DEF 14A of D-Wave Quantum Inc.
Filed Apr 23, 2024 · FY20230001140361-24-021424
Proposal 1: Election of Directors
Proposal 1: Election of Directors At the Annual Meeting, three (3) Class II directors are to be elected to hold office until the Annual Meeting of Stockholders to be held in 2027 and until each such director’s respective successor is elected and qualified or until each such director’s earlier death, resignation or removal. We currently have eight (8) directors on our Board of Directors. Our current Class II Directors are Emil Michael, Amy Cappellanti-Wolf and Philip Adam Smalley III. The Board of Directors has nominated each of the foregoing director candidates to serve as Class II directors until the 2027 Annual Meeting. The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the three (3) nominees receiving the highest number of affirmative “FOR” votes will be elected as Class II directors. Abstentions and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal. In accordance with our Amended and Restated Certificate of Incorporation (our “Charter”) and Amended and Restated Bylaws, our Board of Directors is divided into three classes with staggered three-year terms. At each annual meeting of stockholders, the successors to the directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following their election. The current class structure is as follows: Class I, whose current term will expire at the 2026 Annual Meeting of Stockholders; Class II, whose term will expire at the 2024 Annual Meeting of Stockholders; and Class III, whose term will expire at the 2025 Annual Meeting of Stockholders. The current Class I Directors are Alan Baratz and Ziv Ehrenfeld; the current Class II Directors are Emil Michael, Amy Cappellanti-Wolf and Philip Adam Smalley III; and the current Class III Directors are Steven M. West, Kirstjen Nielsen and Roger Biscay. Our Charter and Amended and Restated Bylaws provide that, subject to the rights of holders of any series of preferred stock, the authorized number of directors may be changed from time to time by the Board of Directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that the number of directors in each class is divided as nearly equal as reasonably possible. If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the Common Shares represented thereby for the election as directors of the persons whose names and biographies appear below. In the event that Emil Michael, Amy Cappellanti-Wolf or Philip Adam Smalley III should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board of Directors or the Board of Directors may elect to reduce its size. The Board of Directors has no reason to believe that any of the director nominees will be unable to serve if elected. Each of the director nominees has consented to being named in this proxy statement and to serve if elected.
Class I Directors (terms to expire at the 2026 Annual Meeting)
Class I Directors (terms to expire at the 2026 Annual Meeting) The current members of the Board of Directors who are Class I Directors are as follows:
Class I Directors (terms to expire at the 2026 Annual Meeting)
| Name | Age(*) | Served as a Director Since | Position with D-Wave Quantum | | Alan Baratz | 69 | January 14, 2020 | President, Chief Executive Officer and Director | | Ziv Ehrenfeld | 49 | April 4, 2023 | Director |
Class I Directors (terms to expire at the 2026 Annual Meeting)
| (*) | Age as of April 23, 2024. |
Class I Directors (terms to expire at the 2026 Annual Meeting)
The principal occupations and business experience, for at least the past five years, of each director nominee for election at the Annual Meeting are as follows:
Alan Baratz
Alan Baratz Dr. Baratz became the CEO of D-Wave Systems in January 2020 and the Company in August 2022. Previously, as Executive Vice President of R&D and Chief Product Officer of D-Wave Systems from August 2018 to December 2019, he drove the development, delivery, and support of all of the company’s products, technologies, and applications. Dr. Baratz also acted as Senior Vice President of Software & Applications of D-Wave Systems from August 2017 to August 2018. He has over 25 years of experience in product development and bringing new products to market at leading technology companies and software startups. As the first president of JavaSoft at Sun Microsystems, Dr. Baratz oversaw the growth and adoption of the Java platform from its infancy to a robust platform supporting mission-critical applications in nearly 80 percent of Fortune 1000 companies. He has also held executive positions at Symphony, Avaya, Cisco, and IBM. He served as CEO and president of Versata, Zaplet, and NeoPath Networks, and as a managing director at Warburg Pincus LLC. Dr. Baratz also served on the board of Versata from 2003 to 2005 and the board of TRW Inc. in 2002. Dr. Baratz holds a doctorate in computer science from the Massachusetts Institute of Technology. We believe Dr. Baratz is qualified to serve on our Board of Directors because of his extensive knowledge of the Company, past public company board experience, and significant experience in product development and, specifically, bringing new products to market.
Ziv Ehrenfeld
Ziv Ehrenfeld Mr. Ehrenfeld has been a member of our Board of Directors since April 2023. Since 2020, he has served as a Managing Director on the private equity team for PSP Investments. In this role, he heads Strategy and Active Management globally in addition to overseeing various sponsor relationships. He also serves on the boards of several privately held companies with significant operations and scale. Prior to this role, from 2015 to 2020, Mr. Ehrenfeld was a member of PSP Investments’ private debt investment arm, where he developed a new asset class culminating in ~C$26 billion in net AUM as of March 31, 2023. Prior to joining PSP Investments, Mr. Ehrenfeld was a Director in Leveraged Finance at Barclays from 2008 to 2015, where he arranged leveraged loan and high-yield bond financings for sponsor and corporate clients. Mr. Ehrenfeld started his career practicing law at the law firm of Fischer Behar Chen Well Orion & Co. and holds an LL.B. Bachelor of Laws and a BA in Economics from Tel Aviv University and an MBA from Wharton School of the University of Pennsylvania. We believe Mr. Ehrenfeld is qualified to serve on our Board of Directors because of his significant private equity, credit investment, operational management, legal and business development experience.
Class III Directors (terms to expire at the 2025 Annual Meeting)
Class III Directors (terms to expire at the 2025 Annual Meeting) The current members of the Board of Directors who are Class III Directors are as follows:
Class III Directors (terms to expire at the 2025 Annual Meeting)
| Name | Age(*) | Served as a Director Since | Position with D-Wave Quantum | | Steven M. West | 68 | June 29, 2009 | Chair | | Kirstjen Nielsen | 51 | January 10, 2023 | Director | | Roger Biscay | 56 | August 5, 2022 | Director |
Class III Directors (terms to expire at the 2025 Annual Meeting)
| (*) | Age as of April 23, 2024. |
Compensation Committee
| • | administering the equity incentive plans and other benefit programs; |
Compensation Committee
| • | reviewing, adopting, amending and terminating all incentive compensation and equity plans, bonus plans, change-of-control protections and any other compensatory arrangements for the executive officers and other senior management; |
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE AND DIRECTOR COMPENSATION This section presents the executive and director compensation of D-Wave Systems for the periods prior to the completion of the Merger on August 5, 2022, and the Company for the periods subsequent to the completion of the Merger on August 5, 2022. For the purposes of this “Executive and Director Compensation” section “D-Wave Systems” refers to D-Wave Systems Inc., “D-Wave Quantum” and the “Company” refer to D-Wave Quantum Inc., and “D-Wave,” “us”, “we” and “our”, as the context requires, refers to either D-Wave Quantum Inc. or D-Wave Systems Inc. This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below. In 2023, our “named executive officers” and their positions were as follows:
EXECUTIVE AND DIRECTOR COMPENSATION
| • | Alan E. Baratz, President, Chief Financial Officer and Director; |
EXECUTIVE AND DIRECTOR COMPENSATION
| • | John M. Markovich, Chief Financial Officer; and |
EXECUTIVE AND DIRECTOR COMPENSATION
| • | Diane Nguyen, General Counsel. |
Summary Compensation Table
Summary Compensation Table The following table presents information regarding the compensation of our named executive officers (“NEOs”) for the fiscal years ended December 31, 2023 and 2022:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Alan E. Baratz President & Chief Executive Officer, Director | 2023 | 575,000 | 153,900 | — | 316,250 | — | 1,045,150 | | | 2022 | 491,667 | 10,050,000 | — | 273,333 | 1,348 | 10,816,348 | | John M. Markovich Chief Financial Officer | 2023 | 400,000 | 102,600 | — | 179,200 | — | 681,800 | | | 2022 | 350,000 | 3,517,500 | — | 144,000 | 51 | 4,011,551 | | Diane Nguyen (5) General Counsel | 2023 | 255,000 | 43,790 | — | 86,400 | — | 385,190 | | | 2022 | N/A | | | | | |
Summary Compensation Table
| (1) The amounts reported in this column reflect the grant date fair value of restricted share unit awards made under the 2022 Plan to the NEOs listed in this table, computed in accordance with FASB ASC Topic 718 for stock-based compensation transactions. Assumptions used in the calculation of these amounts are included in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Summary Compensation Table
| (2) The amounts reported in this column reflect the grant date fair value of stock option awards made under the 2022 Plan and 2020 Plan to the NEOs, computed in accordance with ASC 718 for stock-based compensation transactions. Assumptions used in the calculation of these amounts are included in Note 12 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the NEO upon the vesting of the stock options, the exercise of the stock options, or the sale of the Common Shares underlying such stock options. |
Summary Compensation Table
| (3) For 2023, the amounts reported in this column reflect annual cash incentive earned by each NEO determined by the Company’s Compensation Committee. |
Summary Compensation Table
For 2022, the amounts reported in this column reflect the annual bonus payable as determined by the Compensation Committee.
Summary Compensation Table
| (4) For 2023 and 2022, the amounts reported in this column represent life insurance premiums paid by D-Wave for the benefit of the NEOs and represent a reimbursement to Dr. Baratz for tax accounting expenses. |
Summary Compensation Table
| (5) Effective as of May 1, 2023, Ms. Nguyen assumed the role of General Counsel. Ms. Nguyen’s 2023 amounts reflect all of her compensation for the full fiscal year. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table presents information regarding outstanding equity awards held by our NEOs as of December 31, 2023. All awards were granted pursuant to the 2020 Plan or the 2022 Plan. Following the Merger, each option of D-Wave Systems granted under the 2020 plan became exercisable at its original option exercise price for 0.8896570 Common Shares. See the section titled “—Equity Incentive Plans – 2020 Plan and 2022 Plan” below for additional information.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(9) | | Alan E. Baratz | 2,920,208 | — | 0.81 | 5/5/2030 | 1,550,000(6) | 1,364,000 | | John M. Markovich | 938,390 | 562,996(2) | 0.82 | 8/20/2031 | 637,500(7) | 561,000 | | Diane Nguyen | 43,108 | 1,152(3) | 0.81 | 5/5/2030 | 178,672(8) | 157,231 | | | 7,601 | 1,517(4) | 0.81 | 11/17/2030 | | | | | 34,475 | 18,904(5) | 0.82 | 8/20/2031 | | |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Except as otherwise noted, these amounts represent Common Shares issuable upon exercise of previously granted options of D-Wave Systems, following the Merger. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) The remaining portion of the option vests in equal monthly installments on the 20th of each month through August 20, 2025. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) The remaining portion of the option vests in equal monthly installments on the 5th of each month through May 5, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (4) The remaining portion of the option vests in equal monthly installments on the 1st of each month through November 1, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5) The remaining portion of the option vests in equal monthly installments on the 16th of each month through July 16, 2025. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6) 500,000 of these restricted share units vest on second anniversary of the grant date of October 27, 2022. 750,000 of these restricted share units vest in equal tranches on the second and third anniversaries of the grant date of October 27, 2022. 300,000 of these restricted share units vest at a rate of 25% on the first anniversary of the grant date of March 27, 2023, with the remaining restricted share units vesting in twelve, equal quarterly installments through March 27, 2027. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7) 437,500 of these restricted share units vest in equal tranches on each of the second and third anniversaries of the grant date of October 27, 2022. 200,000 of these restricted shares units vest at a rate of 25% on the first anniversary of the grant date of March 27, 2023, with the remaining restricted share units vesting in twelve, equal quarterly installments through March 27, 2027. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (8) 93,312 of these restricted share units vest in equal tranches on each of the second and third anniversaries of the grant date of October 13, 2022. 85,360 of these restricted shares units vest at a rate of 25% on the first anniversary of the grant date of March 27, 2023, with the remaining restricted share units vesting in twelve, equal quarterly installments through March 27, 2027. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (9) The market value of these shares is based on the closing price of D-Wave Quantum on December 29, 2023 ($0.88 per share). |
Non-Employee Director Compensation
Non-Employee Director Compensation The annual director compensation is determined by the Board of Directors of the Company at its first meeting following each annual meeting of stockholders and covers the period starting from such annual meeting and ending at the next annual meeting. Unless a director is restricted from receiving any director compensation, our director compensation policy provides that each of our non-employee directors receives an annual cash retainer of $35,000, with our Chair of the Board of Directors, and the chairs of our Audit Committee and Compensation Committee each also receiving an additional annual cash retainer of $30,000, $20,000, and $15,000 respectively. In addition, each member of the Audit Committee, Compensation Committee and Nominating & Governance Committee, other than the chair of each such committee, receives an additional annual cash retainer of $8,000. We do not pay any meeting attendance fees. For the period from August 5, 2022 to June 8, 2023, the annual cash retainer was paid to each eligible director as a lump sum payment in 2022. For the period from June 8, 2023 to June 6, 2024, the annual cash retainer is being paid to each eligible director by four equal, quarterly instalments. Each of our eligible non-employee directors also receives an annual equity-based grant of RSUs valued at $140,000, which generally vests annually; however, the initial annual grants were prorated to reflect service from August 2022 through May 2023 (and which vested as of the date of the 2023 annual stockholder meeting). During 2023, D-Wave granted equity to its eligible non-employee directors as described below, such grants vesting on May 31, 2024. New eligible non-employee directors also receive an initial grant of 7,500 RSUs, which will vest on May 31, 2024. Vesting is subject to continued service on the Board of Directors through the relevant vesting date. Commencing with compensation earned in respect of service following our Annual Meeting, our eligible non-employee directors will be permitted to elect to receive RSUs in lieu of cash compensation. The following table sets forth information concerning the compensation of D-Wave’s non-employee directors for the year ended December 31, 2023.
Non-Employee Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Amy Cappellanti-Wolf | 37,500 | 140,000 | — | 177,500 | | Emil Michael | 32,250 | 140,000 | — | 172,250 | | Kirstjen Nielsen | — | — | — | — | | Philip Adam Smalley III | — | — | — | — | | Steven M. West | 54,750 | 140,000 | — | 194,750 | | Roger Biscay | 41,250 | 140,000 | — | 181,250 | | Ziv Ehrenfeld | — | — | — | — |
Non-Employee Director Compensation
| (1) RSUs awarded and will vest 100% on May 31, 2024. |
Non-Employee Director Compensation
The table below shows for each non-employee director who was serving, and held outstanding equity awards, as of December 31, 2023, the aggregate number of equity awards held by each such non-employee director as of such date.
Non-Employee Director Compensation
| Name | Shares Underlying Options Outstanding at Fiscal Year End (#) | Stock Awards Outstanding at Fiscal Year End (#)(1) | | Amy Cappellanti-Wolf | — | 75,675 | | Emil Michael | — | 75,675 | | Kirstjen Nielsen | — | — | | Philip Adam Smalley III | — | — | | Steven M. West | 311,973 | 75,675 | | Roger Biscay | — | 75,675 | | Ziv Ehrenfeld | — | — |
Non-Employee Director Compensation
| (1) RSUs awarded and will vest 100% on May 31, 2024. |
Non-Employee Director Compensation
The Board of Directors and Nominating and Governance Committee expect to review director compensation periodically to ensure that director compensation remains competitive such that D-Wave is able to recruit and retain qualified directors.
Executive Officer and Director Compensation
Executive Officer and Director Compensation Please see the section titled “Executive and Director Compensation” for information regarding the compensation of our directors and executive officers.