EGC Corporate Governance Practices (May 2018)

Under the JOBS Act, an issuer will remain an EGC until the earliest of: • the last day of the fiscal year during which the issuer has total annual gross revenues of $1.07 billion* or more; • the last day of the issuer’s fiscal year following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) (for a debt-only issuer that never sells common equity pursuant to a Securities Act registration statement, this five-year period will not run); • any date on which the issuer has, during the prior three-year period, issued more than $1 billion in non-convertible debt; or • the date on which the issuer becomes a “Large Accelerated Filer,” as defined in the rules of the SEC. * Updated for inflationary adjustments (from original threshold of $1 billion) and effective beginning April 12, 2017. EGC CORPORATE GOVERNANCE PRACTICES: A Survey and Related Resources Introduction There was a significant increase in the number of completed initial public offerings (“IPOs”) in 2017 compared to 2016 and 2015. However, the number of completed IPOs was still down compared to 2014, which saw the highest number of completed IPOs post-financial crisis. Some commentators have attributed the rise in the number of IPOs in 2017 to improving U.S. economic fundamentals and consumer sentiment. However, the trend since the financial crisis of successful companies remaining private longer and continuing to benefit from attractive valuations in private financing rounds without facing the burdens associated with becoming Securities and Exchange Commission (“SEC”)-reporting companies has continued. In this year’s survey, we consider the characteristics of the emerging growth companies (“EGCs”) that completed IPOs and the corporate governance, compensation and other practices adopted by them. Specifically, we examined the filings of (i) the approximately 853 EGCs (on an aggregated basis) that completed their IPOs in the period from January 1, 2013, through December 31, 2017, and (ii) the 172 EGCs (on a standalone basis) that completed their IPOs during the year ended December 31, 2017. The survey focuses on EGCs that have availed themselves of the provisions of Title I of the Jumpstart Our Business Startups Act (“JOBS Act”). This year is anticipated to be a more active year for IPOs. Our objective is to provide data that will be useful to you in assessing whether your company’s current or proposed corporate governance practices are consistent with EGC market practice.