SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.        )

 

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

Check the appropriate box:

 

Everbridge, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

 

 

 

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April __, 2021

To our stockholders:

We are pleased to invite you to attend our 2021 Annual Meeting of Stockholders to be held on Thursday, May 20, 2021 at 10:00 a.m. at our executive offices, located at 25 Corporate Drive, 4^th Floor, Burlington, Massachusetts 01803. We continue to strictly adhere to safety standards and protocols related to COVID-19. Accordingly, masks will be required for those attending the meeting and seating will be limited in order to provide adequate social distancing for the event.

Details regarding admission to the Annual Meeting and the business to be conducted are described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement.

We have elected to provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to our stockholders a notice instead of a paper copy of this proxy statement and our 2020 Annual Report. The notice contains instructions on how to access those documents over the Internet. The notice also contains instructions on how each of those stockholders can receive a paper copy of our proxy materials, including this proxy statement, our 2020 Annual Report and a form of proxy card or voting instruction card. We believe that providing our proxy materials over the Internet increases the ability of our stockholders to connect with the information they need, while reducing the environmental impact and cost of our Annual Meeting.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote by telephone or through the Internet, or, if you receive a paper proxy card by mail, by completing and returning the proxy card mailed to you. Please review the instructions on each of your voting options described in this proxy statement, as well as in the notice you received in the mail.

Thank you for your ongoing support of and continued interest in Everbridge. We look forward to seeing you at the Annual Meeting.

Sincerely,

 

 

Jaime Ellertson

Chairman of the Board of Directors

 

 

 

 

 

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EVERBRIDGE, INC.

25 Corporate Drive, 4^th Floor

Burlington, Massachusetts 01803

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 20, 2021

To the Stockholders of Everbridge, Inc.:

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Everbridge, Inc., a Delaware corporation, (the “Company”) will be held on Thursday, May 20, 2021 at 10:00 a.m. local time at the Company’s executive offices, located at 25 Corporate Drive, 4^th Floor, Burlington, Massachusetts 01803, for the following purposes:

These items of business are more fully described in the Proxy Statement accompanying this Notice.

The record date for the Annual Meeting is March 22, 2021. Only stockholders of record at the close of business on that date may vote at the Annual Meeting or any adjournment thereof.

 

 

Burlington, Massachusetts

April __, 2021

 

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TABLE OF CONTENTS

 

 

 

 

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EVERBRIDGE, INC.

25 Corporate Drive, 4th Floor

Burlington, Massachusetts 01803

PROXY STATEMENT

FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 20, 2021

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

We are providing you with these proxy materials because the Board of Directors of Everbridge, Inc. (the “Board”) is soliciting your proxy to vote at the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Everbridge, Inc. (the “Company”), including at any adjournments or postponements thereof, to be held on Thursday, May 20, 2021 at 10:00 a.m. local time at the Company’s executive offices, located at 25 Corporate Drive, 4^th Floor, Burlington, Massachusetts 01803. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply follow the instructions below to submit your proxy. The proxy materials, including this Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2020, are being distributed and made available on or about April __, 2021. As used in this Proxy Statement, references to “we,” “us,” “our,” “Everbridge” and the “Company” refer to Everbridge, Inc. and our consolidated subsidiaries.

Why did I receive a notice regarding the availability of proxy materials on the Internet?

Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials (the “Notice”) because the Board is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice.

We intend to mail the Notice on or about April __, 2021 to all stockholders of record entitled to vote at the Annual Meeting.

Will I receive any other proxy materials by mail?

You will not receive any additional proxy materials via mail unless (1) you request a printed copy of the proxy materials in accordance with the instructions set forth in the Notice or (2) we elect, in our discretion, to send you a proxy card and a second Notice of Internet Availability of Proxy Materials, which we may send on or after April __, 2021.

How do I attend the Annual Meeting?

The Annual Meeting will be held on Thursday, May 20, 2021 at 10:00 a.m. local time at Everbridge’s executive offices, located at 25 Corporate Drive, 4^th Floor, Burlington, MA 01803. Information on how to vote in person at the Annual Meeting is discussed below.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on March 22, 2021 will be entitled to vote at the Annual Meeting. On this record date, there were 37,607,133 shares of common stock outstanding and entitled to vote.

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Stockholder of Record: Shares Registered in Your Name

If on March 22, 2021, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares electronically through the Internet, over the telephone or by completing and returning a printed proxy card that you may request or that we may elect to deliver at a later time to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on March 22, 2021, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

What am I voting on?

There are five matters scheduled for a vote:

What if another matter is properly brought before the Annual Meeting?

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

How do I vote?

You may either vote “FOR” each of the nominees to the Board or you may “WITHHOLD” your vote for each of the nominees. Proxies cannot be voted for a greater number of persons than the two nominees named in this Proxy Statement. For each of the other matters to be voted on, you may vote “FOR” or “AGAINST” or abstain from voting.

The procedures for voting are fairly simple:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy over the telephone, vote by proxy through the Internet or vote by proxy using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the Annual Meeting, we

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urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a Notice containing voting instructions from that organization rather than from us. Simply follow the voting instructions in the Notice to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact that organization to request a proxy form.

 

Can I vote my shares by filling out and returning the Notice?

No. The Notice identifies the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote through the Internet, over the telephone, by requesting and returning a printed proxy card or by submitting a ballot in person at the Annual Meeting.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you own as of March 22, 2021.

If I am a stockholder of record and I do not vote, or if I return a proxy card or otherwise vote without giving specific voting instructions, what happens?

If you are a stockholder of record and do not vote by telephone, through the Internet or by completing the printed proxy card that may be delivered to you or in person at the Annual Meeting, your shares will not be voted.

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “FOR” the election of each of the nominees for director, “FOR” the ratification of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, “FOR” the advisory approval of named executive officer compensation,

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“FOR” declassifying our board of directors and “FOR” eliminating the supermajority voting requirements to amend our Certificate of Incorporation and Bylaws. If any other matter is properly presented at the Annual Meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

If I am a beneficial owner of shares held in street name and I do not provide my broker or bank with voting instructions, what happens?

If you are a beneficial owner of shares held in street name and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent may still be able to vote your shares in its discretion. In this regard, under the rules of the New York Stock Exchange (“NYSE”), brokers, banks and other securities intermediaries that are subject to NYSE rules may use their discretion to vote your “uninstructed” shares with respect to matters considered to be “routine” under NYSE rules but not with respect to “non-routine” matters. Proposals 1, 3, 4 and 5 are considered to be “non-routine” under NYSE rules, meaning that your broker may not vote your shares on those Proposals in the absence of your voting instructions. However, Proposal 2 is considered to be a “routine” matter under NYSE rules, meaning that if you do not return voting instructions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposal 2.

If you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one Notice?

If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

Your most current proxy card or telephone or Internet proxy is the one that is counted.

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Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker, bank or other agent, you should follow the instructions provided by your broker, bank or other agent to change those instructions.

When are stockholder proposals and director nominations due for next year’s annual meeting?

To be considered for inclusion in next year’s proxy materials, you must submit your proposal, in writing, by December __, 2021, to our Corporate Secretary, Everbridge, Inc., 25 Corporate Drive, 4th Floor, Burlington, Massachusetts 01803, and you must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Pursuant to our bylaws, if you wish to bring a proposal before the stockholders or nominate a director at the 2022 Annual Meeting, but you are not requesting that your proposal or nomination be included in next year’s proxy materials, you must notify our Corporate Secretary, in writing, not later than the close of business on February 19, 2022 nor earlier than the close of business on January 20, 2022. However, if our 2022 Annual Meeting is not held on or after April 20, 2022 and on or before June 19, 2022, to be timely, notice by the stockholder must be received no earlier than the close of business on the 120th day prior to the 2022 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to the 2022 Annual Meeting or the 10th day following the day on which public announcement of the date of the 2022 Annual Meeting is first made. You are also advised to review our bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.

How are votes counted?

Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count, for Proposal 1 to elect directors, votes “FOR,” “WITHHOLD” and broker non-votes, and, with respect to Proposals 2 through 5, votes “FOR” and “AGAINST,” abstentions and, if applicable, broker non-votes. Abstentions will be counted towards the vote total for each proposal, other than the election of directors (Proposal 1). Abstentions will have the same effect as “Against” votes on Proposals 2 through 5,and will have no effect on Proposal 1. Broker non-votes will have no effect on Proposals 1 through 3 and will not be counted towards the vote total for those proposals. Broker non-votes will have the same effect as “AGAINST” votes on Proposals 4 and 5.

What are “broker non-votes”?

If you are the beneficial owner of shares held in “street name,” your shares may constitute “broker non-votes.” Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to his or her broker, bank or other securities intermediary holding his or her shares as to how to vote. Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker, bank or other securities intermediary holding the shares. If the beneficial owner does not provide voting instructions, the broker, bank or other securities intermediary can still vote the shares with respect to matters that are considered to be “routine,” but cannot vote the shares with respect to “non-routine” matters. Under the rules of NYSE, which generally apply to all brokers, bank or other securities intermediaries, on voting matters characterized by the NYSE as “routine,” NYSE member firms have the discretionary authority to vote shares for which their customers do not provide voting instructions. On non-routine proposals, such “uninstructed shares” may not be voted by member firms. Only Proposal 2 is considered a “routine” matter for this purpose and brokers, banks or other securities intermediaries generally have discretionary voting power with respect to such proposal. Proposals 1, 3, 4 and 5 are not considered routine matters, and without your instructions, your broker cannot vote your shares for those proposals.

As a reminder, if you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent.

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How many votes are needed to approve each proposal?

The following table summarizes the minimum vote needed to approve each proposal and the effect of abstentions and broker non-votes.

 

 

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the Annual Meeting in person or represented by proxy. On the record date, there were 37,607,133 shares outstanding and entitled to vote. Thus, the holders of at least 18,803,567 shares must be present in person or represented by proxy at the Annual Meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum,

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the holders of a majority of shares present at the meeting in person or represented by proxy may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

Our Certificate of Incorporation and our Bylaws provide that the number of our directors shall be fixed from time to time by a resolution of the majority of the Board. Our Board is currently divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class currently has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. Currently, the term of the Class II directors expires at the Annual Meeting; the term of the Class III directors expires at the 2022 Annual Meeting; and the term of the Class I directors expires at the 2023 Annual Meeting. In accordance with our Certificate of Incorporation, after their current initial terms expire, directors are expected to be elected to hold office for a three-year term or until the election and qualification of their successors in office.

There are three directors in Class II whose term of office expires in 2021: Alison Dean, Kent Mathy, and Simon Paris. Our Board has nominated Ms. Dean, Mr. Mathy, and Mr. Paris for re-election at the Annual Meeting to serve as Class II directors and, if elected at the Annual Meeting, each Class II director would serve until the 2024 Annual Meeting and until his or her successor has been duly elected and qualified, or, if sooner, until his or her death, resignation or removal. Ms. Dean, Mr. Mathy and Mr. Paris were each recommended for election by the Nominating and Corporate Governance Committee, and all are currently serving as directors of the Company. Subject to stockholder approval of Proposal 4 and the filing of a certificate of amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware, each member of our Board (including Class II directors elected to a three-year term at this 2021 Annual Meeting) will serve one-year terms and all directors will be up for election at the 2022 Annual Meeting. If Proposal 4 is not approved, we will continue to have a staggered board with three-year terms as provided in our charter and expiring in the years noted below.

The Board presently has eight members. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. Accordingly, the nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees named below. If either of the nominees becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee that we will propose. Ms. Dean, Mr. Mathy and Mr. Paris have each agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.

It is our policy to invite directors and nominees for director to attend the Annual Meeting. All of our directors serving at the time of our 2020 Annual Meeting attended that meeting.

The following is a brief biography of each nominee and each director whose term will continue after the Annual Meeting.

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Nominees for Election for a One-Year Term Expiring at the 2022 Annual Meeting

 

 

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE NAMED NOMINEES.

Directors Continuing in Office Until the 2022 Annual Meeting

 

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Directors Continuing in Office Until the 2023 Annual Meeting

 

 

 

INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Independence of the Board of Directors

As required under Nasdaq Stock Market (“Nasdaq”) listing rules, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the company’s board. The Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Our Board has undertaken a review of the independence of the directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning such director’s background, employment and affiliations, including family relationships, our Board determined that Messrs. and Mmes. D’Amore, Dean, Grayson, Mathy, Paris, and Rowlands, representing six of our eight directors, are “independent directors” as defined under current rules and regulations of the SEC and the listing standards of Nasdaq. In making these determinations, our Board considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances that our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director and the transactions involving them described in “Transactions with Related Persons.”

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Board Leadership Structure

Our Board is currently chaired by Mr. Ellertson. Mr. Ellertson previously served in the combined role of Chairman of the Board and Chief Executive Officer, until Mr. Meredith joined Everbridge in 2019 as Chief Executive Officer.

Our corporate governance guidelines provide that one of our independent directors shall serve as a lead independent director at any time when an independent director is not serving as the Chairman of the Board. Our Board has appointed Mr. Grayson to serve as our lead independent director. As lead independent director, Mr. Grayson presides over periodic meetings of our independent directors, coordinates activities of the independent directors and performs such additional duties as our Board may otherwise determine and delegate.

Role of the Board in Risk Oversight

One of the Board’s key functions is informed oversight of our risk management process. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for our Company. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements. Our Nominating and Corporate Governance Committee monitors the effectiveness of our Corporate Governance Guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking. It is the responsibility of the chairperson of each committee of the Board to report findings regarding material risk exposures to the Board as quickly as possible. The Board has delegated to the Chairman the responsibility of coordinating between the Board and management with regard to the determination and implementation of responses to any problematic risk management issues.

Meetings of the Board of Directors

The Board met six times during 2020. Each Board member attended 75% or more of the aggregate number of meetings of the Board and of the committees on which he or she served, held during the portion of the last fiscal year for which he or she was a director or committee member.

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INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS

The Board has three committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The following table provides membership and meeting information for the fiscal year ended December 31, 2020 for each of the Board committees:

 

 

**  Simon Paris was appointed to the Nominating and Corporate Governance Committee in February 2020.

Below is a description of each committee of the Board. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board has determined that, except as specifically described below, each member of each committee meets the applicable Nasdaq rules and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company.

Audit Committee

The Audit Committee of the Board was established by the Board in accordance with Section 3(a)(58)(A) of the Exchange Act to oversee our corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the Audit Committee performs several functions. The Audit Committee evaluates the performance of and assesses the qualifications of the Company’s independent auditors; determines and approves the engagement of the independent auditors; determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors; reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent auditors on the Company’s audit engagement team as required by law; reviews and approves or disapproves transactions between the Company and any related persons; establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent auditor, including a review of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The Audit Committee is currently composed of three directors: Ms. Dean, Mr. D’Amore, and Mr. Mathy. The Audit Committee met 10 times during 2020. The Board has adopted a written Audit Committee charter that is available to stockholders in the investor relations section of our website.

Our Board has determined that each of Ms. Dean, Mr. D’Amore, and Mr. Mathy are independent directors under Nasdaq listing rules and under Rule 10A-3 under the Exchange Act.

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The Board has also determined that Ms. Dean and Mr. D’Amore each qualify as an “audit committee financial expert,” as defined in applicable SEC rules. The Board made a qualitative assessment of Ms. Dean and Mr. D’Amore’s level of knowledge and experience based on a number of factors, including their formal education and experience. This designation does not impose on Ms. Dean or Mr. D’Amore any duties, obligations or liabilities that are greater than those generally imposed on members of our Audit Committee and our Board.

Report of the Audit Committee of the Board of Directors

The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2020 with management of the Company. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee of the Board of Directors has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Respectfully submitted,

Alison Dean

Richard D’Amore

Kent Mathy

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Compensation Committee

The Compensation Committee is currently composed of three directors: Ms. Rowlands and Messrs. Grayson and Mathy. All members of our Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the Nasdaq listing rules). The Compensation Committee met eight times during 2020. The Board has adopted a written Compensation Committee charter that is available to stockholders in the investor relations section of our website.

The Compensation Committee acts on behalf of the Board to review, adopt and approve the Company’s compensation strategy, policies, plans and programs, including:

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Additionally, the Compensation Committee will review, discuss with management and oversee as it deems appropriate the Company’s policies, practices and strategies as they relate to human capital management, including those regarding recruiting, retention, career development and progression, diversity and inclusion.

Compensation Committee Processes and Procedures

Typically, the Compensation Committee meets quarterly and with greater frequency if necessary. The agenda for each meeting is usually developed by the Chairperson of the Compensation Committee, in consultation with our Chief Executive Officer. The Compensation Committee meets regularly in executive session. The Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The Compensation Committee has the authority to obtain, at our expense, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Compensation Committee, other than in-house legal counsel and certain other types of advisers, only after assessing the independence of such person in accordance with SEC and Nasdaq requirements that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent.

After taking into consideration the six factors prescribed by the SEC and Nasdaq, the Compensation Committee has engaged FW Cook (the “Consultant”), a compensation consulting firm, as a compensation consultant. The Compensation Committee has assessed the Consultant’s independence and determined that the Consultant has no conflicts of interest in connection with its provision of services to the Compensation Committee. Specifically, the Compensation Committee engaged the Consultant in 2020 to suggest a peer company group composed of public companies comparable to us and conduct an executive compensation assessment analyzing the current cash and equity compensation of our executive officers against compensation for similarly situated executives at our peer group companies. Our management does not have the ability to direct the Consultant’s work.

Historically, the Compensation Committee has made most of the significant adjustments to annual compensation, determined bonus and equity awards and established new performance objectives at one or more meetings held during the first or fourth quarter of the year. The Compensation Committee also

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considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of our compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings throughout the year. Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current year. For executives other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations submitted to the Compensation Committee by the Chief Executive Officer. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any adjustments to his compensation as well as awards to be granted.

The specific determinations of our Compensation Committee with respect to executive compensation for the year ended December 31, 2020 are described in greater detail in the “Compensation Discussion and Analysis” section of this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee is currently or has been at any time one of our officers or employees. None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or Compensation Committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee of the Board is responsible for identifying and evaluating candidates to serve as directors of the Company (consistent with criteria approved by the Board), reviewing and evaluating incumbent directors, recommending to the Board for selection candidates for election to the Board, making recommendations to the Board regarding the membership of the committees of the Board, assessing the performance of management and the Board and developing a set of corporate governance principles for us.

The Nominating and Corporate Governance Committee is currently composed of three directors: Messrs. Grayson and Paris and Ms. Rowlands. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing rules). The Nominating and Corporate Governance Committee met four times during 2020. The Board has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders in the investor relations section of our website.

The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board, our operating requirements and the long-term interests of our stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee also considers diversity, age, skills, gender, race, and such other individual characteristics and factors as it deems appropriate given the current needs of the Board and the Company, to maintain a balance of knowledge, experience and capability.

In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director

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candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: Everbridge, Inc., 25 Corporate Drive, 4th Floor, Burlington, Massachusetts 01803 at least 90 days, but no more than 120 days, prior to the anniversary date of the mailing of the Company’s proxy statement for the last Annual Meeting. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record holder of our common stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.

Stockholder Communications with the Board of Directors

Stockholder communications will be reviewed by the Corporate Secretary of the Company, who will determine whether the communication should be presented to the Board. The purpose of this screening is to allow the Board to avoid having to consider irrelevant or inappropriate communications (such as advertisements, solicitations and hostile communications). All communications directed to the Audit Committee in accordance with our Whistleblower Policy for Accounting and Auditing Matters that relate to questionable accounting or auditing matters involving the Company will be promptly and directly forwarded to the Audit Committee.

Code of Ethics

We have adopted the Everbridge, Inc. Code of Business Conduct that applies to all of our officers, directors, employees and independent contractors. The Code of Business Conduct is available in the investor relations section of our website. If we make any substantive amendments to the Code of Business Conduct or we grant any waiver from a provision of the Code of Business Conduct to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.

Corporate Governance Guidelines

The Board has documented our governance practices by adopting Corporate Governance Guidelines to assure that the Board will have the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The guidelines are also intended to align the interests of directors and management with those of our stockholders. The Corporate Governance Guidelines set forth the practices the Board intends to follow with respect to board composition and selection, board meetings and involvement of senior management, Chief Executive Officer performance evaluation and succession planning, and board committees and compensation. The Corporate Governance Guidelines, as well as the charters for each committee of the Board, may be viewed in the investor relations section of our website. 

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PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board has selected Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 and has further directed that management submit the selection of our independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has served as our independent registered public accounting firm since August 2018. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Neither our bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and our stockholders.

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of Ernst & Young LLP.

Principal Accountant Fees and Services

The following table represents aggregate fees billed to us for the fiscal years ended December 31, 2020 and December 31, 2019 from Ernst & Young LLP.  

 

 

All auditor fees must be approved by our Audit Committee and all fees described above were pre-approved by the Audit Committee.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.

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PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board recognizes the interests our investors have in the compensation of our named executive officers. In recognition of that interest and as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with SEC rules.

This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. The compensation of our named executive officers subject to the vote is disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related narrative disclosure contained in this Proxy Statement. As discussed in those disclosures, we believe that our compensation policies and decisions are based on principles that reflect a “pay-for-performance” philosophy and are strongly aligned with our stockholders’ interests and consistent with current market practices. Compensation of our named executive officers is designed to enable us to attract and retain talented and experienced executives to lead us successfully in a competitive environment.

Accordingly, the Board is asking our stockholders to indicate their support for the compensation of our named executive officers as described in this Proxy Statement by casting a non-binding advisory vote “FOR” the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Because the vote is advisory, the result will not be binding on the Board or Compensation Committee. Nevertheless, the views expressed by our stockholders, whether through this say-on-pay vote or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

Vote Required

Advisory (non-binding) approval of Proposal 3 requires the approval of the holders of a majority of shares present in person or represented by proxy and entitled to vote on this proposal at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 3.

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PROPOSAL 4

AMENDMENT TO CERTIFICATE OF INCORPORATION TO DECLASSIFY BOARD OF DIRECTORS

Our Certificate of Incorporation currently provides that our Board is divided into three classes, with each class currently elected every three years. Under this structure, only one class of directors, constituting approximately one-third of the Board, is considered for election each year. On the recommendation of the Nominating and Corporate Governance Committee, our Board has approved, and recommends that the stockholders approve, an amendment to our Certificate of Incorporation to eliminate the classified board structure in order to provide for the annual election of all directors elected by the stockholders at and after the Annual Meeting for one-year terms.

The affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of our common stock entitled to vote at the Annual Meeting is required for approval of this proposal. If approved, this proposal would become effective upon the filing of an amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware, which we would file promptly after stockholder approval is obtained. If the amendment is adopted, then notwithstanding the fact that the existing directors may have been elected to a multi-year term, all of the directors will be nominated to stand for election to a one-year term expiring at our 2022 Annual Meeting, along with all of our Class II directors, who were elected for a three year term at this Annual Meeting. As a result, assuming the proposed amendment is approved, at this Annual Meeting and at subsequent Annual Meetings, absent future changes to our board election procedures, all of our directors would be subject to election to serve until the next Annual Meeting and until their successors have been duly elected and qualified. In the case of any vacancy on the board of directors occurring after this Annual Meeting created by an increase in the number of directors on our Board, the vacancy would be filled through an interim appointment by the Board with the new director to serve a term ending no later than at the next Annual Meeting. Vacancies on our Board created by resignation, removal, or death would be filled by election by the Board of a new director to serve until the end of the term of the director being replaced. The proposed amendment would not change the present number of directors or the authority of the Board to change that number and to fill any vacancies or newly created directorships. If this proposal is not approved, the Board will remain classified.

Delaware law provides that members of a board that is classified may be removed only for cause. At present, because our Board is classified, our Certificate of Incorporation provides that our directors may be removed only for cause. If the proposed amendment to our Certificate of Incorporation is approved, directors elected on or after this Annual Meeting will be able to be removed with or without cause.

If this proposal is not approved, we will continue to have a staggered board at the Annual Meeting and Class I directors, Messrs. and Mmes. Dean, Mathy, and Paris, will stand for election to a three-year term expiring at the 2024 Annual Meeting.

Our Nominating and Corporate Governance Committee and the full Board periodically consider our corporate governance practices and structures. As part of that process, the Board considers corporate trends, peer practices, the views of our institutional stockholders and the guidelines of proxy advisory firms. After balancing these interests, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, has decided to submit this proposal to eliminate our classified board structure.

In making this decision, the Board considered that many public companies have taken action to declassify their boards of directors. The Board further weighed the merits of both a classified board of directors and an annually-elected board of directors. In conducting its evaluation, the Board considered the advantages of a classified board structure, such as promoting board stability and continuity, providing a greater opportunity to protect the interests of stockholders in the event of an unsolicited takeover offer and reinforcing a commitment to long-term perspectives and value creation for our stockholders. The Board also considered, however, the corporate governance trend towards annual elections of directors, as this may increase directors’ accountability to stockholders and enable stockholders to express their views on each director’s performance by means of an annual vote. Moreover, many institutional investors believe

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that the election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for implementing those policies.

Article V of our Certificate of Incorporation contains the provisions that will be affected if this proposal is adopted. Appendix A to this Proxy Statement shows the proposed changes to this Article, with deletions indicated by strike-outs and additions indicated by underlining. The Board has also adopted conforming amendments to our Bylaws, which will become effective contingent upon and immediately following the effectiveness of the amendments to our Certificate of Incorporation.

If our stockholders do not approve this proposal, our directors will continue to be elected in three classes with staggered terms and provisions of our Certificate of Incorporation relating to the removal of directors only for cause will not be amended.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4.

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PROPOSAL 5

AMENDMENT TO CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING PROVISIONS FOR AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS

Our Certificate of Incorporation currently includes supermajority voting provisions in order for our stockholders to amend our Bylaws or various provisions of our Certificate of Incorporation. On the recommendation of the Nominating and Corporate Governance Committee, our Board approved, and recommends that stockholders approve, amendments to our Certificate of Incorporation to remove the supermajority voting requirements in Article V of our Certificate of Incorporation relating to the stockholder approval required to amend our Bylaws and in Article VIII of our Certificate of Incorporation relating to the stockholder approval required to amend various provisions of our Certificate of Incorporation.

The affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of our common stock entitled to vote at the Annual Meeting is required for approval of this proposal. If approved, this proposal would become effective upon the filing of an amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware, which we would do promptly after stockholder approval is obtained. Following the effectiveness of the amendment, our stockholders will be permitted to amend our Bylaws and Certificate of Incorporation by a simple majority of the outstanding shares. If this proposal is not approved, the existing supermajority voting provisions will remain in effect.

Our Nominating and Corporate Governance Committee and the Board periodically consider our corporate governance practices and structures. As part of that process, the Board considers corporate trends, peer practices, the views of our institutional stockholders and the guidelines of proxy advisory firms. After balancing these interests, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, has decided to submit this proposal to remove the supermajority voting requirements for stockholders to amend our Bylaws and various provisions of our Certificate of Incorporation.

In making this decision, the Board considered that the purpose of supermajority voting requirements is to facilitate corporate governance stability by requiring broad stockholder consensus to effect certain changes. The Board also considered, however, that evolving corporate governance practices have come to view such supermajority voting provisions as conflicting with principles of good corporate governance and that the elimination of such supermajority voting provisions in a company’s constituent documents increases a board’s accountability to stockholders and provides stockholders with greater ability to participate in the corporate governance of a company. The Board also considered the fact that many other public companies have transitioned away from such supermajority voting provisions. The Board concluded that a “majority of outstanding shares” standard for stockholder approval of amendment to our Bylaws and Certificate of Incorporation more appropriately balances the opportunity for stockholders to participate meaningfully in the corporate governance of the Company with the desire to protect the interests of all stockholders from action that may only be in the interest of a small percentage of stockholders.

Articles V and VIII of our Certificate of Incorporation contain the provisions that will be affected if this proposal is adopted. Appendix A to this Proxy Statement shows the proposed changes to these Articles, with deletions indicated by strike-outs and additions indicated by underlining. The Board has also adopted conforming amendments to our Bylaws, which will become effective contingent upon and immediately following the effectiveness of the amendment to our Certificate of Incorporation.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 5.

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EXECUTIVE OFFICERS

The following table sets forth information concerning our executive officers as of April ___, 2021.

 

 

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SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of our common stock as of March 22, 2021 by:

The percentage ownership information shown in the table is based upon 37,607,133 shares of common stock outstanding as of March 22, 2021. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options that are either immediately exercisable or exercisable 60 days after March 31, 2021. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Except as otherwise noted below, the address for persons listed in the table is c/o Everbridge, Inc., 25 Corporate Drive, 4th Floor, Burlington, Massachusetts 01803.  

 

 

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DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year that ended on December 31, 2020, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with, except for one late filing for each of Messrs. and Mmes. Dean, Mathy, and Grayson.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis (“CD&A”) details Everbridge’s executive compensation philosophy, as well as how and why the Compensation Committee arrived at specific compensation decisions and policies. The Compensation Committee’s written charter is available on the Everbridge investor relations website at ir.everbridge.com.

 

In accordance with SEC rules and regulations, our Named Executive Officers (“NEOs”) for 2020 include our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers on December 31, 2020.

 

Our Named Executive Officers for fiscal 2020 were:

 

Mr. Ellertson resigned as our Executive Chairman effective January 1, 2021 and assumed the role of Chairman of our Board.

 

2020: A Year of Tremendous Progress Despite COVID-19

 

Business Overview:

 

Everbridge is a global software company that provides enterprise software applications that automate and accelerate organizations’ operational response to critical events in order to keep people safe and businesses running. During public safety threats including active shooter situations, terrorist attacks or severe weather conditions, as well as critical business events such as Information Technology (“IT”) outages, cyber-attacks or other incidents such as product recalls or supply-chain interruptions, over 5,600 global customers rely on our Critical Event Management platform to quickly and reliably aggregate and assess threat data, locate people at risk and responders able to assist, automate the execution of pre-defined communications processes through the secure delivery to over 100 different communication devices, and track progress on executing response plans. Our customers use our platform to identify and assess hundreds of different types of threats to their organizations, people, assets or brand.

 

 

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In 2020, despite the macroeconomic impact of COVID-19, Everbridge achieved strong growth and significantly improved business results while achieving considerable returns for stockholders, including:

 

Adjusted EBITDA. As used in this report, Adjusted EBITDA represents our net loss before interest and investment (income) expense, net, (benefit from) provision for income taxes, depreciation and amortization expense, loss on extinguishment of convertible notes, change in fair value of contingent consideration and stock-based compensation expense. We do not consider these items to be indicative of our core operating performance. The items that are non-cash include depreciation and amortization expense, loss on extinguishment of convertible notes, change in fair value of contingent consideration and stock-based compensation expense. Adjusted EBITDA is a measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding the allocation of capital and invest in initiatives that are focused on cultivating new markets for our solutions. Adjusted EBITDA is not a measure calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021, for a more detailed discussion of our fiscal 2020 financial results. See Appendix B of this Proxy Statement for a reconciliation of Adjusted EBITDA to net loss, which is the most directly comparable financial measure calculated in accordance with GAAP.

 

Total Stockholder Return:

 

The clear strategic approach, business development acumen, and strong operational execution of our executive team has driven Everbridge’s rapid, transformational growth. As a result, we have outperformed both our peer group and the S&P 500 Information Technology Index in total stockholder return over the one- and three-year periods ended December 31, 2020. With new product launches, the ability to upsell and cross sell the Company’s existing customer base, expanding the number of Critical Event Management transactions, and entering new markets, Everbridge is well positioned for sustainable long-term growth.

 

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For more information about our financial and business performance in 2020, please see “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Consolidated Financial Statements,” and “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2020.

 

Everbridge Executive Compensation Program

 

Say-on-Pay and Stockholder Engagement

 

Our stockholders’ views are important to us. At the 2020 Annual Meeting, the Company failed to gain approval for an advisory vote to approve the compensation of our named executive officers for 2019. While this result was disappointing, we believe the lower support was due in large part to one-time events related to the CEO transition in 2019 as evidenced by (i) commentary from well-known proxy advisory firms about the sign-on compensation package for the new CEO and (ii) dialogue with our top investors about the CEO leadership transition during our stockholder outreach efforts.

 

Beginning in 2020, Everbridge has undertaken an ongoing and year-round stockholder engagement initiative at the request of our Board of Directors and our Nominating and Corporate Governance and Compensation Committees. The outreach is led by our investor engagement team, which includes Joshua Young, Vice President of Investor Relations, and Elliot Mark, Senior Vice President and General Counsel. In the fall and winter of 2020, we reached out to stockholders representing approximately 80% of our outstanding shares and held virtual meetings or calls with stockholders who owned approximately 50% of our outstanding shares (and in some instances we met with a stockholder more than once). A key objective of our 2020 investor outreach was to listen to our stockholders and better understand their perspectives on our executive compensation program and any concerns that motivated the lack of approval for our 2020 “say-on-pay” vote. Feedback from these stockholder engagements was informative for the Compensation Committee’s thinking when evaluating our current compensation program and when considering potential modifications to the program.

 

 

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Our stockholders appreciated the outreach, and the feedback from these engagements was very helpful. With respect to compensation matters, many stockholders noted their support of our compensation practices, including that 97% of CEO target compensation was “at-risk” and tied to individual and corporate performance; compensation levels were at or below the mid-point of proxy peers; and the program’s heavy emphasis on long-term equity incentives creates alignment with stockholders. Our conversations with investors centered on additional governance topics including having a classified Board, supermajority voting, and environmental, social, and corporate governance related topics.  

 

In response to feedback from stockholders, we have undertaken efforts to provide more transparency and simplified disclosure in this year’s CD&A, including more details about short-term and long-term incentive targets for our management team. Our Board has also recommended that our stockholders approve the proposals contained in this proxy statement to sunset our director classification and approve an amendment to our Certificate of Incorporation to remove supermajority voting provisions. We greatly value the dialogue that we have with our stockholders, and we look forward to significant continued and consistent engagement with our stockholders in future years.

 

Pay-for-Performance Focus

 

Our compensation strategy is focused on targeted business priorities that guide and align our actions to the needs of our customers, stockholders, and employees. To achieve this, our compensation program is designed to (1) attract and retain top talent that can continue building on our trajectory for long-term growth and (2) provide competitive compensation packages that create a significant and substantial link between our business results, stockholder interests, and the individual employee’s pay opportunity.

 

To ensure pay-for-performance alignment, the Compensation Committee annually reviews the designs of our short- and long-term incentive compensation programs to confirm that they continue to promote a culture of responsible performance. The majority of total compensation opportunity offered to our executives comes in the form of an annual incentive bonus and equity awards granted under our long-term incentive (“LTI”) program, both of which represent “at risk” pay. Payouts of our annual bonus are dependent on our short-term business objectives, and equity awards include restricted stock units (“RSUs”) and performance-based stock units (“PSUs”). Prior to 2017, our executives primarily received LTI awards in the form of stock options, but since 2017, long-term equity incentive awards have primarily been in the form of RSU and PSU awards to better align executive compensation with a pay-for-performance culture.

 

We believe that our executive compensation program for 2020 continued to tie incentive-based compensation metrics with the business objectives and corporate strategies that drive stockholder value creation. As shown by the figure below, a significant portion of our CEO’s and NEOs’ target total direct compensation was composed of “at-risk” compensation elements that only pay out upon meeting a

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predetermined mix of annual and long-term performance metrics.

 

 

¹ Reflects the average pay mix of Messrs. Brickley, Irvin, and Nigam. Mr. Ellertson is not included in this chart due to his unique role as Executive Chair.

 

Compensation Philosophy

 

Our executive compensation program is designed to attract, motivate, and retain our key executives who drive our success and enable long-term stockholder value. We achieve these objectives by:

 

Our NEOs are highly specialized talent, which makes their retention a key priority. The Compensation Committee believes NEO compensation should be set at competitive levels to retain a valuable team and attract talent, while placing a strong emphasis on successful attainment of Company performance goals.

 

Our executive compensation program primarily consists of annual base salary, an “at-risk” annual incentive bonus, time-vesting RSUs and “at-risk” PSUs.

 

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Compensation Program and Governance

 

The Compensation Committee is appointed by the Board of Directors to oversee our compensation polices, plans and programs, administration of our equity plans, and its responsibilities related to the compensation of our executive officers, directors, and senior management, as appropriate. A significant part of this oversight is aligning management interests with our business strategies and goals, as well as stockholder interests, while also mitigating excessive risk-taking. We continually take steps to strengthen and improve our executive compensation policies and practices.

 

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Highlights of our current policies and practices include:

 

 

Role of the Compensation Committee

 

The Compensation Committee seeks to ensure that our executive compensation program is properly rewarding and motivating our NEOs while aligning their goals with our business strategy and the interests of our stockholders. To do this, our Compensation Committee conducts an annual review of the aggregate level of our executive compensation and the mix of elements used to compensate our executive officers and historic compensation levels, including prior equity awards.

 

When setting executive compensation opportunities, the Compensation Committee considers several factors, including:

 

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Role of the CEO in Compensation Decisions

 

Our CEO typically evaluates the performance of other executive officers and other employees, along with the performance of the Company as a whole, against previously determined objectives, on an annual basis and makes recommendations to the Compensation Committee with respect to annual base salary adjustments, bonuses, cash performance incentives and annual equity awards for the other executives. The Compensation Committee exercises its own independent discretion in approving compensation for all executive officers and assessing corporate performance against the pre-established objectives. The CEO is not present during deliberations or voting with respect to his own compensation.

 

Role of the Independent Compensation Consultant

 

The Compensation Committee retains the services of third-party, independent executive compensation consultants as it sees fit in connection with Everbridge’s compensation programs and related policies. For 2020, the Compensation Committee continued to engage Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent consultant.

 

As the independent compensation consultant, FW Cook reports directly to the Compensation Committee. The scope of FW Cook’s assistance on Everbridge’s compensation program design and pay setting includes, but is not limited to, the following services:

 

The Compensation Committee has assessed the independence of FW Cook under applicable SEC and Nasdaq rules. After conducting this assessment and considering any potential conflicts of interest, the Compensation Committee concluded that FW Cook is independent and has no conflicts of interest.

 

Peer Group

 

The Compensation Committee believes that it is important to make decisions informed by the current practices of comparable public companies with which we compete for top talent. To help inform compensation decisions for 2020, the Compensation Committee requested that FW Cook review Everbridge’s existing peer group to assess whether the companies included were appropriate for 2020. Criteria included industry, size (based on employee headcount, revenue, and market capitalization), business characteristics (3-year averages sales growth rates), and peer groups listed by proxy advisors.

 

In 2019, the Compensation Committee used the following 16-company peer group to make compensation decisions for 2020:

 

 

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Using data compiled from the public filings of these peer companies, FW Cook completed an assessment of our executive compensation to inform the Compensation Committee’s determinations regarding executive compensation for 2020. FW Cook prepared, and the Compensation Committee reviewed, a range of market data reference points (generally at the 25^th, median, and 75^th percentiles of the market data) with respect to base salary, performance bonuses, equity compensation (valued based both on an approximation of grant date fair value and as well as ownership percentage), total target cash compensation (base salary and the annual target performance bonus) and total direct compensation (total target cash compensation and equity compensation) with respect to each of our executive officers. The Compensation Committee did not target pay to fall at any particular percentile of the market data, but rather reviewed this market data as a helpful reference point in making 2020 compensation decisions. Market data is only one of the factors that the Compensation Committee considers in making compensation decisions.

 

Subsequent Updates to the Peer Group

 

Since the last review of the peer group in 2019 (used for 2020 compensation decisions), Everbridge more than doubled in market capitalization, causing many of the companies from the 2019 peer group to no longer be size appropriate. To better align Everbridge’s revenue and market capitalization with median positioning, the 2020 peer group was formulated using the following criteria (which remained largely consistent with the prior year’s peer group assessment):

 

In September 2020, the Compensation Committee reviewed and approved a final peer group of 20 companies, which will be used to help make informed compensation decisions for 2021.

 

 

When making executive compensation decisions, the Compensation Committee does not rely on the peer group alone but also considers other data sources and other factors. To supplement market data gathered from publicly disclosed filings of our peer group, the Compensation Committee also considers market compensation data from the Radford Global Technology Survey, which is reflective of the broader market in which Everbridge competes for talent. The identity of the companies comprising the survey data is not disclosed to, or considered by, the Compensation Committee in its decision-making process, and the Compensation Committee does not consider the identity of the companies comprising the Radford Global Technology Survey to be material for its executive compensation responsibilities.

 

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Elements of Executive Compensation

 

Target total direct compensation for NEOs is comprised of base salary, annual cash incentives, and long-term incentives (both time and performance-vesting). In addition, each NEO is eligible for benefits that are generally offered to Everbridge employees.

 

 

Base Salary

 

Base salaries for our NEOs are established based on the individual’s scope of responsibilities, experience, and market factors. The Compensation Committee reviews base salaries on an annual basis, referencing peer group and survey data to understand the marketplace for individuals in similar positions.

 

The annual base salaries of our NEOs for 2020, as well as the increase from their prior base salary levels, are as follows:

 

 

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2020 Bonus Plan Structure

 

Everbridge NEOs participate in an annual performance-based cash bonus plan as an incentive to achieve defined, quantitative corporate goals.

 

 

For 2020, the Compensation Committee established performance goals for the two bonus pool funding metrics – 60% qualified Revenue and 40% qualified Adjusted EBITDA. The qualification criteria for each of these performance goals were predetermined to align with our 2020 strategic priorities. In March 2021, the Committee approved a final bonus pool of 110% of target based on revenue and Adjusted EBITDA performance, as displayed in the table below:

 

 

The Committee establishes an individual target for each NEO expressed as a dollar value (target bonus as a percentage of salary shown below for reference purposes), and the final bonus payout may range from 0% to 125% of the targeted payout level. When considering executives’ target bonus, the Committee evaluates market data as well as internal compensation parity among the executive team.

 

 

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Long-Term Incentives

 

In 2020, the Compensation Committee adopted an annual LTI grant schedule to our executive officers. The Compensation Committee believes in a strong pay-for-performance program and culture that encourages management to align their long-term interests with those of Everbridge’s stockholders. To achieve this, the 2020 annual LTI grants to executives consisted of two equity vehicles:

 

 

In 2020, our NEOs received LTI grants for the following amounts:

 

 

 

Time-Vested RSUs

 

The time-vesting RSUs are generally subject to four-year annual graded vesting over the service period commencing when the RSU is granted, with one-fourth of the RSUs vesting on each anniversary of the grant date.

 

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Performance Stock Units

 

Prior to 2017, long-term equity awards to our executive officers had been primarily in the form of stock options. Beginning in mid-2017, the Compensation Committee began granting PSU awards in order to more strongly align executive officers’ interests with those of stockholders and of the Company.

 

In 2020, Everbridge’s NEOs received PSUs that are eligible to vest based on the achievement of specific revenue CAGR goals, with the opportunity for up to 62.5% of the grant to vest at the end of the fiscal quarter after the second anniversary of grant based on preceding 8-quarter revenue CAGR, and for up to another 62.5% to vest at the end of the fiscal quarter after the third anniversary of grant based on preceding 12-quarter revenue CAGR. If both tranches (one vesting after the second anniversary of grant, and the other vesting after the third anniversary of grant) payout at the maximum 62.5% of target, the employee will receive 125% of target cumulatively.

 

We believe that revenue is a critical bellwether of our current valuation and long-term business prospects, and that the 2020 PSUs demonstrate pay-for-performance by supporting our comprehensive approach to growing Everbridge’s top line. The structure of these awards is an integral part of ensuring that our leadership team is focused on our key objectives and operating principles of our long-term strategy, and PSUs appropriately reward executives for financial achievement.

 

Vesting of 2018 PSUs

 

During 2020, Mr. Ellertson had 27,500 PSUs that vested based on our revenue CAGR for the 8-quarter period that ended on September 20, 2020. This represents a 50% vesting of the original PSU award. Neither Mr. Meredith, Mr. Brickley, Mr. Irvin nor Mr. Nigam had PSU awards that vested during 2020. Additionally, none of the NEOs held any PSU awards that were originally granted in 2017.  

 

Special Equity Awards

 

CEO New Hire Performance-Contingent Equity Awards. In July 2019, we entered into an employment agreement with Mr. Meredith. Pursuant to this employment agreement, we granted Mr. Meredith with a “make whole” equity award of 100,000 RSUs and 100,000 PSUs to compensate him for equity holdings lost when leaving his previous employer to join us as our Chief Executive Officer.

 

The employment agreement between Mr. Meredith and us also stipulated that Mr. Meredith would receive an additional one-time performance-contingent new hire grant in July 2020 of 15,000 RSUs and 15,000 PSUs if the Company achieved cumulatively 95% or greater of its quarterly plan for each of his first four quarters as CEO. Based on our strong performance in the CEO’s first year in the role, the new hire performance-contingent grants were earned. These awards were issued in July 2020, with a third of the RSUs vesting per year, with the first third vesting on July 31, 2020, and with the PSUs vesting up to 62.5% of the grant to vest at the end of the fiscal quarter after the second anniversary of Mr. Meredith’s hire date based on preceding 8-quarter revenue CAGR, and for up to another 62.5% to vest at the end of the fiscal quarter after the third anniversary of Mr. Meredith’s hire date based on preceding 12-quarter revenue CAGR.

 

The Compensation Committee intended these special one-time “make whole” and “new hire” awards to accomplish several objectives:

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Other NEO New Hire Awards.

 

Executive Chairman 2020 Equity Grant. Upon Mr. Meredith’s appointment as Chief Executive Officer in July 2019, Mr. Ellertson, transitioned from the role of CEO to Executive Chairman of the Board of Directors.

 

On December 29, 2020, our Board of Directors accepted Mr. Ellertson’s notice of retirement as an employee and Executive Chairman effective December 31, 2020. Beginning on January 1, 2021, Mr. Ellertson began serving as non-executive Chair of the Board of Directors. In recognition of Mr. Ellertson’s service as Executive Chairman and his new role as non-Executive Chair of the Board of Directors, the Compensation Committee awarded Mr. Ellertson a grant of 40,250 RSUs on December 31, 2020, subject to Mr. Ellertson’s continued service to the Company. Half of these RSUs will vest on December 31, 2021, and the other half will vest on December 31, 2022.

 

The Compensation Committee intended this special one-time RSU award to accomplish several objectives:

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Chief Product Officer 2020 New Hire Grant. Mr. Nigam joined us in January 2020 as our Chief Product Officer.

 

Accordingly, on February 13, 2020, Mr. Nigam was granted a “new hire” award consisting of 27,500 RSUs and 27,500 PSUs designed to replace equity holdings lost when leaving his prior employer to join us as our Chief Product Officer, to provide him with equity to promote an ownership culture, and to induce him to join the Company. The RSUs vest over four years, with 25% vesting on January 31, 2021, 25% on January 31, 2022, 25% on January 31, 2023, and 25% of January 31, 2024, subject to Mr. Nigam’s continued service to us through the respective vesting date. The PSUs vest up to 62.5% of the grant to vest at the end of the fiscal quarter after the second anniversary of grant based on preceding 8-quarter revenue CAGR, and for up to another 62.5% to vest at the end of the fiscal quarter after the third anniversary of grant based on preceding 12-quarter revenue CAGR.

 

The Compensation Committee intended this special one-time “new hire” award to accomplish several objectives:

 

 

Other Features of the Our Executive Compensation Program

 

Employment Agreements. The initial terms and conditions of employment for each of our named executive officers are set forth in employment offer letters and employment agreements. The terms of

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these letters and agreements are described in greater detail in the section titled “—Employment Arrangements” below. Each of our named executive officers is an at-will employee.

 

Severance and Change in Control Benefits. Our offer letter and employment agreements with each of our named executive officers contain severance and change in control terms. Each of these agreements provides for severance payments and benefits (cash payments, payments for COBRA premiums and equity award acceleration) upon a termination of employment without cause or a resignation for good reason, either alone or following a change in control transaction. We do not provide any tax payments or “gross ups” in connection with a severance or change in control transaction. The Compensation Committee reviewed these severance payments and benefits to ensure that the payments and benefits remain appropriately structured and at reasonable levels. The Compensation Committee believes that these severance protections are necessary to provide stability among our executive officers, important from a retention perspective, serve to focus our executive officers on our business operations, and avoid distractions in connection with a potential change in control transaction or period of uncertainty. A more detailed description of our named executive officer severance and change in control payments and benefits is provided below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

 

Each of our named executive officers holds RSUs, and/or PSUs under our equity incentive plans that were granted subject equity award agreements. A description of the termination and change of control provisions in such equity incentive plans and equity award agreements is provided below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

 

401(k) Plan, Employee Stock Purchase Plan, Welfare and Health Benefits. We maintain a tax-qualified retirement plan that provides eligible U.S. employees, including our named executive officers, with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees may make voluntary contributions from their eligible pay, up to certain applicable annual limits set by the Internal Revenue Code of 1986, as amended (the “Code”). In 2020, we matched 50% of employee contributions, up to the first 4% of eligible employee deferrals per calendar year for each employee. Employee contributions are immediately and fully vested. Company matching contributions vest ratably over three years. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code.

 

We also offer our employees, including our executive officers, the opportunity to purchase shares of our common stock at a discount under our 2016 Employee Stock Purchase Plan (“ESPP”). Pursuant to the ESPP, all eligible employees, including the eligible named executive officers, may allocate up to the lesser of $25,000 annually or 15% of the participant’s base compensation for that year to purchase our stock at a 15% discount to the market price, subject to specified limits.

 

In addition, we provide other benefits to our executive officers, including the named executive officers, on the same basis as to all of our full-time employees. These benefits include, but are not limited to, medical, dental, vision, group life, disability and accidental death and dismemberment insurance plans.

 

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

 

Perquisites and Other Personal Benefits. Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not generally provide perquisites or other personal benefits to our executive officers, including our NEOs, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes. We do, however, pay the premiums for term life insurance and disability insurance, make matching contributions to our 401(k) plan, and allow participation in our ESPP, subject to certain limitations, for all of our employees, including our NEOs. None of our named executive officers individually received perquisites or other personal benefits in fiscal 2020 that were, in the aggregate,

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$10,000 or more.

 

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

 

 

Tax and Accounting Implications

 

Accounting for Stock-Based Compensation

 

Under Financial Accounting Standard Board ASC Topic 718 (“ASC 718”), we are required to estimate and record an expense for each award of equity compensation over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC 718.

 

 

Other Compensation Policies and Practices

 

Equity Awards Grant Delegation Policy

 

The Compensation Committee has delegated authority to our Chief Executive Officer to grant equity awards to our employees (other than our executive officers), subject to the terms and conditions of an equity awards grant delegation policy. Such awards may be granted on scheduled grant dates to newly-hired employees or to existing employees in connection with a promotion or in recognition of their contributions to the Company. In each instance, the policy provides for a limitation on the maximum size of any such awards.

 

Stock Ownership Guidelines

 

In March 2020, the Board adopted equity ownership guidelines to further align the interests of our senior management and directors with those of our stockholders. Under the guidelines, executives are expected to hold common stock in an amount ranging from three times base salary for our Chief Executive Officer and our Executive Chair, to two times base salary for our other executive officers. Our directors are also expected to hold common stock in an amount equal to three times their current cash retainer fee for Board service.

 

 

For purposes of these guidelines, stock ownership includes shares for which the executive or director has direct or indirect ownership or control, but does not include unvested restricted stock units or unvested stock options. Executives and directors are expected to meet their ownership guidelines within two years of becoming subject to the guidelines. All executives and directors are currently meeting or are working to achieve these ownership targets within the two-year time period.

 

Compensation Recovery or Clawback Policy

 

In March 2020, the Board adopted a clawback policy that provides the Board discretion to reduce the amount of future compensation (both cash and equity) payable to an executive officer of the Company for excess proceeds from incentive compensation received by such executive officer due to a material

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restatement of financial statements. The clawback period is the three-year period following the filing of any such restated financial statements with the SEC.

 

Policy Prohibiting Hedging and Pledging of Our Equity Securities

 

Our insider trading policy prohibits our employees, including our executive officers and directors, from engaging in short sales, hedging of stock ownership positions, and transactions involving derivative securities relating to our common stock. In addition, our directors and executive officers and any person required to comply with the blackout periods or pre-clearance requirements under our insider trading policy are prohibited from pledging Company securities as collateral for loans and may not hold Company securities in margin accounts.

 

Compensation Committee Report

 

The material in this report is not “soliciting material,” is furnished to, but not deemed “filed” with, the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with the management of the Company. Based on this review and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement or the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

This report has been furnished by the members of the Compensation Committee.

 

Sharon Rowlands, Chair

Bruns Grayson

Kent Mathy

 

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Summary Compensation Table

The following table sets forth information in accordance with SEC rules regarding compensation of our NEOs as of December 31, 2020.

 

 

 

 

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Grant of Plan-Based Awards in Fiscal 2020

 

The following table shows certain information regarding grants of plan-based awards during the fiscal year ended December 31, 2020 to our NEOs.

 

 

 

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Outstanding Equity Awards at Fiscal Year-End

 

The following table sets forth certain information about outstanding equity awards granted to our NEOs that remain outstanding as of December 31, 2020.

 

 

 

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Option Exercises and Stock Vested in Fiscal 2020

 

The following table shows the number of shares of our common stock acquired upon the exercise of stock options and the aggregate value realized upon the exercise of stock options for our NEOs during the fiscal year ended December 31, 2020.

 

 

Pension Benefits and Deferred Compensation

 

None of our NEOs participate, or have an account balance, in any qualified or non-qualified defined benefit plans or any deferred compensation plans sponsored by us.

 

Employment Arrangements

 

Below are written descriptions of our employment agreements with each of our NEOs. Each of our named executive officers’ employment is “at will” and may be terminated at any time.

 

David Meredith. We entered into an employment arrangement with Mr. Meredith in July 2019 setting forth the terms of his employment. Per his employment arrangement, Mr. Meredith is paid a base salary which was initially $450,000 and which was increased to $475,000, effective July 1, 2020. Mr. Meredith also received a market adjustment and relocation bonus of $145,000, which was paid monthly during calendar year 2020. Mr. Meredith is also eligible to receive annual performance bonuses pursuant to the company bonus plans described above, with a target bonus of $350,000 for 2020, and a target bonus of $375,000 for 2021. Pursuant to his employment agreement, Mr. Meredith was granted an award of 100,000 RSUs and 100,000 PSUs. As an additional incentive, the Company provided an additional grant in July 2020 of 15,000 RSUs and 15,000 PSUs based on the Company’s cumulative achievement of 95% or greater of its quarterly plan for each of his first four quarters as CEO. The RSUs will vest over three years at 33.3% per year, starting on the first anniversary of the last day of the month in which his employment start date occurred, and the PSUs will vest in accordance with the PSU vesting schedule described in more detail above in the section entitled “Long Term Incentives.” Mr. Meredith’s employment agreement also provides for certain severance benefits, the terms of which are described below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

 

Patrick Brickley. Upon his promotion to Senior Vice President, Chief Financial Officer, and Treasurer, we entered into an employment arrangement with Mr. Brickley in March 2019 setting forth the terms of his employment. Mr. Brickley was entitled to an initial base salary of $290,000, which was increased to $300,000, effective July 1, 2020. Mr. Brickley is also eligible to receive annual performance bonuses pursuant to the company bonus plans described above, with a target bonus of $90,000 in 2020, and a target bonus of $90,000 in 2021. Mr. Brickley was granted an award 62,500 RSUs and 62,500 PSUs in January 2019. The RSUs will vest over three years at 33.3% per year, starting on the first anniversary of the last day of the month in which the RSUs were granted, and the PSUs will vest in accordance with the PSU vesting schedule described in more detail above in the section entitled “Long Term Incentives.” Mr. Brickley’s employment agreement also provides for certain severance benefits, the terms of which are described below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

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Jaime Ellertson. We entered into an employment agreement with Mr. Ellertson in July 2012 setting forth the terms of his employment. During 2020, while Mr. Ellertson was serving as Executive Chairman of our Board of Directors, he was entitled to an annual base salary of $400,000. Mr. Ellertson was also eligible to receive annual performance bonuses pursuant to the company bonus plans described above, with a target bonus of $325,000 in 2020. In January 2021, Mr. Ellertson transitioned to Non-Executive Chairman and we amended and restated the terms of his agreement as an engagement agreement. Pursuant to the engagement agreement, for the period from January 1, 2021 to June 30, 2022, Mr. Ellertson will receive an annual retainer of $180,000 in place of the cash retainer payable to non-employee directors under our non-employee director compensation policy. Beginning on July 1, 2022, the annual retainer will be decreased to $150,000. The retainer will be paid quarterly, consistent with the terms for payment of the retainer for the other non-employee members of our Board of Directors. Pursuant to this arrangement, Mr. Ellertson received a grant of 40,250 RSUs under our 2016 Equity Incentive Plan. One-half of the RSUs will vest on December 31, 2021, and the other half will vest on December 31, 2022, subject to Mr. Ellertson’s continued service on our Board of Directors. These grants are in place of the equity awards issuable for the years ending December 31, 2021 and 2022 under our non-employee director compensation policy. Mr. Ellertson also did not receive any equity grants during the years ended December 31, 2018 and December 31, 2019. Mr. Ellertson’s other outstanding equity grants under our 2016 Equity Incentive Plan, consisting of both performance-based PSUs and time-based RSUs, will continue to vest in accordance with their terms. Certain of Mr. Ellertson’s outstanding equity grants will vest upon a change in control, as described below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

 

Vernon Irvin. We entered into an employment agreement with Mr. Irvin in August 2019 setting forth the terms of his employment. Mr. Irvin was entitled to an initial base salary of $325,000, prorated for any partial year of employment as well as a signing bonus of $90,000 which was paid within 30 days of his employment agreement signature date. Mr. Irvin is also eligible to receive annual performance bonuses pursuant to the company bonus plans described above, with a target bonus of $325,000 for 2020, and a target annual performance bonus for 2021 of $325,000. Pursuant to the agreement, Mr. Irvin was granted an award of 50,000 RSUs and 50,000 PSUs. The RSUs will vest over four years at 25% per year, starting on the first anniversary of the last day of the month in which the RSUs were granted and the PSUs will vest in accordance with the PSU vesting schedule described in more detail above in the section entitled “Long Term Incentives.” Mr. Irvin’s employment agreement also provides for certain severance benefits, the terms of which are described below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

 

Ajay Nigam. We entered into an employment agreement with Mr. Nigam in October 2019 setting forth the terms of his employment. Mr. Nigam was entitled to an initial base salary of $300,000, prorated for any partial year of employment as well as a signing bonus of $50,000 which was paid within 30 days of his employment agreement signature date. The signing bonus is reimbursable in the event that Mr. Nigam voluntarily terminates his employment with us, not including termination for certain good reasons, within the first 12 months of employment Mr. Nigam is also eligible to receive annual performance bonuses pursuant to the company bonus plans described above, with a target bonus of $120,000 for 2020. Pursuant to the agreement, Mr. Nigam was granted an award of 27,500 RSUs and 27,500 PSUs. The RSUs will vest over four years at 25% per year, starting on the first anniversary of the last day of the month in which the RSUs were granted and the PSUs will vest in accordance with the PSU vesting schedule described in more detail above in the section entitled “Long Term Incentives.” Mr. Nigam’s employment agreement also provides for certain severance benefits, the terms of which are described below under “Potential Payments upon Termination” and “Potential Payments Upon Change in Control.”

 

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Potential Payments upon Termination

 

Regardless of the manner in which a named executive officer’s service terminates, the named executive officer is entitled to receive amounts earned during his term of service, including salary.

 

David Meredith. Pursuant to his employment agreement, if Mr. Meredith’s employment with us ends due to his resignation for “good reason” or his termination by us other than for “cause,” he is entitled to payment of premiums for continued health benefits under either our sponsored health care program, or COBRA, for twelve months. If Mr. Meredith’s employment ends due to his death or disability, he (or his estate in the event of death) is entitled to continued payment of 1/12^th his base salary for three months following the termination of his employment. If either Mr. Meredith’s employment is terminated by us other than for cause, or if he voluntarily terminates his employment for “good reason,” we will (a) continue to pay him 1/12^th of his base salary for 12 months, (b) any pro-rated bonus earned to date per our Management Incentive Plan, and (c) during the initial three-year employment term, any RSUs and PSUs that remain unvested as of such termination date will vest as to (i) a fraction of the then-unvested underlying shares of common stock equal to the number of months of full-time employment as of the date of employment termination divided by thirty-six, and (ii) 50% of all his unvested (as of the date of termination of employment after the acceleration) RSUs and PSUs. Mr. Meredith’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and signing a general release of claims in our favor. In addition, in the event that, within 12 months following a change in control, there is an involuntary termination of service or Mr. Meredith resigns for good reason, then any RSUs and PSUs that remain unvested as of such termination date will vest as of such termination date.

 

Patrick Brickley. Pursuant to his employment agreement, if Mr. Brickley’s employment ends due to his resignation for “good reason” or he is terminated by us other than for “cause,” he is entitled to payment for his health benefits under our sponsored health care program in which he was enrolled, or COBRA, for the severance period. If Mr. Brickley’s employment ends due to his death or disability, he (or his estate in the event of death) is entitled to continued payment of 1/12^th his base salary for three months following the termination of his employment. If Mr. Brickley’s employment is terminated by the Company involuntarily, other than for cause then, as a severance benefit, the Company will continue to pay him an amount equal to 1/12^th of his salary for (a) six months, if and to the extent that his employment is terminated within 12 months following his commencement date; or (b) 12 months, if and to the extent that his employment is terminated more than 12 months following the commencement date. In addition, if either his employment is terminated by the Company other than for cause, or if Mr. Brickley voluntarily terminates his employment for “good reason” within 12 months following his hire date, one-third of his total RSU and PSU grant will vest fully. Mr. Brickley’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and signing a general release of claims in our favor. In addition, in the event that, within 12 months following a change in control, there is an involuntary termination of service or Mr. Brickley resigns for good reason, then any RSUs and PSUs that remain unvested as of such termination date will vest as of such termination date.  

 

Jaime Ellertson. Pursuant to his former employment agreement, if Mr. Ellertson’s employment with us had ended on or before December 31, 2020 due to his resignation for “good reason” or his termination by us other than for “cause,” he would have been entitled to (a) continued payment of his base salary for twelve months following his termination and (b) payment of premiums for continued health benefits under either our sponsored health care program, or COBRA, for twelve months. If Mr. Ellertson’s employment with us had ended on or before December 31, 2020 due to his death or disability, he (or his estate in the event of death) would have been entitled to continued payment of his base salary for six months following the termination of his employment. Mr. Ellertson’s benefits would have been conditioned, among other things, on his complying with his post- termination obligations under his employment agreement and signing a general release of claims in our favor. In addition, if our company had undergone a change of control on or before December 31, 2020, and Mr. Ellertson had undergone an involuntary termination of his employment with us or our successor within 12 months following such change of control, all of Mr. Ellertson’s outstanding stock options would have vested as to 100% of the then-unvested underlying shares of common stock. Effective January 1, 2021, as Chairman of our Board, Mr. Ellertson is entitled to

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the same change of control provisions regarding his equity grants as our other non-employee directors. Accordingly, if our company undergoes a change of control, all of Mr. Ellertson’s outstanding equity grants will vest as to 100% of the then-unvested underlying shares of common stock.

 

Vernon Irvin. Pursuant to his employment agreement, if Mr. Irvin’s employment ends due to his resignation for “good reason” or he is terminated by us other than for “cause,” he is entitled to payment for his health benefits under our sponsored health care program in which he was enrolled, or COBRA, for the severance period. If Mr. Irvin’s employment ends due to his death or disability, he (or his estate in the event of death) is entitled to continued payment of 1/12^th his base salary for three months following the termination of his employment. If Mr. Irvin’s employment is terminated by us involuntarily other than for cause then, as a severance benefit, we shall continue to pay him an amount equal to 1/12^th of his salary for 12 months. Mr. Irvin’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and signing a general release of claims in our favor. In addition, in the event that, within 12 months following a change in control, there is an involuntary termination of service or Mr. Irvin resigns for good reason, then any RSUs and PSUs that remain unvested as of such termination date will vest as of such termination date.

 

Ajay Nigam. Pursuant to his employment agreement, if Mr. Nigam’s employment ends due to his resignation for “good reason” or he is terminated by us other than for “cause,” he is entitled to payment for his health benefits under our sponsored health care program in which he was enrolled, or COBRA, for the severance period. If Mr. Nigam’s employment ends due to his death or disability, he (or his estate in the event of death) is entitled to continued payment of 1/12^th his base salary for three months following the termination of his employment. If Mr. Nigam’s employment is terminated by us involuntarily other than for cause then, as a severance benefit, we shall continue to pay him an amount equal to 1/12^th of his salary for 6 months. Mr. Nigam’s benefits are conditioned, among other things, on his complying with his post-termination obligations under his employment agreement and signing a general release of claims in our favor. In addition, in the event that, within 12 months following a change in control, there is an involuntary termination of service or Mr. Nigam resigns for good reason, then any RSUs and PSUs that remain unvested as of such termination date will vest as of such termination date.

 

Potential Payments upon Change in Control

For all executive officers, pursuant to the terms of their RSU and PSU grants, if our company undergoes a change of control, then the executive’s outstanding RSUs and PSUs will vest as to (1) a fraction of the then-unvested underlying shares of common stock equal to the number of months of their full-time employment with us divided by either thirty-six or forty-eight, plus (2) 50% of the remaining then-unvested underlying shares of common stock. In the event that, after giving effect to the accelerated vesting above, our successor does not assume or convert all of the executive’s remaining unvested shares, or does not offer equivalently valued equity incentives, the executive’s outstanding RSUs, and PSUs will vest as to all of the then-unvested underlying shares of common stock. Beginning in 2021, the Compensation Committee has committed to no longer offer newly hired executive officers with RSU or PSU grants that include acceleration of vesting on a change of control as described above, unless within 12 months following a change in control, there is an involuntary termination of service of such executive officer or such executive officer resigns for good reason.

 

Estimated Change in Control and Severance Benefits

The following charts present the approximate amount of the benefits to which each of our named executive officers would have been entitled had his employment terminated under the circumstances described in the preceding paragraphs, or had we undergone a change in control, on December 31, 2020.

 

The amounts in the following table also assume the closing price of our common stock on December 31, 2020, which was $149.07 per share. These amounts are in addition to benefits generally available to our employees upon termination of employment, such as distributions from our 401(k) plan and payout of accrued vacation. The amounts in the following table do not include amounts earned or benefits accrued

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due to continued service by the named executive officer through December 31, 2020, such as vested stock options, or amounts the named executive officers were eligible to receive under our annual bonus plan with respect to fiscal 2020 performance which was paid in fiscal 2021.

 

 

 

CEO Pay Ratio

 

We are required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K to disclose the ratio of our median employee's annual total

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compensation to the annual total compensation of our principal executive officer. At the end of 2020, our principal executive officer was Mr. Meredith, our chief executive officer. In 2020, Mr. Meredith’s combined annual total compensation (calculated on an annual basis) was $7,442,542, and for our median employee was $89,831, resulting in a pay ratio of approximately 83:1.

 

In accordance with Item 402(u) of Regulation S-K, we identified the median employee by aggregating for each applicable employee (a) the annual base salary for salaried employees (or, for hourly employees, the hourly pay rate multiplied by the estimated 2020 work schedule), (b) the target bonus for 2020, and (c) the accounting value of any equity awards granted during 2020 and then ranking this total compensation measure for our employees from lowest to highest. This calculation was performed for individuals employed by us on December 31, 2020, excluding our chief executive officer David Meredith, whether employed on a full-time, part-time or seasonal basis. Components of compensation paid in foreign currencies were converted to U.S. dollars based on 2020 average exchange rates. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

 

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DIRECTOR COMPENSATION

The following table sets forth information regarding the compensation earned for service on our Board during the year ended December 31, 2020 by our directors who were not also our employees. Jaime Ellertson, who served as our Chief Executive Officer until July 2019 and as our Executive Chairman until January 1, 2021, and David Meredith, who has served as Chief Executive Officer since July 2019, are also members of our Board, but did not receive any additional compensation for their service as a director. Their compensation as executive officers is set forth above under “Executive Compensation—Summary Compensation Table.”

 

 

 

Non-Employee Director Compensation Policy

Our Board adopted a compensation policy for non-employee directors. The policy provides for the compensation of non-employee directors with cash and equity compensation. Under the policy, each non-employee director receives an annual board service retainer of $40,000. Effective January 1, 2021, the chairperson of each of our audit committee, our compensation committee and our nominating and corporate governance committee receive additional annual committee chair service retainers of $20,000, $12,000 and $8,000, respectively. Effective January 1, 2021, other members of our audit committee, our compensation committee and our nominating and corporate governance committee receive additional annual cash retainers of $10,000, $5,000 and $4,000, respectively, for each such committee of which they are a member. The annual cash compensation amounts set forth above are payable in equal quarterly installments, payable in arrears following the end of each calendar quarter in which the board service occurs, prorated for any partial quarters of service. We also reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending meeting of our Board or any committee thereof.

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In addition to cash compensation, each non-employee director is eligible to receive the RSUs pursuant to our 2016 Equity Incentive Plan. Each continuing non-employee director as of the date of each Annual Meeting will receive an annual grant of RSUs with a value of $170,000 based on the 30-day average closing price of our common stock on the Nasdaq Stock Market through December 31 in the prior year, which will vest in full on the earlier of the end of the month that includes the first anniversary of such grant date or the date of the next annual stockholders’ meeting, provided that the applicable non-employee director is, as of such vesting date, then a director of our company. Additionally, any new non-employee directors who are appointed to the Board of Directors are eligible for an initial grant of RSUs with a value of $170,000 based on the closing price of our common stock on the Nasdaq Stock Market on the date of grant, which will vest in full on the first anniversary of the last day of the month of the date of grant, provided that at such vesting date, the director continues to serve on the Board of Directors. Any RSUs granted to a non-employee director pursuant to this policy will become fully vested upon a change in control, as long as such director is providing continuous service as of the date of such change in control. All equity awards under this policy will also be subject to the limitations on compensation payable to non-employee directors set forth in the 2016 Equity Incentive Plan.  

 

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides certain information with respect to all of our equity compensation plans in effect as of December 31, 2020.  

 

 

 

 

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TRANSACTIONS WITH RELATED PERSONS

Related-Person Transactions Policy and Procedures

We have adopted a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants in which the amount involves exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.

Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our Board, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy.

In addition, under our Code of Business Conduct and Ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.

In considering related person transactions, our audit committee, or other independent body of our Board, takes into account the relevant available facts and circumstances including, but not limited to:

The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our Board, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our Board, determines in the good faith exercise of its discretion.

Except as described below, there have been no transactions since January 1, 2020 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of our common stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described under “Executive and Director Compensation.”

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Employment Arrangements and Separation Agreements

We have entered into employment agreements with our executive officers. For more information regarding these agreements with our NEOs, see “Executive Compensation—Employment Arrangements.”

Stock Option Grants and Stock Awards to Directors and Executive Officers

We have granted stock options, RSU and PSUs to our certain of our directors and executive officers. For more information regarding the stock options and stock awards granted to our directors and named executive officers see “Executive Compensation.”

Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our amended and restated certificate of incorporation and amended and restated bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law.

Certain of the transactions described above were entered into prior to the adoption of the written policy, but all such transactions were approved by our Board considering similar factors to those described above.

 

 

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HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify us or your broker. Direct your written request to Everbridge, Inc., Attn: Corporate Secretary, 25 Corporate Drive, 4th Floor, Burlington, Massachusetts 01803 or call us at 1-888-366-4911. Stockholders who currently receive multiple copies of the Notices of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers.

OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.

 

 

April __, 2021

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC, is available without charge upon written request to: Everbridge, Inc., Attn: Corporate Secretary, 25 Corporate Drive, 4th Floor, Burlington, Massachusetts, 01803.

 

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APPENDIX A

 

Text of Proposed Amendment to the Company’s Certificate of Incorporation to Declassify the Board of Directors

The proposed amendment to the Company’s Certificate of Incorporation would revise paragraph B of Article V as follows (new language is indicated by underlined text, and deletions are indicated by strikethroughs):

Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, each director whether elected at an annual meeting of stockholders or elected in the interim to fill vacancies and newly created directorships, shall be elected for a term expiring at the next annual meeting of stockholders following their election. In addition, notwithstanding the length of term of any director elected at an annual meeting of stockholders prior to the date of filing of the first amendment to this Fifth Amended and Restated Certificate of Incorporation, or elected in the interim to fill vacancies or newly created directorships, each such director shall serve a term expiring at the next annual meeting of stockholders following the date of filing of the first amendment to this Fifth Amended and Restated Certificate of Incorporation.    .    , following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “1933 Act”), covering the offer and sale of Common Stock to the public (the “Initial Public Offering”), the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. The Board of Directors is authorized to assign members of the Board of Directors already in office to such classes at the time the classification becomes effective. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting.

Notwithstanding the foregoing provisions of this section, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

 

The proposed amendment to the Company’s Certificate of Incorporation would revise paragraph C of Article V of the Company’s Certificate of Incorporation as follows:

 

“C. REMOVAL OF DIRECTORS

Subject to the rights of any series of Preferred Stock to elect additional directors under specified circumstances, and subject to any limitations imposed by law following the closing of the Initial Public Offering, neither the Board of Directors nor and any individual director may be removed with or without cause.

 

Subject to any limitation imposed by law, any individual director or directors may be removed with cause by the affirmative vote of the holders of a majority sixty six and two thirds percent (66 2/3%) of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally at an election of directors."

 

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Text of Proposed Amendment to the Company’s Certificate of Incorporation to Remove Certain Supermajority Voting Provisions

The proposed amendment to the Company’s Certificate of Incorporation would revise paragraph E of Article V and paragraph B of Article VIII as follows (new language is indicated by underlined text, and deletions are indicated by strikethroughs):

1.The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the authorized number of directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Fifth Amended and Restated Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of a majority at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

Paragraph B of Article VIII of the Company’s Certificate of Incorporation be amended as follows:

B.Notwithstanding any other provisions of this Fifth Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Corporation required by law or by this Fifth Amended and Restated Certificate of Incorporation or any certificate of designation filed with respect to a series of Preferred Stock, the affirmative vote of the holders of at least a majority sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Articles V, VI, VII and VIII .

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APPENDIX B

Reconciliation of Non-GAAP Financial Measures

In this Proxy Statement, we provide Adjusted EBITDA, which is a non-GAAP financial measure that represents our net loss before interest and investment expense, net, (benefit from) provision for income taxes, depreciation and amortization, loss on extinguishment of convertible notes, change in fair value of contingent consideration and stock-based compensation. The following table reconciles GAAP net loss, the most directly comparable GAAP measure, to adjusted EBITDA for each of the periods indicated:  

 

 

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[INSERT PROXY CARD]

 

 

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