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We operate the world’s largest work marketplace that connects businesses with independent talent, as measured by gross services volume. Our platform provides various tools that bring greater ease of operations and certainty to both sides of a transaction.

 

 

Building on our ESG materiality assessment and identifying the topics most critical to our success, we focus on the following impact areas:

 

 

 

To Our Stockholders,

Upwork had a banner year in 2021. We saw record financial performance, driven by fundamental changes to the nature of work. Companies are experimenting with new ways of accessing critical skills, constructing teams, and getting work done. Professionals are exploring career paths that veer widely from the traditional or linear. And in this new reality, Upwork is becoming the ideal place for talent and clients to collaborate and achieve more together. I’m excited by what we accomplished this past year and how we’ve set the stage for growth in 2022 and beyond.

Before delving too deeply into our operational and financial highlights, I want to address the war in Ukraine. In early March, we decided to suspend operations in Russia and Belarus in response to Russian President Vladimir Putin’s unprovoked invasion of Ukraine. It was a difficult decision but one that aligns with our core values and the operational realities on the ground.

We’ve taken a number of measures to support the people of Ukraine. We introduced a mechanism for individuals to donate directly to professionals in Ukraine through Project Catalog™. We also made a $1 million donation to Direct Relief International and matched $100,000 in employee donations to nonprofit relief efforts in Ukraine. We launched product enhancements that help Ukraine-based talent maintain their livelihoods during this time of uncertainty and peril. For example, their professional reputation on our platform is protected, even if they’re unable to work, and they can receive expedited payments and communicate with clients about their safety and work status. We are exploring additional ways to aid those impacted by the war, including highlighting displaced talent and helping them find new work opportunities among our global client base.

I am humbled by the work Upwork team members have done to support the community in Ukraine and help ensure the safety, security, and well-being of talent and colleagues affected by the crisis.

Returning to our performance, I am proud of how Upwork has grown significantly by anticipating and addressing our customers’ needs amid the transformation taking place in the world of work. Professionals are seeking more flexibility and control as they chart their careers in ways that better speak to their needs, passions, and skills. Companies are embracing remote work models, hybrid teams of full-time employees and independent professionals, and other new work practices.

Upwork is at the heart of this acceleration of career and work innovation. In 2021, we launched Talent Scout™ and Virtual Talent Bench™, expanded Project Catalog globally, and added features and improvements to our Enterprise Suite, among other product enhancements. The evolution of our product offerings gives our customers additional ways to engage with each other and collaborate on our work marketplace.

Our business is built for the type of work and career innovation that is happening right now. In 2021, gross services volume (GSV)¹ grew to an all-time high of $3.5 billion, representing a 41% year-over-year increase. We also reported record revenue of $503 million, up 35% year-over-year. Top talent continues to seek work on our platform. In the fourth quarter of 2021, we surpassed $15 billion in lifetime talent earnings.² We also ended the fourth quarter with approximately 771,000 active clients.³ A growing number of these clients are spending six and seven figures with us annually.

We view our performance in 2021 as a starting point. Ahead of us is a total addressable market of more than $1.3 trillion. Upwork is well-positioned to capitalize on this opportunity. We have 20 years of experience, a trusted and scalable platform, and proprietary transaction data for over 5 million jobs per year, giving us unique insight into the factors that create successful long-term working relationships between clients and talent. Perhaps most importantly, we have an agile and innovative team that has shown time and again its ability to move the business forward, no matter market conditions.

Building and supporting a diverse team of professionals is critical to Upwork’s mission of creating economic opportunities so that people have better lives. We know that, while talent is equally distributed, opportunity is not. We are intensely focused on increasing access to fulfilling work that helps people reach their potential, both for our team members and those who use our platform.

Our work marketplace is purposely designed to help level the playing field. Rather than relying on conventional measures of professional achievement, such as background, educational opportunities, or industry connections, talent on Upwork can build their careers through meritocracy: portfolios of their work, client feedback, and platform earnings. We advance inclusive economic opportunity by continually improving the accessibility of our platform, employing inclusive design principles when developing new products and services, and creating solutions that serve the diverse perspectives and needs of our global audience.

As a unique example, Upwork’s Diversity-Certified Badges help our clients prioritize representation by hiring talent from historically underrepresented communities, including minority-, woman-, LGBTQIA+-, U.S. veteran-, and disability-owned businesses.

At the same time, we strive to cultivate an inclusive culture within our own organization. Upwork’s Office of Diversity, Inclusion, and Belonging (DIBs), led by Erin L. Thomas, PhD, helps build operating models, educational tools, and accountability mechanisms that move us closer to a more equitable working environment.

A key element of our DIBs program is our eight Upwork Belonging Communities (UBCs), employee-led groups that help team members forge relationships and create a sense of connection and belonging. In 2021, we launched our newest UBC, UpMIND, for neurodiverse Upworkers and allies. Over half of our employee population participates in at least one UBC.

2021 also marked the launch of GlowUP, a dedicated enrichment program for and by our leaders of color, through which they examine leadership challenges and grow their influence at Upwork. In March 2022, we created a similar program to help cultivate early- to mid-career leaders of color.

Through Upwork’s Inclusive Sourcing Program, started in 2020, we are building a diverse portfolio of suppliers to not only meet Upwork’s procurement needs but also help drive equity, innovation, and economic opportunity among the wider business community. We aim to increase the number of underrepresented suppliers in our request for proposal exercises and grow our underrepresented supplier spend.

I am proud of these efforts and the recognition Upwork has received for them. This includes being named to the 2022 Human Rights Campaign Foundation’s Corporate Equality Index and 2022 Bloomberg Gender-Equality Index.

We see Upwork as a natural ally in the fight against climate change. Our work marketplace makes work more sustainable by reducing commuting and, we believe, contributing to decreased business travel and usage of office space.

As in so many other domains in which we operate, Upwork leads by example when it comes to environmental sustainability. We have achieved carbon neutrality since 2019 and are committed to maintaining this status. We also embraced a remote-first working model and have seen the environmental benefits of this arrangement firsthand. Even as our team grew, our emissions reached an all-time low in 2021.

Last year, Upwork adopted a new Global Environmental Policy that outlines our environmental commitments. Building on our commitment to carbon neutrality, the Global Environmental Policy outlines the steps we’re taking to further decrease our footprint and achieve net-zero emissions on an annual basis. This includes operational improvements and the direct purchase of renewable power.

2021 was the first year in which we executed our three-part strategy of innovating, scaling, and evangelizing our work marketplace. We were incredibly pleased with our progress and will continue to execute that winning strategy going forward.

In 2022, we will build upon our product fundamentals, rev the innovation engine, and launch new offerings that enable clients and talent to unlock their potential as they forge ahead into new ways of working. Upwork’s Enterprise Suite will be of particular focus. Enterprise revenue⁴ grew 73% year-over-year in 2021, and we are aggressively scaling our Enterprise sales team to pursue the opportunity here. We will also continue to strategically invest in targeted and data-driven marketing initiatives to drive brand awareness and consideration among our target audiences.

The opportunity in front of us is massive. We have a winning strategy and the right team to harness it and help our customers succeed in the new world of work.

Thank you for your continued support of our business and our mission.

Sincerely,

 

Hayden Brown

 

April 19, 2022

To Our Stockholders:

You are cordially invited to attend the 2022 Annual Meeting of Stockholders of Upwork Inc., which we refer to as the Annual Meeting. The meeting will be held exclusively online via live webcast on Thursday, June 2, 2022, at 8:00 a.m. Pacific Time. The meeting can be accessed by visiting www.virtualshareholdermeeting.com/UPWK2022, where you will be able to listen to the meeting live, submit questions, and vote online. We believe that a virtual stockholder meeting provides greater access to those who may want to attend and provides a safer forum in light of the ongoing COVID-19 pandemic, and therefore we have chosen this over an in-person meeting. This approach also lowers costs, enables participation from our global community, and aligns with our broader sustainability goals.

The matters expected to be acted upon at the Annual Meeting are described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement. The Annual Meeting materials include the notice, proxy statement, and annual report to stockholders, each of which has been furnished to you over the internet or, if you have requested a paper copy of the materials, by mail.

Your vote is important. Whether or not you plan to attend the Annual Meeting, please cast your vote as soon as possible by internet, by telephone, or if you received a paper copy of the meeting materials by mail, by completing and returning the enclosed proxy card or voting instruction form in the postage-prepaid envelope to ensure that your shares will be represented. Your vote by written proxy will ensure your representation at the Annual Meeting regardless of whether or not you attend the meeting. Returning the proxy does not affect your right to attend and to vote your shares at the Annual Meeting.

Sincerely,

 

Thomas Layton

Chairperson of the Board of Directors

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON THURSDAY, JUNE 2, 2022: THE PROXY STATEMENT AND ANNUAL REPORT ARE AVAILABLE AT

www.proxyvote.com

This Proxy Statement for the Annual Meeting, which we refer to as this Proxy Statement, includes forward-looking statements. These statements are not historical facts and are based on current expectations, estimates, and projections about our industry, management’s beliefs, and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict, including but not limited to the ongoing Russian invasion of Ukraine and the effect that it may have on our business, operating results, financial condition, and access to capital. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. References to our website in this Proxy Statement are not intended to function as hyperlinks, and the information contained on our website is not intended to be incorporated into this Proxy Statement. In this Proxy Statement, we refer to Upwork Inc. as “Upwork,” “we,” or “us.”

We are changing the way work gets done by placing independent talent at the heart of every business. We operate the world’s largest work marketplace that connects businesses with independent talent, as measured by GSV.⁵

Despite the challenges of the ongoing COVID-19 pandemic, in 2021 we continued to evolve our new generation of executive leadership and generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights include:

We monitor GSV as a key financial and operational metric to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. We believe GSV is an important metric because it represents the amount of business transacted through our work marketplace. Moreover, we believe revenue is the primary measure of the performance of our business, as it provides comparability to other online marketplaces and is aligned to our strategic focus on growth objectives.

 

The following charts show comparisons from October 3, 2018 (the date our common stock commenced trading on The Nasdaq Global Select Market), through December 31, 2021, and from January 1, 2020 (the date on which Hayden Brown became our President and Chief Executive Officer), through December 31, 2021, of the cumulative total returns for our common stock, the NASDAQ-100 Technology Sector Index, and the NASDAQ Composite Index, respectively. Such returns are based on historical results and are not intended to suggest future performance. The NASDAQ Composite Index and the NASDAQ-100 Technology Sector Index assume reinvestment of any dividends.

 

 

Our board of directors and executive management team value feedback from our stockholders. In addition to our normal-course investor relations activities, we initiated a dedicated stockholder outreach program in 2021 to engage with our stockholders on topics including corporate governance, executive compensation, and corporate responsibility and sustainability.

In 2021, we contacted stockholders representing approximately 48% of our current shares outstanding and engaged in discussions with stockholders representing approximately 42% of our current shares outstanding. Members of our board of directors and management team participated in these engagements and used feedback heard from stockholders as a key input in deliberations on our strategy, governance, executive compensation, risk management, and environmental, social, and governance, which we refer to as ESG, priorities. Key themes from our engagement with stockholders and the actions our board of directors took in response include:

Our mission is to create economic opportunities so people have better lives. We seek to do what is right for our business, stakeholders, and planet. In 2021, we focused on building a robust internal ESG function to proactively manage the key non-financial topics identified in our 2020 ESG materiality assessment. This included hiring a Senior Program Manager of ESG to lead our ESG program and establishing our ESG Program Office, which comprises members of the legal department and is focused on engaging key stakeholders and strengthening our ESG performance. The ESG Program Office is supported by our ESG Task Force, which is a management-level committee made up of senior leaders and subject matter experts across Upwork.

Board oversight starts with our nominating and governance committee, which oversees our overall ESG performance and provides input on our management of material ESG risks and opportunities, ESG reporting, and progress against ESG targets. Our ESG Program Office briefs the nominating and governance committee on a biannual basis, which then updates the full board of directors on ESG matters on a biannual basis.

In 2021, our notable ESG accomplishments included:

Additional information about our ESG programs and performance, including our workforce diversity data and annual emissions figures, are included in our 2021 Impact Report, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub.

Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, whom we identify in the “Compensation Discussion and Analysis” section below, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives while simultaneously creating sustainable long-term value for our stockholders.

We are committed to effective corporate governance that promotes the long-term interests of our stockholders and strengthens the accountability of our board of directors and management. As we continue to mature as a public company, we are committed to evolving our corporate governance practices in line with our growth. Our board of directors takes a thoughtful approach to our governance structure, regularly assessing a range of factors, including regular stockholder input and feedback. Our board of directors carefully considers each of our corporate governance practices to ensure they are aligned with our state of maturity as a company and the best interests of our stockholders. Key elements include the following:

Our board of directors conducts an annual self-evaluation process, which is used, in part, to assess the current composition of the board of directors and its committees relative to the evolving needs of the business. This exercise is conducted with the goal of ensuring we have developed and maintain a diverse, experienced, and highly qualified board of directors that is representative of our key stakeholders and well positioned to oversee corporate strategy and culture. As part of the evaluation and refreshment process, our board of directors has added two new independent directors since our initial public offering in 2018: Leela Srinivasan and Anilu Vazquez-Ubarri, in addition to Ms. Brown who joined our board of directors when she became our President and Chief Executive Officer.

The charts below provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2022). We define tenure as including service on the board of directors of Elance, Inc., which we refer to as Elance, or oDesk Corporation, which we refer to as oDesk, prior to the combination of the two companies in March 2014.

 

We are committed to creating a diverse and inclusive culture, which starts at the top with our board of directors. Four of our eight directors are women, two directors self-identify as being racially or ethnically diverse, and one director self-identifies as LGBTQ+. All of our directors bring unique experiences and backgrounds to Upwork.

Thursday, June 2, 2022

Online at www.virtualshareholdermeeting.com/UPWK2022

There is no physical location for the Annual Meeting.

April 4, 2022, which we refer to as the Record Date

Only stockholders of record at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting and any adjournments thereof.

We are pleased to invite you to participate in our Annual Meeting, which will be conducted exclusively online at www.virtualshareholdermeeting.com/UPWK2022. Please see “Important Information About the Annual Meeting” for additional information.

The Annual Meeting will begin promptly at 8:00 a.m. Pacific Time. The virtual meeting room will open at 7:45 a.m. Pacific Time for registration.

Your vote is very important to us. Please act as soon as possible to vote your shares, even if you plan to participate in the Annual Meeting. For specific instructions on how to vote your shares, please see “Frequently Asked Questions–Voting Information” beginning on page 75 of this Proxy Statement.

This notice of the Annual Meeting, Proxy Statement, and form of proxy are being distributed and made available on or about April 19, 2022.

Whether or not you plan to attend the Annual Meeting, we encourage you to vote and submit your proxy through the internet or by telephone or to request and submit your proxy card as soon as possible, so that your shares may be represented at the meeting.

Our Annual Meeting will be conducted online only, via live webcast. Stockholders will be able to access the meeting live by visiting www.virtualshareholdermeeting.com/UPWK2022.

We have conducted efficient and effective virtual meetings since 2019. We intend to continue to ensure that our stockholders are afforded the same rights and opportunities to participate virtually as they would at an in-person meeting. We believe the virtual format makes it easier for stockholders to attend, and participate fully and equally in, the Annual Meeting because they can join with any internet-connected device from any location around the world at no cost. Our virtual meeting format helps us engage with all stockholders–regardless of size, resources, or physical location, protects the health and safety of attendees in light of the ongoing COVID-19 pandemic, saves us and stockholders’ time and money, and reduces our environmental impact.

We are strongly committed to good corporate governance practices. These practices provide an important framework within which our board of directors and management can pursue our strategic objectives for the benefit of our stockholders.

Our board of directors has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions, and other policies for the governance of our company. Our Corporate Governance Guidelines are available on the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking “Documents & Charters” in the “Governance” section of our website. Our nominating and governance committee reviews the Corporate Governance Guidelines annually, and changes are recommended to our board of directors as warranted.

Our Corporate Governance Guidelines provide that our board of directors shall be free to choose its chairperson in any way that it considers in the best interests of our company, and that the nominating and governance committee periodically considers the leadership structure of our board of directors and makes such recommendations to our board of directors with respect thereto as appropriate.

Currently, the positions of chairperson and chief executive officer are held by different individuals. Thomas Layton is the chairperson of our board of directors. Mr. Layton has served as a member of our board of directors and chairperson since our inception. Our board of directors believes that Mr. Layton’s historical knowledge, operational expertise, and extensive leadership experience serving as the chairperson of our board of directors since our inception make him well qualified to serve as chairperson of our board of directors. Mr. Layton is an independent director, and accordingly, our board of directors has not designated a lead independent director.

Our Corporate Governance Guidelines also provide that, when the positions of chairperson and chief executive officer are held by the same person, the independent directors may designate a “lead independent director.” In cases in which the chairperson and chief executive officer are the same person and a lead independent director has been designated, the chairperson schedules and sets the agenda for meetings of our board of directors in consultation with the lead independent director, and the chairperson, or if the chairperson is not present, the lead independent director, chairs such meetings. The responsibilities of the lead independent director include: calling meetings of the independent directors; presiding at executive sessions of independent directors; serving as a liaison between the chairperson and the independent directors; disseminating information to our board of directors; being available under appropriate circumstances for communication with stockholders; and performing such other functions and responsibilities as requested by our board of directors from time to time.

Our board of directors, as a whole, has responsibility for risk oversight, although the committees of our board of directors oversee and review risk areas that are particularly relevant to them. The risk oversight responsibility of our board of directors and its committees is supported by our management reporting processes, which are designed to provide visibility to our board of directors and to our personnel who are responsible for risk assessment and information about the identification, assessment, and management of critical risks and management’s risk-mitigation strategies. These areas of focus include competitive, economic, operational, financial (accounting, credit, investment, liquidity, and tax), legal, regulatory, cybersecurity, privacy, compliance, and reputational risks. Our board of directors reviews strategic and operational risk in the context of discussions, question-and-answer sessions, and reports from the management team at each regular board meeting; receives reports on all significant committee activities at each regular board meeting; and evaluates the risks inherent in significant transactions. Our audit, risk and compliance committee, which we refer to as our audit committee, assists our board of directors in fulfilling its oversight responsibilities with respect to risk management.

Each committee of our board of directors meets with key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus.

We believe this division of responsibilities is an effective approach for addressing the risks we face and that our board leadership structure supports this approach.

Securing the information of our users, team members, vendors, and other third parties is important to us. We have adopted physical, technological, and administrative controls on data security and have a defined procedure for data incident detection, containment, response, and remediation. While everyone at our company plays a part in managing these risks, oversight responsibility is shared by our board of directors, our audit committee, and management.

Our Chief Information Security Officer provides regular cybersecurity updates in the form of written reports and presentations to our audit committee at every quarterly meeting. Our audit committee regularly reviews metrics about cyber threat response preparedness, program maturity milestones, risk mitigation status, and the current and emerging threat landscape. Additionally, we leverage the National Institute of Standards and Technology security framework to drive strategic direction and maturity improvement and engage third-party security experts for risk assessments and program enhancements.

Commencing with the Annual Meeting, our amended and restated bylaws provide for a majority voting standard for uncontested elections of directors and require that stockholder director nominations include a written statement as to whether the nominee intends to tender an irrevocable resignation upon such nominee’s election or re-election. The majority voting standard provides that, in uncontested director elections, a director nominee will be elected only if the number of votes cast FOR the nominee exceeds the number of votes cast AGAINST the nominee. In addition, our Corporate Governance Guidelines require each incumbent nominee to submit an irrevocable contingent resignation letter prior to the annual meeting of stockholders in which such election is to take place. This addresses the “holdover” director situation under the Delaware General Corporation Law, which we refer to as the DGCL, pursuant to which a director remains on the board of directors until such director’s successor is elected and qualified. Such resignation becomes effective only upon (i) such nominee’s failure to receive the requisite number of votes for re-election at any future meeting at which such person would face re-election and (ii) our board of directors’ acceptance of such resignation. If the nominee does not receive the requisite number of votes for re-election, our nominating and governance committee will make a recommendation to our board of directors as to whether to accept or reject the resignation, or whether other action should be taken. Our board of directors will act on the nominating and governance committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.

The listing rules of Nasdaq generally require that a majority of the members of a listed company’s board of directors be independent. In addition, the listing rules generally require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent.

In addition, audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or be an affiliated person of the listed company or any of its subsidiaries.

Our board of directors conducts an annual review of the independence of our directors. In its most recent review, our board of directors determined that Thomas Layton, Gregory C. Gretsch, Kevin Harvey, Elizabeth Nelson, Leela Srinivasan, Gary Steele, and Anilu Vazquez-Ubarri, representing seven of our eight directors, are “independent directors” as defined under the applicable listing standards of Nasdaq and the applicable rules and regulations promulgated by the SEC. Our board of directors has also determined that all members of our audit committee, compensation committee, and nominating and governance committee are independent and satisfy the relevant SEC and Nasdaq independence requirements for such committees.

Our board of directors has established an audit committee, a compensation committee, and a nominating and governance committee. The composition and responsibilities of each committee are described below. Each of these committees has a written charter approved by our board of directors. Copies of the charters for each committee are available on the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of our website.

  Chair

  Member

  Financial Expert

Our audit committee is composed of Ms. Nelson, who is the chairperson of the committee, Mr. Gretsch, and Ms. Srinivasan. Each member of our audit committee is independent under the current Nasdaq listing standards and SEC rules and regulations. Each member of our audit committee is financially literate as required by the current Nasdaq listing standards. In addition, our board of directors has determined that Mr. Gretsch and Ms. Nelson both satisfy the requirements for an “audit committee financial expert” as defined in SEC rules and regulations. This designation does not impose any duties, obligations, or liabilities that are greater than those generally imposed on members of our audit committee and our board of directors. Our audit committee is responsible for, among other things:

Our compensation committee is composed of Mr. Gretsch, who is the chairperson of the committee, Mr. Steele, and Ms. Vazquez-Ubarri. The composition of our compensation committee meets the requirements for independence under current Nasdaq listing standards and SEC rules and regulations. Each member of this committee is a non-employee director, as defined in SEC rules and regulations. Our compensation committee is responsible for, among other things:

Our nominating and governance committee is composed of Mr. Layton, who is the chairperson of the committee, Mr. Harvey, and Ms. Nelson. The composition of our nominating and governance committee meets the requirements for independence under current Nasdaq listing standards. Our nominating and governance committee is responsible for, among other things:

Our board of directors recognizes that one of its most important duties is its oversight of succession planning for our Chief Executive Officer. Our board of directors has delegated primary oversight responsibility for succession planning for our Chief Executive Officer to the compensation committee and the chairperson of our board of directors. Our Chief Executive Officer is responsible for identifying, evaluating, and selecting potential successors for our Chief Executive Officer’s direct reports. Our board of directors continues to regularly evaluate its succession planning to ensure that we are well positioned to continue to execute on our corporate strategy.

Our board of directors actively oversees management’s establishment and execution of corporate strategy, including major business and organizational initiatives, annual budget and long-term strategic plans, capital allocation priorities, potential corporate development opportunities, and risk management. At its regularly scheduled meetings and throughout the year, our board of directors receives information and formal updates from our management and actively engages with the senior leadership team with respect to our corporate strategy. Our board of directors’ diverse skill set and experience enhances our board of directors’ ability to support management in the execution and evaluation of our corporate strategy. The independent members of our board of directors also hold regularly scheduled executive sessions at which strategy is discussed.

The members of our compensation committee during 2021 were Mr. Gretsch, Ms. Nelson, and Mr. Steele. None of the members of our compensation committee in 2021 were at any time an officer or employee of ours or any of our subsidiaries, and none had or have any relationships with us that are required to be disclosed under Item 404 of Regulation S-K. During 2021, none of our executive officers served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors or compensation committee.

Our board of directors and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. During 2021, our board of directors met six times and also acted by unanimous written consent. During 2021, each member of our board of directors attended at least 75% of the aggregate of all meetings of our board of directors and of all meetings of committees of our board of directors on which such member served that were held during the period in which such director served. The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest discussion. During 2021, our audit committee met four times, our compensation committee met four times, and our nominating and governance committee met two times, and each committee also acted by unanimous written consent.

Our policy is to invite and encourage each member of our board of directors to be present at our annual meetings of stockholders. All members of our board of directors attended our 2021 annual meeting of stockholders in their capacity as directors of our company.

Stockholders and interested parties who wish to communicate with our board of directors, non-management members of our board of directors as a group, a committee of our board of directors, or a specific member of our board of directors (including our chairperson) may do so by letters addressed to the attention of our Corporate Secretary.

All communications are reviewed by the Corporate Secretary and provided to the members of our board of directors as appropriate. Sales materials, abusive, threatening, or otherwise inappropriate materials, and items unrelated to the duties and responsibilities of our board of directors will not be provided to directors.

The mailing address for these communications is:

Upwork Inc.

c/o Corporate Secretary

655 Montgomery Street, Suite 490, Department 17022

San Francisco, CA 94111-2676

We have adopted a Code of Business Conduct and Ethics that applies to all the members of our board of directors, officers, and employees. Our Code of Business Conduct and Ethics is posted on the “Investor Relations” section of our website, which is located at investors.upwork.com under “Documents & Charters” in the “Governance” section of our website. We intend to satisfy the disclosure requirement under applicable SEC and Nasdaq disclosure requirements regarding amendments to, or waivers of, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the address and location specified above.

Our mission is to create economic opportunities so people have better lives. We do this by removing friction in the labor market, allowing clients to hire independent talent, and helping global independent talent find better opportunities than those available in their local job markets. We believe that operating in a responsible and sustainable way will drive long-term value creation, and we are committed to managing our ESG risks and opportunities.

We recognize that sound oversight is critical to our ability to meet our ESG commitments and goals. We structure our ESG oversight as follows:

In 2020, we undertook an ESG materiality assessment to help identify ESG-related topics and issues that are most important to our business and stakeholders. This assessment was informed by interviews with both internal and external stakeholders, including employees, executives, stockholders, and talent and clients. With their input we were able to identify and evaluate the topic areas that they view as most important to them as stakeholders and to our business success.

More details on our ESG materiality assessment are included in our 2021 Impact Report, published in March 2022, which is available at our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub. The information contained in our 2021 Impact Report is not intended to be incorporated into this Proxy Statement. Our 2021 Impact Report also includes quantitative disclosures on our workforce diversity. We are committed to continued engagement with our key stakeholders going forward and ensuring our practices and disclosures align with evolving ESG-related priorities.

For more information regarding our ESG programs and performance, including our workforce diversity data and annual emissions figures, see our 2021 Impact Report, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub.

Our board of directors recognizes the critical importance of our team and the necessity to ensure a diverse, inclusive, and creative work environment that is centered around a values-based culture. Our board of directors meets regularly with management to discuss issues impacting our team members and to focus on ways to support our workforce. Our focus on culture comes from our board of directors and flows throughout our company. In evaluating our Chief Executive Officer and management team, emphasis is put on their contributions to our overall culture.

Our mission—to create economic opportunities so people have better lives—is integral to our culture and how we build amazing teams and products to lead our industry. We enable remote work not only through our work marketplace for our users, but also for our own team members for whom we are proud to offer a remote-first work model, which has environmental, as well as other, benefits. Our team consists of independent talent that we engage through our work marketplace, corporate employees, and advisors. Our team members are distributed around the world, and while we have corporate offices, we do not solely rely on in-person collaboration. Our team works with a variety of tools and has adopted practices to ensure all voices are heard, innovation is fostered, and results are achieved. Our hybrid team, and its belief in our mission, values, and vision, is critical to our success. With the consistent investment in the development of our team and our commitment to diversity, inclusion, and belonging, we cultivate an environment where people are able to be themselves at work and perform to the best of their abilities.

Our mission not only drives the creation and continuous development of our work marketplace, but it is also integral to how we engage our employees and our approach to creating and fostering an inclusive environment that promotes and encourages diversity, inclusion, belonging, career development, and wellness. As of December 31, 2021, we had approximately 650 employees, and throughout 2021, we engaged approximately 1,800 independent team members through our work marketplace to provide services to us on a variety of internal projects. We believe the positive relationship between us and our team members and our unique, strong culture differentiate us and are key drivers of our business success.

We put our people and their experiences first. We view belonging as a feeling, inclusion as a practice, and diversity as an outcome.

We foster belonging through our Upwork Belonging Communities—employee resource groups that build empathy and promote inclusive skill-building. We cultivate inclusion by equipping managers with tools to effectively build and lead amazing and inclusive teams that amplify team members’ voices. Additionally, we practice multi-dimensional compensation and mobility reviews during our semi-annual employee performance evaluation process. This is led by a cross-functional team of human resource and legal leaders to help ensure we are fair in our rewards and recognition strategy. To bolster our diversity, inclusion, and belonging efforts, we also conduct an internal review to facilitate equity in internal mobility practices throughout our company as an ongoing priority. Diversity, inclusion, and belonging is a journey, not a destination, and as such, we will continue to explore ways to cultivate an inclusive culture where every team member belongs.

As an organization built on talent and skills development, we understand the value of providing our employees with ongoing professional development and leadership opportunities so that they can advance their careers. Led by our dedicated learning and development team, we offer our team members an array of learning and development opportunities, including a variety of training sessions and workshops.

Beyond our training and development efforts, we take pride in offering competitive, market-based compensation and benefits to our employees. We engage compensation consultants to benchmark our employee compensation with external sources to ensure fair and equitable pay practices, and utilize equity grants to align employee compensation with stockholder interests. Merit increases and promotions are awarded based on an individual’s impact within the organization and an established business need, and in consideration with market data. Knowing our employees have diverse needs and life priorities, we also provide expanded benefits to those eligible, which include core benefits such as medical, dental, vision, and disability insurance, in addition to benefits tailored to the specific needs of our employees, such as mental health, fertility, family back-up care, and adoption support.

We engage our workforce in meaningful ways and take timely action in response to their feedback. While our culture and engagement process starts during the team member onboarding process, one way we sustain our feedback loop is via an industry-recognized team member engagement platform. Through the platform, we survey our team members on a regular basis to gather feedback. In 2021, our average employee response rate was 86%, and we received notably high scores with respect to our leadership and purpose, with the survey results reflecting that many team members feel invested in our future and continue to regard Upwork as a workplace they would recommend to others. In these surveys, team members also consistently recognize our efforts to cultivate an inclusive workplace. Responses to these surveys and other employee feedback guide our team engagement efforts. We believe that ensuring that our team members feel valued, supported, and heard helps us attract, retain, and develop the right talent to lead our company and successfully execute our corporate strategy.

Employee safety and well-being is of paramount importance to us in any year and continued to be of particular focus in 2021 in light of the COVID-19 pandemic. We provide productivity and collaboration tools and resources for employees, including training and toolkits to help leaders effectively lead and manage remote teams. In addition, we enhanced and promoted programs to support our employees’ physical, financial, and mental well-being. For example, we regularly conduct internal surveys to assess the well-being and needs of our employees, and we significantly expanded employee assistance and mindfulness programs to help employees and their families manage anxiety, stress, sleep, and overall well-being. Additionally, we believe that our employees are at their best when they take the time to recharge. In order to encourage our employees to recharge and make their well-being a priority, we provide company-wide “ChargeUp Days”—paid time off in addition to our company-recognized holidays.

Candidates for nomination to our board of directors are selected by our board of directors based on the recommendation of our nominating and governance committee in accordance with the committee’s charter, our restated certificate of incorporation and amended and restated bylaws, our Corporate Governance Guidelines, and the criteria approved by our board of directors regarding director candidate qualifications. In identifying and recommending candidates for nomination, the nominating and governance committee considers candidates recommended by directors, officers, employees, stockholders, and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected candidates as appropriate, and, in addition, the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.

Stockholders wishing to recommend candidates for consideration by our nominating and governance committee should submit their recommendations to the attention of the Corporate Secretary at our mailing address contained elsewhere in this Proxy Statement. Information regarding the process for submitting stockholder nominations for candidates for membership on our board of directors is set forth below under “Frequently Asked Questions.”

With the goal of developing a diverse, experienced, and highly qualified board of directors, our nominating and governance committee is responsible for developing and recommending to our board of directors the desired qualifications, expertise, and characteristics of members of our board of directors, including any specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on our board of directors and any specific qualities or skills that the committee believes are necessary for one or more of the members of our board of directors to possess.

Because the identification, evaluation, and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors and will be significantly influenced by the particular needs of our board of directors from time to time, our board of directors has not adopted a specific set of minimum qualifications, qualities, or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory, and Nasdaq listing requirements and the provisions of our restated certificate of incorporation, our amended and restated bylaws, our Corporate Governance Guidelines, and the charters of the committees of our board of directors. In addition, neither our board of directors nor our nominating and governance committee has a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, the nominating and governance committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, diversity, skills, financial and other expertise, breadth of experience, knowledge about our business or industry, and ability to devote adequate time and effort to responsibilities of our board of directors in the context of its existing composition. Through the nomination process, our nominating and governance committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds, and other characteristics that are expected to contribute to our board of directors’ overall effectiveness. The brief biographical description of each director set forth in Proposal 1 below includes the primary individual experience, qualifications, attributes, and skills of each of our directors that led to the conclusion that each director should serve as a member of our board of directors at this time.

We conduct an annual self-evaluation process for our board of directors and its committees. As part of this process, each member of our board of directors individually meets with outside counsel to discuss their assessment of the performance of the board of directors and its committees, their own performance, and the performance of fellow members of the board of directors. The chairperson of our board of directors shares feedback received with individual members of the board of directors, with the nominating and governance committee, and with the full board of directors. Our board of directors then reviews and discusses the feedback.

Our board evaluation process is used:

Our board of directors currently consists of eight directors and is divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Directors in Class I will stand for election at the Annual Meeting. The terms of office of directors in Class II and Class III do not expire until the annual meetings of stockholders held in 2023 and 2024, respectively. At the recommendation of our nominating and governance committee, our board of directors proposes that each of the Class I nominees named below, each of whom is currently serving as a director in Class I, be elected as a Class I director for a three-year term expiring at the 2025 annual meeting of stockholders and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification, or removal.

We have a majority voting standard for uncontested elections of directors, which means that to be elected, a director nominee must receive a majority of the votes cast. This means the number of shares voted “FOR” a director nominee must exceed the votes cast “AGAINST” that nominee (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If any nominee for any reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected. Proxies may not be voted for more than three directors. Stockholders may not cumulate votes for the election of directors.

The nominees and their age, occupation, and length of service on our board of directors as of March 31, 2022, are provided in the table below and in the additional biographical descriptions set forth in the text below the table.

The directors who are serving for terms that end following the Annual Meeting and their age, occupation, and length of service on our board of directors as of March 31, 2022, are provided in the table below and in the additional biographical descriptions set forth in the text below the table.

Our board of directors comprises a diverse mix of directors with complementary expertise, experience, and attributes, as summarized in the table below. Our directors may also have experience or attributes in addition to what is reflected in the table below.

 

 

We also believe that our current board of directors’ composition represents an effective balance with respect to director tenure and age. Recent director additions provide our board of directors with fresh perspectives and diverse experiences, while directors with longer tenure provide continuity and valuable insight into our business and strategy. The matrix above and charts below provide information regarding the tenure and age distribution of our board of directors (as of March 31, 2022). We define tenure as including service on the board of directors of Elance or oDesk prior to the combination of the two companies in March 2014.

We are committed to creating a diverse and inclusive culture, which starts at the top with our board of directors. Four of our eight directors are women, two directors self-identify as being racially or ethnically diverse, and one director self-identifies as LGBTQ+. All of our directors bring unique experiences and backgrounds to Upwork.

 

The following table provides information for 2021 regarding all compensation awarded to, earned by, or paid to each person who served as a director for some portion or all of 2021, other than Ms. Brown, our President and Chief Executive Officer. Ms. Brown is not included in the table below, as she is an employee and received no additional compensation for her service as a director during 2021. The compensation received by Ms. Brown as an employee is shown in the “Executive Compensation—2021 Summary Compensation Table” below.

In April 2021, our board of directors approved an amended and restated non-employee director compensation program. Under the amended and restated non-employee director compensation program, non-employee directors receive the following cash and equity compensation:

Upon initial appointment or election to our board of directors, each new non-employee director appointed or elected to our board of directors will be granted RSUs under our 2018 Equity Incentive Plan, which we refer to as the 2018 Plan, with a total value of $400,000 based on a 30-day trailing average trading price, which we refer to as the Initial Award. The grant date fair value of the Initial Award shall not exceed $1,000,000 in a calendar year when combined with the aggregate grant date fair value of any other equity award(s) and cash compensation received by such non-employee director for service on our board of directors for such calendar year.

The Initial Award will be granted effective on the date of the non-employee director’s initial appointment or election to our board of directors, which we refer to as the Initial Award Grant Date.

The Initial Award will vest with respect to one-third of the total number of RSUs subject to the Initial Award each year beginning with the date that is one year following the Initial Award Grant Date, in each case, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The final annual installment of the Initial Award will fully vest on the earlier of (i) the date immediately prior to our annual meeting of stockholders in the last full year of the vesting of the Initial Award and (ii) the date that is the last day of the last full year of the vesting of such grant, in each case, so long as the non-employee director continues to provide services as a non-employee director to us through such date.

The Initial Award will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).

Each non-employee director will automatically be entitled to an annual award of a $170,000 cash payment or RSUs with a total value of $170,000 based on a 30-day trailing average trading price, which we refer to as the Annual Award. The Annual Award will be payable in the form of RSUs or, at a non-employee director’s election, in cash.

The initial Annual Award, to the extent payable in RSUs and consistent with the applicable election made, will be granted automatically on the date of the non-employee director’s initial appointment or election to our board of directors, which we refer to as the Initial Annual Award Grant Date, and will be pro-rated for partial quarters served. Subsequently, the Annual Award, to the extent payable in RSUs, will be granted automatically on the date of our annual meeting of stockholders for each year thereafter, which we refer to as the Annual Award Grant Date.

The Annual Award will fully vest, or in the case of cash will be paid, on the earlier of (i) the date immediately prior to our next annual meeting of stockholders and (ii) the date that is one year following the Initial Annual Award Grant Date or Annual Award Grant Date, as the case may be, so long as the non-employee director continues to provide services as a non-employee director to us through such date. The Annual Award will be paid, in the case of cash, or settle, in the case of RSUs, in the same calendar year in which the Annual Award vests.

The Annual Award (regardless of the form of payment) will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).

Annual compensation payable to (i) each non-employee director as a general board service fee is $55,000, which we refer to as the General Board Service Fee, (ii) the non-executive chairperson as a chairperson fee is $40,000, which we refer to as the Chairperson Fee, and (iii) the lead independent director as a lead independent director fee is $15,000, we refer to each fee in clauses (i)-(iii), as a Fee, each of which is pro-rated for partial quarters served and payable in cash or, at a non-employee director’s election, in the form of RSUs.

If the non-employee director elects to receive the Fee in cash, which we refer to as the Fee (Cash), it will be paid quarterly in arrears (with the first such payment in any event occurring on the last day of the first calendar quarter following the date of the director’s appointment or election to our board of directors), in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

If the non-employee director elects to receive the Fee in RSUs, which we refer to as the Fee (RSU), the initial Fee (RSU) will be granted automatically on the date of the director’s initial appointment or election to our board of directors and each subsequent Fee (RSU) will be granted automatically on the date of our annual meeting of stockholders for each year thereafter. The number of shares subject to the applicable Fee (RSU) will be based on a 30-day trailing average trading price (which will be pro-rated for partial quarters served in the relevant capacity). The Fee (RSU) will vest and settle quarterly (with the first such vesting and settlement date occurring on the last day of the first calendar quarter following the date of the non-employee director’s appointment or election to our board of directors), in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

The Fee (regardless of the form of payment) will accelerate in full immediately prior to the consummation of a “corporate transaction” (as defined in the 2018 Plan).

The final quarterly installment of each Fee (Cash) or the Fee (RSU), as applicable, will fully vest on the earlier of (i) the date immediately prior to our next annual meeting of stockholders and (ii) the date that is the last day of the last full quarter of the vesting of such grant, in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

In addition to the General Board Service Fee, each non-employee director is entitled to receive additional annual cash compensation for committee membership as follows:

Chairs of our committees receive the cash compensation designated above for chairs in lieu of the non-chair member cash compensation.

The cash compensation designated above will be paid quarterly in arrears, for so long as the non-employee director continues to provide services in the applicable non-employee director capacity to us through such date, and will be pro-rated for partial quarters served. The final quarterly installment of each such annual fee will be paid on the earliest of (i) the date of our next annual meeting of stockholders, (ii) the date immediately prior to our next annual meeting of stockholders if the applicable non-employee director’s service as a director ends at such meeting due to the director’s failure to be re-elected or the director not standing for re-election, and (iii) the date that is the last day of the last full quarter of such installment, in each case, so long as the non-employee director continues to provide services in the applicable capacity to us through such date.

In order to remain competitive in an increasingly challenging landscape for recruitment of non-employee directors, in April 2022, our board of directors approved an amended and restated non-employee director compensation program, to take effect as of the date of the Annual Meeting. Under such amended and restated non-employee director compensation program, non-employee directors will be entitled to receive an increase in the amount of certain compensation provided under our current non-employee director compensation program described above. This increase will result in the following: (i) Initial Award with a total value of $400,000 based on a 30-day trailing average trading price, (ii) Annual Award with a total value of $185,000 (if payable in RSUs, based on a 30-day trailing average trading price), (iii) General Board Service Fee of $55,000 (if payable in RSUs, based on a 30-day trailing average trading price), and (iv) Chairperson Fee of $60,000 (if payable in RSUs, based on a 30-day trailing average trading price). Additionally, this increase will result in the following annual fees for committee memberships: (1) audit committee chair fee of $35,000 and audit committee member fee of $17,500, (2) compensation committee chair fee of $15,000 and compensation committee member fee of $7,500, and (3) nominating and governance committee chair fee of $8,500 and nominating and governance committee member fee of $4,300. The increase in annual fees for our audit committee is in particular recognition of our audit committee members’ broad oversight responsibilities and heavy workload as a result, which provide significant value to us.

Our audit committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm to perform the audits of our consolidated financial statements and our internal control over financial reporting for the year ending December 31, 2022, and recommends that stockholders vote for ratification of such selection. The ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2022, requires the affirmative vote of a majority of the voting power of the shares present or represented by proxy at the Annual Meeting and voting affirmatively or negatively on the proposal. In the event that PricewaterhouseCoopers LLP is not ratified by our stockholders, the audit committee will review its future selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Further, the audit committee may select a different independent registered public accounting firm at any time if, in the committee’s sole discretion, the committee determines that such a change would be in the best interests of our company and stockholders.

PricewaterhouseCoopers LLP audited our consolidated financial statements and our internal control over financial reporting for the year ended December 31, 2021. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting, and they will be given an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions.

We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our audit committee annually. In accordance with standard policy, PricewaterhouseCoopers LLP periodically rotates the individuals who are responsible for our audit.

In addition to performing the audit of our consolidated financial statements and our internal control over financial reporting, PricewaterhouseCoopers LLP provided various other services during the years ended December 31, 2020 and 2021. Our audit committee has determined that PricewaterhouseCoopers LLP’s provision of these services, which are described below, does not impair PricewaterhouseCoopers LLP’s independence from us. During the years ended December 31, 2020 and 2021, fees for services provided by PricewaterhouseCoopers LLP were as follows (in thousands):

Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm, the scope of services provided by the independent registered public accounting firm, and the fees for the services to be performed. These services may include audit services, audit-related services, tax services, and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

All of the services relating to the fees described in the table above were approved by our audit committee.

OUR BOARD OF DIRECTORS AND AUDIT COMMITTEE RECOMMEND A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2022.

In accordance with Section 14A of the Exchange Act, we are providing stockholders with an opportunity to make a non-binding, advisory vote on the compensation of our Named Executive Officers. This non-binding advisory vote is commonly referred to as a “say-on-pay” vote. The non-binding advisory vote on the compensation of our Named Executive Officers, as disclosed in this Proxy Statement, will be determined by the vote of a majority of the voting power of the shares present or represented at the Annual Meeting and voting affirmatively or negatively on the proposal.

Stockholders are urged to read the “Executive Compensation” section of this Proxy Statement, which discusses how our executive compensation policies and procedures implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of our Named Executive Officers. Our compensation committee and our board of directors believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving our goals. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that our stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers, as disclosed in the Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion and the other related disclosures.”

As an advisory vote, this proposal is not binding. However, our board of directors and compensation committee, which is responsible for designing and administering our executive compensation program, value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 31, 2022, by:

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole dispositive power with respect to all shares beneficially owned, subject to applicable community property laws.

Applicable percentage ownership is based on 129,651,218 shares of common stock outstanding as of March 31, 2022. Shares of our common stock subject to stock options that are exercisable as of and within 60 days of March 31, 2022, or RSUs that may vest and settle within 60 days of March 31, 2022, are deemed to be outstanding and to be beneficially owned by the person holding the stock options or RSUs for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities listed in the table below is c/o Upwork Inc., 475 Brannan Street, Suite 430, San Francisco, California 94107.

The names of our executive officers and key employees, their ages as of March 31, 2022, and their positions are shown below.

Our board of directors chooses executive officers, who then serve at the discretion of our board of directors. There is no family relationship between any of the directors or executive officers and any of our other directors or executive officers.

For information regarding Ms. Brown, please refer to Proposal 1 above.

This Compensation Discussion and Analysis describes the material elements of our executive compensation program during 2021 and provides an overview of our executive compensation philosophy, including our principal compensation policies and practices. In addition, it analyzes how and why the compensation committee of our board of directors made the specific compensation decisions for our principal executive officer, our principal financial officer, and the executive officer (other than our principal executive officer and principal financial officer) who was our most highly compensated executive officer at the end of 2021, whom we refer to collectively as our Named Executive Officers.

For 2021, our Named Executive Officers were:

We operate the world’s largest work marketplace that connects businesses with independent talent, as measured by GSV. During the year ended December 31, 2021, our work marketplace enabled $3.5 billion of GSV. For talent, we serve as a powerful marketing channel to find rewarding, engaging, and flexible work. Talent benefits from access to quality clients, simplified invoicing, and secure and timely payments while enjoying the freedom to run their own businesses, create their own schedules, and work from their preferred locations. For clients, our work marketplace offers fast, secure, and efficient access to high-quality talent with over 10,000 skills across more than 90 categories.

Talent includes independent professionals and agencies of varying sizes and is an increasingly sought-after, critical, and expanding segment of the global workforce.

In 2021, we generated strong operational and financial results while advancing valuable strategic initiatives. Key business highlights from 2021 include:

We monitor GSV as a key financial and operational metric to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Moreover, we believe revenue is the primary measure of the performance of our business, as it provides comparability against competitors and is aligned to our strategic focus on growth objectives.

 

The following charts show comparisons from October 3, 2018 (the date our common stock commenced trading on The Nasdaq Global Select Market), through December 31, 2021, and from January 1, 2020 (the date on which Hayden Brown became our President and Chief Executive Officer), through December 31, 2021, of the cumulative total returns for our common stock, the NASDAQ-100 Technology Sector Index, and the NASDAQ Composite Index, respectively. Such returns are based on historical results and are not intended to suggest future performance. The NASDAQ Composite Index and the NASDAQ 100-Technology Sector Index assume reinvestment of any dividends.

 

 

Generally, our executive compensation program consists of three principal elements–annual base salary, annual bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards:

As disclosed in our 2021 proxy statement, our board of directors and compensation committee determined that Ms. Brown demonstrated outstanding and exceptional capabilities in her first year as President and Chief Executive Officer, including leading our company as our share price appreciated more than 200% in 2020. Accordingly, our board of directors granted Ms. Brown an additional incentive commensurate with the level of achievement and ambition she had demonstrated as President and Chief Executive Officer. The incentive also promotes her retention in a highly competitive market for this level of leadership capability. In January 2021, the compensation committee granted Ms. Brown the CEO Performance Award, which has both service- and performance-based vesting requirements.

The CEO Performance Award is structured to protect stockholder interests and has a performance-based vesting component that requires achievement of extremely rigorous stock price hurdles, which promotes the alignment of Ms. Brown’s interests with those of stockholders and underscores our board of directors’ confidence in both Ms. Brown and our company. At the time of the award, our shares were trading near all-time high prices—following significant share price appreciation in 2020 under Ms. Brown’s leadership—and the lowest performance threshold requires an increase in share price of approximately 55% relative to the exercise price of the CEO Performance Award, and the majority of the award’s value will be earned only if the most rigorous goals are achieved. Additionally, achievement of any performance threshold is evaluated based on a 90-day volume-based weighted average price of our common stock to ensure that a short-term increase in share price was not treated as achievement of the intended long-term goals. The service-based vesting requirement provides for vesting of earned awards over a four-year period, which increases the value of the award in supporting retention.

The CEO Performance Award is described under the heading “Chief Executive Officer Performance Award” below.

We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The compensation committee evaluates our executive compensation program on at least an annual basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following summarizes our executive compensation and related policies and practices:

At our 2021 annual meeting of stockholders, we held a non-binding, advisory vote on the compensation of our Named Executive Officers, which we refer to as a “Say-on-Pay” vote, and approximately 96.3% of the votes cast (for and against) approved our executive compensation program for 2020.

Our board of directors and the compensation committee will continue to consider the result of the Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our Named Executive Officers, as we value the opinions of our stockholders. In addition, consistent with the recommendation of our board of directors and the preference of our stockholders as reflected in the non-binding, advisory vote on the frequency of future Say-on-Pay votes held at our 2020 annual meeting of stockholders, we intend to hold a Say-on-Pay vote every year. This policy will remain in effect until the next stockholder vote on the frequency of non-binding, advisory votes on the compensation of our Named Executive Officers, which is expected to be held at the 2026 annual meeting of stockholders.

In 2021, our board of directors and management team led a dedicated effort to engage with our largest stockholders to discuss topics related to our strategy, board of directors composition, corporate governance, executive compensation, and environmental and social practices. The compensation committee chair and the audit committee chair participated in select meetings and engaged directly with stockholders.

 

Overall, the feedback we heard from stockholders was supportive of our executive compensation practices, and they did not request any significant changes to our ongoing compensation program. An overview of the insights we gathered in our discussions can be found under the heading “Stockholder Engagement” in the proxy summary above. Specific to our executive compensation program, topics included:

Our executive compensation philosophy is to provide a competitive compensation program that attracts and retains talented executives, including our Named Executive Officers, and to motivate and reward them to meet or exceed our short-term and long-term strategic objectives, while simultaneously creating sustainable long-term value for our stockholders. We strive to create an executive compensation program that is competitive, rewards achievement of our strategic objectives, and aligns our executives’ interests with those of our stockholders. Consistent with this philosophy, we designed our executive compensation program to achieve the following primary objectives:

We structure the annual compensation of our Named Executive Officers using three principal elements: annual base salary, annual bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards. We design our executive compensation program to balance the goals of attracting, motivating, rewarding, and retaining our Named Executive Officers with the goal of promoting the interests of our stockholders by aligning the interests of our Named Executive Officers and stockholders and linking pay with performance. We therefore seek to ensure that a meaningful portion of our Named Executive Officers’ annual target total direct compensation opportunity is “at-risk” and variable in nature.

To date, we have emphasized variable “at-risk” compensation through two separate compensation elements. First, we provide the opportunity to earn short-term incentives, either through participation in our annual performance bonus plan or, in the case of Mr. Gilpin, a sales compensation plan. The annual performance bonus plan provides payments if our Named Executive Officers produce short-term results that meet or exceed certain pre-established annual financial targets in effect as determined from time to time by us and approved by the compensation committee. The sales compensation plan for Mr. Gilpin provides payments as described in “Sales Compensation Plan for Mr. Gilpin” below. In addition, we grant PSU awards and RSU awards to our Named Executive Officers, the value of which depends on both our short-term and long-term financial performance, which influences the value of our common stock thereby incentivizing our Named Executive Officers to build sustainable long-term value for the benefit of our stockholders.

Through the use of these variable pay elements, a substantial portion of our Named Executive Officers’ annual target total direct compensation varies based on our performance, with the value ultimately received subject to variability above or below target levels commensurate with our actual performance. We believe this compensation program design provides balanced incentives for our Named Executive Officers to meet our business objectives and drive long-term growth. The compensation committee aims to maintain an appropriate “pay-for-performance” alignment with an emphasis on long-term stockholder value creation.

We have not adopted policies or established guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. As our needs evolve and as circumstances require, we intend to reevaluate our executive compensation philosophy, primary objectives, and program design.

Finally, we use equity incentives as part of our broad-based compensation program to foster a culture of ownership and shared success among our employees. Please see page 54 of our 2021 Impact Report, which is available on our ESG Reports Hub on our website at upwork.com/about/our-impact/reports-hub, for details regarding the distribution of equity incentives and stock ownership across our employee base.

The compensation committee has the overall responsibility for overseeing our compensation and benefits plans, policies, and practices generally and with respect to our Named Executive Officers.

In carrying out its responsibilities, the compensation committee evaluates our compensation policies and practices for alignment with our executive compensation philosophy, develops compensation-related strategies, makes decisions that it believes further our philosophy and/or align with compensation best practices, and reviews the performance of our Named Executive Officers when making decisions about their compensation.

Each year, the compensation committee conducts an evaluation of our executive compensation program to determine if any changes are appropriate. The compensation committee also conducts an annual review of the compensation arrangements of our Named Executive Officers, typically during the first quarter of the fiscal year. The compensation committee’s authority, duties, and responsibilities are further described in its charter, which is reviewed annually by the compensation committee and revised as warranted. The charter is available on the “Investor Relations” section of our website, which is located at investors.upwork.com, by clicking on “Documents & Charters” in the “Governance” section of the website.

In making its decisions, including with respect to the compensation of our Named Executive Officers, the compensation committee retains a compensation consultant (as described in “Role of Compensation Consultant” below) to provide support in its review and assessment of our executive compensation program.

Typically, during the first quarter of the fiscal year or more frequently as warranted, the compensation committee reviews the annual base salary levels, annual bonus opportunities, and long-term incentive compensation opportunities of our Named Executive Officers and all related performance criteria. Adjustments are generally effective at the beginning of the fiscal year or at the time of a promotion, as the case may be.

The compensation committee does not establish a specific target for formulating the target total direct compensation opportunities of our Named Executive Officers. Instead, in consultation with its compensation consultant, Compensia, Inc., which we refer to as Compensia, the compensation committee weighs various considerations, including the following:

These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each Named Executive Officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.

The compensation committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation decisions with respect to our Named Executive Officers. The compensation committee believes that overreliance on benchmarking can result in compensation that is unrelated to the value delivered by our Named Executive Officers because compensation benchmarking does not take into account the specific performance of the Named Executive Officers or our relative size and performance.

Instead, in making its determinations, and in consultation with the compensation consultant, the compensation committee reviews compensation information for a representative group of peer companies to the extent that the executive positions at these companies are considered comparable to our executive officers’ positions and informative of the competitive environment. The compensation committee also reviews broad-based compensation surveys to understand market compensation levels. These principles and processes apply to both cash and equity-based compensation awards granted under our executive compensation program.

In discharging its responsibilities, the compensation committee works with members of our management, including our Chief Executive Officer. Our management assists the compensation committee by providing information on corporate and individual performance and management’s perspective on compensation matters. The compensation committee solicits and reviews our Chief Executive Officer’s proposals with respect to program structures, as well as our Chief

Executive Officer’s recommendations for adjustments to annual cash compensation, long-term incentive compensation opportunities, and other compensation-related matters for our Named Executive Officers (except with respect to her own compensation) based on our Chief Executive Officer’s evaluation of their performance for the prior year.

At the beginning of each year, our Chief Executive Officer reviews the performance of our other Named Executive Officers based on their overall performance and performance against business objectives established for them for the prior year, and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation as described above. The annual business objectives for each Named Executive Officer are developed through mutual discussion and agreement between our Chief Executive Officer and the Named Executive Officers and are also reviewed with our board of directors.

The compensation committee reviews and discusses our Chief Executive Officer’s recommendations and considers them as one factor in determining and approving our Named Executive Officers’ compensation. Our Chief Executive Officer also attends meetings of the board of directors and the compensation committee at which executive compensation matters are addressed, except for discussions involving her own compensation.

The compensation committee believes that peer group comparisons are useful guides to measure the competitiveness of our executive compensation program and related policies and practices. To assess our executive compensation against the competitive market, the compensation committee reviews and considers the compensation levels and practices of a select group of peer companies.

This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, and industry focus. The competitive data drawn from this compensation peer group is only one of several factors that the compensation committee considers, however, in making its compensation decisions for our Named Executive Officers.

In February 2021, the compensation committee used the compensation peer group set forth below to analyze the compensation of our Named Executive Officers and make its initial compensation decisions for the year. This compensation peer group, which was developed in July 2020 with the assistance of Compensia after conducting a thorough review of our then-compensation peer group, was comprised of publicly-traded technology companies against which we compete for executive talent. In evaluating the companies comprising the compensation peer group, Compensia specifically considered and weighed the following primary criteria, among other factors:

As a result, the compensation committee approved an updated compensation peer group consisting of the following companies:

The following companies were removed from our peer group: Care.com and Etsy.

The following companies were added to our peer group: Eventbrite, EverQuote, Fiverr International, The RealReal, and Magnite.

The compensation committee used data drawn from the companies in our compensation peer group, as well as data from a custom data cut of 71 U.S.-based software companies with revenues ranging from $110 million to $900 million and market capitalizations ranging from $300 million to $7 billion (including peer company participants) drawn from the Radford Global Technology Survey database, to evaluate the competitive market when determining the total direct compensation packages for our Named Executive Officers, including annual base salary, target annual bonus opportunities, and long-term incentive compensation opportunities.

This compensation peer group was used by the compensation committee for most of 2021 as a reference for understanding the competitive market for executive positions in our industry sector. However, given the significant increase in our market capitalization over the prior 12 months, in July 2021, the compensation committee, with the assistance of Compensia, reviewed and updated our compensation peer group to reflect our market capitalization and to account for merger and acquisition activity of peer companies. In evaluating the companies comprising the compensation peer group at that time, Compensia considered and weighed the following primary criteria, among other factors:

Based on a review of the analysis prepared by Compensia, the compensation committee approved a revised compensation peer group for the remainder of 2021 consisting of the following companies:

Seven companies, Benefitfocus, Cars.com, EverQuote, Quotient Technology, The RealReal, TrueCar, and Yext, were removed from our peer group because their market capitalization was no longer within our targeted market capitalization range; two companies, Eventbrite and TechTarget, were removed because their revenue was no longer within our targeted revenue range; and one company, Pluralsight, was removed because it had been acquired.

Eleven companies were added to our peer group: Alteryx, Anaplan, Asana, BlackLine, Chegg, Everbridge, Fastly, Paylocity, Q2 Holdings, Revolve Group, and Smartsheet.

The compensation committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.

The compensation committee engages an external compensation consultant to assist it by providing information, analysis, market compensation data, and other advice for our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the compensation committee and its chair, and serves at the discretion of the compensation committee, which reviews the engagement annually.

In 2021, the compensation committee again engaged Compensia to serve as its compensation consultant to advise on executive compensation matters.

During 2021, Compensia attended the meetings of the compensation committee (both with and without management present) as requested and provided various services, which included the following:

The terms of Compensia’s engagement include reporting directly to the compensation committee chair. Compensia also coordinated with our management for data collection and job matching for our executives. In 2021, Compensia did not provide any other services to us.

The compensation committee has evaluated its relationship with Compensia to ensure that it believes that such firm is independent from management. This review process included a review of the services that Compensia provided, the quality of those services, and the fees associated with the services provided during 2021. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the Nasdaq Marketplace Rules, and such other factors as were deemed relevant under the circumstances, the compensation committee evaluated Compensia’s independence and determined that no conflict of interest has arisen as a result of the work performed by Compensia.

Annual base salary represents the fixed portion of the compensation of our Named Executive Officers and is an important element of compensation intended to attract and retain highly talented individuals. Generally, we use base salary to provide each Named Executive Officer with a specified level of cash compensation during the year with the expectation that he or she will perform his or her responsibilities to the best of his or her ability and in our best interests.

Generally, we establish the initial base salaries of our Named Executive Officers through arm’s-length negotiation at the time of hire, taking into account the individual’s position, qualifications, experience, competitive market data, and the base salaries of our other executive officers. Thereafter, the compensation committee reviews the base salaries of our Named Executive Officers each year as part of its annual compensation review, with input from our Chief Executive Officer (except with respect to her own base salary) and Compensia, and makes adjustments as it determines to be reasonable and necessary to reflect the scope of a Named Executive Officer’s performance, individual contributions and responsibilities, position in the case of a promotion, target total direct compensation opportunity, and market conditions.

In February 2021, the compensation committee reviewed the annual base salaries of our Named Executive Officers after considering a competitive market analysis prepared by Compensia and the recommendations of our Chief Executive Officer (except with respect to her own base salary), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the compensation committee determined to adjust the annual base salary of each of our Named Executive Officers to bring their base salaries to a level that targets the 50^th percentile of the competitive marketplace and was comparable to that of similarly situated executives at the companies in our compensation peer group.

Our Named Executive Officers’ base salaries, as determined in February 2021, were as follows:

These base salary increases were effective January 1, 2021.

The base salaries paid to our Named Executive Officers during 2021 are set forth in the “2021 Summary Compensation Table” below.

We use an annual bonus plan to motivate our employees, including our Named Executive Officers (other than Mr. Gilpin, our Chief Sales Officer, who participates in a separate sales compensation plan), to achieve our annual business goals as reflected in our annual operating plan. Typically, our board of directors or the compensation committee approves our annual bonus plan, including the performance criteria, during the first quarter of the year. In February 2021, the compensation committee approved the 2021 performance criteria, bonus pool, and other terms under our annual performance bonus plan, the Upwork Inc. Performance Bonus Plan, which we refer to as the 2021 Performance Bonus Plan, to provide annual bonus awards for our employees, including certain of our Named Executive Officers, and set the target annual bonus opportunities for the members of our leadership team, including our Named Executive Officers, who were participants in the 2021 Performance Bonus Plan.

The compensation committee served as the administrator of the 2021 Performance Bonus Plan. Our board of directors and the compensation committee have the authority to amend or terminate the plan at any time and for any reason, provided that any amendment, suspension, or termination of the plan will not, without a participant’s consent, alter or impair any rights or obligations under any earned award of such participant.

In February 2021, the compensation committee reviewed the target annual bonus opportunities of our Named Executive Officers who were participants in the 2021 Performance Bonus Plan after considering a competitive market analysis prepared by Compensia and the recommendations of our Chief Executive Officer (except with respect to her own target annual bonus opportunity), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Following this review, the compensation committee determined to adjust the target annual bonus opportunity of each of our Named Executive Officers who was a participant in the 2021 Performance Bonus Plan to bring their target annual bonus opportunities (as a percentage of each Named Executive Officer’s annual base salary) to a level that was comparable to that of similarly situated executives at the companies in our compensation peer group.

Our Named Executive Officers’ target annual bonus opportunities (other than Mr. Gilpin), as determined in February 2021, were as follows:

These target annual bonus opportunities were effective January 1, 2021.

In February 2021, the compensation committee selected revenue as the performance measure for the 2021 Performance Bonus Plan. For this purpose, “revenue” meant our revenue for 2021 as reported to our board of directors following fiscal year 2021 under the then-applicable Financial Accounting Standards Board, which we refer to as FASB, Accounting Standards Codification guidance, except as otherwise determined by our board of directors or the compensation committee. The computation of the revenue target achievement was to be determined in our sole discretion, as approved by our board of directors or the compensation committee.

The compensation committee consistently reviews an array of potential performance measures to determine the appropriate metrics to drive and evaluate the strategic success of our business. The compensation committee selected revenue as the sole performance measure for the 2021 Performance Bonus Plan because, in its view, it was most consistent with our near-term objective of driving revenue growth. In 2020, we used revenue as the sole performance measure for our bonus plan because revenue growth was the primary focus of our 2020 annual operating plan. Similarly, the compensation committee believed that our revenue performance alone would be the best indicator of our successful execution of our business plan in 2021 in the continuing volatile environment created by the COVID-19 pandemic. For purposes of the 2021 Performance Bonus Plan, the compensation committee set the following performance levels for our revenue performance for 2021:

The target level for revenue under the 2021 Performance Bonus Plan was greater than the revenue earned for the prior fiscal year and represented an aggressive level of performance that the compensation committee believed our management team could achieve with diligent effort in the then-existing business environment. Further, the threshold performance level represented a 15% year-over-year revenue growth figure which the compensation committee determined was appropriate for there to be any payout under the 2021 Performance Bonus Plan.

In the event of an acquisition the bonus payout percentage was to be determined using the most recent revenue forecast for 2021, as approved by the board of directors, and the amount of the bonus was to be pro rated based on the amount of base salary actually paid to a particular participant between the first date of fiscal year 2021 and the date of the acquisition.

The following formula was used to calculate the annual bonuses paid to participants under the 2021 Performance Bonus Plan:

For purposes of the 2021 Performance Bonus Plan:

In February 2022, the compensation committee approved annual bonus awards to the participants in the 2021 Performance Bonus Plan, including our Named Executive Officers (other than Mr. Gilpin). Based on the 2021 performance criteria established by the compensation committee in February 2021, the compensation committee determined we achieved revenue of $502.8 million, which resulted in a Revenue Achievement Percentage of 199%. Based on this Revenue Achievement Percentage, the following bonuses were payable to our Named Executive Officers who were participants in the 2021 Performance Bonus Plan:

As our Chief Sales Officer, Mr. Gilpin’s annual cash incentive for 2021 was based on his ability to manage our sales organization to achieve our annual enterprise revenue quota and reward him for growing our enterprise accounts for the year and to achieve our annual enterprise sales quota and reward him for our sales team’s enterprise bookings efforts for the year. Each of these performance incentives was weighted 50% for purposes of Mr. Gilpin’s 2021 annual cash incentive. In 2021, Mr. Gilpin was eligible to earn an annual cash incentive payment of up to $365,000, which was equal to 100% of his 2021 annual base salary. In addition, each performance incentive included an additional multiplier if enterprise revenue and/or enterprise bookings for the year exceeded his annual quota.

We are not disclosing the target level for our annual enterprise revenue quota and annual enterprise bookings quota because we believe to do so would be competitively harmful, as it would give our competitors valuable insight into our strategic and financial planning processes. However, the target performance level for each performance incentive was greater than our actual performance in the prior year and represented an aggressive level of performance that we believed Mr. Gilpin and our sales organization could achieve with diligent effort.

For purposes of his annual cash incentive, Mr. Gilpin’s payments were calculated based on the total revenue attributable to his enterprise accounts compared to the applicable year-to-date quota and the total enterprise bookings compared to the applicable year-to-date quota. For this purpose, achievement of the quota for each quarterly measurement period (ending March 31, June 30, September 30, and December 31, 2021, respectively) meant the enterprise revenue or enterprise bookings actually attributable to the period calculated as a percentage of the quota for the period. The payment was to be determined on a straight line basis of the cumulative target for each performance incentive, with no cap on the percentage

of the year-to-date target that could be paid for a given period. For example, if the enterprise revenue quota for the period was $1,000 and we achieved enterprise revenue for the period of $610, Mr. Gilpin would be considered to have achieved 61% of his quota. The same formula was applicable to his annual enterprise bookings quota.

In addition, in the event that the sales organization exceeded our annual enterprise revenue quota or annual enterprise bookings quota, as the case may be, in addition to his quarterly cash incentive payment, Mr. Gilpin was eligible to receive an additional payment equal to 3% of each dollar generated over the applicable annual enterprise revenue or enterprise bookings quota, as the case may be, for each performance incentive, which we refer to as the Accelerated Payment. There was no cap on the Accelerated Payment (which was payable after the end of the year) in addition to the quarterly cash incentive payments.

In 2021, Mr. Gilpin earned an annual cash incentive payment under his sales compensation plan in the aggregate amount of $520,739, based on our actual total enterprise revenue performance and our actual enterprise bookings performance as measured against our enterprise revenue and enterprise bookings quotas for 2021. This amount included an Accelerated Payment in the amount of $167,787. Mr. Gilpin’s annual cash incentive payment equaled 142.67% of his 2021 target annual bonus opportunity.

The annual bonuses and sales compensation awarded to our Named Executive Officers for 2021 are set forth in the “2021 Summary Compensation Table” below.

We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. We use equity awards to incentivize and reward our Named Executive Officers for long-term corporate performance based on the value of our common stock and, thereby, to align the interests of our Named Executive Officers with those of our stockholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our Named Executive Officers to create long-term value for our stockholders. Equity awards also help us retain and reward qualified executives in a competitive market. Typically, we have granted equity awards to our Named Executive Officers as part of the compensation committee’s annual review of our executive compensation program.

For 2021, the compensation committee sought to retain, motivate, and reward our Named Executive Officers for long-term increases in the value of our common stock and, thereby, to align their interests with those of our stockholders, using both RSU awards with time-based vesting requirements that may be settled for shares of our common stock and PSU awards with performance-based vesting requirements and time-based vesting requirements that, if earned, may be settled for shares of our common stock. We grant RSU awards because they enable us to incentivize and retain our Named Executive Officers using fewer shares of our common stock than would be necessary if we used stock options and because they have value to the recipient even in the absence of stock price appreciation. In 2021, we also granted PSU awards to our Named Executive Officers to enable them to earn shares of our common stock based on certain pre-established revenue targets in respect of our year ended December 31, 2021 as described below in the section titled “2021 Equity Awards” as well as continued service.

To date, the compensation committee has not applied a rigid formula in determining the size and form of the equity awards to be granted to our Named Executive Officers. Instead, in making these decisions, the compensation committee has exercised its judgment as to the amount and form of the awards. The compensation committee considers the retention value of the equity compensation held by the Named Executive Officer, the cash compensation received by the Named Executive Officer, a competitive market analysis prepared by Compensia, the recommendations of our Chief Executive Officer (except with respect to her own equity awards), the amount of equity compensation held by the Named Executive Officer (including the current economic value of his or her unvested equity and the ability of these unvested holdings to satisfy our retention objectives), as well as the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Based upon these factors, the compensation committee has exercised its judgment to determine the size of each award at levels it considered appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value.

In February 2021, the compensation committee approved long-term incentive compensation opportunities in the form of equity awards for our Named Executive Officers in amounts that it considered to be consistent with our compensation philosophy and its desired market positioning. The number of shares of our common stock subject to the RSU awards and the target number of shares subject to the PSU awards granted to our Named Executive Officers (viewed in the aggregate by value) was determined by the compensation committee based on its consideration of the factors described

above. In 2021, the target number of PSUs comprised 50% of the total long-term incentive compensation opportunity of our Chief Executive Officer (excluding her CEO Performance Award, described below) and 20% of the total long-term incentive compensation opportunities of Messrs. McCombs and Gilpin.

The equity awards granted to our Named Executive Officers in February 2021 were as follows:

RSU Awards. The RSU awards will vest in equal installments of 1/16^th of the award on each quarterly anniversary of the vesting commencement date, February 18, 2021, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date, as described in the applicable restricted stock unit award agreement, such that the RSU award will vest in full on February 18, 2025. The RSU awards are subject to acceleration as described in “Potential Payments upon Termination or Change in Control” below.

PSU Awards. The PSU awards have both a performance-based vesting requirement and a time-based vesting requirement. The number of PSUs that could become subject to each award, which we refer to as the Earned PSUs, were to be earned subject to the achievement of certain pre-established revenue targets in respect of our fiscal year ended December 31, 2021, which we refer to as the Performance Period. Following the Performance Period, all Earned PSUs were then subject to an additional time-based vesting requirement, such that the Earned PSUs would only be settled to the extent vested in accordance with the time-based vesting requirement described below.

The various performance levels for our 2021 revenue and the number of PSUs earned at each performance level were as follows:

Between revenues of $429,640,000 and $503,160,000, the number of Earned PSUs were to be determined on a straight line basis.

For purposes of the PSU awards, “revenue” means our revenue for 2021 under the then-applicable FASB Accounting Standards Codification guidance as reported to our board of directors following the 2021 fiscal year, except as otherwise determined by the compensation committee. The computation of revenue was determined in the sole discretion of the company, as approved by the compensation committee.

Under the time-based vesting requirement, 25% of the Earned PSUs vest on the one year anniversary of the vesting commencement date, February 18, 2021, and thereafter an additional 1/16th of the Earned PSUs vest on each quarterly anniversary thereafter, subject to the Named Executive Officer’s continuous service with us on each applicable vesting date. In the aggregate, the Performance Period and the time-based vesting requirement require four years of service for the Earned PSUs to vest fully.

On February 4, 2022, which we refer to as the Certification Date, the compensation committee determined and certified in writing that we had attained revenue for 2021 in the amount of $502.8 million, resulting in each Named Executive Officer earning the number of Earned PSUs set forth next to their name in the following table and with one-quarter of such Earned PSUs vesting and being settled in the number of shares of our common stock set forth next to their name in the following table):

Each Named Executive Officer was required to be in continuous service with us on the Certification Date in order for the PSUs to become Earned PSUs. If their service terminated for any reason prior to the Certification Date, all PSUs would have been forfeited.

With respect to Ms. Brown’s PSUs, the acceleration provisions set forth in Ms. Brown’s change in control and severance agreement, which we refer to as the CIC Agreement, do not apply to the PSUs. However, in the event of a termination of Ms. Brown’s employment either by us without “cause” or a resignation of Ms. Brown for “good reason,” the time-based vesting requirement described above will accelerate in a manner consistent with the acceleration provisions set forth in the CIC Agreement (as described in “Potential Payments upon Termination or Change in Control” below).

With respect to PSUs granted to Messrs. McCombs and Gilpin, the acceleration provisions set forth in their change in control and severance agreements do not apply. However, in the event of a termination of Mr. McCombs’s or Mr. Gilpin’s employment either by us without “cause” or a resignation by Mr. McCombs or Mr. Gilpin for “good reason” within 12 months following or within 3 months preceding a “change in control,” the time-based vesting requirement described above will accelerate in a manner consistent with the acceleration provisions set forth in their change in control and severance agreements (as described in “Potential Payments upon Termination or Change in Control” below).

Our board of directors and the compensation committee determined that Ms. Brown decisively demonstrated outstanding and exceptional capabilities in her first year as President and Chief Executive Officer. Following significant discussion among its members and review of a competitive market analysis prepared by Compensia, the compensation committee determined that a supplemental performance-based option award, which could be earned only through the combination of significant stock price growth and long-term continued service, would be appropriate to further incentivize Ms. Brown to continue delivering on our growth potential while further aligning Ms. Brown’s interests with those of our stockholders. Accordingly, in January 2021, the compensation committee approved the CEO Performance Award commensurate with the level of achievement and ambition she had demonstrated as President and Chief Executive Officer, while also promoting her retention in a highly competitive market for this level of leadership capability.

 

On January 18, 2021, which we refer to as the Grant Date, the compensation committee granted to Ms. Brown the CEO Performance Award, exercisable for up to 1,500,000 shares of our common stock at a per share exercise price of $38.80, subject to the achievement of certain pre-established per share stock price targets, which we refer to as the Performance Vesting Requirement, and a four-year service-based vesting requirement, which we refer to as the Service Vesting Requirement. For the CEO Performance Award to be exercisable for any shares of our common stock, both the Performance Vesting Requirement and the Service Vesting Requirement must be met with respect to such shares, and the majority of the award’s value will be earned only if the most rigorous of the performance goals are achieved.

The CEO Performance Award is structured to protect stockholder interests and has a Performance Vesting Requirement that requires achievement of extremely rigorous stock price hurdles, which promotes the alignment of Ms. Brown’s interests with those of stockholders and underscores our board of directors’ confidence in both Ms. Brown and our company. Stock price is the sole performance metric for the award because the compensation committee believes the ambitious stock price targets will create significant value for our stockholders through the share price appreciation required for their achievement. At the time of the award, our shares were trading near all-time high prices—following significant share price appreciation in 2020 under Ms. Brown’s leadership—and the lowest performance threshold requires an increase in share price of approximately 55% relative to the exercise price of the CEO Performance Award, and the majority of the award’s value will be earned only if the most rigorous goals are achieved. The Service Vesting Requirement provides for vesting of the earned portion of the CEO Performance Award over a four-year period, which increases the retention value of the award.

Award Structure Promotes Outperformance and Retention

Performance Vesting Requirement. The shares of our common stock subject to the CEO Performance Award are eligible to vest with respect to the Performance Vesting Requirement to the extent the volume-weighted average per share price of our common stock measured over any consecutive 90-day period, with the last 90-day measurement period ending on the 90^th day following the fifth anniversary of the Grant Date, which we refer to as the Final Measurement Date, equals or exceeds (and not to be determined on a straight line basis) an applicable per share stock price target as set forth in the following table:

The performance levels and targets associated with the CEO Performance Award are very rigorous and require exceptional stockholder value creation to vest:

Stock Price Hurdles and Implied Stock Price Appreciation

 

Except as described below, the CEO Performance Award will expire with respect to any shares of common stock that have not satisfied the Performance Vesting Requirement on or before the earlier of:

In the event of a change in control (i) during which Ms. Brown is serving as our Chief Executive Officer, or (ii) within three months following a termination of Ms. Brown’s employment as Chief Executive Officer by us without “cause” or by Ms. Brown for “good reason” (in each case, as defined in the CIC Agreement), then the price per share applicable to the change in control will be applied to determine whether any per share stock price target as set forth in the above table has been achieved, and the number of shares listed directly across from such stock price will vest with respect to the Performance Vesting Requirement. In the event of a termination of Ms. Brown’s employment as our Chief Executive Officer either (x) by us without “cause” or a resignation of Ms. Brown for “good reason,” or (y) due to Ms. Brown’s death or disability, and such termination takes place on a date on which the volume-weighted average per share price of our common stock for a minimum of 45 consecutive days immediately preceding such termination equals or exceeds an applicable per share stock price target as set forth in the above table, then the number of shares listed directly across from such stock price will vest with respect to the Performance Vesting Requirement.

In the event that Ms. Brown’s service with us is terminated in a manner that could not give rise to accelerated vesting in accordance with the terms set forth in this description, any portion of the CEO Performance Award that is then-unvested as of the date of such termination of service will be forfeited.

Service Vesting Requirement. The CEO Performance Award is also subject to the Service Vesting Requirement. The shares of our common stock subject to the CEO Performance Award are eligible to vest with respect to the Service Vesting Requirement with respect to 1/16th of each tranche of shares subject to the CEO Performance Award on each quarterly anniversary of the Grant Date (with each number of shares associated with a specific per share stock price target noted in the above table constituting a separate tranche), subject to Ms. Brown’s continuous service to us as our Chief Executive Officer, Executive Chairperson, or any C-level officer position, each of which we refer to as a Designated Position, on each applicable vesting date. With respect to the Service Vesting Requirement, but not the Performance Vesting Requirement, the vesting of the shares of our common stock subject to the CEO Performance Award will accelerate as follows: (a) as set forth in the CIC Agreement (as described in “Potential Payments upon Termination or Change in Control” below), and (b) in the event that Ms. Brown is terminated or resigns from a Designated Position due to her death or disability, the CEO Performance Award will accelerate with respect to that number of shares that would have vested in accordance with the Service Vesting Requirement over the 12 months immediately following such termination or resignation, only to the extent that such number of shares have satisfied the Performance Vesting Requirement as of immediately prior to such termination or resignation. Any vesting (including any vesting acceleration) with respect to the Service Vesting Requirement would apply proportionately to each tranche of shares of our common stock.

As of December 31, 2021, none of the Performance Vesting Requirements had been met. Accordingly, none of the shares of our common stock subject to the CEO Performance Award had vested with respect to the Performance Vesting Requirements.

The equity awards granted to our Named Executive Officers during 2021 are set forth in the “2021 Summary Compensation Table” and the “2021 Grants of Plan-Based Awards Table” below.

To incentivize long-term value creation and strong financial performance, to further align the interests of our Named Executive Officers with those of our stockholders, and to promote retention of our Named Executive Officers, in February 2022, the compensation committee increased the percentage allocation of PSUs that comprise each of our Named Executive Officers’ long-term incentive compensation opportunity. The target number of PSUs for 2022 will comprise 40% of the total long-term incentive opportunity issued to Messrs. McCombs and Gilpin, increased from 20% in 2021, and the target number of PSUs for 2022 will comprise of 60% of the total long-term incentive opportunity issued to Ms. Brown, increased from 50% in 2021 (excluding her CEO Performance Award).

Our Named Executive Officers are eligible to participate in the same employee benefit plans, and generally on the same terms and conditions, as all other U.S. full-time employees. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, mental health benefits, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, commuter benefits, and reimbursement for mobile phone coverage.

We also sponsor a Section 401(k) retirement plan, which we refer to as the Section 401(k) Plan, that provides eligible employees, including our Named Executive Officers, with an opportunity to save for retirement on a tax-advantaged basis. U.S. employees who have attained at least 18 years of age are generally eligible to participate in the Section 401(k) Plan as of the first day of the calendar month. Participants may make pre-tax contributions to the Section 401(k) Plan from their eligible earnings up to the statutorily prescribed annual limit on pre-tax contributions under the Internal Revenue Code, which we refer to as the Code. Currently, we match 50% of a participant’s contributions to the Section 401(k) Plan in cash, subject to an annual maximum limit of $5,000 per employee. An employee’s interest in our match of a participant’s contributions is 100% vested after one year of service. An employee’s interest in his or her pre-tax deferrals is 100% vested when contributed.

We design and adjust our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices.

Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our Named Executive Officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2021, none of our Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, equal to $10,000 or more for any individual.

We entered into written employment offer letters with each of our Named Executive Officers when they joined us, which employment offer letters were amended and restated in May 2018, in the case of Ms. Brown and Mr. Gilpin. Subsequently, Ms. Brown executed an addendum to her amended and restated employment offer letter to reflect her promotion to Chief Marketing and Product Officer effective April 1, 2019, and thereafter entered into an amended and restated offer letter dated December 8, 2019, to reflect the terms of her employment as our President and Chief Executive Officer effective January 1, 2020. Mr. McCombs entered into a written employment offer letter in July 2020 prior to joining us in August 2020. Collectively, these amended and restated offer letters and Mr. McCombs’s employment offer letter are referred to in this section as the Offer Letters. We believe that these arrangements were necessary to secure the continued service of these individuals in a highly competitive job market.

Each of these Offer Letters provides for “at will” employment (meaning that either we or the Named Executive Officer may terminate the employment relationship at any time with or without cause and with or without notice) and generally sets forth the Named Executive Officer’s then-current annual base salary, eligibility for participation in our annual performance bonus plan, and eligibility to participate in our employee benefit plans, including our health insurance plan and disability insurance plan, as established from time to time. In addition, by executing an Offer Letter, each of Ms. Brown and Mr. Gilpin reaffirmed the terms and conditions of the employee invention assignment and confidentiality agreement and the employee dispute resolution agreement that she or he had previously entered into with us. Mr. McCombs also entered into an employee invention assignment and confidentiality agreement and an employee dispute resolution agreement with us when he accepted his employment offer letter.

These Offer Letters also provide that each Named Executive Officer will be eligible to enter into a change in control and severance agreement based on his or her position within our company. These agreements specify the severance payments and benefits that he or she will be eligible to receive in connection with certain terminations of employment from our company. These post-employment compensation arrangements are discussed in “Post-Employment Compensation” below.

For detailed descriptions of the employment arrangements with our Named Executive Officers, see “Potential Payments upon Termination or Change in Control” below.

We have entered into change in control and severance agreements with each of our Named Executive Officers, which provide for certain protections in the event of certain involuntary terminations of employment, including a termination of employment in connection with a change in control, in exchange for a general release of claims and compliance with a non-disparagement covenant for a period of 24 months following separation from us. Each change in control and severance agreement is in effect for three years, with automatic renewals for new three-year periods unless notice is given by us to the Named Executive Officer three months prior to the date on which the agreement would otherwise renew.

We believe these change in control and severance agreements provide reasonable compensation in the form of severance pay and certain limited benefits to the Named Executive Officer if he or she leaves our employ under certain circumstances to facilitate his or her transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing Named Executive Officer to sign a separation and release agreement in a form prescribed by us providing for a general release of all claims as a condition to receiving post-employment compensation payments or benefits. We believe that these agreements help maintain our Named Executive Officers’ continued focus on their assigned duties to maximize stockholder value if there is a potential change in control transaction and mitigate the risk of subsequent disputes or litigation. The terms and conditions of these agreements were approved by our board of directors after an analysis of competitive market data in consultation with Compensia.

Under the change in control and severance agreements, all payments and benefits in the event of a change in control are payable only if there is a connected loss of employment by a Named Executive Officer (a so-called “double-trigger” arrangement). We use this double-trigger arrangement to protect against the loss of retention value following a change in control and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.

In the event of a change in control, to the extent Section 280G or 4999 of the Code is applicable to a Named Executive Officer, such individual is entitled to receive either a:

We are not obligated to provide excise tax payments, which we refer to as gross-ups, to any of our executive officers, including our Named Executive Officers.

We believe that having in place reasonable and competitive post-employment compensation arrangements, including in the event of a change in control, are essential to attracting and retaining highly qualified executive officers. The compensation committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining our Named Executive Officers’ compensation. We do believe, however, that these arrangements are necessary to offer competitive compensation packages.

For detailed descriptions of the post-employment compensation arrangements with our Named Executive Officers, as well as an estimate of the potential payments and benefits payable thereunder, see “Potential Payments upon Termination or Change in Control” below.

Our Named Executive Officers have each entered into agreements containing confidentiality, non-competition, and non-solicitation covenants. Under these agreements, our Named Executive Officers have agreed to refrain from (i) disclosing our proprietary information in perpetuity, (ii) competing with us or soliciting our clients or customers during the period of their employment, and (iii) soliciting our employees or consultants for a period of 12 months following the termination of their employment.

Our Stock Ownership Guidelines are designed to encourage our Chief Executive Officer and other executive officers and members of our board of directors to achieve and maintain a meaningful ownership stake in our company that aligns their interests with those of our stockholders and promotes a long-term perspective in managing our company. In April 2022, we amended our Stock Ownership Guidelines to remove vested stock options from counting toward satisfaction of such guidelines.

Our Chief Executive Officer and other executive officers and the members of our board of directors are expected to accumulate shares of our common stock towards target ownership levels that are based on a multiple of their respective base salary or annual retainer, as the case may be. If any of our executive officers or the members of our board of directors have not satisfied these ownership levels, the Stock Ownership Guidelines require that they retain ownership of shares according to the retention ratio described below. Currently, the market value of the qualifying shares that each executive officer or member of our board of directors is required to own is as follows:

The minimum level of ownership is expected to be achieved within five years of the date the applicable individual becomes covered by the Stock Ownership Guidelines, and each such individual is expected to continuously hold a sufficient number of shares of our common stock to satisfy the ownership level thereafter for the duration the individual is covered by the Stock Ownership Guidelines. Compliance is evaluated by the compensation committee annually, as of fiscal year-end each year. As of December 31, 2021, each of our executive officers, including our Named Executive Officers, and members of our board of directors was either in compliance with the applicable ownership levels required by the Stock Ownership Guidelines or had not been covered by the Stock Ownership Guidelines for five years.

If, following the compliance deadline, an individual covered by the Stock Ownership Guidelines has not satisfied the applicable ownership level called for by the Stock Ownership Guidelines, then he or she must retain ownership of shares based on a retention ratio which is equal to 50% of the “net profit shares” as follows: each time he or she exercises a stock option, vests in a restricted stock award, or has an RSU award settled for shares of our common stock, he or she is expected to retain 50% of the shares remaining after payment of the option exercise price and taxes owed upon exercise, 50% of the newly-vested shares of restricted stock after the payment of applicable taxes, and 50% of the shares received on settlement of the RSU award after the payment of applicable taxes, in each case until the ownership level called for by the Stock Ownership Guidelines is met.

In April 2021, our board of directors approved a compensation recoupment and forfeiture policy, which we refer to as our Clawback Policy, covering all employees who are officers for purposes of Section 16 of the Exchange Act, including current and former Section 16 executive officers, each of which we refer to as a Covered Officer, and which applies to their incentive-based cash compensation and performance-based equity awards.

If incentive-based cash compensation or performance-based equity awards are granted or received by a Covered Officer that are predicated upon us achieving certain financial results, and if the quarterly or annual financial statements (whether audited or unaudited) are adjusted or restated to correct one or more errors that have a material impact on our financial statements and our board of directors determines that a Covered Officer engaged in fraud or intentional misconduct that materially contributed to the need for such adjustment or restatement, then we may recoup or require forfeiture of any such amounts or any portion of such amounts that are in excess of any compensation that would have been earned by such Covered Officer based upon the adjusted or restated financial results in the event of any adjustment or restatement of our financial statements during the three-year period preceding the date on which we determined, or if later first disclosed, that we are or will be preparing an adjustment or restatement.

In determining whether to require recoupment or forfeiture and, if so, the amount of such recoupment or forfeiture, the compensation committee or board of directors shall take into account such factors as it deems appropriate, including, without limitation, the requirements of applicable law, and stock exchange listing requirements; the extent to which the current or former executive officer participated or otherwise bore responsibility for the facts and circumstances giving rise to the adjustment or restatement and such other factors as it may deem appropriate under the circumstances. Any recoupment or forfeiture of such amounts will be publicly disclosed to the extent our board of directors or the compensation committee determines such disclosure is appropriate or otherwise as required by applicable law.

Under our Insider Trading Policy, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from engaging in hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts, and may not contribute our securities to exchange funds that could be interpreted as having the effect of hedging in our securities. Further, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from engaging in transactions involving options or other derivative securities on our securities, such as puts and calls, whether on an exchange or in any other market and from engaging in short sales of our securities, including short sales “against the box.”

Also, under our Insider Trading Policy, our employees (including our executive officers) and the non-employee members of our board of directors are prohibited from using or pledging our securities as collateral in a margin account or as collateral for a loan unless the pledge has been approved by the designated compliance administrator pursuant to the Insider Trading Policy, which approval is limited to situations where the subject individual has demonstrated the financial capacity to repay the loan without resorting to the pledged securities.

Certain of our executive officers and non-employee directors have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the executive officer or non-employee director when entering into the plan, without further direction from them. The executive officer or non-employee director may amend or terminate the plan in specified circumstances.

The compensation committee takes the applicable tax and accounting requirements into consideration in designing and overseeing our executive compensation program.

Section 162(m) of the Code disallows public companies a tax deduction for federal income tax purposes for remuneration in excess of $1 million paid to certain current and former executive officers who are “covered employees.” The Tax Cuts and Jobs Act of 2017, which we refer to as the TCJA, repealed exceptions to the deductibility limit that were previously available for “performance-based compensation,” including equity awards, effective for taxable years after December 31, 2017, subject to certain grandfathering rules. Prior to the enactment of the TCJA, Section 162(m) included special transition relief rules pursuant to which remuneration paid according to a compensation plan or agreement that existed prior to a company’s initial public offering and had been publicly disclosed was excluded from the $1 million annual deduction limit. This transition relief applied until the earliest of: (i) the expiration of the plan or agreement; (ii) a material modification of the plan or agreement; (iii) the issuance of all employer stock and other compensation that had been allocated under the plan; or (iv) the first meeting of stockholders at which directors are elected that is after the end of the third calendar year following the calendar year in which our initial public offering occurred.

While the compensation committee considers the deductibility of awards as one factor in determining executive compensation, our compensation committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) beyond the control of the compensation committee, no assurances can be given that any compensation paid by us will qualify for the transition relief or be deductible under Section 162(m) even if so intended.

The compensation committee considers accounting implications when designing compensation plans and arrangements for our executive officers and other employees. Chief among these is ASC 718, the standard which governs the accounting treatment of certain stock-based compensation. Among other things, ASC 718 requires us to record a compensation expense in our income statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.

The compensation committee, with the assistance of Compensia, periodically reviews our various compensation programs and related policies and practices and believes that the mix and design of the elements of such programs do not encourage our employees, including our executive officers, to take, or reward our employees for taking, inappropriate or excessive risks and accordingly are not reasonably likely to have a material adverse effect on us. In particular, in conducting our review, we consider compensation program attributes that help to mitigate risk, including:

This report of the compensation committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, which we refer to as the Securities Act, or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.

Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee

The following table provides information concerning compensation awarded to, earned by, or paid to each of our Named Executive Officers for all services rendered in all capacities during 2019, 2020, and 2021:

The following table provides information concerning each grant of an award made in 2021 for each of our Named Executive Officers under any plan. This information supplements the information about these awards set forth in the Summary Compensation Table.