

For the month of
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April
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2022
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Commission File Number
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001-37400
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Shopify Inc.
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(Translation of registrant’s name into English)
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151 O’Connor Street, Ground Floor
Ottawa, Ontario, Canada K2P 2L8
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(Address of principal executive offices)
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Form 20-F
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Form 40-F
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X
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Exhibit
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Shopify Inc. – Notice of Annual General and Special Meeting and Management Information Circular
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Shopify Inc. – Proxy Form
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Certificate of Officer for Abridgement of Time pursuant to NI 54-101
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Shopify Inc. Announces Filing of Circular for Annual and Special Meeting of Shareholders
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Shopify Inc.
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(Registrant)
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Date:
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April 12, 2022 |
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By:
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/s/ Jessica Hertz
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Name:
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Jessica Hertz
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Title:
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General Counsel and Corporate Secretary
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SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | i |
SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | ii |
![]() | | | ![]() |
Robert Ashe | | | Gail Goodman |
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Colleen Johnston | | | Jeremy Levine |
SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | iii |
SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | iv |
SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | v |
| Voting Matter | | | Board Recommendation | | | For more information see the following sections in this Circular | |
| Election of directors | | | FOR each nominee | | | Section 2(1) | |
| Appointment of PricewaterhouseCoopers LLP as auditors | | | FOR | | | Section 2(2) | |
| Approval of the Arrangement | | | FOR | | | Section 2(3) | |
| Approval of the Share Split | | | FOR | | | Section 2(4) | |
| Advisory vote on executive compensation | | | FOR | | | Section 2(5) | |
SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | vi |
| Name | | | Age | | | Independent | | | Director Since | | | Position | | | Committees | | | Board and Standing Committee Attendance in 2021 | | | Other Public Boards | | | Votes FOR in 2021 | |
| Tobias Lütke | | | 41 | | | No | | | 2004 | | | CEO, Shopify | | | – None | | | 100%(1) | | | 1 | | | 99.16% | |
| Robert Ashe | | | 63 | | | Yes | | | 2014 | | | Corporate Director | | | – Lead Independent Director – Audit Committee – Compensation and Talent Management Committee – Nominating and Corporate Governance Committee (Chair) | | | 100% | | | 1 | | | 98.61% | |
| Gail Goodman | | | 61 | | | Yes | | | 2016 | | | Corporate Director | | | – Audit Committee – Compensation and Talent Management Committee (Chair) | | | 100% | | | 0 | | | 99.66% | |
| Colleen Johnston | | | 63 | | | Yes | | | 2019 | | | Corporate Director | | | – Audit Committee (Chair) – Nominating and Corporate Governance | | | 100% | | | 1 | | | 99.35% | |
| Jeremy Levine | | | 48 | | | Yes | | | 2011 | | | Partner at Bessemer Venture Partners | | | – Nominating and Corporate Governance | | | 89% | | | 1 | | | 99.3% | |
| John Phillips | | | 71 | | | Yes | | | 2010 | | | CEO, Klister Credit Corp. | | | – Compensation and Talent Management | | | 100%(1) | | | 0 | | | 95.85% | |
| Fidji Simo | | | 36 | | | Yes | | | 2021 | | | CEO, Instacart | | | – None | | | 100% | | | 0 | | | N/A | |
(1) | Does not include the March 5, 2021 meeting, which Messrs. Lütke and Phillips did not attend. Please see “Section 2(3): Business of the Meeting – Approval of the Arrangement – Background to the Arrangement – Formation of the Special Committee.” |
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SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | viii |
SHOPIFY MANAGEMENT INFORMATION CIRCULAR | | | 1 |
| | Year ended December 31 (CAD) | | | Three-month Period ended March 31 (CAD) | |||||||
| | 2021 | | | 2020 | | | 2019 | | | 2022 | |
Rate at end of Period | | | 1.2678 | | | 1.2732 | | | 1.2988 | | | 1.2496 |
Average rate during Period | | | 1.2535 | | | 1.3415 | | | 1.3269 | | | 1.2662 |
High during Period | | | 1.2942 | | | 1.4496 | | | 1.3600 | | | 1.2867 |
Low during Period | | | 1.2040 | | | 1.2718 | | | 1.2988 | | | 1.2470 |
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a) | the election of directors of the Company, who will serve until the end of the next annual shareholder meeting or until their successors are elected or appointed; |
b) | the appointment of PricewaterhouseCoopers LLP as the auditors of the Company and authorizing the directors to fix their remuneration; |
c) | the approval of a proposed plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act (the “Arrangement”) to effect, among other things, certain updates to the Company's governance structure, including an amendment to our restated articles of incorporation to provide for the creation of a new class of share, designated as the Founder share, and the issuance of such Founder share to our Founder and Chief Executive Officer, Mr. Lütke; |
d) | the approval of an amendment to our restated articles of incorporation to effect a ten-for-one split of our Shares (the “Share Split”); |
e) | an advisory, non-binding resolution in respect of Shopify's approach to executive compensation; and |
f) | any other business that may properly come before the Meeting. |
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a) | the election of directors of the Company, who will serve until the end of the next annual shareholder meeting or until their successors are elected or appointed (see “Section 2(1): Business of the Meeting – Election of Directors”); |
b) | the appointment of PricewaterhouseCoopers LLP as the auditors of the Company and authorizing the directors to fix their remuneration (see “Section 2(2): Business of the Meeting – Appointment of Auditors”); |
c) | the approval of the Arrangement (see “Section 2(3): Business of the Meeting – Approval of the Arrangement”); |
d) | the approval of the Share Split (see “Section 2(4): Business of the Meeting – Approval of the Share Split”); |
e) | an advisory, non-binding resolution in respect of Shopify's approach to executive compensation (see “Section 2(5): Business of the Meeting – Advisory Resolution on Executive Compensation”); and |
f) | any other business that may properly come before the Meeting. |
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• | FOR the election of each of the seven (7) director nominees nominated in this Circular; |
• | FOR the appointment of PricewaterhouseCoopers LLP as auditors, and authorizing the directors to fix their remuneration; |
• | FOR the Arrangement; |
• | FOR the Share Split; and |
• | FOR the advisory, non-binding resolution in respect of Shopify's approach to executive compensation. |
• | submitting written notice to the Company at corporate@shopify.com not later than the last business day before the day of the Meeting or any adjournment or postponement thereof; |
• | submitting a new proxy or new voting instructions bearing a later date through any of the voting methods described above by no later than 10:00 am (Eastern Time) on June 3, 2022 (the proxy deadline); |
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• | with the Chair of the Meeting at corporate@shopify.com not later than the last business day before the day of the Meeting or any adjournment or postponement thereof; or |
• | in any other manner permitted by law. |
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![]() Tobias Lütke 41 Ontario, Canada Director since 2004 Non-Independent | | | Tobias Lütke co-founded Shopify in September 2004. Mr. Lütke has served as our Chief Executive Officer since April 2008. Prior to that, Mr. Lütke acted as our Chief Technology Officer between September 2004 and April 2008. Mr. Lütke worked on the core team of the Ruby on Rails framework and has created many popular open source libraries such as Active Merchant. Board and Committee Attendance Mr. Lütke is the Chair of the Board of Directors. Mr. Lütke does not sit on any committees. He attended each of the Board of Directors meetings held in 2021, other than the meeting on March 5, 2021 (see “Section 2(3): Business of the Meeting – Approval of the Arrangement – Background to the Arrangement – Formation of the Special Committee”). Current Public Directorships Mr. Lütke currently serves on the Board of Directors of Coinbase Global Inc. (Nasdaq). Share, Option and RSU Holdings Shares: 7,891,852 Class B multiple voting shares are currently held by Tobias Lütke and by 7910240 Canada Inc., which Tobias Lütke is deemed to beneficially own. 5,250 Class A subordinate voting shares are currently held by Mr. Lütke and by 7910240 Canada Inc. This represents 33.8% of votes attaching to all outstanding Shares. Options: Mr. Lütke also currently holds 147,839 options to purchase Class A subordinate voting shares under our Stock Option Plan (as defined herein). 2021 Annual and Special Meeting Votes In 2021, 99.16% of all votes cast at the annual and special meeting of shareholders were in favour of re-electing Mr. Lütke to the Board of Directors. |
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![]() Robert Ashe 63 Ontario, Canada Director since 2014 Independent | | | Robert Ashe held a variety of positions over 24 years with increasing responsibility at Cognos Incorporated, a business intelligence and performance management software company. Mr. Ashe ultimately served as Chief Executive Officer of Cognos Incorporated from 2005 to 2008 before the company was acquired by IBM. Mr. Ashe remained with IBM as a general manager of business analytics from 2008 to 2012. Mr. Ashe holds a Bachelor of Commerce from the University of Ottawa and is a Fellow of the Institute of Chartered Accountants of Ontario. Board and Committee Attendance Mr. Ashe is our Lead Independent Director, is Chair of our Nominating and Corporate Governance Committee and is a member of our Audit Committee and Compensation and Talent Management Committee. He attended every Board of Directors, Nominating and Corporate Governance, Compensation and Talent Management Committee and Audit Committee meeting held in 2021. Current Public Directorships Mr. Ashe currently serves on the Board of Directors of MSCI Inc. (NYSE). Share, Option and RSU Holdings Shares: Mr. Ashe currently owns 9,772 Class A subordinate voting shares. This represents less than 1% of votes attaching to all outstanding Shares. Options: Mr. Ashe currently holds 42,500 options for Class B multiple voting shares under our Legacy Option Plan, which options were granted on December 17, 2014 prior to our becoming a public company. Mr. Ashe currently holds 1,624 options to purchase Class A subordinate voting shares under our Stock Option Plan. RSUs: Mr. Ashe currently holds 259 Restricted Share Units (RSUs) under our LTIP. DSUs: Mr. Ashe currently holds 872 Deferred Share Units (DSUs) under our LTIP. 2021 Annual and Special Meeting Votes In 2021, 98.61% of all votes cast at the annual and special meeting of shareholders were in favour of re-electing Mr. Ashe to the Board of Directors. |
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![]() Gail Goodman 61 Massachusetts, United States Director since 2016 Independent | | | Gail Goodman is the former Chief Product Officer at Pepperlane, where she served from March 2019 to March 2021. Prior to Pepperlane, Ms. Goodman served as President and Chief Executive Officer of Constant Contact, a software company providing small businesses with online marketing tools to grow their businesses, for over 16 years. Over that time, Ms. Goodman served as a director and chairwoman of the board and led Constant Contact through its initial public offering and for eight years as a publicly traded company, until its acquisition by Endurance International Group Holdings, Inc. (NASDAQ) in February 2016. Ms. Goodman currently serves on the board of directors of a number of private companies and non-profits. Ms. Goodman holds a B.A. from the University of Pennsylvania and an M.B.A. from The Tuck School of Business at Dartmouth College. Board and Committee Attendance Ms. Goodman is Chair of our Compensation and Talent Management Committee and a member of our Audit Committee. She attended every Board of Directors, Compensation and Talent Management Committee and Audit Committee meeting held in 2021. Current Public Directorships None. Share, Option and RSU Holdings Shares: Ms. Goodman currently owns 2,683 Class A subordinate voting shares. This represents less than 1% of votes attaching to all outstanding Shares. Options: Ms. Goodman currently holds 9,802 options to purchase Class A subordinate voting shares under our Stock Option Plan. RSUs: Ms. Goodman currently holds 231 Restricted Share Units (RSUs) under our LTIP. 2021 Annual and Special Meeting Votes In 2021, 99.66% of all votes cast at the annual and special meeting of shareholders were in favour of re-electing Ms. Goodman to the Board of Directors. |
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![]() Colleen Johnston 63 Ontario, Canada Director since 2019 Independent | | | Colleen Johnston is the former Chief Financial Officer of Toronto-Dominion Bank. Prior to her retirement in 2018, Ms. Johnston spent 14 years at TD, ten of which she spent as Group Head, Finance, Sourcing, Corporate Communications and Chief Financial Officer. Prior to TD, Ms. Johnston held senior leadership roles at Scotiabank over the course of 15 years, including as CFO of Scotia Capital. Ms. Johnston currently serves on the board of directors of a number of private companies and non-profits, including her role as Chair of the Unity Health Toronto board of directors. Ms. Johnston holds a Bachelor of Business Administration from York University's Schulich School of Business and is a Fellow of the Institute of Chartered Accountants of Ontario. Board and Committee Attendance Ms. Johnston is Chair of our Audit Committee and a member of our Nominating and Corporate Governance Committee. She attended every Board of Directors, Audit Committee and Nominating and Corporate Governance Committee meeting held in 2021. Current Public Directorships Ms. Johnston currently serves on the Board of Directors of Q4 Inc. (TSX). Share, Option and RSU Holdings Shares: Ms. Johnston currently owns 1,022 Class A subordinate voting shares. This represents less than 1% of votes attaching to all outstanding Shares. RSUs: Ms. Johnston currently holds 231 Restricted Share Units (RSUs) under our LTIP. DSUs: Ms. Johnston currently holds 83 Deferred Share Units (DSUs) under our LTIP. 2021 Annual and Special Meeting Votes In 2021, 99.35% of all votes cast at the annual and special meeting of shareholders were in favour of re-electing Ms. Johnston to the Board of Directors. |
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![]() Jeremy Levine 48 New York, United States Director since 2011 Independent | | | Jeremy Levine has been a Partner at Bessemer Venture Partners since January 2007, a venture capital firm he joined in May 2001. Prior to joining Bessemer, Mr. Levine was Vice President of Operations at Dash.com Inc., an internet software publisher, from 1999 to 2001. Prior to that, Mr. Levine was an Associate at AEA Investors, a management buyout firm, where he specialized in consumer products and light industrials, from 1997 to 1999. Mr. Levine was with McKinsey & Company as a management consultant from 1995 to 1997. Mr. Levine holds a B.S. degree in Computer Science from Duke University. Board and Committee Attendance Mr. Levine is a member of our Nominating and Corporate Governance Committee. He attended 6/7 Board of Directors meetings and every Nominating and Corporate Governance Committee meeting held in 2021. Current Public Directorships Mr. Levine currently serves on the Board of Directors of Pinterest, Inc. (NYSE). Share, Option and RSU Holdings Shares: Mr. Levine currently owns 72,052 Class A subordinate voting shares. This represents less than 1% of votes attaching to all outstanding Shares. 2021 Annual and Special Meeting Votes In 2021, 99.30% of all votes cast at the annual and special meeting of shareholders were in favour of re-electing Mr. Levine to the Board of Directors. |
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![]() John Phillips 71 Ontario, Canada Director since 2010 Independent | | | John Phillips is currently Chief Executive Officer of Klister Credit Corp., an investment and consulting company, a position he has held since 1993. Mr. Phillips had a career in the legal profession working in private practice at Blake, Cassels & Graydon LLP for 20 years and as general counsel at Clearnet Communications Inc. for nearly six years. Mr. Phillips currently serves on the board of directors of a number of privately held companies and previously served on the board of directors of Clearnet Communications Inc. and Redknee Solutions Inc., both then public companies. Mr. Phillips holds a B.A. from Trinity College, University of Toronto and an L.L.B./J.D. from the Faculty of Law, University of Toronto. Board and Committee Attendance Mr. Phillips is a member of our Compensation and Talent Management Committee. He attended every Board of Directors and Compensation and Talent Management Committee meeting held in 2021, other than the meeting on March 5, 2021 (see “Section 2(3): Business of the Meeting – Approval of the Arrangement – Background to the Arrangement –Formation of the Special Committee”). Current Public Directorships None. Share, Option and RSU Holdings Shares: Mr. Phillips, is the Chief Executive Officer of Klister Credit Corp., and directly or indirectly beneficially owns 50% of Klister Credit Corp. and accordingly is considered to indirectly beneficially own 50% of our Shares owned by Klister Credit Corp. Catherine Phillips owns the remaining 50% of Klister Credit Corp. Klister Credit Corp. currently owns 3,750,000 Class B multiple voting shares and 16,998 Class A subordinate voting shares. This represents 16.1% of votes attaching to all outstanding Shares. 2021 Annual and Special Meeting Votes In 2021, 95.85% of all votes cast at the annual and special meeting of shareholders were in favour of re-electing Mr. Phillips to the Board of Directors. |
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![]() Fidji Simo 36 California, United States Director since 2021 Independent | | | Fidji Simo is the Chief Executive Officer and member of the board of directors of Instacart, an on-demand online grocery platform. Prior to joining Instacart, Ms. Simo held a variety of positions over 10 years with increasing responsibility at social networking company Facebook, ultimately serving as the Vice President and Head of the Facebook app. Ms. Simo began her career as a strategy manager at eBay. Ms. Simo is also a co-founder of Metrodora and serves as President of the Metrodora Foundation, and is the co-founder of Women in Product, a non-profit organization. Ms. Simo holds a Master of Management from HEC Paris. Board and Committee Attendance Ms. Simo was appointed to the Board of Directors on December 15, 2021 and does not sit on any committees at this time. Current Public Directorships None. Share, Option and RSU Holdings RSUs: Ms. Simo currently owns 576 Restricted Share Units (RSUs) under our LTIP. DSUs: Ms. Simo currently holds 17 Deferred Share Units (DSUs) under our LTIP. 2021 Annual and Special Meeting Votes N/A |
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• | Jeremy Levine, who, until June 4, 2018, was a board member of Onestop Internet Inc., a corporation that made an assignment for the benefit of creditors on June 4, 2018. The sale of assets and the liquidation has been completed and any arrangements with creditors have been or are expected to be settled. Jeremy Levine was also a board member, until May 29, 2019, of Rabbit, Inc., a corporation that made an assignment for the benefit of creditors on May 24, 2019. The liquidation has been completed. |
• | Fidji Simo, who, until November 24, 2020, was a board member of Cirque du Soleil Entertainment Group, a corporation that filed for protection under the Companies' Creditors Arrangement Act (“CCAA”) in Canada and Chapter 15 in the United States on June 30, 2020. On November 24, 2020, the company announced the closing of a sale transaction with the company's secured creditors and its emergence from CCAA and Chapter 15 protection. |
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Audit Committee | | | Compensation and Talent Management Committee | | | Nominating and Corporate Governance Committee |
Colleen Johnston (Chair) | | | Gail Goodman (Chair) | | | Robert Ashe (Chair) |
Robert Ashe | | | Robert Ashe | | | Colleen Johnston |
Gail Goodman | | | John Phillips | | | Jeremy Levine |
(1) | Fidji Simo was appointed to the Company's Board of Directors on December 15, 2021, but does not sit on any committees at this time. |
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Fees | | | Fiscal Year 2021 | | | Fiscal Year 2020 |
Audit Fees | | | $1,664,000 | | | $1,461,000 |
Audit-Related Fees | | | $0 | | | $0 |
Tax Fees | | | $53,000 | | | $39,000 |
All Other Fees | | | $7,000 | | | $2,000 |
Total | | | $1,724,000 | | | $1,502,000 |
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• | a number of votes, when combined with the votes attached to the Class B multiple voting shares and any Class A subordinate voting shares resulting from a conversion of Class B multiple voting shares after the effective date of the Arrangement (and, in some circumstances, additional Class A subordinate voting shares acquired following a disposition of Class A subordinate voting shares resulting from a conversion of Class B multiple voting shares after the effective date of the Arrangement), beneficially owned or controlled by Mr. Lütke, his immediate family and affiliates, equal to 40% of the aggregate voting power attached to all of the Company's outstanding voting shares at such time; or |
• | a number of votes, when combined with the votes attached to the Class B multiple voting shares and all Class A subordinate voting shares beneficially owned or controlled by Mr. Lütke, his immediate family and affiliates, equal to 49.9% of the aggregate voting power attached to all of the Company's outstanding voting shares at such time; |
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| | | | | | | | Mr. Lütke's voting power after giving effect to the Arrangement | |||||||||||||
Illustrative Baseline | | | Net change in shares beneficially owned or controlled by Mr. Lütke other than the Founder share | | | Net change in total issued and outstanding shares other than the Founder share | | | Mr. Lütke's voting power under current governance structure after conversion of Klister shares | | | Percentage of votes attached to Mr. Lütke's Class A subordinate voting shares | | | Percentage of votes attached to Mr. Lütke's Class B multiple voting shares | | | Percentage of votes attached to the Founder share | | | Aggregate percentage of votes attached to all shares beneficially owned or controlled by Mr. Lütke |
No change to Mr. Lütke's shareholdings or the Company's issued and outstanding shares | | | — | | | — | | | 39.5% | | | < 0.01% | | | 39.1% | | | 0.9% | | | 40.0% |
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Illustrative Examples | | | | | | | | | | | | | | | |||||||
1. Mr. Lütke purchases 1MM additional Class A subordinate voting shares in the open market | | | 1MM Class A subordinate voting shares | | | — | | | 40.0% | | | 0.5% | | | 39.1% | | | 0.9% | | | 40.5% |
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2. Mr. Lütke converts and subsequently sells 1MM Class B multiple voting shares | | | (1MM Class B multiple voting shares) | | | — | | | 36.1% | | | < 0.01% | | | 33.9% | | | 6.1% | | | 40.0% |
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3. New issuance of 40MM Class A subordinate voting shares by the Company, triggering the Dilution Sunset and collapse of the Class B multiple voting shares | | | 7,891,852 Class A subordinate voting shares (7,891,852 Class B multiple voting shares) | | | 40MM Class A subordinate voting shares | | | 4.8% | | | 3.0% | | | — | | | 37.0% | | | 40.0% |
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4. Buyback of 10MM Class A subordinate voting shares by the Company | | | — | | | (10MM Class A subordinate voting shares) | | | 41.6% | | | < 0.01% | | | 41.5% | | | (1 vote)* | | | 41.6% |
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5. Mr. Lütke converts and subsequently sells 80% of his Class B multiple voting shares, triggering the collapse of the multi-voting share structure | | | 1,578,370 Class A subordinate voting shares (7,891,852 Class B multiple voting shares) | | | — | | | 1.3% | | | 1.3% | | | — | | | — | | | 1.3% |
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* | Founder share is worth only one vote if percentage of votes attached to Mr. Lütke's Class B multiple voting shares is over 40%. |
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• | effectively setting and preserving the voting power of Mr. Lütke's and his affiliates' existing Class B multiple voting shares (and any Class A subordinate voting shares issued in the future upon conversion of such Class B multiple voting shares and certain other Class A subordinate voting shares acquired after the Arrangement is implemented) at 40% of the aggregate voting power attached to all of the Company's outstanding voting shares when combined with the variable number of votes attached to the Founder share; |
• | introducing a new liquidity-based sunset that is triggered when the number of Class B multiple voting shares and Class A subordinate voting shares held by Mr. Lütke, his immediate family and affiliates is less than 30% of the Class B multiple voting shares currently held by Mr. Lütke and his affiliates (as adjusted to appropriately reflect any share split, consolidation, stock dividend, reorganization, recapitalization or similar event); |
• | introducing a new service-based sunset that is triggered (a) when Mr. Lütke is no longer providing services to Shopify as an executive officer (as defined by applicable securities laws) of Shopify or a consultant whose primary engagement is with Shopify and Mr. Lütke is no longer serving as a member of the Board of Directors or (b) upon Mr. Lütke's death or Disability; |
• | preventing Mr. Lütke and his affiliates from receiving a premium in connection with certain transactions involving the elimination of the Founder share or the Class B multiple voting shares; |
• | providing for a transition period, as determined by the Board of Directors, of not less than nine months and not more than 18 months following the occurrence of a Sunset Event; |
• | ensuring that Mr. Lütke maintains voting control over the Class B multiple voting shares held by Mr. Lütke and his affiliates; and |
• | prohibiting the transfer of the Founder share by Mr. Lütke. |
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• | the Special Committee, comprised entirely of independent directors, conducted an extensive review of the Initial Founder Proposal, the Second Founder Proposal and the Third Founder Proposal (the “Founder Proposals”) and oversaw the negotiation of the terms of the Arrangement, including the amendment to the restated articles of incorporation, the Conversion Notice and the Founder Agreement; |
• | the Special Committee retained and received advice from independent legal and financial advisors; |
• | the Special Committee, after consultation with its independent legal and financial advisors, considered a wide range of reasonably available alternatives, including maintaining Shopify's existing share capital and governance structure, the issuance of non-voting shares and various other features of governance structures based on a review of precedents in Canada and the United States; |
• | the Arrangement must be approved by (i) not less than two-thirds of the votes cast by all holders of Class A subordinate voting shares and Class B multiple voting shares present at the Meeting or represented by proxy, voting together as a single class and (ii) a majority of the votes cast by holders of Class A subordinate voting shares and Class B multiple voting shares present at the Meeting or represented by proxy excluding shares beneficially owned or controlled by Mr. Lütke and his associates and affiliates (see “ – Required Shareholder Approval – Securities Law Requirements and Minority Approval”); and |
• | the Arrangement must be approved by the Court, which will consider, among other things, the fairness and reasonableness of the Arrangement. |
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1) | the restated articles of incorporation of the Company shall be amended to create a new class of share, designated as the Founder share, of which a maximum number of one (1) share shall be authorized for issuance, and which shall carry the rights, privileges, restrictions and conditions as set forth in Schedule A to the Plan of Arrangement; |
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2) | the Klister shares shall be converted into an equal number of Class A subordinate voting shares pursuant to the Conversion Notice and in accordance with their terms; |
3) | the Founder Agreement shall become effective; and |
4) | the Company shall issue the Founder share to Mr. Lütke pursuant to the Founder Agreement. |
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• | offers a price per Class A subordinate voting share at least as high as the highest price per share paid or required to be paid pursuant to the take-over bid for the Class B multiple voting shares; |
• | provides that the percentage of outstanding Class A subordinate voting shares to be taken up (exclusive of shares owned immediately prior to the offer by the offeror or persons acting jointly or in concert with the offeror) is at least as high as the percentage of outstanding Class B multiple voting shares to be sold (exclusive of Class B multiple voting shares owned immediately prior to the offer by the offeror and persons acting jointly or in concert with the offeror); |
• | has no condition attached other than the right not to take up and pay for Class A subordinate voting shares tendered if no shares are purchased pursuant to the offer for Class B multiple voting shares; and |
• | is in all other material respects identical to the offer for Class B multiple voting shares. |
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• | not to Transfer, directly or indirectly, the Founder share; |
• | not to Transfer, directly or indirectly, the Class B multiple voting shares held by the Founder Holders to a Permitted Holder if such Transfer would result in the Founder not retaining Voting Control over such Class B multiple voting shares; |
• | that, other than in connection with the Founder's death or Disability, in the event a Transfer, directly or indirectly, of any Class B multiple voting shares held by the Founder Holders results in the Founder no longer retaining Voting Control over such Class B multiple voting shares, the applicable Founder Holder will as promptly as reasonably practicable convert or cause to be converted all such Class B multiple voting shares into Class A subordinate voting shares pursuant to and in accordance with subsection 1.4 of the Company's restated articles of incorporation, and the applicable Founder Holder will not vote any such |
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• | that, following the occurrence of a Sunset Event, the Founder Holders will convert or cause to be converted all Class B multiple voting shares held by the Founder Holders into Class A subordinate voting shares on or before the Sunset Date pursuant to and in accordance with subsection 1.4 of the Company's restated articles of incorporation. |
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(i) | not less than two-thirds of the votes cast by all holders of Class A subordinate voting shares and Class B multiple voting shares present or represented by proxy, voting together as a single class; and |
(ii) | a majority of the votes cast by all holders of Class A subordinate voting shares and Class B multiple voting shares, voting together as a single class, excluding, for the purpose of confirming that the requisite minority approval has been obtained, the votes attached to 5,250 Class A subordinate voting shares and 7,891,852 Class B multiple voting shares beneficially owned or controlled by Mr. Lütke and his associates and affiliates (each as defined in the Securities Act (Ontario)) (such number being based on our knowledge, after reasonable inquiry). |
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Tobias Lütke | | | Chief Executive Officer |
Amy Shapero | | | Chief Financial Officer |
Allan Leinwand | | | Chief Technology Officer |
Toby Shannan | | | Chief Operating Officer |
Harley Finkelstein | | | President |
Jean-Michel Lemieux(1) | | | Former Chief Technology Officer |
(1) | Mr. Lemieux, the Company's former Chief Technology Officer, departed from his role on June 30, 2021. |
| Growth | | | Our mission is to make commerce better for everyone, and we believe we can help merchants of nearly all retail verticals and sizes, from aspirational entrepreneurs to large enterprises, realize their potential at all stages of their business life cycle. In 2021, we grew our merchant base from approximately 1.7 million to over 2 million merchants from approximately 175 countries as of December 31, 2021. | |
| Strategy | | | We consider our merchants' success to be one of the most powerful drivers of our business model. When our merchants grow their sales and become more successful, they consume more of our merchant solutions, upgrade to higher subscription plans, and purchase additional apps. Key elements of our strategy include continuing to: grow our base of merchants, grow our merchants' revenue, expand our platform and introduce innovative solutions, grow and develop our ecosystem, expand our referral partner programs, and focus on building for the long term. | |
| People & Culture | | | We continued to grow, adding more than 3,000 employees to end the year with more than 10,000 employees and contractors worldwide. If you have ambitious goals, you need an equally ambitious team. Shopify is composed of highly talented, deeply caring individuals all working on making commerce better for everyone. Our culture is continuously being redefined with every person that joins our company, but, at our core, we value people who: are impactful; are merchant-obsessed; make great decisions quickly; thrive on change; are constant learners; and build for the long term. Shopify values continuous learning and personal development. We are a fast-growing company that is constantly striving to get better. We expect to see similar growth from everyone on our team. We offer opportunities to our employees to learn and grow so they feel engaged and are progressing in their careers. | |
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| | | In a 2021 company-wide employee survey, nearly three out of four respondents reported that Shopify motivates them to go above and beyond what they would in a similar role elsewhere. We consider our relationship with our employees to be excellent. | | |
| Innovation | | | Shopify strives on behalf of merchants to not just keep pace in this dynamic environment, but to bring to market new and better selling and buying experiences by leveraging what technology and connectivity have made possible. We look to do this for smaller merchants by simplifying their user experience and arming them with new and innovative ways to compete with larger, better-funded competitors, as well as for larger merchants seeking technology and support for higher volumes and global reach. As such, research and development at Shopify is currently focused on product management, product development, and product design to accomplish these goals. Some of our 2021 product launches and business highlights include: launching a Spotify channel, enabling artist-entrepreneurs on Spotify for Artist accounts with their Shopify online stores; introducing TikTok Shopping to merchants; launching the Shopify Global ERP program, allowing select ERP partners to build direct integrations into the Shopify App Store; opening a brick and mortar space in New York City, to serve as a hub where merchants can receive hands-on support, inspiration, and education to help grow their business; launching our All-New POS Pro software for android devices; expanding Shopify shipping to the United Kingdom; and launching Shop Pay Installments, a 'buy now, pay later' product that lets merchants offer their buyers more payment choice and flexibility at checkout, generally available to all eligible merchants in the United States. | |
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• | Provide market-competitive compensation opportunities to attract and retain talented, high-performing and experienced executive officers whose knowledge, skills and level of impact are critical to our success. |
• | Motivate these executive officers to deliver outstanding outcomes. |
• | Align the interests of our executive officers with those of Shopify by providing long-term incentives that tie directly to the long-term value and growth of our business. |
• | Provide long-term incentives that encourage appropriate levels of risk-taking by the executive team. |
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• | reviewed and advised on our compensation comparator group composed of industry-related, public companies with comparable revenue, revenue growth, market capitalization, and employee populations for use in executive and board compensation benchmarking; |
• | conducted executive and board compensation assessments against compensation for similarly situated executives and board members at our comparator group companies; |
• | assisted in reviewing the competitiveness and design of the Compensation and Talent Management Committee's recommended cash and equity compensation arrangements for our executives and members of the Board of Directors; |
• | assisted in designing the size and structure of new equity awards for our executives; |
• | assisted with the review and development of our broader equity compensation strategy; and |
• | attended and supported all Compensation and Talent Management Committee meetings. |
Year | | | Consulting Firm | | | Executive Compensation Consulting-Related Fees ($) | | | All Other Fees | | | Total Fees ($) | | | Currency |
2021 | | | Compensia | | | 175,337 | | | — | | | 175,337 | | | USD |
2020 | | | Compensia | | | 145,219 | | | — | | | 145,219 | | | USD |
Atlassian Corporation PLC | | | Pinterest Inc. | | | Twilio Inc. |
Autodesk, Inc. | | | RingCentral Inc. | | | Twitter Inc. |
CoStar Group | | | ServiceNow Inc. | | | Veeva Systems Inc. |
Docusign Inc. | | | Slack Technologies, Inc. | | | Workday Inc. |
Lyft Inc. | | | Snap Inc. | | | Zillow Group Inc. |
Okta Inc. | | | Splunk Inc. | | | Zoom Video Communications Inc. |
Palo Alto Networks Inc. | | | Block Inc. (formerly Square Inc.) | | |
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| Component | | | Form | | | Rationale | | | Review Process | | | Award Determination | |
| Base Salary | | | Cash | | | Provided as a fixed source of compensation | | | Reviewed annually Adjustments may be warranted throughout the year | | | Established based on the scope of the executive officer's responsibilities, impact, internal fairness, criticality, and market data. Takes into consideration: - Total compensation opportunity - Individual level of impact - Promotions or other changes in the scope or breadth of role or responsibilities - Desired positioning relative to market - Shopify performance on key business measures - Internal fairness | |
| Long-Term Incentive (Equity) | | | Stock Options and Restricted Share Units (RSUs) | | | Serves as an effective retention tool and focuses the executive officers on creating long term value over time | | | Reviewed annually Prior to November 2017, equity awards were subject to time-based vesting at a rate of 25% on the first anniversary of the vesting start date, the remainder vesting in equal quarterly instalments over the next three years. Equity awards are subject to time-based vesting at a rate of 33.33% on the first anniversary of the vesting start date, the remainder vesting in equal quarterly instalments over the next two years. | | | Size of equity awards and frequency of grants are based on: - Total compensation opportunity - Attraction and retention - Market competitiveness - CEO's recommendations for executives and leadership: - Individual level of impact - Changes in scope or breadth of role or responsibilities - Existing equity award holdings (including the unvested portion of such awards) - Internal fairness - Our available equity plan funding /dilution limitations - Review of market practices related to aggregate equity dilution metrics such as burn rate and compensation expense | |
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| Component | | | Form | | | Rationale | | | Review Process | | | Award Determination | |
| Employee Benefits & Perks | | | Flexible vacation, benefits and perks | | | Attraction and retention | | | Ongoing | | | Benefits include health, dental, life, and disability insurance benefits. Voluntary perquisites are limited and include flexible vacation and a flexible spending allowance. The same benefits and perks are offered to all Shopify employees. | |
Name | | | Effective Date | | | Base Salary ($US)(1) | | | Base Salary ($CAD) | | | Increase/(decrease) from prior base salary ($CAD) (%) |
Tobias Lütke | | | January 1, 2021 | | | 0.7888 | | | 1 | | | (100)% |
Amy Shapero(2) | | | January 1, 2021 | | | 600,000 | | | 760,649 | | | 1.4% |
Allan Leinwand | | | October 25, 2021 | | | 600,000 | | | 760,649 | | | n/a |
Toby Shannan | | | January 1, 2021 | | | 512,720 | | | 650,000 | | | 0% |
Harley Finkelstein | | | January 1, 2021 | | | 473,280 | | | 600,000 | | | 0% |
(1) | All base salaries are paid to our NEOs in Canadian dollars with the exception of Amy Shapero and Allan Leinwand. The 2021 base salary amounts reported in the above table, and the 2020 base salary amount used to calculate the percentage increase have been converted to U.S dollars using an exchange rate of C$1.00 = US$0.7888, which was the Bank of Canada average rate on December 31, 2021. |
(2) | Ms. Shapero received an increase in base salary in connection with her relocation to the United States. |
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Name | | | Share-based Awards(1) ($US) | | | Option-based Awards(2) ($US) |
Tobias Lütke | | | — | | | 20,000,457 |
Amy Shapero | | | 3,500,395 | | | 3,500,120 |
Allan Leinwand | | | 13,001,236 | | | — |
Toby Shannan | | | 3,001,070 | | | 3,000,256 |
Harley Finkelstein | | | 3,250,732 | | | 3,250,456 |
Jean-Michel Lemieux(3) | | | 4,001,000 | | | 4,000,520 |
(1) | The value of share-based awards shown for our NEOs are the grant date fair values for RSU awards granted under the LTIP, being equal to the number of share units granted multiplied by the weighted average trading price per Class A subordinate voting share on the NYSE for the five (5) trading days immediately preceding the grant date. This compensation has not actually been received by our NEOs and the actual value received may differ. |
(2) | The value of option-based awards shown for our NEOs are the grant date fair values for stock option awards granted under the Stock Option Plan, being equal to the number of stock options granted multiplied by the Black-Scholes value of the options at the time of grant. |
(3) | Mr. Lemieux's award was granted in March 2021, prior to his departure on June 30, 2021. The RSUs and stock options granted to Mr. Lemieux prior to such date were canceled and forfeited in accordance with the terms of the plans and the applicable grant agreements. |
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| Balance between short- and long-term performance objectives | | | ☑ | | | We do not offer annual / short-term incentives. We expect all employees to perform at a high level of impact and provide a base salary for this contribution. In addition to base salary we provide long-term incentives in the form of stock options and RSUs. While we take into account both short-term and individual performance, we want our primary focus to be on the long-term growth of Shopify. | |
| Preservation of Board discretion | | | ☑ | | | The Board of Directors has the ability to apply its discretion on base salary increases and the value, award mix and vesting of equity compensation. | |
| External independent advice | | | ☑ | | | The Compensation and Talent Management Committee has retained independent advisors to deliver independent advice on executive compensation and related matters. The majority of the Board of Directors (and 100% of the Compensation and Talent Management Committee) is independent. | |
| Stress testing and predictive modeling of equity program | | | ☑ | | | Equity plan outcomes are stress tested to ensure appropriate pay and performance alignment and retention. Predictive modeling of equity programs is reviewed quarterly. | |
| Vesting of equity awards | | | ☑ | | | Equity awards generally vest over three years at a rate of 33.33% on the first anniversary of the vesting start date, and the remainder vesting in equal quarterly installments over the next two years. | |
| No hedging | | | ☑ | | | All Shopify directors and employees are prohibited from purchasing financial instruments designed to hedge or offset a decrease in the market value of Shopify securities, may not buy Shopify securities on margin, and are strongly discouraged from using Shopify securities as collateral for loans. | |
| Regular monitoring of market practice/investor outreach | | | ☑ | | | The Compensation and Talent Management Committee reviews and considers evolving best compensation governance practices and policies. In 2021, at our annual general and special meeting, Shopify presented a non-binding advisory vote on the Company's approach to executive compensation. 93.97% of all votes cast at the annual and special meeting of shareholders were in favour of Shopify's approach to executive compensation. Shopify is presenting a non-binding advisory vote on the Company's approach to executive compensation again this year. We value feedback from our shareholders on our executive compensation program and corporate governance policies and welcome input, as it impacts our decision-making. In 2021, we met with shareholders owning 50% of Shopify's Class A subordinate voting shares, whose feedback indicated our shareholder outreach programs are aligned with their interests. We believe that ongoing engagement builds mutual trust with our shareholders and will continue to monitor feedback from our shareholders and may solicit feedback, as appropriate. | |
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Name and Principal Position | | | Year | | | Salary(1) ($) | | | Share- based Awards(2) ($) | | | Option- based Awards(3) ($) | | | Non-Equity Incentive Plan Compensation(4) ($) | | | Pension Value(5) ($) | | | All Other Compensation(6) ($) | | | Total Compensation ($) | |||
| Annual incentive plans ($) | | | Long-term incentive plans ($) | | ||||||||||||||||||||||
Tobias Lütke CEO | | | 2021 | | | 1 | | | — | | | 20,000,457 | | | — | | | — | | | — | | | — | | | 20,000,458 |
| 2020 | | | 104,721 | | | — | | | 15,000,456 | | | — | | | — | | | — | | | — | | | 15,105,177 | ||
| 2019 | | | 615,920 | | | — | | | 10,000,032 | | | — | | | — | | | — | | | — | | | 10,615,952 | ||
Amy Shapero CFO | | | 2021 | | | 596,850 | | | 3,500,395 | | | 3,500,120 | | | — | | | — | | | — | | | 13,277 | | | 7,610,642 |
| 2020 | | | 589,050 | | | 3,000,326 | | | 3,000,091 | | | — | | | — | | | — | | | — | | |