What changed in this filing

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Item 9A. Controls and Procedures

2021-02-25 compared with 2020-02-27 · 66 added, 995 removed, 85 unchanged (93% of the section changed)

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Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as noted below.

On April 1, 2020, we completed the Merger with Telaria.

See Note 10 of "Notes to Consolidated Financial Statements" for more information.

We are currently integrating Telaria into our operations and internal control processes.

As we complete this integration, we are analyzing, evaluating, and where necessary, making changes in control and procedures related to the Telaria business, which we expect to complete within one year after the date of acquisition.

Pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal controls over financial reporting at December 31, 2020 excludes Telaria to the extent that they are not yet integrated into our internal controls environment.

Management's Report on Internal Control Over Financial Reporting

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Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in "Internal Control - Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that the Company's internal control over financial

reporting was effective as of December 31, 2019 .

As permitted by the Securities and Exchange Commission, companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition.

During the quarter ended June 30, 2020, the Company acquired Telaria, Inc..

Pursuant to applicable rules, because the Company has not yet fully incorporated the internal controls and procedures of the acquired entity into the Company's internal control over financial reporting, management excluded certain elements related to the acquired business from its assessment of the effectiveness of internal control over financial reporting as of December 31, 2020.

The excluded elements of the Telaria business represented 25% of the Company's revenue and 25% of the Company’s total assets as of and for the year ended December 31, 2020.

Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2020.

Deloitte & Touche LLP has independently assessed the effectiveness of our internal control over financial reporting and its report is included under "Item 8.

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Directors, Executive Officers and Corporate Governance

The table below lists the Company's seven directors and their committee assignments.

A summary of the background for each director is set forth after the table.

These background summaries include the specific experience, qualifications, attributes, and/or skills that, together with the general characteristics and qualifications contributed to our board’s conclusion that the person should serve as a director of the company.

Committee Assignments

Frank Addante

President, Chief Executive Officer and Director

December 2015

Lead Director

February 2014

As of February 1, 2020

Class I Directors—Term expiring 2021

Frank Addante is our founder and has been a member and Chairman of our board of directors since 2007 and served as our Chief Executive Officer from April 2007 to March 2017 and our Chief Product Architect from November 2014 to February 2016.

From March 2017 to June 2018, he was employed by the company, reporting to and assisting the Chief Executive Officer, including by providing analysis and advice in the areas of strategy, innovation, and advertising technology market conditions and dynamics.

Addante founded the email infrastructure provider StrongMail Systems, Inc.

From January 1998 to November 2000, Mr.

Addante was CTO and Technology Founder of L90, an Internet advertising company, where he pioneered one of the Internet’s first ad serving platforms, adMonitor.

Addante started his Internet career with the creation of Starting Point, a search engine.

Addante brings to our board of directors thorough knowledge of our company and extensive experience in advertising automation and related systems engineering, innovation, and executive leadership.

Frankenberg joined our board of directors in connection with our initial public offering in April 2014.

Frankenberg has owned NetVentures, a management consulting and investment firm focused on the high-tech industry, since 1996.

He served on the board of directors of public company Nuance Communications from March 2000 to June 2018.

He previously served as a member of the boards of directors of public companies Polycom from October 2013 to September 2016, Wave Systems from December 2011 to June 2015 and National Semiconductor until October 2011.

He also serves on the board of private company Veracity Networks and the Sundance Institute board.

Prior to its sale in 2004, Mr.

Frankenberg chaired Kinzan, a leading provider of Internet services platforms.

Frankenberg was the chairman, president, and CEO of Encanto Networks from June 1997 to July 2000 when the company’s major business was sold to Avaya.

Encanto was a leading provider of eBusiness software and services to small business.

From April 1994 to August 1996, Mr.

Frankenberg was the Chairman/CEO of Novell, a networking software company.

Prior to Novell, Mr.

Frankenberg was the Vice President & Group General Manager of Hewlett-Packard’s Personal Information Products Group, responsible for HP’s personal computer, server, networking, office software, calculator, and consumer product lines.

Frankenberg joined Hewlett-Packard in 1969 as a manufacturing technician, later became a design engineer, software designer, project manager, engineering and marketing executive, and general manager.

He became a corporate vice president in 1990 and general manager of the Personal Information Products Group in 1991.

He served in the US Air Force from 1965 to 1969.

Frankenberg previously served on various other boards, including for America OnLine (AOL), and holds several computer design patents.

He brings to the board a deep knowledge of software, computer networks and systems, business operations, the technology industry, and public company governance and board service.

Harden joined our board of directors in July 2019.

Harden brings more than two decades of experience in digital media, entertainment and direct-to-consumer video to the Company’s Board.

Since January 2018, Ms.

Harden has served as the Chief Executive Officer of Reese Witherspoon’s media company Hello Sunshine.

Prior to that, Ms.

Harden held executive-level positions at Otter Media/The Chernin Group from 2013 to 2018, including President and Executive Vice President.

Harden previously served as board member of privately held ESPN-Star Sports, Star China Media and The Moby Group and as a board director overseeing successful acquisitions and exits of private portfolio companies including Crunchyroll, Fullscreen, Roosterteeth, McBeard, Stagebloc and minority-invested company DLVR.

Harden received her MBA from Harvard Business School and graduated with honors with a B.A.

in international relations from The University of Melbourne.

Class II Directors—Term expiring 2022

Barrett has been a member of our board of directors and has served as our President and Chief Executive Officer since March 2017.

Barrett has served as the President of Ichabod Farm Ventures LLC, an investment company that he founded, since December 2012.

From January 2014 to December 2015, he served as President and Chief Executive Officer of Millennial Media, Inc.

From July 2012 to December 2012, Mr.

Barrett served as Global Chief Revenue Officer and Executive Vice President at Yahoo!

Prior to Yahoo!, from January 2012 to July 2012, Mr.

Barrett served as Director at Google Inc., where he led the integration efforts following Google’s acquisition of AdMeld Inc., a global supply side platform solution for premium publishers.

Barrett previously served as Chief Executive Officer at AdMeld from November 2008 to December 2011.

Barrett also held senior positions at AOL, Fox Interactive Media and Disney Online.

Barrett serves on the board of directors of Media Math, a demand-side platform.

Barrett brings to the board extensive experience in digital advertising and advertising technology, as well as significant executive management expertise.

Spillane joined our board of directors in connection with our initial public offering in April 2014.

From 1998 to 2017, Mr.

Spillane was a Managing Principal at DigaComm, L.L.C., a private investment firm that leads early-stage venture capital transactions, primarily involving companies in technology and digital media.

Spillane was formerly a Principal and President and CEO of the investment group DM Holdings, Inc., which was formed in 1991 to acquire Donnelley Marketing, Inc.

from The Dun and Bradstreet Corporation.

Donnelley Marketing was a leading direct marketing and information services company.

Spillane served as President and CEO, and on the board of directors of Donnelley Marketing, Inc.

Prior to joining DM Holdings, Mr.

Spillane was the Executive Vice President of Diamandis Communications, Inc., then a leading consumer magazine publisher, formed in 1987 in a leveraged buyout of CBS Magazines from CBS Inc., and also served as a member of the Diamandis board of directors from 1987 to 1990.

Prior to Diamandis, Mr.

Spillane held various executive positions with CBS, Inc., including Senior Vice President Group Publisher, Vice President of Circulation, Vice President General Manager of the CBS Special Interest Magazine Group, and Vice President Sales and Marketing of Fawcett Books.

His ten-year career at CBS culminated in service from 1985 to 1987 as Senior Vice President, Publishing of CBS Magazines.

In that capacity, he was directly responsible for 10 magazines.

From 1972 to 1977, Mr.

Spillane held various positions with Chesebrough Ponds, Inc.

Spillane also served on the board of directors of TVSM, Inc., a private media company, from 1992-1998.

Spillane brings to the board expertise in the publishing and advertising businesses, as well as significant experience with operations and mergers and acquisitions.

Class II Directors—Term expiring 2020

Coleman has been a member of our board of directors since December 2015.

He is the retired Vice Chairman of DreamWorks Animation, a position he held from July 2014 to January 2015.

Prior to that, he served in various executive-level positions with DreamWorks since December 2005, including as President from December 2005 to August 2014, Chief Financial Officer from February 2007 to September 2015, and acting Chief Accounting Officer from June to September 2014.

Prior to joining DreamWorks, Mr.

Coleman was the President of the Gordon and Betty Moore Foundation from its founding in November 2000 to December 2004.

Prior to that, Mr.

Coleman was a Senior Managing Director at Montgomery Securities and then President and Chief Operating Officer of its successor, Banc of America Securities, where he also served as Chairman from 1998 to 2000.

Before then, Mr.

Coleman spent ten years at Bank of America where he served as Vice Chairman and Chief Financial Officer.

He spent the previous 21 years at Wells Fargo Bank, where his positions included Chief Credit Officer and Chairman of the Credit Policy Committee, and at Bank of California.

Coleman currently serves on the board of directors of Immune Design, a publicly traded clinical-stage immunotherapy company focused on oncology, as well as DCI, LLC, a private fund management company, and Vista Capital Advisors (formerly eBond Advisors), a private financial technology company.

Coleman’s previous board experience includes Chiron Corporation, Regal Entertainment, Bank of America, DreamWorks Animation and Northrop Grumman, where he was the Lead Independent Director.

Coleman brings to the board an extensive background in consumer media and technology, and successful track record of expanding businesses into emerging markets, as well as significant executive level and public company board experience.

Troe has been a member of our board of directors since February 2014.

She is a Senior Managing Director and co-founder of Athena Advisors LLC, a business advisory firm, a position she has held since January 2014.

From October 2005 to December 2013, Ms.

Troe was a Senior Managing Director in the forensic and litigation consulting practice at FTI Consulting, Inc., a global business advisory firm.

From January 1995 to October 2005, Ms.

Troe served on the staff of the Division of Enforcement at the SEC’s Pacific regional office, including seven years as an enforcement branch chief and six years as regional chief enforcement accountant.

Her career includes accounting positions in public and private companies and with a Big Four public accounting firm.

Troe served as a member of a public gaming industry company board's special litigation committee, a director of a nonpublic technology company, and an advisory board member to an upstream energy company.

Troe is a National Association of Corporate Directors (NACD) Board Leadership Fellow, the highest level of credentialing for corporate directors offered by the NACD, and completed the NACD Cyber-Risk Oversight Program.

Troe holds a CERT Certificate in Cybersecurity from the Software Engineering Institute of Carnegie Mellon University.

She is a CPA, and member of NACD, the American Institute of CPAs, and other director and professional organizations.

Troe brings to the board an extensive background in public company governance and oversight, enterprise risk and crisis management, and public company accounting, financial reporting and disclosure, as well as a diverse experience with many industries allowing her to bring additional perspective to our board.

EXECUTIVE OFFICERS

The table below sets forth certain information regarding our executive officers.

President, Chief Executive Officer and Director

Chief Financial Officer

Jonathan Feldman

Co-General Counsel and Secretary

Co-General Counsel and Chief Privacy Counsel

Thomas Kershaw

Chief Technology Officer

Chief Revenue Officer

Head of Global Buyer Team

Chief Accounting Officer

As of February 1, 2020

See “Directors” for Mr.

Barrett’s biography.

Day has served as our Chief Financial Officer since May 2016 and served as our Chief Accounting Officer from March 2013 to August 2017.

From May 2011 to March 2013, Mr.

Day served as the Chief Accounting Officer at ReachLocal, Inc., a public company servicing small and medium-sized businesses as their digital ad agency.

Prior to that, Mr.

Day provided finance and accounting-related consulting services to technology and telecommunications companies and was co-founder of SignJammer Corporation, a start-up in the out-of-home advertising market, from 2008 to 2011.

His career also includes experience as Vice President of Finance for Spot Runner, a technology-based ad agency for small and medium-sized business, Senior Vice President of Finance for Yahoo!

Search Marketing, Senior Vice President of Finance and Corporate Controller of Overture, and public accounting experience with PricewaterhouseCoopers and Arthur Andersen.

Jonathan Feldman has served has our Co-General Counsel and Secretary since June 2018.

From November 2013 to June 2018, Mr.

Feldman served as our Deputy General Counsel - Corporate and Assistant Secretary.

Prior to joining the company, Mr.

Feldman was counsel at O’Melveny & Myers LLP, where he focused on mergers and acquisitions and public company reporting.

Eve Filip has served as our Co-General Counsel and Chief Privacy Counsel since June 2018 and as our Data Protection Officer from June 2017 to December 2018.

She previously served as our Deputy General Counsel - Commercial from March 2015 to June 2018.

Prior to joining the company, Ms.

Filip served as Assistant General Counsel at Sony Pictures Entertainment, an American entertainment company that produces, acquires, and distributes filmed entertainment through multiple platforms, from April 2014 to February 2015 and as Senior Counsel from July 2011 to April 2014.

Filip also served as Vice President, Associate General Counsel at Ascent Media Group, a company that provides end-to-end media and technology services for the creation, management, and distribution of media content, from July 2007 to May 2011.

Prior to such time, Ms.

Filip worked as an attorney in the corporate department of Fried, Frank, Harris, Shriver & Jacobson LLP from September 2004 to June 2007.

Filip is a registered in-house counsel in the State of California.

Thomas Kershaw has served as our Chief Technology Officer since October 2016.

Previously, Mr.

Kershaw served as Director of Product Management of Google, a multinational technology company specializing in Internet-related services and products, from March 2013 to October 2016, and Senior Vice President and General Manager of the Iconectiv business unit of Ericsson, a communications technology company, from March 2008 to March 2013.

Kershaw has also held executive positions at VeriSign, Clarent Corporation and Unisys, and was Chief Technical Officer of SS8 Networks.

Joseph Prusz has served as our Chief Revenue Officer since December 2017 and is responsible for maintaining and growing our revenue stream across all formats, channels, and inventory types.

Prior to that, since joining the company in September 2008, Mr.

Prusz had various roles of increasing responsibility in our sales department, including leading the Americas region and being Head of Mobile.

Adam Soroca has served as our Head of Global Buyer Team since our acquisition of nToggle, Inc.

in July 2017.

Soroca co-founded nToggle in September 2014 and served as its Chief Executive Officer and a member of the board of directors until nToggle’s sale to the company.

Prior to founding nToggle, Mr.

Soroca was the chief product officer at Millennial Media (via acquisition of Jumptap) from November 2013 to July 2014, where he oversaw the global product and operations teams.

Millennial Media, from June 2005 to November 2013, Mr.

Soroca was the chief product officer and a founding leadership team member at Jumptap, the leading mobile programmatic and audience platform.

Soroca serves as an advisor at CoachUp, Inc., viisights and Chalk Digital.

He pioneered bringing both audience data (DMP) and programmatic capabilities (DSP) to the mobile industry.

He is a digital advertising entrepreneur and inventor, holding over 90 awarded patents spanning mobile advertising and search techniques.

Blima Tuller has served as our Chief Accounting Officer since August 2017.

Prior to joining the company, Ms.

Tuller was Chief Financial Officer of Liberman Broadcasting, Inc., a Spanish-language broadcaster, from July 2012 to July 2017.

Liberman Broadcasting filed for protection under Chapter 11 of the United States Bankruptcy Code in November 2018.

She was previously at MRV Communications Inc., a publicly traded technology company, where she served as Vice President, Finance from 2009 to 2011 and as Director of Finance from 2008 to 2009.

From 2006 to 2008, Ms.

Tuller served as Vice President of Finance and Chief Accounting Officer of QPC Lasers, Inc., a start-up manufacturer and distributor of semiconductor lasers.

Prior to joining QPC Lasers, Inc., Ms.

Tuller was Vice President of Finance of Ameripath, Inc.’s Esoteric Division, an anatomic pathology laboratory and esoteric testing services provider, and served as Director of Finance and Director of Internal Audit of Specialty Laboratories, a clinical reference laboratory acquired by Ameripath, Inc., from 2003 to 2006.

From 1998 to 2003, Ms.

Tuller held a positions of increasing responsibility at the public accounting firms of Arthur Andersen LLP and KPMG LLP.

Our executive officers are elected by, and serve at the discretion of, our board of directors.

There are no family relationships among any of our directors or executive officers.

CODE OF BUSINESS CONDUCT AND ETHICS

Our board of directors has adopted a Code of Business Conduct and Ethics that applies to each of our directors, officers and employees.

The full text of our Code of Business Conduct and Ethics is posted on the “Corporate Governance” section of our Investor Relations website at http://investor.rubiconproject.com .

We intend to post any amendment to our Code of Business Conduct and Ethics, and any waivers of the Code for directors and executive officers, on the same website.

CORPORATE GOVERNANCE

There are no material changes to the procedures by which security holders may recommend nominees to the Company’s board of directors.

Audit Committee

The Company has an audit committee that is responsible for, among other things, providing assistance to the board of directors in fulfilling its oversight responsibilities regarding the integrity of our financial statements, our compliance with applicable legal and regulatory requirements, the integrity of our financial reporting processes, including our systems of internal accounting and financial controls, the performance of our internal audit function and our independent registered public accounting firm, and our financial policy matters.

The audit committee approves the services performed by our independent registered public accounting firm and reviews their reports regarding our accounting practices and systems of internal control over financial reporting, as applicable.

The audit committee also oversees the audit efforts and confirms the independence of our independent registered public accounting firm.

Our board of directors has determined that each member of our audit committee, Ms.

Troe and Messrs.

Coleman and Frankenberg, satisfies SEC requirements for independence and the independence and financial literacy requirements of the New York Stock Exchange, and that each qualifies as an “audit committee financial expert,” as defined in the SEC rules.

The information required by Item 10 will be included in our Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2020, or the 2021 Proxy Statement, under the headings "Proposal 1—Election of Directors," "Delinquent Section 16(a) Reports," (if applicable) and "Corporate Governance" and is incorporated herein by reference.

Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes the compensation arrangements we had for 2019 with our “named executive officers,” as determined under the rules of the SEC and identified in the following table.

President and Chief Executive Officer

Chief Financial Officer

Thomas Kershaw

Chief Technology Officer

Head of Global Buyer Team

Chief Revenue Officer

Executive Summary

Compensation Highlights.

Our compensation programs are designed to support creation of stockholder value while maintaining our ability to recruit and retain personnel.

For 2019, the compensation committee took the following actions:

Changed the compensation peer group by removing larger peers and replacing with smaller companies;

the resulting group better reflected Rubicon Project’s revised revenue growth trajectory and market valuation with median 2018 revenues of $186 million (down from $255 million) and a median market capitalization of $690 million (down from $1.1 billion);

Did not make any changes to base salary or target cash incentives opportunities for any named executive officer;

Approved annual long-term incentive grant values that were closer to competitive market levels after making annual grants in 2018 and 2017 that were low versus competitive market long-term incentive levels;

Approved an annual cash incentive opportunity with payouts ranging from 0% to 150% of the named executive officer’s target cash incentive amount, with the actual payout based on pre-determined revenue and adjusted EBITDA less capital expenditures, referred to as capex, financial targets tied to our budget and operating plan.

CEO Pay and Performance.

The compensation committee’s pay actions in the past three years for Mr.

Barrett recognize his leadership, deep industry experience, recognition that he was the right chief executive to lead the company through its turn-around, and the successful execution of that turn-around .

Since joining in March 2017, Mr.

Barrett has executed several strategic objectives, including removing buy-side fees and embracing open source and transparency, shifting the business towards header bidding, developing Demand Manager for publishers, and recently announcing the merger with Telaria;

The market’s response to these accomplishments resulted in a doubling of our market value in each of 2018 and 2019—outpacing the growth from other ad-tech peers and the Russell 2000;

at the end of December 2019, we generated the following annualized returns for stockholders:

+12% (versus +7% for the Russell 2000) from March 2017 (Mr.

Barrett’s hire date) through December 31, 2019;

+106% (versus +4% for the Russell 2000) from January 2, 2018 through December 31, 2019;

+113% (versus +23% for the Russell 2000) from January 2, 2019 through December 31, 2019

Barrett’s target pay levels increased to $3.7 million (from $2.0 million in 2018) (measured based on Mr.

Barrett’s base salary, target cash incentive amount and the grant date fair value of his equity awards), with the increase coming entirely in the grant date fair value of the equity, to (i) recognize the stellar overall company performance through 2018 under Mr.

Barrett’s leadership and (ii) provide a target total pay opportunity more closely in line with competitive market levels after delivering an equity award in 2018 that was low versus the competitive market.

Our executive compensation program includes a number of features intended to reflect best practices in the market and help ensure that the program reinforces our stockholders’ interests.

These features are described in more detail below in this Compensation Discussion and Analysis and include the following:

What We Don't Do:

ü Provide a significant portion of CEO pay that is “at-risk” (86% of 2019 target direct compensation was based on financial or share price performance) (with target direct compensation determined based on the CEO’s annual base salary, target cash incentive amount, and the grant date fair value of his equity awards)

ü Utilize a formulaic incentive structure in our annual incentive program and limit the use of discretion, as well as limit the maximum annual incentive payment to 150% of the target amount

ü Maintain an ownership and holding requirement policy to encourage alignment with stockholders

ü Employ a clawback policy to allow the company to recover any performance-based compensation

ü Retain an independent compensation consultant to advise the compensation committee

ü Consider feedback from stockholders as part of the compensation committee’s annual program review

û No single-trigger change in control benefits

û No gross-ups for change in control benefits

û No discounted stock options or option re-pricings

û No excessive perquisites

û No hedging of our equity securities

Executive Compensation Philosophy and Objectives

The compensation committee conducts an annual review of our executive compensation program to help ensure that:

(1) the program is designed to align the interests of our named executive officers with our stockholders’ interests by rewarding performance that is tied to creating stockholder value;

and (2) the program provides a total compensation package for each of our named executive officers that we believe is competitive and necessary to attract and retain talent.

We accomplish these objectives by providing a total compensation package that includes three main components:

base salary, annual performance-based cash awards and long-term equity-based awards.

We believe that in order to attract and retain top executives, we need to provide them with compensation levels that reward their continued service.

Some of the elements, such as base salaries and annual cash awards, are paid out on a short-term or current basis.

Other elements, such as equity awards that are subject to multi-year vesting schedules and benefits provided upon certain terminations of employment, are paid out on a long-term basis.

We believe this mix of short- and long-term elements allows us to achieve our goals of attracting, retaining and motivating our top executives.

We also, in certain cases, provide our named executive officers with certain relocation and other benefits in connection with their joining us.

In structuring executive compensation packages, the compensation committee considers how each component promotes retention and motivates performance.

Base salaries, severance and other termination benefits are primarily intended to attract and retain highly qualified executives.

These elements of our executive compensation program are generally not dependent on performance.

Annual cash bonus opportunities provide further incentives to achieve performance goals specified by the compensation committee and long-term equity awards provide incentives to help create value for our stockholders and continue employment with us through specified vesting dates.

We believe that by providing a significant portion of our named executive officers’ total compensation package in the form of equity-based awards, we are able to create an incentive to build stockholder value over the long-term and more closely align the interests of our named executive officers to those of our stockholders.

Our annual equity awards to the named executive officers for 2019 consisted of stock options and restricted stock unit awards, which generally only vest if the executive remains employed with us through the vesting date.

For additional information regarding equity-based awards granted to our named executive officers during 2019, see “Compensation Discussion and Analysis—Current Executive Compensation Program Elements—Annual Performance-Based Cash Awards” below.

Payment of our annual performance-based cash awards is solely contingent upon the achievement of financial performance metrics.

The amount of compensation ultimately received for these awards varies with our annual financial

performance, thereby providing additional incentives to achieve short-term or annual goals that we believe will maximize stockholder value over the long term.

Compensation Determination Process

The compensation committee considers, determines, reviews, and revises all components of each named executive officer’s compensation.

It may not delegate that responsibility.

The compensation committee also has oversight of and consults with management regarding executive and non-executive employee compensation plans and programs, including administration of our equity incentive plans.

The compensation committee retains an independent executive compensation consultant, Semler Brossy Consulting Group, referred to as Semler Brossy, to provide input, analysis, and consultation about our executive compensation.

During 2019, Semler Brossy’s work with the compensation committee included analysis, advice, and recommendations on total compensation philosophy;

peer groups and market assessment and analysis;

compensation program design, including program goals, components, and metrics;

equity usage and allocation;

compensation trends in comparable business sectors and in the general marketplace for senior executives;

regulatory factors;

and the compensation of the chief executive officer and the other named executive officers, including advice on the design of cash-based and equity-based compensation.

Semler Brossy reports directly and solely to the compensation committee and performs compensation consulting services for the compensation committee at its request.

Semler Brossy is not engaged to perform services directly for our management.

The compensation committee has concluded that no conflict of interest exists with respect to its engagement of Semler Brossy nor are there other factors that would adversely impact Semler Brossy’s independence in advising the compensation committee under applicable SEC and New York Stock Exchange rules.

The compensation committee reached this conclusion after considering the following six factors, as well as Semler Brossy’s views regarding its independence and other information the compensation committee deemed relevant:

(i) the provision of other services to us by Semler Brossy;

(ii) the amount of fees received from us by Semler Brossy, as a percentage of the total revenue of Semler Brossy;

(iii) the policies and procedures of Semler Brossy that are designed to prevent conflicts of interest;

(iv) any business or personal relationship of the Semler Brossy consultants with a member of the compensation committee;

(v) any of our stock owned by the Semler Brossy consultants;

and (vi) any business or personal relationship of the Semler Brossy consultants or Semler Brossy with any of our executive officers.

Executive officers do not propose or seek approval for, or have any decision-making authority with respect to, their own compensation.

The chief executive officer makes recommendations to the compensation committee on the base salary, annual incentive cash targets, and equity awards for each named executive officer other than himself, based on his assessment of each executive officer’s performance during the year and other factors, including compensation survey data and input from Semler Brossy.

Performance reviews for the chief executive officer and other named executive officers include factors that may vary depending on the role of the individual officer, including strategic capability—how well the executive officer identifies and develops relevant business strategies and plans;

execution—how well the executive officer executes strategies and plans;

and leadership capability—how well the executive officer leads and develops the organization and its people.

The compensation committee conducts an annual performance review of the chief executive officer to evaluate the company’s performance, his performance and the performance of the management team and considers this review in determining the chief executive officer’s base salary, annual performance-based cash incentive target, and equity awards.

We have engaged in discussions regarding our compensation philosophy with several of our large stockholders, and we intend to engage in further compensation-related discussions from time to time at such stockholders’ request.

Additionally, at our 2020 annual meeting, stockholders will have an opportunity to cast an advisory vote to approve the compensation programs of our named executive officers, referred to as the Say-On-Pay Vote, and will have an opportunity to cast an advisory vote on the frequency of future Say-On-Pay Votes.

Peer Group Compensation Assessment

The compensation committee works with Semler Brossy periodically to select a peer group of companies in our industry to assist the committee in making its compensation decisions.

Although the compensation committee reviews and discusses the peer company compensation data provided by Semler Brossy to help inform its decision-making process, the compensation committee does not set compensation levels at any specific level or percentile against the peer group data.

The peer company data is only one point of information taken into account by the compensation committee in making compensation decisions.

Fiscal Year 2019 Peer Group Approach.

In July 2018, the compensation committee, with assistance from Semler Brossy, reviewed the list of peer group companies selected in 2017, and re-calibrated the peer companies to reflect our business expectations with respect to earnings, headcount, and potential return to revenue growth in late 2018 and into 2019.

As a result of this re-evaluation, five companies used in the 2018 peer group were removed for the 2019 peer group (Box, Inc., Cornerstone OnDemand, Inc., ANGI Homeservices Inc., Rocket Fuel, Inc., and YuMe, Inc.).

Those five companies had either been acquired or had outsized revenue or market capitalization as compared to us.

Five new companies were added (ChannelAdvisor Corp., TechTarget, Inc., TeleNav, Inc., Digital Turbine, Inc., and Marchex, Inc.);

these companies were selected based on several criteria, including being similar in size to us, favoring companies based in California or New York, and having a reasonably comparable business to ours.

Fiscal 2019 Peer Group

AppFolio, Inc.

Model N, Inc.

TechTarget, Inc.

ChannelAdvisor Corporation

PROS Holdings, Inc.

Telaria, Inc.

Digital Turbine, Inc.

Telenav, Inc.

QuinStreet, Inc.

The Trade Desk, Inc.

Leaf Group Ltd.

Quotient Technology Inc.

TrueCar, Inc.

Marchex, Inc.

SPS Commerce, Inc.

Varonis Systems, Inc.

MobileIron, Inc.

Synacor, Inc.

Fiscal Year 2020 Peer Group Approach.

In July 2019, the compensation committee, with assistance from Semler Brossy, conducted an annual review of the peer group and determined that several peers have grown too large and continue to have different market value multiples than us.

The assessment led to the removal of five companies (AppFolio, Five 9, Qualys, QuinStreet and Quotient Technology) and the addition of three new companies (Cardlytics, Everquote, and Fluent).

Current Executive Compensation Program Elements

The current elements of our executive compensation program are:

base salaries;

annual performance-based cash awards;

equity-based incentive awards;

certain additional employee benefits.

We strive to achieve an appropriate mix between the various elements of our compensation program to meet our compensation objectives and philosophy;

however, we do not apply any rigid allocation formula in setting our named executive officers’ compensation, and we may make adjustments to this approach for various positions after giving due consideration to prevailing circumstances.

As discussed throughout this Compensation Discussion and Analysis, the compensation policies and programs applicable to our named executive officers reflect our emphasis on aligning the interests of our executive officers with our stockholders’ interests in enhancing our value over the long term.

Applying this philosophy, a significant portion of overall compensation opportunities offered to our named executive officers is in the form of (i) equity-based compensation with a value directly linked to our stock price and (ii) annual performance-based cash awards contingent upon achievement of measurable financial objectives.

Base Salaries

Base salaries for our named executive officers are designed to be competitive when compared with similarly situated executives with our peer group, and are based on a variety of factors, including level of responsibility, performance, and the recommendations of the chief executive officer for named executive officers other than the chief executive officer.

Base salaries are reviewed annually or at the time of promotion or other changes in responsibilities.

In determining whether to award base salary increases, the compensation committee considers our overall business outlook, our budget, the executive’s individual performance, historical compensation, market compensation levels for comparable positions, internal pay equity, and other factors, including any retention concerns.

After consideration of the data from the peer groups described above and the other factors described in the preceding paragraph, the compensation committee determined that the named executive officers’ base salaries for 2019 would remain unchanged from their 2018 levels and were as follows:

Percent Increase (%)

Michael Barrett

Thomas Kershaw

Annual Performance-Based Cash Awards

For 2019, our named executive officers were eligible to receive cash incentive payments under our 2019 Executive Cash Incentive Plan, referred to as the Executive Bonus Plan, which is administered by our compensation committee.

The amount of cash incentive payments under the Executive Bonus Plan is determined based upon the achievement of pre-established corporate financial objectives that the compensation committee believed were challenging yet achievable.

For 2019, the target award opportunities for our named executive officers remained unchanged from 2018 levels and were as follows:

2018 Annual Target

Bonus Opportunity

2019 Annual Target

Bonus Opportunity

Percent Increase (%)

Michael Barrett

Thomas Kershaw

For 2019, performance was measured against two financial goals:

revenue and adjusted EBITDA less capital expenditures, referred to as capex, with each goal given equal weight.

The compensation committee chose these financial metrics because they represent objectively determinable financial targets that we believe indicates our growth and overall success.

For a description of how we calculate adjusted EBITDA, see the "Non-GAAP Financial Measures" section of the Management Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of this Annual Report on Form 10-K.

Under the Executive Bonus Plan, we must achieve one of the threshold performance goals noted in the table below for any bonus to be payable for the fiscal year.

If either threshold goal is achieved, each executive’s bonus would be based 50% on revenue achieved and 50% on adjusted EBITDA less capex achieved, in each case against the performance goals set forth below.

Performance is measured both at mid-year and at fiscal year-end.

Following the end of the second quarter, the compensation committee determines our revenue and adjusted EBITDA less capex performance and determines the applicable bonus payout based on the mid-year performance goals set forth in the table below.

This payout percentage is then multiplied by 50% of the executive’s target bonus opportunity for the year, and the executive will receive a mid-year bonus for that amount.

However, the executive’s bonus with respect to the first half of the year is capped at 40% of the executive’s total target bonus opportunity.

At the end of the fiscal year, the compensation committee determines our performance and the final bonus payout based on the table below (with the amount of the final payout offset by any payment that was made to the

executive as a mid-year bonus payment).

If the mid-year bonus payment exceeds the total bonus the executive would be eligible to receive for the entire fiscal year, the compensation committee has discretion to reduce any future bonus or severance payments to be paid to the executive by such excess bonus amount.

The compensation committee retains the discretion to reduce, but not increase, the amount of any bonus otherwise payable to our executive officers based on such factors as it deems appropriate.

Our performance targets and the corresponding payout percentages for mid-year and full-year performance, which were approved by the compensation committee at the beginning of 2019, are as follows (with the payout percentage determined by linear interpolation for performance between these levels):

Percentage of Target Bonus Paid

(100% payout)

(150% payout)

(percentage of goal achieved)

- Mid-year goal

$51.3 million

$65.0 million

$68.4 million

$71.9 million

$85.5 million

- Full-year goal

$112.8 million

$142.9 million

$150.4 million

$158.0 million

$188.0 million

Adjusted EBITDA less Capital Expenditures

(percentage of goal achieved)

- Mid-year goal

($13.8 million)

($12.7 million)

($10.4 million)

($7.5 million)

$11.4 million

- Full-year goal

($21.9 million)

($18.9 million)

($13.9 million)

($8.7 million)

$14.3 million

In July 2019, the compensation committee determined that for the first half of 2019, we achieved revenue of $70.3 and adjusted EBITDA less capex of ($2.2 million), resulting in a weighted payout percentage of 110.2% that was then capped at 40% of the named executive officers’ target annual bonuses (which is the maximum bonus amount payable for the first half of the fiscal year).

In February 2020, the compensation committee determined that for the full year of 2019, we achieved revenue of $156.4 million and adjusted EBITDA less capex of $5.7 million, resulting in a weighted payout percentage of 118.3% of each named executive officers' target annual bonuses.

Equity-Based Awards.

We grant equity-based compensation to our named executive officers in order to attract, retain and reward our executives and strengthen the mutuality of interests between our named executive officers and stockholders.

The compensation committee annually determines the form and amount of equity-based incentives granted to executives.

In making its determinations, the compensation committee considers factors such as peer group market data, recommendations from Semler Brossy, the executive’s and our performance in the last year and the results achieved by the executive, the executive’s base salary, target annual incentive opportunity and prior grants of equity awards, and the compensation committee’s view regarding the future potential of long-term contributions of the executive.

Recommendations of the chief executive officer are also taken into consideration for our named executive officers other than the chief executive officer.

In February 2019, each of our named executive officers received grants of stock options and RSUs.

The number of stock options and RSUs granted to each of our named executive officers for 2019 is set forth in the table below:

Number of Stock Options

Number of RSUs

Michael Barrett

Thomas Kershaw

If our stock price were not to increase, the stock options will not deliver any economic value because the options have an exercise price equal to our stock price on the date of grant and our equity incentive plans prohibit stock option repricing.

The stock options and RSUs vest over four years to provide an additional retention incentive.

In determining the size of the 2019 annual awards for all named executive officers, the compensation committee calibrated award values to encourage equity ownership and ensure a stable leadership team through the organization’s strategic re-positioning;

specifically, the compensation committee (i) considered the retention value of all outstanding equity holdings at that time (all options grants made prior to 2018 had exercise prices that exceeded the closing price of our stock on the date the 2019 equity awards were made) and (ii) sought to deliver annual equity grant values in 2019 that were closer to the competitive market levels after delivering annual equity grant values in 2017 and 2018 that were generally low versus the competitive market.

Day, his 2019 grant values also recognize his sustained individual performance since becoming full-time chief financial officer in February 2017 with an intention to move his target total pay opportunity closer to competitive market levels as other similar chief financial officers.

See the table titled “Outstanding Equity Awards as of December 31, 2019” below for more information with respect to these grants.

Other Employee Benefits and Perquisites

We have generally not offered extensive benefits or other compensation programs to our named executive officers, apart from employee benefits made available generally to our employees such as participation in Rubicon Project’s 401(k) plan and eligibility to receive a company match, and health and welfare benefit programs.

Day is eligible for up to $30,000 in annual reimbursement for the use of a car service for transportation between his home and our headquarters for the purpose of allowing Mr.

Day to devote his lengthy commute time to work duties.

Employment Arrangements

We have entered into an employment agreement with Mr.

Barrett and offer letters with each of our other named executive officers.

Each of the named executive officers serves on an at-will basis and the employment agreement and offer letters do not have a specified term.

The employment agreement and offer letters provide for a base salary, eligibility to receive an annual performance bonus, and eligibility to participate in employee benefit or group insurance plans maintained from time to time by us.

Severance Agreements

We are also party to Executive Severance and Vesting Acceleration Agreements, referred to as the severance agreements, with each of our named executive officers that provide for severance and other termination benefits.

These severance agreements are intended to provide economic protection so that an executive can remain focused on our business without undue personal concern in the event that his position is eliminated or, in some cases, significantly altered by us, which we believe is particularly important in light of the executives’ leadership roles at Rubicon Project.

The compensation committee believes that providing severance or similar benefits is common among similarly situated executives in our industry generally and remains important in recruiting and retaining key executives.

The prospect of a change in control of Rubicon Project can also cause significant distraction and uncertainty for executive officers and, accordingly, the compensation committee believes that appropriate change in control protections are important tools for aligning executives’ interests with those of our stockholders by allowing our executive officers to focus on strategic

transactions that may be in the best interest of our stockholders without undue concern regarding the effect of such transactions on their continued employment.

Accordingly, the severance agreements also provide for enhanced severance payments and accelerated vesting of equity awards if the executives’ employment is terminated in connection with or following a change in control of Rubicon Project.

In December 2019, in connection with the approval of the merger agreement between Rubicon Project and Telaria, our board of directors approved the modification of the severance agreements to provide that if the executive officer is terminated in connection with or within 13 months following the closing of the merger between us and Telaria, the executive officer will be entitled to the enhanced change in control severance under the severance agreements.

For more information regarding the potential payments and benefits that would be provided to our named executive officers in connection with certain terminations of their employment (including terminations in connection with a change in control) on the last business day of fiscal year 2019, please see "Potential Payments upon Termination or Change in Control" below.

We do not provide our executives with tax “gross-up” payments in connection with a termination of their employment and/or a change in control of Rubicon Project.

Tax Considerations

Section 162(m) of the federal tax laws generally prohibits a publicly held company from deducting compensation paid to a current or former named executive officer that exceeds $1 million during the tax year.

Certain awards granted before November 2, 2017 that were based upon attaining pre-established performance measures that were set by the company’s compensation committee under a plan approved by the company’s stockholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility limit.

As one of the factors in its consideration of compensation matters, the compensation committee notes this deductibility limitation.

However, the compensation committee has the flexibility to take any compensation-related actions that it determines are in the best interests of Rubicon Project and our stockholders, including awarding compensation that may not be deductible for tax purposes.

There can be no assurance that any compensation will in fact be deductible.

Recoupment Policy

Our board or the compensation committee shall, in circumstances it deems appropriate, require return to us of the excess portion of any payment made to an employee pursuant to an award issued after April 7, 2016 under our 2014 Equity Incentive Plan or 2014 Inducement Grant Equity Incentive Plan, or under our annual cash incentive plan, if:

(1) the payment was predicated upon achieving certain financial results that became the subject of a substantial restatement of our financial statements filed with the SEC within the three full fiscal years after the payment;

(2) our board or the compensation committee determines that the participant engaged in intentional misconduct that caused or substantially caused the need for the substantial restatement;

and (3) a lower payment would have been made to the participant based upon the restated financial results.

In each such instance, the “excess portion” of the payment is the amount (in terms of dollars or shares) by which the payment received exceeded the lower payment that would have been made based on the restated financial results.

In each case, the return of payment will be net of any taxes paid by the employee in connection with original receipt or subsequent transfer of the payment.

Our board or the compensation committee also has the discretion, in circumstances it deems appropriate, to require reimbursement of any or all payments received with respect to any award granted on or after April 7, 2016 to an employee who has engaged in fraud, bribery, or illegal acts similar to fraud or bribery related to employment, or knowingly failed to report such acts of another employee over whom the employee had direct supervisory responsibility.

Our board or the compensation committee shall not seek recovery to the extent it determines (a) that to do so would be unreasonable or (b) that it would be better for us not to do so.

In making such determination, and without limiting the scope of its discretion, our board or the compensation committee shall take into account such considerations as it deems appropriate, including, without limitation, the likelihood of success under governing law versus the cost and effort involved, whether the assertion of a claim may prejudice our interests, including in any related proceeding or investigation, the passage of time since the occurrence of the act in respect of the applicable fraud or intentional illegal conduct, and any pending legal proceeding relating to the applicable fraud or illegal conduct.

Our board or the compensation committee also may in its discretion direct us to disclose the circumstances surrounding any recoupment made under this policy where not otherwise required by applicable regulation.

Executive Officer Equity Ownership Guidelines and Retention Holding Requirements

Under equity retention guidelines implemented by our board in April 2016, the chief executive officer and each of the other named executive officers are required to accumulate within five years from the later of the date the guidelines were

implemented and the date he became a named executive officer, and thereafter to retain for the duration of employment, a minimum level of company equity.

The minimum level of equity for the chief executive officer is equal to five times base salary and the minimum level of equity for the other named executive officers is equal to the named executive officer's base salary.

Equity that counts toward the ownership requirement includes:

(1) shares owned outright by the named executive officer or beneficially owned by the named executive officer by virtue of being held by a member of the named executive officer’s immediate family residing in the same household or in a trust for the benefit of the named executive officer or immediate family members residing in the same household;

(2) shares held in qualified plans or IRAs;

(3) vested shares (or vested RSUs) deemed to be held in non-qualified plans;

(4) the in-the-money portion of vested stock options (but not unvested stock options);

and (5) unvested time-based restricted shares (or restricted stock units).

Until the minimum level of company equity is achieved, a named executive officer is prohibited from selling or otherwise transferring beneficial ownership of more than one-half of:

(a) the vested after-tax shares of our common stock obtained as a result of the vesting of any restricted stock or RSU award made after implementation of the equity retention guidelines;

or (b) the shares of our common stock subject to the vested portion of any stock option award made after implementation of the equity retention guidelines, net of any shares surrendered or sold to cover exercise price and/or income tax resulting from the exercise.

Policy Against Repricing and Cash Buyouts

Our 2014 Equity Incentive Plan and 2014 Inducement Grant Equity Incentive Plan prohibit our board from decreasing the exercise price of or otherwise repricing awards of stock options and stock appreciation rights unless such action is first approved by our stockholders.

In addition, the plans prohibit us from redeeming or repurchasing stock options or stock appreciation rights unless such redemptions or repurchases are approved by our stockholders.

Policy Against Hedging

We recognize that hedging against losses in company shares may disturb the alignment between stockholders and employees that our equity awards are intended to build.

Accordingly, we have incorporated prohibitions on various hedging activities within our Insider Trading Policy, which applies to directors, officers and other employees who we have designated as insiders, as well as such persons’ family members, life partners, or owned or controlled entities.

The policy prohibits all transactions that are designed to sell short, hedge or offset any decrease in the market value of our securities, including prepaid variable forward contracts, equity swaps, futures, collars, exchange funds, options, puts, and calls and purchases or sales of puts or calls for speculative purposes.

Risk Assessment in Compensation Programs

The compensation committee annually assesses our executive and broad-based compensation and benefits programs on an overall basis to determine whether the programs’ provisions and operations create undesired or unintentional material risk.

This risk assessment process takes into account numerous compensation terms and practices that we maintain that aid in controlling risk, including the mix of cash, equity, and near- and long-term incentive programs, the use of multi-year vesting periods for equity awards, and a variety of performance criteria for incentive compensation, the claw-back provisions that apply to our annual incentive cash plan and equity plan, and the cap on the maximum cash incentive awards that can be earned in a given year regardless of company performance.

This risk assessment process also included a review of program policies and practices, program analysis to identify risk and risk controls, and determinations as to the sufficiency of risk identification and risk control, the balance of potential risk to potential reward, and the significance of the programs and their risks to company strategy.

Although we reviewed all significant compensation programs, we focused on those programs with variable payout, in particular assessing the ability of participants to directly affect payouts, and the controls on such situations.

Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us as a whole.

We also believe that our incentive compensation programs do not encourage risk-taking beyond the organization’s ability to effectively identify and manage significant risks;

are compatible with effective internal controls and our risk-management practices;

and are adequately supported by the compensation committee’s oversight of our executive compensation programs.

Compensation Committee Interlocks and Insider Participation

Harden and Messrs.

Coleman, Frankenberg, Mandal, and Spillane served on Rubicon Project’s compensation committee during the last completed fiscal year.

Mandal’s service on the compensation committee ended with his resignation from the Rubicon Project board in May 2019.

Harden’s service on the compensation committee commenced in

None of the members of the compensation committee is or has at any time been an officer or employee of Rubicon Project.

There are no interlocking relationships (and there were no such interlocking relationships during 2019) between the our board, executive officers or the compensation committee and the our board, executive officers or the compensation committee of any other company.

Compensation Committee Report

The compensation committee has reviewed and discussed our Compensation Discussion and Analysis section with management and, based on the review and discussions, recommended to the board that the Compensation Discussion and Analysis section be included in this Annual Report on Form 10-K.

Compensation Committee

Frankenberg, Chair

The foregoing report of the Compensation Committee is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any Rubicon Project filing under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report and irrespective of any general incorporation language in such filing.

Director Compensation

Each director who is not employed by us or any of our subsidiaries, referred to as a non-employee director, is compensated for service on our board through a combination of annual cash retainers and equity awards.

For purposes of our director compensation program, a non-employee director is a member of our board who is not, and has not been within the previous 180 days, either an employee of ours or any of our subsidiaries or a consultant performing material services to us or any of our subsidiaries.

In order to align the interests of non-employee directors and stockholders, equity awards constitute a majority of total director compensation.

Directors are reimbursed for travel, food, lodging and other expenses directly related to their activities as directors, such as attendance at board or committee meetings.

Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our certificate of incorporation and bylaws, and they receive coverage under a director and officer insurance policy that we maintain.

Annual Cash Fees

Our non-employee directors receive annual retainer fees as described in the table below for board and committee service.

The fees are paid in four equal quarterly advance installments and prorated for any partial year of board service.

Audit Committee Chair

Compensation Committee Chair

Nominating & Governance Committee Chair

Audit Committee Member

Compensation Committee Member

Nominating & Governance Committee Member

Lead Director

Equity Awards

For 2019, equity compensation for non-employee directors consisted of (i) an initial equity award with a calculated value of $375,000 for each newly-elected or appointed non-employee director, and (ii) annual awards with a calculated value of $125,000.

For 2019, equity awards for directors consisted solely of restricted stock units covering a number of shares determined by dividing the calculated value of the award by the closing price of a share of our common stock on the grant date.

The initial equity award is granted on the date of appointment to the board or attainment of non-employee director status, unless the board or compensation committee specified another issuance date.

Annual equity awards are issued on the date of each annual meeting or the date of attainment of non-employee director status.

If no intervening annual meeting has been held, annual equity awards will be granted on a date specified by the compensation committee that is at least 30 calendar days after the first anniversary of the prior year’s annual meeting.

The first annual award for non-employee directors who join the board at any time other than the date of an annual meeting is subject to proration for the partial year of service ending on the date of the next annual meeting.

Initial equity awards vest, subject to continued board service, in three equal annual increments, on the first, second, and third anniversaries of the date of commencement of board service or attainment of non-employee director status or, if earlier, upon (but effective immediately prior to) the occurrence of a change in control of Rubicon Project.

Annual equity awards vest, subject to continued board service, on the first anniversary of the date of grant (or, if no intervening annual meeting has been held, annual equity awards will vest on the second anniversary of the prior year’s annual meeting) or, if earlier, upon the occurrence of either (1) a change in control of Rubicon Project (effective immediately prior thereto) or (2) the first regular annual meeting occurring in the year immediately following the year in which such annual equity awards were granted.

In addition, if a non-employee director ceases board service for any reason other than removal for cause before vesting in full of equity awards, then the director’s awards vest with respect to a pro-rata portion of the underlying shares (up to but not exceeding the number of unvested shares remaining subject to such awards) determined based upon the period of board service.

Vesting of equity awards will cease, and unvested equity awards will lapse, upon a recipient’s removal for cause from board service.

Director Equity Retention Guidelines

Under equity retention guidelines implemented by the board in April 2016, each director is required to accumulate within five years from the later of the date the guidelines were implemented and the date of commencement of service for a new director, and thereafter to retain for the duration of board service, an amount of equity equal to five times the director’s base board cash compensation.

Equity that counts toward the ownership requirement includes:

(1) shares owned outright by the director or beneficially owned by the director by virtue of being held by a member of the director’s immediate family members residing in the same household or in a trust for the benefit of the director or his or her immediate family residing in the same household;

(2) shares held in qualified plans or IRAs;

(3) vested shares (or vested restricted stock units) deemed to be held in non-qualified plans;

(4) the in-the-money portion of vested stock options (but not unvested stock options);

and (5) unvested time-based restricted shares (or restricted stock units).

Until the minimum level of company equity is achieved, a director is prohibited from selling or otherwise transferring beneficial ownership of more than one-half of:

(a) the vested after-tax shares of our common stock obtained as a result of the vesting of any restricted stock or restricted stock unit award made after implementation of the equity retention guidelines;

2019 Director Compensation Table

The following table sets forth all compensation provided to our non-employee directors for 2019.

The compensation for Mr.

Barrett, our President and Chief Executive Officer, is described in the “Executive Compensation” section below.

Barrett did not receive any compensation for his services as a director in 2019.

Frank Addante (5)

Sumant Mandal (7)

Consists of annual board retainer and fees for service as a committee chair, committee member, or Lead Director, as the case may be.

See the narrative disclosure above for a description of such fees.

In accordance with the rules of the SEC, these amounts represent the aggregate grant date fair value of the stock awards and option awards granted to the non-employee directors during the applicable fiscal year computed in accordance with ASC 718.

Our equity awards valuation approach and related underlying assumptions for awards granted in 2019 are described in Note 2 “Organization and Summary of Significant Accounting Policies—Stock-Based Compensation” and Note 13 “Stock-Based Compensation” to the Consolidated Financial Statements in this Annual Report on Form 10-K (and the assumptions for awards granted prior to 2019 are set forth in the corresponding notes in the Annual Report on Form 10-K for the applicable fiscal year).

The reported amounts do not necessarily reflect the value that may be realized by the executive with respect to the awards, which will depend on future changes in stock value and may be more or less than the amount shown.

Stock awards consist of an annual award of 19,562 restricted stock units issued on May 15, 2019 to each director, other than Ms.

Harden and Mr.

Mandal, with an aggregate grant date fair market value as described in footnote 2 of $125,001.

On February 15, 2019, Mr.

Addante was granted a pro-rated annual equity award of 8,737 restricted stock units.

On July 1, 2019, Ms.

Harden was granted an initial equity award of 56,647 restricted stock units and a pro-rated annual equity award of 15,861 restricted stock units in connection with her appointment to the board.

As of December 31, 2019, the aggregate number of shares of our common stock covered by unvested stock awards held by each of our non-employee directors was as follows:

Frank Addante

Sumant Mandal

As of December 31, 2019, the aggregate number of shares of our common stock covered by stock options held by each of our non-employee directors was as follows:

Frank Addante

Sumant Mandal

Addante became a non-employee director effective December 27, 2018.

Harden was appointed to the Board effective July 1, 2019.

Mandal resigned from the Board effective May 15, 2019.

Rubicon Project Named Executive Officer Compensation Tables

Summary Compensation Table - 2019

The following table and narratives that follow describe the 2019, 2018 and 2017 compensation provided to our named executive officers.

Soroca and Mr.

Prusz were not named executive officers of Rubicon Project prior to 2019, thus, pursuant to SEC guidance, we have only included compensation information for them for 2019.

Principal Position

Stock Awards ($) (1)

Option Awards

Non-Equity Incentive Plan Compensation ($) (2)

All Other Compensation ($)

Michael Barrett

President and CEO

Chief Financial Officer

Thomas Kershaw

Chief Technology Officer

Adam Soroca (10)

Head of Global Buyer Team

Joseph Prusz (12)

Chief Revenue Officer

In accordance with the rules of the SEC, these amounts represent the aggregate grant date fair value of the stock awards and option awards granted to the named executive officer during the applicable fiscal year computed in accordance with ASC 718.

Rubicon Project’s equity awards valuation approach and related underlying assumptions for awards granted in 2019 are described in Note 2 “Organization and Summary of Significant Accounting Policies—Stock-Based Compensation” and Note 13 “Stock-Based Compensation” to the Consolidated Financial Statements in this Annual Report on Form 10-K (and the assumptions for awards granted prior to 2019 are set forth in the corresponding notes in the Annual Report on Form 10-K for the applicable fiscal year).

Cash incentive amounts earned by the named executive officers for service during the year, including amounts paid subsequent to that year based upon performance during that year.

In February 2020, the compensation committee determined that for the full year of 2019, we achieved revenue of $156.4 million and adjusted EBITDA less capex of $5.7 million, resulting in a weighted payout percentage of 118.3% pursuant to the annual incentive program for the named executive officers for 2019 as described in the Compensation Discussion and Analysis section above.

As described in such section, each named executive officer was paid a portion of his annual bonus in July 2019 based on performance during the first half of the year.

The final 2019 award for each executive, which appears in the table above, will be paid in March 2020 (less the amount of the incentive already paid to the named executive officer for the first half of 2019).

Represents $5,600 in 401(k) plan matching contributions and $135 in life insurance premiums.

Barrett joined Rubicon Project in March 2017 with an annual salary of $515,000.

Represent $8,400 in 401(k) plan matching contributions, $135 in life insurance premiums and $20,005 in transportation reimbursement.

Represents a $100,000 retention bonus that vested during the applicable year.

Day’s base salary was increased effective February 22, 2017 in connection with his appointment as permanent chief financial officer.

This amount represents 10.2 months of base salary at an annual rate of $400,000 and 1.8 months of base salary at an annual rate of $295,625 and also includes $17,500 in supplemental compensation for service as interim chief financial officer for 2017 through his appointment as permanent chief financial officer on February 22, 2017.

Represents $5,600 in 401(k) plan matching contributions and $135 in life insurance premiums.

Represents a $150,000 retention bonus that vested during the applicable year.

Soroca was not a named executive officer of Rubicon Project prior to 2019.

Represents $6,094 in 401(k) plan matching contributions, $135 in life insurance premiums, and $1,453 in transit benefit plan matching contributions.

Prusz was not a named executive officer of Rubicon Project prior to 2019.

Represents $135 in life insurance premiums.

Grants of Plan-Based Awards - 2019

The following table provides information regarding the equity and non-equity incentive plan awards that were granted to Rubicon Project’s named executive officers in 2019.

Estimated Future Payouts Under

Non-Equity Incentive Plan

All Other Stock Awards:

Number of Shares of Stock or Units

All Other Option Awards:

Number of Securities Underlying Options

Exercise or Base Price of Option Awards

Grant Date Fair Value of Stock and Option Awards (1)

Michael Barrett

Thomas Kershaw

Our equity awards valuation approach and related underlying assumptions for awards granted in 2019 are described in Note 2 “Organization and Summary of Significant Accounting Policies-Stock-Based Compensation” and Note 13 “Stock-Based Compensation” to the Consolidated Financial Statements in this Annual Report on Form 10-K (and the assumptions for awards granted prior to 2019 are set forth in the corresponding notes in the Annual Report on Form 10-K for the applicable fiscal year).

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreement/Offer Letters

We have entered into an employment agreement with Mr.

Barrett and offer letters with each of our other named executive officers.

Each of our named executive officers serves on an at-will basis and the employment agreement and offer letters do not have a specified term.

We are also party to agreements with the named executive officers providing for the severance benefits described below under “Potential Payments upon Termination or Change in Control.”

Non-Equity Incentive Plan Awards

For a description of the material terms of the non-equity incentive plan awards reported in the table above, see “Compensation Discussion and Analysis — Current Executive Compensation Program Elements—Annual Performance-Based Cash Awards” above.

Equity Incentive Plan Awards

Each of the equity incentive awards reported in the “Grants of Plan-Based Awards - 2019” table above was granted under, and is subject to, the terms of our 2014 Equity Incentive Plan, referred to as the 2014 Plan.

The 2014 Plan is administered by the compensation committee.

The compensation committee has authority to interpret the plan provisions and make all required determinations under the plan.

Awards granted under the plan are generally not transferable other than by will or the laws of descent and distribution, except that the plan administrator may authorize certain transfers.

Generally, and subject to limited exceptions set forth in the 2014 Plan, if we undergo certain corporate transactions such as a merger, consolidation or similar transaction, or a sale of all or substantially all of our assets or securities, the plan administrator has the discretion to determine how outstanding equity awards will be treated in connection with such corporate transaction (including discretion to provide for accelerated vesting of such awards in connection with the transaction), and if no affirmative determination is made, all outstanding equity awards will fully vest and options will be fully exercisable, and will terminate or be terminated in connection with such corporate transaction, unless the awards are to be assumed or substituted by the successor corporation.

The named executive officers are also party to agreements that provide for acceleration of their equity awards in connection with certain terminations of their employment as described below under “Potential Payments upon Termination or Change in Control.”

The equity awards granted to our named executive officers in 2019 were in the form of stock options and restricted stock units, referred to as RSUs.

The vesting requirements applicable to each equity award granted to the named executive officers are described in the footnotes to the table below and in the section above entitled “Compensation Discussion and Analysis.” RSUs are payable on vesting in an equal number of shares of our common stock.

Stock options represent the right to receive a share of our common stock upon exercise of the option and payment of the exercise price.

The named executive officers do not have the right to vote the shares subject to the awards and do not have any dividend rights with respect to the RSUs or stock options.

Outstanding Equity Awards as of December 31, 2019

The following table provides information regarding outstanding equity awards made to our named executive officers as of December 31, 2019.

Option Awards

Unexercisable

Number of Shares or Units of Stock that Have Not Vested (#)

Market Value of Shares or Units of Stock that Have Not Vested ($)(1)

Michael Barrett

Thomas Kershaw

In accordance with the rules of the SEC, the values represent the product of the number of shares that have not vested and $8.16, which was the closing market price of our common stock on December 31, 2019.

The reported amount does not necessarily reflect the value that may be realized by the individual because the awards vest over a specified period of time from the date of grant contingent upon continued employment, and the actual amount received upon sale of shares will depend upon the fair market value of the shares at the times they are sold.

These stock options vest (or vested) with respect to 25% of the underlying shares on February 1, 2020 and with respect to the remaining 75% of the underlying shares in equal monthly installments over the following 36 months.

These stock options vest (or vested) with respect to 25% of the underlying shares on February 1, 2019 and with respect to the remaining 75% of the underlying shares in equal monthly installments over the following 36 months.

These stock options vest (or vested) with respect to 25% of the underlying shares on March 17, 2018 and with respect to the remaining 75% of the underlying shares in equal monthly installments over the following 36 months.

These RSUs vest with respect to 109,375 of the underlying shares on May 15, 2020;

with respect to 43,750 shares on each November 15 and May 15 thereafter until November 15, 2022, and with respect to 21,875 of such shares on May 15, 2023.

These RSUs vest with respect to 21,875 of the underlying shares on each May 15 and November 15 until November 15, 2021;

and with respect to 10,938 of such shares on May 15, 2022.

These RSUs vested on January 15, 2020.

These RSUs vest with respect to 137,392 of the underlying shares on each May 15 and November 15 through November 15, 2020 and with respect to 114,495 of such shares on May 15, 2021.

These stock options vest (or vested) with respect to 25% of the underlying shares on February 1, 2018 and with respect to the remaining 75% of the underlying shares in equal monthly installments over the following 36 months.

These RSUs vest with respect to 58,750 of the underlying shares on May 15, 2020, with respect to 23,500 shares on each November 15 and May 15 hereafter until November 15, 2022, and with respect to 11,750 of such shares on May 15, 2023.

These RSUs vest with respect to 6,098 of the underlying shares on each May 15 and November 15 until November 15, 2021;

and with respect to 3,050 of such shares on May 15, 2022.

These RSUs vest with respect to 4,691 of the underlying shares on each May 15 and November 15 through November 15, 2020 and with respect to 2,346 of such shares on May 15, 2021.

These shares of restrict stock vest on May 15, 2020.

These stock options vest (or vested) with respect to 25% of the underlying shares on October 3, 2017 and with respect to the remaining 75% of the underlying shares in equal monthly installments over the following 36 months.

These RSUs vest with respect to 65,312 of the underlying shares on May 15, 2020, with respect to 26,125 shares on each November 15 and May 15 hereafter until November 15, 2022, and with respect to 13,063 of such shares on May 15, 2023.

These RSUs vest with respect to 12,639 of the underlying shares on each May 15 and November 15 until November 15, 2021;

and with respect to 6,319 of such shares on May 15, 2022.

These RSUs vest with respect to 9,722 of the underlying shares on each May 15 and November 15 through November 15, 2020;

and with respect to 4,862 of such shares on May 15, 2021.

These RSUs vest with respect to 15,625 of the underlying shares on each of May 15, 2020 and November 15, 2020.

These RSUs vest with respect to 49,062 of the underlying shares on May 15, 2020, with respect to 19,625 shares on each November 15 and May 15 hereafter until November 15, 2022, and with respect to 9,813 of such shares on May 15, 2023.

These RSUs vest with respect to 6,144 of the underlying shares on each May 15 and November 15 until November 15, 2021, and with respect to 3,072 of such shares on May 15, 2022.

These RSUs vest with respect to 4,375 of the underlying shares on each May 15 and November 15 through May 15, 2021, and with respect to 2,188 of such shares on November 15, 2021.

These RSUs vest with respect to 40,625 of the underlying shares on May 15, 2020, with respect to 16,250 shares on each November 15 and May 15 hereafter until November 15, 2022, and with respect to 8,125 of such shares on May 15, 2023.

These RSUs vest with respect to 3,750 of the underlying shares on each May 15 and November 15 until November 15, 2021, and with respect to 1,250 of such shares on May 15, 2022.

These RSUs vest with respect to 6,144 of the underlying shares on each May 15 and November 15 until November 15, 2021, and with respect to 3,072 of such shares on May 15, 2022.

These RSUs vest with respect to 2,625 of the underlying shares on each of May 15, 2020 and November 15, 2020, and with respect to 1,313 of such shares on May 15, 2022.

These RSUs vest on May 15, 2020.

Option Exercises and Stock Vested - 2019

The following table provides information regarding stock options that were exercised by our named executive officers during 2019 and the restricted stock unit awards granted to our named executive officers that vested during 2019.

Option Awards

Number of Shares

Value Realized on

Number of Shares

Value Realized on

Michael Barrett

Thomas Kershaw

The value realized upon the exercise of a stock option is calculated by multiplying (i) the number of shares of our common stock to which the exercise of the option related, by (ii) the difference between the per-share closing price of our common stock on the date the stock option was exercised and the per-share exercise price of the options.

The value realized upon the vesting of a stock award is calculated by multiplying (i) the number of shares of our common stock that vested, by (ii) the per-share closing price of our common stock on the vesting date.

Represents the gross value realized prior to any applicable tax withholding.

Potential Payments upon Termination or Change in Control

The following section describes the benefits that may become payable to our named executive officers in connection with a termination of their employment with us and/or a change in control of Rubicon Project.

Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different from the amounts presented below.

Factors that could affect these amounts include the timing during the year of any such event.

We are a party to an Executive Severance and Vesting Acceleration Agreement, referred to as the severance agreement, with each of our named executive officers.

These agreements provide that if we terminate the employment of any of these executives without “cause”, if any of these executives resigns for “good reason”, or if the executive’s employment terminates due to the executive’s death or “disability” (as such terms are defined in the severance agreement), and prior to and not in connection with the consummation of a “sale transaction” (as such term is defined in the severance agreement), the executive will be entitled to receive continuation of his then-current base salary for a specified period (12 months for Messrs.

Barrett and Day, 6 months for Messrs.

Kershaw and Soroca, and 3 months for Mr.

Prusz), a pro-rata target bonus for the year of termination based upon the portion of the year worked and net of bonus amounts previously paid for the year, continuation of group health insurance coverage or reimbursement of premiums for each executive and his respective dependents for a specified period (12 months for Mr.

Barrett, 6 months for Messrs.

Day and Soroca, and 3 months for Messrs.

Kershaw and Prusz), and accelerated vesting of equity awards for a specified period (12 months for Messrs.

Barrett and Day, 6 months for Messrs.

Kershaw and Soroca, and 3 months for Mr.

If we terminate the employment of any of these executives without cause, if any of them resigns for good reason or if any the executive’s employment terminates due to the executive’s death or disability, in any case in connection with or following a change in control of Rubicon Project (within thirteen months of the change in control for Mr.

Barrett), the benefits described above will be increased to include for Messrs.

Barrett and Day, additional cash severance equal to one year’s target bonus (paid over 12 months);

Kershaw and Prusz, a longer period of continuation of base salary equal to 12 months for Mr.

Kershaw and 6 months for Mr.

for all the executives, full acceleration of vesting of all equity awards;

and for all executives, except Mr.

Soroca, a longer period of group health insurance coverage or reimbursement of premiums (12 months for Messrs.

Barrett and Day and 6 months for Messrs.

Kershaw and Prusz).

As noted above in the Compensation Discussion and Analysis section, in December 2019, in connection with the approval of the merger agreement between us and Telaria, our board approved the modification of the severance agreements to provide that if the executive officer is terminated in connection with or within 13 months following the closing of the merger between us and Telaria, the executive officer will be entitled to the enhanced change in control severance benefits described in this paragraph.

All severance benefits are conditioned upon these executives entering into a release of claims with us and abiding by the restrictive covenants contained in our standard confidentiality agreement (which includes an indefinite confidentiality covenant and one-year post-termination non-solicitation of employees covenant).

The severance agreements also provide that if the payments or benefits made to the executive in connection with a change in control of Rubicon Project would result in an excise tax under Section 280G and 4999 of the U.S.

Internal Revenue Code, such payments or benefits will be reduced if and to the extent such a reduction would result in a greater after-tax benefit for the executive.

The following tables present our estimates of the value of the payments and benefits that each of the named executive officers would have been entitled to receive (1) had his employment been terminated by us without “cause,” by the executive for “good reason”, or due to the executive’s death or “disability” on December 31, 2019 and (2) had both such a termination of the executive’s employment and a change in control of Rubicon Project occurred on that date.

The actual amounts that would be paid upon a named executive officer’s termination of employment and/or a change in control can only be determined at the time of such event.

Severance Benefits (No Change in Control)

Cash Severance

Equity Awards

Michael Barrett

Thomas Kershaw

The cash severance amount included in the table above is equal to 12 months base salary (in the case of Messrs.

Barrett and Day), 6 months base salary (in the case of Messrs.

Kershaw and Soroca) and 3 months base salary (in the case of Mr.

Prusz), which will be paid in equal installments in accordance Rubicon Project’s normal payroll schedule beginning on or after the 60 th day following the termination date.

The pro-rata bonus amount included in the table above is equal to the executive’s target bonus for the 2019 fiscal year, reduced by the mid-year bonus amounts which were previously paid to the executive for 2019.

Such pro-rata bonus amount will be paid in a lump sum on or after the 60 th day following the termination date.

The executive is entitled to continuation of group health insurance coverage or reimbursement of premiums for the executive and his dependents for a specified period (12 months for Mr.

Barrett, 6 months for Messrs.

Day and Soroca, and 3 months for Messrs.

Kershaw and Prusz).

The equity acceleration amount included in the table represents the value of the equity awards that would vest in connection with the termination of the executive’s employment.

Barrett and Day would be credited with an additional 12 months vesting, Messrs.

Kershaw and Soroca would be credited with an additional 6 months vesting and Mr.

Prusz would be credited with an additional 3 months vesting (or 6 months in the case of a termination due to Mr.

Prusz’s death or disability).

The value of the accelerated options and RSUs presented in the table is calculated based on our closing stock price on December 31, 2019 of $8.16, and, in the case of the accelerated options, less the exercise price of the options.

Severance Benefits (Change in Control)

Cash Severance

Pro-Rata Bonus

Continued Health Insurance Coverage

Value of Accelerated Vesting of Equity Awards

Michael Barrett

Thomas Kershaw

The cash severance amount included in the table above is equal to 12 months base salary plus target bonus (in the case of Messrs.

Barrett and Day), 12 months base salary (in the case of Mr.

Kershaw) or 6 months base salary (in the case of Messrs.

Soroca and Prusz), which will be paid in equal installments in accordance with our normal payroll schedule beginning on or after the 60 th day following the termination date.

Such pro-rata bonus amount will be paid in a lump sum on or after the 60 th day following the termination date.

The executive is entitled to continuation of group health insurance coverage or reimbursement of premiums for the executive and his dependents for a specified period (12 months for Messrs.

Barrett and Day, and 6 months for Messrs.

Kershaw, Soroca and Prusz).

The equity acceleration amount included in the table represents the value of the full acceleration of the executive’s then-unvested equity awards.

CEO Pay-Ratio Disclosure

Pursuant to the Exchange Act, we are required to disclose the ratio of the total annual compensation of our President and CEO, Michael Barrett, to the median of the total annual compensation of all of our employees (excluding our CEO).

Based on SEC rules for this disclosure and applying the methodology described above, we have determined that our CEO's total compensation for 2019 was $3,813,065, and the median of the total 2019 compensation of all of our employees (excluding our CEO) was $134,169.

Accordingly, we estimate the ratio of our CEO's total compensation for 2019 to the median of the total 2019 compensation of all of our employees (excluding our CEO) to be 28.4 to 1.

We identified the median employee by taking into account the annualized total cash compensation for 2019 for all individuals, excluding our CEO, who were employed by us or one of our affiliates on December 31, 2019.

We included all employees, whether employed on a full-time or part-time basis.

We did not make any assumptions, adjustments or estimates with respect to their total cash compensation for 2019, but we did annualize the compensation for any employees who were not employed by us for all of 2019.

We believe total cash compensation for all employees is an appropriate measure because we do not distribute annual equity awards to all employees.

Once the median employee was identified as described above, that employee's total annual compensation for 2019 was determined using the same rules that apply to reporting the compensation of our named executive officers (including our CEO) in the "Total" column of the Summary Compensation Table.

The total compensation amounts included in the first paragraph of this pay-ratio disclosure were determined based on that methodology.

The information required by Item 11 will be included in the 2021 Proxy Statement under the headings "Executive Officers" and "Executive Compensation" and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2019 with respect to the shares of our common stock that may be issued under our existing equity compensation plans:

Plan Category

Securities to be

Weighted-average

Exercise Price of

and Rights (4)

Number of Securities

Remaining Available

for Future Issuance

Compensation Plans

(Excluding Securities

Reflected in Column

Equity Compensation Plans Approved by Stockholders (1)

Equity Compensation Plans Not Approved by Stockholders (2)

Consists of our 2007 Stock Incentive Plan, 2014 Equity Incentive Plan, and 2014 Employee Stock Purchase Plan.

Consists of our 2014 Inducement Grant Equity Incentive Plan, the iSocket, Inc.

2009 Equity Incentive Plan, the Chango Inc.

2009 Stock Option Plan, and the nToggle, Inc.

2014 Equity Incentive Plan, each described below.

Represents 4,262,059 shares to be issued upon exercise of outstanding options and 8,076,583 shares subject to outstanding unvested restricted stock units.

Does not include 1,875 unvested restricted stock awards, which are included in outstanding shares.

Represents the weighted-average exercise price of outstanding options.

Shares subject to outstanding unvested restricted stock units become issuable upon vesting without any exercise price or other cash consideration required.

Consists of 2,931,722 shares that were available for future issuance under the 2014 Equity Incentive Plan and 1,891,813 shares that were available for future issuance under the 2014 Employee Stock Purchase Plan as of December 31, 2019.

On January 1, 2020, an additional 2,694,390 shares became available for future issuance under the 2014 Equity Incentive Plan pursuant to the plan’s evergreen provisions.

No future awards will be made under our 2007 Stock Incentive Plan.

Shares available for future issuance under the 2014 Inducement Grant Equity Incentive Plan as of December 31, 2019.

Our 2014 Inducement Grant Equity Incentive Plan was adopted by our board in November 2014 for use in making employment inducement awards pursuant to New York Stock Exchange Rule 303A.08.

A total of 1,000,000 shares of our common stock was initially reserved for granting stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock awards, and other awards under our 2014 Inducement Grant Equity Incentive Plan.

Our board or the compensation committee may increase the number of shares reserved for granting awards under this plan in its discretion, from time to time.

The share reserve under this plan was increased by 1,700,000 shares in March 2017 to provide shares underlying the initial equity awards granted to Mr.

Barrett in connection with his hire as our President and Chief Executive Officer, which were made as inducement awards.

Our board and the compensation committee have discretion to determine the terms of awards granted under our 2014 Inducement Grant Equity Incentive Plan, including vesting, forfeiture and acceleration.

The exercise price for stock options granted under our 2014 Inducement Grant Equity Incentive Plan will not be less than the fair market value of our common stock on the date of grant.

Restricted stock units may be granted in exchange for any form of legal consideration acceptable to our board and restricted stock may be granted in exchange for the payment of a purchase price, past or future services to our company or any other form of legal consideration.

In connection with our acquisition of iSocket, Inc.

in November 2014, we issued 132,000 stock options under our 2014 Inducement Grant Equity Incentive Plan with an exercise price of $14.62 per share and a ten-year term, and vesting over approximately four years, with 25% of the total shares granted vesting on the first anniversary of the date of the acquisition of iSocket, Inc.

and the balance vesting in 36 equal monthly installments thereafter.

In connection with the acquisition of iSocket, we also issued 126,050 restricted stock unit awards under the 2014 Inducement Grant Equity Incentive Plan, vesting over approximately 54 months.

In connection with our acquisition of nToggle, Inc.

in July 2014, we issued an aggregate of 174,117 restricted stock units under the 2014 Inducement Grant Equity Incentive Plan, vesting over approximately four years.

We assumed the iSocket, Inc.

2009 Equity Incentive Plan in connection with our acquisition of iSocket, Inc.

in November 2014.

2009 Equity Incentive Plan, with a weighted-average exercise price per share of $4.31, remaining terms ranging to September 2024 and remaining vesting periods ranging to September 2018.

In addition, 95,080 shares of common stock remaining available under the iSocket 2009 Equity Incentive Plan were added to the pool of available shares under our 2014 Equity Incentive Plan, and can be used for awards during the period when they would have been available for grant under the iSocket, Inc.

2009 Equity Incentive Plan to persons who were not employed by the company or its affiliates immediately before the iSocket acquisition, and otherwise in accordance with the New York Stock Exchange Rule 303A.08.

No further awards will be made under the iSocket 2009 Equity Incentive Plan.

We assumed the Chango 2009 Stock Option Plan in connection with our acquisition of Chango in April 2015.

In connection with the acquisition, and giving effect to the exchange ratio used to determine the number of shares we issued to pay the purchase price in the acquisition, we assumed a total of 428,798 outstanding stock options previously granted under the Chango 2009 Stock Option Plan, with a weighted-average exercise price per share of $4.43, remaining terms ranging to March 2020 and remaining vesting periods ranging to March 2019.

In addition, 247,686 shares of common stock remaining available under the Chango 2009 Stock Option Plan were added to the pool of available shares under our 2014 Equity Incentive Plan, and can be used for awards during the period when they would have been available for grant under the Chango 2009 Stock Option Plan to persons who were not employed by the company or its affiliates immediately before the Chango acquisition, and otherwise in accordance with the New York Stock Exchange Rule 303A.08.

No further awards will be made under the Chango 2009 Stock Option Plan.

We assumed the nToggle, Inc.

2014 Equity Incentive Plan in connection with our acquisition of nToggle, Inc.

in July 2017.

In connection with the acquisition, and giving effect to the exchange ratio used to determine the number of Rubicon Project options we issued in exchange for outstanding nToggle options, we assumed a total of 432,482 options previously granted under the nToggle, Inc.

2014 Equity Incentive Plan, with a weighted-average exercise price per share of $0.51, remaining terms ranging to April 2027 and remaining vesting periods ranging to April 2021.

We also assumed 77,499 shares of unvested restricted stock with a remaining vesting period to October 2019.

In addition, 480,673 shares of common stock remaining available under the nToggle, Inc.

2014 Equity Incentive Plan were added to the pool of available shares under our 2014 Equity Incentive Plan, and can be used for awards during the period when they would have been available for grant under the nToggle 2014 Equity Incentive Plan to persons who were not employed by the company or its affiliates immediately before the nToggle acquisition, and otherwise in accordance with the New York Stock Exchange Rule 303A.08.

No Further awards will be made under the nToggle 2014 Equity Incentive Plan.

COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information regarding beneficial ownership of Rubicon Project’s equity interests as of February 23, 2020 by:

(1) each stockholder or group of stockholders known by Rubicon Project to be the beneficial owner of more than 5% of Rubicon Project common stock;

(2) each of Rubicon Project’s directors;

(3) each of Rubicon Project’s named executive officers;

and (4) all of Rubicon Project’s current directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC, and thus represents voting or investment power with respect to Rubicon Project securities.

Unless otherwise indicated below, to Rubicon Project’s knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.

Percentage ownership of Rubicon Project common stock is based on 55,040,645 shares of our common stock outstanding as of February 23, 2020 .

Name and Address of Beneficial Owner (1)

5% Stockholders

BlackRock,Inc.

Named Executive Officers

Michael Barrett (4)

Thomas Kershaw (5)

David Day (6)

Joe Prusz (7)

Adam Soroca (8)

Directors and Director Nominees

Frank Addante (9)

Spillane (10)

Frankenberg (11)

Sarah Harden (14)

All Current Executive Officers and Directors as a Group (14 persons) (15)

*Indicates ownership of less than one percent.

Except as noted, the address of the named beneficial owner is c/o The Rubicon Project, Inc., 12181 Bluff Creek Drive, Suite 400, Los Angeles, California 90094.

The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose.

Under such rules, beneficial ownership includes shares (i) as to which the individual or entity has sole or shared voting power or investment power, and (ii) the individual owns or has the right to acquire beneficial ownership of within 60 days of February 23, 2020 .

Shares not owned but which the individual has the right to acquire beneficial ownership within 60 days of February 23, 2020 are included in the numerator and denominator for that specific individual in calculating that individual’s beneficial ownership percentage, but not deemed outstanding in the aggregate for computing the ownership percentage for others.

Beneficial ownership information is based solely upon a Schedule 13G filed with the SEC on February 7, 2020 by BlackRock, Inc.

According to the Schedule 13G, as of December 31, 2019, BlackRock has sole voting power with respect to 3,404,728 shares and sole dispositive power with respect to 3,481,724 shares.

The address for BlackRock, Inc.

is 55 East 52nd Street, New York, NY 10055.

Includes 778,915 shares issuable pursuant to outstanding stock options exercisable by Mr.

Barrett within 60 days of February 23, 2020 , of which 725,325 were fully vested as of such date.

Excludes options to purchase 507,245 shares of common stock and 837,717 restricted stock units that are unvested and unexercisable within 60 days of February 23, 2020 .

Also includes 7,313 shares owned by Ichabod Farm Ventures LLC, of which Mr.

Barrett is the beneficial owner.

Includes 172,208 shares issuable pursuant to outstanding stock options exercisable by Mr.

Kershaw within 60 days of February 23, 2020 , of which 156,277 were fully vested as of such date.

Excludes options to purchase 186,654 shares of common stock and 321,431 restricted stock units that are unvested and unexercisable within 60 days of February 23, 2020 .

Includes 244,373 shares issuable pursuant to outstanding stock options exercisable by Mr.

Day within 60 days of February 23, 2020 , of which 234,583 were fully vested as of such date, and 1,875 shares of unvested time-based restricted stock.

Excludes options to purchase 139,911 shares of common stock and 227,170 restricted stock units that are unvested and unexercisable within 60 days of February 23, 2020 .

Includes 100,945 shares issuable pursuant to outstanding stock options exercisable by Mr.

Prusz within 60 days of February 23, 2020 , of which 93,815 were fully vested as of such date.

Excludes options to purchase 101,685 shares of common stock and 182,336 restricted stock units that are unvested and unexercisable within 60 days of February 23, 2020 .

Includes 61,903 shares issuable pursuant to outstanding stock options exercisable by Mr.

Soroca within 60 days of February 23, 2020 , of which 54,565 were fully vested as of such date.

Excludes options to purchase 114,227 shares of common stock and 199,961 restricted stock units that are unvested and unexercisable within 60 days of February 23, 2020 .

Includes 183,464 shares issuable pursuant to outstanding stock options exercisable by Mr.

Addante within 60 days of February 23, 2020 , all of which were fully vested as of such date.

Also includes 1,250 shares owned by his spouse.