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Section 1: 8-K (8-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): April 10, 2020
CLARIVATE ANALYTICS PLC
(Exact name of registrant as specified in its charter)
Jersey, Channel Islands
001-38911
N/A
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
Friars House
160 Blackfriars Road
London SE1 8EZ
United Kingdom
(Address of principal executive offices)
Registrant’s telephone number, including area code: +44 207 433 4000
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Ordinary shares
CCC
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On April 10, 2020, Matthew Scattarella informed Clarivate Analytics Plc (the “Company”) of his decision to step down from the Company’s Board of Directors effective as of the date of our Annual General Meeting, May 7, 2020. Mr. Scattarella has served as a Class II director since May 2019, and his term was scheduled to expire at the 2021 Annual General Meeting.
Item 7.01.
Regulation FD Disclosure
On April 10, 2020, the Company commenced the distribution of its Proxy Statement for the 2020 Annual General Meeting, to be held at 2:00 p.m. BST on Thursday, May 7, 2020, at Hotel Sofitel London St. James, 6 Waterloo Place, St. James’s, London SW1Y 4AN, United Kingdom. Shareholders of record at the close of business on the record date of March 9, 2020 are entitled to notice of, and to vote at, the Annual General Meeting and any adjournments or postponements thereof.
The Company is sensitive to public health and travel concerns and recommendations that public health officials may issue in light of the evolving COVID-19 coronavirus situation. In order to do its part to assist in protecting the health and well-being of its shareholders and employees, the Company is actively monitoring all available information. If the Company determines to change any of the logistics for the Annual General Meeting due to developments relating to the COVID-19 coronavirus or otherwise, the Company will provide notice to shareholders through a press release and the filing of a Current Report on Form 8-K.
A copy of the Notice of Annual General Meeting of Shareholders and Proxy Statement is furnished herewith as Exhibit 99.1 and incorporated by reference herein. A copy of the form of proxy for the 2020 Annual General Meeting is furnished herewith as Exhibit 99.2 and incorporated by reference herein.
The Company intends to issue a press release announcing that the Company's Board of Directors has nominated Jane Okun Bomba and Richard W. Roedel to stand for election as directors at the Annual General Meeting, and that Sir Martin Broughton, Charles E. Moran and Amir Motamedi, who have served as directors since May 2019, are not standing for election at the Annual General Meeting. A copy of the press release is furnished herewith as Exhibit 99.3 and incorporated by reference herein.
The information in this Item 7.01, including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3 furnished herewith, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.
Item 9.01.
Financial Statements and Exhibits
(d) Exhibits.
No.
Description
Notice of Annual General Meeting of Shareholders and Proxy Statement for Clarivate Analytics Plc 2020 Annual General Meeting
Form of Proxy for Clarivate Analytics Plc 2020 Annual General Meeting
Press Release of Clarivate Analytics Plc

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date:
April 10, 2020
CLARIVATE ANALYTICS PLC
 
 
By:
/s/ Richard Hanks
 
 
 
Richard Hanks
 
 
 
Chief Financial Officer
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Section 2: EX-99.1 (EXHIBIT 99.1)

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Exhibit 99.1

April 10, 2020
Dear Shareholder:
Clarivate Analytics Plc is pleased to invite you to attend our 2020 Annual General Meeting of Shareholders. The Annual General Meeting will be held at 2:00 p.m. BST on Thursday, May 7, 2020, at Hotel Sofitel London St. James, 6 Waterloo Place, St. James’s, London SW1Y 4AN, United Kingdom.
Whether or not you attend the Annual General Meeting, it is important that you participate. We value the vote of every shareholder. Please review the enclosed Proxy Card carefully to understand how you may vote by proxy. If you choose to appoint a proxy, please sign and return your Proxy Card promptly or follow the instructions for internet voting provided on the Proxy Card. For Proxy Cards delivered in hard copy, a postage-paid return envelope is enclosed. Alternatively, a Proxy Card may be delivered by sending a scanned PDF version of the original by email to [email protected] If your shares are held in the name of a bank or broker, appointing a proxy will depend on the processes of the bank or broker, and you should follow the instructions you receive from your bank or broker.
If you intend to attend the Annual General Meeting in person, please let us know in advance. Each shareholder of record has the opportunity to vote in person at the Annual General Meeting. If your shares are not registered in your name (for instance, if you hold shares through a broker, bank, or other institution), please advise the shareholder of record that you wish to attend; that firm will then provide you with evidence of ownership that will be required for admission to the Annual General Meeting. Let us know if we can explain any of these matters or otherwise help you with appointing a proxy or attending our Annual General Meeting.
Remember that your shares cannot be voted unless you submit your proxy or attend the Annual General Meeting in person. Your participation is important to all of us at Clarivate, so please review these materials carefully and cast your vote.
We look forward to hearing from you or seeing you at the Annual General Meeting.
Lastly, we are sensitive to public health and travel concerns and recommendations that public health officials may issue in light of the evolving COVID-19 coronavirus situation. In order to do our part to assist in protecting the health and well-being of our shareholders and employees, we are actively monitoring all available information. If we determine to change any of the logistics for the Annual General Meeting due to developments relating to the COVID-19 coronavirus or otherwise, we will provide notice to shareholders through a press release and the filing of a Current Report on Form 8-K.
Very truly yours,

Stephen Hartman
General Counsel, Global Head of Corporate Development and Secretary
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NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
to be held
Thursday, May 7, 2020
To Our Shareholders:
Clarivate Analytics Plc will hold its Annual General Meeting of Shareholders (the “Annual General Meeting”) at 2:00 p.m. BST on Thursday, May 7, 2020, at Hotel Sofitel London St. James, 6 Waterloo Place, St. James’s, London SW1Y 4AN, United Kingdom.
We are holding this Annual General Meeting to allow our shareholders to vote on several key topics:

to elect four Class I directors to serve until the 2023 Annual General Meeting or until their successors are duly elected and qualified (Proposal 1);

to change the name of the company to “Clarivate Plc” (Proposal 2);

to amend our Memorandum and Articles of Association in order to eliminate certain provisions that will no longer be appropriate upon anticipated further reductions in ownership of our ordinary shares by our former controlling shareholders, affiliates of Onex Partners Advisor LP (“Onex”) and Baring Private Equity Asia Pte Ltd (“Baring,” and collectively, the “Private Equity Sponsors”) and for other purposes, as described in further detail herein (Proposal 3);

to authorize the Company to repurchase its ordinary shares in open-market transactions on the terms described in further detail herein (Proposal 4);

to authorize the Company to repurchase its ordinary shares from the Private Equity Sponsors on the terms described in further detail herein (Proposal 5);

to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accountants (Proposal 6); and

to transact such other business as may properly come before the Annual General Meeting and any adjournments or postponements of the Annual General Meeting.
The text of the resolutions for each proposal is set forth below.
Only shareholders of record at the close of business on March 9, 2020 (the “Record Date”) are entitled to notice of, and to vote at, the Annual General Meeting and any adjournments or postponements of the Annual General Meeting. For ten days prior to the Annual General Meeting, a complete list of shareholders entitled to vote at the Annual General Meeting will be available for shareholders to review for purposes relevant to the meeting. To arrange to review that list contact Clarivate Analytics Plc, Attention: Secretary, Friars House, 160 Blackfriars Road, London SE1 8EZ United Kingdom.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL GENERAL MEETING TO BE HELD ON MAY 7, 2020: The Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2019 (our “Annual Report”) are available at http://ir.clarivate.com.
We will deliver a copy of the Proxy Statement and our Annual Report free of charge if a shareholder sends a request to the Secretary, Clarivate Analytics Plc, Friars House, 160 Blackfriars Road, London SE1 8EZ United Kingdom or calls +44 207 4334000.
Even if you plan to attend the Annual General Meeting in person, we hope that you will promptly vote and submit your proxy by dating, signing, and returning the enclosed Proxy Card by mail or by email, or by following the instructions for internet voting provided on the Proxy Card, or, if you hold your shares in the name of a bank or broker, by following the instructions you receive from your bank or broker. Casting a vote by proxy will not limit your rights to attend or vote at the Annual General Meeting.
Any shareholder who is entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies to attend and vote instead of that shareholder. A proxy need not be a shareholder.

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TEXT OF PROPOSED RESOLUTIONS
Text of Resolutions for Proposal 1
RESOLVED, that each of Sheryl von Blucher, Jane Okun Bomba, Balakrishnan S. Iyer and Richard W. Roedel be elected to serve as a director of the Company until the 2023 Annual General Meeting or until her or his successor is duly elected and qualified; and further
RESOLVED, that in the event that any of the above nominees should become unavailable prior to the Annual General Meeting, proxies in the enclosed form will be voted for a substitute nominee or nominees designated by the Board, or the Board may reduce the number of directors to constitute the entire Board, in its discretion.
Text of Resolutions for Proposal 2
RESOLVED AS A SPECIAL RESOLUTION, that the name of the Company be changed to “Clarivate Plc” from “Clarivate Analytics PLC;” and further
RESOLVED, that the directors of the Company are hereby authorized to take such steps as are necessary or useful to cause the name of the Company to be so changed as soon as practicable.
Text of Resolutions for Proposal 3
RESOLVED AS A SPECIAL RESOLUTION, that the Memorandum and Articles of Association of the Company be amended and restated in their entirety in the form set forth in Appendix A hereto, effective as of the date this resolution shall have been duly passed by the shareholders.
Text of Resolutions for Proposal 4
RESOLVED AS A SPECIAL RESOLUTION, that the Company is hereby authorized to conduct open-market purchases of its ordinary shares from time to time as approved by the Board of Directors; provided that (i) this purchase authority shall extend from May 7, 2020 to May 6, 2025, inclusive; (ii) the price per ordinary share (exclusive of brokerage fees and commissions) paid by the Company pursuant to this resolution shall not be less than $10 per share nor in excess of $150 per share; and (iii) the Company shall not purchase more than 50,000,000 ordinary shares pursuant to this resolution (without giving effect to purchases pursuant to any other resolution); and further
RESOLVED, that any ordinary shares that the Company purchases pursuant to the foregoing resolution may be held by it as treasury shares, and may, at the Company’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.
Text of Resolutions for Proposal 5
RESOLVED AS A SPECIAL RESOLUTION, that the Company is hereby authorized to purchase its ordinary shares from time to time from any Private Equity Sponsor as approved by the Board of Directors; provided that (i) this purchase authority shall extend from May 7, 2020 to May 6, 2025, inclusive; (ii) each purchase from a Private Equity Sponsor shall be executed pursuant to a Share Repurchase Agreement between the Company and the applicable Private Equity Sponsor substantially in the form set forth in Appendix C hereto; (iii) the price per share payable by the Company for ordinary shares purchased pursuant to this resolution shall be equal to the volume weighted average price of the ordinary shares for the consecutive trading-day period established by the Board that ends on the trading day immediately prior to the date on which such Share Repurchase Agreement is entered into, as displayed under the heading “VWAP” on the applicable Bloomberg page or on or by another third-party market data provider approved by the Board; (iv) the consecutive trading-day period established by the Board pursuant to this resolution shall not be fewer than five consecutive trading days nor greater than ninety consecutive trading days; and (v) the Company shall not purchase more than 50,000,000 ordinary shares pursuant to this resolution (without giving effect to purchases pursuant to any other resolution); and further
RESOLVED, that any ordinary shares that the Company purchases pursuant to the foregoing resolution may be held by it as treasury shares, and may, at the Company’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.

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Text of Resolutions for Proposal 6
RESOLVED, that the shareholders of the Company hereby ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accountants for the fiscal year 2020 on a non-binding and advisory basis.
BY ORDER OF THE BOARD OF DIRECTORS

Stephen Hartman
General Counsel, Global Head of Corporate Development
and Secretary
April 10, 2020

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PROXY STATEMENT

Information Concerning Voting and Proxy Solicitation
This Proxy Statement is being furnished to you in connection with the solicitation by the Board of Directors of Clarivate Analytics Plc, a company limited by shares organized under the laws of Jersey, Channel Islands, of proxies for the 2020 Annual General Meeting of Shareholders and any adjournments or postponements thereof. The Annual General Meeting will be held at 2:00 p.m. BST on Thursday, May 7, 2020, at Hotel Sofitel London St. James, 6 Waterloo Place, St. James’s, London SW1Y 4AN, United Kingdom.
This Proxy Statement, the Annual Report on Form 10-K for the year ended December 31, 2019 (our “Annual Report”), and the accompanying form of Proxy Card are being first sent to shareholders on or about April 10, 2020.
References in this Proxy Statement to “we,” “us,” “our,” the “Company,” and “Clarivate” refer to Clarivate Analytics Plc.
Appointment of Proxy Holders
The Board of Directors of Clarivate (the “Board of Directors” or “Board”) asks you to appoint the following individuals as your proxy holders to vote your shares at the 2020 Annual General Meeting of Shareholders:
Jerre Stead
Executive Chairman and Chief Executive Officer
Richard Hanks
Chief Financial Officer
Stephen Hartman
General Counsel, Global Head of Corporate Development and Secretary
You may make this appointment by using one of the methods described below. If appointed by you, the proxy holders will vote your shares as you direct on the matters described in this Proxy Statement. In the absence of your direction, they will vote your shares as recommended by the Board.
Unless you otherwise indicate on the Proxy Card, you also authorize your proxy holders to vote your shares on any matters not known by the Board at the time this Proxy Statement was printed and that, under our Articles of Association, may be properly presented for action at the Annual General Meeting.
If you do not wish to appoint Messrs. Stead, Hanks and Hartman as your proxies, you need not do so. Any shareholder who is entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies to attend and vote instead of that shareholder. A proxy need not be a shareholder. Any such appointment must be submitted to the Company in accordance with its Articles of Association.
Who Can Vote
Only shareholders who owned our ordinary shares at the close of business on March 9, 2020—the “Record Date” for the Annual General Meeting—can vote at the Annual General Meeting.
Each holder of our ordinary shares is entitled to one vote for each share held as of the Record Date. As of the close of business on the Record Date, we had 363,211,397 ordinary shares outstanding and entitled to vote.
There is no cumulative voting in the election of directors.
How You Can Vote
You may vote your shares at the Annual General Meeting either in person or by proxy, as described below. If your shares are held in the name of a bank or broker, voting by proxy will depend on the processes of the bank or broker, and you should follow the voting instructions on the form you receive from your bank or broker.
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Voting by Proxy. Shareholders of record may appoint a proxy by signing, dating, and returning the Proxy Card in the enclosed postage-paid return envelope or by email, or by following the instructions for internet voting provided on the Proxy Card. Carefully review and follow the instructions on the enclosed Proxy Card. The shares represented will be voted in accordance with the directions in the Proxy Card.
By Mail. The Proxy Card must be received by us at the address specified in the Proxy Card (Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood NY 11717) no later than the close of business on May 5, 2020. Please mail your Proxy Card in the enclosed postage-paid return envelope no later than April 17, 2020 in order to allow sufficient time for us to receive your Proxy Card by mail.
By Email. A Proxy Card may be delivered to us by sending a scanned PDF version of the original by email to: [email protected] A Proxy Card sent to us by email must be received by us no later than the close of business on May 5, 2020.
By Internet. Please follow the instructions set forth on the Proxy Card to vote using the internet. You must register your vote over the internet no later than the close of business on May 5, 2020.
A form of proxy different from the Proxy Card may be submitted to the Company in the manner contemplated by the Articles of Association.
Voting at the Annual General Meeting. Voting by proxy will not limit your right to vote at the Annual General Meeting if you decide to attend in person. The Board recommends that you vote by proxy, as it is not practical for most shareholders to attend the Annual General Meeting. If you hold shares through a bank or broker, you must obtain a proxy, executed in your favor, from the bank or broker to be able to attend and vote in person at the Annual General Meeting.
Revocation of Proxies
Shareholders can revoke their proxies at any time before they are exercised in any of three ways:
by voting in person at the Annual General Meeting;
by submitting written notice of revocation to the Secretary prior to the Annual General Meeting; or
by submitting another proxy—properly executed and delivered—on a later date, but prior to the Annual General Meeting.
Quorum
A quorum, which is shareholders holding in aggregate not less than a simple majority of all ordinary shares outstanding present in person or by proxy and entitled to vote (provided there are at least two shareholders entitled to vote), must be present to hold the Annual General Meeting. A quorum is calculated based on the number of shares represented by the shareholders attending in person and by their proxy holders. If you indicate an abstention as your voting preference, your shares will be counted toward a quorum but they will not be voted on any given proposal. “Broker non-votes” (see “Required Vote” below) will be counted as ordinary shares that are present for the purpose of determining the presence of a quorum but will have no effect with respect to any matter for which a broker does not have authority to vote.
Required Vote
With respect to each of Proposal 1 (election of directors) and Proposal 6 (ratification of appointment of independent registered public accountants), the proposal will be passed if approved by a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy.
With respect to each of Proposal 2 (change of name), Proposal 3 (amendment of Memorandum and Articles of Association) and Proposal 4 (open-market share repurchases), the proposal will be passed if approved by two-thirds of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy.
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With respect to Proposal 5 (share repurchases from the Private Equity Sponsors), the proposal will be passed if approved by both (i) two-thirds of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy and (ii) a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy, excluding for purposes of this clause (ii) votes cast by the applicable Private Equity Sponsor.
Please note that under New York Stock Exchange (“NYSE”) rules, brokers may not vote your shares on certain “non-routine” matters without your voting instructions. Accordingly, if you do not provide your broker or other nominee with instructions on how to vote your shares, this will be considered a “broker non-vote” and your broker or nominee will not be permitted to vote those shares on Proposal 1 (election of directors), Proposal 2 (change of name), Proposal 3 (amendment of Memorandum and Articles of Association), Proposal 4 (open-market share repurchases) or Proposal 5 (share repurchases from the Private Equity Sponsors). Your broker or nominee will be entitled to cast votes on Proposal 6 (ratification of appointment of independent registered public accountants).
We encourage you to provide instructions to your broker regarding the voting of your shares.
Please note that “vote cast” means a vote “FOR” or “AGAINST” a proposal. An abstention, or “ABSTAIN” vote, is not a “vote cast” and will not factor into whether a Proposal is passed.
Solicitation of Proxies
We pay the cost of printing and mailing the Notice of Annual General Meeting, the Annual Report, and all proxy and voting materials. Our directors, officers, and other employees may participate in the solicitation of proxies by personal interview, telephone, or email. No additional compensation will be paid to our directors, officers, or other employees for solicitation. We will reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation materials to beneficial owners of our common stock.
Shareholders Who Share an Address
Multiple Clarivate shareholders who share an address may receive only one copy of this Proxy Statement and the Annual Report, unless the shareholder gives instructions to the contrary. We will deliver promptly a separate copy of this Proxy Statement and the Annual Report to any Clarivate shareholder who resides at a shared address and to which a single copy of the documents was delivered if the shareholder makes a request by contacting the Secretary at:
Clarivate Analytics Plc
Friars House
160 Blackfriars Road
London SE1 8EZ United Kingdom
(or by telephone: +44 207 4334000)
Multiple shareholders who share a single address and who receive multiple copies of the Proxy Statement and the Annual Report and who wish to receive a single copy of each at that address in the future will need to contact their bank, broker, or other nominee.
Potential Impact of Developments Relating to COVID-19 Coronavirus
We are sensitive to public health and travel concerns and recommendations that public health officials may issue in light of the evolving COVID-19 coronavirus situation. In order to do our part to assist in protecting the health and well-being of our shareholders and employees, we are actively monitoring all available information. If we determine to change any of the logistics for the Annual General Meeting described herein due to developments relating to the COVID-19 coronavirus or otherwise, we will provide notice to shareholders through a press release and the filing of a Current Report on Form 8-K.
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Important Reminder
 
Please promptly vote and submit your proxy by mail or email, or by following the instructions for internet voting provided on the Proxy Card, or if you hold your shares through a bank or broker, as instructed by your bank or broker.
 
To appoint a proxy, you may sign, date, and return the enclosed Proxy Card in the postage-paid return envelope, or email it to [email protected], or follow the instructions for internet voting provided on the Proxy Card. We must receive your Proxy Card or internet voting instructions by May 5, 2020. If mailing, please mail your Proxy Card no later than April 17, 2020.
 
Voting by proxy will not limit your rights to attend or vote at the Annual General Meeting.
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PROPOSAL 1: ELECTION OF DIRECTORS
Directors and Nominees
Pursuant to the authority granted to the Board by the Company’s Articles of Association, the Board has determined that it be composed of thirteen directors, divided into three classes. Directors are elected for three-year terms and one class is elected at each Annual General Meeting.
Four Class I directors are to be elected at the 2020 Annual General Meeting. These directors will hold office until the Annual General Meeting in 2023, or until their respective successors have been elected and qualified. Each director nominee set forth below has consented to being named in this Proxy Statement as a nominee for election as director and has agreed to serve as a director if elected. In the event that either of the nominees should become unavailable prior to the Annual General Meeting, proxies in the enclosed form will be voted for a substitute nominee or nominees designated by the Board, or the Board may reduce the number of directors to constitute the entire Board, in its discretion. The Private Equity Sponsors have agreed to vote their ordinary shares in favor of the four director nominees.
Sir Martin Broughton, Charles E. Moran and Amir Motamedi have served as Class I directors since May 2019 and are not standing for election at the Annual General Meeting. In addition, Matthew Scattarella, who has served as a Class II director since May 2019, will step down from the board effective as of the date of the Annual General Meeting.
2020 NOMINEES FOR DIRECTOR
For more information about each director nominee, our continuing directors, and the operation of our Board, see “Corporate Governance and Board of Directors—Business Experience and Qualification of Board Members” below.
Name
Age
Director Since
Position with Company
Sheryl von Blucher
58
2019
Director
Jane Okun Bomba
57
Balakrishnan S. Iyer
63
2019
Director
Richard W. Roedel
70
Vote Required and Recommendation
A director will be elected if approved by a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy.
Text of Proposed Resolutions
RESOLVED, that each of Sheryl von Blucher, Jane Okun Bomba, Balakrishnan S. Iyer and Richard W. Roedel be elected to serve as a director of the Company until the 2023 Annual General Meeting or until her or his successor is duly elected and qualified; and further
RESOLVED, that in the event that any of the above nominees should become unavailable prior to the Annual General Meeting, proxies in the enclosed form will be voted for a substitute nominee or nominees designated by the Board, or the Board may reduce the number of directors to constitute the entire Board, in its discretion.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE ELECTION OF THESE NOMINEES
PROPOSAL 2: CHANGE OF NAME
The Company is seeking shareholder approval to change its name to “Clarivate Plc” from “Clarivate Analytics PLC” in order to more clearly signal to its customers and the market the breadth and uniqueness of the Company’s global information services and analytics product offerings. If approved, the name change would be effective as soon as practicable.
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Vote Required and Recommendation
The Company’s name will be changed to “Clarivate Plc” if approved by two-thirds of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy.
Text of Proposed Resolutions
RESOLVED AS A SPECIAL RESOLUTION, that the name of the Company be changed to “Clarivate Plc” from “Clarivate Analytics PLC;” and further
RESOLVED, that the directors of the Company are hereby authorized to take such steps as are necessary or useful to cause the name of the Company to be so changed as soon as practicable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
CHANGING THE COMPANY’S NAME TO “CLARIVATE Plc”
PROPOSAL 3: AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION
The Company is seeking shareholder approval to amend our Memorandum and Articles of Association in order to eliminate certain provisions that will no longer be appropriate upon anticipated further reductions in ownership of our ordinary shares by our former controlling shareholders, affiliates of Onex Partners Advisor LP (“Onex”) and Baring Private Equity Asia Pte Ltd (“Baring,” and collectively, the “Private Equity Sponsors”), and for other purposes, as described below.
The amendments to our Memorandum and Articles of Association, if approved by shareholders, will be effective as of the date this resolution shall have been duly passed by the shareholders. We currently expect that on or after that date, and also upon anticipated further reductions in ownership of our ordinary shares by the Private Equity Sponsors, our Board and the Private Equity Sponsors will agree to terminate and/or modify our Shareholders Agreement, Director Nomination Agreement and Sponsor Agreement. Each of these agreements is filed as an exhibit to our Annual Report.
We have attached to this Proxy Statement as Appendix A the form of our amended Memorandum and Articles of Association giving effect to the amendments herein proposed, and attached to this Proxy Statement as Appendix B is a copy of the proposed amended Memorandum and Articles of Association marked to show changes from the Memorandum and Articles of Association as currently in effect. The proposed changes to our Memorandum and Articles of Association are reflected in Appendix B hereto. Text that is proposed to be deleted is shown in Appendix B in red strikethrough (e.g., “Shareholders Agreement and Director Nomination Agreement”), text that is proposed to be added is shown in Appendix B in blue double underscore (e.g., “Plc”), and text that is proposed to be moved is shown in green, with green strikethough (e.g., “Company”) indicating where the text previously appeared and green double underscore with no strikethrough (e.g., “Company”) indicating where the text is proposed to be moved.
The significant proposed changes to our Memorandum and Articles of Association include the following:
Throughout—the name of the Company is proposed to be changed to give effect to Proposal 2 (change of name).
Throughout—various text and/or articles are proposed to be moved to a new Article 44 that will apply only for so long as appointees of the Private Equity Sponsors remain on the Board, including: Article 1.1 (various defined terms); former Article 1.4; Article 14.16(c); former Article 15.20(i); former Articles 15.21; 21.4 and 21.5; certain text in Articles 20.4 and 20.5; and former Articles 28.2(a)-(d) and 28.3.
Throughout—various text and/or articles are proposed to be revised or deleted in view of the fact that the Private Equity Sponsors no longer own a majority of our ordinary shares and the Company now has a standing Board, including: Article 19; and former Articles 21.1 and 25.3 (explicitly authorizing directors appointed by the Private Equity Sponsors to serve on committees).
Articles 22, 26.5, 33.3 and 33.4—directors are proposed to be given the ability to appoint alternate directors to perform the functions of the appointing director in their absence, including being able to
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attend and vote at meetings of the Board at which the appointing director is not personally present. This flexibility is being proposed because the Company’s directors generally must meet physically in the United Kingdom in order to transact business, which can cause logistical difficulties in the event a Board meeting is scheduled on short notice.
Articles 7.5 and 8.3—the Board is proposed to be given the ability to convert the Company's ordinary shares into shares that are “redeemable” on a voluntary and as-agreed basis with the holders of such shares. This is being proposed to permit the Company to engage in transactions that are economically the same as open-market share repurchases without a need for advance shareholder approval (which would require a special resolution similar to that set out in Proposal 4 to be passed by the shareholders, which may be difficult to obtain on short notice). With this flexibility, the Company would have powers which can be exercised in a manner equivalent to the ability of Delaware-incorporated companies to buy back shares subject only to board, and not shareholder, approval.
Article 15.13, replacing former Articles 16.12, 16.13 and 16.14—the former provisions providing for the ability of shareholders to act by written consent while the Private Equity Sponsors hold a majority of our ordinary shares are no longer applicable and accordingly are proposed to be replaced by Article 15.13, providing for no shareholder action by written consent, with corresponding modifications to the definitions of “Ordinary Resolution” and “Special Resolution” in Article 1.1.
Articles 16.12 and 16.15(c)—the Board is proposed to be given the ability to prescribe non-written (e.g., telephonic, internet-based or via other electronic systems) shareholder proxies.
Article 19.2—the Board is proposed to be given the ability to reallocate directors amongst classes in connection with any change in the total number of directors from time to time in order to equalize, as nearly as possible, the number of directors in each class.
Article 26.4—the quorum for Board meetings is proposed to be reduced to two directors for the same reason provision for alternate directors is proposed. Pursuant to new Article 44.11, for so long as appointees of the Private Equity Sponsors remain on the Board, unless a majority of the authorized number of Directors is present, the meeting shall immediately be adjourned without further action unless the Private Equity Sponsors agree otherwise.
Article 41—the courts of the Island of Jersey are proposed to be the sole and exclusive forum for certain types of litigation unless the Company consents in writing to the selection of an alternative forum. This change is being proposed because the Company is incorporated in Jersey, and Jersey law would govern any such disputes; this will also help the Company avoid multiple lawsuits in multiple jurisdictions relating to such disputes, thus saving significant costs and effort in addressing cases brought in multiple jurisdictions.
Please review Appendix B for a full depiction of the proposed changes to the Memorandum and Articles of Association.
Vote Required and Recommendation
The proposed amendments to the Memorandum and Articles of Association will be passed if approved by two-thirds of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy, and will be effective upon approval by the shareholders.
Text of Proposed Resolutions
RESOLVED AS A SPECIAL RESOLUTION, that the Memorandum and Articles of Association of the Company be amended and restated in their entirety in the form set forth in Appendix A hereto, effective as of the date this resolution shall have been duly passed by the shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE PROPOSED AMENDMENTS TO THE COMPANY’S
MEMORANDUM AND ARTICLES OF ASSOCIATION
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PROPOSAL 4: OPEN-MARKET SHARE REPURCHASES
As a company incorporated in Jersey, Channel Islands and subject to the Companies (Jersey) Law 1991, Clarivate may only effect open-market purchases of its ordinary shares pursuant to a special resolution of its shareholders. If authorized by a resolution of its shareholders, any shares that Clarivate purchases may be held by it as treasury shares, and may, at Clarivate’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.
The Company is seeking shareholder approval to permit it to conduct open-market purchases of its ordinary shares from time to time as approved by the Board of Directors, subject to the following terms and conditions:
This purchase authority shall extend from May 7, 2020 to May 6, 2025, inclusive.
The price per ordinary share (exclusive of brokerage fees and commissions) paid by Clarivate shall not be less than $10 per share nor in excess of $150 per share.
Clarivate shall not purchase more than 50,000,000 ordinary shares pursuant to this resolution (without giving effect to purchases pursuant to any other resolution).
Any ordinary shares that Clarivate purchases may be held by it as treasury shares, and may, at Clarivate’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.
Vote Required and Recommendation
The Company will be authorized to conduct open-market share repurchases if approved by two-thirds of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy.
Text of Proposed Resolutions
RESOLVED AS A SPECIAL RESOLUTION, that the Company is hereby authorized to conduct open-market purchases of its ordinary shares from time to time as approved by the Board of Directors; provided that (i) this purchase authority shall extend from May 7, 2020 to May 6, 2025, inclusive; (ii) the price per ordinary share (exclusive of brokerage fees and commissions) paid by the Company pursuant to this resolution shall not be less than $10 per share nor in excess of $150 per share; and (iii) the Company shall not purchase more than 50,000,000 ordinary shares pursuant to this resolution (without giving effect to purchases pursuant to any other resolution); and further
RESOLVED, that any ordinary shares that the Company purchases pursuant to the foregoing resolution may be held by it as treasury shares, and may, at the Company’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
AUTHORIZING THE COMPANY TO CONDUCT OPEN-MARKET SHARE REPURCHASES
PROPOSAL 5: SHARE REPURCHASES FROM THE PRIVATE EQUITY SPONSORS
As a company incorporated in Jersey, Channel Islands and subject to the Companies (Jersey) Law 1991, Clarivate may only effect purchases of its own ordinary shares other than on a stock exchange pursuant to a special resolution of its shareholders, and only if the purchase is made on the terms of a written purchase contract which has been approved in advance by an ordinary resolution of its shareholders, excluding votes cast by the applicable Private Equity Sponsor. The shareholder from whom Clarivate proposes to purchase or redeem ordinary shares is not entitled to vote in respect of the ordinary shares to be purchased from such shareholder (but such shareholders’ vote will count in respect of the ordinary shares to be purchased from other shareholders).
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The Company is seeking shareholder approval to permit it to repurchase its ordinary shares from time to time from any Private Equity Sponsor as approved by the Board of Directors, subject to the following terms and conditions:
This purchase authority shall extend from May 7, 2020 to May 6, 2025, inclusive.
Each purchase from a Private Equity Sponsor shall be executed pursuant to a Share Repurchase Agreement between Clarivate and the applicable Private Equity Sponsor substantially in the form set forth in Appendix C hereto.
The price per share payable by Clarivate shall be equal to the volume weighted average price of the ordinary shares for the consecutive trading-day period established by the Board that ends on the trading day immediately prior to the date on which such Share Repurchase Agreement is entered into, as displayed under the heading “VWAP” on the applicable Bloomberg page or on or by another third-party market data provider approved by the Board.
The consecutive trading-day period established by the Board pursuant to this resolution shall not be fewer than five consecutive trading days nor greater than ninety consecutive trading days.
Clarivate shall not purchase more than 50,000,000 ordinary shares pursuant to this resolution (without giving effect to purchases pursuant to any other resolution).
Any ordinary shares that Clarivate purchases may be held by it as treasury shares, and may, at Clarivate’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.
Vote Required and Recommendation
The Company will be authorized to repurchase shares from any Private Equity Sponsor if approved by both (i) two-thirds of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy and (ii) a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy, excluding for purposes of this clause (ii) votes cast by a Private Equity Sponsor with respect to share repurchases from such Private Equity Sponsor.
Text of Proposed Resolutions
RESOLVED AS A SPECIAL RESOLUTION, that the Company is hereby authorized to purchase its ordinary shares from time to time from any Private Equity Sponsor as approved by the Board of Directors; provided that (i) this purchase authority shall extend from May 7, 2020 to May 6, 2025, inclusive; (ii) each purchase from a Private Equity Sponsor shall be executed pursuant to a Share Repurchase Agreement between the Company and the applicable Private Equity Sponsor substantially in the form set forth in Appendix C hereto; (iii) the price per share payable by the Company for ordinary shares purchased pursuant to this resolution shall be equal to the volume weighted average price of the ordinary shares for the consecutive trading-day period established by the Board that ends on the trading day immediately prior to the date on which such Share Repurchase Agreement is entered into, as displayed under the heading “VWAP” on the applicable Bloomberg page or on or by another third-party market data provider approved by the Board; (iv) the consecutive trading-day period established by the Board pursuant to this resolution shall not be fewer than five consecutive trading days nor greater than ninety consecutive trading days; and (v) the Company shall not purchase more than 50,000,000 ordinary shares pursuant to this resolution (without giving effect to purchases pursuant to any other resolution); and further
RESOLVED, that any ordinary shares that the Company purchases pursuant to the foregoing resolution may be held by it as treasury shares, and may, at the Company’s option, be cancelled, sold, transferred for the purposes of or under an employee share scheme or held without cancelling, selling or transferring them.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
AUTHORIZING THE COMPANY TO REPURCHASE SHARES FROM
ANY PRIVATE EQUITY SPONSOR
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PROPOSAL 6: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS
The Audit Committee of the Board, which is composed entirely of independent directors, has selected PricewaterhouseCoopers LLP as the independent registered public accountants to audit our books, records, and accounts and those of our subsidiaries for the fiscal year 2020. The Board has endorsed this appointment. Ratification of the selection of PricewaterhouseCoopers LLP by shareholders is not required by law and is being sought on a non-binding and advisory basis. However, as a matter of good corporate practice, such selection is being submitted to the shareholders for ratification at the Annual General Meeting. If the shareholders do not ratify the selection, the Board and the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP, but may, in their discretion, retain PricewaterhouseCoopers LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such change would be in the best interests of Clarivate and its shareholders.
PricewaterhouseCoopers LLP previously audited our consolidated financial statements or those of our predecessor since 2016. Representatives of PricewaterhouseCoopers LLP will be present at the Annual General Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate shareholder questions.
Audit, Audit-Related and Tax Fees
In connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2019, we entered into an engagement letter with PricewaterhouseCoopers LLP that sets forth the terms by which PricewaterhouseCoopers LLP performed audit services for us. Aggregate fees for professional services rendered for us by PricewaterhouseCoopers LLP for the fiscal year ended December 31, 2019 and 2018, respectively, were as follows:
 
2019
2018
 
(in thousands)
Audit Fees
$4,965
$7,621
Audit-Related Fees
250
325
Tax Fees
895
1,310
All Other Fees
8
8
Total
$6,118
$9,264
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our consolidated financial statements, the statutory audit of our subsidiaries, the review of our interim consolidated financial statements, and other services provided in connection with statutory and regulatory filings.
Audit-Related Fees. 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 the Company’s consolidated financial statements and are not reported under “Audit Fees.” These services may include employee benefit plan audits, due diligence services related to acquisitions and divestitures, auditing work in proposed transactions, attestation services that are not required by regulation or statute and consultations regarding financial accounting or reporting standards. For 2019, audit-related fees included approximately $250,000 for consultations regarding reporting standards. For 2018, audit-related fees included approximately $325,000 for due diligence services rendered related to divestitures.
Tax Fees. Tax fees consist of tax compliance consultants, preparation of tax reports, and other tax services.
All Other Fees. All other fees for 2019 and 2018 consisted of license fees for utilization of technical databases.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has implemented pre-approval policies and procedures related to the provision of audit and non-audit services by PricewaterhouseCoopers LLP. Under these procedures, the Audit Committee pre-approves both the type of services to be provided by PricewaterhouseCoopers LLP and the estimated fees related to these services.
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During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the registered public accountants. The services and fees must be deemed compatible with the maintenance of such accountants’ independence, including compliance with rules and regulations of the Securities and Exchange Commission (the “SEC” or the “Commission”) and the NYSE. The Audit Committee does not delegate its responsibilities to pre-approve services performed by PricewaterhouseCoopers LLP to management or to any individual member of the Audit Committee. Throughout the year, the Audit Committee will review any revisions to the estimates of audit and non-audit fees initially approved.
Vote Required and Recommendation
Ratification of the appointment of PricewaterhouseCoopers LLP if approved by a simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote in person or represented by proxy. Unless marked to the contrary, proxies received will be voted “FOR” this Proposal 6 regarding the ratification of PricewaterhouseCoopers LLP as our independent registered public accountants. In the event ratification is not obtained, the Audit Committee will review its future selection of our independent registered public accountants.
Text of Proposed Resolutions
RESOLVED, that the shareholders of the Company hereby ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accountants for the fiscal year 2020 on a non-binding and advisory basis.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
Board Leadership Structure
The Board of Directors of Clarivate believes strongly in the value of an independent board of directors to provide effective oversight of management. Of the thirteen members of our Board of Directors, twelve are independent. This includes all members of the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Risk Committee. The independent members of the Board of Directors meet regularly without management.
The Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer (“CEO”) in any way that it deems to be in the best interests of the Company. Jerre Stead, who has served as our Executive Chairman since our merger with Churchill Capital Corp in May 2019, was appointed Executive Chairman and CEO shortly after the closing of the merger. Mr. Stead possesses detailed and in-depth knowledge of the business of Clarivate and the opportunities we have in the global marketplace and is thus well positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters.
Business Experience and Qualifications of Board Members and Director Nominees
2020 Nominees for Class I Director
Sheryl von Blucher, 58, has been a member of our board since May 2019. Ms. von Blucher has over 30 years of experience in a variety of roles in the global integrated energy, information services, technology services and software, and public and non-profit sectors. She has led strategic and portfolio planning, operations, and corporate finance and development for both domestic and international organizations. Ms. von Blucher served as Co-Chief Executive Officer of DTN LLC from 2017 to 2018. Prior to this, she joined IHS in 2000 as Senior Vice President of Planning and Corporate Development, and then served as an Advisor to the Chairman & CEO of the company from 2007 through 2017. Ms. von Blucher has also worked in private-equity portfolio management as a partner and managing director for the JMJS Group, a private equity partnership. Ms. von Blucher currently serves on the Board of Directors of Washington Prime Group, Inc.; Capital Canyon Club and Golf Development LLC; and on the Board of Trustees for the not-for-profit Guideposts. Ms. von Blucher holds a bachelor’s degree from Rice University and a master’s degree from Harvard University. Ms. von Blucher was selected to serve on the board of directors due to her significant experience as a senior executive in information services.
Jane Okun Bomba, 57, was nominated by the Board to stand for election at the Annual General Meeting. Ms. Okun Bomba also serves on the Board of Directors of Service Source International since March 2020 and Brightview Holdings, Inc. since April 2019. Ms. Okun Bomba has served as President of Saddle Ridge Consulting since January 2018 and advises on a range of strategic issues, including investor relations, corporate perception and governance, transaction integration, human resources and ESG. Previously, from 2004 to 2017, Ms. Okun Bomba was an executive at IHS Markit, most recently as Executive Vice President, Chief Administrative Officer, where she led 450 people in corporate functions including HR, Marketing, Communications, Sustainability and Investor Relations. Prior to IHS, she was a partner at Genesis, Inc. and headed investor relations at Velocom, MediaOne Group, and Northwest Airlines. She held various management positions in corporate finance at Northwest Airlines and American Airlines, and was a CPA at PriceWaterhouse. Ms. Okun Bomba serves on the board of Kickstart International and is a member of the International Women’s Forum. She is a member of the University of Michigan, Ross School of Business Advisory Board and the School of Literature, Science and Arts Dean’s Advisory Committee. Ms. Okun Bomba holds both a BGS and an MBA from the University of Michigan at Ann Arbor. She completed graduate studies at the Stockholm School of Economics, and board director education in the Women’s Director Development Program at the Kellogg School of Management, Northwestern University and the Directors’ Consortium. Ms. Okun Bomba was selected to serve on the board of directors due to her significant experience in human resources, finance and investor relations.
Balakrishnan S. Iyer, 63, has been a member of our board since May 2019. Mr. Iyer served as a Board member of IHS Markit Ltd. (previously IHS Inc.) from 2003 to 2019. Mr. Iyer also has served on the Board of Directors of Skyworks Solutions Inc. since 2002 and Power Integrations, Inc. since 2004. Previously, Mr. Iyer was Senior Vice President and Chief Financial Officer of Conexant Systems, Inc. from 1998 to 2003. He held various leadership positions at VLSI Technology Inc., including Senior Vice President and Chief Financial Officer
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from 1997 to 1998 and Vice President, Corporate Controller from 1993 to 1997. Mr. Iyer served on the Board of Directors of Conexant Systems from 2002 to 2011, Life Technologies (and its predecessor Invitrogen) from 2001 to 2014 and QLogic Corporation from 2003 to 2016. Mr. Iyer holds a B.Tech in Mechanical Engineering from the Indian Institute of Technology, Madras, an MS in Industrial Engineering from the University of California, Berkeley and an MBA in Finance from the Wharton School of the University of Pennsylvania. Mr. Iyer was selected to serve on the board of directors due to his significant financial and corporate governance experience in information services.
Richard W. Roedel, 70, was nominated by the Board to stand for election at the Annual General Meeting. Mr. Roedel also serves on the Board of Directors of Brightview Holdings, Inc., Six Flags Entertainment Corporation, LSB Industries, Inc. and Luna Innovations Incorporated. Mr. Roedel also currently serves on the Board of Directors of IHS Markit Inc. but will not be seeking reelection thereto when his current term expires at its annual general meeting of stockholders in April 2020. Mr. Roedel serves as Non-Executive Chairman of Six Flags, LSB and Luna Innovations. Mr. Roedel has previously served on the boards of Lorillard, Inc., Sealy Corporation, BrightPoint, Inc, Broadview Holdings, Inc., Dade Behring Holdings, Inc. and TakeTwo Interactive Software, Inc. Mr. Roedel is a member of the National Association of Corporate Directors (NACD) Risk Oversight Advisory Council. Mr. Roedel was appointed to a three year term, ending in 2017, on the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB). Until 2000, Mr. Roedel was employed by BDO Seidman LLP, having been managing partner of its Chicago and New York Metropolitan area offices and later Chairman and CEO. Mr. Roedel is a graduate of The Ohio State University and a CPA. Mr. Roedel was selected to serve on the board of directors due to his significant finance, accounting and risk management experience.
Class II Directors with Terms Expiring at the 2021 Annual General Meeting
Michael Klein, 56, has been a member of our board since May 2019. Mr. Klein currently serves as a Director for Credit Suisse Group AG and Credit Suisse AG. Mr. Klein is the founder and managing partner of M. Klein and Company, LLC, which he founded in 2012. M. Klein and Company, LLC is a global strategic advisory firm that provides its clients a variety of advice tailored to their objectives. Mr. Klein is a strategic advisor to global companies, boards of directors, senior executives, governments and institutional investors. Mr. Klein’s background in strategic advisory work was built during his 30-year career, including more than two decades at Citi and its predecessors, during which he initiated and executed strategic advisory transactions. He began his career as an investment banker in the M&A Advisory Group at Salomon Smith Barney and subsequently became Chairman and Co-Chief Executive Officer of Citi Markets and Banking, with responsibilities for global corporate and investment banking and Global Transaction Services across Citi. Mr. Klein is a graduate of The Wharton School of the University of Pennsylvania, where he earned his Bachelors of Science in Economics with concentrations in finance and accounting. Mr. Klein was selected to serve on the board of directors due to his significant investment banking and advisory experience, including for companies in information services.
Charles J. Neral, 61, has been a member of our board since July 2017 and also serves on the Board of Directors of SAI Global. In 2016, he founded Neral Associates, LLC which provides advisory services to public and private clients. Prior to that, from July 2012 to January 2016, Mr. Neral served as the Senior Vice President and Chief Financial Officer of SunGard. He also served as the Senior Vice President and Chief Financial Officer of SafeNet from October 2009 to June 2012. From 1981 to 2009, Mr. Neral served in a variety of positions across IBM’s Sales, Server, Global Services and Software Business lines including executive roles in Asia Pacific, IBM Corporate Headquarters and ultimately serving as the Chief Financial Executive of IBM’s Software Segment (2004 to 2009). Mr. Neral holds a B.S. in Computer Science from Indiana University of Pennsylvania and an MBA in Finance from New York University. Mr. Neral was selected to serve on the board of directors due to his significant business and advisory experience.
Class III Directors with Terms Expiring at the 2022 Annual General Meeting
Jerre Stead, 77, has been Chief Executive Officer of the Company since June 2019 and Executive Chairman of our board since May 2019. Mr. Stead served as Chairman and Chief Executive Officer of IHS Markit Ltd., a world leader in critical information, analytics and solutions, from its formation in 2016 through 2017 and as Executive Chairman of its predecessor company, IHS Inc., from 2000 through 2016 and as both Chairman and Chief Executive Officer from 2015 through 2016 and from 2006 through 2013. Mr. Stead previously served as Co-Chief Executive Officer of DTN LLC, which provides services in relation to the delivery of weather, agricultural, energy and commodity market information from 2017 to 2018 and also previously served as its
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Executive Chairman. Mr. Stead previously served as Chairman and CEO of Ingram Micro from 1996 to 2000 and as Chairman and CEO of Legent Corporation in 1995. Mr. Stead has also previously served as Chairman and CEO of Honeywell-Phillips Medical Electronics, Chairman and CEO of Square D Company and Chairman and CEO of AT&T Global Information Solutions. Mr. Stead has served on over 30 corporate boards during his career and in 2017 received the B. Kenneth West Lifetime Achievement Award from the National Association of Corporate Directors. Mr. Stead is a graduate of the University of Iowa, where he earned a bachelor’s degree in business administration, and of the Harvard University Advanced Management Program in Switzerland. Mr. Stead was selected to serve on the board of directors due to his significant experience leading and growing companies in information services.
Kosty Gilis, 46, has been a member of our board since October 2016 and Clarivate’s board since its formation in January 2019. Mr. Gilis is a Managing Director of Onex. Since joining Onex in 2004, Mr. Gilis has worked on numerous private equity transactions including the acquisitions and realizations of Allison Transmission and Tomkins plc, as well as the acquisitions of Emerald Expositions, WireCo Worldgroup and SMG. He currently also serves on the Board of Emerald Expositions Events, Inc. and ASM Global, and previously served on the boards of Allison Transmission Holdings, Inc., Gates Global Inc. and WireCo Worldgroup Inc. Prior to joining Onex, Mr. Gilis was a Vice President at Willis Stein & Partners, a Chicago-based private equity firm and was a management consultant at Bain & Company in Toronto, Canada and Johannesburg, South Africa. Mr. Gilis is a graduate of The Wharton School of the University of Pennsylvania, where he earned a B.S. in Economics, and Harvard Business School, where he earned an MBA. Mr. Gilis was selected to serve on the board of directors due to his significant experience in a variety of financing transactions and business services investments.
Nicholas Macksey, 40, has been a member of our board since October 2016. Mr. Macksey is a Managing Director of BPEA. Since joining BPEA in 2006, Mr. Macksey has worked on numerous private equity transactions. These transactions include Courts Asia Limited, Nord Anglia Education Inc., Vistra Group Limited, SAI Global Limited, Giant Interactive Group Inc. Prior to joining Baring Mr. Macksey was a Senior Associate at Westpac Institutional Bank. Mr. Macksey graduated with a Bachelor of Commerce and a Bachelor of Economics from the University of Queensland and is also a CFA charter holder. Mr. Macksey was selected to serve on the board due to his significant investment and business services experience.
Karen G. Mills, 66, has been a member of our board since May 2019. Ms. Mills is currently a Senior Fellow at Harvard Business School and Harvard Kennedy School, focusing on technology, U.S. competitiveness, and entrepreneurship. Ms. Mills was a member of President Barack Obama’s Cabinet, serving as the Administrator of the U.S. Small Business Administration from 2009 to 2013. She is President of MMP Group, which invests in financial services, consumer products and technology solutions businesses. Prior to this, Ms. Mills held leadership positions in the private sector, including as a partner in several private equity firms. Ms. Mills is Vice Chair of the immigration services company Envoy Global and a past director of Arrow Electronics and Scotts Miracle-Gro. She also serves as a director of the National Bureau of Economic Research (NBER) and as a member of the Harvard Corporation. Ms. Mills holds an AB in economics from Harvard University and an MBA from Harvard Business School. Ms. Mills was selected to serve on the board of directors due to her significant experience in government, academia and investment.
Anthony Munk, 59, has been a member of our board since October 2016. Mr. Munk is a Senior Managing Director at Onex. Since joining Onex in 1988, Mr. Munk has worked on numerous private equity transactions, including the acquisitions and realizations of Husky Injection Molding Systems Ltd., RSI Home Products, Tomkins plc, Vencap Equities Alberta Ltd., Imperial Parking Ltd., ProSource Inc., and Loews Cineplex; and the initial public offering of the Cineplex Galaxy Income Fund, which acquired the Canadian operations of Loews Cineplex, Cineplex Odeon, and the operations of Onex’ subsidiary, Galaxy Entertainment. More recently, Mr. Munk was involved in the acquisitions by Onex of Ryan LLC, Jeld-Wen Holdings Inc., Jack’s Family Restaurants and Moran Foods, LLC (“Save-A-Lot”). Mr. Munk also currently serves on the boards of directors of Ryan LLC, Save-A-Lot, Jeld-Wen and SGS. Mr. Munk previously served on the board of directors of Barrick Gold Corporation, RSI Home Products, Husky Injection Molding Systems Ltd., Cineplex Inc., SMG, and Jack’s Family Restaurants. Prior to joining Onex, Mr. Munk was a Vice President with First Boston Corporation in London, England and an Analyst with Guardian Capital in Toronto. Mr. Munk is a graduate of Queen’s University, where he earned a bachelor’s degree in Economics. Mr. Munk was selected to serve on the board of directors due to his significant experience in a variety of strategic and financing transactions and investments.
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Independence of Directors
We adhere to the rules of the NYSE in determining whether a director is independent. The NYSE listing standards generally define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has determined that Sheryl von Blucher, Martin Broughton, Kosty Gilis, Balakrishnan S. Iyer, Nicholas Macksey, Charles E. Moran, Karen G. Mills, Amir Motamedi, Anthony Munk, Charles J. Neral and Matthew Scattarella are independent directors. The Board has also determined that director nominees Jane Okun Bomba and Richard W. Roedel would be independent if elected to the Board.
Directors’ Meeting Attendance
The Board held three meetings during 2019 since becoming a public company in May 2019. At each meeting, the Executive Chairman was the presiding director. Each director attended at least 75 percent of the total regularly scheduled and special meetings of the Board and the committees on which they served. Our Board expects each director to attend our Annual General Meeting of Shareholders (subject to travel precautions or restrictions in light of the COVID-19 coronavirus outbreak), although attendance is not required.
Simultaneous Service on Other Public Company Boards
The Board does not believe that its members should be prohibited from serving on boards of other organizations and has not adopted any guidelines limiting such activities. However, as set forth in the Audit Committee charter, no Audit Committee member may simultaneously serve on the audit committee of more than two other public companies, unless the Board determines that such simultaneous service would not impair the ability of the member to effectively serve on the Audit Committee and this determination is disclosed in accordance with NYSE rules. In addition, other than with respect to any directors and director candidates designated pursuant to the Shareholders Agreement or the Director Nomination Agreement (for so long as such agreements are in effect), for whom the Nominating and Corporate Governance Committee does not provide a recommendation to the Board, the Nominating and Corporate Governance Committee may take into account the nature of and time involved in a director’s service on other boards and/or committees in evaluating the suitability of individual director candidates and current directors.
Family Relationships
There are no family relationships between any of Clarivate’s executive officers and directors.
Compensation Committee Interlocks and Insider Participation
Our chief executive officer and executive chairman, Mr. Stead, was a member of our Compensation Committee during 2019. Mr. Stead no longer serves on our Compensation Committee as of January 1, 2020. In addition, in 2019, Mr. Stead designated Ms. von Blucher, a member of our Compensation Committee, to receive 1,800,000 Merger Shares in recognition of her founding of Churchill and in exchange for Ms. von Blucher agreeing to subject her Clarivate shares to specified transfer restrictions, see “Certain Relationships and Related Person Transactions—Transactions Involving Related Persons—Sponsor Agreement.” Other than Mr. Stead and Ms. von Blucher, none of the members of the Compensation Committee were at any time during 2019, or at any other time, an officer or employee of Clarivate or had any relationship requiring disclosure under the SEC's rules regarding related person transactions. During 2019, none of our executive officers served on the board of directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or the Compensation Committee.
Code of Conduct
Clarivate has adopted a Code of Conduct that applies to all of its employees, officers, and directors. This includes Clarivate’s principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. The full text of Clarivate’s Code of Conduct is posted on its website at http://ir.clarivate.com/Governance-Documents. Clarivate intends to disclose on its website any future amendments of the Code of Conduct or waivers that exempt any principal executive officer, principal financial officer, principal accounting officer or controller, persons performing similar functions, or Clarivate’s directors from provisions in the Code of Conduct.
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Statement of Significant Differences Between our Corporate Governance Practices and NYSE Corporate Governance Standards for U.S. Issuers
Pursuant to exceptions for foreign private issuers, we are not required to comply with certain of the corporate governance practices followed by U.S. companies under NYSE listing standards. However, Section 303A.11 of the NYSE Listed Company Manual requires that we state any significant differences between our corporate governance practices and the practices required by the NYSE. In this regard, if we believe that circumstances warrant, we may elect to comply with provisions of Companies (Jersey) Law 1991 in lieu of the NYSE shareholder approval requirements applicable to certain dilutive events, such as the establishment or material amendment of certain equity-based compensation plans. In addition, our compensation committee and nominating and corporate governance committee are not subject to annual performance evaluations.
Communications with the Board
If you wish to communicate with the Board as a whole, with any Committee, with any one or more individual directors, or with our non-management directors, you may send your written communication to:
Stephen Hartman
General Counsel, Global Head of Corporate Development and Secretary
Clarivate Analytics Plc
Friars House, 160 Blackfriars Road
London SE1 8EZ United Kingdom
Board Committees
In 2019, our Board had four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Risk Committee. With the exception of Mr. Stead, who until January 1, 2020 served on the Compensation and Risk Committees, we believe that all members of each of these committees meet the independence standards of the NYSE and SEC rules and regulations. The Board has approved a charter for each of the standing committees, each of which can be found on our website at http://ir.clarivate.com.
Composition of Board Committees
The Board had four standing committees in 2019 with duties, membership as of year-end, and number of meetings for each as shown below.
 
Audit
Committee
Nominating and
Corporate
Governance
Committee
Compensation
Committee
Risk Committee
Amir Motamedi(1)
 
 
 
Balakrishnan S. Iyer
 
 
Chairperson
Charles E. Moran(1)
 
 
 
Charles J. Neral
Chairperson
 
 
Jerre Stead(2)
 
 
Karen G. Mills
 
 
Kosty Gilis
 
Chairperson
Nicholas Macksey
 
 
Sheryl von Blucher
 
Chairperson
 
 
 
 
 
Number of meetings(3)
4
2
3
2
(1)
Messrs. Moran and Motamedi are not standing for election at the Annual General Meeting.
(2)
Mr. Stead stepped down from the Compensation and Risk Committees on January 1, 2020.
(3)
Since becoming a public company in May 2019.
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Audit Committee
Members—
Charles J. Neral, Chairperson
Balakrishnan S. Iyer
Karen G. Mills
The Board has established an Audit Committee comprised of independent directors. Each of the members of the Audit Committee is independent under NYSE listing standards and SEC rules. The Audit Committee has a written charter. The purpose of the Audit Committee is, among other things, to appoint, retain, set compensation of, and supervise Clarivate’s independent accountants, review the results and scope of the audit and other accounting related services and review Clarivate’s accounting practices and systems of internal accounting and disclosure controls.
Financial Experts on Audit Committee
The Audit Committee will at all times be composed exclusively of  “independent directors,” as defined for Audit Committee members under the NYSE listing standards and the rules and regulations of the SEC, who are “financially literate.” “Financially literate” generally means being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, Clarivate is required to certify to the NYSE that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
Mr. Neral serves as a financial expert on the Audit Committee.
Compensation Committee
Members—
Kosty Gilis, Chairperson
Amir Motamedi
Nicholas Macksey
Sheryl von Blucher
The Board has established a Compensation Committee. The Compensation Committee has a written charter. The purpose of the Compensation Committee is to review and approve compensation paid to Clarivate’s officers and directors and to administer Clarivate’s incentive compensation plans, including authority to make and modify awards under such plans.
Any award made pursuant to an individual subject to the requirements of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) must consist of a committee of two or more members of the board who are “nonemployee directors” as defined in Rule 16b-3(d)(1) under the Exchange Act.
Each of the members of the Compensation Committee is independent under NYSE listing standards and is a “non-employee director.”
Nominating and Corporate Governance Committee
Members—
Sheryl von Blucher, Chairperson
Charles E. Moran
Kosty Gilis
Nicholas Macksey
The Board has established a Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has a written charter. The Nominating and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on the Board. Each of the members of the Nominating and Corporate Governance Committee is independent under NYSE listing standards.
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Risk Committee
Members—
Balakrishnan S. Iyer, Chairperson
Charles J. Neral
Karen G. Mills
Kosty Gilis
Sheryl von Blucher
The Risk Committee has been created by our Board to assist our Board in its oversight of the Company’s risk management. The Risk Committee has a written charter. In addition to any other responsibilities which may be assigned from time to time by the Board, the Risk Committee is responsible for (i) reviewing and discussing with management the Company’s risk management and risk assessment processes, including any policies and procedures for the identification, evaluation and mitigation of major risks of the Company; (ii) receiving periodic reports from management as to efforts to monitor, control and mitigate major risks; and (iii) reviewing periodic reports from management on selected risk topics as the Risk Committee deems appropriate from time to time, encompassing major risks other than those delegated by the Board to other Committees of the Board in their respective charters or otherwise. Each of the members of the Risk Committee is independent under NYSE listing standards.
Director Nominations
Subject to the requirements of the Shareholders Agreement and Director Nomination Agreement discussed under “Certain Relationships and Related Person Transactions,” the Nominating and Corporate Governance Committee will consider persons identified by its members, management, shareholders, investment bankers and others. The guidelines for selecting nominees, which are specified in the nominating and corporate governance committee charter, generally provide that persons to be nominated:
should have demonstrated notable or significant achievements in business, education or public service;
should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
The Nominating and Corporate Governance Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The Nominating and Corporate Governance Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific Board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of Board members. Subject to the requirements of the Shareholders Agreement and Director Nomination Agreement, the Nominating and Corporate Governance Committee will not distinguish among nominees recommended by shareholders and other persons.
Director Compensation
Non-employee directors who are not employees or affiliates of Onex or Baring receive compensation comprised of an annual retainer for Board service, annual retainers for applicable committee service, and meeting fees. These payments are quantified in the table below.
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Director Compensation
Amount
($)
Annual Retainers:
 
Board of Directors
75,000
Audit Committee Chair
50,000
Risk Committee Chair
20,000
Audit Committee
15,000
Nominating and Corporate Governance Committee
10,000
Compensation Committee
15,000
Risk Committee
10,000
Individual Meeting Fee
18,750
Directors may elect to receive 50.0% of their annual Board retainer in shares of Clarivate stock. Directors do not receive grants of stock options or stock awards.
In addition to the fees described above, reimbursement is provided for travel, lodging and other reasonable expenses. Some of this expense reimbursement is taxable in the UK, and in those cases, the Company provides a tax gross-up so that directors would not have been responsible for paying taxes on their expense reimbursements.
The Nominating and Corporate Governance Committee periodically evaluates the compensation of our non-employee directors, with the assistance of Pay Governance, the Compensation Committee’s consultant. Pay Governance reviews director pay levels and provides analyses on where the Company is positioned relative to the Company’s compensation. The Nominating and Corporate Governance Committee may bring recommendations for adjustments to non-employee director compensation to the Board for review and approval.
The following table provides information concerning the compensation of each of our non-employee directors who received compensation during fiscal year 2019. Other than directors who elected to receive 50.0% of the annual Board retainer in shares of Clarivate stock, none of the non-employee directors received stock options, stock awards, or non-equity incentive compensation.
Non-Employee Director Compensation
Name(1)
Fees
earned or
paid in
cash(1)
($)
All other
compensation(2)
($)
Total
compensation
($)
Martin Broughton
112,500
112,500
Michael Klein
112,500
112,500
Balakrishnan S. Iyer(3)
138,750
1,630
140,380
Charles E. Moran(4)
176,250
34
176,284
Charles J. Neral(4)
240,000
72
240,072
Sheryl von Blucher
132,346
5,426
137,772
Karen G. Mills(3)
131,250
1,209
132,459
Vin Caraher(4)(5)
112,500
297
112,797
(1)
Messrs. Gilis, Munk and Motamedi do not receive compensation as they are affiliates of Onex. Messrs. Scattarella and Macksey do not receive compensation as they are affiliates of Baring. Mr. Stead, who serves as our CEO, has not received any compensation for director services other than what is disclosed in the Summary Compensation Table.
(2)
All other compensation was for reimbursement of UK taxes due on certain aspects of ordinary business travel considered as taxable compensation by the UK tax authorities.
(3)
Mr. Iyer and Ms. Mills elected to receive half of their Board retainer fees, excluding meeting fees and committee retainers and equal to $28,125 for each, in shares of Clarivate stock. The number of shares they received was calculated by dividing $28,125 by $13.34, the closing price of our stock on May 13, 2019, the day of the first scheduled Board meeting following the merger of Churchill Capital Corp and Clarivate Analytics Plc (the “Merger”). Mr. Iyer and Ms. Mills each received 2,108 shares of Clarivate stock in lieu of half of their cash retainer.
(4)
Messrs. Moran, Neral and Caraher were directors of Clarivate prior to the Merger and their reported fees include payments for their services prior to the Merger.
(5)
Mr. Caraher’s service as a director ended on May 13, 2019 in connection with the Merger.
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The Company’s Articles of Association provide that, to the fullest extent permitted by law, the Company shall indemnify its directors and officers against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, which they may incur as a result of any act or failure to act in carrying out their functions in connection with the Company other than such liability (if any) that they may incur by reason of their own actual fraud or willful default. The Company maintains a directors’ and officers’ liability policy for the benefit of any director or officer in the event of any loss or liability the director or officer may experience in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director.
Executive Officers
Set forth below is information concerning our executive officers as of March 9, 2020.
Name
Age
Position
Jerre Stead
77
Executive Chairman and Chief Executive Officer
Richard Hanks
55
Chief Financial Officer
Mukhtar Ahmed
52
President, Science Group
Jeff Roy
51
President, IP Group
Stephen Hartman
50
General Counsel and Global Head of Corporate Development
Executive officers are appointed by our Board. Information about Mr. Stead is provided under “Continuing Directors with Terms Expiring at the Annual General Meeting in 2022” in this Proxy Statement. A brief biography for each of our other executive officers follows.
Richard Hanks has been the Chief Financial Officer of the Company since March 2017. Mr. Hanks served as Chief Financial Officer of BDP International from April 2013 to March 2017 and as Chief Financial Officer and an Executive Vice President of infoGROUP, Inc. from 2010 to 2013. Prior to that, Mr. Hanks served as Chief Operating Officer of Enterprise Media Group (EMG) of Dow Jones & Company Inc. from 2007 to 2010. From 1999 to 2006, Mr. Hanks served as Chief Financial Officer of Factiva, LLC. Prior to that, he served as Finance Director for the Corporate and Media Information Division of Reuters, Finance Director for the Financial Times Business Limited, Director of Operations Research and Internal Audit for SmithKline Beecham PLC and Senior Manager of Corporate Finance and Restructuring at PricewaterhouseCoopers. Mr. Hanks is a Chartered Accountant and is a graduate of the University of Nottingham, where he earned a bachelor’s degree in Industrial Economics (B.A. with Honors).
Mukhtar Ahmed has been President, Science Group of the Company since January 2019. He joined the Company in January 2018 as President of Life Sciences. Prior to joining, Mr. Ahmed served as President of eHealth Solutions at BioClinica from April 2015 to December 2017 and as Global Vice President at Oracle from November 2011 to April 2015. Prior to that, Mr. Ahmed served in senior executive positions at various multinational corporations including Parexel and Kendle International, as well as board-level positions with the National Health Service in the United Kingdom. Mr. Ahmed holds a B.Sc. (Hons) in Applied Computer Systems from Brunel University and a diploma in computing from Buckinghamshire College.
Jeff Roy has been President, IP Group of the Company since September 2019. He joined the Company in September 2017 as President of CompuMark. Prior to joining the Company, Mr. Roy served as Global Head of Operations and Client Support for ICE Data Services at the Intercontinental Exchange (“ICE”) from February 2016 to September 2017. Prior to that, Mr. Roy served as Managing Director, Data Operations and Client Support for Interactive Data Inc., which was acquired by ICE in December 2015, from January 2011 to February 2016. Prior to that, Mr. Roy was the founder and CEO of Implementation Factory, Inc. Mr. Roy holds a bachelor’s degree in Banking and Finance from Hofstra University.
Stephen Hartman has been General Counsel and Global Head of Corporate Development of the Company since July 2014. Prior to that, Mr. Hartman served as Deputy General Counsel, TR Professional, General Counsel for Thomson Scientific and as Chief Counsel (EMEA) for Thomson Financial. Before joining Thomson Reuters in 2000, Mr. Hartman served as European counsel for Primark. Mr. Hartman is a graduate of the University of Nottingham.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and accompanying footnotes present information relating to the beneficial ownership of our ordinary shares as of December 31, 2019 and shows the number of shares and percentage of outstanding common shares owned by:
each person or entity who is known by us to own beneficially 5% or more of our common shares;
each of our directors, director nominees and executive officers, individually; and
all current directors and executive officers as a group.
Unless otherwise indicated, the business address of each of the individuals is c/o Clarivate Analytics Plc, Friars House, 160 Blackfriars Road, London, SE1 8EZ, UK.
 
Amount and Nature of
Beneficial Ownership
Beneficial Owner
Number
Percent
Five Percent Holders:
 
 
Onex(1)
92,240,031
30.1%
Baring(2)
35,871,123
11.7%
T. Rowe Price Associates, Inc.(3)
37,968,527
12.4%
 
 
 
Directors, Director Nominees and Executive Officers:
 
 
Jerre Stead(4)
12,505,963
4.1%
Sheryl von Blucher(5)
3,556,684
1.2%
Jane Okun Bomba
Martin Broughton(6)
532,279
*
Kosty Gilis(7)
Balakrishnan S. Iyer(8)
532,279
*
Michael Klein(9)
19,878,342
6.5%
Nicholas Macksey(10)
Karen G. Mills(11)
532,279
*
Charles E. Moran(12)
Amir Motamedi(13)
Anthony Munk(14)
Charles J. Neral
26,427
*
Richard W. Roedel
Matthew Scattarella(15)
Mukhtar Ahmed(16)
132,136
*
Richard Hanks(17)
437,108
*
Stephen Hartman(18)
404,339
*
Jeff Roy(19)
219,344
*
All current directors and executive officers as a group (17 individuals)
38,757,180
12.6%
*
Less than one percent.
(1)
Includes: (i) 33,597,790 ordinary shares held by Onex Partners IV LP, (ii) 2,258,718 ordinary shares held by Onex Partners IV PV LP, (iii) 236,521 ordinary shares held by Onex Partners IV Select LP, (iv) 977,150 ordinary shares held by Onex Partners IV GP LP, (v) 1,258,995 ordinary shares held by Onex US Principals LP, (vi) 31,898,163 ordinary shares held by Onex Partners Holdings LLC, (vii) 2,019,440 ordinary shares held by New PCO II Investment Ltd. and (viii) 19,993,254 ordinary shares held by Onex Camelot Co-Invest LP. Onex Corporation, a corporation whose subordinated voting shares are traded on the Toronto Stock Exchange, and/or Mr. Gerald W. Schwartz, may be deemed to beneficially own the ordinary shares held by (a) Onex Partners IV LP, through Onex Corporation’s ownership of all of the equity of Onex Partners Canadian GP Inc., which owns all of the equity of Onex Partners IV GP Limited, the general partner of Onex Partners IV GP LP, the general partner of Onex Partners IV LP, (b) Onex Partners IV PV LP, through Onex Corporation’s ownership of all of the equity of Onex Partners Canadian GP Inc., which owns all of the equity of Onex Partners IV GP Limited, the general partner of Onex Partners IV GP LP, the general partner of Onex Partners IV PV LP, (c) Onex Partners IV Select LP, through Onex Corporation’s ownership of all of the equity of Onex Partners Canadian GP Inc., which owns all of the equity of Onex Partners IV GP LLC, the general partner of Onex Partners IV Select LP, (d) Onex Partners IV GP LP, through Onex Corporation’s ownership of all of the equity of Onex Partners Canadian GP Inc., which owns all of the equity of Onex Partners IV GP Limited, the general partner of Onex Partners IV GP LP, (e) Onex US Principals LP, through Onex Corporation’s ownership of
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all of the equity of Onex American Holdings II LLC, which owns all of the equity of Onex American Holdings GP LLC, the general partner of Onex US Principals LP, (f) Onex Partners Holdings LLC, through Onex Corporation’s ownership of all of the equity of Onex American Holdings II LLC, which owns all of the equity of Onex American Holdings Subco III LLC, which in turn owns all of the equity of Onex Partners Holdings LLC, (g) New PCO II Investment Ltd., through Gerald W. Schwartz’s indirect control of 1597257 Ontario Inc., which owns all of the voting equity of New PCo II Investments Ltd., and (h) Onex Camelot Co-Invest LP, through Onex Corporation’s ownership of all of the equity of Onex Partners Canadian GP Inc., which owns all of the equity of Onex Partners IV GP Limited, the general partner of Onex Partners IV GP LP, the general partner of Onex Camelot Co-Invest LP. Mr. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex Corporation, indirectly owns shares representing a majority of the voting rights of the shares of Onex Corporation, and as such may be deemed to beneficially own all of the ordinary shares beneficially owned by Onex Corporation. Mr. Schwartz disclaims such beneficial ownership. The address for Onex Corporation and Mr. Schwartz is 161 Bay Street, Toronto, ON M5J 2S1 Canada.
(2)
The Baring Asia Private Equity Fund VI, L.P.1 (“Fund VI1”) and The Baring Asia Private Equity Fund VI, L.P.2 (“Fund VI2”) and certain affiliates indirectly hold approximately 35,871,123 ordinary shares. The general partner of Fund VI1 and Fund VI2 is Baring Private Equity Asia GP VI, L.P. (“Fund VI GP”). The general partner of Fund VI GP is Baring Private Equity Asia GP VI Limited (“Fund VI Limited”). As the sole shareholder of Fund VI Limited, Jean Eric Salata may be deemed to have voting and dispositive power with respect to the shares beneficially owned by Fund VI and Fund VI2 and their affiliates, but disclaims beneficial ownership of such shares. The address of Fund VI GP, Fund VI Limited, and Jean Eric Salata is c/o Maples Corporate Services Limited, 390 GT Ugland House, South Church Street, Georgetown, Grand Cayman, Cayman Islands.
(3)
The information in the table above is based solely on information contained in this shareholder’s Schedule 13D or Schedule 13G under the Exchange Act filed by such shareholder with the SEC. The address of T. Rowe Price Associates, Inc. is 100 East Pratt Street, Baltimore, Maryland 21202.
(4)
Includes (i) 3,540,963 shares held by Mr. Stead, (ii) 1,000,000 ordinary shares held by JMJS Group - II, LP, an affiliate of Mr. Stead, (iii) 1,000,000 ordinary shares held by Mr. Stead issuable upon the exercise of options exercisable, and (iv) 6,965,000 ordinary shares issuable upon the exercise of warrants held by Mr. Stead.
(5)
Includes (i) 3,282,684 ordinary shares and (ii) 274,000 ordinary shares issuable upon the exercise of warrants.
(6)
Includes (i) 258,279 ordinary shares and (ii) 274,000 ordinary shares issuable upon the exercise of warrants. Sir Martin is not standing for election at the Annual General Meeting.
(7)
Does not include ordinary shares held by funds managed by an affiliate of Onex Corporation. Mr. Gilis is a managing director of Onex Corporation. Mr. Gilis does not have voting or investment power with respect to the shares held by such funds.
(8)
Includes (i) 258,279 ordinary shares and (ii) 274,000 ordinary shares issuable upon the exercise of warrants held by the Iyer Family Trust dated January 25, 2001. Mr. Iyer, as trustee, has voting and investment power over these shares.
(9)
Includes (i) 500,000 ordinary shares held by Mr. Klein, (ii) 5,655,738 ordinary shares held by Garden State Capital Partners LLC, (iii) 3,695,778 ordinary shares held by M. Klein Associates, Inc., and (iv) 4,026,826 ordinary shares and 6,000,000 ordinary shares issuable upon the exercise of warrants held by M. Klein Associates, Inc. and Garden State, respectively. Mr. Klein holds an equity interest in and is the managing member of Garden State Capital Partners LLC and is the sole stockholder of M. Klein Associates, Inc. In such capacities, Mr. Klein is deemed to have voting and investment power over these shares. The address of Garden State Capital Partners LLC and M. Klein Associates, Inc. is 640 Fifth Avenue, 12th Floor, New York, NY 10019.
(10)
Does not include ordinary shares held by funds managed by an affiliate of Baring. Mr. Macksey is a managing director of Baring. Mr. Macksey does not have voting or investment power with respect to the shares held by such funds.
(11)
Includes (i) 129,140 ordinary shares held by Mills Family I, LLC, (ii) 137,000 ordinary shares issuable upon the exercise of warrants held by Mills Family I, LLC, (iii) 129,139 ordinary shares held by K&BM LP and (iv) 137,000 ordinary shares issuable upon the exercise of warrants held by K&BM LP. Ms. Mills is the managing member of Mills Family I, LLC and the general partner of K&BM LP, and in such capacities has voting and investment power over the shares held by such entities.
(12)
Mr. Moran is not standing for election at the Annual General Meeting.
(13)
Does not include ordinary shares held by funds managed by an affiliate of Onex Corporation. Mr. Motamedi is a managing director of Onex Corporation. Mr. Motamedi does not have voting or investment power with respect to the shares held by such funds. Mr. Motamedi is not standing for election at the Annual General Meeting.
(14)
Does not include ordinary shares held by funds managed by an affiliate of Onex Corporation. Mr. Munk is a managing director of Onex Corporation. Mr. Munk does not have voting or investment power with respect to the shares held by such funds.
(15)
Does not include ordinary shares held by funds managed by an affiliate of Baring. Mr. Scattarella is a managing director of Baring. Mr. Scattarella does not have voting or investment power with respect to the shares held by such funds. Mr. Scattarella will step down from the board effective as of the date of the Annual General Meeting.
(16)
Includes 132,136 ordinary shares issuable upon the exercise of options.
(17)
Includes 437,108 ordinary shares issuable upon the exercise of options.
(18)
Includes (i) 132,137 ordinary shares and (ii) 272,202 ordinary shares issuable upon the exercise of options.
(19)
Includes 219,344 ordinary shares issuable upon the exercise of options.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Because we are a foreign private issuer under the SEC’s rules, our executive officers and directors, and persons who own more than 10 percent of a registered class of our equity securities, are not subject to the reporting requirements or liability provisions Section 16 of the Exchange Act.
REPORT OF THE AUDIT COMMITTEE
The following report of the Audit Committee does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any other filing by Clarivate under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.
The Audit Committee provides assistance to the Board in fulfilling its legal and fiduciary obligations in matters involving the Company’s accounting, auditing, financial reporting, internal control, and legal compliance functions by approving the services performed by the Company’s independent registered public accountants and reviewing their reports regarding the Company’s accounting practices and systems of internal accounting controls as set forth in a written charter adopted by the Board.
The Company’s management is responsible for preparing the Company’s financial statements. The independent registered public accountants are responsible for auditing those financial statements. The Audit Committee is responsible for overseeing the conduct of these activities by the Company’s management and the independent registered public accountants.
To fulfill that responsibility, the Audit Committee has regularly met and held discussions with management, internal auditors, and the independent registered public accountants. Management represented to the Audit Committee that the Company’s consolidated financial statements for fiscal year 2019 were prepared in accordance with generally accepted accounting principles and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent registered public accountants.
The Audit Committee has discussed with the independent registered public accountants matters required to be discussed by Statement on Auditing Standards No. 16 (Communication with Audit Committees), as adopted by the Public Company Accounting Oversight Board.
As part of that review, the Audit Committee received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed the independent registered public accounting firm’s independence from the Company and its management, including any matters in those written disclosures. Additionally, the Audit Committee considered whether the provision of non-audit services was compatible with maintaining such accountants’ independence.
The Audit Committee has discussed with internal accountants, internal auditors, and independent registered public accountants, with and without management present, its evaluations of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions with management, internal auditors, and the independent registered public accountants referred to above, the Audit Committee approved and recommended to the Board the inclusion of the audited consolidated financial statements for fiscal year 2019 in the Annual Report on Form 10-K for the year ended December 31, 2019.
Respectfully submitted on April 10, 2020, by the members of the Audit Committee of the Board:
Charles J. Neral, Chairperson
Balakrishnan S. Iyer
Karen G. Mills
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REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee does not constitute “soliciting material” and shall not be deemed filed or incorporated by reference into any other filing by Clarivate under the Securities Act or the Exchange Act.
The Compensation Committee of the Board has reviewed and discussed with management of the Company the Compensation Discussion and Analysis. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and this Proxy Statement.
Respectfully submitted on April 10, 2020, by the members of the Compensation Committee of the Board:
Kosty Gilis, Chairperson
Amir Motamedi
Nicholas Macksey
Sheryl von Blucher
Jerre Stead (served on Compensation Committee through January 1, 2020)
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis (CD&A) describes how we determine compensation provided to the executive officers whose compensation is described herein and who are referred to as named executive officers (“NEOs”).
Our active NEOs are:
Jerre Stead—Executive Chairman and Chief Executive Officer
Richard Hanks—Chief Financial Officer
Mukhtar Ahmed—President, Science Group
Jeff Roy—President, Intellectual Property (“IP”) Group
Stephen Hartman—General Counsel and Global Head of Corporate Development
In addition, we will be reporting compensation for the following two former executive officers, who served during the last fiscal year: Jay Nadler, former Chief Executive Officer and Dr. Annette Thomas, former Chief Executive Officer, Scientific and Academic Research.
Executive Summary
Who We Are
We are a global leader in providing trusted insights and analytics that accelerate the pace of innovation. To achieve this, we deliver critical data, information, workflow solutions and deep domain expertise to innovators everywhere. We offer solutions that drive the entire lifecycle of innovation, including the following:
Scientific and academic research
Patent intelligence and compliance standards
Pharmaceutical and biotech intelligence
Trademark, domain and brand protection
Fiscal year 2019 reflected a transformational year for Clarivate Analytics. In May 2019, we transitioned from a private to a publicly held company through the merger of Churchill Capital Corp (“Churchill”) and Clarivate Analytics Plc (the “Merger”). From a business perspective, we have made significant accomplishments in a short period, as described under “2019 Business Highlights” and “2019 Financial Results” below.
Since the Merger, we have been highly focused on building a culture of high engagement and accountability. We are moving forward with a sense of urgency and intense external curiosity about what drives success for our customers. We understand that our own success and future is inextricably linked to the success and future of the world around us, and that identifying and addressing gaps in our environmental, social and governance performance will ultimately make us more globally competitive and allow us to drive profitable growth for the long-term.
We have a vibrant, engaged workforce guided by a common mission, values and strategic goals.
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Executive Compensation Disclosures
We are voluntarily providing this CD&A and the related compensation disclosure. Clarivate is currently classified as a foreign private issuer, and with this classification we are not required to provide a CD&A and detailed individual compensation information for our NEOs. However, we believe it is important to provide our shareholders with transparent disclosure of our past year’s executive compensation. We have chosen not to have a say on pay vote this year, as we have not yet had time to fully implement our planned compensation programs.
Shareholder Engagement
We are subjecting ourselves to the U.S. disclosure rules to be able to engage with shareholders more effectively. In 2020, we plan to reach out to our shareholders to discuss our executive compensation and corporate governance practices as they relate to executive compensation, and we will consider our shareholders’ input as we continue to refine our executive compensation program.
2019 Business Highlights
Clarivate is the leading provider of intellectual property and scientific information. In 2019, we have accomplished the following (see our Annual Report under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting the Comparability of Our Results of Operations—Our Transition to Operations as a Standalone Business”).
Completed the separation of our business from Thomson Reuters infrastructure
Consolidated five Product Lines into two Product Groups: the Science Group and the IP Group (Mr. Ahmed and Mr. Roy were chosen to lead the Science Group and the IP Group, respectively)
Initiated organizational efficiency work, including headcount optimization, facilities consolidation, technology modernization, and vendor rationalization and renegotiation
Refinanced our debt capital structure to improve the weighted average cost of debt and lower interest expense by approximately $18.0 million per year
Completed two secondary offerings totaling 89,355,000 ordinary shares (including the underwriters’ option to purchase additional shares) held by our private equity sponsors and other shareholders
Completed the buyout of the tax receivable agreement for $200.0 million
Acquired two businesses (Sequencebase and Darts-ip) to augment our existing portfolio of IP assets and reached an agreement to divest our non-core brand protection assets
Implemented a customer delight program to focus our improvement efforts
Commenced the process to acquire Decision Resources Group, which expands our Life Sciences services and solutions portfolio to enable customers worldwide to accelerate life-changing innovations and improve patient outcomes and access; a definitive agreement was reached in January 2020
2019 Financial Results
The table below highlights our key financial metrics which we measured for purposes of compensating our NEOs in 2019.
Key Financial Results
 
2019 Results
2018 Results
Revenue
$974,345
$968,468
Adjusted Revenue
$974,783
$951,170
Adjusted EBITDA
$294,066
$272,861
Standalone Adjusted EBITDA
$336,066
$310,968
Free Cash Flow
$47,744
$(71,510)
See Appendix D for a reconciliation of our non-GAAP to GAAP financial measures.
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Return to Shareholders
We have delivered a strong return to our shareholders through the year. On December 31, 2019, Clarivate stock closed at $16.80 per share providing our shareholders with a 24.6% increase in value from the Merger (on May 14, 2019, the first trading day following the Merger, Clarivate stock closed at $13.48 per share) and providing investors who had invested in Churchill as of the end of 2018 and continued to hold their shares with a 75.9% increase in value from December 31, 2018, when our stock closed at $9.55 per share.
Approach to Performance-Based Compensation
To reward achievement in 2019, we maintained a target-based annual incentive plan (the “AIP”) that delivered annual cash payments to the NEOs and other senior employees based on achievement of pre-determined financial goals of the Company tied to adjusted revenue, standalone adjusted EBITDA and adjusted free cash flow (for employees with group-wide responsibility) and Product Line revenue and product contribution (for employees within Product Lines). The AIP also has an individual performance modifier. Our active NEOs had target payments ranging from 58.2% to 100.0% of their annual base salaries, depending upon their positions. As a result of the financial performance described in the table above, the AIP pool tied to corporate goals was funded at 100.0% of target.
Because our long-term incentive compensation program was not in effect in 2019, the percentage of fiscal year 2019 compensation that was at risk is not a full reflection of NEO compensation over a normal period. Beginning in 2020, we are expecting approximately 90% of our CEO’s compensation to be at risk and approximately 70% of the other NEOs’ compensation, on average as a group, to be at risk. For purposes of these estimates, compensation is comprised of base salary, AIP target and long-term incentive target, with AIP target and long-term incentive target both counting as at-risk pay.
Key Compensation Decisions
In 2019, we made decisions that impacted the compensation our NEOs received during 2019 as well as the structure of our future executive compensation program.
Initially, our executive compensation program for 2019 was designed and implemented as a private-equity owned company. As the year progressed and we became a public company, we focused on aligning and simplifying our organization, instilling a strong sense of urgency and accountability and further structuring Clarivate for incremental growth and profitability. In connection with this restructuring, there were several changes at the senior leadership level, including the appointment of Mr. Stead as our new CEO and subsequent personnel changes at the senior level in order to help achieve Mr. Stead’s goals for the Company. These leadership changes have required us to offer new compensation packages, adjust other compensation, and approve severance arrangements. Details of these compensation decisions are described further in this CD&A.
Since the Merger, we have been pivoting our executive compensation programs to align with the expectations of our public shareholders and expect that compensation for the 2020 fiscal year will create a performance-based culture and reward colleagues for collective performance and demonstration of our values. Although some of our plans will not take effect until 2020, we began planning a compensation program whose goals are to:
Provide appropriate rewards for achievement of business objectives and which support the creation of long-term shareholder value, including the granting of performance-based equity tied to three-year performance goals and relative shareholder return;
Align with best practices from a corporate governance perspective, including having an appropriate peer group of comparator companies; and
Attract, retain and motivate the high-caliber executive talent needed to support our growth targets.
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Corporate Governance and Compensation Program Enhancements
We are committed to having policies in place to ensure effective oversight of our executive compensation program and strong corporate governance. Because we began the year as a private-equity-held firm, we are still implementing some governance policies relating to executive compensation. The table below highlights practices in effect in 2019 as well as practices we will be implementing in 2020.
WHAT WE DO
WHAT WE DON’T DO
We have an independent compensation consultant
We do not provide our CEO with an employment agreement
We have adopted share ownership guidelines for our executive officers and the Board of Directors
We do not permit our employees to engage in hedging transactions
Beginning in 2020, we will have a Compensation Committee that is fully comprised of independent directors
We do not permit our employees to pledge the Company’s securities to secure margin or other loans
Beginning in 2020, the majority of NEO pay will be at risk and dependent upon performance
We do not reprice underwater stock options
The mix of executive officer equity awards in 2020 will include a performance-based element
We do not provide excise tax gross-up payments
In 2020, we intend to engage with our shareholders to discuss executive compensation and corporate governance matters
We do not have an evergreen provision that automatically adds shares to our equity incentive plan
Our Approach to Pay
Compensation Philosophy
Our compensation in 2019 recognized Clarivate’s legacy as a private-equity-held firm, including: (i) increased emphasis on cash incentives, which were at risk based on pre-assigned company financial targets, (ii) pay levels targeted at or below market median without specific reference to an identified peer group for benchmarking, and (iii) historic stock options whose primary purpose was to create value for recipients alongside the private equity sponsors upon a Liquidity Event (as defined in the Clarivate Analytics PLC 2019 Incentive Award Plan (the “2019 Incentive Plan”)).
Soon after the merger with Churchill, we began reviewing our compensation programs in order to reflect our public company status and to create a performance-based culture and reward colleagues for collective performance and demonstration of our values. We adopted the following guiding principles for compensation and benefits:

Our total rewards strategy should support our mission, vision and values

Our compensation philosophy must attract, retain and motivate top talent

Our compensation programs should be globally consistent and locally competitive

Our incentives need to be aligned to key business objectives appropriate to colleague roles

Our compensation programs must support a pay-for-performance culture
We assessed our long-term and short-term incentive plans against these principles and determined that our AIP is well designed for future purposes and not in need of significant change (other than our normal review in the ordinary course and setting of suitably demanding annual targets). However, we determined that stock options that had been tied to private equity returns did not give us the adaptability we need for providing ongoing competitive pay or to allow for a wider distribution of incentives to colleagues who are key to ensuring we hit our goals. Beginning in 2020, equity grants pursuant to our 2019 Incentive Plan will be comprised of a mix of restricted stock units: (a) performance-based units (“PRSUs”) tied to long-term financial and operational metrics with a relative total shareholder return modifier, and (b) time-based units (“RSUs”) that will vest over time.
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Peer Group Benchmarking
With guidance from Pay Governance LLC, our independent compensation consultant, we established a peer group for benchmarking executive pay based on the following guiding principles:
Companies engaged in intelligence development, data analytics, digital delivery or cybersecurity/intellectual property protections
Revenues between $300 million—$3.0 billion (approximately 0.3x—3.0x Clarivate)
Market capitalization between $1.0—$24.0 billion (approximately 0.25x—5.0x Clarivate)
Business/talent competitors of Clarivate
A group of between 10 to 25 companies so that results are statistically reliable, and the peer group is sustainable over time
Sufficient pay data is available for companies identified as potential peers
Based on this analysis, we selected the following companies as our primary peer group for compensation benchmarking in 2019:
Clarivate Analytics Peer Group for Compensation
Cloudera, Inc.
FTI Consulting, Inc.
MSCI Inc.
ExIService Holdings, Inc.
Gartner, Inc.
Proofpoint, Inc.
Exponent, Inc.
ICF International, Inc.
PRA Health Sciences, Inc.
FactSet Research Systems Inc.
ICON Public Limited Company
RWS Holdings plc
Fair Isaac Corporation
Informa plc
Teradata Corporation
FireEye, Inc.
Morningstar, Inc.
 
Determination of Executive Compensation
Role of the Compensation Committee
Following the closing of the Merger, the Compensation Committee of the Board of Directors has administered the compensation program for our executive officers and executive leadership team.
With respect to CEO compensation, the Compensation Committee:
Reviews and approves the corporate goals and objectives;
Evaluates the CEO’s performance in light of these goals and objectives; and
Sets the CEO’s compensation based upon the evaluation of the CEO’s performance. (Under its charter, the Compensation Committee may set the CEO’s compensation either alone or, if directed by the Board, in conjunction with a majority of the independent directors on the Board.)
Additionally, the Compensation Committee reviews and sets or makes recommendations to the Board regarding the compensation of the executive officers other than the CEO.
The Compensation Committee reviews and approves or recommends to the Board regarding the adoption or amendment of the Company’s incentive compensation and equity-based plans and arrangements. The Compensation Committee administers these plans and has authority to make and modify awards under these plans.
The Compensation Committee considers a variety of factors when making compensation decisions, including:
Experience, responsibilities, and both individual and overall Company performance
Internal equity among executives
Executive role in succession planning
Competitive external market data and trends
Alignment with shareholders, customers and colleagues
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Role of Compensation Consultant
During 2019, the Compensation Committee engaged Pay Governance LLC as its independent compensation consultant to advise on executive compensation matters. Pay Governance specializes in executive compensation and related governance matters and does not perform any unrelated services for Clarivate Analytics. The Compensation Committee has sole authority with regard to the decision to retain the compensation consultant and, while the compensation consultant interacts with management from time to time in order to best coordinate with and deliver services to the Compensation Committee, it reports directly to the Compensation Committee with respect to its compensation consulting advice.
Role of Management
At the Compensation Committee’s request, management provides us with information, analyses and recommendations regarding our executive compensation program. From May 2019, our CEO was a member of the Compensation Committee and participated in compensation decisions, other than those decisions that were directly related to the CEO’s own compensation. Starting in 2020, the CEO will no longer serve on the Compensation Committee, which is consistent with our decision to report as a domestic filer.
Compensation for Named Executive Officers
Elements of Compensation
For 2019, the executive compensation program consisted of the elements described in the table below.
 
 
Pay
Element
Alignment to Business
Objectives
Overview
Annual
Fixed
Base Salary
• Benchmarked base salaries
  attract and retain key talent
• Adjustments are linked to
  individual performance and
  market data
• Cash
• Aligned to scope
  of responsibilities and market
  benchmarks
 
Variable
Annual Incentive
Plan
• Rewards performance to
  achieve short-term business
  objectives
• Motivates executives to
  deliver on individual
  objectives alongside broader
  business objectives
• Cash
• Annual recognition of
  performance against
  pre-established targets,
  including
• Standalone Adjusted EBITDA
• Adjusted revenue
• Adjusted free cash flow
• Product Line profit and
 revenue
• Individual performance
  modifier
Long- Term
 
Long-Term Incentive
Plan
• Supports retention and
  mitigates excessive risk
  taking
• Event-based grants (hire,
  promotion, etc.)
• Stock Options
• RSUs
Other
 
 
• Market aligned programs to
  facilitate strong productivity
  and support at times of
  personal need
• Health, welfare and retirement
  programs
• Limited perquisites
CEO
At the time of the Merger, Mr. Stead was named Executive Chairman, and shortly thereafter Mr. Stead agreed to expand his role to become our CEO effective as of June 30, 2019. Mr. Stead has had a long and very successful career generating value for investors as a public company CEO. Over the last two decades, he led one of the fastest-growing and most successful companies in the information services sector, IHS Markit Ltd.
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Post-Merger Compensation. Mr. Stead has been provided with an annual salary of $600,000 (pro-rated for the time he served as CEO) and an AIP target equal to 100.0% of his annual salary. Prior to the time that Mr. Stead’s AIP payout could be calculated, he requested and the Compensation Committee agreed that he be paid only 50.0% of his earned AIP payout. Mr. Stead has also requested that he not have an employment agreement. We have been advised by our compensation consultant, Pay Governance LLC, that Mr. Stead’s compensation (excluding the Merger Shares discussed below) is below market compared to our peer group. Given Mr. Stead’s successful track record and years of experience in the information services industry, we will review his compensation as compared to our peer group in 2020.
Pre-Merger Compensation. Under the Sponsor Agreement, Clarivate, Churchill and the other parties thereto agreed that Clarivate would issue 7,000,000 ordinary shares to persons designated by Messrs. Stead and Klein, including themselves, upon Clarivate’s achievement of a closing share price on the NYSE of at least $20.00 per share for 40 days over a 60 consecutive trading day period on or before the sixth anniversary of the closing of the Merger (the “Merger Shares”). Of the 7,000,000 Merger Shares, Mr. Stead was delegated the authority to designate recipients of up to 4,000,000. As of December 31, 2019, 1,000,000 Merger Shares were designated for Mr. Stead, and he retained the authorization to designate the recipients of a residual 400,000 unissued Merger Shares. On January 31, 2020, our Board agreed to waive the performance vesting condition described above, and such Merger Shares are expected to be issued to persons designated by Messrs. Stead and Klein on or prior to December 31, 2020. Additionally, the terms of the Sponsor Agreement provided that the Churchill board of directors could allocate up to 1,000,000 immediately vested non-qualified stock options that would be granted after the close of the Merger. At that time, the Churchill board of directors designated that the options would be granted to Mr. Stead given his agreement to serve as the executive chairman of Clarivate following the Merger. These options were then granted to Mr. Stead with an exercise price of $13.30, the fair market value as of the May 20, 2019 grant date. The stock options will only have value to Mr. Stead if our share price remains above the $13.30 exercise price. While we are required to report the Merger Shares and stock options designated for Mr. Stead as compensation to him under the rules of the SEC, the Merger Shares and stock options were actually received by Mr. Stead in his role as a founder of Churchill and were part of the terms of the Merger, which were negotiated on an arm’s length basis among the parties to the Sponsor Agreement, and not a decision of the Compensation Committee.
Base Salary. In connection with the Merger and restructuring described in “Key Compensation Decisions” above, we provided salary adjustments to Messrs. Ahmed, Roy and Hartman. Over the course of the year, Mr. Ahmed received two separate salary increases (the first being 13.8% and the second being 21.6%). The first increase, in July 2019, was after the Merger to align his pay with the competitive market, and the second increase, effective in September 2019, was in recognition of his appointment as head of one of our two primary Product Groups. In total Mr. Ahmed’s salary increased from $414,050 at the beginning of the year to $573,300 at year-end. Mr. Roy received an 17.6% increase in salary, from $382,500 to $450,000 after the Merger, which aligns his pay with the competitive market and recognizes his appointment as head of one of our two primary Product Groups. Both Messrs. Ahmed and Roy have significantly increased areas of responsibility and hold critically important roles. Mr. Hartman received a 25.0% increase in salary, from $305,760 to $382,200, in recognition of his expanded responsibilities as general counsel of a public company and to align his pay with the competitive market. Messrs. Hartman and Ahmed are based in the United Kingdom and their salaries have been converted to USD using a GBP:USD exchange rate of 1.274, which is a rate set at the beginning of 2019 using a six-month forward look which we use for the purposes of our budgetary planning.
Annual Incentive Plan
Our AIP is intended to reward achievement of operational and financial performance by aligning individual performance with our business strategy and objectives. Each NEO has a target AIP payout, which is defined as a percentage of the respective NEO’s eligible base pay. There is also a discretionary individual performance modifier, which may be used to increase or decrease an individual’s final payout up to twice the calculated payment, depending upon an assessment of that individual’s performance, determined by the Compensation Committee for NEOs, against individual objectives.
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In mid-2019, the Compensation Committee adjusted the AIP target payout for the NEOs (other than for the CEO) as follows:
Mr. Hanks: 62.5% to 85.0% of his base salary
Mr. Ahmed: 85.0% to 100.0% of his base salary
Mr. Roy: 60% to 85% of his base salary
Mr. Hartman: 50% to 65% of his base salary
These adjustments were made to recognize the expanded roles following the Merger and restructuring. The increased targets have been pro-rated (from the date of adjustment) for purposes of determining the 2019 AIP payouts.
The AIP for our NEOs included goals which best represent our key business performance areas, including adjusted revenue, standalone adjusted EBITDA, and adjusted free cash flow. Additionally, Messrs. Roy and Ahmed had goals tied to Product Line performance.
The table below provides the threshold, target and maximum AIP opportunities and actual results achieved in 2019 at the corporate level. Payments are interpolated between these levels.
2019 AIP Calculations
Metric
Weighting
Payment Level
2019
Corporate Goal
(in thousands)
2019
Corporate
Goal as % of
Target
2019 Results
(in thousands)
AIP Payout
Level
Achieved
Adjusted Revenue(1)
40%
Threshold
0%
$962,000
97.9%
977,775
35.8%
Target
100%
$982,600
100.0%
Maximum
200%
$1,080,000
110.0%
Standalone Adjusted EBITDA(1)
40%
Threshold
0%
$325,000
97.9%
Target
100%
$332,000
100.0%
338,219
43.4%(2)
Maximum
200%
$365,200
110.0%
Adjusted Free Cash Flow(1)
20%
Threshold
0%
$42,800
75.0%
57,600
20.8%
Target
100%
$57,000
100.0%
Maximum
200%
$71,300
125.0%
Calculated Annual Incentive Payout (as a Percentage of Target)
100%
(footnotes in thousands)
(1)
Adjusted revenue and standalone adjusted EBITDA are presented at plan rates excluding results from two acquisitions that occurred late in 2019: Darts-ip, acquired in November 2019, and SequenceBase, acquired in September 2019. These exclusions and the presentation at plan rates resulted in the following differences between the amounts included above for 2019 AIP Calculations and the amounts reported in “Key Financial Results” in this section of the annual report: adjusted revenue plan results increased by $2,992; standalone adjusted EBITDA plan results increased by $2,153. See Appendix D for a reconciliation of our non-GAAP to GAAP financial measures. Adjusted free cash flows for AIP purposes are presented at actual rates and are adjusted to exclude certain transactions that do not represent operations from our ongoing business. These adjustments resulted in an increase of $9,856 between the amount included above for 2019 AIP Calculation and the amount reported in “Key Financial Results” in this section of the annual report.
(2)
The calculated payout for standalone adjusted EBITDA is 47.5%; however, the payout was set at 43.4% to ensure that payment based on non-GAAP adjustments would not adversely impact overall adjusted EBITDA.
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The table below illustrates the AIP payout calculations for Messrs. Stead, Hanks and Hartman, whose AIP goals were 100% tied to the corporate AIP goals shown above, plus an individual modifier for Messrs. Hanks and Hartman. The Compensation Committee utilized the individual performance modifier to increase the final payments to Messrs. Hanks and Hartman to recognize their leadership and accomplishments that were required for the successful and timely closing of the Merger and start of operations as a public company.
Individual NEO AIP Calculations—100% Corporate
Name
Eligible
Base Pay
($)
Pro-Rata
AIP Target
(%)
Corporate
Goal
Achievement
(%)
Voluntary
Forfeiture
($)
Individual
Modifier
($)
Final AIP
Payout
Total AIP
Payout as
Percent of
Target
Jerre Stead(1)
600,000
100.0%
100.0%
(300,000)
300,000
50.0%
Richard Hanks
500,000
68.9%
100.0%
5,445
350,000
101.6%
Stephen Hartman
350,576
58.2%
100.0%
15,813
220,000
107.7%
(1)
See “CEO Compensation” for additional discussion regarding Mr. Stead’s eligible earnings and voluntary forfeiture of AIP incentive payout.
Messrs. Ahmed and Roy had 50% of their AIP tied to the corporate AIP goals shown above and 50% tied to the performance of the Product Lines for which they had responsibility. Their respective Product Lines did not achieve the applicable threshold performance levels; thus, Messrs. Ahmed and Roy are not receiving a payout for the portion of their AIP that is weighted to their Product Lines. Because of their leadership, vision and key contributions to the Company’s strategic path forward, the Compensation Committee utilized the individual performance modifier to increase their payouts, as shown in the following table.
Individual NEO AIP Calculations—50% Corporate/50% Product Line
Name
Eligible
Base Pay
($)
Pro-Rata
AIP Target
($)
Corporate
Goal
Achievement
(%)
Percentage
of AIP
Payout
Weighted to
Corporate
Goals (%)
Individual
Modifier
($)
Final AIP
Payout ($)
Total AIP
Payout as
Percent of
Target (%)
Mukhtar Ahmed
477,017
91.0%
100.0%
50.0%
132,896
350,000
80.6%
Jeff Roy
416,527
69.9%
100.0%
50.0%
104,453
250,000
85.9%
Messrs. Hartman and Ahmed are based in the United Kingdom and, in the AIP tables above, their payments have been converted to USD using a GBP/USD exchange rate of 1.274. Since Mr. Nadler and Dr. Thomas were no longer employed with the Company as of the end of the fiscal year 2019, they did not receive an AIP payout tied to achievement of the performance goals.
Long-Term Incentive Plan
None of our NEOs received new equity grants in 2019 as compensation for their roles with Clarivate. As discussed previously under “Pre-Merger Compensation” above, as part of the Merger, Mr. Stead received an award of stock options for his role as a founder of Churchill.
In prior years, our NEOs, other than Mr. Stead, had received grants of non-qualified options under the Camelot Holdings (Jersey) Limited 2016 Equity Incentive Plan. In addition to compensatory grants, under this equity scheme, participants had an opportunity to invest in the then-private company and receive matching non-qualified stock options. After the Merger, these options were converted to non-qualified stock options under the 2019 Incentive Plan.
The terms of the stock options held by our NEOs, other than our CEO, provide for accelerated vesting in the event of a Liquidity Event which would require our “Principal Shareholders” (as defined in the 2019 Incentive Plan) to be holding less than 30% of the total shares of the Company that they held immediately after the Merger. The terms of the stock options held by our NEOs were approved when the Company was private-equity owned.
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Benefits
We sponsor a qualified defined contribution plan (“401(k) Plan”) for U.S. employees, including U.S.-based NEOs. In addition, we sponsor a qualified defined contribution plan for UK employees, including UK-based NEOs. Other than the qualified plans described above, we do not provide any other pension plan, supplemental retirement plan, or deferred compensation plan to our NEOs.
We also provide NEOs with life and medical insurance, and other benefits generally available to all employees. We provide limited perquisites.
Employment and Separation Agreements
Our CEO does not have an employment agreement. In prior years, Clarivate entered into employment agreements with Messrs. Hanks, Ahmed, Roy and Hartman as well as with our former officers, Mr. Nadler and Dr. Thomas.
The employment agreements that we have in place with Messrs. Hanks, Ahmed, Roy, and Hartman are for the purpose of establishing their employment terms. These employment agreements provide a description of compensation elements and benefits to which each NEO is entitled, as further discussed under “Employment Contracts” below.
In 2019, we also entered into separation agreements with Mr. Nadler and Dr. Thomas that are described under “Employment Contracts” and “Potential Payments Upon Termination or Change in Control.”
Compensation Policies
Stock Ownership Guidelines
In January 2020, we adopted the following stock ownership guidelines for our non-employee directors, CEO, executive officers and leadership team.
Position
Stock Ownership Guidelines
Chief Executive Officer
6 times base salary
Other Executive Officers and Leadership Team
3 times base salary
Non-employee Directors
5 times annual retainer
Insider Trading Policy
We have an insider trading policy that prohibits officers, directors, employees and consultants of the Company from trading while in possession of material, non-public information about the Company. We have Company-wide trading blackouts that are in effect prior to the release of earnings and we require all executive officers and other key employees to pre-clear any transactions with the Company’s General Counsel or Chief Financial Officer.
No Hedging Policy
Certain forms of hedging or monetization transactions allow an individual to lock in much of the value of his or her share holdings, often in exchange for all or part of the potential for upside appreciation in the shares. We have a policy that prohibits directors, executive officers, employees and consultants from engaging in such transactions.
No Pledging Policy
We have a policy that prohibits our directors, executive officers, employees and consultants from pledging the Company’s securities as collateral to secure loans or otherwise. This prohibition includes a prohibition on holding the Company’s securities in a margin account, which would allow the director or executive officer to borrow against their holdings to buy securities.
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Equity Grant Practices
Beginning in 2020, we expect to make annual equity awards, comprised of PRSUs and RSUs, to management during the first quarter of the year. We also expect to make broad-based grants to our non-management employees in the fourth quarter of the year if we meet our Customer Delight goals. New hire and ad hoc grants may be made throughout the year.
Risk Management
The Board of Directors is responsible for the oversight of the Company’s ongoing assessment and management of material risks impacting our business. The Compensation Committee oversees compensation risk management by participating in the creation of, and approving, compensation elements, programs and performance metrics that encourage an appropriate level of risk-taking consistent with our business strategy. In 2019, we had a formulaic-based annual incentive plan with maximum caps and pre-established goals that focused on multiple areas across the Company. Beginning in 2020, we will have short-term and long-term incentive plans that include a mix of performance metrics that align with our overall corporate goals and strategy and do not encourage excessive risk taking in order to meet one particular goal. As noted above in “Compensation Policies,” we have stock ownership guidelines and prohibitions against hedging and pledging of our securities. We do not believe our current compensation practices and programs are reasonably likely to have a material adverse effect on the Company.
Impact of Accounting and Tax Treatment
The Compensation Committee considers the accounting and tax treatment to Clarivate and the NEOs in its decision-making process, including: the recognition of stock-based compensation; the Tax Cuts and Jobs Act which eliminated the exception that allowed for the deductibility of certain performance-based compensation under Section 162(m) of the Internal Revenue Code; and Section 409A of the Internal Revenue Code. We strive to ensure that there are no significant negative accounting implications due to the design of our compensation programs; however, we will base our decisions on what we believe is necessary and appropriate to further the growth of our Company, align with our shareholders interest, and pay for performance.
Employee Share Plans
Prior to our merger with Churchill Capital Corp, we granted awards to eligible participants under the Camelot Holdings (Jersey) Limited 2016 Equity Incentive Plan (the “Prior Plan”). Options to purchase ordinary shares of Camelot, which are referred to herein as Company shares, granted under the Prior Plan typically were divided into four tiers, with distinct escalating exercise prices for each tier. In addition, certain participants were previously given an opportunity to make a cash investment to purchase Company shares and those participants who made such a cash investment received additional options under the Prior Plan that had a single exercise price. All options granted under the Prior Plan are eligible to vest in five equal annual installments generally following the date of grant of such options. Vesting will accelerate at such time as Camelot Investors have collectively sold for cash 70% of the total Clarivate ordinary shares received by them in our merger with Churchill Capital Corp.
Effective as of the effective time of the Jersey Merger, each option to purchase Company shares, to the extent then outstanding and unexercised, were converted into an option to purchase ordinary shares of Clarivate (a “Rollover Option”), on the same terms, conditions and vesting schedules as previously applied, with adjustments to the number of shares and exercise price, in each case based on an exchange ratio that is intended to preserve the intrinsic value and overall economics of the outstanding options. The conversion and adjustment of the options to purchase Camelot’s shares as described above is referred to herein as the Option Conversion.
In addition, in connection with our merger with Churchill Capital Corp, Clarivate adopted the Clarivate Analytics Plc 2019 Incentive Award Plan, or the 2019 Plan, under which Clarivate may grant cash and equity-based incentive awards to eligible service providers in order to attract, retain and motivate the persons who make important contributions to Clarivate. The 2019 Plan is intended to be the successor plan to the Prior Plan and, upon the effectiveness of the 2019 Plan, the Rollover Options ceased to be subject to the terms of the Prior Plan and are instead governed by the terms and conditions of the 2019 Plan. The 2019 Plan became effective immediately prior to the consummation of our merger with Churchill Capital Corp. The following summarizes the material features of the 2019 Plan.
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Eligibility and Administration
Employees, consultants and directors of Clarivate, and employees and consultants of subsidiaries of Clarivate, are eligible to receive awards under the 2019 Plan. The 2019 Plan is administered by the Clarivate board of directors, which may delegate its duties and responsibilities to one or more committees of the directors and/or officers of Clarivate (referred to collectively as the plan administrator below), subject to the limitations imposed under the 2019 Plan, Section 16 of the Exchange Act, stock exchange rules and other applicable laws. The plan administrator has the authority to take all actions and make all determinations under the 2019 Plan, to interpret the 2019 Plan and award agreements and to adopt, amend and repeal rules for the administration of the 2019 Plan as it deems advisable. The plan administrator also has the authority to grant awards, determine which eligible service providers receive awards and set the terms and conditions of all awards under the 2019 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2019 Plan.
Award Limits
An aggregate pool of 60,000,000 ordinary shares are initially available for issuance under the 2019 Plan. Shares issued upon exercise of the Rollover Options and shares issued in respect of all future awards will come out of this pool. No more than 60,000,000 ordinary shares may be issued under the 2019 Plan upon the exercise of options that are intended to qualify as incentive stock options under Section 422 of the Code. Shares issued under the 2019 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares.
If an award under the 2019 Plan (including the Rollover Options) expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, redeemed, cancelled without having been fully exercised or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new grants under the 2019 Plan. Awards granted under the 2019 Plan in substitution for any options or other shares or share-based awards granted by an entity before the entity’s merger or consolidation with Clarivate or Clarivate’s acquisition of the entity’s property or shares will not reduce the shares available for grant under the 2019 Plan, but will count against the maximum number of shares that may be issued upon the exercise of options that are intended to qualify as incentive stock options under Section 422 of the Code.
Awards
The 2019 Plan provides for the grant of options, including options that are intended to qualify as incentive stock options under Section 422 of the Code and nonqualified options, share appreciation rights, restricted shares, dividend equivalents, restricted share units and other share or cash based awards. Certain awards under the 2019 Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code. All awards under the 2019 Plan will be set forth in award agreements, which will detail the terms and conditions of awards, including any applicable vesting and payment terms and post-termination exercise limitations. A brief description of each award type follows.
Options and Share Appreciation Rights. Options provide for the purchase of ordinary shares in the future at an exercise price set on the grant date. Options that are intended to qualify as incentive stock options under Section 422 of the Code, in contrast to nonqualified options, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. Share appreciation rights entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. The plan administrator will determine the number of shares covered by each option and share appreciation right, the exercise price of each option and share appreciation right and the conditions and limitations applicable to the exercise of each option and share appreciation right. The exercise price of an option or share appreciation right will not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of options that are intended to qualify as incentive stock options under Section 422 of the Code granted to certain significant shareholders), except with respect to certain substitute awards granted in connection with a corporate transaction. The term of an option or share appreciation right may not be longer than ten years (or five years in the case of options that are intended to qualify as incentive stock options under Section 422 of the Code granted to certain significant shareholders).
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Restricted Shares and Restricted Share Units. Restricted shares are awards of nontransferable ordinary shares that remain forfeitable unless and until specified conditions are met and which may be subject to a purchase price. Restricted share units are contractual promises to deliver ordinary shares in the future, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on ordinary shares prior to the delivery of the underlying shares. The plan administrator may provide that the delivery of the shares underlying restricted share units will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to restricted shares and restricted share units will be determined by the plan administrator, subject to the conditions and limitations contained in the 2019 Plan.
Other Share or Cash Based Awards. Other share or cash based awards are awards of cash, fully vested ordinary shares and other awards valued wholly or partially by referring to, or otherwise based on, ordinary shares or other property. Other share or cash based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled. The plan administrator will determine the terms and conditions of other share or cash based awards, which may include any purchase price, performance goal, transfer restrictions and vesting conditions.
Performance Criteria
The plan administrator may select performance criteria for an award to establish performance goals for a performance period. Performance criteria under the 2019 Plan may include, but are not limited to, the following: net earnings or losses (either before or after one or more of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenues or sales or revenues growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on shareholders’ equity; total shareholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any incremental increase or decrease. Such performance goals also may be based solely by reference to the company’s performance or the performance of a subsidiary, division, business segment or product line of the company or a subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. When determining performance goals, the plan administrator may provide for exclusion of the impact of an event or occurrence which the plan administrator determines should appropriately be excluded, including, without limitation, non-recurring charges or events, acquisitions or divestitures, changes in the corporate or capital structure, events unrelated to the business or outside of the control of management, foreign exchange considerations, and legal, regulatory, tax or accounting changes.
Certain Transactions
In connection with certain corporate transactions and events affecting the ordinary shares of Clarivate, including a change in control, or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the 2019 Plan to prevent the dilution or enlargement of intended benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes cancelling awards for cash or property, accelerating the vesting of awards, providing for the
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assumption or substitution of awards by a successor entity, adjusting the number and type of shares subject to outstanding awards and/or with respect to which awards may be granted under the 2019 Plan and replacing or terminating awards under the 2019 Plan. In addition, in the event of certain non-reciprocal transactions with the shareholders of Clarivate, the plan administrator will make equitable adjustments to awards outstanding under the 2019 Plan as it deems appropriate to reflect the transaction.
Plan Amendment and Termination
The Clarivate board of directors may amend or terminate the 2019 Plan at any time; however, no amendment, other than an amendment that increases the number of shares available under the 2019 Plan, may materially and adversely affect an award outstanding under the 2019 Plan without the consent of the affected participant and shareholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. The 2019 Plan will remain in effect until the tenth anniversary of its effective date, unless earlier terminated by the Clarivate board of directors. No awards may be granted under the 2019 Plan after its termination.
Claw-Back Provisions, Transferability and Participant Payments
All awards will be subject to any company claw-back policy as set forth in such claw-back policy or the applicable award agreement. Except as the plan administrator may determine or provide in an award agreement, awards under the 2019 Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding obligations arising in connection with awards under the 2019 Plan and exercise price obligations arising in connection with the exercise of options under the 2019 Plan, the plan administrator may, in its discretion, accept cash, wire transfer or check, Shares that meet specified conditions, a promissory note, a “market sell order,” such other consideration as the plan administrator deems suitable or any combination of the foregoing.
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EXECUTIVE COMPENSATION TABLES
2019 Summary Compensation Table
The following summary compensation table sets forth information concerning compensation paid or accrued to: (i) each person who served as our CEO during the fiscal year 2019, (ii) our chief financial officer, (iii) our three other most highly compensated executive officers who serve in such capacity as of the end of 2019, and (iv) one former executive officer who would have been included as one of our three other most highly compensated executive officers had she been serving in that capacity at the end of 2019.
Name and principal position(1)
Year
Salary
($)
Stock
awards
($)(2)
Option
awards
($)(3)
Non-equity
incentive plan
compensation
($)(4)
All other
compensation
($)(5)
Total
($)
Jerre Stead
Executive Chairman and Chief Executive Officer
2019
380,769
12,960,000
2,940,000
300,000
8,346
16,589,115
Richard Hanks
Chief Financial Officer
2019
500,000
350,000
8,442
858,442
Mukhtar Ahmed(6)
President, Science Group
2019
476,688
350,000
62,800
889,488
Jeff Roy
President, IP Group
2019
416,527
250,000
8,442
674,969
Stephen Hartman(6)
General Counsel and Global Head of Corporate Development
2019
350,350
220,000
46,168
616,518
Jay Nadler
Chief Executive Officer (Former)
2019
363,462
1,986,382
2,349,844
Annette Thomas(6)
CEO, Scientific and Academic Research (Former)
2019
547,820
5,853,715
2,593,711
8,995,246
(1)
Mr. Stead was named Executive Chairman in connection with the closing of the Merger on May 13, 2019 and shortly thereafter, he agreed to expand his role to become our CEO effective June 30, 2019. Mr. Nadler served as our CEO prior to Mr. Stead and continued to serve as an advisor to the Company through year-end. Effective September 18, 2019, we entered into a separation agreement with Dr. Thomas.
(2)
Represents the value of 1,000,000 Merger Shares based on the fair market value on the date of designation and calculated in accordance with FASB ASC Topic 718, excluding the effect of any estimated forfeitures. Information about the assumptions used to calculate the grant date fair value of the stock can be found in our Annual Report under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Note 3: Summary of Significant Accounting Policies—Share Based Compensation” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Note 17: Employment and Compensation Arrangements.” The reported amount does not include the value of the 400,000 Merger Shares over which Mr. Stead has retained the authority to designate, which were not designated as of December 31, 2019. As further described under “Pre-Merger Compensation” above, the Merger Shares were provided for in the Sponsor Agreement, the terms of which were negotiated on an arm’s length basis among the parties thereto.
(3)
For Mr. Stead, the value of the option awards reflects the grant date fair value of stock options calculated in accordance with FASB ASC Topic 718, excluding the effect of any estimated forfeitures. As further described under “Pre-Merger Compensation” above, the stock options listed for Mr. Stead were provided for in the Sponsor Agreement, the terms of which were negotiated on an arm’s length basis among the parties thereto. For Dr. Thomas, the value of options reflects $5,553,629 of fair value related to stock options that were accelerated upon her termination and $300,086 in incremental expense related to the extension of exercise period for options that were vested at the time of her termination. The values for Dr. Thomas were calculated as of the modification date in accordance with FASB ASC Topic 718. Information about the assumptions used to calculate the grant date fair value of the stock options can be found in our Annual Report under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Note 3: Summary of Significant Accounting Policies—Share Based Compensation” and “Note 17: Employment and Compensation Arrangements.”
(4)
Represents annual incentive payments under our AIP that will be paid in March 2020 for 2019 performance.
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(5)
The table below provides a breakdown of All Other Compensation in 2019 for our NEOs:
Description
Jerre
Stead
Richard
Hanks
Mukhtar
Ahmed
Jeff
Roy
Stephen
Hartman
Jay
Nadler
Annette
Thomas
Matching Contributions to Retirement Plans ($)(a)
8,250
8,250
41,866
8,250
38,539
8,250
 
Pension Allowance ($)
 
 
 
 
 
 
33,055
Life Insurance ($)
96
192
550
192
367
96
432
Car Allowance ($)
 
 
20,384
 
7,262
 
 
Benefits Continuation ($)
 
 
 
 
 
22,844
 
Advisor Payments ($)(b)
 
 
 
 
 
1,150,000
 
Legal Fees ($)(c)
 
 
 
 
 
35,000
12,740
Notice Payment ($)(d)
 
 
 
 
 
 
254,284
Severance ($)(e)
 
 
 
 
 
750,000
2,293,200
Vacation Payout at Termination
   
   
   
   
   
20,192
   
Totals ($)
8,346
8,442
62,800
8,442
46,168
1,986,382
2,593,711
(a)
For Messrs. Stead, Hanks, Roy and Nadler, the matching contributions to retirement plans were under the Company’s 401(k) plan offered to employees located in the U.S. For Messrs. Ahmed and Hartman, the matching contributions to retirement plans were under the Company’s defined contribution plan offered to employees located in the UK.
(b)
Mr. Nadler received a payment of $350,000 for ongoing advisory services from the date of his termination through December 31, 2019. In addition, because he made himself available to provide advisory services as provided in his separation agreement, in March 2020, Mr. Nadler will receive a full-year non-pro-rated AIP payment at target level performance in the amount of $800,000.
(c)
Mr. Nadler and Dr. Thomas received reimbursement of certain legal fees related to their separations.
(d)
Dr. Thomas received a notice payment in lieu of the United Kingdom’s required three-month notice period for salary and benefits.
(e)
Mr. Nadler’s severance represents only payments made in 2019 as continuation of his severance benefits is contingent upon him remaining in compliance with restrictive covenants set forth in his original employment agreement, including a non-compete covenant.
(6)
Messrs. Ahmed and Hartman and Dr. Thomas received cash payments in British Pounds. For purposes of the compensation tables, we used a GBP:USD exchange rate of 1.274 to convert their cash payments received to US dollars.
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Grants of Plan Based Awards During Fiscal Year 2019
The following table provides information regarding grants of plan-based awards to our NEOs.
Name
 
 


Estimated future payouts under
non-equity incentive plan awards(1)
All other
stock
awards:
Number of
shares of
stock or
units (#)
All other
option
awards:
Number of
securities
underlying
options
(#)(2)
Exercise
or base
price of
option
awards
($/Sh)
Grant date
fair value
of stock
and option
awards ($)
Grant date
Approval
date
Threshold
($)
Target
($)
Maximum
($)
Jerre Stead
 
 
600,000
1,200,000
 
 
 
 
 
May 20, 2019
May 20, 2019
 
 
 
 
1,000,000(3)
13.30
2,940,000
 
May 26, 2019
May 26, 2019
 
 
 
1,000,000(4)
 
 
12,960,000
Richard Hanks
 
 
344,555
689,110
 
 
 
 
Mukhtar Ahmed
 
 
434,207
868,414
 
 
 
 
Jeff Roy
 
 
291,095
582,190
 
 
 
 
Stephen Hartman
 
 
204,187
408,374
 
 
 
 
Jay Nadler
 
 
 
 
 
 
Annette Thomas(5)
 
 
 
 
 
 
 
Sept. 18, 2019
Sept. 16, 2019
 
 
 
 
286,525
6.76
3,061,277
 
Sept. 18, 2019
Sept. 16, 2019
 
 
 
 
204,626
10.39
1,474,084
 
Sept. 18, 2019
Sept. 16, 2019
 
 
 
 
204,626
14.18
805,846
 
Sept. 18, 2019
Sept. 19, 2019
 
 
 
 
122,807
17.96
212,422
(1)
The threshold, target and maximum amounts shown under “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” reflect the ranges of payments that could be made under the AIP. Actual payments under the AIP are shown in the Summary Compensation Table. Because Mr. Nadler and Dr. Thomas terminated employment before the end of fiscal year 2019, they were not eligible to receive an AIP payout based on year-end performance.
(2)
Stock options were granted pursuant to the 2019 Incentive Plan.
(3)
As further described under “Pre-Merger Compensation” above, the stock options listed for Mr. Stead were provided for in the Sponsor Agreement, the terms of which were negotiated on an arm’s length basis among the parties thereto.
(4)
Represents the value of 1,000,000 Merger Shares based on the fair market value on the date of designation and calculated in accordance with FASB ASC Topic 718, excluding the effect of any estimated forfeitures. Information about the assumptions used to calculate the grant date fair value of the stock can be found in our Annual Report under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Note 17: Employment and Compensation Arrangements.” As further described under “Pre-Merger Compensation” above, the Merger Shares were provided for in the Sponsor Agreement, the terms of which were negotiated on an arm’s length basis among the parties thereto.
(5)
The option awards listed for Dr. Thomas show the details of the accelerated vesting of her unvested stock options, pursuant to the terms of her separation agreement, as further described in “Former Officer Agreement.” The number of securities underlying her stock options is the number of stock options accelerated. The exercise price is the original exercise price of the accelerated stock options, and the amounts shown for grant date fair value includes $5,553,629 of fair value related to stock options that were accelerated upon her termination and excludes $300,086 of incremental expense related to the extension of the exercise period for her stock options that were vested upon her termination.
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Outstanding Equity Awards at Fiscal Year-End
The following table provides information concerning the outstanding equity awards held by the NEOs at the end of fiscal year 2019. Except for our CEO, our NEOs were holding only stock options at the end of the fiscal year; none were holding stock awards.
 
Option awards
Option
exercise
price ($)
Option
expiration
date
Stock awards
Name
Number of
securities
underlying
unexercised
options (#)
exercisable
Number of
securities
underlying
unexercised
options (#)
unexercisable
Number of
shares or
units of
stock that
have not
vested(#)
Market value
of shares or
units of
stock that
have not
vested ($)
Jerre Stead
1,000,000(1)
13.30
May 19, 2029
 
 
 
 
 
 
 
1,000,000(8)
16,800,000
Richard Hanks
147,992
221,990(2)
6.61
Mar. 2, 2027
 
 
 
105,710
158,563(2)
10.39
Mar. 2, 2027
 
 
 
105,710
158,563(2)
14.18
Mar. 2, 2027
 
 
 
63,426
95,138(2)
17.96
Mar. 2, 2027
 
 
 
14,271
9,513(3)
6.61
May 22, 2027
 
 
Mukhtar Ahmed
46,248
184,991(4)
6.91
Mar. 7, 2028
 
 
 
33,034
132,136(4)
10.85
Mar. 7, 2028
 
 
 
33,034
132,136(4)
14.78
Mar. 7, 2028
 
 
 
19,820
79,282(4)
18.72
Mar. 7, 2028
 
 
Jeff Roy
73,996
110,995(5)
6.76
Sept. 4, 2027
 
 
 
52,854
79,282(5)
10.39
Sept. 4, 2027
 
 
 
52,854
79,282(5)
14.18
Sept. 4, 2027
 
 
 
31,712
47,570(5)
17.96
Sept. 4, 2027
 
 
 
7,928
11,892(5)
6.76
Sept. 4, 2027
 
 
Stephen Hartman
50,661
33,774(6)
6.61
Mar. 2, 2027
 
 
 
36,153
24,101(6)
10.39
Mar. 2, 2027
 
 
 
36,153
24,101(6)
14.18
Mar. 2, 2027
 
 
 
21,723
14,482(6)
17.96
Mar. 2, 2027
 
 
 
79,281
52,855(6)
6.61
May 22, 2027
 
 
 
16,887
67,548(7)
8.14
Nov. 12, 2028
 
 
 
12,051
48,203(7)
12.68
Nov. 12, 2028
 
 
 
12,051
48,203(7)
17.23
Nov. 12, 2028
 
 
 
7,241
28,964(7)
21.78
Nov. 12, 2028
 
 
Jay Nadler
863,098
6.61
Mar. 2, 2027
 
 
 
1,970,422
10.39
Mar. 2, 2027
 
 
 
1,970,422
14.18
Mar. 2, 2027
 
 
 
1,182,226
17.96
Mar. 2, 2027
 
 
Annette Thomas
477,541
6.76
Dec. 31, 2022
 
 
 
341,044
10.39
Dec. 31, 2022
 
 
 
341,044
14.18
Dec. 31, 2022
 
 
 
204,679
17.96
Dec. 31, 2022
 
 
(1)
Represents stock options allocated to Mr. Stead. As further described under “Pre-Merger Compensation” above, the stock options were provided for in the Sponsor Agreement, the terms of which were negotiated on an arm’s length basis among the parties thereto.
(2)
40% of each of Mr. Hanks’ option awards expiring on March 2, 2027 was vested as of December 31, 2019 and 20% will vest on each of March 1, 2020; March 1, 2021; and March 1, 2022.
(3)
60% of Mr. Hanks’ option award expiring on May 22, 2027 was vested as of December 31, 2019 and 20% will vest on each of October 3, 2020 and October 3, 2021.
(4)
20% of each of Mr. Ahmed’s option awards was vested as of December 31, 2019 and 20% will vest on each of February 13, 2020; February 13, 2021; February 13, 2022; and February 13, 2023.
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(5)
40% of each of Mr. Roy’s option awards was vested as of December 31, 2019 and 20% will vest on each of July 1, 2020; July 1, 2021; and July 1, 2022.
(6)
60% of each of Mr. Hartman’s option awards expiring on March 2, 2027 and May 22, 2027 were vested as of December 31, 2019 and 20% will vest on each of October 3, 2020 and October 3, 2021.
(7)
20% of each of Mr. Hartman’s option awards expiring on November 12, 2028 were vested as of December 31, 2019 and 20% will vest on each of November 13, 2020; November 13, 2021; November 13, 2022; and November 13, 2023.
(8)
Represents the value of Mr. Stead’s allocated and unissued 1,000,000 Merger Shares based on the $16.80 closing price of Clarivate stock on December 31, 2019. The Merger Shares are further described under “Pre-Merger Compensation” above.
Option Exercises and Stock Vested in 2019 Table
The following table provides information concerning stock options that were exercised by the NEOs during fiscal year 2019. Only Mr. Nadler exercised options. None of our NEOs received shares upon vesting of stock awards during fiscal year 2019.
Name
Number of
Shares
Acquired
Upon
Exercise
(#)
Value
Realized
on Exercise
($)
Jay Nadler
2,357,997(1)
24,457,399
(1)
Mr. Nadler used a net share exercise method through which 918,401 shares were withheld for the option exercise price, and 1,439,596 shares were issued to Mr. Nadler.
Pension Benefits and Nonqualified Deferred Compensation
We do not provide any pension plan, supplemental retirement plan, or deferred compensation plan benefits to our NEOs. We do provide company matches to employee contributions to qualified retirement plans and these are reported as All Other Compensation in the Summary Compensation Table.
EXECUTIVE EMPLOYMENT AGREEMENTS
Our CEO does not have an employment agreement.
NEO Agreements, Other Than CEO
In prior years, we entered in employment agreements with Messrs. Hanks, Ahmed, Roy, and Hartman.
On March 1, 2017, the Company entered into an employment agreement with Mr. Hanks. Mr. Hanks’ employment agreement provides for an annual base salary to be reviewed at the discretion of management and the Compensation Committee and each salary adjustment is dependent on performance. Mr. Hanks is eligible to (a) participate in the AIP and is entitled to participate in employee benefits plans, programs and arrangements as are customarily accorded to our executives, and (b) participate in our 2019 Incentive Plan. In the event of an involuntary termination without cause, Mr. Hanks is eligible to receive 18 months’ of annual base salary continuation and a payment equal to 1.5 times his AIP target, as well as 18 months’ of continued benefits coverage. Payment of severance is contingent upon Mr. Hanks entering into a separation agreement, including a release of claims, with the Company. There is no eligibility for severance benefits if Mr. Hanks voluntarily resigns or the Company terminates him for cause. Mr. Hanks’ employment agreement does not constitute a contract of employment, does not entitle him to employment for any specified period and employment will continue to be considered “at will.”
Under his stock option agreements, Mr. Hanks is subject to confidentiality and intellectual property provisions and 12-month post-termination restrictive covenants related to non-competition and non-solicitation of employees and customers. His stock option agreements provide for accelerated vesting in the event of a Liquidity Event.
On January 1, 2018, the Company entered into an employment agreement with Mr. Ahmed, which constitutes a UK contract of employment. Mr. Ahmed’s employment agreement provides for an annual base salary to be reviewed at the discretion of management and the Compensation Committee and each salary adjustment is dependent on performance. Mr. Ahmed is eligible to (a) participate in the AIP and is entitled to participate in employee benefits plans, programs and arrangements as are customarily accorded to our executives, and (b) participate in our 2019 Incentive Plan. In the event of an involuntary termination without cause as defined in
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the agreement, Mr. Ahmed is eligible to receive one year of annual salary. Payment of severance is contingent upon Mr. Ahmed entering into a separation agreement, including a release of claims, with the Company. There is no eligibility for severance benefits if Mr. Ahmed voluntarily resigns or the Company terminates him for cause. Under the terms of his employment agreement, Mr. Ahmed is subject to confidentiality and intellectual property provisions and 12-month post-termination restrictive covenants related to non-competition and non-solicitation of employees, customers and suppliers.
Mr. Ahmed’s stock option agreements provide for accelerated vesting in the event of a Liquidity Event.
On September 5, 2017, the Company entered into an employment agreement with Mr. Roy. Mr. Roy’s employment agreement provides for an annual base salary to be reviewed at the discretion of management and the Compensation Committee and each salary adjustment is dependent on performance. Mr. Roy is eligible to (a) participate in the AIP and is entitled to participate in employee benefits plans, programs and arrangements as are customarily accorded to our executives, and (b) participate in our 2019 Incentive Plan. In the event of an involuntary termination without cause, Mr. Roy is eligible to receive 52 weeks’ severance of annual base salary continuation and 52 weeks’ continued benefits coverage. Mr. Roy is also entitled to be paid a prorated bonus if he is terminated without cause on or after April 1 of the year of termination. Payment of severance is contingent upon Mr. Roy entering into a separation agreement, including a release of claims, with the Company. There is no eligibility for severance benefits if Mr. Roy voluntarily resigns or the Company terminates him for cause. Mr. Roy’s employment agreement does not constitute a contract of employment, does not entitle him to employment for any specified period and employment will continue to be considered “at will.”
Under his stock option agreements, Mr. Roy is subject to confidentiality and intellectual property provisions and 12-month post-termination restrictive covenants related to non-competition and non-solicitation of employees and customers. His stock option agreements provide for accelerated vesting in the event of a Liquidity Event as defined in the 2019 Incentive Plan.
On April 22, 2013, the Company entered into an employment agreement with Mr. Hartman which constitutes a UK contract of employment. Mr. Hartman’s employment agreement provides for an annual base salary to be reviewed at the discretion of management and the Compensation Committee and each salary adjustment is dependent on performance. Mr. Hartman is eligible to participate in the AIP and is entitled to participate in employee benefits plans, programs and arrangements as are customarily accorded to our executives. Mr. Hartman’s employment agreement does not entitle him to severance in any termination event. Under the terms of his employment agreement, Mr. Hartman is subject to confidentiality and intellectual property provisions and six-month post-termination restrictive covenants related to non-competition and non-solicitation of employees, customers and suppliers.
Mr. Hartman’s stock option agreements provide for accelerated vesting in the event of a Liquidity Event.
Former CEO Agreements
Prior to 2019, the Company had an employment agreement with Mr. Nadler that provided for the following benefits in the event his employment was involuntarily terminated without “cause” (as defined in his employment agreement), subject to Mr. Nadler executing and not revoking a release of claims in favor of the Company: cash severance equal to 18 months’ of annual base salary continuation and payment of his AIP incentive at 1.5 times target payout for the year of termination, payment equal to the value of welfare benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for the earlier to occur of (a) 18 months (the severance period), (b) the date he is no longer eligible for welfare benefits under COBRA, or (c) the date when he is eligible to receive benefits from a subsequent employer, and acceleration of stock options due to vest in the 12 month period following the termination date, with exercisability through the earlier of 18 months following the termination date or the full original term of the stock options. Additionally, to the extent unpaid as of his termination date, Mr. Nadler was entitled to a cash payment equivalent to the annual incentive for the prior year on the basis of actual performance achieved.
In April 2019, prior to the close of the Merger, Mr. Nadler’s employment agreement was amended to provide increased benefits in the event his employment was involuntarily terminated without “cause,” subject to Mr. Nadler executing and not revoking a release of claims in favor of the Company, including cash severance equal to 24 months of annual base salary continuation and payment of his AIP incentive at two times his target payout for the year of termination, and payment equal to the value of welfare benefits under COBRA for the
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earlier to occur of (a) 24 months (the severance period), (b) the date he is no longer eligible for welfare benefits under COBRA, or (c) the date when he is eligible to receive benefits from a subsequent employer. Mr. Nadler’s employment agreement was further amended to provide that, in the event of his termination without cause within 12 months following a “change in control” (as defined in his employment agreement), the vesting of all outstanding, unvested stock options would be accelerated and the options would remain exercisable through the earlier of 24 months following the termination date or the full original term of the options.
Upon his separation from the Company in June 2019, we entered into a separation agreement that provided the following benefits, subject to Mr. Nadler entering into a release of claims in favor of the Company:
A severance payment of $3,000,000, which represents two times the sum of annual base salary and target AIP incentive which is payable in equal monthly installments over the 24-month period following the termination date
Payment in an amount equal to the Company’s portion of payments which would have been required to be paid to continue medical, dental and vision coverage for Mr. Nadler and his dependents under the Company’s group healthcare plans under COBRA if Mr. Nadler and his dependents elect COBRA coverage for a 24-month period (the “COBRA Payment”)
Accelerated vesting of 5,006,501 stock options which remain exercisable for the remainder of their term
A contribution of $35,000 towards legal fees related to his separation
In exchange for Mr. Nadler’s ongoing advisory services to the Company through December 31, 2019, (x) a payment of $350,000 in equal monthly installments beginning on July 1, 2019 through December 31, 2019, (y) an amount equal to six times the monthly amount of the COBRA Payment in equal monthly installments beginning on July 1, 2019 through December 2019, and (z) a payment of $800,000 relating to his target AIP incentive to be paid in March 2020.
In the separation agreement, Mr. Nadler agreed to abide by the restrictive covenants included in his amended employment agreement, including a 24-month post-termination non-competition covenant. Mr. Nadler’s continued severance is subject to his remaining in compliance with these covenants through the 24-month payment period.
Former Officer Agreement
Effective September 18, 2019, we entered into a separation agreement with Dr. Thomas. In recognition of the terms of Dr. Thomas’s employment agreement, her tenure and her agreement to release the Company from any and all claims, Dr. Thomas received certain payments described below. These payments were made in British Pounds Sterling and are reported here in U.S. currency, using a GBP:USD exchange rate of 1.274.
A payment of $254,283 for payment in lieu of her 3 months’ notice period related to salary and benefits, including accrued annual leave
A severance payment of $2,293,200 representing 12 months annual base salary and two times the sum of target AIP incentive
Accelerated vesting of 818,584 stock options
A contribution of $12,740 towards legal fees related to her separation
In the separation agreement Dr. Thomas agreed to abide by the confidentiality and intellectual property covenants set forth in her original employment agreement, in addition to the restrictive covenants set forth in her separation agreement, including a 12-month post-termination non-competition covenant.
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The information in the table below provides the estimated value of compensation that would have been paid to each of the NEOs in the event the NEO was involuntarily terminated by the Company for reason other than cause on December 31, 2019. Messrs. Stead and Hartman are not entitled to any payments upon termination. Other than the accelerated vesting of stock options that would occur in a Liquidity Event, none of the current NEOs would receive additional payments or benefits should their terminations be related to or following a change in control.
 
 
Potential Payments Upon Termination
 
 
 
Name
Salary and
AIP(1)
($)
Continued
benefits(1)
($)
Equity
awards
($)
Consulting
services
($)
Legal
fees
($)
Notice
fees(2)
($)
Total
($)
Jerre Stead
Richard Hanks
1,387,500
31,309