DEF 14A: ZoomInfo Technologies Sets Date for Annual Stockholders Meeting, Outlines Key Proposals

ZoomInfo Technologies Inc. announces its annual meeting of stockholders to be held virtually on May 15, 2024, featuring proposals for director elections, auditor ratification, and executive compensation approval.

Summary

• ZoomInfo Technologies Inc. will hold its Annual Meeting of Stockholders on May 15, 2024, at 12:00 p.m. Eastern Time, as a virtual meeting.
• Stockholders of record as of March 18, 2024, are eligible to vote on three proposals.
• The proposals include the election of two Class I directors (Henry Schuck and Keith Enright) for terms expiring in 2027, the ratification of KPMG LLP as the independent registered public accounting firm for 2024, and an advisory vote on the compensation of named executive officers.
• The Board of Directors recommends voting for all director nominees, the ratification of KPMG LLP, and the approval of the compensation of named executive officers.
• The proxy materials were first sent to stockholders on or about March 29, 2024.
• As of the record date, there were 377,628,229 shares of common stock outstanding.
• Mitesh Dhruv will not be standing for re-election, reducing the board size to eight members after the meeting.
• In 2023, ZoomInfo's revenue was $1,239.5 million, a 13% increase year-over-year, with an operating income of $259.5 million and adjusted operating income of $498.6 million.
• The GAAP operating income margin was 21%, and the adjusted operating income margin was 40%.
• Cash flow from operations was $434.9 million, and unlevered free cash flow was $463.5 million.
• The annual net revenue retention rate for 2023 was 87%.
• ZoomInfo closed the year with 1,820 customers having $100,000 or greater in annual contract value.

Sentiment

Score: 7

Explanation: The document is generally positive, outlining standard corporate governance procedures and highlighting solid financial performance. However, it also acknowledges potential risks and uncertainties, preventing a higher score.

Positives

• The company achieved revenue of $1,239.5 million in 2023, representing a 13% year-over-year increase.
• Adjusted operating income reached $498.6 million, demonstrating strong profitability.
• The company maintains a solid annual net revenue retention rate of 87%.
• ZoomInfo increased its customer base with annual contract values of $100,000 or greater to 1,820.
• The company is actively engaged with stockholders, holding over 500 meetings in 2023.
• The board has adopted stock ownership guidelines to align management and shareholder interests.

Negatives

• The annual net revenue retention rate for 2023 was 87%, which may indicate some customer churn or reduced spending compared to previous periods.
• The company's GAAP operating income margin was 21%, lower than the adjusted operating income margin of 40%, suggesting significant adjustments are needed to reflect underlying profitability.
• Mitesh Dhruv's decision not to stand for re-election will reduce the board size and may impact board dynamics.

Risks

• The company's future performance is subject to risks and uncertainties described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
• Failure of stockholders to ratify the selection of KPMG LLP as the independent registered public accounting firm could necessitate the selection of a different firm.
• The advisory vote on executive compensation is non-binding, but a negative outcome could influence future compensation decisions.
• The company's success depends on its ability to attract and retain talented executives in a competitive market.
• The company faces risks related to privacy, cybersecurity, and technology, requiring ongoing monitoring and management.

Future Outlook

The Proxy Statement includes forward-looking statements and refers to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for risks and uncertainties that could cause actual results to differ materially from management's expectations.

Management Comments

• Henry Schuck, Chief Executive Officer and Chairman of the Board, thanks stockholders for their continued support.
• The Board believes that a classified Board of Directors provides continuity and stability in pursuing the Company's policies and strategies and reinforces its commitment to long term perspective and value creation.

Industry Context

ZoomInfo operates in the competitive SaaS industry, requiring them to attract and retain skilled executive management teams. The company's compensation program is designed to align executive interests with long-term stockholder value creation, which is a common practice among publicly traded SaaS companies.

Comparison to Industry Standards

• The document mentions a peer group of companies used for benchmarking executive compensation, including Alteryx, Crowdstrike Holdings, Datadog, HubSpot, Okta, Paycom Software, Smartsheet, and The Trade Desk.
• These companies are generally recognized as leaders in the SaaS and technology sectors, providing a relevant comparison for ZoomInfo's compensation practices.
• The document highlights that ZoomInfo's compensation program emphasizes long-term equity compensation, which is a common practice among publicly traded SaaS companies to align executive interests with long-term stockholder value creation.
• The document also mentions that ZoomInfo has adopted stock ownership guidelines for non-employee directors and executive officers, which is a common practice among publicly traded companies to further align management and shareholder interests.

Management Changes

Corporate Governance

Related Party Transactions

• The company has a related person policy requiring Board or Audit Committee approval of transactions exceeding $120,000 with related persons.
• The company has a stockholders agreement with certain affiliates of TA Associates, Carlyle, and our Founders granting them certain board designation rights so long as they maintain a certain percentage of ownership of our outstanding common stock.
• The company has a registration rights agreement with certain affiliates of TA Associates, Carlyle, 22C Capital, and the Founders pursuant to which we granted them and their affiliates the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act shares of common stock.
• The company has two tax receivable agreements with certain pre-IPO owners and certain Pre-IPO HoldCo Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group is deemed to realize (calculated using certain assumptions) as a result of certain tax attributes and benefits covered by the tax receivable agreements.
• Michelle Milner, our Vice President, Human Resources, is the sister-in-law of Henry Schuck, our Chief Executive Officer. Total compensation paid by the Company to Ms. Milner, including salary, bonus, and equity compensation, for the year ended December 31, 2023 was approximately $0.3 million.
• We paid ongoing tax, accounting, and other administrative expenses on behalf of HSKB Funds, LLC, HSKB Funds II, LLC and DiscoverOrg Management Holdings, LLC, each of which was formed prior to our IPO to hold employee retention equity and is controlled by Mr. Schuck, in the amount of $137,484, for the year ended December 31, 2023.
• We provide limited complimentary access to our platform to 22C Capital, Carlyle and TA Associates. We estimate the value of such access provided to each of 22C Capital, Carlyle and TA Associates in 2023 to be approximately $5,300, $5,300 and $10,500, respectively.
• We provide our services to TA Associates and the Carlyle Group in the ordinary course of our business. We recorded revenues from TA Associates and The Carlyle Group in 2023 of approximately $415,000 and $364,000, respectively.

Stakeholder Impact

• Stockholders are asked to vote on key proposals that will impact the company's governance and executive compensation.
• Employees are affected by the company's compensation policies and benefit programs.
• Customers and suppliers may be impacted by the company's commitment to sustainability and ethical business practices.
• The company's performance and governance practices can impact investor confidence and the company's reputation.

Next Steps

• Stockholders are encouraged to vote on the proposals before the deadlines.
• The company will hold its Annual Meeting of Stockholders on May 15, 2024.
• The Board and Compensation Committee will consider the outcome of the advisory vote on executive compensation when making future decisions.

Key Dates

Keywords

ZoomInfo, Annual Meeting, Stockholders, Proxy Statement, Director Election, KPMG, Executive Compensation, Governance, Financial Performance, Revenue, ARR, Audit Committee, Compensation Committee