Table of Contents
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
(Amendment
No.__)
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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
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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)
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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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1.
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Title of each class of securities
to which transaction applies:
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Aggregate number of securities to
which transaction applies:
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Per unit price or other
underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
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Proposed maximum aggregate value
of transaction:
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Total fee paid:
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
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1.
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Amount Previously
Paid:
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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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 June 15, 2017
Dear Stockholder:
You are cordially invited to attend the
2017 Annual Meeting of Stockholders (the “Annual Meeting”) of YELP INC., a
Delaware corporation (the “Company”). The Annual Meeting will be held on
Thursday, June 15, 2017 at 9:00 a.m. (Pacific time).
As in 2016, 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/Yelp2017. We continue to believe that hosting
a virtual meeting provides expanded access, improved communication and cost
savings for our stockholders and the Company.
At the Annual Meeting, stockholders
will vote on the following matters:
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1.
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To
elect the two nominees for director named in the accompanying proxy
statement (the “Proxy Statement”) to hold office until the 2020 Annual
Meeting of Stockholders.
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2.
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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, 2017.
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3.
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To
approve, on an advisory basis, the compensation of the Company’s named
executive officers, as disclosed in the Proxy Statement.
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To conduct any other business
properly brought before the Annual Meeting.
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These items of business are more fully
described in the Proxy Statement accompanying this Notice.
The record date for the Annual Meeting
is April 17, 2017. Only stockholders of record at the close of business on that
date may vote at the Annual Meeting or at 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
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San Francisco, California
April 28,
2017
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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
legal proxy issued in your name from that record
holder.
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Table of Contents
TABLE OF CONTENTS
Table of Contents
YELP INC.
140 New Montgomery Street
San Francisco, California 94105
PROXY STATEMENT
FOR THE 2017 ANNUAL MEETING OF
STOCKHOLDERS
June 15, 2017
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 Yelp’s 2017 Annual Meeting of Stockholders, or
the Annual Meeting, including at any adjournments or postponements thereof, to
be held via a live audio webcast on Thursday, June 15, 2017 at 9:00 a.m. Pacific
time. The Annual Meeting can be accessed by visiting
www.virtualshareholdermeeting.com/Yelp2017, 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 Annual Report on Form 10-K for the year
ended December 31, 2016, or our Annual Report, are being distributed and made
available on or about April 28, 2017. 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 April 28, 2017 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 May 9, 2017. 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 April 17, 2017, the Record Date, will be entitled to vote
at the Annual Meeting. On the Record Date, there were 80,342,962 shares of our
common stock outstanding and entitled to vote.
Stockholders of Record: Shares
Registered in Your Name
If on the Record Date 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 the Record Date 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 three matters scheduled for a
vote:
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Proposal No. 1: the election of the two nominees for director named
in this Proxy Statement;
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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, 2017;
and
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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.
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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 year’s 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/Yelp2017. 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.” 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/Yelp2017.
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, 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.
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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:
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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 June 14,
2017 to be counted.
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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 June 14, 2017 to be
counted.
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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.
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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.
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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.
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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 common stock you owned as of the Record Date. We
previously had two classes of common stock outstanding: Class A common stock,
holders of which were entitled to one vote per share, and Class B common stock,
holders of which were entitled to ten votes per share. Our Class A common stock
and Class B common stock converted into a single class of common stock on
September 22, 2016.
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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 or 3 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:
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“For” the election of each of the
two nominees for director;
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“For” the ratification of the selection of Deloitte & Touche
LLP as our independent registered public accounting firm for the year
ending December 31, 2017; and
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“For” the advisory approval of executive compensation.
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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.
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.
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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:
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You may grant a subsequent proxy
by telephone or through the Internet.
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You may submit another properly completed proxy card with a later
date.
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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. Such notice will be considered timely if
it is received at the indicated address by the close of business on
Wednesday, June 14, 2017.
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You may attend and vote online during the Annual Meeting. Simply
attending the Annual Meeting will not, by itself, revoke your proxy.
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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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Proposal
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Effect
of
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Effect of
Broker
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Number
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Proposal Description
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Vote Required for Approval
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Abstentions
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Non-Votes
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1
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Election of Directors
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Two
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, 2017
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“For” votes from the holders of a
majority 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 a majority of the shares
present and entitled to vote
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Against
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None
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____________________
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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.
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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 stockholders holding at least a majority of the
outstanding shares entitled to vote are present at the Annual Meeting in person,
by remote communication or represented by proxy. On the Record Date, there were
80,342,962 shares of common stock outstanding and entitled to vote. Thus, the
holders of 40,171,482 shares of our common stock must be present in person, by
remote communication or represented by proxy at the Annual meeting to have a
quorum.
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
shares of common stock present at the Annual Meeting in person, by remote
communication or represented by proxy may adjourn the Annual Meeting to another
date.
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When are stockholder proposals and
director nominations due for next year’s annual meeting?
To be considered for inclusion in next
year’s proxy materials, you must submit your proposal, in writing, by December
29, 2017 to our Corporate Secretary at 140 New Montgomery Street, 9
th
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 2018
Annual Meeting of Stockholders, but you are not requesting that your proposal or
nomination be included in next year’s proxy materials, you must notify our
Corporate Secretary, in writing, not later than the close of business on March
17, 2018 nor earlier than the close of business on February 15, 2018. However,
if our 2018 Annual Meeting of Stockholders is not held between May 16, 2018 and
July 15, 2018, to be timely, notice by the stockholder must be received not
earlier than the close of business on the 120
th
day prior to the 2018
Annual Meeting of Stockholders and not later than (i) the close of business on
the later of the 90
th
day prior to the 2018 Annual Meeting of
Stockholders or (ii) the 10
th
day following the day on which public
announcement of the date of the 2018 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 2018 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 2018 Annual
Meeting of Stockholders will confer discretionary voting authority with respect
to any proposal (i) presented by a stockholder at that meeting for which we have
not been provided with timely notice and (ii) made in accordance with our
Bylaws, if (x) the 2018 proxy statement briefly describes the matter and how
management’s proxy holders intend to vote on it, and (y) 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 director’s
successor is duly elected and qualified.
The Board presently has eight members.
There are two directors in the class whose term of office expires in 2017. If
elected at the Annual Meeting, each of these nominees would serve until the 2020
Annual Meeting of Stockholders and until her successor has been duly elected and
qualified, or, if sooner, until the director’s death, resignation or removal.
Under our Corporate Governance Guidelines, directors are encouraged and expected
to attend the Annual Meeting. Six out of the eight then-current directors
attended the 2016 Annual Meeting of Stockholders.
The following table sets forth
information with respect to our directors, including the two nominees for
election at the Annual Meeting, as of April 17, 2017:
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D
IRECTOR
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P
RINCIPAL
O
CCUPATION
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N
AME
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A
GE
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S
INCE
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P
OSITION
H
ELD
W
ITH THE
C
OMPANY
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Class II Directors – Nominees for
Election at the Annual Meeting
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Diane M. Irvine
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58
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Nov. 2011
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Chairperson of the Board; Independent
Advisor
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Mariam Naficy
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46
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Jan. 2014
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Chief Executive Officer,
Minted LLC
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Class III Directors – Continuing
in Office until the 2018 Annual Meeting
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Geoff Donaker
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44
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Dec. 2010
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Director, Yelp Inc.
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Robert Gibbs
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46
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May 2012
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Executive Vice President, Global Chief
Communications Officer, McDonald’s Corporation
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Jeremy
Stoppelman
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39
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Sept. 2005
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Co-Founder and Chief
Executive Officer
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Class I Directors – Continuing in
Office until the 2019 Annual Meeting
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Fred D. Anderson,
Jr.
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72
|
|
Feb. 2011
|
|
Managing Director,
Elevation Partners and NextEquity Partners
|
|
|
Peter Fenton
|
|
44
|
|
Sept. 2006
|
|
General Partner, Benchmark
Capital
|
|
|
Jeremy Levine
|
|
43
|
|
Nov. 2005
|
|
Partner, Bessemer Venture
Partners
|
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 Board’s 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.
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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 two
nominees receiving the highest number of affirmative votes will be elected.
However, pursuant to the Director Resignation Policy our Board adopted in 2017,
any nominee for director in an uncontested election who receives a greater
number of votes “withheld” from his or her election than votes “for” such
election will be required to submit his or her resignation for the consideration
by the Nominating Committee. The Nominating Committee will then consider the
relevant facts and circumstances and recommend to the Board the action to be
taken with respect to such offer of resignation. The Board will then act on the
Nominating Committee’s recommendation. Promptly following the Board’s decision,
we will disclose that decision and an explanation of such decision in a filing
with the SEC or a press release.
Shares represented by executed proxies
will be voted, if authority to do so is not withheld, for the election of the
two nominees named below. If either 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 either nominee
will be unable to serve.
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.
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NOMINEES FOR ELECTION FOR A
THREE-YEAR TERM EXPIRING AT THE 2020 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 and a Doctor of Humane Letters 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.
THE BOARD RECOMMENDS
A VOTE “FOR”
ALL OF THE NAMED NOMINEES
DIRECTORS CONTINUING IN OFFICE UNTIL
THE 2018 ANNUAL MEETING
Geoff Donaker
is a start-up advisor and investor and most
recently served as our Chief Operating Officer from June 2006 through August
2016, where he 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 Inc., an Internet marketplace and online payments platform
company, 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 McDonald’s Corporation, a global foodservice retailer,
since June 2015. Prior to joining McDonald’s, 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 Barack 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. Obama’s 2008 presidential campaign. Mr.
Gibbs was Press Secretary for Senator John Kerry’s 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.
DIRECTORS CONTINUING IN OFFICE UNTIL
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. 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., the board of trustees of Whittier College and
the Stanford Athletic Advisory Board. 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. Anderson’s 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. (through May 2017),
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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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 company’s 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 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. J.
Stoppelman, our Chief Executive Officer, is not independent by virtue of his
employment with the Company. Mr. Donaker, our former Chief Operating Officer, is
not independent due to his recent employment with the Company.
BOARD LEADERSHIP STRUCTURE
Ms. Irvine has served as Chairperson of
the Board since September 2015. Ms. Irvine’s tenure on the Board, as well as the
deep knowledge of our Company gained in her role as Chairperson of the Audit
Committee of the Board, or Audit Committee, allow her to provide valuable
insights and facilitate the implementation of our strategic initiatives and
business plans. The Company believes that separation of the positions of Board
Chair and Chief Executive Officer reinforces the independence of the Board in
its oversight of the business and affairs of the Company. The Board also
believes that Ms. Irvine’s independence is complementary to her familiarity with
the Company and management representation on the Board, helping to foster an
environment that is conducive to objective evaluation and oversight of
management’s performance.
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 chairpersonship in the best
interests of the Board, the Company and its stockholders.
MEETINGS OF THE BOARD
The Board met five times during 2016.
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 that were
held during the portion of 2016 for which he or she was a director or committee
member.
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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
2016 for each of the Board committees:
|
Name
|
|
Audit
|
|
Compensation
|
|
Nominating
|
|
Fred D. Anderson, Jr.
|
|
|
|
|
|
|
|
Peter Fenton
|
|
|
|
|
|
|
|
Robert Gibbs
|
|
|
|
|
|
|
|
Diane M. Irvine
|
|
|
|
|
|
|
|
Jeremy Levine
|
|
|
|
|
|
|
|
Mariam Naficy
|
|
|
|
|
|
|
|
Total meetings in 2016
|
|
9
|
|
5
|
|
1
|
____________________
|
|
|
Committee
Chairperson
|
|
|
|
|
|
|
|
Committee
member
|
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;
|
|
●
|
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 “Management’s 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 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;
|
13
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|
●
|
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.
Irvine’s and Mr. Anderson’s 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
Chairperson 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, 2016
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. 1301, 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 firm’s
independence. Based on the foregoing, the Audit Committee has recommended to the
Board that the audited financial statements be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2016.
|
Respectfully
submitted,
The Audit Committee of the
Board of Directors
Diane M. Irvine, Chair
Fred
D. Anderson, Jr.
Robert Gibbs
|
____________________
|
(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.
|
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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
Chairperson 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 2016 and the
Compensation Committee Report, as well as the Compensation Committee’s 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
Compensation—Compensation 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.
15
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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. Levine is the
Chairperson of 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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Table of Contents
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 management’s representation 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 Committee’s review of compensation-related risk, please see the
section of this Proxy Statement entitled “
Executive Compensation—Compensation 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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Table of Contents
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 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, 2016, certain information with respect to the compensation of
each of our non-employee directors.
Director Compensation for the Year
Ended December 31, 2016
|
|
|
Fees Earned
or Paid
|
|
Stock Awards
|
|
|
|
|
|
Name
|
|
in Cash ($)
|
|
($)(3)(4)
|
|
Total ($)
|
|
Fred D. Anderson, Jr.
|
|
|
—
|
(1)
|
|
|
|
35,881
|
|
|
|
35,881
|
|
|
Geoff Donaker
(2)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Peter Fenton
|
|
|
—
|
(1)
|
|
|
|
31,656
|
|
|
|
31,656
|
|
|
Robert Gibbs
|
|
|
—
|
(1)
|
|
|
|
30,605
|
|
|
|
30,605
|
|
|
Diane M. Irvine
|
|
|
—
|
(1)
|
|
|
|
63,312
|
|
|
|
63,312
|
|
|
Jeremy Levine
|
|
|
—
|
(1)
|
|
|
|
26,380
|
|
|
|
26,380
|
|
|
Mariam Naficy
|
|
|
22,500
|
|
|
|
|
—
|
|
|
|
22,500
|
|
____________________
|
(1)
|
The indicated non-employee
director elected to receive the following cash fees he or she was
otherwise entitled to receive in the form of a restricted stock unit, or
RSU, award of equivalent value (calculated as set forth under
“—
Director Compensation
Arrangements
—
Cash Compensation
” below): (a)
Mr. Anderson, $34,000; (b) Mr. Fenton, $30,000; (c) Mr. Gibbs, $29,000;
(d) Ms. Irvine, $60,000; and (e) Mr. Levine,
$25,000.
|
|
(2)
|
Mr. Donaker became a non-employee
director during 2016, but did not receive any additional compensation for
his service on the Board in 2016 due to his employment by the Company for
a portion of the year. He will be eligible to receive compensation for his
service on the Board beginning in 2017.
|
|
(3)
|
The amounts reported here do not
reflect the actual economic value realized by our directors. In accordance
with SEC rules, this column represents aggregate grant date fair value of
RSUs granted during the year ended December 31, 2016, calculated in
accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 718, or ASC 718, based on the closing price of our
common stock on the date of grant.
|
18
Table of Contents
|
(4)
|
The aggregate number of shares
subject to outstanding RSU awards held by non-employee directors as of
December 31, 2016 was as follows: (a) 427 shares of common stock for Mr.
Anderson; (b) 377 shares of common stock for Mr. Fenton; (c) 364 shares of
common stock for Mr. Gibbs; (d) 753 shares of common stock for Ms. Irvine;
and (e) 314 shares of common stock for Mr. Levine. Ms. Naficy did not hold
any outstanding stock awards as of December 31,
2016.
|
|
|
The aggregate number of shares
subject to outstanding stock option awards held by non-employee directors
as of December 31, 2016 was as follows: (a) 45,000 shares of common stock
for Mr. Gibbs; (b) 45,000 shares of common stock for Ms. Irvine; and (c)
22,500 shares of common stock for Ms. Naficy. No other non-employee
director held stock options as of December 31,
2016.
|
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. Mr. J. Stoppelman does not receive any
additional compensation for his service on the Board. As discussed above, Mr.
Donaker did not receive any additional compensation for his service on the Board
in 2016 due to his employment by the Company, but will be eligible to receive
compensation for his service on the Board beginning in 2017.
Cash Compensation
. Following Ms. Irvine’s appointment as Chairperson of the
Board at the end of 2015, the Compensation Committee undertook an evaluation of
our pay practices for Board and Board committee membership. In connection with
this evaluation, in the first quarter of 2016, the Compensation Committee
engaged Compensia, its independent compensation consultant, to provide a
compensation analysis consisting of Board compensation data from our 2016 peer
group companies (as detailed below under “
Executive Compensation—Compensation Discussion and Analysis—Compensation
Setting Process—Role of Compensation Consultant and Use of Market
Data
”). The Compensation Committee reviewed
this analysis of our Board compensation program and noted that our total cash
compensation fell below the 10
th
percentile of our peer group. After
considering this market data, as well as the time and responsibility
requirements of the various Board roles and committees, our Compensation
Committee recommended, and the Board approved, increases to the cash
compensation we provide to non-employee directors serving as Board Chairperson
or on the Audit Committee, which were effective for 2016 compensation. The
resulting cash fees for these roles approximated the 50
th
percentile
of cash retainer levels for corresponding roles at our peer group companies, as
reported in Compensia’s analysis, which the Compensation Committee determined to
be an appropriate benchmark to adequately compensate Board members. The 2016
increases to cash compensation were as follows:
|
●
|
$20,000 per year for service as chairperson of the
Board, up from zero in previous years;
|
|
●
|
$20,000 per year for service as chairperson of the Audit
Committee, up from $10,000 in previous years; and
|
|
●
|
$9,000 per year for service as a member of the Audit
Committee (other than as chairperson), up from $5,000 in previous years.
|
19
Table of Contents
Our Compensation Committee determined
that the cash compensation for other Board roles and the equity compensation
element of Board compensation were sufficient at present and did not make
changes to those elements of our Board compensation program, which are as
follows:
|
●
|
$20,000 per year for service as a Board member;
|
|
●
|
$10,000 per year for service as the chairperson of the
Compensation Committee;
|
|
●
|
$5,000 per year for service as a member of the
Compensation Committee (other than as chairperson) or chair of any other
committee; and
|
|
●
|
$2,500 per year for service as a member of any other
committee (other than as chairperson).
|
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 common stock with an equivalent value, issued in the form of
RSU awards that vest quarterly over the applicable year of service. Such
election must be made on an annual basis no later January 1 of the year for
which the election is being made. In 2016, the number of shares issued in lieu
of cash fees was calculated based on the average closing price of our common
stock on the NYSE over the 20 trading days prior to grant. Beginning in 2017,
the number of shares to be issued will instead be calculated based on the
average closing price of our common stock on the NYSE over the two calendar
months prior to grant, to conform to our general practice with respect to grants
to employees.
Equity Compensation
. Each non-employee director is also currently entitled to
receive an option to purchase 10,000 shares of our common stock every other year
on the date of our annual meeting of stockholders. Each such option vests 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 a one-time option grant of 25,000 shares of 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 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.
20
Table of Contents
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, 2017 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, 2016 and 2015 by
Deloitte & Touche LLP, our independent registered public accounting firm.
|
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(in
thousands)
|
|
Audit
Fees
(1)
|
|
|
$
|
1,425
|
|
|
|
$
|
1,350
|
|
|
Audit-related Fees
(2)
|
|
|
|
4
|
|
|
|
|
—
|
|
|
Tax
Fees
(3)
|
|
|
|
110
|
|
|
|
|
55
|
|
|
Total Fees
|
|
|
$
|
1,539
|
|
|
|
$
|
1,405
|
|
____________________
|
(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)
|
Audit-related Fees are fees
billed for the assurance and related services that are reasonably related
to the performance of the audit or review of our financial statements and
are not reported under “Audit Fees.”
|
|
(3)
|
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
2016 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.
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 accountant’s independence.
21
Table of
Contents
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 Committee’s 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.
REQUIRED VOTE
The affirmative vote of the holders of
a majority 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
22
Table of
Contents
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 Company’s stockholders are entitled to vote to approve, on an
advisory basis, the compensation of the Company’s 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 Compensation—Compensation
Discussion and Analysis
,” equity compensation
continued to be the principal component of our executive compensation program in
2016. 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.
Highlights of our executive
compensation program for 2016 include:
|
●
|
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
executive’s 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.
|
23
Table of
Contents
|
●
|
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 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.
|
We believe that our 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.
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 Company’s 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 a majority 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 2018 Annual
Meeting of Stockholders.
THE BOARD RECOMMENDS
A VOTE IN
FAVOR OF PROPOSAL NO. 3
24
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 March 1, 2017 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 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 March 1, 2017. Applicable percentages are based on 80,245,113 shares
of common stock outstanding on March 1, 2017. Shares subject to options
exercisable as of or within 60 days of March 1, 2017 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.
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.
|
Beneficial Owner
|
|
Number of Shares
|
|
Percent of
Total
|
|
Principal Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Stoppelman
|
|
|
5,902,319
|
(1)
|
|
|
|
7.2
|
%
|
|
|
The
Vanguard Group, Inc.
|
|
|
5,129,604
|
(2)
|
|
|
|
6.4
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Stoppelman
|
|
|
5,902,319
|
(1)
|
|
|
|
7.2
|
|
|
|
Charles Baker
|
|
|
132,538
|
(3)
|
|
|
|
*
|
|
|
|
Rob
Krolik
|
|
|
16,622
|
|
|
|
|
*
|
|
|
|
Joseph Nachman
|
|
|
331,548
|
(4)
|
|
|
|
*
|
|
|
|
Michael Stoppelman
|
|
|
446,796
|
(5)
|
|
|
|
*
|
|
|
|
Laurence Wilson
|
|
|
488,969
|
(6)
|
|
|
|
*
|
|
|
|
Diane M. Irvine
|
|
|
52,103
|
(7)
|
|
|
|
*
|
|
|
|
Fred D. Anderson, Jr.
|
|
|
2,576
|
(8)
|
|
|
|
*
|
|
|
|
Geoff Donaker
|
|
|
1,276,049
|
(9)
|
|
|
|
1.6
|
|
|
|
Peter Fenton
|
|
|
84,381
|
(10)
|
|
|
|
*
|
|
|
|
Robert Gibbs
|
|
|
41,155
|
(11)
|
|
|
|
*
|
|
|
|
Jeremy Levine
|
|
|
100,306
|
(12)
|
|
|
|
*
|
|
|
|
Mariam Naficy
|
|
|
14,531
|
(13)
|
|
|
|
*
|
|
|
|
All
executive officers and directors as a group (12 persons)
|
|
|
8,464,265
|
(14)
|
|
|
|
10.1
|
%
|
|
____________________
25
Table of
Contents
|
(1)
|
Consists of (a)
3,356,310 shares of common stock held by the Jeremy Stoppelman Revocable
Trust, over which Mr. J. Stoppelman retains sole voting and dispositive
power, and (b) 2,546,009 shares of common stock issuable upon exercise of
options exercisable within 60 days of March 1,
2017.
|
|
(2)
|
Based on information
contained in a Schedule 13G filed with the SEC on February 10, 2017, The
Vanguard Group, Inc. (“Vanguard”), an independent advisor, has sole voting
power over 37,142 shares, shared voting power over 8,324 shares, sole
dispositive power over 5,087,460 shares and shared dispositive power over
42,144 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary
of Vanguard, beneficially owns 33,820 shares as a result of its serving as
an investment manager of collective trust accounts. Vanguard Investments
Australia, Ltd., a wholly-owned subsidiary of Vanguard, beneficially owns
11,646 shares as a result of its serving as an investment manager of
Australian investment offerings. The Schedule 13G filed by Vanguard
provides information only as of December 31, 2016 and, consequently, the
beneficial ownership of Vanguard may have changed between December 31,
2016 and March 1, 2017. The address of Vanguard is 100 Vanguard Blvd.,
Malvern, Pennsylvania 19355.
|
|
(3)
|
Consists of (a)
129,038 shares of common stock held by Mr. Baker, all of which are
underlying RSUs that remain subject to vesting requirements (none of which
are expected to vest within 60 days of March 1, 2017), and (b) 3,500 shares of
common stock held by Mr. Baker’s family trust, over which Mr. Baker
exercises shared voting and dispositive control.
|
|
(4)
|
Consists of (a)
149,904 shares of common stock, including 118,840 shares underlying RSUs
that remain subject to vesting requirements (none of which are expected to
vest within 60 days of March 1, 2017), and (b) 181,644 shares of common
stock issuable upon exercise of options exercisable within 60 days after
March 1, 2017.
|
|
(5)
|
Consists of (a)
117,647 shares of common stock, including 94,382 shares underlying RSUs
that remain subject to vesting requirements (none of which are expected to
vest within 60 days of March 1, 2017), and (b) 329,149 shares of common
stock issuable upon exercise of options exercisable within 60 days after
March 1, 2017.
|
|
(6)
|
Consists of (a)
185,075 shares of common stock held by Mr. Wilson, including 95,429 shares
underlying RSUs that remain subject to vesting requirements (none of which
are expected to vest within 60 days of March 1, 2017), (b) 220,436 shares
of common stock issuable to Mr. Wilson upon exercise of options
exercisable within 60 days after March 1, 2017, (c) 38,271 shares of
common stock held by Mr. Wilson’s spouse, including 27,209 shares
underlying RSUs that remain subject to vesting requirements (none of which
are expected to vest within 60 days of March 1, 2017), and (d) 45,187
shares of common stock issuable to Mr. Wilson’s spouse upon exercise of
options exercisable within 60 days after March 1, 2017. As spouses, Mr.
Wilson and his spouse may be deemed to beneficially own the shares of our
common stock that are held by the other spouse. Mr. Wilson and his spouse
disclaim beneficial ownership of the shares of our common stock that are
held by the other spouse.
|
|
(7)
|
Consists of (a) 13,145
shares of common stock, including 1,533 shares underlying RSUs that remain
subject to vesting requirements (none of which are expected to vest within
60 days of March 1, 2017), and (b) 38,958 shares of common stock issuable
upon exercise of options exercisable within 60 days after March 1,
2017.
|
|
(8)
|
Includes 869 RSUs that
remain subject to vesting requirements (none of which are expected to vest
within 60 days of March 1, 2017).
|
|
(9)
|
Consists of (a) 5,079
shares of common stock held by Mr. Donaker, including 511 shares
underlying RSUs that remain subject to vesting requirements (none of which
are expected to vest within 60 days of March 1, 2017), (b) 397,940 shares
of common stock held by Mr. Donaker’s family trust, over which Mr. Donaker
exercises shared voting and dispositive control, and (c) 873,030 shares of
common stock issuable upon exercise of options exercisable within 60 days
after March 1, 2017.
|
26
Table of
Contents
|
(10)
|
Consists of (a) 2,273
shares of common stock held by Mr. Fenton, including 767 shares underlying
RSUs that remain subject to vesting requirements (none of which are
expected to vest within 60 days of March 1, 2017), and (b) 82,108 shares
of common stock held by Mr. Fenton’s family trust, over which Mr. Fenton
exercises shared voting and dispositive
control.
|
|
(11)
|
Consists of (a) 2,197
shares of common stock, including 741 shares underlying RSUs that remain
subject to vesting requirements (none of which are expected to vest within
60 days of March 1, 2017), and (b) 38,958 shares of common stock issuable
upon exercise of options exercisable within 60 days after March 1,
2017.
|
|
(12)
|
Includes 639 RSUs that
remain subject to vesting requirements (none of which are expected to vest
within 60 days of March 1, 2017).
|
|
(13)
|
Consists of shares of
common stock issuable upon exercise of options exercisable within 60 days
after March 1, 2017.
|
|
(14)
|
Consists of (a)
4,490,004 shares of common stock, including 487,648 shares underlying RSUs
that remain subject to vesting requirements (none of which are expected to
vest within 60 days of March 1, 2017), and (b) 4,306,572 shares of common
stock issuable upon exercise of options exercisable within 60 days after
March 1, 2017.
|
27
Table of
Contents
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, 2016, all
Section 16(a) filing requirements applicable to our officers, directors and
greater than ten percent stockholders were complied with, except that one report
was filed late by each of Messrs. Nachman, M. Stoppelman and Wilson due to an
administrative error.
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
|
|
|
|
Options and Rights
|
|
Options and Rights
|
|
Reflected in Column (a))
|
|
Plan Category
|
|
(a)
|
|
(b)(1)
|
|
|
(c)
|
|
|
|
Equity compensation plans
approved by stockholders
|
|
|
15,102,408
|
(2)
|
|
|
|
$
|
19.1788
|
|
|
|
5,686,784
|
(3)
|
|
|
Equity compensation plans not approved
by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Total
|
|
|
15,102,408
|
|
|
|
|
$
|
19.1788
|
|
|
|
5,686,784
|
|
|
____________________
|
(1)
|
The weighted average exercise
price excludes RSU awards, which have no exercise
price.
|
|
(2)
|
Consists of options to purchase a
total of 8,018,941 shares of common stock and 7,083,467 shares of common
stock subject to RSU awards under our 2012 Equity Incentive Plan, as
amended, or 2012 Plan. Excludes purchase rights currently accruing under
our 2012 Employee Stock Purchase Plan, or 2012 ESPP. Each offering under
our 2012 ESPP consists of one six-month purchase period and eligible
employees may purchase shares of our common stock at a price equal to 85%
of the fair market value of our common stock at the beginning of each
offering period.
|
|
(3)
|
Consists of 2,794,275 shares of
common stock reserved for issuance under our 2012 Plan and 2,892,509
shares of common stock reserved for issuance under our 2012
ESPP.
|
|
|
The number of shares of our
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 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. Pursuant to the terms of our 2012 Plan, an
additional 5,560,088 shares of common stock were added to the number of
shares reserved for issuance under the 2012 Plan, effective January 1,
2017.
|
|
|
The number of shares of our
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
common stock; or (c) such lesser number as determined by the Board.
Pursuant to the terms of our 2012 ESPP, an additional 1,588,596 shares of
common stock were added to the number of shares reserved for issuance
under the 2012 ESPP, effective January 1,
2017.
|
28
Table of
Contents
EXECUTIVE OFFICERS
The names, ages and certain other
information concerning our executive officers as of April 17, 2017 are set forth
below.
|
Name
|
|
Age
|
|
Position Held With the
Company
|
|
Jeremy
Stoppelman
|
|
39
|
|
Co-Founder and Chief
Executive Officer
|
|
Charles (“Lanny”) Baker
|
|
50
|
|
Chief Financial Officer
|
|
Joseph R. (“Jed”)
Nachman
|
|
44
|
|
Chief Operating
Officer
|
|
Alan Ramsay
|
|
48
|
|
Chief Accounting Officer
|
|
Laurence Wilson
|
|
44
|
|
Senior Vice President,
Legal and User Operations, General Counsel and
Secretary
|
There are no family relationships between
any of our directors and any of our current executive officers.
Jeremy Stoppelman
. Biographical information regarding Mr. Stoppelman is set
forth under “
Proposal No. 1—Election of
Directors
.”
Lanny Baker
has served as our Chief Financial Officer since April 2016. Prior to
joining us, Mr. Baker served as Chief Executive Officer and President of
ZipRealty, Inc., an online real estate brokerage and technology company, from
September 2010 through March 2016. He also served as Executive Vice President
and Chief Financial Officer of ZipRealty from December 2008 to September 2010.
ZipRealty was acquired by Realogy Holdings, Inc. in August 2014. From June 2007
to December 2008, Mr. Baker was an independent investor. From March 2005 to June
2007, he served as Senior Vice President and Chief Financial Officer of Monster
Worldwide, Inc., which operates the employment website monster.com. From 1993 to
2005, Mr. Baker held various positions at Salomon Brothers (subsequently Salomon
Smith Barney, then Citigroup), including Managing Director in the Equity
Research Department. Mr. Baker currently serves on the board of XO Group, Inc.,
a life stage consumer Internet and media company, where he chairs the Audit and
Nominating and Corporate Governance Committees. He also served as a director and
chairman of the Audit Committee of HomeAway, Inc., an online vacation rental
company, from 2011 to December 2015, when it was acquired by Expedia, Inc. Mr.
Baker holds a B.A. from Yale College and holds the designation of Chartered
Financial Analyst.
Jed Nachman
has served as our Chief Operating Officer since August 2016 and
previously served as our Chief Revenue Officer from January 2016 to August 2016,
Senior Vice President of Revenue from September 2011 to January 2016 and Vice
President of Sales from January 2007 to September 2011. Prior to joining us, Mr.
Nachman held several senior sales roles at Yahoo! from January 2002 to January
2007, most recently as Director of Corporate Sales for the Western Region for
Yahoo! HotJobs, an online job search company. Prior to Yahoo!, Mr. Nachman
served as sales manager at HotJobs from June 1999 to 2002, when it was acquired
by Yahoo! Prior to HotJobs, Mr. Nachman was an associate at Robertson Stephens
from 1996 to 1998. Mr. Nachman holds a B.A. in Economics from the University of
Colorado at Boulder.
Alan Ramsay
has served as our Chief Accounting Officer since March 2017. Prior to
his appointment as Chief Accounting Officer, Mr. Ramsay served as our Vice
President, Accounting from January 2016 to March 2017 and Corporate Controller
from July 2012 to December 2015. Prior to joining us, Mr. Ramsay was an
independent consultant providing finance and accounting services to technology
companies from January 2011 to July 2012, and held several senior accounting
roles for Granite Construction Inc., a heavy civil construction company, from
October 2001 to December 2010. Mr. Ramsay is a California C.P.A. (inactive) and
holds a B.S. in Accounting and Finance from the University of Arizona and an
M.B.A. in Finance from the Wharton School of Business at the University of
Pennsylvania.
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.
29
Table of
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Our compensation discussion and analysis
describes our executive compensation program and the decisions in 2016 regarding
compensation for our named executive officers:
|
●
|
Jeremy Stoppelman, our Chief Executive
Officer;
|
|
●
|
Lanny Baker, our Chief Financial
Officer;
|
|
●
|
Rob Krolik, our former Chief Financial
Officer;
|
|
●
|
Jed Nachman, our Chief Operating
Officer;
|
|
●
|
Michael Stoppelman, our former Senior Vice President, Engineering;
and
|
|
●
|
Laurence Wilson, our Senior Vice President, Legal and User
Operations, General Counsel and Secretary.
|
Executive Summary
During 2016, we continued to transform the
way people discover, engage and transact with great local businesses. Highlights
of our company performance in 2016 include:
|
●
|
We generated net revenue of $713.1 million, representing 30% growth
over 2015.
|
|
●
|
We continued to see strong growth in our non-financial metrics,
including:
|
|
|
○
|
Cumulative reviews grew 27%
year-over-year to approximately 121 million at the end of
2016;
|
|
|
○
|
Unique mobile devices accessing our
mobile app grew 20% year-over-year in the fourth quarter of 2016 to
approximately 24 million on a monthly average basis; and
|
|
|
○
|
The number of pages viewed per user
increased nearly 20% in the fourth quarter of 2016 compared to the same
period in 2015.
|
|
●
|
We expanded our transactions capabilities by increasing the number
of transactions-enabled businesses and categories, as well as streamlining
the checkout process, which resulted in consumers completing over 40% more
transactions through the Yelp Platform, Yelp Eat24 and Yelp Reservations
in 2016 than in the prior year.
|
|
●
|
We began broadening our sales strategy by developing new sales
channels, such as our self-serve advertising channel, through product
improvements to facilitate sales to franchised businesses and by expanding
our client partner team to further address the revenue opportunity from
existing customers.
|
|
●
|
We expanded our portfolio of revenue-generating products with the
Yelp Knowledge program, which offers local analytics and insights through
access to our historical data.
|
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 2016 include:
|
●
|
Mr. J. Stoppelman continued to receive a nominal base salary of
$1.00 per year, supplemented by a stock option award with a two-year
monthly vesting schedule designed to provide a medium-term incentive to
balance his lack of meaningful cash compensation.
|
30
Table of
Contents
|
●
|
With the exception of Mr. J. Stoppelman, each of our named
executive officers received the same annualized base salary in 2016,
reflecting our philosophy of internal pay equity.
|
|
●
|
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 — other than
Messrs. Baker and Krolik — to meet our incentive goals. The form, mix and
vesting schedules of these awards reflected our general practices with
respect to non-executive refresh equity awards.
|
|
●
|
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 executive’s 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 for Mr. J. Stoppelman in connection
with the reduction of his salary 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 2016 say-on-pay vote,
our executive compensation was approved by approximately 95% of the votes
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
a reference 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.
|
31
Table of
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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.
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 teamwork;
|
|
●
|
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 our 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.
|
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.
32
Table of
Contents
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 2015, in
anticipation of making executive compensation decisions for 2016, 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 2016, 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 to ensure that the compensation of our
executive officers remains competitive and that we are meeting our
retention objectives;
|
|
●
|
each executive officer’s existing equity awards and stock holdings
(including the unvested portions); and
|
|
●
|
the potential dilutive effect of equity awards on our stockholders.
|
Although Mr. M. Stoppelman was not
determined to be an executive officer until August 2016, our Compensation
Committee nonetheless reviewed and approved his compensation prior to that time,
as described below, due to his family relationship to Mr. J. Stoppelman. While
the payment of compensation for service as an employee is not covered by our
Related-Person Transaction Policy (see “
Transactions with Related Persons—Related-Person Transactions Policy and
Procedures
” below), our Compensation
Committee agreed that this process would be appropriate to avoid any appearance
of a conflict of interest in senior management setting Mr. M. Stoppelman’s
compensation, as would be typical for other non-executive employees.
Role of Management
In general, 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 executive’s job duties,
company-wide pay levels and benefits, current cash constraints, each executive
officer’s 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. In the case of establishing a
new hire package for Mr. Baker, our new Chief Financial Officer, our
then-current Chief Operating Officer Geoff Donaker took on the responsibility of
working with finance and human resources to assemble management’s recommendation
to our Compensation Committee regarding appropriate compensation for Mr. Baker.
33
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 officer’s compensation package.
Say-on-Pay Vote in 2016
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 2016. 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 2016 Annual
Meeting of Stockholders, approximately 95% of the votes 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 2016 following the
vote, or for 2017. 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.
34
Table of Contents
2016 Compensation
Analysis
. In September 2015, 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. Based on Compensia’s recommendations, our Compensation
Committee approved the following peer company group:
|
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.
|
|
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, and
generally met the following criteria:
|
|
|
|
|
Revenue
Over
|
|
Market
|
|
|
|
Group
|
|
Industries
|
|
Previous Four Quarters
(1)
|
|
Capitalization
(1)
|
|
Other Criteria
|
|
2016 Peer
Companies
|
|
Internet Software
and
|
|
$126M – $3.2B
|
|
$1.1B – $6.1B
|
|
Annual revenue
|
|
|
|
Services
|
|
|
|
|
|
growth >10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Application and Systems
|
|
$434M median
|
|
$1.974B median
|
|
Market cap ≥ 2x
|
|
|
|
Software
|
|
|
|
|
|
annual
revenue
|
____________________
|
(1)
|
As of October 16,
2015
|
By comparison, at the time of the
Compensation Committee’s review, our net revenue over the previous four quarters
was approximately $465 million (representing 56% year-over-year growth) and our
market capitalization was approximately $1.7 billion (representing 3.7x our net
revenue).
35
Table of Contents
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 (other than Mr. Baker, who was not yet employed by
the Company, and Mr. M. Stoppelman, who was not considered an executive officer
at that time), as well as an overview of market trends. Compensia based its
analysis on market data for the peer group companies listed above. In addition,
Compensia provided a supplemental report that contained a similar analysis of
the compensation of our non-executive senior management, including Mr. M.
Stoppelman. The analysis in this supplemental report was based on market data from the Radford Technology survey
for three sets of companies:
|
|
|
|
|
|
|
Revenue
Over
|
|
|
|
|
|
Number of
|
|
|
|
Previous
Four
|
|
Market
|
|
Group
|
|
Companies
|
|
Industries
|
|
Quarters
(1)
|
|
Capitalization
(1)
|
|
Primary Group
|
|
|
|
|
|
|
|
|
|
Narrow Cut
|
|
14
|
|
|
|
$178M – $1.8B
|
|
$1.2B – $21B
|
|
|
|
|
|
Internet Software and Services
|
|
$537M median
|
|
$4.8B median
|
|
|
|
|
|
|
|
|
|
|
|
Broad Cut
|
|
71
|
|
Application and Systems
Software
|
|
$160M – $1.3B
|
|
$358M – $8.5B
|
|
|
|
|
|
|
|
$467M median
|
|
$1.8B median
|
|
Secondary Group
|
|
|
|
|
|
|
|
|
|
Next-Stage Companies
|
|
11
|
|
Internet Software and
Services
|
|
$224,337M – $2,561M
|
|
$99,194M – $2,211M
|
|
|
|
|
|
Application and Systems
Software
|
|
$14,640M median
|
|
$51,988M
median
|
The market data from the primary group
of companies provided reference points for businesses at similar stage of growth
and financial profile to Yelp, with the narrow cut of companies representing
close business and regional-based talent competitors and the broad cut of
companies including a broader set of companies selected based on similar
business and financial metrics. The secondary group consisted of very large
technology companies that were identified as key talent competitors. To account
for the larger size of the companies in the secondary group, the compensation of
our non-executive senior managers was compared against second-level executive roles at the
secondary group companies. For example, Mr. M. Stoppelman’s compensation was
compared against second-level engineering executives rather than the top
engineering positions at those companies.
36
Table of Contents
All cash compensation data used in both
analyses reflected a three percent upward adjustment from the compensation
levels disclosed by such companies, which Compensia applied to update the data
for 2016. Compensia based this adjustment factor on published trends and its
experience in analyzing compensation trends. Our Compensation Committee reviewed
Compensia’s analyses and market data in its evaluation of our executive
compensation program for 2016, but did not benchmark to any particular level.
2017 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
2017, our Compensation Committee engaged Compensia again in September 2016 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 Compensia’s
recommendations, our Compensation Committee approved an updated peer group for
2017 reflecting our then-current annual net revenue and market capitalization.
The 2017 peer company group consists of the following publicly traded companies:
|
Box Inc.
|
Groupon, Inc.
|
RealPage, Inc.
|
The Ultimate Software Group,
Inc.
|
|
|
|
|
|
|
Cornerstone OnDemand, Inc.
|
GrubHub Inc.
|
Shutterstock, Inc.
|
Web.com Group, Inc.
|
|
|
|
|
|
|
CoStar Group, Inc.
|
New Relic, Inc.
|
Splunk Inc.
|
WebMD Health Corp.
|
|
|
|
|
|
|
Etsy Inc.
|
Pandora Media, Inc.
|
Synchronoss Technologies
Inc.
|
Zendesk, Inc.
|
|
|
|
|
|
|
FireEye, Inc.
|
Proofpoint, Inc.
|
Tableau Software Inc.
|
Zillow Group,
Inc.
|
Of the five companies from our 2016
peer group that were not included in the 2017 peer group, two were removed
because they no longer met our revenue parameters and three were removed as a
result of being acquired. The new companies added to the 2017 peer group were
chosen based on meeting industry, revenue, market capitalization and other
criteria.
Independence
Assessment
. In March 2016, 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 Compensia’s
total revenue; (iii) Compensia’s 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.
37
Table of Contents
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 executive’s 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 officer’s 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 2016, our Compensation Committee
reviewed our executive officers’ base salaries, with the exceptions of Messrs.
Baker and Krolik, as part of its annual review of our executive compensation.
The Compensation Committee did not review Mr. Krolik’s salary at that time as a
result of his upcoming departure from the Company, while Mr. Baker’s base salary
was set in connection with the negotiation of his offer letter as described
below.
The following table shows each named
executive officer’s base salary for 2015 and 2016:
|
|
|
2015 Base
|
|
2016
Base
|
|
Name
|
|
Salary ($)
|
|
Salary ($)
|
|
Jeremy
Stoppelman
|
|
1
|
|
1
|
|
Lanny Baker
|
|
N/A
|
|
325,000
|
|
Jed Nachman
|
|
325,000
|
|
325,000
|
|
Michael Stoppelman
|
|
325,000
|
|
325,000
|
|
Laurence Wilson
|
|
325,000
|
|
325,000
|
Jeremy Stoppelman
. As part of its annual review of his compensation, the
Compensation Committee considered whether it would be appropriate to continue to
honor Mr. J. Stoppelman’s request for a nominal base salary. Although this
arrangement conserves our cash resources and allows Mr. J. Stoppelman to
continue to signal his 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 Mr. J. Stoppelman’s personal wealth
continued to be tied directly to our stock performance, potentially encouraging
him to emphasize short-term performance at the expense of long-term value
creation.
38
Table of Contents
Our Compensation Committee continued to
believe, however, that this potential risk could be effectively addressed
through the equity compensation awarded to Mr. J. Stoppelman. Although Mr. J.
Stoppelman’s outstanding equity awards would fully vest within a year, and he
did not receive any new long-term stock options at that time for reasons
discussed under “Equity Compensation” below, our Compensation Committee did
grant him a new supplemental option award with a shorter two-year vesting schedule to strengthen Mr.
J. Stoppelman’s medium-term incentives, thereby mitigating the risk of him
focusing disproportionately on short-term results, and to balance the lack of
meaningful cash compensation. Based on this determination, our Compensation
Committee approved the continued payment of a nominal base salary to Mr. J.
Stoppelman.
Lanny Baker
. While Mr. Baker’s initial base salary reflects only one
element of the new hire package arrived at through individual negotiations with
Mr. Baker, our Compensation Committee’s primary objective with respect to his
cash compensation was to maintain internal pay equity. As a new member of the
executive team, management recommended and our Compensation Committee agreed
that setting Mr. Baker’s base salary at parity with our other executive officers
(aside from Mr. J. Stoppelman) would be appropriate to promote team
work.
Jed Nachman, Michael Stoppelman and
Laurence Wilson
. Our Compensation Committee
decided not to increase Messrs. Nachman’s, Stoppelman’s or Wilson’s base salary
for 2016 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 each of
their base salaries fell below the 25th percentile of target total cash
compensation levels reported in Compensia’s 2016 executive compensation analysis
for Messrs. Nachman and Wilson, and its 2016 supplemental analysis of senior
management compensation for Mr. M. Stoppelman. As in prior years, although their
cash compensation remained comparatively low, our Compensation Committee
concluded that Messrs. Nachman’s, Stoppelman’s and Wilson’s total compensation
was adequate in light of the substantial equity awards being made to each of
them in 2016, as described under “Equity Compensation” below.
2017 Base Salaries
. In the first quarter of 2017, our Compensation Committee
reviewed our executive officers’ base salaries as part of its annual review of
our executive compensation program and decided not to make any changes for 2017.
In particular, it determined that it was appropriate to continue honoring Mr. J.
Stoppelman’s request for a nominal base salary in light of the substantial
equity awards granted to him that year, and that the other executive officers’
base salaries provided sufficient cash compensation at present.
Incentive Cash Compensation
Historically, we have not offered
incentive cash compensation opportunities to our executive officers. Our
Compensation Committee revisited this practice in setting 2016 and 2017
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 2016. 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.
39
Table of Contents
Equity Compensation
The primary component of our executive
compensation program is equity awards. 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 team’s focus and contributions
with our long-term interests and those of our stockholders.
In determining the form, size and
material terms of executive equity awards, our Compensation Committee may
consider, among other things, the executive officer’s 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
executive’s job duties, the executive officer’s 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.
Historically, equity awards to our
executive officers have been primarily in the form of stock options, which have
an exercise price not less than the fair market value of our common stock on the
date of grant. As a result, stock options 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.
Beginning in 2015, our Compensation Committee began splitting the equity awards
to certain of our executive officers between stock options and RSUs to reflect
our general practice with respect to refresh grants for employees at the
director level and above and to mitigate the effects of the extreme volatility
in our stock price. These RSUs also vest over four years.
In the first quarter of 2016, our
Compensation Committee reviewed the then-current equity compensation
opportunities and holdings of each of our executive officers, with the
exceptions of Messrs. Krolik and Baker for the reasons noted above.
Jeremy Stoppelman
. In its review of Mr. J. Stoppelman’s equity holdings, our
Compensation Committee noted that his outstanding equity awards would fully vest
within the following year. Additionally, our Compensation Committee had
previously determined in 2015 that a new equity award for Mr. J. Stoppelman
would be appropriate to meet our long-term retention goals and provide
sufficient incentive opportunities, but had elected to grant him only a
supplemental stock option award with a medium-term vesting schedule that year 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. Although our Compensation Committee had
intended to revisit granting a long-term equity award for Mr. J. Stoppelman in
2016, it decided to further defer granting such an award given the compensation
expense associated with Mr. Krolik’s departure and the expected expense of new
hire equity awards for a new Chief Financial Officer, with the firm expectation
of granting Mr. J. Stoppelman a long-term award in 2017. However, in order to
balance his lack of meaningful cash compensation, our Compensation Committee
granted Mr. J. Stoppelman a stock option award covering the number of shares of
common stock set forth in the table below, which vests monthly over two years
following the date of grant. With its shorter vesting period and equal monthly
vesting installments, our Compensation Committee designed this award to provide
a medium-term incentive linked to our stock performance.
40
Table of Contents
Lanny Baker
. While the size and mix of Mr. Baker’s initial equity awards
were the result of individual negotiations with Mr. Baker, these negotiations
were shaped by management’s recommendation, and our Compensation Committee’s
agreement, that internal pay equity among the executive officers be maintained.
Specifically, both management and our Compensation Committee approached
discussions regarding Mr. Baker’s equity awards according to our philosophy that
his compensation should reflect the importance of his role as compared to the
roles of the other executives, while at the same time providing a certain amount
of parity to promote teamwork. Following these negotiations, our Compensation
Committee granted Mr. Baker a stock option award and an RSU award in the amounts
set forth in the table below, with Mr. Baker’s resulting annualized total
compensation opportunity generally in line with, but slightly higher than, the
annualized total compensation opportunity of executives other than Mr. J.
Stoppelman. In addition, these awards reflected our general practice of
splitting equity awards between options and RSUs for employees at the director
level and above. Both equity awards vest over four years, with 25% of each award
vesting after approximately one year of employment, after which the option vests
in equal monthly installments and the RSUs vest in equal quarterly installments
for the remainder of the vesting period. These are the vesting schedules
generally applicable to new hire equity awards for non-executive employees.
Jed Nachman, Michael Stoppelman and
Laurence Wilson
. Although Messrs. Nachman, M.
Stoppelman and Wilson received equity awards in 2015 and held options that
generally would not fully vest for another three years, our Compensation
Committee noted that a substantial portion of their outstanding stock options
had exercise prices above or nearly above recent market prices for the Company’s
stock, greatly reducing the then-current value of these awards. The Compensation Committee
also considered that the Company had moved to annual refresh awards for
non-executive employees generally to provide attractive compensation
opportunities in a competitive market. Taking these factors into account, and
using the 2016 compensation analyses from Compensia as general guidelines, our
Compensation Committee granted Messrs. Nachman, M. Stoppelman and Wilson each a
new stock option award and an RSU award, in the amounts set forth in the table
below. Each of these awards vests over four years, with the options vesting in
equal monthly installments and the RSUs vesting in equal quarterly installments.
Our Compensation Committee determined
that the size of these awards and their vesting schedules, which are generally
applicable to non-executive employee refresh equity awards, would appropriately
address the need to provide these executives with meaningful incentive
opportunities and to motivate them to achieve our business objectives in the
absence of cash incentive opportunities. The relative sizes of the awards
reflect our Compensation Committee’s recognition of the increasing
responsibilities assumed by Mr. Nachman in connection with his appointment as
Chief Operating Officer and the highly competitive market for senior engineering
positions with respect to Mr. M. Stoppelman. The mix of stock options and RSUs
reflects a 75%-RSUs / 25%-options split (based on value rather than number of shares),
which also reflects our general practice with respect to refresh grants for
employees at the director level and above.
|
|
|
|
|
Shares Issuable
|
|
Shares Subject to
|
|
|
|
Exercise Price of
|
|
upon Exercise of
|
|
2016 Restricted
|
|
Name
|
|
2016 Option
Grants
|
|
2016 Option
Grants
|
|
Stock Unit
Awards
|
|
Jeremy
Stoppelman
|
|
|
$
|
20.47
|
|
|
|
426,200
|
|
|
|
—
|
|
|
Lanny Baker
|
|
|
$
|
21.51
|
|
|
|
281,150
|
|
|
|
129,038
|
|
|
Jed Nachman
|
|
|
$
|
20.47
|
|
|
|
53,300
|
|
|
|
73,356
|
|
|
Michael Stoppelman
|
|
|
$
|
20.47
|
|
|
|
46,650
|
|
|
|
64,186
|
|
|
Laurence Wilson
|
|
|
$
|
20.47
|
|
|
|
40,000
|
|
|
|
55,017
|
|
41
Table of Contents
2017 Equity Awards
. In the first quarter of 2017, our Compensation Committee
reviewed the then-current equity compensation opportunities and holdings of each
of our executive officers, with the exception of Mr. M. Stoppelman, who had
announced his decision to step down from his role as our Senior Vice President,
Engineering. Based on this review, our Compensation Committee determined that it
would be advisable to grant awards to Messrs. J. Stoppelman, Nachman and Wilson.
Our Compensation Committee did not to grant any additional award to Mr. Baker in
light of his recent new hire equity awards.
Using the 2017 compensation analysis
from Compensia as a general reference, and taking into account the need to both
provide Mr. J. Stoppelman with a long-term incentive and compensate him for not
receiving a new long-term equity award as expected in 2016, our Compensation
Committee granted Mr. J. Stoppelman two stock options in the amounts set forth
below. The stock option covering 347,650 shares vests over 36 months following
the date of grant, as follows: (a) 35% of the shares will vest in equal
monthly installments over the first 12 months
following the date of grant; (b) 45% of the shares will vest in equal monthly
installments over the second 12 months following the date of grant; and (c) the
remaining 20% of the shares will vest in equal monthly installments over the
third 12 months following the date of grant. The stock option covering 305,950
shares will vest in equal monthly installments over four years following the
date of grant. Together with his 2016 equity award, these stock option awards
will give Mr. J. Stoppelman staggered, medium- and long-term incentive
opportunities that balance his lack of meaningful cash compensation as well as
address our long-term retention goals.
Also using the 2017 compensation
analysis from Compensia as a reference, our Compensation Committee granted
Messrs. Nachman and Wilson each a new stock option and RSU award, in the amounts
set forth in the table below. The relative sizes of these awards again recognize
Mr. Nachman’s increased responsibilities at a time of rapid organizational
expansion, and Mr. Nachman’s mix of equity awards continues to follow the
75%-RSUs / 25%-options split described above, while Mr. Wilson’s mix reflects
his preference that his awards be weighted toward RSUs. As in 2016, each of
these awards vests over four years, with the shares underlying the options
vesting in equal monthly installments and the shares covered by the RSUs vesting
in equal quarterly installments.
|
|
|
|
|
Shares Issuable
|
|
Shares Subject to
|
|
|
|
Exercise
Price of
|
|
upon Exercise of
|
|
2017 Restricted
|
|
Name
|
|
2017 Option Grants
|
|
2017 Option
Grants
|
|
Stock Unit
Awards
|
|
Jeremy
Stoppelman
|
|
$
|
34.66
|
|
|
|
347,650
|
|
|
|
—
|
|
|
|
|
$
|
34.66
|
|
|
|
305,950
|
|
|
|
—
|
|
|
Lanny Baker
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Jed Nachman
|
|
$
|
34.66
|
|
|
|
83,450
|
|
|
|
38,628
|
|
|
Laurence Wilson
|
|
$
|
34.66
|
|
|
|
20,900
|
|
|
|
28,971
|
|
42
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 Arrangements—Severance
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.
Krolik Transition
. 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 Krolik Transition Agreement. For a summary
of the material terms and conditions of the Krolik Transition Agreement, see
“—Compensation Plans and
Arrangements—Severance Arrangements—Krolik Transition Agreement
” below. The terms of the Krolik Transition Agreement were the
result of individual negotiations with Mr. Krolik and reflected the Board’s
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.
Michael Stoppelman Transition
Agreement
. In February 2017, Mr. M.
Stoppelman notified us of his resignation, which would be effective as of March
2, 2017. For a summary of the material terms and conditions of Mr. M.
Stoppelman’s transition agreement, see
“—Compensation Plans and Arrangements—Severance Arrangements—Michael
Stoppelman Transition Agreement
” below. While
the terms of his transition agreement were the result of individual negotiations
with Mr. M. Stoppelman and reflected our Compensation Committee’s discretionary
judgment regarding the appropriate compensation for Mr. M. Stoppelman during his
transition, they generally reflected the separation terms offered to other
senior employees who recently left the Company, such as Mr. Donaker, our former
Chief Operating Officer.
43
Table of Contents
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. Baker, Krolik, Nachman and Wilson each received the
full 401(k) company match in 2016. 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 2016, 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. J. Stoppelman, Krolik, M. Stoppelman 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 Mr. J. Stoppelman’s base salary
to a nominal amount, our Compensation Committee approved payment of his monthly
parking fees. The actual amount received by Mr. J. Stoppelman in 2016 is set
forth in the Summary Compensation Table below.
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. Nachman’s 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. Nachman’s compensation during his
secondment and in connection with his return were the result of individual
negotiations with him, they generally reflected benefits we typically provide to
employees we require 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 current executive officers
collectively owned outright approximately 5.5% of our stock as of March 1,
2017.
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 grant
date for equity awards approved by written consent will generally be either the
fifth or tenth business day of the month in which the consent is effective,
provided that if the consent is not effective until after the tenth business day
of the month, the grant date will be the fifth business day of the following
month.
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Table of Contents
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.
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 2016, 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.
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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, 2016.
|
|
Respectfully submitted,
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The Compensation Committee of the Board of
Directors
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Peter Fenton, Chair
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Fred D. Anderson,
Jr.
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____________________
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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, 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 2017, 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 sales compensation
plans, as well as our alignment with market pay levels and compensation program
designs.
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 Mr. J.
Stoppelman’s nominal base salary to encourage unnecessary risk taking is
effectively mitigated by his 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.
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Table of Contents
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, 2016, 2015 and 2014.
2016 Summary Compensation
Table
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Stock
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|
Option
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|
All Other
|
|
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|
Name
|
|
Year
|
|
Salary ($)
|
|
Awards
($)(1)
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|
Awards
($)(1)
|
|
Compensation
($)(2)
|
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Total ($)
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Jeremy
Stoppelman
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2016
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1
|
|
|
|
—
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|
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3,670,221
|
|
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59,057
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(3)
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3,729,279
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Chief Executive
Officer
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2015
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1
|
|
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—
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|
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852,112
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67,202
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|
|
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919,315
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|
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2014
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1
|
|
|
|
—
|
|
|
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—
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|
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66,912
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|
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66,913
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Lanny Baker
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2016
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230,208
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|
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2,775,607
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2,655,968
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|
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13,656
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|
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5,675,439
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Chief Financial
Officer
|
|
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|
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|
|
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|
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|
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Rob Krolik
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2016
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311,458
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593,100
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—
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28,815
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(4)
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933,373
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Former Chief Financial
Officer
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2015
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325,000
|
|
|
|
—
|
|
|
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86,257
|
|
|
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15,420
|
|
|
|
426,677
|
|
|
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2014
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|
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325,000
|
|
|
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—
|
|
|
|
—
|
|
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13,533
|
|
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338,533
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Jed Nachman
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2016
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325,000
|
|
|
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1,501,597
|
|
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476,337
|
|
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261,185
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(5)
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2,564,119
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Chief Operating
Officer
|
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2015
|
|
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325,000
|
|
|
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2,169,941
|
|
|
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639,084
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|
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48,289
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(6)
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3,182,314
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|
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2014
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319,046
|
|
|
|
—
|
|
|
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—
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627,307
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(7)
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946,353
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Michael
Stoppelman
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2016
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325,000
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1,313,887
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416,906
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7,200
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|
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2,062,994
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Former Senior Vice
President,
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Engineering
|
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|
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Laurence Wilson
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2016
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325,000
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|
|
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1,126,198
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357,476
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|
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7,973
|
|
|
|
1,816,647
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Senior Vice
President,
|
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2015
|
|
|
325,000
|
|
|
|
2,169,941
|
|
|
|
639,084
|
|
|
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7,983
|
|
|
|
3,142,008
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General Counsel and
Secretary
|
|
2014
|
|
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325,000
|
|
|
|
—
|
|
|
|
—
|
|
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8,233
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|
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333,233
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____________________
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(1)
|
The amounts reported in this
column 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 14,
“Stockholders’ Equity,” in our Annual Report.
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(2)
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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 2016:
$5,720 for Mr. J. Stoppelman; $12,656 for Mr. Baker; $12,895 for Mr.
Krolik; $12,656 for Mr. Nachman; $5,720 for Mr. M. Stoppelman; and $5,973
for Mr. Wilson. The 2016 amount also includes (a) a matching charitable
donation of $1,000 made by The Yelp Foundation on behalf of each of
Messrs. J. Stoppelman, Krolik, M. Stoppelman and Wilson, (b) $1,000 in
Company-paid 401(k) plan matching contributions for each of Messrs. Baker,
Krolik, Nachman and Wilson, and (c) $420 and $480 in health club
reimbursements for Messrs. Krolik and M. Stoppelman, respectively. These
benefits were provided to the named executive officers on the same terms
as provided to all of our regular full-time employees.
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Table of Contents
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(3)
|
The amount reported also includes
(a) $4,920 in monthly parking fees paid by the Company and (b) $47,417 for
personal administrative services performed by Mr. J. Stoppelman’s
executive assistant. Because Mr. J. Stoppelman’s executive assistant is
employed and paid by the Company to perform these 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 assistant’s regular time spent on Mr.
J. Stoppelman’s personal matters during 2016 as a percentage of her total
time spent working for the Company during 2016, multiplied by her base
salary paid by the Company in 2016.
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(4)
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Includes $13,500 paid in exchange
for a release of claims pursuant to the Krolik Transition Agreement. See
“
—Compensation Plans and
Arrangements—Severance Arrangements—Krolik Transition Agreement
” below.
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(5)
|
The amount reported also includes
the following amounts paid pursuant to Mr. Nachman’s Repatriation
Agreement: (a) $247,529 of tax equalization payments, $232,293 of which was
paid in British pounds sterling and converted using the interbank exchange
rate in effect on the date of payment, and (b) $6,770 of tax preparation
payments. 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. Nachman’s tax equalization for
2016 until both his U.S. and U.K. tax returns for 2016 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.
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(6)
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Includes an additional (a) $8,246
in tax equalization payments owed to Mr. Nachman in connection with his
2015 taxes and (b) $6,950 of payments related to the preparation of Mr.
Nachman’s 2015 taxes for costs incurred after March 4, 2016, the date that
our Definitive Proxy Statement on Schedule 14A for our 2016 Annual Meeting
of Stockholders was filed with the SEC.
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(7)
|
This amount reflects (a) $925 of
payments related to the preparation of Mr. Nachman’s amended 2014 tax
returns for costs and (b) a reduction of $137,813 from the amount
previously reported. Based on his final U.S. and U.K. tax returns, it was
determined that the tax equalization payments made to Mr. Nachman for 2012
and 2013 were too high by $49,551 and $88,262, respectively. Mr. Nachman
repaid these amounts to the Company in 2016.
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COMPENSATION PLANS AND
ARRANGEMENTS
Employment Agreements
We entered into amended and restated
employment letter agreements with Messrs. J. Stoppelman, Nachman and Wilson 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.
We entered into employment agreements
with Messrs. Baker, M. Stoppelman and Ramsay on April 15, 2016, February 10,
2007 and July 13, 2012, respectively. The agreements provide for initial base
salary, eligibility to participate in our standard benefit plans and initial
equity awards, but did not provide for severance, other than for Mr. Baker,
whose agreement provides that he is eligible to participate in the 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 Krolik Transition Agreement with Mr. Krolik on February 4, 2016, which set
forth the terms of his transition from the Chief Financial Officer role. To
facilitate a smooth transition, Mr. Krolik agreed to remain employed by the
Company in an advisory capacity after the position had been filled through the
earlier of (x) the date he began providing similar services to another company
or (y) December 15, 2016, or the Transition Period.
In connection with Mr. Baker’s
appointment as Chief Financial Officer effective May 9, 2016, Mr. Krolik’s
Regular End Date was determined to be May 8, 2016, and he remained an advisor to
the Company through December 15, 2016. During his Transition Period, Mr. Krolik
continued receiving his base salary and benefits, and continued vesting in his
outstanding equity awards. Had his Regular End Date occurred after June 30,
2016, the Krolik Transition Agreement provided that he would have been eligible
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 occurred, but he did not receive such a payment
because his Regular End Date was determined to be May 8, 2016. In addition, Mr.
Krolik received a lump-sum payment of $13,500 upon signing a release of claims
following the end of his Transition Period.
The Krolik Transition Agreement also
provided that we would recommend to the Board that it grant Mr. Krolik an RSU
award covering 30,000 shares of 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 remained employed as of each vesting date that occurred prior to the
Regular End Date and (ii) as of each vesting date thereafter, Mr. Krolik’s
employment had 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
Krolik Transition Agreement, which fully vested over the term of Mr. Krolik’s
Transition Period.
Michael Stoppelman Transition
Agreement
. On February 13, 2017, Mr. Michael
Stoppelman notified us of his decision to step down from his position as Senior
Vice President, Engineering, effective March 2, 2017. On February 17, 2017, we
entered into a transition agreement with Mr. M. Stoppelman, pursuant to which he
will remain employed by the Company in an advisory capacity to ensure a smooth
transition through the earlier of (a) December 10, 2017 or (b) the date he
begins providing services to another company. During this transition period, Mr.
M. Stoppelman will continue receiving health benefits and vesting in his
outstanding equity awards, and will be paid at an hourly rate equivalent to his
previous annualized base salary of $325,000 for any hours worked after March 2,
2017.
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.
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Table of Contents
Each eligible participant who suffers
an involuntary termination without cause or a constructive termination will be
eligible to receive, provided that he or she signs a release of claims and
complies with continuing obligations of confidentiality, (i) a lump sum cash
payment equal to one year of his or her 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 officer’s
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.
Equity Incentive
Plans
2012 Equity Incentive Plan, as
amended
In January 2012, our Board adopted, and
our stockholders subsequently approved, our 2012 Plan as a successor to and
continuation of our 2011 Plan. In 2013 and 2016, our Board and stockholders
approved amendments to the 2012 Plan to increase the aggregate number of shares
of our common stock that may be issued pursuant to awards under the 2012 Plan by
2,000,000 shares and 3,000,000 shares, respectively. In addition, prior to
January 1, 2017, the number of shares of our common stock reserved for issuance
under our 2012 Plan automatically increased on January 1 of each year by 4.0% of
the total number of shares of our capital stock outstanding on December 31 of
the preceding year, or a lesser number of shares determined by the Board; on
January
1, 2013, 2014, 2015 and 2016, the number
of shares reserved for issuance increased by 2,540,210, 2,834,979, 1,458,411 and
3,039,312 shares, respectively. Following the amendment to the 2012 Plan
approved by our Board and stockholders in 2016, the number of shares of our common stock
reserved for issuance will automatically increase on January 1 of each year
beginning January 1, 2017 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 determined by the Board. On January
1, 2017, the number of shares reserved for issuance increased by 5,560,088
shares.
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Table of Contents
The 2012 Plan provides for the grant of
incentive stock options, nonstatutory stock options, stock appreciation rights,
restricted stock awards, restricted stock unit awards, performance-based stock
awards and other stock awards. Additionally, the 2012 Plan provides for the
grant of performance cash awards to our employees, directors and consultants.
Incentive stock options granted under the 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 2012 Plan are not intended to
qualify as incentive stock options under the Code. To date, we have granted
stock options and restricted stock units under the 2012 Plan.
As of April 17, 2017, options to
purchase 6,050,898 shares of common stock granted pursuant to the 2012 Plan were
outstanding and 8,371,382 shares of common stock were subject to issuance upon
settlement of unvested RSU awards issued pursuant to the 2012 Plan. Such
outstanding options had a weighted-average exercise price of approximately
$29.4566 per share as of that date.
Our Board has delegated concurrent
authority to administer the 2012 Plan to our Compensation Committee.
Our 2012 Plan provides that in the
event of a specified corporate transaction, as defined in the 2012 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 a stock award and provide for its termination
prior to the transaction; (4) arrange for the lapse of any reacquisition or
repurchase rights held by us; or (5) 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
(as defined in the 2012 Plan). In the absence of such a provision, no such
acceleration of the stock award will occur.
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 April 17, 2017, options to purchase 308,069
shares of common stock at a weighted-average exercise price per share of
$10.8973 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 Committee’s 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.
51
Table of Contents
Amended and Restated 2005 Equity
Incentive Plan
Our Board adopted, and our stockholders
approved, our 2005 Plan in September 2005. As of April 17, 2017, options to
purchase 2,187,153 shares of common stock at a weighted-average exercise price
per share of $7.0624 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 Committee’s charter.
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 right 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 April 17, 2017, the
maximum aggregate number of shares of our common stock that may be issued under
our 2012 ESPP is 2,892,509 shares. The number of shares of our 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 common stock; or (iii)
such lesser number as determined by our Board. The number of shares of our
common stock reserved for issuance under the 2012 ESPP automatically increased
on January 1, 2013 by 1,270,105 shares and on January 1, 2017 by 1,588,596
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 has delegated concurrent
authority to administer our 2012 ESPP to our Compensation Committee under the
terms of the Compensation Committee’s 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 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.
52
Table of Contents
Our 2012 ESPP permits participants to
purchase shares of our 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
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 a 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.
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 Mr. J. Stoppelman in connection
with the reduction of his salary to a nominal amount, please see
“—
Compensation Discussion and
Analysis—Executive Compensation Program Components—Employee
Benefits
.”
53
Table of Contents
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, 2016.
Grants of Plan-Based Awards in the
Year Ended December 31, 2016
|
|
|
|
|
All Other
Stock
|
|
All Other
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
Number
|
|
Awards:
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
of
|
|
Securities
|
|
Exercise or
Base
|
|
Grant Date Fair
|
|
|
|
|
|
Stock or
Units
|
|
Underlying
Options
|
|
Price of
Option
|
|
Value of Stock and
|
|
Name
|
|
Grant Date
|
|
(#)(1)
|
|
(#)(2)
|
|
Awards ($/Share)
|
|
Option Awards
($)
|
|
Jeremy
Stoppelman
|
|
3/9/2016
|
|
|
—
|
|
|
|
426,200
|
|
|
|
20.47
|
|
|
|
3,670,221
|
|
|
Lanny Baker
|
|
5/2/2016
|
|
|
129,038
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,775,607
|
|
|
|
|
5/2/2016
|
|
|
—
|
|
|
|
281,150
|
|
|
|
21.51
|
|
|
|
2,655,968
|
|
|
Rob Krolik
|
|
2/4/2016
|
|
|
30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
593,100
|
|
|
Jed Nachman
|
|
3/9/2016
|
|
|
73,356
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,501,597
|
|
|
|
|
3/9/2016
|
|
|
—
|
|
|
|
53,300
|
|
|
|
20.47
|
|
|
|
476,337
|
|
|
Michael
Stoppelman
|
|
3/9/2016
|
|
|
64,186
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,313,887
|
|
|
|
|
3/9/2016
|
|
|
—
|
|
|
|
46,650
|
|
|
|
20.47
|
|
|
|
416,906
|
|
|
Laurence Wilson
|
|
3/9/2016
|
|
|
55,017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,126,198
|
|
|
|
|
3/9/2017
|
|
|
—
|
|
|
|
40,000
|
|
|
|
20.47
|
|
|
|
357,476
|
|
____________________
|
(1)
|
The amounts in this column
represent shares of common stock subject to RSU awards granted pursuant to
our 2012 Plan. Please see “
—Compensation
Discussion and Analysis—Executive Compensation Program Components—Equity
Compensation
.”
|
|
(2)
|
The amounts in this column
represent shares of common stock underlying options granted pursuant to
our 2012 Plan. Please see “
—Compensation
Discussion and Analysis—Executive Compensation Program Components—Equity
Compensation
.”
|
|
(3)
|
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 common stock on the date of
grant.
|
|
(4)
|
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 14, “Stockholders’ Equity,” in our Annual
Report.
|
54
Table of Contents
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR END
The following table shows certain
information regarding outstanding equity awards at December 31, 2016 for the
named executive officers
Outstanding Equity Awards at December
31, 2016
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market Value of
|
|
|
|
|
Underlying
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
|
Shares or Units
|
|
Shares or Units
|
|
|
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
Option
|
|
of Stock that
|
|
of Stock that
|
|
|
|
|
Options (#)
|
|
Unexercised Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Name
|
|
|
Exercisable
|
|
(#) Unexercisable
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested ($)(1)
|
|
Jeremy
Stoppelman
|
|
|
|
1,601,039
|
|
|
|
—
|
|
|
|
|
7.16
|
|
|
|
01/05/2021
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
536,666
|
|
|
|
38,334
|
(2)
|
|
|
|
21.18
|
|
|
|
02/05/2023
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
90,000
|
|
|
|
—
|
|
|
|
|
21.18
|
|
|
|
02/05/2023
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
31,241
|
|
|
|
1,359
|
(3)
|
|
|
|
53.83
|
|
|
|
01/08/2025
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
159,825
|
|
|
|
266,375
|
(3)
|
|
|
|
20.47
|
|
|
|
03/09/2026
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Lanny Baker
|
|
|
|
—
|
|
|
|
281,150
|
(4)
|
|
|
|
21.51
|
|
|
|
05/02/2026
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
129,038
|
(5)
|
|
|
|
4,920,219
|
|
|
Rob Krolik
|
|
|
|
3,162
|
|
|
|
—
|
|
|
|
|
53.83
|
|
|
|
03/15/2017
|
(6)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Jed Nachman
|
|
|
|
11,555
|
|
|
|
—
|
|
|
|
|
7.16
|
|
|
|
01/05/2021
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
141,636
|
|
|
|
14,667
|
(2)
|
|
|
|
21.18
|
|
|
|
02/05/2023
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
6,927
|
|
|
|
17,523
|
(2)
|
|
|
|
53.83
|
|
|
|
01/08/2025
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
9,993
|
|
|
|
43,307
|
(7)
|
|
|
|
20.47
|
|
|
|
03/09/2026
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
28,218
|
(8)
|
|
|
|
1,075,952
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
59,602
|
(9)
|
|
|
|
2,272,624
|
|
|
Michael
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stoppelman
|
|
|
|
108,500
|
|
|
|
—
|
|
|
|
|
7.16
|
|
|
|
03/06/2021
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
176,000
|
|
|
|
44,000
|
(2)
|
|
|
|
28.20
|
|
|
|
06/05/2023
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
6,675
|
|
|
|
20,025
|
(2)
|
|
|
|
47.79
|
|
|
|
03/04/2025
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
3,115
|
|
|
|
10,235
|
(2)
|
|
|
|
45.50
|
|
|
|
04/01/2025
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
8,746
|
|
|
|
37,904
|
(7)
|
|
|
|
20.47
|
|
|
|
03/09/2026
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
49,545
|
(8)
|
|
|
|
1,889,151
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
52,152
|
(9)
|
|
|
|
1,988,556
|
|
|
Laurence Wilson
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
|
7.16
|
|
|
|
01/25/2021
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
182,833
|
|
|
|
14,667
|
(2)
|
|
|
|
21.18
|
|
|
|
02/05/2023
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
6,927
|
|
|
|
17,523
|
(2)
|
|
|
|
53.83
|
|
|
|
01/08/2025
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
7,500
|
|
|
|
32,500
|
(7)
|
|
|
|
20.47
|
|
|
|
03/09/2026
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
28,218
|
(8)
|
|
|
|
1,075,952
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
44,702
|
(9)
|
|
|
|
1,704,487
|
|
____________________
|
(1)
|
Represents the market value of
the unvested shares subject to this RSU based on the closing price of our
common stock on December 30, 2016, which was $38.13 per
share.
|
55
Table of Contents
|
(2)
|
10% of the shares underlying this
option vest in equal monthly installments over the first 12 months
following the grant date; 20% of the shares underlying the option vest 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.
|
|
(3)
|
1/24
th
of the shares underlying this option vest on a monthly
basis over two years following the grant date.
|
|
(4)
|
25% of the shares underlying this
option vested on April 15, 2017, with the remainder vesting ratably on a
monthly basis over the following three years.
|
|
(5)
|
25% of the shares subject to this
RSU vest on May 20, 2017, with the remainder vesting ratably on a
quarterly basis over the following three years.
|
|
(6)
|
This expiration date reflects the
shortened option term triggered by Mr. Krolik’s termination of
employment.
|
|
(7)
|
1/48
th
of the shares underlying this option vest on a monthly
basis over four years following the grant date.
|
|
(8)
|
2.5% of the shares subject to
this RSU vest each quarter over the first 12 months following the grant
date; 5.0% of the shares vest each quarter over the second 12 months; 7.5%
of the shares vest each quarter over the third 12 months; and 10.0% of the
shares vest each quarter over the fourth 12 months.
|
|
(9)
|
1/16
th
of the shares subject to this RSU vest on a quarterly
basis over four years following the grant date.
|
OPTION EXERCISES AND STOCK VESTED
The following table shows certain
information regarding option exercises and stock vested during the year ended
December 31, 2016.
Option Exercises and Stock Vested in
the Year Ended December 31, 2016
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
Value
Realized
|
|
Number
of
|
|
Value
Realized
|
|
|
|
Acquired on
|
|
on
Exercise
|
|
Shares
Acquired
|
|
on
Vesting
|
|
Name
|
|
Exercise (#)
|
|
($)(1)
|
|
on Vesting (#)
|
|
($)(2)
|
|
Jeremy
Stoppelman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Lanny Baker
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Rob Krolik
|
|
|
157,333
|
|
|
|
2,762,155
|
|
|
|
30,000
|
|
|
|
902,925
|
|
|
Jed Nachman
|
|
|
61,152
|
|
|
|
1,414,342
|
|
|
|
21,816
|
|
|
|
710,523
|
|
|
Michael
Stoppelman
|
|
|
35,000
|
|
|
|
963,300
|
|
|
|
23,595
|
|
|
|
776,730
|
|
|
Laurence Wilson
|
|
|
73,150
|
|
|
|
1,842,223
|
|
|
|
18,377
|
|
|
|
593,536
|
|
____________________
|
(1)
|
The value realized is calculated
as the difference between the closing price of our common stock on the
date of exercise and the applicable exercise price of such options,
multiplied by the number of shares underlying the options that were
exercised.
|
|
(2)
|
The value realized equals the
closing price of our common stock on each vesting date or, if the vesting
date fell on a non-trading day, the closing price on the trading day
immediately preceding the vesting date, multiplied by the number of shares
that vested on that date.
|
56
Table of Contents
POTENTIAL PAYMENTS UPON TERMINATION
OR CHANGE IN CONTROL
The following table sets forth
quantitative estimates of the benefits that each of our named executive officers
would be entitled to in connection with certain termination and change in
control events pursuant to the Severance Plan. Except with respect to Mr.
Krolik, who stepped down as our Chief Financial Officer as of May 8, 2016, the
table assumes that the qualifying termination or change in control event, as
applicable, occurred on December 31, 2016.
|
|
|
|
|
|
|
Lump Sum
|
|
|
|
|
|
|
|
|
|
|
Value
of
|
|
|
|
|
|
|
|
Salary
|
|
Cash
|
|
Continuation
|
|
Value of
|
|
Equity
|
|
|
|
|
|
|
|
Continuation
|
|
Severance
|
|
of Benefits
|
|
Stock
|
|
Acceleration
|
|
|
|
|
|
Name
|
|
($)
|
|
Payment ($)(1)
|
|
($)
|
|
Award ($)
|
|
($)(2)
|
|
Total ($)
|
|
Jeremy Stoppelman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination
(3)
|
|
|
—
|
|
|
|
1
|
(4)
|
|
|
|
2,973
|
(5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,974
|
|
|
Qualifying Termination Upon
Change in
|
|
|
—
|
|
|
|
1
|
(4)
|
|
|
|
2,973
|
(5)
|
|
|
|
—
|
|
|
|
2,676,963
|
|
|
|
2,679,937
|
|
|
Control
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lanny
Baker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination
(3)
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
6,448
|
(5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
331,448
|
|
|
Qualifying Termination Upon
Change in
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
6,448
|
(5)
|
|
|
|
—
|
|
|
|
2,336,357
|
|
|
|
2,667,804
|
|
|
Control
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rob Krolik
(7)
|
|
|
196,354
|
|
|
|
13,500
|
|
|
|
|
7,522
|
|
|
|
|
593,100
|
|
|
|
—
|
|
|
|
810,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jed
Nachman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination
(3)
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
6,448
|
(5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
331,448
|
|
|
Qualifying Termination Upon
Change in
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
6,448
|
(5)
|
|
|
|
—
|
|
|
|
2,180,975
|
|
|
|
2,512,422
|
|
|
Control
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Stoppelman
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination
(3)
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
2,973
|
(5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
327,973
|
|
|
Qualifying Termination Upon
Change in
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
2,973
|
(5)
|
|
|
|
—
|
|
|
|
2,491,987
|
|
|
|
2,819,959
|
|
|
Control
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurence
Wilson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
Termination
(3)
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
2,973
|
(5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
327,973
|
|
|
Qualifying Termination Upon
Change in
|
|
|
—
|
|
|
|
325,000
|
(4)
|
|
|
|
2,973
|
(5)
|
|
|
|
—
|
|
|
|
1,801,489
|
|
|
|
2,129,462
|
|
|
Control
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
|
(1)
|
The amount indicated does not
include the payment of any accrued salary or vacation that might be due
upon termination of employment.
|
|
(2)
|
The value of unvested options
that are subject to accelerated vesting and have an exercise price of less
than $38.13, the closing price of our common stock on December 31, 2016,
is calculated as (a) the difference between $38.13 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, M. Stoppelman 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 $38.13.
|
57
Table of Contents
|
(3)
|
Represents benefits payable under
the Severance Plan upon an involuntary termination without cause or
constructive termination (as such terms are defined in the Severance
Plan).
|
|
(4)
|
Represents one year of the
executive officer’s base salary in effect as of December 31,
2016.
|
|
(5)
|
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 for 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.
|
|
(6)
|
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).
|
|
(7)
|
Represents benefits paid under
the Krolik Transition Agreement, pursuant to which, after stepping down as
Chief Financial Officer on May 8, 2016, he remained employed by the
Company in an advisory capacity through December 15, 2016, or the
Transition Period. These benefits consist of: (a) payment of Mr. Krolik’s
salary during the Transition Period; (b) a lump-sum payment of $13,500
paid in exchange for his release of claims against the Company; (c)
continuation of Mr. Krolik’s benefits during the Transition Period; and
(d) an RSU award covering 30,000 shares of common stock. The value of the
RSU award is calculated in accordance with ASC 718 based on the closing
price of our common stock on the date of grant. “
—Compensation Plans and Arrangements—Severance
Arrangements—Krolik Transition Agreement
”
above.
|
|
(8)
|
Mr. M. Stoppelman resigned from
his role as Senior Vice President, Engineering in February 2017; we
entered into a transition agreement with him that sets forth the
compensation to be paid to him in connection with his transition. See
“
—Compensation Plans and
Arrangements—Severance Arrangements—Michael Stoppelman Transition
Agreement
”
above.
|
58
Table of Contents
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 director’s 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, 2016, 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 our common stock, or any immediate family member
of the foregoing persons, had or will have a direct or indirect material
interest.
|
Related-Person Compensation
For complete descriptions of
compensation arrangements for all our directors and named executive officers,
see “
Information Regarding the Board of
Directors and Corporate Governance—Director Compensation
” and “
Executive
Compensation
,” respectively.
59
Table of Contents
Miriam Warren, our Vice President,
Enterprise Engagement and Culture and spouse of our Senior Vice President and
General Counsel, Laurence Wilson, received compensation for her services as an
employee in the year ended December 31, 2016, including an annualized base
salary of $235,000, an option to purchase 8,200 shares of common stock, with an
exercise price of $27.60 per share, and RSUs covering 12,065 shares of common
stock. Ms. Warren’s 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. In January 2017, the Compensation
Committee granted Ms. Warren additional RSUs covering 8,107 shares of common
stock, which vest in equal quarterly installments over four years from the date
of grant. The payment of such compensation is not considered a related-person
transaction covered by our Related-Person Transaction Policy.
Other Benefits.
Ms. Warren received our standard U.S. benefits package and
$579 in reimbursements for a health club membership. These benefits were
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. Ms.
Warren and Messrs. J. Stoppelman, Baker, Nachman 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. J. Stoppelman, M. Stoppelman, Wilson
and Krolik in 2016, as reflected in the Summary Compensation Table.
In addition, in 2016, The Yelp
Foundation awarded grants totaling $39,000 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.
60
Table of Contents
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
|
April 28, 2017
A copy of the Company’s Annual
Report to the U.S. Securities and Exchange Commission on Form 10-K for the year
ended December 31, 2016 is available without charge upon written request to:
Corporate Secretary, Yelp Inc., 140 New Montgomery Street, 9
th
Floor, San
Francisco, California 94105.
61
Table of Contents
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 June 14, 2017. 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/Yelp2017
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 June 14, 2017. Have your proxy card in hand when you call and then follow the
instructions. There is no charge for this call.
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:
|
|
|
E29129-Z70187
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
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.
|
|
|
|
|
1.
|
|
Election of
Directors
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
Nominees:
|
|
|
|
|
|
|
|
|
|
|
|
|
01)
|
|
Diane M.
Irvine
|
|
|
|
|
|
|
|
|
|
|
|
|
02)
|
|
Mariam
Naficy
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors
recommends you vote
FOR
proposals 2 and
3.
|
|
For
|
Against
|
Abstain
|
|
2.
|
|
To ratify the selection of
Deloitte & Touche LLP as Yelp's independent registered public
accounting firm for the year ending December 31,
2017.
|
|
☐
|
☐
|
☐
|
|
3.
|
|
To approve, on an advisory basis,
the compensation of Yelp's named executive officers, as disclosed in the
accompanying proxy statement.
|
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or other
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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
June 15,
2017 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 2017
Annual Meeting of Stockholders of YELP INC. and the accompanying Proxy
Statement, and hereby appoint(s) Laurence Wilson and Charles Baker, 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
Common Stock of YELP INC. that the undersigned stockholder(s) is/are entitled to
vote at the 2017 Annual Meeting of Stockholders of YELP INC. to be held at 9:00
AM, PDT on June 15, 2017 via live audio webcast, and any adjournment or
postponement thereof. To attend the Annual Meeting, please visit
www.virtualshareholdermeeting.com/Yelp2017.
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
proxyholders will have the authority to vote
FOR
each of the nominees listed in
Proposal No. 1 and
FOR
Proposal Nos. 2 and 3.
Continued and to be signed
on reverse side
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