DEF 14A of Innovative Solutions & Support Inc
Filed Mar 5, 2024 · FY20230001104659-24-030998
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
(Item 1 on Proxy Card) At the Annual Meeting, the shareholders will elect four (4) directors to hold office until the annual meeting of shareholders in 2025, or until their respective successors have been duly elected and qualified. Upon the recommendation of the Nominating & Corporate Governance Committee of the Board (the “Nominating & Corporate Governance Committee”), the Board has nominated Messrs. Shahram Askarpour, Roger A. Carolin, Glen R. Bressner and Stephen L. Belland to serve as directors. Each of the foregoing persons currently serves as a director, and each has indicated a willingness to continue to serve as a director. In February 2024, Parizad Olver (Parchi) informed the Board of Directors that she would not seek reelection at the Annual Meeting. As a result, Ms. Olver’s service as a director will end on the date of the Annual Meeting. Following the election of directors at the Annual Meeting, Mr. Belland will replace Ms. Olver on the Nominating & Corporate Governance Committee. Unless contrary instructions are given, the shares represented by a properly executed proxy will be voted “FOR” the elections of each of the nominees. Shareholders must cast a separate vote “FOR” the candidacy of each nominee or to “WITHHOLD AUTHORITY” with respect thereto. Each nominee must receive a majority of the votes cast to be elected. Should any nominee become unavailable to accept election as a director, the persons named in the enclosed proxy will vote the shares that they represent for the election of such other person as the Board may recommend. The Board of Directors recommends voting “FOR” the nominees for directors.
DIRECTOR NOMINEES
DIRECTOR NOMINEES The director nominees standing for election at this meeting, together with certain information about them, are set forth below.
DIRECTOR NOMINEES
| Name | Age | Director Since | Current Term Expires | Positions with the Company | | Shahram Askarpour | 66 | 2022 | 2024 | Director, Chief Executive Officer | | Glen R. Bressner | 63 | 1999 | 2024 | Director, Chairman of the Board | | Roger A. Carolin | 68 | 2016 | 2024 | Director | | Stephen L. Belland | 66 | 2022 | 2024 | Director |
Director Nominees
Director Nominees Shahram Askarpour. Dr. Askarpour joined the Company as Vice President of Engineering in 2003, was promoted to President in March 2012, and was appointed as the Company’s Chief Executive Officer, and joined the Company’s Board, in January 2022. Dr. Askarpour has more than 40 years of aerospace industry experience in managerial and technical positions. Prior to joining the Company, he was employed by Smiths Aerospace (a division of Smiths Group plc), Instrumentation Technology, and Marconi Avionics. He holds a number of key patents in the aviation field. Dr. Askarpour received his engineering education in the United Kingdom, and received an undergraduate degree in Electrical Engineering from Middlesex University, a post graduate Certificate of Advanced Study in Systems Engineering, and a PhD in Automatic Control from Brunel University London. He was awarded the title of Associate Research Fellow for three consecutive years by Brunel University and has published numerous papers in leading international, peer reviewed journals. In addition, he has completed management courses at Carnegie Mellon University and finance courses at the Wharton School of the University of Pennsylvania. Glen R. Bressner. Mr. Bressner is the co-founder and Managing Partner of Activate Venture Partners, an early-stage focused venture capital firm that has evolved from a series of affiliated venture funds that he is a co-founder of, beginning in 1985. Mr. Bressner has been a board director of several companies, including IQE plc (LSE: IQEP), where he was a member of its Audit Committee, and Tabula Rasa Healthcare (NASDAQ: TRHC), where he chaired its Nomination Committee. He is also a shareholder and a director on the board of Alum-a-Lift, Inc., a family-owned manufacturer of precision material handling solutions. From 1996 to 1997, Mr. Bressner served as the chairman of the Board of the Greater Philadelphia Venture Group. Mr. Bressner holds a Bachelor of Science, cum laude, in Business Administration from Boston University and a Masters of Business Administration degree from Babson College. Roger A. Carolin. Mr. Carolin is currently a Venture Partner at SCP Partners, a position he has held since 2004. Mr. Carolin works to identify attractive investment opportunities and assists portfolio companies in the areas of strategy development, operating management, and intellectual property. Mr. Carolin co-founded CFM Technologies, Inc., a global manufacturer of semiconductor process equipment, and served as its Chief Executive Officer for 10 years, until the company was acquired. Mr. Carolin formerly worked for Honeywell, Inc. and General Electric Co., where he developed test equipment and advanced computer systems for on-board missile applications. Mr. Carolin is also a director of Amkor Technology, Inc. (NASDAQ: AMKR), a supplier of outsourced semiconductor assembly and test services. Mr. Carolin holds a B.S. in Electrical Engineering from Duke University and an M.B.A. from the Harvard Business School. Stephen L. Belland. Mr. Belland is the Co-Founder and Chief Executive Officer at Integrated Connection, LLC and a Principal at Clear Rock Advisors. Prior to Clear Rock Advisors, he has held various executive positions at Rockwell Collins including Technical Director, Vice President of Program and Product Management, Vice President of Strategy and Marketing and most recently Vice President of Corporate Development. Mr. Belland received his B.S. in Electrical Engineering from Michigan Technological University and has attended executive programs at the Kellogg School of Management, the Wharton School of the University of Pennsylvania, and INSEAD.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS The Company’s compensation program for non-employee directors for 2023 consisted of three elements of compensation: meeting fees, restricted stock or restricted stock unit awards, and an annual retainer. All cash fees were paid quarterly in arrears. Each non-employee director was entitled to a fee of $1,500 for each Board meeting attended and $1,500 for each committee meeting that is not held on the same day as a Board meeting. The Chairman of the Board received $35,000 per year in addition to the meeting fees and restricted stock or restricted stock awards. Mr. Bressner served as Chairman of the Audit Committee until June 2023 and received $3,000 per quarter. Mr. Carolin became Chairman of the Audit Committee in June 2023 and received $3,000 per quarter in addition to the meeting fees and restricted stock or restricted stock unit awards. The Chairman of the Compensation Committee received $5,000 per year in addition to the meeting fees and restricted stock or restricted stock unit awards. Each non-employee director, including the Chairman of the Board, was also paid an annual retainer of $25,000. The Company also makes annual awards of restricted stock or restricted stock units, with each such unit representing a contingent right to receive one share of common stock upon vesting, to non-employee directors under the 2019 Plan. The target value of such annual awards was $50,000 for each non-employee director for 2023. The number of shares underlying such annual awards are calculated based upon the price of the Company’s common stock at the close of business on the date of the Company’s annual meeting and such shares vest on the first anniversary of the date of grant. A director who resigns during the course of the year will vest in and receive a pro rata portion of the shares that he or she otherwise would have vested (in the case of restricted stock) or received (in the case of restricted stock units) had no such resignation occurred, based on the number of days served during the applicable calendar year. With respect to the fiscal year ended September 30, 2023, the Company’s common stock closed at a price of $8.10 per share on January 3, 2023. Because the Company transitioned from a calendar year grant period to a one-year grant period beginning at each annual meeting, each non-employee director received (i) a grant of 1,742 restricted stock units on January 3, 2023 vesting 100 days following the date of grant, and (ii) a grant of 6,868 restricted stock units on April 13, 2023 vesting one year following the date of grant. In addition, all directors are reimbursed for reasonable travel and lodging expenses actually incurred in connection with required attendance at Board and committee meetings. Director Compensation Table The following table provides information on the total compensation earned by each non-employee director of the Company for the fiscal year ended September 30, 2023:
COMPENSATION OF DIRECTORS
| Name | Fees Earned or Paid in Cash $(1) | Stock Awards $(2) | Option Awards $ | Non-Equity Incentive Plan Compensation $ | Change in Pension Value and Non-qualified Deferred Compensation Earnings | All Other Compensation $ | Total $ | | Glen R. Bressner | 82,241 | 64,109 | — | — | — | — | 146,350 | | Winston J. Churchill(3) | 43,250 | 14,110 | — | — | — | — | 57,360 | | Roger A. Carolin | 73,750 | 64,109 | — | — | — | | 137,859 | | Stephen L. Belland | 53,667 | 64,109 | — | — | — | — | 117,776 | | Parizad Olver (Parchi) | 47,500 | 64,109 | — | — | — | — | 111,609 |
COMPENSATION OF DIRECTORS
(1) The amounts reported in this column include fees paid for attendance of Board and Board committee meetings and annual retainer for each non-employee director for the year ended September 30, 2023. The amounts reported in this column represent the grant date fair value, computed based on the compensation cost recognized for financial reporting purposes by the Company in accordance with the valuation guidelines of Accounting Standards Codification (“ASC”) 505-50, “Equity-Based Payments to Non-Employees” and ASC 718 “Compensation — Stock Compensation” with respect to the stock awards granted to each non-employee director during the fiscal year ended September 30, 2023. See also Note 3, under the heading “Share-Based Compensation,” to the Company’s audited financial statements as filed in the Annual Report, which sets forth the material assumptions used in determining the compensation cost to the Company with respect to such awards. In addition, as of the close of the fiscal year ended September 30, 2023, none of the non-employee directors held outstanding options to purchase stock of the Company. Mr. Churchill was a member of the Board until April 13, 2023.
Elements of Compensation
Elements of Compensation The Company’s executive compensation program consists of the following elements of compensation, each described in greater depth below: • Base Salary; • Annual Bonus; • Equity-based Compensation; • General Benefits. In determining the different elements of compensation to provide to the named executive officers, the Compensation Committee does not adhere to a specific allocation between short-term and long-term compensation, or between cash and non-cash compensation. Instead, the Compensation Committee determines the elements of compensation in a manner designed to reward strong financial performance, provide overall compensation opportunities that are sufficient to attract and retain highly skilled named executive officers, and ensure that named executive officers’ interests are aligned with those of the Company’s shareholders. This may result in the named executive officers receiving all cash compensation in some years (through base salary and annual bonuses) and a combination of cash and equity-based compensation in other years (through base salary, annual bonuses and equity awards). Base Salary The Company pays base salaries to named executive officers because the Company believes that base salaries are essential to recruiting and retaining qualified executives. In addition, base salaries create an incentive for named executive officers to make meaningful contributions to the Company’s success because they are subject to increase based on the executive’s performance. The Compensation Committee sets the initial base salary level upon the hire or promotion of a named executive officer. Base salary levels are determined initially based on the named executive officer’s previous experience and employment, and the named executive officer’s expected duties and responsibilities with respect to the Company and considering market data provided by the Company’s independent compensation consultant. Thereafter, the Compensation Committee may increase a named executive officer’s base salary each year based on the results of the named executive officer’s annual review (which is conducted by the Chief Executive Officer for each of the other named executive officers and by the Compensation Committee for the Chief Executive Officer), and based on the Compensation Committee’s subjective assessment of the Company’s overall performance during the preceding year. Annual Bonus The Compensation Committee retains discretion to grant bonus compensation to the named executive officers and other employees of the Company. From time to time, the Company may award discretionary annual bonuses to the named executive officers and may agree, in hiring or promoting a named executive officer, to a target bonus opportunity, expressed as a percentage of base salary, in any case, to be paid only if the Company determines that the Company has attained its financial performance goals or other objectives. The named executive officers’ 2023 target annual bonus opportunities were as follows:
Elements of Compensation
| Named Executive Officer | Annual Bonus Opportunity as a % of Base Salary | | Shahram Askarpour | 75% | | Michael Linacre | 40% |
Elements of Compensation
66% of the potential annual incentive opportunity was based on the achievement of financial performance targets and the remaining portion of the annual incentive was based on a qualitative assessment of performance. In 2023, the Company chose Revenue and Operating Income as its financial performance metrics. In the case of Dr. Askarpour, the qualitative assessment took into account organic growth, progress on mergers and acquisitions, progress on autonomous flight initiatives, increased strategic partnerships and investor relations activities. In the case of Mr. Linacre, the qualitative assessment considered investor relations activities, quality of financial accounting, mergers and acquisitions support, and progress toward additional financing.
Elements of Compensation
| Performance Measures | Target 100% | Maximum 150% | Weight (%) | | Revenue ($) | $27,748,000 | $41,622,000 | 33% | | Operating Income ($) | $4,353,193 | $6,529,789 | 33% | | Qualitative | — | — | 33% |
Elements of Compensation
In 2023, the Company achieved $29,361,916 in adjusted revenue and $6,964,804 in adjusted operating income, and the Compensation Committee determined that each of Dr. Askarpour and Mr. Linacre achieved their qualitative goals at 100%. As a result, the Compensation Committee approved annual incentive bonuses of $355,816 and $118,605 for Dr. Askarpour and Mr. Linacre, respectively. The 2023 annual cash incentives were paid to Dr. Askarpour on November 12, 2023 and to Mr. Linacre on December 12, 2023. The payments are listed as 2023 compensation in the Summary Compensation Table in the column labeled “Non-Equity Incentive Plan Compensation.” Equity-based Compensation The Company awards equity-based compensation to named executive officers in order to provide a link between the long-term results achieved for its shareholders and the rewards provided to named executive officers, thereby ensuring that such officers have a continuing stake in the Company’s long-term success (see the section titled “Equity Compensation Plan Information” below). Such awards are made at the discretion of the Compensation Committee and are not timed or coordinated with the release of material, non-public information. In 2023, we granted 200,000 option shares and 100,000 RSUs to Dr. Askarpour and 12,210 option shares to Mr. Linacre as part of the annual equity grant. 50% of Dr. Askarpour’s option shares vested immediately upon the date of grant, and the remaining shares vest on a quarterly basis such that the entire award will be fully vested one year from the date of grant. 25% of Dr. Askarpour’s RSUs vested immediately upon the date of grant, and the remaining RSUs vest on a quarterly basis such that the entire award will be fully vested on the third anniversary of the date of grant. Mr. Linacre’s option shares were scheduled to vest in equal quarterly installments such that they would be fully vested on the fourth anniversary of the date of grant. To reward Mr. Linacre for his performance during his first year of employment and incentivize him to continue his performance, the Compensation Committee approved an additional award of 6,082 restricted stock units and 12,164 option shares for Mr. Linacre on August 21, 2023. Both the restricted stock units and option shares were scheduled to vest annually at a rate of 25% on each anniversary of the date of grant commencing with the first anniversary, subject to his continued employment on the applicable vesting date. Upon Mr. Linacre’s resignation effective November 8, 2023, all of his unvested option shares and restricted stock units were forfeited. General Benefits The following are standard benefits offered to all eligible Company employees, including the named executive officers. Retirement Benefits. The Company maintains a tax-qualified 401(k) savings plan for all eligible employees, including the named executive officers, known as the Innovative Solutions and Support 401(k) Plan (the “Savings Plan”). The Savings Plan is a voluntary contributory plan under which employees may elect to defer compensation for federal income tax purposes under Section 401(k) of the Code. The Company makes a matching contribution to the Savings Plan at one half of each participant’s deferral rate, limited to a maximum contribution of 2% of base salary and subject to limitations imposed by the Internal Revenue Code. Medical, Dental, Life Insurance, and Disability Coverage. The Company makes available medical, dental, life insurance, and disability coverage to all active eligible employees, including the named executive officers. Other Paid Time-Off Benefits. The Company provides vacation and other paid holidays to all employees, including the named executive officers.
Employment Agreements
Employment Agreements It is the Company’s general philosophy that all of the Company’s employees should be “at will” employees, thereby allowing both the Company and the employee to terminate the employment relationship at any time and without restriction or financial obligation. However, in certain cases, the Company has determined that, as a retention device and a means to obtain non-compete arrangements, employment agreements or other contractual agreements are appropriate. The Company entered into an amended and restated employment agreement with Dr. Askarpour on April 14, 2022 in connection with his appointment as Chief Executive Officer of the Company on January 14, 2022. The initial term of the employment agreement began on April 14, 2022 and will end on April 13, 2024. Pursuant to the terms of the agreement, the term extends for one additional year each subsequent April 14, unless either party provides written notice to the other party at least 30 days prior to the expiration of the then-current term that the term will not be renewed. The agreement provides for a base salary of $400,000 per year, which the Company determined to be appropriate given Dr. Askarpour’s increased duties and responsibilities as Chief Executive Officer. If Dr. Askarpour’s employment is terminated by the Company without “cause” or by Dr. Askarpour for “good reason,” then, subject to Dr. Askarpour’s execution and non-revocation of a release of claims in favor of the Company, the Company will continue to pay Dr. Askarpour his base salary at the rate then in effect for a period of twelve (12) months following his termination date, during which period the Company will also pay Dr. Askarpour’s COBRA premiums. The employment agreement contains covenants restricting Dr. Askarpour’s ability to compete with the Company or solicit its employees, other service providers, or current, former, or prospective customers for twelve (12) months after the cessation of Dr. Askarpour’s employment. The employment agreement also contains standard confidentiality, assignment of invention, and non-disparagement provisions. The Company entered into an offer letter agreement with Mr. Linacre on June 1, 2022 in connection with his hiring as the Chief Financial Officer of the Company. The offer letter provided for a base salary of $230,000 per year, an annual target bonus amount equal to 30% of his base salary, a grant of restricted common stock of the Company (as described in the section titled “Equity-based Compensation” above) and certain relocation benefits. If Mr. Linacre’s employment had been terminated by the Company without “cause,” then, subject to Mr. Linacre’s execution and non-revocation of a release of claims in favor of the Company, the Company would continue to pay Mr. Linacre his base salary at the rate then in effect for a period of six (6) months following his termination date in addition to a pro-rata bonus for the year of termination based on the actual bonus he would have been paid absent such termination. The offer letter contained covenants restricting Mr. Linacre’s ability to compete with the Company or solicit its employees, other service providers, or current, former, or prospective customers for twelve (12) months after the cessation of Mr. Linacre’s employment. The offer letter also contained standard confidentiality, assignment of invention, and non-disparagement provisions. As previously disclosed, Mr. Linacre resigned from his position as Chief Financial Officer effective November 8, 2023.
Change in Control Benefits
Change in Control Benefits The Compensation Committee has the authority to accelerate the vesting of Company equity awards granted to named executive officers under the 2019 Plan upon a change in control of the Company (except for certain transactions that are expressly carved out under the 2019 Plan). The Company believes that such accelerated vesting is essential to maintaining the commitment and dedication of its key employees throughout a potential change in control of the Company. Unless otherwise determined by the Compensation Committee or provided in an award agreement, “change in control” is generally defined for these purposes as: • the acquisition in one or more transactions during any 12-month period by any “person” (as such term is used for purposes of section 13(d) or section 14(d) of the Exchange Act) but excluding, for this purpose, the Company or its subsidiaries or any employee benefit plan of the Company or its subsidiaries, of “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the Company’s then outstanding voting securities; • a change in the composition of the Board during any 12-month period such that the individuals who at the beginning of such period constituted the Board cease to constitute a majority of the Board; • the consummation of a merger or consolidation involving the Company, if the shareholders of the Company, immediately before such merger or consolidation, do not own, directly or indirectly, immediately following such merger or consolidation, more than seventy percent (70%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation; or • a complete liquidation or dissolution of the Company or a sale or other disposition of all or substantially all of the assets of the Company. Under Dr. Askarpour’s amended and restated employment agreement, in the event of a “change in control,” if a successor to the Company fails or refuses to either materially assume the Company’s obligations under Dr. Askarpour’s employment agreement or enter into a new employment agreement with Dr. Askarpour on terms that are materially similar to those provided under his employment agreement, then Dr. Askarpour may terminate his employment with “good reason” and, subject to his execution and non-revocation of a release of claims in favor of the Company, the Company will continue to pay Dr. Askarpour his base salary at the rate then in effect for a period of twelve (12) months following his termination date, during which period the Company will also pay Dr. Askarpour’s COBRA premiums. For purposes of Dr. Askarpour’s employment agreement, “change in control” is generally defined for these purposes as: a “person” (as such term is used for purposes of section 13(d) or section 14(d) of the Exchange Act) but excluding, for this purpose, any employee benefit plan of the Company or its subsidiaries, is or becomes a “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of forty percent (40%) or more of the combined voting power of the Company’s then outstanding voting securities; a change in the composition of the Board during any 2-year period such that the individuals who at the beginning of such period constituted the Board cease to constitute a majority of the Board; • the consummation of a merger or consolidation involving the Company, if the shareholders of the Company, immediately before such merger or consolidation, do not own, directly or indirectly, immediately following such merger or consolidation, at least seventy-five percent (75%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation; or • a complete liquidation or dissolution of the Company or a sale or other disposition of all or substantially all of the assets of the Company.
Summary Compensation Table
Summary Compensation Table This Summary Compensation Table provides information on the total compensation earned by each named executive officer for fiscal years ended September 30, 2023, 2022 and 2021.
Summary Compensation Table
| Name and Principal Position | Year | Salary $ | Bonus $ | Non-Equity Incentive Plan Compensation $ | Option Awards $(2) | Stock Awards $(2) | All Other Compensation $(1) | Total $ | | Shahram Askarpour Chief Executive Officer | 2023 | 400,000 | — | 355,816 | 852,000 | 819,000 | 12,592 | 2,439,408 | | | 2022 | 369,616 | 300,000 | — | — | — | 6,585 | 676,201 | | | 2021 | 300,000 | — | — | — | — | 5,700 | 305,700 | | Michael Linacre Former Chief Financial Officer | 2023 | 233,770 | — | 118,605 | 111,264 | 49,994 | 162,491 | 676,124 | | | 2022 | 53,077 | 25,000 | — | — | 49,997(3) | — | 128,074 |
Summary Compensation Table
(1) The amounts set forth in this column represent (i) for Dr. Askarpour, contributions to the his Savings Plan account for the applicable fiscal year, and (ii) for Mr. Linacre, $154,761 in relocation benefits and $7,730 in contributions to his Savings Plan account for the applicable fiscal year. (2) These amounts represent the aggregate grant date fair value determined in accordance with the valuation guidelines of ASC Topic 718 “Stock Compensation” with respect to the options granted to the named executive officers in the applicable year. See also Note 3, under the heading “Share-Based Compensation,” in the Company’s audited financial statements as filed in the Annual Report. The values do not correspond to the actual value that will be recognized by the named executive officers at the time such awards vest. (3) This award was inadvertently excluded from the Company’s 2022 proxy statement; however, the details of the award have been previously disclosed on Form 4.
Grants Of Plan-Based Awards
Grants Of Plan-Based Awards The following table sets forth information about non-equity and equity awards granted to the named executive officers in the fiscal year ended September 30, 2023.
Grants Of Plan-Based Awards
| | | Estimated Future Payouts under Non-Equity Incentive Plan Awards | | | All other stock awards | All other option awards | Exercise price of option awards ($/Sh) | Grant date fair value if stock and option awards ($)(1) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Number of shares of stock or units (#) | Number of securities underlying options (#) | | | | Shahram Askarpour | | — | 300,000 | 450,000 | | | | | | | 1/11/2023 | | | | 100,000 | | | 819,000 | | | 1/11/2023 | | | | | 200,000 | 8.19 | 852,000 | | Michael Linacre | | — | | | | | | | | | 1/11/2023 | | 100,000 | 150,000 | | | 8.19 | 54,945 | | | 8/21/2023 | | | | | 12,210 | 8.22 | 56,319 | | | 8/21/2023 | | | | 6,082 | 12,164 | | 49,994 |
Grants Of Plan-Based Awards
The amounts included in this column are the dollar amounts representing the grant date fair value of each restricted stock unit or option share, as applicable, calculated in accordance with FASB ASC Topic 817, and do not represent the actual value that may be recognized by the named executive officers upon vesting of restricted stock units or options.
Outstanding Equity Awards At Fiscal Year-End
Outstanding Equity Awards At Fiscal Year-End The following table provides outstanding stock option information for the named executive officers as of the end of fiscal year 2023:
Outstanding Equity Awards At Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | | Shahram Askarpour | 150,000(1) | 50,000 | 8.19 | 1/11/2033 | 62,500(2) | 475,000 | | Michael Linacre | — | 12,210(3) | 8.19 | 1/11/2033 | 6,082(4) | 46,223 | | | — | 12,164(4) | 8.22 | 8/21/2033 | 5,915(5) | 44,954 |
Outstanding Equity Awards At Fiscal Year-End
(1) The award becomes vested according to the following schedule: 50% at the date of grant, and the remaining 50% on a quarterly basis, becoming fully vested on the first anniversary of the date of grant. (2) The award becomes vested according to the following schedule: 25% at the date of grant, and the remaining 75% on a quarterly basis, becoming fully vested on the third anniversary of the date of grant. (3) The award becomes vested according to the following schedule: 1/16th on each anniversary of the date of grant, becoming fully vested on the fourth anniversary of the date of grant. (4) The award becomes vested according to the following schedule: 25% on each anniversary of the date of grant, becoming fully vested on the fourth anniversary of the date of grant. (5) The award becomes vested according to the following schedule: 25% on the first anniversary of the date of grant, and the remaining 75% on a quarterly basis, becoming fully vested on the fourth anniversary of the date of grant.
Option Exercises And Stock Vested
Option Exercises And Stock Vested The following table provides information on the value of stock options that were exercised and stock awards that vested during the fiscal year ended September 30, 2023 for each of our named executive officers:
Option Exercises And Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise $ | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) | | Shahram Askarpour | — | — | 37,500 | 297,000 | | Michael Linacre | — | — | 1,972 | 15,184 |
Potential Payments Upon Termination Or Change In Control
Potential Payments Upon Termination Or Change In Control Dr. Askarpour’s amended and restated employment agreement provides that if his employment is terminated by the Company without “cause” or by Dr. Askarpour for “good reason,” then, subject to his execution and non-revocation of a release of claims in favor of the Company, the Company will continue to pay Dr. Askarpour his base salary at the rate then in effect for a period of twelve (12) months following his termination date, during which period the Company will also pay Dr. Askarpour’s COBRA premiums. If Dr. Askarpour’s employment were terminated by the Company without “cause” or for “good reason” on September 30, 2023, the total amounts payable to Dr. Askarpour would be $429,126. For purposes of Dr. Askarpour’s employment agreement, “cause” generally means (a) the commission by or conviction of Dr. Askarpour, or plea of guilty or nolo contendere to, a felony or any crime involving dishonesty, disloyalty, or moral turpitude; (b) Dr. Askarpour’s willful misconduct or willful failure substantially to perform the duties of his position or his willful refusal to comply with the lawful directives of the Board; (c) a breach by Dr. Askarpour of his employment agreement or any written policies of the Company applicable to Dr. Askarpour; (d) any act or omission by Dr. Askarpour constituting dishonesty, fraud or embezzlement, or an intentional violation of Dr. Askarpour’s duty of loyalty to the Company under law; (e) Dr. Askarpour’s gross negligence in the performance of his duties; or (f) Dr. Askarpour’s poor job performance or other improper conduct not otherwise described above, except that cause shall not exist based solely on clauses (e) or (f), unless the Company has given Dr. Askarpour written notice of its intent to terminate his employment for cause, and allowed Dr. Askarpour thirty (30) days to cure such alleged poor job performance or other improper conduct. For purposes of Dr. Askarpour’s employment agreement, “good reason” generally means (a) a material reduction of Dr. Askarpour’s duties, responsibilities or authority; (b) a reduction of Dr. Askarpour’s base salary; (c) failure or refusal of a successor to the Company to either materially assume the Company’s obligations under Dr. Askarpour’s employment agreement or enter into a new employment agreement with Dr. Askarpour on terms that are materially similar to those provided under his employment agreement, in any case, in the event of a “change in control”; (d) a relocation of Dr. Askarpour’s primary work location that results in an increase in his one-way commute by more than twenty-five (25) miles; or (e) a material breach of Dr. Askarpour’s employment agreement by the Company. See the section titled “Compensation Discussion and Analysis” for additional information. Mr. Linacre’s offer letter provided that if his employment is terminated by the Company without “cause,” then, subject to his execution and non-revocation of a release of claims in favor of the Company, the Company would continue to pay Mr. Linacre his base salary at the rate then in effect for a period of six (6) months following his termination date in addition to a pro-rata bonus for the year of termination based on the actual bonus he would have been paid absent such termination. If Mr. Linacre’s employment were terminated by the Company without “cause” on September 30, 2023, the total amounts payable to Mr. Linacre would have been $235,490. For purposes of Mr. Linacre’s offer letter, “cause” generally means (a) the indictment or conviction of Mr. Linacre, or plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude or dishonesty; (b) Mr. Linacre’s intentional action or an act of fraud, dishonesty or theft affecting the property, reputation, or business of the Company or its affiliates; (c) Mr. Linacre’s willful and persistent neglect of his duties and responsibilities; (d) Mr. Linacre’s failure or refusal to carry out the lawful directives of the Board; (e) Mr. Linacre’s diverting any business opportunity of the Company or its affiliates for his own personal gain; (f) Mr. Linacre’s omission of or misrepresentation of a significant fact on his employment application or resume; or (g) Mr. Linacre’s misuse of alcohol or drugs affecting his work performance. See the section titled “Compensation Discussion and Analysis” for additional information. As previously disclosed, Mr. Linacre resigned from his position as Chief Financial Officer effective November 8, 2023. He did not receive any payments in connection with his termination of employment. The Company’s Compensation Committee has the authority to accelerate the vesting of Company stock options granted to named executive officers under the 2019 Plan upon a change in control of the Company. See the section titled “Compensation Discussion and Analysis” for additional information
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation 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
| | PAY VERSUS PERFORMANCE | | | | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(1)(2)(3) | Average Summary Compensation Table Total for Non-PEO NEOs(1) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2)(3) | Value of Initial Fixed $100 Investment Based on TSR(4) | Net Income ($MM) | | 2023 | $2,439,408 | $2,394,368 | $676,259 | $661,666 | $124.64 | $6.02 | | 2022 | $676,201 | $676,201 | $188,028 | $206,087 | $122.93 | $5.52 |
Pay Versus Performance
The Principal Executive Officer (“PEO”) in 2022 and 2023 is Shahram Askarpour. The Non-PEO NEOs for whom the average compensation is presented in this table for 2022 are Michael Linacre, Geoffrey S.M. Hedrick and Relland Winand, and for 2023 is Michael Linacre. (2) The amounts shown as Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually realized or received by the Company’s NEOs. These amounts reflect total compensation as set forth in the Summary Compensation Table for each year, adjusted as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions for the PEO and NEOs set forth below. Amounts excluded, which are set forth in the Exclusion of Stock Awards columns below, represent the Stock Awards amounts from the applicable Summary Compensation Table. Amounts included in the Inclusion of Equity Values column below are the aggregate of the following components, as applicable: the fair value as of the end of the fiscal year of unvested equity awards granted in that year; the change in fair value during the year of equity awards granted in prior years that remained outstanding and unvested at the end of the year; and the change in fair value during the year through the vesting date of equity awards granted in prior years that vested during that year, less the fair value at the end of the prior year of awards granted prior to the year that failed to meet applicable vesting conditions during the year. Equity values are calculated in accordance with FASB ASC Topic 718. (4) Dollar values assume $100 was invested in the Company for the cumulative period from September 30, 2021 to September 30, 2023, and reinvestment of the pre-tax value of dividends paid. Historical stock performance is not necessarily indicative of future stock performance.
Adjustments Made To Determine Compensation Actually Paid
Adjustments Made To Determine Compensation Actually Paid
Adjustments Made To Determine Compensation Actually Paid
| | | 2023 | 2022 | | Summary Compensation Table Total | PEO | $2,439,408 | $676,201 | | | Average Non-PEO NEOs | $676,259 | $188,028 | | Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table | PEO | $1,671,000 | — | | | Average Non-PEO NEOs | $161,258 | $49,997 | | Fair value as of the end of the covered year of awards granted during year that remain unvested as of year-end | PEO | $689,560 | — | | | Average Non-PEO NEOs | $154,923 | $68,056 | | Increase/Deduction for change in fair value from prior year-end to current year-end of awards granted prior to that year that were outstanding and unvested as of year-end | PEO | — | — | | | Average Non-PEO NEOs | $(6,092) | — | | Increase for fair value as of the vesting dates for awards granted during year that vest during the year | PEO | $936,400 | — | | | Average Non-PEO NEOs | $— | — | | Increase/Deduction for change in fair value from prior year-end to vesting date of awards granted prior to that year that vested during year | PEO | — | — | | | Average Non-PEO NEOs | $(2,030) | — | | Deduction for fair value of awards granted prior to year that were forfeited during year | PEO | — | — | | | Average Non-PEO NEOs | — | — | | Compensation Actually Paid | PEO | $2,394,368 | $676,201 | | | Average Non-PEO NEOs | $661,666 | $206,087 |
Description Of Relationship Between NEO Compensation Actually Paid And Total Shareholder Return (“TSR”)
Description Of Relationship Between NEO Compensation Actually Paid And Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and the Company’s cumulative TSR over the fiscal two-year period from 2022 through 2023.
Description of Relationship Between NEO Compensation Actually Paid and Net Income
Description of Relationship Between NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our net income during fiscal 2022 through 2023.