DEF 14A of Agilysys Inc
Filed Jul 26, 2024 · FY20240000950170-24-086874
CONTENTS
| PROXY STATEMENT | 1 | | 2024 ANNUAL MEETING OF STOCKHOLDERS | 1 | | Annual Meeting Information | 1 | | Corporate Governance | 3 | | Director Compensation | 9 | | PROPOSAL 1: ELECTION OF DIRECTORS | 10 | | Nominees for Director | 10 | | Board Diversity Matrix | 15 | | Vote Required | 15 | | PROPOSAL 2: Approval of THE AGILYSYS, INC. 2024 EQUITY INCENTIVE PLAN | 16 | | Reasons to Vote for Proposal 2 | 16 | | Responsible Features of the 2024 Plan | 17 | | Selected Information Regarding Historical Share Usage under our Equity Compensation Programs | 17 | | Summary of the 2024 Plan | 19 | | Shares Subject to the Plan | 19 | | Eligibility | 19 | | Substitute Awards | 19 | | Minimum Vesting Requirements | 19 | | Administration | 20 | | No Repricing without Shareholder Approval | 20 | | Types of Awards Available for Grant under the 2024 Plan | 20 | | Deferrals | 21 | | Recapitalizations and Reorganizations | 21 | | Change in Control | 21 | | Transferability | 22 | | Forfeiture and Clawbacks | 22 | | Amendment or Termination | 22 | | Federal Income Tax Consequences of Awards under the 2024 Plan | 22 | | New Plan Benefits under the 2024 Plan | 23 | | Equity Compensation Plan Information | 23 | | BENEFICIAL OWNERSHIP OF COMMON SHARES | 25 | | SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 26 | | COMPENSATION DISCUSSION AND ANALYSIS | 27 | | Compensation Focus for Fiscal Year 2024 | 27 | | Compensation Philosophy, Objectives, and Structure | 27 | | Compensation Key Considerations | 28 | | Fiscal Year 2024 Compensation | 29 | | Employment Agreements and Change of Control | 32 | | CEO Pay Ratio Disclosure | 33 | | Additional Compensation-Related Policies and Practices | 33 | | COMPENSATION COMMITTEE REPORT | 36 | | EXECUTIVE COMPENSATION | 37 | | Summary Compensation Table for Fiscal Year 2024 | 37 | | Grants of Plan-Based Awards | 38 | | Outstanding Equity Awards | 39 | | Option Exercises and Stock Vested | 40 | | Termination and Change of Control | 40 | | Pay Versus Performance | 43 | | Analysis of the Information Presented in the Pay versus Performance Table | 44 | | EQUITY COMPENSATION PLAN INFORMATION | 46 |
Director Compensation
Director Compensation During fiscal year 2024, the board of directors approved compensation for non-employee directors consisting of the following: • $40,000 annual cash retainer for each non-employee director; • $35,000 annual cash retainer for the chairman of the board; • $15,000 annual cash retainer for the chairman of the Audit Committee; • $12,500 annual cash retainer for the chairman of the Compensation Committee; • $7,500 annual cash retainer for the chairman of the Nominating & Corporate Governance Committee; • $10,000 annual cash retainer for each member of the Audit, Nominating & Corporate Governance, and Compensation Committees, including each chairman; and • An award of restricted shares to each non-employee director valued at $100,000 on the grant date. We also reimburse our directors for reasonable out-of-pocket expenses incurred for attendance at board of directors and committee meetings. The fiscal year 2024 equity award for each director consisted of 1,435 restricted shares, based on the closing price of the Company’s common stock of $69.65 on the date the grant was approved by the board of directors, and was granted under the 2020 Equity Incentive Plan. The restricted shares vested on March 31, 2024, and provided for pro-rata vesting upon retirement prior to March 31, 2024. Our directors are subject to share ownership guidelines that require ownership of common stock with a market value of six times the director’s respective annual cash retainer within five years of service. We pay no additional fees for board of director or committee meeting attendance.
Director Compensation for Fiscal Year 2024
Director Compensation for Fiscal Year 2024
Director Compensation for Fiscal Year 2024
| Director (1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Total ($) | | Donald Colvin | 65,000 | 100,000 | 165,000 | | Dana Jones | 72,500 | 100,000 | 172,500 | | Jerry Jones | 70,000 | 100,000 | 170,000 | | Michael A. Kaufman | 102,500 | 100,000 | 202,500 | | Melvin Keating | 60,000 | 100,000 | 160,000 | | John Mutch | 70,000 | 100,000 | 170,000 |
Director Compensation for Fiscal Year 2024
(1) Our CEO, Ramesh Srinivasan, is also a member of the board of directors, but he receives no direct compensation for such service. (2) Fees are paid quarterly. Amounts in this column represent the fair value of the restricted shares computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 based on a grant date of May 24, 2023. The closing price of the Company’s common stock on May 24, 2023, was $69.65. As of March 31, 2024, each of Ms. Jones and Messrs. Colvin, Jones, Kaufman, Keating and Mutch held 0 unvested stock awards.
Director Compensation for Fiscal Year 2024
| | 2024 Proxy Statement | 9 |
Director Compensation for Fiscal Year 2024
| | ProPOSAL 1 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| | | |
ELECTION OF DIRECTORS
Our board of directors currently consists of seven members whose term expires at this Annual Meeting. In each case, subject to their earlier death, resignation, removal or retirement, the directors remain in office until their respective successors are duly elected and qualified, notwithstanding the expiration of the otherwise applicable term.
Nominees for Director
Nominees for Director Upon the recommendation of the Nominating and Corporate Governance Committee, comprised of independent directors, the board of directors has nominated each of Donald Colvin, Dana Jones, Jerry Jones, Michael A. Kaufman, Melvin Keating, John Mutch and Ramesh Srinivasan for election to the board of directors for a term of one year, to serve until the annual meeting of stockholders in 2025 and until their successors have been duly elected and qualified, subject to their earlier death, resignation, retirement or removal. Information concerning the nominees for election at this Annual Meeting is set forth below. Unless the stockholder specifies otherwise as to any of these nominees, the shares represented by a validly executed proxy will be voted “FOR” the election of each of Ms. Jones and Messrs. Colvin, Jones, Kaufman, Keating, Mutch and Srinivasan for a one-year term. Each nominee has indicated his or her willingness to serve as a director, if elected. A biography for each director nominee follows and, if applicable, arrangements under which a director was appointed to the board of directors or information regarding any involvement in certain legal or administrative proceedings is provided. Additional information about the experiences, qualifications, attributes, or skills of each director and director nominee in support of his or her service on the board of directors is also provided.
Nominees for Director
| 10 | 2024 Proxy Statement | |
Nominees for Director
| ProPOsal 1 | |
Director Nominees
Director Nominees
Director Nominees
| | PROPOSAL 1: Recommendation of the Board of Directors The board of directors recommends a vote “for” the election of each of the nominees. Proxy cards received by the company will be voted "FOR" the election of each of the nominees unless the stockholder specifies otherwise on the proxy card. |
Director Nominees
| DONALD COLVIN Independent Director Age 71 | Director since 2015 Committee Memberships: • Audit (Chair) Other Public Board Directorships: • Viavi Solutions Inc. • Maxeon Solar Education: Mr. Colvin earned his B.A. in Economics, with honors, and an M.B.A. from the University of Strathclyde in Scotland. | Biographical Information Mr. Colvin is a director of Viavi Solutions Inc. (Nasdaq: VIAV), a global provider of network test, monitoring and assurance solutions, and a director and chairman of the board of Maxeon Solar (Nasdaq: MAXN). He was formerly a director of UTAC Holdings, Ltd., a private Singapore technology company, and a director of Applied Micro Circuits Corporation from 2007 to 2011. Mr. Colvin previously served as Chief Financial Officer of Caesars Entertainment Corporation from November 2012 to January 2015. Caesars Entertainment Group filed for bankruptcy protection in January 2015. Before that, he was Executive Vice President and Chief Financial Officer of ON Semiconductor Corp. from April 2003 to October 2012. Prior to joining ON Semiconductor, he held a number of financial leadership positions, including Vice President of Finance and Chief Financial Officer of Atmel Corporation, Chief Financial Officer of European Silicon Structures as well as several financial roles at Motorola Inc. Value Mr. Colvin Brings to our Board Mr. Colvin’s qualifications and extensive experience include financial management, capital structure, financial strategy, significant public company leadership and board experience, and experience in the hospitality industry which the Company serves. |
Director Nominees
| | 2024 Proxy Statement | 11 |
Director Nominees
| | ProPOSAL 1 |
Director Nominees
| DANA JONES Independent Director Age 49 | Director since 2019 Committee Memberships: • Compensation (Chair) • Audit Education: Ms. Jones graduated Summa Cum Laude and holds a BSE in industrial and operations engineering from the University of Michigan. | Biographical Information Dana Jones has served as Chief Executive Officer and President of RealPage, Inc. since August 2021. She also serves as a current member of RealPage’s Board of Directors and has over two decades of experience leading and growing global enterprise software businesses. Prior to RealPage, Ms. Jones was the Chief Executive Officer of Sparta Systems, the market leader in digital enterprise quality management software for the life sciences space, from March 2018 until March 2021 when Sparta was acquired by Honeywell. She also served as a director of RealPage, Inc. (formerly Nasdaq: RP), from October 2019 to April 2021 when the company was acquired by Thoma Bravo. Prior to joining Sparta Systems in April 2018, Dana served as Chief Executive Officer of Active Network, the leader in activity and event management software, during 2016 and 2017. Before joining Active Network, Ms. Jones was Chief Marketing Officer and Senior Vice President of Products for Sabre Airline Solutions, a global provider of software to the airline industry, from 2012 to 2017. Prior to Sabre, Ms. Jones co-founded Noesis Energy and served as Executive Vice President of Product, Sales, Marketing, and Operations. Ms. Jones also serves on the board of directors of Zapata Computing, a leading enterprise software company for NISQ-based quantum applications. Value Ms. Jones Brings to our Board Ms. Jones is an accomplished software executive with decades of experience leading and growing cloud-based global enterprise software businesses. |
Director Nominees
| JERRY JONES Independent Director Age 68 | Director since 2012 Committee Memberships: • Compensation • Nominating and Corporate Governance Education: Mr. Jones is a 1980 graduate of the University of Arkansas School of Law and holds a bachelor’s degree in public administration from the University of Arkansas. | Biographical Information Mr. Jones is the Executive Vice President, Chief Ethics and Legal Officer of LiveRamp Holdings, Inc. (NYSE: RAMP), a software-as-a-service (SaaS) company that provides the identity platform for powering exceptional experiences. His responsibilities include oversight of its legal, privacy and security teams and various strategic initiatives, including the strategy and execution of mergers and alliances, as well as serving as a director of most wholly owned subsidiary companies. Prior to joining LiveRamp, which is the successor entity to Acxiom Corp., in September 2018, Mr. Jones was the Chief Ethics and Legal Officer at Acxiom since 1999, where he oversaw all legal and data ethics matters. Prior to joining Acxiom, Mr. Jones was a partner with the Rose Law Firm in Little Rock, Arkansas, where he specialized in problem solving and business litigation for 19 years, representing a broad range of business interests. Value Mr. Jones Brings to our Board As the Chief Ethics and Legal Officer of a SaaS company, Mr. Jones has extensive experience with legal, privacy, and cybersecurity matters. He has also led the strategy and execution of mergers and alliances and international expansion efforts. |
Director Nominees
| 12 | 2024 Proxy Statement | |
Director Nominees
| ProPOsal 1 | |
Director Nominees
| MICHAEL A. KAUFMAN Chairman and Independent Director Age 52 | Director since 2014 Committee Memberships: • Compensation • Nominating and Corporate Governance (Chair) Other Public Board Directorships: • Skyline Champion • Yatra Online, Inc. Education: Mr. Kaufman holds a B.A. in Economics from the University of Chicago, where he also received his M.B.A. He also earned a law degree from Yale University. | Biographical Information Mr. Kaufman has served as the Chief Executive Officer of MAK Capital, an investment advisory firm based in New York, New York, since he founded the firm in 2002. He also serves as a director for Skyline Champion, Corp. (NYSE: SKY), Yatra Online, Inc. (Nasdaq: YTRA), Trailhead Biosystems, Inc. and Noveome Biotherapeutics, Inc. Value Mr. Kaufman Brings to our Board As Chief Executive Officer of MAK Capital, a significant stockholder of the Company, Mr. Kaufman is especially qualified to represent the interests of the Company’s stockholders as a director and chairman of the board. Additionally, Mr. Kaufman’s qualifications and experience include capital markets, investment strategy, and financial management. |
Director Nominees
| MELVIN KEATING Independent Director Age 77 | Director since 2015 Committee Memberships: • Compensation • Nominating and Corporate Governance Other Public Board Directorships: • MagnaChip Semiconductor Corporation Education: Mr. Keating holds a B.A. from Rutgers University as well as both an M.S. in Accounting and an M.B.A. in Finance from The Wharton School of the University of Pennsylvania. | Biographical Information Mr. Keating has been a consultant, providing investment advice and other services to private and public companies and private equity firms since 2008. Mr. Keating also serves as a director of MagnaChip Semiconductor Corporation (NYSE: MX), a specialist in OLED panel technology and a designer/manufacturer of analog and mixed signal semiconductor platform solutions (since August 2016). Previously he was a director of Vitamin Shoppe Inc., a retailer of nutritional supplements, from April 2018 until it was taken private in December 2019, and Red Lion Hotels Corporation from July 2010 until June 2017, serving as Chairman of the Board from May 2013 to 2015. During the past five years, Mr. Keating also served on the boards of directors of the following public companies: SPS Commerce, Inc., a provider of cloud-based supply chain management solutions (from March 2018 to May 2019), and Harte Hanks Inc. a global marketing services firm (2017 until July 2020). Value Mr. Keating Brings to our Board Mr. Keating has substantial experience leading public companies in the technology and hospitality industries and is qualified in global operations, financial management and strategy, and capital markets. |
Director Nominees
| | 2024 Proxy Statement | 13 |
Director Nominees
| | ProPOSAL 1 |
Director Nominees
| JOHN MUTCH Independent Director Age 67 | Director since 2009 Committee Memberships: • Audit • Nominating and Corporate Governance Other Public Board Directorships: • Aviat Networks, Inc. Education: Mr. Mutch holds a B.S. in Economics from Cornell University and an M.B.A. from the University of Chicago. | Biographical Information Mr. Mutch has served as managing partner of MV Advisors LLC (“MV Advisors”), a strategic block investment firm that provides focused investment and strategic guidance to small and mid-cap technology companies, since founding the firm in December 2005. From December 2008 to January 2014, Mr. Mutch served as President, CEO and Chairman of the Board of Directors of BeyondTrust Software, a privately-held security software company. Mr. Mutch has served as Chairman of the board of directors of Aviat Networks, Inc. (Nasdaq: AVNW), a global provider of microwave networking solutions, since February 2015, and has served on the board of directors since January 2015. Previously, Mr. Mutch served on the board of directors of Maxwell Technologies, Inc. (formerly Nasdaq: MXWL), a manufacturer of energy storage and power delivery solutions for automotive, heavy transportation, renewable energy, backup power, wireless communications and industrial and consumer electronics applications, from April 2017 to May 2019, YuMe, Inc. (NYSE: YUME), a provider of digital video brand advertising solutions, from July 2017 to February 2018, at which time the company was acquired by RhythmOne PLC (LON: RTHM), a technology-enabled digital media company, and Mr. Mutch continued serving as a director on the RhythmOne PLC board of directors until January 2019. Value Ms. Mutch Brings to our Board As a former chief executive officer and board member of many technology companies, Mr. Mutch has extensive experience in the technology industry, restructuring, financial management and strategy, capital markets, sales management, and marketing. |
Director Nominees
| RAMESH SRINIVASAN President and Chief Executive Officer, Director Age 64 | Director since 2017 Committee Memberships: • None Education: Mr. Srinivasan holds a Post-Graduate Diploma in Management (MBA equivalent) from the Indian Institute of Management, Bangalore, India, and a degree in Engineering from the Indian Institute of Technology (Banaras Hindu University), Varanasi, India. | Biographical Information Mr. Srinivasan has been President and Chief Executive Officer of the Company since January 3, 2017. He previously served as CEO of Ooyala, a Silicon Valley based provider of a suite of technology offerings in the online video space, from January 2016 to November 2016. From March 2015 to November 2015, he was President and CEO of Innotrac Corp., an ecommerce fulfillment provider which merged with eBay Enterprise to form Radial Inc. in 2015. Prior to that, Mr. Srinivasan served as President and CEO of Bally Technologies Inc. (NYSE: BYI) from December 2012 to May 2014, and President and COO from April 2011 to December 2012; he started as Executive Vice President of Bally Systems in March 2005. Mr. Srinivasan was with Manhattan Associates from 1998 to 2005, where his last position was Executive Vice-President of Warehouse Management Systems. Value Mr. Srinivasan Brings to our Board Mr. Srinivasan has nearly three decades of hands-on enterprise software development, execution and senior technology management leadership and strategy expertise and accomplishments, including experience and expertise in driving performance at high growth technology companies and helping them scale their business profitably. |
Director Nominees
| 14 | 2024 Proxy Statement | |
Director Nominees
| ProPOsal 1 | |
Compensation Focus for Fiscal Year 2024
Compensation Focus for Fiscal Year 2024 In determining compensation for our Named Executive Officers in fiscal year 2024, the Committee was primarily focused on: • Maintaining base salary and annual cash incentives for our other Named Executive Officers generally at prior year levels; and • Providing long-term equity incentives to our Named Executive Officers that continued to meet the Company’s compensation objectives. The compensation arrangements with our Named Executive Officers for fiscal year 2024 were similar to the compensation arrangements for Named Executive Officers in prior years. Our CEO’s compensation includes base salary and an annual incentive based on company financial performance that is settled in shares of common stock. The compensation for our other Named Executive Officers includes base salary, annual cash incentives based on company financial performance, and long-term equity incentives. At the 2023 Annual Meeting, approximately 99% of the votes cast approved the Company’s executive compensation program for its Named Executive Officers. The Compensation Committee believes our current program adequately and effectively addresses shareholder concerns, promotes the Company’s business strategy and aligns pay with performance and shareholder value. Consequently, the Compensation Committee continued to link executive pay to performance and maintained annual incentive opportunities for the Named Executive Officers at similar levels as fiscal year 2023. Annual incentive performance targets for fiscal year 2024 were focused on improvements over fiscal year 2023 results. The annual incentive for our CEO, while based on the same company financial measures as the annual incentives for the other Named Executive Officers, was settled in shares of common stock to further align the CEO with stockholder interests and to emphasize long term value creation. Long-term equity incentives for the Named Executive Officers other than the CEO in fiscal year 2024 consisted of grants of shares of restricted stock that vest over three years.
Compensation Philosophy, Objectives, and Structure
Our Compensation Committee adopted its pay philosophy, objectives, and structure for Named Executive Officers to achieve financial and business goals and create long-term stockholder value. Compensation Philosophy and Objectives. For fiscal year 2024, our Compensation Committee’s pay philosophy was to emphasize performance-based compensation tied to annual goals in the form of annual cash incentives and long-term performance-based compensation in the form of long-term equity incentives. The Compensation Committee’s objective was to establish an overall compensation package to: • Reward the achievement of business objectives approved by our board of directors; • Provide a rational, consistent, and competitive executive compensation program that is well understood by those to whom it applies; • Tie a significant portion of compensation to the long-term performance of our common shares; and • Attract, retain, and motivate executives who could significantly contribute to our success. Compensation Structure. Our compensation structure is comprised of: Base Salary — Base salary provides fixed pay levels aimed to attract and retain executive talent. Variations in salary levels among Named Executive Officers are based on each executive’s roles and responsibilities, experience, functional expertise, relation to benchmark pay levels, individual performance, and changes in salaries in the overall general market and for all employees of the Company. Salaries are reviewed annually by our Compensation Committee, and changes in salary are based on these factors and input from our CEO, other than for himself. None of the factors are weighted according to any specific formula. Salaries for new executive officers are generally based on the Compensation Committee’s discretion and judgment but may be based on any of the above-mentioned relevant factors. Annual Incentives — Annual incentives provide variable pay for achievement of the Company’s financial goals, with target incentives set as a percentage of salary, and are designed to reward achievement of goals with an annual cash payment. At the end of each fiscal year, the Compensation Committee considers the aggregate compensation of each Named Executive Officer and may adjust the annual incentive payment otherwise earned if the aggregate compensation is deemed deficient or excessive in the opinion and discretion of the Compensation Committee. Annual incentives are paid in cash except for our CEO, and his annual incentives are settled in shares of common stock. Long-Term Incentives — Long-term incentives are variable, equity incentives designed to drive improvements in performance that build wealth and create long-term stockholder value by tying the value of earned incentives to the long-term performance of our common shares. For Named Executive Officers other than the CEO, target long-term incentives are also set as a percentage of salary.
Compensation Key Considerations
Compensation Key Considerations Annual Goal Setting. Annual goals for our Named Executive Officers may be tied to our financial, strategic, and operational goals and may include business specific financial targets relating to our goals. For fiscal year 2024, the Compensation Committee continued to link annual incentive goals to financial targets emphasizing both growth and profitability. Annual incentives were based on revenue growth, but payment was conditioned upon the achievement of a minimum adjusted EBITDA as a percentage of revenue. Variable Pay at Risk. Our compensation philosophy drives the provision of greater at-risk pay to our Named Executive Officers, and variable pay at risk comprised between 50% and 64% of target annual compensation for the Named Executive Officers. Our Named Executive Officers have significant opportunities for long-term, equity-based incentive compensation, as our philosophy is to tie a significant portion of compensation to the long-term performance of our common shares. Thus, emphasis is placed on long-term stockholder value creation, thereby we believe minimizing excessive risk taking by our executives.
Fiscal Year 2024 Compensation
Annual Incentives. Annual Incentive Targets. The Compensation Committee set fiscal year 2024 annual incentive goals at the beginning of the fiscal year. As previously discussed, the Committee linked the annual incentive goals of the Named Executive Officers to revenue and Adjusted EBITDA. All the Named Executive Officers were subject to the same annual incentive structure: • Revenue Goal: 100% of target annual incentives were based on the Company’s achievement of a fiscal year 2024 revenue target of $235 million (subject to satisfaction of the Adjusted EBITDA condition); and • Adjusted EBITDA Condition: All annual incentive payouts were subject to the condition that Adjusted EBITDA as a percentage of revenue after payment of annual incentives exceeded 14% of revenue.
Fiscal Year 2024 Compensation
| | | Threshold | | Target | | Maximum | | | Component | Weighting (%) | Amount | Payout (% of base salary) | Amount | Payout (% of base salary) | Amount | Payout (% of base salary) | | Revenue | 100 | $225M | 20-50% (1) | $235M | 50-100% (2) | $250M | 65-150% (3) |
Fiscal Year 2024 Compensation
(1) The threshold payout in fiscal year 2024 for Mr. Srinivasan was 50% of base salary and for all other NEOs, it was approximately 20% of base salary. (2) The target payout in fiscal year 2024 for Mr. Srinivasan was 100% of base salary, for Mr. DeMarinis it was approximately 55% of base salary and for all other NEOs it was 50% of base salary. (3) The maximum payout in fiscal year 2024 for Mr. Srinivasan was 150% of base salary, for Mr. DeMarinis it was approximately 71% of base salary and for all other NEOs it was 65% of base salary. Under the annual incentive plan, payouts are scaled for achievement of the revenue goal that falls between the threshold level and the target level and between the target level and the maximum level. If the Adjusted EBITDA condition was not achieved, then the annual incentives would not be earned.
Fiscal Year 2024 Compensation
For fiscal year 2024, the Committee continued to believe that revenue growth was the measure most accretive to stockholder value. The Committee imposed the Adjusted EBITDA condition in order to encourage disciplined management of Company expenses and profitable growth. The annual net revenue target represented a 19% increase over actual fiscal year 2023 net revenue, which the Compensation Committee believed required performance that was reasonably difficult and demonstrated sufficient goal rigor. Annual Incentive Results. Total net revenue increased 19.9% to a record $237.5 million in fiscal 2024, compared to total net revenue of $198.1 million in fiscal year 2023. Adjusted EBITDA was a record $37.1 million, or 15.6% of net revenue, in fiscal year 2024, compared to $30.3 million, or 15.3% of net revenue, in fiscal year 2023. As a result, the Adjusted EBITDA condition was attained, and the net revenue target was exceeded by 5%. Accordingly, the Compensation Committee certified 105% achievement of annual incentive targets.
Fiscal Year 2024 Compensation
CEO Annual Incentive. Mr. Srinivasan was eligible for an annual incentive for fiscal year 2024 based on the Company financial performance metrics described above, with any such earned incentive to be settled in shares of common stock. Pursuant to both his prior employment agreement and his amended employment agreement, Mr. Srinivasan’s target annual incentive for fiscal year 2024 was set at 100% of his base salary, or $600,000, with a maximum potential incentive of $900,000 (150% of his base salary) and a threshold potential incentive of $300,000 (50% of his base salary). Based on the fiscal year 2024 results discussed above, Mr. Srinivasan was awarded 105%, or $630,000, of his annual incentive target. Accordingly, the Compensation Committee granted Mr. Srinivasan 6,098 shares of common stock, being the number of shares having an approximate value of $630,000 based on the closing price of the Company’s common stock on May 21, 2024, the date that the Committee made its determination. Annual Incentives for the Other Named Executive Officers. Fiscal year 2024 target annual incentives for the other Named Executive Officers other than Mr. DeMarinis, were set as 50% of the executive’s base salary. Mr. DeMarinis’ annual incentive was set at approximately 55% of his base salary, and he was also eligible for an additional annual sales-related incentives of $150,000 at target due to his role as head of our Americas and EMEA Sales teams. Annual incentives comprised 18% to 39% of total fiscal year 2024 target compensation for these Named Executive Officers.
Fiscal Year 2024 Compensation
| Officer | Target Annual Incentive as % of Base Salary | Target Annual Sales Incentive as % of Base Salary (1) | Aggregate Target Annual Incentives ($) | Target Annual Incentive as % of FY24 Total Target Compensation | | Dave Wood | 50% | — | 155,000 | 18% | | Don DeMarinis | 55% | 55% | 300,000 | 39% | | Sridhar Laveti | 50% | — | 150,000 | 23% | | Sethuram Shivashankar | 50% | — | 155,000 | 22% |
Fiscal Year 2024 Compensation
Based on the fiscal year 2024 results discussed above, each of the Named Executive Officers were awarded 105% of their target annual incentives subject to the annual incentive plan described above. Mr. DeMarinis earned an additional $141,103 of his target $150,000 sales incentives (94.1%) based on the net gross profit of eligible sales.
Fiscal Year 2024 Compensation
| Officer | Annual Incentive Plan Target ($) | Achievement of Annual Incentive Goal (%) | Annual Incentive Plan Payout ($) | Annual Sales Incentive Plan Target ($) | Achievement of Annual Sales Incentive Goal (%) | Annual Sales Incentive Payout ($) | Total Annual Incentives Payouts ($) | | Dave Wood | 155,000 | 105% | 162,800 | — | — | — | 162,800 | | Don DeMarinis | 150,000 | 105% | 157,500 | 150,000 | 94% | 141,103 | 298,603 | | Sridhar Laveti | 150,000 | 105% | 157,500 | — | — | — | 157,500 | | Sethuram Shivashankar | 155,000 | 105% | 162,800 | — | — | — | 162,800 |
Fiscal Year 2024 Compensation
Long-Term Incentives. Pursuant to his amended employment agreement, Mr. Srinivasan received grants in March 2023 of time-vesting and performance vesting restricted stock units (RSUs) with vesting and performance periods of three years. Consistent with its prior practices for Mr. Srinivasan, the Committee intended and in fiscal year 2024 continued to believe that these awards meet its goals of retention and alignment with stockholder interests for Mr. Srinivasan, and the Committee did not provide any additional long-term incentive to Mr. Srinivasan in fiscal year 2024. With respect to the other Named Executive Officers, for fiscal year 2024, the Committee provided long-term equity awards to each of these Named Executive Officers in amounts that it believed further the goals of retention and alignment with stockholder interests. In setting the long-term incentive awards for these Named Executive Officers, the Committee received input and recommendations from Mr. Srinivasan. The Committee granted long-term equity awards to the Named Executive Officers and other key employees of the Company in November 2023. The Committee determined the level of awards for each Named Executive Officer based on a determination, with the advice and recommendations of Mr. Srinivasan, of the amount that furthered its goals of retention and alignment with stockholder interests with respect to each Named Executive Officer. The long-term equity incentive awards to these Named Executive Officers comprised between 25% and 45% of each executive’s total fiscal year 2024 target compensation. Each of the awards were comprised of restricted shares that vest in equal annual amounts over three years beginning on the first anniversary of the date of grant.
Fiscal Year 2024 Compensation
| Officer | LTI Value ($)* | Shares Subject to Award (#) | | Dave Wood | 387,475 | 4,265 | | Don DeMarinis | 192,511 | 2,119 | | Sridhar Laveti | 210,045 | 2,312 | | Sethuram Shivashankar | 248,021 | 2,730 |
Fiscal Year 2024 Compensation
* The awards were based on the closing price of our common stock on November 15, 2023, the date the Committee granted the awards, which was $90.85 per share. The Committee’s focus with long-term incentive awards has been to link compensation directly to stockholder gains. In addition, the Committee believed the vesting schedule for the awards bolsters retention over the three-year vesting period. Additional Compensation – Executive Benefits. We provide executive benefits to our Named Executive Officers including additional life and long-term disability insurance plans. Executive benefits are further described in the Summary Compensation Table. We believe these benefits enhance the competitiveness of our overall executive compensation package. We have, however, limited executive benefits offered to reduce compensation costs.
Employment Agreements and Change of Control
Employment Agreements and Change of Control The material termination and change of control provisions of various agreements are summarized below for each Named Executive Officer and are covered in more detail in the Termination and Change of Control table and accompanying discussion. Employment Agreements. The Company has entered into employment agreements with each of the Named Executive Officers. In accordance with his amended employment agreement, Mr. Srinivasan will serve as CEO and President for an additional three-year initial term beginning on March 10, 2024. The term of employment will automatically extend for successive periods of one year unless either the Company or Mr. Srinivasan provides written notice of non-renewal at least 90 days before the end of the then-current employment term. If the employment agreement is terminated by the Company without cause or by Mr. Srinivasan for good reason, then subject to his execution of a release of claims, Mr. Srinivasan will be entitled to receive severance equal to two years’ then-current base salary and two times the value of his target annual bonus performance shares, which will be paid during regular pay intervals over the course of two years. In addition, he will also receive (a) a lump sum payment in cash, on the 60th day after the termination date, equal to the total after-tax premiums required to pay for 24 months of COBRA continuation coverage under the Company’s medical, dental and vision insurance plans; (b) a lump sum payment in cash of his pro-rated bonus for the year of termination based on actual performance with no negative discretion by the Board; and (c) twelve (12) months of accelerated vesting of all equity compensation awards that are subject to time or service-based vesting and were unvested and outstanding on the termination date. If such termination occurs within three months before or 24 months after a change in control, Mr. Srinivasan will receive two times the sum of his then-current base salary and target annual bonus, 48 months of COBRA continuation coverage under the Company’s medical, dental and vision insurance plans and 100% release of any post-closing restrictions related to equity awards that were deemed vested as a result of the change of control. In addition, upon any termination of employment, Mr. Srinivasan will receive accrued but unpaid base salary and payment for any unused vacation and unreimbursed expenses. The Company has entered into employment agreements with each of the other Named Executive Officers. Under the employment agreements for these Named Executive Officers, upon termination without cause, we must pay severance equal to 12 months’ salary and reimbursement of the executive’s total premium for 12 months of COBRA continuation coverage under the Company’s health benefit plans. If the executive’s compensation is reduced by more than 10%, other than a general reduction that affects all similarly situated executives, or if at any time prior to a change in control the executive no longer reports to the CEO, the executive may terminate his employment if the Company fails to materially cure such condition within 30 days following notice of such condition by the executive, and the termination will be deemed to be a termination without cause and the executive is entitled to his or her severance benefits. In the event that any of these Named Executive Officers are terminated without cause or by the executive for good reason in the 24 months following a change of control of the Company, the executive is entitled to severance pay equal to 12 months’ salary and a pro rata portion of target annual incentive and reimbursement of the executive’s total premium for 12 months of COBRA continuation coverage under the Company’s health benefit. None of the Named Executive Officers is entitled to excise tax gross-up payments. In consideration of the severance benefits, Mr. Srinivasan is subject to 24-month post-termination confidentiality and non-disclosure requirements, as well as non-competition and non-solicitation obligations, except that if the term of his employment agreement expires at the end of the initial three-year term, the non-competition provisions will only apply for 12 months following termination. Each other employment agreement contains a 12-month post-termination non-solicitation provision, an indefinite confidentiality provision, and a 12-month post-termination non-compete provision. Our Compensation Committee believes that the terms of these employment agreements enhance our ability to retain our executives and contain severance costs by providing reasonable severance benefits competitive with
Employment Agreements and Change of Control
| 32 | 2024 Proxy Statement | |
Employment Agreements and Change of Control
| COMPENSATION DISCUSSION AND ANALYSIS | |
Employment Agreements and Change of Control
market practice. Severance costs are contained by limiting pay to one year in the absence of a change of control, limiting personal benefits, not providing accelerated vesting for awards under the agreements, and narrowly defining a voluntary termination for good reason that triggers severance benefits. Severance payments in the event of a change of control are subject to a double trigger such that severance benefits are provided only upon a combination of a change of control and a qualified termination. Additionally, the Company benefits greatly from the non-competition, non-disclosure, and non-solicitation clauses contained in the employment agreements. Accelerated Vesting. Except as described above for our CEO, none of the employment agreements provide for accelerated vesting of equity. Under our 2020 Equity Incentive Plan and 2016 Stock Incentive Plans and the 2024 Plan (if approved), vesting is accelerated upon the actual occurrence of a change of control for all SSARs and restricted shares (including performance shares). The Compensation Committee believed that during a change of control situation, a stable business environment is in the stockholders’ best interests, and accelerated vesting provisions provide stability. Additionally, under outstanding restricted share award agreements, all restricted shares (including performance shares) vest upon death or disability. The accelerated vesting provisions are applicable to all employees who receive equity awards, not just executive management. The equity incentive awards granted to the Named Executive Officers are subject to a holding period of one year following a change of control. Under this provision, all unvested SSARs and restricted shares accelerate upon the actual occurrence of a change of control but remain subject to restrictions on exercise and transfer until the earlier of one year after the change of control or the executive’s qualified termination. The Committee believed that this further restriction during a change of control situation further promotes a stable business environment and is in the stockholders’ best interests.
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure The following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees. We determined our median employee at the end of fiscal year 2023 based on total compensation (annualized in the case of full- and part-time employees who joined the company during fiscal year 2023) of each of our employees (excluding the CEO) as of March 31, 2023. For fiscal 2024, we determined that there had been no material change in our employee population or employee compensation arrangements as compared to fiscal year 2023 that would result in a significant change to our pay ratio disclosure. As such, we determined to use the same median employee as 2023. The annual total compensation of our median employee for 2024 was $38,212. As disclosed in the Summary Compensation Table appearing on page 37, our CEO’s annual total compensation for fiscal year 2024 was $1,249,289. Based on the foregoing, our estimate of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 33 to 1. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
Additional Compensation-Related Policies and Practices
employees and consultants. The insider trading policy prohibits purchases, sales and other dispositions of the Company’s securities while in possession of material non-public information regarding the Company and from disclosing such information to others. It also imposes additional restrictions on directors, officers and certain other employees who regularly have access to such material non-public information, including blackout periods and pre-clearance requirements. A copy of the insider trading policy was filed as Exhibit 19 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2024. Because the Company has not historically engaged in stock buybacks and grants awards during open windows, the Company has not adopted formal policies and procedures with respect to the Company’s transactions in its own securities. Timing of Equity Grants. During fiscal year 2024, the Compensation Committee did not grant any stock options or similar awards as part of the Company’s equity compensation programs. If stock options or similar awards are granted in the future, our practice is to not grant any such awards at a time when we are in possession of material nonpublic information, such as the release of earnings or news regarding a significant transaction. In addition, we generally do not grant stock options or similar awards (i) during trading blackout periods established under our insider trading policy or (ii) at any time during the four business days prior to or the one business day following the filing of our periodic reports or the filing or furnishing of a Form 8-K that discloses material nonpublic information. Our executive officers are not permitted to choose the grant date for their individual stock option or similar award grants. Stock Ownership Guidelines. To underscore the importance of strong alignment between the interests of management and stockholders, the board of directors approved stock ownership guidelines for directors and executives, with our CEO and directors having the highest ownership requirements. Director and executive compensation are designed to provide a significant opportunity to tie individual rewards to long-term Company performance. The objective of our stock ownership guidelines is to support this overall philosophy of alignment and to send a positive message to our stockholders, customers, suppliers, and employees of our commitment to stockholder value. Each director and executive officer is expected to maintain minimum share ownership of shares with a value based on a multiple of base salary or director annual retainer listed below:
Additional Compensation-Related Policies and Practices
Stock ownership that is included toward attainment of the guidelines includes (i) shares owned directly (including through open market purchases, through the Company’s Employee Stock Purchase Plan or acquired and held upon vesting of Company equity awards); (ii) shares owned either jointly with, or separately by, his or her immediate family members residing in the same household; (iii) shares held in trust for the benefit of the individual, or his or her immediate family members; and (iv) unvested restricted shares and restricted stock units. Directors and executives are expected to attain the specified target ownership levels within five years from becoming a director or an executive and remain at or above that level until retirement. The Compensation Committee of the board of directors regularly reviews progress toward achieving these ownership levels, and at its meeting in May 2024, the Compensation Committee determined that all of the directors and executives met the prescribed ownership levels. Until a director or executive has satisfied the stock ownership guidelines, such director or executive is required to retain fifty percent (50%) of the net shares of common stock received from the Company as compensation after deducting any shares withheld by the Company or sold by the director or executive, if any, for the purpose of satisfying the exercise price and tax liabilities and related fees related to the settlement event. Once an individual achieves his or her stock ownership goal, these retention restrictions no longer will apply unless a disposition would cause the individual’s stock ownership to fall below his or her goal. Impact of Tax Considerations. Section 162(m) of the Internal Revenue Code, through December 31, 2017, limited the tax deduction of public companies for compensation in excess of $1.0 million paid to their CEO and the three
Summary Compensation Table for Fiscal Year 2024
Summary Compensation Table for Fiscal Year 2024
Summary Compensation Table for Fiscal Year 2024
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Ramesh Srinivasan | FY24 | 600,000 | — | 630,000 | — | 19,366 | 1,249,366 | | President and Chief Executive | FY23 | 600,000 | — | 5,219,824 | — | 16,464 | 5,836,288 | | Officer | FY22 | 600,000 | — | 204,000 | — | 18,789 | 822,789 | | Dave Wood | FY24 | 310,000 | — | 387,475 | 162,800 | 19,581 | 879,856 | | Vice President and Chief | FY23 | 275,000 | 82,500 | 247,490 | — | 29,325 | 634,316 | | Financial Officer | FY22 | 251,173 | 42,783 | 275,000 | — | 9,735 | 578,691 | | Don DeMarinis | FY24 | 275,000 | — | 192,511 | 298,603 | 13,917 | 780,031 | | Senior Vice President Sales, | FY23 | 250,000 | 226,176 | 175,027 | — | 20,222 | 671,424 | | Americas | FY22 | 250,000 | 32,205 | — | — | 12,776 | 294,981 | | Sridhar Laveti (5) | FY24 | 300,000 | — | 210,045 | 157,500 | 21,019 | 688,564 | | Senior Vice President, Product | | | | | | | | | Engineering & Customer Support | | | | | | | | | Sethuram Shivashankar (5) | FY24 | 310,000 | — | 248,021 | 162,800 | 17,945 | 738,766 | | Senior Vice President, Chief | | | | | | | | | Technology Officer & Chief | | | | | | | | | Information Officer | | | | | | | |
Summary Compensation Table for Fiscal Year 2024
(1) Amounts represent discretionary cash incentive payments awarded to the Named Executive Officers. (2) Stock Awards include grants of restricted shares and, with respect to Mr. Srinivasan, restricted stock units (RSUs). With respect to Mr. Srinivasan, amounts disclosed also include amounts received under the Company’s annual incentive plan, based on achievement of pre-set incentive goals established at the beginning of the year, as follows: 6,098 common shares were awarded in fiscal year 2024; 5,168 common shares were awarded in fiscal year 2023; and 5,384 common shares were awarded in fiscal year 2022. Amounts disclosed do not represent the economic value received by the Named Executive Officers. The value, if any, recognized for restricted shares and RSUs will depend upon the market price of the shares upon vesting. In accordance with SEC rules, the values for restricted shares, RSUs and common shares, are equal to the aggregate grant date fair value for each award computed in accordance with FASB ASC Topic 718. The fair value of RSU and restricted share grants subject only to a service condition is based on the closing price of our common shares on the grant date. For RSU and restricted share grants subject to a market condition (“performance grants”), we estimate the fair value on the grant date through a lattice option pricing model that utilizes a Monte Carlo analysis, based on the probable outcome of the performance condition. The fair value of grants of common shares is based on the closing price of our common shares on the grant date. Discussion of the assumptions used in determining these valuations is set forth in Note 13 of the Notes to Consolidated Financial Statements of the Company’s 2024 Annual Report. Amounts represent cash-based annual incentive payments received based on pre-set incentive goals established at the beginning of the fiscal year. With respect to Mr. DeMarinis, amounts also include sales-related incentives. With respect to Mr. Srinivasan, his annual incentive award is paid in the form of stock, the value of which is reported in the “stock awards” column.
Summary Compensation Table for Fiscal Year 2024
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Summary Compensation Table for Fiscal Year 2024
| | EXECUTIVE COMPENSATION |
Summary Compensation Table for Fiscal Year 2024
All other compensation includes the following compensation, calculated based on the aggregate incremental cost to the Company of the benefits noted:
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table and related notes summarize grants of equity and non-equity incentive compensation awards to our Named Executive Officers for fiscal year 2024. All equity awards were made under the Company’s 2020 Equity Incentive Plan.
Grants of Plan-Based Awards for Fiscal Year 2024
Grants of Plan-Based Awards for Fiscal Year 2024
Grants of Plan-Based Awards for Fiscal Year 2024
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards ($)(1) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards ($)(2) | | | Stock Awards: Number of | Grant Date Fair Value of | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Shares of Stock (#) | Stock Awards ($)(3) | | Ramesh Srinivasan | 4/13/2023 | | | | 300,000 | 600,000 | 900,000 | | | | Dave Wood | 11/15/2023 | | | | | | | 4,265 | 387,475 | | | 4/13/2023 | 62,000 | 155,000 | 201,500 | | | | | | | Don DeMarinis | 11/15/2023 | | | | | | | 2,119 | 192,511 | | | 4/13/2023(1) | 60,000 | 150,000 | 195,000 | | | | | | | | 4/13/2023(4) | | 150,000 | | | | | | | | Sridhar Laveti | 11/15/2023 | | | | | | | 2,312 | 210,045 | | | 4/13/2023 | 60,000 | 150,000 | 195,000 | | | | | | | Sethuram Shivashankar | 11/15/2023 | | | | | | | 2,730 | 248,021 | | | 4/13/2023 | 62,000 | 155,000 | 201,500 | | | | | |
Grants of Plan-Based Awards for Fiscal Year 2024
(1) Except with respect to Mr. DeMarinis’ sales-based annual incentive plan detailed in footnote 4, amounts shown in the columns under Estimated Possible Payouts Under Non-Equity Incentive Plan Awards represent fiscal year 2024 threshold, target and maximum cash-based annual incentive payouts under the 2024 annual incentive plan. Payouts under the 2024 annual incentive plan were based on achievement of net revenue goals and were further subject to satisfaction of an Adjusted EBITDA condition for each Named Executive Officer. As discussed in the CD&A above, annual incentives could not be earned for less than threshold performance. Fiscal year 2024 payouts for each Named Executive Officer pursuant to these awards are shown in the Summary Compensation Table above. Amounts shown in the columns under Estimated Possible Payouts Under Equity Incentive Plan Awards represent fiscal year 2024 threshold, target and maximum annual incentive payouts under the 2024 annual incentive plan, which are paid out in stock in such number of shares that translate into the disclosed dollar amount at the time of the payout. Payouts under the 2024 annual incentive plan were based on achievement of net revenue goals and were further subject to satisfaction of an Adjusted EBITDA condition. As discussed in the CD&A above, annual incentives could not be earned for less than threshold performance. With respect to Mr. Srinivasan, his fiscal year 2024 annual incentive plan award was paid out on May 11, 2024 in the form of 6,098 shares with a grant date fair value of $630,000.
Grants of Plan-Based Awards for Fiscal Year 2024
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Grants of Plan-Based Awards for Fiscal Year 2024
| EXECUTIVE COMPENSATION | |
Grants of Plan-Based Awards for Fiscal Year 2024
The dollar amount shown for each equity grant, all of which are restricted shares, represents the grant date fair value of the shares, calculated in accordance with FASB ASC Topic 718, based on the closing price of our common shares on the grant date. The actual value, if any, recognized upon the vesting of shares will depend upon the market price of the shares on the date the shares vest. With respect to Mr. DeMarinis, upon his retirement on August 30, 2024, all unvested awards held by him will be forfeited on such date and will not vest. (4) With respect to Mr. DeMarinis, amounts shown in this row under the Estimated Possible Payouts Under Non-Equity Incentive Plan Awards columns represent fiscal year 2024 target cash-based annual incentive payouts upon achievement of target sales-based goals. As discussed in the CD&A above, annual incentives under this sales-based plan were not subject to any threshold or maximum limitations and instead are paid out on a sliding scale tied to actual performance (as a percentage of target). Mr. DeMarinis’ fiscal year 2024 payout under this sales-based plan is shown in the Summary Compensation Table above.
Outstanding Equity Awards
Outstanding Equity Awards The following table and related notes summarize the outstanding equity awards held by the Named Executive Officers as of March 31, 2024.
Outstanding Equity Awards at 2024 Fiscal Year-End
Outstanding Equity Awards at 2024 Fiscal Year-End
Outstanding Equity Awards at 2024 Fiscal Year-End
| | | Option or SSAR Awards | | | | Stock Awards | | | | | Number of Securities Underlying Unexercised Options or SSARs (#) | | | | Number of Shares | Market Value of Shares of | | Name | Grant Date | Exercisable | Unexercisable | Option Exercise Price ($) | Option Expiration Date | of Stock That Have Not Vested (#)(1)(2) | Stock That Have Not Vested ($)(3) | | Ramesh Srinivasan | 2/10/2020 | 600,000 | | 36.60 | 8/10/2024 | | | | | 3/10/2023 | | | | | 22,619 | 1,905,877 | | | 3/10/2023 | | | | | 21,035 | 1,772,409 | | | 3/10/2023 | | | | | 12,893 | 1,086,364 | | Dave Wood | 11/19/2020 | 2,528 | | 20.02 | 6/2/2027 | | | | | 12/1/2021 | | | | | 5,484(a) | 462,082 | | | 6/8/2022 | | | | | 2,129(a) | 179,390 | | | 11/12/2022 | | | | | 1,128(a) | 95,045 | | | 11/15/2023 | | | | | 4,265(a) | 359,369 | | Don DeMarinis | 6/20/2019 | | | | | 1,936(b) | 163,127 | | | 11/19/2020 | | | | | 513(b) | 43,225 | | | 11/12/2022 | | | | | 2,119(b) | 178,547 | | Sridhar Laveti | 5/31/2018 | 13,800 | | 14.22 | 5/31/2025 | | | | | 6/20/2019 | 9,272 | | 22.41 | 6/20/2026 | | | | | 11/19/2020 | 60,603 | | 20.02 | 6/2/2027 | | | | | 6/8/2022 | | | | | 2,013(c) | 169,615 | | | 11/12/2022 | | | | | 533(c) | 44,911 | | | 11/15/2023 | | | | | 2,312(c) | 194,809 | | Sethuram | 12/1/2021 | | | | | 4,521(d) | 380,939 | | Shivashankar | 6/8/2022 | | | | | 388(d) | 32,693 | | | 11/12/2022 | | | | | 769(d) | 64,796 | | | 11/15/2023 | | | | | 2,730(d) | 230,030 |
Outstanding Equity Awards at 2024 Fiscal Year-End
(1) For Mr. Srinivasan, the share amounts represent RSUs granted to Mr. Srinivasan. 11,309 will vest on March 10, 2025, and 11,310 will vest on March 10, 2026. 21,035 will vest on March 10, 2026 if the closing price of the Company’s stock has been equal to or higher than $100 per share for 20 consecutive trading days following the grant date and Mr. Srinivasan continues to be employed with the Company on March 10, 2026. 12,893 will vest on March 10, 2026 if the closing price of the Company’s stock has been equal to or higher than $115 per share for 20 consecutive trading days following the grant date and Mr. Srinivasan continues to be employed with the Company on March 10, 2026. (2) For the Named Executive Officers other than Mr. Srinivasan, as of March 31, 2024, the vesting schedules for the stock awards were as follows: a. 1,064 vest on June 30, 2024; 1,985 vest on October 31, 2024; 5,484 vest on November 30, 2024; 1,065 vest on June 30, 2025; 1,986 vest on October 31, 2025; 1,422 vest on October 31, 2026. b. 968 vest on June 30, 2024; 962 vest on October 31, 2024; 968 vest on June 30, 2025; 963 vest on October 31, 2025; and 707 vest on October 31, 2026. Upon Mr. DeMarinis’ retirement on August 30, 2024, all unvested awards will be forfeited on such date and will not vest.
Outstanding Equity Awards at 2024 Fiscal Year-End
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Outstanding Equity Awards at 2024 Fiscal Year-End
| | EXECUTIVE COMPENSATION |
Outstanding Equity Awards at 2024 Fiscal Year-End
c. 1,006 vest on June 30, 2024; 1,036 vest on October 31, 2024; 1,007 vest on June 30, 2025; 1,038 vest on October 31, 2025; and 771 vest on October 31, 2026. d. 194 vest on June 30, 2024; 1,294 vest on October 31, 2024; 4,521 vest on November 30, 2024; 194 vest on June 30, 2025; 1,295 vest on October 31, 2025; and 771 vest on October 31, 2026. (3) Calculated based on the closing price of the shares on March 31, 2024, of $84.26 per share.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table and related notes summarize the exercise of stock options and/or SSARs and the vesting of other stock awards by the Named Executive Officers while they were serving as Named Executive Officers during fiscal year 2024.
Option Exercises and Stock Vested for Fiscal Year 2024
Option Exercises and Stock Vested for Fiscal Year 2024
Option Exercises and Stock Vested for Fiscal Year 2024
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | | Ramesh Srinivasan | — | — | 11,309 | 865,478 | | Dave Wood | — | — | 4,091 | 335,112 | | Don DeMarinis | 2,634 | 141,699 | 1,223 | 88,337 | | Sridhar Laveti | 15,000 | 1,057,050 | 1,272 | 91,872 | | Sethuram Shivashankar | — | — | 3,049 | 260,507 |
Option Exercises and Stock Vested for Fiscal Year 2024
(1) The value realized upon exercise is determined by calculating the difference between (i) the closing market price of the shares underlying the options or SSARs on the date of exercise and (ii) the exercise price of the options or SSARs. (2) The amounts in this column reflect the full number of shares that vested and do not take into account shares withheld to satisfy tax obligations upon vesting. (3) The value realized on vesting of stock awards is determined by multiplying the number of shares underlying the stock awards by the closing market price of the shares on the vesting date of the awards.
Pay Versus Performance
Pay Versus Performance The following table shows the total compensation for our named executive officers (“NEOs”) for the past four fiscal years as set forth in the Summary Compensation table, the “compensation actually paid” (or “CAP”) to our principal executive officer (“PEO”), and on an average basis, to our other NEOs (in each case, as determined under SEC rules), our Total Stockholder Return (“TSR”), the TSR of companies listed in the SIC Code 7373 - Computer Integrated Systems Design (our peer group for this purpose), our GAAP net income (loss), and our Company Selected Metric results (GAAP net revenue).
Pay Versus Performance
| Fiscal Year ended March 31, (a) | Summary compensation on table total for PEO ($)(b)(1) | Compensation actually paid to PEO ($)(c)(2) | Average summary compensation on table total for non- PEO NEOs ($)(d)(3) | Average compensation actually paid to non- PEO NEOs ($)(e)(2) | Total stockholder return ($)(4) | Peer group total stockholder return ($)(4) | Net income (loss) (in thousands) ($) | Net revenue (in thousands) ($)(5) | | 2024 | 1,249,366 | 989,700 | 771,804 | 774,745 | 404.43 | 61.58 | 86,195 | 237,464 | | 2023 | 5,836,288 | 9,323,318 | 605,203 | 1,791,185 | 394.01 | 11.64 | 14,582 | 198,065 | | 2022 | 822,789 | (205,682) | 403,998 | 416,487 | 138.80 | 42.08 | 6,478 | 162,636 | | 2021 | 348,447 | 10,333,284 | 1,342,437 | 3,148,920 | 187.19 | 34.69 | (21,001) | 137,176 |
Pay Versus Performance
(1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Srinivasan (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation table. Refer to “Summary Compensation Table for Fiscal Year 2024.” (2) The dollar amounts reported in column (c) and (e) represent the amount of “compensation actually paid”, as computed in accordance with SEC rules. “Compensation actually paid” may not necessarily represent total cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. We do not have a defined benefit plan for named executives, so no adjustment for pension benefits is included in the table below. The following table details these adjustments:
Pay Versus Performance
| Fiscal Year ended March 31, (a) | Executives | SCT Total Compensation ($)(A) | Grant date value of new awards ($)(B) | Year-end value of new awards ($)(i) | Change in value of prior awards that are unvested ($)(ii) | Change in value of vested awards granted in prior fiscal years ($)(iii) | Value of vested awards granted during fiscal year ($)(iv) | Value of unvested awards forfeited during fiscal year ($)(v) | Total equity CAP (C)=(i)+(ii) +(iii)+(iv)+(v) ($) | CAP (D)=(A)- (B)+(C) ($) | | 2024 | PEO | 1,249,366 | 630,000 | — | (192,038) | (67,628) | 630,000 | — | 370,334 | 989,700 | | | Other NEOs | 771,804 | 259,513 | 240,689 | 23,888 | (2,123) | — | — | 262,453 | 774,745 | | 2023 | PEO | 5,836,288 | 5,219,824 | 5,027,042 | — | 3,319,813 | 360,000 | — | 8,706,855 | 9,323,318 | | | Other NEOs | 605,203 | 195,125 | 669,074 | 130,734 | 581,299 | — | — | 1,381,107 | 1,791,185 | | 2022 | PEO | 822,789 | 204,000 | — | (1,019,476) | (8,995) | 204,000 | — | (824,471) | (205,682) | | | Other NEOs | 403,998 | 99,375 | 101,195 | 41,643 | (30,975) | — | — | 111,864 | 416,487 | | 2021 | PEO | 348,447 | 180,000 | — | 8,578,180 | 1,406,657 | 180,000 | — | 10,164,837 | 10,333,284 | | | Other NEOs | 1,342,437 | 1,094,854 | 182,613 | 125,012 | 495,753 | 2,150,273 | (52,315) | 2,901,337 | 3,148,920 |
Pay Versus Performance
A. The dollar amounts reported in the Summary Compensation table for the applicable fiscal year (on an average basis for the non-PEO NEOs). B. The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and "Option Awards" columns in the Summary Compensation table for the applicable year (on an average basis for the non-PEO NEOs). C. The recalculated value of equity awards for each applicable year includes the addition (or subtraction, as applicable) of the following (on an average basis for the non-PEO NEOs): (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that vest in the applicable year, the change in the fair value as of the vesting date from the end of the prior fiscal year; and (iv) for awards that are granted and also vest in the applicable year, the fair value as of the vesting date. The valuation assumptions and processes used to recalculate fair values used a consistent process and did not materially differ from those disclosed at the time of the applicable grant; and (v) for awards that forfeit in the applicable year, the fair value as of the end of the prior fiscal year. D. “Compensation Actually Paid” may not necessarily represent total cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. The dollar amounts reported in column (d) are the average amounts of total compensation reported for the non-PEO NEOs for each corresponding year in the “Total” column of the Summary Compensation table. Refer to “Summary Compensation Table for Fiscal Year 2024.” For each of years ended March 31, 2024, 2023, 2022 and 2021, the non-PEO NEOs were:
Pay Versus Performance
| | 2024 Proxy Statement | 43 |
Pay Versus Performance
| | EXECUTIVE COMPENSATION |
Pay Versus Performance
| Year ended March 31, | Non-PEO NEOs | | 2024 | Dave Wood, Don DeMarinis, Sridhar Laveti, Sethuram Shivashankar | | 2023 | Dave Wood, Kyle Badger, Prabuddha Biswas, Don DeMarinis | | 2022 | Dave Wood, Kyle Badger, Don DeMarinis, Chris Robertson | | 2021 | Dave Wood, Kyle Badger, Prabuddha Biswas, Don DeMarinis, Tony Pritchett |
Pay Versus Performance
TSR is determined based on the value of an initial fixed investment of $100 at market close on the last trading before April 1, 2020. The TSR peer group consists of the companies listed in the SIC Code 7373 - Computer Integrated Systems Design. (5) Our company-selected measure is GAAP revenue.
Analysis of the Information Presented in the Pay versus Performance Table
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. Therefore, we do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular fiscal year and the Compensation Committee did not consider this information in making its executive compensation decisions. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid and Cumulative TSR of the Company
Compensation Actually Paid and Cumulative TSR of the Company For fiscal years 2021, 2022, 2023 and 2024, the Company’s TSR (based on a $100 investment at the beginning of fiscal year 2021) increased by 87.2%, decreased by 25.8%, increased by 183.9% and increased by 2.6%, respectively. During each of fiscal years 2022, 2023 and 2024, CAP to our PEO decreased from $10.3 million to $(0.2) million; increased from $(0.2) million to $9.3 million; and decreased from $9.3 million to $1.0 million, respectively. During each of fiscal years 2022, 2023 and 2024, average CAP to our non-PEO NEOs decreased from $3.1 million to $0.4 million; increased from $0.4 million to $1.8 million; and decreased from $1.8 million to $0.8 million, respectively.
Compensation Actually Paid and Net Income (Loss)
Compensation Actually Paid and Net Income (Loss) For fiscal years 2021, 2022, 2023 and 2024, the Company’s Net Income (Loss) increased by 38.4%, 130.8%, 125.1% and 491.1%, respectively. As noted above, CAP to our PEO and to our non-PEO NEOs decreased during fiscal year 2022, increased during fiscal year 2023 and decreased during fiscal year 2024.
Compensation Actually Paid and Revenue
Compensation Actually Paid and Revenue For fiscal years 2021, 2022, 2023 and 2024, the Company’s Revenue (computed in accordance with GAAP) decreased by 14.7%, increased by 18.6%, increased by 21.8% and increased by 19.9%, respectively. As noted above, CAP to our PEO and to our non-PEO NEOs decreased during fiscal year 2022, increased during fiscal year 2023 and decreased during fiscal year 2024.