SNCR Synchronoss Technologies Inc

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

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SYNCHRONOSS TECHNOLOGIES, INC.​

(Name of Registrant as Specified In Its Charter)​

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Dear Stockholder:

I am pleased to invite you to our 2021 Annual Meeting of Stockholders, which will be held on June 10, 2021, at 10:00 a.m. Eastern Time. The 2021 Annual Meeting will be held virtually via a live interactive audio webcast on the Internet. You will be able to vote and submit your questions at www.virtualshareholdermeeting.com/SNCR2021 during the meeting. We elected to use a virtual meeting given the current public health implications of COVID-19 and our desire to promote the health and welfare of our stockholders.

At the meeting, we will be electing two members of our Board of Directors, ratifying the appointment of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2021, holding an advisory vote on executive compensation, approving an increase to the number of shares issuable under the Company’s 2015 Equity Incentive Plan and acting upon such other matters as may properly come before the meeting or any adjournments or postponements thereof.

Details regarding the 2021 Annual Meeting and the business to be conducted are described in the accompanying proxy materials. Also included is a copy of our Annual Report on Form 10-K for the year ended December 31, 2020. We encourage you to read this information carefully.

It is important that your shares be represented and voted at the 2021 Annual Meeting. As discussed in the Proxy Statement, voting by proxy does not deprive you of your right to attend the Annual Meeting.

WHETHER OR NOT YOU PLAN TO ATTEND THE 2021 ANNUAL MEETING, WE HOPE YOU WILL VOTE AS SOON AS POSSIBLE. YOU MAY VOTE OVER THE INTERNET, BY TELEPHONE OR BY MAILING A PROXY CARD. VOTING OVER THE INTERNET, BY TELEPHONE OR BY WRITTEN PROXY WILL ENSURE YOUR REPRESENTATION AT THE 2021 ANNUAL MEETING REGARDLESS OF WHETHER OR NOT YOU ATTEND THE ANNUAL MEETING. PLEASE REVIEW THE INSTRUCTIONS ON THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS YOU RECEIVED IN THE MAIL REGARDING EACH OF THESE VOTING OPTIONS.

If you have any questions concerning the annual meeting or the proposals, please contact our Investor Relations department at (800) 575-7606. For questions regarding your stock ownership, you may contact our transfer agent, American Stock Transfer & Trust Co., by e-mail through their website at www.amstock.com or by phone at (800) 937-5449 (within the U.S. and Canada) or 718-921-8200 ext. 4801 (outside the U.S. and Canada).

On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the affairs of Synchronoss Technologies.

Sincerely,

Jeffrey Miller
President and Chief Executive Officer
April 21, 2021

 

 

Synchronoss Technologies, Inc.
200 Crossing Boulevard
Bridgewater, New Jersey 08807

 

 

 

Proposals to be Voted On:

The following proposals will be voted on at the Annual Meeting of Stockholders.

If you are a stockholder of record, you may cast your vote in any of the following ways:

If you are a beneficial owner holding shares through a bank, broker or other nominee, please refer to your Notice or other information forwarded by your bank or broker to see which voting options are available to you.

This proxy statement (“Proxy Statement”) is furnished in connection with solicitation of proxies by our Board of Directors (“Board”) for use at the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) to be held via a live interactive audio webcast on the Internet at 10:00 a.m. Eastern Time on Thursday, June 10, 2021, and any postponements or adjournments thereof. Beginning on or about April 21, 2021, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy materials. As used in this proxy statement, the terms “Synchronoss,” the “Company,” “we,” “us,” and “our” mean Synchronoss Technologies, Inc. and its subsidiaries unless the context indicates otherwise.

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Approval of Amendment of the Company’s 2015 Equity Incentive Plan

Our Board unanimously recommends that stockholders vote to approve the amendment and restatement of our 2015 Equity Incentive Plan (the “2015 Plan”) to, among other things, increase the aggregate number of shares authorized for issuance under the 2015 Plan. The purpose of this increase in the number of shares available for issuance is to continue to be able to attract, retain and motivate valued executive officers and other employees and certain consultants. Upon stockholder approval, an additional 3,000,000 shares of Common Stock will be reserved for issuance under the 2015 Plan, which will enable us to continue to grant equity awards to our officers, employees and consultants at levels determined by our Board to be necessary to attract, retain and motivate the individuals who will be critical to our Company’s success in achieving its business objectives and thereby creating greater value for all our stockholders. Furthermore, we believe that equity compensation aligns the interests of our management and other employees with the interests of our other stockholders. Equity awards are a key component of our incentive compensation program which we believe have been critical in attracting and retaining talented employees and officers, aligning their interests with those of stockholders, and focusing key employees on the long-term growth of our Company.

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON JUNE 10, 2021.

The proxy statement and annual report to stockholders is available at
http://materials.proxyvote.com/87157B.

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Corporate Governance Guidelines

Synchronoss is committed to excellent corporate governance, which we believe helps us sustain our success and build long-term value for our stockholders. Our Board has adopted Corporate Governance Guidelines (the “Guidelines”) that set forth the framework within which our Board can effectively function and govern our affairs. The Guidelines address, among other things, the composition and responsibilities of our Board, director independence, management succession planning and evaluation, access to information, executive sessions, communication with stockholders, target ownership by, and remuneration of, our directors, Board committees and selection of new directors. We have also adopted a Workplace Code of Ethics and Business Conduct (the “Code”) that applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer, or those serving similar functions) and directors. The Guidelines and Code are available on the Investor Relations section of our website at www.synchronoss.com.

Our Board regularly reviews legal and regulatory requirements, evolving best practices and other developments, and may modify, waive, suspend or repeal the Guidelines or Code from time to time as it deems necessary or appropriate in the exercise of our Board’s judgment or in the best interests of our stockholders. If our Board makes any substantive amendments to the Guidelines or the Code, we will promptly disclose the nature of the amendment or waiver on our website to the extent required by applicable law or regulations.

Board Leadership Structure

Consistent with the Guidelines, our Board believes it is important to retain its flexibility to allocate the responsibilities of our Chief Executive Officer (“CEO”) and Chairman of the Board in any way that is in the best interests of our Company based on the circumstances existing at a particular point in time. Our Board believes that it should periodically assess who should serve these roles and whether the offices should be served independently or jointly, and that our Board should not be restricted by any strict policy directive when making these decisions. In addition, our Board continually evaluates its leadership structure to ensure that the Board is structured to address the best interests of our Company and our stockholders as they evolve over time.

Our Board has determined that our Company and our stockholders are best served by having Mr. Waldis, one of our founders, serve as our Executive Chairman of the Board, and Mr. Miller serve as our CEO and a member of our Board. As CEO, Mr. Miller is the individual with primary responsibility for managing our day-to-day operations, setting our overall business strategy, and ensuring the successful growth of our business. Mr. Waldis’ in-depth experience as our founder and long-time CEO and Chairman of the Board position him well to serve as our Executive Chairman of the Board, where he will remain on our Board, assisting on certain sales and business development activities, and providing other consultative support to the CEO, upon his request.

Independence of our Board of Directors

Each year, as part of our assessment of director independence, our Nominating/Corporate Governance Committee and our full Board conduct a review of the financial and other relationships between each director,

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or any of their immediate family members, and our Company, our senior management, companies with whom we have business dealings and our independent registered public accounting firm. Our Board also consults with our legal counsel to ensure that its determinations are consistent with all relevant laws and regulations regarding the definition of independence, including those set forth in pertinent listing standards of The Nasdaq Global Market (“Nasdaq”), as amended from time to time. Consistent with those considerations, after review of all relevant transactions or relationships, our Board has affirmatively determined that all of our directors are independent directors within the meaning of the applicable Nasdaq listing standards, except for Stephen G. Waldis, who serves as our Executive Chairman, and Jeffrey Miller, who serves as our CEO. Our independent directors meet in regularly scheduled executive sessions where only independent directors are present. Mr. Cadogan presides over those sessions. There are no family relationships among any of our directors or executive officers.

Board of Directors Oversight of Risk Management

Risk is inherent with every business and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our operations, strategic direction and intellectual property as more fully discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and our other SEC filings. Assessing and managing risk is the responsibility of our management. Our Board oversees management in the execution of its responsibilities and for assessment of our approach to risk management. An overall review and assessment of risk is inherent in our Board’s consideration of our business plans, strategies and other significant developments. Additionally, our Board regularly reviews various risks arising out of transactions and other matters that are presented to our Board and when making decisions impacting us. At least annually, our Board also reviews and analyzes the strategic and operational risks and opportunities that face our Company as a whole, as well as those related to specific areas of our business.

Our Board delegates the oversight of certain categories of risk affecting our Company to designated Board committees, who report their findings to our full Board. Our Audit Committee is responsible for overseeing our Board’s execution of its risk management oversight responsibility, including discussing guidelines and policies governing the process by which our management and other persons responsible for risk management assess and manage our exposure to major financial risk, and the steps management has taken to monitor and control such exposure, based on consultation with our management and independent auditors. Our Audit Committee also annually reviews the audit plan of management, our information technology and cybersecurity risks and mitigation strategies, the domestic and international tax function and treasury operations and conformity with ethics and compliance standards. In addition, our Board has delegated to other Board committees the oversight of risks within their areas of responsibility and expertise. For example, our Compensation Committee oversees the risks associated with our compensation practices, including an annual assessment of our compensation policies and practices for our employees.

Board Self-Evaluation

Our Nominating/Corporate Governance Committee oversees a biennial self-evaluation process to analyze and review our Board’s performance and the performance of each of the members of our Board. Our Nominating/Corporate Governance Committee reviews these results and discusses them with the full Board with the intention of utilizing them to enhance our Board’s effectiveness and, if necessary, develop action plans.

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Stockholder Communications with our Board of Directors

Stockholders may communicate with our management and independent directors by sending a letter to Synchronoss Technologies, Inc., 200 Crossing Boulevard, Bridgewater, New Jersey 08807, Attention: Secretary. Each communication should set forth the (i) name and address of the stockholder as they appear on our books and, if the shares of our Common Stock are held by a broker, bank or other agent, the name and address of the beneficial owner of such shares, and (ii) number of shares of our Common Stock that are owned of record by such record holder and/or beneficially by such beneficial owner. Our Secretary will review all communications from stockholders and has the authority to disregard any inappropriate communications or take other appropriate actions with respect to any inappropriate communications. If deemed an appropriate communication, our Secretary will forward it, depending on the subject matter, to the chairperson of a committee of our Board or a particular director, as appropriate.

Board of Directors and Committee Duties

Our Board oversees, counsels and directs management in the long-term interests of our Company and our stockholders. Our Board, individually and through its committees, is responsible for:

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overseeing the conduct, assessment and other operational risks to evaluate whether our business is being properly managed;

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reviewing and approving our strategic, financial and operating plans and other significant actions;

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evaluating the performance of and reviewing and determining the compensation of our CEO and other executive officers;

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planning for succession for our CEO and monitoring management’s succession planning for other executive officers; and

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overseeing the processes for maintaining the integrity of our financial statements, public disclosures, and compliance with laws and ethics.

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Board Structure and Committees

During 2020, our Board met 21 times and acted once by unanimous written consent. Each director attended at least 75% of the meetings of our Board and of each committee of which he or she served as a member. Each of our directors attended our 2020 Annual Meeting of Stockholders. Our Board has established an Audit Committee, a Compensation Committee, a Business Development Committee and a Nominating/Corporate Governance Committee. Our Board has delegated various responsibilities and authority to its committees as generally described below. The following table shows the current membership of our Board and its committees, and the number of meetings held by our Board and its committees during 2020:

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M

Member      C   Chair

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*

Mr. Berger also attends meetings of our Audit Committee as a non-voting observer. Mr. Waldis also attends meetings of our Compensation Committee as a non-voting observer.

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Audit Committee

Our Audit Committee oversees the integrity of our financial statements, compliance with applicable legal and regulatory requirements, effectiveness of our internal controls and audit function, and the qualifications, independence, and performance of our independent registered public accounting firm. Our Audit Committee also discussed with our independent registered public accounting firm the overall scope and plans for their audit and met with them on a regular basis without members of management. Our Audit Committee consults with our management and our independent registered public accounting firm prior to the presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. In addition, our Audit Committee:

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reviews our annual audited and quarterly financial statements and SEC reporting;

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reviews management’s assessment of risk pertaining to our reporting and disclosure controls and monitors our internal controls and audit functions, the results and scope of the annual audit and other services provided by our independent registered public accounting firm and our compliance with legal matters that have a significant impact on our financial statements;

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establishes procedures for the receipt and treatment of complaints regarding internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

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appoints, compensates, reviews procedures to ensure the independence of and oversees the work of, our independent registered public accounting firm, including approving services and fee arrangements;

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reviews with senior members of our management our policies and practices regarding risk assessment and risk management;

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approves all related party transactions;

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reviews periodically the adequacy and effectiveness of our internal and disclosure controls, including our policies regarding compliance with legal, regulatory, code of conduct, ethical and internal auditing standards;

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reviews earnings press releases prior to issuance; and

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reviews findings and recommendations of our independent registered public accounting firm and management’s response to their recommendations.

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Our Audit Committee is comprised of the following three directors: Thomas J. Hopkins, Kristin S. Rinne and Laurie Harris (Chair). Mr. Berger also attends Audit Committee meetings in a non-voting observer capacity. Our Audit Committee met nine times during 2020. Our Board annually reviews the definition of independence for Audit Committee members set forth in the Nasdaq listing standards and has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(a)(2) and 5605(c)(2) of the Nasdaq listing standards). In addition to qualifying as independent under the Nasdaq rules, each member of our Audit Committee can read and has a working understanding and comprehension of fundamental financial statements. Our Board has determined that each of Mr. Hopkins and Ms. Harris is an audit committee financial expert, as defined by Item 407(d) of Regulation S-K based on a qualitative assessment of each of their level of knowledge and experience based on a number of factors, including their respective formal education and experience. The designation does not impose on either Mr. Hopkins or Ms. Harris any duties, obligations or liability that are greater than are generally imposed on them as a member of our Audit Committee and our Board, and their respective designations as Audit Committee financial experts pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of our Audit Committee or Board. Our Audit Committee charter can be found on the Investor Relations section of our website at www.synchronoss.com.

Compensation Committee

Our Compensation Committee is comprised of the following four directors: William J. Cadogan (Chair), Thomas J. Hopkins, Mohan Gyani and Peter Berger, each of whom is independent, as currently defined in Rule 5605(a)(2) and 5605(d)(2) of the Nasdaq listing standards. Mr. Waldis also attends Compensation Committee meetings in a non-voting observer capacity but does not participate in discussions regarding his own compensation. Each member of our Compensation Committee is a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Compensation Committee met seven times during 2020. Our Compensation Committee is charged by our Board to:

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review and approve our compensation strategy and philosophy;

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review and approve our annual corporate goals and objectives related to executive compensation and evaluate performance in light of these goals;

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review and approve policies and all forms of compensation and other benefits to be provided to our employees (including our NEOs), including among other things the annual base salaries, bonus, stock options, restricted stock grants and other incentive compensation arrangements;

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evaluate the CEO’s performance and determine his salary and incentive compensation;

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in consultation with the CEO, determine the salaries and incentive compensation of our other executive officers;

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make recommendations from time to time to our Board regarding non-employee director compensation matters;

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recommend, for approval by the Board, the adoption or amendment of our equity and cash incentive plans;

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administer our stock purchase plan and equity incentive plans;

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oversee the administration of our other material employee benefit plans, including our 401(k) plan; and

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review and approve other aspects of our compensation policies and matters as they arise from time to time.

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A more detailed description of our Compensation Committee’s functions can be found in our Compensation Committee charter, which can be found on the Investor Relations section of our website at www.synchronoss.com.

Our Compensation Committee has also established a Key Employee Equity Awards Committee, with our CEO as the sole member, whose purpose is to approve equity awards to our newly hired and current employees, other than executive officers and subject to guidelines previously approved by our Compensation Committee. Our Key Employee Equity Awards Committee acted 12 times in 2020.

In accordance with Nasdaq listing standards, our Compensation Committee, under its charter, may select and retain, and is directly responsible for the appointment, compensation and oversight of, compensation consultants or any other third party to assist in the evaluation of director and officer compensation, as well as any other compensation matters. In addition, our Compensation Committee has the responsibility to consider the independence of these advisers in accordance with applicable law and/or Nasdaq listing standards. Our Compensation Committee has retained Deloitte Consulting LLP (“Deloitte”) as its compensation consultant. In 2020, Deloitte did not perform any services for us other than its services to our Compensation Committee and received no compensation from our Company other than its fees in connection with the firm’s retention as our Compensation Committee’s compensation consultant. Our Compensation Committee assessed the independence of Deloitte pursuant to applicable SEC rules and Nasdaq listing standards and concluded that the work of Deloitte has not raised any conflict of interest. Our Compensation Committee considers the information provided by Deloitte when making decisions with respect to compensation matters, along with information it receives from management and its own judgment and experience. Deloitte serves at the discretion of our Compensation Committee and our Compensation Committee approves the fees paid to Deloitte.

Compensation Committee Interlocks and Insider Participation

During the year ended December 31, 2020, William J. Cadogan (Chair), Thomas J. Hopkins, Peter Berger and Mohan Gyani served as members of our Compensation Committee. None of the members of our Compensation Committee was an officer or employee of our Company at any time during 2020 and none of the members of our Compensation Committee has ever served as an officer of our Company or had any relationship with us requiring disclosure herein. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

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Nominating/Corporate Governance Committee

The current members of our Nominating/Corporate Governance Committee are: Frank Baker, Peter Berger, William J. Cadogan (Chair) and Thomas J. Hopkins. Our Nominating/Corporate Governance Committee met once in 2020. All members of our Nominating/Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). In addition, our Nominating/Corporate Governance Committee:

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reviews and reports to our Board on a periodic basis with regard to matters of corporate governance;

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recommends qualified candidates to our Board for election as our directors, including the directors our Board proposes for election by the stockholders at the Annual Meeting and directors nominated by our stockholders;

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reviews, assesses and makes recommendations on the effectiveness of our corporate governance policies and on matters relating to the practices of directors and the functions and duties of the various Board committees;

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develops and implements our Board’s biennial self-assessment process and works with our Board to implement improvements in their effectiveness;

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reviews succession plans periodically with our CEO relating to positions held by elected corporate officers;

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reviews and makes recommendations to our Board regarding the size and composition of our Board and the appropriate qualities and skills required of our directors in the context of the then current make-up of our Board and our business; and

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establishes and periodically reviews stock ownership guidelines for our executive officers and directors.

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Our Nominating/Corporate Governance Committee charter can be found on the Investor Relations section of our website at www.synchronoss.com.

Our Nominating/Corporate Governance Committee has established procedures for the nomination process and leads the search for, selects and recommends candidates for election to our Board. Consideration of new director candidates typically involves a series of committee discussions, the review of information concerning candidates and interviews with selected candidates. Candidates for nomination to our Board typically have been suggested by other members of our Board or by our executive officers. From time to time, our Nominating/Corporate Governance Committee may engage the services of a third-party search firm to identify director candidates. Our Nominating/Corporate Governance Committee also considers candidates proposed in writing by stockholders, provided those proposals meet the eligibility requirements for submitting stockholder proposals under our amended and restated bylaws, and are accompanied by certain required information about the candidate in accordance with our amended and restated bylaws and organizational documents. Candidates proposed by stockholders will be evaluated by our Nominating/​Corporate Governance Committee using the same criteria as for all other candidates. Stockholders may contact the Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder nominations and proposals. For more information pertaining to stockholder proposal, see “Stockholder Proposals for the Next Annual Meeting.”

In considering nominees for our Board, our Nominating/Corporate Governance Committee considers each candidate’s independence, personal and professional integrity, financial literacy or other professional or

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business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment and ability to serve our stockholders’ long-term interests. These factors, along with others considered useful by our Nominating/Corporate Governance Committee, are reviewed in the context of an assessment of the perceived needs of our Board at a particular point in time. As a result, the priorities and emphasis of our Nominating/Corporate Governance Committee and of our Board may change from time to time to take into account changes in our business and other trends and the portfolio of skills and experience of current and prospective directors. Although we have not adopted a formal policy, our Nominating/​Corporate Governance Committee is committed to considering a diverse slate of candidates in identifying director nominees or in searching for new directors.

Business Development Committee

The current members of our Business Development Committee are: Thomas J. Hopkins (Chair), William J. Cadogan, Frank Baker, Kristin S. Rinne and Stephen G. Waldis. All members of our Business Development Committee other than Mr. Waldis are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). Our Business Development Committee did not meet in 2020. Our Business Development Committee reviews certain strategic business development and growth opportunities and recommends those that it determines are in line with our short-term and long-term strategic goals. Our Business Development Committee charter can be found on the Investor Relations section of our website at www.synchronoss.com.

Director Compensation

This section provides information regarding the cash & equity compensation policies provided to our directors in 2020.

Non-Employee Director Compensation Program

Each member of our board of directors who is not an employee of our Company is entitled to the following compensation pursuant to our non-employee director compensation program:

(1)

Options and restricted shares vest one-third in three equal installments on the anniversary date of the grant date.

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Our Compensation Committee annually reviews the amounts awarded under our non-employee director compensation program based on their analysis of the competitive range of the equity granted to directors at our peer group companies and other publicly available information. The actual number of restricted shares and shares underlying stock options is determined based on the grant date fair value of the equity awards. The stock options have an exercise price equal to the closing price reported on Nasdaq of our Common Stock on the grant date. The annual retainer fees are paid to our directors quarterly at the beginning of each quarter. In addition, we currently have a policy of reimbursing directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at our Board and Committee meetings.

Executive Chairman Compensation

As Executive Chairman, Stephen G. Waldis received a base salary of $300,000. Mr. Waldis did not receive any cash incentive bonus in 2020. Mr. Waldis did receive an equity grant in 2020 as described below. In addition, Mr. Waldis received a 401(k) match and from January 1, 2020 to September 30, 2020, we leased an automobile (and paid applicable insurance and gas) for Mr. Waldis.

The following table sets forth the compensation awarded to, earned by, or paid to each person who served as a non-employee director during 2020. Mr. Lurie, our former Chief Executive Officer, President and director received no compensation for his service as a director in 2020 prior to his resignation. Mr. Miller, our current Chief Executive Officer and President, was appointed a director of our Company in March 2021 and does not receive additional compensation for his service as a director. Neither Mr. Lurie nor Mr. Miller are included in the table below.

(1)

The amounts in this column reflect the aggregate grant date fair value of the stock awards computed in accordance with FASB ASC Topic No. 718. See Footnote 13 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our assumptions in estimating the fair value of our stock awards.

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(2)

The amounts in this column reflect the aggregate grant date fair value of the stock options computed in accordance with FASB ASC Topic No. 718. See Footnote 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our assumptions in estimating the fair value of our stock option awards.

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(3)

Reflects amounts paid for automobile expenses and 401(k) Company match.

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(4)

Each of Messrs. Baker and Berger assigned their compensation to Siris Capital Group.

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Director Stock Ownership Guidelines

We have established stock ownership guidelines for our directors to retain an equity stake in the Company to more closely align their interests with those of our stockholders. Each director is required to own the number of shares of our Common Stock with a value equal to three times the annual cash retainer for service on our Board. Ownership is calculated annually based on the closing sales price of our Common Stock on Nasdaq for the last trading day in the prior year. Any newly elected director has three years from the date of his or her election to achieve the targeted equity ownership level. As of December 31, 2020, each of our directors, directly or indirectly through Siris Capital Group for Messrs. Baker and Berger, owned at least the number of shares of our Common Stock required by these guidelines based on the price of our Common Stock on such date or were within their 3-year accumulation period.

Limitation of Liability and Indemnification

As permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws provide that we are authorized to (i) enter into indemnification agreements with our directors and officers and (ii) purchase directors’ and officers’ liability insurance, which we currently maintain to cover our directors and executive officers. The form of indemnification agreement with our directors provides that we will indemnify each director against any and all expenses incurred by that director because of his or her status as one of our directors, to the fullest extent permitted by Delaware law, our restated certificate of incorporation and amended and restated bylaws. In addition, the form agreement provides that, to the fullest extent permitted by Delaware law, but subject to various exceptions, we will advance all expenses incurred by our directors in connection with a legal proceeding. Our restated certificate of incorporation and bylaws contain provisions relating to the limitation of liability and indemnification of directors. The restated certificate of incorporation provides that our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability:

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for any breach of a director’s duty in respect of unlawful payments of dividends or stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law and the breach of a director’s duty of loyalty to us or our stockholders;

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for any transaction from which the director derives any improper personal benefit; and

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for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law.

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Our restated certificate of incorporation also provides that if Delaware law is amended after the approval by our stockholders of our restated certificate of incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law. The foregoing provisions of the restated certificate of incorporation are not intended to limit the liability of directors or officers for any violation of applicable federal securities laws. As permitted by Section 145 of the Delaware General Corporation Law, our restated certificate of incorporation provides that we may indemnify our directors to the fullest extent permitted by Delaware law and the restated certificate of incorporation provisions relating to indemnity may not be retroactively repealed or modified so as to adversely affect the protection of our directors.

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Compensation Risk Management Considerations

Each year, our Compensation Committee reviews our compensation practices and policies for all employees, including our NEOs, and assesses whether they have the potential to incentivize employees taking risks that are reasonably likely to have a material adverse effect on our Company. Since our annual performance-based bonus and equity programs are designed to align our employees’ compensation with both our short- and long-term business objectives and performance, and therefore enhance stockholder value, our Compensation Committee believes that our compensation practices and policies discourage behavior that leads to excessive risk-taking. Therefore, our Compensation Committee believes our practices and policies will promote balanced risk management and are not likely to have a material adverse effect on our Company. Set forth below are the key risk-balancing elements of our compensation practices and policies:

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Information about our Executive Officers

The following table sets forth the name, age and position of each of our executive officers as of April 12, 2021. Information as of April 12, 2021 about the number of shares of Common Stock beneficially owned by each of the individuals designated as a NEO, whether held directly or indirectly, appears below under the heading “Equity Security Ownership of Certain Beneficial Owners and Management.”

Jeffrey Miller has served as our President, Chief Executive Officer and a Director since March 2021, after holding the position of interim President and Chief Executive Officer since September 2020. Mr. Miller joined Synchronoss as Chief Commercial Officer in October 2018. Mr. Miller previously served as President of IDEAL Industries Technology Group from December 2017 to October 2018. Prior to IDEAL, Mr. Miller held several senior sales and operations positions at Motorola during a 16-year tenure, most recently as Corporate Vice President and General Manager of Operations in North America for Motorola Mobility, LLC. Mr. Miller received a degree in business from Miami University of Ohio and a master’s degree in Business Administration from The Ohio State University. Our Board believes Mr. Miller’s qualifications to sit on our Board include his broad experience in the software and services industry and his experience with our Company.

David Clark joined Synchronoss as Executive Vice President, Finance in May 2018 and has served as our Chief Financial Officer since August 2018. Mr. Clark was Chief Financial Officer of The Meet Group, a publicly-held company, from 2013 to 2018. Mr. Clark was Chief Financial Officer at Nutrisystem, Inc., a publicly-held company, from 2007 to 2013. Mr. Clark received a degree in accounting from Boston College.

Christopher Hill has been with Synchronoss since January 2018, was promoted to EVP, Products in May 2020 and has served as our EVP, Products and Sales since December 2020. Prior to joining Synchronoss, Mr. Hill was President of Tsuanimi AR/VR from 2016 to 2018 and President of OpenPeak from 2014 to 2016. Prior to that position, Mr. Hill spent 17 years at AT&T in various positions, ultimately as a Senior Vice President of Advanced Solutions. Mr. Hill received a bachelor’s degree in Economics from the University of Virginia and completed the General Management Program at Harvard Business School.

Ronald J. Prague has served as our Chief Legal Officer and Secretary since joining Synchronoss in 2006. Before joining Synchronoss, Mr. Prague held various senior legal positions with Intel Corporation from 1998 to 2006, including as Group Counsel for Intel’s Communications Infrastructure Group. Prior to joining Intel, Mr. Prague practiced law with the law firms of Haythe & Curley (now Torys LLP) and Richards & O’Neil (now Morgan, Lewis & Bockius LLP). Mr. Prague received a Juris Doctor from Northwestern Pritzker School of Law and received a bachelor’s degree in business administration and marketing from Cornell University.

Patrick J. Doran has served as our Chief Technology Officer since January 2007. Prior to that position, Mr. Doran served in various positions, including Vice President of Research & Development and Chief Architect since joining our Company in 2002. From 2000 to 2002, Mr. Doran was a Senior Development Engineer at Agility Communications, a member of the technical staff at AT&T/Lucent from 1996 to 2000 and a Software Engineer at General Dynamics from 1995 to 1996. Mr. Doran received a degree in computer and systems engineering from Rensselaer Polytechnic Institute and a master’s degree in Systems and Industrial Engineering from Purdue University.

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2020 Executive Leadership Transition

On September 18, 2020, Glenn Lurie resigned as our President and Chief Executive Officer and as a Director of our Company. Jeffrey Miller was appointed as our President, Chief Executive Officer and a Director in March 2021, after serving as interim President and Chief Executive Officer since September 2020.

Mary Clark’s employment with our company as Chief Product Officer and Chief Marketing Officer was terminated without cause, effective as of May 1, 2020. In connection with her departure, we entered into a separation agreement with Ms. Clark. See Management Changes-Named Executive Officer Separation Agreement.

2020 Compensation Program Highlights

Our executive compensation program is designed to attract, retain and motivate high-quality executives and drive the creation of long-term stockholder value by tying a significant portion of our executives’ compensation to Company and individual performance. Our compensation philosophy and programs are designed to achieve the following objectives:

The following highlights some of the key components of our pay for performance policies and practices:

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Our Compensation Committee oversees the design and administration of the compensation of our NEOs and certain other executive officers, with an enhanced focus on the individual compensation of our NEOs. For 2020, our CEO assessed the performance of our NEOs (other than himself), consulted with other members of management, including our Executive Chairman and our compensation consultant, and made recommendations to our Compensation Committee regarding the amount and the form of the compensation of our NEOs and other key employees, including the performance goals, weighting of goals, and equity compensation awards of our NEOs. Our CEO was not present during discussions regarding his compensation.

2020 Executive Compensation Program

Cash Incentive Compensation

For our NEOs’ Annual Cash Incentive Bonuses in 2020 (other than Mr. Hill), our Compensation Committee approved the following metrics:

•

35% based on revenue for 2020;

​

•

35% based on non-GAAP EBITDA for 2020;

​

•

20% based on the number of new customer deals with a contribution margin of greater than 30% and a minimum total contract value (“TCV”) of $1,000,000 for 2020; and

​

•

10% based on the specific performance of each NEO as determined by the CEO.

​

In addition, each NEO (other than Mr. Hill) had the opportunity to earn another 10% of his annual cash compensation bonus target if our non-GAAP EBITDA for 2020 exceeded $45,000,000. Due to the economic uncertainty created by the global COVID-19 pandemic, our Company focused on our cash balance in a manner that would ensure our Company is positioned to remain financially secure and viable throughout 2020, and to accelerate growth in 2021 and beyond. As a result, in April 2020, our Compensation Committee established an additional incentive for each NEO (other than Mr. Hill) to receive up to an additional 30% of his annual cash compensation bonus target based on the following:

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​	Cash Balance	​	​	Payout				​
​	Less than $30,000,000	​	​	No payout				​
​	$30,000,000 to $31,999,000	​	​	​	​	21%	​	​
​	$32,000,000 to $33,999,000	​	​	​	​	22%	​	​
​	$34,000,000 to $35,999,000	​	​	​	​	23%	​	​
​	$36,000,000 to $37,999,000	​	​	​	​	24%	​	​
​	$38,000,000 to $39,999,000	​	​	​	​	25%	​	​
​	$40,000,000 or greater	​	​	​	​	30%	​	​

​	Cash Balance	​	​	Payout				​
​	Less than $36,000,000	​	​	No payout				​
​	$36,000,000 to $37,999,000	​	​	​	​	1%	​	​
​	$38,000,000 to $39,999,000	​	​	​	​	3%	​	​
​	$40,000,000 to $41,999,000	​	​	​	​	5%	​	​
​	$42,000,000 or greater	​	​	Committee Discretion				​

Our Compensation Committee provided that since the 2019 cash bonuses to the employees had not been paid at the time of the establishment of the additional incentive, the amount which was to be paid to the employees could be added back to the cash balance of our Company at the end of 2020 when calculating whether the above cash metric was met. Our Compensation Committee believes that revenue, non-GAAP EBITDA, cash balance and entering into large strategic transactions with companies are metrics that are targeted to emphasize strong growth on gross revenue and managing expenses. Based on the feedback received as part of our stockholder outreach program, we believe several of these metrics are the key metrics many of our stockholders use in their evaluation of our Company. As such, we believe our cash incentive bonus goals for NEOs are aligned with our stockholders’ perspective on our Company’s ability to grow and succeed in the short- and long-term.

As Mr. Hill was not a NEO at the time our Compensation Committee approved the executive compensation plan, he was not included in the executive plan but instead had an individual compensation plan, based on three components:

(i)

50% based on the same metrics as the executive plan except: (a) 35% based on our Company’s 2020 revenue, (b) 25% based on our Company’s 2020 non-GAAP EBITDA, (c) 15% based on new customer deals and (d) 25% based on Mr. Hill’s individual performance;

​

(ii)

371∕2% based on our Company’s revised 2020 revenue targets, which were revised for certain individual compensation plans to account for the economic uncertainty created by the global COVID-19 pandemic, and adjusted to account for our renewal of our agreement with Verizon; and

​

(iii)

121∕2% based on our Company’s 2020 contribution margin, which was defined as (x) our Company’s 2020 revenue (adjusted as provided in (ii) above) less (y) cost of goods sold, depreciation and amortization and software capitalization.

​

Long-term Incentive Compensation

Each year, our Compensation Committee awards time-based vesting restricted shares, stock options and/or performance-based restricted cash units or shares to our NEOs as the long-term incentive component of their compensation. The annual mix and number, if any, of stock options, performance-based restricted cash units or shares and time-based vesting restricted shares granted to our NEOs are based on our Compensation Committee’s general understanding of pay practices for equivalent positions in our peer group, as well as published survey data for comparable roles at companies of a similar financial size in the same industry, our CEO’s recommendations (except for his own equity grants) and other factors it deemed

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appropriate. In 2020, our Compensation Committee granted only vesting stock options and performance-based restricted cash units to our NEOs except that Mr. Hill, who was not a NEO at the time our Compensation Committee approved equity grants, received only stock options.

2020-2022 Performance-Based Restricted Cash Units

Our 2020 long-term equity incentive plan was designed to reward financial and strategic performance during a three-year period from 2020 through 2022, and the restricted cash units granted under the long-term incentive plan (the “2020-2022 Performance Units”) are earned and vest, subject to achievement of pre-determined performance criteria during that period. Our NEOs are required to remain employed by our Company through February 2023 in order to vest in the cash units. Our Compensation Committee approved the following performance metrics for the 2020-2022 Performance Units:

•

One-third are earned based on the revenue in the three-year period of 2020 to 2022;

​

•

One-third are earned based on the non-GAAP EBITDA in the three-year period of 2020 to 2022; and

​

•

One-third are earned based on the total shareholder return of the Company’s common stock on NASDAQ in 2020-2022 compared to those companies that are listed on the Russell 2000 index (“TSR”).

​

As to the actual amount of 2020-2022 Performance Units granted to each NEO, and our Compensation Committee, in consultation with Deloitte, its compensation consultant, agreed that each NEO would receive only 80% of the long-term incentive targeted value initially proposed by management.

2020 Say on Pay Vote

At our 2020 Annual Meeting of Stockholders, approximately 94% of the shares voted were cast in favor of the advisory vote on executive compensation. We continuously strive to improve the level of stockholder support for our executive compensation program and, in 2020, met with several of our largest stockholders and solicited their feedback on our executive compensation policies. We continued an ongoing dialogue with our stockholders throughout the year on matters related to executive compensation, and our programs reflect feedback provided through these discussions. Our Compensation Committee evaluates our executive compensation program each year with the goal of ensuring it is in line with our stockholders’ interests. We encourage stockholders to take into account the continuous changes to our executive compensation program in considering the advisory vote presented below including adding new metrics to both our short-term and long-term compensation plans, adding non-financial metrics to our short-term incentive plan and meeting with stockholders as part of our annual stockholder outreach program.

Compensation Consultant

Our Compensation Committee’s compensation consultant, Deloitte Consulting LLP (“Deloitte”), generally attends regular Compensation Committee meetings and meets with our Compensation Committee without management present. Deloitte has been our compensation consultant since 2013. When making decisions with respect to compensation matters and to gain a better understanding of the competitive landscape, our Compensation Committee considers various analyses prepared by its compensation consultant, along with information it receives from management and its own judgment and experience.

Peer Group

Our Compensation Committee generally reviews executive compensation survey and proxy data from technology companies that have similar software/services business models or operate in the mobile

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networking space, are of similar financial size and are representative of the organizations with which we compete with for our executive talent. Our Compensation Committee, based in part on advice from Deloitte, identified and approved the following companies that fit some or all of these criteria as our peer group for purposes of assisting in benchmarking our 2020 executive compensation decisions:

Our Compensation Committee reviewed the companies in our 2019 peer group in early 2020 in connection with its determination of the companies in our peer group for 2020 executive compensation decisions and, in consultation with Deloitte, eliminated Carbonite, Inc., FireEye, Inc., Hubspot, Inc., Imperva, Inc., MicroStrategy, Inc., Shutterstock, Inc. and Yext, Inc. because they were acquired or it was concluded they were no longer a match with the Company’s line of business and on-going strategy. To replace these companies, our Compensation Committee added Alarm.com Holdings, Inc., Medallia, Inc., Mimecast Limited, Model N, PROS Holding, Inc., Q2 Holdings, Inc., Upland Software, Workiva, Inc. and Zoom Video Communications as companies in our peer group and PegaSystems as a peer company other than our chief executive officer compensation, based on the similarities of the business offerings, financial profile, market capitalization and profitability of these companies with those of our Company. As a result of these changes, we believe the peer group utilized for purposes of 2020 executive compensation decisions was representative of companies that we compete with for executive talent. When making compensation decisions for our NEOs, our Compensation Committee also reviews published survey and peer group compensation data for other software/services companies or companies that operate in the same space as our Company. Competitive market practices are an important factor in our Compensation Committee’s decision-making process, although its decisions are not entirely based upon these factors. Rather, our Compensation Committee reviews and considers the peer group and other survey data to obtain a general understanding of current competitive compensation practices. Additionally, reviewing the peer group and survey compensation data enables our Compensation Committee to accomplish our goal of paying our NEOs what is appropriate and necessary to attract and retain qualified and committed executives while incentivizing achievement of our corporate goals and conserving cash and equity.

Principal Elements of Compensation

Our executive compensation program has the following principal elements: base salary, annual cash incentive bonuses, long-term incentive awards and severance, and change in control benefits. For base salary, annual cash bonuses and long-term incentive awards for our executive officers, our Company’s compensation philosophy generally is to evaluate individual experience and contribution, as well as corporate performance, and then consider competitive market analysis. The markets we are serving are narrow and highly competitive for large-scale implementations leveraging unique technologies. With respect to all compensation components, we generally use the median compensation of our peer group and the markets for which we compete for talent as the starting point for the compensation decision making process. We seek to drive our Company to over-perform the market in the long term, and we believe that to ensure an appropriate pay-for-performance alignment, it may be appropriate for our

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Compensation Committee to approve compensation levels for individual executives that may be above or below target pay for similar positions based on experience, individual contribution and corporate performance. Additionally, our Compensation Committee may exercise discretion to issue one-time equity awards where appropriate to ensure alignment with key strategic business initiatives. The following table describes the primary compensation elements used by our Company and the objectives of each element:

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Chief Executive Officer Compensation

In September 2020, Glenn Lurie resigned as our President and CEO. Effective September 2020, Jeffrey Miller, our Chief Commercial Officer at the time, was elected our interim President and CEO, replacing Mr. Lurie. Upon his election as interim President and CEO, Mr. Miller’s base salary was increased from $388,500 to $500,000. Mr. Miller received no additional equity in 2020 other than the equity he received as Chief Commercial Officer. Effective March 2021, Mr. Miller was appointed as our President and CEO.

Pay Mix

In keeping with our results-driven culture, our Compensation Committee expects our NEOs to deliver superior performance in a sustained fashion and believes that a substantial portion of their overall compensation should be at-risk and tied to our short- and long-term performance. As shown below,

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approximately 70% of Mr. Lurie, our former CEO’s targeted compensation and an average of approximately 59% of the targeted compensation of our other NEOs for 2020 was tied to long-term term incentives2.

2020 Compensation Decisions

In determining the criteria for our NEOs’ incentive compensation, our Compensation Committee considers a variety of factors, including alignment of our NEOs’ compensation with our stockholders’ returns, and from time to time may adjust these factors or performance metrics based on our Company’s transactions or the occurrence of unknown or unexpected events during the applicable measurement period. On the corporate level, our Compensation Committee selected revenue, non-GAAP EBITDA and our entering into strategic agreements, metrics that our Compensation Committee believes appropriately value our Company on both a short- and long-term basis and are targeted to emphasize strong growth on gross revenue while also managing our earnings per share. Based on feedback received as part of our stockholder outreach program, several of these are also the key metrics we believe our stockholders use in their evaluation of our Company. As a result, our NEOs are focused on growing revenue, non-GAAP EBITDA, total shareholder return and entering into strategic agreements, which we believe is aligned with our stockholders’ perspective on our Company’s ability to grow and succeed on the short- and long-term.

Base Salary

Base salaries for our NEOs are reviewed and may be adjusted annually. Base salaries may also be adjusted during the year upon promotion or based on internal equity or external market conditions. Our Compensation Committee makes these decisions after reviewing the recommendation of our CEO (except as it concerns his own salary) and consulting with our compensation consultant.

2

Calculated based on Mr. Miller’s base salary prior to his promotion to Chief Executive Officer and not including Mr. Hill who did not receive a NEO equity grant.

​

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In 2020, none of Messrs. Clark, Doran or Prague received an increase in his base salary. To assist our Company in managing its cash flow as a result of the COVID-19 pandemic, in May 2020, each of Messrs. Clark, Doran and Prague voluntarily agreed to a 15% reduction in his base salary for the remainder of 2020. Upon becoming our interim Chief Executive Officer and President, Mr. Miller’s base salary was increased from $388,500 to $500,000. Prior to Mr. Miller’s promotion, Mr. Miller had also voluntarily agreed to a 15% reduction in his base salary. In March 2020, Mr. Hill was promoted to Executive Vice President, Products and his base salary was increased from $309,000 to $325,000. In December 2020, Mr. Hill added certain commercial responsibilities and as a result his base salary was increased to $350,000. The table below sets forth each of our NEOs’ 2020 base salary as of December 31, 2020 and, for Messrs. Clark, Doran and Prague, their base salary as a result of the voluntary reduction.

*

On September 18, 2020, Mr. Lurie resigned as our President and Chief Executive Officer, and his employment terminated on October 18, 2020 in accordance with the terms of his employment agreement. His base salary in effect at the time his employment terminated was $772,500. In May 2020, Mr. Lurie had agreed to a 20% reduction in his base salary to $618,000.

​

**

Ms. Clark’s employment with our Company was terminated without cause on May 1, 2020. Her base salary in effect at the time her employment was terminated was $360,500.

​

2020 Annual Cash Incentive Bonus Compensation

Our Annual Cash Incentive Bonus Compensation Program promotes our pay-for-performance philosophy by providing all executives and other management-level corporate employees with direct financial incentives in the form of annual cash awards for achieving Company, business and individual performance goals.

Target Percentage

Our Compensation Committee sets each NEO’s individual target cash incentive amount (expressed as a percentage of base salary) based on its general understanding of competitive pay practices, our CEO’s recommendation (except with respect to his own target), its consultation with our compensation consultant, and other factors it deems appropriate. Based on its review of these factors, in March 2020, our Compensation Committee kept the target bonus percentage of each of our NEOs at the same level as in 2019.

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The target cash incentive and maximum bonus percentages for each of our NEOs for 2020 were as follows:

*

As Mr. Lurie and Ms. Clark were not employed by our Company on December 31, 2020, neither of them received any cash incentive bonus in 2020.

​

2020 Objectives

For 2020, the cash incentive bonus for each of our NEOs (other than Mr. Hill) was determined as follows: (i) 90% based on certain corporate objectives; and (ii) 10% based on a discretionary individual performance component. In addition, each NEO (other than Mr. Hill) had the opportunity to earn up to 30% of his annual bonus target if our Company’s cash balance achieved certain levels.

Our Compensation Committee established (i) revenue, (ii) non-GAAP EBITDA and (iii) the number of new deals with a contribution margin of 30% and a minimum TCV of $1 million as the corporate components of our 2020 annual cash incentive bonus program, with each of the components weighted as set forth below. We utilize these non-GAAP financial measures internally in analyzing our financial results and evaluating our ongoing operational performance because they exclude certain non-cash adjustments and non-recurring charges required under GAAP. These metrics were also selected because they are several of the key performance metrics stockholders use in evaluating our Company. In calculating both revenue and non-GAAP EBITDA, we add back the fair value stock-based compensation expense, deferred revenue, acquisition-related costs, restructuring charges, changes in the contingent consideration obligation, deferred compensation expense related to earn-outs and amortization of intangibles associated with acquisitions.

Each of the components was assigned a “threshold” level, which is the minimum achievement level that must be satisfied to receive a portion of the applicable bonus amounts, and a “maximum” level, which, if achieved or exceeded, would result in our NEOs receiving up to 175% of the target amount attributed to that component.

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The components of the 2020 cash incentive compensation plan are set forth below:

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To incent certain individuals who had individual plans as a result of the difficulties caused by the COVID-19 pandemic in securing new deals, in April of 2020, Mr. Lurie, as Chief Executive Officer at the time, Mr. Miller,

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as Chief Commercial Officer at the time, and Mr. Clark, as Chief Financial Officer, revised certain components of the commercial team’s compensation to reduce the revenue component of each of their compensation plans as provided above and adjusted the revenue to add back the $9,400,000 of Verizon revenue that our Company was required to spread over time as a result of the renewal of our agreement with Verizon in calculating our Company’s 2020 revenue. As Mr. Hill was not a NEO at the time and, as described above, had an individual compensation plan as a member of our commercial team, his individual compensation plan was similarly adjusted. Accordingly, as our revenue in 2020 was $301,000,000 after adding back the Verizon revenue, Mr. Hill received 78% of this component or $95,063. With respect to the contribution margin of Mr. Hill’s compensation plan, as our Company’s contribution margin in 2020, after adding back the Verizon revenue, was 38.2%, representing 160% of the target contribution margin in Mr. Hill’s compensation plan, Mr. Hill received $65,000 with respect to this component. Accordingly, Mr. Hill received a total of $273,813 under his cash incentive compensation plan. In addition, Mr. Hill received a special $15,000 bonus provided to other non-executive key employees of our Company.

The above calculations resulted in the following payout amounts under the 2020 cash incentive bonus plan for each of our NEOs:

*

As Mr. Lurie and Ms. Clark were not employed by our Company on December 31, 2020, neither of them received any cash incentive bonus in 2020.

​

2020 Long-Term Incentive Compensation Plan

Our Compensation Committee awarded time-based vesting stock options and performance-based restricted cash units to our NEOs as the long-term equity incentive component of their compensation, targeting an annual mix with the intent to provide NEOs with a balanced retention and performance opportunity and serve to closely align our NEOs’ long-term objectives with those of our stockholders. The number of shares underlying time-based vesting stock options and the target number of performance-based restricted cash units granted to our NEOs is based on our Compensation Committee’s general understanding of competitive pay practices, our CEO’s recommendation (except with respect to his own awards), consultation with our compensation consultant, and other factors that our Compensation Committee deems appropriate.

Time-Based Stock Options and Performance-Based Restricted Cash Units

In February 2020, in consultation with our compensation consultant, our Compensation Committee granted time-based vesting options to purchase shares of our Common Stock (25% of such NEO’s equity award) and performance-based restricted cash units (75% of such NEO’s equity award) to each of our NEOs

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(other than Mr. Hill). The time-based vesting stock options vest one-third on each of the first, second and third anniversary of their grant date. The performance-based restricted cash units vest upon the Compensation Committee approving the level of performance against pre-established metrics for such grants, and such approval is expected to occur on or about February 28, 2023. Each component is subject to the NEO remaining employed through the date of such approval in 2023. The time-based vesting helps tie our NEOs’ variable realizable compensation to our performance and further align their interests with those of our stockholders. See “Description of Awards Granted in 2020,” below.

As Mr. Hill was not a NEO at the time equity was granted to the NEO’s. Mr. Hill was granted 20,718 stock options but no performance-based restricted cash units as part of the annual equity grant provided to other employees. In addition, in connection with his promotion to Executive Vice President, Product, Mr. Hill received a grant of an additional 14,000 stock options. In addition, Mr.Hill received a grant of an additional 25,000 stock options in connection with a retention program provided to other critical employees.

The following table sets forth the number of performance-based restricted cash units awarded, and the number of time-based stock options to purchase shares of our Common Stock granted to our NEOs in 2020.

The 2018-2020 Performance Units provide the opportunity to earn the identified performance-based restricted cash units based on the performance of our business during 2018, 2019 and 2020. Our NEOs were required to remain employed by our Company through March 2021 in order to vest in the cash units or shares. Our Compensation Committee will determine whether to settle the vested performance-based units in cash or shares of our Common Stock at the time they vest.

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The following were the performance targets for the plan established by our Compensation Committee: 40% based on revenue, 40% based on non-GAAP EBITDA and 20% based on a strategic objective established by our Compensation Committee each year during the three-year period. For 2018 and 2019, our Compensation Committee designated free cash flow as the strategic metric. In consultation with Deloitte, and to be consistent with many of our peer group of companies, our Compensation Committee has decided that for 2020 the strategic metric will be total shareholder return of our Company compared to the total shareholder return for companies in the Russell 2000 index (“TSR”).

Each of the components was separately assigned a “threshold” level, which established the minimum achievement necessary to be satisfied to receive any portion of the applicable bonus amounts, and a “maximum” level, which, if achieved or exceeded, would result in 200% of the target cash units being earned with respect to such component as described below.

As previously disclosed in the Compensation, Discussion and Analysis section of our 2019 and 2020 proxy statements, our NEOs earned 51.4% of the target number of the 2018-2020 Performance Units allocable to 2018 based on our Company’s 2018 financial performance and did not receive any of the 2018-2020 Performance Units allocable to 2019 based on our Company’s 2019 financial performance. The actual number of 2018-2020 Performance Units earned based on each of our 2018 and 2019 performance is set forth below, which performance units vested in February 2021:

In 2020, using the same adjustments and calculations as described above under our 2020 cash incentive compensation plan, our NEOs did not receive any portion with respect to the revenue metric and received 90% with respect to the Non-GAAP EBITDA metric. With respect to the Total Shareholder Return (“TSR”) metric, our Company’s TSR compared to the the Russel 2000 was in the 35th percentile, i.e, Threshold. However, our Compensation Committee, using its discretion, credited the NEOs with a 40% payout, rather than a 50% payout.

As a result, each NEO received the following payout with respect to our Company’s 2020 performance:

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As a result, our NEOs earned 44% of the target number of the 2018-2020 Performance Units allocable to 2020 based on our Company’s 2020 financial performance. The actual number of 2018-2020 Performance Units earned based on our 2020 performance is set forth below, which performance units vested in February 2021:

Our Compensation Committee agreed to pay the NEOs in the number of shares of our Company’s Common Stock equal to the number of Performance-Based Restricted Cash Units.

2019-2021 Performance-Based Restricted Cash Units

In April 2019, our Compensation Committee granted 2019-2021 performance-based restricted cash units to our NEOs (other than Mr. Hill who was not a NEO on such date) employed as of the grant date. The following table sets forth the 2019-2021 performance-based restricted cash units (collectively, the “2019-2021 Performance Units”) awarded to our NEOs:

The 2019-2021 Performance-Based Restricted Units provide the opportunity to earn the identified performance-based restricted cash units based on the performance of our business during 2019, 2020 and 2021. Our NEOs are required to remain employed by our Company through March 2022 in order to vest in the cash units. Our Compensation Committee will determine whether to settle the vested performance-based restricted cash units in cash or shares of our Common Stock at the time they vest.

The following were the performance targets for the plan established by our Compensation Committee: 40% based on revenue, 40% based on non-GAAP EBITDA and 20% based on a strategic objective established by our Compensation Committee. For the 2019-2021 period, our Compensation Committee designated “revenue diversity” as the strategic metric which was defined as year-over-year revenue growth for DXP and the internet of things (“IoT”), with the target year-over-year revenue growth of 35%.

Each of the components was separately assigned a “threshold” level, which established the minimum achievement necessary to be satisfied to receive any portion of the applicable bonus amounts, and a “maximum” level, which, if achieved or exceeded, would result in 200% of the target cash units being earned with respect to such component as described below.

As previously disclosed in the Compensation Discussion and Analysis section of our proxy statement for our 2020 annual meeting of stockholders, our NEOs earned 20% of the target number of the 2019-2021

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Performance Units allocable to 2019 based on our 2019 financial performance. The actual number of 2019-2021 Performance Units earned based on each our 2019 performance is set forth below, which performance units shall vest in or about February 2022:

In 2020, using the same adjustments and calculations as described above under our 2020 cash incentive compensation plan, our NEOs did not receive any portion with respect to the revenue metric and received 90% with respect to the Non-GAAP EBITDA metric. With respect to the Revenue Diversity metric, the actual Revenue Diversity was $3,350,000, resulting in no payment for this metric. As a result, each NEO received the following payout with respect to our Company’s 2020 performance:

As a result, our NEOs earned 36% of the target number of the 2019-2021 Performance Units allocable to 2020 based on our Company’s 2020 financial performance. The actual number of 2019-2021 Performance Units earned based on our 2020 performance is set forth below, which performance units shall vest in or about February 2022 provided the NEO remains employed by our Company through such date: