DEF 14A of Alarm.com Holdings, Inc., Apr 23, 2024

DEF 14A of Alarm.com Holdings, Inc.

Filed Apr 23, 2024 · FY20230001104659-24-050614

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS The Board presently has seven members. All current directors, Messrs. Clarke, McAdam, Nevin, Whall, Evans and Trundle and Ms. Wu, have been nominated for re-election at the Annual Meeting by the Nominating and Corporate Governance Committee. If elected at the Annual Meeting, each of these nominees would serve until the 2025 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified, or, if sooner, until his or her death, resignation, retirement, disqualification or removal. In 2021, we amended our Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) and Bylaws to phase out our classified Board structure which consisted of directors divided into three classes — Class I, Class II and Class III — with each class serving staggered, three-year terms. Pursuant to the amendments, the terms of all incumbent directors will expire at the 2024 Annual Meetings of Stockholders, at which time our Board structure will no longer be classified. As a result, beginning with the 2024 Annual Meeting of Stockholders, all director nominees, if elected, will hold office for a one-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy, including vacancies created by an increase in the number of directors, shall serve until the next Annual Meeting of Stockholders and until the director’s successor is duly elected and qualified. Directors will hold office until his or her successor will be duly elected and qualified, or if earlier, such director’s death, resignation, retirement, disqualification or removal. Messrs. Clarke and Whall were previously elected at the 2022 Annual Meeting as directors with terms expiring at the 2023 Annual Meeting, Messrs. Evans and McAdam and Ms. Wu were previously elected as Class II directors with terms expiring at the 2023 Annual Meeting, and Messrs. Trundle and Nevin were previously elected as Class III directors with terms expiring at the 2024 Annual Meeting. Accordingly, each of the seven directors has been nominated for a one-year term expiring at the 2025 Annual Meeting of Shareholders. It is our policy to invite directors and nominees for director to attend the Annual Meeting. All of our then-current directors attended the 2023 Annual Meeting of Stockholders in person.

  2. Director Nominees

    Director Nominees The following is a brief biography of each nominee for director, and a discussion of the specific experience, qualifications, attributes or skills of each nominee that led the Nominating and Corporate Governance Committee to recommend that person as a nominee for director, as of the date of this Proxy Statement. Donald Clarke, age 65, has served as a member of our Board since May 2014. Since December 2016, Mr. Clarke has served as a member of the Board of Directors of BigCommerce Holdings, Inc., a publicly traded ecommerce platform provider. From January 2014 through December 2021, Mr. Clarke served as the Chief Financial Officer for Plex Systems, Inc., a privately held cloud technology company, and previously also held the position of its interim Chief Executive Officer from October 2017 through November 2018. Prior to joining Plex, from March 2008 to March 2013, he served as the Chief Financial Officer for Eloqua, Inc., a then publicly held marketing automation company. Prior to working at Eloqua, Mr. Clarke served as Chief Financial Officer for Cloakware, Inc., a privately held security solutions company, from August 2006 to February 2008 and for Visual Networks, Inc., a then publicly traded application and network management solutions company, from July 2004 to March 2006. He is a member of the American Institute of Certified Public Accountants and holds a B.S. in Accounting from Virginia Polytechnic Institute and State University. Our Board believes that Mr. Clarke’s experience in operations, strategy, accounting and financial management at both publicly and privately held companies qualifies him to serve on the Board. Timothy McAdam, age 56, has served as chairman of our Board since April 2015 and has served as a member of our Board since July 2012. Mr. McAdam is a General Partner of Technology Crossover Ventures and has been in the venture capital industry since 1991. He currently serves on the board of directors of FinancialForce.com, Inc., a cloud-based applications company, Vectra, a cybersecurity company, Oversight, an application software company, Perceptyx, a cloud-based software company, and Aviatrix, an infrastructure cloud software company. Mr. McAdam holds a B.A. in Classics from Dartmouth College and an M.B.A. from the Stanford Graduate School of Business. Our Board believes Mr. McAdam’s experience in building technology companies and his expertise as an investor in such companies qualifies him to serve on the Board. Darius G. Nevin, age 66, has served as a member of our Board since April 2016. Mr. Nevin is a member of G3 Capital Partners, LLC, a consulting company, which has served as an adviser to private equity firms in the fields of security, telecommunications, and recurring services. He is also a member of G3 Investment Holdings, LLC, an investment company. Since August 2022, he has been a member of the board of directors of Psychemedics Corporation, a publicly traded hair drug testing company. He is chairman of their board, serves on their nominating and corporate governance committee and is chair of their audit committee. Prior to co-founding G3 Capital Partners, LLC in October 2010, Mr. Nevin served as chief financial officer of Protection One, Inc., a then publicly traded security systems installation and monitoring company, from 2001 until June 2010. He served as a director and chairman of the audit committee of WCI Communities, Inc., a then publicly traded community developer and luxury homebuilder, from July 2013 through its acquisition in February 2017. Mr. Nevin earned an A.B. from Harvard College and an M.B.A. from the University of Chicago Booth School of Business. Our Board believes that Mr. Nevin’s experience in executive management of security monitoring companies and in developing and executing the operating and financing strategies at both publicly and privately held companies and his background in public company financial reporting qualifies him to serve on the Board. Timothy J. Whall, age 62, has served as a member of our Board since August 2021. Mr. Whall served as the Chief Executive Officer of ADT Inc. (ADT), a publicly traded security, interactive and smart home solutions company, from May 2016 until his retirement in November 2018, the President of ADT from May 2016 until September 2017 and as a member of the board of directors of ADT from May 2016 until October 2019. He was also President of Prime Borrower from July 2015 to March 2018. Previously, Mr. Whall served as the President, Chief Executive Officer and a member of the board of directors of Protection One, Inc. from June 2010 to March 2017. From 1990 to 2010, Mr. Whall served in a variety of roles with SecurityLink, GTCR, ADT, Honeywell, and Stanleyworks. Our Board believes that Mr. Whall’s experience in executive management and directorship of companies in the security industry, extensive experience in mergers and acquisitions and his background in public company financial reporting qualifies him to serve on the Board. Rear Admiral (Ret.) Stephen Evans, age 59, has served as a member of our Board since February 2021. Since June 2021, Admiral Evans has served as a member of the Board of Directors of Merit Medical Systems, Inc., a publicly traded company that manufactures and markets proprietary disposable medical devices. Admiral Evans retired in 2020 from the United States Navy where he most recently served as Special Advisor to the Commander, Naval Installations. Admiral Evans served as Senior Advisor, Deputy U.S. Military, NATO Military Committee from 2019 to 2020, as Commander, George H. W. Bush Carrier Strike Group from 2017 to 2019, as Commander, Naval Service Training Command from 2015 to 2017 and Senior Military Assistant to the 75th Secretary of the Navy from 2013 to 2015. Prior to that, during his more than twenty years of service in the United States Navy, Admiral Evans held a variety of leadership positions. Admiral Evans earned a B.A. at The Citadel, a M.A. in National Security Affairs from the U.S. Naval War College and has attended Executive Education programs at Harvard’s John F. Kennedy School, the Massachusetts Institution of Technology, the University of Virginia Darden School of Business and the University of North Carolina Kenan-Flagler Business School. Our Board believes Admiral Evans’ experience in cyber defense, national security, public policy, governmental relations and leadership development qualifies him to serve on the Board. Stephen Trundle, age 55, has served as our Chief Executive Officer since January 2023. He previously served as our President and Chief Executive Officer from May 2003 to January 2023 and has been a member of our Board since October 2003. Previously, Mr. Trundle served in various positions with MicroStrategy Incorporated, including as Vice President of Technology and Chief Technology Officer. Mr. Trundle holds an A.B. in Engineering and an A.B. in Government from Dartmouth College. Our Board believes that Mr. Trundle’s extensive knowledge of our business and prior industry experience with technology qualifies him to serve on the Board.

  3. Director Nominees

    Simone Wu, age 59, has served as a member of our Board since February 2020. Ms. Wu has served as the Senior Vice President, General Counsel, Corporate Secretary & External Affairs of Choice Hotels International, Inc. since 2015 and was previously Senior Vice President, General Counsel, Corporate Secretary & Chief Compliance Officer at Choice Hotels from 2012 to 2015. At Choice Hotels, she leads the Legal, Public Policy, Risk Management, and Corporate Secretary functions. Prior to joining Choice Hotels, Ms. Wu served in a variety of roles with XO Communications and its affiliates from 2001 to 2012, including as General Counsel and Corporate Secretary from 2006 to 2012. Earlier in her career, she held a variety of legal and business roles including with AOL and MCI, focusing on both domestic and international matters, and she began her legal career as an associate with Skadden, Arps, Slate, Meagher & Flom, primarily engaged in telecommunications regulatory, transactional, and privatization work. Our Board believes Ms. Wu’s extensive legal, executive and regulatory experience and expertise, particularly in corporate governance, business development, mergers and acquisitions, joint ventures, commercial transactions and intellectual property issues, qualifies her to serve on the Board. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH NAMED NOMINEE.

  4. Board Diversity, Qualifications and Expertise Total Number of Directors: 7 Board Diversity Matrix as of April 23, 2024

    Board Diversity, Qualifications and Expertise Total Number of Directors: 7 Board Diversity Matrix as of April 23, 2024

  5. Board Diversity, Qualifications and Expertise Total Number of Directors: 7 Board Diversity Matrix as of April 23, 2024

    | | 1 | 2 | 3 | 4 | 5(2) | 6 | 7 | | Gender(1) | U | M | M | M | M | M | F | | Demographic Background | | | | | | | | | African American or Black | | | | X | | | | | Alaskan Native or American Indian | | | | | | | | | Asian | | | | | | | X | | Hispanic or LatinX | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | White | | X | X | | X | X | | | Two or more races or ethnicities | | | | | | | | | LGBTQ+ | | | | | | | | | Did not disclose demographic background | X | | | | | | |

  6. Board Diversity, Qualifications and Expertise Total Number of Directors: 7 Board Diversity Matrix as of April 23, 2024

    (1) Male (M), Female (F), Non-Binary (NB), Gender Undisclosed (U) This director self-identifies as Middle Eastern or North African.

  7. Board Qualifications and Expertise Matrix

    Board Qualifications and Expertise Matrix

  8. Board Qualifications and Expertise Matrix

    | Qualifications and Expertise | 1 | 2 | 3 | 4 | 5 | 6 | 7 | | Financial (Leadership of a financial firm or management of the finance function of an enterprise, resulting in proficiency in complex financial management, capital allocation, and financial reporting processes.) | X | X | X | | X | X | | | Global Business (Experience driving business success in markets around the world, with an understanding of diverse business environments, economic conditions, cultures, and regulatory frameworks, and abroad perspective on global market opportunities.) | X | X | X | | | | X | | Leadership (Extended leadership experience for a significant enterprise, resulting in a practical understanding of organizations, processes, strategic planning, and risk management. Demonstrated strengths in developing talent, planning succession, and driving change and long-term growth.) | X | X | X | X | X | X | X | | Mergers and Acquisitions (A history of leading growth through acquisitions and other business combinations, with the ability to assess “build or buy” decisions, analyze the fit of a target with a company’s strategy and culture, accurately value transactions, and evaluate operational integration plans.) | X | X | X | | X | X | X | | Sales and Marketing (Experience developing strategies to grow sales and market share, build brand awareness and equity, and enhance enterprise reputation.) | X | | X | | X | X | | | Technology (A significant background working in technology, resulting in knowledge of how to anticipate technological trends, generate disruptive innovation, and extend or create new business models.) | X | X | X | X | X | | |

  9. INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

    INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

  10. Objectives, Philosophy and Elements of Executive Compensation

    We focus on providing a competitive compensation package to each of our executive officers that provides significant short- and long-term incentives for the achievement of measurable corporate objectives. We believe that this approach provides an appropriate blend of short-term and long-term incentives to maximize stockholder value. We do not have formal policies for allocating compensation among salary, performance bonus awards and equity grants, short-term and long-term compensation or among cash and non-cash compensation. Instead, the Compensation Committee uses its judgment to establish a total compensation program for each named executive officer that is a mix of current, short-term and long-term incentive compensation, and cash and non-cash compensation, that it believes appropriate to achieve the goals of our executive compensation program and our corporate objectives. However, we historically have structured a significant portion of the named executive officers’ total target compensation so that it is comprised of performance-based bonus opportunities and long-term equity awards granted based on performance, in order to align the executive officers’ incentives with the interests of our stockholders and our corporate goals.

  11. 2023 Executive Compensation Program

    (1) The 2023 base salaries listed in this column took effect on September 1, 2023. The percentage increases reflected in this column assume that the 2023 base salaries listed in the table above became effective as of January 1, 2023. Note, however, that because the listed 2023 base salaries actually took effect on September 1, 2023 (and were not retroactively effective to January 1, 2023), the percentage increases in 2023 base salaries actually paid during 2023 over 2022 base salaries were lower than the percentage increases reflected in this column (since the increased 2023 base salaries were only paid from September 1, 2023 to December 31, 2023). Annual Performance Bonus In April 2023, the Compensation Committee approved the following 2023 annual cash bonus targets listed below for each named executive officer. The 2023 target bonus for each named executive officer was effective September 1, 2023. Company policy specifies that fiscal year bonuses be calculated on a prorated basis to account for target bonus increases that occur during the fiscal year, by factoring in the previous target bonus for the portion of the fiscal year prior to the effective date of the increase, and the increased target bonus for the portion of the fiscal year after the effective date of the increase. The target bonus amounts are primarily based on applicable market data comparisons and input from our Chief Executive Officer.

  12. 2023 Executive Compensation Program

    | Executive | 2023 Target Bonus ($)(1) | Percentage Increase from 2022 Target Bonus(2) | | Stephen Trundle | 250,000 | — | | Steve Valenzuela | 236,000 | 3.1% | | Jeffrey Bedell | 300,000 | 9.1% | | Daniel Kerzner | 300,000 | 9.1% | | Daniel Ramos | 235,000 | 3.3% |

  13. 2023 Executive Compensation Program

    (1) The 2023 target bonuses listed in this column took effect on September 1, 2023. (2) The percentage increases reflected in this column assume that the 2023 target bonuses listed in the table above became effective as of January 1, 2023. Note, however, that because the listed 2023 target bonuses actually took effect on September 1, 2023 (and were not retroactively effective to January 1, 2023), the actual percentages by which 2023 target bonuses increased over 2022 target bonuses were lower than the percentages reflected in this column (since the increased 2023 target bonuses were applicable to only the portion of 2023 from September 1, 2023 to December 31, 2023). For example, Steve Valenzuela’s 2022 target bonus was $229,000, and therefore the actual percentage by which his 2023 target bonus increased would be determined by factoring in his 2022 target bonus (i.e., $229,000) for the portion of 2023 during which his 2022 target bonus applied (i.e., from January 1, 2023 until August 31, 2023), and his increased 2023 target bonus (i.e., $236,000) for the portion of 2023 during which the increased 2023 target bonus applied (i.e., from September 1, 2023 until December 31, 2023), or (($229,000*(8/12)) + ($236,000*(4/12)), i.e., $231,333, such that his 2023 target bonus actually represented an increase of 1.0% from his 2022 target bonus. In January 2023, the Compensation Committee approved the adoption of the executive bonus plan for our executive officers, including the named executive officers, for 2023 (the “Executive Bonus Plan”). The Executive Bonus Plan was designed to award cash incentive payments for performance in 2023 to participants based on our achievement of certain performance goals set by the Compensation Committee and included a three-tiered program based on achievement of two tiers relating to pre-established performance goals and a third tier under which the Compensation Committee, with input from our Chief Executive Officer (except with respect to his own performance), could adjust each named executive officer’s actual payout based on the individual performance of each officer. The Compensation Committee could also apply negative discretion in Tier 3, such that lower or no payout may be determined even if the relevant Tier 1 and Tier 2 goals were achieved. In no event could an executive officer receive more than 150% of his target bonus. The first two tiers, the payout formula and actual achievement are listed in the table below.

  14. 2023 Executive Compensation Program

    | 2023 Performance Goals | Bonus Funding Formula | Achievement | | Tier 1: 2023 SaaS and license revenue | For each 1% achievement below target goal, target bonus payout is reduced by 2%, rounded to nearest 0.1% | We exceeded the SaaS and license revenue target by 2.2%, resulting in a target payout increase of 4.4% For each 1% achievement above target, target bonus payout is increased by 2%, rounded to nearest 0.1% | | Tier 2: 2023 Adjusted EBITDA | For each 1% achievement below target goal, target payout resulting from Tier 1 calculation is reduced by 1%, rounded to nearest 0.1% | We exceeded the Adjusted EBITDA target by 28.2%, resulting in a target payout increase of 14.1% For each 1% achievement above target, target payout resulting from Tier 1 calculation is increased by 0.5%, rounded to nearest 0.1% | | Total (including Tier 3) | | Target payout decrease of 9.0% (i.e., approximately 108.4% target payout potential) |

  15. 2023 Executive Compensation Program

    | Executive | Performance Achievement for 2023 as a Percentage of Target Bonus (%)(1) | 2023 Bonus Amount Paid ($) | | Stephen Trundle | 108.4% | 270,999 | | Steve Valenzuela | 108.4% | 250,764 | | Jeffrey Bedell | 108.4% | 307,132 | | Daniel Kerzner | 108.4% | 307,132 | | Daniel Ramos | 108.4% | 249,319 |

  16. 2023 Executive Compensation Program

    The percentages in this column were calculated using each named executive officer’s prorated 2023 target bonus (as described above in “Annual Performance Bonus”). The annual cash incentive awards earned by our named executive officers for fiscal year 2023 performance are also set forth in the Summary Compensation Table below. Equity Awards The Compensation Committee determined that the 2023 equity grants for our named executive officers should consist of stock options and restricted stock unit awards. The Compensation Committee believes that stock options, which have historically been an important part of our equity compensation program, continue to be a key tool in serving to align the interests of our executive officers and our stockholders; stock options are inherently performance based, and automatically link executive pay to stockholder return, as the value realized, if any, by the executive from an award of stock options is dependent upon, and directly proportionate to, appreciation in stock price. Executives will only receive value from the stock option awards if the price of our common stock increases above the price at time of grant and remains above as the stock options continue to vest. Stock options also do not have downside protection, and the awards will not provide value to the holder when the stock price is below the exercise price. We have added restricted stock unit awards to our equity award mix in the last several years to align with peer company practices, and because we believe that it improves the balance and risk profile of our compensation program to include a form of award that does not rely solely on stock price appreciation in order to provide value. In connection with making its decision regarding our executive equity compensation program for 2023, the Compensation Committee reviewed market trends and data, prepared by Compensia, regarding equity award grant practices. For 2023, the Compensation Committee determined that equity awards vesting over time continued to be the most appropriate incentive structure for our executive officers to reward performance over time and achieve our retention objectives. Our time-based vesting schedules, which at five years are longer than most of those of our peer companies, deliver retention incentives over the long-term and, unlike awards that vest based on pre-determined financial or market goals, do not create incentives for inappropriate short-term risk-taking at the expense of realizing long-term value or the potential incentive for unethical conduct. In addition, we deliver a meaningful portion of compensation in the form of annual incentive compensation that is directly tied to, and incentivizes our executives to work towards, achievement of our key corporate goals. The Compensation Committee approved annual equity awards to our named executive officers for 2023 consisting of stock options and restricted stock units, to be granted May 22, 2023, to each of our named executive officers, as reflected in the table below. The Compensation Committee determined that each of the annual equity awards to the named executive officers should consist of a combination of stock options and restricted stock units for the reasons stated above, with the target value allocated approximately (i) 30% to options and 70% to restricted stock units for Messrs. Valenzuela and Ramos, (ii) 59% to options and 41% to restricted stock units for Messrs. Bedell and Kerzner, and (iii) 34% to options and 66% to restricted stock units for Mr. Trundle, our Chief Executive Officer.

  17. 2023 Executive Compensation Program

    | Executive | Stock Option Award (# of shares) | Restricted Stock Unit Award (# of shares) | | Stephen Trundle | 30,000 | 25,000 | | Steve Valenzuela | 12,500 | 12,500 | | Jeffrey Bedell | 57,500 | 17,500 | | Daniel Kerzner | 57,500 | 17,500 | | Daniel Ramos | 14,000 | 14,000 |

  18. 2023 Executive Compensation Program

    The Compensation Committee determined the size of each of the named executive officer’s 2023 annual equity award in its discretion, in the context of each named executive officer’s total compensation, taking into account the market data provided by Compensia in addition to the individual officer’s responsibilities and performance and the recommendations of the Chief Executive Officer (except as to his own performance) with respect to appropriate grants and any particular individual circumstances. The Compensation Committee determined that Mr. Trundle’s annual equity award was appropriate and reasonable in light of Mr. Trundle’s request that his compensation remain at the low end of the market data. Each of the stock option awards made in 2023 to each of the named executive officers each vest in sixty equal monthly installments on the 1st day of each calendar month beginning on June 1, 2023, subject to the officer’s continued service with us through each such vesting date, except for one-time awards of 40,000 stock options granted to each of Mr. Bedell and Mr. Kerzner in connection with their promotions to President in early 2023, which vest in full on the fifth year anniversary of the grant date subject to such officer’s continued service with us through such vesting date (and provide that if there is a change in control prior to such vesting date, such officer will be entitled to pro-rata vesting of such options, in an amount equal to the amount that would have vested had such officer’s stock option award vested monthly over the five-year vesting schedule as of the date of the change in control event.). Each of the named executive officers’ restricted stock unit awards, including Mr. Trundle’s, vests 20% on each anniversary of the grant date for a period of five years, subject to the officer’s continued service with us through each vesting date. In addition, as described further below, our named executive officers are eligible to participate in our 2015 Employee Stock Purchase Plan (“ESPP”) if they meet the requirements for participation in the ESPP.

  19. Other Features of Our Executive Compensation Program

    Other Features of Our Executive Compensation Program Employment Offer Letters The initial terms and conditions of employment for each of our named executive officers are set forth in employee offer letters. Each of our named executive officers is an at-will employee. Severance and Change in Control Benefits Our named executive officers, other than Mr. Valenzuela, are not entitled to any severance benefits upon a termination of employment. Pursuant to Mr. Valenzuela’s offer letter, if his employment is terminated by us without cause, then he will be entitled to receive continuing payments of his then-current salary for a period of four months, as well as payment of the health insurance premiums for continued coverage under COBRA for a period of six months. In addition, in the event of a change in control (as defined in our 2015 Equity Incentive Plan), the unvested shares subject to the equity awards granted to Mr. Valenzuela prior to 2020 and pursuant to the terms of his offer letter would generally fully vest upon the first anniversary of the change in control, or if earlier, upon certain qualifying terminations of employment or adverse changes to employment terms. Such acceleration provisions do not apply to equity awards granted to Mr. Valenzuela in and after 2020. Other Programs Open to all Employees, Including 401(k) Plan, ESPP, Welfare and Health Benefits We maintain a tax-qualified retirement plan that provides eligible U.S. employees, including our named executive officers, with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees may make voluntary contributions from their eligible pay, up to certain applicable annual limits set by the Internal Revenue Code of 1986, as amended (the “Code”). In 2023, we matched 100% of employee contributions, up to 10% of earnings with an annual maximum company matching contribution of $5,000 in matching contributions per calendar year for each employee and such employee contributions are immediately and fully vested. Company matching contributions vest over four years ratably. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. We also offer our employees, including our executive officers, the opportunity to purchase shares of our common stock at a discount under our ESPP. Pursuant to the ESPP, all eligible employees, including the eligible named executive officers, may allocate up to the lesser of $15,000 or 10% of the participant’s base compensation for that year to purchase our stock at a 10% discount to the market price, subject to specified limits. In addition, we provide other benefits to our executive officers, including the named executive officers, on the same basis as to all of our full-time employees. These benefits include, but are not limited to, medical, dental, vision, group life, disability and accidental death and dismemberment insurance plans, and welfare and health benefits such as a fitness subsidy and gym discounts. Our patent program rewards employees who are named as inventors on our pending patent applications and newly issued patents. Our named executive officers are also eligible to participate in this program on the same basis as all of our full-time employees, and during fiscal 2023, Mr. Kerzner received awards under this program. We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. Perquisites and Other Personal Benefits Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not generally provide perquisites or other personal benefits to our executive officers, including the named executive officers, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes. In the future, we may provide perquisites or other personal benefits in limited circumstances. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.

  20. Other Compensation Policies and Practices

    Other Compensation Policies and Practices Equity Awards Grant Delegation Policy The Compensation Committee has delegated authority to our Chief Executive Officer and Chief Financial Officer to grant equity awards to our employees (other than our executive officers), subject to the terms and conditions of an equity awards grant delegation policy. Such awards may be granted on scheduled grant dates to newly hired employees or to existing employees in connection with a promotion or in recognition of their contributions to the Company. In each instance, the policy provides for a limitation on the maximum size of any such awards. In the case of options to purchase shares of our common stock, the exercise price of such options must at least be equal to the fair market value of our common stock, which is defined as the closing price for our common stock as quoted on the Nasdaq Global Select Market on the date of grant, or, if the date of grant is a non-trading day (i.e., a weekend or holiday), then the determination date for fair market value will be the closing price for our common stock on the trading day immediately preceding the date of grant. Clawback Policy As a public company, if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws as a result of misconduct, our Chief Executive Officer and Chief Financial Officer may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive in accordance with the provisions of Section 304 of the Sarbanes-Oxley Act of 2002. In addition, the Compensation Committee adopted a revised compensation recovery, or “clawback,” policy, effective December 1, 2023 (the “Revised Clawback Policy”), which states that, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under securities laws, the Company will recoup any erroneously awarded incentive-based compensation from the Company’s current and former executive officers. The Revised Clawback Policy is intended to satisfy the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC’s final regulations on the subject, and Nasdaq’s listing standards on the subject. The Revised Clawback Policy supersedes the Company’s previous clawback policy which was in effect from May 2018 until the adoption of the Revised Clawback Policy. The Revised Clawback Policy is incorporated herein by reference to Exhibit 97.1 of the Company’s Annual Report on Form 10-K filed February 22, 2024. Policy Prohibiting Hedging and Pledging of Our Equity Securities Our insider trading policy prohibits our employees, including our executive officers and directors, from engaging in short sales, hedging of stock ownership positions, and transactions involving derivative securities relating to our common stock. In addition, our directors and executive officers and any person required to comply with the blackout periods or pre-clearance requirements under our insider trading policy are prohibited from pledging Company securities as collateral for loans and may not hold Company securities in margin accounts.

  21. Summary Compensation Table

    Summary Compensation Table The following table sets forth information regarding compensation awarded to, earned by or paid to the following individuals during the years ended December 31, 2023, 2022 and 2021: (i) Stephen Trundle, our Chief Executive Officer; (ii) Steve Valenzuela, our Chief Financial Officer; and (iii) Jeffrey Bedell, our President, Ventures Business and Corporate Strategy, Daniel Kerzner, our President, Platforms Business, and Daniel Ramos, our Chief Legal and Compliance Officer and Senior Vice President, Corporate Operations, our three other most highly compensated executive officers other than the Chief Executive Officer and Chief Financial Officer who were serving as executive officers at the end of our fiscal year ended December 31, 2023.

  22. Summary Compensation Table

    Summary Compensation Table

  23. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | | Stephen Trundle | 2023 | 210,000 | 1,287,500 | 669,076 | 270,999 | — | 2,437,575 | | Chief Executive Officer | 2022 | 210,000 | 1,477,500 | 718,568 | 222,000 | — | 2,628,068 | | | 2021 | 210,000 | 2,062,750 | 1,090,846 | 250,000 | — | 3,613,596 | | Steve Valenzuela | 2023 | 383,334 | 643,750 | 278,782 | 250,764 | 5,300(4) | 1,561,930 | | Chief Financial Officer | 2022 | 375,001 | 738,750 | 299,403 | 205,000 | 5,000(5) | 1,623,154 | | | 2021 | 360,000 | 1,031,375 | 454,519 | 215,000 | 5,000(5) | 2,065,894 | | Jeffrey Bedell | 2023 | 375,501 | 901,250 | 1,282,396 | 307,132 | 3,004(5) | 2,869,283 | | President, Ventures Business and | 2022 | 353,667 | 1,034,250 | 419,165 | 245,000 | 2,833(5) | 2,054,915 | | Corporate Strategy | 2021 | 331,667 | 1,237,650 | 545,423 | 265,000 | 4,167(6) | 2,383,907 | | Daniel Kerzner | 2023 | 372,168 | 901,250 | 1,282,396 | 307,132 | 9,800(7) | 2,872,746 | | President, Platforms Business | 2022 | 348,668 | 1,034,250 | 419,165 | 245,000 | 9,500(8) | 2,056,583 | | | 2021 | 326,667 | 1,237,650 | 545,423 | 265,000 | 21,500(9) | 2,396,240 | | Daniel Ramos | 2023 | 355,001 | 721,000 | 312,236 | 249,319 | 5,000(5) | 1,642,556 | | Chief Legal and Compliance Officer | 2022 | 345,000 | 827,400 | 335,332 | 202,500 | 5,000(5) | 1,715,232 | | and Senior Vice President, Corporate Operations | 2021 | 330,000 | 1,031,375 | 454,519 | 215,000 | 5,000(5) | 2,035,894 |

  24. Summary Compensation Table

    (1) Amounts for fiscal year 2023 represent salary amounts actually paid to the named executive officers during 2023. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Base Salary” for further information regarding the amounts for fiscal year 2023 in this column. (2) The amounts in this column reflect the aggregate grant date fair value of the shares underlying restricted stock unit award or option awards (as applicable) granted in the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, excluding the effect of estimated forfeitures and assumes that the named executive officer will perform the requisite service for the award to vest in full. The assumptions we used in valuing these equity awards are described in Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 22, 2024 and do not necessarily correspond to the actual economic value recognized or that may be recognized by the named executive officers. (3) Amounts for fiscal year 2023 represent amounts earned by the named executive officers during 2023 pursuant to our Executive Bonus Plan but paid in 2024. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Annual Performance Bonus” for further information regarding the amounts in this column. (4) Represents (i) a match of contributions to our 401(k) savings plan in the amount of $5,000 and (ii) a wellness subsidy in the amount of $300. (5) Represents a match of contributions to our 401(k) savings plan. (6) Represents (i) a match of contributions to our 401(k) savings plan in the amount of $2,667 and (ii) a patent program award in the amount of $1,500. Represents (i) a match of contributions to our 401(k) savings plan in the amount of $5,000, (ii) a patent program award in the amount of $4,500 and (iii) a wellness subsidy of $300. Represents (i) a match of contributions to our 401(k) savings plan in the amount of $5,000 and (ii) a patent program award in the amount of $4,500. (9) Represents (i) a match of contributions to our 401(k) savings plan in the amount of $5,000 and (ii) patent program awards in the amount of $16,500.

  25. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table shows certain information regarding grants of plan-based awards during the fiscal year ended December 31, 2023 to our named executive officers.

  26. Grants of Plan-Based Awards in Fiscal 2023

    Grants of Plan-Based Awards in Fiscal 2023

  27. Grants of Plan-Based Awards in Fiscal 2023

    | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh)(7) | Grant Date Fair Value of Stock and Option Awards ($)(8) | | Name | Grant Type | Grant Date | Approval Date | Threshold ($) | Target ($)(2) | Maximum ($)(3) | | | | | | Stephen Trundle | Annual Stock Option Grant | 5/22/2023 | 4/27/2023 | — | — | — | — | 30,000(5) | 51.50 | 669,076 | | | Annual RSU Grant | 5/22/2023 | 4/27/2023 | — | — | — | 25,000 | — | — | 1,287,500 | | | Annual Performance-Based Cash Bonus | — | — | — | 250,000 | 375,000 | — | — | — | — | | Steve Valenzuela | Annual Stock Option Grant | 5/22/2023 | 4/27/2023 | — | — | — | — | 12,500(5) | 51.50 | 278,782 | | | Annual RSU Grant | 5/22/2023 | 4/27/2023 | — | — | — | 12,500 | — | — | 643,750 | | | Annual Performance-Based Cash Bonus | — | — | — | 231,333 | 347,000 | — | — | — | — | | Jeffrey Bedell | Annual Stock Option Grant | 5/22/2023 | 4/27/2023 | — | — | — | — | 17,500(5) | 51.50 | 390,295 | | | Additional One-Time Stock Option Grant | 5/22/2023 | 4/27/2023 | | | | | 40,000(6) | 51.50 | 892,102 | | | Annual RSU Grant | 5/22/2023 | 4/27/2023 | — | — | — | 17,500 | — | — | 901,250 | | | Annual Performance-Based Cash Bonus | — | — | — | 283,333 | 425,000 | — | — | — | — | | Daniel Kerzner | Annual Stock Option Grant | 5/22/2023 | 4/27/2023 | — | — | — | — | 17,500(5) | 51.50 | 390,295 | | | Additional One-Time Stock Option Grant | 5/22/2023 | 4/27/2023 | | | | | 40,000(6) | 51.50 | 892,102 | | | Annual RSU Grant | 5/22/2023 | 4/27/2023 | — | — | — | 17,500 | — | — | 901,250 | | | Annual Performance-Based Cash Bonus | — | — | — | 283,333 | 425,000 | — | — | — | — | | Daniel Ramos | Annual Stock Option Grant | 5/22/2023 | 4/27/2023 | — | — | — | — | 14,000(5) | 51.50 | 312,236 | | | Annual RSU Grant | 5/22/2023 | 4/27/2023 | — | — | — | 14,000 | — | — | 721,000 | | | Annual Performance-Based Cash Bonus | — | — | — | 230,000 | 345,000 | — | — | — | — |

  28. Grants of Plan-Based Awards in Fiscal 2023

    (1) The amounts set forth in these columns represent the target and maximum annual bonus amounts for each named executive officer for fiscal 2023 under our Executive Bonus Plan, and do not represent either additional or actual compensation earned by the named executive officers for the year ended December 31, 2023. The dollar value of the actual payments for these awards are included in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” above. For more information about our Executive Bonus Plan, see “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Annual Performance Bonus.” (2) The dollar amounts in this column represent each named executive officer’s prorated 2023 target annual bonus, in accordance with Company policy. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Annual Performance Bonus” for more information. (3) The dollar amounts in this column were calculated using each named executive officer’s prorated 2023 target annual bonus, in accordance with Company policy. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Annual Performance Bonus” for more information. (4) The restricted stock unit awards were granted pursuant to our 2015 Equity Incentive Plan. The shares of our common stock subject to the restricted stock unit awards vest in five equal annual installments beginning on May 22, 2024, subject to the officer’s continued service with us through each such vesting date. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Equity Awards.” (5) These stock option awards were granted pursuant to our 2015 Equity Incentive Plan. The shares of our common stock subject to these stock options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on June 1, 2023, subject to the officer’s continued employment through each such vesting date. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Equity Awards” for more information. These stock option awards were granted pursuant to our 2015 Equity Incentive Plan. The shares of our common stock subject to these stock options vest and become exercisable in full on May 22, 2028, subject to the officer’s continuous service with us through such vesting date and subject to pro-rata acceleration upon a change in control prior to such date. See “Compensation Discussion and Analysis — 2023 Executive Compensation Program — Equity Awards” for more information. The option awards were granted pursuant to our 2015 Equity Incentive Plan with an exercise price equal to 100% of the fair market value of our common stock, which was $51.50 per share, based on the closing market price of our common stock on the date of grant. The dollar amounts in this column represent the aggregate grant date fair value of each option award and restricted stock unit award, as applicable, granted to the named executive officers in 2023, computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures, and assumes that the named executive officer will perform the requisite service for the award to vest in full. The assumptions we used in valuing these awards are described in Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 22, 2024 and do not necessarily correspond to the actual economic value recognized or that may be recognized by our named executive officers.

  29. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information about outstanding and unexercised stock options and outstanding restricted stock unit awards that have not vested for each named executive officer as of December 31, 2023.

  30. Outstanding Equity Awards at December 31, 2023

    Outstanding Equity Awards at December 31, 2023

  31. Outstanding Equity Awards at December 31, 2023

    | | | Option Awards(1) | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#)(2) | Number of Securities Underlying Unexercised Options Unexercisable (#)(3) | Option Exercise Price ($)(4) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock that Have Not Vested ($)(5) | | Stephen Trundle | 5/22/2023 | — | — | — | — | 25,000(6) | $1,615,500 | | | 5/22/2023 | 3,500 | 26,500(7) | 51.50 | 5/21/2033 | — | — | | | 5/15/2022 | — | — | — | — | 20,000(8) | 1,292,400 | | | 5/15/2022 | 9,500 | 20,500(9) | 59.10 | 5/14/2032 | — | — | | | 5/15/2021 | — | — | — | — | 15,000(10) | 969,300 | | | 5/15/2021 | — | 30,000(11) | 82.51 | 5/14/2031 | — | — | | | 4/1/2020 | — | — | — | — | 10,000(12) | 646,200 | | | 4/1/2020 | — | 30,000(13) | 37.94 | 3/31/2030 | — | — | | | 4/1/2019 | — | — | — | — | 5,000(14) | 323,100 | | | 4/1/2019 | — | 30,000(15) | 65.03 | 3/31/2029 | — | — | | | 4/1/2018 | 30,000 | — | 37.74 | 3/31/2028 | — | — | | | 5/15/2017 | 50,000 | — | 32.17 | 5/14/2027 | — | — | | | 5/15/2016 | 47,500 | — | 21.70 | 5/14/2026 | — | — | | Steve Valenzuela | 5/22/2023 | — | — | — | — | 12,500(6) | 807,750 | | | 5/22/2023 | 1,458 | 11,042(7) | 51.50 | 5/21/2033 | — | — | | | 5/15/2022 | — | — | — | — | 10,000(8) | 646,200 | | | 5/15/2022 | 3,958 | 8,542(9) | 59.10 | 5/14/2032 | — | — | | | 5/15/2021 | — | — | — | — | 7,500(10) | 484,650 | | | 5/15/2021 | 6,458 | 6,042(16) | 82.51 | 5/14/2031 | — | — | | | 4/1/2020 | — | — | — | — | 5,000(12) | 323,100 | | | 4/1/2020 | 4,791 | 3,334(17) | 37.94 | 3/31/2030 | — | — | | | 4/1/2019 | — | — | — | — | 2,500(18) | 161,550 | | | 4/1/2019 | 4,791 | 834(19) | 65.03 | 3/31/2029 | — | — | | Jeffrey Bedell | 5/22/2023 | — | — | — | — | 17,500(6) | 1,130,850 | | | 5/22/2023 | — | 40,000(20) | 51.50 | 5/21/2033 | — | — | | | 5/22/2023 | 2,041 | 15,459(7) | 51.50 | 5/21/2033 | — | — | | | 5/15/2022 | — | — | — | — | 14,000(8) | 904,680 | | | 5/15/2022 | 5,541 | 11,959(9) | 59.10 | 5/14/2032 | — | — | | | 5/15/2021 | — | — | — | — | 9,000(10) | 581,580 | | | 5/15/2021 | 7,750 | 7,250(16) | 82.51 | 5/14/2031 | — | — | | | 4/1/2020 | — | — | — | — | 5,000(12) | 323,100 | | | 4/1/2020 | 9,166 | 3,334(17) | 37.94 | 3/31/2030 | — | — | | | 4/1/2019 | — | — | — | — | 2,000(14) | 129,240 | | | 4/1/2019 | 9,333 | 667(21) | 65.03 | 3/31/2029 | — | — | | | 4/1/2018 | 10,000 | — | 37.74 | 3/31/2028 | — | — | | | 5/15/2017 | 10,000 | — | 32.17 | 5/14/2027 | — | — | | | 2/15/2016 | 25,000 | — | 15.02 | 2/14/2026 | — | — |

  32. Outstanding Equity Awards at December 31, 2023

    | | | Option Awards(1) | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#)(2) | Number of Securities Underlying Unexercised Options Unexercisable (#)(3) | Option Exercise Price ($)(4) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock that Have Not Vested ($)(5) | | Daniel Kerzner | 5/22/2023 | — | — | — | — | 17,500(6) | 1,130,850 | | | 5/22/2023 | — | 40,000(20) | 51.50 | 5/21/2033 | — | — | | | 5/22/2023 | 2,041 | 15,459(7) | 51.50 | 5/21/2033 | — | — | | | 5/15/2022 | — | — | — | — | 14,000(8) | 904,680 | | | 5/15/2022 | 5,541 | 11,959(9) | 59.10 | 5/14/2032 | — | — | | | 5/15/2021 | — | — | — | — | 9,000(10) | 581,580 | | | 5/15/2021 | 7,750 | 7,250(16) | 82.51 | 5/14/2031 | — | — | | | 4/1/2020 | — | — | — | — | 6,000(12) | 387,720 | | | 4/1/2020 | 11,000 | 4,000(17) | 37.94 | 3/31/2030 | — | — | | | 4/1/2019 | — | — | — | — | 3,000(14) | 193,860 | | | 4/1/2019 | 14,000 | 1,000(21) | 65.03 | 3/31/2029 | — | — | | | 4/1/2018 | 12,500 | — | 37.74 | 3/31/2028 | — | — | | | 5/15/2017 | 10,000 | — | 32.17 | 5/14/2027 | — | — | | | 2/15/2016 | 35,000 | — | 15.02 | 2/14/2026 | — | — | | | 5/15/2015 | 10,000 | — | 11.55 | 5/14/2025 | — | — | | Daniel Ramos | 5/22/2023 | — | — | — | — | 14,000(6) | 904,680 | | | 5/22/2023 | 1,633 | 12,367(7) | 51.50 | 5/21/2033 | — | — | | | 5/15/2022 | — | — | — | — | 11,200(8) | 723,744 | | | 5/15/2022 | 4,433 | 9,567(9) | 59.10 | 5/14/2032 | — | — | | | 5/15/2021 | — | — | — | — | 7,500(10) | 484,650 | | | 5/15/2021 | 6,458 | 6,042(16) | 82.51 | 5/14/2031 | — | — | | | 4/1/2020 | — | — | — | — | 5,000(12) | 323,100 | | | 4/1/2020 | 833 | 3,334(17) | 37.94 | 3/31/2030 | — | — | | | 4/1/2019 | — | — | — | — | 2,000(14) | 129,240 | | | 4/1/2019 | 4,167 | 667(21) | 65.03 | 3/31/2029 | — | — |

  33. Outstanding Equity Awards at December 31, 2023

    Except as otherwise specified herein, option awards vest over a five-year period, subject to continued service with us through each vesting date. All of the option awards listed in the table above granted prior to the completion of our initial public offering on July 1, 2015 were granted under our Amended and Restated 2009 Stock Incentive Plan, and all of the option awards granted after our initial public offering were granted under our 2015 Equity Incentive Plan. (2) With respect to options granted to our named executive officers that are immediately exercisable subject to our right to repurchase that lapses as the option vests, this column reflects the number of options held by our named executive officers that were exercisable and vested as of December 31, 2023. (3) With respect to options granted to our named executive officers that are immediately exercisable subject to our right to repurchase that lapses as the option vests, this column reflects the number of options held by our named executive officers that were exercisable and unvested as of December 31, 2023. All of the option awards were granted with a per share exercise price equal to the fair market value of one share of our common stock on the date of grant. Prior to the completion of our initial public offering, the fair market value of one share of common stock was determined in good faith by our Board with the assistance of a third-party valuation expert. After our initial public offering, the fair market value of one share of common stock is determined to be the closing price of our common stock as reported on the Nasdaq Global Select Market on the date of grant, or, if the date of grant is a non-trading day (i.e., a weekend or holiday), then the determination date for fair market value will be the closing price for our common stock on the trading day immediately preceding the date of grant. The value of the restricted stock units shown in the table was calculated using the closing price of our common stock as reported on the Nasdaq Global Select Market on December 29, 2023, which was $64.62. (6) These restricted stock unit awards shall vest in five equal annual installments beginning on May 22, 2024, subject to the officer’s continued service with us through each such vesting date. (7) These options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on June 1, 2023, subject to the officer’s continued service with us through each such vesting date. (8) These restricted stock unit awards shall vest in five equal annual installments beginning on May 15, 2023, subject to the officer’s continued service with us through each such vesting date. (9) These options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on June 1, 2022, subject to the officer’s continued service with us through each such vesting date. (10) These restricted stock unit awards shall vest in five equal annual installments beginning on May 15, 2022, subject to the officer’s continued service with us through each such vesting date. (11) These options vest and become exercisable in full on May 15, 2026, subject to the officer’s continuous service with us through such vesting date and subject to pro-rata acceleration upon a change in control prior to such date. If there is a change in control prior to the five-year vesting date, Mr. Trundle is entitled to pro rata vesting of such options, in an amount equal to the amount that would have vested had Mr. Trundle’s equity awards vested monthly over the five-year vesting schedule as of the date of the change in control event. (12) These restricted stock unit awards shall vest in five equal annual installments beginning on April 1, 2021, subject to the officer’s continued service with us through each such vesting date. (13) These options vest and become exercisable in full on April 1, 2025, subject to the officer’s continuous service with us through such vesting date and subject to pro-rata acceleration upon a change in control prior to such date. If there is a change in control prior to the five-year vesting date, Mr. Trundle is entitled to pro rata vesting of such options, in an amount equal to the amount that would have vested had Mr. Trundle’s equity awards vested monthly over the five-year vesting schedule as of the date of the change in control event. (14) These restricted stock unit awards shall vest in five equal annual installments beginning on April 1, 2020, subject to the officer’s continued service with us through each such vesting date. (15) These options vest and become exercisable in full on April 1, 2024, subject to the officer’s continuous service with us through such vesting date and subject to pro-rata acceleration upon a change in control prior to such date. If there is a change in control prior to the five-year vesting date, Mr. Trundle is entitled to pro rata vesting of such options, in an amount equal to the amount that would have vested had Mr. Trundle’s equity awards vested monthly over the five-year vesting schedule as of the date of the change in control event. (16) These options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on June 1, 2021, subject to the officer’s continuous service with us through each such vesting date. (17) These options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on May 1, 2020, subject to the officer’s continuous service with us through each such vesting date. (18) These restricted stock unit award shall vest in five equal annual installments beginning on April 1, 2020, subject to Mr. Valenzuela’s continuous service with us through each such vesting date. See “Compensation Discussion and Analysis — Other Features of Our Executive Compensation Program — Severance and Change in Control Benefits” for a description of vesting acceleration applicable to equity awards held by Mr. Valenzuela. These options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on May 1, 2019, subject to Mr. Valenzuela’s continuous service with us through each such vesting date. See “Compensation Discussion and Analysis — Other Features of Our Executive Compensation Program — Severance and Change in Control Benefits” for a description of vesting acceleration applicable to equity awards held by Mr. Valenzuela. These options vest and become exercisable in full on May 22, 2028, subject to the officer’s continuous service with us through such vesting date and subject to pro-rata acceleration upon a change in control prior to such date. If there is a change in control prior to the five-year vesting date, the officer is entitled to pro rata vesting of such options, in an amount equal to the amount that would have vested had the officer’s stock option award vested monthly over the five-year vesting schedule as of the date of the change in control event. These options vest and become exercisable in sixty equal monthly installments on the 1st day of each calendar month beginning on May 1, 2019, subject to the officer’s continuous service with us through each such vesting date.

  34. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table shows the number of shares of our common stock acquired upon the exercise of stock options and the aggregate value realized upon the exercise of stock options, as well as the number of shares of our common stock acquired upon the vesting of restricted stock unit awards and the aggregate value realized upon the vesting of restricted stock unit awards, for the named executive officers during the fiscal year ended December 31, 2023.

  35. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Stephen Trundle | — | — | 5,000 | 251,400 | | | — | — | 5,000 | 251,400 | | | — | — | 5,000 | 251,400 | | | — | — | 5,000 | 247,300 | | | — | — | 5,000 | 247,300 | | Steve Valenzuela | — | — | 1,309 | 72,218 | | | — | — | 2,500 | 125,700 | | | — | — | 2,500 | 125,700 | | | — | — | 2,500 | 123,650 | | | — | — | 2,500 | 123,650 | | Jeffrey Bedell | 63,787 | 3,012,491 | — | — | | | — | — | — | — | | | — | — | 2,000 | 100,560 | | | — | — | 2,000 | 100,560 | | | — | — | 2,500 | 125,700 | | | — | — | 3,000 | 148,380 | | | — | — | 3,500 | 173,110 | | Daniel Kerzner | — | — | 2,500 | 125,700 | | | — | — | 3,000 | 150,840 | | | — | — | 3,000 | 150,840 | | | — | — | 3,000 | 148,380 | | | — | — | 3,500 | 173,110 | | Daniel Ramos | 1,334 | 29,425 | — | — | | | 2,500 | 54,645 | — | — | | | — | — | 2,000 | 100,560 | | | — | — | 2,000 | 100,560 | | | — | — | 2,500 | 125,700 | | | — | — | 2,500 | 123,650 | | | — | — | 2,800 | 138,488 |

  36. Option Exercises and Stock Vested

    (1) The value realized on exercise of the stock options is based on the difference between the closing price of the shares of our common stock on the date of exercise and the applicable exercise price of those options. The value realized on vesting of the restricted stock unit awards is based on the number of shares of common stock underlying the restricted stock unit award that vested multiplied by the closing market price of the shares of our common stock on the vesting date.

  37. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control Potential Payments upon Termination without Cause The following table provides an estimate of the value of the compensation and benefits that would be due to Mr. Valenzuela assuming a termination without cause, effective as of December 31, 2023, other than in connection with a change of control, under our agreement with Mr. Valenzuela described above. The actual amounts that would be paid can only be determined at the time of such event.

  38. Potential Payments Upon Termination or Change in Control

    | Name | Cash Payment ($) | Benefit Continuation ($) | Total ($) | | Steve Valenzuela | 130,000(1) | 12,655(1) | 142,655 |

  39. Potential Payments Upon Termination or Change in Control

    (1) Reflects a lump sum cash payment equal to four months of Mr. Valenzuela’s then-current base salary and reimbursement of company-paid health insurance coverage for six months. Potential Payments in Connection with a Change in Control The following table provides an estimate of the value of the compensation and benefits that would be due to Mr. Valenzuela assuming a termination without cause, effective as of December 31, 2023, in connection with a change in control, under our agreement with Mr. Valenzuela described above. The actual amounts that would be paid can only be determined at the time of such event.

  40. Potential Payments Upon Termination or Change in Control

    | Name | Cash Payment ($) | Benefit Continuation ($) | Value of Accelerated Equity Awards(1) ($) | | Total ($) | | | | | Restricted Stock Units | Options | | | Steve Valenzuela | 130,000 | 12,655 | 161,550 | — | 304,205(2) |

  41. Potential Payments Upon Termination or Change in Control

    (1) Reflects vesting of the unvested shares subject to the outstanding equity awards granted to Mr. Valenzuela pursuant to the terms of his offer letter. The value of the vesting acceleration of stock option and restricted stock unit awards is based on the closing price of our common stock on December 29, 2023, which was $64.62, less, in the case of stock options, the exercise price of the unvested stock option shares subject to acceleration. Stock options that have exercise prices at or above $64.62 per share are reflected as having $0 value for purposes of this table. Reflects a lump sum cash payment equal to four months of Mr. Valenzuela’s then-current base salary and reimbursement of company-paid health insurance coverage for six months, as well as the value of the vesting of the vesting acceleration of the restricted stock unit awards, as described in footnote 1. Mr. Trundle holds stock options granted in 2019, 2020 and 2021 that vest upon the five-year anniversary of the respective grant date, rather than monthly over such term. If there is a change in control prior to the five-year vesting date, Mr. Trundle is entitled to pro rata vesting of such options, in an amount equal to the amount that would have vested had Mr. Trundle’s equity awards vested monthly over the five-year vesting schedule. The following table provides an estimate of the value of the compensation and benefits that would be due to Mr. Trundle assuming a change of control occurred as of December 31, 2023. The actual amounts that would be paid can only be determined at the time of such event.

  42. Potential Payments Upon Termination or Change in Control

    | Name | Cash Payment ($) | Benefit Continuation ($) | Value of Accelerated Equity Awards(1) ($) | | Total ($) | | | | | Restricted Stock Units | Options | | | Stephen Trundle | — | — | — | 586,960 | 586,960 |

  43. Potential Payments Upon Termination or Change in Control

    (1) The value of the vesting acceleration of stock option awards is based on the closing price of our common stock on December 29, 2023, which was $64.62, less, in the case of stock options, the exercise price of the unvested stock option shares subject to acceleration. Stock options that have exercise prices at or above $64.62 per share are reflected as having $0 value for purposes of this table. Mr. Bedell and Mr. Kerzner each hold stock options granted in 2023 that vest upon the five-year anniversary of the grant date, rather than monthly over such term. If there is a change in control prior to the five-year vesting date, Mr. Bedell and Mr. Kerzner are entitled to pro rata vesting of such options, in an amount equal to the amount that would have vested had Mr. Bedell’s and Mr. Kerzner’s equity awards, respectively, vested monthly over the five-year vesting schedule. The following table provides an estimate of the value of the compensation and benefits that would be due to Mr. Bedell and Mr. Kerzner assuming a change of control occurred as of December 31, 2023. The actual amounts that would be paid can only be determined at the time of such event.

  44. Potential Payments Upon Termination or Change in Control

    | Name | Cash Payment ($) | Benefit Continuation ($) | Value of Accelerated Equity Awards(1) ($) | | Total ($) | | | | | Restricted Stock Units | Options | | | Jeffrey Bedell | — | — | — | 61,227 | 61,227 | | Daniel Kerzner | — | — | — | 61,227 | 61,227 |

  45. Potential Payments Upon Termination or Change in Control

    (1) The value of the vesting acceleration of stock option awards is based on the closing price of our common stock on December 29, 2023, which was $64.62, less, in the case of stock options, the exercise price of the unvested stock option shares subject to acceleration. Stock options that have exercise prices at or above $64.62 per share are reflected as having $0 value for purposes of this table.

  46. Pay Ratio

    Pay Ratio In accordance with Item 402(u) of Regulation S-K, promulgated by the Dodd Frank Act, we determined the ratio of: (a) the annual total compensation of our Chief Executive Officer, to (b) the median of the annual total compensation of all of our employees, except for our Chief Executive Officer, both calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. To identify our median employee, we used the following methodology: • To determine our total population of employees, we included all of our employees as of December 31, 2023, other than our Chief Executive Officer. • To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s (i) base salary paid in 2023, (ii) actual bonuses paid for 2023, and (iii) the value of equity awards granted in 2023 using the same methodology we use for estimating the value of the equity awards granted to our named executive officers and reported in our Summary Compensation Table, excluding, in each case, our Chief Executive Officer. In making this determination, we annualized the base salary and bonus elements listed in (i) and (ii) above paid for employees (other than seasonal or temporary employees) who were employed by us for less than the entire calendar year. • As of December 31, 2023, our employee population consisted of 1,838 individuals, 1,819 of whom were located in the United States and 19 individuals that were located outside of the United States, all of whom were located in Canada. As permitted by SEC rules, our employee population data described in the prior sentence does not include approximately 150 employees of EBS Spółka z ograniczoną odpowiedzialnością, which we acquired in January 2023. Because of the limited scale of our operations outside the United States, we excluded all 19 of our employees located in Canada for purposes of determining our “median employee” in our pay ratio calculation. After applying the methodology described above, we determined our median employee. Once the median employee was identified, we then calculated the annual total compensation of this employee for 2023 in accordance with the requirements of the Summary Compensation Table, resulting in an annual total compensation of $117,202. The annual total compensation of our Chief Executive Officer in 2023, as reported in the Summary Compensation Table included in this Proxy Statement, was $2,437,575. Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees was 21 to 1. This pay ratio represents our reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K and applicable guidance, which provide significant flexibility in how companies identify the median employee. Each company may use a different methodology and make different assumptions. As a result, and as explained by the SEC when it adopted these rules, in considering the pay ratio disclosure, stockholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures. Neither the Compensation Committee nor our management used our Chief Executive Officer to median employee pay ratio in making compensation decisions.

  47. Pay Versus Performance

    Pay Versus Performance The following table reports the compensation of our CEO and the average compensation of the other Named Executive Officers (non-CEO NEOs) as reported in the Summary Compensation Table for the past four fiscal years, as well as their “compensation actually paid” as calculated pursuant to recently adopted SEC rules and certain performance measures required by the rules.

  48. Pay Versus Performance

    | | | | Average Summary Compensation Table Total for Non-CEO NEOs(2) ($) | Average Compensation “Actually Paid” to Non-CEO NEOs(3) ($) | Value of Initial Fixed $100 Investment Based on: | | | | | Year(1) | Summary Compensation Table Total for CEO(2) ($) | Compensation “Actually Paid” to CEO(3) ($) | | | Company Total Shareholder Return ($)(4) | Peer Group Total Shareholder Return(4) ($) | Net Income ($ in thousands)(5) | SaaS and License Revenue(6) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 2,437,575 | 4,607,821 | 2,236,629 | 3,404,619 | 150.38 | 167.30 | 80,340 | 569,200 | | 2022 | 2,628,068 | (1,979,284) | 1,862,471 | 182,761 | 115.15 | 116.65 | 55,631 | 520,377 | | 2021 | 3,613,596 | 1,586,343 | 2,220,484 | 1,494,706 | 197.37 | 174.36 | 51,175 | 460,372 | | 2020 | 1,890,141 | 9,991,190 | 1,275,652 | 4,695,274 | 240.75 | 143.64 | 76,660 | 393,257 |

  49. Pay Versus Performance

    (1) The CEO and non-CEO NEOs for each year reported were as follows: Stephen Trundle (PEO); Steve Valenzuela, Jeffrey Bedell, Daniel Kerzner, Daniel Ramos (Non-CEO NEOs) (2) The 2023 Summary Compensation Table totals reflected are as reported for the CEO and the average of the non-CEO NEOs for each of 2023, 2022, 2021, and 2020. Compensation Actually Paid: The dollar amounts reported in columns (c) and (e) represent the amount of compensation “actually paid” to the CEO and the average amount of compensation “actually paid” to the Non-CEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The following table details the applicable adjustments that were made to the CEO’s and the Non-CEO NEOs’ total compensation for each year to determine the compensation “actually paid” (all amounts are averages for the Non-CEO NEOs other than the CEO). For purposes of determining the compensation “actually paid,” no value was included for the pension benefit adjustments, because the Company does not provide such benefits to the NEOs (including the CEO).

  50. Pay Versus Performance

    | | | | Equity Award Adjustments | | | | | | Year | Executives | Reported Summary Compensation Table (SCT) Total ($) | Stock Awards Deducted from SCT Total (a) ($) | Stock Awards Added to Compensation “Actually Paid” ($) | Stock Option Awards Deducted from SCT Total ($) | Stock Option Awards Added to Compensation “Actually Paid” ($) | Total Compensation “Actually Paid” ($) | | | | (a) | (b) | (c) | (d) | (e) | | | 2023 | CEO | 2,437,575 | 1,287,500 | 2,384,300 | 669,076 | 1,742,522 | 4,607,821 | | | Non-CEO NEOs | 2,236,629 | 791,813 | 1,427,147 | 788,953 | 1,321,608 | 3,404,619 | | 2022 | CEO | 2,628,068 | 1,477,500 | (921,300) | 718,568 | (1,489,984) | (1,979,284) | | | Non-CEO NEOs | 1,862,471 | 908,663 | (375,779) | 368,266 | (27,003) | 182,761 | | 2021 | CEO | 3,613,596 | 2,062,750 | 1,042,650 | 1,090,846 | 83,693 | 1,586,343 | | | Non-CEO NEOs | 2,220,484 | 1,134,513 | 562,481 | 499,971 | 346,226 | 1,494,706 | | 2020 | CEO | 1,890,141 | 948,500 | 4,652,750 | 417,641 | 4,814,440 | 9,991,190 | | | Non-CEO NEOs | 1,275,652 | 497,963 | 2,539,217 | 206,343 | 1,584,710 | 4,695,274 |

  51. Pay Versus Performance

    The Company’s TSR and the Company’s Peer Group TSR reflected in these columns for each applicable fiscal year is determined based on the value of an initial fixed investment of $100 on December 31, 2019. The Peer Group TSR represents TSR of the Nasdaq Composite Index, which is the industry peer group used for purposes of Item 201(e) of Regulation S-K. (5) Represents, in thousands, the amount of net income (loss), reflected in the Company’s audited financial statements for the year indicated. (6) The Company has identified SaaS and License Revenue as our company-selected measure, as it represents the most important financial measure used to link compensation actually paid to the CEO and the non-CEO NEOs in 2023 to the Company’s performance. Relationship Between Pay and Performance: Compensation Actually Paid versus Company Performance The relationship between compensation actually paid and the Company’s financial performance over the four-year period shown in the tables above is shown in the tables below. Tabular List of Financial Performance Measures The Company considers the following to be the most important financial performance measures it uses to link actual compensation paid to its NEOs, for 2023, to Company performance. We do not currently use any other metrics, performance or otherwise, in our incentive compensation plans but may incorporate other metrics in the future. • SaaS and license revenue Adjusted EBITDA

  52. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION The following table sets forth information regarding the compensation earned for service on our Board by our non-employee directors during the year ended December 31, 2023. Mr. Trundle serves as our Chief Executive Officer in addition to being a director but does not receive any additional compensation for his service as a director and accordingly, he is not included in the table.

  53. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | All Other Compensation ($) | Total ($) | | Donald Clarke | 60,000 | 144,971 | 18,847(3) | 223,818 | | Timothy McAdam | 65,000 | 144,971 | — | 209,971 | | Darius G. Nevin | 70,000 | 144,971 | — | 214,971 | | Timothy J. Whall | 55,000 | 144,971 | — | 199,971 | | Simone Wu | 45,000 | 144,971 | 3,202(4) | 193,173 | | Rear Admiral (Ret.) Stephen Evans | 45,000 | 144,971 | — | 189,971 |

  54. DIRECTOR COMPENSATION

    (1) This column reflects the aggregate grant date fair value of all restricted stock units granted during fiscal 2023 computed in accordance with ASC Topic 718. The grant date fair value of each restricted stock unit is measured based on the closing price of our shares of our common stock on the date of grant and assumes that the director will perform the requisite service for the award to vest in full. The assumptions we used in valuing restricted stock units are described in Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 22, 2024. (2) The table below shows the aggregate number of shares underlying outstanding stock awards and unexercised option awards (all such options are fully vested) outstanding for each of our non-employee directors as of December 31, 2023:

  55. DIRECTOR COMPENSATION

    | Name | Stock Awards (#) | Option Awards (#) | | Donald Clarke | 2,837 | — | | Timothy McAdam | 2,837 | — | | Darius G. Nevin | 2,837 | 36,000 | | Timothy J. Whall | 2,837 | — | | Simone Wu | 2,837 | — | | Rear Admiral (Ret.) Stephen Evans | 2,837 | — |

  56. DIRECTOR COMPENSATION

    (3) Represents reimbursed equipment expenses related to an Alarm.com security system in the amount of $18,847, which includes a tax gross-up payment of $8,057. (4) Represents reimbursed equipment expenses related to an Alarm.com security system in the amount of $3,202, which includes a tax gross-up payment of $1,369.

  57. Non-Employee Director Compensation Policy

    Non-Employee Director Compensation Policy Overview Our directors play a critical role in guiding our strategic direction and overseeing management. The Compensation Committee reviews pay levels for non-employee directors on an annual basis with assistance from its compensation consultant, Compensia, which prepares a comprehensive assessment of our non-employee director compensation program. Such assessment includes benchmarking of our current director compensation against the same peer group used for executive compensation purposes and an update on recent trends in director compensation. Following such review, the Board, upon recommendation of the Compensation Committee, approves any updates to the non-employee director compensation policy for the ensuing calendar year. Non-Employee Director Compensation Policy Our Board has adopted a director compensation policy for non-employee directors, which was most recently amended by the Board in September 2023 upon recommendation by the Compensation Committee. Non-employee directors receive a combination of cash and equity compensation. Cash Compensation Under our policy, each non-employee director, other than Mr. McAdam, will receive an annual board service retainer of $40,000, and Mr. McAdam, as Chairman of our Board, will receive an annual board service retainer of $50,000. The members of each of our Compensation Committee and Nominating and Corporate Governance Committee will receive an annual service retainer of $5,000, and the members of our Audit Committee will receive an annual service retainer of $15,000. In addition, the chairman of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee will receive an annual committee chair service retainer of $20,000, $15,000 and $10,000, respectively. On September 15, 2023, the Compensation Committee approved increases to the annual board service retainer for each Compensation Committee member from $5,000 to $7,500 and the annual board service retainer for the chairperson of the Board from $10,000 to $25,000. All changes were effective January 1, 2024. The annual cash compensation amounts set forth above are payable in equal quarterly installments, payable in arrears during the first 30 days of the first month following the end of each calendar quarter in which the board service occurs. If the director joins our Board at a time other than the first day of a calendar quarter, he or she will be entitled to the cash compensation set forth above beginning with the calendar quarter following the date he or she joins our Board. Equity Compensation In addition to cash compensation, each non-employee director is eligible to receive nonqualified stock options and/or restricted stock unit awards under our 2015 Plan. In 2023 and in recent years, all equity compensation provided to our non-employee directors has been in the form of restricted stock unit awards. Vesting schedules for equity awards are subject to the non-employee director’s continuous service on each applicable vesting date. Notwithstanding any vesting schedule, for each non-employee director who remains in continuous service with the Company until immediately prior to the closing of a change in control, the shares subject to his or her then-outstanding equity awards that were granted pursuant to this policy will become fully vested immediately prior to the closing of such change in control. Initial Award Each non-employee director who is newly elected or appointed to our Board is eligible to receive an initial grant of restricted stock unit awards. The amount and vesting schedule of such initial award is in the Board’s discretion. Annual Award Each continuing non-employee director will automatically be granted an annual restricted stock unit award on the business day following our annual meeting of stockholders with a grant date fair value of $145,000; provided that no annual award will be granted to a non-employee director in the same calendar year that such person received his or her initial award. The grant date fair value shall be converted into the number of shares underlying the award based on the closing price of our common stock on the date of grant. This annual restricted stock unit award will vest in full on the day immediately preceding the date of the next year’s annual meeting of stockholders, provided that the applicable non-employee director remains a director as of such vesting date.