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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Shutterfly Inc | NASDAQ:SFLY | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 50.97 | 48.98 | 52.10 | 0 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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☒ | Definitive Proxy Statement | |
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☐ | Soliciting Material under §240.14a-12 |
Shutterfly, Inc.
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LETTER FROM THE CEO
April 13, 2018
DEAR STOCKHOLDERS,
CONSUMER The leading digital retailer and manufacturer of high-quality personalized products and services. The leading online cards and stationery boutique, offering stylish announcements, invitations and personal stationery for every occasion. Built on the tradition of Picture Day, Lifetouch captures smiling faces, preschool through high school graduation. Product lines include sports, events, seniors and yearbooks. Lifetouch also has a Specialty business which includes retail and church photography. The premier online marketplace for photographic and video equipment rentals. WHO WE ARE 2017 BY THE NUMBERS $1.2B 40B+ REVENUES HOSTED PHOTOS ~$38 26M AVERAGE ANNUAL ORDER VALUE ORDERS ~75% 10M RETURNING CUSTOMERS CUSTOMERS $190M+ ENTERPRISE REVENUE SHUTTERFLY BUSINESS SOLUTIONS Variable print-on-demand solutions for large enterprises. TARGETED DIRECT MAIL JUST-IN-TIME, INVENTORY-FREE PRINTING SHUTTERFLY PRODUCT CATEGORY EVOLUTION TINY PRINTS KIDS & PETS BOUTIQUE SHUTTERFLY WEDDING CARDS TINY PRINTS HOME DECOR / STATEMENT SHOP LIFETOUCH EXPANSION ACQUISITION PHOTO EXPANSION GIFTS GIFTS ACQUISITION 1999 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 2018
PHASE 1: 2017 WHAT WE DID Focus all of our resources on our largest opportunities. Brought the vast majority of Consumer customers and brands onto a single platform. WHAT HAPPENED Success of platform migration seen in Q4 results - retained majority of revenue and customers from migrating brands. Significant cost savings allow both reinvestment and improved bottom line. OUR STRATEGY PHASE 2: 2018 TO 2020 2018 FOCUS Launch Kids and Pets Increase personalization and targeting Drive mobile monetization Expand Enterprise gross margin and pipeline MAKE PURCHASING OFFER A PIVOT TO LEVERAGE OUR PERSONALIZED BROADER RANGE MOBILE MANUFACTURING PRODUCTS SIMPLE OF PRODUCTS PLATFORM WEDDING HOLIDAYS & BIRTH SEASONAL Leader in + Leader in photo-based products school photography GRADUATION PRESCHOOL K-12 +12% ADJUSTED EBITDA +49% FREE CASH FLOW FREE CASH FLOW SUMMARY ($ in Millions) $169 $88 $114 $74 $69 2013 2014 2015 2016 2017 2020 MINIMUM ADJUSTED EBITDA TARGET $50m $270m** Revenue & Shutterfly Cost Synergies $450m $37m* $100m Base Growth Lifetouch *Assumes minimum growth of 5%. ** Mid point of 2018 Shutterfly standalone guidance provided as of January 30, 2018
2018 PROXY STATEMENT |
PROXY SUMMARY
YOUR VOTE MATTERS
This summary highlights information described in more detail elsewhere in this Proxy Statement. We recommend that you read the entire Proxy Statement carefully and consider all information before voting. Page references are supplied to help you find further information in this proxy statement.
VOTING MATTERS, VOTE RECOMMENDATIONS AND RATIONALE
PROPOSAL |
BOARD RECOMMENDS | |||||
Proposal 1: Election of Directors (page 7)
The Corporate Governance Committee and the Board believe that the Director nominees and the entire Board provide Shutterfly with a diverse range of perspectives and business acumen and allow our Directors to effectively engage each other and management to effectively address our evolving needs and represent the best interests of our stockholders.
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FOR Each Nominee | |||||
Proposal 2: Advisory Vote on Frequency of Vote on Compensation of Named Executive Officers (page 24)
As described in detail under the heading Compensation Discussion and Analysis, the objective of our executive compensation program is to attract, motivate and retain the exceptional leaders we need to drive stockholder value, fulfill our vision and mission, uphold our company values and achieve our corporate goals. We accomplish these goals in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. We believe the compensation program for the Named Executive Officers was strongly aligned with the long-term interests of our stockholders and was instrumental in helping us achieve strong financial performance in 2017.
|
FOR | |||||
Proposal 3: Amendment of 2016 Equity Incentive Plan (pages 50 to 58)
Our Board believes the Companys success is due to its highly talented employee base and that future success depends on our ability to continue attracting and retaining high-caliber employees. Our operations are primarily located in Silicon Valley, where we compete with many technology companies, including high profile start-ups, for a limited pool of talented people. Our ability to grant equity awards is a necessary and powerful recruiting and retention tool to maintain and create stockholder value. Non-approval of the Plan Amendment may compel us to increase the cash component of employee compensation because the Company would need to replace components of compensation previously delivered in equity awards.
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FOR | |||||
Proposal 4: Ratification of Selection of Independent Registered Public Accounting Firm (pages 59 to 60)
The Board and the Audit Committee believe that the continued retention of PricewaterhouseCoopers LLP for the fiscal year ending December 31, 2018 is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committees selection of the independent registered public accounting firm.
|
FOR |
2018 PROXY STATEMENT SUMMARY | 1 |
PROXY SUMMARY
|
BUSINESS STRATEGY UPDATE AND 2017 BUSINESS RESULTS
2 |
PROXY SUMMARY
|
DIRECTOR NOMINEES AND OTHER DIRECTORS
The following are the Class III Directors who are the nominees for the 2018 Annual Meeting. For additional information regarding the Shutterfly Board of Directors, please read their biographies which begin on page 9.
AGE
|
TITLE
|
DIRECTOR
|
TERM
|
INDEPENDENT
|
AUDIT
|
COMPENSATION
|
GOVERNANCE
|
|||||||||||||||
Thomas D. Hughes
|
58
|
Director
|
2015
|
2018
|
Yes
|
|
|
|
|
|
| |||||||||||
Eva Manolis
|
54
|
Director
|
2016
|
2018
|
Yes
|
|
|
| ||||||||||||||
Elizabeth Sartain
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63
|
Director
|
2016
|
2018
|
Yes
|
|
|
|
||||||||||||||
The following are the Class I and Class II Directors who will continue on the Board of Directors after the 2018 Annual Meeting.
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|
|||||||||||||||||||||
AGE
|
TITLE
|
DIRECTOR
|
TERM
|
INDEPENDENT
|
AUDIT
|
COMPENSATION
|
GOVERNANCE
|
|||||||||||||||
Christopher North
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47 | President and Chief Executive Officer, Director | 2016 | 2019 | ||||||||||||||||||
William Lansing
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59 | Chairman of the Board, Director | 2017 | 2019 | Yes | |||||||||||||||||
Ann Mather
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58 | Director | 2013 | 2020 | Yes | |||||||||||||||||
Elizabeth S. Rafael
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56 | Director | 2016 | 2019 | Yes |
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||||||||||||||
H. Tayloe Stansbury
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56 | Director | 2016 | 2020 | Yes |
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|
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||||||||||||||
Brian T. Swette
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64 | Director | 2009 | 2020 | Yes |
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|
|
|
|
| |||||||||||
Michael P. Zeisser
|
53 | Director | 2013 | 2019 | Yes |
|
|
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Chairperson Member
DIRECTOR DASHBOARD
2018 PROXY STATEMENT SUMMARY | 3 |
PROXY SUMMARY
|
4 |
PROXY SUMMARY
|
Below are certain highlights of our fiscal 2017 executive compensation policies and practices. Additional information can be found in the section entitled Our Corporate Values, Compensation Philosophy, and Practices which begins on page 29.
WHAT WE DO | WHAT WE DONT DO | |
Pay for Performance. Our program is designed to align executive pay with our financial performance and stockholder value.
Peer Group Analysis. The Committee reviews total direct compensation (base salary, annual cash incentive and long-term incentive awards) and the mix of the compensation components for our peer group as one of the factors in determining the compensation for our NEOs.
CEO Stock Ownership Guideline. Our CEO is required to hold four times his base salary in our stock, which must be achieved within five years of hire.
Use of Independent Compensation Consultant. The Committee is advised by an independent compensation consulting firm that provides no other services to us.
Clawback Policy. The Committee has adopted a clawback policy applicable to all incentive payments provided to executive officers.
|
No Single Trigger Change-in-Control Payments. No payments or benefits are payable solely on the occurrence of a change-in-control of the company.
No Tax Gross-Ups for Excise Taxes. Our NEOs are not entitled to any tax gross-up payments with respect to excise taxes that may be imposed on certain payments.
No Hedging, Speculative Trading, or Pledging. Our trading policies prohibit employees and directors from hedging, speculative trading or pledging of our stock. |
2018 PROXY STATEMENT SUMMARY | 5 |
NOTICE OF 2018 ANNUAL MEETING
Meeting Date & Time Wednesday, May 23, 2018 10:30 a.m. PST |
Meeting Place Shutterfly, Inc. 2800 Bridge Parkway Redwood City, California 94065 |
Record Date March 26, 2018 |
DEAR STOCKHOLDER:
Notice is hereby given that the 2018 Annual Meeting of Stockholders (the Annual Meeting) of Shutterfly, Inc., a Delaware corporation (we or our), will be held at 2800 Bridge Parkway, Redwood City, California 94065, on May 23, 2018, at 10:30 a.m., Pacific Daylight Time, for the following purposes:
1. To elect three Class III directors to hold office until our 2021 Annual Meeting of Stockholders;
2. To approve, on an advisory basis, the compensation of our named executive officers;
3. To approve the amendment of our 2015 Equity Incentive Plan to increase the number of shares available for issuance thereunder by 900,000 shares;
4. To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2018; and
5. To conduct any other business properly brought before the Annual Meeting.
SHUTTERFLY, INC.
2800 Bridge Parkway
Redwood City, California 94065
PROXY STATEMENT
2018 PROXY STATEMENT | 1 |
THE PROXY PROCESS AND STOCKHOLDER VOTING
|
2018 PROXY STATEMENT | 3 |
THE PROXY PROCESS AND STOCKHOLDER VOTING
|
4 |
THE PROXY PROCESS AND STOCKHOLDER VOTING
|
2018 PROXY STATEMENT | 5 |
THE PROXY PROCESS AND STOCKHOLDER VOTING
|
6 |
PROPOSAL NO. 1 ELECTION OF DIRECTORS
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF EACH NOMINEE
The following is biographical information as of April 13, 2018 for each nominee for Class III, Thomas D. Hughes, Eva Manolis and Elizabeth Sartain, director and each person whose term of office as a Class I or II director will continue after the Annual Meeting.
AGE | TITLE | INDEPENDENT |
AUDIT |
COMPENSATION | GOVERNANCE | |||||||||
Christopher North
|
47
|
President and Chief Executive Officer, Director
|
||||||||||||
William Lansing
|
59
|
Chairman of the Board, Director
|
|
Yes
|
|
|||||||||
Thomas D. Hughes
|
58
|
Director
|
|
Yes
|
|
|
| |||||||
Eva Manolis
|
54
|
Director
|
|
Yes
|
|
| ||||||||
Ann Mather
|
58
|
Director
|
|
Yes
|
|
|||||||||
Elizabeth S. Rafael
|
56
|
Director
|
|
Yes
|
|
|
||||||||
Elizabeth Sartain
|
63
|
Director
|
|
Yes
|
|
|
||||||||
H. Tayloe Stansbury
|
56
|
Director
|
|
Yes
|
|
|
||||||||
Brian T. Swette
|
64
|
Director
|
|
Yes
|
|
|
| |||||||
Michael P. Zeisser
|
53
|
Director
|
|
Yes
|
|
|
= Chairperson = Member
Below are certain key competencies and attributes represented on our Board. More details on each Directors competencies are included in the Director profiles which follows.
KEY COMPETENCIES AND ATTRIBUTES
8 |
Nominees for Election for a Three-year Term Expiring at the 2021 Annual Meeting of Stockholders
|
PROPOSAL NO. 1 ELECTION OF DIRECTORS
|
2018 PROXY STATEMENT | 9 |
PROPOSAL NO. 1 ELECTION OF DIRECTORS
|
Directors Continuing in Office until the 2019 Annual Meeting of Stockholders
|
10 |
Directors Continuing in Office until the 2019 Annual Meeting of Stockholders
|
PROPOSAL NO. 1 ELECTION OF DIRECTORS
|
2018 PROXY STATEMENT | 11 |
PROPOSAL NO. 1 ELECTION OF DIRECTORS
|
Directors Continuing in Office until the 2020 Annual Meeting of Stockholders
|
There | are no family relationships among any of our directors and executive officers. |
12 |
EXECUTIVE OFFICERS
|
The following is biographical information for our executive officers, other than Mr. North, our Chief Executive Officer, as of April 13, 2018.
NAME |
AGE | POSITION | ||||
Michele Anderson
|
|
52
|
|
Senior Vice President, Retail
| ||
Scott Arnold
|
|
54
|
|
Senior Vice President, Enterprise
| ||
Dwayne Black
|
|
50
|
|
Senior Vice President and Chief Operations Officer
| ||
Tracy Layney
|
|
45
|
|
Senior Vice President and Chief Human Resources Officer
| ||
Ishantha Lokuge
|
|
51
|
|
Senior Vice President and Chief Product Officer
| ||
Satish Menon
|
|
60
|
|
Senior Vice President and Chief Technical Officer
| ||
Michael Pope
|
|
51
|
|
Senior Vice President and Chief Financial Officer
|
2018 PROXY STATEMENT | 13 |
EXECUTIVE OFFICERS
|
14 |
EXECUTIVE OFFICERS
|
2018 PROXY STATEMENT | 15 |
CORPORATE GOVERNANCE
|
Our Board of Directors has an Audit Committee, a Compensation and Leadership Development Committee and a Governance Committee. Each committee operates pursuant to a written charter that is available on our website at http://ir.shutterfly.com/corporate-governance/committee-composition. The following table presents committee memberships as of the date of this proxy statement:
NAME |
AUDIT | COMPENSATION | GOVERNANCE | |||||||||
William Lansing
|
||||||||||||
Thomas D. Hughes
|
|
|
|
|
|
| ||||||
Eva Manolis
|
|
|
| |||||||||
Ann Mather
|
||||||||||||
Elizabeth S. Rafael
|
|
|
|
|||||||||
Elizabeth Sartain
|
|
|
|
|||||||||
H. Tayloe Stansbury
|
|
|
|
|||||||||
Brian T. Swette
|
|
|
|
|
|
| ||||||
Michael P. Zeisser
|
|
|
|
|||||||||
Total meetings in 2017
|
|
7
|
|
|
7
|
|
|
5
|
|
= Chairperson = Member
* | William J. Lansing, Ann Mather and Christopher North do not currently serve on any committee of the Board. |
2018 PROXY STATEMENT | 17 |
CORPORATE GOVERNANCE
|
18 |
CORPORATE GOVERNANCE
|
2018 PROXY STATEMENT | 19 |
CORPORATE GOVERNANCE
|
20 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Percentage ownership of our Common Stock in the table is based on 33,107,322 shares of our Common Stock outstanding as of March 26, 2018. In accordance with Securities and Exchange Commission rules and regulations, shares of our Common Stock subject to equity awards that are currently vested or will vest within 60 days of March 26, 2018 (i.e., by May 25, 2018) are deemed to be beneficially owned by the holder of the equity award 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 person named below is c/o Shutterfly, Inc., 2800 Bridge Parkway, Redwood City, California 94065.
SHARES OF COMMON STOCK BENEFICIALLY OWNED
| ||||||
NAME OF BENEFICIAL OWNER |
NUMBER |
PERCENTAGE | ||||
5% Stockholders |
||||||
Primecap Management Company (1) |
|
5,059,482 |
|
15.3% | ||
BlackRock, Inc. (2) |
|
4,127,633 |
|
12.5% | ||
The Vanguard Group (3) |
|
3,009,168 |
|
9.1% | ||
Park West Asset Management, LLC (4) |
|
1,811,637 |
|
5.5% | ||
Thomas D. Hughes (5) |
|
8,565 |
|
| ||
William Lansing (6) |
|
27,124 |
|
| ||
Eva Manolis (7) |
|
6,986 |
|
| ||
Ann Mather (8) |
|
7,868 |
|
| ||
Christopher North (9) |
|
249,685 |
|
| ||
Elizabeth S. Rafael (10) |
|
8,615 |
|
| ||
Elizabeth Sartain (11) |
|
6,627 |
|
| ||
H. Tayloe Stansbury (12) |
|
6,025 |
|
| ||
Brian T. Swette (13) |
|
27,765 |
|
| ||
Michael P. Zeisser (14) |
|
20,161 |
|
| ||
Michele Anderson (15) |
|
6,020 |
|
|
2018 PROXY STATEMENT | 21 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
SHARES OF COMMON STOCK BENEFICIALLY OWNED
| ||||||
NAME OF BENEFICIAL OWNER |
NUMBER |
PERCENTAGE | ||||
Scott Arnold (16) |
|
|
|
| ||
Dwayne A. Black (17) |
|
22,886 |
|
| ||
Tracy Layney (18) |
|
2,095 |
|
| ||
Ishantha Lokuge (19) |
|
2,513 |
|
| ||
Satish Menon (20) |
|
3,980 |
|
| ||
Michael Pope (21) |
|
24,616 |
|
| ||
All current directors and executive officers as a group (17 persons) |
1.3% |
22 |
COMPENSATION DISCUSSION AND ANALYSIS
TABLE OF CONTENTS
|
This Compensation Discussion and Analysis (CD&A) provides a detailed description of our compensation philosophy, practices, and the factors and process used in making compensation decisions with respect to our named executive officers for the year ended December 31, 2017 (NEOs). Our NEOs are:
Christopher North, President and Chief Executive Officer (CEO); Michael Pope, Senior Vice President and Chief Financial Officer (CFO); Michele Anderson, Senior Vice President, Retail; Scott Arnold, Senior Vice President, Enterprise; and Satish Menon, Senior Vice President and Chief Technology Officer.
EXECUTIVE SUMMARY
Overview. As the leading provider and online retailer of high-quality personalized products and services offered through our lifestyle brands, we operate in numerous dynamic and competitive market segments. The market in which we compete for skilled executive management talent is highly competitive. Our executive compensation program is designed to attract, motivate, and retain the key executives who drive success for our stockholders, customers, and employees. Compensation that reflects performance and aligns with the long-term interests of our stockholders is fundamental to our compensation program design and decisions.
Business Strategy Update. At the beginning of 2017, we refined our business strategy around four key areas of focus: 1) simplifying the process of creating and purchasing personalized products, 2) expanding the range of products, 3) pivoting to mobile, and 4) leveraging our manufacturing platform for business customers. As the first step of our long-term strategy, we made the decision to restructure our Consumer business, simplifying our brand portfolio and shifting customers to our flagship Shutterfly.com website. We believed effectively executing our strategy would position the Company to deliver sustainable, profitable growth and create value for our stockholders. We delivered strong results during 2017, setting us up for success in 2018 and beyond (see 2017 Business Results).
| |||||
25
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|||||
38 |
Report of the Compensation and Leadership Development Committee of the Board of Directors
|
|||||
39
|
|
|||||
40
|
|
|||||
41
|
Outstanding Equity Awards at Year-End
|
|||||
42
|
Option Exercises and Stock Vested
|
|||||
42
|
|
|||||
42 |
Potential Payments upon Termination or Change of Control
|
2018 PROXY STATEMENT | 25 |
COMPENSATION DISCUSSION AND ANALYSIS
|
26 |
COMPENSATION DISCUSSION AND ANALYSIS
|
2017 Business Results. Under the leadership of our executive team, we exceeded our plan for 2017, delivering 5% growth in net revenues and 12% growth in Adjusted EBITDA. In addition, after the close of 2017, we announced our agreement to acquire Lifetouch, a national leader in school photography. We are targeting a minimum of $450 million in Adjusted EBITDA by 2020, through the strength of each others core businesses as well as our realization of unique revenue and cost synergies available from combining our two complementary companies. By executing our long-term strategy, we delivered strong financial performance and created value for our stockholders over the past year. Our 1-year total stockholder return (TSR) over calendar year 2017 was -0.9%. However, we believe it is also relevant to evaluate TSR from the day after the release of our 2016 Fourth Quarter Earnings (February 2, 2017) through the day after the release of our 2017 Fourth Quarter Earnings and Lifetouch acquisition announcement (January 31, 2018). Over this period reflecting when our 2017 financial results were publicly-disclosed, our total stockholder return was 55.9% compared to 16.0% for the Russell 2000 index.
Net Revenue ($ Millions) |
Adjusted EBITDA ($ Millions) |
Total Stockholder Return | ||
2018 PROXY STATEMENT | 27 |
COMPENSATION DISCUSSION AND ANALYSIS
|
28 |
COMPENSATION DISCUSSION AND ANALYSIS
|
EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS
WHAT WE DO | WHAT WE DONT DO | |
Pay for Performance. Our program is designed to align executive pay with our financial performance and stockholder value.
Peer Group Analysis. The Committee reviews total direct compensation (base salary, annual cash incentive and long-term incentive awards) and the mix of the compensation components for our peer group as one of the factors in determining the compensation for our NEOs.
CEO Stock Ownership Guideline. Our CEO is required to hold four times his base salary in our stock, which must be achieved within five years of hire.
Use of Independent Compensation Consultant. The Committee is advised by an independent compensation consulting firm that provides no other services to us.
Clawback Policy. The Committee has adopted a clawback policy applicable to all incentive payments provided to executive officers.
|
No Single Trigger Change-in-Control Payments. No payments or benefits are payable solely on the occurrence of a change-in-control of the company.
No Tax Gross-Ups for Excise Taxes. Our NEOs are not entitled to any tax gross-up payments with respect to excise taxes that may be imposed on certain payments.
No Hedging, Speculative Trading, or Pledging. Our trading policies prohibit employees and directors from hedging, speculative trading or pledging of our stock. |
2018 PROXY STATEMENT | 29 |
COMPENSATION DISCUSSION AND ANALYSIS
|
30 |
COMPENSATION DISCUSSION AND ANALYSIS
|
In late 2016, the Committee approved changes to the peer group to reposition Shutterfly near the median of our peer group by revenue and market cap. The peer group for 2017 was comprised of companies similar to Shutterfly on the basis of revenue, market capitalization, industry (focused on e-commerce, Internet, and software companies), and geography (focused on the San Francisco Bay Area and other major metropolitan markets). This data is supplemented with data from a survey of executive compensation by Radford Associates, a unit of Aon Hewitt, representing both public and private technology companies that are of similar size with revenues between $500 million and $3 billion. Our peer group for 2017 was comprised of the following companies:
2017 PEER GROUP | ||||||
1-800-Flowers.com, Inc. |
Groupon, Inc. | Shutterstock, Inc. | WebMD Health Corp | |||
Box, Inc. |
GrubHub Inc. | Stamps.com Inc. | Yelp Inc. | |||
Cimpress N.V. |
Match Group, Inc. | TripAdvisor, Inc. | Zillow Group, Inc. | |||
Etsy, Inc. |
Pandora Media, Inc. | TrueCar, Inc. | Zynga, Inc. | |||
GoDaddy Inc.
|
Quotient Technology Inc.
|
Wayfair Inc.
|
The table below shows how Shutterfly compares to the peer group used in 2017:
REVENUE LATEST |
MARKET AS OF | |||||||||
75th Percentile
|
$
|
1,556
|
|
$
|
6,375
|
| ||||
Median
|
$
|
861
|
|
$
|
3,382
|
| ||||
25th Percentile
|
$
|
479
|
|
$
|
1,419
|
| ||||
Shutterfly
|
$
|
1,190
|
|
$
|
1,633
|
|
(1) | Expressed in millions. |
2018 PROXY STATEMENT | 31 |
COMPENSATION DISCUSSION AND ANALYSIS
|
Base Salary. We provide base salaries to provide executives with a competitive level of fixed, short-term compensation. The Committee sets the annual base salaries of our NEOs at levels it believes will enable us to hire and retain individuals in a competitive environment and to reward individual performance and contribution to our overall corporate goals. In determining base salaries, the Committee takes into account each NEOs qualifications and experience, position and scope of responsibilities, external pay benchmarks, internal pay equity, and job performance. Salary reviews are conducted annually; however, individual salaries are not necessarily adjusted each year. For 2017, salaries for incumbent NEOs (Messrs. North, Pope and Menon) were maintained at 2016 levels. The salaries for Ms. Anderson and Mr. Arnold were set at the time of their hire.
NEO |
2016 BASE SALARY | 2017 BASE SALARY | PERCENTAGE ADJUSTMENT |
|||||||||
Mr. North |
$ | 700,000 | $ | 700,000 | 0.0 | % | ||||||
Mr. Pope |
415,000 | 415,000 | 0.0 | % | ||||||||
Ms. Anderson |
N/A | 350,000 | N/A | |||||||||
Mr. Arnold |
N/A | 350,000 | N/A | |||||||||
Mr. Menon |
375,000 | 375,000 | 0.0 | % |
For 2017, we redesigned and simplified our short-term incentive plan to be based solely on Adjusted EBITDA to encourage a singular focus on increasing profitability as we undertook initiatives to consolidate our consumer brands and position the Company for profitable growth.
2016 PLAN | 2017 PLAN | |||
Goal Setting |
Quarterly | Annual | ||
Performance Period |
Quarterly | Quarterly | ||
Financial Metrics |
Adjusted EBITDA (threshold), Revenue | Adjusted EBITDA | ||
Individual Performance |
Modifier up to +/- 50% | No adjustment for individual performance |
32 |
COMPENSATION DISCUSSION AND ANALYSIS
|
The sum of the quarterly Adjusted EBITDA goals for 2017 represents an aggregate 10% increase from 2016. The Adjusted EBITDA threshold performance levels set by the Committee under the 2017 Bonus Plans are detailed below (amounts shown in millions):
PERIOD |
PERIOD WEIGHTING |
2016 ACTUAL ADJUSTED EBITDA ($ MIL.) |
2017 ADJUSTED ($ MIL.) |
2017 ACTUAL ADJUSTED EBITDA ($ MIL.) (1) |
2017 BONUS FUNDING | ||||||||||||||||||||
First Quarter
|
|
20
|
%
|
-$
|
2.6
|
|
-$
|
4.4
|
|
-$
|
1.9
|
|
|
100
|
%(2)
| ||||||||||
Second Quarter
|
|
20
|
%
|
|
18.2
|
|
|
17.4
|
|
|
17.4
|
|
|
98
|
%
| ||||||||||
Third Quarter
|
|
20
|
%
|
|
-2.0
|
|
|
3.0
|
|
|
3.0
|
|
|
100
|
%
| ||||||||||
Fourth Quarter
|
|
40
|
%
|
|
194.8
|
|
$
|
214.0
|
|
|
215.6
|
|
|
156
|
%(2)
| ||||||||||
Total
|
$
|
208.5
|
|
$
|
230.0
|
|
$
|
234.1
|
|
|
122
|
%
|
(1) | Excludes $17 million of restructuring charges relating to our single platform migration and capital lease termination charges related to the HP printer upgrade of $8.1 million. |
(2) | First quarter payout was capped at 100% with earnout for overachievement paid as part of the fourth quarter bonus, once full-year results were determined. |
Bonus Decisions
At each of its quarterly meetings where it reviewed our financial results for purposes of the 2017 Bonus Plan, the Committee considered the potential bonus payments for each of our executive officers, including our NEOs. The following table presents the quarterly bonus payments that were made to the NEOs under the 2017 Bonus Plan.
NEO |
Q1 | Q2 | Q3 | Q4 | TOTAL | % SAL. | % TARGET | ||||||||||||||||||||||||||||
Mr. North
|
$
|
140,000
|
|
$
|
137,200
|
|
$
|
140,000
|
|
$
|
439,600
|
|
$
|
856,800
|
|
|
122
|
%
|
|
122
|
%
| ||||||||||||||
Mr. Pope
|
|
33,200
|
|
|
32,536
|
|
|
33,200
|
|
|
104,248
|
|
|
203,184
|
|
|
49
|
%
|
|
122
|
%
| ||||||||||||||
Ms. Anderson
|
|
10,360
|
(1)
|
|
27,440
|
|
|
28,000
|
|
|
87,920
|
|
|
153,720
|
|
|
44
|
%
|
|
122
|
%
| ||||||||||||||
Mr. Arnold
|
|
N/A
|
|
|
N/A
|
|
|
28,000
|
|
|
87,920
|
|
|
115,920
|
|
|
33
|
%
|
|
122
|
%
| ||||||||||||||
Mr. Menon
|
|
30,000
|
|
|
29,400
|
|
|
30,000
|
|
|
94,200
|
|
|
183,600
|
|
|
49
|
%
|
|
122
|
%
|
(1) | Pro-rated to Ms. Andersons start date. |
2018 PROXY STATEMENT | 33 |
COMPENSATION DISCUSSION AND ANALYSIS
|
The equity awards granted to the NEOs were as follows:
NEO |
ANNUAL / NEW HIRE SHARE TOTALS
|
RETENTION RSU AWARDS (NO.) |
AGGREGATE GRANT DATE FAIR VALUE OF EQUITY AWARDS ($) |
|||||||||||||
STOCK OPTION AWARDS (NO.) |
RSU AWARDS (NO.) |
|||||||||||||||
Mr. North |
| | | | ||||||||||||
Mr. Pope |
78,771 | 23,500 | | 1,994,908 | ||||||||||||
Ms. Anderson |
144,483 | 48,161 | | 3,996,140 | ||||||||||||
Mr. Arnold |
157,894 | 50,170 | | 4,392,544 | ||||||||||||
Mr. Menon |
63,687 | 19,000 | 10,000 | 2,060,402 |
34 |
COMPENSATION DISCUSSION AND ANALYSIS
|
OTHER POLICIES
Stock Ownership Policy. Our stock ownership guidelines are designed to encourage our CEO and Board to achieve and maintain a significant equity stake in Shutterfly and more closely align their interests with those of our stockholders. The current ownership levels are as follows:
INDIVIDUAL SUBJECT TO STOCK OWNERSHIP POLICY |
MINIMUM REQUIRED LEVEL OF STOCK OWNERSHIP | |
Chief Executive Officer |
Four times current annual base salary | |
Non-Employee Members of our Board of Directors |
$200,000 |
2018 PROXY STATEMENT | 35 |
COMPENSATION DISCUSSION AND ANALYSIS
|
36 |
COMPENSATION DISCUSSION AND ANALYSIS
|
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | |||||||||||
Net income (loss) |
$ | 30,085 | $ | 15,906 | ||||||||
Add back: |
||||||||||||
Interest expense |
27,836 | 23,023 | ||||||||||
Interest and other income, net |
(1,481 | ) | (501 | ) | ||||||||
Tax expense |
5,160 | 10,682 | ||||||||||
Depreciation and amortization |
103,862 | 113,651 | ||||||||||
Stock-based compensation expense |
43,573 | 45,692 | ||||||||||
Capital lease termination |
8,098 | | ||||||||||
Restructuring |
16,966 | | ||||||||||
Non-GAAP Adjusted EBITDA |
$ | 234,099 | $ | 208,453 |
2018 PROXY STATEMENT | 37 |
The following table presents compensation information for each NEO for the year ended December 31, 2017, and, to the extent required by the Securities and Exchange Commission compensation disclosure rules, the years ended December 31, 2016 and 2015. The table does not include columns for Change in Pension Value and Nonqualified Deferred Compensation Earnings because there were no amounts to report for the years presented.
NAME AND PRINCIPAL POSITION |
YEAR | SALARY ($)(1) |
BONUS ($)(2) |
STOCK ($)(3) |
OPTION ($)(4) |
NON
EQUITY ($)(5) |
ALL OTHER COMPENSATION |
TOTAL ($) |
||||||||||||||||||||||||
Christopher North
|
|
2017
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
856,800
|
|
|
|
|
|
1,556,800
|
| ||||||||
President and Chief
|
|
2016
|
|
|
411,202
|
|
|
1,972,450
|
|
|
7,245,000
|
|
|
11,475,000
|
|
|
|
|
|
354,333
|
(6)
|
|
21,457,985
|
| ||||||||
Executive Officer
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Michael Pope
|
|
2017
|
|
|
415,000
|
|
|
|
|
|
1,051,625
|
|
|
943,283
|
|
|
203,184
|
|
|
|
|
|
2,613,092
|
| ||||||||
Senior Vice President,
|
|
2016
|
|
|
415,000
|
|
|
|
|
|
|
|
|
|
|
|
105,450
|
|
|
|
|
|
520,450
|
| ||||||||
Chief Financial Officer
|
|
2015
|
|
|
75,551
|
|
|
|
|
|
5,651,875
|
|
|
|
|
|
46,800
|
|
|
|
|
|
5,774,226
|
| ||||||||
Michele Anderson
|
|
2017
|
|
|
296,154
|
|
|
|
|
|
2,199,994
|
|
|
1,766,146
|
|
|
153,720
|
|
|
|
|
|
4,416,014
|
| ||||||||
Senior Vice President,
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Retail
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Scott Arnold
|
|
2017
|
|
|
176,346
|
|
|
|
|
|
2,383,075
|
|
|
2,009,470
|
|
|
115,920
|
|
|
|
|
|
4,684,811
|
| ||||||||
Senior Vice President,
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Enterprise
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Satish Menon
|
|
2017
|
|
|
375,000
|
|
|
|
|
|
1,297,750
|
|
|
762,652
|
|
|
183,600
|
|
|
|
|
|
2,619,002
|
| ||||||||
Senior Vice President,
|
|
2016
|
|
|
374,180
|
|
|
|
|
|
1,899,993
|
|
|
|
|
|
85,350
|
|
|
|
|
|
2,359,523
|
| ||||||||
Chief Technical Officer
|
|
2015
|
|
|
369,333
|
|
|
|
|
|
336,075
|
|
|
|
|
|
150,190
|
|
|
|
|
|
855,598
|
|
2018 PROXY STATEMENT | 39 |
COMPENSATION TABLES
|
The following table provides information on incentive awards granted to each NEO during the year ended December 31, 2017.
ESTIMATED FUTURE PAYOUTS UNDER
|
ESTIMATED FUTURE PAYMENTS UNDER
|
ALL OTHER (#) |
GRANT DATE FAIR STOCK AND ($)(1) |
|||||||||||||||||||||||||||||||||||
NAME |
TYPE OF AWARD |
GRANT DATE |
MINIMUM ($) |
TARGET ($) |
MAXIMUM ($) |
THRESHOLD (#) |
TARGET (#) |
MAXIMUM (#) |
||||||||||||||||||||||||||||||
Christopher North
|
Cash (2)
|
|
|
|
|
|
|
|
700,000
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Michael Pope
|
Cash (2)
|
|
|
|
|
|
|
|
166,000
|
|
|
332,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
RSU (3)
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,500
|
|
|
1,051,625
|
| |||||||||||
Option (4)
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,771
|
|
|
943,283
|
| |||||||||||
Michele Anderson
|
Cash (2)
|
|
|
|
|
|
|
|
105,000
|
|
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
RSU (3)
|
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,161
|
|
|
2,199,994
|
| |||||||||||
Option (4)
|
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,483
|
|
|
1,766,146
|
| |||||||||||
Scott Arnold
|
Cash (2)
|
|
|
|
|
|
|
|
70,000
|
|
|
140,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
RSU (3)
|
|
6/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,170
|
|
|
2,383,075
|
| |||||||||||
Option (4)
|
|
6/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157,894
|
|
|
2,009,470
|
| |||||||||||
Satish Menon
|
Cash (2)
|
|
|
|
|
|
|
|
150,000
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
RSU (3)
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,000
|
|
|
850,250
|
| |||||||||||
RSU (3)
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
447,500
|
| |||||||||||
Option (4)
|
|
2/14/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,687
|
|
|
762,652
|
|
The material terms of our 2017 Quarterly Bonus Plan necessary to an understanding of the possible aggregate cash awards payable to our NEOs, including the quarterly corporate performance measures under the plan, are described in Compensation Discussion and Analysis above under Compensation Program ElementsShort-term Performance-based Incentive Program.
The material terms of the RSUs and stock options awarded to NEOs during 2017, including the vesting schedules applicable to the RSUs and stock options are described in Compensation Discussion and Analysis.
40 |
COMPENSATION TABLES
|
OUTSTANDING EQUITY AWARDS AT YEAR-END
The following table provides information regarding equity awards held by each NEO as of December 31, 2017. No NEO has any other outstanding form of equity award.
NAME |
GRANT DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) |
MARKET VALUE NOT VESTED ($)(1) |
EQUITY (#) |
EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED ($) |
NUMBER
OF (#) |
NUMBER
OF (#) |
OPTION EXERCISE PRICE ($) |
OPTION EXPIRATION DATE |
|||||||||||||||||||||||||||
Christopher North |
5/31/2016 | (2) | 110,000 | 5,472,500 | | | | | | | ||||||||||||||||||||||||||
5/31/2016 | (3) | | | | | 336,458 | 513,542 | 48.30 | 5/30/2023 | |||||||||||||||||||||||||||
Michael Pope |
10/27/2015 | (4) | 35,000 | 1,741,250 | | | | | | | ||||||||||||||||||||||||||
10/27/2015 | (4) | 35,000 | 1,741,250 | | | | | | | |||||||||||||||||||||||||||
2/14/2017 | (4) | 23,500 | 1,169,125 | | | | | | | |||||||||||||||||||||||||||
2/14/2017 | (3) | | | | | | 78,771 | 44.75 | 2/13/2024 | |||||||||||||||||||||||||||
Michele Anderson |
2/27/2017 | (4) | 48,161 | 2,396,010 | | | | | | | ||||||||||||||||||||||||||
2/27/2017 | (3) | | | | | | 144,483 | 45.68 | 2/26/2024 | |||||||||||||||||||||||||||
Scott Arnold |
6/30/2017 | (4) | 50,170 | 2,495,958 | | | | | | | ||||||||||||||||||||||||||
6/30/2017 | (3) | | | | | | 157,894 | 47.50 | 6/30/2024 | |||||||||||||||||||||||||||
Satish Menon |
11/3/2014 | (4) | 12,500 | 621,875 | | | | | | | ||||||||||||||||||||||||||
11/3/2014 | (4) | 12,500 | 621,875 | | | | | | | |||||||||||||||||||||||||||
2/10/2016 | (4) | 18,642 | 927,440 | | | | | | | |||||||||||||||||||||||||||
2/10/2016 | (4) | 18,642 | 927,440 | | | | | | | |||||||||||||||||||||||||||
2/14/2017 | (4) | 19,000 | 945,250 | | | | | | | |||||||||||||||||||||||||||
2/14/2017 | (5) | 10,000 | 497,500 | | | | | | | |||||||||||||||||||||||||||
2/14/2017 | (3) | | | | | | 63,687 | 44.75 | 2/13/2024 |
2018 PROXY STATEMENT | 41 |
COMPENSATION TABLES
|
OPTION EXERCISES AND STOCK VESTED
The following table provides information regarding stock option exercises by our NEOs during the year ended December 31, 2017, and the number of shares issued to each NEO upon vesting of RSUs during 2017. No options were exercised by any of our NEOs during 2017. Value realized on vesting of RSUs is based on the fair market value of our Common Stock on the vesting date multiplied by the number of shares vested and does not necessarily reflect proceeds received by the NEO.
OPTION AWARDS
|
STOCK AWARDS
| |||||||||||||||||||
NAME |
NUMBER OF SHARES ACQUIRED ON EXERCISE |
VALUE REALIZED ON EXERCISE ($) |
NUMBER OF SHARES ACQUIRED ON VESTING |
VALUE REALIZED ON VESTING ($) | ||||||||||||||||
Christopher North |
| | 40,000 | 1,979,600 | ||||||||||||||||
Michael Pope |
| | 35,000 | 1,465,100 | ||||||||||||||||
Michele Anderson |
| | | | ||||||||||||||||
Scott Arnold |
| | | | ||||||||||||||||
Satish Menon |
| | 37,428 | 1,587,832 |
42 |
COMPENSATION TABLES
|
The following table summarizes the potential payments and benefits payable to Mr. North upon termination of employment or a qualifying termination in connection with a change in control under each situation listed below, modeling, in each situation, that Mr. North was terminated on December 31, 2017.
FOLLOWING A CHANGE IN CONTROL
|
||||||||||||||||||||
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION |
VOLUNTARY FOR CAUSE |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
|||||||||||||||
Base Salary |
$ | | $ | 700,000 | $ | 700,000 | $ | 700,000 | $ | 700,000 | ||||||||||
Bonus |
| | | | | |||||||||||||||
Health Benefits (1) |
| 50,359 | 50,359 | 50,359 | 50,359 | |||||||||||||||
Value of Accelerated Stock Options |
| 308,125 | 308,125 | 308,125 | 308,125 | |||||||||||||||
Value of Accelerated Restricted Stock Units |
| 5,472,500 | 5,472,500 | 5,472,500 | 5,472,500 |
(1) | This amount reflects our maximum 18 month obligation. If Mr. North became covered by another employers health plan during such 18 months period, then our obligation to pay Mr. Norths health plan coverage shall cease. |
2018 PROXY STATEMENT | 43 |
COMPENSATION TABLES
|
44 |
COMPENSATION TABLES
|
Michael Pope. The following table summarizes the potential payments and benefits payable to Mr. Pope upon termination of employment or a qualifying termination in connection with a change in control under each situation listed below, modeling, in each situation that Mr. Pope was terminated on December 31, 2017. The table is pursuant to the terms set forth in Mr. Popes offer letter, the Retention Agreement and the Amended and Restated Retention Agreement, as applicable (each as set forth above).
FOLLOWING A CHANGE IN CONTROL
|
||||||||||||||||||||
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION |
VOLUNTARY FOR CAUSE |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
|||||||||||||||
Base Salary |
$ | | $ | 415,000 | $ | 415,000 | $ | 415,000 | $ | 415,000 | ||||||||||
Bonus |
| | | | | |||||||||||||||
Health Benefits (1) |
| 33,572 | 33,572 | 33,572 | 33,572 | |||||||||||||||
Value of Accelerated Stock Options |
| 98,465 | 98,465 | 393,855 | 393,855 | |||||||||||||||
Value of Accelerated Restricted Stock Units |
| 2,033,531 | 2,033,531 | 4,651,625 | 4,651,625 |
(1) | This amount reflects our maximum 12 month obligation. If Mr. Pope became covered by another employers health plan during such 12 month period, then our obligation to pay Mr. Popes health plan coverage shall cease. |
2018 PROXY STATEMENT | 45 |
COMPENSATION TABLES
|
Michele Anderson. The following table summarizes the potential payments and benefits payable to Ms. Anderson upon termination of employment or a qualifying termination in connection with a change in control under each situation listed below, modeling, in each situation that Ms. Anderson was terminated on December 31, 2017. The table is pursuant to the terms set forth in Ms. Andersons offer letter, the Retention Agreement and the Amended and Restated Retention Agreement, as applicable (each as set forth above).
FOLLOWING A CHANGE IN CONTROL
|
||||||||||||||||||||
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION |
VOLUNTARY FOR CAUSE |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
|||||||||||||||
Base Salary |
$ | | $ | 350,000 | $ | 350,000 | $ | 350,000 | $ | 350,000 | ||||||||||
Bonus |
| | | | | |||||||||||||||
Health Benefits (1) |
| 22,026 | 22,026 | 22,026 | 22,026 | |||||||||||||||
Value of Accelerated Stock Options |
| 147,012 | 147,012 | 588,046 | 588,046 | |||||||||||||||
Value of Accelerated Restricted Stock Units |
| 599,040 | 599,040 | 2,396,010 | 2,396,010 |
(1) | This amount reflects our maximum 12 month obligation. If Ms. Anderson became covered by another employers health plan during such 12 month period, then our obligation to pay Ms. Andersons health plan coverage shall cease. |
46 |
COMPENSATION TABLES
|
Scott Arnold. The following table summarizes the potential payments and benefits payable to Mr. Arnold upon termination of employment or a qualifying termination in connection with a change in control under each situation listed below, modeling, in each situation that Mr. Arnold was terminated on December 31, 2017. The table is pursuant to the terms set forth in Mr. Arnolds offer letter, the Retention Agreement and the Amended and Restated Retention Agreement, as applicable (each as set forth above).
FOLLOWING A CHANGE IN CONTROL
|
||||||||||||||||||||
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION |
VOLUNTARY FOR CAUSE |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
|||||||||||||||
Base Salary |
$ | | $ | 350,000 | $ | 350,000 | $ | 350,000 | $ | 350,000 | ||||||||||
Bonus |
| | | | | |||||||||||||||
Health Benefits (1) |
| 33,572 | 33,572 | 33,572 | 33,572 | |||||||||||||||
Value of Accelerated Stock Options |
| 88,817 | 88,817 | 355,262 | 355,262 | |||||||||||||||
Value of Accelerated Restricted Stock Units |
| 624,014 | 624,014 | 2,495,958 | 2,495,958 |
(1) | This amount reflects our maximum 12 month obligation. If Mr. Arnold became covered by another employers health plan during such 12 month period, then our obligation to pay Mr. Arnolds health plan coverage shall cease. |
Satish Menon. The following table summarizes the potential payments and benefits payable to Mr. Menon upon termination of employment or a qualifying termination in connection with a change in control under each situation listed below, modeling, in each situation that Mr. Menon was terminated on December 31, 2017. The table is pursuant to the terms set forth in Mr. Menons offer letter, the Retention Agreement and the Amended and Restated Retention Agreement, as applicable (each as set forth above).
FOLLOWING A CHANGE IN CONTROL
|
||||||||||||||||||||
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION |
VOLUNTARY FOR CAUSE |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
INVOLUNTARY TERMINATION NOT FOR CAUSE |
TERMINATION FOR GOOD REASON |
|||||||||||||||
Base Salary |
$ | | $ | 375,000 | $ | 375,000 | $ | 375,000 | $ | 375,000 | ||||||||||
Bonus |
| | | | | |||||||||||||||
Health Benefits (1) |
| 33,572 | 33,572 | 33,572 | 33,572 | |||||||||||||||
Value of Accelerated Stock Options |
| 79,610 | 79,610 | 318,435 | 318,435 | |||||||||||||||
Value of Accelerated Restricted Stock Units |
| 2,098,356 | 2,098,356 | 4,541,379 | 4,541,379 |
(1) | This amount reflects our maximum 12 month obligation. If Mr. Menon became covered by another employers health plan during such 12 month period, then our obligation to pay Mr. Menons health plan coverage shall cease. |
2018 PROXY STATEMENT | 47 |
The following table provides compensation information for each person who served as a director during fiscal 2017, except for Mr. North who did not receive any compensation for his service as a member of the Board. Norths compensation is summarized in the Compensation Discussion and Analysis and Compensation Tables above.
YEAR ENDED DECEMBER 31, 2017
| |||||||||||||||
NAME
|
FEES EARNED
|
STOCK
|
TOTAL ($)
| ||||||||||||
Thomas D. Hughes
|
|
|
|
|
199,994
|
|
|
199,994
|
| ||||||
William J. Lansing (2)
|
|
36,597
|
|
|
356,208
|
|
|
392,805
|
| ||||||
Eva Manolis
|
|
|
|
|
199,994
|
|
|
199,994
|
| ||||||
Ann Mather
|
|
|
|
|
199,994
|
|
|
199,994
|
| ||||||
Elizabeth S. Rafael (3)
|
|
15,000
|
|
|
234,968
|
|
|
249,968
|
| ||||||
Elizabeth Sartain (4)
|
|
10,000
|
|
|
219,994
|
|
|
229,994
|
| ||||||
H. Tayloe Stansbury
|
|
|
|
|
199,994
|
|
|
199,994
|
| ||||||
Brian T. Swette (5)
|
|
15,903
|
|
|
199,994
|
|
|
215,897
|
| ||||||
Michael P. Zeisser
|
|
|
|
|
199,994
|
|
|
199,994
|
|
48 |
DIRECTOR COMPENSATION
|
2018 PROXY STATEMENT | 49 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
SHUTTERFLY SVT: ACTUAL 2017 AND EXPECTED 2017
SHUTTERFLY STOCKHOLDER VALUE TRANSFER (SVT)
|
||||||||||||||||||||
ACTUAL |
PROJECTED |
|||||||||||||||||||
2014 | 2015 | 2016 | 2017 | |||||||||||||||||
(a) RSUs/PBRSUs Granted |
1,889,000 | 2,412,000 | 1,312,000 | 821,000 | 823,366 | |||||||||||||||
(b) Stock Options Granted |
| | 850,000 | 614,000 | 312,293 | |||||||||||||||
(c) Option Black-Scholes % |
| | 28.0 | % | 27.0 | % | 31.0 | % | ||||||||||||
(d) Avg. Common Shares Outstanding |
38,452,000 | 36,761,000 | 34,097,000 | 33,113,000 | 33,107,321 | |||||||||||||||
(e) SVT ((a + b x c) ÷ d) |
4.91 | % | 6.56 | % | 4.54 | % | 2.98 | % | 2.78 | % |
SHUTTERFLY SVT VS. PEERS
3-YEAR AVERAGE SVT
|
||||
Peer 75th Percentile |
4.79% | |||
Peer Median |
3.21% | |||
Peer 25th Percentile |
2.26% | |||
Shutterfly (2015-2017) |
4.69% | |||
Shutterfly Expected 2018
|
2.78% |
2018 PROXY STATEMENT | 51 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
52 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
2018 PROXY STATEMENT | 53 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
54 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
2018 PROXY STATEMENT | 55 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
56 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information with respect to all of our equity compensation plans in effect as of December 31, 2017.
PLAN CATEGORY
|
NUMBER OF SECURITIES TO BE
|
WEIGHTED-AVERAGE
|
NUMBER OF SECURITIES
| ||||||||||||
Equity Compensation Plans Approved by Stockholders (1)(2)
|
|
2,582,794
|
|
$
|
10.48
|
(3)
|
|
1,765,468
|
| ||||||
Equity Compensation Plans Not Approved by Stockholders (4)
|
|
1,239,750
|
|
|
35.85
|
(5)
|
|
|
| ||||||
Total
|
|
3,822,544
|
|
|
|
|
|
1,765,468
|
|
2018 PROXY STATEMENT | 57 |
PROPOSAL NO. 3 AMENDMENT OF 2015 EQUITY INCENTIVE PLAN
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT OF OUR 2015 EQUITY INCENTIVE PLAN.
58 |
PROPOSAL NO. 4 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table provides information regarding the fees by PricewaterhouseCoopers LLP during the years ended December 31, 2017 and 2016. All fees described below were approved by the Audit Committee.
YEAR ENDED DECEMBER 31, | ||||||||||
2017 | 2016 | |||||||||
Audit Fees
|
$
|
2,310,300
|
|
$
|
2,273,000
|
| ||||
Audit-Related Fees
|
|
|
|
|
|
| ||||
Tax Fees
|
|
|
|
|
|
| ||||
All Other Fees
|
|
233,939
|
|
|
1,800
|
| ||||
Total Fees
|
$
|
2,544,239
|
|
$
|
2,274,800
|
|
2018 PROXY STATEMENT | 59 |
PROPOSAL NO. 4 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
60 |
Our Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
ANNUAL REPORT
Our 2017 Annual Report to Stockholders is part of the proxy materials being distributed to our stockholders in connection with the Annual Meeting. This Proxy Statement and our 2017 Annual Report can be accessed at http://ir.shutterfly.com/annual- reports-and-proxies which does not have cookies that identify visitors to the site. The 2017 Annual Report contains our consolidated financial statements for fiscal 2017.
62 |
We have filed our Annual Report on Form 10-K for fiscal 2017 with the Securities and Exchange Commission. It is available free of charge at the Securities and Exchange Commissions website at www.sec.gov and also available on the Investor Relations section of our website at http://ir.shutterfly.com/annual-reports-and-proxie. Upon written request (analystinquiries@shutterfly.com) or telephone request (650-632-2310) by a Shutterfly stockholder, we will mail without charge a copy of our Annual Report on Form 10-K for fiscal 2017, including the financial statements and financial statement schedules, but excluding exhibits to the Annual Report on Form 10-K for fiscal 2017. Exhibits to the Annual Report on Form 10-K for fiscal 2017 are available upon payment of a reasonable fee, which is limited to our expenses in furnishing the requested exhibit(s). All requests should be directed to Investor Relations, Shutterfly, Inc., 2800 Bridge Parkway, Redwood City, California 94065.
By Order of the Board of Directors |
Christopher North |
President and Chief Executive Officer |
Redwood City, California
April 13, 2018
2018 PROXY STATEMENT | 63 |
APPENDIX A |
A-2 |
APPENDIX A |
2018 PROXY STATEMENT | A-3 |
APPENDIX A |
A-4 |
APPENDIX A |
2018 PROXY STATEMENT | A-5 |
APPENDIX A |
A-6 |
APPENDIX A |
2018 PROXY STATEMENT | A-7 |
APPENDIX A |
A-8 |
APPENDIX A |
2018 PROXY STATEMENT | A-9 |
APPENDIX A |
A-10 |
A
APPENDIX A |
2018 PROXY STATEMENT | A-11 |
APPENDIX A |
A-12 |
APPENDIX A |
2018 PROXY STATEMENT | A-13 |
APPENDIX A |
A-14 |
APPENDIX A |
2018 PROXY STATEMENT | A-15 |
APPENDIX A |
A-16 |
APPENDIX A |
2018 PROXY STATEMENT | A-17 |
VOTE BY INTERNETwww.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on May 22, 2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
SHUTTERFLY, INC. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
2800 BRIDGE PARKWAY If you would like to reduce the costs incurred by our company in mailing proxy materials, REDWOOD CITY, CA 94065 you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time
on May 22, 2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED
AND DATED.
For Withhold For All To withhold authority to vote for any All All Except individual nominee(s), mark For All Except and write the number(s) of the
The Board of Directors recommends you vote FOR the following: nominee(s) on the line below.
0 0 0
1. Election of Directors
Nominees
01 Thomas D. Hughes 02 Eva Manolis 03 Elizabeth(Libby)Sartain
The Board of Directors recommends you vote FOR
proposals 2, 3 and 4. For Against Abstain
2 To approve, on an advisory basis, the compensation of Shutterflys named executive
officers. 0 0 0
3 To approve the amendment of our 2015 Equity Incentive Plan to increase the number of shares
available 0 0 0 thereunder by 900,000 shares.
4 To ratify the selection of PricewaterhouseCoopers LLP as
Shutterflys independent registered public accounting 0 0 0 firm for the year ending December 31, 2018.
NOTE: To
conduct any other business properly brought before the meeting.
. 17 Yes No
. 1
. 0 Please indicate if you plan to attend this meeting 0 0
R1 _ 1
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or 0000375291 partnership, please sign in full corporate or partnership name, by authorized officer.
Signature [PLEASE
SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report/10-K Wrap are available at www.proxyvote.com
SHUTTERFLY, INC.
Annual Meeting of StockholdersMay 23, 2018 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned
hereby appoints Christopher North and Michael Pope, and each of them, with full power of substitution, as proxies and attorneys-in-fact of the undersigned with all
powers that the undersigned would possess if present at the Annual Meeting of Stockholders of Shutterfly, Inc. to be held on May 23, 2018, at 2800 Bridge Parkway, Redwood City, California 94065, and hereby authorizes each of them to represent
and vote, as provided on the other side, all shares of Shutterfly, Inc. Common Stock that the undersigned is entitled to vote at the meeting, and, in their discretion, to vote upon such other business as may properly come before the meeting, or at
any adjournment or postponement thereof. The undersigned hereby revokes all proxies previously given to vote at the meeting or any adjournment or postponement thereof.
THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR ALL THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
. 17
. 1 . 0 R1 _ 2 0000375291
Continued and to be signed on reverse side
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