What changed in this filing

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Item 9A. Controls and Procedures

2022-03-17 compared with 2021-03-16 · 185 added, 117 removed, 124 unchanged (71% of the section changed)

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Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be included in our SEC reports is recorded, processed, summarized and reported within the applicable time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”), who is our principal executive officer, and Chief Financial Officer (“CFO”), who is our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

appropriate, to allow timely decisions regarding required disclosures.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

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However, our disclosure controls and procedures are designed to provide reasonable assurances of achieving our control objectives.

We conducted an evaluation, under the supervision and with the participation of our management, including our CEO, CFO and management Disclosure Committee, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(e) and 15(d)-15(e) of the Exchange Act.

Based on that evaluation our CEO and CFO concluded that our disclosure controls and procedures are effective as of December 31, 2020.

Based on that evaluation, and in light of the material weaknesses identified in our internal control over financial reporting, our CEO and CFO concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective at a reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

The Company’s internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors;

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

(1) pertain to the maintenance of records that accurately and fairly reflect our transactions and the dispositions of our assets;

(2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with appropriate authorizations;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management (with the participation of our CEO and CFO) conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 31, 2020.

The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by BDO USA LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, under the supervision of and with the participation of the CEO and CFO, assessed the effectiveness of our internal control over financial reporting and disclosure controls and procedures as of December 31, 2021.

In making this assessment, management used the updated criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework .

Based on our assessment under the COSO framework, management believes that, as of December 31, 2021, our internal control over financial reporting was not effective, as described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified:

We did not effectively select and develop certain information technology (“IT”) general controls related to access and change management controls that led to deficiencies in the design and operation of control activities, including segregation of duties deficiencies.

We also had deficiencies in the design and operation of account reconciliations.

These deficiencies and a lack of sufficient resources contributed to the potential for there to have been material errors in our financial statements and therefore resulted in the following additional material weaknesses:

• Risk Assessment—control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to:

(i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact the system of internal controls;

• Control Activities—control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to:

(i) addressing relevant risks, (ii) providing evidence of performance, (iii) providing appropriate segregation of duties, or (iv) operation at a level of precision to identify all potentially material errors;

• Information and Communication—control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control;

• Monitoring—control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to monitoring activities to ascertain whether the components of internal control are present and functioning.

As a result of the merger between MDC and SMG on August 2, 2021, and the acquisition of GoodStuff Holdings Limited (“GoodStuff”) on December 31, 2021, management excluded from its assessment t internal control over financial reporting as of December 31, 2021, the internal control over financial reporting of SMG and GoodStuff, which together constituted 44% of

total assets (excluding goodwill, intangible and right of use assets) and 59% of total revenue as of and for the year ended December 31, 2021.

In addition, the effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included in this Item 9A.

Changes in Internal Control Over Financial Reporting

In our Annual Report on Form 10-K for the year ended December 31, 2019, management identified a material weakness over the accounting for income taxes, principally related to the deferred tax accounts (liabilities, assets, and provision).

In response to the material weakness, management has implemented the following remediation actions during the fiscal year ended December 31, 2020:

i) hired a Senior Vice President of Global Tax with extensive experience in ASC 740, “Accounting for Income Taxes” and a Tax Manager to assist in the global tax compliance process, ii) designed and implemented a comprehensive process to collect information critical to calculation of the tax provision, iii) developed supplemental schedules to support, analyze and validate the tax provision, iv) implemented enhanced review procedures over the accounting for income taxes including the proper application of ASC 740, critical calculations, adequacy of valuation and other income tax reserves and the appropriateness of financial statement disclosures.

Management has determined as of December 31, 2020, that the remediation actions discussed above result in controls that are effective in design and operation and enables management to conclude that the material weakness has been remediated.

We have given consideration to the impact of the COVID-19 pandemic and have concluded that there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

There have been no changes to our internal control over financial reporting, other than the material weaknesses noted above, that occurred during the quarter ended December 31, 2021.

As described above in Management’s Report on Internal Control Over Financial Reporting, we excluded from our assessment the internal control over financial reporting of Legacy SMG.

We are aware that Legacy SMG had previously identified and disclosed the following material weaknesses:

• Legacy SMG did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience and training commensurate with its accounting and reporting requirements;

• Legacy SMG did not establish effective controls in response to the risks of material misstatement, including designing and maintaining formal accounting policies, procedures and controls over journal entries, significant accounts and disclosures, in order to achieve complete and accurate financial accounting, reporting and disclosures;

• Legacy SMG did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of its financial statements.

Specifically, SMG did not design and maintain:

(i) program change management controls for the financial systems to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately;

(ii) appropriate user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs and data to appropriate SMG personnel;

(iii) computer operations controls to ensure critical data interfaces between systems are appropriately identified and monitored, and data backups are authorized and restorations monitored;

and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements;

• Legacy SMG did not establish a sufficient risk assessment process to identify risks of material misstatement due to fraud and/or error and implement controls against such risks.

Remediation Efforts to Address Material Weaknesses

We are evaluating what remedial actions will be necessary to remediate the material weaknesses in our internal control over financial reporting.

We intend to develop and execute a remediation plan and to continue evaluating our internal control over financial reporting during 2022.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

MDC Partners Inc.

New York, New York

To the shareholders and the Board of Directors of Stagwell Inc.

Opinion on Internal Control over Financial Reporting

We have audited MDC Partners Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company and subsidiaries as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), shareholders’ deficit, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and schedules presented in Item 15 and our report dated March 16, 2021 expressed an unqualified opinion thereon.

We have audited the internal control over financial reporting of Stagwell Inc.

and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, 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, 2021, of the Company and our report dated March 17, 2022, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A, as a result of the merger between MDC Partners, Inc.

(“Legacy MDC”) and Stagwell Marketing Group, LLC (“Legacy SMG”) on August 2, 2021, and the acquisition of Goodstuff Holdings, Limited (“GoodStuff”) on December 31, 2021, management excluded from its assessment the internal control over financial reporting of Legacy SMG and GoodStuff which together constituted 44% of total assets (excluding goodwill, intangible and right of use assets) and 59% of total revenue as of and for the year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at Legacy SMG and GoodStuff.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting .

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

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/s/ BDO USA, LLP

New York, New York

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management's assessment:

The Company did not effectively select and develop certain information technology (“IT”) general controls related to access and change management controls that led to deficiencies in the design and operation of control activities, including segregation of duties deficiencies.

The Company also had deficiencies in the design and operation of account reconciliations.

These deficiencies and a lack of sufficient resources contributed to the potential for there to have been material errors in the Company's financial statements.

Therefore, such deficiencies resulted in the following material weaknesses:

Risk Assessment - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to:

Control Activities - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to:

(i) addressing relevant risks, (ii) providing evidence of performance, (iii) providing appropriate segregation of duties, and (iv) operation at a level of precision to identify all potentially material errors.

Information and Communication - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control.

Monitoring - control deficiencies constituting material weaknesses, either individually or in the aggregate, relating to monitoring activities to ascertain whether the components of internal control are present and functioning.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2021, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

March 17, 2022

Other Information

Second Amended and Restated Employment Agreement and Amended and Restated Stock Appreciation Rights Agreement with CEO

On March 11, 2022, the Company and Mark Penn, Chief Executive Officer of the Company, entered into (i) a Second Amended and Restated Employment Agreement (the “Second A&R Employment Agreement”) and (ii) an Amended and Restated Stock Appreciation Rights Agreement (the “A&R SARs Agreement”).

The Second A&R Employment Agreement and the A&R SARs Agreement provide that, with respect to the December 14, 2021 award to Mr.

Penn of 1,500,000 stock appreciation rights (“SARs”) in respect of the Company’s Class A common stock with a base price equal to $8.27 under the Company’s 2016 Stock Incentive Plan (the “Plan”), (i) the SARs will be settled only in cash upon any exercise, and (ii) the SARs will be considered to have been granted outside of the Plan and are not subject to stockholder approval.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

The information required by this item, and not set forth below, will be included in the sections captioned “Election of Directors,” “Information About the Board and Corporate Governance - Audit Committee,” and “Delinquent Section 16(a) Reports” in the Company’s Proxy Statement for the 2021 Annual General Meeting of Stockholders, and is incorporated herein by reference.

Executive Officers of MDC Partners

The executive officers of MDC Partners as of February 28, 2021 are:

The information required by this item, and not set forth below, will be included in the Company’s Proxy Statement for the 2022 Annual General Meeting of Stockholders (the “ 2022 Proxy Statement ” ), to be filed with the SEC no later than 120 days after December 31, 2021.

and is incorporated herein by reference.

Executive Officers of Stagwell Inc.

The executive officers of Stagwell Inc.

as of March 17, 2022 are:

Name Age Office

Mark Penn 68 Chairman of the Board, Chief Executive Officer

Jay Leveton 45 President

Frank Lanuto 59 Chief Financial Officer

Ross 40 Executive Vice President, Strategy & Corporate Development, General Counsel and Secretary

Ryan Greene 44 Chief Operating Officer

Peter McElligott 37 General Counsel

Vincenzo DiMaggio 47 Senior Vice President, Chief Accounting Officer

There is no family relationship among any of the executive officers or directors.

Penn joined MDC Partners in March 2019 and currently serves as Chairman of the Board and Chief Executive Officer.

Penn has been acting as the Managing Partner and President at the Stagwell Group since 2015.

Prior thereto, Mr.

Penn joined MDC in March 2019 and currently serves as Chairman of the Board and Chief Executive Officer.

Penn has also been the Managing Partner and President of The Stagwell Group, a private equity fund that invests in digital

marketing services companies, since its formation in 2015.

Previously, Mr.

Penn served as Microsoft’s Executive Vice President and Chief Strategy Officer and held Chief Executive Officer position in multiple strategic public relation firms.

Lanuto joined MDC partners in June 2019 as Chief Financial Officer.

Prior to joining MDC Partners, Mr.

Leveton joined the Company in August 2021 as President.

Prior to joining Stagwell Inc., Mr.

Leveton served as a Partner of The Stagwell Group, where he was responsible for sourcing, integrating and scaling Stagwell’s portfolio of companies, since July 2015.

Previously, Mr.

Leveton served as the Executive Vice President, Worldwide at Burson-Marsteller, a global public relations firm, from November 2010 to July 2015.

Leveton has more than 20 years of leadership experience in marketing communications services and extensive experience in high-level political and corporate market research.

Lanuto joined MDC in June 2019 as Chief Financial Officer.

Prior to joining Stagwell Inc., Mr.

Lanuto served as Vice President, Corporate Controller at Movado Group, Inc.

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Before Movado Group, he spent over 17 years overseeing global financial functions and operations activities in the advertising, marketing and media services industries.

Ross j oined MDC Partners in 2010 and currently serves as General Counsel, Executive Vice President, Corporate Development.

Prior to joining MDC Partners, Mr.

Ross was an attorney at Skadden Arps LLP where he represented global clients in a wide range of capital markets offerings, M&A transactions, and general corporate matters.

DiMaggio joined MDC Partners in 2018 as Chief Accounting Officer.

Prior to joining MDC Partners, he served as the Senior Vice President, Global Controller & Chief Accounting Officer at Endeavor, from 2017 to 2018.

Greene joined the Company in August 2021 as Chief Operating Officer.

Prior to joining Stagwell Inc., Mr.

Greene served as Chief Financial Officer of Stagwell Marketing Group since September 2015.

Previously, Mr.

Greene served as a Financial Management Consultant at MorganFranklin Consulting from October 2013 to September 2015, where he serviced clients across a variety of industries, including advertising technology, healthcare, financial services, and defense contractors, in connection with initial public offerings, mergers and acquisitions and business process reengineering.

Prior to MorganFranklin, Mr.

Greene worked in various financial leadership roles for several agencies of Omnicom Group Inc., including CLS Strategies and C2 Creative.

Earlier in his career, Mr.

Greene held corporate finance and operations roles with Ernst & Young LLP, B|Com3 (acquired by Publicis Groupe), and Arthur Andersen, where he was employed in the Technology, Media and Telecom group.

McElligott joined Stagwell Inc.

in March 2021 and became our General Counsel in February 2022.

Prior to joining Stagwell Inc., Mr.

McElligott served as General Counsel of RapidSOS, Inc.

from October 2019 to March 2021 and General Counsel of Spruce Holdings Inc.

from January 2017 to October 2019.

Previously, Mr.

McElligott held positions as senior legal counsel at Citrix Systems Inc., a member of the corporate strategy team at Microsoft, and with a Washington, D.C.

based law firm.

McElligott started his legal career as a clerk for Judge James Loken on the 8 th Circuit Court of Appeals.

DiMaggio joined MDC in 2018 as Chief Accounting Officer.

Prior to joining Stagwell Inc., he served as the Senior Vice President, Global Controller & Chief Accounting Officer at Endeavor, from 2017 to 2018.

Prior thereto, he worked at Viacom Inc.

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The Company’s policy is to not permit any waiver of the Code of Conduct for any director or executive officer, except in extremely limited circumstances.

Any waiver of this Code of Conduct for directors or officers of the Company must be approved by the Company’s Board of Directors.

Any waiver of this Code of Conduct for directors or officers of the Company must be approved by the Board.

Amendments to and waivers of the Code of Conduct will be publicly disclosed as required by applicable laws, rules and regulations.

The Code of Conduct is available free of charge on the Company’s website at https://www.mdc-partners.com , or by writing to MDC Partners Inc., One World Trade Center, Floor 65, New York, New York 10017, Attention:

The Code of Conduct is available free of charge on the Company’s website at https://www.stagwellglobal.com , or by writing to Stagwell Inc., One World Trade Center, Floor 65, New York, New York 10007, Attention:

Investor Relations.

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Executive Compensation

The information required by this item will be included in the sections captioned “Executive Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Interlocks and Insider Participation,” “Director Compensation for Fiscal Year 2020,” and “Report of the Human Resources and Compensation Committee” in the Company’s Proxy Statement for the 2021 Annual General Meeting of Stockholders, and is incorporated herein by reference.

The information required by this item will be included in the 2022 Proxy Statement to be filed with the SEC no later than 120 days after December 31, 2021 and is incorporated herein by reference.

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

The information required by this item will be included in the sections captioned “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans” in the Company’s Proxy Statement for the 2021 Annual General Meeting of Stockholders and is incorporated herein by reference.

The information required by this item will be included in the 2022 Proxy Statement to be filed with the SEC no later than 120 days after December 31, 2021 and is incorporated herein by reference.

Certain Relationships and Related Transactions and Director Independence

The information required by this item will be included in the sections captioned “Review and Approval of Related Party Transactions” and “Election of Directors” in the Company’s Proxy Statement for the 2021 Annual General Meeting of Stockholders, and is incorporated herein by reference.

The information required by this item will be included in the 2022 Proxy Statement to be filed with the SEC no later than 120 days after December 31, 2021 and is incorporated herein by reference.

Principal Accounting Fees and Services

The information required by this item will be included in the section captioned “Appointment of Auditors and Authorizing the Audit Committee to Determine its Remuneration” in the Company’s Proxy Statement for the 2021 Annual General Meeting of Stockholders, and is incorporated herein by reference.

The information required by this item will be included in the 2022 Proxy Statement to be filed with the SEC no later than 120 days after December 31, 2021 and is incorporated herein by reference.

Exhibits and Financial Statement Schedules

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Schedule II — 1 of 2

MDC PARTNERS INC.

STAGWELL INC.

& SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

For the Three Years Ended December 31,

For the Two Years Ended December 31,

(Dollars in Thousands)

Column A Column B Column C Column D Column E Column F

Description Balance at

of Period Charged to

Expenses Removal of Uncollectible Receivables Translation Adjustments

(Decrease) Balance at

Description Balance at Beginning of Period Charged to Costs and Expenses Removal of Uncollectible Receivables Translation Adjustments Increase (Decrease) Balance at the End of Period

Valuation accounts deducted from assets to which they apply – allowance for doubtful accounts:

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December 31, 2020 2,777 6,222 ( 3,907 ) 17 5,109

December 31, 2018 $ 2,453 $ 1,538 $ ( 1,795 ) $ ( 317 ) $ 1,879

Schedule II — 2 of 2

MDC PARTNERS INC.

STAGWELL INC.

& SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

For the Three Years Ended December 31,

For the Two Years Ended December 31,

(Dollars in Thousands)

Column A Column B Column C Column D Column E Column F

Description Balance at

of Period Charged to

Expenses Other Translation Adjustments

(Decrease) Balance at

Description Balance at Beginning of Period Charged to Costs and Expenses Other Translation Adjustments Increase (Decrease) Balance at the End of Period

Valuation accounts deducted from assets to which they apply – valuation allowance for deferred income taxes:

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December 31, 2020 2,945 2,606 — — 5,551

December 31, 2018 $ 19,032 $ 49,447 $ — $ — $ 68,479

The exhibits listed on the accompanying Exhibits Index are filed as a part of this report.

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EXHIBIT INDEX

Transaction Agreement, dated as of December 21, 2020, by and among Stagwell Media LP and the Company (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on December 22, 2020)

Articles of Amalgamation, dated January 1, 2004 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 10, 2004)

Articles of Continuance, dated June 28, 2004 (incorporated by reference to Exhibit 3.3 to the Company’s Form 10-Q filed on August 4, 2004)

Articles of Amalgamation, dated July 1, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on July 30, 2010)

Articles of Amalgamation, dated May 1, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-Q filed on May 2, 2011)

Articles of Amalgamation, dated January 1, 2013 (incorporated by reference to Exhibit 3.1.4 to the Company’s Form 10-K filed on March 10, 2014)

Articles of Amalgamation, dated April 1, 2013 (incorporated by reference to Exhibit 3.1.5 to the Company’s Form 10-K filed on March 10, 2014)

Articles of Amalgamation, dated July 1, 2013 (incorporated by reference to Exhibit 3.1.6 to the Company’s Form 10-K filed on March 10, 2014)

Articles of Amendment, dated March 7, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on March 7, 2016)

Articles of Amendment, dated March 14, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on March 15, 2019)

General By-law No.

1, as amended on April 29, 2005 (incorporated by reference to Exhibit 3.2 to the Company’s Form 10-K filed on March 16, 2007)

Indenture, dated as of March 23, 2016, among the Company, the Guarantors and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on March 23, 2016)

Senior Notes due 2024 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on March 23, 2016)

First Supplemental Indenture, dated as of September 16, 2020, among the Additional Note Guarantors and the Bank of New York Mellon, as trustee, to Indenture, dated as of March 23, 2016, among the Company, the Guarantors, and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-Q filed on October 29, 2020)

Second Supplemental Indenture, dated as of January 13, 2021, among the Company, the Note Guarantors party thereto and the Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on January 13, 2021)

Third Supplemental Indenture, dated as of February 8, 2021, among the Company, the Note Guarantors party thereto and the Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on February 9, 2021)

Transaction Agreement, dated as of December 21, 2020, by and among Stagwell Media LP and MDC Partners Inc.

(incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on December 22, 2020).

Amendment No.

1 to the Transaction Agreement, dated as of June 4, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on June 7, 2021).

Amendment No.

2 to the Transaction Agreement, dated as of July 8, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on July 9, 2021).

Second Amended and Restated Certificate of Incorporation of Stagwell Inc., as amended.*

Amended and Restated Bylaws of Stagwell Inc.

(incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on August 2, 2021).

Indenture, dated as of August 20, 2021, among Stagwell Global LLC (f/k/a Midas OpCo Holdings LLC), the Note Guarantors party thereto, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on August 20, 2021).

Form of 5.625% Senior Note due 2029 (included in Exhibit 4.1).

Description of Securities*

Second Amended and Restated Credit Agreement, dated as of May 3, 2016, among the Company, Maxxcom Inc., a Delaware corporation, each of their subsidiaries party thereto, Wells Fargo Capital Finance, LLC, as agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 4, 2016)

Consent and First Amendment to the Second Amended and Restated Credit Agreement, dated as of May 3, 2016, among the Company, Maxxcom Inc., a Delaware corporation, each of their subsidiaries party thereto, Wells Fargo Bank, N.A., as agent, and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on March 15, 2019)

Second Amendment, dated as of May 29, 2020, to the Second Amended and Restated Credit Agreement, dated as of May 3, 2016, among the Company, Maxxcom Inc., each of their subsidiaries party thereto, Wells Fargo Capital Finance, LLC, as agent and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 1, 2020)

Amended and Restated Limited Liability Company Agreement of Stagwell Global LLC (f/k/a Midas OpCo Holdings LLC) dated as of August 2, 2021.*

Amended and Restated Credit Agreement, dated August 2, 2021, by and among Stagwell Global LLC (f/k/a Midas OpCo Holdings LLC), Maxxcom LLC, Stagwell Marketing Group LLC, and the other Borrowers party thereto, and JP Morgan Chase Bank, as Administrative Agent, and the other Agents and Lenders party thereto (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed on August 2, 2021).

Amendment No.

1 to Amended and Restated Credit Agreement, dated as of December 17, 2021.*

Securities Purchase Agreement, by and between MDC Partners Inc.

and Broad Street Principal Investments, L.L.C., dated as of February 14, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 15, 2017).

Goldman Letter Agreement, dated as of April 21, 2021, by and among MDC Partners Inc., Broad Street Principal Investments, L.L.C., Stonebridge 2017, L.P.

and Stonebridge 2017 Offshore, L.P.

(incorporated by reference to Exhibit 10.1 to the Company’s Amendment No.

2 to Registration Statement on Form S-4 filed on April 21, 2021).

Goldman Letter Agreement, dated as of July 8, 2021, by and among MDC Partners Inc., Broad Street Principal Investments, L.L.C., Stonebridge 2017, L.P.

and Stonebridge 2017 Offshore, L.P.

(incorporated by reference to Exhibit 2.2 to the Company’s Form 8-K filed on July 9, 2021).

Amendment to Securities Purchase Agreement, dated August 4, 2021, by and between Stagwell Inc.

and Broad Street Principal Investments, L.L.C.

(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 4, 2021).

Securities Purchase Agreement, by and between MDC Partners Inc.

and Stagwell Agency Holdings LLC, dated as of March 14, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on March 15, 2019).

Employment Agreement, effective March 18, 2019, by and between the Company and Mark Penn (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on March 15, 2019)

Amendment to Securities Purchase Agreement, dated August 4, 2021, by and between Stagwell Inc.

and Stagwell Agency Holdings LLC (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on August 4, 2021).

Registration Rights Agreement, dated August 2, 2021, by and among the Company and the Stagwell Parties (as defined therein) (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 2, 2021).

Tax Receivable Agreement, dated August 2, 2021, by and among the Company, Midas OpCo Holdings LLC and Stagwell Media LP (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on August 2, 2021).

Information Rights Letter Agreement, dated August 2, 2021, by and among the Company, Stagwell Media LP, Stagwell Group LLC and Stagwell Agency Holdings LLC (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on August 2, 2021).

OpCo Letter Agreement, dated August 4, 2021, by and among Stagwell Inc., Broad Street Principal Investments, L.L.C., Stonebridge 2017, L.P.

and Stonebridge 2017 Offshore, L.P.

(incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on August 4, 2021).

Second Amended and Restated Employment Agreement Amendment, dated as of March 11, 2022, by and between the Company and Mark Penn.*

Stock Appreciation Rights Agreement by and between the Company and Mark Penn, dated as of April 5, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-K/A filed April 29, 2020).

Amended and Restated Stock Appreciation Rights Agreement by and between the Company and Mark Penn, dated as of March 11, 2022.*

Employment Agreement dated as of May 6, 2019, by and between the Company and Frank Lanuto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 8, 2019).

Employment Agreement Amendment, dated as of September 8, 2021, by and between the Company and Frank Lanuto (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on September 8, 2021).

Stock Appreciation Rights Agreement by and between the Company and Frank Lanuto, dated as of June 12, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K/A filed April 29, 2020).

Stock Appreciation Rights Agreement by and between the Company and Frank Lanuto, dated as of June 12, 2019 (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-K/A filed April 29, 2020).

Second Amended and Restated Employment Agreement between the Company and David Ross, dated as of February 27, 2017 (incorporated by reference to Exhibit 10.7 to the Company’s Form10-K filed on March 1, 2017)

Letter Agreement between the Company and David Ross, dated June 4, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on June 6, 2019)

Employment Agreement, dated as of September 12, 2021, by and between the Company and Jay Leveton (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 16, 2021).

Employment Agreement, dated as of September 12, 2021, by and between the Company and Ryan Greene (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on September 16, 2021).

Employment Agreement between the Company and Vincenzo DiMaggio, dated as of May 8, 2018 (incorporated by reference to Exhibit 10.8 to the Company's 10-K filed on March 18, 2019).

Employment Agreement dated as of May 6, 2019, by and between the Company and Jonathan Mirsky (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on May 8, 2019)

Stock Appreciation Rights Agreement by and between the Company and Jonathan Mirsky, dated as of June 26, 2019 (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-K/A filed April 29, 2020)

Inducement Restricted Stock Agreement, made as of June 17, 2019, between the Company and Jonathan Mirsky (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K/A filed April 29, 2020)

Separation Agreement and General Release between MDC Partners Inc.

and Jonathan Mirsky, dated as of September 22, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 23, 2020)

Amended and Restated Employment Agreement between the Company and David Doft, dated as of July 19, 2007 (effective August 10, 2007) (incorporated by reference to Exhibit 10.7 to the Company's Form 10-Q filed on August 7, 2007)

Amendment No.

1 dated March 7, 2011, to the Amended and Restated Employment Agreement made as of July 19, 2007, by and between the Company and David Doft (incorporated by reference to Exhibit 10.2 to the Company Form 10-Q filed on May 2, 2011

Separation and Release Agreement, dated as of May 8, 2019, by and between the Company and David Doft (incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q filed on May 9, 2019)

Amended and Restated Employment Agreement between the Company and Mitchell Gendel, dated as of July 6, 2007 (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on August 7, 2007)

Amendment No.

1 dated March 7, 2011, to the Amended and Restated Employment Agreement made as of July 6, 2007, by and between the Company and Mitchell Gendel (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on May 2, 2011)

Separation and Release Agreement, dated as of May 6, 2019, by and between the Company and Mitchell Gendel (incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q filed on May 9, 2019)

Amended and Restated Stock Appreciation Rights Plan, as adopted by the shareholders of the Company on June 2, 2009 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on June 5, 2009)

2011 Stock Incentive Plan of the Company, as approved and adopted by the shareholders of the Company on June 1, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 1, 2011)

MDC Partners Inc.

2014 Long Term Cash Incentive Compensation Plan, as adopted March 6, 2014, including forms of 2014 Award Agreement (incorporated by reference to Exhibit 10.12 to the Company’s Form 10-K filed on March 10, 2014)

2011 Stock Incentive Plan, as approved and adopted by the shareholders of the Company on June 1, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 1, 2011).

MDC Partners Inc.

1 unchanged sentence

Form of Financial Performance-Based Restricted Stock Agreement (2019) (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed on November 6, 2019).

Form of Long-Term Cash Incentive Compensation Plan 2019 Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed on November 6, 2019)

Form of Indemnification Agreement with Directors and Officers*

Letter Agreement, dated as of December 21, 2020, by and between the Company and Broad Street Principal Investments, L.L.C.

(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 22, 2020)

Form of Consent and Support Agreement entered into by and between MDC Partners Inc.

and the holders of more than 50% of the aggregate principal amount of the Senior Notes due 2024 of the Company (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on December 22, 2020)

Form of Financial Performance-Based Restricted Stock Grant Agreement (2021) (incorporated by reference to Exhibit 10.14 to the Company's Form 10-Q filed on November 9, 2021).

Form of Indemnification Agreement with Directors and Officers (incorporated by reference to Exhibit 10.17 to the Company’s Form 10-K filed March 16, 2021).

Stagwell Inc.

Non-Employee Director Compensation Policy.*

Subsidiaries of Registrant*

Consent of Independent Registered Public Accounting Firm BDO USA LLP*

Consent of Independent Registered Public Accounting Firm Deloitte & Touche LLP*

Power of Attorney (included on the signature pages to this Form 10-K)*

1 unchanged sentence

Certification by Chief Financial Officer pursuant to Rules 13a - 14(a) and 15d - 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification by Chief Executive Officer pursuant to 18 USC Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Certification by Chief Financial Officer pursuant to 18 USC Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Certification by Chief Executive Officer pursuant to 18 USC.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

Certification by Chief Financial Officer pursuant to 18 USC.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

101 Interactive Data File, for the period ended December 31, 2021.

5 unchanged sentences

Pursuant to the requirements 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.

MDC PARTNERS INC.

STAGWELL INC.

/s/ Frank Lanuto

4 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

MDC PARTNERS INC.

STAGWELL INC.

/s/ Mark Penn

11 unchanged sentences

March 17, 2022

/s/ Asha Daniere

March 16, 2021

/s/ Bradley Gross

7 unchanged sentences

March 17, 2022

/s/ Eli Samaha

March 17, 2022

Lead Independent Director

March 17, 2022

/s/ Rodney Slater

Secretary Rodney Slater

March 17, 2022

/s/ Brandt Vaughan

Brandt Vaughan

March 17, 2022

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