuant to Regulation 14A under the Securities Exchange Act of 1934.

As required by our Corporate Governance Guidelines, when evaluating the appropriate characteristics of candidates for service as a director, the governance and nominating committeeGovernance & Nominating Committee takes into account many factors. The board of directors selects and recommends to stockholders qualified individuals who, if added to the board, would provide the mix of director characteristics and diverse experiences, perspectives and skills appropriate for us. Board candidates are considered based on various criteria, including breadth and depth of relevant business and board skills and experiences, judgment and integrity, reputation in their profession, diversity of background, education, leadership ability, concern for the interests of stockholders and relevant regulatory guidelines. These considerations are made in the context of an assessment of the perceived needs of the board of directors at the particular point in time. We do not have a formal policy with respect to diversity, however, the board of directors seeks to have a board that represents diversity as to gender, race, ethnicity, and background experiences. We are committed to inclusiveness and as such, when searching for director nominees, the governance and nominating committeeGovernance & Nominating Committee endeavors to include highly qualified diverse candidates (including gender, race, and ethnicity) in the pool from which nominees are chosen. Directors must be willing and able to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on the board for an extended period of time.

The governance and nominating committeeGovernance & Nominating Committee will consider director candidates recommended by stockholders in the same manner that it considers all director candidates. Stockholders who wish to suggest qualified candidates should write to SPS Commerce, Inc., 333 South Seventh Street, Suite 1000, Minneapolis, Minnesota 55402, Attention:the Company at the address listed above, to the attention of our Chief Financial Officer, stating in detail the characteristics that make the candidate a suitable person to serve on our board of directors in light of our Corporate Governance Guidelines.

Hedging, Pledging and Other Restricted Transactions

Our employees, including directors and Section 16 officers, are prohibited from engaging in the following transactions with respect to our securities:

Director Compensation

Our director compensation program is designed to compensate our non-employee directors fairly for work required for a company of our size and scope and to align their interests with the long-term interests of our stockholders. Director compensation reflects our desire to attract, retain and use the expertise of highly qualified individuals serving on our board of directors. The compensation committeeCompensation & Talent Committee periodically reviews the compensation

16

arrangements for our non-employee directors and makes recommendations to our board of directors. In May 2019,2020, the compensation committee,Compensation & Talent Committee, with the advice of its compensation consultant, conducted a review of our director compensation program. This review analyzed the structure and the overall level and mix of compensation delivered by our director compensation program as compared to our peer group. Following this review, the compensation & talent committee recommended, and the Boardboard approved, changes to our director compensation program as described below.

For 2019,2020, our director compensation program provided that each non-employee director receivereceives a total grant of $170,000 (consistent with the 2019 program). The compensation is split equally ($85,000) between stock option to purchase up to $85,000options and at the election of shares of our commonthe director, restricted stock and/or deferred stock units. The components are granted on the date of the annual meeting of stockholders, at which the director was elected to the board, calculated as the grant date fair value of the option computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“ASC Topic 718”). These awardsAll grants vest in four equal installments on the last day of each fiscal quarter with the first vesting date occurring on June 30, 2019,2020, provided the recipient remains a member of the board as of the vesting date, anddate. Stock options have an exercise price equal to the fair market value of our common stock on the date of grant in accordance with our 2010 Equity Incentive Plan. The $85,000 option grant in 2019 reflects an increase over the $68,000 option granted awarded to non-employee directors during 2018. Prior to December 2019, each non-employee director also received an initial stock option grant to purchase up to $111,000 of shares of our common stock in connection with initial appointment to the board.

Our director compensation program for 2019 also provided that each non-employee director receive an award of up to $85,000 in restricted stock or deferred stock units (or some combination of two), at the director’s election, on the date of the annual meeting of stockholders at which the director was elected to the board, calculated as the grant date fair value of the award computed in accordance with FASB ASC Topic 718. These awards vest in four equal installments on the last day of each fiscal quarter with the first vesting date occurring on June 30, 2019, provided the recipient remains a member of the board as of the vesting date. The deferredgrant. Deferred stock units must be retained until completion of the director’s service on the board, and upon completion of such service, convert into an equal number of shares of our common stock. A director may defer receipt of the shares for up to ten years after completion of service. The $85,000 award

Additionally, each new non-employee director also receives an initial stock option grant to purchase up to $170,000 of restrictedshares of our common stock and/or deferred stock units in 2019 reflects an increase overconnection with initial appointment to the $68,000 restricted stock awardboard, to be granted to non-employee directors during 2018.following the release of earnings for the quarter in which appointment occurs.

Non-employee directors receive cash fees in addition to the equity awards described above. In 2019,2020, each non-employee director received an annualwas paid the following cash retainer of $31,000 (no change from 2018) and the chair of our board of directors received an annual cash retainer of $53,500 ($5,500 increase from 2018). In addition, the annual cash fee paid to the chair of each committee was as follows: 

retainers for roles served:

The annual cash fee for each committee member, other than the chair, was as follows:

We also reimbursed our non-employee directors for out-of-pocket expenses incurred in connection with attending our board and committee meetings.

17The table below sets forth the compensation provided to our non-employee directors during 2020.

2020 Director Compensation Table

Under our stock ownership guidelines, adopted in February 2019, we require our non-employee directors to achieve ownership ofown shares of our common stock (excluding unvested equity awards but including vested in-the-money options and vested restricted stock units) having a fair market value equal to five times the directors’ annual base cash retainer.retainer ($155,000 for 2020). Non-employee directors must comply with the stock ownership guidelines within five years of their appointment to the board of directors. Until a non-employee director has achieved compliance with the ownership guidelines, the director must retain 50% of the net shares acquired upon exercise, vesting or settlement of any equity award. As of March 25, 2020,24, 2021, all of our non-employee directors had met the stock ownership requirement or had served as a director for less than five years since the ownership guidelines took effect.

The table below sets forthAs of December 31, 2020, the compensation provideddirectors held shares of unvested restricted stock, options to purchase shares of our non-employee directors during 2019. Mr. Black’s compensation is set forth under “2019 Summary Compensation Table” because he servedcommon stock, and vested options as our President and Chief Executive Officer during that year. Mr. Black did not receive any separate compensation for his service as a director.follows:

2019 Director Compensation Table

18

The following is a discussion and analysis of compensation arrangements of our named executive officers for 2019. Named Executive Officers

Our named executive officers for 2019 were:2020 were the following (unchanged from 2019):

Executive Summary

As reflectedIn 2020, the Compensation & Talent Committee took the following actions with respect to the compensation of our named executive officers:

Each of the primary elements of our executive compensation program is discussed in more detail below. See the chart below for the proportion of fixed and at-risk components of named executive officer compensation during 2020, including a further breakout of what components made up at-risk compensation.

Compensation Objectives and Process

Historically and in 2020, our Compensation & Talent Committee (referred to in this Compensation Discussion and Analysis section as the “Committee”) has determined all elements of compensation for our named executive officers. Generally, prior to making its compensation determinations, our Chief Executive Officer provides his review of our other named executive officers to the Committee. Our Committee engages Compensia, Inc., a national independent compensation consultant, to help evaluate our compensation philosophy weand provide guidance in administering our compensation program. Our Committee has determined that Compensia is independent and the services provided by Compensia do not raise any conflict of interests.

We set the compensation of our executive officers, including our named executive officers, based on their ability to create sustainable long-term stockholder value in a cost-effective manner. Our executive compensation philosophy is to align executive compensation decisions with our desired business direction, strategy, and performance. The primary objectives and priorities of our executive compensation program are the following:

To achieve these objectives, we have designed an executive compensation program that is significantly weighted towards long-term goals. This approach aids us in the retention of executive officers and assures that the interests of our executive officers and stockholders are aligned. WhileWe provide compensation to our named executive officers through a combination of base salary, incentive compensation and equity awards (RSUs and PSUs under our 2010 Equity Incentive Plan).While our program emphasizes performance-basedat-risk, performance and equity-based compensation as a percentage of total directcompared to fixed compensation (base salary and annual and long-term incentives)salary), we do not have specific policies governing the allocation of the target total direct compensation opportunity among its various components.components or overall amounts.

Each of the primary elements of our executive compensation program is discussed in more detail below. While we have identified particular compensation objectives that each element of executive compensation serves, our compensation program is designed to be flexible and complementary and to collectively serve all of the executive compensation objectives described above. Accordingly, whether or not specifically mentioned below, we believe that as a part of our overall executive compensation policy, each individual element, to a greater or lesser extent, serves each of our objectives.

Say-on-Pay

Our compensation committeeCommittee considers the results of the stockholders’ advisory vote on the compensation of our named executive officers. At our 20192020 Annual Meeting of Stockholders, our say-on-pay proposal received “for”“FOR” votes that represented approximately 90.5%94.6% of the shares voted on this proposal. The compensation committeeCommittee considered the results of the say-on-pay vote when evaluating our compensation practices and policies in 2019 and when setting the compensation of our named executive officers for 2020 and decided not to make any significant changes to our executive compensation program. The compensation committeeCommittee believes that the significant support for the 2019prior year say-on-pay proposal demonstrates stockholders’ support of our compensation program, policies, and practices.

19Policies and Practices

In 2019, the compensation committee took the following actions with respect to the compensation of our named executive officers:

In addition to the compensation actions and decisions noted above, weWe maintained the following compensation policies and practices in 2019:2020:

Peer Group

Our compensation committeeCommittee determines executive compensation, in part, by reference to the compensation information for the executives of a peer group of comparable companies. For 2019,2020, our compensation committeeCommittee reviewed an updated version of the formal compensation study and executive compensation market assessment prepared in 20182019 by Compensia. The competitive market data used in the Compensia study was gathered from our compensation peer group, which consisted in 2019 of the following US-based technology companies of similar size:  

In comparison to the prior year peers, we replaced three companies. We removed five companiesApptio, Imperva, and added three. Of the five companies removed, two, Broadsoft and Callidus Software, were removedMINDBODY, because they had been acquired. The three other companies removed,acquired and are no longer publicly traded. We added 2U, HubspotAppian, and Stamps.com, were removed because their market capitalization exceeded our selection range, which, at the time had a maximum of $3.3 billion (3.0x our market capitalization at the time of the analysis in May 2018). The three peer companies added were 8x8, Model N and PROS Holdings. These three companies were addedInstructure because they met our selection criteria, including being software companies with trailing four quarter revenue between 50% and 200% of our trailing four quarter revenue (which was $221 million at the time of the review in May 2018) and the market capitalization range of between 33% and 300% of our then current market capitalization.capitalization at the time of review.

Data from the compensation peer group is valuable to the compensation committeeCommittee because it provides insight into competitive pay practices for each of the elements of total compensation as well as confirms the reasonableness of its compensation decisions.

Factors Considered in Compensation Deliberations

The Compensation Committee does not use a single method or measure in setting or approving the target total direct compensation opportunities orfor each individual compensation element for our named executive officers, nor is the weighting of any one factor on the determination of pay components and levels quantifiable in comparison to the other factors. The factors below, which the Compensation Committee considers when selecting and setting the amount of each compensation element for our named executive officers provide a framework for its compensation decision-making:

These factors provide the framework for decision-making by the compensation committeeCommittee with respect to the compensation of each of our named executive officers.

Base Salary

Base salaries are used to recognize the experience, skills, knowledge, and responsibilities required of all our employees, including our named executive officers. BaseInitially at the time of their hire, base salaries for each of our named executive officers arewere established based on arm’s-length negotiations between us and the executive. Our compensation committeeCommittee reviews the base salaries of our named executive officers annually at the beginning of each year. When negotiating or reviewing base salaries, the compensation committeeCommittee considers market competitiveness based on their experience, the executive’s expected future contribution to our success and the relative base salaries and responsibilities of our other executives. Our named executive officers received no base salary increases in 2019.

Annual Cash Bonus – 2019

Management Incentive Plan

Our named executive officers participate in our management incentive plan, which provides them with an opportunity to receive a formula-based cash bonus. The formula-based bonus is intended to motivate our executives to achieve specific financial goals that will drive the growth and success of our business.

The formula-based bonus is based on a target bonus opportunity for each named executive officer established by the compensation committeeCommittee at the beginning of each year. The compensation committeeCommittee established the target bonus opportunity at an amount it believes is necessary to provide a competitive overall compensation package in light of each named executive officer’s base salary and to motivate our executives to achieve an aggressive level of growth. The target bonus opportunity was set at $445,000 for Mr. Black, $260,000 for Ms. Nelson and $270,000 for Mr. Frome. The amount of the formula-based bonus, if any, actually paid to executives after the end of the year is determined by a matrix approved by the compensation committeeCommittee that takes into account our revenues and earnings before interest, taxes, depreciation and amortization and stock-based compensation, and other adjustments (“Adjusted EBITDA”).^1{A}

¹Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.

22

The formula-based bonus is based in part on revenues because, given the scalability of our current core business, the compensation committeeCommittee believes revenue growth has the most significant impact on our financial results are driven most significantly by the revenues we generate.results. The compensation committeeCommittee also believes formula-based bonuses should be based in part on Adjusted EBITDA, because Adjusted EBITDA is a useful measure of our operating performance.

The matrix approved for 20192020 provided that each executive would receive a percentage of his or her target formula-based bonus, between 60%zero and 190%, based on our actual revenues and Adjusted EBITDA performance for the year, with the potential for no payout if performance fell below the threshold levels. For example, to be paid out at the maximum 190% bonus level, we needed to generate $283.65 million in revenue and at least $72.06 million of Adjusted EBITDA. For our named executive officers to earn their target bonuses for 2019, we needed to generate revenues of approximately $278.85 million and Adjusted EBITDA of approximately $66.06 million. If we failed to achieve both threshold levels of revenues of approximately $274.05 million and Adjusted EBITDA of approximately $66.06 million, our named executive officers would not receive a formula-based bonus for the year.

The compensation committeeCommittee had the discretion to adjust the pre-established target levelsthresholds for revenues and Adjusted EBITDA in the event we completed one or moreany acquisitions during the year. The compensation committeeCommittee exercised such discretion for 20192020 and increased the target levelsadjusted thresholds for revenuesboth revenue and Adjusted EBITDA to take into account for the impact of the MAPADOC acquisition during 2019.D Masons Software, LLC (“Data Masons”) acquisition.

The compensation committee establishedCommittee approved the intervals for the matrix with the intent that achieving 100% of an executive’s target bonus will be a difficult but achievable goal in light of the prior year’s results of operations and anticipated growth for 2019. For 2019, we delivered $279.1 million in revenues and $69.8 million of Adjusted EBITDA and therefore exceeded the target levels set under the management incentive plan for revenues and Adjusted EBITDA.2020. As a result of 2020 operating results, the formula-based bonus for each named executive officer was determined to be 122%earned at 74% of the target amount, resultingamount. See below for the summary of the incentive factor thresholds, actual results, and corresponding payouts for 2020:

^{A}Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a reconciliation of this non-GAAP financial measure to the following payouts:corresponding GAAP measure.

Equity Awards

Historically, we have granted our named executive officers stock optionsequity awards. These equity awards reflect the pay levels our Committee believed were appropriate relative to the market data, each executive’s individual performance, and RSUs. In 2017, we also began granting our named executive officers PSUs.maintaining an overall competitive compensation package. We believe equity awards are an important element of compensation because they provide our executives a potential ownership interest in our company,Company, which helps align their interests with those of other stockholders. In the future, we anticipate that equity compensation will remain a significant part of our executive compensation program and will continue to be granted on an annual basis to ensure a continued unvested equity component to the executive compensation package. When determining the size of the equity award for our named executive officers, our compensation committeeCommittee considers the executive’s position and responsibilities, the equity holdings of our other executives, competitive market data, CEOChief Executive Officer recommendations, and the anticipated future contribution the executive will make to our success.

We believe stock options further align the interest of our executives and stockholders because the executives profit from stock options only if our stock price increases relative to the option’s exercise price as our policy is to grant annual stock options with an exercise price equal to the fair market value of our common stock on the date of grant. We believe stock options also help retain our executives because the awards vest over a specific period of time, and vesting depends on the executive’s continued employment with us, or until meeting the requirements for retirement eligible individuals.

RSUs vest over several years and have immediate value to the executives upon vesting, while requiring the executives to maintain continuous employment with us in order See below for the change in mix of equity awards types granted to vest. Typically, our stock options and RSUs vest over a period of four years. named executive officers.

The vesting of the stock options and RSUsgranted equity awards in the event of a termination or change in control is described in more detail below under “Potential Payments Upon Termination or Change in Control.”

RSUs

RSUs generally vest over four years and provide a strong retention component to the compensation program as they require the executives to maintain continuous employment with us in order for the awards to vest.

PSUs

PSUs are earned over a specifiedthree-year performance period depending on the company’sCompany’s performance during such performance period and the award recipient’s continued employment. We believe PSUs further align our executives’ interests with those of our stockholders because the executives profit from PSUs only if certain performance goals

23

are achieved. Consequently, we believe PSUs also help retain our executives. The PSUs awarded in 2017 are earned contingent upon successful attainment of pre-determined revenue goals over the course of a three-year performance period and the award recipient’s continued employment. The PSUs awarded in 2018, 2019, and 20192020 are earned contingent upon successful attainment of pre-determined total shareholder return (“TSR”) targets, relative to Russell 2000 companies (the “Index”) over the course of a three-yearthe performance period and the award recipient’s continued employment.period. The Index was selected because it is a major, broad index of stocks many of which we are a component and many members are similar in size to SPS. The three yearthree-year period was designed to provide a long term performance periodsperiod to align management compensation with long term shareholderstockholder returns. The following table sets forth the TSR targets for PSUs granted to our named executive officers in 2019:2020:

If the company’sCompany’s TSR is greater than the Index TSR but is negative, the percentage of PSUs earned is capped at 100%. If the comparison of the company’sCompany’s TSR against Index TSR falls between the levels specified in the above table, the corresponding PSUs earned will be determined by a linear interpolation. The vesting of

Previous Grant Certification

In 2021, the Committee certified results for 2018 – 2020 performance period for PSUs granted in the event of a termination or change in control is described in more detail below under “Potential Payments Upon Termination or Change in Control.”

At the beginning of each year, our compensation committee grants annual equity awards to our named executive officers. These equity awards to our named executive officers reflect the pay levels our compensation committee believed were appropriate2018. Based on Company TSR achieved relative to the market data, each executive’s individual performance,Index TSR, the maximum threshold was achieved and maintaining an overall competitive compensation package. The following table sets forth certain information regarding grantsthe maximum shares vested in 2021. See below for the calculation of equity based awards to our named executive officers in 2019:

the earned PSUs.

In 2019, the mix of equity awards granted was similar to the mix granted in 2018. In the future, we anticipate that equity compensation, whetherThe earned but unvested shares are included in the form of restricted stock, stock options, RSUs, PSUs or other stock-based awards, will remain a significant part of our executive compensation program and will continue to be granted on an annual basis to ensure a continued unvested equity component to the executive compensation package.“Outstanding Equity Awards at Fiscal Year-End” Table.

Stock Ownership Guidelines

Under our stock ownership guidelines, our chief executive officerChief Executive Officer is required to beneficially own shares of our common stock with a value equal to at least three times his annual base salary, and our other executive officers are required to beneficially own shares of our common stock with a value equal to at least one times his or her annual base salary. AnA named executive officer has five years from the date he or she becomes subject to the ownership guidelines to achieve compliance with the guidelines. Until an executive officer has achieved compliance with the ownership guidelines, the executive must retain 50% of the net shares acquired upon exercise, vesting or settlement of any equity award. Each of our executive officers were in compliance with our stock ownership guidelines as of March 25, 2020.24, 2021.

24

Other Compensation

Perquisites are not a material aspect of our executive compensation program. All of our full-time employees, including our named executive officers, are eligible to participate in our 401(k) plan. Pursuant to our 401(k) plan, employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit and to have the amount of this reduction contributed to our 401(k) plan. In 2019,2020, our 401(k) plan provided that we would match eligible employees’ 401(k) contributions equal to 50% of the employee’s elective deferrals, up to the first 6% of the employee’s pre-tax compensation for each pay period, payable half in cash and half in shares of our common stock.

Severance and Change in Control Benefits

We have entered into employment agreements with each of our named executive officers that require us to provide certain payments and benefits to them in the event of a termination of employment and/or a change in control of the company.Company. We believe that these payments and benefits are necessary to attract and retain our executives to join our companyCompany and that they are in the best interests of the companyCompany and our stockholders because they help assure us that we will have the continued dedication and objectivity of our executives, notwithstanding the possibility or occurrence of a change in control.

Tax Implications

Under Section 162(m) of the Internal Revenue Code (the “Code”) as in effect prior to the enactment of the Tax Cuts and Jobs Act of 2017 (“Tax Reform Act”) in December 2017 generally disallowed a tax deduction to public companies for compensation of more than $1 million paid in any taxable year to each “covered employee,” consisting of the chief executive officer and the three other highest paid executive officers employed at the end of the year (other than the chief financial officer). “Performance-based compensation” was exempt from this deduction limitation if the company met specified requirements set forth in the Code and applicable treasury regulations.

The Tax Reform Act retained the $1 million deduction limit, but repealed the “performance-based compensation” exemption from the deduction limit and expanded the definition of “covered employees,” effective for taxable years beginning after December 31, 2017. Consequently, compensation paid in 2018 and later years to our named executive officers in excess of $1 million is not deductible unless it qualifies for transitional relief applicable to certain binding, written performance-based compensation arrangements that were in place as of November 2, 2017.deductible. The compensation committee intends to continue to comply with the requirements of Section 162(m) as it existed prior to the Tax Reform Act with respect to performance-based compensation in excess of $1 million payable under outstanding awards granted before November 2, 2017 under the 2010 Equity Incentive Plan in order to qualify them for the transitional relief.

The compensation committeeCommittee believes that stockholder interests are best served if its discretion and flexibility in structuring and awarding compensation is not restricted, even though some compensation awards result in non-deductible compensation expenses to the company.Company. Also, our compensation committeeCommittee takes into account whether components of our compensation program may be subject to the penalty tax associated with Section 409A of the Code and aims to structure the elements of compensation to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.

Compensation Committee Report

The committeeCommittee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the board of directors the inclusion of the Compensation Discussion and Analysis in the company’sCompany’s definitive proxy statement and incorporated by reference in the company’sCompany’s Annual Report on Form   10-K.

Compensation & Talent Committee of the Board of Directors of SPS Commerce, Inc.

Philip E. Soran,Marty Reaume, Chair

Philip Soran

James B. Ramsey
Marty M. Reaume

25

20192020 Summary Compensation Table*

The following table provides information regarding the compensation paid to and earned by our named executive officers in 2020, 2019, 2018 and 2017:

2018: