DEF 14A of ACM Research, Inc.
Filed Apr 26, 2024 · FY20230001140361-24-022553
Director Nominee Representation
Director Nominee Representation
Director Nominee Representation
| DIVERSITY | INDEPENDENCE | TENURE | | All of our director nominees voluntarily self-identify as having a diverse identity (gender or race). | Four of our five director nominees qualify as independent under SEC regulations and NASDAQ standards. | The tenure of our director nominees reflects a mix of experience and perspective. | | | | |
Board Governance Practices
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(1) | ACM Research Option Awards ($)(1)(2) | All Other Compensation ($)(1)(3) | Total ($) | | David H. Wang Chief Executive Officer and President | 2023 | $256,212 | $205,755 | $23,067,744 | $4,264 | $23,533,975 | | | 2022 | 233,918 | 167,294 | — | 3,770 | 404,982 | | | 2021 | 183,105 | 212,188 | — | 3,583 | 398,876 | | Mark McKechnie Chief Financial Officer, Treasurer and Secretary | 2023 | 273,675 | 37,500 | 3,113,850 | — | 3,425,025 | | | 2022 | 267,000 | 100,000 | 1,740,782 | — | 2,107,782 | | | 2021 | 242,703 | 50,000 | — | — | 292,703 | | Jian Wang Chief Executive Officer and President ACM Research (Shanghai), Inc. | 2023 | 203,317 | 170,280 | 8,822,265 | 3,674 | 9,199,536 | | | 2022 | 180,967 | 62,454 | 903,915 | 3,770 | 1,151,106 | | | 2021 | 120,094 | 108,500 | — | 3,583 | 232,177 | | Lisa Feng Chief Financial Officer ACM Research (Shanghai), Inc. | 2023 | 196,532 | 93,654 | 3,978,705 | 4,264 | 4,273,155 | | | 2022 | 174,755 | 61,562 | 361,556 | 4,288 | 602,161 | | | 2021 | 157,123 | 64,170 | — | 4,159 | 225,452 | | Fuping Chen Vice President, Sales—China ACM Research (Shanghai), Inc. | 2023 | 157,845 | 170,280 | 6,830,141 | — | 7,158,266 | | | 2022 | 135,282 | 98,142 | 361,556 | 205 | 595,185 | | | 2021 | $108,842 | $103,850 | $— | $214 | $212,906 |
Compensation Committee
| • | making recommendations to the board with respect to director compensation; |
Director Compensation
Director Compensation Our director compensation program is intended to enhance our ability to attract, retain and motivate non-employee directors of exceptional ability and to promote the common interest of directors and stockholders in enhancing the value of the common stock. The board of directors reviews director compensation periodically based on recommendations by the compensation committee. Directors may be reimbursed for reasonable out-of-pocket expenses incurred in attending board and committee meetings.
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION
| Director | Fees Earned or Paid in Cash($)(1) | Option Awards($)(2) | All Other Compensation($) | Total($) | | Haiping Dun(3) | $40,500 | $549,967 | $— | $590,467 | | Chenming C. Hu(3) | 28,500 | 238,582 | 66,667(4) | 333,749 | | Tracy Liu(3) | $57,500(5) | $549,967 | $— | $607,467 |
2023 DIRECTOR COMPENSATION
| (1) Annual cash retainers to our non-employee directors are paid in arrears. |
2023 DIRECTOR COMPENSATION
| (2) The amounts shown represent the aggregate grant date fair value, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, excluding estimated forfeitures, of non-qualified stock options granted on August 10, 2023 to acquire, subject to vesting, a total of 24,000 shares of Annual Options. Each Annual Option vests, subject to continued board service, in full immediately prior to the 2024 Annual Meeting. Each of Dr. Dun and Ms. Liu were also granted 30,000 shares of Subsidiary Options for their board service on the Hanguk board of directors. Each Subsidiary Option vests, subject to continued board service, over 4 years, with 25% vesting on the first anniversary of the grant date followed by equal monthly installments thereafter. The amounts do not necessarily correspond to the actual amounts that may be earned by the directors. For assumptions made in valuing these awards and related information, see Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. As of December 31, 2023, (a) Dr. Dun held unexercised stock options for 348,001 shares of Class A common stock, (b) Dr. Hu held unexercised stock options for 63,000 shares of Class A common stock, (c) Ms. Liu held unexercised stock options for 215,000 shares of Class A common stock, and (d) Ms. Xing did not held any unexercised stock options for Class A common stock. |
2023 DIRECTOR COMPENSATION
| (3) Chair of a board committee during 2023. |
2023 DIRECTOR COMPENSATION
| (4) This amount represents the portion of the consulting fee paid to Dr. Hu in 2023 for independent consulting services pursuant to the Hu Agreement. |
2023 DIRECTOR COMPENSATION
| (5) This amount includes additional fees paid to Ms. Liu in 2023 for services on a special subcommittee of the board. |
2023 DIRECTOR COMPENSATION
Under our Restated Insider Trading Policy, directors, as well as their family members, may not hedge or pledge any ACM securities that they hold directly. An exception to this prohibition may be granted where a person wishes to pledge ACM securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any director, as well as their family members, who wishes to pledge ACM securities as collateral for a loan must submit a request for approval to the chief financial officer at least two weeks prior to the proposed execution of documents evidencing the proposed pledge, except that any proposed pledge by the chief financial officer must be submitted to and either approved or prohibited by the chief executive officer.
— Election of Directors
— Election of Directors At the Annual Meeting, stockholders will elect the entire board of directors to serve for the ensuing year and until their successors are elected and qualified. The board has designated as nominees for election the five persons named below, all of whom currently serve as directors. Shares of common stock that are voted as recommended by the board will be voted in favor of the election as directors of the nominees named below.
Director Qualifications
Director Qualifications The board of directors has determined that, as a whole, it must have the right mix of characteristics, skills and diversity to provide effective oversight of our company. The nominating and governance committee has adopted Qualifications for Nomination to the board, a copy of which is posted on our website at https://ir.acmrcsh.com/corporate-governance/highlights. The Qualifications for Nomination provide that, in selecting directors, the board should seek to achieve a mix of directors that enhances the diversity of background, skills and experience on the board, including with respect to age, gender, international background, ethnicity and specialized experience. Directors should have relevant expertise and experience and be able to offer advice and guidance to our Chief Executive Officer based on that expertise and experience. Also, a majority of directors should be independent under applicable Nasdaq listing standards, board and committee guidelines, and applicable laws and regulations. Each director is also expected to:
Director Qualifications
| • | be of the highest ethical character and share our values as reflected in our Code of Conduct; |
Director Qualifications
| • | be highly accomplished in his or her field, with superior credentials and recognition; |
Director Qualifications
| • | have sound business judgment, be able to work effectively with others, have sufficient time to devote to our affairs, and be free from conflicts of interest; and |
Director Qualifications
| • | be independent of any particular constituency and able to represent all of our stockholders. |
Director Qualifications
The board is to conduct a self-assessment process every year and to periodically review the diversity of skills and characteristics needed in the board’s oversight of our company, as well as the effectiveness of the mix of skills and experience. The board considers the skill areas represented on the board, those skill areas represented by any directors who are expected to retire or leave the board in the near future, and recommendations of directors regarding skills that could improve the ability of the board to carry out its responsibilities. Although we do not have a formal diversity policy, the nominating and governance committee seeks to identify candidates who will enhance the board’s overall diversity.
Identifying and Evaluating Nominees for Directors
Identifying and Evaluating Nominees for Directors When the board of directors or its nominating and governance committee has identified the need to add a new director with specific qualifications or to fill a vacancy on the board, the chair of the nominating and governance committee will initiate a search, seeking input from other directors and senior management, review any candidates that the nominating and governance committee has previously identified, and, if necessary, hire a search firm. The nominating and governance committee will identify the initial list of candidates who satisfy the specific criteria and otherwise qualify for membership on the board. At least one member of the nominating and governance committee (preferably the chair) and the Chair of the Board and Chief Executive Officer will interview each qualified candidate; other directors will also interview the candidate if practicable. Based on a satisfactory outcome of those interviews, the nominating and governance committee will make its recommendation on the candidate to the board. Our bylaws include a procedure that stockholders must follow in order to nominate a person for election as a director at an annual meeting of stockholders. The Bylaws require that timely notice of the nomination in proper written form, including all required information, be provided to the Corporate Secretary.
Information Concerning Nominees for Election as Directors
Information Concerning Nominees for Election as Directors The information appearing in the following table sets forth, for each nominee for election as a director, as of April 16, 2024:
Information Concerning Nominees for Election as Directors
| • | the nominee’s professional experience for at least the past five years; |
Information Concerning Nominees for Election as Directors
| • | the year in which the nominee first became one of our directors; |
Information Concerning Nominees for Election as Directors
| • | each committee of the board of directors on which the nominee currently serves; |
Information Concerning Nominees for Election as Directors
| • | the nominee’s age as of the record date for the Annual Meeting; |
Information Concerning Nominees for Election as Directors
| • | the relevant skills the nominee possesses that qualify him or her for nomination to the board; and |
Information Concerning Nominees for Election as Directors
| • | directorships held by each nominee presently and at any time during the past five years at any public company or registered investment company. |
Information Concerning Nominees for Election as Directors
| | DAVID H. WANG Age: 62 ACM Board Service • Tenure: 26 years (1998) | | HAIPING DUN Age: 73 ACM Board Service • Tenure: 21 years (2003) • Committees: ○ Audit ○ Compensation (Chair) INDEPENDENT | | Professional Experience | | Professional Experience | | | • Founder, Chief Executive Officer, President and one of our directors since 1998. • Inventor of stress-free Cu polishing technology. • Holds more than 100 patents in semiconductor equipment and process technology. | | • Served as one of our directors since 2003. • Former President of Champion Microelectronic Corp., an integrated circuit company based in Taiwan, from 2008 through 2018. • Former Senior Director of Intel Corporation, a multi-national technology company where he was employed from 1983 to 2004. | | | Education | | Education | | | • Received a Ph.D. and Master of Engineering in Precision Engineering from Osaka University and a Bachelor of Science in Precision Instruments from Tsinghua University. | | • Received a Ph.D. in material science and engineering from Stanford University, a Master of Science in physics from the University of Washington and a Bachelor of Science in physics from National Taiwan University. | | | Relevant Skills | | Relevant Skills | | | • Industry | | • Industry | | | • Innovation | | • Global | | | • Leadership | | • Leadership | |
Information Concerning Nominees for Election as Directors
| | CHENMING C. HU Age: 76 ACM Board Service • Tenure: 7 years (2017) • Nominating and Governance Committee (Chair) INDEPENDENT | | TRACY LIU Age: 59 ACM Board Service • Tenure: 8 years (2016) • Committees: ○ Audit (Chair) ○ Compensation ○ Nominating and Governance INDEPENDENT | | Professional Experience | | Professional Experience | | | • Served as one of our directors since January 2017. • Served as a member of our board of advisors since May 2016. • Professor in electrical engineering and computer sciences at the University of California, Berkeley since 1976. • Taiwan Semiconductor Manufacturing Company Distinguished Chair Professor Emeritus and Professor of the Graduate School at the University of California, Berkeley since 2010. • Developed FinFet, a fin-shaped field-effect transistor in 1999. • Served as the Chief Technology Officer of Taiwan Semiconductor Manufacturing Company Ltd. from 2001 to 2007. • Member of the U.S. National Academy of Engineering and the Chinese Academy of Sciences, and Taiwan’s Academia Sinica. • Received a Master of Science degree and Ph.D. from the University of California, Berkeley and a Bachelor of Science degree from National Taiwan University, all in electrical engineering. | | • Served as one of our directors since September 2016. • Managing Partner of H&M Int’l CPAs, LLP since January 2017. • Founder and owner of H&M Financial Consulting from 2006 to 2016, where she provided international accounting and tax solutions to high-technology companies. • Received a Bachelor of Science from Nankai University and a Master of Accounting and Tax from Golden Gate University. • Certified Public Accountant and a member of the American Institute of Certified Public Accountants. | | | Relevant Skills | | Relevant Skills | | | • Innovation | | • Finance | | | • Industry | | • Leadership | | | • Education | | • Global | | | Other Public Board Service | | | | | • Ambarella, Inc. 2010-present | | | |
Information Concerning Nominees for Election as Directors
| | XIAO XING Age: 48 ACM Board Service • Tenure: 1 year (2023) • Audit Committee INDEPENDENT | | Professional Experience | | | • Vice President of Shanghai Pudong Haiwang Private Fund Management Co. Ltd since September 2021. • General Manager of various Investment Departments of Shanghai Pudong SPINNOTEC Group Co., Ltd from 2018-2021. • Deputy General Manager of Zhangjiang Torch Entrepreneurship Park Investment Development Co., Ltd. Of Shanghai from 2012-2018. • Received a Bachelor of Science degree and a Master of Business Administration degree from Zhejiang University. | | | Relevant Skills | | | • Finance | | | • Leadership | | | • Global | |
Information Concerning Nominees for Election as Directors
each of the five nominees for election as directors.
What We Do
| • | reinforce our Pay for Performance philosophy by having a portion of NEO compensation “at risk” with the use of multi-year equity award vesting periods tied to performance |
What We Do
| • | independent compensation consultant engaged by the compensation committee; |
What We Don’t Do
| • | no retirement vesting of equity awards; |
What We Don’t Do
| • | no agreements stipulating or guaranteeing bonuses for any of our NEOs |
What We Don’t Do
| • | no strict benchmarking of compensation to a specific percentile of our compensation peer group; |
Compensation Philosophy
Compensation Philosophy We operate in a highly competitive business environment within a rapidly evolving and extremely competitive talent market. To successfully compete and grow our business in this dynamic environment, we need to recruit, incentivize and retain talented and seasoned technology leaders. Our success is critically dependent on the skills, acumen and motivation of our executives and employees to rapidly execute at the highest level. We have designed, and intend to modify as necessary, our NEO compensation program and philosophy to attract, retain and incentivize talented, qualified and committed NEOs by offering compensation, as described below, that reflects competitive market practices in the jurisdictions in which we operate and as adjusted for individual NEO factors and circumstances. As our needs evolve and as we continue to broaden our operations outside the PRC, we will continue to evaluate our NEO compensation program and philosophy, as circumstances may require. Except as specifically described herein, the compensation committee does not affirmatively set out in any given year, or with respect to any given NEO, to apportion compensation in any specific ratio among the various categories of compensation (that is, between short- and long-term compensation or between non-performance-based and performance-based compensation). Rather, the compensation committee uses the philosophy described above, and the factors described for each category in the discussion that follows, as a guide in assessing the proper allocation among those categories. In addition, except as specifically described herein, the compensation committee does not affirmatively set out in any given year, or with respect to any given NEO, to apportion cash and equity compensation in any specific ratio. Rather, the compensation committee uses the philosophy described above, and the factors described below, as a guide in assessing the proper allocation between cash and equity awards. Our NEO compensation program has historically emphasized equity, generally granted in the form of stock options, over cash compensation paid in the form of base salary and target bonus. The compensation committee does not strictly “benchmark” compensation to a specific level or percentile within a “peer group”. Rather, the compensation committee makes adjustments based on the philosophy described above and considers competitive market practices in the jurisdictions in which we operate as one factor in its deliberations. The compensation committee believes that retaining discretion to assess the overall performance of NEOs gives the compensation committee the ability to more accurately reflect individual contributions that cannot be absolutely quantified. The compensation committee believes that over-reliance on benchmarking can result in compensation that is unrelated to the value delivered by our executive officers because compensation benchmarking does not take into account the specific performance of the executive officers, the relative size, growth and performance of the Company, or any unique circumstances or strategic considerations of the Company. As noted above, as our needs evolve and as we continue to broaden our operations outside the PRC, we will continue to evaluate our NEO compensation program and philosophy as circumstances require.
Role of Compensation Committee
| • | administering our NEO cash incentive compensation plans and equity-based plans, including the designation of NEOs to whom awards are to be granted, the type and amount of award to be granted, and the terms and conditions applicable to each award; |
Role of Compensation Committee
| • | our long-term goals and strategies; |
Role of Compensation Committee
| • | an analysis of the competitiveness of our compensation relative to our compensation peer group; and |
Role of Independent Compensation Consultant
Role of Independent Compensation Consultant The compensation committee has the authority to retain the services and obtain the advice of external advisors, including compensation consultants, legal counsel or other advisors, to assist in the evaluation of executive officer compensation. For 2023, the compensation committee engaged Aon to review our executive compensation program, policies and practices, our peer group, to conduct an executive compensation market analysis and to review our long-term incentive compensation program to help ensure alignment with competitive market practices. Aon reviewed and advised on all principal aspects of our executive compensation program for fiscal 2023, including meeting regularly with the compensation committee to review all elements of executive compensation including the competitiveness of such compensation elements.The compensation committee believes that working with an independent compensation consultant furthers our objectives to recruit and retain qualified executives, align executive interests with those of stockholders, and ensure that executive compensation packages will appropriately motivate and reward ongoing achievement of business goals. Based on the consideration of the factors specified in the rules of the SEC and the listing standards of The Nasdaq Stock Market, the compensation committee does not believe that its relationship with Aon’s and the work of Aon on behalf of the compensation committee has raised any conflict of interest. The compensation committee reviews these factors on an annual basis. As part of the compensation committee’s determination of Aon independence, it received written confirmation from Aon addressing these factors and supporting the independence determination.
Compensation Peer Group
Compensation Peer Group Although there are unique aspects to our compensation program, market data provides a reference point for the compensation committee to make its compensation decisions. The compensation committee takes into consideration the structure and components of, and the amounts paid under, the executive compensation programs of other, comparable peer companies, as derived from public filings and other sources when making decisions about the structure and component mix of our executive compensation program. The compensation committee had, in 2021, established a peer group that was used to assess the pay levels and pay mix of the aggregate executive compensation program. The peer group selection was based on the following criteria: sector (semiconductor materials and equipment), revenue, market capitalization, and headcount. The 2021 peer group consisted of the following 12 companies:
Compensation Peer Group
| Alpha and Omega Semiconductor Limited (AOSL) | Impinj, Inc. (PI) | | Axcelis Technologies, Inc. (ACLS) | Kulicke and Soffa Industries, Inc. (KLIC) | | AXT, Inc. (AXTI) | Photronics, Inc. (PLAB) | | Cohu, Inc. (COHU) | Pixelworks, Inc. (PXLW) | | Everspin Technologies, Inc. (MRAM) | Rambus Inc. (RMBS) | | Ichor Holdings, Ltd. (ICHR) | Ultra Clean Holdings, Inc. (UCTT) |
Compensation Peer Group
The compensation committee, with the assistance of Aon, developed an updated peer group in June 2023 for use in connection with decisions about executive compensation for fiscal year 2023 using the same categories used for developing the earlier peer group, but updated to reflect the Company’s market capitalization revenue, and headcount. Based on these updated criteria, the compensation committee approved a compensation peer group for fiscal year 2023 that consisted of the following 14 companies:
Compensation Peer Group
| Alpha and Omega Semiconductor Limited (AOSL) | Mangnachip Semiconductor Corporation (MX) | | AXT, Inc. (AXTI) | PDF Solutions, Inc. (PDSF) | | Cohu, Inc. (COHU) | Photronics, Inc. (PLAB) | | FormFactor, Inc. (FORM) | Semtech Corporation (SMTC) | | Ichor Holdings, Ltd. (ICHR) | SkyWater Technology, Inc. (SKYT) | | Indie Semiconductor, Inc. (INDI) | Ultra Clean Holdings, Inc. (UCTT) | | Kulicke and Soffa Industries, Inc. (KLIC) | Veeco Instruments Inc. (VECO) |
Compensation Peer Group
The compensation committee in 2023 removed three of the companies from the prior peer group – Axcelis Technologies, Inc., Impinj, Inc., and Rambus, Inc. – because the market capitalization of each was significantly above our Company’s at the time of committee’s review. Similarly, the compensation committee in 2023 removed two of the companies from the prior peer group – Everspin Technologies, Inc. and Pixelworks, Inc. – because the market capitalization, revenue and headcount of each was significantly below our Company’s at the time of the committee’s review. The compensation committee added eight companies to the peer group – FormFactor, Inc., indie Semiconductor, Inc., Magnachip Semiconductor Corporation, PDF Solutions, Inc., Semtech Corporation, Skywater Technology, Inc., and Veeco Instruments Inc. – as the committee determined that those companies were the best fit for the selection criteria of companies in the semiconductor materials and equipment sector relative to our Company in terms of their market capitalization, revenue and headcount. As of June 2023, the Company’s revenue was at the 34th percentile of the revised peer group revenue, and our market capitalization was at the 19th percentile of the peer group market capitalization.
Overview of Compensation Components
| Pay Element | Payment Vehicle | Purpose/Design | | Base Salary | Fixed cash payment | Attracts, retains and rewards NEOs, and provides NEOs with fixed compensation based on their performance and contributions | | Bonus | Variable cash bonus | We do not have an established bonus policy for our NEOs; the compensation committee may decide, in its sole discretion, to reward NEOs with annual cash bonuses based on individual NEO performance, our business performance generally and, in certain circumstances, achievement of specific business objectives | | Long-Term Equity Awards | Stock options | Directly ties individual performance to long-term appreciation of our common stock price, rewards NEOs for strong company performance, and aligns the interests of NEOs with those of our stockholders |
Base Salary
Base Salary We pay base salaries to our NEOs to compensate them for their services and provide predictable annual income. The salaries typically reflect each NEO’s experience, skills, knowledge and responsibilities, although competitive market data also plays a role in setting salary levels. We do not apply specific formulas to determine salaries or changes in salaries. Instead, the salaries of our NEOs are reviewed on an annual basis by the compensation committee based on our compensation philosophy and objectives. The compensation committee determined the 2023 base salary of each of our NEOs after considering the recommendations of our CEO, other than with respect to his own base salary, and other factors described throughout this Compensation Discussion & Analysis. Based on Aon’s 2023 analysis, we determined that the salaries of our named executive officers have been positioned well below the market 25th percentile of our compensation peer group. While we do not benchmark a specific percentile for salary or cash compensation, in 2023, the compensation committee increased the base salaries for each of our NEOs to reflect each individual’s responsibilities and performance and to increase their base salaries to more market-competitive levels. We expect to continue to increase the salaries of our NEOs in an incremental fashion to bring the salary of each closer to a market-appropriate compensation level.
Annual Cash Bonus Program
Annual Cash Bonus Program We do not have an established bonus policy for our NEOs. The compensation committee may decide, in its sole discretion, to reward NEOs with annual cash bonuses based on the achievement of individual NEO performance, our business performance, and development generally. The program is designed to motivate our NEOs to focus on company priorities and to reward them for individual results and achievements. The company priorities did not have specific target levels associated with them for purposes of determining performance under the program, and our compensation committee has full discretion to determine the level of bonus payout for each year. Based on the Company’s revenue growth in 2023, improved operating margins, progress on new products, new customers and progress with global customers, and other strategic contributions, the compensation committee approved the following bonuses for 2023:
Annual Cash Bonus Program
| Named Executive Officer | 2023 Cash Bonus | 2022 Cash Bonus | | David H. Wang | $205,755 | $167,294 | | Mark McKechnie | 37,500 | 100,000 | | Jian Wang | 170,280 | 62,454 | | Lisa Feng | 93,654 | 61,562 | | Fuping Chen | $170,280 | $98,142 |
Long-Term Incentive Program
Long-Term Incentive Program Historically we have not typically granted stock options to NEOs on an annual basis. From time to time, however, we grant stock options, when appropriate, as the long-term incentive component of our compensation program. The Compensation Committee does not grant equity awards to take advantage of the release of material nonpublic information. Similarly, the Compensation Committee does not time the release of material nonpublic information to effect the value of equity award grant dates.Our stock options allow our employees to purchase covered shares at a price equal to the fair market value on the date of grant. Stock options motivate the NEOs to drive stock price performance, since the NEO can only realize the value of the options if our stock price increases above the exercise price. We believe that incorporating stock price growth as part of our long-term equity award design further aligns our executives’ and stockholders’ interests. Stock options create a meaningful foundation of outstanding long-term equity incentives aligned with the long-term interests of our stockholders. We grant our NEOs stock options covering shares of ACM Research and ACM Shanghai to incentivize value creation across our entire operations. Accordingly, in August 2023, we granted stock options to our NEOs, vesting over a four-year period and with a 10-year term, with details as described in “Grants of Plan-Based Awards” section later in this document, as follows:
Long-Term Incentive Program
| Named Executive Officer | ACM Research Options Granted (#) | ACM Research Grant Date Fair Value ($) | ACM Research (Shanghai) Options Granted (#) | ACM Research (Shanghai) Grant Date Fair Value ($) | | David H. Wang | 1,080,000 | $11,209,860 | 1,250,000 | $11,857,884 | | Mark McKechnie | 300,000 | 3,113,850, | — | — | | Jian Wang | — | — | 930,000 | 8,822,265 | | Lisa Feng | 100,000 | 1,037,950 | 310,000 | 2,940,755 | | Fuping Chen | — | $— | 720,000 | $6,830,141 |
Long-Term Incentive Program
The option awards for Class A common stock generally vest over 4 years, with 25% vesting on the first anniversary of the grant date, followed by equal monthly installments thereafter, generally subject to continued service to us. The option awards for stock of ACM Shanghai generally vest over 4 years, with 25% vesting on each of the first four anniversaries of the grant date, generally subject to continued service to us.
Results of 2022 Performance-Based Option Awards
Results of 2022 Performance-Based Option Awards In 2022, the Compensation Committee granted performance-based stock options to our named executive officers other than our chief executive officer. These performance-based options were structured to incentivize each recipient to achieve goals that were specific to that officer’s area of responsibility. Among other goals, the compensation committee identified achievements that were necessary to allow us to strategically execute on growing our business, increase our access to capital, and provide assurance of the accuracy of our financial statements. For Mark McKechnie, Jian Wang, Lisa Feng, and Fuping Chen, the March 2022 performance-based option awards represented 34%, 79%, 60%, and 61%, respectively, of each named executive officer’s 2022 total compensation as reflected in the 2022 Summary Compensation Table. The vesting of the performance-based options was tied to goals that were required to be achieved either in 2022 or by the end of 2023. We describe below the extent to which these awards either vested or failed to vest. (All the share information shown in this section reflects a three-for-one stock split of our common stock that occurred on March 24, 2022.)
Results of 2022 Performance-Based Option Awards
Mr. McKechnie was awarded an option covering 60,000 shares on March 4, 2022. On December 28, 2022, the compensation committee determined that Mr. McKechnie met certain of the strategic and operational milestones resulting in the vesting of 22,500 shares covered by the option, or 37.5% of the total shares covered by the option award. Specifically, the Audit Committee of the Board approved an independent audit firm subject to annual inspection by the Public Company Accounting Oversight Board, or a PCAOB-compliant auditor, during the performance period resulting in the vesting of 15,000 shares covered by the option. In addition, the Company completed the first acquisition or strategic investment transaction by the Company, resulting in the vesting of 7,500 shares covered by the option. However, the remaining 37,500 of the shares covered by the option expired unvested at the end of 2023, as the required performance criteria were not met. In particular, the Company did not within the performance period close a public or private capital raise and did not complete a second acquisition or strategic investment transaction. Mr. Wang was awarded an option covering 75,000 shares on March 4, 2022. On February 12, 2023, the compensation committee determined that Mr. Wang met certain strategic and operational milestones resulting in the vesting of 15,000 of the shares covered by the option, or 20% of the total shares covered by the option award. Specifically, the Company achieved the target for cost of goods sold reduction saving of at least 5% in fiscal year 2022 compared to fiscal year 2021. However, the remaining 60,000 of the shares covered by the option expired unvested, as the required performance criteria were not met. In particular, the Company’s consolidated revenue for fiscal year 2022 did not meet or exceed $400,000,000; the Company’s consolidated revenue for fiscal year 2023 did not meet or exceed $600,000,000; an operational goal related to civil construction was not timely completed; and the Company’s secondary offering was not completed by December 31, 2023. Ms. Feng was awarded an option covering 30,000 shares on March 4, 2022. On December 31, 2022, the compensation committee determined that Ms. Feng met certain strategic and operational milestones resulting in the vesting of 22,500 of the shares covered by the option, or 75% of the total shares covered by the option award. Specifically, the audit committee of the board approved a PCAOB-compliant auditor resulting in the vesting of 7,500 shares covered by the option; an enterprise resource planning (ERP) system was installed by December 31, 2022, resulting in the vesting of 7,500 shares covered by the options; and the Company completed the closing of a public offering by ACM Shanghai by December 31, 2023, resulting in the vesting of 7,500 shares covered by the options. However, the remaining 7,500 of the shares covered by the option expired unvested at the end of the performance period, as the Company did not complete the closing of a public offering by December 31, 2023. Mr. Chen was awarded an option covering 30,000 shares on March 4, 2022. On December 30, 2022, the compensation committee confirmed that Mr. Chen met certain operational milestones resulting in the vesting of 3,000 of the shares covered by the options, or 10% of the total shares covered by the option award. Specifically, 1,500 shares covered by the option vested for the receipt of first tool purchase orders for a Track tool, and 1,500 shares covered by the option vested for the achievement of a Furnace ALD tool by December 31, 2022. However, the remaining 27,000 of the shares covered by the option expired unvested at the end of the performance period, as the required performance criteria was not met. In particular, the consolidated revenue of the Company for fiscal year 2022 did not meet or exceed $400,000,000; the target for receipt of first tool purchase orders for PECVD and/or super critical C02 tool was not achieved by December 31, 2022; the consolidated revenue of the Company for fiscal year 2023 did not meet or exceed $600,000,000; and the target for receipt of certain other tool purchase orders was not achieved by December 31, 2023.
Employment Agreements
Employment Agreements We enter into employment agreements with our employees located principally in the PRC, including all of our NEOs other than U.S.-based NEO Mr. McKechnie, that contain an employment term and other statutorily required terms and conditions but do not include compensatory terms. In addition, ACM Shanghai was a party to an employment agreement with Ms. Feng that was entered into as of September 25, 2022 and through September 24, 2024. The agreement contains provisions with respect to base salary, annual bonus eligibility and certain severance payments. We have not entered into an employment agreement with Mr. McKechnie.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Our option awards granted under our 2016 Omnibus Incentive Plan to employees, including NEOs, provide for acceleration upon a change in control, excluding the performance-based stock option granted to David Wang on March 20, 2020. Except for those option arrangements, none of our NEOs is party to a currently effective contract or other arrangement that provides for the acceleration or payment of any benefits in the event of a change in control of our company or the termination of the NEO’s employment, whether or not the termination occurs within a specified time period after the occurrence of a change in control. NEOs based in the PRC, who include all NEOs other than U.S.-based Mark McKechnie, may be entitled to statutory severance as required by applicable law.
Internal Revenue Code Sections 280G and 409A Considerations
Internal Revenue Code Sections 280G and 409A Considerations We have not provided or committed to provide any NEO with a gross-up or other reimbursement for tax amounts the executive might pay pursuant to Section 280G or Section 409A of the Internal Revenue Code. Section 280G and related sections of the Internal Revenue Code provide that an executive officer and certain persons who hold significant stockholder interests and certain other service providers could be subject to significant additional taxes if they receive payments or benefits in connection with a change in control that exceeds certain limits, and that we or our successor could lose a deduction on the amounts subject to the additional tax. Section 409A also imposes additional significant taxes on the individual in the event that an executive officer, director or service provider of certain types receives “deferred compensation” that does not meet the requirements of Section 409A.
Summary Compensation Table
Summary Compensation Table The following table provides information concerning the compensation paid to our NEOs, who consist of our Chief Executive Officer and President, David H. Wang, our Chief Financial Officer, Treasurer and Secretary, Mark McKechnie, and our three next most highly compensated executive officers during 2023 who were serving as executive officers at the end of 2023, Jian Wang, Lisa Feng and Fuping Chen.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(1) | Options Awards ($)(1)(2) | All Other Compensation ($)(1)(3) | Total ($) | | David H. Wang Chief Executive Officer and President | 2023 | $256,212 | $205,755 | $23,067,744 | $4,264 | $23,533,975 | | | 2022 | 233,918 | 167,294 | — | 3,770 | 404,982 | | | 2021 | 183,105 | 212,188 | — | 3,583 | 398,876 | | Mark McKechnie Chief Financial Officer, Treasurer and Secretary | 2023 | 273,675 | 37,500 | 3,113,850 | — | 3,425,025 | | | 2022 | 267,000 | 100,000 | 1,740,752 | — | 2,107,752 | | | 2021 | 242,703 | 50,000 | — | — | 292,703 | | Jian Wang Chief Executive Officer and President, ACM Research (Shanghai), Inc. | 2023 | 203,317 | 170,280 | 8,822,265 | 3,674 | 9,199,536 | | | 2022 | 180,967 | 62,454 | 903,915 | 3,770 | 1,151,106 | | | 2021 | 120,094 | 108,500 | — | 3,583 | 232,177 | | Lisa Feng Chief Financial Officer ACM Research (Shanghai), Inc. | 2023 | 196,532 | 93,654 | 3,978,705 | 4,264 | 4,273,155 | | | 2022 | 174,755 | 61,562 | 361,556 | 4,288 | 602,161 | | | 2021 | 157,123 | 64,170 | — | 4,159 | 225,452 | | Fuping Chen Vice President, Sales—China ACM Research (Shanghai), Inc. | 2023 | 157,845 | 170,280 | 6,830,141 | — | 7,153,266 | | | 2022 | 135,282 | 98,142 | 361,556 | 205 | 595,185 | | | 2021 | $108,842 | $103,850 | $— | $214 | $212,906 |
Summary Compensation Table
| (1) Compensation amounts paid in RMB have been converted, for purposes of the table, to U.S. dollars at the average RMB per U.S. dollar exchange rate for the applicable years. |
Summary Compensation Table
| (2) Amounts shown represent the aggregate grant date fair value of option awards granted in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation excluding estimated forfeitures. The estimated fair value of option awards is calculated based on a Black-Scholes valuation model on the grant date. Amounts include option awards exercisable for Class A common stock and common stock of ACM Shanghai, as applicable. See the “Grants of Plan-Based Awards” table below for additional details. These amounts do not necessarily correspond to the actual amounts that may be earned by the NEOs. The amount included for grants associated with ACM Shanghai shares were approximately $11.9 million for David H. Wang, $8.1 million for Jian Wang, $2.9 million for Lisa Feng, and $6.8 million for Fuping Chen. For assumptions for both ACM Research and ACM Shanghai options made in valuing these awards, see note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.Option awards subject to performance-based vesting conditions vest based on a single estimated payout, and do not provide for a payout based on a highest level of performance. |
Summary Compensation Table
| (3) The amounts shown include (a) health insurance premiums with respect to 2021, 2022 and 2023, and (b) housing subsidies with respect to 2021. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth each grant of equity award made to the NEOs during the year ended December 31, 2023. The equity awards were granted under the 2016 Omnibus Incentive Plan, and the ACM Shanghai 2023 Subsidiary Stock Option Plan.
Grants of Plan-Based Awards
| Name | Grant Date | Approval Date | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) (3) | Grant Date Closing Stock Price (4) | Grant Date Fair Value of Stock Option Awards(5) | | David H. Wang(1)(2) | 8/3/2023 | 7/27/2023 | 1,080,000 | $13.89 | $13.89 | $11,209,860 | | | 8/3/2023 | | 1,250,000 | 7.06 | 14.87 | 11,857,844 | | Mark McKechnie(1) | 8/10/2023 | 7/27/2023 | 300,000 | 13.89 | 13.89 | 3,113,850 | | Jian Wang(2) | 8/3/2023 | | 930,000 | 7.06 | 14.87 | 8,822,265 | | Lisa Feng (1)(2) | 8/10/2023 | 7/27/2023 | 100,000 | 13.89 | 13.89 | 1,037,950 | | | 8/3/2023 | | 310,000 | 7.06 | 14.87 | 2,940,755 | | Fuping Chen(2) | 8/3/2023 | 7/27/2023 | 720,000 | $7.06 | $14.87 | $6,830,141 |
Grants of Plan-Based Awards
| (1) Represents the number of shares subject to the option awards for Class A common stock. The option awards generally vest over 4 years, with 25% vesting on the first anniversary of the grant date followed by equal monthly installments thereafter, generally subject to continued service to us. |
Grants of Plan-Based Awards
| (2) Represents the number of shares subject to the option awards for ACM Shanghai stock. The option awards generally vest over 4 years, with 25% vesting on each of the four anniversaries of the grant date. |
Grants of Plan-Based Awards
| (3) The exercise price of each option of shares in ACM Research equals the grant date closing stock price, as reported on the NASDAQ stock exchange. |
Grants of Plan-Based Awards
| (4) The exercise price of each option of shares in ACM Shanghai reflects the exercise price of $7.06 (RMB 49.78) as set at the time of the grant, converted to U.S. dollars at the RMB per U.S. dollar exchange rate on December 29,2023, and represents a discount to the grant date closing stock price of $14.87 (RMB 105.27), as reported on Shanghai Stock Exchange. |
Grants of Plan-Based Awards
| (5) This column represents the full grant date fair value of stock options under ASC 718 granted to each of the NEOs in the fiscal year ended December 31, 2023. Generally, the full grant date fair market value is the amount that we will expense in our financial statements over the award’s vesting period. Fair market value was calculated using the Black-Scholes value on the grant date. See the information appearing in Note 2 to our consolidated financial statements included as part of our Annual Report on Form 10-K for the year ended December 31, 2023 for certain assumptions made in the valuation of these awards for Class A common stock and ACM Shanghai stock. Fair value amounts for options granted in RMB have been converted, for purposes of the table, to U.S. dollars at the average RMB per U.S. dollar exchange rate for the full year 2023. |
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023 The following table sets forth information regarding each unexercised option held by each of our NEOs as of December 31, 2023.
Outstanding Equity Awards at December 31, 2023
| Name | Option Awards | | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price($) | Option Expiration Date | | David H. Wang(1)(3) | 840,000 | — | — | 0.50 | 4/30/2025 | | (1)(3) | 1,000,002 | — | — | 1.00 | 12/27/2026 | | (1)(3) | 150,000 | — | | 5.60 | 4/22/2029 | | (1)(4) | 545,397 | — | 1,090,800 | 7.36 | 3/19/2030 | | (1)(5) | — | 1,080,000 | | 13.89 | 8/9/2033 | | (2)(6) | — | — | 269,231 | 1.89 | 12/31/2024 | | (2)(7) | — | 1,250,000 | | 7.06 | 8/2/2028 | | Mark McKechnie(1)(3) | 14,016 | — | — | 4.62 | 07/31/2028 | | (1)(3) | 67,500 | — | — | 5.60 | 04/22/2029 | | (1)(3) | 18,750 | — | — | 4.55 | 11/03/2029 | | (1)(3)(8) | 22,500 | — | — | 25.45 | 03/03/2032 | | (1)(9) | 33,333 | 66,667 | — | 19.49 | 08/11/2032 | | (1)(5) | — | 300,000 | | 13.89 | 08/09/2033 | | Jian Wang(1)(3) | 120,000 | — | — | 4.62 | 7/31/2028 | | (1)(3) | 90,000 | — | — | 5.60 | 4/22/2029 | | (1)(3)(8) | 15,000 | — | — | 25.45 | 3/3/2032 | | (2)(6) | — | — | 149,231 | 1.89 | 12/31/2024 | | (2)(7) | — | 930,000 | | 7.06 | 8/2/2028 | | Lisa Feng(1)(3) | 67,500 | — | — | 5.60 | 04/22/2029 | | (1)(3) | 30,000 | — | — | 4.55 | 11/03/2029 | | (1)(10) | 27,498 | 2,502 | — | 12.75 | 04/27/2030 | | (1)(3)(8) | 22,500 | — | — | 25.45 | 03/03/2032 | | (1)(5) | — | 100,000 | | 13.89 | 08/09/2033 | | (2)(6) | — | | 130,000 | 1.89 | 12/31/2024 | | (2)(7) | — | 310,000 | | 7.06 | 08/02/2028 | | Fuping Chen(1)(3) | 141,165 | — | — | 1.77 | 1/24/2028 | | (1)(3) | 30,000 | — | — | 5.33 | 8/3/2029 | | (1)(11) | 30,000 | — | 30,000 | 28.42 | 7/27/2030 | | (1)(3)(8) | 3,000 | — | — | 25.45 | 3/3/2032 | | (2)(6) | — | — | 130,000 | 1.89 | 12/31/2024 | | (2)(7) | — | 720,000 | — | 7.06 | 8/2/2028 |
Outstanding Equity Awards at December 31, 2023
| (1) Option covers Class A common stock. |
Outstanding Equity Awards at December 31, 2023
| (2) Option covers shares of ACM Shanghai, Inc. Disclosure assumes threshold achievement. One-half of the option vests on January 1, 2023, generally subject to continued service and key financial metrics. The remaining half of the option vests on January 1, 2024, generally subject to continued service and key financial metrics. In each case, vesting is also contingent on the applicable NEO’s performance rating for the year prior to the applicable time-based vesting date, such that 100% of the option that would otherwise vest pursuant to the foregoing two sentences will vest if such performance rating is “excellent” or “good,” 80% if such performance rating is “medium,” 60% if such performance rating is “pass,” and 0% if such performance rating is below “pass.” All such options accelerate vesting upon a defined change in control of ACM. |
Outstanding Equity Awards at December 31, 2023
| (3) Option is fully vested. |
Outstanding Equity Awards at December 31, 2023
| (4) Option was granted on March 20, 2020. An initial 545,397 shares vested and became exercisable on August 5, 2020, which was the first trading day as of which the Issuer’s market capitalization equaled or exceeded $1,553,383,586. The remaining shares will vest and become exercise in two equal installments upon the first trading days, if any, on which the Issuer’s market capitalization equals or exceeds $2,553,383,586 and $3,553,383,586, respectively. |
Outstanding Equity Awards at December 31, 2023
[Footnotes continued on next page]
Outstanding Equity Awards at December 31, 2023
| (5) Option was granted on August 10,2023 One quarter of the option shall vest and become exercisable on the first anniversary of the grant date, with the remaining three-quarters vesting and becoming exercisable in equal monthly installments over the following 36 months, subject to continued service through each vesting date. Option accelerates vesting upon a defined change in control of ACM. |
Outstanding Equity Awards at December 31, 2023
| (6) Option was granted on January 1, 2020. Performance-based option award pursuant to which one-half of the shares vested and becomes exercisable on January 1, 2023, the third anniversary of the grant date. The second half of the shares vests and becomes exercisable on January 1, 2024, the fourth anniversary of the grant date, if ACM Shanghai’s operating income is not less than RMB1.2 billion for the year ending December 31, 2023. |
Outstanding Equity Awards at December 31, 2023
| (7) Option was granted on August 3,2023 One quarter of the option shall vest and become exercisable on the each of the first four anniversaries of the grant date, subject to continued service through each vesting date. Option accelerates vesting upon a defined change in control of ACM Research (Shanghai), Inc. |
Outstanding Equity Awards at December 31, 2023
| (8) Performance-based option was granted on March 4, 2022, and subject to vesting contingent on the achievement of performance goals for the performance period ending December 31, 2023, as determined by the compensation committee. See Compensation Discussion and Analysis above for additional details regarding these awards. |
Outstanding Equity Awards at December 31, 2023
| (9) Option was granted on August 12,2022. One quarter of the option shall vest and become exercisable on the first anniversary of the grant date, with the remaining three-quarters vesting and becoming exercisable in equal monthly installments over the following 36 months, subject to continued service through each vesting date. Option accelerates vesting upon a defined change in control of ACM. |
Outstanding Equity Awards at December 31, 2023
| (10) Option was granted on April 28, 2020. One quarter of the option shall vest and become exercisable on the first anniversary of the grant date, with the remaining three-quarters vesting and becoming exercisable in equal monthly installments over the following 36 months, subject to continued service through each vesting date. Option accelerates vesting upon a defined change in control of ACM. |
Outstanding Equity Awards at December 31, 2023
| (11) Option was granted on July 28, 2020. Performance-based option award pursuant to which one-half of the shares subject to the award vested and became exercisable upon our receipt of our first demo tool order from a specified semiconductor company and the other half vests and becomes exercisable upon the qualification of our first demo tool for such semiconductor company. |
Outstanding Equity Awards at December 31, 2023
For information regarding the vesting acceleration provisions applicable to the options held by our NEOs, please see “Compensation Discussion and Analysis—Potential Change in Control Benefits” above.
2023 Equity Award Exercises and Stock Vested
2023 Equity Award Exercises and Stock Vested The following table provides information regarding the exercise by the NEOs of vested options during the year ended December 31, 2023. All options were exercised for Class A common stock.
2023 Equity Award Exercises and Stock Vested
| | Option Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | | David Wang | 360,000 | $6,238,800 | | Mark McKechnie | 41,250 | 591,000 | | Lisa Feng | 52,500 | 400,950 | | Fuping Chen | 105,000 | $1,605,997 |
2023 Equity Award Exercises and Stock Vested
| (1) The value realized on vesting is calculated by multiplying the number of shares of stock by the market value of the underlying shares on each exercise date, minus the aggregate exercise price. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control In addition to PRC statutorily required cash severance, our option awards granted under our 2016 Plan to employees, including NEOs, provide for acceleration upon a change in control, excluding the performance-based stock option granted to David Wang on March 20, 2020. Except for those option arrangements, none of our NEOs is party to a currently effective contract or other arrangement that provides for the acceleration or payment of any benefits in the event of a change in control of our company or the termination of the NEO’s employment, whether or not the termination occurs within a specified time period after the occurrence of a change in control. NEOs based in the PRC, who include all NEOs other than U.S.-based Mark McKechnie, may be entitled to statutory severance as required by applicable law, as disclosed in the table below. The amounts below assume a triggering event occurred on December 31, 2023. For purposes of the 2016 Plan, “change in control” generally means the occurrence of any of the following:
Potential Payments Upon Termination or Change in Control
| ○ | Any person becomes the owner of securities in the Company representing more than fifty percent of the combined voting power of the Company, other than as a result of a merger, consolidation or similar transaction; |
Potential Payments Upon Termination or Change in Control
| ○ | Consummation of a merger, consolidation or similar transaction of the Company and after such transaction the stockholders of the Company no longer own 50% of the combined outstanding voting power of the surviving entity or the parent of the surviving entity, in substantially the same proportions as their ownership prior to such transaction; |
Potential Payments Upon Termination or Change in Control
| ○ | A sale, lease, exclusive license or other disposition of all or substantially of the assets of the Company and the subsidiary; and |
Potential Payments Upon Termination or Change in Control
| ○ | The incumbent board ceases to constitute, for any reason, at least a majority of the members of the board. |
Potential Payments Upon Termination or Change in Control
| Name | Vesting upon Change in Control($) | | David H. Wang | $6,102,000 | | Mark McKechnie | 1,698,333 | | Jian Wang | 11,606,400 | | Lisa Feng | 581,989 | | Fuping Chen | $3,868,800 |
CEO Pay Ratio
CEO Pay Ratio As required by applicable SEC rules, we are providing the following information about the relationship of the annual total compensation of our median compensated employee and the annual total compensation of David Wang, our chief executive officer as of December 31, 2023, or our CEO. For 2023, our last completed fiscal year:
CEO Pay Ratio
| • | The annual total compensation of our median compensated employee (other than our CEO) in 2023 was $28,881. |
CEO Pay Ratio
| • | For our CEO’s annual total compensation, we used the amount reported in the “Total” column of the table included under “—Summary Compensation Table” above. The annual total compensation of our CEO, for the purposes of this disclosure, was $23,533,975. |
CEO Pay Ratio
Based on this information, for 2023 the ratio of the annual total compensation of our CEO to the annual total compensation of our median compensated employee was 815 to 1. We took the following steps to identify, and to determine the annual total compensation of, our median compensated employeefor 2023.
CEO Pay Ratio
| 1. | We determined that, as of December 31, 2023, our employee population consisted of 1,579 individuals. This population consisted of our full-time, part-time and temporary employees employed with us as of the determination date. |
CEO Pay Ratio
| 2. | To identify the “median employee” from our employee population, we aggregated for each applicable employee, other than our CEO, (a) annual base salary (or hourly rate multiplied by estimated work schedule, for hourly employees), (b) the bonus amount earned for 2022, which was paid in 2023, and (c) the grant date fair value of equity awards granted in 2023. Once aggregated, we ranked this compensation measure for our employees from lowest to highest and selected the median employee. Compensation amounts paid in RMB have been converted, for purposes of this pay ratio disclosure, to U.S. dollars at the average RMB per U.S. dollar exchange rate for the applicable years. |
CEO Pay Ratio
| 3. | For the annual total compensation of our median employee, we identified and calculated the elements of that employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K of the SEC, resulting in annual total compensation of $28,881. |
CEO Pay Ratio
The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions reflecting their employee populations and compensation practices. The pay ratios reported by other companies may not be comparable to the pay ratio reported above, as those companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing certain information, including information about the relationship between executive compensation actually paid to certain individuals by the Company and certain financial performance of the Company. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Compensation Discussion and Analysis section of this Proxy Statement.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO1 | Compensation Actually Paid to PEO2 | Average Summary Compensation Table Total for Non-PEO NEOs3 | Average Compensation Actually Paid to Non-PEO NEOs4 | Value of Initial Fixed $100 Investment Based On: | | Net Income (millions)7 | Revenue (millions)8 | | | | | | | Total Stockholder Return5 | Peer Group Total Stockholder Return6 | | | | 2023 | $23,533,975 | $39,640,249 | $6,013,995 | $6,772,361 | 317.8 | 153.6 | $97 | $558 | | 2022 | 404,982 | (20,877,170) | 1,114,059 | (1,948,838) | 125.4 | 122.00 | 51 | 389 | | 2021 | 398,876 | 10,772,637 | 240,810 | 4,119,010 | 462.2 | 151.2 | 43 | 260 | | 2020 | $5,369,089 | $45,103,619 | $501,343 | $3,631,284 | 440.4 | 120.3 | $22 | $157 |
Pay Versus Performance
| 1 | This column represents the amount of total compensation reported for Mr. Wang (our Chief Executive Officer and President) for each corresponding year in the “Total” column of the Summary Compensation Table (“total compensation”). Please refer to the Summary Compensation Table in this Proxy Statement. |
Pay Versus Performance
| 2 | This column represents the amount of “compensation actually paid” to Mr. Wang, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Wang during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Wang’s total compensation for each year to determine the “compensation actually paid”: |
Pay Versus Performance
| Year | Reported Summary Compensation Table Total for PEO(a) | Reported Summary Compensation Table Value of PEO Equity Awards(b) | Adjusted Value of Equity Awards(c) | Compensation Actually Paid to PEO | | 2023 | $23,533,975 | $(23,067,744) | $39,174,018 | $39,640,249 |
Pay Versus Performance
| (a) This column represents the amount of total compensation reported for Mr. Wang for 2023 in the “Total” column of the Summary Compensation Table. Please refer to the Summary Compensation Table in this Proxy Statement. |
Pay Versus Performance
| (b) This column represents the grant date fair value of equity awards reported in the “Option Awards” column in the Summary Compensation Table for 2023. Please refer to the Summary Compensation Table in this Proxy Statement.The amount in this column is replaced with the amount reported in the Adjusted Value of Equity Awards column in order to arrive at compensation actually paid to PEO for 2023. |
Pay Versus Performance
| (c) This column represents an adjustment to the amounts in the “Option Awards” column in the Summary Compensation Table for 2023. For 2023, the adjusted amount replaces the “Option Awards” column in the Summary Compensation Table for Mr. Wang for 2023. The adjusted amount is determined by adding (or subtracting, as applicable) the following for 2023: (i) the year-end fair value of any equity awards granted in 2023 that are outstanding and unvested as of the end of 2023; (ii) the amount of change as of the end of 2023 (from the end of 2022) in the fair value of any awards granted in prior years that are outstanding and unvested as of the end of 2023; (iii) for awards that are granted and vest in 2023, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in 2023, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in the fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during 2023, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock awards in 2023 prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for 2023. |
Pay Versus Performance
The amounts added or subtracted to determine the adjusted amount for our PEO are as follows:
Pay Versus Performance
| Year | Year End Fair Value of Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards at FYE Granted in Prior Years | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation in the Summary Compensation Table for the Year | Adjusted Value of Equity Awards | | 2023 | $25,572,150.00 | $13,564,605 | $— | $37,263 | $— | $— | $39,174,018 |
Pay Versus Performance
For stock options, the fair value or change in fair value, as applicable, was determined using a Black-Scholes valuation model. The model references the closing stock price, in addition to the stock option’s strike price, expected life, volatility, expected dividend yield, and risk-free rate as of the measurement date.
Pay Versus Performance
| 3 | This column represents the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Wang) in the “Total” column of the Summary Compensation Table in each applicable year. Please refer to the Summary Compensation Table in the Company’s Proxy Statement for the applicable year. The names of each of the NEOs (excluding Mr. Wang) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, 2022, 2021 and 2020, Mark McKechnie, Jian Wang, Lisa Feng, and Fuping Chen. |
Pay Versus Performance
| 4 | This column represents the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Wang), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Wang) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Wang) for 2023 to determine the “compensation actually paid”, using the same adjustment methodology described above in Note 2(c): |
Pay Versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs(a) | Average Reported Summary Compensation Table Value of Non-PEO NEO Equity Awards(b) | Average Non-PEO NEO Adjusted Value of Equity Awards(c) | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $6,013,995 | $(5,686,240) | $6,444,606 | $6,772,361 |
Pay Versus Performance
| (a) This column represents the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Mr. Wang) in the “Total” column of the Summary Compensation Table in 2023. Please refer to the Summary Compensation Table in this Proxy Statement. |
Pay Versus Performance
| (b) This column represents the average of the total amounts reported for the NEOs as a group (excluding Mr. Wang) in the “Option Awards” column in the Summary Compensation Table in 2023. Please refer to the Summary Compensation Table in this Proxy Statement.The amount in this column is replaced with the amount reported in the Average Non-PEO NEO Adjusted Value of Equity Awards column in order to arrive at compensation actually paid for 2023. |
Pay Versus Performance
| (c) This column represents an adjustment to the average of the amounts reported for the NEOs as a group (excluding Mr. Wang) in the “Option Awards” column in the Summary Compensation Table in 2023 determined using the same methodology described above in Note 2(c). |
Pay Versus Performance
The amounts added or subtracted to determine the adjusted average amount for our non-PEO NEOs are as follows:
Pay Versus Performance
| Year | Average Year End Fair Value of Equity Awards Granted in the Year | Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards at FYE Granted in Prior Years | Average Fair Value as of Vesting Date of Equity Awards Granted in the Year and Vested in the Year | Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation in the Summary Compensation Table for the Year | Adjusted Average Value of Equity Awards | | 2023 | $5,929,406 | $433,345 | $— | $81,855 | $— | $— | $6,444,606 |
Pay Versus Performance
| 5 | Company total stockholder return (TSR) is calculated by dividing the sum of the cumulative amount of dividends for each measurement period (2020, 2020-2021, 2020-2022 and 2020-2023), assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
Pay Versus Performance
| 6 | This column represents cumulative peer group TSR computed in accordance with Note 5. The peer group used for this purpose is the following published industry index: the Russell 1000 index. |
Pay Versus Performance
| 7 | This column represents the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
Pay Versus Performance
| 8 | We determined Revenue to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023. This performance measure may not have been the most important financial performance measure for years 2022, 2021 or 2020, and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
Description of the Information Presented in the Pay versus Performance Table
Description of the Information Presented in the Pay versus Performance Table As described in greater detail in the Compensation Discussion and Analysis section of this Proxy Statement, the Company’s executive compensation program reflects a pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance (as described in greater detail in the Compensation Discussion and Analysis section of this Proxy Statement), not all of those Company measures are presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. Compensation actually paid is influenced by numerous factors, including but not limited to the timing of new grant issuances and outstanding grant vesting, share price volatility during the fiscal year, our mix of short-term and long-term metrics, and many other factors. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid and Cumulative Company TSR
Compensation Actually Paid and Cumulative Company TSR The following chart also shows the relationship between Compensation Actually Paid to our PEO, and the average of Compensation Actually Paid to our Non-PEO NEOs, versus the Company’s cumulative TSR over the four most recently completed fiscal years, in each case as computed in accordance with the requirements of Item 402(v) of Regulation S-K:
Compensation Actually Paid and Company Net Income
Compensation Actually Paid and Company Net Income The following chart shows the relationship between Compensation Actually Paid to our PEO, and the average of Compensation Actually Paid to our non-PEO NEOs, versus the Company’s net income during the most-recently completed four fiscal years, in each case as computed in accordance with the requirements of Item 402(v) of Regulation S-K:
Compensation Actually Paid and Company Revenue
Compensation Actually Paid and Company Revenue The following chart shows the relationship between Compensation Actually Paid to our PEO, and the average of Compensation Actually Paid to our non-PEO NEOs, versus the Company’s revenue during the four most-recently completed fiscal years, in each case as computed in accordance with the requirements of Item 402(v) of Regulation S-K: