DEF 14A of Audioeye Inc
Filed Apr 10, 2024 · FY20230001104659-24-045807
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
ELECTION OF DIRECTORS (PROPOSAL NO. 1) Proposal No. 1 is a proposal to elect five persons to serve as directors on our Board of Directors. Each director will hold office until the next Annual Meeting of Stockholders and until his or her successor is elected and qualified, or his or her earlier resignation or removal. All of the Board’s director nominees have consented to be named in this Proxy Statement and to serve as a director, if elected. The Board, based on the recommendation of the Nominating and Corporate Governance Committee, has nominated Dr. Carr Bettis, Anthony Coelho, Dr. Katherine Fleming, David Moradi and Jamil Tahir for re-election as directors at the 2024 Annual Meeting. Proxies cannot be voted for a greater number of persons than five, which is the number of nominees named in this Proxy Statement. If elected, each of the five nominees will serve a one-year term expiring at the 2025 Annual Meeting of Stockholders. If, prior to the Annual Meeting, any of the nominees should be unavailable to serve for any reason, the Board may (i) designate a substitute nominee or nominees (in which event the persons named on the enclosed proxy card will vote the shares represented by all valid proxy cards for the election of such substitute nominee or nominees), (ii) allow the vacancy(ies) to remain open until a suitable candidate or candidates are located, or (iii) by resolution provide for a lesser number of directors. The Board has no reason to believe that any of its nominees will be unable to serve. Directors are elected by a plurality of the votes cast by holders of our shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on Proposal 1, provided a quorum is present. Stockholders do not have the right to cumulate their votes in the election of directors or with respect to any other proposal or matter. Assuming a quorum is present, the five validly nominated individuals receiving the highest number of votes cast at the Annual Meeting will be elected directors. All five of the director nominees were elected at our 2023 Annual Meeting of Stockholders. Messrs. Moradi and Tahir were initially appointed by the Board in November 2019 following the exercise of director designation rights by Sero Capital LLC, a significant stockholder of the Company (“Sero Capital”), pursuant to the terms of a Letter Agreement dated as of August 14, 2019 between the Company and Sero Capital (the “Letter Agreement”). Mr. Moradi is the Chief Executive Officer and beneficial owner of Sero Capital. In the Letter Agreement, the Company agreed that, upon the request of Sero Capital and subject to the terms and conditions provided therein, the Company would take all action necessary to cause two individuals designated by Sero Capital to be appointed to the Board. The number of designees will be reduced to one at such time as Sero Capital and its affiliates collectively own less than 30% of the Company’s voting power. At such time as such ownership falls below 5%, Sero Capital will cease to have the right to designate any directors. Although Sero Capital did not designate any directors for election at the 2024 Annual Meeting, the Board is nominating Messrs. Moradi and Tahir for reelection.
Nominees for Director
Nominees for Director Summarized below is certain information concerning the persons who are nominated by the Board for election to the Board, including a brief account of the education and business experience during at least the past five years. There are no family relationships between any director, executive officer, or person nominated to become a director. The Board recommends that stockholders vote FOR each of the five director nominees named below to constitute the Board. If not otherwise specified, proxies will be voted “FOR” each of the five nominees for director. Dr. Carr Bettis. Dr. Bettis, age 60, has served as a director since December 2012 and previously served as a director from July 2007 to April 2010. Dr. Bettis has served as Executive Chairman/Chairman of the Board since March 2015. Dr. Bettis served as our principal financial officer and principal accounting officer from May 2021 until August 2021. He is a founder, chairman and chief architect of numerous financial science and technology innovations and businesses that have been acquired by Merrill Lynch, Thomson Financial (now LSEG/Refinitiv), Primark/Disclosure (now LSEG/Refinitiv), Institutional Shareholder Services (ISS) and others. Dr. Bettis jointly owns intellectual property with LSEG/Refinitiv via his IP firm CB Partners and is co-founder and Chairman of Verus Analytics, a 25+ year quantitative financial technology company. He currently sits on the First Contact Entertainment board and was Executive Chairman of Emmersive Entertainment, Inc when its assets were sold in 2021. He also serves as an advisor to other private businesses across a range of industries. He maintains a clinical affiliation with Arizona State University as Research Professor of Finance and is an Executive Mentor for Columbia University’s Center for Technology Management. His research has been published in academic and professional journals, such as the Journal of Financial Economics, Review of Financial Studies, Journal of Accounting and Economics, Journal of Financial and Quantitative Analysis, Financial Management and the Financial Analyst Journal. He received his Ph.D. from Indiana University in 1992. We believe that Dr. Bettis’ extensive education and background in finance make him qualified to serve as our Executive Chairman/Chairman of the Board and as a director. Anthony Coelho. Mr. Coelho, age 81, has served as a director since June 2014. Mr. Coelho was a member of the U.S. House of Representatives from 1978 to 1989, where he authored the Americans with Disabilities Act of 1990 (“ADA”). After leaving Congress, he joined Wertheim Schroder & Company, an investment banking firm in New York, and became President and CEO of Wertheim Schroder Financial Services, and a member of the bank’s executive committee, from 1990 to 1995. From 1995 to 1997, he served as Chairman and CEO of an education and training technology company that he established and subsequently sold. In 1998, President Clinton appointed him as the U.S. Commissioner General for the World’s Fair in Lisbon, Portugal. He served as general chairman of the presidential campaign of former Vice President Al Gore from April 1999 until June 2000.Since 1997, Mr. Coelho has worked independently as a business and political consultant. Mr. Coelho also served as Chairman of the President’s Committee on Employment of People with Disabilities from 1994 to 2001. He previously served as Chairman of the Board of the Epilepsy Foundation and Chairman of the Board for the American Association for People with Disabilities. Mr. Coelho has served on a number of boards, including those of Circus Circus, Warren Resources, Kaiser Resources and Cyberonics. Since 1991, he has been a member of the Board of Service Corporation International (NYSE:SCI), a publicly traded company, as its Lead Director. Mr. Coelho is also currently a member of the Board of Esquire Financial Holdings, Inc. (Nasdaq: ESQ), a publicly traded company, as its Chairman. Mr. Coelho earned a Bachelor of Arts degree in Political Science from Loyola Marymount University in 1964. We believe that Mr. Coelho’s political acumen and contacts, as well as his extensive executive, financial and business experience, qualify him to serve as a director. Dr. Katherine E. Fleming. Dr. Fleming, age 58, has over fifteen years’ experience in arts and education leadership. Currently the CEO and President of the J. Paul Getty Trust, she served as Provost of New York University from 2016-2022. At Getty she oversees the Trust’s endowment, the activities of its programs, and its strategic priorities. At NYU, she was responsible for allocating financial resources and had oversight of all Deans and Directors. From 2012- 2016 she served as President of the Board of the University of Piraeus, Greece, and from 2007-2011 she directed the Institut Remarque at the Ecole Normale Superieure in Paris. Dr. Fleming was a member of the Board of Advent Technologies Holdings, Inc. (Nasdaq:ADN), a publicly traded company, until June 2022. A historian by training, Dr. Fleming earned a B.A. from Barnard College of Columbia University, an M.A. from the University of Chicago and a Ph.D. from the University of California, Berkeley. She is an elected member of the American Academy of Arts and Sciences, a Chevalier in the French Legion of Honor, and holds the Silver Cross in the Greek Order of Beneficence. We believe that Dr. Fleming’s extensive financial and scholastic experience qualify her to serve as a director. David Moradi. Mr. Moradi, age 48, has served as Chief Executive Officer (“CEO”) since January 2022, served as Interim Chief Executive Officer and Chief Strategy Officer from August 2020 to January 2022, and has served as a director since November 2019. Mr. Moradi is an entrepreneur, investor, and advisor to numerous technology companies. In September 2018, Mr. Moradi founded and became Chief Executive Officer of Sero Capital LLC, a private investment firm that focuses on growth opportunities in the technology sector. Sero Capital LLC is a principal stockholder of the Company. He founded and was Chief Executive Officer of Anthion Management, a technology-focused investment fund. Prior to founding Anthion Management, Mr. Moradi was a portfolio manager at Pequot Capital Management and, prior to that, an analyst and portfolio manager for Soros Fund Management. Mr. Moradi started his career as a special situations analyst for Imperial Capital LLC. Mr. Moradi is also the founder and chairman of the David Moradi Foundation, a charitable foundation that supports education and veterans. He graduated with a B.A. in psychology from the University of California, Los Angeles. We believe that Mr. Moradi’s extensive executive, investment, financial and business experience qualify him to serve as a director. Jamil Tahir. Mr. Tahir, age 47, has served as a director since November 2019 and the lead independent director since July 2020. Mr. Tahir is a co-founder and managing member of TurnMark Capital LLC, a private investment firm that was founded in 2008. Mr. Tahir has over 25 years of public stock and bond investing experience. Prior to founding TurnMark Capital, Mr. Tahir managed the research team for Cannell Capital LLC, an asset management company. Mr. Tahir began his career as an investment banking analyst in the Financial Entrepreneurs Group of Salomon Smith Barney, New York. He graduated from the University of California at Berkeley in 1999 earning a B.S. in Business Administration and a B.A. in Economics. We believe that Mr. Tahir’s extensive experience investing in publicly traded companies and in asset management and investment banking qualify him to serve as a director.
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023 Prior to April 1, 2023, our non-employee director compensation program consisted of the following: • each non-employee director receives an annual equity award of RSUs with a value of $85,000; • the Lead Independent Director receives an additional annual equity award of RSUs with a value of $42,500; • each non-employee director receives a quarterly equity award of RSUs with a value of $10,000; • each Chair of the Compensation Committee, Nominating and Corporate Governance Committee and Audit Committee receives an additional quarterly equity award of RSUs with a value of $3,000; and • the Lead Independent Director receives an additional quarterly equity award of RSUs with a value of $5,000. The number of RSUs in each award is determined by dividing the applicable value by the volume-weighted average price of the Company’s common stock on the Nasdaq Capital Market over the 20 consecutive trading days immediately prior to the date of grant. Effective April 1, 2023, our non-employee director compensation program was amended to consist of the following: • each non-employee director receives an annual equity award of 5,667 RSUs; • the Lead Independent Director receives an additional annual equity award of 2,833 RSUs; • each non-employee director receives a quarterly equity award of 667 RSUs; • each Chair of the Compensation Committee, Nominating and Corporate Governance Committee and Audit Committee receives an additional quarterly equity award of 200 RSUs; and • the Lead Independent Director receives an additional quarterly equity award of 333 RSUs. The annual RSUs are granted on the date of the annual meeting of stockholders in each year and vest on the earlier of (a) one year following the date of grant or (b) immediately prior to the next annual meeting of stockholders following the date of grant, provided the director’s service has not terminated prior to such date. Any of these vested RSUs are settled on the earlier of (i) the 7th anniversary of the grant date, (ii) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (iii) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. The quarterly RSUs are granted in advance on the first day of each calendar quarter and vest on the grant date. These vested RSUs are settled on the earlier of (i) the 3rd anniversary of the grant date, (ii) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (iii) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. 2023 Compensation. The following table sets forth summary information concerning the compensation paid to our non-employee directors for the fiscal year ended December 31, 2023. Compensation paid to or earned by Dr. Carr Bettis and David Moradi, each of whom was a director and a named executive officer during the fiscal year ended December 31, 2023, is set forth in the Summary Compensation Table in the section below titled “Executive Compensation — Summary Compensation Table.”
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023
| Director Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Total ($) | | Anthony Coelho | — | 61,761(3) | 61,761 | | Dr. Katherine Fleming | — | 54,007(4) | 54,007 | | Jamil Tahir | — | 95,803(5) | 95,803 | | Marc Lehmann | — | 14,617(6) | 14,617 |
DIRECTOR COMPENSATION FOR FISCAL YEAR 2023
Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for stock granted during the reported fiscal year. For additional information regarding the assumptions we used to calculate the amounts in this column, please refer to Note 2 to our audited consolidated financial statements included in our 2023 Annual Report filed with the SEC on March 7, 2024. (2) On May 19, 2023, each of Mr. Coelho and Dr. Fleming was granted 5,667 RSUs as the annual equity grant to non-employee directors, and Mr. Tahir was granted 8,500 RSUs as the aggregate annual equity grant to non-employee directors and the annual equity grant to the Lead Independent Director. Each such award will vest on the earlier of the first anniversary of the grant date or immediately prior to the next annual meeting of stockholders, provided the director’s service does not terminate prior to such date. In addition, on March 24, 2023, Dr. Fleming was granted 1,233 RSUs upon becoming a director as the prorated annual equity grant to non-employee directors, which vested on May 19, 2023. The settlement date for any RSUs that become vested will be the first to occur of (x) the 7th anniversary of the grant date, (y) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (z) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. (3) During 2023, Mr. Coelho received quarterly equity awards aggregating 5,955 RSUs. These vested RSUs are settled on the earlier of (i) the 3rd anniversary of the grant date, (ii) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (iii) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. As of December 31, 2023, Mr. Coelho held the following stock awards that had been granted to him as compensation for services provided to us in his capacity as a director: (i) 93,272 RSUs that had vested but not yet settled and (iii) 5,667 unvested RSUs. (4) During 2023, Dr. Fleming received quarterly equity awards aggregating 2,230 RSUs. These vested RSUs are settled on the earlier of (i) the 3rd anniversary of the grant date, (ii) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (iii) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. As of December 31, 2023, Dr. Fleming held the following stock awards that had been granted to her as compensation for services provided to us in her capacity as a director: (i) 3,463 RSUs that had vested but not yet settled and (iii) 5,667 unvested RSUs. (5) During 2023, Mr. Tahir received quarterly equity awards aggregating 9,617 RSUs. These vested RSUs are settled on the earlier of (i) the 3rd anniversary of the grant date, (ii) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (iii) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. As of December 31, 2023, Mr. Tahir held the following stock and awards that had been granted to him as compensation for services provided to us in his capacity as a director: (i) 93,535 RSUs that had vested but not yet settled and (ii) 8,500 unvested RSUs. Mr. Lehmann did not stand for re-election at the 2023 Annual Meeting and retired from the Board on May 19, 2023. During 2023, Mr. Lehmann received quarterly equity awards aggregating 3,247 RSUs. These vested RSUs are settled on the earlier of (i) the 3rd anniversary of the grant date, (ii) immediately prior to the closing of a change in control, but in no case later than 90 days following the change in control, or (iii) the calendar year following the year of death, with payment made no later than the end of the year following the year of death. As of December 31, 2023, Mr. Lehmann held 45,054 RSUs that had vested but not yet settled, which had been granted to him as compensation for services provided to us in his capacity as a director.
Compensation Objectives and Philosophy
Compensation Objectives and Philosophy The primary objective of our executive compensation program is to attract and retain exceptional leaders and enable them to behave like owners. When setting executive compensation, we apply a consistent approach for all executive officers and intend that the combination of compensation elements closely aligns the executives’ financial interests with those of our stockholders. The program is primarily designed to: • Attract, motivate and retain a highly capable and performance-focused executive team; • Promote a culture of employee owners whose financial interests are aligned with those of our stockholders; • Pay for performance such that total compensation reflects the individual performance of executives and the Company’s performance; • Promote a focus on equity value by tying executive compensation to the long-term enhancement of stockholder value; • Permit the Compensation Committee to exercise independent judgment and approval authority with respect to establishing executive compensation programs, performance measures, and awards; and • Consider the potential stock dilution, cash flow, tax and reported earnings implications of executive compensation, consistent with the other objectives of the program. Target total compensation consists of an appropriate balance of cash and equity and is divided into three core elements: base salary, annual cash incentive compensation, and long-term equity incentive compensation. The Compensation Committee offers long-term equity incentive opportunities that encourage stock ownership. Generally, the amount of compensation realizable from prior compensation does not directly impact the level at which future pay opportunities are set. However, when granting equity awards, the Compensation Committee reviews and considers the number of outstanding and previously granted equity awards. In addition to promoting share ownership, our executive compensation objectives and philosophy focus on rewarding performance. This means that stockholder returns along with corporate and individual performance, both short-term and long-term, determine a significant portion of the executives’ pay opportunity.
Equity Incentive Plans
Equity Incentive Plans A key component of an executive officer’s compensation is equity incentive awards, which are critical to focusing our executives on the Company’s long-term growth and creating stockholder value. The AudioEye, Inc. 2019 Equity Incentive Plan, as amended (the “2019 Plan”), and the AudioEye, Inc. 2020 Equity Incentive Plan (the “2020 Equity Plan”) are designed to attract and retain exceptional leaders and enable them to behave like owners. In 2022, we granted restricted stock unit awards, or RSUs, and performance stock units, or PSUs, to our executive officers. An RSU is a right to receive the fair market value of a specified number of shares of our common stock, payable in cash, shares, or a combination of both, that vests at such times, in such installments and subject to such conditions as may be determined by the Compensation Committee. A PSU is a right to receive the fair market value of a specified number of shares of our common stock, payable in cash, shares, or a combination of both, that is earned if and to the extent certain performance goals established by the Compensation Committee are achieved and will vest at such times and in such installments as determined by the Compensation Committee. Until it vests, an RSU and a PSU is subject to restrictions and the possibility of forfeiture. Following the vesting of an RSU or a PSU, settlement of the award and payment to the participant will be made at such time as determined by the Compensation Committee. RSUs and PSUs will be subject to such terms and conditions, consistent with the other provisions of the 2019 Plan or 2020 Equity Plan, as applicable, as may be determined by the Compensation Committee. The Compensation Committee may provide for the payment of dividend equivalents on RSUs and other stock-based awards, but any such dividend equivalents will be subject to the same restrictions and risk of forfeiture as the underlying units or other share equivalents to which such dividend equivalents relate.
Summary Compensation Table for Fiscal Year 2023
Summary Compensation Table for Fiscal Year 2023 The table below summarizes the compensation paid to or earned by our named executive officers for the fiscal years ended December 31, 2023 and December 31, 2022.
Summary Compensation Table for Fiscal Year 2023
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | All Other Compensation ($) | Total ($) | | David Moradi Chief Executive Officer and Director | 2023 | 1 | — | — | — | 1 | | | 2022 | 1 | — | 1,292,000(2) | — | 1,292,001 | | Kelly Georgevich Chief Financial Officer | 2023 | 334,115 | 62,753 | 85,817(3) | — | 482,685 | | | 2022 | 325,000 | 50,000 | 168,098(4) | — | 543,098 | | Dr. Carr Bettis(5) Executive Chairman | 2023 | 36,000 | — | 64,484(6) | — | 100,484 | | Dominic Varacalli(7) Chief Operating Officer | 2023 | 225,000 | — | 217,750(8) | 62,500(9) | 505,250 | | | 2022 | 289,583 | 20,000 | 149,200(10) | — | 458,783 |
Summary Compensation Table for Fiscal Year 2023
(1) Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 (“ASC 718”) for stock awards granted during the reported fiscal years, plus the incremental fair value of any modified or canceled award, computed as of the modification or cancellation date in accordance with ASC 718. For additional information regarding the assumptions we used to calculate the amounts in these columns, please refer to Note 2 to our audited consolidated financial statements included in our 2023 Annual Report filed with the SEC on March 7, 2024. The grant date fair value of performance stock units (“PSUs”) for which performance goals were established was based on the assumption that the maximum performance is achieved. On May 20, 2022, Mr. Moradi received an award of RSUs with respect to 400,000 shares of the Company’s common stock, of which 111,706 RSUs vested on January 20, 2023 and 111,706 RSUs vested on January 20, 2024. The remaining RSUs are scheduled to vest as follows: (i) 111,706 RSUs on January 20, 2025; and (ii) 64,882 RSUs on August 20, 2025, subject to his continued employment. On June 21, 2021, Ms. Georgevich received an award of PSUs with respect to 28,852 shares of the Company’s common stock scheduled to vest over the three years following the grant based upon performance goals to be established by the Compensation Committee. On August 3, 2022, Ms. Georgevich received an additional award of PSUs with respect to 20,000 shares of the Company’s common stock scheduled to vest over three years based upon performance goals to be established by the Compensation Committee for calendar years 2023 through 2025. The grant date fair value of 9,617 PSUs from the 2021 grant and 6,667 PSUs from the 2022 grant that have been determined to have been earned with respect to 2023 performance are included in the amount shown for 2023. The performance goals with respect to the remaining 4,506 PSUs from the 2021 grant and the remaining 13,333 PSUs from the 2022 grant have not yet been established. (4) On August 3, 2022, Ms. Georgevich received an award of RSUs with respect to 20,000 shares of the Company’s common stock, of which 6,667 RSUs vested on June 21, 2023, and the remaining are scheduled to vest as follows: (i) 6,667 RSUs on June 21, 2024, and (ii) 6,666 RSUs on June 21, 2025, provided that Ms. Georgevich is continuously employed on each of those vesting dates. The grant date fair value of those RSUs is included in the amount shown. Because the performance goals relating to the 2022 PSUs referenced in footnote (3) had not yet been established, no grant date fair value had been determined or included in the amount shown for 2022. The amount shown for 2022 also includes the grant date fair value of 9,617 PSUs awarded to Ms. Georgevich in 2021, as described in footnote (3), that have been determined to have been earned with respect to 2022 performance. (5) Dr. Bettis was not a named executive officer in 2022. (6) Includes monthly awards of fully vested shares of common stock of the Company as follows: (i) a prorated portion of $139,000 in annual equity grant through March 31, 2023; and (ii) a monthly award of 772 shares for the remainder of the year. (7) Mr. Varacalli served as Chief Operating Officer of the Company from September 2021 to August 2023. (8) On January 9, 2023, Mr. Varacalli received an award of RSUs with respect to 25,000 shares of the Company’s common stock that were scheduled to vest over a three-year period on each January 1, 2024, January 1, 2025, and January 1, 2026, subject to continued employment on each of those vesting dates. This RSU grant was subsequently modified such that Mr. Varacalli vested in 18,863 RSUs on November 15, 2023 and forfeited the remaining RSUs. The amount included in the table related to such RSUs granted in 2023 represent (i) $99,000 in grant date fair value of 25,000 RSUs, plus (ii) $89,599 in incremental fair value associated with the modification of 18,863 RSUs to vest on November 15, 2023. Total stock compensation expense recognized in connection with such RSUs awarded in 2023 totaled $89,599. The amount shown also includes the grant date fair value of 6,137 PSUs awarded in 2020 to Mr. Varacalli that were modified to vest in 2023 based on service instead of performance. (9) Mr. Varacalli received a severance payment of $62,500 in connection with his termination. (10) On August 3, 2022, Mr. Varacalli received an award of RSUs with respect to 15,000 shares of the Company’s common stock that were scheduled to vest over a three-year period on each June 1, 2023, June 1, 2024, and June 1, 2025, subject to continued employment on each of those vesting dates. The grant date fair value of those RSUs is included in the amount shown for 2022. The grant date fair value of 10,000 PSUs awarded in 2020 with respect to Mr. Varacalli’s 2022 performance is included in the amount shown and 9,200 of such PSUs were certified as vested on March 13, 2023.
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End The following table sets forth certain information as of December 31, 2023 concerning outstanding equity awards, including both awards subject to market-based and performance conditions and time-based awards, held as of such date by our named executive officers:
Outstanding Equity Awards at 2023 Fiscal Year End
| | Stock Awards | | | | | Name | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(1) | Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested (#)(2) | Equity Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not vested ($)(1) | | David Moradi | 288,294(3) | 1,562,553 | 205,000(4) | 1,111,100 | | Kelly Georgevich | 18,141(5) | 98,324 | 17,839(6) | 96,687 | | Dr. Carr Bettis | — | — | — | — | | Dominic Varacalli(7) | — | — | — | — |
Outstanding Equity Awards at 2023 Fiscal Year End
(1) The market value of unvested stock awards is calculated using a value of $5.42 per share, which was the closing price of our common stock on the Nasdaq Capital Market on December 29, 2023, the last trading day of 2023. (2) Reflects PSUs that are subject to achievement of performance goals that had not been earned as of December 31, 2023. The number of PSUs shown assumes maximum performance is achieved. (3) On May 20, 2022, Mr. Moradi received an award of RSUs with respect to 400,000 shares of the Company’s common stock of which 111,706 RSUs vested on January 20, 2023. The amount shown includes 111,706 RSUs that vested on January 20, 2024, 111,706 RSUs scheduled to vest on January 20, 2025, and 64,882 RSUs scheduled to vest on August 20, 2025, subject to his continued employment. (4) On August 20, 2020, the Compensation Committee granted Mr. Moradi PSUs with respect to 260,000 shares of the Company’s common stock, for which vesting terms and performance conditions are described above in connection with Mr. Moradi’s employment agreement. Any PSUs that have not vested on or prior to August 20, 2025 will be forfeited. As of December 31, 2023, 205,000 of these PSUs remained unearned and are included in this table. (5) On August 3, 2022, Ms. Georgevich received an award of RSUs with respect to 20,000 shares of the Company’s common stock, of which 6,667 RSUs vested on June 21, 2023. The amount shown includes 6,667 RSUs scheduled to vest on June 21, 2024, and 6,666 RSUs scheduled to vest on June 21, 2025, provided that Ms. Georgevich is continuously employed on each of those vesting dates. On June 21, 2021, Ms. Georgevich received an award of RSUs with respect to 28,852 shares of the Company’s common stock that vests over a three-year period as follows: one-third shall vest on the first anniversary of the grant date and the remaining two-thirds shall vest quarterly over the next two years, in equal installments, starting at the end of the first quarter occurring after the first anniversary of the grant date, subject to her continued employment. The amount shown includes 4,808 RSUs from this grant that have not yet vested. (6) On August 3, 2022, Ms. Georgevich received an award of PSUs with respect to 20,000 shares of the Company’s common stock scheduled to vest over three years based upon performance goals to be established by the Compensation Committee for calendar years 2023 through 2025. On June 21, 2021, Ms. Georgevich received an award of PSUs with respect to 28,852 shares of the Company’s common stock scheduled to vest over the three-years following the grant based upon performance goals to be established by the Compensation Committee. As of December 31, 2023, 17,839 of these PSUs awarded in 2021 and 2022 remained unearned and are included in the amount shown. Mr. Varacalli served as Chief Operating Officer of the Company from September 2021 to August 2023. As of December 31, 2023, Mr. Varacalli had no equity awards outstanding.
Additional Potential Payments for Accelerated Equity Awards
Additional Potential Payments for Accelerated Equity Awards The 2019 Plan provides for accelerated vesting of time-based equity awards and the 2020 Equity Plan provides for vesting of time-based equity awards or performance-based equity awards based on both (1) the occurrence of a change in control and (2) an accompanying involuntary termination of service without cause or a termination for good reason, within 12 months after the change in control (other than in the event awards are not continued, assumed, or replaced in connection with a corporate transaction, in which case they will accelerate upon the change in control, or in the event the award agreement provides otherwise). For a change in control not involving a corporate transaction, both the 2019 Plan and the 2020 Equity Plan provide Compensation Committee with discretion to accelerate vesting of outstanding equity awards. Pursuant to the terms of the PSU award agreements, in the event of either type of change of control, the number of units that will accelerate will be based on actual performance through the date of the change in control or termination of employment, as applicable. In addition, the terms of the PSUs granted to Mr. Moradi in August 2020 provide that any unvested PSUs under that award will become fully vested if, on or prior to August 20, 2025, Mr. Moradi’s employment is terminated by the Company without cause. If any such accelerated vesting had occurred on December 31, 2023, then each of our NEOs serving on such date would have had RSUs and PSUs accelerate having the values set forth in the table below, assuming that any performance goals related to the period ended December 31, 2023 were deemed to have been satisfied as the target level of performance. No other equity awards held by our NEOs as of such date would have had any value upon acceleration. The value of the accelerated RSUs and PSUs set forth in the table is based on the $5.42 closing price of our stock on December 29, 2023, the last trading day of 2023.
Additional Potential Payments for Accelerated Equity Awards
| Name | Value of Accelerated RSUs and PSUs ($) | | David Moradi | 2,673,653 | | Kelly Georgevich | 98,324 |
Pay Versus Performance Table
Pay Versus Performance Table The following table sets forth additional compensation information of our CEO (referred to as our “PEO” in this section) and of the average of our other NEOs (the “Non-PEO NEOs”) along with total shareholder return and net income (loss) performance results for 2023, 2022 and 2021:
Pay Versus Performance Table
| Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(2) ($) | Value of Initial Fixed $100 Investment Based on: Total Shareholder Return(3) ($) | Net Income (Loss) ($ in thousands) | | 2023 | 1 | 785,902 | 362,806 | 342,404 | 20.98 | (5,872) | | 2022 | 1,292,001 | 878,051 | 500,941 | 407,056 | 14.83 | (10,433) | | 2021 | 2,773,501 | (3,964,399) | 1,317,218 | 599,653 | 27.18 | (14,209) |
Pay Versus Performance Table
For 2021, the PEO was Mr. Moradi and the Non-PEO NEOs were Ms. Georgevich and Christopher Hundley, Former President. For 2022, the PEO was Mr. Moradi and the Non-PEO NEOs were Ms. Georgevich and Mr. Varacalli. For 2023, the PEO was Mr. Moradi and the Non-PEO NEOs were Ms. Georgevich, Dr. Bettis, and Mr. Varacalli, who served as Chief Operating Officer through August 2023. A reconciliation of Total Compensation from the Summary Compensation Table (“SCT”) to Compensation Actually Paid to our PEO and our Non-PEO NEOs (as an average) for 2023 is shown below:
Pay Versus Performance Table
| | 2023 | | | Adjustments | PEO ($) | Average of Non-PEO NEOs ($) | | Total Compensation from SCT | 1 | 362,806 | | Adjustments for stock and option awards: | | | | (Subtraction): Stock Awards amounts | — | (122,684) | | Addition: Fair value at year-end of awards granted during the covered fiscal year that are outstanding and unvested at year-end | — | — | | Addition (Subtraction): Year-over-year change in fair value of awards granted in any prior fiscal year that are outstanding and unvested at covered year end | 784,337 | 9,615 | | Addition: Vesting date fair value of awards granted and vesting during the covered year | — | 87,434 | | Addition (Subtraction): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered year | 1,564 | 18,000 | | (Subtraction): Fair value at end of prior year of awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during the covered year | — | (12,767) | | Addition: Dividends or other earnings paid on stock or option awards in the covered year prior to vesting if not otherwise included in the total compensation for the covered year | — | — | | Compensation Actually Paid (as calculated) | 785,902 | 342,404 |
Pay Versus Performance Table
Fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns, which includes RSUs and PSUs, was determined by reference to the closing price on the applicable year-end date(s) or the applicable vesting date and was based on the assumption that the maximum performance is achieved. (3) Total shareholder return as calculated is based on a fixed investment of one hundred dollars measured from the market close on December 31, 2020 through and including the end of the fiscal year for each year reported in the table.
Compensation Actually Paid versus TSR
Compensation Actually Paid versus TSR
Compensation Actually Paid versus Net Loss
Compensation Actually Paid versus Net Loss We believe the Compensation Actually Paid in each of the years reported above and over the three-year cumulative period are reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the “Compensation Actually Paid” fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement of conditions established in awards with market and individual performance goals.