This compensation discussion and analysis, which
reviews and discusses our compensation programs and policies for our 2020 named executive officers, should be read together with the compensation
tables and related disclosures included below. It contains forward-looking statements that are based on our current plans, considerations,
expectations and determinations regarding our compensation decisions and programs.
Highlights of developments involving our executive
compensation program in 2020 included the following:
At our 2018 annual meeting of stockholders, we
conducted an advisory vote of our stockholders to determine the frequency at which we conduct our Say on Pay vote. With over 94% of our
stockholders voting in favor of annual Say on Pay votes, we now intend to conduct an advisory Say on Pay vote annually.
We regularly conduct an extensive stockholder
outreach program. Following an extensive stockholder outreach program in late 2018 and early 2019, as well as affirmative actions by our
Compensation Committee in early 2019, over 98% of our stockholders voted in favor of approving the compensation of our named executive
officers at our 2019 annual meeting of stockholders, as disclosed in the proxy statement for that meeting. Our Compensation Committee
reviewed the results of the vote and the high level of stockholder support and concluded that it would continue to implement the changes
it took in early 2019 for the remainder of 2019 and compensation decisions for 2020. At our 2020 annual meeting of stockholders, over
98% of our stockholders again voted in favor of approving the compensation of our named executive officers, as disclosed in the proxy
statement for that meeting. Our Compensation Committee reviewed the results of the vote and the high level of stockholder support and
concluded that it would continue to maintain the compensation decisions and changes made in 2019 and 2020 for the remainder of 2020 and
into 2021.
Highlights of the changes that were made in 2019
and 2020 include the following:
Historically, our compensation programs have aimed
to conserve cash while attracting and retaining executive officers who are highly motivated to grow our business in the long term. As
with other growth-oriented companies in the wireless industry and the technology sector generally, we emphasize equity compensation, through
a mix of service-based and performance-based RSUs, to align the interests of management and stockholders, which we believe motivates the
management team to grow the business in the long term. The Compensation Committee continues to believe that the total cash compensation
of our named executive officers (including their base salary plus annual incentive bonus) should generally target the 50th percentile
of our selected peer group and that total direct compensation (total cash compensation plus equity awards) should generally target the
60th percentile of our selected peer group.
We recognize that our success depends to a great
degree on the integrity, knowledge, imagination, skill, diversity and teamwork of our employees. To this end, we designed, and intend
to modify as necessary, our compensation and benefits program and philosophy in order to attract, retain and motivate talented, highly
qualified and committed executive officers who share our business goals and corporate values. In doing so, we strive to reward achievement
of clear, easily measured performance goals that keep our executive officers focused on accomplishing our long-term business objectives,
while offering sufficient fixed compensation to remain competitive within our industry and geography. We expect to continue relying on
this approach in the future.
In general, our Compensation Committee makes compensation
decisions regarding our named executive officers. Our Compensation Committee is comprised of two members, Mr. Davis and Ms. Choka,
with Ms. Choka serving as Chair of the Committee. The Compensation Committee has overall responsibility for overseeing and, together
with input from the full Board of Directors as the Committee deems appropriate, approving the compensation of our Chief Executive Officer
and other executive officers.
We anticipate that our Chief Executive Officer
will continue to make recommendations to our Compensation Committee regarding compensation for other executive officers. However, while
our Compensation Committee will consider our Chief Executive Officer’s recommendations, it need not adopt these recommendations
and may adjust them as it deems appropriate. The Committee has authority to approve all compensation decisions regarding our executive
officers, although our Board of Directors also retains concurrent authority. The Committee may from time to time refer matters to the
entire Board of Directors in order to obtain input from other directors prior to making a decision and, if appropriate, may submit matters
for approval by the full Board of Directors. Other executive officers, including our Chief Financial Officer and our former Senior Vice
President Human Resources, participate in Compensation Committee meetings from time to time, primarily to present information to the Committee.
Our Compensation Committee has the authority to
engage the services of outside consultants and advisors to assist it in making decisions regarding our executive compensation programs.
The Croner Company has been retained by our Compensation Committee since 2014 to advise the Committee regarding the compensation of our
executive officers and non-employee directors. The Compensation Committee believes that The Croner Company’s deep expertise in the
technology industry provides the Committee with relevant and targeted advice.
To assist the Compensation Committee in evaluating
the different components of compensation to be paid to our named executive officers, the Compensation Committee relies on compensation
data from a group of peer companies developed with the assistance of The Croner Company. The Compensation Committee meets annually to
review the peer group for compensation decisions for the following year, and in late 2019 the Compensation Committee determined the companies
that would constitute our peer group for compensation decisions in 2020. The Croner Company identified potential peer companies among
telecom and technology companies with business models similar to ours, including competitors, companies with relevant GICS codes and their
peers. Once the larger population of companies was determined, The Croner Company applied a revenue guideline (companies within 40% to
250% of our revenue) and a market cap guideline (companies with a market cap equal to 25% on the low end and 400% on the high end of a
market cap range of $200M to $1B), accepting into the final peer group those companies meeting the criteria that are headquartered either
in California or in major metropolitan areas. The companies recommended by The Croner Company, and accepted by the Compensation Committee,
as peer companies for fiscal 2020 compensation (listed below) all fell within these guidelines.
2020 Fiscal Year Peer Group Companies:
•
|
8x8, Inc.
|
•
|
Limelight Networks, Inc.
|
•
|
Aerohive Networks, Inc.
|
•
|
MaxLinear, Inc.
|
•
|
Alaska Communications
|
•
|
MobileIron, Inc.
|
•
|
Aviat Networks, Inc.
|
•
|
ORBCOMM Inc.
|
•
|
Brightcove Inc.
|
•
|
Ribbon Communications Inc.
|
•
|
CalAmp Corp.
|
•
|
Spok Holdings, Inc.
|
•
|
Calix, Inc.
|
•
|
Synacor, Inc.
|
•
|
Carbonite, Inc.
|
•
|
Synchronoss Technologies, Inc.
|
•
|
Digi International Inc.
|
•
|
Telenav, Inc.
|
•
|
Globalstar, Inc.
|
•
|
Vocera Communications, Inc.
|
•
|
Internap Corporation
|
|
As the Compensation Committee meets annually to
review the peer group for compensation decisions for the following year, in late 2020 the Compensation Committee determined that it would
make the following changes to the fiscal year 2020 peer group, which would then be utilized for compensation decisions in 2021. Three
companies were removed due to acquisition or bankruptcy, and one due to market cap falling outside the targeted range. Six additional
companies were added, utilizing the same revenue guideline (companies within 40% to 250% of our revenue) but an updated market cap guideline
(companies with a market cap ranging from $50M to $4B). All but one of the companies recommended by The Croner Company for inclusion in
the peer group fell within these guidelines, with Fastly falling above the market cap range, but within the revenue guideline.
New Companies
Added for Fiscal Year 2021 Peer
Group
|
|
Companies
Removed for Fiscal Year 2021 Peer
Group
|
•
|
Applied Optoelectronics
|
|
•
|
Aerohive Networks, Inc.
|
•
|
ATN International
|
|
•
|
Carbonite, Inc.
|
•
|
Fastly
|
|
•
|
Internap Corporation
|
•
|
Iridium Communications
|
|
•
|
Synacor, Inc.
|
•
|
Ooma
|
|
|
•
|
Shenandoah Telecommunications
|
|
|
The compensation data from the peer group of companies
developed with The Croner Company is used in evaluating our executive compensation program. Data from relevant published compensation
surveys is reviewed in conjunction with the peer group when evaluating our executive compensation program. Our Compensation Committee
previously made the decision that the total cash compensation of our named executive officers (including their base salary plus annual
incentive target bonus) should generally target the 50th percentile of our selected peer group (and survey market data,
when applicable) and that total direct compensation (total cash compensation plus the grant date value of annual equity awards) should
generally target the 60th percentile of our selected peer group compensation data (and survey market data, when applicable).
Our Compensation Committee believes this targeted range for total direct compensation is appropriate primarily because companies we recruit
from or that recruit our employees tend to be significantly larger telecommunication or technology companies with greater pay practices.
Our Compensation Committee continued to work with these targeted ranges for fiscal 2020 compensation decisions.
When compared to the market data from the peer
group, our Compensation Committee’s decisions regarding fiscal year 2020 compensation for our named executive officers other than
Mr. Zeto (whose role was not included in the market data analysis as he was not a named executive officer in 2019) presents as follows:
|
•
|
Base salaries, on average as a group, were at 100% of the market 50th percentile, with individual base salaries ranging
from 88% to 106% of that percentile;
|
|
•
|
Total cash compensation (at target), on average as a group, was at 98% of the market 50th percentile, with individual
total cash compensation (at target) ranging from 78% to 112% of that percentile; and
|
|
•
|
Total direct compensation (at target), on average as a group, was at 107% of the market 60th percentile, with individual
total direct compensation (at target) ranging from 94% to 124% of that percentile.
|
Elements of Compensation
Our executive compensation program currently includes
the following components:
|
•
|
annual cash incentive bonus;
|
|
•
|
equity-based awards, including both service-based and performance-based awards; and
|
|
•
|
certain benefits upon involuntary termination of employment under specified circumstances.
|
The weight of each of these components has not
to date been determined by any particular formula, although our overall mix of total compensation has historically emphasized and continues
to emphasize equity-based awards for their long-term incentive and retention value. The specific mix of components has been and will continue
to be within the discretion and business judgment of our Board of Directors and the Compensation Committee.
The following table provides a breakdown for 2020
target compensation for our named executive officers. Fixed compensation is comprised of annual base salary and service-based equity awards,
as it does not vary based on the Company’s performance, whereas variable compensation is comprised of annual cash incentive bonuses
and performance-based equity awards, as the value of both components is inherently tied to the Company’s performance.
Named Executive Officer
|
|
Fixed
Compensation
(%)
|
|
|
Variable
Compensation(1)
(%)
|
|
Mike Finley
|
|
|
59
|
|
|
|
41
|
|
Peter Hovenier
|
|
|
61
|
|
|
|
39
|
|
Dawn Callahan
|
|
|
64
|
|
|
|
36
|
|
Derek Peterson
|
|
|
64
|
|
|
|
36
|
|
Michael J. Zeto III
|
|
|
68
|
|
|
|
32
|
|
Doug Lodder(2)
|
|
|
67
|
|
|
|
33
|
|
|
(1)
|
Includes annual cash incentive bonus and performance-based equity awards at target levels. For the 2019 and 2020 performance-based
RSUs, includes only the portion of the RSUs subject to the revenue and Adjusted EBITDA goals for the 2020 performance period, as the grant
date for the portions of the 2019 and 2020 performance-based RSUs subject to the revenue and Adjusted EBITDA goals for the 2021 and/or
2022 performance periods did not occur prior to December 31, 2020, as determined in accordance with provisions of Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation—Stock
Compensation.
|
|
(2)
|
Doug Lodder, our Senior Vice President, General Manager, resigned from the Company in October 2020.
|
Base Salary
We provide a base salary to our named executive
officers to compensate them for services rendered on a day-to-day basis during the year and to provide sufficient fixed cash compensation
to allow them to focus on their ongoing responsibilities. The base salaries of all executive officers are reviewed annually and adjusted
when necessary to reflect individual roles and performance as well as market conditions. In connection with the Compensation Committee’s
annual review process in January 2020, the following base salary increases were approved for our named executive officers other than
Messrs. Finley and Zeto. Mr. Finley’s base salary was negotiated at the time of his appointment as CEO in March 2019,
and the Compensation Committee determined that no adjustment would be made to it for 2020, based on market data from our peer group. Mr. Zeto’s
base salary was negotiated at the time of his hiring in March 2020.
Name
|
|
Increase in
Annual Base Salary
|
|
|
2020 Annual Base
Salary ($)
|
|
Peter Hovenier
|
|
|
2
|
%
|
|
|
377,917
|
|
Dawn Callahan
|
|
|
2
|
%
|
|
|
324,104
|
|
Derek Peterson
|
|
|
2
|
%
|
|
|
339,097
|
|
Doug Lodder
|
|
|
10
|
%
|
|
|
310,468
|
|
A paired comparison of base salary changes among
incumbents in the same position year-to-year in peer base salary data showed average base salary increases of 2% for chief financial officer
positions, and 2% for chief technology officer positions. Mr. Lodder’s increase also includes a market-based adjustment. Following
the base salary increases for our named executive officers, they were on average at 100% of the 50th percentile.
Annual Cash Incentive Bonuses
We use annual cash incentive bonuses to reward
our named executive officers for the achievement of Company performance goals. Each year, we adopt new corporate financial objectives
under our management incentive compensation plan to motivate and reward our senior executives, including our named executive officers,
to attain specific short-term performance objectives that, in turn, further our long-term business objectives. These objectives are based
upon corporate targets, rather than individual objectives. In setting target payout levels under our management incentive compensation
plan, our Compensation Committee considers historical payouts, the total cost to the Company should performance objectives be achieved
and our retention needs. The Compensation Committee retains discretion to reduce or eliminate payment under our management incentive compensation
plan.
For 2020, the performance goals under our management
incentive compensation plan included three corporate objectives: a company revenue goal, determined on a quarterly basis, and Adjusted
EBITDA and annual free cash flow, determined on an annual basis. For each goal, we established a threshold and a maximum achievement level,
as well as a weighting as a proportion of the total bonus target. The revenue and Adjusted EBITDA objectives have historically been selected
based on the desire to strongly encourage responsible revenue growth with profitability during the year as well as continued focus on
our long-term strategy of monetizing our high-density wireless networks. In recent years, and again for 2020, our Compensation Committee
determined it would be appropriate to include a free cash flow target for our named executive officers with a weighting of 10% of total
target opportunity, in order to continue our focus on non-revenue objectives as well as annual performance, and further determined it
appropriate to equally weight revenue at 45% and Adjusted EBITDA at 45%. This resulted in the relative weighting of annual objectives
at 55% of the total target opportunity and quarterly revenue-based objectives at 45% of the total target opportunity.
Target bonuses for our named executive officers
under the 2020 plan were as follows:
Named Executive Officer
|
|
Target
Bonus ($)
|
|
|
Percentage of
Base Salary
|
|
Mike Finley
|
|
|
500,000
|
|
|
|
100
|
%
|
Peter Hovenier
|
|
|
283,437
|
|
|
|
75
|
%
|
Dawn Callahan
|
|
|
178,257
|
|
|
|
55
|
%
|
Derek Peterson
|
|
|
186,503
|
|
|
|
55
|
%
|
Michael J. Zeto III
|
|
|
142,083
|
|
|
|
55
|
%
|
Doug Lodder
|
|
|
141,004
|
|
|
|
55
|
%
|
The 2020 target levels for each of the objectives
and actual achievement were as follows:
Financial Objective
|
|
2020 Target
Level
Achievement
|
|
|
Actual 2020
Achievement
Metrics
|
|
Revenue(1)
|
|
$
|
258,969,000
|
|
|
$
|
237,416,000
|
|
Adjusted EBITDA(2)
|
|
$
|
84,807,000
|
|
|
$
|
83,460,000
|
|
Free Cash Flow(3)
|
|
$
|
15,000,000
|
|
|
$
|
(33,714,000
|
)
|
|
(1)
|
For 2020, the revenue portion of the annual incentive bonus was originally approved to be determined and paid on a quarterly basis,
with the following target levels of achievement, weightings and actual achievement:
|
Applicable Quarter
|
|
|
Relative
Weighting
|
|
|
Target Level
Achievement
|
|
|
Actual
Achievement
|
|
1
|
|
|
|
10
|
%
|
|
$
|
60,322,000
|
|
|
$
|
59,886,000
|
|
2
|
|
|
|
11
|
%
|
|
$
|
63,250,000
|
|
|
$
|
58,672,000
|
|
3
|
|
|
|
12
|
%
|
|
$
|
67,778,000
|
|
|
$
|
58,754,000
|
|
4
|
|
|
|
12
|
%
|
|
$
|
67,619,000
|
|
|
$
|
60,104,000
|
|
|
(2)
|
For a discussion of Adjusted EBITDA, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 1, 2021.
|
|
(3)
|
For a discussion of free cash flow, see Exhibit 99.1 of our Form 8-K filed with the SEC on March 1, 2021.
|
In February 2021, our Compensation Committee
determined that the achievement of the financial objectives under the management incentive compensation plan for 2020 would result in
a payout at 70% of target based on the relative weightings and payout levels in the chart below. Actual payout for the revenue target
was approved by the Compensation Committee based on achievement on an annual basis in consideration of the volatility to quarterly revenues
resulting from COVID-19, rather than quarterly. For achievement above or below the targeted level, straight line interpolation was applied
to the target levels.
|
|
Revenue (45% total weight)
|
|
Adjusted EBITDA (45% total weight)
|
|
Free Cash Flow (10% total weight)
|
|
|
|
|
|
Payout
Level
|
|
|
Targeted
Achievement
|
|
|
|
|
Payout
Level
|
|
|
Targeted
Achievement
|
|
|
|
Payout
Level
|
|
|
Targeted
Achievement
|
|
Maximum
|
|
|
|
|
|
150
|
%
|
|
|
110% of Target
|
|
|
|
|
|
|
150
|
%
|
|
|
120% of Target
|
|
|
|
|
|
150
|
%
|
|
|
120% of Target
|
|
Target
|
|
|
|
|
|
100
|
%
|
|
$
|
258,969,000
|
|
|
|
|
|
|
100
|
%
|
|
$
|
84,807,000
|
|
|
|
|
|
100
|
%
|
|
$
|
15,000,000
|
|
|
|
|
Actual Achievement
|
|
|
58
|
%
|
|
|
92% of Target
|
|
|
Actual Achievement
|
|
|
|
97
|
%
|
|
|
98% of Target
|
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
|
|
|
50
|
%
|
|
|
90% of Target
|
|
|
|
|
|
|
50
|
%
|
|
|
70% of Target
|
|
|
|
|
|
50
|
%
|
|
|
70% of Target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Achievement
|
|
|
0
|
%
|
|
|
(225)% of Target
|
|
|
|
|
Revenue
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
Free Cash Flow
|
|
|
|
Actual Bonus Payout
|
|
|
|
(45% × 58%)
|
|
|
+
|
|
|
(45% × 97%)
|
|
+
|
|
|
(10% × 0%)
|
|
|
=70%
|
Actual bonus amounts paid to our named executive
officers for fiscal 2020 were as follows:
Named Executive Officer
|
|
Bonus
Payout ($)
|
|
Mike Finley
|
|
|
350,416
|
|
Peter Hovenier
|
|
|
198,642
|
|
Dawn Callahan
|
|
|
124,928
|
|
Derek Peterson
|
|
|
130,707
|
|
Michael J. Zeto III
|
|
|
100,006
|
|
Doug Lodder
|
|
|
28,443
|
(1)
|
|
(1)
|
Mr. Lodder’s bonus included quarterly revenue achievement for the first three quarters of 2020.
|
Long-Term Equity Incentive Award Program
We believe that equity-based awards encourage
our named executive officers to focus on the long-term performance of our business. Our Compensation Committee generally grants equity
awards annually to our executives and other employees in order to enable them to participate with our stockholders in the long-term value
of our stock price. Additionally, we believe our equity awards provide an important retention tool for our named executive officers, as
they are subject to multi-year vesting.
We currently use service-based and performance-based
RSUs for our long-term equity program. We believe that RSUs are the appropriate form of long-term incentive award for our Company in
the current competitive conditions facing the wireless industry in which we compete for executive talent, allowing us to both retain
current employees and attract new talent, as well as limit the dilution to our stockholders that our offering a stock option program
would impose. For named executive officers, we generally determine the number of RSUs to be granted by dividing the annual target grant
value approved for each officer by our Compensation Committee by the average trading price for the last five trading days of the prior
month preceding the date of grant.
2018
Equity Awards. In early 2018, our named executive officers other than Messrs. Finley, Hovenier and Zeto were granted RSUs,
with 50% of the aggregate grant value in the form of three-year service-based RSUs and 50% (at-target) in the form of performance-based
RSUs. The performance-based RSUs granted to Ms. Callahan, Dr. Peterson and Mr. Lodder in 2018 were subject to two equally-weighted
performance objectives: 50% of the at-target value was based upon achieving average revenue growth of 13% over a two-year period ending
on December 31, 2019, as compared with revenue in the year ending on December 31, 2017, and 50% was based upon an Adjusted EBITDA
margin target of 31.5%, measured at the end of 2019. The performance objectives were subject to under- or over- achievement on a sliding
scale, with a threshold of 50% of the target number of RSUs (for average revenue growth of 8% and an Adjusted EBITDA margin target of
26.5%) and a maximum of 150% of the target number of RSUs (for average revenue growth of 18% and an Adjusted EBITDA margin target of 36.5%),
with straight-line interpolation applied between performance increments.
In March 2020, our Compensation Committee
determined that the average revenue growth over the two-year period ending on December 31, 2019 was 8.4% and the Adjusted EBITDA
margin was 36.2%, resulting in achievement of the 2018 performance-based RSUs at 100.5% of the target objective. As a result, each of
our named executive officers other than Messrs. Finley, Hovenier and Zeto became eligible to vest in 6,374 RSUs. 662/3%
of such RSUs vested on the date achievement was determined, and the remainder will vest in four equal quarterly installments beginning
on May 1, 2020, subject to the executive officer’s continued service through each vesting date.
2019
Equity Awards. In February 2019 our Compensation Committee approved the following RSU grants for our named executive officers
other than Mr. Finley, whose equity awards were granted when he was appointment our Chief Executive Officer, in March 2019 (with
the same terms and conditions as the RSUs granted to our other named executive officers in February 2019), and Mr. Zeto, who
was not employed by us in 2019:
Executive Officer
|
|
Aggregate
Number of
RSUs (at target)
|
|
|
Service-Based
Vesting
RSUs
|
|
|
Performance-
Based Vesting
RSUs (at target)
|
|
Mike Finley
|
|
|
93,640
|
|
|
|
46,820
|
|
|
|
46,820
|
|
Peter Hovenier
|
|
|
38,610
|
|
|
|
19,305
|
|
|
|
19,305
|
|
Dawn Callahan
|
|
|
13,942
|
|
|
|
6,971
|
|
|
|
6,971
|
|
Derek Peterson
|
|
|
38,610
|
|
|
|
19,305
|
|
|
|
19,305
|
|
Doug Lodder
|
|
|
13,942
|
|
|
|
6,971
|
|
|
|
6,971
|
|
The service-based vesting RSUs granted to our
named executive officers other than Messrs. Finley and Hovenier in 2019 vest in equal quarterly installments over three years of
continued service; the service-based vesting RSUs granted to Messrs. Finley and Hovenier in 2019 vest in annual installments over
three years of continued service. The performance-based vesting RSUs granted to our named executive officers in 2019 (the “2019
PSUs”) are subject to three performance-based objectives – revenue (weighted in total at 45%, with three consecutive one-year
performance periods weighted at 15% each), EBITDA (weighted in total at 45%, with three consecutive one-year performance periods weighted
at 15% each) and rTSR (weighted at 10%, for a three-year performance period). Achievement of the revenue and Adjusted EBITDA goals for
the 2019 PSUs is based upon the annual operating budgets established for each of the years in the three-year performance period. As a
result, as we approve budgets on an annual basis, the performance targets for the 2019 PSUs related to revenue and Adjusted EBITDA goals
will be set. Actual achievement of each of the performance metrics will be determined using the sliding scales set forth below, with straight
line interpolation applied between performance increments. 2019 PSUs which become eligible to vest based on achievement will vest on February 1,
2022 (April 1, 2022 for Mr. Finley), provided the named executive officer remains in continuous service through such date.
Revenue Achievement as a Percentage of Revenue Target
|
|
Percentage of Revenue
RSUs Eligible to Vest
|
|
Below 90%
|
|
|
0
|
%
|
At 90% (threshold)
|
|
|
50
|
%
|
At 100% (target)
|
|
|
100
|
%
|
At and above 110% (maximum)
|
|
|
150
|
%
|
EBITDA Achievement as a Percentage of EBITDA Target
|
|
Percentage of EBITDA
RSUs Eligible to Vest
|
|
Below 70%
|
|
|
0
|
%
|
At 70% (threshold)
|
|
|
50
|
%
|
At 100% (target)
|
|
|
100
|
%
|
At and above 120% (maximum)
|
|
|
150
|
%
|
rTSR Achievement as a Percentile Against the Russell 2000 Performance
|
|
Percentage of rTSR
RSUs Eligible to Vest
|
|
Below 25th Percentile
|
|
|
0
|
%
|
At 25th Percentile (threshold)
|
|
|
50
|
%
|
At 50th Percentile (target)
|
|
|
100
|
%
|
At and above 75th Percentile
|
|
|
150
|
%
|
Based on the consolidated financial statements
included in our Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 2, 2020, achievement of
the revenue goal for the one-year period ending on December 31, 2019 was 95.1% and achievement for the Adjusted EBITDA goal for the
one-year period ending on December 31, 2019 was 96.9%, resulting in achievement at 75.3% and 94.8% of the target objective for revenue
and Adjusted EBITDA, respectively, for the 2019 performance period. Based on the consolidated financial statements included in our Form 10-K
for the year ended December 31, 2020 as filed with the SEC on March 1, 2021, achievement for the revenue goal for the one-year
period ending on December 31, 2020 was 91.7% and achievement for the Adjusted EBITDA goal for the one-year period ending on December 31,
2020 was 98.4%, resulting in achievement at 58.4% and 97.4% of the target objective for revenue and Adjusted EBITDA, respectively, for
the 2020 performance period.
As a result, our named executive officers became
eligible to vest in the following 2019 PSUs for the 2019 and 2020 performance periods:
Executive Officer
|
|
2019 Performance
Period
|
|
|
2020 Performance
Period
|
|
Mike Finley
|
|
|
11,943
|
|
|
|
10,937
|
|
Peter Hovenier
|
|
|
4,925
|
|
|
|
4,510
|
|
Dawn Callahan
|
|
|
1,778
|
|
|
|
1,628
|
|
Derek Peterson
|
|
|
4,925
|
|
|
|
4,510
|
|
Doug Lodder
|
|
|
1,778
|
(1)
|
|
|
—
|
(1)
|
|
(1)
|
As a result of Mr. Lodder’s termination of employment in October 2020, all of his 2019 PSUs were forfeited at that
time and he will not be eligible to vest in any such PSUs.
|
2020
Equity Awards. In January 2020, our Compensation Committee approved the following RSU grants for our named executive officers
other than Mr. Zeto, whose equity awards were granted when he was hired in March 2020 (with the same terms and conditions as
the RSUs granted to our other named executive officers in January 2020):
Executive Officer
|
|
Aggregate
Number of
RSUs (at target)
|
|
|
Service-Based
Vesting
RSUs
|
|
|
Performance-
Based Vesting
RSUs (at target)
|
|
Mike Finley
|
|
|
192,307
|
|
|
|
96,154
|
|
|
|
96,153
|
|
Peter Hovenier
|
|
|
83,612
|
|
|
|
41,806
|
|
|
|
41,806
|
|
Dawn Callahan
|
|
|
27,173
|
|
|
|
13,587
|
|
|
|
13,586
|
|
Derek Peterson
|
|
|
75,250
|
|
|
|
37,625
|
|
|
|
37,625
|
|
Michael J. Zeto III
|
|
|
44,673
|
|
|
|
22,337
|
|
|
|
22,336
|
|
Doug Lodder
|
|
|
62,709
|
|
|
|
31,355
|
|
|
|
31,354
|
|
Both the service-based vesting RSUs and performance-based
vesting RSUs granted to our named executive officers in 2020 have the same vesting terms and conditions as the service-based vesting
RSUs and performance-based vesting RSUs granted to our named executive officers in 2019; provided, however that the performance-based
vesting RSUs granted to our named executive officers in 2020 (the “2020 PSUs”) are subject to performance periods commencing
on January 1, 2020 (rather than January 1, 2019) and 2020 PSUs which become eligible to vest based on achievement will vest
on February 1, 2023 (April 1, 2023 for Mr. Zeto), provided the named executive officer remains in continuous service through
such date.
Based on the consolidated financial statements
included in our Form 10-K for the year ended December 31, 2020 as filed with the SEC on March 1, 2021, achievement for
the revenue goal for the one-year period ending on December 31, 2020 was 91.7% and achievement for the Adjusted EBITDA goal for the
one-year period ending on December 31, 2020 was 98.4%, resulting in achievement of the 2020 PSUs at 58.4% and 97.4% of the target
objective for revenue and Adjusted EBITDA, respectively, for the 2020 performance period. As a result, each of our named executive officers
(excluding Mr. Lodder, who terminated employment with the Company in October 2020, at which time all of his 2020 PSUs were forfeited),
became eligible to vest in the following 2020 PSUs for the 2020 performance period:
Executive Officer
|
|
2020 Performance
Period
|
|
Mike Finley
|
|
|
22,462
|
|
Peter Hovenier
|
|
|
9,766
|
|
Dawn Callahan
|
|
|
3,174
|
|
Derek Peterson
|
|
|
8,790
|
|
Michael J. Zeto III
|
|
|
5,218
|
|
Severance and Change of Control Benefits
Our Board of Directors believes that it is necessary
to offer senior members of our executive team severance benefits to ensure that they remain focused on executing our strategic plans,
including in the event of a proposed or actual acquisition. We have entered into employment agreements with our named executive officers
to provide them with additional severance benefits upon an involuntary termination of employment under specified circumstances prior to
and following a change of control. The terms of these agreements are described below in “Severance or Employment Agreements.”
Additionally, the 2018 RSUs granted to Ms. Callahan,
Dr. Peterson and Mr. Lodder and the 2019 and 2020 RSUs granted to all our named executive officers provide that if the officer
were to be involuntarily terminated outside the change of control context, then they would be treated as vested in a number of shares
underlying the award equal to the sum of the number of shares applying a monthly pro-rata vesting over the three-year overall vesting
schedule (with the performance-based RSUs determined at 100% of target if before the date performance has been determined to be achieved,
and at the actual level of achievement if after such date), plus in Mr. Finley’s case an additional 24 months of vesting,
in Mr. Hovenier’s case an additional 12 months of vesting or in Ms. Callahan’s, Dr. Peterson’s,
Mr. Zeto’s or Mr. Lodder’s case, an additional 9 months of vesting. Upon an involuntary termination in connection
with a change of control, each officer would be entitled to full vesting of these awards, with achievement of the performance-based award
deemed to be at-target if the transaction occurred prior to the end of the performance period.
Perquisites
We do not provide any significant perquisites
or other personal benefits to our named executive officers except for the one-time relocation benefits for Mr. Finley related to
his initial employment package when he joined us as our Chief Executive Officer.
Benefits
We provide the following benefits, which we believe
are typical of the companies with which we compete for employees, to our named executive officers on the same basis provided to all of
our employees:
|
•
|
health, dental and vision insurance;
|
|
•
|
life insurance and accidental death and dismemberment insurance;
|
|
•
|
an employee assistance plan;
|
|
•
|
short and long-term disability insurance;
|
|
•
|
a medical and dependent care flexible spending account; and
|
|
•
|
a health savings account.
|
Corporate Governance Considerations
Stock
Ownership Guidelines. Our stock ownership guidelines reinforce our Board of Directors’ belief that executives and members
of the Board who believe in our future should have meaningful equity holdings in the Company. The ownership guidelines provided for a
three-year transition period from their adoption in 2016, and require that our directors hold shares and share equivalents equal in value
to three times their annual retainer and that each of our executive officers hold shares and share equivalents equal in value to a multiple
of base salary, specifically, six times base salary for our Chief Executive Officer and one times base salary for each of our other executive
officers. For purposes of the stock ownership guidelines, vested RSUs and vested and in-the-money options will be counted toward the applicable
requirement. With the exception of Ms. Callahan, all of our named executive officers subject to the ownership guidelines (i.e., they
have served as executive officers for at least three years) are currently in compliance therewith.
Anti-Hedging
and Anti-Pledging. We have a policy that prohibits any hedging or pledging transactions of our securities by our directors
and executive officers. This policy does not allow for exceptions or waivers to such prohibitions on hedging and pledging.
Recoupment
Policy. In 2020, based upon feedback received from ongoing stockholder outreach, and at the recommendation of the Compensation
Committee, our Board of Directors adopted a recoupment policy that applies to executive officers and covers all incentive compensation
received after the date the policy was adopted. The policy applies in the event our financial results are restated as a result of material
non-compliance with financial reporting requirements under the federal securities laws and provides our Board with broad discretion as
to what actions may be taken based on circumstances leading to the restatement, including recovery of incentive compensation received
by an executive officer in excess of what the executive officer would have been paid under the restatement.
Risk Considerations
As discussed in “Risk Oversight Management”
above, the Compensation Committee reviews our compensation programs annually and concluded in 2020 that such programs do not create risks
that could be reasonably likely to have a material adverse effect on us.
Tax Considerations
We do not provide any tax gross-ups to our executive
officers or directors.
Section 162(m) of the Internal Revenue
Code of 1986, as amended, limits deductibility of certain compensation to $1.0 million per year for the Chief Executive Officer
and certain other executive officers. Prior to changes in tax law taking effect in 2018, there was an exception to the $1.0 million
limitation for performance-based compensation, including stock options, meeting certain requirements. Historically, the stock options
we have granted to named executive officers were designed to qualify as performance-based compensation for purposes of Section 162(m),
as well as a portion of our performance-based RSUs. However, to maintain flexibility in compensating our executive officers in a manner
designed to achieve our strategic goals, contractual commitments and such other factors as our Compensation Committee considered in its
judgment to be appropriate, our Compensation Committee does not have a policy requiring all compensation to be deductible.
As a result of the repeal of the exemption from
the Section 162(m) deduction limit for performance-based compensation, effective for taxable years beginning after December 31,
2017, we will not be able to deduct compensation in excess of $1.0 million paid in a single tax year to our Chief Executive Officer
and to certain other executive officers.
Compensation
Committee Report(1)
The Compensation Committee has reviewed and discussed
the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee
has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the following members of the Compensation
Committee:
Michele Vion Choka
Chuck Davis
|
(1)
|
The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to
be incorporated by reference in any filing of Boingo Wireless under the Securities Act or the Exchange Act, whether made before or after
the date hereof and irrespective of any general incorporation language in any such filing.
|
2020 Summary Compensation
Table
The following table provides information regarding
the compensation of our “principal executive officer,” our former “principal executive officer,” our “principal
financial officer,” and our next three most highly compensated executive officers during the 2020 fiscal year. We refer to these
individuals as our “named executive officers.”
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Stock
Awards(1)
($)
|
|
|
Non-Equity
Incentive Plan
Compensation(2)
($)
|
|
|
Bonus(3)
($)
|
|
|
All Other
Compensation(4)
($)
|
|
|
Total
($)
|
|
Mike Finley(5)
|
|
|
2020
|
|
|
|
500,000
|
|
|
|
1,730,460
|
|
|
|
302,328
|
|
|
|
48,088
|
|
|
|
61,050
|
(6)
|
|
|
2,641,926
|
|
Chief Executive Officer
|
|
|
2019
|
|
|
|
395,833
|
|
|
|
1,451,888
|
|
|
|
317,290
|
|
|
|
52,454
|
|
|
|
360,132
|
|
|
|
2,577,597
|
|
Peter Hovenier
|
|
|
2020
|
|
|
|
377,916
|
|
|
|
748,474
|
|
|
|
171,382
|
|
|
|
27,260
|
|
|
|
8,550
|
|
|
|
1,333,582
|
|
Chief Financial Officer
|
|
|
2019
|
|
|
|
370,506
|
|
|
|
990,219
|
|
|
|
235,206
|
|
|
|
—
|
|
|
|
8,400
|
|
|
|
1,604,331
|
|
|
|
|
2018
|
|
|
|
360,000
|
|
|
|
—
|
|
|
|
300,994
|
|
|
|
—
|
|
|
|
8,250
|
|
|
|
669,244
|
|
Dawn Callahan
|
|
|
2020
|
|
|
|
324,104
|
|
|
|
245,856
|
|
|
|
107,784
|
|
|
|
17,144
|
|
|
|
8,550
|
|
|
|
703,438
|
|
Chief Marketing Officer
|
|
|
2019
|
|
|
|
317,749
|
|
|
|
235,851
|
|
|
|
147,924
|
|
|
|
—
|
|
|
|
8,400
|
|
|
|
709,924
|
|
|
|
|
2018
|
|
|
|
303,000
|
|
|
|
305,811
|
|
|
|
185,693
|
|
|
|
—
|
|
|
|
8,250
|
|
|
|
802,754
|
|
Derek Peterson
|
|
|
2020
|
|
|
|
339,097
|
|
|
|
680,813
|
|
|
|
112,770
|
|
|
|
17,937
|
|
|
|
8,550
|
|
|
|
1,159,167
|
|
Chief Technology Officer
|
|
|
2019
|
|
|
|
332,448
|
|
|
|
653,218
|
|
|
|
154,767
|
|
|
|
—
|
|
|
|
8,400
|
|
|
|
1,148,833
|
|
|
|
|
2018
|
|
|
|
317,000
|
|
|
|
305,811
|
|
|
|
194,283
|
|
|
|
—
|
|
|
|
8,250
|
|
|
|
825,344
|
|
Michael J. Zeto III(7)
|
|
|
2020
|
|
|
|
258,333
|
|
|
|
372,125
|
|
|
|
79,236
|
|
|
|
20,770
|
|
|
|
7,438
|
|
|
|
737,902
|
|
Senior Vice President, Strategy and Emerging Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doug Lodder(8)
|
|
|
2020
|
|
|
|
256,371
|
|
|
|
544,060
|
|
|
|
28,443
|
|
|
|
—
|
|
|
|
29,718
|
(9)
|
|
|
858,592
|
|
Former Senior Vice President, General Manager
|
|
|
2019
|
|
|
|
282,243
|
|
|
|
235,851
|
|
|
|
131,395
|
|
|
|
—
|
|
|
|
8,400
|
|
|
|
657,889
|
|
|
(1)
|
The amounts in this column represent the aggregate grant date fair value of stock awards granted to the officer in the applicable
fiscal year computed in accordance with FASB ASC Topic 718. See Notes 2 and 19 of the notes to our audited consolidated financial
statements included in our Annual Report on Form 10-K for a discussion of the assumptions made by the Company in determining the
grant date fair value of its equity awards. In accordance with SEC rules, the grant date fair value of any award subject to a performance
condition is based on the probable outcome of the performance conditions. In 2020, each named executive officer was granted both performance-based
RSUs, the vesting of which is contingent upon the Company’s achievement of revenue, EBITDA margin and rTSR targets, and service-based
RSUs, as described in greater detail in the “Long-Term Equity Incentive Award Program” section of the “Compensation
Discussion and Analysis” beginning on page 21. For the performance-based RSUs granted to our named executive officers in
2019 and 2020, only the portion of such awards with a grant date in the 2020 fiscal year (as determined in accordance with FASB ASC Topic
718) has been included at their “target” level (100%), which the Company determined was the probable outcome for such awards
at the time of grant. The grant date fair value of the 2020 service-based RSUs included in this column is as follows: Mr. Finley:
$1,111,540; Mr. Hovenier: $483,277; Ms. Callahan: $157,066; Dr. Peterson: $434,945; Mr. Zeto: $265,810; and Mr. Lodder:
$373,125. The grant date fair value of the 2019 performance-based RSUs included in this column with a grant date in 2020, assuming achievement
at the maximum level (150%) for each of the named executive officers, is as follows: Mr. Finley: $261,466; Mr. Hovenier: $107,818;
Ms. Callahan: $38,942; Dr. Peterson: $107,818; and Mr. Lodder: $38,943. The grant date fair value of the 2020 performance-based
RSUs included in this column with a grant date in 2020, assuming achievement at the maximum level (150%) for each of the named executive
officers, is as follows: Mr. Finley: $666,914; Mr. Hovenier: $289,977; Ms. Callahan: $94,243; Dr. Peterson: $260,984;
Mr. Zeto: $159,472; and Mr. Lodder: $217,461.
|
|
(2)
|
Represents amounts paid under our 2020 management incentive compensation plan.
|
|
(3)
|
The amounts shown for 2020 in this column represent the portion of the
total amount paid under our 2020 management incentive plan that was attributable to the Compensation
Committee’s decision to determine our revenue achievement under the 2020 management
incentive plan on an annual basis rather than quarterly, following the close of the fiscal
year, as described in greater detail in the “Annual Cash Incentive Bonuses”
section of the “Compensation Discussion and Analysis” beginning on page 20.
|
|
(4)
|
The amounts shown for 2020 as All Other Compensation for our named executive officers other than Messrs. Finley and Lodder include
matching contributions made under our 401(k) plan during 2020. The 401(k) contributions are provided to our executive officers
on the same basis as those provided to all other regular U.S. employees.
|
|
(5)
|
Mr. Finley was appointed as our Chief Executive Officer in 2019. Accordingly, compensation information is not provided for 2018.
|
|
(6)
|
Consists of (i) $52,500 of Company-paid relocation expenses and (ii) $8,550 in matching contributions made under our 401(k) plan.
|
|
(7)
|
Mr. Zeto commenced employment with us in March 2020. Accordingly, compensation information is not provided for 2018 or 2019.
|
|
(8)
|
Mr. Lodder was employed by us, but was not one of our named executive officers in 2018. Accordingly, compensation information
is not provided for 2018. Further, Mr. Lodder’s employment with the Company terminated in October 2020.
|
|
(9)
|
Consists of (i) $21,168 of severance expenses and (ii) $8,550 in matching contributions made under our 401(k) plan.
|
2020 Grants of Plan-Based Awards
The following table sets forth certain information
regarding each plan-based award granted to our named executive officers during our 2020 fiscal year.
|
|
|
|
|
|
Estimated Future/Possible
Payouts Under Non-Equity
Incentive Plan Awards(1)
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Board
Approval
Date
|
|
Minimum
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All
Other
Stock
Awards :
Number
of
Shares
of
Stock or
Units
(#)
|
|
|
Grant Date
Fair
Value
of Stock
Awards
($)(2)
|
|
Mike Finley
|
|
N/A
|
|
N/A
|
|
|
250,000
|
|
|
|
500,000
|
|
|
|
750,000
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1/28/20
|
|
3/21/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,512
|
(3)
|
|
|
14,046
|
(3)
|
|
|
21,069
|
(3)
|
|
|
|
|
|
|
174,311
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
96,154
|
|
|
|
1,111,540
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
4,808
|
(4)
|
|
|
38,461
|
(4)
|
|
|
57,692
|
(4)
|
|
|
—
|
|
|
|
444,609
|
|
Peter Hovenier
|
|
N/A
|
|
N/A
|
|
|
141,719
|
|
|
|
283,437
|
|
|
|
425,156
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1/28/20
|
|
2/21/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,448
|
(3)
|
|
|
5,792
|
(3)
|
|
|
8,688
|
(3)
|
|
|
—
|
|
|
|
71,879
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,806
|
|
|
|
483,277
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,091
|
(4)
|
|
|
16,723
|
(4)
|
|
|
25,085
|
(4)
|
|
|
—
|
|
|
|
193,318
|
|
Dawn Callahan
|
|
N/A
|
|
N/A
|
|
|
89,128
|
|
|
|
178,257
|
|
|
|
267,385
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1/28/20
|
|
2/4/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
523
|
(3)
|
|
|
2,092
|
(3)
|
|
|
3,138
|
(3)
|
|
|
—
|
|
|
|
25,962
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,587
|
|
|
|
157,066
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
680
|
(4)
|
|
|
5,435
|
(4)
|
|
|
8,153
|
(4)
|
|
|
—
|
|
|
|
62,829
|
|
Derek Peterson
|
|
N/A
|
|
N/A
|
|
|
93,252
|
|
|
|
186,503
|
|
|
|
279,755
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1/28/20
|
|
2/4/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,448
|
(3)
|
|
|
5,792
|
(3)
|
|
|
8,688
|
(3)
|
|
|
—
|
|
|
|
71,879
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,625
|
|
|
|
434,945
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,882
|
(4)
|
|
|
15,051
|
(4)
|
|
|
22,577
|
(4)
|
|
|
—
|
|
|
|
173,990
|
|
Michael J. Zeto III
|
|
N/A
|
|
N/A
|
|
|
85,250
|
|
|
|
170,500
|
|
|
|
255,750
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3/2/20
|
|
3/2/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,337
|
|
|
|
265,810
|
|
|
|
3/2/20
|
|
3/2/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,117
|
(4)
|
|
|
8,934
|
(4)
|
|
|
13,401
|
(4)
|
|
|
—
|
|
|
|
106,315
|
|
Doug Lodder
|
|
N/A
|
|
N/A
|
|
|
85,379
|
|
|
|
170,757
|
|
|
|
256,136
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1/28/20
|
|
2/4/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
523
|
(3)
|
|
|
2,092
|
(3)
|
|
|
3,138
|
(3)
|
|
|
—
|
|
|
|
25,962
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,355
|
|
|
|
373,125
|
|
|
|
2/3/20
|
|
2/3/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,568
|
(4)
|
|
|
12,541
|
(4)
|
|
|
18,812
|
(4)
|
|
|
—
|
|
|
|
144,974
|
|
|
(1)
|
Each named executive officer was granted a non-equity incentive plan award pursuant to our 2020 management incentive compensation
plan which is discussed in greater detail in the “Annual Cash Incentive Bonuses” section of the “Compensation
Discussion and Analysis,” beginning on page 20. The amounts show in the “target” column reflect the target
payout under the plan. The target amount is equal to 100% of Mr. Finley’s annual base salary, 75% of Mr. Hovenier’s
annual base salary, and 55% of Ms. Callahan’s, Dr. Peterson’s, Mr. Zeto’s , and Mr. Lodder’s
annual base salary. The amounts shown in the “minimum” column reflect the minimum payout of 50% of the target bonus amount
if 90% of the revenue, 70% of the Adjusted EBITDA and 70% of the free cash flow targets are achieved. The amounts shown in the “maximum”
column reflect the maximum payout of 150% of the target bonus amount if 110% of the revenue, 120% of the Adjusted EBITDA and 120% of the
free cash flow targets are achieved. The actual amounts paid to each named executive officer are shown in the Summary Compensation Table
on page 27.
|
|
(2)
|
The amounts represent the aggregate grant date fair value of stock awards granted to the officer in the applicable fiscal year computed
in accordance with FASB ASC Topic 718. See Notes 2 and 19 of the notes to our audited consolidated financial statements included
in our Annual Report on Form 10-K for a discussion of the assumptions made by the Company in determining the grant date fair value
of its equity awards. For the performance-based RSUs reflected in the table, the grant date fair value assumes such RSUs will become eligible
to vest at their “target” level (100%), which the Company determined was the probable outcome for such awards at the time
of grant. The grant date fair value of such performance-based RSUs assuming achievement at the maximum level (150%) is set forth in footnote
1 to the Summary Compensation Table on page 27.
|
|
(3)
|
Each of our named executive officers except for Mr. Zeto was granted performance-based RSUs under our 2011 Equity Incentive Plan
in 2019, the vesting of 15% of which is related to the Company’s 2020 revenue growth and an additional 15% of which is related to
the Company’s EBITDA margin at the end of 2020, as discussed in greater detail in the “Long-Term Equity Incentive Award
Program” section of the “Compensation Discussion and Analysis,” beginning on page 21. The number of
RSUs reflected in the table represents only the portion of such awards with a grant date in the 2020 fiscal year, as determined in accordance
with FASB ASC Topic 718. The “threshold” amount represents the minimum number of such RSUs that will be eligible to vest on
February 1, 2022 (excluding Mr. Finley, whose 2019 performance-based RSUs will vest on April 1, 2022), subject to the named
executive officer’s continued service with the Company through such date and achievement of either the 2020 revenue growth performance
metric or the metric related to the Company’s EBITDA margin at the end of 2020, at their minimum achievement level. The number of
RSUs reflected in the table above as the “target” requires full achievement of the 2020 revenue and EBITDA margin targets
and will only vest based on continued service with the Company through February 1, 2022 (excluding Mr. Finley, whose 2019 performance-based
RSUs will vest on April 1, 2022). The number of RSUs reflected in the table above as the “maximum” requires overachievement
of the 2020 revenue and EBITDA margin targets and will only vest based on continued service with the Company through February 1,
2022 (excluding Mr. Finley, whose 2019 performance-based RSUs will vest on April 1, 2022).
|
|
(4)
|
Each of our named executive officers was granted performance-based RSUs under our 2011 Equity Incentive Plan in 2020, the vesting
of 45% of which is related to the Company’s 2020, 2021 and 2022 revenue growth, an additional 45% of which is related to the Company’s
EBITDA margin at the end of each of 2020, 2021 and 2022, and the remaining 10% of which is related to the Company’s stock price
performance over the three-year period ending December 31, 2022 as measured against the performance of the Russell 2000 index over
the same period, as discussed in greater detail in the “Long-Term Equity Incentive Award Program” section of the “Compensation
Discussion and Analysis,” beginning on page 21. The number of RSUs reflected in the table represents only the portion of
such awards with a grant date in the 2020 fiscal year, as determined in accordance with FASB ASC Topic 718. The “threshold”
amount represents the minimum number of such RSUs that will be eligible to vest on February 1, 2023 (excluding Mr. Zeto, whose
2020 performance-based RSUs will vest on April 1, 2023), subject to the named executive officer’s continued service with the
Company through such date and achievement of the stock price performance metric at its minimum achievement level. The number of RSUs reflected
in the table above as the “target” requires full achievement of the 2020 revenue and EBITDA margin targets and three-year
stock price performance metric and will only vest based on continued service with the Company through February 1, 2023 (excluding
Mr. Zeto, whose 2020 performance-based RSUs will vest on April 1, 2023). The number of RSUs reflected in the table above as
the “maximum” requires overachievement of the 2020 revenue and EBITDA margin targets and three-year stock price performance
metric and will only vest based on continued service with the Company through February 1, 2023 (excluding Mr. Zeto, whose 2020
performance-based RSUs will vest on April 1, 2023).
|
Outstanding Equity Awards
at 2020 Fiscal Year-End
The following table sets forth information regarding
each unexercised option and all unvested RSUs held by each of our named executive officers as of December 31, 2020.
The vesting schedule applicable to each outstanding
award is described in the footnotes to the table below. For information regarding the vesting acceleration provisions applicable to the
options and RSUs held by our named executive officers excluding Mr. Lodder, who terminated his employment with the Company in October 2020,
please see the section titled “2020 Potential Payments Upon Termination or Change in Control” below.
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Initial
Vesting
Date
|
|
Number of
Securities
Underlying
Unexercised
Options—
Vested
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options—
Unvested
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares or
Units of
Stock that
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(1)
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested(1)
($)
|
|
Mike Finley
|
|
04/01/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,214
|
(2)
|
|
|
397,042
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/01/21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
96,154
|
(2)
|
|
|
1,223,079
|
|
|
|
—
|
|
|
|
—
|
|
|
|
04/01/22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,884
|
(3)
|
|
|
291,085
|
|
|
|
28,092
|
(4)
|
|
|
357,330
|
|
|
|
02/01/23
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,471
|
(5)
|
|
|
285,831
|
|
|
|
100,961
|
(6)
|
|
|
1,284,218
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
172,723
|
|
|
|
2,197,037
|
|
|
|
129,053
|
|
|
|
1,641,548
|
|
Peter Hovenier
|
|
02/01/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,871
|
(2)
|
|
|
163,719
|
|
|
|
—
|
|
|
|
—
|
|
|
|
08/01/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,435
|
(7)
|
|
|
81,853
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/01/21
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,806
|
(2)
|
|
|
531,772
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/01/22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,436
|
(3)
|
|
|
120,026
|
|
|
|
11,585
|
(4)
|
|
|
147,355
|
|
|
|
02/01/23
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,769
|
(5)
|
|
|
124,262
|
|
|
|
43,896
|
(6)
|
|
|
558,357
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80,317
|
|
|
|
1,021,632
|
|
|
|
55,481
|
|
|
|
705,712
|
|
Dawn Callahan
|
|
06/03/12
|
|
|
7,993
|
|
|
|
—
|
|
|
|
13.50
|
|
|
|
05/03/21
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
05/01/18
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
528
|
(8)
|
|
|
6,716
|
|
|
|
—
|
|
|
|
—
|
|
|
|
05/01/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,905
|
(8)
|
|
|
36,952
|
|
|
|
—
|
|
|
|
—
|
|
|
|
03/11/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
534
|
(9)
|
|
|
6,792
|
|
|
|
—
|
|
|
|
—
|
|
|
|
05/01/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,190
|
(2)
|
|
|
129,617
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/01/22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,406
|
(3)
|
|
|
43,324
|
|
|
|
4,184
|
(4)
|
|
|
53,214
|
|
|
|
02/01/23
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,175
|
(5)
|
|
|
40,386
|
|
|
|
14,265
|
(6)
|
|
|
181,451
|
|
|
|
|
|
|
7,993
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,738
|
|
|
|
263,787
|
|
|
|
18,449
|
|
|
|
234,665
|
|
Derek Peterson
|
|
05/01/18
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
528
|
(8)
|
|
|
6,716
|
|
|
|
—
|
|
|
|
—
|
|
|
|
05/01/19
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,044
|
(8)
|
|
|
102,320
|
|
|
|
—
|
|
|
|
—
|
|
|
|
03/11/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
534
|
(9)
|
|
|
6,792
|
|
|
|
—
|
|
|
|
—
|
|
|
|
05/01/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,218
|
(8)
|
|
|
358,933
|
|
|
|
—
|
|
|
|
—
|
|
|
|
02/01/22
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,436
|
(3)
|
|
|
120,026
|
|
|
|
11,585
|
(4)
|
|
|
147,355
|
|
|
|
02/01/23
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,793
|
(5)
|
|
|
111,847
|
|
|
|
39,506
|
(6)
|
|
|
502,510
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55,553
|
|
|
|
706,634
|
|
|
|
51,091
|
|
|
|
649,865
|
|
Michael J. Zeto III
|
|
07/01/20
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,614
|
(8)
|
|
|
236,770
|
|
|
|
—
|
|
|
|
—
|
|
|
|
04/01/23
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,218
|
(5)
|
|
|
66,373
|
|
|
|
23,454
|
(6)
|
|
|
298,335
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,832
|
|
|
|
303,143
|
|
|
|
23,454
|
|
|
|
298,335
|
|
|
(1)
|
The closing price of a share of our common stock on December 31, 2020 was $12.72.
|
|
(2)
|
Shares underlying the RSU award vest in a series of three successive equal annual installments commencing on the initial vesting date,
subject to continued service to the Company through each vesting date.
|
|
(3)
|
Vesting of the shares underlying the performance-based RSU award was originally contingent upon achievement of a revenue goal and
an Adjusted EBITDA goal over one-year performance periods ending on December 31, 2019 and 2020. The shares underlying the award will
vest on February 1, 2022 (April 1, 2022 for Mr. Finley), subject to continued service through such date.
|
|
(4)
|
Vesting of the remaining shares underlying the performance-based RSU award granted to our named executive officers in 2019 is contingent
upon achievement of a rTSR goal over a three-year performance period ending on December 31, 2021 and achievement of revenue and Adjusted
EBITDA goals over a one-year performance period ending on December 31, 2021, as well as continued service through February 1,
2022 (April 1, 2022 for Mr. Finley). The number of shares in the table above and the corresponding value of such shares reflects
maximum performance of the remaining performance-based RSU award for which performance has not yet been determined.
|
|
(5)
|
Vesting of the shares underlying the performance-based RSU award was originally contingent upon achievement of a revenue goal and
an Adjusted EBITDA goal over a one-year performance period ending on December 31, 2020. The shares underlying the award will vest
on February 1, 2023 (April 1, 2023 for Mr. Zeto), subject to continued service through such date.
|
|
(6)
|
Vesting of the remaining shares underlying the performance-based RSU award granted to our named executive officers in 2020 is contingent
upon achievement of a rTSR goal over a three-year performance period ending on December 31, 2022 and achievement of revenue and Adjusted
EBITDA goals over one-year performance periods ending on each of December 31, 2021 and 2022, as well as continued service through
February 1, 2023 (April 1, 2023 for Mr. Zeto). The number of shares in the table above and the corresponding value of such
shares reflects maximum performance of the remaining performance-based RSU award for which performance has not yet been determined.
|
|
(7)
|
Shares underlying the RSU award vest on February 1, 2021, subject to continued service through such date.
|
|
(8)
|
Shares underlying the RSU award vest in a series of twelve successive equal quarterly installments commencing on the initial vesting
date, subject to continued service to the Company through each vesting date.
|
|
(9)
|
Vesting of the shares underlying the performance-based RSU award was originally contingent upon achievement of both a revenue growth
metric and the Company’s Adjusted EBITDA margin over a two-year performance period ending on December 31, 2019, as well as
continued service through the date performance is determined to have been achieved by the Company. 662/3% of the
shares underlying the RSU award vested on March 11, 2020, following a determination that achievement was at 100.5%, and an additional
1/12th of such shares will vest quarterly thereafter, subject to continued service to the Company through each vesting
date.
|
2020 Option Exercises and
Stock Vested
The following table shows the number of RSUs held
by each named executive officer that vested during the 2020 fiscal year. None of our named executive officers exercised any options during
the 2020 fiscal year.
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
|
Value
Realized on
Vesting(1)
($)
|
|
Mike Finley
|
|
|
15,606
|
|
|
|
164,019
|
|
Peter Hovenier
|
|
|
12,869
|
|
|
|
161,764
|
|
Dawn Callahan
|
|
|
16,105
|
|
|
|
186,183
|
|
Derek Peterson
|
|
|
26,227
|
|
|
|
308,070
|
|
Michael J. Zeto III
|
|
|
3,723
|
|
|
|
44,547
|
|
Doug Lodder
|
|
|
20,545
|
|
|
|
240,916
|
|
|
(1)
|
Represents the closing price of a share of our common stock on the date of vesting multiplied by the number of shares that have vested.
|
Pension Benefits and Nonqualified Deferred Compensation
We do not provide a pension plan for our employees,
and no named executive officers participated in a nonqualified deferred compensation plan during 2020.
2020 Potential Payments Upon
Termination or Change in Control
Please see “Severance or Employment Agreements”
below for a description of the severance arrangements for our named executive officers.
The following table describes the potential payments
and benefits for each of our named executive officers under their employment agreements upon an involuntary termination, as if each officer’s
employment terminated as of December 31, 2020.
Name
|
|
Benefit
|
|
Qualifying
Involuntary
Termination of
Employment
($)
|
|
|
Qualifying
Involuntary
Termination of
Employment within
12 months after a
Change in Control
($)
|
|
Mike Finley
|
|
Cash Severance
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
Health Benefits
|
|
|
51,439
|
|
|
|
51,439
|
|
|
|
Vesting of RSUs(1)
|
|
|
3,248,355
|
(2)
|
|
|
3,291,402
|
(3)
|
|
|
Total Value
|
|
|
4,799,794
|
|
|
|
4,842,841
|
|
Peter Hovenier
|
|
Cash Severance
|
|
|
661,354
|
|
|
|
661,354
|
|
|
|
Health Benefits
|
|
|
34,293
|
|
|
|
34,293
|
|
|
|
Vesting of RSUs(1)
|
|
|
1,176,458
|
(2)
|
|
|
1,492,107
|
(3)
|
|
|
Total Value
|
|
|
1,872,105
|
|
|
|
2,187,754
|
|
Dawn Callahan
|
|
Cash Severance
|
|
|
243,078
|
|
|
|
502,360
|
|
|
|
Health Benefits
|
|
|
8,344
|
|
|
|
11,126
|
|
|
|
Vesting of RSUs(1)
|
|
|
253,096
|
(2)
|
|
|
420,231
|
(3)
|
|
|
Total Value
|
|
|
504,518
|
|
|
|
933,717
|
|
Derek Peterson
|
|
Cash Severance
|
|
|
254,322
|
|
|
|
525,600
|
|
|
|
Health Benefits
|
|
|
26,274
|
|
|
|
35,032
|
|
|
|
Vesting of RSUs(1)
|
|
|
677,040
|
(2)
|
|
|
1,139,877
|
(3)
|
|
|
Total Value
|
|
|
957,636
|
|
|
|
1,700,509
|
|
Michael J. Zeto III
|
|
Cash Severance
|
|
|
232,500
|
|
|
|
480,500
|
|
|
|
Health Benefits
|
|
|
18,492
|
|
|
|
24,656
|
|
|
|
Vesting of RSUs(1)
|
|
|
234,709
|
(2)
|
|
|
502,033
|
(3)
|
|
|
Total Value
|
|
|
485,701
|
|
|
|
1,007,189
|
|
Doug Lodder(4)
|
|
Cash Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
Health Benefits
|
|
|
—
|
|
|
|
—
|
|
|
|
Vesting of RSUs
|
|
|
—
|
|
|
|
—
|
|
|
|
Total Value
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
The value of vesting of RSUs shown above assumes that each executive’s qualifying termination of employment and change of control
(if applicable) occurred on December 31, 2020, and was calculated by multiplying the number of unvested RSUs that would have accelerated
by the fair market value of our common stock on December 31, 2020 ($12.72).
|
|
(2)
|
For the 2018 RSUs granted to each of Ms. Callahan and Dr. Peterson, includes that number of RSUs underlying the award equal
to the sum of the number of RSUs applying a monthly pro-rata vesting over the 36-month period commencing on February 1, 2018 plus
an additional 9 months of vesting (with the performance-based RSUs calculated at 100.5% of target). For the 2019 RSUs, includes that
number of RSUs underlying the award equal to the sum of the number of RSUs applying a monthly pro-rata vesting over the 36 month
period commencing on February 1, 2019 (with the performance-based RSUs related to the 2019 revenue and Adjusted EBITDA goals calculated
at 75.3% and 94.8%, respectively, the performance-based RSUs related to the 2020 revenue and Adjusted EBITDA goals calculated at 58.4%
and 97.4%, respectively, and the remaining portion calculated at target), plus in Mr. Finley’s case an additional 24 months
of vesting, in Mr. Hovenier’s case an additional 12 months of vesting and, in Ms. Callahan’s and Dr. Peterson’s
case, an additional 9 months of vesting. For the 2020 RSUs, includes that number of RSUs underlying the award equal to the sum of
the number of RSUs applying a monthly pro-rata vesting over the 36 month period commencing on February 1, 2020 (with the performance-based
RSUs related to the 2020 revenue and Adjusted EBITDA goals calculated at 58.4% and 97.4%, respectively, and the remaining portion calculated
at target), plus in Mr. Finley’s case an additional 24 months of vesting, in Mr. Hovenier’s case an additional
12 months of vesting and, in Ms. Callahan’s, Dr. Peterson’s, and Mr. Zeto’s case, an additional
9 months of vesting.
|
|
(3)
|
For the 2018 performance-based RSUs, includes full vesting acceleration with achievement deemed to be at 100.5%. For the portion of
the 2019 performance-based RSUs related to the 2019 revenue and Adjusted EBITDA goals, includes full vesting acceleration with achievement
deemed to be at 75.3% and 94.8%, respectively, and the performance-based RSUs related to the 2020 revenue and Adjusted EBITDA goals calculated
at 58.4% and 97.4%, respectively. For the remaining portion of the 2019 performance-based RSUs where the performance goals were not achieved
as of December 31, 2020, includes full vesting acceleration with achievement deemed to be at the target level. For the portion of
the 2020 performance-based RSUs related to the 2020 revenue and Adjusted EBITDA goals calculated at 58.4% and 97.4%, respectively. For
the remaining portion of the 2020 performance-based RSUs where the performance goals were not achieved as of December 31, 2020, includes
full vesting acceleration with achievement deemed to be at the target level.
|
|
(4)
|
As a result of his termination of employment in October 2020, Mr. Lodder did not receive the severance benefits set forth
in his employment agreement, as further described below.
|
Severance or Employment Agreements
Mike Finley
In connection with his appointment to Chief Executive
Officer in March 2019, we entered into an employment agreement with Mr. Finley that provides that if Mr. Finley’s
employment is terminated without cause or should Mr. Finley resign his employment for good reason more than three months prior to,
or more than 18 months after, a change of control, Mr. Finley is entitled to 18 months of base salary, 150% of his annual
target bonus, a pro-rated bonus for the year in which his termination occurs, 18 months of continued health benefits, and 24 months
of vesting credit under his outstanding equity awards. If Mr. Finley’s employment is terminated without cause or should Mr. Finley
resign his employment for good reason within three months prior to or 18 months following a change of control, Mr. Finley is
entitled to 18 months of base salary, 150% of his annual target bonus, a pro-rated bonus for the year in which his termination occurs,
18 months of continued health benefits, and full vesting of his outstanding equity awards.
Peter Hovenier
We entered into an employment agreement with Mr. Hovenier
in April 2013 after he was promoted as our Chief Financial Officer. Under this agreement, if Mr. Hovenier’s employment
is terminated without cause or should Mr. Hovenier resign his employment for good reason prior to, or more than 12 months after,
a change in control, Mr. Hovenier is entitled to 12 months of base salary, a pro rata payment of his annual target bonus, 12 months
of continued health benefits, and 12 months of vesting credit under his outstanding equity awards. If Mr. Hovenier’s employment
is terminated without cause or should Mr. Hovenier resign his employment for good reason within 12 months following a change
in control, Mr. Hovenier is entitled to 12 months of base salary, annual target bonus, 12 months of continued health benefits,
and full vesting of his outstanding equity awards.
Dawn Callahan
We entered into an employment agreement with Ms. Callahan
in January 2013 after she was promoted to our Senior Vice President of Marketing and Sales. Under this agreement, if Ms. Callahan’s
employment is terminated without cause or should Ms. Callahan resign her employment for good reason prior to, or more than 12 months
after, a change in control, Ms. Callahan is entitled to 9 months of base salary, 9 months of continued health benefits,
and 9 months of vesting credit under her outstanding equity awards. If Ms. Callahan’s employment is terminated without
cause or should Ms. Callahan resign her employment for good reason within 12 months following a change in control, Ms. Callahan
is entitled to 12 months of base salary, annual target bonus, 12 months of continued health benefits, and full vesting of her
outstanding equity awards.
Derek Peterson
We entered into an employment agreement with Dr. Peterson
in January 2013 after he was promoted to our Senior Vice President of Engineering. Under this agreement, if Dr. Peterson’s
employment is terminated without cause or should Dr. Peterson resign his employment for good reason prior to, or more than 12 months
after, a change in control, Dr. Peterson is entitled to 9 months of base salary, 9 months of continued health benefits,
and 9 months of vesting credit under his outstanding equity awards. If Dr. Peterson’s employment is terminated without
cause or should Dr. Peterson resign his employment for good reason within 12 months following a change in control, Dr. Peterson
is entitled to 12 months of base salary, annual target bonus, 12 months of continued health benefits, and full vesting of his
outstanding equity awards.
Michael J. Zeto III
We entered into an employment agreement with Mr. Zeto
in March 2020 after he was hired as our Senior Vice President, Strategy and Emerging Businesses. Under this agreement, if Mr. Zeto’s
employment is terminated without cause or should Mr. Zeto resign his employment for good reason prior to, or more than 12 months
after, a change in control, Mr. Zeto is entitled to 9 months of base salary, 9 months of continued health benefits, and
9 months of vesting credit under his outstanding equity awards. If Mr. Zeto’s employment is terminated without cause or
should Mr. Zeto resign his employment for good reason within 12 months following a change in control, Mr. Zeto is entitled
to 12 months of base salary, annual target bonus, 12 months of continued health benefits, and full vesting of his outstanding
equity awards.
Doug Lodder
We entered into an employment agreement with Mr. Lodder
in January 2016 after he was promoted to our Senior Vice President of Business Development. Under this agreement, if Mr. Lodder’s
employment is terminated without cause or should Mr. Lodder resign his employment for good reason prior to, or more than 12 months
after, a change in control, Mr. Lodder is entitled to 9 months of base salary, 9 months of continued health benefits, and 9 months
of vesting credit under his outstanding equity awards. If Mr. Lodder’s employment is terminated without cause or should Mr. Lodder
resign his employment for good reason within 12 months following a change in control, Mr. Lodder is entitled to 12 months of base
salary, annual target bonus, 12 months of continued health benefits, and full vesting of his outstanding equity awards. Mr. Lodder
voluntarily terminated his employment with us in October 2020. As a result of his termination, he received a severance payment equal
to his base salary for the period between October 29, 2020 and November 20, 2020.
Pay Ratio Disclosure
As required by the Dodd-Frank Act and SEC rules,
we are providing the following information about the relationship of the annual total compensation of our employees and the annual total
compensation of Mike Finley, our Chief Executive Officer, as of December 31, 2020:
For our fiscal year ended December 31, 2020:
|
•
|
The median of the annual total compensation of all employees (other than our CEO) was $120,252; and
|
|
•
|
The total compensation of our CEO, as reported in the 2020 Summary Compensation Table included elsewhere in this Proxy Statement,
was $2,641,926.
|
Based on this information, the ratio of the total
compensation of Mr. Finley to the median of the annual total compensation of our employees was 22.0:1.
The above ratio is appropriately viewed as an
estimate. As there were no changes in our employee population or employee compensation arrangements in 2020 that we believe would significantly
impact the required pay ratio disclosure, we used the same employee identified last year to identify the median of the annual compensation
of our employees. We identified this employee by reviewing the salary, stock awards, non-equity incentive plan compensation, and matching
contributions made under our 401(k) plan during 2019 for all of our employees as of December 31, 2019 for the period from January 1,
2019 through December 31, 2019. We excluded our non-U.S. employees as they constituted less than 5% of our workforce. As of December 31,
2019, we had 411 employees, including 11 employees in Brazil, 3 employees in the United Arab Emirates, and 1 employee in the United Kingdom.
No cost of living or other adjustments were made.
DIRECTOR COMPENSATION
Cash Compensation
Non-employee directors of the Company are eligible
for paid compensation for services provided as a director. Each member of our Board of Directors who was not an employee was paid an annual
retainer for 2020 service of $43,000. In addition, Board members were paid additional annual retainer amounts in 2020 for specified service,
as follows:
|
•
|
$15,000 for service as the lead independent director of our Board of Directors;
|
|
•
|
$24,000 for service as the chair of our Audit Committee;
|
|
•
|
$15,000 for service as the chair of our Compensation Committee;
|
|
•
|
$15,000 for service as the chair of our Steering Committee;
|
|
•
|
$15,000 for service as the chair of our Nominating and Corporate Governance Committee;
|
|
•
|
$10,000 for service as the chair of our Cybersecurity Committee;
|
|
•
|
$10,000 for service (other than as the chair) on our Audit Committee;
|
|
•
|
$7,500 for service (other than as the chair) on our Compensation Committee;
|
|
•
|
$7,500 for service (other than as the chair) on our Steering Committee;
|
|
•
|
$7,500 for service (other than as the chair) on our Nominating and Corporate Governance Committee; and
|
|
•
|
$4,500 for service (other than as the chair) on our Cybersecurity Committee.
|
The non-employee members of our Board of Directors
are also eligible for reimbursement of reasonable out-of-pocket travel expenses incurred in attending Board and committee meetings.
Equity-Based Compensation
Our equity compensation program for non-employee
directors provides for the grant of restricted stock units (“RSUs”) and is comprised of both an initial equity award upon
joining our Board of Directors and annual equity awards in connection with each annual meeting of our stockholders.
|
•
|
Initial Equity Award—Each new non-employee director joining our Board will receive a one-time RSU award covering a number of
shares equal to the quotient obtained by dividing $200,000 by the average of the closing sales price of our common stock for the five
consecutive trading days prior to the date of grant (rounded down to the next whole number of shares of our common stock). The RSUs will
vest 331/3% per year over a three-year period of continuous service. In addition, such RSUs will vest in full upon
the earlier of (a) the occurrence of a change in control on or before the date the director’s service with us terminates, or
(b) the day immediately prior to our first regular annual meeting of stockholders that occurs in the third year following the date
of grant.
|
|
•
|
If the non-employee director is elected to our Board of Directors, the grant will be made on the date the non-employee director becomes
elected to the Board of Directors.
|
|
•
|
If the non-employee director is instead appointed to our Board of Directors, the grant will be made on the first Tuesday of the month
occurring after the date the non-employee director was appointed to the Board of Directors; provided, however, that if such date occurs
during a blackout period as determined under the Company’s Insider Trading Policy, the effective date of the grant will be the next
occurring Tuesday that is not in a blackout period.
|
|
•
|
Annual Equity Award—Following the conclusion of each regular annual meeting of stockholders, each continuing non-employee director
will receive a RSU award covering a number of shares equal to the quotient obtained by dividing $128,000 by the average of the closing
sales price of our common stock for the five consecutive trading days prior to the date of grant. Such RSUs will vest in full upon the
earliest of (a) the first anniversary of the date of grant, (b) the occurrence of a change in control on or before the date
the director’s service with us terminates, or (c) the day immediately prior to our first regular annual meeting of stockholders
that occurs in the year following the date of grant.
|
The following table sets forth information about
the compensation of each person who served as a director during the 2020 fiscal year, other than a director who also served as a named
executive officer.
Name
|
|
Fees Earned
or Paid
in Cash
($)
|
|
|
Restricted
Stock Unit
Awards
($)(1)(2)
|
|
|
Total
($)
|
|
Maury Austin
|
|
|
67,000
|
|
|
|
129,848
|
|
|
|
196,848
|
|
Roy Chestnutt
|
|
|
50,500
|
|
|
|
129,848
|
|
|
|
180,348
|
|
Michele Choka
|
|
|
68,000
|
|
|
|
129,848
|
|
|
|
197,848
|
|
Chuck Davis
|
|
|
65,500
|
|
|
|
129,848
|
|
|
|
195,348
|
|
David Hagan
|
|
|
61,518
|
|
|
|
129,848
|
|
|
|
191,366
|
|
Terrell Jones
|
|
|
70,500
|
|
|
|
129,848
|
|
|
|
200,348
|
|
Kathy Misunas
|
|
|
55,000
|
|
|
|
129,848
|
|
|
|
184,848
|
|
Lance Rosenzweig
|
|
|
87,052
|
|
|
|
129,848
|
|
|
|
216,900
|
|
|
(1)
|
The amounts in this column represent the aggregate grant date fair value of stock awards granted to the non-employee director in the
applicable fiscal year computed in accordance with FASB ASC Topic 718. See Notes 2 and 19 of the notes to our audited consolidated
financial statements included in our Annual Report on Form 10-K for a discussion of the assumptions made by the Company in determining
the grant date fair value of its equity awards.
|
|
(2)
|
As of December 31, 2020, the above-listed non-employee directors held outstanding RSUs under which the following number of shares
of our common stock are issuable: Maury Austin—9,255; Roy Chestnutt—18,678; Michele Choka—12,332; Chuck Davis—9,255;
David Hagan—9,255; Terrell Jones—9,255; Kathy Misunas—9,255; and Lance Rosenzweig—9,255.
|
Non-Employee Director Stock Ownership Guidelines
In January 2016, our Compensation Committee
adopted stock ownership guidelines for our non-employee directors and our named executive officers. The ownership guidelines provided
for a three-year transition period from their adoption, and require that our non-employee directors hold shares and share equivalents
equal in value to three times their annual retainer. For purposes of the stock ownership guidelines, vested RSUs and vested and in-the-money
options will be counted toward the applicable requirement. All of our non-employee directors other than those with less than three years
of service on our Board are currently in compliance with the ownership guidelines.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY
COMPENSATION PLANS
We have two equity compensation plans under which
shares of Common Stock are authorized for issuance to eligible employees, directors, and consultants: (i) the Amended and Restated
2001 Stock Incentive Plan, or 2001 Plan; and (ii) the 2011 Equity Incentive Plan, or Incentive Plan. The following table provides
certain information with respect to each of our equity compensation plans in effect as of December 31, 2020:
Plan Category
|
|
Number of Securities
to be Issued
Upon Exercise
of Outstanding
Options, Warrants
and Rights
(a)(1)
|
|
|
Weighted-Average
Exercise Price
of Outstanding
Options, Warrants
and Rights
(b)(2)
|
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding
Securities Reflected
in Column (a))
(c)(1)
|
|
Equity compensation plans approved by stockholders
|
|
|
1,060,389
|
|
|
$
|
7.75
|
|
|
|
1,381,752
|
|
Equity compensation plans not approved by stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
1,060,389
|
|
|
$
|
7.75
|
|
|
|
1,381,752
|
|
|
(1)
|
Calculated assuming achievement for performance-based RSUs for which performance targets have not yet been achieved as of December 31,
2020 at the maximum level (150%).
|
|
(2)
|
Calculated without taking into account the 951,121 shares of common stock subject to outstanding RSUs that become issuable as the
units vest.
|
In March 2011, our Board of Directors and
stockholders approved the Incentive Plan. The Incentive Plan became effective on May 3, 2011 upon the completion of our initial public
offering. The Incentive Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted
shares of our common stock, restricted stock units, and performance cash awards. The number of shares of common stock reserved for issuance
under the Incentive Plan automatically increased on January 1st of each calendar year through 2018 by an amount equal
to the lesser of (a) 4.5% of the total number of shares of common stock then outstanding, (b) 3,000,000 shares of common stock
or (c) as determined by our Board of Directors. As of December 31, 2020, options to purchase approximately 109,000 shares of
common stock and RSUs covering approximately 951,000 shares of common stock were outstanding under the Incentive Plan.
Our Board of Directors and stockholders approved
the 2001 Plan. The 2001 Plan was terminated following the completion of our initial public offering, and no further awards will be made
under that plan. Options outstanding under the 2001 Plan will continue to be governed by their existing terms. As of December 31,
2020, there were no options outstanding under the 2001 Plan.