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Section 1: DEF 14A (DEFINITIVE PROXY STATEMENT)

Definitive Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14A-12

 


RetailMeNot, Inc.

(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
  1.  

Title of each class of securities to which transaction applies:

 

 

   

 

  2.  

Aggregate number of securities to which transaction applies:

 

 

   

 

  3.  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

   

 

  4.  

Proposed maximum aggregate value of transaction:

 

 

   

 

  5.   Total Fee Paid:
   
   

 

  Fee paid previously with preliminary materials:
  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.
  1.  

Amount Previously Paid:

 

 

   

 

  2.  

Form, Schedule or Registration Statement No.:

 

 

   

 

  3.  

Filing Party:

 

 

   

 

  4.  

Date Filed:

 

 

   

 


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LOGO

March 16, 2017

Dear Stockholder:

You are cordially invited to attend this year’s annual meeting of stockholders of RetailMeNot, Inc. on April 27, 2017, at 8:30 a.m. Central Time. The meeting will be held at the offices of DLA Piper LLP (US) at 401 Congress Avenue, Austin, Texas 78701 in Suite 2500.

We are pleased to take advantage of the U.S. Securities and Exchange Commission rule that allows companies to furnish proxy materials primarily over the Internet. On March 16, 2017, we mailed to our stockholders (other than those who previously requested electronic or paper delivery) a Notice Regarding the Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy materials, including our Proxy Statement and Annual Report to Stockholders for the fiscal year ended December 31, 2016 (the “Annual Report”) over the Internet. The Notice also provides instructions on how to vote online or by telephone and includes instructions on how you can receive a paper copy of the proxy materials by mail. If you receive your annual meeting materials by mail, the Notice of Annual Meeting of Stockholders, Proxy Statement, Annual Report and proxy card will be enclosed. If you receive your proxy materials via e-mail, the e-mail will contain voting instructions and links to the Annual Report and Proxy Statement on the Internet, both of which are available at www.proxyvote.com.

The matters to be acted upon are described in the Notice of Annual Meeting of Stockholders and Proxy Statement. Following the formal business of the meeting, we will be available to report on our operations and respond to questions from stockholders.

Whether or not you plan to attend the meeting, your vote is very important and we encourage you to vote promptly. You may vote by proxy over the Internet or by telephone, or, if you received paper copies of the proxy materials by mail, you can also vote by mail by following the instructions on the proxy card or voting instruction card. If you attend the meeting you will have the right to revoke the proxy and vote your shares in person. If you hold your shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from your brokerage firm, bank or other nominee to vote your shares.

We look forward to seeing you at the annual meeting.

 

  Sincerely yours,
  Jonathan B. Kaplan
  Chief Legal Officer, General Counsel and Secretary


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LOGO

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

To Be Held April 27, 2017

The 2017 annual meeting of stockholders of RetailMeNot, Inc., a Delaware corporation, will be held on April 27, 2017, at 8:30 a.m., Central Time, at the offices of DLA Piper LLP (US), located at 401 Congress Avenue, Austin, Texas 78701 in Suite 2500, for the following purposes:

1. To elect two Class I directors to hold office for three-year terms and until their respective successors are elected and qualified.

2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.

3. To vote on a non-binding basis to approve the compensation of our named executive officers.

4. To transact such other business as may properly come before the meeting or any adjournment or postponement of the meeting.

Our Board of Directors recommends a vote FOR the election of all nominees for the Board of Directors and FOR Proposals 2 and 3. Stockholders of record at the close of business on February 28, 2017 are entitled to notice of, and to vote at, the meeting and any adjournment or postponement thereof. For ten days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our principal offices located at 301 Congress Avenue, Suite 700, Austin, Texas 78701.

By order of the Board of Directors,

Jonathan B. Kaplan

Chief Legal Officer, General Counsel and Secretary

March 16, 2017


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IMPORTANT: Please vote your shares via telephone or the Internet, as described in the accompanying materials, to assure that your shares are represented at the meeting, or, if you received a paper copy of the proxy card by mail, you may mark, sign and date the proxy card and return it in the enclosed postage-paid envelope. If you attend the meeting, you may choose to vote in person even if you have previously voted your shares.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 2017: Our Proxy Statement is enclosed. Financial and other information concerning RetailMeNot, Inc. is contained in our Annual Report to Stockholders for the fiscal year ended December 31, 2016. A complete set of proxy materials relating to our annual meeting, consisting of the Notice of Annual Meeting, Proxy Statement, Proxy Card and Annual Report, is available on the Internet and may be viewed at www.proxyvote.com.

Attending the Meeting

The meeting will be held at the offices of DLA Piper LLP (US) located at 401 Congress Avenue, Austin, Texas 78701 in Suite 2500 (25th Floor).

 

    Doors open at 8:00 a.m. Central Time.

 

    Meeting starts at 8:30 a.m. Central Time.

 

    Proof of RetailMeNot, Inc. stock ownership and photo identification is required to attend the annual meeting.

 

    The use of cameras or other audio or video recording devices is not allowed.

Questions

 

For Questions Regarding:

   Contact:

Annual meeting

  

RetailMeNot, Inc. Investor Relations

IR@rmn.com

Stock ownership for registered holders

  

Toll Free Phone Number: (866) 321-8022

Direct Phone Number: (720) 378-5956

Email: shareholder@broadridge.com

Stock ownership for beneficial holders

   Please contact your broker, bank or other nominee

Voting for registered holders

  

RetailMeNot, Inc. Investor Relations

IR@rmn.com

Voting for beneficial holders

   Please contact your broker, bank or other nominee


Table of Contents

RetailMeNot, Inc.

Table of Contents

 

     Page  

Notice of 2017 Annual Meeting of Stockholders

  

Proxy Statement for Annual Meeting of Stockholders

     1  

Solicitation and Voting

     1  

Record Date

     1  

Internet Availability of Annual Meeting Materials

     1  

Quorum

     1  

Vote Required to Adopt Proposals; Impact of Advisory Votes

     1  

Effect of Abstentions and Broker Non-Votes

     2  

Voting Instructions

     2  

Solicitation of Proxies

     3  

Voting Results

     3  

Proposal No. 1: Election of Directors

     4  

Corporate Governance

     7  

Director Independence

     7  

Board of Directors Leadership Structure

     7  

Risk Management

     7  

Executive Sessions

     8  

Meetings of the Board of Directors and Committees

     8  

Audit Committee

     8  

Compensation Committee

     9  

Nominating and Corporate Governance Committee

     10  

Director Nominations

     11  

Compensation of Directors

     12  

Communications with Directors

     14  

Director Attendance at Annual Meetings

     14  

Committee Charters and Other Corporate Governance Materials

     14  

Corporate Governance Guidelines

     14  

Compensation Committee Interlocks and Insider Participation

     14  

Proposal No.  2: Ratification of Appointment of Independent Registered Public Accounting Firm

     15  

Fees Billed by Ernst & Young

     15  

Policy on Audit Committee Pre-approval of Audit and Non-audit Services Performed by Independent Registered Public Accounting Firm

     15  

Vote Required and Board of Directors Recommendation

     16  

Report of the Audit Committee

     17  

Executive Officers

     18  

Compensation Discussion and Analysis

     20  

Compensation Discussion and Analysis

     20  

Executive Summary

     20  

Executive Compensation Policies and Practices

     24  

Executive Compensation Philosophy and Program Design

     25  

Compensation-Setting Process

     26  

Executive Compensation Program Elements

     28  

Employment Arrangements

     40  

Other Compensation Policies

     40  

Tax and Accounting Considerations

     41  

Report of the Compensation Committee

     43  

Compensation of Named Executive Officers

     44  

2016 Summary Compensation Table

     44  

2016 Grants of Plan-Based Awards Table

     46  

Employment Agreements

     46  


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Payments upon Termination and Change in Control

     49  

Potential Payment Tables

     50  

Pension Benefits

     51  

Nonqualified Deferred Compensation

     51  

2016 Outstanding Equity Awards at Fiscal Year-End Table

     52  

2016 Option Exercises and Stock Vested Table

     54  

Equity Compensation Plan Information

     55  

Certain Relationships and Related Party Transactions

     56  

Related Party Transaction Policy

     56  

Related Party Transactions

     56  

Security Ownership of Certain Beneficial Owners and Management

     59  

Section 16(a) Beneficial Ownership Reporting Compliance

     62  

Proposal No.  3: Advisory Vote to Approve the Compensation of our Named Executive Officers

     63  

Vote Required and Board of Directors Recommendation

     63  

Stockholder Proposals or Nominations to Be Presented at Next Annual Meeting

     64  

Transaction of Other Business

     64  

Stockholders Sharing the Same Last Name and Address

     64  


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RETAILMENOT, INC.

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD APRIL 27, 2017

The Board of Directors of RetailMeNot, Inc. is soliciting your proxy for the 2017 Annual Meeting of Stockholders to be held on April 27, 2017, or any adjournment or postponement thereof, at 401 Congress Avenue, Austin, Texas 78701 in Suite 2500, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement and related materials are first being made available to stockholders on or about March 16, 2017. References in this Proxy Statement to the “Company,” “we,” “our,” “us” and “RetailMeNot” are to RetailMeNot, Inc. and its consolidated subsidiaries, and references to the “annual meeting” are to the 2017 Annual Meeting of Stockholders. When we refer to the Company’s fiscal year, we mean the annual period ending on December 31, 2016. This Proxy Statement covers our 2016 fiscal year, which was from January 1, 2016 through December 31, 2016 (“fiscal 2016”). Certain information contained in this Proxy Statement is incorporated by reference into Part III of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 17, 2017.

SOLICITATION AND VOTING

Record Date

Only stockholders of record at the close of business on February 28, 2017 will be entitled to notice of and to vote at the meeting and any adjournment thereof. As of this record date there were 48,252,739 shares of Series 1 common stock and no shares of Series 2 common stock outstanding and entitled to vote.

Internet Availability of Annual Meeting Materials

We are pleased to take advantage of the rules adopted by the SEC, allowing companies to furnish proxy materials over the Internet to their stockholders rather than mailing paper copies of those materials to each stockholder. On March 16, 2017, we mailed to our stockholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) directing stockholders to a website where they can access our Proxy Statement for the annual meeting and our Annual Report to Stockholders for the fiscal year ended December 31, 2016 and view instructions on how to vote via the Internet or by phone. If you would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the Notice.

Quorum

A majority of the shares of common stock issued and outstanding as of the record date must be represented at the meeting, either in person or by proxy, to constitute a quorum for the transaction of business at the meeting. Your shares will be counted towards the quorum if you submit a valid proxy (or one is submitted on your behalf by your broker or bank) or if you vote in person at the meeting. Abstentions and “broker non-votes” (shares held by a broker or nominee that does not have the authority, either express or discretionary, to vote on a particular matter) will each be counted as present for purposes of determining the presence of a quorum.

Vote Required to Adopt Proposals; Impact of Advisory Votes

Each share of our Series 1 common stock outstanding on the record date is entitled to one vote on each of the two director nominees. For the election of directors, the two director nominees who receive the highest number of “For” votes will be elected as Class I directors. You may vote “For” or “Withhold” with respect to each director nominee. Votes that are withheld will be excluded entirely from the vote with respect to the nominee from which they are withheld and will have the same effect as an abstention. With respect to Proposal

 

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No. 2 regarding ratification of our independent auditors, approval of the proposal requires the affirmative vote of a majority of the shares present and entitled to vote. Approval of Proposal No. 3, the advisory vote to approve the compensation of our named executive officers, requires the affirmative vote of a majority of the shares present and entitled to vote. Proposal No. 3 is advisory in nature and therefore will not be binding on our Board of Directors. Our Board of Directors and its Compensation Committee will, however, consider the outcome of this vote when determining issues with respect to executive compensation in the future.

Effect of Abstentions and Broker Non-Votes

Shares not present at the meeting and shares voted “Withhold” will have no effect on the election of directors. For the other proposals, abstentions will have the same effect as negative votes. If your shares are held in an account at a bank or brokerage firm, that bank or brokerage firm may vote your shares on Proposal No. 2 regarding ratification of our independent auditors, but will not be permitted to vote your shares of common stock with respect to Proposal Nos. 1 or 3 unless you provide instructions as to how your shares should be voted. If an executed proxy card is returned by a bank or broker holding shares which indicates that the bank or broker has not received voting instructions and does not have discretionary authority to vote on the proposals, the shares will not be considered to have been voted in favor of the proposals. Your bank or broker will vote your shares of common stock on Proposal Nos. 1 and 3 only if you provide instructions on how to vote by following the instructions they provide to you. Accordingly, we encourage you to vote promptly, even if you plan to attend the annual meeting. In tabulating the voting results for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal.

Voting Instructions

If you complete and submit your proxy card or voting instructions, the persons named as proxies will follow your voting instructions. If no choice is indicated on the proxy card, the shares will be voted as the board recommends on each proposal. Many banks and brokerage firms have a process for their beneficial owners to provide instructions via telephone or the Internet. The voting form that you receive from your bank or broker will contain instructions for voting.

Depending on how you hold your shares, you may vote in one of the following ways:

Stockholders of Record: You may vote by proxy, over the Internet or by telephone. Please follow the instructions provided in the Notice, or, if you requested printed copies of the proxy materials, on the proxy card you received, then sign and return it in the prepaid envelope. You may also vote in person at the annual meeting.

Beneficial Stockholders: Your bank, broker or other holder of record will provide you with a voting instruction card for you to use to instruct them on how to vote your shares. Check the instructions provided by your bank, broker or other holder of record to see which options are available to you. However, since you are not the stockholder of record, you may not vote your shares in person at the annual meeting unless you request and obtain a valid legal proxy from your bank, broker or other agent.

Votes submitted by telephone or via the Internet must be received by 11:59 p.m. Eastern Time on April 26, 2017. Submitting your proxy by telephone or via the Internet will not affect your right to vote in person should you decide to attend the annual meeting in-person.

If you are a stockholder of record, you may revoke your proxy and change your vote at any time before the polls close by returning a later-dated proxy card, by voting again by Internet or telephone as more fully detailed in your Notice or proxy card or by delivering written instructions to the Corporate Secretary before the annual meeting. Attendance at the annual meeting will not in and of itself cause your previously voted proxy to be revoked unless you specifically so request or vote again at the annual meeting. If your shares are held in an account at a bank, brokerage firm or other agent, you may change your vote by submitting new voting

 

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instructions to your bank, brokerage firm or other agent, or, if you have obtained a legal proxy from your bank, brokerage firm or other agent giving you the right to vote your shares, by attending the annual meeting and voting in person.

Solicitation of Proxies

We will bear the cost of soliciting proxies. In addition to soliciting stockholders by mail, we will request banks, brokers and other intermediaries holding shares of our common stock beneficially owned by others to obtain proxies from the beneficial owners and will reimburse them for their reasonable, out-of-pocket costs for forwarding proxy and solicitation material to the beneficial owners of common stock. We may use the services of our officers, directors and employees to solicit proxies, personally, by telephone or by email, without additional compensation. Additionally, we may retain D. F. King & Co. to solicit proxies.

Voting Results

We will announce preliminary voting results at the annual meeting. We will report final results in a Form 8-K report filed with the SEC.

 

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

We have a classified Board of Directors consisting of three Class I directors, three Class II directors and three Class III directors. At each annual meeting of stockholders, directors are elected for a term of three years to succeed those directors whose terms expire at the annual meeting date.

The term of the Class I directors, C. Thomas Ball, Jeffrey M. Crowe and Eric A. Korman, will expire on the date of the upcoming annual meeting. The board has nominated for election by the stockholders to serve as Class I members of the Board of Directors, C. Thomas Ball and Eric A. Korman. Mr. Crowe has declined to be considered for nomination to stand for reelection in order to pursue other opportunities. If elected, each nominee will serve as a director until our annual meeting of stockholders in 2020 and until their respective successors are elected and qualified. If any of the nominees declines to serve or becomes unavailable for any reason (although we know of no reason to anticipate that this will occur), or if a vacancy occurs before the election, the proxies may be voted for such substitute nominees as we may designate. The proxies cannot vote for more than two persons.

The two nominees for Class I director receiving the highest number of votes of shares of outstanding common stock will be elected as Class I directors.

We believe that each of our directors has demonstrated business acumen, ethical integrity and an ability to exercise sound judgment as well as a commitment of service to us and our Board of Directors.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF C. THOMAS BALL AND ERIC A. KORMAN AS CLASS I DIRECTORS.

The names of our directors who will continue in office until the 2018 and 2019 annual meetings of stockholders, including the nominees for Class I directors to be elected at this meeting, and certain information about them as of February 28, 2017 is set forth below. Also set forth below are the specific experience, qualifications, attributes or skills that led our Nominating and Corporate Governance Committee to conclude that each person should serve as a director.

 

Name    Principal Occupation   Age     Director
Since
 
Class I Directors Nominated for Election at the 2017Annual Meeting of Stockholders:  

C. Thomas Ball

   General Partner of Next Coast Ventures     50       2007  

Eric A. Korman

   Chief Executive Officer of Phlur, Inc.     46       2014  
Class II Directors Whose Terms Expire at the 2018 Annual Meeting of Stockholders:  

Jules A. Maltz

   General Partner of Institutional Venture Partners     37       2011  

Brian Sharples

   Chairman, Twyla, Inc.     56       2011  

Tamar Yehoshua

   Vice President of Product Management, Google, Inc.     52       2015  
Class III Directors Whose Terms Expire at the 2019 Annual Meeting of Stockholders:  

G. Cotter Cunningham

   President and Chief Executive Officer of RetailMeNot, Inc.     54       2007  

Gokul Rajaram

   Product Engineering Lead at Square, Inc.     42       2013  

Greg J. Santora

   Independent Management Consultant     65       2013  

 

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Class I Directors

C. Thomas Ball has been a member of our Board of Directors since September 2007. Mr. Ball is a private investor and entrepreneur. In May 2016 Mr. Ball co-founded Next Coast Ventures, a venture capital firm focusing on early-stage information technology companies, where he serves as a General Partner. From April 2005 through June 2015, Mr. Ball was with Austin Ventures, where he started as a Venture Partner and finished as a General Partner. From November 2001 to December 2004, Mr. Ball was Chief Executive Officer and co-founder of Openfield Technologies, a provider of e-commerce and business management software and technology solutions. Mr. Ball was also a founder of eCoupons.com, where he served as Chief Executive Officer from January 1999 through December 2000. Mr. Ball has served on a number of private company boards, including Social Gaming Network, Adometry and Boundless Network, and also served on the board of Convio (CNVO) from December 2006 through February 2011. Mr. Ball holds an M.B.A. from the Stanford Graduate School of Business and a B.S. in finance from the University of Florida. We have determined that Mr. Ball’s experience in the digital offers industry as founder of eCoupons.com, as well as his experience in both managing and evaluating companies as an officer, board member and investor makes him a valuable member of our Board of Directors, our Compensation Committee and our Nominating and Corporate Governance Committee.

Eric A. Korman has been a member of our Board of Directors since September 2014. Mr. Korman is the founder and Chief Executive Officer of Phlur, Inc., a modern luxury brand reimagining fragrance from scent inspiration to production to purchase, which he founded in May 2015. Mr. Korman was previously the President, Digital & Global e-Commerce at Ralph Lauren from October 2011 to February 2014. Prior to this role, Mr. Korman was Senior Vice President, Strategy & Development at Ralph Lauren from November 2010 to January 2012. Before joining Ralph Lauren, Mr. Korman was President of Ticketmaster Entertainment from October 2008 to January 2010 and served as its Executive Vice President from May 2006 to October 2008 after its spin-off from IAC. Prior to that, Mr. Korman held a variety of senior positions at IAC from September 2001 to May 2006, serving as Senior Vice President, Mergers & Acquisitions from February 2005 to May 2006. Mr. Korman has served on the boards of directors of Points International (TSX: PTS), The Active Network (ACTV), BET Digital and OpenTable (OPEN). Mr. Korman holds an M.B.A from the J.L. Kellogg Graduate School of Management and a B.A., cum laude, in economics and political science from Emory University. We have determined that Mr. Korman’s extensive experience in senior management positions of various commerce and retail companies makes him a valuable member of our Board of Directors and our Nominating and Corporate Governance Committee.

Class II Directors

Jules A. Maltz has served as a member of our Board of Directors since October 2011. Mr. Maltz is General Partner at Institutional Venture Partners, which he joined in August 2008, and focuses on investments in rapidly growing Internet and software companies. In addition to his service on our Board of Directors, Mr. Maltz serves on the Board of Directors of Yext, Oportun, NerdWallet, Indiegogo and TuneIn and previously served on the Board of Directors of Buddy Media and H5. He is actively involved in a number of other portfolio companies of Institutional Venture Partners. Mr. Maltz received an M.B.A. from Stanford University and a B.A. in economics from Yale University. We have determined that Mr. Maltz’s knowledge and experience with growth-stage Internet and software companies, as well as his financial expertise, makes him an integral member of our Board of Directors, our Audit Committee and our Nominating and Corporate Governance Committee.

Brian Sharples has served as a member of our Board of Directors since July 2011. In September 2016 Mr. Sharples co-founded Twlya, an online art marketplace, where he serves as chairman. Mr. Sharples is also one of the co-founders of HomeAway and served as its President, Chief Executive Officer and board member from its inception in April 2004 until its sale to Expedia, Inc. (EXPE) in December 2015. Mr. Sharples retired as Chief Executive Officer and Chairman of HomeAway on January 15, 2017. He has served on the Board of Directors of GoDaddy (GDDY) since March 2016 and is currently Chairman of the Board for Fexy Media, a privately-owned venture backed company. Prior to co-founding HomeAway, Mr. Sharples was an angel investor from 2001 until

 

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2004 and also served as Chief Executive Officer of Elysium Partners from 2002 until 2003. Mr. Sharples served as President and Chief Executive Officer of IntelliQuest Information Group, a supplier of marketing data and research to Fortune 500 technology companies, from 1996 to 2001, as President from 1991 to 1996, and as Senior Vice President from 1989 to 1991. Prior to IntelliQuest, Mr. Sharples was Chief Executive Officer of Practical Productions, an event-based automotive distribution business, from 1988 to 1989 and a consultant with Bain & Co. from 1986 to 1988. Mr. Sharples served on the Board of Directors of Kayak Software (KYAK), an online travel resource aggregator, until November 2012. He received an M.B.A. from the Stanford Graduate School of Business and a B.S. in math and economics from Colby College. We have determined that Mr. Sharples’ current and previous tenures in executive positions at various public and private technology companies and his experience with online aggregation service companies allow him to bring valuable insight to our Board of Directors and our Compensation Committee.

Tamar Yehoshua has served as a member of our Board of Directors since December 2015. Ms. Yehoshua is a vice president of product management in the Search team at Google, Inc. Prior to joining Google in 2010, Tamar served as vice president for advertising technology at A9, an Amazon company, from 2005-2010, and director of engineering from 2004-2005. She previously served in senior engineering leadership roles at Reasoning, Inc. from 2002-2004, and Noosh, Inc. from 1999-2002. Tamar holds a Bachelor of Arts degree in Mathematics from the University of Pennsylvania and a Master’s degree in Computer Science from The Hebrew University of Jerusalem.

Class III Directors

G. Cotter Cunningham is our Founder, President, Chief Executive Officer and Chairman of the Board, and has overseen our growth from inception. Previously, Mr. Cunningham served in various positions with Bankrate (RATE) from April 2000 through April 2007, most recently as Chief Operating Officer. He also previously served as CEO-in-Residence at Austin Ventures, Vice President and General Manager of VML, Vice President of Block Financial Corporation and Assistant Vice President of H&R Block. He holds an M.B.A. from Vanderbilt University and a B.B.A. in economics from the University of Memphis. Mr. Cunningham’s perspective as our Founder and Chief Executive Officer makes him a critical member of our Board of Directors.

Gokul Rajaram has served as a member of our Board of Directors since October 2013. Mr. Rajaram is the Product Engineering Lead at Square (SQ), a commerce company based in San Francisco, California. Before joining Square in July 2013, Mr. Rajaram was Product Director, Ads at Facebook (FB) from September 2010 to June 2013. Mr. Rajaram was Co-Founder and Chief Executive Officer of Chai Labs, a semantic technology startup, from December 2007 until its acquisition by Facebook in September 2010. Prior to Chai Labs, Mr. Rajaram served as Product Management Director for Google AdSense (GOOG) from January 2003 to November 2007. Mr. Rajaram holds an M.B.A. from the Massachusetts Institute of Technology Sloan School of Management, a M.S. in computer science from the University of Texas and a B. Tech in computer science from the Indian Institute of Technology Kanpur. We have determined that Mr. Rajaram’s knowledge and experience with product development and innovation at Internet and technology companies makes him a valuable member of our Board of Directors and our Compensation Committee.

Greg J. Santora has served as a member of our Board of Directors since May 2013. Mr. Santora has worked as an independent management consultant since September 2005. Prior to that, he served as Chief Financial Officer of Shopping.com, a provider of Internet-based comparison shopping resources, from December 2003 through September 2005. From January 1997 through December 2002, he served as Chief Financial Officer of Intuit. Mr. Santora currently serves on the Board of Directors of Align Technology (ALGN) and MarkLogic Corporation. He previously served on the Board of Directors of Taleo Corporation (TLEO) and Digital Insight Corporation (DGIN). He holds an M.B.A. from San Jose State University and a B.A. in accounting from the University of Illinois. We have determined that Mr. Santora’s experience as a financial leader, his financial reporting and audit expertise and his current service on public and private company boards allows him to bring valuable insight to our Board of Directors and our Audit Committee.

 

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CORPORATE GOVERNANCE

Director Independence

In February 2017, the Board of Directors determined that, other than Mr. Cunningham, each of the current members of the board is an “independent director” for purposes of the Nasdaq Listing Rules and Rule 10A-3(b)(1) under the Exchange Act as the term relates to membership on the Board of Directors.

The definition of independence under the Nasdaq Listing Rules includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his or her family members, has engaged in various types of business dealings with us. In addition, as further required by the Nasdaq Listing Rules, our board has made a subjective determination as to each independent director that no material relationships exist that, in the opinion of our board, would interfere with his exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board reviewed and discussed information provided by the directors in questionnaires with questions tailored to the Nasdaq Listing Rules with regard to each director’s business and personal activities as they may relate to us and our management.

Board of Directors Leadership Structure

The Board of Directors has adopted Corporate Governance Guidelines to promote the functioning of the board and its committees. These guidelines address board composition, board functions and responsibilities, qualifications, leadership structure, committees and meetings.

Our Corporate Governance Guidelines do not contain a policy mandating the separation of the offices of the Chairman of the Board and the Chief Executive Officer, or CEO, and the board is given the flexibility to select its Chairman and our CEO in the manner that it believes is in the best interests of our stockholders. Accordingly, the Chairman and the CEO may be filled by one individual or two. The board has not separated the positions of Chairman of the Board and CEO and both positions are held by Mr. Cunningham. The board believes that this structure has historically served the company well and continues to do so, by creating a critical link between management and the Board of Directors, enabling the board to perform its oversight function with the benefits of management’s perspectives on the business, facilitating communication between the board and our senior management and providing the board with direct oversight of our business and affairs.

The board does not believe that mandating a particular structure that requires an independent lead director be designated is necessary to achieve effective oversight of management or to protect stockholder interests. Other than Mr. Cunningham, all members of our Board of Directors are independent under the Nasdaq Listing Rules and each of the board’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are comprised solely of independent directors. Additionally, each committee is chaired by a different director, thus promoting diverse perspectives and styles in critical areas of corporate governance. Based on the board and committee structures currently in place, our Nominating and Corporate Governance Committee believes that each independent director plays a critical role in oversight, leadership and governance and that designating a lead independent director would not create additional benefits at this time.

Risk Management

Our risk management function is overseen by our Board of Directors. Through our internal risk management committee, management reports and company policies, such as our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and our Audit Committee’s and Compensation Committee’s review of financial, executive compensation and other risks, we keep our Board of Directors apprised of material risks and provide our directors access to all information necessary for them to understand and evaluate how these risks interrelate, how they affect us and how our management addresses those risks. Mr. Cunningham, as our CEO, works with

 

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our independent directors and with management when material risks are identified by the Board of Directors or management to address such risk. If the identified risk poses an actual or potential conflict with management, our independent directors would conduct an assessment by themselves.

Executive Sessions

Independent directors meet in executive session at certain of the Board of Directors’ meetings. The board’s policy is to hold executive sessions without the presence of management, including the CEO, who is the only non-independent director.

Meetings of the Board of Directors and Committees

The Board of Directors held eight meetings during the fiscal year ended December 31, 2016. The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. During the last fiscal year, each of our directors attended at least 75% of the total number of meetings of the board and all of the committees of the board on which such director served during that period.

The following table sets forth the standing committees of the Board of Directors and the members of each committee as of the date that this Proxy Statement was first made available to our stockholders:

 

Name of Director

   Audit    Compensation    Nominating and Corporate
Governance

C. Thomas Ball

      Chair    X

Jeffrey M. Crowe

   X      

Eric Korman

         X

Jules A. Maltz

   X       Chair

Gokul Rajaram

      X   

Greg J. Santora

   Chair      

Brian Sharples

      X   

Mr. Cunningham and Ms. Yehoshua do not serve on any committees, and, consequently are not included in the table above.

The Board of Directors periodically reviews the composition of each committee to ensure that each committee’s members possess the background, skills and experience to effectively carry out their duties, and may make changes to the composition of the committees from time to time when they deem it prudent.

Audit Committee

The members of the Audit Committee are Messrs. Crowe, Maltz and Santora. Mr. Santora serves as the chair of the Audit Committee. In February 2017, our Board of Directors determined that each of Messrs. Crowe, Maltz and Santora was independent for purposes of the Nasdaq Listing Rules and SEC rules and regulations as they apply to Audit Committee members. Our Board of Directors has determined that each of Messrs. Crowe, Maltz and Santora meet the requirements for financial literacy and sophistication, and that Mr. Santora qualifies as an “Audit Committee financial expert,” under the applicable requirements of the Nasdaq Listing Rules and SEC rules and regulations. The composition of our Audit Committee complies with all applicable requirements in the Nasdaq Listing Rules and SEC rules and regulations and all of our Audit Committee members are independent directors.

The functions of the Audit Committee include:

 

    appointing, compensating, retaining and overseeing our independent registered public accounting firm;

 

    approving the terms of the audit and pre-approving the engagement of our independent registered public accounting firm to perform permissible non-audit services;

 

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    reviewing, with our independent auditors, all critical accounting policies and procedures;

 

    reviewing with management the adequacy and effectiveness of our internal control structure and procedures for financial reports;

 

    ensure the rotation of the lead audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law and to consider whether to rotate the audit firm itself;

 

    reviewing and discussing with management and our independent auditor our annual audited financial statements and any certification, report, opinion or review rendered by the independent auditor;

 

    reviewing and investigating conduct alleged to be in violation of our Code of Business Conduct and Ethics;

 

    reviewing and approving any related party transactions;

 

    preparing the Audit Committee report required in our annual proxy statement; and

 

    reviewing and evaluating, at least annually, its own performance and the adequacy of the committee charter.

The Audit Committee held five meetings during fiscal 2016. Additional information regarding the Audit Committee is set forth in the Report of the Audit Committee immediately following Proposal No. 2.

Compensation Committee

The members of the Compensation Committee are Messrs. Ball, Rajaram and Sharples, each of whom is a non-employee member of our Board of Directors. Mr. Ball serves as the chairperson of the Compensation Committee. In February 2017, our Board of Directors determined that each member of the Compensation Committee is independent for purposes of the Nasdaq Listing Rules, a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code.

The functions of the Compensation Committee include:

 

    reviewing and approving corporate goals and objectives relevant to the compensation of our CEO and our other executive officers;

 

    reviewing and approving the following for our CEO and our other executive officers: base salaries, bonuses, incentive compensation, equity awards, benefits and perquisites;

 

    recommending the establishment and terms of our incentive compensation plans and equity compensation plans, and administering such plans;

 

    recommending compensation programs for the non-employee members of our Board of Directors;

 

    preparing disclosures regarding executive compensation and any related reports required by the Nasdaq Listing Rules and SEC rules and regulations;

 

    reviewing grants of equity awards made by the management equity award committee to employees and other eligible individuals pursuant to the authority delegated to it by the Compensation Committee;

 

    making and approving grants of stock options and other equity awards to all executive officers, non-employee directors and other individuals whose equity awards are not made by the management equity award committee; and

 

    reviewing and evaluating, at least annually, its own performance and the adequacy of the committee charter.

 

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The Compensation Committee and our Board of Directors believe that attracting, retaining and motivating our employees, and particularly the company’s senior management team and key operating personnel, are essential to RetailMeNot’s performance and enhancing stockholder value. The Compensation Committee will continue to administer and develop our compensation programs in a manner designed to achieve these objectives.

The Compensation Committee reviews and determines executive officer compensation. Our CEO makes recommendations to the Compensation Committee regarding base salary increases, bonuses, incentive compensation, equity awards, benefits and perquisites for each executive officer other than himself. These recommendations are based upon objective criteria, including market data for our peer group, competitive positioning, our financial performance, accomplishment of strategic objectives, retention and individual performance. The Compensation Committee reviews and evaluates submitted proposals, discusses them with our CEO, and uses these recommendations as one factor in determining compensation levels for our executive officers. The Compensation Committee is ultimately responsible for establishing executive compensation levels, including for our CEO.

In January 2012, the Compensation Committee selected Compensia, Inc. (“Compensia”) to provide compensation consulting support. Compensia has provided market information on compensation trends and practices and compensation analysis based on competitive data drawn from a peer group of companies. Compensia is also available to perform special projects at the Compensation Committee’s request. Compensia provides analyses that inform the Compensation Committee’s decisions, but does not decide or approve any compensation actions. As needed, the Compensation Committee also consults with Compensia on program design matters. The engagement of any compensation consultant rests exclusively with the Compensation Committee, which has sole authority to retain and terminate any compensation consultant or other advisor that it uses.

In July 2016, the Compensation Committee assessed the independence of Compensia and concluded that no conflicts of interest exist that would prevent Compensia from providing independent and objective advice to the Compensation Committee. In making this determination, the Compensation Committee reviewed and discussed information provided by Compensia in a questionnaire that included questions tailored to the Nasdaq Listing Rules with regards to Compensia’s independence and provision of services.

The Compensation Committee held five meetings during 2016.

Nominating and Corporate Governance Committee

The members of the Nominating and Corporate Governance Committee are Messrs. Ball, Korman and Maltz. Mr. Maltz serves as the chairperson of the Nominating and Corporate Governance Committee. In February 2017, our Board of Directors determined that each member of the Nominating and Corporate Governance Committee is independent for purposes of the Nasdaq Listing Rules and under applicable SEC rules and regulations.

The functions of the Nominating and Corporate Governance Committee include:

 

    assisting our Board of Directors in identifying qualified director nominees and recommending nominees for each annual meeting of stockholders;

 

    developing, recommending and reviewing our Corporate Governance Guidelines and our Code of Business Conduct and Ethics;

 

    assisting the board in its evaluation of the performance of our Board of Directors and each committee thereof;

 

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    recommending corporate governance principles; and

 

    reviewing and evaluating, at least annually, its own performance and the adequacy of the committee charter.

The Nominating and Corporate Governance Committee held four meetings during fiscal 2016.

Director Nominations

Our Nominating and Corporate Governance Committee is responsible for, among other things, assisting our Board of Directors in identifying qualified director nominees and recommending nominees for election at each annual meeting of stockholders. The Nominating and Corporate Governance Committee’s goal is to assemble a board that brings to our company a diversity of experience in areas that are relevant to our business and that complies with the Nasdaq Listing Rules and applicable SEC rules and regulations. While we do not have a formal diversity policy for board membership, the Nominating and Corporate Governance Committee generally considers the diversity of nominees in terms of knowledge, experience, background, skills, expertise and demographic factors. When considering nominees for election as directors, the Nominating and Corporate Governance Committee reviews the needs of the board for various skills, background, experience and expected contributions and the qualification standards established from time to time by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee believes that directors must also have an inquisitive and objective outlook and mature judgment. Director candidates must have sufficient time available in the judgment of the Nominating and Corporate Governance Committee to perform all board and committee responsibilities. Members of the Board of Directors are expected to rigorously prepare for, attend and participate in all meetings of the board and applicable committee meetings.

Other than the foregoing and the applicable rules regarding director qualification, there are no stated minimum criteria for director nominees. Under the Nasdaq Listing Rules, at least a majority of the members of the board must meet the definition of “independence” and at least one director must be a “financial expert” under the Exchange Act and the Nasdaq Listing Rules and applicable SEC rules and regulations. The Nominating and Corporate Governance Committee also believes it appropriate for our CEO to participate as a member of the Board of Directors.

The Nominating and Corporate Governance Committee will evaluate annually the current members of the board whose terms are expiring and who are willing to continue in service against the criteria set forth above in determining whether to recommend these directors for election. The Nominating and Corporate Governance Committee will assess regularly the optimum size of the board and its committees and the needs of the board for various skills, background and business experience in determining if the board requires additional candidates for nomination.

Candidates for director nomination come to our attention from time to time through incumbent directors, management, stockholders or third parties. These candidates may be considered at meetings of the Nominating and Corporate Governance Committee at any point during the year. Such candidates are to be evaluated against the criteria set forth above. If the Nominating and Corporate Governance Committee believes at any time that it is desirable that the board consider additional candidates for nomination, the committee may poll directors and management for suggestions or conduct research to identify possible candidates and may engage, if the Nominating and Corporate Governance Committee believes it is appropriate, a third party search firm to assist in identifying qualified candidates.

Our bylaws permit stockholders to nominate directors for consideration at an annual meeting. The Nominating and Corporate Governance Committee will consider director candidates validly recommended by stockholders. For more information regarding the requirements for stockholders to validly submit a nomination for director, see “Stockholder Proposals or Nominations to Be Presented at Next Annual Meeting” elsewhere in this Proxy Statement.

 

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Compensation of Directors

In March 2013, we adopted a director compensation plan, and in October 2015 we adopted an amended and restated director compensation plan, which became effective in 2016. Pursuant to the plan certain of our non-employee directors are eligible to receive equity awards and cash retainers as compensation for service on our Board of Directors and its committees. Under our director compensation plan, our non-employee directors are entitled to receive a $30,000 annual cash retainer fee. The details of 2016 cash compensation for service by our non-employee directors on the committees of our Board of Directors is set forth in the table below.

 

Committee

   Chairperson Fee ($)      Member Fee ($)  

Audit Committee

     20,000        10,000  

Compensation Committee

     10,000        5,000  

Nominating and Corporate Governance Committee

     7,500        3,500  

In addition, our non-employee directors generally receive an initial (i) option to purchase that number of shares of our Series 1 common stock equal to $150,000 divided by the then current Black-Scholes-Merton value of our Series 1 common stock and (ii) restricted stock unit (“RSU”) award to be settled for that number of shares of our Series 1 common stock equal to $150,000 divided by the then current share price of our Series 1 common stock. These awards vest on the earlier of (a) the third anniversary of the date of grant and (b) the day prior to the annual stockholders’ meeting during the year such director’s term expires, provided that the director continues to serve through such vesting date.

In subsequent years, on the date of the annual stockholders’ meeting, non-employee directors will receive an annual (i) option grant entitling each director to purchase that number of shares of the Company’s Series 1 common stock equal to $75,000 divided by the then current Black-Scholes-Merton value of the Company’s Series 1 common stock and (ii) restricted stock unit grant entitling the director to receive that number of shares of the Company’s Series 1 common stock equal to $75,000 divided by the then current share price of the Company’s Series 1 common stock. These grants will vest on the earlier of (a) the first anniversary of the grant date and (b) the day prior to the annual stockholders’ meeting in the year following the year of grant, provided, in each case, that the non-employee director continues to serve as a director of the Company through such vesting date.

2016 Director Compensation

The following table sets forth information concerning the compensation earned during 2016. Currently, members of our Board of Directors who are affiliated with venture capital firms that invested in shares of our preferred stock prior to our initial public offering do not receive compensation for service on our Board of Directors. Our CEO did not receive additional compensation for his service as a director and, consequently, is not included in the table. The compensation received by our CEO as an employee is presented in the Summary Compensation Table:

 

Name

   Fees Earned or
Paid in Cash ($)
    Stock
Awards ($)(1)
    Option Awards
($)(1)
    Total ($)  

C. Thomas Ball

     43,500 (2)      74,998 (3)      74,969 (4)      193,467  

Jeffrey M. Crowe

                        

Eric A. Korman

     33,500 (5)      74,998 (3)      74,969 (4)      183,467  

Jules A. Maltz

                        

Gokul Rajaram

     35,000 (6)      74,998 (3)      74,969 (4)      184,967  

Greg A. Santora

     50,000 (7)      74,998 (3)      74,969 (4)      199,967  

Brian Sharples

     35,000 (8)      74,998 (3)      74,969 (4)      184,967  

Tamar Yehoshua

     30,000 (9)      74,998 (3)      74,969 (4)      179,967  

 

(1)

Amounts represent the aggregate grant date fair value of stock options and RSU awards granted during 2016 computed in accordance with ASC Topic 718. Assumptions used in calculating the grant date fair

 

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  value of the stock options and RSU awards reported in this column are set forth in Note 8 “Stockholders’ Equity and Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Note that the amounts reported in this column reflect the accounting cost for these stock options and RSU awards, and do not correspond to the actual economic value that our non-employee directors may receive from these equity awards.
(2) Amount consists of $30,000 annual retainer fee for service on the Board of Directors, $10,000 fee for service as chairman of our Compensation Committee and a $3,500 fee for service as a member of our Nominating and Corporate Governance Committee.
(3) Represents the grant on April 28, 2016 of 8,741 RSUs. All of such RSUs vest on the earlier of (i) the first anniversary of the date of grant and (ii) the day prior to the date of the annual stockholder meeting in the year following the date of grant and were outstanding as of December 31, 2016.
(4) Represents the grant on April 28, 2016 of an option to purchase 17,792 shares of Series 1 common stock at an exercise price of $8.58 per share. All of such options vest on the earlier of (i) the first anniversary of the date of grant and (ii) the day prior to the date of the annual stockholder meeting in the year following the date of grant and were outstanding as of December 31, 2016.
(5) Amount consists of $30,000 annual retainer fee for service on the Board of Directors and $3,500 fee for service as a member of our Nominating and Corporate Governance Committee.
(6) Amount consists of $30,000 annual retainer fee for service on the Board of Directors and $5,000 fee for service as a member of our Compensation Committee.
(7) Amount consists of $30,000 annual retainer fee for service on the Board of Directors and a $20,000 fee for service as chairman of our Audit Committee.
(8) Amount consists of $30,000 annual retainer fee for service on the Board of Directors and a $5,000 fee for service as a member of our Compensation Committee.
(9) Amount consists of $30,000 annual retainer fee for service on the Board of Directors.

We maintain guidelines for minimum ownership levels of shares of our Series 1 common stock by the members of our Board of Directors. All members of our Board of Directors were in compliance with these guidelines in 2016. For more information regarding the stock ownership guidelines, see “Other Compensation Policies” in the Compensation Discussion and Analysis section of this Proxy Statement.

 

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Communications with Directors

Stockholders and other interested parties may communicate with the Board of Directors by mail or e-mail addressed as follows:

Board of Directors of RetailMeNot, Inc.

c/o Corporate Secretary

301 Congress Avenue, Suite 700

Austin, Texas 78701

E-mail address: corporatesecretary@rmn.com

All directors have access to this correspondence. In accordance with instructions from the board, the Corporate Secretary logs and reviews all correspondence and transmits such communications to the full board or individual directors, as appropriate. Certain communications, such as business solicitations, job inquiries, junk mail, patently offensive material or communications that present security concerns may not be transmitted, as determined by the Corporate Secretary.

Director Attendance at Annual Meetings

We attempt to schedule our annual meeting of stockholders at a time and date to accommodate attendance by members of our Board of Directors taking into account the directors’ schedules. All directors are encouraged to attend our annual meeting of stockholders.

Committee Charters and Other Corporate Governance Materials

We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors. The Code of Business Conduct and Ethics is available on the investor relations portion of our website at http://investor.retailmenot.com. A printed copy of the code may also be obtained by any stockholder free of charge upon request to the Corporate Secretary, RetailMeNot, Inc., 301 Congress Avenue, Suite 700, Austin, Texas 78701. Any substantive amendment to or waiver of any provision of the Code of Business Conduct and Ethics may be made only by the Board of Directors, and will be disclosed on our website as well as via any other means then required by Nasdaq Listing Rules or applicable law.

Our Board of Directors has also adopted a written charter for each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each charter is available on the investor relations portion of our website at http://investor.retailmenot.com.

Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines that address the composition of the board, criteria for board membership and other board governance matters. The Corporate Governance Guidelines are available on the investor relations portion of our website at http://investor.retailmenot.com. A printed copy may also be obtained by any stockholder free of charge upon request to the Corporate Secretary, RetailMeNot, Inc., 301 Congress Avenue, Suite 700, Austin, Texas 78701.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee are or have been an officer or employee of RetailMeNot. None of our executive officers currently serves, or in the past year has served, as a member of the Board of Directors or Compensation Committee of any entity that has one or more executive officers serving on our Board of Directors or our Compensation Committee.

 

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PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board of Directors has selected Ernst & Young LLP (“Ernst & Young”) to serve as our independent registered public accounting firm to audit the consolidated financial statements of RetailMeNot, Inc. for the fiscal year ending December 31, 2017. Ernst & Young has served as our auditor since 2010. A representative of Ernst & Young is expected to be present at the annual meeting to be available to respond to appropriate questions.

Fees Billed by Ernst & Young

The following table sets forth the aggregate fees billed by Ernst & Young for the fiscal years ended December 31, 2016 and 2015:

 

     Fiscal
2016
     Fiscal
2015
 

Audit fees(1)

   $ 1,155,600      $ 1,094,400  

Audit-related fees(2)

   $      $  

Tax fees(3)

   $ 53,000      $ 46,600  

All other fees(4)

   $      $  

Total

   $ 1,208,600      $ 1,141,100  
  

 

 

    

 

 

 

 

(1) Audit fees consist of fees billed for professional services rendered in connection with the audit of our consolidated annual financial statements, review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by the independent auditor in connection with statutory and regulatory filings or engagements, consultations concerning financial reporting in connection with acquisitions and issuances of auditor consents and comfort letters in connection with SEC registration statements and related SEC registered securities offerings.
(2) Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit fees.”
(3) Tax fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning (domestic and international). These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning.
(4) All other fees consist of fees for products and services other than the services reported above.

Policy on Audit Committee Pre-approval of Audit and Non-audit Services Performed by Independent Registered Public Accounting Firm

The Audit Committee has determined that all services performed by Ernst & Young are compatible with maintaining the independence of Ernst & Young. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Unless the specific service has been pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent registered public accounting firm is engaged to perform it. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval process.

 

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Vote Required and Board of Directors Recommendation

The affirmative vote of a majority of the votes cast on the proposal at the annual meeting is required for approval of this proposal. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum and will have the same effect as voting against the proposal. Your bank or broker will have discretion to vote any uninstructed shares on this proposal. If the stockholders do not approve the ratification of Ernst & Young as our independent registered public accounting firm, the Audit Committee will reconsider its selection.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017. PROXIES WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.

 

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee currently consists of three directors, Messrs. Santora, Crowe and Maltz. Each of Messrs. Santora, Crowe and Maltz is, in the judgment of the Board of Directors, an independent director. The Audit Committee acts pursuant to a written charter that has been adopted by the Board of Directors. A copy of the charter is available on the investor relations portion of RetailMeNot’s website at http://investor.retailmenot.com.

The Audit Committee oversees RetailMeNot’s financial reporting process on behalf of the Board of Directors. The Audit Committee is responsible for retaining RetailMeNot’s independent registered public accounting firm, evaluating its independence, qualifications and performance, and approving in advance the engagement of the independent registered public accounting firm for all audit and non-audit services. The Audit Committee’s specific responsibilities are set forth in its charter. The Audit Committee reviews its charter at least annually.

Management has the primary responsibility for the financial statements and the financial reporting process, including internal control systems, and procedures designed to insure compliance with applicable laws and regulations. RetailMeNot’s independent registered public accounting firm, Ernst & Young, is responsible for expressing an opinion as to the conformity of our audited financial statements with generally accepted accounting principles.

The Audit Committee has reviewed and discussed with management the company’s audited financial statements. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee has met with the independent registered public accounting firm, with and without management present, to discuss the overall scope of the independent registered public accounting firm’s audit, the results of its examinations, its evaluations of the company’s internal controls and the overall quality of RetailMeNot’s financial reporting.

The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence.

Based on the review and discussions referred to above, the Audit Committee recommended to RetailMeNot’s Board of Directors that the company’s audited financial statements be included in RetailMeNot’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

AUDIT COMMITTEE

Greg J. Santora, Chair

Jeffrey M. Crowe

Jules A. Maltz

The foregoing Report of the Audit Committee shall not be deemed to be incorporated by reference into any filing of RetailMeNot under the Securities Act of 1933 or the Exchange Act, except to the extent that RetailMeNot specifically incorporates such information by reference in such filing and shall not otherwise be deemed “filed” under either the Securities Act or the Exchange Act or considered to be “soliciting material.”

 

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EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers as of March 16, 2017.

 

Name

   Age     

Position

G. Cotter Cunningham

     54      Chief Executive Officer, President and Chairman of the Board

J. Scott Di Valerio

     54      Chief Financial Officer

Kelli A. Beougher

     47      Chief Operating Officer

Paul M. Rogers

     48      Chief Technology Officer

Jonathan B. Kaplan

     43      Chief Legal Officer, General Counsel and Secretary

Louis J. Agnese, III

     38      Senior Vice President and General Manager, Gift Cards

G. Cotter Cunningham’s biography can be found on page 6 of this Proxy Statement with the biographies of the other members of the Board of Directors. Biographies for our other executive officers, including our other named executive offers, are below.

J. Scott Di Valerio has served as our Chief Financial Officer since December 2015. Mr. Di Valerio has more than 30 years of management, operations, and financial experience. He most recently served as chief executive officer at Outerwall, Inc. Mr. Di Valerio joined Outerwall in 2010 and served as the company’s chief financial officer until he was appointed chief executive officer in 2013. In addition to his leadership of Outerwall’s financial organization, strategy, and operating roles, Mr. Di Valerio also led the company’s corporate information technology and supply chain functions. Prior to Outerwall, Mr. Di Valerio served as president of the Americas for the Lenovo Group Limited. He also held senior positions at Microsoft Corporation, as corporate vice president of Microsoft’s OEM division and as corporate vice president of finance and administration and chief accounting officer. Previously Mr. Di Valerio served in management positions at The Walt Disney Company and Mindwave Software Inc., and as a partner at PricewaterhouseCoopers. Mr. Di Valerio has a B.B.A. in accounting from the University of San Diego.

Kelli A. Beougher has served with us since December 2009, and was promoted to Chief Operating Officer in May 2012. Prior to joining us, Ms. Beougher served in various positions at Rakuten LinkShare from December 2001 to May 2009, most recently as Senior Vice President of Services. Before that time, she served in various capacities at GE Capital. Ms. Beougher holds a B.B.A. in marketing from the University of Texas.

Paul M. Rogers has served as our Chief Technology Officer since June 2011. Previously, he worked as Engineering Director with Google (GOOG) from February 2008 to May 2011. Prior to that time, he led the engineering team at Bazaarvoice (BV). He also held multiple development and technical management roles at Trilogy Software. Mr. Rogers holds a B.A. in psychology and managerial studies from Rice University.

Jonathan B. Kaplan has served as our General Counsel and Secretary since August 2015. He was appointed our Chief Legal Officer in January 2017. He previously served as our interim General Counsel beginning in December 2014 and as our Assistant General Counsel, Corporate from March 2014 until November 2014, after having joined RetailMeNot in January 2014 to work on various matters prior to his appointment. Prior to that, Mr. Kaplan worked as a corporate attorney at DLA Piper LLP from June 2011 through November 2013. He served as Chief Operating Officer of ROI Pop, Inc., a digital marketing agency, from September 2010 to April 2011. Mr. Kaplan worked as a corporate attorney at Vinson & Elkins LLP from November 2008 through August 2010 and at Latham & Watkins LLP from September 2006 to October 2008. Mr. Kaplan holds a J.D. from the University of California, Davis School of Law (Order of the Coif) and a B.A., with honors, in religious studies from the University of California, Santa Barbara.

Louis J. Agnese, III has served as our Senior Vice President and General Manager, Gift Cards since April 2016. Mr. Agnese joined the company as General Counsel and Corporate Secretary in 2011 and served in that

 

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capacity until he was appointed interim Chief Financial Officer in December 2014. In December 2015, he was appointed Senior Vice President, Administration, managing the company’s legal, human resources and facilities functions. Prior to RetailMeNot, Mr. Agnese was an attorney with DLA Piper LLP and Akin Gump Strauss Hauer & Feld, representing numerous companies in capital markets transactions, public company compliance obligations and a wide range of private and public mergers and acquisitions. Mr. Agnese holds a J.D. from the University of Texas and a B.B.A. in international business with a minor in Japanese from the University of the Incarnate Word.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes the compensation program for our Principal Executive Officer, our Principal Financial Officer, and the next three most highly-compensated executive officers of the Company during 2016 (the “Named Executive Officers”). During 2016, these individuals were:

 

    G. Cotter Cunningham, our President and Chief Executive Officer (our “CEO”);

 

    J. Scott Di Valerio, our Chief Financial Officer (our “CFO”);

 

    Kelli A. Beougher, our Chief Operating Officer;

 

    Paul M. Rogers, our Chief Technology Officer; and

 

    Jonathan Kaplan, our General Counsel and Secretary.

This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 2016. It also provides an overview of our executive compensation philosophy and objectives. Finally, it analyzes how and why the Compensation Committee of our Board of Directors (the “Compensation Committee”) arrived at the specific compensation decisions for our executive officers, including the Named Executive Officers, for 2016, including the key factors that the Compensation Committee considered in determining their compensation.

This Compensation Discussion and Analysis contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. The actual compensation programs that we adopt in the future may differ materially from currently planned programs as summarized in this discussion.

Senior Management Changes

Effective February 8, 2017, Mr. Kaplan, previously our General Counsel and Secretary, was appointed our Chief Legal Officer, General Counsel and Secretary.

Executive Summary

2016 Business Highlights

We operate a leading savings destination, connecting consumers with retailers, restaurants and brands, both online and in-store. In 2016, our marketplace featured more than 700,000 digital offers each month, including discounted gift cards. Our websites, mobile applications, email newsletters and alerts and social media presence enable consumers to search for, discover and redeem hundreds of thousands of relevant digital offers, from paid merchants, or merchants with which we had a contract in 2016. Our marketplace features digital offers across multiple product categories, including clothing; electronics; health and beauty; home and office; travel, dining and entertainment; personal and business services; and shoes.

2016 was a challenging year for our business, largely attributable to (i) consumers’ continuing shift to mobile devices, which monetize at a comparably lower rate than traffic to our desktop websites, and (ii) overall deceleration in traffic to our marketplace. Despite these challenges, we grew our consolidated net revenues driven by new gift card net revenues and strong growth in both in-store and advertising net revenues. This was offset by a decline in desktop online transaction net revenues driven primarily by a decline in visits. Our key financial results were as follows:

 

    Net revenues were $280.4 million, representing an increase of 12.6% from $249.1 million in 2015;

 

    Desktop online transaction net revenues were $144.3 million, representing a decrease of 17.0% from $173.9 million in 2015;

 

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    Mobile online transaction net revenues were $27.0 million, representing an increase of 10.8% from $24.4 million in 2015;

 

    In-store and advertising net revenues were $65.5 million, representing an increase of 29.0% from $50.8 million in 2015;

 

    Gift card net revenues were $43.5 million, driven by our acquisition of GiftcardZen Inc in April 2016 (we had no gift card net revenues in 2015, prior to our acquisition of GiftcardZen Inc);

 

    Net income was $2.0 million, representing a decrease of 83.4% from $11.8 million in 2015;

 

    Non-GAAP net income was $34.2 million, representing a decrease of 17.0% from $41.2 million in 2015;

 

    Adjusted EBITDA was $61.3 million, down 14.8% from 2015 and representing 21.9% of net revenues;

 

    Total visits decreased 9.5% from 2015 to 650.1 million; and

 

    Mobile unique visitors for the three-month period ended December 31, 2016 remained flat over the comparable period in 2015, at 23.1 million. This figure represents the average number of monthly mobile unique visitors for the last three months of the year. We define each of the following as a mobile unique visitor: (i) the first time a specific mobile device accesses one of our mobile applications during a calendar month, and (ii) the first time a specific mobile device accesses one of our mobile websites using a specific web browser during a calendar month. If a mobile device accesses more than one of our mobile websites or mobile applications in a single calendar month, the first access to each such mobile website or mobile application is counted as a mobile unique visitor, as they are tracked separately for each mobile domain. We measure mobile unique visitors with a combination of internal data sources and Google Analytics data.

Stockholder Advisory Vote on Executive Compensation

At our 2016 Annual Meeting of Stockholders, we conducted a non-binding stockholder advisory vote on the compensation of the Named Executive Officers (commonly known as a “Say-on-Pay” vote). Our stockholders approved the Say-on-Pay proposal with approximately 98.5% of the votes cast in favor of the proposal. We believe that this result demonstrates that our stockholders are generally supportive of our executive compensation program.

The Compensation Committee has reviewed our executive compensation policies and practices since that vote, and has been mindful of the level of support our stockholders have expressed for our approach to executive compensation. Upon consideration of the vote results and feedback from discussions with our stockholders (as described below) in 2016, the Compensation Committee continued to refine certain elements of our executive compensation program for 2016, and review and improve our disclosure of our executive compensation program in this proxy statement.

2016 Executive Compensation Highlights

The key elements of our 2016 executive compensation program were as follows:

 

   

Performance-based equity awards – Strong emphasis on long-term incentive compensation opportunities of our executive officers, consisting of performance-based equity awards (“PSUs”) that may be settled for shares of our Series 1 common stock and performance-based options (“PSOs”) to purchase shares of our Series 1 common stock. The shares subject to PSU awards were earned based on our financial performance relative to pre-established target levels for our 2016 advertising and in-store net revenues, subject to a minimum payment intended to address executive retention concerns. Shares of our Series 1 common stock earned pursuant to the PSU awards are also subject to time-based vesting requirements over three years from the date of grant. The shares of our Series 1 common stock subject

 

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to the PSOs will vest only if we “over-achieve” our total stockholder return relative to the Russell 2000 index over a two-year period beginning on April 1, 2016 and ending on March 31, 2018.

 

    Equity acceleration provisions for our CEO – Consistent with policy revisions we made in 2016, and pursuant to an amendment to our CEO’s employment agreement in May 2016, all equity awards granted to our CEO in 2016 provided (and all equity awards granted to our CEO in subsequent years will provide) as follows:

 

    Awards will no longer provide for accelerated vesting solely upon a termination of employment by the Company without “cause” or by our CEO for “good reason.”

 

    Awards will provide for full accelerated vesting in the event of a change in control of the Company only if such transaction is accompanied by a qualifying termination of employment (a “double trigger” arrangement).

In addition, awards granted beginning in 2017 will no longer provide for partial accelerated vesting solely upon the occurrence of a change in control.

The following key compensation actions were taken with respect to the Named Executive Officers for 2016:

 

    Base salaries – Our CEO declined an increase in his annual base salary for 2016, and his base salary remains at the level set in 2014. The annual base salary of Mr. Di Valerio was maintained at its 2015 level. The annual base salaries of Ms. Beougher, Mr. Rogers and Mr. Kaplan, were increased in amounts ranging from 4.7% to 9.3%.

 

    Annual cash bonuses – Our executives received annual bonuses earned in accordance with the terms and conditions of our 2016 Bonus Plan, as amended and restated. Additionally, in recognition of maintaining comparatively strong levels of adjusted EBITDA despite the year-over-year decline in our desktop online transaction net revenues, our Named Executive Officers other than our CEO were awarded additional cash bonus payments. See the section titled “Executive Compensation Program Elements – 2016 Annual Cash Bonus Decisions” for additional discussion of bonus payments made to our executives in 2016.

 

    Long-term incentive compensation – Long-term incentive compensation opportunities in the form of PSOs to purchase shares of our Series 1 common stock, which vest over a multi-year period, in amounts ranging from $28,920 to $187,980, including a PSO in the amount of $187,980 granted to our CEO, and PSU awards that may be settled for shares of our Series 1 common stock, which are earned for 2016 performance and then vest over a multi-year period, in amounts ranging from $195,900 to $1,273,350, including a PSU award in the amount of $1,273,350 granted to our CEO, were granted. The aggregate grant date fair value of the long-term incentive compensation opportunity granted to each Named Executive Officer in 2016 was less than the corresponding value of his or her long-term incentive compensation opportunity in 2015, other than Mr. Di Valerio, who received no equity awards in 2015.

Pay-for-Performance

We believe our executive compensation program is reasonable, competitive, and appropriately balances the goals of attracting, motivating, rewarding, and retaining our executive officers, including the Named Executive Officers. To ensure our executive officers’ interests are aligned with those of our stockholders and to motivate and reward individual initiative and effort, a substantial portion of their target annual total direct compensation opportunity is “at-risk” and will vary above or below target levels commensurate with our performance.

We emphasize performance-based compensation that appropriately rewards our executive officers for delivering financial, operational and strategic results that meet or exceed pre-established goals through our annual cash bonus plan, as well as the equity awards that we use to deliver long-term incentive compensation opportunities.

 

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The following graphic illustrates our CEO’s target total direct compensation mix for 2016, which emphasizes variable, performance-based pay:

 

LOGO

As reflected in the foregoing graphic, we believe that PSU awards that may be settled for shares of our Series 1 common stock are a key incentive for our executive officers to drive long-term growth. To ensure that we remain faithful to our compensation philosophy, at least annually the Compensation Committee evaluates the relationship between the reported values of the equity awards granted to our executive officers, the amount of compensation realizable (and, ultimately, realized) from such awards in subsequent years and our total stockholder return over this period.

Stockholder Engagement

We carefully consider feedback from our stockholders regarding our executive compensation program. Our stockholders are invited to express their views to the Compensation Committee as described in the section of this Proxy Statement entitled “Corporate Governance—Communicating with the Board” above. We also engage in dialogue with our major stockholders throughout the year about various topics, including executive compensation. In connection with our 2017 Annual Meeting of Stockholders and over the course of 2016, we engaged in dialogue with several of our major stockholders which, in the aggregate, beneficially owned approximately 60% of the outstanding shares of our Series 1 common stock.

Our Board of Directors and the Compensation Committee value the insights gained from these discussions and find them to be helpful as the Compensation Committee considers and adopts compensation policies affecting our executive officers, including the Named Executive Officers. We will continue to seek opportunities for dialogue with our stockholders on executive compensation matters and, more broadly, corporate governance.

 

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Executive Compensation Policies and Practices

We endeavor to maintain sound governance standards with respect to our executive compensation policies and practices. The Compensation Committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following policies and practices were in effect during 2016:

 

    Independent Compensation Committee. The Compensation Committee is comprised solely of independent directors.

 

    Independent Compensation Committee advisor. The Compensation Committee engaged its own compensation consultant to assist with its 2016 compensation reviews. This consultant performed no other services for us.

 

    Annual executive compensation risk review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes and a review of our compensation-related risk profile to ensure that our compensation programs do not encourage excessive or inappropriate risk taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us.

 

    Executive compensation policies and practices. Our compensation philosophy and related corporate governance policies and practices are complemented by several specific compensation practices that are designed to align our executive compensation with long-term stockholder interests, including the following:

 

    Compensation at-risk. Our executive compensation program is designed so that a significant portion of compensation is “at risk” based on Company performance, as well as short-term cash and long-term equity incentives to align the interests of our executive officers and stockholders.

 

    No retirement plans. We do not currently offer, nor do we have plans to provide, pension arrangements, retirement plans or nonqualified deferred compensation plans or arrangements to our executive officers. At this time, we maintain a defined contribution plan that is intended to satisfy the requirements of Sections 401(a) and 401(k) of the Internal Revenue Code (the “Code”), which is available to our executive officers on the same basis as our other full-time, salaried U.S. employees.

 

    No perquisites. We do not provide perquisites or other personal benefits to our executive officers.

 

    No tax reimbursements. We generally do not provide any tax reimbursement payments (including “gross-ups”) on any perquisites or other personal benefits.

 

    No special health or welfare benefits. Our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees.

 

    No post-employment tax reimbursements. We do not provide any tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits.

 

    Double-Trigger” change-in-control arrangements. Generally, our change-in-control payments and benefits are based on a “double-trigger” arrangement (that is, they require both a change in control of the Company plus a qualifying termination of employment before payments and benefits are paid), although, pursuant to the terms of their existing employment agreements, certain Named Executive Officers receive partial acceleration of their outstanding equity awards (50% of equity awards granted on or before December 31, 2016 in the case of our CEO and 25% of any outstanding equity awards in the cases of Ms. Beougher and Mr. Rogers) upon a change in control of the Company.

 

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    Multi-year vesting requirements. The equity awards granted to our executive officers vest over multi-year periods, consistent with current market practice and our retention objectives. Grants of RSU awards vest over four years in equal annual installments. Stock options grants for our executive officers also vest over four years. For newly hired executive officers, 25% of the award vests on the first anniversary of the vesting commencement date and the remaining awards vest monthly over the remaining three years. Stock options granted to existing executive officers vest over four years in equal monthly installments. Grants of performance-based restricted stock units were earned over a one-year period based on the Company’s performance against specific targets and are subject to time-based vesting over a period of three years from the date of grant. Grants of performance-based stock options are earned based on the Company’s total stockholder return over an approximately two-year period and are subject to time-based vesting over that same period.

 

    Stock ownership guidelines. We maintain guidelines for minimum ownership of shares of our Series 1 common stock by our executive officers and the non-employee members of our Board of Directors.

 

    Hedging and pledging prohibited. We prohibit our executive officers and the members of our Board of Directors from hedging or pledging our securities.

 

    Thorough disclosure about our short-term incentive plan. We provide a comprehensive discussion and analysis of our annual bonus plan in this proxy statement, including the disclosure of specific performance achievement levels and maximum bonus payments.

Executive Compensation Philosophy and Program Design

Compensation Philosophy

We compete with many other companies in seeking to attract and retain a skilled management team. To meet this challenge, we offer our executive officers, including the Named Executive Officers, compensation and benefits that are market competitive and that meet our goals of attracting, retaining and motivating highly-skilled individuals to help us achieve our financial and strategic objectives.

Our executive compensation program is designed to achieve the following principal objectives:

 

    attract and retain talented and experienced individuals;

 

    offer total compensation opportunities that take into consideration the practices of other comparably-positioned Internet and technology companies;

 

    directly and substantially link total compensation to measurable corporate and individual performance;

 

    create and sustain a sense of urgency surrounding strategy execution and the achievement of key business objectives; and

 

    strengthen the alignment of the interests of our executive officers and stockholders through equity-based, long-term incentives and reward our executive officers for creating long-term stockholder value.

Program Design

In designing our executive compensation program for 2016, we were cognizant of our need to motivate our executive officers to meet our short-term goals and long-term strategic objectives. Thus, we continued to structure the annual compensation of our executive officers, including the Named Executive Officers, using three principal elements: base salary, annual cash bonus opportunities and a long-term incentive compensation opportunity.

We offer cash compensation to our executive officers, including the Named Executive Officers, in the form of base salaries and annual cash bonus opportunities at levels that we believe help us provide competitive compensation packages. To emphasize our annual goals, we set base salaries and target total cash compensation

 

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opportunities of our executive officers with reference to the 50th percentile of the competitive market. Generally, we have structured our annual cash bonus opportunities to focus on the achievement of specific short-term financial and strategic goals that will further our longer-term growth objectives.

In the case of long-term incentive compensation opportunities of our executive officers, we offered a blend of performance-based equity awards (“PSUs”) that may be settled for shares of our Series 1 common stock and performance-based options (“PSOs”) to purchase shares of our Series 1 common stock. The shares subject to PSU awards are earned based on our financial performance relative to pre-established target levels for our 2016 advertising and in-store net revenues, and are also subject to time-based vesting requirements over three years from the date of grant. Shares of our Series 1 common stock subject to the PSOs will vest only if we “over-achieve” our total stockholder return relative to the Russell 2000 index over a two-year period beginning on April 1, 2016 and ending on March 31, 2018 and are subject to time-based vesting over that period.

In 2016, the Compensation Committee considered competitive compensation data from companies within our industry (which are discussed in more detail in the section entitled “Compensation-Setting Process—Competitive Positioning” below) to better understand the competitive market for executive talent when establishing compensation levels for our executive officers. For this purpose, the Compensation Committee considered data from publicly-traded companies with business models and financial and size characteristics similar to ours, with an emphasis on Internet and technology companies. Using this information as a reference, the Compensation Committee placed an emphasis on remaining competitive in our market and differentiating total cash compensation through an annual cash bonus plan.

Compensation-Setting Process

Role of the Compensation Committee

The Compensation Committee discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers, including the Named Executive Officers. The Compensation Committee is responsible for overseeing our compensation and benefits policies generally, and overseeing, evaluating and approving the compensation plans, policies and programs applicable to our CEO and our other executive officers.

The Compensation Committee regularly reports to our Board of Directors on its deliberations, but is ultimately responsible for compensation decisions, as described in the Compensation Committee charter. A summary description of the Compensation Committee charter is provided in the section of this Proxy Statement entitled “Corporate Governance—Committees of the Board of Directors” above.

The Compensation Committee reviews, on at least an annual basis, our executive compensation program, including our incentive compensation plans and arrangements, to determine whether they are appropriate, properly coordinated and achieve their intended purposes, and recommends to our Board of Directors any modifications or new plans or programs. It also reviews the compensation of our executive officers, including the Named Executive Officers, and makes decisions about the various elements that comprise their compensation packages.

The Compensation Committee does not establish a specific target when setting the target total direct compensation opportunity of our executive officers, including the Named Executive Officers. When selecting and setting the amount of each compensation element, the Compensation Committee considers the following factors:

 

    our performance against the financial and operational objectives established by the Compensation Committee or our Board of Directors;

 

    each individual executive officer’s skills, experience, and qualifications relative to other similarly-situated executives at the companies in our compensation peer group;

 

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    the scope of each executive officer’s role compared to other similarly-situated executives at the companies in our compensation peer group;

 

    the performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values;

 

    compensation parity among our executive officers;

 

    our financial performance relative to our peers; and

 

    the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels.

These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable.

Role of Management

In discharging its responsibilities, the Compensation Committee works with members of our management team, including our CEO, CFO, Chief Legal Officer, Senior Vice President and General Manager, Gift Cards, and Vice President, Human Resources. The management team assists the Compensation Committee by providing information on corporate and individual performance, competitive market data, and management’s perspective and recommendations on compensation matters.

The Compensation Committee solicits and reviews our CEO’s recommendations and proposals with respect to adjustments to annual cash compensation, long-term incentive compensation opportunities, program structures, and other compensation-related matters for our executive officers (other than with respect to his own compensation) and attends Compensation Committee meetings (except when the discussion involves his own compensation). The Compensation Committee reviews and discusses these recommendations and proposals with our CEO and uses them as one factor in determining and approving the compensation for our executive officers.

Role of Compensation Consultant

The Compensation Committee is authorized to retain the services of an external compensation consultant and other advisors from time to time to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review.

Since January 2012, the Compensation Committee has engaged Compensia, a national compensation consulting firm, to assist it each year in reviewing and making appropriate changes to our executive compensation guiding principles, to update our compensation peer group, to evaluate the competitiveness of our executive officers’ compensation, and to assist it in its deliberations concerning executive compensation decisions. Compensia serves at the discretion of the Compensation Committee.

In 2016, Compensia did not provide any services to us other than its consulting services to the Compensation Committee. Compensia’s total fees for fiscal 2016 were approximately $83,407.14, all of which were for its services to the Compensation Committee as its independent compensation advisor. The Compensation Committee regularly reviews the objectivity and independence of the advice provided by its compensation advisors on executive and non-employee director compensation. The Compensation Committee has assessed the independence of Compensia, considering, among other things, the six factors set forth in Exchange Act Rule 10C-1 and the applicable NASDAQ listing standards, and has concluded that no conflict of interest exists with respect to the work that Compensia performs for the Compensation Committee.

 

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Competitive Positioning

To assess the competitiveness of our executive compensation program and compensation levels, Compensia, under the direction of the Compensation Committee, examines the executive compensation practices of a peer group of Internet and technology companies. Compensation data for the peer group companies is gathered from public filings and from Compensia’s proprietary compensation databases. Compensation data for the broader group of technology companies is gathered from the Radford Global Technology Survey.

Peer group and survey data were used to assess compensation levels and to assist the Compensation Committee in setting compensation levels for 2016. The companies comprising the compensation peer group were selected primarily based on their similarity to us in size (as determined by revenue and market capitalization), industry sector, geography, and product or service similarity. In some cases, the compensation peer group included companies that may compete with us for talent or may otherwise influence the market compensation for our employees.

Until October 2015, the compensation peer group was comprised of the following companies:

 

 

•    Angie’s List

•    Bazaarvoice

•    Bottomline Technologies

•    Constant Contact

•    Cornerstone OnDemand

•    HomeAway

•    Marketo

•    PROS Holdings

  

•    Quotient Technology (Coupons.com)

•    RealPage

•    Rocket Fuel

•    Shutterstock

•    SolarWinds

•    TrueCar

•    XO Group

•    Yelp

  

In October 2015, the Compensation Committee directed Compensia to update the compensation peer group to reflect changes in our market capitalization, recognize our evolving business focus and account for changes in the competitive market. Compensia identified companies for the updated compensation peer group primarily based on their similarity to us in size (as determined by revenue and market capitalization), industry sector, geography, and product or service similarity. Based on this effort, the Compensation Committee approved an updated compensation peer group consisting of the following companies:

 

 

•    Angie’s List

•    Bazaarvoice

•    Bottomline Technologies

•    Constant Contact

•    Cornerstone OnDemand

•    Marketo

•    PROS Holdings

  

•    Quotient Technology (Coupons.com)

•    RealPage

•    Rocket Fuel

•    Shutterstock

•    SolarWinds

•    TrueCar

•    XO Group

•    Yelp

  

The Compensation Committee reviews our compensation peer group at least annually and adjusts its composition, considering changes in both our business and the businesses of the companies in the peer group.

Executive Compensation Program Elements

In 2016, the primary elements of our executive compensation program consisted of base salary, an annual cash bonus opportunity and long-term incentive compensation in the form of PSOs to purchase shares of our Series 1 common stock and PSU awards that may be settled for shares of our Series 1 common stock.

 

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Base Salary

Base salary represents the fixed portion of the compensation of our executive officers, including the Named Executive Officers, which we view as an important element to attract, retain and motivate highly-talented executives. Base salaries represent a modest portion of the target total compensation opportunity for our executive officers.

Generally, we establish the initial base salaries of our executive officers through arm’s-length negotiation at the time we hire the individual executive officer, considering his or her position, qualifications, experience, prior salary level and the base salaries of our other executive officers. Thereafter, the Compensation Committee reviews the base salaries of our executive officers annually and adjusts base salaries as it determines to be necessary or appropriate.

In February 2016, the Compensation Committee reviewed the base salaries of our executive officers, including the Named Executive Officers, taking into consideration a competitive market analysis prepared by Compensia, the recommendations of our CEO (except with respect to his own base salary), and the other factors described in “Compensation Setting Process-Role of the Compensation Committee” above with respect to compensation elements. The Compensation Committee then made adjustments as it determined to be reasonable and appropriate. In making these adjustments, the Compensation Committee considered the median of the base salary range of the compensation peer group. The base salaries of the Named Executive Officers for 2016 were as follows:

 

Named Executive Officer

   2016
Base
Salary ($)
    2015
Base
Salary ($)
    %
Increase
from
2015
to 2016
 

G. Cotter Cunningham

     478,000 (1)      478,000       0

J. Scott Di Valerio

     370,000 (2)      370,000       0

Kelli A. Beougher

     400,000       382,000       4.7

Paul M. Rogers

     350,000       320,000       9.3

Jonathan Kaplan

     295,000       262,082 (3)      5.4

 

(1) Mr. Cunningham declined an increase in his annual base salary for 2016 and his base salary remains at the level set in 2014.
(2) Mr. Di Valerio was hired on December 29, 2015 and therefore his base salary was not adjusted for 2016.
(3) On August 7, 2015, Mr. Kaplan was promoted from Interim General Counsel to General Counsel & Corporate Secretary, and his annual salary was increased to $280,000, effective as of that date.

Cash Bonuses

We use cash bonuses to motivate our executive officers, including the Named Executive Officers, to achieve both short-term financial and strategic goals and longer-term growth and other objectives. Under our 2016 Bonus Plan, as amended and restated, the Compensation Committee established each executive officer’s target and maximum annual cash bonus opportunity and set the formula for bonus payments at the beginning of 2016. Then, following the conclusion of our second fiscal quarter and the end of the year, the Compensation Committee determined the cash bonus payments for our executive officers based on our achievement of the corporate financial objectives established under the plan for such periods.

Target Cash Bonus Opportunities

In February 2016 we adopted a 2016 Bonus Plan, pursuant to which annual cash bonus opportunities were available to reward our executive officers, including the Named Executive Officers, based on our performance as established in our annual operating plan. At that time, the Compensation Committee reviewed the target annual

 

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cash bonus opportunities of our executive officers, taking into consideration a competitive market analysis prepared by Compensia, the recommendations of our CEO (except with respect to his own target annual cash bonus opportunity) and the other factors described in “Compensation Setting Process-Role of the Compensation Committee” above. The Compensation Committee then made adjustments as it determined to be reasonable and appropriate to maintain the competitiveness of our executive officers’ target total cash compensation opportunities. Each of our executive officers was then assigned a target annual cash bonus opportunity, the amount of which was calculated as a percentage of his or her base salary.

The target annual cash bonus opportunities of the Named Executive Officers as of February 2016 were as follows:

 

Named Executive Officer

   2015 Target
Annual Cash
Bonus
Opportunity (as
a percentage of
base salary)
    2016 Target
Annual Cash
Bonus
Opportunity (as
a percentage of
base salary)
    2016 Target
Annual Cash
Bonus
Opportunity ($)
     2016 Maximum
Annual Cash
Bonus
Opportunity ($)
 

G. Cotter Cunningham

     100     100     478,000        956,000  

J. Scott Di Valerio

     (1)      70     259,000        518,000  

Kelli A. Beougher

     70     70     280,000        560,000  

Paul M. Rogers

     50     55     192,500        385,000  

Jonathan Kaplan

     44 %(2)      50     147,500        295,000  

 

(1) In December 2015, in connection with his appointment as our Chief Financial Officer, it was agreed in an arms-length negotiation that Mr. Di Valerio was not eligible to receive a bonus under the 2015 Bonus Plan.
(2) On August 7, 2015, Mr. Kaplan was promoted to General Counsel & Corporate Secretary, and his annual bonus target was increased to 50%, effective as of that date.

In July 2016 we amended and restated our 2016 Bonus Plan, such amended and restated plan hereinafter referred to as the “Amended 2016 Bonus Plan,” to account for our April 2016 acquisition of GiftcardZen Inc to specify that the impact of the acquisition would be credited toward achievement of the consolidated net revenues and consolidated adjusted EBITDA performance measures, but would not be credited toward achievement of the audience measure under the Amended 2016 Bonus Plan in each case, with respect to the second half of calendar 2016 as discussed below.

Performance Periods

In a change from 2015, the Compensation Committee determined to provide two separate measurement periods: January 1, 2016 through June 30, 2016 (the “1H Period”) and July 1, 2016 through December 31, 2016 (the “2H Period”). The Compensation Committee made this change with respect to all employees eligible to participate in the 2016 Bonus Plan and subsequently the Amended 2016 Bonus Plan, including the Named Executive Officers, principally to address retention concerns. Bonus amounts under the Amended 2016 Bonus Plan were earned and paid twice annually, once after the 1H Period and again after the 2H period, upon availability of the financial statements and other data for such period as are needed to make the payout determinations.

Performance Measures

In February 2016, the Compensation Committee selected (i) consolidated net revenues, (ii) consolidated adjusted EBITDA and (iii) the audience for the Company’s portfolio of websites and mobile applications, as the corporate performance measures for purposes of the Named Executive Officer’s participation in the Amended 2016 Bonus Plan. The Compensation Committee selected these performance measures, which supported our annual operating plan as approved by our Board of Directors, because it believed that they were key indicators of our overall performance and represented measures over which the Named Executive Officers had control.

 

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The Compensation Committee selected consolidated net revenues as a performance measure because it provides an important measure of the overall growth and success of our business and they believe it is strongly correlated with stockholder value creation. The Compensation Committee selected consolidated adjusted EBITDA as a performance measure because our ability to realize meaningful returns from our operations is one of our principal objectives and we believe that consolidated adjusted EBITDA is a key driver of both short-term performance and profitability, as well as long term value creation in our industry. Our management team and Board of Directors use adjusted EBITDA in conjunction with GAAP financial measures as part of our assessment of our financial performance. Additionally, securities analysts use a measure similar to our adjusted EBITDA as a supplemental measure to evaluate the overall operating performance and comparison of companies. Finally, the Compensation Committee selected audience for the Company’s portfolio of websites and mobile applications as a performance measure because we believe the size of our audience directly impacts the appeal of our marketplace to consumers as well as to retailers, brands and other merchants. We believe that maintaining or growing the size of our audience may drive future growth in our business.

Our Compensation Committee believed that the combination of (i) consolidated net revenues, (ii) consolidated adjusted EBITDA and (iii) the audience for the Company’s portfolio of websites and mobile applications, as the corporate performance measures under the Amended 2016 Bonus Plan, focused our executives on delivering strong performance to help drive long-term value creation for our stockholders.

Financial and Audience Elements

Net Revenues

 

  1. The actual amount of the Net Revenues element divided by the applicable target was used to determine the percentage achievement level. The percentage achieved was be applied as set forth below to determine the percentage payout.

If the actual percentage achieved falls between the specified percentage performance levels, the percentage payout will be extrapolated. For example, 98% achievement would result in 96% payout since each percentage point drop in achievement between 95% and 100% results in a two percentage point drop in percentage payout.

 

% Net Revenues Target Achieved

  

Payout

 

0%

     0.0

70%

     25.0

75%

     40.0

80%

     55.0

85%

     67.5

90%

     80.0

95%

     90.0

100%

     100.0

 

  2. The percentage payout was multiplied by the applicable Net Revenues weighting percentage to determine the percentage of the Net Revenues element earned.

Adjusted EBITDA

 

  1. The actual amount of Adjusted EBITDA was divided by the target to determine the percentage achievement level. The percentage achieved was applied as set forth below to determine the percentage payout.

 

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If the actual percentage achieved falls between the specified percentage performance levels, the percentage payout will be extrapolated. For example, 98% achievement would result in 96% payout since each percentage point drop in achievement between 95% and 100% results in a two percentage point drop in percentage payout.

 

% Adjusted EBITDA Target Achieved

  

Payout

 

0%

     0.0

70%

     25.0

75%

     40.0

80%

     55.0

85%

     67.5

90%

     80.0

95%

     90.0

100%

     100.0

 

  2. The percentage payout of the Adjusted EBITDA element was multiplied by the applicable Adjusted EBITDA weighting percentage to determine the percentage of the Adjusted EBITDA element earned.

Audience

 

  1. The actual amount for the Audience element was divided by the applicable target to determine the percentage achievement level. The percentage achieved was applied as set forth below to determine the percentage payout.

If the percentage achieved falls between the specified percentage performance levels, the percentage payout will be extrapolated. For example, 98% achievement would result in 96% payout since each percentage point drop in achievement between 95% and 100% results in a two percentage point drop in percentage payout.

 

% Audience Target Achieved

  

Payout

 

0%

     0.0

70%

     25.0

75%

     40.0

80%

     55.0

85%

     67.5

90%

     80.0

95%

     90.0

100%

     100.0

 

  2. The percentage payout was multiplied by the applicable Audience weighting percentage to determine the percentage of the Audience element earned.

 

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With respect to the target annual cash bonus opportunities of the Named Executive Officers, the Compensation Committee weighted elements as set forth below, based upon each measure’s relative strategic importance to our business.

 

Corporate Performance Measures

  

Description

   Weighting  

Consolidated Net Revenues

   The corresponding amount as reported in the Company’s Statements of Operations as of June 30, 2016 with respect to the 1H Period and for the full fiscal year 2016 with respect to the 2H Period, excluding, for each such period, the impact of any acquisitions completed in fiscal year 2016 other than the acquisition of GiftcardZen Inc.      30
Consolidated Adjusted EBITDA    The consolidated, corresponding amount as derived from the Company’s Statements of Operations as of June 30, 2016 with respect to the 1H Period and for the full fiscal year 2016 with respect to the 2H Period, excluding the impact of any acquisitions completed in fiscal year 2016 other than the acquisition of GiftcardZen Inc.      30
Audience    The number of the Company’s user days during the 1H Period and the 2H Period, excluding the impact of any acquisitions completed in fiscal year 2016. The Company determines user days by summing the number of days each user is active during a calendar month. Users of our desktop and mobile websites are determined using browser cookies from Google Analytics, a third-party product that provides digital marketing intelligence. Users of our native (including mobile) applications are determined using device ID. Because user days are tracked separately for each domain, the Company counts each of the following as a separate user day: (i) the first time a user accesses one of our desktop or mobile websites using a specific device or browser on a particular day, (ii) each time a user re-accesses one of our desktop or mobile on the same device or browser on a particular day after that user clears their browser cookies and (iii) the first time a specific mobile device accesses one of our mobile applications on a particular day.      40

 

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The Amended 2016 Bonus Plan also provided for an “accelerator” bonus in the event that the Company outperformed a financial measure or the audience measure as set forth in the table below, with the maximum accelerator bonus being capped at 200% additional bonus.

 

Element vs. Target(1)

   Additional Bonus(2)  

Element vs. Target(1)

   Additional Bonus(2)

>=1%

   2.5%   >=19%    93.1%

>=2%

   5.0%   >=20%    100.0%

>=3%

   7.5%   >=21%    106.7%

>=4%

   10.0%   >=22%    113.3%

>=5%

   12.5%   >=23%    120.0%

>=6%

   15.0%   >=24%    126.7%

>=7%

   20.0%   >=25%    133.3%

>=8%

   25.0%   >=26%    140.0%

>=9%

   30.0%   >=27%    146.7%

>=10%

   35.0%   >=28%    153.3%

>=11%

   40.0%   >=29%    160.0%

>=12%

   45.0%   >=30%    166.7%

>=13%

   51.9%   >=31%    173.3%

>=14%

   58.8%   >=32%    180.0%

>=15%

   65.6%   >=33%    186.7%

>=16%

   72.5%   >=34%    193.3%

>=17%

   79.4%   >=35%    200.0%

>=18%

   86.3%     

 

(1) Percentage by which actual element exceeds target.
(2) The additional bonus percentage was multiplied by the actual element. For example, if actual Consolidated Net Revenues exceeds Target by 16%, the Consolidated Net Revenues Bonus would be calculated by multiplying the Consolidated Net Revenues Element by 172.5% (i.e. 100% represents the Consolidated Net Revenues Base amount and 72.5% represents the Consolidated Net Revenues Accelerator amount).

Target Performance Levels

The target levels for the financial and audience performance measures were based on our 2016 operating plan, which was reviewed and approved by our Board of Directors and subsequently amended as described above. In other words, target performance levels for the consolidated net revenues and consolidated adjusted EBITDA measures applicable to Named Executive Officers were increased as a result of the GiftcardZen Inc acquisition. The target levels for consolidated net revenues, consolidated adjusted EBITDA and audience for the Amended 2016 Bonus Plan as follows:

 

Corporate Performance Measures

   Original Target
Performance Levels
     Amended Target
Performance Levels(1)
 

Consolidated Net Revenues

   $ 243.9 million      $ 303.5 million  

Consolidated Adjusted EBITDA

   $ 65.0 million      $ 60.9 million  

Audience (Daily Active Users, Annual Total)

     886.1 million        886.1 million  

 

(1) Reflects the updated annual plan for 2H after giving effect to the acquisition of GiftcardZen Inc in April 2016.

Should any aspect of our corporate performance fail to reach the pre-established target level, the Compensation Committee reserved the right to exercise its discretion to determine whether to pay bonuses for the applicable period.

 

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2016 Annual Cash Bonus Decisions

In July 2016 and February 2017 the Compensation Committee determined the amounts to be paid to the Named Executive Officers under the Amended 2016 Bonus Plan. Amounts paid for the 1H Period were based on our actual performance for that period with respect to each of the corporate performance measures established at the beginning of the year. Amounts paid for the 2H Period were based on actual performance for that period against each of the corporate performance measures established at the beginning of the year as adjusted, with respect to consolidated net revenues and consolidated adjusted EBITDA, based on the acquisition of GiftcardZen Inc.

For the 1H Period, our performance with respect to each of the financial and operational measures under the 2016 Bonus Plan was as follows:

 

Corporate Performance Measures

   Actual Performance Achieved
(in thousands)
     Actual Performance Achieved (as a
percentage of target level or
minimum)
 

Consolidated Net Revenues

   $ 116,751        101.7

Consolidated Adjusted EBITDA

   $ 22,044        96.8

Audience (Daily Active Users)

     391,723        123.7

For the 2H Period, our performance with respect to each of the financial and operational measures under the Amended 2016 Bonus Plan was as follows:

 

Corporate Performance Measures

   Actual Performance Achieved
(in thousands)
     Actual Performance Achieved (as a
percentage of target level or
minimum)
 

Consolidated Net Revenues

   $ 163,729        87.7

Consolidated Adjusted EBITDA

   $ 45,529        92.2

Audience (Daily Active Users)

     390,484        79.0

The target annual cash bonus opportunities and the actual cash bonus payments made to the Named Executive Officers for 2016 pursuant to the Amended 2016 Bonus Plan were made consistent with the terms of the plans without any exercise of discretion by the Compensation Committee and were as follows:

 

Named Executive Officer

   Target Annual
Cash Bonus
Opportunity($)
     Actual Annual
Cash Bonus
Payment($)
     Actual Annual
Cash Bonus
Payment
(as a percentage
of target annual
cash bonus
opportunity)
 

G. Cotter Cunningham

     478,000        470,902        98.5

J. Scott Di Valerio

     259,000        255,154        98.5

Kelli A. Beougher

     280,000        275,842        98.5

Paul M. Rogers

     192,500        189,641        98.5

Jonathan Kaplan

     147,500        145,310        98.5

In addition, in recognition of their performance in maintaining strong levels of adjusted EBITDA in 2016 despite the year-over-year decline in our desktop online transaction net revenues, the Compensation Committee in February 2017 determined to award our Named Executive Officers, other than our CEO, additional cash

 

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bonuses as set forth below. The aggregate amount of these cash bonuses was $140,000, or approximately 0.2% of our 2016 adjusted EBITDA.

 

Named Executive Officer

   Cash Bonus
Payment ($)
 

J. Scott Di Valerio

     50,000  

Kelli A. Beougher

     25,000  

Paul M. Rogers

     40,000  

Jonathan Kaplan

     25,000  

Long-Term Incentive Compensation

The Compensation Committee believes long-term incentive compensation is an effective means for focusing our executive officers, including the Named Executive Officers, on driving increased stockholder value over a multi-year period, provides a meaningful reward for appreciation in our stock price and long-term value creation, motivates them to remain employed with us, and aligns their interests with those of our stockholders.

As with their other elements of compensation, the Compensation Committee determines the target award value of the long-term incentive compensation for our executive officers as part of its annual compensation review and after taking into consideration a competitive market analysis, the recommendations of our CEO (except with respect to his own long-term incentive compensation), the outstanding equity holdings of each executive officer, the projected impact of the proposed awards on our earnings, the proportion of our total shares outstanding used for annual employee long-term incentive compensation awards (our “burn rate”) in relation to the companies in our compensation peer group, the voting policies of the major proxy advisory firms, the relationship between the proposed equity awards for our executive officers and the proposed equity awards for our workforce as a whole, and other factors. Based upon these factors, the Compensation Committee sets the value of each equity award at the level it considers appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value.

Historically, we have used equity awards in the form of options to purchase shares of our Series 1 common stock and RSU awards that may be settled for shares of our Series 1 common stock to deliver the annual long-term incentive compensation opportunities to our executive officers and to address special situations as they may arise from time-to-time.

The Compensation Committee believes that stock options, when granted with exercise prices equal to the fair market value of our Series 1 common stock on the date of grant, provide an appropriate long-term incentive for our executive officers, since the options reward them only to the extent that our stock price grows and stockholders realize value following their grant date. The Compensation Committee also believes that RSU awards help us to retain our executive officers and reward them for long-term stock price appreciation while at the same time providing some value to the recipient even if the market price of our Series 1 common stock declines. In 2016, the Compensation Committee elected to grant certain of our executive officers PSOs and PSUs in lieu of time-based equity awards. We believe that the use of performance-based equity awards strengthens the alignment of the interests of our executive officers and stockholders through long-term incentives and rewards our executive officers for creating long-term stockholder value.

In determining the appropriate mix of PSOs and PSUs, the Compensation Committee considers the current stock and other equity holdings of each executive officer and competitive market data of the types of equity compensation provided to executive officers by the companies in our compensation peer group, with a goal of reaching a mix that would provide the appropriate incentives while staying competitive in our market.

 

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In February 2016, the Compensation Committee decided to grant our executive officers, including the Named Executive Officers, a value mix of approximately 10% performance-based options to purchase shares of our Series 1 common stock and 90% performance-based RSU awards that may be exercised or settled, as applicable, for shares of our Series 1 common stock. The performance-based options and performance-based RSUs awards granted to the Named Executive Officers during 2016 were as follows:

 

Named Executive Officer

   Target
Performance RSU
Awards
(#)
     Target Performance
Stock Options
(#)
     Aggregate
Grant
Date Value of
Performance Stock
Option Award(1)
($)
     Aggregate
Grant
Date Value of
Performance RSU
Award(1)
($)
 

G. Cotter Cunningham

     195,000        39,000        187,980        1,273,350  

J. Scott Di Valerio

     30,000        6,000        28,920        195,900  

Kelli A. Beougher

     100,000        20,000        96,400        653,000  

Paul M. Rogers

     45,000        9,000        43,380        293,850  

Jonathan Kaplan

     59,000        11,800        56,876        385,270  

 

(1) The amounts reported represent the aggregate grant date fair value of performance stock options and performance stock awards granted during 2016 computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). Assumptions used in calculating the options and stock awards reported in this column are set forth in Note 8” Stockholders’ Equity and Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission on February 17, 2017. Note that the amounts reported in this column reflect the accounting cost for these stock options and stock awards, and do not correspond to the actual economic value that our named executive officers may receive from the options and stock awards.

Additionally, in January 2016, the Compensation Committee decided to grant Mr. Di Valerio certain time-based stock options and RSUs in connection with his joining the Company in December 2015. Those time-based option and time-based RSU grants were as follows:

 

Named Executive Officer

   Restricted Stock
Unit Awards for
Shares of Our
Series 1 Common
Stock

(#)
     Options to
Purchase Shares
of Our Series 1
Common Stock
(#)
     Aggregate Grant
Date Value of
Option Award(1)
($)
     Aggregate Grant
Date Value of
RSU Award(1)
($)
 

J. Scott Di Valerio

     130,000        265,000        1,050,020        1,090,700  

 

(1) The amounts reported represent the aggregate grant date fair value of performance stock options and performance stock awards granted during 2016 computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). Assumptions used in calculating the options and stock awards reported in this column are set forth in Note 8” Stockholders’ Equity and Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission on February 17, 2017. Note that the amounts reported in this column reflect the accounting cost for these stock options and stock awards, and do not correspond to the actual economic value that our named executive officers may receive from the options and stock awards.

2016 PSU Awards

Other than Mr. Cunningham, the PSUs were eligible to be earned as follows: (i) a minimum amount of 70% of the total amount of PSUs set forth above for each named executive officer, and (ii) subject to overachievement of a performance goal based on the Company’s advertising and in-store net revenues, or the sum of the individual

 

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components thereof, as set forth in the Key Financial and Operating Metrics Section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “PSU Performance Goal”), a maximum amount of 150% of the total amount of PSUs set forth above for each named executive officer. Mr. Cunningham’s PSUs will be eligible to vest in (i) a minimum amount of 25% of the total amount of PSUs set forth in the table above, and (ii) subject to overachievement of the PSU performance goal, a maximum amount of 250% of the total amount of PSUs set forth in the table above.

To achieve vesting at 100% of the total amount of granted PSUs, the Company was required to achieve advertising and in-store net revenues of $66 million, and to achieve vesting at the maximum amount of 150% of the total granted PSUs, the Company was required to achieve advertising and in-store net revenues of $72.35 million, each for the fiscal year ended December 31, 2016.

The PSU Performance Goal measurement period was the 12-month period ending December 31, 2016, after which the number of PSUs determined to be eligible to vest will vest as follows: (i) 25% on February 15, 2017; (ii) 37.5% on February 15, 2018; and (iii) 37.5% on February 15, 2019, provided that recipients must remain employed by the Company through such dates for their PSUs to vest, except to the extent otherwise provided in an employment agreement between such named executive officer and the Company. Following the completion of the performance period, the Compensation Committee determined in February 2017 that, based upon achievement of $65.5 million in advertising and in-store net revenues for the fiscal year ended December 31, 2016, 96% of the Target PSU shares had been earned.

The following table sets forth the minimum, target and maximum number of shares underlying PSUs granted to each of our Named Executive Officers during 2016, as well as the percentage and number of shares actually earned based on performance during the PSU’s performance period, which was the 12-month period ending December 31, 2016.

 

Performance-Based Stock Grants

 

Named Executive Officer

   Minimum
(#)
     Target
(#)
     Maximum
(#)
     Percentage Earned
(%)
    Shares Earned
(#)
 

G. Cotter Cunningham

     48,750        195,000        487,500        96.0     187,200  

J. Scott Di Valerio

     21,000        30,000        45,000        96.0     28,800  

Kelli A. Beougher

     70,000        100,000        150,000        96.0     96,000  

Paul M. Rogers

     31,500        45,000        67,500        96.0     43,200  

Jonathan Kaplan

     41,300        59,000        88,500        96.0     56,640  

The shares earned reflected in the table above remain subject to the additional time-based vesting as described above.

2016 PSO Awards

The Compensation Committee also granted PSOs to the Named Executive Officers, as set forth above. The PSOs will vest (become exercisable) based on the Company’s total stockholder return for the period beginning on April 1, 2016 and ending March 31, 2018 as compared to the total stockholder return of the Russell 2000 Index during that same period (the “PSO Performance Goal”). The Company’s total stockholder return during the performance period must exceed that of the Index by at least 0.5% in order for the Target shares to vest. For every 1% by which the Company’s total stockholder return exceeds that of the Index, an additional 2.5% of the Target shares will be earned and vest, up to the maximum of 200% of the Target shares upon outperformance of the Index by 40% or greater.

Upon the achievement of the PSO Performance Goal, the total number of shares of our common stock subject to the PSOs (as set forth for each Named Executive Officer in the table above) will vest and become

 

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exercisable. There is no minimum number of shares of our common stock subject to the PSOs guaranteed to vest for any Named Executive Officer. The vesting date of the PSOs will be April 30, 2018 at which time 100% of the total number of shares of our common stock subject to the PSOs determined to be eligible to vest will vest, provided that recipients must remain employed by the Company through that date for their PSOs to vest, except to the extent otherwise provided in an employment agreement between such Named Executive Officer and the Company.

The following table sets forth the minimum, target and maximum number of shares underlying PSOs granted to each of our Named Executive Officers during 2016.

 

Performance-Based Option Grants

 

Named Executive Officer

   Minimum
(#)
     Target
(#)
     Maximum
(#)
 

G. Cotter Cunningham

            39,000        78,000  

J. Scott Di Valerio

            6,000        12,000  

Kelli A. Beougher

            20,000        40,000  

Paul M. Rogers

            9,000        18,000  

Jonathan Kaplan

            11,800        23,600  

Welfare and Health Benefits

We sponsor a retirement plan intended to qualify for favorable tax treatment under Section 401(a) of the Code, which contains a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code (the “Section 401(k) Plan”). Generally, the Named Executive Officers are eligible to participate in the Section 401(k) Plan on the same basis as our other employees who satisfy the plan’s eligibility requirements, including requirements relating to age and length of service. Under the Section 401(k) Plan, participants may elect to reduce their current compensation by up to the statutory limit, $18,000 in 2016, plus an additional $6,000 for participants 50 years or older, and have us contribute the amount of this reduction to the Section 401(k) Plan. During 2016, we matched 50% to 100% of employee contributions, up to a maximum 6% of an employee’s eligible earnings. Our contributions for the year ended December 31, 2016 were approximately $1.5 million. We intend that the Section 401(k) Plan to qualify under Section 401 of the Code so that contributions by employees or by us to the plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan.

In addition, our executive officers, including the Named Executive Officers, are eligible to participate in our employee benefit programs on the same basis as all of our employees. These benefits include medical, dental and vision benefits, short-term disability insurance, long-term disability insurance, life and accidental death and dismemberment insurance, and health savings accounts.

We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.

Perquisites and Other Personal Benefits

We do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide perquisites or other personal benefits to our executive officers, including the Named Executive Officers, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes. During 2016, none of the Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more for each individual.

 

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In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.

Employment Arrangements

Employment Agreements

We have entered into written employment agreements with each of the Named Executive Officers. With the exception of his own employment agreement, each of these agreements was negotiated on our behalf by our CEO, with the oversight and approval of the Compensation Committee. Our CEO’s employment agreement was negotiated by him directly with the Compensation Committee.

For a summary of the terms and conditions of the employment agreements with our Named Executive Officers, see “Compensation of Named Executive Officers—Employment Agreements” below.

Post-Employment Compensation Arrangements

The employment agreements of each of the Named Executive Officers contains certain protection in the event of his or her termination of employment under specified circumstances, including following a change of control of the Company. The terms and conditions of these post-employment compensation arrangements were determined after review by the Compensation Committee of our retention objectives for each Named Executive Officer and an analysis of competitive market data.

We believe that having in place reasonable and competitive post-employment compensation arrangements is essential to attracting and retaining highly-qualified executive officers. Our post-employment compensation arrangements are designed to provide reasonable compensation to any Named Executive Officer who leaves the Company under certain circumstances to facilitate their transition to new employment and to ensure that they receive a partial benefit from their equity awards. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing Named Executive Officer to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits.

We believe that the arrangements in the event of a change in control of the Company are designed to align the interests of management and stockholders when considering the long-term future for the Company. The primary purpose of these arrangements is to keep our most senior executive officers focused on pursuing all corporate transaction activity that is in the best interests of stockholders regardless of whether those transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the executive and our investors.

For a summary of the terms and conditions of the post-employment compensation arrangements for the Named Executive Officers, as well as an estimate of the potential payments and benefits payable under these arrangements as of the end of 2016, see “Compensation of Named Executive Officers—Potential Payments Upon Termination or Change in Control” below.

Other Compensation Policies

Stock Ownership Policy

Our Board of Directors believes that they and our executive officers should own and hold shares of our Series 1 common stock to further align their interests with the interests of our stockholders and to further promote our commitment to sound corporate governance. Accordingly, we have adopted the following minimum

 

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stock ownership guidelines applicable to our executive officers, including the Named Executive Officers, and the non-employee members of our Board of Directors.

 

    Our CEO is expected to accumulate the lesser of:

 

    57,000 shares of our Series 1 common stock; or

 

    the equivalent of the net market value of his vested options to purchase shares of our Series 1 common stock and shares of our common stock actually owned equal to three times his annual base salary as of each annual meeting of stockholders.

 

    Each of our other executive officers is expected to accumulate the lesser of the following within three years:

 

    16,000 shares of our Series 1 common stock; or

 

    the equivalent of the net market value of his or her vested options to purchase shares of our Series 1 common stock and shares of our Series 1 common stock actually owned equal to one times his or her annual base salary as of each annual meeting of stockholders.

 

    Non-employee members of our Board of Directors are expected to accumulate the lesser of the following within three years:

 

    4,000 shares of our Series 1 common stock; or

 

    the equivalent of the net market value of the vested options to purchase shares of our Series 1 common stock and shares of our Series 1 common stock actually owned equal to three times his or her annual cash retainer as of each annual meeting of stockholders.

Our Board of Directors may approve any amendments, waivers, or exceptions to this policy at its discretion. Our stock ownership guidelines are set forth in our Corporate Governance Guidelines, which may be found at the investor relations portion of our website at http://investor.retailmenot.com.

Compensation Recovery (“Clawback”) Policy

We have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive compensation paid to the Named Executive Officers and other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial restatement. The Compensation Committee intends to adopt such a policy when the Securities and Exchange Commission completes its rulemaking pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Policy Prohibiting Hedging or Pledging of Our Equity Securities

All of our executive officers and the members of our Board of Directors are prohibited from entering into hedging or pledging transactions in respect of shares of our Series 1 common stock or other securities issued by the Company.

Tax and Accounting Considerations

Deductibility of Executive Compensation

Generally, Section 162(m) of the Code disallows publicly-held companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid in any taxable year to their chief executive officer and each of the three other most highly-compensated executive officers (other than the chief financial officer) whose compensation is required to be disclosed to our stockholders under the Exchange Act. Remuneration in excess of $1 million may only be deducted if it is “performance-based compensation” within the meaning of Section 162(m) or qualifies for one of the other exemptions from the deductibility limit.

 

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In addition, under a Section 162(m) exception for private companies that subsequently become publicly-held, any compensation paid pursuant to a compensation plan in existence before the effective date of the public offering of securities will not be subject to the $1 million deductibility limit until the earliest of: (i) the expiration of the compensation plan, (ii) a material modification of the compensation plan (as determined under Section 162(m)), (iii) the issuance of all the employer stock and other compensation allocated under the compensation plan, or (iv) the first meeting of stockholders at which directors are elected after the close of the third calendar year following the year in which the public offering of securities occurred.

Where reasonably practicable, the Compensation Committee seeks to qualify the performance-based incentive compensation paid or awarded to the Named Executive Officers for the “performance-based compensation” exemption from the deductibility limit of Section 162(m). As such, in approving the amount and form of compensation for the Named Executive Officers, the Compensation Committee considers all elements of our cost of providing such compensation, including the potential impact of Section 162(m). To maintain flexibility in compensating the Named Executive Officers in a manner designed to promote varying corporate goals, however, the Compensation Committee has not adopted a policy that all compensation payable to the Named Executive Officers that is subject to Section 162(m) must be deductible for federal income tax purposes. From time to time, the Compensation Committee may, in its judgment, approve compensation for the Named Executive Officers that does not comply with an exemption from the deductibility limit when it believes that such compensation is in 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 members of our Board of Directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change-in-control of our Company that exceed certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax.

Section 409A of the Code imposes significant additional taxes in the event that an employee, including a Named Executive Officer, member of our Board of Directors, or other service provider receives “nonqualified deferred compensation” that does not satisfy the conditions of Section 409A.

We did not provide any executive officer, including any Named Executive Officer, with a “gross-up” or other reimbursement payment for any tax liability that he or she may owe as a result of the application of Sections 280G, 4999, or 409A of the Code during 2016, and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement.

Accounting for Stock-Based Compensation

We follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”) for our stock-based compensation awards. ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and members of our Board of Directors, including options to purchase shares of our Series 1 common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards. ASC Topic 718 also requires us to recognize the compensation expense of our share-based payment awards in our financial statements over the period that our employees and members of our Board of Directors are required to render services in exchange for their awards.

 

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of our Board of Directors has reviewed and discussed with management the disclosures contained in the section of this Proxy Statement entitled “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting of Stockholders.

 

SUBMITTED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
C. Thomas Ball, Chair
Gokul Rajaram
Brian Sharples

 

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COMPENSATION OF NAMED EXECUTIVE OFFICERS

2016 Summary Compensation Table

The following table presents compensation information for our fiscal years ended December 31, 2016, 2015 and 2014 paid to or accrued for our principal executive officer, our principal financial officer and our three other most highly compensated executive officers who were serving as executive officers as of December 31, 2016. We refer to these executive officers as our “Named Executive Officers” for 2016.

 

Name and Principal Position

  Year     Salary
($)
    Bonus
($)
    Stock
Awards(1)
    Option
Awards(1)
($)
    Non-Equity
Incentive Plan
Compensation
($)
    All Other
Compensation(2)
($)
    Total
($)
 

G. Cotter Cunningham

    2016       478,000             1,273,350       187,980       407,902 (3)      18,285       2,428,517  

President and Chief

    2015       478,000             1,542,540       1,432,203       0 (3)      21,145       3,473,888  

Executive Officer

    2014       478,000             2,606,400       2,521,042       431,347 (3)      20,076       6,056,865  

J. Scott Di Valerio

    2016       370,000       50,000       1,286,600       1,078,940       255,154 (3)      120,416 (4)      3,161,109  

Chief Financial Officer

    2015       3,854 (5)                                    3,854  
    2014                                            

Kelli A. Beougher

    2016       400,000       25,000       653,000       96,400       275,842 (3)      17,905       1,468,147  

Chief Operating Officer

    2015       382,000             918,960       851,138       106,960 (3)      14,901       2,273,959  
    2014       360,000             1,140,300       1,234,077       211,162 (3)      15,383       2,960,922  

Paul M. Rogers

    2016       350,000       40,000       293,850       43,380       189,641 (3)      12,765       929,636  

Chief Technology Officer

    2015       326,250 (6)            410,250       384,649       64,000 (3)      16,822       1,201,971  
    2014       320,000             521,280       564,149       129,945 (3)      14,855       1,550,229  

Jonathan Kaplan

    2016       295,000       25,000       385,270       56,876       145,310 (3)      12,872       920,328  

Chief Legal Officer,

General Counsel and

Secretary

   

2015

2014

 

 

   

262,082

185,945

(7) 

(7) 

   


 

 

   

275,722

265,719

 

 

   

146,942

 

 

   

46,400

42,662

(3) 

(3) 

   

9,029

13,961

 

 

   

740,225

508,287

 

 

 

(1) The amounts reported represent the aggregate grant date fair value of stock options and stock awards granted during the year computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). Assumptions used in calculating the options and stock awards reported in this column are set forth in Note 8 “Stockholders’ Equity and Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Note that the amounts reported in this column reflect the accounting cost for these stock options and stock awards, and do not correspond to the actual economic value that our Named Executive Officers may receive from the options and stock awards.
(2) Unless otherwise noted, consists of premiums paid for medical, dental, short term disability, long term disability, life and accidental death and dismemberment insurance, Health Savings Account contributions, 401(k) contributions and additional taxable awards.
(3) Includes amounts earned under our Amended 2016 Bonus Plan, 2015 Bonus Plan (the “2015 Plan”), and 2014 Bonus Plan (the “2014 Plan”). Payments due under the Amended 2016 Plan for the first and second half of the year were made in August 2016 and February 2017, respectively. Payments due under the 2015 Plan and 2014 Plan were made in February 2016 and 2015, respectively.

Amounts earned under the Amended 2016 Plan and payable to the Named Executive Officers were calculated in accordance with the provisions of the plan, which provided for the amounts to be earned based on the applicable combination of Consolidated Net Revenues, Audience and Adjusted EBITDA, and excluding the impact of the acquisition of GiftcardZen Inc in April 2016, each as defined in the Amended 2016 Plan, compared to the annual budget approved by our Board of Directors. The Amended 2016 Plan

 

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contained a component for achieving the budgeted Consolidated Net Revenues, Audience, and Adjusted EBITDA, as well as an accelerator overachievement component for exceeding the budgeted amount for these measures and a decelerator for failure to achieve the budget amounts for these measures.

Amounts earned under the 2015 Plan were calculated in accordance with the provisions of the plan, which provided for the amounts to be earned based on the applicable combination of Consolidated Net Revenues and Consolidated Mobile Net Revenues, each as defined in the 2015 Plan, compared to the annual budget approved by our Board of Directors at the beginning the fiscal year. The 2015 Plan contained a component for achieving the budgeted Consolidated Net Revenues and Consolidated Mobile Net Revenues, as well as an accelerator overachievement component for exceeding the budgeted amount for these measures and a decelerator for failure to achieve the budget amounts for these measures. In addition, the 2015 Plan required that Adjusted EBITDA be achieved at 70% of the budgeted amount for any payments to be made (with respect to Named Executive Officers) for achievement of any other measures.

Amounts earned under the 2014 Plan were calculated in accordance with the provisions of the plan, which provided for the amounts to be earned based on the applicable combination of Consolidated Net Revenues, Country Net Revenues, Regional Net Revenues, Consolidated Mobile Net Revenues, Country Mobile Net Revenues and Regional Mobile Net Revenues, each as defined in the 2014 Plan, compared to the annual budget approved by our Board of Directors at the beginning the fiscal year. The 2014 Plan contained a component for achieving the budgeted Consolidated Net Revenues, Country Net Revenues, Regional Net Revenues, Consolidated Mobile Net Revenues, Country Mobile Net Revenues and Regional Mobile Net Revenues as well as an overachievement component for exceeding the budgeted amount of each of these measures. The payments under the 2014 Plan included an overachievement amount based on the Consolidated Mobile Net Revenues having exceeded the budgeted amount of that measure. In addition, the 2014 Plan required that Adjusted EBITDA be achieved at 70% of the budgeted amount for any payments to be made (with respect to Named Executive Officers) for achievement of any other measures.

(4) Includes reimbursement amounts paid to Mr. Di Valerio in connection with his relocation to Austin, Texas, the location of our corporate headquarters, and a related tax gross-up payment. With the exception of this payment to Mr. Di Valerio, we generally do not provide tax gross-up payments to our executives.
(5) Mr. Di Valerio was hired December 29, 2015. His annualized base salary in 2016 was $370,000.
(6) Mr. Rogers received a pay increase effective August 1, 2015. His annualized base salary in 2015 was $335,000 after giving effect to that increase.
(7) Mr. Kaplan served as our Assistant General Counsel from January 2014 until November 2014. His annual base salary as of November 30, 2014 was $180,000. Mr. Kaplan was appointed interim General Counsel effective December 1, 2014, and his annual base salary was increased to $250,000, effective as of that date. On August 7, 2015, Mr. Kaplan was promoted to General Counsel & Corporate Secretary, and his annual base salary was increased to $280,000, effective as of that date.

 

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2016 Grants of Plan-Based Awards Table

The following table sets forth information regarding grants of plan-based awards to our Named Executive Officers made during 2016.

 

    Grant
Date
    Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
($)
    Estimated Future Payouts
Under Equity
Incentive Plan Awards
($)(2)
    All other
Stock
Awards:
Number
of
Shares
of
Stock or
Units
(#)(3)
    All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
    Exercise
or Base
Price of
Option
Awards
($/Sh)
    Grant
Date Fair
Value of
Stock and
Option
Awards
($)(3)
 

Name

   

Threshold

   

Target

   

Maximum

   

Threshold

   

Target

   

Maximum

         

G. Cotter Cunningham

    2/15/2016             318,338       1,461,330       3,559,335          

Cash Award

            478,000       956,000                

J. Scott Di Valerio

    2/15/2016             137,130       224,820       351,690       130,000       265,000       8.39       2,140,720  

Cash Award

            259,000       518,000                

Kelli A. Beougher

    2/15/2016             457,100       749,400       1,172,300          

Cash Award

            280,000       560,000                

Paul M. Rogers

    2/15/2016             205,695       337,230       527,535          

Cash Award

            192,500       385,000                

Jonathan Kaplan

    2/15/2016             269,689       442,146       691,657          

Cash Award

            147,500       295,000                

 

(1) The amounts reported in this column represent amounts payable under our Amended 2016 Bonus Plan as of February 2016 when the Compensation Committee approved target annual cash bonus opportunities. The target column assumes the achievement of certain target performance levels as approved by our Board of Directors. The actual amounts paid are set forth in the section entitled “2016 Summary Compensation Table.”
(2) Amounts represent the aggregate grant date fair value of stock options and RSUs granted during the year computed in accordance with ASC Topic 718. Assumptions used in calculating these options reported in this column are set forth in Note 8 “Stockholders’ Equity and Stock-Based Compensation” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 201. The amounts reported in this column reflect the accounting cost for these stock options and RSUs, and do not correspond to the actual economic value that our directors may receive from the options and RSUs.
(3) Represents RSUs.

Employment Agreements

Each of our Named Executive Officers is subject to certain obligations relating to non-competition, non-solicitation, proprietary information and assignment of inventions. Pursuant to these obligations, each Named Executive Officer has agreed (i) not to solicit our employees or customers during employment and for a period of 12 months (24 months with respect to customers) after the termination of employment, (ii) not to compete with us or assist any other person to compete with us during employment and a period of 12 months after the termination of employment and (iii) to protect our confidential and proprietary information and to assign to us intellectual property developed during the course of employment.

In addition, we have entered into employment agreements with each of our Named Executive Officers. The following is a summary of the employment agreements with our Named Executive Officers as currently in effect.

G. Cotter Cunningham is party to an employment agreement with us effective March 1, 2013, as amended on May 1, 2016. This employment agreement has no specific term and constitutes “at-will” employment. Mr. Cunningham’s annual base salary for 2016 was $478,000. Mr. Cunningham is also eligible to receive benefits that are substantially similar to those of our other employees. His employment agreement sets forth his target annual bonus, which for 2016 was set at 100% of his annual base salary. Payment of any bonus to Mr. Cunningham is subject to approval by our Board of Directors or the Compensation Committee.

 

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Pursuant to this agreement, in the event Mr. Cunningham’s employment is terminated for any reason (other than for cause (as such term is defined in the 2007 Stock Plan), as a result of his death or disability or of his own volition and not for good reason) or he resigns of his own volition for good reason (as such term is defined in his employment agreement), we will be obligated to pay him (i) 100% of his then current monthly base salary for 12 months, (ii) 12 months of monthly premiums for his then current health benefits in a single lump sum and (iii) 100% of his then unvested shares subject to any equity awards granted by the company on or prior to December 31, 2015 will become vested in full. In the event Mr. Cunningham voluntarily terminates his employment with us for good reason or is terminated without cause, either within 60 days prior to or within 12 months following a change in control of the company, we will be obligated to pay him (i) 100% of his then current monthly base salary for 12 months and 100% of his then current bonus, (ii) 12 months of monthly premiums for his then current health benefits in a single lump sum and (iii) 100% of his then unvested shares subject to any equity awards granted by the company will become vested in full. Each of the severance benefits described above is contingent on Mr. Cunningham (i) executing a mutual release of claims and (ii) continuing to protect our confidential and proprietary information. In addition, in the event of a change in control of the company in which Mr. Cunningham’s employment is not terminated, 50% of his then unvested shares subject to any equity awards granted by the company on or prior to December 31, 2016 will become vested in full, so long as Mr. Cunningham continues his employment with us through the date of such change in control.

J. Scott Di Valerio is party to an employment agreement with us effective December 29, 2015. This employment agreement has no specific term and constitutes “at-will” employment. Mr. Di Valerio’s annual base salary for 2016 was $370,000. Mr. Di Valerio is also eligible to receive benefits that are substantially similar to those of our other employees. His employment agreement sets forth his target annual bonus, which for 2016 was set at 70% of his annual base salary. Payment of any bonus to Mr. Di Valerio is subject to approval by our Board of Directors or the Compensation Committee.

Pursuant to this agreement, in the event Mr. Di Valerio’s employment is terminated for any reason (other than for cause (as such term is defined in his employment agreement), as a result of his death or disability or of his own volition and not for good reason), we will be obligated to pay him (i) 100% of his then current monthly base salary for six months and (ii) six months of monthly premiums for his then current health benefits in a single lump sum. In the event Mr. Di Valerio voluntarily terminates his employment with us for good reason (as specifically defined in his employment agreement), or is terminated without cause, either within 60 days prior to or within 12 months following a change in control of the company, we will be obligated to pay him (i) 100% of his then current monthly base salary for 12 months and 100% of his then current bonus, (ii) 12 months of monthly premiums for his then current health benefits in a single lump sum and (iii) 100% of his then unvested shares subject to any equity awards granted by the company will become vested in full. Each of the severance benefits described above is contingent on Mr. Di Valerio (i) executing a mutual release of claims and (ii) continuing to protect our confidential and proprietary information.

Kelli A. Beougher is party to an employment agreement with us effective March 1, 2013. This employment agreement has no specific term and constitutes “at-will” employment. Ms. Beougher’s annual base salary for 2016 was $400,000. Ms. Beougher is also eligible to receive benefits that are substantially similar to those of our other employees. Her employment agreement sets forth her target annual bonus, which for 2016 was set at 70% of her annual base salary. Payment of any bonus to Ms. Beougher is subject to approval by our Board of Directors or the Compensation Committee.

Pursuant to this agreement, in the event Ms. Beougher’s employment is terminated for any reason (other than for cause (as such term is defined in the 2007 Stock Plan), as a result of her death or disability or of her own volition and not for good reason), we will be obligated to pay her (i) 100% of her then current monthly base salary for six months and (ii) six months of monthly premiums for her then current health benefits in a single lump sum. In the event Ms. Beougher voluntarily terminates her employment with us for good reason (as specifically defined in her employment agreement), or is terminated without cause, either within 60 days prior to or within 12 months following a change in control of the company, we will be obligated to pay her (i) 100% of

 

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her then current monthly base salary for 12 months and 100% of her then current bonus, (ii) 12 months of monthly premiums for her then current health benefits in a single lump sum and (iii) 100% of her then unvested shares subject to any equity awards granted by the company will become vested in full. Each of the severance benefits described above is contingent on Ms. Beougher (i) executing a mutual release of claims and (ii) continuing to protect our confidential and proprietary information. In addition, in the event of a change in control of the company in which Ms. Beougher’s employment is not terminated, 25% of her then unvested shares subject to any equity awards granted by the company will become vested in full, so long as Ms. Beougher continues her employment with us through the date of such change in control.

Paul M. Rogers is party to an employment agreement with us effective March 1, 2013. This employment agreement has no specific term and constitutes “at-will” employment. Mr. Rogers’ annual base salary for 2016 was $350,000. Mr. Rogers is also eligible to receive benefits that are substantially similar to those of our other employees. His employment agreement sets forth his target annual bonus, which for 2016 was set at 55% of Mr. Rogers’ annual base salary. Payment of any bonus to Mr. Rogers is subject to approval by our Board of Directors or the Compensation Committee.

Pursuant to this agreement, in the event Mr. Rogers’ employment is terminated for any reason (other than for cause (as such term is defined in the 2007 Stock Plan), as a result of his death or disability or of his own volition and not for good reason), we will be obligated to pay him (i) 100% of his then current monthly base salary for six months, and (ii) six months of monthly premiums for his then current health benefits in a single lump sum. In the event Mr. Rogers voluntarily terminates his employment with us for good reason or is terminated without cause, either within 60 days prior to or within 12 months following a change in control of the company, we will be obligated to pay him (i) 100% of his then current monthly base salary for 12 months and 100% of his then current bonus, (ii) 12 months of monthly premiums for his then current health benefits in a single lump sum and (iii) 100% of his then unvested shares subject to any equity awards granted by the company will become vested in full. Each of the severance benefits described above is contingent on Mr. Rogers (i) executing a mutual release of claims and (ii) continuing to protect our confidential and proprietary information. In addition, in the event of a change in control of the company in which Mr. Rogers’ employment is not terminated, 25% of his then unvested shares subject to any equity awards granted by the company will become vested in full, so long as Mr. Rogers’ continues his employment with us through the date of such change in control.

Jonathan Kaplan is party to an employment agreement with us effective August 7, 2015. This employment agreement has no specific term and constitutes “at-will” employment. Mr. Kaplan’s annual base salary for 2016 was $295,000. Mr. Kaplan is also eligible to receive benefits that are substantially similar to those of our other employees. His employment agreement sets forth his target annual bonus, which for 2016 was set at 50% of his annual base salary. Payment of any bonus to Mr. Kaplan is subject to approval by our Board of Directors or the Compensation Committee.

Pursuant to this agreement, in the event Mr. Kaplan’s employment is terminated for any reason (other than for cause (as such term is defined in the 2007 Stock Plan), as a result of his death or disability or of his own volition and not for good reason) or resigns of his own volition for good reason (as such term is defined in his employment agreement), we will be obligated to pay him (i) 100% of his then current monthly base salary for six months, and (ii) six months of monthly premiums for his then current health benefits in a single lump sum. In the event Mr. Kaplan voluntarily terminates his employment with us for good reason or is terminated without cause, either within 60 days prior to or within 12 months following a change in control of the company, we will be obligated to pay him (i) 100% of his then current monthly base salary for six months and 50% of his then current bonus, (ii) six months of monthly premiums for his then current health benefits in a single lump sum and (iii) 100% of his then unvested shares subject to any equity awards granted by the company will become vested in full. Each of the severance benefits described above is contingent on Mr. Kaplan (i) executing a mutual release of claims and (ii) continuing to protect our confidential and proprietary information.

 

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Payments upon Termination and Change in Control

As of December 31, 2016, we were parties to agreements with our Named Executive Officers that provide for certain severance or vesting payments or benefits, or both, if their employment is involuntarily terminated, in connection with a change of control of the Company, or if in connection with or during the period from 60 days prior to 12 months following a change of control of the Company they are involuntarily terminated under certain circumstances. The key terms of our arrangements upon an involuntary termination of employment or a change of control for these Named Executive Officers as of December 31, 2016 were as follows:

 

   

Termination(1) Without a Change of Control Event

 

Termination(1) 60 Days Prior to or Within 12 Months
Following a Change of Control Event

 

Remaining Through
Date of a Change of
Control Event

Name

 

Cash and Benefit
Payments

 

Equity Acceleration

 

Cash and Benefit
Payments

 

Equity Acceleration

 

Equity Acceleration

G. Cotter Cunningham

  100% of current monthly base salary for 12 months.   100% of any unvested shares subject to any equity grants issued by the company on or before December 31, 2015 become vested in full.   100% of current monthly base salary for 12 months and 100% of current bonus.   100% of any unvested shares subject to any equity grants issued by the company become vested in full.   50% of any unvested shares subject to any equity grants issued by the company on or before December 31, 2016 become vested in full.
  12 months of monthly premiums for current health benefits in a single lump sum.     12 months of monthly premiums for current health benefits in a single lump sum.    

J. Scott Di Valerio

  100% of current monthly salary for 6 months.     100% of current monthly base salary for 12 months and 100% of current bonus.   100% of any unvested shares subject to any equity grants issued by the company become vested in full.   None.
  6 months of monthly premiums for current health benefits in a single lump sum.     12 months of monthly premiums for current health benefits in a single lump sum.    

Kelli A. Beougher

  100% of current monthly base salary for 6 months.   None.   100% of current monthly base salary for 12 months and 100% of current bonus.   100% of any unvested shares subject to any equity grants issued by the company become vested in full.   25% of any unvested shares subject to any equity grants issued by the company become vested in full.
  6 months of monthly premiums for current health benefits in a single lump sum.     12 months of monthly premiums for current health benefits in a single lump sum.    

Paul M. Rogers

  100% of current monthly base salary for 6 months.   None.   100% of current monthly base salary for 12 months and 100% of current bonus.   100% of any unvested shares subject to any equity grants issued by the company become vested in full.   25% of any unvested shares subject to any equity grants issued by the company become vested in full.
  6 months of monthly premiums for current health benefits in a single lump sum.     12 months of monthly premiums for current health benefits in a single lump sum.    

 

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Termination(1) Without a Change of Control Event

 

Termination(1) 60 Days Prior to or Within 12 Months
Following a Change of Control Event

 

Remaining Through
Date of a Change of
Control Event

Name

 

Cash and Benefit
Payments

 

Equity Acceleration

 

Cash and Benefit
Payments

 

Equity Acceleration

 

Equity Acceleration

Jonathan Kaplan

  100% of current monthly salary for 6 months.   None.   100% of current monthly salary for 6 months plus 50% of current bonus.   100% of any unvested shares subject to any equity grants issued by the company become vested in full.   None.
  6 months of monthly premiums for current health benefits in a single lump sum.     6 months of monthly premiums for current health benefits in a single lump sum.    

 

(1) See the section titled “Employment Agreements” for a summary of the circumstances associated with the various terminations of employment and changes in control described in this table.

Potential Payments Tables

The table below estimates the payments and benefits that our Named Executive Officers would have received in the event his or her employment had been involuntarily terminated not in connection with a change of control of the Company, assuming the termination occurred on December 31, 2016. The accelerated equity market value was $9.30 per share, the closing price of our Series 1 common stock on the NASDAQ Global Select Market on December 30, 2016, the trading day immediately preceding December 31, 2016.

 

    Cash Payments     Equity Acceleration  

Name

  Salary ($)     Benefits ($)     Shares      Market Value of
Accelerated
Equity
(net of exercise
price, if any) ($)
 

G. Cotter Cunningham

    478,000       19.292       253,314        1,027,650  

J. Scott Di Valerio

    185,000       7.734               

Kelli A. Beougher

    200,000       5,797               

Paul M. Rogers

    175,000       3,087               

Jonathan Kaplan

    147,500       7,458               

 

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The table below estimates the payments and benefits that our Named Executive Officer would have received in the event his or her employment had been involuntarily terminated immediately following a change of control of the Company, assuming the termination occurred on December 31, 2016. The accelerated equity market value was $9.30, the closing price of our Series 1 common stock on the NASDAQ Global Select Market on December 30, 2016, the trading day immediately preceding December 31, 2016.

 

    Cash Payments     Equity Acceleration  

Name

  Salary
and
Bonus ($)
    Benefits ($)     Shares      Market Value
of
Accelerated
Equity
(net of exercise
price, if any) ($)
 

G. Cotter Cunningham

    956,000       19,292       487,314        2,949,180  

J. Scott Di Valerio

    629,000       15,469       332,250        1,383,233  

Kelli A. Beougher

    680,000       11,595       258,512        1,538,750  

Paul M. Rogers

    542,500       6,174       116,251        692,205  

Jonathan Kaplan

    221,250       7,458       110,350        747,391  

Pension Benefits

We did not sponsor any defined benefit pension or other actuarial plan for our Named Executive Officers during 2016.

Nonqualified Deferred Compensation

We did not maintain any nonqualified defined contribution or other deferred compensation plans or arrangements for our Named Executive Officers during 2016.

 

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2016 Outstanding Equity Awards at Fiscal Year-End Table

The following table sets forth information regarding outstanding options and performance-based options to purchase shares of Series 1 common stock, and RSU and performance-based RSU awards that may be settled for shares of Series 1 common stock held by our Named Executive Officers at December 31, 2016.

 

    OPTION AWARDS     STOCK AWARDS  

Name

 

Number of
Securities
Underlying
Unexercised Options
(Exercisable)(1)
(#)

   

Number of
Securities
Underlying
Unexercised
Options
(Unexercisable)
(#)

   

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)

   

Option
Exercise
Price
($)

   

Option
Expiration
Date

   

Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)

   

Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)

   

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units, or
Other
Rights
That
Have Not
Vested
(#)

   

Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)

 

G. Cotter Cunningham

              40,000 (2)      372,000      
              70,500 (3)      655,650      
                  195,000 (4)      1,813,500  
    144,230 (5)              2.08       7/1/2021          
    186,789               2.08       7/1/2021          
    140,847 (6)              2.08       8/23/2021          
    62,500               10.36       6/12/2022          
    223,000               18.52       2/15/2023          
    104,270       38,730         32.58       1/17/2024          
    80,208       94,792         16.41       2/15/2025          
        39,000 (7)      6.53       2/15/2026          

J. Scott Di Valerio

              97,500 (8)      906,750      
                  30,000 (4)      279,000  
    66,250 (9)      198,750         8.39       1/15/20206          
        6,000 (7)      6.53       2/15/2026          

Kelli A. Beougher

              17,500 (2)      162,750      
              42,000 (3)      390,600      
                  100,000 (4)      930,000  
    2,500 (10)              5.32       10/19/2021          
    10,937 (11)              10.36       5/31/2022          
    89,250               18.52       2/15/2023          
    51,041       18,959         32.58       1/17/2024          
    47,666       56,334         16.41       2/15/2025          
        20,000 (7)      6.53       2/15/2026          

Paul M. Rogers

              8,000 (2)      74,400      
              18,750 (3)      174,375      
                  45,000 (4)      418,500  
    3,000 (12)              2.08       6/8/2021          
    56,275 (13)              2.08       7/15/2021          
    33,000               18.52       2/15/2023          
    23,333       8,667         32.58       1/17/2024          
    21,541       25,459         16.41       2/15/2025          
        9,000 (7)      6.53       2/15/2026          

Jonathan Kaplan

              3,450 (14)      32,085      
              3,150 (3)      29,295      
              6,000 (15)      55,800      
              5,250 (16)      48,825      
                  59,000 (4)      548,700  
    10,850       21,700         9.36       8/15/2025          
        11,800 (7)      6.53       2/15/2026          

 

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(1) Options were granted on the date ten years prior to the option expiration date. Unless otherwise noted, and assuming the continued service of the executive officer, the options granted prior to 2014 were fully exercisable on the date of grant and shall vest in a series of 48 monthly installments over the four-year period measured from the grant date. Unless otherwise noted, and assuming the continued service of the executive officer, the options granted in 2014 or later shall vest and become exercisable in a series of 48 monthly installments over the four-year period measured from the grant date.
(2) These RSUs were granted on January 17, 2014 and vest annually over the four year period measured from the date of grant.
(3) These RSUs were granted on February 15, 2015 and vest annually over the four year period measured from the date of grant.
(4) These PSUs were granted on February 15, 2016 with a performance period of fiscal year 2016. Shares earned during the performance period vest 25% on February 15, 2017, 37.5% on February 15, 2018 and 37.5% on February 15, 2019.
(5) The option vested in a series of 48 monthly installments beginning on August 1, 2011. These shares became exercisable with respect to 48,076 shares on the grant date and an additional 48,076 shares on January 1 of each subsequent year until the option was fully exercisable.
(6) The option was fully exercisable on the grant date and, assuming the continued service of the executive officer, vested in a series of 48 monthly installments beginning on October 1, 2011.
(7) These PSOs were granted on February 15, 2016 with a performance period of April 1, 2016 through March 31, 2018. Shares earned during the performance period vest in full on April 30, 2018.
(8) These RSUs were granted on January 15, 2016 and vest annually over the four year period measured from the date of grant.
(9) Assuming the continued service of the executive officer, the option vests and becomes exercisable with respect to 25% of the shares on December 1, 2016, and the remaining shares vest monthly thereafter in a series of 36 monthly installments.
(10) The option was fully exercisable on the grant date and vested with respect to 25% of the shares on December 1, 2012, and the remaining shares vest monthly thereafter in a series of 36 monthly installments.
(11) Assuming the continued service of the executive officer, the option vest in a series of 48 monthly installments measured from the grant date. These shares became exercisable with respect to 5,520 shares on the grant date and an additional 9,652 shares on January 1 of each subsequent year until the option is fully exercisable.
(12) The option was fully exercisable on the grant date and vested with respect to 25% of the shares on October 1, 2011, and the remaining shares vested monthly thereafter in a series of 36 monthly installments.
(13) Assuming the continued service of the executive officer, the option vested with respect to 25% of the shares on June 1, 2012, and the remaining shares vest monthly thereafter in a series of 36 monthly installments. These shares became exercisable with respect to 48,076 shares on the grant date and an additional 48,076 shares on January 1 of each subsequent year until the option is fully exercisable.
(14) These RSUs were granted on March 15, 2014 and vest annually over the four year period measured from the date of grant.
(15) These RSUs were granted on February 25, 2015 and vest annually over the four year period measured from the date of grant.
(16) These RSUs were granted on August 15, 2015 and vest annually over the four year period measured from the date of grant.

 

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2016 Option Exercises and Stock Vested Table

The following table sets forth information about the vesting of RSU awards and the exercise of stock options held by our Named Executive Officers during 2016.

 

     Stock Awards      Option Awards

Name

   Number of
Shares
Acquired
Upon
Vesting (#)
     Value Realized
on Vesting
($)
     Number of
Shares
Acquired
Upon
Exercise (#)
   Value Realized
on Exercise
($)(1)

G. Cotter Cunningham

     43,500        321,255        

J. Scott Di Valerio

     32,500        312,000        

Kelli A. Beougher

     22,750        164,833        

Paul M. Rogers

     10,250        74,373        

Jonathan Kaplan

     6,525        53,486        

 

(1) The value realized on exercise of stock options is calculated based on the difference between the market price of our Series 1 common stock upon exercise and the exercise price of the options.

 

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EQUITY COMPENSATION PLAN INFORMATION

We currently maintain three compensation plans that provide for the issuance of shares of our common stock to our executive officers and other employees, directors and consultants. These consist of the 2007 Stock Plan (the “2007 Plan”), the 2013 Equity Incentive Plan (the “2013 Plan”) and the 2013 Employee Stock Purchase Plan (the “2013 Purchase Plan”), each of which has been approved by our stockholders, and the GiftcardZen 2012 Equity Incentive Plan (the “GCZ Plan”) which we assumed in connection with our acquisition of GiftcardZen Inc in April 2016. The following table sets forth information regarding outstanding options and shares reserved for future issuance under the foregoing plans as of December 31, 2016:

 

Plan Category

   Number of shares to be
issued upon exercise of
outstanding options
(a)
    Weighted-average exercise
price of outstanding
options
(b)
    Number of shares
remaining available for
future issuance under
equity compensation plans
(excluding shares reflected
in column (a))
(c)
 

Equity compensation plans approved by stockholders

     9,360,712 (1)    $ 14.51 (2)      5,322,851 (3) 

Equity compensation plans not approved by stockholders

                  

Total

     9,360,712         5,322,851  
  

 

 

     

 

 

 

 

(1) Excludes purchase rights accruing under our 2013 Purchase Plan.
(2) Calculated without taking into account 5,208,635 shares of Series 1 common stock subject to outstanding RSUs and performance RSUs that will become issuable as those awards vest without any cash consideration for such shares.
(3) Includes 3,357,078 shares of Series 1 common stock available for issuance in connection with future awards under our 2013 Plan, 405,260 shares of Series 1 common stock available for issuance in connection with future awards under our GCZ Plan, and 1,560,513 shares of Series 1 common stock available for future issuance under the 2013 Purchase Plan. The 2013 Plan provides that the number of shares reserved for issuance under that plan will automatically increase on January 1, 2014 and each subsequent anniversary through 2023, by an amount equal to the smaller of (i) 4% of the number of shares of combined Series 1 and Series 2 common stock issued and outstanding on the immediately preceding December 31, or (ii) an amount determined by the board. This reserve will be increased to include any shares issuable upon exercise of options granted under our 2007 Stock Plan that expire or terminate without having been exercised in full. The 2013 Purchase Plan provides that the number of shares reserved for issuance under that plan will automatically increase on January 1, 2014 and each subsequent anniversary through 2023 equal to the smallest of (i) 1,400,000 shares, (ii) 1% of the issued and outstanding shares of our combined Series 1 and Series 2 common stock on the immediately preceding December 31 or (iii) such other amount as may be determined by the board.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transaction Policy

We have a written policy on authorizations, the Related Party Transactions Policy, which includes specific provisions for related party transactions. Pursuant to the Related Party Transactions Policy, related party transactions include any transaction, arrangement or relationship, or series of such transactions, including any indebtedness or guarantees, in which the amount involved exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. In the event that a related party transaction is identified, such transaction must be reported to our Corporate Secretary and subsequently must be reviewed and approved or ratified by the chairman of our Audit Committee or our full Audit Committee, depending on the amount of the transaction. Any member of the Audit Committee who is one of the parties in the related party transaction and who has a direct material interest in the transaction may not participate in the approval of the transaction. The Audit Committee has pre-approved certain potential related party transactions in advance including employment of executive officers and director compensation.

Related Party Transactions

During fiscal 2016, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, except for the compensation and other arrangements described in “Compensation of Named Executive Officers and Directors” elsewhere in this Proxy Statement and the transactions described below.

On December 26, 2013, we entered into an agreement with a private company (and certain of its subsidiaries) in the domain registry business, pursuant to which we agreed to pay the domain registry company $4.3 million for second level domains, or SLDs, contingent upon the domain registry company becoming the registry operator for such domains. At the time the agreement was entered into an investment fund holding more than 10% of the outstanding capital stock of the domain registry company held more than 5% of a class of our voting securities. In April 2015, we paid $4.3 million to purchase the SLDs from the domain registry company pursuant to the terms of the agreement. During the period in which the agreement with the domain registry company was entered into and as of the date the purchase of the SLDs was completed, a member of our Board of Directors was a general partner of the entity that indirectly is the general partner of the investment fund.

Stock Options Granted to Executive Officers and Directors

We have granted stock options, performance-based stock options, RSU awards and performance-based RSU awards to our executive officers and certain non-employee members of our Board of Directors. For more information regarding certain of these equity awards, see “Compensation of Named Executive Officers and Directors—Summary Compensation Table” and “Corporate Governance—Compensation of Directors” elsewhere in this Proxy Statement.

Investors’ Rights Agreement

We are party to a third amended and restated investors’ rights agreement, as amended, with certain holders of our common stock. The third amended and restated investors’ rights agreement, as amended, grants such stockholders certain registration rights, which include demand registration rights, piggyback registration rights and short-form registration rights, with respect to shares of our common stock. The registration rights described above, granted pursuant to the investor’s rights agreement will terminate, with respect to any particular stockholder, upon the earlier of (i) July 24, 2018, or (ii) at such time that all registrable securities held by the particular stockholder may be sold under Rule 144 without registration under the Securities Act during a 60-day period.

 

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Employment Agreements

We have entered into employment agreements with certain of our executive officers. These employment agreements provide for specified severance payments and benefits upon termination of the employment of the executive officer in certain circumstances and acceleration of vesting of stock options upon the occurrence of a change in control of RetailMeNot. Please see “Compensation of Named Executive Officers and Directors—Potential Payments upon Termination and Change in Control” elsewhere in this Proxy Statement for an estimate of the potential payments and benefits to be received by our named executive officers upon a termination of employment, including in connection with the occurrence of a change in control of RetailMeNot.

Indemnification of Officers and Directors

As permitted by Delaware law, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by Delaware law, no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Pursuant to Delaware law such protection would be not available for liability:

 

    for any breach of a duty of loyalty to us or our stockholders;

 

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

 

    for any transaction from which the director derived an improper benefit; or

 

    for an act or omission for which the liability of a director is expressly provided by an applicable statute, including unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law.

Our amended and restated certificate of incorporation also provides that if Delaware law is amended after the approval by our stockholders of the amended and restated certificate of incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law. In addition, our amended and restated bylaws provide that we are required to advance expenses to our directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in the amended and restated bylaws are not exclusive

We have entered into indemnity agreements with each of our directors and certain of our executive officers. These agreements, among other things, require us to indemnify each director and officer to the fullest extent permitted by Delaware law and our amended and restated certificate of incorporation and bylaws for expenses such as, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action by or in our right, arising out of the person’s services as our director or executive officer or as the director or executive officer of any subsidiary of ours or any other company or enterprise to which the person provides services at our request. We also maintain directors’ and officers’ liability insurance.

Other Related Party Transactions

On December 23, 2014, we entered into a second amended and restated revolving credit and term loan agreement, as amended on May 26, 2016, with certain lenders, or Senior Debt. Among the lenders is JPMorgan Chase Bank, N.A., which is affiliated with J.P. Morgan, an entity which now holds, and held at the time the original agreement was entered into and at the time it was amended, more than 5% of a class of our voting securities. The Senior Debt consists of a $125.0 million revolving credit facility, an additional uncommitted revolving credit facility of up to $65.0 million and a $50.0 million term loan facility. The term loan facility was fully borrowed on December 23, 2014, and was used, in part, to fully repay the $26.3 million of borrowings

 

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outstanding under our prior senior debt facility, which obligations were repaid in full effective upon the closing of the Senior Debt. On December 31, 2016, we had $93.0 million available for borrowings under the revolving credit facility.

We pay a quarterly revolving credit facility fee of 50 basis points per annum. At our option, borrowings under both the term loan facility and the revolving credit facility bear interest at either the base rate or a Eurodollar-based rate (each as more fully described in the second amended and restated revolving credit and term loan agreement) plus an applicable margin as determined based on the senior secured debt to EBITDA ratio (as more fully described in the second amended and restated revolving credit and term loan agreement). These rates are summarized in the following table:

 

Basis for Pricing

   Level I    Level II    Level III    Level IV

Consolidated Senior Secured Debt/ EBITDA

   <1.00:1.00    >1.00:1.00

<1.50:1.00

   >1.50:1.00

<2.00:1.00

   >2.00:1.00

Revolving Credit Eurodollar Margin (LIBOR)

   125 basis points    175 basis points    225 basis points    275 basis points

Revolving Credit Base Rate Margin

   25 basis points    75 basis points    125 basis points    175 basis points

Letter of Credit Fees (exclusive of facing fees)

   125 basis points    175 basis points    225 basis points    275 basis points

Term Loan Eurodollar Margin (LIBOR)

   175 basis points    225 basis points    275 basis points    325 basis points

Term Loan Base Rate Margin

   75 basis points    125 basis points    175 basis points    225 basis points

Interest is payable quarterly in arrears for base rate borrowings and on the last day of the applicable Eurodollar-interest period for any Eurodollar-based borrowings. Principal payments on the term loan facility of $2.5 million are due on the first day of each quarter beginning April 1, 2015, with any remaining balance due in December 2019. Borrowings under the revolving credit facility carry the same maturity date as the $50.0 million term loan. Mandatory prepayments include net cash proceeds from certain asset sales, 100% of the net cash proceeds of any subordinated debt and 50% of the net cash proceeds of certain equity transactions, excluding the cash proceeds from any permitted senior unsecured debt, any equity interests issued under certain stock option or employer incentive plans, and any other equity interests issued if consolidated senior secured debt to EBITDA is less than or equal to 2.00 to 1.00.

The Senior Debt has priority in repayment to all other outstanding debt except certain senior secured notes that we are permitted to issue in the future. We have granted our lenders a security interest in substantially all of our assets, including intellectual property, pursuant to a security agreement and an intellectual property security agreement, except that the security interest shall apply only after the total debt to EBITDA ratio is greater than or equal to 1:50 to 1:00. We are subject to complying with certain financial covenants, including minimum trailing 12 month EBITDA levels, total debt to EBITDA ratio, a fixed charge coverage ratio and a consolidated senior secured debt to EBITDA ratio (each as more fully described in the second amended and restated revolving credit and term loan agreement). The second amended and restated revolving credit and term loan agreement, as amended, contains customary affirmative and negative covenants and prohibits, among other things and subject to certain exceptions, the incurrence of additional debt, payment of other debt obligations, incurrence of liens, acquisitions of businesses, capital expenditures, sales of businesses or assets, payment of dividends, repurchases of our capital stock, making loans or advances and certain other restrictions. The exceptions to the foregoing include capital expenditures of up to $20 million in any fiscal year and our right to repurchase up to $150 million of our outstanding capital stock subject to certain conditions set forth in the second amended and restated revolving credit and term loan agreement, as amended. The second amended and restated revolving credit and term loan agreement, as amended, also contains customary events of default including, among others, payment defaults, breaches of covenants, bankruptcy and insolvency events, cross defaults with certain material indebtedness, judgment defaults, change of control and breaches of representations and warranties.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and footnotes set forth information with respect to the beneficial ownership of our common stock as of February 28, 2017 by:

 

    each stockholder, or group of affiliated stockholders, who we know beneficially owns more than 5% of the outstanding shares of our common stock;

 

    each of our named executive officers;

 

    each of our current directors; and

 

    all of our current directors and current executive officers as a group.

Beneficial ownership of shares is determined under the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power.

Applicable percentage ownership in the following table is based on 48,252,739 shares of Series 1 common stock and no shares of Series 2 common stock outstanding as of February 28, 2017. Shares of Series 1 common stock subject to options currently exercisable or exercisable within 60 days of February 28, 2017 or subject to RSUs which will vest within 60 days of February 28, 2017 are deemed to be outstanding for calculating the number and percentage of outstanding shares of the person holding such options, but are not deemed to be outstanding for calculating the percentage ownership of any other person. Beneficial ownership or voting power representing less than 1% is denoted with an asterisk (*).

Shares shown in the table below include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over the shares listed, except for those jointly owned with that person’s spouse.

 

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Unless otherwise noted below, the address of each person listed on the table is c/o RetailMeNot, Inc., 301 Congress Avenue, Suite 700, Austin, Texas 78701.

 

     Shares of Series 1 Common
Stock Beneficially Owned(1)
     % of
Series 1 Common Stock
Outstanding
 

5% Stockholders:

     

Entities affiliated with Norwest Venture Partners(2)

     3,591,493        7.4

The Blackrock Group(3)

     2,438,887        5.1

The Vanguard Group(4)

     2,854,939        5.9

Institutional Venture Partners XIII LP(5)

     2,475,897        5.1

JPMorgan Chase & Co. (6)

     4,232,220        8.8

Directors and Named Executive Officers:

     

G. Cotter Cunningham(7)

     1,444,299        2.9

J. Scott Di Valerio(8)

     116,795        *  

Kelli A. Beougher(9)

     271,622        *  

Paul M. Rogers(10)

     166,310        *  

Jonathan Kaplan(11)

     27,333        *  

C. Thomas Ball(12)

     48,389        *  

Jeffrey M. Crowe(13)

     3,591,493        7.4

Eric Korman(14)

     76,575        *  

Jules A. Maltz(15)

     2,478,424        5.1

Gokul Rajaram(16)

     53,484        *  

Greg J. Santora(17)

     67,132        *  

Brian Sharples(18)

     122,624        *  

Tamar Yehoshua(19)

     73,577        *  

All Directors and Executive Officers as a group (13 persons)(20)

     8,540,583        17.1

Total Beneficial Ownership

     11,395,522        22.8

 

(1) All of the outstanding shares of Series 2 common stock converted into shares of Series 1 common stock on a one-to-one basis on March 7, 2014 upon the election of the holders thereof.
(2) Pursuant to a 13G/A dated February 14, 2017 filed with the SEC, NVP Associates, LLC, (“NVP Associates”) reported that as of December 31, 2016, Norwest Venture Partners XI, LP (“NVP XI”) and related entities had sole voting and dispositive power over 3,591,493 shares and that its address is 525 University Avenue, Suite 800, Palo Alto, California 94301. Genesis VC Partners XI, LLC (“Genesis XI”) is the general partner of NVP XI. As of Dec 31, 2016, Genesis XI had sole voting and dispositive power over 3,591,493 shares. NVP Associates is managing member of Genesis XI. As of Dec 31, 2016, NVP Associates had sole voting and dispositive power over 4,788,661 shares. Promod Haque, Matthew Howard, and Jeffrey M. Crowe are each officers of NVP Associates and may be deemed to share voting and dispositive power over the shares held by NVP Associates. Such persons and entities disclaim beneficial ownership of shares held by NVP Associates, except to the extent of any pecuniary interest therein. Mr. Crowe is a member of our Board of Directors.
(3) Pursuant to a 13G dated January 30, 2017 filed with the SEC, The Blackrock Group reported that as of December 31, 2016 it had sole voting power over 2,365,735 shares and sole dispositive power over 2,438,887 shares and that its address is 55 East 52nd Street, New York, NY 10055.
(4) Pursuant to a 13G dated February 10, 2017 filed with the SEC, The Vanguard Group reported that as of December 31, 2016, it had sole voting power over 46,977 shares, shared voting power over 2,300 shares, sole dispositive power over 2,807,756 shares and shared dispositive power over 47,183 shares and that its address is 100 Vanguard Boulevard, Malvern, PA 19355.

 

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(5) Institutional Venture Management XIII, LLC (“IVM”) serves as the sole general partner of Institutional Venture Partners XIII, L.P. (“IVP”) and has sole voting and investment control over the shares owned by IVP. Todd C. Chaffee, Norman A. Fogelsong, Stephen J. Jarrick, J. Sanford Miller, Dennis B. Phelps and Jules A. Maltz are managing directors of IVM and share voting and dispositive power over the shares held by IVP XIII. The address for IVP is 3000 Sand Hill Road, Building 2, Suite 250, Menlo Park, California 94025. Mr. Maltz is a member of our Board of Directors.
(6) Pursuant to a 13G dated January 23, 2017 filed with the SEC, JPMorgan Chase & Co. reported that as of December 31, 2016, it had sole voting power over 3,716,770 shares and sole dispositive power over 4,187,920 shares and that its address is 270 Park Avenue, New York, NY 10017.
(7) Includes 35,451 shares held in family trusts and 968,344 shares issuable upon the exercise of stock options. Mr. Cunningham does not have voting or investment power with respect to the 35,451 shares held in the family trusts.
(8) Includes 88,333 shares issuable upon the exercise of stock options.
(9) Includes 215,895 shares issuable upon the exercise of stock options.
(10) Includes 138,632 shares issuable upon the exercise of stock options.
(11) Includes 13,562 shares issuable upon the exercise of stock options and 1,725 shares upon the issuance of vested RSUs.
(12) Includes 32,822 shares issuable upon the exercise of stock options and 8,741 shares upon the issuance of vested RSUs.
(13) Mr. Crowe is an officer of NVP Associates and as such, may be deemed to share voting and dispositive power over the shares held by each of NVP VI, NVP VII, and NVP XI. Mr. Crowe disclaims beneficial ownership of shares held by each of NVP VI, NVP VII, and NVP XI, except to the extent of his pecuniary interest therein. Mr. Crowe’s address is 525 University Avenue, Suite 800, Palo Alto, California 94301. Mr. Crowe is a member of our Board of Directors.
(14) Includes 42,914 shares issuable upon the exercise of stock options and 8,741 shares upon the issuance of vested RSUs.
(15) Mr. Maltz is a general partner of IVP XIII, and as such, may be deemed to share voting and dispositive power over the 2,475,897 shares held by IVP XIII. Mr. Maltz’s address is 3000 Sand Hill Road, Building 2, Suite 250, Menlo Park, California 94025. Mr. Maltz is a member of our Board of Directors.
(16) Includes 236 shares held in a family trust and 37,107 shares issuable upon the exercise of stock options and 8,741 shares upon the issuance of vested RSUs.
(17) Includes 53,114 shares issuable upon the exercise of stock options and 8,741 shares upon the issuance of vested RSUs.
(18) Includes 31,555 shares held in a trust by Moose Pond Investments, LP, 78,058 shares issuable upon the exercise of stock options and 8,741 shares upon the issuance of vested RSUs. Moose Pond Mgt., LP, is the general partner of Moose Pond Investments, LP. Mr. Sharples is the limited partner of Moose Pond Investments, LP, and the sole manager of Moose Pond Mgt., LP and has voting and dispositive power over the shares held by Moose Pond Investments, LP.
(19) Includes 50,072 shares issuable upon the exercise of stock options and 8,741 shares upon the issuance of vested RSUs.
(20) Includes an aggregate of 1,718,853 shares issuable upon the exercise of stock options and an aggregate of 54,171 shares issuable upon the vesting of RSUs.

 

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of our common stock to file initial reports of beneficial ownership and reports of changes in beneficial ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by such person.

Based solely on our review of such forms furnished to us, and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater-than-10% stockholders during the fiscal year ended December 31, 2016 were satisfied.

 

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PROPOSAL NO. 3

ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Section 14A of the Securities Exchange Act of 1934 enables our stockholders to vote to approve, on an advisory or nonbinding basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s rules.

Our Board of Directors and the Compensation Committee believe that our executive compensation program, as described in the section titled “Compensation Discussion and Analysis,” the compensation tables and the related narratives and other materials in this Proxy Statement reflects our philosophy of linking the compensation of our executive officers with our performance. Our Board of Directors and the Compensation Committee believe that the executive compensation program is reasonable and effective in that it aligns the interests of our executive officers with both the short-term and long-term interests of our stockholders.

This proposal gives you as a stockholder the opportunity to endorse or not endorse our executive compensation program through the following resolution:

“RESOLVED, that the compensation of our named executive officers, as described in the section titled “Compensation Discussion and Analysis,” the compensation tables and the related narratives and other materials in this Proxy Statement are hereby approved.”

Because this vote is advisory, it will not be binding upon our Board of Directors or the Compensation Committee. However, the views of our stockholders on our executive compensation program are important to us and the Compensation Committee will carefully consider the outcome of the vote when determining future executive compensation arrangements. 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.

Vote Required and Board of Directors Recommendation

The affirmative vote of a majority of the votes cast on the proposal at the annual meeting is required for approval of this proposal. If you abstain from voting on the proposal or your broker is unable to vote your shares, it will have the same effect as a vote against the proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

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STOCKHOLDER PROPOSALS OR NOMINATIONS

TO BE PRESENTED AT NEXT ANNUAL MEETING

Pursuant to Rule 14a-8 under the Exchange Act of 1934, some stockholder proposals may be eligible for inclusion in our proxy statement for the 2018 annual meeting. These stockholder proposals must be submitted, along with proof of ownership of our stock in accordance with Rule 14a-8(b)(2), to the Corporate Secretary at our principal executive offices no later than the close of business on November 16, 2017 (120 days prior to the anniversary of this year’s mailing date). Failure to deliver a proposal in accordance with these procedures may result in it not being deemed timely received.

Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement. Our Nominating and Corporate Governance Committee reviews all stockholder proposals and makes recommendations to the board for actions on such proposals. For information on qualifications of director nominees considered by our Nominating and Corporate Governance Committee, see the “Corporate Governance—Director Nominations” section of this Proxy Statement.

In addition, our Bylaws provide that any stockholder intending to nominate a candidate for election to the board or to propose any business at our 2018 annual meeting, other than non-binding proposals presented pursuant to Rule 14a-8 under the Exchange Act, must give notice to the Corporate Secretary at our principal executive offices, not earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the first anniversary of the date of the preceding year’s annual meeting as first specified in the notice of meeting (without regard to any postponements or adjournments of such meeting after the notice was first given). The notice must include the information specified in our Bylaws, including information concerning the nominee or proposal, as the case may be, and information concerning the proposing or nominating stockholder’s ownership of and agreements related to our stock. If the 2018 annual meeting is held more than 30 days before or after the first anniversary of the date of the 2017 annual meeting, the stockholder must submit notice of any such nomination and of any such proposal that is not made pursuant to Rule 14a-8 by the later of the 90th day prior to the 2018 annual meeting or the 10th day following the date on which public announcement of the date of such meeting is first made. We will not entertain any proposals or nominations at the meeting that do not meet the requirements set forth in our Bylaws. If the stockholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, we may exercise discretionary voting under proxies that we solicit to vote in accordance with our best judgment on any stockholder proposal or nomination. To make a submission or request a copy of our Bylaws, stockholders should contact our Corporate Secretary. We strongly encourage stockholders to seek advice from knowledgeable counsel before submitting a proposal or a nomination.

TRANSACTION OF OTHER BUSINESS

At the date of this Proxy Statement, the Board of Directors knows of no other business that will be conducted at the annual meeting other than as described in this Proxy Statement. If any other matter or matters are properly brought before the meeting or any adjournment or postponement of the meeting, it is the intention of the persons named in the accompanying proxy to vote the proxy on such matters in accordance with their best judgment.

STOCKHOLDERS SHARING THE SAME LAST NAME AND ADDRESS

To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding RetailMeNot stock but sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive only one copy of our Notice of Internet Availability of Proxy Materials and, as applicable, any additional proxy materials that are

 

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delivered until such time as one or more of these stockholders notifies us that they want to receive separate copies. This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.

If you receive a single set of proxy materials as a result of householding, and you would like to have separate copies of our Notice, Annual Report to Stockholders or Proxy Statement mailed to you, please submit a written request to our Corporate Secretary, RetailMeNot, Inc., 301 Congress Avenue, Suite 700, Austin, Texas 78701, or call our Investor Relations department at (512) 777-2970, and we will promptly send you what you have requested. However, please note that if you want to receive a paper proxy statement or voting instruction form or other proxy materials for purposes of this year’s annual meeting, you should follow the instructions included in the Notice that was sent to you. You can also contact our Corporate Secretary or Investor Relations department if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future, or if you would like to opt out of householding for future mailings.

 

By order of the Board of Directors
Jonathan B. Kaplan
Chief Legal Officer, General Counsel and Secretary

March 16, 2017

 

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RETAILMENOT, INC.

301 CONGRESS AVENUE

SUITE 700

AUSTIN, TX 78701

      VOTE BY INTERNET - www.proxyvote.com        
     

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. 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.

 

       
      ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS        
     

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

 

       
      VOTE BY PHONE - 1-800-690-6903        
      Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.        
     

 

VOTE BY MAIL

       
      Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.        

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

       KEEP THIS PORTION FOR YOUR RECORDS  
      DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

                                                                         
                                      
                 

 

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.        
   

 

The Board of Directors recommends you vote FOR the following:

 

                            
    1.   Election of Directors                      

 

     
     

 

Nominees

 

                                          
    01   C. Thomas Ball                                
   

 

02

 

 

 

Eric A. Korman

 

                                        
   

 

The Board of Directors recommends you vote FOR the following:

    

 

For

  

 

Against

 

 

Abstain

   
    2.   Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.        

 

  

 

 

 

   
   
    3.   Advisory vote to approve compensation of named executive officers.        

 

  

 

 

 

   
   

 

NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

                
   

 

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

                              
         
                                                        
      Signature [PLEASE SIGN WITHIN BOX]   Date                   Signature (Joint Owners)           Date                       


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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report to Stockholders is/are available at www.proxyvote.com.

   

 

  

 

RETAILMENOT, INC.

Annual Meeting of Stockholders

April 27, 2017 at 8:30 a.m. Central Time

This proxy is solicited by the Board of Directors

 

The undersigned hereby appoints G. Cotter Cunningham and Jonathan Kaplan, or either of them, as proxies of the undersigned with full power of substitution, to vote all shares of Series 1 common stock which the undersigned would be entitled to vote if personally present and acting at the Annual Meeting of Stockholders of RetailMeNot, Inc., to be held on April 27, 2017 at the offices of DLA Piper LLP (US) located at 401 Congress Avenue, Suite 2500, Austin, Texas 78701, and at any adjournments or postponements thereof as follows:

 

a.         This proxy, when properly executed, will be voted as directed. If no direction is given, the proxyholders will have authority to vote FOR the election of all nominees for the Board of Directors, and FOR Proposals 2 and 3.

 

b.        In their discretion, the proxyholders are authorized to vote on such other business as may properly come before the meeting.

 

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.

 

 

Continued and to be signed on reverse side

 

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