Item 10. |
Directors, Executive Officers and Corporate Governance |
The Company’s Board of Directors (the “Board”) currently
consists of six members, five of whom are non-management directors. The Board is divided into three classes with each class serving a
three-year term. The term of one class expires at each annual meeting of stockholders of the Company. The Board is comprised of the following
members:
James B. Avery |
|
Director since August 2018 |
Mr. Avery, age 58, was appointed to the Board in August 2018 pursuant
to the terms of that certain Securities Purchase Agreement, dated August 6, 2018, by and among the Company, North Sound Trading, L.P.
and Golden Harbor Ltd. (the “Purchase Agreement Mr. Avery joined Tavistock Group in July 2014 and is currently a Senior Managing
Director. From 2003 to June 2014, Mr. Avery was a Managing Director and Co-Founder of GCA Savvian, a boutique investment bank, in addition
to holding the position of Representative Director for GCA Corporation, GCA Savvian’s parent company publicly traded on the Tokyo
Stock Exchange. Prior to GCA Savvian, Mr. Avery spent 10 years at Morgan Stanley, working in the New York and Silicon Valley offices where
he advised clients across a number of industries on strategic, merger & acquisitions and capital market transactions. Mr. Avery has
also held roles at Edward M. Greenberg Associates, Burson-Marsteller, Westdeutsche Landesbank, and Republic National Bank of New York.
Mr. Avery is currently a member of the board of directors of FrontWell Capital Partners. Mr. Avery received his Bachelor of Science in
Finance from Miami University. Mr. Avery’s management background and expertise in strategic corporate matters and capital markets
provide a valuable background for him to serve as a member of our Board, as Chairman of our Nominating and Corporate Governance Committee,
and as a member of the Compensation and Audit Committees. Mr. Avery’s term as a director will expire at the 2023 annual meeting
of stockholders of the Company.
Stephanie Bowers |
|
Director since June 2021 |
Ms. Bowers, age 42, was appointed to the Board in June 2021. Ms. Bowers
has two decades of U.S. government experience at the White House and with the U.S. Department of State. Ms. Bowers led the U.S. Embassy
in The Bahamas as Chargé d’Affaires from 2018 to 2020. Prior to that, Ms. Bowers held senior positions in both Democratic
and Republican administrations, including serving as chief of staff for the Western Hemisphere at the State Department from 2016 to 2018,
as Deputy Director of Central America Affairs at the State Department from 2015 to 2016 and as a National Security Council Director at
the White House from 2013 to 2014. Her previous foreign service experience includes acting as an Economic Officer in South Africa and
Spain and overseeing some of the U.S. government’s largest foreign assistance initiatives and budgets, including in the Middle East
and throughout the Americas and the Caribbean.
Ms. Bowers received bachelor degrees in International Affairs and French
Language and Literature from The George Washington University. She received a Master of Science degree in National Security Strategy from
the National War College, where she was named Distinguished Graduate. Ms. Bowers’ substantial experience in the international relations
and government affairs provide valuable perspective and expertise as a member of our Board. Ms. Bowers’s term as a director will
expire at the 2022 annual meeting of stockholders of the Company.
Christopher Harland |
|
Director since October 2019 |
Mr. Harland, age 64, was appointed to the Board in October 2019. Mr.
Harland is a Partner in the Strategic Advisory Group at PJT Partners, based in New York. Prior to joining PJT Partners, Mr. Harland spent
32 years at Morgan Stanley. From 2008 to March 2015, Mr. Harland served as Chairman and Regional Head of Morgan Stanley Latin America
and was also a member of the Management Committee and International Operating Committee. Under his leadership, Morgan Stanley significantly
expanded the scope of its operations in Brazil and Mexico and opened new offices in Peru, Colombia and Chile. Before assuming responsibility
for Latin America, Mr. Harland was Global Head of the Media and Communications Investment Banking Group from 1996 to 2007. In this capacity
he advised many leading media and communications companies on a variety of acquisitions, divestitures and corporate financings. He is
a trustee of the New York Studio School, a director of Round Hill Developments and a member of the Council on Foreign Relations. Mr. Harland
graduated magna cum laude from Harvard College, attended Oxford University and received an MBA from Harvard Business School where he was
a George F. Baker Scholar. Mr. Harland’s experience with international expansion and expertise in capital markets provide a valuable
background for him to serve as a member of our Board, and as a member of the Audit Committee. Mr. Harland’s term as a director will
expire at the 2024 annual meeting of stockholders of the Company.
Christopher Lytle |
|
Director since October 2020 |
Mr. Lytle, age 52, was appointed to the Board in October 2020. Mr.
Lytle has been president of Longfellow Capital, a private investment firm, since January 2009. He served in a consulting capacity as the
Company’s Head of Government Affairs from April 2020 to October 2020 and has been providing strategic consulting services to the
Company since 2018. Mr. Lytle previously served as the Company’s Chief Strategy Officer and Executive Vice President of Enterprise
SaaS Solutions from August 2017 to October 2018. Prior to joining the Company, Mr. Lytle was President of Cavulus, a privately-held SaaS-based
technology provider in the healthcare industry. Before joining Cavulus, Mr. Lytle was a Managing Director at Morgan Stanley from July
2006 to December 2008 and previously was Lead Portfolio Manager of RCL Capital, a hedge fund focused on small and mid-cap telecom and
wireless technology businesses from July 2006 to December 2008. He also recently became Chairman of Prolifiq, a leading cloud-native provider
of sales- enablement applications to Salesforce customers. Mr. Lytle holds a Bachelor of Arts degree in Economics from Lafayette College.
Mr. Lytle’s knowledge of the Company and experience with enterprise SaaS software solutions provide valuable background for him
to serve as a member of our Board. Mr. Lytle’s term as a director will expire at the 2024 annual meeting of stockholders of the
Company.
Dan Mondor |
|
Director since June 2017
Chairman of the Board since August 2018
Executive Chairman since March 2022 |
Mr. Mondor, age 66, has served as the Company’s Executive Chairman
since March 2022. Mr. Mondor served as the Company’s Chief Executive Officer and Chairman of the Board from August 2018 to March
2022. Mr. Mondor served as Chief Executive Officer of the company from June 2017 until August 2018, when he was appointed to serve as
Chairman of the Board. Prior to joining the Company, from April 2016 to June 2017, Mr. Mondor provided corporate strategy and merger and
acquisition advisory services to companies involved in the telecommunications industry through his private consulting firm, The Mondor
Group, LLC. From March 2015 to March 2016, he was President and Chief Executive Officer of Spectralink Corporation, a private equity-owned
global company that designs and manufactures mobile-workforce telecommunications products, including Android based industrial WiFi devices,
for global enterprises. From April 2008 to November 2014, Mr. Mondor was the President and Chief Executive Officer of Concurrent Computer
Corporation, a global company that designs and manufactures IP video delivery systems and real-time Linux based software solutions for
the global services provider, military, aerospace and financial services industries. From February 2007 to March 2008, he was President
of Mitel Networks, Inc., a subsidiary of Mitel Networks Corporation, a global company that designs and manufactures business communications
systems and mobile communications technology that serve the enterprise and wireless carrier markets. Prior to that, Mr. Mondor held a
number of executive management positions at Nortel Networks, including Vice President and General Manager of Enterprise Network Solutions
and Vice President of Global Marketing for Nortel’s Optical Internet business. Mr. Mondor holds a Master of Science degree in Electrical
Engineering from the University of Ottawa and a Bachelor of Science degree in Electrical Engineering from the University of Manitoba.
Mr. Mondor’s substantial experience in the telecommunications and technology industries, gained from senior executive positions
at leading global corporations, and his unique understanding of our operations, opportunities and challenges, provide a relevant and informed
background for him to serve as a member of our Board. Mr. Mondor’s term as a director will expire at the 2022 annual meeting of
stockholders of the Company.
Jeffrey Tuder |
|
Director since June 2017 |
Mr. Tuder, age 49, was appointed to the Board in June 2017. Mr. Tuder
is the Founder and Managing Member of Tremson Capital Management, LLC since April 2015. Mr. Tuder is also Chief Executive Officer of Concord
Acquisition Corp. Prior to founding Tremson, he held investment roles at KSA Capital Management, LLC from 2012 until April 2015 and at
JHL Capital Group, LLC during 2011. From 2007 until 2010, Mr. Tuder was a Managing Director of CapitalSource Finance, LLC, where he analyzed
and underwrote special situation credit investments in the leveraged loan and securitized bond markets. From 2005 until 2007, Mr. Tuder
was a member of the private equity investment team at Fortress Investment Group, LLC . Mr. Tuder began his career in various investment
capacities at Nassau Capital, a private investment firm that managed the private portion of Princeton University’s endowment and
ABS Capital Partners, a private equity firm affiliated with Alex Brown & Sons. Mr. Tuder currently serves on the board of directors
of SeaChange International Inc. (NASDAQ: SEAC) and Unico American (NASDAQ: UNAM). Mr. Tuder previously served on the board of directors
of MRV Communications, Inc., a communications equipment and services company, until August 2017 prior to its sale to Adva Optical Networking.
Mr. Tuder also serves as a director of a number of privately held companies. Mr. Tuder received a Bachelor of Arts degree from Yale College.
Mr. Tuder’s private equity and hedge fund investment experience, his expertise in evaluating both public and private investment
opportunities across numerous industries, and his ability to think creatively in considering ways to maximize long-term shareholder value
provide a valuable background for him to serve as a member of our Board, as Chair of our Audit Committee, Chair of the Compensation Committee
of the Board (the “Compensation Committee”), and as a member of the Nominating and Corporate Governance Committee of the Board
(the “Nominating and Corporate Governance Committee”). Mr. Tuder’s term as a director will expire at the 2023 annual
meeting of stockholders of the Company.
Board Committees
The Board currently has three standing committees: an Audit Committee,
a Compensation Committee and a Nominating and Corporate Governance Committee. Each committee operates under a written charter adopted
by the Board. All of the charters are publicly available on our website at investor.inseego.com under “Governance.”
You may also obtain a copy of these charters upon sending a written request to our Secretary at our principal executive offices.
Upon the recommendation of the Nominating and Corporate Governance
Committee, the Board appoints committee members annually.
The table below sets forth the current composition of our Board committees:
Name |
|
Audit
Committee |
|
Compensation
Committee |
|
Nominating and
Corporate
Governance
Committee |
James B. Avery |
|
✓ |
|
✓ |
|
☑ |
Stephanie Bowers |
|
|
|
|
|
✓ |
Christopher Harland |
|
✓ |
|
|
|
|
Jeffrey Tuder |
|
☑ |
|
☑ |
|
✓ |
______________________________
☑
Chair ✓ Member
Audit Committee
The Audit Committee oversees our accounting and financial reporting
processes and the audits of our financial statements and internal control over financial reporting.
The functions and responsibilities of the Audit Committee include:
|
• |
|
engaging our independent registered public accounting firm and conducting an annual review of the independence of that firm; |
|
• |
|
reviewing with management and the independent registered public accounting firm the scope and the planning of the annual audit; |
|
• |
|
reviewing the annual audited financial statements and quarterly unaudited financial statements with management and the independent registered public accounting firm; |
|
• |
|
reviewing the findings and recommendations of the independent registered public accounting firm and management’s response to the recommendations of that firm; |
|
• |
|
discussing with management and the independent registered public accounting firm, as appropriate, the Company’s policies with respect to financial risk assessment and financial risk management; |
|
• |
|
overseeing compliance with applicable legal and regulatory requirements, including ethical business standards; |
|
• |
|
establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; |
|
• |
|
establishing procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters; |
|
• |
|
preparing the Audit Committee Report to be included in our annual proxy statement; |
|
• |
|
monitoring ethical compliance, including review of related party transactions; and |
|
• |
|
periodically reviewing the adequacy of the Audit Committee charter. |
Our independent registered public accounting firm reports directly
to the Audit Committee. Each member of the Audit Committee must have the ability to read and understand fundamental financial statements
and at least one member must have past employment experience in finance or accounting, and the requisite professional certification in
accounting or another comparable experience or background. The Board has determined that each member of the Audit Committee is “independent”
as defined by the NASDAQ Stock Market LLC (“NASDAQ”) listing requirements and SEC rules. The Board has also determined that
Mr. Tuder, the Chair of the Audit Committee, meets the requirements of an “audit committee financial expert” as defined
by SEC rules.
Compensation Committee
The Compensation Committee establishes, administers and oversees compliance
with our policies, programs and procedures for compensating our executive officers and the Board.
The functions and responsibilities of the Compensation Committee include:
|
• |
|
establishing and reviewing our general compensation policies and levels of compensation applicable to our executive officers and our non-management directors; |
|
• |
|
evaluating the performance of, and determining the compensation for, our executive officers, including our Chief Executive Officer; |
|
• |
|
reviewing regional and industry-wide compensation practices in order to assess the adequacy and competitiveness of our executive compensation programs; |
|
• |
|
administering our employee benefits plans, including approving awards of stock, restricted stock units (“RSUs”) and stock options to employees and other parties under our equity incentive compensation plans; and |
|
• |
|
periodically reviewing the adequacy of the Compensation Committee charter. |
The Board has determined that each member of the Compensation Committee
is “independent” as defined by the NASDAQ listing requirements and SEC rules.
The Compensation Committee has the sole authority to retain and supervise
one or more outside advisors, including outside counsel and consulting firms, to advise the Compensation Committee on executive and director
compensation matters and to terminate any such adviser. In addition, the Compensation Committee has the sole authority to approve the
fees of an outside adviser and other terms of such adviser’s retention by the Company.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee considers, evaluates
and nominates director candidates, including the members of the Board eligible for re-election and the recommendations of potential
director candidates from stockholders.
The functions and responsibilities of the Nominating and Corporate
Governance Committee include:
|
• |
|
developing and recommending a set of corporate governance guidelines applicable to the Company; |
|
• |
|
identifying and evaluating candidates to serve on the Board, including determining whether incumbent directors should be nominated for re-election to the Board, and reviewing and evaluating director nominees submitted by stockholders; |
|
• |
|
reviewing possible conflicts of interest of prospective Board members; |
|
• |
|
recommending director nominees; |
|
• |
|
establishing procedures and guidelines for individuals to be considered to become directors; |
|
• |
|
recommending the appropriate size and composition of the Board and each of its committees; |
|
• |
|
overseeing periodic evaluations of the performance of the Board, the Board committees and the directors; |
|
• |
|
monitoring the continued legal compliance of our established principles and policies; and |
|
• |
|
periodically reviewing the adequacy of the Nominating and Corporate Governance Committee charter. |
The Board has determined that each member of the Nominating and Corporate
Governance Committee is “independent” as defined by the NASDAQ listing requirements.
Other Information Regarding Our Board of Directors and its Committees
There are no family relationships among any of our directors and/or
executive officers. There are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that
are material to the evaluation of the ability or integrity of any of our directors.
Advisory Board
In 2021, the Board established an Advisory Board to enhance
the Company’s strategic development, acquire additional expertise of industry leaders, and enable former members of the Board or
the Company’s management to continue to make significant contributions to the Company. One of our former directors, Brian Miller,
currently serves as a member of the Advisory Board.
Compensation Committee Interlocks and Insider Participation
Messrs. Avery and Tuder served on our Compensation
Committee during 2021. None of the members of our Compensation Committee during 2021 has ever been one of our officers or employees. None
of our executive officers currently serves, or has served during the last completed fiscal year, as a member of the board of directors
or compensation committee of any entity that has one or more executive officers serving as a member of our Bboard or Compensation Committee.
Securities Trading Policy/Hedging Prohibition
Directors, officers and other employees may not
engage in any transaction in which they may profit from short-term speculative swings in the value of the Company’s securities.
This includes “short sales” (selling borrowed securities which the seller hopes can be purchased at a lower price in the future)
or “short sales against the box” (selling owned, but not delivered securities), “put” and “call” options
(publicly available rights to sell or buy securities within a certain period of time at a specified price) and hedging transactions, such
as zero-cost collars and forward sale contracts. In addition, this policy is designed to ensure compliance with all insider trading rules.
Information about our Executive Officers
The following table sets forth certain information with respect to
our current executive officers as of April 30, 2022:
Executive |
|
Age |
|
Title |
Ashish Sharma |
|
49 |
|
Chief Executive Officer & President |
Robert Barbieri |
|
66 |
|
Chief Financial Officer |
Doug Kahn |
|
63 |
|
Executive Vice President, Operations |
Ashish Sharma has served as the Company’s Chief Executive
Officer and President since March 2022. He previously served as the Company’s President from June 2021 to March 2022 and as President
of IoT & Mobile Solutions from February 2020 to June 2021. Prior to that, he had served as the Company’s Executive Vice President
IoT & Mobile Solutions since joining the Company in September 2017. Prior to joining the Company, Mr. Sharma was Chief Marketing Officer
at Spectralink Corporation, a provider of enterprise grade mobile solutions, from December 2015 to September 2017. Prior to that, Mr.
Sharma served as Senior Vice President and General Manager, Americas for Graymatics, Inc. a cognitive media processing company, from January
2015 to December 2015 and as Chief Marketing Officer at FreeWave Technologies, an industrial wireless networking company, from November
2010 to January 2015. Mr. Sharma holds a Bachelor of Science in Electrical Engineering from the University of District of Columbia, a
Master of Science in Electrical Engineering from George Mason University and an MBAMBA from the UCLA Anderson School of Management in
Finance, Marketing and Strategy.
Robert Barbieri has served as the Company’s Chief Financial
Officer since October 2021, and served as the Company’s interim Chief Financial Officer from April 2021 to October 2021. He was
a Partner with TechCXO, LLC (“TechCXO”), a professional services firm that provides experienced, C-Suite professionals to
deliver strategic and functional consulting services, from 2019 to 2021. Before joining TechCXO, Mr. Barbieri led his own firm, CxO Advisory
Services, which provided similar strategic and functional consulting services, from 2010 to 2019. Mr. Barbieri has more than 30 years
of experience as a senior executive, strategic partner, and management advisor. Mr. Barbieri has served in senior financial leadership
positions with a number of companies, including Chief Financial Officer at ABILITY Network, Inc., a leading healthcare technology company;
Chief Financial Officer at Converge One, a leader in telecommunication technology; Executive Vice President and Chief Financial Officer
at TriZetto, a publicly traded healthcare IT company; Chief Financial Officer at Textura, a cloud collaboration company; Chief Financial
Officer at Apogee Enterprises, a publicly traded glass and coatings technologies company; Chief Financial and Performance Officer at Lawson
Software, Inc., a publicly traded international technology, software and e-commerce solution company; and a senior executive with Air
Products, a global manufacturing and services company. Mr. Barbieri is a Certified Management Accountant and holds both a B.S. in Business
Administration and Accounting and an MBA in Financial Management from Drexel University.
Doug Kahn joined the Company in February 2019 as Executive Vice
President of Operations. Prior to joining the Company, Mr. Kahn was Vice President of Global Supply Chain at Vispero, Inc., a provider
of assistive technology solutions for the visually impaired, from 2018 to 2019. Mr. Kahn was Executive Vice President of Global Operations
and Customer Support for Tintri, Inc., a virtualized storage and storage company from 2014 to 2018. Prior to that, he was Vice President
of Global Purchasing and Vice President of Operations for TomTom International BV, a global GPS company, from 2012 to 2014. Mr. Kahn has
held several additional leadership roles in all major supply chain functions, including Vice President of Supply Chain and IT for Synaptics
Inc. Earlier in his career, Mr. Kahn spent 17 years with Hewlett Packard in roles of increasing responsibility in supply chain development
and operations. Mr. Kahn earned a Bachelor of Arts from the University of California, Berkeley, an Master of Science in Geophysics and
an MBA in finance and statistics from the University of Chicago.
There are no family relationships among any of our executive officers
and/or directors. There are currently no legal proceedings, and during the past 10 years, there have been no legal proceedings, that are
material to the evaluation of the ability or integrity of any of our current executive officers.
Code of Conduct and Ethics
The Board has adopted a Code of Conduct and Ethics that is applicable
to all of our directors, officers and employees. The purpose of the Code of Conduct and Ethics is to, among other things, focus our directors,
officers and employees on areas of ethical risk, provide guidance to help them recognize and deal with ethical issues, provide mechanisms
to report concerns regarding possible unethical or unlawful conduct and to help enhance and formalize our culture of integrity, respect
and accountability. We distribute copies of the Code of Conduct and Ethics to, and conduct periodic training sessions regarding its content
for, our newly elected directors and newly hired officers and employees. We will post information regarding any amendment to, or waiver
from, our Code of Conduct and Ethics on our website in the Investors tab under “Governance” as required by applicable law.
A copy of our Code of Conduct and Ethics is available on our website at investor.inseego.com under “Governance”.
Item 11. |
Executive Compensation |
Compensation Discussion and Analysis for Named Executive Officers
The following Compensation Discussion and Analysis
describes the material elements of compensation for the Company’s named executive officers, which consist of: (1) our Executive
Chairman and former Chief Executive Officer, (2) our President and Chief Executive Officer, (3) our Chief Financial Officer, (4) our Executive
Vice President of Operations, (5) our former Chief Financial Officer, and (6) our Vice President and Corporate Controller, who served
as our principal financial officer and principal accounting officer for a portion of 2021.
Objectives of Compensation Program
The primary objectives of the Company’s
compensation program, including our executive compensation program, are to maintain a pay-for-performance compensation program that will
fairly compensate our executives and employees, attract and retain qualified executives and employees who are able to contribute to our
long-term success, induce performance consistent with clearly defined corporate goals and align our executives’ long-term interests
with those of our stockholders. To that end, the Company’s compensation practices are intended to:
|
• |
|
provide overall compensation (assuming that targeted levels of performance are achieved) that is sufficient to attract and retain executives and key employees; |
|
• |
|
tie total compensation to Company performance and individual performance in achieving financial and non-financial objectives; and |
|
• |
|
closely align senior management’s interests with stockholders’ interests through long-term equity incentive compensation. |
How the Compensation Committee Determines the Forms and Amounts
of Compensation
The Compensation Committee structures our compensation
programs and establishes compensation levels for our executives and senior officers. The Compensation Committee annually determines the
compensation levels for our executive officers by considering several factors, including competitive market data, each executive officer’s
roles and responsibilities, how the executive officer is performing those responsibilities and our historical financial performance.
The Compensation Committee considers the recommendations
from our Chief Executive Officer in determining executive compensation. In making his recommendations, the Chief Executive Officer receives
input from our Human Resources Department.
The Compensation Committee makes all decisions
for the total direct compensation, which includes base salary, bonus compensation based upon annual incentive goals and objectives and
long-term stock-based awards, of the Company’s executive officers and other members of the Company’s senior management team,
including the named executive officers.
The Compensation Committee engages independent
compensation consultants from time-to-time to assist the Compensation Committee in its duties, including providing advice regarding industry
trends relating to the form and amount of compensation provided to executives by companies with which we compete for executive talent
and other similarly situated companies. The Compensation Committee retained Compensia during 2021 to provide competitive compensation
data and analysis. The Compensation Committee considers available market data as one factor in making executive compensation decisions,
but has not adopted a specific benchmark or peer group as a guideline in its determination of compensation.
The Compensation Committee annually reviews and
approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s
performance in light of those goals and objectives, and determines the Chief Executive Officer’s compensation levels based on this
evaluation. In determining the long-term incentive component of the Chief Executive Officer’s compensation, the Committee considers
corporate performance, the impact of incentive awards on the Chief Executive Officer’s total compensation and the awards given to
the Chief Executive Officer in past years. For the other named executive officers, the Compensation Committee receives a performance assessment
and compensation recommendation from the Chief Executive Officer and also exercises its judgment based on the Board’s interactions
with the named executive officers. As with the Chief Executive Officer, the performance evaluation of these executives is based on his
or her contributions to the Company’s performance and other leadership accomplishments.
Components of Executive Compensation
The elements of the Company’s compensation
program are base salaries, bonus compensation based upon incentive goals and objectives and stock-based equity awards. Our compensation
program is designed to balance our need to provide our named executive officers with incentives to achieve our short- and long-term performance
goals with the need to pay competitive base salaries. There is no pre-established policy for allocating between cash and non-cash or short-term
or long-term compensation. Each named executive officer’s current and prior compensation is considered in setting future compensation.
Base Salaries. Base salary is the guaranteed
element of employees’ annual cash compensation. Base salaries are generally based on relative responsibility and are targeted to
provide competitive guaranteed cash compensation. The value of base salary reflects the employee’s long-term performance,
skill set and the market value of that skill set. Base salaries for our named executive officers are reviewed on an annual basis and adjustments
are made to reflect performance-based factors, as well as competitive conditions. The Company does not apply specific formulas to determine
increases. In setting base salaries, the Compensation Committee considers the following factors:
|
• |
|
The Company’s overall financial condition; |
|
• |
|
Internal relativity, meaning the relative pay differences for different job levels; |
|
• |
|
Individual performance; |
|
• |
|
Overall economic conditions and market factors; and |
|
• |
|
Consideration of the mix of overall compensation. |
In June 2021, the Compensation Committee increased
the base salary of Mr. Sharma in connection with his promotion to President of Inseego Corp. Mr. Sharma’s base salary was again
increased in March 2022 in connection with his appointment as Chief Executive Officer. These decisions were based upon Mr. Sharma’s
increase in responsibilities, salary history and internal relativity.
In June 2021, the Compensation Committee also
increased the base salary of Mr. Kahn based upon his individual performance contributions, salary history and internal relativity, as
well as consideration of overall market conditions.
Mr. Barbieri’s 2021 base salary was established
in October 2021 at the time of his commencement of employment with us based on the Compensation Committee’s consideration of the
factors described above.
The fiscal 2021 base salaries for each of the named
executive officers are shown in the following table.
|
|
2021 Base |
|
Name |
|
Salary (1) |
|
Ashish Sharma |
|
$ |
400,000 |
|
Robert Barbieri |
|
$ |
400,000 |
|
Doug Kahn |
|
$ |
325,000 |
|
Dan Mondor |
|
$ |
550,000 |
|
Craig Foster |
|
$ |
375,000 |
|
Wei Ding |
|
$ |
250,000 |
|
(1) |
Reflects base salaries effective December 31, 2021. |
Annual Incentive Bonuses
The Company believes that as an employee’s
level of responsibility increases, a greater portion of the individual’s cash compensation should be variable and linked to both
quantitative and qualitative expectations, including key financial, operational and strategic metrics. To that end, the Company awards
annual bonuses in order to align employees’ goals with the Company’s financial, strategic and tactical objectives for the
current year.
Executive Bonuses for 2021. For 2021, the
Compensation Committee established the Senior Management Bonus Program for the year ended December 31, 2021 (the “2021 Bonus
Program”). Under the 2021 Bonus Program, bonus target amounts, expressed as a percentage of base salary, were established for participants.
Bonus payouts for the year were then determined by (a) the achievement by the Company of certain financial goals and/or targets set
forth in the 2021 Bonus Program related to the Company’s revenue performance and cash flow; and (b) each participating employee’s
individual performance. Satisfactory individual performance is a condition to payment.
The Compensation Committee considered the following
when establishing the awards for 2021:
|
• |
|
Bonus Targets. Target bonuses are expressed as a percentage of the participant’s base salary earned during the plan year. Bonus targets were based on job responsibilities and internal relativity. Consistent with the Company’s executive compensation policy, individuals with greater job responsibilities had a greater proportion of their total compensation tied to Company performance in the 2021 Bonus Program. With the exception of Mr. Mondor, bonus targets for the named executive officers were unchanged for 2021 compared to prior years. Prior to 2021, Mr. Mondor had an annual target bonus equal to 65% of his annual base salary. In addition, he had the potential to receive up to an additional 65% of his base salary (for an aggregate annual bonus of up to 130% of his annual base salary) upon the achievement of certain “stretch goals” established by the Compensation Committee from time-to-time. For 2021, Mr. Mondor’s target bonus was set at 130% based upon the same goals as applicable to the rest of the management team. The schedule below shows the target incentives for the 2021 awards for each of the named executive officers as a percentage of 2021 base salary: |
| |
Target Bonus | | |
2021 Bonus | |
Name | |
% of Salary | | |
Dollars | | |
Earned (1) | |
Ashish Sharma | |
| 50% | | |
$ | 200,000 | | |
$ | 270,000 | |
Robert Barbieri | |
| 50% | | |
$ | 200,000 | | |
$ | 225,000 | |
Doug Kahn | |
| 40% | | |
$ | 120,000 | | |
$ | 200,000 | |
Dan Mondor | |
| 130% | | |
$ | 715,000 | | |
$ | 950,000 | |
Craig Foster | |
| 50% | | |
$ | 187,500 | | |
$ | 63,094 | (2) |
Wei Ding | |
| 25% | | |
$ | 62,500 | | |
$ | 110,000 | |
________________________
(1) |
Bonuses were paid in March 2022 in the form of fully vested shares based upon Company and individual performance during 2021, except for Mr. Foster, who received a cash payment. Represents the aggregate bonus amount payable to each named executive officer, which is also the grant date fair value of the fully vested shares granted in satisfaction of such bonuses as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. |
(2) |
For Mr. Foster, the 2021 bonus award is pro-rated to reflect the portion of the year for which he was employed. |
|
• |
|
Company performance measures. For all participants in the 2021 Bonus Program, including the named executive officers, the Compensation Committee established performance measures based upon total revenue, cash flow and specific product line revenues. Payouts could range from zero to 160% of target depending on the Company’s performance. The bonuses earned by the named executive officers for 2021 relating to corporate performance were 135% of target as a result of achieving sales in excess of the established target for 2021. |
|
• |
|
Personal performance. Based on individual performance, the Compensation Committee uses its discretion to adjust bonus payouts – either up or down – to reflect the individual performance of each named executive officer during the year. |
Long-Term Incentives. Long-term incentive awards are a key element
of the Company’s total compensation package for the named executive officers. We also have adopted an equity incentive approach
intended to reward longer-term performance and to help align the interest of our named executive officers with those of our stockholders.
We believe that long-term performance is achieved through an ownership culture that rewards performance by our named executive officers
through the use of equity incentives. Our equity incentive plans have been established to provide our employees, including our named executive
officers, with incentives to help align those employees’ interests with the interests of our stockholders. Our equity incentive
plans have provided the principal method for our named executive officers to acquire equity interests in the Company.
The size and terms of the awards for an individual
recipient will depend upon the level of responsibility of the recipient; the expected future contributions to the growth and development
of the Company; the value of past service; and the number of options and restricted shares owned by other executives in comparable positions
within the Company. The Company’s 2018 Stock Incentive Plan provides for a variety of long-term awards including stock options,
restricted stock, restricted share units and performance awards.
Stock Options and RSU Awards
The Compensation Committee continually evaluates
its equity compensation program to determine whether to issue either restricted stock units (“RSUs”), stock options or a combination
thereof. In making such determinations, the Compensation Committee considers the accounting treatment, the retention and the number of
shares available for grant under the Company’s equity incentive plan and the potential dilutive impact on the Company’s stockholders.
The Compensation Committee primarily relies on
stock options as the main equity vehicle for our named executive officers. Stock options provide for financial gain derived from the potential
appreciation in stock price from the date that the option is granted until the date that the option is exercised. The grant date is established
when the Compensation Committee approves the grant and all key terms have been determined. The exercise price of stock option grants is
set at the fair market value on the date of grant, which is the closing price on the NASDAQ Stock Market. Under the stockholder-approved
2018 Stock Incentive Plan, the Company may not grant stock options at a discount to the fair market value or reduce the exercise price
of outstanding options, except with the approval of the stockholders or except in the case of a stock split or other similar event. The
Company does not grant stock options with “reload” features and it does not loan funds to employees to enable them to exercise
stock options.
From time to time, our Compensation Committee
may also issue RSUs to our named executive officers. RSUs are generally less dilutive to our stockholders, as fewer shares of our common
stock are granted to achieve an equivalent value relative to stock options, and because RSU awards are an effective retention tool that
maintain value even in cases where the share price is trading lower than the initial grant price.
The equity awards granted to our named executive
officers during 2021 are reflected in the “Grants of Plan-Based Awards Table” below.
Other Elements of Compensation
Perquisites and Other Benefits. The Company
does not provide significant perquisites or personal benefits to our named executive officers. Our named executive officers are eligible
to participate in our health and welfare plans to the same extent as all full-time employees generally.
Retirement Plans. We currently maintain
a 401(k) retirement savings plan that allows eligible employees to defer a portion of their compensation, within limits prescribed by
the Internal Revenue Code, on a pre-tax or after-tax basis through contributions to the plan. Our named executive officers are eligible
to participate in the 401(k) plan on the same terms as other full-time employees generally. Currently, we match contributions made by
participants in the 401(k) plan at $0.50 for each $1.00 contributed on up to 6% an employee’s eligible compensation. We believe
that providing a vehicle for retirement savings through our 401(k) plan adds to the overall desirability of our executive compensation
package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.
Severance and Change-in-Control Arrangements
We generally enter into offer letters, rather than
formal employment agreements, with our named executive officers. The letters set forth the initial salary and bonus terms for each named
executive officer. The current base salaries and bonus targets for the named executive officers are set forth below.
In addition, each of the named executive officers
(other than Ms. Ding), as well as certain other key employees, is a party to an change in control and severance agreement with the Company.
The principal purpose of the agreements is to protect the Company from certain business risks (e.g., threats from loss of confidentiality
or trade secrets, disparagement, solicitation of customers and employees) and to define the Company’s right to terminate the employment
relationship. In return, the executive officers are provided assurances with regard to salary and other compensation and benefits, as
well as certain severance benefits.
For a description of these agreements and the
severance benefits provided under these arrangements, see –Potential Payments Upon Termination or Change-in-Control–Severance Agreements.
2021 Say-On-Pay Vote
At our 2021 annual meeting of stockholders, our
stockholders approved, on a non-binding, advisory basis, the compensation paid to our named executive officers described in our 2021 proxy
statement. Approximately 94% of the votes cast on the matter were voted in favor of this “say-on-pay” approval. The Board
and the Compensation Committee considered the voting results and high level of stockholder support when establishing our executive compensation
programs for fiscal 2022.
Clawback Guidelines
Our Corporate Governance Guidelines provide that
in the event of any accounting restatement of the financial statements of the Company, the Board will review the incentive compensation
and awards made to the executive officers based on the financial results during the period covered by the restatement and, in appropriate
circumstances and to the extent permitted by applicable law and the Company’s policies and plans, seek to recover or cancel the
portion of any such compensation or awards in excess of what would have been received under the restated financial statements. Among the
key factors that the Board will consider in determining whether seeking recovery is appropriate is whether the executive officer engaged
in fraud or willful misconduct that resulted in the need for a restatement.
Tax Considerations
Section 162(m) of the Internal Revenue Code generally
prohibits a publicly-held company from deducting compensation paid to a current or former named executive officer that exceeds $1 million
during the tax year. Certain awards granted before November 2, 2017 that were based upon attaining pre-established performance measures
that were set by the Compensation Committee under a plan approved by our stockholders, as well as amounts payable to former executives
pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility
limit.
The Compensation Committee notes this deductibility
limitation as one of the factors in its consideration of compensation matters. However, the Compensation Committee generally has the flexibility
to take any compensation-related actions that it determines are in the Company’s and its stockholders’ best interest, including
designing and awarding compensation for our executive officers that is not fully deductible for tax purposes.
Stock Ownership Requirements
The Board has historically encouraged its members
and members of senior management to acquire and maintain stock in the Company to link the interests of such persons to the stockholders.
However, neither the Board nor the Compensation Committee has established stock ownership guidelines for members of the Board or the executive
officers of the Company.
Securities Trading Policy/Hedging Prohibition
Officers and other employees may not engage in
any transaction in which they may profit from short-term speculative swings in the value of the Company’s securities. This includes
“short sales” (selling borrowed securities which the seller hopes can be purchased at a lower price in the future) or “short
sales against the box” (selling owned, but not delivered securities), “put” and “call” options (publicly
available rights to sell or buy securities within a certain period of time at a specified price) and hedging transactions, such as zero-cost
collars and forward sale contracts. In addition, this policy is designed to ensure compliance with all insider trading rules.
Indemnification Agreements
The Company has entered into indemnification agreements
with each of its directors and executive officers (each, an “Indemnitee”). In general, the indemnification agreements provide
that, subject to certain limitations, the Company will indemnify and hold harmless each Indemnitee against all expenses, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such Indemnitee or on such Indemnitee’s behalf, in connection
with certain pending, completed or threatened proceedings, as defined in the indemnification agreements, if the Indemnitee acted in good
faith and reasonably in the best interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe
that his or her conduct was unlawful.
Risk Assessment of Compensation Program
In April 2022, management assessed our compensation
program for the purpose of reviewing and considering any risks presented by our compensation policies and practices that are reasonably
likely to have a material adverse effect on us. As part of that assessment, management reviewed the primary elements of our compensation
program, including base salary, short-term incentive compensation and long-term incentive compensation. Management’s risk assessment
included a review of the overall design of each primary element of our compensation program, and an analysis of the various design features,
controls and approval rights in place with respect to compensation paid to management and other employees that mitigate potential risks
to us that could arise from our compensation program. Following the assessment, management determined that our compensation policies and
practices did not create risks that were reasonably likely to have a material adverse effect on us and reported the results of the assessment
to our compensation committee.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of our Board of Directors
has submitted the following report for inclusion in this proxy statement:
The Compensation Committee has reviewed and discussed
with management the Compensation Discussion and Analysis set forth above. Based on such review and discussions, the Compensation Committee
has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K
for the year ended December 31, 2021, filed by us with the SEC.
This report of the Compensation Committee is not
“soliciting material,” shall not be deemed “filed” with the SEC and shall not be incorporated by reference by
any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation
language in any such filing, except to the extent that we specifically incorporate this information by reference, and shall not otherwise
be deemed filed under such acts.
The foregoing report has been furnished by the
Compensation Committee.
Respectfully submitted,
The Compensation Committee of the Board of Directors
Jeffrey Tuder (Chairman)
James B. Avery
Summary Compensation Table
The following table sets forth information regarding the compensation
of our named executive officers for the years ended December 31, 2021, 2020 and 2019.
Name and Principal Position |
|
Year |
|
Salary
($) |
|
|
Bonus
($)(1) |
|
|
Stock
Awards
($)(2) |
|
Option
Awards
($)(2) |
|
|
All Other
Compensation
($)(3) |
|
|
Total
($) |
|
Ashish Sharma |
|
|
2021 |
|
|
388,128 |
|
|
175,056 |
(4) |
|
|
– |
|
2,415,000 |
|
|
|
9,626 |
|
|
|
2,987,810 |
|
Chief Executive Officer & President |
|
|
2020 |
|
|
317,153 |
|
|
81,985 |
(5) |
|
|
– |
|
1,415,375 |
|
|
|
7,929 |
|
|
|
1,822,442 |
|
Robert Barbieri(6) |
|
|
2021 |
|
|
69,231 |
|
|
– |
|
|
|
– |
|
2,456,250 |
|
|
|
405,694 |
(7) |
|
|
2,931,175 |
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doug Kahn |
|
|
2021 |
|
|
311,762 |
|
|
182,597 |
(4) |
|
|
282,600 |
|
857,650 |
|
|
|
8,228 |
|
|
|
1,642,837 |
|
Executive Vice President, Operations |
|
|
2020 |
|
|
299,776 |
|
|
66,480 |
(5) |
|
|
– |
|
272,295 |
|
|
|
8,250 |
|
|
|
646,801 |
|
Dan Mondor |
|
|
2021 |
|
|
550,411 |
|
|
469,333 |
(4) |
|
|
– |
|
4,830,000 |
|
|
|
12,750 |
|
|
|
5,862,494 |
|
Executive Chairman |
|
|
2020 |
|
|
549,589 |
|
|
199,522 |
(5) |
|
|
– |
|
– |
|
|
|
75,251 |
|
|
|
824,362 |
|
and Former Chief Executive Officer |
|
|
2019 |
|
|
550,000 |
|
|
563,251 |
(8) |
|
|
– |
|
– |
|
|
|
99,331 |
|
|
|
1,212,582 |
|
Craig Foster(9) |
|
|
2021 |
|
|
115,485 |
|
|
84,162 |
|
|
|
– |
|
– |
|
|
|
187,500 |
|
|
|
387,147 |
|
Former Chief Financial Officer |
|
|
2020 |
|
|
141,907 |
|
|
– |
|
|
|
399,995 |
|
2,380,540 |
|
|
|
– |
|
|
|
2,922,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wei Ding (10) |
|
|
2021 |
|
|
250,000 |
|
|
– |
|
|
|
117,680 |
|
– |
|
|
|
3,243 |
|
|
|
370,923 |
|
Vice President and Corporate Controller |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
(1) |
Represents bonus payments made for performance during the applicable year. Bonus payments were made through an award of fully vested shares under the 2018 Omnibus Incentive Compensation Plan (the “2018 Incentive Plan”), except for Mr. Foster’s bonus for 2021, which was paid in cash. The number of RSUs issued was determined by dividing the amount of the bonus award by the 5-day weighted average sales price for the Company’s common stock. Represents the aggregate grant date fair value of the shares issued in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, Share-based Compensation, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. |
(2) |
Represents the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, Share-based Compensation, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. |
(3) |
See the All Other Compensation table below for additional information. |
(4) |
Represents a bonus payment made during fiscal 2021 based on individual and Company performance during 2020. |
(5) |
Represents a bonus payment made during fiscal 2020 based on individual and Company performance during 2019. |
(6) |
Mr. Barbieri joined as the Company’s permanent Chief Financial Officer starting October 25, 2021. |
(7) |
Mr. Barbieri served on a consulting basis as Interim Chief Financial Officer from March 2021 to October 2021 and amounts reflect compensation paid to the consulting firm, TechCXO, LLC, for Mr. Barbieri’s services. |
(8) |
Represents a bonus payment made during fiscal 2019 based on individual and Company performance during 2018. |
(9) |
Mr. Foster served as the Company’s Chief Financial Officer from August 14, 2020 through April 5, 2021. |
(10) |
Ms. Ding served as the Company’s principal financial officer and principal accounting officer from April 5, 2021 to October 25, 2021. Ms. Ding is no longer serving in an executive capacity. |
All Other Compensation
The following table sets forth information concerning All Other
Compensation in the table above:
Name |
|
Year |
|
|
401(k)
Employer
Match
($) |
|
|
Other
Compensation
($) |
|
|
Total
($) |
|
Ashish Sharma |
|
|
2021 |
|
|
|
9,626 |
|
|
|
– |
|
|
|
9,626 |
|
|
|
|
2020 |
|
|
|
7,929 |
|
|
|
– |
|
|
|
7,929 |
|
Robert Barbieri |
|
|
2021 |
|
|
|
– |
|
|
|
405,694 |
(1) |
|
|
405,694 |
|
Doug Kahn |
|
|
2021 |
|
|
|
8,228 |
|
|
|
– |
|
|
|
8,228 |
|
|
|
|
2020 |
|
|
|
8,250 |
|
|
|
– |
|
|
|
8,880 |
|
Dan Mondor |
|
|
2021 |
|
|
|
12,750 |
|
|
|
– |
|
|
|
12,750 |
|
|
|
|
2020 |
|
|
|
8,550 |
|
|
|
66,701 |
(2) |
|
|
75,251 |
|
|
|
|
2019 |
|
|
|
8,400 |
|
|
|
90,931 |
(2) |
|
|
99,331 |
|
Craig Foster |
|
|
2021 |
|
|
|
– |
|
|
|
187,500 |
(3) |
|
|
187,500 |
|
|
|
|
2020 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Wei Ding |
|
|
2021 |
|
|
|
3,243 |
|
|
|
– |
|
|
|
3,243 |
|
__________________
(1) |
Represents compensation paid to TechCXO, LLC for consulting services provided by Mr. Barbieri as interim Chief Financial Officer. |
(2) |
Represents a living expense allowance plus tax gross-up. |
(3) |
Represents severance pay. |
Grants of Plan-Based Awards
The table below sets forth information on grants
of options, stock awards and other plan-based awards to the named executive officers in 2021. Mr. Foster did not receive equity awards
during 2021.
| |
| |
Estimated Future Payouts Under Non-Equity Incentive
Plan Awards | | |
Estimated Future Payouts Under Equity Incentive Plan
Awards | | |
All Other Stock Awards: Number of Shares of Stock | | |
All Other Option Awards: Number of Securities | | |
Exercise or Base Price of Option | | |
Grant Date Fair Value of Stock and Option | |
Name | |
Grant Date | |
Threshold ($) | | |
Target ($) | | |
Maximum ($) | | |
Threshold (#) | | |
Target (#) | | |
Maximum (#) | | |
or Units
(#) | | |
Underlying
Option (#) | | |
Awards
($/share) | | |
Awards
($) | |
Mr. Sharma | |
3/9/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 17,062 | (2) | |
| – | | |
| – | | |
| 175,056 | |
| |
6/6/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 250,000 | (3) | |
$ | 9.66 | | |
| 2,415,000 | |
Mr. Barbieri | |
10/25/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 375,000 | (3) | |
| 6.55 | | |
| 2,456,250 | |
Mr. Kahn | |
3/9/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 17,797 | (2) | |
| – | | |
| – | | |
| 182,597 | |
| |
6/30/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 45,000 | (3) | |
$ | 10.09 | | |
| 857,650 | |
| |
12/15/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 45,000 | (4) | |
| – | | |
| – | | |
| – | |
Mr. Mondor | |
3/9/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 45,744 | (1) | |
| – | | |
| – | | |
| 469,333 | |
| |
6/6/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 500,000 | | |
$ | 9.66 | | |
| 4,830,000 | |
Mr. Foster | |
3/9/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 8,203 | (1) | |
| – | | |
| – | | |
| 84,162 | |
Ms. Ding | |
5/7/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 5,000 | (4) | |
| – | | |
| – | | |
| 41,600 | |
| |
10/27/2021 | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 12,000 | (4) | |
| – | | |
| – | | |
| 76,080 | |
____________________
(1) | | Represents the aggregate grant date fair value of the stock
and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated
forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, Share-based Compensation, in the
Original Form 10-K. |
(2) | | Bonuses paid in March 2021 in the form of immediately vesting
RSUs, based upon Company and individual performance during 2020. For Mr. Foster, the bonus award was pro-rated to reflect the portion
of the year for which he was employed. |
(3) | | Represents stock options that are scheduled to vest over a
four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably
on a monthly basis thereafter through the fourth anniversary of the grant date. |
(4) | | Represents RSU awards. RSUs are scheduled to vest
over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting
ratably on a monthly basis thereafter through the fourth anniversary of the grant date. |
(5) | | Represents stock options that are scheduled to vest over a
three-year period, with one-third vesting on the first anniversary of the grant date and the remainder vesting ratably
on a monthly basis thereafter through the third anniversary of the grant date. |
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding the stock options
and RSUs held by our named executive officers that were outstanding at December 31, 2021. Mr. Foster did not hold any outstanding
equity awards at December 31, 2021.
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
Name |
|
Grant Date |
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) |
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1) |
|
|
Option
Exercise
Price
($) |
|
|
Option
Expiration
Date |
|
Number of
shares of stock
that have
not vested
(#)(2) |
|
|
Market value
of shares
of stock
that have not vested
($)(3) |
|
Ashish Sharma |
|
6/6/2021 |
|
|
– |
|
|
|
250,000 |
|
|
|
9.66 |
|
|
6/6/2031 |
|
|
|
|
|
|
|
|
|
|
2/5/2020 |
|
|
114,583 |
|
|
|
135,417 |
|
|
|
7.70 |
|
|
2/5/2030 |
|
|
|
|
|
|
|
|
|
|
7/30/2018 |
|
|
213,542 |
|
|
|
36,458 |
|
|
|
1.80 |
|
|
7/30/2028 |
|
|
|
|
|
|
|
|
|
|
9/25/2017 |
|
|
150,000 |
|
|
|
– |
|
|
|
1.38 |
|
|
9/25/2027 |
|
|
|
|
|
|
|
|
Robert Barbieri |
|
10/25/2021 |
|
|
– |
|
|
|
375,000 |
|
|
|
6.55 |
|
|
10/25/2031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doug Kahn |
|
12/15/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
262,350 |
|
|
|
06/30/2021 |
|
|
– |
|
|
|
85,000 |
|
|
|
10.09 |
|
|
06/30/2031 |
|
|
|
|
|
|
|
|
|
|
7/29/2020 |
|
|
8,854 |
|
|
|
16,146 |
|
|
|
13.72 |
|
|
7/29/2030 |
|
|
|
|
|
|
|
|
|
|
10/4/2019 |
|
|
10,416 |
|
|
|
22,917 |
|
|
|
4.78 |
|
|
10/4/2029 |
|
|
|
|
|
|
|
|
|
|
2/13/2019 |
|
|
41,667 |
|
|
|
58,333 |
|
|
|
4.84 |
|
|
2/13/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan Mondor |
|
6/6/2021 |
|
|
– |
|
|
|
500,000 |
(4) |
|
|
9.66 |
|
|
6/6/2031 |
|
|
|
|
|
|
|
|
|
|
6/6/2018 |
|
|
1,250,000 |
|
|
|
– |
|
|
|
2.00 |
|
|
6/6/2028 |
|
|
|
|
|
|
|
|
|
|
6/6/2017 |
|
|
600,000 |
|
|
|
– |
|
|
|
0.94 |
|
|
6/6/2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wei Ding |
|
10/27/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000 |
|
|
|
69,960 |
|
|
|
11/09/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
87,450 |
|
___________________
(1) |
Unless otherwise indicated, stock options are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. |
(2) |
Represents RSU awards. RSUs are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date. |
(3) |
Calculated based on the closing price per share of our common stock on December 31, 2021 ($5.83). |
(4) |
Stock options are scheduled to vest over a three-year period, with one-third vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the third anniversary of the grant date. |
Option Exercises and Stock Vested
The following table sets forth information regarding
option exercises and stock awards that vested during 2020 with respect to our named executive officers.
Name and Position | |
Option Awards Number of Shares Acquired On Exercise (#) | | |
Value Realized on Exercise ($)(1) | | |
Stock Awards Number of Shares Acquired On Vesting (#) | | |
Value Realized on Vesting ($)(2) | |
Ashish Sharma | |
| – | | |
$ | – | | |
| 17,062 | | |
$ | 175,056 | |
Robert Barbieri | |
| – | | |
$ | – | | |
$ | – | | |
$ | – | |
Doug Kahn | |
| 10,417 | | |
$ | 116,692 | | |
| 17,797 | | |
$ | 182,597 | |
Dan Mondor | |
| 150,000 | | |
$ | 2,728,500 | | |
| 45,744 | | |
$ | 469,333 | |
Craig Foster | |
| – | | |
$ | – | | |
| 15,081 | | |
$ | 149,366 | |
Wei Ding | |
| – | | |
$ | – | | |
| 15,000 | | |
$ | 113,500 | |
Potential Payments Upon Termination or Change-in-Control
Change-in-Control and Severance Agreements
The Company has entered into Change-in-Control
and Severance Agreements with Messrs. Sharma, Barbieri and Kahn - all with substantially identical provisions - to provide severance benefits
in the event the executive’s employment is terminated. A description of the material terms of the agreements, including the severance
benefits payable under these agreements is set forth below.
In addition, prior to his transition to Executive
Chairman on March 1, 2022, the Company was a party to a Change-in-Control and Severance Agreement with Mr. Mondor, which agreement terminated
effective upon his transition.
Under the terms of the agreements, if the employment
of a named executive officer is terminated by the Company without cause or by the named executive officer for good reason not in connection
with a Change-in-Control, then the named executive officer is entitled to the following severance benefits:
|
• |
|
an amount equal to the named executive officer’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the named executive officer under our compensation plans; |
|
• |
|
an amount equal to six months of the named executive officer’s base salary (12 months for Mr. Mondor), payable in cash in the form of salary continuation; |
|
• |
|
immediate vesting of the portion of the named executive officer’s outstanding equity awards under our compensation plans that would have vested or become exercisable had his employment continued through the next vesting date (or within 12 months of the date of termination for Mr. Mondor); |
|
• |
|
a lump-sum bonus payment equal to the pro-rated portion of the target bonus in the year of termination based on actual achievement of corporate performance goals and assumed full achievement of any individual performance goals; and |
|
• |
|
continued participation for up to nine months (18 months for Mr. Mondor) by the named executive officer and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately prior to the termination; |
provided, however, that in order to receive the aforementioned severance
benefits (other than the named executive officer’s unpaid base salary and incentive pay through the date of termination and any
other amounts owed to the named executive officer under our compensation plans), the named executive officer must execute a general release
of claims.
Under the agreements, subject to the executive’s
execution of a general release of claims (other than with respect to the first severance benefit noted below), the named executive officer
is entitled to the following severance benefits, in lieu of the benefits described above, if the named executive officer ’s employment
is terminated by the Company without cause or by the named executive officer for good reason during a Change-in-Control Period:
|
• |
|
an amount equal to the named executive officer’s unpaid base salary and incentive pay through the date of termination and any other amounts owed to the named executive officer under our compensation plans; |
|
• |
|
an amount equal to the sum of 18 months of the named executive officer’s base salary; |
|
• |
|
an amount equal to 12 months of the named executive officer’s target annual bonus opportunity; |
|
• |
|
immediate vesting of outstanding equity awards under our compensation plans; and |
|
• |
|
continued participation for up to 18 months by the named executive officer and his dependents in our group health plan, at the same benefit and contribution levels in effect immediately before the termination. |
The Change-in-Control and Severance
Agreements described above utilize the following definitions:
“Cause” means:
|
• |
|
any act of material misconduct or material dishonesty by the named executive officer in the performance of his or her duties; |
|
• |
|
any willful failure, gross neglect or refusal by the named executive officer to attempt in good faith to perform his or her duties to the Company or to follow the lawful instructions of the Board (except as a result of physical or mental incapacity or illness) which is not promptly cured after written notice; |
|
• |
|
the named executive officer’s commission of any fraud or embezzlement against the Company (whether or not a misdemeanor); |
|
• |
|
any material breach of any written agreement with the Company, which breach has not been cured by the named executive officer (if curable) within 30 days after written notice thereof to the named executive officer by the Company; |
|
• |
|
the named executive officer’s being convicted of (or pleading guilty or nolo contendere to) any felony or misdemeanor involving theft, embezzlement, dishonesty or moral turpitude; and/or |
|
• |
|
the named executive officer’s failure to materially comply with the material policies of the Company in effect from time to time relating to conflicts of interest, ethics, codes of conduct, insider trading, or discrimination and harassment, or other breach of the named executive officer’s fiduciary duties to the Company, which failure or breach is or could reasonably be expected to be materially injurious to the business or reputation of the Company. |
“Good Reason” means the
occurrence, without the named executive officer ’s consent, for more than thirty days after such named executive officer provides
the Company a written notice detailing such conditions of:
|
• |
|
a material diminution in his or her base compensation; |
|
• |
|
a material diminution in his or her job responsibilities, duties or authorities; or |
|
• |
|
a relocation of his or her principal place of work by more than 50 miles. |
“Change-in-Control” means:
|
• |
|
a transaction after which an individual, entity or group owns 50% or more of the outstanding shares of our common stock, subject to limited exceptions; |
|
• |
|
a sale of all or substantially all of the Company’s assets; or |
|
• |
|
a merger, consolidation or similar transaction, unless immediately following such transaction (a) the holders of our common stock immediately prior to the transaction continue to beneficially own more than 50% of the combined voting power of the surviving entity in substantially the same proportion as their ownership immediately prior to the transaction, (b) no person becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the outstanding shares of the voting securities eligible to elect directors of the surviving entity and (c) at least a majority of the members of the board of directors of the surviving entity immediately following the transaction were also members of the Board at the time the Board approved the transaction. |
“Change-in-Control Period” means
the period commencing 30 days prior to a Change-in-Control and ending on the 12-month anniversary of such Change-in-Control.
Equity Award Agreements
The following is a summary of the material terms
applicable to the outstanding equity awards held by our named executive officer s as of December 31, 2021.
2018 Incentive Plan. The award agreements
covering grants of stock options and RSUs made to our named executive officer s under our 2018 Incentive Plan provide that the Board,
in its discretion, may accelerate the vesting of any unvested stock options or RSUs in the event of a change-in-control.
Under our 2018 Incentive Plan, a “change-in-control”
is defined as:
|
• |
|
any person becoming the beneficial owner of 50% or more of the combined voting power of the then-outstanding shares of our common stock, subject to certain exceptions; |
|
• |
|
a majority of the Board ceasing to be comprised of directors who (a) were serving as members of the Board on May 11, 2018 or (b) became members of the Board after May 11, 2018 and whose nomination, election or appointment was approved by a vote of two-thirds of the then-incumbent directors; |
|
• |
|
a reorganization, merger, consolidation, sale of all or substantially all of the assets of the Company or similar transaction, unless the holders of our common stock immediately prior to the transaction beneficially own more than 50% of the combined voting power of the shares of the surviving entity and certain other conditions are satisfied; or |
|
• |
|
a liquidation or dissolution of the Company approved by the Company’s stockholders. |
Mondor Transition Agreement
Effective March 1, 2022, Mr. Mondor transitioned
from the role of Chief Executive Officer of the Company to Executive Chairman, to serve in such capacity until the Company’s next
annual meeting of stockholders, pursuant to the terms of a transition agreement between Mr. Mondor and the Company (the “Transition
Agreement”). Pursuant to the Transition Agreement, Mr. Mondor will continue to serve as a member of the Company’s Board of
Directors and, following the Company’s 2022 annual meeting of stockholders, will cease employment and resume his role as non-management
Chairman of the Board. Mr. Mondor’s base salary as Executive Chairman will be $100,000 per year. Mr. Mondor will also be entitled
to a cash success fee, payable upon the last day of his employment, determined by multiplying $50,000 by the number of employees successfully
recruited by him during his transition period that are employed by the Company as of such date. On March 1, 2022, the vesting of 25% of
the options granted to Mr. Mondor on June 6, 2021 accelerated and became immediately exercisable, and the remaining options under such
grant were cancelled.
Following the end of the transition period, Mr.
Mondor will be compensated as a non-employee director under the Company’s non-employee director compensation policies, including
cash retainers for service as a Board member and Chairman of the Board, and annual equity awards commencing at the 2022 annual meeting
of stockholders.
Potential Payments Upon Termination or Change in Control Table
The following table summarizes the potential payments
to our named executive officers in two scenarios: (1) upon termination by us without cause or the executive’s resignation for good
reason apart from a change in control; or (2) upon termination by us without cause or the executive’s resignation for good reason
within 30 days prior to or 12 months following a Change-in-Control. The table assumes that the termination of employment or Change-in-Control,
as applicable, occurred on December 31, 2021. The value of the accelerated vesting of stock and option awards was computed using $5.83,
which was the price of our common stock at December 31, 2021 (less, in the case of option awards, the exercise price per share of such
option awards).
The employment of Mr. Foster terminated effective
April 5, 2021 to pursue other interests. Accordingly, he is not included in the table below as he would not have been entitled to any
benefits in the event of the occurrence of any of the triggering events described in the table on December 31, 2021. In connection with
his termination, Mr. Foster received severance in the amount of $187,500 as provided for under his Change-in-Control and Severance Agreement,
as described above. Mr. Mondor transitioned from his role as Chief Executive Officer to Executive Chairman effective March 1, 2022. A
description of the Transition Agreement with Mr. Mondor is provided above. Ms. Ding is not eligible for severance benefits and therefore
is not included in the table below as she would not have been entitled to any benefits in the event of the occurrence of any of the triggering
events described in the table on December 31, 2021.
Name/Benefit | |
Involuntary Termination Without Cause/Resignation for Good Reason Apart from a Change in Control (1) ($) (1) | | |
Involuntary Termination Without Cause/Resignation for Good Reason in Connection with a Change in Control ($) (2) | |
Ashish Sharma | |
| | | |
| | |
Cash severance | |
| 400,000 | | |
| 800,000 | |
Accelerated Vesting of Equity | |
| 125,938 | | |
| 146,926 | |
Health Benefits | |
| 18,000 | | |
| 36,000 | |
Total | |
| 537,938 | | |
| 982,926 | |
Robert Barbieri | |
| | | |
| | |
Cash severance | |
| 400,000 | | |
| 800,000 | |
Accelerated Vesting of Equity | |
| – | | |
| – | |
Health Benefits | |
| 13,500 | | |
| 27,000 | |
Total | |
| 409,000 | | |
| 827,000 | |
Doug Kahn | |
| | | |
| | |
Cash severance | |
| 292,500 | | |
| 617,500 | |
Accelerated Vesting of Equity | |
| 18,938 | | |
| 344,163 | |
Health Benefits | |
| 13,500 | | |
| 27,000 | |
Total | |
| 320,438 | | |
| 988,663 | |
Dan Mondor | |
| | | |
| | |
Cash severance | |
| 1,265,000 | | |
| 1,540,000 | |
Accelerated Vesting of Equity | |
| – | | |
| – | |
Health Benefits | |
| 13,500 | | |
| 27,000 | |
Total | |
| 1,274,000 | | |
| 1,567,000 | |
____________________
| (1) | Represents base salary for 6 months (12 months in the case of Mr. Mondor), a prorated target annual bonus for the year of termination,
and continued health plan coverage for up to 9 months (18 months for Mr. Mondor) at our expense. Also includes the value the equity awards
eligible for accelerated vesting upon such termination. |
| (2) | Represents base salary for 18 months, payable in a lump sum, the executive’s target annual bonus for the year of termination,
and continued health plan coverage for up to 18 months at our expense. Also reflects the value of the accelerated vesting of all outstanding
stock and option awards. |
CEO Pay Ratio
As required by the Dodd-Frank Wall Street Reform
and Consumer Protection Act, we are providing disclosure regarding the ratio of the annual total compensation of Mr. Mondor, who was our
CEO during fiscal 2021, to the median of the total annual compensation of our employees other than Mr. Mondor. We identified our employee
with the median annual compensation using total cash compensation for calendar year 2021 of all employees who were employed by us on December
31, 2021, at which date our global workforce consisted of 508 employees, of which 292 were U.S. employees and 216 were non-U.S. employees.
We did not include any contractors or other non-employee workers in our employee population. We annualized the compensation for any employees
who commenced work during calendar 2021. We believe total cash compensation for all employees is reasonable to use as a consistently applied
compensation measure because we do not have a broad-based equity award plan. We selected December 31, 2021, which is within the last three
months of our fiscal 2021, for the date as of when we would identify the employee with the median annual compensation, because it enabled
us to make such identification in a reasonably efficient and economical manner.
After identifying the employee with the median
total cash compensation for the 12 months ended December 31, 2021, we calculated total compensation for this employee for the fiscal year
ended December 31, 2021 using the same methodology that we use for our named executive officers in the Summary Compensation Table above.
For fiscal 2021, the total compensation of our Mr. Mondor was $5,862,494,
and the total compensation of our employee with median annual compensation was $133,330. Accordingly, we estimated our CEO pay ratio for
fiscal 2021 to be 44 to 1.
Director Compensation
We use a combination of cash and equity-based incentive
compensation to attract and retain qualified candidates to serve on the Board. Upon the recommendation of the Compensation Committee,
the Board makes all compensation decisions for our non-management directors. In recommending director compensation, the Compensation
Committee considers, among other things, the amount of time required of directors to fulfill their duties. A director who is also an employee
of the Company does not receive additional compensation for serving as a director.
Cash Compensation. The Board has approved
the following components of the annual cash retainer fee to our non-management directors for Board and Board committee service
in 2021 (which amounts are prorated for directors who only served for a portion of the year):
| |
Chair | | |
Member | |
Board of Directors | |
$ | 80,000 | (1) | |
$ | 40,000 | |
Audit Committee | |
$ | 20,000 | | |
$ | 10,000 | |
Compensation Committee | |
$ | 14,000 | | |
$ | 6,000 | |
Nominating and Corporate Governance Committee | |
$ | 10,000 | | |
$ | 5,000 | |
__________________________
(1) As our Chief Executive Officer and Executive Chairman, Mr. Mondor
does not receive retainers for his service on the Board. Commencing on the date of our 2022 annual meeting of stockholders, Mr. Mondor
will cease serving as an employee and Executive Chariman and will continue as a non-management Chairman of the Board, eligible for compensation
under our non-management director compensation program.
Equity-Based Compensation. The Board
approved the following components for equity compensation to be awarded to each non-management director of the Company for fiscal 2021.
|
• |
|
An initial equity award upon joining the Board in the form of RSUs with an economic value of $145,000. The RSUs vest in three equal annual installments beginning with the first anniversary of the grant date. |
|
• |
|
Thereafter, an annual equity award in the form of RSUs with an economic value of $125,000 that vests in full on the first anniversary of the grant date. |
Based on the foregoing policy, the Compensation
Committee awarded non-management directors 6,242 RSUs in May 2021 as compensation for Board service from February 2020 to February
2021, and 14,221 RSUs in July 2021 for Board service from July 2021 until the 2022 annual meeting of stockholders. The non-management
directors, including Mr. Mondor, will be eligible for annual awards during 2022 as described above.
Director Compensation Table. The table below
summarizes the compensation paid to our non-management directors for service on the Board for the fiscal year ended December 31,
2021. In addition to the payments below, the Company reimburses directors for reasonable out-of-pocket expenses incurred
in connection with attending Board and Board committee meetings.
Name | |
Fees Earned in Cash ($) | | |
Stock Awards ($)(1)(2) | | |
All Other Compensation ($) | | |
Total ($) | |
James B. Avery(3) | |
| 56,000 | | |
| 176,936 | | |
| – | | |
| 255,936 | |
Stephanie Bowers(4) | |
| 14,835 | | |
| 262,385 | (5) | |
| – | | |
| 277,220 | |
Christopher Harland | |
| 50,000 | | |
| 176,936 | | |
| – | | |
| 226,936 | |
Christopher Lytle | |
| 40,000 | | |
| 176,936 | | |
| – | | |
| 216,936 | |
Brian Miller(6) | |
| 20,833 | | |
| – | | |
| – | | |
| 20,833 | |
Jeffrey Tuder | |
| 79,000 | | |
| 176,936 | | |
| – | | |
| 255,936 | |
_____________________
(1) |
Represents the aggregate grant date fair value of the equity awards granted in 2021 as computed in accordance with Accounting Standards Codification (“ASC”) Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 9, Share-based Compensation, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. |
(2) |
The following table shows, for each of our non-management directors, the aggregate number of shares subject to stock and option awards outstanding as of December 31, 2021. |
Name | |
Stock Awards (#) | | |
Option Awards (#) | |
James B. Avery (issued to Tavistock Financial LLC) | |
| 14,221 | | |
| – | |
Stephanie Bowers | |
| 28,070 | | |
| – | |
Christopher Harland | |
| 22,555 | | |
| – | |
Christopher Lytle | |
| 24,810 | | |
| – | |
Brian Miller | |
| – | | |
| – | |
Jeffrey Tuder | |
| 14,221 | | |
| 56,912 | |
(3) |
As required by the terms of his employment with Tavistock Financial, LLC, all cash director fees earned by Mr. Avery are paid to Tavistock Foundation, Inc., a non-profit incorporated and existing under the laws of the State of Florida, and all equity awards to which he would be entitled for service as a director of the Company are issued to Tavistock Financial LLC. |
(4) |
Ms. Bowers was appointed to the Board effective as of June 15, 2021. |
(5) |
Includes both the initial grant made to Ms. Bowers with three-year vesting and an annual grant. |
(6) |
Mr. Miller resigned from the Board effective March 1, 2021. |