DEF 14A of Veritone, Inc.
Filed Apr 25, 2024 · FY20230001193125-24-113880
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
BOARD OF DIRECTORS Our Board of Directors is currently fixed at six directors. On April 12, 2024, Jeffrey P. Gehl notified the Board of his intention to resign as a member of the Board effective immediately prior to the commencement of the Annual Meeting. The Board has nominated Mr. Michael Keithley to stand for election as a Class I director as a result of Mr. Gehl’s resignation. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws (“Bylaws”) provide for a staggered, or classified, Board consisting of three classes of directors, each serving a staggered three-year term and with one class being elected at each year’s annual meeting of stockholders as follows:
BOARD OF DIRECTORS
| • | the Class I directors are Mr. Richard H. Taketa and Mr. Jeffrey P. Gehl, and their terms will expire at the Annual Meeting. |
BOARD OF DIRECTORS
| • | the Class II directors are Mr. Knute P. Kurtz and Mr. Michael Zilis, and their terms will expire at the annual meeting of stockholders to be held in 2025. |
BOARD OF DIRECTORS
| • | the Class III directors are Mr. Chad Steelberg and Mr. Ryan Steelberg, and their terms will expire at the annual meeting of stockholders to be held in 2026. |
BOARD OF DIRECTORS
Upon the expiration of the term of a class of directors, directors for that class may be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires. Each director’s term is subject to the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Subject to any rights applicable to any then outstanding preferred stock, any vacancies on our Board may be filled only by the affirmative vote of a majority of the directors then in office. The Corporate Governance and Nominating Committee of the Board is responsible for reviewing and recommending to the Board from time to time the criteria for Board membership including independence, character, judgment, diversity, age, expertise and corporate experience, as well as identifying, evaluating and recommending prospective director nominees for election to the Board. The Corporate Governance and Nominating Committee will review and consider any candidates recommended by stockholders in accordance with the bylaws of the Company. In considering candidates for nomination or appointment to the Board, the Board considers such factors as whether the director candidate has relevant expertise upon which to be able to offer advice and guidance to management, has sufficient time to devote to the affairs of the Company, has demonstrated excellence in his or her field, has the ability to exercise sound business judgment and has the commitment to rigorously represent the long-term interests of the Company’s stockholders. Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting its assessment, the Board considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and the Company to maintain a balance of knowledge, experiences, background and capability. Although we do not have a formal diversity policy, we believe it is important to have an appropriate mix of diversity for the optimal functionality of the Board. In the case of incumbent directors whose terms of office are set to expire, the Board reviews such directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such directors’ independence. All of our directors bring to the Board a wealth of executive leadership experience. Below we identify and describe the key experience, qualifications, and skills our directors bring to the Board that are important in light of our businesses and structure. The directors’ experiences, qualifications, and skills that the Board considers in their nominations are included in their individual biographies.
Director Nominees
Director Nominees Based upon the recommendation of our Corporate Governance and Nominating Committee, our Board has nominated the individuals set forth below to serve as Class I directors until our annual meeting of stockholders in 2027. Mr. Taketa is currently serving on our Board. Mr. Keithley is standing for election to our Board for the first time. Mr. Keithley was initially identified as a potential director nominee by our Chief Executive Officer. Our Corporate Governance and Nominating Committee then assessed the potential candidacy of Mr. Keithley in light of the director criteria included in our Corporate Governance Guidelines. Each member of the Corporate Governance and Nominating Committee, as well as certain other directors, interviewed Mr. Keithley. Following these interviews, the Board approved the nomination of Mr. Keithley to be elected as a Class I director on our Board to serve until our annual meeting of stockholders in 2027. The following sets forth certain information about our director-nominees as of April 16, 2024:
Director Nominees
| Name | Principal Occupation | Age | Director Since | | Michael Keithley | Former Chief Information Officer, United Talent Agency | 61 | N/A | | Richard H. Taketa | President, Taketa Capital Corporation | 52 | 2019 |
Director Nominees
Mr. Keithley served as the Chief Information Officer at United Talent Agency from March 2017 until April 2024. In this capacity he was responsible for all aspects of United Talent Agency’s technology platform and advised clients and companies on emerging digital business models, distribution platforms and other technology-related issues. In addition to managing United Talent Agency’s Information Technology department, Mr. Keithley provided United Talent Agency’s clients with corporate consulting, marketing, venture funding and strategic advisory services to companies ranging from start-ups to Fortune 500 companies. Prior to his role at United Talent Agency, Mr. Keithley was the Chief Information Officer and Chief Technology Officer at Creative Artists Agency from 1991 to 2016, where he made significant contributions to the agency’s technological advancement and digital strategy. Mr. Keithley currently serves on numerous startup and venture capital advisory boards. Michael holds a B.S. in Business Information Systems from Arizona State University. We believe that Mr. Keithley is qualified to serve on our Board based on his blend of strategic vision, technological expertise, and leadership experience will make him an invaluable asset to our Board. Richard H. Taketa has served as our director since May 2019. Since September 2018, Mr. Taketa has been President of Taketa Capital Corporation, a private equity investment and consulting company. Previously, he served as President and Chief Executive Officer of York Risk Services, Inc. (“York”), a leading provider of technology-enabled, integrated insurance services to the property and casualty insurance industry, from January 2014 to September 2018, and served as Chairman of York’s board of directors from October 2014 to July 2017. Prior to becoming York’s Chief Executive Officer, Mr. Taketa served in a variety of capacities including as the President of Commercial Business, Chief Operating Officer and Chief Strategy Officer. Mr. Taketa joined York in 2006 upon its acquisition of Southern California Risk Management Associates, a regional provider of third-party administration services to insurance companies, where he had served as Chief Executive Officer since 2004. Prior to that, he was a co-founder and managing director of Eventide Capital, a small private equity firm, after working as a corporate securities lawyer with DLA, a global law firm and in various public policy roles with non-governmental organizations in Washington, D.C. Mr. Taketa has served on the board of directors of Palomar Holdings, Inc., a publicly traded provider of property catastrophe insurance, since 2019, and has also served on the boards of directors of several privately held companies and charitable organizations. He was named an Ernst & Young’s Entrepreneur of the Year in 2017 for the State of New Jersey. He has been a recurring guest lecturer at the Stanford Graduate School of Business and is a member of the California Bar Association, inactive status. Mr. Taketa holds a Bachelor of Arts degree from Colgate University and a law degree from Stanford Law School. We believe that Mr. Taketa is qualified to serve on our Board based on his extensive experience in financing, developing and managing high-growth, technology-enabled companies, as well as his experience in the insurance and healthcare industries, corporate law and governance, mergers and acquisitions, public policy, and operating in regulated markets. Unless otherwise instructed, each proxy received by us will be voted in favor of the election of the nominees named above as directors. The nominees have consented to being named in this Proxy Statement and to serve as directors if elected. If any nominee should become unable or unwilling to serve, it is the intention of the persons designated as proxies to vote instead, in their discretion, for any such other person as may be designated as a nominee by our Board.
Continuing Directors
Continuing Directors The individuals set forth below will continue to serve as directors on our Board. The following sets forth certain information about each director as of April 16, 2024:
Continuing Directors
| Name | Principal Occupation | Age | Class | Term Expires | Director Since | | Knute P. Kurtz | Independent Investor | 68 | II | 2025 | 2017 | | Michael Zilis | Chief Financial Officer, Ingram Micro, Inc. | 54 | II | 2025 | 2023 | | Chad Steelberg | Technology Executive | 52 | III | 2026 | 2014 | | Ryan Steelberg | President and Chief Executive Officer and Chairman of the Board, Veritone, Inc. | 50 | III | 2026 | 2014 |
Continuing Directors
Knute P. Kurtz has served as our director since June 2017. Until his retirement in June 2016, Mr. Kurtz was the Managing Partner of the Orange County office of PricewaterhouseCoopers LLP (“PwC”). During his ten years in that role, Mr. Kurtz was responsible for leading all important market facing activities on behalf of PwC and overseeing the delivery of assurance, financial/tax and advisory services to public and private clients in the market. He was a member of PwC’s senior leadership for the Southern California, Phoenix and Las Vegas cluster of offices and also served as the Market Leader for PwC’s Private Company Services practice in that region. Prior to his role in the Southern California market, Mr. Kurtz served in various other leadership positions with PwC over a career that spanned 38 years and six offices throughout the United States. His professional experience includes serving as the lead advisor and audit partner to public and private clients in a number of different industry sectors and companies as diverse as Fortune 500 companies to high tech start-up entities. In addition to financial/audit services, he has extensive experience in capital market transactions including initial public offerings, mergers and acquisitions and debt offerings. His client work has also included advising audit committees and senior management on matters pertaining to corporate governance, risk assessments, internal controls and strategic initiatives. Mr. Kurtz holds a Bachelor of Science from Nicholls State University. We believe that Mr. Kurtz is qualified to serve on our Board based on his extensive experience and knowledge in accounting and auditing matters involving publicly traded technology companies, which provide our Board with valuable insight in their oversight of our company in these areas. Michael Zilis has served as our director since December 2023. Mr. Zilis has served as Chief Financial Officer of Ingram Micro Inc. (“Ingram Micro”) since January 2020. He joined Ingram Micro in 2006 as Senior Vice President and Corporate Controller, heading the company’s financial planning and analysis, external and internal financial reporting, long-term strategic planning, financial due diligence and merger and acquisition work. In addition, between 2012 and 2020, Mr. Zilis held a variety of roles at Ingram Micro, including EVP and President of Asia Pacific, most recently from 2017 to 2020, and prior to that, Emerging Markets and Latin American regional operations. Prior to Ingram Micro, Mr. Zilis was Vice President and Corporate Controller for Avnet, Inc., where he was instrumental in leading the company’s cost-saving initiatives and efforts to streamline and add efficiency to ongoing processes. Mr. Zilis began his career with 10 years in the commercial audit practice of Arthur Andersen LLP. He is a licensed Certified Public Accountant (inactive) and received his Bachelor of Science degree in Finance and Accounting from Boston College. We believe that Mr. Zilis is qualified to serve on our Board based on his financial expertise and service as the chief financial officer of a large multinational technology company. Chad Steelberg is a co-founder of our company and served as Chairman of our Board from our inception in June 2014 until January 2024. He also served as our Chief Executive Officer from our inception in June 2014 through December 2022. From January 2007 to December 2012, he served as a board member of Brand Affinity Technologies, Inc., a technology and marketing services company. Prior to that, Mr. Steelberg served as the general manager of the Audio Division of Google Inc. from February 2006 to February 2007. From February 2002 to February 2007, he was the co-founder and Chief Executive Officer of dMarc Broadcasting, an advertising company that was acquired by Google Inc. in 2006. Prior to that, Mr. Steelberg was the co-founder and Chief Executive Officer of Adforce, a publicly traded centralized independent ad-serving company that was acquired by CMGi in 1999. We believe that Mr. Steelberg is qualified to serve on our Board based on his long and successful track record in identifying new market opportunities and creating disruptive technology-based companies. In addition, given his many years of services as our Chief Executive Officer, Mr. Steelberg’s intimate knowledge of the day-to-day management and operations of our company provides our Board with more in-depth understanding of our company. Ryan Steelberg is a co-founder of our company and has served as our Chief Executive Officer since January 2023. Mr. Steelberg has also served as a director since our inception in June 2014, and he was appointed as Chairman of our Board in January 2024. From March 2017 to December 2022, Mr. Steelberg served as our President. From October 2007 to June 2014, he served as the President and Chief Executive Officer of Brand Affinity Technologies, Inc. and as a member of the Board of Directors. Prior to that, Mr. Steelberg served as the Head of the Radio Division of Google Inc. from February 2006 to February 2007. From September 2002 to February 2007, he was the co-founder and President of dMarc Broadcasting, an advertising company that was acquired by Google Inc. in 2006. Mr. Steelberg holds a Bachelor of Science degree in Biology from the University of California, Los Angeles. We believe that Mr. Steelberg is qualified to serve on our Board because of his extensive experience in the business development, marketing and management of enterprises in the media and digital technology industries. In addition, Mr. Steelberg’s intimate knowledge of our operations, products and technology solutions provides our Board with an in-depth understanding of our company.
Board Diversity
Board Diversity The Board Diversity Matrix below, provides diversity statistics for our Board as of April 16, 2024. Our Board Diversity Matrix for the prior year, measured as of April 11, 2023, is available in our 2023 proxy statement filed with the SEC on April 27, 2023. As discussed above, we consider numerous factors in assessing potential new Board members, including diversity, age, skills, domain expertise and such other factors as we deem appropriate given the needs of the Board and the Company at the time. Although we do not have a formal diversity policy, we believe it is important to have an appropriate mix of diversity for the optimal functionality of the Board. Of our current five Board members, one member identifies as part of an under-represented community. Although we have not had any women on our Board since December 2022, we are committed to returning to a gender diverse mix on our Board.
Board Diversity
| Board Diversity Matrix | | | | | | | As of April 16, 2024 | | | | | Total Number of Directors | 6 | | | | | | Female | Male | Non- Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | — | 6 | — | — | | Part II: Demographic Background | | | | | | African American or Black | — | — | — | — | | Alaskan Native or Native American | — | — | — | — | | Asian | — | 1 | — | — | | Hispanic or Latinx | — | — | — | — | | Native Hawaiian or Pacific Islander | — | — | — | — | | White | — | 5 | — | — | | Two or More Races or Ethnicities | — | — | — | — | | LGBTQ+ | — | | | | | Did Not Disclose Demographic Background | — | | | |
Vote Required for Election of Directors
Vote Required for Election of Directors Directors are elected if they received a plurality of the votes cast on the election of directors at the Annual Meeting. Accordingly, the two nominees receiving the largest number of votes cast will be elected. Broker non-votes and abstentions will have no effect on the election of directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE TWO DIRECTOR NOMINEES.
2023 Employment Agreements
2023 Employment Agreements As noted above, in January 2023, as part of our CEO transition, we entered into new employment agreements with Ryan Steelberg and Michael Zemetra, which superseded and replaced the employment agreements previously entered into with such officers in 2020. These new employment agreements are intended to ensure that our executive compensation program is designed to pay for performance. Our Compensation Committee believes it is important to structure a significant portion of our named executive officers’ compensation so that it is aligned with the Company’s corporate strategies and business objectives, and it incentivizes our named executive officers to create long-term value for our stockholders without encouraging unnecessary or excessive risk taking. In line with this compensation philosophy, generally, a substantial majority of each named executive officer’s annual compensation opportunity is not fixed but consists of performance-based compensation (annual bonus opportunity and equity awards with performance-based vesting requirements) and/or compensation tied to long-term vesting requirements with a value dependent on our stock price (all equity awards). Ryan Steelberg. Pursuant to Mr. Steelberg’s 2023 employment agreement, his annual base salary was set initially at $525,000 and was voluntarily reduced by him to $1 in May 2023, and such reduction remains in effect. He is also eligible to receive discretionary annual incentives under our cash incentive program, with a target of not less than one hundred percent (100%) of his annual base salary, up to a maximum amount determined in accordance with the terms of our annual bonus plan, or such amount in excess of target as may be determined by our Compensation Committee, based on the achievement of performance goals determined by our Compensation Committee. Pursuant to his 2023 employment agreement, Mr. Steelberg was granted a time-based restricted stock unit (“RSU”) award representing the right to receive 158,025 shares of our common stock and a performance-based RSU award representing the right to receive 148,176 shares of our common stock. The number of shares for each award was determined by dividing $1,000,000 by the 90-day average closing price of our common stock prior to the date of grant. The time-based RSU award will vest in equal installments on the first three anniversaries of the effective date of Mr. Steelberg’s employment agreement, subject to his continuous service through the relevant vesting date. The performance-based RSU award did not vest because the Compensation Committee determined in April 2024 that the performance criteria for such performance-based RSUs had not been met. Mr. Steelberg is also entitled to receive: (i) purchase of a separate healthcare policy covering him and his family; (iii) reimbursement of legal fees reasonably incurred in the negotiation of his employment agreement, up to a maximum of $15,000; and (iii) other benefits generally made available to employees under our employee benefit plans. Mr. Steelberg also received a one-time cash bonus in the amount of $400,000 in connection with his promotion to Chief Executive Officer in January 2023. Our employment agreement with Mr. Steelberg is an at-will agreement and may be terminated at any time and for any reason or without reason. However, if Mr. Steelberg terminates his employment as a Good Leaver (as defined in his employment agreement), then he will be entitled to receive cash severance payments and acceleration of the vesting of certain of his equity awards, as discussed under the heading “Payments Upon Termination of Employment or Change in Control” below. Michael Zemetra. Pursuant to Mr. Zemetra’s 2023 employment agreement, his annual base salary was set initially at $400,000. He is also eligible to receive discretionary annual incentives under our cash incentive program, with a target of not less than sixty percent (60%) of his annual base salary, up to a maximum amount determined in accordance with the terms of our annual bonus plan, or such amount in excess of target as may be determined by our Compensation Committee, based on the achievement of performance goals determined by our Compensation Committee. Pursuant to his 2023 employment agreement, Mr. Zemetra was granted a time-based RSU award representing the right to receive 71,111 shares of our common stock, a second time-based RSU award representing the right to receive 28,396 shares of our common stock; and a performance-based RSU award representing the right to receive 22,226 shares of our common stock. The number of shares for each award was determined by dividing the dollar value of the award ($450,000 for the first time-based RSU and $150,000 for each of the second time-based RSU and the performance-based RSU) by the 90-day average closing price of our common stock prior to the date of grant. The time-based RSU awards will vest in equal installments on the first three anniversaries of the effective date of Mr. Zemetra’s employment agreement, subject to his continuous service through the relevant vesting date. The performance-based RSU award did not vest because the Compensation Committee determined in April 2024 that the performance criteria for such performance-based RSUs had not been met. Mr. Zemetra is also entitled to receive: (i) payment by us of 100% of the costs of healthcare benefits for Mr. Zemetra and his family; (ii) reimbursement of legal fees reasonably incurred in the negotiation of his employment agreement, up to a maximum of $5,000; and (iii) other benefits generally made available to employees under our employee benefit plans. Our employment agreement with Mr. Zemetra is an at-will agreement and may be terminated at any time and for any reason or without reason. However, if Mr. Zemetra terminates his employment as a Good Leaver (as defined in his employment agreement), then he will be entitled to receive cash severance payments and acceleration of the vesting of certain of his equity awards, as discussed under the heading “Payments Upon Termination of Employment or Change in Control” below.
Cash Incentives
Cash Incentives The Compensation Committee has established a cash incentive program for our executive officers to link a significant portion of each executive’s total compensation to the achievement of pre-established quarterly and/or annual financial performance goals. For 2023, the Compensation Committee established target and maximum levels for each financial measure, with the target level corresponding to the level for such measure reflected in our annual operating plan and the maximum level reflecting significant overachievement of the target level. Payouts are prorated on a straight-line basis in the event of achievement between the target and maximum levels for the applicable financial measure. 2023 Annual Bonus. For 2023, the target and maximum incentive amounts for Ryan Steelberg were set at 100% and 200%, respectively, of his annual base salary and the target and maximum incentive amounts for Mr. Zemetra were set at 60% and 120%, respectively, of his annual base salary, in each case pursuant to the terms of the applicable officer’s employment agreement. For the annual performance goals for 2023, the Compensation Committee selected two financial measures, which were equally weighted, and established target levels for such measures equal to the levels for such measures set forth in the annual operating plan approved by our Board for 2023, as follows: (i) reported GAAP revenue of $150.0 million and (ii) non-GAAP net loss prior to any bonus accrual of $2.2 million. The maximum achievement levels for these measures were set at up to a 200% target payout at (i) reported GAAP revenue of $165.2 million and (ii) pre-bonus non-GAAP net income of $2.8 million. For the year ended December 31, 2023, our reported GAAP revenue was $126.7 million (0% payout) and our non-GAAP net loss prior to any bonus accrual for 2023 was $37.3 million (0% payout). As a result, we paid no incentive bonuses under our cash incentive program to our executive officers for 2023. An explanation of non-GAAP net loss and a reconciliation of this non-GAAP measure to our net loss calculated in accordance with GAAP for 2023 is included under the heading “Non-GAAP Financial Measures and Key Performance Indicators” in Part II, Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Equity Incentives
Equity Incentives We provide long-term incentive compensation to our executive officers through equity-based awards under our equity incentive plans, such as stock options and RSUs, with time-based and/or performance-based vesting conditions. 2023 Equity Awards On January 19, 2023, the Compensation Committee granted to Ryan Steelberg under the 2017 Stock Incentive Plan (the “2017 Plan”) an award of RSUs representing the right to receive 158,025 shares of our common stock upon vesting. Mr. Steelberg’s award had a grant date fair value of $1,008,199 based on the closing stock price of our common stock on the grant date. This award vests in three equal installments on each of the first three anniversaries of the effective date of Mr. Steelberg’s employment agreement with us, subject to Mr. Steelberg’s continued service to us through each applicable vesting date. On March 16, 2023, the Compensation Committee granted to Mr. Steelberg under the 2017 Plan an award of performance-based RSUs representing the right to receive 148,176 shares of our common stock upon vesting. These performance-based RSUs became eligible to vest upon the achievement of certain revenue and non-GAAP net income targets in 2023 (the “2023 Milestones”). Mr. Steelberg’s award had a grant date fair value of $863,866 based on the probable outcome of the applicable performance conditions. In April 2024 the Compensation Committee determined that the 2023 Milestones had not been achieved; as a result, these performance-based RSUs were not eligible to vest and were forfeited by Mr. Steelberg. On January 19, 2023, the Compensation Committee granted to Michael Zemetra under the 2017 Plan an award of RSUs representing the right to receive 71,111 shares of our common stock upon vesting. Mr. Zemetra’s award had a grant date fair value of $453,688 based on the closing stock price of our common stock on the grant date. The award vests in three equal installments on each of the first three anniversaries of the effective date of Mr. Zemetra’s employment agreement with us, subject to Mr. Zemetra’s continued service to us through each applicable vesting date. On March 16, 2023, the Compensation Committee granted to Michael Zemetra under the 2017 Plan an award of performance-based RSUs representing the right to receive 22,226 shares of our common stock upon vesting. These performance-based RSUs became eligible to vest upon the achievement of the 2023 Milestones. Mr. Zemetra’s award had a grant date fair value of $129,578 based on the probable outcome of the applicable performance conditions. In April 2024, the Compensation Committee determined that the 2023 Milestones had not been achieved; as a result, these performance-based RSUs were not eligible to vest and were forfeited by Mr. Zemetra. On June 12, 2023, pursuant to Mr. Zemetra’s employment agreement, following the adoption of our 2023 Equity Incentive Plan (the “2023 Plan”) by our Board and stockholders, the Compensation Committee granted to Michael Zemetra under the 2023 Plan an award of RSUs representing the right to receive 28,396 shares of our common stock upon vesting. Mr. Zemetra’s award had a grant date fair value of $112,732 based on the closing stock price of our common stock on the grant date. This award vests in three equal installments on each of the first three anniversaries of the effective date of Mr. Zemetra’s employment agreement with us, subject to Mr. Zemetra’s continued service to us through each applicable vesting date. Inducement Grant Plan Our Inducement Grant Plan (the “Inducement Grant Plan”) was adopted by our Board in October 2020. Under the Inducement Grant Plan, nonstatutory stock options, stock appreciation rights, stock awards, RSUs and dividend equivalent rights may be granted as an inducement material for eligible persons to enter into employment with the company in accordance with NASDAQ Marketplace Rule 5635(c)(4) and the related guidance under NASDAQ IM 5635-1, and any amendments or supplements thereto. All stock options granted under the Inducement Grant Plan have exercise prices equal to or greater than the fair market value of our common stock on the grant date, and expire 10 years after the grant date, subject to earlier expiration in the event of termination of the awardee’s continuous service with the company. All equity awards granted under the Inducement Grant Plan vest in accordance with the vesting schedules established by the Compensation Committee at the time of award, subject to the awardee’s continued service with our Company. The vesting of equity awards granted to our executive officers under the Inducement Grant Plan is subject to acceleration under certain circumstances as discussed under the heading “Payments Upon Termination of Employment or Change in Control” below. In March 2023, our Board amended and restated the Inducement Grant Plan to increase by 425,000 the number of shares of our common stock reserved for issuance pursuant to equity awards granted under the Inducement Grant Plan to 1,175,000 shares. As of April 16, 2024, there are 492,304 shares of Common Stock currently available for issuance under the Inducement Grant Plan. In accordance with NASDAQ Listing Rule 5635(c)(4), we did not seek stockholder approval of the amended and restated Inducement Grant Plan. Other than the increase in the Inducement Grant Plan share reserve, there were no other changes to any terms and conditions of the previously existing Inducement Grant Plan.
PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
2023 Employment Agreements
2023 Employment Agreements
2018 Plan
2018 Plan Pursuant to the terms of our 2018 Performance-Based Stock Incentive Plan, as amended in June 2020 (the “2018 Plan”), in the event of a change in control (as defined in the 2018 Plan) of Veritone, then outstanding performance-based stock options granted under the 2018 Plan to Mr. Steelberg will be assumed, substituted or exchanged for an equivalent award (which may include a cash payment) by the successor entity to the extent the successor entity agrees to such treatment, and shall remain exercisable for the remainder of their term. In addition, if Mr. Steelberg’s employment is terminated by us without cause, other than following a change in control of Veritone, then the exercisable portion of such awards held by him will remain exercisable for the remainder of their term, provided that he has not engaged in misconduct, as defined in the 2018 Plan.
2023 Plan
2023 Plan In the event of a corporate transaction or change in control (each as defined in the 2023 Plan) in which the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the 2023 Plan, or substitute similar stock awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants (including Mr. Steelberg and Mr. Zemetra) whose continuous service has not terminated prior to the effective time of the corporate transaction or change in control, the vesting (and exercisability, if applicable) of such awards will be accelerated in full (and with respect to any such awards that are subject to performance-based vesting conditions or requirements, vesting will be deemed to be satisfied at the target level of performance) to a date prior to the effective time of the corporate transaction or change in control (contingent upon the closing or completion of the corporate transaction or change in control) as the plan administrator will determine, and such awards will terminate if not exercised (if applicable) prior to the effective time of the corporate transaction or change in control in accordance with the exercise procedures determined by the plan administrator, and any reacquisition or repurchase rights held by Veritone with respect to such awards will lapse (contingent upon the closing or completion of the corporate transaction or change in control).
Role of Management in Determining Executive Compensation
Role of Management in Determining Executive Compensation The Compensation Committee periodically meets with our Chief Executive Officer and/or other executive officers to obtain recommendations with respect to compensation programs for executives and other employees. Our Chief Executive Officer makes recommendations to the Compensation Committee on the base salaries, target incentives and performance measures, and equity compensation for our executives and other key employees. The Compensation Committee considers, but is not bound to accept, management’s recommendations with respect to executive compensation. Our Chief Executive Officer and certain other executives attend most of the Compensation Committee’s meetings, but the Compensation Committee also holds private sessions outside the presence of members of management. The Compensation Committee discusses our Chief Executive Officer’s compensation with him but makes decisions with respect to his compensation without him present. In 2022 and 2023, the Compensation Committee reviewed the compensation arrangements for our executive officers and took the actions discussed above under the headings “Base Salaries,” “Cash Incentives,” “2022 Equity Awards” and “2023 Equity Awards.” In late 2022 and early 2023, in connection with our CEO transition, the Compensation Committee again reviewed the compensation arrangements for our executive officers and took the actions discussed above under the heading “2023 Employment Agreements.” The Compensation Committee has delegated to management the authority to make certain decisions regarding compensation for employees other than executive officers. The Compensation Committee has not delegated any of its authority with respect to the compensation of executive officers.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table sets forth compensation earned during the fiscal years ended December 31, 2023 and 2022 by Ryan Steelberg, our principal executive officer, and Michael Zemetra, our other executive officer serving at December 31, 2023, as well as the grant date fair values of share-based compensation awarded to such officers during such fiscal years, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“ASC Topic 718”). Mr. Zemetra was also serving as our principal financial officer as of December 31, 2023. These officers are referred to herein as the “named executive officers.”
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Non-equity Incentive Plan Compen- sation ($) | All Other Compen- sation ($) | Total ($) | | Ryan Steelberg President, Chief Executive Officer and Chairman of the Board | 2023 | 196,877(2) | 425,840 | 1,872,066 | — | 52,264(3) | 2,547,047 | | | 2022 | 406,055 | 103,359 | 2,208,238 | — | 86,334 | 2,803,987 | | Michael L. Zemetra | 2023 | 400,000 | 50,000(4) | 711,332 | — | 39,299(5) | 1,200,561 | | Executive Vice President, Chief Financial Officer and Treasurer | 2022 | 325,000 | — | 312,115 | — | 31,741(6) | 668,856 |
SUMMARY COMPENSATION TABLE
| (1) Reflects the grant date fair values of RSUs awarded to the named executive officers, which were computed based on the closing price of our common stock on each grant date. See additional information regarding the RSUs awarded to our named executive officers in 2023 under the heading “2023 Equity Awards” above. |
SUMMARY COMPENSATION TABLE
| (2) Mr. Steelberg is entitled to receive a base salary of $525,000 under his employment agreement with us. Mr. Steelberg voluntarily reduced his annual base salary from $525,000 to $1.00 in May 2023. |
SUMMARY COMPENSATION TABLE
| (3) Consists of reimbursement of costs of Mr. Steelberg’s separate healthcare plan totaling $39,498 and a commuter allowance totaling $12,500. All other compensation for 2022 consists of the following: for Ryan Steelberg, reimbursement of costs of his separate healthcare plan totaling $36,334 and a commuter allowance totaling $50,000. |
SUMMARY COMPENSATION TABLE
| (4) Reflects a one-time deal bonus for the successful completion of the Broadbean acquisition in 2023. |
SUMMARY COMPENSATION TABLE
| (5) Consists of Company contributions made to Mr. Zemetra’s 401(k) account totaling $13,000 and contributions made towards Mr. Zemetra’s health insurance premiums totaling $26,299. |
SUMMARY COMPENSATION TABLE
| (6) Consists of Company contributions towards Mr. Zemetra’s health insurance premiums totaling $31,741, which were inadvertently omitted from the Summary Compensation Table included in the Company’s 2022 Proxy Statement. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END The table below sets forth information regarding outstanding equity awards held by each named executive officer as of December 31, 2023, including: (i) the numbers of shares of our common stock underlying exercisable and unexercisable stock options, and unearned performance-based stock options, held by each named executive officer and the exercise prices and expiration dates thereof; and (ii) the aggregate number of RSUs held by each named executive officer, and the market value thereof, that had not vested as of December 31, 2023.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| | | Option Award | | | | Stock Award | | | | | | | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares Or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Name | Grant Date | Exercisable | Unexercisable | | | | | | | | Ryan Steelberg | 3/31/23 | — | — | — | — | — | — | 148,176(2) | 268,199 | | | 1/19/23 | — | — | — | — | 158,025(3) | 286,025 | — | — | | | 5/11/17 | 522,409 | — | 15.00 | 05/11/27 | — | — | — | — | | | 5/11/17 | 1,044,819 | — | 15.00 | 05/11/27 | — | — | — | — | | | 3/15/18 | 68,015 | — | 15.14 | 03/15/28 | — | — | — | — | | | 8/27/20 | 1,357,425(4) | — | 11.97 | 08/27/30 | — | — | — | — | | Michael L. Zemetra | 3/31/23 | — | — | — | — | — | — | 22,226(2) | 40,229 | | | 1/19/23 | — | — | — | — | 71,111(3) | 128,711 | — | — | | | 6/21/23 | — | — | — | — | 28,396(3) | 51,397 | — | — | | | 10/8/20 | 47,500 | 12,500(5) | 11.10 | 10/08/30 | — | — | — | — | | | 10/8/20 | 120,000(4) | — | 11.10 | 10/08/30 | — | — | — | — |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| (1) The market values of all RSUs reflected in the table above have been calculated based on the closing price of our common stock on December 29, 2023 as reported on the NASDAQ Global Market, which was $1.81 per share. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| (2) In April 2024 the Compensation Committee determined that, for purposes of this award, the 2023 Milestones (defined above) had not been achieved; as a result, these performance-based RSUs were not eligible to vest and were forfeited. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| (3) Represents time-based restricted stock unit awards that vest in three equal installments on each of January 1, 2024, January 1, 2025 and January 1, 2026. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| (4) Consists of performance-based stock options awarded to Ryan Steelberg on August 27, 2020, and a performance-based stock option awarded to Mr. Zemetra under our Inducement Grant Plan on October 8, 2020. The vesting of one-third (1/3rd) of such performance-based stock options was conditioned upon the achievement of stock price milestones for our common stock of $17.50, $22.50 and $27.50 per share, respectively. The first and second stock price milestones were achieved in January 2021, and the third stock price milestone was achieved in February 2021. Accordingly, all such performance-based stock options have vested in full. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| (5) The remaining unvested portion of the stock option vests in equal monthly installments of 1,250 from January 8, 2024 through October 8, 2024. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with our company and is subject to acceleration under certain circumstances as discussed under the heading “Payments Upon Termination of Employment or Change in Control” above.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between the “compensation actually paid” (“CAP”) to our current and former principal executive officers (“PEOs”) and our non-PEO named executive officers (“Non-PEO NEOs”) and certain aspects of our financial performance for the fiscal years ended December 31, 2023, 2022 and 2021.
PAY VERSUS PERFORMANCE
| Year (1) | Summary Compensation Table Total for PEO (2) | Compensation Actually Paid to PEO (3) | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs (4) | Total Shareholder Return: Value of Initial $100 Investment (5) | Net Income (6) | | | 2023 | $2,547,047 | $1,096,517 | $1,200,561 | $654,974 | $6 | ($ | 58,625,000) | | 2022 | $4,125,172 | $1,020,990 | $1,736,422 | $124,911 | $19 | ($ | 25,557,000) | | 2021 | $10,199,584 | $39,004,877 | $4,143,110 | $16,274,421 | $79 | ($ | 64,672,000) |
PAY VERSUS PERFORMANCE
| (1) Ryan Steelberg served as our PEO for the entirety of 2023. Chad Steelberg served as our PEO for the entirety of 2021 and 2022. Our Non-PEO NEOs for the applicable years were as follows: |
PAY VERSUS PERFORMANCE
| • | 2023: Michael Zemetra |
PAY VERSUS PERFORMANCE
| • | 2022: Ryan Steelberg and Michael Zemetra |
PAY VERSUS PERFORMANCE
| • | 2021: Ryan Steelberg and Michael Zemetra |
PAY VERSUS PERFORMANCE
| (2) Amounts reported in these columns represent (i) the total compensation reported in the Summary Compensation Table for the applicable years for our PEO and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable years for our Non-PEO NEOs. |
PAY VERSUS PERFORMANCE
| (3) Amounts reported in this column represent CAP to our PEO, based on his total compensation reported in the Summary Compensation Table for the indicated fiscal years and certain adjustments required by Item 402(v) of Regulation S-K. The following adjustments were made to the reported total compensation of the PEO for 2023 to determine CAP for 2023: |
PAY VERSUS PERFORMANCE
| | PEO | 2023 | | | Summary Compensation Table - Total Compensation | $2,547,047 | | - | Grant Date Fair Value of Stock Awards and Option Awards Granted in Fiscal Year | $1,872,066 | | + | Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards and Option Awards Granted in Fiscal Year | $286,043 | | + | Change in Fair Value of Outstanding and Unvested Stock Awards and Option Awards Granted in Prior Fiscal Years | $0 | | + | Fair Value at Vesting of Stock Awards and Option Awards Granted in Fiscal Year That Vested During Fiscal Year | $0 | | + | Change in Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $135,759 | | - | Fair Value as of Prior Fiscal Year End of Stock Awards and Option Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $0 | | = | Compensation Actually Paid | $1,096,517 |
PAY VERSUS PERFORMANCE
Equity award values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant.
PAY VERSUS PERFORMANCE
| (4) Amounts reported in this column represent CAP to our Non-PEO NEOs, based on their average total compensation reported in the Summary Compensation Table for the indicated fiscal years and certain adjustments required by Item 402(v) of Regulation S-K. The following adjustments were made to the reported total compensation of the Non-PEO NEOs for 2023 to determine CAP for 2023: |
PAY VERSUS PERFORMANCE
| | Non-PEO NEO Average | 2023 | | | | Summary Compensation Table - Total Compensation | | 1,200,561 | | - | Grant Date Fair Value of Stock Awards and Option Awards Granted in Fiscal Year | | 711,332 | | + | Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards and Option Awards Granted in Fiscal Year | | 180,108 | | + | Change in Fair Value of Outstanding and Unvested Stock Awards and Option Awards Granted in Prior Fiscal Years | - | $27,133 | | + | Fair Value at Vesting of Stock Awards and Option Awards Granted in Fiscal Year That Vested During Fiscal Year | | 0 | | + | Change in Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | 12,770 | | - | Fair Value as of Prior Fiscal Year End of Stock Awards and Option Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | | 0 | | = | Compensation Actually Paid | | 654,974 |
PAY VERSUS PERFORMANCE
Please see footnote 1 for the Non-PEO NEOs included in the average for 2023. Equity award values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant.
PAY VERSUS PERFORMANCE
| (5) Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2020 in our common stock. Historic stock price performance is not necessarily indicative of future stock price performance. |
PAY VERSUS PERFORMANCE
| (6) The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable year. |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
2023 Director Compensation
2023 Director Compensation The table below sets forth cash compensation earned by each non-employee director, and the grant date fair values of equity awards granted to each non-employee director, during the fiscal year ended December 31, 2023. All compensation of Ryan Steelberg is reported in the “Summary Compensation Table” and has been excluded from the table below.
2023 Director Compensation
| Name | Fees Earned or Paid in Cash(1) ($) | RSU Awards(2)(3) ($) | All Other Compensation ($) | Total ($) | | Chad Steelberg | $62,500 | — | $1,270,982(4) | $1,333,482 | | Jeffrey P. Gehl | 52,500 | 149,997(5) | — | 202,497 | | Knute P. Kurtz | 60,000 | 149,997(5) | — | 209,997 | | Richard H. Taketa | 58,750 | 149,997(5) | — | 208,747 | | Michael Zilis | 6,257 | 87,499(6) | — | 93,756 |
2023 Director Compensation
| (1) Reflects cash retainer fees earned in 2023 by each non-employee director for service on our Board and committees of our Board, as applicable. |
2023 Director Compensation
| (2) Reflects the grant date fair values of RSU awards granted to each non-employee director in 2023, calculated in accordance with ASC Topic 718. Mr. Steelberg did not receive an annual RSU award pursuant to our non-employee director compensation program in 2023. |
2023 Director Compensation
| (3) The number of stock awards, consisting of RSUs and non-qualified stock options, held as of December 31, 2023 by each non-employee director serving on the Board on such date is set forth in the table below. |
2023 Director Compensation
| Name | Aggregate Number of Shares Underlying Outstanding RSUs | Aggregate Number of Shares Underlying Outstanding Options | | Chad Steelberg | 59,226(a) | 3,513,157 | | Jeffrey P. Gehl | 37,220 | 7,964 | | Knute P. Kurtz | 37,220 | 8,688 | | Richard H. Taketa | 37,220 | 8,688 | | Michael Zilis | 42,475 | — |
2023 Director Compensation
| (a) Consists of RSUs that were awarded to Mr. Steelberg pursuant to the Consulting Agreement, which are reported under “All Other Compensation” in the 2023 Director Compensation Table above. |
2023 Director Compensation
| (4) Reflects amounts paid in cash and RSU awards granted pursuant to the Consulting Agreement between the Company and Steel Holdings, LLC, an entity affiliated with Mr. Steelberg. Mr. Steelberg was paid $1,092,505 in cash under the Consulting Agreement in 2023. The grant date fair values of the RSU awards granted were calculated in accordance with ASC Topic 718. RSUs representing a right to receive 19,743 shares were granted on April 7, 2023, and the grant date fair value of such awards was determined based on our closing stock price on such date which was $5.16 per share. Such RSUs vested in full on April 22, 2023. RSUs representing a right to receive 39,486 shares were granted on November 15, 2023, and the grant date fair value of such awards was determined based on our closing stock price on such date which was $1.94 per share. Such RSUs vested in full on November 30, 2023. |
2023 Director Compensation
| (5) RSUs representing a right to receive 37,220 shares of our common stock were awarded to each of our then-serving non-employee directors on June 8, 2023, and the grant date fair value of such awards was determined based on our closing stock price on such date, which was $4.03 per share. Such RSUs will vest in full on June 8, 2024. |
2023 Director Compensation
| (6) RSUs representing a right to receive 42,475 shares of our common stock were awarded to Mr. Zilis on November 8, 2023, and the grant date fair value of such award was determined based on our closing stock price on such date, which was $2.06 per share. Such RSUs will vest in full on June 12, 2024. |
Indemnification of Directors and Officers
Indemnification of Directors and Officers Our amended and restated certificate of incorporation and our Bylaws provide that we will indemnify our directors and officers to the fullest extent permitted under Delaware law, which prohibits our amended and restated certificate of incorporation from limiting the liability of our directors for the following:
Indemnification of Directors and Officers
| • | any breach of the director’s duty of loyalty to us or our stockholders; |
Indemnification of Directors and Officers
| • | acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; |
Indemnification of Directors and Officers
| • | unlawful payment of dividends or unlawful stock repurchases or redemptions; or |
Indemnification of Directors and Officers
| • | any transaction from which the director derived an improper personal benefit. |
Indemnification of Directors and Officers
Our amended and restated certificate of incorporation also provides that if Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. This limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission. Our amended and restated certificate of incorporation and our Bylaws also provide that we will indemnify our employees and agents to the fullest extent permitted by law. Our Bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless of whether we would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. We have obtained directors’ and officers’ liability insurance. We have entered into separate indemnification agreements with each of our directors and executive officers, in addition to indemnification provided for in our amended and restated certificate of incorporation and our Bylaws. These agreements, among other things, provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by this person in any action or proceeding arising out of this person’s services as a director or executive officer or at our request. We will not indemnify such director or officer, however, for expenses and the payment of profits arising from the purchase and sale by the director or officer of securities in violation of Section 16(b) of the Exchange Act.