UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

LOGMEIN, INC.

(Name of the Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

 

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Notice of 2019 Annual

Meeting of Stockholders

and Proxy Statement

Thursday, May 30, 2019 at 9:00 a.m., Eastern Time

Offices of Latham & Watkins LLP

200 Clarendon Street, 27^th Floor

Boston, MA 02116

 

 

 

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April 12, 2019

Dear Fellow Stockholders:

We are pleased to invite you to our 2019 Annual Meeting of Stockholders, which will take place on Thursday, May 30, 2019 at 9:00 AM, Eastern Time, at the offices of Latham & Watkins LLP, 200 Clarendon Street, 27th Floor, Boston, MA 02116. Annual Meetings play an important role in maintaining communications and understanding among our management, Board of Directors and stockholders.

On the pages following this letter you will find:

We have elected to provide our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” rules. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send to these stockholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials, including our proxy statement and Annual Report to Stockholders, and for voting via the Internet. Providing our proxy materials to stockholders electronically allows us to conserve natural resources, consistent with our Social and Environmental Responsibility Principles, and reduce our printing and mailing costs related to the distribution of our proxy materials. If you wish to receive paper copies of our proxy materials you may do so by following the instructions contained in the Notice.

The ability to have your vote counted at the Annual Meeting is an important stockholder right. Regardless of the number of shares you hold or whether you plan to attend the meeting, we hope that you will promptly cast your vote. You may vote over the Internet, or, if you received printed proxy materials, by mailing a proxy or voting instruction card. Please review the instructions on each of your voting options described in our proxy statement, as well as in the Notice.

Thank you for your ongoing support and continued interest in LogMeIn.

Sincerely,

 

William R. Wagner

President & Chief Executive Officer

 

 

 

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Notice of Annual Meeting of Stockholders

To Be Held on Thursday, May 30, 2019

Notice is hereby given that the 2019 Annual Meeting of Stockholders will be held at the offices of Latham & Watkins LLP, 200 Clarendon Street, 27th Floor, Boston, MA 02116, on Thursday, May 30, 2019, at 9:00 AM, Eastern Time, for the following purposes:

1.  To elect the three nominees identified in the attached proxy statement as members of our Board of Directors to serve as Class I directors for a term of three years;

2.  To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019;

3.  To approve the adoption of our proposed 2019 Employee Stock Purchase Plan (“ESPP”) so that eligible employees may purchase LogMeIn shares pursuant to a plan which is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as amended;

4.  To approve, on an advisory basis, the compensation of our named executive officers; and

5.  To transact other business, if any, that may properly come before the Annual Meeting of Stockholders or any adjournment of the Annual Meeting of Stockholders.

We are taking advantage of the Securities and Exchange Commission rules that allow us to furnish proxy materials to you via the Internet. We believe this will allow us to provide you with the information you need in a manner that is convenient and familiar to you, while also helping us lower our costs to deliver these materials and reduce the environmental impact of our Annual Meeting.

On or about April 12, 2019, we will mail to our stockholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our Annual Meeting as well as our Annual Report to Stockholders for the year ending December 31, 2018, which contains our audited consolidated financial statements and other information of interest to our stockholders. The Notice will also provide instructions on how to vote online or, alternatively, request a paper copy of the proxy materials by mail. Stockholders of record at the close of business on our record date, Wednesday, April 10, 2019, are entitled to receive this Notice and to vote at the Annual Meeting of Stockholders and at any adjournments of such meeting. The stock transfer books of LogMeIn will remain open between the record date and the date of the Annual Meeting for any stockholder to examine for any purpose germane to the Annual Meeting. These books will also be available to stockholders for any such purpose at the Annual Meeting.

YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to cast your vote and submit your proxy as soon as possible by one of the methods below:

1.  Vote over the Internet. You may vote your shares by following the Internet voting instructions provided in the Notice you received. Please see the section of this proxy statement entitled “INFORMATION ABOUT THE ANNUAL MEETING AND VOTING — “How do I vote?” for additional information.

2.  Vote by mail. If you received your proxy materials by mail, you may vote by completing and signing the proxy card delivered with those materials and returning it in the postage pre-paid envelope we provided.

3.  Vote in person. If you are attending the 2019 Annual Meeting of Stockholders, you may vote by delivering a completed proxy card in person or by completing and submitting a ballot, which will be provided at the 2019 Annual Meeting of Stockholders.

If you are a registered stockholder (that is, you hold your shares in your name), you must present valid identification to vote at the Annual Meeting. If you are a beneficial stockholder (that is, your shares are held in the name of a broker, bank or other holder of record), you will also need to obtain a “legal proxy” from the holder of record to vote at the Annual Meeting.

By Order of the Board of Directors,

 

Michael J. Donahue

As Secretary

 

 

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Table of Contents

 

 

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Proxy Statement Summary

The below summary is intended to highlight certain key information contained in this Proxy Statement. As it is only a summary, it does not contain all of the information that you should consider. We strongly encourage you to read the complete Proxy Statement as well as our 2018 Annual Report to Stockholders before casting your vote.

 

2019 Annual Meeting of Stockholders

 

Voting Matters & Board Recommendations

 

 

Our Business

LogMeIn simplifies how people connect with each other and the world around them to drive meaningful interactions, deepen relationships, and create better outcomes for individuals and businesses. A market leader in unified communications and collaboration, identity and access management, and customer engagement and support solutions, LogMeIn has millions of customers spanning virtually every country across the globe. We are headquartered in Boston, Massachusetts with additional locations in North America, South America, Europe, Asia and Australia.

We introduced our first cloud-based connectivity offering in 2004, which allowed users to securely connect to remote computer resources, including files, applications and the remote device itself. We have since used this scalable technology to expand the types of devices and data that can be connected, while introducing a variety of cloud-based offerings or applications designed to address the needs of today’s unified communications and collaboration, identity and access management, customer engagement and support markets.

In January 2017, we completed our acquisition of the GoTo family of service offerings, or the GoTo Business, from a wholly–owned subsidiary of Citrix Systems, Inc., or Citrix, which we refer to herein as the Merger. Following the completion of the Merger, our revenue grew to over $1 billion on an annualized basis in fiscal 2017 and we added over 1,600 employees. In April 2018, we completed our acquisition of Jive Communications, Inc., or Jive, a provider of cloud-based phone systems and unified communications services. Our acquisition of Jive added approximately 700 employees and revenue of approximately $78 million.

A New Era of Growth

In December 2017, we first outlined our strategy to move beyond our current markets and expand into three much larger, rapidly growing adjacent markets - Unified Communications and Collaboration, or UCC, Customer Engagement and Support, or CES, and Identity as a Service, or IDaaS. This strategy was centered around our belief that, by leveraging our leadership positions in online meetings, remote support and remote access as well as our scale, large customer base and our broad product portfolio of well-known brands, we were well-positioned to expand into these adjacent markets that together would significantly expand our market opportunities.  

 

 

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Proxy Statement Summary (continued)

 

 

We embarked on this strategy in 2018 by setting two key goals: (1) build or acquire the missing pieces needed to compete in these larger markets, and (2) validate and demonstrate our ability to capture share in these larger markets. Looking back on 2018, we believe we successfully achieved both of these goals as evidenced by the following:

More importantly, when we announced our intention to expand into these adjacent markets in December 2017, the products aimed at those opportunities generated total revenues of less than $100 million in 2017, representing only about 10% of LogMeIn’s total revenue. By the end of 2018, our products aimed at UCC, CES and IDaaS were collectively generating nearly $240 million in annual revenue, representing approximately 20% of our total Company revenue and growing at 35% on a pro forma basis.

Building off of this momentum, we entered 2019 believing that increasing our investments in these products would allow us to further accelerate growth and take advantage of the exciting opportunities before us. Therefore, in February 2019 we announced a strategic plan, which included a global restructuring, designed to allow us to invest an incremental $75 million dollars in 2019 and accelerate the success of our growth assets by further funding our sales capacity, marketing and research and development.

LogMeIn is now entering an exciting new era. We want to be THE defining leader in the UCC, IDaaS, and CES markets, which together represent a total addressable opportunity that is an order of magnitude larger than our current markets. By investing now, we believe we are taking the steps needed to accelerate growth and deliver enhanced long-term stockholder value.

 Significant 2018 Business Highlights

 

 

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Proxy Statement Summary (continued)

 

Corporate Governance Highlights

We believe that good corporate governance is important to achieve success and to ensure that we are managed for the long-term benefit of our stockholders. We believe that the following corporate governance policies, guidelines and practices adopted by our Board of Directors (“Board” or “Board of Directors”) reflect many current “best practices,” including:

 

 

Please see the section entitled “Our Commitment to Corporate Governance,” beginning on page 21

of this Proxy Statement for additional information about our Corporate Governance practices.

Results of Last Year’s “Say-on-Pay” Vote

LogMeIn conducts an annual non-binding advisory vote to approve the compensation of our named executive officers, commonly referred to as a “say-on-pay” vote. At our 2018 Annual Meeting of Stockholders, approximately 95.3% of the votes cast by stockholders on this proposal were cast in support of the 2017 compensation of our named executive officers. While this vote is non-binding, the Compensation Committee and our Board of Directors value this feedback and carefully consider the results. Given the strong level of support evidenced by last year’s say-on-pay vote, the Compensation Committee determined that our stockholders were generally supportive of our current executive compensation philosophy and program and decided that no significant changes to our executive compensation program were necessary for 2018. Nevertheless, the Compensation Committee and our Board of Directors continue to monitor the executive compensation program to ensure that it continues to align the interests of our executive officers with the interests of our stockholders.

Please see the section entitled “Executive Compensation Discussion & Analysis — Executive Summary” on page 39 of this Proxy Statement for additional information about our executive compensation program and policies.

 

 

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Proxy Statement Summary (continued)

 

Executive Compensation Highlights

Summary of Our 2018 Executive Compensation Program

Our Compensation Committee designs our executive compensation programs with the goal of attracting, retaining and motivating talented executives, while simultaneously promoting the achievement of key financial and strategic performance measures by linking a portion of executive compensation to the achievement of measurable corporate performance goals, and thereby aligning the incentives of our executives with the creation of value for our stockholders.

Below, we summarize those executive compensation practices we have implemented to help drive executive performance, as well as practices we have chosen not to implement because we believe such practices do not support our stockholders’ long-term interests:

What We Do

What We Don’t Do

 

 

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Proxy Statement Summary (continued)

 

Summary of Fiscal 2018 Chief Executive Officer Compensation

 

 

Mr. Wagner does not receive any compensation for his service as a member of our Board of Directors. Below is a summary of the compensation that Mr. Wagner received during fiscal 2018 for his service as President and Chief Executive Officer:

 

 

 

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Proxy Statement Summary (continued)

 

 2018 CEO Total Direct Compensation Pay Mix

Our Compensation Committee evaluates executive compensation annually and bases its executive compensation decisions on each named executive officer’s total direct compensation opportunity. The total direct compensation opportunities of our named executive officers are generally comprised of a mix of cash compensation, in the form of base salaries and annual cash incentive bonuses, and long-term incentive compensation in the form of equity awards. Over the years, this total direct compensation mix has been designed so that the elements of variable pay, such as our annual cash incentive bonus awards and equity awards, represent a substantial portion of the total direct compensation opportunity awarded to our named executive officers.

For fiscal 2018, 51% of Mr. Wagner’s total direct compensation opportunity was designed to be “at risk,” by tying a majority of his compensation opportunity to variable pay elements such as long-term equity incentive awards with performance-based vesting conditions (as further described in the section below entitled “Equity Incentive Awards — Fiscal 2018 Equity Awards”) and our cash incentive bonus plan, which provides for a variable cash payment based on the Company’s achievement of certain pre-established financial goals. By dedicating a meaningful percentage of our executives’ total direct compensation opportunity to these variable “at risk” pay elements, rather than fixed pay elements like base salary, the Compensation Committee believes that we are able to better link executive incentives with the Company’s performance. The value of the target number of shares that may be earned under Mr. Wagner’s 2018 performance-based RSU awards, or PRSU awards, when calculated based on their fair value (i.e., the market value per share of our common stock as represented by the closing price of our common stock on the NASDAQ Global Select Market on the date of grant) represented 42% of Mr. Wagner’s 2018 total direct compensation opportunity, while nearly 9% of his 2018 total direct compensation opportunity was subject to our cash incentive bonus plan.

In keeping with the Company’s pay-for-performance philosophy, the fiscal 2018 equity awards granted to Mr. Wagner were comprised of 50% time-based RSUs and 50% PRSUs. The Compensation Committee believes that including PRSU awards in the total direct compensation opportunities of those executives whose individual performances and decisions have a direct impact on our Company’s performance helps to strengthen our overall pay-for-performance alignment by ensuring that a substantial portion of their compensation is aligned with the creation of value for our stockholders.

The following chart illustrates the breakdown of Mr. Wagner’s total direct compensation pay mix awarded in fiscal 2018:

 

Please see the Executive Compensation Discussion and Analysis section beginning on page 39 of this Proxy Statement for a more detailed description of the compensation paid to our CEO and other named executive officers during fiscal 2018.

 

 

 

 

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Information about the Annual Meeting and Voting

 

 

 

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Information about the Annual Meeting and Voting (continued)

 

 

 

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Information about the Annual Meeting and Voting (continued)

 

 

 

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Information about the Annual Meeting and Voting (continued)

 

 

 

 

 

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Our Board of Directors

Our Board of Directors currently consists of ten members. Mr. Simon has resigned from our Board of Directors and will continue to serve until the conclusion of this Annual Meeting of Stockholders on May 30, 2019, at which time our Board will consist of nine members. Our by-laws provide that the authorized number of directors may be changed only by resolution of our Board of Directors and that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the votes entitled to be cast in an annual election of directors. Any vacancy on our Board of Directors, including a vacancy resulting from an enlargement of our Board of Directors, may be filled only by vote of a majority of our directors then in office.

Our Board of Directors is divided into three classes, with the members of each class serving for staggered three-year terms. At each Annual Meeting of Stockholders, the successors to directors whose terms are set to expire will be elected to serve from the time of their election and qualification until the third Annual Meeting following their election. We believe that having a staggered Board of Directors divided by classes is in the best interest of both the Company and its stockholders because it provides for greater stability and continuity on our Board of Directors.

The table below provides summary information about the current composition of our Board of Directors:

 

 

 

 

 

 

 

 

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Our Board of Directors (continued)

 

The table below summarizes key qualifications, skills and attributes most relevant to the decision to nominate candidates to serve on our Board of Directors. A check mark indicates a specific area of focus or experience on which the Board relies most. The lack of a mark does not necessarily mean that the director does not possess that qualification or skill:

 

 

 

Director Biographies and Qualifications

The paragraphs that follow provide information as of the date of this proxy statement about each of our director nominees and current Board members. The information presented includes their length of service as a director of LogMeIn, as well as information each director has given us about their age as of April 10, 2019, current positions held, principal occupation and business experience for the past five years, as well as the names of any other publicly-held companies for which they currently serve as a director or have served as a director during the past five years. There are no family relationships among any of our directors, nominees for director, or executive officers. We have also included information about each nominee’s specific experience, qualifications, attributes, or skills that led our Board to conclude that they should serve as a director of LogMeIn.

 

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Our Board of Directors (continued)

 

 

 

 

 

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Our Board of Directors (continued)

 

 

 

 

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Our Board of Directors (continued)

 

 

 

 

 

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Corporate Governance (continued)

 

Corporate Governance

Our Commitment to Corporate Governance

The principal responsibility of our Board of Directors is to oversee the management of the Company and, in so doing, serve the best interests of the Company and its stockholders. To help fulfill this responsibility, our Board of Directors has adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics. We believe that these corporate governance policies and guidelines adopted by our Board of Directors reflect many current “best practices,” including:

 

 

Complete copies of our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters for our Audit, Compensation, and Nominating and Corporate Governance Committees are available on the “Investors — Corporate Governance — Documents & Charters” section of our website, www.logmeininc.com. Alternatively, you may request a copy of any of these documents free of charge by writing to:

LogMeIn, Inc.

320 Summer Street

Boston, Massachusetts 02210

Attention: Investor Relations

Any amendments to our Code of Business Conduct and Ethics will be disclosed on our website.

 

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Corporate Governance (continued)

 

Our Commitment to Environmental, Social and Governance Matters

At LogMeIn, we recognize the impact that a business can have on its surrounding community and environment and believe that an organization has the responsibility to be a good corporate citizen of the world. We also value our employees and recognize the critical roles that they play in the achievement of our long-term goals and overall success. The following is intended as a summary of some of the steps we have taken to create a safe, inclusive and positive workplace for our employees while also conducting our operations in an environmentally responsible manner. Additional information can be found in our Social & Environmental Responsibility Principles under the “Investor — Corporate Governance-Documents & Charters” section on our website, located at www.logmeininc.com.

 

 

We recognize the impact that companies can have on the environment and we are working to integrate sustainability initiatives into our business practices by:

 

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Corporate Governance (continued)

 

 

 

At LogMeIn, we promote a sense of corporate social responsibility by encouraging our employees to take part in social and community volunteering through our corporate social responsibility program, known as Mission Possible. For example, in 2018, we:

Board Leadership Structure

In February 2019, we announced a Board succession plan whereby our co-founder and long-time Chairman, Mr. Michael Simon, resigned his position as Chairman of the Board effective as of the close of business on March 1, 2019 and Mr. Robert Calderoni was appointed to succeed him. Mr. Simon also resigned from the Board effective as of the conclusion of our 2019 Annual Meeting of Stockholders on May 30, 2019. Mr. Calderoni is considered “independent” under the standards set forth in the NASDAQ Marketplace Rules and the Exchange Act. Our Corporate Governance Guidelines provide for the appointment of an independent “Lead Director” in the event that the Chairman of the Board is not an independent director. Prior to Mr. Calderoni succeeding Mr. Simon as Chairman in March 2019, Mr. Edwin Gillis served as our Lead Independent Director.

As our Chairman, Mr. Calderoni is responsible for, among other things, presiding over and managing the Board and setting agendas for our Board meetings. Our Board of Directors believes that Mr. Calderoni’s extensive experience as a leader and manager of multiple large scale global software-as-a-service companies, particularly his experience leading companies through business transition situations, as well as his experience as Chairman of the Board and Former Interim President and CEO of Citrix Systems, Inc., makes him uniquely qualified for the role of Chairman because he possesses detailed knowledge of the issues, opportunities and challenges facing the Company, its business and its industry.

Director Independence

NASDAQ and Exchange Act Independence Standards

Under Rule 5605(b)(1) of the NASDAQ Marketplace Rules (the “NASDAQ Rules”), independent directors must comprise a majority of a listed company’s Board of Directors within one year of listing. The NASDAQ Rules also require that, subject to specified exceptions, each member of a listed company’s Audit, Compensation and Nominating and Corporate Governance Committees be independent. Audit Committee members must also satisfy the independence criteria set forth in Rule 10A-3 (“Rule 10A-3”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under the NASDAQ Rules, a director will only qualify as an “independent director” if, in the opinion of that company’s Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an Audit Committee of a listed company may not, other than in his capacity as a member of the Audit Committee, the Board of Directors, or any other Board Committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.

Our Board of Directors has determined that, with the exception of Mr. Simon and Mr. Wagner, all of our current directors, including each of Messrs. Calderoni, Henshall and Sacripanti – who were appointed in connection with the Merger with Citrix’ GoTo business, qualify as “independent” as that term is defined under NASDAQ Marketplace Rule 5605(a)(2) and the SEC regulations and that those directors who comprise our Audit, Compensation and Nominating and Corporate Governance Committees also satisfy the heightened independence standards for those committees established by applicable SEC regulations and the NASDAQ Rules. In making this determination, our Board of Directors considered the relationships that each non-employee director has with our Company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

 

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Corporate Governance (continued)

 

Additional Independence Standards

In addition to the independence standards required by the NASDAQ Rules and the Exchange Act, certain organizations that serve institutional investors have additional heightened standards and policies which they use to evaluate director independence when making voting recommendations to shareholders. These standards and policies are often driven by a belief that directors who are too closely tied to management may have inherent conflicts of interest and therefore may be less willing and able to effectively evaluate and scrutinize company performance.

With the exception of Mr. Simon, who previously served as our CEO, and Mr. Wagner, who currently serves as our President and CEO, we believe that our other eight directors are sufficiently independent from our management team to allow them to effectively serve as directors since, in addition to their independence under the NASDAQ and Exchange Act standards, none of them have ever served as an officer or employee of LogMeIn or one of its affiliates, nor have they ever beneficially owned more than 50% of LogMeIn’s voting power.

Specifically with regard to Mr. Calderoni and Mr. Henshall, each of whom currently hold management positions at Citrix, it is important to note that: (i) while each is an officer of Citrix, Citrix itself never owned any shares of LogMeIn, and thus was not an affiliate of LogMeIn; (ii) Citrix was not a parent or predecessor to LogMeIn; and (iii) LogMeIn never had a joint venture or partnership arrangement, before, during or after the Merger with Citrix.

Board Meetings and Attendance

Our Board met seven (7) times during the year ended December 31, 2018. During 2018, each director attended at least 75% of the Board meetings held during the period for which he or she has been a director and each incumbent director attended at least 75% of the meetings held by the committees of the Board on which he or she then served. All of our directors were present at our Annual Meeting of Stockholders in May 2018.

Board Committees

During fiscal 2018, our Board of Directors had three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each committee operates under a charter that has been approved by our Board of Directors in compliance with the NASDAQ Marketplace Rules, copies of which are available under the “Investor — Corporate Governance-Documents & Charters” section on our website, located at www.logmeininc.com.

 

 

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Corporate Governance (continued)

 

 The following table indicates the members of each Board Committee from January 1, 2018 to December 31, 2018:

 

 

✽ = Chairman of the Board    = Committee Chair   = Committee member

Audit Committee — At the beginning of fiscal 2018, our Audit Committee was comprised of Mr. Gillis, who serves as chairman, Mr. Henshall and Mr. Sacripanti. In November 2018, in connection with her appointment to our Board of Directors, Ms. Brennan was also added to the Audit Committee. Our Board of Directors has determined that each Audit Committee member satisfies the requirements for financial literacy under the current requirements of the NASDAQ Marketplace Rules. Mr. Gillis is an “Audit Committee financial expert,” as defined by SEC rules, and satisfies the financial sophistication requirements of the NASDAQ Global Select Market. Our Audit Committee assists our Board of Directors in its oversight of our accounting and financial reporting process and the audits of our financial statements. The Audit Committee’s responsibilities include:

All audit and non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our Audit Committee.

Compensation Committee — The members of our Compensation Committee are Mr. Henshall, who serves as chairman of the Committee, and Messrs. Benson, Calderoni and Christenson. The Compensation Committee’s responsibilities include:

 

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Corporate Governance (continued)

 

None of our executive officers serve as a member of the Board of Directors or Compensation Committee, or other Committee serving an equivalent function, of any entity where a member of our Board of Directors or our Compensation Committee serves as an executive officer. None of the members of our Compensation Committee is an officer or employee of our Company, nor have they ever been an officer or employee of our Company.

Nominating and Corporate Governance Committee — The members of our Nominating and Corporate Governance Committee are Mr. Benson, who serves as chairman of the Committee, and Messrs. Christenson and Sacripanti. The Nominating and Corporate Governance Committee’s responsibilities include:

Director Nomination Process

Our Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become members of our Board of Directors and for recommending to our Board of Directors the persons to be nominated for election as directors and to each Board Committee.

The process followed by our Nominating and Corporate Governance Committee to identify and evaluate director candidates typically includes:

Our Nominating and Corporate Governance Committee also considers candidates proposed by our stockholders. Stockholders nominating director candidates must follow the procedures set forth under “INFORMATION ABOUT THE ANNUAL MEETING AND VOTING — “May I recommend a candidate for LogMeIn’s Board of Directors?”” and “How and when may I submit a stockholder proposal for the 2020 Annual Meeting?”

Candidate Criteria and Skills

Before recommending any particular candidate for inclusion in the Board of Directors’ slate of recommended director nominees, our Nominating and Corporate Governance Committee believes that each candidate must satisfy at least the following minimum criteria:

In addition to the above minimum criteria, our Board of Directors also believes that having directors who provide a significant breadth of experience, knowledge and abilities in areas relevant to LogMeIn’s business, while also representing a diversity of gender, race, age, sexual orientation and ethnicity, contributes to a well-balanced and effective Board. Therefore, the Nominating and Corporate Governance Committee is committed to ensuring that at least one candidate representing a diversity of gender, race, ethnicity, age and/or sexual orientation is included in each pool of new candidates from which Board nominees are chosen, and that directors should be selected so that the Board is a diverse body. Any search firm retained by our Nominating and Corporate Governance Committee to find director candidates will be instructed to take into account all of the criteria used by our Nominating and Corporate Governance Committee, including diversity. Director nominees are not discriminated against on the basis of gender, race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.

In the spirit of this commitment to diversity the two most recent directors appointed to our Board of Directors were women and going forward, the Board remains committed to ensuring that it remains a diverse body, reflecting a variety of different perspectives, backgrounds and experiences.

The Nominating and Corporate Governance Committee believes that the re-nomination of existing directors should not be viewed as automatic, but should be based on continuing qualification under the criteria set forth above, the director’s past performance as a member of the Board and confirmation that each nominee possesses the appropriate skills and characteristics required of LogMeIn’s directors.

 

You can find more detailed information on our process for selecting Board members and our criteria for Board nominees in our Corporate Governance Guidelines, which are available on the “Investors — Corporate Governance — Documents & Charters” section of our website, www.logmeininc.com.

 

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Corporate Governance (continued)

 

Director Voting Standard

Our by-laws provide that, in an uncontested election, each director will be elected by a majority of votes cast. A “majority of votes cast” means the number of shares voted “for” a director exceeds the number of votes cast “against” that director. In addition, our Corporate Governance Guidelines include a director resignation policy that provides that, in uncontested elections, an incumbent director nominee who does not receive the required votes for re-election is expected to tender his or her resignation to the Board. The Nominating and Corporate Governance Committee, or another duly authorized Committee of the Board, will determine whether to accept or reject the tendered resignation generally within ninety days after certification of the election results. No director who failed to receive the required votes for re-election may participate in the consideration of the matter. The Company will publicly disclose the Nominating and Corporate Governance Committee’s (or other responsible Committee’s) decision.

The majority voting standard does not apply, however, if the Board of Directors determines that the number of nominees for director exceeds the number of directors to be elected. In such circumstances, even if the number of nominees for director later no longer exceeds the number of directors to be elected, directors will instead be elected by a plurality of the votes cast, meaning that the nominees receiving the most votes will be elected.

Compensation Risk Assessment

Consistent with the SEC’s disclosure requirements, we have assessed our compensation programs for all employees. We have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. Management has evaluated our executive and employee compensation and benefits programs to determine if these programs’ provisions and operations create undesired or unintentional risk of a material nature. The risk assessment process includes a review of program policies and practices; analysis to identify risks and risk controls related to our compensation programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward, the effectiveness of our risk controls and the impacts of our compensation programs and their risks to LogMeIn strategy. Although we periodically review all compensation programs, we focus on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. In relation to this, we believe that our incentive compensation arrangements provide incentives that do not encourage risk taking beyond our ability to effectively identify and manage significant risks and are compatible with effective internal controls and the risk management practices of LogMeIn.

The Compensation Committee monitors our compensation programs on an annual basis and expects to make modifications as necessary to address any changes in the Company’s business or risk profile.

The Compensation Committee has the authority to retain compensation consultants and other outside advisors to assist in the evaluation of executive officer compensation. Additionally, the Compensation Committee may delegate authority to one or more sub-committees as it deems appropriate. The processes and procedures followed by our Compensation Committee in considering and determining executive compensation are described below under the heading “Executive Compensation Discussion and Analysis.”

Transactions with Related Persons

Since January 1, 2018, we have not engaged in any transactions with our directors, executive officers and holders of more than 5% of our voting securities, and affiliates or immediate family members of our directors, executive officers or holders of more than 5% of our voting securities, in which the amount involved exceeds $120,000.

Our Board of Directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), each of whom we refer to as a “related person,” has a direct or indirect material interest.

If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our General Counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by the Audit Committee of our Board of Directors. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the Audit Committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chairman of the Audit Committee to review and, if deemed appropriate, approve proposed related person transactions that arise between Audit Committee meetings, subject to ratification by the Audit Committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.

A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the Audit Committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the Audit Committee will review and consider:

 

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Corporate Governance (continued)

 

The Audit Committee may approve or ratify the transaction only if it determines that, under all of the circumstances, the transaction is consistent with our best interests. The Audit Committee may impose any conditions on the related-person transaction that it deems appropriate.

In addition to the transactions that are excluded by the instructions to the SEC’s related-person transaction disclosure rule, our Board of Directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related-person transactions for purposes of this policy:

The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the Compensation Committee in the manner specified in its charter.

Communicating with our Board of Directors

Our Board of Directors will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. The chairman of the Nominating and Corporate Governance Committee, subject to the advice and assistance of our General Counsel, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he considers appropriate.

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the chairman of the Nominating and Corporate Governance Committee considers to be important for the directors to review. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we receive repetitive or duplicative communications.

Stockholders who wish to send communications to our Board of Directors on any topic should address such communications to:

LogMeIn, Inc.

320 Summer Street

Boston, Massachusetts 02210

Attention: Board of Directors, c/o Corporate Secretary

 

 

 

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Director Compensation

Overview of 2018 Director Compensation Program

Our Compensation Committee is responsible for overseeing our director compensation program and for making recommendations to our Board of Directors regarding the appropriateness of our director compensation levels. We use a combination of cash and stock-based compensation to attract and retain qualified persons to serve on our Board of Directors. Our Compensation Committee has retained an independent compensation consultant, Compensia, Inc., or Compensia, who reports directly to the Compensation Committee and uses competitive market data to provide the Committee with compensation ranges that are consistent with the compensation offered by other companies within our peer group.

Mr. Wagner, our President and Chief Executive Officer, did not receive any compensation in connection with his service as a director during fiscal 2018. The compensation that we paid in 2018 to Mr. Wagner as an employee is discussed in the “Executive Compensation Discussion and Analysis” section beginning on page 39.

2018 Director Cash Compensation

For fiscal 2018, each of our non-employee directors were entitled to receive the annual cash retainer fees set forth in the tables below, which were paid in quarterly installments. We also reimburse each non-employee director for any out-of-pocket expenses incurred in connection with their attending meetings of our Board of Directors.

The tables below summarize our 2018 non-employee director cash compensation program:

 

 

 

 

2018 Director Stock Compensation

In addition to cash compensation, we also grant our non-employee directors restricted stock unit, or RSU, awards under our Amended and Restated 2009 Stock Incentive Plan. In determining the amounts of RSU awards to be granted to our non-employee directors, the Compensation Committee generally plans to grant awards that are deemed to be competitive with the equity awards granted by the other companies within our fiscal 2018 compensation peer group and other companies within our industry and region.

Each of our non-employee directors who served during fiscal 2018 were awarded a time-based RSU award with vesting conditions which were subject to their continued service as a director through their applicable vesting date. Pursuant to the individual award agreements, vesting rights typically cease after termination of service except in the case of death or disability. Prior to the vesting of an RSU, the holder has no rights as a stockholder with respect to the shares subject to such RSU, including voting rights and the right to receive dividends.

 

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Director Compensation (continued)

 

 In fiscal 2018, the following time-based RSU awards were granted to our non-employee directors:

 

 

Director Stock Ownership Guidelines

Our Board of Directors has adopted stock ownership guidelines, as amended in fiscal 2018, for our non-employee directors. Pursuant to these stock ownership guidelines, each current non-employee director and any newly appointed non-employee director is required to, by the date three (3) years from the date the guidelines became applicable to such non-employee director, own shares of the Company’s common stock having an aggregate value at least equal to three (3) times the amount of the annual cash retainer that we currently pay our non-employee directors for general service on our Board, excluding any additional retainers paid for serving on committees or as Lead Independent Director. For purposes of this calculation, shares of the Company’s common stock held directly or indirectly by the non-employee director are included while any outstanding and unvested RSU awards or any outstanding and unvested or vested but unexercised stock option awards are excluded. Prior to amending the guidelines in 2018, our non-employee directors were required to own shares having an aggregate value equal to one times the annual cash retainer.

Director Compensation in Fiscal 2018

The following table sets forth information regarding compensation earned by our non-employee directors during 2018:

 

 

 

 

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Director Compensation (continued)

 

 

 

 

 

 

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 Auditor Fees and Services

The following table presents the aggregate fees of Deloitte & Touche LLP, our independent registered public accounting firm, incurred by us for the years ended December 31, 2017 and 2018:

 

 

 

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PROPOSAL 2 (continued)

 

The Audit Committee of our Board of Directors believes that the non-audit services described above did not compromise Deloitte & Touche LLP’s independence. The Audit Committee’s charter, a copy of which can be found on the “Investors — Corporate Governance — Documents & Charters” section of our website, www.logmeininc.com, requires that all proposals to engage Deloitte & Touche LLP for services, and all proposed fees for these services, be submitted to the Audit Committee for approval before Deloitte & Touche LLP may provide the services. From time to time, our Audit Committee may pre-approve specified types of services that are expected to be provided to us by our registered public accounting firm during the next twelve months. Any pre-approval is also generally subject to a maximum dollar amount, and the Audit Committee is informed of each service once it has been provided.

 

 

 

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PROPOSAL 3 (continued)

 

Summary of the ESPP

The principal features of the ESPP are summarized below, but the summary is qualified in its entirety by reference to the ESPP itself, which is attached as Annex B to this Proxy Statement.

Purpose

The ESPP has been designed to assist our eligible employees in acquiring a stock ownership interest in our Company and to encourage our eligible employees to remain in our employment.

Securities Subject to the ESPP

A total of 1,500,000 shares of our common stock are initially reserved for issuance under our ESPP, which may be adjusted for changes in our capitalization and certain corporate transactions, as described below under the heading “Adjustments.”

Administration

Our Board of Directors or its committee has full and exclusive authority to interpret the terms of the ESPP and determine eligibility. Our Compensation Committee will be the “Administrator” of the ESPP.

Eligibility

The Administrator may designate certain of our subsidiaries as participating “designated subsidiaries” in the ESPP and may change these designations from time to time. Employees of the Company and our designated subsidiaries are eligible to participate in the ESPP if they meet the eligibility requirements under the ESPP established from time to time by the Administrator. Unless otherwise determined by the Administrator, our employees are eligible to participate in the ESPP if they are customarily employed by us or a designated subsidiary for more than 20 hours per week and more than five months in any calendar year. However, an employee may not be granted rights to purchase stock under our ESPP if such employee, immediately after the grant, would own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of our common stock or other class of stock.

If the grant of a purchase right under the ESPP to any eligible employee who is a citizen or resident of a foreign jurisdiction would be prohibited under the laws of such foreign jurisdiction or the grant of a purchase right to such employee in compliance with the laws of such foreign jurisdiction would cause the ESPP to violate the requirements of Section 423 of the Internal Revenue Code, or the Code, as determined by the Administrator in its sole discretion, such employee will not be permitted to participate in the ESPP.

Eligible employees become participants in the ESPP by enrolling and authorizing payroll deductions by the deadline established by the Administrator prior to the relevant offering date. Directors who are not employees, as well as consultants, are not eligible to participate in the ESPP. Employees who choose not to participate, or are not eligible to participate at the start of an offering period but who become eligible thereafter, may enroll in any subsequent offering period.

As of March 31, 2019, we had approximately 3,554 employees, of whom approximately 3,315 would have been eligible to participate in the ESPP had it been in effect on such date. Also as of that date, we did not have any consultants or non-employee directors eligible to participate in the ESPP.

Participation in an Offering

Offering Periods and Purchase Periods. The ESPP is intended to qualify under Section 423 of the Code and common stock will be offered under the ESPP during offering periods. The length of the offering periods under the ESPP will be determined by the Administrator and may be up to 27 months long. Employee payroll deductions will be used to purchase shares on each purchase date during an offering period. The number of purchase periods within, and purchase dates during, each offering period will be established by the Administrator prior to the commencement of each offering period. Offering periods under the ESPP will commence when determined by the Administrator. The Administrator may, in its discretion, modify the terms of future offering periods.

Enrollment and Contributions. The ESPP permits participants to purchase common stock through payroll deductions of up to 25% of their eligible compensation, which includes a participant’s gross base compensation for services to us, including overtime payments and sales commissions, but excluding incentive compensation, bonuses, expense reimbursements, fringe benefits, equity compensation and other special payments. The Administrator will establish a maximum number of shares that may be purchased by a participant during any offering period, which, in the absence of a contrary designation, will be 3,000 shares. In addition, and to the extent required under Section 423 of the Code, no employee will be permitted to accrue the right to purchase stock under the ESPP at a rate in excess of $25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per share of our common stock as of the first day of the offering period during which such right is granted).

Purchase Rights. On the first trading day of each offering period, each participant will automatically be granted an option to purchase shares of our common stock. The option will be exercised on the applicable purchase date(s) during the offering period, to the extent of the payroll deductions accumulated during the applicable purchase period.

Purchase Price. The purchase price of the shares, in the absence of a contrary determination by the Administrator, and subject to applicable laws and provisions of the ESPP, will be 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the applicable purchase date, which will be the final trading day of the applicable purchase period. The fair market value per share of our common stock under the ESPP, generally is the closing sales price of our common stock on the Nasdaq Global Select Market on the date for which fair market value is being determined, or if there is no closing sales price for a share of our common stock on the date in question, the closing sales price for a share of common stock on the last preceding date for which such quotation exists. The closing price per share of our common stock on the Nasdaq Global Select Market on April 10, 2019, was $83.44.

 

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PROPOSAL 3 (continued)

 

Withdrawal and Termination of Employment. Participants may voluntarily end their participation in the ESPP at any time at least five business days prior to the end of the applicable offering period, and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. Participation ends automatically upon a participant’s termination of employment.

Adjustments

In the event of certain transactions or events affecting our common stock, such as any stock dividend or other distribution, change in control, reorganization, merger, consolidation or other corporate transaction, the Administrator will make equitable adjustments to the ESPP and outstanding rights. In addition, in the event of the foregoing transactions or events or certain significant transactions, including a change in control, the Administrator may provide for either (1) the replacement of outstanding rights with other rights or property or termination of outstanding rights in exchange for cash, (2) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, if any, (3) the adjustment in the number and type of shares of stock subject to outstanding rights and/or in the terms and conditions of outstanding rights, (4) the use of participants’ accumulated payroll deductions to purchase stock on a new purchase date prior to the next scheduled purchase date and termination of any rights under ongoing offering periods or (5) the termination of all outstanding rights.

Transferability

A participant may not transfer rights granted under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP.

Plan Amendment and Termination

The Administrator may amend, suspend or terminate the ESPP at any time. However, stockholder approval of any amendment to the ESPP will be obtained for any amendment which increases the aggregate number or changes the type of shares that may be sold pursuant to rights under the ESPP or changes the ESPP in any manner that would cause the ESPP to no longer be an employee stock purchase plan within the meaning of Section 423(b) of the Code.

Federal Income Tax Consequences

The material federal income tax consequences of the ESPP under current federal income tax law are summarized in the following discussion, which deals with the general tax principles applicable to the ESPP. The following discussion is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change. Foreign, state and local tax laws, and employment, estate and gift tax considerations are not discussed due to the fact that they may vary depending on individual circumstances and from locality to locality. The summary does not discuss all aspects of federal income taxation that may be relevant in light of a participant’s personal circumstances.

The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Section 423 of the Code. Under the applicable Code provisions, no income will be taxable to a participant until the sale or other disposition of the shares purchased under the ESPP. This means that an eligible employee will not recognize taxable income on the date the employee is granted an option under the ESPP. In addition, the employee will not recognize taxable income upon the purchase of shares. Upon such sale or disposition, the participant generally will be subject to tax in an amount that depends upon the length of time such shares are held by the participant prior to disposing of them. If the shares are sold or disposed of more than two years from the date of grant and more than one year from the date of purchase, or if the participant dies while holding the shares, the participant (or his or her estate) will recognize ordinary income measured as the lesser of (1) the excess of the fair market value of the shares at the time of such sale or disposition (or death) over the purchase price or (2) an amount equal to the applicable discount from the fair market value of the shares as of the date of grant. Any additional gain will be treated as long-term capital gain. If the shares are held for the holding periods described above but are sold for a price that is less than the purchase price, there is no ordinary income and the participating employee has a long-term capital loss for the difference between the sale price and the purchase price.

If the shares are sold or otherwise disposed of before the expiration of the holding periods described above, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price and we will be entitled to a tax deduction for compensation expense in the amount of ordinary income recognized by the employee. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on how long the shares were held following the date they were purchased by the participant prior to disposing of them. If the shares are sold or otherwise disposed of before the expiration of the holding periods described above but are sold for a price that is less than the purchase price, the participant will recognize ordinary income equal to the excess of the fair market value of the shares on the date of purchase over the purchase price (and we will be entitled to a corresponding deduction), but the participant generally will be able to report a capital loss equal to the difference between the sales price of the shares and the fair market value of the shares on the date of purchase.

New Plan Benefits

Benefits under the ESPP will depend on the employees’ enrollment and contribution elections, and the fair market value of the shares at various future dates. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the ESPP.

Our Board of Directors recommends a vote FOR the approval of the ESPP.

 

 

36   LOGMEIN, INC.

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LOGMEIN, INC.   37

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Our Executive Officers

Our executive officers and their respective ages and positions as of our record date, April 10, 2019, are as follows:

 

 

Executive Officer Biographies

 

 

 

 

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Executive Compensation Discussion and Analysis

This Executive Compensation Discussion and Analysis describes our executive compensation philosophy, policies and practices, and also details the 2018 compensation paid to those individuals who served as our principal executive officer and principal financial officer during the year ended December 31, 2018, the three executive officers (other than our principal executive officer and principal financial officer) who were our most highly compensated executive officers as of December 31,2018, as well as one additional highly compensated executive officer who left the Company in August 2018. These individuals were as follows:

 

 

The above executive officers represent our named executive officers for the fiscal year ended December 31, 2018. In this Executive Compensation Discussion and Analysis, LogMeIn may also be referred to as “our,” “us,” “we,” or the “Company.”

Executive Summary

Use of non-GAAP Financial Measures

To supplement our consolidated financial statements which are prepared in accordance with generally accepted accounting principles in the United States and presented on a GAAP basis, the Company discloses certain non-GAAP financial measures in our Compensation Discussion and Analysis. Please see Annex A to this Proxy Statement for a reconciliation of these non-GAAP measures.

Significant 2018 Business Highlights

 

 

 

1.The amounts herein represent non-GAAP measures, a reconciliation of which has been included in Annex A to this Proxy Statement.

2.Assumes $100 invested on 12/13/2013 in stock or index, including investment of dividends. Fiscal year ending December 31.

Our Executive Compensation Philosophy

We believe in the importance of aligning the financial interests of our executive officers with those of our stockholders. Therefore, a significant portion of our named executive officers’ compensation is designed to be variable and tied to our achievement of key financial and strategic performance objectives, the performance of our stock price, or both, which helps us incentivize our executive officers to create value for our stockholders.

Our executive compensation program has been designed to attract, retain and motivate talented executives. Accordingly, when setting individual executive compensation levels, the Compensation Committee generally targets executive compensation at levels that are competitive with other public and private companies in our industry and region with whom we compete for talent. Actual target pay positioning may vary by individual depending on the experience level and performance of the executive and other factors, such as the demand for executives with certain skills and experience and the costs associated with recruiting qualified executives from other established companies.

 

 

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Executive Compensation Discussion and Analysis (continued)

 

What We Do vs. What We Don’t Do

We believe in maintaining sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. Below we summarize those executive compensation policies and practices we have implemented to help drive executive performance, as well as practices we have chosen not to implement because we believe such practices do not support our stockholders’ long-term interests:

 

 

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

How We Set our 2018 Executive Compensation Program

Results of Last Year’s “Say-on-Pay” Vote

At our 2018 Annual Meeting of Stockholders, approximately 95.3% of the votes cast by stockholders on the compensation of our named executive officers, commonly referred to as a “say-on-pay” vote, were cast in support of the 2017 compensation of our named executive officers. While the “say-on-pay” vote is non-binding, the Compensation Committee and our Board of Directors pay close attention to the results and given the strong level of support evidenced by last year’s say-on-pay vote, the Compensation Committee determined that our stockholders were generally supportive of our current executive compensation philosophy and program and decided that no significant changes were necessary for our 2018 executive compensation program.

Nevertheless, the Compensation Committee and our Board of Directors continue to regularly monitor the executive compensation program to ensure it continues to align the interests of our executive officers with the interests of our stockholders.

Role of Stockholder Engagement

We believe in the importance of regularly engaging with our stockholders. In recent years, we have proactively reached out to many of our largest stockholders, as well as well-known proxy advisory firms, to solicit their feedback on the elements of our executive compensation program, our disclosure practices and our corporate governance in order to gain a better understanding of the practices they most value. Typically, our stockholder engagement team has consisted of one or more members of our investor relations, finance or legal teams. Stockholders also regularly meet with members of our senior management team to discuss our strategy and/or review our operational performance. During 2018, we met with approximately 50 of our most active stockholders, which collectively held approximately 75% of our outstanding shares. These engagement efforts and meaningful conversations provided our management team with a valuable understanding of investors’ perspectives and an opportunity to exchange views.

In recent years, stockholder feedback has influenced certain changes made to our executive compensation program, including the introduction of performance-based RSU awards with multi-year performance periods for our principal executive officer and principal financial officer, the implementation of an executive compensation recovery, or “clawback,” policy, and the establishment of stock ownership guidelines for our executive officers and non-employee directors. The Compensation Committee will continue to consider material stockholder feedback and the results of our say-on-pay votes when making future compensation decisions for our named executive officers.

 

Stockholders who wish to communicate with our stockholder engagement team may do so by contacting our Investor Relations Department at the address below:

LogMeIn, Inc.

320 Summer Street

Boston Massachusetts 02210

Attention: Investor Relations

InvestorRelations@logmein.com

781-897-1301

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Role of the Compensation Committee

The Compensation Committee of our Board of Directors oversees our executive compensation program and approves all executive compensation decisions. Near the beginning of each fiscal year, the Compensation Committee meets to review the executive compensation program, set the Company’s compensation peer group, establish the company-wide performance measures used to determine each executive officer’s annual cash bonus opportunities for the fiscal year and review the total compensation for our executive officers to ensure consistency with our overall compensation philosophy.

Role of Our Chief Executive Officer

We believe that our Chief Executive Officer is uniquely positioned to help our Board of Directors and the Compensation Committee in many of its compensation decisions as he possesses detailed knowledge of the issues, opportunities and challenges facing us, our business and our industry, which help him to identify the key performance measures and indicators that may be used in setting incentive-based compensation. Our Chief Executive Officer is also close enough to our day-to-day operations to be able to identify key contributors and top performers within the Company and help ensure that their compensation accurately reflects their responsibilities, performance, future expectations and experience levels. For these reasons, the feedback and recommendations of our Chief Executive Officer is often taken into consideration by our Board of Directors and the Compensation Committee when setting compensation levels for our executive officers, other than himself.

Role of the Compensation Consultant and Other Advisors

The Compensation Committee has retained Compensia, a nationally-recognized compensation consulting firm, to serve as its independent compensation consultant. In this role, Compensia reports directly to the Compensation Committee and, as requested by the Committee, attends certain Compensation Committee meetings, executive sessions and preparatory meetings with the Committee chair. Compensia uses the competitive market data described below to provide the Committee with compensation ranges that are consistent with our compensation peer group for the Compensation Committee to consider and also reviews the Compensation Committee’s proposed compensation decisions. Compensia did not provide any other services for LogMeIn in 2018.

In compliance with the disclosure requirements of the SEC and the listing standards of NASDAQ regarding the independence of compensation consultants, the Compensation Committee has assessed each of the six independence factors established by the SEC and the NASDAQ and has determined that the engagement of Compensia does not raise any conflicts of interest or similar concerns. In addition, the Compensation Committee evaluated the independence of its other outside advisors to the Compensation Committee, including outside legal counsel, considering the same independence factors and concluded their work for the Compensation Committee also does not raise any conflicts of interest.

 

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Executive Compensation Discussion and Analysis (continued)

 

Use of Competitive Market Data

Our Compensation Committee works with Compensia to regularly review competitive market data and analysis based on a select group of peer companies, including information about current market practices and trends, compensation structures and peer group compensation ranges. The comparative market data Compensia provides is based on a compensation peer group approved by the Compensation Committee with input from Compensia. Typically, this compensation peer group is comprised of software-as-a-services (“SaaS”) companies that are considered comparable to LogMeIn based on financial criteria, such as revenue, market capitalization and growth history and potential.

For fiscal 2018, the compensation peer group differed from our fiscal 2017 compensation peer group due to certain companies being acquired and certain companies who were no longer deemed comparable in terms of revenue and market capitalization (based on our fiscal 2017 results). As a result, the fiscal 2018 compensation peer group utilized in deriving market data to aid in setting our executive compensation program, consisted of the following SaaS companies (the “2018 Peer Group”):

 

Our positioning with respect to the 2018 Peer Group expressed in terms of the last four quarters of their disclosed revenue and market capitalization as of December 31, 2017, is reflected in the following tables:

 

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Elements of Our Executive Compensation Program

The table below and the Executive Compensation Program Narrative that follows identify and describe the individual elements of our executive compensation program:

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Summary of Fiscal 2018 Chief Executive Officer Compensation

 

Mr. Wagner does not receive any compensation for his service as a member of our Board of Directors. Below is a summary of the compensation that Mr. Wagner received during fiscal 2018 for his service as President and Chief Executive Officer:

 

 

2018 Executive Compensation for Messrs. Strassman and Van Zadelhoff

Messrs. Strassman and Van Zadelhoff both joined LogMeIn as new hires in November 2018. Mr. Strassman, after spending more than 25 years in product management in the software industry, was hired as our Senior Vice President and General Manager, Unified Communications and Collaboration and is responsible for leading our largest business unit, while Mr. Van Zadelhoff, a 20-year IT and security industry veteran with experience in strategy, venture capital, business development and marketing, was hired as our SVP, Chief Operating Officer to lead all of our customer-facing operations across our entire portfolio, including sales, marketing and customer care. Both new hires filled important roles needed to help us achieve our go-forward strategy of accelerating revenue growth by expanding into some of the largest markets in technology today, Unified Communications & Collaboration, Identity and Access Management, and Customer Engagement and Support.

As part of our search to fill these critical roles, we retained an external executive recruiting firm to identify qualified potential candidates. Once Mr. Strassman and Mr. Van Zadelhoff were identified as LogMeIn’s top candidates, our Compensation Committee, working with Mr. Wagner, our external compensation consultant and the external executive recruiting firm, formulated new hire compensation packages designed to attract and retain Messrs. Strassman and Van Zadelhoff. In setting the compensation packages for Messrs. Strassman and Van Zadelhoff, the Compensation Committee considered factors such as the compensation packages for Messrs. Strassman and Van Zadelhoff at their previous employers, competitive market pay levels at our peer companies for comparable roles, their levels of executive experience, the anticipated scope of their responsibilities and the importance of their expected contributions to the Company’s overall business goals and go-forward strategy.  

In connection with Mr. Van Zadelhoff’s appointment as our Chief Operating Officer in November 2018, the Board of Directors, on the recommendation of the Compensation Committee, approved an annualized base salary of $500,000, an annual cash incentive bonus target of 100% base salary, a sign-on bonus of $275,000 and a new hire equity award valued at $5,790,952. In connection with Mr. Strassman’s appointment as our Senior Vice President and General Manager of our Unified Communications and Collaboration business unit in November 2018, upon the recommendation of the Compensation Committee, the Board of Directors approved an annualized base salary of $400,000, an annual cash incentive bonus target of 50% base salary, a sign-on bonus of $150,000 and a new hire equity award valued at $4,211,484.

The Compensation Committee and Board of Directors, working together with our Chief Executive Officer and Chief Human Resources Officer, determined Mr. Van Zadelhoff’s and Mr. Strassman’s new hire compensation packages after considering several factors including, compensation data for comparable positions at other companies and the need to provide meaningful retention incentives. One third of the equity awards consisted of PRSUs with a market-based vesting condition tied to the Company’s achievement of a specified relative total stockholder return goal over a two- and three-year performance period, as described further above, while the remaining equity awards vest one third annually over a three-year time period. The new hire compensation packages awarded to Messrs. Strassman and Van Zadelhoff were ultimately the result of arms-length negotiations between the Company, the external executive recruiting firm and Messrs. Strassman and Van Zadelhoff, and we believe that these compensation packages represent compensation that is necessary to attract top-executive candidates of Mr. Strassman’s and Mr. Van Zadelhoff’s caliber and experience to LogMeIn.

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Total Direct Compensation and Our Pay-for-Performance Alignment

The Compensation Committee evaluates executive compensation annually and bases its executive compensation decisions on each named executive officer’s total direct compensation opportunity. The total direct compensation opportunities of our named executive officers are generally comprised of a mix of cash compensation, in the form of base salaries and annual cash incentive bonuses, and long-term incentive compensation in the form of equity awards. Over the years, this total direct compensation mix has been designed so that the elements of variable pay, such as our annual cash incentive bonus awards and equity awards, represent a substantial portion of the total direct compensation opportunity awarded to our named executive officers.

Much like in recent years, at least 50% of Mr. Wagner’s 2018 total direct compensation opportunity was designed to be “at risk,” by tying at least half of his 2018 compensation opportunity to variable pay elements such as long-term equity incentive awards with performance-based vesting conditions, or PRSU awards, (as further described in the section below entitled “Equity Incentive Awards — Fiscal 2018 Equity Awards”) and our cash incentive bonus plan, which provides for a variable cash payment based on the Company’s achievement of certain pre-established financial goals. In addition, our other named executive officers had approximately one-third of their 2018 compensation opportunity tied to variable pay elements, which included long-term equity incentive awards with performance-based vesting conditions and awards under our cash incentive bonus plan.

By dedicating a meaningful percentage of our executives’ total direct compensation opportunity to these variable “at risk” pay elements rather than fixed pay elements like base salary, the Compensation Committee believes that we are able to better link executive incentives with the Company’s performance. The value of the target number of shares that may be earned under the 2018 PRSU awards granted to Mr. Wagner and to all of our named executive officers as a group, excluding Mr. Wagner, when calculated based on the value (i.e., the market value per share of our common stock as represented by the closing price of our common stock on the NASDAQ Global Select Market on the date of grant), represented 42% and 24%, respectively, of their total direct compensation opportunity, while 9% and 8%, respectively, of their 2018 total direct compensation opportunity was subject to our cash incentive bonus plan.

In keeping with the Company’s pay-for-performance philosophy, the fiscal 2018 equity awards granted to all of our named executive officers were comprised of a significant portion of PRSUs. The Compensation Committee believes that including PRSU awards in the total direct compensation opportunities of our executives whose individual performances and decisions have a direct impact on our Company’s performance helps to strengthen our overall pay-for-performance alignment by ensuring that a substantial portion of their compensation is aligned with the creation of value for our stockholders.

The following charts illustrate the breakdown of the total direct compensation pay mix awarded to Mr. Wagner and the average of all named executive officers (excluding our CEO) in fiscal 2018:

 

CEO Target Compensation Mix CFO Target Compensation Mix Restricted Stock Units 42% Salary 6% Target Bonus 6% Performance Stock Units 46% Restricted Stock Units 41% Salary 9% Target Bonus 5% Performance Stock Units 45% 52% Performance-Based Pay 50% Performance-Based

 

    

 

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Executive Compensation Discussion and Analysis (continued)

 

Executive Compensation Program Narrative

Base Salaries

Overview

To ensure that we continue to attract, retain and motivate our executive officers, we believe that we must offer base salaries that are competitive with those base salaries offered by other similarly situated companies in our industry and region. We believe that our base salaries are representative of the overall experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. None of our executives are currently party to any employment agreement that provides for automatic or scheduled increases in their base salary.

Base salaries are reviewed by our Compensation Committee annually and are adjusted from time-to-time where deemed appropriate.

Fiscal 2018 Base Salaries

In establishing the base salaries for our named executive officers for fiscal 2018, our Compensation Committee considered the following factors:

The following table sets forth the fiscal 2018 base salaries and the percentage increase over their fiscal 2017 base salaries for each of our named executive officers for the year ended December 31, 2018:

 

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Annual Cash Incentive Bonuses

Overview

All of our named executive officers (except for Mr. D’Angelo who is on a sales commission plan as described further below) are eligible to earn an annual cash bonus under our performance-based annual Cash Incentive Bonus Plan. Our annual cash bonuses are intended to reward our executives for the achievement of our financial and operational performance goals and objectives for the applicable fiscal year. The target annual cash bonus opportunity (assuming achievement of 100% of our goals) for each named executive officer is set by the Compensation Committee at the beginning of each fiscal year and expressed as a percentage of the applicable executive officer’s base salary, with potential cash bonus opportunity generally commensurate with each executive’s role and responsibilities. Pursuant to the terms of our Cash Incentive Bonus Plan, the maximum aggregate amount that may be paid to any one bonus plan participant during any fiscal year is $3 million.

2018 Annual Cash Incentive Bonus Plan

For 2018, our named executive officers were eligible to earn an annual cash incentive bonus equal to the following percentages of their 2018 base salary:

 

At the beginning of each fiscal year, the Compensation Committee determines which key performance measures should be used to set the Company’s annual cash incentive bonus targets for the year. For fiscal 2018, the Company’s annual cash incentive bonus plan was tied to two key performance measures:

For fiscal 2018, both performance measures and the target performance levels set by the Compensation Committee were prepared on a pro-forma basis excluding the financial results of the Jive acquisition. Please see Annex A to this Proxy Statement for a reconciliation of these non-GAAP measures.

 

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Executive Compensation Discussion and Analysis (continued)

 

Our Compensation Committee believes that basing the annual cash incentive bonus plan on recognized indicators of overall top and bottom-line Company performance helps to align our executive incentives with the interests of our stockholders in a balanced manner as our Company’s achievement of the target performance levels set by the Compensation Committee for these measures should also translate into stockholder value. When setting the target performance levels for each performance measure, the Compensation Committee considers factors such as our historical performance, growth rates and current market conditions and designs each target performance level to require significant effort and rigorous operational success on the part of our executive officers and the Company as a whole. For fiscal 2018, the target performance levels for the non-GAAP revenue and non-GAAP operating income measures were each weighted equally as being worth 50% of the potential 2018 cash incentive bonus opportunity for each named executive officer. For the purposes of calculating the 2018 annual cash incentive bonuses:

 

 

 

Typically, annual cash incentive bonuses are paid after the completion of the applicable fiscal year, based on the Company’s actual results versus the target performance levels established by the Compensation Committee at the beginning of the year. In the event that the Company’s actual results exceed or fall short of the target performance levels, cash incentive bonus amounts are increased or decreased accordingly. Our actual 2018 cash incentive bonus plan results versus the Compensation Committee’s pre-established target performance levels for non-GAAP operating income and non-GAAP revenues were as follows:

 

 

The Company achieved 100.3% of the 2018 non-GAAP operating income target and 98.4% of its non-GAAP revenue target performance level, which resulted in an achievement of 100.6% and 78.2%, respectively, of the performance measure set by the Compensation Committee. When the results of both performance measures were weighed together, the 2018 annual cash incentive bonuses for our named executive officers were awarded at approximately 89.4% of the established target performance levels and paid as follows:

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Mr. D’Angelo’s Fiscal 2018 Sales Commission Cash Incentive Plan

As our Senior Vice President, Chief Sales Officer, Mr. D’Angelo is not eligible to receive a bonus under our annual cash incentive bonus plan, but instead is assigned an annual sales quota approved by the Compensation Committee at the beginning of each year and is entitled to receive a monthly commission based on a percentage of the Company’s monthly sales bookings for each calendar month. The monthly sales bookings levels used to calculate Mr. D’Angelo’s commissions track the total contract value associated with subscription business closed during the applicable calendar month. Sales bookings are internal measures that we use to monitor our business and are not publicly disclosed in any form. We keep the target sales bookings levels and the percentage used to calculate Mr. D’Angelo’s commissions confidential for both operational and competitive reasons, but generally the annual sales quota assigned to Mr. D’Angelo and the sales bookings target levels for each calendar month are set at levels our Board of Directors has determined would require significant effort to achieve and would not be met by average or below average performance.

Based on our actual 2018 results, Mr. D’Angelo earned $407,315 in sales commissions in 2018.

Compensation Recovery (“Clawback”) Policy

The bonus awards granted under our annual cash incentive bonus plan are subject to our executive compensation recovery, or “clawback,” policy. This policy requires the reimbursement of excess incentive-based cash compensation paid to our executive officers in the event that we are required to prepare an accounting restatement due to the fraud or misconduct of any one of our executive officers. Pursuant to this policy, the Company may clawback the portion of any incentive-based cash compensation from our executive officers to the extent that the cash compensation paid was in excess of what would have been paid under the accounting restatement. This policy is applicable to all incentive-based cash compensation paid after the date of adoption of the policy (November 14, 2013) and it covers the three-year period preceding the date on which we are required to prepare the accounting restatement.

We also continue to monitor the SEC’s actions and will amend the policy to comply with the final regulations under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act when they are adopted by the SEC.

In addition, if we are required, as a result of misconduct, to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws, our CEO and CFO may be legally required to reimburse the Company for any bonus or other incentive-based compensation they received pursuant to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002.

Equity Incentive Awards

Overview

Our equity incentive award program is the primary compensation vehicle used to offer long-term incentives to our executive officers. Historically, we have granted all of our employees, including our executive officers, stock-based awards under our Amended and Restated 2009 Stock Incentive Plan (our “2009 Plan”), typically in the form of stock options or restricted stock units, or RSUs. We believe that equity incentive awards provide our executive officers with a strong link to our Company’s long-term performance, create an ownership culture within our Company and help to further align the interests of our executive officers with those of our stockholders by incentivizing them to create stockholder value.

The Compensation Committee believes that RSU awards are a valuable component of our annual compensation program for a number of reasons, including the fact that the majority of executive compensation packages offered by the companies in our compensation peer group include RSUs, RSUs are potentially less dilutive to the Company’s earnings per share than options, and the effectiveness of RSUs as a retention tool for retaining executive officers and other key employees since the time-based vesting feature of our equity awards incentivizes our executive officers to remain in our employment throughout the duration of their applicable vesting periods.

When determining the size of the RSU awards to be granted to our named executive officers, our Compensation Committee generally estimates the grant date fair value of potential stock awards to be granted and also considers other factors such as:

In addition to the above factors, when determining the size of RSU awards to be granted to new hires, including Messrs. Strassman and Van Zadelhoff during 2018, our Compensation Committee also considers the value of the compensation opportunities such employees forfeit when they leave a former employer to join LogMeIn and the need to provide a meaningful retention incentive, as well as an analysis of executive equity incentive awards as a percentage of our issued and outstanding shares of common stock, the equity incentive awards granted to our named executive officers as a percentage of the total equity granted and the value of equity incentive awards granted to our named executive officers as a percentage of the total value of all equity granted and the Company’s annual equity burn rates.

 

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Executive Compensation Discussion and Analysis (continued)

 

Fiscal 2018 Equity Awards

The Compensation Committee awarded our named executive officers long-term equity incentive awards on the Company’s usual cadence at the May 31, 2018 meeting of our Board of Directors. In keeping with the Company’s pay-for-performance philosophy, 50% of the equity awards granted to Messrs. Wagner and Herdiech were time-based RSUs while the remaining 50% of the equity awards granted to Messrs. Wagner and Herdiech were PRSUs with a market-based vesting condition tied to the Company’s achievement of a relative total stockholder return goal, as described further below. The rest of the Company’s executive officers, including each of the named executive officers, also received both time-based RSUs and PRSUs. In deciding to grant all executives PRSU awards, our Compensation Committee determined that, since the individual performances and decisions of our executive team have a direct influence on our Company’s overall performance, it was especially important to align their interests with those of our stockholders by linking a meaningful percentage of their target total direct compensation with the creation of value for our stockholders.

The number of shares of our common stock underlying the May 2018 RSU and PRSU awards granted to our named executive officers were as follows:

 

 

The market-based PRSUs granted at the May 31, 2018 meeting of our Board of Directors provide that each executive officer will earn a specified number of shares of the Company’s common stock based on the Company’s relative total stockholder return, or TSR, performance. Specifically, the vesting of the PRSUs is tied to (a) the level of TSR realized by the Company’s stockholders over a two- and three-year performance period, as compared to the TSR realized for that same period by the S&P North American Technology Software Index, or the Index, which was selected by the Compensation Committee due to the fact that it is a well-known index specific to the Company’s industry that would be relatively simple for stockholders to track for the purposes of measuring the Company’s long-term performance, and (b) the individual’s continued service with the Company through the applicable performance period. 50% of the shares underlying our named executive officers’ 2018 PRSU award are subject to a two-year performance period from May 1, 2018 to May 1, 2020, while the remaining 50% of its underlying shares are subject to a three-year performance period from May 1, 2018 to May 1, 2021. In deciding to measure the Company’s performance over two- and three-year performance periods, the Compensation Committee determined that staggering the vesting schedules of the PRSUs as two- and three-year long-term equity incentive awards would help to maximize the retention value of these awards by incentivizing the award recipients incrementally over the three-year performance period.

For the purposes of calculating the actual number of shares of the Company’s common stock that may be earned pursuant to the market-based PRSUs, 50% of the target number of shares underlying the 2018 PRSU awards may be earned for the two-year performance period, while the remaining 50% of the target number of shares underlying the 2018 PRSUs may be earned for the three-year performance period. Any shares that are not earned during the two-year performance period are forfeited and do not carry-over, or get applied, to the three-year performance period. Upon the conclusion of each performance period, the Compensation Committee shall determine the number of shares of our common stock earned by using the following formula:

 

Relative Performance Percentage = 100% + (the Company’s TSR – the Index’s TSR)

Once the applicable Relative Performance Percentage is calculated, the Compensation Committee will use this percentage to determine the actual number of shares of the Company’s common stock earned, which may range from 0% to 200% of the target number of shares granted depending on the Company’s level of achievement, as follows:

 

Notwithstanding the foregoing, in the event the Company’s TSR for a particular performance period is negative, then the total number of shares underlying the 2018 PRSU awards for such performance period that may be earned shall be capped at 100% of the on-target amount for such period, regardless of the Company’s TSR performance as compared to the Index’s TSR in such period.

 

 

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Executive Compensation Discussion and Analysis (continued)

 

2018 New Hire Equity Awards

In December 2018, in connection with the hire of Messrs. Strassman and Van Zadelhoff as our new GM, Unified Communications and Collaboration and our SVP, Chief Operating Officer, respectively, our Compensation Committee granted Mr. Strassman and Mr. Van Zadelhoff each new hire equity awards comprised of 75% time-based RSUs and 25% PRSUs with a market-based vesting condition tied to the Company’s achievement of a relative total stockholder return goal. In determining the size of the new hire grants awarded to Messrs. Strassman and Van Zadelhoff, the Compensation Committee considered the importance of each executive to LogMeIn’s success and their expected contributions to the Company’s overall business goals, the need to attract and retain top-executive talent in a competitive public company environment, as well as the value of the compensation opportunities these executives forfeited when they left their former employers to join LogMeIn.      

The number of shares of our common stock underlying the December 2018 RSU and PRSU awards granted to Messrs. Strassman and Van Zadelhoff were as follows:

 

 

The market-based PRSUs granted to Messrs. Strassman and Van Zadelhoff provide that each executive will earn a specified number of shares of the Company’s common stock based on the Company’s relative TSR performance subject to (a) the individual’s continued service with the Company through the applicable performance period and (b) the level of TSR realized by the Company’s stockholders over a two and three-year performance period, as compared to the TSR realized for that same period by the S&P North American Technology Software Index. 50% of the shares underlying Messrs. Strassman and Van Zadelhoff 2018 PRSU awards are subject to a two-year performance period from November 1, 2018 to December 1, 2020, while the remaining 50% of its underlying shares are subject to a three-year performance period from November 1, 2018 to December 1, 2021.

The same method described above for the fiscal 2018 equity awards granted to the other named executive officers is used to calculate the actual number of shares of the Company’s common stock that may be earned pursuant to these market-based PRSUs granted to Messrs. Strassman and Van Zadelhoff.

Update on February 2017 Merger-Related Equity Awards

In February 2017, shortly after the Company completed its acquisition of the GoTo family of service offerings, or the GoTo Business, from Citrix, the Compensation Committee granted the Company’s executive officers a Merger-related equity award comprised of 50% time-based RSUs and 50% PRSUs with a performance-based vesting condition tied to the Company’s achievement of two Adjusted EBITDA Margin goals over a two-year cliff vesting period. Both the time-based and performance-based portions of the RSU awards had a vesting commencement date of February 14, 2017 and two-year cliff vesting schedules, each subject to their respective vesting conditions being satisfied.

For the time-based portion of the RSU awards, 100% of the shares subject to the time-based RSU awards vested on February 14, 2019, subject to the named executive officer continuing to be an employee, officer or director of, or consultant or advisor to, the Company on the vesting date. The PRSU portion of the awards had a performance-based vesting condition tied to the Company’s achievement of a two-year Adjusted EBITDA Margin goal, as measured over two performance periods with 50% of the PRSU subject to a performance period starting on January 1, 2017 and ending on December 31, 2017 (which includes the GoTo Business’ January 2017 revenue and Adjusted EBITDA), and the remaining 50% of the PRSU subject to a performance period starting on January 1, 2018 and ending on December 31, 2018. If the Adjusted EBITDA Margin target for the applicable performance period was not achieved, the portion of the PRSUs subject to that performance period would have been forfeited.

In deciding to select the Adjusted EBITDA Margin performance measure, the Compensation Committee considered the Company’s previously announced goal of achieving more than $100 million of run rate cost synergies within the first two years following the completion of the Merger, which was expected to benefit the Company’s stockholders by generating significant free cash flow and operational efficiencies needed to continuously improve the Company’s financial profile. The Compensation Committee believed that the Adjusted EBITDA Margin measure was the financial operating measure that most closely resembled the Company’s $100 million synergy goal and that by using the Adjusted EBITDA Margin measure they were aligning a substantial portion of our named executive officer’s compensation with the realization of the $100 million synergy goal and the creation of value for our stockholders. In connection with these grants:

 

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Executive Compensation Discussion and Analysis (continued)

 

Our actual Adjusted EBITDA Margin results for the 2017 and 2018 performance periods versus the Compensation Committee’s pre-established target performance levels for Adjusted EBITDA Margin were as follows:

 

 

Based on these results, the Compensation Committee deemed the performance-based vesting condition was achieved, resulting in 100% of the Merger-related PRSUs being earned by our executive officers. The following table summarizes the number of shares earned by our named executive officers which fully vested as of February 14, 2019:

 

 

New Hire Sign-on Bonuses

We provide sign-on bonuses on a case-by-case basis subject to our Compensation Committee’s analysis and determination whether it is necessary and appropriate to advance the Company’s interests, including to attract top-executive talent from other companies. We believe that, when used properly, sign-on bonuses can be an effective means of offsetting the compensation opportunities executives typically must forfeit when they leave a former employer to join LogMeIn.

In connection with Mr. Van Zadelhoff’s appointment as our Chief Operating Officer in November 2018, the Board of Directors, on the recommendation of the Compensation Committee, approved a sign-on bonus of $275,000. In connection with Mr. Strassman’s appointment as our Senior Vice President and General Manager of our Unified Communications and Collaboration business unit in November 2018, on the recommendation of the Compensation Committee, the Board of Directors approved a sign-on bonus of $150,000. Each of these sign-on bonuses were paid, subject to taxes and applicable withholdings, within 30 days of the named executive officer’s respective start date and are subject to repayment on a pro-rated basis should either executive voluntarily resign or be terminated for cause within twelve months of their start date (other than in connection with a layoff).

Exchange Act Rule 10b5-1 Sales Plans

Certain of our directors and executive officers have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy or sell shares of our common stock on a periodic basis. Pursuant to these Rule 10b5-1 plans, a broker executes trades subject to parameters established by the director or executive officer upon entering into the plan, without further direction from them. Once entered into, the director or executive officer may amend or terminate the plan only in certain circumstances. We have implemented an internal policy that prevents our directors and executive officers from selling any shares of our common stock outside of a Rule 10b5-1 plan, regardless of whether or not they are in possession of material, nonpublic information.

 

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Executive Compensation Discussion and Analysis (continued)

 

Tax Considerations for Equity Awards

Prior to the Tax Cuts and Jobs Act (“Tax Reform”) that was signed into law December 22, 2017, Section 162(m) of the Internal Revenue Code generally limited to $1 million the U.S. federal income tax deductibility of compensation paid in one year to a corporation’s Chief Executive Officer and certain other executive officers. Compensation that qualified as “performance-based” under Section 162(m) of the Internal Revenue Code was exempt from this $1 million limitation. As part of Tax Reform, the ability to rely on this “qualified performance-based compensation” exception was eliminated, and the limitation on deductibility was generally expanded to include all named executive officers. Although we maintained compensation arrangements that were intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code prior to the Tax Reform, subject to certain transition relief rules, we may no longer take a deduction for any compensation paid to our covered employees in excess of $1 million.

The Compensation Committee believes that the tax deduction is only one of several relevant considerations in setting compensation and stockholder interests are best served by not restricting the Compensation Committee’s discretion and flexibility in structuring compensation programs, even though such programs may result in non-deductible compensation expenses. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that in certain cases is not deductible for federal income tax purposes.

Accounting for Stock-Based Compensation

We follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and members of our Board of Directors, including options to purchase shares of our common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.

Stock Ownership Guidelines

Each current executive officer (defined for purposes of the ownership guidelines as each executive officer subject to Section 16 of the Exchange Act) or newly appointed executive officer is required to own, within five years from the date of his/her hire or promotion, shares of our common stock having an aggregate value at least equal to: (i) three times the base salary for our CEO and (ii) one times the base salary for all other executive officers. For purposes of this calculation, shares of the Company’s common stock held directly or indirectly by the executive officer are included, while any shares of our common stock subject to outstanding and unvested RSU awards or any outstanding and unvested, or vested but unexercised, stock option awards are excluded. Each executive officer remains subject to the stock ownership guidelines as long as they continue to be employed by the Company as an executive officer. Exceptions to the guidelines may be made in the case of extraordinary circumstances, such as personal hardship, in the Compensation Committee’s sole discretion.

Anti-Hedging and Pledging Policy

Our insider trading policy prohibits any employee, including the named executive officers, and any member of the Board of Directors from “hedging” ownership of Company securities by engaging in short sales or trading in any puts, calls and other derivatives involving Company securities. In addition, all of our executive officers and members of our Board of Directors are prohibited from purchasing Company securities on margin, borrowing against Company securities held in a margin account and pledging Company securities as collateral for a loan.

Equity Award Grant Policy

Equity award grants are made on a quarterly basis in the discretion of our Board of Directors or Compensation Committee consistent with our incentive compensation program objectives. The exercise price of any stock options granted pursuant to the 2009 Plan may not be less than the fair market value of the common stock on the date of grant.

Severance and Change in Control Benefits

Our named executive officers are entitled to certain severance payments and benefits in connection with a qualifying termination of employment, including a qualifying termination of employment occurring in connection with a change in control. For more detail regarding these benefits and why we grant them, please refer to the section entitled “Potential Payments Upon Termination or Change of Control” below.

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Fiscal 2018 Executive Compensation Tables

2018 Summary Compensation Table

The following table sets forth information regarding the compensation paid to and either received or earned by our named executive officers during fiscal 2018, fiscal 2017 and fiscal 2016.

 

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Grants of Plan-Based Awards in 2018

The following table sets forth information regarding the grant of plan-based awards made during fiscal 2018 to our named executive officers:

 

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Outstanding Equity Awards at 2018 Fiscal Year End

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2018:

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Option Exercises and Stock Vested in 2018

The following table sets forth information regarding each exercise of stock options and the vesting of RSU awards by each of our named executive officers during the year ended December 31, 2018:

 

 

Employment Agreements

We do not have formal employment agreements with any of our named executive officers. Instead, the initial compensation of each named executive officer is set forth in an employment offer letter that we execute with them upon the commencement of his or her employment. Typically, these offer letters set forth the applicable compensation, equity award vesting arrangements and post-employment compensation payments and benefits, if any, for each named executive officer. Each offer letter provides that the named executive officer’s employment is “at will.” As a condition to their employment, our named executive officers entered into non-competition, non-solicitation agreements and proprietary information and inventions assignment agreements. Under these agreements, each named executive officer has agreed (i) not to compete with us or to solicit our employees during his or her employment and for a period of 12 months after the termination of his or her employment and (ii) to protect our confidential and proprietary information and to assign to us intellectual property developed during the course of his or her employment.

Separation Agreement with Christopher K. Battles

In July 2018, we entered into a separation agreement with Mr. Battles pursuant to which he was entitled to receive the following severance payments and benefits in connection with his departure from the Company effective August 15, 2018: (i) a lump sum cash payment of $380,000, representing 12 months of his base salary; (ii) a lump sum cash payment of $750,000, representing the approximate cash value of 75% of the Merger-related PRSUs granted to Mr. Battles in 2017, which Mr. Battles earned and would have received if he had remained employed at the Company through the vesting date of the PRSUs; (iii) accrued paid time off and (iv) continued medical, dental and vision insurance coverage pursuant to COBRA through August 31, 2019. These severance payments and benefits are reflected in the “All Other Compensation” column of the 2018 Summary Compensation Table above. All unvested LogMeIn equity awards held by Mr. Battles were forfeited as of the date of his departure. Mr. Battles’ receipt of the separation payments and benefits was subject to his execution and non-revocation of a general release of claims in favor of the Company.

Potential Payments Upon Termination or Change in Control

Our general executive severance program states that the Company’s named executive officers would be entitled to receive a severance benefit equal to one (1) times their base salary and 12 months of COBRA insurance coverage in the event that their employment was terminated by the Company either without “Cause” or by them for “Good Reason.” We also maintain an additional executive severance program in the event of a “Change in Control.” In the event either Mr. Wagner or Mr. Herdiech were to be terminated within 24 months of a “Change in Control” either without “Cause” or by him for “Good Reason,” Mr. Wagner and Mr. Herdiech would be entitled to receive a severance benefit equal to two (2) times their base salary and target cash incentive bonus amount, plus an amount equal to 24 months of COBRA insurance coverage. All other executives would be entitled to receive a severance benefit equal to one (1) times their base salary and target cash incentive bonus amount, plus 12 months of COBRA insurance coverage if they were terminated within 24 months of a “Change in Control” either without “Cause” or by himself for “Good Reason.”

 

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Executive Compensation Discussion and Analysis (continued)

 

In addition to the cash severance payments described above, the equity awards granted to all of our named executive officers include a ‘‘double trigger’’ vesting provision, which provides that, if the named executive officer’s employment is terminated (i) by us other than for “Cause,” death or disability or (ii) by the named executive officer for “Good Reason,” within 24 months following a Change in Control of the Company, any remaining outstanding and unvested portion of their applicable equity award will immediately become vested in full. This “double trigger” vesting provision has been included in all time-based and performance-based RSU awards granted to our named executive officers since 2012. Additionally, beginning in fiscal 2017, the agreements governing PRSU awards granted to our named executive officers also include a “double trigger” vesting provision that provides for the accelerated vesting of any unvested shares of our common stock that have been earned pursuant to the applicable performance-based vesting condition for the pro-rated performance period as measured as of the date of termination in the event their employment is terminated (i) by us other than for “Cause,” death or disability or (ii) by him for “Good Reason,” in either case, within 24 months following a Change in Control.

As used above:

 

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Executive Compensation Discussion and Analysis (continued)

 

The following table shows the potential payments and benefits that would be received by each named executive officer if his employment was terminated by us without “Cause” or by the named executive officer for “Good Reason”. The amounts reported in the table below have been calculated based on the assumption that the employment termination took place on December 31, 2018.

 

 

 

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Executive Compensation Discussion and Analysis (continued)

 

Indemnification Agreements

We have entered into indemnification agreements with each of our directors. Under these indemnification agreements, we agree to indemnify these directors to the fullest extent permitted by law for claims arising in his capacity as our director, officer, employee or agent, provided that he or she acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, our best interests and, with respect to any criminal proceeding, had no reasonable basis to believe that his or her conduct was unlawful. In the event that we do not assume the defense of a claim against a director or executive officer, we are required to advance his or her expenses in connection with their defense, provided that they undertake to repay all amounts advanced if it is ultimately determined that they are not entitled to be indemnified by us.

We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our Company pursuant to the foregoing provisions, the opinion of the SEC is that such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

In addition, we maintain standard policies of insurance under which coverage is provided to our directors and executive officers against losses arising from claims made by reason of breach of duty or other wrongful act, and to us with respect to payments which may be made by us to such directors and officers pursuant to the above indemnification provisions or otherwise as a matter of law.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K (“Item 402(u)”), the Company is providing the following estimate of the ratio of the median of the annual total compensation of all of our employees except Mr. William Wagner, our President and CEO, to the annual total compensation of Mr. Wagner. We consider the pay ratio specified to be a reasonable estimate, calculated in a manner consistent with Item 402(u). We determined the pay ratio by dividing Mr. Wagner’s total 2018 compensation, as disclosed in the Summary Compensation Table, by the total 2018 compensation of our median employee, using the same components of compensation as used in the Summary Compensation Table for the CEO.

For the year ended December 31, 2018:

Our median employee was determined using the compensation of our employee population of approximately 3,589 individuals, including employees working both within and outside of the U.S. who were actively employed on December 31, 2018. We used their total cash compensation including the grant date fair value of equity granted, if any, from January 1, 2018 to December 31, 2018 as a consistently applied compensation measure to identify our median employee. Consistent with SEC rules, we have annualized this number for part-time and full-time employees who were employed for less than the full year in 2018, but not for our employees whose positions are seasonal or temporary in nature. Once we identified the median employee, we determined their total compensation using the same methodology we use for calculating Mr. Wagner’s Summary Compensation Table compensation.

The CEO pay ratio was calculated in accordance with SEC rules based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to the Company’s pay ratio as disclosed above.

 

LOGMEIN, INC.   61

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Executive Compensation Discussion and Analysis (continued)

 

Equity Compensation Plan Information

We currently maintain an equity compensation plan that provides for the issuance of shares of our common stock to our officers, employees, directors, consultants and advisors. Our 2009 stock incentive plan, or 2009 Plan, became effective upon the closing of our initial public offering and was adopted by our Board of Directors on June 9, 2009, approved by our stockholders on June 12, 2009 and was most recently amended and restated as of January 31, 2017. Our 2009 Plan, as amended, provides for the grant of non-statutory stock options, restricted stock awards and other stock-based awards to our employees, officers, directors, consultants and advisors. The total number of shares of our common stock allowed to be issued under the 2009 Plan is the sum of 14,723,996 shares plus the number of shares of our common stock subject to outstanding awards under our 2009 Plan, which expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us pursuant to a contractual repurchase right or are withheld, but not issued, by the Company upon vesting of full-value award shares in satisfaction of tax withholding obligations associated with their vesting.

The following table provides information about the securities authorized for issuance under our equity compensation plans as of March 31, 2019:

 

 

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management. Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

By the Compensation Committee of the Board of Directors of LogMeIn, Inc.

David J. Henshall, Chairman

Steven J. Benson

Robert M. Calderoni

Michael J. Christenson

 

 

 

62   LOGMEIN, INC.

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Security Ownership of Certain Beneficial Owners and Management

The following table contains information as of April 2, 2019 about the beneficial ownership of shares of our common stock by:

 

 

 

 

 

LOGMEIN, INC.   63

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock, or reporting persons, to file reports with the SEC disclosing their ownership of, and transactions in, our common stock and other equity securities. Whenever a reporting person files a report with the SEC, the reporting person is also required to send us a copy. Based solely on our review of reports that we have received from the reporting persons or written representations from such persons, we believe that all of the reporting persons complied with all Section 16(a) filing requirements during 2018.

* * *

The Board of Directors hopes that stockholders will attend the meeting. Whether or not you plan to attend, you are urged to vote your shares by Internet, mail or in person. A prompt response will greatly facilitate arrangements for the meeting, and your cooperation will be appreciated.

By Order of the Board of Directors,

 

Robert M. Calderoni

Chairman

April 12, 2019

 

 

 

64   LOGMEIN, INC.

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ANNEX A

Reconciliation of Non-GAAP Financial Measures

In this Proxy Statement, we present certain non-GAAP financial information, including non-GAAP revenue, cash incentive bonus plan non-GAAP revenue, merger-related equity award non-GAAP revenue, non-GAAP operating income, cash incentive bonus plan non-GAAP operating income and merger-related equity award Adjusted EBITDA. The exclusion of certain expenses in the calculation of non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. We anticipate excluding these expenses in the future presentation of our non-GAAP financial measures.

The Company believes that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods and uses these measures in financial reports prepared for management and the Company’s Board of Directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software-as-a-service companies, many of which present similar non-GAAP financial measures to investors. The Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with U.S. GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant elements that are required to be recorded in our financial statements in connection with our GAAP results. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents our non-GAAP financial measures in connection with our GAAP results.

The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, and not to rely on any single financial measure to evaluate the Company’s business. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this Proxy Statement are included below:

 

LOGMEIN, INC.   A-1

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Annex A (continued)

 

How we define, calculate and use certain non-GAAP financial measures

The following Non-GAAP financial measures have been used in this Proxy Statement:

 

 

A-2   LOGMEIN, INC.

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Annex A (continued)

 

 

 

 

 

 

LOGMEIN, INC.   A-3

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Annex A (continued)

 

 

 

 

 

 

A-4   LOGMEIN, INC.

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ANNEX B

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I.

PURPOSE

This LogMeIn, Inc. 2019 Employee Stock Purchase Plan (as it may be amended or restated from time to time, the “Plan”) has been designed to assist Eligible Employees of LogMeIn, Inc., a Delaware corporation (the “Company”), and its Designated Subsidiaries in acquiring a stock ownership interest in the Company pursuant to a plan which is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code, and to help Eligible Employees provide for their future security and to encourage them to remain in the employment of the Company and its Designated Subsidiaries.

ARTICLE II.

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates. Masculine, feminine and neuter pronouns are used interchangeably and each comprehends the others.

The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto.

 

 

LOGMEIN, INC.   B-1

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Annex B (continued)

 

 

B-2    LOGMEIN, INC.

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Annex B (continued)

 

ARTICLE III.

SHARES SUBJECT TO THE PLAN

ARTICLE IV.

OFFERING PERIODS; OFFERING DOCUMENTS; PURCHASE DATES

ARTICLE V.

ELIGIBILITY AND PARTICIPATION

 

LOGMEIN, INC.   B-3

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Annex B (continued)

 

ARTICLE VI.

GRANT AND EXERCISE OF RIGHTS

 

B-4    LOGMEIN, INC.

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Annex B (continued)

 

ARTICLE VII.

WITHDRAWAL; CESSATION OF ELIGIBILITY

ARTICLE VIII.

ADJUSTMENTS UPON CHANGES IN STOCK

 

LOGMEIN, INC.   B-5

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Annex B (continued)

 

ARTICLE IX.

AMENDMENT, MODIFICATION AND TERMINATION

Such modifications or amendments shall not require stockholder approval or the consent of any Participant.

 

B-6    LOGMEIN, INC.

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Annex B (continued)

 

ARTICLE X.

TERM OF PLAN

The Plan shall be effective on the Effective Date. The effectiveness of the Plan shall be subject to approval of the Plan by the stockholders of the Company within twelve months following the date the Plan is first approved by the Board. No right may be granted under the Plan prior to such stockholder approval. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan.

ARTICLE XI.

ADMINISTRATION

ARTICLE XII.

MISCELLANEOUS

 

LOGMEIN, INC.   B-7

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Annex B (continued)

 

* * * * *

 

 

B-8    LOGMEIN, INC.

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

The Plan and this Sub-Plan are complimentary to each other and shall be deemed as one. In any case of contradiction between the provisions of this Sub-Plan and the Plan, the provisions set out in the Sub-Plan shall prevail. Any capitalized terms used in this Sub-Plan but not defined shall have the meaning given to those terms in the Plan.

* * * * *

 

 

 

LOGMEIN, INC.   B-9

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

AUSTRALIA

(a)The Eligible Employee agrees to indemnify and keep indemnified the Company, its Parent or any Subsidiary from and against any liability for or obligation to pay any tax liability that is attributable to: (i) the grant or exercise of a right under the Plan; (ii) the acquisition by the Eligible Employee of the Shares on exercise of the right; or (iii) the disposal of any Shares (each, a “Tax Liability”).

(b)The provisions of Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) (the “Act”) shall apply to rights granted under the Plan subject to the requirements of that Act.

(c)Without prejudice to the terms of the Plan, rights cannot be exercised until the Eligible Employee has made such arrangements as the Company may require for the satisfaction of any Tax Liability that may arise in connection with the exercise of the right and/or the acquisition of the Shares by the Eligible Employee. Where any Tax Liability is likely to arise, the Company, the Employer, the Parent or any Subsidiary may recover from the Eligible Employee an amount of money sufficient to meet the Tax Liability by any of the following arrangements:

 

B-10    LOGMEIN, INC.

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

CANADA

The parties acknowledge that it is their express wish that the Plan, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Consentement relatif à la langue utilisée. Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

In the event of termination of an Eligible Employee’s employment, the Eligible Employee’s right to purchase Shares under the Plan, if any, will terminate, and he or she shall be deemed to have elected to withdraw from the Plan, effective as of the date that is the earlier of (i) the date on which the Eligible Employee receives a notice of termination of employment from the Company or the Employer, or (ii) the date on which the Eligible Employee is no longer employed, regardless of any notice period or period of pay in lieu of such notice required under local law. The Administrator shall have the exclusive discretion to determine when the Eligible Employee is no longer employed for purposes of the Plan. The payroll deductions credited to such Eligible Employee’s account during the Offering Period shall be paid to such Eligible Employee or, in the case of his or her death, to the person or persons entitled thereto under Section 12.4 of the Plan, as soon as reasonably practicable and such Eligible Employee’s rights for the Offering Period shall be automatically terminated on the effective date described in the previous sentence.

 

LOGMEIN, INC.   B-11

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Annex B (continued)

 

Regardless of any action the Company or the Employer takes with respect to any or all income tax (including foreign, federal, state and local tax), social insurance, payroll tax, payment on account or other tax-related items related to a Participant’s participation in the Plan and legally applicable to a Participant (“Withholding Taxes”), the ultimate liability for all Withholding Taxes legally due by a Participant is and remains such Participant’s responsibility and may exceed the amount actually withheld by the Company and/or the Employer. Neither the Company and/or the Employer (i) make any representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of rights under the Plan, including but not limited to, the grant, vesting, exercise of the right, the issuance of Shares upon exercise, the subsequent sale of Shares acquired pursuant to the exercise of the right and the receipt of any dividends, and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the rights under the Plan to reduce or eliminate a Participant’s liability for Withholding Taxes or achieve any particular tax result. Further, if a Participant has become subject to tax in more than one jurisdiction, the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Withholding Taxes in more than one jurisdiction. Prior to any relevant taxable or tax withholding event (“Tax Date”), as applicable, a Participant will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Withholding Taxes. In this regard, the Company and/or the Employer or their respective agents are authorized, at their discretion, to satisfy the obligations with regard to all Withholding Taxes by one or a combination of the following: (A) accept a cash payment in USD in the amount of Withholding Taxes, (B) withhold whole Shares which would otherwise be delivered to a Participant having an aggregate fair market value, determined as of the Tax Date, or withhold an amount of cash from the Participant’s wages or other cash compensation which would otherwise be payable to the Participant by the Company and/or the Employer, equal to the amount necessary to satisfy any such obligations, (C) withhold from proceeds of the sale of Shares acquired upon exercise of the right either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization), or (D) a cash payment to the Company by a broker-dealer acceptable to the Company to whom a Participant has submitted an irrevocable notice of exercise. To avoid negative accounting treatment, the Company may withhold or account for Withholding Taxes by considering applicable minimum statutory withholding rates. If the obligation for Withholding Taxes is satisfied by withholding in Shares, for tax purposes, a Participant is deemed to have been issued the full number of Shares subject to the right, notwithstanding that a number of Shares are held back solely for the purpose of paying the Withholding Taxes. Finally, a Participant shall pay to the Company or the Employer any amount of Withholding Taxes that the Company or the Employer may be required to withhold as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company shall have sole discretion to deliver the Shares if a Participant fails to comply with such Participant’s obligations in connection with the Withholding Taxes as described in this section and each Participant unconditionally consents to and approves any such action taken by the Company. A Participant (or any beneficiary or person entitled to act on a Participant’s behalf) shall provide the Company with any forms, documents or other information reasonably required by the Company.

 

B-12    LOGMEIN, INC.

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

GERMANY

It shall be a term and condition of each award under the Plan that an Eligible Employee acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, and its subsidiaries LogMeIn USA, Inc., LogMeIn Germany GmbH and LogMeIn Ireland Limited (all together, the “Company Entities”), hold certain personal information, including the Eligible Employee’s name, home address and telephone number, date of birth, social security number or other employee tax identification number, employment history and status, salary, nationality, job title, and any equity compensation grants awarded, cancelled, purchased, vested, unvested or outstanding in the Eligible Employee’s favor, for the only purpose of managing and administering the Plan (“Data”). The Company Entities will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. The Company Entities may also make the Data available to public authorities where required under locally applicable law. These recipients may be located in the United States, the European Economic Area, or elsewhere, which the Eligible Employee separately and expressly consents to, accepting that outside the European Economic Area, data protection laws may not be as protective as within. The third parties currently assisting the Company in the implementation, administration and management of the Plan are the following: Fidelity Stock Plan Services, LLC of 245 Summer Street, V72A, Boston, MA 02210. However, from time to time, the Company Entities may retain additional or different third parties for any of the purposes mentioned on which the Company will inform the Eligible Employee and seek additional consent of the Eligible Employee. The Eligible Employee hereby authorizes the Company Entities to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan on behalf of the Eligible Employee to a third party with whom the Eligible Employee may have elected to have payment made pursuant to the Plan. A Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company through its local Human Resources Director; however, withdrawing the consent may affect the Participant’s ability to participate in the Plan and receive the benefits under the subscription agreement. Data will only be held as long as necessary to implement, administer and manage the Participant’s participation in the Plan and any subsequent claims or rights.

 

LOGMEIN, INC.   B-13

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Annex B (continued)

 

 

B-14    LOGMEIN, INC.

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

HUNGARY

 

LOGMEIN, INC.   B-15

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

INDIA

 

B-16    LOGMEIN, INC.

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

IRELAND

 

LOGMEIN, INC.   B-17

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

ISRAEL

 

B-18    LOGMEIN, INC.

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

NETHERLANDS

 

LOGMEIN, INC.   B-19

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Annex B (continued)

 

LOGMEIN, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

SUB-PLAN FOR INTERNATIONAL PARTICIPANTS

UNITED KINGDOM

 

 

 

 

B-20    LOGMEIN, INC.

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important notice regarding the availability of proxy materials for the stockholder meeting of logmein, inc. to be held on: may 30, 2019, at 9:00 a.m. eastern time at the offices of latham & watkins llp, john hancock tower, 200 clarendon street, 27th floor, boston ma 02116 this communication presents only an overview of the more complete proxy materials that are available to you on the internet. we encourage you to access and review all of the important information contained in the proxy materials before voting. if you want to receive a paper or e-mail copy of the proxy materials you must request one. there is no charge to you for requesting a copy. to facilitate timely delivery please make the request as instructed below before may 20, 2019. please visit https://www.proxydocs.com/logm, where the following materials are available for view: • notice of annual meeting of stockholders • proxy statement • form of electronic proxy card • annual report on form 10-k to request material: tele phone: 888-proxy-na (888-776-9962) 718-921-8562 (for international callers) e-mail: info@astfinancial.com web site: https://us.astfinancial.com/onlineproxyvoting/proxyvoting/requestmaterials to vote: online: to access your online proxy card, please visit www.voteproxy.com and follow the on-screen instructions or scan the qr code with your smartphone. you may enter your voting instructions at www.voteproxy.com up until 11:59 pm eastern time the day before the cut-off or meeting date. in person: you may vote your shares in person by attending the annual meeting. mail: you may request a card by following the instructions above. company number account number control number 1. election of directors: 01 steven j. benson class i director 02 robert m. calderoni class i director 03 michael j. christenson class i director 2. ratification of appointment of deloitte & touche llp as independent registered public accounting firm for fiscal year ending december 31, 2019. 3. to approve the adoption of the company’s proposed 2019 employee stock purchase plan (“espp”). 4. advisory vote for the approval of the company’s executive compensation. in their discretion, the proxies are authorized to vote upon such other business as may properly come before the annual meeting. the board of directors recommends a vote “for” the election of director nominees and “for” proposals 2, 3 and 4. please note that you cannot use this notice to vote by mail.