InnerWorkings, Inc.
INNERWORKINGS INC (Form: DEF 14A, Received: 04/18/2016 06:13:17)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


 
SCHEDULE 14A

 Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.  )

 
 
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Soliciting Material Pursuant to §240.14a-12
InnerWorkings, Inc.

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InnerWorkings, Inc.
600 West Chicago Avenue, Suite 850
Chicago, Illinois 60654


April 15, 2016

To Our Stockholders:

On behalf of the Board of Directors and management, we cordially invite you to attend the annual meeting of stockholders to be held on Friday, June 3, 2016 , at 11:00 a.m., Central Time, at our corporate headquarters, 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654.

The following pages contain the formal notice of the annual meeting, the proxy statement and the proxy card. Please review this material for information concerning the business to be conducted at the meeting and the nominees for election as directors.

The purpose of the meeting is to consider and vote upon proposals to (i) elect eight directors who have been nominated for election, (ii) ratify the appointment of our independent registered public accounting firm for 2016 , (iii) re-approve the material terms of performance-based awards under our Annual Incentive Plan, and (iv) approve our amended and restated 2006 Stock Incentive Plan. In addition to the specific items to be acted upon, there will be a report on the progress of the Company and an opportunity for questions of general interest to the stockholders.

We are pleased to again take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe these rules allow us to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of our annual meeting. The proxy statement contains instructions on how you can request a paper copy of the proxy statement and annual report.

Whether or not you plan to attend the meeting, your vote is important and we encourage you to vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by mail if you request a proxy card in writing. Instructions regarding these methods of voting are contained on the notice regarding the availability of proxy materials for the annual meeting of stockholders to be held on June 3, 2016 .

We look forward to seeing you at the meeting.

Sincerely yours,
 
                    

Jack M. Greenberg
Chairman of the Board
 
Eric D. Belcher
Chief Executive Officer, President and Director





Notice of 2016 Annual Meeting of Stockholders
600 West Chicago Avenue, Suite 850
Chicago, Illinois 60654
June 3, 2016 , 11:00 a.m., Central Time
April 15, 2016

Fellow stockholders:

Notice is hereby given that the annual meeting of the stockholders of InnerWorkings, Inc. (the “Company”), a Delaware corporation, will be held on Friday, June 3, 2016 at 11:00 a.m., Central Time, at our corporate headquarters, 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654 for the following purposes:

to elect eight members of the Board of Directors to serve until the 2017 annual meeting of stockholders or until their respective successors are elected and qualified;
to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2016 ;
to reapprove the material terms of performance-based awards under our Annual Incentive Plan; and
to approve our amended and restated 2006 Stock Incentive Plan

These items of business, including the nominees for director, are more fully described in the proxy statement accompanying this notice. The Board of Directors has fixed the close of business on April 8, 2016 as the record date for determining the stockholders entitled to notice of and to vote at the annual meeting and any adjournment or postponement thereof.

All stockholders are cordially invited to attend the annual meeting in person. However, whether or not you plan to attend the annual meeting in person, we urge you to vote your shares via the toll-free telephone number or over the Internet, as described in the enclosed materials. If you submit your proxy and then decide to attend the annual meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the proxy statement. Only stockholders of record as of the close of business on April 8, 2016 are entitled to receive notice of, and to attend and to vote at, the meeting. We look forward to seeing you at the annual meeting.

By Order of the Board of Directors,


Ronald C. Provenzano
General Counsel & Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Stockholders to be Held on June 3, 2016

Our Proxy Statement and 2015 Annual Report are available at http://www.proxyvote.com. You may also request hard copies of these documents free of charge by writing to:

Investor Relations
InnerWorkings, Inc.
600 West Chicago Avenue, Suite 850
Chicago, Illinois 60654




PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement carefully before voting.

Annual Meeting Information
Date, Time and Location:
June 3, 2016 at 11:00 a.m. Central Time, 600 West Chicago Avenue, Chicago, Illinois 60654
Record Date:
April 8, 2016

Items to be Voted on at the 2016 Annual Meeting of Stockholders
 
Proposal
 
Board of Directors’ Recommendation
Elect eight members of the Board of Directors to serve until the 2017 annual meeting of stockholders or until their respective successors are elected and qualified.
 
FOR
Ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2016.
 
FOR
Reapproval of the material terms of performance-based awards under the Annual Incentive Plan
 
FOR
Approval of the amended and restated 2006 Stock Incentive Plan
 
FOR
Director Nominees
Name
 
Director
Since
 
Independent
 
Other Public
Boards (1)
 
Committee Memberships
AC
 
CC
 
NCG
Jack M. Greenberg (Chairman of the Board)
 
2005
 
Yes
 
2
 
  
 
M
 
M
Eric D. Belcher (Chief Executive Officer)
 
2009
 
No
 
 
 
 
 
 
 
Charles K. Bobrinskoy
 
2008
 
Yes
 
 
C, F
 
M
 
 
David Fisher
 
2011
 
Yes
 
2
 
M
 
M
 
 
Daniel M. Friedberg
 
2014
 
Yes
 
2
 
  
 
M
 
M
J. Patrick Gallagher, Jr.
 
2011
 
Yes
 
1
 
  
 
C
 
M
Julie M. Howard
 
2012
 
Yes
 
1
 
M
 
M
 
M
Linda S. Wolf
 
2006
 
Yes
 
1
 
M
 
M
 
C
(1)
Other Public Boards reflects directorships as of date of this proxy statement .
AC
Audit Committee
 
C
Chair
 
NCG
Nominating and Corporate Governance Committee
CC
Compensation Committee
 
M
Member
 
F
Financial expert

Corporate Governance and Compensation Practices

Governance
 
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All directors except the CEO are independent (see pages 18, 20)
 
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All directors are elected annually (see page 18)
 
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Directors are elected by majority vote, with plurality standard for contested elections (see page 18)
 
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The roles of Chairman of the Board and CEO are currently separate (see page 18)
 
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No shareholder rights plan or poison pill (see page 18)
 
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No cumulative voting (see page 1)
 
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Proactive stockholder governance outreach (see pages 20, 35)
 
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Published corporate governance guidelines summarizing key governance practices (see page 20)

Compensation
 
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Pay for performance approach (see pages 27 – 29)
 
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Independent compensation committee and independent compensation consultant (see pages 18, 29)
 
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Directors and officers subject to stock ownership guidelines and stock holding policy (see pages 22 – 23, 49)
 
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Policy against hedging/pledging (see page 28)
 
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Long-term focus and stockholder alignment through equity compensation (see page 27)
 
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No problematic pay practices, such as excise tax gross-up provisions (see page 28)
 
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No “single trigger” change in control severance arrangements (see page 28)




Proxy Statement for the Annual Meeting of Stockholders of

INNERWORKINGS, INC. 

To Be Held on Friday, June 3, 2016

TABLE OF CONTENTS

PROXY STATEMENT
Annual Meeting Information
Voting Information
PROPOSALS TO BE VOTED ON
Proposal 1: Election of Directors
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm
Proposal 3: Re-approval of material terms of performance-based awards under Annual Incentive Plan
Proposal 4: Approval of amended and restated 2006 Stock Incentive Plan
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Board Leadership Structure
Board of Directors Role in Risk Oversight
Meetings and Committees of the Board of Directors
Director Independence
Governance Documents
Compensation Committee Interlocks and Insider Participation
Communications with Directors
Attendance at Annual Meeting
STOCK OWNERSHIP
Security Ownership of Certain Beneficial Owners and Management
Section 16(a) Beneficial Ownership Reporting Compliance
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
EXECUTIVE OFFICERS
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
Executive Compensation
Summary of Director Compensation
REPORT OF THE COMPENSATION COMMITTEE
AUDIT COMMITTEE REPORT
FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL REGISTERED PUBLIC ACCOUNTING FIRM
OTHER INFORMATION
Stockholder Proposals for the 2017 Annual Meeting
Expenses of Solicitation
“Householding” of Proxy Materials




600 West Chicago Avenue, Suite 850
Chicago, Illinois 60654

PROXY STATEMENT

This proxy statement and enclosed proxy card are being furnished commencing on or about April 22, 2016 in connection with the solicitation by the Board of Directors of InnerWorkings, Inc., a Delaware corporation. In this proxy statement, we refer to InnerWorkings, Inc. as the “Company,” “we,” “our” or “us” and the Board of Directors as the “Board.” We are sending the proxy materials because the Board is seeking your permission (or proxy) to vote your shares at the annual meeting of stockholders on your behalf. This proxy statement presents information that is intended to help you in reaching a decision on voting your shares of common stock. Only stockholders of record at the close of business on April 8, 2016 , the record date, are entitled to vote at the meeting, with each share entitled to one vote. We have no other voting securities.

Annual Meeting Information

Date and Location.   We will hold the annual meeting on Friday, June 3, 2016 at 11:00 a.m., Central Time, at our corporate headquarters at 600 West Chicago Avenue, Suite 850, Chicago, Illinois, 60654.

Admission.   Only record or beneficial owners of the Company’s common stock or their proxies may attend the annual meeting in person. When you arrive at the annual meeting, you must present photo identification, such as a driver’s license. Beneficial owners must also provide evidence of stock holdings, such as a recent brokerage account or bank statement.

Voting Information

Record Date.   The record date for the annual meeting is April 8, 2016 . You may vote all shares of the Company’s common stock that you owned as of the close of business on that date. Each share of common stock entitles you to one vote on each item to be voted on at the annual meeting. Cumulative voting is not permitted. On the record date, 54,335,124 shares of our common stock were outstanding. We need a majority of the shares of common stock outstanding on the record date, represented in person or by proxy, to hold the annual meeting.

Confidential Voting.   Your vote is confidential and will not be disclosed to any officer, director or employee, except in certain limited circumstances, such as when you request or consent to disclosure.

Vote by Proxy.   If your shares of common stock are held in your name, you can vote your shares on items presented at the annual meeting or by proxy. There are three ways to vote by proxy:

1.
By Telephone — Stockholders can vote by telephone by calling 1-800-690-6903 and following the instructions on the proxy card;
2.
By Internet — You can vote over the Internet at www.proxyvote.com by following the instructions on the proxy card; or
3.
By Mail — You can vote by mail by signing, dating and mailing a proxy card that you request in writing.

Submitting Voting Instructions for Shares Held Through a Broker.   If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and your broker, bank or nominee is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the annual meeting with proper evidence of stock holdings, such as a recent brokerage account or bank statement. Street name stockholders should check the voting instruction cards used by their brokers or nominees for specific instructions on methods of voting. If your shares are held in street name, you must contact your broker or nominee to revoke your proxy.

If you hold shares through a broker, follow the voting instructions you receive from your broker. If you want to vote in person at the annual meeting, you must obtain a legal proxy from your broker and present it at the annual meeting. If you do not submit voting instructions to your broker, your broker may still be permitted to vote your shares in certain cases. Brokers may vote your shares as described below.

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Non-discretionary Items.    All items, other than the ratification of the appointment of the Company’s independent registered public accounting firm, are “non-discretionary” items. It is critically important that you submit your voting instructions if you want your shares to count for non-discretionary items, such as the election of directors. Your shares will remain unvoted for such items if your broker does not receive instructions from you.

Discretionary Item.   The ratification of the appointment of the Company’s independent registered public accounting firm is a “discretionary” item. Brokers that do not receive instructions from beneficial owners may vote uninstructed shares in their discretion.

In order to carry on the business of the meeting, we must have a quorum. This means that stockholders representing at least a majority of the common stock issued and outstanding as of the record date must be present at the annual meeting, either in person or by proxy, for there to be a quorum at the annual meeting. Abstentions and broker non-votes are counted as present for purposes of establishing a quorum but broker non-votes are not considered “present” for purposes of voting on non-discretionary items, such as the election of directors. A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.

Revoking Your Proxy.   You can revoke your proxy at any time before your shares are voted by (1) delivering a written revocation notice prior to the annual meeting to Ronald C. Provenzano, Corporate Secretary, InnerWorkings, Inc., 600 West Chicago Avenue, Suite 850, Chicago, Illinois, 60654; (2) submitting a later-dated proxy that we receive no later than the conclusion of voting at the annual meeting; or (3) voting in person at the annual meeting. Attending the annual meeting does not revoke your proxy unless you vote in person at the meeting.

Votes Required to Elect Directors.   In order to be elected, director nominees must receive the affirmative vote of a majority of the votes cast in the election of directors. In other words, a nominee for director must receive more votes “FOR” his or her election than votes “AGAINST” such nominee. The size of the Board is currently set at eight members.

Votes Required to Adopt Other Proposals.   The ratification of Ernst & Young LLP’s appointment as independent registered public accounting firm, the re-approval of the material terms of performance-based awards under our Annual Incentive Plan, and the approval of our amended and restated 2006 Stock Incentive Plan require the affirmative vote of a majority of the shares of common stock represented at the annual meeting and entitled to vote thereon.

“Abstaining” and “Broker Non-Votes.”   You may “abstain” from voting for any nominee in the election of directors and on the other proposals. Shares “abstaining” from voting on any proposal will be counted as present at the annual meeting for purposes of establishing the presence of a quorum. Your abstention will have no effect on the election of directors and will have the effect of a vote against the ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm, the re-approval of the material terms of performance-based awards under our Annual Incentive Plan, and the approval of the amended and restated 2006 Stock Incentive Plan. Broker non-votes will have no effect on the election of directors, the re-approval of the material terms of performance-based awards under the Annual Incentive Plan, and the approval of the amended and restated 2006 Stock Incentive Plan. There will be no broker non-votes with respect to the ratification of Ernst & Young LLP’s appointment as independent registered public accounting firm, as it is a discretionary item.

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PROPOSALS TO BE VOTED ON

Proposal 1: Election of Directors

Nominees

The size of the Board is currently set at eight members. At the annual meeting, the stockholders will elect eight directors to serve until the 2017 annual meeting of stockholders or until their respective successors are elected and qualified. All of our nominees are currently directors. Any director vacancy occurring after the election may be filled by a majority vote of the remaining directors. In accordance with the Company’s Bylaws, a director appointed to fill a vacancy will be appointed to serve until the next annual meeting of stockholders.

We use a majority voting standard to elect directors in uncontested director elections. The date for determining if an election is contested or uncontested has been set at 14 days before the Company files its definitive proxy statement. This procedure is intended to clarify whether directors will be elected under a majority or plurality standard prior to soliciting proxies. Accordingly, assuming a quorum is present, in order to be elected in an uncontested election such as this one, director nominees must receive the affirmative vote of a majority of the votes cast in the election of directors. In other words, a director nominee must receive more votes “FOR” his or her election than votes “AGAINST” such nominee. Our Corporate Governance Guidelines requires that prior to each annual stockholder meeting, incumbent directors submit a contingent resignation in writing to the Chairman of the Nominating and Corporate Governance Committee to become effective only if the director receives a greater number of votes “AGAINST” his or her election than votes “FOR” his or her election. Following the stockholder vote, the Nominating and Corporate Governance Committee will promptly consider the resignation submitted by such director and will recommend to the Board whether to accept or reject the tendered resignation. In considering whether to accept or reject the tendered resignation, the Committee will consider all factors deemed relevant by its members. The Board will act on the Committee’s recommendation no later than 90 days following the date of the stockholders’ meeting where the election occurred. In considering the Committee’s recommendation, the Board will consider the factors considered by the Committee and such additional information and factors the Board deems to be relevant. Any director who tenders his or her resignation pursuant to our Corporate Governance Guidelines will not participate in the Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation.

In April 2014, we entered into a letter agreement (the “Letter Agreement”) with Sagard Capital Partners, L.P. (“Sagard”) and Daniel Friedberg in connection with the Board’s decision to nominate and elect Mr. Friedberg to the Board in April 2014. He was re-elected by our stockholders at our 2015 Annual Meeting. As of April 8, 2016 , Sagard owned approximately 13.8% of our outstanding common stock.

All nominees have consented to serve as directors, if elected. If any nominee is unable or unwilling to serve as a director at the time of the annual meeting, the persons who are designated as proxies intend to vote, in their discretion, for such other persons, if any, as may be designated by the Board. As of the date of this proxy statement, the Board has no reason to believe that any of the director nominees named herein will be unable or unwilling to serve as a director if elected.

The Company believes that its Board, as a whole, should encompass a range of talent, skill, diversity, experience and expertise enabling it to provide sound guidance with respect to the Company’s operations and interests. In addition to considering a candidate’s background, experience and accomplishments, candidates are reviewed in the context of the current composition of the Board and the evolving needs of our business. Although the Company does not have a formal policy with regard to the consideration of diversity in identifying candidates, the Nominating and Corporate Governance Committee strives to nominate candidates with a variety of complementary skills so that, as a group, the Board will possess the appropriate level of talent, skills and expertise to oversee the Company’s business. The Company regularly assesses the size of the Board, whether any vacancies are expected due to retirement or otherwise, and the need for particular expertise on the Board. The Company’s policy is to have at least a majority of our directors qualify as “independent directors” as defined in the rules of NASDAQ. Currently, seven of our eight directors are independent.

The Nominating and Corporate Governance Committee seeks candidates with strong reputations and experience in areas relevant to the strategy and operations of the Company, particularly in industries and growth segments that the Company serves, as well as key geographic markets where it operates. Each of the director nominees holds or has held senior positions in complex organizations and has operating experience that meets this objective, as described below. In these positions, they have also gained experience in core management skills, such as strategic and financial planning, financial reporting, corporate governance, risk management and leadership development. Each of our directors also has experience serving on boards of directors and committees of other organizations.


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The Nominating and Corporate Governance Committee also believes that each of the nominees has the experience, expertise, integrity, sound judgment and ability to engage management in a collaborative fashion to collectively comprise an effective Board. In addition, the Nominating and Corporate Governance Committee believes that each of the nominees are committed to devoting significant time and energy to service on the Board and its committees.

The Company’s Bylaws provide that the number of directors that shall constitute the Board shall not be less than three nor more than fifteen. The size of the Board is currently set at eight members.

The names of the director nominees, their ages as of April 15, 2016 , their recent employment or principal occupation, the names of other public companies for which they currently serve as a director or have served as a director within the past five years, and their period of service as an InnerWorkings director are set forth below.

Name
 
Age
 
Position
Jack M. Greenberg (2)(3)
 
73
 
Chairman of the Board
Eric D. Belcher
 
47
 
Chief Executive Officer, President and Director
Charles K. Bobrinskoy (1)(2)
 
56
 
Director
David Fisher (1)(2)
 
47
 
Director
Daniel M. Friedberg (2)(3)
 
54
 
Director
J. Patrick Gallagher, Jr. (2)(3)
 
64
 
Director
Julie M. Howard (1)(2)(3)
 
53
 
Director
Linda S. Wolf (1)(2)(3)
 
68
 
Director

(1)
Current member of our Audit Committee.

(2)
Current member of our Compensation Committee.

(3)
Current member of our Nominating and Corporate Governance Committee.

DIRECTOR NOMINEES

Jack M. Greenberg has served on our Board since October 2005 and has served as the non-executive Chairman of the Board since June 2010. Mr. Greenberg currently serves as the Chairman of The Western Union Company and as the Chairman of Quintiles Transnational. He retired as Chairman and Chief Executive Officer of McDonald’s Corporation, a publicly traded global food service retailer, at the end of 2002. He had served as McDonald’s Chairman since May 1999, and as its Chief Executive Officer since August 1998. Mr. Greenberg served as McDonald’s President from August 1998 to May 1999, and as its Vice-Chairman from December 1991 to August 1998. He also served as Chairman from October 1996, and Chief Executive Officer, from July 1997, of McDonald’s USA until August 1998. Before joining McDonald’s, Mr. Greenberg was a Partner and Director of Tax Services for both the Midwest Region and Chicago office of Arthur Young & Company, and served on the firm’s management committee. He is a member of the American Institute of Certified Public Accountants, the Illinois CPA Society, and the Chicago Bar Association. He also served as a Director of The Allstate Corporation, and Hasbro, Inc. until 2015. Mr. Greenberg’s civic involvement includes service as the Chairman of the Metropolitan Pier & Exposition Authority (MPEA), the public agency which owns McCormick Place and Navy Pier, and service on the board of Choose Chicago, DePaul University, where he previously served as Chairman, the Institute of International Education, the Field Museum, and Navy Pier, Inc. Mr. Greenberg is a graduate of DePaul University’s School of Commerce and School of Law. Mr. Greenberg’s various leadership positions, including Chief Executive Officer of a major global corporation, brings to the Board extensive management experience and economics expertise and strengthens the Board’s global perspective. In addition to Mr. Greenberg’s significant public company experience, he is a certified public accountant and an attorney, which provides additional value and perspective to the Board.

Eric D. Belcher has served on our Board and as our Chief Executive Officer since January 2009. Prior to his appointment as Chief Executive Officer, Mr. Belcher served as our President since April 2008 and our Chief Operating Officer from December 2006 to December 2008. From May 2005 to December 2006, Mr. Belcher served as our Executive Vice President of Operations. Mr. Belcher served as Chief Operating Officer from March 2003 to June 2005 and as Chief Financial Officer from April 2001 to March 2003 of MAN Roland Inc., a printing equipment manufacturer and distributor. From 1995 to 2000, he led project teams at Marakon Associates, an international management consulting firm. Mr. Belcher holds a bachelor’s degree from Bucknell University and a Masters in Business Administration from the University of Chicago Booth School of Business. He currently serves on the Advisory Board for the Polsky Center for Entrepreneurship at Chicago Booth. As Chief Executive Officer of the Company, Mr.

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Belcher brings to the Board the critical link to management’s perspective in Board discussions regarding the business and strategic direction of the Company and an extensive understanding of InnerWorkings’ business through his ten years of service to the Company.

Charles K. Bobrinskoy has served on our Board since August 2008. Mr. Bobrinskoy is currently Vice Chairman, Head of Investment Group at Ariel Investments, a global financial institution. Additionally, he is a Portfolio Manager of Ariel Focus Fund, a concentrated portfolio investing in mid-to-large cap companies. Prior to Ariel, Mr. Bobrinskoy spent 21 years as an investment banker at Salomon Brothers, a global financial institution, and its successor company, Citigroup, a global financial institution, where he held many leadership positions, most recently Managing Director and Head of North American Investment Banking Branch Offices. In addition to his work at Ariel, Mr. Bobrinskoy serves on the boards of the Museum of Science and Industry, La Rabida Children’s Foundation, the Big Shoulders Fund, and Lakeshore Athletic Club. He is also a member of the Executive Committee of the Commercial Club of Chicago. He is a member of the Economic Club of Chicago and is a Harry Crown Fellow of the Aspen Institute. He holds a bachelor’s degree from Duke University and a Masters in Business Administration from the University of Chicago Booth School of Business. Mr. Bobrinskoy’s extensive financial knowledge obtained through his various leadership positions within global financial institutions brings valuable perspectives to the Company in connection with its financial strategies and reporting, particularly in his role as Chairman and financial expert of the Board’s Audit Committee.

David Fisher has served on our Board since November 2011. Mr. Fisher is currently Chairman and Chief Executive Officer of Enova International, Inc., a global consumer lending company. He has served as Enova’s Chief Executive Officer since January 2013. From September 2011 through February 2012, Mr. Fisher served as both President of optionsXpress online brokerage, which was acquired by The Charles Schwab Corporation, a leading provider of financial services, in September 2011, and as Senior Vice President of Derivatives at The Charles Schwab Corporation. From 2007 until the acquisition, Mr. Fisher served as Chief Executive Officer and a member of the optionsXpress Board of Directors. Mr. Fisher is a member of the Board of Directors of GrubHub, Inc. and serves as chairman of its audit committee and a member of its compensation committee. From January 2008 through October 2011, Mr. Fisher served as a member of the Board of Directors of CBOE Holdings, Inc. From 2001 through 2004, Mr. Fisher served as Chief Financial Officer at Potbelly Sandwich Works. Mr. Fisher also served as Chief Financial Officer of RBC Mortgage from 2000 through 2001 and of Prism Financial from December 1998 through January 2001. Mr. Fisher received his bachelor’s degree in Finance from the University of Illinois at Champaign and his Juris Doctor from Northwestern University School of Law. Mr. Fisher’s experience as Chief Executive Officer of a public company and his previous years of service as the Chief Financial Officer of several organizations provides valuable financial knowledge and valuable insight on reporting to the Board as well as to the Company’s Audit Committee on which he serves.

Daniel M. Friedberg has served on our Board since April 2014. Mr. Friedberg has been President and Chief Executive Officer of Sagard Capital Partners Management Corporation, the investment manager of Sagard, since its founding in 2005. Since 2005, he has also served as a Vice President of Power Corporation of Canada, a diversified international management and holding company. Prior to that, he was a Partner at Bain & Company. Mr. Friedberg joined Bain & Company in 1987 in the London office, and was a founder of the Toronto office in 1989 and the New York office in 2000. Mr. Friedberg served as a director of X-Rite, Incorporated from 2008 to 2012 and has served on the Board of Directors of GP Strategies since December 2009 and joined the Board of Directors of Performance Sports Group, Ltd. in April 2016. Mr. Friedberg brings to the Board experience in investment management, which provides perspective into organizational and operational management as well as strategic planning matters.

J. Patrick Gallagher, Jr. has served on our Board since August 2011. Mr. Gallagher is currently Chairman, President and Chief Executive Officer of Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm. He began his career with Gallagher in 1974. In addition to his corporate responsibilities, Mr. Gallagher serves on the boards of the American Institute for Chartered Property Casualty Underwriters and the International Insurance Foundation. He also serves on the Advisory Council for Boys Hope/Girls Hope and the Board of Advisors for Catholic Charities. He is a member of the Economic Club of Chicago, the Executive Club of Chicago and the Commercial Club of Chicago. Mr. Gallagher holds a Bachelor of Arts in Government from Cornell University. Mr. Gallagher’s 19 years as the Chief Executive Officer of a publicly-listed services business provides valuable insight and perspective to the Company.

Julie M. Howard has served on our Board since October 2012. Ms. Howard is currently Chairman and Chief Executive Officer of Navigant Consulting, Inc. Prior to becoming Chief Executive Officer of Navigant Consulting in March 2012, Ms. Howard served as President beginning in 2006 and Chief Operating Officer beginning in 2003. Ms. Howard also serves as a member of the Medical Center Board for Lurie Children's Hospital. Ms. Howard formerly served on the Board of Directors for Kemper Corporation, including service on its Audit, Compensation and Nominating and Governance Committees, the Board of Directors for the Association of Management Consulting Firms, the Dean's Advisory Board of the Business School at the University of Wisconsin-Madison, and the Board of Governors for the Metropolitan Planning Council of Chicago. Ms. Howard is a founding member of the Women’s Leadership and Mentoring Alliance. Ms. Howard holds a Bachelor of Science in Finance from the University of Wisconsin. She has also participated in Harvard Business School Executive Education programs and completed the

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Corporate Governance program at Stanford University. Ms. Howard’s business experience and involvement with strategic and operational programs, development of growth and profitability initiatives and regular interaction with a wide range of corporate constituents contributes unique perspectives and skill sets to the Board in its oversight of the Company’s business and its respective strategic initiatives.

Linda S. Wolf has served on our Board since November 2006. Ms. Wolf retired as Chairman and Chief Executive Officer of Leo Burnett Worldwide, a global advertising agency, in April 2005. She had served as Leo Burnett Worldwide’s Chairman and Chief Executive Officer since January 2001 and as President of Leo Burnett USA from July 1996 to December 2000. From March 1992 to June 1996, she was an Executive Vice President responsible for Business Development at Leo Burnett USA. Ms. Wolf joined the Board of Directors of Wal-Mart Stores Inc. in 2005. She is the Chairperson on its Compensation, Nominating and Governance Committee and also serves on its Technology and eCommerce Committee. Ms. Wolf joined the Board of Wrapports LLC in 2012. She is a trustee for investment funds advised by the Janus Capital Group Inc. She is also a director of Lurie Children’s Hospital, The Chicago Council on Global Affairs, the Chicago Community Trust and the Rehabilitation Institute of Chicago. Ms. Wolf holds a bachelor’s degree from Ohio Wesleyan University. As a former senior executive of a global advertising agency, Ms. Wolf brings to the Board extensive senior executive and global leadership experience, including business development, marketing, operations and strategic planning. Ms. Wolf also strengthens the Board’s global perspective and governance expertise.

Required Vote

A nominee for director must receive more votes “FOR” his or her election than votes “AGAINST” such nominee as described above.

Recommendation of the Board of Directors

THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL NOMINEES NAMED ABOVE.


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Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

Ernst & Young LLP has served as the Company’s independent registered public accounting firm since March 2006 and has been appointed by the Audit Committee to continue as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016 . In the event that ratification of this selection is not approved by the affirmative vote of the holders of a majority of the shares of common stock of the Company represented at the annual meeting in person or by proxy and entitled to vote on the item, the Audit Committee and the Board of Directors will review the Audit Committee’s future selection of an independent registered public accounting firm.

Representatives of Ernst & Young LLP will be present at the annual meeting. The representatives will have an opportunity to make a statement and will be available to respond to appropriate questions.

Required Vote

The affirmative vote of the holders of a majority of the Company’s common stock present at the annual meeting in person or by proxy and entitled to vote on this proposal is required to approve the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the current fiscal year.

Recommendation of the Board of Directors

THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016 .

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Proposal 3: Reapproval of the Material Terms of Performance-Based Awards under the Annual Incentive Plan

A proposal will be presented at the annual meeting to reapprove the material terms of performance-based awards under the InnerWorkings, Inc. Annual Incentive Plan (the “Annual Incentive Plan”), in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Annual Incentive Plan provides incentive award opportunities to our officers, and was originally approved by our shareholders in August 2006 in connection with the Company’s initial public offering. The material terms of performance-based awards under the Annual Incentive Plan were most recently approved by our shareholders in 2011. The Annual Incentive Plan was amended and restated most recently effective January 1, 2016 to implement certain minor clarifying and technical changes.
Section 162(m) of the Code limits the deductibility for federal income tax purposes of compensation in excess of $1 million per year for the chief executive officer and the three other highest compensated officers (other than the chief financial officer) (the “Covered Employees”) unless such compensation qualifies as “performance-based compensation” under the Code. One of the requirements of performance-based compensation for purposes of Section 162(m) of the Code is that the material terms of the performance goals under which compensation may be paid must be disclosed to and reapproved by the Company’s stockholders every five years. The material terms of the performance goals used to determine compensation payable under the Annual Incentive Plan include (i) the classes of individuals eligible to receive bonus awards thereunder; (ii) the types of business criteria upon which the payments of such awards are based; and (iii) the maximum amount of bonuses that can be paid during a specified period to any participant under the Annual Incentive Plan. With respect to awards under the Annual Incentive Plan, each of these issues is discussed below, and stockholder approval of this proposal will also constitute approval of the material terms of the performance goals thereunder. However, nothing in this proposal precludes the Company or the Compensation Committee, which administers the Annual Incentive Plan, from granting awards that do not qualify for tax deductibility under Section 162(m) of the Code, nor is there any guarantee that awards intended to qualify for tax deductibility under Section 162(m) of the Code will ultimately be viewed as so qualifying by the Internal Revenue Service.
A summary of the material features of the Annual Incentive Plan follows. This summary, however, does not purport to be a complete description of all provisions of the Annual Incentive Plan and is qualified in its entirety by the copy of the Annual Incentive Plan set forth in Appendix A hereto.
Eligibility
Eligibility to participate in the Annual Incentive Plan is limited to substantially all regular full-time and part-time employees. Temporary employees, any independent contractors, and certain other specified classifications are not eligible to participate in the Annual Incentive Plan.
Performance Criteria
The Compensation Committee shall use any one or more of the following financial measures to establish objective performance goals under the Annual Incentive Plan: earnings before interest and taxes (EBIT); earnings before interest, taxes, depreciation and amortization (EBITDA); net earnings; operating earnings or income; earnings growth; net income (absolute or competitive growth rates comparative); net income per share; cash flow, including operating cash flow, free cash flow, discounted cash flow return on investment, and cash flow in excess of cost of capital; earnings per share; return on shareholders' equity (absolute or peer-group comparative); stock price (absolute or peer-group comparative); absolute and/or relative return on common shareholders' equity; absolute and/or relative return on invested capital; absolute and/or relative return on assets; economic value added (income in excess of cost of capital); customer satisfaction; expense reduction; ratio of operating expenses to operating revenues; gross revenue or revenue by pre-defined business segment (absolute or competitive growth rates comparative); revenue backlog; margins realized on delivered services; total shareholder return; debt-to-capital ratio or market share. The Compensation Committee may specify any reasonable definition of the financial measures it uses. Such definitions may provide for reasonable adjustments and may include or exclude items, including but not limited to: realized investment gains and losses; items determined to be unusual in nature, infrequent in occurrence or unusual in nature and infrequent in occurrence; other unusual or non-recurring items; gains or losses on the sale of assets; changes in accounting principles or the application thereof; currency fluctuations, acquisitions, divestitures, or necessary financing activities; recapitalizations, including stock splits and dividends; expenses for restructuring or productivity initiatives; and other objective non-financial measures and non-operating items.
Maximum Awards
Employees are eligible to receive bonuses based on meeting operational and financial goals that may be stated (a) as goals of the Company, a subsidiary, or a portion thereof, (b) on an absolute basis and/or relative to other companies, or (c) separately for one or more participants or business units. The objective performance goals for the Annual Incentive Plan are established by our Compensation Committee no later than 90 days after the beginning of the performance period (but not after more than 25%

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of the performance period has elapsed). Bonus payouts are determined within a reasonable time after the end of the performance period. Bonuses may not exceed $5,000,000 for any individual with respect to any performance period.
General
Our Compensation Committee will administer the Annual Incentive Plan and will have the authority to construe, interpret and implement the Annual Incentive Plan and prescribe, amend and rescind rules and regulations relating to the Annual Incentive Plan. The determination of the Compensation Committee on all matters relating to the Annual Incentive Plan or any award agreement will be final, binding and conclusive. The Annual Incentive Plan may be amended or terminated by the Compensation Committee or our Board of Directors. However, the Annual Incentive Plan may not be amended without the prior approval of our stockholders, if such approval is necessary to qualify bonuses as performance-based compensation under Section 162(m) of the Code.
Target bonus amounts for 2016 and 2015 and bonuses awarded for 2015 under the Annual Incentive Plan are discussed in further detail under the headings “2015 Annual Cash Incentives” and “2016 Annual Cash Incentives” in the “EXECUTIVE AND DIRECTOR COMPENSATION - Compensation Discussion & Analysis” section of this proxy statement.
Required Vote
If stockholders do not reapprove the material terms of the performance goals under the Annual Incentive Plan pursuant to this proposal, the Company will not have the ability to grant bonuses to our Covered Employees that are intended to be deductible for tax purposes pursuant to Section 162(m) of the Code.
The affirmative vote of the holders of a majority of the Company’s common stock present at the annual meeting in person or by proxy and entitled to vote on this proposal is required to approve this proposal.
Recommendation of the Board of Directors
THE BOARD RECOMMENDS A VOTE “FOR” THE REAPPROVAL OF THE MATERIAL TERMS OF PERFORMANCE-BASED AWARDS UNDER THE ANNUAL INCENTIVE PLAN.


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Proposal 4: Approval of the Amended and Restated 2006 Stock Incentive Plan

A proposal will be presented at the annual meeting to approve the amended and restated InnerWorkings, Inc. 2006 Stock Incentive Plan, which we refer to as the Plan. The Plan was originally adopted by the Board of Directors effective July 31, 2006 and was amended and restated on June 19, 2008, June 18, 2009, June 16, 2011, June 21, 2012, and June 13, 2014. On April 12, 2016, the Compensation Committee of the Board (which we refer to in this proposal as the Committee) approved the further amendment and restatement of the Plan, subject to stockholder approval. The Plan, as proposed to be amended and restated effective June 3, 2016, (i) increases the maximum number of shares of common stock that may be issued under the Plan by 2,900,000 , from 7,850,000 (a majority of which have been previously granted as set forth in our Equity Compensation Plan Information  table on page 17, plus any shares that are or become available for grant under our prior unit option plans (a majority of which have been previously granted as set forth in our  Equity Compensation Plan Information  table on page 17)) to 10,750,000, (ii) extends the term of the Plan to June 3, 2026; (iii) reiterates the performance goals used in granting performance-based awards under the Plan to be approved by stockholders for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”); (iv) clarifies the individual annual award limits under the Plan and adds a separate annual limit applicable to awards made to non-employee directors; and (v) implements certain other minor clarifying and technical changes to the Plan.
Section 162(m) of the Code
Section 162(m) of the Code limits the deductibility for federal income tax purposes of compensation in excess of $1 million per year for the chief executive officer and the three other highest compensated officers (other than the chief financial officer) unless such compensation qualifies as “performance-based compensation” under the Code. One of the requirements of performance-based compensation for purposes of Section 162(m) of the Code is that the material terms of the performance goals under which compensation may be paid be disclosed to and reapproved by the Company’s stockholders every five years. The material terms of the performance goals used to determine compensation payable under the Plan include (i) the classes of individuals eligible to receive awards thereunder; (ii) the types of business criteria upon which the payments of such awards are based; and (iii) the maximum amount of awards that can be paid during a specified period to any participant under the Plan. With respect to awards under the Plan, each of these issues is discussed below, and stockholder approval of the Plan pursuant to this proposal will also constitute approval of the material terms of the performance goals thereunder. However, nothing in this proposal precludes the Company or the Committee, which administers the Plan, from granting awards that do not qualify for tax deductibility under Section 162(m) of the Code, nor is there any guarantee that awards intended to qualify for tax deductibility under Section 162(m) of the Code will ultimately be viewed as so qualifying by the Internal Revenue Service.
Share Usage and Burn Rate
The Plan is an integral component of the Company’s executive compensation program, which enhances and implements our “pay for performance” philosophy in order to continue to attract, retain, and appropriately motivate the Company’s key employees who drive long-term value creation. In determining to approve the amended and restated Plan, the Committee took into consideration the Company’s effective management of share usage under the Plan to avoid excessive stockholder dilution. Our burn rates for the fiscal years 2013, 2014 and 2015 were 2.20%, 4.32%, and 4.45%, respectively, which represents a three-year average burn rate of 3.66%. These burn rates were calculated using an assumption that each full value award is equivalent to an award of two stock options, which is the assumption used by the proxy advisory firm, ISS. Our unadjusted burn rates for the fiscal years 2013, 2014 and 2015 were 1.33%, 2.91%, and 3.15%, respectively, which represents a three-year unadjusted average burn rate of 2.46%. In addition, our potential equity dilution is approximately 13.32% on a fully diluted basis (determined based on the number of shares subject to outstanding awards that are unvested or unexercised and shares remaining available under our plans for future awards as of March 31, 2016, including the additional 2,900,000 shares of our common stock that we are requesting under the amendment and restatement of the Plan, relative to our fully diluted issued and outstanding shares of common stock as of the record date). Based on our historically judicious use of available shares under the Plan and the fact that continuing to offer equity-based awards is important to our ability to continue to attract, retain and motivate talented executive officers and employees, the Committee has determined that the increase in the number of shares reserved for issuance under the Plan is reasonable and appropriate.
A summary of the material provisions of the Plan, as amended and restated, is set forth below. This summary is qualified in its entirety by reference to the provisions of the Plan, which is attached as Appendix B. Unless otherwise indicated, terms used in this summary shall have the meanings set forth in the Plan.

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Description of the Plan
Purpose of the Plan
The Plan was established by the Company to:
promote the success and enhance the value of the Company by linking the personal interests of participants to those of Company stockholders and by providing participants with an incentive for outstanding performance; and
provide flexibility to the Company in its ability to motivate, attract, and retain the services of participants upon whose judgment, interest and special effort the successful conduct of its business is largely dependent.

The Plan permits the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock awards and forms of incentive compensation to all participants in the Plan. Any option granted under the Plan may be either an incentive stock option, which we refer to as an ISO, or a non-qualified stock option, which we refer to as an NQSO.
Eligibility and Limits on Awards
Any employee, consultant or director of the Company or an affiliate is eligible to receive awards under the Plan. As of December 31, 2015, the Company and its affiliates had approximately 1,600 employees and independent contractors and seven non-employee directors. The specific employees, consultants and directors who will be granted awards under the Plan and the type and amount of any such awards will be determined by the Committee or such person or persons to whom the Committee has delegated this authority under the Plan.
The Plan limits the maximum amount of awards that may be granted to participants. The maximum number of shares of our common stock that may be delivered to participants and their beneficiaries under the Plan is 10,750,000 (plus any shares that are or become available for grant under our prior unit plan), which includes the 2,900,000 shares added pursuant to the proposed amendment and restatement and would leave approximately 3,113,106 shares available for grants under the Plan on and after March 31, 2016 (consisting of 213,106 shares available for issuance as of March 31, 2016, plus the 2,900,000 proposed additional shares). The maximum number of shares of common stock that may be delivered to participants and their beneficiaries with respect to ISOs under the Plan is 1,000,000 shares. The aggregate awards that may be granted to any one participant during any one calendar year shall not exceed: (i) 500,000 shares subject to options or stock appreciation rights; (ii) 500,000 shares subject to restricted stock, restricted stock units, performance shares, or any other awards (other than options and stock appreciation rights), which are determined by reference to the value of shares or appreciation in value thereof, to the extent that such awards are intended to be performance-based for purposes of Section 162(m) of the Code; and (iii) $5,000,000 with respect to any cash-based awards, to the extent that such awards are intended to be performance-based for purposes of Section 162(m) of the Code. Notwithstanding the foregoing, the maximum number of shares that may be granted in a calendar year to any one participant who is a non-employee director under all types of awards available under the Plan, when taken together with any cash fees paid to such non-employee director with respect to his or her service as a director in such calendar year, will not exceed $400,000 in total value (calculating the value of any such awards based on the fair market value at the time of grant for financial reporting purposes).
Administration
The authority to control and manage the operation and administration of the Plan is vested in the Committee. To the extent not prohibited by applicable law or the applicable rules of any stock exchange, the Board in its discretion may determine that the Plan will be administered by another committee appointed by the Board whose composition satisfies the “nonemployee director” requirements of Rule 16b-3 under the Securities Exchange Act of 1934, the “independent director” requirements of NASDAQ and the “outside director” provisions of Section 162(m) of the Code or any successor regulations or provisions.
The Committee has the authority and discretion to select employees, directors and consultants to participate in the Plan, determine the sizes and types of awards, determine the terms and conditions of awards in a manner consistent with the Plan, construe and interpret the Plan and any agreement or instrument entered into under the Plan, establish, amend or waive rules and regulations for the Plan’s administration, amend the terms and conditions of any outstanding award to the extent they are within the discretion of the Committee as provided in the Plan, and make all other determinations that may be necessary or advisable for the administration of the Plan.
Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may delegate some or all of its authority under the Plan to any person or persons selected by it.

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Shares Reserved for Awards
Subject to the stockholders’ approval of this amendment and restatement, the maximum number of shares of our common stock that may be delivered under the Plan is 10,750,000 shares (plus shares that are or become available for grant under our prior unit option plans) of which approximately 3,113,106 will be available for future grants under the Plan on or after March 31, 2016 (consisting of 213,106 shares available for issuance as of March 31, 2016, plus the 2,900,000 proposed additional shares). The closing price of the Company’s common stock on the NASDAQ Global Market on April 8, 2016 was $8.15 per share.
The table below quantifies, as of December 31, 2015 and March 31, 2016, without taking into account the proposed amendment, the number of stock option awards outstanding under the Plan, unvested restricted stock awards (with full voting rights) outstanding under the Plan, and shares available for issuance pursuant to future awards under the Plan. If approved, the amendment would increase the available share pool by 2,900,000 .
 
December 31, 2015
 
March 31, 2016
 
Shares
 
Weighted Average Exercise Price
 
Weighted Average Remaining Life
 
Shares
 
Weighted Average Exercise Price
 
Weighted Average Remaining Life
Shares currently available for grant under the 2006 Stock Incentive Plan
677,450

 
 
 
 
 
213,106

 
 
 
 
Shares subject to outstanding stock options rights under the 2006 Stock Incentive Plan
4,060,384

 
$
8.37

 
5.89

 
4,218,549

 
$
8.39

 
6.31

Shares subject to outstanding, unvested restricted stock awards rights under the 2006 Stock Incentive Plan
957,163

 
 
 
 
 
1,014,605

 
 
 
 
To the extent any shares of our common stock covered by an award are not delivered because the award is forfeited, canceled, or otherwise terminated, such shares shall not be deemed to have been delivered for purposes of determining the number of shares of our common stock available for delivery under the Plan. As amended and restated, the Plan provides that, to the extent shares are not delivered by reason of their being withheld to cover taxes (other than with respect to options or stock appreciation rights), such shares shall be not be deemed to have been delivered and shall be available for issuance under the Plan, and to the extent (i) shares are not delivered by reason of their being withheld to cover taxes or the exercise price of an award of options or stock appreciation rights or (ii) share-settled stock appreciation rights are exercised, such shares shall be deemed to have been delivered and shall not be available for issuance under the Plan.
In the event of a corporate transaction involving the Company (including, without limitation, any merger, reorganization, consolidation, recapitalization, separation, liquidation, split-up, or share combination), the Committee shall adjust awards in any manner determined by the Committee to be an appropriate and equitable means to prevent dilution or enlargement of rights.
Stock Options
The Plan permits the granting of stock options. The grant of an option entitles the participant to purchase shares of our common stock at an exercise price established by the Committee. Any option granted under the Plan may be either an ISO or an NQSO, as determined in the discretion of the Committee.
An option shall become vested and exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee and set forth in the applicable award agreement. In no event, however, shall an option expire later than ten years after the date of its grant. The exercise price of each option shall be established by the Committee; provided, however, that the exercise price shall not be less than 100% of the fair market value of a share of our common stock on the date of grant.

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The full exercise price for shares of our common stock purchased upon the exercise of any option shall be paid at the time of such exercise:
in cash;
by tendering previously acquired shares (provided that the shares that are tendered must have been held by the participant for at least six months prior to the payment date) duly endorsed for transfer to the Company or shares issuable to the participant upon exercise of the option;
by a combination of the above-mentioned payment methods; or
by any other means the Committee determines to be consistent with the Plan's purposes and applicable law (including through broker-assisted cashless exercises).

Except for either adjustments in connection with a corporate transaction for the purpose of preserving the benefits or potential benefits of the awards, or reductions of the exercise price approved by the Company’s stockholders, the exercise price for any outstanding option may not be decreased after the date of grant. This prohibition on repricing without stockholder approval also applies to canceling an option and issuing an option with a lower exercise price, or canceling an underwater option and issuing a substitute award.
Stock Appreciation Rights
The Plan permits the granting of stock appreciation rights (“SARs”). The exercise price of a SAR is determined by the Committee, but must be equal to or greater than the fair market value of a share of our common stock on the date of grant. The term of a SAR may not exceed ten years. A SAR may be exercised upon the terms and conditions imposed by the Committee. Upon exercise of a SAR, a participant will receive payment equal to the number of SARs exercised multiplied by the excess of the fair market value of a share of our common stock on the date of exercise over the exercise price. Payment of a SAR may be made in cash, shares of our common stock, or a combination of cash and shares, as determined by the Committee.
Except in certain recapitalization events, a SAR award may not be modified to specify a lower exercise price without the approval of our stockholders. This prohibition on repricing without stockholder approval also applies to canceling a SAR and issuing a SAR with a lower exercise price or canceling an underwater SAR and issuing a substitute award. The Plan does not permit grants of dividend equivalent rights with respect to SARs.
Restricted Stock and Restricted Stock Units
The Plan permits the granting of restricted stock and restricted stock units. The grant of a share of restricted stock entitles the participant to receive a share of our common stock upon completing a specified period of service with the Company or its affiliates and/or the achievement of specific performance objectives. The grant of a restricted stock unit entitles the participant to receive a payment of a share of our common stock, which vests upon completing a specified period of service with the Company or its affiliates and/or the achievement of specific performance objectives.
Grants of restricted stock and restricted stock units become vested in accordance with such terms and conditions and during such periods as may be established by the Committee and set forth in the applicable award agreement. Selected participants may elect (or be required, as to bonuses) to defer a portion of their salary and/or bonus in exchange for restricted stock units. Each participant who elects to make a deferral will be credited under the Plan with a number of restricted stock units equal to no less than the amount of the deferral divided by the fair market value of a share of our common stock on the date of the grant of the restricted stock units.
Participants holding shares of restricted stock during the restriction period may exercise full voting rights with respect to those shares, unless otherwise determined by the Committee. In addition, during the restriction period a participant will receive regular cash dividends that are paid with respect to underlying shares of restricted stock, unless otherwise determined by the Committee. If the award agreement governing the restricted stock units permits it, during the restriction period a participant may receive regular cash dividend equivalents paid with respect to restricted stock units.
Performance Shares; Performance Criteria
The Plan permits the granting of performance shares. Each performance share must have an initial value equal to the fair market value of a share of our common stock on the date of grant. The Committee will set the performance periods and performance objectives that, depending on the extent to which they are met, will determine the number of performance shares payable in cash, shares or a combination of cash and shares, as applicable.

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The performance measures used for purposes of awards designed to qualify for the performance-based exception from the tax deductibility limitations of Section 162(m) of the Code and any regulations promulgated thereunder will be chosen by the Committee from among the following alternatives:
earnings before interest and taxes;
earnings before interest, taxes, depreciation and amortization;
net earnings;
operating earnings or income;
earnings growth;
net income (absolute or competitive growth rates comparative);
net income applicable to shares of common stock;
cash flow, including operating cash flow, free cash flow, discounted cash flow return on investment, and cash flow in excess of cost of capital;
earnings per share of common stock;
return on stockholders’ equity (absolute or peer-group comparative);
stock price (absolute or peer-group comparative);
absolute and/or relative return on common stockholders’ equity;
absolute and/or relative return on capital;
absolute and/or relative return on assets;
economic value added (income in excess of cost of capital);
customer satisfaction;
expense reduction;
ratio of operating expenses to operating revenues;
gross revenue or revenue by pre-defined business segment (absolute or competitive growth rates comparative);
revenue backlog;
margins realized on delivered services; and
total stockholder return (absolute or relative to a peer group).

The Committee may specify any reasonable definition of the performance measure(s) it uses. Such definitions may provide for reasonable adjustments and may include or exclude items, including, but not limited to: realized investment gains and losses; items determined to be unusual in nature, infrequent in occurrence or unusual in nature and infrequent in occurrence; other unusual or non-recurring items; gains or losses on the sale of assets; changes in accounting principles or the application thereof; currency fluctuations, acquisitions, divestitures, or necessary financing activities; recapitalizations, including stock splits and dividends; expenses for restructuring or productivity initiatives; and other objective non-financial measures and non-operating items (in each case, to the extent not inconsistent with Section 162(m) of the Code, if applicable).
The Committee will have the discretion to adjust targets set for pre-established performance objectives; however, awards designed to qualify for the performance-based exception may not be adjusted upward, except to the extent permitted under Section 162(m) of the Code, to reflect accounting changes or other events. Additional provisions relating to the setting of the performance goal and certifying achievement of performance against the goal and the amount earned apply to awards made to executive officers that are intended to meet the performance-based exception from the tax deductibility limitations of Section 162(m) of the Code.
We have generally attempted to structure the Plan so that remuneration attributable to stock options and other awards will not be subject to a deduction limitation contained in Section 162(m) of the Code; however, nothing in this proposal or in the Plan precludes granting awards that are not intended to qualify for tax deductibility under Section 162(m) of the Code.
Other Stock Awards
Subject to the terms of the Plan, other stock awards may be granted to participants in such amounts and upon such terms, and at any time from time to time, as the Committee determines.
Transfers
Except as otherwise provided by the Committee and except as designated by the participant by will or by the laws of descent and distribution, awards under the Plan are not transferable. However, subject to the conditions of the Plan and the applicable award agreement and any such additional conditions as the Committee may impose, a participant may transfer NQSOs as a gift to certain trusts maintained solely for the benefit of the participant’s spouse or children or designate the trusts to which the Company may issue NQSOs.

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Change of Control
In the event of a change in control (defined in the Plan attached hereto as Appendix B), the Committee shall have the discretion to accelerate the vesting of awards, eliminate any restrictions applicable to awards, deem the performance measures to be satisfied, or take such other action as it deems appropriate, in its sole discretion.
Federal Income Tax Consequences
Nonqualified Stock Options
Under the current tax rules, NQSOs granted under the Plan will not be taxable to a participant at grant, but generally will result in taxation at exercise, at which time the participant will recognize ordinary income in an amount equal to the difference between the option’s exercise price and the fair market value of the shares on the exercise date. The Company will be entitled to deduct a corresponding amount as a business expense in the year the participant recognizes this income.
Incentive Stock Options
Under the current tax rules, an employee will generally not recognize ordinary income on receipt or exercise of an ISO so long as he or she has been an employee of the Company or its subsidiaries from the date the ISO was granted until three months before the date of exercise; however, the amount by which the fair market value of the shares on the exercise date exceeds the exercise price is generally an adjustment in computing the employee’s alternative minimum tax in the year of exercise. If the employee holds the shares of our common stock received on exercise of the ISO for one year after the date of exercise (and for two years from the date of grant of the ISO), any difference between the amount realized upon the disposition of the shares and the amount paid for the shares will be treated as long-term capital gain (or loss, if applicable) to the employee. If the employee exercises an ISO and satisfies these holding period requirements, the Company may not deduct any amount in connection with the ISO. If an employee exercises an ISO but engages in a “disqualifying disposition” by selling the shares acquired on exercise before the expiration of the one- and two-year holding periods described above, the employee generally will recognize ordinary income (for regular income tax purposes only) in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the shares on the date of exercise over the exercise price; and any excess of the amount realized on the disposition over the fair market value on the date of exercise will be taxed as long- or short-term capital gain (as applicable). If, however, the fair market value of the shares on the date of disqualifying disposition is less than on the date of exercise, the employee will recognize ordinary income equal only to the difference between the amount realized on the disqualifying disposition and the exercise price. In either event, the Company will be entitled to deduct an amount equal to the amount constituting ordinary income to the employee in the year of the disqualifying disposition.
Stock Appreciation Rights
Under the current tax rules, a participant will generally not recognize income, and we will not be entitled to a deduction from income, at the time of grant of a SAR. When the SAR is exercised, the participant will recognize ordinary income equal to the difference between the aggregate exercise price and the fair market value, as of the date the SAR is exercised, of our common stock. The participant’s tax basis in shares acquired upon exercise of a stock-settled SAR will equal the amount recognized by the participant as ordinary income. We will generally be entitled to a federal income tax deduction, in the tax year in which the SAR is exercised, equal to the ordinary income recognized by the participant as described above. If the participant holds shares acquired through exercise of a stock-settled SAR for more than one year after the exercise of the SAR, the capital gain or loss realized upon the sale of those shares will be a long-term capital gain or loss. The participant’s holding period for shares acquired upon the exercise of a stock-settled SAR will begin on the date of exercise.
Restricted Stock and Restricted Stock Units
The Company is required to withhold taxes to comply with federal and state laws applicable to the value of shares of restricted stock when they vest. Upon the lapse of the applicable restrictions, the value of the restricted stock generally will be taxable to the participant as ordinary income and deductible by the Company. Restricted stock units generally are subject to tax at the time of payment and the Company will generally have a corresponding deduction when the participant recognizes income.
Performance Shares
Performance shares generally are subject to tax at the time of payment and we generally will have a corresponding deduction when the participant recognizes income.

15



Section 409A
To the extent that Section 409A of the Code is applicable, we intend to administer the Plan and any grants made thereunder in a manner consistent with the requirements of Section 409A, and any regulations and other guidance promulgated with respect to Section 409A by the U.S. Department of Treasury or Internal Revenue Service. The Committee may permit or require a participant to defer receipt of cash or shares of common stock that would otherwise be due to the participant under the Plan or otherwise create a deferred compensation arrangement (as defined in Section 409A of Code) in accordance with the terms of the Plan.
The deferral of an award under the Plan or compensation otherwise payable to the participant will be set forth in the terms of the award agreement or as elected by the participant pursuant to such rules and procedures as the Committee may establish. Any such initial deferral election by a participant will designate a time and form of payment and will be made at such time as required by and in accordance with Section 409A. Any deferred compensation arrangement created under the Plan will be distributed at such times as provided in an award agreement or a separate election form and in accordance with Section 409A. No distribution of a deferral will be made pursuant to the Plan if the Committee determines that a distribution would (i) violate applicable law; (ii) be nondeductible pursuant to Section 162(m) of the Code; or (iii) violate a loan covenant or similar contractual requirement of the Company causing material harm to the Company. In any such case, a distribution will be made at the earliest date at which the Committee determines such distribution would not trigger clause (i), (ii) or (iii) above. All awards under the Plan are intended either (i) to be exempt from Section 409A or (ii) to comply with Section 409A, and will be administered in a manner consistent with that intent.
Withholding
The Company has the right to deduct or withhold, or require the participant to remit to the Company, the amount the Company determines is necessary to satisfy federal, state and local taxes, domestic or foreign, required by applicable law or regulation to be withheld with respect to any taxable event arising under the Plan. The Company may withhold shares of our common stock to satisfy the minimum withholding tax required upon a taxable event arising under the Plan (or another amount, if determined by the Committee not to result in adverse accounting consequences), but the participant may elect, subject to the approval of the Committee, to deliver to the Company the necessary funds to satisfy the withholding obligation, in which case there will be no reduction in the shares of our common stock otherwise distributable to the participant.
Tax Advice
The preceding discussion is based on U.S. income tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the U.S. income tax aspects of the Plan. A participant may also be subject to state and local income taxes in connection with the grant of awards under the Plan. The Company suggests that participants consult with their individual tax advisors to determine the applicability of the tax rules to the awards granted to them in their personal circumstances.
Other Information
The Plan was originally effective on July 31, 2006. The amendment and restatement of the Plan will be effective June 3, 2016, subject to stockholder approval, and, subject to the right of the Committee to amend or terminate the Plan, will remain in effect as long as any awards under it are outstanding; provided, however, that no awards may be granted under the Plan after June 3, 2026.
The Committee may, at any time, amend, suspend or terminate the Plan, and the Committee may amend any award agreement; provided that no amendment may, in the absence of written consent to the change by the affected participant, materially alter or impair any rights or obligations under an award already granted under the Plan.
New Plan Benefits and Other Matters
The Committee has discretion to determine the type, terms and conditions and recipients of awards granted under the Plan. Other than certain awards of restricted stock and stock options granted subject to our stockholders’ approval of this amendment and restatement, it is not possible to determine the amount of the awards that will be received by any director, officer, consultant or employee of the Company under the Plan if the amendment and restatement of the Plan is approved. The approximate dollar value of equity awards that we expect to grant following our stockholders’ approval of this amendment and restatement is set forth below.


16



Name or Group
 
Total Dollar Value (1)
Eric D. Belcher
 
$
1,400,000

Jeffrey P. Pritchett
 
$
500,000

Ronald C. Provenzano
 
$
425,000

Robert L. Burkart
 
$
125,000

All executive officers as a group
 
$
2,450,000

All non-employee directors as a group
 
$
700,000

All non-executive employees as a group (2)
 
$
3,500,000

(1)
For all grant recipients who are executive officers, amounts reflect the total grant value approved by the Committee, which will be awarded 50% in the form of stock options and 50% in the form of restricted stock. For the non-employee directors, amounts are equal to the total value of all restricted stock awards that will be issued to our non-employee directors for 2016. For the non-executive employees, amounts reflect the total grant value approved by the Committee, which will be awarded in the form of stock options and/or restricted stock. The number of shares of restricted stock and stock options granted will depend on the value of a share of stock on the grant date.
(2)
The total dollar value of equity awards to be granted to all non-executive employees as a group, subject to approval of the Plan’s amendment and restatement, is an estimate; the actual total dollar value of equity awards may differ from the amount disclosed.

Equity Compensation Plan Information
The following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2015.
Plan Category
 
Number of Securities to be Issued Upon Exercise of Outstanding
Options (a)
 
Weighted Average Exercise Price of Outstanding Options
 
Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
 
Equity compensation plans approved by security holders (1)
 
4,060,384

 
$
8.37

 
677,450

(2  
)  
Equity compensation plans not approved by security holders (3)
 

 

 

 
Total
 
4,060,384

 
$
8.37

 
677,450

 
(1)
Includes our 2004 Unit Option Plan, which was merged with our 2006 Stock Incentive Plan.
(2)
Includes shares remaining available for future issuance under our 2006 Stock Incentive Plan.
(3)
There are no equity compensation plans in place not approved by our stockholders.

Required Vote
The affirmative vote of the holders of a majority of the Company’s common stock present at the annual meeting in person or by proxy and entitled to vote on this proposal is required to approve this proposal to amend and restate our 2006 Stock Incentive Plan.
Recommendation of the Board of Directors
THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF THE AMENDED AND RESTATED 2006 STOCK INCENTIVE PLAN.


17



BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Summary of Corporate Governance Practices

We are committed to high standards of ethical and business conduct and strong corporate governance practices. This commitment is highlighted by the practices described below as well as the information contained on our website at www.inwk.com on the “Investor” page under the link “Corporate Governance.” In addition, we engage in shareholder outreach activities, which have informed our Board’s decisions concerning governance and related practices, as described below.

Our directors are elected annually by majority vote for one year terms.
A nominee for director must receive more votes “FOR” his or her election than votes “AGAINST” such director.
We currently separate the roles of Chairman of the Board and Chief Executive Officer.
Our Board and its committees have an advisory role in risk oversight for the Company.
Seven of our eight director nominees are independent.
Each of our key Board committees (Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee) is comprised entirely of independent directors and operates under a written charter.
We do not currently have in place, nor have we ever had, a shareholder rights plan, commonly known as a “poison pill.”

Board Leadership Structure

Our Board is led by an independent Chairman, Jack M. Greenberg. We believe that the current Board leadership structure for the Company is appropriate in light of the differences between the roles of Chairman of the Board and Chief Executive Officer. The Chief Executive Officer is responsible for setting the strategic direction of the Company and for the day-to-day leadership and performance of the Company, whereas the Chairman of the Board provides guidance to the Chief Executive Officer, is responsible for chairing Board meetings, including executive sessions with Board members, and advising on agenda topics and corporate governance matters. We have had this leadership structure since our inception; however, the Board recognizes that other leadership structures could be appropriate depending on the circumstances and, therefore, regularly re-evaluates this structure.

Board of Directors Role in Risk Oversight

Our Board and its committees have an advisory role in risk oversight for the Company. Company management maintains primary responsibility for the risk management of the Company, however, the Audit Committee and the Board review a risk assessment of the Company on a regular basis. While it is not possible to identify and mitigate all potential risks, the Board relies on the representations of management, the external audit of the financial information, the Company’s systems of internal controls and the historically conservative practices of the Company to provide comfort on the Company’s ability to manage its risks. Management’s discussion of current risk factors are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 .

Meetings and Committees of the Board of Directors

During 2015 , the Board held six meetings. During 2015 , each director attended at least 75% of the aggregate of the total number of meetings of the Board held during the period in which he or she was a director and the total number of meetings held by all of the committees of the Board on which he or she served. The Board has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. The Audit, Compensation and Nominating and Corporate Governance Committees were formally established in August 2006 in connection with the Company’s initial public offering and operate under written charters adopted by the Board. The Executive Committee was established in April 2010.

Audit Committee.   Charles K. Bobrinskoy, David Fisher, Julie M. Howard and Linda S. Wolf serve on the Audit Committee. Mr. Bobrinskoy serves as the chairman of our Audit Committee and, subject to his re-election to serve an additional one-year term, the Board has elected Mr. Bobrinskoy to continue as chairman of the Audit Committee. The Audit Committee is composed of independent non-employee directors and is responsible for, among other things, supervising internal audit and reviewing internal financial controls and accounting principles to be employed in the preparation and review of our financial statements. In addition, the Audit Committee has authority to engage public accountants to audit our annual financial statements and determine the scope of the audit to be undertaken by such accountants. Charles K. Bobrinskoy is our Audit Committee financial expert under the SEC rule implementing Section 404 of the Sarbanes-Oxley Act of 2002. During 2015 , the Audit Committee held seven meetings.

Compensation Committee.   Charles K. Bobrinskoy, David Fisher, J. Patrick Gallagher, Jr., Jack M. Greenberg, Julie M. Howard, Linda S. Wolf and Daniel M. Friedberg serve on the Compensation Committee. Mr. Gallagher serves as the chairman of our Compensation Committee and, subject to his re-election to serve an additional one-year term, the Board has elected Mr.

18



Gallagher to continue as chairman of the Compensation Committee. The Compensation Committee is composed of independent non-employee directors, each of whom is an “independent director” as required by the applicable listing standards of NASDAQ (including the specific independence requirements for compensation committee members), and is responsible for, among other things, reviewing and approving compensation of our Chief Executive Officer and our other executive officers. Additionally, the Compensation Committee reviews and recommends to our Chief Executive Officer and the Board policies, practices and procedures relating to the compensation of managerial employees and the establishment and administration of certain employee benefit plans for managerial employees. The Compensation Committee has the authority to administer our Stock Incentive Plan, and to advise and consult with our officers regarding managerial personnel policies. In 2015, the Compensation Committee engaged Towers Watson to perform certain compensation consulting services related to benchmarking the Company’s executive compensation. In connection with this engagement, the Compensation Committee requested that Towers Watson:

review the appropriateness of our proxy peer group based on an evaluation of our size and operations;
provide advice on executive compensation issues; and
assess the extent to which our executive compensation is aligned with performance and market practices.

Towers Watson provided compensation consulting services to the Compensation Committee only on matters for which the Compensation Committee is responsible. Towers Watson did not provide us with any additional services. While the Compensation Committee sought input from Towers Watson on the matters described above, the Compensation Committee is solely responsible for determining the final amount and form of compensation and the level of performance targets. Towers Watson is directly engaged by and reports to the Compensation Committee and does not perform any work for the Company or its executive officers, although it does interact with Company management at the Compensation Committee’s direction. In accordance with the requirements of Regulation S-K, the Company has determined that no conflict has risen in connection with the work of Towers Watson as compensation consultant to the Compensation Committee. See the “EXECUTIVE AND DIRECTOR COMPENSATION — Compensation Discussion and Analysis” section of this proxy statement for discussion of the Company’s processes and procedures for considering and determining executive and director compensation. During 2015, the Compensation Committee held four meetings.

Executive Committee.   On April 9, 2010, the Board of Directors voted to create an Executive Committee effective June 24, 2010. The Executive Committee is appointed by the Board of Directors and is authorized to exercise the powers and duties of the Board between regularly scheduled Board meetings and while the Board is not in session. The Executive Committee consists of Eric D. Belcher, Charles K. Bobrinskoy and Jack M. Greenberg. Mr. Belcher serves as the chairman of our Executive Committee. During 2015, the Executive Committee did not meet.

Nominating and Corporate Governance Committee.   J. Patrick Gallagher, Jr., Jack M. Greenberg, Julie M. Howard, Linda S. Wolf and Daniel M. Friedberg serve on the Nominating and Corporate Governance Committee. Ms. Wolf serves as the chairman of our Nominating and Corporate Governance Committee and, subject to her re-election to serve an additional one-year term, the Board has elected Ms. Wolf to continue as chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is composed of independent non-employee directors and is responsible for, among other things, assisting the Board with its responsibilities regarding:

the identification of individuals qualified to become directors;
the selection of the director nominees for the next annual meeting of stockholders;
the selection of director candidates to fill any vacancies on the Board;
the performance, composition, duties and responsibilities of the Board and the committees of the Board;
succession planning for the Chief Executive Officer; and
the operation of the Board with respect to corporate governance matters.

In evaluating and determining whether to nominate a candidate for a position on the Company’s Board, the Nominating and Corporate Governance Committee will consider the candidate’s professional ethics and values, relevant management experience and a commitment to enhancing stockholder value. The Company regularly assesses the size of the Board, whether any vacancies are expected due to retirement or otherwise, and the need for particular expertise on the Board. Candidates may come to the attention of the Nominating and Corporate Governance Committee from current Board members, stockholders, professional search firms, officers or other persons. The Nominating and Corporate Governance Committee will review all candidates in the same manner regardless of the source of recommendation. During 2015 , the Nominating and Corporate Governance Committee held four meetings.

The Nominating and Corporate Governance Committee will consider stockholder recommendations of candidates when the recommendations are properly submitted. Any stockholder recommendations which are submitted under the criteria summarized

19



above should include the candidate’s name and qualifications for Board membership and should be addressed to Ronald C. Provenzano, Corporate Secretary, InnerWorkings, Inc., 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654.

For purposes of potential nominees to be considered at the 2017 annual stockholders’ meeting, the Corporate Secretary must receive this information no earlier than March 5, 2017 and no later than the close of business on April 4, 2017, in accordance with the procedures in the Bylaws. The notice must set forth the candidate’s name, age, business address, residence address, principal occupation or employment, the number of shares beneficially owned by the candidate and information that would be required to solicit a proxy under federal securities law. In addition, the notice must include the stockholder’s name, address and the number of shares beneficially owned (and the period they have been held).

In 2015 , the Company did not engage a third party to identify, evaluate or assist in identifying potential nominees for director.

Director Independence

There are no family relationships among any of the directors or executive officers of the Company. Our Board of Directors has affirmatively determined that the following seven of our eight director nominees are “independent directors” as defined in the rules of NASDAQ: Jack M. Greenberg, Charles K. Bobrinskoy, David Fisher, Daniel M. Friedberg, J. Patrick Gallagher, Jr., Julie M. Howard and Linda S. Wolf. In making the independence determination, the Board considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances that the Board deemed relevant, including the beneficial ownership of the Company’s capital stock by each non-employee director and the transactions involving them as described in the section titled “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.”

In particular, the Board considered the Company’s business relationship with Arthur J. Gallagher & Co., of which Mr. Gallagher serves as Chairman, President and Chief Executive Officer. The Board noted that:

The relationship between the companies preceded Mr. Gallagher’s appointment as director.
Mr. Gallagher is not involved in the transactions or ongoing discussions or negotiations between the parties.
The transactions between the companies are on terms and conditions no more favorable than what is to be expected of an arm’s length transaction.
The relationship between the companies is transactional in nature and does not involve sensitive professional services such as legal or accounting services. Arthur J. Gallagher & Co.’s services to the Company are insurance brokerage and risk management services and Arthur J. Gallagher & Co. is not an insurer of the Company. The Company’s services to Arthur J. Gallagher & Co. are print procurement services.
Amounts involved represent less than 0.2% of each company’s revenues.

After assessing the relationship, the Board concluded that such relationship was not material, would not interfere with Mr. Gallagher’s ability to exercise independent judgment as a director and would not give rise to any undue influence. Therefore, the Board concluded that Mr. Gallagher continues to be an independent director.

Governance Documents

The Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee charters are available at www.inwk.com on the “Investor” page under the link “Corporate Governance.” In addition, the Board has adopted corporate governance guidelines, which are available at www.inwk.com on the “Investor” page under the link “Corporate Governance.” Information on, or accessible through, our website is not a part of, or incorporated by reference into, this proxy statement. For a further discussion of compensation and governance updates, see “EXECUTIVE AND DIRECTOR COMPENSATION — Compensation Discussion and Analysis — Executive Summary.”

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee serves, or has at any time served, as an officer or employee of us or any of our subsidiaries. None of our executive officers has served as a member of the Compensation Committee, or other committee serving an equivalent function, of any other entity, one of whose executive officers served as a member of our Compensation Committee.

Communications with Directors

We value shareholder outreach activities, which serve to inform our Board’s decisions concerning governance and related practices.

20




The Board has also established a process to receive communications from stockholders. Stockholders and other interested parties may contact any member (or all members) of the Board, or the non-management directors as a group, any Board committee or any chair of any such committee by mail. To communicate with the Board, any individual directors or any group or committee of directors, correspondence should be addressed to the Board or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent “c/o Ronald C. Provenzano, Corporate Secretary” at 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654.

All communications received as set forth in the preceding paragraph will be opened by the Corporate Secretary for the sole purpose of determining whether the contents represent a message to our directors. The Corporate Secretary will forward copies of all correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or its committees or that he otherwise determines requires the attention of any member, group or committee of the Board.

Attendance at Annual Meeting

Directors are encouraged, but not required, to attend our annual stockholders’ meeting. Messrs. Belcher and Greenberg attended the 2015 annual meeting of stockholders.

21



STOCK OWNERSHIP

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 8, 2016 (except as indicated below) by:

all persons known by us to own beneficially 5% or more of our outstanding common stock;
each of our directors and director nominees;
each of the named executive officers listed in the “EXECUTIVE AND DIRECTOR COMPENSATION — Executive Compensation — Summary Compensation Table” section of this proxy statement; and
all of our directors and executive officers as a group.

Unless otherwise indicated, the address of each beneficial owner listed below is c/o InnerWorkings, Inc., 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654.
Name and Address
 
Number of Shares
Beneficially
Owned (1)
 
Approximate
Percent of
Class (1)
CERTAIN BENEFICIAL OWNERS (not including directors and executive officers):
 
 
   
 
  

Sagard Capital Partners Management Corp.
325 Greenwich Avenue
Greenwich, CT 06830
 
7,481,023

(2)  
 
13.8
%
Richard A. Heise, Jr.
2221 Old Willow Road
Northfield, IL 60093
 
6,344,907

(3)  
 
11.7
%
Riverbridge Partners LLC
801 Nicollet Mall, Suite 600
Minneapolis, MN 55402
 
3,874,995

(4)  
 
7.1
%
Rutabaga Capital Management
64 Broad Street, 3rd Floor
Boston, MA 02109
 
3,407,346

(5)  
 
6.3
%
DIRECTORS, DIRECTOR NOMINEES AND NAMED EXECUTIVE OFFICERS:
 
 
   
 
*

Eric D. Belcher
 
1,503,516

(6)  
 
2.7
%
Ronald C. Provenzano
 
137,513

(7)  
 
*

Jeffrey P. Pritchett
 
80,000

 
 
*

Robert Burkart
 
85,522

(8)  
 
*

Joseph M. Busky
 
387,494

(9)  
 
*

Ryan K. Spohn
 
53,927

(10)  
 
*

John Eisel
 

 
 
*

Jack M. Greenberg
 
143,332

(11)  
 
*

Linda S. Wolf
 
169,130

(12)  
 
*

Charles K. Bobrinskoy
 
189,346

(12)  
 
*

J. Patrick Gallagher, Jr.
 
104,195

(13)  
 
*

David Fisher
 
66,203

(14)  
 
*

Julie M. Howard
 
57,094

(15)  
 
*

Daniel M. Friedberg
 
7,481,023

(2)  
 
13.8
%
All directors and executive officers as a group (11persons)
 
10,016,874

(16)  
 
18.4
%

22




*
= less than 1%.
(1)
“Beneficial ownership” means any person who, directly or indirectly, has or shares voting or investment power with respect to a security or has the right to acquire such power within 60 days. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of April 8, 2016 are deemed outstanding for computing the ownership percentage of the person holding such options, but are not deemed outstanding for computing the ownership percentage of any other person. The number of shares beneficially owned is determined as of April 8, 2016 , and the percentages are based upon 54,335,124 shares of our common stock outstanding as of April 8, 2016 . Unless otherwise indicated, each stockholder listed below has sole voting and investment power with respect to the shares of common stock beneficially owned by such stockholder.
(2)
Includes 7,466,053 shares of common stock held by Sagard Capital Partners, L.P., a Delaware limited partnership (“Sagard”). Sagard Capital Partners GP, Inc., a Delaware corporation (“GP”), and Sagard Capital Partners Management Corp., a Delaware corporation (“Sagard Management,” and together with Sagard and GP, the “Reporting Persons”) may be deemed to be indirect beneficial owners of such reported shares of common stock. Each of the Reporting Persons disclaims beneficial ownership (as defined in Rule 16a-1(a)(2)) of the securities reported herein except to the extent of its pecuniary interest therein. Mr. Friedberg is the President of Sagard and each of the Reporting Persons.
(3)
Includes 4,013,316 shares owned by Old Willow Partners, LLC and 1,897,418 shares of common stock held by the Heise Family Dynasty Trust, both of which are controlled by Richard A. Heise, Jr. Based solely on a Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) on February 14, 2013.
(4)
Based solely on a Schedule 13G/A filed with the SEC on February 1, 2016 .
(5)
Based solely on a Schedule 13G filed with the SEC on February 11, 2016 .
(6)
Includes options to purchase 1,061,374 shares of common stock which are exercisable within 60 days of April 8, 2016 .
(7)
Includes options to purchase 49,662 shares of common stock, which are exercisable within 60 days of April 8, 2016 .
(8)
Includes options to purchase 54,791 shares of common stock, which are exercisable within 60 days of April 8, 2016 .
(9)
Includes options to purchase 232,393 shares of common stock, which are exercisable within 60 days of April 8, 2016 . Effective March 9, 2015, Mr. Busky resigned from his position as Chief Financial Officer of the Company.
(10)
Includes options to purchase 24,609 shares of common stock, which are exercisable within 60 days of April 8, 2016 . Mr. Spohn served as interim CFO through July 31, 2015.
(11)
Includes options to purchase 37,622 shares of common stock which are exercisable within 60 days of April 8, 2016. Of these options, an option to purchase 30,000 shares is held for the benefit of Mr. Greenberg’s family. Mr. Greenberg may be deemed to have voting and dispositive power over the securities held for the benefit of members of his family. Mr. Greenberg disclaims beneficial ownership of these securities except to the extent of his pecuniary interest.
(12)
Includes options to purchase 87,622 shares of common stock which are exercisable within 60 days of April 8, 2016 .
(13)
Includes 15,620 shares of common stock held by the J. Patrick Gallagher Trust, of which Mr. Gallagher is trustee. Includes options to purchase 5,082 shares of common stock which are exercisable within 60 days of April 8, 2016 .
(14)
Includes options to purchase 1,499 shares of common stock which are exercisable within 60 days of April 8, 2016 .
(15)
Includes 14,800 shares of common stock held by the Julie M. Howard Trust, of which Ms. Howard is trustee.
(16)
Does not include shares held by Mr. Busky, Mr. Spohn, or Mr. Eisel. See notes 9 and 10.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in ownership of our common stock. They are also required to provide us with copies of any forms they file.

Based solely on our review of the reports furnished to us, we believe that during the last fiscal year, all reports filed by our directors and executive officers under Section 16(a) were made timely, except that a Form 4 for Eric Belcher's exercise of stock options on July 14, 2015 was inadvertently filed untimely on July 17, 2015.

23



CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of our business, we have entered into transactions with our directors, officers and 5% or greater stockholders or companies in which they have a material interest. We entered into the transactions set forth below in 2015 , which were approved by our Audit Committee. We believe that we executed these transactions on terms no less favorable to us than we could have obtained from unrelated third parties. Our Audit Committee is responsible for approving related party transactions, as defined in applicable rules promulgated by the SEC. Our Audit Committee operates under a written charter pursuant to which all related party transactions are reviewed for potential conflicts of interest situations. Such transactions must be approved by our Audit Committee.

Relationship with Arthur J. Gallagher & Co.

During 2015 , the Company provided print procurement services to Arthur J. Gallagher & Co. J. Patrick Gallagher, Jr., a member of our Board, is the Chairman, President and Chief Executive Officer of Arthur J. Gallagher & Co. and has a direct ownership interest in Arthur J. Gallagher & Co. The Company billed Arthur J. Gallagher & Co. $1.7 million for these services in 2015 . Additionally, Arthur J. Gallagher & Co. provided insurance brokerage and risk management services to the Company. Arthur J. Gallagher & Co. billed the Company $0.6 million for such services in 2015 . See “BOARD OF DIRECTORS AND CORPORATE GOVERNANCE — Director Independence.”

24



EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of our executive officers as of April 15, 2016 :

Name
 
Age
 
Position
Eric D. Belcher
 
47
 
Chief Executive Officer, President and Director
Jeffrey P. Pritchett
 
40
 
Executive Vice President, Chief Financial Officer
Ronald C. Provenzano
 
50
 
General Counsel and Corporate Secretary
Robert L. Burkart
 
37
 
Chief Information Officer

Biographies for our executive officers as of April 15, 2016 are set forth below.

Eric D. Belcher.   For more information on Mr. Belcher, please see the section of this proxy statement entitled “PROPOSALS TO BE VOTED ON — Proposal No. 1 — Election of Directors.”

Jeffrey P. Pritchett has served as Executive Vice President, Chief Financial Officer since August 2015.  He previously served as a Senior Operating Executive of Cerberus Operating and Advisory Company , LLC ("COAC"), an affiliate of Cerberus Capital Management, L.P., from May 2013 through August 2015 and was Head of the COAC Finance Practice during 2015. In connection with these roles, Mr. Pritchett was named Interim Executive Chairman of the Board of TransCentra and a Board Member of Remington Outdoors Company. From November 2007 to January 2013, he held finance and strategy roles at Vertis Communications, where he ended his tenure as Interim Chief Financial Officer. Prior to joining Vertis, Mr. Pritchett held treasury, strategy, and international financial roles of increasing responsibility at Delphi Corporation. Mr. Pritchett holds a Bachelor of Business Administration in Finance from Walsh College and a Masters in Business Administration from Purdue University Krannert School of Management.

Ronald C. Provenzano has served as General Counsel of InnerWorkings since September 2012, and additionally as Corporate Secretary since March 2015. From January 2005 to August 2012, Mr. Provenzano served as Senior Vice President, Deputy General Counsel for R.R. Donnelley & Sons Company, a global print services company. Previously, Mr. Provenzano served in senior legal executive roles for Huron Consulting Group and True North Communications. Before joining True North in 1999, Mr. Provenzano was a partner at Kirkland & Ellis, a large global law firm. Mr. Provenzano holds a Juris Doctor from University of Illinois College of Law and a Bachelor of Science in Accountancy from the University of Illinois, Urbana-Champaign.

Robert L. Burkart has served as the Chief Information Officer of InnerWorkings since May 2014. Prior to becoming Chief Information Officer, Mr. Burkart served as Senior Vice President, Business Technology from March 2014 to April 2014, Vice President, Strategic Growth from January 2011 to February 2013, and Vice President, Operations from July 2009 to December 2011. Before joining InnerWorkings in 2009, Mr. Burkart held engineering positions at Johnson Controls and MPC Products. Mr. Burkart holds a Bachelor of Science in Engineering from Purdue University West Lafayette and a Masters in Business Administration from the University of Chicago Booth School of Business.

25



EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

This compensation discussion describes the material elements of compensation awarded to, earned by, or paid to each of the individuals who served as our named executive officers during the last completed fiscal year: Eric D. Belcher, Jeffrey P. Pritchett, Joseph M. Busky, Ryan K. Spohn, Robert L. Burkart, John D. Eisel, and Ronald C. Provenzano. This compensation discussion focuses on the last completed fiscal year, but we also describe compensation actions taken before or after the last completed fiscal year to the extent it enhances the understanding of our executive compensation disclosure.

Executive Summary

Overview.   Our Compensation Committee designs and maintains our compensation programs to attract, motivate and retain talented and dedicated executive officers who are essential to our long-term success. To that end, our executive compensation programs focus on the principles summarized below.

Pay for Performance Approach:  The majority of our total direct compensation is variable and directly or indirectly tied to Company performance.

Long-Term Focus and Shareholder Alignment:  We reward long-term strategic management and growth in the value of the Company through long-term equity incentives, which make up a significant portion of our incentive opportunity.

Stock Ownership Requirements:  We have stock ownership requirements that apply to our executive officers.

Highlights of Company Performance in 2015 .   We had a very successful year in 2015 , with robust organic revenue growth, strong client retention, and the best year in our company's history in terms of both profitability and new client wins.

Revenue was $1.03 billion in 2015 and $1.09 billion in constant currency, reflecting 9.3% growth in constant currency compared with $1.00 billion in 2014 .

Non-GAAP adjusted EBITDA was $51.9 million as reported and $55.7 million in constant currency, reflecting 30.0% growth in constant currency as compared to $42.8 million in 2014 (Non-GAAP Adjusted EBITDA is defined below under “Determining 2015 Executive Compensation”).

We achieved a 97% client retention rate, based on successfully retaining 97 of our top 100 enterprise clients, and signed record new enterprise contracts totaling $135 million in projected annual revenue at full run-rate.

Impact of Company Performance on Compensation.   Our Company’s results in 2015 had a direct impact on annual incentive compensation earned by our named executive officers, as more thoroughly described later in this “Compensation Discussion and Analysis.” For 2015 , our named executive officers earned 105% of their target annual incentive awards, reflecting record revenue and Adjusted EBITDA results that exceeded targets established in February 2015 . However, the value of the named executive officers’ equity holdings continues to be less than the grant date fair value due to the Company’s stock price performance relative to grant date stock prices. The table below illustrates the total grant date fair value of equity awards received by our named executive officers who are currently executive officers in 2015 , 2014 and 2013 compared to their realizable value as of December 31, 2015 . Realizable value is defined as the value of equity awards which would be received upon exercise as of a given date after grant.

26




Advisory Approval of Executive Compensation.   The Company’s executive compensation as disclosed in the Company’s 2014 Proxy Statement (filed on April 24, 2014) was approved on an advisory basis by holders of approximately 97% of the shares voted at the Company’s June 13, 2014 annual meeting. The Compensation Committee’s current compensation programs, objectives and philosophy remain consistent with the compensation programs in existence since 2013, and the Compensation Committee believes that the compensation of our named executives is competitive with the market and aligns with the best interest of our stockholders. As such, we have not made any specific changes to our executive compensation program with respect to 2014 or 2015 in connection with the results of the 2014 stockholder advisory vote. As previously disclosed, at the 2011 annual meeting, a majority of votes cast by stockholders approved a three-year frequency for the stockholder advisory vote to approve executive compensation. Therefore, we intend to offer our stockholders the opportunity to vote to approve, on an advisory basis, our executive compensation programs at least once every three years. Accordingly, our next stockholder advisory vote on executive compensation will be held at our annual meeting in 2017.

Summary of Executive Compensation Practices.   We adhere to executive compensation best practices, as summarized below.

We have a “pay for performance” approach
We have no “single trigger” or “modified single trigger” change in control severance benefits
Our Compensation Committee is comprised solely of independent directors under SEC and NASDAQ requirements
Our Compensation Committee retains an independent compensation consultant
We maintain stock ownership and stock holding guidelines for our executive officers and directors
Our InnerWorkings, Inc. 2006 Stock Incentive Plan (the “2006 Plan”), as amended and restated, has a fixed term and a finite share pool (i.e., it is not evergreen), prohibits repricing of stock options, and does not permit recycling of shares used to pay the exercise price or withholding obligations upon the exercise of stock options
We have no excise tax gross-up provisions
We prohibit hedging transactions and pledging of our stock by executive officers and directors
We provide modest perquisites and reasonable severance arrangements


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Components and Objectives of Compensation Program.   The principal elements of our executive compensation program are base salary, annual cash incentives, and long-term equity incentives in the form of stock options and restricted stock awards. The objectives and benefit to stockholders of each component and its relative percentage of total compensation are described below.

Component
 
Objective
 
Benefit to Stockholders
Base Salary
 
Provides a measure of stable fixed compensation. Amount reflects individual’s performance, responsibilities, and competitive market for executive talent.
 
Enables us to attract and retain top talent for position.
Annual Cash Incentives
 
Provides motivation for achievement of annual company and individual performance goals.
 
Focuses executives on meeting key company and individual performance goals.
Long-Term Equity Incentives
 
Provides long-term incentive to focus on stockholder value creation.
 
Value opportunity for executives is directly tied to long-term improvement of Company stock price.

2015 Compensation Allocation Relative to Total Compensation*
Name
 
Base Salary
(%)
 
Short-Term
Incentive
Compensation
(%)
 
Long-Term
Equity
Incentives
(%)
Eric D. Belcher
 
25.1
%
 
31.8
%
 
43.0
%
Jeffrey P. Pritchett
 
9.8

 
19.2

 
70.9

Ronald C. Provenzano
 
36.6

 
26.9

 
36.6

Robert L. Burkart
 
47.5

 
28.2

 
24.2

Ryan K. Spohn
 
49.6

 
23.6

 
26.8

Joseph M. Busky
 
84.1

 
15.9

 

John D. Eisel
 
40.5

 
59.5

 

*
Based on data in the Summary Compensation Table.

Determining Executive Compensation

Role of the Compensation Committee.   We define our competitive market for executive talent to be the business and technology services industries. For each of our named executive officers, the Compensation Committee reviews and approves all elements of compensation taking into consideration recommendations from our Chief Executive Officer (for compensation other than his own). The Compensation Committee meets in executive session to determine the compensation of our Chief Executive Officer and to approve the compensation of the other named executive officers.

Role of Executive Officers.   The Compensation Committee meets at least annually with our Chief Executive Officer to review the performance of our other named executive officers and receive the Chief Executive Officer’s recommendations regarding the compensation of those named executive officers. Neither the Chief Executive Officer nor any other named executive officer plays any role in the discussion or setting of his own compensation by the Compensation Committee.

Role of the Compensation Consultant.   For 2015 , the Compensation Committee retained an external independent consultant, Towers Watson, to advise the Compensation Committee on executive compensation matters, including the composition of the Company’s peer group and competitive pay practices for 2015 and 2016 . For 2015 , the Compensation Committee worked with Towers Watson to review and update the peer group that had been used to advise executive compensation determinations for 2014 . The peer group was selected from a pool of U.S. public companies primarily within the Company’s industry (GICS code) and a comparable revenue range. The Compensation Committee determined that the revised peer group of 16 companies (which includes the addition of certain new companies as identified below) provided a robust statistical set of compensation data to serve as a basis for 2015 compensation decisions. In addition to the compensation data disclosed by the companies in the peer group, Towers Watson utilized compensation data from nationally recognized compensation surveys to advise the Compensation Committee on competitive compensation levels.

The companies included in the revised peer group used to benchmark the 2015 compensation levels of the executive officers are listed below:

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Cenveo, Inc.
IHS, Inc.
Sykes Enterprises, Inc.
Cimpress N.V.
MAXIMUS, Inc.
ICF International, Inc.
Navigant Consulting, Inc.
Huron Consulting Group, Inc.
Multi-Color Corp.
Standard Register Company
CEB Inc.
Resources Connection, Inc.
Ennis, Inc.
Schawk, Inc.
Deluxe Corp.
The Advisory Board Company


For 2015 , the Compensation Committee considered the 25 th percentile, median and 75 th percentile base salaries, bonus targets, long term incentives and total compensation to evaluate each executive’s compensation. The Compensation Committee primarily looks at the 50 th percentile of the peer group companies as a benchmark when determining the named executive officers’ total compensation, but also considers other factors such as prior experience, tenure with the Company and overall performance of the Company and the executive officer.

Determining 2015 Executive Compensation

2015 Base Salary.   We provide the opportunity for our named executive officers and other executives to earn a competitive annual base salary. We believe that to attract and retain an appropriate caliber of talent for the position, a portion of our executives’ compensation should be fixed and predictable. The Compensation Committee looks at the 50 th percentile of the peer group companies as a benchmark when considering and determining the executive officer’s base salaries, but also considers other factors such as prior experience, tenure with the Company, overall performance of the Company, and the named executive officer’s total compensation package.

Based on these considerations, the 2015 salaries of our Chief Executive Officer, former Chief Financial Officer and Chief Operating Officer remained unchanged from 2014 levels (i.e., $700,000 for Mr. Belcher, $460,000 for Mr. Busky, and $350,000 for Mr. Eisel). Our General Counsel’s 2015 base salary increased $20,000 , from $320,000 to $340,000 , our Chief Information Officer's base salary increased $15,000 , from $185,000 to $200,000 , our interim Chief Financial Officer's base salary was increased by $33,900 , from $196,100 to $230,000 , and our current Chief Financial Officer, who joined the Company July 31, 2015, had a base salary of $400,000 throughout 2015 .

The Summary Compensation Table sets forth the actual base salary earned by each of our named executive officers during 2015 . The table below sets forth our named executive officers’ base salary rates as in effect in 2014 , the changes that went into effect on April 1, 2015, and the percentage of increase, if any.


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Comparative Information for 2015
Base Salary Rates
Name
 
Base Salary
Rate in 2014
($)
 
Base Salary
Rate Effective
April 1, 2015
($)
 
Percentage
Increase
(%)
Eric D. Belcher
 
$
700,000

 
$
700,000

 
%
Jeffrey P. Pritchett
 
n/a

 
400,000

 
n/a

Ronald C. Provenzano
 
320,000

 
340,000

 
6

Robert L. Burkart
 
185,000

 
200,000

 
8

Ryan K. Spohn
 
196,100

 
230,000

 
17

Joseph M. Busky
 
460,000

 
460,000

 

John D. Eisel
 
350,000

 
350,000

 


2015 Annual Cash Incentives.   We provide the opportunity for our named executive officers and other executives to earn an annual cash incentive award. We provide this opportunity to attract and retain an appropriate caliber of talent for the position and to motivate executives to achieve our annual business goals. We review annual cash incentive awards for our named executive officers and other executives annually in January or February to determine award payments for the last completed fiscal year, as well as to establish award opportunities for the current fiscal year. Annual cash incentive awards for 2015 were administered under our Annual Incentive Plan.

The 2015 target opportunities under the Annual Incentive Plan were approved by the Compensation Committee on February 10, 2015 . The 2015 management bonus award opportunities were based on the following criteria: 40% on Adjusted EBITDA performance (50% to 200% pay-out based on reaching 82% to 124% of target Adjusted EBITDA of $51 million), 40% on revenue growth (50% to 200% pay-out based on reaching 95% to 109% of target revenue of $1,050 million) and 20% based on qualitative Company performance, which includes goals such as improved ROIC results, retention of top 100 accounts, successful implementation of 2014 enterprise contracts, continued wins of new large enterprise contracts. These criteria were the same for all named executive officers, except for the Chief Operating Officer, whose bonus award is based on profitability for specified accounts.

The following table sets forth the Company’s 2015 results with respect to the quantitative criteria components of our Annual Incentive Plan (in millions):
 
 
2015 Target
 
2015 Actual (2)
 
Percentage of
Target Reached
 
Weighting
 
Pay-Out
Percentage
Revenue
 
$
1,050,000

 
$
1,047,500

 
100
%
 
40
%
 
98
%
Adjusted EBITDA (1)
 
$
51,000

 
$
52,700

 
103
%
 
40
%
 
114
%
(1)
Adjusted EBITDA, which represents income from operations with the addition of depreciation and amortization, stock-based compensation expense, income/expense related to changes in the fair value of contingent consideration liabilities, goodwill and intangible asset impairment charges, restructuring and other charges, secured assets reserves and legal fees from patent infringement defense, is considered a non-GAAP financial measure under SEC regulations. Income from operations is the most directly comparable financial measure calculated in accordance with GAAP. The Company presents this measure as supplemental information to help investors better understand trends in its business results over time. The Company's management team uses Adjusted EBITDA to evaluate the performance of the business. Adjusted EBITDA is not equivalent to any measure of performance required to be reported under GAAP, nor should this data be considered an indicator of the Company's overall financial performance and liquidity. Moreover, the Adjusted EBITDA definition the Company uses may not be comparable to similarly titled measures reported by other companies.
(2)
Reported results adjusted to reflect currency and other impacts.

Based on the Compensation Committee’s assessment of the qualitative Company performance factors listed above, the Compensation Committee awarded the named executive officers a payout of approximately 100% of the target established for the qualitative component of the annual incentive award for the named executive officers of the Company.

Based on the Compensation Committee’s assessment of both the quantitative and qualitative goals, the Compensation Committee approved 2015 incentive bonuses earned by our named executive officers as set forth in the table below. The table sets forth the fiscal 2015 target and maximum annual incentive compensation opportunities for our named executive officers and the actual incentive bonus earned by each named executive officer in dollar amounts and as a percentage of the target (other than for Mr. Busky, who, pursuant to the terms of the January 2015 Transition Agreement (described in greater detail in “- Employment

30



Agreements” below), was not eligible to receive an annual incentive bonus with respect to the 2015 fiscal year). As discussed above, the bonus earned by our former Chief Operating Officer was determined based on profitability for specified accounts.
 
 
 
  
 
Target Incentive
 
Maximum Incentive
 
Actual Incentive Earned
Name
 
% of
Salary
 
Amount
($)
 
% of
Target
 
Amount
($)
 
% of
Target
 
Amount
($)
Eric D. Belcher
 
115
%
 
$
805,000

 
200
%
 
$
1,610,000

 
105
%
 
$
842,600

Jeffrey P. Pritchett
 
75

 
300,000

 
200

 
600,000

 
105

 
314,000

Ronald C. Provenzano
 
60

 
204,000

 
200

 
408,000

 
105

 
213,500

Robert L. Burkart
 
40

 
80,000

 
200

 
160,000

 
105

 
83,700

Ryan K. Spohn (1)
 
30

 
69,000

 
200

 
138,000

 
105

 
72,250

Joseph M. Busky
 

 

 

 

 

 

John D. Eisel
 
*

 
*

 
*

 
*

 
*

 
193,388

*
Beginning in 2014, the revised bonus structure under Mr. Eisel’s employment agreement provides for a bonus based on a percentage of the gross profit received from certain Company accounts. In addition, he is entitled to commissions with respect to new business generated based on certain percentages of the accompanying gross profit, subject to certain minimum contribution margin percentages and other conditions.

(1)
Mr. Spohn also received a $200,000 cash retention bonus in connection with his appointment as Interim Chief Financial Officer.

Except as described above for the former Chief Operating Officer, there were no specific individual performance goals for 2015 incentive awards, but the Compensation Committee or the Board could exercise discretion and take into account individual performance in determining awards.

Under the Annual Incentive Plan, the Compensation Committee may define performance measures to allow for reasonable adjustments to our overall corporate performance goals and our actual performance results that may cause differences between the numbers used for our performance goals and the numbers reported in our financial statements. These adjustments may exclude all or a portion of both the positive or negative effect of external events that are outside the control of our executives, such as natural disasters, litigation, or regulatory changes in accounting or taxation standards. These adjustments may also exclude all
or a portion of both the positive or negative effect of unusual or significant strategic events that are within the control of our executives but that are undertaken with an expectation of improving our long-term financial performance, such as restructurings, acquisitions, or divestitures.

2015 Long-Term Equity Incentives.   We provide the opportunity for our named executive officers and other executives to earn a long-term equity incentive award. Long-term incentive awards provide employees with the incentive to stay with us for longer periods of time, which in turn provides us with greater stability during a period of rapid growth. In addition, we believe that these awards are the best way to align the interests of the executives with those of our stockholders. For our named executive officers, equity incentives were initially based on grants individually negotiated in connection with employment agreements, and now consist of annual grants.

In determining the amounts of equity compensation awarded, our Compensation Committee generally considers a variety of factors including: individual performance, scope of responsibility within the organization and demonstrated leadership competencies. The table below sets forth the grant date value of our stock option and restricted stock awards to our named executive officers (other than Mr. Busky, who did not receive a 2015 equity grant in connection with the January 2015 Transition Agreement (described in greater detail in “- Employment Agreements” below)). Each of these awards vests ratably over a period of four years from the grant date. Additional details regarding our equity grants, including vesting schedules for awards, are set forth in the Summary Compensation Table and the Grants of Plan-Based Awards table.


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2015 Long-Term Equity Incentives
Name
 
Grant Date
Value of
Options
($)
 
Grant Date
Value of
Restricted Stock
($)
 
Total
Value
($)
Eric D. Belcher
 
$
600,000

 
$
600,000

 
$
1,200,000

Jeffrey P. Pritchett
 
600,000

 
600,000

 
1,200,000

Ronald C. Provenzano
 
167,500

 
167,500

 
335,000

Robert L. Burkart
 
50,000

 
50,000

 
100,000

Ryan K. Spohn
 
59,800

 
59,800

 
119,600

Joseph M. Busky
 

 

 

John D. Eisel
 

 

 


Stock Options.   Our stock options are granted under the terms and conditions of the 2006 Plan, and generally have a 10-year contractual exercise term. We have traditionally used stock options as a form of equity compensation because stock options provide a relatively straightforward incentive for our executives, and result in less immediate dilution of existing stockholders’ interests. All grants of stock options to our employees are granted with exercise prices equal to or greater than the fair market value of our common stock on the respective grant dates. Grants of stock options become vested in accordance with such terms and conditions and during such periods as may be established by the Compensation Committee and set forth in the applicable award agreement. For a discussion of the determination of the fair market value of these grants, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Stock-Based Compensation” in our Annual Report on Form 10-K.

Restricted Stock Awards.   Our restricted stock awards are granted under the terms and conditions of the 2006 Plan. We have traditionally used restricted stock as a form of equity compensation because restricted stock provides a relatively straightforward incentive and retention tool for our executives, and aligns our executives’ interests with stockholders’ interests. The grant of a share of restricted stock entitles the participant to receive a share of our common stock that becomes transferable upon completing a specified period of service and/or the achievement of specific performance objectives. Grants of restricted stock become vested in accordance with such terms and conditions and during such periods as may be established by the Compensation Committee and set forth in the applicable award agreement.

Determining 2016 Executive Compensation

2016 Base Salary.   Taking into consideration the Company’s performance in 2015 , the individual performance of our named executive officers, and the competitive benchmarking results from our annual executive compensation review, on February 11, 2016, the Compensation Committee determined that the annual base salaries of our Chief Executive Officer and Chief Financial Officer would remain at current levels (i.e., $700,000 for Mr. Belcher, $400,000 for Mr. Pritchett); the annual base salary of our General Counsel was increased to $350,000 for 2016 from $340,000 in 2015 and the annual base salary of our Chief Information Officer was increased to $215,000 for 2016 from $200,000 in 2015 .

 
 
Comparative Information for 2015
Base Salary Rates
Name
 
Base Salary
Rate in 2015
($)
 
Base Salary
Rate Effective
April 1, 2016
($)
 
Percentage
Increase
(%)
Eric D. Belcher

$
700,000


$
700,000


%
Jeffrey P. Pritchett (1)

400,000


400,000



Robert L. Burkart

200,000


215,000


8

Ronald C. Provenzano

340,000


350,000


3


(1)
Mr. Busky resigned as Chief Financial Officer effective March 9, 2015 and became a non-executive employee of the Company. Pursuant to the terms of the January 2015 Transition Agreement (described in greater detail in “— Employment Agreements” below), Mr. Busky received the same base salary in effect immediately prior to January 19, 2015 while he remained employed by the Company for part of 2015. Ryan K. Spohn was appointed as interim Chief Financial Officer effective March 9, 2015, and remained in that position until August 10, 2015, and later transitioned into a senior international finance role.

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2016 Annual Cash Incentives.   The 2016 target opportunities under the Annual Incentive Plan were approved by the Compensation Committee on February 11, 2016. The target bonus award is 115% of the base salary for the Chief Executive Officer, 75% of the base salary for the Chief Financial Officer, 60% of the base salary for the General Counsel, and 40% of the base salary for the Chief Information Officer. The maximum bonus awards payable to the named executive officers are 200% of such target amounts. The criteria and weightings for these bonus awards were approved by the Compensation Committee on February 29, 2016. At this meeting, the Compensation Committee approved the addition of return on invested capital (ROIC) as a standalone quantitative objective. The weightings approved by the Compensation Committee for 2016 of the quantitative and qualitative objectives are as follows: revenue growth (30% weighting), profit growth (30% weighting), ROIC improvement (20% weighting), and qualitative goals (20% weighting).

2016 Long-Term Equity Incentives.   The 2016 target long-term equity incentive opportunities were approved by the Compensation Committee on February 11, 2016 and will be granted to our named executive officers the day after our annual meeting, subject to our stockholders' approval of our amended and restated 2006 Stock Incentive Plan. The target long-term incentive grant value is $1,400,000 for the Chief Executive Officer, $500,000 for the Chief Financial Officer, $425,000 for the General Counsel, and $125,000 for the Chief Information Officer, in each case divided equally between options and restricted stock grants with substantially similar terms as the 2015 grants, including vesting in four equal annual installments beginning one year after the grant date.

With respect to Mr. Belcher, effective March 15, 2016, the Compensation Committee also approved a special equity grant consisting of 400,000 stock options, which are subject to both service and stock performance vesting conditions. The options have a strike price of $7.30 and a 10-year exercise term. The vesting schedule of the options is based on stock price performance as follows:
    
50,000 shares vest at a stock price of $9.00 per share
50,000 shares vest at a stock price of $10.00 per share
100,000 shares vest at a stock price of $11.00 per share
100,000 shares vest at a stock price of $12.00 per share
100,000 shares vest at a stock price of $13.00 per share

The share price milestones must be maintained for 20 consecutive trading days using the volume-weighted average daily price and must be achieved within five years of the grant date (March 15, 2016). Options that meet the share price condition will vest on March 15, 2019. This performance grant was designed and approved by the Compensation Committee, as advised by its independent compensation consultant, in recognition of Mr. Belcher's contributions and leadership in achieving the Company's strong performance in 2015 and the Committee's determination that this grant aligns the Chief Executive Officer's pay and long-term incentives with the Chief Executive Officer's performance and with the best interests of the Company and its stockholders. The grant date fair value of the award was estimated to be $1,224,000 .

Other Executive Compensation Practices, Arrangements and Policies

Executive Benefits and Perquisites .  We provide the opportunity for our named executive officers and other executives to receive certain perquisites and general health and welfare benefits. We also offer participation in our defined contribution 401(k) plan. In 2015 , we provided a 401(k) matching contribution equal to 50% of an employee’s contributions under our 401(k) plan, capped at the lesser of 5% of the employee’s salary, or $6,000. Mr. Belcher, Mr. Burkart, and Mr. Provenzano received matching contributions of $6,000 each for 2015 . In 2015 , we provided reimbursements for automobile lease payments and medical insurance premiums to our named executive officers. We offer these benefits, at relatively low cost, to remain competitive in the marketplace for executive talent.

Change in Control and Severance Benefits.   We provide the opportunity for certain of our named executive officers to be protected under the severance and change in control provisions contained in their employment agreements. We provide this opportunity to attract and retain an appropriate caliber of talent for the position. We believe our arrangements are reasonable and consistent with market practices. Cash severance is limited to one year of salary continuation for Mr. Provenzano (at a rate equal to his then-current base salary); one year of salary continuation (at a rate equal to his then-current base salary) plus one year’s target annual bonus for Mr. Pritchett; two years of salary continuation (at a rate equal to his then-current base salary) plus one year’s target annual bonus for Mr. Belcher. There is no severance increase in connection with a change in control for any of our named executive officers. Further, the employment agreements of Mr. Belcher and Mr. Eisel were amended, effective February 22, 2013, to eliminate the “modified single-trigger” severance provisions that (1) required the executive to continue employment for nine months following a change in control and (2) provided that the executive’s resignation for any reason during the ninety days following such nine month period would constitute “good reason” entitling the executive to severance benefits. In addition,

33



Mr. Belcher’s and Mr. Pritchett's unvested options and restricted stock will all vest upon a qualifying termination in connection with a change in control (i.e., on a "double trigger" basis), and effective April 2015, Mr. Provenzano’s unvested options and restricted stock will all vest upon a qualifying termination in connection with a change in control, all subject to conditions in the applicable agreements.

We entered into a transition agreement, dated as of January 19, 2015, in connection with Mr. Busky’s resignation as Chief Financial Officer (the “January 2015 Transition Agreement”). The January 2015 Transition Agreement provided for: (i) a transition period from March 9, 2015 through June 30, 2015, (ii) salary continuation and health benefits through November 15, 2015, (iii) continued eligibility to receive an annual bonus with respect to the 2014 calendar year and (iv) accelerated vesting or forfeiture, as applicable, of certain equity awards under the 2006 Plan.

See “— Employment Agreements” and “— Potential Payments upon Termination or Change in Control” below for a more detailed discussion of these employment, severance and change in control arrangements.

Regulatory Considerations.   We have designed our incentive plans so that certain awards paid thereunder may qualify as performance-based compensation under Section 162(m) of the Code to the extent that Section 162(m) applies to us. However, we reserve the right to award compensation that is not deductible under Section 162(m). We will consider the size and frequency of any future stock option and restricted stock awards under our long-term equity incentive program based on Company and individual performance and other market factors.

Stock Ownership Guidelines .  On May 26, 2011, the Compensation Committee approved stock ownership guidelines for the named executive officers of the Company. Under the stock ownership guidelines, the named executive officers are expected to hold common stock with a value equal to a designated multiple of annual base salary. The Chief Executive Officer must hold stock with a value equal to four times his annual base salary and the other named executive officers must hold stock with a value equal to three times their respective annual base salaries. The named executive officers are required to meet these guidelines within three years of becoming subject to them. Shares that count toward satisfaction of the stock ownership guidelines include:

shares owned outright by the executive officer or his or her immediate family members residing in the same household;
shares held in trust for the benefit of the executive officer or his or her immediate family members;
shares acquired upon stock option exercise;
shares purchased in the open market;
restricted stock granted under our equity incentive plan; and
shares subject to stock options that are fully vested, after deducting shares that would be required to be sold or surrendered to cover the applicable exercise price.

In the event that the stock ownership guidelines place a severe hardship on an executive officer, our Compensation Committee will make the final decision as to developing an alternative stock ownership guideline for such executive officer that reflects the intention of the stock ownership guidelines and his or her personal circumstances. As of December 31, 2015, our Chief Executive Officer met and exceeded the stock ownership guidelines. As of December 31, 2015, our General Counsel has not met the stock ownership guidelines due in large part to the realizable value of his equity awards being significantly less, in the aggregate, than the grant date fair value of such awards; however, he has made consistent progress and is now on track to meet the guidelines by June 30, 2017, the extended deadline approved by the Compensation Committee. Our other named executive officers are on track to meet the guidelines within three years of becoming subject to them. In the interim, these executive officers remain subject to the Stock Holding Policy described below.

Stock Holding Policy .  On April 21, 2014, as an enhancement to our stock ownership guidelines, our Compensation Committee adopted a holding policy requiring our executive officers and directors to hold and refrain from selling any shares of our common stock acquired through equity awards (net of shares withheld or sold in order to satisfy tax obligations or exercise prices) until the executive officer or director has satisfied the ownership requirements in the applicable stock ownership guidelines.

Hedging/Pledging Policy.   Under the Company’s long-standing trading policy, there are various restrictions on trading in the Company’s stock, including during blackout periods. As an enhancement to the trading policy, on April 21, 2014, the Board adopted an additional policy prohibiting executive officers and directors from (i) entering into hedging, short sale or monetization transactions involving Company stock and (ii) holding Company stock in a margin account or pledging Company stock as collateral for a loan. Limited exceptions to the margin account/pledging prohibition may be granted by the Company’s General Counsel.

Shareholder Outreach .  Beginning in 2013, we initiated a shareholder governance outreach program, in order to obtain input from our large shareholders on governance and related practices, including executive compensation. From June 2015 through February 2016, our General Counsel, on behalf of the Board, held telephonic meetings with representatives of institutional

34



shareholders representing approximately 24% of shares outstanding based on shares owned on the applicable meeting date. The feedback received in these meetings has informed our Board’s and Compensation Committee’s decisions concerning governance and executive compensation matters. Our Board and Compensation Committee intend to continue this outreach program.

Executive Compensation

The following table sets forth the information regarding 2015 compensation for each of our named executive officers. 2014 and 2013 information is presented for executives who were also named executive officers during those years.

2015 SUMMARY COMPENSATION TABLE
Name and Principal Position
 
Year
 
Salary
($)
 
Bonus
($)
 
Option
Awards (1)
($)
 
Stock
Awards (1)
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
All Other
Compensation (2)
($)
 
Total
($)
Eric D. Belcher
Chief Executive Officer and President
 
2015
 
700,000

 

 
600,000

 
600,000

 
842,600

 
44,921

 
2,787,521

 
2014
 
700,000

 

 
597,122

 
597,122

 
989,000

 
43,332

 
2,926,576

 
2013
 
700,000

 

 
700,000

 
700,000

 
446,000

 
35,846

 
2,581,846

Jeffrey P. Pritchett
Chief Financial Officer and Executive Vice President
 
2015
 
166,667

 

 
600,000

 
600,000

 
314,000

 
11,479

 
1,692,146

Ronald C. Provenzano
General Counsel
 
2015
 
340,000

 

 
167,500

 
167,500

 
213,500

 
32,921

 
921,421

 
2014
 
320,000

 

 
165,500

 
165,500

 
197,000

 
31,332

 
879,332

 
2013
 
300,000

 

 

 
112,500

 
90,000

 
23,846

 
526,346

Robert Burkart
Chief Information Officer
 
2015
 
196,250

 

 
50,000

 
50,000

 
83,700

 
32,921

 
412,871

Ryan K. Spohn
Former Interim Chief Financial Officer
(4)
 
2015
 
221,525

 
200,000 (3)


59,800

 
59,800

 
72,250

 
32,921

 
446,296

Joseph M. Busky
Former Chief Financial Officer
(5)
 
2015
 
182,083

 

 

 

 

 
34,486

 
216,569

 
2014
 
457,500

 

 

 
2,000,000

 
339,000

 
40,932

 
2,837,432

 
2013
 
450,000

 

 
300,000

 
300,000

 
162,000

 
33,446

 
1,245,446

John D. Eisel
Former Chief Operating Officer
(6)
 
2015
 
148,485

 

 

 

 
193,338

 
24,647

 
366,470

 
2014
 
350,000

 

 
191,931

 
191,931

 
3,546

 
32,532

 
769,940

 
2013
 
350,000

 

 
125,000

 
125,000

 
126,000

 
26,499

 
752,499

(1)
Amounts represent the full grant date fair value of the stock option awards and restricted stock awards granted in 2015 , 2014 , and 2013 calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the stock option awards and restricted stock awards, please see Note 2 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 .
(2)
Consists of 401(k) matching contributions, reimbursed car payments and medical insurance premiums.
(3)
Retention bonus paid in connection with interim Chief Financial Officer appointment.
(4)
Following Mr. Pritchett's appointment as Chief Financial Officer, Mr. Spohn transitioned to his current senior international financial role.
(5)
Joseph M. Busky resigned as Chief Financial Officer effective March 9, 2015.
(6)
John D. Eisel resigned as Chief Operating Officer effective June 2, 2015.

For a description of the material terms of employment agreements with our named executive officers, see “— Employment Agreements.”

35



2015 GRANTS OF PLAN-BASED AWARDS

The following table provides information for each of the Company’s named executive officers regarding 2015 plan-based awards.
Name
 
Type of Award
 
Grant Date
 
Estimated Possible Payouts Under
Non-Equity Incentive
Plan Awards
 
All Other
Stock
Awards:
Number of
Shares of
Stock
(#)
 
All Option
Awards:
Number of
Securities
Underlying
Options
(#)
 
Exercise
Price of
Option
Awards
($)/sh
 
Grant Date
Fair Value
of Stock
and Option
Awards
($) (2)
Threshold
($) (1)
 
Target
($) (1)
 
Maximum
($) (1)
 
Eric D. Belcher
 
Annual Incentive Award
 
  
 
$
402,500

 
$
805,000

 
$
1,610,000

 

 

 

 

  
 
Restricted Stock
 
6/3/2015
 

 

 

 
89,820

 

 

 
$
600,000

  
 
Stock Options
 
6/3/2015
 

 

 

 

 
181,818

 
$
6.68

 
$
600,000

Jeffrey P. Pritchett
 
Annual Incentive Award
 
 
 
$
150,000

 
$
300,000

 
$
600,000

 

 

 

 

 
 
Restricted Stock
 
8/1/2015
 

 

 

 
80,000

 

 

 
$
600,000

 
 
Stock Options
 
8/1/2015
 

 

 

 

 
163,043

 
$
7.50

 
$
600,000

Ronald C. Provenzano
 
Annual Incentive Award
 
  
 
$
102,000

 
$
204,000

 
$
408,000

 

 

 

 
$

 
 
Restricted Stock
 
6/3/2015
 

 

 

 
25,075

 

 

 
$
167,500

 
 
Stock Options
 
6/3/2015
 

 

 

 
 
 
50,758

 
$
6.68

 
$
167,500

Robert Burkart
 
Individual Incentive Award
 
 
 
$
40,000

 
$
80,000

 
$
160,000

 

 

 

 
$

 
 
Restricted Stock
 
6/3/2015
 

 

 

 
7,485

 

 

 
$
50,000

 
 
Stock Options
 
6/3/2015
 

 

 

 

 
15,152

 
$
6.68

 
$
50,000

Ryan K. Spohn
 
Annual Incentive Award
 
 
 
$
34,500

 
$
69,000

 
$
138,000

 

 

 

 

 
 
Restricted Stock
 
6/3/2015
 

 

 

 
8,952

 

 

 
$
59,800

 
 
Stock Options
 
6/3/2015
 

 

 

 

 
18,121

 
$
6.68

 
$
59,800

Joseph M. Busky (3)
 
Annual Incentive Award
 
 
$

 
$

 
$

 

 

 

 

 
 
Restricted Stock
 
 

 

 

 

 

 

 
$

 
 
Stock Options
 
 

 

 

 

 

 
$

 
$

John D. Eisel (4)
 
Individual Incentive Award
 
 
$

 
$
193,338

 
$

 

 

 

 

 
 
Restricted Stock
 
 

 

 

 

 

 

 
$

 
 
Stock Options
 
 

 

 

 

 

 
$

 
$

(1)
These represent potential incentive opportunities for 2015 annual incentive awards. Because Mr. Eisel does not have a fixed target bonus, the amount reported in this column represents the actual amount earned for his 2015 performance. Actual amounts earned for the other named executive officers for 2015 are reported in the Summary Compensation Table.
(2)
Values based on the closing price of a share of our common stock on the date of grant. The exercise price for options granted to Messrs. Belcher, Pritchett, Spohn, Burkart, and Provenzano is $6.68. Values for restricted stock awards are based on the closing price of a share of our common stock on the date of grant. Values for option grants are based on the grant date value calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the option awards and restricted stock awards, please see Notes 2 and 14 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 .
(3)
Mr. Busky terminated employment in 2015 and thus did not receive awards under these plans.
(4)
Mr. Eisel terminated employment in 2015 and thus did not receive any stock awards under these plans.

Employee Benefit Plans

2004 Unit Option Plan

Effective January 1, 2004, we adopted the InnerWorkings, LLC 2004 Unit Option Plan. The principal purpose of the Unit Option Plan has been to attract, retain and reward selected employees, consultants and directors through the granting of non-qualified stock options.

Upon adoption of our 2006 Plan, the Unit Option Plan was merged into the 2006 Plan and ceased to separately exist. Except with respect to rights that may be protected under prior award agreements, outstanding awards under the Unit Option Plan are now subject to the 2006 Plan. The awards remaining under the Unit Option Plan were rolled into the 2006 Plan. No additional awards may be made under the Unit Option Plan on or after the effective date of the 2006 Plan.


36



2006 Stock Incentive Plan

We maintain the InnerWorkings, Inc. 2006 Stock Incentive Plan. The principal purpose of the 2006 Plan is to attract, motivate, reward and retain selected employees, consultants and directors through the granting of stock-based compensation awards. The 2006 Plan provides for a variety of awards, including non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Code), stock appreciation rights, restricted stock awards, performance-based awards and other stock-based awards. On April 12, 2016, our Compensation Committee approved, subject to stockholder approval, the amended and restated 2006 Plan, which amendment and restatement (i) increases the maximum number of shares of common stock that may be issued under the plan by 2,900,000 , from 7,850,000 to 10,750,000, and (ii) reiterates the performance-based goals used in granting performance-based awards under the 2006 Plan to be approved by stockholders for purposes of Section 162(m) of the Code. We are asking stockholders to approve the amended and restated 2006 Plan in Proposal 4.

Annual Incentive Plan

We maintain the InnerWorkings Annual Incentive Plan that rewards employees for meeting and exceeding annual performance goals established by the Compensation Committee based on one or more criteria set forth in the Annual Incentive Plan.

Eligibility to participate in the Annual Incentive Plan is limited to substantially all regular full-time and part-time employees. Temporary employees, any independent contractors, and certain other specified classifications are not eligible to participate in the Annual Incentive Plan.

Employees are eligible to receive bonuses based on meeting operational and financial goals that may be stated (a) as goals of the company, a subsidiary, or a portion thereof, (b) on an absolute basis and/or relative to other companies, or (c) separately for one or more participants or business units. The objective performance goals for the Annual Incentive Plan are established by our Compensation Committee at the beginning of the year. Bonus payouts are determined within a reasonable time after the end of the performance period.

Our Compensation Committee administers the Annual Incentive Plan and has the authority to construe, interpret and implement the Annual Incentive Plan and prescribe, amend and rescind rules and regulations relating to the Annual Incentive Plan. The determination of the Compensation Committee on all matters relating to the Annual Incentive Plan or any award agreement will be final, binding and conclusive. The Annual Incentive Plan may be amended or terminated by the Compensation Committee or our Board. However, the Annual Incentive Plan may not be amended without the prior approval of our stockholders, if such approval is necessary to qualify bonuses as performance-based compensation under Section 162(m) of the Code. We are asking stockholders to reapprove the material terms of performance-based awards under the Annual Incentive Plan in Proposal 3.


37



OUTSTANDING EQUITY AWARDS AT 2015 FISCAL YEAR-END

The following table summarizes the number of securities underlying outstanding plan awards for each named executive officer as of December 31, 2015 .
 
 
Option Awards
 
Stock Awards
Name
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
 
Market Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
Eric D. Belcher
 
161,031

 

 
 
 
14.36

 
1/22/2018

 
11,488

 
(2)  
 
86,160

  
 
575,000

 

 
 
 
6.00

 
11/14/2018

 
23,256

 
(3)  
 
174,420

  
 
100,952

 

 
 
 
8.24

 
6/23/2021

 
62,374

 
(4)  
 
467,805

  
 
68,751

 
22,917

 
(2)  
 
11.97

 
3/15/2022

 
89,820

 
(5)  
 
673,650

  
 
60,449

 
60,449

 
(3)  
 
15.05

 
3/15/2023

 

 
 
 

  
 
42,050

 
126,153

 
(4)  
 
7.18

 
6/13/2024

 

 
 
 

  
 

 
181,818

 
(5)  
 
6.68

 
6/3/2025

 

 
 
 

Jeffrey P. Pritchett
 

 
163,043

 
(6)  
 
7.50

 
8/1/2025

 
80,000

 
(6)  
 
600,000

Ronald C. Provenzano
 
38,007

 
25,338

 
(10)  
 
12.10

 
9/4/2022

 
12,397

 
(10)  
 
92,978

 
 
11,655

 
34,965

 
(4)  
 
7.18

 
6/13/2024

 
9,222

 
(8)  
 
69,165

  
 

 
50,758

 
(5)  
 
6.68

 
6/3/2025

 
17,288

 
(4)  
 
129,660

  
 

 

 
 
 

 

 
25,075

 
(5)  
 
188,063

Robert Burkart
 
24,090

 

 
 
 
4.36

 
7/13/2019

 
1,022

 
(7)  
 
7,665

  
 
4,832

 

 
 
 
5.40

 
3/10/2020

 
2,413

 
(9)  
 
18,098

  
 
7,396

 

 
 
 
6.48

 
1/18/2021

 
4,059

 
(4)  
 
30,443

 
 
9,500

 

 
 
 
8.24

 
6/23/2021

 
7,485

 
(5)  
 
56,138

 
 
6,237

 
2,082

 
(7)  
 
12.24

 
9/14/2022

 

 
 
 

 
 
2,736

 
8,208

 
(4)  
 
7.18

 
6/13/2024

 

 
 
 

 
 

 
15,152

 
(5)  
 
6.68

 
6/3/2025

 

 
 
 

Ryan K. Spohn
 
10,000

 

 
 
 
5.49

 
6/26/2019

 
440

 
(7)  
 
3,300

 
 
6,168

 

 
 
 
5.40

 
3/10/2020

 
4,549