Table of Contents
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)
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-12 |
YELP INC. |
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(Name of Registrant as Specified In Its
Charter) |
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(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)(1) and 0-11. |
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computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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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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Table of Contents
YELP
INC.
140 New Montgomery Street
San Francisco, California 94105
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held
on April 13, 2016
Dear
Stockholder:
You are
cordially invited to attend the Annual Meeting of Stockholders (the Annual
Meeting) of YELP INC., a Delaware corporation (the Company). The Annual
Meeting will be held on Wednesday, April 13, 2016 at 9:00 a.m. (Pacific
Time).
We are pleased
to announce that this year, the Annual Meeting will be a completely virtual
meeting of stockholders, which will be conducted via a live audio webcast. You
will be able to attend the Annual Meeting, submit your questions and vote online
during the meeting by visiting www.virtualshareholdermeeting.com/YELP. We are
excited to embrace the latest technology to provide expanded access, improved
communication and cost savings for our stockholders and the Company. We believe
that hosting a virtual meeting will enable increased stockholder attendance and
participation by allowing stockholders to participate from any location around
the world.
At the Annual
Meeting, stockholders will vote on the following matters:
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1. |
To elect the
three nominees for director named in the accompanying proxy statement (the
Proxy Statement) to hold office until the 2019 Annual Meeting of
Stockholders. |
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2. |
To ratify
the selection by the Audit Committee of the Board of Directors of Deloitte
& Touche LLP as the independent registered public accounting firm of
the Company for the year ending December 31, 2016. |
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3. |
To approve,
on an advisory basis, the compensation of the Companys named executive
officers, as disclosed in the Proxy Statement. |
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4. |
To approve
the Companys 2012 Equity Incentive Plan, as amended, to: |
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a. |
increase the aggregate
number of shares of Class A common stock authorized for issuance under the
plan by 3,000,000 shares; and |
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b. |
increase the maximum
number of shares that may be automatically added to the share reserve on
January 1 of each year from January 1, 2017 through January 1, 2022 from
4.0% to 7.0% of the total number of shares of our capital stock
outstanding on December 31 of the preceding calendar year. |
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5. |
To conduct
any other business properly brought before the Annual
Meeting. |
These items
of business are more fully described in the Proxy Statement accompanying this
Notice.
The record
date for the Annual Meeting is February 16, 2016. Only stockholders of record at
the close of business on that date may vote at the Annual Meeting or any
adjournment thereof.
We look
forward to your attendance at our Annual Meeting.
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By Order of the Board of
Directors |
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Laurence Wilson |
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Corporate Secretary |
San Francisco, California
March 4,
2016
Table of Contents
You are cordially invited to attend
and participate in the Annual Meeting, which will be held virtually via the
Internet. Whether or not you expect to attend the Annual Meeting, please vote
over the telephone or Internet, or, if you receive a paper proxy card by mail,
by completing and returning the proxy card mailed to you, as promptly as
possible in order to ensure your representation at the Annual Meeting. Voting
instructions are provided in the Notice of Internet Availability of Proxy
Materials, or, if you receive a paper proxy card by mail, the instructions are
printed on your proxy card and included in the accompanying Proxy Statement.
Even if you have voted by proxy, you may still vote your shares if you attend
the Annual 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 Annual Meeting,
you must obtain a proxy issued in your name from that record
holder.
Table of Contents
TABLE OF CONTENTS
Table of Contents
Table of Contents
YELP INC.
140 New Montgomery
Street
San Francisco, California 94105
PROXY
STATEMENT
FOR THE 2016 ANNUAL MEETING
OF STOCKHOLDERS
April 13, 2016
QUESTIONS AND ANSWERS ABOUT THESE
PROXY MATERIALS AND VOTING
We are providing you with these proxy
materials because the Board of Directors of Yelp Inc., or the Board, is
soliciting your proxy to vote at Yelps 2016 Annual Meeting of Stockholders, or
the Annual Meeting, including at any adjournments or postponements thereof, to
be held via a live audio webcast on Wednesday, April 13, 2016 at 9:00 a.m.
Pacific Time. The Annual Meeting can be accessed by visiting
www.virtualshareholdermeeting.com/YELP, where you will be able to listen to the
meeting live, submit questions and vote online.
You are invited to attend the Annual
Meeting to vote on the proposals described in this Proxy Statement. However, you
do not need to attend the Annual Meeting to vote your shares. Instead, you may
simply follow the instructions below to submit your proxy. The proxy materials,
including this Proxy Statement and our 2015 Annual Report, are being distributed
and made available on or about March 4, 2016. As used in this Proxy Statement,
references to we, us, our, Yelp and the Company refer to Yelp Inc. and
its consolidated subsidiaries.
Why did I receive a notice regarding
the availability of proxy materials on the Internet?
Pursuant to rules adopted by the U.S.
Securities and Exchange Commission, or SEC, we have elected to provide access to
our proxy materials over the Internet. Consequently, our stockholders generally
will not receive paper copies of our proxy materials unless they request them.
We will instead send a Notice of Internet Availability of Proxy Materials, or
Notice, to our stockholders of record with instructions for accessing the proxy
materials and voting over the Internet or by telephone. All stockholders will
have the ability to access the proxy materials on the website referred to in the
Notice or request to have a printed set of the proxy materials. Instructions on
how to access the proxy materials over the Internet or to request a printed copy
may be found in the Notice.
We intend to mail the Notice on or
about March 4, 2016 to all stockholders of record entitled to vote at the Annual
Meeting.
Will I receive any other proxy
materials by mail?
We may send you a proxy card, along
with a second Notice, on or after March 14, 2016. In addition, you may request a
printed copy of our proxy materials by following the instructions found in the
Notice.
Who can vote at the Annual
Meeting?
Only stockholders of record at the
close of business on February 16, 2016 will be entitled to vote at the Annual
Meeting. On this record date, there were 67,611,020 shares of Class A common
stock and 8,445,146 shares of Class B common stock outstanding and entitled to
vote.
Stockholders of Record: Shares
Registered in Your Name
If on February 16, 2016 your shares
were registered directly in your name with our transfer agent, Computershare
Trust Company, N.A., then you are a stockholder of record. As a stockholder of
record, you may vote online at the Annual Meeting or vote by proxy. Whether or
not you plan to attend the Annual Meeting, we urge you to vote your shares
electronically over the Internet or by telephone, or by completing and returning
a printed proxy card that you may request or that we may elect to deliver at a
later time, to ensure your vote is counted.
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Beneficial Owners: Shares Registered
in the Name of a Broker or Bank
If on February 16, 2016 your shares
were held not in your name, but rather in an account at a brokerage firm, bank,
dealer or other similar organization, then you are a beneficial owner of shares
held in street name and the Notice is being forwarded to you by that
organization. The organization holding your account is considered to be the
stockholder of record for purposes of voting at the Annual Meeting. As a
beneficial owner, you have the right to direct your broker or other agent
regarding how to vote the shares in your account. You are also invited to attend
the Annual Meeting. However, because you are not the stockholder of record, you
may not vote your shares online at the Annual Meeting unless you request and
obtain a valid proxy from your broker or other agent.
What am I voting on?
There are four matters scheduled for a
vote:
● |
Proposal No. 1: the election of
three directors; |
● |
Proposal No. 2: the ratification
of the selection by the Audit Committee of the Board of Deloitte &
Touche LLP as our independent registered public accounting firm for the
year ending December 31, 2016; |
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Proposal No. 3: the approval, on
an advisory basis, of the compensation of our named executive officers, as
disclosed in this Proxy Statement in accordance with SEC
rules; and |
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Proposal No. 4: the approval of
our 2012 Equity Incentive Plan, as amended,
to: |
○ |
increase the aggregate number of
shares of Class A common stock authorized for issuance under the plan by
3,000,000 shares; and |
○ |
increase the maximum number of
shares that may be automatically added to the share reserve on January 1
of each year from January 1, 2017 through January 1, 2022 from 4.0% to
7.0% of the total number of shares of our capital stock outstanding on
December 31 of the preceding calendar year. |
What if another matter is properly
brought before the Annual Meeting?
The Board knows of no other matters
that will be presented for consideration at the Annual Meeting. If any other
matters are properly brought before the Annual Meeting, it is the intention of
the persons named in the proxy to vote on those matters in accordance with their
best judgment.
How do I attend and participate in the Annual Meeting?
This years Annual Meeting will be held entirely online via audio webcast to allow greater participation. You may attend, vote and ask questions at the Annual Meeting by following the instructions provided on the Notice to log in to www.virtualshareholdermeeting.com/YELP. If you are a stockholder of record, you will be asked to provide the control number from your Notice. If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, follow the instructions from your broker or bank.
How do I vote?
You may vote For all the nominees to
the Board, Withhold your vote from all nominees or you may Withhold your
vote for any nominee you specify. For each of the other matters to be voted on,
you may vote For or Against the proposal, or abstain from voting. The
procedures for voting are as follows:
Vote at the Annual Meeting
If you are a
stockholder of record, you may vote your shares at the Annual Meeting by following
the instructions provided on the Notice to log in to
www.virtualshareholdermeeting.com/YELP. You will be asked to provide the control number from your Notice.
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If you are a beneficial owner of shares
registered in the name of your broker, bank or other agent, you must obtain a
valid proxy from your broker, bank or other agent to vote online during the
Annual Meeting. Follow the instructions from your broker or bank included with
these proxy materials, or contact your broker or bank to request a proxy form.
The webcast of the Annual Meeting will
begin promptly at 9:00 a.m. Pacific Time. We encourage you to access the meeting
prior to the start time. Online check-in will begin at 8:45 a.m. Pacific Time,
and you should allow reasonable time for the check-in procedures.
Vote by Proxy
Whether or not you plan to attend the
Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You
may still attend and vote at the Annual Meeting even if you have already voted
by proxy.
If you are a stockholder of record, you
may vote by proxy over the telephone, vote by proxy through the Internet or vote
by proxy using a proxy card that you may request or that we may elect to deliver
at a later time:
● |
To vote over the telephone, dial
toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded
instructions. You will be asked to provide the control number from the
Notice. Your vote must be received by 11:59 p.m. Eastern Time on April 12,
2016 to be counted. |
● |
To vote through the Internet, go
to www.proxyvote.com to complete an electronic proxy card. You will be
asked to provide the control number from your Notice. Your vote must be
received by 11:59 p.m. Eastern Time on April 12, 2016 to be
counted. |
● |
To vote using the printed proxy
card that may be delivered to you, simply complete, sign and date the
proxy card and return it promptly in the envelope provided. If you return
your signed proxy card to us before the Annual Meeting, we will vote your
shares as you instruct. |
If you are a beneficial owner of shares
registered in the name of your broker, bank or other agent, you should have
received a Notice containing voting instructions from that organization rather
than from us. Simply follow the voting instructions in the Notice to ensure that
your vote is counted.
We are holding the Annual Meeting
online and providing Internet voting to provide expanded access and to allow you
to vote your shares online, with procedures designed to ensure the authenticity
and correctness of your voting instructions. However, please be aware that you
must bear any costs associated with your Internet access, such as usage charges
from Internet access providers and telephone companies.
Can I vote my shares by filling out
and returning the Notice?
No. The Notice identifies the items to
be voted on at the Annual Meeting, but you cannot vote by marking the Notice and
returning it. The Notice provides instructions on how to vote by telephone or
through the Internet, by requesting and returning a printed proxy card or by
submitting a ballot online during the Annual Meeting.
How many votes do I
have?
On each matter to be voted on, you have
one vote for each share of Class A common stock and ten votes for each share of
Class B common stock you owned as of February 16, 2016. The Class A common stock
and Class B common stock will vote together as a single class on all proposals
described in this Proxy Statement.
3
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What happens if I do not
vote?
Stockholders of Record: Shares
Registered in Your Name
If you are a stockholder of record and
do not vote by telephone, through the Internet, by completing a proxy card that
may be delivered to you or online during the Annual Meeting, your shares will
not be voted.
Beneficial Owners: Shares Registered
in the Name of a Broker or Bank
If you are a beneficial owner and do
not instruct your broker, bank or other agent how to vote your shares, the
question of whether your broker or nominee will still be able to vote your
shares depends on whether the New York Stock Exchange, or NYSE, deems the
particular proposal to be a routine matter. Brokers and nominees can use their
discretion to vote uninstructed shares with respect to matters that are
considered to be routine, but not with respect to non-routine matters.
Under the rules and interpretations of
the NYSE, non-routine matters are matters that may substantially affect the
rights or privileges of stockholders, such as mergers, stockholder proposals,
elections of directors (even if not contested), executive compensation
(including any advisory stockholder votes on executive compensation and on the
frequency of stockholder votes on executive compensation) and certain corporate
governance proposals, even if management supported. Accordingly, your broker or
nominee may not vote your shares on Proposal Nos. 1, 3 or 4 without your
instructions, but may vote your shares on Proposal No. 2.
What if I return my proxy card or
otherwise vote but do not make specific choices?
If you return a signed and dated proxy
card or otherwise vote without marking voting selections, your shares will be
voted, as applicable:
● |
For the election of all three
nominees for director; |
● |
For the ratification of the selection of Deloitte &
Touche LLP as our independent registered public accounting firm for the
year ending December 31, 2016; |
● |
For the advisory approval of executive
compensation; and |
● |
For the approval of our 2012 Equity Incentive Plan, as
amended, to: |
○ |
increase the aggregate number of
shares of Class A common stock authorized for issuance under the plan by
3,000,000 shares; and |
○ |
increase the maximum number of
shares that may be automatically added to the share reserve on January 1
of each year from January 1, 2017 through January 1, 2022 from 4.0% to
7.0% of the total number of shares of our capital stock outstanding on
December 31 of the preceding calendar year.
|
If any other matter is properly
presented at the Annual Meeting, your proxy holder (one of the individuals named
on your proxy card) will vote your shares using his best judgment.
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Who is paying for this proxy
solicitation?
We will pay for the entire cost of
soliciting proxies. In addition to these proxy materials, our directors and
employees may also solicit proxies in person, by telephone or by other means of
communication. Directors and employees will not be paid any additional
compensation for soliciting proxies. We may also reimburse brokerage firms,
banks and other agents for the cost of forwarding proxy materials to beneficial
owners.
What does it mean if I receive more
than one Notice?
If you receive more than one Notice,
your shares may be registered in more than one name or in different accounts.
Please follow the voting instructions on each of your Notices to ensure that all
of your shares are voted.
Can I change my vote after
submitting my proxy?
Yes. You can revoke your proxy at any
time before the final vote at the Annual Meeting.
Stockholders of Record: Shares
Registered in Your Name
If you are the record holder of your
shares, you may revoke your proxy in any one of the following ways:
● |
You may grant a subsequent proxy
by telephone or through the Internet. |
● |
You may submit another properly
completed proxy card with a later date. |
● |
You may send a timely written
notice that you are revoking your proxy to our Corporate Secretary at 140
New Montgomery Street, 9th Floor, San Francisco, California
94105. |
● |
You may attend and vote online
during the Annual Meeting. Simply attending the Annual Meeting will not,
by itself, revoke your proxy. |
Your most current proxy card or
telephone or Internet proxy is the one that is counted.
Beneficial Owners: Shares Registered
in the Name of a Broker or Bank
If your shares are held by your broker
or bank as a nominee or agent, you should follow the instructions provided by
your broker or bank.
How are votes
counted?
Votes will be counted by the inspector
of election appointed for the Annual Meeting, who will separately count, for
Proposal No. 1 to elect directors, For and Withhold votes and broker
non-votes, and, with respect to all other proposals, votes For and Against,
abstentions and, if applicable, broker non-votes.
What are broker
non-votes?
As discussed above, when a beneficial owner of shares held in
street name does not give instructions to the broker or nominee holding the
shares as to how to vote on matters deemed by the NYSE to be non-routine, the
broker or nominee cannot vote the shares. These unvoted shares are counted as
broker non-votes.
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How many votes are needed to approve
each proposal?
The following table summarizes the
minimum vote needed to approve each proposal and the effect of abstentions and
broker non-votes.
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Effect
of |
Proposal |
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Effect
of |
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Broker
Non- |
Number |
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Proposal Description |
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Vote Required for Approval |
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Abstentions |
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Votes |
1 |
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Election of Directors |
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Three nominees receiving the most For votes from the
holders of shares present and entitled to vote |
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Withheld votes will have no effect |
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None |
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2 |
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Ratification of the selection of
Deloitte & Touche LLP as our independent registered public accounting
firm for the year ending December 31, 2016 |
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For votes from the holders of
shares representing a majority of the voting power of the shares present
and entitled to vote |
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Against |
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None* |
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3 |
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Advisory approval of the compensation of our named
executive officers |
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For votes from the holders of shares representing a
majority of the voting power of the shares present and entitled to
vote |
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Against |
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None |
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4 |
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Approval of our 2012 Equity Plan, as
amended |
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For votes from the holders of
shares representing a majority of the voting power of the shares present
and entitled to vote |
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Against |
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None |
* |
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Broker non-votes will have no effect;
however, Proposal No. 2 is considered a routine matter, and therefore no
broker non-votes are expected to exist in connection with Proposal No.
2. |
What is the quorum
requirement?
In order to conduct business at the
Annual Meeting, a quorum must be present at the meeting or represented by proxy.
A quorum will be present if shares representing a majority of the aggregate
voting power of shares of Class A common stock and Class B common stock (voting
together as a single class) entitled to vote are present at the Annual Meeting
in person, by remote communication or represented by proxy. On the record date, there were
67,611,020 shares of Class A common stock and 8,445,146 shares of Class B common
stock outstanding and entitled to vote. Thus, the holders of shares representing
an aggregate of 76,031,241 votes must be present in person, by remote
communication or represented by proxy at the Annual meeting to have a
quorum.
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Your shares will be counted towards the
quorum only if you submit a valid proxy (or one is submitted on your behalf by
your broker, bank or other nominee) or if you attend the Annual Meeting.
Abstentions and broker non-votes will be counted towards the quorum requirement.
If there is no quorum, the holders of shares representing a majority of the
voting power present at the Annual Meeting in person, by remote communication or
represented by proxy may adjourn the Annual Meeting to another date.
When are stockholder proposals and director nominations due
for next years annual meeting?
To be considered for inclusion in next
years proxy materials, you must submit your proposal, in writing, by November
4, 2016 to our Corporate Secretary at 140 New Montgomery Street, 9th
Floor, San Francisco, California 94105, and you must comply with all applicable
requirements of Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, or the Exchange Act.
Pursuant to our Bylaws, if you wish to
bring a proposal before the stockholders or nominate a director at the 2017
Annual Meeting of Stockholders, but you are not requesting that your proposal or
nomination be included in next years proxy materials, you must notify our
Corporate Secretary, in writing, not later than the close of business on January
13, 2017 nor earlier than the close of business on December 14, 2016. However,
if our 2017 Annual Meeting of Stockholders is not held between March 14, 2017
and May 13, 2017, to be timely, notice by the stockholder must be received not
earlier than the close of business on the 120th day prior to the 2017
Annual Meeting of Stockholders and not later than the close of business on the
later of the 90th day prior to the 2017 Annual Meeting of
Stockholders or the 10th day following the day on which public
announcement of the date of the 2017 Annual Meeting of Stockholders is first
made. You are also advised to review our Bylaws, which contain additional
requirements about advance notice of stockholder proposals and director
nominations.
The chair of the 2017 Annual Meeting of
Stockholders may determine, if the facts warrant, that a matter has not been
properly brought before the meeting and, therefore, may not be considered at the
meeting. In addition, the proxy solicited by the Board for the 2017 Annual
Meeting of Stockholders will confer discretionary voting authority with respect
to (i) any proposal presented by a stockholder at that meeting for which we have
not been provided with timely notice and (ii) any proposal made in accordance
with our Bylaws, if the 2017 proxy statement briefly describes the matter and
how managements proxy holders intend to vote on it, if the stockholder does not
comply with the requirements of Rule 14a-4(c)(2) promulgated under the Exchange
Act.
How can I find out the results of
the voting at the Annual Meeting?
Preliminary voting results will be
announced at the Annual Meeting. In addition, final voting results will be
published in a current report on Form 8-K that we expect to file with the SEC
within four business days after the Annual Meeting. If final voting results are
not available to us in time to file a Form 8-K within four business days after
the Annual Meeting, we intend to file a Form 8-K to publish preliminary results
and, within four business days after the final results are known to us, file an
additional Form 8-K to publish the final results.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board is divided into three
classes. Each class consists, as nearly as possible, of one-third of the total
number of directors, and each class has a three-year term. Vacancies on the
Board may be filled only by persons elected by a majority of the remaining
directors. A director elected by the Board to fill a vacancy in a class,
including vacancies created by an increase in the number of directors, will
serve for the remainder of the full term of that class and until the directors
successor is duly elected and qualified.
The Board presently has eight members.
There are three directors in the class whose term of office expires in 2016. If
elected at the Annual Meeting, each of these nominees would serve until the 2019
Annual Meeting of Stockholders and until his successor has been duly elected and
qualified, or, if sooner, until the directors death, resignation or removal.
Under our Corporate Governance Guidelines, directors are encouraged and expected
to attend the Annual Meeting. Eight out of the nine then-current directors
attended the 2015 Annual Meeting of Stockholders.
The following table sets forth
information with respect to our directors, including the three nominees for
election at the Annual Meeting, as of February 16, 2016:
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Director |
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Principal Occupation/ |
Name |
|
Age |
|
Since |
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Position Held With the Company |
Class I
Directors Nominees for Election at the Annual
Meeting |
Fred D. Anderson,
Jr. |
|
71 |
|
Feb. 2011 |
|
Managing Director, Elevation Partners and NextEquity
Partners |
Peter
Fenton |
|
43 |
|
Sept. 2006 |
|
General Partner, Benchmark Capital |
Jeremy Levine |
|
42 |
|
Nov. 2005 |
|
Partner, Bessemer Venture Partners |
|
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|
|
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Class II
Directors Continuing in Office until the 2017 Annual
Meeting |
Diane M. Irvine |
|
57 |
|
Nov. 2011 |
|
Chairperson of the Board; Independent
Advisor |
Mariam
Naficy |
|
45 |
|
Jan. 2014 |
|
Chief Executive Officer, Minted LLC |
|
|
|
|
|
|
|
Class III
Directors Continuing in Office until the 2018 Annual
Meeting |
Geoff
Donaker |
|
43 |
|
Dec. 2010 |
|
Chief Operating Officer |
Robert Gibbs |
|
44 |
|
May 2012 |
|
Executive Vice President, Global Chief Communications
Officer, McDonalds Corporation |
Jeremy
Stoppelman |
|
38 |
|
Sept. 2005 |
|
Co-Founder and Chief Executive
Officer |
Each of the listed nominees was
recommended for election by the Nominating and Corporate Governance Committee of
the Board, or the Nominating Committee. Our Nominating Committee seeks to
assemble a Board that, as a whole, possesses the appropriate balance of
professional and industry knowledge, financial expertise and high-level
management experience necessary to oversee and direct our business. To that end,
the Nominating Committee has identified and evaluated these nominees in the
broader context of the Boards overall composition, with the goal of selecting
nominees who complement and strengthen the skills of other members of the Board
and who also exhibit integrity, collegiality, sound business judgment and other
qualities that the Nominating Committee views as critical to the effective
functioning of the Board.
Directors are elected by a plurality of
the votes of the holders of shares present in person, by remote communication or
represented by proxy and entitled to vote on the election of directors. The
three nominees receiving the highest number of affirmative votes will be
elected. Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the three nominees named below. If
any nominee becomes unavailable for election as a result of an unexpected
occurrence, shares that would have been voted for that nominee will instead be
voted for the election of a substitute nominee proposed by the Nominating
Committee. Each person nominated for election has agreed to serve if elected.
Our management has no reason to believe that any nominee will be unable to
serve.
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Each of the nominees listed below is
currently a director. A brief biography of each nominee and each director whose
term will continue after the Annual Meeting is set forth below. The biographies
below also include information regarding the specific experience,
qualifications, attributes or skills of each nominee or director that led the
Nominating Committee to determine that such individual should serve as a member
of the Board as of the date of this Proxy Statement.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT
THE 2019 ANNUAL MEETING
Fred D. Anderson, Jr. serves as a Managing Director of Next Equity Partners, a firm he co-founded in
July 2015, and Elevation Partners, a firm he co-founded in July 2004, making
venture capital and private equity investments in technology and digital media
companies. From March 1996 to June 2004, Mr. Anderson served as Executive Vice
President and Chief Financial Officer of Apple Inc., a manufacturer of mobile
communication and media devices, personal computers and related software. Prior
to joining Apple, Mr. Anderson was Corporate Vice President and Chief Financial
Officer of Automatic Data Processing, Inc., an electronic transaction processing
firm, from August 1992 to March 1996. On April 24, 2007, the SEC filed a
complaint against Mr. Anderson and another former officer of Apple. The
complaint alleged that Mr. Anderson failed to take steps to ensure that the
accounting for an option granted in 2001 to certain executives of Apple,
including himself, was proper. Simultaneously with the filing of the complaint,
Mr. Anderson settled with the SEC, neither admitting nor denying the allegations
in the complaint. In connection with the settlement, Mr. Anderson agreed to a
permanent injunction from future violations of Sections 17(a)(2) and 17(a)(3) of
the Securities Act of 1933, as amended, or the Securities Act, and Section 16(a)
of the Exchange Act and Rules 13b2-2 and 16a-3 thereunder, and from aiding and
abetting future violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 14(a)
of the Exchange Act and Rules 12b-20, 13a-1, 13a-13 and 14a-9 thereunder. He
also agreed to disgorge approximately $3.5 million in profits and interest from
the option he received and to pay a civil penalty of $150,000. Under the terms
of the settlement, Mr. Anderson may continue to act as an officer or director of
public companies. Mr. Anderson also served on the boards of directors of Apple
from June 2004 to September 2006, Palm, Inc. from October 2007 to July 2010 and
Move, Inc. from November 2006 to March 2012. Mr. Anderson currently serves on
the board of directors of eBay Inc., an Internet marketplace and online payments
platform company, and the board of trustees of Whittier College. Mr. Anderson
holds a B.A. from Whittier College and an M.B.A. from the University of
California, Los Angeles. The Nominating Committee believes Mr. Andersons
extensive financial management expertise as the former Chief Financial Officer
of global technology firms gives him the experience, qualifications and skills
to serve as a director. In addition, his significant expertise on the boards of
directors of other public and private technology companies at various stages of
development provides the Board with important perspectives on corporate
governance matters.
Peter Fenton has been a General Partner at Benchmark, a venture capital
firm, where his investment interests include software, digital media and
technology-enabled devices, since September 2006. Prior to joining Benchmark,
Mr. Fenton was a Managing Partner at Accel Partners, a venture capital firm,
from October 1999 to May 2006. Prior to joining the venture capital community,
he was a General Manager of Video at Autonomy Virage, Inc., a multimedia
information retrieval company, from April 1996 to April 1998. Mr. Fenton also
serves on the boards of directors of Twitter, Inc., Hortonworks, Inc., Zendesk,
Inc. and New Relic, Inc. He holds a B.A. in Philosophy from Stanford University
and an M.B.A. from the Stanford University Graduate School of Business. The
Nominating Committee believes Mr. Fenton should serve on the Board due to his
extensive experience with providing guidance and counsel to a wide variety of
Internet and technology companies and serving on the boards of directors of a
range of public and private companies.
Jeremy Levine is a Partner at Bessemer Venture Partners, a venture capital
firm, which he joined in May 2001, where his investment interests include
entrepreneurial startups and high growth companies in industries including
consumer Internet, consumer software and business software and services. Prior
to joining Bessemer, Mr. Levine was Vice President of Operations at Dash.com
Inc., an Internet software publisher, from June 1999 to May 2001. Prior to Dash,
Mr. Levine was an Associate at AEA Investors, a management buyout firm, where he
specialized in consumer products and light industrials, from July 1997 to June
1999. Previously, Mr. Levine was with McKinsey & Company as a management
consultant from June 1995 to July 1997. Mr. Levine also serves on the boards of
directors of MINDBODY, Inc. and Shopify Inc. Mr. Levine holds a B.S. in Computer
Science and Economics from Duke University. The Nominating Committee believes
Mr. Levine should serve on the Board due to his experience providing guidance
and counsel to a wide variety of Internet and technology companies and serving
on the boards of directors of a range of public and private companies.
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THE BOARD
RECOMMENDS
A VOTE FOR ALL OF THE NAMED NOMINEES
DIRECTORS CONTINUING IN OFFICE UNTIL
THE 2017 ANNUAL MEETING
Diane M. Irvine has served as Chairperson of the Board since September 2015.
She previously served as Chief Executive Officer of Blue Nile, Inc., an online
retailer of diamonds and fine jewelry, from February 2008 to November 2011 and
as President from February 2007 to November 2011. Ms. Irvine also served on the
board of directors of Blue Nile from May 2001 to November 2011, and as the Chief
Financial Officer of Blue Nile from December 1999 to September 2007. From
February 1994 to May 1999, Ms. Irvine served as Vice President and Chief
Financial Officer of Plum Creek Timber Company, Inc., a timberland management
and wood products company. From September 1981 to February 1994, Ms. Irvine
served in various capacities, most recently as a partner, with Coopers &
Lybrand LLP, an accounting firm. Ms. Irvine currently serves on the boards of
directors of Rightside Group, Ltd. and XO Group Inc. She previously served on
the board of directors of CafePress Inc. from May 2012 to May 2015. Ms. Irvine
holds a B.S. in Accounting from Illinois State University and an M.S. in
Taxation from Golden Gate University. The Nominating Committee believes Ms.
Irvine should serve on the Board due to her financial expertise and extensive
experience in public company management.
Mariam Naficy has been the Chief Executive Officer of Minted LLC, an online
marketplace for independent design and art, since she founded the company in
June 2007. Prior to founding Minted, she was the general manager of the
e-commerce division of The Body Shop International plc, a cosmetics retailer,
from November 2003 to June 2007. She previously served as Vice President,
Marketing and Product Development of Movielink, LLC, a web-based video on demand
service, from April 2002 to May 2003, Interim Vice President of Marketing for
Columbia Tristar International Television, a television and distribution and
production company, from January 2002 to May 2002, and co-founder and Chief
Executive Officer of Eve.com, an online cosmetics retailer, from June 1998 to
October 2000, when it was acquired by Idealab. Ms. Naficy also sits on the board
of Every Mother Counts, a non-profit organization founded to increase public
awareness and support for improved maternal and child health. She holds a B.A.
in Political Economy from Williams College and an M.B.A. from the Stanford
University Graduate School of Business. The Nominating Committee believes Ms.
Naficy should serve on the Board due to her expertise in operating and managing
companies in the e-commerce sector.
DIRECTORS CONTINUING IN OFFICE
UNTIL THE 2018 ANNUAL MEETING
Geoff Donaker joined us in 2005 and has served as our Chief Operating
Officer since June 2006. Since joining Yelp, Mr. Donaker has helped to
orchestrate our geographic expansion, build our revenue lines and hire our
management team. Prior to joining us, Mr. Donaker served in various management
and business development roles at Internet companies, including eBay and Excite,
an Internet search and content provider, from 1998 to 2005. Mr. Donaker began
his career with Mercer Management Consulting (now Oliver Wyman). He holds a B.S.
in Mechanical Engineering from Stanford University. The Nominating Committee
believes Mr. Donaker should serve on the Board due to his experience in the
Internet industry and the perspective gained from working with us since our
early stages.
Robert Gibbs has been Executive Vice President, Global Chief
Communications Officer of McDonalds Corporation, a global foodservice retailer,
since June 2015. Prior to joining McDonalds, Mr. Gibbs was a Partner at The
Incite Agency, a strategic communications firm, from June 2013 to June 2015 and
a contributor to cable news channel MSNBC from February 2013 to June 2015. Mr.
Gibbs previously served as a senior campaign advisor to President Barak Obama
for the 2012 presidential election from January 2012 to November 2012. From
January 2009 to February 2011, he served as the 28th White House Press
Secretary. Prior to January 2009, Mr. Gibbs was the Communications Director for
then-U.S. Senator Obama and for Mr. Obamas 2008 presidential campaign. Mr.
Gibbs was Press Secretary for Senator John Kerrys 2004 presidential campaign
and previously specialized in Senate campaigns, having served as Communications
Director for the Democratic Senatorial Campaign Committee and for four
individual Senate campaigns, including those of Mr. Obama in 2004 and Fritz
Hollings in 1998. Mr. Gibbs holds a B.A. in Political Science from North
Carolina State University. The Nominating Committee believes Mr. Gibbs should
serve on the Board due to his significant media, communications and public
policy experience.
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Jeremy Stoppelman is our co-founder and has served as our Chief Executive
Officer since our inception in 2004. Prior to founding Yelp, Mr. Stoppelman held
various engineering roles at PayPal, Inc., an online payment company, from
February 2000 to June 2003, most recently serving as Vice President of
Engineering. Prior to PayPal, Mr. Stoppelman was a software engineer at
Excite@Home, an Internet company, from August 1999 to January 2000. He holds a
B.S. in Computer Science from the University of Illinois. The Nominating
Committee believes Mr. Stoppelman should serve on the Board due to the
perspective gained from his experience as one of our founders and our Chief
Executive Officer, as well as his experience in the Internet industry.
INFORMATION REGARDING THE BOARD OF
DIRECTORS AND CORPORATE GOVERNANCE
INDEPENDENCE OF THE BOARD
Under the NYSE listing standards, a
majority of the members of a listed companys board of directors must qualify as
independent, as affirmatively determined by its board of directors. The Board
consults with our counsel to ensure that its determinations are consistent with
relevant securities and other laws and regulations regarding the definition of
independent, including those set forth in pertinent listing standards of the
NYSE, as in effect from time to time.
Consistent with these considerations,
after review of all relevant identified transactions or relationships between
each director, or any of his or her family members, and the Company, our
executive management and independent auditors, the Board has affirmatively
determined that the following six directors are independent directors within the
meaning of the applicable NYSE listing standards: Mses. Irvine and Naficy and
Messrs. Anderson, Fenton, Gibbs, and Levine. In addition, the Board had
previously determined that Max Levchin was an independent director within the
meaning of the applicable NYSE listing standards prior to his resignation from
the Board in July 2015.
In making these determinations, the
Board found that none of these directors had a material or other disqualifying
relationship with the Company. It considered the current and prior relationships
that each non-employee director has with our company and each other and all
other facts and circumstances the Board deemed relevant in determining their
independence, including the beneficial ownership of our capital stock by each
non-employee director. Mr. Stoppelman, our Chief Executive Officer, and Mr.
Donaker, our Chief Operating Officer, are not independent by virtue of their
employment with the Company.
BOARD LEADERSHIP STRUCTURE
Until Mr. Levchins resignation from
the Board in July 2015, our Board had both an independent Chairman and Lead
Independent Director: Messrs. Levchin and Anderson, respectively. We believed
Mr. Levchins history with and knowledge of the Company made him best positioned
to act as a bridge between management and the Board and to help ensure that the
Board and management acted with a common purpose. The Board determined that it
would also be beneficial to have a Lead Independent Director to reinforce the
independence of the Board in its oversight of our business and affairs.
Accordingly, the Board appointed Mr. Anderson, an independent director with deep
technology and financial experience, as Lead Independent Director in November
2011.
Following Mr. Levchins resignation,
the Board appointed Ms. Irvine as Chairperson and eliminated the position of
Lead Independent Director in September 2015. Ms. Irvines tenure on the Board,
as well as the deep knowledge of our Company gained in her role as Audit
Committee Chair, allow her to provide valuable insights and facilitate the
implementation of our strategic initiatives and business plans. In our view,
having a Chairperson that is far removed from management would have the
potential to give rise to divided leadership, which could interfere with good
decision making or weaken our ability to develop and implement strategy. The
Board also believes, however, that Ms. Irvines independence is an essential
complement to her familiarity with the Company and the two members of management
on the Board, helping to foster an environment that is conducive to objective
evaluation and oversight of managements performance.
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Ms. Irvine has authority, among other
things, to call and preside over Board meetings and set meeting agendas, as well
as to preside over and establish agendas for executive sessions of the
independent directors, giving her substantial authority to shape the work of the
Board. The Board believes that her independence, coupled with her substantial
financial expertise and experience in public company management, enhances the
effectiveness of the Board as a whole and makes her chairmanship in the best
interests of the Board, the Company and its stockholders.
MEETINGS OF THE BOARD
The Board met eight times during 2015.
Each member of the Board attended at least 75% of the aggregate number of
meetings of the Board and of the committees on which he or she served, held
during the portion of 2015 for which he or she was a director or committee
member, with the exception of Ms. Naficy, who attended 73% of such
meetings.
INFORMATION REGARDING THE COMMITTEES
OF THE BOARD
The Board has three standing
committees: the Audit Committee, Compensation Committee and Nominating
Committee. The following table provides membership and meeting information for
2015 for each of the Board committees:
Name |
|
Audit |
|
Compensation |
|
Nominating |
Max Levchin |
|
|
|
|
|
(1) |
Fred D. Anderson,
Jr. |
|
|
|
|
|
|
Peter Fenton |
|
|
|
|
|
|
Robert Gibbs |
|
|
|
|
|
|
Diane M. Irvine |
|
|
|
|
|
|
Jeremy Levine |
|
|
|
|
|
|
Mariam Naficy |
|
|
|
|
|
|
Total meetings in
2015 |
|
9 |
|
4 |
|
3 |
____________________
|
Committee Chairperson |
|
|
|
Committee member |
|
|
(1) |
Mr. Levchin resigned
from the Nominating Committee in connection with his resignation from the
Board on July 24, 2015. |
Below is a description of each
committee of the Board. The Board has determined that each member of each
committee meets the applicable NYSE rules and regulations regarding
independence and that each member is free of any relationship that would
impair his or her individual exercise of independent judgment with regard to
Yelp.
Audit Committee
The Board established the Audit
Committee to oversee our corporate accounting and financial reporting processes,
systems of internal control over financial reporting and audits of our financial
statements, and the quality and integrity of our financial statements and
reports. For this purpose, the Audit Committee performs several functions,
including:
● |
reviewing and
pre-approving the engagement of our independent registered public
accounting firm to perform audit services and any permissible non-audit
services; |
|
|
● |
evaluating the
performance of our independent registered public accounting firm and
deciding whether to retain its services; |
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● |
monitoring the rotation
of partners of our independent registered public accounting firm on our
engagement team as required by law; |
|
|
● |
reviewing our annual
and quarterly financial statements and reports and discussing the
statements and reports with our independent registered public accounting
firm and management, including a review of disclosures under Managements
Discussion and Analysis of Financial Condition and Results of Operations;
|
|
|
● |
conferring with
management and our independent registered public accounting firm regarding
the scope, adequacy and effectiveness of our internal control over
financial reporting; |
|
|
● |
considering and
approving or disapproving all related-party transactions; |
|
|
● |
reviewing, with our
independent registered public accounting firm and management, significant
issues that may arise regarding accounting principles and financial
statement presentation, as well as matters concerning the scope, adequacy
and effectiveness of our financial controls; |
|
|
● |
conducting an annual
assessment of the performance of the Audit Committee and its members, and
the adequacy of its charter; and |
|
|
● |
establishing procedures
for the receipt, retention and treatment of complaints received by us
regarding financial controls, accounting or auditing matters.
|
The Audit Committee is currently
composed of three directors, Ms. Irvine and Messrs. Anderson and Gibbs, each of
whom the Board has determined to be independent (as independence is currently
defined in Section 303A.02 of the NYSE listing standards and in Rule 10A-3(b)(1)
promulgated under the Exchange Act). The Board has determined that Ms. Irvine
and Mr. Anderson each qualify as an audit committee financial expert, as
defined in applicable SEC rules. The Board made a qualitative assessment of Ms.
Irvines and Mr. Andersons level of knowledge and experience based on a number
of factors, including their formal education and experiences as described in
their biographies included in this Proxy Statement. Ms. Irvine is the Chair of
the Audit Committee.
The Audit Committee has adopted a
written charter that is available to stockholders on our website at
www.yelp-ir.com under the section entitled Corporate Governance.
Audit Committee
Report(1)
The Audit Committee has reviewed and
discussed the audited financial statements for the year ended December 31, 2015
with management of the Company. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be
discussed by Auditing Standard No. 16, Communications with Audit Committees, as
adopted by the Public Company Accounting Oversight Board, or PCAOB. The Audit
Committee has also received the written disclosures and the letter from the
independent registered public accounting firm required by applicable
requirements of the PCAOB regarding the independent accountants communications
with the Audit Committee concerning independence, and has discussed with the
independent registered public accounting firm the accounting firms
independence. Based on the foregoing, the Audit Committee has recommended to the
Board that the audited financial statements be included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2015.
Respectfully submitted, |
The Audit Committee of the Board of
Directors |
|
Diane M. Irvine, Chair |
Fred D. Anderson, Jr. |
Robert
Gibbs |
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____________________
(1) |
|
The material in this report is
not soliciting material, is furnished to, but not deemed filed with,
the SEC and is not deemed to be incorporated by reference in any filing of
Yelp under the Securities Act or the Exchange Act, whether made before or
after the date hereof and irrespective of any general incorporation
language in any such filing. |
Compensation Committee
The Board established the Compensation
Committee to oversee our compensation policies, plans and programs, and to
review and determine the compensation to be paid to our executive officers and
directors. The functions of the Compensation Committee include:
● |
determining the
compensation and other terms of employment of our Chief Executive Officer
and our other executive officers and reviewing and approving corporate
performance goals and objectives relevant to such compensation, if
appropriate; |
|
|
● |
reviewing and
recommending to the full Board the compensation of our directors;
|
|
|
● |
evaluating, adopting
and administering the equity incentive plans, compensation plans and
similar programs advisable for us, as well as modification or termination
of existing plans and programs; |
|
|
● |
establishing policies
with respect to equity compensation arrangements; |
|
|
● |
reviewing with
management our disclosures under the caption Compensation Discussion and
Analysis and recommending to the full Board its inclusion in our periodic
reports to be filed with the SEC; and |
|
|
● |
reviewing and
evaluating, at least annually, the performance of the Compensation
Committee and the adequacy of its charter.
|
Our Compensation Committee is currently
composed of two directors, Messrs. Fenton and Anderson, each of whom the Board
has determined to be independent under the NYSE listing standards, a
non-employee director as defined in Rule 16b-3 promulgated under the Exchange
Act and an outside director as that term is defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended, or the Code. Mr. Fenton is the Chair
of the Compensation Committee.
The Compensation Committee has adopted
a written charter that is available to stockholders on our website at
www.yelp-ir.com under the section entitled Corporate Governance. Under its
charter, the Compensation Committee may form and delegate authority to
subcommittees as appropriate, including, but not limited to, a subcommittee
composed of one or more members of the Board to grant stock awards under our
equity incentive plans.
The specific determinations of the
Compensation Committee with respect to executive compensation for 2015 and the
Compensation Committee Report, as well as the Compensation Committees processes
and procedures and the role of our executive officers in recommending and
determining executive compensation, are described in detail in the section of
this Proxy Statement entitled Executive
CompensationCompensation Discussion and Analysis. Our compensation arrangements for our non-employee directors are
described under the section of this Proxy Statement entitled Director Compensation
below.
Compensation Committee Interlocks
and Insider Participation
No member of the Compensation Committee
is currently or has been at any time one of our officers or employees. None of
our executive officers currently serve, or has served during the last year, as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our Board or
Compensation Committee.
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Nominating Committee
The Board established the Nominating
Committee to oversee our corporate governance functions. Specifically, the
functions of the Nominating Committee include:
● |
reviewing periodically
and evaluating director performance on our Board and its applicable
committees, and recommending to the Board and management areas for
improvement; |
|
|
● |
interviewing,
evaluating, nominating and recommending individuals for membership on our
Board; |
|
|
● |
reviewing and
recommending to our Board any amendments to our corporate governance
policies; and |
|
|
● |
reviewing and
assessing, at least annually, the performance of the Nominating Committee
and its charter. |
The Nominating Committee is currently
composed of two directors, Mr. Levine and Ms. Naficy, each of whom the Board has
determined to be independent under the NYSE listing standards. Mr. Levchin
served on the Nominating Committee until July 24, 2015, when he resigned from
the Board and the Nominating Committee.
The Nominating Committee has adopted a
written charter that is available to stockholders on our website at
www.yelp-ir.com under the section entitled Corporate Governance.
The Nominating Committee believes that
candidates for director should have certain minimum qualifications, including
being able to read and understand basic financial statements, being over 21
years of age and having the highest personal integrity and ethics. The
Nominating Committee also considers such factors as possessing relevant
expertise on which to be able to offer advice and guidance to management, having
sufficient time to devote to the affairs of the Company, demonstrated excellence
in his or her field, having the ability to exercise sound business judgment and
having the commitment to represent rigorously the long-term interests of our
stockholders. However, the Nominating Committee retains the right to modify
these qualifications from time to time. Candidates for director are reviewed in
the context of the current composition of the Board, the operating requirements
of the Company and the long-term interests of the stockholders.
In conducting this assessment, the
Nominating Committee typically considers diversity, age, skills and such other
factors as it deems appropriate given the current needs of the Board and the
Company, to maintain a balance of knowledge, experience and capability. In the
case of incumbent directors whose terms of office are set to expire, the
Nominating Committee reviews such directors overall service to the Company
during their term, including the number of meetings attended, level of
participation, quality of performance and any other relationships and
transactions that might impair such directors independence. In the case of new
director candidates, the Nominating Committee also determines whether the
nominee is independent for NYSE purposes, which determination is based upon NYSE
listing standards, applicable SEC rules and regulations and the advice of
counsel, if necessary. The Nominating Committee meets to discuss and consider
candidates qualifications and then selects nominee(s) for recommendation to the
Board by majority vote.
To identify candidates for Board
membership, the Nominating Committee uses its network of contacts to compile a
list of potential candidates, but may also engage, if it deems appropriate, a
professional search firm. The Nominating Committee conducts any appropriate and
necessary inquiries into the backgrounds and qualifications of possible
candidates after considering the function and needs of the Board.
At this time, the Nominating Committee
does not have a policy with regard to the consideration of director candidates
recommended by stockholders. The Nominating Committee believes that it is in the
best position to identify, review, evaluate and select qualified candidates for
Board membership, based on the comprehensive criteria for Board membership
approved by the Board.
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ROLE OF THE BOARD IN RISK OVERSIGHT
Our Board recognizes the importance of
effective risk oversight in running a successful business and in fulfilling its
fiduciary responsibilities to Yelp and its stockholders. While our management is
responsible for the day-to-day management of the risks that we face, the Board
is responsible for overseeing our aggregate risk profile and our risk management
process, as well as ensuring that an appropriate culture of risk management
exists within the Company and setting the right tone at the top.
The Board believes that its current
leadership structure facilitates its risk oversight responsibilities. In
particular, the Board believes an independent Chairperson, the
majority-independent Board and independent Board committees provide a
well-functioning and effective balance to the members of our executive
management on the Board. Although the Board does not have a standing risk
management committee, it administers its oversight function directly as well as
through its standing committees that address risks inherent in their respective
areas of oversight. In particular, our Board is responsible for monitoring and
assessing strategic risk exposure, including a determination of the nature and
level of risk appropriate for the Company.
The Audit Committee considers and
discusses our major financial risk exposures, as well as the steps our
management has taken to monitor and control these exposures, including
guidelines and policies to govern the process by which risk assessment and
management are undertaken. Our Audit Committee also monitors compliance with
legal and regulatory requirements, in addition to oversight of the performance
of our internal audit function.
Our Nominating Committee oversees risks
related to our overall corporate governance, including Board and committee
composition, Board size and structure and director independence, as well as
succession planning for the Board and management. In addition, the Nominating
Committee monitors the effectiveness of our Corporate Governance Guidelines and
Code of Business Conduct and Ethics, including whether they are successful in
preventing illegal and improper liability-creating conduct.
The Compensation Committee assesses and
monitors whether any of our compensation policies and programs has the potential
to encourage excessive risk taking. For additional information regarding the
Compensation Committees review of compensation-related risk, please see the
section of this Proxy Statement entitled Executive CompensationCompensation Risk Assessment.
Both the Board as a whole and the
various standing committees receive periodic reports from executive management
and our Head of Internal Audit, as well as incidental reports as matters may
arise. It is the responsibility of the committee chairs to report findings
regarding material risk exposures to the Board as appropriate.
COMMUNICATIONS WITH THE BOARD
Stockholders, any other security
holders of the Company and other interested parties may communicate with the
Board at the following address:
The Board of Directors
c/o
Corporate Secretary
Yelp Inc.
140 New
Montgomery Street, 9th Floor
San Francisco, CA 94105
Communications are distributed to the
Board or to a particular director, as appropriate, depending on the facts and
circumstances outlined in the communication. In addition, material that is
unduly hostile, illegal or similarly unsuitable will be excluded, with the
provision that any communication that is filtered out will be made available to
any non-management director upon request.
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CODE OF ETHICS
Our Board has adopted a Code of
Business Conduct and Ethics that applies to all officers, directors and
employees, including those officers responsible for financial reporting. The
Code of Business Conduct and Ethics is available on our website at
www.yelp-ir.com under the section entitled Corporate Governance. If we make
any substantive amendments to the Code of Business Conduct and Ethics or grant
any waiver of its provisions to any executive officer or director, we will
promptly disclose the nature of the amendment or waiver on our website.
CORPORATE GOVERNANCE GUIDELINES
In 2012, the Board documented the
governance practices followed by the Company by adopting the Corporate
Governance Guidelines to help ensure that the Board will have the necessary
authority and practice in place to review and evaluate our business operations
as needed to make decisions that are independent of our management. The
guidelines are also intended to align the interests of directors and management
with those of our stockholders. The Corporate Governance Guidelines set forth
the practices the Board intends to follow with respect to Board composition and
selection, Board meetings and involvement of executive management, Chief
Executive Officer performance evaluation and succession planning, and Board
committees and compensation. The Corporate Governance Guidelines, as well as the
charter of each committee of the Board, may be viewed at our website at
www.yelp-ir.com under the section entitled Corporate Governance.
DIRECTOR COMPENSATION
The following table shows, for the year
ended December 31, 2015, certain information with respect to the compensation of
each of our non-employee directors.
Director Compensation for the Year
Ended December 31, 2015
|
|
Fees Earned or
Paid |
|
Option
Awards |
|
|
Name |
|
in Cash ($) |
|
($)(1)(2)(3) |
|
Total ($) |
Robert Gibbs |
|
25,000 |
|
183,564 |
|
208,564 |
Diane Irvine |
|
30,000 |
|
183,564 |
|
213,564 |
Mariam Naficy |
|
22,500 |
|
183,564 |
|
206,064 |
____________________
(1) |
The amount in this
column represents the aggregate grant date fair value of a stock option
award granted during the year ended December 31, 2015 calculated in
accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 718, or ASC 718. Assumptions used in the calculation of
the grant date fair value are set forth in Note 12, Stockholders Equity
in our Annual Report on Form 10-K for the year ended December 31, 2015, or
our Annual Report. |
|
(2) |
In connection with our
2015 Annual Meeting of Stockholders, Ms. Irvine, Ms. Naficy and Mr. Gibbs
were each granted an option to purchase 10,000 shares of our Class A
common stock at an exercise price of $42.44 per share on July 1, 2015. The
shares underlying each such option vest in equal monthly installments over
four years following the date of grant. |
|
|
(3) |
The aggregate number
of shares subject to outstanding stock options held by each director
listed in the table above as of December 31, 2015 was as follows: (i)
45,000 shares of Class A common stock for Mr. Gibbs; (ii) 20,000 shares of
Class A common stock and 25,000 shares of Class B common stock for Ms.
Irvine; and (iii) 22,500 shares of Class A common stock for Ms. Naficy. No
other non-employee director held stock options as of December 31,
2015. |
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Director Compensation Arrangements
We have a policy of reimbursing our
directors for their reasonable out-of-pocket expenses incurred in attending
Board and Board committee meetings. Neither of our employee directors receives
additional compensation for his service on the Board.
Given the value of the investments made
by funds affiliated with certain of our non-employee directors, as well as the
internal policies of certain of those funds, we historically did not provide
non-employee directors who were affiliated with an institutional or venture
investor of the Company with compensation for their service on the Board. As a
result, during 2015, only Ms. Irvine, Ms. Naficy and Mr. Gibbs were eligible to
receive compensation for their Board and Board committee services. However,
recognizing that our venture investors had disposed of their holdings of Yelp
stock, the Board revised our policy, effective January 1, 2016, to provide
compensation to all non-employee directors. Accordingly, beginning in 2016,
Messrs. Anderson, Fenton and Levine will also be eligible to receive
compensation.
Cash Compensation. We currently provide the following cash compensation for
Board and Board committee services, as applicable, to non-employee directors:
● |
$20,000 per year for
service as a Board member; |
|
|
● |
$10,000 per year for
service as the Chair of the Audit Committee or Compensation Committee;
|
|
|
● |
$5,000 per year for
service as a member of the Audit Committee or Compensation Committee
(other than as chair) or chair of any other committee; and |
|
|
● |
$2,500 per year for
service as a member of any other committee (other than as
chair). |
Beginning in 2016, our non-employee
directors may elect to receive any cash fees that they would otherwise be
entitled to receive in the form of shares of Class A common stock with an
equivalent value. Such election must be made on an annual basis no later January
1 of the year for which the election is being made, except that the election for
2016 may be made up to March 31, 2016. The number of shares to be issued in lieu
of cash fees will be calculated based on the average closing price of our Class
A common stock on the NYSE over the 20 trading days prior to grant.
Equity Compensation. Each non-employee director is also currently entitled to
receive an option to purchase 10,000 shares of our Class A common stock every
other year on the date of our annual meeting of stockholders. Each such option
will vest in equal monthly installments over four years following the date of
grant. In addition, any new chair of the Audit Committee (if a new director)
will also receive an option grant of 25,000 shares of Class A common stock. The
option will vest over four years, with 25% vesting on the one-year anniversary
of the date of grant and the remainder vesting on a monthly basis thereafter. We
grant stock options with an exercise price of not less than the fair market
value of our Class A common stock on the date of grant. We do not have, nor do
we plan to establish, any program, plan or practice to time stock option grants
in coordination with releasing material non-public information.
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PROPOSAL NO. 2
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected
Deloitte & Touche LLP as our independent registered public accounting firm
for the year ending December 31, 2016 and has further directed that management
submit the selection of our independent registered public accounting firm for
ratification by the stockholders at the Annual Meeting. Deloitte & Touche
LLP has audited our financial statements beginning with those for the year ended
December 31, 2007. Representatives of Deloitte & Touche LLP are expected to
be present at the Annual Meeting. They will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
Neither our Bylaws nor other governing
documents or law require stockholder ratification of the selection of Deloitte
& Touche LLP as our independent registered public accounting firm. However,
the Audit Committee is submitting the selection of Deloitte & Touche LLP to
the stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Audit Committee will reconsider
whether or not to retain that firm. Even if the selection is ratified, the Audit
Committee in its discretion may direct the appointment of different independent
auditors at any time during the year if they determine that such a change would
be in the best interests of the Company and our stockholders.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table represents
aggregate fees billed to us for the years ended December 31, 2015 and 2014 by
Deloitte & Touche LLP, our independent registered public accounting firm.
|
|
Year Ended December 31, |
|
|
2015 |
|
2014 |
|
|
(in
thousands) |
Audit
Fees(1) |
|
$ |
1,350 |
|
$ |
1,317 |
Tax Fees(2) |
|
|
55 |
|
|
160 |
Total Fees |
|
$ |
1,405 |
|
$ |
1,477 |
____________________
(1) |
Audit Fees are fees
and expenses for the audit of our financial statements, review of interim
financial statements and services in connection with our statutory and
regulatory filings or engagements in those fiscal years. |
|
(2) |
Tax Fees are fees
billed for tax compliance, advice and planning. |
All fees described above were
pre-approved by the Audit Committee.
In connection with the audit of our
2015 financial statements, we entered into certain engagement agreements with
Deloitte & Touche LLP that set forth the terms by which Deloitte &
Touche LLP will perform audit services for the Company. These agreements are
subject to alternative dispute resolution procedures.
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PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a
policy and procedures for the pre-approval of audit and non-audit services
rendered by our independent registered public accounting firm, Deloitte &
Touche LLP. The policy generally pre-approves specified services up to specified
amounts. Pre-approval may also be given as part of the Audit Committees
approval of the scope of the engagement of the independent auditor or on an
individual, explicit, case-by-case basis before the independent auditor is
engaged to provide each service. The Audit Committee has delegated to the Chair
of the Audit Committee the authority to grant interim pre-approvals of audit
services, provided that any such pre-approvals are required to be presented to
the full Audit Committee at its next scheduled meeting.
The Audit Committee has determined that
the rendering of the services other than audit services by Deloitte & Touche
LLP is compatible with maintaining the principal accountants independence.
REQUIRED VOTE
The affirmative vote of the holders of shares representing a majority of the voting power of the shares present in person, by remote communication or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of Deloitte & Touche LLP.
THE BOARD RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL NO. 2
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PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Wall Street Reform
and Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the
Exchange Act, the Companys stockholders are entitled to vote to approve, on an
advisory basis, the compensation of the Companys named executive officers as
disclosed in this Proxy Statement in accordance with SEC rules. The Board has
adopted a policy of soliciting a non-binding advisory vote on the compensation
of our named executive officers, commonly referred to as a say-on-pay vote,
every year in accordance with the preference previously indicated by our
stockholders. Accordingly, this year we are again asking the stockholders to
approve, on an advisory basis, the compensation of our named executive officers
as disclosed in this Proxy Statement. This vote is not intended to address any
specific item of compensation, but rather the overall compensation of our named
executive officers and the philosophy, policies and practices described in this
Proxy Statement.
Our executive compensation program
emphasizes teamwork and long-term value creation through a philosophy of
maintaining internal pay equity, tying a meaningful portion of compensation to
the long-term value of our business and establishing responsible pay practices
that have a reasonable cost structure and do not encourage unnecessary or
excessive risk taking. Consistent with this philosophy, the Compensation
Committee has designed an executive compensation program that we believe has
been effective at achieving its objectives of:
● |
attracting and
retaining talented and experienced executive officers, whose knowledge,
skills and performance are critical to our success; |
|
|
● |
motivating these
executive officers to achieve our business objectives; |
|
|
● |
aligning the interests
of our executive officers with those of our stockholders; and
|
|
|
● |
promoting teamwork
while also recognizing the role that each executive officer plays in our
success. |
As described in detail under the
heading Executive CompensationCompensation
Discussion and Analysis, equity compensation
continued to be the principal component of our executive compensation program in
2015. Equity awards to our named executive officers directly link the most
substantial component of their compensation to the long-term success of our
business and generally require continued service over a multi-year period as a
condition to vesting, which creates a strong retention incentive and helps
ensure the continuity of our operations.
In 2015, for example, after reviewing
our executive officers existing equity opportunities, our Compensation
Committee determined that new equity awards would be appropriate for each
officer to meet our long-term incentive and retention goals. However, in light
of the large stock-based compensation expense associated with these equity
awards, the Compensation Committee granted new long-term awards only to Messrs.
Nachman and Wilson and planned to revisit the other executive officers in
subsequent years. However, Messrs. Stoppelman, Krolik and Donaker each received
a smaller, supplemental stock option grant with a two-year vesting schedule to
provide a medium-term incentive in the absence of meaningful cash compensation
in the cases of Messrs. Stoppelman and Donaker, and to supplement cash
compensation below market levels in the case of Mr. Krolik. Our Compensation
Committee believes these supplemental awards are also appropriate to maintain
our focus on equity compensation and internal pay equity.
We believe this program is reasonable
in light of the executive compensation programs of companies with whom we
compete for talent and responsible in that it encourages our executive officers
to work for meaningful stockholder returns without encouraging our executives to
assume excessive risks. We encourage you to read the Compensation Discussion and
Analysis, compensation tables and related narrative disclosures included in this
Proxy Statement for additional details about our executive compensation program.
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The Board is asking the stockholders to
indicate their support for the compensation of our named executive officers, as
described in this Proxy Statement, by casting a non-binding advisory vote FOR
the following resolution:
RESOLVED, that the compensation paid
to the Companys named executive officers, as disclosed pursuant to the
compensation disclosure rules of the SEC, including the Compensation Discussion
and Analysis, the compensation tables and any related material disclosed in this
Proxy Statement, is hereby APPROVED.
Because the vote is advisory, it is not
binding on the Board or the Company. Nevertheless, the views expressed by the
stockholders, whether through this vote or otherwise, are important to
management and the Board and, accordingly, the Board and Compensation Committee
intend to consider the results of this vote in making determinations in the
future regarding executive compensation arrangements.
Advisory approval of this Proposal No.
3 requires the vote of the holders of shares representing a majority of the
voting power of the shares present in person, by remote communication or
represented by proxy and entitled to vote at the Annual Meeting. Unless the
Board decides to modify its policy regarding the frequency of soliciting
advisory votes on the compensation of our named executive officers, the next
scheduled advisory vote will be at the 2017 Annual Meeting of Stockholders.
THE BOARD RECOMMENDS
A VOTE IN FAVOR
OF
PROPOSAL NO. 3
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PROPOSAL NO. 4
APPROVAL OF 2012 EQUITY INCENTIVE
PLAN, AS AMENDED
On January 27, 2016, our Board and Compensation
Committee approved the amendment of our 2012 Equity Incentive Plan, or 2012
Plan, subject to stockholder approval, to make the following material
changes:
● |
increase the aggregate number of
shares of our Class A common stock reserved for issuance under the 2012
Plan by 3,000,000 shares, from 25,590,061 to 28,590,061 shares, subject to
adjustment for certain changes in our capitalization; and
|
● |
increase the maximum number of
shares of our Class A common stock that may be automatically added to the
share reserve of the 2012 Plan on January 1 of each year from January 1,
2017 until (and including) January 1, 2022 pursuant to the evergreen
provision of the 2012 Plan, as described below, from 4.0% to 7.0% of the
total number of shares of our capital stock outstanding on December 31 of
the preceding calendar year. |
Accordingly, our Board is requesting
stockholder approval of our 2012 Plan, as amended, or the Amended 2012 Plan.
Stockholder approval of the Amended
2012 Plan will also constitute approval of terms and conditions in the Amended
2012 Plan that will permit us to grant stock options, stock appreciation rights
and performance stock and cash awards under the Amended 2012 Plan that may
qualify as performance-based compensation within the meaning of Section 162(m)
of the Code. Section 162(m) of the Code disallows a deduction to any
publicly-held corporation and its affiliates for certain compensation paid to
covered employees in a taxable year to the extent that compensation paid to a
covered employee exceeds $1,000,000. However, some kinds of compensation,
including qualified performance-based compensation, are not subject to this
deduction limitation. While we believe it is in the best interests of Yelp and
our stockholders to preserve the ability to grant performance-based
compensation under Section 162(m) of the Code, in certain circumstances, we may
determine to grant compensation to covered employees that is not intended to
qualify as performance-based compensation for purposes of Section 162(m) of
the Code. Moreover, even if we grant compensation that is intended to qualify as
performance-based compensation for purposes of Section 162(m) of the Code, we
cannot guarantee that such compensation ultimately will be deductible by us. For
compensation awarded under a plan to qualify as performance-based compensation
under Section 162(m) of the Code, among other things, the following terms must
be disclosed to and approved by the stockholders before the compensation is
paid: (i) a description of the employees eligible to receive such awards; (ii) a
per-person limit on the number of shares subject to stock options, stock
appreciation rights and performance stock awards, and the amount of cash subject
to performance cash awards, that may be granted to any employee under the plan
in any year; and (iii) a description of the business criteria upon which the
performance goals for performance awards may be granted (or become vested and/or
exercisable). Accordingly, we are requesting that our stockholders approve the
Amended 2012 Plan, which includes terms regarding eligibility for awards, annual
per-person limits on awards and the business criteria for performance awards
granted under the Amended 2012 Plan (as described in the summary below).
The Amended 2012 Plan will become
effective immediately upon stockholder approval of this Proposal No. 4 at the
Annual Meeting.
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BACKGROUND
In January 2012, the Board initially
adopted, and our stockholders subsequently approved, the 2012 Plan. The initial
maximum number of shares of our Class A common stock issuable pursuant to awards
under the 2012 Plan at the time of our initial public offering was 13,717,149
shares, which number is the sum of (i) 3,575,500 shares, (ii) 146,739 shares,
representing the number of shares otherwise available for issuance under our
2011 Equity Incentive Plan, or 2011 Plan, at the time our 2012 Plan became
effective, and (iii) certain shares subject to stock options or other stock
awards granted under our 2011 Plan or our Amended and Restated 2005 Equity
Incentive Plan, or 2005 Plan, that would have otherwise returned to our 2011
Plan or our 2005 Plan, as applicable, not to exceed 9,994,910 shares. In January
2013, the Board approved an amendment of the 2012 Plan, which was subsequently
approved by our stockholders, to increase the aggregate number of shares of our
Class A common stock reserved for issuance under the 2012 Plan by 2,000,000
shares. In addition, pursuant to the evergreen provision of the 2012 Plan, the
aggregate number of shares of our Class A common stock reserved for issuance
under the 2012 Plan was automatically increased by (i) 2,540,210 shares on
January 1, 2013, (ii) 2,834,979 shares on January 1, 2014, (iii) 1,458,411
shares on January 1, 2015 and (iv) 3,039,312 shares on January 1, 2016.
The Board and Compensation Committee
believe that our ability to provide equity compensation has been, and will continue to be, vital to our ability to attract and
retain highly qualified and skilled employees. In January 2013, when the Board approved an amendment of our 2012 Plan to increase
the aggregate number of shares of our Class A common stock reserved for issuance under the 2012 Plan, it believed that such increase,
plus the automatic annual increase in shares reserved pursuant to the evergreen provision of the 2012 Plan, would allow us to
provide adequate equity compensation to our employees based on internal forecasts, including our anticipated growth rates. However,
since then we have aggressively invested in the growth of our business, including hiring additional employees, resulting in rapid
growth in our headcount and operations. The number of our full-time employees has increased from approximately 1,387 as of December
31, 2012 to approximately 4,440 as of the date of this Proxy Statement, representing an increase of approximately 220%. As a result
of this faster than anticipated growth in headcount, the Compensation Committee determined that increasing the aggregate number
of shares of our Class A common stock reserved for issuance under the 2012 Plan by 3,000,000 shares and increasing the maximum
number of shares of our Class A common stock that may be automatically added to the share reserve of the 2012 Plan on January
1 of each year from January 1, 2017 until (and including) January 1, 2022 pursuant to the evergreen provision of the 2012 Plan,
from 4.0% to 7.0% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year,
would be appropriate to facilitate the continued growth of our business by enabling us to continue to attract, retain and incentivize
employees through the grant of equity compensation.
If this Proposal No. 4 is approved by
our stockholders, the Amended 2012 Plan will become effective on the date of the
Annual Meeting. In the event our stockholders do not approve this Proposal No.
4, the 2012 Plan will continue in its current form.
24
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OVERHANG
The following table provides certain
additional information regarding our equity incentive program.
|
|
As of December 31, |
|
|
2015 |
Total Shares Subject to Outstanding Stock
Options(1)(2) |
|
8,206,774 |
Weighted-Average
Exercise Price Per Share of Outstanding Stock
Options(1)(2) |
|
$20.9343 |
Weighted-Average Remaining Term of Outstanding Stock
Options(1)(2) |
|
6.45 years |
Total Shares
Subject to Outstanding Restricted Stock Unit
Awards(1)(2)(3) |
|
4,094,387 |
Total Shares of Class A Common Stock Available for Grant under the
2012 Plan(4) |
|
5,702,223 |
Total Shares
Available for Grant under Other Equity Incentive Plans |
|
|
|
|
|
As of February 16, |
|
|
2016 (Record Date) |
Total Common Stock Outstanding(2) |
|
76,056,166 |
Per Share
Closing Price of Class A Common Stock as Reported on the NYSE |
|
$16.72 |
____________________
(1) |
Includes all awards under our
2012 Plan, 2011 Plan and 2005 Plan. Certain shares subject to awards
granted under our 2011 Plan and 2005 Plan that would have otherwise
returned to such plans will become available for future grant under our
2012 Plan. |
|
|
(2) |
Includes both Class A and Class B
common stock, considered together on an as-converted basis. |
|
|
(3) |
Restricted stock units are the only type of full value award outstanding. |
|
|
(4) |
Includes the effect of an
automatic increase in the number of shares reserved for issuance under the
2012 Plan on January 1, 2016, pursuant to the evergreen provision of the
2012 Plan, as described below. |
BURN RATE
The following table provides detailed
information regarding the activity related to our 2012 Plan for the year ended
December 31, 2015. No awards were granted under our 2011 Plan or 2005 Plan
during this period and no awards may be granted under our 2011 Plan or 2005 Plan
in the future.
|
|
2015 |
Total Shares of Class A
Common Stock Subject to Stock Options Granted |
|
466,000 |
Total Shares of Class A Common Stock Subject
to Restricted Stock Unit Awards Granted |
|
3,940,821 |
Weighted-Average Shares
of Common Stock Outstanding |
|
74,682,777 |
Burn Rate |
|
5.9% |
DESCRIPTION OF THE AMENDED 2012
PLAN
The material features of the Amended
2012 Plan are summarized below. The following description of the Amended 2012
Plan is a summary only and is qualified in its entirety by reference to the
Amended 2012 Plan itself, which is attached to this Proxy Statement as Annex A.
25
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General
The Amended 2012 Plan provides for the
grant of incentive stock options, nonstatutory stock options, stock appreciation
rights, restricted stock awards, RSU awards, performance stock awards,
performance cash awards and other stock awards, which we refer to collectively
as awards. Incentive stock options granted under the Amended 2012 Plan are
intended to qualify as incentive stock options within the meaning of Section
422 of the Code. Nonstatutory stock options granted under the Amended 2012 Plan
are not intended to qualify as incentive stock options under the Code.
Purpose
The purpose of the Amended 2012 Plan is
to promote the success and enhance the value of Yelp by aligning the interests
of employees, directors and consultants of Yelp and our affiliates to those of
our stockholders and by providing such individuals with an incentive for
outstanding performance to generate superior returns to our stockholders. The
Amended 2012 Plan is further intended to enable us to grant incentives that will
motivate, attract and retain the services of our employees, directors and
consultants, and those of our affiliates, upon whose judgment, interest and
special effort the successful conduct of our business is largely dependent.
Administration
The Board administers the Amended 2012
Plan. Subject to the terms of the Amended 2012 Plan, the Board has the power to
construe and interpret the Amended 2012 Plan and to determine the terms of
awards, including recipients, the exercise, purchase or strike price of awards,
if any, the number of shares of Class A common stock subject to or the cash
value of each award, the vesting schedule applicable to awards, together with
any vesting acceleration, and the form of consideration, if any, payable upon
exercise or settlement of an award and the terms of the award agreements for use
under the Amended 2012 Plan. All determinations, interpretations and
constructions made by the Board in good faith will be final, binding and
conclusive on all persons.
The Board has the power to delegate
administration of the Amended 2012 Plan to a committee of the Board. The Board
has delegated concurrent authority to administer the Amended 2012 Plan to our
Compensation Committee. As used in this Proposal No. 4 with respect to the
Amended 2012 Plan, the Board refers to the Compensation Committee as well as
to the Board itself. The Board may also delegate to one or more of our officers
the authority to designate employees (other than officers) to receive specified
awards and determine the number of shares of our Class A common stock to be
subject to such awards. The Board has delegated such authority to each of our
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and
General Counsel. These officers may not grant awards to themselves.
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Stock Subject to the Amended 2012
Plan
Subject to adjustment for certain
changes in our capitalization, the maximum number of shares of our Class A
common stock that may be issued pursuant to awards under the Amended 2012 Plan
is 28,590,061 shares, which number is the sum of: (i) 3,575,500 shares that were
initially reserved for issuance under the 2012 Plan and approved by our
stockholders on February 24, 2012; (ii) 2,540,210 shares that were added to the
share reserve on January 1, 2013 pursuant to the evergreen provision of the 2012
Plan; (iii) 2,000,000 shares that were approved by our stockholders on June 5,
2013; (iv) 2,834,979 shares that were added to the share reserve on January 1,
2014 pursuant to the evergreen provision of the 2012 Plan; (v) 1,458,411 shares
that were added to the share reserve on January 1, 2015 pursuant to the
evergreen provision of the 2012 Plan; (vi) 3,039,312 shares that were added to
the share reserve on January 1, 2016 pursuant to the evergreen provision of the
2012 Plan; (vii) 3,000,000 shares to be added to the share reserve on the date
of the Annual Meeting if this Proposal No. 4 is approved by our stockholders;
(viii) 146,739 shares (representing the number of shares otherwise available for
issuance under our 2011 Plan at the time the 2012 Plan became effective); and
(ix) certain shares subject to stock options or other stock awards granted under
our 2011 Plan or our 2005 Plan that would have otherwise returned to our 2011
Plan or our 2005 Plan, as applicable, not to exceed 9,994,910 shares. In
addition, if this Proposal No. 4 is approved by our stockholders, pursuant to
the evergreen provision of the Amended 2012 Plan, the aggregate number of shares
of our Class A common stock reserved for issuance under the Amended 2012 Plan
will automatically increase on January 1 of each year, beginning on January 1,
2017 and continuing through (and including) January 1, 2022, by 7.0% of the
total number of shares of our capital stock outstanding on December 31 of the
preceding calendar year, or a lesser number of shares determined by the Board.
Shares issuable under the Amended 2012 Plan will be shares of authorized but
unissued or reacquired Class A common stock, including shares repurchased by us
on the open market or otherwise.
If an award granted under the Amended
2012 Plan expires or otherwise terminates without all of the shares covered by
such award having been issued or is settled in cash, such expiration,
termination or settlement will not reduce the number of shares available for
issuance under the Amended 2012 Plan. If any shares issued pursuant to an award
granted under the Amended 2012 Plan are forfeited back to or repurchased by us
because of a failure to vest, the shares that are forfeited or repurchased will
again become available for issuance under the Amended 2012 Plan. Any shares
reacquired by us in satisfaction of tax withholding obligations on, or as
consideration for the exercise or purchase price of, an award granted under the
Amended 2012 Plan will again become available for issuance under the Amended
2012 Plan.
Eligibility
All of the approximately 4,440 employees,
six non-employee directors and approximately 682 consultants of Yelp and our
affiliates are eligible to participate in the Amended 2012 Plan and may receive
all types of awards other than incentive stock options. Incentive stock options
may be granted under the Amended 2012 Plan only to employees (including
officers) of Yelp and its affiliates.
No incentive stock option may be
granted under the Amended 2012 Plan to any person who, at the time of the grant,
owns (or is deemed to own) stock possessing more than 10% of the total combined
voting power of the Company or any affiliate of the Company, unless the exercise
price is at least 110% of the fair market value of the stock subject to the
option on the date of grant and the term of the option does not exceed five
years from the date of grant. In addition, the aggregate fair market value,
determined at the time of grant, of the shares of Class A common stock with
respect to which incentive stock options are exercisable for the first time by a
participant during any calendar year (under the 2005 Plan and the 2011 Plan as
well as the Amended 2012 Plan) may not exceed $100,000. Subject to adjustment
for certain changes in our capitalization, the maximum number of shares of our
Class A common stock that may be issued pursuant to the exercise of incentive
stock options under the Amended 2012 Plan is 27,500,000 shares.
27
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Section 162(m)
Limits
Under the Amended 2012 Plan, subject to
adjustment for certain changes in our capitalization, no participant will be
eligible to be granted during any single calendar year:
● |
more than 2,000,000 shares of our
Class A common stock pursuant to stock options, stock appreciation rights
and other stock awards whose value is determined by reference to an
increase over an exercise price or strike price of at least 100% of the
fair market value of our Class A common stock on the date of grant;
|
● |
more than 2,000,000 shares of our
Class A common stock pursuant to performance stock awards; or
|
● |
more than $2,000,000 pursuant to
performance cash awards. |
The above limitations, which we refer
to as the Section 162(m) Limitations, are designed to allow us to grant
compensation that may qualify as performance-based compensation within the
meaning of Section 162(m) of the Code.
Repricing; Cancellation and Re-Grant
of Stock Awards
The Board may, with the consent of any
adversely affected participant, (1) reprice any outstanding stock option, stock
appreciation right or other stock award by reducing the exercise, strike or
purchase price of the stock option, stock appreciation right or other stock
award, (2) cancel any outstanding stock option, stock appreciation right or
other stock award in exchange for cash or other stock awards or (3) take any
other action that is treated as a repricing under generally accepted accounting
principles.
Option Awards
The following is a description of the
permissible terms of options under the Amended 2012 Plan. The Amended 2012 Plan
permits the grant of incentive stock options and nonstatutory stock options.
Individual option grants may be more restrictive as to any or all of the
permissible terms described below.
Exercise Price; Payment.
The exercise price of options may not be less
than 100% of the fair market value of the shares of our Class A common stock
subject to the options on the date of grant and, in some cases (see
Eligibility above), may not be less than 110% of such fair market value. However,
an option may be granted with an exercise price that is lower than 100% of the
fair market value of the shares of our Class A common stock subject to the
option on the date of grant if such option is granted pursuant to an assumption
of or substitution for another option pursuant to a corporate transaction (such
as a merger), as defined in the Amended 2012 Plan. The exercise price of options
granted under the Amended 2012 Plan may be paid, as determined by the Board in
its sole discretion, (i) by cash, check, bank draft or money order, (ii) through
a brokers same day sale arrangement, (iii) by delivery of other shares of our
Class A common stock, (iv) in the case of nonstatutory stock options only,
pursuant to a net exercise arrangement or (v) in any other form of legal
consideration acceptable to the Board.
Vesting; Exercisability.
Options granted under the Amended 2012 Plan
may vest and become exercisable in cumulative increments as determined by the
Board. The Board has the authority to accelerate the time during which an option
may vest or be exercised. In addition, options granted under the Amended 2012
Plan may permit exercise prior to vesting, but in such event the participant may
be required to enter into an early exercise stock purchase agreement that allows
the Company to repurchase unvested shares, generally at their exercise price,
should the participants service terminate before vesting.
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Term; Termination of Service.
The maximum term of options granted under the
Amended 2012 Plan is ten years, except that in certain cases (see
Eligibility above) the maximum term is five years. Options granted under the
Amended 2012 Plan generally terminate three months after termination of the
participants service with us or our affiliates, unless: (i) such termination is
for cause, in which case the option will terminate immediately upon the date on
which the event giving rise to the participants termination for cause first
occurred (or, if required by law, on the date of such termination for cause);
(ii) such termination is due to the participants disability, in which case the
option may, but need not, provide that it may be exercised (to the extent the
option was exercisable at the time of such termination of service) at any time
within 12 months after such termination; (iii) such termination is due to the
participants death, or the participant dies within the period (if any)
specified in the award agreement for exercisability after termination of the
participants service for a reason other than death, in which case the option
may, but need not, provide that it may be exercised (to the extent the option
was exercisable at the time of the participants death) within 18 months after
the participants death by the participants estate or beneficiary; or (iv) the
option by its terms specifically provides otherwise. Individual option grants
may provide for post-termination exercisability periods that are longer or
shorter than those described above. In no event may a participant (or a
participants estate or beneficiary, if applicable) exercise an option beyond
the original expiration date of the option, as set forth in the award agreement.
If the exercise of an option following
a participants termination of service (other than for cause, death or
disability) would be prohibited because the issuance of shares of our Class A
common stock would violate the registration requirements under the Securities
Act, the post-termination exercisability period will be extended until the
expiration of a total period of three months (that need not be consecutive)
after such termination of service during which the exercise of the option would
not be in violation of such registration requirements. In addition, unless
otherwise provided in an award agreement, if the sale of shares of our Class A
common stock received upon exercise of an option following a participants
termination of service (other than for cause) would violate our insider trading
policy, the post-termination exercisability period will be extended until the
expiration of a period of months (that need not be consecutive) equal to the
applicable post-termination exercise period after such termination of service
during which the sale of the shares of our Class A common stock would not be in
violation of our insider trading policy. However, in no event may such an
extended post-termination exercisability period exceed the original expiration
date of the option, as set forth in the award agreement.
Other Awards
The following is a description of the
permissible terms of other awards that may be made under the Amended 2012 Plan.
Individual award grants may be more restrictive as to any or all of the
permissible terms described below.
Stock Appreciation Rights.
Stock appreciation rights, or SARs, may be
granted under the Amended 2012 Plan pursuant to SAR award agreements. Each SAR
is denominated in Class A common stock share equivalents. SARs generally are
subject to the same terms and conditions as options, as described above under
Option Awards. The strike price of each SAR will be determined by the Board but will
in no event be less than 100% of the fair market value of the shares of our
Class A common stock subject to the SAR at the time of grant. The Board may also
impose restrictions or conditions upon the vesting of SARs that it deems
appropriate. The appreciation distribution of SARs may be paid in shares of our
Class A common stock, in cash, in a combination of cash and stock, or in any
other form of consideration approved by our Board and set forth in the SAR
agreement. SARs are subject to the same conditions upon termination of service
as options under the Amended 2012 Plan.
RSU Awards. Restricted stock unit awards, or RSU awards, may be granted
under the Amended 2012 Plan pursuant to RSU award agreements. Payment of any
purchase price may be made in any legal form acceptable to the Board. RSUs may
be settled in shares of our Class A common stock, their cash equivalent, by a
combination of cash and stock, or in any other form of consideration determined
by our Board and set forth in the RSU award agreement. Dividend equivalents may
be credited in respect of shares of our Class A common stock covered by an RSU
award, as determined by the Board and set forth in an RSU award agreement. RSU
awards may be subject to vesting in accordance with a vesting schedule to be
determined by the Board. Except as otherwise provided in the applicable RSU
award agreement, RSUs that have not vested will be forfeited upon the
participants termination of service for any reason.
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Restricted Stock Awards.
Restricted stock awards may be granted under
the Amended 2012 Plan pursuant to restricted stock award agreements. A
restricted stock award may be awarded in consideration for cash, check, bank
draft or money order payable to us, the recipients services performed for us or
an affiliate of ours, or any other form of legal consideration acceptable to the
Board. Shares of our Class A common stock acquired under a restricted stock
award may be subject to forfeiture in accordance with a vesting schedule to be
determined by the Board. A restricted stock award agreement may provide that any
dividends paid on restricted stock will be subject to the same vesting and
forfeiture restrictions as apply to the shares of Class A common stock to which
such dividends relate. Rights to acquire shares of our Class A common stock
under a restricted stock award may be transferred only upon such terms and
conditions as are set forth in the restricted stock award agreement. Upon a
participants termination of service for any reason, we may receive through a
forfeiture condition or a repurchase right any shares held by the participant
that have not vested as of the date of such termination under the terms of the
restricted stock award agreement.
Performance Awards. The Amended 2012 Plan allows the Company to grant cash and
stock-based performance awards. Performance awards may be granted, vest or be
exercised based upon the attainment during a specified period of time, or
performance period, of specified performance goals.
A performance stock award is a stock
award that may be granted, may vest or may be exercised contingent upon the
achievement during a performance period of specified performance goals. A
performance stock award may also require the completion of a specified period of
service. The length of any performance period, the performance goals to be
achieved during the performance period and the measure of whether and to what
degree such performance goals have been attained will be conclusively determined
by the Compensation Committee (or, if not required for compliance with Section
162(m) of the Code, the Board), in its sole discretion. In addition, to the
extent permitted by applicable law and the award agreement, the Board may
determine that cash may be used in payment of performance stock awards.
A performance cash award is a cash
award that is payable contingent upon the achievement during a performance
period of specified performance goals. A performance cash award may also require
the completion of a specified period of service. The length of any performance
period, the performance goals to be achieved during the performance period and
the measure of whether and to what degree such performance goals have been
attained will be determined by the Compensation Committee (or, if not required
for compliance with Section 162(m) of the Code, the Board), in its sole
discretion. The Board may specify the form of payment of performance cash
awards, which may be cash or other property, or may provide for a participant to
elect to have his or her performance cash award, or such portion thereof as the
Board may specify, be paid in whole or in part in cash or other property.
In granting a performance award
intended to qualify as performance-based compensation under Section 162(m) of
the Code, the Compensation Committee will set a performance period over which
the attainment of one or more performance goals will be measured. Within the
time period prescribed by Section 162(m) of the Code (no later than the earlier
of the 90th day of a performance period and the date on which 25% of the
performance period has elapsed, and in any event at a time when the achievement
of the performance goals remains substantially uncertain), the Compensation
Committee will establish the performance goals, based upon one or more criteria,
or the performance criteria, enumerated in the Amended 2012 Plan and described
below. Prior to the payment of any compensation under any award intended to
qualify as performance-based compensation under Section 162(m) of the Code,
the Compensation Committee will certify in writing whether the performance goals
have been satisfied. Notwithstanding the satisfaction of the achievement of any
performance goals, the number of shares of our Class A common stock, options,
cash or other benefits granted, issued, retainable or vested under an award on
account of such satisfaction may be reduced by the Compensation Committee, as
determined in its sole discretion.
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Performance awards may be subject to
performance goals based on one or more of the following performance criteria:
(1) earnings (including earnings per share and net earnings); (2) earnings
before interest, taxes and depreciation; (3) earnings before interest, taxes,
depreciation and amortization; (4) earnings before interest, taxes,
depreciation, amortization and legal settlements; (5) earnings before interest,
taxes, depreciation, amortization, legal settlements and other income (expense);
(6) earnings before interest, taxes, depreciation, amortization, legal
settlements, other income (expense) and stock-based compensation; (7) earnings
before interest, taxes, depreciation, amortization, legal settlements, other
income (expense), stock-based compensation and changes in deferred revenue; (8)
total stockholder return; (9) return on equity or average stockholders equity;
(10) return on assets, investment, or capital employed; (11) stock price; (12)
margin (including gross margin); (13) income (before or after taxes); (14)
operating income; (15) operating income after taxes; (16) pre-tax profit; (17)
operating cash flow; (18) sales or revenue targets; (19) increases in revenue or
product revenue; (20) expenses and cost reduction goals; (21) improvement in or
attainment of working capital levels; (22) economic value added (or an
equivalent metric); (23) market share; (24) cash flow; (25) cash flow per share;
(26) share price performance; (27) debt reduction; (28) implementation or
completion of projects or processes; (29) user satisfaction; (30) stockholders
equity; (31) capital expenditures; (32) debt levels; (33) operating profit or
net operating profit; (34) workforce diversity; (35) growth of net income or
operating income; (36) billings; (37) bookings; (38) the number of users,
including but not limited to unique users; (39) employee retention; and (40) to
the extent that an award is not intended to comply with Section 162(m) of the
Code, other measures of performance selected by the Board.
Performance goals may be based on a
Company-wide basis, with respect to one or more business units, divisions,
affiliates or business segments, and in either absolute terms or relative to the
performance of one or more comparable companies or the performance of one or
more relevant indices. Unless specified otherwise (i) in the award agreement at
the time the award is granted or (ii) in such other document setting forth the
performance goals at the time the goals are established, the Board will
appropriately make adjustments in the method of calculating the attainment of
the performance goals as follows: (1) to exclude restructuring and/or other
nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the
effects of changes to generally accepted accounting principles; (4) to exclude
the effects of any statutory adjustments to corporate tax rates; (5) to exclude
the effects of any extraordinary items as determined under generally accepted
accounting principles; (6) to exclude the dilutive effects of acquisitions or
joint ventures; (7) to assume that any business divested by us achieved
performance objectives at targeted levels during the balance of a performance
period following such divestiture; (8) to exclude the effect of any change in
the outstanding shares of our common stock by reason of any stock dividend or
split, stock repurchase, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other similar
corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the
effects of stock based compensation and the award of bonuses under our bonus
plans; (10) to exclude costs incurred in connection with potential acquisitions
or divestitures that are required to be expensed under generally accepted
accounting principles; (11) to exclude the goodwill and intangible asset
impairment charges that are required to be recorded under generally accepted
accounting principles; and (12) to exclude the effect of any other unusual,
non-recurring gain or loss or other extraordinary item. In addition, our Board
retains the discretion to reduce or eliminate the compensation or economic
benefit due upon attainment of the performance goals. The performance goals may
differ from participant to participant and from award to award.
Other Stock Awards. Other forms of stock awards valued in whole or in part by
reference to our Class A common stock may be granted either alone or in addition
to other stock awards under the Amended 2012 Plan. The Board will have sole and
complete authority to determine the persons to whom and the time or times at
which such other stock awards will be granted, the number of shares of our Class
A common stock to be granted and all other conditions of such other stock
awards. Other forms of stock awards may be subject to vesting in accordance with
a vesting schedule to be determined by the Board.
Restrictions on
Transfer
Generally, a participant may not
transfer an award under the Amended 2012 Plan. However, options and SARs may be
transferred by will or by the laws of descent and distribution, and, if approved
by the Board or a duly authorized officer, options and SARs may be transferred
by domestic relations order or official marital settlement agreement. In
addition, with the approval of the Board or a duly authorized officer, a
participant may, by delivering written notice to the Company, designate a third
party who, on the death of the participant, will thereafter be entitled to
exercise the participants options and SARs.
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Clawback Policy
Awards granted under the Amended 2012
Plan will be subject to recoupment in accordance with any clawback policy that
we are required to adopt pursuant to the listing standards of any national
securities exchange or association on which our securities are listed or as is
otherwise required by the Dodd-Frank Act or other applicable law. In addition,
the Board may impose other clawback, recovery or recoupment provisions in an
award agreement as the Board determines necessary or appropriate, including a
reacquisition right in respect of previously acquired shares of our Class A
common stock or other cash or property upon the occurrence of an event
constituting cause.
Changes to Capital
Structure
In the event of certain capitalization
adjustments, the Board will appropriately adjust: (1) the class(es) and maximum
number of securities subject to the Amended 2012 Plan; (2) the class(es) and
maximum number of securities that may be issued pursuant to the exercise of
incentive stock options; (3) the class(es) and maximum number of securities that
may be awarded to any person pursuant to the Section 162(m) Limitations; and (4)
the class(es) and number of securities and price per share of stock subject to
outstanding stock awards.
Corporate
Transactions
In the event of a corporate transaction
(as defined in the Amended 2012 Plan and described below), the Board will have
the discretion to take one or more of the following actions with respect to
outstanding stock awards (contingent upon the closing or completion of such
corporate transaction), unless otherwise provided in the stock award agreement
or other written agreement with the participant or unless otherwise provided by
the Board at the time of grant:
● |
arrange for the surviving or
acquiring corporation (or its parent company) to assume or continue the
stock award or to substitute a similar stock award for the stock award
(including an award to acquire the same consideration paid to our
stockholders pursuant to the corporate transaction);
|
● |
arrange for the assignment of any
reacquisition or repurchase rights held by us with respect to the stock
award to the surviving or acquiring corporation (or its parent company);
|
● |
accelerate the vesting (and, if
applicable, the exercisability), in whole or in part, of the stock award
to a date prior to the effective time of such corporate transaction, with
such stock award terminating if not exercised (if applicable) at or prior
to the effective time of the corporate transaction;
|
● |
arrange for the lapse of any
reacquisition or repurchase rights held by us with respect to the stock
award; |
● |
cancel or arrange for the
cancellation of the stock award, to the extent not vested or not exercised
prior to the effective time of the corporate transaction, in exchange for
such cash consideration, if any, as the Board, in its sole discretion, may
consider appropriate; and |
● |
cancel or arrange for the cancellation of the stock award, to the
extent not vested or not exercised prior to the effective time of the
corporate transaction, in exchange for a payment, in such form as may be
determined by the Board, equal to the excess, if any, of (i) the value of
the property the participant would have received upon the exercise of the
stock award immediately prior to the effective time of the corporate
transaction, over (ii) any exercise price payable in connection with such
exercise. |
The Board is not obligated to treat all
stock awards or portions of stock awards in the same manner. The Board may take
different actions with respect to the vested and unvested portions of a stock
award.
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For purposes of the Amended 2012 Plan,
a corporate transaction generally will be deemed to occur in the event of the
consummation of (i) a sale or other disposition of all or substantially all of
our consolidated assets, (ii) a sale or other disposition of at least 50% of our
outstanding securities, (iii) a merger, consolidation or similar transaction
following which we are not the surviving corporation, or (iv) a merger,
consolidation or similar transaction following which we are the surviving
corporation but the shares of our Class A common stock outstanding immediately
prior to such transaction are converted or exchanged into other property by
virtue of the transaction.
Changes in Control
Under the Amended 2012 Plan, a stock
award may be subject to additional acceleration of vesting and exercisability
upon or after a change in control (as defined in the Amended 2012 Plan) as may
be provided in the stock award agreement or other written agreement with the
participant, but in the absence of such provision, no such acceleration will
occur.
Plan Amendments and
Termination
Our Board has the authority to amend or
terminate the Amended 2012 Plan at any time. However, except as otherwise
provided in the Amended 2012 Plan, no amendment or termination of the Amended
2012 Plan may materially impair any rights under awards already granted to a
participant unless agreed to in writing by the affected participant. We will
obtain stockholder approval of any amendment to the Amended 2012 Plan as
required by applicable law and listing requirements. No incentive stock options
may be granted under the Amended 2012 Plan after the tenth anniversary of
January 25, 2012, which was the date the 2012 Plan was initially adopted by the
Board.
U.S. FEDERAL INCOME TAX
CONSEQUENCES
The information set forth below is a
summary of the principal U.S. federal income taxation consequences to
participants and us with respect to participation in the Amended 2012 Plan. This
summary is not intended to be exhaustive, and does not discuss the income tax
laws of any local, state or foreign jurisdiction in which a participant may
reside. The information is based upon current federal income tax rules and
therefore is subject to change when those rules change. Because the tax
consequences to any participant may depend on his or her particular situation,
each participant should consult the participants tax adviser regarding the
federal, state, local and other tax consequences of the grant or exercise of an
award or the disposition of stock acquired as a result of an award. The Amended
2012 Plan is not qualified under the provisions of Section 401(a) of the Code
and is not subject to any of the provisions of the Employee Retirement Income
Security Act of 1974, as amended. Our ability to realize the benefit of any tax
deductions described below depends on our generation of taxable income as well
as the requirement of reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of our tax reporting obligations.
Nonstatutory Stock
Options
Generally, there is no taxation upon
the grant of a nonstatutory stock option if the option is granted with an
exercise price equal to the fair market value of the underlying stock on the
grant date. On exercise, a participant will recognize ordinary income equal to
the excess, if any, of the fair market value of the underlying stock on the date
of exercise of the option over the exercise price. If the participant is
employed by us or one of our affiliates, that income will be subject to
withholding taxes. The participants tax basis in those shares will be equal to
their fair market value on the date of exercise of the stock option, and the
optionholders capital gain holding period for those shares will begin on that
date.
Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, we will generally be entitled to a
tax deduction equal to the taxable ordinary income realized by the participant.
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Incentive Stock
Options
The Amended 2012 Plan provides for the
grant of stock options that are intended to qualify as incentive stock
options, as defined in Section 422 of the Code. Under the Code, a participant
generally is not subject to ordinary income tax upon the grant or exercise of an
incentive stock option. If the participant holds a share received on exercise of
an incentive stock option for more than two years from the date the incentive
stock option was granted and more than one year from the date the incentive
stock option was exercised, which is referred to as the required holding period,
the difference, if any, between the amount realized on a sale or other taxable
disposition of that share and the participants tax basis in that share will be
long-term capital gain or loss.
If, however, a participant disposes of
a share acquired on exercise of an incentive stock option before the end of the
required holding period, which is referred to as a disqualifying disposition,
the participant generally will recognize ordinary income in the year of the
disqualifying disposition equal to the excess, if any, of the fair market value
of the share on the date the incentive stock option was exercised over the
exercise price. However, if the sales proceeds are less than the fair market
value of the share on the date of exercise of the incentive stock option, the
amount of ordinary income recognized by the participant will not exceed the
gain, if any, realized on the sale. If the amount realized on a disqualifying
disposition exceeds the fair market value of the share on the date of exercise
of the incentive stock option, that excess will be short-term or long-term
capital gain, depending on whether the holding period for the share exceeds one
year.
For purposes of the alternative minimum
tax, the amount by which the fair market value of a share of stock acquired on
exercise of an incentive stock option exceeds the exercise price of that stock
option generally will be an adjustment included in the participants alternative
minimum taxable income for the year in which the incentive stock option is
exercised. If, however, there is a disqualifying disposition of the share in the
year in which the incentive stock option is exercised, there will be no
adjustment for alternative minimum tax purposes with respect to that share. In
computing alternative minimum taxable income, the tax basis of a share acquired
on exercise of an incentive stock option is increased by the amount of the
adjustment taken into account with respect to that share for alternative minimum
tax purposes in the year the incentive stock option is exercised.
We are not allowed a tax deduction with
respect to the grant or exercise of an incentive stock option or the disposition
of a share acquired on exercise of an incentive stock option after the required
holding period. If there is a disqualifying disposition of a share, however, we
will generally be entitled to a tax deduction equal to the taxable ordinary
income realized by the participant, subject to the requirement of reasonableness
and the provisions of Section 162(m) of the Code, and provided that either the
employee includes that amount in income or we timely satisfy our reporting
requirements with respect to that amount.
RSU Awards
Generally, the recipient of an RSU
award structured to comply with the requirements of Section 409A of the Code or
an exception to Section 409A of the Code will recognize ordinary income at the
time the stock subject to the RSU award is delivered equal to the excess, if
any, of the fair market value of the stock received over any amount paid by the
recipient in exchange for the stock. If an RSU award is subject to Section 409A
of the Code, the stock subject to the RSU award may generally only be delivered
upon one of the following events: a fixed calendar date (or dates), separation
from service, death, disability or a change in control. If delivery occurs on
another date, unless the RSU award otherwise complies with or qualifies for an
exception to the requirements of Section 409A of the Code, in addition to the
tax treatment described above, the recipient will owe an additional 20% federal
tax and interest on any taxes owed.
The recipients basis for the
determination of gain or loss upon the subsequent disposition of shares acquired
upon settlement of an RSU award will be the amount paid for such shares plus any
ordinary income recognized when the stock is delivered.
Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, we will generally be entitled to a
tax deduction equal to the taxable ordinary income realized by the recipient of
the RSU award.
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Restricted Stock
Awards
Generally, the recipient of a
restricted stock award will recognize ordinary income at the time the stock is
received equal to the excess, if any, of the fair market value of the stock
received over any amount paid by the recipient in exchange for the stock. If,
however, the stock is not vested when it is received (for example, if the
participant is required to work for a period of time in order to have the right
to sell the stock), the recipient generally will not recognize income until the
stock becomes vested, at which time the recipient will recognize ordinary income
equal to the excess, if any, of the fair market value of the stock on the date
it becomes vested over any amount paid by the recipient in exchange for the
stock. A recipient may, however, file an election with the Internal Revenue
Service, within 30 days following his or her receipt of the restricted stock
award, to recognize ordinary income, as of the date the recipient receives the
award, equal to the excess, if any, of the fair market value of the stock on the
date the award is granted over any amount paid by the recipient for the stock.
The recipients basis for the
determination of gain or loss upon the subsequent disposition of shares acquired
from a restricted stock award will be the amount paid for such shares plus any
ordinary income recognized either when the stock is received or when the stock
becomes vested.
Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, we will generally be entitled to a
tax deduction equal to the taxable ordinary income realized by the recipient of
the restricted stock award.
Stock Appreciation
Rights
If a SAR is granted with a strike price
equal to the fair market value of the underlying stock on the grant date, the
participant will recognize ordinary income equal to the fair market value of the
stock or cash received upon such exercise. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, we will generally be entitled to a
tax deduction equal to the taxable ordinary income realized by the recipient of
the SAR.
NEW PLAN BENEFITS UNDER AMENDED 2012
PLAN
|
|
Number of
Shares |
|
Dollar
Value |
Name and Position |
|
Subject to Awards |
|
of Awards |
Jeremy
Stoppelman |
|
|
|
|
Chief Executive Officer and
Director |
|
(1) |
|
(1) |
Rob Krolik |
|
|
|
|
Chief
Financial Officer |
|
(1) |
|
(1) |
Geoff
Donaker |
|
|
|
|
Chief Operating Officer and
Director |
|
(1) |
|
(1) |
Jed Nachman |
|
|
|
|
Chief
Revenue Officer |
|
(1) |
|
(1) |
Laurence
Wilson |
|
|
|
|
Senior Vice President, General Counsel and
Secretary |
|
(1) |
|
(1) |
All current executive officers as
a group |
|
(1) |
|
(1) |
All current
directors who are not executive officers as a group |
|
10,000 per
director every other year(2) |
|
$167,500 per year(2)
|
All employees, including all
current officers who are not executive officers, as a group |
|
(1) |
|
(1) |
35
Table of
Contents
____________________
(1) |
Awards granted under the Amended
2012 Plan to our executive officers and other employees are discretionary
and are not subject to set benefits or amounts under the terms of the
Amended 2012 Plan, and the Board and the Compensation Committee have not
granted any awards under the Amended 2012 Plan subject to stockholder
approval of this Proposal No. 4. Accordingly, the benefits or amounts that
will be received by or allocated to our executive officers and other
employees under the Amended 2012 Plan are not determinable. |
|
|
(2) |
Awards granted under the Amended
2012 Plan to our non-employee directors are discretionary and are not
subject to set benefits or amounts under the terms of the Amended 2012
Plan. However, pursuant to our current compensation arrangements for non-employee directors, each of our current non-employee directors is entitled
to receive an option to purchase 10,000 shares of our Class A common stock
every other year on the date of our annual meeting of stockholders.
In addition, pursuant to our current compensation arrangements for non-employee directors, each of our current non-employee directors is entitled to receive certain cash compensation as detailed in "Information Regarding the Board of Directors and Corporate GovernanceDirector Compensation." Each non-employee director may elect to receive payment of such compensation in the form of shares of our Class A common stock in lieu of cash, with the number of shares calculated based on the average closing price of our Class A common stock on the NYSE over the 20 trading days prior to grant.
On and
after the date of the Annual Meeting, any such options and shares of Class A common stock will be granted
under the Amended 2012 Plan if this Proposal No. 4 is approved by our
stockholders. For additional information regarding our current
compensation arrangements for non-employee directors, please see the
section of this Proxy Statement entitled Information Regarding the Board of Directors and Corporate
GovernanceDirector Compensation. |
PLAN BENEFITS UNDER 2012 PLAN
The following table sets forth, for
each of the individuals and groups indicated, the total number of shares of our
Class A common stock subject to awards that have been granted under the 2012
Plan as of February 16, 2016.
|
|
Number of
Shares |
Name and Position |
|
Subject to Awards |
Jeremy
Stoppelman |
|
|
Chief Executive Officer and
Director |
|
697,600 |
Rob Krolik |
|
|
Chief
Financial Officer |
|
253,300 |
Geoff
Donaker |
|
|
Chief Operating Officer and
Director |
|
541,100 |
Jed Nachman |
|
|
Chief
Revenue Officer |
|
284,761 |
Laurence
Wilson |
|
|
Senior Vice President, General Counsel and
Secretary |
|
284,761 |
All current executive officers as
a group |
|
2,061,522 |
All current
directors who are not executive officers as a group |
|
87,500 |
Each nominee for election as a
director: |
|
|
Fred D. Anderson, Jr. |
|
|
Peter Fenton |
|
|
Jeremy Levine |
|
|
Each associate of any executive
officers, current directors or director nominees |
|
|
Each other person
who has received or is to receive 5% of awards |
|
|
All current employees, including
all current officers who are not executive officers, as a group |
|
6,972,037 |
36
Table of
Contents
SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS
The following table provides certain
information with respect to our current and former equity compensation plans
under which awards remained outstanding or available for future grant as of
December 31, 2015. Information is included for our 2005 Plan, 2011 Plan, 2012
Plan and the Yelp Inc. 2012 Employee Stock Purchase Plan, or 2012 ESPP, each of
which was adopted with the approval of our stockholders.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
Shares of
Common Stock |
|
|
|
|
Shares of
Common |
|
|
|
|
Available for Future |
|
|
|
|
Stock to be
Issued |
|
Weighted-Average |
|
Issuance Under Equity |
|
|
|
|
Upon Exercise
of |
|
Exercise Price
of |
|
Compensation
Plans |
|
|
|
|
Outstanding |
|
Outstanding |
|
(Excluding
Securities |
|
|
Class of
Common |
|
Options and
Rights |
|
Options and
Rights |
|
Reflected in
Column (a)) |
Plan Category |
|
Stock |
|
(a) |
|
(b)(1) |
|
(c) |
Equity compensation plans approved by
stockholders |
|
Class A |
|
9,086,462 |
(2) |
|
$ |
29.5420 |
|
4,308,881 |
(4) |
Equity
compensation plans approved by stockholders |
|
Class B |
|
3,214,699 |
(3) |
|
$ |
7.5673 |
|
|
|
Total |
|
Class A and Class B |
|
12,301,161 |
|
|
$ |
20.9343 |
|
4,308,881 |
|
____________________
(1) |
The weighted average exercise
price excludes RSU awards, which have no exercise price. |
|
|
(2) |
Consists of options to purchase a
total of 4,992,075 shares of Class A common stock and 4,094,387 shares of
Class A common stock subject to RSU awards under our 2012 Plan. Excludes
purchase rights currently accruing under our 2012 ESPP. For offerings
under our 2012 ESPP that began prior to December 1, 2014, offering periods
were 24-month periods comprised of four six-month purchase periods and
eligible employees could purchase shares of our Class A common stock at a
price equal to 85% of the lower of the fair market value of our Class A
common stock at the beginning of each offering period or the end of each
semi-annual purchase period. Beginning with the offering commencing on
December 1, 2014, each offering consists of one six-month purchase period
and eligible employees may purchase shares of our Class A common stock at
a price equal to 85% of the fair market value of our Class A common stock
at the beginning of each offering period. |
|
(3) |
Consists of options to purchase
464,182 shares of Class B common stock under our 2011 Plan and options to
purchase 2,750,517 shares of Class B common stock under our 2005 Plan.
Shares of Class B common stock are convertible at any time by the holder
into shares of Class A common stock on a share-for-share
basis. |
|
(4) |
Consists of 2,662,911 shares of
Class A common stock reserved for issuance under our 2012 Plan and
1,645,970 shares of Class A common stock reserved for issuance under our
2012 ESPP. |
37
Table of
Contents
The number of shares of our Class A
common stock reserved for issuance under our 2012 Plan will automatically
increase on January 1 of each year through and including January 1, 2022 by 4.0%
of the total number of shares of our capital stock outstanding on December 31 of
the preceding calendar year, or a lesser number of shares determined by the
Board. Pursuant to the terms of our 2012 Plan, an additional 3,039,312 shares of
Class A common stock were added to the number of shares reserved for issuance
under the 2012 Plan, effective January 1, 2016.
The number of shares of our Class A
common stock reserved for issuance under our 2012 ESPP will increase
automatically each year through and including January 1, 2022 by the least of
(a) 2.0% of the total number of shares of our capital stock outstanding on
December 31 of the preceding calendar year; (b) 5,000,000 shares of Class A
common stock; or (c) such lesser number as determined by the Board. The Board
determined not to increase the number of shares reserved for issuance under the
2012 ESPP on January 1, 2016.
REQUIRED VOTE
The affirmative vote of the holders of
shares representing a majority of the voting power of the shares present in
person, by remote communication or represented by proxy and entitled to vote at
the Annual Meeting will be required to approve the Amended 2012 Plan.
THE BOARD RECOMMENDS
A VOTE IN
FAVOR OF PROPOSAL NO. 4
38
Table of Contents
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of our capital stock as of January 15, 2016 by:
● |
each director
and nominee for director; |
● |
each of the
executive officers named in the Summary Compensation
Table; |
● |
all executive officers and directors of Yelp as
a group; and |
● |
all those known by us to be beneficial owners
of more than five percent of our Class A common stock or Class B common
stock. |
Beneficial ownership is determined
according to the rules of the SEC and generally means that the person has
beneficial ownership if he, she or it possesses sole or shared voting power of a
security, including options that are currently exercisable or exercisable within
60 days of January 15, 2016. Applicable percentages are based on 66,559,018
shares of Class A common stock and 9,447,646 shares of Class B common stock
outstanding on January 15, 2016. Shares subject to options exercisable as of or
within 60 days of January 15, 2016 are deemed to be outstanding for computing
the percentage ownership of the person holding such options and the percentage
ownership of any group of which the holder is a member, but are not deemed
outstanding for computing the percentage of any other person.
39
Table of Contents
This table is based upon information supplied by our officers and
directors, as well as our review of Schedule 13Gs filed with the SEC. Except as
indicated by footnote, and subject to applicable community property laws, we
believe that each person identified in the table possesses sole voting and
investment power with respect to all capital stock shown to be held by that
person. The address of each executive officer and director, unless otherwise
indicated by footnote, is c/o Yelp Inc., 140 New Montgomery Street,
9th Floor, San Francisco, California 94105.
|
|
Class A Common Stock |
|
Class B Common Stock |
|
Percent of |
|
|
Number of |
|
Percent of |
|
Number of |
|
Percent of |
|
Total Voting |
Beneficial Owner |
|
Shares |
|
Total |
|
Shares |
|
Total |
|
Power |
Principal
Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy
Stoppelman(1) |
|
514,233 |
|
* |
% |
|
5,587,349 |
|
50.6 |
% |
|
31.8 |
% |
Max Levchin(2) |
|
|
|
* |
|
|
4,476,794 |
|
47.4 |
|
|
27.8 |
|
Geoff
Donaker(3) |
|
404,900 |
|
* |
|
|
987,649 |
|
9.8 |
|
|
6.1 |
|
Tybourne Capital Management (HK) Ltd(4) |
|
6,150,603 |
|
9.2 |
|
|
|
|
* |
|
|
3.8 |
|
Jackson Square
Partners, LLC(5) |
|
4,565,199 |
|
6.9 |
|
|
|
|
* |
|
|
2.8 |
|
Maverick Capital, Ltd.(6) |
|
4,360,359 |
|
6.6 |
|
|
|
|
* |
|
|
2.7 |
|
The Vanguard
Group, Inc.(7) |
|
4,303,153 |
|
6.5 |
|
|
|
|
* |
|
|
2.7 |
|
Eminence Capital, LP(8) |
|
3,623,683 |
|
5.4 |
|
|
|
|
* |
|
|
2.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officers and
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Stoppelman(1) |
|
514,233 |
|
* |
|
|
5,587,349 |
|
50.6 |
% |
|
31.8 |
|
Geoff
Donaker(3) |
|
404,900 |
|
* |
|
|
987,649 |
|
9.8 |
|
|
6.1 |
|
Rob Krolik(9) |
|
102,700 |
|
* |
|
|
34,045 |
|
* |
|
|
* |
|
Joseph
Nachman(10) |
|
189,027 |
|
* |
|
|
26,555 |
|
* |
|
|
* |
|
Laurence Wilson(11) |
|
219,517 |
|
* |
|
|
95,883 |
|
1.0 |
|
|
* |
|
Fred
Anderson |
|
|
|
* |
|
|
|
|
* |
|
|
* |
|
Peter Fenton(12) |
|
82,108 |
|
* |
|
|
|
|
* |
|
|
* |
|
Robert
Gibbs(13) |
|
33,645 |
|
* |
|
|
|
|
* |
|
|
* |
|
Diane Irvine(14) |
|
11,666 |
|
* |
|
|
25,000 |
|
* |
|
|
* |
|
Jeremy
Levine |
|
98,412 |
|
* |
|
|
|
|
* |
|
|
* |
|
Mariam Naficy(13) |
|
9,114 |
|
* |
|
|
|
|
* |
|
|
* |
|
All executive
officers and directors as a group |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11 persons)(15) |
|
1,665,322 |
|
2.5 |
|
|
6,756,481 |
|
57.4 |
|
|
37.3 |
|
____________________
|
Shares of Class B
common stock are convertible at any time by the holder into shares of
Class A common stock on a share-for-share basis, such that each holder of
shares of Class B common stock beneficially owns an equivalent number of
shares of Class A common stock. |
|
Percentage total
voting power represents voting power with respect to all shares of our
Class A and Class B common stock, voting as a single class. Stockholders
will be entitled to one vote per share of Class A common stock and ten
votes per share of Class B common stock. The Class A common stock and
Class B common stock will vote together on all matters (including election
of directors) submitted to a vote of stockholders, except as may otherwise
be set forth in our Certificate of Incorporation or as required by law.
|
* |
Less than one
percent. |
40
Table of Contents
(1) |
Consists of (a) 3,986,310 shares of Class B common stock held by
the Jeremy Stoppelman Revocable Trust, over which Mr. Stoppelman retains
sole voting and dispositive power, (b) 514,233 shares of Class A common
stock issuable upon exercise of options exercisable within 60 days of
January 15, 2016 and (c) 1,601,039 shares of Class B common stock issuable
upon exercise of options exercisable within 60 days of January 15,
2016. |
(2) |
Consists of (a) 1,785,037 shares of Class B common stock held
directly by Mr. Levchin and (b) 2,691,757 shares of Class B common stock
held by PENSCO Trust Company FBO Max Levchin Roth IRA, over which Mr.
Levchin retains voting and dispositive power. Mr. Levchins address is 225
Bush Street, 16th Floor, San Francisco, California 94104. Does
not reflect the conversion of 1,000,000 shares of Class B common stock
held directly by Mr. Levchin into an equivalent number of shares of Class
A common stock after January 15, 2016. |
(3) |
Consists of (a) 397,940 shares of Class B common stock held by Mr.
Donakers family trust, over which Mr. Donaker exercises voting and
dispositive control, (b) 404,900 shares of Class A common stock issuable
upon exercise of options exercisable within 60 days of January 15, 2016
and (c) 589,709 shares of Class B common stock issuable upon exercise of
options exercisable within 60 days of January 15, 2016. Does not reflect
the exercise and subsequent sale of options covering 42,000 shares of Class B
common stock by Mr. Donaker after January 15, 2016. |
(4) |
Based on information contained in a Schedule 13G filed with the SEC
on February 16, 2016, the shares are held for the account of Tybourne
Equity Master Fund (Tybourne Master Fund). Tybourne Capital Management
(HK) Limited (Tybourne HK) serves as the investment advisor to Tybourne
Master Fund. Tybourne Capital Management Limited (Tybourne Cayman)
serves as the manager to Tybourne Master Fund and the parent of Tybourne
HK. Tybourne Kesari Limited (Tybourne Kesari) is the parent of Tybourne
Cayman. Viswanathan Krishnan is the principal and sole shareholder of
Tybourne Kesari. In such capacities, each of Tybourne HK, Tybourne Cayman,
Tybourne Kesari and Mr. Krishnan (together with Tybourne Master Fund,
Tybourne) may be deemed to have voting or dispositive power over the
shares held for the Tybourne Master Fund, and each disclaims beneficial
ownership of the shares, except to the extent of its or his pecuniary
interest therein. The Schedule 13G filed by Tybourne provides information
only as of December 31, 2015 and, consequently, the beneficial ownership
of Tybourne may have changed between December 31, 2015 and January 15,
2016. The address of Tybourne HK and Mr. Krishnan is 2302 Cheung Kong
Center, 2 Queens Road Central, Hong Kong. The address of the registered
office of Tybourne Cayman and Tybourne Kesari is 190 Elgin Avenue, George
Town, Grand Cayman KY1-9005. |
(5) |
Based on information contained in a Schedule 13G filed with the SEC
on February 16, 2016, Jackson Square Partners, LLC (Jackson Square) has
sole voting power over 1,408,223 shares, shared voting power over
1,734,253 shares and sole dispositive power over 4,565,199 shares. The
Schedule 13G filed by Jackson Square provides information only as of
December 31, 2015 and, consequently, the beneficial ownership of Jackson
Square may have changed between December 31, 2015 and January 15, 2016.
The address of Jackson Square is 101 California Street, Suite 3750, San
Francisco, California 94111. |
(6) |
Based on information contained in a Schedule 13G filed with the SEC
on February 16, 2016, the shares are held for the accounts of clients of
Maverick Capital, Ltd. (Maverick Ltd.). Maverick Ltd. is an investment
advisor and, as such, may be deemed to have beneficial ownership of the
shares through the investment discretion it exercises over its clients
accounts. Maverick Capital Management, LLC (Maverick LLC) is the General
Partner of Maverick Ltd. Lee S. Ainslie III is the manager of Maverick LLC
and Andrew H. Warford is the Chairman of the Stock Committee of Maverick
Ltd. The Schedule 13G filed by Maverick Ltd., Maverick LLC and Messrs.
Ainslie and Warford provides information only as of December 31, 2015 and,
consequently, their respective beneficial ownerships may have changed
between December 31, 2015 and January 15, 2016. The address of Maverick
Ltd. and Maverick LLC is 300 Crescent Court, 18th Floor,
Dallas, Texas 75201. The address of Messrs. Ainslie and Warford is 767
Fifth Avenue, 11th Floor, New York, New York
10153. |
41
Table of Contents
(7) |
Based on information
contained in a Schedule 13G filed with the SEC on February 11, 2016, The
Vanguard Group, Inc. (Vanguard), an independent advisor, has sole voting
power over 43,198 shares, shared voting power over 4,200 shares, sole
dispositive power over 4,259,755 shares and shared dispositive power over
43,398 shares. Vanguard Fiduciary Trust Company, a wholly owned subsidiary
of Vanguard, beneficially owns 39,198 shares as a result of its serving as
investment manager of collective trust accounts. Vanguard Investments
Australia, Ltd., a wholly owned subsidiary of Vanguard, beneficially owns
8,200 shares as a result of its serving as investment manager of
Australian investment offerings. The Schedule 13G filed by Vanguard
provides information only as of December 31, 2015 and, consequently, the
beneficial ownership of Vanguard may have changed between December 31,
2015 and January 15, 2016. The address of Vanguard is 100 Vanguard Blvd.,
Malvern, Pennsylvania 19355. |
(8) |
Based on information contained in
a Schedule 13G filed with the SEC on February 16, 2016, (a) Eminence
Capital, LP (Eminence Capital) has shared voting and dispositive power
over 3,623,683 shares, (b) Eminence GP, LLC (Eminence GP) has shared
voting and dispositive power over 3,229,491 shares and (c) Ricky C.
Sandler has sole voting and dispositive power over 3,715 shares and shared
voting and dispositive power over 3,623,683 shares. |
|
Eminence Capital serves as the
management company to Eminence Partners, L.P. (Eminence I), Eminence
Partners II, L.P. (Eminence II), Eminence Partners Leveraged, L.P.
(Eminence Leveraged), Eminence Eaglewood Master, L.P. (Eminence
Eaglewood), Eminence Partners Long, L.P. (together with Eminence I,
Eminence II, Eminence Leveraged and Eminence Eaglewood, the
Partnerships), as well as Eminence Fund Master, Ltd. (Eminence Offshore
Master Fund), Eminence Fund Leveraged Master, Ltd. (together with
Eminence Offshore Master Fund, the Master Funds), and Eminence Fund
Long, Ltd. (Eminence Offshore Long). The Partnerships, Master Funds and
Eminence Offshore Long are collectively referred to as the Eminence
Funds. Mr. Sandler has investment discretion over certain family and
other related accounts (the Family Accounts). |
|
Eminence Capital serves as the
management company to the Eminence Funds with respect to the shares
directly owned by the Eminence Funds and may be deemed to have voting and
dispositive power over the shares held for the accounts of the Eminence
Funds. Eminence GP serves as the general partner or manager with respect
to the shares directly owned by the Partnerships and Master Funds and may
be deemed to have voting and dispositive power over the shares held for
the accounts of the Partnerships and Master Funds. Mr. Sandler is the
Chief Executive Officer of Eminence Capital and the Managing Member of
Eminence GP and may be deemed to have voting and dispositive power with
respect to shares directly owned by the Eminence Funds and the Family
Accounts, as applicable. The Schedule 13G provides information only as of
December 31, 2015 and, consequently, the beneficial ownership of Eminence
Capital, Eminence GP and Mr. Sanders may have changed between December 31,
2015 and January 15, 2016. The address of Eminence Capital, Eminence GP
and Mr. Sandler is 65 East 55th Street, 25th Floor, New
York, New York 10022. |
(9) |
Consists of (a) 9,000 shares of
Class A common stock, (b) 14,045 shares of Class B common stock, (c)
93,700 shares of Class A common stock issuable upon exercise of options
exercisable within 60 days of January 15, 2016 and (c) 20,000 shares of
Class B common stock issuable upon exercise of options exercisable within
60 days of January 15, 2016. Does not reflect Mr. Kroliks receipt of an
RSU award covering 30,000 shares of Class A common stock after January 15,
2016. See Executive CompensationCompensation
Plans and ArrangementsSeverance ArrangementsKrolik Transition
Agreement. |
(10) |
Consists of (a) 48,497 shares of
Class A common stock, 34,265 shares of which were RSUs subject to vesting
as of the date 60 days after January 15, 2016, (b) 140,530 shares of Class
A common stock issuable upon exercise of options exercisable within 60
days of January 15, 2016 and (c) 26,555 shares of Class B common stock
issuable upon exercise of options exercisable within 60 days of January
15, 2016. Does not reflect the sale of 912 shares to cover taxes
associated with the vesting of RSUs after January 15, 2016. |
(11) |
Consists of (a) 61,442 shares of
Class A common stock, 34,265 shares of which were RSUs subject to vesting
as of the date 60 days after January 15, 2016, (b) 35,233 shares of Class
B common stock, (c) 158,075 shares of Class A common stock issuable upon
exercise of options exercisable within 60 days of January 15, 2016 and (d)
60,650 shares of Class B common stock issuable upon exercise of options
exercisable within 60 days of January 15, 2016. Does not reflect the sale
of 912 shares to cover taxes associated with the vesting of RSUs after
January 15, 2016. |
|
|
42
Table of Contents
(12) |
Consists of shares held by Mr.
Fentons family trust, over which Mr. Fenton exercises voting and
dispositive control. |
(13) |
Consists of shares issuable upon
exercise of options exercisable within 60 days of January 15,
2016. |
(14) |
Consists of (a) 2,500 shares of
Class A common stock, (b) 9,166 shares of Class A common stock issuable
upon exercise of options exercisable within 60 days of January 15, 2016
and (c) 25,000 shares of Class B common stock issuable upon exercise of
options exercisable with 60 days of January 15, 2016. Does not reflect the
purchase of 6,100 shares of Class A common stock by Ms. Irvine after
January 15, 2016. |
(15) |
Consists of (a) 301,959 shares of
Class A common stock, 68,530 shares of which were RSUs subject to vesting
as of the date 60 days after January 15, 2016, (b) 4,433,528 shares of
Class B common stock, (c) 1,363,363 shares of Class A common stock
issuable upon exercise of options exercisable within 60 days of January
15, 2016 and (d) 2,322,953 shares of Class B common stock issuable upon
exercise of options exercisable within 60 days of January 15, 2016.
|
|
|
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a)
of the Exchange Act requires our directors and executive officers, and persons
who own more than ten percent of a registered class of our equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of our common stock and other equity securities. Officers, directors
and greater than ten percent stockholders are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file.
To our
knowledge, based solely on a review of the copies of such reports furnished to
us and written representations that no other reports were required, during the
year ended December 31, 2015, all Section 16(a) filing requirements applicable
to our officers, directors and greater than ten percent stockholders were
complied with.
43
Table of Contents
EXECUTIVE OFFICERS
The names, ages and certain other
information concerning our executive officers as of February 16, 2016 are set
forth below.
Name |
|
Age |
|
Position Held With the Company |
Jeremy
Stoppelman |
|
38 |
|
Co-Founder and Chief
Executive Officer |
Rob Krolik |
|
47 |
|
Chief Financial Officer |
Geoff Donaker |
|
43 |
|
Chief Operating
Officer |
Joseph R. (Jed) Nachman |
|
43 |
|
Chief Revenue Officer |
Laurence Wilson |
|
43 |
|
Senior Vice President,
Legal and User Operations, General Counsel and
Secretary |
Jeremy Stoppelman. Biographical
information regarding Mr. Stoppelman is set forth under Proposal No. 1Election of Directors.
Rob
Krolik has served as our Chief Financial
Officer since July 2011. Prior to joining us, Mr. Krolik served as Chief
Financial Officer of Move, Inc., an online real estate company, from July 2009
to August 2011. Prior to Move, Mr. Krolik served in several roles, most recently
as Vice President, Global Finance Operations at eBay from September 2005 to July
2009. Prior to eBay, Mr. Krolik served as Vice President of Finance at
Shopping.com, Inc., a price comparison service company, from September 2004 to
September 2005, when it was acquired by eBay. Prior to Shopping.com, Mr. Krolik
held management roles at DigitalThink, Inc., an online learning company, from
March 2002 to May 2004, most recently as its Chief Financial Officer. Mr. Krolik
holds a B.B.A. from the University of Texas at Austin and is a certified public
accountant (inactive). As previously disclosed, Mr. Krolik will be stepping down
from his position as Chief Financial Officer upon the earlier of December 15,
2016 or the start date of his successor in that role.
Geoff Donaker. Biographical
information regarding Mr. Donaker is set forth under Proposal No. 1Election of Directors.
Jed
Nachman has served as our Chief Revenue
Officer since January 2016 and previously served as our Senior Vice President of
Revenue from September 2011 to December 2015 and Vice President of Sales from
January 2007 to September 2011. Prior to joining us, Mr. Nachman held several
senior sales roles for Yahoo! Inc., an Internet search company, from January
2002 to January 2007, most recently as Director of Corporate Sales for the
Western Region for Yahoo! HotJobs. Prior to Yahoo!, Mr. Nachman served as sales
manager at HotJobs, an online job search company, from June 1999 to 2002, when
it was acquired by Yahoo!. Prior to HotJobs, Mr. Nachman was an associate at
Robertson Stephens, an investment bank, from 1996 to 1998. Mr. Nachman holds a
B.A. in Economics from the University of Colorado at Boulder.
Laurence Wilson has served as our
General Counsel since November 2007 and as our Senior Vice President, Legal and
User Operations since September 2013. Prior to joining us, Mr. Wilson served as
Vice President of Legal and Business Development for Xoom Corporation from
January 2004 to October 2007. Mr. Wilson began his legal career with Claremont
Partners, Inc., a health care solutions company, from March 2002 to January
2004. He holds a B.A. in History from the University of California, San Diego
and a J.D. from Stanford Law School.
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Table of Contents
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Our compensation discussion and
analysis describes our executive compensation program and the decisions in 2015
regarding compensation for our named executive officers:
● |
Jeremy Stoppelman, our Chief
Executive Officer; |
● |
Rob Krolik, our Chief Financial
Officer; |
● |
Geoff Donaker, our Chief
Operating Officer; |
● |
Jed Nachman, our Chief Revenue
Officer; and |
● |
Laurence Wilson, our Senior Vice President, Legal and User
Operations, General Counsel and Secretary. |
Executive Summary
During 2015, we continued to transform
the way people discover, engage and transact with great local businesses.
Highlights of our company performance in 2015 include:
● |
We
generated net revenue of $549.7 million, representing 46% growth over
2014. |
● |
Cumulative reviews grew 34% year-over-year to approximately 95.2
million at the end of 2015, and unique mobile devices accessing our mobile
app grew 38% year-over-year in the fourth quarter to approximately 20
million unique mobile devices on a monthly average basis.
|
● |
We
successfully transitioned our local advertising business from selling
primarily impression-based ads to primarily performance-based ads. As of
the fourth quarter of 2015, 61% of our local revenue came from
cost-per-click advertisers, compared to 32% in the fourth quarter of 2014.
|
● |
In
February 2015, we acquired Eat24, a leading web- and app-based online food
ordering service. Benefitting from our large traffic base, which drove
incremental transactions and new diners at low or no cost, Eat24s revenue
growth in the fourth quarter of 2015 accelerated, with revenue up
approximately 80% year over year. |
● |
Over 15 million diners were seated through our SeatMe reservations
product in the fourth quarter of 2015, an increase of approximately 120%
over the fourth quarter of 2014. |
● |
We
expanded our Platform partners and added the ability for consumers to
order and make reservations directly from search results. Yelp Platform
transactions across all verticals grew 150% year-over-year in the fourth
quarter. |
Our Compensation Committee believes
that our executive compensation program is appropriately designed to achieve its
objectives, reasonable in light of the executive compensation programs of
companies with whom we compete for talent and responsible in that it encourages
our executive officers to work for meaningful stockholder returns without
encouraging them to assume excessive risks. Highlights of our executive
compensation program for 2015 include:
● |
Messrs. Stoppelman and Donaker each continued to receive a nominal
base salary of $1.00 per year. |
● |
Equity compensation remained the principal component
of our executive compensation program. After reviewing their existing equity opportunities, our Compensation
Committee determined that new equity awards would be appropriate for each of the executive officers to meet our
long-term retention goals. However, in light of the large stock-based compensation expense associated with these
equity awards, the Compensation Committee granted long-term equity awards only to Messrs. Nachman
and Wilson in 2015; it granted smaller, medium-term equity awards to the other executive officers (as described in the
following bullet) and planned to revisit long-term awards for them in subsequent
years. |
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Table of Contents
● |
Messrs. Stoppelman, Krolik and Donaker each received a smaller
stock option grant with a two-year vesting schedule to provide a
medium-term incentive in the absence of meaningful cash compensation in
the cases of Messrs. Stoppelman and Donaker, and to supplement cash
compensation below market levels in the case of Mr. Krolik.
|
● |
We
do not maintain employment agreements with our executive officers that
contain multi-year guarantees for salary increases, guaranteed bonuses or
guaranteed equity compensation. Our executives are employed at-will and
are expected to demonstrate high-quality performance in order to continue
serving as members of our executive team. |
● |
We
offer reasonable change in control and severance benefits to our executive
officers, as customary in our industry, with cash severance payments under
these agreements not exceeding the executives annual cash compensation
(i.e. base salary plus cash bonus amount, if any) at the time of
termination. We do not provide excise tax reimbursements or gross ups to
our executive officers with respect to benefits received in connection
with a change in control or termination event. |
● |
We
provide few fringe benefits to our executive officers and do not
offer access to car allowances, financial planning advice or club
memberships. The perquisites and benefits offered to our executive
officers do not generally differ from those that are provided on a broad
basis to our employees. However, in certain circumstances as it determines
reasonable and necessary, our Compensation Committee has in the past, and
may in the future, approve special benefits to our executive officers,
such as the payment of parking fees and health insurance premiums for
Messrs. Stoppelman and Donaker in connection with the reduction of their
salaries to a nominal amount. |
Our Board and
Compensation Committee have also implemented a number of other corporate
governance policies and practices that were determined to be in the best
interests of our stockholders:
● |
In
accordance with the preference of our stockholders expressed in 2013, we
conduct an annual advisory vote on executive compensation, commonly
referred to as a say-on-pay vote. In our 2015 say-on-pay vote, our
executive compensation was approved by approximately 95% of the votes
affirmatively cast on the proposal. Based on this overwhelming support,
our Compensation Committee decided to maintain our current approach to
executive compensation for our named executive officers. |
● |
Our Compensation Committee is composed solely of independent
directors. |
● |
Our Compensation Committee utilizes an independent compensation
consultant to provide market data and engage in ongoing review of our
executive compensation programs; these inputs and data serve solely as
guidelines to our Compensation Committee in determining the components of
our executive compensation program and the amount of each component
awarded to our executive officers. |
● |
Our trading window policy prohibits short sales, hedging
transactions and other inherently speculative transactions in our equity
securities by our executive officers. |
● |
Our Compensation Committee generally reviews our executive
compensation program on an annual basis to ensure that we provide
competitive compensation packages to attract, retain and incentivize our
executive management team to achieve success for our business and our
stockholders. |
● |
Our Compensation Committee regularly reviews our executive
compensation program to ensure that it strikes the appropriate balance of
risk and reward in relation to our overall business strategy and does not
encourage excess or unnecessary risk-taking behavior.
|
Executive Compensation Philosophy,
Objectives and Design
Philosophy. We operate in a rapidly evolving market. To succeed in this
environment, we must continually refine our business model, increase our traffic
and revenue, manage the effectiveness of our advertising solutions and attract
new advertising clients, develop and update our technology infrastructure,
deploy new functions and products, expand our business and partner with other
companies.
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Table of Contents
To achieve these business objectives,
we need to attract and retain a highly talented team of executives. We expect
our team to possess and demonstrate strong leadership and management
capabilities, as well as foster our company culture, which is the foundation of
our success and remains a pivotal part of our everyday operations. We believe
the best way to accomplish this through our compensation program is to emphasize
teamwork and long-term value creation through a philosophy of:
● |
maintaining internal pay equity the compensation paid to each
executive should reflect the importance of his role as compared to the
roles of the other executive officers, while at the same time providing a
certain amount of parity to promote team work; |
● |
tying a meaningful portion of
compensation directly to the long-term value and growth of our business
and total stockholder return; and |
● |
establishing responsible pay
practices that have a reasonable cost structure and do not encourage
unnecessary or excessive risk taking. |
Objectives. Our executive compensation program is designed to achieve the
following objectives:
● |
attract and retain talented and experienced executive officers,
whose knowledge, skills and performance are critical to our
success; |
● |
motivate the executive officers
to achieve our business objectives; |
● |
align the interests of our
executive officers with those of our stockholders; and |
● |
promote teamwork while also
recognizing the role each executive plays in our success.
|
Design. The total compensation package for our executive team generally consists
of:
● |
a
base salary to compensate employees for their day-to-day responsibilities,
at levels that we feel are necessary to attract and retain executive
talent; |
● |
grants under our equity incentive
compensation plans, including stock options and RSUs; and |
● |
limited severance and change in
control benefits to encourage our executives to work to maximize
stockholder value. |
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Table of Contents
Compensation is typically weighted towards equity, with limited cash
compensation. Our Compensation Committee believes that making equity awards a
key component of executive compensation focuses the executive team on the
achievement of our long-term strategic and financial goals, thereby aligning
their interests with those of our stockholders. We generally do not offer cash
bonus opportunities to our executive officers, as we believe that providing
meaningful equity opportunities motivates our executive officers to drive
long-term value creation while conserving cash.
We do
not affirmatively set out in any given year, or with respect to any given new
hire package, to apportion compensation in any specific ratio between cash and
equity, or between long-term and short-term compensation. Rather, total
compensation may skew more heavily toward either cash or equity, or short-term
or long-term compensation, as a result of the factors described in the
paragraphs above and in greater detail below. Our Compensation Committee
continues to evaluate our executive compensation philosophy, objectives and
design, generally on an annual basis or more frequently as circumstances
require.
Compensation Setting Process
Role of Our Compensation Committee
Our
Compensation Committee is primarily responsible for executive compensation
decisions, including establishing our executive compensation philosophy and
programs, as well as determining specific compensation arrangements for each
executive. Our Compensation Committee generally reviews our compensation
programs and individual executive compensation arrangements on an annual basis.
In the fourth quarter of 2014, in anticipation of making executive compensation
decisions for 2015, our Compensation Committee conducted a review of our
executive compensation program and related policies. As part of this review, and
in making individual compensation decisions for 2015, our Compensation Committee
considered the philosophy and objectives outlined above, together with one or
more of the following factors, as discussed in greater detail below:
● |
the experiences
and individual knowledge of the members of our Compensation Committee
regarding executive compensation, as we believe this approach helps us
compete in hiring and retaining the best possible talent while maintaining
a reasonable and responsible cost structure; |
● |
the recommendations of our executive
management; |
● |
corporate and individual performance, as we
believe this encourages our executive officers to focus on achieving our
business objectives; |
● |
solely as a guide and not as a determinative
factor, various market data presented by Compensia, our Compensation
Committees independent compensation consultant, to ensure that the
compensation of our executive officers remains competitive and that we are
meeting our retention objectives; |
● |
each executive officers existing equity awards
and stock holdings (including the unvested portions); and |
● |
the potential dilutive effect of equity awards
on our stockholders. |
Role of Management
Our
Compensation Committee works closely with members of our management, and our
Chief Financial Officer and Vice President, Human Resources in particular, to
manage and develop our executive compensation program, including reviewing
existing compensation for adjustment (as needed) and establishing new hire
packages. Our finance and human resources departments work with the Chief
Financial Officer to gather financial data which may include information
related to each executives job duties, company-wide pay levels and benefits,
current cash constraints, each executive officers current equity award
holdings, shares available for grant under our equity plans and Company and
individual accomplishments, as appropriate that management reviews in making
its recommendations.
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Table of Contents
From
time to time, our Chief Financial Officer and other members of our executive
management attend meetings (or portions of meetings) of the Compensation
Committee to present information and answer questions. Members of our human
resources and legal departments also attend Compensation Committee meetings. Our
Compensation Committee meets in executive session when appropriate to discuss
and determine the compensation for each executive officer. Neither our Chief
Executive Officer, Chief Financial Officer nor any other member of management
participates in any deliberations of our Compensation Committee regarding
executive compensation and no executive officer voted in or was present during
the final deliberations of our Compensation Committee regarding the amount or
any component of his own compensation package or of any other executive
officers compensation package.
Say-on-Pay Vote in
2015
In
accordance with the preference indicated by our stockholders in 2013, we held an
advisory vote on the compensation of our named executive officers in 2015. Our
Compensation Committee considers the views of our stockholders as expressed in
the outcome of each such advisory vote in determining executive compensation
levels. At our 2015 Annual Meeting of Stockholders, approximately 95% of the
votes affirmatively cast were voted in favor of the say-on-pay proposal
approving the compensation of our named executive officers. Our Compensation
Committee viewed the results of this vote as reflecting broad general stockholder support
for our executive compensation program. Based on this result and its ongoing
review of our compensation practices, our Compensation Committee believes that
our executive compensation program has been effective in implementing our
compensation philosophy and objectives. Accordingly, our Compensation Committee
determined not to make any significant changes to our executive compensation
program in 2015 following the vote, or for 2016. Nevertheless, our Compensation
Committee recognizes that pay practices continue to evolve, and so will continue
to refine our executive compensation program in its ongoing effort to ensure
that our executive compensation reflects our compensation philosophy and
objectives, as well as supports long-term value creation and our company
culture.
Role of
Compensation Consultant and Use of Market Data
Our
executive compensation program is designed to attract and retain talented and
experienced executive officers in an extremely competitive market. As a result,
our Compensation Committee believes that it is important to be informed as to
the current practices of comparable public companies with which we compete for
talent. To that end, our Compensation Committee typically reviews the executive
compensation practices of a public company peer group as a comparative framework
for our executive compensation program. In some instances, it may supplement
publicly available data from the peer company group with relevant published
survey sources.
Our
Compensation Committee has the authority under its charter to engage its own
advisors to assist in carrying out its responsibilities. Our Compensation
Committee typically engages an independent executive compensation consultant to
advise it on current market practices, and we expect that it will continue to do
so in the future to ensure that our executive compensation program is
competitive and aligned with our strategy. From time to time, representatives of
such consultants may attend meetings (or portions of meetings) of our
Compensation Committee to present information and answer questions.
2015
Compensation Analysis. In September 2014, our
Compensation Committee engaged Compensia to provide executive compensation
advisory services in preparation for its annual evaluation of our pay practices.
These services included recommending a peer company group and providing a
compensation analysis consisting of executive compensation data from these
companies most recent publicly available compensation disclosures, supplemented
by market data for these companies published in the Radford Technology Survey
when compensation for directly comparable positions to each of our named
executive officers was not publicly disclosed. Compensia recommended, and our
Compensation Committee approved, the following peer company group:
Concur Technologies, Inc. |
Financial Engines, Inc. |
Pandora Media, Inc. |
SolarWinds, Inc. |
The Ultimate Software |
Cornerstone OnDemand, Inc. |
GrubHub Inc. |
Proofpoint, Inc. |
Splunk Inc. |
Group, Inc. |
CoStar Group, Inc. |
HomeAway, Inc. |
ServiceNow, Inc. |
Tableau Software, Inc. |
Zillow, Inc. |
Demandware, Inc. |
NetSuite Inc. |
Shutterstock, Inc. |
Trulia, Inc. |
|
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Table of Contents
The companies from our 2014 peer group that were not included in the 2015 peer group were removed because they no longer met our market capitalization parameters, except for OpenTable, Inc., which was removed as a result of its being acquired. The new companies added to the 2015 peer group were chosen based on meeting industry, revenue, market capitalization and other criteria, as detailed below.
In the fourth quarter of 2015, Compensia provided a
compensation analysis to our Compensation Committee consisting of a detailed
market assessment and retention analysis for each of our named executive
officers, as well as an overview of market trends. Compensia based its analysis
on market data for the peer group companies listed above and, as additional
reference points, for TripAdvisor, Inc. and ZenDesk, Inc., which were too large
and too small, respectively, to be included in the peer group, but that were
considered key talent competitors. The peer group companies generally met the
following criteria:
|
|
|
|
Revenue
Over |
|
Market |
|
|
Group |
|
Industries |
|
Previous Four Quarters |
|
Capitalization(1) |
|
Other Criteria |
2015 Peer
Companies |
|
Internet Software
and |
|
$128M $731M |
|
$1.4B $9.3B |
|
Annual revenue |
|
|
Services |
|
|
|
|
|
growth >10% |
|
|
|
|
|
|
|
|
|
|
|
Application and
Systems |
|
|
|
|
|
Market cap ≥5x |
|
|
Software |
|
|
|
|
|
annual revenue |
|
|
|
|
|
|
|
|
|
TripAdvisor, Inc. |
|
Internet Retail |
|
$1.1B |
|
$12.4B |
|
Industry fit |
|
ZenDesk, Inc. |
|
Application
Software |
|
$96M |
|
$1.5B |
|
Talent |
|
|
|
|
|
|
|
|
competitors |
____________________
(1) As of October 27, 2014
By
comparison, at the time of the Compensation Committees review, our net revenue
over the previous four quarters was approximately $338 million (representing 66%
year-over-year growth) and our market capitalization was approximately $4
billion (representing approximately 12x our net revenue).
All
cash compensation data used in the analysis reflected a three percent upward
adjustment from the compensation levels disclosed by such companies, which
Compensia applied to update the data for 2015. Compensia based this adjustment
factor on published trends and its experience in analyzing compensation trends.
Our Compensation Committee reviewed Compensias analysis and market data in its
evaluation of our executive compensation program for 2015, but did not benchmark to any
particular level.
2016
Compensation Analysis. Our Compensation
Committee reviews and updates our peer company group periodically to ensure that
it continues to reflect appropriately the market in which we compete for
talented executives. In this regard, in anticipation of making executive
compensation decisions for 2016, our Compensation Committee engaged Compensia
again in September 2015 to recommend updates to the peer company group and to
conduct a new assessment comparing the compensation of our executive management
team to compensation for similarly situated executives at such peer companies.
Based on Compensias recommendations, our Compensation Committee approved an
updated peer group for 2016 reflecting our reduced market capitalization as compared to
the prior year. The 2016 peer company group consists of the following publicly
traded companies:
Box
Inc. |
Etsy
Inc. |
New Relic,
Inc. |
SolarWinds,
Inc. |
WebMD Health
Corp. |
|
|
|
|
|
comScore,
Inc |
Financial
Engines, Inc. |
Pandora Media,
Inc. |
Synchronoss Technologies Inc. |
Zendesk,
Inc. |
|
|
|
|
|
Cornerstone OnDemand, Inc. |
Groupon,
Inc. |
Proofpoint,
Inc. |
Tableau Software
Inc. |
Zillow Group,
Inc. |
|
|
|
|
|
CoStar Group,
Inc. |
GrubHub
Inc. |
RealPage,
Inc. |
The Ultimate
Software Group, Inc. |
|
|
|
|
|
|
Demandware,
Inc. |
HomeAway,
Inc. |
Shutterstock,
Inc. |
Web.com Group,
Inc. |
|
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Table of Contents
The companies from our 2015 peer group that were not included in the 2016 peer group were removed because they no longer met our market capitalization parameters, except for Concur Technologies, Inc. and Trulia, Inc., each of which was removed as a result of its being acquired. The new companies added to the 2016 peer group were chosen based on meeting industry, revenue, market capitalization and other criteria.
Independence Assessment. In March
2015, our Compensation Committee analyzed whether the work of Compensia as a
compensation consultant raised any conflict of interest, taking into
consideration the following factors: (i) that Compensia does not provide any
other services to us; (ii) the fees paid by us to Compensia represent less than
one percent of Compensias total revenue; (iii) Compensias policies and
procedures that are designed to prevent conflicts of interest; (iv) the absence
of any material business or personal relationship of Compensia or the individual
compensation advisors employed by the firm with any of our executive officers;
(v) the absence of any material business or personal relationship of the
individual compensation advisors with any member of our Compensation Committee;
and (vi) none of the individual compensation advisors employed by Compensia own
any shares of our stock. Our Compensation Committee has determined, based on its
analysis of the above factors, that the work of Compensia and the individual
compensation advisors employed by Compensia as compensation consultants to our
Compensation Committee has not created any conflict of interest and our
Compensation Committee is satisfied with the independence of Compensia. Our
Compensation Committee intends to continue to assess the independence of any of
our compensation advisors by reference to the foregoing factors, consistent with
applicable NYSE listing standards.
Executive Compensation Program Components
Base Salary
We
provide a base salary as a fixed source of compensation for our executive
officers, allowing them a degree of certainty in the face of having a meaningful
portion of their compensation at risk in the form of equity awards with value
generally contingent on stock price appreciation. Our Compensation Committee
recognizes the importance of base salaries as an element of compensation that
helps to attract and retain highly qualified executive talent, particularly in
light of the absence of a cash bonus opportunity for our executive officers.
Our
Compensation Committee does not apply specific formulas in setting initial
salary levels or determining adjustments from year to year. Rather our
Compensation Committee may consider a range of factors, including the
executives anticipated responsibilities and individual experience, our
Compensation Committee members experience and knowledge in compensating
similarly situated individuals at other companies, the value of the executive
officers existing equity awards, our then-current cash constraints, a general
sense of internal pay equity among our officers and negotiations with the
executive. Our Compensation Committee may also consider target total cash
compensation (i.e. base salary plus target annual incentive or bonus cash
compensation) for similarly situated executives at our peer group companies. Our
Compensation Committee generally believes target total cash compensation data to
be a more relevant measure of the market competitiveness of the cash
compensation paid to our executive officers than base salary data because we do
not offer cash incentive or bonus opportunities.
Our
Compensation Committee generally reviews, and adjusts as necessary, base
salaries for each of our executive officers annually. In the first quarter of
2015, our Compensation Committee reviewed our executive officers base salaries
as part of its annual review of our executive compensation program and
determined not to make any changes for 2015. The following table shows each
named executive officers base salary for 2014 and 2015:
|
|
2014 and
2015 |
Name |
|
Base Salary ($) |
Jeremy
Stoppelman |
|
1 |
Rob Krolik |
|
325,000 |
Geoff Donaker |
|
1 |
Jed Nachman |
|
325,000 |
Laurence Wilson |
|
325,000 |
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Table of Contents
Jeremy Stoppelman and Geoff Donaker. As part of its annual review of their compensation, the
Compensation Committee considered whether it would be appropriate to continue to
honor Messrs. Stoppelmans and Donakers requests for nominal base salaries.
Although this arrangement conserves our cash resources and allows these
executive officers to continue to signal their confidence in our business, the
Compensation Committee revisited whether the lack of meaningful cash
compensation would encourage excessive or unnecessary risk-taking behavior. In
particular, the Compensation Committee noted that a large portion of Messrs.
Stoppelmans and Donakers personal wealth continued to be tied directly to our
stock performance, potentially encouraging them to emphasize short-term
performance at the expense of long-term value creation.
Our Compensation Committee continued to believe
that this potential risk could be effectively addressed by the equity compensation awarded to Messrs. Stoppelman and
Donaker; they would realize value from their stock options with medium- and long-term vesting schedules only through the
appreciation of our stock price in the medium- and long-term, thereby mitigating the incentive for short-term risk taking.
However, the Compensation Committee also noted that Messrs. Stoppelmans and Donakers outstanding equity awards
would fully vest within two years. While the Compensation Committee decided not to grant Messrs. Stoppelman and Donaker new
options with long-term vesting schedules at that time, for reasons discussed under Equity
Compensation below, it did grant each of them a supplemental option award to
replace the supplemental stock options granted to them in 2013, which had fully vested. These grants would strengthen
Messrs. Stoppelmans and Donakers medium-term incentives, thereby mitigating the risk of them focusing
disproportionately on short-term results until such time as the Compensation Committee may grant them new options with
long-term vesting schedules. Based on these determinations, our Compensation Committee approved the continued payment of
nominal base salaries to Messrs. Stoppelman and Donaker.
Jed Nachman and Laurence Wilson. Our
Compensation Committee decided not to increase Messrs. Nachmans or Wilsons
base salary for 2015 based on its determination that these officers existing
base salaries, taken together with the other elements of their compensation,
provided sufficient fixed compensation for retention purposes. In making this
determination, our Compensation Committee did not benchmark their salaries to
specific market levels, but did note that Messrs. Nachmans and Wilsons base
salaries each fell below the 25th percentile of target total cash
compensation levels reported in Compensias analysis for 2015. As in prior
years, although their cash compensation remained comparatively low, our
Compensation Committee concluded that Messrs. Nachmans and Wilsons total
compensation was adequate in light of the substantial equity awards being made
to each of them in 2015, as described under Equity Compensation below.
Rob Krolik. Using Compensias 2015
compensation analysis as a reference point, the Compensation Committee noted
that Mr. Kroliks base salary was at a less competitive level than either of
Messrs. Nachmans or Wilsons compared to similarly situated executives at our
peer companies. The Compensation Committee determined, however, to supplement
his cash compensation with an equity award similar those supplementing Messrs.
Stoppelmans and Donakers nominal base salaries, as discussed under
Equity Compensation below, to maintain our focus on equity compensation and
internal pay equity.
Incentive Cash
Compensation
Historically, we have not offered incentive cash compensation
opportunities to our executive officers. Our Compensation Committee revisited
this practice in setting 2015 and 2016 compensation, but decided not to offer
incentive cash compensation opportunities to any executive officer at such
times. Our Compensation Committee also elected not to pay any bonus compensation
for 2015. Although our Compensation Committee recognized that incentive and
bonus cash compensation is a common compensation element at many companies,
including companies with whom we compete for talent, it continues to believe
that the equity compensation opportunities held by our executives provide
sufficient motivation and retention incentives at this time. Our Compensation
Committee also feels that it is appropriate, given the broader economic
environment, to conserve our cash resources and rely on base salary and equity
compensation rather than incentive or bonus cash compensation.
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Equity
Compensation
Historically, we have primarily used stock options as the principal
component of our executive compensation program. Consistent with our
compensation objectives, we believe this approach has allowed us to attract and
retain key talent in our industry and aligned our executive teams focus and
contributions with our long-term interests and those of our stockholders. We
grant stock options with an exercise price not less than the fair market value
of our Class A common stock on the date of grant, so these stock options will
have value to our executive officers only if the fair market value of our common
stock increases after the date of grant and our executive officers continue in
service through the applicable vesting terms. Typically, stock options granted
to our executive officers vest over four years, allowing them to serve as an
effective retention tool. As discussed below, the Compensation Committee began
granting RSUs to executive officers in 2015, which also vest over four years.
In
determining the form, size and material terms of executive equity awards, our
Compensation Committee may consider, among other things, the executive officers
total compensation opportunity, the need to create a meaningful opportunity for
reward predicated on the creation of long-term stockholder value, the need to
attract and retain employees in the absence of a cash bonus program,
recommendations of our executive management, equity awards to similarly situated
executives at our peer group companies, individual accomplishments, any recent
changes to the executives job duties, the executive officers existing equity
award holdings (including the unvested portion of such awards), the retention
implications of existing grants and our incentive goals, internal pay equity
among our executive officers and market conditions.
In
the first quarter of 2015, our Compensation Committee reviewed the then-current
equity compensation opportunities and holdings of each of our executive
officers. In particular, our Compensation Committee noted that each officers
outstanding equity awards would fully vest over the following two years. Based
on this review, our Compensation Committee determined that new equity awards
would be appropriate to adequately meet our long-term retention goals and
provide sufficient incentive opportunities. However, in light of the large
stock-based compensation expense associated with equity awards of the size our
Compensation Committee believed to be necessary to meet our incentive and
retention goals, it determined it would be advisable to grant awards to Messrs.
Nachman and Wilson in 2015 and revisit Messrs. Stoppelman, Krolik and Donaker in
subsequent years.
Using
the 2015 compensation analysis from Compensia as a general guideline, our
Compensation Committee granted Messrs. Nachman and Wilson each a new stock
option award and an RSU award, in the amounts set forth in the table below. The
size of these awards reflects our Compensation Committees determination of the
need to provide substantial equity opportunities to motivate our executive
officers to achieve our business objectives in the absence of cash incentive
opportunities. The Compensation Committee elected to split the awards between
stock options and restricted stock unit awards to reflect our general practice with
respect to refresh grants for employees at the director level and above, which
it adopted in 2014, and is intended to mitigate the effects of the extreme
volatility in our stock price. Each of these awards to Messrs. Nachman and
Wilson vests over four years, with 10% vesting over the first year following the
date of grant, 20% vesting over the second year, 30% vesting over the third year
and 40% vesting over the fourth year. Our Compensation Committee determined that
this vesting schedule, which was at the time generally applicable to
non-executive employee refresh equity awards as well, would appropriately
address our long-term retention goals for Messrs. Nachman and Wilson.
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Using
the 2015 peer group market data solely as a reference, our Compensation
Committee also granted stock option awards covering the number of shares of
Class A common stock set forth in the table below to Messrs. Stoppelman, Krolik
and Donaker, which vest monthly over the two years following the grant date. Our
Compensation Committee determined that these awards would be appropriate to
balance the lack of meaningful cash compensation for Messrs. Stoppelman and
Donaker, given that the similar grants made to them in 2013 were now fully
vested. Similarly, the Compensation Committee granted a stock option award to
Mr. Krolik in lieu of an increase in base salary as noted above. With their
shorter vesting period and equal monthly vesting installments, our Compensation
Committee designed these awards to provide a medium-term incentive linked to our
stock performance.
|
|
|
|
|
Shares
Issuable |
|
|
|
|
Exercise Price
of |
|
upon Exercise
of |
|
Shares
Subject to |
|
|
2015
Option |
|
2015
Option |
|
2015
Restricted |
Name |
|
Grants |
|
Grants |
|
Stock Unit Awards |
Jeremy
Stoppelman |
|
$ |
53.83 |
|
32,600 |
|
|
Rob Krolik |
|
$ |
53.83 |
|
3,300 |
|
|
Geoff
Donaker |
|
$ |
53.83 |
|
26,100 |
|
|
Jed Nachman |
|
$ |
53.83 |
|
24,450 |
|
40,311 |
Laurence
Wilson |
|
$ |
53.83 |
|
24,450 |
|
40,311 |
2016 Compensation
Beginning in the fourth quarter of 2015, our Compensation Committee began
its annual review of our executive compensation program. As of the filing of
this Proxy Statement, the Compensation Committee had not finalized its
determinations with respect to compensation arrangements for 2016, with the
exception of the terms of Mr. Kroliks transition, as described under
Post-Employment and Change in Control
CompensationTransition Agreement
below.
54
Table of Contents
Post-Employment and Change in
Control Compensation
Severance Plan. In January 2012, our Compensation Committee approved our
Executive Severance Benefit Plan, or the Severance Plan, which provides that our
named executive officers are eligible to receive certain cash severance upon an
involuntary termination without cause (including a constructive termination),
subject to signing a release of claims and compliance with continuing
obligations of confidentiality. If such involuntary termination occurs on or
within 12 months following a change in control (as defined in the Severance
Plan), the Severance Plan also provides for limited accelerated vesting of
certain equity awards. For a summary of the material terms and conditions of the
Severance Plan, see Compensation Plans and
ArrangementsSeverance Arrangements below.
Our Compensation Committee believes,
based on the experience of its members, that such severance benefits are
reasonable and allow our executive officers to focus on pursuing business
strategies that, while in the best interests of our stockholders, may result in
disruption of their employment. Our Compensation Committee has also determined
that the limited benefits upon an involuntary termination not in connection with
the change in control provided under the Severance Plan are in-line with the
benefits provided at the companies with whom we compete for talent and
appropriate to encourage our executives to remain with us.
Transition Agreement.
In February 2016, our Board and Mr. Krolik
agreed that Mr. Krolik would step down from his position as Chief Financial
Officer by the end of 2016. On February 4, 2016, we entered into an agreement
with him regarding his transition from that role, or the Transition Agreement.
For a summary of the material terms and conditions of the Transition Agreement,
see Compensation Plans and
ArrangementsSeverance ArrangementsKrolik Transition Agreement below. The terms of the Transition Agreement were the result
of individual negotiations with Mr. Krolik and reflected the Boards
discretionary judgment regarding the appropriate compensation for Mr. Krolik
during his transition. The Board did consider, however, that the Compensation
Committee had postponed granting Mr. Krolik new equity awards in 2015 to stagger
the stock-based compensation expense associated with large new awards to the
named executive officers. As a result, the Board determined to grant him a new
RSU award with a one-year vesting schedule to incentivize him to remain
motivated through the remainder of his time at Yelp and work toward a smooth
transition to his successor in the role.
Employee
Benefits
We provide standard health, dental,
vision, life and disability insurance benefits to our executive officers on the
same terms and conditions as provided to all other eligible employees. Our
executive officers may also participate in our broad-based 401(k) plan, which
includes a company match of up to $1,000 per year per employee, including
executive officers. Messrs. Krolik, Nachman and Wilson each received the full
401(k) company match in 2015. We believe these benefits are consistent with the
broad-based employee benefits provided at the companies with whom we compete for
talent and therefore are important to attracting and retaining qualified
employees. In addition, in 2015, The Yelp Foundation, a non-profit organization
established by the Board in 2011, offered to match donations to charitable
organizations made by our regular full-time employees of up to $1,000 per
employee. Messrs. Stoppelman, Krolik, Donaker and Wilson participated in this
matching program as detailed in the notes to the Summary Compensation Table
below.
We generally do not offer many
executive perquisites. However, from time to time, we may consider providing
limited perquisites to the extent our Compensation Committee believes that these
limited perquisites are important for attracting and retaining key talent. For
example, beginning in 2013 with the reduction of Messrs. Stoppelmans and
Donakers base salaries to a nominal amount, our Compensation Committee approved
payment of their monthly parking fees. Our Compensation Committee also approved
payment of the portion of Mr. Donakers health insurance premium that ordinarily
would have been deducted from his paycheck (we already covered Mr. Stoppelmans
entire premium under our standard practices). The actual amounts received by
Messrs. Stoppelman and Donaker in 2015 are set forth in the Summary Compensation
Table below.
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Table of Contents
Similarly, during his secondment to our
wholly owned subsidiary Yelp UK Ltd., we provided Mr. Nachman with tax
equalization tax reimbursements or amounts paid to cover additional taxes
incurred by Mr. Nachman by reason of his secondment to ensure his tax burden
during the secondment was approximately the same as it would have been had he
remained in the United States and paid for the preparation of required tax
returns and tax equalization settlement calculations during his secondment.
Although Mr. Nachmans secondment ended in 2014 and he resumed working for us in
the United States, we continue to pay for the preparation of his tax returns and
tax equalization settlement calculations for the tax years affected by his
secondment in accordance with our tax equalization policy and as provided in the
letter agreement we entered into with Mr. Nachman in May 2014 regarding the
conclusion of his secondment, return to the United States and his continued
employment with us upon his return, or the Repatriation Agreement. The actual
amounts received by Mr. Nachman are set forth in the Summary Compensation Table
below. Although the final terms of Mr. Nachmans compensation during his
secondment and in connection with his return were the result of individual
negotiations with him, they generally reflect benefits we typically provide to
employees we requires to relocate abroad.
Other Compensation
Policies
Stock Ownership
Guidelines. We have not set specific equity
ownership guidelines. However, we encourage our executive officers to hold a
significant equity interest in our stock and, as detailed in Security Ownership of Beneficial Owners and
Management, our executive officers
collectively owned outright approximately 6% of our stock as of January 15, 2016.
Equity Grant Policy.
We do not have, nor do we plan to establish,
any program, plan or practice to time stock option grants in coordination with
releasing material non-public information. We have adopted a policy regarding
the timing of the grant of equity awards that provides, among other things, that
the date for equity awards approved by written consent will generally be the
first business day of the month following the month in which the consent is
effective.
Short Sale and Hedging Policy.
Our trading window policy prohibits short
sales, hedging transactions and other inherently speculative transactions in our
equity securities by our executive officers and Board members, among others.
Compensation Recovery
Policies. To date, we have not offered cash
incentive or bonus opportunities to executive officers. Accordingly, our Board
and Compensation Committee have not determined whether they would attempt to
recover bonuses from our executive officers if the performance objectives that
led to the bonus determination were to be restated, or found not to have been
met to the extent originally believed by our Compensation Committee. However, as
a public company subject to the provisions of Section 304 of the Sarbanes-Oxley
Act of 2002, if we are required as a result of misconduct to restate our
financial results due to our material non-compliance with any financial
reporting requirements under the federal securities laws, our Chief Executive
Officer and Chief Financial Officer may be legally required to reimburse us for
any bonus or other incentive- or equity-based compensation they receive. In
addition, we will comply with the requirements of the Dodd-Frank Act and will
adopt a compensation recovery policy once final regulations on the subject have
been adopted.
Tax and Accounting
Considerations
Deductibility of Executive
Compensation. Section 162(m) of the Code
limits the amount that a public company may deduct from federal income taxes for
remuneration paid to named executive officers (other than the chief financial
officer) to $1,000,000 per executive officer per year, unless certain
requirements are met. Section 162(m) provides an exception from this deduction
limitation for certain forms of performance-based compensation, including the
gain recognized by executive officers upon the exercise of qualifying
compensatory stock options. While our Compensation Committee is mindful of the
benefit to us of the full deductibility of compensation, our Compensation
Committee believes that it should not be constrained by the requirements of
Section 162(m) where those requirements would impair flexibility in compensating
our executive officers in a manner designed to best promote our corporate
objectives. The Compensation Committee has not yet established a policy for
determining which forms of incentive compensation awarded to executive officers
will be designed to qualify as performance-based compensation. To maintain
flexibility in compensating our executive officers in a manner designed to best
promote our objectives, we have not adopted a policy that requires all
compensation to be deductible. We intend to compensate our executive officers in
a manner consistent with the best interests of the Company and our stockholders.
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Table of Contents
Taxation of Parachute Payments and
Deferred Compensation. Sections 280G and 4999
of the Code provide that executive officers and directors who hold significant
equity interests and certain other service providers may be subject to an excise
tax if they receive payments or benefits in connection with a change in control
that exceeds certain defined limits, and that the company, or a successor,
may forfeit a deduction on the amounts subject to this additional tax. Section
409A of the Code also imposes additional significant taxes on the individual in
the event that an executive officer, director or other service provider receives
deferred compensation that does not meet the requirements of Section 409A of
the Code. We have not historically, and did not in 2015, provide any executive
officer, including any named executive officer, with a gross up or other
reimbursement payment for any tax liability that he might owe as a result of the
application of Sections 280G, 4999 or 409A of the Code, and we have not agreed,
and are not otherwise contractually obligated to provide, any named executive
officers with such a gross up or other reimbursement in connection with such
taxes.
Accounting
Treatment. The accounting impact of our
compensation programs is a factor that the Compensation Committee considers in
determining the size and structure of our programs to ensure that our
compensation programs are reasonable and in the best interests of the
stockholders.
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee has reviewed
and discussed with management the Compensation Discussion and Analysis required
by Item 402(b) of Regulation S-K and contained in this Proxy Statement. Based on
such review and discussion, our Compensation Committee has recommended to the
Board that the Compensation Discussion and Analysis be included in this Proxy
Statement and incorporated into our Annual Report on Form 10-K for the year
ended December 31, 2015.
Respectfully submitted, |
The Compensation Committee of the
Board of Directors |
|
Peter Fenton, Chair Fred
Anderson |
____________________
(1) |
|
The material in this report is
not soliciting material, is furnished to, but not deemed filed with,
the SEC and is not deemed to be incorporated by reference in any filing of
Yelp under the Securities Act or the Exchange Act, other than our Annual
Report, where it shall be deemed furnished, whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing. |
COMPENSATION RISK ASSESSMENT
During the first quarter of 2016, in
connection with its annual review of our compensation programs, the Compensation
Committee, assisted by our management, conducted a risk assessment review of our
compensation policies and practices. Based on its review, the Compensation
Committee concluded that our compensation programs are designed with an
appropriate balance of risk and reward in relation to our overall business
strategy and do not create risk that is reasonably likely to have a material
adverse effect on the Company. In making this determination, the Compensation
Committee considered our pay mix, base salaries, the attributes of our variable
compensation programs, including our equity program and our sales compensation
plans, as well as our alignment with market pay levels and compensation program
designs.
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In particular, the Compensation
Committee believes the structure of our compensation program for executive
officers does not encourage excessive or unnecessary risk-taking behavior. The
base salary component does not encourage risk taking because it is a fixed
amount, and we do not offer incentive cash compensation opportunities. In
addition, as discussed in greater detail above, the potential for Messrs.
Stoppelmans and Donakers nominal base salaries to encourage unnecessary risk
taking is effectively mitigated by their equity compensation opportunities. The
principal component of our executive compensation program has been long-term
equity awards that help further align our executive officers interests with
those of our stockholders. The Compensation Committee believes that these awards
do not encourage unnecessary or excessive risk taking because the ultimate value
of the awards is tied to our stock price and because awards are staggered and
subject to long-term vesting schedules to help ensure that executives have
significant value tied to long-term stock price performance.
SUMMARY COMPENSATION TABLE
The following table shows compensation
awarded to, paid to or earned by our named executive officers for the years
ended December 31, 2015, 2014 and 2013.
2015 Summary Compensation
Table
|
|
|
|
|
|
Stock |
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
Awards |
|
All Other |
|
|
|
Name |
|
Year |
|
Salary ($) |
|
($)(1) |
|
($)(1) |
|
Compensation ($)(2) |
|
Total ($) |
Jeremy Stoppelman |
|
2015 |
|
1 |
|
|
|
852,112 |
|
67,202 |
(3) |
|
919,315 |
|
Chief Executive Officer |
|
2014 |
|
1 |
|
|
|
|
|
66,912 |
|
|
66,913 |
|
|
|
2013 |
|
37,501 |
|
|
|
8,010,363 |
|
50,100 |
|
|
8,097,964 |
|
Rob
Krolik |
|
2015 |
|
325,000 |
|
|
|
86,257 |
|
15,420 |
|
|
426,677 |
|
Chief Financial Officer |
|
2014 |
|
325,000 |
|
|
|
|
|
13,533 |
|
|
338,533 |
|
|
|
2013 |
|
321,875 |
|
|
|
2,674,826 |
|
10,847 |
|
|
3,007,548 |
|
Geoff Donaker |
|
2015 |
|
1 |
|
|
|
682,212 |
|
25,045 |
(4) |
|
707,258 |
|
Chief Operating Officer |
|
2014 |
|
1 |
|
|
|
|
|
23,231 |
|
|
23,232 |
|
|
|
2013 |
|
37,501 |
|
|
|
6,186,618 |
|
19,608 |
|
|
6,243,727 |
|
Jed
Nachman |
|
2015 |
|
325,000 |
|
2,169,941 |
|
639,084 |
|
33,093 |
(5) |
|
3,167,118 |
|
Chief Revenue Officer |
|
2014 |
|
319,046 |
|
|
|
|
|
764,195 |
(6) |
|
1,083,240 |
(6) |
|
|
2013 |
|
292,681 |
|
|
|
2,674,826 |
|
194,698 |
|
|
3,162,205 |
|
Laurence Wilson |
|
2015 |
|
325,000 |
|
2,169,941 |
|
639,084 |
|
7,983 |
|
|
3,142,008 |
|
Senior Vice President, |
|
2014 |
|
325,000 |
|
|
|
|
|
8,233 |
|
|
333,233 |
|
General Counsel and
Secretary |
|
2013 |
|
321,875 |
|
|
|
2,674,826 |
|
6,544 |
|
|
3,003,245 |
|
____________________
(1) |
The amounts reported here do not
reflect the actual economic value realized by our named executive
officers. In accordance with SEC rules, this column represents the grant
date fair value of shares underlying stock awards and stock options,
calculated in accordance with ASC 718. Assumptions used in the calculation
of the grant date fair value are set forth in Note 12, Stockholders
Equity, in our Annual Report. |
|
|
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(2) |
The amount reported includes the
following health, dental, vision, life and disability insurance premiums
paid by the Company on behalf of the named executive officers in 2015:
$5,782 for Mr. Stoppelman; $12,760 for Mr. Krolik; $12,585 for Mr.
Donaker; $12,760 for Mr. Nachman; and $5,983 for Mr. Wilson. The 2015
amount also includes (a) a matching charitable donation of $1,000 made by
The Yelp Foundation on behalf of each of Messrs. Stoppelman, Krolik,
Donaker and Wilson, (b) $1,000 in Company-paid 401(k) plan matching
contributions for each of Messrs. Krolik, Nachman and Wilson, and (c) $660
in reimbursements for health club membership for each of Messrs. Donaker
and Krolik. These benefits were provided to the named executive officers
on the same terms as provided to all of our regular full-time
employees. |
|
|
(3) |
The amount reported also includes
(a) $5,400 in monthly parking fees paid by the Company and (b) $55,021 for
personal administrative services performed by Mr. Stoppelmans executive
assistant. Because Mr. Stoppelmans executive assistant is employed and
paid by the Company to perform these services as well as her services to
the Company, the dollar amount of this benefit represents the estimate of
the aggregate incremental cost to the Company of these services, based on
the approximate amount of the executive assistants regular time spent on
Mr. Stoppelmans personal matters during 2015 as a percentage of her total
time spent working for the Company during 2015, multiplied by her base
salary paid by the Company in 2015. |
|
|
(4) |
The amount reported also includes
(a) $5,400 in monthly parking fees paid by the Company and (b) $5,400 in
health, dental, vision, life and disability insurance premiums paid by the
Company in addition to the premiums covered under our standard practices
applicable to all of our regular full-time employees. |
|
(5) |
The amount reported also includes the following amounts paid pursuant to Mr. Nachmans Repatriation Agreement: (a) $910
of tax equalization payments, (b) $16,615 of tax preparation payments and (c) $1,808 in moving expenses. The tax equalization
payments represent additional taxes on income imputed to Mr. Nachman as a result of our payment of certain other taxes on his
behalf; however, we will not be able to make a final determination as to the exact amount of Mr. Nachmans tax equalization for
2015 until both his U.S. and U.K. tax returns for 2015 are finalized and, as a result, we may make additional tax equalization payments at a
later date. We may also make additional tax preparation payments on behalf of Mr. Nachman in connection with the final
determination of his tax equalization payments. |
|
(6) |
Includes an additional (a) $452,295 in tax equalization payments owed to Mr.
Nachman in connection with his 2014 taxes and (b) $11,465 of payments related to the preparation of Mr. Nachmans
2014 taxes for costs incurred after April 10, 2015, the date that our Definitive Proxy
Statement on Schedule 14A for our 2015 Annual Meeting of Stockholders was filed with the SEC,
or the 2015 Proxy Statement. The tax equalization payments represent taxes incurred and paid by Mr. Nachman as a result of
his secondment, which were determined following the filing of our 2015 Proxy Statement. |
COMPENSATION PLANS AND ARRANGEMENTS
Employment Agreements
We entered into amended and restated
employment letter agreements with each of our executive officers on February 3,
2012. The agreements do not provide for a specific employment term and our
executive officers are employed on an at-will basis. The amended and restated
employment letter agreements provide that our executive officers are eligible to
participate in our incentive compensation programs, insurance programs and other
employee benefit plans established by us, including our Severance
Plan.
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Table of Contents
Severance Arrangements
Krolik Transition Agreement.
On February 4, 2016, Mr. Krolik and the Board
agreed that he would step down from his position as Chief Financial Officer upon
the earlier of (a) the start date of his successor in that role or (b) December
15, 2016. We refer to this date as his Regular End Date. We also entered into
the Transition Agreement with Mr. Krolik on February 4, 2016, which sets forth
the terms of his transition from the Chief Financial Officer role. To facilitate
a smooth transition, Mr. Krolik has agreed to remain employed by the Company in
an advisory capacity after the position has been filled through the earlier of
(x) the date he begins providing similar services to another company or (y)
December 15, 2016, or the Separation Date. Under the Transition Agreement, Mr.
Krolik will continue receiving his current base salary and benefits, and
continue vesting in his outstanding equity awards, through the Separation Date
so long as he remains employed by the Company through such date. If the Regular
End Date occurs after June 30, 2016, he will also be entitled to receive a
lump-sum payment equal to his monthly base salary multiplied by the number of
full calendar months between June 30, 2016 and the date that the Regular End
Date actually occurs. In addition, he will be entitled to receive a lump-sum
payment of $13,500 if he signs a release of claims following the Separation
Date.
The Transition Agreement also provided
that we would recommend to the Board that it grant Mr. Krolik an RSU award
covering 30,000 shares of Class A common stock under the 2012 Plan, with one
quarter of the shares subject to the RSU vesting on each of February 20, 2016,
May 20, 2016, August 20, 2016 and November 20, 2016, provided that (i) Mr.
Krolik remains employed as of each vesting date that occurs prior to the Regular
End Date and (ii) as of each vesting date thereafter, Mr. Kroliks employment
has not terminated as a result of his resignation (other than to accept
alternative employment), misconduct or breach of his agreements with the
Company. The Board subsequently approved this grant on the terms outlined in the
Transition Agreement.
Severance Plan. Each of our executives at the level of vice president or
above, including our named executive officers, who is deemed to be an officer
under Section 16 of the Exchange Act and selected by the Board is eligible to
participate in the Severance Plan.
Each eligible participant who suffers
an involuntary termination without cause or a constructive termination will be
eligible to receive, provided that he signs a release of claims and complies
with continuing obligations of confidentiality, (i) a lump sum cash payment
equal to one year of his then-current base salary, (ii) a lump sum bonus payment
equal to the actual cash bonus amount the participant would have earned for the
year in which the termination occurred, if any, based on our actual performance,
prorated for the period of active service, and (iii) six months of company-paid
health insurance coverage. In the event a participant suffers an involuntary
termination without cause or a constructive termination in the same year as a
change in control (as defined in the Severance Plan), the lump sum bonus payment
will be equal to the actual cash bonus amount as if we had achieved all of the
goals under the bonus plan in the year in which the termination occurred and
will not be pro-rated. Additionally, each participant who experiences an
involuntary termination without cause or a constructive termination on or within
12 months following a change in control will receive accelerated vesting of 50%
of the number of their unvested shares subject to each equity award held by such
participant that was awarded after the adoption of the Severance Plan.
These benefits are subject to a best
after-tax provision in the case where benefits would trigger excise tax
penalties and loss of deductibility under Sections 280G and 4999 of the Code.
This means that the executive officer will receive whichever of the following
two alternative forms of payment would result in the executive officers
receipt, on an after-tax basis, of the greater amount of benefits
notwithstanding that all or some portion of the benefit may be subject to the
excise tax: (a) payment in full of the entire amount of the benefits or (ii)
payment of only a part of the benefit so that the executive officer receives the
largest benefit possible without the imposition of the excise tax. If a
participant has other severance benefits in another agreement with us, he or she
will not receive double benefits.
Equity Awards. Equity awards are subject to potential vesting acceleration
under the terms of our equity plans. For a summary of these terms, see
Equity Incentive Plans below.
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Equity Incentive Plans
2012 Equity Incentive Plan, as
amended
The terms of our 2012 Plan are as
described in Proposal No. 4, provided that, unless and until stockholders
approve Proposal No. 4, (i) only 25,590,061 shares of Class A common stock may
currently be issued pursuant to awards under our 2012 Plan and (ii) the number
of shares of our Class A common stock reserved for issuance under the 2012 Plan
will continue to increase automatically on January 1 of each year through and
including January 1, 2022 by 4.0% of the total number of shares of our capital
stock outstanding on December 31 of the preceding calendar year, or a lesser
number of shares determined by the Board.
2011 Equity Incentive Plan
Our Board adopted, and our stockholders
approved, our 2011 Plan in July 2011, as a successor to and continuation of our
2005 Plan discussed below. As of February 16, 2016, options to purchase 448,708
shares of Class B common stock at a weighted-average exercise price per share of
$10.79 remained outstanding under our 2011 Plan. No grants have been made under
our 2011 Plan since the date of our initial public offering and no further
awards will be granted under our 2011 Plan. All outstanding awards continue to
be governed by their existing terms.
Our Board has delegated concurrent
authority to administer our 2011 Plan to our Compensation Committee under the
terms of the Compensation Committees charter.
Our 2011 Plan provides that in the
event of a specified corporate transaction, as defined under the 2011 Plan, the
administrator will determine how to treat each outstanding stock award. The
administrator may (1) arrange for the assumption, continuation or substitution
of a stock award by a successor corporation; (2) arrange for the assignment of
any reacquisition or repurchase rights held by us to a successor corporation;
(3) accelerate the vesting of the stock award and provide for its termination
prior to the transaction and arrange for the lapse of any reacquisition or
repurchase rights held by us; or (4) cancel the stock award prior to the
transaction in exchange for a cash payment, which may be reduced by the exercise
price payable in connection with the stock award. The administrator is not
obligated to treat all stock awards or portions of stock awards, even those that
are of the same type, in the same manner.
The administrator may provide, in an
individual award agreement or in any other written agreement between a
participant and us, that the stock award will be subject to additional
acceleration of vesting and exercisability in the event of a change in control.
In the absence of such a provision, no acceleration of the stock award will
occur.
Amended and Restated 2005 Equity
Incentive Plan
Our Board adopted, and our stockholders
approved, our 2005 Plan in September 2005. As of February 16, 2016, options to
purchase 2,709,012 shares of Class B common stock at a weighted-average exercise
price per share of $7.04 remained outstanding under the 2005 Plan. Effective as
of July 2011, our Board terminated the 2005 Plan and provided that no further
stock awards were to be granted under our 2005 Plan. All outstanding stock
awards under the 2005 Plan will continue to be governed by their existing terms.
Our Board has delegated concurrent
authority to administer our 2005 Plan to our Compensation Committee under the
terms of the Compensation Committees charter.
61
Table of Contents
In the event of a corporate
transaction, including a reorganization, merger, consolidation, split-up,
spin-off or combination, or a disposition of our securities, the administrator
will determine how to treat each outstanding stock award. The administrator may
(1) provide for the purchase of the stock award for cash had the stock award
been exercisable, payable or fully vested, or provide for the replacement of the
stock award with other rights or property determined by the administrator; (2)
provide that the stock award will be exercisable in full; (3) provide for the
assumption and substitution of the stock award by a successor corporation; (4)
adjust the number and type of securities or property subject to the stock award
and/or the terms and conditions (including the grant or exercise price) of the
stock award or stock awards that may be granted in the future; or (5) provide
that the stock award will not be exercisable and will terminate immediately upon
the consummation of the transaction, provided that for a specified period of
time prior to the transaction, the stock award will be exercisable in full, the
restrictions imposed on the shares subject to the stock award may be terminated
and any repurchase price held by us will no longer be in effect.
2012 Employee Stock Purchase Plan
In January 2012, our Board adopted, and
our stockholders subsequently approved, our 2012 ESPP. As of February 16, 2016,
the maximum aggregate number of shares of our Class A common stock that may be
issued under our 2012 ESPP is 1,645,970 shares. The number of shares of our
Class A common stock reserved for issuance under the 2012 ESPP automatically
increases on January 1 of each year through and including January 1, 2022 by the
least of (i) 2.0% of the total number of shares of our capital stock outstanding
on December 31 of the preceding calendar year; (ii) 5,000,000 shares of Class A
common stock; or (iii) such lesser number as determined by our Board. The number
of shares of our Class A common stock reserved for issuance under the 2012 ESPP
automatically increased on January 1, 2013 by 1,270,105 shares. The Board
determined not to increase the shares reserved for issuance under the 2012 ESPP
on January 1, 2014, 2015 or 2016. Shares subject to purchase rights granted
under our 2012 ESPP that terminate without having been exercised in full will
not reduce the number of shares available for issuance under our 2012 ESPP.
Our Board, or a duly authorized
committee thereof, will administer our 2012 ESPP. Our Board has delegated
concurrent authority to administer our 2012 ESPP to our Compensation Committee
under the terms of the Compensation Committees charter.
Our employees, including executive
officers, or any employees of our designated affiliates may have to satisfy one
or more of the following service requirements before participating in our 2012
ESPP, as determined by the administrator: (a) customary employment with us or
one of our affiliates for more than 20 hours per week and more than five months
per calendar year, or (b) continuous employment with us or one of our affiliates
for a minimum period of time, not to exceed two years, prior to the first date
of an offering. An employee may not be granted rights to purchase stock under
our 2012 ESPP if such employee (x) immediately after the grant would own stock
possessing five percent or more of the total combined voting power or value of
our common stock, or (y) holds rights to purchase stock under our 2012 ESPP that
would accrue at a rate that exceeds $25,000 worth of our stock for each calendar
year that the rights remain outstanding.
The administrator may approve offerings
with a duration of not more than 27 months, and may specify one or more shorter
purchase periods within each offering. Each offering will have one or more
purchase dates on which shares of our Class A common stock will be purchased for
the employees who are participating in the offering. The administrator, in its
discretion, will determine the terms of offerings under our 2012 ESPP.
Our 2012 ESPP permits participants to
purchase shares of our Class A common stock through payroll deductions or other
methods, if required by law, with up to 15% of their earnings. The purchase
price of the shares will not be less than 85% of the lower of the fair market
value of our Class A common stock on the first day of an offering or on the date
of purchase.
A participant may not transfer purchase
rights under our 2012 ESPP other than by will, the laws of descent and
distribution or as otherwise provided under our 2012 ESPP.
In the event of a specified corporate
transaction, such as our merger or change in control, a successor corporation
may assume, continue or substitute each outstanding purchase right. If the
successor corporation does not assume, continue or substitute for the outstanding purchase rights, the
offering in progress will be shortened and a new exercise date will be set. The
participants purchase rights will be exercised on the new exercise date and
such purchase rights will terminate immediately thereafter.
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Table of Contents
Our 2012 ESPP will remain in effect
until terminated by the administrator in accordance with the terms of the 2012
ESPP. Our Board has the authority to amend, suspend or terminate our 2012 ESPP,
at any time and for any reason.
Additional Benefits
We maintain a tax-qualified 401(k)
retirement plan for all employees who satisfy certain eligibility requirements,
including requirements relating to age and length of service. Under our 401(k)
plan, employees may elect to defer a portion of their eligible compensation,
subject to applicable annual limits under the Code. We intend for the 401(k)
plan to qualify under Section 401(a) and 501(a) of the Code so that
contributions by employees to the 401(k) plan, and income earned on those
contributions, are not taxable to employees until withdrawn from the 401(k)
plan.
For a description of additional
benefits we offer to our executive officers, including health and welfare
benefits and the additional benefits provided to Messrs. Stoppelman and Donaker
in connection with the reduction of their salaries to a nominal amount, please
see Compensation Discussion and
AnalysisExecutive Compensation Program ComponentsEmployee
Benefits.
GRANTS OF PLAN-BASED AWARDS
The following table shows certain
information regarding grants of plan-based awards to the named executive
officers during the year ended December 31, 2015.
Grants of Plan-Based Awards in the
Year Ended December 31, 2015
|
|
|
|
All Other Stock |
|
All Other Option |
|
|
|
|
|
|
|
|
|
Awards: |
|
Awards: Number |
|
|
|
|
|
|
|
|
|
Number of |
|
of Securities |
|
Exercise or Base |
|
Grant Date Fair |
|
|
|
|
Shares of Stock |
|
Underlying Options |
|
Price of Option |
|
Value of Stock and |
Name |
|
Grant Date |
|
or Units (#)(1) |
|
(#)(2) |
|
Awards ($/Share) |
|
Option Awards ($) |
Jeremy Stoppelman |
|
01/08/2015 |
|
|
|
32,600 |
|
53.83 |
|
852,112 |
(3) |
Rob
Krolik |
|
01/08/2015 |
|
|
|
3,300 |
|
53.83 |
|
86,257 |
(3) |
Geoff Donaker |
|
01/08/2015 |
|
|
|
26,100 |
|
53.83 |
|
682,212 |
(3) |
Jed
Nachman |
|
01/08/2015 |
|
40,311 |
|
|
|
|
|
2,169,941 |
(4) |
|
|
01/08/2015 |
|
|
|
24,450 |
|
53.83 |
|
639,084 |
(3) |
Laurence
Wilson |
|
01/08/2015 |
|
40,311 |
|
|
|
|
|
2,169,941 |
(4) |
|
|
01/08/2015 |
|
|
|
24,450 |
|
53.83 |
|
639,084 |
(3) |
____________________
(1) |
The amounts in this column
represent shares of our Class A common stock subject to RSU awards granted
pursuant to our 2012 Plan. Please see Compensation Discussion and AnalysisExecutive Compensation
Program ComponentsEquity Compensation. |
|
|
(2) |
The amounts in this column
represent shares of our Class A common stock underlying options granted
pursuant to our 2012 Plan. Please see Compensation Discussion and AnalysisExecutive Compensation
Program ComponentsEquity Compensation. |
63
Table of Contents
(3) |
This amount represents the grant
date fair value of the stock option award calculated in accordance with
ASC 718. Assumptions used in the calculation of the grant date fair value
are set forth in Note 12, Stockholders Equity, in our Annual
Report. |
|
|
(4) |
This amount represents the grant
date fair value of the RSU award calculated in accordance with ASC 718
based on the closing price of our Class A common stock on the date of
grant. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table shows certain
information regarding outstanding equity awards at December 31, 2015 for the
named executive officers.
Outstanding
Equity Awards at December 31, 2015 |
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
Number of |
|
Number
of |
|
|
|
|
|
Number
of |
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
Shares
or |
|
Market
Value |
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
Units
of |
|
of Shares
or |
|
Class of |
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
Stock
that |
|
Units of
Stock |
|
Common |
|
Options
(#) |
|
Options
(#) |
|
Exercise |
|
Expiration |
|
Have
Not |
|
that Have
Not |
Name |
Stock |
|
Exercisable |
|
Unexercisable |
|
Price ($) |
|
Date |
|
Vested (#) |
|
Vested ($) |
Jeremy
Stoppelman |
Class B |
|
1,601,039 |
|
|
|
|
7.16 |
|
01/05/2021 |
|
|
|
|
|
|
|
Class A |
|
316,250 |
|
258,750 |
(1) |
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
90,000 |
|
|
|
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
14,941 |
|
17,659 |
(2) |
|
53.83 |
|
01/08/2025 |
|
|
|
|
|
|
Rob Krolik |
Class B |
|
20,000 |
|
|
|
|
9.08 |
|
07/26/2021 |
|
|
|
|
|
|
|
Class A |
|
69,500 |
|
126,500 |
(3) |
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
1,512 |
|
1,788 |
(2) |
|
53.83 |
|
01/08/2025 |
|
|
|
|
|
|
Geoff Donaker |
Class B |
|
601,709 |
|
|
|
|
7.16 |
|
01/05/2021 |
|
|
|
|
|
|
|
Class A |
|
233,750 |
|
191,250 |
(1) |
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
90,000 |
|
|
|
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
11,962 |
|
14,138 |
(2) |
|
53.83 |
|
01/08/2025 |
|
|
|
|
|
|
Jed Nachman |
Class B |
|
26,555 |
|
|
|
|
7.16 |
|
01/05/2021 |
|
|
|
|
|
|
|
Class A |
|
103,455 |
|
99,000 |
(1) |
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
2,241 |
|
22,209 |
(4) |
|
53.83 |
|
01/08/2025 |
|
|
|
|
|
|
|
Class A |
|
|
|
|
|
|
|
|
|
|
36,280 |
(5) |
|
1,044,864 |
(6) |
Laurence Wilson |
Class B |
|
60,650 |
|
|
|
|
7.16 |
|
01/25/2021 |
|
|
|
|
|
|
|
Class A |
|
121,000 |
|
99,000 |
(1) |
|
21.18 |
|
02/05/2023 |
|
|
|
|
|
|
|
Class A |
|
2,241 |
|
22,209 |
(4) |
|
53.83 |
|
01/08/2025 |
|
|
|
|
|
|
|
Class A |
|
|
|
|
|
|
|
|
|
|
36,280 |
(5) |
|
1,044,864 |
(6) |
____________________
(1) |
10% of the shares underlying this
option vested in equal monthly installments over the first 12 months
following the vesting commencement date of February 5, 2013; 20% of the
shares underlying the option vested in equal monthly installments over the
second 12 months; 30% of the shares underlying the option vested in equal
monthly installments over the third 12 months; and 40% of the shares
underlying the option vest in equal monthly installments over the fourth
12 months. |
64
Table of Contents
(2) |
1/24th of the shares underlying this option will vest each
month for two years following the grant date. |
|
|
(3) |
10% of the shares underlying this
option vested in equal monthly installments over the first 12 months
following the vesting commencement date of July 27, 2013; 20% of the
shares underlying the option vested in equal monthly installments over the
second 12 months; 30% of the shares underlying the option vest in equal
monthly installments over the third 12 months; and 40% of the shares
underlying the option vest in equal monthly installments over the fourth
12 months. |
|
|
(4) |
10% of the shares underlying this
option vested in equal monthly installments over the first 12 months
following the grant date of January 8, 2015; 20% of the shares underlying
the option vested in equal monthly installments over the second 12 months;
30% of the shares underlying the option vest in equal monthly installments
over the third 12 months; and 40% of the shares underlying the option vest
in equal monthly installments over the fourth 12 months. |
|
(5) |
2.5% of the shares subject to
this RSU vested on each of February 20, 2015, May 20, 2015, August 20,
2015 and November 20, 2015; 5.0% of the shares vest on each of February
20, 2016, May 20, 2016, August 20, 2016 and November 20, 2016; 7.5% of the
shares vest on each February 20, 2017, May 20, 2017, August 20, 2017 and
November 20, 2017; and 10.0% of the shares vest on each of February 20,
2018, May 20, 2018, August 20, 2018 and November 20, 2018. |
|
(6) |
Represents the market value of
the unvested shares subject to this RSU based on the closing price of our
Class A common stock on December 31, 2015, which was $28.80 per
share. |
65
Table of Contents
OPTION EXERCISES AND STOCK VESTED
The following table shows certain
information regarding option exercises and stock vested during the year ended
December 31, 2015.
Option Exercises and Stock Vested in
the Year Ended December 31, 2015
|
|
Option Awards |
|
Stock Awards |
|
|
Number of
Shares |
|
Value |
|
Number
of |
|
Value
Realized |
|
|
Acquired
on |
|
Realized
on |
|
Shares
Acquired |
|
on
Vesting |
Name |
|
Exercise (#)(1) |
|
Exercise ($)(2) |
|
on Vesting (#) |
|
($)(5) |
Jeremy
Stoppelman |
|
|
|
|
|
|
|
|
|
Rob Krolik |
|
29,000 |
|
736,960 |
|
25,659 |
(3) |
|
1,049,198 |
Geoff Donaker |
|
276,232 |
|
9,008,444 |
|
|
|
|
|
Jed Nachman |
|
|
|
|
|
4,031 |
(4) |
|
150,588 |
Laurence Wilson |
|
13,750 |
|
358,025 |
|
4,031 |
(4) |
|
150,588 |
____________________
(1) |
With the exception of exercises
covering an aggregate of 10,000 shares of our Class A common stock by Mr.
Krolik, the shares exercised were shares of our Class B common
stock. |
|
(2) |
The value realized is calculated
as the difference between the closing price of our Class A common stock on
the date of exercise and the applicable exercise price of such options,
multiplied by the number of shares underlying the options that were
exercised. Where applicable, the value assumes that the fair market value
of a share of our Class B common stock, which is not listed or approved
for trading on or with any securities exchange or association, is equal to
the fair market value of a share of our Class A common stock. |
|
|
(3) |
The shares vested were shares of
our Class B common stock. |
|
(4) |
The shares vested were shares of
our Class A common stock. |
|
(5) |
The value realized equals the
closing price of our Class A common stock on each vesting date, or, if the
vesting date fell on a non-trading day, the closing price on the trading
day preceding the vesting date, multiplied by the number of shares vested
on that date. Where applicable, the value assumes that the fair market
value of a share of our Class B common stock is equal to the fair market
value of a share of our Class A common stock. |
66
Table of Contents
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table sets forth
quantitative estimates of the benefits that each of our named executive officers
would be entitled to in connection with certain termination and change in
control events pursuant to the Severance Plan. The table assumes that the
qualifying termination or change in control event, as applicable, occurred on
December 31, 2015.
|
|
Lump Sum
Cash |
|
Continuation |
|
Value of
Equity |
|
|
|
|
Severance
Payment |
|
of
Benefits |
|
Acceleration |
|
|
Name |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
Total ($) |
Jeremy Stoppelman |
|
|
|
|
|
|
|
|
Qualifying
Termination(4) |
|
1 |
|
2,956 |
|
|
|
2,957 |
Qualifying Termination Upon Change in
Control(5) |
|
1 |
|
2,956 |
|
985,838 |
|
988,795 |
Rob
Krolik(6) |
|
|
|
|
|
|
|
|
Qualifying Termination(4) |
|
325,000 |
|
8,967 |
|
|
|
333,967 |
Qualifying Termination
Upon Change in Control(5) |
|
325,000 |
|
8,967 |
|
481,965 |
|
815,932 |
Geoff Donaker |
|
|
|
|
|
|
|
|
Qualifying
Termination(4) |
|
1 |
|
8,967 |
|
|
|
8,968 |
Qualifying Termination Upon Change in
Control(5) |
|
1 |
|
8,967 |
|
728,663 |
|
737,631 |
Jed
Nachman |
|
|
|
|
|
|
|
|
Qualifying Termination(4) |
|
325,000 |
|
8,967 |
|
|
|
333,967 |
Qualifying Termination
Upon Change in Control(5) |
|
325,000 |
|
8,967 |
|
899,622 |
|
1,233,589 |
Laurence Wilson |
|
|
|
|
|
|
|
|
Qualifying
Termination(4) |
|
325,000 |
|
2,970 |
|
|
|
327,970 |
Qualifying Termination Upon Change in
Control(5) |
|
325,000 |
|
2,970 |
|
899,622 |
|
1,227,952 |
____________________
(1) |
Represents one year of the
executive officers base salary in effect as of December 31, 2015. The
amount indicated does not include the payment of any accrued salary or
vacation that might be due upon termination of employment. |
|
|
(2) |
Represents six months of payments
of premiums for continued health insurance coverage under COBRA, assuming
in each case that the executive officer timely elects to receive the
benefits. Under the Severance Plan, we would continue to pay such premiums
for six months unless the executive officer earlier (a) becomes eligible
for substantially equivalent health insurance coverage in connection with
new employment or self-employment, or (b) loses eligibility for
continuation coverage under COBRA. |
|
(3) |
The value of unvested options
that are subject to accelerated vesting and have an exercise price less
than $28.80, the closing price of our Class A commons tock on December 31,
2015, is calculated as (a) the difference between $28.80 and the exercise
price of the applicable option, multiplied by (b) the number of unvested
options subject to accelerated vesting held by the applicable named
executive officer. With respect to Messrs. Nachman and Wilson, the value
of unvested RSUs subject to accelerated vesting is calculated as the
number of RSUs subject to accelerated vesting held by the applicable named
executive officer multiplied by $28.80. |
|
(4) |
Represents benefits payable under
the Severance Plan upon an involuntary termination without cause or a
constructive termination (as such terms are defined in the Severance
Plan). |
67
Table of Contents
(5) |
Represents benefits payable under
the Severance Plan upon an involuntary termination without cause or a
constructive termination that occurs on or within 12 months following a
change in control (as such terms are defined in the Severance
Plan). |
|
|
(6) |
Mr. Krolik will be stepping down
from his role as Chief Financial Officer in 2016. In February 2016, we
entered into the Transition Agreement with Mr. Krolik, which sets forth
the compensation to be paid to him in connection with his transition.
See Compensation Plans and
ArrangementsSeverance ArrangementsKrolik Transition
Agreement
above. |
TRANSACTIONS WITH RELATED PERSONS
RELATED-PERSON TRANSACTIONS POLICY
AND PROCEDURES
We have adopted a written
Related-Person Transactions Policy that sets forth our policies and procedures
regarding the identification, review, consideration and approval or ratification
of related-person transactions. For purposes of our policy only, a
related-person transaction is a transaction, arrangement or relationship (or
any series of similar transactions, arrangements or relationships) in which the
Company and any related person are participants involving an amount that
exceeds $100,000. Transactions involving compensation for services provided to
the Company as an employee, director or consultant are not covered by this
policy. A related person is any executive officer, director or more than five
percent stockholder of the Company, including any of their immediate family
members, and any entity owned or controlled by such persons.
Under the policy, where a transaction
has been identified as a related-person transaction, management must present
information regarding the proposed related-person transaction to the Audit
Committee (or, where the Audit Committee would be inappropriate, to another
independent committee of the Board) for consideration and approval or
ratification. The presentation must include a description of, among other
things, the material facts, the interests, direct and indirect, of the related
persons, the benefits to the Company of the transaction and whether any
alternative transactions were available. To identify related-person transactions
in advance, we rely on information supplied by our executive officers, directors
and certain significant stockholders.
In considering related-person
transactions, the Audit Committee takes into account the relevant available
facts and circumstances including, but not limited to (a) the risks, costs and
benefits to the Company, (b) the impact on a directors independence in the
event the related person is a director, immediate family member of a director or
an entity with which a director is affiliated, (c) the terms of the transaction,
(d) the availability of other sources of comparable services or products and (e)
the terms available to or from, as the case may be, unrelated third parties, or
to or from employees generally. The policy requires that, in determining whether
to approve, ratify or reject a related-person transaction, the Audit Committee
consider, in light of known circumstances, whether the transaction is in, or is
not inconsistent with, the best interests of the Company and our stockholders,
as the Audit Committee determines in the good faith exercise of its discretion.
CERTAIN RELATED-PERSON TRANSACTIONS
Other than compensation arrangements,
we describe below transactions and series of similar transactions since January
1, 2015, to which we were or will be a party, in which:
● |
the amounts involved exceeded or
will exceed $120,000; and |
● |
any of our directors, executive officers or
holders of more than five percent of any class of our common stock,
or any immediate family member of
the foregoing persons, had or will have a direct or indirect material
interest. |
For complete descriptions of
compensation arrangements for our directors and named executive officers, see
Information Regarding the Board of Directors
and Corporate GovernanceDirector Compensation and Executive
Compensation, respectively.
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Related-Person Compensation
Michael Stoppelman, our Senior Vice
President, Engineering and brother of our Chief Executive Officer, Jeremy
Stoppelman, and Miriam Warren, our Vice President, New Markets and spouse of our
Senior Vice President and General Counsel, Laurence Wilson, received
compensation for their services as employees in the year ended December 31,
2015, as set forth below. The payment of such compensation is not considered a
related-person transaction covered by our Related-Person Transaction Policy.
Base Salary. Mr. Stoppelman and Ms.
Warren received annualized base salaries of $325,000 and $235,000, respectively,
in 2015.
Equity Compensation.
In 2015, the Compensation Committee granted
both Mr. Stoppelman and Ms. Warren equity awards. Mr. Stoppelman was granted:
● |
an option to purchase up to
26,700 shares of our Class A common stock, with an exercise price of
$47.49 per share; |
● |
an option to purchase up to
13,350 shares of our Class A common stock, with an exercise price of
$45.50 per share; and |
● |
RSUs covering 66,060 shares of
our Class A common stock. |
Ms. Warren was granted:
● |
an option to purchase 11,000
shares of our Class A common stock, with an exercise price of $55.15; and |
● |
RSUs covering 18,099 shares of our Class A common stock. |
Each of these awards granted to Mr.
Stoppelman and Ms. Warren vests over four years from the date of grant, with 10%
vesting over the first year, 20% vesting over the second year, 30% vesting over
the third year and 40% vesting over the fourth year.
In January 2016, Ms. Warren also
received:
● |
an option to purchase 8,200
shares of our Class A common stock, with an exercise price of $27.60 per
share; and |
● |
RSUs covering 12,065 shares of
our Class A common stock. |
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Ms. Warrens stock option vests in
equal monthly installments over four years from the date of grant and her RSU
vests in equal quarterly installments over four years from the date of grant.
Change in Control Benefits.
In 2015, the Compensation Committee also
granted Mr. Stoppelman and Ms. Warren certain change in control severance
benefits: in the event they suffer an involuntary termination without cause or a
constructive termination on or within 12 months following a change in control
(as defined in the Severance Plan), they will receive accelerated vesting with
respect to all unvested shares subject to their outstanding equity awards,
provided that they sign a release of claims and comply with continuing
obligations of confidentiality. The Compensation Committee provided these
severance benefits to Mr. Stoppelman and Ms. Warren on the same terms as
severance benefits provided to other Company employees with comparable
seniority.
Other Benefits. Mr. Stoppelman and Ms. Warren each received our standard U.S.
benefits package and $600 and $686, respectively, in reimbursements for health
club memberships. The Yelp Foundation also made a matching charitable donation
of $1,000 on behalf of Mr. Stoppelman in 2015. Each of these benefits was
provided on the same terms as provided to all of our regular full-time
employees.
The Yelp Foundation
In 2011, our Board approved the
establishment of The Yelp Foundation, a non-profit organization designed to
support consumers and businesses in the communities in which we operate. Messrs.
Stoppelman, Donaker, Krolik and Wilson are officers and directors of The Yelp
Foundation. As described under Executive
Compensation, The Yelp Foundation made
matching charitable donations of $1,000 to charitable organizations on behalf of each of Messrs. Stoppelman, Krolik,
Donaker and Wilson in 2015, as reflected in the Summary Compensation
Table.
In addition, in 2015, The Yelp
Foundation awarded grants totaling $32,000 to certain local branches of Reading
Partners, a non-profit that provides reading instruction to elementary school
students reading below grade level. Ms. Warren serves on the San Francisco Bay
Area regional board of Reading Partners.
Indemnification
Our Amended and Restated Certificate of
Incorporation and Bylaws provide that we will indemnify our directors and
officers, and may indemnify our employees and other agents, to the fullest
extent permitted by the Delaware General Corporation Law. In addition to the
indemnification required in our Amended and Restated Certificate of
Incorporation and Bylaws, we have entered into indemnification agreements with
each of our current directors, officers and certain employees. These agreements
provide for the indemnification of such persons for all reasonable expenses and
liabilities incurred in connection with any action or proceeding brought against
them by reason of the fact that they are or were serving in such capacity. We
have obtained director and officer liability insurance to cover liabilities our
directors and officers may incur in connection with their services to us.
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HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit
companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for Notices of Internet Availability of Proxy Materials or other
Annual Meeting materials with respect to two or more stockholders sharing the
same address by delivering a single Notice of Internet Availability of Proxy
Materials or set of other Annual Meeting materials addressed to those
stockholders. This process, which is commonly referred to as householding,
potentially means extra convenience for stockholders and cost savings for
companies.
This year, we and a number of brokers
with account holders who are Yelp stockholders will be householding our proxy
materials. A single Notice of Internet Availability of Proxy Materials will be
delivered to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders. Once you have
received notice from us (if you are a stockholder of record) or your broker (if
you are a beneficial owner) that we or they, as applicable, will be householding
communications to your address, householding will continue until you are
notified otherwise or until you revoke your consent. 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, or if you currently
receive multiple copies and would like to request householding of your
communications, please notify the Company or your broker. Direct your written
request to the Company to the attention of our Corporate Secretary, Yelp Inc.,
140 New Montgomery Street, 9th Floor, San Francisco, California 94105, or
contact our Corporate Secretary at (415) 908-3801.
OTHER MATTERS
The Board knows of no other matters
that will be presented for consideration at the Annual Meeting. If any other
matters are properly brought before the Annual Meeting, it is the intention of
the persons named in the accompanying proxy to vote on such matters in
accordance with their best judgment.
By Order of the Board of
Directors |
|
|
|
Laurence Wilson Corporate
Secretary |
March 4, 2016
A copy of the Companys Annual
Report to the U.S. Securities and Exchange Commission on Form 10-K for the year
ended December 31, 2015 is available without charge upon written request to:
Corporate Secretary, Yelp Inc., 140 New Montgomery Street, 9th Floor, San
Francisco, California 94105.
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ANNEX A
YELP INC.
2012 EQUITY INCENTIVE PLAN
ADOPTED BY THE BOARD OF DIRECTORS:
JANUARY 25, 2012
APPROVED BY THE STOCKHOLDERS: FEBRUARY 24, 2012
IPO
DATE/EFFECTIVE DATE: MARCH 1, 2012
AMENDED BY THE BOARD OF DIRECTORS:
JANUARY 30, 2013
APPROVED BY THE STOCKHOLDERS: JUNE 5, 2013
AMENDED BY
THE BOARD OF DIRECTORS: JANUARY 27, 2016
APPROVED BY THE STOCKHOLDERS: APRIL
13, 2016
1. GENERAL.
(a) Successor to and Continuation of
Prior Plan. The Plan is intended as the
successor to and continuation of the Yelp! 2011 Equity Incentive Plan, as
amended (the Prior
Plan). From and after 12:01 a.m. Pacific
time on the Effective Date, no additional stock awards will be granted under the
Prior Plan. All Awards granted on or after 12:01 a.m. Pacific Time on the
Effective Date will be granted under this Plan. All stock awards granted under
the Prior Plan will remain subject to the terms of the Prior Plan.
(i) Any shares that would otherwise remain available for future grants under
the Prior Plan as of 12:01 a.m. Pacific Time on the Effective Date (the
Prior Plans Available
Reserve) will cease to be available
under the Prior Plan at such time. Instead, that number of shares of Common
Stock equal to the Prior Plans Available Reserve will be added to the Share
Reserve (as further described in Section 3(a) below) and be then immediately
available for grants and issuance pursuant to Stock Awards hereunder, up to the
maximum number set forth in Section 3(a) below.
(ii) In addition, from and after 12:01 a.m. Pacific time on the Effective
Date, with respect to the aggregate number of shares subject, at such time, to
outstanding stock awards granted under either the Prior Plan or the Yelp! Inc.
Amended and Restated 2005 Equity Incentive Plan that would, but for the
operation of this sentence, subsequently return to the share reserve of the
Prior Plan by operation of Sections 1(a) and 3(a) of the Prior Plan (such shares
the Returning Shares), such shares will not return to the reserve of the Prior
Plan, and instead that number of shares of Common Stock equal to the Returning
Shares will immediately be added to the Share Reserve (as further described in
Section 3(a) below) as and when the such a share becomes a Returning Share, up
to the maximum number set forth in Section 3(a) below.
(b) Eligible Award Recipients.
Employees, Directors and Consultants are
eligible to receive awards.
(c) Available
Awards. The Plan provides for the grant of
the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Stock Appreciation Rights (iv) Restricted Stock Awards, (v)
Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance
Cash Awards, and (viii) Other Stock Awards.
(d) Purpose. This Plan, through the granting of Awards, is intended to help
the Company secure and retain the services of eligible award recipients, provide
incentives for such persons to exert maximum efforts for the success of the
Company and any Affiliate, and provide a means by which the eligible recipients
may benefit from increases in value of the Common Stock.
2. ADMINISTRATION.
(a) Administration by Board.
The Board will administer the Plan. The Board
may delegate administration of the Plan to a Committee or Committees, as
provided in Section 2(c).
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(b) Powers of Board.
The Board will have the power, subject to,
and within the limitations of, the express provisions of the Plan:
(i) To determine: (A) who will be granted Awards; (B) when and how each Award
will be granted; (C) what type of Award will be granted; (D) the provisions of
each Award (which need not be identical), including when a person will be
permitted to exercise or otherwise receive cash or Common Stock under the Award;
(E) the number of shares of Common Stock subject to, or the cash value of, an
Award; and (F) the Fair Market Value applicable to a Stock Award.
(ii) To construe and interpret the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for administration of the Plan
and Awards. The Board, in the exercise of these powers, may correct any defect,
omission or inconsistency in the Plan or in any Award Agreement or in the
written terms of a Performance Cash Award, in a manner and to the extent it will
deem necessary or expedient to make the Plan or Award fully
effective.
(iii) To settle all controversies regarding the Plan and Awards granted under
it.
(iv) To accelerate, in whole or in part, the time at which an Award may be
exercised or vest (or at which cash or shares of Common Stock may be
issued).
(v) To suspend or terminate the Plan at any time. Except as otherwise
provided in the Plan or an Award Agreement, suspension or termination of the
Plan will not materially impair a Participants rights under his or her
then-outstanding Award without his or her written consent.
(vi) To amend the Plan in any respect the Board deems necessary or advisable,
including, without limitation, by adopting amendments relating to Incentive
Stock Options and certain nonqualified deferred compensation under Section 409A
of the Code and/or to bring the Plan or Awards granted under the Plan into
compliance therewith, subject to the limitations, if any, of applicable law. If
required by applicable law or listing requirements, and except as provided in
Section 9(a) relating to Capitalization Adjustments, the Company will seek
stockholder approval of any amendment of the Plan that (A) materially increases
the number of shares of Common Stock available for issuance under the Plan, (B)
materially expands the class of individuals eligible to receive Awards under the
Plan, (C) materially increases the benefits accruing to Participants under the
Plan, (D) materially reduces the price at which shares of Common Stock may be
issued or purchased under the Plan, (E) materially extends the term of the Plan,
or (F) materially expands the types of Awards available for issuance under the
Plan. Except as otherwise provided in the Plan or an Award Agreement, no
amendment of the Plan will materially impair that Participants rights under an
outstanding Award without his or her written consent.
(vii) To submit any amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to satisfy the requirements
of (A) Section 162(m) of the Code regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
Covered Employees, (B) Section 422 of the Code regarding incentive stock
options or (C) Rule 16b-3.
(viii) To approve forms of Award Agreements for use under the Plan and to amend
the terms of any one or more outstanding Awards. Except with respect to
amendments that disqualify or impair the status of an Incentive Stock Option or
as otherwise provided in the Plan or an Award Agreement, no amendment of an
outstanding Award will materially impair that Participants rights under his or
her outstanding Award without his or her written consent. To be clear, unless
prohibited by applicable law, the Board may amend the terms of an Award without
the affected Participants consent if necessary (A) to maintain the qualified
status of the Award as an Incentive Stock Option, (B) to clarify the manner of
exemption from, or to bring the Award into compliance with, Section 409A of the
Code, or (C) to comply with other applicable laws.
(ix) Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company and
that are not in conflict with the provisions of the Plan or Awards.
(x) To adopt such procedures and sub-plans as are necessary or appropriate to
permit participation in the Plan by Employees, Directors or Consultants who are
foreign nationals or employed outside the United States.
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(xi) To effect, with the consent of any adversely affected Participant, (A)
the reduction of the exercise, purchase or strike price of any outstanding Stock
Award; (B) the cancellation of any outstanding Stock Award and the grant in
substitution therefor of a new (1) Option or SAR, (2) Restricted Stock Award,
(3) Restricted Stock Unit Award, (4) Other Stock Award, (5) cash award and/or
(6) award of other valuable consideration determined by the Board, in its sole
discretion, with any such substituted award (x) covering the same or a different
number of shares of Common Stock as the cancelled Stock Award and (y) granted
under the Plan or another equity or compensatory plan of the Company; or (C) any
other action that is treated as a repricing under generally accepted accounting
principles.
(c) Delegation to Committee.
(i) General. The Board may delegate some or all of the administration of
the Plan to a Committee or Committees. If administration of the Plan is
delegated to a Committee, the Committee will have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board that
have been delegated to the Committee, including the power to delegate to a
subcommittee of the Committee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board will thereafter
be to the Committee or subcommittee). Any delegation of administrative powers
will be reflected in resolutions, not inconsistent with the provisions of the
Plan, adopted from time to time by the Board or Committee (as applicable). The
Board may retain the authority to concurrently administer the Plan with the
Committee and may, at any time, revest in the Board some or all of the powers
previously delegated.
(ii) Section 162(m) and Rule 16b-3
Compliance. The Committee may consist solely
of two or more Outside Directors, in accordance with Section 162(m) of the Code,
or solely of two or more Non-Employee Directors, in accordance with Rule
16b-3.
(d) Delegation to an
Officer. The Board may delegate to one (1) or
more Officers the authority to do one or both of the following (i) designate
Employees who are not Officers to be recipients of Options and SARs (and, to the
extent permitted by applicable law, other Stock Awards) and, to the extent
permitted by applicable law, the terms of such rights and options, and (ii)
determine the number of shares of Common Stock to be subject to such Stock
Awards granted to such Employees; provided,
however, that the Board resolutions regarding
such delegation will specify the total number of shares of Common Stock that may
be subject to the Stock Awards granted by such Officer and that such Officer may
not grant a Stock Award to himself or herself. Any such Stock Awards will be
granted on the form of Stock Award Agreement most recently approved for use by
the Committee or the Board, unless otherwise provided in the resolutions
approving the delegation authority. The Board may not delegate authority to an
Officer who is acting solely in the capacity of an Officer (and not also as a
Director) to determine the Fair Market Value pursuant to Section 13(x)(iii)
below.
(e) Effect of Boards
Decision. All determinations, interpretations
and constructions made by the Board in good faith will not be subject to review
by any person and will be final, binding and conclusive on all
persons.
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3. SHARES SUBJECT TO THE
PLAN.
(a) Share Reserve. Subject to Section 9(a) relating to Capitalization
Adjustments, and the following sentence regarding the annual increase, the
aggregate number of shares of Common Stock that may be issued pursuant to Stock
Awards will not exceed 28,590,061 (the Share Reserve), which number is
the sum of (i) the 3,575,500 shares that were initially reserved for issuance
and approved by stockholders on February 24, 2012; (ii) the 2,540,210 shares
subject to the January 1, 2013 annual increase; (iii) the 2,000,000 shares that
were approved by stockholders on June 5, 2013, the date of the Companys 2013
Annual Meeting of Stockholders; (iv) the 2,834,979 shares subject to the January
1, 2014 annual increase; (v) the 1,458,411 shares subject to the January 1, 2015
annual increase; (vi) the 3,039,312 shares subject to the January 1, 2016 annual
increase; (vii) the 3,000,000 shares that were approved by stockholders on April
13, 2016, the date of the Companys 2016 Annual Meeting of Stockholders; (viii)
the 146,739 shares subject to the Prior Plans Available Reserve; and (ix) the
number of shares that are Returning Shares, as such shares become available from
time to time, in an amount not to exceed 9,994,910 shares. In addition, the
Share Reserve will automatically increase on January 1st of each
year, for a period of not more than six years, commencing on January 1, 2017 and
ending on (and including) January 1, 2022, in an amount equal to 7.0% of the
total number of shares of Capital Stock outstanding on December 31st of the
preceding calendar year. Notwithstanding the foregoing, the Board may act prior
to January 1st of a given year to provide that there will be no
January 1st increase in the Share
Reserve for such year or that the increase in the Share Reserve for such year
will be a lesser number of shares of Common Stock than would otherwise occur
pursuant to the preceding sentence. For clarity, the Share Reserve in this
Section 3(a) is a limitation on the number of shares of Common Stock that may be
issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the
granting of Stock Awards except as provided in Section 7(a). Shares may be
issued in connection with a merger or acquisition as permitted by NASDAQ Listing
Rule 5635(c) or, if applicable, NYSE Listed Company Manual Section 303A.08, AMEX
Company Guide Section 711 or other applicable rule, and such issuance will not
reduce the number of shares available for issuance under the Plan.
(b) Reversion of Shares to the Share
Reserve. If a Stock Award or any portion
thereof (i) expires or otherwise terminates without all of the shares covered by
such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant
receives cash rather than stock), such expiration, termination or settlement
will not reduce (or otherwise offset) the number of shares of Common Stock that
may be available for issuance under the Plan. If any shares of Common Stock
issued pursuant to a Stock Award are forfeited back to or repurchased by the
Company because of the failure to meet a contingency or condition required to
vest such shares in the Participant, then the shares that are forfeited or
repurchased will revert to and again become available for issuance under the
Plan. Any shares reacquired by the Company in satisfaction of tax withholding
obligations on a Stock Award or as consideration for the exercise or purchase
price of a Stock Award will again become available for issuance under the
Plan.
(c) Incentive Stock Option Limit.
Subject to the provisions of Section 9(a)
relating to Capitalization Adjustments, the aggregate maximum number of shares
of Common Stock that may be issued pursuant to the exercise of Incentive Stock
Options will be 27,500,000 shares of Common Stock.
(d) Section 162(m)
Limitations. Subject to the provisions of
Section 9(a) relating to Capitalization Adjustments, at such time as the Company
may be subject to the applicable provisions of Section 162(m) of the Code: (i) a
maximum of 2,000,000 shares of Common Stock subject to Options, SARs and Other
Stock Awards whose value is determined by reference to an increase over an
exercise or strike price of at least 100% of the Fair Market Value on the date
the Stock Award is granted may be granted to any one Participant during any one
calendar year, (ii) a maximum of 2,000,000 shares of Common Stock subject to
Performance Stock Awards may be granted to any one Participant during any one
calendar year (whether the grant, vesting or exercise is contingent upon the
attainment during the Performance Period of the Performance Goals) and (iii) a
maximum of $2,000,000 may be granted as a Performance Cash Award to any one
Participant during any one calendar year.
(e) Source of Shares.
The stock issuable under the Plan will be
shares of authorized but unissued or reacquired Common Stock, including shares
repurchased by the Company on the open market or otherwise.
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4. ELIGIBILITY.
(a) Eligibility for Specific Stock
Awards. Incentive Stock Options may be
granted only to employees of the Company or a parent corporation or
subsidiary corporation thereof (as such terms are defined in Sections 424(e)
and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants; provided, however, that Stock Awards
may not be granted to Employees, Directors and Consultants who are providing
Continuous Service only to any parent of the Company, as such term is defined
in Rule 405 of the Securities Act, unless (i) the stock underlying such Stock
Awards is treated as service recipient stock under Section 409A of the Code
(for example, because the Stock Awards are granted pursuant to a corporate
transaction such as a spin off transaction), (ii) the Company, in connection
with its legal counsel, has determined that such Stock Awards are otherwise
exempt from Section 409A of the Code, or (iii) the Company, in connection with
its legal counsel, has determined that such Stock Awards comply with the
distribution requirements of Section 409A of the Code.
(b) Ten Percent Stockholders.
A Ten Percent Stockholder will not be granted
an Incentive Stock Option unless the exercise price of such Option is at least
110% of the Fair Market Value on the date of grant and the Option is not
exercisable after the expiration of five years from the date of
grant.
5. PROVISIONS RELATING TO OPTIONS
AND STOCK APPRECIATION RIGHTS.
Each Option or SAR will be in such form
and will contain such terms and conditions as the Board deems appropriate. All
Options will be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. If an Option is not specifically designated
as an Incentive Stock Option, or if an Option is designated as an Incentive
Stock Option but some portion or all of the Option fails to qualify as an
Incentive Stock Option under the applicable rules, then the Option (or portion
thereof) will be a Nonstatutory Stock Option. The provisions of separate Options
or SARs need not be identical; provided,
however, that each Award Agreement will
conform to (through incorporation of provisions hereof by reference in the
applicable Award Agreement or otherwise) the substance of each of the following
provisions:
(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent
Stockholders, no Option or SAR will be exercisable after the expiration of ten
years from the date of its grant or such shorter period specified in the Award
Agreement.
(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, the exercise or strike price of each Option or SAR will be
not less than 100% of the Fair Market Value of the Common Stock subject to the
Option or SAR on the date the Award is granted. Notwithstanding the foregoing,
an Option or SAR may be granted with an exercise or strike price lower than 100%
of the Fair Market Value of the Common Stock subject to the Award if such Award
is granted pursuant to an assumption of or substitution for another option or
stock appreciation right pursuant to a Corporate Transaction and in a manner
consistent with the provisions of Section 409A and, if applicable, Section
424(a) of the Code. Each SAR will be denominated in shares of Common Stock
equivalents.
(c) Purchase Price for Options.
The purchase price of Common Stock acquired
pursuant to the exercise of an Option may be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board will have the
authority to grant Options that do not permit all of the following
methods of payment (or otherwise restrict the ability to use certain methods)
and to grant Options that require the consent of the Company to use a particular
method of payment. The permitted methods of payment are as follows:
(i) by cash, check, bank draft or money order payable to the
Company;
(ii) pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board that, prior to the issuance of the stock subject to the
Option, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds;
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(iii) by delivery to the Company (either by actual delivery or attestation) of
shares of Common Stock;
(iv) if an option is a Nonstatutory Stock Option, by a net exercise
arrangement pursuant to which the Company will reduce the number of shares of
Common Stock issuable upon exercise by the largest whole number of shares with a
Fair Market Value that does not exceed the aggregate exercise price;
provided, however, that the Company will accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise
price not satisfied by such reduction in the number of whole shares to be
issued. Shares of Common Stock will no longer be subject to an Option and will
not be exercisable thereafter to the extent that (A) shares issuable upon
exercise are reduced to pay the exercise price pursuant to the net exercise,
(B) shares are delivered to the Participant as a result of such exercise, and
(C) shares are withheld to satisfy tax withholding obligations; or
(v) in any other form of legal consideration that may be acceptable to the
Board and specified in the applicable Award Agreement.
(d) Exercise and Payment of a
SAR. To exercise any outstanding SAR, the
Participant must provide written notice of exercise to the Company in compliance
with the provisions of the Stock Appreciation Right Agreement evidencing such
SAR. The appreciation distribution payable on the exercise of a SAR will be not
greater than an amount equal to the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the SAR) of a number of shares of Common
Stock equal to the number of Common Stock equivalents in which the Participant
is vested under such SAR, and with respect to which the Participant is
exercising the SAR on such date, over (B) the strike price. The appreciation
distribution may be paid in Common Stock, in cash, in any combination of the two
or in any other form of consideration, as determined by the Board and contained
in the Award Agreement evidencing such SAR.
(e) Transferability of Options and
SARs. The Board may, in its sole discretion,
impose such limitations on the transferability of Options and SARs as the Board
will determine. In the absence of such a determination by the Board to the
contrary, the following restrictions on the transferability of Options and SARs
will apply:
(i) Restrictions on Transfer.
An Option or SAR will not be transferable
except by will or by the laws of descent and distribution (or pursuant to
subsections (ii) and (iii) below), and will be exercisable during the lifetime
of the Participant only by the Participant. The Board may permit transfer of the
Option or SAR in a manner that is not prohibited by applicable tax and
securities laws. Except as explicitly provided herein, neither an Option nor a
SAR may be transferred for consideration.
(ii) Domestic Relations Orders.
Subject to the approval of the Board or a
duly authorized Officer, an Option or SAR may be transferred pursuant to the
terms of a domestic relations order or official marital settlement agreement. If
an Option is an Incentive Stock Option, such Option may be deemed to be a
Nonstatutory Stock Option as a result of such transfer.
(iii) Beneficiary Designation.
Subject to the approval of the Board or a
duly authorized Officer, a Participant may, by delivering written notice to the
Company, in a form approved by the Company (or the designated broker), designate
a third party who, on the death of the Participant, will thereafter be entitled
to exercise the Option or SAR and receive the Common Stock or other
consideration resulting from such exercise. In the absence of such a
designation, the executor or administrator of the Participants estate will be
entitled to exercise the Option or SAR and receive the Common Stock or other
consideration resulting from such exercise. However, the Company may prohibit
designation of a beneficiary at any time, including due to any conclusion by the
Company that such designation would be inconsistent with the provisions of
applicable laws.
(f) Vesting Generally.
The total number of shares of Common Stock
subject to an Option or SAR may vest and therefore become exercisable in
periodic installments that may or may not be equal. The Option or SAR may be
subject to such other terms and conditions on the time or times when it may or
may not be exercised (which may be based on the satisfaction of Performance
Goals or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options or SARs may vary. The provisions of this
Section 5(f) are subject to any Option or SAR provisions governing the minimum
number of shares of Common Stock as to which an Option or SAR may be
exercised.
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(g) Termination of Continuous
Service. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if a Participants Continuous Service terminates (other than for Cause
and other than upon the Participants death or Disability), the Participant may
exercise his or her Option or SAR (to the extent that the Participant was
entitled to exercise such Award as of the date of termination of Continuous
Service) within the period of time ending on the earlier of (i) the date three
months following the termination of the Participants Continuous Service and
(ii) the expiration of the term of the Option or SAR as set forth in the Award
Agreement. If, after termination of Continuous Service, the Participant does not
exercise his or her Option or SAR within the applicable time frame, the Option
or SAR will terminate.
(h) Extension of Termination
Date. If the exercise of an Option or SAR
following the termination of the Participants Continuous Service (other than
for Cause and other than upon the Participants death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option or SAR will terminate on the earlier of (i) the expiration of a total
period of three months (that need not be consecutive) after the termination of
the Participants Continuous Service during which the exercise of the Option or
SAR would not be in violation of such registration requirements, and (ii) the
expiration of the term of the Option or SAR as set forth in the applicable Award
Agreement. In addition, unless otherwise provided in a Participants Award
Agreement, if the sale of any Common Stock received on exercise of an Option or
SAR following the termination of the Participants Continuous Service (other
than for Cause) would violate the Companys insider trading policy, then the
Option or SAR will terminate on the earlier of (i) the expiration of a period of
months (that need not be consecutive) equal to the applicable post-termination
exercise period after the termination of the Participants Continuous Service
during which the sale of the Common Stock received upon exercise of the Option
or SAR would not be in violation of the Companys insider trading policy, or
(ii) the expiration of the term of the Option or SAR as set forth in the
applicable Award Agreement.
(i) Disability of Participant.
Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if a Participants Continuous Service terminates as a result of the
Participants Disability, the Participant may exercise his or her Option or SAR
(to the extent that the Participant was entitled to exercise such Option or SAR
as of the date of termination of Continuous Service), but only within such
period of time ending on the earlier of (i) the date 12 months following such
termination of Continuous Service and (ii) the expiration of the term of the
Option or SAR as set forth in the Award Agreement. If, after termination of
Continuous Service, the Participant does not exercise his or her Option or SAR
within the applicable time frame, the Option or SAR (as applicable) will
terminate.
(j) Death of Participant.
Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the
Company, if (i) a Participants Continuous Service terminates as a result of the
Participants death, or (ii) the Participant dies within the period (if any)
specified in the Award Agreement for exercisability after the termination of the
Participants Continuous Service for a reason other than death, then the Option
or SAR may be exercised (to the extent the Participant was entitled to exercise
such Option or SAR as of the date of death) by the Participants estate, by a
person who acquired the right to exercise the Option or SAR by bequest or
inheritance or by a person designated to exercise the Option or SAR upon the
Participants death, but only within the period ending on the earlier of (i) the
date 18 months following the date of death and (ii) the expiration of the term
of such Option or SAR as set forth in the Award Agreement. If, after the
Participants death, the Option or SAR is not exercised within the applicable
time frame, the Option or SAR will terminate.
(k) Termination for Cause.
Except as explicitly provided otherwise in a
Participants Award Agreement, if a Participants Continuous Service is
terminated for Cause, the Option or SAR will terminate upon the date on which
the event giving rise to the termination for Cause first occurred, and the
Participant will be prohibited from exercising his or her Option or SAR from and
after the date on which the event giving rise to the termination for Cause first
occurred (or, if required by law, the date of termination of Continuous
Service).
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(l) Non-Exempt
Employees. If an Option or SAR is granted to
an Employee who is a non-exempt employee for purposes of the Fair Labor
Standards Act of 1938, as amended, the Option or SAR will not be first
exercisable for any shares of Common Stock until at least six (6) months
following the date of grant of the Option or SAR (although the Award may vest
prior to such date). Consistent with the provisions of the Worker Economic
Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability,
(ii) upon a Corporate Transaction in which such Option or SAR is not assumed,
continued, or substituted, (iii) upon a Change in Control, or (iv) upon the
Participants retirement (as such term may be defined in the Participants Award
Agreement in another agreement between the Participant and the Company, or, if
no such definition, in accordance with the Company's then current employment
policies and guidelines), the vested portion of any Options and SARs may be
exercised earlier than six months following the date of grant. The foregoing
provision is intended to operate so that any income derived by a non-exempt
employee in connection with the exercise or vesting of an Option or SAR will be
exempt from his or her regular rate of pay. To the extent permitted and/or
required for compliance with the Worker Economic Opportunity Act to ensure that
any income derived by a non-exempt employee in connection with the exercise,
vesting or issuance of any shares under any other Stock Award will be exempt
from the employees regular rate of pay, the provisions of this Section 5(l)
will apply to all Stock Awards and are hereby incorporated by reference into
such Stock Award Agreements.
6. PROVISIONS OF STOCK AWARDS OTHER
THAN OPTIONS AND SARS.
(a) Restricted Stock Awards.
Each Restricted Stock Award Agreement will be
in such form and will contain such terms and conditions as the Board will deem
appropriate. To the extent consistent with the Companys bylaws, at the Boards
election, shares of Common Stock may be (x) held in book entry form subject to
the Companys instructions until any restrictions relating to the Restricted
Stock Award lapse; or (y) evidenced by a certificate, which certificate will be
held in such form and manner as determined by the Board. The terms and
conditions of Restricted Stock Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Award Agreements need
not be identical. Each Restricted Stock Award Agreement will conform to (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:
(i) Consideration. A Restricted Stock Award may be awarded in consideration for
(A) cash, check, bank draft or money order payable to the Company, (B) past
services to the Company or an Affiliate, or (C) any other form of legal
consideration (including future services) that may be acceptable to the Board,
in its sole discretion, and permissible under applicable law.
(ii) Vesting. Shares of Common Stock awarded under the Restricted Stock
Award Agreement may be subject to forfeiture to the Company in accordance with a
vesting schedule to be determined by the Board.
(iii) Termination of Participants
Continuous Service. If a Participants
Continuous Service terminates, the Company may receive through a forfeiture
condition or a repurchase right any or all of the shares of Common Stock held by
the Participant that have not vested as of the date of termination of Continuous
Service under the terms of the Restricted Stock Award Agreement.
(iv) Transferability.
Rights to acquire shares of Common Stock
under the Restricted Stock Award Agreement will be transferable by the
Participant only upon such terms and conditions as are set forth in the
Restricted Stock Award Agreement, as the Board will determine in its sole
discretion, so long as Common Stock awarded under the Restricted Stock Award
Agreement remains subject to the terms of the Restricted Stock Award
Agreement.
(v) Dividends. A Restricted Stock Award Agreement may provide that any
dividends paid on Restricted Stock will be subject to the same vesting and
forfeiture restrictions as apply to the shares subject to the Restricted Stock
Award to which they relate.
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(b) Restricted Stock Unit Awards.
Each Restricted Stock Unit Award Agreement
will be in such form and will contain such terms and conditions as the Board
will deem appropriate. The terms and conditions of Restricted Stock Unit Award
Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Unit Award Agreements need not be identical. Each
Restricted Stock Unit Award Agreement will conform to (through incorporation of
the provisions hereof by reference in the Agreement or otherwise) the substance
of each of the following provisions:
(i) Consideration. At the time of grant of a Restricted Stock Unit Award, the
Board will determine the consideration, if any, to be paid by the Participant
upon delivery of each share of Common Stock subject to the Restricted Stock Unit
Award. The consideration to be paid (if any) by the Participant for each share
of Common Stock subject to a Restricted Stock Unit Award may be paid in any form
of legal consideration that may be acceptable to the Board, in its sole
discretion, and permissible under applicable law.
(ii) Vesting. At the time of the grant of a Restricted Stock Unit Award, the
Board may impose such restrictions on or conditions to the vesting of the
Restricted Stock Unit Award as it, in its sole discretion, deems
appropriate.
(iii) Payment. A Restricted Stock Unit Award may be settled by the delivery
of shares of Common Stock, their cash equivalent, any combination thereof or in
any other form of consideration, as determined by the Board and contained in the
Restricted Stock Unit Award Agreement.
(iv) Additional Restrictions.
At the time of the grant of a Restricted
Stock Unit Award, the Board, as it deems appropriate, may impose such
restrictions or conditions that delay the delivery of the shares of Common Stock
(or their cash equivalent) subject to a Restricted Stock Unit Award to a time
after the vesting of such Restricted Stock Unit Award.
(v) Dividend Equivalents.
Dividend equivalents may be credited in
respect of shares of Common Stock covered by a Restricted Stock Unit Award, as
determined by the Board and contained in the Restricted Stock Unit Award
Agreement. At the sole discretion of the Board, such dividend equivalents may be
converted into additional shares of Common Stock covered by the Restricted Stock
Unit Award in such manner as determined by the Board. Any additional shares
covered by the Restricted Stock Unit Award credited by reason of such dividend
equivalents will be subject to all of the same terms and conditions of the
underlying Restricted Stock Unit Award Agreement to which they
relate.
(vi) Termination of Participants
Continuous Service. Except as otherwise
provided in the applicable Restricted Stock Unit Award Agreement, such portion
of the Restricted Stock Unit Award that has not vested will be forfeited upon
the Participants termination of Continuous Service.
(c) Performance
Awards.
(i) Performance Stock
Awards. A Performance Stock Award is a Stock
Award (covering a number of shares not in excess of that set forth in Section
3(d) above) that is payable (including that may be granted, vest or exercised)
contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Stock Award may, but need not, require the
completion of a specified period of Continuous Service. The length of any
Performance Period, the Performance Goals to be achieved during the Performance
Period, and the measure of whether and to what degree such Performance Goals
have been attained will be conclusively determined by the Committee (or, if not
required for compliance with Section 162(m) of the Code, the Board), in its sole
discretion. In addition, to the extent permitted by applicable law and the
applicable Award Agreement, the Board may determine that cash may be used in
payment of Performance Stock Awards.
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(ii) Performance Cash
Awards. A Performance Cash Award is a cash
award (for a dollar value not in excess of that set forth in Section 3(d) above)
that is payable contingent upon the attainment during a Performance Period of
certain Performance Goals. A Performance Cash Award may also require the
completion of a specified period of Continuous Service. At the time of grant of
a Performance Cash Award, the length of any Performance Period, the Performance
Goals to be achieved during the Performance Period, and the measure of whether
and to what degree such Performance Goals have been attained will be
conclusively determined by the Committee (or, if not required for compliance
with Section 162(m) of the Code, the Board), in its sole discretion. The Board
may specify the form of payment of Performance Cash Awards, which may be cash or
other property, or may provide for a Participant to have the option for his or
her Performance Cash Award, or such portion thereof as the Board may specify, to
be paid in whole or in part in cash or other property.
(iii) Section 162(m)
Compliance. Unless otherwise permitted in
compliance with the requirements of Section 162(m) of the Code with respect to
an Award intended to qualify as performance-based compensation thereunder, the
Committee will establish the Performance Goals applicable to, and the formula
for calculating the amount payable under, the Award no later than the earlier of
(a) the date 90 days after the commencement of the applicable Performance
Period, and (b) the date on which 25% of the Performance Period has elapsed, and
in any event at a time when the achievement of the applicable Performance Goals
remains substantially uncertain. Prior to the payment of any compensation under
an Award intended to qualify as performance-based compensation under Section
162(m) of the Code, the Committee will certify the extent to which any
Performance Goals and any other material terms under such Award have been
satisfied (other than in cases where such relate solely to the increase in the
value of the Common Stock). Notwithstanding satisfaction of any completion of
any Performance Goals, the number of shares of Common Stock, Options, cash or
other benefits granted, issued, retainable and/or vested under an Award on
account of satisfaction of such Performance Goals may be reduced by the
Committee on the basis of such further considerations as the Committee, in its
sole discretion, will determine.
(d) Other Stock
Awards. Other forms of Stock Awards valued in
whole or in part by reference to, or otherwise based on, Common Stock, including
the appreciation in value thereof (e.g., options or stock rights with an
exercise price or strike price less than 100% of the Fair Market Value of the
Common Stock at the time of grant) may be granted either alone or in addition to
Stock Awards provided for under Section 5 and the preceding provisions of this
Section 6. Subject to the provisions of the Plan, the Board will have sole and
complete authority to determine the persons to whom and the time or times at
which such Other Stock Awards will be granted, the number of shares of Common
Stock (or the cash equivalent thereof) to be granted pursuant to such Other
Stock Awards and all other terms and conditions of such Other Stock
Awards.
7. COVENANTS OF THE
COMPANY.
(a) Availability of Shares.
The Company will keep available at all times
the number of shares of Common Stock reasonably required to satisfy
then-outstanding Awards.
(b) Securities Law
Compliance. The Company will seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking will not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts and at a reasonable cost, the
Company is unable to obtain from any such regulatory commission or agency the
authority that counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company will be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such Stock
Awards unless and until such authority is obtained. A Participant will not be
eligible for the grant of an Award or the subsequent issuance of cash or Common
Stock pursuant to the Award if such grant or issuance would be in violation of
any applicable securities law.
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(c) No Obligation to Notify or
Minimize Taxes. The Company will have no duty
or obligation to any Participant to advise such holder as to the time or manner
of exercising such Stock Award. Furthermore, the Company will have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of an Award or a possible period in which the Award may not be
exercised. The Company has no duty or obligation to minimize the tax
consequences of an Award to the holder of such Award.
8. MISCELLANEOUS.
(a) Use of Proceeds from Sales of
Common Stock. Proceeds from the sale of
shares of Common Stock pursuant to Awards will constitute general funds of the
Company.
(b) Corporate Action Constituting
Grant of Stock Awards. Corporate action
constituting a grant by the Company of an Award to any Participant will be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Award is communicated to, or actually received or accepted
by, the Participant. In the event that the corporate records (e.g., Board
consents, resolutions or minutes) documenting the corporate action constituting
the grant contain terms (e.g., exercise price, vesting schedule or number of
shares) that are inconsistent with those in the Award Agreement as a result of a
clerical error in the papering of the Award Agreement, the corporate records
will control and the Participant will have no legally binding right to the
incorrect term in the Award Agreement.
(c) Stockholder Rights.
No Participant will be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to an Award unless and until (i) such Participant has
satisfied all requirements for exercise of, or the issuance of shares under, the
Award pursuant to its terms, and (ii) the issuance of the Common Stock subject
to such Award has been entered into the books and records of the
Company.
(d) No Employment or Other Service
Rights. Nothing in the Plan, any Award
Agreement or any other instrument executed thereunder or in connection with any
Award granted pursuant thereto will confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the
time the Award was granted or will affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without notice
and with or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultants agreement with the Company or an Affiliate, or (iii)
the service of a Director pursuant to the bylaws of the Company or an Affiliate,
and any applicable provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.
(e) Change in Time Commitment.
In the event a Participants regular level of
time commitment in the performance of his or her services for the Company and
any Affiliates is reduced (for example, and without limitation, if the
Participant is an Employee of the Company and the Employee has a change in
status from a full-time Employee to a part-time Employee or takes an extended
leave of absence) after the date of grant of any Award to the Participant, the
Board has the right in its sole discretion to (x) make a corresponding reduction
in the number of shares or cash amount subject to any portion of such Award that
is scheduled to vest or become payable after the date of such change in time
commitment, and (y) in lieu of or in combination with such a reduction, extend
the vesting or payment schedule applicable to such Award. In the event of any
such reduction, the Participant will have no right with respect to any portion
of the Award that is so reduced.
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(f) Incentive Stock Option
Limitations. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by any
Optionholder during any calendar year (under all plans of the Company and any
Affiliates) exceeds $100,000 (or such other limit established in the Code) or
otherwise does not comply with the rules governing Incentive Stock Options, the
Options or portions thereof that exceed such limit (according to the order in
which they were granted) or otherwise do not comply with the rules will be
treated as Nonstatutory Stock Options, notwithstanding any contrary provision of
the applicable Option Agreement(s).
(g) Investment Assurances.
The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Award, (i) to give
written assurances satisfactory to the Company as to the Participants knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Award; and (ii) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Common Stock subject to
the Award for the Participants own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, will be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of Common Stock under the Award has been registered under a then currently
effective registration statement under the Securities Act, or (B) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common
Stock.
(h) Withholding
Obligations. Unless prohibited by the terms
of an Award Agreement, the Company may, in its sole discretion, satisfy any
federal, state or local tax withholding obligation relating to an Award by any
of the following means or by a combination of such means: (i) causing the
Participant to tender a cash payment; (ii) withholding shares of Common Stock
from the shares of Common Stock issued or otherwise issuable to the Participant
in connection with the Award; provided,
however, that no shares of Common Stock are
withheld with a value exceeding the minimum amount of tax required to be
withheld by law (or such lesser amount as may be necessary to avoid
classification of the Stock Award as a liability for financial accounting
purposes); (iii) withholding cash from an Award settled in cash; (iv)
withholding payment from any amounts otherwise payable to the Participant; or
(v) by such other method as may be set forth in the Award Agreement.
(i) Electronic
Delivery. Any reference herein to a written
agreement or document will include any agreement or document delivered
electronically, filed publicly at www.sec.gov (or any successor website thereto)
or posted on the Companys intranet.
(j) Deferrals. To the extent permitted by applicable law, the Board, in its
sole discretion, may determine that the delivery of Common Stock or the payment
of cash, upon the exercise, vesting or settlement of all or a portion of any
Award may be deferred and may establish programs and procedures for deferral
elections to be made by Participants. Deferrals by Participants will be made in
accordance with Section 409A of the Code. Consistent with Section 409A of the
Code, the Board may provide for distributions while a Participant is still an
employee or otherwise providing services to the Company. The Board is authorized
to make deferrals of Awards and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments, following the
Participants termination of Continuous Service, and implement such other terms
and conditions consistent with the provisions of the Plan and in accordance with
applicable law.
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(k) Compliance with Section 409A.
Unless otherwise expressly provided for in an
Award Agreement, the Plan and Award Agreements will be interpreted to the
greatest extent possible in a manner that makes the Plan and the Awards granted
hereunder exempt from Section 409A of the Code, and, to the extent not so
exempt, in compliance with Section 409A of the Code. If the Board determines
that any Award granted hereunder is not exempt from and is therefore subject to
Section 409A of the Code, the Award Agreement evidencing such Award will
incorporate the terms and conditions necessary to avoid the consequences
specified in Section 409A(a)(1) of the Code, and to the extent an Award
Agreement is silent on terms necessary for compliance, such terms are hereby
incorporated by reference into the Award Agreement. Notwithstanding anything to
the contrary in this Plan (and unless the Award Agreement specifically provides
otherwise), if the shares of Common Stock are publicly traded, and if a
Participant holding an Award that constitutes deferred compensation under
Section 409A of the Code is a specified employee for purposes of Section 409A
of the Code, no distribution or payment of any amount that is due because of a
separation from service (as defined in Section 409A of the Code without regard
to alternative definitions thereunder) will be issued or paid before the date
that is six (6) months following the date of such Participants separation from
service or, if earlier, the date of the Participants death, unless such
distribution or payment can be made in a manner that complies with Section 409A
of the Code, and any amounts so deferred will be paid in a lump sum on the day
after such six (6) month period elapses, with the balance paid thereafter on the
original schedule.
(l)
Clawback/Recovery. All Awards granted under
the Plan will be subject to recoupment in accordance with any clawback policy
that the Company is required to adopt pursuant to the listing standards of any
national securities exchange or association on which the Companys securities
are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and
Consumer Protection Act or other applicable law. In addition, the Board may
impose such other clawback, recovery or recoupment provisions in an Award
Agreement as the Board determines necessary or appropriate, including but not
limited to a reacquisition right in respect of previously acquired shares of
Common Stock or other cash or property upon the occurrence of Cause. No recovery
of compensation under such a clawback policy will be an event giving rise to a
right to resign for good reason or constructive termination (or similar
term) under any agreement with the Company.
9. ADJUSTMENTS UPON CHANGES IN
COMMON STOCK; OTHER CORPORATE EVENTS.
(a) Capitalization
Adjustments. In the event of a Capitalization
Adjustment, the Board will appropriately and proportionately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to
Section 3(a), (ii) the class(es) and maximum number of securities that may be
issued pursuant to the exercise of Incentive Stock Options pursuant to Section
3(c), (iii) the class(es) and maximum number of securities that may be awarded
to any person pursuant to Sections 3(d), and (iv) the class(es) and number of
securities and price per share of stock subject to outstanding Stock Awards. The
Board will make such adjustments, and its determination will be final, binding
and conclusive.
(b) Dissolution or
Liquidation. Except as otherwise provided in
the Stock Award Agreement, in the event of a dissolution or liquidation of the
Company, all outstanding Stock Awards (other than Stock Awards consisting of
vested and outstanding shares of Common Stock not subject to a forfeiture
condition or the Companys right of repurchase) will terminate immediately prior
to the completion of such dissolution or liquidation, and the shares of Common
Stock subject to the Companys repurchase rights or subject to a forfeiture
condition may be repurchased or reacquired by the Company notwithstanding the
fact that the holder of such Stock Award is providing Continuous Service;
provided, however, that the Board may, in its sole discretion, cause some or all Stock
Awards to become fully vested, exercisable and/or no longer subject to
repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but
contingent on its completion.
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(c) Corporate Transaction.
The following provisions will apply to Stock
Awards in the event of a Corporate Transaction unless otherwise provided in the
instrument evidencing the Stock Award or any other written agreement between the
Company or any Affiliate and the Participant or unless otherwise expressly
provided by the Board at the time of grant of a Stock Award. In the event of a
Corporate Transaction, then, notwithstanding any other provision of the Plan,
the Board will take one or more of the following actions with respect to Stock
Awards, contingent upon the closing or completion of the Corporate
Transaction:
(i) arrange for the surviving corporation or acquiring corporation (or the
surviving or acquiring corporations parent company) to assume or continue the
Stock Award or to substitute a similar stock award for the Stock Award
(including, but not limited to, an award to acquire the same consideration paid
to the stockholders of the Company pursuant to the Corporate
Transaction);
(ii) arrange for the assignment of any reacquisition or repurchase rights held
by the Company in respect of Common Stock issued pursuant to the Stock Award to
the surviving corporation or acquiring corporation (or the surviving or
acquiring corporations parent company);
(iii) accelerate the vesting, in whole or in part, of the Stock Award (and, if
applicable, the time at which the Stock Award may be exercised) to a date prior
to the effective time of such Corporate Transaction as the Board will determine
(or, if the Board will not determine such a date, to the date that is five days
prior to the effective date of the Corporate Transaction), with such Stock Award
terminating if not exercised (if applicable) at or prior to the effective time
of the Corporate Transaction;
(iv) arrange for the lapse, in whole or in part, of any reacquisition or
repurchase rights held by the Company with respect to the Stock
Award;
(v) cancel or arrange for the cancellation of the Stock Award, to the extent
not vested or not exercised prior to the effective time of the Corporate
Transaction, in exchange for such cash consideration, if any, as the Board, in
its sole discretion, may consider appropriate; and
(vi) cancel or arrange for the cancellation of the Stock Award, to the extent
not vested or not exercised prior to the effective time of the Corporate
Transaction, in exchange for a payment, in such form as may be determined by the
Board equal to the excess, if any, of (A) the value of the property the
Participant would have received upon the exercise of the Stock Award immediately
prior to the effective time of the Corporate Transaction, over (B) any exercise
price payable by such holder in connection with such exercise.
The Board need not take the same action
or actions with respect to all Stock Awards or portions thereof or with respect
to all Participants.
(d) Change in Control.
A Stock Award may be subject to additional
acceleration of vesting and exercisability upon or after a Change in Control as
may be provided in the Stock Award Agreement for such Stock Award or as may be
provided in any other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such acceleration will
occur.
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10. PLAN TERM; EARLIER TERMINATION
OR SUSPENSION OF THE PLAN.
The Board may suspend or terminate the
Plan at any time. No Incentive Stock Options may be granted after the tenth
anniversary of the earlier of (i) the date the Plan is adopted by the Board (the
Adoption Date), or (ii) the date the Plan is approved by the stockholders
of the Company. No Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.
11. EXISTENCE OF THE PLAN; TIMING OF
FIRST GRANT OR EXERCISE.
The Plan will come into existence on
the Adoption Date; provided,
however, no Award may be granted prior to the
IPO Date (that is, the Effective Date). In addition, no Stock Award will be
exercised (or, in the case of a Restricted Stock Award, Restricted Stock Unit
Award, Performance Stock Award, or Other Stock Award, will be granted) and no
Performance Cash Award will be settled unless and until the Plan has been
approved by the stockholders of the Company, which approval will be within 12
months after the date the Plan is adopted by the Board.
12. CHOICE OF LAW.
The law of the State of California will
govern all questions concerning the construction, validity and interpretation of
this Plan, without regard to that states conflict of laws rules.
13. DEFINITIONS. As used in the Plan, the following definitions will apply to
the capitalized terms indicated below:
(a) Affiliate means, at the time of determination, any parent or
subsidiary of the Company as such terms are defined in Rule 405 of the
Securities Act. The Board will have the authority to determine the time or times
at which parent or subsidiary status is determined within the foregoing
definition.
(b) Award means a Stock Award or a Performance Cash Award.
(c) Award Agreement means a written agreement between the Company and a
Participant evidencing the terms and conditions of an Award.
(d) Board means the Board of Directors of the Company.
(e) Capital Stock means each and every class of common stock of the Company,
regardless of the number of votes per share.
(f) Capitalization
Adjustment means any change that is made
in, or other events that occur with respect to, the Common Stock subject to the
Plan or subject to any Stock Award after the Adoption Date without the receipt
of consideration by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or any
similar equity restructuring transaction, as that term is used in Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (or any
successor thereto). Notwithstanding the foregoing, the conversion of any
convertible securities of the Company will not be treated as a Capitalization
Adjustment.
(g) Cause means the Participants termination because of: (A) the
Participants engaging in any act of dishonesty or misrepresentation or willful
commission of fraud; (B) the Participants violation of any federal, state or
foreign law or regulation applicable to the Companys business; (C) the
Participants violation of the Companys Code of Conduct, confidential
information and/or inventions assignment agreement, or any similar obligations
under contract or applicable law; (D) the Participants conviction of, or
entering a plea of nolo
contendere to, any felony; or (E) any other
misconduct that is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company, which
conduct, if capable of cure or remedy, is not cured or remedied within two weeks
after written notice from the Company describing such conduct.
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(h) Change in
Control means the occurrence, in a
single transaction or in a series of related transactions, of any one or more of
the following events:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than 50% of the combined voting
power of the Companys then outstanding securities other than by virtue of a
merger, consolidation or similar transaction. Notwithstanding the foregoing, a
Change in Control will not be deemed to occur (A) on account of the acquisition
of securities of the Company directly from the Company, (B) on account of the
acquisition of securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person that acquires the Companys securities in a
transaction or series of related transactions the primary purpose of which is to
obtain financing for the Company through the issuance of equity securities, (C)
on account of the acquisition of securities of the Company by any individual who
is, on the IPO Date, either an executive officer or a Director (either, an
IPO Investor) and/or any entity in which an IPO Investor has a direct or
indirect interest (whether in the form of voting rights or participation in
profits or capital contributions) of more than 50% (collectively, the
IPO Entities ) or on account of the IPO Entities continuing to hold
shares that come to represent more than 50% of the combined voting power of the
Companys then outstanding securities as a result of the conversion of any class
of the Companys securities into another class of the Companys securities
having a different number of votes per share pursuant to the conversion
provisions set forth in the Companys Amended and Restated Certificate of
Incorporation; or (D) solely because the level of Ownership held by any Exchange
Act Person (the Subject
Person) exceeds the designated
percentage threshold of the outstanding voting securities as a result of a
repurchase or other acquisition of voting securities by the Company reducing the
number of shares outstanding, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition, the Subject
Person becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control will be deemed to
occur;
(ii) there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than 50%
of the combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than 50% of the combined
outstanding voting power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction; provided, however, that a merger,
consolidation or similar transaction will not constitute a Change in Control
under this prong of the definition if the outstanding voting securities
representing more than 50% of the combined voting power of the surviving Entity
or its parent are owned by the IPO Entities;
(iii) there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition; provided, however, that a sale, lease,
exclusive license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries will not constitute a
Change in Control under this prong of the definition if the outstanding voting
securities representing more than 50% of the combined voting power of the
acquiring Entity or its parent are owned by the IPO Entities; or
(iv) individuals who, on the date the Plan is adopted by the Board, are
members of the Board (the Incumbent
Board) cease for any reason to
constitute at least a majority of the members of the Board; provided, however, that if
the appointment or election (or nomination for election) of any new Board member
was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member will, for purposes of this Plan, be
considered as a member of the Incumbent Board.
A-16.
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For purposes of determining voting
power under the term Change in Control, voting power shall be calculated by
assuming the conversion of all equity securities convertible (immediately or at
some future time) into shares entitled to vote, but not assuming the exercise of
any warrant or right to subscribe to or purchase those shares. In addition, (A)
the term Change in Control will not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company, (B) the term Change in Control will not include a change in the voting
power of any one or more stockholders as a result of the conversion of any class
of the Companys securities into another class of the Companys securities
having a different number of votes per share pursuant to the conversion
provisions set forth in the Companys Amended and Restated Certificate of
Incorporation, and (C) the definition of Change in Control (or any analogous
term) in an individual written agreement between the Company or any Affiliate
and the Participant will supersede the foregoing definition with respect to
Awards subject to such agreement; provided,
however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition will apply. If required for compliance with
Section 409A of the Code, in no event will a Change in Control be deemed to have
occurred if such transaction is not also a change in the ownership or effective
control of the Company or a change in the ownership of a substantial portion
of the assets of the Company as determined under Treasury Regulation Section
1.409A-3(i)(5) (without regard to any alternative definition thereunder). The
Board may, in its sole discretion and without a Participants consent, amend the
definition of Change in Control to conform to the definition of Change in
Control under Section 409A of the Code, and the regulations
thereunder.
(i) Code means the Internal Revenue Code of 1986, as amended, including any
applicable regulations and guidance thereunder.
(j) Committee means a committee of one or more Directors to whom authority
has been delegated by the Board in accordance with Section 2(c).
(k) Common Stock means, as of the IPO Date, the Class A common stock of the
Company, having 1 vote per share.
(l) Company means Yelp Inc., a Delaware corporation.
(m) Consultant means any person, including an advisor, who is (i) engaged
by the Company or an Affiliate to render consulting or advisory services and is
compensated for such services, or (ii) serving as a member of the board of
directors of an Affiliate and is compensated for such services. However, service
solely as a Director, or payment of a fee for such service, will not cause a
Director to be considered a Consultant for purposes of the
Plan. Notwithstanding the foregoing, a person is treated as a Consultant under
this Plan only if a Form S-8 Registration Statement under the Securities Act is
available to register either the offer or the sale of the Companys securities
to such person.
(n) Continuous
Service means that the Participants
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. A change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participants service with the Company or an Affiliate, will not terminate a
Participants Continuous Service; provided,
however, that if the Entity for which a
Participant is rendering services ceases to qualify as an Affiliate, as
determined by the Board, in its sole discretion, such Participants Continuous
Service will be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. To the extent permitted by law, the Board or the chief
executive officer of the Company, in that partys sole discretion, may determine
whether Continuous Service will be considered interrupted in the case of (i) any
leave of absence approved by the Board or chief executive officer, including
sick leave, military leave or any other personal leave, or (ii) transfers
between the Company, an Affiliate, or their successors. Notwithstanding the
foregoing, a leave of absence will be treated as Continuous Service for purposes
of vesting in an Award only to such extent as may be provided in the Companys
leave of absence policy, in the written terms of any leave of absence agreement
or policy applicable to the Participant, or as otherwise required by law. In
addition, to the extent required for exemption from or compliance with Section
409A of the Code, the determination of whether there has been a termination of
Continuous Service will be made, and such term will be construed, in a manner
that is consistent with the definition of separation from service as defined
under Treasury Regulation Section 1.409A-1(h) (without regard to any
alternative definition thereunder).
A-17.
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(o) Corporate
Transaction means the occurrence, in a
single transaction or in a series of related transactions, of any one or more of
the following events:
(i) the consummation of a sale
or other disposition of all or substantially
all, as determined by the Board, in its sole discretion, of the consolidated
assets of the Company and its Subsidiaries;
(ii) the consummation of a sale or other disposition of at least 50% of the
outstanding securities of the Company;
(iii) the consummation of a merger, consolidation or similar transaction
following which the Company is not the surviving corporation; or
(iv) the consummation of a merger, consolidation or similar transaction
following which the Company is the surviving corporation but the shares of
Common Stock outstanding immediately preceding the merger, consolidation or
similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.
To the extent required for compliance
with Section 409A of the Code, in no event will an event be deemed a Corporate
Transaction if such transaction is not also a change in the ownership or
effective control of the Company or a change in the ownership of a substantial
portion of the assets of the Company as determined under Treasury Regulation
Section 1.409A-3(i)(5) (without regard to any alternative definition
thereunder).
(p) Covered
Employee will have the meaning provided
in Section 162(m)(3) of the Code.
(q) Director means a member of the Board.
(r) Disability means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than 12 months, as provided in Sections 22(e)(3) and
409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis
of such medical evidence as the Board deems warranted under the
circumstances.
(s) Effective Date means the IPO Date.
(t) Employee means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services,
will not cause a Director to be considered an Employee for purposes of the
Plan.
(u) Entity means a corporation, partnership, limited liability company
or other entity.
(v) Exchange Act means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
(w) Exchange Act
Person means any natural person, Entity
or group (within the meaning of Section 13(d) or 14(d) of the Exchange Act),
except that Exchange Act Person will not include (i) the Company or any
Subsidiary of the Company, (ii) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of the Company,
(iii) an underwriter temporarily holding securities pursuant to a registered
public offering of such securities, (iv) an Entity Owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or (v) any natural
person, Entity or group (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) that, as of the Effective Date, is the Owner, directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Companys then outstanding securities.
A-18.
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(x) Fair Market
Value means, as of any date, the value
of the Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or traded
on any established market, the Fair Market Value of a share of Common Stock will
be, unless otherwise determined by the Board, the closing sales price for
such stock as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.
(ii) Unless otherwise provided by the Board, if there is no closing sales
price for the Common Stock on the date of determination, then the Fair Market
Value will be the closing selling price on the last preceding date for which
such quotation exists.
(iii) In the absence of such markets for the Common Stock, the Fair Market
Value will be determined by the Board in good faith and in a manner that
complies with Sections 409A and 422 of the Code.
(y) Incentive Stock
Option means an option granted pursuant
to Section 5 of the Plan that is intended to be, and qualifies as, an incentive
stock option within the meaning of Section 422 of the Code.
(z) IPO Date means the date of the underwriting agreement between the
Company and the underwriter(s) managing the initial public offering of the
Common Stock, pursuant to which the Common Stock is priced for the initial
public offering.
(aa) Non-Employee
Director means a Director who either (i) is
not a current employee or officer of the Company or an Affiliate, does not
receive compensation, either directly or indirectly, from the Company or an
Affiliate for services rendered as a consultant or in any capacity other than as
a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(Regulation S-K)), does not possess an interest in any other transaction for
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
non-employee director for purposes of Rule 16b-3.
(bb) Nonstatutory Stock
Option means any option granted pursuant
to Section 5 of the Plan that does not qualify as an Incentive Stock
Option.
(cc) Officer means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act.
(dd) Option means an Incentive Stock Option or a Nonstatutory Stock
Option to purchase shares of Common Stock granted pursuant to the
Plan.
(ee) Option
Agreement means a written agreement
between the Company and an Optionholder evidencing the terms and conditions of
an Option grant. Each Option Agreement will be subject to the terms and
conditions of the Plan.
(ff) Optionholder means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding
Option.
(gg) Other Stock
Award means an award based in whole or
in part by reference to the Common Stock which is granted pursuant to the terms
and conditions of Section 6(d).
(hh) Other Stock Award
Agreement means a written agreement between
the Company and a holder of an Other Stock Award evidencing the terms and
conditions of an Other Stock Award grant. Each Other Stock Award Agreement will
be subject to the terms and conditions of the Plan.
A-19.
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(ii) Outside
Director means a Director who either (i)
is not a current employee of the Company or an affiliated corporation (within
the meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an affiliated corporation
who receives compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the taxable year, has not been an officer
of the Company or an affiliated corporation, and does not receive remuneration
from the Company or an affiliated corporation, either directly or indirectly,
in any capacity other than as a Director, or (ii) is otherwise considered an
outside director for purposes of Section 162(m) of the Code.
(jj) Own, Owned, Owner, Ownership means a person or Entity will be deemed to Own, to have Owned, to be
the Owner of, or to have acquired Ownership of securities if such person or
Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power, which
includes the power to vote or to direct the voting, with respect to such
securities.
(kk) Participant means a person to whom an Award is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Stock
Award.
(ll) Performance Cash
Award means an award of cash granted
pursuant to the terms and conditions of Section 6(c)(ii).
(mm) Performance
Criteria means the one or more criteria
that the Board will select for purposes of establishing the Performance Goals
for a Performance Period. The Performance Criteria that will be used to
establish such Performance Goals may be based on any one of, or combination of,
the following as determined by the Board: (i) earnings (including earnings per
share and net earnings); (ii) earnings before interest, taxes and depreciation;
(iii) earnings before interest, taxes, depreciation and amortization; (iv)
earnings before interest, taxes, depreciation, amortization and legal
settlements; (v) earnings before interest, taxes, depreciation, amortization,
legal settlements and other income (expense); (vi) earnings before interest,
taxes, depreciation, amortization, legal settlements, other income (expense) and
stock-based compensation; (vii) earnings before interest, taxes, depreciation,
amortization, legal settlements, other income (expense), stock-based
compensation and changes in deferred revenue; (viii) total stockholder return;
(ix) return on equity or average stockholders equity; (x) return on assets,
investment, or capital employed; (xi) stock price; (xii) margin (including gross
margin); (xiii) income (before or after taxes); (xiv) operating income; (xv)
operating income after taxes; (xvi) pre-tax profit; (xvii) operating cash flow;
(xviii) sales or revenue targets; (xix) increases in revenue or product revenue;
(xx) expenses and cost reduction goals; (xxi) improvement in or attainment of
working capital levels; (xxii) economic value added (or an equivalent metric);
(xxiii) market share; (xxiv) cash flow; (xxv) cash flow per share; (xxvi) share
price performance; (xxvii) debt reduction; (xxviii) implementation or completion
of projects or processes; (xxix) user satisfaction; (xxx) stockholders equity;
(xxxi) capital expenditures; (xxxii) debt levels; (xxxiii) operating profit or
net operating profit; (xxxiv) workforce diversity; (xxxv) growth of net income
or operating income; (xxxvi) billings; (xxxvii) bookings; (xxxviii) the number
of users, including but not limited to unique users; (xxxix) employee retention;
(xxxx) and to the extent that an Award is not intended to comply with Section
162(m) of the Code, other measures of performance selected by the
Board.
A-20.
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(nn) Performance
Goals means, for a Performance Period,
the one or more goals established by the Board for the Performance Period based
upon the Performance Criteria. Performance Goals may be based on a Company-wide
basis, with respect to one or more business units, divisions, Affiliates, or
business segments, and in either absolute terms or relative to the performance
of one or more comparable companies or the performance of one or more relevant
indices. Unless specified otherwise by the Board (i) in the Award Agreement at
the time the Award is granted or (ii) in such other document setting forth the
Performance Goals at the time the Performance Goals are established, the Board
will appropriately make adjustments in the method of calculating the attainment
of Performance Goals for a Performance Period as follows: (1) to exclude
restructuring and/or other nonrecurring charges; (2) to exclude exchange rate
effects; (3) to exclude the effects of changes to generally accepted accounting
principles; (4) to exclude the effects of any statutory adjustments to corporate
tax rates; (5) to exclude the effects of any extraordinary items as determined
under generally accepted accounting principles; (6) to exclude the dilutive
effects of acquisitions or joint ventures; (7) to assume that any business
divested by the Company achieved performance objectives at targeted levels
during the balance of a Performance Period following such divestiture; (8) to
exclude the effect of any change in the outstanding shares of common stock of
the Company by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distributions to
common stockholders other than regular cash dividends; (9) to exclude the
effects of stock based compensation and the award of bonuses under the Companys
bonus plans; (10) to exclude costs incurred in connection with potential
acquisitions or divestitures that are required to be expensed under generally
accepted accounting principles; (11) to exclude the goodwill and intangible
asset impairment charges that are required to be recorded under generally
accepted accounting principles and (12) to exclude the effect of any other
unusual, non-recurring gain or loss or other extraordinary item. In addition,
the Board retains the discretion to reduce or eliminate the compensation or
economic benefit due upon attainment of Performance Goals and to define the
manner of calculating the Performance Criteria it selects to use for such
Performance Period. Partial achievement of the specified criteria may result in
the payment or vesting corresponding to the degree of achievement as specified
in the Stock Award Agreement or the written terms of a Performance Cash
Award.
(oo) Performance
Period means the period of time selected
by the Board over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participants right to and the payment
of a Stock Award or a Performance Cash Award. Performance Periods may be of
varying and overlapping duration, at the sole discretion of the
Board.
(pp) Performance Stock
Award means a Stock Award granted under
the terms and conditions of Section 6(c)(i).
(qq) Plan means this Yelp Inc. 2012 Equity Incentive Plan.
(rr) Restricted Stock
Award means an award of shares of Common
Stock which is granted pursuant to the terms and conditions of Section
6(a).
(ss) Restricted Stock Award
Agreement means a written agreement
between the Company and a holder of a Restricted Stock Award evidencing the
terms and conditions of a Restricted Stock Award grant. Each Restricted Stock
Award Agreement will be subject to the terms and conditions of the
Plan.
(tt) Restricted Stock Unit
Award means a right to receive shares
of Common Stock which is granted pursuant to the terms and conditions of Section
6(b).
(uu) Restricted Stock Unit Award
Agreement means a written agreement between
the Company and a holder of a Restricted Stock Unit Award evidencing the terms
and conditions of a Restricted Stock Unit Award grant. Each Restricted Stock
Unit Award Agreement will be subject to the terms and conditions of the
Plan.
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(vv) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(ww) Securities Act means the Securities Act of 1933, as amended.
(xx) Stock Appreciation
Right or SAR means a right to receive the
appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 5.
(yy) Stock Appreciation Right
Agreement means a written agreement
between the Company and a holder of a Stock Appreciation Right evidencing the
terms and conditions of a Stock Appreciation Right grant. Each Stock
Appreciation Right Agreement will be subject to the terms and conditions of the
Plan.
(zz) Stock Award means any right to receive Common Stock granted under the
Plan, including an Incentive Stock Option, a Nonstatutory Stock Option, a
Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation
Right, a Performance Stock Award or any Other Stock Award.
(aaa) Stock Award
Agreement means a written agreement
between the Company and a Participant evidencing the terms and conditions of a
Stock Award grant. Each Stock Award Agreement will be subject to the terms and
conditions of the Plan.
(bbb) Subsidiary means, with respect to the Company, (i) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation will have or might have voting power by reason of the happening
of any contingency) is at the time, directly or indirectly, Owned by the
Company, and (ii) any partnership, limited liability company or other entity in
which the Company has a direct or indirect interest (whether in the form of
voting or participation in profits or capital contribution) of more than
50%.
(ccc) Ten Percent
Stockholder means a person who Owns (or
is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or any Affiliate.
A-22.
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YELP
INC.
140 NEW MONTGOMERY ST., 9TH
FLOOR
SAN FRANCISCO, CA 94105
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your
voting instructions and for electronic delivery of information up until 11:59
P.M. Eastern Daylight Time on April 12, 2016. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/YELP
You may attend the Meeting via the
Internet and vote during the Meeting. Have the information that is printed in
the box marked by the arrow available and follow the instructions.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern
Daylight Time on April 12, 2016. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK
INK AS FOLLOWS: |
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E01488-P72845 |
KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED. |
YELP INC. The Board of Directors recommends you vote FOR
all of the following nominees: |
For All |
Withhold All |
For
All Except |
To withhold
authority to vote for any individual nominee(s), mark For All Except and
write the number(s) of the nominee(s) on the line below. |
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1. |
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Election of
Directors |
☐ |
☐ |
☐ |
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Nominees: |
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01) |
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Fred D. Anderson,
Jr. |
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02) |
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Peter Fenton |
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03) |
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Jeremy Levine |
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The Board of Directors
recommends you vote FOR proposals 2, 3 and 4. |
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For |
Against |
Abstain |
2. |
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To ratify the selection of Deloitte
& Touche LLP as Yelp's independent registered public accounting firm
for the year ending December 31, 2016. |
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☐ |
☐ |
☐ |
3. |
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To approve, on an advisory basis, the
compensation of Yelp's named executive officers, as disclosed in the
accompanying proxy statement. |
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☐ |
☐ |
☐ |
4. |
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To approve the Yelp Inc. 2012 Equity
Incentive Plan, as amended. |
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☐ |
☐ |
☐ |
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NOTE: In their discretion, the proxyholders are authorized to
vote upon such other business as may properly come before the meeting and
any adjournment or postponement thereof. |
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Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please sign
in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
Table of Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement and Annual Report are
available at www.proxyvote.com.
YELP INC.
Annual Meeting of Stockholders
April 13,
2016 9:00 AM, PDT
This proxy is solicited by
the Board of Directors
The undersigned stockholder(s) hereby
revoke(s) all previous proxies, acknowledge(s) receipt of the Notice of the 2016
Annual Meeting of Stockholders of YELP INC. and the accompanying Proxy
Statement, and hereby appoint(s) Laurence Wilson and Rob Krolik, or either of
them, as proxies of the undersigned, each with the power to appoint his
substitute, and hereby authorizes them, or either of them, to represent and to
vote, as designated on the reverse side of this ballot, all of the shares of
Class A Common Stock and Class B Common Stock of YELP INC. that the undersigned
stockholder(s) is/are entitled to vote at the 2016 Annual Meeting of
Stockholders of YELP INC. to be held at 9:00 AM, PDT on April 13, 2016 via live
audio webcast, and any adjournment or postponement thereof. To attend the Annual
Meeting, please visit www.virtualshareholdermeeting.com/YELP.
The shares represented by this
proxy, when properly executed, will be voted in the manner directed by the
stockholder, with discretionary authority as to any and all other matters that
may properly come before the meeting. If no such direction is made, the proxy
holders will have the authority to vote FOR each of the nominees listed in
Proposal No. 1 and FOR Proposal Nos. 2, 3 and 4.
Continued and to be signed on reverse
side
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