NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS

The 2022 Annual Meeting of Stockholders of Instructure Holdings, Inc. will be held at our principal executive offices, located at 6330 South 3000 East, Suite 700, Salt Lake City, Utah 84121 on Thursday, May 26, 2022, at 10:00 a.m. Mountain Time for the following purposes:

 

1.

to elect three nominees identified in the accompanying proxy statement to serve as Class I directors until the 2025 Annual Meeting and until their successors are duly elected and qualified;

 

2.

to approve, by an advisory vote, to retain the classified structure of the Board of Directors;

 

3.

to approve, by an advisory vote, to retain the supermajority voting standards in the Company’s Second Amended and Restated Certificate of Incorporation and the Company’s Amended and Restated Bylaws;

 

4.

to approve, by an advisory vote, the compensation of the Company’s named executive officers, as disclosed in the proxy statement (“say-on-pay”);

 

5.

to approve, by an advisory vote, the frequency of solicitation of future advisory votes to approve named executive officer compensation (“say-on-pay frequency”);

 

6.

to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022; and

 

7.

to transact other business as may properly come before the meeting or any adjournment of the meeting.

Our Board of Directors (the “Board”) has set the record date as of April 8, 2022. Only stockholders that owned shares of the Company’s common stock as of the close of business on that day are entitled to notice of and may vote at this Annual Meeting, or any adjournment or postponement thereof. A list of the Company’s stockholders of record will be available for examination by any stockholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to May 26, 2022, at 6330 South 3000 East, Suite 700, Salt Lake City, Utah 84121, and on the date of the Annual Meeting.

The proxy statement is first being delivered to the Company’s stockholders of record on or about April 26, 2022.

By Order of the Board of Directors,

/s/ Matthew A. Kaminer        

Matthew A. Kaminer

Chief Legal Officer and Secretary

TABLE OF CONTENTS

 

		Page
COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING			1
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE			5
PROPOSAL 1 — ELECTION OF DIRECTORS			8
EXECUTIVE OFFICERS			16
COMPENSATION DISCUSSION AND ANALYSIS			17
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			33
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			36
COMPENSATION COMMITTEE REPORT			38
PROPOSAL 2 — ADVISORY VOTE REGARDING RETENTION OF THE CLASSIFIED STRUCTURE OF OUR BOARD			39
PROPOSAL 3 — ADVISORY VOTE REGARDING RETENTION OF THE SUPERMAJORITY VOTING STANDARDS IN OUR CHARTER AND BYLAWS			41
PROPOSAL 4 — ADVISORY VOTE REGARDING NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY”)			44
PROPOSAL 5 — ADVISORY VOTE REGARDING SAY-ON-PAY FREQUENCY			45
PROPOSAL 6 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			46
AUDIT COMMITTEE REPORT			48
OTHER MATTERS			49
WHERE TO FIND ADDITIONAL INFORMATION			50
COST OF PROXY SOLICITATION			51

 

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COMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

Q: Why did I receive these materials?

The Board of Directors of the Company (the “Board”) is soliciting your proxy to vote at our 2022 Annual Meeting of Stockholders (or at any postponement or adjournment thereof). Stockholders who own shares of our common stock as of the close of business on the record date, April 8, 2022 (the “Record Date”), are entitled to vote at the Annual Meeting. You should review these proxy materials carefully as they give important information about the proposals that will be voted on at the Annual Meeting, as well as other important information about the Company.

Householding. The Securities and Exchange Commission (“SEC”) rules permit us to print an individual’s multiple accounts on a single set of annual meeting materials. To take advantage of this opportunity, we have summarized on one set of annual meeting materials all of the accounts registered with the same tax identification number or duplicate name and address, unless we received contrary instructions from the impacted stockholder prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the Annual Meeting materials, as requested, to any stockholder to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Annual Meeting materials, contact Broadridge Financial Solutions, Inc. at 1-866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. A number of brokerage firms have instituted householding. They will have their own procedures for stockholders who wish to receive individual copies of the proxy materials.

Q: Who will be entitled to vote?

Stockholders who own shares of our common stock as of the Record Date, are entitled to vote at the Annual Meeting. As of the Record Date, the Company had 141,347,146 shares of common stock outstanding. Holders of shares of common stock are entitled to one vote per share. Cumulative voting is not permitted with respect to the election of directors or any other matter to be considered at the Annual Meeting.

Q: What will I be voting on?

You will be voting on:

 

1.

the election of Charles Goodman, Ossa Fisher and Paul Holden Spaht, Jr. as Class I directors to serve on the Board until the 2025 Annual Meeting of Stockholders and until their successors are duly elected and qualified;

 

2.

the approval, by an advisory vote, of the retention of the classified structure of the Board;

 

3.

the approval, by an advisory vote of the retention of the supermajority voting standards in the Company’s Second Amended and Restated Certificate of Incorporation (our “Charter”) and the Company’s Amended and Restated Bylaws (our “Bylaws”);

 

4.

the approval, by an advisory vote, of the compensation of the Company’s named executive officers, as disclosed in this Proxy Statement (“say-on-pay”);

 

5.

the approval, by an advisory vote, of the frequency of solicitation of future advisory votes to approve named executive officer compensation (“say-on-pay frequency”);

 

6.

the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022; and

 

7.

any other business as may properly come before the meeting or any adjournment of the meeting.

 

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Q: How does the Board recommend I vote on these matters?

The Board recommends you vote:

 

1.

FOR the election of Charles Goodman, Ossa Fisher and Paul Holden Spaht, Jr. as Class I directors;

 

2.

FOR the approval, by an advisory vote, of the retention of our classified Board structure;

 

3.

FOR the approval, by an advisory vote, of the retention of the supermajority voting standards in our Charter and Bylaws;

 

4.

FOR the approval, by an advisory vote, of the compensation of the Company’s named executive officers, as disclosed in the proxy statement (“say-on-pay”);

 

5.

Every year for the frequency of solicitation of future advisory votes to approve named executive officer compensation (“say-on-pay frequency”); and

 

6.

FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2022.

Q: How do I cast my vote?

You can vote either in person at the Annual Meeting or by proxy without attending the meeting.

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

If on April 8, 2022, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Annual Meeting materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.

Stockholder of Record: Shares Registered in Your Name

If on April 8, 2022, your shares were registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy before the Annual Meeting in the following ways:

 

1.

via the Internet at www.proxyvote.com;

 

2.

by phone by calling 1-800-690-6903; or

 

3.

by signing and returning a proxy card.

Proxies submitted via the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on May 25, 2022.

Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.

Q: Can I access the proxy materials electronically?

Yes. Our proxy materials are available at www.proxyvote.com. In addition, instead of receiving future copies of our proxy statement and annual report by mail, stockholders of record and most beneficial owners can

 

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elect to receive an email that will provide an electronic link to these documents. If you would like to instruct us to send electronic copies of our proxy materials, you should follow the instructions available at www.proxyvote.com. Your election to receive future proxy materials by email will remain in effect until you revoke it.

Q: How may I change or revoke my proxy?

Beneficial Owner: Shares Registered in the Name of Broker or Bank. Beneficial stockholders should contact their broker, trustee or nominee for instructions on how to change their proxy vote.

Stockholder of Record: Shares Registered in Your Name. Registered stockholders may change a properly executed proxy at any time before its exercise:

 

1.

via the Internet at www.proxyvote.com;

 

2.

by phone by calling 1-800-690-6903;

 

3.

by signing and returning a new proxy card; or

 

4.

by voting at the Annual Meeting.

Q: How can I attend and participate in the Annual Meeting?

The Annual Meeting is being held in person at the Company’s principal executive offices located at 6330 South 3000 East, Suite 700, Salt Lake City, UT, 84121. If you were a stockholder as of the Record Date you may attend the Annual Meeting. A form of personal identification must be presented in order to be admitted to the Annual Meeting. For directions to the Company’s executive offices, you may call us at (800) 203-6755 or email investors@instructure.com. Information on how to vote at the Annual Meeting is discussed above.

Q: What is the voting requirement to approve each of the proposals, and how are the votes counted?

PROPOSAL 1—ELECTION OF DIRECTORS

A plurality of the votes cast by the shares of common stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to elect each nominee named herein. This means that the three nominees receiving the highest number of votes at the Annual Meeting will be elected, even if those votes do not constitute a majority of the votes cast. Abstentions and broker non-votes will not impact the election of the nominees.

PROPOSALS 2, 3 AND 4—NON-BINDING, ADVISORY VOTES, TO: RETAIN THE CLASSIFIED STRUCTURE OF THE BOARD OF DIRECTORS; RETAIN THE SUPER-MAJORITY VOTING STANDARDS IN THE COMPANY’S CHARTER AND BYLAWS; AND APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS INCLUDED IN THIS PROXY STATEMENT

The affirmative vote of a majority of the voting power of the capital stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve Proposals 2, 3 and 4. Abstentions will be counted as present and entitled to vote on these proposals and will therefore have the effect of a negative vote. Broker non-votes will have no effect on these proposals. Although the results of these proposals will not be binding on the Board, the Board will consider the results of the stockholder vote when making future decisions regarding these matters.

PROPOSAL 5—NON-BINDING ADVISORY APPROVAL OF SAY-ON-PAY FREQUENCY

In the case of Proposal 5, the frequency that receives the highest number of votes cast will be deemed to be the frequency selected by stockholders. Abstention and broker non-votes will not count in the determination of

 

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which alternative receives the highest number of votes cast. Although the results will not be binding on the Board, the Board will consider the results of the stockholder vote when making future decisions regarding the frequency with which it will submit the Company’s executive compensation program for stockholder approval.

PROPOSAL 6—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED ACCOUNTING FIRM

The affirmative vote of a majority of the voting power of the capital stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to approve Proposal 6. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. There will not be broker non-votes with respect to the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2022.

Q: When will the results of the vote be announced?

The preliminary voting results will be announced at the Annual Meeting. The final voting results will be published in a Current Report on Form 8-K filed with the SEC within four business days of the Annual Meeting.

Q: What is the deadline for submitting a stockholder proposal or director nomination for the 2023 Annual Meeting?

Stockholder proposals pursuant to SEC Rule 14a-8 for inclusion in the Company’s proxy statement and form of proxy for the Company’s annual meeting of stockholders to be held in 2023, must be received by the Company at our principal executive offices at 6330 South 3000 East, Suite 700, Salt Lake City, UT, 84121, Attn: Corporate Secretary, no later than the close of business on December 27, 2022. Stockholders wishing to make a director nomination or bring a proposal before the 2023 Annual Meeting (but not include it in the Company’s proxy materials) must provide written notice of such proposal to the Company’s Corporate Secretary at our principal executive offices no later than the close of business on February 25, 2023 and not earlier than the close of business on January 26, 2023, assuming the Company does not change the date of the 2023 Annual Meeting of Stockholders by more than 70 days before or after the anniversary of this Annual Meeting. If so, the Company will release an updated time frame for stockholder proposals. Any stockholder proposal or director nomination must comply with the other provisions of the Company’s Bylaws and be submitted in writing to the Corporate Secretary at the Company’s principal executive offices.

In addition, to comply with the universal proxy rules (once applicable), stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.

 

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Our business and affairs are managed under the direction of our Board, which is composed of eight directors. Our Charter provides that the authorized number of directors may be changed only by resolution of our Board. Our Charter also provides that our Board will be divided into three classes of directors, with the classes as nearly equal in number as possible. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring.

The following table sets forth the director class, name, age as of April 15, 2022, and other information for each member of our Board:

 

Name		Class				Age				Position		Year Elected				Year Current Term Expires				Expiration Year of Term For Which Nominated
Charles Goodman			I				61			Chair of the Board			2020				2022				2025
Ossa Fisher			I				45			Director			2021				2022				2025
Paul Holden Spaht, Jr.			I				47			Director			2020				2022				2025
Erik Akopiantz			II				57			Director			2020				2023
James Hutter			II				32			Director			2021				2023
Steve Daly			III				57			CEO and Director			2020				2024
Brian Jaffee.			III				36			Director			2020				2024
Lloyd “Buzz” Waterhouse			III				70			Director			2021				2024

The Board believes that in order for our Board to effectively guide us to long-term sustainable, dependable performance, it should be composed of individuals with sophistication and experience in the many disciplines that impact our business. In order to best serve our stockholders, our Board seeks to, as a whole, be competent in key corporate disciplines, including risk management, crisis management, leadership, regulatory issues, reputational issues, accounting and financial acumen, business judgment, governance, social responsibility, strategy and strategic planning. Additionally, we desire that the Board have specific knowledge related to our industry. The Compensation and Nominating Committee of the Board (the “Compensation and Nominating Committee”) believes that all directors must, at a minimum, meet the criteria set forth in the Company’s Code of Ethics and the Corporate Governance Guidelines, which specify, among other things, that the Compensation and Nominating Committee will consider criteria such as independence, diversity, skills, and qualifications in the context of the needs of the Board. In addressing issues of diversity in particular, the Compensation and Nominating Committee considers a nominee’s differences in gender, race, ethnicity and tenure. The Compensation and Nominating Committee believes that diversity of backgrounds and viewpoints is a key attribute for a director nominee. While we do not have a formal policy on diversity, when considering the selection of director nominees, the Compensation and Nominating Committee considers individuals with diverse viewpoints, accomplishments, cultural background, professional expertise, and diversity in gender, ethnicity, race, skills and geographic representation, that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of our stockholders. The Compensation and Nominating Committee also will consider a combination of factors for each director, including (a) the nominee’s good reputation and character to conduct themselves in accordance with the Company’s Code of Ethics, (b) whether the nominee has any conflict of interest that would impair his or her ability to fulfill the responsibilities of a member of the Board, (c) whether the nominee will be considered independent under the standards of the NYSE and heightened standards for audit and compensation committees, (d) the nominee’s educational background, experience, qualifications and skills relevant for effective management and oversight of the Company’s management, (e) whether the nominee has the time and willingness to carry out their duties and responsibilities effectively and (f) the diverse attributes of the nominee, such as differences in background, qualifications and personal characteristics.

 

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The Compensation and Nominating Committee has determined that all of our directors meet the criteria and qualifications set forth in the Company’s Code of Ethics, the Corporate Governance Guidelines and the criteria set forth above for director nominees. Moreover, each director possesses the following critical personal qualities and attributes that we believe are essential for the proper functioning of the Board to allow it to fulfill its duties for our stockholders: accountability, ethical leadership, governance, integrity, risk management, and sound business judgment. In addition, our directors have the confidence to assess and challenge the way things are done and recommend alternative solutions, a keen awareness of our business and regulatory and social realities of the environment in which we operate, the independence and high performance standards necessary to fulfill the Board’s oversight function, and the humility, professional maturity, and style to interface openly and constructively with other directors. Finally, the director biographies below include a non-exclusive list of other key experiences and qualifications that further qualify the individual to serve on the Board. These collective qualities, skills, experiences and attributes are essential to our Board’s ability to exercise its oversight function for the Company and its stockholders, and guide the long-term sustainable, dependable performance of the Company.

Subject to any earlier resignation or removal in accordance with the terms of our Charter, our Bylaws and the Director Nomination Agreement (as defined and discussed below), our Class I directors will serve until this Annual Meeting, our Class II directors will serve until the 2023 Annual Meeting of Stockholders, and our Class III directors will serve until the 2024 Annual Meeting of Stockholders. In addition, our Charter provides that our directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding shares of stock entitled to vote, voting together as a single class, for so long as our Principal Stockholder (as defined below) owns 40% or more of the total number of shares of our common stock then-outstanding. If our Principal Stockholder’s beneficial ownership falls below 40% of the total number of shares of our common stock outstanding, then our directors may be removed only for cause upon the affirmative vote of at least 66²⁄₃% of the voting power of our outstanding shares of stock entitled to vote thereon.

Director Nomination Agreement

In connection with our initial public offering (“IPO”) that took place in July 2021, we entered into a Director Nomination Agreement (the “Director Nomination Agreement”) by and among the Company and Thoma Bravo Fund XIII, L.P., a Delaware limited partnership, Thoma Bravo Fund XIII-A, L.P., a Delaware limited partnership, Thoma Bravo Executive Fund XIII, L.P., a Delaware limited partnership, Thoma Bravo Partners XIII, L.P., and Thoma Bravo UGP, LLC, a Delaware limited liability company (collectively, “Thoma Bravo” or our “Principal Stockholder”). The Director Nomination Agreement provides our Principal Stockholder the right to designate (i) all of the nominees for election to the Company’s Board for so long as our Principal Stockholder controls, in the aggregate, 40% or more of the total number of the Company’s shares of common stock beneficially owned by our Principal Stockholder upon completion of our IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization, or such amount of shares, as adjusted (the “Original Amount”); (ii) a number of directors (founded up to the nearest whole number) equal to 40% of the total directors for so long as our Principal Stockholder beneficially owns at least 30% and less than 40% of the Original Amount; (iii) a number of directors (rounded up to the nearest whole number) equal to 30% of the total directors for so long as our Principal Stockholder beneficially at least 20% and less than 30% of the Original Amount; (iv) a number of directors (rounded up to the nearest whole number) equal to 20% of the total directors for so long as our Principal Stockholder beneficially owns at least 10% and less than 20% of the Original Amount; and (v) one director for so long as our Principal Stockholder beneficially owns at least 5% of the Original Amount. In each case, our Principal Stockholder’s nominees must comply with applicable law and stock exchange rules. In addition, our Principal Stockholder is entitled to designate the replacement for any of its board designees whose service terminates prior to the end of the director’s term regardless of our Principal Stockholder’s beneficial ownership at such time. Our Principal Stockholder also has the right to have its designees participate on committees of our Board proportionate to its stock ownership, subject to compliance with applicable law and stock exchange rules. The Director Nomination

 

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Agreement also prohibits us from increasing or decreasing the size of our Board without the prior written consent of our Principal Stockholder. The Director Nomination Agreement will terminate at such time as our Principal Stockholder owns less than 5% of the Original Amount. Our Principal Stockholder may assign its designation rights under the Director Nomination Agreement to an affiliate.

Charles Goodman, Ossa Fisher and Paul Holden Spaht, Jr., the Class I directors that are nominated for election at the Annual Meeting, were nominated by Thoma Bravo pursuant to the Director Nomination Agreement.

Stockholder Recommendations for Director Nominees

Subject to the requirements of the Director Nomination Agreement, the Compensation and Nominating Committee will consider stockholder nominations for membership on the Board. For the 2023 Annual Meeting, nominations may be submitted to 6330 South 3000 East, Suite 700, Salt Lake City, UT, 84121, Attn: Corporate Secretary, and such nominations will then be forwarded to the Chair of the Compensation and Nominating Committee. Recommendations must be in writing and we must receive the recommendation no later than the close of business on February 25, 2023 and not earlier than the close of business on January 26, 2023. Recommendations must also include certain other procedural requirements as specified in our Bylaws. In addition, to comply with the universal proxy rules (once applicable), stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 27, 2023.

When filling a vacancy on the Board, the Compensation and Nominating Committee will identify the desired skills and experience of a new director and will nominate individuals who it believes can strengthen the Board’s capabilities and further diversify the collective experience represented by the then-current directors. The Compensation and Nominating Committee may engage third parties to assist in the search and provide recommendations. Also, directors are generally asked to recommend candidates for the position. The candidates will then be evaluated based on the process outlined in our Corporate Governance Guidelines and the Compensation and Nominating Committee charter, and the same process will be used for all candidates, including candidates recommended by stockholders.

Our Board is committed to diversity and, going forward, intends to seek qualified women and individuals from underrepresented minority groups to include in the pool from which new candidates are selected. Currently, of the eight directors on our Board, one is a woman.

 

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PROPOSAL 1 — ELECTION OF DIRECTORS

Our Board recommends that the nominees below be elected as members of the Board at the Annual Meeting.

 

Name		Class				Age(1)				Position		Year Elected				Year Current Term Expires				Expiration Year of Term For Which Nominated
Charles Goodman			I				61			Chair of the Board			2020				2022				2025
Ossa Fisher			I				45			Director			2021				2022				2025
Paul Holden Spaht, Jr.			I				47			Director			2020				2022				2025

 

(1)	Ages as of April 15, 2022.

Each above-named director nominee was recommended for election by the Compensation and Nominating Committee for consideration by the Board and our stockholders and has agreed to serve as a director, if elected. If, before the Annual Meeting, any nominee becomes unable to serve, or chooses not to serve, the Board may nominate a substitute. If that happens, the persons named as proxies on the proxy card will vote for the substitute. Alternatively, the Board may either let the vacancy stay unfilled until an appropriate candidate is identified or reduce the size of the Board to eliminate the unfilled seat.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.

Director Nominees to Serve for a Three-Year Term Expiring at the 2025 Annual Meeting of Stockholders.

Charles Goodman has served as Chair of the Board since March 2020. Mr. Goodman is an Operating Partner at Thoma Bravo. Prior to Thoma Bravo, Mr. Goodman served as Chief Executive Officer of PowerPlan, a Thoma Bravo portfolio company that sold to Roper Technologies in 2018. Prior to joining PowerPlan in 2015, Mr. Goodman was Chief Executive Officer of P2 Energy Solutions. Prior to joining P2 Energy Solutions, Mr. Goodman served as Chief Operating Officer of Ventyx and as EVP, Corporate Operations of Atmos Energy. Mr. Goodman currently serves as chair of the board for Adenza Group, Inc., Stamps.com Inc. (dba Auctane), Flexera, Frontline Technologies Group LLC (dba Frontline Education), Imperva, Imprivata, Quorum Software, QAD and RealPage Inc. and as a director for Apttus Corporation (dba Conga) and Hyland. Mr. Goodman holds a bachelor’s degree in Petroleum Engineering from Texas Tech University.

We believe Mr. Goodman’s extensive software and technology experience as well as his experience serving as chair of the board for other education, technology and software companies, makes him a valuable member of our Board.

Ossa Fisher has served on our Board since July 2021. Ms. Fisher has served as the President and Chief Operating Officer of Istation, Inc. since 2019 and previously served as Istation’s Chief Operating Officer from 2017 to 2018 and Chief Marketing Officer from 2015 to 2017. Prior to joining Istation, Ms. Fisher was the Senior Vice President of Strategy and Analytics at global dating leader, Match.com, where she served since May 2013. Swedish-born Fisher has a career history spanning growth strategy, customer analytics and marketing, all within competitive business industries. Ms. Fisher has a broad range of expertise in technology and media, including more than 10 years in the Technology, Media and Telecom practices of both Bain & Company from 2004 to 2013 and Goldman, Sachs & Co. from 1999 to 2002. Ms. Fisher also worked for the World Bank Group in the information technology investment division in 2003. Ms. Fisher holds a bachelor’s degree in Economics from Yale University, an M.A. in Education from Stanford University and an MBA from Stanford Graduate School of Business.

 

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We believe Ms. Fisher’s expertise in technology and media, including more than 10 years in the Technology, Media and Telecom practices of both Bain & Company and Goldman, Sachs & Co, and in the IT investment division of the World Bank Group, and strategic and customer service expertise from her experience at Match.com makes her a valuable member of our Board.

Paul Holden Spaht, Jr. has served on our Board since March 2020. Mr. Spaht has served as a Managing Partner at Thoma Bravo since November 2013. Mr. Spaht joined Thoma Bravo as a Vice President in 2005, became a Principal in 2008 and became a Partner in 2011. Prior to joining Thoma Bravo, he worked for several years at Morgan Stanley in both its investment banking and private equity divisions, and served as part of Thomas H. Lee Partners’ investment team. Mr. Spaht currently serves on the board of directors of several software and technology service companies in which certain investment funds advised by Thoma Bravo hold an investment, including Apttus Corporation (dba Conga), Adenza Group, Inc., Frontline Technologies Group, LLC (dba Frontline Education), and Trader Corporation. Mr. Spaht holds a bachelor’s degree of Arts, Economics from Dartmouth College and an MBA from Harvard Business School.

We believe Mr. Spaht’s business and director experience at technology and software companies makes him a valuable member of our Board.

Continuing Directors

Class II Directors (terms expiring at the 2023 Annual Meeting of Stockholders)

Erik Akopiantz has served on our Board since March 2020. Mr. Akopiantz has served as an Operating Partner at Thoma Bravo since April 2014. Mr. Akopiantz’s prior experience includes serving as the Chief Financial Officer of Roadnet Technologies, Inc. from 2011 to 2014, the Chief Operating Officer of Paranet Solutions, LLC from 2008 to 2011, the Chief Executive Officer of Digital Reach from 2006 to 2008, and various executive finance roles for The SABRE Group from 2002 to 2006. Mr. Akopiantz currently serves on the board of directors of several software and technology service companies in which certain investment funds advised by Thoma Bravo hold an investment, including Apttus Corporation (dba Conga), Barracuda Networks, Inc., Frontline Technologies Group LLC (dba Frontline Education), Imperva, Inc., Kofax Inc., Quorum Business Solutions, Inc., Proofpoint, Inc., RealPage Inc., Sophos Ltd., Stamps.com Inc. (dba Auctane) and Veracode Software, Inc. Mr. Akopiantz also served on the board of directors of a number of former Thoma Bravo portfolio companies, including iPipeline, Inc., Ellie Mae, Inc. and Planview, Inc. and an operating advisor to several Thoma Bravo portfolio companies. Mr. Akopiantz earned degrees in a Bachelor of Science, Finance from the University of Vermont and an MBA from the Rice University.

We believe Mr. Akopiantz’s extensive operating, board and industry experience and knowledge of our business makes him a valuable member of our Board.

James “Jaimie” Hutter has served on our Board since March 2020. Mr. Hutter joined Thoma Bravo in 2014 as an Associate and was promoted to Senior Associate in 2016, Vice President in 2018 and Senior Vice President in 2022. Mr. Hutter focuses primarily on application software investments. Prior to joining Thoma Bravo, he worked in investment banking at Morgan Stanley. Mr. Hutter currently serves on the board of directors of Apttus Corporation (dba Conga), Adenza Group, Inc. and Stamps.com Inc. (dba Auctane). Mr. Hutter earned his bachelor’s degree with Honors in Science, Technology, & Society at Stanford University.

We believe Mr. Hutter’s business and director experience at technology and software companies makes him a valuable member of our Board.

Class III Directors (terms expiring at the 2024 Annual Meeting of Stockholders)

Steve Daly has served as our Chief Executive Officer since July 2020. Mr. Daly has also been a member of our Board since March 2020. Prior to this, Mr. Daly was the Chief Executive Officer of LANDESK/Ivanti, an IT

 

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management and security software company from 2008 to 2021. Mr. Daly holds a bachelor’s degree in Mechanical Engineering and a master’s degree in Business Administration, both from Brigham Young University.

We believe Mr. Daly is qualified to serve as a member of our Board due to his experience as our Chief Executive Officer and his executive experience at other software companies.

Brian Jaffee has served on our Board since March 2020. Mr. Jaffee has been serving as a Partner at Thoma Bravo since 2021. Mr. Jaffee joined Thoma Bravo in 2014 as a Vice President. Prior to joining Thoma Bravo, Mr. Jaffee served as an Associate and Senior Associate at Veritas Capital. Prior to joining Veritas in 2009, he worked as an Investment Banking Analyst in the Leveraged Finance Group at Merrill Lynch, where he originated structured and executed leveraged loan and high yield bond financings for leveraged buyouts, strategic acquisitions, and recapitalizations across a wide range of industries. Mr. Jaffee currently serves on the board of directors of Apttus Corporation (dba Conga), Adenza Group, Inc., Stamps.com Inc. (dba Auctane) and Frontline Technologies Group, LLC (dba Frontline Education). Mr. Jaffee holds a bachelor’s degree, magna cum laude, in Finance from Miami University and an MBA from University of Chicago.

We believe Mr. Jaffee’s business and director experience at technology and software companies makes him a valuable member of our Board.

Lloyd “Buzz” Waterhouse has served on our Board since September 2021. Mr. Waterhouse has also worked a senior advisor to New Mountain Capital since 2015. Mr. Waterhouse was previously the Chief Executive Officer of McGraw-Hill Education from 2012 to 2014, and before that served as Chief Executive Officer and President of Harcourt Education Group, a global education company from 2006 to 2008. From 2001 to 2004, Mr. Waterhouse served as Chief Executive Officer and Chairman of Reynolds and Reynolds Co., a leading provider of integrated solutions to automotive retailers. From May 2010 to February 2016, Mr. Waterhouse served on the board of directors of SolarWinds, Inc. Mr. Waterhouse holds a B.S. in finance from Pennsylvania State University and an M.B.A. from Youngstown State University.

We believe Mr. Waterhouse’s leadership positions and experience as a Chief Executive Officer in organizations in the education industry as well as prior board experience makes him a valuable member of our Board.

Controlled Company; Independence Status

Our Principal Stockholder controls a majority of our outstanding common stock. As a result, we are a “controlled company.” Under The New York Stock Exchange (“NYSE”) rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:

 

•

we have a board that is composed of a majority of “independent directors,” as defined under the rules of NYSE;

 

•

we have a compensation committee that is composed entirely of independent directors; and

 

•

we have a nominating and corporate governance committee that is composed entirely of independent directors.

We currently have a majority of independent directors on our Board. In addition, our Audit Committee consists entirely of independent directors. Our Compensation and Nominating Committee, however, may not consist of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

 

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Board Meetings and Committees

Our Board has an Audit Committee and a Compensation and Nominating Committee. The composition, duties and responsibilities of these committees are as set forth below. In the future, our Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.

We became a public company upon the completion of our IPO in July 2021. For the year ended December 31, 2021, our Board held 13 meetings. Our Audit Committee and our Compensation and Nominating Committee were each formed in connection with the closing of our IPO. During 2021, the Audit Committee held 7 meetings and the Compensation and Nominating Committee held 7 meetings. Directors are expected to attend the annual meeting of stockholders and all or substantially all of the Board meetings and meetings of committees on which they serve. In 2021, each director attended at least 75% of the meetings of the Board during such director’s tenure and the total number of meetings held by any of the committees of the Board on which the director served.

Additionally, the rules of the NYSE require that non-management directors of a listed company meet periodically in executive sessions and that independent directors meet in executive session at least once a year. The Company’s independent directors met separately in executive session at least one time during 2021. Mr. Charles Goodman, Chair of the Board, presided over the executive sessions of the independent directors.

Each of our standing committees has a written charter which is available on the Investor Relations page of our website at https://ir.instructure.com. Our website is not part of this notice and proxy statement.

The table below sets forth the composition of our Board committees:

 

Board Member		Audit Committee		Compensation and Nominating Committee
Charles Goodman				X (Chair)
Ossa Fisher		X
Paul Holden Spaht, Jr				X
Erik Akopiantz		X (Chair)
James Hutter
Steve Daly
Brian Jaffee				X
Lloyd “Buzz” Waterhouse		X

Audit Committee

Our Audit Committee is composed of Erik Akopiantz, Ossa Fisher, and Lloyd “Buzz” Waterhouse, with Erik Akopiantz serving as chair of the committee. We comply with the audit committee requirements of the SEC and NYSE, which require that the Audit Committee be composed of all independent directors within one year following the IPO. Our Board has determined that Mr. Akopiantz, Ms. Fisher and Mr. Waterhouse meet the independence requirements of Rule 10A-3 under the Exchange Act and the applicable listing standards of NYSE. Our Board has determined that Mr. Akopiantz is an “audit committee financial expert” within the meaning of SEC regulations and applicable listing standards of NYSE. The Audit Committee’s responsibilities include:

 

•

appointing, approving the compensation of, and assessing the qualifications, performance and independence of our independent registered public accounting firm;

 

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•

pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

 

•

reviewing our policies on risk assessment and risk management;

 

•

reviewing, advising and overseeing the effectiveness of our cybersecurity and data protection programs and practices, including controls, policies and guidelines, security strategy and technology planning, compliance, and preparedness and incident response planning;

 

•

reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

 

•

reviewing the adequacy of our internal control over financial reporting;

 

•

establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;

 

•

recommending, based upon the Audit Committee’s review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;

 

•

monitoring our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

 

•

preparing the Audit Committee report required by the rules of the SEC to be included in our annual proxy statement;

 

•

reviewing all related party transactions for potential conflict of interest situations and approving all such transactions; and

 

•

reviewing and discussing with management and our independent registered public accounting firm our earnings releases and scripts.

Compensation and Nominating Committee

Our Compensation and Nominating Committee is composed of Charles Goodman, Brian Jaffee and Paul Holden Spaht, Jr., with Charles Goodman serving as chair of the committee. As a controlled company, we rely upon the exemption for the requirement that we have a Compensation and Nominating Committee comprised entirely of independent directors. The Compensation and Nominating Committee’s responsibilities include:

 

•

annually reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer;

 

•

evaluating the performance of our chief executive officer in light of such corporate goals and objectives and recommending to the Board the compensation of our chief executive officer;

 

•

reviewing and approving the compensation of our other executive officers;

 

•

appointing, compensating and overseeing the work of any compensation consultant, legal counsel or other advisor retained by the compensation committee;

 

•

conducting the independence assessment outlined in NYSE rules with respect to any compensation consultant, legal counsel or other advisor retained by the compensation committee;

 

•

annually reviewing and reassessing the adequacy of the committee charter in its compliance with the listing requirements of NYSE;

 

•

reviewing and establishing our overall management compensation, philosophy and policy;

 

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•

overseeing and administering our compensation and similar plans;

 

•

reviewing and making recommendations to our Board with respect to director compensation;

 

•

reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K;

 

•

developing and recommending to our Board criteria for board and committee membership;

 

•

subject to the rights of our Principal Stockholder under the Director Nomination Agreement, identifying and recommending to our Board the persons to be nominated for election as directors and to each of our Board’s committees;

 

•

developing and recommending to our Board best practices and corporate governance principles;

 

•

developing and recommending to our Board a set of corporate governance guidelines; and

 

•

reviewing and recommending to our Board the functions, duties and compositions of the committees of our Board.

Board Leadership Structure

The following section describes our Board leadership structure, the reasons our Board considers that this structure is appropriate at this time, the roles of various positions, and related key governance practices. Our Board believes that the mix of experienced independent directors, including those directors affiliated with our Principal Stockholder, and our Chief Executive Officer, that currently make up our Board, our Board committee composition and the separation of the roles of Chair and Chief Executive Officer benefit the Company and its stockholders.

Independence

The Board has determined that, with the exception of Mr. Daly, our Chief Executive Officer, all other members of the Board meet the NYSE requirements to be independent directors. In making this determination, our Board considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that our Board deemed relevant in determining their independence, including beneficial ownership of our common stock.

Chair and Chief Executive Officer

With respect to the roles of Chair and Chief Executive Officer, the Corporate Governance Guidelines provide that the roles may be separated or combined, and the Board will exercise its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances. Since the IPO, the roles of Chair and Chief Executive Officer have been separated. The Board believes that, at this time, separating the roles of Chair and Chief Executive Officer is the most effective leadership structure because it allows Mr. Daly to focus on the management of the Company and day-to-day operations, and allows Mr. Goodman, our Chair, to leverage his strong background to provide strategic guidance and effective oversight of management.

Self-Evaluation

Our Compensation and Nominating Committee was established upon the completion of our IPO in July 2021. Going forward, our Compensation and Nominating Committee will conduct an annual performance evaluation to determine whether the Board, its committees and management are functioning effectively. We expect that this will include survey materials as well as individual conversations between each director and the Chair. The evaluation will focus on the Board’s and the committees’ contributions to the Company, with an enhanced focus on areas in which the Board or management believes that the Board could improve.

 

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The Board will review the results of the annual board evaluation to determine whether the current leadership structure continues to be appropriate for the Company and its stockholders, and that the Board and its committees are functioning effectively. Our Corporate Governance Guidelines provide the flexibility for our Board to modify our leadership structure in the future as appropriate.

Management Succession

The Compensation and Nominating Committee reviews and approves corporate goals and objectives relevant to Chief Executive Officer compensation and evaluates the Chief Executive Officer’s performance in light of these goals and objectives. The Compensation and Nominating Committee recommends to the Board the Chief Executive Officer’s compensation level or changes to such level based on this evaluation and any other factors the committee deems relevant. In determining the long-term incentive component of Chief Executive Officer compensation, the Compensation and Nominating Committee may consider the Company’s performance and relative stockholder return, the value of similar incentive awards given to chief executive officers at comparable companies and the awards given to the Company’s Chief Executive Officer in past years. In evaluating and recommending Chief Executive Officer compensation, the Compensation and Nominating Committee will consider the results of the most recent stockholder advisory vote on executive compensation required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if applicable.

The entire Board works with the Compensation and Nominating Committee to evaluate potential successors to the Chief Executive Officer and other officers (the “Succession Plan”). The Compensation and Nominating Committee is responsible for periodically reviewing the Succession Plan, developing and evaluating potential candidates for officer positions and recommending to the Board any changes to and any candidates for succession under the Succession Plan

Hedging Transactions

Pursuant to our Insider Trading Policy, we prohibit our employees, directors and officers from engaging in any speculative or hedging transactions or any other transactions that are designed to offset any decrease in the value of our securities. Such hedging transactions may permit a director, officer or employee to continue to own Company securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other stockholders. Additionally, directors, officers and other employees are prohibited from holding our securities in a margin account or otherwise pledging our securities as collateral for a loan.

Risk Oversight

Our Board oversees the risk management activities designed and implemented by our management. Our Board executes its oversight responsibility for risk management both directly and through its committees. The full Board also considers specific risk topics, including risks associated with our strategic plan, business operations and capital structure. In addition, our Board receives detailed regular reports from members of our senior management and other personnel that include assessments and potential mitigation of the risks and exposures involved with their respective areas of responsibility.

Our Board has delegated to the Audit Committee oversight of our risk management process. Our other committees of our Board also consider and address risk as they perform their respective committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.

 

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Code of Ethics

We have adopted a Code of Ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. Our Code of Ethics is available on the Investor Relations page of our website at https://ir.instructure.com. We intend to disclose any amendments to the Code of Ethics, or any waivers of its requirements, on our website or in public filings.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or in the past fiscal year has served, as a member of the Board or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation and Nominating Committee.

Communications by Stockholders and Other Interested Parties with the Board

Stockholders and other interested parties may contact an individual director, the Board as a group, or a specified Board committee or group, including the independent directors as a group, by sending regular mail to:

Instructure Holdings, Inc.

6330 South 3000 East, Suite 700

Salt Lake City, UT 84121

Telephone: (800) 203-6755

Attention: Board of Directors

c/o Chief Legal Officer

Each communication should specify which director or directors the communication is addressed to, as well as the general topic of the communication. The Company will receive the communications and process them before forwarding them to the addressee. The Company may also refer communications to other departments within the Company. The Company generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information regarding the Company.

 

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EXECUTIVE OFFICERS

Below is a list of the names, ages, positions, and a brief account of the business experience of the individuals who serve as executive officers of the Company as of April 15, 2022:

 

Name		Age				Position
Steve Daly			57			Chief Executive Officer and Director
Mitch Benson			49			Chief Product Officer
Dale Bowen			52			Chief Financial Officer
Matthew A. Kaminer			48			Chief Legal Officer
Melissa Loble			49			Chief Customer Experience Officer
Frank Maylett			59			Chief Revenue Officer

Steve Daly is our Chief Executive Officer. Mr. Daly’s biographical information is included in the section titled “Proposal 1—Election of Directors” of this Proxy Statement.

Mitch Benson has served as our Chief Product Officer since August 2019, and previously served as Senior Vice President, Product from August 2017 to August 2019, as Vice President, Canvas Product from May 2016 to August 2017, and Vice President, K-12 Markets from 2014 to May 2016. Prior to joining Instructure in 2014, Mr. Benson was the Senior Vice President and Chief Learning Technology Officer of Pearson from 2009 to 2013 and a Senior Director of Microsoft from 2006 to 2009. Mr. Benson has also worked in the not-for-profit and public sectors in Washington State. Mr. Benson holds a bachelor’s degree in Comparative U.S. studies from the University of Washington, completed a fellowship in Not-for-Profit Leadership at the Stanford University Graduate School of Business, and holds a master’s degree in Information Systems from Capella University.

Dale Bowen has served as our Chief Financial Officer since April 2020. Prior to his role at Instructure, Mr. Bowen served as the Chief Financial Officer of Consilio, a technology enabled eDiscovery service provider from 2013 to 2020, and prior to that, as the Vice President of Finance of GridPoint from 2006 to 2013. Mr. Bowen holds a bachelor’s degree in Business Management from the University of Utah, and a master’s degree in Financial Economics for Public Policy from American University.

Matthew A. Kaminer has served as our Chief Legal Officer since 2015. Prior to this, Mr. Kaminer served as General Counsel of Collective, Inc., a video and mobile advertising company, from 2013 to 2015. Mr. Kaminer has also previously served as General Counsel of Epocrates, Inc. and MediMedia USA, Inc., and Assistant General Counsel and Chief Privacy Officer at WebMD Health Corp. Mr. Kaminer holds a bachelor’s degree in Computer Science from Pennsylvania State University and a Juris Doctorate from George Washington University.

Melissa Loble has served as our Chief Customer Experience Officer since January 2020, and previously served as Senior Vice President of Customer Success and Partnerships from October 2018 to April 2020, Vice President of Platform, Partnerships and Professional Services from April 2017 to October 2018, and Vice President of Platform and Partnerships from December 2013 to April 2017. Ms. Loble teaches leadership courses on managing technology for education change at University of California, Irvine. Ms. Loble holds a bachelor’s degree in Political Science and in History from University of California, Los Angeles, a master’s degree in educational policy from Teacher’s College, Columbia University, and a master’s degree in Business Administration from Columbia Business School.

Frank Maylett has served as our Chief Revenue Officer since April 2020, and previously served as Global Head of Sales from 2019 to 2020. Prior to joining Instructure in 2019, Mr. Maylett served as President and Chief Executive Officer of RizePoint, Inc. from September 2015 to August 2019 and, prior to that, as Executive Vice President for Global Sales, Services, and Alliances at Workfront from 2012 to 2015. Mr. Maylett holds a bachelor’s degree in Business from the University of Phoenix and studied Business Administration and Management at the University of Utah.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Compensation

The purpose of this compensation discussion and analysis section is to discuss the material components of the executive compensation program for our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated officers, who we refer to as our “Named Executive Officers” or “NEOs.” For the year ended December 31, 2021, our NEOs and their positions were as follows:

 

•

Steve Daly, our Chief Executive Officer (“CEO”);

 

•

Dale Bowen, our Chief Financial Officer (“CFO”);

 

•

Matthew A. Kaminer, our Chief Legal Officer (“CLO”);

 

•

Frank Maylett, our Chief Revenue Officer (“CRO”); and

 

•

Mitch Benson, our Chief Product Officer (“CPO”).

Compensation Philosophy and Objectives

Our Compensation and Nominating Committee reviews and approves the compensation of our NEOs and oversees and administers our executive compensation programs and initiatives. As we gain experience as a public company, we expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve. For example, since our IPO, we have reduced our reliance upon subjective determinations made by our Compensation and Nominating Committee in favor of a more empirically-based approach that involves benchmarking against peer companies. Accordingly, the compensation paid to our NEOs for fiscal year 2021 is not necessarily indicative of how we will compensate our NEOs after this fiscal year.

Our executive compensation program is designed to provide our Named Executive Officers with meaningful incentives and rewards, while effectively balancing the short-term and long-term interests of our stockholders with our ability to attract and retain talented executives. The Compensation and Nominating Committee has the primary responsibility for establishing our executive compensation philosophy and determining the specific components and levels of each Named Executive Officer’s compensation (or recommending to our Board for approval, with respect to our CEO). Our executive compensation program is based on four guiding principles, as set forth by the Compensation and Nominating Committee. We have created a compensation program that combines short-term and long-term components, cash and equity and fixed and performance-based contingent payments, in the proportions we believe achieve these four guiding principles:

 

•

enhance stockholder value by aligning the financial interests of our Named Executive Officers with those of our stockholders;

 

•

enable us to attract, motivate and retain the people needed to define and create industry-leading products and services;

 

•

integrate compensation closely with the achievement of our business and performance objectives; and

 

•

reward the individual performance that contributes to our short-term and long-term success.

To achieve these objectives, our Compensation and Nominating Committee expects to implement new compensation plans and maintain our current compensation plans in order to tie a substantial portion of the executives’ overall compensation to key strategic financial and operational goals such as profitability and revenue growth.

An important element of our compensation philosophy is to provide our Named Executive Officers with compensation packages that are competitive with the compensation offered to the executives in comparable positions in technology companies of similar size and industries in order to attract dynamic and innovative

 

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executives to lead our strategic initiatives. As such, the Compensation and Nominating Committee utilizes and relies significantly on a competitive market analysis when determining (or recommending to our Board, in the case of our CEO) the size, components and mix of our Named Executive Officers’ compensation packages.

Historically, our Named Executive Officers’ target annual compensation has consisted of three principal components: (a) base salary, (b) a performance-based cash bonus or sales commission and (c) long-term equity incentive compensation. The base salary component has primarily been designed to provide a predictable level of financial stability. The performance-based cash bonus has been designed to reward the achievement of the short-term goals contained in our operating plan. The base salary and performance-based cash bonus have been referred to as the cash component of the compensation plan. The equity compensation component is primarily designed to incentivize and retain our executives and to reward the achievement of our long-term financial and strategic objectives.

Compensation and Nominating Committee Procedures

In order to ensure that we continue to remunerate our executives appropriately, the Compensation and Nominating Committee retained Compensia as its independent compensation consultant to review its policies and procedures with respect to executive compensation. Compensia assists the Compensation and Nominating Committee by providing comparative market data on compensation practices and programs based on an analysis of peer competitors and by providing guidance on industry best practices. The Compensation and Nominating Committee retains the right to modify or terminate its relationship with Compensia or select other outside advisors to assist the Compensation and Nominating Committee in carrying out its responsibilities. In connection with its engagement of Compensia and based on the information presented to it, the Compensation and Nominating Committee assessed the independence of Compensia pursuant to applicable SEC and NYSE rules and concluded that Compensia’s work for the Compensation and Nominating Committee did not raise any conflict of interest for 2021. Outside of providing executive and director advisory services to our Compensation and Nominating Committee, Compensia provided no other services to the Company or its affiliates.

Mitigation of Risk

The Company has determined that any risks arising from its compensation programs and policies are not reasonably likely to have a material adverse effect on the Company. The Company’s compensation programs and policies mitigate risk by combining performance-based, long-term compensation elements with payouts that are highly correlated to the value delivered to stockholders. The combination of performance measures for annual bonuses and the equity compensation programs, as well as the multiyear vesting schedules for equity awards encourage employees to maintain both a short and a long-term view with respect to Company performance.

Elements of Compensation

Our current executive compensation program, which was set by our Compensation and Nominating Committee, consists of the following components:

 

•

base salary;

 

•

performance-based cash bonuses or sales commissions;

 

•

equity compensation in Instructure Parent, LP (“TopCo”);

 

•

Merger Awards (as defined below);

 

•

other executive benefits and perquisites; and

 

•

eligibility to receive severance payments and benefits.

We combine these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives and align the interests of our executive officers and other senior personnel with those of our stockholders.

 

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Base Salary

The base salary established for each of our NEOs is intended to reflect each individual’s responsibilities, experience, prior performance and other discretionary factors deemed relevant by our Compensation and Nominating Committee. Base salary is also designed to provide our NEOs with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in our corporate performance. Our Compensation and Nominating Committee determines market level compensation for base salaries based on our NEOs’ experience in the industry with reference to the base salaries of similarly situated executives in other companies of similar size and stage of development operating in our industry. This determination is informal and based primarily on the general knowledge of our Compensation and Nominating Committee of practices within our industry and such base salaries have been periodically reviewed and adjusted by our Compensation and Nominating Committee. The table below sets forth the base salaries of each of our NEOs who was employed by us as of December 31, 2021.

 

Name		Base Salary ($)
Steve Daly			450,000
Dale Bowen			330,000
Matthew A. Kaminer			331,000
Frank Maylett			330,000
Mitch Benson			300,000

Performance-Based Cash Bonuses

Each of our NEOs (other than Mr. Maylett) is eligible to receive a performance-based annual bonus, subject to employment on the date of payment. The Compensation and Nominating Committee approved the 2021 executive bonus objectives in April 2021 (such objectives, the “2021 Bonus Plan”). Under the 2021 Bonus Plan, performance-based cash bonuses were to be earned based on our actual performance as measured against a target Cash EBITDA amount equal to $177.7 million (the “Cash EBITDA Target”). Each of our NEOs (other than Mr. Maylett) was eligible to earn his annual performance-based cash bonus target (the “Incentive Target”) based on the Company’s achievement level of the Cash EBITDA Target. Mr. Maylett did not participate in the 2021 Bonus Plan, but instead had the potential to earn sales commissions based on the achievement of sales targets.

Our 2021 Bonus Plan provided each NEO (except Mr. Maylett) with eligibility to earn between 50% and 150% of the NEO’s Incentive Target. Actual bonus amounts under our 2021 Bonus Plan were based on the level of achievement of the Cash EBITDA Target based on the schedule shown in the table below, with straight line interpolation for the achievement of an actual Cash EBITDA between percentages of Cash EBITDA Target shown below.

 

Actual Cash EBITDA Achievement		Incentive Target Earned (%)
120% or greater of Cash EBITDA Target			150
100% of Cash EBITDA Target			100
90% of Cash EBITDA Target			50
Below 90% of Cash EBITDA Target			0

In general, we consider our Cash EBITDA Target for 2021 to have been challenging but achievable. Our actual Cash EBITDA amount for 2021 was approximately 108.8% of the Cash EBITDA Target and as a result, on February 28, 2022, each of our NEOs received a payment equal to 122% of his Incentive Target. The table below sets forth the Incentive Target (as both a percentage of base salary and a dollar amount based on the NEO’s base salary as of December 31, 2021) and actual bonus payment amounts for each our NEOs who was employed on the bonus payment date.

 

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Cash EBITDA is an internal metric used by management to evaluate the health of the business on a cash basis and generally reflects our earnings on an entirely cash basis prior to making adjustments for debt-related costs, including interest expense, taxes, depreciation, and amortization, as well as other items of a significant or unusual nature.

 

Name		Incentive Target (%)				Incentive Target ($)				Bonus Amount Earned ($)
Steve Daly			100				450,000				549,000
Dale Bowen			50				165,000				201,300
Matthew A. Kaminer			45				148,950				181,719
Frank Maylett(1)			—				—				—
Mitch Benson			50				150,000				183,000

 

(1)	Mr. Maylett did not participate in the 2021 Bonus Plan. In 2021, Mr. Maylett was paid $431,971 of sales commission based on the achievement of sales targets.

Long-Term Equity-Based Compensation

Prior to our IPO, we awarded equity-based compensation in the form of Class B Units of TopCo pursuant to the Second Amended and Restated Instructure Parent, LP Incentive Equity Plan and the Amended and Restated Limited Partnership Agreement of TopCo that are intended to constitute “profits interests” for U.S. federal income tax purposes (“Management Incentive Units”), which represent the right to share in any increase in the equity value of the company that exceeds a specified threshold. In connection with our IPO, our NEOs’ unvested Management Incentive Units were exchanged for restricted stock units (“IPO RSUs”) under the Instructure Holdings, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”).

In general, our Compensation and Nominating Committee previously considered an NEO’s current position with our Company, the size of the NEO’s total compensation package and the amount of existing vested and unvested equity awards, if any, then held by the NEO. Prior to the Take-Private Transaction, our Compensation and Nominating Committee determined the size of equity award grants after considering the following factors:

 

•

the competitive equity compensation practices for comparable positions identified in the applicable market analysis;

 

•

the executive’s level of responsibility and duties;

 

•

a comparison to grant levels of other executive officers;

 

•

individual NEO performance;

 

•

our corporate performance;

 

•

our total equity compensation costs relative to total expenses;

 

•

the NEO’s prior experience, experience within his or her specific job and breadth of knowledge; and

 

•

our corporate objectives for share-based compensation charges and earnings dilution.

For Messrs. Kaminer, Maylett and Benson, the results of the determinations made based on the factors listed above were carried forward in determining equity grants following the Take-Private Transaction. As a private company, no formal benchmarking efforts were made by our Compensation and Nominating Committee with respect to the size of equity grants made to NEOs and, in general, the determination process was very informal. Historically, our Compensation and Nominating Committee made all equity grant decisions with respect to our executive officers, and going forward, the Compensation and Nominating Committee will, subject to approval by the Board as deemed necessary by the Compensation and Nominating Committee, determine the size and terms and conditions of equity grants to our executive officers in accordance with the terms of the applicable incentive equity program and will approve them on an individual basis.

 

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Prior to the Take-Private Transaction, certain of our NEOs held equity awards that were cancelled and converted into cash consideration, which consideration was subject to generally the same terms as the corresponding, cancelled equity award, including vesting conditions (each such cash award being a “Merger Award”). For a discussion of the vesting and other material terms of the Management Incentive Units and Merger Awards, see “Narrative to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table.”

Effective upon the completion of our public offering, we implemented the 2021 Plan which is administered by our Compensation and Nominating Committee. Our 2021 Plan allows for the grant of equity incentives, such as grants of stock options, restricted stock, restricted stock units and stock appreciation rights. In light of the retentive value of the IPO RSUs and the Merger Awards, the Compensation and Nominating Committee did not award any additional grants to our NEOs in 2021 following our initial public offering.

Effective upon the completion of our public offering, we also implemented the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which authorizes the grant of options to employees that are intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Code.

Other Executive Benefits and Perquisites

We provide the following benefits to our executive officers on the same basis as other eligible employees:

 

•

health insurance;

 

•

contributions to health savings accounts;

 

•

paid time off;

 

•

life insurance and supplemental life insurance;

 

•

short-term and long-term disability; and

 

•

a 401(k) plan with matching contributions.

We believe these benefits are generally consistent with those offered by other companies and specifically with those companies with which we compete for employees.

Employment Agreements and Severance Benefits

We are party to executive agreements with our NEOs, which provide eligibility for severance payments and benefits in connection with certain qualifying terminations of employment. The terms of the executive agreements with our NEOs are described in the sections captioned “Narrative to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table” and “Potential Payments upon a Termination of Employment or a Change in Control.”

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code.

We focus on long-term stockholder value when determining all elements of compensation. As a result, tax deductibility is not our only consideration in awarding compensation. Section 162(m) of the Internal Revenue Code (the “Code”) generally limits the tax deductibility of compensation paid by public companies to covered employees, such that a public company generally can take a tax deduction for up to $1 million worth of compensation paid to any given covered employee in any calendar year. Although our Compensation and Nominating Committee is mindful of the benefits of tax deductibility when determining executive compensation, our Compensation and Nominating Committee may approve compensation that will not be fully-deductible in order to ensure competitive levels of total compensation for our executive officers and will retain flexibility to design compensation programs that are in the long-term interests of the Company and our stockholders, with deductibility of compensation being one of a variety of considerations taken into account.

 

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Section 280G of the Internal Revenue Code

Section 280G of the Code disallows a tax deduction with respect to “excess parachute payments” to certain executive officers of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% excise tax penalty on the individual receiving the “excess parachute payment”. Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans or programs and other equity-based compensation. “Excess parachute payments” are parachute payments that exceed a threshold determined under Section 280G of the Code based on an executive officer’s prior compensation. In approving compensation arrangements for our NEOs in the future, we expect that the Board will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 280G of the Code. However, the Board may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility of Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.

Section 409A Considerations

Another section of the Code, Section 409A, affects the manner by which deferred compensation opportunities are offered to our employees because Section 409A requires, among other things, that “non-qualified deferred compensation” be structured in a manner that limits employees’ abilities to accelerate or further defer certain kinds of deferred compensation. To the extent any of our existing compensation arrangements are subject to Section 409A of the Code, we intend to operate them in accordance with the applicable rules thereunder, and we will continue to review and amend our compensation arrangements if necessary to comply with Section 409A. We do not provide for excise tax gross-ups under Section 409, Section 280G or otherwise to our executive officers and do not expect to do so in the future.

Accounting for Stock-Based Compensation

We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our equity-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their equity-based awards using a variety of assumptions. ASC 718 also requires companies to recognize the compensation cost of their equity-based awards in their income statements over the period that an associate is required to render service in exchange for the award. Future grants of stock options, restricted stock, restricted stock units and other equity-based awards under our equity incentive award plans will be accounted for under ASC 718. The Compensation and Nominating Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

 

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2021 Summary Compensation Table

 

Name and Principal Position		Fiscal Year				Salary ($)				Bonus ($)				Non-Equity Incentive Plan Compensation ($)(1)				Stock Awards ($)				Option Awards ($)				All Other Compensation ($)				Total Compensation ($)
Steve Daly(2)			2021				450,000				—				549,000				4,603,570	(4)			—				2,000	(6)			5,604,570
CEO			2020				232,386				—				273,898				1,303,870	(5)			9,931,000				1,000				11,742,154
Dale Bowen(3)			2021				330,000				—				201,300				1,296,050	(4)			—				2,000	(6)			1,829,350
CFO			2020				242,917				—				150,370				12,055	(5)			2,863,000				51,000				3,319,342
Matthew A. Kaminer			2021				331,000				—				181,719				648,025	(4)			—				809,456	(6)			1,970,200
CLO			2020				319,967				700				180,825				24,110	(5)			1,431,500				3,168,538				5,125,640
			2019				266,667				—				—				4,604,106				—				101,093				4,971,866
Frank Maylett			2021				330,000				—				431,971				648,025	(4)			—				931,236	(6)			2,341,232
CRO			2020				892,854	(7)			—				—				—				1,431,500				1,162,496				3,486,850
			2019				189,780	(8)			—				—				3,167,567				—				1,095				3,358,442
Mitch Benson			2021				300,000				—				183,000				648,025	(4)			—				324,616	(6)			1,455,641
CPO			2020				290,000				700				145,680				—				1,431,500				349,488				2,217,368
			2019				241,689	(9)			—				74,400				876,104				—				51,093				1,243,286

 

(1)

Other than with respect to Mr. Maylett, the amounts in this column for 2021 reflect amounts earned in 2021 under the 2021 Bonus Plan based on the achievement of Company goals for the 2021 fiscal year. For 2021, our Board determined that each of Messrs. Daly, Bowen, Kaminer and Benson was entitled to 122% of his respective Incentive Target. Mr. Maylett did not participate in the 2021 Bonus Plan. Mr. Maylett had the potential to earn sales commissions based on the achievement of sales targets. The amount included for 2021 for Mr. Maylett represents sales commissions totaling approximately $431,971.

(2)	Mr. Daly was appointed as the Company’s CEO, effective as of July 1, 2020.

(3)	Mr. Bowen was appointed as the Company’s CFO, effective as of April 1, 2020.

(4)

The amounts reported in the “Stock Awards” column reflect the modification charge recognized for the Management Incentive Units that were converted into IPO RSUs for financial statement reporting purposes for the 2021 fiscal year in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our consolidated financial statements included our Annual Report on Form 10-K for the year ended December 31, 2021.

(5)

Prior to the initial public offering, certain of our NEOs purchased Class A Units and in connection with such purchase, were granted Class B Units (the “Granted Units”) which were treated as compensation. The amounts reported reflect the aggregate dollar amounts recognized for the Granted Units for financial reporting purposes for the 2020 fiscal year.

(6)	The amounts included in the “All Other Compensation” column for 2021 include the following:

 

Name		Merger Awards ($)				401(k) Match ($)				Total ($)
Steve Daly			—				2,000				2,000
Dale Bowen			—				2,000				2,000
Matthew A. Kaminer			807,456				2,000				809,456
Frank Maylett			929,236				2,000				931,236
Mitch Benson			322,616				2,000				324,616

The amounts included in the “Merger Awards” column represent the amounts paid to the NEOs in respect of Merger Awards as consideration for vested equity awards at the time of the Take-Private Transaction and

 

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amounts that were paid as consideration for unvested equity awards that subsequently met the vesting conditions in 2021 and were paid out following the Take-Private Transaction.

 

(7)	The amount included in the “Salary” column for 2020 for Mr. Maylett represents base salary payments of $319,000 and sales commissions totaling approximately $573,854.

(8)	The amount included in the “Salary” column for 2019 for Mr. Maylett represents base salary payments of $93,500 and sales commissions totaling approximately $96,280.

(9)	The amount included in the “Salary” column for 2019 for Mr. Benson represents base salary payments of $238,333 and a one-time sales commission payment totaling approximately $3,356.

2021 Grants of Plan-Based Awards

The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2021 with respect to our NEOs. Please see the “Narrative to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table” below for additional information about the vesting parameters and other material terms applicable to equity awards reflected in the table immediately below.

 

										Estimated Future Payouts Under Non-Equity Incentive Plan(1)												All Other Stock Awards:				Grant date fair value of stock and option awards ($)(2)
Name		Award Type				Grant Date				Threshold ($)				Target ($)				Maximum ($)				Number of Shares of Stock or Units (#)
Steve Daly			2021 Bonus Plan				—				225,000				450,000				675,000				—				—
			IPO RSUs				7/21/2021				—				—				—				1,075,956				4,603,570
Dale Bowen			2021 Bonus Plan				—				82,500				165,000				247,500				—				—
			IPO RSUs				7/21/2021				—				—				—				289,197				1,296,050
Matthew A. Kaminer			2021 Bonus Plan				—				74,475				148,950				223,425				—				—
			IPO RSUs				7/21/2021				—				—				—				144,598				648,025
Frank Maylett			2021 Bonus Plan				—				—				—				—				—				—
			IPO RSUs				7/21/2021				—				—				—				144,598				648,025
Mitch Benson			2021 Bonus Plan				—				75,000				150,000				225,000				—				—
			IPO RSUs				7/21/2021				—				—				—				144,598				648,025

 

(1)	The amounts reported in these columns reflect the performance-based bonus opportunity under our 2021 Bonus Plan, the terms of which are summarized under “Compensation Discussion and Analysis—Elements of Compensation” above.

(2)

The values reported reflect the modification charge recognized for the Management Incentive Units that were converted into IPO RSUs for financial statement reporting purposes for the 2021 fiscal year in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 10 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Narrative to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table

Executive Agreements with NEOs

In June 2021, we entered into executive agreements with all of our NEOs, which became effective on July 26, 2021 (collectively, the “Executive Agreements”). The Executive Agreements superseded the offer letters

 

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previously in place with each of Messrs. Daly, Benson, and Bowen, and the executive agreements previously in place with each of Messrs. Kaminer and Maylett. The Executive Agreements generally provide for at-will employment and eligibility for severance payments and benefits upon a qualifying termination of employment. For additional information with respect to such severance payments and benefits, see “Potential Payments upon a Termination of Employment or a Change in Control.”

Merger Awards

Prior to the Take-Private Transaction, each of Messrs. Kaminer, Maylett and Benson held restricted stock units and/or stock option awards under the Company’s then-existing equity incentive plans. In connection with the Take-Private Transaction, (a) all vested equity awards granted under the Company’s then-existing equity incentive plans, including stock options and restricted stock unit awards were cancelled and converted into Merger Awards in the form of cash consideration equal to $49.00 multiplied by the number of shares subject to the vested equity award (less the applicable per share exercise price of those vested shares, with respect to any options), subject to any required tax withholdings, payable shortly after the closing of the merger and (b) all unvested equity awards were cancelled and converted into Merger Awards in the form of cash consideration equal to $49.00 multiplied by the number of shares subject to the unvested equity award (less the applicable per share exercise price of those unvested shares, with respect to any options), subject to any required tax withholdings, which consideration was subject to generally the same terms as the corresponding, cancelled equity award, including vesting conditions.

IPO RSUs

On July 21, 2021, Management Incentive Units were converted into the IPO RSUs, which are time-vesting restricted stock units that vest in 11 (12, for Mr. Daly) equal quarterly installments commencing September 1, 2021, subject to continued employment.

Outstanding Equity Awards at 2021 Fiscal Year End

The following table summarizes the outstanding equity awards held as of December 31, 2021 by each of the NEOs, using the closing stock price of $23.98.

 

Stock Awards(1)

Name and Principal Position

Grant Date

Number of shares or units of stock that have not vested (#)(2)

Market value of shares or units of stock that have not vested ($)

Steve Daly

7/21/2021

896,329

21,493,969

CEO

Dale Bowen

7/21/2021

236,614

5,674,004

CFO

Matthew A. Kaminer

7/21/2021

118,307

2,837,002

CLO

Frank Maylett

7/21/2021

118,307

2,837,002

CRO

Mitch Benson,

7/21/2021

118,307

2,837,002

CPO

 

(1)	Amounts listed are Management Incentive Units that were converted to IPO RSUs upon our IPO. See “Narrative to Summary Compensation and 2021 Grants of Plan-Based Awards Table—IPO RSUs” for additional information.

 

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(2)	The IPO RSUs generally vest in 11 (12, for Mr. Daly) equal quarterly installments commencing September 1, 2021. For additional information with respect to the vesting terms of the IPO RSUs, see “Narrative to Summary Compensation and 2021 Grants of Plan-Based Awards Table—IPO RSUs.”

2021 Options Exercised and Stock Vested

The Company does not issue stock options to any of its employees. The following table summarizes the value received from stock grants vested during 2021.

 

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)(1)				Value Realized on Vesting ($)(2)
Steve Daly			179,627				4,014,663
Dale Bowen			52,583				1,175,229
Matthew Kaminer			26,291				587,603
Frank Maylett			26,291				587,603
Mitch Benson			26,291				587,603

 

(1)	Represents the gross number of shares acquired on vesting of IPO RSUs, without taking into account any shares withheld to satisfy applicable tax obligations.

(2)	Represents the value of the vested IPO RSUs calculated by multiplying (x) the number of vested IPO RSUs by (y) the closing price on the vesting date.

2021 Pension Benefits

Our NEOs did not participate in, or otherwise receive any benefits under, any pension plan sponsored by the Company during the 2021 fiscal year. For a description of the Company’s 401(k) plan, see the description in Note 15 to our financial statement included in our Annual Report on Form 10-K for the year ended December 31, 2021.

2021 Nonqualified Deferred Compensation

Our NEOs did not participate in or have account balances in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us.

Potential Payments upon a Termination of Employment or a Change in Control

Executive Agreements

Termination in Connection with a Change in Control

Each of the Executive Agreements provide that, upon a termination of the Named Executive Officer by the Company without “cause” or a resignation by the Named Executive Officer for “good reason” (each as defined in the Executive Agreements), in either case within three months prior to (and contingent upon the consummation of a “change in control” (as defined in the Executive Agreements)), in connection with, or within 12 months following the effective date of a “change in control” (a “CIC Termination”, and such benefits, “CIC Severance”)), the Named Executive Officer is eligible to receive severance consisting of (a) continued installments of the NEO’s then current base salary for (i) in the case of Mr. Daly, 18 months, and (ii) in the case of Messers. Bowen, Kaminer, Maylett and Benson, 12 months, following the Named Executive Officer’s separation in accordance with the Company’s regular payroll schedule; (b) reimbursement of COBRA premiums for up to (i) in the case of Mr. Daly, 18 months and (ii) in the case of Messers. Bowen, Kaminer, Maylett and Benson, 12 months, following the separation date; and (c) full vesting of all outstanding unvested stock awards then held by the NEO immediately prior to the date of separation.

 

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Messrs. Bowen, Kaminer and Benson’s Executive Agreements also provide that if the CIC Termination occurs on or after March 31 in a calendar year, the Named Executive Officer is eligible for a lump sum amount equal to 80% of their then current target bonus, pro-rated based on the number of full months employed in the year of separation. Mr. Kaminer’s Executive Agreement also states that he is eligible to receive full acceleration of all of his unvested Merger Awards, with any such amounts becoming payable in a lump sum no later than March 15 of the year following any such termination.

These payments are, in each case, subject to the NEO’s timely execution and non-revocation of a general release of claims in favor of the Company.

Termination without a Change in Control

Upon a termination of the Named Executive Officer by the Company without “cause” or a resignation by the Named Executive Officer for “good reason” that is not a CIC Termination, the Named Executive Officers are eligible for severance (“Non-CIC Severance”) of (a) six months (or, in the case of Mr. Daly, 12 months) of the NEO’s then current base salary in accordance with the regular payroll schedule and (b) a reimbursement of COBRA premiums for up to six months (or, in the case of Mr. Daly, 12 months) following the separation date; in each case subject to the timely execution and non-revocation of a general release of claims in favor of the Company. Additionally, in connection with the Take-Private Transaction, Mr. Kaminer’s Executive Agreement provides that he is eligible to receive full acceleration of all of his unvested Merger Awards, with any such amounts becoming payable in a lump sum no later than March 15 of the year following any such termination, subject to his timely execution and non-revocation of a general release of claims in favor of the Company.

These payments are, in each case, subject to the NEO’s timely execution and non-revocation of a general release of claims in favor of the Company.

Payment of any of the CIC Severance or Non-CIC Severance is conditioned upon (i) the Named Executive Officer continuing to comply with the Named Executive Officer’s obligations under our standard Confidentiality and Intellectual Property Agreement and (ii) the Named Executive Officer’s resignation from all positions with the Company, any subsidiaries and affiliates, and the Board (if applicable).

As defined in the Executive Agreements, “good reason” means the occurrence of any of the following without the NEO’s written consent: (i) a material reduction in job duties, responsibilities, title or authority inconsistent with the NEO’s position with the Company (provided, however, that any such reduction or change (including a change in title) after a change in control will not constitute “good reason” if the executive retains reasonably comparable duties, position and responsibilities with respect to the Company’s business within the successor entity following a change of control); (ii) a material reduction of the NEO’s then current base salary, representing a reduction of more than 10% of the NEOs’s then current base salary (provided, that an across-the-board reduction in the salary level of all executive officers of the Company by the same percentage amount as part of a general salary level reduction implemented prior to a change in control will not constitute such a material salary reduction); or (iii) the relocation of the NEO’s principal place of employment to a place that increases the NEO’s one-way commute by more than 35 miles as compared to the NEO’s then current principal place of employment immediately prior to such relocation; provided, that the NEO gives written notice to the Company of the event forming the basis of the termination for “good reason” within 60 days after the date on which the Company gives the NEO written notice of the Company’s affirmative decision to take an action set forth in clause (i), (ii),or (iii) above, the Company fails to cure such basis for the “good reason” resignation within 30 days after receipt of the NEO’s written notice and the NEO terminates the NEO’s employment within 30 days following the expiration of the cure period.

As defined in the Executive Agreements, “cause” means that the NEO is terminated by the Company due to the NEO’s (i) commission of any material act of dishonesty; (ii) conviction of a felony or any crime involving moral turpitude; (iii) commission of any action that that has caused or is reasonably expected to result in material harm

 

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to the business or the reputation of the Company (excluding any action taken in good faith); (iv) material violation of any duty or obligation owed by that NEO to the Company which causes or is reasonably expected to cause material injury to the Company; (v) material breach of any of the NEO’s obligations under any written agreement or covenant with the Company; or (vi) repeated refusal to substantially perform the NEO’s assigned duties.

Pursuant to the Executive Agreements, “change in control” has the meaning set forth in the 2021 Plan. As set forth in the 2021 Plan, “change in control” generally means (a) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; (b) a merger, reorganization, or consolidation of the Company or in which equity securities of the Company are issued; (c) during the period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (d) a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets.

Single-Trigger Vesting upon a Change in Control

Mr. Daly’s Executive Agreement provides for single-trigger vesting of all outstanding equity awards held by Mr. Daly effective immediately prior to a change in control.

IPO RSUs

Pursuant to the IPO RSU agreements, in the event an NEO incurs a termination of service due to the NEO’s death or disability, any unvested portion of the IPO RSUs outstanding as of immediately prior to such termination will automatically vest.

 

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Potential Payments upon a Termination of Employment or a Change in Control

The precise amount that each NEO below would receive cannot be determined with certainty until a qualifying termination or change in control has occurred. However, the table below provides estimates of the amounts each NEO would have received if a qualifying termination and/or a change in control had occurred on December 31, 2021.

 

Name and Principal Position(1)		Event		Salary Continuation ($)				Pro-Rated Bonus ($)				Continued Health Benefits ($)				Acceleration of Equity Awards/ Merger Awards ($)				Total Payments ($)
Steve Daly         CEO		Change in Control			—				—				—				21,493,969	(4)			21,493,969
		CIC Termination(2)			675,000				—				27,879				21,493,969	(4)			22,196,849
		Non-CIC Termination(3)			450,000				—				18,586				—				468,586
		Death or Disability Termination(5)			—				—				—				21,493,969				21,493,969
Dale Bowen         CFO		Change in Control			—				—				—				—				—
		CIC Termination(2)			330,000				132,000				18,586				5,674,004	(4)			6,154,590
		Non-CIC Termination(3)			165,000				—				9,293				—				174,293
		Death or Disability Termination(5)			—				—				—				5,674,004				5,674,004
Matthew A. Kaminer         CLO		Change in Control			—				—				—				—				—
		CIC Termination(2)			331,000				119,160				18,586				3,713,768	(4)(6)			4,182,514
		Non-CIC Termination(3)			165,500				—				9,293				876,766	(6)			1,051,559
		Death or Disability Termination(5)			—				—				—				2,837,002				2,837,002
Frank Maylett,         CRO		Change in Control			—				—				—				—				—
		CIC Termination(2)			330,000				—				18,586				2,837,002	(4)			3,185,588
		Non-CIC Termination(3)			165,000				—				9,293				—				174,293
		Death or Disability Termination(5)			—				—				—				2,837,002				2,837,002
Mitch Benson,         CPO		Change in Control			—				—				—				—				—
		CIC Termination(2)			300,000				120,000				27,287				2,837,002	(4)			3,284,289
		Non-CIC Termination(3)			150,000				—				13,644				—				163,644
		Death or Disability Termination(5)			—				—				—				2,837,002				2,837,002

 

(1)	The Named Executive Officers are each party to an Executive Agreement that, in each case, provide eligibility for severance in the event of certain qualifying terminations of employment as described in further detail above.

(2)

The “CIC Termination” values reflect amounts that the Named Executive Officers would have been eligible to receive in the event of a termination of employment without “cause” or a resignation for “good reason” occurring on December 31, 2021, if such termination had been within three months prior to (and contingent upon the consummation of a “change in control” of the Company), in connection with, or within twelve months following the effective date of such “change in control,” as described in further detail above.

(3)

The “Non-CIC Termination” values reflect amounts that the Named Executive Officers would have been eligible for in the event of a termination of employment without “cause” or a resignation for “good reason” occurring on December 31, 2021 that was not a CIC Termination, as described in further detail above.

(4)	Reflects accelerated vesting of all outstanding equity awards.

 

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(5)	The “Death or Disability Termination” values reflect the amounts that the Named Executive Officers would have been eligible to receive in the event the Named Executive Officer incurred a termination due to death or disability on December 31, 2021.

(6)	Reflects accelerated vesting of any unvested portion of Mr. Kaminer’s Merger Award.

2021 Non-Employee Director Compensation

The following table presents the total compensation for each person who served as a non-employee member of our Board during fiscal year 2021. Other than as set forth in the table and described more fully below, we did not pay any compensation, reimburse any expense of, make any equity awards or non-equity awards to, or pay any other compensation to any of the other non-employee members of our Board in fiscal year 2021.

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)(1)				Total ($)
Charles Goodman			98,668				—				98,668
Erik Akopiantz			50,000				—				50,000
Ossa Fredricsson Fisher			17,717				450,000				467,717
Buzz Waterhouse			13,370				450,008				463,378
James Hutter			13,288				—				13,288
Brian Jaffee			15,946				—				15,946
Paul Holden Spaht, Jr.			15,946				—				15,946

 

(1)

The amounts reported in the “Stock Awards” column reflect the grant date fair value of RSUs that vest annually over a three-year period at each annual meeting. In addition, as of December 31, 2021, Mr. Goodman, Mr. Akopiantz, Ms. Fisher and Mr. Waterhouse held 96,997, 25,866, 22,500, and 19,651 outstanding IPO RSUs, respectively.

Non-Employee Director Policy

Pursuant to our non-employee director compensation policy, each non-employee director receives an annual cash retainer of $30,000. In addition, the Audit Committee chair receives a cash retainer of $20,000, and the Compensation & Nominating Committee chair receives a cash retainer of $12,000. Members of the Audit Committee and Compensation & Nominating Committee (other than the chairpersons of such committees) receive an additional cash retainer of $10,000 and $6,000, respectively. Each non-employee director may elect to receive his or her annual cash compensation in the form of RSUs.

In addition, upon their initial appointment to the Board, each non-employee director receives an initial grant of RSUs (the “Initial Appointment RSUs”) with a value of (i) $150,000, pro-rated for the number of days that the non-employee director has served on the Board (the “Pro-rated Portion”), plus (ii) $300,000 (the “Annual Portion”). The Initial Appointment RSUs vest annually with (a) the Pro-rated Portion vesting on the last trading day immediately prior to the date of the first annual shareholders meeting following such appointment and (b) the Annual Portion vesting (i) 50% on the last trading day immediately prior to the date of the second annual shareholders meeting following such appointment and (ii) 50% on the last trading day immediately prior to the date of the third annual shareholders meeting following such appointment, subject in each case to continuous service through the applicable vesting date.

If a non-employee director is initially elected at an annual shareholders meeting rather than appointed, such non-employee director will automatically be granted RSUs with a value of $450,000 (an “Initial Election RSU Grant”). The Initial Election RSU Grant will vest annually with (i) 33.3% vesting on the last trading day immediately prior to the date of the annual shareholder meeting, (ii) 33.3% vesting on the last trading day immediately prior to the date of the second annual shareholder meeting following such election, and (iii) 33.4%

 

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vesting on the last trading day immediately prior to the date of the third annual shareholder meeting following such election, subject in each case to continuous service through the applicable vesting date (the “Three Year Vesting Schedule”).

On the date of each annual shareholders meeting, each non-employee director (i) who is then continuing in office after the date of the annual shareholders meeting (and who, for the avoidance of doubt, is not elected for the first time to be a member of the Board at such annual shareholders meeting) and (ii) who has continued his or her service through the third annual shareholders meeting since our IPO or whose Initial Appointment RSU Grant, Initial Election RSU Grant or most recent Triennial RSU Grant (as defined below), as applicable, has fully vested on the last trading day immediately prior to the date of such annual shareholders meeting will automatically be granted RSUs with a value of $450,000 (the “Triennial RSU Grant”). The Triennial RSU Grant will vest in accordance with the Three Year Vesting Schedule.

In the event of a Change in Control (as defined in the 2021 Plan), any unvested portion of any RSU award granted pursuant to the non-employee director compensation policy will fully vest, subject to continuous service to the effective date of such transaction.

Limitations of Liability and Indemnification Matters

We have adopted provisions in our Charter that limit the liability of our directors for monetary damages for breach of their fiduciary duties, except for liability that cannot be eliminated under the Delaware General Corporation Law (the “DGCL”). Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for any of the following:

 

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any breach of their duty of loyalty to the corporation or its stockholders;

 

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acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

 

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unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or

 

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any transaction from which the director derived an improper personal benefit.

 

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This limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our Charter and our Bylaws also provide that we shall indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law. We believe that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified parties. Our Bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether our Bylaws would permit indemnification.

We have entered into separate indemnification agreements with our directors and executive officers, in addition to indemnification provided for in our charter documents. These agreements, among other things, provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by this person in any action or proceeding arising out of this person’s services as a director or executive officer or at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.

 

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Equity Compensation Plan Information

The following table sets forth information regarding the Company’s equity compensation plans as of the year ended December 31, 2021.

 

Plan Category		Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights				Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights				Number of Securities Remaining Available for Future Issuances Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
Equity Compensation Plans Approved by Security Holders(1)			5,747,184	(2)		$	—	(2)			14,542,188	(3)
Equity Compensation Plans Not Approved by Security Holders			—				—				—
Total			5,747,184			$	—				14,542,188

 

(1)

Represents the 2021 Plan and the Instructure Holdings, Inc. 2021 Employee Stock Purchase Plan (the “ESPP”). As of December 31, 2021, the number of shares reserved for issuance under the 2021 Plan and the ESPP were 18,000,000 shares and 1,900,000 shares, respectively, subject to adjustments in the event of a stock split, stock dividend or other change in our capitalization. The number of shares reserved for issuance under the 2021 Plan automatically increases each January 1, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31, or such lesser amount of shares as determined by the Board. The total number of shares reserved for issuance under the ESPP increases annually on January 1 ending in 2031 by a number of shares of our common stock equal to 1% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, or such lesser number of shares as determined by the Board. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated, other than by exercise, under the 2021 Plan are added back to the shares of common stock available for issuance under such plan.

(2)	Represents 5,747,184 RSUs granted under the 2021 Plan as of December 31, 2021. RSUs do not have an exercise price.

(3)	As of December 31, 2021, there were 12,642,188 shares available for grant under the 2021 Plan and 1,900,000 shares available for grant under the ESPP.

 

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