avatar Blue Apron, LLC Retail Trade
  • Location: New York 
  • Founded:
  • Website:

Pages

  • Page 1

    2017 Annual Report & 2018 Proxy Statement


  • Page 2

    Proxy Statement & Meeting Notice


  • Page 3

    $SULO 'HDU%OXH$SURQ6WRFNKROGHU ,DPSOHDVHGWRLQYLWH\RXWRDWWHQGWKH$QQXDO0HHWLQJRI6WRFNKROGHUV WKH³$QQXDO0HHWLQJ´ RI%OXH $SURQ+ROGLQJV,QF ³%OXH$SURQ´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³1RWLFH´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resident, Chief Executive Officer, Chief Financial Officer and Treasurer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


  • Page 4

     %/8($3521+2/',1*6,1& :HVWUG6WUHHW 1HZ<RUN1< 127,&(2)$118$/0((7,1*2)672&.+2/'(56 1RWLFHLVKHUHE\JLYHQWKDW%OXH$SURQ+ROGLQJV,QFZLOOKROGLWV$QQXDO0HHWLQJRI6WRFNKROGHUV WKH ³$QQXDO0HHWLQJ´ RQ7KXUVGD\-XQHDWDP(DVWHUQ7LPHDWWKHRIILFHVRI:LOPHU&XWOHU3LFNHULQJ +DOHDQG'RUU//3:RUOG7UDGH&HQWHU*UHHQZLFK6WUHHW1HZ<RUN1<IRUWKHIROORZLQJSXUSRVHV • 7RHOHFWWZR&ODVV,GLUHFWRUV.HQQHWK$)R[DQG*DU\5+LUVKEHUJWRKROGRIILFHXQWLORXUDQQXDO PHHWLQJRIVWRFNKROGHUVRUXQWLOWKHLUVXFFHVVRUVDUHGXO\HOHFWHGDQGTXDOLILHGVXEMHFWWRWKHLUHDUOLHUGHDWK UHVLJQDWLRQRUUHPRYDO • 7RUDWLI\WKHDSSRLQWPHQWRI(UQVW <RXQJ//3DVRXULQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPIRUWKH ILVFDO\HDUHQGLQJ'HFHPEHUDQG • 7RWUDQVDFWDQ\RWKHUEXVLQHVVWKDWSURSHUO\FRPHVEHIRUHWKH$QQXDO0HHWLQJ LQFOXGLQJDGMRXUQPHQWVDQG SRVWSRQHPHQWVWKHUHRI  2QO\KROGHUVRIUHFRUGRIRXU&ODVV$FRPPRQVWRFNDQG&ODVV%FRPPRQVWRFNDWWKHFORVHRIEXVLQHVVRQ $SULO WKH³5HFRUG'DWH´ DUHHQWLWOHGWRQRWLFHRIDQGWRYRWHDWWKH$QQXDO0HHWLQJDVVHWIRUWKLQWKHHQFORVHG SUR[\VWDWHPHQW WKH³3UR[\6WDWHPHQW´ ,I\RXSODQWRDWWHQGWKH$QQXDO0HHWLQJLQSHUVRQ\RXVKRXOGEHSUHSDUHGWR SUHVHQWSKRWRLGHQWLILFDWLRQVXFKDVDYDOLGGULYHU¶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³9RWLQJ´EHJLQQLQJRQSDJHRIWKHDWWDFKHG3UR[\6WDWHPHQWRULI\RXUHTXHVWHGWRUHFHLYH SULQWHGSUR[\PDWHULDOV\RXUHQFORVHGSUR[\FDUG %\2UGHURIRXU%RDUGRI'LUHFWRUV  %HQMDPLQ&6LQJHU General Counsel and Secretary 1HZ<RUN1HZ<RUN $SULO   


  • Page 5

    7$%/(2)&217(176    *(1(5$/,1)250$7,21                                                                                           (;3/$1$725<127(                                                                                             ,QWHUQHW$YDLODELOLW\RI3UR[\0DWHULDOV                                                                           5HFRUG'DWH                                                                                                4XRUXP                                                                                                   6KDUHV2XWVWDQGLQJ                                                                                           9RWLQJ                                                                                                    5HYRNLQJ<RXU3UR[\                                                                                         9RWLQJ5LJKWV                                                                                               9RWHV5HTXLUHGWR$GRSW3URSRVDOV                                                                               (IIHFWRI$EVWHQWLRQVDQG%URNHU1RQ9RWHV                                                                        9RWLQJ,QVWUXFWLRQV                                                                                           9RWLQJ5HVXOWV                                                                                              $GGLWLRQDO6ROLFLWDWLRQ&RVWV                                                                                   +RXVHKROGLQJ                                                                                                352326$/21(±(/(&7,212)',5(&7256                                                                          1XPEHURI'LUHFWRUV%RDUG6WUXFWXUH                                                                             1RPLQHHV                                                                                                  5HFRPPHQGDWLRQRIRXU%RDUGRI'LUHFWRUV                                                                         ',5(&7256(;(&87,9(2)),&(56$1'&25325$7(*29(51$1&(                                                   %RDUGRI'LUHFWRUV                                                                                           1RPLQHHVIRU(OHFWLRQIRUD7KUHH<HDU7HUP(QGLQJDWWKH$QQXDO0HHWLQJ                                           'LUHFWRUV&RQWLQXLQJLQ2IILFH8QWLOWKH$QQXDO0HHWLQJ                                                          'LUHFWRUV&RQWLQXLQJLQ2IILFH8QWLOWKH$QQXDO0HHWLQJ                                                          ([HFXWLYH2IILFHUV                                                                                           'LUHFWRU,QGHSHQGHQFH                                                                                        %RDUG/HDGHUVKLS6WUXFWXUH                                                                                    &RGHRI%XVLQHVV&RQGXFWDQG(WKLFV                                                                             &RUSRUDWH*RYHUQDQFH*XLGHOLQHV                                                                                %RDUG0HHWLQJV                                                                                             $QQXDO0HHWLQJ$WWHQGDQFH                                                                                    &RPPLWWHHV                                                                                                &RPSHQVDWLRQ&RQVXOWDQWV                                                                                     &RPSHQVDWLRQ&RPPLWWHH,QWHUORFNVDQG,QVLGHU3DUWLFLSDWLRQ                                                           %RDUG3URFHVVHV                                                                                             6WRFNKROGHU&RPPXQLFDWLRQV                                                                                   &RPSHQVDWLRQ5LVN$VVHVVPHQW                                                                                  352326$/7:2±5$7,),&$7,212)7+($332,170(172)285,1'(3(1'(175(*,67(5('38%/,&$&&2817,1*),50     3ULQFLSDO$FFRXQWLQJ)HHVDQG6HUYLFHV                                                                           5HFRPPHQGDWLRQRIRXU%RDUGRI'LUHFWRUV                                                                        5HSRUWRIWKH$XGLW&RPPLWWHHRIRXU%RDUGRI'LUHFWRUV                                                               6(&85,7<2:1(56+,32)&(57$,1%(1(),&,$/2:1(56$1'0$1$*(0(17$1'5(/$7('672&.+2/'(50$77(56     6HFWLRQ D %HQHILFLDO2ZQHUVKLS5HSRUWLQJ&RPSOLDQFH                                                              (;(&87,9(&203(16$7,21                                                                                       ([HFXWLYH&RPSHQVDWLRQ2YHUYLHZ                                                                               6XPPDU\&RPSHQVDWLRQ7DEOH                                                                                  1DUUDWLYHWR6XPPDU\&RPSHQVDWLRQ7DEOH                                                                        2XWVWDQGLQJ(TXLW\$ZDUGVDW)LVFDO<HDU(QG                                                                      (TXLW\&RPSHQVDWLRQ3ODQ,QIRUPDWLRQ                                                                            3RWHQWLDO3D\PHQWV8SRQ7HUPLQDWLRQRU&KDQJHLQ&RQWURO                                                            5HWLUHPHQW%HQHILWV                                                                                          (PSOR\HH%HQHILWVDQG3HUTXLVLWHV                                                                               /LPLWDWLRQVRI/LDELOLW\DQG,QGHPQLILFDWLRQ                                                                         ',5(&725&203(16$7,21                                                                                       &(57$,15(/$7,216+,36$1'5(/$7('75$16$&7,216                                                              3ROLFLHVDQG3URFHGXUHVIRU5HODWHG3HUVRQ7UDQVDFWLRQV                                                               5HODWHG3HUVRQ7UDQVDFWLRQV                                                                                     75$16$&7,212)27+(5%86,1(66                                                                                $'',7,21$/,1)250$7,21                                                                                        3URFHGXUHVIRU6XEPLWWLQJ6WRFNKROGHU3URSRVDOV                                                                     


  • Page 6

    352;<67$7(0(17 )257+($118$/0((7,1*2)672&.+2/'(5672%(+(/' 7+856'$<-81( *(1(5$/,1)250$7,21 2XUERDUGRIGLUHFWRUVVROLFLWV\RXUSUR[\RQRXUEHKDOIIRUWKH$QQXDO0HHWLQJRI6WRFNKROGHUV WKH ³$QQXDO0HHWLQJ´ DQGDWDQ\SRVWSRQHPHQWRUDGMRXUQPHQWRIWKH$QQXDO0HHWLQJIRUWKHSXUSRVHVVHWIRUWKLQWKLV 3UR[\6WDWHPHQWDQGWKHDFFRPSDQ\LQJ1RWLFHRI,QWHUQHW$YDLODELOLW\RI3UR[\0DWHULDOV WKH³1RWLFH´ 7KH$QQXDO 0HHWLQJZLOOEHKHOGDWDP(DVWHUQ7LPHRQ7KXUVGD\-XQHDWWKHRIILFHVRI:LOPHU&XWOHU3LFNHULQJ +DOHDQG'RUU//3:RUOG7UDGH&HQWHU*UHHQZLFK6WUHHW1HZ<RUN1<:HLQWHQGWRPDLOD1RWLFHRI ,QWHUQHW$YDLODELOLW\RI3UR[\0DWHULDOVWRVWRFNKROGHUVRIUHFRUGDQGWRPDNHWKLV3UR[\6WDWHPHQWDQGDFFRPSDQ\LQJ PDWHULDOVDYDLODEOHRQWKHLQWHUQHWRQRUDERXW$SULO ,QWKLV3UR[\6WDWHPHQWWKHWHUPV³%OXH$SURQ´³WKHFRPSDQ\´³ZH´³XV´DQG³RXU´UHIHUWR%OXH$SURQ +ROGLQJV,QF7KHPDLOLQJDGGUHVVRIRXUSULQFLSDOH[HFXWLYHRIILFHVLV%OXH$SURQ+ROGLQJV,QF:HVWUG6WUHHW 1HZ<RUN1<$OOZHEVLWHDGGUHVVHVVHWIRUWKLQWKLV3UR[\6WDWHPHQWDUHIRULQIRUPDWLRQRQO\DQGDUHQRW LQWHQGHGWREHDQDFWLYHOLQNRUWRLQFRUSRUDWHDQ\ZHEVLWHLQIRUPDWLRQLQWRWKLVGRFXPHQW (;3/$1$725<127( :HDUHDQ³HPHUJLQJJURZWKFRPSDQ\´XQGHUDSSOLFDEOHIHGHUDOVHFXULWLHVODZVDQGWKHUHIRUHSHUPLWWHGWRWDNH DGYDQWDJHRIFHUWDLQUHGXFHGSXEOLFFRPSDQ\UHSRUWLQJUHTXLUHPHQWV$VDQHPHUJLQJJURZWKFRPSDQ\ZHSURYLGHLQ WKLV3UR[\6WDWHPHQWWKHVFDOHGGLVFORVXUHSHUPLWWHGXQGHUWKH-XPSVWDUW2XU%XVLQHVV6WDUWXSV$FWRIRUWKH -2%6$FWLQFOXGLQJWKHFRPSHQVDWLRQGLVFORVXUHVUHTXLUHGRID³VPDOOHUUHSRUWLQJFRPSDQ\´DVWKDWWHUPLVGHILQHGLQ 5XOHESURPXOJDWHGXQGHUWKH6HFXULWLHV([FKDQJH$FWRIDVDPHQGHG WKH³([FKDQJH$FW´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


  • Page 7

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³SOXUDOLW\´RIWKHYRWHVSURSHUO\FDVW ZLOOEHHOHFWHGDVGLUHFWRUV      )RU3URSRVDO7ZRDPDMRULW\RIWKHYRWHVSURSHUO\FDVW)25WKHSURSRVDOLVUHTXLUHGWR UDWLI\WKHDSSRLQWPHQWRI(UQVW <RXQJ//3DVRXULQGHSHQGHQWUHJLVWHUHGSXEOLF DFFRXQWLQJILUPIRUWKHILVFDO\HDUHQGLQJ'HFHPEHU    


  • Page 8

    (IIHFWRI$EVWHQWLRQVDQG  9RWHVZLWKKHOGIURPDQ\QRPLQHHDEVWHQWLRQVDQG³EURNHUQRQYRWHV´ i.e.ZKHUHD %URNHU1RQ9RWHV EURNHUKDVQRWUHFHLYHGYRWLQJLQVWUXFWLRQVIURPWKHEHQHILFLDORZQHUDQGIRUZKLFKWKH  EURNHUGRHVQRWKDYHGLVFUHWLRQDU\SRZHUWRYRWHRQDSDUWLFXODUPDWWHU DUHFRXQWHGDV   SUHVHQWIRUSXUSRVHVRIGHWHUPLQLQJWKHSUHVHQFHRIDTXRUXP6KDUHVYRWLQJ³ZLWKKHOG´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³KRXVHKROGLQJ´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


  • Page 9

    RWKHUQRPLQHHUHFRUGKROGHURU\RXPD\FRQWDFWXVDWWKHDERYHDGGUHVVRUHPDLORU  WHOHSKRQHQXPEHU    


  • Page 10

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³)25´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³)25´WKHHOHFWLRQRIHDFKRI.HQQHWK$)R[DQG *DU\5+LUVKEHUJDV&ODVV,GLUHFWRUV     


  • Page 11

    ',5(&7256(;(&87,9(2)),&(56$1'&25325$7(*29(51$1&( %RDUGRI'LUHFWRUV 7KHELRJUDSKLHVRIHDFKRIWKHGLUHFWRUQRPLQHHVDQGFRQWLQXLQJGLUHFWRUVEHORZFRQWDLQLQIRUPDWLRQUHJDUGLQJ HDFKVXFKSHUVRQ¶VVHUYLFHDVDGLUHFWRURQRXUERDUGRIGLUHFWRUVEXVLQHVVH[SHULHQFHDQGRWKHUH[SHULHQFHV TXDOLILFDWLRQVDWWULEXWHVRUVNLOOVWKDWFDXVHGRXUERDUGRIGLUHFWRUVDQGQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHH WRGHWHUPLQHWKDWWKHSHUVRQVKRXOGVHUYHDVDGLUHFWRURIWKHFRPSDQ\,QDGGLWLRQWRWKHLQIRUPDWLRQSUHVHQWHGEHORZ UHJDUGLQJHDFKVXFKSHUVRQ¶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¶H[SHULHQFHLQUHOHYDQWDUHDVRIEXVLQHVVPDQDJHPHQWDQGRQRWKHUERDUGVRIGLUHFWRUVDQG ERDUGFRPPLWWHHV 2XUFRUSRUDWHJRYHUQDQFHJXLGHOLQHVDOVRGLFWDWHWKDWDPDMRULW\RIRXUERDUGRIGLUHFWRUVEHFRPSULVHGRI LQGHSHQGHQWGLUHFWRUVZKRPRXUERDUGRIGLUHFWRUVKDVGHWHUPLQHGKDYHQRPDWHULDOUHODWLRQVKLSZLWKWKHFRPSDQ\DQG DUHRWKHUZLVH³LQGHSHQGHQW´GLUHFWRUVXQGHUWKHSXEOLVKHGOLVWLQJUXOHVRIWKH1HZ<RUN6WRFN([FKDQJH ³1<6(´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²  %ULDQ3.HOOH\                 <HV  1RPLQDWLQJDQG&RUSRUDWH*RYHUQDQFH&RPPLWWHH  'LUHFWRUVZLWKWHUPVH[SLULQJDWWKH$QQXDO0HHWLQJ &ODVV,,,   $XGLW&RPPLWWHH 7UDF\%ULWW&RRO                <HV  1RPLQDWLQJDQG&RUSRUDWH*RYHUQDQFH&RPPLWWHH  5REHUW3*RRGPDQ             <HV  &RPSHQVDWLRQ&RPPLWWHH &KDLU   0DWWKHZ%6DO]EHUJ            1R  ²     


  • Page 12

    1RPLQHHVIRU(OHFWLRQIRUD7KUHH<HDU7HUP(QGLQJDWWKH$QQXDO0HHWLQJ Kenneth A. Fox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ary R. HirshbergKDVEHHQDPHPEHURIRXUERDUGRIGLUHFWRUVVLQFH2FWREHU0U+LUVKEHUJFRIRXQGHG 6WRQ\ILHOG)DUP,QFDSURGXFHURIRUJDQLFGDLU\UHODWHGSURGXFWVLQDQGVHUYHGDVWKHFRPSDQ\¶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ulie M.B. Bradley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radley J. Dickerson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rian P. KelleyKDVEHHQDPHPEHURIRXUERDUGRIGLUHFWRUVVLQFH$SULO0U.HOOH\KDVEHHQDSDUWQHUDW /LQGVD\*ROGEHUJ//&DSULYDWHHTXLW\ILUPVLQFH-DQXDU\)URP'HFHPEHUWR0D\KHVHUYHGDV SUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHURI.HXULJ*UHHQ0RXQWDLQ,QFDEHYHUDJHFRPSDQ\ZKLFKZDVDFTXLUHGE\-$% +ROGLQJ&RPSDQ\LQ0DUFK)URP$SULOWR1RYHPEHU0U.HOOH\ZDVHPSOR\HGE\7KH&RFD&ROD &RPSDQ\DFRQVXPHUEHYHUDJHFRPSDQ\VHUYLQJDVWKHSUHVLGHQWRIVWLOOQRQFDUERQDWHGEHYHUDJHVDQGVXSSO\FKDLQ 


  • Page 13

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racy Britt Cool KDVEHHQDPHPEHURIRXUERDUGRIGLUHFWRUVVLQFH-DQXDU\6LQFH1RYHPEHU 0V&RROKDVVHUYHGDVFKLHIH[HFXWLYHRIILFHURI3DPSHUHG&KHIDSURYLGHURIKLJKTXDOLW\NLWFKHQZDUHVROXWLRQV GLVWULEXWHGWKURXJKLQGHSHQGHQWFRRNLQJFRQVXOWDQWV0V&RROMRLQHG%HUNVKLUH+DWKDZD\3DPSHUHG&KHI¶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obert P. Goodman KDVEHHQDPHPEHURIRXUERDUGRIGLUHFWRUVVLQFH1RYHPEHUDQGLVRXUOHDG LQGHSHQGHQWGLUHFWRU0U*RRGPDQLVDSDUWQHUDW%HVVHPHU9HQWXUH3DUWQHUVDYHQWXUHFDSLWDOILUPDQGLVDPDQDJLQJ PHPEHURI'HHU0DQDJHPHQW&R//&WKHPDQDJHPHQWFRPSDQ\IRU%HVVHPHU9HQWXUH3DUWQHUV¶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atthew B. Salzberg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


  • Page 14

    ([HFXWLYH2IILFHUV ,QDGGLWLRQWR0U'LFNHUVRQRXUSUHVLGHQWFKLHIH[HFXWLYHRIILFHUFKLHIILQDQFLDORIILFHUDQGWUHDVXUHUZKRDOVR VHUYHVDVDGLUHFWRURXUH[HFXWLYHRIILFHUVDUH Jared Cluff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ainie Cooney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lia M. PapasRQHRIRXUIRXQGHUVKDVVHUYHGDVRXUFKLHIWHFKQRORJ\RIILFHUVLQFH)HEUXDU\%HIRUHFR IRXQGLQJ%OXH$SURQ0U3DSDVZDVHPSOR\HGDVGLUHFWRUWHFKQLFDODUFKLWHFWE\2SWDURV,QFDQLQIRUPDWLRQ WHFKQRORJ\DQGVHUYLFHVFRPSDQ\IURP6HSWHPEHUWR)HEUXDU\DQGDVDVRIWZDUHHQJLQHHUE\0ROHFXODU QRZ,VREDU DGLJLWDODJHQF\IURP6HSWHPEHUWR$XJXVW0U3DSDVKROGVD%$GHJUHHLQFRPSXWHU VFLHQFHIURP7XIWV8QLYHUVLW\ Benjamin C. SingerKDVVHUYHGDVRXUJHQHUDOFRXQVHODQGVHFUHWDU\VLQFH1RYHPEHU%HIRUHMRLQLQJ %OXH$SURQ0U6LQJHUZDVHPSOR\HGE\*LOW*URXSHDQHFRPPHUFHFRPSDQ\DVYLFHSUHVLGHQWDVVRFLDWHJHQHUDO FRXQVHODQGDVVLVWDQWVHFUHWDU\IURP$SULOWR1RYHPEHUDQGDVDVVLVWDQWJHQHUDOFRXQVHOIURP$SULOWR $SULO3ULRUWRWKDW0U6LQJHUZDVDQDVVRFLDWHDWWRUQH\DWWKHODZILUPV.LUNODQG (OOLV//3IURP0D\WR $SULODQG:LOVRQ6RQVLQL*RRGULFK 5RVDWL3&IURP6HSWHPEHUWR0D\0U6LQJHUKROGVD%$ GHJUHHLQSKLORVRSK\DQGUHOLJLRXVVWXGLHVIURP,QGLDQD8QLYHUVLW\DQGD-'GHJUHHIURP7KH8QLYHUVLW\RI7H[DV 6FKRRORI/DZ Timothy J. Smith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¶VERDUGRI GLUHFWRUVZLWKLQDVSHFLILHGSHULRGRIWKHFRPSOHWLRQRILWVLQLWLDOSXEOLFRIIHULQJ,QDGGLWLRQWKHUXOHVRIWKH1<6( UHTXLUHWKDWVXEMHFWWRVSHFLILHGH[FHSWLRQVHDFKPHPEHURIDOLVWHGFRPSDQ\¶VDXGLWFRPSHQVDWLRQDQGQRPLQDWLQJ DQGFRUSRUDWHJRYHUQDQFHFRPPLWWHHVEHLQGHSHQGHQW8QGHUWKHUXOHVRIWKH1<6(DGLUHFWRUZLOORQO\TXDOLI\DVDQ ³LQGHSHQGHQWGLUHFWRU´LILQWKHRSLQLRQRIWKDWFRPSDQ\¶VERDUGRIGLUHFWRUVWKDWSHUVRQGRHVQRWKDYHDUHODWLRQVKLS WKDWZRXOGLQWHUIHUHZLWKWKHH[HUFLVHRILQGHSHQGHQWMXGJPHQWLQFDUU\LQJRXWWKHUHVSRQVLELOLWLHVRIDGLUHFWRU 


  • Page 15

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¶VDELOLW\WRVDWLVI\KLVRUKHUUHVSRQVLELOLWLHVDVDQ LQGHSHQGHQWGLUHFWRU%DVHGRQWKLVHYDOXDWLRQRXUERDUGRIGLUHFWRUVZLOOPDNHDQDQQXDOGHWHUPLQDWLRQRIZKHWKHUHDFK GLUHFWRULVLQGHSHQGHQWZLWKLQWKHPHDQLQJRIWKHLQGHSHQGHQFHVWDQGDUGVRIWKH1<6(WKH6HFXULWLHVDQG([FKDQJH &RPPLVVLRQ ³6(&´ DQGRIRXUDSSOLFDEOHERDUGFRPPLWWHHV 2XUERDUGRIGLUHFWRUVKDVGHWHUPLQHGWKDWHDFKRI0VHV%UDGOH\DQG&RRODQG0HVVUV)R[*RRGPDQ+LUVKEHUJ DQG.HOOH\LVDQ³LQGHSHQGHQWGLUHFWRU´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³&RUSRUDWH *RYHUQDQFH±*RYHUQDQFH'RFXPHQWV´RQWKH,QYHVWRU5HODWLRQVVHFWLRQRIRXUZHEVLWHZKLFKLVORFDWHGDW LQYHVWRUVEOXHDSURQFRP,IZHPDNHDQ\VXEVWDQWLYHDPHQGPHQWVWRRUJUDQWDQ\ZDLYHUVIURPWKHFRGHRIFRQGXFW DQGHWKLFVZHZLOOGLVFORVHWKHQDWXUHRIVXFKDPHQGPHQWRUZDLYHURQRXUZHEVLWHRULQD&XUUHQW5HSRUWRQ)RUP. WRWKHH[WHQWUHTXLUHGE\DSSOLFDEOHODZWKHUXOHVRIWKH6(&RUWKHUXOHVRIWKH1<6( 


  • Page 16

    &RUSRUDWH*RYHUQDQFH*XLGHOLQHV 2XUERDUGRIGLUHFWRUVKDVDGRSWHGFRUSRUDWHJRYHUQDQFHJXLGHOLQHVWRDVVLVWLQWKHH[HUFLVHRILWVGXWLHVDQG UHVSRQVLELOLWLHVDQGWRVHUYHWKHEHVWLQWHUHVWVRIRXUFRPSDQ\DQGRXUVWRFNKROGHUV7KHJXLGHOLQHVSURYLGHDPRQJRWKHU WKLQJVWKDW • RXUERDUGRIGLUHFWRUV¶SULQFLSDOUHVSRQVLELOLW\LVWRRYHUVHHWKHPDQDJHPHQWRIWKHFRPSDQ\ • DPDMRULW\RIWKHPHPEHUVRIRXUERDUGRIGLUHFWRUVPXVWEHLQGHSHQGHQWGLUHFWRUV • WKHLQGHSHQGHQWGLUHFWRUVZLOOPHHWLQH[HFXWLYHVHVVLRQDWOHDVWVHPLDQQXDOO\ • GLUHFWRUVKDYHIXOODQGIUHHDFFHVVWRPDQDJHPHQWDQGDVQHFHVVDU\LQGHSHQGHQWDGYLVRUV • QHZGLUHFWRUVSDUWLFLSDWHLQDQRULHQWDWLRQSURJUDPDQGDOOGLUHFWRUVDUHH[SHFWHGWRSDUWLFLSDWHLQFRQWLQXLQJ GLUHFWRUHGXFDWLRQRQDQRQJRLQJEDVLVDQG • WKHQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHHZLOOFRQGXFWDQDQQXDOVHOIHYDOXDWLRQRIWKHERDUGRI GLUHFWRUVWRGHWHUPLQHZKHWKHULWDQGLWVFRPPLWWHHVDUHIXQFWLRQLQJHIIHFWLYHO\ $FRS\RIWKHFRUSRUDWHJRYHUQDQFHJXLGHOLQHVLVSRVWHGXQGHUWKHKHDGLQJ³&RUSRUDWH*RYHUQDQFH±*RYHUQDQFH 'RFXPHQWV´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³&RUSRUDWH*RYHUQDQFH± *RYHUQDQFH'RFXPHQWV´RQWKH,QYHVWRU5HODWLRQVVHFWLRQRIRXUZHEVLWHZKLFKLVORFDWHGDWLQYHVWRUVEOXHDSURQFRP Audit Committee 2XUDXGLWFRPPLWWHH¶VUHVSRQVLELOLWLHVLQFOXGH • DSSRLQWLQJDSSURYLQJWKHFRPSHQVDWLRQRIDQGDVVHVVLQJWKHLQGHSHQGHQFHRIRXUUHJLVWHUHGSXEOLF DFFRXQWLQJILUP 


  • Page 17

    • RYHUVHHLQJWKHZRUNRIRXUUHJLVWHUHGSXEOLFDFFRXQWLQJILUPLQFOXGLQJWKURXJKWKHUHFHLSWDQGFRQVLGHUDWLRQ RIUHSRUWVIURPVXFKILUP • UHYLHZLQJDQGGLVFXVVLQJZLWKPDQDJHPHQWDQGWKHUHJLVWHUHGSXEOLFDFFRXQWLQJILUPRXUDQQXDODQG TXDUWHUO\ILQDQFLDOVWDWHPHQWVDQGUHODWHGGLVFORVXUHV • FRRUGLQDWLQJRXUERDUGRIGLUHFWRUV¶RYHUVLJKWRIRXULQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJGLVFORVXUH FRQWUROVDQGSURFHGXUHVDQGFRGHRIFRQGXFWDQGHWKLFV • GLVFXVVLQJRXUULVNPDQDJHPHQWSROLFLHV • HVWDEOLVKLQJSROLFLHVUHJDUGLQJKLULQJHPSOR\HHVIURPWKHUHJLVWHUHGSXEOLFDFFRXQWLQJILUPDQGSURFHGXUHV IRUWKHUHFHLSWDQGUHWHQWLRQRIDFFRXQWLQJUHODWHGFRPSODLQWVDQGFRQFHUQV • PHHWLQJLQGHSHQGHQWO\ZLWKRXUUHJLVWHUHGSXEOLFDFFRXQWLQJILUPDQGPDQDJHPHQW • UHYLHZLQJDQGDSSURYLQJRUUDWLI\LQJDQ\UHODWHGSHUVRQWUDQVDFWLRQVDQG • SUHSDULQJWKHDXGLWFRPPLWWHHUHSRUWUHTXLUHGE\6(&UXOHV $OODXGLWVHUYLFHVDQGDOOQRQDXGLWVHUYLFHVRWKHUWKDQGHPLQLPLVQRQDXGLWVHUYLFHVWREHSURYLGHGWRXVE\RXU LQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPPXVWEHDSSURYHGLQDGYDQFHE\RXUDXGLWFRPPLWWHH 7KHPHPEHUVRIRXUDXGLWFRPPLWWHHDUH0V%UDGOH\ FKDLU 0V&RRODQG0U)R[2XUERDUGRIGLUHFWRUVKDV GHWHUPLQHGWKDWHDFKPHPEHURIRXUDXGLWFRPPLWWHHPHHWVWKHUHTXLUHPHQWVIRUILQDQFLDOOLWHUDF\XQGHUWKHDSSOLFDEOH UXOHVDQGUHJXODWLRQVRIWKH6(&DQGWKH1<6(2XUERDUGRIGLUHFWRUVKDVGHVLJQDWHG0V%UDGOH\DVDQ³DXGLW FRPPLWWHHILQDQFLDOH[SHUW´DVGHILQHGXQGHUWKHDSSOLFDEOHUXOHVRIWKH6(& 2XUDXGLWFRPPLWWHHKHOGIRXUPHHWLQJVGXULQJWKHILVFDO\HDUHQGHG'HFHPEHU2XUDXGLWFRPPLWWHH RSHUDWHVXQGHUDZULWWHQFKDUWHUDGRSWHGE\RXUERDUGRIGLUHFWRUVDFXUUHQWFRS\RIZKLFKLVDYDLODEOHXQGHUWKHKHDGLQJ ³&RUSRUDWH*RYHUQDQFH±*RYHUQDQFH'RFXPHQWV´RQWKH,QYHVWRU5HODWLRQVVHFWLRQRIRXUZHEVLWHZKLFKLVORFDWHGDW LQYHVWRUVEOXHDSURQFRP Compensation Committee 2XUFRPSHQVDWLRQFRPPLWWHH¶VUHVSRQVLELOLWLHVLQFOXGH • DQQXDOO\UHYLHZLQJDQGDSSURYLQJFRUSRUDWHJRDOVDQGREMHFWLYHVUHOHYDQWWRWKHFRPSHQVDWLRQRIRXUFKLHI H[HFXWLYHRIILFHU • GHWHUPLQLQJWKHFRPSHQVDWLRQRIRXUFKLHIH[HFXWLYHRIILFHU • UHYLHZLQJDQGDSSURYLQJRUPDNLQJUHFRPPHQGDWLRQVWRRXUERDUGRIGLUHFWRUVZLWKUHVSHFWWRWKH FRPSHQVDWLRQRIRXURWKHUH[HFXWLYHRIILFHUV • RYHUVHHLQJDQHYDOXDWLRQRIRXUVHQLRUH[HFXWLYHV • RYHUVHHLQJDQGDGPLQLVWHULQJRXUFDVKDQGHTXLW\LQFHQWLYHSODQV • UHYLHZLQJDQGPDNLQJUHFRPPHQGDWLRQVWRRXUERDUGRIGLUHFWRUVZLWKUHVSHFWWRGLUHFWRUFRPSHQVDWLRQ • UHYLHZLQJDQGGLVFXVVLQJDQQXDOO\ZLWKPDQDJHPHQWRXU³&RPSHQVDWLRQ'LVFXVVLRQDQG$QDO\VLV´ GLVFORVXUHWRWKHH[WHQWVXFKGLVFORVXUHLVUHTXLUHGE\6(&UXOHVDQG • SUHSDULQJDQQXDOFRPSHQVDWLRQFRPPLWWHHUHSRUWVWRWKHH[WHQWUHTXLUHGE\6(&UXOHV 7\SLFDOO\RXUFRPSHQVDWLRQFRPPLWWHHPHHWVTXDUWHUO\DQGZLWKJUHDWHUIUHTXHQF\LIQHFHVVDU\7KHDJHQGDIRU HDFKPHHWLQJLVXVXDOO\GHYHORSHGE\RXUFRPSHQVDWLRQFRPPLWWHHLQFRQVXOWDWLRQZLWKRXUSUHVLGHQWDQGFKLHI H[HFXWLYHRIILFHUDQGRXUFKLHIKXPDQUHVRXUFHVRIILFHU2XUFRPSHQVDWLRQFRPPLWWHHPHHWVUHJXODUO\LQH[HFXWLYH VHVVLRQ2XUSUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHUPD\QRWSDUWLFLSDWHLQRUEHSUHVHQWGXULQJDQ\GHOLEHUDWLRQVRU 


  • Page 18

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¶V LQGHSHQGHQFHKRZHYHUWKHUHLVQRUHTXLUHPHQWWKDWDQ\DGYLVHUEHLQGHSHQGHQW 7KHPHPEHUVRIRXUFRPSHQVDWLRQFRPPLWWHHDUH0U*RRGPDQ FKDLU 0V%UDGOH\DQG0U+LUVKEHUJ2XU FRPSHQVDWLRQFRPPLWWHHKHOGRQHPHHWLQJGXULQJWKHILVFDO\HDUHQGHG'HFHPEHU2XUFRPSHQVDWLRQ FRPPLWWHHRSHUDWHVXQGHUDZULWWHQFKDUWHUDGRSWHGE\RXUERDUGRIGLUHFWRUVDFXUUHQWFRS\RIZKLFKLVDYDLODEOHXQGHU WKHKHDGLQJ³&RUSRUDWH*RYHUQDQFH±*RYHUQDQFH'RFXPHQWV´RQWKH,QYHVWRU5HODWLRQVVHFWLRQRIRXUZHEVLWHZKLFKLV ORFDWHGDWLQYHVWRUVEOXHDSURQFRP Nominating and Corporate Governance Committee 2XUQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHH¶VUHVSRQVLELOLWLHVLQFOXGH • LGHQWLI\LQJLQGLYLGXDOVTXDOLILHGWREHFRPHPHPEHUVRIRXUERDUGRIGLUHFWRUV • UHFRPPHQGLQJWRRXUERDUGRIGLUHFWRUVWKHSHUVRQVWREHQRPLQDWHGIRUHOHFWLRQDVGLUHFWRUVDQGWRHDFKRI WKHERDUGRIGLUHFWRUV¶FRPPLWWHHV • UHYLHZLQJDQGPDNLQJUHFRPPHQGDWLRQVWRWKHERDUGRIGLUHFWRUVZLWKUHVSHFWWRPDQDJHPHQWVXFFHVVLRQ SODQQLQJ • GHYHORSLQJDQGUHFRPPHQGLQJWRWKHERDUGRIGLUHFWRUVFRUSRUDWHJRYHUQDQFHSULQFLSOHVDQG • RYHUVHHLQJDQDQQXDOHYDOXDWLRQRIWKHERDUGRIGLUHFWRUV 7KHPHPEHUVRIRXUQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHHDUH0U+LUVKEHUJ FKDLU 0V&RRODQG 0U.HOOH\2XUQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHHKHOGRQHPHHWLQJGXULQJWKHILVFDO\HDUHQGHG 'HFHPEHU2XUQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHHRSHUDWHVXQGHUDZULWWHQFKDUWHUDGRSWHGE\ RXUERDUGRIGLUHFWRUVDFXUUHQWFRS\RIZKLFKLVDYDLODEOHXQGHUWKHKHDGLQJ³&RUSRUDWH*RYHUQDQFH±*RYHUQDQFH 'RFXPHQWV´RQWKH,QYHVWRU5HODWLRQVVHFWLRQRIRXUZHEVLWHZKLFKLVORFDWHGDWLQYHVWRUVEOXHDSURQFRP &RPSHQVDWLRQ&RQVXOWDQWV 2XUFRPSHQVDWLRQFRPPLWWHHPD\LQLWVVROHGLVFUHWLRQUHWDLQRUREWDLQWKHDGYLFHRIRQHRUPRUHFRPSHQVDWLRQ FRQVXOWDQWV3ULRUWRRXULQLWLDOSXEOLFRIIHULQJ ³,32´ LQRXUFRPSHQVDWLRQFRPPLWWHHHQJDJHG&RPSHQVLD,QFD QDWLRQDOPDQDJHPHQWFRQVXOWLQJILUP ³&RPSHQVLD´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


  • Page 19

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versight of Risk 2XUERDUGRIGLUHFWRUVRYHUVHHVRXUULVNPDQDJHPHQWSURFHVVHVGLUHFWO\DQGWKURXJKLWVFRPPLWWHHV2XU PDQDJHPHQWLVUHVSRQVLEOHIRUULVNPDQDJHPHQWRQDGD\WRGD\EDVLV7KHUROHRIRXUERDUGRIGLUHFWRUVDQGLWV FRPPLWWHHVLVWRRYHUVHHWKHULVNPDQDJHPHQWDFWLYLWLHVRIRXUPDQDJHPHQW7KH\IXOILOOWKLVGXW\E\GLVFXVVLQJZLWK PDQDJHPHQWWKHSROLFLHVDQGSUDFWLFHVXWLOL]HGE\PDQDJHPHQWLQDVVHVVLQJDQGPDQDJLQJULVNVDQGSURYLGLQJLQSXWRQ WKRVHSROLFLHVDQGSUDFWLFHV,QJHQHUDORXUERDUGRIGLUHFWRUVRYHUVHHVULVNPDQDJHPHQWDFWLYLWLHVUHODWLQJWREXVLQHVV VWUDWHJ\DFTXLVLWLRQVFDSLWDODOORFDWLRQRUJDQL]DWLRQDOVWUXFWXUHDQGFHUWDLQRSHUDWLRQDOULVNVRXUDXGLWFRPPLWWHH RYHUVHHVULVNPDQDJHPHQWDFWLYLWLHVUHODWHGWRILQDQFLDOFRQWUROVDQGOHJDODQGFRPSOLDQFHULVNVRXUQRPLQDWLQJDQG FRUSRUDWHJRYHUQDQFHFRPPLWWHHRYHUVHHVULVNPDQDJHPHQWDFWLYLWLHVUHODWLQJWRWKHFRPSRVLWLRQRIRXUERDUGRI GLUHFWRUVDQGRXUFRPSHQVDWLRQFRPPLWWHHRYHUVHHVULVNPDQDJHPHQWDFWLYLWLHVUHODWLQJWRRXUFRPSHQVDWLRQSROLFLHV DQGSUDFWLFHVDQGPDQDJHPHQWVXFFHVVLRQSODQQLQJ(DFKFRPPLWWHHUHSRUWVWRWKHIXOOERDUGRIGLUHFWRUVRQDUHJXODU EDVLVLQFOXGLQJUHSRUWVZLWKUHVSHFWWRHDFKFRPPLWWHH¶VULVNRYHUVLJKWDFWLYLWLHVDVDSSURSULDWH,QDGGLWLRQEHFDXVH ULVNLVVXHVRIWHQRYHUODSFRPPLWWHHVIURPWLPHWRWLPHUHTXHVWWKDWWKHIXOOERDUGRIGLUHFWRUVGLVFXVVSDUWLFXODUULVNV Director Nomination Process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


  • Page 20

    JRYHUQDQFHFRPPLWWHHWKHQGLVFXVVHVDQGHYDOXDWHVWKHTXDOLWLHVDQGVNLOOVRIHDFKFDQGLGDWHERWKRQDQLQGLYLGXDOEDVLV DQGWDNLQJLQWRDFFRXQWWKHRYHUDOOFRPSRVLWLRQDQGQHHGVRIRXUERDUGRIGLUHFWRUV%DVHGRQWKHUHVXOWVRIWKH HYDOXDWLRQSURFHVVRXUQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHHUHFRPPHQGVFDQGLGDWHVIRURXUERDUGRI GLUHFWRUV¶DSSURYDODVGLUHFWRUQRPLQHHVIRUHOHFWLRQWRRXUERDUGRIGLUHFWRUV,QFRQVLGHULQJZKHWKHUWRUHFRPPHQGDQ\ SDUWLFXODUFDQGLGDWHIRULQFOXVLRQLQRXUERDUGRIGLUHFWRUV¶VODWHRIUHFRPPHQGHGGLUHFWRUQRPLQHHVRXUQRPLQDWLQJDQG FRUSRUDWHJRYHUQDQFHFRPPLWWHHDSSOLHVWKHFULWHULDVHWIRUWKLQRXUFRUSRUDWHJRYHUQDQFHJXLGHOLQHVGHVFULEHGDERYH XQGHU³&RUSRUDWH*RYHUQDQFH*XLGHOLQHV´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³1RPLQHHVIRU(OHFWLRQIRUD7KUHH<HDU7HUP(QGLQJDWWKH$QQXDO 0HHWLQJ´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³3URFHGXUHVIRU6XEPLWWLQJ6WRFNKROGHU3URSRVDOV´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³3URFHGXUHVIRU6XEPLWWLQJ6WRFNKROGHU 3URSRVDOV´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


  • Page 21

    &RPSHQVDWLRQ5LVN$VVHVVPHQW :HEHOLHYHWKDWDOWKRXJKDSRUWLRQRIWKHFRPSHQVDWLRQSURYLGHGWRRXUH[HFXWLYHRIILFHUVDQGRWKHUHPSOR\HHVLV SHUIRUPDQFHEDVHGRXUH[HFXWLYHFRPSHQVDWLRQSURJUDPGRHVQRWHQFRXUDJHH[FHVVLYHRUXQQHFHVVDU\ULVNWDNLQJ7KLV LVSULPDULO\GXHWRWKHIDFWWKDWRXUFRPSHQVDWLRQSURJUDPVDUHGHVLJQHGWRHQFRXUDJHRXUH[HFXWLYHRIILFHUVDQGRWKHU HPSOR\HHVWRUHPDLQIRFXVHGRQERWKVKRUWWHUPDQGORQJWHUPVWUDWHJLFJRDOVLQSDUWLFXODULQFRQQHFWLRQZLWKRXUSD\ IRUSHUIRUPDQFHFRPSHQVDWLRQSKLORVRSK\WKDWDSSOLHVWRRXUH[HFXWLYHRIILFHUV,QDGGLWLRQZHEHOLHYHWKDWWKHHTXLW\ FRPSHQVDWLRQFRPSRQHQWRIRXUH[HFXWLYHFRPSHQVDWLRQSURJUDPDVVLVWVLQSURWHFWLQJDJDLQVWH[FHVVLYHRUXQQHFHVVDU\ ULVNWDNLQJE\SURYLGLQJRXUH[HFXWLYHVZLWKDVWURQJOLQNWRRXUORQJWHUPSHUIRUPDQFHFUHDWLQJDQRZQHUVKLSFXOWXUH DQGKHOSLQJWRDOLJQWKHLQWHUHVWVRIRXUH[HFXWLYHVDQGRXUVWRFNKROGHUV$VDUHVXOWZHGRQRWEHOLHYHWKDWRXU FRPSHQVDWLRQSURJUDPVDUHUHDVRQDEO\OLNHO\WRKDYHDPDWHULDODGYHUVHHIIHFWRQXV   


  • Page 22

    352326$/7:2 5$7,),&$7,212)7+($332,170(172) 285,1'(3(1'(175(*,67(5('38%/,&$&&2817,1*),50 :HKDYHDSSRLQWHG(UQVW <RXQJ//3DVRXULQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPWRSHUIRUPWKHDXGLW RIRXUFRQVROLGDWHGILQDQFLDOVWDWHPHQWVIRUWKHILVFDO\HDUHQGLQJ'HFHPEHUDQGZHDUHDVNLQJ\RXDQGRWKHU VWRFNKROGHUVWRUDWLI\WKLVDSSRLQWPHQW(UQVW <RXQJ//3KDVVHUYHGDVRXULQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJ ILUPVLQFH 2XUDXGLWFRPPLWWHHDQQXDOO\UHYLHZVWKHLQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUP¶VLQGHSHQGHQFH LQFOXGLQJUHYLHZLQJDOOUHODWLRQVKLSVEHWZHHQWKHLQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPDQGXVDQGDQ\ GLVFORVHGUHODWLRQVKLSVRUVHUYLFHVWKDWPD\LPSDFWWKHREMHFWLYLW\DQGLQGHSHQGHQFHRIWKHLQGHSHQGHQWUHJLVWHUHGSXEOLF DFFRXQWLQJILUPDQGWKHLQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUP¶VSHUIRUPDQFH$VDPDWWHURIJRRGFRUSRUDWH JRYHUQDQFHRXUERDUGRIGLUHFWRUVGHWHUPLQHGWRVXEPLWWRVWRFNKROGHUVIRUUDWLILFDWLRQWKHDSSRLQWPHQWRI(UQVW  <RXQJ//3$PDMRULW\RIWKHYRWHVSURSHUO\FDVWLVUHTXLUHGLQRUGHUWRUDWLI\WKHDSSRLQWPHQWRI(UQVW <RXQJ//3 ,QWKHHYHQWWKDWDPDMRULW\RIWKHYRWHVSURSHUO\FDVWGRQRWUDWLI\WKLVDSSRLQWPHQWRI(UQVW <RXQJ//3ZHZLOO UHYLHZRXUIXWXUHDSSRLQWPHQWRI(UQVW <RXQJ//3 2XUDXGLWFRPPLWWHH¶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² 7D[)HHV                                                          ²   $OO2WKHU)HHV                                                       ² 7RWDO)HHV                                                           Audit Fees. 5HSUHVHQWVIHHVIRUSURIHVVLRQDOVHUYLFHVSURYLGHGLQFRQQHFWLRQZLWKWKHDXGLWRIRXUDQQXDO FRQVROLGDWHGILQDQFLDOVWDWHPHQWVDQGWKHUHYLHZVRIRXUTXDUWHUO\FRQVROLGDWHGILQDQFLDOVWDWHPHQWV Audit-Related Fees5HSUHVHQWVIHHVIRUVHUYLFHVSURYLGHGLQFRQQHFWLRQZLWKWKHVXEPLVVLRQRIRXU5HJLVWUDWLRQ 6WDWHPHQWRQ)RUP6LQFRQQHFWLRQZLWKRXU,32 Tax Fees5HSUHVHQWVIHHVIRUSURIHVVLRQDOVHUYLFHVSURYLGHGIRUWD[DGYLFHDQGSODQQLQJ All Other Fees5HSUHVHQWVIHHVIRUVHUYLFHVRWKHUWKDQWKHVHUYLFHVUHSRUWHGLQ$XGLW)HHV$XGLW5HODWHG)HHVDQG 7D[)HHV 5HFRPPHQGDWLRQRIRXU%RDUGRI'LUHFWRUV 7KHERDUGRIGLUHFWRUVUHFRPPHQGVWKDW\RXYRWH³)25´WKHUDWLILFDWLRQDQGDSSRLQWPHQWRI(UQVW <RXQJ //3DVRXULQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPIRUWKHILVFDO\HDUHQGLQJ'HFHPEHU     


  • Page 23

    5HSRUWRIWKH$XGLW&RPPLWWHHRIRXU%RDUGRI'LUHFWRUV 7KHLQIRUPDWLRQFRQWDLQHGLQWKLVDXGLWFRPPLWWHHUHSRUWVKDOOQRWEHGHHPHGWREH  ³VROLFLWLQJPDWHULDO´  ³ILOHG´ZLWKWKH6(&XQGHUWKH6HFXULWLHV$FWRIDVDPHQGHG WKH³6HFXULWLHV$FW´ RUWKH([FKDQJH$FW  VXEMHFWWR5HJXODWLRQV$RU&RIWKH([FKDQJH$FWRU  VXEMHFWWRWKHOLDELOLWLHVRI6HFWLRQRIWKH([FKDQJH $FW1RSRUWLRQRIWKLVDXGLWFRPPLWWHHUHSRUWVKDOOEHGHHPHGWREHLQFRUSRUDWHGE\UHIHUHQFHLQWRDQ\ILOLQJXQGHUWKH 6HFXULWLHV$FWRUWKH([FKDQJH$FWWKURXJKDQ\JHQHUDOVWDWHPHQWLQFRUSRUDWLQJE\UHIHUHQFHLQLWVHQWLUHW\WKHSUR[\ VWDWHPHQWLQZKLFKWKLVUHSRUWDSSHDUVH[FHSWWRWKHH[WHQWWKDW%OXH$SURQVSHFLILFDOO\LQFRUSRUDWHVWKLVUHSRUWRUD SRUWLRQRILWE\UHIHUHQFH 2XUDXGLWFRPPLWWHH¶VJHQHUDOUROHLVWRDVVLVWRXUERDUGRIGLUHFWRUVLQPRQLWRULQJRXUILQDQFLDOUHSRUWLQJSURFHVV DQGUHODWHGPDWWHUV,WVVSHFLILFUHVSRQVLELOLWLHVDUHVHWIRUWKLQLWVFKDUWHU 2XUDXGLWFRPPLWWHHKDVUHYLHZHGWKHFRPSDQ\¶VFRQVROLGDWHGILQDQFLDOVWDWHPHQWVIRUDQGPHWZLWK PDQDJHPHQWDVZHOODVZLWKUHSUHVHQWDWLYHVRI(UQVW <RXQJ//3WKHFRPSDQ\¶VLQGHSHQGHQWUHJLVWHUHGSXEOLF DFFRXQWLQJILUPWRGLVFXVVWKHFRQVROLGDWHGILQDQFLDOVWDWHPHQWV2XUDXGLWFRPPLWWHHDOVRGLVFXVVHGZLWKWKH LQGHSHQGHQWUHJLVWHUHGSXEOLFDFFRXQWLQJILUPWKHPDWWHUVUHTXLUHGWREHGLVFXVVHGE\$XGLWLQJ6WDQGDUG1R ³&RPPXQLFDWLRQVZLWK$XGLW&RPPLWWHHV´LVVXHGE\WKH3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW%RDUG ,QDGGLWLRQRXUDXGLWFRPPLWWHHUHFHLYHGWKHZULWWHQGLVFORVXUHVDQGWKHOHWWHUIURP(UQVW <RXQJ//3UHTXLUHG E\DSSOLFDEOHUHTXLUHPHQWVRIWKH3XEOLF&RPSDQ\$FFRXQWLQJ2YHUVLJKW%RDUGUHJDUGLQJWKHLQGHSHQGHQWDFFRXQWDQW¶V FRPPXQLFDWLRQVZLWKRXUDXGLWFRPPLWWHHFRQFHUQLQJLQGHSHQGHQFHDQGGLVFXVVHGZLWKPHPEHUVRI(UQVW <RXQJ //3LWVLQGHSHQGHQFH %DVHGRQWKHIRUHJRLQJFRPPXQLFDWLRQVLWVUHYLHZRIWKHILQDQFLDOVWDWHPHQWVDQGRWKHUPDWWHUVLWGHHPHG UHOHYDQWRXUDXGLWFRPPLWWHHUHFRPPHQGHGWRRXUERDUGRIGLUHFWRUVWKDWWKHFRPSDQ\¶VDXGLWHGFRQVROLGDWHGILQDQFLDO VWDWHPHQWVIRUEHLQFOXGHGLQWKHFRPSDQ\¶V$QQXDO5HSRUWRQ)RUP.IRU 5HVSHFWIXOO\VXEPLWWHGE\WKHPHPEHUVRIWKHDXGLWFRPPLWWHHRIWKHERDUGRIGLUHFWRUV Julie M.B. Bradley (Chair) Tracy Britt Cool Kenneth A. Fox   


  • Page 24

    6(&85,7<2:1(56+,32) &(57$,1%(1(),&,$/2:1(56$1'0$1$*(0(17$1'5(/$7('672&.+2/'(50$77(56 7KHIROORZLQJWDEOHVHWVIRUWKFHUWDLQLQIRUPDWLRQNQRZQWRXVUHJDUGLQJWKHEHQHILFLDORZQHUVKLSRIRXUFDSLWDO VWRFNDVRI0DUFKIRU • HDFKSHUVRQRUJURXSRIDIILOLDWHGSHUVRQVNQRZQE\XVWREHQHILFLDOO\RZQPRUHWKDQRIRXU&ODVV$ FRPPRQVWRFNRU&ODVV%FRPPRQVWRFN • HDFKRIRXUQDPHGH[HFXWLYHRIILFHUV • HDFKRIRXUGLUHFWRUVDQG •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


  • Page 25

      6KDUHV%HQHILFLDOO\2ZQHG      &ODVV$  &ODVV%    1DPH  1XPEHU    1XPEHU    RI7RWDO9RWLQJ3RZHU 5% Stockholders       (QWLWLHVDIILOLDWHGZLWK%HVVHPHU9HQWXUH 3DUWQHUV                                 ² ²    (QWLWLHVDIILOLDWHGZLWK)LUVW5RXQG&DSLWDO         ² ²    -30RUJDQ&KDVH &R                         ² ²  6**URZWK3DUWQHUV,,/3                     ² ²    )DPLO\7UXVW&UHDWHG8QGHU$UWLFOH9RIWKH 0DWWKHZ6DO]EHUJ$QQXLW\7UXVW $JUHHPHQW                               ² ²               Named Executive Officers and Directors            %UDGOH\-'LFNHUVRQ                               0DWWKHZ%6DO]EHUJ                        ² ²    3DEOR&XVVDWWL                                ² ²   -DUHG&OXII                                    ,OLD03DSDV                                   -XOLH0%%UDGOH\                          ² ²    7UDF\%ULWW&RRO                            ² ²     .HQQHWK$)R[                           ² ²    5REHUW3*RRGPDQ                         ² ²    *DU\5+LUVKEHUJ                          ² ²    %ULDQ3.HOOH\                            ² ²    $OOH[HFXWLYHRIILFHUVDQGGLUHFWRUVDVDJURXS SHUVRQV                                    /HVVWKDQ   &RQVLVWVRI L VKDUHVRI&ODVV%FRPPRQVWRFNKHOGE\%HVVHPHU9HQWXUH3DUWQHUV9,,, ,QVWLWXWLRQDO/3DQG LL VKDUHVRI&ODVV%FRPPRQVWRFNKHOGE\%HVVHPHU9HQWXUH3DUWQHUV9,,,/3 FROOHFWLYHO\WKH³%93(QWLWLHV´ (DFKRI'HHU9,,, &R/3 ³'HHU9,,,/3´ WKHJHQHUDOSDUWQHURIWKH%93 (QWLWLHVDQG'HHU9,,, &R/WG ³'HHU9,,,/WG´ WKHJHQHUDOSDUWQHURI'HHU9,,,/3KDVYRWLQJDQG GLVSRVLWLYHSRZHURYHUWKHVKDUHVKHOGE\WKH%93(QWLWLHV-(GPXQG&ROORWRQ'DYLG-&RZDQ%\URQ%'HHWHU 5REHUW3*RRGPDQ-HUHP\6/HYLQHDQG5REHUW06WDYLVDUHWKHGLUHFWRUVRI'HHU9,,,/WG,QYHVWPHQWDQG YRWLQJGHFLVLRQVZLWKUHVSHFWWRWKHVKDUHVKHOGE\WKH%93(QWLWLHVDUHPDGHE\WKHGLUHFWRUVRI'HHU9,,,/WG DFWLQJDVDQLQYHVWPHQWFRPPLWWHH7KHDGGUHVVRIHDFKRIWKH%93(QWLWLHVLVFR%HVVHPHU9HQWXUH3DUWQHUV 3DOPHU$YHQXH6XLWH/DUFKPRQW1HZ<RUN   &RQVLVWVRI L VKDUHVRI&ODVV%FRPPRQVWRFNKHOGE\)LUVW5RXQG&DSLWDO,9/3 ³)5&,9´ DQG LL VKDUHVRI&ODVV%FRPPRQVWRFNKHOGE\)LUVW5RXQG&DSLWDO,93DUWQHUV)XQG/3 ³)5&,93)´  )LUVW5RXQG&DSLWDO0DQDJHPHQW,9/3 ³)5&0,9/3´ WKHJHQHUDOSDUWQHURI)5&,9DQG)5&,93)DQG )LUVW5RXQG&DSLWDO0DQDJHPHQW,9//& ³)5&0,9//&´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


  • Page 26

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


  • Page 27

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


  • Page 28

    (;(&87,9(&203(16$7,21 ([HFXWLYH&RPSHQVDWLRQ2YHUYLHZ 7KLVVHFWLRQGHVFULEHVWKHPDWHULDOHOHPHQWVRIFRPSHQVDWLRQDZDUGHGWRHDUQHGE\RUSDLGWRRXUFKLHIH[HFXWLYH RIILFHUDQGRXUWZRPRVWKLJKO\FRPSHQVDWHGH[HFXWLYHRIILFHUV RWKHUWKDQRXUFKLHIH[HFXWLYHRIILFHU SOXVDGGLWLRQDO SHUVRQVDVGHWHUPLQHGXQGHUWKHUXOHVRIWKH6(&:HUHIHUWRWKLVJURXSRIH[HFXWLYHRIILFHUVDVRXU³QDPHGH[HFXWLYH RIILFHUV´)RURXUQDPHGH[HFXWLYHRIILFHUVZHUH • %UDGOH\-'LFNHUVRQSUHVLGHQWFKLHIH[HFXWLYHRIILFHUFKLHIILQDQFLDORIILFHUDQGWUHDVXUHU DSSRLQWHG SUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHUHIIHFWLYH1RYHPEHU  • 0DWWKHZ%6DO]EHUJH[HFXWLYHFKDLUPDQDQGIRUPHUSUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHU UHVLJQHGDV SUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHUHIIHFWLYH1RYHPEHU  • 3DEOR&XVVDWWLIRUPHUVHQLRUYLFHSUHVLGHQWRIRSHUDWLRQVDQGIXOILOOPHQW UHVLJQHGHIIHFWLYH'HFHPEHU   • -DUHG&OXIIFKLHIPDUNHWLQJRIILFHUDQG •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


  • Page 29

    6XPPDU\&RPSHQVDWLRQ7DEOH 7KHIROORZLQJWDEOHSUHVHQWVLQIRUPDWLRQUHJDUGLQJWKHWRWDOFRPSHQVDWLRQDZDUGHGWRHDUQHGE\RUSDLGWRHDFK RIRXUQDPHGH[HFXWLYHRIILFHUVGXULQJWKH\HDUVLQGLFDWHG                 $OORWKHU %RQXV 6WRFNDZDUGV 2SWLRQDZDUGV FRPSHQVDWLRQ 1DPHDQG3ULQFLSDO3RVLWLRQ  <HDU 6DODU\                7RWDO    %UDGOH\-'LFNHUVRQ              ² ²  President, Chief Executive Officer, Chief Financial Officer and Treasurer     ²  ²  0DWWKHZ%6DO]EHUJ            ²   ²  Executive Chairman and Former President and Chief Executive Officer     ² ² ²   3DEOR&XVVDWWL                 ²  ²    Former Senior Vice President of Operations and Fulfillment            -DUHG&OXII                      ²  Chief Marketing Officer                ,OLD03DSDV                    ²  Chief Technology Officer                   5HSUHVHQWVGLVFUHWLRQDU\FDVKERQXVHVIRUWKHDSSOLFDEOH\HDUSDLGLQWKHVXEVHTXHQW\HDU)RU0U&XVVDWWLWKH ERQXVDPRXQWLQFOXGHVDVLJQLQJERQXVSDLGLQFRQQHFWLRQZLWKKLVKLULQJLQ   7KHDPRXQWVUHSRUWHGLQWKLVFROXPQUHSUHVHQWWKHDJJUHJDWHJUDQWGDWHIDLUYDOXHRIWKHUHVWULFWHGVWRFNXQLWV ³568V´ JUDQWHGWRWKHQDPHGH[HFXWLYHRIILFHUVGXULQJWKHDSSOLFDEOH\HDUDVFRPSXWHGLQDFFRUGDQFHZLWK)$6% $FFRXQWLQJ6WDQGDUGV&RGLILFDWLRQ7RSLF Compensation-Stock Compensation7KHDVVXPSWLRQVXVHGLQ FDOFXODWLQJWKHJUDQWGDWHIDLUYDOXHRIWKH568VUHSRUWHGLQWKLVFROXPQDUHVHWIRUWKLQ³0DQDJHPHQW¶V'LVFXVVLRQ DQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG5HVXOWVRI2SHUDWLRQV²&ULWLFDO$FFRXQWLQJ3ROLFLHVDQG6LJQLILFDQW (VWLPDWHV²6KDUH%DVHG3D\PHQWV´RIRXU$QQXDO5HSRUWRQ)RUP.IRUWKH\HDUHQGHG'HFHPEHU   7KHDPRXQWVUHSRUWHGLQWKLVFROXPQUHSUHVHQWWKHDJJUHJDWHJUDQWGDWHIDLUYDOXHRIWKHRSWLRQDZDUGVJUDQWHGWR WKHQDPHGH[HFXWLYHRIILFHUVGXULQJWKHDSSOLFDEOH\HDUDVFRPSXWHGLQDFFRUGDQFHZLWK)$6%$FFRXQWLQJ 6WDQGDUGV&RGLILFDWLRQ7RSLFCompensation-Stock Compensation7KHDVVXPSWLRQVXVHGLQFDOFXODWLQJWKH JUDQWGDWHIDLUYDOXHRIWKHRSWLRQDZDUGVUHSRUWHGLQWKLVFROXPQDUHVHWIRUWKLQ³0DQDJHPHQW¶V'LVFXVVLRQDQG $QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG5HVXOWVRI2SHUDWLRQV²&ULWLFDO$FFRXQWLQJ3ROLFLHVDQG6LJQLILFDQW (VWLPDWHV²6KDUH%DVHG3D\PHQWV´RIRXU$QQXDO5HSRUWRQ)RUP.IRUWKH\HDUHQGHG'HFHPEHU   5HSUHVHQWVVDODU\HDUQHGE\0U'LFNHUVRQIRUWKHSRUWLRQRIGXULQJZKLFKKHZDVHPSOR\HGE\XV 0U'LFNHUVRQZDVKLUHGHIIHFWLYH)HEUXDU\DQGZDVSDLGDSURUDWDSRUWLRQRIDQDQQXDOEDVHVDODU\RI    0U&XVVDWWL¶VHPSOR\PHQWZLWKXVHQGHGHIIHFWLYH'HFHPEHU   5HSUHVHQWVVDODU\HDUQHGE\0U&XVDWWLIRUWKHSRUWLRQRIGXULQJZKLFKKHZDVHPSOR\HGE\XV0U&XVDWWL¶V HPSOR\PHQWZLWKXVHQGHGHIIHFWLYH'HFHPEHUDQGGXULQJKHZDVSDLGDSURUDWDSRUWLRQRIDQ DQQXDOEDVHVDODU\RI   &RQVLVWVRIDOXPSVXPSD\PHQWHTXDOWRWKHSURUDWHGSRUWLRQRI0U&XVVDWWL¶VWDUJHWERQXVDPRXQWWRZKLFK 0U&XVVDWWLZDVHQWLWOHGSXUVXDQWWRDOHWWHUDJUHHPHQWDQGJHQHUDOUHOHDVHHQWHUHGLQWRRQ'HFHPEHU   5HSUHVHQWVVDODU\HDUQHGE\0U&XVVDWWLIRUWKHSRUWLRQRIGXULQJZKLFKKHZDVHPSOR\HGE\XV0U&XVVDWWL ZDVKLUHGHIIHFWLYH6HSWHPEHUDQGZDVSDLGDSURUDWDSRUWLRQRIDQDQQXDOEDVHVDODU\RI 


  • Page 30

      5HSUHVHQWVUHORFDWLRQVWLSHQGDZDUGHGLQFRQQHFWLRQZLWK0U&XVVDWWL¶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¶VSD\SKLORVRSK\DQGPHWKRGRORJ\DQGLQOLQHZLWKH[HFXWLYHFRPSHQVDWLRQIRUVLPLODUO\VLWXDWHGH[HFXWLYHVDW SHHUFRPSDQLHV2XUFRPSHQVDWLRQFRPPLWWHHWKHQW\SLFDOO\UHYLHZVDQGGLVFXVVHVWKHSURSRVDOVZLWKWKHFKLHI H[HFXWLYHRIILFHUDQGFKLHIKXPDQUHVRXUFHVRIILFHUIRUDOOH[HFXWLYHVRWKHUWKDQWKHFKLHIH[HFXWLYHRIILFHU7KH FRPSHQVDWLRQFRPPLWWHHZLWKRXWWKHDSSOLFDEOHPHPEHUVRIPDQDJHPHQWSUHVHQWIXUWKHUGLVFXVVHVWKHFKLHIH[HFXWLYH RIILFHU¶VUHFRPPHQGDWLRQVDQGXOWLPDWHO\UHFRPPHQGVIRURXUERDUGRIGLUHFWRUV¶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¶FRPSHQVDWLRQUHODWLYHWRFRPSDUDEOHFRPSDQLHV6HH³&RUSRUDWH*RYHUQDQFH²&RPSHQVDWLRQ &RQVXOWDQWV´IRUPRUHLQIRUPDWLRQDERXWWKHHQJDJHPHQWRI&RPSHQVLDE\WKHFRPSHQVDWLRQFRPPLWWHH Base salary,QZHSDLGDQQXDOEDVHVDODULHVWR0U'LFNHUVRQ0U6DO]EHUJ0U&XVVDWWL0U&OXIIDQG 0U3DSDVLQWKHDPRXQWVRIDQGUHVSHFWLYHO\(IIHFWLYH 'HFHPEHULQFRQQHFWLRQZLWKKLVWUDQVLWLRQWR([HFXWLYH&KDLUPDQ0U6DO]EHUJ¶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nnual bonus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


  • Page 31

    Equity incentives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¶VJUDQWLVHTXDOWRRIWKHIDLUPDUNHWYDOXHRIDVKDUHRIRXU&ODVV%FRPPRQVWRFNRQWKH GDWHRIJUDQWLQDFFRUGDQFHZLWKRXU(TXLW\,QFHQWLYH3ODQZKLFKUHTXLUHVWKDWLIDWWKHWLPHZHJUDQWDQLQFHQWLYH VWRFNRSWLRQWKHRSWLRQHHRZQVVWRFNWKDWUHSUHVHQWVPRUHWKDQRIWKHWRWDOFRPELQHGYRWLQJSRZHURIDOOFODVVHVRI RXUVWRFNWKHH[HUFLVHSULFHPXVWEHDWOHDVWRIWKHIDLUYDOXHRIWKHVKDUHVXQGHUO\LQJWKHVWRFNRSWLRQRQWKHJUDQW GDWHDQGWKHWHUPZLOOQRWEHPRUHWKDQILYH\HDUV 2Q-XQHRXUERDUGRIGLUHFWRUVJUDQWHG568DZDUGVUHSUHVHQWLQJWKHULJKWWRUHFHLYHVKDUHVRI&ODVV$ FRPPRQVWRFNWRHDFKRIRXUQDPHGH[HFXWLYHRIILFHUVHIIHFWLYHDVRIDQGFRQWLQJHQWXSRQWKHFORVLQJRIRXU,327KH GROODUYDOXHRIWKHVH568DZDUGVZDVIRUHDFKRI0U'LFNHUVRQ0U6DO]EHUJ0U&OXIIDQG0U3DSDVDQG IRU0U&XVVDWWL7KHQXPEHURIVKDUHVRI&ODVV$FRPPRQVWRFNXQGHUO\LQJHDFK568DZDUGZDV GHWHUPLQHGE\GLYLGLQJWKHGROODUYDOXHRIHDFKDZDUGE\WKHLQLWLDOSXEOLFRIIHULQJSULFHRIRXU&ODVV$FRPPRQVWRFN LQRXU,32ZKLFKZDVSHUVKDUH7KHUHIRUHRQ-XO\WKHFORVLQJGDWHRIRXU,32HDFKRI0U'LFNHUVRQ 0U6DO]EHUJ0U&OXIIDQG0U3DSDVUHFHLYHG568VDQG0U&XVVDWWLUHFHLYHG568V7KH568 DZDUGVDUHVFKHGXOHGWRYHVWRYHUIRXU\HDUVLQDQQXDOLQVWDOOPHQWVZLWKRIWKH568VYHVWLQJRQHDFKRI-XO\ -XO\-XO\DQG-XO\DWZKLFKSRLQWWKH568DZDUGVZLOOEHIXOO\YHVWHG7KHYHVWLQJLV VXEMHFWWRWKHQDPHGH[HFXWLYHRIILFHU¶VFRQWLQXHGHPSOR\PHQWZLWKXVRQHDFKDSSOLFDEOHYHVWLQJGDWH 2Q$XJXVWRXUERDUGRIGLUHFWRUVJUDQWHG0U&XVVDWWL568VUHSUHVHQWLQJWKHULJKWWRUHFHLYHDQ HTXDOQXPEHURIVKDUHVRI&ODVV$FRPPRQVWRFN7KH568VZHUHVFKHGXOHGWRYHVWRYHUIRXU\HDUVLQTXDUWHUO\ LQVWDOOPHQWVZLWKRIWKH568VYHVWLQJRQHDFK1RYHPEHU)HEUXDU\0D\DQG$XJXVWRYHUWKHIRXU \HDUSHULRGIROORZLQJ$XJXVW 2Q'HFHPEHURXUERDUGRIGLUHFWRUVJUDQWHG0U6DO]EHUJ568VUHSUHVHQWLQJWKHULJKWWRUHFHLYH DQHTXDOQXPEHURIVKDUHVRI&ODVV$FRPPRQVWRFN7KH568VDUHVFKHGXOHGWRYHVWLQIXOORQWKHILUVWDQQLYHUVDU\RI WKHLUJUDQWGDWH7KHYHVWLQJLVVXEMHFWWR0U6DO]EHUJ¶VFRQWLQXHGHPSOR\PHQWZLWKXVRUVHUYLFHDVDPHPEHURIWKH ERDUGRIGLUHFWRUVRQWKHYHVWLQJGDWH 


  • Page 32

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²  ²        ²  ²     ² ²  ² ²    0DWWKHZ%6DO]EHUJ            ²  ²   ² ²  ² ²      ² ²  ² ²    3DEOR&XVVDWWL             ²    ²  ² -DUHG&OXII                   ²  ²          ²  ²          ²  ²   ² ²  ² ²    ,OLD03DSDV                  ²  ²   ² ²  ² ²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¶VHPSOR\PHQWZLWKXVHQGHGHIIHFWLYH'HFHPEHUDQGXSRQWKHFHVVDWLRQRIKLVHPSOR\PHQW DQ\XQYHVWHGHTXLW\DZDUGVZHUHIRUIHLWHG   RIWKHVKDUHVRIRXU&ODVV%FRPPRQVWRFNVXEMHFWWRWKLVRSWLRQJUDQWHGXQGHUWKH(TXLW\,QFHQWLYH3ODQ YHVWHGRQ6HSWHPEHUDQGWKHEDODQFHYHVWVLQVXFFHVVLYHHTXDOPRQWKO\LQVWDOOPHQWVWKHUHDIWHUVXEMHFW WRFRQWLQXHGVHUYLFHZLWKXVWKURXJKHDFKVXFKYHVWLQJGDWH   RIWKHVKDUHVRIRXU&ODVV%FRPPRQVWRFNVXEMHFWWRWKLVRSWLRQJUDQWHGXQGHUWKH(TXLW\,QFHQWLYH3ODQ YHVWHGRQ)HEUXDU\DQGWKHEDODQFHYHVWVLQVXFFHVVLYHHTXDOPRQWKO\LQVWDOOPHQWVWKHUHDIWHUVXEMHFWWR FRQWLQXHGVHUYLFHZLWKXVWKURXJKHDFKVXFKYHVWLQJGDWH   RIWKHVKDUHVRIRXU&ODVV%FRPPRQVWRFNVXEMHFWWRWKLVRSWLRQJUDQWHGXQGHUWKH(TXLW\,QFHQWLYH3ODQ YHVWHGRQ0DUFKDQGWKHEDODQFHYHVWVLQVXFFHVVLYHHTXDOPRQWKO\LQVWDOOPHQWVWKHUHDIWHUVXEMHFWWR FRQWLQXHGVHUYLFHZLWKXVWKURXJKHDFKVXFKYHVWLQJGDWH   


  • Page 33

    (TXLW\&RPSHQVDWLRQ3ODQ,QIRUPDWLRQ 2XUHTXLW\FRPSHQVDWLRQSODQVFRQVLVWRIRXU(TXLW\,QFHQWLYH3ODQDQGRXU(TXLW\,QFHQWLYH3ODQ 3ULRUWRRXU,32ZHJUDQWHGDZDUGVXQGHUWKH(TXLW\,QFHQWLYH3ODQ)ROORZLQJRXU,32DQ\UHPDLQLQJVKDUHV DYDLODEOHIRULVVXDQFHXQGHURXU(TXLW\,QFHQWLYH3ODQZHUHDGGHGWRWKHVKDUHVUHVHUYHGXQGHURXU(TXLW\ ,QFHQWLYH3ODQ 7KHIROORZLQJWDEOHVKRZVFHUWDLQLQIRUPDWLRQFRQFHUQLQJDOORIRXUHTXLW\FRPSHQVDWLRQSODQVLQHIIHFWDVRI 'HFHPEHU          1XPEHURIVHFXULWLHVWREHLVVXHG :HLJKWHGDYHUDJHH[HUFLVHSULFHRI 1XPEHURIVHFXULWLHVUHPDLQLQJ XSRQH[HUFLVHRIRXWVWDQGLQJRSWLRQV RXWVWDQGLQJRSWLRQVZDUUDQWVDQG DYDLODEOHIRUIXWXUHLVVXDQFHXQGHU   ZDUUDQWVDQGULJKWV  ULJKWV    HTXLW\FRPSHQVDWLRQSODQV  (TXLW\FRPSHQVDWLRQSODQV DSSURYHGE\VHFXULW\ KROGHUV         (TXLW\ ,QFHQWLYH3ODQ         ² (TXLW\ ,QFHQWLYH3ODQ        ²  (TXLW\FRPSHQVDWLRQ SODQVQRWDSSURYHGE\ VHFXULW\KROGHUV         ²  ² ² 7RWDO                        7KHZHLJKWHGDYHUDJHH[HUFLVHSULFHLVFDOFXODWHGEDVHGVROHO\RQRXWVWDQGLQJVWRFNRSWLRQV,WGRHVQRWWDNHLQWR DFFRXQWWKHVKDUHVRIRXUFRPPRQVWRFNXQGHUO\LQJUHVWULFWHGVWRFNXQLWVZKLFKKDYHQRH[HUFLVHSULFH 3RWHQWLDO3D\PHQWV8SRQ7HUPLQDWLRQRU&KDQJHLQ&RQWURO 7KH%OXH$SURQ+ROGLQJV,QF([HFXWLYH6HYHUDQFH%HQHILWV3ODQDGRSWHGE\RXUFRPSHQVDWLRQFRPPLWWHHLQ )HEUXDU\ WKH³6HYHUDQFH3ODQ´ SURYLGHVFHUWDLQGHVLJQDWHGHOLJLEOHIXOOWLPHH[HFXWLYHVRIWKHFRPSDQ\RUDQ\RI LWVVXEVLGLDULHVZKRVHSRVLWLRQJHQHUDOO\LVDWRUDERYHWKHOHYHORI6HQLRU9LFH3UHVLGHQWRULWVHTXLYDOHQW ³&RYHUHG (PSOR\HHV´ LQFOXGLQJRXUQDPHGH[HFXWLYHRIILFHUVFHUWDLQVHYHUDQFHEHQHILWVXSRQWKHRFFXUUHQFHRIWKHIROORZLQJ HYHQWV HDFKD³&RYHUHG7HUPLQDWLRQ´  D DWHUPLQDWLRQZLWKRXWFDXVH DVGHILQHGLQWKH6HYHUDQFH3ODQ SULRUWRD FKDQJHLQFRQWURO DVGHILQHGLQWKH6HYHUDQFH3ODQ  E ZLWKUHVSHFWWR0U'LFNHUVRQDQGFHUWDLQRWKHUGHVLJQDWHG H[HFXWLYHVDWHUPLQDWLRQZLWKRXWFDXVHRUDUHVLJQDWLRQIRUJRRGUHDVRQ DVGHILQHGLQWKH6HYHUDQFH3ODQ LQHLWKHUFDVH SULRUWRDFKDQJHLQFRQWURODQG F DWHUPLQDWLRQZLWKRXWFDXVHRUDUHVLJQDWLRQIRUJRRGUHDVRQLQHLWKHUFDVHZLWKLQ PRQWKVIROORZLQJDFKDQJHLQFRQWURO D³&KDQJHLQ&RQWURO7HUPLQDWLRQ´  7KH6HYHUDQFH3ODQDGPLQLVWUDWRULVRXUERDUGRIGLUHFWRUVRUDFRPPLWWHHWKHUHRIGHVLJQDWHGE\RXUERDUGRI GLUHFWRUV3XUVXDQWWRWKH6HYHUDQFH3ODQHDFK&RYHUHG(PSOR\HHZKRLVVXEMHFWWRD&RYHUHG7HUPLQDWLRQLVHQWLWOHG WR • FRQWLQXDWLRQRIVXFK&RYHUHG(PSOR\HH¶VPRQWKO\EDVHVDODU\ DVGHILQHGLQWKH6HYHUDQFH3ODQ IRUD SHULRGRIPRQWKVLQWKHFDVHRIWKHFRPSDQ\¶VFKLHIH[HFXWLYHRIILFHURUVL[PRQWKVLQWKHFDVHRIRWKHU &RYHUHG(PSOR\HHV DVDSSOLFDEOHWKH³6HYHUDQFH3HULRG´ IROORZLQJVXFKWHUPLQDWLRQ • LQWKHHYHQWVXFK&RYHUHG(PSOR\HHHOHFWVWRUHFHLYH&RQVROLGDWHG2PQLEXV%XGJHW5HFRQFLOLDWLRQ$FWRU &2%5$FRQWLQXDWLRQKHDOWKFRYHUDJHIROORZLQJVXFKWHUPLQDWLRQSD\PHQWE\WKHFRPSDQ\RIDSRUWLRQRI WKHFRVWRI&2%5$FRQWLQXDWLRQKHDOWKFRYHUDJHIRUWKH&RYHUHG(PSOR\HHDQGKLVRUKHUDSSOLFDEOH GHSHQGHQWVWKURXJKWKHHDUOLHVWRI L WKHHQGRIWKH&RYHUHG(PSOR\HH¶V6HYHUDQFH3HULRG LL WKHGDWHRQ ZKLFKWKH&RYHUHG(PSOR\HH¶VQHZEHQHILWVSODQFRYHUDJHFRPPHQFHVZLWKDQHZHPSOR\HUDQG LLL WKH GDWHRQZKLFKVXFK&2%5$FRQWLQXDWLRQKHDOWKFRYHUDJHLVQRORQJHULQIRUFH 


  • Page 34

    • DWWKHUHTXHVWRIWKH&RYHUHG(PSOR\HHDQGDVGHWHUPLQHGLQWKH6HYHUDQFH3ODQDGPLQLVWUDWRU¶VVROH GLVFUHWLRQWKHDUUDQJHPHQWRIDQGSD\PHQWIRUUHDVRQDEOHRXWSODFHPHQWVHUYLFHVE\WKHFRPSDQ\IRUXSWR VL[PRQWKVIROORZLQJWKH&RYHUHG(PSOR\HH¶VGDWHRIWHUPLQDWLRQRIHPSOR\PHQW • DQ\XQSDLGDQQXDORURWKHUERQXVHDUQHGLQUHVSHFWRIDQ\FRPSOHWHGERQXVSHULRGWKDWHQGHGSULRUWRWKH GDWHRIWKH&RYHUHG(PSOR\HH¶V&RYHUHG7HUPLQDWLRQWKDWWKH6HYHUDQFH3ODQDGPLQLVWUDWRUGHWHUPLQHVWREH SD\DEOHWRWKH&RYHUHG(PSOR\HHLQLWVGLVFUHWLRQSXUVXDQWWRWKHFRPSDQ\¶VFRQWLQJHQWFRPSHQVDWLRQ SURJUDP • VROHO\LQWKHFDVHRID&KDQJHLQ&RQWURO7HUPLQDWLRQDOXPSVXPSD\PHQWLQDQDPRXQWHTXDOWRWKH SURUDWHGSRUWLRQRIWKH&RYHUHG(PSOR\HH¶VDQQXDOWDUJHWERQXVIRUWKH\HDURIWKH&RYHUHG7HUPLQDWLRQ DQG •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³FDWFKXS´FRQWULEXWLRQV8QGHUWKH N SODQHDFKHPSOR\HHLVIXOO\YHVWHGLQ KLVRUKHUGHIHUUHGVDODU\FRQWULEXWLRQV(PSOR\HHFRQWULEXWLRQVDUHKHOGDQGLQYHVWHGE\WKHSODQ¶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• IRUDQ\EUHDFKRIWKHGLUHFWRU¶VGXW\RIOR\DOW\WRXVRURXUVWRFNKROGHUV • IRUDFWVRURPLVVLRQVQRWLQJRRGIDLWKRUZKLFKLQYROYHLQWHQWLRQDOPLVFRQGXFWRUDNQRZLQJYLRODWLRQRI ODZ • IRUYRWLQJRUDVVHQWLQJWRXQODZIXOSD\PHQWVRIGLYLGHQGVVWRFNUHSXUFKDVHVRURWKHUGLVWULEXWLRQVRU • IRUDQ\WUDQVDFWLRQIURPZKLFKWKHGLUHFWRUGHULYHGDQLPSURSHUSHUVRQDOEHQHILW $Q\DPHQGPHQWWRRUUHSHDORIWKHVHSURYLVLRQVZLOOQRWHOLPLQDWHRUUHGXFHWKHHIIHFWRIWKHVHSURYLVLRQVLQ UHVSHFWRIDQ\DFWRPLVVLRQRUFODLPWKDWRFFXUUHGRUDURVHSULRUWRVXFKDPHQGPHQWRUUHSHDO,IWKH'HODZDUH*HQHUDO &RUSRUDWLRQ/DZLVDPHQGHGWRSURYLGHIRUIXUWKHUOLPLWDWLRQVRQWKHSHUVRQDOOLDELOLW\RIGLUHFWRUVRIFRUSRUDWLRQVWKHQ 


  • Page 35

    WKHSHUVRQDOOLDELOLW\RIRXUGLUHFWRUVZLOOEHIXUWKHUOLPLWHGWRWKHJUHDWHVWH[WHQWSHUPLWWHGE\WKH'HODZDUH*HQHUDO &RUSRUDWLRQ/DZ ,QDGGLWLRQRXUUHVWDWHGFHUWLILFDWHRILQFRUSRUDWLRQSURYLGHVWKDWZHPXVWLQGHPQLI\RXUGLUHFWRUVDQGRIILFHUV DQGZHPXVWDGYDQFHH[SHQVHVLQFOXGLQJDWWRUQH\V¶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¶IHHVMXGJPHQWVILQHVDQGVHWWOHPHQWDPRXQWVLQFXUUHGE\KLPLQDQ\DFWLRQRUSURFHHGLQJDULVLQJRXWRIKLV VHUYLFHDVRQHRIRXUGLUHFWRUV &HUWDLQRIRXUQRQHPSOR\HHGLUHFWRUVPD\WKURXJKWKHLUUHODWLRQVKLSVZLWKWKHLUHPSOR\HUVEHLQVXUHGDQGRU LQGHPQLILHGDJDLQVWFHUWDLQOLDELOLWLHVLQFXUUHGLQWKHLUFDSDFLW\DVPHPEHUVRIRXUERDUGRIGLUHFWRUV:HKDYHDJUHHG WKDWZHZLOOEHWKHLQGHPQLWRURI³ILUVWUHVRUW´KRZHYHUZLWKUHVSHFWWRDQ\FODLPVDJDLQVWWKHVHGLUHFWRUVIRU LQGHPQLILFDWLRQFODLPVWKDWDUHLQGHPQLILDEOHE\ERWKXVDQGWKHLUHPSOR\HUV$FFRUGLQJO\WRWKHH[WHQWWKDW LQGHPQLILFDWLRQLVSHUPLVVLEOHXQGHUDSSOLFDEOHODZZHZLOOKDYHIXOOOLDELOLW\IRUVXFKFODLPV LQFOXGLQJIRUWKH DGYDQFHPHQWRIDQ\H[SHQVHV DQGZHKDYHZDLYHGDOOUHODWHGULJKWVRIFRQWULEXWLRQVXEURJDWLRQRURWKHUUHFRYHU\WKDW ZHPLJKWRWKHUZLVHKDYHDJDLQVWWKHVHGLUHFWRUV¶HPSOR\HUV   


  • Page 36

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¶VLQLWLDOHOHFWLRQWRRXUERDUGRIGLUHFWRUVZKLFKDPRXQWVKDOOEHSURUDWHGEDVHGRQWLPHXQWLOWKHFRPSDQ\¶V QH[WVFKHGXOHGDQQXDOPHHWLQJRIVWRFNKROGHUV6XFK568DZDUGZLOOYHVWLQIXOORQWKHILUVWDQQLYHUVDU\RIWKHJUDQW GDWH$OO568DZDUGVJUDQWHGWRRXUQRQHPSOR\HHGLUHFWRUVSURYLGHIRUWKHLPPHGLDWHDFFHOHUDWLRQRIDOOYHVWLQJ WKHUHXQGHULQWKHHYHQWRIDFKDQJHLQFRQWURO (DFKQRQHPSOR\HHGLUHFWRULVHOLJLEOHWRUHFHLYHFRPSHQVDWLRQIRUKLVRUKHUVHUYLFHRQRXUERDUGRIGLUHFWRUVRU FRPPLWWHHVWKHUHRIFRQVLVWLQJRIDQQXDOFDVKUHWDLQHUVSDLGTXDUWHUO\LQDUUHDUVDVIROORZV7KHDQQXDOUHWDLQHUIRUQRQ HPSOR\HHGLUHFWRUVLV$GGLWLRQDODQQXDOUHWDLQHUVDUHDVIROORZVOHDGLQGHSHQGHQWGLUHFWRU  WKH FKDLUPDQRIWKHDXGLWFRPPLWWHH  WKHFKDLUPDQRIWKHFRPSHQVDWLRQFRPPLWWHH  WKHFKDLUPDQRIWKH QRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFHFRPPLWWHH  QRQFKDLUPHPEHURIDXGLWFRPPLWWHH  QRQFKDLU PHPEHURIFRPSHQVDWLRQFRPPLWWHH  DQGQRQFKDLUPHPEHURIWKHQRPLQDWLQJDQGFRUSRUDWHJRYHUQDQFH FRPPLWWHH   :HKDYHDSROLF\RIUHLPEXUVLQJRXUGLUHFWRUVIRUWKHLUUHDVRQDEOHRXWRISRFNHWH[SHQVHVLQFXUUHGLQDWWHQGLQJ ERDUGRIGLUHFWRUVDQGFRPPLWWHHPHHWLQJV 7KHWDEOHEHORZVKRZVDOOFRPSHQVDWLRQWRRXUQRQHPSOR\HHGLUHFWRUVGXULQJ               )HHVHDUQHG RUSDLGLQFDVK 6WRFNDZDUGV 2SWLRQDZDUGV 7RWDO 1DPH             -XOLH0%%UDGOH\                                                     ²   7UDF\%ULWW&RRO                                                          .HQQHWK$)R[                                                       ²   5REHUW3*RRGPDQ                                                    ²   *DU\5+LUVKEHUJ                                                     ²   %ULDQ3.HOOH\                                                             2XUQRQHPSOR\HHGLUHFWRUFRPSHQVDWLRQSROLF\ZDVDGRSWHGLQ$XJXVW7KHIHHVHDUQHGE\RXUQRQHPSOR\HH GLUHFWRUVLQUHSUHVHQWDSURUDWDSRUWLRQRIWKHDQQXDOFDVKUHWDLQHUVGLVFXVVHGDERYH   7KHYDOXHVGLVFORVHGUHSUHVHQWWKHDJJUHJDWHJUDQWGDWHIDLUYDOXHRIUHVWULFWHGVWRFNXQLWVJUDQWHGWRWKHGLUHFWRU FDOFXODWHGLQDFFRUGDQFHZLWK)$6%$6&7RSLF7KHDVVXPSWLRQVXVHGLQFDOFXODWLQJWKHJUDQWGDWHIDLUYDOXH RIWKHUHVWULFWHGVWRFNXQLWJUDQWVUHSRUWHGLQWKLVFROXPQDUHVHWIRUWKLQWKHQRWHVWRRXUFRQVROLGDWHGILQDQFLDO VWDWHPHQWVLQRXU$QQXDO5HSRUWRQ)RUP.IRUWKHILVFDO\HDUHQGHG'HFHPEHU   ,QFRQMXQFWLRQZLWKMRLQLQJRXUERDUGRIGLUHFWRUVLQ-DQXDU\DQG$SULOUHVSHFWLYHO\0V&RRODQG 0U.HOOH\HDFKUHFHLYHGDVWRFNRSWLRQJUDQWWRSXUFKDVHVKDUHVRI&ODVV%FRPPRQVWRFN7KHYDOXHV GLVFORVHGUHSUHVHQWWKHDJJUHJDWHJUDQWGDWHIDLUYDOXHRIRSWLRQVWRSXUFKDVHVKDUHVJUDQWHGWR0V&RRODQG 0U.HOOH\FDOFXODWHGLQDFFRUGDQFHZLWK)$6%$6&7RSLF7KHDVVXPSWLRQVXVHGLQFDOFXODWLQJWKHJUDQWGDWH IDLUYDOXHRIWKHRSWLRQJUDQWVUHSRUWHGLQWKLVFROXPQDUHVHWIRUWKLQWKHQRWHVWRRXUFRQVROLGDWHGILQDQFLDO VWDWHPHQWVLQRXU$QQXDO5HSRUWRQ)RUP.IRUWKHILVFDO\HDUHQGHG'HFHPEHU $VDJHQHUDOPDWWHUZHGRQRWSURYLGHDQ\DGGLWLRQDOFRPSHQVDWLRQWR0U'LFNHUVRQRXUSUHVLGHQWFKLHI H[HFXWLYHRIILFHUFKLHIILQDQFLDORIILFHUDQGWUHDVXUHURU0U6DO]EHUJRXUIRUPHUSUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHU IRUWKHLUVHUYLFHDVPHPEHUVRIRXUERDUGRIGLUHFWRUV,Q1RYHPEHU0U6DO]EHUJUHVLJQHGDVRXUSUHVLGHQWDQG FKLHIH[HFXWLYHRIILFHUUHPDLQLQJDVFKDLUPDQRIWKHERDUGZLWKWKHWLWOHRIH[HFXWLYHFKDLUPDQ%HFDXVHKHVHUYHGDV SUHVLGHQWDQGFKLHIH[HFXWLYHRIILFHUGXULQJ0U6DO]EHUJLVDQDPHGH[HFXWLYHRIILFHUIRU7KHFRPSHQVDWLRQ 


  • Page 37

    SDLGWR0U'LFNHUVRQDQG0U6DO]EHUJLQLVVHWIRUWKDERYHXQGHU³([HFXWLYH&RPSHQVDWLRQ²6XPPDU\ &RPSHQVDWLRQ7DEOH´ 2XUFRPSHQVDWLRQFRPPLWWHHHQJDJHGWKHVHUYLFHVRI&RPSHQVLDDQDWLRQDOPDQDJHPHQWFRQVXOWLQJILUPWR SURYLGHDVVLVWDQFHLQGHYHORSLQJRXUQRQHPSOR\HHGLUHFWRUFRPSHQVDWLRQSROLF\LQFRQMXQFWLRQZLWKEHFRPLQJDSXEOLF FRPSDQ\:HH[SHFWWRUHYLHZQRQHPSOR\HHGLUHFWRUFRPSHQVDWLRQSHULRGLFDOO\ZLWKLQSXWIURPDFRPSHQVDWLRQ FRQVXOWDQW&RPSHQVLDSURYLGHGRXUFRPSHQVDWLRQFRPPLWWHHZLWKFRPSHQVDWLRQVXUYH\GDWDIRUSXUSRVHVRIFRPSDULQJ HDFKFRPSHQVDWLRQFRPSRQHQWZLWKLQRXUQRQHPSOR\HHGLUHFWRUFRPSHQVDWLRQSROLF\²QDPHO\DQQXDOUHWDLQHUVIRU ERDUGDQGFRPPLWWHHPHPEHUVKLSDQGHTXLW\LQFHQWLYHDZDUGV²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¶V3L]]D 3LQQDFOH)RRGV :D\IDLU 'XQNLQ¶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


  • Page 38

    &(57$,15(/$7,216+,36$1'5(/$7('75$16$&7,216 3ROLFLHVDQG3URFHGXUHVIRU5HODWHG3HUVRQ7UDQVDFWLRQV 2XUERDUGRIGLUHFWRUVKDVDGRSWHGZULWWHQSROLFLHVDQGSURFHGXUHVIRUWKHUHYLHZRIDQ\WUDQVDFWLRQDUUDQJHPHQW RUUHODWLRQVKLSLQZKLFKRXUFRPSDQ\LVDSDUWLFLSDQWWKHDPRXQWLQYROYHGH[FHHGVDQGRQHRIRXUH[HFXWLYH RIILFHUVGLUHFWRUVGLUHFWRUQRPLQHHVRUVWRFNKROGHUVRUWKHLULPPHGLDWHIDPLO\PHPEHUVHDFKRIZKRPZHUHIHUWR DVD³UHODWHGSHUVRQ´KDVDGLUHFWRULQGLUHFWPDWHULDOLQWHUHVW ,IDUHODWHGSHUVRQSURSRVHVWRHQWHULQWRVXFKDWUDQVDFWLRQDUUDQJHPHQWRUUHODWLRQVKLSZKLFKZHUHIHUWRDVD ³UHODWHGSHUVRQWUDQVDFWLRQ´WKHUHODWHGSHUVRQPXVWUHSRUWWKHSURSRVHGUHODWHGSHUVRQWUDQVDFWLRQWRRXUJHQHUDO FRXQVHO7KHSROLF\FDOOVIRUWKHSURSRVHGUHODWHGSHUVRQWUDQVDFWLRQWREHUHYLHZHGDQGLIGHHPHGDSSURSULDWH DSSURYHGE\RXUDXGLWFRPPLWWHH:KHQHYHUSUDFWLFDEOHWKHUHSRUWLQJUHYLHZDQGDSSURYDOZLOORFFXUSULRUWRHQWU\LQWR WKHWUDQVDFWLRQ,IDGYDQFHUHYLHZDQGDSSURYDOLVQRWSUDFWLFDEOHRXUDXGLWFRPPLWWHHZLOOUHYLHZDQGLQLWVGLVFUHWLRQ PD\UDWLI\WKHUHODWHGSHUVRQWUDQVDFWLRQ7KHSROLF\DOVRSHUPLWVWKHFKDLURIRXUDXGLWFRPPLWWHHWRUHYLHZDQGLI GHHPHGDSSURSULDWHDSSURYHSURSRVHGUHODWHGSHUVRQWUDQVDFWLRQVWKDWDULVHEHWZHHQDXGLWFRPPLWWHHPHHWLQJVVXEMHFW WRUDWLILFDWLRQE\WKHDXGLWFRPPLWWHHDWLWVQH[WPHHWLQJ$Q\UHODWHGSHUVRQWUDQVDFWLRQVWKDWDUHRQJRLQJLQQDWXUHZLOO EHUHYLHZHGDQQXDOO\ $UHODWHGSHUVRQWUDQVDFWLRQUHYLHZHGXQGHUWKHSROLF\ZLOOEHFRQVLGHUHGDSSURYHGRUUDWLILHGLILWLVDXWKRUL]HG E\RXUDXGLWFRPPLWWHHDIWHUIXOOGLVFORVXUHRIWKHUHODWHGSHUVRQ¶VLQWHUHVWLQWKHWUDQVDFWLRQ$VDSSURSULDWHIRUWKH FLUFXPVWDQFHVRXUDXGLWFRPPLWWHHZLOOUHYLHZDQGFRQVLGHU • WKHUHODWHGSHUVRQ¶VLQWHUHVWLQWKHUHODWHGSHUVRQWUDQVDFWLRQ • WKHDSSUR[LPDWHGROODUYDOXHRIWKHDPRXQWLQYROYHGLQWKHUHODWHGSHUVRQWUDQVDFWLRQ • WKHDSSUR[LPDWHGROODUYDOXHRIWKHDPRXQWRIWKHUHODWHGSHUVRQ¶VLQWHUHVWLQWKHWUDQVDFWLRQZLWKRXWUHJDUG WRWKHDPRXQWRIDQ\SURILWRUORVV • ZKHWKHUWKHWUDQVDFWLRQZDVXQGHUWDNHQLQWKHRUGLQDU\FRXUVHRIRXUEXVLQHVV • ZKHWKHUWKHWHUPVRIWKHWUDQVDFWLRQDUHQROHVVIDYRUDEOHWRXVWKDQWHUPVWKDWFRXOGKDYHEHHQUHDFKHGZLWK DQXQUHODWHGWKLUGSDUW\ • WKHSXUSRVHRIDQGWKHSRWHQWLDOEHQHILWVWRXVRIWKHWUDQVDFWLRQDQG • DQ\RWKHULQIRUPDWLRQUHJDUGLQJWKHUHODWHGSHUVRQWUDQVDFWLRQRUWKHUHODWHGSHUVRQLQWKHFRQWH[WRIWKH SURSRVHGWUDQVDFWLRQWKDWZRXOGEHPDWHULDOWRLQYHVWRUVLQOLJKWRIWKHFLUFXPVWDQFHVRIWKHSDUWLFXODU WUDQVDFWLRQ 2XUDXGLWFRPPLWWHHPD\DSSURYHRUUDWLI\WKHWUDQVDFWLRQRQO\LILWGHWHUPLQHVWKDWXQGHUDOORIWKH FLUFXPVWDQFHVWKHWUDQVDFWLRQLVLQRULVQRWLQFRQVLVWHQWZLWKRXUFRPSDQ\¶VEHVWLQWHUHVWV2XUDXGLWFRPPLWWHHPD\ LPSRVHDQ\FRQGLWLRQVRQWKHUHODWHGSHUVRQWUDQVDFWLRQWKDWLWGHHPVDSSURSULDWH 3XUVXDQWWRWKH6(&¶VUHODWHGSHUVRQWUDQVDFWLRQGLVFORVXUHUXOHWKHIROORZLQJWUDQVDFWLRQVGRQRWFUHDWHD PDWHULDOGLUHFWRULQGLUHFWLQWHUHVWRQEHKDOIRIUHODWHGSHUVRQVDQGWKHUHIRUHDUHQRWUHODWHGSHUVRQWUDQVDFWLRQVIRU SXUSRVHVRIWKHSROLF\ • LQWHUHVWVDULVLQJRQO\IURPWKHUHODWHGSHUVRQ¶VSRVLWLRQDVDGLUHFWRURIDQRWKHUFRUSRUDWLRQRURUJDQL]DWLRQ WKDWLVDSDUW\WRWKHWUDQVDFWLRQ • LQWHUHVWVDULVLQJRQO\IURPWKHGLUHFWRULQGLUHFWRZQHUVKLSE\WKHUHODWHGSHUVRQDQGDOORWKHUUHODWHGSHUVRQV LQWKHDJJUHJDWHRIOHVVWKDQDHTXLW\LQWHUHVW RWKHUWKDQDJHQHUDOSDUWQHUVKLSLQWHUHVW LQDQRWKHUHQWLW\ ZKLFKLVDSDUW\WRWKHWUDQVDFWLRQ 


  • Page 39

    • LQWHUHVWVDULVLQJVROHO\IURPWKHRZQHUVKLSRIDFODVVRIRXUHTXLW\VHFXULWLHVLIDOOKROGHUVRIWKDWFODVVRI HTXLW\VHFXULWLHVUHFHLYHWKHVDPHEHQHILWRQDSURUDWDEDVLV • FRPSHQVDWLRQDUUDQJHPHQWVZLWKH[HFXWLYHRIILFHUVLIWKHFRPSHQVDWLRQKDVEHHQDSSURYHGRUUHFRPPHQGHG WRWKHERDUGRIGLUHFWRUVIRUDSSURYDOE\RXUFRPSHQVDWLRQFRPPLWWHH • FRPSHQVDWLRQIRUVHUYLFHVDVDGLUHFWRURIRXUFRPSDQ\LIVXFKFRPSHQVDWLRQZLOOEHSXEOLFO\UHSRUWHG SXUVXDQWWR6(&UXOHV • LQWHUHVWVDULVLQJVROHO\IURPLQGHEWHGQHVVRIDVWRFNKROGHURUDQLPPHGLDWHIDPLO\PHPEHURID VWRFNKROGHU • DWUDQVDFWLRQZKHUHWKHUDWHVRUFKDUJHVLQYROYHGLQWKHWUDQVDFWLRQDUHGHWHUPLQHGE\FRPSHWLWLYHELGV • DWUDQVDFWLRQWKDWLQYROYHVWKHUHQGHULQJRIVHUYLFHVDVDFRPPRQRUFRQWUDFWFDUULHURUSXEOLFXWLOLW\DWUDWHV RUFKDUJHVIL[HGLQFRQIRUPLW\ZLWKODZRUJRYHUQPHQWDODXWKRULW\DQG • DWUDQVDFWLRQWKDWLQYROYHVVHUYLFHVDVDEDQNGHSRVLWDU\RIIXQGVWUDQVIHUDJHQWUHJLVWUDUWUXVWHHXQGHUD WUXVWLQGHQWXUHRUVLPLODUVHUYLFHV ,QDGGLWLRQRXUERDUGRIGLUHFWRUVKDVGHWHUPLQHGWKDWWUDQVDFWLRQVWKDWDUHVSHFLILFDOO\FRQWHPSODWHGE\RXU FRUSRUDWHFKDUWHURUE\ODZVDUHQRWUHODWHGSHUVRQWUDQVDFWLRQVIRUSXUSRVHVRIWKHSROLF\7KHSROLF\SURYLGHVWKDW WUDQVDFWLRQVLQYROYLQJFRPSHQVDWLRQRIH[HFXWLYHRIILFHUVVKDOOEHUHYLHZHGDQGDSSURYHGE\RXUFRPSHQVDWLRQ FRPPLWWHHLQWKHPDQQHUVSHFLILHGLQLWVFKDUWHU :HGLGQRWKDYHDZULWWHQSROLF\UHJDUGLQJWKHUHYLHZDQGDSSURYDORIUHODWHGSHUVRQWUDQVDFWLRQVSULRUWRRXU,32 LQ-XQH1HYHUWKHOHVVZLWKUHVSHFWWRVXFKWUDQVDFWLRQVLWZDVKLVWRULFDOO\WKHSUDFWLFHRIRXUERDUGRIGLUHFWRUVWR FRQVLGHUWKHQDWXUHRIDQGEXVLQHVVUHDVRQVIRUVXFKWUDQVDFWLRQVKRZWKHWHUPVRIVXFKWUDQVDFWLRQVFRPSDUHGWRWKRVH ZKLFKPLJKWEHREWDLQHGIURPXQUHODWHGWKLUGSDUWLHVDQGZKHWKHUVXFKWUDQVDFWLRQVZHUHRWKHUZLVHIDLUWRDQGLQWKHEHVW LQWHUHVWVRIRUQRWFRQWUDU\WRRXUFRPSDQ\¶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urchases in our Initial Public Offering (QWLWLHVDIILOLDWHGZLWK)LGHOLW\ZKLFKDWWKHWLPHZDVRQHRIRXUVWRFNKROGHUVSXUFKDVHGDQDJJUHJDWHRI VKDUHVRI&ODVV$FRPPRQVWRFNLQRXU,32LQ-XQHDWWKHSULFHWRWKHSXEOLFRISHUVKDUHIRUDQ DJJUHJDWHSXUFKDVHSULFHRI Directed Share Program $WRXUUHTXHVWWKHXQGHUZULWHUVLQRXU,32UHVHUYHGIRUVDOHDWWKHLQLWLDOSXEOLFRIIHULQJSULFHXSWRRIWKH VKDUHVRI&ODVV$FRPPRQVWRFNRIIHUHGLQWKH,32WRFHUWDLQRIRXUHPSOR\HHVDQGWKHLUIULHQGVDQGIDPLO\DQGFHUWDLQ RIRXUVXSSOLHUVDQGYHQGRUVDVSDUWRIDGLUHFWHGVKDUHSURJUDP7KHVDOHVXQGHUWKHGLUHFWHGVKDUHSURJUDPZHUHPDGH DWRXUGLUHFWLRQE\)LGHOLW\&DSLWDO0DUNHWVDGLYLVLRQRI1DWLRQDO)LQDQFLDO6HUYLFHV//&ZKLFKDUHHDFKDIILOLDWHG ZLWK)LGHOLW\ZKLFKDWWKHWLPHZDVRQHRIRXUVWRFNKROGHUV)LGHOLW\&DSLWDO0DUNHWVUHFHLYHGDVWDQGDUGVDOHV FRQFHVVLRQRQWKHVKDUHVRI&ODVV$FRPPRQVWRFNGLVWULEXWHGDVSDUWRIWKHGLUHFWHGVKDUHSURJUDP%DVHGRQWKHVDOHRI VKDUHVRI&ODVV$FRPPRQVWRFNLQWKHGLUHFWHGVKDUHSURJUDP UHIOHFWLQJRIWKHVKDUHVRIIHUHG LQWKH,32 DWWKHLQLWLDOSXEOLFRIIHULQJSULFHRISHUVKDUH)LGHOLW\&DSLWDO0DUNHWVZDVSDLGWRWDOVDOHV FRPPLVVLRQVRIDSSUR[LPDWHO\ 


  • Page 40

    Convertible Note Financing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egistration Rights :HDUHDSDUW\WRDQLQYHVWRUV¶ULJKWVDJUHHPHQWRULJLQDOO\HQWHUHGLQWRLQ-DQXDU\DQGPRVWUHFHQWO\ DPHQGHGDQGUHVWDWHGLQ0D\ZLWKRXUVLJQLILFDQWVWRFNKROGHUVLQFOXGLQJHQWLWLHVDIILOLDWHGZLWK%HVVHPHU 9HQWXUH3DUWQHUV,OLD03DSDV0DWWKHZ%6DO]EHUJ)DPLO\7UXVW&UHDWHG8QGHU$UWLFOH9RIWKH0DWWKHZ6DO]EHUJ $QQXLW\7UXVW$JUHHPHQWDQG7KH0DWWKHZ6DO]EHUJ)DPLO\7UXVW7KHLQYHVWRUV¶ULJKWVDJUHHPHQWSURYLGHV WKHVHKROGHUVWKHULJKWWRGHPDQGWKDWZHILOHDUHJLVWUDWLRQVWDWHPHQWRUUHTXHVWWKDWWKHLUVKDUHVEHLQFOXGHGLQD UHJLVWUDWLRQVWDWHPHQWWKDWZHDUHRWKHUZLVHILOLQJ3XUVXDQWWRWKHLQYHVWRUV¶ULJKWVDJUHHPHQWZHDUHUHTXLUHGWRSD\DOO UHJLVWUDWLRQH[SHQVHVDQGLQGHPQLI\WKHVHKROGHUVZLWKUHVSHFWWRHDFKUHJLVWUDWLRQRIUHJLVWUDEOHVKDUHVWKDWLVHIIHFWHG Indemnification Agreements 2XUUHVWDWHGFHUWLILFDWHRILQFRUSRUDWLRQSURYLGHVWKDWZHZLOOLQGHPQLI\RXURIILFHUVDQGGLUHFWRUVWRWKHIXOOHVW H[WHQWSHUPLWWHGE\'HODZDUHODZ,QDGGLWLRQZHKDYHHQWHUHGLQWRLQGHPQLILFDWLRQDJUHHPHQWVZLWKDOORIRXUGLUHFWRUV DQGH[HFXWLYHRIILFHUV Arrangements with Executive Officers and Directors )RUDGHVFULSWLRQRIWKHFRPSHQVDWLRQDUUDQJHPHQWVWKDWZHKDYHZLWKRXUH[HFXWLYHRIILFHUVDQGGLUHFWRUVVHH ³([HFXWLYH&RPSHQVDWLRQ´   


  • Page 41

    75$16$&7,212)27+(5%86,1(66 2XUERDUGRIGLUHFWRUVNQRZVRIQRRWKHUPDWWHUVWKDWZLOOEHSUHVHQWHGIRUFRQVLGHUDWLRQDWWKH$QQXDO0HHWLQJ,I DQ\RWKHUPDWWHUVDUHSURSHUO\EURXJKWEHIRUHWKH$QQXDO0HHWLQJWKHSHUVRQVDSSRLQWHGLQWKHDFFRPSDQ\LQJSUR[\ LQWHQGWRYRWHWKHVKDUHVUHSUHVHQWHGWKHUHE\LQDFFRUGDQFHZLWKWKHLUEHVWMXGJPHQWRQVXFKPDWWHUVXQGHUDSSOLFDEOH ODZV $'',7,21$/,1)250$7,21 3URFHGXUHVIRU6XEPLWWLQJ6WRFNKROGHU3URSRVDOV Requirements for Stockholder Proposals to be Brought Before the Annual Meeting. 2XUDPHQGHGDQGUHVWDWHGE\ ODZVSURYLGHWKDWIRUQRPLQDWLRQVRISHUVRQVIRUHOHFWLRQWRRXUERDUGRIGLUHFWRUVRURWKHUSURSRVDOVWREHFRQVLGHUHGDW DQDQQXDOPHHWLQJRIVWRFNKROGHUVDVWRFNKROGHUPXVWJLYHZULWWHQQRWLFHWRRXU6HFUHWDU\DW:HVWUG6WUHHW1HZ <RUN1<QRWODWHUWKDQWKHFORVHRIEXVLQHVVGD\VQRUHDUOLHUWKDQWKHFORVHRIEXVLQHVVGD\VSULRUWRWKH ILUVWDQQLYHUVDU\RIWKHGDWHRIWKHSUHFHGLQJ\HDU¶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¶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¶VQRWLFHWREHGHOLYHUHGWRRXU 6HFUHWDU\DWWKHDGGUHVVVHWIRUWKDERYHQRWODWHUWKDQWKHFORVHRIEXVLQHVVRQ0DUFKLQRUGHUWREHWLPHO\ Requirements for Stockholder Proposals to be Considered for Inclusion in the Company’s Proxy Materials,Q DGGLWLRQWRWKHUHTXLUHPHQWVVWDWHGDERYHDQ\VWRFNKROGHUZKRZLVKHVWRVXEPLWDSURSRVDOIRULQFOXVLRQLQRXUSUR[\ PDWHULDOVPXVWFRPSO\ZLWK5XOHDSURPXOJDWHGXQGHUWKH([FKDQJH$FW)RUVXFKSURSRVDOVWREHLQFOXGHGLQRXU SUR[\PDWHULDOVUHODWLQJWRRXUDQQXDOPHHWLQJRIVWRFNKROGHUVDOODSSOLFDEOHUHTXLUHPHQWVRI5XOHDPXVWEH VDWLVILHGDQGZHPXVWUHFHLYHVXFKSURSRVDOVQRODWHUWKDQ'HFHPEHU6XFKSURSRVDOVPXVWEHGHOLYHUHGWRRXU 6HFUHWDU\FR%OXH$SURQ+ROGLQJV,QF:HVWUG6WUHHW1HZ<RUN1<  


  • Page 42

    2017 Annual Report on Form 10-K


  • Page 43

    81,7('67$7(6 6(&85,7,(6$1'(;&+$1*(&200,66,21 :DVKLQJWRQ'&  )250.  0DUN2QH   _ $118$/5(325738568$17726(&7,2125 G 2)7+(6(&85,7,(6(;&+$1*($&72)  )RUWKHILVFDO\HDUHQGHG'HFHPEHU  25  † 75$16,7,215(325738568$17726(&7,2125 G 2)7+(6(&85,7,(6(;&+$1*($&72)  )RUWKHWUDQVLWLRQSHULRGIURPWR  &RPPLVVLRQILOHQXPEHU  %OXH$SURQ+ROGLQJV,QF ([DFWQDPHRIUHJLVWUDQWDVVSHFLILHGLQLWVFKDUWHU      'HODZDUH   6WDWHRU2WKHU-XULVGLFWLRQRI,QFRUSRUDWLRQRU2UJDQL]DWLRQ   ,56(PSOR\HU,GHQWLILFDWLRQ1R     :HVWUG6WUHHW1HZ<RUN1HZ<RUN   $GGUHVVRI3ULQFLSDO([HFXWLYH2IILFHV   =LS&RGH   5HJLVWUDQW¶VWHOHSKRQHQXPEHULQFOXGLQJDUHDFRGH    6HFXULWLHVUHJLVWHUHGSXUVXDQWWR6HFWLRQ E RIWKH$FW     7LWOHRIHDFKFODVV  1DPHRIHDFKH[FKDQJHRQZKLFKUHJLVWHUHG    &ODVV$&RPPRQ6WRFNSDUYDOXH  1HZ<RUN6WRFN([FKDQJH  6HFXULWLHVUHJLVWHUHGSXUVXDQWWR6HFWLRQ J RIWKH$FW  1RQH  ,QGLFDWHE\FKHFNPDUNLIWKHUHJLVWUDQWLVDZHOONQRZQVHDVRQHGLVVXHUDVGHILQHGLQ5XOHRIWKH6HFXULWLHV$FW <HV† 1R_  ,QGLFDWHE\FKHFNPDUNLIWKHUHJLVWUDQWLVQRWUHTXLUHGWRILOHUHSRUWVSXUVXDQWWR6HFWLRQRU6HFWLRQ G RIWKH$FW    <HV† 1R_  ,QGLFDWHE\FKHFNPDUNZKHWKHUWKHUHJLVWUDQW  KDVILOHGDOOUHSRUWVUHTXLUHGWREHILOHGE\6HFWLRQRU G RIWKH6HFXULWLHV([FKDQJH$FWRIGXULQJWKHSUHFHGLQJPRQWKV  RUIRUVXFKVKRUWHUSHULRGWKDWUHJLVWUDQWZDVUHTXLUHGWRILOHVXFKUHSRUWV DQG  KDVEHHQVXEMHFWWRVXFKILOLQJUHTXLUHPHQWVIRUWKHSDVWGD\V   <HV_ 1R†  ,QGLFDWHE\FKHFNPDUNZKHWKHUWKHUHJLVWUDQWKDVVXEPLWWHGHOHFWURQLFDOO\DQGSRVWHGRQLWVFRUSRUDWH:HEVLWHLIDQ\HYHU\,QWHUDFWLYH'DWD)LOHUHTXLUHGWREHVXEPLWWHGDQGSRVWHG SXUVXDQWWR5XOHRI5HJXODWLRQ67GXULQJWKHSUHFHGLQJPRQWKV RUIRUVXFKVKRUWHUSHULRGWKDWWKHUHJLVWUDQWZDVUHTXLUHGWRVXEPLWDQGSRVWVXFKILOHV      <HV_ 1R†  ,QGLFDWHE\FKHFNPDUNLIGLVFORVXUHRIGHOLQTXHQWILOHUVSXUVXDQWWR,WHPRI5HJXODWLRQ6.LVQRWFRQWDLQHGKHUHLQDQGZLOOQRWEHFRQWDLQHGWRWKHEHVWRIWKHUHJLVWUDQW¶V NQRZOHGJHLQGHILQLWLYHSUR[\RULQIRUPDWLRQVWDWHPHQWVLQFRUSRUDWHGE\UHIHUHQFHLQ3DUW,,,RIWKLV)RUP.RUDQ\DPHQGPHQWWRWKLV)RUP.†  ,QGLFDWHE\FKHFNPDUNZKHWKHUWKHUHJLVWUDQWLVDODUJHDFFHOHUDWHGILOHUDQDFFHOHUDWHGILOHUDQRQDFFHOHUDWHGILOHUVPDOOHUUHSRUWLQJFRPSDQ\RUDQHPHUJLQJJURZWKFRPSDQ\6HH WKHGHILQLWLRQVRI³ODUJHDFFHOHUDWHGILOHU´³DFFHOHUDWHGILOHU´³VPDOOHUUHSRUWLQJFRPSDQ\´DQG³HPHUJLQJJURZWKFRPSDQ\´LQ5XOHERIWKH([FKDQJH$FW  /DUJHDFFHOHUDWHGILOHU† $FFHOHUDWHGILOHU† 6PDOOHUUHSRUWLQJFRPSDQ\† (PHUJLQJJURZWKFRPSDQ\_     1RQDFFHOHUDWHGILOHU_ 'RQRWFKHFNLIDVPDOOHUUHSRUWLQJFRPSDQ\    ,IDQHPHUJLQJJURZWKFRPSDQ\LQGLFDWHE\FKHFNPDUNLIWKHUHJLVWUDQWKDVHOHFWHGQRWWRXVHWKHH[WHQGHGWUDQVLWLRQSHULRGIRUFRPSO\LQJZLWKDQ\QHZRUUHYLVHGILQDQFLDODFFRXQWLQJ VWDQGDUGVSURYLGHGSXUVXDQWWR6HFWLRQ D RIWKH([FKDQJH$FW†  ,QGLFDWHE\FKHFNPDUNZKHWKHUWKHUHJLVWUDQWLVDVKHOOFRPSDQ\ DVGHILQHGE\5XOHERIWKH([FKDQJH$FW     <HV† 1R_  %DVHGRQWKHFORVLQJSULFHRIWKH5HJLVWUDQW¶V&ODVV$&RPPRQ6WRFNRQWKHODVWEXVLQHVVGD\RIWKH5HJLVWUDQW¶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


  • Page 44

    %/8($3521+2/',1*6,1& 7$%/(2)&217(176            3$57,      ,WHP %XVLQHVV                                                                   ,WHP$5LVN)DFWRUV                                                                ,WHP%8QUHVROYHG6WDII&RPPHQWV                                                   ,WHP 3URSHUWLHV                                                                  ,WHP /HJDO3URFHHGLQJV                                                           ,WHP 0LQH6DIHW\'LVFORVXUHV                                                          3$57,,      ,WHP 0DUNHWIRU5HJLVWUDQW¶V&RPPRQ(TXLW\5HODWHG6WRFNKROGHU0DWWHUVDQG,VVXHU   3XUFKDVHVRI(TXLW\6HFXULWLHV                                                ,WHP 6HOHFWHG&RQVROLGDWHG)LQDQFLDO'DWD                                           ,WHP 0DQDJHPHQW¶V'LVFXVVLRQDQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG5HVXOWVRI   2SHUDWLRQV                                                                ,WHP$4XDQWLWDWLYHDQG4XDOLWDWLYH'LVFORVXUHVDERXW0DUNHW5LVN                         ,WHP )LQDQFLDO6WDWHPHQWVDQG6XSSOHPHQWDU\'DWD                                    ,WHP &KDQJHVLQDQG'LVDJUHHPHQWVZLWK$FFRXQWDQWVRQ$FFRXQWLQJDQG)LQDQFLDO   'LVFORVXUH                                                                ,WHP$&RQWUROVDQG3URFHGXUHV                                                      ,WHP%2WKHU,QIRUPDWLRQ                                                               3$57,,,      ,WHP'LUHFWRUV([HFXWLYH2IILFHUVDQG&RUSRUDWH*RYHUQDQFH                           ,WHP([HFXWLYH&RPSHQVDWLRQ                                                      ,WHP6HFXULW\2ZQHUVKLSRI&HUWDLQ%HQHILFLDO2ZQHUVDQG0DQDJHPHQWDQG5HODWHG   6WRFNKROGHU0DWWHUV                                                         ,WHP&HUWDLQ5HODWLRQVKLSVDQG5HODWHG7UDQVDFWLRQVDQG'LUHFWRU,QGHSHQGHQFH           ,WHP3ULQFLSDO$FFRXQWDQW)HHVDQG6HUYLFHV                                             3$57,9      ,WHP([KLELWVDQG)LQDQFLDO6WDWHPHQW6FKHGXOH                                       ,WHP)RUP.6XPPDU\                                                             (;+,%,76,1'(;                                                                         6,*1$785(6                                                                                 8QOHVVWKHFRQWH[WRWKHUZLVHUHTXLUHVZHXVHWKHWHUPV³%OXH$SURQ´WKH³&RPSDQ\´³ZH´³XV´DQG³RXU´LQWKLV  $QQXDO5HSRUWWRUHIHUWR%OXH$SURQ+ROGLQJV,QFDQGZKHUHDSSURSULDWHRXUFRQVROLGDWHGVXEVLGLDULHV     6HH³0DQDJHPHQW¶V'LVFXVVLRQDQG$QDO\VLVRI)LQDQFLDO&RQGLWLRQDQG5HVXOWVRI2SHUDWLRQV±.H\)LQDQFLDODQG  2SHUDWLQJ0HWULFV´IRUWKHGHILQLWLRQVRIWKHIROORZLQJWHUPVXVHGLQWKLV$QQXDO5HSRUW³2UGHUV´³&XVWRPHUV´ ³$YHUDJH2UGHU9DOXH´³2UGHUVSHU&XVWRPHU´DQG³$YHUDJH5HYHQXHSHU&XVWRPHU´       


  • Page 45

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³PD\´³VKRXOG´³H[SHFWV´ ³SODQV´³DQWLFLSDWHV´³FRXOG´³LQWHQGV´³WDUJHW´³SURMHFWV´³FRQWHPSODWHV´³EHOLHYHV´³HVWLPDWHV´³SUHGLFWV´ ³SRWHQWLDO´RU³FRQWLQXH´RUWKHQHJDWLYHRIWKHVHWHUPVRURWKHUVLPLODUH[SUHVVLRQV7KHIRUZDUGORRNLQJVWDWHPHQWVLQ WKLV$QQXDO5HSRUWRQ)RUP.DUHRQO\SUHGLFWLRQV:HKDYHEDVHGWKHVHIRUZDUGORRNLQJVWDWHPHQWVODUJHO\RQRXU FXUUHQWH[SHFWDWLRQVDQGSURMHFWLRQVDERXWIXWXUHHYHQWVDQGILQDQFLDOWUHQGVWKDWZHEHOLHYHPD\DIIHFWRXUEXVLQHVV ILQDQFLDOFRQGLWLRQDQGUHVXOWVRIRSHUDWLRQV7KHVHIRUZDUGORRNLQJVWDWHPHQWVVSHDNRQO\DVRIWKHGDWHRIWKLV$QQXDO 5HSRUWRQ)RUP.DQGDUHVXEMHFWWRDQXPEHURIULVNVXQFHUWDLQWLHVDQGDVVXPSWLRQVGHVFULEHGLQWKH³5LVN)DFWRUV´ VHFWLRQDQGHOVHZKHUHLQWKLV$QQXDO5HSRUWRQ)RUP.%HFDXVHIRUZDUGORRNLQJVWDWHPHQWVDUHLQKHUHQWO\VXEMHFW WRULVNVDQGXQFHUWDLQWLHVVRPHRIZKLFKFDQQRWEHSUHGLFWHGRUTXDQWLILHG\RXVKRXOGQRWUHO\RQWKHVHIRUZDUGORRNLQJ VWDWHPHQWVDVSUHGLFWLRQVRIIXWXUHHYHQWV7KHHYHQWVDQGFLUFXPVWDQFHVUHIOHFWHGLQRXUIRUZDUGORRNLQJVWDWHPHQWV PD\QRWEHDFKLHYHGRURFFXUDQGDFWXDOUHVXOWVFRXOGGLIIHUPDWHULDOO\IURPWKRVHSURMHFWHGLQWKHIRUZDUGORRNLQJ VWDWHPHQWV6RPHRIWKHNH\IDFWRUVWKDWFRXOGFDXVHDFWXDOUHVXOWVWRGLIIHUIURPRXUH[SHFWDWLRQVLQFOXGH x RXUH[SHFWDWLRQVUHJDUGLQJRXUH[SHQVHVDQGUHYHQXHRXUDELOLW\WRPDLQWDLQDQGJURZDGMXVWHG(%,7'$ DQGWRDFKLHYHSURILWDELOLW\WKHVXIILFLHQF\RIRXUFDVKUHVRXUFHVDQGQHHGVIRUDGGLWLRQDOILQDQFLQJ x RXUDELOLW\WRFRVWHIIHFWLYHO\DWWUDFWQHZFXVWRPHUVDQGUHWDLQH[LVWLQJFXVWRPHUV x RXUDELOLW\WRH[SDQGRXUSURGXFWRIIHULQJV x RXUDELOLW\WRPDLQWDLQDQGJURZWKHYDOXHRIRXUEUDQGDQGUHSXWDWLRQ x RXUDELOLW\WRUHVXPHUHYHQXHJURZWKRUWRPDQDJHIXWXUHJURZWKHIIHFWLYHO\ x RXUH[SHFWDWLRQVUHJDUGLQJDQGWKHVWDELOLW\RIRXUVXSSO\FKDLQLQFOXGLQJSRWHQWLDOVKRUWDJHVRU LQWHUUXSWLRQVLQWKHVXSSO\RUGHOLYHU\RILQJUHGLHQWV x RXUDELOLW\WRPDLQWDLQIRRGVDIHW\DQGSUHYHQWIRRGERUQHLOOQHVVLQFLGHQWV x FKDQJHVLQFRQVXPHUWDVWHVDQGSUHIHUHQFHVRULQFRQVXPHUVSHQGLQJ x RXUDELOLW\WRHIIHFWLYHO\FRPSHWH x RXUDELOLW\WRDWWUDFWDQGUHWDLQTXDOLILHGHPSOR\HHVDQGNH\SHUVRQQHO x RXUDELOLW\WRFRPSO\ZLWKPRGLILHGRUQHZODZVDQGUHJXODWLRQVDSSO\LQJWRRXUEXVLQHVV x RXUYXOQHUDELOLW\WRDGYHUVHZHDWKHUFRQGLWLRQVRUQDWXUDOGLVDVWHUVDQG x RXUDELOLW\WRREWDLQDQGPDLQWDLQLQWHOOHFWXDOSURSHUW\SURWHFWLRQ :KLOHZHPD\HOHFWWRXSGDWHWKHVHIRUZDUGORRNLQJVWDWHPHQWVDWVRPHSRLQWLQWKHIXWXUHZKHWKHUDVDUHVXOW RIDQ\QHZLQIRUPDWLRQIXWXUHHYHQWVRURWKHUZLVHZHKDYHQRFXUUHQWLQWHQWLRQRIGRLQJVRH[FHSWWRWKHH[WHQW UHTXLUHGE\DSSOLFDEOHODZ  


  • Page 46

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±±GHPDQGSODQQLQJUHFLSHFUHDWLRQUHFLSH PHUFKDQGLVLQJIXOILOOPHQWRSHUDWLRQVDQGPDUNHWLQJ±±GULYHRXUHQGWRHQGYDOXHFKDLQ 2XU3URGXFWV Meals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³DJUHDWUHFLSHLVFRPSRVHGRILQFUHGLEOHLQJUHGLHQWV´LVDFRUH%OXH$SURQSKLORVRSK\:HDUH FRPPLWWHGWRVRXUFLQJIUHVKKLJKTXDOLW\LQJUHGLHQWVIURPIDUPHUVUDQFKHUVILVKHUPHQDQGDUWLVDQV\HDUURXQG2XU UHFLSHVFKDQJHHYHU\ZHHNEDVHGRQWKHVHDVRQDQGRIWHQIHDWXUHVSHFLDOW\LQJUHGLHQWVQRWUHDGLO\DYDLODEOHHOVHZKHUH %\PHUFKDQGLVLQJWKHVHLQJUHGLHQWVLQWRFDUHIXOO\FUDIWHGUHFLSHVZHDUHDEOHWRLQWURGXFHRXUFXVWRPHUVWRLQJUHGLHQWV WKH\PD\KDYHQHYHUH[SHULHQFHGEHIRUH:HDOVRSDUWQHUZLWKDUWLVDQVXSSOLHUVWRFUHDWHLQJUHGLHQWVVSHFLILFDOO\IRURXU 


  • Page 47

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¶VPRVWUHVSHFWHGVXVWDLQDEOHVHDIRRGRUJDQL]DWLRQV,QWKH ILUVWTXDUWHURIZHDOVRDFTXLUHGWKHDVVHWVRI%15DQFKDSUHPLXPVXSSOLHURIVXVWDLQDEOHEHHISRXOWU\DQGODPE WRIXUWKHUVXSSRUWRXUSKLORVRSK\RQLQJUHGLHQWVWDQGDUGV Wine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pVGHSHQGLQJRQWKHVHDVRQ WDVWLQJQRWHVSDLULQJWLSVDQGWKHVWRU\EHKLQGHDFKZLQH:H DUHDOLFHQVHGZLQHU\DQGFXUUHQWO\VKLSGLUHFWO\WRFXVWRPHUVLQVWDWHVDQG:DVKLQJWRQ'&:HHVWLPDWHWKDWWKHVH VWDWHVWRJHWKHUZLWK:DVKLQJWRQ'&UHSUHVHQWDSSUR[LPDWHO\RIWKH86ZLQHGULQNLQJSRSXODWLRQ2XU FXVWRPHUVFDQFKRRVHWRSXUFKDVHZLQHDORQHRUWRSXUFKDVHERWKPHDOVDQGZLQH$VZLWKRXUPHDOVFXVWRPHUVPD\ FKRRVHWRDFWLYHO\PDQDJHWKHLUZLQHRUGHUVE\DGMXVWLQJGHOLYHULHVWRILWWKHLUVFKHGXOHVRUWKH\PD\VLPSO\VLJQXSDQG UHFHLYHDGHOLYHU\HDFKPRQWK Market %OXH$SURQ0DUNHWRXUHFRPPHUFHPDUNHWSODFHIHDWXUHVDFXUDWHGVHOHFWLRQRIFRRNLQJWRROVXWHQVLOVDQG SDQWU\LWHPVZKLFKDUHWHVWHGDQGUHFRPPHQGHGE\RXUFXOLQDU\WHDP0DQ\RIWKHVHLWHPVDUHQRWDYDLODEOHHOVHZKHUH DQGZHKDYHIRFXVHGRQH[SDQGLQJRXUH[FOXVLYHLWHPVDQGSDUWQHUVKLSV$OORIRXUUHFLSHFDUGVIHDWXUHFRRNLQJWRROV DQGXWHQVLOVIURP%OXH$SURQ0DUNHWFUHDWLQJDQLQWHJUDWHGEUDQGH[SHULHQFHIRURXUFRPPXQLW\RIKRPHFRRNVDQG UHSHDWHGPHUFKDQGLVLQJRSSRUWXQLWLHVIRURXUFRPSDQ\ Digital Experience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upply-Demand Coordination 2XUVXSSO\GHPDQGFRRUGLQDWLRQDFWLYLWLHVLQFOXGHGHPDQGSODQQLQJUHFLSHFUHDWLRQUHFLSHPHUFKDQGLVLQJDQG PDUNHWLQJ:HXVHQHDUWHUPDQGORQJWHUPGHPDQGIRUHFDVWLQJEDVHGRQSURSULHWDU\GDWDDQGVRIWZDUHWRLQIRUP GHFLVLRQVDWHYHU\VWHSRIRXUYDOXHFKDLQIURPGHFLVLRQVDERXWIXOILOOPHQWFHQWHUFDSDFLW\WRFURSSODQQLQJE\RXUIDUP 


  • Page 48

    SDUWQHUVWRSUHGLFWLQJRXUVXSSO\QHHGVWRLQJUHGLHQWSXUFKDVLQJ7KLVSURFHVVFRQWLQXHVWKURXJKUHFLSHFUHDWLRQDQG PHUFKDQGLVLQJDVZHFUDIWUHFLSHVDURXQGDYDLODEOHLQJUHGLHQWVDQGKDYHWKHDELOLW\WRPDNHDGMXVWPHQWVXSWRMXVWD IHZZHHNVSULRUWRIXOILOOPHQW:HKDYHDOVRWDLORUHGRXUPDUNHWLQJVWUDWHJLHVEDVHGRQWKHVHGHPDQGIRUHFDVWVDQG SODQQLQJWRRSWLPL]HRXUPDUNHWLQJUHWXUQRQLQYHVWPHQW Supplier Partnerships 2XUGHHSVXSSOLHUUHODWLRQVKLSVEXLOWRQDIRXQGDWLRQRIWUXVWSURYLGHXVDFFHVVWRDVXSSO\RIKLJKTXDOLW\ LQJUHGLHQWVDQGHQDEOHXVWRUHGXFHFRVWVDQGHQKDQFHXWLOL]DWLRQRIQDWXUDOUHVRXUFHV&XUUHQWVWUDWHJLHVZHHPSOR\ZLWK VRPHRIRXUVXSSOLHUVWRVXSSRUWWKLVDSSURDFKLQFOXGH x :RUNLQJGLUHFWO\ZLWKIDUPHUVUDQFKHUVDQGILVKHUPHQWRSURYLGHIUHVKVXVWDLQDEO\VRXUFHGLQJUHGLHQWVWR RXUFXVWRPHUVDWDFRPSHOOLQJYDOXH x 6KDULQJWRROVDQGLQVLJKWVWRHQDEOHRXUVXSSOLHUVWRLPSURYHWKHLUHIILFLHQF\SURPRWHDJULFXOWXUDOSUDFWLFHV WKDWSULRULWL]HORQJWHUPKHDOWKRIWKHIDUPODQGDQGSURGXFHKLJKTXDOLW\LQJUHGLHQWV x &ROODERUDWLQJZLWKIDUPHUVDQGUDQFKHUVRQPHDWDQGSRXOWU\WKDWPHHWVRXUDQLPDOZHOIDUHVWDQGDUGV JLYLQJXVWKHDELOLW\WRSURYLGHSUHPLXPKXPDQHO\UDLVHGSURGXFWVWRRXUFXVWRPHUVVXFKDVJUDVVIHG EHHIDQGSDVWXUHUDLVHGSRXOWU\ Operations 2XUSXUFKDVLQJSURGXFWLRQIXOILOOPHQWDQGORJLVWLFVRSHUDWLRQVDUHLQWHJUDWHGZLWKRXUGHPDQGPDQDJHPHQW DQGVXSSOLHUUHODWLRQVKLSV6XFFHVVIXOO\LQWHJUDWLQJWKHVHGLVSDUDWHDFWLYLWLHVUHTXLUHVXVWRSRVVHVVDYDULHW\RI FRPSHWHQFLHVDWHDPZLWKGHHSLQJUHGLHQWVSHFLILFUHODWLRQVKLSVDWHFKQRORJ\HQDEOHGSODWIRUPWKDWFRQQHFWVRXU HQGWRHQGRSHUDWLRQVDQGDVFDODEOHDUFKLWHFWXUHWKDWDGDSWVWRVXUJHVLQGHPDQGDVZHOODVYDULDWLRQVLQDYDLODEOH VXSSO\ Informed Purchasing :KLOHZHZRUNGLUHFWO\ZLWKRXUVXSSOLHUVPRQWKVLQDGYDQFHWRSODQRXUVXSSO\QHHGVZHSODFHSXUFKDVH RUGHUVFORVHUWRWKHH[SHFWHGIXOILOOPHQWDIWHUFRRUGLQDWLQJVXSSO\DQGGHPDQGWKURXJKSURFHVVHVVXFKDVUHFLSH PHUFKDQGL]LQJDQGDQDO\]LQJWKHRXWSXWVRIRXUGHPDQGSODQQLQJWRROV Production and Fulfillment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ogistics 2XUORJLVWLFVWHDPGHVLJQVPDQDJHVDQGRSWLPL]HVDJURXQGEDVHGGHOLYHU\QHWZRUNFRPSULVHGRIVHYHUDO WKLUGSDUW\SDUWQHUVFDSDEOHRIGHOLYHULQJWRJHRJUDSKLHVFRYHULQJRYHURIWKH86SRSXODWLRQ:HDQDO\]H RXWERXQGORJLVWLFVRQD]LSFRGHE\]LSFRGHEDVLVWRHQDEOHFRVWHIIHFWLYHDQGWLPHO\GHOLYHU\RIRUGHUVZKLOHDOVR 


  • Page 49

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ur Customers 2XUFXVWRPHUVUHSUHVHQWDEURDGUDQJHRIGHPRJUDSKLFVLQFOXGLQJDZLGHUDQJHRIDJHJURXSVDQGLQFRPHV &XVWRPHUVRIDOONLQGVDUHDEOHWRVXFFHVVIXOO\LQFRUSRUDWH%OXH$SURQLQWRDZLGHYDULHW\RIOLIHVW\OHV 


  • Page 50

      Source: Customer email survey of Blue Apron account holders, November 2017, with 1,243 respondents. :HDOVREHOLHYHRXUFXVWRPHUVURXJKO\PLUURUWKHJHQHUDOJHRJUDSKLFDOSRSXODWLRQGLVWULEXWLRQRIWKH8QLWHG 6WDWHV$FFRUGLQJWRWKH&XUUHQW3RSXODWLRQ6XUYH\E\WKH86&HQVXV%XUHDXWKHWRSWHQVWDWHVDFFRXQWIRU RIWRWDO86KRXVHKROGV6LPLODUO\ZHHVWLPDWHWKDWWKHVHVWDWHVDFFRXQWHGIRURIRXU&XVWRPHUVIRUWKHIRXUWK TXDUWHURI   Source: Blue Apron Customers for the quarter ended December 31, 2017. 

  • View More

Get the full picture and Receive alerts on lawsuits, news articles, publications and more!