UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
| Filed by the Registrant þ |
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| Filed by a Party other than the Registrant o |
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
CONSENSUS CLOUD SOLUTIONS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
| þ |
No Fee Required |
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Fee paid previously with preliminary materials |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a–6(i)(1) and 0–11 |
2023
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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DATE AND TIME
June 15, 2023
8:30am Pacific Time
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WHO CAN VOTE
Stockholders of record as of the close of business on April 18, 2023 will be entitled to notice of, and to vote at, the Annual Meeting, or any adjournment thereof.
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LOCATION
Online via live audiocast on
www.virtualshareholdermeeting.com/CCSI2023
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| VOTING ITEMS |
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| PROPOSALS |
BOARD
VOTE RECOMMENDATION |
FOR FURTHER DETAILS |
| 1 |
Election of 2 Class II directors named in this
proxy statement |
“FOR” each director nominee |
Page 11 |
| 2 |
Advisory vote to approve the appointment of BDO USA, LLP as
the Company’s independent registered public accounting firm for 2023 |
“FOR” |
Page 18 |
| 3 |
To approve, on a non-binding, advisory basis, the frequency
of future non-binding, advisory votes to approve the compensation of the Company’s named executive officers |
“1
Year” |
Page 20 |
Stockholders will also transact any other business that may be properly presented at the Annual Meeting. This proxy statement is first being made
available to our stockholders on April 28, 2023.
We are holding the Annual Meeting in a virtual-only format this year. To attend the Annual Meeting online, vote, submit questions or view the list
of registered stockholders during the meeting, stockholders of record will need to go to the meeting website listed above and log in using their 16-digit control number included on their proxy card or Notice. Beneficial owners should review these
proxy materials and their voting instruction form for how to vote in advance of and how to participate in the Annual Meeting.
As permitted by the Securities and Exchange Commission (the “SEC”), we are providing access to our proxy materials online under the SEC’s “notice
and access” rules. As a result, unless you previously requested electronic or paper delivery on an ongoing basis, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of the
proxy statement, our 2022 Annual Report and a form of proxy card or voting instruction card (together, the “proxy materials”). This distribution process is more resource- and cost-efficient. The Notice contains instructions on how to access the proxy
materials online. The Notice also contains instructions on how stockholders can receive a paper copy of our proxy materials. If you elect to receive a paper copy, our proxy materials will be mailed to you.
We encourage you to review these proxy materials and vote your shares before the Annual Meeting.
By Order of the Board of Directors,
Vithya Aubee
Chief Legal Officer, Secretary
700 S. Flower Street, 15th Floor
Los Angeles, California 90017
April 28, 2023
| HOW
TO VOTE |
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INTERNET
To vote before the meeting,
visit www.proxyvote.com.
To vote at the meeting, visit
www.virtualshareholdermeeting.
com/CCSI2023
You will need the control number printed on your Notice, proxy card or voting instruction form.
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TELEPHONE
Dial toll-free (1-800-690-6903) or the telephone number on your voting instruction form. You will need the control number printed on your Notice, proxy card or
voting instruction form.
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MAIL
If you received a paper copy of a proxy card by mail Mark, sign, date and promptly mail the proxy card in the postage-paid envelope
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QR CODE
Scan this QR code to vote.
You will need the control number printed on your notice, proxy card or voting instruction form. with your mobile device
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 2023
The notice, proxy statement, and 2022 Annual Report on Form 10-K are available at www.proxyvote.com.
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TABLE OF CONTENTS
| INDEX OF FREQUENTLY REQUESTED INFORMATION |
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| FORWARD-LOOKING STATEMENTS AND WEBSITE REFERENCES |
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This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or
current facts, including statements regarding our environmental and other sustainability plans and goals, made in this document are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions
to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons. Risks and uncertainties that could
cause our actual results to differ significantly from management’s expectations are described in our 2022 Annual Report on Form 10-K. Website references throughout this document are provided for convenience only, and the content on the
referenced websites is not incorporated by reference into this document.
Unless the context otherwise requires, references in this proxy statement to “Consensus,” “we,” “us,” “our,” “our company” and “the Company” refer to Consensus Cloud Solutions, Inc.
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PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and
you should read the entire Proxy Statement carefully before voting.
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| DATE AND TIME |
LOCATION |
RECORD DATE |
| June 15, 2023 at 8:30 a.m. Pacific Time |
Online
at
www.virtualshareholdermeeting.com/CCSI2023 |
April
18, 2023 |
| VOTING MATTERS |
BOARD’S VOTE
RECOMMENDATIONS |
FOR FURTHER INFORMATION |
| PROPOSAL
1 |
Election of Directors |
“FOR” each director
nominee |
Page 11 |
| PROPOSAL 2 |
Ratification of Independent Registered Public Accounting Firm |
“FOR” |
Page 18 |
| PROPOSAL 3 |
Frequency of Future
Non-Binding, Advisory Votes to Approve the Compensation of our Named Executive Officers |
“1 Year” |
Page 20 |
Company Overview and Business Strategy
Consensus Cloud Solutions, Inc., together with its subsidiaries (“Consensus Cloud Solutions” or “Consensus”, “our”, “us” or “we”), is a provider of
secure information delivery services with a scalable Software-as-a-Service (“SaaS”) platform. Consensus serves more than one million customers of all sizes, from enterprises to individuals, across over 50 countries and multiple industry verticals
including healthcare, financial services, law and education. Beginning as an online fax company over two decades ago, Consensus has evolved into a leading global provider of enterprise secure communication solutions. Our communication and digital
signature solutions enable our customers to securely and cooperatively access, exchange and use information across organizational, regional and national boundaries. Our mission is to democratize secure information interchange across technologies and
industries, and solve the healthcare interoperability challenge. Substantially all of Consensus’ revenue is recurring in nature and is generated either via fixed subscription plans or usage-based contracts.
In 2020, we launched the Consensus Unite healthcare interoperability platform, a comprehensive workflow collaboration and data exchange solutions
suite. Healthcare represents Consensus’ largest industry vertical and has information, secure communication, management and interoperability needs. The sector is undergoing a large-scale digitization effort, with the objective to streamline
workflows, increase efficiency for operators, and increase transparency for patients. We believe our leadership in digital cloud fax, HL7, FHIR and our deep domain knowledge and experience in the healthcare industry positions Consensus well to help
healthcare providers accomplish their broader digitization and interoperability objectives.
To address market demand for effective interoperability solutions, Consensus is concentrating its development efforts in tools capable of
integrating with existing healthcare IT infrastructure to facilitate communication between providers and allow use of multiple transmission protocols within a single cloud-based platform.
Our strategy focuses on generating attractive organic growth, achieving solid margins and free cash flow generation, pursuing value-accretive
acquisitions and delivering high value to our shareholders. Our strategy includes:
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Continuing to grow in Corporate secure information exchange; |
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Solving healthcare interoperability challenges; |
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Optimize eCommerce (SoHo) revenue; |
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Positioning the business for sustained growth through continued focus on profitability and cash flow generation; |
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Leveraging our technology to enter new markets (e.g. government); and |
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Complementing organic growth investments with targeted acquisitions. |
On October 7, 2021, we completed a spin-off from our former parent company, J2 Global, Inc. (now known as “Ziff Davis,
Inc.”). We refer to this transaction, which resulted in the separation of Consensus and Ziff Davis into two separate publicly traded companies, as the “Separation” or “Spin-Off”.
Directors
The following provides summary information about each director (including the director nominees):
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AC – Audit Committee
CC – Compensation Committee
ESG – Environmental, Social and Corporate Governance Committee
EXE – Executive Committee
 Independent
 Chairman of the Board of Directors
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 Chair
 Member
+ Audit Committee Financial Expert
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Board Snapshot - Skills & Experience
The following chart shows how certain relevant and important skills, experience, characteristics and other criteria, are
currently represented on our board. This chart is not intended to be an exhaustive list for each director, but instead intentionally focuses on the primary skill sets each director contributes. We believe the combination of the skills and
qualifications shown below demonstrates how our board is well-positioned to provide effective oversight and strategic advice to our management.
| Board Skills and Experience Matrix |
| Total Number of
Directors |
6 |
| Prior Board Experience |
6 |
| Financial Expert - CPA or CFO |
2 |
| Financially Literate - Accounting or Related
Financial Management (except as reported above) |
4 |
| Operations |
5 |
| Cybersecurity |
1 |
| Executive / CEO |
6 |
| Human Resources / Compensation |
4 |
| Safety / Health / Environment |
1 |
| Legal / Regulatory / Government |
3 |
| Board Diversity Matrix as of April 28, 2023 |
| Total Number of Directors |
6 |
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Female |
Male |
| Part I: Gender
Identity |
| Directors |
2 |
4 |
| Part II:
Demographic Background |
| African American or Black |
1 |
1 |
| White |
1 |
3 |
Corporate Governance Highlights
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Independent Chairman of the Board |
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Supermajority of independent directors |
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Majority vote for directors in uncontested elections |
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Key committee memberships limited to independent directors |
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Robust director search process, which requires that the Environmental, Social and Corporate Governance Committee
(the “ESG Committee”) include women and minority candidates in the pool from which Board nominees are chosen |
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Annual Board and committee self-evaluations |
| • |
No poison pill |
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Active Board oversight of strategy, risk management, and environmental, social and governance matters |
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Robust overboarding policies |
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Hedging/pledging prohibited |
CORPORATE GOVERNANCE
Director Independence
Our board of directors (the “Board”) has undertaken a review of its composition, the composition of its committees and the independence of each director. Based
upon information provided by each director, our Board has determined that none of our directors, with the exception of Scott Turicchi, has a relationship that would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director and, accordingly, that Douglas Bech, Elaine Healy, Stephen Ross, Nathaniel Simmons, and Pamela Sutton-Wallace are each independent under applicable Nasdaq rules. In making these determinations, our Board considered the
current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each
non-employee director. Specifically, with respect to Mr. Simmons, the Board considered his employment at Ziff Davis, Inc., which currently beneficially owns less than five percent of our outstanding common stock. The Board continues to take into
account that Mr. Simmons is not, and has never served as, an executive officer of Ziff Davis, Inc., and determined that such relationship did not impair his independence.
Board Leadership Structure
The Board annually reviews its leadership structure to evaluate whether the structure remains appropriate for the Company. The Board believes that it is in the
best interests of the Company and its stockholders to separate the Chairman of the Board and Chief Executive Officer roles and for our Chairman to be independent. Currently, Mr. Bech serves as our independent Chairman of the Board. The Board believes
Mr. Bech is well suited to serve as independent Chairman of the Board given his significant managerial, operational and global experience. As a result of his broad -based and relevant experience, as well as his deep knowledge of our business, Mr.
Bech is well positioned to carry out the responsibilities of the independent Chairman of the Board and provide constructive, independent, and informed guidance and oversight to management. Our Board believes that our current structure, with an
independent Chairman who is well-versed in the needs of a complex business and has strong, well-defined governance duties, gives our Board a strong leadership and corporate governance structure that best serves the needs of Consensus and its
stockholders. The Board will continue to evaluate its leadership structure on an ongoing basis and may make changes as appropriate to Consensus and its future needs.
Director Nominations
In accordance with its charter, the ESG Committee determines the qualifications, qualities, skills, and other expertise required to be a director and recommends to the Board
criteria to be considered in selecting nominees for directors. Our Board generally expects directors to possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the
stockholders and that directors should also have an inquisitive mind, an objective perspective, practical wisdom and mature judgment. The ESG Committee evaluates the composition of our Board annually to assess whether the skills, experience,
characteristics and other criteria established by our Board are currently represented on our board as a whole, and in individual directors, and to assess the criteria that may be needed in the future in light of the Company’s anticipated needs. The
ESG Committee reviews the qualifications of director candidates and incumbent directors in light of the criteria established by our Board and recommends appropriate candidates to our Board for election by the Company’s stockholders at the applicable
annual meeting.
Additionally, we believe diversity in the boardroom helps the Board better oversee Consensus’s management and provide strategic advice. Our Board is committed to considering
geographic, age, gender, racial and ethnic diversity when selecting director candidates and as part of the search process for each new director, the ESG Committee will include women and minority candidates in the pool from which Board nominees are
chosen. The Board will assess its effectiveness in this regard as part of the Board’s annual self-evaluation process.
The ESG Committee reviews the qualifications of director candidates and incumbent directors in light of the criteria established by the Board, and any
stockholder recommendations for directors are evaluated in the same manner as other candidates considered by the ESG Committee. Stockholders that wish to nominate a director for election to our Board should follow the procedures described under the
“Submission of Stockholder Proposals for the 2023 Annual Meeting” heading.
Board Committees
Our Board has four standing committees: an Audit Committee, a Compensation Committee, an ESG Committee, and an Executive Committee.
In accordance with our Corporate Governance Principles, the independent directors meet in an executive session without management present on a regularly scheduled basis. Mr. Bech,
as our independent Chairman, presides at these executive sessions.
From January 1, 2022 to December 31, 2022, the Board held six meetings, in addition to five meetings of the Audit Committee, four meetings of the Compensation Committee and four
meetings of the ESG Committee. All incumbent directors attended all of the meetings of the Board and committees on which they served during 2022.
Directors are encouraged to attend the annual meeting of stockholders absent unusual circumstances. All 6 of our incumbent directors attended our 2022 Annual Meeting of
Stockholders.
| AUDIT COMMITTEE |
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MEMBERS
Elaine Healy
(Chair)
Stephen Ross
Pamela Sutton-Wallace
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PRINCIPAL RESPONSIBILITIES:
The primary role of the Audit Committee is to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s financial
statements. Management of the Company is responsible for preparing the Company’s financial statements determining that they are complete, accurate, and in accordance with generally accepted accounting principles and establishing satisfactory
disclosure controls and internal control over financial reporting. The independent auditor is responsible for auditing the Company’s financial statements and the effectiveness of the Company’s internal control over financial reporting.
We have adopted a committee charter that details the principal functions of the Audit Committee, including:
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appointing, overseeing the work of, evaluating, compensating and retaining the independent registered public accounting firm and discussing with the
independent registered public accounting firm its relationships with the Company and its independence;
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reviewing financial statements and discussing the scope and results of the independent audit and quarterly reviews with the independent registered public
accounting firm;
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reviewing the adequacy and effectiveness of our disclosure controls and procedures and developing procedures for employees to submit concerns anonymously
regarding accounting, internal accounting controls, auditing and federal securities law matters;
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reviewing our policies on risk assessment and risk management, including risks related to the our financial statements and financial reporting processes,
information technology, cybersecurity and any other compliance or governance requirements deemed material;
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reviewing related party transactions; and
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approving in advance all audit and permissible non-audit services and fees, to be performed by the independent registered public accounting firm.
Under the Nasdaq listing rules and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of
Elaine Healy, Stephen Ross and Pamela Sutton-Wallace qualify as an “independent” director for purposes of the SEC and Nasdaq independence rules that are applicable to audit committee members. Each member of the Audit Committee is financially
literate, and our Board has determined that each of Ms. Healy and Mr. Ross qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
The Audit Committee has established and oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters. The Audit Committee has the authority to retain
counsel and other advisers as it determines necessary to fulfill its duties and responsibilities.
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| COMPENSATION COMMITTEE |
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MEMBERS
Stephen Ross
(Chair)
Douglas Bech
Elaine Healy
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PRINCIPAL RESPONSIBILITIES:
The primary role of the Compensation Committee is to assist the Board with the oversight of executive compensation.
We have adopted a committee charter that details the principal functions of the Compensation Committee, including:
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reviewing the competitiveness of our executive compensation programs with respect to (i) the attraction and retention of executive officers, (ii) the
motivation of executive officers to achieve our business objectives, and (iii) to align the interest of executive officers with the long-term interests of stockholders;
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annually reviewing and approving corporate goals and objectives relevant to the compensation of the Chief Executive Officer and other executive officers,
evaluating their performance against these goals and objectives, and, based on this evaluation, recommending to the Board the compensation for the CEO and other executive officers;
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administering and making recommendations to the Board with respect to the Company’s incentive compensation and equity-based compensation plans that are
subject to Board approval; and
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reviewing and discussing with the Board and senior executives plans for officer development for all senior executives, including the Chief Executive Officer.
Each of Stephen Ross, Douglas Bech and Elaine Healy qualifies as an “independent” director for purposes of the SEC and Nasdaq independence rules that are applicable to compensation committee members.
The Compensation Committee has the authority, in its sole discretion, to retain a compensation consultant, legal counsel or other advisers, and are directly responsible for the compensation, retention terms and
overseeing the work of any such advisers.
The Compensation Committee has been engaged with Frederic W. Cook & Co., Inc. (“FW Cook”) since October 2021 to serve as the compensation consultant for the Compensation Committee and to
provide annual advice in connection with the Company’s compensation program for directors and executive officers. FW Cook did not provide any other services to the Company or management, and FW Cook only received fees from the Company for the
services it provided to the Compensation Committee. The Compensation Committee evaluated FW Cook’s independence under the applicable Nasdaq and SEC standards and concluded that FW Cook was independent of the Company and that its services
raised no conflicts of interest.
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| ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
COMMITTEE |
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MEMBERS
Pamela
Sutton-Wallace
(Chair)
Douglas Bech
Elaine Healy
Nathaniel (Nate) Simmons
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PRINCIPAL RESPONSIBILITIES:
The primary role of the ESG Committee is to assist the Board with oversight of the director nominations process, the Company’s corporate governance and the Company’s policies, procedures and other
actions that support the Company’s ongoing commitment to diversity, equity, inclusion and environmentally sustainable practices.
We have adopted a committee charter, which details the purpose and responsibilities of the ESG Committee, including:
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identifying, evaluating, and selecting, or making recommendations to our Board regarding, nominees for election to our Board;
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overseeing the evaluation of the Board and its committees;
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considering and making recommendations to our Board regarding the composition of our Board and its Committees;
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overseeing and making recommendations to the Board regarding sustainability matters relevant to the Company’s business, including policies, activities and
opportunities; and
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developing and making recommendations to our Board regarding the Company’s corporate governance principles and matters.
The ESG Committee comprises at least three directors and each director meets the Nasdaq independence requirements.
The ESG Committee has the authority to retain counsel and other advisers as it determines necessary to fulfill its duties and responsibilities, including search firms to be used to identify director candidates.
The ESG Committee is responsible for setting the compensation and retention terms and overseeing the work of any director search firm, outside legal counsel or any other advisors.
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| EXECUTIVE COMMITTEE |
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MEMBERS
Doug Bech
(Chair)
Elaine Healy
Scott Turicchi
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PRINCIPAL RESPONSIBILITIES:
The primary role of the Executive Committee is to act on behalf of the Board when the Board is not in session, to the extent permitted by applicable law and
the Company bylaws.
We have adopted a committee charter, which details the limited purpose and responsibilities of the Executive Committee as stated above.
The Executive Committee comprises at least three directors.
The Executive Committee has the authority to retain counsel and other advisers as it determines necessary to fulfill its duties and responsibilities and
are directly responsible for the compensation, retention terms and overseeing the work of any such advisers.
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Risk Oversight
A core responsibility of the Board is to understand the principal risks associated with the Company’s business on an ongoing basis, and oversee the key risk decisions of management,
which includes comprehending the appropriate balance between risks and rewards. While the Audit Committee has primary responsibility for risk oversight, both the Audit Committee and the Board are actively involved in risk oversight and both receive
reports on our risk management activities from our executive management team on a regular basis. Members of both the Audit Committee and the Board also engage in periodic discussions with members of management as they deem appropriate to review and
address the proper management of the Company’s risks. In addition, each committee of the Board considers risks associated with its respective area of responsibility.
| BOARD |
| Oversees the key risk decisions of management |
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| AUDIT COMMITTEE |
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COMPENSATION COMMITTEE |
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ESG COMMITTEE |
| • Reviews and discusses with management the risks faced
by the Company and the policies, guidelines and process by which management assesses and manages the Company’s risks, including risks related to the Company’s financial statements and financial reporting processes, information technology,
cybersecurity and any other compliance or governance requirements deemed material. |
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• Reviews the Company’s incentive compensation arrangements to determine whether they
encourage excessive risk-taking, to review and discuss at least annually the relationship between risk management policies and practices and compensation, and to evaluate compensation policies and practices that could mitigate any such risk. |
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• Oversees risks related to corporate governance as well as risks related to
sustainability matters relevant to the Company’s business. |
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| SENIOR MANAGEMENT |
| CEO, Chief Financial Officer, Chief Legal Officer, Chief Technology Officer and other
members of management monitor and implement policies for managing the Company’s risks, including those related to legal, accounting, financial matters, and security matters, and report periodically on these matters to the Board and its
Committees. |
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| CYBERSECURITY |
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The Company formed a Cybersecurity Committee comprised of the Chief Information Security Officer, Chief Technology Officer, Chief Operational Officer, Chief Legal Officer and Head of Internal Audit who meet
regularly to oversee the Company’s privacy program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments relevant to privacy and data security matters on a global scale. The Company is also
engaged with a third party Data Protection Officer to oversee and ensure compliance with the General Data Protection Regulation (GDPR) and third party auditors for HITRUST, PCI Level 1 (as both a Service Provider and a Merchant), and SOC 2
Type 2.
The Company’s Audit Committee and Board of Directors receives a quarterly update on any relevant security related issues, including progress on security audits and certifications. The senior leadership team also
presents to the Board of Directors, at least on an annual basis, a detailed, technical analysis of the Company’s privacy and data security programs, as well as updates on the Company’s services and products.
All employees complete annual, mandatory training on key security and data protection topics, including but not limited to trainings on: The Company’s Information Security Policy and Information Security Incident
Response Plan, HIPAA, PCI, Security Awareness, Data Privacy, Secure Code / Secure Application Development, Role-based Security Awareness training for privileged users, and Phishing Exercises.
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Communications with Directors
Stockholders and other interested parties may contact the Board by mailing correspondence “c/o Corporate Secretary” to the Company’s principal offices at 700 S. Flower Street, 15th
Floor, Los Angeles, California 90017. Correspondence will be forwarded to the respective director, except that the Corporate Secretary reserves the right not to forward advertisements or solicitations, customer complaints, obscene or offensive items,
communications unrelated to the Company’s affairs, business or governance, or otherwise inappropriate materials.
Governance Documents
The Audit Committee, Compensation Committee, ESG Committee, and Executive Committee each operate pursuant to written charters adopted by the Board. These
charters, along with the Corporate Governance Principles and the Code of Conduct and Ethics, are available at the Company’s website. To access these documents from the Company’s website, go to
https://investor.consensus.com/board-esg/governance-documents.
Business Ethics
Our Board adopted a Code of Business Conduct and Ethics relating to the conduct of our business by all of our employees, executive officers (including our principal executive
officer and principal financial officer/principal accounting officer (or persons performing similar functions)) and directors. This code satisfies the requirement that we have a “code of conduct” under the Nasdaq and SEC rules and is available on our
website at https://investor.consensus.com/board-esg/governance-documents. All global employees go through an annual training schedule which includes specific training on Code of Business Conduct and Ethics as well as Anti-Corruption and Bribery. To
the extent required under the Nasdaq listing rules and SEC rules, we intend to disclose future amendments to certain provisions of this code, or waivers of such provisions, applicable to any of our executive officers or directors, on our website
identified above.
Additionally, all global employees receive and acknowledge various policies including our Insider Trading Policy and Whistleblower Policy in their Employee
Handbook. The Company has established mechanisms for reporting ethical concerns and alleged misconduct, including complaints and concerns about accounting, internal accounting controls and auditing matters. As of April 18, 2023, The Company can
confirm that there have been no reports made. The Company’s Whistleblower Policy and related documents are made available in multiple places its public website, internal platforms, and the Employee Handbook.
Hedging Policy
The Compensation Committee has adopted a policy prohibiting all employees, including executive officers, and directors from engaging in any form of hedging
transaction involving the securities of the Company. The policy addresses short sales and transactions involving publicly traded options and also prohibits such individuals from holding our securities in margin accounts and from pledging our
securities as collateral for loans. We believe that these policies further align our executives’ interests with those of our stockholders.
Related Person Transaction Policy
We have adopted a Related Party Transaction Policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5%
of any class of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the approval or ratification of our Audit Committee or other
independent body of our board of directors. Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our common stock, or any member of
the immediate family of any of the foregoing persons, in which the amount involved exceeds $120,000 and such person would have a direct or indirect interest, must be presented to our Audit Committee for review, consideration, and approval. In
approving or rejecting any such proposal, our Audit Committee is to consider, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same
or similar circumstances and the extent of the related person’s interest in the transaction.
Related Party Transactions
In connection with the Separation, Consensus and Ziff Davis entered into a separation and distribution agreement, as well as various other agreements to provide
a framework for our relationship with Ziff Davis after the Separation, such as a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property license agreement and a stockholder and registration
rights agreement. These agreements provide for the allocation between Consensus and Ziff Davis of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) associated
with the Cloud Fax business and govern certain relationships between Consensus and Ziff Davis after the Separation. For additional details regarding these agreements see Exhibit 99.1 to Amendment No. 3 to the Company’s Registration Statement on
Form 10 as filed with the SEC on September 21, 2021.
Delinquent Section 16(A) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’s officers and directors and persons who beneficially own more than 10% of
the Company’s common stock (collectively, “Reporting Persons”) to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Based solely on our review of filed reports or written representations from certain Reporting
Persons, the Company believes that all reports were filed on a timely basis, except that the following forms were filed late due to administrative errors: a Form 4 filed on behalf of Mr. Jeff Sullivan on February 18, 2022 to report an RSU award vest
which occurred on February 7, 2022 and a Form 4 filed on behalf of Mr. John Nebergall on June 28, 2022 to report an RSU award vest which occurred on June 18, 2022.
Director Compensation
Our non-employee directors are eligible to receive cash compensation for their service on Board in the form of cash retainers. The non-executive director compensation program is
reviewed on an annual basis and provides for:
| Position |
Retainer ($) |
| Annual Cash Retainer |
$50,000 payable quarterly in arrears |
| Chair of the Board Annual Cash Retainer |
$50,000 payable quarterly in arrears |
| Committee Chair Cash Retainers |
|
| Audit Committee |
$30,000 |
| Compensation Committee |
$20,000 |
| ESG Committee |
$20,000 |
Our non-employee directors will receive annual grants of restricted stock units with an aggregate grant date value of $200,000 (which fully vest on the first anniversary of the date
of grant).
Our directors will be reimbursed for travel, food, lodging and other expenses directly related to their activities as directors. Our directors are also entitled to the protection
provided by the indemnification provisions in our bylaws. Our Board may revise the compensation arrangements for our directors from time to time.
The table below describes the compensation provided to our non-executive directors in fiscal 2022.
| Name |
Fees Earned or
Paid
in Cash ($) |
Stock
Awards(1)
($)
|
Total ($) |
| Douglas Bech |
100,000 |
$199,980 |
$299,980 |
| Elaine Healy |
80,000 |
$199,980 |
$279,980 |
| Stephen Ross |
70,000 |
$199,980 |
$269,980 |
| Nathaniel (Nate) Simmons |
50,000 |
$199,980 |
$249,980 |
| Pamela Sutton-Wallace |
70,000 |
$199,980 |
$269,980 |
| (1) |
These amounts represent the grant date fair value under FASB ASC Topic No. 718, Compensation – Stock Compensation (“ASC 718”) for restricted stock units granted in 2022. As of December 31, 2022, each non-employee
director held the following unvested restricted stock units: Mr. Bech: 3,333; Ms. Healy: 3,333; Mr. Ross: 3,333; Mr. Simmons: 3,333; and Ms. Sutton-Wallace: 3,333. |
| PROPOSAL 1 |
|
Election of Directors
There are two Class II directors whose term of office expires at the Annual Meeting. Our ESG Committee has recommended, and our Board has approved, Elaine Healy and Stephen
Ross as nominees for election as Class II directors at the Annual Meeting. If elected at the Annual Meeting, each nominee will serve until the 2026 Annual Meeting of Stockholders or until his successor has been duly elected and qualified, or,
if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Class I directors, which consists of Nathaniel Simmons and Douglas Bech were approved and will serve until the 2025 Annual Meeting of
Stockholders or until his successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Class III directors, which consists of Pamela Sutton-Wallace and
Scott Turicchi, will initially serve for a term expiring at the 2024 annual meeting of stockholders. Beginning at the 2026 annual meeting of stockholders, all of our directors will stand for election each year for annual terms, and our Board
will thereafter no longer be divided into three classes. Information concerning these nominees and our continuing directors appears below.
Each of the nominees has consented to serve as a director, if elected, and all of the nominees are currently directors. We have no reason to believe that
any of the nominees will be unavailable or, if elected, will decline to serve. If any nominee becomes unable or unwilling to stand for election as a director, proxies will be voted for any substitute as designated by the Board, or
alternatively, the Board may reduce the size of the Board.
|
| Our Board recommends a vote
“FOR” the election of each nominee. |
Director Nominees
For each of the two director nominees standing for election, as well as the four other directors with terms expiring at future annual meetings, the following describes certain
biographical information and the specific experience, qualifications, attributes or skills that qualify them to serve as our directors and, as applicable, the Board committees on which they serve.
Nominees for Election to a Three-Year Term Expiring at the 2026 Annual Meeting of Stockholders
 |
Elaine Healy
DIRECTOR SINCE: 2021
|
|
| COMMITTEES |
OTHER PUBLIC COMPANY BOARDS |
| • |
Audit (Chair) |
• |
OFS Capital Corp. |
| • |
Compensation |
• |
Hancock Park Corporate Income |
| • |
Executive |
|
|
BACKGROUND
Elaine Healy (age 60) has served as a director of Consensus since October 2021 and is chair of the Audit Committee. Ms. Healy
is Co-Founder and Co-CEO of NexGen Venture Partners, LLC, dba Aura, a provider of wireless infrastructure technology. Prior to co-founding NexGen, Ms. Healy was Co-Founder, President and Chief Operating
Officer of Accel Networks, LLC, a fixed wireless broadband service provider featuring patented technology founded in November 2002 and acquired in June 2015.
Prior to becoming an entrepreneur in 2002, Ms. Healy spent 18 years as a private equity manager during which time she gained a broad background
investing in operating companies ranging from start-ups to emerging growth to publicly traded entities and serving as a director of companies in a wide range of industries. Ms. Healy is currently Chair of the Audit Committees and Lead Director for
OFS Capital Corp, and Hancock Park Corporate Income.
Ms. Healy’s background has enabled her to cultivate an enhanced understanding of operations and strategy with an added layer of risk management.
Ms. Healy graduated from The Florida State University in 1984 with a Bachelor of Science in Finance.
 |
Stephen Ross
DIRECTOR SINCE: 2021
|
|
COMMITTEES
| • |
Audit |
| • |
Compensation (Chair) |
BACKGROUND
Stephen Ross (age 75) has served as a director of Consensus since September 2021. Mr. Ross served as a director of J2 Global
Inc. from July 2007 through October 2021. From 1989 to August 31, 2017, he served in various positions with Warner Bros Entertainment, Inc., a broad-based entertainment company (“WBE”). His last position with WBE was Executive Vice President –
Recreational Enterprises. Until 2009, Mr. Ross also served as a director of Grill Concepts, Inc., a restaurant company. Mr. Ross’ more than 20 years of broad experience with one of the world’s premier entertainment companies provides the Board a
unique perspective.
Directors Continuing in Office Until the 2024 Annual Meeting of Stockholders
 |
Pamela
Sutton-Wallace
DIRECTOR SINCE: 2021
|
|
COMMITTEES
| • |
Audit |
| • |
Environmental, Social and Corporate Governance (Chair) |
BACKGROUND
Pamela Sutton-Wallace (age 53) has served as a director of Consensus since October 2021. Ms. Sutton-Wallace served as a director of J2 Global,
Inc. from October 2020 through October 2021. Currently, Ms. Sutton-Wallace serves as Chief Operating Officer at Yale-New Haven Health (YNHH). Prior to her appointment at YNHH, Ms. Sutton-Wallace served as Senior Vice President and Regional Chief
Operating Officer at New York Presbyterian (NYP) through May 2021 Prior to her appointment at NYP, Ms. Sutton-Wallace served as the Chief Executive Officer for the University of Virginia (UVA) Medical Center in Charlottesville, Virginia from 2014
through 2020. Prior to that, Ms. Sutton-Wallace served as Senior Vice President of Hospital Operations at Duke University Hospital, where she also held several leadership positions across the Duke University Health System over a 17-year time span.
Ms. Sutton-Wallace has also held positions in the pharmaceutical and insurance industries at Pfizer and Blue Cross & Blue Shield of North Carolina, respectively. She received her undergraduate degree in Political Science and African-American
Studies from Washington University in St. Louis, MO. She later graduated from Yale University with a Master of Public Health (MPH) degree. With her 27 years of healthcare experience at some of the world’s most renowned health systems, Ms.
Sutton-Wallace brings valuable expertise and perspective to the Board.
 |
Scott Turicchi
CHIEF EXECUTIVE OFFICER
AND DIRECTOR SINCE: 2021
|
|
COMMITTEES
BACKGROUND
R. Scott Turicchi (age 59) was appointed as a director of Consensus in September 2021 and the Chief Executive Officer in October 2021. He also
served as Consensus’s Interim Chief Financial Officer from October 2021 through January 2022. Prior to joining Consensus, Mr. Turicchi held various positions at J2 Global Inc. from March 2000 - October 2021, including serving as the President and
Chief Financial Officer from August 2014 to October 2021. Mr. Turicchi also served as a member of the J2 Global, Inc. Board of Directors from 1998 through 2000. From 1990 to 2000, he was with Donaldson, Lufkin & Jenrette Securities Corporation’s
investment banking department, holding various positions, including Managing Director. Mr. Turicchi is a member of the Board of Directors of Greenhills Software, Inc., a privately held company that develops real-time operating systems. He is Chairman
of the Board of Governors of Thomas Aquinas College. Mr. Turicchi also serves on the boards of Lumen Christi Institute and Sanctuary of Culture. Mr. Turicchi’s extensive management experience and familiarity with the company provides valuable insight
to the Board.
Directors Continuing in Office Until the 2025 Annual Meeting of Stockholders
 |
Nathaniel Simmons
DIRECTOR SINCE: 2021
|
|
COMMITTEES
| • |
Environmental, Social and Governance |
BACKGROUND
Nathaniel (Nate) Simmons (age 46) has served as a director of Consensus since October 2021. Mr. Simmons has served as President of the
Cybersecurity and Martech division (formerly the Cloud Services division) at Ziff Davis, Inc. (formerly J2 Global, Inc.) since September 2019. Before joining Ziff Davis, Mr. Simmons was Senior Vice President and Chief Operating Officer of Norton
LifeLock, the Consumer Division of Symantec Corp, from 2017-2019. He also served as Norton’s Senior Vice President and Chief Marketing Officer from 2015-2017. Prior to Symantec, Mr. Simmons was Senior Vice President of Consumer Marketing at Time
Inc., where he held a variety of leadership positions. Mr. Simmons began his career as a consultant at McKinsey & Company. Mr. Simmons’s extensive experience in subscription-based technology businesses and familiarity with the Historical
Consensus business provides valuable insight to the Board.
 |
Douglas Bech
CHAIRMAN OF THE BOARD
AND DIRECTOR SINCE: 2021
|
|
| COMMITTEES |
OTHER PUBLIC COMPANY BOARDS |
| • |
Compensation |
• |
Create Media & Community |
| • |
Environmental, Social and Corporate Governance |
|
|
| • |
Executive |
|
|
BACKGROUND
Douglas Y. Bech (age 77) has served as a director of Consensus Cloud Solutions Inc. since October 2021. He previously served as a director for J2
Global Inc., the former parent company of Consensus Cloud Solutions, Inc., from November 2000 - October 2021. From August 1988 through November 2000, he served as a director of eFax.com, a company J2 Global, Inc. acquired in November 2000. Since
August 1997, Mr. Bech has served as Chairman and Chief Executive Officer of Raintree Resorts International, a company that owns and operates vacation ownership resorts throughout North America. Mr. Bech practiced securities and corporate finance law
from 1970 until 1997. Mr. Bech also served as independent presiding director of HollyFrontier Corporation (now HF Sinclair) from July 2011 to May 2021 and was a director of Frontier Oil Corporation from May 1993 until it merged with Holly Corporation
in July 2011. Mr. Bech has also been serving as an independent director of Creative Media & Community Trust since March 2014. Mr. Bech’s previous work as a securities and corporate finance lawyer, as a director of other public companies and his
current experience as a chief executive officer of a private enterprise engaged in hospitality, resort management services, and sales and marketing in three different countries, provide expertise on corporate governance and a unique perspective to
the Board of Directors.
ENVIRONMENTAL SUSTAINABILITY
Consensus is a cloud solution-based business and our direct operations generate relatively light greenhouse gas emissions. Nonetheless, we strive
further to create a climate friendly culture at our headquarters in downtown Los Angeles (“HQ”). We are mindful of our carbon footprint and strive to make choices to lessen our impact on the environment. Our HQ is within a Leadership Energy
Environmental Design (“LEED”) building. LEED, sponsored by the United States Green Building Council (“USGBC”), is a globally recognized symbol of sustainability and the most widely used green building rating system in the world. Further, we are
located within walking distance to a primary downtown Los Angeles Metro Center to reduce and encourage use of public transportation, which we further emphasize by offering monthly stipends for those employees who elect this method of transportation.
The Company has transitioned to all but 2 of its co-location data centers to the cloud with AWS. Cloud based products offer greater energy
efficiency when compared to onsite data centers.
The Company has also accommodated the request of over 90% of our employees to work remotely full-time and less than 10% of our employees work in
office on a hybrid work schedule. Additionally, while travel restrictions related to COVID-19 have lifted, we continue to evaluate the need for airline travel and encourage virtual meetings whenever possible. We will continue to find ways to be
environmentally responsible as we establish ourselves as an independent company.
Human Capital Management
The Chief People Officer reports directly to the CEO and partners with the Executive Team and the Board of Directors to focus on the strategic
direction necessary to attract qualified candidates on a global scale and develop and retain our current global workforce. As of December 31, 2022, we had 581 employees, with just under one-third of the employees located outside of the United States.
We are committed to driving strong employee engagement to motivate our highly qualified workforce as we believe their professional development and success is key to our Company’s continued success.
Our Culture
We have a strong enterprise-wide culture that focuses on our core values – strive for excellence, demonstrate empathy, embrace innovation, foster
open communication, focus on solutions, and be driven by data as we make decisions – and in turn, deliver solid business results.
Our mission is to be the trusted global source for the transformation, enhancement and secure exchange of digital information. Our vision is to
deliver life’s essential data when, where and how you need it.
Community Outreach
The Company provides 24 paid hours per calendar year for our employees to volunteer their time to support their local communities. We have many
employees who volunteer on a monthly basis serving their communities through local community service days in neighborhoods, packing and/or delivering food boxes, serving in homeless shelters and building projects for Habitat for Humanity. We launched
Consensus Cares to be a global volunteer program and align with our Diversity, Equity and Inclusion (“DEI”) initiatives of community outreach.
“Investing in the Future” is the current theme used by our DEI Council with an emphasis to serve within the communities in which we live. We
launched the Do-Good Challenge which provides opportunities for employees to join one of six (6) teams which are actively serving the community. The teams are volunteering in supporting the following causes - Animal Shelters, Education, Cleaner
Living, Wellness, Food Banks and Homeless Shelters.
Diversity, Equity & Inclusion
Consensus is focused on creating and maintaining a work environment in which people are treated with dignity, decency and respect. Our customers and
employees are diverse in traits including but not limited to professional background, gender, race, ethnicity, age, national origin, sexual orientation, geography, and education. The Executive Team works closely with the ESG Committee to review
programing as we address DEI initiatives and training. We believe that for our business to succeed over the long term, maintaining and enhancing this diversity is crucial.
As of December 31, 2022, our US workforce is 37% female and 63% male. The ethnic breakdown for our US workforce is 22% Asian, 9% Black or African
American, 12% Hispanic or Latino, 6% Two or more races (not Hispanic or Latino) and 51% White.
The Company conducts Diversity, Equity and Inclusion training for all our global employees on an annual basis which includes training vignettes on
Definitions of Diversity, Equity and Inclusion, Implicit Bias and Microinequities, Ways to Support an Inclusive Workplace, Best Practices for Taking a Proactive Approach to Diversity, Equity & Inclusion, How to Respond to Inappropriate Workplace
Behavior, The Prohibition on Retaliation and an opportunity to review key policies and certify understanding.
We launched a DEI Council in 2022 comprised of 14 employees with varied backgrounds to promote thoughtful discussion and organize trainings and
events to foster respectful awareness of diversity, equity, and inclusion in our workplace environment, with the overall intent to create a community where each employee feels they belong and feels they can contribute to the overall success of the
Company.
Hiring
We reinforce our culture and our values by seeking out diverse candidates, and look for candidates that will
uphold well with our organizational priorities, values, mission, and vision. Our diversity recruiting initiatives include posting jobs on specialized job boards focusing on under-represented candidates and creating internships. All job
descriptions are reviewed to ensure a focus on equity and inclusivity to attract qualified and interested candidates. We have a robust employee referral program to encourage our employees to refer their network as we seek to attract and retain the
top talent. In 2022, 17% of our hires were a result of employee referrals.
Talent Pipeline Strategy
We source for evergreen positions within our Technology and Customer Support families to build a pipeline of qualified candidates as we cultivate
relationships with prospective candidates. We have a robust employee referral program, an internal mobility program and continue to source candidates through various specialized groups and programs which provide an opportunity to cultivate networking
relationships. We continue to have our hiring managers network and post jobs via multiple social media outlets. We also continue to review job requirements and reach out to qualified candidates within our competitive landscape.
Employee Compensation & Benefits
Compensation is an important consideration for all of our employees and we strive to pay competitive compensation packages that reflect the success
of the business and the individual contributions of each colleague. We are committed to fair pay practices; roles are periodically benchmarked to help inform where adjustments may be needed.
We provide our employees with benefits we believe are effective at attracting and retaining the talent critical for our success and, more
importantly, promoting their day to day well-being. Those benefits include comprehensive health insurance coverage and covering an average of 84% of health insurance premiums for covered U.S. employees and their families, an employee stock purchase
program, equity grants for all qualifying employees as part of the annual merit cycle, flexible time off, up to 16 weeks of paid parental leave for birth parents and up to 10 weeks parental leave for
non-birthing parents, up to 10 days of bereavement, 10 days for jury duty, and 24 hours annually of fully paid Volunteer Time Off. We also have a robust Employee Assistance program which offers face to face sessions with a counselor for employees or
their family members for matters such as: job pressures, legal, divorce, anxiety, depression, substance abuse, and grief.
Health and Wellness
Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission. We expect to evolve our programs to meet
our colleagues’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber, and we offer a competitive benefits package focused on fostering work/life integration.
Throughout 2022, we promoted wellness resources through our medical carriers - Kaiser Permanente and Cigna, including Ginger, Calm, Happify,
Recovery One and Omada. Additionally, we hosted an emotional well-being seminar through Cigna, hosted a financial wellness seminar through Rocket Lawyer, held multiple 401(k) seminars on a variety of topics and launched an internal wellness website
focused on employee mental health.
In the fall of 2022, we launched a wellness challenge and as a group, the Consensus employees clocked a total of 116,262 minutes of wellness
activity in a six-week challenge.
Employee Development
The Company continues to work with employees on their professional development. As part of the onboarding program, there is a 30-60-90 day feedback tool to assist the employee and their manager to determine the milestones necessary for success. The Company invested in a people success platform which includes survey tools, goal setting,
manager performance reviews, self-evaluations and upward manager feedback. From these annual reviews, employee training programs are developed including employee coaching, manager training, presentation skills training and other skill-based learning
tools.
An Employee Tuition Reimbursement Program was launched in April 2022 to encourage ongoing education with our employees to assist in their
professional development.
DATA PRIVACY & CYBERSECURITY
As noted in the Risk Oversight section above, the Company has a Cybersecurity Committee which meets regularly to oversee the Company’s privacy
program, cybersecurity risks, risk management, and relevant legislative, regulatory, and technical developments relevant to privacy and data security matters on a global scale. The Company is also engaged with a third party Data Protection Officer to
oversee and ensure compliance with the General Data Protection Regulation (GDPR) and third party auditors for HITRUST, PCI Level 1 (as both a Service Provider and a Merchant), and SOC 2 Type 2, as further detailed below.
The Consensus Cloud Solutions security platform is a key focus of the Company. Our Company’s cybersecurity practices include programs for HIPAA
compliance, HITRUST, FedRAMP, SOC2, and GDPR.
The Company uses the HiTrust cybersecurity framework, an externally audited solution, to manage its HIPAA compliance.
HITRUST has more than 370 different controls to ensure that your system is as secure and protected as possible.
FedRAMP has a risk profile standard featuring three levels of security impact: low impact, moderate impact and high impact. FedRAMP high impact has more
than 570 different controls. Consensus Cloud Solutions has been certified FedRAMP High.
Our systems are SOC2, type two certified. There are trust principles that the SOC2 system embodies having to do with data
privacy, process and security, physical security, infrastructure security. All of those trust principles are what we are externally audited on an annual basis and certified.
In addition, the Company is certified for PCI compliance (the payment card industry compliance standards) on an annual basis by an external auditor
as both a merchant and as a service provider. We’re evaluated at level one because of the size and scope that we operate at, which is the highest of levels.
All Company employees must complete trainings at least annually on various kinds of security threats and best practices including but not limited to
trainings on: the Company’s Information Security Policy; Information Security Incident Response Plan; HIPAA, PCI Compliance; GDPR and CCPA; , Security Awareness and Incident Response Training covering Social Engineering Phishing (identification and
common red flags), Social Media safety best practices, Internet Security best practices, and Incident response training for end-users; and Phishing. In addition, our developers must complete Secure Code / Secure Application Development Training based
on OWASP top 10 standards.
| PROPOSAL
2 |
|
Ratification of Appointment of Independent Registered Public Accounting Firm
BDO USA, LLP (“BDO”) has served as the Company’s independent registered public accounting firm since 2021. Representatives of BDO
are expected to be present at the Annual Meeting online and will have an opportunity to make a statement if they wish and be available to respond to appropriate questions from stockholders.
We are asking stockholders to ratify the Audit Committee’s selection of BDO as our independent registered
public accounting firm for the fiscal year ending December 31, 2023. While such ratification is not required, the Board is submitting the selection of BDO to our stockholders for ratification as a matter of good corporate practice. If
stockholders do not ratify the selection of BDO as our independent registered public accounting firm for the fiscal year ending December 31, 2023, our Audit Committee may reconsider the selection of BDO as our independent registered public
accounting firm. Even if the selection is ratified, the Audit Committee may, in its discretion, select a 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 our stockholders.
|
| Our Board recommends a vote “FOR” the ratification of the selection by the Audit Committee of BDO as our independent registered public accounting firm. |
Independent Public Accountant
The following is a summary of fees paid or to be paid to BDO for services rendered for the Company in fiscal 2022 and 2021. All such services were
pre-approved by our Audit Committee in accordance with the “Pre-Approval Policy” described below.
| |
FOR
THE YEAR ENDED
December 31, 2021 |
FOR
THE YEAR ENDED
December 31, 2022 |
| Audit
Fees(1) |
$1,032,619 |
$3,753,122 |
| Audit-Related
Fees(2) |
$7,693 |
$0 |
| Tax
Fees(3) |
$16,171 |
$0 |
| All
Other Fees(4) |
$0 |
$0 |
| Total |
$1,056,484 |
$3,753,122 |
|
(1) |
Audit Fees included amounts billed or to be billed for professional services rendered for the audit of the annual consolidated financial statements and the review of financial statements included in quarterly
reports for the applicable year. In addition, fiscal year 2021 also included audit fees for professional services rendered in relation to the review of our registration statement in connection with our spin-off transaction and other documents
filed with the SEC and fiscal year 2022 includes audit fees for professional services rendered in relation to the review of our secondary offering and other documents filed with the SEC, amounts billed for incremental procedures performed in
connection with the acquisition of Summit Healthcare, Inc. |
|
(2) |
Audit Related Fees included amounts billed for assurance and related services, for fiscal 2021, including but not limited to, consultations in connection with spin-off transaction accounting matters and
international statutory audits. |
|
(3) |
Tax Fees, if any, consist of professional services rendered for tax compliance and tax planning for each applicable year and for fiscal 2021, advice related to spin-off transaction related matters. |
|
(4) |
All Other Fees, if any, include amounts billed for all other fees not related to the categories presented above. |
Pre-Approval Policy
The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy, under which the Audit Committee annually reviews and
pre-approves the services that are expected to be provided by the outside auditor. Any engagement to provide audit or non-audit services that has not been pre-approved through that process must be specifically pre-approved by the Audit Committee if
it is to be provided by the outside auditor. The Audit Committee may delegate its pre-approval responsibilities to one or more subcommittees as the Audit Committee may deem appropriate, provided that any pre-approval of services by such subcommittees
pursuant to this delegated authority must be presented to the full Audit Committee at its next scheduled meeting.
Audit Committee Report*
The Audit Committee has reviewed and discussed our audited financial statements with management, and has discussed with our independent registered
public accounting firm the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and SEC. Additionally, the Audit Committee has received the written disclosures and the letter from
our independent registered public accounting firm, as required by the applicable requirements of the PCAOB, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence.
Based upon such review and discussion, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the last fiscal year for filing with the SEC.
Submitted by:
Audit Committee of the Board of Directors
Elaine Healy (Chair)
Stephen Ross
Pamela Sutton-Wallace
|
* |
The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or
subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that the Company specifically requests that the information be treated as soliciting material or
specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act. |
| PROPOSAL 3 |
|
Non-Binding, Advisory Vote to Approve the
Frequency of Future Non-Binding, Advisory
Votes to Approve Named Executive Officer
Compensation
Pursuant to Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to cast a non-binding advisory
vote on whether future advisory votes on the compensation of our named executive officers should occur every one year, every two years or every three years. This vote on the frequency of “say-on-pay” votes must be held at least once every six
years. Stockholders may specify whether they prefer such votes to occur every one year, two years or three years, or they may abstain from voting. Stockholders are not voting to approve the Board’s recommendation.
After careful consideration, our Board recommends that future advisory votes on named executive officer compensation occur every
year (annually). We believe that an annual advisory vote on executive compensation is the most appropriate option for us at this time because it will allow our stockholders to provide more frequent and direct input on our compensation
policies and practices, and the resulting compensation for our named executive officers. Stockholders will have the opportunity to consider our most recent compensation decisions, focus on increasing long-term stockholder value and provide
feedback to us in a timely way.
This advisory resolution is not binding on our Board. The Board will consider the voting results in determining the frequency of
future advisory votes, and expects to be guided by the alternative that receives the greatest number of votes, even if that alternative does not receive a majority vote. Notwithstanding the Board’s recommendation and the outcome of the
stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to
compensation programs.
In accordance with transition rules applicable to emerging growth companies, the Company expects to hold its first say-on-pay vote
at the 2024 annual meeting of stockholders.
|
| Our Board recommends a
vote “FOR” a frequency of “1 YEAR” for future non-binding, advisory votes to approve the compensation of our named executive officers. |
EXECUTIVE COMPENSATION
Information About Our Executive Officers
Below is a list of our executive officers and their respective ages and a brief account of the business experience of each of them.
 |
Scott Turicchi, Chief Executive Officer and Director, age 59. Please see “Directors Continuing in Office Until the 2024
Annual Meeting of Stockholders” for information regarding Mr. Turicchi. |
James Malone, Chief Financial Officer, age 74, has served as our Chief Financial Officer since January
2022. Prior to joining Consensus, Mr. Malone served as the Executive Vice President and Chief Financial Officer at XIFIN, Inc. from 2015 to 2020. XIFIN is a cloud-based health information technology company. Mr. Malone has previously served
as the Chief Financial Officer at multiple other companies, including American Well, Misys plc, and The TriZetto Group. He has over 20 years of experience within the healthcare market. Mr. Malone received his Bachelor of Science in Accounting
from St. Francis College and completed a graduate study in Taxation at
Pace University. |
 |
 |
Vithya Aubee, Chief Legal Officer and Secretary, age 34, has served as our Chief Legal Officer,
Secretary, since October 2021. Prior to joining Consensus, Ms. Aubee served in various legal roles at J2 Global, Inc. from May 2016 to October 2021, most recently serving as the Assistant General Counsel from June 2019 to October 2021 where
she oversaw legal matters for the J2 Cloud Services division, and as Commercial Counsel at Broadcom Limited, a global semiconductor and infrastructure software solutions company, from 2013 to 2016, supporting Broadcom’s Carrier Access and
Set-Top Box business units. Ms. Aubee holds a Bachelor of Science in Clinical Psychology from the University of California San Diego and a Juris Doctor from the California Irvine School of Law. |
| John Nebergall, Chief Operating Officer, age 63, has served as our Chief Operating Officer since
October 2021. He served as General Manager of the J2 Global Inc. Cloud Fax business unit from June 2018 to October 2021. From 2015 to 2018 he was General Manager of Demandforce, a cloud software firm located in San Francisco. Prior to that,
Mr. Nebergall served 2013 to 2015 as Senior Vice President at Orion Health, as Senior Vice President Zynx Health from 2010 to 2013 and as Senior Vice President Allscripts from 2003 to 2010. Mr. Nebergall is a Certified Public Accountant who
earned his MBA at the University of Chicago. |
 |
 |
Jeffrey Sullivan, Chief Technology Officer, age 58, has served as our Chief Technology Officer since
October 2021. He served as Chief Technology Officer of the J2 Global Inc. Cloud Fax business from February 2019 to October 2021. From 2016 to 2019, Mr. Sullivan was Chief Technology Officer for Demandforce (owned by Internet Brands, Inc.) and
Vice President of Technology for the Health market segment at Internet Brands, Inc. From 2010 to 2016, Mr. Sullivan was Chief Technology Officer for Minute Menu Systems. He served on the Board of Directors of Minute Menu Systems from 2013 to
2016. From 2007 to 2009, Mr. Sullivan was Chief Information Officer at Think Financial. From 2000 to 2007, he was Chief Technology Officer and then Chief Operating Officer at LoanWeb.com and iHomeowners, Inc. (an INC 500 company). Previously
in his career, he held technology and technology leadership positions at Countrywide Home Loans, Digital Arcana, Inc., and the University of Southern California’s Information Sciences Institute. Mr Sullivan was also a professional writer in
the areas of technology and creative writing, with more than 200 published magazine articles and book chapters to his credit. He holds an M.A. in Artificial Intelligence from the University of Pittsburgh and a B.S. in Psychology and Computer
Science from the Indiana University of Pennsylvania. |
| |
|
|
Compensation Discussion and Analysis
Role of Compensation Committee and Third Party Compensation Consultant in Establishing Compensation
In September 2022, the Compensation Committee engaged a third party compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”) to prepare
a competitive analysis and benchmarking of executive compensation programs for the Compensation Committee to consider in establishing and awarding its executive compensation (“FW Cook Executive Pay Benchmarking and Analysis”). Specifically, our
Compensation Committee worked with FW Cook to review competitive market data and analysis, including information about current market practices and trends, compensation structures and compensation ranges of a comparison group selected by FW Cook (the
“Peer Group”). The Peer Group was comprised of the following companies that have a revenue and market capitalization that is roughly ⅓ to 3 times the size of the Company and operate in the application and system software services, health care
technology and other related technology services:
| • Veradigm, Inc. (fka Allscripts) |
• OneSpan |
| • Box |
• Phreesia |
| • Commvault Systems |
• Progress Software |
| • Computer Programs & Systems Inc. |
• R1 RCM |
| • Ebix |
• SecureWorks |
| • Evolent Health |
• Tabula Rasa HealthCare |
| • HealthStream |
• Verint Systems |
| • NextGen Healthcare |
• Yext, Inc |
| • Omnicell |
|
Based on the FW Cook Executive Pay Benchmarking and Analysis, the Compensation Committee established the base salary, target bonus, and stock award
set forth above and detailed below for the Named Executive Officers (“NEOs”).
Components of Our Executive Compensation Program
Annual Base Salary
Base salary is a customary, fixed element of compensation intended to attract and retain executives. When setting the annual base salaries of our
NEOs, the Compensation Committee considered the relevant experience and skillset of the NEOs and the FW Cook Executive Pay Benchmarking and Analysis provided by our independent compensation consultant. Base salaries will be evaluated annually for all
Company employees, including our executive officers.
Performance Incentive Cash Compensation (“PIC”)
The annual bonus program, also known as Performance Incentive Compensation (“PIC”), for our NEOs is intended to reward strategic deliverables, drive
organic revenue growth and minimize expenses. The PIC is broken into two components: Organic Revenue and Non-GAAP Net Income targets.
Design of the plan has been with insight from FW Cook and reviewed against the Company’s peer group based on guidance from the Chairman of the
Compensation Committee and Management. The Organic Revenue and Non-GAAP Net Income targets are reviewed and approved by the Compensation Committee in conjunction with the Board of Directors approval of the annual budget.
50% of the PIC payout is based on target achievement of Organic Revenue. Below 97.5% target attainment, there is no payout. At 97.5%, the plan will
pay 46% of target; this payout accelerates to 100% when the target revenue is achieved at goal. Above 100% achievement, there is a linear relationship between 100%-105% attainment of the target which pays out linearly between 100%-200%. By way of
example, if we attain 102.5% of targeted Organic Revenue, payout for this component would be 150%. Organic Revenue is defined as revenues, as calculated on a GAAP basis, exclusive of revenue contribution from acquisitions made within the fiscal year.
For 2022, the Organic Revenue target for purposes of the PIC was set at $377,549,000.
50% of the PIC payout is based on target achievement of Non-GAAP Net Income. Below 90%, the payout is $0; between 90%-110%, the payout is linear up
to 200% of target. By way of example, if we attain 102% of targeted Non-GAAP Net Income, payout for this component would be 120%. Non-GAAP Net Income for the purposes of the PIC is defined as revenues less cost of revenues, operating expenses, income
taxes, and interest expenses, excluding expenses related to share-based compensation, amortization of patents and acquired intangible assets, and other one-time non-recurring expenses related to operation of the business. For 2022, the Non-GAAP Net
Income target for purposes of the PIC was set at $112,826,000.
The 2022 PCIP calculation for the payment was based on the achievement percentage of the budgeted Organic Revenue and Non-GAAP Net Income for the 2022 fiscal year. Based on the calculations, the payout percentages are noted as follows:
|
• |
50% Organic Revenue - 2022 achievement was 94.18% overall (below the targeted range of 97.5% - 105%). Consequently, the payout for Organic Revenue was 0%. |
|
• |
50% Non-GAAP Net Income - 2022 achievement was 94.45% (within the targeted range of 90-108.5%). Consequently, the payout for Non-GAAP Net Income was 44.50%. |
CEO and COO Long-Term Equity Incentive Compensation
In connection with their appointments as Chief Executive Officer and Chief Operating Officer of the Company, Mr. Turicchi and Mr. Nebergall,
respectively, were each awarded an upfront long-term equity award (“Long Term Equity Award”) on December 15, 2021 (“Grant Date”) under the Company’s 2021 Equity Incentive Plan. It is the Compensation Committee’s current intent that this upfront, Long
Term Equity Award will be the only stock based compensation awarded to Mr. Turicchi and Mr. Nebergall over the next five years, or until the awarded stock units have substantially vested. The time-based restricted stock unit awards will vest over 5
years and the performance-based restricted stock awards have 6 years to satisfy the performance goals or expire. The Compensation Committee, with the assistance of
FW Cook, emphasized long-term performance and retention by weighting the compensation of Mr. Turicchi (CEO) and Mr. Nebergall
(COO) toward long-term equity incentives. Mr. Turicchi received 266,667 performance-based restricted stock units (“PSUs”) and 80,000 time-based restricted stock awards (“RSUs”). Mr. Nebergall received 177,778 PSUs and 53,333 RSUs. One-fifth of the
RSUs vest on the first anniversary of the Grant Date and one-tenth vest every 6 months thereafter, subject to continued employment except as described below. The PSUs vest in one-fifth increments only if the Company’s common stock price remains at or
above the following five stock prices for at least 20 trading days in any 25 consecutive trading day period and the average closing price for such 30 day period is equal to or exceeds such stock price threshold: $62.87, $69.15, $76.07, $83.67, and
$92.04; provided that no PSUs may vest before the first anniversary of the Grant Date. The stock price thresholds were based on the compounded annual growth rate in the Company’s common stock price from the date of its initial public offering until
the Grant Date, as applied to each of the five successive stock price thresholds. The recipients have a total of six years to achieve the performance targets with respect to the PSUs. Any unvested PSUs generally are forfeited upon termination of
employment except as described below. The RSUs and PSUs are otherwise subject to the terms and conditions of the 2021 Equity Incentive Plan, and the individual award agreements thereunder corresponding to the awards.
Annual Equity Incentive Compensation for Other Executive Officers
The Company also granted equity based awards to its executive officers and other certain senior managers in the form of RSUs and PSUs (“Annual
Equity Award”). Unlike the awards described above, these grants were not intended to be one-time, large grants; rather, it is expected that our key employees other than Mr. Turicchi and Mr. Nebergall will receive annual equity incentive grants. The
awards granted are based on executive compensation benchmarking data provided by FW Cook and each award is designed and developed in conjunction with the Compensation Committee. The purpose of the Annual Equity Award is for key employees to have a
portion of their compensation tied directly to the key metrics of the Company. The Annual Equity Award RSUs vest ratably over a four-year vesting period, with awards vesting one-fourth on the first anniversary of the date of the award and vesting
one-eighth every 6 months thereafter, provided that the recipient is still employed by Company at the applicable vesting date. The 2022 Annual Equity PSUs vest with respect to one-fourth of such shares at each such time as Company common stock
remains at or above the following four stock prices for at least 20 trading days in any 30 consecutive trading day period and the average closing price for such 30 day period is equal to or exceeds such stock price threshold: $64.50, $69.34, $74.54,
$80.13; provided that in the case of PSUs no such shares shall vest prior to the first anniversary of the date of grant, whether or not any stock price condition is satisfied prior to such time. The recipients have a total of eight years to achieve
any performance targets with respect to the PSUs. Any unvested PSUs generally are forfeited upon termination of employment. The Annual Equity Award RSUs and PSUs are otherwise subject to the terms and conditions of the 2021 Equity Incentive Plan, and
the individual award agreements thereunder corresponding to the awards. Due to Mr. Malone’s date of hire being within 30 days of the Company’s 2021 equity cycle, Mr. Malone received his initial equity grant in January 2022 and was then eligible to
participate in the Company’s regular annual equity cycle in November 2022.
Other Benefits
Our Company’s NEOs may also participate in the Company’s health, vision, dental, life and disability insurance plans, voluntary life and disability
plans, our tax-qualified 401(k) plan and company match, and other Company benefits to the same extent as all other eligible employees.
Tax and Accounting Considerations
Deductibility of Executive Compensation: Section 162(m) of the Internal Revenue Code imposes limitations on the deductibility for corporate
federal income tax purposes of remuneration in excess of $1 million paid to any person who has served as chief executive officer, chief financial officer and each of the three next most highly compensated executive officers of a public company. As a
result, we expect that compensation awarded to our NEOs will not be deductible to the extent it is in excess of the $1 million threshold. The Compensation Committee notes this deductibility limitation as a factor in its compensation matters. However,
the Compensation Committee has the flexibility to take any compensation-related actions that it determines are in the best interests of the company and our stockholders, including awarding compensation that may not be deductible for tax purposes.
There can be no assurance that any compensation to the NEOs will be deductible.
Taxation of “Parachute” Payments and Deferred Compensation: Sections 280G and 4999 of the Internal Revenue Code provide that executive
officers, directors who hold significant equity interests, and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change of control of the Company that exceed
certain prescribed limits, and that the Company may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officers, including any NEO, with a “gross-up” or other reimbursement payment for any tax
liability that the executive officer might owe as a result of the application of Sections 280G or 4999 during fiscal 2022 and we have not agreed and are not otherwise obligated to provide any NEO with such a “gross-up” or other reimbursement.
Section 409A of the Internal Revenue Code imposes significant additional taxes in the event that an executive officer, director or service provider
receives “deferred compensation” that does not satisfy the restrictive conditions of the provision. We generally have structured our equity awards in a manner intended to comply with the applicable Section 409A conditions.
Accounting for Stock-Based Compensation: The Company accounts for share-based awards to employees and non-employees in accordance with the
provisions of FASB ASC Topic No. 718, Compensation - Stock Compensation (“ASC 718”). Accordingly, the Company measures share-based compensation expense at the grant date, based on the fair value of the award, and recognizes the expense over the
employee’s requisite service period using the straight-line method. The measurement of share-based compensation expense is based on several criteria, including but not limited to the valuation model used and associated input factors, such as expected
term of the award, stock price volatility, risk free interest rate, dividend rate and award cancellation rate. These inputs are subjective and are determined using management’s judgment. If differences arise between the assumptions used in
determining share-based compensation expense and the actual factors, which become known over time, the Company may change the input factors used in determining future share-based compensation expense. Any such changes could materially impact the
Company’s results of operations in the period in which the changes are made and in periods thereafter. The Company estimates the expected term based upon the contractual term of the award. When determining the types and amounts of equity compensation
granted to the NEOs, the Compensation Committee considers the advantages and disadvantages of various equity vehicles, such as stock options, RSUs and PSUs. As part of this consideration, the Compensation Committee considers the overall program cost,
which includes the associated compensation expense for financial reporting purposes.
Compensation Committee Report
The Compensation Committee has reviewed the Compensation Discussion and Analysis section of this proxy statement and discussed that section with
management. Based on its review and discussions with management, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this proxy statement. This report is provided by the following members
of our Board, who compose the Compensation Committee:
Stephen Ross (Chair)
Douglas Bech
Elaine Healy
Summary Compensation Table
The following table sets forth the compensation earned during fiscal 2022 (January 1, 2022-December 31, 2022) by our principal executive officer,
principal financial officer and our next three most highly compensated executive officers who served in such capacities at December 31, 2022.
Name and Principal
Position |
Year |
Base
Salary
($)(1) |
Non-Equity
Incentive Plan
Compensation
($) |
Stock
Awards
($)(2) |
All
Other
Compensation
($)(3) |
Total
($) |
Scott
Turicchi
Chief Executive Officer |
2022 |
$750,000 |
$166,125 |
$0 |
$32,045 |
$948,170 |
| 2021 |
$175,481 |
$274,500 |
$16,769,349 |
$110,566 |
$17,329,896 |
| |
|
|
|
|
|
|
Jim
Malone
Chief Financial Officer |
2022 |
$336,539 |
$46,515 |
$1,418,167 |
$23,600 |
$1,824,821 |
| |
|
|
|
|
|
|
Vithya
Aubee
Chief Legal Officer |
2022 |
$300,000 |
$39,870 |
$533,140 |
$6,719 |
$879,729 |
| |
|
|
|
|
|
|
John
Nebergall
Chief Operating Officer |
2022 |
$450,000 |
$66,450 |
$0 |
$23,733 |
$540,183 |
| 2021 |
$115,769 |
$109,800 |
$11,179,547 |
$5,480 |
$11,410,334 |
| |
|
|
|
|
|
|
Jeffrey
Sullivan
Chief Technology Officer |
2022 |
$350,000 |
$46,515 |
$872,475 |
$8,001 |
$1,276,991 |
| 2021 |
$91,538 |
$76,860 |
$850,807 |
$1,470 |
$1,020,675 |
| |
|
|
|
|
|
|
|
(1) |
Mr. Malone’s annual salary is $350,000, his date of hire was January 10, 2022. Amounts reported for NEOs in 2021 represent compensation earned and paid in the fiscal year in which they were reported from October 7
2021 to December 31 2021. In 2021, Mr. Turicchi’s annual salary was $750,000, Mr. Nebergall’s annual salary was $450,000, and Mr. Sullivan’s annual salary was $350,000. |
|
(2) |
These amounts represent the grant date fair value under ASC 718 for restricted stock awards granted and report a grant date value for the performance restricted shares based upon Monte Carlo simulations of the
performance conditions. As noted below under the subsection titled “CEO and COO Long-Term Equity Incentive Compensation,” the stock awards granted in 2021 to Mr. Turicchi and Mr. Nebergall were upfront, long term awards, and no further grants
are expected until the stock units have substantially vested or expired. As such, those NEOs did not receive any equity awards in 2022. The ASC 718 value as of the grant date for stock awards is amortized over the number of months of service
required for the grant to become non-forfeitable. There can be no assurance that the ASC 718 amount will ever be realized. The Stock Awards reported above in 2022 for Mr. Malone, Ms. Aubee and Mr. Sullivan are comprised 50% of time-based
restricted units (RSUs) and 50% performance-based restricted units (PSUs). Assuming the achievement of all performance conditions, the value of the 2022 performance-based restricted shares at grant would be: $912, 303 for Mr. Malone; $330, 568
for Ms. Aubee; and $540, 956 for Mr. Sullivan. |
|
(3) |
The following table and related footnotes describe each component of the column entitled “All Other Compensation” in the Summary Compensation Table: |
| Name |
Year |
Insurance
Premiums ($) |
Company
Contributions
to Retirement and
401(k) Plans ($) |
Total
($) |
| Scott
Turicchi |
2022 |
$25,945(a) |
$6,100 |
$32,045 |
| Jim
Malone |
2022 |
$17,500(b) |
$6,100 |
$23,600 |
| Vithya
Aubee |
2022 |
$619(c) |
$6,100 |
$6,719 |
| John
Nebergall |
2022 |
$17,633(d) |
$6,100 |
$23,733 |
| Jeffrey
Sullivan |
2022 |
$1,901(e) |
$6,100 |
$8,001 |
|
(a) |
Consists of $22,461 in medical, dental and vision insurance premium contributions, $3,000 in HSA matching funds, $232 in short term and long-term disability insurance premium contributions and $252 in life
insurance premium contributions for $500,000 in life insurance benefits. |
|
(b) |
Consists of $17,173 in medical, dental and vision insurance premium contributions, $232 in short term and long-term disability insurance premium contributions and $95 in life insurance premium contributions for
$188,000 in life insurance benefits. |
|
(c) |
Consists of $205.68 in medical, dental and vision insurance premium contributions, $232 in short term and long-term disability insurance premium contributions and $181.44 in life insurance premium contributions for
$360,000 in life insurance benefits. |
|
(d) |
Consists of $17,173 in medical, dental and vision insurance premium contributions, $232 in short term and long-term disability insurance premium contributions and $227 in life insurance premium contributions for
$451,000 in life insurance benefits. |
|
(e) |
Consists of $1,479 in dental and vision insurance premium contributions, $232 in short term and long-term disability insurance premium contributions and $189 in life insurance premium contributions for $376,000 in
life insurance benefits. |
Grants of Plan Based Awards
The following table summarizes equity awards granted to our executive officers in 2022.
|
Name
|
Award
Type
|
Estimated Future Payouts Under
Non-Equity Incentive Awards (1) |
Estimated Future Payouts Under
Equity Incentive Awards (2) |
Other Stock Awards |
|
Grant Date
|
Target
|
Maximum
|
Grant Date
|
Threshold
|
Maximum
|
Grant Date |
# of
Units
|
Grant Date Fair Market
Value of Stock Awards (2) |
|
Scott
Turicchi
|
PIC |
Mar 1, 2022 |
$750,000 |
$1,500,000 |
— |
— |
— |
— |
— |
— |
|
Jim
Malone
|
PIC
|
Mar 1, 2022
|
$210,000
|
$420,000
|
— |
— |
— |
— |
— |
— |
| PSU (3) |
— |
— |
— |
Jan 10, 2022 |
$79,971
|
$371,348
|
— |
— |
— |
| PSU (4) |
— |
— |
— |
Nov 10, 2022 |
$120,938
|
$540,956
|
— |
— |
— |
| RSU (5) |
— |
— |
— |
— |
— |
— |
Jan 10, 2022 |
5,091 |
$295,634 |
| RSU |
— |
— |
— |
— |
— |
— |
Nov 10, 2022 |
7,500 |
$450,000 |
|
Vithya Aubee
|
PIC
|
Mar 1, 2022
|
$180,000
|
$360,000
|
— |
— |
— |
— |
— |
— |
| PSU |
— |
— |
— |
Nov 10, 2022
|
$73,853
|
$330,568
|
— |
— |
— |
| RSU |
— |
— |
— |
— |
— |
— |
Nov 10, 2022
|
4,583 |
$274,980 |
|
John
Nebergall
|
PIC |
Mar 1, 2022 |
$300,000 |
$600,000 |
— |
— |
— |
— |
— |
— |
|
Jeffrey Sullivan
|
PIC
|
Mar 1, 2022
|
$210,000
|
$420,000
|
— |
— |
— |
— |
— |
— |
| PSU |
— |
— |
— |
Nov 10, 2022
|
$120,938
|
$540,956
|
— |
— |
— |
| RSU |
— |
— |
— |
— |
— |
— |
Nov 10, 2022
|
7,500 |
$450,000 |
|
(1) |
The Company’s non-equity incentive plan awards are based on achieving Organic Revenue and Non-GAAP Net Income FY Budget targets. Both components are weighted at 50% for bonus calculation. |
|
(2) |
These amounts represent the grant date fair value under ASC 718 for restricted stock awards granted and report a grant date value for the performance restricted shares based upon Monte Carlo simulations of the
performance conditions. |
|
(3) |
Mr. Malone received an equity grant on his date of hire in accordance with the Company’s 2021 Annual Equity Performance Stock Units (PSUs) which vest with respect to one-fourth of such shares at each such time as
Company common stock remains at or above the following four stock prices for at least 20 trading days in any 30 consecutive trading day period and the average closing price for such 30 day period is equal to or exceeds such stock price
threshold: $62.87, $69.15, $76.07, $83.67; provided that in the case of PSUs no such shares shall vest prior to the first anniversary of the date of grant, whether or not any stock price condition is satisfied prior to such time. |
|
(4) |
The 2022 Annual Equity Performance Stock Units (PSUs) vest with respect to one-fourth of such shares at each such time as Company common stock remains at or above the following four stock prices for at least 20
trading days in any 30 consecutive trading day period and the average closing price for such 30 day period is equal to or exceeds such stock price threshold: $64.50, $69.34, $74.54, $80.13; provided that in the case of PSUs no such shares shall
vest prior to the first anniversary of the date of grant, whether or not any stock price condition is satisfied prior to such time. |
|
(5) |
The 2022 Annual Equity Restricted Stock Units (RSUs) vest ratably over a four-year vesting period, with awards vesting one-fourth on the first anniversary of the date of the award and vesting one-eighth every 6
months thereafter, provided that the recipient is still employed by Company at the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes equity awards held by our named executive officers as of December 31, 2022.
| Stock Awards |
| Name |
Number of Shares or
Units of Stock That
Have Not Vested
(#) |
Market Value
of Shares or Units of
Stock That Have Not
Vested
($)(11) |
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 ($)(12) |
| Scott
Turicchi |
131,891(1) |
$7,090,460 |
287,361(6) |
$21,870,138 |
| Jim Malone |
12,591(2) |
$676,892 |
12,591(7) |
$912,304 |
| Vithya
Aubee |
9,542(3) |
$512,978 |
7,452(8) |
$539,002 |
| John
Nebergall |
46,732(4) |
$2,512,312 |
179,121(9) |
$13,739,595 |
| Jeffrey
Sullivan |
18,370(5) |
$987,571 |
14,357(10) |
$1,038,542 |
|
(1) |
Consists of the unvested restricted stock with respect to the following restricted stock awards: (a) 8,076 remaining restricted shares, as adjusted for the Spin-Off, converted over from a restricted stock award
granted on May 3, 2018 that vest ratably over five years, beginning on May 3, 2019; (b) 15,679 remaining restricted shares as adjusted for the Spin-Off, converted from a restricted stock award granted on March 13, 2019 that vest ratably over
five years, beginning on March 13, 2020; (c) 21,819 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 6, 2020 by Ziff Davis, Inc. that vest ratably over five years,
beginning on March 6, 2021; (d) 4,365 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 13, 2020 by Ziff Davis, Inc. that vest ratably over five years, beginning on March
13, 2021; (e) 21,819 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 3, 2021 by Ziff Davis, Inc. that vest ratably over four years, beginning on March 3, 2022, and
(f) 60,000 restricted stock units, granted by Company on December 15, 2021 that vest as follows: 25% of the grant on the first anniversary, December 15, 2022, and the remaining 75% of the grant ratably over the remaining four years. |
|
(2) |
Consists of the unvested restricted stock with respect to the following restricted stock awards (a) 5,091 restricted stock units, granted by Company on January 10, 2022 that vest ratably over four years, beginning
on January 10, 2022; and (b) 7,500 restricted stock units, granted by Company on November 10, 2022 that vest ratably over four years, beginning on November 10, 2023. |
|
(3) |
Consists of the unvested restricted stock with respect to the following restricted stock awards (a) 366 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award
granted on March 3, 2021 by Ziff Davis, Inc. that vest ratably over four years, beginning on March 3, 2022; (b) 4,593 restricted stock units, granted by Company on December 15, 2021 that vest ratably over four years, beginning on December 15,
2022; and; (c) 4,583 restricted stock units, granted by Company on November 10, 2022 that vest ratably over four years, beginning on November 10, 2023. |
|
(4) |
Consists of the unvested restricted stock with respect to the following restricted stock awards: (a) 1,309 remaining restricted shares as adjusted for the Spin-Off, converted over from a restricted stock award
granted on March 13, 2019 that vest ratably over five years, beginning on March 13, 2020; (b) 1,818 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 6, 2020 by Ziff Davis,
Inc. that vest ratably over five years, beginning on March 6, 2021; (c) 365 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 13, 2020 by Ziff Davis, Inc. that vest ratably
over five years, beginning on March 13, 2021; (d) 1,343 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 3, 2021 by Ziff Davis, Inc. that vest ratably over four years,
beginning on March 3, 2022; and (e) 39,999 restricted stock units, granted by Company on December 15, 2021 that vest as follows: 25% of the grant on the first anniversary, December 15, 2022, and the remaining 75% of the grant ratably over the
remaining four years. |
|
(5) |
Consists of the unvested restricted stock with respect to the following restricted stock awards: (a) 1,460 remaining restricted shares, as adjusted for the Spin-Off, converted over from a restricted stock award
granted on February 7, 2019, that vest ratably over five years, beginning on February 7, 2020; (b) 910 remaining restricted stock units, as adjusted for the Spin-Off, converted from a restricted stock award granted on March 6, 2020 by Ziff
Davis, Inc. that vest ratably over five years, beginning on March 6, 2021; (c) 183 remaining restricted stock units, as adjusted for the Spin-Off, converted over from a restricted stock award granted on March 13, 2020 by Ziff Davis, Inc. that
vest ratably over five years, beginning on March 13, 2021; (d) 1,099 remaining restricted stock units, as adjusted for the Spin-Off, converted over from a restricted stock award granted on March 3, 2021 by Ziff Davis, Inc. that vest ratably
over four years, beginning on March 3, 2022; (e) 7,218 restricted stock units, granted by Company on December 15, 2021 that vest ratably over four years, beginning on December 15, 2022; and (f) 7,500 restricted stock units, granted by Company
on November 10, 2022 that vest ratably over four years, beginning on November 10, 2023. |
|
(6) |
Consists of (a) 6,064 unvested restricted units, as adjusted for the Spin-Off, granted on May 4, 2017 by Ziff Davis that vest based on specified stock price targets of the Company’s common stock; (b) 14,634
unvested restricted units, as adjusted for the Spin-Off, granted on March 3, 2021 by Ziff Davis that vest based on specified stock price targets of the Company’s common stock; and (c) 266,667 unvested restricted units, granted on December 15,
2021 by Company that vest based on specified stock price targets of the Company’s common stock. |
|
(7) |
Consists of (a) 5,091 unvested restricted units, as adjusted, granted on January 10, 2022 that vest based on specified stock price targets of the Company’s common stock; (b) and 7,500 unvested restricted units,
granted on November 10, 2022 by Company that vest based on specified stock price targets of the Company’s common stock. |
|
(8) |
Consists of (a) 244 remaining restricted stock units, as adjusted for the Spin-Off, converted over from a restricted stock award granted on March 3, 2021 by Ziff Davis, Inc. that vest based on specified stock price
targets of the Company’s common stock; (b) 2,625 restricted stock units, granted by Company on December 15, 2021 that vest based on specified stock price targets of the Company’s common stock; and (c) 4,583 restricted stock units, granted by
Company on November 10, 2022 that vest based on specified stock price targets of the Company’s common stock. |
|
(9) |
Consists of (a) 1,343 unvested restricted units, as adjusted for the Spin-Off, granted on March 3, 2020 by Ziff Davis that vest based on specified stock price targets of the Company’s common stock; and (b) 177,778
unvested restricted units, granted on December 15, 2021 by Company that vest based on specified stock price targets of the Company’s common stock. |
|
(10) |
Consists of (a) 733 unvested restricted units, as adjusted for the Spin-Off, granted on March 3, 2020 by Ziff Davis that vest based on specified stock price targets of the Company’s common stock; (b) 6,124 unvested
restricted units, granted on December 15, 2021 by Company that vest based on specified stock price targets of the Company’s common stock; and (c) 7,500 restricted stock units, granted by Company on November 10, 2022 that vest based on specified
stock price targets of the Company’s common stock. |
|
(11) |
The market value is determined by multiplying the number of shares by $53.76, the closing trading price of Company common stock on the Nasdaq Global Select Market on December 30, 2022, the last trading day of the
fiscal year. |
|
(12) |
This is the cumulative value of all PSA and PSU grants, assuming the achievement of all performance conditions at each respective price target. |
Option Exercises and Stock Vested Table
The following table summarizes equity awards that vested for our executive officers in 2022, none of the executive officers have stock options.
| Name |
Number of Shares
Acquired on Vesting
(#)(1) |
Value Realized
on Vesting(2) |
| Scott Turicchi |
72,654 |
$4,168,454 |
| Jim Malone |
— |
— |
| Vithya Aubee |
1,898 |
$108,955 |
| John Nebergall |
17,951 |
$1,009,803 |
| Jeffrey Sullivan |
4,596 |
$264,775 |
|
(1) |
The number of shares reported in this column represent the shares acquired before applicable income tax withholdings are applied, for which shares are surrendered back to the Company. |
|
(2) |
The values reported in this column represent the number of shares acquired before applicable income taxes are applied, multiplied by the closing price of the Company’s common stock on the vesting date. |
Potential Payments Upon Termination or
Change in Control
The Company has not entered into change of control or severance arrangements with its executive officers, other than certain equity award special
vesting benefits as set forth below:
In the event of a change of control of Company, all outstanding restrictions on each share of restricted stock including time and performance-based
restrictions, and each RSU and PSU awarded under the 2021 Equity Incentive Plan will only lapse in full if the Committee or the Board of Directors determines that the holder has not been offered substantially identical replacement awards, as the case
may be, and a comparable position at the acquiring company.
In the event that a participant’s employment with the Company or its subsidiaries terminates as a result of death or disability then (1) for all
performance-based restricted shares, the continued employment conditions shall lapse and the performance-based restricted shares shall be eligible to meet the stock price performance conditions during the 36 months following the termination of
employment (after which any unvested performance vesting restricted units will be forfeited), provided that such 36 month period is subject to and shall not extend the expiration date of the applicable grant, and no restrictions on performance-based
restricted shares shall lapse prior to the date that is the one year anniversary of the date of the restricted stock agreement related thereto; and (2) all time-based restricted shares will vest in full. In the event that a participant’s employment
with the Company or its subsidiaries terminates for any other reason (including retirement, voluntary resignation or termination by the Company with or without cause), all restricted shares (performance-based and time-based) will be forfeited.
| STOCK AWARD POTENTIAL PAYMENTS UPON TERMINATION DUE TO DEATH OR DISABILITY |
| NAME |
OUTSTANDING
TIME-BASED
RESTRICTED
SHARES AS OF
DEC 31, 2022
(#)
|
MARKET VALUE
OF OUTSTANDING
TIME-BASED
RESTRICTED
SHARES AS OF
DEC 31, 2022
($)(1) |
OUTSTANDING
PERFORMANCE-
BASED RESTRICTED
SHARES AS OF
DEC 31, 2022
(#)
|
MARKET OR
PAYOUT VALUE
OF OUTSTANDING
PERFORMANCE-
BASED RESTRICTED
SHARES AS OF
DEC 31, 2022
($)(2) |
| Scott Turicchi |
131,891 |
$7,090,460 |
287,361 |
$0 |
| Jim Malone |
12,591 |
$676,892 |
12,591 |
$0 |
| Vithya Aubee |
9,542 |
$512,978 |
7,452 |
$0 |
| John Nebergall |
46,732 |
$2,512,312 |
179,121 |
$0 |
| Jeffrey Sullivan |
18,370 |
$987,571 |
14,357 |
$0 |
|
(1) |
The market value is determined by multiplying the number of shares by $53.76, the closing trading price of Company common stock on the Nasdaq Global Select Market on December 30, 2022,
the last trading day of the fiscal year. |
|
(2) |
No performance-based restricted stock award met any target price by December 30, 2022, the last trading day of the fiscal year. |
Pay vs. Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation
S-K, we are providing the following information about the relationship between executive “compensation actually paid” and certain financial performance of the Company. For further information concerning the Company’s pay for performance philosophy
and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”
Year
(a)(1) |
Summary
Compensation
Table Total
for PEO(2)(b) |
Compensation
Actually Paid
to PEO(3)(c) |
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs(4)(d) |
Average
Compensation
Actually Paid
to Non-PEO
NEOs(5)(e) |
Year End Value of $100
Investment on
October 7, 2021
Based on: |
Net
Income(8)(h) |
Organic
Revenue(9)(i) |
Total
Shareholder
Return(6)(f) |
Peer Group
Total
Shareholder
Return(7)(g) |
| 2022 |
$948,170 |
$(234,633) |
$1,213,998 |
$984,259 |
$96 |
$65 |
$106,564,441 |
$355,582,874 |
| 2021 |
$17,329,896 |
$25,437,231 |
$6,215,505 |
$6,776,038 |
$103 |
$97 |
$26,905,333 |
$89,036,000 |
|
(1) |
The Company became an independent public company on October 7, 2021, therefore we are providing pay versus performance information for only two years in accordance with the
transitional rule for new registrants. |
|
(2) |
The dollar amounts reported in column (b) are the amounts reported for Scott Turicchi (the Company’s Chief Executive Officer) for each of the corresponding years in the “Total” column in our Summary Compensation Table. Refer to the “Executive Compensation – Summary Compensation Table”. |
|
(3) |
The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Turicchi, as computed in accordance with Item 402(v) of Regulation S-K
and do not reflect the total compensation actually realized or received by Mr. Turicchi. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown
below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
|
(4) |
The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Turicchi)
in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs included for these purposes in each applicable year are as follows: (i) for 2022, James Malone, John Nebergall, Jeffrey Sullivan;
(ii) for 2021, John Nebergall and Jeffrey Sullivan. |
|
(5) |
The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Scott Turicchi), as computed in
accordance with Item 402(v) of Regulation S-K. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in
accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant. |
|
(6) |
The beginning of the measurement period for 2021 is October 7, 2021. |
|
(7) |
The peer group used for this purpose is the same Peer Group set forth above under our Compensation Discussion and Analysis. |
|
(8) |
The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. The 2021 data represents only
Q4 2021. |
|
(9) |
Organic Revenue is determined on a GAAP basis, exclusive of revenue contribution from acquisitions made within the fiscal year. The
2021 data represents only Q4 2021. |
| Compensation
Actually Paid to PEO |
2022 |
2021 |
| Summary Compensation Table Total |
$948,170 |
$17,329,896 |
| Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table |
$0 |
$16,769,349 |
| Less, Change in Pension Value reported in
Summary Compensation Table |
$0 |
$0 |
| Plus, year-end fair value of outstanding and unvested equity awards granted in the year |
$0 |
$24,876,684 |
| Plus, fair value as of vesting date of
equity awards granted and vested in the year |
$0 |
$0 |
| Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in
prior years |
($1,146,770) |
$0 |
| Plus (less), year over year change in fair
value of equity awards granted in prior years that vested in the year |
($36,033) |
$0 |
| Less, prior year-end fair value for any equity awards forfeited in the year |
$0 |
$0 |
| Plus, pension service cost for services
rendered during the year |
$0 |
$0 |
| Compensation Actually Paid to Scott Turicchi |
$(234,633) |
$25,437,231 |
| Average Compensation Actually Paid to Non-PEO NEOs |
2022 |
2021 |
| Average Summary Compensation Table Total |
$1,213,998 |
$6,215,505 |
| Less, average value of Stock Awards reported in Summary Compensation Table |
$763,547 |
$6,015,177 |
| Less, average Change in Pension Value
reported in Summary Compensation Table |
$0 |
$0 |
| Plus, average year-end fair value of outstanding and unvested equity awards granted in the year |
$686,717 |
$6,575,710 |
| Plus, average fair value as of vesting
date of equity awards granted and vested in the year |
$0 |
$0 |
| Plus (less), average year over year change in fair value of outstanding and unvested equity awards
granted in prior years |
($142,837) |
$0 |
| Plus (less), average year over year change
in fair value of equity awards granted in prior years that vested in the year |
($10,072) |
$0 |
| Less, prior year-end fair value for any equity awards forfeited in the year |
$0 |
$0 |
| Plus, average pension service cost for
services rendered during the year |
$0 |
$0 |
| Average Compensation Actually Paid to Non-PEO NEOs |
$984,259 |
$6,776,038 |
Description of Certain Relationships between Information Presented in the Pay versus Performance Table
As described in more detail in the section “Compensation – Discussion and Analysis” the Company’s executive compensation program reflects a variable
pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the
Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In
accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
| CAP vs. TSR |
CAP vs. Net Income and CAP vs.
Organic Revenue |
 |
 |
Financial Performance Measures
As described in greater detail under “Compensation – Discussion and Analysis” the Company’s executive compensation program reflects a variable
pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our shareholders. The
most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
1. Net Income
2. Organic Revenue
3. Share Price of Company’s Common Stock
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information about our common stock that may be issued under equity compensation plans as of
December 31, 2022.
| |
|
(A) |
|
(B) |
|
(C) |
| |
|
NUMBER OF SECURITIES
TO BE ISSUED
UPON EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS(1) |
|
WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND
RIGHTS(2) |
|
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
EQUITY COMPENSATION PLANS
(EXCLUDING SECURITIES
REFLECTED IN COLUMN (A))(3) |
| Equity Compensation Plans Approved by Security Holders |
|
1,117,867 |
|
— |
|
2,757,445 |
| Equity Compensation Plans Not Approved by Security Holders |
|
— |
|
— |
|
— |
| Total |
|
1,117,867 |
|
|
|
2,757,445 |
|
(1) |
This column reflects restricted stock units granted under the Consensus Cloud Solutions, Inc. 2021 Equity Incentive Plan that were outstanding as of December 31, 2022. |
|
(2) |
There are no outstanding options. |
|
(3) |
This column reflects the total shares of our common stock remaining available for issuance under the Consensus Cloud Solutions, Inc. 2021 Equity Incentive Plan. |
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth information with respect to the beneficial ownership of our shares as of April 18, 2023 by:
| • |
each of our named executive officers; |
| • |
each of our current directors; |
| • |
all of our directors and executive officers as a group; and |
| • |
each person or entity known by us to own beneficially more than 5% of our preferred stock and common stock (by number or by voting power). |
Except as indicated in the footnotes below, we have determined beneficial ownership in accordance with the rules and regulations of the SEC, which
generally includes any shares over which a person exercises sole or shared voting and/or investment power. The information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we
believe, based on information furnished to us, that the persons and entities named in the table below have sole or shared voting and/or investment power with respect to all shares that they beneficially own, subject to applicable community property
laws.
Applicable percentage ownership is based on 19,659,661 shares of common stock outstanding as of April 18, 2023. Shares of common stock subject to
restricted stock units that are exercisable within 60 days of April 18, 2023 are considered outstanding and beneficially owned by the person holding the restricted stock units for the purpose of computing the percentage ownership of that person but
are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
Unless otherwise indicated, the address of each of the individuals named below is Consensus Cloud Solutions, Inc., 700 S. Flower Street, 15th Floor,
Los Angeles, California 90017.
| NAME OF
BENEFICIAL OWNERS |
NUMBER OF
SHARES |
OWNERSHIP
PERCENTAGE (%) |
| BlackRock, Inc. (1) |
2,864,187 |
14.57 |
| The Vanguard Group (2) |
2,056,864 |
10.46 |
| ArrowMark Colorado Holdings, LLC (3) |
2,067,728 |
10.52 |
| Janus Henderson Group plc (4) |
1,156,176 |
5.88 |
| Gates Capital Management, L.P. (5) |
1,077,287 |
5.48 |
| Macquarie Group Limited (6) |
1,046,010 |
5.32 |
| Scott Turicchi (7) |
156,368 |
* |
| Jim Malone |
1,273 |
* |
| John Nebergall (8) |
16,586 |
* |
| Jeffrey Sullivan (9) |
5,987 |
* |
| Douglas Bech |
53,180 |
* |
| Elaine Healy |
7833 |
* |
| Stephen Ross |
16,410 |
* |
| Nathaniel (Nate) Simmons |
6,833 |
* |
| Pamela Sutton-Wallace |
11,407 |
* |
| All directors and officers as a group (10 individuals) |
277,146 |
2.29 |
** Less than one percent.
|
(1) |
Based on the most recently available Schedule 13G/A filed with the SEC on January 31, 2023 by BlackRock, Inc. According to its Schedule 13G/A, BlackRock, Inc. reported having sole voting power over 2,834,803
shares, shared voting power over no shares, sole dispositive power over 2,864,187 shares and shared dispositive power over no shares. The Schedule 13G/A contained information as of December 31, 2022 and may not reflect current holdings of
Consensus’s stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
|
(2) |
Based on the most recently available Schedule 13G/A filed by the Vanguard Group on February 9, 2023. According to its Schedule 13G/A, the Vanguard Group reported having sole voting power over no shares, shared
voting power over 26,840 shares, sole dispositive power over 2,012,967 shares, and shared dispositive power over 43,897 shares. The Schedule 13G contained information as of December 30, 2022 and may not reflect current holdings of Consensus’s
stock. The address for the Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
|
(3) |
Based on the most recently available Schedule 13G/A filed by ArrowMark Colorado Holdings, LLC on April 10, 2023. According to its Schedule 13G/A, ArrowMark reported having sole voting power and sole dispositive
power over 2,067,728 shares. The Schedule 13G/A contained information as of March 31, 2023 and may not reflect current holdings of Consensus’s stock. The address for ArrowMark is 100 Fillmore Street, Suite 325, Denver, Colorado 80206. |
|
(4) |
Based on the most recently available Schedule 13G filed by Janus Henderson Group plc on February 13, 2023. According to its Schedule 13G,
Janus reported having shared voting power and shared dispositive power over 1,156,176 shares. The Schedule 13G contained information as of December 31, 2022 and may not reflect current holdings of Consensus’s stock. The address for Janus is
201 Bishopsgate, EC2M 3AE, United Kingdom. |
|
(5) |
Based on the most recently available Schedule 13G filed by Gates Capital Management, L.P. on February 14, 2023. According to its Schedule 13G,
Gates Capital Management reported having shared voting power and shared dispositive power over 1,077,287 shares. The Schedule 13G contained information as of December 31, 2022 and may not reflect current holdings of Consensus’s stock. The
address for Gates Capital Management is 1177 Avenue of the Americas, 46th Floor, New York, New York 10036. |
|
(6) |
Based on the most recently available Schedule 13G filed by Macquarie Group Limited on February 14, 2023. According to its Schedule 13G,
Macquarie Group Limited may be deemed to beneficially own 1,046,010 shares due to its ownership of Macquarie Management Holdings Inc. and Macquarie Investment Management Business Trust, each of which reported having sole voting power and sole
dispositive power over 1,030,845 shares. The Schedule 13G contained information as of December 30, 2022 and may not reflect current holdings of Consensus’s stock. The principal business address of Macquarie Group Limited is 50 Martin Place
Sydney, New South Wales, Australia. The principal business address of Macquarie Management Holdings Inc. and Macquarie Investment Management Business Trust is 2005 Market Street, Philadelphia, PA 19103. |
|
(7) |
Consists of 156,368 shares of Company common stock, including 5757 shares held by The Turicchi Family Foundation and 15,576 RSUs that will vest within 60 days of the Record Date. |
|
(8) |
Consists of 16,586 shares of Company common stock and 4,999 RSUs that will vest within 60 days of the Record Date. |
|
(9) |
Consists of 5,987 shares of Company common stock and 1,202 RSUs that will vest within 60 days of the Record Date. |
QUESTIONS AND ANSWERS ABOUT
THE ANNUAL MEETING
This proxy statement is being provided to you in connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting to be held on Thursday, June 15, 2023 at 8:30 a.m. Pacific Time, or at any adjournments or postponements thereof.
WHERE IS THE ANNUAL MEETING BEING HELD?
The Board has determined that the Annual Meeting should be held online this year via live audiocast in order to permit stockholders from any
location with access to the Internet to participate. This format also reduces the environmental impact of the Annual Meeting. The Company has endeavored to provide stockholders with the same rights and opportunities for participation in the Annual
Meeting online as an in-person meeting.
HOW CAN I PARTICIPATE IN AND VOTE AT THE ANNUAL MEETING ONLINE?
Stockholders of record as of the close of business on April 18, 2023, the record date, are entitled to participate in and vote at the Annual
Meeting. To participate in the Annual Meeting, including to vote, ask questions, and view the list of registered stockholders as of the record date during the meeting, stockholders of record should go to the Annual Meeting website at
www. www.virtualshareholdermeeting.com/CCSI2023, enter the 16-digit control number found on your proxy card or Notice and follow the instructions on the website.
If your shares are held in street name and your voting instruction form indicates that you may vote those shares through the
http://www.proxyvote.com website, then you may access, participate in, and vote at the Annual Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, stockholders who hold their shares in street name should contact
their bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Annual Meeting.
The Annual Meeting will begin promptly at 8:30 a.m Pacific Time on Thursday, June 15, 2023. Online check-in will begin at approximately 8:15 a.m.
Pacific Time, and we encourage you to provide sufficient time before the Annual Meeting begins to check-in. Technicians will be available to assist you with any difficulties you may have accessing the Annual Meeting.
Stockholders may submit questions before the Annual Meeting at www.proxyvote.com and during the Annual Meeting at the meeting website. We plan to
answer as many questions as possible during the time permitted. More information regarding the question and answer process, including the number and types of questions permitted, and how questions will be recognized, answered, and disclosed, will be
available in the meeting rules of conduct, which will be posted on the Annual Meeting website.
WHAT PROPOSALS WILL BE ADDRESSED AT THE ANNUAL MEETING?
Stockholders will be asked to consider the following proposals at the Annual Meeting:
| 1. |
To elect two directors to serve as Class II directors on the Board until the 2026 annual meeting of stockholders or until their successors are duly elected and qualified; |
| 2. |
To ratify the selection by our Audit Committee of BDO USA, LLP (“BDO”) to serve as our independent registered public accounting firm for the year ending December 31, 2023; and |
| 3. |
To approve, on a non-binding, advisory basis, the frequency of future non-binding, advisory votes to approve the compensation of our named executive officers. |
We will also consider any other business that properly comes before the Annual Meeting.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
Our Board unanimously recommends that stockholders vote “FOR” each nominee for director, “FOR” the ratification of the selection of
BDO as our independent registered public accounting firm and for “1 YEAR” as the frequency of future non-binding, advisory votes to approve the compensation of our named executive officers.
WHO MAY VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS?
Stockholders who owned shares of the Company’s common stock, par value $.01 per share, as of the close of business on April 18, 2023 are entitled to
vote at the Annual Meeting. As of the record date, there were 19,659,661 shares of our common stock issued and outstanding.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
In order for us to conduct the Annual Meeting, a quorum, consisting of a majority of the outstanding shares of stock entitled to vote at the Annual
Meeting, must be present in person or represented by proxy.
HOW MANY VOTES DO I HAVE?
Each share of common stock is entitled to one vote on each matter that comes before the Annual Meeting.
WHAT IS THE DIFFERENCE BETWEEN A STOCKHOLDER OF RECORD AND A BENEFICIAL OWNER OF SHARES HELD IN STREET
NAME?
Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, you are considered the
stockholder of record with respect to those shares, and the proxy materials were sent directly to you by the Company.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other
similar organization, then you are the beneficial owner of shares held in “street name,” and the proxy materials were 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 have the right to instruct that organization on how to vote the shares held in your account. Those instructions are contained in a “vote instruction form.”
WHAT IS THE PROXY CARD?
The proxy card enables you to appoint Scott Turicchi, our CEO, and Vithya Aubee, our Chief Legal Officer, as your representatives at the Annual
Meeting. By completing and returning the proxy card, you are authorizing Mr. Turicchi and Ms. Aubee to vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not
you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, it is strongly recommended that you complete and return your proxy card before the Annual Meeting date in case your plans change. If a proposal comes up for vote at the
Annual Meeting that is not on the proxy card, the proxies will vote your shares, under your proxy, according to their best judgment.
IF I AM A STOCKHOLDER OF RECORD OF THE COMPANY’S SHARES, HOW DO I VOTE?
Before the Annual Meeting, you may vote:
• By mail, by completing, signing, and dating your proxy card (if you have received a paper copy of a proxy card by mail).
• Online at www.proxyvote.com.
• By telephone, at 1-800-690-6903.
During the Annual Meeting, you may vote online at www.virtualshareholdermeeting.com/CCSI2023
IF I AM A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME, HOW DO I VOTE?
Beneficial owners should check their voting instruction form for how to vote in advance of and how to participate in the Annual Meeting.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
If you hold your shares directly in your own name, they will not be voted if you do not provide a proxy.
Your shares may be voted under certain circumstances if they are held in the name of a brokerage firm. Brokerage firms generally have the authority
to vote shares not voted by customers on certain “routine” matters, including the ratification of an independent registered public accounting firm. Accordingly, at the Annual Meeting, your shares may only be voted by your brokerage firm for the
ratification of our independent registered public accounting firm.
Brokers are prohibited from exercising discretionary authority on non-routine matters. The election of directors and the proposal on the frequency
of future non-binding, advisory votes to approve the compensation of our named executive officers are considered non-routine matters, and therefore brokers cannot exercise discretionary authority regarding these proposals for beneficial owners who
have not returned proxies to the brokers (so-called “broker non-votes”). In the case of broker non-votes, and in cases where you abstain from voting on a matter when present at the Annual Meeting and entitled to vote, those shares will still be
counted for purposes of determining if a quorum is present.
WHAT VOTE IS REQUIRED TO ELECT DIRECTORS?
Directors are elected by the vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of
shares voted “against” such nominee). Any shares voted “Abstain” and broker non-votes are not considered votes cast for the foregoing purpose and will have no effect on the outcome of the election.
WHAT VOTE IS REQUIRED FOR OTHER PROPOSALS?
Assuming that a quorum is present, approval of Proposals 2 and 3 requires the affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote thereon. Abstentions will have the effect of a vote against these proposals. Broker non-votes, if any, will have no effect on the outcome of Proposal 2 and Proposal 3. Because Proposal 2 is
considered a “routine” matter, we do not expect there to be any broker non-votes on Proposal 2. Because Proposal 3 has four choices, it is possible that no choice will receive the affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote thereon. In that case, our Board will consider the choice that receives the highest number of votes as the choice supported by our stockholders.
CAN I CHANGE MY VOTE AFTER I HAVE VOTED?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You may revoke your proxy or change your
vote by voting at a later date by Internet or telephone or, if you received a paper copy of a proxy card by mail, by signing and returning a new proxy card with a later date or by attending the Annual Meeting online and voting. Your attendance at the
Annual Meeting online will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering to the Company’s Corporate Secretary at 700 S. Flower Street, 15th
Floor, Los Angeles, California 90017, a written notice of revocation prior to the Annual Meeting.
Please note, however, that if your shares are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or
other nominee that you wish to change your vote by following the procedures on the voting form provided to you by the broker, bank or other nominee.
WHAT HAPPENS IF I DO NOT INDICATE HOW TO VOTE MY PROXY?
If you vote by proxy card and sign your proxy card without providing further instructions, your shares will be voted “FOR” each of the director
nominees, “FOR” the ratification of BDO to serve as our independent registered public accounting firm for the fiscal year ended December 31, 2023 and for “1 YEAR” as the frequency of future non-binding, advisory votes to approve the compensation of
our named executive officers.
IS MY VOTE KEPT CONFIDENTIAL?
Proxies, ballots and voting tabulations identifying stockholders are kept confidential and will not be disclosed except as may be necessary to meet
legal requirements.
WHERE DO I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We will announce preliminary voting results at the Annual Meeting. The final voting results will be tallied by the inspector of election and
published in the Company’s Current Report on Form 8-K, which the Company will file with the SEC within four business days following the Annual Meeting.
WHO BEARS THE COST OF SOLICITING PROXIES?
The Company will bear the cost of soliciting proxies in the accompanying form and will reimburse brokerage firms and others for expenses involved in
forwarding proxy materials to beneficial owners or soliciting their execution. In addition to solicitations by mail, the Company, through its directors and officers, may solicit proxies in person, by telephone or by electronic means. Such directors
and officers will not receive any special remuneration for these efforts.
OTHER MATTERS
Other Business
We are not currently aware of any business to be acted upon at the Annual Meeting other than the matters discussed in this
proxy statement. The form of proxy accompanying this proxy statement confers discretionary authority upon the named proxy holders with respect to amendments or variations to the matters identified in the accompanying Notice of Annual Meeting of
Stockholders and with respect to any other matters which may properly come before the Annual Meeting or any adjournment or postponement thereof. If other matters do properly come before the Annual Meeting, or at any such adjournment or postponement
of the Annual Meeting, we expect that shares of our common stock, represented by properly submitted proxies, will be voted by the proxy holders in accordance with the recommendations of our Board.
Submission of Stockholder Proposals for the 2024 Annual Meeting
Rule 14a-8 Proposals. For any proposal to be considered for inclusion in our proxy statement and form of proxy for
submission to the stockholders at our 2024 annual meeting of stockholders, it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Exchange Act. Such proposals must be received by the Company at its offices at 700 S.
Flower Street, 15th Floor, Los Angeles, California 90017 no later than December 30, 2023.
Advance Notice Proposals and Nominations. In addition, our bylaws provide notice procedures for stockholders to nominate a person as a
director and to propose business to be considered by stockholders at a meeting (but not for inclusion in the proxy statement). Notice of a nomination or proposal must be delivered to the Corporate Secretary at 700 S. Flower Street, 15th Floor, Los
Angeles, California 90017 no later than the close of business on the 90th day, nor earlier than the close of business on the 120th day prior to, the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 30 days before or more than 30 days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered not earlier than the
close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th day following the day on which public announcement of the date of
the annual meeting is first made by us. Accordingly, for our 2024 annual meeting of stockholders, notice of a nomination or proposal must be delivered to us no later than March 17, 2024 and no earlier than February 16, 2024. Nominations and proposals
also must satisfy the other requirements set forth in the bylaws. In addition, the deadline for providing notice to the Company under Rule 14a-19, the SEC’s universal proxy rule, of a stockholder’s intent to solicit proxies in support of nominees
submitted under the Company’s advance notice bylaws is April 16, 2024.
Householding Information
Unless we have received contrary instructions, we may send a single copy of this proxy statement to any household at which two
or more stockholders reside. This process, known as “householding,” reduces the volume of duplicate information received at any one household, helps to reduce our expenses, and benefits the environment. However, if stockholders prefer to receive
multiple sets of our disclosure documents at the same address this year or in future years, the stockholders should follow the instructions described below. Similarly, if an address is shared with another stockholder and together, both of the
stockholders would like to receive only a single set of our disclosure documents, the stockholders should follow these instructions: If the shares are registered in the name of the stockholder, the stockholder should contact our Legal Department at
our offices by sending a written request to 700 S. Flower Street, 15th Floor, Los Angeles, California 90017 or calling 323-860-9201, to inform us of his or her request; or if a bank, broker or other nominee holds the shares, the stockholder should
contact the bank, broker or other nominee directly.
Where You Can Find More Information
We file annual and quarterly reports and other reports and information with the SEC. We distribute to our stockholders annual
reports containing financial statements audited by our independent registered public accounting firm and, upon request, quarterly reports for the first three quarters of each fiscal year containing unaudited financial information. In addition, the
reports and other information are filed through Electronic Data Gathering, Analysis and Retrieval (known as “EDGAR”) system and are publicly available on the SEC’s website, located at http://www.sec.gov.
Upon written or oral request, we will provide you, without charge, a copy of the Annual Report on Form 10-K for the fiscal year ended December
31, 2022, including the financial statements and schedules. Any requests for copies of information, reports or other filings with the SEC should be directed to Legal Department, Consensus Cloud Solutions, Inc., 700 S. Flower Street, 15th
Floor, Los Angeles, California 90017.
