DEF 14A of Bandwidth Inc.
Filed Apr 9, 2024 · FY20230001193125-24-090888
To Be Held at 9:30 a.m. Eastern Time on Thursday, May 23, 2024
| DIRECTOR COMPENSATION | 52 | | Non-Employee Director Compensation Program | 52 | | 2023 Director Compensation | 53 | | EQUITY COMPENSATION PLAN INFORMATION | 54 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 55 | | CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 57 | | Transactions with Relay | 57 | | Other Transactions | 58 | | Policies and Procedures for Related Party Transactions | 58 | | OTHER MATTERS | 59 | | Delinquent Section 16(a) Reports | 59 | | 2023 Annual Report and SEC Filings | 59 |
Nominees for Director
Nominees for Director Brian D. Bailey has served as a director since 2013. Mr. Bailey is a Co-Founder and Managing Partner of Carmichael Partners, a private investment firm based in Charlotte, North Carolina. Prior to forming Carmichael Partners, he worked in private equity at The Carlyle Group in Washington, D.C., Forstmann Little & Co. in New York and Carousel Capital in Charlotte. In addition to his private equity background, Mr. Bailey previously held investment banking positions at Bowles Hollowell Conner & Co. in Charlotte and CS First Boston in New York and served in several government positions in Washington, D.C. including Special Assistant to the President in the Office of the White House Chief of Staff and Director of Strategic Planning and Policy at the U.S. Small Business Administration. Mr. Bailey also currently serves on the board of directors of FIBA ClubCo LLC, Relay, Inc. and the TDF Foundation. He has previously served on the board of directors of a number of private, public and nonprofit organizations. Mr. Bailey holds a B.A. degree from the University of North Carolina at Chapel Hill and an M.B.A. degree from the Stanford Graduate School of Business. Mr. Bailey was selected to serve on our board of directors due to his extensive financial acumen, his experience gained from directorships at other companies and his investment banking background. Lukas M. Roush has served as a director since 2018. Mr. Roush co-founded Sovereign’s Capital, a private equity firm, in 2012 and currently serves as a Managing Partner. Prior to Sovereign’s Capital, Mr. Roush served as Vice President for Sales, Marketing, and Business Development at TransEnterix, a medical device company that developed and commercialized a minimally invasive surgical system in the United States, Europe, and Asia. Prior to joining TransEnterix, Mr. Roush served as Chief Operating Officer at Liquidia Technologies, a nanotechnology company focused on biopharmaceutical applications. Mr. Roush previously served as global marketing manager for the neurovascular stroke business at Boston Scientific. Mr. Roush also currently serves on the board of directors of Crown Financial Ministries and Brotherhood Mutual Insurance Company. Mr. Roush graduated summa cum laude from Duke University, and later earned his M.B.A. from The Fuqua School of Business. Mr. Roush was selected to serve on our board of directors due to his sales, marketing and operations leadership background at other companies, his extensive financial qualifications and his experience in private equity including directorships at other companies.
Directors Continuing in Office Until the 2025 Annual Meeting
Directors Continuing in Office Until the 2025 Annual Meeting John C. Murdock joined Bandwidth in 2008 and served as President until December 2018. Mr. Murdock previously served as Bandwidth’s General Counsel. Mr. Murdock also currently serves as a member of the board of directors of Relay, Inc., ArenaCX, Inc. and Double D, LLC (DBA Paper Water Bottle). Prior to joining Bandwidth, Mr. Murdock founded a specialized law firm with a national level complex civil litigation practice. As a Marine officer, Mr. Murdock served on active duty, including combat service in Operation Desert Shield/Storm. Mr. Murdock obtained a B.S. in Finance from Miami University of Ohio, with an NROTC scholarship and a J.D. from the University of Notre Dame Law School. Mr. Murdock was selected to serve on our board of directors due to his experience as the Company’s former President and former General Counsel, and his general experience in the communications industry. Douglas A. Suriano has served as a director of Bandwidth since 2017. Until 2019, Mr. Suriano was Senior Vice President and General Manager of Oracle Communications. Mr. Suriano joined Oracle Communications in 2013 as Vice President of Products following Oracle Communications’ acquisition of Tekelec, Inc. At Tekelec, Inc., Mr. Suriano served as Chief Technology Officer and Vice President of Engineering. Prior to Tekelec, Inc., Mr. Suriano served as the Vice President of Engineering at dynamicsoft, Inc. and Chief Information Officer for QAD, Inc. Before QAD, Inc., Mr. Suriano managed the information technology division for the United States Marine Corps. Mr. Suriano holds a B.S. degree from the U.S. Naval Academy and an M.S. in information technology from the U.S. Naval Postgraduate School. Mr. Suriano was selected to serve on our board of directors due to his leadership experience with companies in the information technology and communications industries.
Directors Continuing in Office Until the 2026 Annual Meeting
Directors Continuing in Office Until the 2026 Annual Meeting David A. Morken. Refer to “Executive Officers” in this proxy statement for Mr. Morken’s biographical information. Rebecca G. Bottorff. Refer to “Executive Officers” in this proxy statement for Ms. Bottorff’s biographical information.
Identifying and Evaluating Director Nominees
Identifying and Evaluating Director Nominees The independent members of our board of directors have the responsibility to identify suitable candidates for nomination to the board of directors (including candidates to fill any vacancies that may occur) and to assess their qualifications. Such board members may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that they deem to be appropriate in the evaluation process. Our board of directors then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and considering the overall composition and needs of our board of directors. Based on the results of the evaluation process, our board approves director nominees for election to the board of directors.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our board of directors is currently composed of six members. In accordance with our third amended and restated certificate of incorporation, our board of directors is divided into three staggered classes of directors. At the Annual Meeting, two Class I directors will be elected for a three-year term to succeed the same class whose term is then expiring. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in the control of the Company.
2023 Executive Compensation Highlights
| ● | We generally target our executive compensation levels at or above the medians of market benchmarks. We design our executive compensation program to provide competitive pay levels to attract, |
2023 Executive Compensation Highlights
| motivate, and retain talented executives. Our 2023 cash and equity compensation levels are generally competitive with the 50th percentile among our peer companies and other companies surveyed by our compensation consultant. |
2023 Executive Compensation Highlights
| ● | We link executive bonuses to corporate objectives. Our annual performance-based bonus opportunities for all of our named executive officers depend on our achievement of annual corporate objectives we establish each year and the individual executive officer’s contributions towards our achievement of these annual corporate objectives. |
2023 Executive Compensation Highlights
| ● | We emphasize long-term equity incentives. Equity awards are fundamental to our executive compensation program, and we generally believe equity-based awards align our executive officers’ interests with those of our stockholders by providing a continuing financial incentive to maximize long-term value for our stockholders, and by encouraging our executive officers to remain in our long-term employ. Equity awards comprise the primary “at-risk” portion of our named executive officer compensation package. In 2018, we discontinued the use of stock options as a form of equity award, and began solely granting restricted stock units (“RSUs”). We believe granting RSUs subject to vesting conditions based on the executive officer’s continued employment is an appropriate award structure, as it aligns the interests of our executive officers with those of shareholders while also not being reliant solely on stock price appreciation to provide value to the recipient. |
2023 Executive Compensation Highlights
| ● | Our equity awards granted to our executive officers generally have multiple-year vesting requirements, consistent with our retention objectives, although we have granted some equity awards with time-based vesting of less than one year to our directors and executive officers. We also granted fully vested RSUs in March 2024 to our executive officers as payment for bonuses earned with respect to the 2023 fiscal year under our 2023 MBO Bonus Plan (defined below). |
2023 Executive Compensation Highlights
| ● | Our compensation committee retained independent third-party compensation consultants for guidance in making compensation decisions. The compensation consultants advised the compensation committee on market practices, including identifying a peer group of companies and their compensation practices. The compensation consultants helped our compensation committee regularly assess the Company’s individual and total compensation programs against these peer companies, the general marketplace, and other industry data points. |
Objectives, Philosophy and Elements of Executive Compensation
| ● | Attracting, motivating, incentivizing and retaining employees at the executive level who contribute to our long-term success; |
Objectives, Philosophy and Elements of Executive Compensation
| ● | Effectively aligning our executives’ interests with those of our stockholders by awarding a significant portion of compensation in the form of long-term equity incentives that provide value based on the growth of sustainable long-term value for our stockholders. |
Objectives, Philosophy and Elements of Executive Compensation
| Element of Compensation | Objectives | Key Features | | Annual Base Salary (fixed) | ● Provides financial stability and security through a fixed amount of cash for performing job responsibilities. | ● We establish fixed cash compensation, which we periodically review and adjust if and when appropriate. ● We determine each executive officer’s fixed cash compensation based on a variety of factors, including the executive officer’s performance, experience, skills, position, and scope of responsibility, as well as the competitive marketplace for executive talent specific to our industry. ● We also consider our performance and the market data provided by our independent compensation consultant. | | Annual Performance Bonus (at-risk short-term incentive) | ● Motivates and rewards the achievement of our annual corporate objectives and individual contributions. | ● We establish target bonus amounts, which we periodically review and adjust if and when appropriate, unless established by an employment agreement. ● Our compensation committee determines each executive officer’s target bonus based upon a variety of factors, including the executive officer’s anticipated impact on our company and our achievement of our corporate objectives, the individual performance objectives that relate to the officer’s role and expected contribution toward reaching our corporate goals, and competitive bonus opportunities in our industry. ● We generally communicate each executive officer’s target bonus at the beginning of the year, unless established by an employment agreement. Our compensation committee determines each executive officer’s actual bonus amounts after the end of the year, based on the achievement of our annual corporate objectives and the executive’s achievement of his or her individual performance objectives. | | Long-Term Equity Incentive (at-risk long-term incentives) | ● Motivates and rewards the achievement of our long-term corporate objectives and performance. ● Aligns our executives’ interests with our stockholders’ interests in growing sustainable long-term value. ● Attracts and retains highly qualified executives and encourages their continued employment over the long term. | ● We generally review equity incentives annually for existing executives, considering our performance and the market data provided by our independent compensation consultant. ● We also generally review equity incentives as appropriate during the year for new hires, promotions, or other special circumstances. ● We believe equity incentives enhance executive retention and periodically reward significant achievement. ● We determine individual awards based on a variety of factors, including current corporate and individual performance and market data provided by our independent compensation consultant. ● Since January 2018, our equity incentives have consisted solely of RSUs. |
Objectives, Philosophy and Elements of Executive Compensation
We believe we provide competitive compensation to each of our executive officers that offers significant short- and long-term incentives for the achievement of measurable corporate objectives. We believe that our approach appropriately blends short-term and long-term incentives to maximize stockholder value. We do not have formal policies for allocating compensation among salary, annual performance bonus awards, and equity grants, among short-term and long-term compensation, or among cash and non-cash compensation. Our compensation committee establishes a total compensation program for each named executive officer that balances current, short-term, and long-term incentive compensation, and cash and non-cash compensation, which our compensation committee believes will allow our executive compensation program to appropriately support the achievement of our corporate objectives. Our compensation committee generally has structured a substantial portion of the named executive officers’ total target compensation to consist of annual performance-based bonus opportunities and long-term equity awards to align the executive officers’ incentives with our corporate objectives and our stockholders’ interest in the growth of sustainable long-term value.
Role of our Compensation Committee, Management and the Board
Role of our Compensation Committee, Management and the Board Our executive compensation program is administered and overseen by our compensation committee, in consultation with our board of directors, including with respect to the Company’s compensation policies, plans and programs, administration of Company equity plans and its responsibilities related to the compensation of the Company’s executive officers, directors, and senior management, as appropriate. For more information about the compensation committee’s oversight of the executive compensation program, see the section titled “Board of Directors and Corporate Governance—Board Meetings and Committees—Compensation Committee” beginning on page 11 of this proxy statement. Our compensation committee consists solely of independent members of our board of directors. Our compensation committee meets periodically throughout the year to manage and evaluate our executive compensation program, and generally determines, annually, the principal components of compensation (base salary, performance bonus and equity awards) for our executive officers. In particular, our compensation committee determines appropriate target levels and performance measures and the allocation between short-term and long-term compensation and between cash and equity-based awards, in order to establish an overall compensation program it believes is appropriate for each named executive officer. Our compensation committee does not delegate authority to approve executive officer compensation. Our compensation committee also may make decisions throughout the year for new hires, promotions, or other special circumstances as it determines appropriate. Our compensation committee does not maintain a formal policy regarding the timing of equity awards to our executive officers, and generally approves the grant of equity awards to executive officers at a regularly scheduled meeting or by written consent consistent with discussion at a prior regularly scheduled meeting. Our compensation committee works with and receives information and analyses from management, including members of our Finance, Legal, and People Services teams, and considers and evaluates this information to determine the structure and amount of compensation to be paid to our executive officers, including our named executive officers. Our compensation committee also works with and receives input from our Chief Executive Officer. Outside of the presence of any other named executive officers, our Chief Executive Officer evaluates and provides to the compensation committee executive officer performance assessments, recommendations and proposals regarding executive officer compensation programs, and decisions affecting base salaries, performance bonuses, equity compensation, and other compensation-related matters. Our compensation committee retains the final authority to set compensation for all named executive officers. Our Chief Executive Officer discusses his own performance and compensation with the compensation committee, but he does not participate in the committee’s deliberations. Our compensation committee meets in executive session without the Chief Executive Officer to evaluate his performance and determine his compensation. From time to time, our compensation committee may invite members of management, other employees, and outside advisors or consultants to make presentations, provide financial or other background information or advice, or otherwise participate in compensation committee meetings. Members of management, including our Chief Executive Officer, may attend portions of our compensation committee’s meetings. Our Finance, Legal, and People Services teams work closely with our Chief Executive Officer to design and develop recommended executive compensation for our named executive officers and other senior executives, to recommend changes to existing compensation programs, to recommend financial and other performance targets to be achieved under those programs, to prepare analyses of financial data, to prepare peer data comparisons and other briefing materials, and ultimately to implement the decisions of the compensation committee.
Role of Compensation Consultant
Role of Compensation Consultant The work of Radford and Meridian, as consultants to the compensation committee, included advising on the Company’s compensation practices relative to its peer group, a compensation risk assessment, review of executive officer and director compensation, the development of a new peer group to be used for 2023 executive and director compensation, and general advice to the compensation committee throughout 2023 on the market positioning of the Company’s compensation programs. Our compensation committee analyzed in 2023 whether the work of either Radford or Meridian as compensation consultants raised any conflict of interest, taking into account relevant factors in accordance with SEC guidelines. Based on its analysis, our compensation committee determined that the work of Radford and Meridian, and the individual compensation advisors employed by them, does not create any conflict of interest pursuant to the SEC rules and NASDAQ listing standards.
Use of Competitive Market Compensation Data
Use of Competitive Market Compensation Data Our compensation committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable public companies with which we compete for top talent. To this end, our compensation committee directed Radford to develop a proposed list of our peer group companies to be used in connection with assessing the compensation practices of the publicly traded companies with whom we compete for top talent. As directed by our compensation committee, Radford developed our peer group in consultation with our management team and our compensation committee. The compensation committee, in consultation with Radford and with management, approved a group of companies that would be appropriate peers based on our industry focus and size (based on employee headcount, revenues and market capitalization), as well as companies with whom we compete for talent. The peer group used by our compensation committee in making executive pay decisions for 2023 was as follows:
Use of Competitive Market Compensation Data
| 8x8 Cogent Communications Model N PROS Shutterstock Upland Software | Alarm.com Domo PagerDuty QuinStreet SolarWinds LivePerson | Appian Everbridge Paylocity RingCentral Telos Workiva | Calix Five9 Ping Identity Twilio Yext |
Use of Competitive Market Compensation Data
Two companies were removed from our peer group for 2023 due to pending acquisitions: Sailpoint Technologies and Vonage. Liveperson was added to our peer group for 2023, as our compensation committee deemed it an appropriate peer due to its favorable comparison to our industry and size. Using data compiled from the public filings of these peer companies and data from Radford’s national survey of companies similar to us, which we refer to as peer, or “benchmarking,” data, Radford completed an assessment of our executive compensation to inform our compensation committee’s determinations regarding executive compensation for 2023. Radford prepared, and the compensation committee reviewed, a range of market data reference points (generally at the 25th, 50th and 75th percentiles of the market data) with respect to base salary, performance bonuses, equity compensation (valued based both on an approximation of grant date fair value and as well as ownership percentage), total target cash compensation (base salary and the annual target performance bonus) and total direct compensation (total target cash compensation and equity compensation) with respect to each of our executive officers. The compensation committee does not have a defined percentile of market to target executive compensation levels, although our executive compensation levels generally fall at or above the medians of market ranges. Our compensation committee considers market data as only one factor when making compensation decisions. Our compensation committee considers other factors as described below under “Factors Used in Determining Executive Compensation.”
Factors Used in Determining Executive Compensation
| Ø | Alignment of named executive officer compensation with short-term and long-term Company performance; |
Factors Used in Determining Executive Compensation
| Ø | A range of market data reference points, as described above under “Use of Competitive Market Compensation Data”; and |
Factors Used in Determining Executive Compensation
| Ø | Recommendations, data and analyses from our compensation committee’s independent compensation consultant on compensation policy determinations for our executive officers. |
Annual Performance Bonus
Annual Performance Bonus Our compensation committee believes that the payment of annual incentive compensation provides motivation necessary to retain the named executive officers and reward them for short-term company performance. On January 30, 2023, our compensation committee approved the adoption of our 2023 “Management by Objective” Bonus Plan (the “2023 MBO Bonus Plan”) for our executive officers, including the named executive officers. The 2023 MBO Bonus Plan encourages our named executive officers to contribute to the profitability, growth and increased value of the Company. Amounts payable under our 2023 MBO Bonus Plan were determined as follows:
Annual Performance Bonus
| ● | Each executive officer has a target incentive compensation amount (the “Individual Target Bonus”). |
Annual Performance Bonus
| ● | In January 2023, our compensation committee established Adjusted EBITDA, Non-GAAP Gross Margin and Revenue as the corporate performance objectives (collectively, the “Corporate Objectives”) under the 2023 MBO Bonus Plan, and also set target performance levels for and the respective weighting of each Corporate Objective. Each executive officer’s individual objectives for 2023 were generally based on the executive officer’s role and its relationship to and areas of potential impact on our strategic business imperatives, such as achieving Company financial objectives, improving efficiencies, increasing customer opportunities and satisfaction, developing and managing a talented workforce, and managing compliance. |
Annual Performance Bonus
| ● | Following the conclusion of the 2023 calendar year, our compensation committee: |
Annual Performance Bonus
| o | assessed our financial results for 2023, and determined the degree of achievement of each Corporate Objective. Based on the respective weighting of each Corporate Objective, our compensation committee determined an overall corporate achievement percentage for the 2023 MBO Bonus Plan (the “Corporate Achievement Percentage”); and |
Annual Performance Bonus
| o | determined each executive officer’s achievement of the executive officer’s individual objectives, expressed as a percentage of the applicable performance goal (the “Individual Achievement Percentage”). Our Chief Executive Officer provided to our compensation committee performance assessments for each executive officer (other than himself) and his recommendations for each executive officer’s Individual Achievement Percentage. |
Annual Performance Bonus
| ● | Each executive officer’s individual bonus under the 2023 MBO Bonus Plan was calculated as follows: |
Annual Performance Bonus
| o | The executive officer’s Individual Target Bonus, multiplied by |
Annual Performance Bonus
| o | The Corporate Achievement Percentage, multiplied by |
Annual Performance Bonus
| o | The executive officer’s Individual Achievement Percentage. |
Annual Performance Bonus
The Individual Target Bonus under the 2023 MBO Bonus Plan for each named executive officer was as follows:
Annual Performance Bonus
| Executive | Target Bonus ($) | | David A. Morken | $516,476 | | Daryl E. Raiford | $328,313 | | Anthony F. Bartolo | $315,000 | | R. Brandon Asbill | $185,753 | | Rebecca G. Bottorff | $183,627 |
Annual Performance Bonus
Following the conclusion of the 2023 calendar year, our compensation committee determined that the Corporate Achievement Percentage for 2023 was 87.7%. Our compensation committee then determined the Individual Achievement Percentage for each of Messrs. Morken, Raiford, Bartolo and Asbill, and Ms. Bottorff. The Corporate Achievement Percentage and Individual Achievement Percentage yielded bonuses under the 2023 MBO Bonus Plan for our named executive officers as follows:
Annual Performance Bonus
| Executive | 2023 MBO Bonus Earned ($) | | David A. Morken | 418,524 | | Daryl E. Raiford | 296,568 | | Anthony F. Bartolo | 255,260 | | R. Brandon Asbill | 162,905 | | Rebecca G. Bottorff | 169,093 |
Annual Performance Bonus
Bonuses to our named executive officers for amounts earned with respect to the 2023 fiscal year under our 2023 MBO Bonus Plan were paid in the form of fully vested shares of common stock which were issued to the named executive officers on March 1, 2024. These shares had a grant date value equal to 110% of the value of the 2023 MBO Bonuses earned by our named executive officers, and these amounts are included in the “Stock Awards” column in the 2023 Summary Compensation Table in this proxy statement.
Equity Awards
Equity Awards Prior to our November 2017 initial public offering, we granted equity awards in the form of stock options. We utilized stock options because they provided value only if our equity value increased, and the stock options only vested if the executive officer continued in our employment. Beginning in 2018, we determined that it was advisable to utilize RSUs to align with peer company practices. In addition to aligning with market practice, we believe the use of RSUs improves the balance and risk profile of our compensation program as this form of award does not rely solely on stock price appreciation to provide value to the recipient. These awards are generally subject to vesting dependent on the executive officer’s continued employment. During 2023, our compensation committee did not have a formal policy for determining the value or type of equity-based awards to grant to our named executive officers. Rather, equity grants to our named executive officers were considered, evaluated and approved by our compensation committee as a component of each named executive officer’s total compensation, taking into account the compensation benchmarking conducted by our compensation consultant, the individual officer’s responsibilities and performance, and the recommendations of the Chief Executive Officer (except as to his own award of equity-based compensation). In November 2023, our compensation committee approved customary RSU grants for the named executive officers. These RSU’s vest over 3 years, with 1/3 vesting on the first anniversary of the date of grant, and the remainder vesting in equal quarterly installments over the following 2 years. In May 2023, we also granted our Chief Financial Officer, Daryl Raiford, an additional award of 127,226 RSUs having an aggregate value as of the grant date of $1,500,000. In August 2023, we granted our Chief People Officer, Rebecca Bottorff, 17,844 RSUs having an aggregate value as of the grant date of $250,000, in recognition of Ms. Bottorff’s leadership over several years in the planning, design and development of, and our relocation to, our new global headquarters campus in Raleigh, North Carolina. The following table summarizes the equity grants made to our named executive officers during the 2023 fiscal year:
Equity Awards
| Executive | Total RSUs Granted in 2023 (# of RSUs) | | David A. Morken | 92,725 | | Daryl E. Raiford | 195,993 | | Anthony F. Bartolo | 65,978 | | R. Brandon Asbill | 50,023 | | Rebecca G. Bottorff | 67,295 |
Equity Awards
Refer to the 2023 Grants of Plan-Based Awards table below for additional information, including vesting schedules, regarding the equity awards issued to our named executive officers in 2023.
Employment Agreements with Named Executive Officers
Employment Agreements with Named Executive Officers
David A. Morken
David A. Morken We entered into an employment agreement with David A. Morken as of January 1, 2015, and amendments thereto on March 9, 2017 and February 26, 2024 (collectively, as amended, the “Morken Agreement”). The Morken Agreement automatically renewed on January 1, 2024, and will automatically renew for additional one-year periods unless either Mr. Morken or we give at least 60 days’ notice of non-renewal to the other party. The Morken Agreement entitles Mr. Morken to receive a base salary and the opportunity to earn an annual performance-based bonus, with a target of 100% of base salary, subject to the achievement of individual and company performance goals to be mutually agreed by the compensation committee of the board of directors and Mr. Morken at the beginning of each calendar year. Under the terms of the Morken Agreement prior to its amendment on February 26, 2024 (the “Prior Severance Terms”), in the event Mr. Morken’s employment was terminated (i) by us other than for Cause, (ii) by Mr. Morken for Good Reason, or (iii) by Mr. Morken for any reason within 12 months following a change of control of the Company that is not approved by at least a majority of our board of directors (an “Unapproved Change in Control”), then, subject to his execution of a general release of claims in our favor, Mr. Morken was entitled to receive 150% of his then-current base salary plus 150% of his target bonus for the year of termination, payable over an 18 month period following the termination. If Mr. Morken was terminated by us other than for Cause, he was also entitled to receive company-paid basic medical insurance premiums for 18 months following his termination and a lump sum equal to 18 months of premiums for the term life insurance coverage then in effect. Following the amendment of the Morken Agreement on February 26, 2024 and in lieu of the severance benefits described above, if Mr. Morken’s employment is terminated by the Company other than for Cause (as defined in the Morken Agreement) or if Mr. Morken resigns for Good Reason (as defined in the Morken Agreement) (either, a “Morken Qualifying Termination”), then, subject to his execution of a general release of claims in our favor, Mr. Morken will receive (i) severance payments equal to 150% (or, if the Morken Qualifying Termination occurs within 12 months following a change in control of the Company or Mr. Morken resigns for any reason within 12 months following an Unapproved Change in Control, 300%) of his base salary, plus (ii) 150% (or, if the Morken Qualifying Termination occurs within 12 months following a change in control of the Company or Mr. Morken resigns for any reason within 12 months following an Unapproved Change in Control, 300%) of his target annual cash incentive bonus, payable over an 18 month period following the termination (or a 36 month period if the termination occurs within 12 months following a change in control of the Company). Mr. Morken will also be entitled to receive a healthcare stipend for 18 months (or 36 months if the Morken Qualifying Termination occurs within twelve months following a change in control or Mr. Morken resigns for any reason within 12 months following an Unapproved Change in Control), grossed up for taxes, in an amount sufficient to facilitate his purchase of healthcare coverage and a lump sum amount equal to 18 months (or 36 months if the Morken Qualifying Termination occurs within twelve months following a change in control or Mr. Morken resigns for any reason within 12 months following an Unapproved Change in Control) of premiums for the term life insurance coverage then in effect. The Morken Agreement provides that any then outstanding and unvested stock options or shares of restricted stock will immediately vest, and the options will be exercisable for the remainder of their full original term, upon the earliest of (i) Mr. Morken’s death during the term of the Morken Agreement, (ii) a change in control of the Company, or (iii) a Morken Qualifying Termination. Mr. Morken has agreed to refrain from disclosing our confidential information during or at any time following his employment with us and from competing with us or soliciting our employees or customers during his employment and for 12 months following termination of his employment. If payments to Mr. Morken from us would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, and would be subject to the excise tax imposed by Section 4999 of the Code, then such payments would be reduced to the extent necessary to avoid the payment of any excess parachute payments and to avoid Mr. Morken being subject to the excise tax imposed by Section 4999 of the Code. Mr. Morken has also entered into an Indemnification and Advancement Agreement with the Company.
Daryl E. Raiford
Daryl E. Raiford We entered into an employment agreement with Daryl E. Raiford on July 6, 2021, and an amendment to the employment agreement with Mr. Raiford on March 25, 2022 (collectively, as amended, the “Raiford Agreement”). The Raiford Agreement automatically renewed on December 31, 2023 and will automatically renew for additional one-year periods unless either Mr. Raiford or we give at least 60 days’ notice of non-renewal to the other party. The Raiford Agreement entitles Mr. Raiford to receive a base salary and the opportunity to earn an annual performance-based bonus with a target of 75% of base salary, subject to the achievement of individual and company performance goals established by the compensation committee of the board of directors upon the recommendation of our Chief Executive Officer at the beginning of each calendar year. If Mr. Raiford’s employment is terminated by the Company other than for Cause (as defined in the Raiford Agreement) or if Mr. Raiford resigns for Good Reason (as defined in the Raiford Agreement) (either, a “Raiford Qualifying Termination”), then, subject to his execution of a general release of claims in our favor, Mr. Raiford will receive (i) severance payments equal to 100% (or, if the Raiford Qualifying Termination occurs within 12 months following a change in control of the Company, 150%) of his base salary, plus (ii) 100% (or, if the Raiford Qualifying Termination occurs within 12 months following a change in control of the Company, 150%) of his target annual cash incentive bonus, payable over a 12 month period following the termination (or an 18 month period if the termination occurs within 12 months following a change in control of the Company). Mr. Raiford will also be entitled to receive a lump sum equal to twelve months (or eighteen months if the Raiford Qualifying Termination occurs within twelve months following a change in control) of premiums for basic medical insurance and the term life insurance coverage then in effect. Upon a Raiford Qualifying Termination not in connection with a change in control, any unvested RSUs or other time-based equity award held by Mr. Raiford will become vested as to the portion (if any) that is scheduled to vest within the 6 months following Mr. Raiford’s termination. Any unvested RSUs or other time-based equity awards held by Mr. Raiford will become fully vested upon his death or upon change in control of the Company. Mr. Raiford has agreed to refrain from disclosing our confidential information during or at any time following his employment with us and from competing with us or soliciting our employees or customers during his employment and for 12 months following a termination of his employment. If payments to Mr. Raiford from us would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, and would be subject to the excise tax imposed by Section 4999 of the Code, then such payments would be reduced to the extent necessary to avoid the payment of any excess parachute payments and to avoid Mr. Raiford being subject to the excise tax imposed by Section 4999 of the Code. Mr. Raiford has also entered into an Indemnification and Advancement Agreement with the Company.
Rebecca G. Bottorff
Rebecca G. Bottorff We entered into an employment agreement with Rebecca G. Bottorff on December 6, 2019 (the “Bottorff Agreement”), which automatically renewed on December 31, 2023 and which will automatically renew for additional one-year periods unless either Ms. Bottorff or we give at least 60 days’ notice of non-renewal to the other party. The Bottorff Agreement entitles Ms. Bottorff to receive a base salary and the opportunity to earn an annual performance-based bonus with a target of 50% of base salary, subject to the achievement of individual and company performance goals established by the compensation committee of our board of directors upon the recommendation of our Chief Executive Officer at the beginning of each calendar year. If Ms. Bottorff’s employment is terminated by the Company other than for Cause (as defined in the Bottorff Agreement) or if Ms. Bottorff resigns for Good Reason (as defined in the Bottorff Agreement), then, subject to her execution of a general release of claims in our favor Ms. Bottorff will receive (i) severance payments equal to 100% of her base salary, plus (ii) 100% of her target annual cash incentive bonus, plus (iii) an amount sufficient to facilitate her purchase of health care coverage of her choice comparable to her then-current coverage for a period of 12 months. The severance payments will be payable over a 12 month period following Ms. Bottorff’s termination. In addition, Ms. Bottorff will also be entitled to receive a lump sum equal to twelve months of premiums for the term life insurance coverage then in effect for Ms. Bottorff. Under the Bottorff Agreement, any unvested restricted stock or stock options held by Ms. Bottorff will vest in full upon her death or upon a change in control of the Company. Ms. Bottorff has agreed to refrain from disclosing our confidential information during or at any time following her employment with us and from competing with us or soliciting our employees or customers during her employment and for 12 months following termination of her employment. If payments to Ms. Bottorff from us would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, and would be subject to the excise tax imposed by Section 4999 of the Code, then such payments would be reduced to the extent necessary to avoid the payment of any excess parachute payments and to avoid Ms. Bottorff being subject to the excise tax imposed by Section 4999 of the Code. Ms. Bottorff has also entered into an Indemnification and Advancement Agreement with the Company.
Equity Benefit Plans
Equity Benefit Plans For more information on our current equity compensation program and decisions regarding the grants of equity awards in 2023 for our named executive officers, see “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Annual Performance Bonus” and “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Equity Awards.”
Analysis of Risks Presented by our Compensation Policies and Programs
Analysis of Risks Presented by our Compensation Policies and Programs The compensation committee has reviewed our compensation policies and practices to assess whether they encourage employees to take inappropriate risks. The compensation committee has reviewed and assessed our compensation philosophy, terms and practices, including the mix of fixed and variable, short and long-term incentives and overall pay, incentive plan structures, and the checks and balances built into, and oversight of, each plan and practice. The compensation committee believes the mix and design of the elements of executive compensation do not encourage management to assume excessive risks; rather, it believes the mix of short-term compensation (in the form of salary and annual bonus, if any, which is based on a variety of performance factors) and long-term compensation (in the form of stock options or RSUs) prevents undue focus on short-term results and helps align the interests of our executive officers with the interests of our stockholders. Our insider trading policy and prohibition against hedging and pledging of our stock also protect against short-term decision making.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding compensation awarded to, earned by or paid to our named executive officers during the years ended December 31, 2023, 2022 and 2021:
2023 Summary Compensation Table
2023 Summary Compensation Table
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($) (4) | Total ($) | | David A. Morken | 2023 | 516,476 | — | 1,443,445 | — | 15,714 | 1,975,635 | | Chief Executive Officer | 2022 | 494,235 | — | 3,770,123 | 514,993 | 20,141 | 4,799,492 | | | 2021 | 470,700 | — | 2,429,906 | 464,110 | 19,968 | 3,384,684 | | Daryl E. Raiford(5) | 2023 | 437,750 | — | 2,462,983 | — | 19,378 | 2,920,111 | | Chief Financial Officer | 2022 | 425,000 | — | 2,277,598 | 335,459 | 12,200 | 3,050,257 | | | 2021 | 201,231 | — | 2,413,539 | 188,018 | 16,694 | 2,819,481 | | Anthony F. Bartolo | 2023 | 420,000 | 350,000 | 980,283 | — | 15,270 | 1,765,552 | | Chief Operating Officer | 2022 | 335,185 | 350,000 | 3,519,946 | 273,444 | 13,136 | 4,491,711 | | R. Brandon Asbill | 2023 | 371,505 | — | 709,538 | — | 16,657 | 1,097,701 | | General Counsel | 2022 | 357,216 | — | 1,434,939 | 185,179 | 13,874 | 1,991,208 | | | 2021 | 300,917 | — | 909,401 | 181,796 | 10,988 | 1,403,102 | | Rebecca G. Bottorff(6) | 2023 | 367,254 | | 946,742 | — | 16,689 | 1,330,685 | | Chief People Officer | 2022 | 351,439 | — | 1,186,696 | 186,762 | 14,778 | 1,739,675 | | | 2021 | 316,517 | — | 466,633 | 198,535 | 14,470 | 996,155 |
2023 Summary Compensation Table
| (1) The amount in this column for each of 2022 and 2023 represents a $350,000 installment of a $700,000 signing bonus paid to Mr. Bartolo. See “Compensation Discussion and Analysis – Employment Agreements with our Named Executive Officers” for further details. |
2023 Summary Compensation Table
| (2) Amounts in this column reflect the aggregate grant date fair value of the shares underlying RSUs granted in the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for stock-based compensation transactions. The assumptions we used in valuing these equity awards are described in Note 11 to our consolidated financial statements included in our Annual Report and do not necessarily correspond to the actual economic value recognized or that may be recognized by the named executive officers. The amounts in this column for the 2023 fiscal year include amounts earned by the named executive officers under our 2023 MBO Bonus Plan and paid in the form of fully vested shares of Class A common stock issued to the named executive officers on March 1, 2024 with a grant date value equal to 110% of the amount earned. See “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Annual Performance Bonus” for further information. |
2023 Summary Compensation Table
| (3) Amounts in this column for each of the 2022 and 2021 fiscal years represent amounts earned by the named executive officers under our MBO Bonus Plan with respect to such fiscal year, but paid in the subsequent fiscal year in cash. See “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Annual Performance Bonus” for further information. |
2023 Summary Compensation Table
| (4) Amounts in this column for 2023 represent premiums for supplemental disability insurance coverage paid by the Company and matching contributions to our 401(k) savings plan made by the Company on the named executive officer’s behalf. See “Compensation Discussion and Analysis – Other Features of Our Executive Compensation Program” for more information on premiums for supplemental disability insurance coverage paid by the Company and matching contributions to our 401(k) savings plan. |
2023 Summary Compensation Table
| (5) Amounts in the “Stock Awards” column for 2023 for Mr. Raiford include RSUs having an aggregate value as of the grant date of $1,500,000 awarded to Mr. Raiford in May 2023. |
2023 Summary Compensation Table
| (6) Amounts in the “Stock Awards” column for 2023 for Ms. Bottorff include RSUs having an aggregate value as of the grant date of $250,000 awarded to Ms. Bottorff in November 2023 in recognition of Ms. Bottorff’s leadership over several years in the planning, design and development of, and our relocation to, our new global headquarters campus in Raleigh, North Carolina. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table shows certain information regarding grants of plan-based awards to our named executive officers during the fiscal year ended December 31, 2023.
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023
| Name | Grant Type | Grant Date | Estimated Possible Payouts Under Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | Grant Date Fair Value of Stock and Option Awards ($) (3) | | | | | Threshold ($) | Target ($) | Maximum ($) | | | | David A. Morken | MBO Bonus Plan | 12/31/23 | 485,476 | 568,124 | 850,535 | — | — | | | RSU Grant | 11/28/23 | — | — | — | 92,725 | 983,068 | | Daryl E. Raiford | MBO Bonus Plan | 12/31/23 | 308,779 | 361,144 | 541,717 | — | — | | | RSU Grant | 5/30/23 | — | — | — | 127,226 | 1,407,692 | | | RSU Grant | 11/28/23 | — | — | — | 68,767 | 729,066 | | Anthony F. Bartolo | MBO Bonus Plan | 12/31/23 | 296,258 | 346,500 | 519,750 | — | — | | | RSU Grant | 11/28/23 | — | — | — | 65,978 | 699,497 | | R. Brandon Asbill | MBO Bonus Plan | 12/31/23 | 174,701 | 204,328 | 306,285 | — | — | | | RSU Grant | 11/28/23 | — | — | — | 50,023 | 530,342 | | Rebecca G. Bottorff | MBO Bonus Plan | 12/31/23 | 172,701 | 201,990 | 302,985 | — | — | | | RSU Grant | 8/28/23 | — | — | — | 17,844 | 236,461 | | | RSU Grant | 11/28/23 | — | — | — | 49,451 | 524,278 |
Grants of Plan-Based Awards in Fiscal 2023
| (1) The amounts set forth in these columns represent the threshold, target and maximum bonus amounts for each named executive officer for fiscal year 2023 under our 2023 MBO Bonus Plan, assuming an individual achievement score of 100%, and do not represent either additional or actual compensation earned by the named executive officers for the year ended December 31, 2023. The amount of the actual payments under the 2023 MBO Bonus Plan are included in the “Stock Awards” column of the “Summary Compensation Table” above, as such payments were made in the form of fully vested shares of Class A common stock issued to the named executive officers on March 1, 2024 with a grant date value of 110% of the amount earned by the named executive officers under the 2023 MBO Bonus Plan. For more information about our 2023 MBO Bonus Plan, see “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Annual Performance Bonus.” |
Grants of Plan-Based Awards in Fiscal 2023
| (2) Represent RSUs granted under our 2017 Plan. RSUs granted on May 30, 2023 to Mr. Raiford vest as follows: (1) one-third on May 30, 2024; and (2) remaining two-thirds quarterly thereafter on each of August 30, 2024, November 30, 2024, March 2, 2025, May 30, 2025, August 30, 2025, November 30, 2025, March 2, 2026, and May 30, 2026. RSUs granted on August 28, 2023 to Ms. Bottorff vest as follows: (1) one-third on August 28, 2024; and (2) remaining two-thirds quarterly thereafter on each of November 28, 2024, February 28, 2025, May 28, 2025, August 28, 2025, November 28, 2025, February 28, 2026, May 28, 2026, and August 28, 2026. The RSUs granted on November 28, 2023 to each of Mr. Morken, Mr. Raiford, Mr. Bartolo, Mr. Asbill, and Ms. Bottorff vest as follows: (1) one-third on November 28, 2024; and (2) remaining two-thirds quarterly thereafter on each of February 28, 2025, May 28, 2025, August 28, 2025, November 28, 2026, February 28, 2026, May 28, 2026, August 28, 2026, and November 28, 2026, in each case subject to the officer’s continued service with us through the applicable vesting date. See “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Equity Awards” for additional information about these awards. |
Grants of Plan-Based Awards in Fiscal 2023
| (3) The dollar amounts in this column represent the aggregate grant date fair value of RSUs granted to the named executive officers in fiscal year 2023. These amounts have been calculated in accordance with ASC 718. The assumptions we used in valuing these awards are described in Note 11 to our consolidated financial statements included in our Annual Report, and do not necessarily correspond to the actual economic value recognized or that may be recognized by our named executive officers. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table sets forth certain information about outstanding and unexercised stock options and unvested RSUs for each named executive officer as of December 31, 2023.
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
| | | Stock Awards | | | Executive | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock that Have Not Vested ($) (1) | | David A. Morken | 1/2/2020(2) | 2,102 | 30,416 | | | 1/2/2020(3) | 4,632 | 67,025 | | | 11/2/2020(4) | 317 | 4,587 | | | 1/2/2021(5) | 2,042 | 29,548 | | | 1/2/2021(6) | 5,071 | 73,377 | | | 1/3/2022(7) | 8,751 | 126,627 | | | 1/3/2022(8) | 16,459 | 238,162 | | | 11/28/2022(9) | 33,889 | 490,374 | | | 11/28/2023(10) | 92,725 | 1,341,731 | | | 12/31/2023(16) | 22,251 | 321,972 | | Daryl E. Raiford | 7/21/2021(11) | 9,380 | 135,729 | | | 1/3/2022(7) | 6,584 | 95,270 | | | 1/3/2022(8) | 6,538 | 94,605 | | | 11/28/2022(9) | 25,133 | 363,675 | | | 5/30/2023(12) | 127,226 | 1,840,960 | | | 11/28/2023(10) | 68,767 | 995,058 | | | 12/31/2023(16) | 15,757 | 228,004 | | Anthony F. Bartolo | 3/21/2022(13) | 78,288 | 1,132,827 | | | 11/28/2022(9) | 24,114 | 348,930 | | | 11/28/2023(10) | 65,978 | 954,702 | | | 12/31/2023(16) | 13,571 | 196,372 | | R. Brandon Asbill | 1/18/2021(14) | 2,905 | 42,035 | | | 1/3/2022(7) | 4,744 | 68,646 | | | 1/3/2022(8) | 2,463 | 35,640 | | | 11/28/2022(9) | 18,283 | 264,555 | | | 11/28/2023(10) | 50,023 | 723,833 | | | 12/31/2023(16) | 8,661 | 125,325 | | Rebecca G. Bottorff | 1/2/2020(2) | 1,141 | 16,510 | | | 11/2/2020(4) | 106 | 1,534 | | | 1/2/2021(5) | 1,030 | 14,904 | | | 1/3/2022(7) | 4,667 | 67,531 | | | 11/28/2022(9) | 18,073 | 261,516 | | | 8/28/2023(15) | 17,844 | 258,203 | | | 11/28/2023(10) | 49,451 | 715,556 | | | 12/31/2023(16) | 8,990 | 130,085 |
Outstanding Equity Awards at December 31, 2023
| (1) The value of the RSUs shown in the table is calculated using a closing price of our Class A common stock as reported on the Nasdaq Global Select Market on December 29, 2023 (the last trading day of 2023), which was $14.47. |
Outstanding Equity Awards at December 31, 2023
| (2) RSUs vest as follows: (1) 12.5% quarterly on each of March 31, 2020, June 30, 2020, September 30, 2020, and December 31, 2020; and (2) approximately 16.7% annually thereafter on January 2, 2022, January 2, 2023, and January 2, 2024, in each case subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (3) RSUs vest in equal annual installments over a four-year period, with the first such installment occurring on January 2, 2021, subject to Mr. Morken’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (4) RSUs vest as follows: (1) 12.5% quarterly on each of February 2, 2021, May 2, 2021, August 2, 2021, and November 2, 2021; and (2) approximately 16.7% annually thereafter on November 2, 2023, November 2, 2024, and November 2, 2025, in each case subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (5) RSUs vest as follows: (1) 12.5% quarterly on each of March 31, 2021, June 30, 2021, September 30, 2021, and December 31, 2021; and (2) approximately 16.7% annually thereafter on January 2, 2023, January 2, 2024, and January 2, 2025, in each case subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (6) RSUs vest in equal annual installments over a four-year period, with the first such installment occurring on January 2, 2022, subject to Mr. Morken’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (7) RSUs vest as follows: (1) 12.5% quarterly on each of March 31, 2022, June 30, 2022, September 30, 2022, and December 31, 2022; and (2) approximately 16.7% annually thereafter on January 3, 2024, January 3, 2025, and January 3, 2026, in each case subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (8) RSUs vest in equal annual installments over a four-year period, with the first such installment occurring on January 3, 2023, subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (9) RSUs vest as follows: (1) one-third on November 28, 2023; and (2) remaining two-thirds quarterly thereafter on each of February 28, 2024, May 28, 2024, August 28, 2024, November 28, 2024, February 28, 2025, May 28, 2025, August 28, 2025, and November 28, 2025, in each case subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (10) RSUs vest as follows: (1) one-third on November 28, 2024; and (2) remaining two-thirds quarterly thereafter on each of February 28, 2025, May 28, 2025, August 28, 2025, November 28, 2025, February 28, 2026, May 28, 2026, August 28, 2026, and November 28, 2026, in each case subject to the officer’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (11) RSUs vest in equal annual installments over a four-year period, with the first such installment occurring on July 21, 2022, subject to Mr. Raiford’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (12) RSUs vest as follows: (1) one-third on May 30, 2024; and (2) remaining two-thirds quarterly thereafter on each of August 30, 2024, November 30, 2024, March 2, 2025, May 30, 2025, August 30, 2025, November 30, 2025, March 2, 2026, and May 30, 2026, subject to Mr. Raiford’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (13) RSUs vest in equal annual installments over a four-year period, with the first such installment occurring on March 21, 2023, subject to Mr. Bartolo’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (14) RSUs vest in equal annual installments over a four-year period, with the first such installment occurring on January 18, 2022, subject to Mr. Asbill’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (15) RSUs vest as follows: (1) one-third on August 28, 2024; and (2) remaining two-thirds quarterly thereafter on each of November 28, 2024, February 28, 2025, May 28, 2025, August 28, 2025, November 28, 2025, February 28, 2026, May 28, 2026, and August 28, 2026, subject to Ms. Bottorff’s continued service with us through the applicable vesting date. |
Outstanding Equity Awards at December 31, 2023
| (16) Reflects the number of fully-vested shares of Class A common stock granted to each named executive officer on March 1, 2024 in respect of amounts earned by such named executive officer for fiscal year 2023 under our 2023 MBO Bonus Plan. The market value set forth in this table does not correspond to the actual economic value recognized by such named executive officer upon issuance of such shares. For more information about our 2023 MBO Bonus Plan, see “Compensation Discussion and Analysis – 2023 Executive Compensation Program – Annual Performance Bonus” and the Summary Compensation Table in this proxy statement. |
Option Exercises and Stock Vested in 2023
Option Exercises and Stock Vested in 2023 The following table shows, for our named executive officers, the number of shares of our Class A common stock acquired upon the vesting of RSUs during the fiscal year ended December 31, 2023. No shares of our Class A common stock were acquired upon the exercise of stock options during the fiscal year ended December 31, 2023.
Option Exercises and Stock Vested in 2023
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | David A. Morken | 31,479 | 637,478 | | Daryl E. Raiford | 18,771 | 255,268 | | Anthony F. Bartolo | 30,227 | 542,717 | | R. Brandon Asbill | 10,620 | 150,267 | | Rebecca G. Bottorff | 13,042 | 181,685 |
Option Exercises and Stock Vested in 2023
| (1) The value realized on vesting of the RSUs is calculated by multiplying the number of shares vested by the closing price of our Class A common stock as reported on the Nasdaq Global Select Market on the applicable vesting dates. |
2023 Pension Benefits
2023 Pension Benefits None of our named executive officers participated in any defined benefit pension plans in 2023.
2023 Nonqualified Deferred Compensation
2023 Nonqualified Deferred Compensation None of our named executive officers participated in any non-qualified deferred compensation plans in 2023.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The following table provides an estimate of the value of the compensation and benefits due to each of our named executive officers assuming a termination resulting from death, a change in control, a termination not in connection with a change in control, and a termination in connection with a change in control, effective as of December 31, 2023, under our agreements with each of our named executive officers. (See “Employment Agreements with Named Executive Officers” above.) The actual amounts to be paid can only be determined at the time of such event. We determined the value of the accelerated vesting of RSUs based on a per share price of $14.47, which was the closing price of our Class A common stock on the NASDAQ Global Select Market on December 29, 2023.
Potential Payments upon Termination or Change in Control
| Named Executive Officer | Death ($) (1) | Change in Control ($) (2) | Termination Not In Connection with a Change in Control ($) (3) | Termination in Connection with a Change in Control ($) (4) | | David A. Morken: | | | | | | ● Cash Severance | — | — | 1,549,427 | 3,098,853 | | ● Benefits continuation | — | — | 65,724 | 131,447 | | ● Value of accelerated RSUs | 2,401,846 | 2,401,846 | 2,401,846 | 2,401,846 | | Daryl E. Raiford | | | | | | ● Cash Severance | — | — | 766,063 | 1,149,094 | | ● Benefits continuation | — | — | 28,540 | 42,809 | | ● Value of accelerated RSUs | 3,525,297 | 3,525,297 | 767,836 | 3,525,297 | | Anthony Bartolo | | | | | | ● Cash Severance | — | — | 735,000 | 1,102,500 | | ● Benefits continuation | — | — | 41,775 | 62,662 | | ● Value of accelerated RSUs | 2,436,459 | 2,436,459 | 464,834 | 2,436,459 | | R. Brandon Asbill | | | | | | ● Cash Severance | — | — | 557,258 | 557,258 | | ● Benefits continuation | — | — | 1,470 | 1,470 | | ● Value of accelerated RSUs | 1,134,708 | — | 121,910 | 1,134,708 | | Rebecca G. Bottorff | | | | | | ● Cash Severance | — | — | 550,881 | 550,881 | | ● Benefits continuation(5) | — | — | 28,357 | 28,357 | | ● Value of accelerated RSUs | 1,335,755 | 1,335,755 | — | 1,335,755 |
Potential Payments upon Termination or Change in Control
| (1) All RSUs vest upon death of the named executive officer pursuant to his or her employment agreement. |
Potential Payments upon Termination or Change in Control
| (2) All RSUs held by the named executive officers, other than Mr. Asbill, vest in full upon a change in control of the Company. |
Potential Payments upon Termination or Change in Control
| (3) Assumes a resignation by the named executive officer for “good reason” or a termination by the Company “without cause”, as defined in each named executive officer’s employment agreement. |
Potential Payments upon Termination or Change in Control
| (4) Assumes a resignation by the named executive officer for “good reason” or a termination by the Company “without cause” within 12 months following a change in control; provided, that with respect to Mr. Morken, his resignation may be for any reason within 12 months following a change in control not approved by a majority of the Company’s board of directors. |
Potential Payments upon Termination or Change in Control
| (5) For Ms. Bottorff, benefits continuation payments are applicable only in connection with her termination by the Company “without cause” and not for her resignation for “good reason”. |
2023 CEO Pay Ratio
2023 CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total compensation of Mr. Morken, our Chief Executive Officer, to the annual total compensation of our median employee (as described below). Below is (i) the 2023 annual total compensation of our CEO, (ii) the 2023 annual total compensation of our median employee; (iii) the ratio of the annual total compensation of our CEO to that of our median employee; and (iv) the methodology we used to calculate our CEO pay ratio:
2023 CEO Pay Ratio
| CEO Annual Total Compensation* | $1,975,635 | | Median Employee Annual Total Compensation | $117,518 | | CEO to Median Employee Pay Ratio | 17:1 |
2023 CEO Pay Ratio
| * This annual total compensation corresponds to the total compensation figure for Mr. Morken in the Summary Compensation Table. |
Methodology
| ● | We Calculated the 2023 CEO Pay Ratio. We calculated our 2023 CEO Pay Ratio by dividing (a) our CEO’s annual total compensation for 2023 by (b) our median employee’s annual total compensation for 2023. |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table The following table sets forth information concerning the compensation of our named executive officers (“
NEOs
| Year | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO ($) (1) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) (1) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($) | Adjusted EBITDA ($) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) (2) | | | | 2023 | 1,975,635 | 1,477,924 | 1,778,512 | 1,499,184 | 22.59 | 210.85 | (16,343,000) | 48,170,000 | | 2022 | 4,799,492 | 1,377,062 | 2,818,213 | 1,899,901 | 35.83 | 134.82 | 19,570,000 | 34,618,000 | | 2021 | 3,384,684 | (670,833) | 1,594,716 | 54,250 | 112.04 | 189.64 | (27,362,000) | 49,600,000 | | 2020 | 3,703,155 | 8,980,482 | 1,377,243 | 4,174,765 | 239.92 | 142.21 | (43,977,000) | 26,176,000 |
NEOs
| (1) Amounts represent compensation actually paid to our chief executive officer (“ PEO ”) and the average compensation actually paid to our remaining NEOs for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year: |
Narrative Disclosure to Pay Versus Performance Table
Narrative Disclosure to Pay Versus Performance Table
Pay Versus Performance Tabular List
Pay Versus Performance Tabular List The following performance measures represent each of the financial performance measures used by us to link compensation actually paid to our NEOs for the fiscal year ended December 31, 2023:
Pay Versus Performance Tabular List
| ● | Adjusted EBITDA. Please refer to Page 78 of our Annual Report and pages 25 of this proxy statement for a description of how we calculate Adjusted EBITDA from the GAAP financial measures set forth in our audited financial statements; |
Pay Versus Performance Tabular List
| ● | Non-GAAP gross margin. Please refer to Page 75 of our Annual Report and pages 24-25 of this proxy statement for a description of how we calculate Non-GAAP gross margin from the GAAP financial measures set forth in our audited financial statements; and |
Pay Versus Performance Tabular List
| ● | Revenue. |
Pay Versus Performance Tabular List
For additional details regarding our most important financial performance measures, please see the section titled “2023 Executive Compensation Program––Annual Performance Bonus” in our Compensation Discussion and Analysis (CD&A) elsewhere in this proxy statement.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Non-Employee Director Compensation Program
Non-Employee Director Compensation Program
2023 Director Compensation
2023 Director Compensation Our non-employee directors earned the amounts set forth in the table below for their service on our board of directors during the year ended December 31, 2023. Mr. Morken serves as our Chief Executive Officer and Ms. Bottorff serves as our Chief People Officer, in each case in addition his or her service as a director, but neither receives any additional compensation for his or her service as a director.
2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Brian D. Bailey | 67,500 | 175,000 | 242,500 | | John C. Murdock | 67,500 | 175,000 | 242,500 | | Lukas M. Roush | 77,500 | 175,000 | 252,500 | | Douglas A. Suriano | 75,000 | 175,000 | 252,500 |
2023 Director Compensation
| (1) This column reflects the aggregate grant date fair value of all RSUs granted during fiscal year 2023, computed in accordance with ASC Topic 718 as stock-based compensation transactions. The grant date fair value of each RSU is measured based on the closing price of our shares of our Class A common stock as reported on the Nasdaq Global Select Market on the date of grant. Unlike the calculations contained in our financial statements, this calculation does not give effect to any estimate of forfeitures related to service-based vesting, but assumes that the director will perform the requisite service for the award to vest in full. The assumptions we used in valuing RSUs are described in Note 11 to our consolidated financial statements included in our Annual Report. |
2023 Director Compensation
The table below shows the aggregate number of stock awards (which are in the form of RSUs) outstanding for each of our non-employee directors as of December 31, 2023:
2023 Director Compensation
| Name | Outstanding RSUs at December 31, 2023 (# RSUs) | | Brian D. Bailey | 15,709 | | John C. Murdock | 15,709 | | Lukas M. Roush | 15,709 | | Douglas A. Suriano | 15,709 |