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.  )



 
Filed by the Registrant þ
Filed by a Party other than the Registrant o

Check the appropriate box:

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

InnerWorkings, Inc.

(Name of Registrant as Specified In Its Charter)



 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

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

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

  


 
 

TABLE OF CONTENTS

[GRAPHIC MISSING]

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

April 24, 2014

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 13, 2014, 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 accounting firm for 2014, (iii) approve (on an advisory, non-binding basis) the compensation of executives, (iv) approve our amended and restated 2006 Stock Incentive Plan, and (v) transact such other business as may properly come before the meeting. 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 13, 2014.

We look forward to seeing you at the meeting.

Sincerely yours,

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


 
 

TABLE OF CONTENTS

[GRAPHIC MISSING]

Notice of 2014 Annual Meeting of Stockholders
600 West Chicago Avenue, Suite 850
Chicago, Illinois 60654
June 13, 2014, 11:00 a.m., Central Time

April 24, 2014

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 13, 2014 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 2015 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, 2014;
to approve, on an advisory, non-binding basis, the compensation of executives as disclosed in the proxy statement;
to approve the amended and restated 2006 Stock Incentive Plan; and
to transact such other business as may properly come before the meeting.

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 15, 2014 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 15, 2014 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,
[GRAPHIC MISSING]

Joseph M. Busky
Chief Financial Officer and Secretary

Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Stockholders to be Held on June 13, 2014

Our Proxy Statement and 2013 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


 
 

TABLE OF CONTENTS

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 and Voting Information

 
Date and Time:   Friday, June 13, 2014 at 11:00 a.m., Central Time
Location:   600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654
Admission:   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.
Record Date:   April 15, 2014
Voting:   Each share of common stock entitles you to one vote on each matter to be voted on at the annual meeting. Cumulative voting is not permitted.

Items to be Voted on at the 2014 Annual Meeting of Stockholders

   
Proposal   Board of Directors’ Recommendation
•     Elect eight members of the Board of Directors to serve until the 2015 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, 2014.   FOR
•     Approve, on an advisory, non-binding basis, the compensation of executives as disclosed in the proxy statement.   FOR
•     Approve the amended and restated 2006 Stock Incentive Plan.   FOR

Director Nominees

           
Name   Director Since   Independent   Other Public Boards   Committee Memberships
           AC   CC   NCG
Jack M. Greenberg (Chairman of the Board)     2005       Yes       5                M       M  
Eric D. Belcher (Chief Executive Officer)     2009       No       0                             
Charles K. Bobrinskoy     2008       Yes       0       C, F       M           
David Fisher     2011       Yes       1       M       M           
Daniel M. Friedberg     2014       Yes       1                             
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  

     
AC   Audit Committee   C   Chair
CC   Compensation Committee   M   Member
NCG   Nominating and Corporate Governance Committee   F   Financial expert


 
 

TABLE OF CONTENTS

Corporate Governance

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. In addition, we engage in shareholder outreach activities, which have informed our Board of Directors’ (the “Board”) decisions concerning governance and related practices, such as our adoption of majority voting in uncontested director elections this year, as described below.

Annual Elections:  Our directors are elected annually for one year terms.
Majority Voting for Election of Directors:  In the past, the vote of a plurality of all votes cast was required to elect directors; however, on April 21, 2014, our Board approved a Bylaw amendment to implement a majority voting standard in uncontested director elections.
Board Leadership Structure:  We currently separate the roles of Chairman of the Board and Chief Executive Officer.
Director Independence:  Seven of our eight director nominees are independent, and our key Board committees (Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee) are comprised entirely of independent directors.
No Shareholder Rights Plan.  We do not currently have in place, nor have we ever had, a shareholder rights plan, commonly known as a “poison pill.”

Executive Compensation

Our Compensation Committee designs and maintains our compensation program to attract, motivate, and retain talented and dedicated executive officers who are essential to our long-term success. Key features of our executive compensation program and process are summarized below.

Pay for Performance Approach:  A significant amount of our executive officers’ compensation is variable and tied to our financial and stock price performance. Our annual incentives may be earned based on Company performance, which is measured by our achievement of certain levels of adjusted EBITDA and revenue growth, and qualitative factors as more thoroughly described in “EXECUTIVE AND DIRECTOR COMPENSATION — Compensation Discussion and Analysis.” For 2013, our executives earned 55% to 60% of the target annual incentive awards. Our long-term incentives for 2013 were in the form of restricted stock and stock options, each vesting over a four-year period.
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 compensation. We have stock ownership guidelines that apply to our executive officers and our directors.
Independent Compensation Committee and Consultant:  Our Compensation Committee is comprised solely of directors who are independent under applicable SEC and stock exchange standards, including the specific NASDAQ Stock Market (“NASDAQ”) independence requirements newly applicable to Compensation Committee members. Our Compensation Committee has retained Towers Watson as its independent compensation consultant to review our executive compensation program and advise on compensation best practices. Towers Watson performs no other services for the Company.
Other Executive Compensation Best Practices:  We have a policy that prohibits directors and executive officers from pledging our stock or entering into hedging transactions designed to offset any decline in the value of our stock. In addition, we have no single-trigger change in control severance arrangements, no excise tax gross-up provisions and no “modified single-trigger” severance benefits for our executives.


 
 

TABLE OF CONTENTS

2006 Stock Incentive Plan

We are asking our stockholders to approve, in Proposal 4 herein, our amended and restated 2006 Stock Incentive Plan. The 2006 Stock Incentive Plan is the key vehicle that we use in awarding long-term incentive compensation to executives and other employees. The proposed changes include increasing the number of shares of our common stock that we can issue pursuant to awards under the plan by 2,200,000 shares.

Share Usage:  As described more fully in Proposal 4, we have maintained a reasonable level of share usage as demonstrated by our modest burn rate and equity dilution. In addition, our 2006 Stock Incentive Plan has a fixed term and finite share pool (i.e. is not “evergreen”) and does not allow for recycling of shares used to satisfy the exercise price and tax withholding obligations upon the exercise of options.
Key Terms:  The 2006 Stock Incentive Plan requires that stock options be granted with an exercise price equal to or greater than the fair market value of our common stock on the grant date and prohibits the repricing of stock options without stockholder approval.


 
 

TABLE OF CONTENTS

Proxy Statement for the Annual Meeting of Stockholders of

INNERWORKINGS, INC.
  
To Be Held on Friday, June 13, 2014

TABLE OF CONTENTS

 
PROXY STATEMENT     1  
Annual Meeting Information     1  
Voting Information     1  
PROPOSALS TO BE VOTED ON     3  
Proposal 1: Election of Directors     3  
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm     7  
Proposal 3: Advisory Approval of Executive Compensation     8  
Proposal 4: Approval of the Amended and Restated 2006 Stock Incentive Plan     9  
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE     18  
Board Leadership Structure     18  
Board of Directors Role in Risk Oversight     18  
Meetings and Committees of the Board of Directors     18  
Director Independence     20  
Governance Documents     21  
Compensation Committee Interlocks and Insider Participation     21  
Communications with Directors     21  
Attendance at Annual Meeting     22  
STOCK OWNERSHIP     23  
Security Ownership of Certain Beneficial Owners and Management     23  
Section 16(a) Beneficial Ownership Reporting Compliance     24  
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS     26  
EXECUTIVE AND DIRECTOR COMPENSATION     27  
Executive Officers     27  
Compensation Discussion and Analysis     27  
Executive Compensation     36  
Summary of Director Compensation     47  
REPORT OF THE COMPENSATION COMMITTEE     49  
AUDIT COMMITTEE REPORT     50  
FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL REGISTERED PUBLIC ACCOUNTING FIRM     51  
OTHER INFORMATION     52  
Stockholder Proposals for the 2015 Annual Meeting     52  
Expenses of Solicitation     52  
“Householding” of Proxy Materials     52  
APPENDIX A: INNERWORKINGS, INC. 2006 STOCK INCENTIVE PLAN     A-1  

i


 
 

TABLE OF CONTENTS

[GRAPHIC MISSING]

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 May 2, 2014 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 15, 2014, 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 13, 2014 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 15, 2014. 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, 52,312,577 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.  Our Amended and Restated Bylaws (the “Bylaws”) provide that 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

1


 
 

TABLE OF CONTENTS

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.

Non-discretionary Items.  All items, other than the ratification of the appointment of the Company’s independent auditor, 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 auditor 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 50% 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. 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 Joseph M. Busky, 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 the past, the vote of a plurality of all votes cast was required to elect directors; however, on April 21, 2014, our Board of Directors approved a Bylaw amendment to implement a majority voting standard in uncontested director elections. Accordingly, a nominee for director must receive more votes “FOR” his or her election than votes “AGAINST” such director. 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 auditor, the approval of our amended and restated 2006 Stock Incentive Plan, and the non-binding advisory vote to approve executive compensation as disclosed in this proxy statement each 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 auditor, the amended and restated 2006 Stock Incentive Plan, and the approval of the non-binding advisory vote to approve executive compensation. Broker non-votes will have no effect on the election of directors, the approval of the amended and restated 2006 Stock Incentive Plan and the approval of the non-binding advisory vote to approve executive compensation. There are no broker non-votes with respect to the ratification of Ernst & Young LLP’s appointment as independent auditor as it is a discretionary item.

2


 
 

TABLE OF CONTENTS

PROPOSALS TO BE VOTED ON

Proposal 1: Election of Directors

Nominees

The size of the Board is currently eight members. At the annual meeting, the stockholders will elect eight directors to serve until the 2015 annual meeting of stockholders or until their respective successors are elected and qualified. 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.

In the past, the vote of a plurality of all votes cast was required to elect directors; however, on April 21, 2014, our Board approved a Bylaw amendment to implement a majority voting standard 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, a nominee for director in an uncontested election such as this one must receive more votes “FOR” his or her election than votes “AGAINST” such director. 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.

On April 18, 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. As of April 15, 2014, Sagard owned approximately 14.2% 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

3


 
 

TABLE OF CONTENTS

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.

The Nominating and Corporate Governance Committee also believes that each of the nominees and current directors 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 and current directors 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 24, 2014, 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)   71   Chairman of the Board
Eric D. Belcher   45   Chief Executive Officer, President and Director
Charles K. Bobrinskoy(1)(2)   54   Director
David Fisher(1)(2)   45   Director
Daniel M. Friedberg   54   Director
J. Patrick Gallagher, Jr.(2)(3)   62   Director
Julie M. Howard(1)(2)(3)   51   Director
Linda S. Wolf(1)(2)(3)   66   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. Mr. Greenberg 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. Mr. Greenberg 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. Mr. Greenberg is a director of The Allstate Corporation, The Western Union Company, Hasbro, Inc., Quintiles Transactional and Manpower Inc. Mr. Greenberg’s civic involvement includes service as the Chairman of the Metropolitan Pier 6 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, Metropolis Strategies, an affiliate of the Chicago Community Trust, 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

4


 
 

TABLE OF CONTENTS

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. 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 nine years of service to the Company.

Charles K. Bobrinskoy has served on our Board since August 2008. Mr. Bobrinskoy is currently Vice Chairman, Director of Research 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, a member of the Economic Club of Chicago, and Harry Crown Fellow of the Aspen Institute. In addition, Mr. Bobrinskoy serves on the Duke University Trinity Board of Visitors. 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 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

5


 
 

TABLE OF CONTENTS

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. 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 an Advisory Cabinet Member of the American Cancer Society’s CEO’s Against Cancer, and 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 17 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 the Chief Executive Officer and member of the Board of Directors 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 is a member of the Board of Directors for Kemper Corporation and serves on its Audit, Compensation and Nominating and Governance Committees. She also serves on the Foundation Board for Lurie Children’s Hospital. 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 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 member of the Board of Trustees of the Field Museum, and 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, operations and strategic planning. Ms. Wolf also strengthens the Board’s global perspective.

Required Vote

In the past, the vote of a plurality of all votes cast was required to elect directors; however, on April 21, 2014, our Board approved a Bylaw amendment to implement a majority voting standard in uncontested director elections. Accordingly, a nominee for director must receive more votes “FOR” his or her election than votes “AGAINST” such director.

Recommendation of the Board of Directors

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

6


 
 

TABLE OF CONTENTS

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, 2014. 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, 2014.

7


 
 

TABLE OF CONTENTS

Proposal 3: Advisory Approval of Executive Compensation

Under Section 14A of the Securities Exchange Act of 1934, enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Company is providing a stockholder advisory vote to approve the Company’s executive compensation, as disclosed in our Compensation Discussion and Analysis, related compensation tables, and other related material under the compensation disclosure rules of the Securities and Exchange Commission, as set forth in this proxy statement. At our 2011 annual meeting, a majority of votes cast by stockholders approved a three-year frequency for the stockholder advisory vote to approve executive compensation. Our last stockholder advisory vote on executive compensation was held at our 2011 annual meeting, and holders of approximately 99% of our shares voted at that meeting approved our executive compensation. After the 2014 annual meeting, the next stockholder advisory vote to approve our executive compensation is scheduled to be held at our 2017 annual meeting.

The Company maintains executive compensation and governance best practices and a long-term, pay-for-performance approach, as described more fully in the Compensation Discussion and Analysis section of this proxy statement. These practices include eliminating all “single trigger” or “modified single trigger” change in control severance benefits, the Compensation Committee’s retention of an independent compensation consultant, stock ownership guidelines for our executive officers and directors, no excise tax gross-up provisions, and prohibition of hedging transactions and pledging of our stock by our executive officers and directors.

This vote will not be binding on or overrule any decisions by our Board of Directors, will not create or imply any additional fiduciary duty on the part of the Board, and will not restrict or limit the ability of our stockholders to make proposals related to executive compensation for inclusion in proxy materials. However, our Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. Our Board of Directors has determined to ask our stockholders to vote on the Company’s executive pay programs and policies through the following resolution:

RESOLVED, that the stockholders approve the Company’s compensation of executives as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which includes the Compensation Discussion and Analysis, the compensation tables, and related material).

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.

Recommendation of the Board of Directors

THE BOARD RECOMMENDS A VOTE “FOR” ADVISORY APPROVAL OF THE COMPANY’S COMPENSATION OF EXECUTIVES AS DISCLOSED IN THIS PROXY STATEMENT.

8


 
 

TABLE OF CONTENTS

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, and June 21, 2012. On April 21, 2014, our Compensation 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 13, 2014, (i) increases the maximum number of shares of common stock that may be issued under the Plan by 2,200,000, from 5,650,000 (a majority of which have been previously granted as set forth in our Equity Compensation Plan Information table on page 16) to 7,850,000, 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 16), (ii) extends the term of the Plan to June 13, 2024; (iii) reiterates and amends 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) limits the Plan’s share recycling provisions with respect to options and stock appreciation rights; and (v) implements certain other minor clarifying and technical changes to the Plan.

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 Compensation 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 2011, 2012, and 2013 were 4.09%, 2.36%, and 2.19%, respectively, which represents a three-year average burn rate of 2.88%. 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 2011, 2012 and 2013 were 3.03%, 1.73% and 1.33%, respectively, which represents a three-year unadjusted average burn rate of 2.03%. In addition, our potential equity dilution is approximately 11.8% 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 December 31, 2013, including the additional 2,200,000 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 Compensation Committee has determined that the increase in the number of shares reserved for issuance under the Plan is reasonable and appropriate.

As of December 31, 2013, without taking into account the proposed amendment, there were stock option awards outstanding under the Plan with respect to 3,553,534 shares of our common stock, unvested restricted stock awards (with full voting rights) outstanding under the Plan with respect to 734,550 shares of our common stock, and 424,983 shares available for issuance pursuant to future awards under the Plan.

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 A. Unless otherwise indicated, terms used in this summary shall have the meanings set forth in the Plan.

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

9


 
 

TABLE OF CONTENTS

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, 2013, the Company and its affiliates had approximately 1,500 employees and independent contractors and six 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 Compensation Committee of the Board (which we refer to in this proposal as 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 7,850,000 (plus any shares that are or become available for grant under our prior unit plan), which includes the 2,200,000 shares added pursuant to the proposed amendment and restatement and would leave approximately 2,624,983 shares available for grants under the Plan on and after December 31, 2013 (consisting of 424,983 shares available for issuance as of December 31, 2013, plus the 2,200,000 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 maximum number of shares and share equivalent units that may be granted to any one participant during any one calendar year is 1,000,000 shares.

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.

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 7,850,000 shares (plus shares that are or become available for grant under our prior unit option plans) of which approximately 2,624,983 will be available for future grants under the Plan on or after December 31, 2013 (consisting of 424,983 shares available for issuance as of December 31, 2013, plus the 2,200,000 proposed additional shares). The closing price of the Company’s common stock on the NASDAQ Global Market on April 15, 2014 was $7.32 per share.

As of December 31, 2013, without taking into account the proposed amendment, there were stock option awards outstanding under the Plan with respect to 3,553,534 shares of our common stock, unvested restricted

10


 
 

TABLE OF CONTENTS

stock awards (with full voting rights) outstanding under the Plan with respect to 734,550 shares of our common stock, and 424,983 shares available for issuance pursuant to future awards under the Plan. If approved, the amendment would increase the available share pool by 2,200,000.

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.

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.

11


 
 

TABLE OF CONTENTS

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.

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);

12


 
 

TABLE OF CONTENTS

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 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.

Change of Control

In the event of a change in control (defined in the Plan attached hereto as Appendix A), 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.

13


 
 

TABLE OF CONTENTS

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.

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.

14


 
 

TABLE OF CONTENTS

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, 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 13, 2014, 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 13, 2024.

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.

15


 
 

TABLE OF CONTENTS

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 dollar value of equity awards granted subject to our stockholders’ approval of this amendment and restatement are set forth below.

 
Name or Group   Total Dollar
Value(1)
Eric D. Belcher   $ 1,194,244  
Joseph M. Busky     n/a  
John D. Eisel   $ 383,861  
Ronald C. Provenzano   $ 331,000  
All executive officers as a group   $ 1,909,105  
All non-employee directors as a group   $ 700,000  
All non-executive employees as a group   $ 5,000,000 (2) 

(1) For all grant recipients who are executive officers, amounts reflect the total grant value approved by the Compensation 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 2014. For the non-executive employees, amounts reflect the total grant value approved by the Compensation 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

On April 15, 2014, the NASDAQ Global Market reported a closing price of $7.32 for our common stock. The following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2013.

     
Plan Category   Number of Securities to be Issued Upon Exercise of Outstanding Options   Weighted-Average Exercise Price of Outstanding Options   Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column)
Equity Compensation Plans Approved by Security
Holders(1)
    3,553,534     $ 8.52       424,983 (2) 
Equity Compensation Plans Not Approved by Security
Holders(3)
                 
Total     3,553,534     $ 8.52       424,983  

(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.

16


 
 

TABLE OF CONTENTS

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


 
 

TABLE OF CONTENTS

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, such as our adoption of majority voting in uncontested director elections this year, as described below.

Our directors are elected annually for one year terms.
In the past, the vote of a plurality of all votes cast was required to elect directors; however, on April 21, 2014, the Board approved a Bylaw amendment to implement a majority voting standard in uncontested director elections.
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) are comprised entirely of independent directors and operate 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, advising on agenda topics and advising on 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, 2013, as amended.

Meetings and Committees of the Board of Directors

During 2013, the Board held six meetings. During 2013, 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.

18


 
 

TABLE OF CONTENTS

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 in 2014. 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 2013, the Audit Committee held six meetings.

Compensation Committee.  Charles K. Bobrinskoy, David Fisher, J. Patrick Gallagher, Jr., Jack M. Greenberg, Julie M. Howard and Linda S. Wolf served on the Compensation Committee during 2013. 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. 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 2013, the Compensation Committee engaged Towers Watson (which acquired the Company’s previously-retained independent compensation consultant, The Delves Group, in 2013) 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 “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 2013, the Compensation Committee held six 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 2013, the Executive Committee did not meet.

19


 
 

TABLE OF CONTENTS

Nominating and Corporate Governance Committee.  J. Patrick Gallagher, Jr., Jack M. Greenberg, Julie M. Howard and Linda S. Wolf 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 2013, the Nominating and Corporate Governance Committee held five 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 above should include the candidate’s name and qualifications for Board membership and should be addressed to Joseph M. Busky, Corporate Secretary, InnerWorkings, Inc., 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654.

For purposes of potential nominees to be considered at the 2015 annual stockholders’ meeting, the Corporate Secretary must receive this information no earlier than March 19, 2015 and no later than the close of business on April 18, 2015, 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 2013, 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.”

20


 
 

TABLE OF CONTENTS

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 0.1% 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 engage in shareholder outreach activities, which have informed our Board’s decisions concerning governance and related practices, such as our adoption of majority voting in uncontested director elections this year.

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 Joseph M. Busky, Corporate Secretary” at 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654.

21


 
 

TABLE OF CONTENTS

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, Bobrinskoy and Greenberg attended the 2013 annual meeting of stockholders.

22


 
 

TABLE OF CONTENTS

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 15, 2014 (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
    7,452,125 (2)      14.2 % 
Richard A. Heise, Jr.
2221 Old Willow Road
Northfield, IL 60093
    6,344,907 (3)      12.1 % 
Riverbridge Partners LLC
801 Nicollet Mall, Suite 600
Minneapolis, MN 55402
    4,978,652 (4)      9.5 % 
Wasatch Advisors, Inc.
150 Social Hall Avenue
Salt Lake City, UT 84111
    3,715,670 (5)      7.1 % 
FMR LLC
245 Summer Street
Boston, MA 02210
    3,524,180 (6)      6.7 % 
DIRECTORS, DIRECTOR NOMINEES AND NAMED EXECUTIVE OFFICERS:
                 
Eric D. Belcher     1,388,307 (7)      2.6 % 
Joseph M. Busky     624,991 (8)      1.2 % 
John D. Eisel     146,630 (9)      *  
Ronald C. Provenzano     63,265 (10)           
Jack M. Greenberg     194,434 (11)      *  
Linda S. Wolf     140,232 (12)      *  
Charles K. Bobrinskoy     160,448 (12)      *  
J. Patrick Gallagher, Jr.     75,297 (13)      *  
David Fisher     37,305 (14)      *  
Julie M. Howard     28,196 (15)      *  
Daniel M. Friedberg     7,452,125 (2)      14.2 % 
All directors and executive officers as a group (11 persons)     10,279,230       19.1 % 

23


 
 

TABLE OF CONTENTS

* = 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 15, 2014 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 15, 2014, and the percentages are based upon 52,312,577 shares of our common stock outstanding as of April 15, 2014. 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 7,452,125 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 4, 2014.
(5) Based solely on a Schedule 13G/A filed with the SEC on February 13, 2014.
(6) Based solely on a Schedule 13G filed with the SEC on February 14, 2014.
(7) Includes options to purchase 1,130,380 shares of common stock which are exercisable within sixty days of April 15, 2014.
(8) Includes options to purchase 211,106 shares of common stock, which are exercisable within sixty days of April 15, 2014.
(9) Includes options to purchase 76,045 shares of common stock, which are exercisable within sixty days of April 15, 2014.
(10) Includes options to purchase 15,836 shares of common stock, which are exercisable within sixty days of April 15, 2014.
(11) Includes options to purchase 117,622 shares of common stock which are exercisable within sixty days of April 15, 2014. 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 sixty days of April 15, 2014.
(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 sixty days of April 15, 2014.
(14) Includes options to purchase 1,499 shares of common stock which are exercisable within sixty days of April 15, 2014.
(15) Includes 14,800 shares of common stock held by the Julie M. Howard Trust, of which Ms. Howard is trustee.

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.

24


 
 

TABLE OF CONTENTS

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 for Form 4 filings with respect to grants of restricted stock made to Linda S. Wolf, J. Patrick Gallagher, Jr., Julie Howard, David Fisher, Charles Bobrinskoy and Jack Greenberg on June 20, 2013, which were reported on Form 4 on September 6, 2013.

25


 
 

TABLE OF CONTENTS

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 2013, 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 2013, 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. $0.7 million for these services in 2013. Additionally, Arthur J. Gallagher & Co. provided insurance brokerage and risk management services to the Company. Arthur J. Gallagher & Co. billed the Company $0.5 million for such services in 2013. See “BOARD OF DIRECTORS AND CORPORATE GOVERNANCE — Director Independence.”

26


 
 

TABLE OF CONTENTS

EXECUTIVE AND DIRECTOR COMPENSATION

Executive Officers

The following table sets forth certain information concerning each of our executive officers:

   
Name   Age   Position
Eric D. Belcher   45   Chief Executive Officer, President and Director
Joseph M. Busky   46   Chief Financial Officer and Secretary
John D. Eisel   37   Chief Operating Officer
Ronald C. Provenzano   48   General Counsel

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.”

Joseph M. Busky has served as our Chief Financial Officer since July 2008. From November 2006 to November 2007, Mr. Busky served as Corporate Vice President, Chief Accounting Officer at Dade Behring, Inc., a clinical diagnostics company. Upon the purchase of Dade Behring by Siemens Healthcare in November 2007 and until June 2008, Mr. Busky assumed the role of Vice President, Corporate Controller for the Siemens Healthcare Diagnostics division. Previously, Mr. Busky served in various roles of increasing responsibility at Dade Behring, including Vice President, Treasurer, Vice President, Corporate Controller and Vice President, Corporate Planning. Before joining Dade Behring in 1997, Mr. Busky worked in the audit function of Price Waterhouse, a global accounting firm, for nine years. Mr. Busky is a Certified Public Accountant and holds a Bachelor of Business Administration in Accounting and a Masters in Business Administration from Loyola University in Baltimore.

John D. Eisel has served as Chief Operating Officer of InnerWorkings since September 2011. Previously, Mr. Eisel was the Divisional Vice President of Pharmaceutical Strategic Operations for Walgreens Corporation. From 2004 to 2010, Mr. Eisel worked at McKinsey & Company, where he rose to the position of Associate Principal. He began his career in PricewaterhouseCoopers' Advisory Practice. Mr. Eisel is a Certified Public Accountant, earned a Masters in Business Administration from Northwestern University and graduated with a Bachelor of Science in Accountancy from the University of Illinois, Urbana-Champaign.

Ronald C. Provenzano has served as General Counsel of InnerWorkings since September 2012. 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.

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, Joseph M. Busky, 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

27


 
 

TABLE OF CONTENTS

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 2013.  We had another year of record revenue growth in 2013; however, our earnings did not meet our expectations.

We had record revenue of $891.0 million in 2013, an increase of 12.8% compared to revenue of $789.6 million in 2012.
We continued our rapid international growth, with revenue of $89.3 million in 2013 for our Latin America segment, an increase of 50.8% compared to $59.2 million in 2012, and with revenue of $145.0 million in 2013 for our EMEA segment, an increase of 74.1% compared to $83.3 million in 2012.
Adjusted EBITDA (as defined below under “Determining 2013 Executive Compensation”) was $26.9 million in 2013, which fell short of our 2013 goal.
We hired new leadership in France to address the performance and leadership issues within Production Graphics, a France-based business we acquired in 2011.
We re-engineered our approach to the middle market through our entry into a strategic alliance with a Fortune 500 company with retail locations across the United States.

Impact of Company Performance on Compensation.  Our Company’s results in 2013 had a direct impact on annual incentive compensation earned by our executive officers, as more thoroughly described later in this “Compensation Discussion and Analysis.” For 2013, our executive officers earned 55% to 60% of their target annual incentive awards. In addition, the value of the executive officers’ equity holdings declined over the course of 2013 due to the decline in the Company’s stock price during that period. The table below illustrates the total grant date fair value of equity awards our executive officers received in 2011, 2012 and 2013 compared to their realizable value as of December 31, 2013. Realizable value is defined as the value of equity awards which would be received upon exercise as of a given date after grant.

[GRAPHIC MISSING]

Advisory Approval of Executive Compensation.  The Company’s executive compensation as disclosed in the Company’s 2011 Proxy Statement (filed on April 29, 2011) was approved on an advisory basis by holders of approximately 99% of the shares voted at the Company’s June 16, 2011 annual meeting. The Compensation Committee’s current compensation programs, objectives and philosophy remain consistent with the compensation programs in existence since 2010, 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 2013 or 2014 in connection with the results of the 2011 stockholder advisory vote. Further, at the

28


 
 

TABLE OF CONTENTS

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, we are providing our stockholders the opportunity to approve our executive compensation at the 2014 annual meeting.

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 2006 Stock Incentive Plan 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

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 meetingkey company and individual performance goals.
Long-Term Equity Incentives   Provides long-term incentive to focus on stockholder value creation.   Value opportunity for executivesis directly tied to long-term improvement of Company stock price.

     
2013 Compensation Allocation Relative to Total Compensation*
Name   Base Salary (%)   Annual Bonus Earned
(%)
  Long-Term Equity Incentives
(%)
Eric D. Belcher     27.1 %      17.3 %      54.2 % 
Joseph M. Busky     36.1       13.0       48.1  
John D. Eisel     46.5       16.7       33.2  
Ronald C. Provenzano     56.9       17.1       21.3  

* Based on data in the Summary Compensation Table.

29


 
 

TABLE OF CONTENTS

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.  In late 2012, the Compensation Committee retained an external independent consultant, The Delves Group, to advise the Compensation Committee on executive compensation matters, including the composition of the Company’s peer group and competitive pay practices for 2013. Our independent advisors from The Delves Group joined Towers Watson during 2013. After evaluating the ability of Towers Watson to provide objective executive compensation consulting services, the Committee elected to engage Towers Watson as its advisor. The Compensation Committee also retained Towers Watson to provide guidance with respect to executive compensation decisions for 2014.

For 2013, the Compensation Committee worked with Delves to review and update the peer group that had been used to advise executive compensation determinations for 2012. In October 2012, the peer group was revised to include companies that reflect the Company’s continued growth in sales and business complexity. 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 Committee determined that the revised peer group of 18 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 2013 compensation decisions. In addition to the compensation data disclosed by the companies in the peer group, Delves utilized compensation data from nationally recognized compensation surveys to advise the Committee on competitive compensation levels.

The companies included in the revised peer group used to benchmark the 2013 compensation levels of the executive officers are listed below:

Cenveo, Inc.
IHS, Inc.*
Sykes Enterprises, Inc.*
VistaPrint N.V.
MAXIMUS, Inc.*
Consolidated Graphics, Inc.*
Accretive Health, Inc.*
ICF International, Inc.*
Navigant Consulting, Inc.
Huron Consulting Group, Inc.
Multi-Color Corp.*
Standard Register Company*
Corporate Executive Board Company*
Resources Connection, Inc.
Ennis, Inc.
Schawk, Inc.
TRC Companies, Inc.*
CRA International, Inc.*

* These companies are new to the peer group for 2013.

30


 
 

TABLE OF CONTENTS

For 2013, the Compensation Committee considered the 25th percentile, median and 75th percentile base salaries, bonus targets, long term incentives and total compensation for the relevant executive officers included in the Delves report to evaluate each executive’s compensation. The Compensation Committee primarily looks at the 50th 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 2013 Executive Compensation

2013 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 50th 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 2013 salaries of our Chief Executive Officer, our Chief Financial Officer, and our Chief Operating Officer remained unchanged from 2012 levels of $700,000, $450,000 and $350,00 per year, respectively. Our General Counsel’s 2013 base salary was increased by $50,000, from $250,000 to $300,000, in accordance with the terms of his 2012 employment agreement.

The Summary Compensation Table sets forth the actual base salary earned by each of our named executive officers during 2013. The table below sets forth our named executive officers’ base salary rates as in effect in 2012, the changes that went into effect on January 1, 2013, and the percentage of increase, if any.

     
  Comparative Information for 2013 Base Salary Rates
Name   Base Salary
Rate in 2012
($)
  Base Salary
Rate Effective
January 1, 2013
($)
  Percentage
Increase
(%)
Eric D. Belcher   $ 700,000     $ 700,000       0 % 
Joseph M. Busky     450,000       450,000       0  
John D. Eisel     350,000       350,000       0  
Ronald C. Provenzano(1)     250,000       300,000       20  

(1) Mr. Provenzano was hired in September 2012.

2013 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 2013 were administered under our Annual Incentive Plan.

The 2013 target opportunities under the Annual Incentive Plan were approved by the Compensation Committee on February 5, 2013. The 2013 management bonus award opportunities were based on the following criteria: 40% on Adjusted EBITDA performance (50% to 200% pay-out based on reaching 90% to 110% of target Adjusted EBITDA of $58.3 million), 40% on revenue growth (50% to 200% pay-out based on reaching 90% to 110% of target revenue of $940 million) and 20% based on qualitative Company performance, which includes goals such as client retention, middle market growth, international expansion and improved ROIC results).

31


 
 

TABLE OF CONTENTS

The following table sets forth the Company’s 2013 results with respect to the quantitative criteria components of our Annual Incentive Plan:

       
  2013 Target   2013 Actual   Percentage of Target Reached   Weighting
Revenue   $ 940.0 million     $ 891.0 million       95 %      40 % 
Adjusted EBITDA*   $ 58.3 million     $ 26.9 million       46 %      40 % 

* Adjusted EBITDA, which represents income from operations with the addition of depreciation and amortization, stock-based compensation expense, change in the fair value of contingent consideration liabilities and certain legal settlements, 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. Our management team uses Adjusted EBITDA to evaluate the performance of our 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 our overall financial performance and liquidity. Moreover, the Adjusted EBITDA definition we use may not be comparable to similarly titled measures reported by other companies.

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 the quantitative and qualitative targets, the Compensation Committee approved 2013 incentive bonuses earned by our named executive officers as set forth in the table below. The table sets forth the fiscal 2013 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.

           
  2013 Annual Cash Incentive Awards
     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       55 %    $ 446,000  
Joseph M. Busky     60       270,000       200       540,000       60       162,000  
John D. Eisel     60       210,000       200       420,000       60       126,000  
Ronald C. Provenzano     50       150,000       200       300,000       60       90,000  

There were no specific individual performance goals for 2013 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.

2013 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.

32


 
 

TABLE OF CONTENTS

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. These awards vest in four equal annual installments beginning one year after 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.

     
  2013 Long-Term Equity Incentives
Name   Grant Date Value of Options
($)
  Grant Date Value of Restricted Stock
($)
  Total Value
($)
Eric D. Belcher   $ 700,000     $ 700,000     $ 1,400,000  
Joseph M. Busky     300,000       300,000       600,000  
John D. Eisel     125,000       125,000       250,000  
Ronald C. Provenzano     0       112,500       112,500  

Stock Options.  For our named executive officers, our stock option program was initially based on grants individually negotiated in connection with employment agreements, and now consists of annual grants to our executives. Our stock options are granted under the terms and conditions of the amended and restated 2006 Stock Incentive Plan, which we refer to as 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. 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, as amended.

Restricted Stock Awards.  Subject to the terms and conditions of the 2006 Plan, our Compensation Committee may, at any time and from time to time, grant restricted stock to participants in such amounts as it determines. 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 2014 Executive Compensation

2014 Base Salary.  Taking into consideration the Company’s performance in 2013, the individual performance of our named executive officers, and the competitive benchmarking results from our annual executive compensation review, on February 3, 2014, the Compensation Committee determined that the annual base salaries of our Chief Executive Officer and Chief Operating Officer would remain at current levels (i.e., $700,000 for Mr. Belcher and $350,000 for Mr. Eisel); the annual base salary of our Chief Financial Officer, Mr. Busky, was increased to $460,000 for 2014 from $450,000 in 2013; and the annual base salary of our General Counsel was increased to $320,000 for 2014 from $300,000 in 2013.

     
  Comparative Information for 2014 Base Salary Rates
Name   Base Salary Rate in 2013
($)
  Base Salary Rate Effective April 1, 2014
($)
  Percentage Increase
(%)
Eric D. Belcher   $ 700,000     $ 700,000       0 % 
Joseph M. Busky     450,000       460,000       2  
John D. Eisel     350,000       350,000       0  
Ronald C. Provenzano     300,000       320,000       7  

33


 
 

TABLE OF CONTENTS

2014 Annual Cash Incentives.  The 2014 target opportunities under the Annual Incentive Plan were approved by the Compensation Committee on February 3, 2014. For the named executive officers, the target bonus award is 115% of the base salary for the Chief Executive Officer, 60% of the base salary for the Chief Financial Officer, 60% of the base salary for the Chief Operating Officer, and 50% of the base salary for the General Counsel. The maximum bonus awards payable to the named executive officers are 200% of such target amounts.

2014 Long-Term Equity Incentives.  The 2014 target long-term equity incentive opportunities were approved by the Compensation Committee on February 3, 2014 and will be granted to our named executive officers (other than Mr. Busky, as explained below) 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 $1,194,244 for the Chief Executive Officer, $383,861 for the Chief Operating Officer, and $331,000 for the General Counsel, in each case divided equally between options and restricted stock grants with substantially similar terms as the 2013 grants, including vesting in four equal annual installments beginning one year after the grant date.

With respect to Mr. Busky, on March 18, 2014, the Compensation Committee approved a special retention equity grant valued at $2,000,000, issued in the form of restricted stock on March 21, 2014. This special retention equity grant was issued in lieu of any ordinary long-term equity incentive opportunities that Mr. Busky would otherwise have been eligible to receive in 2014, 2015, and 2016. The restricted stock will vest in full on March 21, 2017, subject to Mr. Busky’s continued employment through such date, and vesting will be accelerated in the event of a change in control or if Mr. Busky’s employment is terminated by the Company without cause or by Mr. Busky for good reason. This special retention equity grant was designed and approved by the Compensation Committee, as advised by its independent compensation consultant, in view of the desire to retain Mr. Busky’s services, which the Compensation Committee determined was in the best interests of the Company and its shareholders. The Compensation Committee believes that the total cost of this award is not significantly greater than the aggregate cost of the awards Mr. Busky would otherwise likely have received in 2014, 2015, and 2016.

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 2013, we provided a 401(k) matching contribution equal to 12.5% of an employee’s contributions under our 401(k) plan, capped at the lesser of 5% of the employee’s salary, or $1,500. Mr. Belcher, Mr. Busky, Mr. Eisel, and Mr. Provenzano received matching contributions of $1,500 each for 2013. In 2013, 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. Our severance and change in control provisions for the named executive officers are summarized in “— Employment Agreements” and “— Potential Payments upon Termination or Change in Control.” We believe our arrangements are reasonable and consistent with market practices. Cash severance is limited to one year of salary continuation for Messrs. Busky, Eisel, and Provenzano (at a rate equal to their then current base salary) and 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 with a change in control. 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, Mr. Belcher’s unvested options and restricted stock, Mr. Busky’s 2014 special retention equity grant, and Mr. Eisel’s 2011 options and restricted stock will all vest upon a change in control.

34


 
 

TABLE OF CONTENTS

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 annual base salary and the other named executive officers must hold stock with a value equal to three times annual base salary. 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 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, 2013, our Chief Executive Officer and Chief Financial Officer have met and exceeded the stock ownership guidelines, and our other named executive officers are on track to meet them within three years of becoming subject to the guidelines.

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, short sales are prohibited and margin accounts and pledging are discouraged, and 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 2013 through February 2014, our General Counsel, on behalf of the Board, held telephonic meetings with representatives of institutional shareholders representing more than 30% 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.

35


 
 

TABLE OF CONTENTS

Executive Compensation

The following table sets forth the information regarding 2013 compensation for each of our named executive officers. 2012 and 2011 information is presented for executives who were also named executive officers during those years.

2013 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
    2013       700,000             700,000       700,000       446,000       35,846       2,581,846  
    2012       687,500             550,000       550,000       675,000       37,646       2,500,146  
    2011       612,500       34,000       425,000       425,000       716,000       34,874       2,253,374  
Joseph M. Busky Chief Financial Officer     2013       450,000             300,000       300,000       162,000       33,446       1,245,446  
    2012       443,750             200,000       200,000       215,000       35,246       1,093,996  
    2011       413,750             165,000       165,000       250,000       31,474       1,031,224  
John D. Eisel
Chief Operating Officer
    2013       350,000             125,000       125,000       126,000       26,499       752,499  
    2012       312,692             100,000       100,000       200,000       28,299       740,991  
    2011       80,770       100,000 (3)      500,000       500,000             9,493       1,190,263  
Ronald C. Provenzano General Counsel     2013       300,000                   112,500       90,000       23,846       526,346  

(1) Amounts represent the full grant date fair value of the stock option awards and restricted stock awards granted in 2013, 2012 and 2011 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, 2013, as amended.
(2) Consists of 401(k) matching contributions, reimbursed car payments and medical insurance premiums.
(3) John D. Eisel joined the Company as its Chief Operating Officer in September of 2011 and was not eligible for a 2011 incentive bonus award. However, Mr. Eisel did receive a $100,000 signing bonus upon joining the Company. A pro-rata share of this signing bonus is recoverable should Mr. Eisel leave the company prior to the fourth anniversary of his start date with the Company.

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

36


 
 

TABLE OF CONTENTS

2013 GRANTS OF PLAN-BASED AWARDS

The following table provides information for each of the Company’s named executive officers regarding 2013 plan-based awards.

                 
                 
Name   Type of Award   Grant Date   Threshold
($)(1)
  Target
($)(1)
  Maximum
($)(1)
  All Other Stock Awards: Number of Shares of Stock
(#)
  All Option Awards: Number of Securities Underlying Options
(#)
  Exercise
Price of Option Awards
($)/sh
  Grant Date Fair Value of Stock and Option
Awards
($)(2)
Eric D. Belcher     Annual Incentive Award              $ 402,500     $ 805,000     $ 1,610,000                          
       Restricted Stock       3/15/2013                         46,512                 $ 700,000  
       Stock Options       3/15/2013                               120,898     $ 15.05     $ 700,000  
Joseph M. Busky     Annual Incentive Award              $ 135,000     $ 270,000     $ 540,000                          
       Restricted Stock       3/15/2013                         19,934                 $ 300,000  
       Stock Options       3/15/2013                               51,813     $ 15.05     $ 300,000  
John D. Eisel     Annual Incentive Award              $ 105,000     $ 210,000     $ 420,000                          
       Restricted Stock       3/15/2013                         8,306                 $ 125,000  
       Stock Options       3/15/2013                               21,589     $ 15.05     $ 125,000  
Ronald C.
Provenzano
    Annual Incentive Award              $ 75,000     $ 150,000     $ 300,000                          
       Restricted Stock       11/12/2013                         18,443                 $ 112,500  

(1) These represent potential incentive opportunities for 2013 annual incentive awards. Actual amounts earned for 2013 performance 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, Busky, and Eisel is $15.05. 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, 2013, as amended.

Employee Benefit Plan

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 Stock Incentive Plan, the Unit Option Plan was merged into the 2006 Stock Incentive 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 Stock Incentive Plan. The awards remaining under the Unit Option Plan were rolled into the 2006 Stock Incentive Plan. No additional awards may be made under the Unit Option Plan on or after the effective date of the 2006 Stock Incentive Plan.

2006 Stock Incentive Plan

We maintain the InnerWorkings, Inc. 2006 Stock Incentive Plan. The principal purpose of the 2006 Stock Incentive Plan is to attract, motivate, reward and retain selected employees, consultants and directors through the granting of stock-based compensation awards. The 2006 Stock Incentive 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 21, 2014, our Compensation Committee approved the amended and restated 2006 Stock Incentive Plan, subject to stockholder approval, which amendment and restatement (i) increases the maximum

37


 
 

TABLE OF CONTENTS

number of shares of common stock that may be issued under the plan by 2,200,000, from 5,650,000 to 7,850,000, and (ii) reiterates the performance based goals used in granting performance based awards under the 2006 Stock Incentive Plan to be approved by stockholders for purposes of Section 162(m) of the Code.

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.

38


 
 

TABLE OF CONTENTS

OUTSTANDING EQUITY AWARDS AT 2013 FISCAL YEAR-END

The following table summarizes the number of securities underlying outstanding plan awards for each named executive officer as of December 31, 2013.

           
  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     25,845             0.65       9/14/2015       12,500 (8)      97,375  
       100,000             1.00       10/1/2015       25,790 (3)      200,904  
       161,031             14.36       1/22/2018       34,464 (3)      268,475  
       575,000             6.00       11/14/2018       46,512 (4)      362,328  
       50,476       50,476 (2)      8.24       6/23/2021              
       22,917       68,751 (3)      11.97       3/15/2022              
             120,898 (4)      15.05       3/15/2023              
Joseph M. Busky     152,091             12.54       7/16/2018       10,500 (8)      81,795  
       19,596       19,596 (2)      8.24       6/23/2021       10,012 (2)      77,993  
       8,334       25,002 (3)      11.97       3/15/2022       12,531 (3)      97,616  
             51,813 (4)      15.05       3/15/2023       19,934 (4)      155,286  
John D. Eisel     66,488       66,491 (5)      7.58       9/20/2021       32,982 (5)      256,930  
       4,159       12,480 (6)      12.24       9/14/2022       6,128 (6)      47,737  
             21,589 (4)      15.05       3/15/2023       8,306 (4)      60,704  
Ronald C. Provenzano     12,669       50,676 (7)      12.10       9/4/2022       18,433 (9)      140,671  
                               24,794 (7)      193,145  

(1) The market value of unvested stock awards is calculated by multiplying the number of shares or units of stock that have not vested by $7.79, the Company’s closing stock price on December 31, 2013, the last trading day of the 2013 fiscal year.
(2) Vests in two equal annual installments beginning on June 23, 2014.
(3) Vests in three equal annual installments beginning on March 15, 2014.
(4) Vests in four equal annual installments beginning on March 15, 2014.
(5) Vests in two equal annual installments beginning on September 20, 2014.
(6) Vests in three equal annual installments beginning on September 14, 2014.
(7) Vests in four equal annual installments beginning on September 4, 2014.
(8) Vested on March 10, 2014.
(9) Vests in four equal annual installments beginning on November 12, 2014.

39


 
 

TABLE OF CONTENTS

2013 OPTION EXERCISES AND STOCK VESTED TABLE

The following table sets forth the number of shares acquired and the value realized by our named executive officers upon the exercise of option awards and the vesting of restricted stock awards during the fiscal year ended December 31, 2013.

       
  Option Awards   Stock Awards
Name   Number of Shares Acquired on Exercise
(#)
  Value Realized on Exercise
($)(1)
  Number of Shares Acquired on Vesting
(#)
  Value
Realized on Vesting
($)(2)
Eric D. Belcher     142,092       1,574,248       36,883       517,074  
Joseph M. Busky                 18,532       195,860  
John D. Eisel                 19,683       284,803  
Ronald C. Provenzano                 6,198       68,550  

(1) Value realized upon the exercise of option awards is based on: (i) if the exercise involves a sale of some or all of the exercised shares, the difference between the actual price at which the exercised shares were sold and the exercise price of the options, or (ii) in all other cases, the difference between the closing market price of our common stock as reported on the NASDAQ Global Market on the date of exercise and the exercise price of the options.
(2) Value based on the closing market price of our common stock as reported on NASDAQ Global Market on the date of vesting.

2013 PENSION BENEFITS

We do not maintain any qualified or non-qualified defined benefit plans.

2013 NONQUALIFIED DEFERRED COMPENSATION

We do not maintain any non-qualified deferred compensation plans.

Employment Agreements

Employment Agreement with Eric D. Belcher

We entered into an amended and restated employment agreement with Eric D. Belcher, our Chief Executive Officer, effective January 1, 2014, upon the expiration of his prior employment agreement effective December 31, 2013. Mr. Belcher’s original employment agreement was entered into in June 2005, and was subsequently amended and restated effective January 1, 2009. The employment agreement provides that the amount of Mr. Belcher’s base salary will be determined annually by our Board, but will not be less than $700,000 per annum. Additionally, Mr. Belcher will receive a target annual bonus under the Company’s Annual Incentive Plan of no less than 115% of his base salary if the Company meets its annual targets, with a maximum bonus eligibility not to exceed 200% of his bonus target. Mr. Belcher will also be eligible to receive long-term incentive awards with a targeted grant date value of 200% of his base salary, subject to adjustment by the Compensation Committee in its sole discretion.

In connection with the execution of his original employment agreement in June 2005, Mr. Belcher received options to purchase 105,000 shares of common stock at an exercise price of $1.00 per share. These options vested upon the completion of our initial public offering and all have been exercised. Also in connection with his original employment agreement, Mr. Belcher was granted options to purchase 120,000 and 100,000 shares of common stock in September 2005 and October 2005, respectively. These grants have exercise prices of $0.65 and $1.00, respectively, which were the fair market values of our stock at the time of the grant, based on an independent valuation. These option grants are fully vested with 25,845 and 100,000 shares remaining unexercised, respectively, as of December 31, 2013.

In January 2008, in connection with an amendment of Mr. Belcher’s employment agreement, he was granted 69,638 shares of restricted stock which vest ratably over four years and are all fully vested as of December 31, 2012. Vesting of these shares would have accelerated in the event of a change in control of the Company.

40


 
 

TABLE OF CONTENTS

In November 2008, in connection with Mr. Belcher’s appointment as Chief Executive Officer effective January 1, 2009, Mr. Belcher was granted options to purchase 575,000 shares of common stock at an exercise price of $6.00 per share, which vest ratably over five years. Vesting of these options will accelerate in the event of a change in control of the Company.

Upon execution of his 2009 amended and restated employment agreement, Mr. Belcher was paid a long term cash incentive bonus of $400,000, which was repayable on a pro rata basis if Mr. Belcher’s employment had terminated under certain circumstances up to January 1, 2012.

Pursuant to his amended and restated employment agreement, Mr. Belcher’s employment may be terminated, with or without cause, by our Board. If we terminate Mr. Belcher’s employment for cause (as described below) or on account of death or disability, or if Mr. Belcher terminates his employment for any reason other than a good reason (as described below), Mr. Belcher is entitled to no further compensation or benefits other than those earned through the date of termination. If we terminate Mr. Belcher’s employment for any reason other than for cause, death or disability, or if Mr. Belcher terminates his employment for good reason, we will provide the following severance benefits:

continued payment of base salary at his rate then in effect for twenty-four months following termination,
his target annual bonus for the fiscal year in which the date of termination occurs, plus his pro-rated annual bonus based on actual performance for the year in which the date of termination occurs,
immediate vesting of all outstanding equity-based awards which would otherwise have vested based solely on the passage of time if his employment had continued for a period of 24 months following the termination,
immediate vesting of a portion of all outstanding equity-based awards which would otherwise vested based on performance (which shall not exceed 100% of such award) as if he had remained employed until the last day of the performance period, pro rated based on the number of full calendar months elapsed during the performance period through the date of termination plus an additional 24 months, and
if the qualifying termination occurs within 90 days before or 24 months after a change in control, immediate vesting of all outstanding equity-based awards (including immediate vesting at the target level of performance for equity-based awards), and
any outstanding accrued obligations.

“Cause” is defined in Mr. Belcher’s employment agreement as the occurrence of any of the following:

theft, dishonesty, or falsification of employment or Company records by Mr. Belcher;
the Board’s determination that Mr. Belcher has committed a felony or any act involving moral turpitude;
the Board’s determination that Mr. Belcher has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or
Mr. Belcher’s continuing material breach of his employment agreement following his receipt of written notice of the breach and a reasonable opportunity to cure it.

“Good reason” is defined in Mr. Belcher’s employment agreement as the occurrence of any of the following:

a material reduction of Mr. Belcher’s duties or authority under, or assignment of duties that are materially inconsistent with, the terms of his employment agreement, or the Company’s failure to appoint or reelect Mr. Belcher to his positions under his employment agreement (however, such an event in and of itself shall not constitute good reason during the nine month period following a change in control);

41


 
 

TABLE OF CONTENTS

a relocation of Mr. Belcher’s office to more than 100 miles from the Company’s current office without his consent; or
the Company’s breach of his employment agreement that continues for more than 30 days after the Company’s receipt of notice thereof.

Mr. Belcher’s employment agreement expires December 31, 2014, and shall renew automatically beginning on such date for successive one-year periods unless either party delivers a notice of non-renewal.

Employment Agreement with Joseph M. Busky

We entered into an amended and restated employment agreement with Joseph M. Busky, our Chief Financial Officer, effective April 30, 2012. Mr. Busky’s original employment agreement was entered into in July of 2008. Mr. Busky’s amended and restated employment agreement extends through December 31, 2016.

The employment agreement provides that the amount of Mr. Busky’s base salary will be determined annually by our Board, but will not be less than $450,000 per annum. Additionally, Mr. Busky will receive a target annual bonus of 50% of his base salary if the Company meets its annual targets, with a maximum bonus eligibility not to exceed 200% of his bonus target. The actual amount of the annual bonus is discretionary and determined based upon Mr. Busky’s performance, our performance and certain performance targets approved by our Board (and by the Compensation Committee under our Annual Incentive Plan). The agreement also contains customary non-competition and non-solicitation provisions.

Mr. Busky’s employment may be terminated, with or without cause, by the Company. If we terminate Mr. Busky’s employment for cause (as described below) or on account of death or disability, or if Mr. Busky terminates his own employment for any reason other than for good reason (as described below), Mr. Busky is generally entitled to no further compensation or benefits other than those earned through the date of termination. If we terminate Mr. Busky’s employment for any reason other than for cause, death or disability, or if Mr. Busky terminates his own employment for good reason, we will continue to pay base salary for 12 months following termination. Mr. Busky would also have been entitled to immediate vesting of all equity awards granted on or about July 16, 2008. These awards are fully vested as of December 31, 2012.

“Cause” is defined in Mr. Busky’s employment agreement as the occurrence of any of the following:

Mr. Busky’s failure to perform reasonably assigned duties following his receipt of written notice of the failure and a reasonable opportunity to remedy it;
theft, dishonesty, or falsification of employment or Company records by Mr. Busky;
the Company’s determination that Mr. Busky has committed a felony or any act involving moral turpitude;
the Company’s determination that Mr. Busky has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or
Mr. Busky’s material breach of his employment agreement following his receipt of written notice of the breach and a reasonable opportunity to cure it.

“Good reason” is defined in Mr. Busky’s employment agreement as the occurrence of any of the following:

a material reduction in Mr. Busky’s duties or responsibilities below what is customary for a chief financial officer at a similar company without his consent;
a relocation of Mr. Busky’s office to more than 100 miles from the Company’s current office without his consent; or
the Company’s breach of his employment agreement that continues for more than 30 days after the Company’s receipt of notice thereof.

If, during the three months prior to the public announcement of a proposed change of control or at any time following a change of control, the executive’s employment is terminated by us for any reason other than

42


 
 

TABLE OF CONTENTS

cause, or terminated by the executive for good reason, Mr. Busky is entitled to full vesting of all equity awards granted on or about July 16, 2008. “Change of Control” has the same definition as set forth in our 2006 Stock Incentive Plan.

Employment Agreement with John D. Eisel

We entered into an employment agreement with John D. Eisel, our Chief Operating Officer, effective September 20, 2011. Under the employment agreement, Mr. Eisel will receive a base salary of not less than $300,000 per annum and, after the one year anniversary of his start date, not less than $350,000 per annum. The Company also agreed to grant Mr. Eisel a $100,000 cash signing bonus, which is repayable on a pro rata basis under certain circumstances. In addition, the Company agreed to grant Mr. Eisel $1,000,000 in stock-based compensation, consisting of 50% in common stock options, which vest ratably over a four-year period, and 50% in restricted shares of common stock, which vest ratably over a four-year period. These awards are subject to the Company’s standard terms and conditions for stock option and restricted stock grants. The employment agreement was amended, effective January 1, 2014, to provide that, instead of an annual bonus under the Company’s Annual Incentive Plan, Mr. Eisel will be eligible to receive 5% of gross profit up to $2,000,000 and 15% of gross profit over $2,000,000 relative to orders invoiced on specified accounts for the 2014 bonus plan year, and for the 2015 and 2016 bonus plan years, Mr. Eisel will be eligible to receive 10% of gross profit relative to orders invoiced on specified accounts. The amendment also provides that Mr. Eisel is eligible to receive commissions on new business, as described in the amendment.

Mr. Eisel’s employment may be terminated, with or without cause, by the Company. If the Company terminates Mr. Eisel’s employment for cause (as described below) or on account of death or disability, or if Mr. Eisel terminates his own employment for any reason other than for good reason (as described below), Mr. Eisel is generally entitled to no further compensation or benefits other than those earned through the date of termination, plus continued commissions on new business for a period of one year following termination. If we terminate Mr. Eisel’s employment for any reason other than for cause, death or disability, or if Mr. Eisel terminates his own employment for good reason, we will continue to pay base salary for 12 months following termination. Mr. Eisel is also entitled to immediate vesting of all equity awards granted on or about September 20, 2011 for a period of 24 months after his termination as if Mr. Eisel had remained an employee of the Company.

“Cause” is defined in Mr. Eisel’s employment agreement as the occurrence of any of the following:

Mr. Eisel’s failure to perform reasonably assigned duties following his receipt of written notice of the failure and a reasonable opportunity to remedy it;
theft, dishonesty, or falsification of employment or Company records by Mr. Eisel;
the Company’s determination that Mr. Eisel has committed a felony or any act involving moral turpitude;
the Company’s determination that Mr. Eisel has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or
Mr. Eisel’s material breach of his employment agreement following his receipt of written notice of the breach and a reasonable opportunity to cure it.

“Good Reason” is defined in Mr. Eisel’s employment agreement as the occurrence of any of the following:

a material reduction in Mr. Eisel’s duties or responsibilities below what is customary for a chief operating officer at a similar company without his consent;
a relocation of Mr. Eisel’s office to more than 100 miles from the Company’s current office without his consent; or
the Company’s breach of his employment agreement that continues for more than 30 days after the Company’s receipt of notice thereof.

43


 
 

TABLE OF CONTENTS

Mr. Eisel’s employment agreement was amended, effective February 22, 2013, to eliminate the “modified single-trigger” severance provisions that (1) required him to continue employment for 9 months following a change in control and (2) provided that Mr. Eisel’s resignation for any reason during the 90 days following such 9 month period would constitute “good reason” entitling him to severance benefits.

Employment Agreement with Ronald C. Provenzano

We entered into an employment agreement with Ronald C. Provenzano, our General Counsel, effective August 23, 2012. Under the employment agreement, Mr. Provenzano received a base salary of $250,000 per annum for 2012, and will receive a base salary of $300,000 per annum starting in 2013. The employment agreement also provides that Mr. Provenzano will be eligible for an annual performance bonus, with an annual target bonus amount equal to not less than 50% of his base salary. The Company also agreed to grant Mr. Provenzano an equity grant upon signing equal in value to $750,000, consisting of 50% in common stock options, which vest ratably over a five-year period, and 50% in restricted shares of common stock, which vest ratably over a five-year period. These awards are subject to the Company’s standard terms and conditions for stock option and restricted stock grants.

Mr. Provenzano’s employment may be terminated, with or without cause, by the Company. If the Company terminates Mr. Provenzano’s employment for cause (as described below) or on account of death or disability, or if Mr. Provenzano terminates his own employment for any reason other than for good reason (as described below), Mr. Provenzano is generally entitled to no further compensation or benefits other than those earned through the date of termination. If we terminate Mr. Provenzano’s employment for any reason other than for cause, death or disability, or if Mr. Provenzano terminates his own employment for good reason, we will continue to pay base salary for 12 months following termination. Mr. Provenzano is also entitled to immediate vesting of all equity awards granted on or about August 23, 2012 for a period of 24 months after his termination as if Mr. Provenzano had remained an employee of the Company.

“Cause” is defined in Mr. Provenzano’s employment agreement as the occurrence of any of the following:

theft, dishonesty, or falsification of employment or Company records by Mr. Provenzano;
the Company’s determination that Mr. Provenzano has committed a felony or any act involving moral turpitude;
the Company’s determination that Mr. Provenzano has engaged in willful misconduct or gross negligence that has had a material adverse effect on the Company’s reputation or business; or
Mr. Provenzano’s material breach of his employment agreement following his receipt of written notice of the breach and a reasonable opportunity to cure it.

“Good Reason” is defined in Mr. Provenzano’s employment agreement as the occurrence of any of the following:

a material reduction in Mr. Provenzano’s duties or responsibilities below, or assignment of duties that are materially inconsistent with, the duties and authority set forth in his employment agreement;
a relocation of Mr. Provenzano’s office to more than 100 miles from the Company’s current office without his consent; or
the Company’s breach of his employment agreement that continues for more than 30 days after the Company’s receipt of notice thereof.

44


 
 

TABLE OF CONTENTS

POTENTIAL PAYMENTS UPON TERMINATION AND/OR CHANGE IN CONTROL

Assuming the employment of our named executive officers were to be terminated without cause or for good reason, each as of December 31, 2013, the following individuals would be entitled to payments in the amounts set forth opposite to their name in the below table:

 
Named Executive Officer   Cash Severance
Eric D. Belcher   $91,875 per month for 24 months
Joseph M. Busky   $37,500 per month for 12 months
John D. Eisel   $29,167 per month for 12 months
Ronald C. Provenzano   $25,000 per month for 12 months

We are not obligated to make any cash payments to these executives if their employment is terminated by us for cause or by the executive without good reason. No severance or benefits are provided for any of the executive officers in the event of death or disability. A change in control does not affect the amount or timing of these cash severance payments.

Assuming the employment of our named executive officers were to be terminated without cause or for good reason, each as of December 31, 2013, the following individuals would be entitled to accelerated vesting of their outstanding stock options and restricted stock awards described in the table below:

   
Named Executive Officer   Value of Equity Awards: Termination Without Cause or for Good Reason(1)   Value of Equity Awards: In Connection
With a Change in Control(1)
Eric D. Belcher   Additional vesting of all qualified equity awards that would have otherwise occurred if employed during 24 months after termination: 84,522 restricted stock awards with a value of $658,426 and 156,759 options with a value of $0. All other awards which would have become immediately vested had already vested as of December 31, 2013.   Immediate vesting of all qualified unvested options and restricted stock awards: 119,266 restricted stock awards with a value of $929,082 and 240,125 options with a value of $0. All other awards which would have become immediately vested had already vested as of December 31, 2013.
Joseph M. Busky(2)   All awards which would have become immediately vested had already vested as of December 31, 2013.   All awards which would have become immediately vested had already vested as of December 31, 2013.
John D. Eisel   Additional vesting of qualified equity from September 2011 equity grants that would have otherwise occurred if employed during 24 months after termination: 32,983 restricted stock awards with a value of $256,938 and 66,491 options with a value of $13,963.   Immediate vesting of all qualified unvested options and restricted stock awards granted in September of 2011: 32,983 restricted stock awards with a value of $256,938 and 66,491 options with a value of $13,963.
Ronald C. Provenzano   Additional vesting of qualified equity from September 2012 equity grants that would have otherwise occurred if employed during 24 months after termination: 12,397 restricted stock awards with a value of $96,571 and 25,338 options with a value of $0.   Not applicable.

45


 
 

TABLE OF CONTENTS

(1) Option award values are based on the aggregate difference between the respective exercise prices and the closing sale price of our common stock on December 31, 2013. Stock award values are based on the closing sale price of our common stock on December 31, 2013. Our closing stock price on December 31, 2013 was $7.79 per share.
(2) Does not include Mr. Busky’s special retention grant awarded in 2014 (and described above in “— Compensation Discussion and Analysis”) for which vesting is accelerated in full upon (i) a change in control or (ii) his termination of employment by the Company without cause or by him for good reason.

In connection with a termination without cause or a termination for good reason, no payments are due unless the executive executes a general release and waiver of claims against us. During the executive’s employment and for a specified period following a termination for any reason, the executive generally is subject to certain restrictive covenants, including non-competition and non-solicitation of customers and employees of the Company.

COMPENSATION AND RISK

Effects of our Compensation Programs on Risk.  All significant transactions are reviewed, and must be approved, by our senior corporate management. Therefore, even though associates in our sales offices may have performance targets that will be affected by growth or short term profitability of their divisions, they are not in a position to cause us to undertake transactions that might expose us to risks that are material to us as a company without the concurrence of our senior corporate management.

Our senior executives and other members of our senior corporate management may participate in bonus programs that are based upon achievement of performance targets that may benefit from our growth or short term profits. However, the incentives for our senior executives and other members of our senior corporate management team are balanced between short term and long term Company results, do not result in additional financial exposure to the Company, and are consistent with established industry practice. Accordingly, we do not believe that our incentive bonus programs create material incentives for our senior executives, or any other of our associates, to expose us to significant risk.

The Compensation Committee reviewed our compensation programs and policies for features that may give rise to risks that have a material adverse effect on the Company, and found that the compensation programs operate with strong governance features and do not encourage unnecessary or excessive risk taking.

46


 
 

TABLE OF CONTENTS

Summary of Director Compensation

For 2013, non-employee directors earned $100,000 in equity (awarded in restricted shares). The stock awards granted to the Board during 2013 will vest on June 20, 2014. In addition, our directors were reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the Board and its committees. Under our 2006 Stock Incentive Plan, directors are eligible to receive stock option and other equity grants at the discretion of the Compensation Committee or other administrator of the plan.

Directors who are employees of the Company receive no additional compensation for serving on the Board or its Committees. The following table summarizes compensation that our non-employee directors earned during 2013 for services as members of our Board, which was paid in the form of restricted stock awards:

2013 DIRECTOR COMPENSATION

   
Name   Stock Awards
($)(1)
  Total
($)
Charles K. Bobrinskoy     100,000       100,000  
David Fisher     100,000       100,000  
J. Patrick Gallagher, Jr.     100,000       100,000  
Jack M. Greenberg     100,000       100,000  
Julie M. Howard     100,000       100,000  
Linda S. Wolf     100,000       100,000  

(1) Represents grant date fair value of restricted stock awards calculated in accordance with FASB ASC Topic 718.

The aggregate option and stock awards outstanding for each person in the table set forth above as of December 31, 2013 are as follows:

           
  Option Awards   Stock Awards
Name   Vested   Unvested   Exercise Price   Expiration Date   Vested   Unvested
Charles K. Bobrinskoy     50,000           $ 11.86       9/2/2018       43,799       8,811  
       13,441           $ 2.36       2/25/2019              
       13,021           $ 6.86       6/19/2019              
       11,160           $ 8.66       7/1/2021              
David Fisher     1,499           $ 8.41       11/17/2021       8,995       8,811  
J. Patrick Gallagher, Jr.     5,082           $ 7.40       8/16/2021       10,784       8,811  
Jack M. Greenberg     90,000           $ 0.65       10/1/2015       43,799       8,811  
       13,441           $ 2.36       2/25/2019              
       13,021           $ 6.86       6/19/2019              
       11,160           $ 8.66       7/1/2021              
Julie M. Howard               $             4,585       8,811  
Linda S. Wolf     50,000           $ 16.41       11/15/2016       43,799       8,811  
       13,441           $ 2.36       2/25/2019              
       13,021           $ 6.86       6/19/2019              
       11,160           $ 8.66       7/1/2021              

47


 
 

TABLE OF CONTENTS

Director Stock Ownership Guidelines.  On February 5, 2013, the Compensation Committee and Board approved stock ownership guidelines for directors of the Company. Under the guidelines, non-employee directors are expected to hold common stock with a value equal to two times total annual director compensation. Directors are required to meet these guidelines within five years of becoming a member of the Board. Shares that count toward satisfaction of the stock ownership guidelines include:

shares owned outright by the director or his or her immediate family members residing in the same household;
shares held in trust for the benefit of the director 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.

48


 
 

TABLE OF CONTENTS

Notwithstanding anything to the contrary set forth in any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934 (the “Exchange Act”) that might incorporate future filings, including this proxy statement, in whole or in part, the following Report of the Compensation Committee and the Audit Committee Report shall not be deemed to be “Soliciting Material,” are not deemed “filed” with the SEC and shall not be incorporated by reference into any filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in such filing except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.

REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as amended.

By the Compensation Committee
of the Board of Directors,
  
J. Patrick Gallagher, Jr. (Chairman)
Charles K. Bobrinskoy
David Fisher
Jack M. Greenberg
Julie M. Howard
Linda S. Wolf

49


 
 

TABLE OF CONTENTS

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors consists of four non-employee directors, Charles K. Bobrinskoy, David Fisher, Julie M. Howard and Linda S. Wolf, each of whom the Board of Directors has determined to be an independent director as defined in the rules of NASDAQ. The Audit Committee is a standing committee of the Board of Directors and operates under a written charter adopted by the Board of Directors. The Board approved charter is available at www.inwk.com on the “Investor” page under the link “Corporate Governance.” Among its other functions, the Audit Committee has the authority and responsibility to retain and terminate the engagement of the Company’s independent registered public accounting firm (the “independent auditors”).

Management is responsible for the Company’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) and to issue a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.

During 2013, at each of its meetings, the Audit Committee met with the senior members of the Company’s financial management team and the independent auditors. The Audit Committee’s agenda is established by the Audit Committee’s chairman and senior members of the Company’s financial management team. The Audit Committee met in private sessions with the Company’s independent auditors at certain of its meetings, and also separately with the Company’s head of internal audit, without management representation, to discuss financial management, accounting and internal control issues. The Audit Committee has reviewed and discussed with management and the independent auditors the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as amended, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the consolidated financial statements. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee discussed with the independent auditors matters required to be discussed by the Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Company’s independent auditors also provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence. The Committee discussed with the independent auditors that firm’s independence and considered whether the non-audit services provided by the independent auditors are compatible with maintaining their independence.

Based on the Audit Committee’s discussion with management and the independent auditors, and the Audit Committee’s review of the representation of management and the report of the independent auditors to the Audit Committee, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as amended, filed with the Securities and Exchange Commission.

Submitted by the Audit Committee
of the Board of Directors,
  
Charles K. Bobrinskoy (Chairman)
David Fisher
Julie M. Howard
Linda S. Wolf

50


 
 

TABLE OF CONTENTS

FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL REGISTERED
PUBLIC ACCOUNTING FIRM

For the fiscal years ended December 31, 2012 and 2013, Ernst & Young LLP, our independent registered public accounting firm, billed the approximate fees set forth below:

   
Fees   Fiscal Year
Ended
December 31,
2012
  Fiscal Year
Ended
December 31,
2013
Audit Fees(1)   $ 1,109,993     $ 1,862,736  
Audit-Related Fees(2)     20,250       45,000  
Tax Fees            
All Other Fees            
Total   $ 1,130,243     $ 1,907,736  

(1) Audit fees include fees billed for professional services rendered for the integrated audit of our annual consolidated financial statements, the review of the interim consolidated financial statements included in our quarterly reports, and other related services that are normally provided in connection with statutory and regulatory filings.
(2) Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” These services include accounting consultations and due diligence in connection with mergers and acquisitions, attest services related to financial reporting that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

The Audit Committee has adopted certain policies and procedures regarding permitted audit and non-audit services and the annual pre-approval of such services. Each year, the Audit Committee will ratify the types of audit and non-audit services of which management may wish to avail itself, subject to pre-approval of specific services. Each year, management and the independent registered public accounting firm will jointly submit a pre-approval request, which will list each known and/or anticipated audit and non-audit services for the upcoming calendar year and which will include associated budgeted fees. The Audit Committee will review the requests and approve a list of annual pre-approved non-audit services. Any additional interim requests for additional non-audit services that were not contained in the annual pre-approval request will be approved during quarterly Audit Committee meetings.

All services provided by Ernst & Young LLP during the fiscal year ended December 31, 2013 were approved by the Audit Committee.

51


 
 

TABLE OF CONTENTS

OTHER INFORMATION

Stockholder Proposals for the 2015 Annual Meeting

If any stockholder intends to present a proposal to be considered for inclusion in the Company’s proxy materials in connection with the 2015 annual meeting of stockholders, the proposal must be in proper form (per SEC Regulation 14A, Rule 14a-8) and received by the Secretary of the Company on or before December 29, 2014. Stockholder proposals to be presented at the 2015 annual meeting of stockholders which are not to be included in the Company’s proxy materials must be received by the Company no earlier than March 19, 2015 and no later than April 18, 2015, in accordance with the procedures in the Company’s Bylaws.

Expenses of Solicitation

The Company pays the cost of preparing, assembling and mailing this proxy-soliciting material. The Company pays all costs of solicitation, including certain expenses of brokers and nominees who mail proxy materials to their customers or principals.

“Householding” of Proxy Materials

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides convenience for stockholders and cost savings for companies.

We have delivered only one notice to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the notice and, if applicable, proxy materials, as requested, to any stockholder at the shared address to which a single copy of these documents was delivered. Stockholders should contact their broker or, if a stockholder is a direct holder of shares of our common stock, they should submit their request to our transfer agent in writing addressed to: American Stock Transfer and Trust Company, 6201 15th Avenue, Brooklyn, New York 11219. In addition, stockholders who currently receive multiple copies of the notice at their address and would like to request “householding” of their communications should contact their broker or, if a stockholder is a direct holder of shares of our common stock, they should submit a request to our transfer agent in writing at the address above.

Upon request by any stockholder entitled to vote at the annual meeting, we will promptly furnish without charge a separate copy of our proxy statement or annual report to you upon written or oral request to: Investor Relations, InnerWorkings, Inc., 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60654, or by telephone at 1-312-642-3700.

52


 
 

TABLE OF CONTENTS

APPENDIX A

INNERWORKINGS, INC.
2006 STOCK INCENTIVE PLAN

(as amended and restated effective June 13, 2014)


 
 

TABLE OF CONTENTS

INNERWORKINGS, INC. 2006 STOCK INCENTIVE PLAN

TABLE OF CONTENTS

 
  Page

Article 1.

Establishment, Objectives and Duration

    A-1  

Article 2.

Definitions

    A-1  

Article 3.

Administration

    A-5  

Article 4.

Shares Subject to the Plan and Maximum Awards

    A-6  

Article 5.

Eligibility and Participation

    A-7  

Article 6.

Options

    A-7  

Article 7.

Stock Appreciation Rights

    A-9  

Article 8.

Restricted Stock and Restricted Stock Units

    A-10  

Article 9.

Performance Shares

    A-11  

Article 10.

Other Stock Awards

    A-11  

Article 11.

Performance Measures

    A-11  

Article 12.

Beneficiary Designation

    A-12  

Article 13.

Deferrals and Code Section 409A

    A-12  

Article 14.

Rights of Participants

    A-14  

Article 15.

Amendment, Modification and Termination

    A-14  

Article 16.

Nontransferability of Awards

    A-15  

Article 17.

Withholding

    A-15  

Article 18.

Indemnification

    A-16  

Article 19.

Successors

    A-16  

Article 20.

Breach of Restrictive Covenants

    A-16  

Article 21.

Legal Construction

    A-16  

i


 
 

TABLE OF CONTENTS

INNERWORKINGS, INC. 2006 STOCK INCENTIVE PLAN

Article 1. Establishment, Objectives and Duration

1.1 Establishment of the Plan.  InnerWorkings, Inc., a Delaware corporation, hereby establishes this InnerWorkings, Inc. 2006 Stock Incentive Plan (the “Plan”) as set forth herein. Capitalized terms used but not otherwise defined herein will have the meanings given to them in Article 2. The Plan permits the grant of Nonstatutory Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, and other Stock Awards. In addition, the Plan provides the opportunity for the deferral of the payment of salary, bonuses and other forms of incentive compensation in accordance with Section 409A.

The Plan became originally effective on July 31, 2006 and will remain in effect as provided in Section 1.3 hereof. The Plan was amended and restated effective June 19, 2008, subject to approval by the Company’s stockholders at the 2008 annual meeting. The Plan was further amended and restated effective June 18, 2009, subject to approval by the Company’s stockholders at the 2009 annual meeting. The Plan was further amended and restated June 16, 2011, subject to approval by the Company’s stockholders at the 2011 annual meeting. The Plan was further amended and restated effective June 21, 2012, subject to approval by the Company’s stockholders at the 2012 annual meeting. The Plan was further amended and restated June 13, 2014, subject to approval by the Company’s stockholders at the 2014 annual meeting.

1.2 Purpose of the Plan.  The purpose of the Plan is 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. The Plan is further intended to 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.

1.3 Duration of the Plan.  The Plan will commence on the Effective Date, as described in Article 2, and will remain in effect, subject to the right of the Committee to amend or terminate the Plan at any time pursuant to Article 15, until all Shares subject to it pursuant to Article 4 have been issued or transferred according to the Plan’s provisions. In no event may an Award be granted under the Plan on or after the tenth annual anniversary of the Effective Date.

1.4 Plan Merger.  The Company’s 2004 Unit Option Plan was merged into this Plan as of July 31, 2006. Except with respect to rights that may be protected under prior award agreements, stock options or unit options awarded and equity interests authorized for awards under the Prior Plan shall be governed by, and available under, the terms of this Plan.

Article 2. Definitions

Whenever used in the Plan, the following terms have the meanings set forth below, and when the meaning is intended, the initial letter of the word is capitalized:

“Affiliate” means (a) for purposes of Incentive Stock Options, any corporation that is a Parent or Subsidiary of the Company, and (b) for all other purposes hereunder, an entity that is (directly or indirectly) controlled by, or controls, the Company.

“Award” means, individually or collectively, a grant under this Plan to a Participant of Nonstatutory Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and other Stock Awards.

“Award Agreement” means an agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award or Awards granted to the Participant or the terms and provisions applicable to an election to defer compensation under Section 8.2.

“Board” or “Board of Directors” means the Board of Directors of the Company.

“Cause” shall have the meaning set forth in any employment, consulting, or other written agreement between the Participant and the Company or an Affiliate. If there is no employment, consulting, or other written agreement between the Participant and the Company or an Affiliate, or if such agreement does not

A-1


 
 

TABLE OF CONTENTS

define “Cause,” then “Cause” shall have the meaning specified by the Committee in connection with the grant of any Award; provided, that if the Committee does not so specify, “Cause” shall mean the Participant’s:

(a) willful neglect of or continued failure to substantially perform his or her duties with or obligations for the Company or an Affiliate in any material respect (other than any such failure resulting from his or her incapacity due to physical or mental illness);
(b) commission of a willful or grossly negligent act or the willful or grossly negligent omission to act that causes or is reasonably likely to cause material harm to the Company or an Affiliate; or
(c) commission or conviction of, or plea of nolo contendere to, any felony or any crime materially injurious to the Company or an Affiliate.

An act or omission is “willful” for this purpose if it was knowingly done, or knowingly omitted, by the Participant in bad faith and without reasonable belief that the act or omission was in the best interest of the Company or an Affiliate. Determination of Cause shall be made by the Committee in its sole discretion, and may be applied retroactively if, after the Participant terminates Service, it is discovered that Cause occurred during Participant’s Service.

“Change in Control” means the occurrence of any one or more of the following:

(a) An effective change of control pursuant to which any person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) beneficial ownership of stock of the Company representing more than thirty-five percent (35%) of the voting power of the Company’s then outstanding stock; provided, however, that a Change in Control shall not be deemed to occur by virtue of any of the following acquisitions: (i) by the Company or any Affiliate, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate, or (iii) by any underwriter temporarily holding securities pursuant to an offering of such securities;
(b) Any person or persons acting as a group acquires beneficial ownership of Company stock that, together with Company stock already held by such person or group, constitutes more than fifty (50%) of the total fair market value or voting power of the Company’s then outstanding stock. The acquisition of Company stock by the Company in exchange for property, which reduces the number of outstanding shares and increases the percentage ownership by any person or group to more than 50% of the Company’s then outstanding stock will be treated as a Change in Control;
(c) Individuals who constitute the Board immediately after the Effective Date (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board during any 12-month period; provided, however, that any person becoming a Director subsequent thereto whose election or nomination for election was approved by a vote of a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director, without written objection to such nomination) shall be an Incumbent Director, provided that no individual initially elected or nominated as a Director of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or
(d) Any person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value of at least forty percent (40%) of the total gross fair market value of all the assets of the Company immediately prior to such acquisition. For purposes of this section, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, without regard to any liabilities

A-2


 
 

TABLE OF CONTENTS

associated with such assets. The event described in this paragraph (d) shall not be deemed to be a Change in Control if the assets are transferred to (i) any owner of Company stock in exchange for or with respect to the Company’s stock, (ii) an entity in which the Company owns, directly or indirectly, at least fifty percent (50%) of the entity’s total value or total voting power, (iii) any person that owns, directly or indirectly, at least fifty percent (50%) of the Company stock, or (iv) an entity in which a person described in (d)(iii) above owns at least fifty percent (50%) of the total value or voting power. For purposes of this section, and except as otherwise provided, a person’s status is determined immediately after the transfer of the assets.

In no event will a Change in Control be deemed to have occurred, with respect to the Participant, if an employee benefit plan maintained by the Company or an Affiliate or the Participant is part of a purchasing group that consummates the transaction that would otherwise result in a Change in Control. The employee benefit plan or the Participant will be deemed “part of a purchasing group” for purposes of the preceding sentence if the plan or the Participant is an equity participant in the purchasing company or group, except where participation is: (i) passive ownership of less than two percent (2%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group that is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Committee” shall mean the Compensation Committee of the Board of Directors, the composition of which shall at all times satisfy the provisions of Code Section 162(m) and shall consist of at least two directors who are “independent directors” within the meaning of the NASDAQ marketplace rules, and “non-employee directors” within the meaning of Exchange Act Rule 16b-3.

“Company” means InnerWorkings, Inc., a Delaware corporation, and any successor thereto as provided in Article 19.

“Consultant” means any person, including an advisor, engaged by the Company or an Affiliate to render services to such entity and who is not a Director or an Employee.

“Director” means any individual who is a member of the Board of Directors.

“Disability” shall mean

(a) A physical or mental condition that would qualify a Participant for a disability benefit under the long-term disability plan of the Company applicable to him or her;
(b) If the Participant is not covered by such a long-term disability plan, disability as defined for purposes of eligibility for a disability award under the Social Security Act;
(c) When used in connection with the exercise of an Incentive Stock Option following termination of employment, disability within the meaning of Code Section 22(e)(3); or
(d) Such other condition as may be determined by the Committee to constitute “disability” under Section 409A.

“Effective Date” means June 13, 2014.

“Employee” means any person employed by the Company or an Affiliate in a common law employee-employer relationship. A Participant shall not cease to be an Employee for purposes of this Plan in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or among the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the one hundred and eighty-first (181st) day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be

A-3


 
 

TABLE OF CONTENTS

treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

“Exercise Price” means the price at which a Share may be purchased by a Participant pursuant to an Option.

“Fair Market Value” of a Share on any given date shall be determined by the Committee as follows:

(a) If the Share is listed for trading on the National Association of Securities Dealers, Inc. (NASDAQ) National Market System or one or more national securities exchanges, the last reported sales price on the NASDAQ or such exchange on the date in question, or if such Share shall not have been traded on the NASDAQ or such exchange on such date, the last reported sales price on the NASDAQ or such exchange on the first day prior thereto on which such Share was so traded;
(b) If the Share is not listed for trading, by any means determined fair and reasonable by the Committee, which determination shall be final and binding on all parties; or
(c) Where the Participant pays the Exercise Price and/or any related withholding taxes to the Company by tendering Shares issuable to the Participant upon exercise of an Option, the actual sale price of the Shares.

“Incentive Stock Option” or “ISO” means an option to purchase Shares granted under Article 6 that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422.

“Initial Public Offering” or “IPO” means an initial public offering of the Company’s Shares pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission.

“Nonstatutory Stock Option” or “NQSO” means an option to purchase Shares granted under Article 6 that is not intended to meet the requirements of Code Section 422.

“Option” means an Incentive Stock Option or a Nonstatutory Stock Option, as described in Article 6.

“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e).

“Participant” means an Employee, Consultant or Director who the Committee has selected to participate in the Plan pursuant to Section 5.2 and who has an Award outstanding under the Plan.

“Performance-Based Exception” means the performance-based exception from the tax deductibility limitations of Code Section 162(m) and any regulations promulgated thereunder.

“Performance Period” means the time period during which performance objectives must be met in order for a Participant to earn Performance Shares granted under Article 9.

“Performance Share” means an Award of Shares with an initial value equal to the Fair Market Value of a Share on the date of grant, which is based on the Participant’s attainment of certain performance objectives specified in the Award Agreement, as described in Article 9.

“Personal Leave” means a leave of absence as described in Section 5.3.

“Plan” means the InnerWorkings, Inc. 2006 Stock Incentive Plan, as set forth in this document, and as amended from time to time.

“Prior Plan” means the Company’s 2004 Unit Option Plan. The Prior Plan was merged into this Plan as of July 31, 2006 and stock or unit options awarded and equity interests authorized for award under the Prior Plan are governed by, and available under, the terms of this Plan.

“Restriction Period” means the period during which the transfer of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or the occurrence of other events as determined by the Committee, in its sole discretion) or the Restricted Stock is not vested.

A-4


 
 

TABLE OF CONTENTS

“Restricted Stock” means a contingent grant of Shares awarded to a Participant pursuant to Article 8. The Shares awarded to the Participant will vest over the Restriction Period and according to the time-based or performance-based criteria, specified in the Award Agreement.

“Restricted Stock Unit” or “RSU” means a notional account established pursuant to an Award granted to a Participant, as described in Article 8, that is (a) valued solely by reference to Shares, (b) subject to restrictions specified in the Award Agreement, and (c) payable only in Shares. The RSUs awarded to the Participant will vest according to the time-based or performance-based criteria specified in the Award Agreement.

“Section 409A” means Code Section 409A and any applicable regulations or interpretive authority thereunder.

“Service” means the provision of services to the Company or its Affiliates in the capacity of (i) an Employee, (ii) a Director, or (iii) a Consultant. For purposes of this Plan, the transfer of an Employee from the Company to an Affiliate, from an Affiliate to the Company or from an Affiliate to another Affiliate shall not be a termination of Service. However, if the Affiliate for which an Employee, Director or Consultant is providing services ceases to be an Affiliate of the Company due to a sale, transfer or other reason, and the Employee, Director or Consultant ceases to perform services for the Company or any Affiliate, the Employee, Director or Consultant shall incur a termination of Service.

“Shares” means the shares of common stock, $0.0001 par value of the Company, or any successor or predecessor equity interest in the Company.

“Stock Appreciation Right” or “SAR” means an Award of the contingent right to receive Shares or cash, as specified in the Award Agreement, in the future, based on the value, or the appreciation in the value, of Shares, pursuant to the terms of Article 7.

“Stock Award” means an Award of Shares pursuant to the terms of Article 10.