Advisory Vote on Executive Compensation
Our Board recommends that stockholders vote to approve, on an advisory basis, the compensation paid to our Named Executive Officers
("NEOs"), as described in this proxy statement. At our 2015 Annual Meeting, 99% of the shares voted were in favor of the advisory vote on executive compensation. Our Compensation Committee of our
Board evaluates our executive compensation program each year in an effort to ensure it is in line with our stockholders' interests. Our Compensation Committee reviewed our executive compensation
programs based on views obtained through our stockholder outreach program and other market data and, as a result, revised the 2015 long-term equity incentive plan for our NEOs to more closely align
with our Company's three-year business plan.
We
encourage stockholders to take into account the significant changes to our executive compensation program that we have made over the last several years in considering the advisory vote including,
among other things, designing a new, updated compensation philosophy, transitioning to a three-year business plan for our long-term equity incentive plan, enhancing our executive stock ownership
guidelines and our annual stockholder outreach program.
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Business Highlights
In 2015, we achieved record financial results and continued to move our business forward including:*
-
•
-
$580.1 million in non-GAAP revenue, compared to $458.6 million in 2014, an increase of 26%
-
•
-
$356.8 million in non-GAAP gross profit, representing a gross margin of 62%, up from 61% in 2014
-
•
-
$208.1 million in non-GAAP EBITDA, an increase of 34% from $155.1 million in 2014
-
•
-
$310.1 million in Cloud Revenue, compared to $211.7 million in 2014, an increase of 46%
-
•
-
$2.23 non-GAAP diluted earnings per share, an increase of 25% from $1.79 in 2014
-
•
-
Launching our enterprise business to offer secure mobility solutions to enterprise clients, and hiring David Schuette, a seasoned
enterprise executive, to lead this effort.
-
•
-
Entering into strategic partnerships with Verizon for multifactor authentication and identity management and with Goldman Sachs for
secure enterprise mobility technology, in both cases to enhance our enterprise offerings.
-
•
-
Acquiring RazorSight Corporation and certain assets from F-Secure Corporation to expand our product portfolio and global presence.
-
•
-
Extending our agreement with AT&T through 2018.
* These
financial measures are non-GAAP measures and should not be reviewed in isolation or as substitutes for our financial results as reported in accordance with GAAP. Please see
Appendix A for an explanation of and reconciliation of these non-GAAP financial measures to the applicable GAAP financial measures.
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Fiscal 2015 Compensation
The following material decisions were approved by our Compensation Committee regarding the 2015 compensation of our
NEOs:
-
•
-
Adjustments to Base Salary:
In reviewing the base salaries of
Messrs. Waldis and Garcia in early 2015, our Compensation Committee provided salary increases of approximately 3% (representing the median base salary increase). In addition, since the salary
of Ms. Rosenberger was below the competitive range of similarly situated chief financial officers, her salary was increased by 10%. Mr. Rizer's salary was increased by approximately 32%
to reflect his expanded role within our Company.
-
•
-
Performance-based Cash Bonus:
Our 2015 non-GAAP revenue and earnings
before income taxes, depreciation and amortization ("EBITDA") were above the target set by our Board for 2015 but below the maximum threshold. As a result, our NEOs received approximately 129% of
their target cash incentive bonus with respect to the corporate goal portion. Messrs. Waldis, Garcia, Rizer and Ms. Rosenberger received 100%, 90%, 100% and 90%, respectively, of their
target individual component portion. Due to Mr. Schuette joining our Company in August 2015, our Board did not believe it appropriate for his cash incentive bonus to have a corporate component.
Therefore, his cash incentive bonus was based 100% on certain individual objectives, all of which he met and therefore he received 100% of his target cash incentive bonus.
-
•
-
Performance-based Equity:
Since NEOs had previously been eligible for
annual payouts under the old performance-based equity plan, as part of a transition to a three-year plan in 2015, each NEO received a one-time transition award to address the vesting opportunity 'gap'
between the old and new plans. Vesting of this transition award is contingent upon the achievement of certain financial metrics in 2015 and 2016. With respect to the transition shares awarded based on
our financial performance in 2015, our 2015 non-GAAP revenue and EBITDA were above the target set by our Board for 2015 but below the maximum threshold. Our 2015 Cloud Revenue exceeded the maximum
goals set by our Board. As a result, our NEOs whom our Company employed on February 9, 2015 were issued an aggregate of 28,185 restricted shares of our Common Stock, or 10,568 shares more than
the target number of performance-based restricted shares that they were eligible to receive under the 2015-2016 performance-based restricted stock awards based on our 2015 financial performance.
-
•
-
Time-Based Equity:
Our NEOs whom our Company employed on
February 9, 2015 were granted (i) an aggregate of 52,852 time-based restricted shares of our Common Stock and (ii) stock options to purchase an aggregate of 143,951 shares of our
Common Stock.
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|
QUESTIONS & ANSWERS ABOUT THIS PROXY MATERIAL & VOTING
|
-
Q:
-
Why am I receiving these proxy materials?
-
A:
-
Our Board is providing these proxy materials to you in connection with the solicitation of proxies
for use at the Annual Meeting to be held on Tuesday, May 17, 2016 at 10:00 a.m. local time, and at any adjournment or postponement thereof, for the purpose of considering and acting upon
the matters set forth herein. The notice of Annual Meeting, this proxy statement and accompanying form of proxy card are being made available to you on or about April 6, 2016. This proxy
statement includes information that we are required to provide to you under SEC rules and that is designed to assist you in voting your shares.
-
Q:
-
What is included in the proxy materials?
-
A:
-
The
proxy materials include:
-
•
-
This proxy statement for the Annual Meeting;
-
•
-
Our 2015 Annual Report to Stockholders, which consists of our Annual Report on Form 10-K for the year ended December 31,
2015; and
-
•
-
The proxy card or a voting instruction form for the Annual Meeting, if you have requested that the proxy materials be mailed to you.
-
Q:
-
How can I get electronic access to the proxy materials?
-
A:
-
The Company's proxy materials are available at
http://materials.proxyvote.com/87157B
and at
www.synchronoss.com
. Our website
address
is included for reference only. The information contained on our website is not incorporated by reference into this proxy statement.
You
can find directions on how to instruct us to send future proxy materials to you by email at
www.proxyvote.com
. Choosing to receive
future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future
proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy
materials by email will remain in effect until you terminate it.
-
Q:
-
Who can vote at the Annual Meeting?
-
A:
-
Only stockholders of record at the close of business on March 23, 2016 will be entitled to
vote at the Annual Meeting. On this record date, there were 45,204,451 shares of common stock of the Company ("Common Stock") outstanding. All of these outstanding shares are entitled to vote at the
Annual Meeting (one vote per share of Common Stock) in connection with the matters set forth in this Proxy Statement. A list of stockholders entitled to vote at the Annual Meeting will be available
for inspection at Synchronoss' principal executive offices at 200 Crossing Boulevard, Bridgewater, New Jersey for the ten-day period prior to the Annual Meeting.
5
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-
Q:
-
How do I vote at the Annual Meeting?
A:
Stockholder of Record;
Shares Registered in Your Name
If
on March 23, 2016 your shares were registered in your name with the Company's transfer agent, American Stock Transfer & Trust Company, then you are a stockholder of record and may
vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy on the Internet or via telephone as instructed below or submit
your proxy card, if you have requested one, to ensure your vote is counted.
Beneficial Owner; Shares Registered in the Name of a Broker or Bank
If on March 23, 2016 your shares were held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the
beneficial owner of shares held in "street name" and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of
record for purposes of voting at the Annual Meeting. As a beneficial owner, you may direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the
Annual Meeting, provided you have proof of your share ownership (such as a brokerage statement showing that you owned shares as of March 23, 2016) and a form of photo identification. However,
since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the Annual Meeting or by one of the following
methods:
-
•
-
By Internet
— You may vote by proxy via the Internet at
www.proxyvote.com
by following the instructions provided
in the
Please
note that the Internet and telephone voting facilities for stockholders of record is available 24 hours a day and will close at 11:59 p.m., Eastern Time on May 16, 2016.
The individuals named as proxies will vote your shares in accordance with your instructions.
We provide Internet proxy voting to allow you to vote your shares on-line, with procedures designed to ensure the authenticity and correctness of your proxy vote. However,
please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received instructions for
granting proxies with these proxy materials from that organization rather than from the Company. A number of brokers and banks participate in a program provided through Broadridge Financial Services
which enables beneficial holders to grant proxies to vote shares via telephone or the Internet. If your shares are held by a broker or bank that participates in the Broadridge program, you may grant a
proxy to vote
6
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those
shares telephonically by calling the telephone number on the instructions received from your broker or bank, or via the Internet at Broadridge's website at
www.proxyvote.com
. To vote in person at the
Annual Meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the
instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.
-
Q.
-
How many votes do I have?
-
A.
-
On each matter to be voted upon, you have one vote for each share of Common Stock you own as of
March 23, 2016.
-
Q.
-
What if I do not make specific voting
selections?
-
A.
-
Stockholder
of record
— If you are a stockholder of record and you:
-
•
-
Indicate when voting on the Internet or by telephone that you wish to vote as recommended by our Board of Directors; or
-
•
-
Sign and return a proxy card without giving specific voting instructions,
then
your shares will be voted
"For"
the election of James M. McCormick and Donnie M. Moore as members of the Company's Board of Directors,
"For"
the
ratification of Ernst & Young LLP as the Company's independent registered public accounting firm for its fiscal year ending
December 31, 2016, and "
For
" the approval of the compensation of the Company's named executive officers. If any other matter is properly
presented at the Annual Meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
Beneficial owners
— If you are a beneficial owner of shares held in street name and do not provide the organization that holds your
shares
with specific voting instructions then, under applicable rules, the organization that holds your shares may generally vote on "routine" matters but cannot vote on "non-routine" matters. If the
organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the inspector of election that it does not
have the authority to vote on any matter other than Proposal 2 with respect to your shares. This is generally referred to as a "broker non-vote."
-
Q.
-
Can I change my vote after submitting my proxy?
-
A.
-
Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are
the record holder of your shares, you may revoke your proxy in any one of three ways:
-
•
-
You may change your vote using the Internet or telephone methods described above prior to 11:59 p.m., Eastern Time on
May 16, 2016, in which case only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted.
-
•
-
You may submit another properly completed timely proxy card with a later date.
-
•
-
You may send a written notice that you are revoking your proxy to the Company's Secretary at 200 Crossing Boulevard,
Bridgewater, New Jersey 08807.
-
•
-
You may attend the Annual Meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.
If
you are a beneficial owner of your shares, you must contact the broker, bank or other agent holding your shares and follow their instructions for changing your vote.
7
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-
Q.
-
Who is paying for this proxy solicitation?
-
A.
-
The Company will pay for the entire cost of soliciting proxies. In addition to the proxy
materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for
soliciting proxies. The Company may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials.
-
Q:
-
Why did I receive a notice regarding the availability of proxy materials on the Internet instead of a full set of proxy
materials?
-
A:
-
In accordance with the rules of Securities and Exchange Commission (SEC), we have elected to
furnish our proxy materials, including this proxy statement and our annual report to our stockholders, primarily via the Internet. Beginning on or about April 6, 2016, we mailed to our
stockholders a "Notice of Internet Availability of Proxy Materials" that contains notice of the Annual Meeting and instructions on how to access our proxy materials on the Internet, how to vote at the
meeting, and how to request printed copies of the proxy materials and annual report. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mail
by following the instructions contained at
http://materials.proxyvote.com/87157B
. We encourage stockholders to take advantage of the availability of the
proxy materials on the Internet to help reduce the environmental impact of our annual meetings.
-
Q:
-
What does it mean if multiple members of my household are stockholders but we only received one Notice or full set of proxy
materials in the mail?
-
A:
-
We have adopted a procedure called "householding," which the SEC has approved. Under this
procedure, we deliver a
single
copy of the Notice and, if applicable, the proxy materials to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders.
This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written
request, we will deliver promptly a separate copy of the Notice and, if applicable, the proxy materials to any stockholder at a shared address to which we delivered a single copy of any of these
documents. To receive a separate copy of the Notice and, if applicable, the proxy materials, stockholders should send their requests to our principal executive offices, Attention: Corporate Secretary.
Stockholders who hold shares in street name (as described below) may contact their brokerage firm, bank, broker-dealer, or other similar organization to request information about householding.
-
Q.
-
How are votes counted?
-
A.
-
Each share of Common Stock is entitled to one vote. Votes will be counted by the inspector of
election appointed for the Annual Meeting. Prior to the Annual Meeting, the inspector will sign an oath to perform his or her duties in an impartial manner and according to the best of his or her
ability. The inspector will determine the number of shares of Common Stock represented at the Annual Meeting and the validity of proxies and ballots, count all votes and ballots, and perform certain
other duties. The determination of the inspector as to the validity of proxies will be final and binding.
-
Q.
-
What vote
is required to approve each proposal?
-
•
-
The directors are elected by a plurality of the votes cast at the Annual Meeting, meaning the nominees receiving the most
8
Table of Contents
-
-
"For"
votes (among votes properly cast in person or by proxy) will be elected. An instruction to "Withhold" authority to vote for a nominee will
result in the nominee receiving fewer votes, but will not count as a vote against the nominee. If you do not instruct your broker how to vote with respect to this item, your broker may not vote with
respect to this proposal. Abstentions and "broker non-votes" (i.e., shares held by a broker or nominee that are represented at the Annual Meeting, but with respect to which such broker or
nominee is not instructed to vote on a particular proposal and does not have discretionary voting power) will have no effect on the election of a nominee. Because this proposal is a non-routine
matter, broker non-votes are expected to exist in connection with this proposal.
-
•
-
Ratification of the appointment by our Board of Directors of Ernst & Young LLP as the Company's independent registered
public accounting firm for our fiscal year ending December 31, 2016, requires a "For" vote from the majority of all of the outstanding shares that are present in person or represented by proxy
and cast affirmatively or negatively at the Annual Meeting. Abstentions and broker non-votes will not be counted "For" or "Against" this proposal and will have no effect on this proposal. Because this
proposal is a routine matter, broker non-votes are not expected to exist in connection with this proposal.
-
•
-
Advisory approval of the compensation of the Company's named executive officers as described in the Proxy Statement requires a "For"
vote from the majority of all of the outstanding shares that are present in person or represented by proxy and cast affirmatively or negatively at the Annual Meeting. Abstentions and broker non-votes
will not be counted "For" or "Against" this proposal and will have no
effect
on this proposal. Even though your vote is advisory and therefore will not be binding on the Company, our Compensation Committee will review the voting results and take them into consideration
when making future executive compensation decisions. Because this proposal is a non-routine matter, broker non-votes are expected to exist in connection with this proposal.
If
there are insufficient votes to approve any of the matters, your proxy may be voted by the persons named in the proxy to adjourn the Annual Meeting in order to solicit additional proxies in favor
of the approval of such proposal(s). If the Annual Meeting is adjourned for any reason, at any subsequent reconvening of the meeting, your proxy will be voted in the same manner as it would have been
voted at the original Annual Meeting unless you revoke or withdraw your proxy. Your proxy may be voted in this manner even though it may have been voted on the same or any other matter at a previous
session of the Annual Meeting.
-
Q.
-
Is my vote confidential?
-
A.
-
Proxies, ballots and voting tabulations are handled on a confidential basis to protect your voting
privacy. This information will not be disclosed, except as required by law.
-
Q.
-
What is the quorum requirement?
-
A.
-
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a
majority of the voting power of all outstanding shares is represented by stockholders present at the Annual Meeting or by proxy. On the record date, there were 45,204,451 shares of Common Stock
outstanding and entitled to vote. Thus, 22,602,226 shares must be represented by stockholders present at the Annual Meeting or by proxy to have a quorum. Your shares will be counted towards the quorum
only if you submit a valid proxy vote (or one is submitted on your behalf by your broker, bank or other agent) or vote at the Annual Meeting. Abstentions and broker non-votes will be counted towards
the quorum requirement.
9
Table of Contents
-
Q.
-
How can I find out the results of the voting at the Annual
Meeting?
-
A.
-
Preliminary voting results will be announced at the Annual Meeting. Final voting results
will
be set forth in a Current Report on Form 8-K to be filed by the Company with the SEC no later than four (4) business days after the Annual Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 17, 2016.
The proxy statement and annual report to stockholders is available at
http://materials.proxyvote.com/87157B
.
10
Table of Contents
|
Corporate Governance at Synchronoss
|
|
CORPORATE GOVERNANCE GUIDELINES
|
Synchronoss
is committed to excellent corporate governance which we believe helps us to sustain our success and build long-term value for our stockholders. Our Board has
adopted Corporate Governance Guidelines (the "Guidelines") which set forth the framework within which our Board can effectively function and govern our affairs. The Guidelines address, among other
things, the composition and responsibilities of our Board, director independence, management succession and review, target ownership by and remuneration of our directors, Board committees, and
selection of new directors. We have also adopted a Code of Business Conduct that applies to all of our employees, officers (including our principal executive officer, principal financial officer,
principal accounting officer, or those serving similar functions) and directors. The Guidelines and Code of Business Conduct are available on the Investor Relations section of our website at
www.synchronoss.com
.
Our
Board regularly reviews legal and regulatory requirements, evolving best practices, and other developments and may modify, waive, suspend or repeal the Corporate Governance Guidelines or Code of
Business Conduct from time to time as it deems necessary or appropriate in the exercise of our Board's judgment or in the best interests of our stockholders. If we make any substantive amendments to
the Guidelines or the Code of Business Conduct, we will promptly disclose the nature of the amendment or waiver on our website to the extent required by applicable law or regulations.
|
BOARD LEADERSHIP STRUCTURE
|
Our
Board believes it is important to retain its flexibility to allocate the responsibilities of our Chief Executive Officer ("CEO") and Chairman of the Board in any way
that is in the best interests of our Company based on the circumstances existing at a particular point in time. Our Board believes that it should periodically assess who should serve these roles, and
whether the offices should be served independently or jointly, and that our Board should not be restricted by any strict policy directive when making these decisions. Currently, our Board has
determined that our Company and our stockholders are best served by having Mr. Waldis, one of our founders, serve as both our Chairman of the Board and CEO. Mr. Waldis' combined role as
Chairman of the Board and CEO promotes unified leadership and direction for our Board and executive management and allows for a single, clear focus for the chain of command to execute our strategic
initiatives and business plans. As the individual with primary responsibility for managing our day-to-day operations and with in-depth knowledge and understanding of our Company, Mr. Waldis is
best positioned to chair regular Board meetings as our Board discusses key business and strategic issues.
|
INDEPENDENCE OF OUR BOARD OF DIRECTORS
|
Each
year, our Nominating/Corporate Governance Committee and our full Board conduct a review of the financial and other relationships between each director, or any of their
immediate family members, and our Company, our senior management, companies with whom we have business dealings, and our independent registered public accounting firm as part of its assessment of
director independence. Our Board also consults with our legal counsel to ensure that its determinations are consistent with all
11
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relevant
laws and regulations regarding the definition of independent, including those set forth in pertinent listing standards of the Nasdaq Global Market ("Nasdaq"), as amended from time to time.
Consistent with those considerations, after review of all relevant transactions or relationships, our Board has affirmatively determined that all of our directors are independent directors within the
meaning of the applicable Nasdaq listing standards except for Stephen G. Waldis, as our CEO. Our independent directors meet in regularly scheduled executive sessions where only independent
directors are present. Mr. Cadogan presides over those sessions.
|
BOARD OF DIRECTORS OVERSIGHT OF RISK MANAGEMENT
|
Assessing
and managing risk is the responsibility of our management. Our Board oversees management in the execution of its responsibilities and for assessing our approach to
risk management. An overall review and assessment of risk is inherent in our Board's consideration of our business plans, strategies, and other significant developments. Additionally, our Board
regularly reviews various risks arising out of transactions and other matters that are presented to our Board and when making decisions impacting us. At least annually, our Board also reviews and
analyzes the strategic and operational risks and opportunities that face our Company as a whole, as well as those related to specific areas of our business.
Our
Board delegates the oversight of certain categories of risk affecting our Company to designated Board committees, who report their findings to our full Board. Our Audit Committee is responsible
for overseeing our Board's execution of its risk management oversight responsibility, including discussing guidelines and policies governing the process by which our management and other persons
responsible for risk management assess and manage our exposure to major financial risk exposures and the steps management has taken to monitor and control such exposures, based on consultation with
our management and independent auditors. Our Audit Committee also annually reviews the audit plan of management, our information technology risks and mitigation strategies, the domestic and
international tax function and treasury operations and conformity with ethics and compliance standards. In addition, our Board has delegated to other Committees the oversight of risks within their
areas of responsibility and expertise. For example, our Compensation Committee oversees the risks associated with our compensation practices, including an annual assessment of our compensation
policies and practices for our employees.
Our Board also believes its oversight of risk is enhanced by the current leadership structure discussed above because our CEO, who is ultimately responsible for our management of risk, also chairs
regular Board meetings, and with his in-depth knowledge and understanding of our Company, is best able to bring key business issues and risks to our Board's attention.
Our
Nominating/Corporate Governance Committee oversees a bi-annual self-evaluation process to analyze and review our Board's performance. The Committee reviews these results
and discusses them with the full Board with the intention of utilizing them to enhance our Board's effectiveness and, if necessary, develop action plans.
|
STOCKHOLDER COMMUNICATIONS WITH OUR BOARD OF DIRECTORS
|
Stockholders
may communicate with our management and independent directors by sending a letter to Synchronoss Technologies, Inc., 200 Crossing Boulevard,
Bridgewater, New Jersey 08807, Attention:
12
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Secretary.
Each such communication should set forth the (i) name and address of such stockholder as they appear on our books and, if the shares of our Common Stock are held by a broker, bank or
other agent, the name and address of the beneficial owner of such shares and (ii) number of shares of our Common Stock that are owned of record by such record holder and beneficially by such
beneficial owner. Our Secretary will review all communications from stockholders and has the authority to disregard any inappropriate communications or take other appropriate actions with respect to
any inappropriate communications. If deemed an appropriate communication, our Secretary will forward it, depending on the subject matter, to the chairperson of a Committee of our Board or a particular
director, as appropriate.
|
BOARD OF DIRECTORS AND COMMITTEE DUTIES
|
Our
Board oversees, counsels and directs management in the long-term interests of our Company and our stockholders. Our Board, individually and through its Committees, is
responsible for:
-
•
-
overseeing the conduct, assessment and other operational risks to evaluate whether our business is being properly managed;
-
•
-
reviewing and approving our strategic, financial and operating plans and other significant actions;
-
•
-
selecting, evaluating the performance of, and determining the compensation of our CEO and other executive officers;
-
•
-
planning for succession for our CEO and monitoring management's succession planning for other executive officers; and
-
•
-
overseeing the processes for maintaining our integrity with regard to our financial statements and other public disclosures, and
compliance with laws and ethics.
|
BOARD STRUCTURE AND COMMITTEES
|
During
2015, our Board met nine times. Each director attended at least 75% of the meetings of our Board and of each Committee of which he served as a member during 2015.
Each director other than Mr. Moore attended our 2015 Annual Meeting of
Stockholders. Our Board has established an Audit Committee, a Compensation Committee, a Business Development Committee and a Nominating/Corporate Governance Committee. Our Board has delegated various
responsibilities and authority to its Committees as generally described below. Our Board has determined that each member of our Audit, Compensation, Business Development and Nominating/Corporate
Governance Committees is free of any relationship that would interfere with his individual exercise of independent judgment with
13
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regard
to us. The following table provides membership and meeting information for each of our Board committees during 2015:
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Name
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Audit
|
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Compensation
|
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Business
Development
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Nominating/Corporate
Governance
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Stephen G. Waldis
|
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·
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William J. Cadogan
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·
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·
1
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·
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·
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Charles E. Hoffman
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·
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·
1
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Thomas J. Hopkins
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·
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·
|
|
·
1
|
|
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|
|
|
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|
|
|
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|
|
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|
|
James M. McCormick
|
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|
Donnie M. Moore
|
|
·
1
|
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|
·
|
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|
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|
Total meetings in year 2015
|
|
8
|
|
7
|
|
3
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles E.
Hoffman has informed the Company that he will not stand for re-election at the Annual Meeting in order to devote his full time and efforts to his other commitments. Following the
Annual Meeting, the size of our Board is expected to be decreased to five directors. Your proxy cannot be voted for a greater number of persons than the number of nominees named in this proxy
statement.
Our
Audit Committee oversees the integrity of our financial statements, compliance with applicable legal and regulatory requirements, effectiveness of our internal controls
and audit function currently in place, and the qualifications, independence, and performance of our independent registered public accounting firm. During 2015, senior members of our financial and
legal management participated in each of our Audit Committee's meetings. Our Audit Committee also discussed with our independent registered public accounting firm the overall scope and plans for their
audit and met with them on a regular basis without members of management. Our Audit Committee consults with our management and our independent registered public accounting firm prior to the
presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. In addition, our Audit
Committee:
-
•
-
reviews our annual audited and quarterly financial statements and reporting;
-
•
-
reviews and monitors our external audits, including, among other things, our internal controls and audit functions, the results and
scope of the annual audit and other services provided by our independent registered public accounting firm and our compliance with legal matters that have a significant impact on our financial
statements;
-
•
-
establishes procedures for the receipt, retention and treatment of complaints regarding internal accounting controls or auditing
matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
14
Table of Contents
-
•
-
appoints, retains, compensates, reviews procedures to ensure the independence of, and oversees the work of, our independent registered
public accounting firm, including approving services and fee arrangements;
-
•
-
reviews with senior members of our management our policies and practices regarding risk assessment and risk management;
-
•
-
approves all related party transactions;
-
•
-
reviews management's implementation and maintenance of effective internal and disclosure controls, including our policies regarding
compliance with legal, regulatory, ethical and internal auditing standards;
-
•
-
reviews earnings press releases prior to issuance; and
-
•
-
reviews findings and recommendations of our independent registered public accounting firm and management's response to their
recommendations.
Three
directors comprise our Audit Committee: Thomas J. Hopkins, William J. Cadogan and Donnie M. Moore. Our Audit Committee met eight times during 2015. Our Board annually reviews the
Nasdaq listing standards definition of independence for Audit Committee members and has determined that all members of our Audit Committee are independent (as independence is currently defined in
Rule 5605(a)(2) and 5605(c)(2) of the Nasdaq listing standards). In addition to qualifying as independent under the Nasdaq rules, each member of our Audit Committee can read and has a working
understanding and comprehension of fundamental financial statements. Our Board has determined that each of Donnie M. Moore and Thomas J. Hopkins is an audit committee financial expert, as
defined by Item 407(d) of Regulation S-K of the Securities Exchange Act. Our Board has made a qualitative assessment of each of their level of knowledge and experience based on a number
of factors, including their respective formal education and experience. The designation does not impose on either Mr. Moore or Mr. Hopkins any duties, obligations or liability that are
greater than are generally imposed on them as a member of our Audit Committee and our Board, and their designation as an Audit Committee financial expert pursuant to this SEC requirement does not
affect the duties, obligations or liability of any other member of our Audit Committee or Board. Our Audit Committee charter can be found on the Investor Relations section of our website at
www.synchronoss.com
.
Our
Compensation Committee of our Board is comprised of three directors: William J. Cadogan, Charles E. Hoffman and Thomas J. Hopkins, each of whom is
independent, as currently defined in Rule 5605(a)(2) and 5605(d)(2) of the Nasdaq listing standards. In addition, each member of our Compensation Committee is a non-employee director, as
defined pursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended.
Effective as of the expiration of Mr. Hoffman's term as a director at our 2016 Annual Meeting, our Board may either appoint another current director of the Company to replace Mr. Hoffman
on our Compensation Committee or the committee will become a two-member
15
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committee.
Our Compensation Committee met seven times during 2015. Our Compensation Committee is charged by our Board to:
-
•
-
review and approve our compensation policies and all forms of compensation and other benefits to be provided to our employees
(including our NEOs), including among other things annual salaries, bonus, stock options, restricted stock grants and other incentive compensation arrangements;
-
•
-
establish our overall compensation objectives and structure relating to executive officers and
directors;
-
•
-
make recommendations from time to time to our Board regarding executive compensation matters;
-
•
-
administer our stock purchase plan and equity incentive plans; and
-
•
-
review and approve other aspects of our compensation policies and matters as they arise from time to time.
In
accordance with Nasdaq listing standards, our Compensation Committee under its charter has the authority and responsibility to retain or obtain the advice of compensation consultants, legal counsel
and other compensation advisers, the authority to fund such advisers, and the responsibility to consider the independence factors specified under applicable law and any additional factors the
compensation committee deems relevant. A more detailed description of our Compensation Committee's functions can be found in our Compensation Committee charter which can be found on the Investor
Relations section of our website at
www.synchronoss.com
. Our Compensation Committee has also established a Key Employee Equity Awards Committee, with
our CEO as the sole member, whose purpose is to approve stock option and restricted stock grants to our newly hired and current employees, subject to guidelines previously approved by our Compensation
Committee. Our Key Employee Equity Awards Committee acted fourteen times in 2015.
Our
Compensation Committee may select and retain, and is directly responsible for the appointment, compensation and oversight of, compensation consultants or any other third party to assist in the
evaluation of director and officer compensation as well as any other compensation matters. Our Compensation Committee considers these analyses as a factor in making decisions with respect to
compensation matters along with information it receives from management and its own judgment and experience. Its compensation consultant generally attends regular Compensation Committee meetings and
meets with our Compensation Committee without management present. Our Compensation Committee has retained Deloitte Consulting LLP ("Deloitte") as its compensation consultant. The compensation
consultant serves at the discretion of our Compensation Committee and the compensation consultant's fees are approved by our Compensation Committee. In 2015, Deloitte did not perform any services for
us other than its services to our Compensation Committee and received no compensation from our Company other than its fees in connection with its retention as our Compensation Committee's compensation
consultant. Our Compensation Committee assessed the independence of Deloitte pursuant to applicable SEC rules and Nasdaq listing standards and concluded that the work of Deloitte has not raised any
conflict of interest.
16
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|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
|
None
of the members of our Compensation Committee was an officer or employee of our Company at any time during 2015. No executive officer serves as a member of the board of
directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee. In 2015, we did not make any loans to
directors or executive officers relating to purchases of our Common Stock or for any other purpose.
|
NOMINATING/CORPORATE GOVERNANCE COMMITTEE
|
The
members of our Nominating/Corporate Governance Committee are: William J. Cadogan, Charles E. Hoffman and Donnie M. Moore. Effective as of the expiration of
Mr. Hoffman's term as a director at our 2016 Annual Meeting, Mr. Moore is expected to be appointed as chair of our Nominating Corporate Governance Committee, and our Board may either
appoint another current director of the Company to replace Mr. Hoffman on our Nominating/Corporate Governance Committee or the committee will become a two-member committee. Our
Nominating/Corporate Governance Committee met once in 2015. All members of our Nominating/Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2)
of the Nasdaq listing standards). In addition, our Nominating/ Corporate Governance Committee:
-
•
-
reviews and reports to our Board on a periodic basis with regard to matters of corporate governance;
-
•
-
recommends qualified candidates to our Board for election as our directors, including the directors our Board proposes for election by
the stockholders at the Annual Meeting and directors nominated by our stockholders;
-
•
-
reviews, assesses and makes recommendations on the effectiveness of our corporate governance policies and on matters relating to the
practices of directors, and the functions and duties of the various Board committees;
-
•
-
develops and implements our Board's bi-annual self-assessment process and works with our Board to implement improvements in their
effectiveness;
-
•
-
reviews succession plans periodically with our CEO relating to positions held by elected corporate officers; and
-
•
-
establishes and periodically reviews stock ownership guidelines for our executive officers and directors.
Our
Nominating/Corporate Governance Committee charter can be found on the Investor Relations section of our website at
www.synchronoss.com
. Our
Nominating/Corporate Governance Committee also reviews and makes recommendations to our Board regarding the size and composition of our Board and the appropriate qualities and skills required of our
directors in the context of the then current make-up of our Board and our business. Our Nominating/Corporate Governance Committee has established procedures for the nomination process and leads the
search for, selects and recommends candidates for election to our Board. Consideration of new director candidates typically involves a series of committee discussions, the review of information
concerning candidates and interviews with selected candidates. Candidates for nomination to our Board typically have been
17
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suggested
by other members of our Board or by our executive officers. From time to time, our Nominating/Corporate Governance Committee may engage the services of a third-party search firm to identify
director candidates. Our Nominating/Corporate Governance Committee also considers candidates proposed in writing by stockholders, provided such proposal meets the eligibility requirements for
submitting stockholder proposals under our amended and restated bylaws and is accompanied by certain required information about the candidate. Candidates proposed by stockholders will be evaluated by
our Nominating/Corporate Governance Committee using the same criteria as for all other candidates. In considering nominees for our Board, our Nominating/Corporate Governance Committee considers each
candidate's independence, personal and professional integrity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act
independently and with sound judgment and ability to serve our stockholders' long-term interests. These factors, along with others considered useful by our Nominating/Corporate Governance Committee,
are reviewed in the context of an assessment of the perceived needs of our Board at a particular point in time. As a result, the priorities and emphasis of our Nominating/Corporate Governance
Committee and of our Board may change from time to time to take into account changes in our business and other trends, and the portfolio of skills and experience of current and prospective directors.
Our Nominating/Corporate Governance Committee has not adopted a formal policy regarding the consideration of diversity in identifying director nominees or in searching for new directors.
|
BUSINESS DEVELOPMENT COMMITTEE
|
Our
Business Development Committee reviews certain strategic business development and growth opportunities and recommends those that it determines are in line with our
short-term and long-term strategic goals. Our Business Development Committee charter can be found on the Investor Relations section of our website at
www.synchronoss.com
. The members of our Business
Development Committee are: William J. Cadogan, Thomas J. Hopkins and Stephen G.
Waldis. All members of our Business Development Committee other than Mr. Waldis are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards).
Our Business Development Committee met three times during 2015.
18
Table of Contents
This
section provides information regarding the compensation policies for our non-employee directors and cash amounts paid and equity awarded to these directors in 2015. Any
director who is an employee of our Company does not receive any additional compensation for service as a director. For 2015, our non-employee director compensation program consisted of:
|
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Compensable Position / Event
|
|
Compensation
|
|
|
|
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|
|
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Initial Equity Grant
|
|
30,000 non-qualified stock options
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Retainer
|
|
$50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Equity Grant
|
|
7,500 non-qualified stock options
(1)
3,335 restricted shares
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Chairperson Retainer
|
|
$20,000 (Audit)
$15,000 (Compensation)
$10,000 (Nominating/Corporate Governance)
$10,000 (Business Development)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Member Retainer
|
|
$10,000 (Audit)
$7,500 (Compensation)
$5,000 (Nominating/Corporate Governance)
$5,000 (Business Development)
|
|
|
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|
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|
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|
-
(1)
-
Options
and restricted shares vest one-third each year over three years.
The
actual number of restricted shares and stock options would be based on the price of our common stock on the date of grant, which would continue to be the first Tuesday of every year. The stock
options have an exercise price equal to the closing price reported on Nasdaq of our Common Stock on the grant date. The annual retainer fees are paid to our directors quarterly in advance In addition,
we currently have a policy of reimbursing directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at our Board and Committee meetings. The following
table sets forth all of the compensation awarded to, earned by, or paid to each person who served as a non-employee director during 2015.
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Name
|
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Fees Earned or
Paid in Cash
($)
|
|
Restricted
Stock Awards
($)(1)
|
|
Option
Awards
($)(2)
|
|
Total
($)
|
|
|
|
|
|
William J. Cadogan
|
|
85,000
|
|
128,498
|
|
110,792
|
|
324,290
|
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|
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|
|
|
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|
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Charles E. Hoffman
|
|
67,500
|
|
128,498
|
|
110,792
|
|
306,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Hopkins
|
|
77,500
|
|
128,498
|
|
110,792
|
|
316,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. McCormick
|
|
50,000
|
|
128,498
|
|
110,792
|
|
289,290
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
Donnie M. Moore
|
|
75,000
|
|
128,498
|
|
110,792
|
|
314,290
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
-
(1)
-
The
amounts in this column reflect the aggregate grant date fair value of the stock awards computed in accordance with FASB ASC Topic No. 718. See
Footnote 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of our assumptions in estimating the fair value of
our stock awards. As of December 31, 2015, each of Messrs. Cadogan, Hoffman, Hopkins, McCormick and Moore held 6,670 restricted shares of our Common Stock.
19
Table of Contents
-
(2)
-
The
amounts in this column reflect the aggregate grant date fair value of the stock options computed in accordance with FASB ASC Topic No. 718. See
Footnote 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of our assumptions in estimating the fair value of
our stock option awards. As of December 31, 2015, each of Messrs. Hoffman, Hopkins and McCormick held options to purchase 65,000 shares of our Common Stock having a weighted average
exercise price of $23.22 per share, of which 50,000 shares were vested, Mr. Cadogan held options to purchase 100,000 shares of our Common Stock, having a weighted average exercise price of
$18.34 per share, of which 85,000 shares were vested and Mr. Moore held options to purchase 80,000 shares of our Common Stock, having a weighted average exercise price of $25.21 per share, of
which 65,000 shares were vested. The options granted in 2015 were granted at an exercise price of $38.53.
Since
2010, each member of our Board had received the same fixed number of restricted shares of our common stock and stock options annually. In 2015, our Compensation Committee, in consultation with
Deloitte, its compensation consultant, approved a change to the equity portion of our directors' compensation. Specifically, beginning in 2016, our Compensation Committee will annually determine a
fixed monetary value of equity (as opposed to the fixed number of shares approach utilized prior to 2016) to be granted to our non-employee directors based on their analysis of the competitive range
of the equity granted to directors at our peer group companies and other publicly-available information.
|
DIRECTOR STOCK OWNERSHIP GUIDELINES
|
We
have established stock ownership guidelines for our directors to retain an equity stake in the Company to more closely align their interests with those of our
stockholders. Each director is required to own the number of shares of our Common Stock with a value equal to three times the annual cash retainer for our directors. Ownership is calculated annually
based on the closing sales price of our Common Stock on Nasdaq for the last trading day in the prior year. Any newly elected director has three years from the date of his or her election to achieve
the targeted equity ownership level. As of December 31, 2015, each of our directors met these guidelines.
|
LIMITATION OF LIABILITY AND INDEMNIFICATION
|
As
permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws provide that we are authorized to (i) enter into
indemnification agreements with our directors and officers and (ii) purchase directors' and officers' liability insurance, which we currently maintain to cover our directors and executive
officers. The form of indemnification agreement with our directors provides that we will indemnify each director against any and all expenses incurred by that director because of his status as one of
our directors, to the fullest extent permitted by Delaware law, our restated certificate of incorporation and amended and restated bylaws. In addition, the form agreement provides that, to the fullest
extent permitted by Delaware law, but subject to various exceptions, we will advance all expenses incurred by our directors in connection with a legal proceeding. Our restated certificate of
incorporation and bylaws contain provisions relating to the limitation of liability and indemnification of directors. The restated certificate of incorporation provides that our directors will not be
personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability:
20
Table of Contents
-
•
-
for any breach of a director's duty in respect of unlawful (i) payments of dividends or (ii) stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law and the breach of a director's duty of loyalty to us or our stockholders;
-
•
-
for any transaction from which the director derives any improper personal benefit; and
-
•
-
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law
Our
restated certificate of incorporation also provides that if Delaware law is amended, after the approval by our stockholders of our restated certificate of incorporation, to authorize corporate
action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law. The
foregoing provisions of the restated certificate of incorporation are not intended to limit the liability of directors or officers for any violation of applicable federal securities laws. As permitted
by Section 145 of the Delaware General Corporation Law, our restated certificate of incorporation provides that we may indemnify our directors to the fullest extent permitted by Delaware law
and the restated certificate of incorporation provisions relating to indemnity may not be retroactively repealed or modified so as to adversely affect the protection of our directors.
21
Table of Contents
|
RISK MANAGEMENT CONSIDERATIONS
|
Each
year, our Compensation Committee reviews our compensation practices and policies for all employees, including our NEOs, and assesses whether they have the potential to
incentivize employees without taking risks that are reasonably likely to have a material adverse effect on our Company. Since our annual performance-based bonus and equity programs are designed to
align our employees' compensation with our long-term business objectives and performance, and therefore enhance stockholder value, our Compensation Committee believes that our compensation practices
and policies discourage behavior that leads to excessive risk. Therefore, our Compensation Committee does not believe these practices and policies will have a material adverse effect on our Company.
Set forth below are the key risk-balancing elements of our compensation practices and policies:
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Financial
Performance
Measures
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The ranges set for financial performance measures are designed to reward success without encouraging excessive risk taking. Pursuant to our three-year equity plan adopted in 2015, the number of performance-based restricted shares to be issued are
based on our financial performance over a three-year period.
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Equity Vesting Periods
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|
Time-based and performance-based restricted shares typically vest over three years, while stock options typically vest over four years. The vesting of the equity awards is designed to reward tenure with us.
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Equity Retention Guidelines
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NEOs are required to acquire within five years of becoming an executive officer, and hold while they are officers, shares (vested and unvested) having a value of at least three times their base salary, or five times for our CEO.
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No Hedging
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NEOs are not permitted to enter into any transaction designed to hedge, or having the effect of hedging, the economic risk of owning our securities.
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Financial Restatement and Related Policies
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As part of our Ethics and Business Conduct Policy, we will investigate all reported instances of questionable or unethical behavior of a director, NEO or other employee and, where improper behavior is found to have occurred, will take appropriate
action up to and including termination. If an investigation uncovers that such individual commits fraud or other improper acts which causes our financials to be restated or otherwise affected, we would take immediate and appropriate disciplinary
action with respect to such individual up to and including termination. We would also take whatever legal remedies are available to prosecute such individual to the fullest extent of the law and seek to recover any amounts he or she inappropriately
received as a result of such actions, including but not limited to any annual or long term incentives that he or she received to the extent the individual would not have received such amount had such act not be taken.
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22
Table of Contents
Compensation of Executive Officers
Compensation
Discussion and Analysis
This section discusses our compensation philosophy, summarizes our compensation programs and reviews compensation decisions for the
following NEOs:
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Named Executive Officer
|
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Title
|
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|
Stephen G. Waldis
|
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Chairman of the Board of Directors and Chief Executive Officer
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Karen L. Rosenberger
|
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Executive Vice President, Chief Financial Officer and Treasurer
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Robert E. Garcia
|
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President and Chief Operating Officer
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Daniel Rizer
|
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Executive Vice President, Business Development & Product Management
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David Schuette
|
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Executive Vice President, Enterprise Business Unit
(1)
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(1)
Mr. Schuette was hired as our Executive Vice President, Enterprise Business Unit, in August 2015.
Executive Summary
Our executive compensation philosophy and programs are designed to attract, retain and motivate high-quality executives who possess
diverse skills and talents required to help us achieve our short and long-term financial and strategic goals. We believe that the programs foster a performance-oriented culture that aligns our
executives' interests with those of our stockholders over the long term. We believe that the compensation of our NEOs is both appropriate for and responsive to the goal of improving stockholder value.
Specifically, in 2015, the majority of each NEO's compensation was at-risk or variable compensation.
The
following provides an overview of the key financial and strategic highlights for the year.
2015 Business Highlights
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Non-GAAP Revenue*
|
|
Fiscal 2015 Achievements
|
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Non-GAAP Revenue*
|
|
$580.1 million, compared to $458.6 million in 2014, an increase of 26%
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Non-GAAP Gross Profit*
|
|
$356.8 million, representing a gross margin of 62%, up from 61% in 2014
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Non-GAAP EBITDA*
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$208.1 million, compared to $155.1 million in 2014, an increase of 34%
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Cloud Revenue
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$310.1 million, compared to $211.7 million in 2014, an increase of 46%
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Diluted Non-GAAP EPS*
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$2.23, compared to $1.79 in 2014, an increase of 25%
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Strategic Business Milestones
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Launched enterprise business to offer secure
mobility solutions to enterprise clients; hired David Schuette, a seasoned enterprise executive, to lead this effort.
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Entered into strategic partnerships with Verizon for multifactor authentication and identity management and with Goldman Sachs for secure enterprise mobility
technology to enhance our enterprise offerings.
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Acquired RazorSight Corporation and certain assets from F-Secure Corporation to expand our product portfolio and global presence.
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Extended our agreement with AT&T through 2018.
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*
These financial measures are non-GAAP measures and should not be reviewed in isolation or as substitutes for our financial results as reported in accordance with GAAP. Please see Appendix A
for an explanation and reconciliation of these non-GAAP financial measures to the applicable GAAP financial measures.
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Table of Contents
2015
Compensation Program Highlights
We design our executive compensation program to attract, retain and motivate high-quality executives and drive the creation of
long-term stockholder value by tying a significant portion of compensation to performance goals. We have adopted the following approach to achieve these objectives:
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Pay for
Performance
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Provide a strong relationship of pay to performance through:
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Performance-based cash bonus tied primarily to achievement of corporate short-term financial goals and individual performance.
•
Equity awards that deliver value based on our stock performance and, in the case of
performance-based stock awards, the achievement of pre-determined, objective financial and business goals.
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Emphasis on
Variable
Compensation
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Total compensation is heavily weighted
toward variable compensation (i.e., annual bonus and long-term equity incentives).
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We use the annual performance-based cash bonuses to focus our NEOs on key short-term financial goals.
•
We use stock options, time-based and performance-based restricted shares to incentivize
our NEOs to focus on sustainable, long-term stockholder value creation. The value realized by our NEOs depends substantially on our long-term performance, achievement of our strategic goals and the value of our Common Stock, which we believe aligns
our NEOs' interests with the long-term interests of our stockholders.
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Fixed
Compensation
Component
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Provide base salary based on our
Compensation Committee's general understanding of current competitive compensation practices, corporate achievement, our NEO's role and responsibilities, length of tenure, internal pay equity and individual performance.
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The
following highlights some of the key components of our pay for performance policies and practices:
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At-Risk Compensation
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A majority of the compensation of the CEO and other NEOs is "at-risk" and tied to Company performance over the short- and/or long-term.
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Incentive Award Metrics
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Establish and approve stretching objective incentive award metrics tied to key company performance indicators.
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Three-Year Equity Plan
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Number of performance-based restricted shares to be issued is based on our financial performance over a three-year period, aligning our NEOs' interests with the long-term interests of our stockholders.
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Equity Vesting
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Vest equity awards over three or four years to promote retention.
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Stock Ownership Guidelines
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Maintain stock ownership guidelines to support the alignment of interests between executives and stockholders.
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No Hedging
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Prohibition of hedging exposure of, or interest in, our stock.
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Our
Compensation Committee oversees our compensation programs covering all our employees, with an enhanced focus on the compensation of our NEOs. It also oversees the administration of our cash and
equity-based incentive plans. Mr. Waldis, in his role as CEO, assesses the performance of our NEOs (other than himself), consults with other members of management and makes recommendations to
our Compensation Committee regarding the amount and the form of the compensation of the NEOs and other key employees, including the performance goals,
weighting of goals, and equity compensation awards of NEOs. Mr. Waldis is not present during discussions regarding his compensation.
24
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2015 Executive Compensation Program
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Cash Incentive Compensation
For our NEOs' Annual Cash Incentive Bonus, our Compensation Committee approved the following
metrics:
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45% based on annual revenue of our Company for 2015
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45% based on EBITDA for 2015 and
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10% based on our NEO's individual performance.
Long-term Incentive Compensation
In 2015, we revised our executive compensation program based, in part, on suggestions from our stockholders during our meetings as
part of our shareholder outreach program. In particular, our long-term equity incentive plan will reward financial and strategic performance during a three-year period from 2015 through 2017 (the
"2015-2017 Performance Shares"), rather than for a single year. In connection with 2015 executive compensation decisions, our Compensation Committee approved the following performance metrics for the
2015-2017 Performance Shares:
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60% based on three-year average annual non-GAAP revenue growth of our Company from 2015 to 2017;
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30% based on three-year average annual non-GAAP EBITDA from 2015 to 2017; and
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10% based on three-year annual revenue growth in our Cloud business from 2015 to 2017.
Given
the transition to the new executive long-term incentive compensation program, our Compensation Committee recognized that there would be a gap in the equity provided to our NEOs for a two-year
transition period during which they would not be eligible to receive any performance-based restricted shares. To address this gap and to provide a retention incentive during the phase-in of the new
program, our Compensation Committee approved a "one-time" grant of performance-based restricted shares. One portion would be based on our financial results in each of 2015 and 2016 (the "2015-2016
Performance Shares") and, to address investors' concerns with respect to customer concentration, one portion would be based on the Company establishing a new line of business with a meaningful revenue
run rate by the end of 2017 (the "New Business Performance Shares").
With
respect to the 2015-2016 Performance Shares, one third would be earned based on 2015 financial metrics and two-thirds would be based on 2016 financial metrics. Each of these share tranches would
vest immediately upon issuance after determination by our Compensation Committee for the respective year. The 2015-2016 Performance Shares would be based on the following financial metrics for each of
2015 and 2016:
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60% based on non-GAAP revenue growth of our Company;
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30% based on non-GAAP EBITDA; and
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•
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10% based on revenue in our Cloud business.
With
respect to the New Business Shares, these shares will only be awarded to the extent we are able to establish a new line of business with a material annual revenue run rate during the three-year
period ending 2017. See page 40 for more details.
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At
our 2015 Annual Meeting, approximately 99% of the shares voted were in favor of the advisory vote on executive compensation. We continuously strive to improve the level of stockholder support for
our executive compensation program and in 2015 met with a majority of our largest stockholders for their feedback on our executive compensation policies. Our Compensation Committee plans to
continuously evaluate our executive compensation program each year with the goal of ensuring it is in line with our stockholders' interests. We encourage stockholders to take into account the
significant changes to our executive compensation program over the last several years in considering the advisory vote presented below including, among other things, designing a new, updated
compensation philosophy, transitioning to a three-year business plan for our long-term equity incentive plan, enhancing our executive stock ownership guidelines and our annual stockholder outreach
program.
Our
Compensation Committee's compensation consultant generally attends regular Compensation Committee meetings and meets with our Compensation Committee without management
present. Our Compensation Committee considers various analyses prepared by its compensation consultant when making decisions with respect to compensation matters, along with information it receives
from management and its own judgment and experience in an effort to gain a better understanding of the competitive landscape. Since July 2013, our compensation consultant has been Deloitte
Consulting LLP.
Our
Compensation Committee generally reviews executive compensation survey and proxy data from technology companies that have similar software/services business models or
operate in the mobile networking space, are of similar financial size and with whom we compete for our executive talent. Our Compensation Committee identified the following companies that fit some or
all of these criteria as our peer group for purposes of 2015 executive compensation decisions:
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Advent Software, Inc.
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Digital River, Inc.
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Medidata Solutions, Inc.
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Aruba Networks, Inc.
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Fleetmatics Group
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Microstrategy, Inc.
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Bottomline Technologies, Inc.
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Informatica Corporation Inc.
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NeuStar, Inc.
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Blackbaud, Inc.
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Interactive Intelligence, Inc.
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Progress Software Corp.
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CommVault Systems, Inc.
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J2 Global Inc.
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The Ultimate Software Group
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Compuware Corporation
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LogMein Inc.
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Our
peer group was updated in 2015 to reflect the acquisition of Concur Technologies, Inc. in 2015. Smith Micro Software, Inc. and Broadsoft, Inc. were removed from our peer group
due to their revenue and market capitalization being significantly lower than our revenue and market capitalization in 2014. In addition, Nuance Communications, Inc. and Verifone
Systems, Inc. were removed from our peer group due to their revenue and market capitalization being significantly higher than our revenue and market capitalization in 2014. Advent
Software, Inc., Blackbaud, Inc., Compuware Corporation, Fleetmatics Group, Medidata Solutions, Inc. and The Ultimate Software Group were added to offset the removal of these five
companies based on the similarities of their business offerings, financial profile, market capitalization and profitability with those of our Company. As a result of these changes, we believe the peer
group utilized for purposes of 2015 executive compensation decisions was representative of companies that we compete with for talent.
However,
when making compensation decisions for our NEOs, our Compensation Committee also reviews published survey and peer group compensation data for other software/services companies.
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As
we continue to grow as a company, competitive market practices become an increasingly important factor in our Compensation Committee's decision-making process, although its decisions are not
entirely based upon these factors and it does not target specific compensation levels as derived from peer group data. Rather, our Compensation Committee reviews and considers the peer group and other
survey data to obtain a general understanding of current competitive compensation practices. Utilization of the peer group and survey data to gain a general understanding of competitive pay practices
allows us to accomplish our goal of paying our NEOs what is appropriate to achieve our corporate goals while conserving cash and equity.
27
Table of Contents
Elements
of Compensation
Our executive compensation program has the following principal elements: base salary, annual cash incentive bonus, equity awards and
severance and change in control protection. The following table sets forth these elements and the objectives of each element:
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Base Salary
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Objective:
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Our Compensation Committee sets base salaries with the intent to attract and retain executives, reward satisfactory performance and provide a minimum, fixed level of cash compensation to compensate him or her for their day-to-day
responsibilities.
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Key Features:
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Base salaries are initially determined as a result of negotiation between the executive and our management in consultation with, and subject to the approval of, our Compensation Committee.
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Our Compensation Committee reviews base salaries annually and has discretion to provide increases based on our Compensation Committee's understanding of current competitive pay practices, promotions, our CEO's recommendation (except for his own
salary), changes in responsibilities and performance, annual budget for increases, our overall financial and operational results, the general economy, length of tenure and internal pay equity and other factors our Compensation Committee deems
appropriate.
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Process:
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At the end of each calendar year, the CEO recommends salaries for executives other than himself for the following calendar year.
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Our Compensation Committee reviews proposed salary changes with input from its compensation consultant.
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•
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Our Compensation Committee determines annual salaries for NEOs.
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Our Compensation Committee reports determinations to the full Board.
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Table of Contents
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Annual Cash
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Objective:
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Incentive Bonus
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The annual cash incentive bonus is a performance-based compensation program designed to align the interests of our NEOs and stockholders by providing compensation based on the achievement of pre-determined corporate and/or business goals and
individual performance.
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Key Features:
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Each year, the target bonus for each NEO is set by our Compensation Committee based on employment agreement provisions, our CEO's recommendation (except for his own target), internal pay equity, our Compensation Committee's general understanding of
current competitive pay practices and other factors it deems appropriate.
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At least 90% of the target incentive is determined by performance against certain financial objectives established at the start of the year.
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If we achieve results that are below certain threshold levels, our NEOs receive no cash incentive bonus, while results that are above certain threshold levels result in larger cash incentive bonuses.
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Process:
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Our Compensation Committee participates in our Board's review of our annual operating plan at the beginning of the year.
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Our CEO recommends bonus targets as a percentage of base salary for each NEO other than himself.
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Our management recommends financial and other performance measures, weightings and ranges.
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Our Compensation Committee reviews proposed bonus targets, performance measures and ranges with input from its compensation consultant and determines bonus targets, performance measures and ranges that it believes establish appropriate stretch
goals.
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After the end of the fiscal year, our management presents financial results to our Board.
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Our CEO recommends the individual component award for our NEOs other than himself.
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Our Compensation Committee reviews the results and determines whether to make any adjustments, determines other performance factor multipliers and establishes each NEO's bonus award.
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Our Compensation Committee reports determinations to the full Board.
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Equity Awards
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Objectives:
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Our Compensation Committee structures equity awards to help align our NEOs' interests with those of our stockholders, to support retention, and to motivate NEOs to achieve our financial, strategic and operational goals. Equity awards include stock
options and time-based and performance-based restricted shares.
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Key Features:
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Our Compensation Committee grants stock options, time-based and performance-based restricted shares to our NEOs with the grant date value based on our Compensation Committee's general understanding of current competitive pay practices, our CEO's
recommendation (except for his own awards), recommendations from our compensation consultant, internal pay equity, evaluation of each NEO's performance, and other factors our Compensation Committee deems appropriate.
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Table of Contents
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Long-term incentive awards are allocated as follows, based on grant date award value (with vesting terms that generally extend up to four years):
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o One-third stock options
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o One-third time-based restricted shares
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o One-third performance-based restricted shares
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Our Compensation Committee believes this mix provides NEOs with a balanced retention and performance opportunity, and serves to closely align their long-term objectives with those of our stockholders.
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Beginning in 2015, each performance-based restricted share award has a target number of shares to be issued following completion of a three-year performance period based on the achievement of certain Company performance criteria. These
performance-based restricted shares will be issued following the completion of the three-year fiscal period.
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Process:
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In the first fiscal quarter, our CEO recommends grant date fair value of awards for executives other than himself.
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Our Compensation Committee reviews proposed awards with input from its compensation consultant.
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Our Compensation Committee determines the number of stock options and restricted shares based on the price of our Common Stock.
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Our Compensation Committee reports determinations to the full Board.
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Severance and
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Objectives:
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Change in
Control
Benefits
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Severance and change in control benefits are included in each NEO's employment agreement in order to promote stability and continuity of our senior management team in the event of a potential change in control and/or any involuntary termination. Our
Compensation Committee believes these provisions help to appropriately align our NEO's interests with those of our stockholders in such scenarios.
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Key Features:
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Events triggering payment require a termination of our NEO's employment by our Company "without cause" or by the executive for good reason. Executives are entitled to enhanced benefits if the foregoing occurs during a specified period following a
change in control (i.e., double-trigger).
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Change in Control benefits do not include excise tax gross-ups.
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Our Compensation Committee has determined these termination-related benefits are appropriate to preserve productivity and encourage retention in the face of potentially disruptive circumstances.
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Each NEO will only be eligible to receive severance payments if he or she signs a general release of claims following an eligible termination.
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Each NEO's outstanding options and restricted shares will vest and become exercisable in full if his or her employment is involuntarily terminated within twelve (12) months following a change in control.
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Chief
Executive Officer Compensation
As our Chairman and CEO, Mr. Waldis' responsibilities are much greater than those of our other NEOs, as he is informed and involved in a
detailed manner with each department's progress toward our shared Company goals. As such, his total base salary and his total compensation opportunity are greater than our other NEOs. In addition, his
equity holding requirements under our Executive Stock Ownership Guidelines are five times his base salary as
opposed to three times for our other NEOs. As of April 6, 2016, Mr. Waldis exceeded the minimum holding requirements under these stock ownership guidelines. In our industry, the CEO must
be deeply aware of a company's strengths and obstacles, and have sharp strategic vision for our future while maintaining our ability to adapt to changing circumstances and prospects quickly and
thoughtfully. The successful progress of our research and development programs and success of our customer engagements bring value to our financial performance and our stockholders, and we believe
Mr. Waldis' direction in the decisions and actions that drive this progress and merit the compensation that he receives.
Pay Mix
In keeping with our results-driven culture, our Compensation Committee expects our NEOs to deliver superior performance in a sustained fashion and
believes that a substantial portion of their overall compensation should be at-risk and tied to our short-term and long-term performance. As shown below, 73% of our CEO's targeted compensation and 58%
of the average targeted compensation of our other NEOs is tied to long-term, equity-based incentives.*
* Excluding
Mr. Schuette who joined our Company in August 2015 and all special equity grants.
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Target
and Realized Pay
As discussed above, our Compensation Committee believes that a program weighted towards variable, performance-based compensation supports the
alignment of our NEOs' interests with those of our stockholders. Furthermore, because the equity awards are also subject to time-based vesting, the compensation an NEO realizes in connection with
equity awards is spread over a number of years, which our Compensation Committee believes assists in motivating our NEOs to drive business growth over the long-term. The amounts shown in the Summary
Compensation Table reflect the grant-date value of equity awards received by a NEO (in accordance with FASB ASC Topic No. 718), but do not reflect the compensation actually realized by our
NEOs, which varies based on achievement of goals and actual performance of our stock.
The
chart below shows the difference between aggregate Target Annual Compensation and Realized Annual Compensation for our CEO for 2013, 2014 and 2015. As illustrated, actual realized
pay for 2013 and 2015 is below the grant date value of compensation disclosed in the Summary Compensation table in accordance with FASB ASC Topic No. 718.
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(1)
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"Target
Compensation" represents the sum of (i) base salary, (ii) on-target annual cash bonus, and (iii) the grant-date
value of (x) stock options, (y) time-vested restricted shares, and (z) performance-based restricted shares (assuming 100% of the target number are earned), using the stock price
on the date of grant.
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(2)
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"Realized
Compensation" represents the sum of (i) base salary, (ii) actual annual cash bonus paid, and (iii) the
(x) intrinsic value as of December 31, 2015 of stock option grants granted in 2015, (y) value as of December 31, 2015 of time-vested restricted shares granted in 2015 and
(z) actual number of performance-based restricted shares issued in 2015, valued as of December 31, 2015.
32
Table of Contents
2015
Compensation Decisions
In determining the criteria for our NEOs' incentive compensation and evaluating whether our NEOs have met both their corporate and individual
objectives, our
Compensation Committee considers a variety of factors, including alignment of our NEOs' compensation with our shareholders' returns. On the corporate level, our Compensation Committee selected
non-GAAP revenue and non-GAAP EBITDA, two metrics that our Compensation Committee believes appropriately values our Company on both a short- and long-term basis and are targeted to emphasize strong
growth on both the top- and bottom-line. Based on feedback received as part of our shareholder outreach program, these are also two of the key metrics a majority of our shareholders use in their
valuation of our Company. As such, all NEOs are focused on growing non-GAAP revenue and EBITDA, which we believe is aligned with our stockholder perspective on our Company's ability to grow and
succeed on the short- and long-term.
Although
we achieved record financial performance in 2015 and exceeded the aggressive targets set by our Compensation Committee, our stock price declined in 2015. From time to time, our stock has
declined due to investors' concerns around our customer concentration and the ability of our telecommunication customer's cloud strategy to succeed and compete with those of other companies like
Google and Apple and, based on investor feedback, we believe this was a key reason for our stock price decline in 2015. We continue to look for ways to expand into new markets and expand our customer
base and in 2015, we addressed both of these areas by acquiring RazorSight Corporation and certain assets from F-Secure Corporation, launching our Enterprise business and entering into strategic
partnerships with both Goldman Sachs and Verizon to increase our product portfolio and expand our customer base. We are hopeful that these investments will lead to greater shareholder value.
Base Salary
Base salaries for our NEOs are reviewed and adjusted annually. Base salary may also be adjusted during the year upon promotion or
based on internal equity or external market conditions. Our Compensation Committee makes these decisions after reviewing the recommendation of our CEO (except as it concerns his own salary) and our
Senior Vice President of Human Resources, and consulting with our compensation consultant when needed. Based on this review, in early 2015, our Compensation Committee provided cost of living salary
increases of 3% to Messrs. Waldis and Garcia. As Ms. Rosenberger's base salary was below the competitive range of similarly situated chief financial officers, she received an increase in
her base salary of 10%. In addition, as Mr. Rizer's role expanded as part of a reorganization within our Company and based on our Compensation Committee's review of the base salaries of
similarly situated employees at our peer group companies and other publicly-available information, he received an increase in his base salary of approximately 32%.
In
August 2015, Mr. Schuette entered into an employment agreement to serve as our Executive Vice President, Enterprise Business Unit pursuant to which we agreed to pay Mr. Schuette a
base
salary of $440,000 annually, subject to adjustment pursuant to our compensation policies in effect from time to time. Mr. Schuette's compensation was negotiated by our management subject to the
approval of our Compensation Committee. Our Compensation Committee determined that this was an acceptable base salary for Mr. Schuette based, among other things, on the advice of our
compensation consultant, the base salary of our other executive officers, his expected senior role with us and its general understanding of competitive pay practices.
33
Table of Contents
The
table below sets forth our NEOs' 2015 base salary compared to their respective 2014 base salary:
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|
Name
|
|
|
|
2014
Base Salary
|
|
|
|
2015
Base Salary
|
|
Stephen G. Waldis
|
|
|
|
$573,947
|
|
|
|
$591,165
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
|
$300,000
|
|
|
|
$330,000
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
|
$424,360
|
|
|
|
$437,091
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
|
$318,270
|
|
|
|
$420,000
|
|
|
|
|
|
|
|
|
|
|
|
David Schuette
|
|
|
|
N/A
|
|
|
|
$440,000
|
2015 Annual Cash Incentive Bonus Compensation
Our Annual Cash Incentive Bonus Compensation Program promotes our pay-for-performance philosophy by providing all executives and other
management-level corporate employees with direct financial incentives in the form of annual cash awards for achieving Company, business and individual performance goals.
Target Percentage
Our Compensation Committee sets each NEO's individual target cash incentive percentage based on its general understanding of
competitive pay practices, our CEO's recommendation (except his own) and other factors it deems appropriate. Based on its review of these factors, in February 2015, our Compensation Committee kept the
target cash percentage of each of our NEOs at the same percentage as in 2014, except for Mr. Rizer, whose target cash percentage was increased to 80% based on his expanded role. Since
Mr. Schuette did not join our Company until August 2015, our Compensation Committee did not believe it appropriate to include any corporate objective as part of his target cash incentive bonus
and instead set certain
individual objectives for him to meet to achieve this target bonus. Commencing in 2016, his target bonus will be equal to 80% of his base salary. Our Compensation Committee determined that this was an
appropriate target bonus for Mr. Schuette based, among other things, on the target bonus incentive percentage of our other executive officers, his expected senior role at our Company and its
general understanding of competitive pay practices.
Each
of our NEO's 2015 target incentive bonus percentages were as follows:
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Name
|
|
|
|
Target Incentive
Bonus Percentage
|
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|
|
Maximum
Bonus Percentage
|
|
Stephen G. Waldis
|
|
|
|
110% of base salary
|
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|
|
192.5% of base salary
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|
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|
Karen L. Rosenberger
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|
60% of base salary
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|
105% of base salary
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|
|
|
|
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|
Robert Garcia
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|
80% of base salary
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|
140% of base salary
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|
|
|
|
|
|
|
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Daniel Rizer
|
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|
|
80% of base salary
|
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|
|
140% of base salary
|
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|
|
|
|
|
|
|
|
|
|
David Schuette
|
|
|
|
$250,000
|
|
|
|
$250,000
|
Each
of the NEOs (other than Mr. Schuette) could have earned a maximum cash incentive bonus in the event that corporate objectives set by our Compensation Committee were exceeded.
34
Table of Contents
Weighting of Components
Each of our NEOs (other than Mr. Schuette) has both (i) a corporate component and (ii) a discretionary
individual performance component in determining his or her annual cash incentive bonus compensation as set forth below. Mr. Schuette's annual cash incentive bonus compensation was determined
entirely by the achievement of specified objectives to be accomplished by him, namely: drafting a comprehensive initial business plan for our Enterprise
business; hiring a strong management team for our Enterprise business, and leading an expansion of our Enterprise business through our strategic partnerships with Goldman Sachs and Verizon.
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|
Name
|
|
|
|
Corporate
Component
Target Rate*
|
|
|
|
Individual
Component
Target Rate*
|
|
Stephen G. Waldis
|
|
|
|
100%
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
|
50%
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
|
70%
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
|
70%
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Percentage
of Base Salary
2015 Corporate Component
Our Compensation Committee established targeted (i) non-GAAP revenue and (ii) non-GAAP EBITDA as the corporate
components of our 2015 annual cash incentive bonus program, with each of the components weighted at 50% of the overall corporate component. We utilize these non-GAAP financial measures internally in
analyzing our financial results and evaluating our ongoing operational performance because they exclude certain non-cash adjustments required under GAAP. These metrics were selected because they are
two of the key performance metrics shareholders use in evaluating our Company. Our 2015 internal annual operating plan was developed by management and presented by Mr. Waldis, as Chairman and
CEO, and Ms. Rosenberger, as CFO, to our Board for its review and approval. The target performance levels are intended to align with our annual internal operating plan to motivate performance
goals in a manner we believe will increase our stockholder value.
Although
the expectations shared in our public guidance stated strong growth in both non-GAAP revenue and EBITDA, our Compensation Committee established the 2015 corporate component objectives as
targets that pushed our NEOs to an even higher threshold than market expectations. In calculating non-GAAP revenue and EBITDA we add back the fair value stock-based compensation expense, deferred
revenue, acquisition-related costs, restructuring charges, changes in the contingent consideration obligation, deferred compensation expense related to earn-outs and amortization of intangibles
associated with acquisitions.
Each
of the components was assigned a "threshold" level which sets the minimum achievement necessary to be satisfied to receive a portion of the applicable bonus amounts and a "maximum" level whereby
if achieved or exceeded the NEO's would receive 175% of the target portion attributed to such component.
35
Table of Contents
The
corporate component of the 2015 cash incentive compensation plan is set forth below:
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Component
|
|
Weighting
|
|
Threshold
25% payout
|
|
Target
100% payout
|
|
Maximum
175% payout
|
|
|
|
|
|
Non-GAAP Revenue*
|
|
50%
|
|
$522,775,000
|
|
$565,000,000
|
|
$595,160,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA*
|
|
50%
|
|
$170,853,000
|
|
$198,000,000
|
|
$213,465,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
2015, our non-GAAP revenue was $580,091,000, representing 26% growth from 2014. Our 2015 non-GAAP revenue was approximately halfway between the target and maximum thresholds, 138% of the target.
Our 2015 EBITDA was $208,096,000, representing 34% growth from 2014. Our 2015 non-GAAP EBITDA was approximately two-thirds of the maximum threshold, representing 149%. As a result, our NEOs (other
than Mr. Schuette) received the following amounts for the corporate component of their respective cash incentive compensation.
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Component
|
|
|
Weighting
|
|
|
Achievement
|
|
|
Plan Payout
|
|
|
|
|
|
Non-GAAP Revenue*
|
|
|
50%
|
|
$
|
580,091,000
|
|
|
138%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA*
|
|
|
50%
|
|
$
|
208,096,000
|
|
|
149%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* These financial measures are non-GAAP measures and should not be reviewed in isolation or as substitutes for our financial results as reported in
accordance with GAAP. Please see
Appendix A
for an explanation of and reconciliation of these non-GAAP financial measures to the applicable GAAP
financial measures.
2015 Individual Component
In 2015, Messrs. Waldis, Garcia and Rizer and Ms. Rosenberger's individual component of his or her annual cash
incentive compensation was based upon our Compensation Committee's subjective assessment of his or her individual performance.
Based
on their assessment and Mr. Waldis' recommendations (other than with respect to his own incentive compensation), our Compensation Committee awarded the following as the individual
component of their annual cash incentive compensation:
-
•
-
Mr. Waldis received 100% due to his integral role in leading our Company during the year through our strong growth and our
entrance into the enterprise market.
-
•
-
Ms. Rosenberger received 90% due to her efforts in helping us achieve our continued strong financial performance.
-
•
-
Mr. Garcia received 90% due to his strong performance in integrating our acquisitions and ensuring our operations continued to
perform well.
-
•
-
Mr. Rizer received 100% due to his strong performance in leading our acquisitions of RazorSight Corporation and certain assets
of F-Secure Corporation and the good progress our Company made on product management.
-
•
-
Mr. Schuette received 100% by meeting each of his individual objectives: drafting a comprehensive initial business plan for our
Enterprise business, hiring a strong management team, and leading our expansion of our Enterprise business through our strategic partnerships with Goldman Sachs and Verizon.
36
Table of Contents
As
such, our NEOs were awarded the following amounts under the 2015 cash incentive bonus plan:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Target
Bonus for
Corporate
Component
|
|
|
Percentage of
Corporate
Component
Target Awarded
|
|
|
Actual
Corporate
Component
Awarded
|
|
|
Target
Bonus for
Individual
Component
|
|
|
Individual
Component
Percentage of
Base Salary
|
|
|
Actual
Individual
Component
Awarded
|
|
|
Total Bonus
Awarded
|
|
|
|
|
|
Stephen G. Waldis
|
|
$
|
591,165
|
|
|
129
|
%
|
$
|
762,099
|
|
$
|
59,117
|
|
|
100.0
|
%
|
$
|
59,117
|
|
$
|
821,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
$
|
165,000
|
|
|
129
|
%
|
$
|
212,709
|
|
$
|
33,000
|
|
|
90.0
|
%
|
$
|
29,700
|
|
$
|
242,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
$
|
305,964
|
|
|
129
|
%
|
$
|
394,432
|
|
$
|
43,709
|
|
|
90.0
|
%
|
$
|
39,338
|
|
$
|
433,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
$
|
294,000
|
|
|
129
|
%
|
$
|
379,010
|
|
$
|
42,000
|
|
|
100.0
|
%
|
$
|
42,000
|
|
$
|
421,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Schuette
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
250,000
|
|
|
100.0
|
%
|
$
|
250,000
|
|
$
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Long-Term Equity Incentive Compensation
Plan
Our Compensation Committee awards time-based restricted shares, stock options and performance-based restricted shares to our NEOs as
the long-term equity incentive component of their compensation, targeting an annual mix of one-third for each of these equity awards (based on grant date fair value). The number of stock options,
target number of performance-based restricted shares and time-based restricted shares to be granted to our NEOs is based on our Compensation Committee's general understanding of competitive pay
practices, our CEO's recommendation (except his own) and other factors it deemed appropriate.
Time-based Restricted Stock and Stock Options
In February 2015, our Compensation Committee awarded time-based restricted stock, determined the targets for the 2015
performance-based restricted share awards and granted options to purchase shares of our Common Stock to our NEOs whom our Company employed on such date. The restricted shares vest one-third on each of
the first, second and third anniversary of their grant date and the stock options vest one-fourth on the first anniversary of their grant date and monthly thereafter over the next thirty-six months.
The time-based vesting helps tie our NEOs variable realizable compensation to our performance and further align their interests with those of our stockholders. See Description of Awards Granted in
2015, below. The number of shares of time-based restricted stock awarded and number of shares subject to the options granted were:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Time-Based
Shares of Restricted Stock
|
|
Number of Shares
Subject to Options
|
|
|
|
|
|
Stephen G. Waldis
|
|
25,901
|
|
70,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
6,137
|
|
16,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Garcia
|
|
16,978
|
|
46,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
3,836
|
|
10,447
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Table of Contents
Performance-based Restricted Shares
As part of the changes to our executive compensation program, our Compensation Committee awarded our NEOs a target number of
performance-based restricted shares ("2015-2017 Performance Shares"), the actual number of performance shares issued will depend on our Company's financial performance over the three-year period
commencing on January 1, 2015 based on the following criteria: 60% based on non-GAAP revenue, 30% based on
non-GAAP EBITDA and 10% based on Cloud Revenue. The specific target values for the 2015-2017 Performance Shares are set using aggressive three-year growth targets tied to key corporate financial
metrics. The metrics for 2015 are the same as described below for the 2015-2016 Performance Shares, but the metrics for the later years are not publicly disclosed at the time of grant due to the
proprietary nature and competitive sensitivity of the information. However, the method used to calculate the awards will be based on actual performance compared to our Company's targets for the
2015-2017 Performance Shares, as shown below, which use straight-line interpolation between points. Shares earned (if any) will be issued in January 2018, and will vest upon issuance. Our NEOs were
awarded the following opportunity with respect to the 2015-2017 Performance Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
Stephen G. Waldis
|
|
|
12,951
|
|
|
25,901
|
|
|
51,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
3,069
|
|
|
6,137
|
|
|
12,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
8,489
|
|
|
16,978
|
|
|
33,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
1,918
|
|
|
3,836
|
|
|
7,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
the transition to the new executive long-term incentive compensation program, our Compensation Committee recognized that there would be a gap in the equity provided to our NEOs for a two-year
transition period during which they would not be eligible to receive any performance-based restricted shares. To address this gap and to provide a retention incentive during the phase-in of the new
program, our Compensation Committee approved a "one-time" transition grant of performance-based restricted shares. One portion would be based on our financial results in each of 2015 and 2016 (the
"2015-2016 Performance Shares") and, to address investors' concerns with respect to our customer concentration, one portion would be based on the ability for our Company to establish a new line of
business with a meaningful revenue run rate by the end of 2017 (the "New Business Performance Shares").
Our
NEOs were awarded the following opportunity with respect to the 2015-2016 Performance Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
Stephen G. Waldis
|
|
|
12,951
|
|
|
25,901
|
|
|
51,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
3,069
|
|
|
6,137
|
|
|
12,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
8,489
|
|
|
16,978
|
|
|
33,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
1,918
|
|
|
3,836
|
|
|
7,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-thirds
of the 2015-2016 Performance Shares will be earned based on our 2016 non-GAAP revenue, non-GAAP EBITDA and Cloud Revenue and will be issued on or about February 2017. One-third of the
2015-2016 Performance Shares was earned based on performance against our non-GAAP revenue, non-GAAP EBITDA and Cloud Revenue for 2015 based on the targets for these metrics approved by our
Compensation Committee and presented below.
38
Table of Contents
For
2015, the non-GAAP revenue and EBITDA targets are the same targets applicable to the 2015 annual cash incentive compensation plan discussed under "2015 Annual Cash Incentive Bonus Compensation."
The weighting of the various components for both 2015 and 2016 was set at 60% for non-GAAP revenue, 30% for non-GAAP EBITDA and 10% for Cloud Revenue. Each of the components was separately assigned a
"threshold" level which sets the minimum achievement necessary to be satisfied to receive a portion of the applicable bonus amounts and a "maximum" level whereby if achieved or exceeded our NEOs would
receive 200% of the target portion attributed to such component. The 2015 long-term equity incentive compensation plan is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Component
|
|
Threshold
25% payout
|
|
Target
100% payout
|
|
Maximum
200% payout
|
|
Weighting
|
|
|
|
|
|
Non-GAAP Revenue*
|
|
$522,775,000
|
|
$565,000,000
|
|
$595,160,000
|
|
60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA*
|
|
$170,853,000
|
|
$198,000,000
|
|
$213,465,000
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud Revenue
|
|
$259,057,000
|
|
$280,000,000
|
|
$295,000,000
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
2015, our non-GAAP revenue was $580,091,000, representing 26% growth from 2014. Our 2015 non-GAAP revenue was approximately halfway between the target and maximum thresholds, 138% of the target.
Our 2015 EBITDA was $208,096,000, representing 34% growth from 2014. Our 2015 non-GAAP EBITDA was approximately two-thirds of the maximum threshold, representing 149%. Our 2015 Cloud Revenue was
$310,116,000 representing 46% growth from 2014, and more than the maximum threshold. As a result, our NEOs (other than Mr. Schuette)
received 162% of the target number of performance-based restricted shares, all of such shares vested upon issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Component
|
|
Achievement
|
|
Plan Payout
|
|
Weighting
|
|
|
|
|
|
Non-GAAP Revenue*
|
|
$580,091,000
|
|
150%
|
|
60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA*
|
|
$208,096,000
|
|
174%
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cloud Revenue
|
|
$310,116,000
|
|
200%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
These
financial measures are non-GAAP measures and should not be reviewed in isolation or as substitutes for our financial results as reported in accordance
with GAAP. Please see
Appendix A
for an explanation of and reconciliation of these non-GAAP financial measures to the applicable GAAP financial
measures.
The
actual number of 2015-2016 Performance Shares awarded based on our 2015 performance is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Performance
Shares Awarded
|
|
|
|
|
|
Stephen G. Waldis
|
|
|
4,317
|
|
|
8,634
|
|
|
17,268
|
|
|
13,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
1,023
|
|
|
2,045
|
|
|
4,090
|
|
|
3,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
2,829
|
|
|
5,658
|
|
|
11,316
|
|
|
9,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
640
|
|
|
1,280
|
|
|
2,560
|
|
|
2,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
respect to the New Business Shares, these shares will only be awarded to the extent we are able to establish a new line of business with a material annual revenue run rate by the end of 2017. The
specific target annual revenue run rate for the New Business Performance Shares is set at an aggressive annual revenue run rate and aligned with shareholder interests, but is not publicly disclosed at
the
39
Table of Contents
time
of grant due to the proprietary nature and competitive sensitivity of the information. At the time of grant, our Company did not have a new line of business and achieving a meaningful revenue run
rate by the end of 2017 is a significantly challenging goal, achievement of which is uncertain. Our NEOs were awarded the following New Business Performance Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
Stephen G. Waldis
|
|
|
6,476
|
|
|
12,951
|
|
|
12,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
1,535
|
|
|
3,069
|
|
|
3,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
4,245
|
|
|
8,489
|
|
|
8,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
959
|
|
|
1,918
|
|
|
1,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Grants
Upon joining Synchronoss, Mr. Schuette was initially granted one-time (i) options to purchase 13,751 shares, vesting
one-fourth after one year from the date of grant and 1/48
th
each month of continuous service with our Company thereafter and (ii) 5,039 restricted shares, vesting
one-fourth after one year from the date of grant and 1/16
th
each three-month period of continuous service with our Company thereafter. In reviewing Mr. Schuette's
compensation later in 2015, our Compensation Committee determined his initial equity grant was made prior to determining the strategic role of our Enterprise business. In recognition of the importance
of his work in driving our Enterprise business forward, which we view as a key component of our future growth, our Compensation Committee awarded Mr. Schuette an additional 50,000 restricted
shares, vesting one-fourth after one year from the date of grant and 1/16
th
each three-month period of continuous service with our Company thereafter. Our Compensation Committee
based the amount of Mr. Schuette's equity grant on, among other things, the size of the equity grants of our other executive officers, his expected senior role at our Company in driving our
Enterprise business, his expertise in the Enterprise industry, and its general understanding of competitive pay practices.
On
May 11, 2015, our Equity Committee awarded Mr. Rizer one-time 20,000 restricted shares of our Common Stock vesting one-fourth after one year from the date of grant and
1/16
th
each three-month period of continuous service with our Company thereafter. Mr. Rizer received these restricted shares due to his expanded role and increased
responsibilities as part of a reorganization of our Company.
Employment Agreements, Other Benefits and
Perquisites
Effective January 1, 2015, we entered into three-year employment agreements with each of our NEOs, other than
Mr. Schuette, that expire on December 31, 2017.
Upon joining our Company, Mr. Schuette entered into an employment agreement which expires on December 31, 2017. Each employment agreement includes a severance arrangement that provides
enhanced benefits in the case of involuntary termination following a change in control which is designed to promote stability and continuity of our senior management. For a description of the terms of
the employment agreements, please see "Employment Agreements" on page 51. Our NEOs are eligible to participate in all of our employee benefit plans (other than our employee stock purchase
plan), such as medical, dental, vision, group life and disability insurance and our 401(k) plan, in each case on the same basis as our other employees. We lease an automobile (and pay applicable
insurance and gas) for Mr. Waldis and Ms. Rosenberger and provide a car allowance to Mr. Garcia, each to be used primarily for business purposes. There were no other special
benefits or perquisites provided to any NEO in 2015.
40
Table of Contents
Financial
Restatement and Related Policies
We maintain a comprehensive Ethics and Business Conduct Policy. As part of this policy, we investigate all reported instances of
questionable or unethical behavior, and where improper behavior is found to have occurred, we take appropriate action up to and including termination. In the event that an investigation uncovers that
one of our employees, officers or directors commits fraud or other improper act which causes our financials for any period to be restated or otherwise affects such financials, we would take immediate
and appropriate disciplinary action against the individual including but not limited to termination. In addition, we would take whatever legal remedies are available to prosecute the individual to the
fullest extent of the law and recover any amounts he or she inappropriately received as a result of the fraudulent action, including but not limited to any annual or long-term incentives that he or
she received but would not have received had such act not be taken.
Executive
Officer Stock Ownership Guidelines
We have instituted stock ownership guidelines for our executive officers with the purpose of ensuring they maintain a meaningful
equity stake in our Company to
further align our executive officers' interests with those of our stockholders. Each executive officer who is subject to Section 16 of the Securities Exchange Act or directly reports to our CEO
(including all our NEOs) is required to own, as of the later of January 1, 2019 or five years from the date such individual begins reporting to our CEO or becomes a Section 16 officer, a
number of vested shares of our Common Stock having a value equal to (a) five times the base salary for our CEO; (b) three times the base salary for our President and Chief Operating
Officer, Chief Financial Officer, and President of any division (i.e., International) and (c) one and one-half times the base salary for other executive officers. In the event an
executive officer is not compliant at the end of such five year period, our Compensation Committee may reduce future equity grants to such executive officer until he or she is compliant. Based on
share holdings on April 6, 2016, each of our NEOs exceeded the minimum holding requirements on that date.
Tax Matters
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), places a $1,000,000 limit on the amount of
compensation that we may deduct in any one year with respect to our CEO and our three other most highly paid NEOs (other than our CFO). To maintain flexibility in compensating NEOs in a manner
designed to promote varying corporate goals, our Compensation Committee may, in its judgment, authorize compensation payments that are not deductible when it believes that such payments are
appropriate, including attracting and retaining highly-qualified executive officers.
41
Table of Contents
|
Compensation Committee Report(1)
|
The
Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the
Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement submitted by the following members of the
Compensation Committee:
William J.
Cadogan, Chairman
Charles E. Hoffman
Thomas J. Hopkins
-
(1)
-
The
material in this report is not "soliciting material," is not deemed "filed" with the SEC and is not to be incorporated by reference in any filing of
Synchronoss Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such
filing.
42
Table of Contents
Summary Compensation Table
The following table sets forth all of the compensation awarded to, earned by, or paid to our "principal executive officer," "principal financial
officer" and our three other highest paid executive officers (our "NEOs") for 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(2)
|
|
Stock
Awards
($)(3)
|
|
Option
Awards
($)(8)
|
|
Non-Equity
Incentive Plan
Compensation
(9)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
|
Stephen G. Waldis
|
|
|
2015
|
|
|
591,165
|
|
|
59,117
|
|
|
4,269,514
|
(4)
|
|
1,128,651
|
|
|
762,099
|
|
|
23,613
|
(10)
|
|
6,834,159
|
|
|
Chairman of the
|
|
|
2014
|
|
|
573,947
|
|
|
57,395
|
|
|
2,879,044
|
|
|
1,429,622
|
|
|
903,966
|
|
|
33,051
|
|
|
5,877,025
|
|
|
Board and CEO
|
|
|
2013
|
|
|
557,230
|
|
|
40,692
|
|
|
3,211,040
|
|
|
1,246,512
|
|
|
139,308
|
|
|
37,061
|
|
|
5,231,843
|
|
|
Karen L. Rosenberger
|
|
|
2015
|
|
|
330,000
|
|
|
29,700
|
|
|
1,011,634
|
(5)
|
|
267,436
|
|
|
212,709
|
|
|
19,704
|
(11)
|
|
1,871,183
|
|
|
EVP, Chief Financial
|
|
|
2014
|
|
|
286,002
|
|
|
22,500
|
|
|
969,045
|
|
|
223,224
|
|
|
236,250
|
|
|
14,905
|
|
|
1,751,926
|
|
|
Officer and Treasurer
|
|
|
2013
|
|
|
236,900
|
|
|
4,027
|
|
|
169,693
|
|
|
65,262
|
|
|
36,246
|
|
|
7,650
|
|
|
519,778
|
|
|
Robert Garcia
|
|
|
2015
|
|
|
437,091
|
|
|
39,338
|
|
|
2,798,597
|
(6)
|
|
739,817
|
|
|
394,432
|
|
|
17,150
|
(12)
|
|
4,426,425
|
|
|
President & Chief
|
|
|
2014
|
|
|
424,360
|
|
|
38,192
|
|
|
2,395,400
|
|
|
889,514
|
|
|
467,857
|
|
|
17,000
|
|
|
4,242,323
|
|
|
Operating Officer
|
|
|
2013
|
|
|
412,000
|
|
|
28,900
|
|
|
1,680,753
|
|
|
652,624
|
|
|
72,100
|
|
|
7,650
|
|
|
2,854,028
|
|
|
Daniel Rizer
|
|
|
2015
|
|
|
385,786
|
|
|
42,000
|
|
|
1,553,078
|
(7)
|
|
167,139
|
|
|
379,010
|
|
|
7,950
|
(13)
|
|
2,534,963
|
|
|
EVP, Business
|
|
|
2014
|
|
|
318,270
|
|
|
28,644
|
|
|
664,450
|
|
|
245,322
|
|
|
250,638
|
|
|
7,800
|
|
|
1,515,124
|
|
|
Development and
|
|
|
2013
|
|
|
309,000
|
|
|
6,000
|
|
|
409,008
|
|
|
158,261
|
|
|
54,000
|
|
|
7,650
|
|
|
943,920
|
|
|
Product Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Schuette(1)
|
|
|
2015
|
|
|
183,333
|
|
|
250,000
|
|
|
2,004,025
|
|
|
195,979
|
|
|
—
|
|
|
—
|
|
|
2,633,337
|
|
|
EVP, Enterprise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Schuette's
employment with us commenced on August 1, 2015.
-
(2)
-
The
amounts set forth in this column represent the subjective individual component portion of our annual cash incentive bonus awards paid to the NEOs. See
"Compensation Discussion and Analysis" above for further discussion of the subjective individual component.
-
(3)
-
The
amounts in this column reflect the grant date fair value, computed in accordance with FASB ASC Topic No. 718, of the actual number of performance
share awards granted to our NEOs and the time-based restricted stock awarded to our NEOs. See "Compensation Discussion and Analysis" above for further discussion of these stock awards. See Footnote 2
to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of our assumptions in estimating the fair value of our stock
awards. Our executive officers will not realize the estimated value of these awards until these awards are sold.
-
(4)
-
Although
the actual number of performance-based shares was used in the Summary Compensation Table, the grant date fair market value of the performance-based
restricted share award assuming the highest level of performance conditions was achieved was $5,330,060.
-
(5)
-
Although
the actual number of performance-based shares was used in the Summary Compensation Table, the grant date fair market value of the performance-based
restricted share award assuming the highest level of performance conditions was achieved was $1,262,925.
-
(6)
-
Although
the actual number of performance-based shares was used in the Summary Compensation Table, the grant date fair market value of the performance-based
restricted share award assuming the highest level of performance conditions was achieved was $3,493,818.
-
(7)
-
Although
the actual number of performance-based shares was used in the Summary Compensation Table, the grant date fair market value of the performance-based
restricted share award assuming the highest level of performance conditions was achieved was $799,576.
-
(8)
-
The
amounts in this column reflect the grant date fair value, computed in accordance with FASB ASC Topic No. 718, of option awards granted to our
NEOs. See Footnote 2 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of our assumptions in estimating the
fair value of our stock option awards. Our NEOs will not realize the estimated value of these awards until these awards are exercised or sold.
-
(9)
-
The
amounts under this column include amounts paid based on the objective corporate component of the Company's annual incentive bonus compensation plan
described under "Compensation Discussion and Analysis."
-
(10)
-
Reflects
amounts paid to Mr. Waldis for leasing an automobile, including insurance premiums, and 401(k) matching contribution.
-
(11)
-
Reflects
amounts paid to Ms. Rosenberger for leasing an automobile, including insurance premiums, and 401(k) matching contribution.
-
(12)
-
Reflects
amounts paid for a car allowance (including insurance), and 401(k) matching contribution.
-
(13)
-
Reflects
amounts paid to Mr. Rizer for 401(k) matching contribution.
43
Table of Contents
Grants of Plan Based Awards
The following table sets forth each plan-based award granted to our NEOs during the year ended December 31, 2015. The FASB ASC Topic
No. 718 value of these
awards is also reflected in the Stock Awards and Option Awards columns of the Summary Compensation Table above:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive Plan
Awards(1)
|
|
Performance Stock Awards:
Number of Shares of Stock
or Units
|
|
Number
of
Shares
of Stock
or Units
(#)
|
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
|
|
|
|
|
|
Awards
Securities
Underlying
Options
(#)
|
|
Value of
Stock and
Option
Awards
($)(11)
|
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
Stephen G.
|
|
|
|
|
|
146,313
|
|
|
585,253
|
|
|
1,024,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waldis
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,546
|
(9)
|
|
41.37
|
|
|
1,128,651
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,901
|
(5)
|
|
|
|
|
|
|
|
1,071,524
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
12,951
|
|
|
25,901
|
|
|
51,802
|
(2)
|
|
|
|
|
|
|
|
|
|
|
1,184,453
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
12,951
|
|
|
25,901
|
|
|
51,802
|
(3)
|
|
|
|
|
|
|
|
|
|
|
1,421,288
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
6,476
|
|
|
12,951
|
|
|
12,951
|
(4)
|
|
|
|
|
|
|
|
|
|
|
592,249
|
|
|
Karen L.
|
|
|
|
|
|
44,550
|
|
|
178,200
|
|
|
311,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rosenberger
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,716
|
(9)
|
|
41.37
|
|
|
267,436
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,137
|
(5)
|
|
|
|
|
|
|
|
253,888
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
3,069
|
|
|
6,137
|
|
|
12,274
|
(2)
|
|
|
|
|
|
|
|
|
|
|
280,645
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
3,069
|
|
|
6,137
|
|
|
12,274
|
(3)
|
|
|
|
|
|
|
|
|
|
|
336,756
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
1,535
|
|
|
3,069
|
|
|
3,069
|
(4)
|
|
|
|
|
|
|
|
|
|
|
140,345
|
|
|
Robert E.
|
|
|
|
|
|
78,676
|
|
|
314,706
|
|
|
550,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garcia
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,242
|
(9)
|
|
41.37
|
|
|
739,817
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.978
|
(5)
|
|
|
|
|
|
|
|
702,380
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
8,489
|
|
|
16,978
|
|
|
33,956
|
(2)
|
|
|
|
|
|
|
|
|
|
|
776,404
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
8,489
|
|
|
16,978
|
|
|
33,956
|
(3)
|
|
|
|
|
|
|
|
|
|
|
931,612
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
4,245
|
|
|
8,489
|
|
|
8,489
|
(4)
|
|
|
|
|
|
|
|
|
|
|
388,202
|
|
|
Daniel Rizer
|
|
|
|
|
|
69,441
|
|
|
277,766
|
|
|
486,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,477
|
(9)
|
|
41.37
|
|
|
167,139
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,836
|
(5)
|
|
|
|
|
|
|
|
158.695
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
1,918
|
|
|
3,836
|
|
|
7,672
|
(2)
|
|
|
|
|
|
|
|
|
|
|
177,684
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
1,918
|
|
|
3,836
|
|
|
7,672
|
(3)
|
|
|
|
|
|
|
|
|
|
|
213,257
|
|
|
|
|
|
2/9/2015
|
|
|
|
|
|
|
|
|
|
|
|
959
|
|
|
1,918
|
|
|
1,918
|
(4)
|
|
|
|
|
|
|
|
|
|
|
88,842
|
|
|
|
|
|
5/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(6)
|
|
|
|
|
|
|
|
914,600
|
|
|
David Schuette
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,751
|
(10)
|
|
39.10
|
|
|
195,979
|
|
|
|
|
|
8/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,039
|
(7)
|
|
|
|
|
|
|
|
197,025
|
|
|
|
|
|
12/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(8)
|
|
|
|
|
|
|
|
1,807,000
|
|
-
(1)
-
Each
of our NEOs was granted a non-equity incentive plan award pursuant to our 2015 annual incentive bonus compensation plan. The amounts shown in the
"Threshold" column reflect the cash payment level under our 2015 annual incentive bonus plan if we achieved the threshold payout level for a single corporate objective with the lowest weight. The
amounts shown in the "Target" column reflect the target payment level under our 2015 annual incentive bonus plan if we achieved all of the objectives previously approved by our Compensation Committee.
The amounts shown in the "Maximum" column reflect the maximum payouts under our 2015 annual incentive bonus compensation plan with respect to the objectives previously approved by our Compensation
Committee. The corporate and business components of our 2015 annual incentive bonus compensation plan are discussed in greater detail in "Compensation Discussion and Analysis." The actual amounts paid
to each NEO are shown in the Summary Compensation Table above. The table does not include the individual discretionary component portion of the NEO's aggregate targeted annual cash incentive bonus
amount.
-
(2)
-
Reflects
a 2015-2017 performance-based restricted share award as described in greater detail in "Compensation Discussion and Analysis." The 2015-2017
performance-based restricted share awards triggered the issuance of a certain number of restricted shares of Common Stock based on the achievement of our 2015-2017 financial performance. The amounts
shown in the "threshold" column reflect the minimum number of restricted shares of Common Stock issuable under the 2015-2017 performance-based restricted share awards if certain minimum financial
goals were achieved. The amounts shown in the "target" column reflect the number of restricted shares of Common Stock issuable under the 2015-2017
44
Table of Contents
performance-based
restricted share awards if all of the 2015-2017 financial goals were achieved at on-target levels. The amounts shown in the "maximum" column reflect the maximum number of restricted
shares of Common Stock issuable under the 2015-2017 performance-based restricted share if all of the 2015-2016 financial goals were surpassed.
-
(3)
-
Reflects
a special one-time 2015-2016 performance-based restricted share award as part of the transition to a three-year performance criteria for our
performance-based restricted share awards, as described in greater detail in "Compensation Discussion and Analysis." One-third of the performance-based share awards triggered the issuance of a certain
number of restricted shares of Common Stock based on the achievement of our 2015 financial performance and two-thirds of the performance-based restricted shares awards trigger the issuance of a
certain number of restricted shares of Common Stock based on the achievement of our 2016 financial performance. The amounts shown in the "threshold" column reflect the minimum number of restricted
shares of Common Stock issuable under the 2015-2016 performance-based restricted share awards if certain minimum financial goals were achieved. The amounts shown in the "target" column reflect the
number of restricted shares of Common Stock issuable under the 2015-2016 performance-based restricted share awards if all of the 2015-2016 financial goals were achieved at on-target levels. The
amounts shown in the "maximum" column reflect the maximum number of restricted shares of Common Stock issuable under the 2015-2016 performance-based restricted share if all of the 2015-2016 financial
goals were surpassed.
-
(4)
-
Reflects
a special "new business" performance-based restricted share award as described in greater detail in "Compensation Discussion and Analysis." The
"new business" performance-based restricted share awards triggered the issuance of a certain number of restricted shares of Common Stock based on the achievement of certain criteria after the end of
the three-year period commencing January 1, 2015. The amounts shown in the "threshold" column reflect the minimum number of restricted shares of Common Stock issuable under the "new business"
performance-based restricted share awards if certain minimum financial goals were achieved with respect to the "new business". The amounts shown in the "target" column reflect the number of restricted
shares of Common Stock issuable under the "new business" performance-based restricted share awards if all of the "new business" criteria were achieved at on-target levels during the three-year period
commencing January 1, 2015. The amounts shown in the "maximum" column reflect the maximum number of restricted shares of Common Stock issuable under the "new business" performance-based
restricted share if all of the "new business" criteria were surpassed during the three-year period commencing January 1, 2015.
-
(5)
-
One-third
of the restricted shares issued vests on February 9 of each of 2016, 2017 and 2018, provided he or she remains continuously employed by our
Company through each such date.
-
(6)
-
One-fourth
of the restricted shares vests on May 11, 2016, and an additional 1/16th of the restricted shares vest upon completion of each
period of three-months of continuous service thereafter.
-
(7)
-
One-fourth
of the restricted shares vests on August 1, 2016 provided he has continuous service from the grant date, and an additional
1/16th of the restricted shares vest upon completion of each period of three-months of continuous service thereafter.
-
(8)
-
One-fourth
of the restricted shares vests on December 17, 2016 provided he has continuous service from the grant date, and an additional
1/16th of the restricted shares vest upon completion of each period of three-months of continuous service thereafter.
-
(9)
-
Each
stock option becomes exercisable with respect to the first 25% of the shares subject to the option upon completion of 12 months of continuous
service after February 9, 2015, and with respect to an additional
1
/
48
of the shares subject to the option upon completion of each month of continuous service thereafter.
-
(10)
-
Each
stock option becomes exercisable with respect to the first 25% of the shares subject to the option upon completion of 12 months of continuous
service after August 1, 2015, and with respect to an additional
1
/
48th
of the shares subject to the option upon completion of each month of continuous service
thereafter.
-
(11)
-
The
amount in this column reflects the grant date fair value, computed in accordance with FASB ASC Topic No. 718, of stock awards and options
granted to our NEOs. See Footnote 2 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of our assumptions in
estimating the fair value of our stock and option awards.
45
Table of Contents
Description
of Awards Granted in 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
|
Stephen G. Waldis:
|
|
|
|
|
|
|
|
On February 9, 2015, we granted Mr. Waldis (i) an option to purchase 70,546 shares of our Common Stock, (ii) 25,901 restricted shares of our Common Stock, (iii) a performance-based restricted stock award pursuant to which
Mr. Waldis is entitled to receive up to 51,802 restricted shares of our Common Stock based on our Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the 2015-2017 Performance Shares,
(iv) a performance-based restricted stock award pursuant to which Mr. Waldis was entitled to receive up to 51,802 restricted shares of our Common Stock based on our Company's performance metrics discussed in the Compensation Discussion and
Analysis section of this proxy for the 2015-2016 Performance Shares and (v) a performance-based restricted stock award pursuant to which Mr. Waldis is entitled to receive up to 12,951 restricted shares of our Common Stock based on our
Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the New Business Performance Shares. On January 27, 2016, 13,813 2015-2016 Performance Shares were issued to Mr. Waldis based on
our Company's 2015 financials.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
|
Karen L. Rosenberger:
|
|
|
|
|
|
|
|
On February 9, 2015, we granted Ms. Rosenberger (i) an option to purchase 16,716 shares of our Common Stock, (ii) 6,137 restricted shares of our Common Stock, (iii) a performance-based restricted stock award pursuant to
which Ms. Rosenberger is entitled to receive up to 12,274 restricted shares of our Common Stock based on our Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the 2015-2017 Performance
Shares, (iv) a performance-based restricted stock award pursuant to which Ms. Rosenberger was entitled to receive up to 12,274 restricted shares of our Common Stock based on our Company's performance metrics discussed in the Compensation
Discussion and Analysis section of this proxy for the 2015-2016 Performance Shares and (v) a performance-based restricted stock award pursuant to which Ms. Rosenberger is entitled to receive up to 3,069 restricted shares of our Common Stock
based on our Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the New Business Performance Shares. On January 27, 2016, 3,272 2015-2016 Performance Shares were issued to
Ms. Rosenberger based on our Company's 2015 financials.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
|
Robert E. Garcia:
|
|
|
|
|
|
|
|
On February 9, 2015, we granted Mr. Garcia (i) an option to purchase 46,242 shares of our Common Stock, (ii) 16,978 restricted shares of our Common Stock, (iii) a performance-based restricted stock award pursuant to which
Mr. Garcia is entitled to receive up to 33,956 restricted shares of our Common Stock based on the Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the 2015-2017 Performance Shares,
(iv) a performance-based restricted stock award pursuant to which Mr. Garcia was entitled to receive up to 33,956 restricted shares of our Common Stock based on the Company's performance metrics discussed in the Compensation Discussion and
Analysis section of this proxy for the 2015-2016 Performance Shares and (v) a performance-based restricted stock award pursuant to which Mr. Garcia was entitled to receive up to 8,489 restricted shares of our Common Stock based on our
Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the New Business Performance Shares. On January 27, 2016, 9,052 2015-2016 Performance Shares were issued to Mr. Garcia based on
our Company's 2015 financials.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
|
Daniel Rizer:
|
|
|
|
|
|
|
|
On February 9, 2015, we granted Mr. Rizer (i) an option to purchase 10,447 shares of our Common Stock, (ii) 3,836 restricted shares of our Common Stock, (iii) a performance-based restricted stock award pursuant to which
Mr. Rizer is entitled to receive up to 7,672 restricted shares of our Common Stock based on our Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the 2015-2017 Performance Shares,
(iv) a performance-based restricted stock award pursuant to which Mr. Rizer was entitled to receive up to 7,672 restricted shares of our Common Stock based on our Company's performance metrics discussed in the Compensation Discussion and
Analysis section of this proxy for the 2015-2016 Performance Shares and (v) a performance-based restricted stock award pursuant to which Mr. Rizer is entitled to receive up to 1,918 restricted shares of our Common Stock based on our
Company's performance metrics discussed in the Compensation Discussion and Analysis section of this proxy for the New Business Performance Shares. On January 27, 2016, 2,048 2015-2016 Performance Shares were issued to Mr. Rizer based on our
Company's 2015 financials. On May 11, 2015, as a special one-time award, we granted Mr. Rizer 20,000 restricted shares of our Common Stock.
|
|
|
|
|
|
|
|
|
|
|
46
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
|
David Schuette:
|
|
|
|
|
|
|
|
On August 1, 2015, in connection with his joining the Company, we granted Mr. Schuette (i) an option to purchase 13,751 shares of our Common Stock and (ii) 5,039 restricted shares of our Common Stock. On December 17, 2015,
based on additional information and Mr. Schuette's performance in his initial months with our Company, we granted Mr. Schuette an additional 50,000 restricted shares of our Common Stock.
|
|
|
|
|
|
|
|
|
|
|
With
respect to each of Messrs. Waldis, Garcia and Rizer and Ms. Rosenberger:
-
(a)
-
each
stock option granted becomes exercisable with respect to the first 25% of the shares subject to the option upon completion of 12 months of continuous
service after February 9, 2015, and with respect to an additional
1
/
48
th
of the shares subject to the option upon completion of each month of continuous service
thereafter;
-
(b)
-
one-third
of the restricted shares issued to him or her on February 9, 2015 vests on each of February 8, 2016, 2017 and 2018, provided he or
she remains continuously employed by our Company through each such date;
-
(c)
-
the
2015-2017 Performance Shares shall vest upon issuance on or about January 2018, provided he or she remains continuously employed by our Company through
such date;
-
(d)
-
one-third
of the 2015-2016 Performance Shares vested upon issuance on January 27, 2016;
-
(e)
-
two-thirds
of the 2015-2016 Performance Shares shall vest upon issuance in January 2017 based on our financial performance in 2016, provided the NEO remains
continuously employed by our Company through such date; and
-
(e)
-
the
New Business Performance Shares shall vest upon issuance in January 2018 contingent on our Company meeting certain objectives, provided he or she
remains continuously employed by our Company through such date.
With
respect to Mr. Rizer's May 11, 2015 grant of restricted shares, one-fourth of the shares will vest on May 11, 2016 and an additional
1
/
16
th
of
the restricted shares will vest following each three-month period thereafter, subject to Mr. Rizer's continued service on each vesting date.
With
respect to Mr. Schuette, (a) the stock option granted to him on August 1, 2015 becomes exercisable with respect to the first 25% of the shares subject to the option upon his
completion of 12 months of continuous service after the grant date, and with respect to an additional
1
/
48
th
of the shares subject to the option upon his completion of
each month of continuous service thereafter and (b) with respect to the restricted shares granted to him on each of August 1, 2015 and December 17, 2015, the first 25% of the
shares will vest upon his completion of 12 months of continuous service after the grant date, and an additional
1
/
16
th
of the shares will vest upon his completion of each
period of three months of continuous service thereafter.
47
Table of Contents
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding each unexercised option and all unvested stock held by each of our NEOs as of
December 31, 2015:
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|
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Option Awards
|
|
Stock Awards
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|
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Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)
|
|
Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)(1)
|
|
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)
|
|
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)(27)
|
|
|
|
|
|
Stephen G. Waldis
|
|
58,300(2)
|
|
-0-
|
|
14.00
|
|
12/1/2016
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|
|
|
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|
|
84,000(3)
|
|
-0-
|
|
27.55
|
|
12/7/2017
|
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|
|
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|
|
160,000(4)
|
|
-0-
|
|
30.50
|
|
12/6/2018
|
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|
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|
|
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|
|
|
|
|
54,117(5)
|
|
22,283
|
|
31.02
|
|
2/14/2020
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,065(6)
|
|
47,348
|
|
32.40
|
|
2/13/2021
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
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|
|
|
-0-
|
|
70,546(10)
|
|
41.37
|
|
2/9/2022
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
10,186(12)
|
|
358,853
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
5,019(13)
|
|
176,819
|
|
|
|
|
|
|
|
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|
|
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|
|
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|
|
|
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|
|
|
|
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|
|
26,995(14)
|
|
951,034
|
|
|
|
|
|
|
|
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|
|
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|
|
33,744(15)
|
|
1,188,801
|
|
|
|
|
|
|
|
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|
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|
|
25,901(16)
|
|
912,492
|
|
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|
|
51,802(24)
|
|
1,824,984
|
|
|
|
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|
|
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|
|
51,802(25)
|
|
1,824,984
|
|
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|
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|
|
12,951(26)
|
|
456,264
|
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|
|
|
|
Karen L. Rosenberger
|
|
188(3)
|
|
-0-
|
|
27.55
|
|
12/7/2017
|
|
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|
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|
|
2,178(4)
|
|
-0-
|
|
30.50
|
|
12/6/2018
|
|
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|
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|
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|
|
|
|
|
1,416(5)
|
|
1,167
|
|
31.02
|
|
2/14/2020
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
1,117(7)
|
|
2,903
|
|
32.24
|
|
2/20/2021
|
|
|
|
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|
|
|
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|
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|
|
|
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|
|
1,273(8)
|
|
4,457
|
|
35.19
|
|
4/1/2021
|
|
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|
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|
|
|
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|
|
|
|
|
|
-0-
|
|
16,716(10)
|
|
41.37
|
|
2/9/2022
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
533(12)
|
|
18,778
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
269(13)
|
|
9,477
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
6,137(16)
|
|
216,207
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
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|
|
|
|
|
|
|
|
219(17)
|
|
7,715
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
1,386(18)
|
|
48,829
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
2,080(19)
|
|
73,278
|
|
|
|
|
|
|
|
|
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|
|
14,085(20)
|
|
496,215
|
|
|
|
|
|
|
|
|
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|
|
12,274(24)
|
|
432,413
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
12,274(25)
|
|
432,413
|
|
|
|
|
|
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|
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|
|
3,069(26)
|
|
108,121
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
Robert Garcia
|
|
13,750(3)
|
|
-0-
|
|
30.50
|
|
12/6/2018
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
9,166(5)
|
|
11,667
|
|
31.02
|
|
2/14/2020
|
|
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|
|
11,458(6)
|
|
29,792
|
|
32.40
|
|
2/13/2021
|
|
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|
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|
|
6,875(9)
|
|
625
|
|
30.11
|
|
1/3/2019
|
|
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|
|
-0-
|
|
46,242(10)
|
|
41.37
|
|
2/9/2022
|
|
|
|
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|
|
5,333(12)
|
|
187,882
|
|
|
|
|
|
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|
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|
|
2,626(13)
|
|
92,514
|
|
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|
|
18,000(14)
|
|
634,140
|
|
|
|
|
|
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|
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|
|
22,500(15)
|
|
792,675
|
|
|
|
|
|
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|
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|
|
16,978(16)
|
|
598,135
|
|
|
|
|
|
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|
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|
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|
|
937(20)
|
|
33,011
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
33,956(24)
|
|
1,196,270
|
|
|
|
|
|
|
|
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|
|
33,956(25)
|
|
1,196,270
|
|
|
|
|
|
|
|
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|
|
8,489(26)
|
|
299,067
|
|
|
|
|
|
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|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
4,871(5)
|
|
2,829
|
|
31.02
|
|
2/14/2020
|
|
|
|
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|
|
|
|
|
4,375(6)
|
|
8,125
|
|
32.40
|
|
2/13/2021
|
|
|
|
|
|
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|
|
|
|
-0-
|
|
10,447(10)
|
|
41.37
|
|
2/9/2022
|
|
|
|
|
|
|
|
|
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|
|
1,293(12)
|
|
45,552
|
|
|
|
|
|
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|
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|
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|
|
|
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|
|
642(13)
|
|
22,618
|
|
|
|
|
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|
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|
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|
|
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|
|
4,000(14)
|
|
140,920
|
|
|
|
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|
|
|
5,000(15)
|
|
176,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,836(16)
|
|
135,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000(21)
|
|
704,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,672(24)
|
|
270,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,672(25)
|
|
270,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,918(26)
|
|
67,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Schuette
|
|
-0-
|
|
13,751(11)
|
|
39.10
|
|
9/1/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,039(22)
|
|
177,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000(23)
|
|
1,761,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
Table of Contents
-
(1)
-
Computed
in accordance with SEC rules as the number of unvested shares multiplied by the closing market price per share of our Common Stock on
December 31, 2015, which was $35.23 per share. The actual value (if any) to be realized by the NEO depends on whether the shares vest and the future performance of our Common Stock. Each of the
options and restricted shares automatically vest if we are acquired and the NEO is either involuntarily terminated or voluntarily resigns for good reason under certain circumstances following our
change of control, as discussed in more detail below under "Employment Agreements."
-
(2)
-
The
option vested over four years of continuous service following December 1, 2009, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option is fully exercisable.
-
(3)
-
The
option vested over four years of continuous service following December 7, 2010, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option is fully exercisable.
-
(4)
-
The
option vested over four years of continuous service following December 6, 2011, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option is fully exercisable.
-
(5)
-
The
option vests over four years of continuous service following February 14, 2013, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on February 14, 2017.
-
(6)
-
The
option vests over four years of continuous service following February 13, 2014, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on February 13, 2018.
-
(7)
-
The
option vests over four years of continuous service following February 20, 2014, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on February 20, 2018.
-
(8)
-
The
option vests over four years of continuous service following April 1, 2014, with 25% vesting after the first year of service and the remaining
shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on April 1, 2018.
-
(9)
-
The
option vests over four years of continuous service following January 3, 2012, with 25% vesting after the first year of service and the remaining
shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on January 3, 2016.
-
(10)
-
The
option vests over four years of continuous service following February 9, 2015, with 25% vesting after the first year of service and the
remaining shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on February 9, 2019.
-
(11)
-
The
option vested over four years of continuous service following August 1, 2015, with 25% vesting after the first year of service and the remaining
shares vesting in equal monthly installments over an additional 36 months of continuous service. As a result, the option will be fully exercisable on August 1, 2019.
-
(12)
-
Reflects
restricted shares granted on February 14, 2013. The remaining unvested shares will vest on February 14, 2016 provided the NEO
remains continuously employed by our Company.
-
(13)
-
Reflects
performance-based restricted shares awarded on February 14, 2013, and issued (based on our 2013 financial performance) on
January 29, 2014. Under the terms of this grant, the remaining unvested shares will vest on February 13, 2016, provided the NEO remains continuously employed by our Company.
-
(14)
-
Reflects
restricted shares granted on February 13, 2014. One half of the unvested shares will vest on each of February 14, 2016 and 2017
provided the NEO remains continuously employed by our Company.
-
(15)
-
Reflects
performance-based restricted shares awarded on February 13, 2014, and issued (based on our 2014 financial performance) on
January 29, 2015. One half of the unvested shares will vest on each of February 13, 2016 and 2017, provided the NEO remains continuously employed by our Company.
49
Table of Contents
-
(16)
-
Reflects
restricted shares granted on February 9, 2015. One-third of the shares shall vest on each of February 9, 2016, 2017 and 2018,
provided the NEO remains continuously employed by our Company.
-
(17)
-
Reflects
restricted shares vesting over four years of continuous service following January 3, 2012, with 25% of the shares vesting after the first
year of service and the remaining shares vesting ratably on a quarterly basis thereafter. As a result, the shares will fully vest on January 3, 2016.
-
(18)
-
Reflects
restricted shares vesting over four years of continuous service following February 20, 2014, with 25% of the shares vesting after the first
year of service and the remaining shares vesting ratably on a quarterly basis thereafter. As a result, the shares will fully vest on February 20, 2018.
-
(19)
-
Reflects
performance-based restricted shares awarded on February 20, 2014, and issued (based on our 2014 financial performance) on
January 29, 2015. One-third of the unvested shares will vest on each of February 20, 2016 and 2017, provided the NEO remains continuously employed by our Company.
-
(20)
-
Reflects
restricted shares vesting over four years of continuous service following April 1, 2014,with 25% of the shares vesting after the first year
of service and the remaining shares vesting ratably on a quarterly basis thereafter. As a result, the shares will fully vest on April 1, 2018.
-
(21)
-
Reflects
restricted shares vesting over four years of continuous service following May 11, 2015, with 25% of the shares vesting after the first year
of service and the remaining shares ratably on a quarterly basis thereafter. As a result, the shares will fully vest on May 11, 2019.
-
(22)
-
Reflects
restricted shares vesting over four years of continuous service following April 1, 2015, with 25% of the shares vesting after the first
year of service and the remaining shares ratably on a quarterly basis thereafter. As a result, the shares will fully vest on April 1, 2019.
-
(23)
-
Reflects
restricted shares vesting over four years of continuous service following December 17, 2015, with 25% of the shares vesting after the first
year of service and the remaining shares ratably on a quarterly basis. As a result, the shares will fully vest on December 17, 2019.
-
(24)
-
Each
NEO employed by our Company as of February 9, 2015 was awarded a 2015-2016 performance-based restricted share award as described in greater
detail in "Compensation Discussion and Analysis." The amounts shown reflect the maximum award if all of the goals were achieved based on 2015 financial metrics. The actual number of restricted shares
of our Common Stock issued with respect to one-third of the award was determined based on our 2015 financial performance and is shown in the table below. The remaining two-thirds of the award is based
on our 2016 financial performance and will be issued (if earned) in January 2017. All of the shares earned vested upon issuance.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waldis
|
|
|
|
13,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rosenberger
|
|
|
|
3,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garcia
|
|
|
|
9,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rizer
|
|
|
|
2,048
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(25)
-
Each
NEO employed by our Company as of February 9, 2015 was awarded a 2015-2017 performance-based restricted share award as described in greater
detail in "Compensation Discussion and Analysis." The amounts shown reflect the maximum award if all of the goals are achieved. The actual number of shares will be determined in January 2018 at which
time the shares will be issued, not subject to any further vesting.
-
(26)
-
Each
NEO employed by our Company as of February 9, 2015 was awarded a new business performance-based restricted share award as described in greater
detail in "Compensation Discussion and Analysis." The amounts shown reflect the maximum award if all of the goals were achieved. The actual number of shares will be determined in January 2018 at which
time the shares will be issued, not subject to any further vesting.
-
(27)
-
Computed
in accordance with SEC rules equal to the number of unvested shares multiplied by the closing market price per share of our Common Stock on
December 31, 2015, which was $35.23 per share. The actual value (if any) to be realized by the NEO depends on whether the shares vest and the future performance of our Common Stock.
50
Table of Contents
Option Exercises and Stock Vested
The
following table shows the number of shares acquired upon exercise of options by each NEO during the year ended December 31, 2015, and the shares of restricted stock acquired by each named
executive officer that vested during the year ended December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
Name
|
|
|
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
|
|
|
Value
Realized on
Exercise
($)(1)
|
|
|
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
|
|
|
Value
Realized on
Vesting
($)(1)
|
|
|
|
|
|
Stephen G. Waldis
|
|
|
|
|
168,000
|
|
|
|
|
5,507,846
|
|
|
|
|
55,954
|
|
|
|
|
2,601,350
|
|
|
|
|
|
Karen L. Rosenberger
|
|
|
|
|
4,437
|
|
|
|
|
48,630
|
|
|
|
|
12,766
|
|
|
|
|
573,515
|
|
|
|
|
|
Robert E. Garcia
|
|
|
|
|
107,667
|
|
|
|
|
1,600,129
|
|
|
|
|
39,358
|
|
|
|
|
1,706,644
|
|
|
|
|
|
Daniel Rizer
|
|
|
|
|
13,954
|
|
|
|
|
217,993
|
|
|
|
|
8,229
|
|
|
|
|
358,321
|
|
|
|
|
|
David Schuette
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
-
(1)
-
For
option awards, value realized is based on the fair market value of our Common Stock on exercise date less the exercise price. For stock awards, value
realized is based on the fair market value of our Common Stock on the vesting date. In neither case do the amounts set forth above necessarily reflect proceeds actually received by the NEO. Our NEOs
will not realize the estimated value of these awards until the underlying shares are sold.
Employment Agreements
Effective
January 1, 2015, we entered into three-year employment agreements with each of our NEOs, other than Mr. Schuette, which expire on December 31, 2017. Upon joining our
Company, Mr. Schuette entered into an agreement which also expires on December 31, 2017. Each employment agreement includes a severance benefit designed to promote stability and
continuity of our senior management. Our Compensation Committee believes these agreements enhance our ability to retain the services of our NEOs, including in the event of a threatened or actual
change in control, appropriately balancing our interests with those of our stockholders. In addition, our Compensation Committee believes that the events triggering payment, are fair hurdles for
providing this protection.
Each
of our NEOs would receive severance under his or her respective employment agreement if he or she is subject to an involuntary termination, contingent on the NEO's signing and not revoking a
general release of all claims against us. The severance program is provided as a temporary source of income in the event of an NEO's involuntary termination of employment.
If
prior to, or more than 24 months following, the occurrence of our change in control, any of our NEOs' employment is subject to an involuntary termination, he or she shall receive a lump-sum
severance payment equal to one and one-half times his or her base salary, plus his or her average bonus received in the immediately preceding two years (two times such base salary and average bonus
with respect to Mr. Waldis). If such involuntary termination occurs within 24 months following our change in control, the NEO shall receive a lump sum severance payment equal to two
times his or her base salary in effect at the time (2.99 times such base salary with respect to Mr. Waldis), plus two times his or her average bonus received in the immediately preceding two
years. In addition, his or her outstanding options and restricted shares will vest and become exercisable in full. If an NEO dies or terminates due to permanent disability, the NEO or his or her
estate will receive an amount equal to his or her target cash
51
Table of Contents
incentive
bonus for the fiscal year in which such termination occurs, prorated based on the number of days of employment completed during that fiscal year.
In
addition, if the NEO or his or her personal representative elects to continue health insurance coverage under COBRA for him or her and his or her dependents following the termination of his or her
employment due to permanent disability or such NEO is subject to an involuntary termination, then we will pay the monthly premium under COBRA until the earliest of the (a) end of the 24-month
period following the termination of his or her employment, (b) expiration of his or her continuation coverage under COBRA or (c) date he or she becomes eligible for substantially
equivalent health insurance coverage in connection with new employment.
"Involuntary
termination" means a (i) discharge without cause (other than due to death or permanent disability) or (ii) resignation following (1) a change in (a) position
that materially reduces his or her level of authority or responsibility, (b) his or her compensation, perquisites or benefits, or (2) a relocation of his or her workplace by more than 50
miles.
A
"change in control" includes: (i) a merger after which our stockholders own 50% or less of the surviving corporation or its parent company; (ii) a sale of 80% or more of the total
gross fair market value of our assets; (iii) a proxy contest that results in the replacement of more than one-half of our directors over a 24 month period; or (iv) an acquisition
of 30% or more of our outstanding stock by any person or group, other than a person related to us, such as a holding company owned by our stockholders. None of the NEO employment agreements provide
for any tax gross-up provisions, including with respect to a change in control.
52
Table of Contents
Estimated Payments and Benefits
The table below reflects the potential payments and benefits to which the named executive officers would be entitled pursuant to their respective
employment agreements. There are no agreements, arrangements or plans that entitle executive officers to severance, perquisites, or other enhanced benefits in connection with the termination of their
employment other than the employment agreements. The amounts shown in the table below assume that each termination was effective as of December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Voluntary
Resignation/
Termination
for Cause($)
|
|
Involuntary
Termination
Prior to, or More
Than 24 Months
after, a Change
in Control($)
|
|
Termination
Due to
Death or
Disability($)
|
|
Involuntary
Termination
Within 24 Months
After a Change
in Control($)
|
|
|
Stephen G. Waldis
|
|
Severance(1)
|
|
|
-0-
|
|
|
2,964,907
|
|
|
650,282
|
|
|
3,550,160
|
|
|
|
|
Option Acceleration(2)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
227,806
|
|
|
|
|
Restricted Stock Acceleration(3)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
4,074,631
|
|
|
|
|
Accrued Vacation(4)
|
|
|
11,369
|
|
|
11,369
|
|
|
11,369
|
|
|
11,369
|
|
|
|
|
Benefit Continuation(5)
|
|
|
-0-
|
|
|
25,505
|
|
|
25,505
|
(6)
|
|
25,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
11,369
|
|
$
|
3,001,781
|
|
$
|
687,155
|
|
$
|
7,889,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L. Rosenberger
|
|
Severance(1)
|
|
|
-0-
|
|
|
745,580
|
|
|
198,000
|
|
|
1,161,159
|
|
|
|
|
Option Acceleration(2)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
13,771
|
|
|
|
|
Restricted Stock Acceleration(3)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
985,771
|
|
|
|
|
Accrued Vacation(4)
|
|
|
6,346
|
|
|
6,346
|
|
|
6,346
|
|
|
6,346
|
|
|
|
|
Benefit Continuation(5)
|
|
|
-0-
|
|
|
25,505
|
|
|
25,505
|
(6)
|
|
25,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
6,346
|
|
|
777,431
|
|
$
|
229,851
|
|
$
|
2,192,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
Severance(1)
|
|
|
-0-
|
|
|
1,125,546
|
|
|
349,673
|
|
|
1,814,001
|
|
|
|
|
Option Acceleration(2)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
136,629
|
|
|
|
|
Restricted Stock Acceleration(3)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
2,657,258
|
|
|
|
|
Accrued Vacation(4)
|
|
|
8,406
|
|
|
8,406
|
|
|
8,406
|
|
|
8,406
|
|
|
|
|
Benefit Continuation(5)
|
|
|
-0-
|
|
|
25,505
|
|
|
25,505
|
(6)
|
|
25,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
8,406
|
|
$
|
1,159,457
|
|
$
|
383,584
|
|
$
|
4,641,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
Severance(1)
|
|
|
-0-
|
|
|
928,825
|
|
|
231,472
|
|
|
1,471,865
|
|
|
|
|
Option Acceleration(2)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
34,904
|
|
|
|
|
Restricted Stock Acceleration(3)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
1,297,133
|
|
|
|
|
Accrued Vacation(4)
|
|
|
7,419
|
|
|
7,419
|
|
|
7,419
|
|
|
7,419
|
|
|
|
|
Benefit Continuation(5)
|
|
|
-0-
|
|
|
20,627
|
|
|
20,627
|
(6)
|
|
20,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
7,419
|
|
|
956,871
|
|
$
|
259,518
|
|
$
|
2,831,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Schuette
|
|
Severance(1)
|
|
|
-0-
|
|
|
525,000
|
|
|
146,666
|
|
|
866,666
|
|
|
|
|
Option Acceleration(2)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
|
|
Restricted Stock Acceleration(3)
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
1,939,024
|
|
|
|
|
Accrued Vacation(4)
|
|
|
3,526
|
|
|
3,526
|
|
|
3,526
|
|
|
3,526
|
|
|
|
|
Benefit Continuation(5)
|
|
|
-0-
|
|
|
24,169
|
|
|
24,169
|
(6)
|
|
24,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Value
|
|
$
|
3,526
|
|
$
|
552,694
|
|
$
|
174,361
|
|
$
|
2,833,384
|
|
-
(1)
-
For
purposes of valuing cash severance payments in the table above, we used each executive officer's base salary and target bonus as of December 31,
2015.
-
(2)
-
The
value of option acceleration shown in the table above was calculated based on the assumption that the triggering event occurred on December 31,
2015. The value of the vesting acceleration was calculated by multiplying the number of unvested shares subject to each option by the excess of the closing price of our Common Stock on
December 31, 2015, over the exercise price of the option.
-
(3)
-
The
value of restricted stock acceleration shown in the table above was calculated based on the assumption that the triggering event occurred on
December 31, 2015. The value of the vesting acceleration was calculated by multiplying the number of unvested shares subject to each restricted stock grant by the closing price of our Common
Stock on December 31, 2015.
-
(4)
-
Based
on each executive officer's base salary in effect and the number of accrued but unused vacation days as of December 31, 2015.
-
(5)
-
Amounts
reflect two times the current cost to us of the individual's health and welfare benefits per year.
-
(6)
-
Only
payable in the event of a disability.
53
Table of Contents
Report
of the Audit Committee(1)
The Audit Committee of the Board consists of the three non-employee directors named below. The Board annually reviews the Nasdaq
listing standards' definition of independence for audit committee members and has determined that each member of the Audit Committee meets that standard. The Board has also determined that each of
Donnie M. Moore and Thomas Hopkins is an audit committee financial expert as described in applicable rules and regulations of the Securities and Exchange Commission.
The
principal purpose of the Audit Committee is to assist the Board in its general oversight of the Company's accounting and financial reporting processes and audits of the Company's financial
statements. The Audit Committee is responsible for selecting and engaging the Company's independent registered public accounting firm and approving the audit and non-audit services to be provided by
the independent registered public accounting firm. The Audit Committee's function is more fully described in its Charter, which the Board has adopted and which the Audit Committee reviews on an annual
basis.
The
Company's management is responsible for preparing the Company's financial statements and the Company's financial reporting process. Ernst & Young LLP, the Company's independent
registered public accounting firm, is responsible for performing an independent audit of the Company's consolidated financial statements and expressing an opinion on the conformity of those financial
statements with U.S. generally accepted accounting principles. The Audit Committee has reviewed and discussed with the Company's management the audited financial statements of the Company included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the "10-K").
The
Audit Committee has also reviewed and discussed with Ernst & Young LLP the audited financial statements in the 10-K. In addition, the Audit Committee discussed with Ernst &
Young LLP those matters required to be discussed by Statement on Auditing Standards No. 61, as amended or supplemented, entitled "Communications with Audit Committees." Additionally,
Ernst & Young LLP provided to the Audit Committee the written disclosures and the letter required by Rule 3526 of the Public Company Accounting Oversight Board (Communications
with Audit Committees Concerning Independence). The Audit Committee also discussed with Ernst & Young LLP its independence from the Company.
Based
upon the review and discussions described above, the Audit Committee recommended to our Board of Directors that the audited financial statements be included in the 10-K for filing with the
United States Securities and Exchange Commission.
Submitted
by the following members of the Audit Committee:
Donnie
M. Moore, Chairman
William J. Cadogan
Thomas J. Hopkins
-
(1)
-
The
material in this report is not "soliciting material," is not deemed "filed" with the SEC and is not to be incorporated by reference in any filing of
Synchronoss Technologies, Inc. under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such
filing.
54
Table of Contents
Equity
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of April 6, 2016 with respect to the beneficial ownership of our Common Stock by
persons known to us to own beneficially more than 5% of our Common Stock, each of our directors, our NEOs, and all of our executive officers and directors as a group. We have no other class of equity
securities outstanding.
As
of March 23, 2016, 45,204,451 shares of our Common Stock were outstanding. The amounts and percentages of our Common Stock beneficially owned are reported on the basis of regulations of the
Securities and Exchange Commission ("SEC") governing the determination of beneficial ownership of securities. Under the SEC rules, a person is deemed to be a "beneficial owner" of a security if that
person has or shares "voting power," which includes the power to vote or direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition
of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more
than one person may be deemed a beneficial owner of securities as to which such person has no economic interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner (*)
|
|
|
Beneficially
Owned (1)
|
|
Percent
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen G. Waldis
|
|
|
935,101
|
(3)
|
2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. McCormick
|
|
|
3,125,561
|
(4)
|
6.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Cadogan
|
|
|
344,852
|
(5)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charlie E. Hoffman
|
|
|
85,378
|
(6)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Hopkins
|
|
|
84,678
|
(7)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donnie M. Moore
|
|
|
96,092
|
(8)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen L Rosenberger
|
|
|
45,280
|
(9)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Garcia
|
|
|
131,109
|
(10)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Rizer
|
|
|
49,115
|
(11)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Schuette
|
|
|
55,039
|
(12)
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (15 persons)
|
|
|
5,114,473
|
(13)
|
11.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC, 82 Devonshire Street, Boston, MA 02109
|
|
|
3,280,157
|
(14)
|
7.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackrock, Inc., 40 East 52
nd
Street, New York, NY 10022
|
|
|
3,832,174
|
(15)
|
8.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oak Ridge Investments LLC, 10 S. LaSalle St., Chicago, IL 60603
|
|
|
2,554,166
|
(16)
|
5.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RBC Global Asset Management (US) Inc.,
50 So. Sixth St., Minneapolis, MN 55402
|
|
|
2,616,977
|
(17)
|
5.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355
|
|
|
2,887,460
|
(18)
|
6.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Unless
otherwise indicated, the address of each beneficial owner is c/o Synchronoss Technologies, Inc., 200 Crossing Boulevard, Bridgewater, NJ
08807.
-
**
-
Less
than 1% of the shares of Common Stock outstanding as of March 23, 2016.
-
(1)
-
Represents
sum of shares owned and shares which may be purchased upon exercise of options exercisable within 60 days of March 23, 2016.
-
(2)
-
Any
shares not outstanding which are subject to options exercisable within 60 days of March 23, 2016 are deemed outstanding for the purpose of
computing the percentage of outstanding shares owned by any
55
Table of Contents
person
holding such shares but are not deemed outstanding for the purpose of computing the percentage of shares owned by any other person.
-
(3)
-
Includes
101,845 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 498,259 shares subject to options
exercisable within 60 days of March 23, 2016. Excludes 187,400 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(4)
-
Includes
870,000 shares held by Vertek Corporation, of which Mr. McCormick is the Chief Executive Officers and sole stockholder. Mr. McCormick
exercises sole voting and dispositive power with respect to such shares. Includes 6,670 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 75,000 shares
subject to options exercisable within 60 days of March 23, 2016. Excludes 15,000 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(5)
-
Includes
6,670 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 50,000 shares held by Barbara Cadogan,
Mr. Cadogan's wife. Includes 85,000 shares subject to options exercisable within 60 days of March 23, 2016. Excludes 15,000 shares subject to options not exercisable within
60 days of March 23, 2016.
-
(6)
-
Includes
6,670 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 75,000 shares subject to options exercisable
within 60 days of March 23, 2015. Excludes 15,000 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(7)
-
Includes
6,670 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 85,000 shares subject to options exercisable
within 60 days of March 23, 2016. Excludes 15,000 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(8)
-
Includes
6,670 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 70,000 shares subject to options exercisable
within 60 days of March 23, 2016. Excludes 15,000 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(9)
-
Includes
28,425 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 4,106 shares subject to options exercisable
within 60 days of March 23, 2016. Excludes 29,219 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(10)
-
Includes
31,568 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 115,209 shares subject to options
exercisable within 60 days of March 23, 2016. Excludes 115,304 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(11)
-
Includes
42,487 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 17,500 shares subject to options
exercisable within 60 days of March 23, 2016. Excludes 56,082 shares subject to options not exercisable within 60 days of March 23, 2016.
-
(12)
-
Includes
14,771 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 14,561 shares subject to options
exercisable within 60 days of March 16, 2015. Excludes 26,461 shares subject to options not exercisable within 60 days of March 16, 2015.
-
(13)
-
Includes
373,091 shares of restricted common stock subject to the Company's lapsing right of repurchase. Includes 1,162,994 shares subject to options
exercisable within 60 days of March 23, 2016. Excludes 617,805 shares subject to options not exercisable within 60 days of March 16, 2015.
-
(14)
-
Information
on the holdings of FMR LLC includes the holdings of Fidelity Management & Research Company ("Fidelity Management"), and is taken
from its Schedule 13G filed on January 11, 2016. Edward C. Johnson 3d and FMR LLC, through its control of Fidelity Management, have sole power to dispose of the shares.
Members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC,
representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B stockholders have entered into a stockholders' voting agreement under which all
Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting
56
Table of Contents
common
shares and the execution of the stockholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with
respect to FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d, Chairman of FMR LLC, has the sole power to vote or direct the voting of the shares owned directly by the
Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees.
-
(15)
-
Information
on the holdings of BlackRock, Inc. includes the holdings of BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors,
BlackRock Asset Management Canada Limited, BlackRock Asset Management (Australia) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Ireland Limited, BlackRock Investment
Management, LLC, BlackRock Advisors (UK) Limited, BlackRock Investment Management (UK) Limited and BlackRock International Limited, and is taken from its Schedule 13G filed on
January 27, 2016.
-
(16)
-
Information
on the holdings of Oak Ridge Investments LLC is taken from its Schedule 13G filed on February 8, 2016.
-
(17)
-
Information
on RBC Global asset Management (US) Inc. is taken from its Schedule 13G filed on February 10, 2016.
-
(18)
-
Information
on the holdings of The Vanguard Group is taken from its Schedule 13G filed on February 10, 2016. Vanguard Fiduciary Trust
Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 83,377 shares of our Common Stock as a result of its serving as investment manager of collective trust
accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 4,400 shares of our Common Stock as a result of its
serving as investment manager of Australian investment offerings.
Certain Related Party Transactions
Transactions, arrangements or relationships in which we were, are or will be a participant and the amount involved exceeds $120,000,
and in which any related person had, has or will have a direct or indirect material interest are subject to review, approval or ratification by our Board or a committee composed of members of our
Board. Our Audit Committee has the principal responsibility for reviewing related person transactions pursuant to written policies and procedures adopted by our Board, subject to specified exceptions
and other than those that involve compensation. In conformance with regulations of the SEC, these policies and procedures define related persons to include our executive officers, our directors and
nominees to become a director of our Company, any person who is known to us to be the beneficial owner of more than 5% of any class of our voting securities, any immediate family member of, or person
sharing the household with, any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or in which such person has
a 5% or greater beneficial ownership interest. As set forth in our policies and procedures, it is our general policy that related person transactions shall be consummated or shall continue only if
approved or ratified by our Audit Committee or the disinterested members of our Board and only if the terms of the transaction are determined to be in, or not to be inconsistent with, the best
interests of our Company and our stockholders. The approval of our Compensation Committee is required to approve any transaction that involves compensation to our directors and executive officers.
This approval process does not apply to any transaction that is available to all of our employees generally.
During
2015, we engaged Meeker Sharkey as our insurance broker for our officers and directors, commercial liability and health benefits insurance. Thomas Sharkey, Jr., a principal of Meeker
Sharkey, is the brother in law of James M. McCormick, a member of our Board. During 2015, we paid Meeker
57
Table of Contents
Sharkey
$452,524. In addition to any value received by Mr. Sharkey, Jr. by virtue of his minority ownership interest in Meeker Sharkey, he received a commission from Meeker Sharkey in
connection with our insurance policies. Our Audit Committee approved our engagement of Meeker Sharkey as our insurance broker as a related party transaction. During 2015, we acquired certain contract
rights from Slide 3 Advisors, LLC for approximately $1.2 million. David Schuette, one of our NEOs was the majority owner of Slide 3 Advisors at the time of the acquisition. Other than
these engagements, there were no other transaction or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and
in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will
have a direct or indirect material interest, other than compensation arrangements, which are described where required under "Executive Compensation" and "Director Compensation."
Section 16(a) Beneficial Ownership
Reporting Compliance
We believe that, during the fiscal year ended December 31, 2015, our directors, NEOs, and greater than 10% stockholders
complied with all applicable Section 16(a) filing requirements. In making these statements, we have relied upon a review of the copies of Section 16(a) reports furnished to us and the
written representations of our directors, NEOs, and certain of our greater than 10% stockholders.
Other Matters
Our Board does not intend to bring any other business before the meeting, and so far as is known to the Board, no matters are to be
brought before the meeting except as specified in the notice of the meeting. In addition to the scheduled items of business, the meeting may consider stockholder proposals which are timely and comply
with the provisions of our amended and restated bylaws (including proposals omitted from the Proxy Statement and form of Proxy pursuant to the proxy rules of the SEC) and matters relating to the
conduct of the meeting. As to any other business that may properly come before the meeting, it is intended that proxies will be voted in respect thereof in accordance with the judgment of the persons
voting such proxies.
58
Table of Contents
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board currently consists of six directors divided into three classes with staggered three-year terms. Charles E. Hoffman has informed the
Company that he will not stand for re-election at the Annual Meeting in order to devote his full time and efforts to his other commitments. Following the Annual Meeting, the size of our Board is
expected to be decreased to five directors and there will be two Class II directors. Your proxy cannot be voted for
a greater number of persons than the number of nominees named in this proxy statement. Each director who is nominated for election to our Board this year, his age as of April 6, 2016, his
position and office held with us and certain biographical information are set forth below. Each director to be elected will hold office until the 2018 Annual Meeting of Stockholders and until his
successor is elected, or until his death, resignation or removal. Each nominee listed below is currently a director of our Company who was previously elected by the stockholders. It is our policy to
encourage nominees for director to attend the Annual Meeting.
Directors
are elected by a plurality of the votes cast at the Annual Meeting, meaning the nominees receiving the most "For" voting (among votes properly cast in person or by proxy) will be elected. An
instruction to "Withhold" authority to vote for a nominee will result in the nominee receiving fewer votes, but will not count as a vote against the nominee. Abstentions and "broker non-votes"
(i.e., shares held by a broker or nominee that are represented at the meeting, but with respect to which such broker or nominee is not instructed to vote on a particular proposal and does not
have discretionary voting power) will have no effect on the outcome of the election of a candidate for director. Because the election of a director is not a matter on which a broker or other nominee
is generally empowered to vote, broker non-votes are expected to exist in connection with this matter. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for
the election of the nominees named below. If either nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee
proposed by our current Board, if any. Each nominee for election has agreed to serve if elected. We have no reason to believe that either nominee will be unable to serve.
DIRECTOR QUALIFICATIONS.
The following paragraphs provide information as of the date of this proxy statement about each member of our Board, including the nominees. The
information presented includes information each director has provided about his age, positions he currently holds, his business experience for at least the past five years, other publicly-held
companies, if any, of which he currently serves as a director or has served as a director during the past five years, and involvement in certain legal or administrative proceedings, if applicable. In
addition to the information presented below regarding each director's experience and qualifications that lead our Board to the conclusion that he should serve as a director of our Company in light of
our business and structure, we also believe that all of our directors have a reputation for integrity and adherence to high ethical standards. Each of our directors has demonstrated business acumen
and an ability to exercise sound judgment, as well as a commitment to our Company and our Board.
59
Table of Contents
The Board of Directors recommends that stockholders vote
"FOR"
each of the nominees:
|
|
|
|
|
|
|
|
Director Since: 2000
Age: 56
Founder
|
|
James M. McCormick
James M. McCormick
is a founder of Synchronoss, has been a member of our Board since our inception in 2000 and served as our Treasurer from September 2000 until December 2001.
Mr. McCormick is founder and Chief Executive Officer of Vertek Corporation. Prior to founding Vertek in 1988, Mr. McCormick was a member of the Technical Staff at AT&T Bell Laboratories. Mr. McCormick received a Bachelor of Science
degree in computer science from the University of Vermont and a master of science degree in computer science from the University of California — Berkeley. Our Board believes Mr. McCormick's qualifications to sit on our Board include
his over 25 years in the consulting, telecommunications and services business, as well as being one of our founders.
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|
|
|
|
|
|
|
|
|
Director Since: 2007
Age: 67
Synchronoss Committees:
•
Audit
•
Nominating/Corporate
Governance
|
|
Donnie M. Moore
Donnie M. Moore
was Senior Vice President, Finance and Administration and Chief Financial Officer for Cognos Incorporated, a publicly-held company providing business intelligence and
performance management solutions, from 1989 until his retirement in 2001. From 1986 to 1989, Mr. Moore was Vice President, Finance and Chief Financial Officer of Cognos. Before joining Cognos, Mr. Moore held various positions at the
Burroughs Corporation from 1973 to 1986, including Corporate Director, Plans and Analysis. Mr. Moore holds a Bachelor of Science degree in engineering from the University of Oklahoma and a master in business administration degree from the
University of Houston. Our Board believes Mr. Moore's qualifications to sit on our Board include his extensive experience in the software industry and his financial expertise.
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60
Table of Contents
Continuing Director — Term
Ending in 2017
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|
|
|
|
|
|
|
|
Director Since: 2004
Age: 59
Synchronoss Committees:
•
Audit
•
Compensation
•
Business Development
|
|
Thomas J. Hopkins
Thomas J. Hopkins
is a Managing Director of Colchester Capital, LLC, an investment firm. Prior to Colchester Capital, Mr. Hopkins was involved in investment banking,
principally at Deutsche Bank (and its predecessor Alex, Brown & Sons), Goldman, Sachs & Co. and Bear Stearns. He began his investment banking career at Drexel Burnham Lambert. Prior to investment banking, Mr. Hopkins was a
lawyer for several years. Mr. Hopkins received a Bachelor of Arts degree from Dartmouth College, a juris doctorate from Villanova University School of Law and a master in business administration degree from the Wharton School at the University
of Pennsylvania. Our Board believes Mr. Hopkins' qualifications to sit on our Board include his extensive financial expertise and his years of experience providing strategic advisory services to complex organizations.
|
Continuing Directors — Term
Ending in 2018
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|
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|
|
Director Since: 2005
Age: 67
Synchronoss Committees:
•
Audit
•
Compensation
•
Business
Development
•
Nominating/Corporate
Governance
|
|
William J. Cadogan
William J. Cadogan
served as a Senior Managing Director with Vesbridge Partners, LLC, formerly St. Paul Venture Capital, a venture capital firm from 2001 until 2006.
Mr. Cadogan served as Chief Executive Officer and Chairman of the board of directors of Mahi Networks, Inc., a leading supplier of multi-service optical transport and switching solutions, from November 2004 until its merger with Meriton
Networks in October 2005. Prior to joining St. Paul Venture Capital in 2001, Mr. Cadogan was Chairman and Chief Executive Officer of ADC, Inc., a leading global supplier of telecommunications infrastructure products and services.
Mr. Cadogan received a Bachelor of Arts degree in electrical engineering from Northeastern University and a master in business administration degree from the Wharton School at the University of Pennsylvania. Our Board believes Mr. Cadogan's
qualifications to sit on our Board include his experience as a CEO leading complex global organizations, combined with his operational and corporate governance expertise.
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61
Table of Contents
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Founder
Chairman of the Board
Chief Executive Officer
Director Since: 2001
Age: 48
Synchronoss Committee:
•
Business Development
|
|
Stephen G. Waldis
Stephen G. Waldis
has served as our Chairman, Founder and CEO and a Director since founding Synchronoss in 2000. From 2000 until 2011, Mr. Waldis also served as President.
From 1994 to 2000, Mr. Waldis served as Chief Operating Officer at Vertek Corporation, a privately held professional services company serving the telecommunications industry. From 1992 to 1994, Mr. Waldis served as Vice President of Sales
and Marketing of Logical Design Solutions, a provider of telecom and interactive solutions. From 1989 to 1992, Mr. Waldis worked in various technical and product management roles at AT&T. Mr. Waldis received a Bachelor of Arts degree in
corporate communications from Seton Hall University. Our Board believes Mr. Waldis' qualifications to sit on our Board include his extensive experience in the software and services industry, and serving as our Chief Executive Officer and one of
our founders.
|
Incumbent Director — Not
Standing for Election
|
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|
|
|
|
|
|
|
Director Since: 2006
Age: 67
Synchronoss Committees:
•
Compensation
•
Nominating/Corporate
Governance Administration
|
|
Charles E. Hoffman
Charles E. Hoffman
has been the Dean of the College of Business of the University of Missouri-St. Louis since September 2013. From 2001 until he retired in 2008,
Mr. Hoffman was President and Chief Executive Officer of Covad Communications Group, Inc. Prior to 2001, Mr. Hoffman was President and Chief Executive Officer of Rogers AT&T. Prior to his time with Rogers, Mr. Hoffman served
as President, Northeast Region, for Sprint PCS. Preceding his time with Sprint PCS, Mr. Hoffman spent 16 years at SBC Communications in various senior management positions, including Managing Director-Wireless for SBC International.
Mr. Hoffman received a Bachelor of Science degree and a master in business administration degree from the University of Missouri.
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62
Table of Contents
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board has appointed Ernst & Young LLP, independent registered public accounting firm, as the
Company's independent registered public accounting firm for the fiscal
year ending December 31, 2016 and has further directed that management submit the appointment of the independent registered public accounting firm for ratification by the stockholders at the
Annual Meeting. Ernst & Young LLP has audited the Company's financial statements since its formation in 2000. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither
the Company's by-laws nor other governing documents or law require stockholder ratification of the appointment of Ernst & Young LLP as the Company's independent registered public
accounting firm. However, the Board is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders
fail to ratify the appointment, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its
discretion may direct the appointment of different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the
Company and its stockholders.
To
ratify the selection by the Audit Committee of Ernst & Young LLP, as the independent registered public accounting firm of the Company for its fiscal year ended December 31,
2016, the Company must receive a "For" vote from the majority of all the outstanding shares that are present in person or represented by proxy and cast either affirmatively or negatively at the Annual
Meeting. Abstentions and broker non-votes will not be counted "For" or "Against" the proposal and will have no effect on the proposal. Because this is a matter on which a broker or other nominee is
generally empowered to vote, broker non-votes are not expected to exist in connection with this matter.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM'S FEES
The following table represents aggregate fees billed to the Company for fiscal years ended December 31, 2015 and
December 31, 2014 by Ernst & Young LLP, the Company's principal accountant.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Fiscal Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees(1)
|
|
$
|
2,281
|
|
$
|
1,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Related Fees(2)
|
|
|
2
|
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
-0
|
-
|
|
-0
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
-0
|
-
|
|
-0
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
2,283
|
|
$
|
2,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
For
professional services rendered for the audits of annual financial statements, including the audit of annual financial statements for the years ended
December 31, 2015 and 2014. The audit fees also include the review of quarterly financial statements included in the Company's quarterly reports on Form 10-Q, statutory audits of foreign
subsidiaries and other regulatory filings or similar engagements.
-
(2)
-
Includes
fees which are for assurance and related services other than those included in Audit Fees.
63
Table of Contents
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee's policy is to pre-approve all audit and permissible non-audit services rendered by Ernst &
Young LLP, our independent registered public accounting firm. The Audit Committee can pre-approve specified services in defined categories of audit services, audit-related services and tax
services up to specified amounts, as part of the Audit Committee's approval of the scope of the engagement of Ernst & Young LLP or on an individual case-by-case basis before
Ernst & Young LLP is engaged to provide a service. The Audit Committee has determined that the rendering of the services other than audit services by Ernst & Young LLP is
compatible with maintaining the principal accountant's independence.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 2
64
Table of Contents
PROPOSAL 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act of 1934, as amended, we are requesting our stockholders to vote, on an advisory
basis, on the compensation of our named executive officers as described in the "Compensation of Executive Officers" section of this Proxy Statement. This proposal, commonly known as a "say-on-pay"
proposal, gives our
stockholders the opportunity to express their views on the compensation of our named executive officers.
Compensation Program and Philosophy
Our executive compensation philosophy and programs are designed to attract, retain and motivate high-quality executives who possess diverse skills
and talents required to help us achieve our short and long-term financial and strategic goals. We believe that the programs foster a performance-oriented culture that aligns our executives' interests
with those of our stockholders over the long term. Specifically, we tie a significant portion of executive compensation to stockholder return in the form of at-risk or variable realizable
compensation.
Fiscal 2015 Compensation
The following is a brief synopsis of the material decisions approved by our Compensation Committee regarding the 2015 compensation of our NEOs:
Adjustments to Base Salary:
In reviewing the base salaries of Messrs. Waldis and Garcia in early 2015, our Compensation Committee provided salary increases
of approximately 3% (representing the median base salary increase). In addition, since the salary of Ms. Rosenberger was below the competitive range of similarly situated chief financial
officers, her salary was increased by 10%. Mr. Rizer's salary was increased by approximately 32% to reflect his expanded role within our Company,
Performance-based Cash Bonus:
Our 2015 non-GAAP revenue and EBITDA were above the target set by our Board for 2015 but below the maximum threshold. As a result,
our NEOs received approximately 129% of their target cash incentive bonus with respect to the corporate goal portion. Messrs. Waldis, Garcia, Rizer and Ms. Rosenberger received 100%,
90%, 100% and 90%, respectively, of their target individual component portion. Due to Mr. Schuette joining our
Company in August 2015, our Board did not believe it was appropriate for his cash incentive bonus to have a corporate component. Therefore, his cash incentive bonus was based 100% on certain
individual objectives, all of which he met and therefore he received 100% of his target cash incentive bonus.
Performance-based Equity:
Since NEOs had previously been eligible for annual payouts under the old performance-based equity plan, as part of a transition to a
three-year plan in 2015, each NEO received a one-time transition award to address the vesting opportunity 'gap' between the old and new plans. Vesting of this transition award is contingent upon the
achievement of certain financial metrics in 2015 and 2016. With respect to the transition shares awarded based on our financial performance in 2015, our 2015 non-GAAP revenue and EBITDA were above the
target set by our Board for 2015 but below the maximum threshold. Our 2015 Cloud Revenue exceeded the maximum goals set by our Board. As a result, our NEOs whom our Company employed on
February 9, 2015 were issued an aggregate of 28,185 restricted shares of our Common Stock, or 10,568 shares more than the target number of
65
Table of Contents
performance-based
restricted shares that they were eligible to receive under the 2015-2016 performance-based restricted stock awards based on our 2015 financial performance.
Time-Based Equity:
Our NEOs whom our Company employed on February 9, 2015 were granted (i) an aggregate of 52,852 time-based restricted shares of our
Common Stock and (ii) stock options to purchase an aggregate of 143,951 shares of our Common Stock.
Employment Agreements.
Effective January 1, 2015, our Company entered into employment agreements with each of our NEOs which expire December 31,
2017. For a full description of these employment agreements please see page 51.
Compensation Discussion and Analysis
In addition to the above summary, stockholders are urged to read the "Compensation Discussion and Analysis" section of this Proxy Statement for
greater detail about our executive compensation program, including information about the fiscal year 2015 compensation of our named executive officers.
Recommendation
For the above reasons, we are asking our stockholders to indicate their support for the compensation of our named executive officers as described in
this Proxy Statement by voting in favor of the following resolution:
"RESOLVED,
that the stockholders advise that they approve, in a non-binding vote, the compensation of the Company's named executive officers as disclosed pursuant to the compensation disclosure rules
of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, related compensation tables, and the accompanying narrative disclosure set forth in the Proxy Statement
relating to the Company's 2016 Annual Meeting of Stockholders."
Even
though this say-on-pay vote is advisory and therefore will not be binding, our Compensation Committee and our Board value the opinions of our stockholders. Accordingly, we expect to take into
account the outcome of the vote when considering future executive compensation decisions.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSAL 3
66
Table of Contents
STOCKHOLDER
PROPOSALS FOR THE NEXT ANNUAL MEETING
If you wish to submit a proposal for inclusion in next year's proxy materials or nominate a director, your proposal must be in proper form according
to SEC Regulation 14A and Rule 14a-8, in conformance with the Company's by-laws and submitted in writing to Synchronoss Technologies, Inc., 200 Crossing Boulevard,
Bridgewater, New Jersey 08807, Attn: Secretary to be received no later than the close of business on December 7, 2016. If you
wish to submit a proposal to be presented at the 2015 Annual Meeting of Stockholders but which will not be included in the Company's proxy materials, your proposal must be submitted in writing and in
conformance with our by-laws to Synchronoss Technologies, Inc., 200 Crossing Boulevard, Bridgewater, New Jersey 08807, Attn: Secretary not before January 21, 2017 and no later
than February 20, 2017. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included. You are advised to review the Company's by-laws, which
contain additional requirements about advance notice of stockholder proposals and director nominations. You may obtain a copy of the Company's by-laws by writing to Synchronoss
Technologies, Inc., 200 Crossing Boulevard, Bridgewater, New Jersey 08807, Attn: Secretary.
NO INCORPORATION BY REFERENCE
In the Company's filings with the SEC, information is sometimes "incorporated by reference." This means that we are referring you to information that
has previously been filed with the SEC and the information should be considered as part of the particular filing. As provided under SEC regulations, the "Audit Committee Report" and the "Compensation
Committee Report" contained in this Proxy Statement specifically are not incorporated by reference into any other filings with the SEC and shall not be deemed to be "soliciting material". In addition,
this Proxy Statement includes several website addresses. These website addresses (including our corporate website at
www.synchronoss.com
) are intended
to provide inactive, textual references only and are not intended to be active hyperlinks in this proxy. The information on these websites is not part of this Proxy Statement.
CONTACT FOR QUESTIONS AND ASSISTANCE WITH VOTING
If you have any questions or require any assistance with voting your shares or need additional copies of this Proxy Statement or voting materials,
please contact:
Ronald
Prague, Esq.
Executive Vice President and General Counsel
Synchronoss Technologies, Inc.
200 Crossing Boulevard
Bridgewater, NJ 08807
or
Call (800) 575-7606
It
is important that your shares are represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, please vote using the Internet or by telephone or by signing and returning
a proxy card, if you have requested one, so your shares will be represented at the Annual Meeting.
The
form of Notice proxy and this Proxy Statement have been approved by the Board of Directors and are being mailed, delivered or made available to stockholders by its authority.
The
Board of Synchronoss Technologies, Inc.
Bridgewater, New Jersey
April 6, 2016
67
Table of Contents
Appendix A
Reconciliation of Non-GAAP Financial Information
(Unaudited – In thousands, except per share data)
Synchronoss
Technologies, Inc. ("Synchronoss") has provided in this proxy statement selected financial information that has not been prepared in accordance with GAAP.
This information includes non-GAAP revenues, gross profit, EBITDA and diluted earnings per share. Synchronoss uses these non-GAAP financial measures internally in analyzing its financial
results and believes they are useful to management and investors, as a supplement to GAAP measures, in evaluating Synchronoss' ongoing operational performance. Synchronoss believes that the use of
these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in
Synchronoss' industry, many of which present similar non-GAAP financial measures to investors. The non-GAAP financial results add back the deferred revenue write-down associated with acquisitions,
fair value stock- based compensation expense, acquisition-related costs, changes in the contingent consideration obligation, deferred compensation expense related to earn outs and amortization of
intangibles associated with acquisitions.
Non-GAAP
financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the
reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures in the tables below.
Reconciliation of GAAP to Non-GAAP Revenue
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
2015
|
|
2014
|
|
Non-GAAP financial measures and reconciliation:
|
|
|
|
|
|
|
|
GAAP Revenue
|
|
|
578,831
|
|
$
|
457,314
|
|
Add: Deferred Revenue Write-Down
|
|
|
1,260
|
|
|
1,299
|
|
|
|
|
|
|
|
|
|
Non-GAAP Revenue
|
|
|
580,091
|
|
$
|
458,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Gross Profit
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
2015
|
|
2014
|
|
GAAP Revenue
|
|
|
578,831
|
|
$
|
457,314
|
|
Less: Cost of Services
|
|
|
239,074
|
|
|
184,414
|
|
|
|
|
|
|
|
|
|
GAAP Gross Margin
|
|
|
339,757
|
|
|
272,900
|
|
Add: Deferred revenue write-down
|
|
|
1,260
|
|
|
1,299
|
|
Add: Fair value stock-based compensation
|
|
|
6,935
|
|
|
5,924
|
|
Add: Acquisition and restructuring costs
|
|
|
8,814
|
|
|
31
|
|
Add: Deferred compensation expense - earn-out
|
|
|
—
|
|
|
16
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Margin
|
|
|
356,766
|
|
$
|
280,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Margin %
|
|
|
62%
|
|
|
61%
|
68
Table of Contents
Reconciliation of GAAP Income from Operations to Non-GAAP EBITDA
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
2015
|
|
2014
|
|
GAAP income from operations
|
|
|
79,590
|
|
$
|
62,298
|
|
Add: Deferred revenue write-down
|
|
|
1,260
|
|
|
1,299
|
|
Add: Fair value stock-based compensation
|
|
|
31,711
|
|
|
28,987
|
|
Add: Acquisition and restructuring costs
|
|
|
22,623
|
|
|
2,938
|
|
Add: Net change in contingent consideration obligation
|
|
|
760
|
|
|
1,799
|
|
Add: Deferred compensation expense - earn-out
|
|
|
—
|
|
|
1,783
|
|
Add: Amortization expense
|
|
|
26,659
|
|
|
18,953
|
|
|
|
|
|
|
|
|
|
Non-GAAP income from operations
|
|
|
162,603
|
|
$
|
118,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
72,152
|
|
|
55,956
|
|
Less: Non-GAAP Amortization expense adjustment
|
|
|
(26,659)
|
|
|
(18,953)
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA
|
|
|
208,096
|
|
|
155,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Diluted Earnings Per Share
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
2015
|
|
2014
|
|
GAAP net income attributable to Synchronoss
|
|
|
40,630
|
|
|
38,895
|
|
Add: Deferred revenue write-down, net of tax
|
|
|
964
|
|
|
868
|
|
Add: Fair value stock-based compensation, net of tax
|
|
|
24,249
|
|
|
19,358
|
|
Add: Acquisition and restructuring costs, net of taxes
|
|
|
17,282
|
|
|
1,962
|
|
Add: Net change in contingent consideration obligation, net of Fx change, net of tax
|
|
|
760
|
|
|
1,855
|
|
Add: Deferred compensation expense - earn-out, net of tax
|
|
|
—
|
|
|
1,191
|
|
Add: Amortization expense, net of tax
|
|
|
20,264
|
|
|
12,657
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to Synchronoss
|
|
|
104,149
|
|
|
76,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: After-tax interest on convertible debt
|
|
|
2,135
|
|
|
776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for diluted EPS calculation
|
|
|
106,284
|
|
|
77,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted non-GAAP net income per share
|
|
|
2.23
|
|
|
1.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted shares outstanding - Diluted
|
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69
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Synchronoss Technologies, Inc. 750 Route 202, 6th Floor Bridgewater, NJ 08807 Attn: Dana Huppert ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For Withhold For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the AllAll The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. Election of Directors Nominees 01 James M. McCormick 02 Donnie M. Moore The Board of Directors recommends you vote FOR proposals 2 and 3. 2To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2016. 3To approve on a non-binding advisory basis the compensation of the Company's named executive officers. For 0 0 Against 0 0 Abstain 0 0 NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000277136_1 R1.0.1.25
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, 10K-Annual Report Wrap is/are available at www.proxyvote.com SYNCHRONOSS TECHNOLOGIES, INC. Annual Meeting of Shareholders May 17, 2016 10:00 A.M. This proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) Ronald J. Prague and Karen L. Rosenberger, or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of (Common/Preferred) stock of SYNCHRONOSS TECHNOLOGIES, INC. that the shareholder(s) is/are entitled to vote at the Annual Meeting of shareholder(s) to be held on May 17, 2016, at 10:00 A.M., at the Offices of Synchronoss Technologies, Inc. 200 Crossing Boulevard, Bridgewater, NJ 08807, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side 0000277136_2 R1.0.1.25
