United States
Securities and Exchange
Commission
Washington, D.C.
20549
Schedule 14A information
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed
by the Registrant
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Filed
by a Party other than the Registrant
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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 §240.14a-11(c) or §240.14a-2
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ON DECK CAPITAL, INC.
(Name
of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check
the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to
which transaction applies:
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(2) Aggregate number of securities to which
transaction applies:
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(3) Per unit price or other underlying value
of transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which
the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of
transaction:
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(5) Total fee
paid:
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Fee
paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
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1400 Broadway, 25th Floor
New York, New York 10018
THURSDAY, MAY 7, 2020
8:00 a.m. Mountain time
OnDeck’s Denver Office
101 West Colfax Avenue
9th Floor
Denver, Colorado 80202
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Voting Proposals
1.
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To elect three Class III directors;
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2.
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To provide advisory approval of our 2019
executive compensation;
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3.
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To provide an advisory vote on the frequency
of future stockholder advisory votes on executive compensation;
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4.
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To ratify the appointment of Ernst &
Young LLP as our independent registered public accountants for the year ending December 31, 2020; and
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5.
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To transact such other business that
may properly come before the Annual Meeting or any adjournment or postponement thereof.
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RECORD DATE
Stockholders of record as of March 9, 2020 may
vote at the Annual Meeting or any postponements or adjournments of the meeting.
By Order of the Board of Directors.
Cory Kampfer
General Counsel and Corporate Secretary
NOTICE
of 2020 Annual
Meeting of
Stockholders
PROXY MATERIALS
This Notice of Annual Meeting, the Notice of Internet
Availability of Proxy Materials, Proxy Statement, our Annual Report on Form 10-K for the year ended 2019, or 2019 Annual Report,
and form of proxy are being made available on or about March 18, 2020.
VOTING
Your vote is important! Whether or not you plan
to attend the meeting in person, please vote your shares as instructed in the Notice of Internet Availability of Proxy Materials.
You may vote over the Internet, by telephone or by mailing a proxy card. Please review the instructions on the proxy card regarding
each of these voting options. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note,
however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must
obtain a proxy issued in your name from that record holder. Please read the entire Proxy Statement before casting your vote.
ATTENDING THE MEETING
If you plan to attend the Annual Meeting in person,
please review the instructions for admission to the meeting on page 10 of the Proxy Statement.
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on May 7, 2020: This Proxy Statement,
along with our 2019 Annual Report, is available at the following website: www.envisionreports.com/ONDK.
REVIEW YOUR PROXY STATEMENT
AND VOTE IN ONE OF FOUR WAYS:
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Please refer to the enclosed proxy materials or the information
forwarded by your bank, broker or other holder of record to see which voting methods are available to you.
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INTERNET
Visit the website
on your proxy card
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BY TELEPHONE
Call the telephone
number on your
proxy card
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BY MAIL
Sign, date and
return your
proxy card in the
enclosed envelope
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IN PERSON
Attend the Annual Meeting
in Denver, Colorado.
See page 10 for
instructions on how
to attend
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MESSAGE
FROM
THE CHAIRMAN
OF THE BOARD
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NOAH BRESLOW
MARCH 18, 2020
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Dear Fellow
Stockholder:
We are pleased to invite
you to attend our 2020 Annual Meeting of Stockholders to be held on May 7, 2020 at 8:00 a.m. Mountain time at our Denver Offices,
101 West Colfax Avenue 9th Floor, Denver, Colorado 80202.
At the Annual Meeting, you
will be asked to vote on the four proposals listed in the Notice of Annual Meeting: (1) the election of three Class III directors;
(2) to provide advisory approval of our 2019 executive compensation; (3) to provide an advisory vote on the frequency of future
advisory votes on executive compensation; and (4) to ratify the appointment of Ernst & Young LLP as our independent registered
public accountants for the year ending December 31, 2020.
The Board of Directors recommends
that you vote FOR proposals 1, 2 and 4, and ONE YEAR for proposal 3.
Business Highlights.
2019 marked a year of solid financial results highlighted by continued growth and profitability as we advanced our strategic
priorities. We entered 2019 with an ambitious agenda focused on building on the success of our US lending franchise, investing
in growth adjacencies and innovating on our core risk, technology and funding strengths. We also announced two new strategic priorities
for the Company in 2019 – increasing capital efficiency and pursuing a bank charter - and advanced each of these. And we
announced and substantially completed a $50 million share repurchase program which was accretive to both earnings and book value
per share.
We made significant progress
on our strategic priorities in 2019. As a result, we are well-positioned in 2020 to further expand our core US lending business,
scale our international operations to achieve profitability, drive value in our ODX platform, advance our effort to obtain a bank
charter, and increase earnings per share and return on shareholders’ equity.
On behalf of our Board of
Directors, and all of our OnDeck team members, thank you for being an OnDeck stockholder and for your continued support of OnDeck.
Noah Breslow
Chairman and Chief Executive
Officer
New York, New York
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PROXY STATEMENT
2020 ANNUAL MEETING OF
STOCKHOLDERS
To Be Held on Thursday,
May 7, 2020
Table of Contents
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investors.ondeck.com
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2020 PROXY
STATEMENT
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3
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PROXY STATEMENT SUMMARY
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THIS SUMMARY HIGHLIGHTS SOME OF THE INFORMATION
CONTAINED IN THIS PROXY STATEMENT AND DOES NOT INCLUDE ALL OF THE INFORMATION YOU SHOULD CONSIDER REGARDING THE PROPOSALS BEING
PRESENTED AT THE ANNUAL MEETING. YOU SHOULD READ THE ENTIRE PROXY STATEMENT BEFORE CASTING YOUR VOTE. PAGE REFERENCES ARE PROVIDED
TO DIRECT YOU TO MORE DETAILED INFORMATION ON THE PROPOSALS.
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Proposal 1 Election of three Class III Director
Nominees
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THE BOARD RECOMMENDS STOCKHOLDERS VOTE FOR ALL CLASS III DIRECTOR NOMINEES
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See the “Election of
Directors” section on page 13 for more information.
The table below presents
information on each of the Class III nominees for director of the Company and each of the continuing directors who are not being
voted on at the Annual Meeting. Each of the nominees is a current Director of the Company and possesses the qualifications to serve
as a member of our Board of Directors. The information set forth below is as of March 9, 2020.
Name
and
Principal Occupation
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Class
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Age
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Committee
Membership
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Director Since
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Current
Term
Expires
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Nominated
for
Term Expiring
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Class
III Director Nominees
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Noah Breslow
Chairman and CEO, On
Deck Capital, Inc.
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III
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44
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• Risk
Management
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2012
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2020
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2023
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Jane J. Thompson
CEO, Jane J. Thompson Financial
Services, LLC
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III
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68
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• Corporate
Governance and Nominating
• Risk
Management
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2014
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2020
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2023
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Ronald F. Verni
Former President and CEO,
Sage Software, Inc.
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III
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71
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• Compensation
• Corporate
Governance and Nominating
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2012
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2020
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2023
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Continuing
Directors
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Chandra Dhandapani
Chief Digital and Technology Officer,
CBRE Group, Inc.
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II
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52
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• Corporate
Governance and Nominating
• Risk
Management
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2018
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2022
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—
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Bruce Nolop
Former EVP and CFO, E*TRADE
Financial Corporation
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II
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69
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• Audit
• Compensation
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2016
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2022
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Manolo Sánchez
Former Chairman, President and CEO,
BBVA Compass
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II
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54
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• Audit
• Compensation
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2018
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2022
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Daniel Henson
Former EVP, GE Capital Holdings/CEO, GE Capital Americas
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I
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59
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• Risk
Management
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2016
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2021
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Neil E. Wolfson
Former President, SF
Capital Group, LLC
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I
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55
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• Audit
• Risk
Management
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2011
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2021
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—
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2020 PROXY
STATEMENT
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4
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Board Composition and Governance Highlights
The Board regularly examines the skills, qualifications
and experience of its members to ensure that it is comprised of a diverse group of individuals who can best support the Company’s
strategy and represent stockholder interests. We believe our Board is well-rounded and reflects an effective mix of backgrounds
and perspectives from both new and seasoned Company directors.
Corporate Governance and Board Practices
We employ best practices in corporate governance
and consistently examine opportunities to adopt new or refine existing practices that will support our stockholders’ interests.
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7 out of 8 directors
and 100% of our Audit, Compensation and Nominating Committees are independent
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Our Audit Committee
members are all audit committee financial experts
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Regular Board executive
sessions are held without management present
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A Lead
Independent Director fosters effective collaboration among directors and counterbalances combined Chair/CEO
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We have robust stock
ownership guidelines for our CEO and directors
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A Board
Diversity Policy supports the identification and appointment of diverse candidates to our Board
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Our Board and management
are subject to a global Code of Business Conduct and Ethics
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Our Insider
Trading Policy restricts stock trading to quarterly windows and requires mandatory pre-clearance
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We have a majority
vote policy in uncontested director elections and a director resignation policy
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Stockholders have
the same voting rights – one vote per share
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We annually seek
stockholder ratification of our independent registered public accounting
firm
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We do
not maintain a stockholder rights plan or “poison pill”
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Director compensation
is reviewed annually by our Compensation and Nominating Committees
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Our Board and each
committee conduct an annual self-evaluation of performance
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Our Disclosure
Committee oversees our disclosure obligations to ensure timely and accurate reporting
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2020 PROXY STATEMENT
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5
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Proposal 2 Advisory Approval of our 2019 Executive
Compensation
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THE BOARD RECOMMENDS STOCKHOLDERS VOTE FOR THIS PROPOSAL
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Executive Compensation Program
Our executive compensation
program is designed to recruit and retain highly qualified executive officers, reward strong Company performance, and align the
long-term interests of our executive officers with those of our stockholders. We do this by offering competitive compensation that
is reflective of market practices and comprised of elements that promote strong short- and long-term performance. The table below
offers a snapshot of the key components of our executive compensation program and the rationale underlying each element.
Component
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Form
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Purpose
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Salary
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Cash
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Provides a stable source of income for performing day-to-day job
responsibilities.
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Short-Term Incentive
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Cash
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Semi-annual performance-based award opportunity based on achievements
with respect to individual and Company defined goals and metrics.
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Long-Term Incentives
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Time-based Restricted Stock Units (RSUs)
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Aligns employees with shareholders and promotes employee retention
by vesting in four equal installments over four years subject to employment with the Company through each vesting date.
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Performance-based Restricted Stock Units (PBRS)
Performance Units,
payable in cash (PSU)
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Award opportunity eligible for vesting based on achievements with
respect to metrics established by the Compensation Committee for the performance period. Encourages long-term focus on Company
goals and strong performance by rewarding executives only for achievements above threshold levels.
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Retirement
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401(k)
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Provides retirement
income through Company matching contributions equal to 50% of employee salary deferrals up to 6% of such deferrals.
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Compensation Governance
Our compensation governance
practices reflect a pay-for-performance philosophy and commitment to aligning our executives’ and stockholders’ interests.
WHAT WE DO
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WHAT WE DON’T DO
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Performance-based
short-term cash incentive compensation that is entirely at-risk
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No
“single-trigger” change in control payments or benefits
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100%
independent directors on our Compensation Committee
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No
tax gross-ups for change in control payments or benefits
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Independent
compensation consultant directly engaged by and reporting to our Compensation Committee
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No
post-employment retirement or pension type benefits for our executive officers that are not available to our employees generally
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Cap
our annual incentive and long-term incentive award payouts at 160% and 150%, respectively, of target and eliminate payouts
entirely for performance below a minimum threshold
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No
executives or directors are permitted to engage in hedging or derivatives trading with Company stock
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Seek
recovery of performance-based incentive compensation pursuant to our clawback policy
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No
perquisites are offered to our named executive officers except for relocation expenses, from time to time
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Robust
stock ownership guidelines for our CEO and directors ensures alignment with stockholders’ interests
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No
employment agreements between the Company and our named executive officers
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2020 PROXY STATEMENT
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6
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2019 Performance and Compensation Levels
Consistent with our pay-for-performance
philosophy, we paid long-term incentive compensation to our NEOs below target levels for the year ended December 31, 2019 because
the following performance levels achieved were below targets established by the Compensation Committee:
Short-term incentive compensation
payable to our NEOs reflects a blend of below target and at target performance on our Company performance metrics for the first
half of 2019, and a blend of target and above-target performance on our Company performance metrics for the second half of 2019.
(1)
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Non-GAAP
measure. Adjusted Pre-Tax Income is calculated as Income (loss) from operations, before provision for income taxes adjusted
to exclude stock-based compensation expenses. For purposes of short-term incentive compensation for the first half of 2019
and long-term incentive compensation for the year ended December 31, 2019, Adjusted Pre-Tax Income has been further adjusted
to exclude the April 1, 2019 business combination with Evolocity Financial Group.
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(2)
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Non-GAAP
measure. Adjusted Gross Revenue is calculated as our 2019 Gross Revenue, which represents the sum of interest and finance
income, gain on sales of loans and other revenue, less revenue attributable from the April 1, 2019 business combination with
Evolocity Financial Group.
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(3)
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Non-GAAP
measure. Adjusted Loan Growth was a metric for the first half of 2019, and is calculated as the percentage change in loans
and finance receivables from December 31, 2018 to June 30, 2019, less the increase attributable from the April 1, 2019 business
combination with Evolocity Financial Group.
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(4)
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Loan
Growth was a metric for the second half of 2019, and is calculated as the percentage change in Loans and finance receivables
from June 30, 2019 to December 31, 2019.
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(5)
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Non-GAAP
measure. Adjusted Reserve Ratio was a metric for the first half of 2019, and is calculated as our allowance for credit losses
at June 30, 2019 divided by the Unpaid Principal Balance at June 30, 2019 less, in each case, amounts attributable from the
April 1, 2019 business combination with Evolocity Financial Group. Unpaid Principal Balance represents the total amount of
principal outstanding on loans, plus outstanding advances relating to other finance receivables and the amortized cost of
loans purchased from other than our issuing bank partner at the end of the period. It excludes net deferred origination costs,
allowance for credit losses and any loans sold or held for sale at the end of the period.
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(6)
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Reserve Ratio was a metric
for the second half of 2019, and is calculated as our allowance for credit losses at December 31, 2019 divided by the Unpaid
Principal Balance at December 31, 2019. Unpaid Principal Balance is defined in footnote (5).
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See the discussions of Annual
Short-Term Incentive Compensation beginning on page 36 and Long-Term Incentive Compensation beginning on page 38 for more information.
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2020 PROXY STATEMENT
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7
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Proposal 3
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Advisory Vote on Frequency of Future
Stockholder Advisory Votes on Executive Compensation
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THE
BOARD RECOMMENDS STOCKHOLDERS VOTE ONE YEAR FOR THIS PROPOSAL
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The Board of Directors believes
that an annual advisory vote to approve executive compensation is the most appropriate policy for our stockholders and the Company
at this time. While this vote is non-binding, the Company values the opinions of its stockholders and will consider the outcome
of the vote when determining the frequency of future stockholder advisory approvals of executive compensation. Consistent with
current prevailing market practice and the Board’s compensation philosophy, the Board recommends an annual frequency for
the stockholder advisory vote on executive compensation.
See page 52 for more information.
Proposal
4
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Ratification
of Ernst & Young LLP as our Independent Registered Public Accountants for 2020
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THE
BOARD RECOMMENDS STOCKHOLDERS VOTE FOR THIS PROPOSAL
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OnDeck’s Audit Committee
of the Board of Directors has selected Ernst & Young LLP as our independent registered public accountants for 2020. While
stockholder ratification of our independent registered public accountants is not required under our governance documents, we are
submitting this item to a vote as a matter of good corporate governance.
See page 58 for more information.
—
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ADDITIONAL VOTING INFORMATION
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Quorum -
At the Annual Meeting, the presence in person or by proxy of a majority of the voting power of the shares issued and outstanding
and entitled to vote at the Annual Meeting is required for the Annual Meeting to proceed. Abstentions and broker non-votes
will qualify for determining whether there is a quorum.
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•
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Proposal 1 (Election of Directors)
- Each nominee for director is elected by a majority of the votes cast. This means
that the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST”
the nominee. Any nominee who receives more votes cast “FOR ” their election than “AGAINST” will be
elected as a Class III director to serve until the 2023 Annual Meeting of Stockholders. Abstentions and broker non-votes will
have no effect on the outcome of the vote, however, they will qualify for determining whether there is a quorum.
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Proposal 2 (Advisory Approval of our
2019 Executive Compensation) - The approval, on an advisory basis, of the compensation
of our NEOs in this Proxy Statement requires the “FOR” vote of a majority of the voting power of the shares present
in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions are treated as present and entitled
to vote and will have the same effect as a vote “AGAINST” the proposal. Broker non-votes will have no effect on
the outcome of this proposal.
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Proposal 3 (Advisory Vote on Frequency
of Future Stockholder Advisory Votes on Executive Compensation) - The option of one
year, two years or three years that receives the highest number of votes cast by stockholders will be considered the frequency
recommended by stockholders. Abstentions and broker non-votes will have no effect on the outcome of this vote.
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•
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Proposal 4 (Ratification of Ernst &
Young LLP) - The ratification of the appointment of Ernst & Young LLP as
our independent registered public accountants requires the affirmative vote of a majority of shares present in person or represented
by proxy and entitled to vote on such proposal. Abstentions are treated as shares present and entitled to vote for purposes
of such proposal and, therefore, will have the same effect as a vote “AGAINST” the proposal. Broker non-votes
will not count as votes cast for purposes of this proposal.
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If your shares are held by
a broker, you must instruct your broker how to vote for Proposals 1, 2 and 3. If you have not instructed the broker how to
vote, your shares will not be voted with respect to Proposals 1, 2 and 3, however, your broker does have the discretionary authority
to vote your shares on Proposal 4.
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2020 PROXY STATEMENT
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8
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GENERAL INFORMATION
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Q:
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Why am I receiving these
materials?
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A:
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This Proxy Statement is furnished to
you by the Board of Directors of On Deck Capital, Inc., or the Board or Board of Directors, in connection with our 2020 Annual
Meeting of Stockholders, or the Annual Meeting. The Annual Meeting is to be held on Thursday, May 7, 2020 beginning at 8:00
a.m. Mountain time at our Denver Offices, 101 West Colfax Avenue, 9th Floor Denver, Colorado 80202. References
in this Proxy Statement to “we,” “us,” “our,” “the Company” or “OnDeck”
refer to On Deck Capital, Inc.
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We have mailed the Notice of Internet
Availability of Proxy Materials to all stockholders and beneficial owners of record as of March 9, 2020, the record date for
the Annual Meeting. All stockholders will have the ability to access the proxy materials via the Internet, including this
Proxy Statement, as filed with the U.S. Securities and Exchange Commission, or SEC, on or about March 18, 2020, and our 2019
Annual Report. The Notice of Internet Availability of Proxy Materials includes information on how to access the proxy materials,
how to submit your vote over the Internet, by phone, by mail, or in person, or how to request a paper copy of the proxy materials.
This Proxy Statement and our 2019 Annual Report are available at www.envisionreports.com/ONDK.
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Q:
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What is included in these materials?
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A:
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These materials include this Proxy Statement
and our 2019 Annual Report. These materials were first made available to you on the Internet on or about March 18, 2020. For
additional information about OnDeck, please visit our website at www.ondeck.com. The information on our website is not a part
of this Proxy Statement.
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Q:
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What items will be voted on at the
Annual Meeting?
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A:
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Stockholders will vote on the following
items at the Annual Meeting:
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•
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To elect each of Noah Breslow,
Jane J. Thompson and Ronald F. Verni as Class III directors;
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•
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To provide advisory approval of our 2019
executive compensation;
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•
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To provide an advisory vote on the frequency
of future stockholder advisory votes on executive compensation;
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To ratify the appointment of Ernst &
Young LLP as our independent registered public accountants for the year ending December 31, 2020; and
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•
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To transact such other business that
may properly come before the Annual Meeting or at any adjournment or postponement thereof.
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Q:
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How does the Board of Directors recommend I vote on these proposals?
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A:
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The Board recommends a vote:
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•
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FOR the
election of each of Noah Breslow, Jane J. Thompson and Ronald F. Verni as Class III directors;
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•
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FOR the
approval of our 2019 executive compensation;
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•
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Of ONE
YEAR for the frequency of future stockholder advisory votes on executive compensation;
and
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•
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FOR the
ratification of the appointment of Ernst & Young LLP as our independent registered public accountants for the year
ending December 31, 2020.
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Q:
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Who is making this solicitation?
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A:
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The proxy for the Annual Meeting is being solicited on behalf of the Board of Directors of OnDeck.
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Q:
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Who pays for the proxy solicitation process?
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A:
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OnDeck will pay the cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. We may, on request, reimburse brokerage firms and other nominees for their expenses in forwarding proxy materials to beneficial owners. In addition to soliciting proxies by mail, we expect that our directors, officers and employees may solicit proxies in person or by telephone or facsimile. We may also solicit proxies by email from stockholders who are our employees or who requested to receive or received proxy materials electronically. None of these individuals will receive any additional or special compensation for doing this, although we may reimburse these individuals for their reasonable out-of-pocket expenses.
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Q:
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Who may vote at the Annual Meeting?
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A:
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Stockholders of record as of the close of business on March 9, 2020, or the Record Date, are entitled to receive notice of, to attend, and to vote at the Annual Meeting. As of the Record Date, there were 58,419,304 shares of OnDeck’s common stock issued and outstanding. Each share of OnDeck’s common stock is entitled to one vote on each matter.
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Q:
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What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
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A:
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Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., or Computershare, you are considered the stockholder of record with respect to those shares, and the Notice of Internet Availability of Proxy Materials was sent directly to you by OnDeck.
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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 Notice of Internet Availability of Proxy Materials was 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.
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2020 PROXY STATEMENT
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9
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Q:
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If I am a stockholder of record of OnDeck’s shares, how do I vote?
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A:
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If you are a stockholder of record, there are four ways to vote:
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•
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Via the Internet. You
may vote by proxy via the Internet by following the instructions found on the proxy card.
|
|
•
|
By Telephone. You
may vote by proxy by calling the toll-free number found on the proxy card.
|
|
•
|
By Mail. You
may vote by proxy by filling out the proxy card and returning it in the envelope provided.
|
|
•
|
In Person. You
may vote in person at the Annual Meeting. The Company will give you a ballot when you arrive upon request.
|
|
Please note that the Internet and telephone voting facilities will close at 1:00 a.m. New York time on May 7, 2020.
|
Q:
|
If I am a beneficial owner of shares held in street name, how do I vote?
|
A:
|
If you are a beneficial owner of shares held in street name, you should have received from your broker, bank, trustee or other nominee instructions on how to vote or instruct the broker to vote your shares, which are generally contained in a “vote instruction form” sent by the broker, bank, trustee or other nominee. Please follow their instructions carefully. Street name stockholders may generally vote by one of the following methods:
|
|
•
|
Via the Internet. You
may vote by proxy via the Internet by following the instruction form provided to you by your broker, bank, trustee, or other
nominee.
|
|
•
|
By Telephone. You
may vote by proxy by calling the toll-free number found on the vote instruction form provided to you by your broker, bank,
trustee, or other nominee.
|
|
•
|
By Mail. You
may vote by proxy by filling out the vote instruction form and returning it in the envelope provided to you by your broker,
bank, trustee, or other nominee.
|
|
•
|
In Person. If
you wish to vote in person at the Annual Meeting, you must obtain a legal proxy from the organization that holds your shares.
Please contact that organization for instructions regarding obtaining a legal proxy for you by your broker, bank, trustee,
or other nominee.
|
Q:
|
If I submit a proxy, how will it be voted?
|
A:
|
When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, the shares will be voted in accordance with the recommendations of our Board of Directors as described above. If any matters not described in the Proxy Statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is postponed or adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have revoked your proxy instructions, as described below under “Can I change my vote or revoke my proxy?”
|
Q:
|
What should I do if I get more than one proxy or voting instruction card?
|
A:
|
Stockholders may receive more than one set of voting materials, including multiple copies of these proxy materials and multiple proxy cards or voting instruction cards. For example, stockholders who hold shares in more than one brokerage account may receive separate sets of proxy materials for each brokerage account in which shares are held. Stockholders of record whose shares are registered in more than one name will receive more than one set of proxy materials. You should vote in accordance with all of the proxy cards and voting instruction cards you receive relating to our Annual Meeting to ensure that all of your shares are counted.
|
Q:
|
Can I change my vote or revoke my proxy?
|
A:
|
You may change your vote or revoke your proxy at any time prior to the taking of the vote at the Annual Meeting.
|
|
Stockholder of Record. If you are the stockholder of record, you may change your vote by (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described on page 10 (and until the applicable deadline for each method), (2) providing a written notice of revocation to OnDeck’s Corporate Secretary at On Deck Capital, Inc., 1400 Broadway, 25th Floor, New York, New York 10018 prior to your shares being voted, or (3) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request or vote in person at the Annual Meeting.
|
|
Beneficial Owner of Shares Held in Street Name. For shares you hold beneficially in street name, you may generally change your vote by submitting new voting instructions to your broker, bank, trustee, or nominee following the instructions they provided, or, if you have obtained a legal proxy from your broker, bank, trustee, or nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.
|
Q:
|
Can I attend the meeting in person?
|
A:
|
You are invited to attend the Annual Meeting if you are a registered stockholder or a street name stockholder as of March 9, 2020, the Record Date. In order to enter the Annual Meeting, you must present a form of photo identification acceptable to us, such as a valid driver’s license or passport. If you hold your shares beneficially in street name, you will need to provide proof of stock ownership as of the Record Date, for example by producing a brokerage statement as of March 2020. Please note that since a street name stockholder is not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy. Please be aware that attendance at the Annual Meeting will not, by itself, revoke a proxy.
|
Q:
|
How many shares must be present or represented to conduct business at the Annual Meeting?
|
A:
|
At the Annual Meeting, the presence in person or by proxy of a majority of the aggregate voting power of the shares issued and outstanding and entitled to vote at the Annual Meeting
|
|
2020 PROXY STATEMENT
|
10
|
|
is required for the Annual Meeting to proceed. If you have returned valid proxy instructions or attend the Annual Meeting in person, your shares of common stock will be counted for the purpose of determining whether there is a quorum, even if you wish to abstain from voting on some or all matters at the meeting.
|
Q:
|
What is the voting requirement to approve each of the proposals?
|
A:
|
Proposal 1 (Election of Directors) - Each nominee for director is elected by a majority of the votes cast. This means that the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” the nominee. Any nominee who receives more votes cast “FOR” their election than “AGAINST” will be elected as a Class III director to serve until the 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualified. Any director nominee who does not receive a majority of the votes cast “FOR” his or her election is required to promptly tender his or her resignation in accordance with the procedures outlined in our Amended and Restated Bylaws, as amended through October 31, 2018, or Bylaws, and our Corporate Governance Guidelines. Abstentions and broker non-votes will have no effect on the outcome of the vote, however, they will qualify for determining whether there is a quorum.
|
|
Proposal 2 (Advisory Approval of our 2019 Executive Compensation) - The approval, on an advisory basis, of the compensation of our NEOs in this Proxy Statement requires the “FOR” vote of a majority of the voting power of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote. Abstentions are treated as present and entitled to vote and will have the same effect as a vote “AGAINST” the proposal. Broker non-votes will have no effect on the outcome of this proposal. Because this vote is advisory only, it will not be binding on our Board or the Company. However, our Board or our Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.
|
|
Proposal
3 (Advisory Vote on Frequency of Future Stockholder Advisory Votes on Executive Compensation)
- The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be
considered the frequency recommended by stockholders. Abstentions and broker non-votes will have no effect on the outcome of
this vote.
|
|
Proposal 4 (Ratification of Ernst & Young LLP) - The ratification of the appointment of Ernst & Young LLP as our independent registered public accountants requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on such proposal. Abstentions are treated as shares present and entitled to vote for purposes of such proposal and, therefore, will have the same effect as a vote “AGAINST” the proposal. Broker non-votes will not count as votes cast for purposes of this proposal.
|
Q:
|
What are broker non-votes?
|
A:
|
Broker non-votes are shares held by brokers that do not have discretionary authority to vote on the matter and have not received voting instructions from their clients. If your broker holds your shares in its name and you do not instruct your broker how to vote, your broker will nevertheless have discretion to vote your shares on our sole “routine” matter - the ratification of the appointment of the Company’s independent registered public accounting firm. Your broker will not have discretion to vote on any other proposal absent direction from you.
|
Q:
|
Who will tabulate the votes?
|
A:
|
OnDeck’s Corporate Secretary will serve as the Inspector of Election and will tabulate the votes at the Annual Meeting.
|
Q:
|
What is the deadline to propose actions for consideration at next year’s Annual Meeting of Stockholders or to nominate individuals to serve as directors?
|
A:
|
Stockholder Proposals for 2021 Annual Meeting of Stockholders. Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at our 2021 Annual Meeting of Stockholders by submitting their proposals in writing to OnDeck’s Corporate Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our 2021 Annual Meeting of Stockholders, the Corporate Secretary of OnDeck must receive the written proposal at our principal executive offices no later than November 18, 2020. Stockholder proposals must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
|
|
If we hold our 2021 Annual Meeting of Stockholders more than 30 days before or more than 60 days after May 7, 2021 (the one-year anniversary date of the 2021 Annual Meeting of Stockholders), then notice of a stockholder proposal that is intended to be included in our proxy statement for our 2021 Annual Meeting of Stockholders must be received by our Corporate Secretary at our principal executive offices:
|
|
•
|
not earlier than the close of business
on the 120th day prior to such annual meeting, or
|
|
•
|
not later than the close of business
on the later of (i) the 90th day prior to such annual meeting, and (ii) the tenth day following the day on which
public announcement of the date of such annual meeting is first made.
|
|
Proposals should be addressed to On Deck Capital, Inc., Attn. Corporate Secretary, at 1400 Broadway, 25th Floor, New York, New York 10018.
|
|
Stockholder Recommendation and Nomination of Director Candidates. Pursuant to our Nominating Committee’s Policies and Procedures for Director Candidates, stockholders holding at least one percent (1%) of the fully diluted capitalization of OnDeck continuously for at least 12 months may propose director candidates for consideration by our Nominating Committee. A stockholder that wants to recommend a candidate for election to the Board should direct the recommendation in writing by letter to the Company, attention of the Corporate Secretary, at 1400 Broadway, 25th
|
|
2020 PROXY STATEMENT
|
11
|
|
Floor, New York, New York 10018. The recommendation must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidate and the Company and evidence of the recommending stockholder’s ownership of Company stock. Such recommendations must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for Board membership.
|
|
In addition, our Bylaws permit eligible stockholders to nominate directors for election at an annual meeting of stockholders. To be eligible, a stockholder must be a stockholder of record both at the time the stockholder provides proper written notice of the proposed nomination and as of the record date determining stockholders entitled to vote at the annual meeting. Nominations by eligible stockholders must also be in proper written form in compliance with the requirements of our Bylaws.
|
|
Copy of Bylaw Provisions. Our Bylaws were filed as Exhibit 3.2 to our Form 10-Q filed with the SEC on November 6, 2018. A link to this filing is available on our investor relations website at https://investors.ondeck.com/investor-overview/overview/default.aspx. You may also contact our Corporate Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. The Bylaws, and not the foregoing summary, together with applicable law control stockholder actions and nominations relating to our annual meetings.
|
Q:
|
I share an address with another stockholder, and we received only one paper copy of the Notice of Internet Availability for the proxy materials. How may I obtain an additional copy of the proxy materials?
|
A:
|
The SEC has adopted rules that permit companies and intermediaries (for example, brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single copy of the Notice of Internet Availability of Proxy Materials for our proxy materials addressed to those stockholders. This process is commonly referred to as “householding.” This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
|
|
Brokers with account holders who are OnDeck stockholders may be householding our proxy materials. A single Notice of Internet Availability of Proxy Materials may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you notify your broker or OnDeck that you no longer wish to participate in householding.
|
|
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, you may: (1) notify your broker; (2) direct your written request to: Investor Relations, On Deck Capital, Inc., 1400 Broadway, 25th Floor, New York, New York 10018; or (3) contact our Investor Relations department by email at ir@ondeck.com or by telephone at (646) 668-3582. Stockholders who currently receive multiple copies of the Notice of Internet Availability of Proxy Materials at their address and would like to request householding of their communications should contact their broker. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the Notice of Internet Availability of Proxy Materials at a shared address to which a single copy of the document was delivered.
|
Q:
|
What if I have questions about my OnDeck shares or need to change my mailing address?
|
A:
|
You may contact our transfer agent, Computershare Trust Company, N.A., by telephone at 1-800-736-3001 (U.S.) or +1-781-575-3100 (outside the U.S.), or by email at web. queries@computershare.com, if you have questions about your OnDeck shares or need to change your mailing address.
|
|
2020 PROXY STATEMENT
|
12
|
|
|
PROPOSAL 1
ELECTION OF DIRECTORS
|
Our business and affairs are
managed under the direction of our Board of Directors. The number of directors is determined by our Board of Directors, subject
to the terms of our Amended and Restated Certificate of Incorporation, or Certificate, and Bylaws. Our Board of Directors consists
of eight directors, seven of whom qualify as “independent” under New York Stock Exchange, or NYSE, listing standards.
As stated in our Certificate and Bylaws, our Board of Directors is divided into three classes with staggered three-year terms.
Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the
remainder of their respective three-year terms. Any increase or decrease in the number of directors will be distributed among the
three classes so that, as nearly as possible, each class will consist of one-third of the directors. On February 13, 2020,
our Board of Directors fixed the number of directors constituting the full Board at eight members.
The Corporate Governance and
Nominating Committee, or Nominating Committee, works with the Board to determine periodically the desired Board qualifications
and experience based on the Board’s needs at the time. The Board will consider several factors in determining a candidate’s
qualifications for membership to the Board including professional experience and other individual qualities and attributes that
contribute to a diverse mix of viewpoints and experience represented on the Board. The Nominating Committee and the Board evaluate
each individual in the context of the membership of the Board as a group, with the objective of assembling a group that can best
perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment, relevant experience
and diverse viewpoints.
Required Qualifications for Board Membership
The Board of Directors and Nominating
Committee require all directors and director candidates to be of high character and integrity, and have the ability to offer advice
and guidance to our Company leaders based on experience gained in positions with a high degree of responsibility and be leaders
in the companies with which they are or were affiliated. Each director and director candidate must also ensure that other existing
and anticipated future commitments do not interfere with his or her service as a director. Our Nominating Committee also considers
the applicable provisions of its Policies and Procedures for Director Candidates which is available in the Investors section of
our website at https://investors.ondeck.com/investor-overview/overview/default.aspx.
In determining whether to recommend
a director for re-election, the Nominating Committee also considers the director’s past attendance at meetings, participation
in and contributions to the activities of the Board and the Company, tenure and other qualifications set forth in the Nominating
Committee’s charter or developed and approved by the Nominating Committee.
Key Qualifications and Experience for Board Membership
The Board has identified key
qualifications and experience that are important to be represented on the Board based on the Company’s current business strategy
and future business goals. These qualifications and experiences are evaluated regularly and updated, as needed, to adapt to the
evolving needs of the Board and the Company. This list is not intended to be exhaustive, but rather a summary of the key criteria
considered by the Board during the nomination and appointment process.
|
2020 PROXY STATEMENT
|
13
|
|
Financial Services/
Fintech Industry
|
Experience in the financial services or fintech industries including investment, commercial banking, global financial markets, lending and private equity enables the board to effectively oversee OnDeck’s financial position, strategy and business model.
|
|
Regulatory/
Government Affairs
|
Experience with regulated industries and legislation involving commercial lending and businesses in general is important given the complexity of our business and consideration of regulatory alternatives.
|
|
Executive Leadership
|
Experience serving a senior executive of a corporation
with broad operational leadership and a practical understanding of how complex businesses function including experience in
core management areas, developing vision, strategy and execution, organizational and talent development, functional
strategies and teamwork to achieve company goals.
|
|
Board/Governance
|
Membership on the board of a public or private company, knowledge of corporate governance practices and trends, and experience interacting with stockholders provides an understanding of matters impacting OnDeck’s governance profile and business objectives.
|
|
Technology
|
Experience overseeing innovative technology, cybersecurity, information systems, data management, disruption and privacy matters allows the board to oversee OnDeck’s loan operations, security practices, investments in technology and related risks.
|
|
Risk Management
|
Experience assessing and managing risks that could impact OnDeck’s business including those related to credit, cybersecurity and technology, and interest rate, liquidity and market-based risks enables the board to effectively oversee our risk profile and risk management programs.
|
|
Accounting/Finance
|
Experience as an accountant or auditor at an accounting firm or chief financial officer of a corporation, or other relevant experience in auditing, analyzing or evaluating financial statements and company valuation.
|
|
International
|
Broad international experience working at a multinational corporation is important as OnDeck expands its global operations and currently operates within multiple international jurisdictions.
|
|
Mergers and
Acquisitions
|
Experience pursuing inorganic strategic opportunities by identifying markets and products to support growth, identifying specific targets, valuation, negotiations, closing and integration.
|
Board Diversity Policy
The Board of Directors adopted
a Board Diversity Policy in 2018 to further advance its commitment to promoting diversity within the Company. The Board recognizes
the value of diversity in achieving Company objectives and maintaining sound governance practices as it brings together individuals
with different perspectives and ideas, from varying backgrounds and experiences, to create balanced and thoughtful decision-making
that best serves stockholder interests.
In identifying qualified candidates
for nomination to the Board, the Nominating Committee seeks to maintain a Board comprised of talented and dedicated directors with
a diverse mix of qualifications and experience that reflect the complex and dynamic nature of our business and meet the needs of
the Company at any given time. Diversity refers to a broad array of individual characteristics that collectively enable the Board
to operate effectively and fulfill its responsibilities including professional qualifications, business experience, age, gender,
race and ethnicity.
Our Board of Directors is comprised
of eight directors with varying backgrounds and characteristics which collectively form a well-rounded group of individuals
with deep knowledge of our business and industry, and a blend of seasoned and fresh perspectives.
|
2020 PROXY STATEMENT
|
14
|
The chart below summarizes the
key qualifications and experience of each director considered by the Board and Nominating Committee for his or her nomination and
appointment. The Board and Nominating Committee considers these factors, and others, in identifying candidates for election or
reappointment to the Board.
|
|
Noah
Breslow
|
Chandra
Dhandapani
|
Dan
Henson
|
Bruce
Nolop
|
Manolo
Sánchez
|
Jane
Thompson
|
Ron
Verni
|
Neil
Wolfson
|
|
Financial Services/
Fintech Industry
|
|
|
|
|
|
|
|
|
|
Regulatory/Government
Affairs
|
|
|
|
|
|
|
|
|
|
Executive Leadership
|
|
|
|
|
|
|
|
|
|
Board/Governance
|
|
|
|
|
|
|
|
|
|
Technology
|
|
|
|
|
|
|
|
|
|
Risk Management
|
|
|
|
|
|
|
|
|
|
Accounting/Finance
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
Mergers and Acquisitions
|
|
|
|
|
|
|
|
|
Upon the recommendation of Nominating
Committee, the Board has nominated each of Noah Breslow, Jane J. Thompson and Ronald F. Verni to serve as Class III directors.
If elected, Mr. Breslow, Ms. Thompson and Mr. Verni will each hold office for a three-year term until our Annual Meeting of Stockholders
to be held in 2023. Set forth below are the names and biographies of our three nominees for Class III directors and the continuing
members of our Board of Directors in Classes I and II. All information is as of March 9, 2020.
Class III Director Nominees (Nominated for Term
Expiring 2023)
|
Noah Breslow
Age 44
Director
since: 2012
NOT INDEPENDENT
Committee:
• Risk
Management
Skills and Qualifications:
We believe Mr. Breslow is qualified to serve as a member
of the Board of Directors because of his substantial operational and business strategy expertise gained from serving as
our Chief Executive Officer and because of his extensive experience in the technology industry.
Other Public Company Boards:
• None
|
Mr. Breslow has served as
our Chief Executive Officer and Chairman of the Board of Directors since June 2012. Previously, he served as our Chief Operating
Officer from October 2011 to June 2012, our Chief Product Officer from October 2009 to September 2011, our Senior Vice President,
Products and Technology from March 2008 to September 2009, and our Vice President, Products and Technology from June 2007 to February
2008. Prior to joining us, Mr. Breslow was Vice President of Marketing and Product Management for Tacit Networks, Inc., a provider
of wide area network optimization solutions, from December 2003 through January 2007. Mr. Breslow holds an S.B. in Computer Science
and Engineering from the Massachusetts Institute of Technology and an M.B.A. with distinction from Harvard Business School.
|
2020 PROXY STATEMENT
|
15
|
|
Jane J. Thompson
Age 68
Director
since: 2014
INDEPENDENT
Committees:
• Corporate
Governance and Nominating (Chair)
• Risk
Management
Skills and Qualifications:
We believe Ms. Thompson is qualified to serve as a member of the Board of Directors because of her over 30 years of leadership experience and a proven track-record as an independent board member and adviser to a wide range of multi-billion dollar organizations across financial services, management consulting, private equity, consumer goods, and technology industries.
Other Public Company Boards:
• Navient
Corporation (since 2014)
• Mitek
Systems Inc. (since 2017)
• Blackhawk
Network Holdings, Inc. (2014 - 2018)
• Verifone
Systems, Inc. (2014 - 2018)
|
Ms. Thompson has been the Chief Executive Officer
of Jane J. Thompson Financial Services LLC since 2011, a consulting firm that she founded. Ms. Thompson served as President, Financial
Services, Walmart, Inc., from 2002 to 2011. Previously, she led Sears Credit, Sears Home Services and Sears Online groups within
Sears, Roebuck & Company, was a partner with McKinsey & Company, Inc. and a brand manager at Procter &
Gamble. Ms. Thompson currently serves as a director of Navient Corporation, a loan management, servicing and asset recovery company,
and Mitek Systems, Inc., a global provider of mobile capture and identity verification software solutions. She previously served
as a director of The Fresh Market, Inc., from 2012 to 2016, a specialty food retailer. Ms. Thompson has also served as an advisor
to the Consumer Financial Protection Bureau from 2012 to 2015 and a board member of the Center for Financial Services Innovation
from 2014 through 2017. Ms. Thompson holds a B.B.A. in Marketing from the University of Cincinnati and an M.B.A. from Harvard Business
School.
|
Ronald F. Verni
Age 71
Director
since: 2012
INDEPENDENT
Committees:
• Compensation
(Chair)
• Corporate
Governance and Nominating
Skills and Qualifications:
We believe Mr. Verni is qualified to serve as a member of
the Board of Directors because of his public company leadership and corporate governance experience and his business strategy
expertise gained from his substantial experience in the technology industry.
Other Public Company Boards:
• Craneware
plc (since 2009)
|
Mr. Verni has mentored startup companies and
worked with high technology incubator entities since July 2008. He previously served on the board of directors of Kewill, plc from
June 2011 to June 2012. He was Chief Executive Officer of Corrigo, Inc., a software as a service, or SaaS, company, from January
2008 to June 2008. From September 1999 to October 2007, Mr. Verni was President and Chief Executive Officer of Sage Software, Inc.,
a management and software services company, and a member of the board of directors of the Sage Group, plc. He currently serves
as a member of the board of directors of Craneware, plc. Mr. Verni holds a B.S. in Engineering and Management from Clarkson University.
Each Class III director nominee
is elected by the affirmative vote of the majority of the votes cast in person or by proxy at the meeting and entitled to vote
on the election of directors at the Annual Meeting. In order to be elected the number of votes “FOR” a director nominee
must exceed the number of votes “AGAINST” such nominee’s election. Accordingly, the director nominees who receive
more votes “FOR” his or her election than “AGAINST” his or her election will be elected as Class III directors
to serve until the 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualified. Abstentions and
broker non-votes will have no effect on the outcome of the vote, however, they will qualify for determining whether there is a
quorum.
|
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” ALL OF THE CLASS III NOMINEES.
|
|
2020 PROXY STATEMENT
|
16
|
Class I (Term Expires 2021)
|
Daniel Henson
Age 59
Director
since: 2016
LEAD INDEPENDENT
DIRECTOR
Committee:
• Risk Management (Chair)
Skills and Qualifications:
We believe Mr. Henson is qualified to serve as a member of
the Board of Directors because of his extensive leadership and other financial services experience gained from his time
in various senior executive roles at General Electric Company.
Other Public Company Boards:
• Healthcare Trust of America, Inc. (2016-2020)
|
Mr. Henson worked for the General Electric Company,
or GE, for over 30 years and held a variety of senior positions at GE and GE Capital. Prior to his retirement in 2016, he served
as Executive Vice President of GE Capital and CEO of GE Capital Americas, where he was responsible for all commercial lending and
leasing businesses in North America and oversaw capital markets activities at GE Capital and GE Capital’s industrial loan
company bank in Utah. Prior to that, he served as Chief Marketing Officer of GE and Six Sigma Quality Leader at GE Capital. He
also served as the CEO of a number of GE Capital’s financial services businesses in the U.S. and internationally. He currently
serves as non-executive Chairman of three private companies: Alight Solutions, Exeter Finance Corp. and Promontory Interfinancial
Network, LLC. Mr. Henson holds a B.B.A. in Marketing from George Washington University.
|
Neil E. Wolfson
Age 55
Director
since: 2011
INDEPENDENT; AUDIT
COMMITTEE FINANCIAL EXPERT
Committees:
• Audit (Chair)
• Risk Management
Skills and Qualifications:
We believe Mr. Wolfson is qualified to serve as a member
of the Board of Directors because of his extensive corporate finance experience gained from his time in the investment
management industry.
Other Public Company Boards:
• None
|
Mr. Wolfson served as the President of SF Capital
Group, LLC, an investment firm, from January 2009 to September 2018. From July 2004 to December 2008, Mr. Wolfson served as Chief
Investment Officer and President of Wilmington Trust Investment Management, an investment management firm. Earlier in his career,
Mr. Wolfson was a partner at KPMG LLP, an audit, tax and advisory services firm, and the Chief Investment Officer of the Analytical
Investment Strategies Group and Managing Director of the PRIME Asset Consulting Group at Kidder, Peabody and Co., a securities
firm. Mr. Wolfson is a Professor at Rutgers Business School. He is a Chartered Financial Analyst and holds a B.S. in Management
and an M.B.A. in Finance from New York University.
Class II Directors (Term Expires 2022)
|
Chandra Dhandapani
Age 52
Director
since: 2018
INDEPENDENT
Committees:
• Corporate
Governance and Nominating
• Risk Management
Skills and Qualifications:
We believe Ms. Dhandapani is qualified to serve on our Board
of Directors because of her significant experience in digital strategy, data and all aspects of technology globally, including
infrastructure, cybersecurity and product development.
Other Public Company Boards:
• None
|
Ms. Dhandapani has served as the Chief Digital
and Technology Officer and Global Group President, Valuation and Advisory Services, of CBRE Group, Inc., the world’s largest
commercial real estate services company, since 2019. Prior to joining CBRE, she served in several senior technology roles at Capital
One Financial for 17 years, including Digital Transformation Leader and Chief Technology Officer, Financial Services Division,
and Chief Information Officer for their auto lending, mortgage, and home equity lending businesses. She earned a B.S. in Mathematics
and an M.B.A. in Marketing & Finance from IRMA India. She also holds an M.B.A in Information Systems from the University
of Texas at Arlington.
|
2020 PROXY STATEMENT
|
17
|
|
Bruce P. Nolop
Age 69
Director
since: 2016
INDEPENDENT; AUDIT
COMMITTEE FINANCIAL EXPERT
Committees:
• Audit
• Compensation
Skills and Qualifications:
We believe Mr. Nolop is qualified to serve as a member of
the Board of Directors because of his financial and accounting expertise gained from his prior experience as chief financial
officer of two publicly traded corporations and as an investment banker. In addition, his current service on other public
company boards of directors provides us with important perspectives on corporate governance matters.
Other Public Company Boards:
• TEGNA, Inc. (since 2015)
• Marsh & McLennan Companies,
Inc. (since 2008)
|
Mr. Nolop served as Executive Vice President
and Chief Financial Officer at E*TRADE Financial Corporation, an online discount stock brokerage company, from September 2008 through
December 2010 and retired from E*TRADE in March 2011. He previously served as Executive Vice President and Chief Financial Officer
at Pitney Bowes Inc., a technology solutions provider, from 2000 to 2008. Earlier in his career, Mr. Nolop served as a Managing
Director at Wasserstein Perella and held positions at Goldman Sachs, Kimberly-Clark and Morgan Stanley. He currently serves as
a member of the board of directors of TEGNA Inc., a broadcast and digital company, Marsh & McLennan Companies, Inc., a
global professional services firm, and CLS Group, a privately-held provider of settlement services in the foreign exchange market.
Mr. Nolop holds a B.A. in Political Science from the University of South Dakota, an M.B.A. from the Stanford Graduate School of
Business and a J.D. from Stanford Law School.
|
Manolo Sánchez
Age 54
Director
since: 2018
INDEPENDENT; AUDIT
COMMITTEE FINANCIAL EXPERT
Committees:
• Audit
• Compensation
Skills and Qualifications:
We believe Mr. Sánchez is qualified to serve as a member of the Board of Directors due to his 27-year banking career, and his extensive experience in international banking and executive leadership roles in risk management, real estate financing, correspondent, community, corporate and investment banking.
Other Public Company Boards:
• Stewart
Information Services Corporation (since 2019)
• Fannie Mae (since 2018)
|
Mr. Sánchez served as Chairman, President
and CEO of BBVA Compass Bank, or BBVA Compass, a U.S. commercial bank, from September 2010 to January 2017, and as its Chairman
from January 2017 to November 2017. Previously, he served as Senior Executive Vice President, Community Banking, Compass Bank (acquired
by BBVA Compass) from March 2008 to December 2008, and President and CEO of The Laredo National Bank (acquired by BBVA Compass)
from July 2005 to March 2008. He also served as Chief Risk Officer, BBVA Bancomer, Mexico City from February 2002 to July 2005.
He currently serves as a board member of Fannie Mae, a leading source of financing for mortgage lenders, and Stewart Information
Services Corporation, a publicly traded title and escrow services company, and an Adjunct Professor of Management at Rice University.
Mr. Sánchez holds a B.A. in Economics and Political Science from Yale University, and master’s degrees in international
relations from the London School of Economics and in advanced European economics from the College of Europe in Bruges, Belgium.
During the five years ended December 31, 2019, each
of our directors, other than Messrs. Sánchez and Wolfson, has held the principal occupation listed in their biography above
or have been retired for that period of time. Mr. Sánchez’s and Mr. Wolfson’s employment history during that
time period is reflected in each of their biographies above. Each member of our board holds office until his or her successor is
duly elected and qualified or until his or her earlier resignation or removal. There are no family relationships among any of our
directors or executive officers.
|
2020 PROXY STATEMENT
|
18
|
|
|
CORPORATE GOVERNANCE
|
Our Board of Directors has adopted the Company’s
Corporate Governance Guidelines, or Guidelines, to assist the Board in the exercise of its responsibilities and to best serve the
interests of the Company and its stockholders. These Guidelines serve as a framework within which the Board can discharge its duties
and foster effective governance of the Company.
Governance Highlights
|
Board
Independence
|
|
Stockholder Rights
|
|
7 out of 8 of our directors are independent and
our Audit, Compensation, and Nominating Committees are 100% independent
|
|
|
We have a majority vote policy in uncontested
director elections and we maintain a director resignation policy
|
|
There are no related party transactions with our directors
and officers
|
|
|
Stockholders have the same voting rights - one vote
per share
|
|
Independent Board members meet regularly in Executive
Session without management present
|
|
|
We annually seek stockholder ratification of our independent
registered public accountants
|
|
A Lead Independent Director fosters effective collaboration
among our independent directors and counterbalances a combined Chairman/CEO
|
|
|
We do not maintain a stockholder rights plan or “poison
pill”
|
Policies and Procedures
|
|
Engagement and Refreshment
|
|
We have robust stock ownership guidelines for our directors
and our CEO to further align with the interests of our stockholders
|
|
|
Our average Board tenure is 5.1 years, and our average
Board age is 59 with more than half of our eight directors less
than age 60
|
|
We have a Board Diversity Policy which supports the
identification and appointment of diverse candidates to our
Board
|
|
|
Director compensation is reviewed annually by our Compensation
and Nominating Committees to ensure competitiveness relative to our peers
|
|
Our Board and management are subject to a global Code of
Business Conduct and Ethics
|
|
|
In 2019, all directors attended 100% of our Board meetings
and our Annual Stockholder Meeting
|
|
Our internal Disclosure Committee oversees OnDeck’s
disclosure obligations to ensure timely and accurate reporting and support our disclosure
controls and procedures processes
|
|
|
Our Board and each committee conduct an annual self-evaluation
of performance
|
Our Board of Directors has undertaken a review of
the independence of each director who served during 2019. Based on information provided by each director concerning his or her
background, employment and affiliations, our Board of Directors determined that neither Ms. Dhandapani and Ms. Thompson nor
Messrs. Henson, Nolop, Sánchez, Verni and Wolfson has a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that
term is defined under the applicable rules and regulations of the SEC and the listing standards of the NYSE. In making these determinations,
our Board of Directors considered the current and prior relationships that each non-employee director has with our Company and
all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial
ownership of our capital stock by each such non-employee director or affiliated entities, and their involvement in any transactions
described under “Certain Relationships and Related Party Transactions” on page 55. The Board of Directors also determined
that each director other than Mr. Breslow is a non-employee director, as defined pursuant to Rule 16b-3 of the Exchange
Act, and an outside director as defined pursuant to Section 162(m) of the Internal Revenue Code, as amended.
|
2020 PROXY STATEMENT
|
19
|
—
|
BOARD MEETINGS AND DIRECTOR COMMUNICATIONS
|
During 2019, the Board of Directors
held five meetings and each director attended 100% of the total number of meetings of the Board of Directors held during the period
for which he or she has been a director. Seven directors attended 100% of the total number of committee meetings of the Board
of Directors on which he or she served, and two directors missed one committee meeting each. Although we do not have a formal
policy regarding attendance by directors at annual meetings of stockholders, we encourage, but do not require, our directors to
attend annual meetings of stockholders of the Company. All directors attended our 2019 Annual Meeting of Stockholders.
Stockholders and other interested parties may communicate
with the non-management members of the Board of Directors by mail to the Company’s principal executive offices addressed
to the intended recipient and care of our General Counsel. Our General Counsel will review all incoming stockholder communications
(except for mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise
inappropriate material) and route such communications as appropriate to member(s) of the Board of Directors.
Our Board of Directors has an Audit Committee, Compensation
Committee, Corporate Governance and Nominating Committee, and Risk Management Committee. The composition and responsibilities of
each of the committees of our Board of Directors are described below. Members serve on these committees until their resignation
or until otherwise determined by our Board of Directors.
Audit
Committee
|
|
|
5
meetings in 2019
|
2019 Members:
Neil Wolfson, Chair
Bruce Nolop
Manolo Sánchez
|
|
Key Oversight Responsibilities:
•
Selecting
and hiring the independent registered public accounting firm to audit our financial statements
•
Helping
to ensure the independence and performance of the independent registered public accounting firm
•
Approving
audit and non-audit services and fees
•
Reviewing
financial statements and discussing with management and the independent registered public accounting firm our annual audited and quarterly financial statements
•
Reviewing
results of the independent audit and the quarterly reviews, and the applicable reports and certifications regarding internal
control over financial reporting and disclosure controls and procedures
•
Preparing
the Audit Committee report that the SEC requires to be included in our annual proxy statement
•
Reviewing
reports and communications from the independent registered public accounting firm
•
Reviewing
the adequacy and effectiveness of our internal controls and disclosure controls and procedures
•
Reviewing
related party transactions
•
Establishing
and overseeing procedures for the receipt, retention and treatment of accounting related complaints and the confidential
submission by our employees of concerns regarding questionable accounting or auditing matters
|
|
|
|
|
The composition of
our Audit Committee meets the requirements for independence of Audit Committee members under current NYSE
listing standards and SEC rules and regulations. Each member of our Audit Committee meets the financial literacy requirements
of the current listing standards. In addition, our Board of Directors has determined that each of Mr. Wolfson, Mr. Nolop
and Mr. Sánchez is an audit committee financial expert within the meaning of Item 407(d)
of Regulation S-K under the Securities Act of 1933, as amended, or Securities Act.
Our Audit Committee was established in
accordance with, and operated under a written charter that satisfies the applicable rules of the
SEC and the listing standards of the NYSE. A copy of the charter of our Audit Committee is available on the Investors section of
our website at https://investors.ondeck.com/investor-overview/overview/default.aspx.
|
2020 PROXY STATEMENT
|
20
|
Compensation Committee
|
5
meetings in 2019
|
2019 Members:
Ronald F. Verni, Chair
Bruce Nolop
Manolo Sánchez
|
|
Key Oversight Responsibilities:
•
Overseeing
our overall compensation philosophy and compensation policies, plans and benefit programs
•
Reviewing
and approving for our executive officers: the annual base salary, annual incentive awards (including the specific goals
and amounts), equity compensation, severance agreements, change in control arrangements, and any other benefits, compensation
or similar arrangements
•
To
the extent determined appropriate by the Compensation Committee, reviewing, approving and/ or making recommendations to
the Board of Directors with respect to employee compensation and overseeing equity compensation for our service providers
•
Preparing
the Compensation Committee report that the SEC requires to be included in our annual proxy statement
•
Administering
our equity compensation plans and the granting of equity awards pursuant to such plans
|
|
|
|
|
The composition
of our Compensation Committee meets the requirements for independence under current NYSE listing standards and
SEC rules and regulations. The purpose of our Compensation Committee is to oversee our compensation policies, plans and
benefit programs and to discharge the responsibilities of our Board of Directors relating to compensation
of our NEOs.
Our Compensation
Committee received advice from Pearl Meyer & Partners, LLC, or Pearl Meyer, an independent compensation consulting
firm, with respect to executive compensation decisions for 2019. Working with management, Pearl Meyer provided various
data and recommendations throughout the year as further discussed beginning on page 34.
Our Compensation
Committee was established in accordance with, and operates under a written charter that satisfies, the applicable rules
of the SEC and the listing standards of the NYSE. A copy of the charter of our Compensation Committee is available on the
Investors section of our website at https://investors.ondeck.com/investor-overview/overview/default.aspx.
Compensation Committee Interlocks and Insider Participation
During 2019, Messrs. Nolop,
Sánchez and Verni served as members of the Compensation Committee. No member of our Compensation Committee served as an
executive officer or employee of OnDeck since we became a public company. None of our executive officers currently serve, or have
served during 2019, on the compensation committee or board of directors of any other entity that has one or more executive officers
serving as a member of our Board of Directors or Compensation Committee.
Corporate
Governance and Nominating Committee
|
4
meetings in 2019
|
2019 Members:
Jane J. Thompson, Chair
Chandra Dhandapani
Ronald F. Verni
|
|
Key Oversight Responsibilities:
•
Identifying,
evaluating and making recommendations to our Board of Directors regarding nominees, including stockholder nominees,
for election to our Board of Directors and its committees
•
Considering
and making recommendations to our Board of Directors regarding the composition of our Board of Directors and its
committees
•
Reviewing
developments in corporate governance practices
•
Evaluating
the adequacy of our corporate governance policies, practices and reporting
•
Developing
and making recommendations to our Board of Directors regarding our corporate governance guidelines
•
Reviewing
the succession planning for our Chief Executive Officer and certain other executive officers
•
Developing
and overseeing the annual Board of Directors and committee evaluation process
•
Evaluating
the performance of our Board of Directors and its committees
•
Reviewing
and making recommendations to the Board of Directors regarding director compensation
|
The composition
of our Nominating Committee meets the requirements for independence under current NYSE listing standards and SEC
rules and regulations. Our Nominating Committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of the NYSE. A copy of the charter of our Nominating Committee is available
on the Investors section of our website at https://investors.ondeck.com/investor-overview/overview/default.aspx.
|
2020 PROXY STATEMENT
|
21
|
Risk
Management Committee
|
5
meetings in 2019
|
2019 Members:
Daniel Henson, Chair
Noah Breslow
Chandra Dhandapani
Jane J. Thompson
Neil E. Wolfson
|
|
Key Oversight Responsibilities:
•
Overseeing
our risk governance framework and reviewing our policies and practices on risk assessment and risk management
•
Reviewing
management’s implementation of risk management policies and procedures to assess their effectiveness
•
Reviewing
our risk appetite and risk tolerance, methods of risk measurement, risk limits, and the guidelines for monitoring and
mitigating such risks
•
Reviewing
with management the categories of risk we face, including risk concentrations and risk interrelationships, likelihood of occurrence,
and potential impact
•
Evaluating
reports regarding our risks, our risk management function, and the results of risk management reviews and assessments
•
Reviewing
and discussing with management our risks, our management function and its effectiveness, and coordinating with management
subcommittees regarding oversight of certain categories of risk determined by the Risk Management Committee
|
|
|
|
|
A copy of the charter of our
Risk Management Committee is available on the Investors section of our website at https://investors. ondeck.com/investor-overview/overview/default.aspx.
—
|
CONSIDERATIONS IN EVALUATING DIRECTOR NOMINEES
|
Overview
The Board of Directors adopted a Board Diversity Policy
in 2018 to further advance its commitment to promoting diversity within the Company. The Board recognizes the value of diversity
in achieving Company objectives and maintaining sound governance practices as it brings together individuals with different perspectives
and ideas, from varying backgrounds and experiences, to create balanced and thoughtful decision-making that best serves stockholder
interests.
In identifying qualified candidates for nomination
to the Board, the Nominating Committee seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix
of experience, qualifications and characteristics that reflect the complex and dynamic nature of our business and meet the needs
of the Company at any given time. Diversity refers to a broad array of individual characteristics that collectively enable the
Board to operate effectively and fulfill its responsibilities including professional qualifications, business experience, age,
gender, race and ethnicity.
Identifying Director Nominees
Our Nominating Committee uses a variety of methods
for identifying and evaluating director nominees. Nominees may be identified by management, members of the Nominating Committee,
our other directors or our stockholders (in accordance with our Bylaws and polices as described elsewhere in this Proxy Statement).
The Nominating Committee may also engage third party search firms to identify qualified candidates. Any search firm engaged to
assist the Nominating Committee in identifying qualified candidates for appointment to the Board will be directed to include diverse
candidates in any slate of potential nominees per our Board Diversity Policy.
Our Nominating Committee will evaluate candidates
that have been duly recommended or nominated by stockholders in accordance with our Bylaws and the Policies and Procedures for
Director Candidates, each as in effect from time to time. The criteria the Nominating Committee uses for evaluating a candidate
duly recommended or nominated by a stockholder are the same criteria used for evaluating candidates recommended by management or
members of our Board of Directors. For more information on the procedures to be followed by stockholders who wish to recommend
or nominate individuals to serve on our Board of Directors, see “General Information - Q: What is the deadline to propose
actions for consideration at next year’s Annual Meeting of Stockholders or to nominate individuals to serve as directors?”
on page 11.
Director Nominee Qualifications
In evaluating director candidates, including the members
of the Board eligible for re-election, our Nominating Committee will consider the current size and composition of our Board of
Directors, the needs of our Board of Directors and its respective committees, and other factors that the Nominating Committee deems
appropriate and in our stockholders’ best interests. The Nominating Committee requires the following minimum qualifications
to be satisfied by any nominee for a position on the Board:
•
|
The highest personal and professional ethics and
integrity;
|
|
|
•
|
Proven achievement and competence in the nominee’s field
and the ability to exercise sound business judgment;
|
|
|
•
|
Skills that are complementary to those of the existing Board;
|
|
2020 PROXY STATEMENT
|
22
|
•
|
The ability to assist and support management and make significant
contributions to the Company’s success; and
|
|
|
•
|
An understanding of the fiduciary responsibilities that are required
of a member of the Board and the commitment of time and energy necessary to diligently carry out those responsibilities.
|
Director candidates must have sufficient time available
in the judgment of our Nominating Committee to perform all Board of Directors and applicable committee responsibilities. Members
of our Board of Directors are expected to prepare for, attend, and participate in all Board of Directors and applicable committee
meetings. Our Nominating Committee also considers these and other factors as it oversees the annual Board of Directors and committee
evaluations. After completing its review and evaluation of director candidates, our Nominating Committee recommends to our full
Board of Directors the director nominees for selection.
—
|
CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS CONDUCT
AND ETHICS
|
We have adopted Corporate
Governance Guidelines that address items such as the qualifications and responsibilities of our directors and director
candidates, director compensation, conflicts of interest, succession planning, committee composition, director term limits,
and other important governance policies and principles. In addition, we have adopted a Code of Business Conduct and Ethics
that is applicable to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial
Officer and other executive and senior financial officers. All employees and directors are required to acknowledge/certify
compliance with the Code of Business Conduct and Ethics and the Company routinely offers training on topics discussed in the
Code. Copies of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics are available on the
Investors section of our website at https://investors.ondeck.com/ investor-overview/overview/default.aspx.
—
|
STOCK OWNERSHIP GUIDELINES FOR DIRECTORS
|
To further align the interests of our directors with
the Company’s stockholders, the Board of Directors adopted stock ownership guidelines for our directors. The guidelines require
our existing directors and newly elected directors to acquire and hold shares of the Company’s common stock equal to at least
five times the value of his or her annual Board retainer within five years of the date the guidelines were adopted or five
years of first joining the Board, respectively. The following equity holdings qualify toward satisfaction of the guidelines:
•
|
Shares directly owned by the director or the director’s
immediate family members;
|
|
|
•
|
Shares beneficially owned by the director, but held in trust,
limited partnerships, or similar entities for the sole benefit of the director or the director’s immediate family members;
|
|
|
•
|
Shares held in retirement or deferred compensation accounts for
the director or the director’s immediate family; and
|
|
|
•
|
Shares subject to other vested time-based stock awards that the
director has deferred.
|
Unexercised stock options do not count toward the
stock ownership guidelines.
Until such time as the stock ownership level has been
achieved, the Compensation Committee may require a director to retain all or a portion of the net shares received as a result of
a stock option exercise or the vesting of time-based stock awards.
As of December 31, 2019, all directors met the guidelines
and all owned shares of the Company’s common stock equal to more than five times their annual Board retainer except for Ms.
Dhandapani and Mr. Sánchez who joined the Board in November 2018.
—
|
SELF-EVALUATION PROCESS
|
The Nominating Committee develops,
subject to approval by the Board, a process for annual evaluation of the Board and its committees and oversees the conduct of the
annual evaluation process. In 2019, the Board and each committee conducted self-evaluations by having each director complete, on
an anonymous basis, detailed questionnaires designed to elicit candid feedback on a variety of Board and committee-specific topics
including the effectiveness of the Board and its committees and their respective chairpersons, the effectiveness of the Board and
committee meetings and their relationships with management, the appropriateness of their roles and responsibilities, and areas
for possible improvement. The responses were reviewed, compiled and discussed by the directors in their committee meeting and at
the board level. In addition, members of the Nominating Committee conducted one-on-one meetings with each director to elicit additional
feedback, the results of which were shared with the Lead Independent Director and discussed with the full Board in executive session.
The Nominating Committee is responsible for establishing the Board and committee evaluation process each year and may determine
to use an independent third-party evaluation process from time to time in the future.
|
2020 PROXY STATEMENT
|
23
|
|
—
|
BOARD LEADERSHIP STRUCTURE
|
Our Board of Directors currently
believes that our Company is best served by combining the roles of a Chairman of the Board and Chief Executive Officer, coupled
with a Lead Independent Director. Mr. Breslow, our Chief Executive Officer, is the director most familiar with our business
and industry, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy.
Our Board of Directors appointed Mr. Daniel Henson to serve as our Lead Independent Director for 2019. As Lead Independent
Director, Mr. Henson was responsible for:
•
|
Determining the agenda and serving as chair of meetings of independent
directors;
|
|
|
•
|
Serving as a liaison between the Board of Directors and our Chairman
regarding feedback from executive sessions;
|
|
|
•
|
Serving as spokesperson for the Company as requested;
|
|
|
•
|
Responding directly to stockholder and other stakeholder questions
and comments that are directed to the Lead Independent Director or to the independent directors as a group, with such consultation
with the Chairman and other directors as the Lead Independent Director may deem appropriate; and
|
|
|
•
|
Performing such other responsibilities as may be designated by
a majority of the independent directors from time to time.
|
Independent directors and
management have different perspectives and roles in strategy development. Our independent directors bring experience, oversight
and expertise from outside the Company, while our Chief Executive Officer brings Company-specific experience and expertise. Our
Board of Directors believes that the combined role of Chairman of the Board of Directors and Chief Executive Officer together with
a Lead Independent Director is the best leadership structure for us at the current time because it promotes the efficient and effective
development and execution of our strategy and facilitates information flow between management and the Board of Directors, which
are essential to effective governance.
|
—
|
BOARD’S ROLE IN RISK OVERSIGHT
|
The Board of Directors plays
an active role in overseeing management of the Company’s risks and each of the Board committees supports the Board is fulfilling
this responsibility. The Board of Directors focuses on the most significant risks facing the Company such as credit risk, cybersecurity
and technology risk, interest rate risk, liquidity risk and other market-related risks, and operational risks related to our business.
The Board seeks to ensure that the risks undertaken by the Company are consistent with a level of risk that is appropriate for
the Company and the achievement of its business objectives and strategies.
The Board of Directors recognizes
that risk management and oversight comprise a dynamic and continuous process and reviews the Company’s risk model and processes
periodically, in addition to receiving reports from management and each of the committees on their risk management activities.
The Board of Directors performs these tasks both in collaboration with and independently of the other Board committees.
Below are descriptions of
some of risk management activities that our Board committees engage in as part of their responsibilities under their respective
Charters.
Audit
Committee
|
|
The Audit Committee
reviews risks that may arise out of our internal control over financial reporting and disclosure controls and procedures.
They also review the Company’s processes and procedures with respect to risk assessment and risk management including
the Company’s enterprise risk assessment (ERA) program which identifies and categorizes the Company’s risks based
on certain criteria. The ERA program, and other factors, inform the the internal audit plan, which is reviewed by the Audit
Committee at each meeting. In addition, the Audit Committee is responsible for reviewing certain proposed related party transactions,
should they arise, with a focus on fairness to the Company.
|
|
Compensation
Committee
|
|
The Compensation Committee
reviews the risks, if any, associated with the Company’s compensation programs and practices including whether or not
they encourage excessive risk-taking. They also review the Company’s key compensation policies, procedures and disclosures,
including the executive compensation disclosure in the proxy statement to ensure it accurately represents the Committee’s
compensation philosophy. The Compensation Committee will also consider the results of an advisory vote on executive compensation
and the feedback of our stockholders in developing and adjusting our plans, as needed.
|
|
Nominating
Committee
|
|
The Nominating Committee,
charged with Board and management succession and overall Company governance matters, examines risks in each of these areas.
They review compliance with our Corporate Governance Guidelines and the policies and procedures that support the Board’s
governance philosophy. Together with the Audit Committee, they are also responsible for reviewing certain proposed related
party transactions, if any, with the Nominating Committee’s focus being on reputational concerns or issues that may
impact director independence. They stay apprised of changes in the regulatory landscape and governance trends and their potential
impact on the manner in which the Board and Company operate.
|
|
Risk Management
Committee
|
|
The Risk Committee oversees
and evaluates the Company’s risk governance framework including the ways in which risk is measured both from a quantitative
and qualitative standpoint. The Risk Committee examines the categories of risk the Company faces, the likelihood of occurrence
and the impact of risks as they relate to credit, interest rates, reputation, fraud, liquidity, information technology and
security, litigation and regulations, and other areas. The Risk Committee reviews management’s risk policies, procedures
and assessments including the ERA program and actions taken to monitor and examine key risk areas.
|
|
2020 PROXY STATEMENT
|
24
|
Compensation Risk Assessment
The Compensation Committee
regularly examines the design and features of the Company’s executive compensation program from a risk perspective to ensure
that it achieves the intended objectives without encouraging excessive or unintended risk-taking. In 2019, the Compensation Committee
reviewed and considered the results of a compensation risk analysis conducted by Pearl Meyer, together with the risk mitigating
features of the Company’s compensation policies and practices (e.g., a clawback policy and incentive award caps),
program design (e.g., a blend of time-based and performance-based awards, and fixed and variable pay) and governance structure
(e.g., compensation decisions informed by peer group and market practices, and individual performance). Following this
review, the Compensation Committee determined that the Company’s compensation programs do not create risks reasonably likely
to have a material adverse impact on the Company.
|
—
|
OUTSIDE DIRECTOR COMPENSATION POLICY
|
Members of the Board of Directors
who are not employees are eligible for compensation under our Outside Director Compensation Policy. The policy was adopted by the
Board of Directors with the objective of assembling a high-performing Board that could best guide the Company in achieving its
strategic and operational goals, and promoting long-term stockholder value. Our policy is reviewed annually under the combined
leadership of the Compensation Committee and Nominating Committee to ensure that it continues to satisfy the Board’s overall
compensation objectives and philosophy. Generally, our policy targets director compensation at the 50th percentile of
our peer group. The Compensation Committee and Nominating Committee are aided in their review by an independent compensation consultant,
Pearl Meyer, which provides compensation benchmarking and consultation services. The policy has been amended over the years to
reflect, among other things, changing trends in director compensation and consideration of the results contained in peer benchmarking
studies. Proposed changes to the policy are jointly recommended to the Board for its review and consideration. The policy was amended
by the Board in 2019, upon the recommendations of the Compensation Committee and Nominating Committee, with changes taking effect
following the 2019 Annual Meeting of Stockholders. Below is a description of compensation received by our directors in 2019 under
the Outside Director Compensation Policy.
Cash Compensation
Annual Retainer
Each outside director receives
an annual cash retainer of $40,000 for serving on the Board of Directors. The cash retainers are paid quarterly and pro-rated for
fractional periods. Mr. Breslow does not receive this annual retainer because he is employed by the Company and therefore is not
an outside director.
Committee and Chair Retainers
The chairpersons and members
of the Board’s four standing committees are entitled to the following additional cash retainers each year (paid quarterly
and pro-rated for fractional periods). In 2019, the Board increased the committee chairperson and committee member retainers to
better align with the 50th percentile of our peer group:
Board Committee
|
|
Chairperson Retainer
($)
|
|
Member Retainer
($)
|
Audit Committee
|
|
18,750
|
|
10,000
|
Compensation Committee
|
|
15,000
|
|
7,500
|
Risk Management Committee(1)
|
|
15,000
|
|
7,500
|
Corporate Governance and Nominating Committee
|
|
10,000
|
|
5,000
|
(1)
|
Mr. Breslow serves as a member of our Risk Management
Committee and does not receive the retainer set forth above because he is employed by the Company and therefore is not an
outside director.
|
Lead Independent Director
Retainer
In 2019, the Board of Directors
adopted an annual Lead Independent Director Retainer of $15,000 in recognition of the increasing responsibilities and expectations
associated with the role, and consistent with the results of our benchmarking analysis.
|
2020 PROXY STATEMENT
|
25
|
Equity Compensation
Equity Award Upon Appointment
Previously, upon joining
the Board, each newly elected outside director received an equity award with a grant date fair value of $330,000, or the Appointment
Award. The Appointment Award was comprised of 60% time-based restricted stock units, or RSUs, which will vest over a three-year
period and 40% stock options which will vest over a four-year period, with vesting in each case subject to continued service through
the vesting date. In 2019, the Board of Directors eliminated the Appointment Award and decided to award newly elected directors
a pro-rata portion of the Annual Award (as defined and discussed immediately below) based on the new director’s days of service
during the year in which the most recent Annual Award was granted.
Annual Equity Award
On the date of each annual
meeting of our stockholders, each outside director receives an equity award with a grant date fair value of $150,000, or Annual
Award. The Annual Award is 100% comprised of RSUs all of which fully vest upon the earlier of the 12-month anniversary of the grant
date or the next annual meeting, in each case, subject to continued service through the vesting date.
Directors are permitted to
defer settlement of their Annual Award on a tax-deferred basis pursuant to the terms of our 2014 Equity Incentive Plan. Directors
who elect to defer settlement receive payment of their Annual Award in whole shares within thirty days of their “separation
of service” from the Board for any reason, or upon a “change in control” as those terms are defined in the Incentive
Plan.
Notwithstanding the vesting
schedules described above, the vesting of each equity award will accelerate in full upon a change in control and termination of
directorship.
|
—
|
DIRECTOR COMPENSATION TABLE FOR 2019
|
The following table summarizes
compensation paid to our non-employee directors during the year ended December 31, 2019. Directors who are also our employees
receive no additional compensation for their service as a director. During the year ended December 31, 2019, Mr. Breslow,
our Chairman of the Board and CEO, was an employee. Mr. Breslow’s compensation is discussed in the “Executive
Compensation” section beginning on page 29.
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock
Awards
($)(1)
|
|
Total
($)
|
Chandra Dhandapani
|
|
52,500
|
|
150,000
|
|
202,500
|
Daniel Henson
|
|
70,000
|
|
150,000
|
|
220,000
|
Bruce P. Nolop
|
|
57,500
|
|
150,000
|
|
207,500
|
Manolo Sánchez
|
|
57,500
|
|
150,000
|
|
207,500
|
Jane J. Thompson
|
|
57,500
|
|
150,000
|
|
207,500
|
Ronald F. Verni
|
|
60,000
|
|
150,000
|
|
210,000
|
Neil E. Wolfson
|
|
66,250
|
|
150,000
|
|
216,250
|
(1)
|
The amounts reported represent the aggregate
grant date fair value of RSUs awarded to the director, calculated in accordance with FASB ASC Topic 718. The methods and assumptions
used in calculating the grant date fair value of RSUs reported in this column are set forth in Notes 2 and 11 to our audited
consolidated financial statements included in our 2019 Annual Report. As required by SEC rules, the amounts shown exclude
the impact of estimated forfeitures related to service-based vesting conditions.
|
The following table lists
all outstanding RSUs (including RSUs for which the payout of shares has been deferred by such director) and stock options held
by our non-employee directors as of December 31, 2019.
Name
|
|
Aggregate Number of Stock
Awards
Outstanding as of
12/31/19
|
|
Aggregate
Number of Stock
Options Outstanding
as of
12/31/19(1)
|
Chandra Dhandapani
|
|
50,013
|
|
44,898
|
Daniel Henson
|
|
32,823
|
|
113,843
|
Bruce P. Nolop
|
|
32,823
|
|
134,823
|
Manolo Sánchez
|
|
50,013
|
|
44,898
|
Jane J. Thompson
|
|
32,823
|
|
162,621
|
Ronald F. Verni
|
|
32,823
|
|
207,621
|
Neil E. Wolfson
|
|
32,823
|
|
102,621
|
(1)
|
In 2019, the Board of Directors determined
that the Annual Award be comprised solely of RSUs. Accordingly, no stock options were granted in 2019. The amounts shown in
the column above reflect stock options outstanding from prior grants.
|
|
2020 PROXY STATEMENT
|
26
|
|
|
EXECUTIVE OFFICERS
|
The table below sets forth
the executive officers of the Company as of December 31, 2019 followed by each of their biographies. For purposes of our executive
compensation discussion that begins on page 29, our named executive officers, or NEOs, consist of our principal executive officer
(Mr. Breslow), our principal financial officer (Mr. Brause) and the next three most highly compensated executive officers (Mr.
Kampfer, Ms. Gellert and Mr. Brown) who were serving as executive officers as of December 31, 2019:
Name
|
|
Age
|
|
Position
|
Noah Breslow
|
|
44
|
|
Chairman and Chief Executive Officer
|
Ken Brause
|
|
55
|
|
Chief Financial Officer
|
Cory Kampfer
|
|
42
|
|
Chief Operations Officer and General Counsel
|
Andrea Gellert(1)
|
|
51
|
|
Chief Revenue Officer
|
Nick Brown
|
|
48
|
|
Chief Risk Officer
|
(1)
|
Ms. Gellert’s employment with the Company
terminated effective February 15, 2020.
|
Noah
Breslow has served as our Chairman of the Board of Directors and Chief Executive Officer
since June 2012 and as our Chief Operating Officer from October 2011 to June 2012, our Chief Product Officer from October 2009
to September 2011, our Senior Vice President, Products and Technology from March 2008 to September 2009, and our Vice President,
Products and Technology from June 2007 to February 2008. Prior to joining us, Mr. Breslow was Vice President of Marketing
and Product Management for Tacit Networks, Inc., a provider of wide area network optimization solutions, from December 2003 through
January 2007. Mr. Breslow holds an S.B. in Computer Science and Engineering from the Massachusetts Institute of Technology
and an M.B.A. with distinction from Harvard Business School.
Ken
Brause has served as our Chief Financial Officer since March 26, 2018. Previously,
he served as Executive Vice President and Treasurer of CIT Group and CIT Bank, Inc. from January 2016 to March 2018. He also served
as Chief Financial Officer for CIT’s North America Banking Group from January 2014 to December 2015, President of CIT Group’s
Small Business Lending Group from December 2012 to July 2014, and Executive Vice President, Investor Relations from August 2007
to December 2013. Prior to CIT, Mr. Brause held positions of increasing responsibility at The Bank of New York, Horizon Blue Cross
Blue Shield of New Jersey, American General, Bankers Trust and Booz, Allen & Hamilton. Mr. Brause received his M.B.A.
in Finance and Accounting from The University of Chicago Graduate School of Business (now known as the Booth School of Business)
and his B.S. Economics in Finance and Management from The Wharton School of the University of Pennsylvania.
Cory
Kampfer was appointed Chief Operations Officer and General Counsel in February 2019.
Previously, he served as Head of Operations since February 2018 in addition to his role as our Chief Legal Officer since March
2015. Prior to that, he served as our General Counsel since November 2011. Prior to joining us, Mr. Kampfer was an associate
at Paul, Weiss, Rifkind, Wharton & Garrison LLP from February 2007 to November 2011. Mr. Kampfer holds a B.B.A.
in International Business from the University of Georgia, where he graduated First in Class, an M.B.A. from Duke’s Fuqua
School of Business and a J.D. from the Duke University School of Law.
Andrea
Gellert has served as our Chief Revenue Officer from May 2017 to February 2020. Previously,
she served as Chief Marketing Officer and Head of Business Partnerships from March 2017 through May 2017. Prior to that she
served as our Chief Marketing Officer from March 2015 to February 2017 and as our Senior Vice President of Marketing from November
2012 to February 2015. Ms. Gellert also held the position of Vice President of Client Services and Operations at Group Commerce,
and Vice President of Marketing for the OPEN small business division of American Express. Ms. Gellert holds an A.B. in History
and Literature from Harvard College and an M.B.A. from the Kellogg School of Management at Northwestern University.
Nick
Brown has served as our Chief Risk Officer since November 2016. He previously served
as General Manager, Risk Management at Commonwealth Bank of Australia from April 2012 to October 2017. Prior to joining Commonwealth
Bank, Mr. Brown served in various senior management positions at Discover Financial Services from October 2005 to April 2012,
including most recently as Vice President and General Manager, Consumer Lending from March 2010 to April 2012. Before Discover,
Mr. Brown served in a variety of leadership roles at Capital One from 1998 to 2002, as a consultant from 2002 to 2003, and in
corporate strategy at MBNA from 2003 to 2005. Mr. Brown holds a BSILR, MSILR and Ph.D. in Organizational Behavior and Statistics
from Cornell University.
|
2020 PROXY STATEMENT
|
27
|
|
|
PROPOSAL 2
ADVISORY
APPROVAL OF OUR
|
|
|
2019 EXECUTIVE
COMPENSATION
|
Section 14A of the Exchange
Act requires that we provide our stockholders with the opportunity to vote to approve, on an advisory basis, not less frequently
than once every three years, the compensation of our NEOs as disclosed in the “Executive Compensation” section of this
Proxy Statement beginning on page 29. As described, our executive compensation program is designed to attract and retain qualified
executives who will drive strong Company performance. At the same time, our compensation program serves to align the interests
of our NEOs with the interests of stockholders to maximize stockholder value and foster sound strategic planning and decision-making.
Stockholders should read the “Executive Compensation” section of this Proxy Statement, the compensation tables and
the related narrative disclosure that follow. Our Board of Directors and our Compensation Committee believe that these policies
and practices are effective in implementing our compensation philosophy and in achieving our compensation program goals.
Accordingly, we are asking
our stockholders to vote on the following resolution at the Annual Meeting:
“RESOLVED, that the
stockholders of On Deck Capital, Inc. hereby approve, on an advisory basis, the compensation of the Company’s NEOs, as disclosed
in this Proxy Statement, including in the Compensation Discussion and Analysis, the compensation tables and the narrative discussions
that accompany the compensation tables.”
The approval, on an advisory
basis, of the compensation of our NEOs in this Proxy Statement requires the “FOR” vote of a majority of the voting
power of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions are
considered shares present and entitled to vote, and thus, will have the same effect as votes “AGAINST” the proposal.
Broker non-votes will have no effect on the outcome of this proposal. Because this vote is advisory only, it will not be binding
on our Board or the Company. However, our Board or our Compensation Committee will review the voting results and take them into
consideration when making future decisions regarding executive compensation.
|
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL, ON
AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NEOS AS DISCLOSED IN THIS PROXY STATEMENT.
|
|
2020 PROXY STATEMENT
|
28
|
|
EXECUTIVE COMPENSATION
|
|
|
|
—
|
COMPENSATION DISCUSSION
AND ANALYSIS
|
Our Compensation Discussion and Analysis details
the objectives and elements of the OnDeck executive compensation program, describes the related processes of our Compensation Committee,
and discusses the compensation earned by our NEOs. For 2019, our NEOs were:
|
2020 PROXY STATEMENT
|
29
|
Executive Summary
Our executive compensation program is designed
to attract, motivate and retain the key executives who drive our success. Pay that reflects performance and aligns with the long-term
interests of stockholders is key to our compensation program design and decisions. Our goal is to align our executive pay with
the success of our business. We do this by providing competitive base salaries, short-term cash incentive compensation opportunities
tied to successful achievement of our annual operating goals and individual performance, and by granting long-term equity awards
that are intended to deliver increasing value as our stock price and/or profitability increases.
2019 Business Highlights
We are a proven leader in transparent and responsible
online lending to small businesses. Since 2006, we have provided over $13 billion in loans to customers in 700 different industries
across the United States, Canada and Australia and have continued to transform small business lending by making it efficient and
convenient for small businesses to access capital through innovative lending experiences and financial products. Enabled by our
proprietary technology and analytics, we collect and analyze thousands of data points from different data sources to assess the
creditworthiness of small businesses rapidly and accurately. Our lending platform touches every aspect of the customer life cycle
from customer acquisition and underwriting to funding, servicing and collections. Small businesses can apply for 24 hours a day,
7 days a week on our website and we can make a funding decision immediately and transfer funds as fast as 24 hours. Today, we offer
a wide range of term loans, lines of credit, equipment finance loans and other forms of financing customized for the needs of small
business owners.
We entered 2019 with an ambitious agenda focused
on a clear set of strategic priorities including:
•
|
Building on the success of our US lending franchise;
|
|
|
•
|
Investing our growth adjacencies of ODX, International and Equipment
Finance; and
|
|
|
•
|
Innovating on our core risk, technology and funding strengths.
|
And we made significant progress on each of these
priorities in 2019. Our US lending portfolio grew 6% driven by continued strength in lines of credit. ODX, our platform-as-a-service
business, continued to build and diversify its client base, we significantly grew our international operations through a business
combination with Evolocity Financial Group in Canada and organic portfolio growth in Australia, and we continued to develop our
equipment finance offering through building internal capabilities and expanding our distribution partners. Finally, we improved
our overall risk analytics, rolled out better loan decisioning tools and made long-term investments in our next-generation technology
infrastructure.
As the year progressed, we announced two additional
strategic priorities for the Company, increasing capital efficiency, and pursuing a bank charter, and advanced each of these. In
terms of capital efficiency, we improved both the cost and flexibility of our funding sources and our overall capital structure.
We grew our committed debt facilities to $1.3 billion and improved our cost of funds rate from 6.3% in 2018 to 5.2% in 2019. We
also announced and substantially completed a $50 million share repurchase program in the second half of 2019, which was accretive
to both earnings and book value per share, while maintaining strong capital ratios.
Obtaining a bank charter will enable us to better
serve the needs of small businesses and increase our resilience to economic uncertainties as we strive to deliver greater value
to our customers, shareholders and communities. In 2019, we commenced building out our internal processes and enhancing capabilities
in order to meet regulatory expectations as we work with our advisers to define the path forward.
Finally, we delivered solid 2019 financial results
highlighted by continued growth and profitability as we advanced our strategic priorities. On the following page are 3-year trends
and related commentary for certain key financial measures including metrics linked to our incentive compensation plans.
|
2020 PROXY STATEMENT
|
30
|
NET INCOME (LOSS) ATTRIBUTABLE TO ONDECK
Net income attributable to OnDeck increased to
$28 million in 2019 from $27 million in 2018 and from a net loss of $12.1 million in 2017. The 2019 improvement was primarily
driven by portfolio growth and a tax benefit while improvement in 2018 reflected portfolio growth, improved net interest margin
and lower credit costs.
ADJUSTED NET INCOME (LOSS)(1)
Adjusted Net Income improved considerably in
2018 driven by aforementioned factors but declined in 2019 as credit costs normalized from a period of outperformance in 2018,
we increased investment in our strategic growth initiatives, and began accruing for US income taxes. Adjusted Net Income (loss)
excludes the impact of stock-based compensation expense and items the Company does not believe reflect the operating results
for the period.
(1)
|
Non-GAAP measure. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP
Financial Measures in the Company’s 2019 Annual Report for a discussion and reconciliation of Adjusted Net Income to net
income (loss).
|
LOAN AND FINANCE RECEIVABLES(2)
We originated $2.5 billion of loans and finance
receivables in 2019 and grew the portfolio 8% to $1.3 billion, with strength in lines of credit and our international operations.
The portfolio grew 23% in 2018 on similar originations.
(2)
|
For 2019, short-term incentive compensation achievement levels for the first half of 2019 were based on Adjusted Loan Growth,
a non-GAAP measure. Refer to footnote 3 on page 7 for a description of how Adjusted Loan Growth is calculated.
|
GROSS REVENUE(3)
In 2019, Gross Revenue increased 12% to $444
million driven by higher Net Interest Income from portfolio growth and a slight increase in Other revenue. Gross Revenue increased
14% in 2018 driven by the same factors along with a higher yield on the portfolio.
(3)
|
For 2019, long-term incentive compensation achievement levels were based on Adjusted Gross Revenue, a non-GAAP measure. Refer
to footnote 2 on page 7 for a description of how Adjusted Gross Revenue is calculated.
|
NET INTEREST MARGIN
Net Interest Margin, which is annualized Net
Interest Income divided by the average earning assets in the period, increased slightly in 2019 to 29.2% as the benefit from a
110 basis point reduction in the cost of funds rate more than offset the impact of a 90 basis point reduction in portfolio yield.
The 280 basis point improvement in Net Interest Margin in 2018 was entirely driven by an increased portfolio yield.
RESERVE RATIO(4)
The Reserve Ratio, which is the allowance for
loan losses divided by the Unpaid Principal Balance as of a specific date, at December 31, 2019 of 12.2% was unchanged from
December 31, 2018 and increased from 11.6% at December 31, 2017. The 2018 increase largely reflected our decision to
hold certain delinquent loans for a longer period and more actively pursue collections as opposed to selling these loans earlier
in our collection cycle. The Reserve Ratio reflects aggregate portfolio credit quality and is impacted by shifts in the mix of
Loans and Finance Receivables.
(4)
|
For 2019, short-term incentive compensation achievement levels for the first half of 2019 were based on Adjusted Reserve Ratio,
a non-GAAP measure. Refer to footnote 5 on page 7 for a description of how Adjusted Reserve Ratio is calculated.
|
|
|
|
|
2020 PROXY STATEMENT
|
31
|
EARNINGS (LOSS) PER DILUTED SHARE
Earnings per diluted share increased to $0.36
in 2019 as Net Income attributable to OnDeck increased slightly and the weighted average diluted share count decreased slightly
as share repurchases in 2019 outpaced new issuance for stock-based compensation. The company transitioned to profitability during
the second quarter of 2018 and has been profitable every quarter since.
BOOK VALUE PER DILUTED
SHARE
Book value per diluted share increased 11% in
2018 to $3.75 per share and then grew another 14% in 2019 to $4.26 at December 31, 2019. The significant increase in 2019
reflects strong internal capital generation and a declining share count due share repurchases, while the 2018 increase was driven
by growth in OnDeck stockholder’s equity through retained earnings.
Executive Compensation Policies and Practices
Our executive compensation program is designed
to be heavily weighted towards compensating our executive officers based on our financial and operational performance. To that
end, we have implemented executive compensation policies and practices that reinforce our pay for performance philosophy and align
with sound governance principles. Currently, the following compensation policies and practices are in place:
WHAT WE DO
|
|
WHAT WE DON’T DO
|
|
Place significant emphasis on performance-based at-risk,
short-term cash incentive compensation
|
|
|
No “single-trigger” change in control payments
or benefits
|
|
Have 100% independent directors on our Compensation Committee
|
|
|
No tax gross-ups for change in control payments or benefits
|
|
Engage an independent compensation consultant reporting
to our Compensation Committee
|
|
|
No post-employment retirement or pension type benefits for
our executive officers that are not available to our employees generally
|
|
Cap our short-term and long-term incentive award at 160%
and 150%, respectively, of target and eliminate payouts for performance below a minimum
threshold
|
|
|
No executives are permitted to engage in hedging or derivatives
trading with respect to Company stock per our Insider Trading Policy
|
|
Seek recovery of performance-based incentive compensation
pursuant to our clawback policy
|
|
|
No perquisites are offered to our NEOs except for relocation
expenses, from time to time
|
|
Maintain robust CEO stock ownership guidelines to ensure
alignment with stockholders’ interests
|
|
|
No employment agreements between the Company and our
NEOs
|
Compensation Principles and Objectives
Our executive compensation program is designed
to attract, motivate and retain the key executives who drive our success. This section provides an overview of our executive compensation
philosophy and objectives, and each component of our executive compensation program.
Overview
We operate in the rapidly evolving online small
business lending industry. To succeed in this environment, we must attract and retain a highly talented executive team, including
executive officers with strong leadership skills who can run our business functions and achieve results that meet our customers’
and stockholders’ needs. We compete with other companies in our industry and other finance and technology companies to attract
and retain a skilled management team. We have designed our executive compensation program to accomplish our goals in this highly
competitive area for top talent, while at the same time fostering a “pay for performance” environment that aligns the
long-term interests of our executive officers with the interests of our stockholders.
Our Compensation Program, Like Our Business,
Is Dynamic
Our business has faced both rapid growth and
operational challenges, requiring intense focus and dedication from our executives and other employees. We have regularly adjusted
our executive compensation program to match the maturity, size,
|
2020 PROXY STATEMENT
|
32
|
scale and growth of our business. We operate
in an industry that is highly competitive and rapidly evolving, and in which the market for skilled and highly motivated executive
management and personnel is fiercely competitive. Because our ability to compete and succeed in this dynamic environment is directly
correlated to our ability to recruit, incentivize and retain talented and seasoned leaders, we expect to continue to adjust our
approach to executive compensation to respond to our needs and market conditions.
Our Objectives
The current objectives of our executive compensation
program are to:
•
|
Recruit, incentivize and retain highly qualified executives
who possess the skills and leadership necessary to grow our business;
|
|
|
•
|
Reward our executives for achieving or exceeding our financial, strategic
and operational goals, as well as his or her individual performance goals;
|
|
|
•
|
Align the long-term interests of our executives with those of our
stockholders;
|
|
|
•
|
Reflect our long-term corporate strategy;
|
|
|
•
|
Promote a healthy and balanced approach to risk; and
|
|
|
•
|
Provide compensation packages that are competitive, reasonable and
fair relative to peers and the overall market.
|
Our Elements of Compensation
Our executive compensation program consists of
the three primary components -- base salary, short-term incentives and long-term incentives. We believe that these elements help
attract and retain qualified individuals, link individual performance to Company performance, focus the efforts of our NEOs and
other executives on the achievement of both our short-term and long-term objectives, and align the interests of our executives
with those of our stockholders. In addition, 50% of our NEOs’ compensation is at-risk, meaning it is earned only if the Company
achieves its performance goals. Taken together, these elements form a competitive compensation package that achieves our overall
compensation objectives as further described in the following table and narrative.
|
|
Compensation Mix
|
|
|
Component
|
|
CEO
|
Other NEOs
|
|
Description
|
Base Salary
|
|
|
|
|
Fixed compensation for performing day-to-day job responsibilities. Reviewed annually for potential adjustment based on market competitiveness, change in responsibilities and other factors.
|
Short-Term Incentive
|
|
|
|
|
Semi-annual performance-based award opportunity based on achievements related to Company performance metrics and targets established by the Compensation Committee, and individual performance.
|
Long-Term Incentives
|
|
|
|
|
Awards of cash and equity intended to reward executives for strong long-term performance, serve as a retention tool and to align the interests of executives and stockholders.
|
We also provide our employees, including our
NEOs and other executives, with comprehensive employee benefit programs such as medical, dental and vision insurance, a 401(k)
plan, life and disability insurance, flexible spending accounts, and other plans and programs made available to eligible employees.
We do not offer perquisites to our NEOs except for relocation expenses, from time to time.
Our Compensation Committee regularly evaluates
our compensation philosophy and the components of our compensation program to ensure that they are effectively driving the Company’s
strategic objectives and promoting strong performance while remaining market competitive. The table below summarizes the components
our executive compensation program.
|
2020 PROXY STATEMENT
|
33
|
2019 EXECUTIVE COMPENSATION PROGRAM SNAPSHOT
Component
|
|
Type
|
|
Terms
|
Salary
|
|
Cash
|
|
Fixed amount of compensation for performing day-to-day job responsibilities.
Reviewed annually for potential adjustment based on market competitiveness, change in responsibilities and other factors.
|
Short-Term Incentive
|
|
Cash
|
|
Semi-annual performance-based award opportunity and for 2019
based on achievements with respect to the Company’s pre-tax income, loan growth
and reserve ratio goals (in each case adjusted to exclude the Evolocity Financial
Group business combination for the first semi-annual period), and individual performance
goals.
|
Long-Term Incentives
|
|
Time-based Restricted Stock Units (RSUs)
|
|
Time-based RSUs vest in four equal installments over four years
subject to the grantee continuing to be employed by the Company through each vesting date.
Once vested, RSUs are payable in shares of Company stock. Unvested RSUs are forfeited
upon termination from the Company.
|
|
|
Performance-based RSUs (PBRS) and Performance
Units (PSUs)
|
|
Eligible
for vesting based on the Company’s achievements with respect to metrics pre-established by the Compensation Committee
for the applicable performance period. Prior to 2019, awards had three 12-month
performance periods and amounts earned, if any, were payable at the end of each 12-month
period subject to additional service-based vesting conditions. Awards granted in 2019 are for a single 12-month period and
amounts earned, if any, are payable in equal installments over three years. Metrics and
targets may differ for each 12-month performance period as determined by the Committee.
For the performance period January 1, 2019 to December 31, 2019, the Compensation
Committee selected adjusted pre-tax income and adjusted gross revenue as the metrics for the 2018 and 2019 grants. Once
earned, PBRS are payable in Company stock, and PSUs are payable in cash.
|
|
|
Stock Options
|
|
One-fourth vest on the one-year anniversary of the grant date,
and the balance vest in equal installments over a period of 36 months, subject to continued
service with the Company. Provides the opportunity to receive any appreciation in
value between the stock price on the date of grant and the date the shares issued
upon exercise of the option are sold. No stock options were granted in 2019 but are outstanding
from prior grants.
|
Retirement
|
|
401(k)
|
|
A qualified 401(k) plan that provides participants with the opportunity
to defer a portion of their compensation and receive a Company matching contribution equal
to 50% of deferrals up to 6% of compensation contributed each payroll period.
|
Other Benefits
|
|
Employee Stock Purchase Plan (ESPP)
|
|
Allows participants to contribute up to 15% of their base salary
and commissions through post-tax deductions into the ESPP over a 6-month period up to
$25,000 per calendar year. At the end of the 6-month period, accumulated deductions are
used to purchase shares of Company stock at a 15% discount to the stock price at the beginning
of the 6-month period or the end of the period, whichever is lower. In July 2019,
the Compensation Committee amended the ESPP to exclude the Company’s Section 16
officers, which includes the NEOs, from participating.
|
Our Compensation Decision-Making Process
Role of the Compensation Committee
The Compensation Committee
is primarily responsible for establishing, approving and adjusting compensation arrangements for our senior executives, including
the Chief Executive Officer and our other NEOs, and for reviewing and approving corporate goals and objectives relevant to these
compensation arrangements, evaluating executive performance and considering factors related to the performance of the Company,
including accomplishment of the Company’s long-term business and financial goals. The Compensation Committee is comprised
of independent, non-employee members of the Board and works very closely with its independent consultant and senior executives
to examine the effectiveness of the Company’s executive compensation program throughout the year. Details of the Compensation
Committee’s authority and responsibilities are specified in its charter, which is available on the Investors section of our
website at http://investors.ondeck.com/corporate-governance/governance-documents/default.aspx.
Compensation decisions for
our NEOs are made by the Compensation Committee, with input from its independent compensation consultant, Pearl Meyer, as well
as from our Chief Executive Officer (except with respect to his own compensation) and our People Operations’ leadership,
with respect to 2019 compensation. The Compensation Committee reviews the cash and equity compensation of our NEOs with the goal
of ensuring that our executive officers are properly incentivized and makes adjustments as it determines to be appropriate.
|
2020 PROXY STATEMENT
|
34
|
The Compensation Committee
considers compensation data from our peer group as one of several factors that inform its judgment of appropriate parameters for
target compensation levels. The Compensation Committee will also consider other factors in determining compensation including those
set forth below, and may pay above, at, or below median:
•
|
The performance and experience of each NEO;
|
•
|
The scope and strategic impact of the NEO’s responsibilities;
|
•
|
Our past business performance and future expectations;
|
•
|
Our long-term goals and strategies;
|
•
|
The difficulty and cost of replacing high-performing leaders with in-demand skills; and
|
•
|
The relative compensation among our NEOs.
|
Role of the Compensation Consultant
The Compensation Committee
has the authority to retain the services of external advisors, including compensation consultants, legal counsel and other advisors,
from time to time, as it sees fit, in connection with carrying out its duties. In 2019, the Compensation Committee continued to
engage Pearl Meyer to assist us in executing our executive compensation strategy and guiding principles, assessing the current
target total direct compensation opportunities of our executive officers, including comparing them against competitive market practices,
developing a compensation peer group and advising on potential executive compensation decisions for 2019.
Pearl Meyer does not provide
any services to us other than the services provided to the Compensation Committee. Our Compensation Committee has assessed the
independence of Pearl Meyer taking into account, among other things, the factors set forth in Exchange Act Rule 10C-1 and
the listing standards of the NYSE, and has concluded that no conflict of interest exists with respect to the work that Pearl Meyer
performs for the Compensation Committee.
The Compensation Committee
works with members of our management team, as appropriate, in reviewing executive compensation. Typically, our Chief Executive
Officer and management team assist the Compensation Committee by providing information on corporate and individual performance
and its perspectives and recommendations on compensation matters. Our Chief Executive Officer makes recommendations to the Compensation
Committee regarding compensation matters, including the compensation of our other NEOs. While the Compensation Committee solicits
and reviews our Chief Executive Officer’s recommendations and proposals with respect to compensation-related matters, it
uses these recommendations and proposals as one of many factors in making compensation decisions, and those decisions do not necessarily
follow the Chief Executive Officer’s recommendations.
Peer Group Considerations
The Compensation Committee
reviews market data of companies that we believe are comparable to us. With Pearl Meyer’s assistance, the Compensation Committee
determined our peer group for 2019 based on several factors, including industry classification, company size based on revenue and
market capitalization, and other qualitative and business-related factors. Each year, the Compensation Committee examines our compensation
peer group to ensure that it continues to reflect these factors, and will make adjustments as needed.
Our peer group for 2019 compensation
decisions consisted of 20 companies of which the majority are financial services companies and the balance are technology companies.
The Compensation Committee believes this mix of companies best reflects the combined nature of our business. The Compensation Committee
referred to compensation data from this peer group when making 2019 base salary, short-term incentive award and equity award decisions
for our NEOs. The following is a list of the public companies that comprised our 2019 peer group that at the time of review had
median revenues of approximately $420 million and a median market capitalization of approximately $950 million.
Role of Management
2019 COMPENSATION PEER GROUP
|
|
|
|
|
|
|
•
|
B. Riley Financial, Inc.
|
|
•
|
Elevate Credit, Inc.
|
|
•
|
GreenSky, Inc.
|
|
•
|
Lending Tree, Inc.
|
•
|
Blucora, Inc.
|
|
•
|
Enova International, Inc.
|
|
•
|
HFF, Inc.
|
|
•
|
LendingClub Corporation
|
•
|
Axos Financial, Inc.
|
|
•
|
Envestnet, Inc.
|
|
•
|
Investment Technology Group
|
|
•
|
Marlin Business Services, Corp.
|
•
|
Bottomline Technologies, Inc.
|
|
•
|
GAIN Capital Holdings, Inc.
|
|
•
|
JMP Group, LLC
|
|
•
|
Meta Financial Group, Inc.
|
•
|
Consumer Portfolio Services, Inc.
|
|
•
|
Green Dot Corporation
|
|
•
|
Ladder Capital Corp.
|
|
•
|
Regional Management Corp.
|
In 2019, as part of its annual
review, the Compensation Committee examined the peer group to be used for 2020 compensation benchmarking and removed two companies
(HFF, Inc. and Investment Technology Group) as each company had been acquired. This updated peer group of 18 companies was used
for purposes of informing 2020 compensation decisions.
|
2020 PROXY STATEMENT
|
35
|
2019 Compensation
Base Salaries
We pay base salaries to our
NEOs to compensate them for their services and provide regular income. The salaries typically reflect each NEO’s experience,
leadership skills and scope of responsibilities, although competitive market conditions also play a role in setting salary levels.
The salaries of our NEOs are reviewed on an annual basis by our Compensation Committee with input from our Chief Executive Officer
(other than with respect to his own salary, which is reviewed and determined by the Compensation Committee) and consultation with
Pearl Meyer. Base salaries are adjusted, as deemed appropriate, to maintain competitive pay positioning, reflect changes in responsibilities
and other factors. In 2019, base salaries for the NEOs were increased to align compensation levels more closely to the 50% percentile
of the market. Mr. Kampfer’s adjustment also reflects his promotion to the role of Chief Operations Officer and General Counsel.
The table below shows the 2019 and 2018 annual base salaries of our NEOs set by the Compensation Committee effective March 1,
2019 and March 1, 2018, respectively.
Name
|
|
2019 Base Salary
($)
|
|
2018 Base Salary
($)
|
Noah Breslow
|
|
580,000
|
|
500,000
|
Ken Brause
|
|
400,000
|
|
375,000
|
Cory Kampfer
|
|
350,000
|
|
325,000
|
Andrea Gellert
|
|
350,000
|
|
325,000
|
Nick Brown
|
|
350,000
|
|
325,000
|
Annual Short-Term Incentive (STI) Compensation
ANNUAL INCENTIVE PLAN (AIP)
A key compensation objective
is to have a significant portion of each NEO’s compensation tied to Company performance. To help accomplish this goal, we
provide for semi-annual performance-based cash incentive opportunities for our NEOs payable under our Annual Incentive Plan, or
AIP, based on achievement against both Company and individual objectives, except for our CEO whose annual incentive is based 100%
on the Company’s financial performance. STI target award levels are based on a percentage of our NEOs’ base salaries
paid during the applicable performance year and informed by market data and Compensation Committee judgment. Actual awards are
based on a target percentage of each NEO’s base salary multiplied by a percentage derived from Company and individual performance
levels. Performance is measured at the end of two six-month performance periods commencing January 1 and July 1 each year. Actual
payouts range from zero to a maximum capped at 160% of target.
SALES COMPENSATION PLAN (SCP)
A portion of Ms. Gellert’s
annual incentive is also based on performance relative to pre-established metrics and targets set by the Compensation Committee
intended to drive responsible loan growth and reduce net charge-off rates during the performance period. Compensation payable to
Ms. Gellert under the Sales Compensation Plan, or SCP, is based on Company performance relative to these targets.
The total annual STI Target
Award opportunity for our NEOs under the AIP, and the SCP for Ms. Gellert only, is calculated as follows:
Name
|
|
2019 Base
Salary Paid
($)
|
|
|
AIP
Target(1)
|
|
|
STI Target
Award
($)
|
Noah Breslow
|
|
566,667
|
|
|
100%
|
|
|
566,667
|
Ken Brause
|
|
395,833
|
|
80%
|
|
316,666
|
Cory Kampfer
|
|
345,833
|
x
|
70%
|
=
|
242,083
|
Andrea Gellert
|
|
345,833
|
|
85%
|
|
293,958
|
Nick Brown
|
|
345,833
|
|
70%
|
|
242,083
|
(1)
|
For Ms. Gellert, 30% of her annual incentive award is payable
under the AIP and 55% payable under the SCP discussed below.
|
The following table illustrates how short-term
incentive awards are calculated for the two semi-annual performance periods commencing January 1 and July 1.
Base Salary
|
|
STI
|
|
STI
Target Award ($)
|
|
Company and
|
|
STI
|
Paid for
|
X
|
Target
|
=
|
X
|
Individual Performance
|
=
|
Award
|
6-months ($)
|
|
(%)
|
|
|
Payout
|
|
Payout ($)
|
|
2020 PROXY STATEMENT
|
36
|
2019 AIP AWARDS
Company Performance Metrics
In selecting the short-term
incentive award performance metrics for 2019, the Compensation Committee targets a balance among a profitability related measure
(pre-tax income), loan growth (the size of the loan portfolio), and credit (reserve ratio). Each performance metric was adjusted
to exclude the April 1, 2019 business combination with Evolocity Financial Group for the first semi-annual period. STI award payouts
were made in August 2019 (for performance during the first half of 2019), and March 2020 (for performance during the second half
of 2019) based on Company and, other than for Mr. Breslow, individual performance for the two semi-annual periods. The targets
for each semi-annual period are set based on Company operating and financial plans and other factors. The following table shows
the metrics, weightings, performance targets and actual results for the first and second half of 2019.
2019 AIP AWARD (ALL NEOS)
|
|
|
|
|
|
Performance Ranges
|
|
Company
|
|
Actual
Results
|
Metrics
|
|
Weight
|
|
|
|
1H
2019
|
|
2H
2019
|
|
Performance
|
|
1H
2019
|
|
2H
2019
|
Adjusted Pre-Tax Income(1)
(Profitability-related measure)
|
|
|
|
Minimum:
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
34%
|
|
Target:
|
|
$24M
|
|
$14M
|
|
100%
|
|
$21.8M
|
|
$15.3M
|
|
|
|
Maximum:
|
|
>$30M
|
|
>$20M
|
|
160%
|
|
|
|
|
Adjusted
Loan Growth(2) and Loan Growth(3)
(Measures loan balance growth)
|
|
|
|
Minimum:
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
33%
|
|
Target:
|
|
4%
|
|
5%
|
|
100%
|
|
<1%
|
|
4.8%
|
|
|
|
Maximum:
|
|
>7%
|
|
>8%
|
|
160%
|
|
|
|
|
Adjusted Reserve Ratio(4) and
Reserve Ratio(5)
(Measures expected credit performance)
|
|
|
|
Minimum:
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
33%
|
|
Target:
|
|
13%
|
|
13%
|
|
100%
|
|
12.6%
|
|
12.2%
|
|
|
|
Maximum:
|
|
<11.5%
|
|
<11.5%
|
|
160%
|
|
|
|
|
(1)
|
Non-GAAP measure. Adjusted Pre-Tax Income
is calculated as Income (loss) from operations, before provision for income taxes adjusted to exclude stock-based compensation
expenses. For purposes of short-term incentive compensation for the first half of 2019 and long-term incentive compensation
for the year ended December 31, 2019, Adjusted Pre-Tax Income has been further adjusted to exclude the April 1, 2019 business
combination with Evolocity Financial Group.
|
(2)
|
Non-GAAP measure. Adjusted Loan Growth
was a metric for the first half of 2019, and is calculated as the percentage change in Loans and finance receivables from
December 31, 2018 to June 30, 2019, less the increase attributable from the April 1, 2019 business combination with Evolocity
Financial Group.
|
(3)
|
Loan Growth was a metric for the second
half of 2019, and is calculated as the percentage change in Loans and finance receivables from June 30, 2019 to December 31,
2019.
|
(4)
|
Non-GAAP measure. Adjusted Reserve Ratio
was a metric for the first half of 2019, and is calculated as our allowance for credit losses at June 30, 2019 divided by
the Unpaid Principal Balance at June 30, 2019 less, in each case, amounts attributable from the April 1, 2019 business combination
with Evolocity Financial Group. Unpaid Principal Balance represents the total amount of principal outstanding on loans, plus
outstanding advances relating to other finance receivables and the amortized cost of loans purchased from other than our issuing
bank partner at the end of the period. It excludes net deferred origination costs, allowance for credit losses and any loans
sold or held for sale at the end of the period.
|
(5)
|
Reserve Ratio was a metric for the second
half of 2019, and is calculated as our allowance for credit losses at December 31, 2019 divided by the Unpaid Principal Balance
at December 31, 2019. Unpaid Principal Balance is defined in footnote (4).
|
Individual Performance Metrics
In addition to the Company
performance objectives, STI compensation for our NEOs (other than Mr. Breslow) was also based on each officer’s achievement
against his or her individual performance objectives. The individual performance objectives, which can be quantitative or qualitative,
were established by the Compensation Committee in discussions with the CEO and based on the Company’s strategic priorities
for the year. The Company also established broad Company objectives targeting growth, expansion of capabilities and workplace culture
enhancements designed to attract talent. These objectives were designed to drive results among senior leadership and alignment
among the broader organization, although our NEOs may also be assigned individual goals related to key departmental, strategic,
operational or other objectives. Mr. Breslow’s AIP award is based solely on Company performance.
In 2019, the Compensation
Committee, in consultation with the CEO, established the following individual performance objectives for our NEOs under the AIP:
•
|
Mr. Brause: Mr. Brause’s specific goals included capital markets transactions and leading corporate development and financial aspects of business development activities.
|
•
|
Mr. Kampfer: Mr. Kampfer’s specific goals included leading legal and regulatory aspects of corporate development activities, achievement of equipment finance and operations targets, and office site leadership.
|
•
|
Ms. Gellert: Ms. Gellert’s specific goals included growth and process initiatives, business development activities, achievement of originations targets, and large loans production.
|
•
|
Mr. Brown: Mr. Brown’s specific goals included credit policy and credit model activities, forecasting and simulation activities, achievement of portfolio quality targets, and collections and fraud detection activities.
|
|
2020 PROXY STATEMENT
|
37
|
Because the CEO directly
oversees the performance of the NEOs, and plays a key role in selecting their individual performance goals, the CEO makes an initial
determination as to each NEO’s level of achievement on their individual goals. The CEO then makes a recommendation to the
Compensation Committee for its consideration based on his assessment of performance by each NEO relative to their individual goals.
The Compensation Committee has discretion to accept the CEO’s recommendation, or to increase, reduce, or eliminate this aspect
of a NEO’s STI compensation based on any factors it deemed relevant. These STI awards could range from 0% to 160% of the
STI Target compensation opportunity based on both Company and, other than for Mr. Breslow, individual performance.
STI Award Payout
For the first half of 2019,
based on actual results for each Company performance metric, the Compensation Committee assigned a Company rating of 1.5 on a scale
of 1 to 3 where 2 equals performance at target. When blended with their individual performance metrics, the NEOs (all of whom performed
at target), earned an overall AIP payout of 75% of their STI Target Award. Mr. Breslow, whose AIP is measured solely based on Company
performance, also earned an AIP payout of 75% of his STI Target Award.
For the second half of 2019,
based on actual results for each Company performance metric, the Compensation Committee assigned a Company rating of 2 on a scale
of 1 to 3 where 2 equals performance at target. When blended with their individual performance metrics, the NEOs earned an overall
AIP payout between 100% – 120% of their STI Target Award depending on their individual performance. Mr. Breslow, whose AIP
is measured solely based on Company performance, earned an AIP payout of 100% of his STI Target Award.
2019 SCP AWARD
For 2019, the Compensation
Committee selected metrics to reward sales and future revenue potential (loan originations units and volume) and credit quality
(net charge-off rate). Targets were established at the beginning of each semi-annual performance period based on Company operating
and financial plans and other factors. Performance at target results in 100% payout for each component. For each percent above
or below the units and volume targets, the payout increases or decreases 5%. There is no payout for unit or volume performance
at or below 80% of target. For each quarter percent above or below the net charge-off rate target, the payout increases or decreases
10%. There is no payout for net charge-off performance at 2.5% below target. STI award payouts were made quarterly based on performance
for the two semi-annual periods.
For the first half of 2019,
Ms. Gellert earned a weighted payout of 40% of her target SCP award opportunity reflecting performance achievements at the following
levels: loan originations volume 87% of target, loan origination units 85% of target, and net charge-off rate 89% of target. In
the second quarter of 2019, performance on loan origination units and net charge off resulted in a zero payout. For the second
half of 2019, Ms. Gellert earned a weighted payout of 76% of her target SCP award opportunity reflecting performance achievements
at the following levels: loan units 96% of target, loan volume 98% of target, and net charge-off rate 91% of target.
For 2019, the actual short-term
incentive awards earned by the NEOs for the first and second half of 2019 are shown in the table below. These amounts are included
in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 46.
2019 TOTAL ANNUAL SHORT-TERM INCENTIVE AWARD
PAYOUT
Name
|
|
1H 2019
($)
|
|
2H 2019
($)
|
|
Total
2019 Payout
($)
|
Noah Breslow
|
|
207,500
|
|
290,000
|
|
497,500
|
Ken Brause
|
|
117,500
|
|
192,000
|
|
309,500
|
Cory Kampfer
|
|
89,687
|
|
147,000
|
|
236,687
|
Andrea Gellert(1)
|
|
128,065
|
|
125,374
|
|
253,439
|
Nick Brown
|
|
89,687
|
|
122,500
|
|
212,187
|
(1)
|
Ms. Gellert’s total short-term incentive award payout includes $38,378 for the
first half of 2019 and $72,874 for the second half of 2019 for performance achievements under the SCP discussed above.
|
2019 Long-Term Incentive Compensation
Our corporate culture encourages
a long-term focus by our executives, including our NEOs, as well as all our other employees. In keeping with this culture,
our executive compensation program includes stock-based awards, the value of which depends on our stock performance and other performance
measures, to incentivize strong long-term performance. The Compensation Committee generally awards long-term incentive compensation
in the form of performance unit awards payable in cash (PSUs), performance-based restricted stock units (PBRS), and time-based
restricted stock units (RSUs). In 2019, based on an analysis of the long-term incentive award practices of our peers, and to further
promote responsible share usage, the Compensation Committee decided it would no longer grant stock options to our NEOs. However,
stock options remain outstanding from prior grants and are reflected in the “Outstanding Equity Awards at Fiscal Year End”
on page 48. Long-term incentive awards are granted to our NEOs in February each
|
2020 PROXY STATEMENT
|
38
|
year and grant amounts are
determined based on various factors including Company and individual performance, market practices and the long-term objectives
identified in our strategic planning process.
In 2019, the Compensation
Committee awarded long-term incentives to the NEOs under our 2014 Equity Incentive Plan in the form of RSUs, PSUs and PBRS with
50% of the total award value subject to performance-based vesting conditions and the balance service-based vesting.
LONG-TERM INCENTIVE AWARD
MIX
The Compensation Committee
selected this award mix to balance the incentive award opportunities for our NEOs equally between performance-based and service-based
awards, and cash and stock-based compensation. Target award values for PSUs, PBRS and RSUs were determined based on peer group
and survey data provided by Pearl Meyer and internal alignment. The table below shows the long-term incentive target award values
granted for 2019 for each of the NEOs:
2019 LONG-TERM INCENTIVE TARGET AWARD VALUES
|
|
PSU
($)
|
|
PBRS
($)
|
|
RSU
($)
|
|
Total Value
($)
|
Noah Breslow
|
|
437,500
|
|
437,500
|
|
875,000
|
|
1,750,000
|
Ken Brause
|
|
175,000
|
|
175,000
|
|
350,000
|
|
700,000
|
Cory Kampfer
|
|
175,000
|
|
175,000
|
|
350,000
|
|
700,000
|
Andrea Gellert
|
|
175,000
|
|
175,000
|
|
350,000
|
|
700,000
|
Nick Brown
|
|
187,500
|
|
187,500
|
|
375,000
|
|
750,000
|
Actual PBRS and RSU award amounts are determined
by dividing the target award values by a conversion rate equal to the average closing price of a share of the Company’s common
stock for the 30-day trading period prior to the date of grant. PSUs are payable in cash and therefore the target award value is
not converted.
2019 PSUS AND PBRS
The Company grants performance-based
awards in order to align executive compensation with stockholder interests. In 2019, PSU and PBRS awards granted to executives
could be earned based on achievement of predefined Company performance objectives measured at the end of a 12-month performance
period (January 1-December 31, 2019). Once earned PSUs and PBRS are paid out to the executive in three equal annual installments
in 2020, 2021 and 2022. If the executive is not employed by the Company on the payout date, earned PSUs and PBRS awards are forfeited.
The Compensation Committee
selects the performance metrics and targets for each 12-month performance period, and certifies achievement and payout of the PSUs
and PBRS awards following the end of each performance period. The performance metrics and targets for any 12-month performance
period may vary depending on the financial, strategic or other goals of the Company at the beginning of the performance period.
If Company performance falls below threshold levels during the performance period, no PSUs or PBRS are paid out to executives for
the period.
Prior to 2019, PSU and PBRS
awards were earned based on the achievement of Company performance objectives over three 12-month performance periods and, if earned,
payable at the end of each period. The Compensation Committee changed the term and payout schedule for the PSUs and PBRS in 2019
to focus performance around discrete 12-month performance cycles tied to our annual Company goals, while promoting a long-term
focus (and retention) through use of a three-year payout schedule.
|
2020 PROXY STATEMENT
|
39
|
The metrics, targets, actual performance and resulting
payout for the 2019 PSU and PBRS grants is shown in the following table:
2019 PSU/PBRS SUMMARY
Performance
Period: January 1 - December 31, 2019
|
|
|
Payout(1)
|
Metrics
|
|
Weight
|
|
Performance
Range
|
|
Payout
|
|
Results
|
|
|
|
|
PSU
($)
|
|
PBRS
(#)
|
Adjusted
Pre-Tax(2) Income
|
|
|
|
Minimum:
|
|
$35M
|
|
50%
|
|
$38.3M
|
|
|
Mr. Breslow
|
|
57,562
|
|
8,340
|
|
60%
|
|
Target:
|
|
$50M
|
|
100%
|
|
|
|
|
Mr. Brause
|
|
23,025
|
|
3,335
|
|
|
|
|
Maximum:
|
|
>$65M
|
|
150%
|
|
|
|
|
Mr. Kampfer
|
|
23,025
|
|
3,335
|
Adjusted Gross Revenue(3)
|
|
|
|
Minimum:
|
|
$440M
|
|
50%
|
|
$436.8M
|
|
|
Ms. Gellert
|
|
23,025
|
|
3,335
|
|
40%
|
|
Target:
|
|
$470M
|
|
100%
|
|
|
|
|
Mr.
Brown
|
|
24,670
|
|
3,574
|
|
|
|
|
Maximum:
|
|
>$500M
|
|
150%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
PAYOUT
|
|
39.87%
|
|
|
|
|
|
|
|
(1)
|
Earned PBRS (stock) are included in the “Stock Awards”
column of the Option Exercises and Stock Vested Table on page 49, and earned PSU cash amounts are included in the “Non-Equity
Incentive Plan Compensation” column of the Summary Compensation Table on page 46.
|
(2)
|
Non-GAAP measure. Adjusted Pre-Tax Income is calculated as Income (loss) from operations,
before provision for income taxes adjusted to exclude stock-based compensation expenses. For purposes of short-term incentive
compensation for the first half of 2019 and long-term incentive compensation for the year ended December 31, 2019, Adjusted
Pre-Tax Income has been further adjusted to exclude the business combination with Evolocity Financial Group.
|
(3)
|
Non-GAAP measure. Adjusted Gross Revenue is calculated as our 2019 Gross Revenue, which
represents the sum of interest and finance income, gain on sales of loans and other revenue, less revenue attributable from
the April 1, 2019 business combination with Evolocity Financial Group. As a result of this adjustment, Adjusted Gross Revenue
is less than Gross Revenue.
|
2019 RSUS
RSUs provide incentives for executives to remain
employed by the Company to execute the Company’s long-term strategic goals. The Compensation Committee believes that RSUs
tie compensation to Company performance, given that the value of an RSU can increase or decrease with our stock price. RSUs are
granted in shares of the Company’s common stock and vest in four equal annual installments on the anniversary of the grant
date. Vested shares are paid out on the next succeeding quarterly Company vesting date, subject to the executive being employed
by the Company on such date. Unvested RSUs are forfeited upon termination of employment.
PRIOR PERFORMANCE AWARD GRANTS
In 2016, the Compensation Committee changed its
equity grant practices to align the equity performance periods with our January 1 to December 31 fiscal year end, instead
of the prior practice of a July 1 to June 30 performance period. In doing so, proposed grants would be informed by the full
prior year performance and performance-based awards tied to key metrics established for the December 31 fiscal year. The following
section provides a summary of the long-term incentive awards that were granted in prior years and earned during 2019.
2016 Awards
For the 12-month performance period ending June 30,
2019, the Company’s gross revenue, adjusted net income and provision rate performance resulted in an above-target payout
for the third and final tranche of PSU and PBRS awards granted in 2016. Based on actual performance, the Compensation Committee
approved payouts of 104.45% of target earning Mr. Breslow, Mr. Kampfer and Ms. Gellert the amounts shown in the table on the
following page.
The following table shows actual Company performance
relative to the metrics and targets established by the Compensation Committee for the 2016 PSU and PBRS grants for the performance
period July 1, 2018 to June 30, 2019.
|
2020 PROXY STATEMENT
|
40
|
2016 PSU/PBRS AWARD SUMMARY
Performance
Period - July 1, 2018 to June 30, 2019
|
|
|
Payout(1)
|
Metrics
|
|
Weight
|
|
Performance
Range
|
|
Payout
|
|
Results
|
|
|
|
|
PSU
($)
|
|
PBRS
(#)
|
Gross Revenue
|
|
|
|
Minimum:
|
|
<$380M
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
|
34%
|
|
Target:
|
|
$410M
|
|
100%
|
|
$430.4M
|
|
|
Mr. Breslow
|
|
117,565
|
|
29,349
|
|
|
|
|
Maximum:
|
|
≥$440M
|
|
150%
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income(2)
|
|
|
|
Minimum:
|
|
<$35M
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
33%
|
|
Target:
|
|
$45M
|
|
100%
|
|
$45.7M
|
|
|
Mr. Kampfer
|
|
133,174
|
|
—
|
|
|
|
|
Maximum:
|
|
≥$55M
|
|
150%
|
|
|
|
|
|
|
|
|
|
Provision Rate
|
|
|
|
Minimum:
|
|
>7%
|
|
50%
|
|
|
|
|
|
|
|
|
|
|
|
33%
|
|
Target:
|
|
6%
|
|
100%
|
|
6.5%
|
|
|
Ms. Gellert
|
|
133,174
|
|
—
|
|
|
|
|
Maximum:
|
|
≥5%
|
|
150%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
PAYOUT
|
|
104.45%
|
|
|
|
|
|
|
|
(1)
|
Earned PBRS (stock) are included in the “Stock Awards Column”
of the Option Exercises and Stock Vested Table on page 49, and earned PSU cash amounts are included in the “Non-Equity
Incentive Plan Compensation” column of the Summary Compensation Table on page 46.
|
(2)
|
Non-GAAP measure. Adjusted Net Income means Net Income (loss) attributable to On Deck
Capital, Inc. common stockholders adjusted to exclude: stock-based compensation expense; debt extinguishment costs; real estate
related disposition costs; out-of-pocket transaction costs related to completed mergers, acquisitions or divestitures; and
employee severance costs associated with Company restructuring activities or executive transitions.
|
2017 Awards
In order to transition the timing of equity grants
and performance periods from July 1 to June 30 to January 1 to December 31, in 2017 the Compensation Committee granted awards that
were generally 50% of the total value of a typical annual award and granted those awards solely in the form of RSUs for this bridge
period. There were no PSUs or PBRS granted in 2017. One-fourth of the 2017 RSU grant vested in October 2019 as shown in the Option
Exercises and Stock Vested table on page 49.
2018 Awards
A target number PSUs were granted to all NEOs,
and a target number of PBRS were granted to Mr. Breslow in 2018. These grants are eligible to vest in equal installments at the
end of three 12-month performance periods (December 31, 2018, December 31, 2019 and December 31, 2020) subject to Company performance
on certain financial metrics designated at the beginning of each performance period and continued employment. The following table
shows details the performance metrics, weightings, ranges and results for the 2018 PSU and PBRS grants for the performance period
ended December 31, 2019, and the payouts for NEOs.
2018 PSU/PBRS SUMMARY
Performance
Period: January 1 - December 31, 2019
|
|
|
Payout(1)
|
Metrics
|
|
Weight
|
|
Performance
Range
|
|
Payout
|
|
Results
|
|
|
|
|
PSU
($)
|
|
PBRS
(#)
|
Adjusted
Pre-Tax(2) Income
|
|
|
|
Minimum:
|
|
$35M
|
|
50%
|
|
|
|
|
Mr. Breslow
|
|
46,050
|
|
18,282
|
|
60%
|
|
Target:
|
|
$50M
|
|
100%
|
|
$38.3M
|
|
|
Mr.
Brause
|
|
65,785
|
|
—
|
|
|
|
|
Maximum:
|
|
>$65M
|
|
150%
|
|
|
|
|
Mr. Kampfer
|
|
26,314
|
|
—
|
Adjusted Gross Revenue(3)
|
|
|
|
Minimum:
|
|
$440M
|
|
50%
|
|
|
|
|
Ms.
Gellert(4)
|
|
—
|
|
—
|
|
40%
|
|
Target:
|
|
$470M
|
|
100%
|
|
$436.8M
|
|
|
Mr.
Brown
|
|
49,339
|
|
—
|
|
|
|
|
Maximum:
|
|
>$500M
|
|
150%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED PAYOUT
|
|
39.87%
|
|
|
|
|
|
|
|
(1)
|
Earned PBRS (stock) are included in the “Stock Awards Column”
of the Option Exercises and Stock Vested Table on page 49, and earned PSU (cash) amounts are included in the “Non-Equity
Incentive Plan Compensation” column of the Summary Compensation Table on page 46.
|
(2)
|
Non-GAAP measure. Adjusted Pre-Tax Income is calculated as Income (loss) from operations,
before provision for income taxes adjusted to exclude stock-based compensation expenses. For purposes of short-term incentive
compensation for the first half of 2019 and long-term incentive compensation for the year ended December 31, 2019, Adjusted
Pre-Tax Income has been further adjusted to exclude the business combination with Evolocity Financial Group.
|
(3)
|
Non-GAAP measure. Adjusted Gross Revenue is calculated as our 2019 Gross Revenue, which
represents the sum of interest and finance income, gain on sales of loans and other revenue, less revenue attributable from
the April 1, 2019 business combination with Evolocity Financial Group. As a result of this adjustment, Adjusted Gross Revenue
is less than Gross Revenue.
|
(4)
|
Ms. Gellert’s employment with OnDeck terminated February 15, 2020 so she was
not eligible to receive payment of her 2018 PSU award.
|
|
2020 PROXY STATEMENT
|
41
|
Other Compensation Policies
Stock Ownership Guidelines
In 2018, the Board of Directors adopted stock
ownership guidelines for our CEO. The guidelines require the CEO to accumulate and hold shares of the Company’s common stock
valued at at least five times his or her annual base salary within five years of the effective date of the guidelines, or in the
case of a successor CEO, on the fifth anniversary of becoming CEO. The following equity holdings qualify toward satisfaction of
the guidelines:
•
|
Shares directly owned by the CEO or the CEO’s immediate family members;
|
•
|
Shares beneficially owned by the CEO, but held in trust, limited partnerships, or similar
entities for the sole benefit of the CEO or the CEO’s immediate family members;
|
•
|
Shares held in retirement or deferred compensation accounts for the CEO or the CEO’s
immediate family;
|
•
|
Shares issuable in connection with RSUs or PBRS that have not vested; and
|
•
|
Shares subject to other vested RSUs or PBRS that the CEO has deferred; however
|
Unexercised
stock options do not count toward the stock ownership guidelines.
Until such time as the stock ownership level has
been achieved, the Compensation Committee may require the CEO to retain all or a portion of the net shares received as a result
of a stock option exercise or the vesting of RSUs or PBRS. As of December 31, 2019, Mr. Breslow exceeded his stock ownership guidelines
of five times.
Employee Benefits
We provide employee benefits to all eligible employees,
including our NEOs, which the Compensation Committee believes are reasonable and consistent with its overall compensation objective
to better enable us to attract and retain employees. These benefits include medical, dental and vision insurance, a 401(k) plan,
life and disability insurance, flexible spending accounts, and other plans and programs. There are no perquisites offered to our
NEOs except for relocation expenses, from time to time.
In 2019, the Compensation Committee exercised
its discretion under the Company’s 2014 Employee Stock Purchase Plan, or ESPP, to specifically exclude from participation
in the ESPP those employees subject to the disclosure requirements of Section 16(a) of the Securities Exchange Act of 1934, as
amended. As a result, the NEOs are no longer eligible to participate in the ESPP. The Compensation Committee made this decision
following an examination of market practices on ESPP participation, and in consideration of the NEOs’ eligibility for annual
grants of equity under the Company’s 2014 Equity Incentive Plan.
Clawback Policy
We have a Clawback Policy pursuant to which we
may seek the recovery of performance-based incentive compensation paid by the Company, including PSUs and PBRS awards. The Clawback
Policy applies to our executive officers, including our NEOs. The Clawback Policy provides that the Compensation Committee may,
in its sole discretion, seek repayment of such incentive compensation if:
•
|
The Company restates its financial statements as a result of a material
error;
|
•
|
The amount of cash incentive compensation or performance-based equity compensation paid or
payable based on achievement of specific financial results paid to a participant would have been less if the financial statements
had been correct;
|
•
|
No more than three years have elapsed since the original filing date of the financial statements
upon which the incentive compensation was determined; and
|
•
|
The Compensation Committee unanimously concludes that gross negligence, fraud or intentional
misconduct by such executive caused the material error and it would be in the best interests of the Company to seek recovery
of the excess compensation from the executive.
|
Insider Trading, Anti-Hedging and Pledging
Policies
We have an Insider Trading Policy that requires
our senior executive officers, including our NEOs, to pre-clear transactions in our common stock with the Company’s
legal department. Trading is permitted only during specified quarterly Company open trading periods. Our NEOs may enter into a
trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. These trading plans may be entered into
only during an open trading period, must be approved by the Compensation Committee of the Board of Directors and the Company’s
legal department, and must include a waiting period prior to commencement of trading under the plan. An executive bears the full
responsibility if he or she violates the Company policy by permitting shares to be bought or sold without pre-clearance or
when trading is restricted.
In addition, our policy prohibits our directors,
officers, employees and certain other persons from (i) purchasing financial instruments that are designed to hedge or offset
any decrease in the market value of our common stock, or (ii) engaging in hedging transactions to offset any decrease in the
market value of our common stock. Our policy also prohibits our directors, officers and employees from pledging shares of our common
stock as collateral for margin loans.
CEO Succession Planning
Our Nominating Committee is delegated with the
responsibility for CEO succession planning. As part of its responsibility, the Nominating Committee ensures that succession planning
is an ongoing discussion recognizing that leadership development and assessment are critical to our continued success. As part
of that discussion, the Nominating Committee reviews the key attributes that a CEO of the Company would need to possess in order
to maximize his or her success. The Nominating Committee reviews and discusses its succession planning activities and related considerations
with the full Board of Directors which then provides valuable input on important succession-related actions and decisions making
the process iterative between the Board of Directors and the Nominating Committee and therefore responsive to the Company’s
needs.
|
2020 PROXY STATEMENT
|
42
|
Executive Employment Arrangements
The Company entered into the following confirmatory
employment offer letters with our NEOs which have no specific term and provide that each of our NEOs is an at-will employee:
Noah Breslow
Effective October 30, 2014, the Company entered
into a confirmatory employment offer letter with Mr. Breslow, which is included as Exhibit 10.7 to our 2019 Annual Report. As of
March 1, 2020, Mr. Breslow’s annual base salary is $580,000, and he is eligible for annual target short-term incentive
award payments of $580,000. Mr. Breslow is also eligible for severance payments and other benefits under his CIC Agreement. The
letter also contains certain non-compete provisions that apply to Mr. Breslow while he is employed by the Company, and other provisions
relating to invention assignment, non-solicitation and confidentiality.
Ken Brause
Effective March 5, 2018, the Company entered into
a confirmatory employment offer letter with Mr. Brause, which is included as Exhibit 10.23 to our 2019 Annual Report. Pursuant
to his offer letter, Mr. Brause was entitled to (i) a one-time signing bonus of $150,000 payable in two equal installments in June
2018 and February 2019, and (ii) accelerated vesting of 25% of his stock options and RSUs and 33% of his target PSU awards granted
upon hire in the event he was terminated without cause within 12 months of his start date. In February 2019, Mr. Brause was paid
the second and final installment his signing bonus. As of March 1, 2020, Mr. Brause’s annual base salary is $415,000, and
he is eligible for annual target short-term incentive award payments of $332,000. Mr. Brause is also eligible for severance payments
and other benefits under his CIC Agreement.
Cory Kampfer
Effective May 2, 2018, the Company entered into
a confirmatory employment offer letter with Mr. Kampfer, which is included as Exhibit 10.26 to our 2019 Annual Report. As of March 1,
2020, Mr. Kampfer’s annual base salary is $365,000, and he is eligible for annual target short-term incentive award payments
of $255,500. Mr. Kampfer is also eligible for severance payments and other benefits under his CIC Agreement. The letter also contains
certain non-compete provisions that apply to Mr. Kampfer while he is employed by the Company, and other provisions relating to
invention assignment and confidentiality.
Andrea Gellert
Effective May 2, 2018, the Company entered
into a confirmatory employment offer letter with Ms. Gellert, which is included as Exhibit 10.25 to our 2019 Annual Report.
Ms. Gellert’s employment with the Company terminated effective February 15, 2020. She received severance payments and
other benefits under her CIC Agreement as discussed on page 50.
Nick Brown
Effective September 12, 2016, the Company entered
into a confirmatory employment offer letter with Mr. Brown, which is included as Exhibit 10.24 to our 2019 Annual Report. As of
March 1, 2020, Mr. Brown’s annual base salary is $365,000, and he is eligible for annual target short-term incentive award
payments of $255,500. Mr. Brown is also eligible for severance payments and other benefits under his CIC Agreement.
Potential Payments upon Termination or Change
in Control
Change in Control and Severance Agreements
The Company has entered into change in control
severance agreements, or CIC Agreements, with the NEOs which were approved by the Compensation Committee. The CIC Agreements provide
our NEOs with payments and benefits in connection with the termination of their employment under certain circumstances. The Compensation
Committee believes that the financial security offered under the CIC Agreements ensure the continued dedication and objectivity
of executives in the event of a change in control, while motivating the executive to maximize the value of the Company for the
benefit of its stockholders. The CIC Agreements supersede any other agreement or arrangement relating to severance benefits with
these NEOs or any terms of their equity award agreements related to vesting acceleration or other similar severance-related terms.
The CIC Agreements remain in effect for an initial
term of three years. At the end of the initial term, each agreement will automatically renew for an additional one-year period
unless either party provides notice of nonrenewal within 90 days prior to the date of automatic renewal. The CIC Agreements also
acknowledge that each executive officer is an at-will employee, whose employment can be terminated at any time.
In order to receive the severance benefits described
below, each NEO is obligated to execute a release of claims, provided such release of claims becomes effective and irrevocable
no later than 60 days following such NEO’s termination date, and to continue to comply with the terms of applicable proprietary
agreements and other post-employment restrictive covenants. For the purpose of the CIC Agreements, “change in control period”
means generally the period beginning three months prior to, and ending 12 months following, a change in control.
|
2020 PROXY STATEMENT
|
43
|
Involuntary Termination (without cause)
In the event of a termination of employment without
“cause” outside of the change in control period, a NEO will receive the following:
•
|
Continued payments of base salary for nine months (or 12 months for our
CEO);
|
•
|
Payment of their STI Target Award for the year of termination, pro-rated based on time served;
|
•
|
Paid COBRA benefits for the earlier of nine months (or 12 months for our CEO), or the date
upon which the executive becomes covered under another similar plan; and
|
•
|
For our CEO only, accelerated vesting of 50% of our CEO’s then-unvested time-based
RSUs.
|
The CIC Agreements define “cause”
as (i) an act of dishonesty made by the executive in connection with his or her responsibilities as an employee, (ii) an executive’s
conviction of a felony or any crime involving fraud or embezzlement, (iii) gross misconduct, (iv) unauthorized use or disclosure
of the Company’s proprietary information or any other party to whom executive owes an obligation of nondisclosure, (v) willful
breach of any written agreement with the Company, (vi) failure to cooperate with a governmental or internal investigation of the
Company its directors or employees, or (vii) an executive’s continued failure to perform his or her duties within ten days
of written demand by the Company.
Change in Control
In the event of a termination of employment without
cause or a resignation for “good reason” during the “change in control period,” a NEO will receive the
following:
•
|
A lump-sum payment of 12 months of base salary;
|
•
|
A lump-sum payment equal to 100% of their STI Target Award;
|
•
|
A lump-sum payment equal to their STI Target Award for the year terminated (pro-rated based
on time served);
|
•
|
Paid COBRA benefits for the earlier of 12 months, or the date upon which the executive becomes
covered under another similar plan; and
|
•
|
100% acceleration of unvested equity awards.
|
Generally, the CIC Agreements define “change
in control” as (i) the acquisition of 50% or more of the total voting power of the stock of the Company, (ii) the replacement
of a majority of the board of directors during any 12-month period, or (iii) the acquisition of 50% or more of the total gross
fair market value of all Company assets during a 12-month period. “Good reason” includes executive’s voluntary
termination, within 30 days following the expiration of Company’s cure period, due to (i) a material reduction of executive’s
responsibilities, (ii) a material reduction in executive’s base salary other than a one-time reduction of no more than 10%
that is also applied to substantially all other Company executives, or (iii) a change in the geographic location of executive’s
primary work location greater than 50 miles from executive’s then present location.
The CIC Agreements also impose a limitation on
payments such that in the event the severance provided to the executive constitutes “parachute payments” within the
meaning of Section 280G of the Code, and would be subject to the excise tax imposed by Section 4999 of the Code, then the executive’s
benefits will be either delivered in full or reduced to such extent that it would no longer be subject to excise tax.
|
2020 PROXY STATEMENT
|
44
|
Treatment of Equity Upon Termination of Employment
or a Change in Control
The table below summarizes
the treatment of equity upon termination of employment in the scenarios noted.
Award Type
|
Involuntary Termination
without Cause
|
Retirement
|
Disability
|
Death
|
Termination without
Cause or Resignation
for Good Reason in
Connection with a
Change in Control
|
RSU
|
Unvested RSUs are forfeited for all NEOs except CEO; 50% of CEO’s
unvested RSUs fully vest.
|
Unvested RSUs are forfeited
|
|
100% of unvested RSUs will fully vest
|
PBRS
|
|
Unvested PBRS are forfeited.
|
|
Unvested PBRS will vest at 100% of target
|
PSU
|
|
Unvested PSUs are forfeited.
|
|
Unvested PSUs will vest at 100% of target
|
Stock Options
|
Unvested stock options are forfeited. Vested options exercisable for 3 months
following the date of employment termination (but not later than the option expiration date).
|
Unvested stock options are forfeited. Vested options exercisable for 3 months
following the date of employment termination (but not later than the option expiration date).
|
Unvested stock options are forfeited. Vested options are exercisable for
12 months following the date of employment termination (but not later than the option expiration date).
|
Unvested stock options are forfeited. Vested options are exercisable by
employee’s beneficiary or estate for 12 months following employee’s death (but not later than the option expiration
date).
|
100% of unvested stock options will fully vest and, together with vested
options, be exercisable for 3 months following the date of employment termination (but not later than the option expiration
date).
|
Tax and Accounting Considerations
The Compensation Committee
will consider tax implications among other relevant factors in designing and implementing our executive compensation programs.
The Committee will monitor taxation, applicable incentives, standard practice in our industry, and other factors and adjust our
executive compensation programs as needed.
|
—
|
COMPENSATION COMMITTEE REPORT
|
The Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement
and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Respectfully submitted by
the members of the Compensation Committee of the Board of Directors:
Ronald F. Verni (Chair)
Bruce P. Nolop
Manolo Sánchez
|
2020 PROXY STATEMENT
|
45
|
|
—
|
2019 SUMMARY COMPENSATION TABLE
|
The following table provides information regarding
the compensation of our NEOs during the years shown.
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Stock Awards
|
|
Option Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)
|
Noah Breslow
Chief Executive Officer
|
|
2019
|
|
566,667
|
|
—
|
|
1,145,885
|
|
—
|
|
778,677
|
|
8,602
|
|
2,499,831
|
|
2018
|
|
483,333
|
|
—
|
|
721,166
|
|
350,000
|
|
997,387
|
|
5,726
|
|
2,557,612
|
|
2017
|
|
400,000
|
|
—
|
|
766,244
|
|
—
|
|
240,000
|
|
5,627
|
|
1,411,871
|
Ken Brause
Chief Financial Officer
|
|
2019
|
|
395,833
|
|
75,000
|
|
457,151
|
|
—
|
|
398,310
|
|
7,202
|
|
1,333,496
|
|
2018
|
|
288,461
|
|
375,000
|
|
522,449
|
|
500,000
|
|
428,202
|
|
3,930
|
|
2,118,042
|
Cory Kampfer
Chief Operations Officer and General Counsel
|
|
2019
|
|
345,833
|
|
—
|
|
457,151
|
|
—
|
|
419,200
|
|
8,602
|
|
1,230,786
|
|
2018
|
|
320,833
|
|
50,000
|
|
103,027
|
|
100,000
|
|
477,537
|
|
79,993
|
|
1,131,390
|
|
2017
|
|
300,000
|
|
50,000
|
|
255,416
|
|
—
|
|
123,750
|
|
5,627
|
|
734,793
|
Andrea Gellert
Chief Revenue Officer
|
|
2019
|
|
345,833
|
|
—
|
|
457,151
|
|
—
|
|
409,638
|
|
5,802
|
|
1,218,424
|
|
2018
|
|
320,833
|
|
—
|
|
103,027
|
|
100,000
|
|
572,430
|
|
5,726
|
|
1,102,016
|
|
2017
|
|
296,667
|
|
—
|
|
255,416
|
|
—
|
|
184,691
|
|
5,612
|
|
742,386
|
Nick Brown
Chief Risk Officer
|
|
2019
|
|
345,833
|
|
—
|
|
489,815
|
|
—
|
|
286,196
|
|
7,202
|
|
1,129,046
|
|
2018
|
|
320,833
|
|
—
|
|
193,171
|
|
187,501
|
|
405,109
|
|
5,726
|
|
1,112,340
|
(1)
|
The Salary column reflects base salaries
paid during the years shown.
|
(2)
|
The Bonus column reflects a bonus paid to Mr. Brause
pursuant to his offer letter as discussed on page 43.
|
(3)
|
The Stock Awards granted in 2019 column reflects the
grant date (February 19, 2019) fair value of RSUs and PBRS granted to the NEOs, as computed in accordance with FASB ASC Topic
718. The methods and assumptions that we used to calculate these amounts are discussed in Notes 2 and 11 to our financial
statements included in our 2019 Annual Report. As required by SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions.
|
(4)
|
The Non-Equity Incentive Plan Compensation column reflects
payments made under the awards noted:
|
|
|
2019 Short-Term
|
|
2016 PSU Award
|
|
2018 PSU Award
|
|
2019 PSU Award
|
|
|
|
|
Incentive Award
|
|
Year 3 Payout
|
|
Year 2 Payout
|
|
Year 1 Payout
|
|
Total
|
Name
|
|
($)(a)
|
|
($)
|
|
($)(b)
|
|
($)
|
|
($)
|
Noah Breslow
|
|
497,500
|
|
177,565
|
|
46,050
|
|
57,562
|
|
778,677
|
Ken Brause
|
|
309,500
|
|
—
|
|
65,785
|
|
23,025
|
|
398,310
|
Cory Kampfer
|
|
236,687
|
|
133,174
|
|
26,314
|
|
23,025
|
|
419,200
|
Andrea Gellert
|
|
253,439
|
|
133,174
|
|
—
|
|
23,025
|
|
409,638
|
Nick
Brown
|
|
212,187
|
|
—
|
|
49,339
|
|
24,670
|
|
286,196
|
(a)
|
The 2019 short-term incentive
awards were based on performance achievements for the two six-month performance periods ended June 30, 2019 and December 31,
2019. Ms. Gellert’s total short-term incentive award payout includes $38,378 for the first half of 2019 and $72,874
for the second half of 2019 for performance achievements under the SCP discussed on page 36. See the discussion of annual
short-term incentive award compensation and long-term incentive compensation beginning on page 36.
|
(b)
|
Ms. Gellert’s employment with OnDeck
terminated February 15, 2020 so she was not eligible to receive payment of her 2018 PSU award.
|
|
|
(5)
|
The All Other Compensation
column reflects: (i) Company matching contributions under the 401(k) plan paid in the following amounts: Mr. Breslow $8,400,
Mr. Brause $7,000, Mr. Kampfer $8,400, Ms. Gellert $5,600 and Mr. Brown $7,000; and (ii) a $202 life insurance premium paid
on behalf of each NEO.
|
|
|
|
2020 PROXY STATEMENT
|
46
|
|
—
|
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
Estimated Future Payouts Under Non-
Equity
Incentive Plan Awards(1)(2)(4)
|
|
Estimated Future Payouts Under
Equity Incentive
Plan Awards(3)
|
|
All Other
Stock
Awards:
Number of
Shares of
|
|
Grant Date
Fair Value of
Stock and
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Stock or
Units
(#)(5)
|
|
Option
Awards
($)(6)
|
Noah Breslow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
|
|
2/7/2019
|
|
—
|
|
500,000
|
|
800,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
RSU
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
126,775
|
|
761,918
|
PBRS
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
31,694
|
|
63,388
|
|
95,082
|
|
—
|
|
383,967
|
PSU
|
|
2/19/2019
|
|
218,750
|
|
437,500
|
|
656,250
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Ken Brause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
|
|
2/7/2019
|
|
—
|
|
300,000
|
|
480,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
RSU
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50,710
|
|
304,767
|
PBRS
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
12,678
|
|
25,355
|
|
38,033
|
|
—
|
|
152,384
|
PSU
|
|
2/19/2019
|
|
87,500
|
|
175,000
|
|
262,500
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Cory Kampfer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
|
|
2/7/2019
|
|
—
|
|
162,500
|
|
260,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
RSU
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50,710
|
|
304,767
|
PBRS
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
12,678
|
|
25,355
|
|
38,033
|
|
—
|
|
152,384
|
PSU
|
|
2/19/2019
|
|
87,500
|
|
175,000
|
|
262,500
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Andrea Gellert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
|
|
2/7/2019
|
|
—
|
|
81,250
|
|
130,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
SCP
|
|
2/7/2019
|
|
111,100
|
|
207,500
|
|
303,900
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
RSU
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50,710
|
|
304,767
|
PBRS
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
12,678
|
|
25,355
|
|
38,033
|
|
—
|
|
152,384
|
PSU
|
|
2/19/2019
|
|
87,500
|
|
175,000
|
|
262,500
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Nick Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
|
|
2/7/2019
|
|
—
|
|
162,500
|
|
260,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
RSU
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
54,333
|
|
326,541
|
PBRS
|
|
2/19/2019
|
|
—
|
|
—
|
|
—
|
|
13,584
|
|
27,167
|
|
40,751
|
|
—
|
|
163,274
|
PSU
|
|
2/19/2019
|
|
93,750
|
|
187,500
|
|
281,250
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
(1)
|
NEOs can earn short-term incentive awards between 0% and 160%
of target based on pre-tax income, loan growth and reserve ratio performance relative to targets pre-established by the Compensation
Committee. Performance is measured at the end of two six-month performance periods commencing January 1, 2019 and July 1,
2019. Each performance metric was adjusted to exclude the April 1, 2019 business combination with Evolocity Financial Group
for the first semi-annual period.
|
(2)
|
Under the SCP, Ms. Gellert can earn a short-term incentive award between 50%
and 150% of target based on loan origination unit and volume performance, and 40% to160% of target based on net charge-off
rate performance, relative to targets pre-established by the Compensation Committee. Performance at target results in 100% payout for each component. For each
percent above or below the units and volume targets, the payout increases or decreases 5%. There is no payout for unit or
volume performance at or below 80% of target. For each quarter percent above or below the net charge-off rate target, the
payout increases or decreases 10%. There is no payout for net charge-off performance below target.
|
(3)
|
Reflects PBRS that may be earned over the twelve-month performance period
commencing January 1, 2019 based on achievements relative to adjusted pre-tax income (60% of award) and adjusted gross revenue
(40% of award) targets pre-established by the Compensation Committee. NEOs are eligible to earn between 50% and 150% of the
target award. PBRS are payable in shares of Company stock.
|
(4)
|
Reflects PSUs that may be earned over the twelve-month performance period
commencing January 1, 2019 based on achievements relative to adjusted pre-tax income (60% of award) and adjusted gross revenue
(40% of award) targets pre-established by the Compensation Committee. NEOs are eligible to earn between 50% and 150% of the
target award. PSUs are payable in cash.
|
(5)
|
Reflects RSUs that vest in four equal annual installments subject to continued
service with the Company through the vesting date.
|
(6)
|
Reflects the grant date fair value of awards computed in accordance with FASB
ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the
awards reported, see Note 11 to the Company’s consolidated financial statements in the Company’s 2019 Annual Report.
|
|
2020 PROXY STATEMENT
|
47
|
|
—
|
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR END
|
The following table sets forth information regarding
outstanding stock options and stock awards held by our NEOs as of December 31, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan
|
|
|
Option Awards
|
|
Stock Awards
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Payout Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Market
|
|
Shares,
|
|
of Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
of Shares
|
|
Value of
|
|
Units or
|
|
Shares, Units
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
or Units of
|
|
Shares of
|
|
Other
|
|
or Other
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
Stock That
|
|
Stock That
|
|
Rights That
|
|
Rights That
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
Name
|
|
Grant Date
|
|
Options (#)
Exercisable
|
|
Options (#)
Unexercisable
|
|
Price
($)
|
|
Expiration
Date
|
|
Vested
(#)
|
|
Vested
($)(1)
|
|
Vested
(#)
|
|
Vested
($)(6)
|
Noah Breslow
|
|
10/06/2011
|
(2)
|
40,000
|
|
—
|
|
0.375
|
|
10/05/2021
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
06/26/2012
|
(2)
|
934,304
|
|
—
|
|
0.425
|
|
06/25/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
08/01/2013
|
(2)
|
950,000
|
|
—
|
|
0.68
|
|
07/31/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
08/14/2014
|
(2)
|
500,000
|
|
—
|
|
10.66
|
|
08/13/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
07/30/2015
|
(2)
|
343,812
|
|
—
|
|
12.67
|
|
07/29/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
09/19/2016
|
(3)
|
295,462
|
|
68,175
|
|
5.95
|
|
09/18/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
08/22/2017
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
82,038
|
|
339,637
|
|
—
|
|
—
|
|
|
03/18/2018
|
(3)
|
79,342
|
|
102,006
|
|
5.19
|
|
03/17/2028
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
03/18/2018
|
(5)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
93,099
|
|
385,430
|
|
|
02/19/2019
|
(4)(5)
|
—
|
|
—
|
|
—
|
|
—
|
|
126,775
|
|
524,849
|
|
63,388
|
|
262,426
|
Ken Brause
|
|
04/16/2018
|
(3)
|
106,714
|
|
137,189
|
|
5.54
|
|
04/15/2028
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
04/16/2018
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
70,728
|
|
292,814
|
|
—
|
|
—
|
|
|
02/19/2019
|
(4)(5)
|
—
|
|
—
|
|
—
|
|
—
|
|
50,710
|
|
209,939
|
|
25,355
|
|
104,970
|
Cory Kampfer
|
|
04/26/2013
|
(2)
|
70,417
|
|
—
|
|
0.68
|
|
04/25/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
08/14/2014
|
(2)
|
100,000
|
|
—
|
|
10.66
|
|
08/13/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
07/30/2015
|
(2)
|
98,232
|
|
—
|
|
12.67
|
|
07/29/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
09/19/2016
|
(3)
|
55,402
|
|
12,780
|
|
5.95
|
|
09/18/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
09/19/2016
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
7,747
|
|
32,073
|
|
—
|
|
—
|
|
|
08/22/2017
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
27,346
|
|
113,212
|
|
—
|
|
—
|
|
|
03/18/2018
|
(3)
|
22,674
|
|
29,140
|
|
5.19
|
|
03/17/2028
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
03/18/2018
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
14,888
|
|
61,636
|
|
—
|
|
—
|
|
|
02/19/2019
|
(4)(5)
|
—
|
|
—
|
|
—
|
|
—
|
|
50,710
|
|
209,939
|
|
25,355
|
|
104,970
|
Andrea Gellert
|
|
03/27/2013
|
(2)
|
201,334
|
|
—
|
|
0.765
|
|
03/26/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
08/14/2014
|
(2)
|
100,000
|
|
—
|
|
10.66
|
|
08/13/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
07/30/2015
|
(2)
|
98,232
|
|
—
|
|
12.67
|
|
07/29/2025
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
09/19/2016
|
(3)
|
55,402
|
|
12,780
|
|
5.95
|
|
09/18/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
09/19/2016
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
7,747
|
|
32,073
|
|
—
|
|
—
|
|
|
08/22/2017
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
27,346
|
|
113,212
|
|
—
|
|
—
|
|
|
03/18/2018
|
(3)
|
22,674
|
|
29,140
|
|
5.19
|
|
03/17/2028
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
03/18/2018
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
14,888
|
|
61,636
|
|
—
|
|
—
|
|
|
02/19/2019
|
(4)(5)
|
—
|
|
—
|
|
—
|
|
—
|
|
50,710
|
|
209,939
|
|
25,355
|
|
104,970
|
Nick Brown
|
|
12/19/2016
|
(3)
|
168,009
|
|
49,940
|
|
4.26
|
|
12/18/2026
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
12/19/2016
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
46,944
|
|
194,348
|
|
—
|
|
—
|
|
|
03/18/2018
|
(3)
|
42,504
|
|
54,647
|
|
5.19
|
|
03/17/2028
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
03/18/2018
|
(4)
|
—
|
|
—
|
|
—
|
|
—
|
|
27,915
|
|
115,568
|
|
—
|
|
—
|
|
|
02/19/2019
|
(4)(5)
|
—
|
|
—
|
|
—
|
|
—
|
|
54,333
|
|
224,939
|
|
27,167
|
|
112,471
|
(1)
|
Reflects the market value of
the shares underlying RSUs as of December 31, 2019, based on the closing price of our common stock, as reported on the New
York Stock Exchange, of $4.14 per share on December 31, 2019, the last business day of 2019.
|
(2)
|
Reflects stock options granted on the dates
shown which are now fully vested and immediately exercisable.
|
(3)
|
Reflects stock options which vest on the
following terms: one-fourth vest on the one-year anniversary of the grant date, and the balance vest in equal installments
over a period of 36 months, subject to continued service with the Company.
|
|
2020 PROXY STATEMENT
|
48
|
(4)
|
Reflects RSUs which vest in
four equal annual installments beginning one year after the Company’s next common vesting date following the date of
grant.
|
(5)
|
Reflects the status of PBRS awards granted
on the dates shown. PBRS awards are eligible for vesting in three equal annual installments subject to the Company’s
achievement of certain financial performance goals for the following performance periods:
|
|
|
Grant Date
|
Performance Period
|
Status
|
9/19/2016
|
July 1, 2016 - June 30, 2017
|
No shares earned
|
|
July 1, 2017 - June 30, 2018
|
Earned
|
|
July 1, 2018 - June 30, 2019
|
Earned
|
3/18/2018
|
January 1, 2018 - December 31, 2018
|
Earned
|
|
January 1, 2019 - December 31, 2019
|
Earned
|
|
January 1, 2020 - December 31, 2020
|
In progress
|
2/19/2019
|
January 1, 2019 - December 31, 2019
|
Earned
|
|
January 1, 2020 - December 31, 2020
|
In progress
|
|
January 1, 2021 - December 31, 2021
|
—
|
(6)
|
Reflects the market value of
unvested PBRS as of December 31, 2019, based on the closing price of our common stock, as reported on the New York Stock Exchange,
of $4.14 per share on December 31, 2019, the last business day of 2019.
|
|
—
|
OPTION EXERCISES AND STOCK VESTED
|
The following table provides information on stock
option exercises and stock awards that vested for the NEOs in 2019.
|
|
Option Awards(1)(2)
|
|
Stock Awards(3)
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized
|
|
|
Acquired on Exercise
|
|
Exercise
|
|
Acquired on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
Noah Breslow
|
|
228,000
|
|
1,048,700
|
|
172,344
|
|
822,532
|
Ken Brause
|
|
—
|
|
—
|
|
23,577
|
|
132,974
|
Cory Kampfer
|
|
16,667
|
|
107,752
|
|
36,408
|
|
161,183
|
Andrea Gellert
|
|
—
|
|
—
|
|
36,408
|
|
161,183
|
Nick
Brown
|
|
—
|
|
—
|
|
32,777
|
|
227,347
|
(1)
|
For Mr. Breslow, reflects (a)
100,000 shares acquired upon the exercise of stock options on January 2, 2019 for a realized value of $553,500; (b) 68,000
shares acquired upon the exercise of stock options on May 6, 2019 for a realized value of $307,700 and (c) 60,000 shares acquired
upon the exercise of stock options on August 1, 2019 for a realized value of $187,500.
|
(2)
|
For Mr. Kampfer, reflects 16,667 shares
acquired upon the exercise of stock options on January 23, 2019 for a realized value of $107,752.
|
(3)
|
The following table provides details of
the stock awards that vested during 2019:
|
|
|
|
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Stock Price on
|
|
|
|
|
|
|
Acquired
|
|
Vesting
|
|
Vesting Date
|
|
|
Name
|
|
Vesting Date
|
|
(#)
|
|
($)
|
|
($)
|
|
Award Description
|
Noah Breslow
|
|
11/1/2019
|
|
41,020
|
|
187,872
|
|
4.58
|
|
RSU
|
|
|
11/1/2019
|
|
29,349
|
|
134,418
|
|
4.58
|
|
PBRS
|
|
|
8/1/2019
|
|
35,083
|
|
122,791
|
|
3.50
|
|
RSU
|
|
|
5/1/2019
|
|
66,892
|
|
377,271
|
|
5.64
|
|
PBRS
|
Ken Brause
|
|
5/1/2019
|
|
23,577
|
|
132,974
|
|
5.64
|
|
RSU
|
Cory Kampfer
|
|
11/1/2019
|
|
21,421
|
|
98,108
|
|
4.58
|
|
RSU
|
|
|
8/1/2019
|
|
10,024
|
|
35,084
|
|
3.50
|
|
RSU
|
|
|
5/1/2019
|
|
4,963
|
|
27,991
|
|
5.64
|
|
RSU
|
Andrea Gellert
|
|
11/1/2019
|
|
21,421
|
|
98,108
|
|
4.58
|
|
RSU
|
|
|
8/1/2019
|
|
10,024
|
|
35,084
|
|
3.50
|
|
RSU
|
|
|
5/1/2019
|
|
4,963
|
|
27,991
|
|
5.64
|
|
RSU
|
Nick Brown
|
|
2/1/2019
|
|
23,472
|
|
174,866
|
|
7.45
|
|
RSU
|
|
|
5/1/2019
|
|
9,305
|
|
52,480
|
|
5.64
|
|
PBRS
|
|
2020 PROXY STATEMENT
|
49
|
|
—
|
POTENTIAL PAYMENTS UPON TERMINATION
OR CHANGE IN CONTROL
|
The table below shows potential payments to our
NEOs in the event of their involuntary termination of employment without cause, and termination without cause or resignation for
good reason in connection with a change in control. The payments and benefits extended to the NEOs upon each of these termination
scenarios are payable pursuant to the terms of their CIC Agreements, the 2014 Equity Incentive Plan and related award agreements.
There are no incremental benefits payable to the NEOs upon termination of employment due to death or disability, a change in control
without termination, termination of employment for cause, voluntary separation or retirement. The table below assumes the following:
•
|
Termination of employment and/or change of control, as applicable, occurred on December 31, 2019;
|
|
|
•
|
Vested stock options and other vested equity awards were neither exercised nor sold; and
|
|
|
•
|
The NEOs elected COBRA benefits for the maximum time period allotted under their CIC Agreements.
|
|
|
|
|
|
|
Termination without
|
|
|
|
|
Cause or Resignation for
|
|
|
Involuntary Termination
|
|
Good Reason in Connection
|
|
|
without Cause
|
|
with a Change in Control
|
Name
|
|
($)
|
|
($)
|
Noah Breslow
|
|
|
|
|
Cash Severance
|
|
580,000
|
|
580,000
|
Short-Term Incentive
|
|
290,000
|
|
870,000
|
Benefit Continuation
|
|
26,905
|
|
26,905
|
Equity
|
|
432,243
|
|
2,184,342
|
TOTAL
|
|
1,329,148
|
|
3,661,247
|
Ken Brause
|
|
|
|
|
Cash Severance
|
|
300,000
|
|
400,000
|
Short-Term Incentive
|
|
160,000
|
|
480,000
|
Benefit Continuation
|
|
20,178
|
|
26,905
|
Equity
|
|
—
|
|
1,117,723
|
TOTAL
|
|
480,178
|
|
2,024,628
|
Cory Kampfer
|
|
|
|
|
Cash Severance
|
|
262,500
|
|
350,000
|
Short-Term Incentive
|
|
122,500
|
|
367,500
|
Benefit Continuation
|
|
16,301
|
|
21,734
|
Equity
|
|
—
|
|
830,830
|
TOTAL
|
|
401,301
|
|
1,570,064
|
Andrea Gellert
|
|
|
|
|
Cash Severance
|
|
262,500
|
|
350,000
|
Short-Term Incentive
|
|
52,500
|
|
157,500
|
Benefit Continuation
|
|
20,125
|
|
26,833
|
Equity
|
|
—
|
|
830,830
|
TOTAL
|
|
335,125
|
|
1,365,163
|
Nick Brown
|
|
|
|
|
Cash Severance
|
|
262,500
|
|
350,000
|
Short-Term Incentive
|
|
122,500
|
|
367,500
|
Benefit Continuation
|
|
17,186
|
|
22,915
|
Equity
|
|
—
|
|
1,086,076
|
TOTAL
|
|
402,186
|
|
1,826,491
|
|
2020 PROXY STATEMENT
|
50
|
|
—
|
EQUITY BENEFIT AND STOCK PLANS
|
Securities Authorized for Issuance under Equity
Compensation Plans
At December 31, 2019 we maintained three equity
compensation plans, all of which were approved by the Board of Directors and our stockholders prior to our initial public offering
in December 2014. The following table provides the information shown for each of the three plans as of December 31, 2019.
|
|
Shares issuable
|
|
|
|
Shares remaining
|
|
|
upon exercise
|
|
Weighted-average
|
|
available for future
|
|
|
of outstanding
|
|
exercise price of
|
|
issuance under plan
|
|
|
plan options,
|
|
outstanding options,
|
|
(excluding those
|
|
|
warrants and rights
|
|
warrants and rights(1)
|
|
reflected in column (a))
|
Plan
|
|
(a)
|
|
(b)
|
|
(c)
|
Equity compensation plans approved by security
holders(2)(3)
|
|
11,007,779
|
|
$ 5.68
|
|
9,216,958
|
Equity compensation
plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
TOTAL
|
|
11,007,779
|
|
$ 5.68
|
|
9,216,958
|
(1)
|
The weighted average exercise price is calculated based solely on outstanding
stock options. It does not take into account the shares of our common stock underlying PBRS or RSUs, which have no exercise
price.
|
(2)
|
Includes the following plans: 2014 Equity Incentive Plan, Amended and Restated
2007 Stock Incentive Plan and ESPP.
|
(3)
|
The 2014 Equity Incentive Plan provides that on the first day of each year
beginning in 2016 and ending in 2020, the number of shares available for issuance thereunder is automatically increased by
a number equal to the least of (i) 7,200,000 shares, (ii) 4% of the outstanding shares of our common stock as of the last
day of our immediately preceding year, or Threshold Percentage, (iii) a percentage equal to the Threshold Percentage, plus
the difference between the Threshold Percentage and the percentage added to the 2014 Equity Incentive Plan for each prior
year; or (iv) such other amount as the 2014 Equity Incentive Plan Administrator (as defined in the 2014 Equity Incentive Plan)
may determine. For the year beginning January 1, 2020, there was no increase in the number of shares issuable under the 2014
Equity Incentive Plan. Our ESPP provides that on the first day of each year, the number of shares available for issuance thereunder
is automatically increased by a number equal to the least of (i) 1% of the outstanding shares of our common stock on the first
day of such year, (ii) 1,800,000 shares, or (iii) such other amount as the ESPP Administrator (as defined in the ESPP) may
determine. For the year beginning January 1, 2020, there was no increase in the number of shares issuable under the ESPP.
|
Under the SEC rules, the Company is providing
the following information for calendar year 2019:
•
|
The total compensation of the median employee, excluding the CEO, was $117,655;
|
|
|
•
|
The annual total compensation of the CEO: $2,656,678; and
|
|
|
•
|
The ratio of CEO total compensation to median employee total compensation: 23 to 1.
|
Our CEO pay ratio information
is a reasonable good faith estimate calculated in a manner consistent with the SEC pay ratio rules and methods for disclosure.
In order to determine the
median employee, the Company examined cash compensation (base salary earnings, short-term incentive awards and commissions) plus
the fair market value of equity granted in the 2019 calendar year for all employees, excluding our CEO, employed as of December
31, 2019, or the Determination Date. On the Determination Date, our employee population consisted of 656 individuals, of which
579 employees were located in the United States and 77 were located in non-US jurisdictions. This population consisted of our full-time,
part-time, and temporary employees. Pursuant to SEC rules we excluded the approximately 80 employees of Evolocity. In April 2019,
we combined our Canadian operations with Evolocity to create a new holding company in which we own a 58.5% majority interest.
Once we identified our median
employee, we combined all of the elements of such employee’s compensation for 2019 to determine the median employee total
compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K and compared such total compensation to
the total compensation of our CEO, as reported in the Summary Compensation Table.
|
2020 PROXY STATEMENT
|
51
|
|
|
PROPOSAL
3
ADVISORY VOTE ON THE FREQUENCY
OF FUTURE STOCKHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION
|
Pursuant to Section 14A of the
Exchange Act, we are asking stockholders to recommend, on an advisory basis, whether future stockholder advisory approval of the
compensation of our NEOs should occur every one, two or three years. The Board believes that an annual advisory vote to approve
executive compensation is the most appropriate policy for our stockholders and the Company at this time. While this vote is non-binding,
the Company values the opinions of its stockholders and will consider the outcome of the vote when determining the frequency of
future stockholder advisory approvals of executive compensation. Consistent with current prevailing market practice and the Board’s
compensation philosophy, the Board recommends an annual frequency for the stockholder advisory vote on executive compensation.
|
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS’
VOTE ONE YEAR AS THE FREQUENCY WITH WHICH EXECUTIVE COMPENSATION SHOULD BE SUBJECT TO AN ADVISORY VOTE FROM OUR STOCKHOLDERS.
|
|
2020 PROXY STATEMENT
|
52
|
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
The following table sets forth
information regarding beneficial ownership of our common stock as of February 28, 2020 by:
•
|
Each person or group of affiliated persons known
by us to be the beneficial owner of more than 5% of our common stock;
|
•
|
Each of our NEOs;
|
•
|
Each of our directors; and
|
•
|
All executive officers and directors as a group.
|
We have determined beneficial
ownership in accordance with the rules of the SEC and the information is not necessarily indicative of beneficial ownership for
any other purpose. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting
and sole investment power with respect to all shares that they beneficially own, subject to community property laws where applicable.
Under SEC rules, the calculation of the number of shares of our common stock beneficially owned by a person and the percentage
ownership of that person includes both outstanding shares of our common stock then owned plus any shares of our common stock subject
to options (or other rights, if any) held by that person that are currently exercisable or exercisable within 60 days of February
28, 2020. Shares subject to those options for a particular person are not included as outstanding, however, for the purpose of
computing the percentage ownership of any other person. We have based percentage ownership of our common stock on 58,419,304 shares
of our common stock outstanding as of February 28, 2020. Unless otherwise indicated, the address of each beneficial owner listed
on the table below is c/o On Deck Capital, Inc., 1400 Broadway, 25th Floor, New York, New York 10018.
Name
|
|
Number of
Outstanding
Shares Owned
|
|
|
Shares Subject
to Options
and RSUs(7)
|
|
|
Total
Beneficial
Ownership
|
|
|
Percent
of Shares
Outstanding
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nantahala Capital Management, LLC(1)
|
|
|
5,672,644
|
|
|
|
—
|
|
|
|
5,672,644
|
|
|
|
9.7
|
%
|
Renaissance Technologies LLC(2)
|
|
|
5,393,029
|
|
|
|
—
|
|
|
|
5,393,029
|
|
|
|
9.2
|
%
|
BlackRock, Inc.(3)
|
|
|
4,870,432
|
|
|
|
—
|
|
|
|
4,870,432
|
|
|
|
8.3
|
%
|
Dimensional Fund Advisors LP(4)
|
|
|
4,610,429
|
|
|
|
—
|
|
|
|
4,610,429
|
|
|
|
7.9
|
%
|
EJF Capital, LLC(5)
|
|
|
3,291,255
|
|
|
|
—
|
|
|
|
3,291,255
|
|
|
|
5.6
|
%
|
Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noah Breslow(6)
|
|
|
950,780
|
|
|
|
3,148,332
|
|
|
|
4,099,112
|
|
|
|
6.6
|
%
|
Ken Brause
|
|
|
23,222
|
|
|
|
124,764
|
|
|
|
147,986
|
|
|
|
*
|
|
Cory Kampfer
|
|
|
253,281
|
|
|
|
356,725
|
|
|
|
610,006
|
|
|
|
1.0
|
%
|
Andrea Gellert
|
|
|
67,062
|
|
|
|
482,142
|
|
|
|
549,204
|
|
|
|
*
|
|
Nick Brown
|
|
|
59,212
|
|
|
|
241,309
|
|
|
|
300,521
|
|
|
|
*
|
|
Chandra Dhandapani
|
|
|
8,592
|
|
|
|
18,043
|
|
|
|
26,635
|
|
|
|
*
|
|
Daniel Henson
|
|
|
97,501
|
|
|
|
84,380
|
|
|
|
181,881
|
|
|
|
*
|
|
Bruce P. Nolop
|
|
|
98,214
|
|
|
|
134,823
|
|
|
|
233,037
|
|
|
|
*
|
|
Manolo Sanchez
|
|
|
8,592
|
|
|
|
18,043
|
|
|
|
26,635
|
|
|
|
*
|
|
Jane J. Thompson
|
|
|
73,283
|
|
|
|
162,621
|
|
|
|
235,904
|
|
|
|
*
|
|
Ronald F. Verni
|
|
|
84,283
|
|
|
|
207,621
|
|
|
|
291,904
|
|
|
|
*
|
|
Neil E. Wolfson
|
|
|
194,031
|
|
|
|
102,621
|
|
|
|
296,652
|
|
|
|
*
|
|
All executive officers and directors as a group (12 persons)
|
|
|
1,918,053
|
|
|
|
5,081,424
|
|
|
|
6,999,477
|
|
|
|
10.7
|
%
|
|
2020 PROXY STATEMENT
|
53
|
*
|
Represents beneficial
ownership of less than 1%.
|
(1)
|
Based on information contained
in a Schedule 13G/A filed with the SEC on February 13, 2020, consists of 5,672,644 shares which Nantahala Capital Management,
LLC (Nantahala) may be deemed to beneficially own held by funds and separately managed accounts under its control, and which
Messrs. Wilmot B. Harkey and Daniel Mack may also be deemed to beneficially own as the managing members of Nantahala, and
as to which they share voting and dispositive power with Nantahala. The address for each of Nantahala and these persons is
130 Main Street, 2nd floor, New Canaan, Connecticut 06840.
|
(2)
|
Based on information contained
in a Schedule 13G/A filed with the SEC on February 13, 2020, all of the reported shares are beneficially owned by each of
Renaissance Technologies, LLC (RTC) and Renaissance Technologies Holdings Corporation (RTHC), the majority owner of RTC. Of
the reported shares, each of RTC and RTHC are stated to have sole voting power as to 5,393,029 shares, sole dispositive power
as to 5,402,055 shares and shared dispositive power as to 3,174 shares. The address for each of these entities is 800 Third
Avenue, New York, New York 10022.
|
(3)
|
Based on information contained
in a Schedule 13G filed with the SEC on February 7, 2020, all of the reported shares are beneficially owned by BlackRock,
Inc. (BlackRock). According to the filing, BlackRock has sole voting power as to 4,690,888 shares and sole dispositive power
as to all such shares. The address for BlackRock is 55 East 52nd Street, New York, New York 10055.
|
(4)
|
Based on information contained
in a Schedule 13G filed with the SEC on February 12, 2020, all of the reported shares are beneficially owned by Dimensional
Fund Advisors LP (Dimensional). According to the filing, Dimensional has sole voting power as to 4,384,877 shares and sole
dispositive power to all such shares. Dimensional, an investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940,
and serves as investment manager or subadvisor to certain funds. In certain cases, subsidiaries of Dimensional may act as
an advisor to certain funds. In its role as investment advisor or manager, Dimensional or its subsidiaries may possess voting
and/or investment power over the securities of the Company that are owned by the funds and may be deemed to be the beneficial
owner of the shares of the Company held by the funds. All securities reported are owned by the funds. Dimensional and/or its
subsidiaries disclaim beneficial ownership of such securities. The address is Dimensional is Building One, 6300 Bee Cave Road,
Austin, Texas 78746.
|
(5)
|
Based on information contained
in a Schedule 13G filed with the SEC on February 20, 2020, the reported shares are beneficially owned by EJF Capital LLC (EJF),
Emanuel J. Friedman, EJF Debt Opportunities Master Fund, L.P. (EJF Fund I L.P.), EJF Debt Opportunities GP, LLC (EJF GP LLC),
EJF Debt Opportunities Master Fund II, LP (EJF Fund II LP), and EJF Debt Opportunities II GP, LLC (EJF II GP LLC). Based on
information contained in a Schedule 13G filed with the SEC on February 20, 2020, the reported shares are beneficially owned
by EJF Capital LLC (EJF), Emanuel J. Friedman, EJF Debt Opportunities Master Fund, L.P. (EJF Fund I L.P.), EJF Debt Opportunities
GP, LLC (EJF GP LLC), EJF Debt Opportunities Master Fund II, LP (EJF Fund II LP), and EJF Debt Opportunities II GP, LLC (EJF
II GP LLC). According to the filing, EJF, as sole member and manager of EJF GP LLC and EJF II GP LLC, and Mr. Friedman, as
controlling member of EJF, have shared voting and dispositive power as to all shares. EJF GP LLC, as general partner of EJF
Fund I L.P., and EJF Fund I L.P. have shared voting and dispositive power as to 2,364,264 shares. EJF II GP LLC, as general
partner of EJF Fund II LP, and EJF Fund II LP have shared voting and dispositive power as to 926,991 shares. The address of
EJF is 2107 Wilson Boulevard, Suite 410, Arlington, Virginia 22201.
|
(6)
|
Consists of (i) 886,780 shares
held of record by Mr. Breslow; (ii) 32,000 shares held in a trust for Mr. Breslow’s minor daughter for which Mr. Breslow’s
spouse serves as trustee; and (ii) 32,000 shares held in a trust for Mr. Breslow’s minor son for which Mr. Breslow’s
spouse serves as trustee.
|
(7)
|
Reflects (i) options exercisable
as of February 28, 2020; (ii) shares subject to options exercisable within 60 days of February 28, 2020; and (iii) unvested
RSUs subject to vesting within 60 days of February 28, 2020.
|
|
2020 PROXY STATEMENT
|
54
|
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
In addition to the director and
executive officer compensation arrangements discussed above under “Corporate Governance” and “Executive Compensation,”
the following is a description of each transaction since January 1, 2019 and each currently proposed transaction in which:
•
|
We have been or are to be
a participant;
|
•
|
The amount involved exceeded or exceeds
$120,000; and
|
•
|
Any of our directors, executive officers
or holders of more than 5% of our capital stock, or any immediate family member of or person sharing the household with any
of these individuals, had or will have a direct or indirect material interest.
|
We have entered into indemnification
agreements with our directors and executive officers. The indemnification agreements and our Certificate and Bylaws require us
to indemnify our directors and executive officers to the fullest extent permitted by Delaware law.
—
|
POLICIES AND PROCEDURES FOR RELATED
PARTY TRANSACTIONS
|
The Board of Directors has adopted
a related party transactions policy which delegates to the Audit Committee primary responsibility for reviewing and, if applicable,
approving and/or ratifying related party transactions. In certain circumstances, related party transactions can be reviewed by
the Nominating Committee and/or Audit Committee, or by the disinterested members of the Board of Directors as determined by either
Committee, in its sole discretion. A related party is defined as a director, executive officer, nominee for director, or greater
than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and their immediate
family members. Under the policy, our directors and executive officers (including director nominees and proposed executive officers)
are required to promptly notify the Company’s General Counsel of any potential or actual related party transactions. Potential
related party transactions are then reviewed and analyzed with the Audit Committee, in consultation with the General Counsel and
third-party experts, if needed, to determine whether the transaction is of a type that requires compliance with the policy.
In reviewing such transactions,
the Audit Committee will consider all relevant facts and circumstances including, among others:
•
|
The commercial reasonableness
of the terms of the related party transaction;
|
•
|
The benefit or perceived benefit (or
lack thereof) of the related party transaction to the Company;
|
•
|
Whether there are business reasons for
the Company to enter into the related party transaction;
|
•
|
Whether the related party transaction
would impair the independence of an outside director;
|
•
|
Whether there are reputational, conflict
of interest, competitive or similar risks to the Company associated with the related party transaction;
|
•
|
The materiality and character of the
related party’s interest in the transaction;
|
•
|
Whether there are alternatives available
that do not involve a related party transaction; and
|
•
|
Whether the transaction would present
an improper conflict of interest for any director or executive officer.
|
Under the policy, the Audit Committee
has reviewed certain transactions and determined them to be generally preapproved, including, among others:
•
|
A transaction where the aggregate amount
of the related party’s interest is not expected to exceed $120,000 in any calendar year;
|
•
|
Compensation paid to a director or designee
that has been approved by the Compensation Committee; and
|
•
|
A transaction with an entity at which
a related party is an employee (other than an executive officer), director, limited partner or beneficial owner of less than
5% of the entity’s common stock and the amount involved in the transaction does not exceed the greater of $2 million
or 2% of that entities total annual revenues.
|
The Audit Committee retains the
right to review, approve and/or ratify any preapproved transaction in its discretion.
|
2020 PROXY STATEMENT
|
55
|
—
|
TRANSACTIONS WITH RELATED PARTIES
|
In connection with our publicly
announced common share repurchase program, we bought shares from related parties as described below.
On November 5, 2019, we repurchased
4,054,250 common shares for approximately $18.6 million from Institutional Venture Partners XIV, L.P. On February 21, 2020, we
repurchased 7,062,396 common shares for approximately $28.6 million from RRE Ventures IV, L.P.
Each transaction was a private
transaction the seller initiated, and each was based on a price publicly reported by the New York Stock Exchange. Prior to each
transaction, the seller had beneficially owned more than 5% of our outstanding common stock. Each transaction was approved by our
Board of Directors in accordance with our related party transaction policy.
STOCKHOLDER COMMUNICATIONS POLICY
Our Board of Directors has adopted
a Stockholder Communications Policy to provide a process by which our stockholders may communicate with the non-management members
of the Board of Directors. Under the policy, stockholders may send communications to our General Counsel at On Deck Capital, Inc.,
1400 Broadway, 25th Floor, New York, New York 10018, Attn: General Counsel. Our General Counsel shall review all incoming
communications (except for mass mailings, service complaints or inquiries, job inquiries, business solicitations and patently offensive
or otherwise inappropriate material) and, if appropriate, route such communications to the appropriate member(s) of the Board of
Directors or, if none is specified, to the Chairman of the Board.
Our General Counsel may decide
in the exercise of his or her judgment whether a response to any communication is necessary and shall provide a report to the Nominating
Committee on a quarterly basis of any communications received for which our General Counsel has either responded or determined
no response is necessary.
This procedure for communications
with the non-management directors is administered by the Company’s Nominating Committee. This procedure does not apply to
(a) communications to non-management directors from officers or directors of the Company who are stockholders, or (b) stockholder
proposals submitted pursuant to Rule 14a-8 under the Exchange Act.
OTHER MATTERS
—
|
DELINQUENT SECTION 16(a) REPORTS
|
Section 16(a) of the Exchange
Act requires directors, certain officers and ten percent stockholders to file reports of ownership and changes in ownership with
the SEC. Based upon a review of filings with the SEC and/or written representations that no other reports were required, we believe
that all reports for the Company’s officers and directors that were required to be filed under Section 16 of the Exchange
Act were timely filed for 2019, except that due to an administrative error, one late Form 4 was filed on behalf of Mr. Breslow
reflecting one transaction.
|
2020 PROXY STATEMENT
|
56
|
|
|
AUDIT COMMITTEE REPORT
|
This Audit Committee Report
does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other OnDeck filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically
incorporate it by reference therein.
The following is the report of
the Audit Committee of our Board of Directors. The Audit Committee has reviewed and discussed our audited financial statements
for the year ended December 31, 2019 with our management. In addition, the Audit Committee has discussed with Ernst &
Young LLP, our independent registered public accountants, the matters required to be discussed by standards promulgated by the
American Institute of Certified Public Accountants and the Public Company Accounting Oversight Board, or PCAOB, including PCAOB
Auditing Standard No. 1301 “Communications with Audit Committees.” The Audit Committee also has received the written
disclosures and the letter from Ernst & Young LLP as required by the applicable requirements of the PCAOB regarding the
independent accountant’s communications with the audit committee concerning independence, and the Audit Committee has discussed
with Ernst & Young LLP the independence of Ernst & Young LLP.
Based on the Audit Committee’s
review of the matters noted above and its discussions with our independent accountants and our management, the Audit Committee
recommended to the Board of Directors that the financial statements be included in our Annual Report on Form 10-K for the year
ended December 31, 2019.
Respectfully submitted by the
members of the Audit Committee of the Board of Directors:
Neil E. Wolfson (Chair)
Bruce P. Nolop
Manolo Sánchez
|
2020 PROXY STATEMENT
|
57
|
|
|
PROPOSAL 4
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
|
Our Audit Committee of the Board
of Directors has appointed Ernst & Young LLP as OnDeck’s independent registered public accountants for the year
ending December 31, 2020 and the Board recommends that stockholders vote for ratification of such appointment. Although stockholder
ratification of the appointment of our independent registered public accountants is not required under our governance documents,
we are asking stockholders to ratify the appointment as a matter of prudent corporate governance. Notwithstanding its selection
or voting results, the Audit Committee, in its discretion, may appoint new independent registered public accountants at any time
during the year if the Audit Committee believes that such a change would be in the best interests of OnDeck and its stockholders.
If our stockholders do not ratify the appointment, the Audit Committee may reconsider whether it should appoint another independent
registered public accounting firm.
Ernst & Young LLP served
as OnDeck’s independent registered public accounting firm for the year ended December 31, 2019. We expect that representatives
of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions and to make a statement
if they so desire.
—
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
The following table sets forth
all fees accrued or paid to Ernst & Young LLP for the years ended December 31, 2019 and 2018:
|
|
2019
|
|
|
2018
|
|
Audit Fees(1)
|
|
$
|
1,614,000
|
|
|
$
|
1,131,000
|
|
Audit-Related Fees(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
Tax Fees(3)
|
|
$
|
289,000
|
|
|
$
|
144,000
|
|
All Other Fees(4)
|
|
$
|
55,000
|
|
|
$
|
284,000
|
|
TOTAL
|
|
$
|
1,958,000
|
|
|
$
|
1,559,000
|
|
(1)
|
Audit Fees consist
of professional services rendered in connection with the audit of our annual consolidated or subsidiary financial statements,
including audited financial statements presented in our Annual Report, the audit of our internal control over financial reporting,
and services that are normally provided by the independent registered public accountants in connection with statutory and
regulatory filings or engagements for those years.
|
(2)
|
Audit-Related Fees consist of fees
for professional services for assurance and related services that are reasonably related to the performance of the audit or
review of our consolidated financial statements and are not reported under “Audit Fees.” These services include
accounting consultations concerning financial accounting and reporting standards.
|
(3)
|
Tax Fees consist of fees for professional
services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international
tax compliance, and IRS audit support.
|
(4)
|
All Other Fees consist of permitted
services other than those that meet the criteria above.
|
Pre-approval Policy
Under our Audit Committee’s
policy governing our use of the services of our independent registered public accountants, the Audit Committee is required to pre-approve
all audit and permitted non-audit services performed by our independent registered public accountants in order to ensure that the
provision of such services does not impair the public accountants’ independence. In the years ended December 31, 2019 and
2018, all fees identified above under the captions “Audit Fees,” “Audit-Related Fees,” “Tax Fees,”
and “All Other Fees” that were billed by Ernst & Young LLP were approved by the Audit Committee in accordance
with SEC requirements.
In the year ended December 31,
2019, there were no other professional services provided by Ernst & Young LLP, other than those listed above, that would
have required our Audit Committee to consider their compatibility with maintaining the independence of Ernst & Young LLP.
|
2020 PROXY STATEMENT
|
58
|
The affirmative vote of the holders
of a majority of the shares of common stock present in person or represented by proxy and entitled to vote on the matter is necessary
to ratify the selection of Ernst & Young LLP as our independent registered public accountants for the year ending December
31, 2020. Abstentions are treated as shares of common stock present in person or represented by proxy and entitled to vote and
therefore, will have the effect of a vote “against” the ratification of Ernst & Young LLP as our independent
registered public accountants. Broker non-votes will have no effect on the outcome of the vote.
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS ONDECK’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2020.
|
The Board of Directors does not
know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented or otherwise
allowed to be considered at the Annual Meeting, the persons named in the enclosed proxy will have discretion to vote shares they
represent in accordance with their own judgment on such matters.
It is important that your shares
be represented at the meeting, regardless of the number of shares that you hold. You are, therefore, urged to submit your proxy
or voting instructions at your earliest convenience.
BY ORDER OF THE BOARD OF DIRECTORS
New York, New York
March 18, 2020
|
2020 PROXY STATEMENT
|
59
|
|
|
|
|
|
|
Your vote matters – here’s how to vote!
You may vote online or by phone instead of mailing this card.
|
|
|
|
|
|
|
|
Votes
submitted electronically must be received by May 07, 2020 at 1:00 A.M., New York time.
|
|
|
|
|
|
|
|
Online
Go to www.envisionreports.com/ONDK or scan the
QR code – login details are located in the shaded bar below.
|
|
|
|
|
|
|
|
Phone
Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada
|
Using a black ink pen, mark your votes
with an X as shown in this example.
Please do not write outside the designated areas.
|
|
|
|
|
|
|
Save paper, time and money!
Sign up for electronic delivery at
www.envisionreports.com/ONDK
|
|
|
|
Annual Meeting Proxy Card
|
|
▼ IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
A
|
Proposals
– The Board of Directors recommend a vote FOR all the nominees listed, FOR Proposals 2 and 4 and for every
1 YEAR on Proposal 3.
|
|
1. Election of Directors:
|
|
|
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|
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For
|
|
Against
|
|
Abstain
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
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For
|
|
Against
|
|
Abstain
|
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01 - Noah Breslow
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02 - Jane J. Thompson
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03 - Ronald F. Verni
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For
|
|
Against
|
|
Abstain
|
|
|
|
1 Year
|
|
2 Years
|
|
3 Years
|
|
Abstain
|
2. Advisory approval of the company’s 2019 executive compensation
|
|
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3. Advisory vote on the frequency of future stockholder advisory votes on executive compensation
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4. To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal
year ending December 31, 2020.
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B
|
Authorized Signatures – This section must be completed for your vote to be counted. – Date and Sign Below
|
|
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) – Please print date below.
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|
Signature 1 – Please keep signature within the box.
|
|
Signature 2 – Please keep signature within the box.
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C 1234567890 J
N T
1 U P X 4 5 7 1 1 9
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037P4C
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2020 Annual Meeting Admission Ticket
2020 Annual Meeting of
On Deck Capital, Inc. Stockholders
Thursday, May 07, 2020, 8:00 A.M. MT
On
Deck Capital, Inc., 101 West Colfax Avenue, 9th Floor
Denver, Colorado 80202
Upon arrival, please present this admission
ticket
and photo identification at the registration desk.
The
meeting is being held at On Deck Capital, Inc., 101 West Colfax Avenue, 9th Floor, Denver, Colorado, 80202. Public
transportation is advised.
Public Transportation Information:
|
|
Denver International Airport (DIA) Information:
|
• Civic Center Station is located
across the street from On Deck Capital, Inc. office. The station services numerous
routes including Free MallRide, Free MetroRide, 0, 6, 12, 3L, 83L, CV, EV,
etc.
• Union Station is located
within walking distance and services Amtrak, Free MetroRide, Free MallRide,
Light Rail lines A, B, C, D, E, G and W.
|
|
• DIA is approximately 40 mins away by car
via Peña Blvd and I-70.
• Light rail line A provides a regular service
between DIA and Union Station.
Parking Information:
• Parking is available for
a fee, subject to availability, at several nearby public garages and on-street.
|
Attendance at the 2020 Annual Meeting of Stockholders is limited to stockholders. Admission will be on
a first-come, first-served basis. On Deck Capital, Inc. has elected to provide its Annual Report on Form 10-K for the fiscal year
ended December 31, 2019
in lieu of producing a glossy annual report.
▼ IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.▼
Proxy – On Deck Capital, Inc.
|
|
Notice of 2020 Annual Meeting of Stockholders
This Proxy is Solicited by the Board of Directors of On Deck Capital, Inc. for the 2020 Annual Meeting of Stockholders to be held Thursday, May 07, 2020.
The undersigned stockholder of On Deck Capital, Inc., a Delaware corporation, hereby acknowledges receipt of the 2020 Notice of Annual Meeting of Stockholders and Proxy Statement for the 2020 Annual Meeting of Stockholders of On Deck Capital, Inc. to be held Thursday, May 07, 2020 at 8:00 A.M. MT, at On Deck Capital, Inc., 101 West Colfax Avenue, 9th Floor, Denver, Colorado, 80202, and hereby appoints Noah Breslow, Kenneth A. Brause and Cory Kampfer, and each of them, as proxies and attorneys-in-fact, each with power of substitution and resubstitution and revocation and all powers that the undersigned would possess if personally present, to vote all of the shares owned by the undersigned at such meeting and any postponement(s) or adjournment(s) thereof as set forth on the reverse hereof, and in their discretion upon any other business that may properly come before such meeting and any such postponement(s) and adjournment(s).
Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all three director nominees, FOR Proposals 2 and 4, and ONE YEAR for Proposal 3.
In their discretion, the Proxies are authorized
to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)
Change of Address – Please print new address below.
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|
Comments – Please print your comments below.
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Meeting Attendance
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Mark box to the right if you plan to attend the Annual Meeting.
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