Forrester Research
Annual Report 2019

Plain-text annual report

2019 Annual Report Notice Of 2020 Annual Meeting & Proxy Statement FORRESTER RESEARCH 2019 ANNUAL REPORT To shareholders and members of the Forrester community: 2019 marked an important milestone in Forrester’s history, as we exceeded $400 million in revenue and took the next step on our voyage to grow to $1 billion in revenue over the next five years. In 2019, Forrester expanded its offerings, integrated three acquisitions, and intensified its efforts to help companies thrive in the age of tech-empowered customers. We grew pro forma revenue 32%, pro forma EPS by 21%, and client count by 22%, positioning us well for the journey ahead. Growth Ambitions To reach our long-term aspirations, we are building an engine that drives shareholder value by increasing company revenue and profitability on a sustained basis. This engine has three components: 1. 2. 3. A customer-centric sales force: a sales force that can renew research contracts at high levels, expand the size of existing contracts (what we call enrichment), and bring new companies into the client fold. Product innovation: the creation of new products and continual improvement of existing products. Strategic acquisitions: the continued pursuit of inorganic opportunities to grow our value and enrich our portfolio. As the company scales, we will generate larger volumes of free cash that we will reinvest in the revenue growth engine. Sales Force Effectiveness As part of our customer engagement model launched two years ago, Forrester continues to build a robust sales team focused on optimizing customer value and success. In 2019, sales force headcount expanded from 528 to 698, primarily through acquisitions. The customer engagement model has been operational for two years, and the new sales structure is yielding results: 1. The sales force has shown 12 quarters of increasing productivity. 2. Client retention was up 1% from 2018. We serve our premier accounts with an integrated team of three executives: a client executive who manages the overall account, a customer success manager who ensures that the client is getting the highest value from our services, and a high-level solution partner who consults with the client to match their challenges with Forrester products and services. Our decision to serve smaller companies from our in-house sales center in Nashville, Tenn., has rightsized our services and offerings for those clients. The SiriusDecisions sales force exclusively sold the Sirius research product in 2019, and we experienced a higher-than- expected attrition rate in that sales force. In 2020, we have integrated our sales teams, with all salespeople selling the full portfolio of Forrester and SiriusDecisions research products. This makes sense because we often sell the two research products to the same client executives. We continue to tune incentives for the sales force to reward the sale of renewable research, which adds to Forrester’s overall agreement value. New And Improved Products In 2019, we continued to digitize our products, making them easier to use and more accessible to our clients. We rolled out a new version of the Customer Experience Index, a product that assesses the customer experience of 800 worldwide brands. The newly enhanced product outperformed its plan for 2019, driven in part by its enhanced digital value. Forrester is developing more software-based products, and we expect our capital expenditures to increase in this area. Our certification product launched in 2018, and it had a breakout year in 2019, growing by 410%. By the end of 2019, we were certifying in three areas: 1) customer experience, 2) B2B marketing, and 3) security and risk management. Acquisitions In 2019, Forrester integrated three acquisitions: SiriusDecisions, FeedbackNow, and GlimpzIt. SiriusDecisions is the largest acquisition in the history of Forrester. The SiriusDecisions product line has become a new Forrester offering: operational research for B2B chief marketing officers, chief sales officers, and chief product officers. This research includes frameworks, models, templates, and data to guide companies in the execution and alignment of marketing, sales, and product. A prominent example is the “Demand Unit Waterfall” — the standard model by which B2B companies construct and operate their demand and lead engines. With the addition of SiriusDecisions, Forrester is well positioned to deliver on its unique value proposition: “We work with business and technology leaders to drive customer-obsessed vision, strategy, and execution that accelerate growth.” Our research portfolio now spans three areas: 1. Vision research: enabling our clients to see around the next corner and understand future challenges. 2. 3. Strategy research: helping our clients make choices, many of them around technology. Execution research: guiding our clients on how to operate on a day-to-day basis. FeedbackNow and GlimpzIt, two smaller acquisitions, are part of our effort to build a real-time customer experience cloud — enabling companies to measure and improve their experience in real time. This cloud, which we call FeedbackNow, grew by 270% in 2019, extending to major airports, retail locations, and sports venues in Europe and the US. Capital Structure As part of the SiriusDecisions acquisition, the company took on $170 million of debt in 2019. During the year, we paid off $36 million ahead of schedule, and we expect to continue to retire debt on an accelerated schedule, depending on economic conditions. Moving Into 2020 Forrester has weathered many crises in its history. I started the company in 1983, at the tail end of a bad recession. Since then, the company has navigated through the 1987 stock market crash and recession, the 1991 recession, the 2000 dot-com meltdown and recession, 9/11, and the great recession of 2008. Admittedly, the COVID-19 pandemic and ensuing economic uncertainty are a new type of challenge. But as we have in past crises, we will manage the company through the moment and prepare it to grow when better economic times arrive. First and foremost, we will remain customer-obsessed — working diligently to help our clients navigate these unfamiliar waters. Thank You Forrester has made great strides over the last three years, sharpening the way we sell, improving products, and acquiring new capabilities. Our growth engine is primed to double the size of the company over the next five years. I want to thank our clients for making Forrester part of their team. I want to thank all Forresterites for their passion and dedication to our clients. And I want to thank our investors for their continued support of our story and the amazing opportunity that lies ahead of us. George F. Colony Chairman and CEO FORRESTER RESEARCH 2019 ANNUAL REPORT Form 10-K 2019 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 000-21433 Forrester Research, Inc. (Exact name of Registrant as specified in its Charter) Delaware (State or other jurisdiction of incorporation or organization) 60 Acorn Park Drive Cambridge, Massachusetts (Address of principal executive offices) 02140 (Zip Code) Registrant’s telephone number, including area code: (617) 613-6000 04-2797789 (I.R.S. Employer Identification No.) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.01 Par Value Securities registered pursuant to Section 12(g) of the Act: None Trading Symbol(s) FORR Name of each exchange on which registered Nasdaq Global Select Market Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒ Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐ Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer ☐ ☐ Accelerated filer Smaller reporting company ☒ ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market on June 30, 2019, was approximately $498,000,000. The number of shares of Registrant’s Common Stock outstanding as of March 6, 2020 was 18,755,000. Portions of the registrant’s Proxy Statement related to its 2020 Annual Stockholders’ Meeting to be filed subsequently -- Part III of this Form 10-K. DOCUMENTS INCORPORATED BY REFERENCE FORRESTER RESEARCH, INC. INDEX TO FORM 10-K PART I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. PART II Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. PART III Item 10. Item 11. Item 12. Item 13. Item 14. PART IV Item 15. Item 16 Business................................................................................................................................................................. Risk Factors ........................................................................................................................................................... Unresolved Staff Comments.................................................................................................................................. Properties............................................................................................................................................................... Legal Proceedings ................................................................................................................................................. Mine Safety Disclosures........................................................................................................................................ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ............................................................................................................................................................... Selected Consolidated Financial Data ................................................................................................................... Management’s Discussion and Analysis of Financial Condition and Results of Operations ............................... Quantitative and Qualitative Disclosures About Market Risk .............................................................................. Consolidated Financial Statements and Supplementary Data ............................................................................... Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .............................. Controls and Procedures........................................................................................................................................ Other Information.................................................................................................................................................. Directors, Executive Officers and Corporate Governance .................................................................................... Executive Compensation ....................................................................................................................................... Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ............. Certain Relationships and Related Transactions, and Director Independence...................................................... Principal Accountant Fees and Services................................................................................................................ Exhibits and Financial Statement Schedules......................................................................................................... Form 10-K Summary............................................................................................................................................. SIGNATURES ............................................................................................................................................................................... Page 3 10 13 13 13 13 14 16 17 28 29 68 68 68 69 70 70 70 70 71 71 74 2 This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “intends,” “plans,” “estimates,” or similar expressions are intended to identify these forward-looking statements. Reference is made in particular to our statements about possible acquisitions, future dividends, future share repurchases, future growth rates and operating income, future deferred revenue, future financial results of SiriusDecisions, future compliance with financial covenants under our credit facility, future interest expense, anticipated increases in, and productivity of, our sales force and headcount, changes to our customer engagement model, future modification of our segment reporting, the estimated impact of holding our SiriusDecisions Summit 2020 as a virtual event, the adequacy of our cash, and cash flows to satisfy our working capital and capital expenditures, and the anticipated impact of accounting standards. These statements are based on our current plans and expectations and involve risks and uncertainties. Important factors that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements are discussed below under “Risk Factors.” We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. PART I Item 1. Business General Forrester Research, Inc. is a global independent research, data, and advisory services firm. We work with business and technology leaders to drive customer-obsessed vision, strategy, and execution that accelerate growth. Forrester’s unique insights are grounded in annual surveys of more than 690,000 consumers and business leaders worldwide, rigorous and objective research methodologies, and the shared wisdom of our clients. Through proprietary research, data and analytics, custom consulting, exclusive executive peer groups, certifications, and events, Forrester is revolutionizing how businesses grow in an era of powerful customers. We were incorporated in Massachusetts on July 7, 1983 and reincorporated in Delaware on February 16, 1996. Our Internet address is www.forrester.com. We make available free of charge, on or through the investor information section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. On January 3, 2019, we acquired SiriusDecisions, Inc., a privately held company based in Wilton, Connecticut with approximately 350 employees globally. SiriusDecisions equips business-to-business (B2B) sales, marketing, and product leaders with the actionable research, frameworks, tools, operational benchmarks and expert advice they need to maximize performance and drive alignment. The acquisition creates several opportunities for us, including cross-selling services to our respective client bases, extending SiriusDecisions’ platform, methodologies, data, and best-practices tools into new roles, and accelerating international and industry growth. Industry Background Enterprises struggle to keep up with digitally-savvy, empowered customers and maintain differentiation in a disruption-rich market. Technology changes and innovations occur at a rapid pace. Developing and executing on comprehensive and coordinated business strategies is challenging as consumers and businesses adopt new methods of buying and selling and markets grow increasingly dynamic. Consequently, companies and the professionals in the roles we serve must rely on external sources of independent business advice spanning a variety of areas including but not limited to customer behavior, technology investments, business strategy, and functional discipline. We believe there is a need for objective research, data, advisory and related services that allow our clients to understand market dynamics, develop differentiated strategies, and execute in a complex, fast-moving market. Forrester’s® Strategy Empowered customers have ushered in a new “Age of the Customer” that we believe is reshaping the way organizations succeed and grow. Our unique strategy, products, and services are designed to help those enterprises become customer-obsessed in service of differentiated customer experiences, growth, and profit. 3 Driven by our strategy, we: 1) help our clients understand what is changing in their markets and how their customers and technology are changing; 2) provide guidance on how clients should build their strategies to achieve competitive advantage; and 3) provide specific, actionable guidance for how to execute on those strategies. Combining the complementary strengths of Forrester and SiriusDecisions, we help clients expand their vision, build strategy, and execute effectively with decisiveness and speed. Importantly, the three areas where we work with our clients — vision, strategy, and execution — are interrelated and widespread in the large organizations that we serve. This creates opportunities to sell add-on products and services to our existing clients. In addition, we believe our go-to-market strategy is unique, increasing our competitive differentiation. Our core capabilities deliver a comprehensive set of products and solutions to help our clients compete and win in the Age of the Customer. Our ability to customize our solutions to specific industries provides a powerful method to drive the success of our clients and creates significant opportunities to consistently enrich our relationships with our clients. Forrester’s Solution We offer a broad set of products and services designed to help our clients win in the Age of the Customer. Our solutions help our clients to: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Understand trends in consumer and business buyer behavior and how to capitalize on those trends. Plan strategies to improve their customer experience. Develop customer-obsessed cultures that drive growth. Assess potential new markets, competitors, products and services, and go-to-market strategies. Anticipate technology-driven business model shifts. Educate, inform, and align strategic decision-makers in their organizations. Navigate technology purchases and implementation challenges and optimize technology investments, particularly in the information technology (IT) and marketing spaces. Capitalize on emerging technologies to accommodate customers’ evolving needs. Benchmark their customer experience. Measure and improve their customer experience in real-time. Align marketing, sales, and product efforts to achieve high efficiency and revenue growth. Continually benchmark how marketing, sales, and product groups operate. Our products and services focus on six market imperatives important to our clients and prospects in the Age of the Customer: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Drive revenue with continuously improving customer experience – so that customer experience becomes a growth engine for our clients. Differentiate with digital – taking the critical step to enable our clients to become digital first companies. Accelerate growth with marketing innovation – enabling our clients to expand and excel at engaging and retaining customers. Use customer insights to gain a competitive advantage – enabling our clients to anticipate changing customer expectations. Transform IT to win, serve and retain customers – so that IT becomes a strategic point of differentiation for our clients. Secure customers and protect the brand – so that trust becomes an asset of our clients. Products and Services We offer our clients a selection of products, services, and engagement opportunities, which fall into five categories: Research (our core research), Connect (our peer offerings and certifications), Analytics, Consulting, and Events. 4 Research Forrester’s published research and tools serve as the foundation for how we address our clients’ and prospects’ opportunities and challenges in the Age of the Customer. We believe that our Research enables clients to do three things: 1) clarify and predict market dynamics to set a bold vision for their firm; 2) build customer-obsessed strategies to achieve competitive advantage; and 3) execute effectively to drive revenue and profit. We offer two distinct Research products, Forrester Research and SiriusDecisions® Research. Our primary syndicated research product, Forrester Research, provides clients with access to our core research designed to expand our clients’ understanding of external trends and tools to inform their strategic decision-making. We deepen clients’ understanding of market, customer, and technology trends through data-driven reports, predictions, and forecasts. Our Playbooks offer a set of integrated reports and tools to tackle critical business initiatives. They provide in-depth advice designed to build detailed strategies for these initiatives, including assessments, roadmaps, and business cases, as well as organizational, process and technology guidance. Forrester Research also includes a body of evaluative research. The Forrester Tech Tide™ helps clients understand what technology categories to invest in and when. Our Now Tech reports help clients identify and segment technology players in established categories. And the Forrester Wave™ allows clients to compare individual products and develop a custom shortlist based on their unique requirements. The Forrester Wave provides a detailed analysis of vendors’ technologies and services in various markets based on transparent, fully accessible criteria, and measurement of characteristics. In the emerging technology space, our New Tech and New Wave reports help clients learn about new game-changing technologies and companies to help customers drive growth and support long-term strategies. SiriusDecisions Research delivers operational intelligence and fact-based insight to functional marketing, sales and product leaders of B2B organizations and their teams. Research types include best-practice models and frameworks to structure functional operations, insights from more than 30 B2B buyer personas, event presentations, webinars, role profiles, select best practices implemented by peers, and the interactive, web-based SiriusTools® to aid in planning, execution and measurement. SiriusDecisions Research is created based on client priorities, which we believe are the most important business opportunities and critical challenges B2B marketing, sales and product leaders are trying to solve. SiriusDecisions Command Center® offers performance benchmarking metrics in a self-service platform to aid sales, marketing, and product leaders in planning, uncovering new opportunities, and making business cases. Clients subscribing to Forrester Research offerings may choose between two subscription levels: (cid:129) (cid:129) Member Licenses. Member Licenses include access to written research, as well as Inquiry with analysts, and access to Forrester On-Demand Keynotes and Webinars. Inquiry enables clients to contact our analysts for quick feedback on projects they may have underway, to discuss ideas and models in the research, or for answers to questions about unfolding industry events. Typically, Inquiry sessions are 30-minute phone calls, scheduled upon client request, or e-mail responses coordinated through our research specialists. Forrester Webinars are Web-based conferences on selected topics of interest to particular professional roles that typically are held several times a week. On-Demand Keynotes are recorded presentations from Forrester Events. Forrester clients that subscribe for one or more Member licenses receive one ticket per order to attend a Forrester Event. Reader Licenses. Reader Licenses provide access to our written research. Clients subscribing to SiriusDecisions Research offerings may choose between the following subscription levels: (cid:129) (cid:129) (cid:129) Role-Based Services. Role-Based Services provide access to our written research for a leader and their team members. Executive Services. Executive Services provide access to our written research with additional add-ons available for onsite sessions and a dedicated analyst advisor. SiriusDecisions for Technology and Service Providers. Technology and Service Providers Licenses provide access to research in addition to an analyst webinar with a replay license. SiriusDecisions offerings include analyst inquiry to enable clients to contact our analysts for feedback on projects they may have underway, to discuss ideas and models in the research, or for answers to questions about unfolding industry events. Typically, these inquiry sessions are 50-minute phone calls, scheduled upon client request, or e-mail responses coordinated through our research specialists. 5 All Research clients receive access to our Customer Success team, which provides additional information about our research, methodologies, coverage areas, and sources. The Customer Success team is available to help clients navigate our website, find relevant information, and put clients in contact with the appropriate analyst for inquiries. We also offer clients the opportunity to license electronic “reprints” of designated Research for posting to their website(s) for a designated period of time to support their marketing or business objectives. Electronic reprints are hosted on an on-line platform that enables interactive content and provides us with improved tracking of distribution of our intellectual property. In addition, we offer Research Share licenses that allow clients to share a designated number of published pieces of research with a designated number of persons within their organizations. Research Methodology We employ a structured methodology in our research that enables us to identify and analyze technology trends, markets, and audiences and ensures consistent research quality and recommendations across all coverage areas. We ascertain the issues important to our clients and prospects through thousands of interactions and surveys with technology vendors and business, marketing, and technology professionals, and accordingly, the majority of our research is focused on helping our clients increase their customer focus and grow their business. We use the following primary research inputs: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Proprietary data from our Customer Experience Index (CX Index™), Consumer Technographics®, Business Technographics, ForecastView, and SiriusDecisions Command Center products. Confidential interviews with early adopters and mainstream users of new technologies across technology, marketing, and strategy roles at end-user companies. In-depth interviews with technology vendors and suppliers of related services. Ongoing briefings with vendors to review current positions and future directions. Continuous dialogue with our clients to identify business and technology opportunities in the marketplace. Collaboration among research, product, analytics and consulting professionals is an integral part of our process, leading to higher-quality research and a unified perspective. Our global research and product organizations support our client base by facilitating research and product collaboration and quality, promoting a uniform client experience and improved customer satisfaction, and encouraging innovation. Connect The Forrester Connect offerings are designed to help clients connect with peers and Forrester’s professionals, optimize use of our products and services, and to coach executives to lead far-reaching change within their organizations. Leadership Boards Our Leadership Boards are exclusive peer groups for executives and other senior leaders at large organizations worldwide. Clients may participate in one or more Leadership Boards. Memberships are available to the Customer Experience (CX) Council, the Chief Information Officer (CIO) Group, the Chief Marketing Officer (CMO) Group and several other Councils for the technology and marketing roles we cover. In addition to a Member license to access the appropriate Research offering, members of our Leadership Boards receive access to the following: (cid:129) (cid:129) (cid:129) (cid:129) A private forum for members to test their thinking with peers through local and national meetings, one-to-one and group peer exchanges, and virtual community activities. Advisors to challenge members’ thinking with insights drawn from peers, our Research, and our analyst community, all designed to help members drive business growth and lead change. Member-generated content that includes next and best practices as well as role-specific maturity benchmark data. An event ticket to attend one Forrester event. 6 Executive Programs Our Executive Programs provide CMOs, CIOs, and CXOs with a trusted partner who helps the executives and their teams establish and tackle their most important initiatives. In addition to a Member license for our research offering and one ticket to attend a Forrester event, our Executive Programs provide on-site strategy workshops, personalized research and analysis, and access to Forrester experts. We also offer Team Access licenses that allow members of a Leadership Board or Executive Program to assign Member or Reader licenses to individuals within their extended teams to enhance collaboration and access to our Research offerings. Certification Our certification offerings consist of a series of courses for leaders and their teams that build upon each other and are purchased individually. Each certification course is an 8-week facilitated experience designed to help individuals gain critical proficiencies and to help teams develop a common vocabulary and mindset. Courses are delivered online leveraging a combination of short videos, hands-on exercises and peer discussion threads. Courses are offered regularly throughout the year. Forrester offers two unique tracks to suit different career needs and experiences, Pro (Professional) and Champ (Champion). Course content for the two tracks are identical, but the work required varies. Our initial certification courses, focused on customer experience (CX), enable CX practitioners and other CX proponents within our clients’ organizations to learn the core skills needed to carry out a CX program aimed at driving business growth. In 2019, we expanded our certification portfolio of products by adding a Zero Trust Certification program that provides cybersecurity professionals and others collaborating with them with the knowledge, skills, and confidence to adopt Forrester’s “Zero Trust” approach to information security at their organizations, as well as a B2B Marketing Certification course that builds off our SiriusDecisions research and teaches the concepts and skills that enable marketing professionals to drive successful marketing strategies. We also added custom enterprise CX Essentials programs that are designed to train a diverse group of employees and can be integrated into our customers’ learning management systems. Analytics Our Analytics products and services are designed to provide fact-based customer insights to our clients. Clients can leverage our Analytics products and services or choose to have us conduct custom data analysis on their behalf. Our Analytics products and services include: (cid:129) (cid:129) (cid:129) Forrester’s Customer Experience (CX) Index. The CX Index is a framework for assessing and measuring the quality of customer experience for nearly 600 brands worldwide. This unique framework provides useful and actionable analysis including a customer experience score, quantitative information about the score, and the most important drivers to improve the customer experience, along with a Business Impact Simulator tool that models out potential revenue uplift to help guide clients’ investments in customer experience. We offer two Forrester CX Index packages, consisting of an industry package that provides a benchmark of a particular brand’s CX Index scores against its competitors and an add-on CX Elite package that offers deep insights on what distinguishes leading brands. For brands not included in our standard offering, we offer a custom survey approach to build out a CX Index score and deliver our insight recommendations. We deliver the CX Index through an easy-to-use interactive platform that allows clients to customize their CX data based on business needs. Consumer Technographics. Consumer Technographics is an ongoing quantitative research program, based on surveys of over 400,000 individuals in North America, Europe, Asia Pacific, and Latin America. Marketing and strategy professionals rely on our Consumer Technographics data and analysis for unique insights into how technology impacts their customers’ purchase journey, including the way consumers select, purchase, use, and communicate about products and services. We combine respondent data sets from our Consumer Technographics surveys into multiple regional and industry offerings. We deliver Consumer Technographics through an interactive platform that provides access to the data, insights and analytic tools. Additionally, clients may have access to an Analytics Client Manager to help them use the data effectively to meet their specific business needs. Business Technographics. Business Technographics is an ongoing quantitative research program that provides comprehensive, in-depth assessments of what motivates businesses to choose certain technologies and vendors over others. The offering also measures and reports on the current information consumption patterns of key influencers for large technology purchases. We annually survey more than 70,000 business and technology executives as well as information workers at small, medium and large enterprises in North American, European, and other global markets. Our surveys reveal these firms’ technology adoption, trends, budgets, business organization, decision processes, purchase plans, brand preferences, and primary influences in the purchasing process. We deliver Business Technographics through an interactive platform that provides access to the data, insights and analytic tools. Business Technographics’ clients may also have access to an Analytics Client Manager to assist in utilizing appropriate data to achieve desired outcomes. 7 (cid:129) (cid:129) FeedbackNow. As customers become more powerful, we believe that companies must have the ability to monitor and improve their experience in real time. To this end, we have acquired and constructed a real-time customer experience cloud solution composed of: 1) multiple data inputs, 2) an artificial intelligence (AI)-assisted analytics engine, or “brain”; and 3) multiple output methods. This product, that we call FeedbackNow, is currently employing physical buttons as the primary input source. It is installed widely in Europe and the U.S. – primarily in large airports, arenas, retail, financial services locations and health care sites – and we are processing hundreds of thousands of “votes” per day. We are expanding the capabilities of FeedbackNow to encompass a range of digital inputs and outputs. In addition, we are incorporating our proprietary customer experience data, drivers, and algorithms into the system brain to increase the precision and efficacy of feedback for our clients. ForecastView. ForecastView is an ongoing data program that provides a detailed evaluation of market size, based on expert analysis and quantitative insights from our consumer and business surveys. We leverage Technographics demand- side data and supply-side metrics to help clients uncover new business opportunities. Each forecast consists of at least ten years of data: five historic, the current year and four years in the future. We offer global forecasts for e-commerce, digital marketing, mobile applications and platforms markets. ForecastView clients may also have access to ForecastView analysts to assist in utilizing appropriate data to support client business decisions. Consulting Our advisory and project consulting services leverage our Research, Technographics and CX Index data, as well as our proprietary consulting frameworks, to deliver focused insights and recommendations that assist clients with their challenges in developing and executing technology and business strategy, including customer experience, digital strategy, and marketing, informing critical decisions and reducing business risk. Our consulting services help clients with challenges addressed in our published research, such as leading customer experience transformations, digital business transformation, technology transformations and modernization, and aligning sales, marketing, and product management. We help business and technology professionals conduct maturity assessments, prioritize best practices, develop strategies, build business cases, select technology vendors, and structure organizations. We help marketing professionals at technology vendors develop content marketing strategies, create content marketing collateral, and develop sales tools. We have a dedicated consulting organization to provide professional project consulting services to our clients, utilizing our Forrester solutions framework and best in class consulting techniques and content development tools, allowing our analysts to spend additional time on writing research and providing shorter-term advisory services. Events We host multiple events in various locations in North America, Europe and Asia throughout the year. Events bring together executives and other participants serving or interested in the particular subject matter or professional role(s) on which an event focuses. Event participants come together to network with their peers, meet with Forrester analysts, and hear business leaders discuss business and technology issues of interest or significance to the professionals in attendance. Forrester Events focus on business imperatives of significant interest to our clients, including marketing, sales and product leadership, customer experience, privacy and security, new technology and innovation, and data strategies and insights. Our Events business was substantially enhanced with the addition of the SiriusDecisions annual Summits, which are leading venues for marketing, sales, and product operations programs in the United States, Europe and Asia. Sales and Marketing We sell our products and services through our direct sales force in various locations in North America, Europe and Asia Pacific. Our sales organization is organized into five groups based on client size, geography and market potential. Our Premier group focuses on our largest vendor and end user clients across the globe and our Core group focuses on small to mid-sized vendor and end user clients. Our European and Asia Pacific groups focus on both end user and vendor clients in their respective geographies. Our International Business Development group sells our products and services through independent sales representatives in select international locations. We employed 698 sales personnel as of December 31, 2019 compared to 528 sales personnel employed as of December 31, 2018. We also sell select Research products directly online through our website. We utilize a customer engagement model where we provide different sales engagement and support levels for clients and prospects in our Premier and Core groups. We believe that this positions us in a manner to improve client and dollar retention and enrichment and accelerate growth. 8 Our marketing activities are designed to enhance the Forrester brand, differentiate and promote Forrester products and solutions, improve the client experience, and drive growth. We achieve these outcomes by combining the value of analytics, content, social media, public relations, creative, and field marketing, delivering multi-channel campaigns, Forrester events, and high-quality digital journeys. As of December 31, 2019, our products and services were delivered to more than 2,800 client companies. No single client company accounted for more than 4% of our 2019 revenues. Pricing and Contracts We report our revenue from client contracts in two categories of revenue: (1) research services and (2) advisory services and events. We classify revenue from subscriptions to, and licenses of, our Research, Connect, and Analytics products and services as research services revenue. We classify revenue from Consulting, custom Analytics projects, and Events as advisory services and events revenue. Contract pricing for annual subscription-based products is principally a function of the number of licensed users at the client. Pricing of contracts for advisory services generally is a fixed fee for the consulting project or shorter-term advisory service. We periodically review and increase the list prices for our products and services. We track the agreement value of contracts to purchase our services as a significant business indicator. We calculate agreement value as the total revenues recognizable from all such contracts in force at a given time (excluding contracts that consist solely of advisory and consulting services and the value of Events sponsorships included in all contracts), without regard to how much revenue has already been recognized. Agreement value increased 34% (approximately 25 percentage points of the increase due to the acquisition of SiriusDecisions) to $358.0 million at December 31, 2019 from $266.3 million at December 31, 2018. Competition We compete principally in the market for research, data, and advisory services, with an emphasis on customer behavior, customer experience, and the deployment of technology to win, serve and retain customers. We believe that the principal competitive factors in the markets we participate in include: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) the ability to offer products and services that meet the changing needs of organizations and their executives for research, data, and advisory services; comprehensive global data and insights on customer behavior; independent analysis and opinions; the ability to render our services in digital forms; the pricing and packaging of our products and services; and customer service, including the quality of professional interactions with our clients. We believe we compete favorably on these factors due to: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) our differentiated Age of the Customer strategy and portfolio of complementary Age of the Customer and SiriusDecisions products and services; our research methodology; our experience with and focus on emerging technologies; our history of providing research and executable advice on the impact of technology on business; and our growing ability to deploy digital products. Our principal direct competitors include other independent providers of research and advisory services, such as Gartner, as well as marketing agencies, general business consulting firms, survey-based general market research firms, providers of peer networking services, and digital media measurement services. In addition, our indirect competitors include the internal planning and marketing staffs of our current and prospective clients, as well as other information providers such as electronic and print publishing companies. We also face competition from free sources of information available on the Internet, such as Google. Our indirect competitors could choose to compete directly against us in the future. In addition, there are relatively few barriers to entry into certain segments of our market, and new competitors could readily seek to compete against us in one or more of these market segments. Increased competition could adversely affect our operating results through pricing pressure and loss of market share. There can be no assurance that we will be able to continue to compete successfully against existing or new competitors. 9 Employees As of December 31, 2019, we employed a total of 1,795 persons, including 688 Research, Connect, Analytics, Consulting and Events staff and 698 sales personnel. Our culture emphasizes certain key values — including client service, courage, collaboration, integrity and quality — that we believe are critical to our future growth. We promote these values through training and frequent recognition for achievement. We encourage teamwork and promote and recognize individuals who foster these values. New employees participate in a three-day training process that focuses on our Age of the Customer strategy, our products and services, corporate culture, values and goals. Item 1A. Risk Factors We operate in a rapidly changing and competitive environment that involves risks and uncertainties, certain of which are beyond our control. These risks and uncertainties could have a material adverse effect on our business and our results of operations and financial condition. These risks and uncertainties include, but are not limited to: A Decline in Renewals or Demand for Our Subscription-Based Research, Connect and Analytics Services. Our success depends in large part upon retaining (on both a client company and dollar basis) and enriching existing subscriptions for our Research, Connect, and Analytics products and services. Future declines in client retention, dollar retention, and enrichment, or failure to generate demand for and new sales of our subscription-based products and services due to competition or otherwise, could have an adverse effect on our results of operations and financial condition. Demand for Our Advisory and Consulting Services. Advisory and consulting services revenues comprised 29% of our total revenues in 2019 and 32% of our total revenues in 2018. Consulting engagements generally are project-based and non-recurring. A decline in our ability to fulfill existing or generate new project consulting engagements could have an adverse effect on our results of operations and financial condition. Our Business May be Adversely Affected by the Economic Environment. Our business is in part dependent on technology spending and is impacted by economic conditions. The economic environment may materially and adversely affect demand for our products and services. If conditions in the United States and the global economy were to lead to a decrease in technology spending, or in demand for our products and services, this could have an adverse effect on our results of operations and financial condition. Our International Operations Expose Us to a Variety of Operational Risks which Could Negatively Impact Our Results of Operations. As of December 31, 2019, we have clients in approximately 76 countries and approximately 21% of our revenues come from international sales. Our operating results are subject to the risks inherent in international business activities, including challenges in staffing and managing foreign operations, changes in regulatory requirements, compliance with numerous foreign laws and regulations, differences between U.S. and foreign tax rates and laws, fluctuations in currency exchange rates, difficulty of enforcing client agreements, collecting accounts receivable, and protecting intellectual property rights in international jurisdictions. Furthermore, we rely on local independent sales representatives in some international locations. If any of these arrangements are terminated by our representatives or us, we may not be able to replace the arrangement on beneficial terms or on a timely basis, or clients sourced by the local sales representative may not want to continue to do business with us or our new representative. We Face Risks Related to Health Epidemics That Could Adversely Impact Our Business. Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of respiratory illness caused by a novel coronavirus first identified in Wuhan, Hubei Province, China, or COVID-19. Any outbreak of contagious diseases, and other adverse public health developments, could have a material and adverse effect on our business operations. This could include disruptions or restrictions on the ability of our employees or our customers to travel and a slowdown in the global economy, which could adversely affect our ability to sell or fulfill, and a reduction in demand for, our products, services or events. Any disruption or delay of our customers or third-party service providers would likely impact our operating results. Our Events business generated $27.0 million of revenues during 2019. On March 13, 2020, due to considerations of the effect of COVID-19, we announced that we will be holding our SiriusDecisions Summit 2020, our single largest event, as a virtual event during its originally scheduled timeframe in May 2020. We estimate the impact of holding this event as a virtual event, as compared to a live event, will reduce revenues by $7.0 million to $9.0 million and will reduce operating income by $4.0 million to $6.0 million. However, the ultimate financial impact may be affected by a number of factors including the number of attendees and sponsors and our ability to recoup certain costs for the event. The ongoing impact of COVID-19 remains difficult to project and our business and financial results may be materially and adversely affected by it. Our Business Could Suffer as a Result of the United Kingdom’s Decision to End Its Membership in the European Union. Our London office serves as our European headquarters and is our second largest location in terms of headcount. The exit of the United Kingdom from the European Union (generally referred to as “Brexit”) could cause disruptions to and create uncertainty surrounding both this office and our business generally, including affecting our relationships with existing and potential customers, suppliers, and employees. The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets either during a transitional period or more permanently. The measures could potentially disrupt some of our target markets 10 and jurisdictions in which we operate, and adversely change tax benefits or liabilities in these or other jurisdictions. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations, as the United Kingdom determines which European Union laws to replace or replicate. Brexit also may create global economic uncertainty, which may cause our customers and potential customers to monitor their costs and reduce their budgets for our products and services. Any of these effects of Brexit, among others, could materially adversely affect our results of operations and financial condition. Ability to Develop and Offer New Products and Services. Our future success will depend in part on our ability to offer new products and services. These new products and services must successfully gain market acceptance by anticipating and identifying changes in client requirements and changes in the technology industry and by addressing specific industry and business organization sectors. The process of internally researching, developing, launching and gaining client acceptance of a new product or service, or assimilating and marketing an acquired product or service, is risky and costly. We may not be able to introduce new, or assimilate acquired, products or services successfully. Our failure to do so would adversely affect our ability to maintain a competitive position in our market and continue to grow our business. Loss of Key Management. Our future success will depend in large part upon the continued services of a number of our key management employees. The loss of any one of them, in particular George F. Colony, our founder, Chairman of the Board and Chief Executive Officer, could adversely affect our business. The Ability to Attract and Retain Qualified Professional Staff. Our future success will depend in large measure upon the continued contributions of our senior management team, research and data professionals, consultants, and experienced sales and marketing personnel. Thus, our future operating results will be largely dependent upon our ability to retain the services of these individuals and to attract additional professionals from a limited pool of qualified candidates. Our future success will also depend in part upon the effectiveness of our sales leadership in hiring and retaining sales personnel and in improving sales productivity. We experience competition in hiring and retaining professionals from developers of Internet and emerging-technology products, other research firms, management consulting firms, print and electronic publishing companies and financial services companies, many of which have substantially greater ability, either through cash or equity, to attract and compensate professionals. If we lose professionals or are unable to attract new talent, we will not be able to maintain our position in the market or grow our business. Failure to Anticipate and Respond to Market Trends. Our success depends in part upon our ability to anticipate rapidly changing technologies and market trends and to adapt our research, data, advisory services, and other related products and services to meet the changing needs of our clients. The technology and commerce sectors that we analyze undergo frequent and often dramatic changes. The environment of rapid and continuous change presents significant challenges to our ability to provide our clients with current and timely analysis, strategies, and advice on issues of importance to them. Meeting these challenges requires the commitment of substantial resources. Any failure to continue to provide insightful and timely analysis of developments, technologies, and trends in a manner that meets market needs could have an adverse effect on our market position and results of operations. We May Experience Difficulties in Integrating the Operations of Acquired Companies into Our Business and in Realizing the Expected Benefits of the Acquisitions. The success of our recent acquisitions of SiriusDecisions, FeedbackNow and GlimpzIt will depend in part on our ability to realize the anticipated business opportunities from combining the operations of these companies with our business in an efficient and effective manner. For 2020, we determined that SiriusDecisions will no longer operate under a separate management structure. Our internal management and reporting will be aligned to consolidate each of the SiriusDecisions products and related operations under a single, combined organization within our existing Products and Research segments. If we are unable to successfully or timely effect these changes, we may not realize the benefits that we currently anticipate will result from having a single, combined organization within our existing Products and Research segments. We Have Outstanding Debt Which Could Materially Restrict our Business and Adversely Affect our Financial Condition, Liquidity and Results of Operations. In connection with the SiriusDecisions acquisition, we entered into a credit agreement (the "Credit Agreement") that provides for a $125.0 million term loan facility and a $75.0 million revolving credit facility. All of the proceeds of the term loans and $50.0 million borrowed under the revolving credit facility were used to pay a portion of the purchase price of the acquisition. As of December 31, 2019, we had outstanding debt of $132.8 million under the Credit Agreement (see Note 4 – Debt in the Notes to Consolidated Financial Statements for further information). The debt service requirements of these credit arrangements could impair our future financial condition and operating results. In addition, the affirmative, negative and financial covenants of the Credit Agreement could limit our future financial flexibility. A failure to comply with these covenants could result in acceleration of all amounts outstanding, which could materially impact our financial condition unless accommodations could be negotiated with our lenders. No assurance can be given that we would be successful in doing so, or that any accommodations that we were able to negotiate would be on terms as favorable as those currently. The outstanding debt may limit the amount of cash or additional credit available to us, which could restrain our ability to expand or enhance products and services, respond to competitive pressures or pursue future business opportunities requiring substantial investments of additional capital. 11 We May be Subject to Network Disruptions or Security Breaches that Could Damage Our Reputation and Harm Our Business and Operating Results. We may be subject to network disruptions or security breaches caused by computer viruses, illegal break-ins or hacking, sabotage, acts of vandalism by third parties or terrorism. Our security measures or those of our third-party service providers may not detect or prevent such security breaches. Any such compromise of our information security could result in the unauthorized publication of our confidential business or proprietary information, cause an interruption in our operations, result in the unauthorized release of customer or employee data, result in a violation of privacy or other laws, expose us to a risk of litigation or damage our reputation, which could harm our business and operating results. Competition. We compete principally in the market for research, data and advisory services, with an emphasis on customer behavior and customer experience, and the impact of technology on our clients’ business and service models. Our principal direct competitors include other independent providers of research and advisory services, such as Gartner, as well as marketing agencies, general business consulting firms, survey-based general market research firms, providers of peer networking services, and digital media measurement services. Some of our competitors have substantially greater financial and marketing resources than we do. In addition, our indirect competitors include the internal planning and marketing staffs of our current and prospective clients, as well as other information providers such as electronic and print publishing companies. We also face competition from free sources of information available on the Internet, such as Google. Our indirect competitors could choose to compete directly against us in the future. In addition, there are relatively few barriers to entry into certain segments of our market, and new competitors could readily seek to compete against us in one or more of these market segments. Increased competition could adversely affect our operating results through pricing pressure and loss of market share. There can be no assurance that we will be able to continue to compete successfully against existing or new competitors. Failure to Enforce and Protect our Intellectual Property Rights. We rely on a combination of copyright, trademark, trade secret, confidentiality and other contractual provisions to protect our intellectual property. Unauthorized third parties may obtain or use our proprietary information despite our efforts to protect it. The laws of certain countries do not protect our intellectual property to the same extent as the laws of the United States and accordingly we may not be able to protect our intellectual property against unauthorized use or distribution, which could adversely affect our business. Privacy Laws. Privacy laws and regulations, and the interpretation and application of these laws and regulations, in the U.S, Europe and other countries around the world where we conduct business are sometimes inconsistent and frequently changing. This includes, but is not limited to, the European Union General Data Protection Regulation (GDPR) and the California Consumer Privacy Act, which went into effect on January 1, 2020. Compliance with these laws, or changing interpretations and application of these laws, could cause us to incur substantial costs or require us to take action in a manner that would be adverse to our business. Fluctuations in Our Operating Results. Our revenues and earnings may fluctuate from quarter to quarter based on a variety of factors, many of which are beyond our control, and which may affect our stock price. These factors include, but are not limited to: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Trends in technology and research, data and advisory services spending in the marketplace and general economic conditions. The timing and size of new and renewal subscriptions for our products and services from clients. The utilization of our advisory services by our clients. The timing of revenue-generating events sponsored by us. The introduction and marketing of new products and services by us and our competitors. The hiring and training of new research and data professionals, consultants, and sales personnel. Changes in demand for our research, data and advisory services. Fluctuations in currency exchange rates. An increase in the interest rates applicable to our outstanding debt obligations. As a result, our operating results in future quarters may be below the expectations of securities analysts and investors, which could have an adverse effect on the market price for our common stock. Factors such as announcements of new products, services, offices, acquisitions or strategic alliances by us, our competitors, or in the research, data and professional services industries generally, may have a significant impact on the market price of our common stock. The market price for our common stock may also be affected by movements in prices of stocks in general. 12 Taxation Risks. We operate in numerous jurisdictions around the world. A portion of our income is generated outside of the United States and is taxed at lower rates than rates applicable to income generated in the U.S. or in other jurisdictions in which we do business. Our effective tax rate in the future, and accordingly our results of operations and financial position, could be adversely affected by changes in applicable tax law or if more of our income becomes taxable in jurisdictions with higher tax rates. Concentration of Ownership. Our largest stockholder is our Chairman and CEO, George F. Colony, who owns approximately 42% of our outstanding stock. This concentration of ownership enables Mr. Colony to strongly influence or effectively control matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation, adoption or amendment of equity plans and approval of significant transactions such as mergers, acquisitions, consolidations and sales or purchases of assets. This concentration of ownership may also limit the liquidity of our stock. As a result, efforts by stockholders to change the direction, management or ownership of Forrester may be unsuccessful, and stockholders may not be able to freely purchase and sell shares of our stock. Any Weakness Identified in Our System of Internal Controls by Us and Our Independent Registered Public Accounting Firm Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 Could Have an Adverse Effect on Our Business. Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on their systems of internal control over financial reporting. In addition, our independent registered public accounting firm must report on its evaluation of those controls. There can be no assurance that no weakness in our internal control over financial reporting will occur in future periods, or that any such weakness will not have a material adverse effect on our business or financial results, including our ability to report our financial results in a timely manner. Item 1B. Unresolved Staff Comments We have not received written comments from the Securities and Exchange Commission that remain unresolved. Item 2. Properties Our corporate headquarters building is comprised of approximately 190,000 square feet of office space in Cambridge, Massachusetts, substantially all of which is currently occupied by the Company. This facility accommodates research, data, marketing, sales, consulting, technology, and operations personnel. The lease term of this facility expires February 28, 2027. We also rent office space in San Francisco, New York City, Dallas, McLean, Virginia, Nashville, Wilton, Connecticut (the SiriusDecisions headquarters), Austin, Amsterdam, Frankfurt, London, Paris, New Delhi, Singapore and Lausanne, Switzerland. Our San Francisco lease is for approximately 31,000 square feet, with a term that expires June 30, 2027. Our New York lease is for approximately 15,200 square feet, with an initial term until January 31, 2021. The Wilton lease is for approximately 42,000 square feet, with an initial term that expires July 31, 2020. The London lease is for approximately 17,800 square feet, with a term that expires September 24, 2021. We also lease office space on a relatively short-term basis in various other locations in North America, Europe, Asia, and Australia. We believe that our existing facilities are adequate for our current needs and that additional facilities are available for lease to meet future needs. Item 3. Legal Proceedings We are not currently a party to any material legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 13 PART II Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq Global Select Market under the symbol “FORR”. During 2018, quarterly dividends of $0.20 per common share were declared and paid in each of the four quarters during the year. On November 27, 2018, in conjunction with the announcement of the acquisition of SiriusDecisions, Forrester announced the indefinite suspension of its quarterly dividend program beginning in 2019. The actual declaration of any potential future dividends, and the establishment of the per share amount and payment dates for any such future dividends are subject to the discretion of the Board of Directors. As of March 6, 2020 there were approximately 33 stockholders of record of our common stock. On March 6, 2020 the closing price of our common stock was $38.55 per share. As of December 31, 2019, our Board of Directors authorized an aggregate $535.0 million to purchase common stock under our stock repurchase program. As of December 31, 2019, we had repurchased approximately 16.3 million shares of common stock at an aggregate cost of $474.9 million, with no repurchases in the year ended December 31, 2019. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”, for information on our equity compensation plans. 14 The following graph contains the cumulative stockholder return on our common stock during the period from December 31, 2014 through December 31, 2019 with the cumulative return during the same period for the Russell 2000 and the S&P 600 Small Cap Information Technology Index, and assumes that the dividends, if any, were reinvested. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Forrester Research, Inc., the Russell 2000 Index, and S&P Small Cap 600 Information Technology $160 $140 $120 $100 $80 $60 $40 $20 $0 12/14 12/15 12/16 12/17 12/18 12/19 Forrester Research, Inc. Russell 2000 S&P Small Cap 600 Information Technology *$100 invested on 12/31/14 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. 15 Item 6. Selected Consolidated Financial Data The selected financial data presented below is derived from our consolidated financial statements and should be read in connection with those statements. Consolidated Statement of Income (Loss) Data Research services Advisory services and events Total revenues Income (loss) from operations Other income (expense) and gains (losses) on investments, net Net income (loss) Basic income (loss) per common share Diluted income (loss) per common share Basic weighted average shares outstanding Diluted weighted average shares outstanding Consolidated Balance Sheet Data Cash, cash equivalents and marketable investments Working capital Total assets Deferred revenue Long-term debt, net of deferred financing fees Total liabilities Cash dividends declared 2019 Years Ended December 31, 2018 2016 2017 (In thousands, except per share amounts) 2015 $ $ $ $ $ 298,735 $ 162,962 461,697 (1,075) 228,399 $ 129,176 357,575 22,425 216,471 $ 121,202 337,673 27,549 215,216 $ 110,879 326,095 30,774 210,268 103,458 313,726 18,827 (470) (9,570) $ (0.52) $ (0.52) $ 18,492 18,492 1,100 15,380 $ 0.85 $ 0.84 $ 18,091 18,380 (178) 15,140 $ 0.84 $ 0.83 $ 17,919 18,240 (65) 17,651 $ 0.98 $ 0.97 $ 17,984 18,269 493 11,996 0.67 0.66 17,927 18,143 2019 2018 As of December 31, 2017 (In thousands) 2016 2015 67,904 $ (76,895) 639,160 179,194 130,545 481,072 — 140,296 $ 46,108 353,524 135,332 — 201,924 14,502 134,123 $ 41,766 345,200 145,207 — 204,011 13,631 138,105 $ 45,962 335,785 134,265 — 185,749 12,987 101,106 15,274 318,991 140,676 — 191,689 12,179 Cash dividends represent quarterly dividends of $0.20, $0.19, $0.18, and $0.17 per common share declared and paid during 2018, 2017, 2016, and 2015, respectively. The following items impact the comparability of our consolidated data: (cid:129) On January 3, 2019, the Company acquired SiriusDecisions, Inc. The reported results for 2019 include the operating results of SiriusDecisions beginning on the acquisition date. Refer to Note 2 – Acquisitions in the Notes to Consolidated Financial Statements for additional information. (cid:129) (cid:129) (cid:129) On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-12, Leases (Topic 842), using the modified retrospective method. The reported results for 2019 reflect the application of Topic 842, while the reported results for prior years reflect the prior lease standard. Adoption of Topic 842 increased both the related operating lease assets and liabilities by $53.3 million. On January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method. The reported results for 2018 and beyond reflect the application of Topic 606, while the reported results for prior years reflect the application of the prior revenue standard - ASU No. 2009-13, Revenue Recognition (Topic 605). Adoption of Topic 606 had the following effects on our 2018 financial results: o An increase of $1.6 million in total revenues for the year ended December 31, 2018 of which $1.3 million related to revenues from research services revenues and $0.3 million related to revenues from advisory services and events. o o o An increase in net income and diluted income per share for the year ended December 31, 2018 by $1.4 million and $0.08, respectively. An increase in working capital as of December 31, 2018 of $4.6 million. A decrease in deferred revenue as of December 31, 2018 of $14.0 million On December 22, 2017, the Tax Cuts and Jobs Act was enacted resulting in a decrease in the U.S. corporate tax rate from 35% to 21% for the year ended December 31, 2018 and beyond and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. As a result, we recorded amounts related to the remeasurement of federal deferred tax assets and liabilities of $1.2 million and the one-time transition tax of $0.8 million, of which $0.4 million and $1.6 million was recognized during 2018 and 2017, respectively. 16 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview We derive revenues from subscriptions to our Research, Connect and Analytics products and services, licensing electronic “reprints” of our Research, performing advisory services and consulting projects, and hosting Events. We offer contracts for our Research, Connect and Analytics products that are typically renewable annually and payable in advance. Subscription products are recognized as revenue ratably over the term of the contract. Accordingly, a substantial portion of our billings are initially recorded as deferred revenue. Reprints include an obligation to deliver a customer-selected research document and certain usage data provided through an on-line platform, which represents two performance obligations. We recognize revenue for the performance obligation for the data portion of the reprint ratably over the license term. We recognize revenue for the performance obligation for the research document at the time of providing access to the document. Billings for licensing of reprints are initially recorded as deferred revenue. Clients purchase advisory and consulting services independently and/or to supplement their access to our subscription-based products. Consulting project revenues, which generally are short-term in nature and based upon fixed-fee agreements, are recognized as the services are provided. Advisory service revenues, such as workshops, speeches and advisory days, are recognized when the service is complete or the customer receives the agreed upon deliverable. Billings attributable to advisory services and consulting projects are initially recorded as deferred revenue. Events revenues consist of ticket or sponsorship sales for a Forrester-hosted event. Billings for Events are also initially recorded as deferred revenue and are recognized as revenue upon completion of each Event. As previously noted, on January 3, 2019, we acquired 100% of the issued and outstanding shares of SiriusDecisions, Inc., a privately held company based in Wilton, Connecticut with approximately 350 employees globally. SiriusDecisions equips business-to- business (B2B) sales, marketing, and product leaders with the actionable research, frameworks, tools, operational benchmarks and expert advice to maximize performance and drive alignment. Pursuant to the terms of the merger agreement, the Company paid $246.8 million at closing, which included the purchase price of $245.0 million plus estimated cash acquired, reduced by certain working capital items. Net cash paid, which accounts for the cash acquired of $7.9 million, was $237.7 million. We paid for the acquisition with $175.0 million of debt and cash on hand. See Note 2 - Acquisitions in the Notes to Consolidated Financial Statements for more information on the acquisition. Our primary operating expenses consist of cost of services and fulfillment, selling and marketing expenses and general and administrative expenses. Cost of services and fulfillment represents the costs associated with the production and delivery of our products and services, including salaries, bonuses, employee benefits and stock-based compensation expense for all personnel that produce and deliver our products and services, including all associated editorial, travel, and support services. Selling and marketing expenses include salaries, sales commissions, bonuses, employee benefits, stock-based compensation expense, travel expenses, promotional costs and other costs incurred in marketing and selling our products and services. General and administrative expenses include the costs of the technology, operations, finance, and human resources groups and our other administrative functions, including salaries, bonuses, employee benefits, and stock-based compensation expense. Overhead costs such as facilities and annual fees for cloud-based information technology systems are allocated to these categories according to the number of employees in each group. In the first quarter of 2019, we modified our calculation of client retention, dollar retention, and enrichment in conjunction with a project to fully automate the calculations. Client retention has been expanded to include virtually all client relationships (except for clients that only purchase web-based products such as individual reports, workshops and Event tickets) in comparison to the prior calculation that included only clients that purchased subscription-based products. Dollar retention and enrichment are now calculated at a client account level in comparison to a contract level in the prior calculation. This results in a broader view of dollar retention and enrichment as it includes virtually all products in the calculations (except for web-based products mentioned above) and captures all enrichment that occurs within the year for an account. We have provided the metrics under the new methodology for each quarter of 2018 in the table below. Client retention Dollar retention Enrichment Q1 2018 Q2 2018 Q3 2018 Q4 2018 71% 90% 110% 71% 89% 107% 71% 90% 109% 71% 90% 109% 17 Deferred revenue, agreement value, client retention, dollar retention, enrichment, and number of clients are metrics that we believe are important to understanding our business. We believe that the amount of deferred revenue, along with the agreement value of contracts, provide a significant measure of our business activity. We define these metrics as follows: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) Deferred revenue — billings in advance of revenue recognition as of the measurement date. Agreement value — the total revenues recognizable from all contracts to purchase our services in force at a given time (excluding contracts that consist solely of Consulting services and the value of Event sponsorships included in all contracts), without regard to how much revenue has already been recognized. No single client accounted for more than 3% of agreement value at December 31, 2019. Client retention — the percentage of client companies (defined as all clients except those that only purchase web-based products such as individual reports, workshops and Event tickets) at the prior year measurement date that have active contracts at the current year measurement date. Dollar retention — the percentage of the total dollar value of client companies’ active contracts at the prior year measurement date that have active contracts at the current year measurement date. Enrichment — the dollar value of client companies’ active contracts at the current year measurement date compared to the dollar value of the corresponding client companies’ active contracts at the prior year measurement date. Clients — we aggregate the various divisions and subsidiaries of a corporate parent as a single client and we also aggregate separate instrumentalities of the federal, state, and provincial governments as a single client. We include only clients that purchased subscription-based products in our definition of clients. Client retention, dollar retention, and enrichment are not necessarily indicative of the rate of future retention of our revenue base. A summary of our key metrics is as follows (dollars in millions): Deferred revenue Agreement value Client retention Dollar retention Enrichment Number of clients As of December 31, 2019 2018 Absolute Increase (Decrease) Percentage Increase (Decrease) $ $ 179.2 358.0 $ $ 72% 90% 106% 2,880 135.3 266.3 $ $ 71% 90% 109% 2,353 43.9 91.7 1 — (3) 527 32% 34% 1% — (3%) 22% Deferred revenue, agreement value and number of clients include the effect of SiriusDecisions, but retention and enrichment metrics will not be similarly affected until the first quarter of 2020. Deferred revenue at December 31, 2019 increased 32% compared to the prior year with approximately 24 percentage points of growth due to the acquisition of SiriusDecisions. Agreement value increased 34% at December 31, 2019 compared to the prior year with approximately 25 percentage points of growth due to the acquisition of SiriusDecisions and the remainder due to both an increase in contract bookings and increased bundling of Consulting services with our Research and Connect products in our contracts. Client retention, dollar retention and enrichment rates were essentially consistent with the prior year. Client count at December 31, 2019 increased 22% compared to the prior year with approximately 17 percentage points of growth due to the acquisition of SiriusDecisions. Critical Accounting Policies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our policies and estimates, including but not limited to, those related to our revenue recognition, leases, goodwill, intangible and other long-lived assets, and income taxes. Management bases its estimates on historical experience, data available at the time the estimates are made and various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. 18 We consider the following accounting policies to be those that require the most subjective judgment or that involve uncertainty that could have a material impact on our financial statements. If actual results differ significantly from management’s estimates and projections, there could be a material effect on our financial statements. This is not a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, with no need for management’s judgment in its application. For a discussion of our other accounting policies, see Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements. (cid:129) Revenue Recognition. We generate revenues from subscriptions to our Research, Connect and Analytics products and services, licensing electronic reprints of our Research, performing advisory services and consulting projects and hosting Events. We execute contracts that govern the terms and conditions of each arrangement. Revenues are recognized when an approved contract with a customer exists, the fees, payment terms, and rights regarding the products or services to be transferred can be identified, it is probable we will collect substantially all of the consideration for the products and services expected to be provided, and we have transferred control of the products and services to the customer. We continually evaluate customers’ ability and intention to pay by reviewing factors including the customer’s payment history, our ability to mitigate credit risk, and experience selling to similarly situated customers. Our contracts may include either a single promise (referred to as a performance obligation) to transfer a product or service or a combination of multiple promises to transfer products or services. We evaluate the existence of multiple performance obligations within our products and services by using judgment to determine if the customer can benefit from each contractual promise on its own or together with other readily available resources and if the transfer of each contractual promise is separately identifiable from other promises in a contract. When both criteria are met, each promise is accounted for as a separate performance obligation. Revenues from contracts that contain multiple products or services are allocated among the separate performance obligations on a relative basis according to their standalone selling prices. We obtain the standalone selling prices of our products and services based upon an analysis of standalone sales of these products and services. When there is an insufficient history of standalone sales, we use judgment to estimate the standalone selling price, taking into consideration available market conditions, factors used to set list prices, pricing of similar products, and internal pricing objectives. The majority of our research services revenues, including our Research, Connect and Analytics subscription products, are recognized ratably over the term of the contract. Certain research services revenues, including revenues from sales of reprints, are recognized as revenue when delivered. Advisory services revenues, such as workshops, speeches and advisory days, are recognized at the point in time the service is complete or the customer receives the agreed upon deliverable. Consulting product revenues are recognized over time as the services are provided, based on an input method that calculates the total hours expended compared to the estimated hours required to satisfy the performance obligation. This input method was chosen since it closely aligns with how control of interim deliverables is transferred to the customer throughout the engagement. It is also the method used internally to price consulting services and assess operational performance. This method requires the use of judgement in determining the required number of hours to complete the project. Event revenues are recognized upon completion of the Event. Reimbursed out-of-pocket expenses are recorded as advisory services and events revenues in the Consolidated Statements of Income (Loss). Our Research subscription products include access to all or a designated portion of our research, and depending on the type of license, unlimited phone or email analyst inquiry, and unlimited participation in Forrester Webinars, all of which are delivered throughout the contract period and are accounted for as a single performance obligation. Certain of our Research subscription products also include advisory services or an Event ticket and these products are accounted for as two performance obligations: (1) the subscription and (2) the advisory services or Event ticket. Arrangement consideration is allocated to each obligation based upon its standalone selling price, which is determined based on standalone sales of the advisory services or Event ticket and the estimated selling price of the remaining subscription services. Our Connect revenues primarily consist of annual subscriptions for Leadership Boards, which include access to the Research offering, access to a private forum with other Leadership Board member peers, access to a Forrester advisor, member-generated content, and one Event ticket. Leadership Boards are accounted for as two performance obligations: (1) the Event ticket and (2) the remaining services that are delivered throughout the contract period. Arrangement consideration is allocated to each obligation based upon their standalone selling prices, which are determined based on standalone sales of Event tickets and the estimated selling price of the remaining services. Our Analytics subscription products include access to designated survey data products and access to an analytics client manager, which are delivered throughout the contract period and are accounted for as a single performance obligation. Certain of our Analytics subscription products also include advisory services and these products are accounted for as two performance obligations: (1) the subscription and analytics client manager, and (2) the advisory services. Arrangement consideration is allocated to each obligation based upon its standalone selling price, which is determined based on standalone sales of the advisory services and the estimated selling price of the remaining Analytics services. 19 (cid:129) (cid:129) We are required to estimate the amount of prepaid performance obligations that will expire unused and recognize revenue for that estimate over the same period the related rights are exercised by our customers. This assessment requires judgment, including estimating the percentage of prepaid rights that will go unexercised and anticipating the impact that future changes to products, pricing, and customer engagement will have on actual expirations. We update the estimates used to recognize unexercised rights on a quarterly basis. Leases. We enter into operating leases, primarily for office space for our employees, which are recorded as operating lease right-of-use assets and operating lease liabilities on our Consolidated Balance Sheets. The amounts recorded are based on the present value of the future minimum lease payments over the lease term at the commencement date of the lease. We use judgement to determine the discount rate in the present value calculation as an implicit rate in our lease agreements is generally not determinable. Currently, we use our incremental borrowing rate based on information available at lease inception or at the time of lease modification. Future events and economic factors could cause these rates to change or for us to conclude that different rates should be used to measure the initial lease asset and liability. Some of our lease agreements contain options to extend or terminate the lease. When determining the lease term at inception, these options are included in the measurement and recognition of the lease asset and liability when it is reasonably certain that we will exercise the option, which requires judgement. We consider various economic factors when making this determination, including, but not limited to, the significance of leasehold improvements incurred in the office space, the difficulty in replacing the asset, underlying contractual obligations, or specific characteristics unique to a particular lease. Subsequent to entering into a lease, if it becomes reasonably certain that we will exercise an option that was not included in the lease term, we account for the change in circumstances as a lease modification, which results in the remeasurement of the lease asset and liability as of the modification date. We continually evaluate whether facts or events indicate it is reasonably certain that management will exercise an option. Goodwill, Intangible Assets and Other Long-Lived Assets. As of December 31, 2019, we had $341.3 million of goodwill and intangible assets with finite lives recorded in our Consolidated Balance Sheets. Goodwill is required to be measured for impairment at least annually or whenever events indicate that there may be an impairment. In order to determine if an impairment exists, we compare each of our reporting units’ carrying value to the reporting unit’s fair value. Determining the reporting unit’s fair value requires us to make estimates of market conditions and operational performance, including projected financial results, discount rates, control premium, and valuation multiples for key financial metrics. We realigned our management structure into Products, Research, and SiriusDecisions as of January 1, 2019 from our prior structure of Products, Research, and Project Consulting. We performed a qualitative assessment of goodwill for the Products and Research reporting units (as the Project Consulting reporting unit did not contain goodwill) as of January 1, 2019, which was based on the quantitative assessment that was performed as of November 30, 2018 and activity in December 2018. We concluded that no impairment existed at January 1, 2019 and goodwill was reassigned as of January 1, 2019 based on the relative fair values of the Products and Research reporting units. Absent an event that indicates a specific impairment may exist, we have selected November 30th as the date to perform the annual goodwill impairment test. The annual assessment of goodwill can be based on either a quantitative or qualitative assessment, or a combination of both. We completed the annual goodwill impairment testing as of November 30, 2019 utilizing a quantitative assessment for the SiriusDecisions reporting unit and a qualitative assessment for the Research reporting unit and concluded that the fair values of each of our reporting units exceeds their respective carrying values. Future events could cause us to conclude that impairment indicators exist and that goodwill associated with our acquired businesses is impaired. Any resulting impairment loss could have a material adverse impact on our results of operations. Intangible assets with finite lives as of December 31, 2019 consist of acquired customer relationships, acquired technology, acquired backlog, and trade names and were valued according to the future cash flows they are estimated to produce or the estimated costs to replace the assets. These assigned values are amortized on a basis which best matches the periods in which the economic benefits are expected to be realized. Tangible assets with finite lives consist of property and equipment, which are depreciated over their estimated useful lives. We continually evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of our intangible and long-lived tangible assets may warrant revision or that the carrying value of these assets may be impaired. No such events or circumstances occurred during 2019. To compute whether intangible assets have been impaired, the estimated undiscounted future cash flows for the estimated remaining useful life of the assets are compared to the carrying value. To the extent that the future cash flows are less than the carrying value, the assets are written down to their estimated fair value. 20 (cid:129) Income Taxes. We recognize deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax bases of assets and liabilities as well as operating loss carryforwards (from acquisitions). Such amounts are adjusted as appropriate to reflect changes in the tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance to reduce our deferred taxes to an amount we believe is more likely than not to be realized. We consider future taxable income and prudent and feasible tax planning strategies in assessing the need for a valuation allowance. As a global company, we use significant judgment to calculate and provide for income taxes in each of the tax jurisdictions in which we operate. In the ordinary course of our business, there are transactions and calculations undertaken whose ultimate tax outcome cannot be certain. Some of these uncertainties arise as a consequence of transfer pricing for transactions with our subsidiaries and potential challenges to nexus and credit estimates. We estimate our exposure to unfavorable outcomes related to these uncertainties and record a liability based on the probability for such outcomes in accordance with current accounting guidelines. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome will not be different from what is reflected in our historical income tax provisions, returns, and accruals. Such differences, or changes in estimates relating to potential differences, could have a material impact on our income tax provision and operating results in the period in which such a determination is made. Results of Operations for the years ended December 31, 2019 and 2018 The following table sets forth our Consolidated Statements of Income (Loss) as a percentage of total revenues for the years noted. Revenues: Research services Advisory services and events Total revenues Operating expenses: Cost of services and fulfillment Selling and marketing General and administrative Depreciation Amortization of intangible assets Acquisition and integration costs Income (loss) from operations Interest expense Other income (expense), net Gains (losses) on investments, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) Years Ended December 31, 2019 2018 64.7% 35.3 100.0 63.9% 36.1 100.0 42.6 37.4 11.5 1.9 4.9 1.9 (0.2) (1.8) (0.1) — (2.1) — (2.1)% 41.0 36.9 12.3 2.2 0.3 1.0 6.3 — 0.2 0.1 6.6 2.3 4.3% 21 2019 compared to 2018 Revenues Revenues Revenues from research services Revenues from advisory services and events Revenues attributable to customers outside of the U.S. Percentage of revenue attributable to customers outside of the U.S. Number of clients (at end of period) Number of events $ $ $ $ 2019 2018 Absolute Increase (Decrease) Percentage Increase (Decrease) (dollars in millions) 461.7 298.7 163.0 98.8 $ $ $ $ 357.6 228.4 129.2 83.4 $ $ $ $ 21% 23% 2,880 19 2,353 15 104.1 70.3 33.8 15.4 (2) 527 4 29% 31% 26% 18% (9%) 22% 27% Total revenues increased 29% during 2019 compared to 2018 with SiriusDecisions contributing 22 percentage points of the increase. Revenues from customers outside of the U.S. increased 18% during 2019 compared to the prior year. The increase in revenues attributable to customers outside of the U.S. was primarily due to the acquisition of SiriusDecisions, which added $9.2 million in international revenue, and growth in revenues in the Asia Pacific region and Europe in the legacy Forrester business. Research services revenues are recognized as revenue primarily on a ratable basis over the term of the contracts, which are generally twelve-month periods. Research services revenues increased 31% during 2019 compared to the prior year with SiriusDecisions contributing 26 percentage points of the increase. The remainder of the increase was primarily driven by growth in the legacy Analytics, Connect and Research products. Revenues from advisory services and events increased 26% during 2019 compared to the prior year with SiriusDecisions contributing 16 percentage points of the increase. The remainder of the increase was due to growth of legacy Consulting revenues, which were partially offset by a decline in legacy Events revenues. Please refer to the “Segment Results” section below for a discussion of revenue and contribution margin results by segment. Cost of Services and Fulfillment Cost of services and fulfillment (dollars in millions) Cost of services and fulfillment as a percentage of total revenues Service and fulfillment employees (at end of period) $ 196.7 $ 146.5 $ 50.2 42.6% 776 41.0% 639 1.6 137 34% 4% 21% 2019 2018 Absolute Increase (Decrease) Percentage Increase (Decrease) Cost of services and fulfillment expenses increased 34% in 2019 compared to 2018. Approximately $39.5 million of the increase was attributable to the acquisition of SiriusDecisions. The remainder of the increase was primarily due to (1) a $5.5 million increase in compensation and benefit costs, resulting principally from an increase in the number of employees compared to the prior year period and annual merit increases, (2) a $2.3 million increase in stock compensation expense, (3) a $1.2 million increase in lease expense and computer software costs, and (4) a $1.1 million increase in professional services costs primarily due to an increase in outsourced services related to revenue delivery. 22 Selling and Marketing Selling and marketing expenses (dollars in millions) Selling and marketing expenses as a percentage of total revenues Selling and marketing employees (at end of period) $ 172.9 $ 131.8 $ 41.0 37.4% 780 36.9% 590 0.5 190 31% 1% 32% 2019 2018 Absolute Increase (Decrease) Percentage Increase (Decrease) Selling and marketing expenses increased 31% in 2019 compared to 2018. Approximately $33.4 million of the increase was attributable to the acquisition of SiriusDecisions. The remainder of the increase was primarily due to (1) a $5.1 million increase in compensation and benefit costs, resulting principally from an increase in the number of employees compared to the prior year period and annual merit increases, (2) a $1.1 million increase in professional services costs primarily due to an increase in advertising and marketing costs, (3) a $0.7 million increase in stock compensation expense, and (4) a $0.6 million increase in lease expense and computer software costs. We intend to increase our sales employees by approximately 4% to 6% during 2020 as compared to 2019. General and Administrative General and administrative expenses (dollars in millions) General and administrative expenses as a percentage of total revenues General and administrative employees (at end of period) 2019 2018 Absolute Increase (Decrease) Percentage Increase (Decrease) $ 53.0 $ 43.9 $ 9.1 21% 11.5% 239 12.3% 203 (0.8) 36 (7%) 18% General and administrative expenses increased 21% in 2019 compared to 2018. Approximately $6.0 million of the increase was attributable to the acquisition of SiriusDecisions. The remainder of the increase was primarily due to (1) a $1.3 million increase in compensation and benefit costs, resulting principally from an increase in the number of employees compared to the prior year period and annual merit increases, (2) a $1.0 million increase in professional services costs primarily due to an increase in technology services, accounting, and tax costs, (3) a $0.5 million increase in lease expense and computer software costs, and (4) a $0.4 million increase in stock compensation expense. Depreciation Depreciation expense remained essentially consistent during the year ended December 31, 2019 compared to the prior year period. Amortization of Intangible Assets Amortization expense increased by $21.5 million to $22.6 million in 2019 as compared to $1.2 million in 2018, primarily due to the acquisition of SiriusDecisions. We expect amortization expense related to our intangible assets to be approximately $19.0 million for the year ending December 31, 2020. Acquisition and Integration Costs Net acquisition and integration costs increased by $5.2 million to $8.9 million in 2019 as compared to $3.8 million in 2018 due to the acquisition and ongoing integration of SiriusDecisions. The costs consist of the direct and incremental costs to acquire and integrate the companies acquired during 2019 and 2018, as well as certain fair value adjustments related to the acquisitions. The costs primarily consisted of consulting, severance, accounting and tax professional fees, and lease expense for unused facilities. For the year ended December 31, 2019, these costs included an offset of $2.5 million related to the benefit of recording deferred commissions for SiriusDecisions in the first year following the acquisition. We expect to incur integration costs in a range of $1.8 million to $2.2 million for the year ending December 31, 2020. 23 Income (Loss) from Operations Income (loss) from operations was a loss of $1.1 million in 2019, which is a decrease of $23.5 million from income of $22.4 million in 2018. The decrease was primarily due to acquisition related costs, including an increase in amortization of intangible assets and acquisition and integration costs of $22.6 million and $5.2 million, respectively, partially offset by an increase in income from operations of $4.3 million due to the other factors mentioned above. Interest Expense During the year ended December 31, 2019, we incurred $8.1 million of interest expense. Interest expense consists of interest on our borrowings used to finance the acquisition of SiriusDecisions. We expect to incur interest expense in a range of $5.9 million to $6.1 million for the year ending December 31, 2020. Other Income (Expense), Net Other income (expense), net primarily consists of interest income as well as gains and losses on foreign currency. The decrease in other income (expense), net of $1.2 million during 2019 was primarily due to a decrease in interest income compared to 2018 due to the use of cash for the acquisition of SiriusDecisions. Gains (Losses) on Investments, Net Gains (losses) on investments, net include our share of equity method investment gains or losses from our technology-related investment funds and gains or losses from the sale of marketable securities. The decrease during 2019 was due to minimal investment gains recognized by the underlying funds in 2019 as compared to an investment gain of $0.6 million in the prior year. Income Tax Expense (Benefit) Provision for income taxes (dollars in millions) Effective tax rate 2019 $ — $ 0.3% 2018 Increase Absolute Percentage Increase (Decrease) (Decrease) 8.1 $ 34.6% (8.1) (34.3) (100%) (99%) The decrease in the effective tax rate during 2019 as compared to the prior year was primarily due to the relative size of the loss before taxes in 2019 of $9.6 million compared to income before taxes in 2018 of $23.5 million, audit settlements in non-U.S. territories in 2019, and the impact of foreign subsidiary income subject to U.S. tax in 2019. Segment Results In the first quarter of 2019, we realigned our management structure into Products, Research and SiriusDecisions. Prior year amounts have been revised to conform to the current presentation. The Products segment includes revenues from our Connect, Analytics, and Events products (excluding the revenues from SiriusDecisions products) and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes Consulting revenues and the related costs of our project consulting organization. The project consulting organization delivers a majority of our project consulting revenue (excluding SiriusDecisions consulting) and certain advisory services primarily related to the Analytics product line. This segment also includes the costs of the product management organization that is responsible for product pricing and packaging and the launch of new products. The Research segment includes revenues from our Research products and the cost of the organizations responsible for developing and delivering the Research products (excluding the costs and revenues from SiriusDecisions products). In addition, this segment includes Consulting revenues primarily from the delivery of advisory services (such as workshops, speeches and advisory days) delivered by our research analysts. The SiriusDecisions segment includes revenues from the all SiriusDecisions products and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes the costs of marketing, technology development and business support departments of the SiriusDecisions business. 24 We evaluate reportable segment performance and allocate resources based on segment revenues and expenses. Segment expenses include the direct expenses of each segment organization and exclude, except as noted above for the SiriusDecisions segment, selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other income (expense), and gains (losses) on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements. For 2020, we determined that SiriusDecisions will no longer operate under a separate management structure. Our internal management and reporting will be aligned to consolidate each of the SiriusDecisions products and related operations under a single, combined organization within our existing Products and Research segments. Accordingly, in the first quarter of 2020, we will modify our segment reporting, which will eliminate the SiriusDecisions segment, and incorporate SiriusDecisions Research products into the Research segment and incorporate SiriusDecisions Consulting, Connect and Event products into the Products segment. Year Ended December 31, 2019 Research services revenues Research Connect Analytics Total research services revenues Advisory services and events revenues Consulting Events Total advisory services and events revenues Total segment revenues Segment expenses Contribution margin Year over year revenue change Year over year expense change Year Ended December 31, 2018 Research services revenues Research Connect Analytics Total research services revenues Advisory services and events revenues Consulting Events Total advisory services and events revenues Total segment revenues Segment expenses Contribution margin Products Research Decisions Consolidated (In thousands, except percentages) Sirius $ $ $ — 54,350 23,322 77,672 161,487 — — 161,487 57,702 $ 1,874 — 59,576 219,189 56,224 23,322 298,735 76,567 12,985 89,552 167,224 81,520 85,704 53,258 — 53,258 214,745 55,330 159,415 12% 9% 3% 4% 6,127 14,025 20,152 79,728 45,734 33,994 N/A N/A 135,952 27,010 162,962 461,697 182,584 279,113 29% 42% Products Research Sirius Decisions Consolidated (In thousands) $ — $ 51,377 19,910 71,287 157,112 $ — — 157,112 — $ — — — 157,112 51,377 19,910 228,399 64,309 13,471 77,780 149,067 75,039 74,028 51,396 — 51,396 208,508 53,326 155,182 — — — — — — 115,705 13,471 129,176 357,575 128,365 229,210 Product segment revenues increased 12% during 2019 compared to the prior year period. Connect revenues increased 6% driven by our Certification products and Analytics revenues grew 17% due primarily to the FeedbackNow product line. Consulting revenues increased 19% driven by strong consultant delivery and Events revenues decreased by 4% due in part to holding four fewer events as compared to the prior year. 25 Product segment expenses increased 9% during 2019 compared to the prior year period. The increase in expenses was primarily due to a $5.1 million increase in compensation and benefit costs due to an increase in the number of employees and annual merit increases, and a $0.8 million increase professional services costs primarily due to an increase in outsourced services related to revenue delivery. Research segment revenues increased 3% during 2019 compared to the prior year period as the Research product line increased 3% driven by our reprint product and Consulting revenues increased 4%. Research segment expenses increased 4% during 2019 compared to the prior year period. The increase in expenses was primarily due to a $1.4 million increase in compensation and benefits due to an increase in the number of employees and annual merit increases and small increases in professional services and travel and entertainment. A detailed description and analysis of the fiscal year 2017 year-over-year changes can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2018. Liquidity and Capital Resources We have historically financed our operations primarily through funds generated from operations. Research services revenues, which constituted approximately 65% of our revenues during 2019, are generally renewable annually and are typically payable in advance. We generated cash from operating activities of $48.4 million and $38.4 million during the years ended December 31, 2019 and 2018, respectively. The $10.0 million increase in cash provided from operations during 2019 was primarily attributable to a $17.2 million increase in cash generated from accounts receivable and deferred revenue due to strong bookings and collections activity in the current year, partially offset by a $4.0 million decrease in cash generated from prepaid expenses and other current assets. During 2019, we used cash in investing activities of $249.5 million, consisting primarily of $237.7 million for the acquisition of SiriusDecisions, net of cash acquired, and $11.9 million in purchases of property and equipment. Property and equipment purchases during 2019 consisted primarily of software and leasehold improvements. During 2018, we generated $40.0 million of cash from investing activities, consisting primarily of $54.4 million in net sales and maturities of marketable investments as we liquidated our entire portfolio of marketable securities during 2018 to fund the SiriusDecisions acquisition. We used $9.3 million for the acquisitions of FeedbackNow and GlimpzIt and also used $5.1 million for purchases of property and equipment during 2018. Property and equipment purchases during 2018 consisted primarily of software. We generated $129.4 million of cash from financing activities during 2019 primarily due to $171.3 million of borrowings to finance the SiriusDecisions acquisition, which reflects the face value of debt of $175.0 million less $3.7 million that was netted against the proceeds to pay debt issuance costs. This was partially offset by $42.3 million of repayments of debt that consisted of $36.0 million of discretionary payments on our revolving credit facility and $6.3 million of required repayments of our term loan. We used $14.0 million of cash from financing activities during 2018 primarily due to $14.5 million for the payment of quarterly dividends, consisting of a $0.20 per share dividend each quarter, $9.9 million for purchases of our common stock, and $2.5 million in taxes paid related to net share settlements of restricted stock units. These uses were partially offset by $13.0 million of proceeds received from the exercise of stock options and our employee stock purchase plan. At December 31, 2019, we had $14.0 million outstanding on our revolving credit facility and plan to use excess cash flow, if any, to continue to make discretionary payments on our revolving credit facility. We also anticipate paying approximately $3.5 million of deferred acquisition purchase price for the FeedbackNow acquisition during 2020. As of December 31, 2019, our remaining stock repurchase authorization was approximately $60.1 million. In connection with the acquisition of SiriusDecisions, we entered into a $200.0 million credit agreement on January 3, 2019. The credit agreement provides for: (1) senior secured term loans in an aggregate principal amount of $125.0 million (the “Term Loans”) and (2) a senior secured revolving credit facility in an aggregate principal amount of $75.0 million (the “Revolving Credit Facility”). We utilized the full $125.0 million of the Term Loans and $50.0 million of the Revolving Credit Facility to finance a portion of the acquisition of SiriusDecisions and to pay certain fees, costs and expenses incurred in connection with the Term Loans and Revolving Credit Facility. Additional information is provided in Note 4 – Debt in the Notes to Consolidated Financial Statements. Borrowings under the credit agreement can be repaid early, in part or in whole, at any time and from time to time, without premium or penalty, other than customary breakage reimbursement requirements for the London Interbank Offering Rate (“LIBOR”) based loans. The Term Loans must be prepaid with net cash proceeds of (i) certain debt incurred or issued by us and our restricted subsidiaries and (ii) certain asset sales and condemnation or casualty events, subject to certain reinvestment rights. 26 Amounts borrowed under the credit agreement bear interest, at our option, at a rate per annum equal to either (i) LIBOR for the applicable interest period plus a margin that is between 1.75% and 2.50% based on our consolidated total leverage ratio or (ii) the alternate base rate plus a margin that is between 0.75% and 1.50% based on our consolidated total leverage ratio. In addition, we will pay a commitment fee that is between 0.25% and 0.35% per annum, based on our consolidated total leverage ratio, on the average daily unused portion of the Revolving Credit Facility, payable quarterly, in arrears. During 2019, we entered into an interest rate swap contract to effectively convert the floating base interest rate to a fixed rate on approximately 80% of the outstanding Term Loan principal balance. Additional information is provided in Note 11 – Derivatives and Hedging in the Notes to the Consolidated Financial Statements. The credit agreement contains certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio and minimum fixed charge coverage ratio. The negative covenants limit, subject to various exceptions, our ability to incur additional indebtedness, create liens on assets, merge, consolidate, liquidate or dissolve any part of Forrester, sell assets, pay dividends or other payments in respect to capital stock, change fiscal year, or enter into certain transactions with affiliates and subsidiaries. We were in full compliance with the covenants as of December 31, 2019 and expect to continue to be in compliance through the next 12 months. The credit agreement also contains customary events of default, representations, and warranties. As of December 31, 2019, we had cash and cash equivalents of $67.9 million. This balance includes $48.1 million held outside of the U.S. If the cash outside of the U.S. is needed for operations in the U.S., we would be required to accrue and pay U.S. state taxes and may be required to pay withholding taxes to foreign jurisdictions to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate these funds for our U.S. operations. We believe that our current cash balance and cash flows from operations will satisfy working capital, financing activities, and capital expenditure requirements for the next twelve months. As of December 31, 2019, we had future contractual cash obligations as follows (in thousands): Contractual Obligations Operating lease payments (1) Debt - principal and interest payments (2) Purchase commitments (3) 2021 2020 Total Thereafter 2022 $ 93,255 $ 15,904 $ 14,092 $ 13,577 $ 13,073 $ 12,673 $ 23,936 — 134,870 14,134 16,811 16,286 18,850 68,789 16,055 14,315 — — $244,180 $ 44,353 $ 31,773 $ 30,733 $ 31,923 $ 81,462 $ 23,936 870 870 — 2023 2024 (1) We primarily lease office space under non-cancellable operating lease agreements. Refer to Note 7 – Leases in the Notes to Consolidated Financial Statements for additional information on the Company’s leases. (2) Principal repayments are based on the contractual repayment dates. Interest payments are based on the interest rates in effect as of December 31, 2019. Refer to Note 4 – Debt in the Notes to Consolidated Financial Statements. (3) Purchase commitments principally consist of contractual commitments for software, outsourced research services and Event venues. In addition to the contractual cash commitments included above, we have other payable and liabilities that may be legally enforceable but are not considered contractual commitments. See Note 13 – Certain Balance Sheet Accounts in the Notes to Consolidated Financial Statements for more information on our payables and liabilities. As of December 31, 2019, $0.1 million of unrecognized tax benefits for uncertain tax positions and the accrual for the related interest was included in non-current liabilities. These amounts were not included in the table above because we are unable to make a reasonably reliable estimate of when a cash settlement, if any, will occur with a tax authority as the timing of examinations and ultimate resolutions of those examinations is uncertain. Off-Balance Sheet Arrangements We do not maintain any off-balance sheet financing arrangements. Recent Accounting Pronouncements See Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition. 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk The following discussion about our market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We are exposed to market risk related to changes in foreign currency exchange rates and changes in interest rates on our variable-rate debt. Foreign Currency Exchange. On a global level, we face exposure to movements in foreign currency exchange rates as we enter into normal business transactions that may be in currencies other than the local currency of our subsidiaries. In addition, transactions and account balances between our U.S. and foreign subsidiaries expose us to currency exchange risk. This exposure may change over time as business practices evolve and could have a material adverse effect on our results of operations. For the year ended December 31, 2019, we incurred foreign currency exchange losses of $0.9 million. For each of the years ended December 31, 2018 and 2017, we incurred foreign currency exchange losses of $0.6 million. Historically, we have not entered into any hedging agreements to mitigate foreign currency exchange risk as we have assessed our exposure to sudden changes in foreign currency exchange rates to be insignificant. However, we may enter into hedging agreements in the future to attempt to mitigate the financial effect of future fluctuations in the euro, British pound or other foreign currencies. Interest Rate Risk. As of December 31, 2019, we had $132.8 million in total debt principal outstanding. See Note 4 — Debt in the Notes to Consolidated Financial Statements for additional information regarding our outstanding debt obligations. All of our debt outstanding as of December 31, 2019 was based on a floating base rate of interest, which potentially exposes us to increases in interest rates. We substantially reduced our overall exposure to changes in interest rates through an interest rate swap contract, which has the effect of converting the floating base rate of interest to a fixed rate on approximately 80% of our term loan principal balance. At December 31, 2019, we had unhedged interest rate risk on approximately $23.8 million of our outstanding term loan principal balance. As an indication of our potential exposure to changes in interest rates, a hypothetical 25 basis point increase or decrease in interest rates on the unhedged portion of our debt could change our annual pretax interest expense for the following 12 month period by approximately $0.1 million. 28 Item 8. Consolidated Financial Statements and Supplementary Data The financial statements listed in the following Index to Financial Statements are filed as a part of this 2019 Annual Report on Form 10-K. FORRESTER RESEARCH, INC. INDEX TO FINANCIAL STATEMENTS Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm........................................................... Consolidated Balance Sheets............................................................................................................................................................ Consolidated Statements of Income (Loss) ...................................................................................................................................... Consolidated Statements of Comprehensive Income (Loss) ............................................................................................................ Consolidated Statements of Stockholders’ Equity ........................................................................................................................... Consolidated Statements of Cash Flows........................................................................................................................................... Notes to Consolidated Financial Statements .................................................................................................................................... Page 30 32 33 34 35 36 37 29 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Forrester Research, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Forrester Research, Inc. and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management’s Report on Internal Control over Financial Reporting, management has excluded certain elements of the internal control over financial reporting of SiriusDecisions, Inc. from its assessment of the Company’s internal control over financial reporting as of December 31, 2019 because it was acquired by the Company in a purchase business combination during 2019. Subsequent to the acquisition, certain elements of SiriusDecisions, Inc.’s internal control over financial reporting and related processes were integrated into the Company’s existing systems and internal control over financial reporting. Those controls that were not integrated have been excluded from management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2019. We have also excluded these elements of the internal control over financial reporting of SiriusDecisions, Inc. from our audit of the Company’s internal control over financial reporting. The excluded elements represent controls over approximately 2% of consolidated assets and 16% of the consolidated revenues. 30 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts March 13, 2020 We have served as the Company’s auditor since 2010. 31 FORRESTER RESEARCH, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) ASSETS Current Assets: Cash and cash equivalents Accounts receivable, net (Note 13) Deferred commissions Prepaid expenses and other current assets Total current assets Property and equipment, net (Note 13) Operating lease right-of-use assets (Note 7) Goodwill (Note 3) Intangible assets, net (Note 3) Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable Accrued expenses and other current liabilities (Note 13) Current portion of long-term debt (Note 4) Deferred revenue Total current liabilities Long-term debt, net of deferred financing fees (Note 4) Non-current operating lease liabilities (Note 7) Other non-current liabilities (Note 8, 13) Total liabilities Stockholders' Equity (Note 9): Preferred stock, $0.01 par value December 31, 2019 December 31, 2018 $ $ $ 67,904 $ 84,605 20,326 19,201 192,036 29,937 69,100 243,895 97,363 6,829 639,160 $ 505 $ 79,857 9,375 179,194 268,931 121,170 67,062 23,909 481,072 140,296 67,318 15,677 12,802 236,093 22,005 — 85,165 4,951 5,310 353,524 588 54,065 — 135,332 189,985 — — 11,939 201,924 Authorized - 500 shares; issued and outstanding - none — — Common stock, $0.01 par value Authorized - 125,000 shares Issued - 23,275 and 22,951 shares as of December 31, 2019 and 2018, respectively Outstanding - 18,644 and 18,320 shares as of December 31, 2019 and 2018, respectively Additional paid-in capital Retained earnings Treasury stock - 4,631 shares as of December 31, 2019 and 2018, at cost Accumulated other comprehensive loss Total stockholders’ equity Total liabilities and stockholders’ equity 233 216,454 118,147 (171,889) (4,857) 158,088 639,160 $ 230 200,696 127,717 (171,889) (5,154) 151,600 353,524 $ The accompanying notes are an integral part of these consolidated financial statements. 32 FORRESTER RESEARCH, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (In thousands, except per share data) Revenues: Research services Advisory services and events Total revenues Operating expenses: Cost of services and fulfillment Selling and marketing General and administrative Depreciation Amortization of intangible assets Acquisition and integration costs Total operating expenses Income (loss) from operations Interest expense Other income (expense), net Gains (losses) on investments, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) Basic income (loss) per common share Diluted income (loss) per common share Basic weighted average common shares outstanding Diluted weighted average common shares outstanding $ $ $ $ 2019 Years Ended December 31, 2018 2017 298,735 $ 162,962 461,697 196,726 172,865 53,042 8,572 22,619 8,948 462,772 (1,075) (8,054) (515) 45 (9,599) (29) (9,570) $ (0.52) $ (0.52) $ 18,492 18,492 228,399 $ 129,176 357,575 146,502 131,824 43,920 7,955 1,162 3,787 335,150 22,425 — 674 426 23,525 8,145 15,380 $ 0.85 $ 0.84 $ 18,091 18,380 216,471 121,202 337,673 136,872 123,917 41,906 6,648 781 — 310,124 27,549 — 301 (479) 27,371 12,231 15,140 0.84 0.83 17,919 18,240 The accompanying notes are an integral part of these consolidated financial statements. 33 FORRESTER RESEARCH, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Net income (loss) Other comprehensive income (loss), net of taxes: Foreign currency translation Net change in market value of interest rate swap Net change in market value of investments Other comprehensive income (loss) Comprehensive income (loss) 2019 Years Ended December 31, 2018 2017 $ (9,570) $ 15,380 $ 15,140 401 (104) — 297 (9,273) $ (3,257) — 141 (3,116) 12,264 $ 5,593 — (32) 5,561 20,701 $ The accompanying notes are an integral part of these consolidated financial statements. 34 FORRESTER RESEARCH, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Balance, December 31, 2016 Issuance of common stock under stock plans, including tax effects Cumulative effect adjustment due to adoption of new accounting pronouncements Stock-based compensation expense Repurchases of common stock Dividends paid on common shares Net income Net change in marketable investments, net of tax Foreign currency translation Balance, December 31, 2017 Issuance of common stock under stock plans, including tax effects Cumulative effect adjustment due to adoption of new accounting pronouncements Stock-based compensation expense Repurchases of common stock Dividends paid on common shares Net income Net change in marketable investments, net of tax Foreign currency translation Balance, December 31, 2018 Issuance of common stock under stock plans, including tax effects Stock-based compensation expense Net loss Net change in interest rate swap, net of tax Foreign currency translation Balance, December 31, 2019 Common Stock Number of $0.01 Par Shares Value Additional Paid-in Capital Treasury Stock Retained Earnings Number of Shares Cost Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity 21,719 $ 217 $ 157,569 $ 121,799 3,358 $ (121,976) $ (7,573) $ 150,036 713 7 15,972 — — — — 15,979 — — — — — — — — — — (121) 8,490 — — — (298) — — (13,631) 15,140 — — 1,033 — — — — (39,967) — — — — — — — — — 22,432 — — 224 — — 181,910 — — 123,010 — — 4,391 — — (161,943) (32) 5,593 (2,012) (419) 8,490 (39,967) (13,631) 15,140 (32) 5,593 141,189 519 6 10,486 — — — — 10,492 — — — — — — — 22,951 324 — — — — 23,275 $ — — — — — — 8,300 — — — 3,829 — — (14,502) 15,380 — — 240 — — — — (9,946) — — — — 230 — — 200,696 — — 127,717 — — 4,631 — — (171,889) 3 — — — — — 4,074 — 11,684 (9,570) — — — — — 233 $ 216,454 $ 118,147 — — — — — — — — — — 4,631 $ (171,889) $ (26) — — — — 141 (3,257) (5,154) — — — (104) 401 (4,857) $ 3,803 8,300 (9,946) (14,502) 15,380 141 (3,257) 151,600 4,077 11,684 (9,570) (104) 401 158,088 The accompanying notes are an integral part of these consolidated financial statements. 35 FORRESTER RESEARCH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation Amortization of intangible assets Net (gains) losses from investments Deferred income taxes Stock-based compensation Operating lease right-of-use asset amortization and impairments Amortization of deferred financing fees Amortization of premium (discount) on investments Foreign currency losses Changes in assets and liabilities, net of businesses acquired Accounts receivable Deferred commissions Prepaid expenses and other current assets Accounts payable Accrued expenses and other liabilities Deferred revenue Operating lease liabilities Net cash provided by operating activities Cash flows from investing activities: Acquisitions, net of cash acquired Purchases of property and equipment Purchases of marketable investments Proceeds from maturities of marketable investments Proceeds from sales of marketable investments Other investing activity Net cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from borrowings, net of costs Payments on borrowings Payment of debt issuance costs Deferred acquisition payments Dividends paid on common stock Repurchases of common stock Proceeds from issuance of common stock under employee equity incentive plans Taxes paid related to net share settlements of stock-based compensation awards Net cash provided by (used in) financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of year Cash, cash equivalents and restricted cash, end of year Supplemental disclosure of cash flow information: Cash paid for interest Cash paid for income taxes 2019 Years Ended December 31, 2018 2017 $ (9,570) $ 15,380 $ 15,140 8,572 22,619 (45) (3,957) 11,684 12,592 968 — 933 3,696 (4,643) (3,697) 278 4,421 15,508 (10,953) 48,406 (237,684) (11,890) — — — 29 (249,545) 171,275 (42,250) (857) (2,799) — — 7,955 1,162 (426) 2,931 8,300 — — (68) 603 2,588 (1,077) 285 172 1,217 (604) — 38,418 (9,250) (5,049) (41,810) 63,627 32,568 — 40,086 — — — — (14,502) (9,946) 6,327 13,020 (2,258) 129,438 597 (71,104) 140,296 69,192 $ (2,526) (13,954) (4,044) 60,506 79,790 140,296 $ 7,003 $ 4,433 $ — $ 4,174 $ $ $ $ 6,648 781 479 6,425 8,490 — — 207 632 (10,327) (1,679) (4,146) (1,600) 7,857 8,586 — 37,493 — (7,861) (31,910) 31,913 6,545 343 (970) — — — — (13,631) (39,967) 18,506 (2,527) (37,619) 3,928 2,832 76,958 79,790 — 10,433 The accompanying notes are an integral part of these consolidated financial statements. Non-cash investing activities for the year ended December 31, 2019 include $3.7 million of debt issuance costs deducted directly from the proceeds of borrowings by the lender. Refer to Note 4 – Debt for further information. 36 FORRESTER RESEARCH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2019 Note 1 - Summary of Significant Accounting Policies Basis of Presentation Principles of Consolidation Forrester Research, Inc. is a global independent research, data, and advisory services firm. Forrester works with business and technology leaders to drive customer-obsessed vision, strategy, and execution that accelerate growth. Forrester’s unique insights are grounded in annual surveys of more than 690,000 consumers and business leaders worldwide, rigorous and objective research methodologies, and the shared wisdom of our clients. Through proprietary research, data and analytics, custom consulting, exclusive executive peer groups, certifications, and events, Forrester is revolutionizing how businesses grow in an era of powerful customers. The accompanying consolidated financial statements include the accounts of Forrester and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Business Acquisitions Forrester accounts for business combinations in accordance with the acquisition method of accounting as prescribed by Accounts Standards Codification (“ASC”) Topic 805, Business Combinations. The acquisition method of accounting requires the Company to record the assets and liabilities acquired based on their estimated fair values as of the acquisition date, with any excess of the consideration transferred over the estimated fair value of the net assets acquired, including identifiable intangible assets, to be recorded to goodwill. In 2019, Forrester acquired SiriusDecisions, Inc. In 2018, Forrester acquired S.NOW SA (which operates as “FeedbackNow”) and SocialGlimpz, Inc. (which operates as “GlimpzIt”). Refer to Note 2 – Acquisitions for further information on these acquisitions. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Forrester considers the more significant of these estimates to be revenue recognition, leases, valuation of goodwill, intangible assets and acquired assets and liabilities from business combinations, ongoing impairment reviews of goodwill and intangible assets, and income taxes. On an ongoing basis, management evaluates its estimates. Actual results could differ from these estimates. Adoption of New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities from leases on the balance sheet and disclose qualitative and quantitative information about the lease arrangements. Lessor accounting is largely unchanged. Leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which allowed for an additional adoption method, and for lessors, provides a practical expedient for the separation of lease and non-lease components within a contract. On January 1, 2019, the Company adopted Topic 842 using the modified retrospective method in which prior periods are not adjusted. Under this method, the cumulative effect of applying the standard is recorded at the date of initial application. Adoption of the standard did not result in the Company recording a cumulative effect adjustment. Adoption of the standard resulted in the recognition of operating lease right-of-use (“ROU”) assets of $53.3 million, operating lease liabilities of $60.8 million and the elimination of deferred rent of $7.5 million on the adoption date. In addition, the Company recorded $10.4 million of operating lease ROU assets and operating lease liabilities on January 3, 2019 as a result of the acquisition of SiriusDecisions (see Note 2 – Acquisitions). Adoption of the standard did not have a material impact on the Company’s results of operations or cash flows. The Company elected the package of practical expedients permitted under Topic 842 that allows the carry forward of the historical lease classification for all leases that existed as of the adoption date. In addition, the Company elected to exempt short term leases from recognition of ROU assets and lease liabilities and elected not to separate lease and non-lease components within its leases. 37 Under prior GAAP, as of December 31, 2018, the Company’s future contractual obligations for operating leases were as follows (in thousands): 2019 2020 2021 2022 2023 Thereafter Total minimum lease payments $ $ 12,498 11,762 10,145 8,552 7,856 22,222 73,035 The Company adopted the guidance in ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, on January 1, 2018. The new standard clarifies certain aspects of the statement of cash flows, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and distributions received from equity method investees, among others. The adoption of this standard did not have a material impact on the Company’s statements of cash flows. The Company adopted the guidance in ASU No. 2016-18, Statement of Cash Flows: Restricted Cash, on January 1, 2018. The new standard requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. The adoption of this standard did not have an impact on the Company’s statements of cash flows. The Company adopted the guidance in ASU No. 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business on January 1, 2018. The new standard amended the prior business combinations guidance by clarifying the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The adoption of the standard did not have an impact on the Company's financial position or statement of operations. The Company elected to adopt the guidance in ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, on January 1, 2018. The new standard allows, but does not require, a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Act”) enacted on December 22, 2017. The Company elected to make the reclassification adjustment as of the beginning of the period of adoption in the amount of $26 thousand using the aggregate portfolio approach. The reclassification amount includes the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts at the date of enactment of the Act related to items remaining in accumulated other comprehensive loss. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers products or services to customers, in an amount that reflects the consideration that the company expects to receive for those products or services. Topic 606 also includes subtopic ASC 340-40, Other Assets and Deferred Costs- Contracts with Customers, which provides guidance on accounting for certain revenue related costs including costs associated with obtaining and fulfilling a contract. On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method. Under this method, the reported results for 2018 reflect the application of Topic 606, while the reported results for 2017 were prepared under the guidance of ASU No. 2009-13, Revenue Recognition (Topic 605), which is referred to herein as the “previous guidance”. The modified retrospective method requires the cumulative effect of applying the new guidance to all contracts with customers that were not completed as of January 1, 2018 to be recorded as an adjustment to retained earnings as of the adoption date. Forrester considered a contract to be complete if all the revenue was recognized in accordance with the previous guidance that was in effect before the adoption date. The effect of adopting Topic 606 included a $7.8 million reduction in deferred revenue, primarily related to prepaid performance obligations expected to expire in 2018 and 2019 that would have been recognized in 2017 under the new guidance; a decrease of $5.5 million in prepaid expenses and other current assets related to deferred survey costs that would have been expensed as incurred in 2017 under the new guidance and the current tax impact of the cumulative effect; an increase of $0.9 million in deferred commissions related to the capitalization of fringe benefits as incremental costs to obtain customer contracts under the new guidance; and an increase of $0.6 million in other assets for the deferred tax effect of the cumulative effect. Retained earnings increased by $3.8 million as a net result of these adjustments. 38 Fair Value Measurements The carrying amounts reflected in the Consolidated Balance Sheets for cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. The Company’s financial instruments also include its outstanding variable-rate borrowings (refer to Note 4 – Debt). The Company believes that the carrying amount of its variable-rate borrowings reasonably approximate their fair values because the rates of interest on those borrowings reflect current market rates of interest. Additionally, the Company has certain financial assets and liabilities recorded at fair value at each balance sheet date in accordance with the accounting standards for fair value measurements. Refer to Note 6 – Fair Value Measurements for the Company’s fair value disclosures. Cash, Cash Equivalents, and Marketable Investments Forrester considers all short-term, highly liquid investments with original maturities at the time of purchase of 90 days or less to be cash equivalents. The Company liquidated its entire portfolio of marketable investments in December of 2018 to fund the acquisition of SiriusDecisions on January 3, 2019. Forrester previously accounted for all marketable investments as available-for-sale securities and as such, the marketable investments were carried at fair value with unrealized gains and losses (not related to credit losses) recorded in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets. Realized gains and losses on securities were included in earnings and were determined using the specific identification method. The Company conducted periodic reviews to identify and evaluate each investment that had an unrealized loss, in accordance with the meaning of other-than-temporary impairment and its application to certain investments, as required under current accounting standards. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded, net of tax, in accumulated other comprehensive loss. The determination of whether a loss is considered temporary is based in part on whether the Company intends to sell the security or whether the Company would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. During the years ended December 31, 2018 and 2017, the Company did not record any other-than-temporary impairment losses on its available-for-sale securities. Realized losses on sales of the Company’s available-for-sale securities were $0.2 million for the year ended December 31, 2018 and were recorded in gains (losses) on investments, net. Realized gains or losses on sales of the Company’s available-for-sale securities were not significant for the year ended December 31, 2017. Presentation of Restricted Cash The following table summarizes the end-of-period cash and cash equivalents from the Company's Consolidated Balance Sheets and the total cash, cash equivalents and restricted cash as presented in the accompanying Consolidated Statements of Cash Flows (in thousands). Cash and cash equivalents Restricted cash classified in (1): Prepaid expenses and other current assets Other assets Cash, cash equivalents and restricted cash shown in statement of cash flows $ For the Year Ended December 31, 2019 2018 $ 67,904 $ 140,296 1,250 38 69,192 $ — — 140,296 (1) Restricted cash consists primarily of collateral required for letters of credit related to the Company’s office space leases. The short-term or long-term classification is determined in accordance with the expiration of the underlying lease as the letters of credit are non-cancellable while the leases are in effect. Concentrations of Credit Risk Forrester has no off-balance sheet or significant concentration of credit risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject Forrester to concentrations of credit risk are principally cash, cash equivalents, and accounts receivable. No single customer accounted for greater than 4% of revenues or 4% of accounts receivable in any of the periods presented. 39 Goodwill Goodwill is not amortized; however, it is required to be tested for impairment annually. Furthermore, testing for impairment is required on an interim basis if an event or circumstance indicates that it is more likely than not an impairment loss has been incurred. An impairment loss would be recognized to the extent that the carrying amount of goodwill exceeds its implied fair value. Absent an event that indicates a specific impairment may exist, the Company has selected November 30th as the date for performing the annual goodwill impairment test. Goodwill impairment charges have not been required for the years ended December 31, 2019, 2018 and 2017. Impairment of Other Long-Lived Tangible and Intangible Assets Forrester continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of long-lived assets and intangible assets may warrant revision or if events or circumstances indicate that the carrying value of these assets may be impaired. To compute whether assets have been impaired, the estimated undiscounted future cash flows for the estimated remaining useful life of the assets are compared to the carrying value. To the extent that the future cash flows are less than the carrying value, the assets are written down to the estimated fair value of the asset. Impairment charges have not been required for the years ended December 31, 2019, 2018 and 2017. Non-Current Liabilities The Company records deferred tax liabilities and other liabilities that are expected to be settled over a period that exceeds one year as non-current liabilities. Prior to adopting Topic 842, the Company also recorded as a non-current liability the portion of the deferred rent liability expected to be recognized over a period greater than one year. Non-current deferred rent liability at December 31, 2018 was $6.6 million and resulted from the difference between cash payments and the straight-line recognition of rent expense under the Company’s facility leases. Adoption of Topic 842 eliminated the deferred rent liability. Foreign Currency The functional currency of Forrester’s wholly-owned subsidiaries is their respective local currency. These subsidiary financial statements are translated to U.S. dollars using period-end exchange rates for assets and liabilities and average exchange rates during the corresponding period for revenues and expenses, with translation gains and losses accumulated as a component of accumulated other comprehensive loss in the Consolidated Balance Sheets. Gains and losses related to the remeasurement of monetary assets and liabilities denominated in a currency other than an entity’s functional currency are included in other income (expense), net in the Consolidated Statements of Income (Loss). Forrester recorded $0.9 million of foreign exchange losses for the year ended December 31, 2019 and $0.6 million of foreign exchange losses for each of the years ended December 31, 2018 and 2017. 40 Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) are as follows (in thousands): Net Unrealized Gain (Loss) on Marketable Investments Net Unrealized Gain (Loss) on Interest Rate Swaps Cumulative Translation Adjustment Total Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2016 Foreign currency translation Unrealized loss on investments, net of tax of $22 Balance at December 31, 2017 Foreign currency translation Reclassification of stranded tax effects from tax reform Unrealized gain on investments before reclassification, net of tax of $(4) Reclassification adjustment for net losses realized in net income, net of tax of $(75) Balance at December 31, 2018 Foreign currency translation Unrealized loss on interest rate swap, net of tax of $40 Balance at December 31, 2019 $ $ (83) $ — (32) (115) — (26) — $ — — — — — (7,490) $ 5,593 — (1,897) (3,257) — (7,573) 5,593 (32) (2,012) (3,257) (26) 12 — — 12 129 — — — — $ — — — (104) (104) $ — (5,154) 401 — (4,753) $ 129 (5,154) 401 (104) (4,857) Revenue The Company recognizes revenue when a customer obtains control of promised products or services, in an amount that reflects the consideration expected to be received in exchange for those products or services. The Company follows the five-step model prescribed under Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenues are presented net of any sales or value added taxes collected from customers and remitted to the government. The Company accounts for a contract when it has approval and commitment from both parties, the fees, payment terms and rights of the parties regarding the products or services to be transferred are identified, the contract has commercial substance and collectability of the consideration expected to be transferred is probable. The Company applies judgment in determining the customer’s ability and intention to pay for services expected to be transferred, which is based on factors including the customer’s payment history, management’s ability to mitigate exposure to credit risk (for example, requiring payment in advance of the transfer of products or services, or the ability to stop transferring promised products or services in the event a customer fails to pay consideration when due) and experience selling to similarly situated customers. Since the transaction price is fixed and defined as part of entering into a contract, and generally does not change, variable consideration is insignificant. Performance obligations within a contract are identified based on the products and services promised to be transferred in the contract. When a contract includes more than one promised product or service, the Company must apply judgment to determine whether the promises represent multiple performance obligations or a single, combined performance obligation. This evaluation requires the Company to determine if the promises are both capable of being distinct, where the customer can benefit from the product or service on its own or together with other resources readily available, and are distinct within the context of the contract, where the transfer of products or services is separately identifiable from other promises in the contract. When both criteria are met, each promised product or service is accounted for as a separate performance obligation. In cases where the promises are distinct, the Company is further required to evaluate if the promises are a series of products and services that are substantially the same and have the same pattern of transfer to the customer (referred to as the “series” guidance). When the Company determines that promises meet the series guidance, they are accounted for as a single, combined performance obligation. The number of performance obligations in the Company’s arrangements is not different under Topic 606 than the number of separate units of accounting under pervious guidance, as discussed further below. 41 Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative basis according to their standalone selling prices. The Company continues to determine standalone selling price based on the price at which the performance obligation is sold separately. If the Company does not have a history of selling a performance obligation, management applies judgment to estimate the standalone selling price, taking into consideration available information, including market conditions, factors considered to set list prices, pricing of similar products, and internal pricing objectives. The corresponding allocated revenues are recognized as the performance obligations are satisfied, as discussed further below. Research services revenues Research services revenues consist primarily of subscriptions to Research, Connect, and Analytics products. The majority of Research revenues are annual subscriptions to our research, including access to all or a designated portion of our research and, depending on the type of license, unlimited phone or email analyst inquiry and unlimited participation in Forrester webinars, all of which are delivered throughout the contract period. The Company has concluded that these promises represent a stand ready obligation to provide a daily information service, in which the services are the same each day, every day is distinct, and the customer simultaneously receives and consumes the benefits as the Company transfers control throughout the contract period. Accordingly, these subscriptions meet the requirements of the series guidance and are each accounted for as a single performance obligation. The Company recognizes revenue ratably over time, using an output measure of time elapsed. Certain of the Research products include advisory services or an Event ticket, which are accounted for as a separate performance obligation and are recognized at the point in time the service is completed, the final deliverable is transferred to the customer or the Event occurs. Research revenues also include sales of electronic reprints, which are written research documents prepared by Forrester’s analysts and hosted via an on-line platform. Reprints include a promise to deliver a customer-selected research document and certain usage data provided through the on-line platform, which represents two performance obligations. The Company satisfies the performance obligation for the research document by providing access to the electronic reprint and accordingly recognizes revenue at that point in time. The Company satisfies the performance obligation for the data portion of the reprint on a daily basis and accordingly recognizes revenue over time. The majority of Connect revenues are the Company’s Leadership Board product which includes access to the Research offering, access to a private forum with other Leadership Board member peers, access to a Forrester advisor, member-generated content, and one Event ticket. The Company has concluded that all these promises, other than the Event ticket, represent a stand ready obligation to provide a daily information and peer service, in which the services are the same each day, every day is distinct, and the customer simultaneously receives and consumes the benefits as the Company transfers control throughout the contract period. Accordingly, these promises meet the requirements of the series guidance and are accounted for as a single performance obligation. The Company recognizes revenue ratably over time, using an output measure of time elapsed. The Event ticket is accounted for as a separate performance obligation and is recognized when the Event occurs. Analytics revenues are primarily annual subscriptions to access designated survey data products and typically include an analytics client manager, all of which are delivered throughout the contract period. For Analytics subscriptions, the Company has concluded that these promises represent a stand ready obligation to provide a daily data service, in which the services are the same each day, every day is distinct, and the customer simultaneously receives and consumes the benefits as the Company transfers control throughout the contract period. Accordingly, these subscriptions meet the requirements of the series guidance and are accounted for as a single performance obligation. The Company recognizes revenue ratably over time, using an output measure of time elapsed. Certain of the Analytics products include advisory services which are accounted for as a separate performance obligation and are recognized at the point in time the service is completed or the final deliverable is transferred to the customer. Advisory services and events revenues Advisory services and events revenues consists of sales of advisory services, consulting projects, and Events. Advisory services revenues are short-term presentations or knowledge sharing sessions (which can range from one hour to two days), such as workshops, speeches and advisory days. Each is a promise for a Forrester analyst to deliver a deeper understanding of Forrester’s published research and represents a single performance obligation. Revenue is recognized at the point in time the service is completed or the final deliverable is transferred to the customer. 42 Consulting project revenues consist of the delivery of focused insights and recommendations that assist customers with their challenges in developing and executing strategies around technology, customer experience and digital transformation. Projects are fixed-fee arrangements that are generally completed within two weeks to three months. The Company has concluded that each project represents a single performance obligation as each is a single promise to deliver a customized engagement and deliverable. For the majority of these services, either practically or contractually, the work performed and delivered to the customer has no alternative use to the Company. Additionally, Forrester maintains an enforceable right to payment at all times throughout the contract. The Company utilizes an input method and recognizes revenue over time, based on hours expended relative to the total estimated hours required to satisfy the performance obligation. This input method was chosen since it closely aligns with how control of interim deliverables is transferred to the customer throughout the engagement and is also the method used internally to price the project and assess operational performance. If the Company were to enter into an agreement where it does not have an enforceable right to payment at all times, revenue would be recognized at the point in time the project is completed. Events revenues consist of either ticket or sponsorship sales for a Forrester-hosted event. Each is a single promise that either allows entry to, or grants the right to, promote a product or service at, a specific event. The Company concluded that each of these represents a single performance obligation. The Company recognizes revenue at the completion of the Event, which is the point in time when the customer has received the benefit(s) from attending or sponsoring the Event. Prepaid performance obligations, including Event tickets, reprints, advisory and consulting hours, on non-cancellable contracts that the Company estimates will expire unused are recognized in proportion to the pattern of related rights exercised by the customer. This assessment requires judgment, including estimating the percentage of prepaid rights that will go unexercised and anticipating the impact that future changes to products, pricing, and customer engagement will have on actual expirations. The Company periodically updates the rates used to recognize unexercised rights. Refer to Note 12 – Operating Segment and Enterprise Wide Reporting for a summary of disaggregated revenue by product category and business segment. Contract Modifications The Company considers a contract modification to exist when a mutually agreed upon change creates new, or updates existing, enforceable rights and obligations. Topic 606 introduced three specific methods to account for contract modifications depending on the nature of the change(s) in scope or price to the original contract. The new guidance is consistent with how the Company has historically accounted for contract modifications and as a result, does not have an impact on the Company’s results of operations. The majority of the Company’s contract modifications result in additional or remaining distinct products and services and are treated on a prospective basis. Under the prospective method, the transaction price is updated to combine the unrecognized amount as of the modification date plus the additional transaction price from the modification. This amount is then re-allocated to the remaining distinct performance obligations and recognized accordingly. Consulting services contracts can be modified to update the scope of the services purchased. Since a consulting project is a single performance obligation that is only partially satisfied at the modification date, the updated project requirements are not distinct and the modification is accounted for as part of the existing contract. The effect of the modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either an increase or decrease) on a cumulative catch-up basis. For the year ended December 31, 2019, the Company recorded an immaterial amount of cumulative catch-up adjustments. Contract Assets and Liabilities Accounts Receivable Accounts receivable includes amounts billed and currently due from customers. Since the only condition for payment of our invoices is the passage of time, the Company records a receivable on the date the invoice is issued. Also included in accounts receivable are unbilled amounts resulting from revenue exceeding the amount billed to the customer, where the right to payment is unconditional. If the right to payment for services performed was conditional on something other than the passage of time, the unbilled amount would be recorded as a separate contract asset. There were no contract assets as of December 31, 2019. 43 The majority of the Company’s contracts are non-cancellable. However, for contracts that are cancellable by the customer, the Company does not record a receivable when it issues an invoice. The Company records accounts receivable on these contracts only up to the amount of revenue earned but not yet collected. In addition, since the majority of the Company’s contracts are for a duration of one year and payment is expected within one year from the transfer of products and services, the Company does not adjust its receivables or transaction price for the effects of a significant financing component. Deferred Revenue The Company refers to contract liabilities as deferred revenue on the Consolidated Balance Sheets. Payment terms in the Company’s customer contracts vary, but generally require payment in advance of fully satisfying the performance obligation(s). Deferred revenue consists of billings in excess of revenue recognized. Similar to accounts receivable, the Company does not record deferred revenue for invoices issued on a cancellable contract. During the year ended December 31, 2019, the Company recognized approximately $147.2 million of revenue related to its deferred revenue balance at January 1, 2019. During the year ended December 31, 2018, the Company recognized approximately $134.7 million of revenue related to its deferred revenue balance at January 1, 2018. To determine revenue recognized in the current period from deferred revenue at the beginning of the period, the Company first allocates revenue to the individual deferred revenue balance outstanding at the beginning of the period, until the revenue equals that balance. Approximately $372.0 million of revenue is expected to be recognized during the next 12 to 24 months from remaining performance obligations as of December 31, 2019. Cost to Obtain Contracts The Company capitalizes commissions paid to sales representatives and related fringe benefits costs that are incremental to obtaining customer contracts. These costs are included in deferred commissions on the Consolidated Balance Sheets. The judgments made in determining the amount of costs incurred include the types of costs to capitalize and whether the costs are in fact incremental. The Company elected the practical expedient to account for these costs at a portfolio level as the Company’s contracts are similar in nature and the amortization model used closely matches the amortization expense that would be recognized on a contract-by-contract basis. Costs to obtain a contract are amortized to operations as the related revenue is recognized over the initial contract term. Amortization of the expense related to deferred commissions was $36.0 million and $32.2 million for the years ended December 31, 2019 and 2018, respectively. The Company evaluates the recoverability of deferred commissions at each balance sheet date. Allowance for Doubtful Accounts Forrester maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make contractually obligated payments. When evaluating the adequacy of the allowance for doubtful accounts, the Company makes judgments regarding the collectability of accounts receivable by specifically analyzing historical bad debts, customer concentrations, current economic trends, and changes in the customer payment terms. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required and if the financial condition of the Company’s customers were to improve, the allowances may be reduced accordingly. Leases The Company determines whether an arrangement is a lease at inception of the arrangement. The Company accounts for a lease when it has the right to control the leased asset for a period of time while obtaining substantially all of the assets’ economic benefits. All of the Company’s leases are operating leases, the majority of which are for office space. Operating lease ROU assets and non- current operating lease liabilities are included as individual line items on the Consolidated Balance Sheets while short-term operating lease liabilities are recorded within accrued expenses and other current liabilities. 44 Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The discount rate used to determine the present value of the lease payments is the Company’s incremental borrowing rate based on the information available at lease inception, as generally an implicit rate in the lease is not readily determinable. An operating lease ROU asset includes all lease payments, lease incentives and initial direct costs incurred. Some of the Company’s leases include options to extend or terminate the lease. When determining the lease term, these options are included in the measurement and recognition of the Company’s ROU assets and lease liabilities when it is reasonably certain that the Company will exercise the option. The Company considers various economic factors when making this determination, including, but not limited to, the significance of leasehold improvements incurred in the office space, the difficulty in replacing the asset, underlying contractual obligations, or specific characteristics unique to a particular lease. Subsequent to entering into a lease arrangement, the Company reassesses the certainty of exercising options to extend or terminate a lease. When it becomes reasonably certain that the Company will exercise an option that was not included in the lease term, the Company accounts for the change in circumstances as a lease modification, which results in the remeasurement of the ROU asset and lease liability as of the modification date. Lease expense for operating leases is recognized on a straight-line basis over the lease term based on the total lease payments (which include initial direct costs and lease incentives). The expense is included in operating expenses in the Consolidated Statements of Income (Loss). The Company’s lease agreements generally contain lease and non-lease components. Non-lease components are fixed charges stated in an agreement and primarily include payments for parking at the leased office facilities. The Company accounts for the lease and fixed payments for non-lease components as a single lease component under Topic 842, which increases the amount of the ROU assets and lease liabilities. Most of the Company’s lease agreements also contain variable payments, primarily maintenance-related costs, which are expensed as incurred and not included in the measurement of the ROU assets and lease liabilities. Leases with an initial term of twelve months or less are not recorded on the Consolidated Balance Sheets and are not material. Advertising Costs The Company expenses advertising costs as incurred. Advertising expense for the years ended December 31, 2019, 2018 and 2017 was $1.3 million, $0.6 million, and $0.7 million, respectively, and consisted primarily of online marketing and is included in selling and marketing expense in the Consolidated Statements of Income (Loss). Stock-Based Compensation The Company recognizes the fair value of stock-based compensation expense over the requisite service period of the individual grantee, which generally equals the vesting period. Forfeitures are recognized as they occur and all income tax effects related to settlements of share-based payment awards are reported in earnings as an increase or decrease to income tax expense. All income tax- related cash flows resulting from share-based payments are reported as operating activities in the statement of cash flows and cash paid by directly withholding shares for tax withholding purposes is classified as a financing activity. Stock-based compensation expense was recorded in the following expense categories (in thousands): Cost of services and fulfillment Selling and marketing General and administrative Total Years Ended December 31, 2018 2017 2019 $ $ 6,627 $ 1,768 3,289 11,684 $ 4,329 $ 1,065 2,906 8,300 $ 4,538 717 3,235 8,490 45 Shares subject to the employee stock purchase plan were valued utilizing the Black-Scholes model using the following assumptions and had the following fair values (no options were granted in 2019, 2018 or 2017): Average risk-free interest rate Expected dividend yield Expected life Expected volatility Weighted average fair value Years Ended December 31, 2018 2017 2019 1.89% 0.0% 1.90% 1.9% 0.90% 1.9% 0.5 Years 0.5 Years 0.5 Years 30% $ 8.29 23% $ 9.13 24% 8.36 $ Prior to the suspension of the quarterly dividend program in November 2018, dividend yields were based on the regular quarterly dividend program approved by the Board of Directors in February 2012. Expected volatility is based, in part, on the historical volatility of Forrester’s common stock as well as management’s expectations of future volatility over the expected term of the awards granted. The risk-free interest rate is based on the U.S. Treasury Constant Maturity rate with an equivalent remaining term. The expected term calculation is based upon the option period of the employee stock purchase plan. The unamortized fair value of stock-based awards as of December 31, 2019 was $21.2 million with a weighted average remaining recognition period of 2.3 years. Depreciation and Amortization Forrester provides for depreciation and amortization of property and equipment, computed using the straight-line method, over estimated useful lives of assets as follows: Computers and equipment Computer software Furniture and fixtures Leasehold improvements Estimated Useful Life 3 to 10 Years 3 to 5 Years 7 Years Shorter of asset life or lease term Forrester provides for amortization of intangible assets, computed using an accelerated method according to the expected cash flows to be received from the underlying assets, over the respective lives as follows: Customer relationships Technology Backlog Trademarks Estimated Useful Life 5 to 11 Years 1 to 8 Years 2 Years 8 to 16 Years Income Taxes Forrester recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statements and tax basis of assets and liabilities as well as operating loss carryforwards. Forrester’s provision for income taxes is composed of a current and a deferred provision for federal, state and foreign jurisdictions. The current provision is calculated as the estimated taxes payable or refundable on tax returns for the current year. The deferred provision is calculated as the net change during the year in deferred tax assets and liabilities. Valuation allowances are provided if based on the weight of available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized. 46 Forrester accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity, and changes in facts or circumstances related to a tax position. The Company evaluates these tax positions on a quarterly basis. The Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense. Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed by dividing net income (loss) by the basic weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the diluted weighted average number of common shares and common equivalent shares outstanding during the period. The weighted average number of common equivalent shares outstanding has been determined in accordance with the treasury-stock method. Common stock equivalents consist of common stock issuable upon the exercise of outstanding stock options and the vesting of restricted stock units. Basic and diluted weighted average common shares are as follows (in thousands): Basic weighted average common shares outstanding Weighted average common equivalent shares Diluted weighted average common shares outstanding Options and restricted stock units excluded from diluted weighted average share calculation as effect would have been anti-dilutive Years Ended December 31, 2018 2017 2019 18,492 — 18,492 18,091 289 18,380 17,919 321 18,240 1,099 8 133 Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The new standard amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The new standard will be effective for the Company on January 1, 2020. The adoption of this standard is not expected to have a material impact on the Company’s financial position or results of operations. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test and requires that instead, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The new standard will be effective for the Company on January 1, 2020. The adoption of this standard is not expected to have a material impact on the Company’s financial position or results of operations. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The standard includes changes to fair value transfers and Level 3 fair value disclosures. The new standard will be effective for the Company on January 1, 2020. The adoption of this standard is not expected to have a material impact on the Company’s financial position or results of operations. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The new standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard will be effective for the Company on January 1, 2020. The adoption of this standard is not expected to have a material impact on the Company’s financial position or results of operations. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The new standard provides guidance to simplify the accounting for income taxes in certain areas, changes the accounting for select income tax transactions and makes minor ASC improvements. The new standard will be effective for the Company on January 1, 2021. The Company is currently evaluating the potential impact that this standard may have on its financial position and results of operations. 47 Note 2 – Acquisitions 2019 SiriusDecisions On January 3, 2019, Forrester acquired 100% of the issued and outstanding shares of SiriusDecisions, Inc. (“SiriusDecisions”), a privately-held company based in Wilton, Connecticut with approximately 350 employees globally. SiriusDecisions equips business- to-business (B2B) sales, marketing, and product leaders with the actionable research, frameworks, tools, operational benchmarks and expert advice they need to maximize performance and drive alignment. The acquisition creates several opportunities for the Company, including cross-selling services to the Company’s respective client bases, extending SiriusDecisions’ platform, methodologies, data, and best-practices tools into new roles, and accelerating international and industry growth. The acquisition of SiriusDecisions was determined to be an acquisition of a business under the provisions of Topic 805. Pursuant to the terms of the merger agreement, the Company paid $246.8 million at closing after certain transaction expense adjustments, which was subject to a working capital adjustment, and included the purchase price of $245.0 million plus an estimate of cash acquired and reduced by an estimate of certain working capital items. At the time of the merger, each vested SiriusDecisions stock option was converted into the right to receive the excess of the per share merger consideration over the exercise price of such stock option. All unvested SiriusDecisions stock options were cancelled without payment of any consideration. Total Consideration Transferred The following table summarizes the fair value of the aggregate consideration paid for SiriusDecisions (in thousands): Cash paid at close (1) Working capital adjustment (2) Total $ $ 246,801 (1,259) 245,542 (1) The cash paid at close represents the gross contractual amount paid. Net cash paid, which accounts for the cash acquired of $7.9 million and the working capital adjustment of $1.3 million, was $237.7 million and is reflected as an investing activity in the Consolidated Statements of Cash Flows. (2) Amount represents the final amount receivable from the sellers based upon working capital as defined, which was received in 2019. Allocation of Purchase Price The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisition of SiriusDecisions (in thousands): Assets: Cash and cash equivalents Accounts receivable Prepaids and other current assets Property and equipment Goodwill (1) Intangible assets (2) Other assets Total assets Liabilities: Accounts payable and other current liabilities Deferred revenue Deferred tax liability Long-term deferred revenue Other long-term liabilities Total liabilities Net assets acquired $ $ 7,858 19,237 3,660 4,169 158,569 115,000 418 308,911 8,924 26,143 26,226 1,037 1,039 63,369 245,542 (1) Goodwill represents the expected revenue and cost synergies from combining SiriusDecisions with Forrester as well as the value of the acquired workforce. 48 (2) All of the intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models, and replacement cost valuation methodologies. The discounted cash flow models required the use of estimates, including projected cash flows related to the particular asset, the useful lives of the particular assets, the selection of royalty and discount rates used in the models and certain published industry benchmark data. The replacement cost methodology requires the use of estimates in determining the costs to replace the assets and the amount of obsolescence existing at the time of the acquisition. In establishing the estimated useful lives of the acquired intangible assets, the Company relied primarily on the duration of the cash flows utilized in the valuation model. Of the $115.0 million assigned to intangible assets, $13.0 million was assigned to the technology asset class with useful lives of 1 to 8 years (with a weighted average amortization period of 3.2 years), $13.0 million to backlog with a useful life of 2.0 years, $77.0 million to customer relationships with a useful life of 9.25 years, and $12.0 million to trademarks with a useful life of 15.5 years. The weighted-average amortization period of all intangible assets is 8.4 years. Amortization of intangible assets was $21.8 million for the year ended December 31, 2019. The Company’s financial statements include the operating results of SiriusDecisions beginning on January 3, 2019, the date of the acquisition. SiriusDecisions’ operating results are being reported as its own operating segment (refer to Note 12 – Operating Segments). The goodwill is not deductible for income tax purposes and has been allocated to the SiriusDecisions and Research operating segments in the amounts of $142.5 million and $16.0 million, respectively. The acquisition of SiriusDecisions added approximately $79.3 million of additional revenue and $103.9 million of direct expenses, including intangible amortization, for the year ended December 31, 2019. Had the Company acquired SiriusDecisions in prior periods, the Company’s operating results would have been materially different, and as a result the following unaudited pro forma financial information is presented as if SiriusDecisions had been acquired by the Company on January 1, 2018 (in thousands): Pro forma total revenue Pro forma net income (loss) Years Ended December 31, 2019 472,810 $ 733 $ 2018 438,049 (10,069) $ $ The pro forma results have been prepared in accordance with U.S. GAAP and include the following pro forma adjustments in 2018: (1) an increase in interest expense and amortization of debt issuance costs related to the financing of the SiriusDecisions acquisition (refer to Note 4 – Debt for further information on the Company’s borrowings related to the acquisition); (2) a decrease in revenue as a result of the fair value adjustment to deferred revenue; and (3) an adjustment for depreciation and amortization expenses as a result of the purchase price allocation for finite-lived intangible assets and property and equipment. In addition, the year ended December 31, 2018 has been adjusted to increase operating costs to recognize acquisition costs incurred upon the close of the acquisition. The year ended December 31, 2019 has been adjusted to add the year two amounts, and eliminate the year one amounts, for the fair value of deferred revenue, depreciation and amortization expense and interest expense. In addition, the year ended December 31, 2019 has been adjusted to eliminate the acquisition costs incurred upon the close of the acquisition. The Company recognized $1.7 million of acquisition costs during the year ended December 31, 2019. The costs primarily consisted of investment banker fees, legal fees, regulatory costs and accounting and tax professional fees. 2018 FeedbackNow On July 6, 2018, Forrester acquired 100% of the issued and outstanding shares of S.NOW SA, a Switzerland-based business that operates as FeedbackNow. FeedbackNow is a maker of physical buttons and monitoring software that companies deploy to measure, analyze, and improve customer experience. The acquisition is part of Forrester's plan to build a real-time customer experience or CX cloud solution. FeedbackNow provides a high-volume input source for the real-time CX cloud solution. The acquisition of FeedbackNow was determined to be an acquisition of a business under the provisions of Topic 805. The Company paid $8.4 million on the closing date and, during 2019, the Company paid an additional $0.8 million for the acquired working capital. An additional $1.5 million “holdback” is payable during a two-year period from the closing date and is subject to typical indemnity provisions from the seller. In addition, the sellers may earn up to CHF 4.2 million ($4.3 million at December 31, 2019) based on the financial performance of FeedbackNow during the two-year period following the closing date. 49 Total Consideration Transferred The following table summarizes the fair value of the aggregate consideration paid or payable for FeedbackNow (in thousands): Cash paid at close (1) Working capital adjustment (2) Indemnity holdback (3) Contingent purchase price (4) Total $ $ 8,425 798 1,485 3,388 14,096 (1) The cash paid at close represents the gross contractual amount paid. Net cash paid, which accounts for the cash acquired of $0.5 million, was $8.0 million and is reflected as an investing activity in the Consolidated Statements of Cash Flows. (2) Represents the amount payable to the sellers based upon working capital as defined, which was paid to the sellers in 2019. (3) $0.5 million of the holdback was paid during 2019 and $1.0 million of the holdback is expected to be paid during 2020. (4) The acquisition of FeedbackNow includes a contingent consideration arrangement that requires additional consideration to be paid to the sellers based on the financial performance of FeedbackNow during the two-year period subsequent to the closing date. The fair value of this contingent consideration arrangement as of the acquisition date was $3.4 million, which was recognized as purchase price. Up to $1.8 million and $2.5 million could be payable during 2019 and 2020, respectively, if the financial targets are met. During the third quarter of 2019, the first year financial targets were met and as such, $1.8 million was paid to the sellers during the same period. The remaining range of undiscounted amounts that could be payable under this arrangement is zero to $2.5 million. See further discussion in Note 6 – Fair Value Measurements. Allocation of Purchase Price The following table summarizes the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the acquisition of FeedbackNow (in thousands): Assets: Cash Accounts receivable Prepaids and other current assets Goodwill (1) Intangible assets (2) Other assets Total assets Liabilities: Accounts payable and other current liabilities Contract liabilities Deferred tax liability Total liabilities Net assets acquired $ $ 463 738 487 9,513 4,780 75 16,056 837 298 825 1,960 14,096 (1) Goodwill represents the expected synergies from combining FeedbackNow with Forrester as well as the value of the acquired workforce. (2) All of the intangible assets are finite-lived. The determination of the fair value of the finite-lived intangible assets required management judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular discounted cash flow models. The use of discounted cash flow models required the use of estimates, including projected cash flows related to the particular asset; the useful lives of the particular assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. In establishing the estimated useful lives of the acquired intangible assets, the Company relied primarily on the duration of the cash flows utilized in the valuation model. Of the $4.8 million assigned to intangible assets, $3.0 million was assigned to the technology asset class with a useful life of 6.5 years, $1.3 million to customer relationships with useful lives of 4.5 years to 7.5 years (with a weighted average amortization period of 6.1 years), and $0.5 million to trademarks with a useful life of 8.5 years. The weighted-average amortization period of all intangible assets is 4.8 years. 50 The Company's financial statements include the operating results of FeedbackNow beginning on July 6, 2018, the date of acquisition. FeedbackNow's operating results are being reported as part of the Company's Product segment. The goodwill is not deductible for income tax purposes and was allocated to the Product segment. GlimpzIt On June 22, 2018, Forrester acquired substantially all of the assets of SocialGlimpz, Inc. (“GlimpzIt”), an artificial intelligence and machine-learning provider based in San Francisco. The acquisition is part of Forrester's plan to build a real-time CX cloud solution, integrating a range of inputs to help companies monitor and improve customer experience. Forrester intends to deploy the GlimpzIt technology to extend the analytics engine in Forrester’s planned real-time CX cloud The acquisition of GlimpzIt was determined to be an acquisition of a business under the provisions of Topic 805. The total purchase price was approximately $1.3 million, which was paid in cash on the acquisition date, and has been allocated as $0.7 million of goodwill and $0.6 million of an intangible asset representing technology, which is being amortized over its estimated useful life of five years. The acquired working capital was insignificant. Forrester may also be required to pay an additional $0.3 million in cash (of which $0.1 million was paid in 2019), contingent on the achievement of certain employment conditions by key employees, which is being recognized as compensation expense over the related service period of two years. Goodwill was allocated to the Product segment and is deductible for income tax purposes. Goodwill is attributable to the acquired workforce as well as future synergies. . Note 3 - Goodwill and Other Intangible Assets As of January 1, 2019, the Company realigned its management structure into Products, Research, and SiriusDecisions from our prior structure of Products, Research, and Project Consulting. The Company performed a qualitative assessment of goodwill for the Products and Research reporting units (as the Project Consulting reporting unit did not contain goodwill) as of January 1, 2019, which was based on the quantitative assessment that was performed as of November 30, 2018 and activity in December 2018. The Company concluded that no impairment existed at January 1, 2019 and goodwill was reassigned as of January 1, 2019 based on the relative fair values of the Products and Research reporting units. The goodwill related to the acquisition of SiriusDecisions was allocated to the SiriusDecisions segment, except for the portion of goodwill representing revenue synergies that are expected to benefit the Research segment. A summary of goodwill by segment and the changes in the carrying amount of goodwill is shown in the following table (in thousands): Balance at January 1, 2018 Acquisitions Translation adjustments Balance at December 31, 2018 Reassignment Acquisition Translation adjustments Balance at December 31, 2019 Product Research Sirius Decisions $ $ 2,438 $ 10,178 (98) 12,518 (12,518) — — — $ 73,731 $ — (1,084) 72,647 12,518 16,025 121 101,311 $ — $ — — — — 142,544 40 142,584 $ Total 76,169 10,178 (1,182) 85,165 — 158,569 161 243,895 While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill to reflect additional information received about facts and circumstances which existed at the date of acquisition. The Company records adjustments to the assets acquired and liabilities assumed subsequent to the purchase price allocation period in the Company’s operating results in the period in which the adjustments are determined. During the year-ended December 31, 2019, the Company recorded measurement period adjustments of $0.8 million primarily related to deferred taxes. As of December 31, 2019, the measurement period was completed for the SiriusDecisions acquisition. As of December 31, 2019, the Company had no accumulated goodwill impairment losses. 51 During the year ended December 31, 2019, $115.0 million of intangible assets were added as a result of the acquisition of SiriusDecisions. During the year ended December 31, 2018, $4.8 million and $0.6 million of intangible assets were added as a result of the acquisitions of FeedbackNow and GlimpzIt, respectively. A summary of Forrester’s intangible assets is as follows (in thousands): Amortizable intangible assets: Customer relationships Technology Backlog Trademarks Total Amortizable intangible assets: Customer relationships Technology Trademarks Total December 31, 2019 Gross Carrying Amount Accumulated Amortization Carrying Amount Net 109,825 $ 16,661 13,000 12,451 151,937 $ 40,169 $ 7,051 6,500 854 54,574 $ 69,656 9,610 6,500 11,597 97,363 December 31, 2018 Gross Carrying Amount Accumulated Amortization Carrying Amount Net 32,823 $ 3,610 443 36,876 $ 31,604 $ 295 26 31,925 $ 1,219 3,315 417 4,951 $ $ $ $ Amortization expense related to intangible assets was approximately $22.6 million, $1.2 million, and $0.8 million during the years ended December 31, 2019, 2018 and 2017, respectively. Estimated intangible asset amortization expense for each of the five succeeding years is as follows (in thousands): 2020 2021 2022 2023 2024 Thereafter Total $ $ 18,843 12,343 11,004 10,830 9,720 34,623 97,363 Note 4 – Debt In connection with the acquisition of SiriusDecisions, the Company entered into a $200.0 million Credit Agreement on January 3, 2019 (the “Closing Date”). The Credit Agreement provides for: (1) senior secured term loans in an aggregate principal amount of $125.0 million (the “Term Loans”) and (2) a senior secured revolving credit facility in an aggregate principal amount of $75.0 million (the “Revolving Credit Facility” and, together with the Term Loans, the “Facilities”). On the Closing Date, the full $125.0 million of the Term Loans and $50.0 million of the Revolving Credit Facility were used to finance a portion of the acquisition of SiriusDecisions and to pay certain fees, costs and expenses incurred in connection with the acquisition and the Facilities. The Facilities are scheduled to mature on January 3, 2024. The Facilities permit the Company to borrow incremental term loans and/or increase commitments under the Revolving Credit Facility in an aggregate principal amount up to $50.0 million, subject to approval by the administrative agent and certain customary terms and conditions. 52 The Facilities can be repaid early, in part or in whole, at any time and from time to time, without premium or penalty, other than customary breakage reimbursement requirements for London Interbank Offering Rate (“LIBOR”) based loans. The Term Loans must be prepaid with net cash proceeds of (i) certain debt incurred or issued by Forrester and its restricted subsidiaries and (ii) certain asset sales and condemnation or casualty events, subject to certain reinvestment rights. Amounts borrowed under the Facilities bear interest, at Forrester’s option, at a rate per annum equal to either (i) LIBOR for the applicable interest period plus a margin that is between 1.75% and 2.50% based on Forrester’s consolidated total leverage ratio or (ii) the alternate base rate plus a margin that is between 0.75% and 1.50% based on Forrester’s consolidated total leverage ratio. In addition, the Company pays a commitment fee between 0.25% and 0.35% per annum, based on Forrester’s consolidated total leverage ratio, on the average daily unused portion of the Revolving Credit Facility, payable quarterly, in arrears. The Term Loans require repayment of the outstanding principal balance in quarterly installments each year, with the balance repayable on the maturity date, subject to customary exceptions. The amount payable in each year as of December 31, 2019 is set forth in the table below (in thousands): 2020 2021 2022 2023 2024 Total remaining principal payments $ 9,375 12,500 12,500 15,625 68,750 $ 118,750 The Revolving Credit Facility does not require repayment prior to maturity, subject to customary exceptions. In addition to financing the acquisition, proceeds from the Revolving Credit Facility can also be used towards working capital and general corporate purposes. Up to $5.0 million of the Revolving Credit Facility is available for the issuance of letters of credit, and any drawings under the letters of credit must be reimbursed within one business day. As of December 31, 2019, $0.6 million in letters of credit were issued under the Revolving Credit Facility. Forrester incurred $1.8 million in costs related to the Revolving Credit Facility, which are recorded in other assets on the Consolidated Balance Sheets. These costs are being amortized as interest expense on the Consolidated Statements of Income (Loss) on a straight-line basis over the five-year term of the Revolving Credit Facility. Forrester incurred $2.8 million in costs related to the Term Loans, which are recorded as a reduction to the face value of long-term debt on the Consolidated Balance Sheets. These costs are being amortized as interest expense on the Consolidated Statements of Income (Loss) utilizing the effective interest rate method. Outstanding Borrowings The following table summarizes the Company’s total outstanding borrowings as of the dates indicated (in thousands): Description: Term loan facility (1) Revolving credit facility (1) (2) Principal amount outstanding (3) Less: Deferred financing fees Net carrying amount December 31, 2019 118,750 $ 14,000 132,750 (2,205) 130,545 $ $ $ December 31, 2018 — — — — — (1) The contractual annualized interest rate as of December 31, 2019 on the Term loan facility was 4.0625%, which consisted of LIBOR of 1.8125% plus a margin of 2.25%, and the annualized interest rate on the Revolving Credit Facility was 4.0%, which consisted of LIBOR of 1.75% plus a margin of 2.25%. However, the Company has an interest rate swap contract that effectively converts the floating LIBOR base rates on a portion of the amounts outstanding to a fixed base rate. Refer to Note 11 – Derivatives and Hedging for further information on the swap. (2) The Company had $61.0 million of available borrowing capacity on the Revolving Credit Facility (not including the expansion feature) as of December 31, 2019. (3) The weighted average annual effective rate on the Company's total debt outstanding for the year ended December 31, 2019, was 4.71%. 53 The Facilities contain certain customary restrictive loan covenants, including among others, financial covenants that apply a maximum leverage ratio and minimum fixed charge coverage ratio. The negative covenants limit, subject to various exceptions, the Company’s ability to incur additional indebtedness, create liens on assets, merge, consolidate, liquidate or dissolve any part of the Company, sell assets, pay dividends or other payments in respect to capital stock, change fiscal year, or enter into certain transactions with affiliates and subsidiaries. The Company was in full compliance with the covenants as of December 31, 2019. The Facilities also contain customary events of default, representations, and warranties. All obligations under the Facilities are unconditionally guaranteed by each of the Company’s existing and future, direct and indirect, material wholly-owned domestic subsidiaries, other than certain excluded subsidiaries, and are collateralized by a first priority lien on substantially all tangible and intangible assets including intellectual property and all of the capital stock of the Company and its subsidiaries (limited to 65% of the voting equity of certain subsidiaries). Note 5 - Non-Marketable Investments At December 31, 2019 and 2018, the carrying value of the Company’s non-marketable investments, which were composed primarily of interests in technology-related private equity funds, was $2.5 million and is included in other assets in the Consolidated Balance Sheets. The Company’s investments are accounted for using the equity method as the investments are limited partnerships and the Company has an ownership interest in excess of 5%. Accordingly, the Company records its share of the investee’s operating results each period, which are included in gains (losses) on investments, net in the Consolidated Statement of Income (Loss). During the year ended December 31, 2019, gains (losses) from the Company’s non-marketable investments were immaterial. During the years ended December 31, 2018 and 2017, the Company recorded a gain (loss) from its non-marketable investments of $0.6 million and $(0.5) million, respectively. During the years ended December 31, 2019 and 2018, no distributions were received from the funds. During the year ended December 31, 2017, a gross distribution of $0.4 million was received from an investment fund that the Company accounted for under the cost method. Note 6 - Fair Value Measurements The Company has certain financial assets and liabilities which have been classified as either Level 1, 2 or 3 within the fair value hierarchy as described below. Level 1 — Fair value based on quoted prices in active markets for identical assets or liabilities. Level 2 —Fair value based on inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 —Fair value based on unobservable inputs that are supported by little or no market activity and such inputs are significant to the fair value of the assets or liabilities. The following table represents the Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis (in thousands): Assets: Money market funds (1) Total Assets Liabilities: Contingent purchase price (2) Interest rate swap (3) Total Liabilities Level 1 Fair Value Measurements As of December 31, 2019 Level 3 Level 2 Total 2,354 $ 2,354 $ — $ — $ — $ — $ 2,354 2,354 — $ — — $ — $ (144) (144) $ (2,511) $ — (2,511) $ (2,511) (144) (2,655) $ $ $ $ (1) Included in cash and cash equivalents in the Consolidated Balance Sheets. (2) Included in accrued expenses and other current liabilities in the Consolidated Balance Sheets. (3) The Company has an interest rate swap contract that hedges the risk of variability from interest payments on its borrowings (see Note 4 – Debt and Note 11 – Derivatives and Hedging). The fair value of the interest rate swap is based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates and other observable market data, which the Company considers Level 2 inputs. 54 Assets: Money market funds (1) Total Assets Liabilities: Contingent purchase price (2) Total Liabilities Level 1 Fair Value Measurements As of December 31, 2018 Level 3 Level 2 Total 255 $ 255 $ — $ — $ — $ — $ 255 255 — $ — $ — $ — $ (4,196) $ (4,196) $ (4,196) (4,196) $ $ $ $ (1) Included in cash and cash equivalents in the Consolidated Balance Sheets. (2) $1.8 million is included in accrued expenses and other current liabilities and $2.4 million is included in non-current liabilities in the Consolidated Balance Sheets. During the years ended December 31, 2019 and 2018, the Company did not transfer assets or liabilities between levels of the fair value hierarchy. Additionally, there have been no changes to the valuation techniques for Level 2 or Level 3 liabilities. Level 3 liabilities at December 31, 2019 consist entirely of the contingent purchase price related to the acquisition of FeedbackNow. Changes in the fair value of Level 3 contingent consideration for the years ended December 31, 2019 and 2018 were as follows (in thousands): Acquisition of FeedbackNow (1) Fair value adjustment of contingent purchase price (2) (3) Foreign exchange effect Balance at December 31, 2018 Fair value adjustment of contingent purchase price (2) (4) Payment of contingent purchase price Foreign exchange effect Balance at December 31, 2019 Contingent Consideration (3,388) (780) (28) (4,196) (68) 1,769 (16) (2,511) $ $ (1) See Note 2 – Acquisitions for a discussion of the fair value of the contingent purchase price as of the acquisition date. (2) Subsequent to the acquisition of FeedbackNow on July 6, 2018, the fair value of the contingent consideration increased by $0.1 million and $0.8 million during 2019 and 2018, respectively, due primarily to the achievement of contract bookings during this period. This amount was recognized as acquisition and integration costs within the Consolidated Statements of Income (Loss). (3) As of December 31, 2018, the significant unobservable inputs used in the Monte Carlo simulation to fair value the contingent consideration included projected contract bookings, a discount rate of 23.8%, and revenue volatility of 21.9%. Increases or decreases in the inputs would result in a higher or lower fair value measurement. (4) As of December 31, 2019, the significant unobservable inputs used in the Monte Carlo simulation to fair value the contingent consideration included projected contract bookings, a discount rate of 17.3%, and revenue volatility of 26.6%. Increases or decreases in the inputs would result in a higher or lower fair value measurement. 55 Note 7 – Leases The components of lease expense were as follows (in thousands): Operating lease cost Short-term lease cost Variable lease cost Sublease income Total lease cost Year Ended December 31, 2019 $ $ 15,005 498 5,318 (205) 20,616 Additional lease information is summarized in the following table (in thousands, except lease term and discount rate): Cash paid for amounts included in the measurement of operating lease liabilities Operating right-of-use assets obtained in exchange for lease obligations Weighted-average remaining lease term - operating leases (years) Weighted-average discount rate - operating leases Year Ended December 31, 2019 $ $ 10,953 18,497 6.4 5.1% Future minimum lease payments under non-cancellable leases as of December 31, 2019 are as follows (in thousands): 2020 2021 2022 2023 2024 Thereafter Total lease payments Less imputed interest Present value of lease liabilities Lease balances are as follows (in thousands): Operating lease right-of-use assets Short-term operating lease liabilities (1) Non-current operating lease liabilities Total operating lease liabilities $ $ 15,904 14,092 13,577 13,073 12,673 23,936 93,255 (13,985) 79,270 As of December 31, 2019 69,100 $ $ $ 12,208 67,062 79,270 (1) Included in accrued expenses and other current liabilities in the Consolidated Balance Sheets. The Company’s leases do not contain residual value guarantees, material restrictions or covenants, and all sublease transactions are not material. The Company incurred $0.4 million of ROU asset impairments during the year ended December 31, 2019 related to facility leases from the SiriusDecisions acquisition. These impairments are included in acquisition and integrations costs in the Consolidated Statements of Income (Loss). 56 Note 8 - Income Taxes Income before income taxes consists of the following (in thousands): Domestic Foreign Total $ $ Years Ended December 31, 2018 2019 (14,637) $ 5,038 (9,599) $ 17,718 $ 5,807 23,525 $ 2017 20,061 7,310 27,371 The components of the income tax expense (benefit) are as follows (in thousands): Current: Federal State Foreign Total current Deferred: Federal State Foreign Total deferred Income tax expense (benefit) Years Ended December 31, 2019 2018 2017 $ $ 618 $ 911 2,399 3,928 (1,454) (2,005) (498) (3,957) (29) $ 2,278 $ 1,173 1,763 5,214 2,111 667 153 2,931 8,145 $ 2,587 1,060 2,159 5,806 5,550 700 175 6,425 12,231 A reconciliation of the federal statutory rate to Forrester’s effective tax rate is as follows: Income tax provision at federal statutory rate Increase (decrease) in tax resulting from: State tax provision, net of federal benefit Foreign tax rate differential Stock option compensation deduction Withholding taxes Non-deductible expenses Change in valuation allowance Foreign subsidiary income subject to U.S. tax Change in tax legislation Audit settlements Other, net Effective tax rate Years Ended December 31, 2018 2017 2019 21.0% 21.0% 35.0% 8.3 0.4 (1.2) (3.5) (9.8) 2.3 (7.4) (1.2) (8.3) (0.3) 0.3% 6.2 (0.2) (1.1) 2.1 5.3 — — 1.9 — (0.6) 34.6% 4.0 (3.4) 0.1 1.7 1.8 3.9 — 5.8 (4.0) (0.2) 44.7% On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a decrease in the corporate tax rate from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a modified territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. In December 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act. SAB 118 provided a measurement period of one year from the enactment date of the Act for companies to complete the accounting for the income tax effects of the Act. During 2017, the Company recorded provisional income tax for the remeasurement of federal deferred tax assets and liabilities of $1.2 million and the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $0.4 million based on cumulative foreign earnings of $22.6 million. The Company completed its analysis of the effect of the Act during 2018 in accordance with 57 SAB 118 and recorded additional tax expense of $0.4 million in the fourth quarter of 2018 relating to the one-time transition tax on the mandatory repatriation of foreign earnings. The Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain of its foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI in the year the tax is incurred. In July 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. The opinion invalidates part of a treasury regulation requiring stock-based compensation to be included in any qualified intercompany cost-sharing arrangement. The Company previously recorded a tax benefit based on the U.S. Tax Court opinion in the case. In June 2019, the U.S. Court of Appeals for Ninth Circuit reversed the U.S. Tax Court’s decision. Altera Corp. submitted its appeal for an en banc rehearing before the U.S. Court of Appeals for the Ninth Circuit, which was subsequently denied. Subsequent to December 31, 2019, Altera Corp. submitted a request to the Supreme Court to accept the case for review, which has yet to be determined. Due to the uncertainty surrounding the status of the current regulations and questions related to jurisdiction as the Company does not reside in the Ninth Circuit, the Company has determined no adjustment is required to the consolidated financial statements as a result of the ruling. The potential impact of an adverse ruling in the case is not expected to be material to the Company’s consolidated financial statements. The Company will continue to monitor ongoing developments. The components of deferred income taxes are as follows (in thousands): Non-deductible reserves and accruals Net operating loss and other carryforwards Stock compensation Depreciation and amortization Lease liability Gross deferred tax asset Less - valuation allowance Sub-total Other liabilities Depreciation and amortization Goodwill and intangible assets Operating lease right-of-use assets Deferred commissions Net deferred tax asset (liability) As of December 31, 2019 2018 $ $ 2,743 $ 13,049 2,651 — 17,382 35,825 (2,274) 33,551 (1,085) (1,567) (32,120) (15,005) (5,706) (21,932) $ 3,835 7,954 2,125 727 — 14,641 (2,574) 12,067 (1,249) — (6,201) — (4,479) 138 As of December 31, 2019 and 2018, long-term net deferred tax assets were $1.0 million and $1.1 million, respectively, and are included in other assets in the Consolidated Balance Sheets. Long-term net deferred tax liabilities were $22.9 million and $1.0 million, respectively, at December 31, 2019 and 2018, and are included in non-current liabilities in the Consolidated Balance Sheets. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. Although realization is not assured, based upon the Company’s historical taxable income and projections of the Company’s future taxable income over the periods during which the deferred tax assets are deductible and the carryforwards expire, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as discussed below. As of December 31, 2019 and 2018, the Company maintained a valuation allowance of approximately $2.3 million and $2.6 million, respectively, primarily relating to U.S. capital losses from the Company’s investment in technology-related private equity funds, and from foreign net operating loss carryforwards from an acquisition. 58 As of December 31, 2019, the Company had U.S. federal net operating loss carryforwards of approximately $18.5 million obtained from acquired businesses. These carryforwards are limited pursuant to section 382 of the Internal Revenue Code due to changes in ownership as a result of the acquisitions. The Act allows U.S. federal net operating loss carryforwards resulting from taxable years beginning after December 31, 2017 to be carried forward indefinitely and can be used to offset 80% of U.S. taxable income. The Company has foreign net operating loss carryforwards of approximately $24.1 million, which can be carried forward indefinitely. Approximately $3.4 million of the foreign net operating loss carryforwards relate to a prior acquisition, the utilization of which is subject to limitation under the tax law of the United Kingdom. As of December 31, 2019, the Company had U.S. federal and state capital loss carryforwards of $5.2 million, of which $0.6 million expires in 2020, $1.4 million expires in 2021, and $3.2 million expires in 2022. The following table provides a summary of the changes in the deferred tax valuation allowance for the years ended December 31, 2019, 2018, and 2017 (in thousands): Deferred tax valuation allowance at January 1 $ Additions Deductions Change in tax legislation Translation adjustments Deferred tax valuation allowance at December 31 $ 2019 2018 2017 2,574 $ 30 (356) — 26 2,274 $ 2,686 $ 74 (139) — (47) 2,574 $ 2,193 1,439 (70) (954) 78 2,686 The Act includes a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been accrued have now been subject to U.S. tax. The Company will generally be free of additional U.S. federal tax consequences on additional unremitted foreign earnings that have been subject to U.S. tax primarily through GILTI or would be eligible for a dividends received deduction implemented as part of the Act for earnings distributed after January 1, 2018. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to invest all of their unremitted earnings of $19.2 million, as well as the capital in these subsidiaries, indefinitely outside of the U.S. unless there are opportunities in the future to repatriate in a tax efficient manner. The Company does not expect to incur any material, additional taxes related to such amounts. The Company utilizes a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2019, 2018, and 2017 (in thousands): Unrecognized tax benefits at January 1 Reductions for tax positions of prior years Additions for tax positions of current year Settlements Translation adjustments Unrecognized tax benefits at December 31 2019 2018 2017 $ $ 799 $ (458) — — 4 345 $ 806 $ — — (7) 799 $ 1,774 — - (986) 18 806 As of December 31, 2019, the total amount of unrecognized tax benefits totaled approximately $0.3 million, all of which if recognized, would decrease our effective tax rate in a future period. The Company expects that the liability for unrecognized tax benefits could decrease by up to $0.3 million within the next 12 months due to expiration of certain statutes of limitation. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and such amounts were not significant in the years ended December 31, 2019, 2018, and 2017. Accrued interest and penalties were insignificant at December 31, 2019, 2018, and 2017. The Company files income tax returns in the U.S. and in foreign jurisdictions. Generally, the Company is no longer subject to U.S., state, local and foreign income tax examinations by tax authorities in its major jurisdictions for years before 2014, except to the extent of net operating loss and tax credit carryforwards from those years. Major taxing jurisdictions include the U.S., the Netherlands, 59 the United Kingdom, Germany, and Switzerland. During 2019, the Company recorded a $0.3 million tax expense to settle a foreign tax audit. As of December 31, 2019, the Company has one non-U.S. subsidiary under audit. Note 9 - Stockholders’ Equity Preferred Stock Forrester has authorized 500,000 shares of $0.01 par value preferred stock. The Board of Directors has full authority to issue this stock and to fix the voting powers, preferences, rights, qualifications, limitations, or restrictions thereof, including dividend rights, conversion rights, redemption privileges and liquidation preferences and the number of shares constituting any series or designation of such series. Treasury Stock As of December 31, 2019, Forrester’s Board of Directors has authorized an aggregate $535.0 million to purchase common stock under the Company’s stock repurchase program including $50.0 million authorized in February 2018. The shares repurchased may be used, among other things, in connection with Forrester’s equity incentive and purchase plans. As of December 31, 2019, the Company had repurchased approximately 16.3 million shares of common stock at an aggregate cost of $474.9 million. Dividends As a result of the acquisition of SiriusDecisions on January 3, 2019 (see Note 2 – Acquisitions), and the related debt incurred to fund the acquisition (see Note 4 – Debt), the Company suspended its dividends program beginning in 2019. The Company did not declare or pay any dividends in the year ended December 31, 2019. During the years ended December 31, 2018 and 2017, the Company declared and paid four quarterly dividends of $0.20 and $0.19 per share each quarter, respectively, amounting to $0.80 per share or $14.5 million and $0.76 per share or $13.6 million, respectively. Equity Plans The Company maintains the Forrester Research, Inc. Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”). The Equity Incentive Plan, which runs until May 2026, provides for the issuance of stock-based awards, including incentive stock options (“ISOs”), non-qualified stock options (“NSOs”), and restricted stock units (“RSUs”) to purchase up to 6,350,000 shares authorized in the plan and 793,275 shares returned from prior plans. Under the terms of the Equity Incentive Plan, ISOs may not be granted at less than fair market value on the date of grant (and in no event less than par value). Options and RSUs generally vest annually over four years and options expire after 10 years. No future awards can be granted or issued under prior plans and there is a maximum amount of awards issuable under the plan to the Company’s non-employee Directors. Beginning in 2017, RSUs granted to non-employee directors vest quarterly over one year. Options and RSUs granted under the Equity Incentive Plan immediately vest upon certain events, as described in the plan. As of December 31, 2019, approximately 2.1 million shares were available for future grant of awards under the Equity Incentive Plan. As of December 31, 2019, approximately 36,000 options remain outstanding and are fully vested under prior plans. Restricted Stock Units Restricted stock units (“RSUs”) represent the right to receive one share of Forrester common stock when the restrictions lapse and the vesting conditions are met, and are valued on the date of grant based upon the value of the Company’s stock on the date of grant less the present value of dividends expected to be paid during the requisite service period. Shares of Forrester’s common stock will be delivered to the grantee upon vesting, subject to a reduction of shares for payment of withholding taxes. The weighted average grant date fair value for RSUs granted in 2019, 2018, and 2017 was $43.84, $43.71 and $39.73, respectively. The value of RSUs vested and converted to common stock, based on the value of Forrester’s common stock on the date of vesting, was $8.2 million, $9.1 million and $8.7 million during 2019, 2018, and 2017, respectively. 60 RSU activity for the year ended December 31, 2019 is presented below (in thousands, except per share data): Unvested at December 31, 2018 Granted Vested Forfeited Unvested at December 31, 2019 Number of Shares Weighted- Average Grant Date Fair Value 497 $ 436 (193) (84) 656 $ 40.89 43.84 39.55 43.24 42.94 Stock Options Stock option activity for the year ended December 31, 2019 is presented below (in thousands, except per share data and contractual term): Outstanding at December 31, 2018 Granted Exercised Forfeited Outstanding at December 31, 2019 Exercisable at December 31, 2019 Vested and expected to vest at December 31, 2019 Weighted - Average Exercise Price Per Share Weighted - Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Number of Shares 583 $ — (125) (22) 436 $ 422 $ 436 $ 35.27 — 34.03 35.38 35.62 35.62 35.62 3.75 $ 3.67 $ 3.75 $ 2,650 2,566 2,650 The total intrinsic value of options exercised during 2019, 2018, and 2017 was $1.5 million, $3.3 million and $4.5 million, respectively. Employee Stock Purchase Plan In May 2018, stockholders of the Company approved an amendment to the Company’s Amended and Restated Employee Stock Purchase Plan (the “Stock Purchase Plan”), which provided for an additional 400,000 shares of common stock, par value $0.01 per share, to be granted under the plan. The Stock Purchase Plan provides for the issuance of up to 1.1 million shares of common stock and as of December 31, 2019, approximately 0.4 million shares remain available for issuance. With certain limited exceptions, all employees of Forrester whose customary employment is more than 20 hours per week, including officers and directors who are employees, are eligible to participate in the Stock Purchase Plan. Purchase periods under the Stock Purchase Plan are six months in length and commence on each successive March 1 and September 1. Stock purchased under the Stock Purchase Plan is required to be held for one year before it is able to be sold. During each purchase period the maximum number of shares of common stock that may be purchased by an employee is limited to the number of shares equal to $12,500 divided by the fair market value of a share of common stock on the first day of the purchase period. An employee may elect to have up to 10% deducted from his or her compensation for the purpose of purchasing shares under the Stock Purchase Plan. The price at which the employee’s shares are purchased is the lower of: (a) 85% of the closing price of the common stock on the day that the purchase period commences, or (b) 85% of the closing price of the common stock on the day that the purchase period terminates. Shares purchased by employees under the Stock Purchase Plan are as follows (in thousands, except per share data): Purchase Period Ended February 28, 2019 August 31, 2019 February 28, 2018 August 31, 2018 Shares Purchased Purchase Price 25 $ 35 $ 27 $ 28 $ 41.82 29.64 34.43 34.21 61 Note 10 - Employee Pension Plans Forrester sponsors several defined contribution plans for eligible employees. Generally, the defined contribution plans have funding provisions which, in certain situations, require contributions based upon formulas relating to employee wages or the level of elective participant contributions, as well as allow for additional discretionary contributions. Further, certain plans contain vesting provisions. Forrester’s contributions to these plans totaled approximately $7.3 million, $5.0 million, $5.2 million for the years ended December 31, 2019, 2018, and 2017, respectively. Note 11 – Derivatives and Hedging During 2019, the Company entered into an interest rate swap contract to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt (see Note 4 – Debt). The Company accounts for outstanding interest rate swap contracts in accordance with FASB ASC Topic 815 – Derivatives and Hedging, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value. At December 31, 2019, the Company had a single interest rate swap contract that matures in 2022, with an initial and year ending notional amount of $95.0 million. The Company pays a base fixed rate of 1.65275% and in return receives the greater of (1) 1- month LIBOR, rounded up to the nearest 1/16 of a percent, or (2) 0.00%. The fair value of the swap on December 31, 2019 was a liability of $0.1 million (see Note 6 – Fair Value Measurements for information on determining the fair value). The liability is included in other non-current liabilities in the Consolidated Balance Sheets. The swap has been designated and accounted for as a cash flow hedge of the forecasted interest payments on the Company’s debt. As long as the swap continues to be a highly effective hedge of the designated interest rate risk, changes in the fair value of the swap are recorded in accumulated other comprehensive income (loss), a component of equity. Any ineffective portion of a change in the fair value of a hedge is recorded in earnings. At both the inception of the swap and at December 31, 2019, the interest rate swap was considered highly effective and accordingly, the $0.1 million change in fair value during the year ended December 31, 2019 was deferred and recorded in other comprehensive income (loss), net of taxes. The Company does not expect any of this loss to be reclassified into earnings within the next 12 months. As required under Topic 815, the swap’s effectiveness will be assessed on a quarterly basis. The Company’s derivative counterparty is an investment grade financial institution. The Company does not have any collateral arrangements with its derivative counterparty and the derivative contract does not contain credit risk related contingent features. The Company did not have any derivatives as of or during the year ended December 31, 2018. Note 12 - Operating Segment and Enterprise Wide Reporting As of January 1, 2019, the Company realigned its management structure into Products, Research and SiriusDecisions. The 2018 and 2017 amounts have been revised to conform to the current presentation. The Products segment includes the revenues of the Connect, Analytics, and Events products (excluding the revenues from SiriusDecisions products) and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes Consulting revenues and the related cost of the Company’s project consulting organization. The project consulting organization delivers a majority of the Company’s project consulting revenue (excluding SiriusDecisions consulting) and certain advisory services primarily related to the Analytics product line. This segment also includes the costs of the product management organization that is responsible for product pricing and packaging and the launch of new products. 62 The Research segment includes the revenues of the Research products and the cost of the organizations responsible for developing and delivering the Research products (excluding the costs and revenues from SiriusDecisions products). In addition, this segment includes Consulting revenues primarily from the delivery of advisory services (such as workshops, speeches and advisory days) delivered by the Company’s research analysts. The SiriusDecisions segment includes the revenues of the SiriusDecisions products and the costs of the organizations responsible for developing and delivering these products. In addition, this segment includes the costs of marketing, technology development and business support departments of the SiriusDecisions business. The Company evaluates reportable segment performance and allocates resources based on segment revenues and expenses. Segment expenses include the direct expenses of each segment organization and exclude, except as noted above for the SiriusDecisions segment, selling and marketing expenses, general and administrative expenses, stock-based compensation expense, depreciation expense, adjustments to incentive bonus compensation from target amounts, amortization of intangible assets, interest and other expense, and gains (losses) on investments. The accounting policies used by the segments are the same as those used in the consolidated financial statements. The Company does not identify or allocate assets, including capital expenditures, by operating segment. Accordingly, assets are not being reported by segment because the information is not available by segment and is not reviewed in the evaluation of performance or making decisions in the allocation of resources. The following tables present information about reportable segments, including the Company’s disaggregation of revenue by product (in thousands): Year Ended December 31, 2019 Research services revenues Research Connect Analytics Total research services revenues Products Research Sirius Decisions Consolidated $ — $ 54,350 23,322 77,672 161,487 $ — — 161,487 57,702 $ 1,874 — 59,576 219,189 56,224 23,322 298,735 Advisory services and events revenues Consulting Events Total advisory services and events revenues Total segment revenues Segment expenses Contribution margin Selling, marketing, administrative and other expenses Amortization of intangible assets Acquisition and integration costs Interest expense, other income (expense) and gains (losses) on investments Loss before income taxes 76,567 12,985 89,552 167,224 81,520 85,704 53,258 — 53,258 214,745 55,330 159,415 6,127 14,025 20,152 79,728 45,734 33,994 135,952 27,010 162,962 461,697 182,584 279,113 (248,621) (22,619) (8,948) $ (8,524) (9,599) 63 Year Ended December 31, 2018 Research services revenues Research Connect Analytics Total research services revenues Advisory services and events revenues Consulting Events Total advisory services and events revenues Total segment revenues Segment expenses Contribution margin Selling, marketing, administrative and other expenses Amortization of intangible assets Acquisition and integration costs Other income (expense) and gains (losses) on investments Income before income taxes Year Ended December 31, 2017 Research services revenues Research Connect Analytics Total research services revenues Advisory services and events revenues Consulting Events Total advisory services and events revenues Total segment revenues Segment expenses Contribution margin Selling, marketing, administrative and other expenses Amortization of intangible assets Acquisition and integration costs Other income (expense) and gains (losses) on investments Income before income taxes Product Research Sirius Decisions Consolidated $ — $ 51,377 19,910 71,287 157,112 $ — — 157,112 — $ — — — 157,112 51,377 19,910 228,399 64,309 13,471 77,780 149,067 75,039 74,028 51,396 — 51,396 208,508 53,326 155,182 — — — — — — $ 115,705 13,471 129,176 357,575 128,365 229,210 (201,836) (1,162) (3,787) 1,100 23,525 Product Research Sirius Decisions Consolidated $ — $ 48,798 18,738 67,536 148,935 $ — — 148,935 — $ — — — 148,935 48,798 18,738 216,471 64,083 11,755 75,838 143,374 67,739 75,635 45,364 — 45,364 194,299 50,972 143,327 — — — — — — $ 109,447 11,755 121,202 337,673 118,711 218,962 (190,632) (781) — (178) 27,371 For 2020, the Company determined that SiriusDecisions will no longer operate under a separate management structure. The Company’s internal management and reporting will be aligned to consolidate each of the SiriusDecisions products and related operations under a single, combined organization within the Company’s existing Products and Research segments. Accordingly, in the first quarter of 2020, the Company will modify its segment reporting, which will eliminate the SiriusDecisions segment, and incorporate SiriusDecisions Research products into the Research segment and incorporate SiriusDecisions Consulting, Connect and Event products into the Products segment. 64 Net long-lived tangible assets by location as of December 31, 2019 and 2018 are as follows (in thousands): United States United Kingdom Europe (excluding United Kingdom) Asia Pacific Other Total 2019 26,709 $ 578 97 2,553 — 29,937 $ 2018 20,880 522 83 517 3 22,005 $ $ Revenues by geographic destination, based on the location products and services are consumed, and as a percentage of total revenues for the years ended December 31, 2019, 2018, and 2017 are as follows (dollars in thousands): United States Europe (excluding United Kingdom) United Kingdom Canada Asia Pacific Other Total United States Europe (excluding United Kingdom) United Kingdom Canada Asia Pacific Other Total 2019 2018 2017 79% 7 4 4 5 1 100% 77% 8 4 4 5 2 100% 77% 9 4 4 4 2 100% 2019 362,867 $ 32,585 21,316 17,246 22,842 4,841 461,697 $ 2018 274,151 $ 29,741 15,273 15,569 17,839 5,002 357,575 $ 2017 260,077 28,525 13,651 14,523 15,952 4,945 337,673 $ $ Note 13 - Certain Balance Sheet Accounts Property and Equipment: Property and equipment as of December 31, 2019 and 2018 is recorded at cost less accumulated depreciation and consists of the following (in thousands): Computers and equipment Computer software Furniture and fixtures Leasehold improvements Total property and equipment Less accumulated depreciation Total property and equipment, net 2019 2018 $ $ 18,337 $ 30,812 10,365 32,935 92,449 (62,512) 29,937 $ 18,621 31,276 8,449 26,610 84,956 (62,951) 22,005 The Company incurs costs to develop or obtain internal use computer software used for its operations, and certain of these costs meeting the criteria in ASC 350 – Internal Use Software are capitalized and amortized over their useful lives. The entire balance in the computer software category above consists of these costs. Amortization of capitalized internal use software costs totaled $5.1 million, $4.2 million, and $2.7 million for the years ended December 31, 2019, 2018, and 2017, respectively, and is included in depreciation in the Consolidated Statements of Income (Loss). 65 Accrued Expenses and Other Current Liabilities: Accrued expenses and other current liabilities as of December 31, 2019 and 2018 consist of the following (in thousands): Payroll and related benefits Taxes Lease liability Other Total 2019 2018 $ $ 45,340 $ 5,320 12,208 16,989 79,857 $ 35,467 2,991 — 15,607 54,065 Non-Current Liabilities: Non-current liabilities as of December 31, 2019 and 2018 consist of the following (in thousands): Deferred tax liability Deferred rent Contingent consideration and indemnity holdback Other Total 2019 2018 $ $ 22,884 $ — — 1,025 23,909 $ 969 6,602 3,433 935 11,939 Allowance for Doubtful Accounts: A rollforward of the allowance for doubtful accounts as of and for the years ended December 31, 2019, 2018, and 2017 is as follows (in thousands): Balance, beginning of year Provision for doubtful accounts Write-offs Balance, end of year 2019 2018 2017 $ $ 359 $ 1,246 (977) 628 $ 155 $ 567 (363) 359 $ 140 331 (316) 155 Note 14 - Summary Selected Quarterly Financial Data (unaudited) The following is a summary of selected unaudited consolidated quarterly financial data for the years ended December 31, 2019 and 2018 (in thousands, except per share data). On January 3, 2019, the Company acquired SiriusDecisions, Inc. The quarterly reported results for 2019 include the operating results of SiriusDecisions beginning as of the acquisition date, which impacts the comparability to the 2018 quarterly reported results in the table below. Refer to Note 2 – Acquisitions for additional information. Three Months Ended Total revenues Income (loss) from operations Net income (loss) Basic income (loss) per common share Diluted income (loss) per common share Total revenues Income (loss) from operations Net income (loss) Basic income (loss) per common share Diluted income (loss) per common share March 31, 2019 100,649 $ (10,884) $ (13,316) $ (0.73) $ (0.73) $ $ $ $ $ $ June 30, 2019 128,183 $ 4,622 $ 1,555 $ 0.08 $ 0.08 $ September 30, 2019 108,596 $ (1,640) $ (2,699) $ (0.15) $ (0.15) $ December 31, 2019 124,269 6,827 4,890 0.26 0.26 Three Months Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 77,749 $ (2,288) $ (1,733) $ (0.10) $ (0.10) $ 96,353 $ 11,027 $ 7,788 $ 0.43 $ 0.43 $ 84,890 $ 4,942 $ 3,950 $ 0.22 $ 0.21 $ 98,583 8,744 5,375 0.29 0.29 $ $ $ $ $ 66 Out of Period Adjustment During the quarter ended June 30, 2018, the Company recorded $1.0 million of revenue ($0.7 million after tax) for an out-of- period correction within research services in the Consolidated Statements of Income (Loss). The error resulted from an understatement of revenue from the reprint product line of $0.8 million ($0.5 million after tax) during the three months ended March 31, 2018 and $0.2 million ($0.1 million after tax) from the year ended December 31, 2017. The Company has concluded that the error was not material to all annual financial statement periods presented. Note 15 – Subsequent Events (unaudited) Due to considerations of the effect of the novel coronavirus, the Company announced on March 13, 2020 that it will be holding its SiriusDecisions Summit 2020, its single largest event, as a virtual event during its originally scheduled timeframe in May 2020. The Company estimates the impact of holding the event as a virtual event, as compared to a live event, will reduce revenues by $7.0 million to $9.0 million and will reduce operating income by $4.0 million to $6.0 million. 67 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2019. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). Internal control over financial reporting includes those policies and procedures that: 1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; 2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and 3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making its assessment, management used the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013. Based on this assessment, management concludes that as of December 31, 2019, the Company’s internal control over financial reporting is effective based on those criteria. The foregoing assessment excludes certain elements of SiriusDecisions, Inc.’s internal control over financial reporting because it was acquired by the Company in a business combination on January 3, 2019 (see Note 2 – Acquisitions in the Notes to Consolidated Financial Statements for additional information). Subsequent to the acquisition, certain elements of SiriusDecisions, Inc.’s internal control over financial reporting and related processes were integrated into the Company’s existing systems and internal control over financial reporting. Those controls that were not integrated have been excluded from our assessment of the effectiveness of internal control over financial reporting as of December 31, 2019. This exclusion is in accordance with the general guidance issued by the Staff of the SEC that an assessment of a recent business acquisition may be omitted from management’s report on internal control over financial reporting in the first year of consolidation. The exclusion represents controls covering approximately 2% of consolidated assets and 16% of consolidated revenues. The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2019, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The Company is finalizing the process of integration its acquisition of SiriusDecisions, evaluating its internal controls and implementing an internal control structure over SiriusDecisions’ operations, which will be complete in the first quarter of 2020. Item 9B. Other Information Not applicable. 68 Item 10. Directors, Executive Officers and Corporate Governance Executive Officers The following table sets forth information about our executive officers as of March 13, 2020. PART III Name George F. Colony Mack Brothers Ryan D. Darrah Michael A. Doyle Kelley Hippler Carrie Johnson Sherri Kottmann Steven Peltzman Position Age 66 Chairman of the Board, Chief Executive Officer 55 Chief Product Officer 48 Chief Legal Officer and Secretary 64 51 Chief Sales Officer 44 Chief Research Officer 44 Chief People Officer 51 Chief Business Technology Officer Chief Financial Officer George F. Colony, Forrester’s founder, has served as Chairman of the Board of Directors and Chief Executive Officer since the Company’s inception in July 1983, and as President since September 2001 and from 1983-2000. Mack Brothers became Forrester’s Chief Product Officer in November 2018. Previously, he served as Chief Consulting Officer from May 2016 until assuming his current role. Prior to joining Forrester, he was Vice President, Industry Services and Consulting, for IHS, Inc. (now IHS Markit, Ltd.), a business intelligence and syndicated research firm, for more than five years. Mr. Brothers held leadership positions at IHS for a total of nine years, and previously was Senior Vice President, Business Development at Wood Mackenzie, Ltd. Ryan D. Darrah began serving as Chief Legal Officer and Secretary in March 2017. Previously, he was the Assistant General Counsel and Assistant Secretary of the Company. Prior to joining the Company in 2007, Mr. Darrah served as General Counsel and Secretary of Sports Loyalty Systems, Inc. and ProfitLogic, Inc. Michael A. Doyle began serving as the Company’s Chief Financial Officer in September 2007. He also served as the Company’s Treasurer from September 2007 through June 2016. Prior to joining the Company, Mr. Doyle was Chief Financial Officer of Easylink Services Corporation, a publicly traded telecommunications messaging provider, since 2004. Prior to joining Easylink, Mr. Doyle was the Chief Financial Officer for North America of Dun & Bradstreet Corporation from 2002 to 2004, and from 1997 to 2002, he held various senior financial and marketing positions with Cendant Corporation. Kelley Hippler became Forrester’s Chief Sales Officer in July 2017. Previously she served as Senior Vice President for Customer Success from November 7, 2016 to July 2017, Chief of Staff, Global Sales from January 2013 to October 2013, and Senior Vice President, Emerging Sales, from January 2012 to January 2013. Ms. Hippler joined Forrester in 1999. Carrie Johnson became Forrester’s Chief Research Officer in November 2018. Previously she served as Senior Vice President, Research from August 2015 to November 2018 and Vice President, Group Director from October 2013 to August 2015. Ms. Johnson joined Forrester in 1998. Sherri Kottmann began serving as the Company’s Chief People Officer in April 2019. Previously she served as Vice President, Performance, Leadership & Culture from 2016 to March 2019 and Director, Strategic Growth, from 2009 to 2016. Steven Peltzman joined Forrester as its Chief Business Technology Officer in September 2011. From 2001 to 2011, Mr. Peltzman was the Chief Information Officer of the Museum of Modern Art in New York City. Prior to that, Mr. Peltzman served as the Chief Technology Officer at MarketMedical.com and as the vice president of technology at Earthweb and was an officer in the United States Air Force. Our Code of Business Conduct and Ethics covers all employees, officers and directors, including our principal executive, financial and accounting officers. A copy of our Code of Business Conduct and Ethics can be found on our web site, www.forrester.com. 69 We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Company’s Code of Business Conduct and Ethics, that relates to a substantive amendment or material departure from a provision of the Code, by posting such information on our Internet website at www.forrester.com. We also intend to satisfy the disclosure requirements of the Nasdaq Stock Market regarding waivers of the Code of Business Conduct and Ethics by posting such information on our Internet website at www.forrester.com. The remainder of the response to this item is contained in our Proxy Statement for our 2020 Annual Meeting of Stockholders (the “2020 Proxy Statement”) under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance”, all of which is incorporated herein by reference. Item 11. Executive Compensation The response to this item is contained in the 2020 Proxy Statement under the captions “Director Compensation” and “Executive Compensation” and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The response to this item is contained in the 2020 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference. The following table summarizes, as of December 31, 2019, the number of options issued under our equity incentive plans and the number of shares available for future issuance under these plans: (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)(1) 1,091,986 (1)$ 35.62 2,535,260 (2) N/A 1,091,986 $ N/A 35.62 N/A 2,535,260 Plan Category Equity compensation plans approved by stockholders Equity compensation plans not approved by stockholders Total (1) Includes 656,171 restricted stock units that are not included in the calculation of the weighted average exercise price. (2) Includes, as of December 31, 2019, 2,130,562 shares available for issuance under our Equity Incentive Plan and 404,698 shares that are available for issuance under our Stock Purchase Plan. The shares available under our Equity Incentive Plan are available to be awarded as restricted or unrestricted stock or stock units. Item 13. Certain Relationships and Related Transactions, and Director Independence The response to this item is contained in the Company’s 2020 Proxy Statement under the captions “Information with Respect to Board of Directors”, “Certain Relationships and Related Transactions”, and “Related Person Transactions” and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The response to this item is contained in the Company’s 2020 Proxy Statement under the caption “Independent Auditors’ Fees and Other Matters” and is incorporated herein by reference. 70 PART IV Item 15. Exhibits and Financial Statement Schedules. a. Financial Statements. See Index to Financial Statement herein. b. Financial Statement Schedules. None. c. Exhibits. A complete listing of exhibits required is given in the Exhibit Index herein, which precedes the exhibits filed with this report. Item 16. Form 10-K Summary. Not applicable. 71 Exhibit No. Description EXHIBIT INDEX 2.1 3.1 3.2 3.3 3.4 4.1 Agreement and Plan of Merger, dated as of November 26, 2018, by and among Forrester Research, Inc., Supernova Acquisition Corp., SiriusDecisions, Inc., the Founder Stockholders named therein, and Fortis Advisors LLC, as Stockholder Representative Restated Certificate of Incorporation of Forrester Research, Inc. (see Exhibit 3.1 to Registration Statement on Form S- 1A filed on November 5, 1996) Certificate of Amendment of the Certificate of Incorporation of Forrester Research, Inc. (see Exhibit 3.1 to Annual Report on Form 10-K for the year ended December 31, 1999) Certificate of Amendment to Restated Certificate of Incorporation of Forrester Research, Inc. Amended and Restated By-Laws of Forrester Research, Inc. Specimen Certificate for Shares of Common Stock, $.01 par value, of Forrester Research, Inc. (see Exhibit 4 to Registration Statement on Form S-1A filed on November 5, 1996) 4.2(1) Description of Common Stock 10.01+ Registration Rights and Non-Competition Agreement (see Exhibit 10.1 to Registration Statement on Form S-1 filed on September 26, 1996) 10.02+ Amended and Restated Employee Stock Purchase Plan 10.03+ Amended and Restated Equity Incentive Plan 10.04+ Stock Option Plan for Directors, as amended 10.05+ Form of Incentive Stock Option Certificate (Amended and Restated Equity Incentive Plan) 10.06+ Form of Non-Qualified Stock Option Certificate (Amended and Restated Equity Incentive Plan) 10.07+ Form of Performance-Based Stock Option Certificate (Amended and Restated Equity Incentive Plan) 10.08+ Form of Performance-Based Restricted Stock Unit Award Agreement (Amended and Restated Equity Incentive Plan) 10.09+ Form of Director’s Option Certificate (Stock Option Plan for Directors) 10.10+ Form of Restricted Stock Unit Award Agreement (Amended and Restated Equity Incentive Plan) 10.11+ 10.12+ Form of Restricted Stock Unit Award Agreement for Directors with Four-Year Vesting (Amended and Restated Equity Incentive Plan) Form of Restricted Stock Unit Award Agreement for Directors with One-Year Vesting (Amended and Restated Equity Incentive Plan) 10.13+ Form of Stock Option Certificate with Non-Solicitation Covenant (Amended and Restated Equity Incentive Plan) 10.14+ 10.15+ 10.16+ Form of Stock Option Certificate with Non-Solicitation and Non-Competition Covenant (Amended and Restated Equity Incentive Plan) Form of Restricted Stock Unit Award Agreement with Non-Solicitation Covenant (Amended and Restated Equity Incentive Plan) Form of Restricted Stock Unit Award Agreement with Non-Solicitation and Non-Competition Covenant (Amended and Restated Equity Incentive Plan) 10.17+ Amended and Restated Executive Cash Incentive Plan 10.18+ Employment Offer Letter from Company to Michael A. Doyle dated July 24, 2007 10.19+ Forrester Research, Inc. Executive Severance Plan 10.20 Lease of Premises at Cambridge Discovery Park, Cambridge, Massachusetts dated as of September 29, 2009 from BHX, LLC, as Trustee of Acorn Park I Realty Trust to the Company 72  10.21 10.22 10.23 10.24 10.25 10.26 10.27 First Amendment of Lease dated as of December 21, 2009 by 200 Discovery Park, LLC, successor to BHX, LLC, as Trustee of Acorn Park I Realty Trust, and the Company Agreement Regarding Project Rights dated as of September 29, 2009, by BHX, LLC, a Massachusetts limited liability company, as Trustee of Acorn Park I Realty Trust, a Massachusetts nominee trust, and the Company Second Amendment of Lease dated as of February 8, 2012 by 200 Discovery Park, LLC and the Company Underlease dated July 15, 2010 among Covington & Burling LLP, Forrester Research Limited, and the Company Agreement of Lease dated as of April 30, 2010 between RFL 160 Fifth LLC and the Company Office Lease dated November 24, 2010 between 150 Spear Street, LLC and the Company First Amendment to Office Lease dated as of August 2012 between 150 Spear Street, LLC and the Company 10.28 Second Amendment to Office Lease dated as of September 25, 2015 between 150 Spear Street, LLC and the Company 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 Third Amendment to Office Lease dated as of March 12, 2019 between Spear Street Corridor LLC and the Company Lease dated as of March 27, 2006 between DIV Danbury 187, LLC and DIV Linden 1987, LLC and SiriusDecisions, Inc. Amendment to Lease dated as of March 27, 2008 between DIV Danbury 187, LLC and DIV Linden 187, LLC and SiriusDecisions, Inc. Second Amendment to Lease dated as of June 15, 2012 between DIV Danbury 187, LLC and DIV Linden 187, LLC and SiriusDecisions, Inc. Third Amendment to Lease dated as of October 24, 2012 between DIV Danbury 187, LLC and DIV Linden 187, LLC and SiriusDecisions, Inc. Fourth Amendment to Lease dated as of February 14, 2014 between DIV Danbury 187, LLC and DIV Linden 187, LLC and SiriusDecisions, Inc. Fifth Amendment to Lease dated as of October 2, 2015 between DIV Danbury 187, LLC and DIV Linden 187, LLC and SiriusDecisions, Inc. Credit Agreement, dated as of January 3, 2019, among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. 21(1) Subsidiaries of the Registrant 23.1(1) Consent of PricewaterhouseCoopers LLP 31.1(1) Certification of the Principal Executive Officer 31.2(1) Certification of the Principal Financial Officer 32.1(1) Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2(1) Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase (1) Filed herewith. + Denotes management contract or compensation arrangements. 73 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES FORRESTER RESEARCH, INC. By: /s/ GEORGE F. COLONY George F. Colony Chairman of the Board and Chief Executive Officer Date: March 13, 2020 Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Capacity In Which Signed Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date March 13, 2020 Chief Financial Officer (Principal Financial Officer) March 13, 2020 /s/ GEORGE F. COLONY George F. Colony /s/ MICHAEL A. DOYLE Michael A. Doyle /s/ SCOTT R. CHOUINARD Scott R. Chouinard Chief Accounting Officer and Treasurer (Principal Accounting Officer) March 13, 2020 /s/ YVONNE L. WASSENAAR Yvonne L. Wassenaar /s/ ROBERT M. GALFORD Robert M. Galford /s/ GRETCHEN TEICHGRAEBER Gretchen Teichgraeber /s/ DAVID J. BOYCE David J. Boyce /s/ ANTHONY J. FRISCIA Anthony J. Friscia /s/ NEIL BRADFORD Neil Bradford /s/ JEAN BIRCH Jean Birch Member of the Board of Directors March 13, 2020 Member of the Board of Directors March 13, 2020 Member of the Board of Directors March 13, 2020 Member of the Board of Directors March 13, 2020 Member of the Board of Directors March 13, 2020 Member of the Board of Directors March 13, 2020 Member of the Board of Directors March 13, 2020 74 Notice Of 2020 Annual Meeting Of Stockholders And Proxy Statement Forrester Research, Inc. 60 Acorn Park Drive Cambridge, Massachusetts 02140 March 31, 2020 George F. Colony Chairman of the Board and Chief Executive Officer To Our Stockholders: You are cordially invited to attend the 2020 Annual Meeting of Stockholders of Forrester Research, Inc., which will be held on Tuesday, May 12, 2020 at 10:00 a.m. Eastern Daylight Time. The Annual Meeting will be a virtual stockholder meeting, conducted via live audio webcast, through which you can submit questions and vote online. You may attend the meeting by visiting www.virtualshareholdermeeting.com/FORR2020 and entering your 16-digit control number included with these proxy materials. On the following pages, you will find the formal notice of the Annual Meeting and our proxy statement. At the Annual Meeting you are being asked to elect eight Directors, to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020, and to approve by non-binding vote our executive compensation. We hope that many of you will be able to attend. Thank you for your continued support and investment in Forrester. Sincerely yours, GEORGE F. COLONY Chairman of the Board and Chief Executive Officer Forrester Research, Inc. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS May 12, 2020 Notice is hereby given that the 2020 Annual Meeting of Stockholders of Forrester Research, Inc. will be held at 10:00 a.m. Eastern Daylight Time on Tuesday, May 12, 2020. The annual meeting will be a virtual stockholder meeting, conducted via live audio webcast, through which you can submit questions and vote online. You may attend the meeting by visiting www.virtualshareholdermeeting.com/FORR2020 and entering your 16-digit control number included with these proxy materials. The purpose of the annual meeting will be the following: 1. 2. 3. To elect the eight directors named in the accompanying proxy statement to serve until the 2021 Annual Meeting of Stockholders; To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; and To approve by non-binding vote our executive compensation. The foregoing items of business are more fully described in the proxy statement accompanying this notice. Stockholders of record at the close of business on March 16, 2020 are entitled to notice of and to vote at the meeting. A list of stockholders entitled to vote at the meeting will be open to examination by any stockholder, for any purpose germane to the meeting, during normal business hours for a period of ten days before the meeting at our corporate offices at 60 Acorn Park Drive, Cambridge, Massachusetts 02140, and online during the meeting accessible at www.virtualshareholdermeeting.com/FORR2020. If you are unable to participate in the annual meeting online, please vote your shares as provided in this proxy statement. By Order of the Board of Directors RYAN D. DARRAH Secretary Cambridge, Massachusetts March 31, 2020 IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE VOTE YOUR SHARES OVER THE INTERNET OR BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ON THE PROXY CARD, OR COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN TO PARTICIPATE IN THE MEETING ONLINE. FORRESTER RESEARCH, INC. Annual Meeting of Stockholders May 12, 2020 PROXY STATEMENT The Board of Directors of Forrester Research, Inc., a Delaware corporation, is soliciting proxies from our stockholders. The proxy will be used at our 2020 Annual Meeting of Stockholders and at any adjournments thereof. You are invited to attend the meeting to be held at 10:00 a.m. Eastern Daylight Time on Tuesday, May 12, 2020. The annual meeting will be held virtually, conducted via live audio webcast, through which you can submit questions and vote online. You may attend the meeting by visiting www.virtualshareholdermeeting.com/FORR2020. Be sure to have your 16-digit control number included with these proxy materials in order to access the annual meeting. This proxy statement was first made available to stockholders on or about March 31, 2020. This proxy statement contains important information regarding our annual meeting. Specifically, it identifies the proposals upon which you are being asked to vote, provides information that you may find useful in determining how to vote and describes voting procedures. We use several abbreviations in this proxy statement. We call our Board of Directors the “Board”, refer to our fiscal year which began on January 1, 2019 and ended on December 31, 2019 as “fiscal 2019,” and refer to our fiscal year ending December 31, 2020 as “fiscal 2020”. We also refer to ourselves as “Forrester” or the “Company.” Who May Attend and Vote? Stockholders who owned our common stock at the close of business on March 16, 2020 are entitled to notice of and to vote at the annual meeting. We refer to this date in this proxy statement as the “record date.” As of the record date, we had 18,757,788 shares of common stock issued and outstanding. Each share of common stock is entitled to one vote on each matter to come before the meeting. How Do I Vote? If you are a stockholder of record of our common stock: 1. 2. 3. You may vote over the internet. If you have internet access, you may vote your shares from any location in the world by following the Vote by Internet instructions on the enclosed proxy card. In addition, you may attend the annual meeting via the internet and vote during the annual meeting. Please have your 16-digit control number included with these proxy materials in order to access the annual meeting. You may vote by telephone. You may vote your shares by following the “Vote by Phone” instructions on the enclosed proxy card. You may vote by mail. If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope provided. By voting over the internet or by telephone, or by signing and returning the proxy card according to the enclosed instructions, you are enabling the individuals named on the proxy card (known as “proxies”) to vote your shares at the meeting in the manner you indicate. We encourage you to vote in advance even if you plan to attend the meeting. In this way, your shares will be voted even if you are unable to attend the meeting. Your shares will be voted in accordance with your instructions. If a proxy card is signed and received by our Secretary, but no instructions are indicated, then the proxy will be voted “FOR” the election of the nominees for directors, “FOR” ratifying the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal 2020, and “FOR” approval of the non-binding vote on our executive compensation. How Do I Vote if My Shares are Held in Street Name? If you hold shares in “street name” (that is, through a bank, broker, or other nominee), the bank, broker, or other nominee, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your brokerage firm provides you. Many brokers also offer the option of voting over the internet or by telephone, instructions for which would be provided by your brokerage firm on your voting instruction form. Please follow the instructions on that form to make sure your shares are properly voted. If you hold shares in “street name” and would like to attend the annual meeting and vote online, you must contact the person in whose name your shares are registered and follow directions provided to obtain a proxy card from that person and have it available for the annual meeting. What Does the Board of Directors Recommend? The Board recommends that you vote FOR the election of nominees for directors identified in Proposal One, FOR ratifying the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm as described in Proposal Two, and FOR approval by non-binding vote of our executive compensation as provided in Proposal Three. If you are a record holder and submit the proxy card but do not indicate your voting instructions, the persons named as proxies on your proxy card will vote in accordance with the recommendations of the Board of Directors. If you hold your shares in “street name”, and you do not indicate how you wish to have your shares voted, your nominee has discretion to instruct the proxies to vote on Proposal Two but does not have the authority, without your specific instructions, to vote on the election of directors or on Proposal Three, and those votes will be counted as “broker non-votes”. What Vote is Required for Each Proposal? A majority of the shares entitled to vote on a particular matter, present in person or represented by proxy, constitutes a quorum as to any proposal. The nominees for election of the directors at the meeting (Proposal One) who receive the greatest number of votes properly cast for the election of directors will be elected. As a result, shares that withhold authority as to the nominees recommended by the Board will have no effect on the outcome. The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and voting is required to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm (Proposal Two) and to approve the non-binding vote on our executive compensation (Proposal Three). Shares represented by proxies that indicate an abstention or a “broker non-vote” (that is, shares represented at the annual meeting held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum, but are not considered to have been voted, and have the practical effect of reducing the number of affirmative votes required to achieve a majority for those matters requiring the affirmative vote of the holders of a majority of the shares present or represented by proxy and voting (Proposals Two and Three) by reducing the total number of shares from which the majority is calculated. However, because directors are elected by a plurality vote, abstentions and broker non-votes will have no effect on the outcome on Proposal One. May I Change or Revoke My Vote After I Return My Proxy Card or After I Have Voted My Shares over the Internet or by Telephone? Yes. If you are a stockholder of record, you may change or revoke a proxy any time before it is voted by: (cid:129) returning to us a newly signed proxy bearing a later date; (cid:129) (cid:129) delivering a written instrument to our Secretary revoking the proxy; or attending the annual meeting via the internet and voting online. Simply attending the annual meeting will not, by itself, revoke your proxy. If you hold shares in “street name”, you should follow the procedure in the instructions that your nominee has provided to you. Who Will Bear the Cost of Proxy Solicitation? We will bear the expense of soliciting proxies. Our officers and regular employees (who will receive no compensation in addition to their regular salaries) may solicit proxies. In addition to soliciting proxies through the mail, our officers and regular employees may solicit proxies personally, as well as by mail, telephone, and telegram from brokerage houses and other stockholders. We will reimburse brokers and other persons for reasonable charges and expenses incurred in forwarding soliciting materials to their clients. Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on May 12, 2020 This proxy statement and our Annual Report to Stockholders are available on-line at www.proxyvote.com. These materials will be mailed to stockholders who request them. How Can I Obtain an Annual Report on Form 10-K? Our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 is available on our website at www.forrester.com/aboutus. If you would like a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, we will send you one without charge. Please contact Investor Relations, Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140, Tel: (617) 613-6000. 2 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table and notes provide information about the beneficial ownership of our outstanding common stock as of March 9, 2020 (except as otherwise noted) by: (i) (ii) each person who we know beneficially owns more than 5% of our common stock; each of the executive officers named below in the Summary Compensation Table; (iii) each member of our Board of Directors; and (iv) our directors and executive officers as a group. Except as otherwise indicated, each of the stockholders named in the table below has sole voting and investment power with respect to the shares of our common stock beneficially owned. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”) and includes voting or investment power with respect to the shares. Shares subject to exercisable options and vesting restricted stock units include options that are currently exercisable or exercisable within 60 days of March 9, 2020 and shares underlying restricted stock units scheduled to vest within 60 days of March 9, 2020. Name of Beneficial Owner George F. Colony c/o Forrester Research, Inc. 60 Acorn Park Drive Cambridge, MA 02140(1) BlackRock, Inc. 55 East 52nd Street New York, NY 10022(2) Wellington Management Group LLP c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210(3) The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355(4) Renaissance Technologies LLC 800 Third Avenue New York, NY 10022(5) Jean Birch David Boyce Neil Bradford Tony Friscia Robert Galford Gretchen Teichgraeber Yvonne Wassenaar Mack Brothers Michael Doyle Kelley Hippler Carrie Johnson Directors, named executive officers, and other executive officers as a group (15 persons)(1) 3 Common Stock Beneficially Owned Shares Subject to Exercisable Options and Shares Beneficially Owned 7,764,198 Vesting Restricted Stock Units Percentage of Outstanding Shares — 41.4% 1,727,341 — 9.2% 1,232,129 — 6.6% 1,152,421 — 6.1% 964,406 — 5.1% 5,459 5,260 7,956 7,836 29,882 17,543 7,836 11,821 31,527 9,017 3,340 — — — — 12,000 21,500 — 15,000 91,500 16,375 1,750 * * * * * * * * * * * 7,921,129 175,212 42.4% Includes 1,580 shares held by Mr. Colony’s wife as to which Mr. Colony disclaims beneficial ownership. (1) (2) Beneficial ownership as of December 31, 2019, as reported in a Schedule 13G filed with the SEC on February 5, 2020, stating that BlackRock, Inc. has sole voting power with respect to 1,698,337 shares and sole dispositive power with respect to 1,727,341 shares. (3) Beneficial ownership as of December 31, 2019, as reported in a Schedule 13G filed with the SEC on January 27, 2020, stating that Wellington Management Group LLP, Wellington Group Holdings LLP, and Wellington Investment Advisors Holdings LLP each has shared voting power with respect to 1,105,540 shares and shared dispositive power with respect to 1,232,129 shares, and Wellington Management Company, LLP has shared voting power with respect to 1,096,180 shares and shared dispositive power with respect to 1,222,769 shares. (4) Beneficial ownership as of December 31, 2019, as reported in a Schedule 13G filed with the SEC on February 12, 2020, stating that The Vanguard Group has sole voting power with respect to 22,081 shares, shared voting power with respect to 964 shares, sole dispositive power with respect to 1,130,386 shares and shared dispositive power with respect to 22,035 shares. (5) Beneficial ownership as of September 30, 2019, as reported in a Schedule 13G filed with the SEC on February 12, 2020, stating that Renaissance Technologies LLC and Renaissance Technologies Holding Corporation each has sole voting and dispositive power with respect to 964,406 shares. Less than 1% * PROPOSAL ONE: ELECTION OF DIRECTORS Our directors are elected annually by the stockholders. The Board has nominated Jean Birch, David Boyce, Neil Bradford, George Colony, Anthony Friscia, Robert Galford, Gretchen Teichgraeber and Yvonne Wassenaar to serve one-year terms that will expire at the 2021 Annual Meeting of Shareholders. These individuals all currently serve on our Board and were all elected at last year’s Annual Meeting. The proxies intend to vote each share for which a proper proxy card has been returned or voting instructions received and not revoked in favor of the nominees named above. If you wish to withhold the authority to vote for the election of any of the nominees, your voting instructions must so indicate or your returned proxy card must be marked to that effect. It is expected that each of the nominees will be able to serve, but if any of them is unable to serve, the proxies reserve discretion to vote, or refrain from voting, for a substitute nominee or nominees. The following section provides information about each nominee, including information provided by each nominee about his or her principal occupation and business experience for the past five years and the names of other publicly-traded companies, if any, for which he or she currently serves as a director or has served as a director during the past five years. In addition to the information presented with respect to each nominee’s experience, qualifications and skills that led our Board to conclude that he or she should serve as a director, we also believe that each of the nominees has demonstrated business acumen and a significant commitment to our company, and has a reputation for integrity and adherence to high ethical standards. NOMINEES FOR ELECTION Jean M. Birch, age 60, became a director of Forrester in February 2018. Ms. Birch currently serves as an independent director of Jack in the Box Inc., a position she has held since May of 2019. At Jack in the Box, Ms. Birch sits on the compensation and nominating and governance committees. Ms. Birch also serves as an independent director of CorePoint Lodging, Inc., a position she has held since September 2018. At CorePoint, Ms. Birch sits on the audit and nominating and governance committees. Previously, Ms. Birch was the Chair of the Board of Papa Murphy’s Holdings, Inc., a position she held from September of 2016 to May of 2019. She joined the PMI board in April of 2015 and, from January through July of 2017, Ms. Birch served as interim President and CEO. Ms. Birch is the President and CEO of Birch Company, LLC., a small consulting practice, a position she has held since the company’s formation in 2007. Ms. Birch has previously served on the board of Darden Restaurants, Inc. from 2014-2016. Additionally, she served on the board of Cosi, Inc. from 2013-2016. Prior to that, from 2009 through 2012, Ms. Birch served as President of IHOP Restaurants, Inc., a division of DineEquity, Inc. We believe Ms. Birch’s qualifications to serve on our Board of Directors include her more than two decades of operating experience leading large consumer businesses and her experience as a public company board member. David Boyce, age 52, became a director of Forrester in June 2017. Mr. Boyce is the Chief Strategy Officer of XANT, Inc. (formerly known as InsideSales.com, Inc.), a software company offering a leading sales acceleration platform. Prior to joining XANT, Mr. Boyce was the Chief Executive Officer and Chairman of Fundly, Inc., a crowdfunding site for online fundraising from 4 2010 to 2013. Previously, Mr. Boyce was global VP of Strategy at Oracle from 2005 to 2010. We believe Mr. Boyce’s qualifications to serve on our Board of Directors include his extensive experience as an operating executive at several software companies and his expertise in product, strategy and marketing. Neil Bradford, age 47, became a director of Forrester in February 2018. From 2017 to March 2019, Mr. Bradford served as the Chief Executive Officer of Financial Express, Ltd., an investment ratings and fund research agency based in the United Kingdom. Prior to joining FE, Mr. Bradford was the Chief Executive Officer of Argus Media, a provider of price assessments, business intelligence and market data for the global energy and commodities markets from 2015 to 2017, where he also served as Chief Operating Officer from 2010 to 2015. In 1997, Mr. Bradford co-founded Fletcher Research Limited, a UK-based technology research firm that was acquired by Forrester in 1999. Mr. Bradford served in executive roles with Forrester until 2006. We believe Mr. Bradford’s qualifications to serve on our Board of Directors include his years of experience in the research and advisory business, having both founded and led companies in the industry, his prior experience as an executive officer of Forrester, and his perspective on European business as a UK citizen having worked for firms headquartered in London. George F. Colony, age 66, is the founder of Forrester and since 1983, he has served as Chairman of the Board and Chief Executive Officer. He also has served as Forrester’s President since September 2001, and he previously was Forrester’s President from 1983 to 2000. We believe Mr. Colony’s qualifications to serve on our Board of Directors and as its Chairman include his extensive experience in the research industry, including more than 30 years as our chief executive officer, and his significant ownership stake in the Company. Anthony Friscia, age 64, became a director of Forrester in June 2017. Mr. Friscia is currently an independent business consultant. From 2014 to 2016, Mr. Friscia was the President and Chief Executive Officer of Eduventures, Inc., a research and advisory firm that provides proprietary research and strategic advice to higher education leaders. Previously, from 2011 to 2014, Mr. Friscia served as a consultant and special advisor to the President of the New School, a private university in New York City. In 1986, Mr. Friscia founded AMR Research, a provider of research and advice on global supply chain and enterprise technology to operations and IT executives, and served as its President and Chief Executive Officer until 2009. We believe Mr. Friscia’s qualifications to serve on our Board of Directors include his extensive experience in business leadership and providing strategic advice to senior leaders. Robert M. Galford, age 67, became a director of Forrester in November 1996. Since November 2007, Mr. Galford has been the managing partner of the Center for Leading Organizations, an organizational development firm he founded in Concord, Massachusetts. From 2001 to 2007, Mr. Galford was a managing partner of the Center for Executive Development, an executive education provider in Boston, Massachusetts. We believe Mr. Galford’s qualifications to serve on our Board of Directors include his many years of organizational development and executive education experience, along with his more recent corporate governance experience as an instructor for the National Association of Corporate Directors. Gretchen G. Teichgraeber, age 66, became a director of Forrester in December 2005. Ms. Teichgraeber is the chair of the board of Leadership Connect, a premier information services company that publishes biographical and contact data on leaders in the private and public sectors. Previously, Ms. Teichgraeber was an independent consultant to digital media companies and various non-profit organizations from 2007 to 2009. From 2000 to 2007, Ms. Teichgraeber was the chief executive officer of Scientific American, Inc., publisher of the science and technology magazine, Scientific American. Prior to joining Scientific American, Ms. Teichgraeber served as general manager, publishing, and vice president, marketing and information services at CMP Media, Inc., a leading provider of technology news and information. We believe Ms. Teichgraeber’s qualifications to serve on our Board of Directors include her significant general management and marketing experience in the publishing and information services business, including on-line and print media. Yvonne Wassenaar, age 51, became a director of Forrester in June 2017. Ms. Wassenaar is the Chief Executive Officer of Puppet, Inc., an information technology automation software company. From 2017 to 2018, Ms. Wassenaar was the Chief Executive Officer of Airware, an enterprise drone solutions company. From 2014 to 2017, Ms. Wassenaar was with New Relic, Inc., a cloud- based SaaS company, most recently as Chief Information Officer. Prior to joining New Relic, Ms. Wassenaar held senior positions at VMware, Inc. from 2010 to 2014. We believe Ms. Wassenaar’s qualifications to serve on our Board of Directors include her thought leadership in the areas of cloud computing, big data analytics and business digitization and her extensive experience in senior leadership positions at technology companies. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES NAMED ABOVE. Corporate Governance We believe that good corporate governance is important to ensure that Forrester is managed for the long-term benefit of its stockholders. Based on our continuing review of the provisions of the Sarbanes-Oxley Act of 2002, rules of the Securities and 5 Exchange Commission and the listing standards of The NASDAQ Stock Market, our Board of Directors has adopted Corporate Governance Guidelines, an amended and restated charter for the Audit Committee of the Board of Directors, and a charter for the Compensation and Nominating Committee of the Board. Our Corporate Governance Guidelines include stock retention guidelines applicable to executive officers and directors. The guidelines, which are described in more detail below in the Compensation Discussion and Analysis section below, require all directors and executive officers to hold a targeted value of our common stock within specified timeframes, and include restrictions on sales of our common stock by such directors and executive officers until the guidelines have been met. These guidelines may be waived, at the discretion of the Compensation and Nominating Committee of the Board of Directors, if compliance with the guidelines would create severe hardship or prevent an executive officer or director from complying with a court order. We currently do not have a policy regarding hedging. We also have a written code of business conduct and ethics that applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. You can access our Code of Business Conduct and Ethics, Corporate Governance Guidelines and our current committee charters on our website, at www.forrester.com/aboutus. Information With Respect to Board of Directors Board Meetings and Committees Our Board of Directors has determined that each of the current directors, with the exception of Mr. Colony, our Chairman and Chief Executive Officer, is independent under applicable NASDAQ standards as currently in effect. Our Board of Directors held six meetings during fiscal 2019. Each director attended at least 75 percent of the aggregate of the meetings of the Board of Directors and of each committee of which he or she is a member. Forrester does not require directors to attend the annual meeting of stockholders. Mr. Colony, who presided at the meeting, attended the 2019 annual meeting of stockholders, as did Mr. Galford. Historically, very few stockholders have attended our annual meeting and we have not found it to be a particularly useful forum for communicating with our stockholders. The Board of Directors currently has two standing committees, the Audit Committee and the Compensation and Nominating Committee, whose members consist solely of independent directors. Our Audit Committee consists of four members: Jean M. Birch, Chair, Neil Bradford, Tony Friscia, and Yvonne Wassenaar, each of whom, in addition to satisfying the NASDAQ independence standards, also satisfies the Sarbanes-Oxley independence requirements for audit committee membership. In addition, the Board has determined that Ms. Birch is an “audit committee financial expert” under applicable rules of the Securities and Exchange Commission, and all of the members of the Audit Committee satisfy the financial literacy standards of NASDAQ. The Audit Committee held five meetings during fiscal 2019. The responsibilities of our Audit Committee and its activities during fiscal 2019 are described in the committee’s amended and restated charter, which is available on our website at www.forrester.com/aboutus. The charter will also be made available without charge to any stockholder who requests it by writing to Forrester Research, Inc., Attn: Chief Legal Officer and Secretary, 60 Acorn Park Drive, Cambridge, MA 02140. Our Compensation and Nominating Committee consists of three members: Robert M. Galford, Chairman, David Boyce, and Gretchen G. Teichgraeber. The Compensation and Nominating Committee held five meetings during fiscal 2019. The Compensation and Nominating Committee has authority, as specified in the committee’s charter, to, among other things, evaluate and approve the compensation of our Chief Executive Officer, review and approve the compensation of our other executive officers, administer our stock plans, and oversee the development of executive succession plans for the CEO and other executive officers. The committee also has the authority to identify and recommend to the Board qualified candidates for director. The Compensation and Nominating Committee charter is available on our website at www.forrester.com/aboutus. The charter will also be made available without charge to any stockholder who requests it by writing to Forrester Research, Inc., Attn: Chief Legal Officer and Secretary, 60 Acorn Park Drive, Cambridge, MA 02140. In 2019, following the acquisition of SiriusDecisions, Inc. that increased the size and scope of our company, we engaged Mercer to assess the compensation paid by Forrester to our executives (described in greater detail in the Compensation and Analysis below). Forrester separately engaged Mercer in 2019 to assist in Forrester’s integration of benefits subsequent to the acquisition of SiriusDecisions and to provide other general compensation and benefits advice and brokerage services. The total fees paid to Mercer with respect to the compensation assessment were approximately $35,000 and the total fees and commissions paid to Mercer for other services performed in 2019 were approximately $592,571. 6 Compensation Committee Interlocks and Insider Participation No person who served during the past fiscal year as a member of our Compensation and Nominating Committee is or was an officer or employee of Forrester, or had any relationship with Forrester requiring disclosure in this proxy statement. During the past fiscal year, none of our executive officers served as a member of the board of directors of another entity, any of whose executive officers served as one of our directors. Board Leadership Structure At the present time, Mr. Colony serves as both Chairman of the Board and Chief Executive Officer. Mr. Colony is a significant stakeholder in Forrester, beneficially owning approximately 41% of our outstanding common stock. As such, we believe it is appropriate that he set the agenda for the Board of Directors in addition to serving as the Chief Executive Officer. We also do not believe that the size of the Company warrants the division of these responsibilities. In 2017, the Board of Directors selected Robert Galford to act as lead independent director. In this role, Mr. Galford presides at executive sessions of the independent directors and will bear such further responsibilities as the Board as a whole may designate from time to time. The Board’s Role in Risk Oversight; Risk Considerations in our Compensation Programs The Board’s role in the Company’s risk oversight process includes receiving regular reports from members of management on areas of material risk to the Company, including financial, strategic, operational, cybersecurity, legal and regulatory risks. The full Board (or the appropriate Committee in the case of risks that are under the purview of a particular Committee) receives these reports from the appropriate manager within the Company. When a committee receives such a report, the Chairman of the relevant Committee reports on the discussion to the full Board during the Committee reports portion of the next Board meeting, enabling the full Board to coordinate the risk oversight role, particularly with respect to risk interrelationships. Our Compensation and Nominating Committee does not believe that our compensation programs encourage excessive or inappropriate risk taking. We structure our pay programs to consist of both fixed and variable compensation, with the fixed base salary portion providing steady income regardless of our stock price performance. The variable components, consisting of cash bonus and stock-based awards, and for our chief sales officer, sales commissions, are designed to reward both short and long-term performance. Targets under our bonus plans are a function of bookings and profit (described in greater detail in the Compensation Discussion and Analysis below), important financial metrics for our business. For long-term performance, we generally award restricted stock units vesting over four years. We believe that the variable elements of compensation are a sufficient percentage of overall compensation to motivate executives to produce excellent short and long-term results for the Company, while fixed base salary is also sufficiently high such that the executives are not encouraged to take unnecessary or excessive risks. In addition, our bonus plan funding metrics apply company-wide, regardless of function or client group, which we believe encourages relatively consistent behavior across the organization. While sales commissions are not capped, we cap our bonus at 1.95 times target company performance. Therefore, even if Company performance dramatically exceeds target performance, bonus payouts are limited. Conversely, we have a minimum threshold on Company performance under our executive bonus plan approved by the Compensation and Nominating Committee so that the bonus plan is not funded at performance below a certain level. We also believe that our Executive Severance Plan adopted in 2014 and described in detail below, which provides severance compensation in the event of involuntary termination of employment without cause and in connection with a change in control, promotes stability and continuity of operations. Director Candidates As noted above, the Compensation and Nominating Committee has responsibility for recommending nominees for election as directors of Forrester. Our stockholders may recommend individuals for this committee to consider as potential director candidates by submitting their names and background to the “Forrester Research Compensation and Nominating Committee”, c/o Chief Legal Officer and Secretary, 60 Acorn Park Drive, Cambridge, MA 02140. The Compensation and Nominating Committee will consider a recommended candidate for the next annual meeting of stockholders only if biographical information and background material are provided no later than the date specified below under “Stockholder Proposals” for receipt of director nominations. The process that the Compensation and Nominating Committee will follow to identify and evaluate candidates includes requests to Board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates, and interviews of selected candidates by members of the Compensation and Nominating Committee. Assuming that biographical and background material is provided for candidates recommended by the stockholders, the Compensation and Nominating Committee will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for candidates submitted by Board members. In considering whether to recommend any candidate for inclusion in the Board’s slate of recommended director nominees, including candidates recommended by stockholders, the Compensation and Nominating Committee will apply the criteria set forth in 7 the committee’s charter and in the Corporate Governance Guidelines. These criteria include, among others, the candidate’s integrity, age, experience, commitment, diligence, conflicts of interest and the ability to act in the interests of all stockholders. Although the Compensation and Nominating Committee considers as one of many factors in the director identification and nomination process diversity of race, gender and ethnicity, as well as geography and business experience, it has no specific diversity policy. The Compensation and Nominating Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a composite mix of experience, knowledge and abilities, including direct operating experience, that will allow the Board to fulfill its responsibilities. In addition, our by-laws permit stockholders to nominate directors for election at an annual meeting of stockholders, other than as part of the Board’s slate. To nominate a director, in addition to providing certain information about the nominee and the nominating stockholder, the stockholder must give timely notice to Forrester, which, in general, requires that the notice be received by us no less than 90 nor more than 120 days prior to the anniversary date of the preceding annual meeting of stockholders. In accordance with our by-laws, the 2021 Annual Meeting will be held on May 11, 2021. Communications from Stockholders The Board will give appropriate attention to communications on issues that are submitted by stockholders, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by committee charters, the Compensation and Nominating Committee, with the assistance of the Chief Legal Officer and Secretary, will be primarily responsible for monitoring communications from stockholders and will provide copies of summaries of such communications to the other directors as deemed appropriate. Stockholders who wish to send communications on any topic to the Board should address such communications to the Forrester Research Compensation and Nominating Committee, c/o Chief Legal Officer and Secretary, Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140. EXECUTIVE COMPENSATION Compensation Discussion and Analysis Executive Summary We have implemented an executive compensation program that rewards performance. Our executive compensation program is designed to attract, retain and motivate the key individuals who are most capable of contributing to the success of our Company and building long-term value for our stockholders. The elements of our executives’ total compensation are base salary, cash incentive awards, equity incentive awards and other employee benefits. We have designed a compensation program that makes a substantial portion of executive pay variable, subject to increase when performance targets are exceeded, and subject to reduction when performance targets are not achieved. 2019 Business Results In 2019, we made further progress on our strategic shift to capitalize on the opportunity presented by the Age of the Customer, including the acquisition and integration of SiriusDecisions, Inc., the largest acquisition in the Company’s history. Although the Company missed its sales plan for the year, it exceeded or met its GAAP and pro forma revenue, operating margin and earnings per share guidance for the year, with revenues increasing by 29% to $461.7 million. Compensation for Performance A substantial amount of the total compensation of our executive officers is linked to our performance, both through short-term cash incentive compensation and long-term equity incentive compensation. We believe this aligns our executives’ incentives with our objective of enhancing stockholder value over the longer term. Cash Compensation. A significant portion of the current cash compensation opportunity for our executive officers is achieved through our Amended and Restated Executive Cash Incentive Plan (the “Executive Cash Incentive Plan”). As described in more detail below, payments under the plan are based on company financial performance metrics (for 2019, booked sales accounts or “bookings” and adjusted operating profit). By design, our plan pays more when we perform well and less, or nothing, when we do not. Equity Awards. Another key component of compensation for our executive officers consists of long-term equity incentives, principally in the form of restricted stock units (RSUs). In 2019, all RSUs granted to executive officers vest over time, with 25% to vest annually over four years. We believe these awards have retention value and reflect a balance between short-term financial performance and long-term shareholder return, supporting our performance-based compensation. Consistent with past years, we did 8 not grant equity awards in 2019 to George Colony, our Chairman and Chief Executive Officer, who is the beneficial owner of approximately 41% of our common stock. Compensation Program Changes in 2019 Base Salary and Short-Term Cash Incentive Compensation. Based on a review of market data, and taking into account the contributions of the named executive officers and our financial performance in 2018, during its annual executive compensation review our Compensation and Nominating Committee (the “Committee”) increased the base salaries of the named executive officers by an average of approximately 3.4% over 2018, while increasing the target cash incentive bonus amount of the named executive officers by an average of 5.0% over 2018, as discussed further below. Executive Cash Incentive Plan. As was the case in 2017 and 2018, while the Committee approved the same performance matrix for purposes of both the Executive Cash Incentive Plan and the Forrester Employee Bonus Plan, the Committee decided to place a stronger emphasis on exceeding, rather than just meeting, the target metrics for the executive team. Accordingly, the Committee approved different percentage payouts at various performance levels for the Executive Cash Incentive Plan than the Forrester Employee Bonus Plan, with executive officers achieving less compensation if 2019 performance were to meet or fall short of the targeted levels, and additional compensation for performance above the targeted levels. Syndicated Overachievement Bonus. In 2019, in addition to target cash incentive bonuses under the Executive Cash Incentive Plan, the Committee approved additional potential bonuses of $100,000 for Mr. Colony and $50,000 for the other named executive officers upon achievement of a certain percentage of syndicated booked sales accounts by the Company, as discussed in more detail below. Stock Retention Guidelines. In April 2019, the Committee recommended and the Board approved revisions to our stock retention guidelines included in our Corporate Governance Guidelines. These changes, which are described in more detail below, require all directors and executive officers to hold a targeted value of our common stock within specified timeframes, and include restrictions on sales of our common stock by such directors and executive officers until the guidelines have been met. Say on Pay Stockholder Vote. As we have done each year since 2011, in 2019 we submitted our executive compensation program to an advisory vote of our stockholders and, consistent with the results of our previous say on pay votes, it received the support of 99% of the total votes cast at our annual meeting. We pay careful attention to any feedback we receive from our stockholders about our executive compensation program, including the say on pay vote. The Committee considered this feedback when setting our executive cash compensation program and granting equity awards to executives in 2019 and will continue to consider stockholder feedback in its subsequent executive compensation decision making. Compensation Objectives and Strategy The primary purpose of our executive compensation program is to attract, retain and motivate the key individuals who are most capable of contributing to the success of our Company and building long-term value for our stockholders. Our principal objectives and strategy concerning our executive compensation program are as follows: (cid:129) (cid:129) (cid:129) (cid:129) encourage achievement of key Company values — including client service, quality, collaboration, courage and integrity — that we believe are critical to our continued growth; base cash compensation on individual achievement and responsibility, teamwork, and our short-term financial performance; align employees’ incentives with our objective of enhancing stockholder value over the longer term through long-term incentives, principally in the form of RSUs; and emphasize individual excellence and encourage employees at all levels, as well as executive officers, to take initiative and lead individual projects that enhance our performance. These objectives and strategy are reviewed each year by the Committee, which oversees our executive compensation program. In furtherance of these objectives, the Committee takes the following actions each year: (cid:129) (cid:129) reviews the performance of George Colony, our Chairman and Chief Executive Officer, including his demonstration of leadership and his overall contribution to the financial performance of the Company; reviews the assessment by Mr. Colony of the performance of the other executive officers against their individual and team goals; 9 (cid:129) (cid:129) (cid:129) (cid:129) reviews the company-wide financial goals that are used in the calculation of the cash incentive compensation for our executives; reviews all components of compensation for each executive officer: base salary, short-term cash incentive compensation, and long-term equity incentive compensation; assesses relevant market data; and holds executive sessions (without our management present) as appropriate to accomplish the above actions. Mr. Colony also plays a substantial role in the compensation process for the other executive officers, primarily by recommending annual goals for the executives reporting directly to him, evaluating their performance against those goals, and providing recommendations on their compensation to the Committee. In 2019, following our acquisition of SiriusDecisions that increased our size and scope, we engaged Mercer to help us assess the compensation paid to our executives. In the course of that engagement, Mercer created a peer comparator group of the following 13 companies: Bottomline Technologies (de), Inc., Cision, Ltd., Cloudera, Inc., Cornerstone OnDemand, Inc., Ellie Mae, Inc., Exponent, Inc., HubSpot, Inc., Inc., Information Services Group, Inc., MicroStrategy Incorporated, New Relic, Inc., RingCentral, Inc., Synchronoss Technologies, and The Hackett Group, Inc. The companies were selected on the basis of market segment similarity, annual revenue and market capitalization. The findings of Mercer were referenced by Forrester management in working with the Committee to formulate compensation recommendations, but were neither presented directly to Committee nor used to specifically target compensation or create a compensation framework. The Committee did not separately engage an independent compensation consultant in 2019 for its general executive compensation analysis because the members were comfortable relying on their independent review of the market data, surveys and other supporting information provided by management, taking into account that the Company does not offer special perquisites, deferred compensation plans, or other special executive compensation arrangements. The Committee believes it is adequately experienced to address relevant issues and discharge its responsibilities consistent with the Company’s compensation objectives and philosophy. The Committee has not historically used formal benchmarking data to establish compensation levels, but has relied instead on relevant market data and surveys to design compensation packages that it believes are competitive with other similarly situated companies or those with whom we compete for talent. While compensation surveys provide useful data for comparative purposes, the Committee believes that successful compensation programs also require the application of sound judgment and subjective determinations of individual and Company performance. The Committee believes it is helpful to utilize data compiled from a wide array of companies and believes it important to consider comparative data from companies of comparable size and revenue, operating within a comparable industry, and located or operating within our principal geographic markets. In setting executive compensation for 2019, the Committee primarily considered data from the Radford Global Technology Survey, Radford Global Sales Survey, Mercer Executive Renumeration Survey, and Willis Towers Watson General Industry Executive Survey, which included companies with annual revenues from $200 million to $1 billion, as well as comparable companies in the industries and geographies applicable to our executives. For each of the Company’s executive officers, the data the Committee reviewed included comparative market percentiles for base salary and total annual cash compensation opportunity (or “on-target earnings”). The Committee determined that the base salaries and on-target earnings of the named executive officers, other than Mr. Colony, were generally at or substantially near the 50th percentile of the comparative market data and, accordingly, made its decisions regarding 2019 executive compensation with the goal of maintaining that status. Since Mr. Colony owns such a substantial percentage of our common stock, the Committee generally does not deem the available market data on chief executive officer compensation as comparable and does not place substantial weight on that data when setting his executive compensation. Elements of Compensation Compensation for our named executive officers consists of the following principal components: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) base salary; short-term cash incentive compensation; long-term equity incentive compensation, principally in the form of RSUs; severance and change-of-control benefits; and other benefits available generally to all full-time employees. 10 We do not have an express policy for weighting different elements of compensation or for allocating between long-term and short-term compensation, but we do attempt to maintain compensation packages that will advance our overall compensation objectives. In reviewing and setting the compensation of each executive officer, we consider the individual’s position with the Company and his or her ability to contribute to achievement of strategic and financial objectives. In 2019, as illustrated below, base salaries for our named executive officers other than Mr. Colony represented an average of approximately 33.4% of total target compensation for these individuals, while the base salary for Mr. Colony represented 44.7% of his total target compensation. Because of Mr. Colony’s significant ownership of our common stock, the Committee generally does not grant equity-based awards to him, resulting in a higher ratio of base salary to total target compensation than that of the other named executive officers. Base Salary. The Committee approves the base salaries of our named executive officers annually by evaluating the responsibilities of their position, the experience and performance of the individual, and as necessary or appropriate, survey and market data. The base salary of a named executive officer is also considered together with the other components of his or her compensation to ensure that both the executive’s total cash compensation opportunity (or “on-target earnings”) and the allocation between base salary and variable compensation for the executive are in line with our overall compensation philosophy and business strategy. Additionally, the Committee may adjust base salary more frequently than annually to address retention issues or to reflect promotions or other changes in the scope or breadth of an executive’s role or responsibilities. Our goal is to pay base salaries to our named executive officers that are competitive with the base salaries of companies that are similarly situated or with which we compete to attract and retain executives, while taking into account total on-target earnings, and remaining consistent with our overall compensation objectives with respect to variable compensation. In February 2019, taking into account the Company’s strong sales performance in 2018, as well as her increased responsibilities as a result of the SiriusDecisions acquisition, the Committee increased the base salary of Kelley Hippler, our Chief Sales Officer, by approximately 5.2%, effective January 1, 2019. In April 2019, taking into account the market data discussed above, the respective tenures, experience and performance of the named executive officers and our financial performance in 2018, the Committee decided to increase the base salaries of Mr. Colony, Michael Doyle, our Chief Financial Officer, and Ms. Hippler by an average of 3.1%, with such changes effective as of April 1, 2019. At the same time, the Committee increased the base salaries of Mack Brothers, our Chief Product Officer, and Carrie Johnson, our Chief Research Officer, by an average of 1.25% over 2018, as each had received compensation increases in November 1, 2018 in connection with their promotions to their current roles. Short-Term Cash Incentive Compensation. A significant portion of each of our named executive officers’ total annual cash compensation is dependent on our achievement of annual financial objectives set forth under our Executive Cash Incentive Plan. Payouts under the plan are made annually in arrears. An individual named executive officer’s annual bonus payout under the Executive Cash Incentive Plan is based on the following factors, which are discussed in more detail below: (cid:129) (cid:129) (cid:129) the named executive officer’s target award; the Company’s financial performance; and if applicable, the named executive officer’s individual and/or team performance. Effective April 1, 2019, as part of its executive compensation reviews, the Committee increased the target cash incentive bonus amounts for each of the named executive officers by an average of approximately 5.0%, taking into account the Company’s financial performance in 2018, the market data discussed above, and the respective tenures, experience and performance of our named executive officers. After giving effect to these increases, the average annual target cash incentive bonus amount for our named executive officers, other than Ms. Hippler, was approximately 70.5% of that person’s base salary. As of April 1, 2019, Ms. Hippler’s 11 target cash incentive bonus amount under our Executive Cash Incentive Plan was $111,000, or 33.0% of her base salary, because as Chief Sales Officer, a significant portion of her target cash incentive amount was tied to sales commissions. Ms. Hippler’s 2019 commission-based target cash incentive amount was set at $225,400, or 67.0% of her base salary. For purposes of the Executive Cash Incentive Plan, the financial performance of our Company for 2019 was measured based on booked sales accounts (referred to as “bookings”) and adjusted operating profit, the same measures used by the Committee in connection with the Executive Cash Incentive Plan in 2018. The Committee selected bookings as one of the metrics because we believe that bookings provide an important measure of our current business activity and estimated future revenues. The Committee selected adjusted operating profit (“operating profit”), meaning the Company’s pro forma operating profit assuming cash incentive compensation payouts under the Executive Cash Incentive Plan and the Forrester Employee Bonus Plan at target levels, as the other key metric because we believe operating profit provides a comprehensive measure of our financial performance that takes into account the importance of both revenue growth and expense management. In addition, by linking payouts under the plan to the Company’s profitability, we provide our employees with the opportunity to share in our profits while assuring that payouts are only made if we achieve a satisfactory, pre-approved level of profitability, taking into account the nature of our business, planned investments to support growth of the business, and the economic environment. Our pro forma operating profit excludes amortization of acquisition- related intangible assets, reorganization costs, costs associated with acquisition activities, stock-based compensation and net gains or losses from investments. The Committee may also adjust the bookings and operating profit metrics, as it deems appropriate, to include or exclude particular non-recurring items to avoid unanticipated results and to promote, and provide appropriate incentives for, actions and decisions that are in the best interests of the Company and its stockholders. For 2019, the Committee exercised its discretion to adjust the bookings and operating profit targets downward for both the Executive Cash Incentive Plan and the Forrester Employee Bonus Plan after the Board of Directors approved a revised 2019 operating plan reflecting adjusted estimated SiriusDecisions operating results for the year. The Executive Cash Incentive Plan was structured as follows in 2019, similar in structure to that in 2018: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) A matrix for 2019 containing bookings on the x axis and operating profit on the y axis was approved by the Committee under the plan based on the Company’s 2019 operating plan approved by the Board of Directors. Minimum bookings and operating profit levels were set taking into account the Company’s recent levels of bookings and operating profit and planned investments to support growth of the business. Failure of our Company to meet either of these minimum levels would result in each executive officer being ineligible to receive any bonus payout. The final minimum, target and maximum levels of bookings and operating profit under the Executive Cash Incentive Plan approved by the Committee were as follows (all dollars in thousands): Minimum Target Maximum Bookings $ $ $ 460,952 $ 512,168 $ 563,385 $ Operating Profit 42,474 53,092 63,710 If the Company’s target bookings and operating profit were both exactly achieved, the Executive Cash Incentive Plan allowed for the payment of 95% of a named executive officer’s target award. If both bookings and operating profit were above the minimum thresholds but neither exceeded the target, the bonus payout would be between 0% and 75% of the target award. If both bookings and operating profit were above the minimum thresholds but only operating profit exceeded the target, the bonus payout would be between 65% and 100% of the target award. If both bookings and operating profit were above the minimum thresholds but only bookings exceeded the target, the bonus payout would be between 40% and 125% of the target award. If both of the applicable target bookings and operating profit were exceeded, the plan allowed for the payment of up to 195% of a named executive officer’s target award. The Company’s actual bookings and operating profit for 2019 were $486.4 million and $51.3 million, respectively, resulting in 65% of each named executive officer’s target award being payable, as is set forth in the Summary Compensation Table under the heading “Non-Equity Incentive Plan Compensation.” This illustrates the pay for performance structure of the compensation awarded to our named executive officers, as our 2019 bookings were approximately 5% below our target level and our 2019 operating profit was approximately 3% below our target level. The total cash incentive plan compensation paid to Ms. Hippler for 2019 also included commissions of $203,425, or 90.3% of her targeted commissions for 2019. 12 In 2019, the Committee determined to offer the named executive officers an additional potential bonus if the Company were to achieve a ratio of syndicated bookings to total Company bookings (or “Q ratio”) of 65.6% or greater for 2019. The amount of the potential bonus was $100,000 for Mr. Colony and $50,000 for each of the other named executive officers. The Company’s actual Q ratio in 2019 was 63.5%, resulting in the none of the named executive officers receiving this additional bonus. Long-term Equity Incentive Compensation. Our equity awards to executive officers historically have consisted of stock options and RSUs granted under our equity incentive plan. Beginning in 2016, the Committee revised the Company’s stock-based compensation program for executive officers to consist solely of RSUs, with the number of RSUs awarded to be calculated with reference to a specific compensation value divided by the share price of our common stock on the award date. All stock-based compensation awards granted to our executive officers are granted by the Committee. We believe that stock- based awards help to motivate and retain executives and also align management’s incentives with long-term stock price appreciation. In general, we believe that time-based equity-based awards serve to encourage retention while further aligning the interests of executives and stockholders, as the awards have value only if the recipient continues to provide service to the Company through the vesting date, and, while the RSUs have immediate compensatory value to recipient upon vesting, increases in our share price provide significant additional compensatory value to the recipient, and decreases in the share price reduce the original compensation value of the award. Neither the Company nor our board of directors, including the Committee, has any plan, program or practice of timing equity incentive awards in coordination with the release or withholding of material non-public information. In determining the size and nature of stock-based awards for 2019, the Committee considered the aggregate number of stock-based awards outstanding relative to the Company’s total shares outstanding, the average aggregate size of stock-based awards made to executive officers of companies that are similarly situated or with which we compete to attract and retain executives, and the individuals that they believed were most likely to contribute to or influence a return to the Company’s historical growth levels and improvement in the Company’s operating margin. On July 23, 2019, the Committee reviewed and approved the grant of time-based RSUs to each of Messrs. Brothers and Doyle and Mses. Hippler and Johnson, effective August 1, 2019, as part of a grant of equity-based compensation to key employees across the Company. Mr. Brothers was granted 9,433 RSUs, Mr. Doyle was granted 10,023 RSUs, Ms. Hippler was granted 11,792 RSUs and Ms. Johnson was granted 8,844 RSUs. The Committee determined that the RSUs would vest 25% annually over four years. Given Mr. Colony’s significant ownership of our common stock, the Committee did not grant stock options or RSUs to Mr. Colony in 2019. Severance and Change in Control Agreements. Effective May 15, 2014, we adopted the Forrester Research, Inc. Executive Severance Plan (the “Severance Plan”), applicable to all of our executive officers, including the named executive officers. Similar to plans maintained by many other companies, our Severance Plan provides for payments and benefits to our executive officers upon a qualifying termination of employment, including in connection with a change in control. Further detail on the Severance Plan is contained below under the heading “Severance and Change-of-Control Benefits.” We believe that the Severance Plan functions as a retention tool for our executive officers to remain with the Company and enable the executive officers to focus on the continuing business operations and, as applicable, the success of a potential business combination that the Board of Directors has determined to be in the best interests of the shareholders. We believe this results in stability and continuity of operations. Other Benefits As employees of our Company, our executive officers are eligible to participate in all Company-sponsored benefit programs on the same basis as other full-time employees, including health and dental insurance and life and disability insurance. In addition, our executive officers are eligible to receive the same employer match under our 401(k) plan as is applicable for all participating employees and to participate in our employee stock purchase plan, pursuant to which participants may elect to purchase shares of our stock on a semi-annual basis at a 15% discount based on the lower of the price of our stock at the beginning and end of each period. We do not offer any supplemental executive health and welfare or retirement programs, or provide any other supplemental benefits or perquisites, to our executives. Stock Retention Guidelines In April 2019, we revised the stock retention guidelines first introduced in 2010 as part of our Corporate Governance Guidelines to further align the interests of our directors and executive officers with those of our stockholders. Members of our executive team and Board of Directors are subject to these stock retention guidelines for so long as they remain an executive officer, or serve as a director, of the Company. 13 The guidelines require directors of the Company to acquire and hold during their service as a Forrester Board member shares of Forrester’s common stock (“Common Stock”) equal in value to at least two times their total annual compensation from Forrester (including cash retainer and grant date value of equity grants) as in effect on April 23, 2019 (or, if later, the date of commencement of Board service). Directors have five years from April 23, 2019 (or, if later, the date of commencement of Board service) to meet the target stock ownership guideline. Executive officers of the Company are required to acquire and hold during their service as a Forrester executive team member shares of Common Stock equal in value to at least one times their total annual on-target earnings (defined as base salary plus total annual cash compensation opportunity) as in effect on April 23, 2019 (or, if later, the date of commencement of executive team service). Executive officers with fewer than two years tenure on the executive team as of April 23, 2019 or that become executive officers thereafter have five years from April 23, 2019 (or, if later, the date of commencement of executive team service) to meet the target stock ownership guideline, and officers with two or more years tenure on the executive team as of April 23, 2019 have three years from such date to meet the target stock ownership guideline. Until such time as a director or officer reaches his or her share ownership guideline, the director or officer may sell shares of Common Stock only to the extent that, subsequent to such sale, such director or officer continues to hold more shares than he or she held as of December 31 of the preceding year. In addition, if a director or officer has not reached his or her share ownership guideline within the required accumulation period, he or she will be required to retain 100% of the net shares of Forrester common stock delivered to him or her upon the exercise or vesting of stock awards held by him or her until such guideline is reached. Net shares are the number of shares remaining after shares are sold or netted to pay the exercise price of stock options and withholding taxes. For directors, the applicable withholding taxes will be presumed to be the minimum withholding tax applicable to an employee. All directors and executive officers are expected to continuously own sufficient shares to meet the guideline once it has been reached. Unexercised stock options and unvested restricted stock units will not count toward meeting the stock ownership guidelines. These guidelines may be waived, at the discretion of the Committee, if compliance with the guidelines would create severe hardship or prevent an executive officer or director from complying with a court order. The Committee will reassess these guidelines on an annual basis, taking into account factors such as compensation and stock price changes. Our directors and executive officers have complied in full with these guidelines since their initial adoption. Impact of Tax and Accounting on Compensation Decisions Section 162(m) of the Internal Revenue Code limits the deductibility of compensation in excess of $1 million paid to any one “covered employee” (as defined by the Code, but generally including the Company’s named executive officers) during any fiscal year. Under the rules in effect before 2018, compensation that qualified as “performance-based” under Section 162(m) was deductible without regard to this $1 million limit. The Tax Cuts and Jobs Act, which was signed into law December 22, 2017, eliminated the performance-based compensation exception under Section 162(m), effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017 and later not materially modified. Each individual who is a covered employee after December 31, 2016 will remain a covered employee for all future tax years. As a result, compensation previously structured with the intent of qualifying as performance-based compensation under Section 162(m) that is paid on or after January 1, 2018 may not be fully deductible, depending on the application of the special grandfather rules, and compensation paid after termination of employment to covered employees such as severance benefits will not be deductible. Moreover, from and after January 1, 2018, compensation awarded in excess of $1,000,000 to our covered employees, including now our chief financial officer, generally will not be deductible. Compensation amounts paid to our executive officers have largely been below this threshold. Accordingly, in many cases the Committee has not structured compensation arrangements with our executive officers to preserve the deductibility of that compensation in light of Section 162(m) and the Committee has not adopted a policy requiring all compensation to be deductible under Section 162(m). Despite the changes to Section 162(m) the Compensation Committee currently expects to structure the Company’s executive compensation programs such that a significant portion of executive compensation is linked to the performance of the Company. When determining amounts of equity awards to executives and employees under our equity incentive program, the Committee considers the compensation charges associated with the awards. We recognize compensation expense for stock-based awards based upon the fair value of the award. Grants of stock options result in compensation expense equal to the fair value of the options, which is calculated using a Black-Scholes option pricing model. Restricted stock unit awards result in compensation expense equal to the fair value of the award on the award date, which is calculated using the closing stock price of the underlying shares on the date of the award, as adjusted to reflect the absence of dividend credits prior to vesting of the restricted stock units. Stock-based compensation is recognized as an expense over the vesting period of the award. 14 Compensation Committee Report The Compensation and Nominating Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management and, based on this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement. Compensation and Nominating Committee Robert M. Galford, Chair David Boyce Gretchen G. Teichgraeber The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference in any such filing. 15 SUMMARY COMPENSATION TABLE The following table shows the compensation earned by our Chief Executive Officer, our Chief Financial Officer and each of our three other most highly compensated executive officers as of December 31, 2019. We refer to these officers as the “named executive officers.” Name and Principal Position George F. Colony Chairman of the Board and Chief Executive Officer Mack Brothers(3) Chief Product Officer Michael A. Doyle Chief Financial Officer Kelley Hippler(4) Chief Sales Officer Year Salary ($) 2019 421,250 2018 407,500 2017 400,000 Stock Awards ($)(1) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($)(2) Total ($) — — — 273,813 426,000 340,000 17,628 17,395 12,852 712,691 850,895 752,852 2019 373,750 399,959 2018 334,785 335,389 2017 326,500 358,036 152,181 172,308 172,125 11,496 9,906 9,756 937,386 852,388 866,417 2019 404,869 424,975 2018 395,106 359,371 2017 382,500 358,036 159,717 184,725 189,125 13,152 1,002,713 952,204 13,002 942,513 12,852 2019 333,489 499,981 2018 306,750 359,371 2017 261,346 334,164 275,412 278,235 160,295 18,693 1,127,575 959,472 15,116 760,353 4,548 Carrie Johnson(5) 2019 353,000 374,986 132,438 9,120 869,544 (1) (2) These amounts represent the aggregate grant date fair value of restricted stock unit and option awards. Assumptions used in the calculation of grant date fair value of stock options are included in footnote 1 to the Company’s consolidated financial statements included in our 2019 Annual Report on Form 10-K. The grant date fair value of restricted stock units is based upon the closing price of the Company’s common stock on the date of grant, as adjusted to reflect the absence of dividend credits prior to vesting of the restricted stock units. The amounts set forth may be more or less than the value ultimately realized by the named executive officer based upon, among other things, the value of the Company’s common stock at the time of exercise of the options or vesting of the restricted stock units and whether the options or restricted stock units actually vest. 2019 amounts include the following amounts of Company matching contributions under our 401(k) plan: Mr. Colony, $8,400; Mr. Brothers, $8,400; Mr. Doyle, $8,400; Ms. Hippler, $8,400; and Ms. Johnson, $8,400. Other amounts consist of group term life insurance premiums and miscellaneous other items. (3) Mr. Brothers was promoted from Chief Consulting Officer to Chief Product Officer on November 1, 2018. (4) Ms. Hippler became our Chief Sales Officer on July 7, 2017. (5) Ms. Johnson became our Chief Research Officer on November 1, 2018. 16 GRANTS OF PLAN-BASED AWARDS FOR 2019 The following table sets forth information with respect to plan-based awards granted to named executive officers in 2019. Name George F. Colony Mack Brothers Grant Date Committee Approval Date — — — — — — 08/01/19 07/23/19 Michael A. Doyle — — 08/01/19 07/23/19 Kelley Hippler — — Carrie Johnson — — 08/01/19 07/23/19 08/01/19 07/23/19 Estimated Possible Payouts Under Non-Equity Incentive Plan Threshold ($) 168,500 N/A Awards(1) Target ($) 421,250 100,000 Maximum ($) 821,438 100,000 93,650 N/A — 234,125 50,000 — 456,544 50,000 — 98,288 N/A — 245,719 50,000 — 479,152 50,000 — 44,300 N/A — 336,150 50,000 — N/A 50,000 — 81,500 N/A — 203,750 50,000 — 397,313 50,000 — All Other All Other Option Stock Awards: Awards: Number of Number of Securities Underlying Shares of Stock (#) Options (#) — — — — — — Grant Date Fair Value of Stock and Exercise or Base Price of Option Awards ($/Sh) Option Awards ($)(2) — — — — — — 9,433 — — 399,959 — — — — 10,023 — — 424,975 — — — — 11,792 — — 499,981 — — — — 8,844 — — 374,986 (1) Except with respect to Ms. Hippler, consists of awards under our Executive Cash Incentive Plan, a non-equity incentive plan, with payouts thereunder made annually in arrears, and an additional potential annual bonus conditioned upon attainment of a targeted level of syndicated business. Our Executive Cash Incentive Plan and the additional bonus are described in detail, including calculation of threshold, target and maximum awards under the plan, in the Compensation Discussion and Analysis above. Actual amounts awarded are set forth in the Summary Compensation Table above. Mr. Colony’s “Target” amounts include the target amount he was eligible to receive under our Executive Cash Incentive Plan of $421,250 and a targeted additional bonus of $100,000. The “Target” amounts for Messrs. Brothers and Doyle and Ms. Johnson include the target amounts they were eligible to receive under our Executive Cash Incentive Plan of $234,125, $245,719, and $203,750, respectively, and a targeted additional bonus for each of $50,000. Ms. Hippler’s “Target” amount includes the target amount she was eligible to receive under our Executive Cash Incentive Plan of $110,750, target sales commissions of $225,400, and a targeted additional bonus of $50,000. There is no cap on Ms. Hippler’s “Maximum” amount because there is no cap on possible commission payments. (2) Assumptions used in the calculation of option awards are included in footnote 1 to the Company’s consolidated financial statements included in our 2019 Annual Report on Form 10-K. The grant date fair value of restricted stock units is based upon the closing price of the Company’s common stock on the date of grant. 17 OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR-END The following table sets forth information for the named executive officers regarding outstanding option awards and stock awards held as of December 31, 2019. Option Awards Number of Number of Stock Awards Equity Incentive Plan Equity Incentive Awards: Market or Plan Payout Value of Securities Securities Underlying Underlying Unexercised Unexercised Options Options Option Exercise Awards: Number of Unearned Shares, Unearned Shares, Units or Other Units or Other Rights That Option Rights That Name George F. Colony Mack Brothers Michael A. Doyle Kelley Hippler Carrie Johnson (#) (#) Exercisable Unexercisable — — Price ($) Expiration Have Not Vested Have Not Vested Date (#) ($)(1) — — — — — — — — 5,000 — — — — 14,000 15,000 17,500 22,500 22,500 — — — 3,125 2,500 5,125 8,750 — — — — — 1,750 — — — — 5,000(6) — — — — — — — — — — — — — — — — — — — — — — — — — — 36.83 — — — — 5/31/2026 — — — — 33.03 33.81 36.18 38.43 33.16 — — — — 6/30/2021 5/13/2022 6/2/2023 7/31/2024 8/2/2025 — — — 29.86 33.03 33.81 36.18 — — — 3/31/2020 6/30/2021 5/13/2022 6/2/2023 — — — — — — — — — 33.16 — 8/2/2025 1,750(2) 4,506(3) 5,590(4) 9,433(5) — 2,321(7) 4,506(3) 5,990(4) 10,023(5) — — — — — 4,206(3) 5,990(4) 11,792(5) — — — — 680(7) 1,322(3) 1,756(4) 2,289(8) 8,844(5) — 72,975 187,900 233,103 393,356 — 96,786 187,900 249,783 417,959 — — — — — 175,390 249,783 491,726 — — — — 28,356 55,127 73,225 95,451 368,795 — (1) (2) (3) (4) (5) (6) (7) (8) The market value was calculated based on $41.70, the closing price per share of our common stock on December 31, 2019. Consists of time-based restricted stock units that vest on June 1, 2020. Consists of time-based restricted stock units that vest as to 50% of the shares subject to the award on each of August 1, 2020 and August 1, 2021. Consists of time-based restricted stock units that vest as to one third of the shares subject to the award on each of August 1, 2020, August 1, 2021 and August 1, 2022. Consists of time-based restricted stock units that vest as to 25% of the shares subject to the award on each of August 1, 2020, August 1, 2021, August 1, 2022 and August 1, 2023. Stock options become exercisable on June 1, 2020. Consists of time-based restricted stock units that vest on August 1, 2020. Consists of time-based restricted stock units that vest as to one third of the shares subject to the award on each of November 1, 2020, November 1, 2021 and November 1, 2022. 18 OPTION EXERCISES AND STOCK VESTED TABLE FOR 2019 The following table sets forth information for the named executive officers regarding the value realized during 2019 by the executives pursuant to option exercises and the vesting of RSUs. Option Awards Stock Awards Number of Shares Acquired on Exercise Value Realized Number of Shares on Exercise Acquired on Value Realized Name George F. Colony Mack Brothers Michael A. Doyle Kelley Hippler Carrie Johnson Pension Benefits (#) ($) Vesting (#) — — 14,000 3,000 1,750 — — 264,427 62,347 29,530 on Vesting ($) — 254,281 353,972 173,840 149,451 — 5,868 8,447 4,100 3,774 We have no defined benefit pension plans or long-term incentive plans applicable to the named executive officers. Nonqualified Deferred Compensation We have no nonqualified defined contribution or deferred compensation plans. Severance and Change-of-Control Benefits Effective May 15, 2014, our Board of Directors adopted and approved the Forrester Research, Inc. Executive Severance Plan (the “Severance Plan”), which is applicable to all of the Company’s executive officers, including the named executive officers. The Severance Plan provides for the payment of severance and other benefits to each executive officer in the event of a termination of employment with the Company without cause and also, in the case of a change in control, by an executive officer for good reason, each as defined in the Severance Plan (each, a “Qualifying Termination”). In the event of a Qualifying Termination and subject to the executive’s execution of a general release of claims against the Company, in addition to any accrued obligations such as unpaid base salary, vacation and earned bonuses, the Severance Plan provides for the following severance payments and benefits: (cid:129) In the event of a Qualifying Termination other than following a change in control: (cid:129) (cid:129) (cid:129) (cid:129) continued payment of the executive officer’s base salary in installments for one year, and in the case of Mr. Colony (or any successor CEO), for 18 months, after the Qualifying Termination; payment in a lump sum of an amount equal to the lesser of the executive officer’s (x) annual target bonus and, if applicable, sales commissions, as in effect on the date of the Qualifying Termination, or (y) the average of the actual bonus and, if applicable, sales commissions, earned by the executive officer under the applicable plans for the two fiscal years preceding the year of the Qualifying Termination (or for such shorter period that the executive officer was employed by the Company); and in the case of the chief executive officer, payment in a lump sum of an amount equal to one and one-half times the lesser of the chief executive officer’s (x) annual target bonus and, if applicable, sales commissions, as in effect on the date of the Qualifying Termination, or (y) the average of the actual bonus and, if applicable, sales commissions earned by the chief executive officer under the applicable plans for the two fiscal years preceding the year of the Qualifying Termination; payment in cash during the 12-month period following a Qualifying Termination for executive officers other than the chief executive officer, and during the 18-month period following a Qualifying Termination for the chief executive officer, of an amount equal to the Company’s portion of the cost for medical and dental coverage under applicable Company plans; and 6 months of outplacement assistance, subject to extension for an additional 6 months upon request of the executive officer and at the discretion of the Company. (cid:129) In the event of a Qualifying Termination during the 18-month period following a change in control (as defined in the Severance Plan): (cid:129) payment in a lump sum of the executive officer’s annual base salary, and in the case of the chief executive officer, two times annual base salary; 19 (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) payment in a lump sum of an amount equal to the excess, if any, of (x) the executive officer’s annual target bonus amount and/or annual target sales commission amount pro-rated as of the Qualifying Termination, over (y) the amount paid or payable for the actual bonus and/or sales commissions earned through the Qualifying Termination; payment of the higher of the executive officer’s (x) target annual incentive opportunity, including target bonus opportunity and, if applicable, target sales commissions, or (y) the average of the actual bonus and, if applicable, sales commissions, earned by the executive under the applicable plans for the two fiscal years preceding the year of the Qualifying Termination (or such shorter period that the executive officer was employed by the Company); and in the case of the chief executive officer, the higher of two times his or her (x) target annual incentive opportunity, including target bonus opportunity and, if applicable, target sales commissions, or (y) the average of the actual bonus and, if applicable, sales commissions, earned by the chief executive officer under applicable plans for the two fiscal years preceding the year of the Qualifying Termination; payment in cash in a lump sum of an amount equal to 12 months for executive officers other than the chief executive officer, and 24 months for the chief executive officer, of the Company’s portion of the cost for medical and dental coverage under applicable Company plans; 12 months of outplacement assistance; and without limiting an executive officer’s rights under any equity plans or agreements, accelerated vesting of, or cancellation and payment of merger consideration for (net of exercise price, if any), all unvested equity and equity- based awards, with performance-based awards, if any, vesting at target level of performance. The Severance Plan shall also reimburse each executive officer whose termination of employment results from a change of control all reasonable legal fees and expenses incurred to obtain or enforce rights or benefits under the Severance Plan if the executive officer prevails in substantial part on the material issues of the proceeding. The Severance Plan does not provide for a gross-up payment to any of the executive officers to offset any excise taxes that may be imposed on excess parachute payments under Section 4999 (“Excise Tax”) of the Internal Revenue Code of 1986, as amended. Instead, the Severance Plan provides that in the event that the severance payments and benefits described above, and any other parachute payments, would, if paid, be subject to the Excise Tax, then the severance payments and benefits under the Severance Plan will be reduced to the extent necessary so that no portion of the payments or benefits under the Severance Plan are subject to the Excise Tax, provided that there shall be no such reduction if the net amount of the payments received by the executive officer after giving effect to all applicable taxes is greater than the net amount of the payments received by the executive officer after giving effect to the reduction. We entered into an employment offer letter on July 24, 2007 with Mr. Doyle that provides for severance benefits following a termination of his employment by the Company without Cause (as defined in the offer letter). In the event of such a termination, we must continue to pay Mr. Doyle his base salary for the 6 months following his termination, subject to his signing a separation agreement in a form acceptable to us that includes a general release of all claims. The Severance Plan provides that there will be no duplication of benefits between the Severance Plan and Mr. Doyle’s employment offer letter. We have not entered into agreements providing for severance benefits with any of the other named executive officers. Each of our named executive officers other than Mr. Colony has entered into stock option and restricted stock unit grant agreements that provide for full acceleration of vesting upon a change of control of the Company, unless there is an assumption, substitution or cash-out of the options or restricted stock units in connection with the change of control. 20 The following table provides the details of payments that would have been paid to, or value that would have been received by, the named executive officers in connection with either a change of control, a termination of employment without cause or for good reason in connection with a change of control, or a termination of employment without cause in the absence of a change of control, in each case effective as of December 31, 2019. Name George F. Colony Salary Continuation ($) Annual Incentive Compensation ($) Payment in Lieu of Medical and Dental ($) Outplacement Assistance ($)(2) Value of Accelerated Unvested Equity ($)(3) Total ($) Event (1) Change in Control — — — — — — Termination Upon Change in Control Not for Cause Termination 850,000 1,289,937 38,440 20,000 — 2,198,377 637,500 574,500 28,830 10,000 — 1,250,830 Mack Brothers Change in Control — — — — 911,684 911,684 Termination Upon Change in Control Not for Cause Termination 375,000 416,069 18,000 20,000 911,684 1,740,753 375,000 172,217 18,000 10,000 — 575,217 Michael A. Doyle Change in Control — — — — 952,428 952,428 Termination Upon Change in Control Not for Cause Termination 407,000 431,721 11,898 20,000 952,428 1,823,047 407,000 186,925 11,898 10,000 — 615,823 Kelley Hippler Change in Control — — — — 916,899 916,899 Termination Upon Change in Control Not for Cause Termination 336,400 496,888 19,220 20,000 916,899 1,789,407 336,400 220,265 19,220 10,000 — 585,885 Carrie Johnson Change in Control — — — — 620,954 620,954 Termination Upon Change in Control Not for Cause Termination 354,000 375,062 19,220 20,000 620,954 1,389,236 354,000 95,580 19,220 10,000 — 478,800 (1) None of the named executive officers has an agreement to receive any salary continuation, variable cash compensation, benefits continuation, acceleration of equity or gross-up in the event such named executive officer dies, becomes disabled, voluntarily terminates his or her employment with Forrester without “Good Reason” or if that named executive officer is terminated by Forrester for cause. Estimated cost of 12 months of outplacement service in the event of a change in control and 6 months of outplacement service in the event of termination without a change in control. (2) (3) Calculated using $41.70, the closing price per share of our common stock on December 31, 2019. In the case of unvested options, calculated using the difference between $41.70 and the exercise price of the applicable option, multiplied by the number of unvested shares. In the case of unvested restricted stock units (RSUs), calculated using $41.70 multiplied by the number of shares underlying such unvested RSU. 21 Director Compensation DIRECTOR COMPENSATION TABLE FOR 2019 The following table shows the compensation that we paid during the year ended December 31, 2019 to each of our directors, other than Mr. Colony, who was not paid additional compensation for his service as a director and whose compensation is reflected in “Executive Compensation” above. Name Jean M. Birch Dave Boyce Neil Bradford Tony Friscia Robert M. Galford Gretchen G. Teichgraeber Yvonne Wassenaar Fees Earned or Paid in Cash ($) 43,000 35,000 35,000 35,000 50,000 35,000 35,000 Stock Awards ($)(1)(2)(3) 119,981 119,981 119,981 119,981 119,981 119,981 119,981 Total ($) 162,981 154,981 154,981 154,981 169,981 154,981 154,981 (1) The amounts in this column reflect the aggregate grant date fair value of restricted stock unit awards for 2019. The grant date fair value of restricted stock units is based upon the closing price of the Company’s common stock on the date of grant. The amounts set forth may be more or less than the value ultimately realized by the named director based upon, among other things, the value of the Company’s Common Stock at the time of vesting of the restricted stock units and whether such restricted stock units actually vest. (2) On June 3, 2019, each of the directors, other than Mr. Colony, received 2,630 restricted stock units. (3) At December 31, 2019, the non-employee directors held options to purchase, and restricted stock units for, the number of shares listed next to their names below: Name Jean M. Birch Dave Boyce Neil Bradford Tony Friscia Robert M. Galford Gretchen G. Teichgraeber Yvonne Wassenaar Number of Shares Options RSUs — — — — 12,000 24,000 — 1,412 1,412 1,412 1,412 4,121 4,121 1,412 Our non-employee directors receive an annual retainer of $30,000 and members of each Board committee receive an additional annual retainer of $5,000 for each committee on which they serve, with the Chairman of the Audit Committee receiving an additional $8,000 per year and the Chairman of the Compensation and Nominating Committee receiving an additional $5,000 per year. Our lead independent director receives an additional $10,000 annual retainer. Each of these annual fees is payable quarterly in arrears. Members of our Board of Directors are reimbursed for their expenses incurred in connection with attending any meeting. The Compensation and Nominating Committee of the Board of Directors has the authority under the Forrester Research, Inc. Amended and Restated Equity Incentive Plan (“Equity Incentive Plan”) to grant stock options and RSUs to non-employee directors in such amounts and on such terms as it shall determine at the time of grant. On June 3, 2019, our seven non-employee directors at that time each received 2,630 restricted stock units, which equals the number of whole shares calculated by dividing $120,000 by $45.62, the closing price of the Company’s common stock on the date of award. These RSUs vest in four equal quarterly installments over a one-year period. RSUs granted under the Equity Incentive Plan become vested in full upon a change of control of the Company, unless there is an assumption, substitution or cash-out of such RSUs in connection with the change of control. Options granted to our non-employee directors prior to our 2012 annual meeting and currently outstanding were made pursuant to our 2006 Stock Option Plan for Directors, as amended. 22 CEO PAY RATIO Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires most companies with publicly traded stock in the United States to identify the median annual total compensation of their worldwide employee population (other than the chief executive officer) and to compare that amount with the annual total compensation of their chief executive officer. The pay ratio information included below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We have excluded approximately 350 employees of SiriusDecisions, Inc., which we acquired effective January 3, 2019, and do not believe that there have been any other changes to our employee population or employee compensation arrangements that would result in a significant change in our pay ratio disclosure and so have elected to use the same median employee for our 2019 disclosure, as permitted by Item 402(u) of Regulation S-K. We identified our median employee using our total employee population as of October 1, 2018 by applying a consistently applied compensation measure across our global employee population. For our consistently applied compensation measure, we used cash compensation (base salary plus bonuses and commissions) paid in the nine months ending September 30, 2018. We used cash compensation as our consistently applied compensation measure as we believe that this measure provides a reasonably accurate depiction of total earnings for the purpose of identifying our median employee. We then calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. Earnings of our employees outside the U.S. were converted to U.S. dollars using the currency exchange rates used for organizational planning purposes, which consider historical and forecasted rates as well as other factors. We did not use any other material estimates, assumptions, adjustments or statistical sampling to determine the worldwide median employee. Our median employee’s total 2019 compensation (other than the CEO) was $112,206. Our Chief Executive Officer’s total 2019 compensation was $712,691, as reported in the Summary Compensation Table. Accordingly, our 2019 CEO to Median Employee Pay Ratio was 6.4 to 1. Please keep in mind that under the SEC’s rules and guidance, there are numerous ways to determine the compensation of a company’s median employee, including the employee population sampled, the elements of pay and benefits used, any assumptions made and the use of statistical sampling. In addition, no two companies have identical employee populations or compensation programs, and pay, benefits and retirement plans differ by country even within the same company. As such, our pay ratio may not be comparable to the pay ratio reported by other companies. 23 REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Board of Directors has appointed an Audit Committee composed of four non-employee directors: Ms. Birch (Chair), Mr. Bradford, Mr. Friscia and Ms. Wassenaar. Each of the members of the Audit Committee is “independent” as defined under the NASDAQ Stock Market listing standards. The Board has determined that Ms. Birch is an “audit committee financial expert” under applicable rules of the Securities and Exchange Commission (“SEC”), and the members of the Audit Committee satisfy the NASDAQ financial literacy standards. The Audit Committee is responsible for providing independent oversight of Forrester’s accounting functions and internal controls. The Audit Committee oversees Forrester’s financial reporting process on behalf of the Board of Directors, reviews financial disclosures, and meets privately, outside of the presence of management, with Forrester’s internal auditor and with representatives of the independent registered public accounting firm. The Audit Committee also selects and appoints the independent registered public accounting firm, reviews the performance of the independent registered public accounting firm, and reviews the independent registered public accounting firm’s fees. The Audit Committee operates under a written charter adopted by the Board of Directors. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed Forrester’s audited financial statements the fiscal year ended December 31, 2019 with Forrester’s management and with PricewaterhouseCoopers LLP for (“PricewaterhouseCoopers”), Forrester’s independent registered public accounting firm. The Audit Committee also reviewed the report of management contained in Forrester’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC, as well as PricewaterhouseCoopers’ report included in Forrester’s Annual Report on Form 10-K related to its audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. The Audit Committee has discussed with PricewaterhouseCoopers the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has received the written disclosures and the letter from PricewaterhouseCoopers required by the PCAOB regarding PricewaterhouseCoopers’ communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers their independence. Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for filing with the SEC. AUDIT COMMITTEE OF THE BOARD OF DIRECTORS Jean M. Birch, Chair Neil Bradford Tony Friscia Yvonne Wassenaar The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference in any such filing. 24 OTHER INFORMATION Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors, and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (“SEC”). Officers, directors and greater than 10% beneficial stockholders are required by SEC regulation to furnish to us copies of all Forms 3, 4 and 5 they file. Based solely on our review of copies of such forms which we received, we believe that all of our officers, directors, and greater than 10% beneficial owners complied on a timely basis with all filing requirements with respect to transactions during 2019, except for one report filed for Scott Chouinard, our Chief Accounting Officer, with respect to the grant of restricted stock units in 2019, and one report filed for Mr. Chouinard with respect to the grant of a stock option in 2010. On January 27, 2020, Wellington Management Group LLP filed an amendment to its previously filed Schedule 13G disclosing that its beneficial ownership as of December 31, 2019 had changed from its beneficial ownership as of December 31, 2018, at which point it was in excess of 10%. Wellington Management Group LLP has not made any filing on Form 4 with respect to this change in beneficial ownership. Certain Relationships and Related Transactions Registration Rights and Non-Competition Agreement. At the time of our initial public offering, we entered into a registration rights and non-competition agreement with Mr. Colony which provides that if Mr. Colony’s employment with us is terminated he will not compete with us for the one year period after the date of such termination. The agreement also provides that in the event we propose to file a registration statement under the Securities Act of 1933, as amended, with respect to an offering by us for our own account or the account of another person, or both, Mr. Colony shall be entitled to include shares held by him in such a registration, subject to the right of the managing underwriter of any such offering to exclude some or all of such shares from such registration if and to the extent the inclusion of the shares would adversely affect the marketing of the shares to be sold by us. The agreement also provides that Mr. Colony may require us to register shares under the Securities Act with a fair market value of at least $5 million, except that we are not required to effect such registration more than twice or at certain times described in the agreement. The agreement also provides that we will pay all expenses incurred in connection with such registration. Related Person Transactions Pursuant to its amended and restated charter, our Audit Committee has responsibility for the review and approval of all transactions between the Company and any related parties or affiliates of the Company, its officers, and directors. Related persons can include any of our directors or executive officers, certain of our stockholders, and any of their immediate family members. In evaluating related person transactions, the committee members apply the same standards they apply to their general responsibilities as members of a committee of the board of directors and as individual directors. The committee will approve a related person transaction when, in its good faith judgment, the transaction is in the best interest of the Company. To identify related person transactions, each year we require our directors and officers to complete a questionnaire identifying any transactions with the Company in which the officer or director or their family members have an interest. In addition, our Code of Business Conduct and Ethics includes our expectation that all directors, officers and employees who may have a potential or apparent conflict of interest will notify our legal department. The daughter of one of our executive officers is a non-officer employee of the Company within our sales organization. The Company reviewed this arrangement with the Audit Committee of the Board of Directors, noting that the compensation of the employee is within comparable market ranges for similar positions, and the Audit Committee approved this relationship. 25 PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020 PricewaterhouseCoopers LLP audited our financial statements for the fiscal year ended December 31, 2019. Our Audit Committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Although stockholder approval of the selection of PricewaterhouseCoopers LLP is not required by law, our Board of Directors believes that it is advisable to give stockholders an opportunity to ratify this selection. If stockholders do not approve this proposal at the 2020 annual meeting, our Audit Committee will reconsider its selection of PricewaterhouseCoopers LLP. If stockholders do ratify this appointment, the Audit Committee, which has direct authority to engage our independent registered public accounting firm, may appoint a different independent registered public accounting firm at any time during the year if it determines that the change would be in the best interests of Forrester and our stockholders. The Audit Committee has approved all services provided to Forrester by PricewaterhouseCoopers LLP during 2019. Representatives of PricewaterhouseCoopers LLP are expected to be present at the 2020 annual meeting. They will have the opportunity to make a statement if they desire to do so and will also be available to respond to appropriate questions from stockholders. Independent Auditors’ Fees and Other Matters The following table presents the aggregate fees billed or expected to be billed by PricewaterhouseCoopers LLP (“PwC”) and its affiliates for fiscal 2019 and fiscal 2018. Audit Fees(1) Audit-Related Fees(2) Tax Fees(3) All Other Fees(4) Total Fees Fiscal 2019 Fiscal 2018 $ 1,705,677 $ 1,321,000 270,000 165,175 2,756 $ 2,013,831 $ 1,758,931 118,553 152,369 37,232 (1) Audit fees are fees related to professional services rendered by PwC and its affiliates in connection with the audit of our financial statements and our internal controls over financial reporting, the reviews of our interim financial statements included in each of our quarterly reports on Form 10-Q, international statutory audits, and review of other SEC filings. (2) Audit-related fees are for assurance and related services by PwC and its affiliates that are reasonably related to the performance of the audit or review of our financial statements. Tax fees are fees billed for professional services related to tax compliance and tax consulting services. (3) (4) All other fees include licenses to web-based accounting and finance reference materials and, for fiscal 2019, consulting services related to Brexit preparedness. Audit Committee’s Pre-Approval Policy and Procedures The Audit Committee approves the engagement of our independent registered public accounting firm to render any audit or non- audit services. At a regularly scheduled Audit Committee meeting, management or a representative of the Company’s independent registered public accounting firm summarizes the services to be provided by the firm and the fees that will be charged for the services. Thereafter, if new services or dollar amounts in excess of those pre-approved at the meeting are proposed, they are either presented for pre-approval at the next meeting of the Audit Committee or approved by the Chairman of the Audit Committee pursuant to delegated authority. At subsequent meetings, the Audit Committee is provided a listing of any newly pre-approved services since the last meeting, and an updated projection for the current year of the estimated annual fees to be paid to the firm for all pre-approved audit and permissible non-audit services. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020. 26 PROPOSAL THREE: NON-BINDING VOTE ON EXECUTIVE COMPENSATION We have implemented an executive compensation program that rewards performance. Our executive compensation program is designed to attract, retain and motivate the key individuals who are most capable of contributing to the success of our Company and building long-term value for our stockholders. The elements of our executives’ total compensation are base salary, cash incentive awards, equity incentive awards, severance and change of control benefits, and other employee benefits. We have designed a compensation program that makes a substantial portion of executive pay variable, subject to increase when performance targets are exceeded, and subject to reduction when performance targets are not achieved. We believe our executive compensation program strikes the appropriate balance between utilizing responsible, measured pay practices and providing incentives to our executives to create value for our stockholders. We believe this is evidenced by the following: (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) The mix of compensation among base salary and cash incentives. Generally our compensation policies and practices are uniform across each of our business units and geographic regions. Our bonus plan for executive officers provides for multiple payout levels based on targets established and approved by our Compensation and Nominating Committee during the first quarter of the applicable plan year. We require that minimum threshold performance targets be achieved before any bonuses under our executive cash incentive plan are paid, and bonus payouts under our executive cash incentive plan are capped. We use multiple performance measures under our executive cash incentive plan, including bookings and operating profit. We currently grant equity-based awards to executives under our equity incentive plan subject to multi-year vesting criteria, and require that the executive remain employed through the vesting date to realize the value of these awards. The Board endorses the Company’s executive compensation program and recommends that stockholders vote in favor of the following resolution: RESOLVED, that the stockholders approve the compensation of the Company’s named executive officers as described in this proxy statement under “Executive Compensation”, including the Compensation Discussion and Analysis and the tabular and narrative disclosure contained in this proxy statement. Because the vote is non-binding, neither the Board of Directors nor the Compensation and Nominating Committee of the Board will be required to take any action as a result of the outcome of the vote on this proposal. The Compensation and Nominating Committee will carefully consider the outcome of the vote when evaluating future executive compensation arrangements. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION. 27 STOCKHOLDER PROPOSALS Stockholder proposals to be considered at the Annual Meeting of Stockholders in 2021 must be received by December 1, 2020 to be considered for inclusion in our proxy materials for that meeting. Stockholders who wish to make a proposal at the 2021 annual meeting, other than proposals included in our proxy materials, or who wish to nominate individuals for election as directors, must notify us between January 12, 2021 and February 11, 2021. If the stockholder does not notify us by February 11, 2021, the proxies will have discretionary authority to vote on a stockholder’s proposal brought before the meeting. The Board of Directors has no knowledge of any other matter that may come before the annual meeting and does not, itself, currently intend to present any other such matter. OTHER BUSINESS A copy of our annual report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission will be sent to stockholders without charge by writing to Forrester Research, Inc., Investor Relations, 60 Acorn Park Drive, Cambridge, Massachusetts 02140. FORM 10-K 28 COMPANY INFORMATION Board Of Directors George F. Colony Chairman of the Board and Chief Executive Officer Jean M. Birch Former Chief Executive Officer, Papa Murphy’s Holdings, Inc. David Boyce Chief Strategy Officer, XANT, Inc. Neil Bradford Former Chief Executive Officer, Financial Express, Ltd. Anthony Friscia Founder and Former President and CEO, AMR Research, Inc. Robert M. Galford Managing Partner, Center for Leading Organizations Gretchen G. Teichgraeber Chair of the Board, Leadership Connect Yvonne Wassenaar Chief Executive Officer, Puppet, Inc. Executive Officers George F. Colony Chairman of the Board and Chief Executive Officer Mack Brothers Chief Product Officer Ryan D. Darrah Chief Legal Officer and Secretary Michael A. Doyle Chief Financial Officer Kelley Hippler Chief Sales Officer Carrie Johnson Chief Research Officer Sherri Kottmann Chief People Officer Shirley Macbeth Chief Marketing Officer Steven Peltzman Chief Business Technology Officer Annual Meeting Forrester’s annual meeting of stockholders will be held at 10 a.m. EDT on May 12, 2020, online at virtualshareholdermeeting.com/FORR2020. Investor Relations Requests for financial information should be sent to: Investor Relations Forrester Research, Inc. 60 Acorn Park Drive Cambridge, MA 02140 USA Tel: +1 617.613.6000 Fax: +1 617.613.5000 Email: investor@forrester.com Transfer Agent Computershare Investor Services P.O. Box 30170 College Station, TX 77842-3170 www.computershare.com/investor Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP Boston, MA Legal Counsel Choate Hall & Stewart LLP Boston, MA Stock Listing And Trading Symbol Forrester’s common stock is listed on the Nasdaq Global Select Market under the trading symbol “FORR.” Corporate Headquarters Forrester Research, Inc. 60 Acorn Park Drive Cambridge, MA 02140 USA Tel: +1 617.613.6000 Fax: +1 617.613.5000 www.forrester.com ©2020 Forrester Research, Inc. All rights reserved. Reproduction in any form without prior written permission is forbidden. 

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