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:

 

April 28, 2021

Dear Stockholders of ContextLogic Inc.:

It is my pleasure to invite you to attend the 2021 Annual Meeting of Stockholders (“Annual Meeting” or “2021 Annual Meeting”) of ContextLogic Inc. d/b/a “Wish,” to be held on Tuesday, June 8, 2021 at 10 a.m. Pacific Daylight Time. In order to provide a safe and accessible experience to all stockholders, our Annual Meeting will be completely virtual. You may attend the virtual meeting, submit questions, and vote your shares electronically during the meeting via live webcast by visiting http://www.virtualshareholdermeeting.com/WISH2021.

Details regarding the business to be conducted at our Annual Meeting are more fully described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

We are pleased to take advantage of the Securities and Exchange Commission rules that allow us to furnish proxy materials to stockholders over the Internet. We believe that providing our proxy materials over the Internet increases the accessibility of our information to stockholders while reducing the environmental impact of our Annual Meeting. On or around April 28, 2021, we expect to mail to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access the proxy statement for our 2021 Annual Meeting of Stockholders (the “Proxy Statement”) and our 2020 Annual Report. The Notice will also provide instructions on how to vote online or by telephone, and how to receive printed proxy materials by mail.

Whether or not you plan to virtually attend our Annual Meeting, your vote is important and we encourage you to vote promptly. You may vote by proxy over the Internet or by telephone, or, if you have received printed proxy materials by mail, you can also vote by mail by following the instructions on your proxy card. If you virtually attend our Annual Meeting, you will have the right to revoke your proxy and vote electronically during the meeting via the live webcast. If you hold your shares through an account with a brokerage firm, bank, or other nominee, please follow the instructions you receive from your brokerage firm, bank, or other nominee to vote your shares.

On behalf of the Board of Directors, thank you for your continued interest and support in Wish.

Sincerely,

 

Piotr Szulczewski

Founder, Chief Executive Officer, and Chairperson

One Sansome Street, 40^th Floor

San Francisco, California 94104

www.wish.com

This Proxy Statement and proxy card are furnished in connection with the solicitation of proxies to be voted at the 2021 Annual Meeting of Stockholders (“Annual Meeting” or “2021 Annual Meeting”) of ContextLogic Inc. d/b/a “Wish” (sometimes referred to as “we,” “us,” “our,” the “Company,” “ContextLogic,” or “Wish”), which will be held virtually on Tuesday, June 8, 2021, at 10 a.m. Pacific Daylight Time via live webcast by visiting http://www.virtualshareholdermeeting.com/WISH2021.

We are making this Proxy Statement and our Annual Report available to stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. On or around April 28, 2021, we intend to mail to our stockholders: (a) a copy of this Proxy Statement, a proxy card, and our Annual Report, or (b) a notice (the “Notice”) containing instructions on how to access and review this Proxy Statement and our Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet or via telephone in advance of our Annual Meeting, and how to vote online during our Annual Meeting. If you have received a Notice and would like to receive a printed copy of our proxy materials, you should follow the instructions in the Notice for requesting those materials.

Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements for the fiscal year ended December 31, 2020, on the website of the Securities and Exchange Commission (“SEC”), at www.sec.gov, or in the “SEC Filings” section of the “Financial Information” section of our website located at www.ir.wish.com. You may also obtain a printed copy of our Annual Report on Form 10-K, which includes our financial statements, free of charge, by sending a written request to corporatesecretary@wish.com. Exhibits will be provided upon written request and payment of an appropriate processing fee.

These proxy materials are being provided because the Board of Directors (the “Board” or “Board of Directors”) of ContextLogic Inc. (“we,” “us,” “our,” the “Company,” “ContextLogic,” or “Wish”) is soliciting your proxy to vote at our 2021 Annual Meeting.

In accordance with rules adopted by the Securities and Exchange Commission (“SEC”), we may furnish our proxy materials over the Internet to our stockholders by delivering a Notice of Internet Availability of Proxy Materials (the “Notice”) in the mail instead of mailing printed copies of a full set of proxy materials. The Notice instructs you on how to access and review the Proxy Statement and Annual Report over the Internet at www.proxyvote.com. The Notice also instructs you on how to submit your proxy over the Internet and vote online at our Annual Meeting. If you would like to receive a printed copy of our proxy materials, please follow the instructions for requesting these materials contained in the Notice.

The Annual Meeting will be conducted as a virtual meeting of stockholders by means of a live webcast. We believe that hosting a virtual meeting will provide an accessible stockholder experience, cost savings to our stockholders, and support the health of our stockholders and employees given the current public health impact of the coronavirus outbreak (“COVID-19”). You can virtually attend the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/WISH2021, where you will be able to vote your shares and submit your questions during the meeting via the Internet. There will not be a physical meeting location and you will not be able to attend the Annual Meeting in person.

We invite you to virtually attend the Annual Meeting and request that you vote on the proposals described in this Proxy Statement. However, you do not need to attend the virtual meeting to vote your shares. Instead, you may vote by Internet, by telephone, or, if you have requested and received printed copies of the proxy materials by mail, you may also vote by completing and mailing in your proxy card.

The Annual Meeting starts at 10 a.m. Pacific Daylight Time. We encourage you to access the meeting website prior to the start time to allow for check in. If you encounter any difficulties with accessing the virtual meeting at any point, please call the technical support number that will be posted on the virtual meeting log-in page.

You do not need to register to virtually attend the Annual Meeting webcast. Follow the instructions on your Notice or proxy card (if you requested and received a printed copy of the proxy materials) to access the Annual Meeting.

If you wish to submit a question on the day of the Annual Meeting, you may log in to the virtual meeting platform at http://www.virtualshareholdermeeting.com/WISH2021 and submit your question through the Q&A tab. Questions pertinent to meeting matters will be answered during the Annual Meeting, subject to time constraints. Questions regarding personal matters, including those related to employment, are not pertinent to Annual Meeting matters and therefore, will not be answered.

There are four matters scheduled for a vote:

The Board of Directors recommends the following votes:

Only stockholders of record at the close of business on April 12, 2021 will be entitled to vote at the Annual Meeting. On this record date, there were 504,180,875 shares of the Company’s Class A common stock (“Class A Common Stock”) and 114,802,497 shares of the Company’s Class B common stock (“Class B Common Stock”) outstanding. Each holder of our Class A Common Stock has the right to one vote for each share of Class A Common Stock held as of the record date, and each holder of our Class B Common Stock has the right to 20 votes for each share of Class B Common Stock held as of the record date.

Registered Stockholders. If shares of our common stock are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, then you are considered the stockholder of record with respect to those shares, and the Notice was provided to you directly by us. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote electronically at the Annual Meeting. Throughout this Proxy Statement, we refer to these registered stockholders as “stockholders of record.”

Street Name Stockholders. If shares of our common stock are held on your behalf in a brokerage account or by a bank or other nominee, then you are considered to be the beneficial owner of shares that are held in “street name” or a street name stockholder and the Notice was forwarded to you by your broker or nominee, who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank, or other nominee as to how to vote your shares. Beneficial owners are also invited to attend the Annual Meeting. However, since a beneficial owner is not the stockholder of record, you may not virtually attend the Annual Meeting and vote electronically at the Annual Meeting unless you follow your broker’ s procedures for obtaining a legal proxy. If you have requested a printed copy of our proxy materials by mail, your broker, bank, or other nominee will provide a voting instruction form for you to use. Throughout this Proxy Statement, we refer to stockholders who hold their shares through a broker, bank, or other nominee as “street name stockholders.”

If on April 12, 2021, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, then you are a stockholder of record. Stockholders of record may vote by using the Internet, by telephone, or (if you have received a proxy card by mail) by mail as described below. Stockholders may also attend the virtual meeting and vote electronically. If you hold shares through a bank or broker, please refer to your proxy card, Notice, or other information forwarded by your bank or broker to see which voting options are available to you.

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted (i) “For” the election of all nine of your Board of Directors’ nominees for director, (ii) “For” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, (iii) “For” the advisory approval of our Company’s executive compensation for the year ended December 31, 2020, and (iv) “For” a frequency of the advisory vote on our Company’s executive compensation of one year, as disclosed herein. However, if you are not a record holder, and your shares are held instead through a broker, nominee, fiduciary, or other custodian, you must provide voting instructions to the record holder of the shares in accordance with the record holder’s requirements in order for your shares to be properly voted. If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

We will pay for the entire cost of soliciting proxies. In addition to these mailed 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 reimburse brokerage firms, banks, and other agents for the cost of forwarding proxy materials to beneficial owners.

If you receive more than one proxy card or Notice, your shares are registered in more than one name or are registered in different accounts. Please complete, sign, and return each proxy card, or submit a proxy for each Notice to ensure that all of your shares are voted.

If you reside at the same address as another Wish stockholder, you and other Wish stockholders residing at the same address will receive a single copy of the Notice of Availability of Proxy Materials. If you wish to receive an additional, separate copy of the Notice of Availability of Proxy Materials, please make a written request to: ContextLogic Inc., One Sansome Street, 40^th Floor, San Francisco, California 94104, Attention: General Counsel and Secretary. Upon your request, we will promptly deliver a separate copy to you. The Annual Report, Proxy Statement, and Notice are also available at www.proxyvote.com.

Yes. You can revoke your proxy at any time before the final vote at the meeting. You may revoke your proxy in any one of three ways:

Proxies may be solicited on behalf of our Board of Directors, without any additional compensation, by the Company’s directors and employees.

The original solicitation of proxies by mail may be supplemented by telephone, telegram, facsimile, electronic mail, and personal solicitation by our directors and officers (who will receive no additional compensation for such solicitation activities). You may also be solicited by advertisements in periodicals, press releases issued by us, and postings on our corporate website at www.ir.wish.com. Unless expressly indicated otherwise, information contained on our corporate website is not part of this Proxy Statement.

QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING (continued)

 

Votes will be counted by the Inspector of Election appointed for the meeting, who will separately count “For” and “Against” votes, votes “Withheld,” abstentions, and broker non-votes. Abstentions will be counted as present for purposes of determining the presence of a quorum. For Proposal 1, abstentions will not be considered as votes cast for or against any director, and will therefore have no effect on the outcome of the vote. For Proposals 2, 3, and 4, abstentions will not be considered as votes cast for or against any proposal, and will therefore have no effect on the outcome of the vote. Broker non-votes, as described in the next paragraph, have no effect and will not be counted towards the vote total for such proposals.

If your shares are held by your bank or broker as your nominee (that is, in “street name”), you will need to obtain a voting instruction form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of the New York Stock Exchange (“NYSE”) on which your broker may vote shares held in street name without your voting instructions. On non-discretionary items for which you do not give your broker instructions, the shares will be treated as broker non-votes. Under current NYSE rules, any election of a member of the Board of Directors, whether contested or uncontested, is considered “non-discretionary,” and therefore, brokers are not permitted to vote your shares held in street name for the election of directors in the absence of instructions from you. All of our proposals, except for Proposal 2, are “non-discretionary,” and therefore, if your shares are held through a broker, nominee, fiduciary, or other custodian, your shares will not be voted on those proposals unless you provide voting instructions to the record holder.

A quorum of stockholders is necessary to hold a valid meeting. A quorum exists if stockholders holding at least a majority of the voting power of the shares of Class A Common Stock and Class B Common Stock (voting together as a single class) entitled to vote are present at the Annual Meeting in person or represented by proxy.

Your shares will be counted towards the quorum only if you submit a valid proxy vote or vote at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.

QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING (continued)

 

We will count a properly executed proxy card marked “Abstain” as present for purposes of determining whether a quorum is present, but the shares represented by that proxy card will not be voted at the Annual Meeting for the proposals so marked.

Preliminary voting results will be announced at the Annual Meeting. Final voting results will be available on a Current Report on Form 8-K filed with the Securities and Exchange Commission within four business days after the end of the Annual Meeting.

If you wish to submit a proposal to be considered for inclusion in next year’s proxy materials, your proposal must follow the guidelines outlined in SEC Regulation 14A, Rule 14a-8 and received by the Secretary of the Company on or before December 29, 2021. If you wish to submit a proposal to be presented at the 2022 Annual Meeting of Stockholders, but which will not be included in the Company’s proxy materials, including to nominate a director, your Solicitation Notice, as defined in our Bylaws, must be received by the Secretary of the Company at ContextLogic Inc., One Sansome Street, 40th Floor, San Francisco, California 94104, Attention: General Counsel and Secretary, no earlier than February 8, 2022, and no later than March 10, 2022. You are advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.

Piotr Szulczewski is our Founder, and has served as our Chief Executive Officer since July 2010 and as our Chairperson of the Board since August 2020. Prior to founding the Company, Mr. Szulczewski served in various positions at Google, Inc., a technology company, including as a technical lead and senior software engineer, from April 2005 until January 2009. Mr. Szulczewski holds a B.S. in mathematics and computer science from University of Waterloo. We believe that Mr. Szulczewski is qualified to serve as a member of our Board based on the perspective and experience he brings as our Founder and Chief Executive Officer.

Rajat Bahri has served as our Chief Financial Officer since December 2016. Prior to joining the Company, Mr. Bahri served as Chief Financial Officer at Jasper Technologies, Inc., a technology company, from June 2013 until October 2016. Prior to Jasper Technologies, Mr. Bahri spent over eight years as Chief Financial Officer of Trimble Navigation, a publicly traded company. Mr. Bahri began his career at Kraft Foods Inc., where he spent 18 years in various positions, including Chief Financial Officer of Kraft Canada, Inc. and Kraft Pizza Company. Since July 2020, Mr. Bahri has served on the Board of Directors of Pacific Gas and Electric Company. Mr. Bahri holds a Bachelor in Commerce from the University of Delhi and an M.B.A. from the Fuqua School of Business at Duke University.

Devang Shah has served as our General Counsel since February 2018 and Secretary since November 2020. From August 2010 until April 2017, Mr. Shah served in various positions at Zynga Inc., a game development company, most recently as General Counsel, Secretary, and Senior Vice President. Prior to Zynga, Mr. Shah served as General Counsel and Associate General Counsel at UTStarcom, a telecommunications company; Senior Corporate Counsel at Longs Drugs Inc.; and Corporate Counsel at Chiron Corporation, a biotechnology company. Mr. Shah began his career as an attorney at Skadden Arps Slate Meagher & Flom, LLP. Mr. Shah holds a B.S. in engineering from Cornell University, an M.S. in engineering from Stanford University, and a J.D. from the University of California, Berkeley School of Law.

Thomas Chuang has served as our Vice President of Operations since December 2019, and prior to that, has served as our Head of Finance then Vice President of Finance beginning in June 2014. Prior to joining the Company, Mr. Chuang was a senior analyst at GGV Capital, a venture capital firm, and began his career at PricewaterhouseCoopers. Mr. Chuang holds a B.S. in Business Administration from the University of California, Santa Cruz and an M.B.A. from the Walter A. Haas School of Business at the University of California, Berkeley.

Pai Liu has served as our Vice President of Data Science since August 2020. He has previously served as Director of Data Science since September 2019. Prior to joining the Company, Mr. Liu served as Data Science Manager at Airbnb, an online rental company, from August 2015 until August 2017, and Data Science Lead until September 2019. Earlier in his career, Mr. Liu was a research scientist at PARC, a Xerox company. Mr. Liu holds a Bachelor’s degree from Tsinghua University, a Masters in Computer Science from the University of Southern California, and a Ph.D. in Industrial and System Engineering from the University of Southern California.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

(continued)

 

Julie Bradley has served on our Board of Directors since October 2020. Ms. Bradley was previously the Chief Financial Officer of TripAdvisor, Inc., a publicly traded online travel planning site, from October 2011 to November 2015. Prior to joining TripAdvisor, Ms. Bradley also served as the Chief Financial Officer of Art Technology Group, Inc., a publicly traded ecommerce software company; as Vice President of Finance for Akamai Technologies, Inc., a publicly traded delivery network, cybersecurity, and cloud service company, from 2000 to 2005; and as an accountant at Deloitte & Touche LLP. Ms. Bradley has served on the board of directors of Wayfair Inc., a publicly traded company, since September 2012, where she is the chair of the audit committee and a member of the governance committee, and GoodRx, a publicly traded company, since September 2020, where she is the chair of the audit committee, and previously served on the boards of other publicly traded companies, which include Blue Apron, Inc. from September 2015 to October 2020, Constant Contact, Inc. from June 2015 to February 2016, and ExactTarget, Inc. from September 2012 to July 2013. Ms. Bradley holds a B.A. from Wheaton College. We believe that Ms. Bradley is qualified to serve as member of our Board due to her extensive public company board experience and her finance experience at publicly traded technology companies.

Ari Emanuel has served on our Board of Directors since November 2019. Mr. Emanuel has served as the CEO of Endeavor Group Holdings, a talent agency, since 2009 following the merger of the William Morris Agency and Endeavor Talent Agency, which he founded in 1995. Prior to founding Endeavor, Mr. Emanuel was a Partner at InterTalent, a talent agency, and a senior agent at ICM Partners, also a talent agency. He began his entertainment industry career at Creative Artists Agency (CAA), a talent agency. He has served as a member of the board of directors of Live Nation Entertainment, Inc. since 2007. Mr. Emanuel holds a bachelor’s degree from Macalester College. We believe that Mr. Emanuel is qualified to serve as a member of our Board due to his extensive leadership experience.

Joe Lonsdale has served on our Board of Directors since May 2012. Mr. Lonsdale is a partner at 8VC, a venture capital firm that he founded in 2015. Previously, he co-founded Palantir Technologies, a global software company known for its work in defense and finance; Addepar, an investment management technology company; and OpenGov, a software company that offers solutions for the public sector. He was a founding partner at Formation8, a venture capital firm with a presence in the U.S. and Asia, and he served as a Principal at Clarium Capital. Mr. Lonsdale holds a B.S. in Computer Science from Stanford University. We believe that Mr. Lonsdale is qualified to serve as a member of our Board due to his extensive experience with technology companies.

Tanzeen Syed has served on our Board of Directors since October 2016 and as Lead Independent Director since our initial public offering in December 2020. Mr. Syed is a Managing Director at General Atlantic and focuses on investments in General Atlantic’s Technology sector. He rejoined General Atlantic in June 2018 after working there from 2006 to September 2013. Prior to rejoining General Atlantic, Mr. Syed was a Director at Temasek, an investment company, from July 2015 until June 2018, where he led U.S. technology growth investments. Prior to Temasek, Mr. Syed was a Vice President at Great Hill Partners from October 2013 to June 2015, where he focused on Internet and software growth investing. Mr. Syed currently serves on the boards of directors of Kiwi.com, s.r.o., an online travel booking platform; and Riskified Ltd., a payment fraud management solution for online merchants, marketplaces, e-travel retailers, digital goods, and services providers; both of which are private portfolio companies of General Atlantic. Mr. Syed holds a B.A. in Economics and Political Science from Macalester College. We believe that Mr. Syed is qualified to serve as a member of our Board due to his extensive experience with ecommerce and technology companies.

Stephanie Tilenius has served on our Board of Directors since August 2020. She is currently the CEO of Vida Health, Inc., a mobile continuous healthcare platform, which she founded in January 2014. Ms. Tilenius was an Executive in Residence at Kleiner Perkins Caufield & Byers, a venture capital firm, from June 2012 until October 2014, primarily focusing on companies within its Digital Growth Fund. From February 2010 until June 2012, Ms. Tilenius was Vice President of Global Commerce and Payments at Google, Inc., a technology company, where she oversaw digital commerce, product search, and payments. Prior to joining Google, she served in various positions at eBay Inc. from March 2001 until October 2009, ultimately as Senior Vice President of eBay.com and Global Products. Ms. Tilenius was also a co-founder of PlanetRx.com, an online healthcare provider. She currently serves on the board of directors of SeaGate Technology PLC and Tradesy, a privately-held ecommerce company focused on women’s fashion, and within the past five years, served on the board of directors of Coach Inc. and Redbubble Limited. Ms. Tilenius holds a B.A. and an M.A from Brandeis University and an M.B.A. from the Harvard Business School. We believe that Ms. Tilenius is qualified to serve as a member of our Board due to her senior executive experience in the consumer Internet and ecommerce sectors, as a company founder and as a board member for other public and private companies.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

(continued)

 

Hans Tung has served on our Board of Directors since January 2014. Mr. Tung is a Managing Partner at GGV Capital, a venture capital firm, where he has worked since October 2013, in Menlo Park, California. Prior to joining GGV, Mr. Tung was a managing partner at Qiming Venture Partners, a venture capital firm, in Shanghai, China. Mr. Tung began his VC career with Bessemer Venture Partners, a venture capital firm, in Menlo Park, California, and was a former entrepreneur himself and a former technology banker at Merrill Lynch in New York and Hong Kong. Mr. Tung has served on the board of directors of companies including musical.ly, Poshmark (Nasdaq: POSH), StockX, Misfit, Xiaomi, eHi Car Service, Vedantu, and Rupeek. He holds a B.S. in Management Science and Engineering from Stanford University. We believe that Mr. Tung is qualified to serve as a member of our Board due to his extensive experience with ecommerce companies, as well as his experience as a venture capitalist investing in technology companies.

Jacqueline Reses has served on our Board of Directors since December 2020. Ms. Reses previously served as Executive Chairman of Square Financial Services LLC and Capital Lead at Square, Inc., a publicly traded financial services company which provides payments, point of sale, and cashflow management services to small businesses and consumers, from October 2015 until October 2020. From February 2016 to July 2018, Ms. Reses also served as People Lead for Square, Inc. From September 2012 to October 2015, Ms. Reses served as Chief Development Officer of Yahoo! Inc. In this role, she focused on leading partnerships, acquisitions and investments, significant corporate tax transactions, as well as human resources. Prior to Yahoo, Ms. Reses led the U.S. media group as a Partner at Apax Partners Worldwide LLP, a global private equity firm, which she joined in 2001. Ms. Reses serves on the board of directors of Pershing Square Tontine Holdings, Ltd., and Affirm Inc. Ms. Reses is also the chair of the Economic Advisory Council of the Federal Reserve Bank of San Francisco. Ms. Reses previously served on the board of directors of Social Capital Hedosophia Holdings Corp. III, Alibaba Group Holding Limited, and Social Capital Hedosophia Holding Corp. Ms. Reses holds a B.S. in Economics with honors from the Wharton School of the University of Pennsylvania. We believe that Ms. Reses is qualified to serve as member of our Board due to her public company board experience and her experience in various strategic and finance roles at publicly traded finance, ecommerce, and technology companies.

As required under the listing standards of the Nasdaq Select Global Market (“Nasdaq”), a majority of the members of a listed company’s Board of Directors must be independent within 12 months following the closing of an initial public offering. Management and outside counsel have reviewed the directors’ responses to a questionnaire asking about their transactions, relationships, and arrangements with the Company (and those of their immediate family members), and other potential conflicts of interest. Other than as set forth in this Proxy Statement, these questionnaires did not disclose any transactions, relationships, or arrangements that question or compromise the independence of our directors or director nominees. After reviewing this information, our Board of Directors affirmatively determined that each of our non-employee directors was an independent director within the meaning of the applicable Nasdaq listing standards in 2020. The independent members of our Board of Directors will hold separate regularly scheduled executive session meetings at which only independent directors are present.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

(continued)

 

As required under Nasdaq listing standards, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. Our initial public offering closed in December 2020 and we did not hold any Board meetings in 2020 after our initial public offering. After our initial public offering, our Board of Directors had an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The following table provides membership information for each Board committee as of December 31, 2020:

Below is a description of each Committee of the Board of Directors. The Board of Directors has determined that each member of the Audit, Compensation, and Nominating and Corporate Governance Committees meets the applicable rules and regulations regarding “independence” and also that each member of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee is free of any relationship that would interfere with his or her individual exercise of independent judgment with regard to Company matters.

The members of our Audit Committee are Mses. Bradley and Tilenius, and Mr. Tung, each of whom can read and understand fundamental financial statements. Each is each independent under the rules and regulations of the SEC and the listing standards of Nasdaq applicable to audit committee members. Ms. Bradley chairs the Audit Committee. Our Board of Directors has determined that Mses. Bradley and Tilenius each qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of Nasdaq.

Our Audit Committee assists our Board of Directors’ oversight of the quality and integrity of our financial statements; our compliance with legal and regulatory requirements; the qualifications, independence, and performance of our independent registered public accounting firm; the effectiveness of our internal controls over financial reporting; and risk assessment and risk management. Among other matters, our Audit Committee’s responsibilities include:

Our Audit Committee charter can be found on the “Corporate Governance” section of our corporate website at www.ir.wish.com. Each of Mses. Bradley and Tilenius, and Mr. Tung served on the Audit Committee during 2020. The Audit Committee, which was formed in connection with our initial public offering in December 2020, met once during 2020.

The members of our Compensation Committee are Messrs. Lonsdale, Syed, and Tung, and Ms. Reses. Mr. Syed chairs the Compensation Committee. Each member of our Compensation Committee is: (i) independent under the rules and regulations of the SEC and the listing standards of Nasdaq applicable to Compensation Committee members; (ii) a “non-employee director,” as defined in Rule 16b-3 adopted under Section 16 of the Exchange Act; and (iii) an “outside director” under Regulation Section 1.162-27 adopted under Section 162(m) of the Code of 1986, as amended. Our Compensation Committee assists the Board of Directors with its oversight of the compensation of executive officers and directors, and administers compensation and incentive plans for employees and other service providers, including our equity incentive plans and employee stock purchase plan. Among other matters, our Compensation Committee’s responsibilities include:

Our Compensation Committee charter can be found on the “Corporate Governance” section of our corporate website at www.ir.wish.com. Each of Messrs. Lonsdale, Syed, and Tung, and Ms. Reses served on the Compensation Committee during 2020.

The Compensation Committee met two times during 2020. Mr. Szulczewski, our principal executive officer, does not participate in the determination of his own compensation or the compensation of directors. However, Mr. Szulczewski makes recommendations to the Compensation Committee regarding the amount and form of the compensation of the other executive officers and key employees, and Mr. Szulczewski participates in the Compensation Committee’s deliberations about their compensation. Mr. Bahri, our Chief Financial Officer, also assists the Compensation Committee in its executive officer, director, and employee compensation deliberations. No other executive officers participate in the determination of the amount or form of the compensation of executive officers or directors.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

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The members of our Nominating and Corporate Governance Committee are Messrs. Emanuel and Syed, and Ms. Tilenius. Mr. Syed chairs the Nominating and Corporate Governance Committee. Each member of our Nominating and Corporate Governance Committee is independent as currently defined under Nasdaq listing standards. Our Nominating and Corporate Governance Committee assists our Board of Directors with its oversight of and identification of individuals qualified to become members of our Board, consistent with criteria approved by our Board, and selects, or recommends that our Board selects, director nominees, develops and recommends to our Board a set of corporate governance guidelines, and oversees the evaluation of our Board. Among other matters, our Nominating and Corporate Governance Committee’s responsibilities include:

Our Nominating and Corporate Governance Committee charter can be found on the “Corporate Governance” section of our corporate website at www.ir.wish.com. Each of Messrs. Emanuel and Syed, and Ms. Tilenius served on our Nominating and Corporate Governance Committee during 2020. Our Nominating and Corporate Governance Committee, which was formed in connection with our initial public offering in December 2020, did not meet in 2020.

Our Nominating and Corporate Governance Committee believes that the minimum qualifications and skills that candidates for director should possess include: (i) the highest professional and personal ethics and values, (ii) a commitment to enhancing stockholder value, and (iii) sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. The Committee also considers the following factors, in no particular order of importance: (i) various and relevant career experience, (ii) relevant skills, such as an understanding of the Company’s business and technology, (iii) financial expertise, (iv) diversity, and (v) local and community ties. Notwithstanding the foregoing, our Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time.

Under our Corporate Governance Guidelines, diversity is one of several critical factors considered by the Nominating and Corporate Governance Committee when evaluating the composition of our Board of Directors, amongst other selection criteria. We consider various diversity factors when considering director candidates, including race, ethnicity, gender, age, professional experience, national origin, and geography. Our Board of Directors currently includes directors embodying a range of diversity. We believe each director contributes to our Board’s overall diversity by providing a variety of perspectives based on distinct personal and professional experiences and backgrounds. We are committed to maintaining and enhancing the diversity of our Board of Directors and in furtherance of this, the Nominating and Corporate Governance Committee will conduct annual self-evaluations to assess its performance and effectiveness, which we expect will include its consideration of diversity and other selection criteria.

Our Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders and evaluate them using the same criteria as candidates identified by our Board or the Committee for consideration. If a stockholder of the Company wishes to recommend a director candidate for consideration by our Nominating and Corporate Governance Committee, the stockholder recommendation should be delivered to the Secretary of the Company at the principal executive offices of the Company, and must include information regarding the candidate and the stockholder making the recommendation.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

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Each of Messrs. Lonsdale, Syed, and Tung, and Ms. Reses served on our Compensation Committee during 2020. None of the members of our Compensation Committee has at any time during the 2020 fiscal year (or at any other time) served as an officer or employee of the Company. None of our executive officers serves 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 of Directors or Compensation Committee.

Our Board of Directors represents our stockholders and the Board’s primary purpose is to build long-term stockholder value. Our Board has combined the roles of Chairperson and Chief Executive Officer, held by Piotr Szulczewski. Our Board has determined that we would be best served by having a Chairperson with deep operational and strategic knowledge of our business. Our Board has also appointed Mr. Syed as our Lead Independent Director. Our Board has determined that we would be best served by also having a lead independent director to be responsible for conducting sessions with the independent directors as part of every Board of Directors meeting, calling special meetings of the independent directors, and chairing all meetings of the independent directors. The guidance and direction provided by our Lead Independent Director reinforces the Board’s independent oversight of management and improves communication among Board members.

Our Board of Directors provides risk oversight for the Company by receiving management presentations, including risk assessments, from all functional areas of the Company, and discussing these assessments with management. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure. Our executive officers are responsible for the day-to-day management of the material risks we face. The risk oversight process includes receiving regular reports from Board committees and members of senior management to enable our Board of Directors to understand our risk identification, risk management, and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, cyber security, strategic, and reputational risk. Our Board of Directors administers its oversight function directly as a whole, as well as through various standing committees of our Board of Directors that address risks inherent in their respective areas of oversight. Our Board of Directors has delegated responsibility related to certain risks to the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. The Audit Committee discusses with management and our independent registered public accounting firm our risk management guidelines and policies, our major financial risk exposures, and the steps taken to monitor and control such exposures. The Nominating and Corporate Governance Committee has primary responsibility to oversee risks related to Board structure and composition, and corporate governance.

Our Compensation Committee oversees risks related to our compensation programs, and discusses with management its annual assessment of employee compensation policies and programs. Based upon this review, our Compensation Committee believes that any risks arising from such policies and practices are not reasonably likely to have a material adverse effect on the Company in the future. Specifically, we believe that the elements of our compensation program do not encourage unnecessary or excessive risk taking. Base salaries are fixed in amount, and thus, do not encourage risk taking. A significant proportion of the compensation provided to our executives, and a material amount of the compensation provided to other employees, is in the form of long-term equity awards that are important to help further align employee interests with those of our stockholders. We do not believe that these awards encourage unnecessary or excessive risk taking because the ultimate value of the awards is tied to our stock price, and because awards are subject to long-term vesting schedules to help ensure that employees have significant value tied to long-term stock price performance.

Stockholders wishing to communicate with our Board of Directors or with an individual member of our Board of Directors may do so by writing to our Board of Directors or to the particular member of our Board of Directors, care of the General Counsel and Secretary by mail to our principal executive offices, Attention: General Counsel and Secretary. The front of the envelope should indicate that it contains stockholder communication. All clearly marked written communications, other than unsolicited advertising or promotional materials, are

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

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logged and copied, and forwarded to the director(s) to whom the communication was addressed. Please note that the foregoing communication procedure does not apply to: (i) stockholder proposals pursuant to Exchange Act Rule 14a-8 and communications made in connection with such proposals, or (ii) service of process or any other notice in a legal proceeding.

Our Board of Directors met 7 times during 2020. Each member of our Board of Directors attended 100% or more of the aggregate of the meetings of our Board of Directors and of the Committees on which he or she served, held during the period for which such member was a Director or Committee Member. Members of our Board of Directors and its Committees also consulted informally with management from time to time and acted at various times by written consent without a meeting during 2020. While we do not have a formal policy regarding attendance by members of our Board of Directors at our annual meetings of stockholders, all directors are encouraged to attend our 2021 Annual Meeting of Stockholders.

Our Board of Directors has adopted a Code of Conduct and Ethics, which applies to all of our employees, officers, and directors. We also expect our contractors, consultants, suppliers, agents, and other third parties to follow our Code of Conduct and Ethics in connection with their work for us. The full text of our Code of Conduct and Ethics is posted on the “Corporate Governance” section of our corporate website at www.ir.wish.com. We intend to disclose future amendments to, or waivers, of our Code of Conduct and Ethics as and to the extent required by SEC regulations, at the same location on our website identified above and in public filings. Our Code of Conduct and Ethics represents our commitment to business integrity. The purpose of our Code of Conduct and Ethics is to promote compliance with applicable laws, regulations, and company policies; address common ethical situations we could encounter in our business; promote integrity and the highest standards of ethical conduct; and avoid even the appearance of anything improper in connection with our business activities.

EXECUTIVE COMPENSATION (continued)

 

of short-term incentive to our named executive officers. We expect our named executive officers to perform at a level deserving of a bonus, however, and have taken this into consideration along with our ongoing corporate financial performance in establishing their current total direct compensation opportunities.

Our Compensation Committee evaluates our compensation practices on an ongoing basis to determine whether they are appropriate to hire, retain, and reward outstanding performers. Such evaluations, along with our ongoing outreach with key company investors, may result in refinements to the compensation program, including changes in how compensation is determined and awarded.

During 2020, our CEO, our Board of Directors, and our Compensation Committee were involved in determining the compensation of our named executive officers.

Prior to our initial public offering in December 2020, our Compensation Committee was comprised of three independent directors who were delegated responsibility for overseeing our executive compensation program, with specific authority to review and recommend to our Board of Directors the compensation payable to our CEO and executive vice presidents, including the adjustment of base salaries each year and all bonus and other incentive compensation programs for such executives.

Going forward, the Compensation Committee will be responsible for our executive compensation program, including establishing our executive compensation philosophy, policies, and practices, and determining the specific compensation, including cash and equity, for our named executive officers. The members of the Compensation Committee periodically discuss our overall executive compensation philosophy and review quantitative competitive market compensation perspectives (with the assistance of its external consultants and advisors) along with applicable qualitative factors relevant to compensation-decision making including company and executive performance. We expect that the Compensation Committee will continue to review, evaluate, and modify the executive compensation framework as a result of our becoming a publicly-traded company. Consequently, our compensation program may, over time, vary from our historical practices.

Our Compensation Committee has the authority to engage the services of outside consultants and advisors to assist it in making decisions regarding our executive compensation program. Compensia, a national compensation consulting firm, was originally retained by us to provide executive compensation advisory services in May 2019, and was subsequently retained by our Compensation Committee in August 2020. The advisory services Compensia provides to the Compensation Committee include the following:

Our Compensation Committee has assessed the independence of Compensia pursuant to SEC rules and Nasdaq listing standards, and concluded that no conflict of interest exists that would prevent Compensia from independently representing it.

To assist our Compensation Committee in evaluating the different components of compensation to be paid to our named executive officers, our Compensation Committee relies on compensation data from a group of peer companies developed with the assistance of Compensia. In July 2020, our Compensation Committee determined the companies that would constitute our peer group for compensation decisions in the second half of 2020 in connection with our initial public offering. Compensia identified potential peer companies using the following criteria:

Based on this criteria, our Compensation Committee approved the following companies for the peer group:

In 2020, we used cash and equity compensation to provide an overall competitive total compensation and benefits package to our named executive officers that is tied to creating value, commensurate with our results, and aligns with our business strategy. Set forth below are the key elements of the compensation program for our named executive officers for 2020.

As part of the Company’s annual review process and in conjunction with our initial public offering, our Compensation Committee reviewed the base salaries of our named executive officers in August 2020 based on an analysis prepared by Compensia, taking into account relative data from our peers, and a review of each individual’s performance, criticality, tenure, and review of peer compensation data. Our Compensation Committee recommended to our Board of Directors that the base salaries of Messrs. Bahri, Shah, and Chuang be increased, effective as of September 1, 2020 as set forth below in order to align their base salaries with the 50th percentile of the executives at the companies in our peer group with similar roles. Our Compensation Committee did not adjust the base salaries for Messrs. Szulczewski and Liu based primarily on a review of their competitiveness relative to peer executives in similar roles.

The base salaries of our named executive officers during fiscal 2020, including the increased salaries to reflect the September 1, 2020 adjustment, were as follows:

In 2020, we used RSU awards as the principal component of our executive compensation program. Consistent with our compensation objectives, we believe this approach aligned our named executive officers’ contributions with our long-term interests and allowed our named executive officers to be accountable for and participate in any future appreciation in our common stock. Prior to our initial public offering, our RSU awards generally included both a multi-year service-based vesting requirement (generally four years) and a liquidity

EXECUTIVE COMPENSATION (continued)

 

event vesting requirement (that is, the effectiveness of either a sale event or an initial public offering) (the “Liquidity Event”), allowing them to serve as an effective retention tool while also motivating our named executive officers to work toward corporate objectives that provide a meaningful return to our stockholders.

In granting equity awards, our Board of Directors generally considers, among other things, the named executive officer’s cash compensation, the need to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value, our financial results, our total annual equity budget, an evaluation of the expected and actual performance of each named executive officer, his individual contributions and responsibilities, the retention hold of his existing equity awards and how that lapses over time as awards vest, and the recommendations of our CEO (except with respect to his own equity award) which take into account peer market data from Compensia and internal pay parity considerations.

As part of our annual performance review cycle and in conjunction with our initial public offering, our Compensation Committee reviewed the factors described above and determined to recommend to our Board of Directors that our named executive officers other than Mr. Szulczewski be granted RSU awards.

The RSU awards granted to our named executive officers other than Mr. Szulczewski were in the following amounts:

These annual “refresh” awards vest (i) monthly over a four-year period, contingent upon the named executive officer remaining continuously employed by us through each applicable vesting date and (ii) subject to the occurrence of a Liquidity Event. Our initial public offering in December 2020 resulted in the satisfaction of the Liquidity Event requirement for the RSUs granted in September 2020 to our named executive officers.

Information with respect to the potential accelerated vesting applied to the equity awards held by certain of our named executive officers in the event of a change of control of our Company or the termination of the named executive officer’s services in connection with or following a change of control of our company is discussed under “Potential Payments upon Termination or Change in Control” below.

In December 2020, in conjunction with our initial public offering, Mr. Szulczewski was granted an award of RSUs under our 2010 Stock Plan covering 10,021,500 shares of our Class B common stock (the “CEO Performance Award”). The CEO Performance Award is intended to provide retention, incentive and stockholder alignment objectives for Mr. Szulczewski and only is earned and vests if he satisfies a service-based vesting condition and we achieve certain rigorous stock price targets over a period of up to seven years following our initial public offering. Our Board of Directors and our Compensation Committee both believed at the time of grant of the CEO Performance Award that the stock price targets represented challenging hurdles and, if achieved, would result in a significant return to our stockholders in excess of market norms for comparable technology companies.

The CEO Performance Award is eligible to vest based on our stock price performance over a performance period beginning six months after the effective date of our initial public offering and ending on the seventh anniversary thereof. The award is divided into five tranches that are eligible to vest based on the achievement of stock price targets (each referred to as a “Company Stock Price Target”) measured based on the 60-trading day trailing average per-share closing price of our Class A common stock on the Nasdaq Global Select Market during the performance period, as set forth below. The Company Stock Price Targets are expressed as a percentage increase above $23 per share (such price, the “Base Price” of the award).

In order for any of these RSUs to be earned and vest, and except as described below in connection with certain change in control transactions, Mr. Szulczewski must remain employed as our CEO through at least the second anniversary of our initial public offering and thereafter he must continue to serve as our CEO as of each applicable Company Stock Price Target achievement date. If our Class A common stock price fails to reach a Company Stock Price Target during the performance period, that portion of the CEO Performance Award will not vest (except as described below).

Under the terms of the CEO Performance Award, certain of the Company Stock Price Targets may also be achieved in connection with a change in control of our company, such that Mr. Szulczewski could earn and vest in up to all of the RSUs. In connection with a change in control (as defined in the applicable award agreement for the CEO Performance Award) that occurs within the first two years after our initial public offering and subject to Mr. Szulczewski continuing to serve as our CEO through immediately prior to the change in control, he could earn and vest in 50% of the otherwise un-earned portion of the RSUs if the per share value of our Class A common stock in the transaction (the “deal price”) is at least equal to the Tranche 1 Company Stock Price Target, and he could earn and vest in all the RSUs if the deal price is at least equal to the Tranche 2 Company Stock Price Target, except if he incurs an involuntary termination of employment (as such term is defined in the CEO Performance Award agreement) after the change in control and prior to the second anniversary of our initial public offering, then 100% of the RSUs that he would have otherwise been entitled to earn if he had continued to serve as our CEO through the second anniversary of our initial public offering will immediately vest, subject to his compliance with the terms of his severance and change in control agreement with us. Thereafter, he could earn and vest in all the RSUs on a change in control occurring after the second anniversary and on or prior to the fourth anniversary of our initial public offering if the deal price is at least equal to the Tranche 2 Company Stock Price Target and on a change in control occurring after the fourth anniversary of our initial public offering if the deal price is above the Tranche 4 Company Stock Price Target, in each case, subject to him continuing to serve as our CEO through immediately prior to the change in control.

Our named executive officers are eligible to participate in the same employee benefit plans, and on the same terms and conditions, as all other full-time, salaried U.S. employees. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, and commuter benefits.

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.

We maintain a Section 401(k) plan for our employees, including our named executive officers. The Section 401(k) plan is intended to qualify under Section 401(k) of the Code, so that contributions to the plan by employees or by us, and the investment earnings thereon, are not taxable to the employees until withdrawn, and so that contributions made by us, if any, will be deductible by us when made. Currently, we do not provide company matching contributions to participants in the Section 401(k) plan.

We do not provide pension arrangements for our named executive officers or other employees, nor do we provide any nonqualified defined contribution or other deferred compensation plans to any of our employees.

EXECUTIVE COMPENSATION (continued)

 

Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our named executive officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2020, none of our named executive officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more for each individual.

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

We have entered into written employment offer letters with each of our named executive officers. We believe that these arrangements were necessary to secure the service of these individuals in a highly competitive job market.

Each of these employment offer letters does not have a specific term, provides for “at will” employment (meaning that either we or the named executive officer may terminate the employment relationship at any time without cause) and generally sets forth the named executive officer’s initial base salary, eligibility to participate in our standard employee benefit plans and programs, and includes a recommendation for an equity award to be approved by our Board of Directors. In addition, each of these employment offer letters required the named executive officer to execute our standard Proprietary (Confidential) Information and Inventions Agreement.

Our named executive officers are also eligible for certain severance and change in control-related acceleration benefits pursuant to either their offer letters or severance and change in control agreements, as described further in “Potential Payments upon Termination or Change in Control” below.

As a general matter, we review and consider the various tax and accounting implications of the compensation vehicles that we use.

In approving the amount and form of compensation for our named executive officers, our Board of Directors will consider all elements of our cost of providing such compensation, including the potential impact of Section 162(m) of the Internal Revenue Code.

Our Board of Directors believes that our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some portion may result in non-deductible compensation expense. Thus, we expect that in future years, some portion of the compensation of our named executive officers may not be fully deductible by us for federal income tax purposes.

We follow FASB ASC Topic 718, Compensation—Stock Compensation, for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payments made to our employees and the members of our Board of Directors, including options to purchase shares of our common stock and other stock-based awards, based on the grant date “fair value” of these awards. This calculation is performed for financial accounting purposes and reported in the compensation tables below, even though recipients may never realize any value from their awards. FASB ASC Topic 718 also requires us to recognize the compensation cost of our share-based compensation awards in our income statements over the period that a recipient is required to render services in exchange for the option or other award.

We believe that the structure of our executive compensation program provides a mix of cash and equity compensation that balances short- and long-term incentives. We believe that the different time horizons and metrics used in the annual and long-term elements of compensation provide incentives to build our business prudently and profitably over time, while encouraging retention of our top talent. In addition, each element of compensation has been designed and is administered in a manner intended to minimize potential risks to us. The result is a program that we believe mitigates inappropriate risk taking and aligns the interests of our executive officers with those of our stockholders. Moreover, we have determined that any risks arising from our compensation policies and practices for all of our employees are not reasonably likely to have a material adverse effect on us.

EXECUTIVE COMPENSATION (continued)

 

The following table provides information regarding outstanding equity awards held by our named executive officers as of December 31, 2020, including the number of shares subject to each award and, where applicable, the exercise price per share.

The vesting schedule applicable to each outstanding award is described in the footnotes to the table below.

Additionally, the following table does not include RSUs that vested on our initial public offering in December 2020 or based on service prior to December 31, 2020, but were later settled in February 2021.

EXECUTIVE COMPENSATION (continued)

 

We do not have any defined benefit pension plans.

We do not offer any nonqualified deferred compensation plans.

EXECUTIVE COMPENSATION (continued)

 

We do not have employment agreements with our named executive officers. Pursuant to the terms of his employment offer letter and his RSU agreements, Mr. Bahri is eligible to receive 100% accelerated vesting of his outstanding RSU awards if we are subject to a sale event while he is providing services to us. Pursuant to the terms of his employment offer letter and his RSU agreements, Mr. Shah is eligible to receive 50% accelerated vesting of any then unvested RSUs if we are subject to a sale event while he is providing services to us and he is terminated without cause or resigns for good reason within 12 months following the sale event.

In November 2020, we entered into severance and change in control agreements with each of our named executive officers that became effective upon the completion of our initial public offering. These agreements have a three-year term and, with the exception of Mr. Bahri as it relates to his existing RSU awards, superseded any acceleration provisions in the officers’ offer letters.

Termination Not in Connection with a Change in Control. Pursuant to his severance and change in control agreement, if Mr. Szulczewski’s employment is terminated by us without cause or he resigns for good reason, he is eligible to receive a lump sum cash payment equal to 12 months of his base salary and an additional lump sum cash payment equal to 12 months of his benefit premiums. If the employment of Mr. Bahri or Mr. Shah is terminated by us without cause or such officer resigns for good reason, such officer is eligible to receive a lump sum cash payment equal to six months of his base salary, an additional lump sum cash payment equal to six months of his benefit premiums, and 12 months accelerated vesting of his time-based equity awards. If the employment of one of our other named executive officers is terminated by us without cause, the officer will be eligible to receive a lump sum cash payment equal to six months of his base salary and an additional lump sum cash payment equal to six months of his benefit premiums.

Termination in Connection with a Change in Control. Pursuant to his severance and change in control agreement, if Mr. Szulczewski’s employment is terminated by us without cause or he resigns for good reason, in either case within three months prior to or 12 months after a change in control, he is eligible to receive a lump sum cash payment equal to 18 months of his base salary, an additional lump sum cash payment equal to 18 months of his benefit premiums, and full acceleration of his time-based equity awards. If the employment of one of our other named executive officers is terminated by us without cause or he resigns for good reason, in either case within three months prior to or 12 months after a change in control, the officer will be eligible to receive a lump sum cash payment equal to 12 months of his base salary, an additional lump sum cash payment equal to 12 months of his benefit premiums, and full acceleration of his time-based equity awards.

For purposes of the severance and change in control agreements, the terms “cause,” “change in control,” and “good reason” have the following meanings:

“Cause” means an officer’s willful and intentional unauthorized use or disclosure of our confidential information or trade secrets which causes material harm, material breach of any agreement with us, material failure to comply with our written policies or rules, conviction of a felony, gross negligence or willful misconduct, continuing failure to perform assigned duties (other than as a result of a disability) or failure to cooperate in good faith with a governmental or internal investigation.

“Good Reason” means a material diminution in the nature or scope of the officer’s responsibilities, authority, powers, functions or duties, a material reduction in the officer’s base salary, or a requirement that the officer relocate more than 50 miles.

“Change in Control” means any person (other than Piotr Szulczewski) acquires ownership of more than 50% of our voting stock, a sale of all or substantially all of our assets, consummation of a merger of the Company with or into another entity if our capital stock represents less than 50% of the voting power of the surviving entity or its parent, or certain changes in the composition of our Board of Directors.

DIRECTOR COMPENSATION (continued)

 

directors who are elected or appointed to our Board other than on the date of a regular annual meeting of our stockholders will be eligible to receive the applicable pro-rated annual equity retainers on the date the non-employee director is elected or appointed to our Board, which will be subject to the same vesting requirements as the annual equity retainers granted to our non-employee directors at the annual meeting of our stockholders.

Non-employee directors will not receive any cash compensation for service on our Board. However, we will continue to reimburse our non-employee directors for their reasonable expenses incurred in connection with attending Board and Committee meetings. Additionally, the equity awards described above will vest in full in the event of a “change in control” (as defined in our 2020 Plan).

We have two equity compensation plans under which shares of Common Stock are authorized for issuance to eligible employees, directors, and consultants: (i) the 2010 Stock Plan (“2010 Plan”); and (ii) the 2020 Plan. The following table provides certain information with respect to each of our equity compensation plans in effect as of December 31, 2020:

In November 2020, our Board of Directors approved the 2020 Plan and in 2010 our stockholders approved the 2010 Plan. The 2020 Plan became effective on November 19, 2020 upon the completion of our initial public offering. The 2020 Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted shares of our common stock, restricted stock units, and performance cash awards. The number of shares reserved for issuance under our 2020 Plan will be increased automatically on the first business day of each of our fiscal years, commencing in 2022 and ending in 2030, by a number equal to the lesser of: (a) 5% of the shares of common stock outstanding on the last business day of the prior fiscal year; or (b) the number of shares determined by our Board of Directors. As of December 31, 2020, RSUs covering approximately 111,110 shares of common stock were outstanding under the 2020 Plan.

The 2010 Plan was terminated following the completion of our initial public offering, and no further awards will be made under that plan. Options and RSUs outstanding under the 2010 Plan will continue to be governed by their existing terms. As of December 31, 2020, options to purchase 74,743,650 shares of common stock, RSUs covering 20,149,876 shares of common stock and CEO Performance Award covering 10,021,500 shares of common stock were outstanding under the 2010 Plan. In addition, there were 29,690,737 RSUs which vested upon satisfying both the service and liquidity vesting conditions for the year ended December 31, 2020. The shares remained unreleased as of December 31, 2020 due to the lock up provisions related to our IPO.

 

All fees described above were pre-approved by the Audit Committee.

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services rendered by Ernst & Young LLP, our independent registered public accounting firm. The Audit Committee pre- approves specified services in defined categories of audit services, audit-related services, and tax services up to specified amounts, as part of the Audit Committee’s approval of the scope of the engagement of Ernst & Young LLP or on an individual case-by-case basis before Ernst & Young LLP is engaged to provide a service. The Audit Committee has determined that the rendering of the services other than audit services by Ernst & Young LLP is compatible with maintaining the principal accountant’s independence.