NEIGHBORHOOD INTELLIGENCE, INC.
For the period ended May 21, 2024. Filed Mar 28, 2024.
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May 21, 2024 · Filed Mar 28, 2024
Contents
Changes to 2024 Executive Compensation Program
Changes to 2024 Executive Compensation Program Create Clearer and Increased Emphasis on Pay-for-Performance
In designing the 2024 executive compensation program, the Compensation Committee and the Board implemented new annual and long-term incentive programs to directly tie a substantial portion of the compensation of our executive officers with the achievement of key Company performance metrics and the creation of long-term stockholder value in the form of stock price appreciation (or, in the case of Mr. Lemonis, all of his compensation, as further described in Proposal 6). This change was influenced by feedback from certain shareholders, representing approximately 28.5% of our common shares outstanding as of December 31, 2023, that the historical compensation program was not sufficiently performance-based. Some of the actions taken by the Compensation Committee and the Board in early 2024 to align executive compensation with Company performance and the interest of Company’s shareholders include:
| • | Implementation of Performance-Based Annual Bonus Program Tied to Key Metrics. For 2024, we have adopted a performance-based bonus program for our executive officers, other than Mr. Lemonis, which is designed to reward the executives for Company achievement relative to our key strategic objectives and the creation of shareholder value. Commencing in 2024, each of our executive officers, other than Mr. Lemonis, are eligible for a performance bonus based upon four components, three pre-established corporate performance goals and objectives approved by our Board, and an individual performance modifier ranging from 0% to 125%. The number of active customers, full year G&A and technology expenses as a percentage of gross profit and revenue were selected as the corporate performance metrics for purposes of determining 2024 annual bonuses and threshold, target and maximum payouts were established for each metric. These corporate performance goals were set at challenging levels such that the attainment of target annual cash incentive award opportunities tied to corporate performance was not assured at the time they were set and would require a high level of effort and execution on the part of the executive officers and others in order to achieve the goals. The Compensation Committee believes that each of these goals was strongly aligned with the creation of stockholder value. |
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| • | Changes to Long-Term Incentives; Introduction of Performance Shares. For 2024, the long-term incentive awards granted to our executive officers (other than Mr. Lemonis) were granted solely in the form of performance shares. Effective February 20, 2024, each of our executive officers was granted an award of performance shares under our 2005 Plan, with 75% of the award tied to achievement of specified stock price hurdles and 25% of the award tied to annual net revenue objectives over a three-year performance period. Each performance share is a unit that represents the right to receive one share of our common stock. |
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Each of Mr. Nielsen and Ms. Holt were granted a total of 200,000 performance shares, Ms. Lee was granted a total of 120,000 performance shares, Ms. Robinson was granted a total of 80,000 performance shares and Mr. Nickle was granted a total of 60,000 performance shares. Of these awards, 100,000 of the performance shares granted to Mr. Nielsen (consisting of the net revenue performance shares and the performance shares tied to the $60.00 stock price hurdle), and 20,000 of the net revenue performance shares granted to Ms. Lee (consisting of the portion of such award tied to 2025 and 2026 performance), are subject to stockholder approval of the 2005 Plan Amendment (as defined in Proposal 5) at the Annual Meeting. In the event such stockholder approval is not obtained, these portions of their performance share awards will be forfeited. For more information about the 2005 Plan Amendment, please see Proposal 5.
| • | Stock Price Hurdle Performance Metrics. The stock price hurdle performance shares will be eligible to vest upon the achievement of three separate stock price hurdles during the three-year period following the grant date as follows: |
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| • | $40.00 Stock Price Hurdle: One-third of the performance shares subject to stock price performance will be earned if the average per-share closing price of our common stock over any 20 consecutive trading day period equals or exceeds $40.00 per share (47% increase over the grant date price of $27.18 per share). The performance shares will vest on the later of (1) the first anniversary of the grant date or (2) the date the price hurdle is achieved during the three-year period following the grant date, subject to continued service through the vesting date. |
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| | | | | 2024 Proxy Statement | 57 |
Compensation Discussion and Analysis / Summary of Executive Compensation Actions Taken After Year-End
| • | $50.00 Stock Price Hurdle: One-third of the performance shares subject to stock price performance will be earned if the average per-share closing price of our common stock over any 20 consecutive trading day period equals or exceeds $50.00 per share (84% increase over the grant date price). The performance shares will vest on the later of (1) the second anniversary of the grant date or (2) the date the price hurdle is achieved during the three-year period following the grant date, subject to continued service through the vesting date. |
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| • | $60.00 Stock Price Hurdle: One-third of the performance shares subject to stock price performance will be earned if the average per-share closing price of our common stock over any 20 consecutive trading day period equals or exceeds $60.00 per share (121% increase over the grant date price). The performance shares will vest on the third anniversary of the grant date if the price hurdle is achieved, subject to continued service through the vesting date. |
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If a stock price hurdle is not achieved within the applicable time frame specified above, the portion of the award tied to such stock price hurdle will be forfeited.
| • | Net Revenue Performance Metrics. The net revenue performance shares will vest based on our GAAP net revenue over three years, with one-third of the performance shares eligible to vest on each of the first, second, and third anniversaries of the grant date, subject to continued service through the vesting date. The GAAP net revenue targets for purposes of the net revenue performance shares are $2 billion for 2024, $2.7 billion for 2025 and $3.4 billion for 2026. To be eligible to vest in any tranche of the performance shares, Beyond must meet the GAAP net revenue goal established by the Board for the applicable year. |
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| • | Employment Letters with Ms. Holt, Mr. Nielsen and Ms. Lee. In connection with the leadership changes announced on February 20, 2024, each of Ms. Holt, Mr. Nielsen, and Ms. Lee entered into an employment letter with us setting forth the terms and conditions of their employment in their new roles. The employment letters set forth each executive’s annual base salary and target annual bonus as follows: Mr. Nielsen, $900,000 annual base salary and $900,000 annual target bonus; Ms. Holt, $900,000 annual base salary and $900,000 annual target bonus; and Ms. Lee, $600,000 annual base salary and $300,000 annual target bonus. These target cash compensation levels were established by the Compensation Committee and the Board following review of data for similarly-situated executives in the Company’s peer group provided by FW Cook, the Compensation Committee’s its independent compensation consultant for 2024. |
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Each of Mr. Nielsen, Ms. Holt and Ms. Lee will also be a “Tier 2 Participant” in our Key Employee Severance Plan (the “Severance Plan”), and eligible for severance benefits under the Severance Plan as described below. Each Our other executive officers are “Tier 3 Participants.” Mr. Lemonis does not participate in the Severance Plan
| • | Engagement of New Independent Compensation Consultant. Commencing in August 2023, the Compensation Committee engaged FW Cook as its independent compensation consultant to advise the Compensation Committee on executive compensation for 2024 and for guidance on making go-forward compensation decisions, including the redesign of the annual and long-term incentive programs. Under this engagement, FW Cook provides our Compensation Committee information, analysis, and other advice regarding our compensation practices, philosophies and designs, including assistance with the confirmation of a compensation peer group for guidance in making compensation decision, as described below. |
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