DEF 14A of Extreme Networks Inc
Filed Sep 26, 2023 · FY20230000950170-23-049939
TABLE OF CONTENTS
| Outstanding Equity Awards at Fiscal Year-End | 61 | | Option Exercises and Stock Vested During Last Fiscal Year | 62 | | Estimated Payments Upon Termination or Upon Change in Control | 62 | | CEO Pay Ratio | 64 | | Pay Versus Performance | 65 | | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 71 | | EQUITY COMPENSATION PLAN INFORMATION | 72 | | NON-GAAP MEASURES OF FINANCIAL PERFORMANCE | 73 | | REPORT OF THE COMPENSATION COMMITTEE | 76 | | REPORT OF THE AUDIT COMMITTEE | 77 | | STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING | 78 | | Transaction of Other Business | 78 | | Delivery to Stockholders Sharing the Same Last Name and Address | 78 | | COMMUNICATING WITH EXTREME NETWORKS | 80 | | EXHIBIT A: AMENDED AND RESTATED 2013 EQUITY INCENTIVE PLAN | A-1 | | EXHIBIT B-1: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION | B-1 | | EXHIBIT B-2: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION | B-2 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The terms of our current directors expire upon the election and qualification of the directors to be elected at the 2023 Annual Meeting. The Board has nominated seven persons for election at the Annual Meeting to serve until the 2024 annual meeting of stockholders and until their successors are duly elected and qualified. Our Board’s nominees for election at the 2023 Annual Meeting are Edward B. Meyercord, Ingrid J. Burton, Charles P. Carinalli, Kathleen M. Holmgren, Raj Khanna, Edward H. Kennedy, and John C. Shoemaker, all of whom are presently directors of Extreme Networks. Please see below under the heading “Board of Directors” for information concerning the nominees. If elected, each nominee will serve as a director until the 2024 annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier resignation or removal. Each nominee has indicated to us that he or she will serve if elected. As of the date of this Proxy Statement, the Board is not aware of any nominee who is unable or who will decline to serve as a director. However, if a nominee declines to serve or becomes unavailable for any reason, the proxies may be voted for a substitute nominee designated by the Nominating, Governance and Environmental & Social Responsibility Committee or our Board.
BOARD OF DIRECTORS
BOARD OF DIRECTORS The following are our nominees for the Board of Directors.
BOARD OF DIRECTORS
| EDWARD B. MEYERCORD President & CEO | Director since: 2009 Independent: no Age: 58 Committees: none Skills: leadership; executive management; mergers & acquisitions; corporate strategy; corporate finance; sales & marketing; operations | JOHN C. SHOEMAKER Board Chair | Director since: 2007 Independent: yes Age: 80 Committees: Nominating, Governance and Environmental & Social Responsibility (Chair); Compensation Skills: leadership, technology management; operational, management and financial expertise, M&A | | INGRID J. BURTON | Director since: 2019 Independent: yes Age: 61 Committees: Nominating, Governance and Environmental & Social Responsibility Skills: marketing and management expertise; brand building; creating demand; growing business | CHARLES P. CARINALLI | Director since: 1996 Independent: yes Age: 75 Committees: Compensation (Chair); Nominating, Governance and Environmental & Social Responsibility Skills: engineering and engineering management; management and technology expertise, product development; strategic planning; risk management | | KATHLEEN M. HOLMGREN | Director since: 2015 Independent: yes Age: 65 Committees: Nominating, Governance and Environmental & Social Responsibility; Audit; Compensation Skills: expertise in storage, computer systems, enterprise software and management consulting; operations; strategic planning; risk assessment and planning | EDWARD H. KENNEDY | Director since: 2011 Independent: yes Age: 68 Committees: Audit; Compensation Skills: financial and executive leadership in technology and networking companies; management expertise; financial expertise | | RAJ KHANNA | Director since: 2014 Independent: yes Age: 77 Committees: Audit (Chair) Skills: financial and internal audit leadership; establishment of financial controls and processes; financial advice; mergers & acquisitions guidance; strategic advice; business model changes | | |
BOARD OF DIRECTORS
| 2023 PROXY STATEMENT | | 6 |
BOARD OF DIRECTORS
There are no family relationships among any of our directors or executive officers. The biography of each of our director nominees below contains information regarding the person’s service as a director, business experience, other director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, and the experiences, qualifications, attributes or skills that caused the Nominating, Corporate Governance and Environmental & Social Responsibility Committee and our Board to determine that the person should serve as a director.
Nominees For Election At 2023 Annual Meeting
Nominees For Election At 2023 Annual Meeting
EDWARD B. MEYERCORD
EDWARD B. MEYERCORD Mr. Meyercord, age 58, has served as our President and Chief Executive Officer since April 2015. Mr. Meyercord joined our Board of Directors as an independent director in October 2009 and served as Chairman from March 2011 until August 2015. Prior to assuming his operating role at Extreme Networks in April 2015, Mr. Meyercord was Chief Executive Officer and Director at Critical Alert Systems, LLC, a privately held software-driven, healthcare information technology company from 2011 to 2015. Prior to that, Mr. Meyercord served as Chief Executive Officer, President and Director of Cavalier Telephone, LLC, a privately held voice, video and data services company, from 2006 to 2009. He served as Chief Executive Officer, President and Director of Talk America Holdings, Inc., a publicly traded company that provided phone and internet services to consumers and small businesses throughout the United States, from 1996 to 2006. Earlier in his career, Mr. Meyercord served as a Vice President in the investment banking division of Salomon Brothers Inc. (now part of Citigroup, Inc.), a Wall Street investment bank, from 1993 to 1996. He also served on the board of Tollgrade Communications, Inc., a then-publicly traded telecommunications company, from August 2009 to May 2011. Mr. Meyercord holds a B.A. degree in economics from Trinity College in Hartford, Connecticut and an M.B.A. degree from the Stern School of Business at New York University. Mr. Meyercord brings to the Board his extensive executive experience in management, operations, sales and marketing, strategy, mergers and acquisitions, and finance. His background in the healthcare and telecommunications industries provides our Board with valuable industry expertise in several of our key markets. Also, the Board believes it is valuable to have the Company’s Chief Executive Officer serve on the board to bring in-depth perspective on the Company’s current operations, strategy, financial condition and competitive position.
JOHN C. SHOEMAKER
JOHN C. SHOEMAKER Mr. Shoemaker has served as one of our directors since October 2007 and has been the Chair of the Board since February 2017. He currently serves as a consultant to the high technology industry and also serves as a mentor to corporate executives. Since April 2023, Mr. Shoemaker has been an advisor to TalentSky, Inc., a private startup in the career development space. Mr. Shoemaker served as a director of Altera Corporation, a publicly-traded provider of programmable logic solutions, from 2007 until it was acquired by Intel Corporation, a publicly traded semiconductor company, in December 2015. From 2004 to 2010, he served as a member of the board of directors for SonicWall, a firewall and cybersecurity solutions company, for which he also served as chairman of the board from 2007 to 2010. From 1990 to June 2004, Mr. Shoemaker held various executive management positions at Sun Microsystems, Inc., including serving as Executive Vice President, Worldwide Operations Organizations and as Executive Vice President, and General Manager for its Computer Systems Division. Mr. Shoemaker previously served in a number of senior executive positions with the Xerox Corporation, a provider of document management technology and services, including as Senior Vice President, World Wide Marketing. Mr. Shoemaker holds a B.A. in political science and business administration from Hanover College, where he currently is on the Board of Trustees, and a M.B.A. from Indiana University’s Kelley School of Business, where he is a member of the School of Business Dean’s Advisory Council for the school of Informatics, Computing, and Engineering, and the Johnson Center for Entrepreneurship Board. Mr. Shoemaker was named the Entrepreneur of the Year by the Kelley School of Business in 2019 and was awarded an honorary Doctor of Humane Letters degree that same year. Mr. Shoemaker brings to the Board his extensive executive experience in senior level management positions in the technology industry, particularly in hardware systems, and provides strong operational, management and financial expertise to our Board.
INGRID J. BURTON
INGRID J. BURTON Ms. Burton has served as one of our directors since August 2019. She is an advisor to Lumino.law, a unique law firm focused on artificial intelligence ("AI") risk and conducts AI audits, a position she has held since October 2022. In May 2022, she was appointed as a member of the board of directors of Fogo de Chão. Ms. Burton is also serving as a marketing advisor to Dataiku, an enterprise AI
INGRID J. BURTON
| 2023 PROXY STATEMENT | | 7 |
INGRID J. BURTON
company, beginning in June of 2021. She has held the position of Chief Marketing Officer for Quantcast, a global advertising technology company, from November 2020 to March 2023. She served on the Board of Directors of Aerohive Networks, Inc. from March 2019 to August 2019, at which time it was acquired by Extreme Networks. From February 2018 to August 2020, she served as Chief Marketing Officer at H2O.ai, an open-source artificial intelligence and machine learning technology company. Previously, from July 2015 to March 2017, Ms. Burton was Chief Marketing Officer for Hortonworks, a data software company. From January 2013 to June 2015, Ms. Burton was Senior Vice President for Technology and Innovation Marketing with SAP, a global software company. Ms. Burton previously held chief marketing officer positions with Silver Spring Networks and Plantronics, and held various executive and senior management positions over 20 years with Sun Microsystems related to corporate marketing and branding. Ms. Burton holds a B.A. degree in mathematics with a concentration in computer science from San Jose State University. Ms. Burton brings to the Board extensive marketing and management expertise as well as experience in building brands, creating demand, and growing businesses for both established technology innovators and industry pioneers.
CHARLES P. CARINALLI
CHARLES P. CARINALLI Mr. Carinalli has served as one of our directors since October 1996. Mr. Carinalli has been a Principal of Carinalli Ventures since January 2002. He has been a member of the board of directors of Algorithmic Intuition, Inc., a privately held medical electronics company since 2020, and of Dhaani Systems, a privately held IT-energy management company since 2009. Mr. Carinalli formerly served on the board of directors of Atmel Corporation, a publicly traded semiconductor company, from February 2008 until its acquisition by Microchip Technology in April 2016. Mr. Carinalli also served on the board of directors of Fairchild Semiconductor International, Inc., a publicly traded semiconductor company beginning in February 2002 until its acquisition by ON Semiconductor, a publicly traded semiconductor company, in September 2016. From 1999 to May 2002, Mr. Carinalli was Chief Executive Officer and a director of Adaptive Silicon, Inc., a privately held developer of semiconductor products. From November 2000 to November 2001, Mr. Carinalli served as Chairman of Clearwater Communications, Inc., a privately held telecommunications company. From December 1996 to July 1999, Mr. Carinalli served as President, Chief Executive Officer, and a director of WaveSpan Corporation, a developer of wireless broadband access systems until the company was acquired by Proxim, Inc., a broadband wireless networking systems company. From 1970 to 1996, Mr. Carinalli served in various positions at National Semiconductor Corporation, a publicly traded semiconductor company that developed and sold analog-based semiconductor and integrated communication products, most recently serving as Senior Vice President and Chief Technical Officer. Mr. Carinalli holds a B.S. degree in electrical engineering from the University of California, Berkeley and a M.S. degree in electrical engineering from Santa Clara University. Mr. Carinalli brings to the Board extensive engineering and engineering management expertise, as well as general management expertise and technology expertise, which aids our Board in understanding product development, engineering management and strategic planning, as well as risk assessment and planning. Mr. Carinalli was selected for the National Association of Corporate Directors ("NACD") Directorship 100 in 2023. Ms. Holmgren has served as one of our directors since November 2015. In June 2021, Ms. Holmgren became an advisor to Circle Security, a cybersecurity platform powered by a patented decentralized cryptographic architecture purpose-built to deliver true prevention. Ms. Holmgren is the first vice-chairman of the board of Calavo Growers, Inc., a publicly traded food and distribution company, which she joined in January 2017, and where she serves as the Chair of their Compensation Committee. From May 2017 through January 2021, Ms. Holmgren was a member of the Board of Directors of Fresh Realm, LLC, a privately held delivery and business platform for the perishable food industry, representing Calavo Growers’ interests. Ms. Holmgren is currently a member of the Board of Directors of Automation Anywhere, Inc., a privately held developer of robotic process automation and testing software, where she serves on their Audit Committee. Ms. Holmgren was also the Chief Operating Officer for Automation Anywhere, Inc. from March 2013 through August 2015 and then served as Chief Officer - Future Workforce through March 2018. Ms. Holmgren served on the Board of Group Delphi, a private design and media production company, from July 2014 through December 2019. From October 2009 to December 2016, she served as a director at the Alliance of Chief Executives, LLC, an organization for chief executives. Since 2008, Ms. Holmgren has served as a Principal at Sage Advice Partners, a management consulting firm specializing in the high-tech and green-tech markets. Ms. Holmgren served as President and Chief Executive Officer of Mendocino Software, a privately-held enterprise-class application data developer, from November 2007 to March 2008. Prior to November 2007, Ms. Holmgren spent over 20 years at Sun Microsystems, Inc., a publicly-held enterprise software company acquired by Oracle Corporation in 2010, where she held increasingly senior roles, culminating in Senior Vice President, Storage Systems. Ms. Holmgren holds a B.S. in industrial engineering from California Polytechnic State University, and a M.B.A from the Stanford Graduate School of Business.
CHARLES P. CARINALLI
| 2023 PROXY STATEMENT | | 8 |
CHARLES P. CARINALLI
In November of 2021, Ms. Holmgren was recognized by NACD for inclusion in the Directorship 100. Ms. Holmgren brings to the Board her knowledge and expertise in executive leadership in storage, enterprise software and management consulting industries, and provides expertise in operations strategic planning and risk assessment and planning. Mr. Kennedy has served as one of our directors since April 2011. He is currently a principal at Kenko Partners, a consultant and investment firm focused on technology and real estate. From June 2017 through September 2018, Mr. Kennedy served as the president and Chief Executive Officer of Cenx, Inc., a leader in service orchestration solutions for software-defined and virtualized networks until the company was acquired by LM Ericsson in 2018. From June 2010 to April 2017, Mr. Kennedy served as the Chairman, Chief Executive Officer and President of Tollgrade Communications, Inc., a telecommunication and smart grid company, which he took private to Golden Gate Capital and then later managed dispositions of portions of the company. Mr. Kennedy previously served as the Chief Executive Officer and President of Rivulet Communications, Inc., a medical video networking company, from 2007 until it was acquired by NDS Surgical Imaging, LLC in 2010. He also previously served as President of Tellabs North American Operations, an optical network technology company, and as Executive Vice President of Tellabs, Inc. from 2002 to 2004. Mr. Kennedy cofounded Ocular Networks, Inc., a provider of optical networking technologies, in 1999 and served as its Chief Executive Officer and President until it was sold to Tellabs, Inc. in 2002. He has also held various executive positions at several telecommunications equipment companies, including Alcatel-Lucent S.A. (previously Alcatel Data Network), a publicly-traded French global telecommunications equipment company, and Newbridge Networks Corporation, a then publicly traded Canadian digital networking equipment company. Mr. Kennedy was also a Venture Partner at Columbia Capital, a private equity investment firm, from 2005 to 2007, where he advised regarding investments into new and existing portfolio companies. In May 2023 Mr. Kennedy was appointed to the Board of Directors of Motionworks, a predictive population intelligence platform. He previously served as a director of Visual Networks, Inc., a publicly traded network and performance management solutions provider, from 2002 until it was acquired by Fluke Electronic Corporation, an electronic test tools and software company, in 2006. He also served on several private boards, including Avizia from 2014 through its merger with American Well in July 2018; Hatteras Networks from 2005 until its merger with Overture in 2011; and Imagine Communications from 2007 through its acquisition by Harris Broadcast in 2010. He also served as a Board Director of the Grid Wise Alliance, a leading industry coalition driving the modernization of the USA electric system from 2013 through 2017, and has been a member of NACD from 2017 to present. In addition, he currently serves on the Executive Parent Board of Villanova University, the Virginia Tech Dean of Engineering Advisory Committee and he was a Trustee of Flint Hill School, a private, JK-12 college preparatory school, in Oakton, Virginia, from 2011 to 2020. Mr. Kennedy holds a B.S. degree in electrical engineering from the Virginia Polytechnic Institute and State University. Mr. Kennedy brings to the Board his extensive financial and executive leadership experience in technology companies, including networking companies, and provides management and financial expertise to our Board.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION We maintain a non-employee director compensation program, pursuant to which cash fees and equity awards are paid to our non-employee directors in exchange for their service on our Board and its committees. For fiscal 2023, the compensation paid to our non-employee directors was as set forth below. Mr. Meyercord, who serves as our President and Chief Executive Officer, does not receive any additional compensation for his service on our Board.
2023 Director Compensation
2023 Director Compensation The compensation information for our non-employee directors who served during fiscal 2023 is set forth below:
2023 Director Compensation
| Name | Director Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) (2) | Total ($) | | Charles P. Carinalli | $97,500 | $215,000 | $312,500 | | Edward H. Kennedy | 95,000 | 215,000 | 310,000 | | Raj Khanna | 102,500 | 215,000 | 317,500 | | Ingrid J. Burton | 77,500 | 215,000 | 292,500 | | John C. Shoemaker | 164,500 | 215,000 | 379,500 | | Kathleen M. Holmgren | 98,349 | 215,000 | 313,349 |
2023 Director Compensation
(1) Represents the aggregate grant date fair value computed in accordance with Accounting Standards Codification, or ASC, Topic 718 and does not reflect whether the director has actually realized a financial benefit from the award. For information on the assumptions used to calculate the value of the awards, refer to Note 12 to our consolidated financial statements in our Form 10-K for the fiscal year ended June 30, 2023. (2) The following table shows the aggregate number of stock awards (RSUs) held as of June 30, 2023 by each of our non-employee directors who served during fiscal year 2023:
2023 Director Compensation
| Name | Stock Awards (#) | | Charles P. Carinalli | 11,466 | | Edward H. Kennedy | 11,466 | | Raj Khanna | 11,466 | | Ingrid J. Burton | 11,466 | | John C. Shoemaker | 11,466 | | Kathleen M. Holmgren | 11,466 |
2023 Director Compensation
| 2023 PROXY STATEMENT | | 20 |
2023 Director Compensation
PROPOSAL TWO:
Fiscal 2023 Compensation Was Closely Aligned With Performance
Fiscal 2023 Compensation Was Closely Aligned With Performance Our executive compensation programs are designed to deliver pay in accordance with corporate and individual performance. For fiscal 2023, our performance was reflected in the compensation of our NEOs in a number of ways: Short-term Cash Incentive Payouts Were Above Target. Overall payouts under the Extreme Incentive Plan (“EIP”), our short-term cash incentive plan, for fiscal 2023 were approximately 108.2% of target. This reflected payouts at 109.6% of target for the first half of fiscal 2023, and payouts at 106.7 % of target for the second half of fiscal 2023, in each case based on the Company’s achievement of applicable goals • Long-term Incentive Earnouts Reflect Strong Company Performance. Three sets of grants of performance-based equity awards were subject to on-going performance periods during fiscal 2023, as summarized below:
Fiscal 2023 Compensation Was Closely Aligned With Performance
| Grant | Performance Criteria | Outcome | | August 2020 PSUs | Total Shareholder Return relative to the Russell 2000 Index over an overall three-year performance period | As of June 30, 2023, the first and second tranches were earned at 100% of target. On August 16, 2023, the Compensation Committee certified the full payout of 150%. | | August 2021 PSUs | Total Shareholder Return relative to the Russell 2000 Index over an overall three-year performance period | As of June 30, 2023, the first tranche was earned at 100% of target. On August 16, 2023, the Compensation Committee certified the second tranche to be earned at 100% of target. As of September 1, 2023, the full 3-year potential payout is tracking at approximately 150%. | | August 2022 PSUs | Total Shareholder Return relative to the Russell 2000 Index over an overall three-year performance period | As of June 30, 2023, the first tranche was not yet earned. On August 16, 2023, the Compensation Committee certified the first tranche to be earned at 100% of target. As of September 1, 2023, the second-year measurement period potential payout is tracking at approximately 100%. | | May 2023 PSUs – CFO New Hire Grant | Total Shareholder Return relative to the Russell 2000 Index over an overall three-year performance period | Not fully earned as of June 30, 2023, and as of September 1, 2023, the first-year measurement period potential payout is tracking at approximately 100%. |
Fiscal 2023 Compensation Was Closely Aligned With Performance
• Long-term Incentive Awards Were Reasonable and Appropriate. For fiscal 2023, half of the annual awards for Messrs. Meyercord, Thomas, Vitalone (on a per share basis) were awarded in the form of PSUs that may be earned, if at all, based on the Company’s TSR relative to the Russell 2000 Index over a three-year performance period. One half of the equity grants made to Mr. Rhodes in connection with his hire were awarded in the form of such PSUs. In fiscal 2023, the Compensation Committee granted time-based RSUs to our NEOs that vest based on continued service over three years, to encourage retention and to tie realizable compensation from such equity awards to the Company’s long-term stock price.
Chief Executive Officer (CEO) Target Compensation versus Estimated Realizable Compensation
Chief Executive Officer (CEO) Target Compensation versus Estimated Realizable Compensation The strong link between pay and performance is further illustrated by the chart below, which shows that our CEO’s estimated realizable pay for fiscal years 2021, 2022 and 2023 was on average 190% of his target direct compensation. While the Summary Compensation Table reflects a measure of total compensation that includes the grant date fair value for equity awards, we believe that an assessment can be made by considering our CEO’s estimated realizable pay, which is based on the value of equity awards at vesting or exercise (or fiscal year end if not yet vested or exercised), and provides another important perspective on our CEO’s compensation package insomuch as it shows the amounts actually earned. The following graph illustrates the impact of our
Chief Executive Officer (CEO) Target Compensation versus Estimated Realizable Compensation
performance-based compensation programs on the total compensation of our CEO and compares his targeted compensation to estimated realizable pay as of June 30, 2023. Target Compensation: Target compensation for each year reflects actual salary paid during the year, target bonus for the year, and the grant date target value of long-term incentive grants awarded in that year. Estimated Realizable Compensation: Estimated realizable compensation for each year reflects (a) actual salary paid during the year; (b) actual bonus paid for the year’s performance; (c) the value of the RSUs granted that year as of the applicable vesting date or June 30, 2023, if outstanding; (d) the in-the-money value of the stock options granted that year as of the applicable exercise date or June 30, 2023, if outstanding; and (e) the value of the performance stock units granted that year based on performance through June 30, 2023.
Compensation Philosophy and Objectives
Compensation Philosophy and Objectives Our guiding principle in establishing executive compensation is to align compensation with the creation of stockholder value while achieving the Company’s strategic objectives and financial goals. Consistent with this principle, we seek to provide a competitive total compensation package that allows us to attract high quality candidates for senior leadership positions, to retain these employees, and to establish a total compensation program which motivates and rewards individual and team performance in alignment with our short- and long-term business strategies and objectives. Our compensation program is designed to provide accountability at both the individual and team level with respect to both absolute and relative competitive performance. We also align the interests of our executives and our stockholders by providing variable compensation to our executives that is directly linked to the performance of the Company and to our stock price. As illustrated below, a substantial portion of our NEOs’ fiscal 2023 compensation (PSUs and short-term cash incentives) was directly tied to Company and stock price performance. The graph below consists of base salary, bonuses, actual short-term cash incentives and the grant-date value of equity awards granted during fiscal 2023. Annual compensation for a given NEO is determined with reference to competitive market data, as well as the individual’s experience, knowledge, skills, and performance. As noted above, a significant portion of fiscal 2023 compensation to our CEO was at risk, specifically his short-term cash incentive and his PSU award.
Compensation Best Practices
In fiscal 2023, our NEOs did not receive any material perquisites other than a disability insurance top-up for Mr. Meyercord and payment of certain legal fees on behalf of Mr. Rhodes in connection with negotiation of his offer letter. Reasonable Severance Benefits - Our NEOs are eligible to receive certain severance benefits and payments upon qualifying termination, including in connection with a change in control. This provides consistency and predictability in the Company’s treatment of such executive officers upon termination of employment and encourages our executives to continue to serve the Company through a potential change in control transaction. Severance is not paid upon an NEOs resignation. • No Tax Gross-Ups - The Company does not provide for excise tax gross-ups following a change in control. • Mitigation of Compensation-Related Risk - The Company has adopted policies, including an insider trading policy, which policies are subject to oversight by independent Committees of the Board, to mitigate compensation-related risk. • No Hedging or Speculative Transactions of Securities - In accordance with our insider trading policy, all executive officers and directors, are prohibited from engaging in speculative transactions in Company securities, including engaging in short sales, engaging in transactions with respect to put options, call options or other derivative securities, or engaging in any other forms of hedging transactions. • Recoupment or Claw-Back Policy - The Company has adopted a recoupment policy, sometimes called a “claw-back” policy, which allows the Company to recover incentive-based compensation paid to any current or former executive officer under certain specified circumstances. • Stock Ownership Guidelines - As of May 17, 2022, we have required that each NEO other than our CEO, own a minimum number of shares valued at two times (2X) their respective annual salary, and that our CEO own a minimum number of shares valued at five times (5X) his annual salary. Each NEO has five years from his or her date of hire, date designated as an NEO, or from the date of an increase in the ownership value requirements, as applicable, to attain the minimum ownership level.
Compensation Consultant
Compensation Consultant In connection with our desire to make our executive compensation competitive, to more closely tie future compensation to performance, and to further align executive compensation with the creation of stockholder value, the Compensation Committee engaged Compensia, Inc., a national compensation consulting firm with expertise in the technology sector, to assist it in the performance of its duties and to advise it with respect to compensation matters for fiscal 2023. In its role as independent compensation consultant and at the request of the Compensation Committee, Compensia participated in Compensation Committee meetings and provided compensation advice to the Compensation Committee on: the competitiveness of NEO compensation levels as compared to market (as represented by our peer group); • revisions and additions to the Company’s peer group, goal metrics and bonus design; • the compensation mix between cash and equity; and • developments in legislation and regulation affecting executive compensation. Although the Company pays Compensia’s fees for its engagement by the Compensation Committee, the Compensation Committee has sole discretion with respect to Compensia’s continued engagement and assignments. Further, the Compensation Committee has reviewed Compensia’s independence and determined that its work does not give rise to any conflicts of interest. Additional details regarding the Compensation Committee’s relationship and review of Compensia are also set forth in the “Compensation Committee” section above.
Peer Group Selection and Review
Peer Group Selection and Review The Compensation Committee considers a variety of factors when setting the compensation of our NEOs, including competitive market data, as well as the individual’s experience, knowledge, skills, performance and need for retention. The Compensation Committee evaluates pay competitiveness on an element-by-element basis, as well as on a total compensation basis. The peer group data reviewed includes a range of pay levels including the 25th, 50th and 75th percentile of the members of the peer group to reflect the range of pay to be considered when determining individual pay elements. While the Compensation Committee does not establish compensation levels by benchmarking to our peer group, the Compensation Committee reviews the practices of members of the peer group to better understand and assess the competitiveness of the compensation that the Company pays to its executives, both with respect to each compensation element and the overall compensation package. On February 2, 2022, following consultation with Compensia, the Compensation Committee approved our peer group for fiscal year 2023 compensation decisions. The peer group included the following companies:
Peer Group Selection and Review
| 8x8 | Dynatrace | Plantronics* | | Box | Infinera | Pure Storage | | Calix | Mandiant, Inc (f/k/a FireEye) | Ribbon Communications | | Commvault Systems | NETGEAR, Inc | Viasat | | Comtech Telecommunications | New Relic | Viavi Solutions | | | Nutanix | |
Peer Group Selection and Review
*On September 8, 2022, Plantronics filed a notice of termination of registration and is no longer publicly traded For fiscal year 2023, this peer group was comprised of computer networking, communication equipment companies, cloud-oriented companies, and other technology companies with approximately $563.0 million to $2.5 billion in revenue and market capitalizations of approximately $684.0 million to $19.5 billion, with a 50th percentile at $3.7 billion, at the time selected for inclusion in the peer group. The 2023 peer group better aligned with our cloud-oriented business focus and stayed within guidelines for revenue and market cap comparability. Relative to the fiscal 2022 peer group, the revised 2023 peer group excluded Casa Systems and Zscaler, and added Box and New Relic.
Compensation Program Elements
| Element | Purpose | | Short-term incentives | Encourage and reward overall company performance relative to our current plans and objectives, particularly in the short term. | | Long-term equity incentives | Promote the achievement of longer-term financial and strategic objectives. Encourage employee retention. Align the interests of our executives and stockholders by tying rewards to long term gains in stockholder value. | | Change in control and severance benefits | Retain our executives during the pendency of a proposed change in control transaction. Avoid adverse impacts to the morale of our executives and of uncertainty regarding continued employment. Align the interests of our executives and stockholders in the event of a change in control. Assist with the recruitment of executives and other key employees. In the event of a change in control, double-trigger cash severance is limited to a multiple of two times target annual cash compensation for our CEO and one and a half times target annual cash compensation for the other officers. | | Other benefits | Attract and retain talented employees. Provide health and welfare benefits with assurance of financial support in the event of illness or injury. Encourage retirement savings. Encourage additional equity ownership by employees. |
Short-Term Cash Incentives
Short-Term Cash Incentives Extreme Incentive Plan - The Compensation Committee establishes a short-term cash incentive plan each year under our EIP, which is applicable to our employees (other than sales personnel on variable compensation plans), including all of our NEOs. The EIP is designed to reward Company performance relative to our current plans and objectives, particularly in the short term. The structure and elements of the plan are reviewed and modified annually based upon expectations for our business derived from our annual operating plan, as amended to address business changes during fiscal 2023. The Compensation Committee does not adhere to a strict formula in determining performance goals. Instead, considering peer group data and the Company’s recent and anticipated performance, the Compensation Committee employs a flexible approach that enables it to select performance metrics that are designed to allow the Company to adjust to evolving market conditions. As in fiscal 2022, the EIP for fiscal 2023, as approved by the Compensation Committee, provided for semi-annual payouts based on the Company’s achievement of pre-established performance goals for each of the first and second halves of fiscal 2023. The Compensation Committee implements the short-term cash incentive plan through semi-annual performance targets to allow it to better set challenging, yet reasonable goals that take into account the current economic environment, the industry and the Company’s business. The semi-annual target levels for the two performance metrics during fiscal 2023 were based on projections of metrics derived from the Company’s annual operating plan. For fiscal 2023, the EIP was funded based on the achievement of pre-established GAAP Revenue and EBITDA performance goals. During each half, GAAP Revenue was weighted at 60%, and EBITDA was weighted at 40%. The threshold, target and maximum goals for each half of fiscal 2023 and their corresponding performance levels are set forth in the tables below. Achievement between threshold and target levels and between target and maximum levels is determined based on linear interpolation. EBITDA represents non-GAAP net income before interest expense, income tax expense and depreciation and amortization expense. Non-GAAP net income was calculated as GAAP net income, adjusted for amortization of intangibles, share-based compensation, acquisition and integration costs, restructuring charges, system transition costs, non-recurring litigation charges, debt
Short-Term Cash Incentives
| 2023 PROXY STATEMENT | | 48 |
Short-Term Cash Incentives
refinancing charges and tax effect on non-GAAP adjustments. The Compensation Committee believed the adjustments used in calculating this metric better reflect how the Company measures its performance. The threshold, target, and maximum goals of the EIP for July 1, 2022 through December 31, 2022 (the “First Half Performance Period”) and the Company’s corresponding performance levels are set forth in the table below.
Short-Term Cash Incentives
| | GAAP Revenue ($ millions) | Performance Level (% of Target) | Payout Scale Multiplier | EBITDA | Performance Level (% of Target) | Payout Scale Multiplier | | <Threshold | $<505.6 | 0% | 0% | $<64.6 | 0% | 0% | | Threshold | 505.6 | 85% | 50% | 64.6 | 75% | 50% | | Target | 594.8 | 100% | 100% | 86.1 | 100% | 100% | | Maximum | 713.8 | 120% | 150% | 120.5 | 140% | 150% |
Short-Term Cash Incentives
The Company’s actual achievement under the First Half Performance Period is set forth in the table below.
Short-Term Cash Incentives
| Financial Metric | Target ($ millions) | Actual ($ millions) | Attainment | Performance Scale | Weight | | GAAP Revenue | $594.8 | $616.0 | 103.6% | 108.9% | 60% | | EBITDA | 86.1 | 94.0 | 108.5% | 110.7% | 40% |
Short-Term Cash Incentives
Accordingly, the Compensation Committee approved a weighted payout for the First Half Performance Period of 109.6% of the target pool. The threshold, target, and maximum goals of the EIP for January 1, 2023 through June 30, 2023 (the “Second Half Performance Period”) and their corresponding performance levels are set forth in the table below.
Short-Term Cash Incentives
| | GAAP Revenue ($ millions) | Performance Level (% of Target) | Payout Scale Multiplier | EBITDA | Performance Level (% of Target) | Payout Scale Multiplier | | <Threshold | $<585.1 | 0% | 0% | $<86.4 | 0% | 0% | | Threshold | 585.1 | 85% | 50% | 86.4 | 75% | 50% | | Target | 688.3 | 100% | 100% | 115.2 | 100% | 100% | | Maximum | 826.0 | 120% | 150% | 161.3 | 140% | 150% |
Short-Term Cash Incentives
The Company’s actual achievement under the Second Half Performance Period is set forth in the table below.
Short-Term Cash Incentives
| Financial Metric | Target ($ millions) | Actual ($ millions) | Attainment | Performance Scale | Weight | | GAAP Revenue | $688.3 | $696.4 | 101.2% | 102.9% | 60% | | EBITDA | $115.2 | $125.1 | 110.0% | 112.4% | 40% |
Short-Term Cash Incentives
Accordingly, the Compensation Committee approved a weighted payout for the Second Half Performance Period of 106.7% of the target pool. For fiscal 2023, the Compensation Committee decided to not increase Messrs. Meyercord, Thomas, and Vitalone’s target bonuses as a percentage of their base salaries. Thus, for fiscal 2023, Messrs. Meyercord, Thomas, and Vitalone and Ms. Tate were eligible to receive bonuses targeted at 130%, 85%, and 100% and 45% of their annual base salaries, respectively. We believe the “at risk” portion of our NEOs’ compensation packages, such as the short-term incentives, should increase with the ability to affect Company performance, the role of the respective NEO and other market factors. This philosophy is reflected in the “target bonus as a percentage of base salary” that was approved by the Compensation Committee for each NEO. The table below reflects the short-term incentive compensation paid to each of our NEOs in Fiscal Year 2023 under the EIP, as well as the target short-term cash incentive opportunity (expressed as a percentage of base salary) for each NEO. We believe the “at risk” portion of each NEO’s compensation package, such as the short-term incentives, should increase with the ability to affect Company performance, the role of the NEO and other market factors. This philosophy is reflected in the “target bonus as a percentage of base salary” that was approved by the Compensation Committee for each NEO as set forth below. Mr. Rhodes, who was hired effective May 30, 2023, was not eligible to receive a bonus in any of fiscal 2023.
Short-Term Cash Incentives
| 2023 PROXY STATEMENT | | 49 |
Short-Term Cash Incentives
| Named Executive Officer | 1st Half Compensation | Target Bonus as % of Base Pay | 1st Half Perf Factor | EIP Paid Feb 2023 | 2nd Half Compensation | Target Bonus as % of Base Pay | 2nd Half Perf Factor | EIP Paid Aug 2023 | Total Compensation from Bonus for FY23 | | Edward B. Meyercord | $400,000 | 130% | 109.6% | $569,920 | $400,000 | 130% | 106.7% | $554,840 | $1,124,760 | | Kevin Rhodes | — | — | — | — | 45,513 | 85% | — | — | — | | Joe Vitalone | 230,000 | 100% | 109.6% | 252,080 | 230,000 | 100% | 106.7% | 245,410 | 497,490 | | Remi Thomas | 250,000 | 85% | 109.6% | 232,900 | 64,423 | 85% | — | — | 232,900 | | Cristina Tate | 154,005 | 45% | 110.0% | 78,519 | 173,171 | 45% | 109.9% | 85,600 | 164,119 |
Short-Term Cash Incentives
Overall, for the full fiscal year, our NEOs received approximately 108.2% of their annual target short-term cash incentive opportunities. The payments to our NEOs for fiscal 2023 were above target award opportunities for the full fiscal year and were directly tied to performance. Ms. Tate, who was interim CFO, received 111.5% of her annual target short-term cash incentive opportunity differentiated by her strong individual performance, as allowed per the company EIP, as a non-NEO at the time her bonus was determined. Fiscal 2023 short-term cash incentives paid to Messrs. Meyercord, Thomas, Vitalone and Ms. Tate equaled $1,124,760, $232,900, $497,490 and $164,119, respectively, as shown above and in the Summary Compensation Table. A GAAP to non-GAAP reconciliation for non-GAAP performance measures under the EIP is provided in this proxy statement under the section “Non-GAAP Measures of Financial Performance – GAAP to non-GAAP Reconciliation.”
Long-Term Equity Incentive Compensation
Long-Term Equity Incentive Compensation We provide equity awards under the Company’s Amended and Restated 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan”) to our NEOs to promote the achievement of longer-term financial and strategic objectives, to encourage employee retention and to align the interests of our executive officers and of our stockholders. We have historically granted equity to NEOs in the form of performance-based awards and time-based awards. The Compensation Committee believes that the RSUs and performance stock units (“PSUs”) granted to our CEO in fiscal 2023 provide appropriate retention incentives while maintaining a direct link between CEO compensation and stockholder value creation and continuing to hold our CEO accountable to the Company’s performance and overall stockholder return. We believe that RSUs are an effective retention and compensatory tool because they retain value even during a challenging economic environment, and provide a retentive effect to maintain our top talent. Meanwhile, PSUs provide an incentive to enhance stockholder value since they are earned based on performance targets related to stockholder return. New Hire Awards - Generally, we grant equity awards to our new employees, including newly employed NEOs, in connection with the commencement of their employment to induce them to join us and to tie their long-term compensation to future increases in our stock price. The type of award, the aggregate amounts of such awards and the vesting terms of the new-hire awards granted to our NEOs are recommended by our CEO to the Chair of the Compensation Committee and are reviewed and approved by our Compensation Committee following consultation with our compensation consultants, Compensia, in consideration of such NEO’s ability to influence Company performance and such NEO’s prior experience. Our new hire equity awards typically are larger than the annual awards made to NEOs during their continued period of employment. In fiscal year 2023, the Compensation Committee granted Mr. Rhodes a sign-on cash bonus of $250,000, subject to pro-rata repayment if his employment terminates within one year, and a sign-on equity grant of a new hire award of RSUs of 47,500 shares, which will vest, subject to his continued employment, on December 30, 2023. In addition, the Compensation Committee granted Mr. Rhodes 142,250 RSUs subject to time-based vesting. One-third of these RSUs will vest on the first anniversary of the grant date and one-twelfth of the RSUs will vest on each three (3) month anniversary of the grant date thereafter, subject to his continued service to the Company. The Compensation Committee also granted Mr. Rhodes 189,750 PSUs, as described below under “—Long-Term Equity Compensation—Annual Awards.” Mr. Rhodes was not eligible for the EIP for the second half of fiscal 2023, and did not receive any annual refresh grants of RSUs or PSUs at the regular award cycle in August 2023. In addition, the Compensation Committee granted a cash bonus of $50,000 and 5,341 time-based RSUs to Ms. Tate in connection with her appointment as Interim Chief Financial Officer. The RSUs will vest, subject to her continued employment, on February 15, 2024. Annual Awards - We also make annual grants to our NEOs, with the goal of aligning the interests of management and our stockholders by providing continued incentives to our NEOs to retain strong executives and improve corporate performance.
Long-Term Equity Incentive Compensation
| 2023 PROXY STATEMENT | | 50 |
Long-Term Equity Incentive Compensation
Awards granted to NEOs other than our CEO, including both the size and type of the award, are recommended to the Compensation Committee by our CEO. Compensia prepared a compensation market analysis with data gathered from the peer group in connection with this annual review and advises the Compensation Committee in connection with its review of our CEO’s recommendations. Compensia also advises the Compensation Committee on the size and type of the award to be granted to our CEO. The Compensation Committee regularly evaluates Mr. Meyercord's role in the Company's growth and profitability, as well as the Company's relative TSR performance. In fiscal 2023, in recognition of Mr. Meyercord's performance in that role, impact to the Company, and desire to retain his services, the Compensation Committee decided to make a meaningful increase in the value of performance-based grants offered to Mr. Meyercord. In fiscal years 2021, 2022 and 2023, the Compensation Committee approved grants of RSUs and PSUs for our NEOs. One-third of the RSUs vest on the first anniversary of the vesting commencement date and 1/12th of the RSUs vest on each quarterly anniversary thereafter, subject to the executive’s continued service to the Company. The PSU awards may be earned based on the Company’s total shareholder return (“TSR”) relative to the Russell 2000 Index (“Index”) over an overall three-year performance period and an overall payout range of 25% of target to 150% of target. While the opportunity to earn any above-target portion of the award is based on three-year performance, executives have the opportunity to earn up to one-third of the target number of shares subject to the award after each of the first and second years of the performance period based on one-year and two-year relative TSR, respectively. At the end of the full three-year period, there is an opportunity to earn up to 150% of the full target number of shares subject to each award based on the three-year TSR relative to the Index, less any shares earned for years one and two. For each performance period, the target number of shares will be earned if the Company’s TSR equals that of the Index, with linear scaling for performance below or above target based on a two-to-one factor (i.e., the number of shares earned will increase by 2% of target for each 1% the Company’s TSR exceeds the Index or the number of shares earned will decrease by 2% of target for each 1% the Company’s TSR is below the Index). No payout is earned if the Company's TSR is more than 37.5% below the Index. We believe the design of these PSUs provides a strong, long-term performance orientation given that the upside opportunity is only provided for strong three-year relative TSR performance and any portion earned based on one- or two-year relative TSR performance is capped at 100% of target of one-third of the overall award. Performance-Based Awards with On-going Performance Periods During Fiscal 2023 - During fiscal 2023, performance-based awards granted in fiscal 2020, 2021 and 2022 were outstanding. Due to his resignation, Mr. Thomas was not eligible to earn any portion of any of his awards for fiscal 2023. August 2020 PSUs - In August 2020, the Compensation Committee approved grants of PSUs to Mr. Meyercord and Mr. Thomas as described above under “—Long-Term Equity Compensation—Annual Awards.” On August 18, 2021, the Compensation Committee certified that the performance target for these PSU awards was exceeded for the first-year measurement period, as the Company’s total stock return for the one-year measurement period was 140%, as compared to the Index TSR performance of 49%. Pursuant to the grant, Messrs. Meyercord and Thomas earned 100% of the target portion of the award for year one, which is a maximum of 33% of the original grant. On August 16, 2022, the Compensation Committee certified that the performance target for these PSU awards was exceeded for the second-year measurement period, as the Company’s total stock return for the two-year measurement period was 157%, as compared to the Index TSR performance of 23%. Pursuant to the grant, Messrs. Meyercord and Thomas earned 100% of the target portion of the award for year two, which is a maximum of 33% of the original grant. On August 16, 2023, the Compensation Committee certified that the performance target for these PSU awards was exceeded for the third and final year measurement period, as the Company’s total stock return for the three-year measurement period was 527%, as compared to the Index TSR performance of 30%. Pursuant to the grant, Mr. Meyercord has earned 84% of the target portion of the award for year three, which, including the portions previously earned, is a maximum of 150% of the original grant. August 2021 PSUs - In July 2021, the Compensation Committee approved grants of PSUs to Messrs. Meyercord Thomas, and Vitalone as described above under “—Long-Term Equity Compensation—Annual Awards.” On August 16, 2022, the Compensation Committee certified that the performance target for these PSU awards was exceeded for the first-year measurement period, as the Company’s total stock return for the one-year measurement period was 7%, as compared to the Index TSR performance of -17%. Pursuant to the grant, Messrs. Meyercord, Thomas, and Vitalone earned 100% of the target portion of the award for year one, which is a maximum of 33% of the original grant. On August 16, 2023, the Compensation Committee certified that the performance target for these PSU awards was exceeded for the second-year measurement period, as the Company’s total stock return for the two-year measurement period was 161%, as
Long-Term Equity Incentive Compensation
| 2023 PROXY STATEMENT | | 51 |
Long-Term Equity Incentive Compensation
compared to the Index TSR performance of -12%. Pursuant to the grant, Messrs. Meyercord and Vitalone have earned 100% of the target portion of the award for year two, which is a maximum of 33% of the original grant. August 2022 PSUs - In July 2022, the Compensation Committee approved grants of PSUs to Messrs. Meyercord Thomas, and Vitalone as described above under “—Long-Term Equity Compensation—Annual Awards.” On August 16, 2023, the Compensation Committee certified that the performance target for these PSU awards was exceeded for the first-year measurement period, as the Company’s total stock return for the one-year measurement period was 147%, as compared to the Index TSR performance of 6%. Pursuant to the grant, Messrs. Meyercord, and Vitalone have earned 100% of the target portion of the award for year one, which is a maximum of 33% of the original grant. May 2023 PSUs - In May 2023, in connection with Mr. Rhodes' hiring, the Compensation Committee approved grants of PSUs to Mr. Rhodes as described above under “—Long-Term Equity Compensation—Annual Awards.” These grants are still within the first-year measurement period, and no PSUs granted have yet been earned.
Change in Control and Severance Arrangements
Change in Control and Severance Arrangements Each of our NEOs is employed at-will. However, from time to time, we implement plans or enter into agreements that would provide benefits payable to certain employees, including our NEOs, in connection with qualifying terminations of their employment or a change in control of the Company. These benefits assist us in our recruiting efforts and are competitive compared to our peer group. Additionally, without change in control benefits, our NEOs may be distracted by the transaction process or may terminate their employment prior to the closing of the change in control, particularly if they do not wish to remain with, or believe they will not be retained by, the remaining entity after the transaction closes. Such departures could jeopardize the consummation of a potential transaction, or our interests should the transaction not close. The Compensation Committee believes that these benefits therefore serve to enhance stockholder value and align our NEOs’ interest with those of our stockholders. Our agreements with our NEOs and our change in control and severance arrangements are described under “Summary of Employment and Other Agreements” below. The estimated potential payments that each NEO would have received if a change in control of the Company or termination of employment had occurred on June 30, 2023 are set forth under “Estimated Payments Upon Termination Without Cause or Upon Change in Control” below.
Other Benefits
Other Benefits Generally, the Company does not provide perquisites or other personal benefits to our NEOs, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our NEOs more efficient and effective, and for recruitment and retention purposes. We do not provide a defined benefit retirement pension plan, deferred compensation plan, or the use of company vehicles to our NEOs. During fiscal 2023, each of our NEOs who joined the Company before May 4, 2016, currently only Mr. Meyercord, was eligible to receive a special benefit in the event of his death or disability which includes a cash payment and full vesting of any outstanding time-based equity awards. See “Summary of Employment and Other Agreements” for more information on this death and disability benefit. This additional benefit is intended to make sure that the income provided to a NEO in the event of their disability is representative of their pre-disability earnings at the same percentage as other employees. We provide other customary benefits to our NEOs that we provide to all of our full-time U.S. based employees. Those benefits include medical, dental, vision and prescription drug insurance coverage; flexible spending contribution plan; disability insurance; life insurance; business travel insurance; a Section 401(k) savings plan with employer match up to a predetermined percentage and maximum dollar amount; educational assistance; employee assistance program; employee stock purchase plan; and paid holidays. We do not provide a fixed vacation allowance for NEOs and other U.S. employees, as they may be required to travel extensively and are required to be available to us even while vacationing. All future practices with respect to perquisites or other personal benefits will be subject to review and approval by our Compensation Committee. See the "Summary Compensation Table" for more information on the benefits described above.
Compensation-Related Risk Evaluation
Compensation-Related Risk Evaluation The Compensation Committee has reviewed compensation-related risks and does not believe the Company’s compensation programs encourage excessive or inappropriate risk-taking or create risks that are reasonably likely to have a material adverse effect on the Company for the following reasons: • The base salary and cash bonus components of the compensation program are designed to provide income independent of the Company’s stock price performance so that employees will not focus exclusively on stock price performance to the detriment of other important business metrics. • We generally utilize formulaic annual and long-term incentive plan awards instead of discretionary payments. The cash bonus and equity components of compensation are designed to reward both short- and long-term company performance, which discourages employees from taking actions that focus solely on the short-term success of the Company. • Because EBITDA performance was used in addition to revenue for determining cash bonus payments during fiscal 2023 short-term incentive program, our NEOs and other employees were encouraged to take a balanced approach that focused on generating corporate revenue while taking into account operating expenses. • The Company’s EBITDA performance target under the EIP is applicable to our executives and employees (other than most sales employees) alike, regardless of functional group. • The Company caps the performance-based cash incentives and performance-based equity awards for our executives at 150% of target, which discourages excessive risk taking. • PSUs granted to NEOs are tied to relative stock return performance, and PSOs previously granted to NEOs are tied to stock price performance, resulting in a diverse and blended set of pre-established goals. • Senior executives, including our chief revenue officer, do not participate in the Sales Compensation Plan and are thus limited to the EIP payouts so they are incentivized to balance both revenue and profitability, which discourages excessive risk taking by our executives. We have internal controls and oversight on plan payouts and exceptions. • Our executives and other employees are entitled to reasonable severance payments and benefits that are consistent with payments and benefits provided by other public companies. • The Company has adopted a recoupment policy that under certain circumstances allows it to recover incentive-based compensation paid to current and former executives.
Fiscal 2023 Summary Compensation Table
Fiscal 2023 Summary Compensation Table The following table sets forth information for fiscal 2023, 2022, and 2021, as applicable, concerning the compensation of our NEOs.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($) (4) | Total ($) | | Edward B. Meyercord | 2023 | $800,000 | — | $14,190,565 | — | $1,124,760 | $17,353 | $16,132,678 | | | 2022 | 760,000 | — | 7,419,370 | — | 710,372 | 17,442 | 8,907,184 | | | 2021 | 725,000 | — | 3,834,580 | — | 1,002,349 | 7,972 | 5,569,901 | | Kevin Rhodes(6) | 2023 | 45,513 | 250,000 | 8,163,045 | — | — | 15,000 | 8,473,558 | | Joe Vitalone | 2023 | 460,000 | — | 2,933,472 | — | 497,490 | 19,704 | 3,910,666 | | | 2022 | 420,000 | — | 1,780,654 | — | 301,980 | 9,057 | 2,511,691 | | | 2021 | 400,000 | 100,000 | 1,788,000 | — | 325,400 | 6,600 | 2,620,000 | | Remi Thomas(5) | 2023 | 314,423 | — | 3,226,959 | — | 232,900 | 4,119 | 3,778,401 | | | 2022 | 460,000 | — | 1,780,654 | — | 281,129 | 5,500 | 2,527,283 | | | 2021 | 440,000 | — | 917,007 | — | 397,749 | 3,492 | 1,758,248 | | Cristina Tate | 2023 | 327,176 | — | 652,598 | — | 164,119 | 7,500 | 1,151,393 |
SUMMARY COMPENSATION TABLE
(1) For 2023, the amount in this column represents the sign-on bonus paid to Mr. Rhodes in connection with his commencement of employment with us under his employment offer letter. For 2021, the amount in this column represents the guaranteed portion of the EIP for the First Half Performance Period to Mr. Vitalone under his employment offer letter. (2) Represents the aggregate grant date fair value computed in accordance with ASC Topic 718 and does not reflect whether our NEOs actually realized a financial benefit from the award. For information on the assumptions used to calculate the value of the awards, refer to Note 12 of our consolidated financial statements in our Form 10-K for the fiscal year ended June 30, 2023. (3) For 2021, amounts in this column represent payments made to the relevant NEO under the First Half and Second Half Performance Periods as described above under “—Short-Term Cash Incentives—” and excludes the guaranteed portion of the EIP for the First Half Performance Period to Mr. Vitalone under his employment offer as described above under “—Short-Term Cash Incentives—First Half Performance Period”. (4) All Other Compensation for all NEOs for fiscal 2023 consisted of matching contributions under our Section 401K plan, premium payments for the executive disability top up (solely for Mr. Meyercord), reimbursement for Mr. Rhodes’ legal fees incurred in connection with the negotiation of his employment offer, spousal travel, and company-taxable health saving account. (5) Mr. Thomas resigned from employment with the Company effective February 16, 2023. Mr. Rhodes commenced employment with the Company effective May 30, 2023.
SUMMARY COMPENSATION TABLE
| 2023 PROXY STATEMENT | | 55 |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth certain information with respect to stock and option awards and other plan-based awards, including non-equity incentive awards (cash bonuses), granted to our NEOs during fiscal 2023. For a narrative description of the various plan-based awards set forth in the following table, see the discussion above under the heading “Compensation Discussion and Analysis.”
Grants of Plan-Based Awards
| | | Estimated Future Payout Under Non Equity | | | Estimated Future Payouts Under | | | All Other Stock Awards: Number of | Grant Date Fair Value of Stock | | | | Incentive Plan (1) | | | Equity Incentive Plan Awards (2) | | | Shares | and | | | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | of Stock | Option | | Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | or Units (#) | Awards (3) | | Edward B. Meyercord | | $520,000 | $1,040,000 | $1,560,000 | — | — | — | — | — | | | 8/15/2022 | — | — | — | 115,961 | 463,845 | 695,768 | | $7,687,458 | | | 8/15/2022 | — | — | — | — | — | — | 463,845(4) | 6,503,107 | | Kevin Rhodes | 5/30/2023 | — | — | — | 47,438 | 189,750 | 284,625 | — | 4,426,868 | | | 5/30/2023 | — | — | — | — | — | — | 142,250(5) | 2,800,903 | | | 5/30/2023 | — | — | — | — | — | — | 47,500(6) | 935,275 | | Joe Vitalone | | 230,000 | 460,000 | 690,000 | — | — | — | — | — | | | 8/15/2022 | — | — | — | 23,972 | 95,886 | 143,829 | — | 1,589,151 | | | 8/15/2022 | — | — | — | — | — | — | 95,886(4) | 1,344,322 | | Remi Thomas | | 133,630 | 267,260 | 400,889 | — | — | — | — | — | | | 8/15/2022 | — | — | — | 26,370 | 105,479 | 158,219 | — | 1,748,144 | | | 8/15/2022 | — | — | — | — | — | — | 105,479(4) | 1,478,816 | | Cristina Tate | | 139,050 | 278,100 | 417,149 | — | — | — | — | — | | | 8/15/2022 | — | — | — | — | — | — | 20,650(4) | 289,513 | | | 8/15/2022 | — | — | — | — | — | — | 15,288(4) | 214,338 | | | 8/15/2022 | — | — | — | — | — | — | 3,341(7) | 46,841 | | | 2/15/2023 | — | — | — | — | — | — | 5,341(8) | 101,906 |
Grants of Plan-Based Awards
(1) Represents threshold, target and maximum payouts under the First and Second Half Performance Periods under the fiscal 2023 EIP as described above under “—Short-Term Cash Incentives—First and Second Half Performance Periods.” Threshold and maximum payouts correspond to 50% and 150% of target, respectively. The actual amount earned by each named executive officer under the First and Second Half Performance Periods is set forth in the Summary Compensation Table elsewhere in this Proxy Statement. Mr. Rhodes was not eligible to receive a bonus under the fiscal 2023 EIP. (2) These PSU awards may be achieved at a minimum threshold of 25% of the target payout, target payout, or a maximum of 150% of the target payout subject to the Company’s TSR relative to the Russell 2000 Index over a three-year period, with an annual achievement of 1/3 of the target payout in years one and two, with the maximum payable, if met, in year three. If the minimum threshold is not met, no shares will be achieved. (3) The grant date fair value is calculated in accordance with ASC Topic 718 and excludes the impact of estimated forfeitures related to service-based vesting conditions. (4) These RSUs vested as to 1/3 of the units on August 15, 2023 and as to 1/12 of the award each quarter thereafter, subject to the NEO’s continued service through such dates. (5) These RSUs vest as to 1/3 of the units on May 30, 2024 and as to 1/12 of the award each quarter thereafter, subject to the NEO’s continued service through such dates. (6) These sign-on RSUs vest in full on December 30, 2023, subject to Mr. Rhodes' continued service through such date. (7) These RSUs vested in full on August 15, 2023. (8) These RSUs vest in full on February 15, 2024, subject to Ms. Tate's continued service through such date.
Pension Benefits and Nonqualified Deferred Compensation Plans
Pension Benefits and Nonqualified Deferred Compensation Plans We do not have any plans with any of our NEOs that provide for payments or other benefits at, following, or in connection with retirement. We also do not have any defined contribution or other plan with any of our NEOs that provides for the deferral of compensation on a basis that is not tax qualified.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information regarding each unexercised option and all unvested stock awards held by each of our NEOs as of June 30, 2023.
Outstanding Equity Awards at Fiscal Year-End
| | OPTIONS AWARDS | | | | | STOCK AWARDS | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Exercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | 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) | | Edward B. Meyercord | 330,200(2) | — | | 6.40 | 8/29/2025 | — | — | — | — | | | 597,042 | 39,803(3) | — | 6.70 | 8/28/2026 | — | — | — | — | | | — | — | — | — | — | 31,961(4) | 832,584 | — | — | | | — | — | — | — | — | 130,274(5) | 3,393,638 | — | — | | | — | — | — | — | — | 463,845(6) | 12,083,162 | — | — | | | — | — | — | — | — | — | — | 127,777(7) | 3,328,591 | | | — | — | — | — | — | — | — | 208,437(8) | 5,429,784 | | | — | — | — | — | — | — | — | 463,845(9) | 12,083,162 | | Kevin Rhodes | — | — | — | — | — | 142,250(10) | 3,705,613 | — | — | | | — | — | — | — | — | 47,500(11) | 1,237,375 | — | — | | | — | — | — | — | — | — | — | 189,750(12) | 4,942,988 | | Joe Vitalone | — | — | — | — | — | 33,150(13) | 863,558 | — | — | | | — | — | — | — | — | 31,266(5) | 814,479 | — | — | | | — | — | — | — | — | 95,886(6) | 2,497,830 | — | — | | | — | — | — | — | — | — | — | 50,026(8) | 1,303,177 | | | — | — | — | — | — | — | — | 95,886(9) | 2,497,830 | | Remi Thomas | — | — | — | — | — | — | — | — | — | | Cristina Tate | — | — | — | — | — | 6,687(5) | 174,196 | — | — | | | — | — | — | — | — | 20,650(6) | 537,933 | — | — | | | — | — | — | — | — | 15,288(6) | 398,252 | — | — | | | — | — | — | — | — | 3,341(14) | 87,033 | — | — | | | — | — | — | — | — | 5,341(15) | 139,133 | — | — |
Outstanding Equity Awards at Fiscal Year-End
(1) The market value of the share awards is based on the closing price of our common stock as of June 30, 2023, which was $26.05. (2) These performance-based stock options were earned when the closing stock price of the Company’s common stock traded for 30 consecutive days at $10.00 or above between May 14, 2021 and June 25, 2021, which was during the performance period beginning August 31, 2018 and ending on August 31, 2021. Once earned, the PSOs vest as to 1/3rd of the shares subject thereto on August 31, 2019 and as to 1/12th of the shares thereto on each quarterly anniversary thereafter, with any shares that would have already been vested in accordance with the time-based vesting schedule vesting immediately when the PSOs are earned. (3) The option vested as to 1/4th of the shares subject to the option on August 31, 2020 and vests as to 1/16th of the shares subject to the option on each quarterly anniversary thereafter, subject to the NEO’s continued service through such dates. (4) These RSUs vested as to 1/3 of the units on August 31, 2021, and vest as to 1/12th of the award each quarter thereafter, subject to Mr. Meyercord's continued service through such dates. (5) These RSUs vested as to 1/3 of the units on August 15, 2022, and vest as to 1/12th of the award each quarter thereafter, subject to the NEO’s continued service through such dates. (6) These RSUs vested as to 1/3 of the units on August 15, 2023 and vest as to 1/12th of the award each quarter thereafter, subject to the NEO’s continued service through such dates. (7) These PSU awards may be earned based on the Company’s total shareholder return relative to the Russell 2000 Index (“Index”) over an overall three-year performance period ending in August 2023 and an overall payout range of 25% of target to 150% of target. These PSU awards may be earned based on the Company’s total shareholder return relative to the Russell 2000 Index (“Index”) over an overall three-year performance period ending in August 2024 and an overall payout range of 25% of target to 150% of target
Outstanding Equity Awards at Fiscal Year-End
| 2023 PROXY STATEMENT | | 61 |
Outstanding Equity Awards at Fiscal Year-End
These PSU awards may be earned based on the Company’s total shareholder return relative to the Russell 2000 Index (“Index”) over an overall three-year performance period ending in August 2025 and an overall payout range of 25% of target to 150% of target These RSUs vest as to 1/3 of the units on May 30, 2024, and vest as to 1/12th of the award each quarter thereafter, subject to Mr. Rhodes' continued service through such dates. (11) These RSUs vest in full on December 30, 2023, subject to Mr. Rhodes' continued service through such date. (12) These PSU awards may be earned based on the Company’s total shareholder return relative to the Russell 2000 Index (“Index”) over an overall three-year performance period ending in May 2026 and an overall payout range of 25% of target to 150% of target. (13) These RSUs vested as to 1/3 of the units on July 15, 2021, and vest as to 1/12th of the award each quarter thereafter, subject to the NEO’s continued service through such dates. (14) These RSUs vested in full on August 15, 2023. (15) These RSUs vest in full on February 15, 2024, subject to Ms. Tate’s continued service through such date.
Option Exercises and Stock Vested During Last Fiscal Year
Option Exercises and Stock Vested During Last Fiscal Year The following table sets forth certain information concerning option exercises and vesting of common stock awards (either RSUs or PSUs) held by our NEOs during the fiscal year ended June 30, 2023.
Option Exercises and Stock Vested During Last Fiscal Year
| | OPTION AWARDS | | STOCK AWARDS | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Edward B. Meyercord | — | $— | 564,192 | $8,543,819 | | Joe Vitalone | — | — | 202,108 | 3,105,599 | | Remi Thomas | — | — | 128,396 | 1,913,216 | | Cristina Tate | — | — | 14,962 | 226,095 |
Estimated Payments Upon Termination or Upon Change in Control
Estimated Payments Upon Termination or Upon Change in Control We have entered into agreements and maintain certain plans and policies that entitle our NEOs to certain benefits in the event of (i) a termination of employment of an NEO other than for Cause or our CEO’s resignation for Good Reason, in either case, and not resulting from a Change in Control of the Company; (ii) a termination of employment of an NEO resulting from the death or disability of an NEO; (iii) a Change in Control; or (iv) a termination of employment of an NEO by the Company other than for Cause or by the NEO for Good Reason in connection with a Change in Control of the Company. These agreements, plans and policies, including the circumstances that would trigger payments or the provision of other benefits, and material conditions and obligations applicable to the recipient of payments and benefits, are described in “Summary of Employment and Other Agreements” elsewhere in this “Executive Compensation” section. The following table describes the potential payments that we would have been required to make to our NEOs upon: (i) a termination of employment of the NEO other than for Cause or a resignation of our CEO for Good Reason outside a Change in Control Period (which is the period of time commencing 3 months prior to the signing of a definitive agreement that results in a Change in Control and ending 18 months after a Change in Control); (ii) a Change in Control; (iii) a termination of employment of the NEO by the Company other than for Cause or by the NEO for Good Reason during a Change in Control Period; and (iv) a termination of employment of the NEO resulting from the death or disability of such NEO (both during and outside of a Change in Control Period); in each case, assuming such qualifying event(s) took place on June 30, 2023, under the assumptions set forth in the footnotes to the table. The amounts listed below do not include the payment of accrued salary that would be due upon termination of employment and are not adjusted for any applicable tax withholding.
Estimated Payments Upon Termination or Upon Change in Control
| 2023 PROXY STATEMENT | | 62 |
Estimated Payments Upon Termination or Upon Change in Control
| Name | Potential Payments upon Termination Other than for Cause Outside of a Change in Control Period($)(1) | Potential Payments Following Change in Control ($)(2) | Potential Payments Upon Termination Other Than for Cause or a Resignation for Good Reason During Change in Control Period($)(3) | Potential Payments upon Termination as a Result of Death or Permanent Disability outside of a Change in Control Period($)(4) | Potential Payments Upon Termination as a Result of Death or Permanent Disability During Change in Control Period($)(5) | | Edward B. Meyercord | | | | | | | Salary | $800,000(6) | $— | $1,600,000(7) | $800,000(6) | $1,600,000(7) | | Bonus | —(8) | — | 3,120,000(9) | — | 3,120,000(9) | | Equity award vesting acceleration | 10,616,973(10) | 35,038,186(11) | 42,900,047(11) | 17,065,640(11) | 35,038,186(11) | | Health and Welfare Benefits | 31,724(12) | — | 63,448(13) | — | — | | Outplacement Benefits | 10,400 | — | 15,643(15) | — | — | | Kevin Rhodes | | | | | | | Salary | 517,000(6) | — | 750,000(7) | — | — | | Bonus | —(8) | — | 1,062,500(9) | — | — | | Equity award vesting acceleration | — | 5,087,435(11) | 5,132,764(11) | — | 5,087,435(11) | | Health and Welfare Benefits | 15,864(12) | — | 47,592(13) | — | — | | Outplacement Benefits | 10,400(14) | — | 15,643(15) | — | — | | Joe Vitalone | | | | | | | Salary | 477,000(6) | — | 690,000(7) | — | — | | Bonus | 245,410(8) | — | 1,150,000(9) | — | — | | Equity award vesting acceleration | | 5,735,078(11) | 6,152,733(11) | — | 5,735,078(11) | | Health and Welfare Benefits | 22,128(12) | — | 33,192(13) | — | — | | Outplacement Benefits | 10,400(14) | — | 15,643(15) | — | — | | Cristina Tate | | | | | | | Salary | 175,000(6) | — | 350,000(7) | — | — | | Bonus | 85,600(8) | — | 393,750(9) | — | — | | Equity award vesting acceleration | — | 1,366,547(11) | 1,336,547(11) | — | 1,366,547(11) | | Health and Welfare Benefits | 24,161(12) | — | 39,536(13) | — | — | | Outplacement Benefits | 6,200(14) | — | 10,400(15) | — | — |
Estimated Payments Upon Termination or Upon Change in Control
Assumes termination without Cause for each NEO or, in the case of our CEO and CFO, a resignation for Good Reason, in each case, as of June 30, 2023, and not during a Change in Control Period. (2) Assumes a hypothetical Change in Control as of June 30, 2023, with no termination of employment during the Change in Control Period. Also assumes that the company acquiring us in the hypothetical change in control did not assume or substitute equivalent replacements for the outstanding equity awards of the participants in the CiC Plan. (3) Assumes a hypothetical Change in Control with termination without Cause or for Good Reason, in each case, as of June 30, 2023. (4) Assumes a termination due to death or permanent disability as of June 30, 2023, and not during a Change in Control Period. (5) Assumes a hypothetical Change in Control with a termination due to death or permanent disability, in each case, as of June 30, 2023. (6) Represents a lump sum cash payment equal to 12 months’ base salary for Mr. Meyercord as described in his offer letter. For Messrs. Rhodes and Vitalone, this represents a payment equal to 12 months' base salary plus $17,000. Ms. Tate, who is eligible to participate in the Vice President/Senior Vice President Severance Practice following her cessation of service as Interim CFO, this represents a payment equal to 6 months’ base salary. (7) Represents a lump sum cash payment equal to 2x base salary for Mr. Meyercord, 1.5x base salary for Messrs. Rhodes, Vitalone, and Thomas, and 1x base salary for Ms. Tate. (8) Because there were no Board-approved Company performance targets in the quarter immediately preceding June 30, 2023, Mr. Meyercord would not have been eligible to receive a prorated bonus. For Mr. Vitalone and Ms. Tate, the amount represents the bonus payout for the second half of fiscal 2023. (9) Represents 2x target bonus for Mr. Meyercord, 1.5x target bonus for each other NEO, and for each NEO, an additional 1x target bonus representing the prorated target bonus as of fiscal year end. Represents an additional 12 months accelerated vesting of all time-based equity awards. Assumes a price per share of our common stock equal to $26.05, the closing market price on June 30, 2023. In the case of RSUs, the amount represents the aggregate value of all shares that would be accelerated. In the case of stock options, the amount represents any positive
Estimated Payments Upon Termination or Upon Change in Control
| 2023 PROXY STATEMENT | | 63 |
Estimated Payments Upon Termination or Upon Change in Control
aggregate spread (i.e., any positive difference between the exercise price and the closing price of our common stock on June 30, 2023) with respect to all options that would be accelerated. Represents full accelerated vesting of all time-based equity awards, assuming the acquiring entity did not assume or substitute equivalent replacement of for the outstanding awards upon a Change in Control. Assumes a price per share of our common stock equal to $26.06, the closing market price on June 30, 2023. In the case of RSUs, the amount represents the aggregate value of all shares that would be accelerated. In the case of stock options, this amount represents any positive aggregate spread (i.e., the difference between the exercise price and the closing price of our common stock on June 30, 2023) with respect to all options that would be accelerated. Assuming the per share consideration paid to our stockholders was equal to the closing stock price on June 30, 2023, the PSUs granted in August 2020 would be deemed to be earned at maximum achievement as of such Change in Control and as a result Messrs. Meyercord and Thomas would earn a number of shares equal to 150% of their respective target number of PSUs; the PSUs granted in August 2021 would be deemed to be earned at target achievement as of such Change in Control and as a result Mr. Meyercord and Mr. Vitalone would earn a number of shares equal to 100% of their target number of PSUs; the PSUs granted in August 2022 would be deemed to be earned at target achievement as of such Change in Control and as a result Mr. Meyercord and Mr. Vitalone would earn a number of shares equal to 100% of their target number of PSUs; and the PSUs granted in May 2023 would be deemed to be earned at target achievement as of such Change in Control and as a result Mr. Rhodes would earn a number of shares equal to 100% of the target number of PSUs. (12) Represents the cost of COBRA premiums for 12 months for Messrs. Meyercord and Vitalone and Ms. Tate, and 6 months for Mr. Rhodes. (13) Represents the cost of COBRA premiums for 24 months for Mr. Meyercord and 18 months for each other NEO. (14) Represents Company-paid outplacement services for 12 months for Messrs. Meyercord, Rhodes, and Vitalone, and 6 months for Ms. Tate. (15) Represents Company-paid outplacement services for 24 months for Mr. Meyercord, 18 months for Messrs. Rhodes and Vitalone, and 12 months for Ms. Tate.
CEO Pay Ratio
CEO Pay Ratio As required by Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO: For fiscal 2023, our last completed fiscal year: • The annual total compensation of our CEO, as reported in the Summary Compensation Table as presented elsewhere in this proxy statement, was $16,132,678. • The annual total compensation for our median employee was $110,655. Based on this information, for fiscal 2023, the ratio of the annual total compensation of our CEO to the annual total compensation of median employee was approximately 146 to 1. This pay ratio is a reasonable estimate based on our reasonable judgement and assumptions and calculated in a manner consistent with Item 402(u) of Regulation S-K. SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to the Company’s pay ratio as disclosed above. To identify the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments, and estimates that we used were as follows: o We identified the employee with compensation at the median of the compensation of all our employees by considering our employee population as of June 30, 2023. We choose a new median employee for fiscal 2023 and included all our employees inside and outside the U.S. o We determined our median employee based on a consistently applied compensation measure of annual base salary as of June 30, 2023 for salaried employees and hourly rate multiplied by estimated work schedule of June 30, 2023 for hourly employees. o Amounts paid in foreign currency were converted into United States dollars using June 30, 2023 exchange rates. Using the foregoing methodology, we then calculated the median employee’s total compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $110,655
CEO Pay Ratio
| 2023 PROXY STATEMENT | | 64 |
CEO Pay Ratio
With respect to the annual total compensation for our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table for Fiscal Year 2023.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer, or our chief executive officer (“CEO”), and Non-CEO named executive officers (“NEOs”) and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown.
Pay Versus Performance Disclosure
| | | | | | Value of Initial Fixed $100 Investment based on:(4) | | | | | Year | Summary Compensation Table Total for Edward B. Meyercord(1) ($) | Compensation Actually Paid to Edward B. Meyercord(1,2,3) ($) | Average Summary Compensation Table Total for Non-CEO NEOs(1) ($) | Average Compensation Actually Paid to Non-CEO NEOs(1,2,3) ($) | TSR ($) | Peer Group TSR ($) | Net Income ($ Millions) | GAAP Revenue ($ Millions)(5) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 16,132,678 | 52,660,443 | 4,328,505 | 6,503,978 | 600.15 | 214.79 | 78.1 | 1,312.5 | | 2022 | 8,907,184 | 6,152,038 | 2,519,487 | 1,934,632 | 205.53 | 151.92 | 44.3 | 1,112.3 | | 2021 | 5,569,901 | 17,733,987 | 2,189,124 | 4,964,042 | 257.14 | 152.85 | 1.9 | 1,009.4 |
Pay Versus Performance Disclosure
(1) Edward B. Meyercord was our CEO for each year presented. The individuals comprising the Non-CEO NEOs for each year presented are listed below.
Pay Versus Performance Disclosure
| 2021 | 2022 | 2023 | | Remi Thomas | Remi Thomas | Kevin Rhodes | | Joe Vitalone | Joe Vitalone | Joe Vitalone | | | | Remi Thomas | | | | Cristina Tate |
Pay Versus Performance Disclosure
(2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the CEO and the Non-CEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards columns set forth in the Summary Compensation Table.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for Edward B. Meyercord ($) | Exclusion of Stock Awards for Edward B. Meyercord ($) | Inclusion of Equity Value for Edward B. Meyercord ($) | Compensation Actually Paid to Edward B. Meyercord ($) | | 2023 | 16,132,678 | (14,190,565) | 50,718,330 | 52,660,443 | | 2022 | 8,907,184 | (7,419,370) | 4,664,224 | 6,152,038 | | 2021 | 5,569,901 | (3,834,580) | 15,998,666 | 17,733,987 |
Pay Versus Performance Disclosure
| Year | Average Summary Compensation Table Total for Non-CEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non-CEO NEOs ($) | Average Inclusion of Equity Values for Non-CEO NEOs ($) | Average Compensation Actually Paid to Non- CEO NEOs ($) | | 2023 | 4,328,505 | (3,744,019) | 5,919,492 | 6,503,978 | | 2022 | 2,519,487 | (1,780,654) | 1,195,798 | 1,934,632 | | 2021 | 2,189,124 | (1,352,504) | 4,127,422 | 4,964,042 |
Pay Versus Performance Disclosure
| 2023 PROXY STATEMENT | | 65 |
Pay Versus Performance Disclosure
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay Versus Performance Disclosure
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Edward B. Meyercord ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Edward B. Meyercord ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Edward B. Meyercord ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Edward B. Meyercord ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Edward B. Meyercord ($) | Total - Inclusion Equity Values for Edward B. Meyercord ($) | | 2023 | 29,595,620 | 16,179,993 | — | 4,942,717 | — | 50,718,330 | | 2022 | 6,046,398 | (1,344,933) | — | (37,241) | — | 4,664,224 | | 2021 | 10,011,243 | 3,532,733 | — | 2,454,690 | — | 15,998,666 |
Pay Versus Performance Disclosure
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-CEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non- CEO NEOs ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-CEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non- CEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non- CEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-CEO NEOs ($) | | 2023 | 4,647,543 | 1,040,980 | — | 553,450 | (322,481) | 5,919,492 | | 2022 | 1,451,135 | (308,066) | — | 52,729 | — | 1,195,798 | | 2021 | 3,429,052 | 415,417 | — | 282,953 | — | 4,127,422 |
Pay Versus Performance Disclosure
Any changes to the RSU and PSU fair values from the grant date (for current year grants) and from prior year-end (for prior year grants) are based on our updated stock price at the respective measurement dates and updated performance metric projections (for PSUs). Changes to the stock option fair values are based on the updated stock price at the respective measurement dates, in addition to updated expected option term, implied volatility of our stock over the updated expected option term, and risk-free rate assumptions. (4) The Peer Group TSR set forth in this table utilizes the NASDAQ US Benchmark Computer Hardware Total Return Index (“NASDAQ Computer Hardware Index”), which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended June 30, 2023. The comparison assumes $100 was invested for the period starting June 30, 2020, through the end of the listed year in the Company and in the NASDAQ Computer Hardware Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. We determined GAAP Revenue (“Revenue”) to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our CEO and Non-CEO NEOs in 2023. Specifically, Revenue is used to evaluate CEO and NEO performance under the EIP, a short-term cash incentive plan that is funded based on the Company’s achievement of Revenue goals as well as Company EBITDA goals, with Revenue goals weighted more heavily. This performance measure may not have been the most important financial performance measure for years 2022 and 2021 and we may determine a different financial performance measure to be the most important financial performance measure in future years.
Pay Versus Performance Disclosure
| 2023 PROXY STATEMENT | | 66 |
Relationship Between CEO and Other NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
Relationship Between CEO and Other NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the average of Compensation Actually Paid to our other NEOs, and the Company’s cumulative TSR over the three most recently completed fiscal years.
Relationship Between CEO and Other NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
| 2023 PROXY STATEMENT | | 67 |
Relationship Between CEO and Other NEO Compensation Actually Paid and Net Income
Relationship Between CEO and Other NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the average of Compensation Actually Paid to our other NEOs, and our Net Income during the three most recently completed fiscal years.
Relationship Between CEO and Other NEO Compensation Actually Paid and Net Income
| 2023 PROXY STATEMENT | | 68 |
Relationship Between CEO and Other NEO Compensation Actually Paid and GAAP Revenue
Relationship Between CEO and Other NEO Compensation Actually Paid and GAAP Revenue The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the average of Compensation Actually Paid to our other NEOs, and our GAAP Revenue during the three most recently completed fiscal years.
Relationship Between CEO and Other NEO Compensation Actually Paid and GAAP Revenue
| 2023 PROXY STATEMENT | | 69 |