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Item 9A. Controls and Procedures

2021-03-10 compared with 2020-02-28 · 74 added, 68 removed, 164 unchanged (46% of the section changed)

12 unchanged sentences

There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation Efforts to Address Material Weakness in Internal Control Over Financial Reporting

As discussed in Item 9A , Controls and Procedures , of the 2018 10-K, we identified a material weakness in the area of revenue accounting as of December 31, 2018 related to journal entries, evaluating evidence of product or service delivery, and account reconciliations related to unbilled revenue and deferred revenue.

Prior to December 31, 2018, we designed and implemented new controls to compensate for the complexity of our accounting for revenue contracts and our dependence on manual processes.

Due to the timing of the design and implementation of these controls during the fourth quarter of 2018, however, there was insufficient time to consistently execute against their design as of December 31, 2018.

During 2019, to remediate the material weakness described above, we:

Enhanced controls related to manual journal entries to strengthen the completeness and accuracy of revenue-related entries;

Enhanced controls, including new automated reports, to demonstrate and verify evidence of product or service delivery;

Enhanced communication between financial and operating personnel to better monitor the status of product and service delivery;

Centralized responsibility for product and service delivery under one department and implemented a monthly attestation process for key operating personnel;

Implemented mandatory training for operational and revenue personnel who are responsible for product or service delivery and revenue recognition;

Enhanced controls over unbilled revenue and deferred revenue account reconciliations, including the review and timely analysis of reconciling items;

Implemented a business process review control that compares our actual results to our forecast and historical results.

We have completed the documentation, implementation and testing of the remediation actions described above, and as of September 30, 2019, management determined that the material weakness identified in the 2018 10-K had been remediated.

Compliance Program

As discussed in Item 9A , Controls and Procedures , of the 2018 10-K, we have taken a number of actions to reinforce a culture of integrity, accountability, and adherence to established internal controls, policies and procedures, including through formal communications, town hall meetings, and mandatory employee training, which continued through 2019.

We have a Compliance Coordinating Committee at the executive level that oversees our compliance program, which includes a policies and procedures library, education and mandatory training, and monitoring for compliance and corrective action where appropriate.

The program also includes policies for receiving, evaluating and reporting on allegations of misconduct or noncompliance with our Code of Business Conduct and Ethics and our Reporting and Non-Retaliation Policy (our corporate whistleblower program).

We continue our focus on maintaining a strong "tone at the top" and culture of compliance and control consciousness.

Inherent Limitation on the Effectiveness of Internal Controls

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We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but we cannot assure that such improvements will be sufficient to provide us with effective internal control over financial reporting in future periods.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 27, 2020, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of new accounting standards.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 9, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company's adoption of a new accounting standard.

Basis for Opinion

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McLean, Virginia

February 27, 2020

March 9, 2021

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OTHER INFORMATION

Not applicable.

On March 5, 2021, the Company's Compensation Committee and Board of Directors approved the following annual awards for the executive officers and former executive officer named below, based on achievement of goals relating to 2020 revenue and adjusted earnings before interest, taxes, depreciation and amortization, as well as corporate culture objectives and other discretionary considerations.

DiBattiste received a prorated award as set forth in her Separation and Release Agreement dated May 7, 2020.

Awards will be paid in a cash lump sum, less applicable deductions and withholdings, on or before April 15, 2021.

William Livek

Chief Executive Officer and Executive Vice Chairman

Chief Financial Officer and Treasurer

Christopher Wilson

Chief Commercial Officer

Carol DiBattiste

Former Chief Legal and Compliance Officer

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Certain information regarding our directors and executive officers required by Item 10 of Part III is set forth in Item 1 of Part I "Business - Executive Officers and Directors." Other information required by Item 10 of Part III, including information regarding any material changes to the process by which security holders may recommend nominees to the Board of Directors, is included in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders, and is incorporated herein by reference.

Information required by Item 10 of Part III regarding our Audit Committee is set forth in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Information relating to our compliance with Section 16(a) of the Exchange Act is set forth in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Certain information regarding our directors and executive officers required by Item 10 of Part III is set forth in Item 1 of Part I "Business - Executive Officers and Directors." Other information required by Item 10 of Part III, including information regarding any material changes to the process by which security holders may recommend nominees to the Board of Directors, is incorporated by reference to the information that will be included in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

Information required by Item 10 of Part III regarding our Audit Committee is incorporated by reference to the information that will be set forth in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

Information relating to our compliance with Section 16(a) of the Exchange Act is incorporated by reference to the information that will be set forth in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

We have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.

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EXECUTIVE COMPENSATION

Information required by Item 11 of Part III is included in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Information required by Item 11 of Part III is incorporated by reference to the information that will be included in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by Item 12 of Part III is included in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Information required by Item 12 of Part III is incorporated by reference to the information that will be included in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by Item 13 of Part III is included in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Information required by Item 13 of Part III is incorporated by reference to the information that will be included in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by Item 14 of Part III is included in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders and is incorporated herein by reference.

Information required by Item 14 of Part III is incorporated by reference to the information that will be included in our Proxy Statement relating to our 2021 Annual Meeting of Stockholders.

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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The exhibits filed as part of this report are listed under "Exhibits" at subsection (b) of this Item 15 .

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3.1 Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant's Registration Statement on Form S-1, as amended, filed June 12, 2007) (File No.

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3.5 Amended and Restated Bylaws of comScore, Inc (incorporated by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2018, filed August 10, 2018) (File No.

Form of Senior Secured Convertible Note (Initial Notes), as amended

Form of Senior Secured Convertible Note (Option Notes), as amended

4.1 Form of Senior Secured Convertible Note (Initial Notes), as amended (incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2020, filed August 10, 2020) (File No.

4.2 Form of Senior Secured Convertible Note (Option Notes), as amended (incorporated by reference to Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2020, filed August 10, 2020) (File No.

4.3 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-1, as amended, filed June 12, 2007) (File No.

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and each of the other investors listed on the signature pages attached thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed May 17, 2018) (File No.

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4.15 Second Amendment to Senior Secured Convertible Notes, dated as of August 8, 2018, by and between comScore, Inc., Starboard Value and Opportunity Master Fund Ltd.

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4.17 Amendment Agreement, dated November 6, 2019, by and among comScore, Inc., Starboard Value LP and certain affiliates of Starboard Value LP (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed November 6, 2019) (File No.

4.18 Letter Agreement, dated December 26, 2020, by and among comScore, Inc., Starboard Value and Opportunity Master Fund Ltd.

and the other investors listed on the signature pages attached thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed December 31, 2020) (File No.

4.19 Agreement, dated as of January 7, 2021, by and among comScore, Inc.

and certain funds affiliated with or managed by Starboard Value LP (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed January 8, 2021) (File No.

10.1 Patent Purchase, License and Settlement Agreement, dated as of December 20, 2011, by and among comScore, Inc., The Nielsen Company (US) LLC and NetRatings LLC (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed December 21, 2011) (File No.

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10.13* Form of Notice of Grant of Restricted Stock Units under 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the Registrant's Registration Statement on Form S-1, filed April 2, 2007) (File No.

2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8, filed June 4, 2018) (File No.

10.14* comScore, Inc.

2018 Equity and Incentive Compensation Plan (as Amended and Rest ated Effective as of July 9, 2020) (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed July 15, 2020) (File No.

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10.15* Form of Restricted Stock Units Award Notice for Employees (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed June 5, 2018) (File No.

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10.21* Form of Restricted Stock Units Award Agreement for Employees (incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2018, filed November 9, 2018) (File No.

Form of Change of Control and Severance Agreement (CFO and General Counsel) (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on September 10, 2018) (File No.

10.22* Form of Change of Control and Severance Agreement (CFO) (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on September 10, 2018) (File No.

10.23* Form of Change of Control and Severance Agreement (Other Executive Officers) (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on September 10, 2018) (File No.

10.24 Form of Indemnification Agreement for directors and executive officers (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed October 4, 2017) (File No.

Letter Agreement, dated as of March 31, 2019, by and between comScore, Inc.

and Dale Fuller (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed April 1, 2019) (File No.

10.25* Separation Agreement, dated as of March 31, 2019, by and between comScore, Inc.

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and William Livek (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed November 6, 2019) (File No.

Consulting Agreement, dated November 8, 2019, by and between comScore, Inc.

and Dale Fuller (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed November 8, 2019) (File No.

10.29* Separation and General Release Agreement, dated as of November 5, 2019, by and between comScore, Inc.

and Joseph Rostock

Change of Control and Severance Agreement, executed on September 28, 2015, by between comScore, Inc.

and William Livek

Form of Stock Option Grant Notice and Stock Option Agreement under 2018 Equity and Incentive Compensation Plan

Form of Deferred Stock Units Award Agreement under 2018 Equity and Incentive Compensation Plan

Form of Performance Restricted Stock Units Award Agreement under 2018 Equity and Incentive Compensation Plan

Form of Restricted Stock Units Award Agreement under 2018 Equity and Incentive Compensation Plan

and Joseph Rostock (incorporated by reference to Exhibit 10.31 to the Registrant's Annual Report on Form 10-K for the period ended December 31, 2019, filed February 28, 2020) (File No.

10.30* Change of Control and Severance Agreement, executed on September 28, 2015, by and between comScore, Inc.

and William Livek (incorporated by reference to Exhibit 10.32 to the Registrant's Annual Report on Form 10-K for the period ended December 31, 2019, filed February 28, 2020) (File No.

10.31* Form of Stock Option Grant Notice and Stock Option Agreement under 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.33 to the Registrant's Annual Report on Form 10-K for the period ended December 31, 2019, filed February 28, 2020) (File No.

10.32* Form of Deferred Stock Units Award Agreement under 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.34 to the Registrant's Annual Report on Form 10-K for the period ended December 31, 2019, filed February 28, 2020) (File No.

10.33* Form of Performance Restricted Stock Units Award Agreement under 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.35 to the Registrant's Annual Report on Form 10-K for the period ended December 31, 2019, filed February 28, 2020) (File No.

10.34* Form of Restricted Stock Units Award Agreement under 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.36 to the Registrant's Annual Report on Form 10-K for the period ended December 31, 2019, filed February 28, 2020) (File No.

10.35* Separation and Release Agreement, dated as of May 7, 2020, by and between comScore, Inc.

and Carol DiBattiste (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2020, filed August 10, 2020) (File No.

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10.36* Form of Compensation Reduction Letter for Executiv e Officers (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterl y Report on Form 10-Q for the period ended June 30, 2020, filed August 10, 2020) (File No.

10.37 Series B Convertible Preferred Stock Purchase Agreement, dated as of January 7, 2021, by and between comScore, Inc.

and Charter Communications Holding Company, LLC (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed January 8, 2021) (File No.

10.38 Series B Convertible Preferred Stock Purchase Agreement, dated as of January 7, 2021, by and between comScore, Inc.

and Qurate Retail, Inc.

(incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed January 8, 2021) (File No.

10.39 Series B Convertible Preferred Stock Purchase Agreement, dated as of January 7, 2021, by and between comScore, Inc.

and Pine Investor, LLC (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K , filed January 8, 2021) (File No.

21.1+ List of Subsidiaries

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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+ + Filed or furnished herewith

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FORM 10-K SUMMARY

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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Principal Accounting Officer)

February 27, 2020

March 9, 2021

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ William P.

Chief Executive Officer and Executive Vice Chairman

February 27, 2020

(Principal Executive Officer)

Livek Chief Executive Officer and Executive Vice Chairman March 9, 2021

Livek (Principal Executive Officer)

/s/ Gregory A.

Chief Financial Officer and Treasurer

February 27, 2020

(Principal Financial Officer and

Fink Chief Financial Officer and Treasurer March 9, 2021

Fink (Principal Financial Officer and

Principal Accounting Officer)

Non-Executive Chairman

February 27, 2020

/s/ Joanne Bradford

February 27, 2020

Joanne Bradford

/s/ Irwin Gotlieb

February 27, 2020

Rosenthal Non-Executive Chairman March 9, 2021

/s/ Irwin Gotlieb Director March 9, 2021

Irwin Gotlieb

/s/ Jacques Kerrest

February 27, 2020

/s/ Jacques Kerrest Director March 9, 2021

Jacques Kerrest

/s/ Kathleen Love

February 27, 2020

/s/ Kathleen Love Director March 9, 2021

Kathleen Love

February 27, 2020

Director March 9, 2021

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures