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Table of Contents
Compensation Discussion and Analysis

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No.           )

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

TrueCar, Inc.

(Name of Registrant as Specified In Its Charter)

 

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

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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Table of Contents

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Notice of 2020 Annual Meeting of Stockholders

DATE
Thursday, May 21, 2020

TIME
8:30 a.m. Pacific Time

PLACE
www.virtualshareholdermeeting.com/True2020

RECORD DATE
March 26, 2020

YOUR VOTE IS IMPORTANT

YOU CAN VOTE IN ONE OF THREE WAYS

 

 

INTERNET

Visit the website noted on your proxycard to vote online.


 

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TELEPHONE

Use the toll-free telephone number on your proxy card to vote by telephone.


 

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MAIL

Sign, date, and return your proxy card in the enclosed envelope to vote by mail.


 

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ITEMS OF BUSINESS

1.
To elect three Class III directors to serve until the 2023 annual meeting of stockholders or until their successors are duly elected and qualified;
2.
To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;
3.
To approve, on an advisory basis, the fiscal 2019 compensation of our named executive officers; and
4.
To transact such other business that may properly come before the Annual Meeting or any adjournment or postponement thereof.

We are pleased to invite you to attend our 2020 Annual Meeting of Stockholders. Our board of directors has fixed the close of business on March 26, 2020 as the record date for the Annual Meeting. Only stockholders of record as of March 26, 2020 are entitled to notice of and to vote at the Annual Meeting or any postponements or adjournments thereof. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying proxy statement.

Sincerely,

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Michael Darrow
President and Chief Executive Officer
Santa Monica, California

April 8, 2020


Your vote is important. Whether or not you plan to attend the Annual Meeting by live webcast, we urge you to submit your vote on the Internet or by telephone or mail to ensure your shares are represented. For specific instructions on how to vote your shares, please refer to the section entitled "General Information" and the instructions on the Notice of Internet Availability. For additional instructions on voting by telephone or the Internet, please refer to your proxy card. Returning the proxy does not deprive you of your right to attend the virtual meeting and to vote your shares at the virtual meeting. Please vote as soon as possible.


The Annual Meeting will be a completely virtual meeting of stockholders. All stockholders are cordially invited to attend the Annual Meeting by live webcast. You will not be able to attend the Annual Meeting in person. As described in more detail in the accompanying proxy statement, our board of directors believes that holding a virtual stockholder meeting facilitates attendance, increases participation and communication and offers significant time and cost savings to us and our stockholders and therefore has chosen this over an in-person meeting. To participate, vote or submit questions during the Annual Meeting by live webcast, please visit www.virtualshareholdermeeting.com/True2020.

In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission, we are once again pleased to provide our stockholders access to our proxy materials on the Internet at http://materials.proxyvote.com/89785L rather than in paper form. The Notice of Internet Availability, which contains instructions on how to access the proxy materials and our 2019 Annual Report to Stockholders, is first being given or sent on or about April 8, 2020 to our stockholders entitled to vote at the Annual Meeting. Our stockholders will also have the ability to request that a printed set of the proxy materials be sent to them by following the instructions in the Notice of Internet Availability.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 21, 2020: This proxy statement, along with the 2019 Annual Report to Stockholders, is available at the following website: http://materials.proxyvote.com/89785L.

By furnishing a Notice of Internet Availability and access to our proxy materials by the Internet, we are lowering the costs and reducing the environmental impact of our Annual Meeting.

The Notice of Internet Availability will also provide instructions on how you may request electronic or paper delivery of future proxy materials. If you choose to receive electronic delivery of future proxy materials, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by electronic or paper delivery will remain in effect until you terminate it. We encourage you to choose to receive future proxy materials by electronic delivery, which will (i) allow us to provide you with the information you need in a more timely manner, (ii) reduce printing and mailing documents to you and (iii) conserve natural resources.


Table of Contents

Table of Contents

Proxy Statement Summary

  1

Executive Officers, Directors and Corporate Governance

 
4

Executive Officers and Directors

  4

Board Composition

  10

Board Meetings and Director Communications

  10

Policy Regarding Nominations

  10

Director Independence

  11

Board Committees

  11

Compensation Committee Interlocks and Insider Participation

  15

Code of Business Conduct and Ethics

  15

Board Leadership Structure

  16

Board's Role in Risk Oversight

  16

Information on Compensation Risk Assessment

  16

Non-Employee Director Compensation

  17

Outside Director Compensation Policy

  17

Security Ownership of Certain Beneficial Owners and Management

 
19

Compensation Discussion and Analysis

 
23

Summary Compensation Table

  42

Grants of Plan Based Awards

  44

Outstanding Equity Awards at Fiscal Year-End

  46

Option Exercises and Stock Vested

  49

Executive Employment Arrangements

  49

Potential Payments Upon Termination, Change in Control or Certain Other Events

  51

Equity Compensation Plan Information

  60

CEO Pay Ratio Disclosure

  61

Certain Relationships and Related Party and Other Transactions

 
63

Audit Committee Report

 
65

Proposal One: Election of Directors

 
66

Proposal Two: Ratification of Selection of Independent Registered Public Accountants

 
67

Proposal Three: Advisory Vote to Approve Named Executive Officer Compensation

 
69

General Information

 
71

ANNEX A — Reconciliation of Adjusted EBIDTA to GAAP Net Loss

 
78

Table of Contents

2020 ANNUAL
PROXY STATEMENT

 

Proxy Statement Summary

This summary highlights selected information in this Proxy Statement. Please review the entire document before voting.

ANNUAL MEETING OF STOCKHOLDERS


 

 

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  DATE   TIME   PLACE   RECORD DATE
  May 21, 2020   8:30 a.m. Pacific Time   www.virtualshareholder
meeting.com/True2020

 
March 26, 2020
       

PROPOSALS AND BOARD RECOMMENDATIONS

Proposals
  Board
Recommendation

  Page
Reference


 1

 

Election of Directors

 

FOR

 

66
             

 2

 

Ratification of independent registered public accounting firm

 

FOR

 

67
             

 3

 

Advisory vote on executive compensation

 

FOR

 

69

HOW TO VOTE


 

 

INTERNET

Visit the website noted on your proxycard to vote online.


 

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MAIL

Sign, date, and return your proxy card in the enclosed envelope to vote by mail.


 

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TELEPHONE

Use the toll-free telephone number on your proxy card to vote by telephone.


 

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IN PERSON

You will not be able attend the Annual Meeting in Person.


 

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Table of Contents

2020 ANNUAL
PROXY STATEMENT

 

Proxy Summary

SNAPSHOT OF BOARD OF DIRECTORS

                    TrueCar Committees
        Age   Director
Since
  Independent   Audit
Committee
      Compensation
& Workforce
Committee
      Executive
Committee
      Nominating
and
Corporate
Governance
Committee
  Michael D. Darrow
Director and President & CEO
    62   2020   NO              
           
  Robert E. Buce
Director
    71   2005   YES   o         ·    
           
  Christopher W. Claus*
Director and
Chairman of the Board
    59   2014   YES   ·     ·     o    
           
  John Krafcik(1)
Director
    58   2014   YES              
           
  Erin N. Lantz
Director
    40   2016   YES   ·             ·
           
  Philip G.J. McKoy
Director
    47   2018   YES               ·
           
  John W. Mendel
Director
    65   2017   YES       ·     ·     o
           
  Wesley A. Nichols
Director
    55   2016   YES       o     ·     ·
           
  Ion A. Yadigaroglu
Director
    50   2007   YES              
           

o Chairperson        · Member        * Chairman of the Board

(1)
Mr. Krafcik resigned from the Board effective March 31, 2020.

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Table of Contents

2020 ANNUAL
PROXY STATEMENT

 

Proxy Summary

COMPENSATION PROGRAM FOR 2019

Below are the primary components of our 2019 executive compensation program:

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2020 ANNUAL
PROXY STATEMENT

 

    

Executive Officers, Directors and Corporate Governance

The following table sets forth the names, ages and positions of our executive officers and directors as of March 31, 2020:

Name


Age
Position

Executive Officers

       

Michael D. Darrow

  62   President and Chief Executive Officer, and a Director

Noel B. Watson

  44   Chief Financial Officer and Chief Accounting Officer

Simon E. Smith

  50   Executive Vice President of Dealer Sales & Service

Jeffrey J. Swart

  52   Executive Vice President, General Counsel and Secretary

Non-Employee Directors

       

Robert E. Buce

  71   Director

Christopher W. Claus

  59   Director and Chairman of the Board

John Krafcik(1)

  58   Director

Erin N. Lantz

  40   Director

Philip G.J. McKoy

  47   Director

John W. Mendel

  65   Director

Wesley A. Nichols

  55   Director

Ion A. Yadigaroglu

  50   Director
(1)
On March 25, 2020, Mr. Krafcik resigned from the Board effective at the end of the day on March 31, 2020, and the Board subsequently decreased the size of the Board from nine to eight directors.

       Michael D. Darrow has served as our President, Chief Executive Officer and a member of our Board since March 2020. From November 2017 until March 2020, he served as our Executive Vice President of Partner and OEM Development and served as our Executive Vice President of OEM Development from March 2017 to November 2017. Mr. Darrow has also served as the President of our subsidiary, ALG, Inc., since January 2018. From June 2016 until he joined us, Mr. Darrow was an Automotive Industry Consultant for Inventory Command Center LLC, before which Mr. Darrow served in numerous roles at Edmunds.com Inc. from July 2000 to August 2014, including as Chief Executive Officer of Edmunds Data Services, Executive Vice President of Sales and Chief Sales Officer. Mr. Darrow holds a B.S. in Economics from Allegheny University.

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PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

We believe that Mr. Darrow is qualified to serve as a member of our Board because of his substantial industry, operational and business strategy expertise, developed over more than 20 years of service in the online automotive industry, and his working relationships with many key customers, partners and industry participants.

       Noel B. Watson has served as our Chief Financial Officer and Chief Accounting Officer since June 2019. From February 2016 until he joined us, Mr. Watson was the Chief Accounting Officer and Vice President of Finance and Accounting of TripAdvisor, Inc., an online travel company that assists travelers by providing user-generated content, price comparison tools and online reservation and related services for accommodations, travel activities and restaurants around the world, and from February 2013 to February 2016, he served as TripAdvisor's Vice President of Accounting and Controller. Before that, Mr. Watson worked in various other accounting roles for TripAdvisor and Expedia, Inc., a travel booking website. Mr. Watson holds a B.A. in Accounting from Bryant University.

       Simon E. Smith has served as our Executive Vice President of Dealer Sales & Service since June 2019. From July 2015 until June 2019, he served as our Senior Vice President of Dealer Development, and as our Vice President of Trade Operations from July 2012 until July 2015. Before joining us, Mr. Smith was the National Sales Director for AutoNation, Inc., the largest automotive retailer in the United States, and before that he spent eight years at CarsDirect.com, Inc. (now known as Internet Brands, Inc.), an online automotive research portal and car-buying service as Vice President of Sales and Operations, after beginning his career at Mercedes-Benz UK Ltd., the UK subsidiary of Daimler AG, a German multinational automobile manufacturer. Mr. Smith attended the University of Canterbury in New Zealand.

       Jeffrey J. Swart has served as our Executive Vice President, General Counsel and Secretary since July 2017. From January 2016 to July 2017, Mr. Swart served as our Senior Vice President, General Counsel and Secretary and he served as our Senior Vice President & Deputy General Counsel from April 2014 until December 2015. From May 1998 until he joined us, Mr. Swart practiced law at the law firm of Alston & Bird LLP, where he was a litigation partner. Before joining Alston & Bird, Mr. Swart served for two years as a law clerk to Judge Edward Carnes of the United States Court of Appeals for the Eleventh Circuit. Mr. Swart has substantial experience in complex commercial litigation. Mr. Swart holds a J.D. from the Emory University School of Law and a B.B.A. from the Goizueta Business School at Emory University.

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PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

Board of Directors

     

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Director Since: 2005

Age: 71

Independent

Current Committee Memberships:

Audit Committee

Executive Committee



ROBERT E. BUCE

Recent Business Experience:

Robert E. Buce has served as a member of our Board since April 2005. Mr. Buce served as our Executive Vice President and Chief Financial Officer from September 2005 to September 2008. Before joining us, Mr. Buce founded and served as Chief Financial Officer and a senior member of the management team of Build-To-Order, Inc., an automotive company focused on modularized outsourced manufacturing of vehicles. Before Build-To-Order, Mr. Buce held a variety of senior management positions, including Managing Partner, at KPMG LLP, an accounting and advisory firm, and served as Managing Director at BearingPoint, Inc., a related consulting firm. Mr. Buce also served on the board of directors of KPMG LLP from March 1991 to November 1995. Since July 2000, Mr. Buce has served as Chairman of PalisadesHoldings, a sole proprietorship providing independent advisory assistance to a variety of technology services and consumer products and services commercial enterprises. From 2011 to 2013, Mr. Buce served on the board of directors of Intersection Technologies, Inc., the parent company of F&I Express, a provider of software and services to the automotive industry. Mr. Buce is a Certified Public Accountant (inactive) in the State of California and a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. Mr. Buce holds a B.S. in Mechanical Engineering from Lehigh University and an M.B.A. from the Anderson School of Management at the University of California, Los Angeles.

Reasons for Nomination:

We believe that Mr. Buce is qualified to serve as a member of our Board because of the experience he gained from serving as our Chief Financial Officer, the substantial corporate governance, operational and financial expertise he gained from serving as Managing Partner at KPMG LLP, as Managing Director at BearingPoint and on the boards of directors and boards of advisors of several private companies. As the longest-serving member of our Board, we also value his deep understanding of our business as it has evolved over time.

   

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PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

 

     

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Board Since: 2014

Board Chair Since: 2016

Age: 59

Independent

Current Committee Memberships:

Compensation and Workforce Committee

Executive Committee

Audit Committee



CHRISTOPHER W. CLAUS

Recent Business Experience:

Christopher Claus has served as a member of our Board since April 2014 and as Chairman of the Board since February 2016. From December 1994 to March 2014, Mr. Claus served in various senior executive roles at the United Services Automobile Association, or USAA, a Fortune 150 diversified financial services company, most recently as Executive Vice President of USAA Enterprise Advice Group and President of USAA Financial Services Group. Previously, he served as the Senior Vice President and then President of USAA Investment Management Company. Mr. Claus also served as USAA's Vice President of Investment Sales and Service. Before USAA, Mr. Claus was Vice President of Equity Trading and Retirement Plans at Norwest Investment Services, Inc, a venture and growth equity investment firm. In June 2017, Mr. Claus joined the board of directors of Citizens, Inc., a provider of insurance and reinsurance services. Mr. Claus holds a B.A. in Business Administration from the University of Minnesota Duluth and an M.B.A. from the University of St. Thomas.

Reasons for Nomination:

We believe that Mr. Claus is qualified to serve as a member of our Board because of his substantial business strategy and corporate development and governance expertise gained as an executive and counselor at several companies in the finance industry.

   

 

 

     

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Director Since: 2016

Age: 40

Independent

Current Committee Memberships:

Audit Committee

Nominating and Corporate Governance Committee



ERIN N. LANTZ

Recent Business Experience:

Erin N. Lantz has served as a member of our Board since November 2016. Ms. Lantz is a technology executive and strategic general manager. Most recently she was the Vice President and General Manager of Mortgages at Zillow Group, Inc., an online real estate database company, where she worked from 2010 through October 2019. Just before joining Zillow, Ms. Lantz was Senior Vice President at Bank of America Corporation, a U.S. multinational investment bank and financial services company, where she led the Direct-to-Consumer purchase home loan business. Before entering the mortgage industry, Ms. Lantz worked at the Boston Consulting Group, a global management consulting firm, as an Associate. From September 2016 until August 2018, Ms. Lantz served on the board of directors of Washington Federal, Inc., a bank holding company. Ms. Lantz holds a B.A. in Political Science, Philosophy and Economics from the University of Pennsylvania and an M.B.A. from Harvard Business School.

Reasons for Nomination:

We believe that Ms. Lantz is qualified to serve as a member of our Board because of her extensive knowledge in finance, consumer behavior, online marketplaces and financial consumer technology.

   

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2020 ANNUAL
PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

 

     

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Director Since: 2018

Age: 47

Independent

Current Committee Memberships:

Nominating and Corporate Governance Committee



PHILIP G.J. MCKOY

Recent Business Experience:

Philip G.J. McKoy has served as a member of our Board since October 2018. Since July 2016, Mr. McKoy has served as the Chief Information Officer of United Healthcare Services, Inc., a business of UnitedHealth Group, a diversified health and well-being company. From January 2016 to June 2016, Mr. McKoy served as Senior Vice President and Chief Information Officer for Global Loyalty Solutions at Aimia Inc., a data-driven marketing and loyalty analytics company, and from July 2014 to December 2015, Mr. McKoy served as Aimia's Senior Vice President and Chief Information Officer of the U.S. Region. Before joining Aimia, Mr. McKoy served in various roles at Target Corporation, a U.S. department store retailer, including as Vice President of Target.com from November 2011 through January 2014, where he was responsible for leading the customer-facing digital experience. Mr. McKoy has a B.A. in Political Science from Washington and Lee University and an M.A. in International Affairs from the Josef Korbel School of International Studies at the University of Denver.

Reasons for Nomination:

We believe that Mr. McKoy is qualified to serve as a member of our Board because of his extensive knowledge in information security, technology strategy and digital business operations.

   

 

     

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Director Since: 2017

Age: 65

Independent

Current Committee Memberships:

Compensation and Workforce Committee

Nominating and Corporate Governance Committee

Executive Committee



JOHN W. MENDEL

Recent Business Experience:

John W. Mendel has served as a member of our Board since May 2017. Mr. Mendel served as the Executive Vice President, Automobile Division, of American Honda Motor Company, the U.S. subsidiary of Honda Motor Company, Ltd., a Japanese multinational automaker, from November 2004 until April 2017. Before Honda, Mr. Mendel worked for Ford Motor Company, a U.S. multinational automaker, from July 1976 until November 2004 in various roles, serving most recently as Chief Operating Officer of Mazda Motor of America, Inc., the U.S. subsidiary of Mazda Motor Corporation, a Japanese multinational automaker and, at the time, a business partner of Ford. Since August 2018, Mr. Mendel has served on the board of directors of LKQ Corporation, a global distributor of vehicle products. Mr. Mendel has a B.A. in Business and Economics from Austin College and an M.B.A. from the Fuqua School of Business at Duke University.

Reasons for Nomination:

We believe that Mr. Mendel is qualified to serve as a member of our Board because of his substantial corporate development, business strategy and automotive expertise gained as an executive in the automotive industry.

   

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2020 ANNUAL
PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

 

     

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Director Since: 2016

Age: 55

Independent

Current Committee Memberships:

Compensation and Workforce Committee

Nominating and Corporate Governance Committee

Executive Committee



WESLEY A. NICHOLS

Recent Business Experience:

Wesley A. Nichols has served as a member of our Board since November 2016. Since April 2018, Mr. Nichols has served as a strategic adviser to Snap Inc., a camera application company, and since January 2017, Mr. Nichols has been advising select portfolio companies of Upfront Ventures as a Board Partner and select multinational companies as a strategic adviser through Incrementum LLC, a strategic advisory and investment firm he co-founded in 2017. Mr. Nichols was the Chief Strategy Officer of Neustar, Inc., a global provider of real-time information services and analytics, from December 2015 until February 2017. Mr. Nichols co-founded MarketShare, LLC, a provider of advanced analytic solutions and software, in 2005 and served as its Chief Executive Officer from January 2005 until its acquisition by Neustar in December 2015. Mr. Nichols served on the board of directors of BJ's Restaurants, Inc. from December 2013 until June 2018, and on the board of directors of comScore, Inc. from October 2017 until October 2018. Mr. Nichols holds a B.A. in Psychology from Randolph-Macon College and an M.A. in Business Management from Johns Hopkins University.

Reasons for Nomination:

We believe that Mr. Nichols is qualified to serve as a member of our Board because of his extensive knowledge in analytics, marketing optimization and digital technology.

   

 

     

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Director Since: 2007

Age: 50

Independent

Current Committee Memberships:



ION A. YADIGAROGLU

Recent Business Experience:

Ion A. Yadigaroglu has served as a member of our Board since August 2007. Since July 2004, Mr. Yadigaroglu has served as a Managing Principal at Capricorn Investment Group LLC, an investment firm. Mr. Yadigaroglu holds a Masters in Physics from Eidgenössische Technische Hochschule Zürich in Switzerland and a Ph.D. in Astrophysics from Stanford University.

Reasons for Nomination:

We believe that Mr. Yadigaroglu is qualified to serve as a member of our Board because of his substantial corporate finance, business strategy and corporate development expertise gained from his holding various executive positions and from his significant experience in the capital industry, analyzing, investing in and serving on the boards of directors of various private technology companies. We also value his perspective as a representative of one of our significant stockholders.

   

 

Our executive officers are appointed by, and serve at the discretion of, our Board. There are no family relationships among any of our directors or executive officers.

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2020 ANNUAL
PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

Our business and affairs are managed under the direction of our Board. The number of directors is fixed by our Board, subject to the terms of our Amended and Restated Certificate of Incorporation, or Charter, and our Amended and Restated Bylaws, or Bylaws, that became effective at the completion of our initial public offering. As of April 1, 2020, our Board consists of eight directors, seven of whom qualify as "independent" under the listing standards of the Nasdaq Stock Market, which we refer to as Nasdaq.

In accordance with our Charter and Bylaws, our Board is divided into three classes with staggered three-year terms. Only one class of directors is elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our directors are divided among the three classes as follows:

Messrs. Claus, McKoy and Mendel are standing for election at the Annual Meeting.

The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control. Under Delaware law, our directors may only be removed for cause by the affirmative vote of the holders of a majority of our outstanding voting stock. Our directors may not be removed by our stockholders without cause.

Any increase or decrease in the number of directors must be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

During 2019, the Board held nine meetings. With the exception of Mr. Yadigaroglu, who attended 27% of the aggregate of the total number of meetings of the Board and the total number of meetings of the nominating and corporate governance committee of the Board, each director attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings held by all committees of the Board on which he or she served during the periods that he or she served in 2019. Directors are also encouraged to attend our annual stockholder meetings absent an unavoidable and irreconcilable conflict. Each member of our Board attended our 2019 annual meeting of stockholders.

Stockholders and other interested parties may communicate with the non-management members of the Board by mail to our principal executive offices addressed to the intended recipient and care of our Corporate Secretary. Our Corporate Secretary will review all incoming stockholder communications (except for mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise inappropriate material) and route such communications as appropriate to the Board or an individual director.

Our Board is responsible for identifying and nominating candidates for election to the Board. The Board considers recommendations from directors, stockholders and others, as it deems appropriate. In evaluating director candidates, our Board considers factors such as character, integrity, judgment, diversity, including diversity in terms of gender, race, ethnicity and experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest and other commitments. Our Board evaluates these factors, among others,

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PROXY STATEMENT

 

Executive Officers, Directors and
Corporate Governance

and does not assign any particular weighting or priority to any of these factors. Our Board considers these factors in light of the specific needs of the Board at that time and also considers advice and recommendations from our President and Chief Executive Officer.

We have paid fees to a third party search firm to assist the Board in identifying and evaluating potential candidates for nomination. Search firms retained to assist our Board in seeking candidates for the Board are instructed to seek to include diverse candidates in terms of race and gender.

Our Board reviewed the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board determined that none of Ms. Lantz or Messrs. Buce, Claus, Krafcik, McKoy, Mendel, Nichols or Yadigaroglu has a relationship that would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director and that each of these directors is "independent" as that term is defined under the applicable rules and regulations of the SEC and Nasdaq's listing standards. In making these determinations, our Board considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. The Board also determined that each of Messrs. Claus, Mendel and Nichols is a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act.

Our Board has an audit committee, a compensation and workforce committee, an executive committee and a nominating and corporate governance committee. The Company also has a standing disclosure committee. The composition and responsibilities of each of the committees of our Board are described below. Members serve on these committees until their resignation or until otherwise determined by our Board. Each of these committees operates under a written charter adopted by our Board that is available on the Investor Relations section of our website at http://ir.truecar.com/corporate-governance.

Our audit committee is comprised of Messrs. Buce and Claus and Ms. Lantz. Mr. Buce serves as the chairperson of the audit committee. Each member of our audit committee meets the requirements for independence of audit committee members under current Nasdaq listing standards and SEC rules and regulations. Each member of our audit committee meets the financial literacy requirements of the current Nasdaq listing standards. In addition, our Board has determined that Mr. Buce qualifies as an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Exchange Act. During 2019, the audit committee held eight meetings. The responsibilities of our audit committee include, among other things:

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Our audit committee operates under a written charter that satisfies the applicable rules of the SEC and Nasdaq's listing standards.

We refer to our compensation and workforce committee as the compensation committee. Our compensation committee is comprised of Messrs. Nichols, Claus and Mendel. Mr. Nichols serves as the chairperson of the compensation committee. The composition of our compensation committee meets the requirements for independence under current Nasdaq listing standards and SEC rules and regulations. Each member of the compensation committee is also a non-employee director, as defined by Rule 16b-3 under the Exchange Act. The purpose of our compensation committee is to oversee our compensation policies, plans and benefit programs, significant matters related to our workforce and to discharge the responsibilities of our Board relating to the compensation of our executive officers. During 2019, the compensation committee held six meetings. The responsibilities of our compensation committee include, among other things:

Our compensation committee operates under a written charter that satisfies the applicable rules of the SEC and Nasdaq's listing standards.

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Our executive committee is comprised of the chairperson of the Board and the chairpersons of each of the committees of the Board. Mr. Claus serves as the chairperson of the executive committee. The executive committee was established in February 2020, and so did not hold any meetings during 2019. The purpose of the executive committee is to assist with coordinating the Board's activities and to be in a position to act expeditiously with the full authority of the Board in the intervals between meetings of the Board, but the executive committee may not:

The executive committee operates under a written charter.

We refer to our nominating and corporate governance committee as our nominating committee. From January 1, 2019 until March 20, 2019, the nominating committee was comprised of Messrs. Mendel, McKoy, Nichols and Yadigaroglu and Ms. Lantz. On March 20, 2019, Mr. Yadigaroglu was removed from the nominating committee. Mr. Mendel served as the chairperson of the nominating committee throughout 2019. The composition of our nominating committee meets the requirements for independence under current Nasdaq listing standards and SEC rules and regulations. During 2019, the nominating and corporate governance committee held two meetings. The responsibilities of our nominating committee include, among other things:

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Our nominating committee believes that candidates for director should have certain minimum qualifications, including the highest professional and personal ethics and values, consistent with our Code of Business Conduct and Ethics, which is posted in the corporate governance section of our investor relations website at www.ir.truecar.com. Candidates should have broad experience and demonstrated excellence in their fields. In addition, candidates for director should have:

Each director must represent the interests of all stockholders. Their service on the boards of directors of other public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. The nominating committee retains the right to modify these qualifications from time to time.

The nominating committee reviews candidates for director in the context of the current composition of our Board, our operating requirements and the long-term interests of our stockholders. In conducting this assessment, the nominating committee considers the appropriate skills, experience and characteristics for members of the Board, including the appropriate role of diversity and such other factors as it deems appropriate given our current needs and those of our Board, to maintain a balance of knowledge, experience and capability. In the case of incumbent directors, the nominating committee reviews a director's overall service during his or her term, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair his or her independence. The nominating committee also determines whether the Board can determine that the nominee is independent under Nasdaq's listing standards.

The nominating committee uses a variety of methods for identifying and evaluating nominees for director. The committee periodically assesses the appropriate size of our Board and whether any vacancies on our Board are expected due to retirement or otherwise. Candidates may come to the attention of the nominating committee through current members of our Board, professional search firms, stockholders or other persons. The nominating committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our Board. The nominating committee meets to discuss and consider the candidates' qualifications and then selects a nominee for recommendation to our Board by majority vote. The nominating committee evaluates these candidates at its meetings, which may take place at any point during the year.

The nominating committee will consider candidates for our Board who meet the minimum qualifications as described above if properly recommended by stockholders holding at least one percent of the fully-diluted capitalization of the Company continuously for at least 12 months before the proposal. Proper recommendations will include the nominee's name, contact information, biography and qualifications as well as a consent signed by the nominee and a statement from the recommending stockholder in support of the nominee and should be directed to our Corporate Secretary at our principal executive offices.

Our nominating committee operates under a written charter that satisfies the applicable rules of the SEC and Nasdaq's listing standards.

Our disclosure committee is comprised of Mr. Watson, our Chief Financial Officer and Chief Accounting Officer; Mr. Darrow, our President and Chief Executive Officer; Mr. Swart, our General Counsel and Secretary, and other members of our management team. Messrs. Watson and Swart co-chair our disclosure committee. During 2019,

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the disclosure committee held four meetings, one before the filing of each quarterly and annual report filed in 2019. The responsibilities of our disclosure committee include, among other things:

Our disclosure committee operates under a written charter adopted by our Chief Executive Officer and Chief Financial Officer.

No member of our compensation committee has ever been an executive officer or employee of ours. Messrs. Nichols, Claus and Mendel served on our compensation committee throughout 2019. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board or compensation committee.

We have adopted a Code of Business Conduct and Ethics that is applicable to all of our employees, officers and directors, including our President and Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. The Code of Business Conduct and Ethics is available on our website at http://ir.truecar.com/corporate-governance. We intend to disclose on our website any amendments to the code, or any waivers of its requirements.

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Our Board currently believes that we are best served by separating the roles of a Chairman of the Board and Chief Executive Officer. Mr. Darrow, our President and Chief Executive Officer, is the director with the most in-depth understanding of and experience in our industry. Consequently, Mr. Darrow is most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Christopher Claus serves as the Chairman of the Board. Independent directors and management have different perspectives and roles in strategy development. Our independent directors bring experience, oversight and expertise from both within and outside the automotive industry, while our President and Chief Executive Officer brings company-specific perspective and industry expertise. Our Board believes that separating the roles of Chairman of the Board and Chief Executive Officer is the best leadership structure for us at the current time because it promotes the efficient and effective development and execution of our strategy and facilitates information flow between management and our Board, which are essential to effective governance. Additionally, we established an executive committee of the Board in February 2020 to allow the independent Board leadership a forum to meet, communicate and act more expeditiously.

Management, which is responsible for day-to-day risk management, continually monitors the material enterprise risks we face, including strategic risks, operational risks, financial risks, credit risks, liquidity risks and legal and compliance risks.

The Board is responsible for overseeing our identification and management of, as well as planning for, those risks. The Board has delegated to certain committees oversight responsibility for those risks that are directly related to their area of focus (see descriptions of our Board committees' areas of responsibilities above) to identify, assess and mitigate risks facing the Company. The Board and its committees exercise their risk oversight function by receiving and evaluating reports from management and by making inquiries of management, as appropriate. In addition, the Board and its committees receive reports from our auditors and other consultants, and meet in executive sessions with these outside consultants. Each of our committees provides reports to the full Board, which enhances the Board's oversight of risk.

Management periodically reviews our incentive compensation programs at all levels within the organization. Employee cash bonuses are based on company-wide and individual performance, and management (with respect to our non-executive employees) and our compensation committee (with respect to our executive officers) have discretion to adjust bonus payouts. Equity awards for new hires are based on the employee's position, prior experience, qualifications and the market for particular types of talent; and any additional grants are based on employee performance and retention objectives. Equity awards generally have long-term vesting requirements to ensure that recipients' focus is on our long-term success. The compensation committee reviewed our incentive compensation structure during 2019. Based on this review, the compensation committee does not believe that our compensation policies and practices, taken as a whole, create risks that are reasonably likely to have a material adverse impact on us.

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The following table presents compensation information for our non-employee directors during the year ended December 31, 2019. Directors who are also our employees receive no additional compensation for service as a director. Compensation paid to Mr. Darrow is discussed in "Executive Compensation."

Name


Fees Earned
($)


Stock Awards
($)(1)


Total
($)

Robert E. Buce

  75,000   149,995   224,995

Christopher W. Claus

  97,500   149,995   247,495

John Krafcik

  55,000   149,995   204,995

Erin N. Lantz

  70,000   149,995   219,995

Philip G.J. McKoy

  60,000   149,995   209,995

John W. Mendel

  72,500   149,995   222,495

Wesley A. Nichols

  75,000   149,995   224,995

Ion A. Yadigaroglu

    149,995   149,995
(1)
The amount represent the aggregate grant-date fair value of the restricted stock units, as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in calculating the grant-date fair value of the restricted stock units are set forth in Note 11 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

The following table presents the aggregate number of stock awards and the aggregate number of option awards outstanding for each non-employee director as of December 31, 2019:

Name


Outstanding Stock Awards at December 31, 2019(1)
Outstanding Options at December 31, 2019(2)

Robert E. Buce

  23,219   155,865

Christopher W. Claus

  23,219   97,976

John Krafcik

  23,219   662,124

Erin N. Lantz

  23,219   62,885

Philip G.J. McKoy

  32,147   28,753

John W. Mendel

  26,069   37,601

Wesley A. Nichols

  23,219   62,885

Ion A. Yadigaroglu

  23,219   83,812
(1)
Represents unvested RSUs held by the director that were received by the director through a grant given in connection with his or her service as a director.

(2)
Represents exercisable and unexercisable options held by the director that were received by the director through a grant given in connection with his or her service as a director.

Our Board has adopted a policy for the compensation of non-employee directors, or Outside Directors, which we refer to as our Outside Director Compensation Policy. Under the Outside Director Compensation Policy, our Outside Directors receive compensation in the form of equity under the terms of our 2014 Equity Incentive Plan, which we refer to as the 2014 Plan, as described below, and Outside Directors who are not affiliated with a

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venture capital investor in the Company, or Non-Affiliated Directors, also receive cash compensation for their service.

Our compensation committee regularly reviews and evaluates the Outside Director Compensation Policy in consultation with Semler Brossy Consulting Group, LLC, or Semler Brossy, an independent compensation consulting firm it has retained as described elsewhere in this proxy statement. Semler Brossy provides the compensation committee with competitive data and analysis regarding non-employee director compensation that the compensation committee considers in reviewing our Outside Director Compensation Policy. The compensation committee endeavors to update the Outside Director Compensation Policy such that it provides reasonable compensation to our Outside Directors that is appropriately aligned with our peers and is commensurate with the services and contributions of our Outside Directors.

Initial Award.    Under the Outside Director Compensation Policy, each person who first becomes an Outside Director is granted an award of RSUs with a grant date fair value of $300,000, which we refer to as an Initial Award. Each Initial Award is automatically granted on the date the recipient first becomes an Outside Director. If a director's status changes from an employee director to an Outside Director, he or she will not receive an Initial Award.

Except as set forth below, an Initial Award vests in three approximately equal annual installments over three years from the 15th day of the month during which the individual commenced service as an Outside Director, subject to continued service as a director through the applicable vesting dates.

Any RSUs under an Initial Award that are scheduled to vest on or after the date of the third annual meeting following the annual meeting at which the Initial Award is granted, in the case of an Initial Award granted at an annual meeting, or the date of the fourth annual meeting following the grant of the Initial Award, in the case of other Initial Awards, will instead vest on the day before that date.

Annual Award.    On the date of each annual meeting, each Outside Director who has served on our Board for at least the preceding six months will be automatically granted an award of RSUs with a grant date fair value of $150,000, which we refer to as an Annual Award. Except as set forth below, the RSUs under an Annual Award will vest on the last day of the month that includes the 12-month anniversary of the date of grant of the Annual Award, subject to continued service as a director through the vesting date.

Any RSUs under an Annual Award that are scheduled to vest on or after the date of the following year's annual meeting will instead vest on the day before the following year's annual meeting.

Under the terms of the 2014 Plan, if the service of an Outside Director is terminated on or after a change in control, other than by a voluntary resignation, his or her restricted stock units will vest fully. Awards granted under our Outside Director Compensation Policy are granted under, and subject to the other terms and conditions of, our 2014 Plan. Our 2014 Plan provides that no Outside Director may be granted, in any fiscal year, stock-settled equity awards with a grant date fair value (determined in accordance with GAAP) of more than $750,000, with this limit increased to $1,500,000 in connection with grants awarded upon his or her initial appointment or election, or cash-settled awards with a grant date fair value of more than $750,000, increased to $1,500,000 in connection with grants awarded upon his or her initial appointment or election.

Cash Compensation.    Each Non-Affiliated Director receives an annual retainer of $55,000 in cash for serving on our Board, or the Annual Fee. In addition to the Annual Fee, a Non-Affiliated Director who serves as chairman of the Board or lead independent director, as applicable, will be entitled to an additional annual retainer of $25,000 in cash.

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Non-Affiliated Directors serving as chairperson and members of the committees of our Board are entitled to the annual cash retainers set forth below.

Board Committee


Chairperson Fee
($)


Member Fee
($)

Audit Committee

  20,000   10,000

Compensation and Workforce Committee

  15,000   7,500

Executive Committee

   

Nominating and Corporate Governance Committee

  10,000   5,000

All cash retainers under the Outside Director Compensation Policy will be paid in quarterly installments to each Non-Affiliated Director that served in the relevant capacity at any point during the immediately preceding fiscal quarter no later than 30 days following the end of such preceding fiscal quarter.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our common stock as of February 29, 2020 by:

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially own, subject to community property laws where applicable. In computing the number of shares of our common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of our common stock subject to options or RSUs held by that person that are currently exercisable or exercisable within 60 days of February 29, 2020. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. We have based percentage ownership of our common stock on 107,083,724 shares of our common stock outstanding as

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of February 29, 2020. Unless otherwise indicated, the address of each beneficial owner listed on the table below is c/o TrueCar, Inc., 120 Broadway, Suite 200, Santa Monica, California 90401.

Name of Beneficial Owner


Number of Shares Beneficially Owned
Percent of Shares Outstanding

5% Stockholders:

       

Caledonia (Private) Investments Pty Limited(1)

  18,626,859   17.4

PAR Capital(2)

  10,299,504   9.6

United Services Automobile Association(3)

  9,042,992   8.4

Vanguard Group(4)

  8,984,300   8.4

BlackRock, Inc.(5)

  8,125,927   7.6

Pacific Sequoia Holdings LLC(6)

  6,363,569   5.9

Named Executive Officers and Directors:

       

Michael D. Darrow(7)

  338,245   *

Victor A. "Chip" Perry(8)

  3,164,908   2.9

Noel B. Watson(9)

  56,510   *

Charles C. Thomas(10)

  52,645   *

John E. Pierantoni(11)

  289,527   *

Simon E. Smith(12)

  212,767   *

Jeffrey J. Swart(13)

  704,550   *

Robert T. "Tommy" McClung

   

Neeraj Gunsagar(14)

  50,000   *

Robert E. Buce(15)

  466,506   *

Christopher W. Claus(16)

  204,123   *

John Krafcik(17)

  711,851   *

Erin N. Lantz(18)

  91,213   *

Philip G.J. McKoy(19)

  18,842   *

John W. Mendel(20)

  51,923   *

Wesley A. Nichols(21)

  91,213   *

Ion A. Yadigaroglu(22)

  1,606,876   1.5

All current executive officers and directors as a group (12 persons)(23)

  4,554,619   4.2
*
Represents beneficial ownership of less than 1%.

(1)
Based on the most recently available Schedule 13G/A filed with the SEC on February 14, 2019, Caledonia (Private) Investments Pty Limited ("Caledonia") held sole voting and dispositive power with respect to all 18,626,859 reported shares. The address for Caledonia is Level 10, 131 Macquarie Street, Sydney, NSW, 2000, Australia.

(2)
Based on the most recently available Schedule 13G/A filed with the SEC on February 14, 2020, PAR Investment Partners, L.P. ("PAR") beneficially owned and held sole voting and dispositive power with respect to all 10,299,504 reported shares. PAR Group II, L.P. ("PAR LP"), the general partner of PAR, and PAR Capital Management, Inc., the general partner of PAR LP, had sole voting and dispositive power with respect to the shares beneficially owned by PAR. The address for these entities is c/o PAR Capital Management, Inc., 200 Clarendon Street, Floor 48, Boston, Massachusetts 02116.

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(3)
Based on the most recently available Schedule 13G/A filed with the SEC on February 13, 2018, supplemented by Company records, the United Services Automobile Association ("USAA") beneficially owned (i) 8,533,350 shares held of record by USAA and (ii) 509,642 shares issuable to USAA pursuant to a warrant exercisable within 60 days of February 29, 2020. The address for USAA is 9800 Fredericksburg Road, San Antonio, Texas 78288.

(4)
Based on the most recently available Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group, Inc. ("Vanguard") held sole voting power of 194,940 shares, shared voting power of 7,279 shares, sole dispositive power of 8,791,651 shares and shared dispositive power of 192,649 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, was the beneficial owner of 185,370 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, was the beneficial owner of 16,849 shares as a result of its serving as investment manager of Australian investment offerings. The address for each of these entities is c/o The Vanguard Group, Inc., 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

(5)
Based on the most recently available Schedule 13G/A filed with the SEC on February 6, 2020, BlackRock, Inc. ("BlackRock") held sole voting power of 7,786,194 shares and sole dispositive power of 8,125,927 shares. The address for BlackRock is 55 East 52nd Street, New York, New York 10055.

(6)
Based upon the most recently available Schedule 13G/A filed with the SEC on January 31, 2019, Pacific Sequoia Holdings LLC ("PSH") held sole voting and dispositive power with respect to all 6,363,569 reported shares. Jeffrey S. Skoll, the indirect sole member of PSH, had sole authority to direct the voting and disposition of the shares held by PSH. The address for PSH is 250 University Avenue, Palo Alto, California 94301.

(7)
Consists of (i) 64,871 shares held of record by Mr. Darrow, (ii) 259,287 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 14,087 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

(8)
Consists of (i) 638,342 shares held of record by Mr. Perry and (ii) 2,526,566 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

(9)
Consists of (i) 11,659 shares held of record by Mr. Watson, (ii) 21,727 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 23,124 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

(10)
Consists of (i) 17,322 shares held of record by Mr. Thomas, (ii) 33,826 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 1,497 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

(11)
Consists of (i) 35,470 shares held of record by Mr. Pierantoni, (ii) 250,189 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 3,868 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

(12)
Consists of (i) 21,439 shares held of record by Mr. Smith, (ii) 182,425 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 8,903 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

(13)
Consists of (i) 68,435 shares held of record by Mr. Swart, (ii) 623,991 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 12,124 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

(14)
Consists of 50,000 shares held of record by Mr. Gunsagar.

(15)
Consists of (i) 84,477 shares held of record by Mr. Buce, (ii) 226,164 shares held of record by the Robert E. Buce and Barbara T. Buce Living Trust for which Mr. Buce serves as trustee and (iii) 155,865 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

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(16)
Consists of (i) 26,147 shares held of record by Mr. Claus, (ii) 80,000 shares held of record by The Christopher W. Claus and Julene K. Otto Revocable Management Trust dated June 6, 2012 for which Mr. Claus serves as trustee and (iii) 97,976 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

(17)
Consists of (i) 49,727 shares held of record by Mr. Krafcik and (ii) 662,124 shares subject to outstanding options exercisable within 60 days of February 29, 2020. Mr. Krafcik resigned from the Board effective March 31, 2020.

(18)
Consists of (i) 28,328 shares held of record by Ms. Lantz and (ii) 62,885 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

(19)
Consists of (i) 4,465 shares held of record by Mr. McKoy and (ii) 14,377 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

(20)
Consists of (i) 14,848 shares held of record by Mr. Mendel and (ii) 37,075 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

(21)
Consists of (i) 28,328 shares held of record by Mr. Nichols and (ii) 62,885 shares subject to outstanding options exercisable within 60 days of February 29, 2020.

(22)
Consists of (i) 27,835 shares held of record by Mr. Yadigaroglu, (ii) 678,775 shares held of record by The Skoll Foundation (the "Foundation"), (iii) 578,736 held of record by The Skoll Fund (the "Fund"), (iv) 205,174 shares held of record by Capricorn S.A. SICAV-SIF-Global Non-Marketable Strategies Sub-Fund ("Capricorn SA"), (v) 26,674 shares held of record by Carthage, L.P. ("Carthage"), (vi) 5,870 shares held of record by Capricorn Investment Group LLC ("Capricorn Group") and (vii) 83,812 shares subject to outstanding options exercisable within 60 days of February 29, 2020. Capricorn Group serves as the investment manager for Foundation, the Fund and Capricorn SA and is the general partner of Carthage. Capricorn Group has sole voting and investment control over the shares held by the Foundation, the Fund, Capricorn SA, Carthage and the shares it holds directly. Voting and dispositive decisions on behalf of Capricorn Group are made by an investment committee consisting of four individuals, including Mr. Yadigaroglu, with respect to the shares held by the Foundation, the Fund, Capricorn SA and Carthage. The address for Mr. Yadigaroglu is c/o Capricorn Investment Group LLC, 250 University Avenue, Palo Alto, California 94301.

(23)
Consists of (i) 2,231,952 shares held of record by our current executive officers and directors, (ii) 2,264,429 shares subject to outstanding options exercisable within 60 days of February 29, 2020 and (iii) 58,238 shares issuable upon the vesting of RSUs within 60 days of February 29, 2020.

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Compensation Discussion and Analysis

 

 

Table of Contents


Page  

 

 

Introduction

  23  

 

 

Named Executive Officers (NEOs)

  23  

 

 

Executive Summary

  24  

 

 

Compensation Philosophy and Design Strategies

  27  

 

 

Establishing Compensation Levels

  27  

 

 

Role of the Compensation Committee

  27  

 

 

Role of Management

  28  

 

 

Role of the Compensation Consultant

  28  

 

 

Use of Competitive Market Data

  28  

 

 

Compensation Elements and 2019 Pay Decisions

  30  

 

 

Base Salary

  30  

 

 

Annual Cash Incentive Program

  31  

 

 

Long-Term Incentive Opportunities

  35  

 

 

Coronavirus Response Preview

  37  

 

 

Other Governance Items

  38  

 

 

Employment Agreements and Severance and    Changes in Control Protections

  38  

 

 

Separation and Consulting Agreements

  38  

 

 

Hedging Policies

  39  

 

 

Stock Ownership Guidelines

  39  

 

 

Recoupment of Incentive Compensation, or
    Clawback Policy


 
39  

 

 

Accounting Treatment and Deductibility of
    Executive Compensation


 
39  

 

 

Equity Grant Timing and Equity Plan
    Information


 
40  

 

 

Taxation of "Parachute" Payments

  40  
     

Our named executive officers, or NEOs, for 2019 consist of our current and former principal officers, our current and former principal financial officers, our next two most highly compensated executive officers and two former executive officers who would have been among our three most highly compensated executive officers had they remained executive officers as of December 31, 2019.

The NEOs among our currently serving executives are:

Michael D. Darrow, our President and Chief Executive Officer, or CEO, and a member of the Board;
Noel B. Watson, our Chief Financial Officer, or CFO, and Chief Accounting Officer, or CAO;
Simon E. Smith, our Executive Vice President, or EVP, of Dealer Sales & Service; and
Jeffrey J. Swart, our EVP, General Counsel and Secretary.

The NEOs among our former executives are:

Victor A. "Chip" Perry, our former President and CEO;
John E. Pierantoni, our former Interim CFO and Senior Vice President, or SVP, and CAO;
Charles C. Thomas, our former principal financial officer and principal accounting officer and currently our Vice President and Controller;
Neeraj Gunsagar, our former EVP and Chief Marketing Officer; and
Robert T. "Tommy" McClung, our former EVP and Chief Technology Officer.

We experienced considerable change in our leadership during 2019. In May 2019, Mr. Perry, then our President and CEO, retired from his positions with us, and Mr. Darrow, who was then serving as our EVP of Partner and OEM Development, became our Interim President and CEO. In March 2020, the Board appointed Mr. Darrow as

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our permanent President and CEO and a member of the Board. References in this Compensation Discussion and Analysis to our CEO refer to Mr. Perry before May 31, 2019 and to Mr. Darrow on and after May 31, 2019.

Mr. Pierantoni, our Interim CFO and CAO, resigned from his positions with us in April 2019 and Mr. Thomas, our Vice President and Controller, served as principal financial officer and principal accounting officer following Mr. Pierantoni's departure until Mr. Watson joined us in June 2019. Mr. Thomas continues to serve in a non-executive officer capacity as our Vice President and Controller. Also in June 2019, Mr. Smith was promoted from SVP of Dealer Development to our EVP of Dealer Sales & Service, and each of Mr. Gunsagar and Mr. McClung ceased service with us.

EXECUTIVE SUMMARY

Our full-year financial and market performance outcomes were below expectations; however, after a mid-year leadership transition, we executed several key strategic initiatives in the second half of the year and in early 2020.

Additionally, although USAA's sudden and unexpected decision in February 2020 to terminate our partnership substantially complicates our efforts to return us to growth, we were able to negotiate a transition services agreement with USAA that gives us time to capitalize on these successful initiatives and chart a course of financial independence from USAA. Nevertheless, despite these achievements, a variety of operational challenges prevented us from achieving the external financial guidance we provided at the beginning of 2019, and USAA's decision to terminate our partnership is likely to weigh on our performance in 2020 and beyond. Below is a summary of our key results in 2019:


(1)
We define units as the number of automobiles purchased by our users from TrueCar Certified Dealers through TrueCar.com, our TrueCar branded mobile applications or the car-buying sites we maintain for our affinity group marketing partners. A unit is counted after we have matched the sale to a TrueCar user with one of the TrueCar Certified Dealers. We view units as a key indicator of the growth of our business, the effectiveness of our product and the size and geographic coverage of our network of TrueCar Certified Dealers.

(2)
Adjusted EBITDA is not a measure of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with GAAP. Refer to Annex A for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP measure.

(3)
Adjusted EBITDA margin is a non-GAAP financial measure calculated as Adjusted EBITDA divided by total revenue.

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Annual target compensation decisions made in early 2019 align with our pay for performance philosophy after mixed company performance in 2018 and reflect feedback from our stockholder outreach efforts in late 2018 and early 2019.

In mid-2019, we underwent a substantial leadership transition and the compensation committee took the following actions relating to the second half of the year that we believe were in the best interests of us and our stockholders:

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We are committed to responsible executive compensation and governance practices.

The following table summarizes what we do and what we don't do in our executive compensation practices to highlight both the responsible practices we have implemented and the practices we have avoided to best serve our stockholders' long-term interests:

    What We Do
 

 

 

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Pay-for-performance (75% of former CEO target pay was tied to performance through equity and cash incentives)

 

 

 

 

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Include multi-year performance-vesting equity awards

 

 

 

 

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Maintain robust stock ownership guidelines and a clawback policy for performance-based compensation

 

 

 

 

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Retain an independent compensation consultant who reports directly to the compensation committee

 

 

 

 

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Solicit advisory votes on our executive compensation program annually and engage in stockholder outreach

 

 

 

    What We Don't Do
 

 

 

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No automatic "single trigger" cash or vesting acceleration upon a change in control

 

 

 

 

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No option repricings or exchanges without stockholder approval

 

 

 

 

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No hedging or pledging by executive officers or directors

 

 

 

 

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No tax gross ups on severance or change in control benefits

 

 

 

 

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No excessive executive perquisites

 

 

Say-on-Pay Vote and Stockholder Engagement

In late 2018 and early 2019, we reached out to more than 20 of our largest stockholders who collectively owned more than 93% of our outstanding shares as of year-end 2018 and met with each stockholder that expressed an interest in speaking with us. We made several changes to our compensation program in response to stockholder feedback on the design of our compensation program, including introducing performance-vesting equity awards, eliminating aspirational companies from our peer group and expanding our peer group disclosure, implementing a clawback policy and adopting stock ownership guidelines, revising our cash incentive program and providing more transparency in our disclosure of our performance goals.

In 2019, our say-on-pay proposal was supported by approximately 99% of the total votes cast, an approximate 47% increase over our 2018 say-on-pay vote. We believe this increase in support was, in part, the result of the stockholder outreach and changes we made to our executive compensation program and related disclosures. We value the views of our stockholders and have continued our stockholder outreach. Our compensation committee will monitor and continue to evaluate our executive compensation program going forward in light of our stockholders' views and our transforming business needs. Our compensation committee expects to continue to consider the outcome of our say-on-pay votes and our stockholders' views when making future compensation decisions for our executive officers.

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COMPENSATION PHILOSOPHY AND DESIGN STRATEGIES

The compensation committee works to design a compensation program for our NEOs to facilitate the attraction and retention of key executive talent in a highly competitive technology job market, align employees' interests with those of stockholders and motivate the creation of sustainable growth in enterprise value. We recognize that our employees are our greatest asset and drive our operational results and the creation of sustainable growth. As such, we strive to provide NEO total pay packages that:

In designing our NEO compensation packages, the compensation committee reviews the competitive market data, without targeting any specific market percentile, and also takes into consideration the factors described above, as well as retention concerns with respect to key talent, the motivational impact of pay levels and mix in driving toward company goals and the creation of stockholder value, the input of our CEO (as to NEOs other than himself) and the overall cost of the compensation package.

ESTABLISHING COMPENSATION LEVELS

The compensation committee oversees our executive compensation and other compensation and benefit programs, serves as the administrator of our equity compensation plans and reviews, formulates and determines the design and amount of compensation for our executive officers, including the NEOs. Compensation decisions for our CEO are made by the compensation committee in executive session without our CEO present.

At the beginning of each year, the compensation committee reviews our executive compensation program, including incentive compensation plans and arrangements, assesses the quality, appropriateness and effectiveness of the program for its intended purposes and makes modifications to existing plans and arrangements or adopts new plans or arrangements as it deems necessary. The compensation committee also annually reviews our executive compensation strategy to ensure it is appropriately aligned with our business strategy and achieving our desired objectives. Further, the compensation committee reviews market trends and changes in competitive compensation practices, as further described below. Based on its review and assessment, the compensation committee, from time to time, makes changes in our executive compensation program and also recommends changes to the remuneration of members of our Board.

During 2019, as detailed above, we underwent numerous changes in our executive team, with the separation of four executive officers, including our former President and CEO and our former Interim CFO, the hiring of our current CFO and the promotion of two additional executives, including our current President and CEO. In each of

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these cases, the compensation committee reviewed and reassessed elements of our executive compensation program and took actions designed to fit the needs of our business.

Our CEO works closely with the compensation committee in determining the compensation of our NEOs, and makes recommendations to the compensation committee as described below.

At the beginning of each year, our CEO reviews the performance of our other NEOs for the previous year and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation. These recommendations concern the base salary, performance-based cash incentives and long-term incentive compensation for each of our NEOs, other than himself, based on our results, the individual's contribution to these results and his individual performance. The compensation committee then reviews these recommendations and considers the other factors described in this proxy statement and makes decisions as to the target total direct compensation of each NEO, as well as the mixture of elements that will comprise each NEO's compensation.

While the compensation committee considers our CEO's recommendations, it only uses these recommendations as one of several factors in making its decisions on the compensation of our NEOs. In all cases, the final decisions on NEO compensation matters are made by the compensation committee. Moreover, no NEO participates in the determination of the amounts or elements of his own compensation.

At the request of the compensation committee, our CEO typically attends a portion of each compensation committee meeting in which executive compensation is discussed, including meetings at which the compensation committee's compensation consultant is present.

Under its charter, the compensation committee has the authority to retain the services of one or more executive compensation advisers, including compensation consultants, legal counsel, accounting and other advisers, to assist in the creation of our compensation plans and arrangements and related policies and practices, as it determines necessary in its sole discretion. The compensation committee makes all determinations regarding the engagement, fees and services of these external advisers, and any external adviser reports directly to the compensation committee.

The compensation committee continued to engage Semler Brossy in 2019 to assess the competitiveness of executive compensation programs and practices to assist the compensation committee in making 2019 executive compensation decisions. During 2019, Semler Brossy also assisted in the stockholder outreach efforts, the design of the annual incentive and long-term incentive programs for 2020 and the structuring of our new-hire and promotion compensation decisions associated with our executive transition in mid-2019. The compensation committee assessed the independence of Semler Brossy, most recently in March 2020, and concluded that it was independent of management and that its work had not raised any conflict of interest.

As part of its deliberations, the compensation committee considers competitive market data and related analysis on executive compensation levels and practices that is provided by Semler Brossy. Our compensation committee reviews and considers this market data, but did not engage in any benchmarking or targeting of any specific levels of pay for 2019 compensation decisions.

In late 2018, Semler Brossy worked with the compensation committee to develop a comparator group of "peer" companies for a competitive assessment of the pay programs. The companies included in the peer group were selected based on a set of financial and industry/business parameters to best reflect a group of companies most similar to us.

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We used initial quantitative screens primarily as guides to inform our decision-making process in reviewing current or potential peers. The screening process for 2019 used the same parameters as 2018, focusing specifically on companies within defined ranges for revenue and market capitalization, the technology industry and additional qualitative parameters (see more below).

Specifically, the criteria the compensation committee used to assess our 2019 peer group are summarized below.

In late 2018, in preparation for 2019 pay decisions, we removed two companies from our 2018 peer group whose revenue and market capitalization had grown to be much larger than ours by October 2018 (Zillow had approximately $1.2 billion in revenues and $8.1 billion market capitalization and CoStar Group had approximately $1.2 billion in revenues and $13.2 billion market capitalization at the time of our assessment) and removed another company which had been acquired and therefore was no longer public (Bazaarvoice). We added three companies to our peer group (Eventbrite, eHealth and EverQuote) that had under $300 million in revenues, less than $2.5 billion in market value and also met the additional industry and qualitative criteria above at the time of our assessment. The compensation committee made these changes to reduce the overall size of our peer group by revenue and market value to bring it more in line with TrueCar. The resulting peer group for 2019 consisted of the following 17 companies:

GrubHub   CarGurus
Yelp   Quotient Technology
LendingTree   Eventbrite
Cars.com   Care.com
Shutterstock   eHealth
Etsy   XO Group
Redfin   EverQuote
QuinStreet    

The compensation committee also reviewed market data from the Radford Technology survey for companies that met the same size and scale parameters described above for our peer group, were in Radford's "Software Products/Services" and "Internet/E-Commerce/Online Community" industries, had similar market valuation multiples (e.g., market cap-to-revenue multiples within one-third to three times ours) and excluded companies with materially different business models (e.g., semi-conductors, IT services, communications equipment, telecommunication services). The compensation committee used the survey data to complement the available information from the peer companies described above. Our compensation committee primarily used data from our peer group and used the data from the Radford survey only when there was a lack of sufficient comparative data available from our peer group. The data from our peer group and the data from the refined Radford Technology survey are collectively referred to in this proxy statement as market data.

In late 2019, the compensation committee again reviewed our peer group for purposes of assisting with pay decisions for 2020, taking into consideration our revised growth trajectory compared to the overall size and growth rates among our peers. After that review, the compensation committee again removed three larger peers by revenue or market value (ANGI Homeservices, GrubHub, and Trade Desk), removed one acquired peer (XO Group) and added five smaller peers (The RealReal, Cardlytics, The Rubicon Project, Leaf Group, and TechTarget). The resulting changes positioned TrueCar at median on company revenues for the new peer group going forward.

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COMPENSATION ELEMENTS AND 2019 PAY DECISIONS

Our 2019 NEO compensation program was comprised primarily of a base salary, a cash incentive opportunity, and long-term incentives. This program emphasized "at-risk" pay (both cash incentives and equity incentives) while providing competitive packages to retain and motivate our key talent.

A base salary is a critical part of our NEO compensation program and establishes financial security for each NEO. We provide base salaries that are market-calibrated, equitable and a relatively small portion of our total compensation opportunities. Generally, we establish base salaries after taking into account an NEO's position, qualifications, experience, market practice and the base salaries of our other executives. Internal base salary parity is an important consideration for NEOs other than our CEO, as it creates a team-first culture. This philosophy promotes a team approach in problem solving and encourages focus on driving stockholder value in ways that will be rewarded through "at risk" pay. Thereafter, the compensation committee reviews the base salaries of our NEOs from time to time, as well as at the time of a promotion or other significant change in responsibility, and makes adjustments to base salaries as determined necessary or appropriate.

In February 2019, the compensation committee reviewed the base salaries of our then-serving NEOs, taking into account the considerations described above and market data. As a result, the compensation committee elected not to make any increases to base salaries at that time, determining that the base salaries continued to be market competitive and appropriately reflect our NEOs' past and expected future contribution levels. In late 2018, effective on January 1, 2019, the compensation committee increased the base salary of Mr. Swart, who at that time was not an NEO, from $375,000 to $400,000 to reflect his contributions during the year and the further the compensation committee's goal of internal pay equity. Additionally, the compensation committee approved an increase in Mr. Smith's pay from $355,000 to $400,000 in connection with his promotion to EVP of Dealer Sales & Service.

In May 2019, we hired Mr. Watson as our new CFO and CAO and the compensation committee approved a base salary of $450,000. Also in May 2019, following our former CEO's retirement, Mr. Darrow was promoted to Interim President and CEO. His annual base salary remained unchanged at $400,000, but the compensation committee approved a monthly stipend of $20,000 in addition to his base salary to recognize the fact that he assumed additional responsibilities while still maintaining his original responsibilities as EVP of OEM and Partner Development for TrueCar and President of ALG. Mr. Darrow's aggregate salary and stipend resulted in annualized non-bonus cash compensation of $640,000, representing a 20% decrease from Mr. Perry's base salary. The compensation committee, after consulting Semler Brossy and market data, determined that these amounts were appropriate compensation for Messrs. Darrow and Watson for their positions.

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The table below illustrates the annual base salaries of our executives as of year end 2018 and 2019. In several cases, the executive did not receive the full amount due to termination of his employment, promotion or new hire. (See the "2019 Summary Compensation Table" for the actual salary paid to each NEO in 2019.)

Executive


2018
Base Salary


2019
Base Salary


% Change

Michael D. Darrow(1)

  $400,000   $400,000   —%

Victor A. "Chip" Perry(2)

  $800,000   $800,000   —%

Noel B. Watson(3)

  N/A   $450,000   N/A

Charles C. Thomas(4)

  $237,500   $237,500   —%

John E. Pierantoni(5)

  $360,500   $360,500   —%

Simon E. Smith(6)

  $355,000   $400,000   13%

Jeffrey J. Swart(7)

  $375,000   $400,000   7%

Robert T. "Tommy" McClung(8)

  $400,000   $400,000   —%

Neeraj Gunsagar(8)

  $400,000   $400,000   —%
(1)
Beginning in June 2019, Mr. Darrow was entitled to an additional monthly stipend of $20,000 for Mr. Darrow's service as Interim President and CEO.

(2)
Mr. Perry left us in May 2019.

(3)
Mr. Watson joined us in June 2019.

(4)
Mr. Thomas was not an NEO in 2018.

(5)
Mr. Pierantoni left us in April 2019.

(6)
Mr. Smith's 2019 base salary reflected above was effective in connection with his promotion in June 2019, and he was not an NEO in 2018.

(7)
Mr. Swart was not an NEO in 2018.

(8)
Messrs. Gunsagar and McClung left us in June 2019.

The objective of our annual cash incentive program is to reward executives for achievement against pre-determined short-term financial and operational objectives established at the beginning of the year. Based on stockholder feedback, the compensation committee moved to a formula-based, annual incentive program for the senior executive team in 2019; below the senior executive team, we maintained a broad-based quarterly incentive program consistent with historical practice, in which some of the NEOs reported in this proxy statement participated at some point during the year based on their role at the time. Messrs. Perry, Darrow, Pierantoni, Watson, Swart, Gunsagar and McClung all participated in the annual incentive program for the senior executive team during the portion of 2019 that they were employed by us. Mr. Smith participated in the quarterly incentive program until his promotion from SVP to EVP in June 2019, at which point he transitioned to the annual incentive program for the senior executive team on a pro-rata basis for the remainder of the year. Mr. Thomas participated in the quarterly incentive program for the entirety of 2019.

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For 2019, the compensation committee approved an annual cash incentive opportunity for the NEOs in which 70% of the payout was tied to financial performance and 30% was tied to the achievement of objective strategic goals established at the beginning of the year.

Executive


2018
Target Incentive as
% of Base Salary



2019
Target Incentive as
% of Base Salary



% Change

Michael D. Darrow(1)

  50%   50%   —%

Victor A. "Chip" Perry(2)

  100%   100%   —%

Noel B. Watson(3)

  N/A   50%   N/A

Charles C. Thomas(4)

  26%   26%   —%

John E. Pierantoni(2)

  40%   40%   —%

Simon E. Smith(5)

  40%   50%   25%

Jeffrey J. Swart

  50%   50%   —%

Robert T. "Tommy" McClung(2)

  50%   50%   —%

Neeraj Gunsagar(2)

  50%   50%   —%
(1)
Mr. Darrow's target incentive applied only to his base salary and not to his monthly stipend for his service as Interim President and CEO.

(2)
Former executives were not eligible to receive any incentive payments due to their termination during the year.

(3)
Mr. Watson joined us in June 2019 and was eligible for a pro-rated cash incentive payment for the period of time that he was employed in 2019.

(4)
Mr. Thomas participated in our non-executive bonus program for all of 2019.

(5)
Mr. Smith was promoted in June 2019 and participated in the annual incentive program for the senior executive team for the second half of 2019 and our non-executive bonus program in the first half of 2019. The increase in his target incentive from 40% to 50% was effective upon his promotion.

For the annual incentive program for the senior executive team, at the beginning of 2019, the compensation committee selected the performance metrics, which were generally consistent with the metrics used in prior years. The financial component, weighted at 70% of the total opportunity, measured performance against Revenue and Adjusted EBITDA, as defined below, and provided the opportunity to earn between 0% and 180% of target payout. The financial component would be set at 100% if the Revenue target of $389 million and the Adjusted EBITDA target of $39.3 million were achieved. The strategic component, weighted at 30% of the total opportunity, included goals relating to the achievement of a variety of critical strategic objectives, and provided the opportunity to earn between 0% and 150% of target payout. The design of the program included a feature where no payout would be delivered on the strategic component if the financial results did not meet the threshold requirements. The illustration below summarizes the framework used to determine the final payouts as a percent of each individual's target incentive.

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(1)
Subject to the achievement of a greater than 0% payout on the financial component.

The compensation committee developed a matrix reflected below to determine the payout mechanism for the financial component. The matrix design was selected to ensure that a cash incentive payout would only be earned

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if both the threshold Revenue growth and Adjusted EBITDA were achieved. The payout in the event of results falling between associated cells in the matrix would be determined by interpolation between the end point when determining the final payout.

                2019 Revenue Growth
                               
            Below
Threshold


  Threshold
  Between
Target and
Threshold



  Target
  Between
Target and
Maximum



  Maximum
                               
    2019 Adjusted EBITDA
  <+4%
  +6%
  +8%
  +10%
  +12%
  +14%
    Below       $36.8M       0%       0%       0%     0%     0%       0%    
   
    Threshold       $37.5M       0%       35%       40%     45%     50%       55%    
   
    Between       $38.2M       0%       40%       70%     75%     80%       85%    
                               
    Target     $39.3M     0%     45%     75%     100%     105%     110%  
                               
    Between       $41.0M       0%       50%       80%     105%     135%       140%    
   
    Max       $43.3M       0%       55%       85%     110%     140%       180%    

After the end of 2019, the compensation committee reviewed financial performance against the pre-determined goals and determined that neither our 2019 Revenue nor our 2019 Adjusted EBITDA met the threshold requirements and thus no cash incentive would be delivered to the participants under the annual incentive program for the senior executive team (including Messrs. Darrow, Watson, Smith and Swart).

As noted earlier, Mr. Smith participated in our non-executive bonus program for the first two quarters of 2019, for which he was paid $73,785 under the program, and Mr. Thomas participated in that program for all of 2019, for which he was paid $57,218 under the program. In the aggregate, these bonus payments to Messrs. Smith and Thomas were nearly 100% of their target incentive for the time during which they participated in the non-executive bonus program. Their quarterly payments under that program were discretionary and were based on (x) our overall non-executive bonus pool, which was determined by management in consultation with the compensation committee, and (y) management's assessments of each participant's individual contributions. Mr. Thomas also received a discretionary "spot" bonus of $17,500 for critical assistance with an important transaction outside the scope of his traditional role. Neither Mr. Smith nor Mr. Thomas was an executive officer within the meaning of Section 16 of the Exchange Act at the time of earning a payout under the non-executive bonus program.

Although our financial performance in 2019 did not result in any cash bonuses being payable to our NEOs under the annual incentive program for the senior executive team, the compensation committee in January 2020 determined to recognize strong second half financial performance and several strategic accomplishments by providing a discretionary cash bonus to our leadership team at the end of the year. The amount of these discretionary bonuses was as follows:

Executive


2019 Cash Bonus  

Michael D. Darrow(1)

  $ 300,000  

Noel B. Watson(2)

  $ 112,500  

Simon E. Smith(2)

  $ 100,000  

Jeffrey J. Swart(2)

  $ 100,000  
(1)
The bonus payout to Mr. Darrow was determined by estimating half of his target bonus opportunity for 2019 with additional consideration for his role as Interim President and CEO in leading a strong second half operational performance.

(2)
The bonus payable to executives other than Mr. Darrow was half of their 2019 target bonus, reflecting approximately a full bonus for the time that they served following our management transition.

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The decision to grant these cash bonuses despite our not having achieved the formula-based metrics underlying the annual executive plan was made in the exercise of the compensation committee's discretion, taking into account a number of relevant considerations, including the following:

Given the new management team's accomplishments in the second half of the year following a significant leadership transition, the compensation committee believed that a below target cash bonus was appropriate and in the best interests of stockholders by stabilizing the business and our leadership team. Additionally, the compensation committee's decision was made at a time that USAA had given us a strong basis for believing that its partnership with USAA would be renewed. The compensation committee will consider the effect of USAA's change in position in its 2020 compensation decisions.

"Adjusted EBITDA" is a financial measure not prepared in accordance with U.S. GAAP, was calculated based on earnings as reflected in our audited consolidated financial statements, adjusted to exclude interest income, interest expense, depreciation and amortization, stock-based compensation, income (loss) from equity method investment, certain restructuring costs, certain executive departure costs, certain transaction expenses, certain litigation costs changes in the fair value of contingent consideration and income taxes. Refer to Annex A for a reconciliation of Adjusted EBITDA to net loss. We use Adjusted EBITDA as an operating performance measure because it is (i) an integral part of our reporting and planning processes; (ii) used by our management and Board to assess our operational performance, and together with operational objectives, as a measure in evaluating employee compensation and bonuses; and (iii) used by our management to make financial and strategic planning decisions regarding future operating investments. We believe that using Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis because it excludes variations primarily caused by changes in the excluded items noted above. In addition, we believe that Adjusted EBITDA is widely used by investors, securities analysts, rating agencies and other parties in evaluating companies as measures of financial performance and debt service capabilities.

"Revenue" is prepared in accordance with U.S. GAAP and is comprised of dealer revenue, consisting of fees paid by our dealer customers participating in our network of TrueCar Certified Dealers either on a per-vehicle basis for sales to our users or in the form of a subscription arrangement or purchasing our other products and services, such as TrueCar Trade or our DealerScience products; OEM incentives revenue, consisting of fees paid by OEMs to promote the sale of their vehicles through the offering of consumer incentives to members of our affinity group marketing partners; and forecasts, consulting and other revenue, primarily from the provision of services to the automotive and financial services industries by our ALG subsidiary.

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We use long-term incentive compensation in the form of equity awards to align the interests of our executive officers, including our NEOs, with the interests of our stockholders. We believe that our executive officers will be strongly incentivized to act in a manner that cultivates opportunities for maximizing long-term value creation if they own significant amounts of our common stock. Since our initial public offering and before 2019, we relied on a combination of time-based stock options and RSUs as vehicles for delivering long-term incentive compensation opportunities to our executive officers. We believe that stock options, which are granted with exercise prices equal to the fair market value of our common stock on the date of grant, provide an appropriate long-term incentive for our executive officers, as the options provide value to the holder only to the extent that our stock price appreciates on a sustained basis following the date of grant. We believe that RSUs, which deliver increasing value with the appreciation of our stock price, serve as a valuable retention tool for our executive officers. In 2019, based on feedback from stockholders and an ongoing review of competitive market practices, we introduced performance units, which we refer to as PUs, to the senior executive team, and in 2020, following our experience in 2019, we extended PUs to our senior vice presidents as well. We believe that PUs strengthen alignment with stockholders, complement the options and RSUs by diversifying our management's equity portfolio and promote a longer-term view of performance by measuring performance over a three-year period.

In determining the size of the equity awards to grant to our executive officers, the compensation committee takes into consideration individual and overall company performance, market data, internal pay equity, the timing of the last equity grant, unvested equity values, compensation expense to us and stockholder dilution, as well as our CEO's recommendations (except as to his own equity awards). The compensation committee uses its subjective judgment considering all of the factors described above to arrive at the amounts it determines are appropriate for each individual NEO.

For Mr. Perry, who was CEO at the time of the annual equity grant in March 2019, the equity mix consisted of 50% PUs, 25% options and 25% RSUs. For the other members of the leadership team in March 2019, including several NEOs, the equity mix consisted of 20% PUs, 40% options and 40% RSUs. For Messrs. Smith and Thomas, the equity mix for the annual grant received in March 2019 was 70% RSUs and 30% options. In establishing these equity mixes, the compensation committee considered the various long-term incentive vehicles used by our peers and determined that the performance-weighting of the awards should be progressively higher as an individual's potential impact increases, with the CEO having the highest performance weighting and the other members of the senior executive team having lesser (though still considerable) performance weighting.

Equity awards were granted in March 2019 and the stock options granted to the NEOs have an exercise price of $6.93 per share and vest monthly over a four-year period. As of December 31, 2019, all of the options granted in the 2019 annual equity grant were "underwater" (that is, had exercise prices higher than the fair market value of our common stock) and provided no direct value to our executives. The RSUs granted in 2019 generally are scheduled to vest over a four-year period with quarterly vesting (see the "Outstanding Equity" table for vesting details), subject to the acceleration provisions of each NEO's employment agreement and our 2014 Plan.

For the PUs granted in 2019, executives have the opportunity to earn between 0% and 150% of the target number of shares based on our annualized total stockholder return determined by reference to our compound annual growth in stock price, or CAGR, compared to that of the Russell 2000 index, or the Index, over a three-year period. The PUs will generally be eligible to vest in early 2022, following the end of the three-year performance period, based on our relative CAGR compared to the Index. If our CAGR is equal to that of the Index, the target number of shares will vest. For every percentage point that our CAGR exceeds the Index, the payout is increased by two percentage points, and for every percentage point that our CAGR is below the Index, the payout is decreased by two percentage points.

In developing the performance goals and vesting structure of the PUs, the compensation committee sought to be rigorous and to align the interests of management and our stockholders. Moreover, it chose a three-year measurement period to accentuate the long-term nature of the award and further align management with the

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interests of our long-term stockholders. The compensation committee chose relative CAGR as the performance goal to provide a relative performance metric against an appropriate comparator group of companies to incentivize and reward not only returns to our stockholders, but also returns in excess of those generally available. At the end of the three-year performance period, the compensation committee will determine the level of achievement of our relative CAGR for the three-year performance period and then apply the resulting vesting to the grant amount to determine the total amount that will vest.

The table below reflects the annual equity grants awarded to our NEOs in March 2019:

Executive(1)


Options
Granted


RSUs
Granted


PUs
Granted

Michael D. Darrow

  68,598   32,927   14,952

Victor A. "Chip" Perry(2)

  113,444   54,453   99,006

Charles C. Thomas

  12,096   13,548  

Simon E. Smith

  27,216   30,482  

Jeffrey J. Swart

  54,432   26,127   11,864

Robert T. "Tommy" McClung(3)

  68,598   32,927   14,952

Neeraj Gunsagar(3)

  54,432   26,127   11,864
(1)
Messrs. Pierantoni and Watson did not receive annual equity grants in March 2019.

(2)
In connection with his retirement, Mr. Perry's option and RSU awards were accelerated, and he forfeited his PU award.

(3)
Of these grants, Messrs. McClung and Gunsagar forfeited options to purchase 68,598 and 54,432 shares, 22,638 and 17,963 RSUs and 13,628 and 10,814 PUs, respectively, in connection with their terminations.

On June 17, 2019, Mr. Watson joined us as our CFO and CAO. In connection with his hiring, the Committee granted him an equity award with a grant-date fair value of approximately $2.5 million, comprising approximately $500,000 in options and approximately $2 million in RSUs. The compensation committee crafted this grant after consultation with Semler Brossy and consideration of competitive annualized opportunities for peer CFOs, as well as the need to compensate Mr. Watson for his outstanding and forfeited equity from his prior employer and to ensure that he is meaningfully and immediately aligned with stockholders. The compensation committee considered the size of the grant to be within the typical market practice for new-hire awards and also within the historical range used in the past for other non-CEO executives when joining us. Further, the grant included a mix of RSUs and options, with a heavier mix of RSUs to provide meaningful retention and immediate ownership with options providing stronger alignment with stockholders. The options were granted with a $5.34 exercise price and were "underwater" as of December 31, 2019.

In addition to the annual grants identified above, the compensation committee also made grants in connection with the leadership transition that occurred in June 2019. Mr. Darrow received an award of RSUs worth approximately $515,000 to recognize his additional responsibilities while serving as Interim President and CEO. The compensation committee, in consultation with Semler Brossy, determined this award amount by reviewing the competitive market range for annualized total pay opportunities for full-time CEO positions among our peers and seeking to position 2019 annualized total pay for Mr. Darrow toward the lower end of that range, given the circumstances and context for the Interim President and CEO role for the second half of the year. These RSUs follow the same quarterly vesting schedule as the annual grants but will vest in full after a two-year period, which the compensation committee established to more closely align with the interim nature of the role and to provide a meaningful retention incentive during a period of uncertainty.

At the same time, Mr. Smith was promoted to EVP of Dealer Sales & Service and received a promotional grant of RSUs and options with a grant-date fair value of approximately $770,000. The compensation committee, in

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consultation with Semler Brossy, determined the amount of these awards by reviewing external market data for similar positions and considering Mr. Smith's internal equity positioning against our other executives and the prior incumbent. The compensation committee believed that this promotional grant was appropriate to recognize Mr. Smith's increased responsibilities, strengthen his retention incentives and include a mix of options and RSUs that is generally more consistent with the annual grant structure, with the same four-year vesting schedule as the annual grants.

Finally, in September 2019, the compensation committee, after reviewing information provided by Semler Brossy, granted Mr. Swart an award of RSUs with a grant-date fair value of approximately $450,000 to further its goal of internal pay equity, strengthen his retention incentives and recognize the critical importance of his role, and continuity in that role, during the period of uncertainty facing us.

The recent outbreak of the novel coronavirus and the measures taken by governments and societies in response thereto have precipitated a period of substantial uncertainty that poses unprecedented challenges to us. Shortly after the scale of the economic impact of the coronavirus outbreak became apparent, we temporarily reduced our executive officers' base salaries and our directors' cash retainers, as described in a contemporaneous Current Report on Form 8-K that we filed with the SEC on March 26, 2020. Responding effectively to this crisis will require that we be as nimble and flexible as possible, and may require us to make additional adjustments to executive compensation to maintain the financial health of our business while simultaneously ensuring that we retain our key executives and provide them with appropriate incentives.

These adjustments could include further changes in executives' base salary or ad hoc cash bonuses or equity awards to executives, in each case in the discretion of the compensation committee, as well as further adjustments to directors' compensation in the Board's discretion. Although the compensation committee expects to adopt an annual cash incentive program for the senior executive team for 2020 similar to the program that was in place for 2019, it expects to do so only after the coronavirus-related uncertainty has abated sufficiently to permit it to make an informed judgment as to the appropriate contours of the program, and it cannot rule out the need to make discretionary, ad hoc cash bonuses in lieu of or in addition to any bonuses payable under such an annual program in light of the ongoing uncertainty.

We maintain a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. All participants' interests in their salary deferrals are 100% vested when contributed. In 2019, we made discretionary matching contributions into the 401(k) plan of 100% of the first 3% of compensation contributed by the participant. Our matching contributions are fully vested after four years with 25% vesting annually. Employee and employer contributions are allocated to each participant's individual account and are then invested in selected investment alternatives according to the participants' directions. The 401(k) plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As a tax-qualified retirement plan, employer contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan, and all employer contributions are deductible by us when made.

We provide perquisites to our NEOs only to the extent that we believe it is appropriate to assist an individual in the performance of his duties, to increase his effectiveness or for recruitment and retention purposes. For 2019, these perquisites included medical expense reimbursements to assist our NEOs with their health and well-being. In addition, due to the increased time commitment required of Mr. Pierantoni during the time he served as Interim CFO in addition to his continuing responsibilities as CAO, he was reimbursed for in-town lodging and was paid a related tax gross up of approximately $4,000. Further, under his employment agreement we reimbursed Mr. Watson for approximately $80,000 of his expenses incurred in connection with his relocation to the Santa

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Monica area and provided him a $15,000 monthly housing allowance for the first six months of his employment. We did not pay Mr. Watson a tax gross up in connection with either of these perquisites.

In the future, we may provide perquisites or other personal benefits not offered to our broader employee population to our executive officers. However, we do not anticipate that perquisites or other personal benefits will be a significant aspect of our executive compensation program. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the compensation committee.

OTHER GOVERNANCE ITEMS

We have entered into employment agreements with each of our NEOs, excluding Mr. Thomas, that provide certain severance benefits if a termination of employment occurs under specified circumstances and certain change in control benefits, which are described in "Executive Employment Agreements" below. Severance benefits under these agreements are conditioned on the executive's signing a release of claims in favor of us. We have provided our executives with severance in the event of certain qualifying terminations, and certain change in control benefits, because we understand that anxieties about future employment or transactions involving a change in control can result in the early departure or distraction of our executives to our detriment. We believe that providing these benefits helps to alleviate these uncertainties, and therefore provides our NEOs with incentives to forgo other employment opportunities to remain with us, and allows our executives to focus more fully on making decisions that are in the best interests of our stockholders. We believe that these arrangements serve as an important recruiting and retention tool to ensure that personal uncertainties do not dilute our executives' complete focus on building stockholder value and driving our success.

The compensation committee determined the terms of these agreements. The employment agreements for the other NEOs are generally similar, as in determining the appropriate severance and change in control benefit levels for executives in general, the compensation committee considered internal parity and length of service and reviewed relevant market data provided by our outside compensation consultant for other companies with which we compete for executive talent.

In 2019, we entered into a separation agreement and release with Messrs. Perry, Pierantoni, Gunsagar and McClung. Under those agreements, Messrs. Perry, Gunsagar and McClung received the benefits to which they were entitled under their employment agreements in the case of a termination without cause, except that the compensation committee determined that it was appropriate to provide an additional cash payment not to exceed $25,000 in the case of Messrs. Gunsagar and McClung to expedite the completion of discussions and mitigate associated transaction costs for us. The separation agreement and release that we entered into with Mr. Pierantoni did not provide any benefits, as it was entered into in circumstances representing a resignation without good reason.

Concurrently with their terminations, we also entered into consulting agreements with Messrs. Perry and Pierantoni to secure their post-termination assistance with the associated management transitions. The consulting agreement with Mr. Pierantoni, which had a one-year term, did not provide him with any consideration other than his continued status as a "service provider" under our 2014 Plan, which resulted in his equity awards continuing to vest, and his stock options remaining exercisable, during that term. The consulting agreement with Mr. Perry, which has a two-year term, similarly does not provide him with any consideration other than his continued status as a "service provider" under the 2014 Plan; because his stock options and RSUs were accelerated and his PUs were forfeited in connection with his termination, the sole compensatory effect of his consulting agreement is to extend the expiration date of his stock options. The compensation committee considered these arrangements and determined that they were appropriate in light of the consulting services that Messrs. Perry and Pierantoni would be providing following their termination.

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We have an insider trading policy that, among other things, prohibits insiders from engaging in short sales of our common stock, hedging of stock ownership positions and transactions in publicly-traded options (such as puts and calls) and other derivative securities relating to our common stock.

In 2018, we adopted formal stock ownership guidelines for certain executives, including our NEOs. Under our stock ownership guidelines, our CEO is expected to accumulate and hold a number of shares of our common stock with a value equal to six times his annual base salary, and each of our other NEOs is expected to accumulate and hold a number of shares of our common stock with a value equal to two times his annual base salary. The NEOs are expected to satisfy the stock ownership guidelines within five years from the adoption of the guidelines (or the individual's date of hire for individuals hired after the effective date). As of March 31, 2020, due to the recent downturn in the price of our stock, none of our NEOs, except for Mr. Watson, would have been in compliance with the stock ownership guidelines were it not for the phase-in period required for such compliance.

In 2018, we adopted a clawback policy applicable to our executive officers. If our compensation committee determines that an officer's misconduct caused us to materially restate all or a portion of our financial results, under certain circumstances our compensation committee has the authority and discretion to, within a period of time following the material restatement, require the officer to repay incentive compensation that would not have been payable absent the material restatement. Incentive compensation for purposes of this policy means an officer's cash bonus and long-term equity-based compensation where the award size or vesting was contingent on our performance. Our compensation committee intends to revisit our clawback policy after the SEC adopts final rules implementing the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The fair value of equity awards is established in accordance with the applicable accounting standards and the related compensation expense is one of the factors taken into consideration by the compensation committee in determining NEO equity awards.

Under Section 162(m) of the Code, or Section 162(m), compensation paid to any publicly held corporation's "covered employees" that exceeds $1 million per taxable year for any covered employee is generally non-deductible. Before the enactment of the Tax Cuts and Jobs Act, Section 162(m) provided a performance-based compensation exception, pursuant to which the deduction limit under Section 162(m) did not apply to any compensation that qualified as "performance-based compensation" under Section 162(m). Under the Tax Cuts and Jobs Act, the performance-based compensation exception under Section 162(m) was repealed with respect to taxable years beginning after December 31, 2017, except that certain transition relief is provided for compensation paid pursuant to a written binding contract that was in effect on November 2, 2017 and which is not modified in any material respect on or after that date.

Compensation paid to each of our "covered employees" in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the performance-based compensation exception under Section 162(m) pursuant to the transition relief described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m), as well as other factors beyond the control of the compensation committee, no assurance can be given that any compensation paid by us will be eligible for such transition relief and be deductible by us in the future. Although the compensation committee will continue to consider tax implications as one factor in determining executive compensation, the compensation committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for our NEOs in a manner

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consistent with the goals of our executive compensation program and the best interests of us and our stockholders, which may include providing for compensation that is not deductible by us due to the deduction limit under Section 162(m). The compensation committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with our business needs.

We do not have a formal policy for the timing of equity award grants. Before 2018, we granted equity awards when our compensation committee determined appropriate to serve the incentive and retention purposes of the awards. Beginning in 2018, our compensation committee determined to initiate a practice of granting equity awards to our executive officers annually in the first half of the year, although grants may occur at other times during the year, including for new hires, for promotees, to address special retention needs or otherwise as determined appropriate by the compensation committee. We currently grant equity awards to the NEOs under the 2014 Plan, which was adopted in connection with our initial public offering in 2014.

Sections 280G and 4999 of the Code provide that executive officers, directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change of control that exceed certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive, including any NEO, with a gross up or other reimbursement payment for any tax liability that the executive might owe as a result of the application of Sections 280G or 4999 of the Code during 2019 and we have not agreed and are not otherwise obligated to provide any executive with such a gross up or other reimbursement.

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Compensation Committee Report

The compensation committee has reviewed and discussed with management the above Compensation Discussion and Analysis. Based on that review and discussion, the compensation committee has recommended to the Board that this Compensation Discussion and Analysis be included in this proxy statement.

Respectfully submitted,

Wesley Nichols (Chair)
Christopher Claus
John Mendel

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2019 SUMMARY COMPENSATION TABLE

The following table shows compensation awarded to, paid to or earned by the persons named below for each of the years ended December 31, 2019, 2018 and 2017, except for Messrs. McClung and Pierantoni, for whom compensation is shown for the years ended December 31, 2019 and 2018 only (reflecting that they were named executive officers only during those years); and for Messrs. Watson Thomas, Smith and Swart, for whom compensation is shown for the year ended December 31, 2019 only (reflecting that they were named executive officers only during that year).

Name and
Principal Position



Year


Salary
($)




Bonus
($)





Stock
Awards
($)(1)






Option
Awards
($)(1)






All Other
Compensation
($)




Total
($)
 
Michael D. Darrow     2019     400,000     300,000(2)     882,413     272,123     158,101(3)     2,012,637  
President and CEO     2018     400,000     70,868(2)     331,178     407,713     9,479(4)     1,219,238  
      2017     333,333     101,922(2)     1,656,702     2,948,302     9,247(4)     5,049,506  
Victor A. "Chip" Perry   2019   333,333     2,799,290(5)   3,944,739(5)   3,214,750(6)   10,292,112  
Former President and CEO   2018   800,000   238,848(2)   784,635   1,181,778   14,878(4)   3,020,139  
  2017   800,000   195,488(2)   789,615   2,818,285   482,876(7)   5,086,264  
Noel B. Watson     2019     243,750     112,500(2)     1,975,752     455,750     376,820(8)     3,164,572  
CFO and CAO                                            
Charles C. Thomas   2019   237,500   74,718(2)   100,215   47,984   8,757(9)   469,174  
VP, Controller                              
John E. Pierantoni     2019     90,125         14,782         20,099(10)     125,006  
Interim CFO; SVP and CAO     2018     356,841     77,318(2)     457,019     105,048     62,770(11)     1,058,996  
Simon E. Smith   2019   380,313   173,785(2)   614,591   622,332   24,266(12)   1,815,287  
EVP, Dealer Sales & Service                              
Jeffrey J. Swart     2019     400,000     100,000(2)     744,496     215,928     14,880(12)     1,475,304  
EVP, General Counsel and Secretary                                            
Robert T. "Tommy" McClung   2019   191,667     369,230   272,123   434,168(13)   1,267,188  
Former EVP and Chief   2018   400,000   70,868(2)   409,212   525,234   9,207(4)   1,414,521  
Technology Officer                              
Neeraj Gunsagar     2019     191,667         298,452     215,928     450,352(14)     1,156,399  
Former EVP and Chief     2018     400,000     70,868(2)     295,868     354,535     13,674(15)     1,134,945  
Marketing Officer     2017     400,000     134,699(2)     699,876     1,735,936     23,803(16)     2,994,314  
(1)
The amounts reported represent the aggregate grant-date fair value of the RSUs, options and PUs awarded to the named executive officer, calculated in accordance with FASB ASC Topic 718. Such grant-date fair value does not take into account any estimated forfeitures related to service-vesting conditions. The assumptions used in calculating the grant-date fair value reported in this column are set forth in Note 11 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. For PUs, the grant date fair value reported is based on the probable outcome of the performance condition as of the grant date. The aggregate grant date fair value of the PUs, assuming the highest level of achievement under the award, is as follows for each NEO who received a PU award:
 
  Maximum
Achievement Payout
 

Michael D. Darrow

  $ 171,798  

Victor A. "Chip" Perry

  $ 1,137,579  

Jeffrey J. Swart

  $ 136,317  

Robert T. "Tommy" McClung

  $ 171,798  

Neeraj Gunsagar

  $ 136,317  
(2)
Amount represents discretionary bonus for performance during the applicable year.

(3)
Amount includes a monthly stipend of $20,000 to reflect the assumed additional responsibilities as our Interim President and CEO beginning in June 2019, 401(k) employer matching contributions of $8,400 and the aggregate incremental costs of perquisites and other personal benefits.

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(4)
Amount includes 401(k) employer matching contributions of $7,950 and the aggregate incremental costs of perquisites and other personal benefits.

(5)
In connection with Mr. Perry's retirement and pursuant to his separation agreement, amounts include incremental value associated with the acceleration of RSUs and options of $1,663,545 and $1,111,190, respectively, and the extension of the exercise period for vested stock options of $2,383,524 as determined under FASB ASC Topic 718.

(6)
Amount includes a $3,200,000 severance payment associated with Mr. Perry's retirement in May 2019, 401(k) employer matching contributions of $8,400 and the aggregate incremental costs of perquisites and other personal benefits.

(7)
Amount includes 401(k) employer matching contributions of $7,950 and the aggregate incremental costs of perquisites and other personal benefits, including, among other things, the costs related to providing housing near our principal executive offices in Santa Monica, California for Mr. Perry and transportation costs in connection with his commuting to Santa Monica. Mr. Perry received $243,899 in tax gross-ups from the Company in 2017 related to expenses paid on his behalf by the Company, primarily the housing and commuting expenses.

(8)
Amount includes 401(k) employer matching contributions of $5,067 and the aggregate incremental costs of perquisites and other personal benefits, including, among other things, a $200,000 partial signing bonus paid to Mr. Watson pursuant to his employment agreement, a housing allowance of $90,000 for his first six months of employment and relocation benefits worth $80,173.

(9)
Amount includes 401(k) employer matching contributions of $8,270 and the aggregate incremental costs of perquisites and other personal benefits.

(10)
Amount includes 401(k) employer matching contributions of $3,174 and the aggregate incremental costs of perquisites and other personal benefits, including the costs related to providing housing near our principal executive offices in Santa Monica, California for Mr. Pierantoni and transportation costs in connection with his commuting to Santa Monica. Mr. Pierantoni received $4,059 in tax gross-ups from the Company in 2019 related to expenses paid on his behalf by the Company, primarily the housing and commuting expenses.

(11)
Amount includes 401(k) employer matching contributions of $7,950 and the aggregate incremental costs of perquisites and other personal benefits, including the costs related to providing housing near our principal executive offices in Santa Monica, California for Mr. Pierantoni and transportation costs in connection with his commuting to Santa Monica. Mr. Pierantoni received $19,283 in tax gross-ups from the Company in 2018 related to expenses paid on his behalf by the Company, primarily the housing and commuting expenses.

(12)
Amount includes 401(k) employer matching contributions of $8,400 and the aggregate incremental costs of perquisites and other personal benefits.

(13)
Amount includes a $425,000 severance payment associated with Mr. McClung's termination in June 2019, 401(k) employer matching contributions of $8,400 and the aggregate incremental costs of perquisites and other personal benefits.

(14)
Amount includes $423,000 in aggregate severance-related payments associated with Mr. Gunsagar's termination in June 2019, 401(k) employer matching contributions of $8,400, medical reimbursements of $17,738 and the aggregate incremental costs of perquisites and other personal benefits.

(15)
Amount includes 401(k) employer matching contributions of $5,737 and the aggregate incremental costs of perquisites and other personal benefits.

(16)
Amount includes medical reimbursements of $16,645, 401(k) employer matching contributions of $5,621 and the aggregate incremental costs of perquisites and other personal benefits.

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2019 GRANTS OF PLAN-BASED AWARDS TABLE

     


Estimated Future Payouts
under Non-Equity Incentive
Plan Awards(1)






Estimated Future Payouts
under Equity Incentive
Plan Awards(2)









All other
stock
awards:
Number of
shares of
stock or












All other
option
awards:
Number of
securities
underlying









Exercise or
base price
of option








Grant
Date Fair
Value of
Stock and
Option
 
                     

Name

  Grant Date


Threshold
($)




Target
(#)




Maximum
($)




Threshold
(#)




Target
(#)




Maximum
(#)




units
(#)




options
(#)




awards
($/sh)



Awards
($)(3)
 

Michael D. Darrow

  3/15/2019                       299     14,952     22,428                 114,532  

  3/15/2019                                   36,753(4)     68,598(5)     6.93     526,821  

  6/8/2019                                   94,162(6)             513,183  

        30,000     200,000     342,000                                            

Victor A. "Chip" Perry

  3/15/2019         1,980   99,006   148,509         758,386  

  3/15/2019               54,453(7)   113,444(5)   6.93   827,383  

    60,000   400,000   684,000                

Noel B. Watson

  6/17/2019                                   369,991(8)     148,991(9)     5.34     2,431,502  

        18,308     122,055     208,714                          </