Document


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


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

(Name of Registrant as Specified In Its Charter)


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InnerWorkings, Inc.
203 N. LaSalle Street, Suite 1800
Chicago, Illinois 60601

September 24, 2019

To Our Stockholders:

On behalf of the Board of Directors (the "Board") and management, we cordially invite you to attend the 2019 annual meeting of stockholders (including any adjournments or postponements thereof, the “Annual Meeting”) of InnerWorkings, Inc. (the “Company”) to be held on Friday, October 4, 2019, at 11:00 a.m., Central Time, at our corporate headquarters, 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601.

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. You may also find copies of these items online at www.inwk.com.

The purpose of the meeting is to consider and vote upon proposals to (i) elect nine director candidates who have been nominated for election, (ii) approve, on an advisory, non-binding basis, the compensation of our named executive officers, (iii) ratify an amendment to our bylaws establishing state and federal courts in Delaware as the exclusive forum for certain stockholder litigation (the "Exclusive Forum Bylaw Amendment"), and (iv) ratify the appointment of our independent registered public accounting firm for 2019. 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.

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. We urge you to fill out and submit the enclosed proxy card today.

If you have any questions or require any assistance with voting your proxy card, please contact our proxy solicitor Morrow Sodali LLC at:

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13120988&doc=4

470 West Avenue
Stamford, Connecticut 06902
Stockholders call toll free: (800) 662-5200
Banks and Brokerage Firms, please call: (203) 658-9400
Email: INWK@morrowsodali.com

On behalf of your Board of Directors, we thank you for your continued support.

Sincerely yours,
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Jack M. Greenberg
Chairman of the Board
 
Richard S. Stoddart
Chief Executive Officer, President and Director
This proxy statement is dated September 24, 2019 and is first being mailed to stockholders on or about September 25, 2019.




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Notice of 2019 Annual Meeting of Stockholders
203 N. LaSalle Street, Suite 1800
Chicago, Illinois 60601
October 4, 2019, 11:00 a.m., Central Time
September 24, 2019

Fellow stockholders:

Notice is hereby given that the Annual Meeting of the stockholders (including any adjournments or postponements thereof, the “Annual Meeting”) of InnerWorkings, Inc. (the “Company”), a Delaware corporation, will be held on Friday, October 4, 2019 at 11:00 a.m., Central Time, at our corporate headquarters, 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601 for the following purposes:

1.
to elect nine members of the Board of Directors (the “Board”) to serve until the 2020 annual meeting of stockholders or until their respective successors are elected and qualified;
2.
to approve, on an advisory, non-binding basis, the compensation of our named executive officers;
3.
to ratify an amendment to our bylaws establishing state and federal courts in Delaware as the exclusive forum for certain stockholder litigation (the "Exclusive Forum Bylaw Amendment");
4.
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, 2019; and
5.
to transact any other business properly brought before the Annual Meeting.

These items of business, including the nominees for director, are more fully described in the proxy statement accompanying this notice.

You are cordially invited to attend the Annual Meeting in person. In accordance with our security procedures, all persons attending the Annual Meeting will be required to present a form of government-issued photo identification. If you hold your shares in “street name,” you must also provide proof of ownership, such as a recent brokerage statement. If you are a holder of record and attend the Annual Meeting, you may vote by ballot in person even if you have previously returned your proxy card. If you hold your shares in “street name” and wish to vote in person, you must provide a “legal proxy” from your bank, broker or other nominee.

The Board has fixed the close of business on September 19, 2019 as the record date for determining the stockholders of the Company entitled to notice of and to vote at the Annual Meeting. Such stockholders are urged to submit the enclosed proxy card, even if your shares were sold after such date. If your bank, broker or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from the holder of record. You must follow these instructions in order for your shares to be voted. We recommend that you instruct your bank, broker or other nominee to vote your shares “FOR” each of the items listed on the enclosed proxy card.

IF YOU CANNOT ATTEND THE ANNUAL MEETING, PLEASE TAKE THE TIME TO PROMPTLY VOTE YOUR PROXY BY CAREFULLY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. Even if you plan to attend the Annual Meeting, we recommend that you vote using the enclosed proxy card prior to the Annual Meeting to ensure that your shares will be represented. 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 September 19, 2019 are entitled to receive notice of, and to attend and to vote at, the meeting.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING "FOR" THE ELECTION OF EACH OF THE BOARD'S NOMINEES UNDER PROPOSAL 1 AND "FOR" PROPOSALS 2, 3 AND 4 USING THE ENCLOSED PROXY CARD.





By Order of the Board of Directors,

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Oren B. Azar
General Counsel & Corporate Secretary






PROXY SUMMARY

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

Annual Meeting Information
Date, Time and Location:
October 4, 2019 at 11:00 a.m. Central Time, at our corporate headquarters, 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601
Record Date:
September 19, 2019

Items to be Voted on at the 2019 Annual Meeting of Stockholders
 
Proposal
 
Board of Directors’ Recommendation
Elect nine members of the Board of Directors to serve until the 2020 annual meeting of stockholders or until their respective successors are elected and qualified.
 
FOR
Approve, on an advisory, non-binding basis, the compensation of the Company’s named executive officers.
 
FOR
Ratify an amendment to our bylaws establishing state and federal courts in Delaware as the exclusive forum for certain stockholder litigation (the "Exclusive Forum Bylaw Amendment").
 
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, 2019.

 
FOR

Director Nominees
Name
 
Director
Since
 
Independent
 
Other Public
Boards(1)
 
Committee Memberships
AC
 
CC
 
NCG
Jack M. Greenberg (Chairman of the Board)
 
2005
 
Yes
 
 
 
 
M
 
M
Richard S. Stoddart (Chief Executive Officer)
 
2018
 
No
 
1
 
 
 
 
 
 
Charles K. Bobrinskoy
 
2008
 
Yes
 
 
C, F
 
M
 
 
Lindsay Y. Corby
 
2018
 
Yes
 
 
M, F
 
 
 
 
David Fisher
 
2011
 
Yes
 
2
 
M
 
M
 
 
Adam J. Gutstein
 
2018
 
Yes
 
 
 
 
 
 
C
Julie M. Howard
 
2012
 
Yes
 
2
 
M
 
C
 
M
Kirt P. Karros
 
2019
 
Yes
 
 
 
 
M
 
 
Marc Zenner
 
2019
 
Yes
 
2
 
M
 
 
 
 
(1)
Other Public Boards reflects directorships as of the date of this proxy statement.

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





Corporate Governance and Compensation Practices

Governance
 
 
 
Location
 
All directors except the CEO are independent
 
All directors are elected annually
 
Directors are elected by majority vote, with plurality standard for contested elections
 
No shareholder rights plan or poison pill
 
No cumulative voting
 
Proactive stockholder governance outreach
 
Published corporate governance guidelines summarizing key governance practices
Compensation
 
 
 
Location
 
Pay for performance approach
 
Independent compensation committee
 
Independent compensation consultant
 
Directors and officers subject to stock ownership guidelines and stock holding policy
 
Policy against hedging/pledging
 
Officers subject to compensation clawback policy
 
Long-term focus and stockholder alignment through equity compensation
 
No problematic pay practices, such as excise tax gross-up provisions
 
No “single trigger” change in control severance arrangements




Proxy Statement for the Annual Meeting of Stockholders of InnerWorkings, Inc. 

To Be Held on October 4, 2019

TABLE OF CONTENTS
PROXY STATEMENT
Annual Meeting Information
Voting Information
PROPOSALS TO BE VOTED ON
Proposal 1: Election of Directors
Proposal 2: Advisory Approval of Named Executive Officer Compensation
Proposal 3: Ratification of Bylaw Amendment
Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Summary of Corporate Governance Practices
Board Leadership Structure
Board of Directors Role in Risk Oversight
Meetings and Committees of the Board of Directors
Director Independence
Governance Documents
Compensation Committee Interlocks and Insider Participation
Attendance at Annual Meeting
STOCK OWNERSHIP
Security Ownership of Certain Beneficial Owners and Management
Section 16(a) Beneficial Ownership Reporting Compliance
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
EXECUTIVE OFFICERS
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
Executive Compensation
Employee Benefit Plans
Employment and Other Related Agreements
Summary of Director Compensation
REPORT OF THE COMPENSATION COMMITTEE
AUDIT COMMITTEE REPORT
FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL REGISTERED PUBLIC ACCOUNTING FIRM
OTHER INFORMATION
Stockholder Proposals for the 2020 Annual Meeting
Expenses of Solicitation
“Householding” of Proxy Materials
Proxy Voting Card
APPENDIX A




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203 N. LaSalle Street, Suite 1800
Chicago, Illinois 60601

PROXY STATEMENT

This proxy statement and enclosed proxy card are being furnished commencing on or about September 24, 2019 in connection with the solicitation by the Board of Directors of InnerWorkings, Inc., a Delaware corporation of proxies for our 2019 annual meeting of stockholders (including any postponements or adjournments thereof, the “Annual Meeting”). 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 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 September 19, 2019, 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, October 4, 2019 at 11:00 a.m., Central Time, at our corporate headquarters at 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601.

Admission. Only record or beneficial owners of the Company’s common stock or their duly authorized proxies may attend the Annual Meeting in person.

All persons attending the Annual Meeting will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting. 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 September 19, 2019. 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. As of September 19, 2019, 51,947,385 shares of our common stock were outstanding.

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

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

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

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

If you hold shares through a broker, follow the voting instructions you receive from your broker. If you want to vote in person at the Annual Meeting, you must obtain a legal proxy from your broker and present it at the Annual Meeting. If you do not submit

1



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

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

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

Revoking Your Proxy.  You can revoke your proxy at any time before your shares are voted by (1) delivering a written revocation notice prior to the Annual Meeting to Oren B. Azar, Corporate Secretary, InnerWorkings, Inc., 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601; (2) submitting a later-dated proxy that we receive no later than the conclusion of voting at the Annual Meeting; or (3) voting in person at the Annual Meeting. Attending the Annual Meeting does not revoke your proxy unless you vote in person at the meeting.

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

Votes Required to Adopt Other Proposals.  The approval, on an advisory, non-binding basis, of the compensation of our named executive officers, the ratification of the Exclusive Forum Bylaw Amendment, and the ratification of Ernst & Young LLP’s appointment as independent registered public accounting firm 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 approval, on an advisory, non-binding basis, of the compensation of our named executive officers, against the ratification of the Exclusive Forum Bylaw Amendment and against the ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm. Broker non-votes will have no effect on the election of directors, the approval, on an advisory, non-binding basis, of the compensation of our named executive officers, and the ratification of the Exclusive Forum Bylaw Amendment. There will be no broker non-votes with respect to the ratification of Ernst & Young LLP’s appointment as independent registered public accounting firm, as it is a discretionary item.


2



Other Matters. If you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials, please contact our proxy solicitor Morrow Sodali LLC (“Morrow Sodali”) using the below contact information:

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13120988&doc=4

470 West Avenue
Stamford, Connecticut 06902
Stockholders call toll free: (800) 662-5200
Banks and Brokerage Firms, please call: (203) 658-9400
Email: INWK@morrowsodali.com







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PROPOSALS TO BE VOTED ON
Proposal 1: Election of Directors

Nominees

The size of the Board is currently set at nine members. The Board resolved to expand the Board from nine to eleven members in connection with the appointment of Mr. Karros and Mr. Zenner as independent directors on August 9, 2019. At the Annual Meeting, the stockholders will elect nine directors to serve until the 2020 annual meeting of stockholders or until their respective successors are elected and qualified. All of the nominees are currently directors. Any director vacancy occurring after the election may be filled by a majority vote of the remaining directors. In accordance with the Company’s Bylaws, a director appointed to fill a vacancy will be appointed to serve until the next annual meeting of stockholders.

If a quorum is present, the election of each director nominee requires the affirmative vote of a majority of the votes cast. In other words, a director nominee must receive more votes “FOR” his or her election than votes “AGAINST” such nominee. Abstentions and broker non-votes (if any) will not constitute votes cast on Proposal 1 and will accordingly have no effect on the outcome of the vote on Proposal 1. If an incumbent nominee fails to receive the vote needed to be re-elected, Delaware law provides that such nominee would continue to serve on the Board as a “holdover director,” which means that such director would remain in office until a successor is elected and qualified or until such director’s earlier resignation or removal.

Our Corporate Governance Guidelines require 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 stockholder 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 as 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.

All nominees of the Board have consented to serve as directors, if elected. If any such 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, eight of our nine directors are independent.

The Nominating and Corporate Governance Committee seeks candidates with strong reputations and experience in areas relevant to the strategy and operations of the Company, particularly in industries and growth segments that the Company serves, as well as key geographic markets where it operates. Each of the Board’s 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 director nominees 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 has the experience, expertise, integrity, sound judgment and ability to engage management in a collaborative fashion to collectively comprise an effective Board. In addition, the Nominating and Corporate Governance Committee believes that each of the nominees are committed to devoting significant time and energy to service on the Board and its committees.

4




The names of the director nominees, their ages as of September 24, 2019, 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 (1)(2)
 
76
 
Chairman of the Board
Richard S. Stoddart
 
56
 
Chief Executive Officer, President and Director
Charles K. Bobrinskoy(1)(3)
 
60
 
Director
Lindsay Y. Corby (3)
 
41
 
Director
David Fisher(1)(3)
 
50
 
Director
Adam J. Gutstein(2)
 
56
 
Director
Julie M. Howard(1)(2)(3)
 
56
 
Director
Kirt P. Karros(1)
 
49
 
Director
Marc Zenner(3)
 
56
 
Director

(1)
Current member of our Compensation Committee.
(2)
Current member of our Nominating and Corporate Governance Committee.
(3)
Current member of our Audit Committee

DIRECTOR NOMINEES

Jack M. Greenberg has served on our Board since October 2005 and has served as Chairman of the Board since September 2018. Mr. Greenberg was Lead Independent Director from April to September 2018 and Chairman of the Board from June 2010 to April 2018. Mr. Greenberg served on the Board of IQVIA until April 2019, and was Chairman of The Western Union Company until his retirement in May 2017. He retired as Chairman and Chief Executive Officer of McDonald’s Corporation, a publicly traded global food service retailer, at the end of 2002. He had served as McDonald’s Chairman since May 1999, and as its Chief Executive Officer since August 1998. Mr. Greenberg served as McDonald’s President from August 1998 to May 1999, and as its Vice-Chairman from December 1991 to August 1998. He also served as Chairman from October 1996, and Chief Executive Officer, from July 1997, of McDonald’s USA until August 1998. Before joining McDonald’s, Mr. Greenberg was a Partner and Director of Tax Services for both the Midwest Region and Chicago office of Arthur Young & Company, and served on the firm’s management committee. He is a member of the American Institute of Certified Public Accountants, the Illinois CPA Society, and the Chicago Bar Association. He also served as a Director of The Allstate Corporation and of Hasbro, Inc. until 2015 and as a Director of Manpower, Inc. until 2014. Mr. Greenberg’s civic involvement includes service on the board of DePaul University, where he previously served as Chairman, the Institute of International Education, and the Field Museum. Mr. Greenberg is a graduate of DePaul University’s School of Commerce and School of Law. Mr. Greenberg’s various leadership positions, including Chief Executive Officer of a major global corporation, brings to the Board extensive management experience and economics expertise and strengthens the Board’s global perspective. In addition to Mr. Greenberg’s significant public company experience, he is a certified public accountant and an attorney, which provides additional value and perspective to the Board.

Richard S. Stoddart has served on our Board and as our Chief Executive Officer and President since April 2018. Prior to his appointment as Chief Executive Officer, from February 2016 through April 2018, Mr. Stoddart served as Global President and the Chief Executive Officer of Leo Burnett Worldwide, a global advertising agency. He previously served as Chief Executive Officer of Leo Burnett North America from 2013 to 2016 and as President of Leo Burnett North America from 2005 to 2013. From 2001 to 2005, he was Manager of Marketing Communications of Ford Motor Company (NYSE). He currently serves on the Board of Directors of Hasbro, Inc. (NASDAQ) and is a member of its Audit and Finance Committees. Mr. Stoddart also served as a member of the Board of Directors of Carbon Media Group, LLC, the largest outdoor sports digital media company, until its acquisition in 2018. Mr. Stoddart holds a Bachelor of Arts from Dartmouth College. As Chief Executive Officer of the Company, Mr. Stoddart brings to the Board the critical link to management’s perspective in Board discussions regarding the business and strategic direction of the Company.

5




Charles K. Bobrinskoy has served on our Board since August 2008. Mr. Bobrinskoy is currently Vice Chairman, Head of Investment Group at Ariel Investments, a global financial institution. Additionally, he is a Portfolio Manager of Ariel Focus Fund, a concentrated portfolio investing in mid-to-large cap companies. Prior to Ariel, Mr. Bobrinskoy spent 21 years as an investment banker at Salomon Brothers, a global financial institution, and its successor company, Citigroup, a global financial institution, where he held many leadership positions, most recently Managing Director and Head of North American Investment Banking Branch Offices. Mr. Bobrinskoy currently serves as a director of State Farm Automobile Insurance Company. 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, Big Shoulders Fund, Abraham Lincoln Presidential Library Foundation, Chicago Club, and Lakeshore Athletic Club. He is also a member of the Executive Committee of the Commercial Club of Chicago. He is a member of the Economic Club of Chicago and is a Henry Crown Fellow of the Aspen Institute. He holds a bachelor’s degree from Duke University and a Master of 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.

Lindsay Y. Corby has served on our Board since July 2018. Ms. Corby is currently Executive Vice President and Chief Financial Officer of Byline Bank (NYSE: BY), a role she has held since July 2015. Ms. Corby joined Byline in June 2013, serving as Chief Administrative Officer until July 2015. From February 2011 to June 2013, Ms. Corby served as a Principal at BXM Holdings, Inc., an investment fund specializing in community bank investments. Prior to joining BXM Holdings, Ms. Corby was a Vice President of Keefe, Bruyette & Woods, Inc., an investment bank. From 2012 to 2016, Ms. Corby also served as a Director on the Board of QCR Holdings, Inc., a public bank holding company. Ms. Corby holds a master’s degree in accounting and a bachelor’s degree in accounting and Spanish from Southern Methodist University. She is also a Registered Certified Public Accountant. Ms. Corby’s financial acumen and experience as a chief financial officer and her prior service on the board of a public company provides the Board and Audit Committee with valuable knowledge and insight on financial strategies, reporting, and controls.

David Fisher has served on our Board since November 2011. Mr. Fisher is currently Chairman and Chief Executive Officer of Enova International, Inc., a global consumer lending company. He has served as Enova’s Chief Executive Officer since January 2013. From September 2011 through February 2012, Mr. Fisher served as both President of optionsXpress online brokerage, which was acquired by The Charles Schwab Corporation, a leading provider of financial services, in September 2011, and as Senior Vice President of Derivatives at The Charles Schwab Corporation. From 2007 until the acquisition, Mr. Fisher served as Chief Executive Officer and a member of the optionsXpress Board of Directors. Mr. Fisher is a member of the Board of Directors of GrubHub, Inc. and serves as chairman of its audit committee and a member of its compensation committee, and is a member of the Board of Directors of FRISS. 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 is also a member of the Board of Trustees for the Museum of Science and Industry. 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 provide valuable financial knowledge and valuable insight on reporting to the Board as well as to the Company’s Audit Committee on which he serves.

Adam J. Gutstein has served on our Board since October 2018. From June 2012 to September 2018, Mr. Gutstein served as Vice Chairman at PricewaterhouseCoopers US (“PwC”), a professional services firm and network, where he led PwC’s Eastern Region from June 2016 to September 2018. He joined PwC in 2010 and became a member of the US Advisory Leadership Group where he held various roles, including leading the integration of Diamond Management & Technology Consultants and other large transactions, leading the firms’ Management Consulting practice, and serving as a Director of PwC Hispanic America Advisory. From April 2006 to November 2010, Mr. Gutstein served as the President and Chief Executive Officer of Diamond Management & Technology Consultants, Inc., and a member of the board of directors of Diamond, and from March 1994 to March 2006, he served as Vice President and Partner of that company. At times during his tenure as CEO and a board member of Diamond, Mr. Gutstein served on the boards of two other public companies, HealthAxis and InnerWorkings. Before joining Diamond as a founding partner in 1994, Mr. Gutstein was an officer of Technology Solutions Company, and he began his career at Andersen Consulting. Mr. Gutstein holds a bachelor’s degree in economics from Haverford College. Mr. Gutstein’s experience at PwC and Diamond leading global teams to deliver client and shareholder value through growth strategies, improving operations, and capitalizing on technology provides valuable knowledge and operational strategy insight to the Company.

Julie M. Howard has served on our Board since October 2012. Ms. Howard is currently Chairman and Chief Executive Officer of Navigant Consulting, Inc. Prior to becoming Chief Executive Officer of Navigant Consulting in March 2012, Ms. Howard served as President beginning in 2006 and Chief Operating Officer beginning in 2003. Ms. Howard serves on the Board of Directors

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of ManpowerGroup Inc., including its Nominating and Governance Committee. Ms. Howard also serves as a member of the Medical Center Board for Lurie Children's Hospital. Ms. Howard formerly served on the Board of Directors for Kemper Corporation, including service on its Audit, Compensation and Nominating and Governance Committees, the Board of Directors for the Association of Management Consulting Firms, the Dean's Advisory Board of the Business School at the University of Wisconsin-Madison, and the Board of Governors for the Metropolitan Planning Council of Chicago. Ms. Howard is a founding member and serves on the board 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.

Kirt P. Karros has served on our Board since August 2019. Mr. Karros has served as Senior Vice President, Finance and Treasurer at Hewlett Packard Enterprise since November 2015. Prior to that, Mr. Karros performed a similar role at Hewlett Packard Co., as well as leading Investor Relations, from May 2015 to October 2015. Previously, Mr. Karros served as a Principal and Managing Director of Research for Relational Investors LLC, an investment manager, from 2001 to May 2015. Prior to joining Relational in 1997, Mr. Karros was a Tax Manager at Arthur Andersen LLP, primarily providing tax consulting to public and private entities. From August 2013 to May 2015, Mr. Karros served on the Board of Directors of PMC-Sierra, Inc., a semiconductor company, including on its compensation committee. Mr. Karros holds a master’s degree in accounting and bachelor’s degree in business administration (summa cum laude) from San Diego State University. He is a Certified Public Accountant and holds the professional designation of Chartered Financial Analyst. Mr. Karros’ financial expertise and his shareholder perspective enable him to offer valuable contributions in his service to the Board as well as the Compensation Committee.

Marc Zenner has served on our Board since August 2019. Until his retirement in September 2017, Mr. Zenner was Global co-head of Corporate Finance Advisory within J.P. Morgan’s Investment Bank, where he was a managing director from 2007 to 2017. Before joining J.P. Morgan, Mr. Zenner was managing director and Global Head of the Financial Strategy Group (FSG), the corporate finance advisory group within the Investment Banking Division of Citi’s Global Markets. Prior to his career in investment banking, Mr. Zenner was the Chairman of the Finance and Economics Area and a Professor of Finance at the University of North Carolina’s Kenan-Flagler Business School. Mr. Zenner received an undergraduate degree in business engineering from the Katholieke Universiteit in Leuven, Belgium, an MBA from City University in London, and a Ph.D. in Financial Economics from Purdue University. Mr. Zenner currently serves on the board of directors of Sentinel Energy Services Inc. where he is the Chairman of the Audit Committee and a member of the Nominating and Corporate Governance Committee and OneSpan Inc. where he is a member of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee. Mr. Zenner also provides strategic advice to various public and private companies. We believe that Mr. Zenner’s background in corporate finance make him well qualified to serve on our Board of Directors and Audit Committee.

Cooperation Agreement with Engaged Capital

On August 9, 2019, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with Engaged Capital, LLC and certain of its affiliates (collectively, “Engaged Capital”). Pursuant to the Cooperation Agreement, the Board temporarily increased its size from nine members to 11 members and appointed Kirt P. Karros and Marc Zenner to the Board, effective immediately. Messrs. Karros and Zenner will stand for election at the Annual Meeting. Mr. Karros has been appointed to the Compensation Committee and Mr. Zenner has been appointed to the Audit Committee.

Following the conclusion of the Annual Meeting, the size of the Board will be reduced from 11 members to nine members. Afterwards and until the conclusion of the 2020 annual meeting of stockholders, for so long as Engaged Capital continuously beneficially owns at least the lesser of (1) 2.5% and (2) 1,298,537 shares of the Company’s then outstanding common stock, the size of the Board will not exceed nine directors, unless at least two-thirds of the directors then serving in office, including both Messrs. Karros and Zenner, approves such increase.

With respect to the shares of the Company’s common stock it owns, Engaged Capital has agreed to certain standstill, voting and other similar provisions in connection with the entry into the Cooperation Agreement. During the term of the Cooperation Agreement, Engaged Capital agreed that it will not, among other things, acquire beneficial ownership of more than 9.9% of the Company’s common stock, nominate or recommend for nomination any persons for election to the Board (except as expressly permitted by the Cooperation Agreement), submit any proposal for consideration at any stockholder meeting or solicit any proxy, consent or other authority to vote from stockholders.


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During the term of the Cooperation Agreement, Engaged Capital will vote all of its shares of the Company’s common stock at all annual and special meetings as well as in any consent solicitations of the Company’s stockholders (1) in favor of the slate of directors recommended by the Board, against the election of any director nominee not approved, recommended and nominated by the Board for election and against any removal of any director of the Board, (2) at the Annual Meeting only, in favor of the named executive officer compensation proposal, (3) at the Annual Meeting only, in favor of ratification of the exclusive forum provision in the Company’s Second Amended and Restated By-Laws, and (4) in accordance with the Board’s recommendation for any other matter (unless Institutional Shareholder Services, Inc. issues a contrary recommendation). Engaged Capital will be permitted to vote on any proposals relating to an extraordinary transaction in its sole discretion.

The full text of the Cooperation Agreement and a summary description thereof may be found in the Current Report on Form 8-K filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on August 9, 2019.

Required Vote

A nominee for director must receive more votes “FOR” his or her election than votes “AGAINST” such nominee as described above. Abstentions and broker non-votes will not constitute votes cast on Proposal 1 and will accordingly have no effect on the outcome of the vote on Proposal 1.

Recommendation of the Board of Directors

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

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Proposal 2: Advisory Approval of Named Executive Officer 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 compensation of the Company’s named executive officers, 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. As most recently approved by stockholders at our 2017 annual meeting and consistent with the Board’s recommendation, we are submitting this proposal for a non-binding vote on an annual basis. Holders of approximately 99% of our shares present and entitled to vote at our 2018 annual meeting approved the compensation of our named executive officers.

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 its named executive officers 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 shares of common stock of the Company represented at the Annual Meeting in person or by proxy and entitled to vote on this proposal is required to approve this proposal. Abstentions will have the same effect as votes against this proposal. Broker non-votes if any will have no effect on the outcome of the proposal.

Recommendation of the Board of Directors

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



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Proposal 3: Ratification of an Amendment to the Company's Bylaws

On October 30, 2018, the Board amended and restated our bylaws to add a new Article IX to provide, with certain exceptions, that the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”) shall be the exclusive forum for certain types of legal actions (the “Exclusive Forum Amendment”).  Although our bylaws allow the Board to adopt the Exclusive Forum Amendment without stockholder approval or ratification, and the Exclusive Forum Amendment became effective upon its adoption by the Board on October 30, 2018, the Board believes it is important for our stockholders to have the opportunity to consider and vote upon, on a non-binding advisory basis, whether the Exclusive Forum Amendment is appropriate for the Company. Therefore, the Board has decided to request that stockholders ratify the Exclusive Forum Amendment on an advisory basis.
 
The full text of the Exclusive Forum Amendment is set forth below:

ARTICLE IX

EXCLUSIVE FORUM

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery lacks jurisdiction, the federal district court for the District of Delaware unless said court lacks subject matter jurisdiction in which case, the Superior Court of the State of Delaware) shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising under any provision of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these by-laws or (d) any action asserting a claim governed by the internal affairs doctrine, in each case subject to the Court of Chancery of the State of Delaware having personal jurisdiction over the indispensable parties. If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the preceding sentence and (ii) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder.

The Exclusive Forum Amendment does not apply to claims arising under the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act of 1934, as amended (the “Exchange Act”) or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. Stockholders cannot waive, and will not be deemed to have waived under the exclusive forum provision, the Company’s compliance with the federal securities laws and the rules and regulations thereunder.

The Exclusive Forum Amendment may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to find the Exclusive Forum Amendment to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations.

The Board believes that it is beneficial to the Company to require that certain disputes involving the Company or its directors or officers be litigated in Delaware courts, such as: (i) certain derivative actions; (ii) certain claims of a breach of fiduciary duty owed by a director, officer or other employee to the Company or its stockholders; or (iii) actions asserting a claim arising under the Delaware General Corporation Law or governed by the internal affairs doctrine. The Company believes that its ability to require claims to be brought in a single forum for disputes of this kind will help ensure consistent consideration of the issues by courts with expertise in the applicable laws, and increase efficiency and cost effectiveness in the resolution of such claims, all of which are in the best interests of the Company and its stockholders. Further, the Board believes that Delaware courts are best suited to address disputes involving such matters given the Company’s incorporation in Delaware and the Delaware courts’ reputation for expertise in corporate law matters.

Specifically, Delaware offers a specialized court system uniquely equipped to deal with corporate law questions, with streamlined procedures and processes which help provide consistent, relatively quick decisions. Such efficiency can limit the time, cost and uncertainty of litigation for all parties. These courts have also developed considerable expertise in dealing with corporate law issues, as well as a substantial and influential body of case law construing Delaware’s corporate law and long-standing precedent regarding corporate governance.

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Exclusive forum provisions, such as our Exclusive Forum Amendment, are becoming increasingly common. Without a bylaw or similar provision like the Exclusive Forum Amendment, the Company would be exposed to the possibility of plaintiffs using the Company’s diverse operational base to bring claims against the Company in multiple jurisdictions or choosing a forum state for litigation that may not apply Delaware law to the Company’s internal affairs in the same manner as the Delaware courts would be expected to do so. Although no assurance can be given that courts in all jurisdictions outside of Delaware will be willing to enforce the terms of the Exclusive Forum Amendment, certain jurisdictions have enforced exclusive forum provisions and the Board believes that the Exclusive Forum Amendment will reduce the risk that the Company could become subject to duplicative litigation in multiple forums, as well as the risk that the outcome of cases in multiple forums could be inconsistent, even though each forum purports to follow Delaware law. Any of these could expose the Company to increased expenses or losses.

The Board believes the Exclusive Forum Amendment will have no impact on the kind of remedy a stockholder may obtain and does not deprive stockholders of legitimate claims; rather it attempts to prevent the Company from being forced to waste corporate assets defending against duplicative suits. In addition, as discussed above, we believe the Delaware Court of Chancery offers a specialized system that can limit the time, cost and uncertainty of litigation for all parties, including stockholder plaintiffs. At the same time, the Board believes that the Company should retain the ability to consent to an alternative forum on a case-by-case basis where the Company determines that its interest and those of its stockholders are best served by permitting such a dispute to proceed in a forum other than Delaware.

The Board is aware that certain proxy advisors and institutional investors have taken the position that, in general, they may not support an exclusive forum clause until the company proposing it can show it already has suffered material harm as a result of multiple stockholder suits filed in different jurisdictions regarding the same matter. However, the Board believes that it is far more prudent to take preventive measures now, before the Company and the interests of its stockholders are harmed by the increasing practice of the plaintiffs’ bar to file selectively their claims in favorable jurisdictions, rather than wait to incur the litigation and related costs of attempting to have the cases consolidated or risk that foreign jurisdictions may misapply Delaware law to the detriment of the Company and its stockholders.

After considering the foregoing, the Board determined that the Exclusive Forum Amendment is in the best interests of the Company and its stockholders.

Required Vote

Stockholder approval is not required for the Exclusive Forum Amendment; however, the Board believes this is an important issue and that it is in the best interests of the Company and its stockholders to seek a non-binding, advisory stockholder vote to ratify the Exclusive Forum Amendment. The ratification of the Exclusive Forum Amendment requires the affirmative vote of a majority of the votes cast at the annual meeting. If the proposal to ratify the Exclusive Forum Amendment is not approved, the Board will consider whether to propose at the 2020 annual meeting of stockholders an amendment to eliminate the Exclusive Forum Amendment.

Recommendation of the Board of Directors

THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION, BY NON-BINDING, ADVISORY VOTE, OF AN AMENDMENT TO THE COMPANY’S BYLAWS TO DESIGNATE DELAWARE AS THE EXCLUSIVE FORUM FOR CERTAIN LEGAL ACTIONS.


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Proposal 4: 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, 2019. 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 shares of common stock of the Company represented 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. Abstentions will have the same effect as votes against this proposal. There will be no broker non-votes for this proposal because this is a discretionary item.

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, 2019.







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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 Corporate Governance Guidelines contained on our website at www.inwk.com on the “Investor” page under the link “Corporate Governance.” In addition, we engage in shareholder outreach activities, which have informed our Board’s decisions concerning governance and related practices, as described below.

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

Board Leadership Structure
Our Board is led by an independent Chairman, Jack M. Greenberg. We believe that such Board leadership structure for the Company is appropriate in light of the differences between the roles of Chairman of the Board and Chief Executive Officer. The Chief Executive Officer is responsible for setting the strategic direction of the Company and for the day-to-day leadership and performance of the Company, whereas the Chairman of the Board provides guidance to the Chief Executive Officer, is responsible for chairing Board meetings, including executive sessions with Board members, and advising on agenda topics and corporate governance matters. We have had this leadership structure for the majority of our existence; 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 is set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Meetings and Committees of the Board of Directors

During 2018, the Board held eleven meetings. During 2018, each director attended at least 75% of the aggregate of the total number of meetings of the Board held during the period in which he or she was a director and the total number of meetings held by all of the committees of the Board on which he or she served. The Board has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. The Audit, Compensation and Nominating and Corporate Governance Committees were formally established in August 2006 in connection with the Company’s initial public offering and operate under written charters adopted by the Board. The Executive Committee was established in April 2010.

Audit Committee. Charles K. Bobrinskoy, Lindsay Y. Corby, David Fisher, Julie M. Howard, Marc Zenner and Linda S. Wolf serve on the Audit Committee. Mr. Bobrinskoy serves as the chairman of our Audit Committee. Linda S. Wolf has chosen not to stand for re-election as a director at the Annual Meeting. 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. Each member of the Audit Committee is financially literate and Charles K. Bobrinskoy and Lindsay Y. Corby are Audit Committee financial experts under the SEC rule implementing Section 404 of the Sarbanes-Oxley Act of 2002. During 2018, the Audit Committee held eight meetings.

Compensation Committee. Charles K. Bobrinskoy, David Fisher, J. Patrick Gallagher, Jr., Jack M. Greenberg, Julie M. Howard, Kirt P. Karros and Linda S. Wolf serve on the Compensation Committee. J. Patrick Gallagher, Jr. and Linda S. Wolf have

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chosen not to stand for re-election as directors at the Annual Meeting. Ms. Howard serves as the chairman of our Compensation Committee. Prior to Ms. Howard's election as chairman on February 21, 2019, Mr. Gallagher had served as chairman of our Compensation Committee since March 2012. 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 2018, the Compensation Committee engaged Willis Towers Watson to perform certain compensation consulting services related to benchmarking the Company’s executive compensation. In connection with this engagement, the Compensation Committee requested that Willis 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.

Willis Towers Watson provided compensation consulting services to the Compensation Committee only on matters for which the Compensation Committee is responsible. While the Compensation Committee sought input from Willis 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. Willis Towers Watson is directly engaged by and reports to the Compensation Committee, although it does interact with Company management at the Compensation Committee’s direction. A different division of Willis Towers Watson provides non-executive benefits and insurance brokerage services to the Company. For 2018, we paid Willis Towers Watson approximately $125,000 for services provided to the Compensation Committee, and we paid approximately $439,000 for the non-executive benefits and insurance brokerage services provided to the Company. In accordance with the requirements of Regulation S-K, the Company has determined that no conflict has arisen in connection with the work of Willis Towers Watson as compensation consultant to the Compensation Committee. See the “EXECUTIVE AND DIRECTOR COMPENSATION - Compensation Discussion and Analysis” section of this proxy statement for discussion of the Company’s processes and procedures for considering and determining executive and director compensation. During 2018, the Compensation Committee held six meetings.

Nominating and Corporate Governance Committee. Adam J. Gutstein, J. Patrick Gallagher, Jr., Jack M. Greenberg, Julie M. Howard and Linda S. Wolf serve on the Nominating and Corporate Governance Committee. J. Patrick Gallagher, Jr. and Linda S. Wolf have chosen not to stand for re-election as directors at the 2019 annual meeting of stockholders. Mr. Gutstein serves as the chairman of our 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 2018, the Nominating and Corporate Governance Committee held four meetings.

The Nominating and Corporate Governance Committee will consider stockholder recommendations of candidates when the recommendations are properly submitted. Any stockholder recommendations which are submitted under the criteria summarized above should include the candidate’s name and qualifications for Board membership and should be addressed to Oren B. Azar, Corporate Secretary, InnerWorkings, Inc., 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601.


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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 eight of our nine director nominees are “independent directors” as defined in the rules of NASDAQ: Jack M. Greenberg, Charles K. Bobrinskoy, Lindsay Y. Corby, David Fisher, Adam J. Gutstein, Julie M. Howard, Kirt P. Karros and Marc Zenner. In making the independence determination, the Board considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances that the Board deemed relevant, including the beneficial ownership of the Company’s capital stock by each non-employee director and the transactions involving them as described in the section titled “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.”

In particular, the Board considered the Company’s business relationship with Enova International, Inc., of which Mr. Fisher serves as Chairman, President and Chief Executive Officer. The Board noted that:
Mr. Fisher is not involved in the transactions or ongoing discussions or negotiations between 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. The Company’s services to Enova International, Inc. are marketing execution and procurement services. Enova International, Inc. does not provide any services to the Company.
Amounts involved represent less than 0.9% of each company’s revenue in 2018.

After assessing the relationship, the Board concluded that such relationship was not material, would not interfere with Mr. Fisher’s ability to exercise independent judgment as a director and would not give rise to any undue influence. Therefore, the Board concluded that Mr. Fisher 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 “Investors” page under the link “Corporate Governance.” In addition, the Board has adopted corporate governance guidelines, which are available at www.inwk.com on the “Investors” page under the link “Corporate Governance.” Information on, or accessible through, our website is not a part of, or incorporated by reference into, this proxy statement. For a further discussion of compensation and governance updates, see “EXECUTIVE AND DIRECTOR COMPENSATION - Compensation Discussion and Analysis - Executive Summary.”

Compensation Committee Interlocks and Insider Participation

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

Communications with Directors

We value shareholder outreach activities, which serve to inform our Board’s decisions concerning governance and related practices. For a discussion of our shareholder outreach activities, see “EXECUTIVE AND DIRECTOR COMPENSATION - Compensation Discussion and Analysis - Executive Summary - Shareholder Outreach.”

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 Oren B. Azar, Corporate Secretary” at 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601.

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.


15



Attendance at Annual Meeting

Directors are encouraged, but not required, to attend our annual stockholders’ meeting. Messrs. Greenberg, Stoddart and Bobrinskoy attended the 2018 annual meeting of stockholders.


16



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 September 19, 2019 (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, director nominees and executive officers as a group.

Unless otherwise indicated, the address of each beneficial owner listed below is c/o InnerWorkings, Inc., 203 N. LaSalle Street, Suite 1800, Chicago, Illinois 60601.
Name and Address
 
Number of Shares
Beneficially
Owned(1)
 
Approximate
Percent of
Class(1)
CERTAIN BENEFICIAL OWNERS (not including directors and executive officers):
 
 
  
 
  

ArrowMark Colorado Holdings LLC
100 Fillmore Street, Suite 325
Denver, CO 80206
 
6,766,499

(2) 
 
13.0
%
Richard A. Heise, Jr. 
2221 Old Willow Road 
Northfield, IL 60093
 
6,344,907

(3) 
 
12.2
%
Dimensional Fund Advisors LP
Building One 6300 Bee Cave Road
Austin, TX, 78746
 
4,468,407

(4) 
 
8.6
%
American Century Capital Portfolios, Inc.
4500 Main Street
9th Floor
Kansas City, Missouri 64111
 
3,940,880

(5) 
 
7.6
%
The Vanguard Group
100 Vanguard Blvd
Malvern, PA 19355
 
3,130,039

(6) 
 
6.0
%
BlackRock, Inc.
55 East 52nd Street
New York, New York 10055
 
3,084,027

(7) 
 
5.9
%
DIRECTORS, DIRECTOR NOMINEES AND NAMED EXECUTIVE OFFICERS:
 
 
  
 


Eric D. Belcher
 
423,029

 
 
*

Ronald C. Provenzano
 
352,323

(8) 
 
*

Richard S. Stoddart
 
200,172

(9) 
 
*

Jack M. Greenberg
 
186,409

(10) 
 
*

Charles K. Bobrinskoy
 
165,549

(11) 
 
*

Linda S. Wolf
 
160,633

(12) 
 
*

J. Patrick Gallagher, Jr.
 
143,419

(13) 
 
*

David Fisher
 
105,427

(14) 
 
*

Julie M. Howard
 
96,318

 
 
*

Oren B. Azar
 
69,650

(15) 
 
*

Lindsay Y. Corby
 
16,129

 
 
*

Adam J. Gutstein
 
15,903

 
 
*

Charles D. Hodgkins III
 
10,008

 
 
*

Kirt P. Karros
 

 
 
*

Marc Zenner
 

 
 
*

All directors, director nominees and executive officers as a group (15 persons)
 
1,944,969

 
 
3.7
%

17




*
= 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 September 19, 2019 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 September 19, 2019, and the percentages are based upon 51,947,385 shares of our common stock outstanding as of September 19, 2019. 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)
Based solely on a Schedule 13G/A filed with SEC on February 14, 2019.
(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 SEC on February 14, 2013.
(4)
Based solely on a Schedule 13G/A filed with the SEC on February 8, 2019.
(5)
Based solely on a Schedule 13G filed with the SEC on February 11, 2019
(6)
Based solely on a Schedule 13G/A filed with the SEC on February 12, 2019.
(7)
Based solely on a Schedule 13G/A filed with the SEC on February 4, 2019.
(8)
Includes options to purchase 251,012 shares of common stock exercisable within 60 days.
(9)
Includes options to purchase 102,821 shares of common stock exercisable within 60 days.
(10)
Includes options to purchase 11,160 shares of common stock exercisable within 60 days.
(11)
Includes options to purchase 11,160 shares of common stock exercisable within 60 days.
(12)
Includes options to purchase 11,160 shares of common stock exercisable within 60 days.
(13)
Includes options to purchase 5,082 shares of common stock exercisable within 60 days.
(14)
Includes options to purchase 1,499 shares of common stock exercisable within 60 days.
(15)
Includes options to purchase 44,912 shares of common stock exercisable within 60 days.

Section 16(a) Beneficial Ownership Reporting Compliance

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

Based solely on our review of the reports furnished to us, we believe that during the last fiscal year, all reports filed by our directors and executive officers under Section 16(a) were made timely during 2018.


18



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 2018, 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.

Relationships with Arthur J. Gallagher & Co. and Enova International, Inc.

During 2018, the Company provided print procurement services to Arthur J. Gallagher & Co. J. Patrick Gallagher, Jr., a member of our Board, is the Chairman, President and Chief Executive Officer of Arthur J. Gallagher & Co. and has a direct ownership interest in Arthur J. Gallagher & Co. The Company billed Arthur J. Gallagher & Co. $1.6 million for these services in 2018. The amount receivable from Arthur J. Gallagher & Co. was $0.3 million as of December 31, 2018. Additionally, Arthur J. Gallagher & Co. provided insurance brokerage and risk management services to the Company. Arthur J. Gallagher & Co. billed the Company $0.1 million for such services in 2018.

The Company also provided marketing execution services to Enova International, Inc. during 2018. David Fisher, a member of the Company’s Board of Directors, is the Chairman and Chief Executive Officer of Enova International, Inc. and has a direct ownership interest in Enova International, Inc. The total amount billed for such marketing services during the year ended December 31, 2018 was $10.1 million. The amount receivable from Enova International, Inc. was $2.0 million as of December 31, 2018. See also “BOARD OF DIRECTORS AND CORPORATE GOVERNANCE - Director Independence.”

 
 


19



EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of our five executive officers as of September 24, 2019:
Name
 
Age
 
Position
Richard S. Stoddart
 
56
 
Chief Executive Officer, President and Director
Donald W. Pearson
 
57
 
Chief Financial Officer and Executive Vice President
Ronald C. Provenzano
 
53
 
Executive Vice President and Head of Operations Excellence
Oren B. Azar
 
55
 
Executive Vice President, General Counsel and Corporate Secretary
Renae D. Chorzempa
 
45
 
Executive Vice President and Chief Human Resources Officer

Biographies for our executive officers are set forth below.

Richard S. Stoddart. For more information on Mr. Stoddart, please see above under “Directors.”

Donald W. Pearson has served as Chief Financial Officer of InnerWorkings since January 2019. Mr. Pearson was a private investor and independent consultant from October 2016 to January 2019. From June 2015 to October 2016, Mr. Pearson was Executive Vice President and Chief Financial Officer of BWAY Corporation. Previously, Mr. Pearson served as Senior Vice President and Chief Financial Officer of Sparton Corporation from September 2014 to June 2015 and as Senior Vice President and Chief Financial Officer of AMCOL International Corporation from 2008 to 2014. Mr. Pearson holds a Master of Business Administration from the University of Chicago and a Bachelor of Arts in Accounting from Augustana College.

Ronald C. Provenzano has served as Executive Vice President and Head of Operations Excellence since October 2018. Mr. Provenzano served as General Counsel of InnerWorkings from September 2012 to October 2018, and additionally as Executive Vice President since June 2016 to October 2018, as interim head of human resources from January 2016 to August 2018, and as Corporate Secretary from March 2015 to October 2018. Previously, Mr. Provenzano served in senior legal executive roles for R.R. Donnelley & Sons Company, 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, a Bachelor of Science in Accountancy from the University of Illinois, Urbana-Champaign, and a Master of Business Administration from the University of Chicago Booth School of Business.

Oren B. Azar has served as Executive Vice President, General Counsel and Corporate Secretary since October 2018. Mr. Azar served as Senior Vice President and Deputy General Counsel of the Company from June 2014 to October 2018. Previously, Mr. Azar served in senior legal roles for Walgreen Co. and Joy Global Inc. and practiced corporate law as a partner at Shearman & Sterling LLP. He holds the professional designation of Chartered Financial Analyst. Mr. Azar holds a Juris Doctor from Harvard Law School and a Bachelor of Science in Economics from the Wharton School of the University of Pennsylvania.

Renae D. Chorzempa has served as Chief Human Resources Officer since August 2018 and additionally as Executive Vice President since February 2019. From May 2012 to November 2017, Ms. Chorzempa was Vice President of Human Resources at Hill-Rom Holdings, Inc. Previously, Ms. Chorzempa held senior human resources positions at Alberto Culver, Illinois Tool Works and Kraft Foods, Inc. Ms. Chorzempa holds a Master of Science degree in Human Resources Management from Purdue University’s Krannert School of Management and a Bachelor of Arts degree in Psychology and Sociology from Purdue University.


20



EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

This compensation discussion describes the material elements of compensation awarded to, earned by, or paid to each of the individuals who served as our named executive officers during the last completed fiscal year, as set forth in the table below:
Name
 
Position
Richard S. Stoddart (1)
 
President and Chief Executive Officer
Eric D. Belcher
 
Former President and Chief Executive Officer; Former Chairman of the Board
Ronald C. Provenzano (2)
 
Executive Vice President and Head of Operations Excellence; Former General Counsel and Corporate Secretary
Oren B. Azar (2)
 
Executive Vice President, General Counsel and Corporate Secretary
Charles D. Hodgkins III (3)
 
Interim Chief Financial Officer, Senior Vice President, Corporate Development and Strategic Initiatives

Robert L. Burkart(4)
 
Former Chief Information Officer
(1) As previously disclosed, effective April 5, 2018, Mr. Belcher transitioned from his position as President and Chief Executive Officer to the role of Chairman of the Board through September 6, 2018 (and served as a non-executive director through December 31, 2018), and the Board appointed Mr. Stoddart as his successor. For additional information regarding the CEO transition, please see the summary set forth below under the caption, “CEO Transition.”
(2) As previously disclosed, effective October 16, 2018, Mr. Provenzano transitioned to the role of Head of Operations Excellence and Mr. Azar was appointed as Executive Vice President, General Counsel and Corporate Secretary (he previously served as Senior Vice President and Deputy General Counsel of the Company). The Company entered into an amended and restated employment agreement with Mr. Provenzano and into an employment agreement with Mr. Azar in connection with this transition. For additional information, please see the summaries set forth below under the caption, “Amended and Restated Employment Agreement with Ronald C. Provenzano” and “Employment Agreement with Oren B. Azar.”
(3) As previously disclosed, on December 6, 2017, Mr. Hodgkins was appointed Interim Chief Financial Officer of the Company. The Board appointed Mr. Pearson as Executive Vice President and Chief Financial Officer of the Company effective January 10, 2019, and Mr. Hodgkins resigned from employment with the Company effective January 15, 2019. For additional information regarding the CFO transition, please see the summary set forth below under the caption, “CFO Transition.”
(4) As previously disclosed, Mr. Burkart resigned from employment with the Company effective November 15, 2018.

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

Key Factors Affecting Compensation in 2018

New Management Team. Since April 2018, the Company has changed over substantially all of its executive team, with newly appointed executives filling the key roles of Chief Executive Officer, Chief Financial Officer, Head of Operations Excellence, General Counsel, and Chief Human Resources Officer. Compensation is a key lever for acquiring exceptional talent and exiting previous incumbents. As a result, the Company’s 2018 executive compensation was substantially affected by the award of one-time grants and non-discretionary payments in connection with our 2018 executive officer transitions, as follows:

Mr. Stoddart received an initial one-time sign-on award of equity, valued at $1,660,441 for purposes of the Summary Compensation Table below, which was intended to attract Mr. Stoddart to the position consistent with competitive practice and mitigate the impact of the substantial unvested equity Mr. Stoddart forfeited by resigning from his former employer

Mr. Belcher received a one-time non-discretionary transition bonus of $500,000, in accordance with the Transition Agreement between the Company and Mr. Belcher dated February 1, 2018, which outlined payments in connection with his transitional role as Chairman and retirement from the position of Chief Executive Officer. This transition bonus was an integral part of Mr. Belcher’s compensation for serving as executive Chairman and working to achieve a smooth CEO transition to Mr. Stoddart that would support continued client retention and new business development

Pursuant to the terms of his employment agreement with the Company, Mr. Hodgkins was paid a special bonus of $100,000 in April 2018 in connection with his role as Interim Chief Financial Officer



21



Mr. Azar received a one-time retention grant of restricted stock units valued at $150,000, in accordance with the Employment Agreement between the Company and Mr. Azar dated October 16, 2018

Company Performance. The other key factor affecting compensation in 2018 was the Company’s financial performance, which was well below the goals established in February 2018. Our Non-GAAP Adjusted EBITDA in 2018 of $27.9 million represented a 52% decrease compared to $57.9 million in 2017, reflecting a combination of lower gross profit and higher selling, general and administrative expenses. In line with our pay for performance approach, our disappointing results in 2018 had a direct impact on the compensation earned by our named executive officers, as described in further detail below and later in this “Compensation Discussion and Analysis.”

The equity component of our executive compensation program further aligns pay with performance. Specifically, the realizable value of the named executive officers’ equity holdings varies depending on the Company’s stock price, and the Company introduced performance-based share compensation (PSUs) as part of the equity mix for named executive officers in 2017.

The Company’s below-target financial results for 2018 significantly reduced the value of the executive compensation and associated equity grants received by our named executive officers, in part due to the 67% decline in the Company’s stock price over the 12 months ended April 2019. This stock price decline resulted largely due to issues and decisions originating prior to April 2018, but coincided almost exactly with the first 12 months of the new management team, during which time that team was working with urgency to develop and execute the Company’s turnaround plan. The reductions in executive compensation and equity value included the following elements:

None of our named executive officers received any annual incentive payments (2018 annual cash incentive were $0 vs. an aggregate target of $1.4 million)

The Board exercised its discretion not to pay Mr. Belcher the $200,000 discretionary bonus that he was eligible to receive under the Transition Agreement

By the end of 2018, the value of the one-time sign-on award of restricted stock granted to Mr. Stoddart had declined by approximately 61% and the value of other stock held by our named executive officers at the start of 2018 had declined by 63%

The PSUs granted to our named executive officers in 2017 and 2018 are currently tracking to zero payouts due to below-threshold performance through 2018

All outstanding stock options held by our named executive officers are out-of-the-money, with exercise prices ranging from 144% to 402% of our stock’s closing price at the end of 2018

Long-Term Restructuring Goals and their Connection to Executive Compensation. In response to the Company’s disappointing results in the first half of 2018, the Company initiated a major restructuring program designed to reduce selling, general and administrative expense and improve the efficiency of the Company’s operations. As a result of an in-depth review and analysis completed in late 2018 with the assistance of management consultants specializing in operational restructuring, the Company determined the specific changes that would be needed to enable the Company to achieve its long-term goal of sustainable, profitable growth and increasing operating leverage over time. A central goal of the restructuring program is to organize the Company’s client service delivery model in a way that will enable improved operating leverage while continuing to deliver superior service and execution to the Company’s clients.

In determining the compensation of the Company’s executive officers, and in particular the one-time sign-on and retention awards made in the second half of 2018 and first half of 2019, the Company’s Board of Directors and Compensation Committee considered that retention of the new executive team installed since early 2018, and in particular Mr. Stoddart, was critical to continuing the early progress made on the Company’s restructuring program. Among the early indicators of success considered by the Committee were:

The Company’s efficient implementation of its first phase of cost-reduction measures in the second half of 2018, which were designed to reduce selling, general and administrative expenses by more than $15 million per year;

The Company’s substantial upgrade to its annual financial planning for 2019, to develop a significantly more robust plan that would enable further cost reductions, operational efficiencies and renewed revenue growth;


22



The Company’s continued strong cost discipline in the first half of 2019, which enabled further improvement in selling, general and administrative expenses as compared to both the prior year period and the second half of 2018, contributing to a significant increase in Adjusted EBITDA over the corresponding period in 2018;

The successful reorganization of the Company’s account leadership teams in North America in June 2019 to drive improved consistency and efficiency in the delivery of client services; and

The Company being awarded, during the first seven months of 2019, client contracts for new enterprise business totaling a record $135 million in incremental annual revenues.

Due to the decline in the Company’s share price since the date of Mr. Stoddart’s original 2018 sign-on grant, by June 2019 such award had an intrinsic value of $301,000, or nearly 80% below the targeted grant date value. The Compensation Committee considered that this amount was insufficient to provide the retentive value intended. In order to ensure that Mr. Stoddart and the executive team he had recruited since joining the Company would remain in place to see the restructuring program through to its anticipated completion in 2021, on June 13, 2019 the Compensation Committee granted Mr. Stoddart a special retention award with a targeted grant date value of $1,500,000. For additional information, see “-Determining 2019 Executive Compensation--2019 Long-Term Equity Incentives” below. Mr. Stoddart’s total compensation for 2019, including the retention award, approximates the median CEO compensation for the Company’s peer group.

Say on Pay. The Company’s executive compensation as disclosed in our 2018 Proxy Statement was approved on an advisory basis by holders of approximately 99% of the shares present and entitled to vote at the Company’s 2018 annual meeting. 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 did not make any structural changes to our executive compensation program in connection with the results of the 2018 stockholder advisory vote. The Compensation Committee regularly reviews the structure of our executive compensation program, and makes changes in light of investor and advisory feedback, changes in market practice, and other factors. As previously disclosed, at the 2017 annual meeting, a majority of votes cast by stockholders approved an annual frequency for the stockholder advisory vote to approve executive compensation. Accordingly, our next stockholder advisory vote on executive compensation will be held at our 2019 annual meeting of stockholders.

Shareholder Outreach. We conduct an annual shareholder governance outreach program, in order to obtain input from our large shareholders on governance and related practices, including executive compensation. From June 2018 through March 2019, our General Counsel and Vice President of Investor Relations, on behalf of the Board, invited each of our top 20 institutional shareholders to participate in individual telephonic meetings regarding governance and related practices, and held telephonic meetings with representatives of institutional shareholders representing approximately 20% of shares outstanding based on shares owned on the applicable meeting date. The feedback received in these and other communications with shareholders has informed our Board’s and Compensation Committee’s decisions concerning governance and executive compensation matters. The feedback regarding the Company’s executive compensation programs has generally been very positive, with strong support for the level and design of executive compensation, especially our substantial emphasis on meaningful and challenging financial metrics rather than highly discretionary or easily achieved “soft” targets. Starting in 2018, based on feedback received as part of our outreach program, our Board determined to add Return on Invested Capital as one of the metrics used for our annual incentive program. Our Board and Compensation Committee intend to continue this outreach program.

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

We have a “pay for performance” approach
We have no “single trigger” or “modified single trigger” change in control severance benefits
Our Compensation Committee is comprised solely of independent directors under SEC and NASDAQ requirements
Our Compensation Committee retains an independent compensation consultant
We maintain stock ownership and stock holding guidelines for our executive officers and directors
Our InnerWorkings, Inc. 2006 Stock Incentive Plan, as amended and restated (the “2006 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 have a compensation clawback policy
Our performance-based compensation is closely tied to quantitative metrics of company performance
We provide modest perquisites and reasonable severance arrangements


23



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

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

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

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

Components and Objectives of Compensation Program. The principal elements of our executive compensation program in 2018 were base salary, annual cash incentives, and long-term equity incentives. 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 experience, performance, responsibilities, and competitive market for executive talent.
 
Enables us to attract and retain top talent for each position.
Annual Cash Incentives
 
Provides motivation for achievement of annual company and individual performance goals.
 
Focuses executives on meeting key company and individual performance goals.
Long-Term Equity Incentives
 
Provides long-term incentive to focus on stockholder value creation.
 
Value opportunity for executives is directly tied to long-term improvement of Company performance and stock price.
*Consist of stock options, restricted stock, restricted stock units (which we began granting in September 2018 in lieu of shares of restricted stock), stock appreciation rights (which we granted in June 2019 in lieu of stock options) and performance share units

2018 Target Compensation Allocation
Name
 
Base Salary
(%)
 
Short-Term
Incentive
Compensation
(%)
 
Long-Term
Equity
Incentives
(%)
Richard S. Stoddart
 
26.8
%
 
22.8
%
 
50.4
%
Eric D. Belcher (1)
 
46.5
%
 
53.5
%
 
%
Ronald C. Provenzano
 
33.9
%
 
23.7
%
 
42.4
%
Oren B. Azar (2)
 
41.7
%
 
25.0
%
 
33.3
%
Charles D. Hodgkins III
 
49.0
%
 
19.6
%
 
31.4
%
Robert L. Burkart
 
50.0
%
 
25.0
%
 
25.0
%
(1) Target compensation allocation reflects Mr. Belcher’s 2018 compensation as President and Chief Executive Officer, which relates to the period prior to his transition to Chairman of the Board on April 5, 2018.
(2) Target compensation allocation reflects compensation set in connection with Mr. Azar's appointment as Executive Vice President, General Counsel and Corporate Secretary on October 16, 2018.

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.


24



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 or her own compensation by the Compensation Committee.

Role of the Compensation Consultant. For 2018, the Compensation Committee retained an external independent consultant, Willis Towers Watson, to advise the Compensation Committee on executive compensation matters, including the composition of the Company’s peer group and competitive pay practices for 2018 and 2019. In 2018, the Compensation Committee worked with Willis Towers Watson to review and update the peer group that had been used to advise executive compensation determinations for 2018. The peer group was selected from a pool of U.S. public companies primarily within the Company’s industry (based on GICS code) and a comparable revenue range. The Compensation Committee determined that the updated peer group of 13 companies listed below provided a robust statistical set of compensation data to serve as a basis for 2019 compensation decisions. In addition to the compensation data disclosed by the companies in the peer group, Willis Towers Watson utilized compensation data from nationally recognized compensation surveys to advise the Compensation Committee on competitive compensation levels.

The companies included in the peer group used to benchmark the 2018 compensation levels of the executive officers are listed below:
CBIZ, Inc.
ICF International, Inc.
CSG Systems International, Inc.
Matthews International Corporation
Deluxe Corp.
Navigant Consulting, Inc.
Echo Global Logistics, Inc.
Resources Connection, Inc.
Ennis, Inc.
Sykes Enterprises, Inc.
FTI Consulting, Inc.
Viad Corp.
Huron Consulting Group, Inc.
 
                        
For 2018, the Compensation Committee considered the 25th percentile, median, and 75th percentile base salaries, annual incentive targets, long-term incentives and total compensation to evaluate each executive’s compensation. The Compensation Committee considers various sources of data when determining the named executive officers’ total compensation, including the 50th percentile of the peer group companies when evaluating Chief Executive Officer and Chief Financial Officer compensation, and also considers other factors such as prior experience, tenure with the Company, and overall performance of the Company and the executive officer.

Determining 2018 Executive Compensation

2018 Base Salary. We provide the opportunity for our named executive officers and other executives to earn a competitive annual base salary. We believe that in order to attract and retain an appropriate caliber of talent for each position, a portion of our executives’ compensation should be fixed and predictable. The Compensation Committee considers the 50th percentile of the peer group companies, among other sources, when considering and determining each executive officer’s base salary, 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, on March 12, 2018, the Compensation Committee determined that Mr. Belcher’s annual base salary would remain at $750,000 for the remainder of his tenure as Chief Executive Officer, at which time his cash compensation would be reduced to $400,000 in accordance with the terms of his transition agreement (as summarized below under "CEO Transition"). The Committee also determined that the annual base salary of Mr. Hodgkins would increase from $234,000 to $239,850, and such salary would be temporarily augmented by a monthly stipend of $10,000 for the duration of his service in the Interim Chief Financial Officer role.


25



The Summary Compensation Table sets forth the actual base salary earned by each of our named executive officers during 2018. The table below sets forth our named executive officers’ base salary rates as in effect in 2017, the changes that went into effect on April 1, 2018, and the percentage of increase, if any.

 
 
Comparative Information for 2018
Base Salary Rates
Name
 
Base Salary
Rate in 2017
($)
 
Base Salary
Rate in April 2018
($)
 
Percentage
Increase
(%)
Richard S. Stoddart
 
$

 
$
800,000

 
 %
Eric D. Belcher
 
750,000

 
400,000

 
(46.7
)%
Ronald C. Provenzano
 
350,000

 
400,000

 
14.3
 %
Oren B. Azar (1)
 
222,789

 
229,389

 
3.0
 %
Charles D. Hodgkins III
 
234,000

 
239,850

 
2.5
 %
Robert L. Burkart
 
250,000

 
256,250

 
2.5
 %
(1) Mr. Azar’s salary was increased to $300,000 under the employment agreement entered into in connection with his appointment as Executive Vice President, General Counsel and Corporate Secretary on October 16, 2018.

2018 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 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 2018 were administered under our Annual Incentive Plan.

The 2018 target opportunities and incentive design under the Annual Incentive Plan were approved by the Compensation Committee on March 12, 2018. The 2018 management bonus award opportunities were based on the following criteria, which were the same for all named executive officers:
30% on gross profit (50% to 200% pay-out based on reaching approximately 94% to 106% of 2018 target gross profit of $308.9 million),
30% on Non-GAAP Adjusted EBITDA* performance (50% to 200% pay-out based on reaching approximately 93% to 115% of 2018 target Non-GAAP Adjusted EBITDA of $76.0 million),
20% on return on invested capital ("ROIC") (50% to 200% pay-out based on reaching approximately 93% to 114% of 2018 target ROIC of 8.5%), and
20% on qualitative Company performance, which includes goals such as retention of top 100 accounts, successful implementation of recent client contracts, continued wins of new large, long-term client contracts, and successful implementation of key initiatives.

* Adjusted EBITDA (“Non-GAAP Adjusted EBITDA”) is a financial measure that is not calculated according to accounting principles generally accepted in the United States (“GAAP”), and we are including our 2018 results for this measure to show an aspect of our performance. Appendix A to this proxy statement contains reconciliations of this measure to the most directly comparable GAAP financial measures under the heading “Reconciliation of GAAP and Non-GAAP Financial Measures.”

The following table sets forth the Company’s 2018 results with respect to the quantitative criteria components of our Annual Incentive Plan ($ in millions):
 
 
2018 Target
 
2018 Actual
 
Percentage of
Target Reached
 
Weighting
 
Pay-Out
Percentage
Gross Profit
 
308.9

 
255.1

 
83
%
 
30
%
 
%
Non-GAAP Adjusted EBITDA
 
76.0

 
27.9

 
37
%
 
30
%
 
%
ROIC (1)
 
8.5
%
 
1.9
%
 
22
%
 
20
%
 
%


26



(1)
2018 ROIC for purposes of our Annual Incentive Plan was calculated as follows ($ in millions):
Non-GAAP Adjusted EBITDA
$
27.9

Less: Stock-based compensation expense
5.3

Less: Depreciation and amortization
13.0

Less: Tax expense
2.7

Adjusted net operating profit after tax
$
6.9

 
 
Average total assets (trailing four quarters)
$
640.7

Less: Average total current liabilities (trailing four quarters)
222.4

Less: Average non-interest bearing long-term liabilities (trailing four quarters)
47.8

Less: Average excess cash (trailing four quarters)
11.5

Average invested capital (trailing four quarters)
$
359.0

 
 
ROIC
1.9
%

The Compensation Committee determined in February 2019 that the qualitative performance payout levels for all named executive officers would be 0% for 2018. Although the Compensation Committee considered the specific goals relevant to an evaluation of qualitative Company performance, several of which reflected performance at or near the Company’s goals, the Compensation Committee determined that overall qualitative Company performance merited a zero payout nonetheless. Based on the Compensation Committee’s assessment of both the quantitative and qualitative goals, none of the named executive officers received a 2018 performance bonus payout under the ordinary Annual Incentive Plan.

The table below sets forth the fiscal 2018 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.
  
 
Target Incentive
 
Maximum Incentive
 
Actual Incentive Earned
Name
 
% of
Salary
 
Amount
($)
 
% of
Target
 
Amount
($)
 
% of
Target
 
Amount
($)
Richard S. Stoddart
 
85
%
 
503,014

 
200
%
 
$
1,006,028

 
%
 
$

Eric D. Belcher (1)
 
115
%
 
222,123

 
200
%
 
$
444,246

 
%
 

Ronald C. Provenzano
 
70
%
 
280,000

 
200
%
 
$
560,000

 
%
 

Oren B. Azar (2)
 
60
%
 
180,000

 
200
%
 
$
360,000

 
%
 

Charles D. Hodgkins
 
40
%
 
95,940

 
200
%
 
$
191,880

 
%
 

Robert L. Burkart
 
50
%
 
132,625

 
200
%
 
$
265,250

 
%
 

(1) Mr. Belcher's 2018 annual incentive opportunity was prorated for the number of days in 2018 that he served as President and Chief Executive Officer.
(2) The target and maximum incentives shown above reflect compensation set in connection with Mr. Azar's appointment as Executive Vice President, General Counsel and Corporate Secretary on October 15, 2018.

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.

2018 One-Time Bonuses. In accordance with the terms of the Transition Agreement entered into between the Company and Mr. Belcher on February 1, 2018, Mr. Belcher received a transition bonus of $500,000 (which was paid net of his remaining recoupment of $120,827). Pursuant to the terms of Mr. Hodgkins’ employment agreement with the Company, Mr. Hodgkins was paid a special bonus of $100,000 in April 2018 in connection with his role as Interim Chief Financial Officer. Additionally, Mr. Burkart earned a special bonus of $30,000 in March 2018 relating to the achievement of a milestone relating to technology implementation.

2018 Long-Term Equity Incentives. We provide the opportunity for our named executive officers and other executives to earn long-term equity incentive awards. Long-term incentive awards align the interests of our executives with those of our stockholders

27



and incent retention. Although the Compensation Committee determines the actual grant value for each named executive officer annually, the Company has an employment agreement with each of our named executive officers that specifies a targeted grant date value. The 2018 annual equity awards to our named executive officers (excluding Mr. Belcher) were weighted as follows: 40% performance share units, 30% stock options, and 30% restricted stock units. Each annual grant of options, restricted stock or RSUs to executive officers vests ratably over a period of four years from the grant date. Each annual grant of PSUs vests at the end of the performance period, which covers three fiscal years (the remainder of the year of grant plus two additional full years). The Company expects that future PSU grants will be awarded with a performance period of three full years.

The target long-term incentive grant values for our named executive officers in 2018 were as follows: Mr. Stoddart ($1,500,000), Mr. Provenzano ($500,000), Mr. Azar ($91,760), Mr. Hodgkins ($153,750), and Mr. Burkart ($128,125). Additionally, Mr. Stoddart and Mr. Azar each received a sign-on long-term incentive grant in connection with their respective employment agreements, with target values equal to $1,500,000 and $150,000, respectively. Following his transition out of the role of President and Chief Executive Officer, at the time of our 2018 annual meeting of stockholders Mr. Belcher received a grant of $125,000 consisting entirely of restricted stock units in his capacity as a non-executive director. In accordance with the terms of his Transition Agreement, Mr. Belcher’s 2018 award vested on December 31, 2018.

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 equity awards granted to our named executive officers in 2018 are summarized below. 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.

Stock Options, Restricted Stock Awards, and Restricted Stock Units

The table below sets forth the amounts and grant date values of our stock option restricted stock and restricted stock unit ("RSU") awards to our named executive officers.
 
 
2018 Stock Option, Restricted Stock Awards, and Restricted Stock Units
Name
 
Stock Options (#)
 
Grant Date Value of Options ($)
 
Restricted Stock (#)
 
Grant Date Value of Restricted Stock ($)
 
Restricted Stock Units (#)
 
Grant Date Value of Restricted Stock Units ($)
 
Total Value ($)
Richard S. Stoddart
 
411,287

 
1,469,600

 
79,031

 
750,004

 
58,065

 
450,004

 
2,669,608

Eric D. Belcher
 

 

 

 

 
16,129

 
125,000

 
125,000

Ronald C. Provenzano
 
58,065

 
186,388

 

 

 
19,355

 
150,001

 
336,389

Oren B. Azar
 
10,655

 
34,203

 

 

 
23,822

 
177,526

 
211,729

Charles D. Hodgkins III
 
17,855

 
57,315

 

 

 
5,952

 
46,128

 
103,443

Robert L. Burkart
 

 

 

 

 

 

 

Our stock options are granted under the terms and conditions of the 2006 Plan, and generally have a 10-year contractual exercise term. We have traditionally used stock options as a form of equity compensation because stock options provide a relatively straightforward incentive for our executives, align our executives’ interests with stockholders’ interests and result in less immediate dilution of existing stockholders’ interests. All grants of stock options to our employees are granted with exercise prices equal to or greater than the fair market value of our common stock on the respective grant dates. Grants of stock options become vested in accordance with such terms and conditions and during such periods as may be established by the Compensation Committee and set forth in the applicable award agreement. For purposes of determining the number of options to award based on the target award value, the Compensation Committee uses a different valuation methodology than the Black-Scholes method used for accounting purposes. The numbers reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table reflect the accounting valuation of options. For a discussion of the determination of the grant date fair 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.

Our restricted stock and RSU awards are granted under the terms and conditions of the 2006 Plan. We have traditionally used restricted stock and RSUs as a form of equity compensation because restricted stock and RSUs provide a relatively straightforward incentive and retention tool for our executives, and align our executives’ interests with stockholders’ interests. The grant of a share of restricted stock or an RSU entitles the participant to receive a share of our common stock that becomes transferable upon

28



completing a specified period of service. Grants of restricted stock or RSUs 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.

Performance Share Unit Awards

On October 12, 2018, the Compensation Committee also approved awards of performance share units (“PSUs”) to our named executive officers. The PSUs are performance-based awards that will settle in shares of Company stock, in an amount between 0% and 200% of the target award level, based on the cumulative adjusted earnings per share (“EPS”) and the ROIC achieved by the Company during the performance period beginning July 1, 2018 and ending December 31, 2020. Each of these awards vests following the end of the performance period, provided that the applicable performance metrics have been satisfied.

 
 
2018-2020 Performance Share Unit Awards
Name
 
Target PSU Award (#)
 
Grant Date Value of PSUs ($)
Richard S. Stoddart
 
81,522

 
600,002

Eric D. Belcher*
 

 

Ronald C. Provenzano
 
27,174

 
200,001

Oren B. Azar
 
4,987

 
36,704

Charles D. Hodgkins III
 
8,356

 
61,500

Robert L. Burkart
 

 

* Mr. Belcher became Chairman of the Board effective April 5, 2018 and was ineligible to receive PSUs in 2018.

Our PSU awards are granted under the terms and conditions of the 2006 Plan. The grant of a PSU entitles the participant to receive a share of our common stock upon the achievement of specific performance objectives during a performance period. Grants of PSUs become vested in accordance with such terms and conditions as may be established by the Compensation Committee and set forth in the applicable award agreement.

Determining 2019 Executive Compensation

2019 Base Salary. Taking into consideration the Company’s performance in 2018, the individual performance of our named executive officers, and the competitive benchmarking results from our annual executive compensation review, on February 21, 2019, the Compensation Committee determined that Mr. Stoddart’s annual base salary would remain at $800,000; Mr. Provenzano’s annual base salary would remain unchanged at $400,000; and Mr. Azar’s annual base salary would increase from $300,000 to $325,000.
 
 
Comparative Information for 2019 Base Salary Rates
Name
 
Base Salary Rate in 2018 ($)
 
Base Salary Rate Effective April 1, 2019 ($)
 
Percentage Increase (%)
Richard S. Stoddart
 
$
800,000

 
$
800,000

 
%
Ronald C. Provenzano
 
400,000

 
400,000

 
%
Oren B. Azar*
 
300,000

 
325,000

 
8.3
%
* Mr. Azar's 2018 base salary rate shown above reflects compensation set in connection with Mr. Azar's appointment as Executive Vice President, General Counsel and Corporate Secretary on October 16, 2018.

2019 Annual Cash Incentives. The 2019 target opportunities under the Annual Incentive Plan (including criteria and weightings) were approved by the Compensation Committee on February 20, 2019, and the minimum and maximum thresholds for payments of 50% and 200% of target were approved on March 20, 2019. The target annual incentive award for each named executive officer remaining employed in 2019 is shown in the table below. The maximum incentive awards payable to the named executive officers are 200% of such target amounts. For 2019, the Compensation Committee approved the same weightings and metrics used in the 2018 Annual Incentive Plan, namely gross profit (30% weighting), Non-GAAP Adjusted EBITDA (30% weighting), ROIC (20% weighting), and qualitative goals (20% weighting).

29



Name
 
2018 Annual Cash Incentive as a Percent of Salary
 
2019 Annual Cash Incentive as a Percent of Salary
Richard S. Stoddart
 
85
%
 
100
%
Ronald C. Provenzano
 
70
%
 
70
%
Oren B. Azar*
 
60
%
 
60
%
*Mr. Azar's 2018 annual incentive percentage shown above reflects compensation set in connection with Mr. Azar's appointment as Executive Vice President, General Counsel and Corporate Secretary on October 16, 2018.

2019 Long-Term Equity Incentives. The 2019 annual target long-term equity incentive opportunities were approved by the Compensation Committee on February 20, 2019, subject to further evaluation of the form of the awards. The 2019 annual equity awards consisted (by grant date target value) 40% of PSUs, 40% of RSUs, and 20% of stock appreciation rights (“SARs”). These awards were granted to our named executive officers on June 3, 2019. The approved target long-term incentive grant values for 2019 awards are $1,500,000 for Mr. Stoddart, $500,000 for Mr. Provenzano, and $260,000 for Mr. Azar. Each annual grant of SARs, restricted stock or RSUs to executive officers vests ratably over a period of four years from the grant date. Each annual grant of PSUs vests at the end of the performance period, which covers three fiscal years (the remainder of the year of grant plus two additional full years). The Company expects that future PSU grants will be awarded with a performance period of three full years. Additionally, Mr. Provenzano received a supplemental retention grant of $60,000 on June 3, 2019 in recognition of his individual performance in 2018 and his critical role in driving the Company’s operational improvement plan. All of these equity awards will not begin vesting until at least one year after the grant date.

In addition, on June 13, 2019, the Compensation Committee approved a one-time retention grant for Mr. Stoddart with a target grant value of $1,500,000. This award consisted of 50% RSUs and 50% SARs, in each case cliff vesting three years from the grant date. The grant was intended to incent Mr. Stoddart to remain as the Company’s CEO throughout the vesting period, and thereby ensure his continued leadership of the Company through the successful implementation of the Company’s multi-year plan to rationalize costs, improve operating efficiencies and drive profitable growth. Due to the significant decline in the intrinsic value of Mr. Stoddart’s sign-on equity grants, such grants currently provide little retentive value. In deciding to approve the grant, the Committee considered that Mr. Stoddart has quickly assembled a talented leadership team and is driving critical operational improvements that have gained significant momentum during his tenure, thereby making his retention essential to continued improvements and the successful execution of the Company’s strategy. Those critical improvements included immediate cost reduction measures, substantial improvement in the Company’s annual planning process, significant reductions in selling, general and administrative expenses, and reorganization of the Company’s account leadership teams in North America. Together, those improvements have led to meaningful increases in Return on Invested Capital and Adjusted EPS during the first half of 2019 and are expected to continue to do so in future periods. In addition to operational improvements, Mr. Stoddart has played a major role in the Company’s efforts to develop new clients, making an important contribution to its future revenue growth. The Committee further considered that the Company’s circumstances had changed substantially since Mr. Stoddart accepted the role of CEO, due largely to factors that predated his arrival (including the 2018 restatement of prior year financial statements), which substantially reduced both the current value of Mr. Stoddart’s sign-on equity grant and Mr. Stoddart’s annual compensation since joining the Company. Another factor the Compensation Committee considered when determining the appropriate amount of the retention award was the competitive market. Mr. Stoddart’s 2019 target total direct compensation, inclusive of the retention grant, approximates the peer group median.

Our SARs are expected to be granted under the terms and conditions of the 2006 Plan and have a 10-year contractual exercise term. The SARs granted in 2019 provide for cash settlement. The Compensation Committee determined to grant SARs in lieu of stock options for 2019 in order to mitigate the dilution resulting from the recent decline in the Company’s share price. In connection with the decision to utilize cash-settled SARs for 2019, the Compensation Committee also decided to slightly increase the proportion of whole share grants (in the form of RSUs) in order to limit the Company’s exposure to the accounting and cash flow implications of cash-settled equity awards. As with stock options, SARs provide a relatively straightforward incentive for our executives, and align executives’ interests with stockholders’ interests. In addition, compared with stock options, SARs result in less immediate dilution of existing stockholders’ interests. All grants of SARs to our employees are granted with exercise prices equal to or greater than the fair market value of our common stock on the respective grant dates. Grants of SARs become vested in accordance with such terms and conditions and during such periods as may be established by the Compensation Committee and set forth in the applicable award agreement. For purposes of determining the number of SARs to award based on the target award value, the Compensation Committee uses a different valuation methodology than the Black-Scholes method used for accounting purposes.


30



2019 Target Compensation Allocation
Name
 
Base Salary
(%)
 
Short-Term
Incentive
Compensation
(%)
 
Long-Term
Equity
Incentives
(%)
Richard S. Stoddart
 
25.8
%
 
25.8
%
 
48.4
%
Ronald C. Provenzano
 
33.9
%
 
23.7
%
 
42.4
%
Oren B. Azar
 
41.7
%
 
25.0
%
 
33.3
%

Recoupment of 2017 Incentive Compensation

As previously disclosed, in light of the Company’s restatement in 2018 of certain of its historical financial statements, the Board (excluding Mr. Belcher for the portion of the discussion relating to the recoupment of his 2017 cash incentive bonus), after discussion with the Compensation Committee, determined in 2018 to recoup an aggregate of $376,017 in 2017 cash incentive bonuses paid to Messrs. Belcher, Provenzano and Burkart with respect to the 2017 performance year, which the Board determined to effect through the recoupment of compensation that would otherwise be paid to each of them. The amounts subject to recoupment were as follows: Mr. Belcher: $270,827; Mr. Provenzano: $65,940; and Mr. Burkart: $39,250. The Board discussed with the Compensation Committee whether to recoup any of the 2016 and 2015 cash incentive bonuses paid to the named executive officers in those years. The Board determined against recouping 2016 or 2015 cash incentive bonuses based on a variety of considerations, including, but not limited to, the following: (i) the impact of the restatement in 2016 and the revision in 2015 was minimal as compared to 2017, and (ii) the errors in the financial statements were not the result of any misconduct or fraud on the part of anyone at the Company, including the named executive officers.

The Board (excluding Mr. Belcher for the portion of the discussion relating to the recoupment of his 2017 cash incentive bonus) further determined to effectuate the recoupment of the 2017 cash incentive bonuses from Mr. Belcher, Mr. Provenzano, and Mr. Burkart, by a combination of reducing the base salary payable to Mr. Belcher, Mr. Provenzano, and Mr. Burkart for the remainder of 2018 and reducing or eliminating the amount of 2018 cash incentive bonus payable to Mr. Belcher, Mr. Provenzano, and Mr. Burkart. In the alternative, if no 2018 cash incentive bonus would be earned and payable to Mr. Belcher, Mr. Provenzano, or Mr. Burkart, the base salary payable to Mr. Belcher, Mr. Provenzano, or Mr. Burkart monthly for 2019 would instead be subject to recoupment.

The table below sets forth the fiscal 2017 annual incentive compensation bonus for our named executive officers calculated before discovery of the financial reporting errors, the amount the Company will recoup from each named executive officer, and the actual incentive bonus that each named executive officer would have earned based on the restated performance results for 2017:

Name
 
Incentive Payout Based on Pre-Restatement Results
 
Amount Recouped from NEO
 
Incentive Payout Retained by NEO (After Recoupment)
Eric D. Belcher
 
$
508,875

 
$
270,827

 
$
238,048

Ronald C. Provenzano
 
134,400

 
65,940

 
68,460

Robert L. Burkart
 
80,000

 
39,250

 
40,750


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. The Company maintains a discretionary 401(k) matching program, under which it may make a contribution equal to 50% of an employee’s contributions under our 401(k) plan, capped at the lesser of 5% of the employee’s eligible compensation or $6,000. Due to the Company’s financial underperformance in 2018, the Company made no discretionary 401(k) matching contribution for that year. In 2018, we provided automobile allowances and fully paid medical insurance premiums to some of 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

31



opportunity to attract and retain an appropriate caliber of talent for the position. We believe our arrangements are reasonable and consistent with market practices. Cash severance is limited to one year of salary continuation (at a rate equal to his or her then-current base salary) plus one year’s target annual bonus for Mr. Pearson, Mr. Provenzano, Mr. Azar and Ms. Chorzempa, and to two years of salary continuation (at a rate equal to his then-current base salary) plus up to two year’s target annual bonus for Mr. Stoddart. Mr. Hodgkins and Mr. Burkart would have each been entitled to receive six months of salary continuation (at a rate equal to his then-current base salary) and Mr. Belcher would have been entitled to receive two years of salary continuation (at a rate equal to his then-current base salary) plus one year’s target annual bonus. There is no severance increase in connection with a change in control for any of our named executive officers. In addition, the unvested equity awards held by all of our named executive officers will vest upon a qualifying termination in connection with a change in control (i.e., on a “double trigger” basis), all subject to conditions in the applicable agreements. See “- Employment and Other Related Agreements” and “- Potential Payments upon Termination or Change in Control” below for a more detailed discussion of these employment, severance and change in control arrangements.

Regulatory Considerations. One of the factors the Compensation Committee considers when determining executive compensation is the anticipated tax treatment to the Company and to the executives of the various payments and benefits. Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally provides that a publicly held company may not deduct compensation paid to certain covered executive officers to the extent that such compensation exceeds $1,000,000 per executive officer in any year. Limited exceptions to Section 162(m) apply with respect to “qualified performance-based compensation,” as defined in the Internal Revenue Code, as well as certain other items of compensation, in each case, that qualify for transition relief applicable to certain arrangements in place as of November 2, 2017. While the Compensation Committee generally considers this limit when determining compensation, there are instances in which the Compensation Committee has concluded, and reserves the discretion to conclude in the future, that it is appropriate to exceed the limitation on deductibility under Section 162(m) to ensure that executive officers are compensated in a manner that it believes to be consistent with the Company’s best interests and those of its stockholders. Furthermore, interpretations of and changes in the tax laws, and other factors beyond the Compensation Committee’s control, may also affect the deductibility of compensation.

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

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

In the event that the stock ownership guidelines place a severe hardship on an executive officer, our Compensation Committee will make the final decision as to developing an alternative stock ownership guideline for such executive officer that reflects the intention of the stock ownership guidelines and his or her personal circumstances. As of December 31, 2018, Mr. Belcher met and exceeded the stock ownership guidelines. Although Mr. Provenzano had previously exceeded the guidelines, as of December 31, 2018, Mr. Provenzano did not meet the guidelines due to the recent decrease in our share price. Our other named executive officers are on track to meet the guidelines within three years of becoming subject to them, consistent with the policy. In the interim, these executive officers remain subject to the Stock Holding Policy described below.

Stock Holding Policy. In 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.

Clawback Policy. Effective April 18, 2018, the Company adopted an incentive compensation recoupment policy (the “Clawback Policy”). Under the Clawback Policy, if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under the securities laws, the Board will review all awards or payments of any form of incentive-based compensation made to current and former employees of the Company. If the Board determines that any such incentive awards or payments were based on erroneous data and would have been lower had they been calculated

32



based on the restated results, the Board may, to the extent permitted by applicable law, seek to recover for the benefit of the Company the difference between the amounts awarded or paid and the amounts that would have been awarded or paid based on the restated results. These remedies would be in addition to, and not in lieu of, any penalties imposed by law enforcement agencies, regulators or other authorities.

Hedging/Pledging Policy. Under the Company’s long-standing trading policy, there are various restrictions on trading in the Company’s stock, including during blackout periods. As an enhancement to the trading policy, in 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.


33



Executive Compensation

The following table sets forth the information regarding 2018 compensation for each of our named executive officers. 2017 and 2016 information is presented for executives who were also named executive officers during those years.

2018 SUMMARY COMPENSATION TABLE
Name and Principal Position
 
Year
 
Salary
($)
 
Bonus(1)
($)
 
Option
Awards
(2)
($)
 
Stock
Awards
(3)
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
All Other
Compensation
(4)
($)
 
Total
($)
Richard S. Stoddart
President and Chief Executive Officer
(5)
 
2018
 
599,000

 

 
1,469,600

 
1,800,010

 

 
32,313

 
3,900,923

Eric D. Belcher
Former President and Chief Executive Officer
(5)
 
2018
 
191,096

 

 

 

 

 
1,013,636

 
1,204,732

 
2017
 
750,000

 

 
535,441

 
1,050,000

 
238,048

 
50,202

 
2,623,691

 
2016
 
700,000

 

 
2,087,830

 
700,000

 
805,000

 
49,487

 
4,342,317

Ronald C. Provenzano
Head of Operations Excellence
(6)
 
2018
 
387,500

 

 
186,388

 
350,002

 

 
50,846

 
974,736

 
2017
 
350,000

 

 
169,558

 
332,500

 
68,460

 
47,802

 
968,320

 
2016
 
350,000

 

 
262,235

 
212,500

 
210,000

 
37,487

 
1,072,222

Oren B. Azar
General Counsel
(7)
 
2018
 
242,500

 

 
34,203

 
214,230

 

 
87,605

 
578,538

Charles D. Hodgkins III
Former Interim Chief Financial Officer
(8)
 
2018
 
238,388

 
100,000

 
57,315

 
107,628

 

 
106,315

 
609,646

 
2017
 
234,000

 

 
26,772

 
52,500

 
131,040

 
14,400

 
458,712

Robert Burkart
Former Chief Information Officer
(9)
 
2018
 
222,656

 
30,000

 

 

 

 
54,648

 
307,304

 
2017
 
250,000

 

 
44,619

 
87,500

 
40,750

 
49,002

 
471,871

 
2016
 
215,000

 

 
77,500

 
62,800

 
86,000

 
47,662

 
488,962


(1) For 2018, this column includes the following amounts: (i) for Mr. Hodgkins, a discretionary bonus of $100,000 paid in April 2018 pursuant to his amended and restated employment agreement, and (ii) for Mr. Burkart, a special bonus of $30,000 paid in March 2018 relating to the achievement of a technology implementation milestone.
(2) For 2018, represents the full grant date fair value of the stock option awards granted to the named executive officers, calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the stock option awards, please see Notes 2 and 14 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
(3) For 2018, represents the aggregate grant date fair value of the restricted stock/RSU and PSU awards granted to each of the named executive officers calculated in accordance with FASB ASC Topic 718. The fair value of the restricted stock/RSU and PSU awards as of the grant date is broken down as follows (the grant date fair value of the RSUs granted to Mr. Belcher in connection with his service as a director is reported in the All Other Compensation column):
Name
Restricted Stock/RSUs ($)
PSUs at Target ($)
PSUs at Maximum ($)
Mr. Stoddart
1,200,008

600,002

1,200,004

Mr. Belcher



Mr. Provenzano
150,001

200,001

400,002

Mr. Azar
177,526

36,704

73,408

Mr. Hodgkins
46,128

61,500

123,000

Mr. Burkart



For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the equity awards granted, please see Notes 2 and 17 to the Company's consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
(4) In 2018, consists of 401(k) matching contributions, auto allowances, and medical insurance premiums. In addition, for Mr. Belcher, the amount shown includes the following amounts paid with respect to his service as a director and Chairman of the Board after April 5, 2018: (i) $335,890 in cash compensation; (ii) an RSU award with a grant date fair value of $125,000, calculated in accordance with FASB ASC Topic 718; and (iii) a $500,000 transition bonus paid pursuant to the terms of the Transition Agreement. For more information regarding the CEO transition, please see “Employment and Other Related Agreements-CEO Transition” below. All Other Compensation also includes (i) for Mr. Azar, $53,908 in international relocation package benefits and (ii) for Mr. Hodgkins, a temporary supplemental stipend of $10,000 per month beginning in April 2018 in connection with his service as Interim Chief Financial Officer (equal to $90,000 in total for 2018).
(5) Mr. Belcher transitioned out of, and Mr. Stoddart assumed, the role of President and Chief Executive Officer on April 5, 2018.
(6) Mr. Provenzano transitioned to the role of Head of Operations Excellence effective October 16, 2018.

34



(7) Mr. Azar was appointed as Executive Vice President, General Counsel and Corporate Secretary effective October 16, 2018.
(8) Mr. Hodgkins resigned from employment with the Company effective January 15, 2019.
(9) Mr. Burkart resigned from employment with the Company effective November 15, 2018.

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


35



2018 GRANTS OF PLAN-BASED AWARDS

The following table provides information for each of the Company’s named executive officers regarding 2018 plan-based awards.
Name
Grant Date
 
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards
All Other Stock Awards: Number of Shares of Stock (#)
 
All Option Awards: Number of Securities Underlying Options (#)
 
Exercise Price of Option Awards ($)/sh
 
Grant Date Fair Value of Stock and Option Awards(2)
 ($)
Threshold ($)
 
Target ($)
 
Maximum ($)
 
Threshold (#)
 
Target (#)
 
Maximum (#)
 
Richard S. Stoddart
  
 
$
251,507

 
$
503,014

 
$
1,006,028

 

 

 

 

 

 

 

  
4/5/2018
 

 

 

 

 

 

 
79,031

 

 

 
$
750,004

  
4/5/2018
 

 

 

 

 

 

 

 
237,093

 
$
9.49

 
$
910,437

 
9/7/2018
 

 

 

 

 

 

 
58,065

 

 

 
$
450,004

 
9/7/2018
 

 

 

 

 

 

 

 
174,194

 
$
7.75

 
$
559,163

 
10/12/2018
 

 

 

 
40,761

 
81,522

 
163,044

 

 

 

 
$
600,002

Eric D. Belcher
 
 
$
111,062

 
$
222,123

 
$
444,246

 

 

 

 

 

 

 

 
9/7/2018
 

 

 

 

 

 

 
16,129

 

 

 
$
125,000

Ronald C. Provenzano
 
 
$
140,000

 
$
280,000

 
$
560,000

 

 

 

 

 

 

 

 
9/7/2018
 

 

 

 

 

 

 
19,355

 

 

 
$
150,001

 
9/7/2018
 

 

 

 

 

 

 

 
58,065

 
$
7.75

 
$
186,389

 
10/12/2018
 

 

 

 
13,587

 
27,174

 
54,348

 

 

 

 
$
200,001

Oren B. Azar
 
 
$
90,000

 
$
180,000

 
$
360,000

 

 

 

 

 

 

 

 
9/7/2018
 
$

 
$

 
$

 

 

 

 
3,552

 

 

 
$
27,528

 
9/7/2018
 

 

 

 

 

 

 

 
10,655

 
$
7.75

 
$
34,203

 
10/12/2018
 

 

 

 
2,494

 
4,987

 
9,974

 

 

 
$

 
$
36,704

 
10/16/2018
 

 

 

 

 

 

 
20,270

 

 
$

 
$
149,998

Charles D. Hodgkins III
 
 
$
47,970

 
$
95,940

 
$
191,880

 

 

 

 

 

 

 

 
9/7/2018
 

 

 

 

 

 

 
5,952

 

 

 
$
46,128

 
9/7/2018
 

 

 

 

 

 

 

 
17,855

 
$
7.75

 
$
57,315

 
10/12/2018
 

 

 

 
4,178

 
8,356

 
16,715

 

 

 

 
$
61,500

Robert Burkart(3)
 
 
$
66,313

 
$
132,625

 
$
265,250

 

 

 

 

 

 

 

(1) These represent potential incentive opportunities for 2018 annual incentive awards. No amounts for 2018 were actually earned by the named executive officers.
(2) The exercise price for options granted is the closing price of a share of our common stock on the date of grant. Values for RSU awards are based on the closing price of a share of our common stock on the date of grant. Values for option grants and PSU awards 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, PSU and RSU 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, 2018.
(3) Mr. Burkart did not receive any equity awards in 2018 prior to his resignation on November 15, 2018.

Employee Benefit Plans

2006 Stock Incentive Plan

We maintain the InnerWorkings, Inc. 2006 Stock Incentive Plan. The principal purpose of the 2006 Plan is to attract, motivate, reward and retain selected employees, consultants and directors through the granting of stock-based compensation awards. The 2006 Plan provides for a variety of awards, including non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Code), stock appreciation rights, restricted stock and RSU awards, performance-based awards and other stock-based awards.

Annual Incentive Plan

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

36




Eligibility to participate in the Annual Incentive Plan is limited to substantially all regular full-time and part-time employees. Temporary employees, 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. Annual incentive 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.

 



37



OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END

The following table summarizes the number of securities underlying outstanding plan awards for each named executive officer as of December 31, 2018.
 
 
Option Awards
 
Stock Awards / Units
 
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)
 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (2)
 
Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2)
 
Richard S. Stoddart
 

 
237,093

 
(7) 
 
9.49

 
4/5/2028

 
79,031

(7) 
 
295,576

 
40,761

 
152,446

 
 
 

 
174,194

 
(8) 
 
7.75

 
9/7/2028

 
58,065

(8) 
 
217,163

 

 

 
Eric D. Belcher
 
100,952

 

 
 
 
8.24

 
6/23/2021

 
22,455

(3) 
 
83,982

 
27,027

 
101,081

 
  
 
91,668

 

 
 
 
11.97

 
3/15/2022

 
41,420

(5) 
 
154,911

 

 

 
  
 
120,898

 

 
 
 
15.05

 
3/15/2023

 
30,406

(6) 
 
113,718

 

 

 
  
 
168,203

 

 
 
 
7.18

 
6/13/2024

 

 
 

 

 

 
  
 
136,363

 
45,455

 
(3) 
 
6.68

 
6/3/2025

 

 
 

 

 

 
 
 

 
400,000

 
(4) 
 
7.30

 
3/15/2026

 

 
 

 

 

 
 
 
124,113

 
124,113

 
(5) 
 
8.45

 
6/6/2026

 

 
 

 

 

 
 
 
30,405

 
91,217

 
(6) 
 
11.10

 
6/1/2027

 

 
 

 

 

 
Ronald C. Provenzano
 
63,345

 

 
 
 
12.10

 
9/4/2022

 
6,269

(3) 
 
23,446

 
8,559

 
32,009

 
 
 
46,620

 

 
 
 
7.18

 
6/13/2024

 
12,574

(5) 
 
47,027

 
13,587

 
50,816

 
 
 
38,068

 
12,690

 
(3) 
 
6.68

 
6/3/2025

 
9,629

(6) 
 
36,012

 

 

 
 
 
37,677

 
37,678

 
(5) 
 
8.45

 
6/6/2026

 
19,355

(8) 
 
72,388

 

 

 
 
 
9,628

 
28,886

 
(6) 
 
11.10

 
6/1/2027

 

 
 

 

 

 
 
 

 
58,065

 
(8) 
 
7.75

 
9/7/2028

 

 
 

 

 

 
Oren B. Azar
 
14,085

 

 
 
 
7.18

 
6/13/2024

 
1,497

(3) 
 
5,599

 
2,494

 
9,326

 
 
 
9,090

 
3,031

 
(3) 
 
6.68

 
6/3/2025

 
2,367

(5) 
 
8,853

 

 

 
 
 
7,092

 
7,092