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DEF 14A 1 d101549ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

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AVALARA, INC.

(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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LOGO

Seattle, Washington

April 20, 2021

Dear Shareholders:

You are cordially invited to attend the Avalara, Inc. 2021 annual meeting of shareholders on June 3, 2021 at 10:00 a.m. (Pacific Time). The meeting will be held in a virtual meeting format only, conducted by live webcast accessible at the following website address: https://web.lumiagm.com/238702773. Our Board of Directors has fixed the close of business on April 9, 2021 as the record date for determining those holders of our common stock entitled to notice of and to vote at the 2021 annual meeting of shareholders and any adjournments or postponements thereof.

The Notice of 2021 Annual Meeting of Shareholders and Proxy Statement, both of which accompany this letter, provide details regarding the business to be conducted at the 2021 annual meeting, including proposals for the election of Class III directors nominated by our Board (Proposal No. 1), advisory approval of the 2020 compensation of our named executive officers (Proposal No. 2), and ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021 (Proposal No. 3).

Our Board recommends that you vote FOR each director nominee named in the accompanying proxy statement under Proposal No. 1 and FOR each of Proposals No. 2 and No. 3.

Your vote is very important. Please vote your shares promptly, whether or not you expect to attend the virtual annual meeting. You may vote by internet or, if you requested printed proxy materials, by mailing a proxy or voting instruction form. If you attend the virtual meeting, you may vote electronically if you wish, even if you previously submitted your vote. If your shares are held through a broker, bank, trustee, or other nominee and you wish to vote or submit questions at the virtual meeting, you must obtain a legal proxy issued in your name from your broker, bank, trustee, or other nominee.

On behalf of our Board, thank you for your continued investment in Avalara.

Sincerely,

LOGO

Scott McFarlane

Chairman and Chief Executive Officer

LOGO

255 South King Street, Suite 1800

Seattle, WA 98104

Notice of 2021 Annual Meeting of Shareholders

The 2021 Annual Meeting of Shareholders of Avalara, Inc. (the “Annual Meeting”) will be held as a virtual meeting only, accessible at https://web.lumiagm.com/238702773, on June 3, 2021 at 10:00 a.m. (Pacific Time) for the following purposes:


1.		To elect three Class III directors nominated by our Board of Directors to serve until the annual meeting of shareholders to be held in 2024, or the earlier to occur of such director’s death, disqualification, resignation, or removal as a Class III director or the appointment of such director’s successor;

2.		To approve on an advisory basis the compensation of our named executive officers;

3.		To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and

4.		To transact such other business as may properly come before the Annual Meeting.

Only shareholders of record of our common stock on the record date, which is the close of business on April 9, 2021, will be entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.

In accordance with Securities and Exchange Commission rules, we are sending a Notice of Internet Availability of Proxy Materials on or about April 20, 2021, and are providing access to our proxy materials over the internet on or before that date, to the holders of record of our common stock as of the close of business on the record date.

You will not be able to attend the Annual Meeting physically. The Annual Meeting will be a completely virtual meeting, which will be conducted through a webcast. Record holders of our common stock and persons holding proxies from such shareholders will be able to participate in, vote online, and submit questions electronically during the Annual Meeting by visiting the website listed above. To vote or submit questions at the Annual Meeting, you will need the control number included on your Notice of Internet Availability of the Proxy Materials, proxy card, or voting instruction form. If you plan to vote or submit questions at the Annual Meeting, please see the instructions for accessing the Annual Meeting on page 58 of the accompanying proxy statement.

By order of the Board of Directors,

LOGO

Alesia Pinney

Executive Vice President, Chief Legal Officer, and Secretary

Seattle, Washington

April 20, 2021

Important Notice Regarding the Availability of Proxy Materials

for the Shareholder Meeting to be Held on June 3, 2021

The accompanying Avalara, Inc. Proxy Statement and the 2020 Annual Report of Avalara, Inc. are available at

http://www.astproxyportal.com/ast/22225

Proxy Summary

This proxy summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement before voting. For more complete information regarding Avalara’s performance in 2020, you should review our annual report on Form 10-K for the fiscal year ended December 31, 2020.

Virtually Attend and Vote at Annual Meeting


Meeting Date	Time	Meeting Website Address	Record Date
June 3, 2021	10:00 a.m. (Pacific Time)	https://web.lumiagm.com/238702773	April 9, 2021

Voting Matters and Board Recommendations


Proposal	Subject Matter	Board Recommendation

Proposal 1	Election of Directors	FOR each nominee

Proposal 2	Advisory Vote to Approve Named Executive Officer Compensation	FOR

Proposal 3	Ratification of Appointment of Independent Registered Public Accounting Firm	FOR

Voting Methods in Advance of the Annual Meeting

Your vote is important. Even if you plan to virtually attend the 2021 annual meeting, please vote right away using one of the following voting methods. Make sure to have your Notice of Internet Availability of the Proxy Materials, proxy card, or voting instruction form in hand and follow the instructions.

LOGO

About Avalara, Inc.

Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the U.S. and around the world in Brazil, Europe, and India.

Highly Qualified Class III Director Nominees

The Board of Directors (the “Board”) currently consists of nine members serving three-year staggered terms. Three directors are to be elected at the annual meeting, each to serve until the 2024 annual meeting of shareholders or the earlier to occur of such director’s death, disqualification, resignation, or removal as a Class III director or the appointment of such director’s successor. The Board has re-nominated the following Class III directors for new three-year terms:

Name

Age

Director

Since

Independent

Committee
Memberships

Primary Occupation

Other Public

Company Boards

Marion Foote

May 2011

Yes

Audit

Independent business advisor

Rajeev Singh

March 2017

Yes

Compensation and Leadership Development

CEO of Accolade

Accolade

Kathleen Zwickert

January 2019

Yes

Compensation and Leadership Development

Former Chief People Officer at NetSuite (now Oracle NetSuite)

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Key Principles of 2020 Named Executive Officer Compensation Program

See “Compensation Discussion and Analysis” for key compensation matters for 2020, including more detail on the following:



✓ What we do		û What we don’t do

✓ Independent Compensation and Leadership Development Committee ✓ Independent compensation advisor ✓ Evaluate market compensation data; annually review peer group ✓ Use a pay-for-performance philosophy ✓ Reasonable severance ✓ Double trigger change in control for employment agreements ✓ Maintain stock ownership guidelines ✓ Annual succession planning ✓ Annual review of compensation risk and risk mitigation ✓ Regularly review share utilization ✓ Annual Say on Pay vote		û No guaranteed bonuses, except new hire inducements û No pension/defined benefit, supplemental executive retirement, or nonqualified deferred compensation plans û Effective for 2021, we discontinued the perquisites previously provided to our Chief Executive Officer, except for those available on the same basis to all U.S. employees û No tax reimbursements, except for certain perquisites û No repricing underwater stock options without shareholder approval û No hedging or pledging permitted

Independent Director Leadership and Balanced Governance Practices

We are committed to good corporate governance appropriate to the company and our shareholders. Highlights include:

✓

Seven independent directors out of nine directors

✓

Fully independent Board committees with key oversight roles

✓

Lead Independent Director with meaningful authority

✓

Board gender diversity with four female directors, two of whom are chairs of Board committees

✓

Average director age of 59, with reasonable tenure

✓

No director overboarding

✓

Annual Board and committee performance evaluations

✓

Active Board and committee oversight of operations, strategy, and material risks

✓

No dual class voting stock

✓

No poison pill

✓

Robust governance policies

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iii

Table of Contents


PROPOSAL NO. 1: ELECTION OF CLASS III DIRECTORS			2

NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS			3

Sources of Director Nominations			3

Highly Qualified and Experienced Board			3

Specific Qualifications, Attributes, Skills, and Experience Regarding Our Nominees and Directors			4

CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE			7

Corporate Governance Guidelines – Key Principles of our Board			7

Code of Business Conduct and Ethics – Establishing Our Company’s Culture of Compliance			7

Board Leadership Through Partnership of Board Chairperson and Lead Independent Director			7

The Fundamental Role of Risk Oversight by our Board and Committees			7

Environmental, Social, and Governance Oversight			9

Dedicated Board and Committee Members – Meetings and Attendance			9

Lead Independent Director Presides Over Non-Employee Director Meetings			9

Stakeholder Communications with Directors			9

Substantial Majority of Directors Determined Independent			9

BOARD COMMITTEES			11

Audit Committee			11

Compensation and Leadership Development Committee			12

Nominating and Corporate Governance Committee			13

DIRECTOR COMPENSATION			14

CORPORATE RESPONSIBILITY AND SUSTAINABILITY			17

EXECUTIVE OFFICERS			19

COMPENSATION DISCUSSION AND ANALYSIS			20

Executive Summary			20

Executive Compensation Philosophy and Objectives			25

Shareholder Engagement and Responsiveness			25

2020 Compensation-Setting Process			27

Compensation Elements			29

Reasonable Severance and Change in Control Benefits			35

Other Compensation Policies Supporting Shareholder Alignment			36

Tax Implications			37

Compensation Risk Assessment			38

REPORT OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE			39

NAMED EXECUTIVE OFFICER COMPENSATION TABLES			40

2020 Summary Compensation Table			40

2020 Grants of Plan Based Awards Table			42

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table			42

2020 Outstanding Equity Awards at Fiscal Year-End			43

2020 Option Exercises and Stock Vested			44

Potential Payments Upon Termination or Change in Control			44
CEO Pay Ratio			48

EQUITY COMPENSATION PLAN INFORMATION			50

PROPOSAL NO. 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION			51

REPORT OF THE AUDIT COMMITTEE OF THE BOARD			52

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PRINCIPAL SHAREHOLDERS			53

AUDIT COMMITTEE MATTERS			55

Principal Accountant Fees and Services			55

Pre-Approval Policies and Procedures			55

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			56

PROPOSAL NO. 3: RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021			57

GENERAL INFORMATION ABOUT THE MEETING			58

ADDITIONAL INFORMATION			62

Shareholder Proposals for the 2022 Annual Meeting of Shareholders			62

No Delinquent Section 16(a) Reports			62

Available Information			62

Electronic Delivery of Shareholder Communications			63

TRANSACTION OF OTHER BUSINESS			64

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255 South King Street, Suite 1800

Seattle, WA 98104

PROXY STATEMENT FOR THE 2021 ANNUAL MEETING OF SHAREHOLDERS

Information about Solicitation and Voting

This proxy statement is being furnished to the shareholders of Avalara, Inc. (“Avalara,” “we,” “us,” “our,” or the “Company”), a Washington corporation, in connection with the solicitation of proxies by our Board for use at the annual meeting of shareholders to be held as a virtual meeting only, accessible at https://web.lumiagm.com/238702773, on June 3, 2021 at 10:00 a.m. (Pacific Time) (the “Annual Meeting”), and at any adjournments or postponements thereof. At the Annual Meeting, holders of our common stock will be asked to vote upon: (i) the election of three Class III directors nominated by our Board to serve until the annual meeting of shareholders to be held in 2024, or the earlier to occur of such director’s death, disqualification, resignation, or removal as a Class III director or the appointment of such director’s successor; (ii) the advisory approval of the compensation of our named executive officers; and (iii) the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. We are not aware of any other matters that will be brought before the shareholders for a vote at the Annual Meeting; however, shareholders may be asked to consider and vote upon other business as may properly come before the Annual Meeting or before any adjournments or postponements thereof. If any other matter is appropriately brought before the Annual Meeting, the persons named in the proxy card intend to vote as the Board recommends or, if the Board gives no recommendation, according to their best judgment, to the extent permitted by applicable law.

The Notice of Internet Availability of Proxy Materials and this proxy statement for the Annual Meeting and the accompanying form of proxy were first distributed and made available on the internet to shareholders on or about April 20, 2021. An annual report for the fiscal year ended December 31, 2020 (the “2020 Annual Report”) is available with this proxy statement and can be accessed by following the instructions in the Notice of Internet Availability of Proxy Materials.

Internet Availability of Proxy Materials

In accordance with U.S. Securities and Exchange Commission (“SEC”) rules, we are using the internet as our primary means of furnishing proxy materials to shareholders. Consequently, most shareholders will not receive paper copies of our proxy materials. We will instead send these shareholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including this proxy statement and the 2020 Annual Report, and voting via the internet. The Notice of Internet Availability of Proxy Materials also provides information on how shareholders may vote by mail and includes instructions on how to obtain paper copies of our proxy materials if they so choose. We believe this rule makes the proxy distribution process more efficient, less costly, and conserves natural resources.

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Proposal No. 1: Election of Class III Directors

As of the date of this proxy statement, our Board consists of nine directors. Our articles of incorporation and bylaws provide for a classified Board, divided into three classes. Based on the criteria noted below, our Board has determined, upon the recommendation of the Nominating and Corporate Governance Committee, to re-nominate three Class III directors, consisting of Ms. Foote, Mr. Singh, and Ms. Zwickert, for election at the Annual Meeting, each to serve until the annual meeting of shareholders to be held in 2024, or the earlier to occur of such director’s death, disqualification, resignation, or removal as a Class III director or the appointment of such director’s successor. Three of the continuing directors are Class I directors, whose terms will expire at our 2022 annual meeting of shareholders, and three of the continuing directors are Class II directors, whose terms will expire at our 2023 annual meeting of shareholders.

The election of the Class III directors will be determined by the three nominees receiving the greatest number of “FOR” votes.

Each of the nominees has consented to be named in this proxy statement and has agreed to serve if elected. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee or nominees designated by the affirmative vote of a majority of the present Board. Alternatively, the Board may leave the position vacant or reduce the size of the Board.

There are no family relationships between any of our directors, nominees, or executive officers. There also are no arrangements or understandings between any director, nominee, or executive officer and any other person pursuant to which he or she has been or will be selected as a director and/or executive officer.

We believe each of the Board’s nominees meets the qualifications, skills, and expertise established by the Board for continuing service on the Board, including regarding areas that are critical to the Company’s strategy and operations. We also believe that such nominees, combined with the qualifications, skills, and expertise of the remaining directors of the Board, will position the Board to continue to serve the best interests of the shareholders and Company.

THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR

THE ELECTION OF MARION FOOTE, RAJEEV SINGH, AND KATHLEEN ZWICKERT AS CLASS III DIRECTORS.

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Nominations Process and Director Qualifications

Sources of Director Nominations

Candidates for nomination to our Board are selected by our Board based on the recommendation of our Nominating and Corporate Governance Committee in accordance with the committee’s charter, our articles of incorporation and bylaws, our Corporate Governance Guidelines, and criteria discussed below. The Nominating and Corporate Governance Committee considers current directors for re-nomination. In addition, the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. The Nominating and Corporate Governance Committee also will consider candidates recommended by shareholders for nomination by the Company for election as directors. In recommending candidates for nomination, the Nominating and Corporate Governance Committee considers candidates recommended by directors, officers, employees, shareholders, and others, using the same criteria to evaluate all candidates.

Nominations by shareholders intending to run a director slate in opposition to Company nominees must be submitted in accordance with our bylaws. Please refer to “Additional Information—Shareholder Proposals for the 2022 Annual Meeting of Shareholders.”

Highly Qualified and Experienced Board

With the goal of developing a diverse, experienced, and highly-qualified Board, the Nominating and Corporate Governance Committee is responsible for developing and recommending to our Board the desired qualifications, expertise, and characteristics of members of our Board, including the specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership to our Board and any specific qualities or skills that the committee believes are necessary for one or more of the members of our Board to possess.

Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected identified candidates as appropriate. Candidates for the Board are generally selected based on desired skills and experience in the context of the existing composition of the Board and needs of the Board and its committees at that time, including the requirements of applicable SEC and New York Stock Exchange rules. When considering candidates for nomination, the Nominating and Corporate Governance Committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, skills, financial and other expertise, breadth of experience, knowledge about our business or industry, and ability to devote adequate time and effort to responsibilities of the Board in the context of its existing composition. Directors should possess the highest personal and professional ethics, integrity, and values and be committed to representing the long-term interest of the shareholders.

Although we do not maintain a specific policy with respect to board diversity, we believe that our Board should be a diverse body, and our Nominating and Corporate Governance Committee considers the diversity of its directors and nominees in terms of knowledge, experience, background, skills, expertise, and other demographic factors when considering the nomination of directors and in assessing the performance of our Board and committees during the annual Board and committee evaluation process.

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Specific Qualifications, Attributes, Skills, and Experience Regarding Our Nominees and Directors

The following table sets forth, as of April 20, 2021, the name and age of each director of the Company and the standing committees of the Board and their members. Messrs. Ingram and McFarlane do not serve on any standing committees:

Class III Directors



Name	Age	Class⁽¹⁾	Audit Committee	Compensation and Leadership Development Committee⁽²⁾	Nominating and Corporate Governance Committee⁽³⁾
Marion Foote	75	III	C
Rajeev Singh*	52	III		M
Kathleen Zwickert	53	III		C
Continuing Directors

Name	Age	Class⁽¹⁾	Audit Committee	Compensation and Leadership Development Committee⁽²⁾	Nominating and Corporate Governance Committee⁽³⁾
Edward Gilhuly	61	I			C
Scott McFarlane	64	I
Tami Reller	56	I	M	M
William Ingram	64	II
Brian Sharples	60	II		M	M
Chelsea Stoner	47	II	M		M

Member

Chair

Mr. Singh has served as our Lead Independent Director (as defined below) since October 23, 2019.

(1)

The terms of Class III directors (if elected) will expire at the 2024 annual meeting of shareholders. The terms of Class I directors will expire at the 2022 annual meeting of shareholders. The terms of Class II directors will expire at the 2023 annual meeting of shareholders.

(2)

Ms. Reller and Mr. Sharples replaced Mr. Gilhuly and Ms. Stoner as members of the Compensation and Leadership Development Committee effective April 1, 2020. Following former director Justin Sadrian’s departure immediately prior to the 2020 annual meeting, the Compensation and Leadership Development Committee has consisted of four directors.

(3)

Mr. Sharples and Ms. Stoner joined the Nominating and Corporate Governance Committee effective April 1, 2020, on which date the size of the committee was increased from two to four directors. Following former director Justin Sadrian’s departure immediately prior to the 2020 annual meeting, the Nominating and Corporate Governance Committee has consisted of three directors.

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Biographies

Class III Director Nominees

Marion Foote has served as a member of our Board since May 2011. Ms. Foote is an independent business advisor and currently serves as a director of multiple private companies in the financial services, life sciences, and technology sectors. Ms. Foote previously served as a director of DLJdirect (now part of E*Trade) and Cascade Financial Corporation/Cascade Bank. Ms. Foote holds a B.A. in Economics from Smith College and an M.B.A. from Harvard Business School. Ms. Foote was selected to serve on our Board because of her significant experience as a director, including service on public company boards and the audit and finance committees of private company boards, her marketing and financial expertise, including service as a senior credit officer, senior vice president and head of specialized financial services, and treasurer, among other roles, her work in customer analytics, and her over four decades of executive experience in financial services and consulting.

Rajeev Singh has served as a member of our Board since March 2017 and as Lead Independent Director since October 2019. Since November 2015, Mr. Singh has served as the Chief Executive Officer and a member of the board of directors of Accolade (Nasdaq: ACCD), an on-demand healthcare concierge for employers, health plans, and health systems. Prior to Accolade, Mr. Singh co-founded Concur Technologies, a global leader in travel and expense management, and held multiple roles over a period of 20 years, including President, Chief Operating Officer, and member of the board of directors. Mr. Singh currently serves on the boards of directors of Amperity, a private company, and Seattle Children’s Hospital Foundation and previously served as a director of Apptio. Mr. Singh holds a B.S. in Manufacturing Administration from Western Michigan University. Mr. Singh was selected to serve on our Board because of his extensive experience in building and leading companies, as well as his background in technology innovation and significant operational and strategic expertise.

Kathleen Zwickert has served as a member of our Board since January 2019. Prior to her retirement in April 2017, Ms. Zwickert served as Chief People Officer at NetSuite (now Oracle NetSuite), a cloud computing company, from August 2013 to April 2017. Ms. Zwickert holds a B.A. in Economics from the University of California, Berkeley. Ms. Zwickert was selected to serve on our Board because of her significant experience with software and SaaS companies and management experience, especially related to talent management and executive compensation.

Class I Directors – Terms Expiring in 2022

Edward Gilhuly has served as a member of our Board since March 2011. Mr. Gilhuly has served as a managing partner at Sageview Capital, a private growth equity investment firm, since May 2006. Mr. Gilhuly currently serves as a director at private companies Elastic Path Software, Exaro Energy III, Demandbase, MetricStream, and Pantheon. Mr. Gilhuly serves on the board of Legrand (Euronext Paris: LR) and previously served on the board of directors of GoPro (Nasdaq: GPRO). Mr. Gilhuly also serves on the Board of Trustees of Duke University and is Chairman of the Board of the Duke Management Company. Mr. Gilhuly holds a B.A. in Economics and History from Duke University and an M.B.A. from Stanford University. Mr. Gilhuly was selected to serve on our Board because of his significant experience as a director of public companies, in corporate management, and in private equity and finance.

Scott McFarlane has served as a member of our Board since May 2004 and as the Chairman of our Board since March 2014. He also has served as our Chief Executive Officer since February 2007 and served as our President from March 2014 to March 2019. Mr. McFarlane served as our Chief Operations Officer from May 2004 to October 2010 and as our Secretary from May 2004 to September 2013. Mr. McFarlane currently serves on the board of directors of Expedition Travel Advisor, a private online travel platform for the adventure travel industry. Mr. McFarlane holds a B.A. in Economics from Claremont McKenna College. Mr. McFarlane was selected to serve on our Board because of the perspective and experience he brings as one of our founders and as our Chief Executive Officer.

Tami Reller has served as a member of our Board since July 2014. Ms. Reller has served as Chief Marketing, Digital and Experience Officer of United Healthcare, a health care company, since November 2017. Ms. Reller previously served as Executive Vice President of Optum, a health-services company, from September 2014 to November 2017,

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including Chief Marketing Officer from September 2014 to June 2016 and Chief Financial Officer from June 2016 to April 2017. Ms. Reller serves as a director of SPS Commerce (Nasdaq: SPSC). Ms. Reller holds a B.S. in Mathematics from Minnesota State University Moorhead and an M.B.A. from St. Mary’s College. Ms. Reller was selected to serve on our Board because of her significant experience with software companies and her corporate finance experience, including through a prior chief financial officer position.

Class II Directors – Terms Expiring in 2023

William Ingram has served as a member of our Board since January 2020. He previously served as our Chief Financial Officer and Treasurer from December 2015 to March 2020. Prior to joining the Company, he served as Interim Chief Financial Officer of Khan Academy, a provider of online learning resources, from April 2015 to December 2015. Mr. Ingram also held various executive roles at Leap Wireless International, the parent company of Cricket Wireless, a wireless telecommunications provider, including Executive Vice President and Chief of Strategy from August 2007 to March 2014, and with the acquiring company, AT&T, from March 2014 to January 2015. Mr. Ingram currently serves on the board of directors of CCC Information Services, Paymentus, and Veniam. Mr. Ingram holds a B.A. in Economics from Stanford University and an M.B.A. from Harvard Business School. Mr. Ingram was selected to serve on our Board because of his service as our Chief Financial Officer and Treasurer for over four years, which contributes to the Board’s critical knowledge of our industry, financial reporting and accounting, risk management, and budgeting, as well as his experience specific to the Company’s operations, financial performance, and strategy.

Brian Sharples has served as a member of our Board since April 2020. Mr. Sharples is a serial entrepreneur, angel investor, and advisor to technology and e-commerce companies. He most recently served as Chairman of Twyla, an online fine art marketplace that he co-founded, from October 2016 to December 2018. Mr. Sharples previously served as Chief Executive Officer of HomeAway, a vacation rental marketplace he co-founded, from April 2004 to September 2016, as President from April 2004 to May 2014, and as Chairman from March 2011 to December 2015. He is currently on the board of directors of Yelp (NYSE: YELP), GoDaddy (NYSE: GDDY), and Ally Financial (NYSE: ALLY) and private companies RVShare, Fexy Media, and Moose Pond Acquisition Corp, NCV I (which has filed a registration statement with the SEC related to a potential initial public offering), and previously served as a director of RetailMeNot, HomeAway, and Kayak. Mr. Sharples holds a B.S. in Math and Economics from Colby College and an M.B.A. from the Stanford University Graduate School of Business. Mr. Sharples was selected to serve on our Board because of his senior executive leadership background, technology industry knowledge, and public company experience.

Chelsea Stoner has served as a member of our Board since June 2012. Ms. Stoner has served as a general partner at Battery Ventures, a venture capital firm, since February 2014. Ms. Stoner also served as a partner at Battery Ventures from June 2012 to February 2014 and as a principal from June 2006 to June 2012. Ms. Stoner serves as a director of private companies PageUp, Curve Dental, InCloudCounsel, Redox, and Behavioral Holdings. Ms. Stoner holds a B.S. in Chemical Engineering from Northwestern University and an M.B.A. from The University of Chicago. Ms. Stoner was selected to serve on our Board because of her extensive experience with cloud-based software companies and corporate finance, including service on the audit committees of private company boards.

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Corporate Governance Standards and Director Independence

Corporate Governance Guidelines – Key Principles of our Board

Our Board has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions, and other policies for the governance of the Company. Our Corporate Governance Guidelines are posted on our investor relations website, which is located at https://investor.avalara.com, under the heading “Governance.” Our Nominating and Corporate Governance Committee periodically reviews and assesses the adequacy of these guidelines and recommends any proposed changes to the Board for approval.

Code of Business Conduct and Ethics – Establishing Our Company’s Culture of Compliance

Our Board has adopted a Code of Business Conduct and Ethics that applies to all our employees (including executive officers and officers responsible for financial reporting), consultants, and directors. Our Code of Business Conduct and Ethics is posted on our investor relations website, which is located at https://investor.avalara.com, under the heading “Governance.” We intend to disclose any amendments to the Code of Business Conduct and Ethics, or any waivers of its requirements for executive officers and directors, on our website to the extent required by applicable law and New York Stock Exchange requirements.

Board Leadership Through Partnership of Board Chairperson and Lead Independent Director

In accordance with the Company’s bylaws, our Corporate Governance Guidelines provide that the Board may, in its discretion, elect a Chairperson of the Board from among the members of the Board. The Board has no policy mandating the separation of the offices of the Chairperson of the Board and the Chief Executive Officer and believes that it should maintain flexibility in determining a board leadership structure appropriate for us from time to time. However, our Corporate Governance Guidelines require that our Board appoint an independent Lead Director (the “Lead Independent Director”) whenever the Chairperson of the Board is not an independent director.

Our Board believes that we and our shareholders currently are best served by Scott McFarlane, our Chief Executive Officer, also serving as Chairman of our Board, considering his experience, expertise, knowledge of our business and operations, and strategic vision. As Chairman, Mr. McFarlane presides over meetings of the Board and holds such other powers and carries out such other duties as are customarily carried out by the chairperson of a board of directors.

In October 2019, our independent directors appointed Rajeev Singh to serve as our Lead Independent Director following the resignation of his predecessor. As Lead Independent Director, Mr. Singh presides over periodic meetings and executive sessions of our independent directors, collaborates with the Chairperson on agendas, schedules, and materials for Board meetings, serves as a liaison between our Chairman and the independent directors, and performs such additional duties as our Board may otherwise determine and delegate.

Our Board believes that its independence and oversight of management is maintained effectively through this leadership structure, the composition of our Board, independent Board committees with significant authority and oversight, and sound corporate governance policies and practices.

The Fundamental Role of Risk Oversight by our Board and Committees

Our Board is actively involved in the oversight of our risk management process. Our Board administers this oversight function directly through the Board as a whole, as well as through its standing committees that address risks inherent in their respective areas of oversight. The full Board, or the appropriate committee, receives reports on risks facing

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Avalara from our Chief Executive Officer and other management regarding our risk identification, management, and mitigation strategies. In particular:



Full Board		● Monitors and assesses strategic risk exposure, including reputational risks, crisis management, and product quality controls ● Reviews and approves management’s annual business plan and budget, strategy, and liquidity plans ● Reviews business developments, strategic plans and implementation, and financial results on at least a quarterly basis ● Reviews capital spending, financings, and capital market activities ● Oversees management succession planning ● Holds regularly scheduled executive sessions of independent directors ● Has significant interaction with business leaders and access to other key employees ● Has focused discussions regarding emerging topics

Audit Committee		● Oversees our major financial, treasury, audit, and other business risk exposures enterprise-wide and the steps our management has taken to monitor and mitigate these exposures ● Reviews accounting and financial reporting, and disclosure control and internal control processes ● Oversees the internal audit, legal, regulatory, and ethical compliance functions ● Consults regularly with our independent registered public accounting firm and internal audit function regarding risk management controls

Compensation and Leadership Development Committee		● Reviews and approves or recommends to the Board for approval executive officer compensation ● Ensures the alignment of incentive programs with the Company’s business and strategic plans ● Reviews whether any of our compensation policies and programs has the potential to encourage excessive risk-taking, and related risk mitigants ● Addresses matters related to human capital management for the general employee population

Nominating and Corporate Governance Committee		● Monitors and reviews our corporate governance structure, policies and procedures, as well as the Board and committee self-assessment process ● Oversees director succession planning and refreshment ● Oversees director onboarding process and continuing education ● Monitors and reviews our risk exposure and risk management policies and procedures dealing with information security matters

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Environmental, Social, and Governance Oversight

Our Board generally oversees our environmental, social, and governance (“ESG”) objectives and supports their implementation. Specific ESG topics are overseen by the Board committee generally responsible for the subject matter. For example, the Nominating and Corporate Governance Committee has oversight responsibility for the corporate governance aspects of ESG. Execution of the Company’s ESG strategy is overseen by the Company’s senior management team. Please see “Corporate Responsibility and Sustainability” below for more information about our ESG efforts and initiatives.

Dedicated Board and Committee Members – Meetings and Attendance

During 2020, our Board held six meetings; the Audit Committee held nine meetings; the Compensation and Leadership Development Committee held seven meetings; and the Nominating and Corporate Governance Committee held five meetings. Each incumbent director who was on the Board attended at least 75% of the aggregate number of meetings of the Board and the aggregate of all meetings of the committees on which he or she served that were held during the period in which such director served during 2020.

In addition, we encourage directors to attend our annual meetings of shareholders. Six of the nine directors

who then served on the Board attended our annual meeting of shareholders in 2020.

Lead Independent Director Presides Over Non-Employee Director Meetings

The non-employee directors meet in regularly scheduled executive sessions without management. Our Lead Independent Director, currently Mr. Singh, is the presiding director at these meetings.

Stakeholder Communications with Directors

Shareholders and interested parties who wish to communicate with our Board, non-management members of our Board as a group, a committee of our Board, or a specific member of our Board (including our Chairman or Lead Independent Director, if any) may do so by letters addressed to the attention of our Corporate Secretary.

All communications are reviewed by the Corporate Secretary and provided to the members of our Board as appropriate. Unsolicited items, sales materials, abusive, threatening, or otherwise inappropriate materials, and other routine items and items unrelated to the duties and responsibilities of our Board will not be provided to directors.

The address for these communications is:

Avalara, Inc.

c/o Corporate Secretary

255 South King Street, Suite 1800

Seattle, WA 98104

To submit concerns regarding accounting, internal accounting controls, or auditing matters, shareholders and other interested persons may also call the Company’s toll free, confidential hotline (United States and Canada: 833-440-0009; rest of world: 800-603-2869). Employees may submit such concerns on a confidential and anonymous basis. Communications made through the confidential hotline and certain communications to the Board to the extent relating to accounting, internal accounting controls, or auditing matters will be reviewed by the Audit Committee in accordance with procedures established by the Audit Committee with respect to such matters.

Substantial Majority of Directors Determined Independent

Our common stock is listed on the New York Stock Exchange. The listing rules of the New York Stock Exchange generally require that a majority of the members of a listed company’s board of directors be independent. In addition, the listing rules generally require that, subject to specified exceptions, each member of our Audit,

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Compensation and Leadership Development, and Nominating and Corporate Governance Committees be independent.

Audit Committee members and Compensation and Leadership Development Committee members also must satisfy additional independence rules established by the SEC and the listing rules of the New York Stock Exchange.

Our Board has reviewed its composition, the composition of its committees, and the independence of each director. Our Board has determined that none of our current directors or directors who served at any time during 2020 has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the New York Stock Exchange, except for Mr. McFarlane by virtue of his position as our Chief Executive Officer and Mr. Ingram by virtue of his former position as our Chief Financial Officer and Treasurer. Accordingly, a majority of our directors are independent, as required under applicable New York Stock Exchange rules. In making this determination, our Board considered the current and prior relationships that each director has or had with us and all other facts and circumstances our Board deemed relevant.

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Board Committees

Our Board has established an Audit Committee, a Compensation and Leadership Development Committee, and a Nominating and Corporate Governance Committee. Our Board may establish other committees to facilitate the management of our business from time to time. Each committee reports on its activities to the full Board at regular meetings or otherwise as appropriate.

Our Board has adopted a written charter for each of the Audit Committee, the Compensation and Leadership Development Committee, and the Nominating and Corporate Governance Committee that satisfies applicable rules of the SEC and the listing standards of the New York Stock Exchange. Copies of the charters for each committee are available on our investor relations website, which is located at https://investor.avalara.com, by clicking on “Committee Charters” under the heading “Governance.” The composition and responsibilities of each of the committees of our Board are described below. Members serve on these committees until their resignation or until otherwise determined by our Board.

The three committees are comprised solely of independent directors, as determined by the Board for purposes of the Board service generally and, as applicable, the additional independence rules for service on the Audit Committee and Compensation and Leadership Development Committee.

Audit Committee

Our Audit Committee consists of Marion Foote, Tami Reller, and Chelsea Stoner. The Chair of our Audit Committee is Ms. Foote. Our Board has determined that each of Ms. Foote, Ms. Reller, and Ms. Stoner is an “audit committee financial expert” within the meaning of SEC regulations. Our Board also has determined that each member of our Audit Committee has the requisite financial expertise under the applicable requirements of the New York Stock Exchange. In arriving at this determination, our Board has examined each Audit Committee member’s scope of experience and the nature of their employment history.

The Audit Committee’s primary functions include, among other things, the matters set forth below.

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Sole authority for appointing, compensating, retaining, and overseeing our independent registered public accounting firm

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Approving in advance all audit and non-audit services performed by our independent registered public accounting firm in accordance with applicable law, and the payment of related fees

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Evaluating annually the performance, qualifications, objectivity, and independence of our independent registered public accounting firm and deciding whether to retain its services

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Monitoring the rotation of partners on the engagement team of our independent registered public accounting firm

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Reviewing our annual and quarterly financial statements and reports and discussing the statements and reports with our independent registered public accounting firm and management

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Reviewing, with our independent registered public accounting firm, internal audit team, and management, significant issues that may arise regarding accounting principles and financial statement presentation, as well as matters concerning the design and implementation of our internal control functions

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Reviewing and approving, as appropriate, all related party transactions

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Overseeing management’s establishment and assessment of the effectiveness and adequacy of our internal control structure and procedures for financial reporting

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Establishing procedures for the receipt, retention, and treatment of complaints received by us regarding financial controls, accounting, or auditing matters

●

Reviewing and evaluating the performance of the Audit Committee and the adequacy of its charter

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Compensation and Leadership Development Committee

Our Compensation and Leadership Development Committee consists of Tami Reller, Brian Sharples, Rajeev Singh, and Kathleen Zwickert. The Chair of our Compensation and Leadership Development Committee is Ms. Zwickert.

The Compensation and Leadership Development Committee’s primary functions include, among other things, the matters set forth below.

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Determining, or recommending to the Board for approval, the compensation of our Chief Executive Officer and reviewing and approving corporate performance goals and objectives relevant to such compensation

●

Reviewing and approving, or recommending to the Board for approval, the compensation of our other executive officers

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Reviewing peer group and other market data to evaluate target annual compensation, compensation programs, and plan design against peer companies

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Making recommendations to our Board regarding the compensation of our directors

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Administering our equity incentive compensation plans and making recommendations to our Board regarding the adoption of and amendments to equity incentive compensation plans

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Approving awards under our equity compensation plans, subject to the procedures and guidelines with respect to such awards as adopted from time to time by our Board

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Monitoring and assessing risks associated with our compensation policies and consulting with our management on such risks

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Reviewing and evaluating the performance of the Compensation and Leadership Development Committee and the adequacy of its charter

The Compensation and Leadership Development Committee reviews and approves or recommends to the Board for approval all forms of compensation to be provided to the executive officers of the Company, as recommended by the Chief Executive Officer (other than with respect to his own compensation). The Compensation and Leadership Development Committee is not authorized to delegate these duties.

Pursuant to its charter, the Compensation and Leadership Development Committee is authorized, in its sole discretion, to retain a compensation consultant to assist the committee in carrying out its duties. For 2020 compensation, as it has done in prior years, the Compensation and Leadership Development Committee retained Compensia, an independent management consulting firm, to assist the Compensation and Leadership Development Committee in discharging its duties. For 2020 executive compensation, the Compensation and Leadership Development Committee retained Compensia to conduct a compensation analysis for executive officers and other executives, to make recommendations for changes based on our pay philosophy, business objectives, and shareholder expectations, and to support other ad hoc matters throughout the year. Compensia conducted a competitive market analysis that included published national survey sources of similarly sized companies augmented by proxy data of our peer group, consisting of companies with revenues of similar size to the Company or that are in similar lines of business. Compensia did not provide any other services to the Company and only received fees from the Company on behalf of the Compensation and Leadership Development Committee.

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Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee consists of Edward Gilhuly, Brian Sharples, and Chelsea Stoner. The Chair of our Nominating and Corporate Governance Committee is Mr. Gilhuly.

The Nominating and Corporate Governance Committee’s primary functions include, among other things, the matters set forth below.

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Reviewing and recommending to our Board criteria for selecting, and recommending persons to serve as, new members of our Board to fill any vacancies

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Reviewing and recommending nominees for our Board, including whether to re-nominate directors

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Considering any nominations of director candidates or shareholder proposals validly made by our shareholders

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Establishing, coordinating, and reviewing with the Chairperson of the Board criteria for the evaluation of Board and committee performance and oversight of the implementation of such process

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Recommending to our Board as to committee membership and chairs

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Reviewing and recommending to our Board corporate governance structure, principles, and policies

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Reviewing and monitoring risks associated with information security matters

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Reviewing and evaluating the performance of the Nominating and Corporate Governance Committee and the adequacy of its charter

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Director Compensation

Under our non-employee director compensation policy (the “Director Compensation Policy”) for 2020, each non-employee director was eligible to receive compensation for his or her service consisting of annual cash retainers and equity awards as described below.



Retainer	Amount ($)
Board
Cash		32,000
Annual equity retainer		150,000
Committee Chair
Audit		20,000
Compensation and Leadership Development		11,000
Nominating and Corporate Governance		7,500
Committee Member
Audit		7,500
Compensation and Leadership Development		5,000
Nominating and Corporate Governance		3,500
Lead Independent Director		15,000

Cash Compensation

Under the Director Compensation Policy, for 2020, all non-employee directors were entitled to receive the cash compensation described above, payable in quarterly installments at the end of the quarter for which services were provided. We generally reimburse our directors for their reasonable out-of-pocket expenses incurred in attending meetings of our Board and its committees.

Equity Compensation

Under the Director Compensation Policy, on the date of each annual meeting of our shareholders, each non-employee director who is a director immediately following the meeting automatically will be granted an equity award. For 2020, the equity award had a value of $150,000, which was allocated approximately evenly between stock options and restricted stock units (“RSUs”) granted under our 2018 Equity Incentive Plan, as may be amended from time to time (the “2018 Equity Plan”). The number of shares subject to the awards was determined based on the grant date fair value of the award, calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718”) (based on the valuation methodology we use to value stock options and RSUs for financial reporting purposes). Each annual award vests and becomes exercisable or payable, as applicable, upon the earlier of the one-year anniversary of the grant date or the day prior to our next annual meeting of shareholders occurring after the grant date, in each case subject to the non-employee director’s continued service through the vesting date, except as permitted below. Each annual award vests and becomes exercisable or payable, as applicable, upon a change in control, as defined in the 2018 Equity Plan.

The per share exercise price for stock options is equal to the closing price of our common stock on the grant date (or if the common stock is not trading on that date, the closing price on the last preceding date on which the common stock was traded). Each stock option expires ten years from the grant date, subject to earlier termination as set forth in the 2018 Equity Plan upon a termination of service.

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In the event that a non-employee director is initially elected or appointed on any date other than the date of an annual meeting of shareholders, the director will, instead, automatically receive the annual award on the date of initial election or appointment, except that the value of the award will be prorated to reflect the number of days that the director will serve based on a period of time commencing on the date of initial election or appointment and ending on the one-year anniversary of the previous annual meeting (the “prorated annual award”). In all other respects, the terms and conditions of the prorated annual award, including the vesting schedule, will be the same as the annual award granted to non-employee directors on the previous year’s annual meeting date.

In the event a non-employee director’s service terminates for any reason other than for cause, as defined in the 2018 Equity Plan, prior to the vesting date of an annual award and the non-employee director has served less than five continuous years as a director, the annual award will become vested as to a pro rata portion based on the number of full months of service that has elapsed between the grant date of the annual award and the non-employee director’s termination date. In the event a non-employee director’s service terminates for any reason other than for cause on or after five years of continuous service, the annual award will become fully vested upon termination. In the event of termination for cause, no portion of the annual award will accelerate in vesting.

2020 Director Compensation Table

The following table provides information regarding total compensation earned by our directors during the fiscal year ended December 31, 2020. Directors who also are our employees, such as Mr. McFarlane, our Chairman and Chief Executive Officer, receive no additional compensation for their service as directors. Similarly, Mr. Ingram did not receive additional compensation for his service as a director during the period in which he also was employed by the Company.

Messrs. McFarlane’s and Ingram’s executive compensation for 2020 is presented under “Named Executive Officer Compensation Tables – 2020 Summary Compensation Table.”



Name	Fees Earned or Paid in Cash ($)		Stock Awards⁽¹⁾ ($)		Option Awards⁽²⁾ ($)		Total ($)
Marion Foote		52,000		74,937		74,984		201,921
Edward Gilhuly		40,750		74,937		74,984		190,671
William Ingram⁽³⁾		23,912		74,937		74,984		173,833
Tami Reller		43,250		74,937		74,984		193,171
Justin Sadrian⁽⁴⁾		18,136		—		—		18,136
Brian Sharples		30,375		91,104		91,598		213,077
Rajeev Singh		52,000		74,937		74,984		201,921
Chelsea Stoner		43,375		74,937		74,984		193,296
Kathleen Zwickert		43,000		74,937		74,984		192,921

(1)

Amounts in this column represent the aggregate grant date fair value of RSUs granted during the fiscal year, as computed in accordance with ASC Topic 718.

(2)

Amounts in this column represent the aggregate grant date fair value of stock options granted during the fiscal year, as computed in accordance with ASC Topic 718, without regard to estimated forfeitures related to service-based vesting conditions.

(3)

Mr. Ingram was appointed to the Board on January 29, 2020 and was a named executive officer until his retirement as Chief Financial Officer and Treasurer of the Company effective March 31, 2020. Amounts in this row are also reported in the 2020 Summary Compensation Table.

(4)

Mr. Sadrian’s term as a director expired immediately prior to our 2020 annual meeting.

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As of December 31, 2020, non-employee directors held the following number of equity awards: Ms. Foote, 752 RSUs and 4,386 stock options; Mr. Gilhuly, 752 RSUs and 1,927 stock options; Mr. Ingram, 752 RSUs and 111,615 stock options (of which 109,688 stock options were granted to Mr. Ingram during employment with us as our Chief Financial Officer and Treasurer); Ms. Reller, 752 RSUs and 4,386 stock options; Mr. Sharples, 752 RSUs and 2,593 stock options; Mr. Singh, 752 RSUs and 4,386 stock options; Ms. Stoner, 752 RSUs and 4,386 stock options; and Ms. Zwickert, 752 RSUs and 1,927 stock options.

Changes to our Director Compensation Policy for 2021

Our Board regularly reviews the total compensation of our non-employee directors and each element of compensation under our Director Compensation Policy to ensure that it remains market competitive and aligned with the interests of our shareholders. Our Board amended the Director Compensation Policy in January 2021 to improve alignment of our director compensation practices with those of our peer group. Under the amended policy, the amounts of certain annual cash retainers and the value of the annual equity award increased and the equity awards to our non-employee directors will consist solely of restricted stock units beginning with the 2021 annual meeting of shareholders.

Non-Employee Director Equity Ownership Guidelines

Our Board has adopted stock ownership guidelines for our executive officers and non-employee directors which set minimum stock ownership requirements at a total value equal to five times such director’s annual cash retainer for Board service. Non-employee directors are expected to initially satisfy the guidelines five years following their initial election or appointment to the Board, or by December 31, 2024 for non-employee directors serving on July 25, 2019. As of April 9, 2021, all our currently serving non-employee directors were either in compliance with the stock ownership guidelines or were within the compliance period and making appropriate progress.

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Corporate Responsibility and Sustainability

Avalara is committed to being a good steward of the environment and social landscapes in which we operate to create a more sustainable world. More information about our ESG efforts and initiatives is available at investor.avalara.com/sustainability.

Our People

Company Culture

We believe our corporate culture provides an advantage in recruiting new employees and retaining our best talent, as well as driving behaviors across our entire organization that help us succeed. This culture is characterized in the many employees who embody our nine success traits: optimism, passion, adaptability, humility, fun, ownership, curiosity, urgency, and simplicity. The rallying point of our culture is the color orange. Our employees wear this color with pride every day, and we have trademarked the slogan “The Power of Orange.”

Employee engagement is critical to our success and a component of our executive and leadership bonus plan. Beginning in 2019, we engaged a leading polling and analytics firm to measure our employee engagement performance and have invested in company-wide initiatives to support our engagement goals. Please see “Compensation Discussion and Analysis—Annual Cash Incentive Bonus – Pay-for-Performance Aligned with Company Strategy” below for more information about the incorporation of employee engagement as a component of our executive and leadership bonus plan. We are committed to continuous improvement through our investments in coaching, mentorship, training, and other initiatives designed to support the well-being and development of our employees. These initiatives include an employee assistance program, commuter benefits, professional training and development platforms and opportunities, tuition reimbursement for eligible employees, and free and subsidized exercise and mindfulness programs.

In response to the COVID-19 pandemic, we launched several initiatives to support our global workforce. We provided a remote work stipend program to our employees. To support working parents, we bolstered our existing AvaKids program for the children of full-time Avalara employees to introduce weekly, virtual learning opportunities, programs, and events. The company also hosted virtual employee events, including yoga sessions, trivia games, contests, a global talent show, cooking classes, and other diverse event programming. As further support, we also launched an employee resource group for remote workers. To assess the impact of these and other Avalara pandemic initiatives, in 2020 we conducted employee surveys to help us understand how the company was addressing employee concerns specifically relating to the impact of the pandemic. For our efforts, we won in the “Virtual Wellbeing Program” category of Ragan’s 2021 Employee Communications Awards.

Diversity and Inclusion

We believe in the value of a diverse culture, beginning from the top as demonstrated by the presence of four women on our Board of Directors, and extending into our commitment to a diverse workforce. We have a number of employee resource groups that enhance our inclusive and diverse culture, including Women of Avalara, Veterans of Avalara, Prism (LGBTQ+), Access (disability), and Ujima (African American/Black). We continue to recruit technical talent in diverse communities, including by engaging as a sponsor of the annual Grace Hopper Celebration (the world’s largest gathering of women technologists) and AfroTech (a multicultural tech conference that brings leaders in technology and business together to exchange ideas and build a strong Black technology community). We require anti-harassment training as part of our new employee onboarding process and regularly for all employees, and we also conduct managing bias training for our leadership and executive teams.

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Environmental Sustainability

Avalara is committed to responsible management of our energy consumption, waste, and recycling methods. We encourage recycling and composting in our offices, provide water dispensers in many of our office locations to encourage use of reusable containers, donate or recycle equipment we no longer use, provide compostable materials and/or reusable dishware and cutlery, and provide a public transportation stipend to employees and encourage alternative modes of transportation. Our offices are located near public transportation hubs and provide end-of-trip amenities including bike storage, locker rooms, and showers. Avalara Hawk Tower, the company’s Seattle headquarters, achieved Silver LEED.

In addition, we are continually looking at ways to include more sustainable practices in our everyday work and are committed to partnering with vendors who share our commitment to strong corporate responsibility and sustainability practices.

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Executive Officers

Our executive officers and their positions and respective ages as of April 20, 2021 are:

Our executive officers and key employees serve at the discretion of the Board. Biographical information for Mr. McFarlane is provided above.

Ross Tennenbaum has served as our Chief Financial Officer and Treasurer since April 2020 and previously served as Executive Vice President of Strategic Initiatives from March 2019 to March 2020. Prior to joining Avalara, Mr. Tennenbaum served as a vice president and later managing director in the technology investment banking division at Goldman Sachs, a financial services firm, from September 2014 to March 2019. Mr. Tennenbaum holds a B.S. with concentrations in Finance and Economics from the University of Florida and an M.B.A. from The Wharton School of the University of Pennsylvania.

Amit Mathradas has served as our President and Chief Operating Officer since March 2019. Prior to joining Avalara, from November 2015 to March 2019, Mr. Mathradas served as General Manager and Head of North American Small Business at PayPal, a digital payments company, where he led the company’s small business segment, managing teams responsible for acquisition, activation, cross-sell, and retention of small businesses. Prior to PayPal, from September 2013 to October 2015, Mr. Mathradas served as Senior Vice President and General Manager of Web.com, an internet services offering, focusing on small businesses. Mr. Mathradas holds a bachelor’s degree from Wittenberg University and an M.B.A. from Northwestern University’s Kellogg School of Management.

Alesia Pinney has served as our Chief Legal Officer (formerly entitled “General Counsel”) since April 2013, our Secretary since September 2013, and an Executive Vice President since March 2014. Ms. Pinney currently serves on the boards of directors of Sharkbite Games, a private video game development studio, and Winc, a private omni-channel winery. Ms. Pinney holds a B.A. in Business Administration in Accounting from Seattle University, a Master of Taxation from the University of Denver, College of Law, and a J.D. from Seattle University School of Law.

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides information about the compensation for the following current and former executive officers in 2020 (our “named executive officers”), including the material elements of our executive compensation program, an overview of our executive compensation philosophy, and how and why our Compensation and Leadership Development Committee made specific compensation decisions for our named executive officers.

Our 2020 named executive officers are:


Name		Position
Scott McFarlane		Chairman and Chief Executive Officer
Ross Tennenbaum⁽¹⁾		Chief Financial Officer and Treasurer
William Ingram⁽²⁾		Former Chief Financial Officer and Treasurer
Amit Mathradas		President and Chief Operating Officer
Alesia Pinney		Executive Vice President, Chief Legal Officer, and Secretary

(1)

Mr. Tennenbaum was appointed as our Chief Financial Officer and Treasurer effective April 1, 2020.

(2)

Mr. Ingram retired as Chief Financial Officer and Treasurer of the Company effective March 31, 2020.

Executive Summary

Our Business

Avalara is a leading provider of tax compliance automation for businesses of all sizes. Every business, regardless of size, faces a bewildering and burdensome array of constantly shifting transaction tax collection, reporting, and remittance obligations imposed by a patchwork of local, regional, state, and national taxing authorities. The rise of omnichannel commerce and international trade has increased this compliance burden. Avalara’s mission is to eliminate this burden and allow companies to focus on their core operations. We offer a leading suite of cloud-based solutions to assist companies with transactional tax and related compliance requirements. This multi-product platform – the Avalara Compliance Cloud – consists of calculation, returns, compliance document management, licensing and registration, tax content, and insight solutions. Our vision is for the Avalara Compliance Cloud to be the leading, category-defining, global cloud compliance platform.

2020 Business Results

In 2020, we delivered another strong year of financial performance and execution despite the on-going COVID-19 pandemic and macroeconomic uncertainties, reflecting the adaptability and resiliency of our business. We achieved strong revenue growth driven by the addition of new and expansion of existing customers, and we generated record free cash flow during the year. Our significant fiscal year 2020 financial and operational results include the following highlights.

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Total revenue was $500.6 million, an increase of 31% year-over-year

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GAAP gross margin was 71%, compared to 70% in fiscal year 2019. Non-GAAP gross margin was 74%, compared to 72% in fiscal year 2019

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GAAP operating loss was $62.0 million, compared to $55.9 million in fiscal year 2019. Non-GAAP operating loss was $3.1 million, compared to $14.4 million in fiscal year 2019

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Net cash provided by operating activities was $42.6 million, compared to $22.2 million provided by operating activities in fiscal year 2019. Free cash flow was $34.0 million, compared to $12.0 million in fiscal year 2019

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Total core customers increased to 14,890, up from 12,150 at the end of 2019

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We define a core customer as a unique account identifier in our U.S. billing systems (multiple companies or divisions within a single consolidated enterprise that each have a separate unique account identifier are each treated as separate customers); that is active as of the measurement date; and for which we have recognized, as of the measurement date, greater than $3,000 in total revenue during the last twelve months.

To supplement our results determined in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating loss, and free cash flow. For a full reconciliation for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP, please see pages 48-51 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Return to Shareholders

We have delivered significant cumulative total return, as evidenced by the chart below, which shows how a $100 investment in Avalara on June 15, 2018 (the date our common stock commenced trading on the New York Stock Exchange) would have grown to $366.91 on December 31, 2020. The chart also compares the cumulative total return on an investment in our common stock to the same investment in the S&P 500 Index and the RDG Software Composite over the same period.

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The stock price performance graph is not necessarily indicative of future price performance.

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2020 Executive Compensation Highlights

In 2020, we took the following key actions with respect to named executive officer compensation:



Use of Peer Group Data		● We utilized a formal peer group and other market data as a reference point in setting target annual compensation elements, total target annual compensation, and other elements of our executive compensation program.

Moderate Changes to Target Cash Compensation		● Base salary increases (ranging from 0% to 10.6%) were primarily to ensure competitive base salaries among the peer companies for whom we compete for talent. ● Mr. McFarlane’s target annual bonus, as a percentage of his annual base salary, was unchanged from his 2019 percentage. In connection with his promotion to Chief Financial Officer, Mr. Tennenbaum’s target annual bonus percentage was increased by 15 percentage points over his 2019 percentage. Mr. Mathradas’ and Ms. Pinney’s target annual bonus percentages were increased by 5 percentage points over their respective 2019 percentages. ● Mr. McFarlane’s base salary increased by 5.3% to $500,000 to remain market-competitive.

Pay-for-Performance for Annual Incentive Bonus		● The cash-based 2020 annual executive and leadership bonus plan (“2020 Incentive Plan”) continued the historical practice of setting performance goals that were challenging and designed to appropriately incentivize strong performance. Actual bonus payouts for executives can vary below and above target, depending on company performance against the performance metrics. ● Earned bonuses for the named executive officers ranged from 141% to 143% of their target bonuses. Mr. McFarlane earned 143% of his target annual incentive bonus for 2020.

Long-Term Equity Grants		● Long-term equity awards that vest over multiple years comprise the largest component of each named executive officer’s compensation. ● Mr. McFarlane’s aggregate grant value for 2020 equity awards, comprising stock options and restricted stock units, was $7,797,548 due to retention needs, his individual performance, and to incentivize his continued long-term stewardship of the Company.

Elimination of CEO Perquisites		● Certain perquisites to our Chief Executive Officer were discontinued by the end of 2020 and in 2021 he will no longer receive any perquisites not available on the same basis to all our U.S. employees.

New CFO – Mr. Tennenbaum		● Mr. Tennenbaum became our Chief Financial Officer and Treasurer effective April 1, 2020 and executed our customary employment agreement for executive officers.

In 2020, we conducted our first Say-on-Pay vote and commenced active engagement with shareholders to obtain additional feedback on our compensation program and practices and other governance practices. Actions we took in

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response to this engagement are discussed under “Shareholder Engagement and Responsiveness.” For 2021, these actions included the transition to performance share units in lieu of stock options for executive officers and elimination of perquisites to our Chief Executive Officer.

Executive Compensation Policies and Practices

We seek to maintain executive compensation policies and practices that reflect sound governance standards. Our Compensation and Leadership Development Committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals, given the nature of our business and the competitive market in which we compete for executive talent.

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_✓ What we do		_û What we don’t do

✓ Independent Committee. The Compensation and Leadership Development Committee consists solely of independent directors. ✓ Independent Compensation Advisor. The Compensation and Leadership Development Committee engages an independent compensation consultant. ✓ Use of Peer Group and Market Compensation Data. We review compensation data of peer companies, supplemented by other market data, to ensure competitive positioning while retaining significant flexibility. We annually review the composition of our peer group. ✓ Pay-for-Performance Philosophy. Annual incentive compensation is at-risk and tied to achievement of financial and operational goals. 80% of our named executive officers’ target cash bonus is based on objective corporate performance measures. Stock options tie value to stock price appreciation. Performance share units payable only if financial performance goals are met over a multi-year period were introduced in 2021. ✓ Reasonable Severance. We have reasonable, market competitive severance and change in control benefits. ✓ Double-Trigger Change in Control for Employment Agreements. Our employment agreements provide change in control benefits only upon certain qualifying terminations. ✓ Robust Stock Ownership Guidelines. We require all executive officers to maintain minimum stock ownership at significant levels to reinforce management alignment with shareholders. ✓ Annual Succession Planning. The Compensation and Leadership Development Committee annually reviews and discusses with the Board the retention of executive officers and oversees succession planning. ✓ Annual Review of Compensation Risk and Risk Mitigation. The Compensation and Leadership Development Committee annually reviews our compensation programs to confirm that they do not encourage excessive or inappropriate risk-taking. Our compensation program mitigates undue risk by including caps on the maximum level of payouts, multiple performance metrics, and Board and management processes to identify risk. ✓ Regular Reviews of Share Utilization. Management and the Compensation and Leadership Development Committee regularly evaluate share utilization levels by reviewing the cost and dilutive impact of equity compensation. ✓ Annual Say-on-Pay Vote. ✓ Limited Perquisites. Effective for 2021, we discontinued the perquisites previously provided to our Chief Executive Officer, except for those available on the same basis to all US. employees.		û No Guaranteed Bonuses. We do not provide guaranteed bonuses, except for limited inducements for new hires. û No Pension/Defined Benefit or Supplemental Executive Retirement Plans. û No Tax Reimbursements on Severance, Change in Control, and Other Payments, except Certain Legacy Perquisites. Perquisites to our Chief Executive Officer that are not available on the same basis to all our employees and related tax-gross ups were fully discontinued in 2021. û No Repricing of Underwater Stock Options without Stockholder Approval. û No Hedging or Pledging Permitted. We prohibit our employees, including our executive officers, and non-employee members of our Board from hedging or pledging our securities.

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Executive Compensation Philosophy and Objectives

The Compensation and Leadership Development Committee recognizes that our compensation philosophy must address the shared interests and varied focus areas of multiple parties, including employees, the Board, shareholders, and other stakeholders. Our executive compensation program is designed to achieve the following primary objectives.

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Attract, motivate, and retain highly qualified executive officers committed to our success and future growth

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Reward the achievement of key performance measures that are linked to the Company’s business strategy

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Reinforce alignment of management with the goal of creating long-term shareholder value

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Maintain reasonable internal pay parity, but reward outstanding individual, team, and Company results

The Compensation and Leadership Development Committee seeks to set both individual pay components and total compensation competitively. While market data is reviewed for context, actual pay decisions reflect the Compensation and Leadership Development Committee’s discretion and judgement based on the following factors.

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Scope of role, promotion, impact on organization, individual performance, experience, skills, and criticality

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Company performance on key metrics

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Pay parity considerations across different executives at similar levels, scope, and experience

Shareholder Engagement and Responsiveness

2020 Say-on-Pay Results and Engagement with Shareholders

Company management, the Compensation and Leadership Development Committee, and the Board value the opinions of our shareholders. We held our first annual Say-on-Pay vote since becoming a public company at our 2020 annual meeting. At our 2020 annual meeting of shareholders, we received approximately 61% shareholder support for our Say-on-Pay vote proposal, which was significantly below our expectations.

Company management welcomes conversations and regularly talks with shareholders. In response to the results of the Say-on-Pay advisory vote, we asked shareholders owning approximately 39% of our shares (as of December 31, 2020) to help us better understand shareholder voting decisions, and to provide additional feedback on our compensation program and practices and other governance topics. Our efforts resulted in discussions about these matters with shareholders owning approximately 31% of shares (as of December 31, 2020). Company participants in these discussions included our Chief Financial Officer and Treasurer, and Vice President of Investor Relations.

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Our shareholders expressed continued support for management and the overall strategy and performance of the Company, and many shareholders noted that our programs are consistent with programs of companies of similar public tenure. They also provided constructive feedback about our compensation plans. The shareholder feedback we received was reported to our Board. The Compensation and Leadership Development Committee carefully considered this feedback and either implemented or recommended to the Board for implementation several changes to our compensation program structure and disclosure practices, described in more detail below.


What we heard		How we responded
Equity awards are not performance-based		Beginning in 2021, our executive officers’ long-term equity awards will include performance share units (“PSUs”) in lieu of stock options. PSUs will be payable only if threshold performance goals are met over a multi-year period. ● Our CEO’s long-term equity awards will be weighted 60% PSUs and 40% time-based RSUs ● Other executive officers’ equity awards will be weighted 50% PSUs and 50% time-based RSUs
Desire for increased disclosure about our annual cash incentive compensation program, including award accelerators and individual performance considerations		We expanded our annual cash incentive compensation program disclosure to more fully demonstrate its pay-for-performance alignment. We have included additional detail around award accelerators and individual performance considerations.
Concern with CEO perquisites		In 2020, we discontinued all perquisites for our CEO that are not available on the same basis to all employees.
Magnitude of CEO equity award		The Compensation and Leadership Development Committee and the Board carefully considered shareholder feedback regarding the CEO equity award. In conjunction with the shift to PSU grants in lieu of stock options, the Board determined that the magnitude of the CEO equity award was appropriate to align his long-term interests with those of our shareholders.

The Compensation and Leadership Development Committee otherwise reviewed our compensation program and determined that the program meets the Company’s objectives, including motivating and retaining our executive officers and aligning management’s interests with the goal of creating long-term shareholder value and rewarding the achievement of key performance measures that are linked to the Company’s business strategy. Following our 2020 Say-on-Pay vote, equity awards will be granted that become payable based on the continued financial success of the Company, measured by revenue compound annual growth rate (the primary metric on which Avalara is valued) for 2021 grants. Please see “Compensation Discussion and Analysis—Long-Term Equity Incentive Compensation” below for more information.

The changes to executive officer equity awards were made in early 2021 and as a result will be reflected in the compensation disclosures in next year’s proxy statement. The compensation decisions reflected in this year’s proxy statement tables reflect approvals that were made in early 2020, prior to receiving the results of last year’s Say-on-Pay vote. We intend to hold our Say-on-Pay vote on an annual basis and, as we did in 2020, will continue to take into consideration the results of the advisory votes on our executive compensation program.

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2020 Compensation-Setting Process

Role of Compensation and Leadership Development Committee

The Compensation and Leadership Development Committee reviews and approves or recommends to the Board for approval all forms of compensation to be provided to the executive officers of the Company. The Compensation and Leadership Development Committee also has overall responsibility for overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies, and practices applicable to our Chief Executive Officer and other executive officers.

Role of Compensation Consultant

For 2020, the Compensation and Leadership Development Committee retained Compensia, a compensation consulting firm, to continue to serve as its compensation consultant and approved the terms of such engagement. Compensia has been engaged as a compensation consultant since 2013. Among other matters impacting our 2020 compensation program for named executive officers, Compensia assisted in establishing our 2020 peer group, evaluated our compensation philosophy, provided a total direct compensation analysis for executive officers and other senior management based on our peer group and other market data, made recommendations on compensation for newly hired executives, and made suggestions regarding target compensation and compensation programs based on our pay philosophy, business objectives, and shareholder alignment.

Role of Management

The Compensation and Leadership Development Committee also works with members of our management, including our Chief Executive Officer. Our management assists the Compensation and Leadership Development Committee by providing information on corporate and individual performance, and management’s perspective and recommendations on compensation matters, including performance metrics and programs generally.

Typically, our Chief Executive Officer will make recommendations to the Compensation and Leadership Development Committee regarding compensation for our executive officers, except with respect to his own compensation. The Compensation and Leadership Development Committee utilizes our Chief Executive Officer in this capacity because he has the most involvement in, and knowledge of, the Company’s business goals, strategies, and performance, the overall effectiveness of the management team, and each person’s individual contribution to the Company’s performance. Other key leaders also provide valuable context for the Company’s human capital management efforts as well as an understanding of peer group and general market practices regarding compensation. At the beginning of each year, our Chief Executive Officer reviews the performance of each of our other executive officers based on the executive officer’s level of success in accomplishing the business objectives established for him or her for the prior year and his or her overall performance during that year, as well as potential for advancement, retention needs, and other subjective factors. The Compensation and Leadership Development Committee reviews and discusses these factors and recommendations with our Chief Executive Officer and uses them as one factor in determining and approving the compensation for our executive officers. Our Chief Executive Officer also attends meetings of our Board and the Compensation and Leadership Development Committee at which executive compensation matters are addressed to the extent requested, except with respect to discussions involving his own compensation. Decisions with respect to our Chief Executive Officer’s compensation are made by our Compensation and Leadership Development Committee in executive session or, as in 2020, by the full Board except Mr. McFarlane.

Use of Comparative Peer Group and Market Data

For purposes of assessing our executive compensation against the competitive market as well as our compensation programs, plan design, and total equity utilization, the Compensation and Leadership Development Committee reviews and considers the compensation levels and practices of a select group of peer companies. The 2020 peer group consists of technology companies that are similar to us based on revenue, market capitalization, industry sector, and other relevant factors. The Compensation and Leadership Development Committee intends to review our

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compensation peer group each year and adjust its composition if warranted. The companies in the 2020 peer group were determined, in consultation with Compensia, using the following criteria.

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Revenue: approximately 0.4x to 2.5x our last four fiscal quarter revenue as of October 2019 of approximately $323 million (approximately $129 million to $808 million)

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Market Capitalization: approximately 0.33x to 3.0x our market capitalization as of October 2019 of approximately $6.3 billion (approximately $2.1 billion to approximately $19.0 billion)

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Industry Sector: cloud-based software companies (primary focus) and other software companies (secondary focus)

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Other Factors: high revenue growth, high market capitalization to revenue multiple, business-to-business model, and located in Pacific Northwest or Silicon Valley

In selecting the following 2020 peer group, the Compensation and Leadership Development Committee included companies that resulted in us being near the median of the group, in terms of both revenue and market capitalization.


Alteryx	Coupa Software	Paylocity Holding	Twilio
Anaplan	DocuSign	PROS Holdings	Workiva
AppFolio	HubSpot	Q2 Holdings	Zendesk
BlackLine	New Relic	RingCentral	Zuora
Cornerstone OnDemand	Paycom Software	Smartsheet

The following companies in the 2019 peer group were not selected for the 2020 peer group: Apptio and Ellie Mae, due to being acquired; and Benefitfocus, Bottomline Technologies, and SPS Commerce, due to low market capitalization, low revenue growth, not being located in a comparable geography, and, with respect to Benefitfocus and SPS Commerce, lower revenue.

Compensation Setting

In setting the elements of compensation for our named executive officers, the Compensation and Leadership Development Committee reviewed the base salaries, annual incentives, total cash compensation, long-term incentives, and total direct compensation of our named executive officers compared to those compensation elements for similarly situated executives at the companies in our compensation peer group. To analyze the compensation practices of our peer group, Compensia provided compensation data at the 25th, 50th, and 75th percentiles for our compensation peer group.

This compensation data was then used as a reference point for the Compensation and Leadership Development Committee to assess our current compensation levels in the course of its deliberations on compensation forms and amounts. The Compensation and Leadership Development Committee maintains significant flexibility to respond to evolving business conditions and to determine individual pay and did not benchmark any compensation element to a specific percentile. Rather, the Compensation and Leadership Development Committee relies on its collective experience and knowledge, its past practices, our overall performance, and other considerations it deemed relevant when setting our executives’ compensation. See the factors set forth above under “– Executive Compensation Philosophy and Objectives.” No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable. We also consider potential risks in our business when designing and administering our executive compensation program.

We review the base salary levels, annual cash bonus opportunities, and long-term equity incentive compensation opportunities of our executive officers and all related performance criteria at the beginning of each year, or more frequently as warranted.

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Compensation Elements

Key Elements, Objectives and Features of Compensation Elements

In 2020, our executive compensation program included base salaries, annual incentive bonuses, and long-term equity compensation in the form of stock options and RSUs. As mentioned above, PSUs based on revenue goals have been introduced for 2021 as a new long-term equity award in replacement of stock options. The below table describes how each component is intended to satisfy the primary objectives of our executive compensation program.



Element	Type	Compensation Form	Objectives	Key Features

*Base Salary*	Fixed	Cash	● Designed to attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market	● Initially established pursuant to employment agreement ● Reviewed annually ● Historically year-to-year changes have been limited and based upon peer group benchmarking and discretionary factors

*Annual Cash Incentive Bonus*	Variable	Cash	● Designed to promote the success of the Company by rewarding executives and eligible employees for outstanding results related to Company strategy, as well as promoting motivation and retention of high performing employees	● Bonus target as a percentage of base salary ● 80% corporate performance metrics (four core financial metrics and one customer metric, weighted equally), and additional performance measures that can increase payout ● 20% individual performance metric

Long-Term Equity Incentive Compensation	Variable		● Designed to align the long-term interests of our executives and our shareholders, support retention, encourage equity ownership, and provide motivational value

		RSUs	● RSUs provide full value upon vesting to address retention needs	● For 2020, 70% of target equity award, with four-year time-based vesting

		Stock Options	● Stock options provide focus on upside and further value creation to shareholders	● For 2020, 30% of target equity award, with four-year time-based vesting ● In 2021, replaced with PSUs

		PSUs (new for 2021)	● Vest based on achievement of revenue goals over a three-year measurement period (with certain annual interim vesting possible)	● For 2021 awards, to be 60% of target equity award for the CEO and 50% for other executive officers

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Base Salary

Generally, we establish the initial base salaries of our executive officers through arm’s-length negotiation at the time of hire, taking into account their position, qualifications, experience, prior salary level, and the base salaries of our other executive officers. Thereafter, the Compensation and Leadership Development Committee reviews the base salaries of our executive officers each year as part of its annual compensation review.

In January 2020, the Compensation and Leadership Development Committee conducted its annual compensation review. The Board approved a base salary increase for Mr. McFarlane, upon the recommendation of the Compensation and Leadership Development Committee, and the Compensation and Leadership Development Committee approved a base salary increase for Ms. Pinney, each effective April 1, 2020, to bring their base salaries to levels that were competitive with those of similarly situated executives at the companies in our 2020 peer group.



Name	2019 Annual Base Salary ($)		2020 Annual Base Salary ($)		Increase (%)
Scott McFarlane		475,000		500,000		5.3
Ross Tennenbaum⁽¹⁾		-		380,000		-
William Ingram		330,000		330,000		-
Amit Mathradas		450,000		450,000		-
Alesia Pinney		302,768		335,000		10.6

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Mr. Tennenbaum was appointed as our Chief Financial Officer and Treasurer effective April 1, 2020.

Annual Cash Incentive Bonus – Pay-for-Performance Aligned with Company Strategy

In January 2020, the Compensation and Leadership Development Committee, with input from management, adopted our 2020 Incentive Plan, which was designed to promote the success of the Company by rewarding executives and eligible employees for outstanding business results, as well as promoting retention of high performing employees. A significant portion of the 2020 Incentive Plan was based on the Company’s actual achievement against pre-established target levels for corporate performance measures. An executive’s annual cash bonus payment is determined by multiplying the executive’s target bonus percentage by the percentage earned based on the levels at which the applicable performance goals are achieved.

For purposes of the 2020 Incentive Plan, target annual incentive opportunities were set as a percentage of each participant’s base salary. In January 2020, the Compensation and Leadership Development Committee reviewed the target annual cash bonus opportunities of our executive officers, taking into consideration the recommendations of our Chief Executive Officer (except with respect to his own target annual cash bonus opportunity) as well as other factors described under “– Executive Compensation Philosophy and Objectives” above. Following this review, the Compensation and Leadership Development Committee decided to maintain Mr. McFarlane’s target annual incentive opportunities at his 2019 percentage. Mr. Tennenbaum’s target annual incentive opportunity as a percentage of base salary increased from 60% to 75% in connection with his appointment as Chief Financial Officer and Treasurer. Mr. Mathradas’ and Ms. Pinney’s target annual bonus percentages were increased by 5 percentage points over their respective 2019 percentages. The dollar amount of the bonus targets increased for executive officers to the extent base salaries were increased, as described above.

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The 2020 target annual incentive opportunities for our named executive officers were:



Name	2020 Target Annual Cash Incentive Opportunity (% of base salary)		2020 Target Annual Cash Incentive Opportunity ($)
Scott McFarlane		100		493,750
Ross Tennenbaum		75		275,625
William Ingram		n/a		n/a
Amit Mathradas		85		382,500
Alesia Pinney		60		196,165

Due to Mr. Ingram’s retirement in 2020, he was not eligible to receive an annual cash bonus.

Corporate Performance Measures

The Company used five corporate performance metrics, weighted equally, to measure corporate performance under the 2020 Incentive Plan. The metrics were (i) new and upsell bookings (defined as an estimate of the 12-month value of new or upgraded signed contracts for our services), (ii) GAAP revenue, (iii) non-GAAP gross margin (defined as the difference between revenue and non-GAAP cost of goods sold divided by revenue), (iv) operating cash flow (a measure of cash generated by our normal business operations and calculated in accordance with GAAP), and (v) a metric reflecting customers at risk (a leading indicator of customer satisfaction, measured both as an average during 2020 to promote improvement throughout the year, and at year-end to promote a good starting state for 2021). Collectively, these five components comprise 80% of the participant’s total target performance bonus. The Compensation and Leadership Development Committee believes that these metrics provide incentives to achieve, and are strong indicators of our successful execution of, our annual operating plan.

Achievement of each performance metric is determined independently of any other metric. Achievement of target level for a corporate performance metric results in 100% funding for that corporate performance metric. Achievement between the threshold and maximum performance for a metric results in a bonus funding percentage on a sliding scale between 25% and 200% of target, respectively, for such corporate performance metric. In January 2020, our Compensation and Leadership Development Committee set the payout levels for each of the corporate performance metrics, as set forth below. All threshold levels for 2020 performance represent an increase from 2019 actual performance. The Compensation and Leadership Development Committee considered the target performance levels challenging but achievable.

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The payouts at different percentages of achievement for each of the 2020 corporate performance metrics were:


2020 Corporate Performance Metrics ($ in 000s)

Metric	25%			50%			75%			100% (target)			150%			200% (maximum)			Weight in Corporate Performance Metric

New and Upsell Bookings	$	207,000		$	210,000		$	214,000		$	218,000		$	228,000			$236,000			20%

Revenue	$	460,000		$	470,000		$	480,000		$	485,000		$	497,000			$515,000			20%

Non-GAAP Gross Margin		71.5	%		72.0	%		72.5	%		73.0	%		74.0	%		75.0	%		20%

Operating Cash Flow	$	6,000		$	9,000		$	12,000		$	15,000		$	25,000			$ 35,000			20%

Customers at Risk 2020 Average		17.87			17.50			17.14			16.77			16.22			15.68			10%

2020 Year-End		17.50			16.77			16.04			14.95			14.22			13.13			10%

Corporate Metrics Weight in Total Target Performance Bonus																				80%

Once the total percentage achievement of the corporate performance metrics is determined, this percentage may be increased if certain additional performance metrics, referred to as “accelerators,” are satisfied. Specific accelerators are selected to incent behaviors consistent with high-performing teams and the achievement of critical business objectives that facilitate long-term success. For 2020, three accelerators applied: (i) employee engagement at or above 4.04 out of 5.00 by the end of 2020, measured by a leading third-party polling and analytics firm; (ii) achievement of a “magic number” target of 1.0 or higher, calculated as a ratio of estimated recurring revenue for every sales and marketing dollar spent; and (iii) annual revenue churn below 3.5%. Achievement of an accelerator results in a 10% increase in the aggregate funding percentage of the corporate performance component. For example, if achievement of the five corporate performance metrics is calculated to be at 120% and one accelerator target is met (i.e., 10%), final Company performance would be at 132%.

Individual Performance

Under the 2020 Incentive Plan, an evaluation of each executive officer’s individual performance comprises 20% of the total target performance bonus. Generally, this evaluation involved, in the case of our Chief Executive Officer, an evaluation of his performance by the Compensation and Leadership Development Committee and the Board and, in the case of our other executive officers, an evaluation by our Chief Executive Officer and discussion with the Compensation and Leadership Development Committee. These evaluations were based on a review of the various individual performance goals established for our executive officers during our annual performance evaluation process. Such performance goals reflect each individual executive officer’s position or function within the company and included factors that reflected corporate or departmental goals or specific operational goals within an executive officer’s area of responsibility. Generally, individual performance is based on a determination of whether the individual is a high contributor (100% to 130% payout of the individual performance factor), core contributor (up to 100% of the individual performance factor), or low contributor (0% to 50% of the individual performance factor).

2020 Annual Cash Bonus Determinations

In January 2021, the Compensation and Leadership Development Committee, based on its evaluation, as well as the recommendation of our Chief Executive Officer for certain components, determined the cash bonus payments for our executive officers pursuant to the 2020 Incentive Plan. The plan requires participants to be actively employed as of the bonus payment date, which was March 15, 2021.

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The Compensation and Leadership Development Committee reviewed our actual performance against the five corporate performance metrics and determined that we had achieved 117% funding.



Metric	100% (target)		Actual Results		Earned (%)		Weight (%)			Total Weighted Attained (%)
New and Upsell Bookings ($ in 000s)		$218,000		$212,940		68.4%
Revenue ($ in 000s)		$485,000		$500,569		159.9%
Non-GAAP Gross Margin		73.0%		73.6%		131.3%
Operating Cash Flow ($ in 000s)		$ 15,000		$ 42,618		200.0%
Customers at Risk (2020 Average)		16.77		19.57		0.0%
Customers at Risk (2020 Year-End)		14.95		19.51		0.0%
Corporate Performance Metrics						112%		80	%		90%
Impact of Accelerators⁽¹⁾						34%		80	%		27%
Total Corporate Performance Metrics											117%

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The Compensation and Leadership Development Committee determined that all three accelerators were achieved.

Our Chief Executive Officer evaluated the achievement of each other executive officer against his or her individual performance objectives and formulated a recommendation for each such executive officer’s annual cash bonus for consideration by the Compensation and Leadership Development Committee. These recommendations were based on our Chief Executive Officer’s assessment of each individual’s contributions against the personal performance objectives during the year, taking into consideration key financial, operational, and strategic objectives over which each individual has responsibility and which would help us accomplish our 2020 business plan. In the case of our Chief Executive Officer, the Compensation and Leadership Development Committee evaluated the achievement of the Chief Executive Officer against his individual performance objectives, including in relation to the execution of our 2020 business plan and the financial, operational, and strategic goals included therein, and formulated a recommended annual cash bonus payment for him. The Compensation and Leadership Development Committee determined that Mr. McFarlane earned 130% of his individual performance factor due to the following factors: his leadership in navigating the business continuity, operational, and employee well-being challenges presented by the COVID-19 pandemic, all while guiding the Company to a year in which operational performance exceeded expectations; hiring and managing a world class executive team; and steering the Company to successfully complete three acquisitions. Additionally, the Compensation and Leadership Development Committee confirmed that the following named executive officers earned the respective individual performance measurement based on accomplishment of the following objectives: Mr. Mathradas earned 120% due to his leadership guiding the operations and sales teams though an unprecedented pandemic and delivery of improved marketing efficiency, improved customer experience, and strong financial results in most categories globally; Mr. Tennenbaum earned 125% due to his leadership of the finance function during his first year as the Chief Financial Officer and management of our strategic initiative group and the Company’s August 2020 public offering; and Ms. Pinney earned 120% due to her leadership of the legal function, management of three acquisitions, supervision of the August 2020 public offering, and oversight of the fiscal representative business in Europe.

Based on these evaluations, together with the achievement of the corporate performance-based metrics, the Compensation and Leadership Development Committee approved the following annual cash incentive payments for our named executive officers for 2020. Due to Mr. Ingram’s retirement in 2020, he was not eligible to receive an annual cash bonus.

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Name	Target Annual Cash Incentive Payment ($)		Actual Annual Cash Incentive Payment ($)		% of Target Annual Cash Incentive Paid
Scott McFarlane		493,750		705,075		143%
Ross Tennenbaum		275,625		390,836		142%
Amit Mathradas		382,500		538,560		141%
Alesia Pinney		196,165		276,201		141%

Long-Term Equity Incentive Compensation

Beginning in 2019, the Board implemented an annual equity award program for executive officers and other key employees to address retention and incentive objectives. We believe that long-term equity incentive compensation aligns the interests of our executives and our shareholders, supports retention, encourages stock ownership, and provides motivational value.

In March 2020, the Compensation and Leadership Development Committee approved stock option and RSU awards to our executive officers, all of which are to be settled in shares of our common stock. The number of shares of our common stock subject to the stock option and RSU awards granted to our executive officers was determined by the Compensation and Leadership Development Committee. Differentiation was made among our executive officers based on the Compensation and Leadership Development Committee’s review of the competitive market data for their respective positions, the size of the equity awards previously granted to them in anticipation of our IPO, and, with respect to Mr. McFarlane, retention needs, his individual performance, and appropriately incentivizing his continued long-term stewardship of the Company.

The aggregate grant values of the March 2020 awards were allocated 30% to stock options and 70% to RSUs. Due to Mr. Ingram’s retirement in 2020, he was not eligible to receive an equity award in his capacity as an executive officer.

The stock option and RSU awards granted to our named executive officers in March 2020 were as follows:



Name	Stock Option Award (#)		Aggregate Grant Value ($)⁽¹⁾		Restricted Stock Unit Award (#)		Aggregate Grant Value ($)⁽¹⁾		Total Target Equity Grant Value ($)
Scott McFarlane		84,940		2,745,000		80,266		6,405,000		9,150,000
Ross Tennenbaum		31,395		1,020,000		29,825		2,380,000		3,400,000
Amit Mathradas		27,701		900,000		26,316		2,100,000		3,000,000
Alesia Pinney		11,634		378,000		11,053		882,000		1,260,000
William Ingram		0		0		0		0		0

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The Compensation and Leadership Development Committee approved a grant value for each award, and then converted the grant value to a number of stock option or RSU awards using an approximation of grant date fair value. The fair values were based on the average closing price of our common stock in accordance with our equity grant strategy. Pursuant to that strategy, we use the average closing price for the 30 days prior to the award’s grant date unless there is a 10% or greater difference between the 30-day average and the closing price on the grant date. In such cases, including for 2020, we instead use the 10-trading day average closing price of our common stock prior to the grant date. Therefore, the aggregate grant values in this table differ from the grant date fair value for such awards set forth in the “2020 Summary Compensation Table.”

Vesting

The time-based RSU awards granted to our named executive officers vest over a four-year period as follows: 20% of the shares vest on the one-year, two-year, and three-year anniversaries of the vesting commencement date (March 5

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for 2020 grants), and the remaining 40% of the shares vest on the four-year anniversary, subject to continuous service with us through each vesting date.

The time-based stock option awards granted to our named executive officers vest over a four-year period as follows: 25% of the shares vest on the one-year anniversary of the vesting commencement date and 1/48th of the shares vest each month thereafter, subject to continuous service with us through each vesting date.

Vesting requires continued employment or service until the vesting date, with limited exceptions in the event of certain qualifying terminations of employment, such as termination without cause or termination by the executive officer for good reason, described in “Potential Payments Upon Termination or Change in Control.”

Welfare and Health Benefits

The Company offers a salary deferral 401(k) plan for its U.S. employees, including its executive officers. The plan allows employees to contribute a percentage of their annual compensation, subject to limitations imposed by the Internal Revenue Service. The plan also allows the Company to make a matching contribution, subject to certain limitations. Additional benefits available to our executive officers include medical, dental, and vision insurance, an employee assistance program, health and dependent care flexible spending accounts, a commuter benefit program, health savings accounts, basic and voluntary life and accidental death and dismemberment insurance, and disability insurance. All of these benefits are provided to our executive officers on the same basis as to all of our employees. In 2020, Mr. McFarlane was also eligible to receive additional benefits described directly below.

Perquisites and Other Personal Benefits

Perquisites or other personal benefits are not a significant component of our executive compensation program. Perquisites are offered in situations where we believe it is appropriate to assist an individual in the performance of their duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During 2020, none of our named executive officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more for each individual, except Mr. McFarlane. Mr. McFarlane received HSA employer contributions, health life insurance premiums paid by the Company (including reimbursement for health insurance premiums paid by Mr. McFarlane in prior years), employee-recognition trip expenses, and Company-paid rent for a Seattle apartment for his use while working in Seattle. Use of the apartment by Mr. McFarlane ceased to be available in October 2020. Named executive officers, including Mr. McFarlane, also received certain tax-gross ups on perquisites. For 2021, all of the foregoing perquisites not available on the same basis to all of our employees and related tax gross-ups were eliminated for Mr. McFarlane and he will no longer receive such benefits.

Reasonable Severance and Change in Control Benefits

Employment Agreements with Each Named Executive Officer

We have written employment agreements with each of our named executive officers, which agreements were approved by the Compensation and Leadership Development Committee or our Board. There is significant competition for talent among software companies and our employment agreements are designed to induce new hires and retain our executive officers, establish target annual compensation and new hire compensation, provide for severance and change in control benefits, and contain confidentiality and general release of legal claims benefits to the Company. We believe the severance and change in control benefits in our employment agreements are reasonable and necessary to ensure that executive officers have the security to make decisions that are in the best long-term interest of the shareholders and to provide continuity of management in the event of an actual or threatened change in control.

Each of our named executive officers has also executed our standard form of proprietary information and inventions agreement. The employment agreements provide that employment with us is “at will.” See “Potential Payments Upon Termination or Change in Control—Executive Employment Agreements” for a description of the material terms of the employment agreements, including specified payments in connection with certain termination events.

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We do not provide any tax gross ups to cover personal income taxes that may apply to any severance or change in control benefits. If any payments or benefits payable under the employment agreements will be subject to an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), we will pay to the named executive officer either (1) the full amount of such payments or benefits or (2) the full amount, reduced by the minimum amount necessary to prevent any portion from being an excess parachute payment within the meaning of Code Section 280G, whichever results, on an after-tax basis, in the greater amount payable to the named executive officer.

Equity Incentive Plans

Under the 2018 Equity Plan, equity awards held by participants fully accelerate in the event of a change in control if equity awards are not continued, assumed, or substituted (or otherwise not exercised or settled prior to such event). This benefit provides participants assurance that the equity awards of the Company will provide the intended purposes, including ensuring that participants have the security to make decisions that are in the best long-term interest of the shareholders and to provide continuity of management in the event of an actual or threatened change in control. See “Potential Payments Upon Termination or Change in Control” for a description of the material terms of the 2018 Equity Plan and 2006 Equity Incentive Plan (the “2006 Equity Plan”), including specified vesting or acceleration of equity awards in connection with certain termination events.

Equity Award Acceleration Policy for Death or Disability

In July 2019, the Compensation and Leadership Development Committee approved the Equity Award Acceleration Policy, which applies to the Chief Executive Officer, other executive officers who have been employed for at least five years, and specified other employees, and provides applicable parties with full accelerated vesting of time-based equity awards in the event of termination due to death or disability.

Other Compensation Policies Supporting Shareholder Alignment

Robust Stock Ownership Guidelines

All of our executive officers and non-employee members of the Board hold shares of common stock and/or stock-based equity awards that further align their interests with those of our shareholders. Our stock ownership guidelines for our executive officers and non-employee members of the Board require the following minimum stock ownership requirements:


Chief Executive Officer	Other Executive Officers	Non-Employee Directors

6X⁽¹⁾ annual base salary	2X⁽¹⁾ annual base salary	5X annual cash retainer

(1)

Prior to July 28, 2020, stock ownership requirements were five times annual base salary for the Chief Executive Officer and four times annual base salary for other executive officers.

Executive officer ownership levels are determined at least annually using the applicable base salary divided by the average closing price of the common stock as of the applicable measurement date. Executive officers, including the Chief Executive Officer, have five years following their initial appointment to their position to attain the required stock ownership level (or, for the Chief Executive Officer and other executive officers serving on the effective date of the initial stock ownership policy, the later of December 31, 2020 and five years following initial appointment to their position). Shares that count toward the stock ownership requirement include those (i) held directly by the executive, (ii) subject to vested and in-the-money stock options held by the executive, (iii) held by the executive’s spouse or immediate family members residing in the executive’s household, and (iv) held in trust for the economic benefit of the executive or the executive’s spouse or children.

Executive officers must show progress of at least 20% per year until the required stock ownership level is satisfied. Once the required stock ownership level is met or after the initial compliance period, the executive officer must

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maintain sufficient equity ownership to satisfy the guidelines. All our currently serving named executive officers were either in compliance with our stock ownership guidelines or were within the compliance period and making appropriate progress.

Hedging and Pledging Prohibitions

As part of our Insider Trading Policy, our employees, including our executive officers, and the non-employee members of our Board are prohibited from trading in publicly traded options, such as puts, calls, and other derivative securities, with respect to our securities. This includes any hedging or similar transaction designed to decrease the risks associated with holding shares of our common stock. In addition, our employees, including our executive officers, and the non-employee members of our Board are prohibited from holding our common stock in a margin account or pledging our securities. Our named executive officers and directors had no outstanding pledges as of December 31, 2020.

Timing and Pricing of Equity-Based Grants

The Compensation and Leadership Development Committee and the Board do not coordinate the timing of equity-based grants to employees with the release of material non-public information. In addition, the 2018 Equity Plan prohibits us from reducing the exercise prices of outstanding options, replacing underwater stock options, or undertaking similar actions that would be treated as a repricing under U.S. generally accepted accounting rules without first obtaining shareholder approval.

Tax Implications

Deductibility of Executive Compensation

Section 162(m) of the Code generally prohibits public companies from deducting annual compensation paid in excess of $1,000,000 to any “covered employee.” For this purpose, a “covered employee” includes all our named executive officers.

However, companies that became publicly held prior to December 20, 2019, such as the Company, may not be subject to the Section 162(m) of the Code annual deduction limitation during a limited transition period following the IPO (the “Reliance Period”). For the Company, this period could expire as late as our 2022 annual shareholder meeting. Under this rule, compensation attributable to equity grants that are made, settled, or paid during the Reliance Period may not be subject to the Code Section 162(m) annual deduction limitation. However, the Reliance Period may end sooner in the event of a “material modification” to our equity plans, within the meaning of Section 162(m).

Our Compensation and Leadership Development Committee may consider the impact of Section 162(m) of the Code in approving the compensation of our executive officers; however, our Compensation and Leadership Development Committee may approve compensation that may not be deductible for federal income tax purposes if it believes that such compensation is in our best interests or the best interests of our shareholders. While the transition rule for newly public companies may help minimize the effect of the Section 162(m) deduction limitation, a portion of our executive officer compensation may not be fully deductible for federal income tax purposes. In addition, due to uncertainties surrounding the application of Section 162(m) of the Code, including under the transition relief, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will in fact so qualify.

Change in Control Payments

Each of the named executive officers has an employment agreement with the Company that entitles him or her to certain payments and benefits upon termination of his or her employment by the Company without cause or by the executive officer for good reason, including in connection with a change in control. If any payments or benefits to

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which he or she would be entitled to receive pursuant to the terms of the applicable agreement or otherwise in connection with a change in control of the Company would result in all or a portion of such payments or benefits being deemed “parachute payments” under Section 280G of the Code and subject to the excise tax imposed by Section 4999 of the Code, such payments and benefits will be reduced to the minimum extent necessary so that they would not result in the imposition of an excise tax under Section 4999 of the Code, provided that no reduction will be made if the named executive officer would receive a greater net after-tax amount absent such reduction. Additional information about the employment agreements with our named executive officers is provided under “Potential Payments Upon Termination or Change in Control—Executive Employment Agreements.”

Other

The Company does not pay tax gross-ups or other reimbursement payments with respect to the excise tax imposed on any person as a result of the application of Sections 4999 or 409A of the Code, except for tax-gross ups on certain perquisites.

Compensation Risk Assessment

Our management regularly assesses and discusses with the Compensation and Leadership Development Committee our compensation programs, policies, and practices for our employees as they relate to our risk management. In this regard, the Compensation and Leadership Development Committee annually undertakes a risk review of our employee compensation programs, policies, and practices to determine whether these programs, policies, and practices contain features that might create undue risks or encourage unnecessary and excessive risk-taking that could threaten our value. Based upon this review, the Compensation and Leadership Development Committee believes that any risks arising from such programs, policies, and practices are not reasonably likely to have a material adverse effect on us.

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Report of the Compensation and Leadership Development Committee

The Compensation and Leadership Development Committee has reviewed and discussed with management the Compensation Discussion and Analysis provided above. Based on its review and discussions, the Compensation and Leadership Development Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and Avalara’s Annual Report on Form 10-K for our fiscal year ended December 31, 2020.

Members of the Compensation

and Leadership Development

Committee:

Kathleen Zwickert (Chair)

Tami Reller

Brian Sharples

Rajeev Singh

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Named Executive Officer Compensation Tables

2020 Summary Compensation Table

The following table provides information regarding the compensation of our named executive officers during the fiscal years ended December 31, 2020, 2019, and 2018, as applicable. Titles are those held as of December 31, 2020.



Name and Principal Position	Fiscal Year		Salary⁽¹⁾ ($)		Bonus⁽²⁾ ($)			Stock Awards⁽³⁾ ($)		Option Awards⁽⁴⁾ ($)		Non-Equity Incentive Compensation⁽⁵⁾ ($)		All Other Compensation⁽⁶⁾ ($)		Total ($)
Scott McFarlane		2020		493,750		—			5,399,494		2,398,054		705,075		212,949		9,209,322
Chairman		2019		475,000		—			2,848,826		6,755,858		822,225		82,095		10,984,004
and Chief		2018		450,000		—			—		1,107,000		656,550		62,494		2,276,044
Executive Officer
Ross Tennenbaum		2020		367,500		—			2,006,328		891,075		390,836		5,700		3,661,439
Chief Financial Officer and Treasurer
William Ingram		2020		83,769		500			74,937		74,984		—		29,612		263,802
Former		2019		330,000		—			—		3,193,960		342,738		5,600		3,872,298
Chief Financial		2018		330,000		—			—		311,716		282,942		2,700		927,358
Officer and Treasurer⁽⁷⁾
Amit Mathradas		2020		450,000		—			1,770,277		786,229		538,560		9,690		3,554,756
President and Chief Operating Officer		2019		373,558		300,000	⁽⁸⁾		4,275,209		1,787,456		511,326		67,419		7,314,967
Alesia Pinney		2020		326,942		—			743,535		330,204		276,201		11,139		1,688,021
Executive Vice President, Chief Legal Officer, and Secretary		2019		302,768

SEC Form DEF 14A filed by Avalara, Inc.