DEF 14A of Aviat Networks, Inc.
Filed Oct 7, 2024 · FY20240001377789-24-000049
Director Nominees
Director Nominees Our Board is recommending a new director nominee for this year's annual meeting, Asako Aoyama, through the nomination rights held by NEC Corporation as part of the Master Sale of Business Agreement ("MSBA") entered into in connection with the previously announced transaction between the Company and NEC Corporation. Ms. Aoyama has vast experience leading teams and has consistently demonstrated her integrity, good judgment and intelligence. Our Board proposes that Ms. Aoyama, who has not previously served on the Company’s Board, be elected as a Director alongside existing Directors Mr. Mutch, Ms. Akkaraju, Mr. Ingram, Ms. Klein, Mr. Smith and Mr. Taten. The Board has determined that Ms. Aoyama is not independent due to her employment by NEC Corporation, a holder of 5% of our common stock, which continues to have a business relationship with the Company. For additional information about our historical and continuing transactions with NEC Corporation, please see "Transactions with Related Persons." We expect each nominee standing for election as a director to be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated. There are no family relationships between or among any of our executive officers, directors, or director nominees. There are no material legal proceedings in which any director, director nominee, officer, or affiliate of the Company or any owner of record or beneficial owner of more than five percent of any class of voting securities of the Company or any, associate of such director, officer, affiliate of the Company or security holder, is a party adverse to us or has a material interest adverse to us.
Board and Committee Meetings and Attendance
Board and Committee Meetings and Attendance In fiscal year 2024, the Board held eight regularly scheduled meetings and five special meetings. Each of the Board members attended at least 75% of the aggregate total number of meetings of the Board and committees of which they were members during the fiscal year.
Board Member Qualifications
Board Member Qualifications Our Board believes that its members should encompass a range of talents, skills and expertise, which enables the Board to provide sound guidance with respect to the Company’s operations, interests and strategy. Candidates for the position of director should exhibit proven leadership capabilities, high integrity, exercise high level responsibilities within their respective careers, and possess an ability to quickly grasp complex principles of business, finance, enterprise risk, international transactions, and communication technologies. Our Board seeks a variety of professional experiences and backgrounds among its members to better ensure a breadth of expertise to support the Company's strategy. The Board has chosen not to impose term limits or mandatory retirement age with regard to service on the Board in the belief that a mix of tenure of directors, some who have institutional memory and have worked with different CEOs and management teams and who have developed an in-depth understanding of the Company and its business, middle-tenured directors, and newer directors with new and relevant skills and experience, brings a more balanced set of perspectives to our Board. In addition to considering a candidate’s experiences and background, candidates are reviewed in the context of the current composition of the Board and evolving needs of our businesses. In particular, the Board has sought to include members that have experience in establishing, growing and leading communications companies in senior management positions and serving on the board of directors of other companies. In determining that each of the members of the Board is qualified to be a director, the Board has relied on the attributes listed below and, where applicable, on the direct personal knowledge of each of the members’ prior service on the Board.
Directors’ Biographies
Directors’ Biographies The following is a brief description of the business experience and background of each nominee for director, including the capacities in which each has served during at least the past five years: Mr. John Mutch, age 68, currently serves as Chair of the Board and has served on the Board since January 2015. Mr. Mutch is a veteran of the U.S. Navy. He served on the Board of Directors of Steel Excel Inc., a provider of drilling and production services to the oil and gas industry and a provider of event-based sports services and other health-related services, from 2007 to 2016. From December 2008 to January 2014, he served as Chairman of the board of directors and Chief Executive Officer of Beyondtrust Software, a privately-held security software company. During this time, Mr. Mutch co-authored the book “Preventing Good People from Doing Bad Things: Implementing Least Privilege” which focuses on enterprise security. Mr. Mutch is the founder and has been the managing partner of MV Advisors LLC, a strategic block investment firm that provides focused investment and strategic guidance to small and mid-cap technology companies, since December 2005. Prior to founding MV Advisors LLC, in March 2003, Mr. Mutch was appointed by the U.S. Bankruptcy court to the board of directors of Peregrine Systems, Inc., a provider of enterprise asset and service management solutions. He assisted that company in a bankruptcy work-out proceeding and was named President and Chief Executive Officer in July 2003. Previous to running Peregrine Systems, Inc., Mr. Mutch served as President, Chief Executive Officer and a director of HNC Software, an enterprise analytics software provider. Before HNC Software, Mr. Mutch spent seven years at Microsoft Corporation in a variety of executive sales and marketing positions. Mr. Mutch previously served on the boards of directors of Phoenix Technologies Ltd., a leader in core systems software products, services and embedded technologies, Edgar Online, Inc., a provider of financial data, analytics and disclosure management solutions, Aspyra, Inc., a provider of clinical and diagnostic information systems for the healthcare industry, Overland Storage, Inc., a provider of unified data management and data protection solutions, and Brio Software, Inc., a provider of business intelligence software. He has served as a director at Agilysys, Inc., a provider of information technology solutions, since March 2009. From April 2017 to May 2019, Mr. Mutch served as a director at Maxwell Technologies, Inc., a manufacturer of energy storage and power delivery solutions for automotive, heavy transportation, renewable energy, backup power, wireless communications and industrial and consumer electronics applications. From July 2017 to March 2018, he served as a director at YuMe, Inc., a provider of digital video brand advertising solutions, at which time YuMe was acquired by RhythmOne plc, a technology-enabled digital media company. Mr. Mutch continued serving as a director on the RhythmOne board until January 2019. Mr. Mutch holds a Bachelor of Science in Economics from Cornell University and a Master of Business Administration from the University of Chicago. Mr. Mutch brings to the Board extensive experience as an executive in the technology sector. He also has experience as a director at several public companies in the technology sector. He is or has been a member of the audit committee of various public and private companies and brings valuable financial expertise to the Board. For these reasons, we believe Mr. Mutch is qualified to continue serving on the Board. Ms. Asako Aoyama, age 52, has been the Corporate Senior Vice President of NEC Corporation since April 2023, and is responsible for managing financial planning and analysis teams of the NEC group. Prior to that, Ms. Aoyama served as Vice President, CFO of Global Business Unit of NEC Corporation, managing a global finance team encompassing controllership and in financial planning and analysis in 30 countries for NEC’s Global Business Unit. Ms. Aoyama was also an Executive Officer with Coca-Cola Bottlers Japan from May 2017 until November 2019, where she oversaw strategic development, mergers and acquisitions, and competitive analysis teams. From June 2018 until June 2024, Ms. Aoyama was a non-executive director of Taiyo Holdings Co., Ltd., a manufacturer of chemical products for electronic components. She has served as Director for NetCracker Technology Corporation since April 2021. Ms. Aoyama holds a Bachelor of Arts from International Christian University and an MBA from The Ohio State University. Ms. Aoyama brings extensive experience in financial planning and analysis, international transactions and leadership of global teams to the Board which qualifies her to serve as a member of the Board. Ms. Laxmi Akkaraju, age 55, has served on the Board since November 2023. Ms. Akkaraju has been the Chief Delivery Officer for Cognite, a global leader in industrial software, since April 2021, having previously served in Senior Vice President roles for Strategy and Customer Services since 2021. She is also a Board Member for the Moller Mobility Group and sits on the Advisory Boards for Digital Norway and BI Norwegian Business School. Prior to Cognite, Ms. Akkaraju was Chief Strategy Officer from 2017 to 2020 for the GSM Association (GSMA), a non-profit industry organization that represents the interests of mobile network operators worldwide. From 2008 to 2017 Ms. Akkaraju was an acting Executive Vice President at EVRY, and prior to that held senior positions at Mu Dynamics (now Spirent) and Holte Consulting. Ms Akkaraju holds a Bachelor of Science in Civil Engineering from University of New Mexico and a Master of Science in Civil Engineering from the University of Colorado Boulder. We believe Ms. Akkaraju’s experience and success in the wireless industry qualifies her to serve as a member of the Board. Mr. Bryan Ingram, age 60, has served on the Board since November 2021. Mr. Ingram is a senior corporate executive and advisor whose technology career spans 35 years in executive management roles with industry leaders Broadcom, Avago, Agilent, HP, and Westinghouse. He has a proven record in the global semiconductor industry for delivering highly differentiated product performance, cost improvements, resilient supply chains, and driving growth through the wireless ecosystem. Mr. Ingram presently serves as a director for SGH (formerly Smart Global Holdings), where he was elected in October 2018 and serves on the nominating and governance committee as well as the compensation committee. Mr. Ingram was also a director for Anokiwave from June 2020 until February 2024. Most recently, from November 2019 to March 2020, Mr. Ingram served as a consultant for Broadcom, and he previously served as senior vice president and general manager of Broadcom’s Wireless Semiconductor Division, from November 2015 to October 2019, where he oversaw the development, production, and marketing of RF components for handsets and other wireless devices. Prior to Broadcom, Mr. Ingram served as the Chief Operating Officer for Avago Technologies from April 2013 to October 2015. From October of 2015 until May 2016, Mr. Ingram served as the Senior Vice President and General Manager of the Wireless Semiconductor Division of Avago Technologies. Mr. Ingram holds a Bachelor of Science in Electrical Engineering from the University of Illinois and a Master of Science in Electrical Engineering from Johns Hopkins University. We believe Mr. Ingram’s experience and success in the semiconductor industry, as well as supply chain expertise, qualify him to serve as a member of the Board.
Directors’ Biographies
Ms. Michele Klein, age 75, was appointed to the Board in May 2021. She is an experienced public company director, venture capital investor and CEO. Ms. Klein chairs our Governance and Nominating committee and serves on the Compensation committee. In 2019 Michele Klein was elected a director of Intevac, a manufacturer of vacuum deposition systems, where she serves on the Compensation and Nominating and Governance Committees. From 2021-2023 Ms. Klein was a director of Rockley Photonics, a chipset developer and module supplier, where she chaired the Nominating and Governance committee and served on Compensation. In 2017 she was elected a director of Photon Control, a provider of optical sensors and systems to the semiconductor industry, where she served on Audit and chaired the M&A Committee until the Company’s acquisition in July 2021. She is also a director of Gridtential Energy, a private energy storage company. From 2005 until 2010 Ms. Klein served as Sr. Director of Applied Ventures LLC, the venture capital arm of Applied Materials, where she recommended and managed investments in energy storage and solar energy and represented Applied Materials on the boards of energy technology companies. Ms. Klein co-founded Boxer Cross, a semiconductor equipment manufacturer, and served as Chief Executive Officer and Director from 1997 until its acquisition by Applied Materials in 2003. She previously co-founded and led High Yield Technology, a semiconductor metrology company, from 1986 until its acquisition by public Pacific Scientific in 1996. Ms. Klein earned a BS degree from the University of Illinois and an MBA from the Stanford Graduate School of Business. We believe Ms. Klein’s investment and capital markets experience, and leadership roles in both public and private manufacturing companies in semiconductor, communications infrastructure, wireless and tech-enabled services, qualifies her to continue to serve as a director of the Company. Mr. Peter A. Smith, age 58, has been our President and CEO since January 2020 and a member of the Board since February 2020. Mr. Smith has more than 25 years of leadership experience in business management and a proven track record of creating value for companies. He most recently served as Senior Vice President, US Windows and Canada for Jeld-Wen from March 2017 to December 2019, where he had full profit and loss responsibility for Jeld-Wen’s $1B+ windows business, implementing lean manufacturing principles and strategic development programs to deliver growth and improved profitability. Prior to Jeld-Wen, from October 2013 to March 2017, he served as President of Polypore International’s Transportation and Industrial segment and oversaw transformative initiatives that helped prepare the former public company for sale to the Asahi Kasei Group. Previously, he served as Chief Executive Officer and a director of Voltaix Inc., until its sale to Air Liquide. Earlier in his career, Mr. Smith held various executive leadership positions at Fortune 100 and Fortune 500 companies, including Cooper Industries, Dover Knowles Electronics and Honeywell Specialty Materials. In these roles, his responsibilities ran the gamut of operations, sales and marketing, business development, and mergers and acquisitions. Mr. Smith also served on the boards of Adaptive 3D from 2020 to 2021 and Soleras Advanced Coatings from 2015 to 2018. He has both a Bachelor of Science degree in Material (Ceramics) Engineering and PhD in Material Science and Engineering from Rutgers University and holds a Master of Business Administration degree from Arizona State University. We believe Mr. Smith’s executive leadership experience and position as the Company’s CEO qualify him to continue serving on the Board. Mr. Bruce Taten, age 68, was appointed to the Board on March 2022. Mr. Taten served as Senior Vice President, General Counsel and Chief Compliance Officer for Cooper Industries, plc from 2008 until its merger with Eaton Corporation in October 2012. Previously, Mr. Taten was Vice President and General Counsel at Nabors Industries from 2003 until 2008 and earlier practiced law with Simpson Thacher & Bartlett LLP and Sutherland Asbill & Brennan LLP. Before attending law school, he practiced as a C.P.A. with Peat Marwick Mitchell & Co., which is now KPMG, in New York. From 2015 to date, Mr. Taten is a practicing attorney and private investor. He is admitted to practice law in the states of Texas and New York. Mr. Taten earned his FSA Credential from the Sustainability Accounting Standards Board (SASB) in 2020. Mr. Taten holds a B.S. and Masters degree from Georgetown University and a J.D. from Vanderbilt University. Mr. Taten has served on the board of directors of Jeld-Wen Holdings, Inc. (NYSE: JELD), since 2014 and currently serves as chair of the governance and nominating committee and on the compensation committee. The Board believes Mr. Taten’s qualifications to sit on our Board include his experience in mergers and acquisitions, compliance, financial, tax and corporate governance expertise working on other companies’ boards of directors and as a general counsel and chief compliance officer.
DIRECTOR COMPENSATION AND BENEFITS
DIRECTOR COMPENSATION AND BENEFITS The Board has delegated responsibility to the Compensation Committee to determine the form and amount of director compensation, which reviewed and assessed from time to time by the Compensation Committee with changes, if any, recommended to the Board for action. Director compensation may take the form of cash, equity, and other benefits ordinarily available to directors. Non-employee Directors received the following fees, as applicable, for their services on our Board during fiscal year 2024: • $50,000 basic annual cash retainer, payable on a quarterly basis, which a director may elect to receive in the form of shares of common stock; • $45,000 annual cash retainer, payable on a quarterly basis, for service as Chair of the Board; • $22,000 annual cash retainer, payable on a quarterly basis, for service as Chair of the Audit Committee; • $10,000 annual cash retainer, payable on a quarterly basis, for service as Chair of the Governance and Nominating Committee; • $15,000 annual cash retainer, payable on a quarterly basis, for service as Chair of the Compensation Committee; • $10,000 annual cash retainer, payable on a quarterly basis, for service on the Audit Committee other than Chair of the Audit Committee; • $5,000 annual cash retainer, payable on a quarterly basis, for service on the Governance and Nominating Committee other than Chair of the Governance and Nominating Committee; • $5,000 annual cash retainer, payable on a quarterly basis, for service on the Compensation Committee other than Chair of the Compensation Committee; and • Annual grant of restricted stock units (“RSUs”) under our Amended and Restated 2018 Incentive Plan (the “2018 Plan”) valued at $120,000, with 100% vesting at the earlier of (1) the day before the date of the Annual Meeting, or (2) the first anniversary of the 2024 annual stockholders’ meeting, subject to continuing service as a director through such earlier date. We reimburse each non-employee director for reasonable travel expenses incurred and in connection with attendance at Board and committee meetings on our behalf, and for expenses such as supplies and continuing director education costs. Employee directors are not compensated for their service as a director. To enhance and expand on the key skills and experiences relevant to the Company’s industry, we provide our directors with continuing education and presentations from both internal and external experts. Additionally, we encourage our directors to participate in external continuing director education programs. New directors also participate in comprehensive orientation sessions that provide them with a thorough understanding of their fiduciary duties as well as a robust overview of the Company’s business and strategies, which allows new directors to begin making contributions to the Board at the start of their service. To better align the interests of our Board with those of our stockholders, in November 2019, the Board adopted a policy whereby members of the Board must achieve ownership of three times (3x) such director’s annual cash retainer (exclusive of chairperson or committee fees). A director is required to achieve compliance with the foregoing ownership requirement by the later of (a) five years from the date of adoption of the guidelines, or (b) five years from the start of such director’s directorship with the Company. All vested RSUs or Company shares purchased by a director in the open market shall be counted toward a director’s ownership requirement.
Fiscal Year 2024 Compensation of Non-Employee Directors
Fiscal Year 2024 Compensation of Non-Employee Directors Our non-employee directors received the following aggregate amounts of compensation in respect of fiscal year 2024:
Fiscal Year 2024 Compensation of Non-Employee Directors
| | Fees Earned in Cash | Stock Awards(1) | Total | | | ($) | ($) | ($) | | Laxmi Akkaraju | 45,000 | 119,893 | 164,893 | | Bryan Ingram | 65,000 | 119,893 | 184,893 | | Michele Klein | 65,000 | 119,893 | 184,893 | | John Mutch | 120,250 | 119,893 | 240,143 | | Dr. James C. Stoffel | 37,500 | — | 37,500 | | Bruce Taten | 67,500 | 119,893 | 187,393 |
Fiscal Year 2024 Compensation of Non-Employee Directors
(1) The amounts shown in this column reflect the aggregate grant date fair value of RSUs granted to our non-employee directors computed in accordance with FASB ASC Topic 718, determined without regard to estimated forfeitures. The assumptions made in determining the fair values of our stock awards and option awards are set forth in Notes 1 and 9 to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended June 28, 2024, as filed with the SEC on October 4, 2024.
Compensation Discussion and Analysis
Over the past year our Company has gone through leadership changes. Mr. Gray, our Senior Vice President and Chief Financial Officer (“CFO”) as of the beginning of the 2024 fiscal year, stepped down on May 28, 2024. On May 28, 2024, the Company appointed Michael Connaway as Senior Vice President and Chief Financial Officer. In addition, Mr. Tucker, Senior Vice President, Americas Sales and Services as of the beginning of the 2024 fiscal year, retired on November 11, 2023. The executive team successfully led the Company to achieve 18.5% revenue growth, increased consolidated non-GAAP gross margins, and grew adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) by 6.4%. The executive team’s accomplishments during fiscal year 2024 led to the fourth consecutive year of topline growth and Adjusted EBITDA growth. The executive team also continued to develop and implement an operating model that serves as the basis for continuous improvement and organic and acquisition led growth enablement, as evidenced by the ongoing integration of the Pasolink acquisition. To understand our approach to executive compensation, you should read the entire Compensation Discussion and Analysis that follows. The following brief summary introduces the major topics covered: • The cornerstone of our executive compensation program is pay for performance. Accordingly, while we pay competitive compensation and other benefits, our Named Executive Officers’ compensation opportunity is weighted toward variable pay. • The objectives of our executive compensation program are to reward superior performance, motivate our executives to achieve our goals and attract and retain a strong management team. We believe that our emphasis on long-term stockholder value creation results in an executive compensation program structure that is beneficial to our Company and our stockholders. • The Compensation Committee is made up of independent, non-employee members of the Board and oversees the executive compensation program for our Named Executive Officers. The Compensation Committee works closely with its independent compensation consultant and management to evaluate the effectiveness of the Company’s executive compensation program throughout the year. The Compensation Committee’s specific responsibilities are set forth in its charter, which can be found on the Company’s website at http://investors.aviatnetworks.com/committee-details/compensation-committee. In reviewing the elements of our executive compensation program - base salary, annual cash incentives, long-term incentives and post-termination compensation - our Compensation Committee reviews market data from similar companies. • Our competitive positioning philosophy is to set compensation fairly, as compared to the compensation of our peer group companies, with allowances for internal factors such as tenure, individual performance and the nature of the relative scope and complexity of the role. • Our annual incentive program is based on specific Company financial performance goals for the fiscal year and includes provisions to “clawback” any excess amounts paid in the event of a later correction or restatement of our financial statements. • We conducted our annual pay review of executive compensation in August of 2023. Our CEO’s base pay was not adjusted with the August modifications that were made to other Named Executive Officers’ base salaries in connection with that annual review. • We believe the compensation program for the Named Executive Officers supported our strategic priorities and aligned compensation earned with the Company’s financial performance in fiscal year 2024. Compensation Governance Best Practices The Compensation Committee believes that a demonstrated commitment to best practices in compensation governance is itself an essential component of our approach to executive compensation. The following practices are some examples of this commitment: • Pay for performance: A substantial portion of our executives’ compensation opportunity is tied to achieving specified corporate objectives. In fiscal year 2024, 100% of the annual cash bonuses granted pursuant to the Annual Incentive Plan (the “AIP”) was performance-based and at-risk, subject to the Company’s achievement of certain financial objectives. Under the 2018 Plan, one-third of the equity awards value granted to the Named Executive Officers during the fiscal year 2024 were performance-based restricted stock units (which, if based on the Company’s stock price are referred to herein as market share units (“MSUs”) and if based on other performance criteria as described herein are referred to as performance share units (“PSUs”)), the vesting of which is subject to achievement of a targeted financial measure. In past years we made the distinction between MSUs and PSUs, however, we decided that going forward it is appropriate to simplify discussion for all awards that vest based on any type of performance measure as PSUs. With respect to the remaining discussions, references to PSUs include references to MSUs, where applicable. All equity grants are subject to the 2018 Plan. • Mix of short-term and long-term compensation: Short-term compensation for our Named Executive Officers is comprised of base salaries and bonuses payable pursuant to the AIP, which pays out only to the extent that the Company achieves its financial targets. Long-term compensation, granted under the 2018 Plan was comprised of PSUs, stock options and time-based RSUs for fiscal year 2024. PSUs are earned, if the performance or market-based criteria, as applicable, are met, at the end of a three-year plan cycle, while stock options and RSUs vest annually 1/3 at the end of each successive anniversary of the date of grant. • Independent compensation consultant: The Compensation Committee directly retains the services of Compensia, an independent compensation consultant, to advise it in determining reasonable and market-based compensation policies and practices. • Prohibition on hedging and pledging: Our Named Executive Officers, together with all other employees, are prohibited from engaging in hedging, pledging or similar transactions with respect to our securities. • No perquisites: Our Named Executive Officers are not provided any perquisites other than our occasional provision of relocation expense reimbursement. • No single trigger change of control acceleration: Change of control arrangements in the employment agreements with applicable Named Executive Officers include “double trigger” vesting provisions providing for acceleration of vesting of outstanding unvested equity awards only in the event that both a change of control occurs, and the Named Executive Officer’s employment terminates thereafter for reasons specified in the employment agreements. • No tax gross-ups: We do not provide gross-up payments to cover our Named Executive Officers’ personal income taxes that may pertain to any of the compensation or benefits paid or provided by the Company. • Clawback: We have a clawback policy that entitles us to recover all or a portion of any performance-based compensation, including cash and equity components, if our financial statements are restated as a result of errors, omissions or fraud. • Compensation risk management: The Compensation Committee reviews and analyzes the risk profile of our compensation programs and practices on an annual basis. Compensation Philosophy and Objectives The primary objectives of our total executive compensation program are to use compensation as a tool to recruit and retain outstanding executives and incentivize them to create longer-term value for our stockholders. The following principles guide our overall compensation program: • reward superior performance; • motivate our executives to achieve strategic, operational, and financial goals; • enable us to attract and retain a world-class management team; and
Compensation Discussion and Analysis
Each year, the Compensation Committee with the compensation consultant reviews the appropriateness of the comparison group used for assessing the compensation of our CEO and other Named Executive Officers. For fiscal year 2024, we removed ADTRAN Holdings, Applied Optoelectronics, Clearfield, EMCORE and Iteris due to their decreased revenue. We added Arlo Technologies, FARO Technologies, InterDigital, nLIGHT, and Vishay Precision Group as they met our size and industry criteria for inclusion and their business descriptions fit in our peer group. The fiscal year 2024 peer group consists of 19 companies located throughout the U.S. with Aviat positioned at or near the medial revenue and other financial metrics. Total Compensation Elements Our executive compensation program includes four primary elements: • base salary • annual incentive compensation pursuant to the AIP • long-term compensation (equity incentives) • post-termination compensation Each Named Executive Officer’s performance is measured against factors such as short- and long-term strategic goals and financial measures of our performance, including revenue, total shareholder return (“TSR”), AIP expenses and other non-GAAP items namely non-GAAP gross adjusted earnings before interest, taxes, depreciation and amortization (“Gross Adjusted EBITDA”). Details regarding the applicable financial targets for incentive awards are described below. Base Salary Base salaries are provided as compensation for day-to-day responsibilities and services. Executive salaries are reviewed annually. Our CEO generally makes recommendations to the Compensation Committee in August of each year regarding the base salary of each executive officer, other than himself. The Compensation Committee considers each executive officer’s responsibilities, as well as the Company’s performance and recommended increases in base salary for select Named Executive Officers and other executives. For the beginning of fiscal year 2024, the CEO recommended, and the Compensation Committee approved, base salary increases for our Named Executive Officers (other than the CEO) as part of our annual compensation review. Effective July 1, 2023, Ms. Boase’s base salary was increased from $266,157 to $318,000. Effective October 2, 2023, Mr. Gray’s base salary was increased from $353,600 to $364,208, Mr. Tucker’s base salary was increased from $337,428 to $350,925, and Mr. Croke’s base salary was increased from $246,376 to $259,998. Mr. Smith did not receive a base salary increase during the 2024 fiscal year. Mr. Connaway started in May 2024 with a base salary of $525,000. Annual Incentive Plan Our AIP is designed to motivate our executives to focus on the achievement of our short-term financial goals. The CEO reviews his recommendations for each Named Executive Officer with the Compensation Committee, taking into account market data obtained from its independent compensation consultant. Based on recommendations by the CEO, and as specified in any applicable employment agreement, the Compensation Committee recommends to the Board an annual incentive compensation target, expressed as a percentage of base salary, for each executive. The Compensation Committee also recommends to the Board specific Company financial performance measures and targets including the relative weighting and payout thresholds for the AIP. The financial targets are aligned with our Board-approved annual operating plan, and during the year periodic reports are made to the Board about our performance compared with the targets. Under the AIP, a significant portion of the executive’s annual compensation is tied directly to our financial performance. The target amount of annual incentive compensation under our AIP, expressed as a percentage of base salary or, solely with respect to our CEO, a target dollar amount, generally increases with an executive’s level of management responsibility and is paid in the form of cash. For fiscal year 2024, individual AIP target incentives were set at $925,000 for Mr. Smith, 80% of base salary for Mr. Connaway, 50% of base salary for Messrs. Gray and Tucker, and 40% for Ms. Boase and Mr. Croke in each case prorated for the number of days employed by the Company and salary adjustments during fiscal year 2024. Executives can earn more or less than target if minimum or maximum performance levels are achieved. No incentive can be earned if the Company does not achieve the minimum performance thresholds. For fiscal year 2024, the AIP provided for an all-cash payout. The performance metric was 75% based on Gross Adjusted EBITDA and 25% based on revenue. The following table outlines the minimum, target and maximum performance and payout levels approved by the Compensation Committee for fiscal year 2024. Fiscal Year 2024 Annual Incentive Plan – Minimum, Target and Maximum Thresholds
Compensation Discussion and Analysis
| | Minimum | Target | Maximum | | Fiscal Year 2024 AIP (75%) | Earn 80% | Earn 100% | Earn 200% | | Gross Adjusted EBITDA(1) | $45,300,000 | $56,700,000 | $79,300,000 | | Fiscal Year 2024 AIP (25%) | Earn 90% | Earn 100% | Earn 200% | | Revenue | $328,400,000 | $364,900,000 | $437,900,000 |
Compensation Discussion and Analysis
(1) For a reconciliation of Gross Adjusted EBITDA to its corresponding GAAP measure, refer to our Current Report on Form 8-K, filed with the SEC on October 4, 2024. In fiscal year 2024, the AIP met the Gross Adjusted EBITDA target at 79% and the Revenue target at 84%. During fiscal year 2024, the Company experienced significant events that could have impacted achievement of the targeted Gross Adjusted EBITDA metric and revenue metric including the integration of the Pasolink acquisition, inflationary pressures, and macroeconomic and geopolitical events. No adjustments were made to the performance objectives, the target performance or the actual results for these significant events. All Named Executive Officers earned a payout as shown in the Summary Compensation Table below. Long Term Incentive Compensation Our equity awards under our 2018 Plan are designed to motivate our executives to focus on the achievement of our long-term financial goals. Equity awards motivate our executives to achieve our long-term goals and to the extent our results affect our stock price, link such results with the performance of our stock over a longer period. Using equity awards helps us to retain executives, encourage share ownership and maintain a direct link between our executive compensation program and stockholder value creation. The Company utilizes stock options as a component of executive compensation because they have value only if the Company’s share price increases and, therefore, motivate our executives to drive sustained, long-term stockholder value creation. Time-vesting RSUs are a component of executive compensation to further align our executives’ interests with those of stockholders. Because these awards typically vest after a specified period following the grant date, they also incentivize our executives to remain in our employ. PSUs are a component of executive compensation to ensure our executives’ incentives are tied directly to key drivers of stockholder value growth. PSUs also play a role in executive retention, as a named executive officer is required to remain employed through the applicable vesting date in order to receive the shares underlying the PSUs as applicable. For fiscal year 2024, the Named Executive Officers were eligible to receive equity incentive awards. These equity incentive awards were granted in August 2023 immediately prior to the filing of the Annual Report on Form 10-K but after the Company released the fourth quarter fiscal year 2023 earnings report, using a combination of PSUs, stock options, and RSUs. Performance metrics and payout levels for the three-year performance period applicable to the PSUs granted during fiscal year 2023 were established at the beginning of fiscal year 2023.
Compensation Discussion and Analysis
| Equity Vehicle | Weighting | Purpose / Description | | PSUs | 1/3 | The PSUs are subject to three-year cliff vesting from the issuance date assuming achievement of TSR and revenue growth targets over a three-year performance period starting fiscal year 2024 and continued employment through the vesting date in August 2026. | | Stock Options | 1/3 | Strike price: Determined based on the closing stock price on the date of grant. Vesting: One-third annually for a three-year period from the issuance date assuming continued employment through the vesting date. Expiration: Seven years from date of grant if not exercised. | | RSUs | 1/3 | One-third annually for a three-year period from the issuance date assuming continued employment through the vesting date. |
Compensation Discussion and Analysis
• Our Compensation Committee and management team have responsibility for managing the administration, determination and approval of total and, in the case of the Named Executive Officers, the Compensation Committee is responsible for individual approval of payouts under the incentive plans. • The incentive elements of our compensation program (annual incentives and multi-year equity awards) are designed to reward both annual performance (under the AIP) and longer-term performance (under the 2018 Plan). We believe this design mitigates any incentive for short-term risk-taking that could be detrimental to our company’s long-term best interests. • The performance periods for our PSUs overlap, and our time-vested RSUs vest one-third annually for a three-year period from the issuance date. This mitigates the motivation to maximize performance in any one period at the expense of others. • Maximum payouts under our AIP are currently capped at no more than 200% for all applicable employees of the target award opportunity set by the Compensation Committee. We believe these limits mitigate excessive risk-taking, since the maximum amount that can be earned is limited. • Finally, our AIP and our 2018 Plan both contain provisions under which awards may be recouped or forfeited if the recipient has not complied with our policies. In addition, our performance-based plans (cash incentive and performance shares) both contain provisions under which awards may be recouped or forfeited if the financial results for a period affecting the calculation of an award are later restated. • The Compensation Committee retains an independent compensation consultant. Compensation Committee Report The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. Compensation Committee of the Board of Directors Bruce Taten, Chair Bryan Ingram Michele Klein
Summary Compensation Table
Summary Compensation Table The following table summarizes the total compensation for each of our fiscal years ended June 28, 2024 (the 2024 year), June 30, 2023 (the 2023 year), July 1, 2022 (the 2022 year), of our Named Executive Officers for the applicable years in which they were serving in their respective Named Executive Officer positions.
Summary Compensation Table
| Name, Principal Position | Fiscal Year | Salary(1) | Stock Awards(2) | Option Awards(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5) | Total | | | | ($) | ($) | ($) | ($) | ($) | ($) | | Peter A. Smith, Director, President and Chief Executive Officer | 2024 | 650,000 | 2,106,947 | 1,110,668 | 371,157 | 13,112 | 4,251,884 | | | 2023 | 650,000 | 1,717,443 | 785,338 | 987,438 | 12,612 | 4,152,831 | | | 2022 | 650,000 | 1,640,498 | 766,369 | 1,113,168 | 19,509 | 4,189,544 | | Michael Connaway, Senior Vice President and Chief Financial Officer | 2024 | 38,365 | 1,000,011 | — | 28,088 | 873 | 1,067,337 | | Erin Boase, General Counsel, Vice President Legal Affairs | 2024 | 318,000 | 345,115 | 181,919 | 102,078 | 11,866 | 958,978 | | | 2023 | 256,811 | 149,349 | 68,291 | 109,943 | 9,825 | 594,219 | | | 2022 | 231,441 | 87,645 | 40,593 | 110,598 | 9,435 | 479,712 | | Gary Croke, Vice President Marketing and Product Line Management | 2024 | 256,331 | 108,984 | 57,455 | 82,366 | 5,724 | 510,860 | | | 2023 | 243,825 | 73,623 | 33,654 | 104,191 | 5,420 | 460,713 | | | 2022 | 236,900 | 109,535 | 50,742 | 113,206 | 10,466 | 520,849 | | David Gray, Former Senior Vice President and Chief Financial Officer | 2024 | 336,138 | 132,324 | 69,750 | 132,985 | 14,052 | 685,249 | | | 2023 | 349,939 | 132,026 | 60,366 | 186,919 | 9,257 | 738,507 | | | 2022 | 235,385 | 200,193 | — | 153,437 | 108,937 | 697,952 | | Bryan Tucker, Former Senior Vice President Americas Sales and Services | 2024 | 124,589 | — | — | 58,106 | 6,590 | 189,285 | | | 2023 | 333,934 | 125,991 | 57,615 | 178,370 | 10,981 | 706,891 | | | 2022 | 324,450 | 146,017 | 67,661 | 193,804 | 16,402 | 748,334 |
Summary Compensation Table
(1) Base salary amounts reflect a combination of the salary levels set at different times during the year. With respect to the 2024 year, the amounts reflect increases effective October 2, 2023 in connection with the annual merit review process discussed within the Compensation Discussion and Analysis. (2) The “Stock Awards” column shows the fair value of the equity-based awards as of the grant date for fiscal 2024, 2023, and 2022. The grant date fair value of PSUs and RSUs was determined under FASB ASC Topic 718 and represents the amount we would expense in our financial statements over the entire vesting schedule for the awards. The award value for PSUs included in the table above is based on the grant date fair value assuming target level achievement, which we have determined to be the probable level of achievement of the performance metrics underlying the awards as of the grant date. The assumptions used for determining values are set forth in Notes 1 and 9 to our audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for fiscal year 2024. These amounts reflect our accounting for these grants and do not correspond to the actual values that may be recognized by the Named Executive Officers. (3) The “Option Awards” column shows the aggregate grant date fair value of the stock options granted in fiscal 2024 and other applicable years as determined under FASB ASC Topic 718 (using Black-Scholes values). The assumptions used for determining values are set forth in Notes 1 and 9 to our audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for fiscal year 2024. (4) The “Non-Equity Incentive Plan Compensation” column shows the cash bonus earned under the fiscal year 2024, 2023 and 2022 annual incentive plan. (5) The following table describes the components of the “All Other Compensation” column.
Summary Compensation Table
| Name | Year | Life Insurance(a) | Company Matching Contributions Under 401(k) Plan(b) | Total All Other Compensation | | | | ($) | ($) | ($) | | Peter A. Smith | 2024 | 3,612 | 9,500 | 13,112 | | Michael Connaway | 2024 | 65 | 808 | 873 | | Erin Boase | 2024 | 657 | 11,209 | 11,866 | | Gary Croke | 2024 | 924 | 4,800 | 5,724 | | David Gray | 2024 | 1,854 | 12,198 | 14,052 | | Bryan Tucker | 2024 | 917 | 5,673 | 6,590 |
Summary Compensation Table
(a) Represents premiums paid for life insurance that represent taxable income for the Named Executive Officer. (b) Represents matching contributions made by us to the 401(k) account of the respective named executive.
Fiscal Year 2024 Grants of Plan-Based Awards
Fiscal Year 2024 Grants of Plan-Based Awards The following table lists our grants and incentives made to the Named Executive Officers during our fiscal year ended June 28, 2024, of plan-based awards, both equity and non-equity based under our AIP and 2018 Plan. There is no assurance that the grant date fair value of stock and option awards will ever be realized.
Fiscal Year 2024 Grants of Plan-Based Awards
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payments Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number or Shares of Stock or Units(3) (#) | All Other Option Awards: Number of Securities Underlying Options(4) (#) | Grant Date, Fair Value of Stock and Option Awards(5) ($) | | Name | Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | Peter A. Smith | Options | 8/28/2023 | — | — | — | — | — | — | — | 68,471 | 1,110,668 | | | RSU | 8/28/2023 | — | — | — | — | — | — | 29,249 | — | 984,229 | | | PSU | 8/28/2023 | — | — | — | 14,625 | 29,249 | 58,498 | — | — | 1,122,718 | | | AIP | — | 462,500 | 925,000 | 1,850,000 | — | — | — | — | — | — | | Michael Connaway | Options | — | — | — | — | — | — | — | — | — | — | | | RSU | 6/5/2024 | — | — | — | — | — | — | 32,489 | — | 1,000,011 | | | PSU | — | — | — | — | — | — | — | — | — | — | | | AIP | — | 17,500 | 35,000 | 70,000 | — | — | — | — | — | — | | Erin Boase | Options | 8/28/2023 | — | — | — | — | — | — | — | 11,215 | 181,919 | | | RSU | 8/28/2023 | — | — | — | — | — | — | 4,791 | — | 161,217 | | | PSU | 8/28/2023 | — | — | — | 2,396 | 4,791 | 9,582 | — | — | 183,898 | | | AIP | — | 63,600 | 127,200 | 254,400 | — | — | — | — | — | — | | Gary Croke | Options | 8/28/2023 | — | — | — | — | — | — | — | 3,542 | 57,455 | | | RSU | 8/28/2023 | — | — | — | — | — | — | 1,513 | — | 50,912 | | | PSU | 8/28/2023 | — | — | — | 757 | 1,513 | 3,026 | — | — | 58,072 | | | AIP | — | 51,319 | 102,637 | 205,274 | — | — | — | — | — | — | | David Gray | Options | 8/28/2023 | — | — | — | — | — | — | — | 4,300 | 69,750 | | | RSU | 8/28/2023 | — | — | — | — | — | — | 1,837 | — | 61,815 | | | PSU | 8/28/2023 | — | — | — | 919 | 1,837 | 3,674 | — | — | 70,509 | | | AIP | — | 90,389 | 180,778 | 361,556 | — | — | — | — | — | — | | Bryan Tucker | Options | 8/28/2023 | — | — | — | — | — | — | — | 6,493 | 105,323 | | | RSU | 8/28/2023 | — | — | — | — | — | — | 2,774 | — | 93,345 | | | PSU | 8/28/2023 | — | — | — | 1,387 | 2,774 | 5,548 | — | — | 106,480 | | | AIP | — | 81,113 | 162,225 | 324,450 | — | — | — | — | — | — |
Fiscal Year 2024 Grants of Plan-Based Awards
(1) The amounts shown under Estimated Possible Payouts Under Non-Equity Incentive Plan Awards reflect possible payouts under our fiscal 2024 AIP. Actual amounts earned for the year are reflected above within the Summary Compensation Table. (2) PSUs vest 100% on the third anniversary of the grant date based on the achievement of performance criteria. (3) These amounts represent the number of RSUs granted to the Named Executive Officers during fiscal year 2024, which vest annually over three years from the data of grant, subject to the Named Executive Officer’s continued employment through such vesting date. (4) These amounts represent the number of stock options granted to the Named Executive Officers during fiscal year 2024, which vest annually over three years from the date of grant, subject to the Named Executive Officer’s continued employment through such vesting date. (5) The “Fair Value of Stock and Option Awards” column shows the full grant date fair value of the stock options and other equity-based awards granted in fiscal year 2024. The grant date fair value of the awards were determined under FASB ASC Topic 718 and represents the amount we would expense in our financial statements over the entire vesting schedule for the awards in the event the vesting provisions are achieved. The assumptions used for determining values are set forth in Notes 1 and 9 to our audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal 2024. These amounts reflect our accounting for these grants and do not correspond to the actual values that may be recognized by the Named Executive Officers.
Fiscal Year 2024 Outstanding Equity Awards
Fiscal Year 2024 Outstanding Equity Awards The following table provides information regarding outstanding unexercised stock options and unvested stock awards held by each of our Named Executive Officers as of June 28, 2024. Each grant of options or unvested stock awards is shown separately for each Named Executive Officer. The vesting schedule for each award of options and unvested stock awards is shown in the footnotes following this table based on the grant date. The material terms of the awards, other than exercise price and vesting schedules described below, are generally described in the 2018 Plan.
Fiscal Year 2024 Outstanding Equity Awards
| | | Option Awards | | | | Stock Awards | | | | | | | | | | | | | Equity Incentive Plan Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | 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(3) | Number of Unearned Shares, Units or Other Rights that have not Vested | Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested(3)(7) | | | | (#) | (#) | ($) | | (#) | ($) | (#) | ($) | | Peter A. Smith | 8/28/2023 | — | 68,471(1) | 33.65 | 8/28/2030 | 29,249(2) | 839,154 | 29,249(4) | 839,154 | | | 9/1/2022 | 18,366 | 36,730(1) | 32.10 | 9/1/2029 | 16,329(2) | 468,479 | 24,494(5) | 702,733 | | | 7/3/2021 | 39,615 | 19,807(1) | 31.88 | 7/3/2028 | 8,016(2) | 229,979 | 24,049(6) | 689,966 | | | 9/1/2020 | 26,386 | —(1) | 11.00 | 9/1/2027 | — | — | — | — | | Michael Connaway | 6/5/2024 | — | — | — | | 32,489(2) | 932,109 | — | — | | Erin Boase | 8/28/2023 | — | 11,215(1) | 33.65 | 8/28/2030 | 4,791(2) | 137,454 | 4,791(4) | 137,454 | | | 9/1/2022 | 1,597 | 3,194(1) | 32.10 | 9/1/2029 | 1,420(2) | 40,740 | 2,130(5) | 61,110 | | | 9/1/2021 | 1,827 | 913(1) | 35.97 | 9/1/2028 | 376(2) | 10,787 | 1,129(6) | 32,391 | | | 9/1/2020 | 5,936 | —(1) | 11.00 | 9/1/2027 | — | — | — | — | | Gary Croke | 8/28/2023 | — | 3,542(1) | 33.65 | 8/28/2030 | 1,513(2) | 43,408 | 1,513(4) | 43,408 | | | 9/1/2022 | 787 | 1,574(1) | 32.10 | 9/1/2029 | 700(2) | 20,083 | 1,050(5) | 30,125 | | | 9/1/2021 | 2,284 | 1,141(1) | 35.97 | 9/1/2028 | 470(2) | 13,484 | 1,411(6) | 40,482 | | | 9/1/2020 | 8,034 | —(1) | 11.00 | 9/1/2027 | — | — | — | — | | David Gray | 8/28/2023 | — | 4,300(1) | 33.65 | 8/28/2030 | 1,837(2) | 52,704 | 1,837(4) | 52,704 | | | 9/1/2022 | 1,412 | 2,823(1) | 32.10 | 9/1/2029 | 1,255(2) | 36,006 | 1,883(5) | 54,023 | | | 10/18/2021 | — | — | — | 10/18/2028 | 2,189(2) | 62,802 | — | — | | Bryan Tucker | 8/28/2023 | — | 6,493(1) | 33.65 | 8/28/2030 | 2,774(2) | 79,586 | 2,774(4) | 78,586 | | | 9/1/2022 | 1,348 | 2,694(1) | 32.10 | 9/1/2029 | 1,198(2) | 34,371 | 1,797(5) | 51,556 | | | 9/1/2021 | 3,045 | 1,522(1) | 35.97 | 9/1/2028 | 627(2) | 17,989 | 1,881(6) | 53,966 | | | 9/1/2020 | 19,554 | —(1) | 11.00 | 9/1/2027 | — | — | — | — |
Fiscal Year 2024 Outstanding Equity Awards
(1) Stock options that vest annually over three years from date of grant. (2) RSUs that vest annually over three years from date of grant. (3) Market value is based on the $28.69 closing price of a share of our common stock as of June 28, 2024. (4) PSUs subject to three-year cliff vesting from date of grant assuming achievement of TSR and revenue growth targets over a three-year performance period starting fiscal 2024 to fiscal 2026. From 50% to 200% of the target PSUs will vest after the Compensation Committee certifies the achievement of the performance measure. Vesting of these PSUs is dependent on continuous employment through the vesting date in August 2026. (5) PSUs subject to three-year cliff vesting from date of grant assuming achievement of TSR and revenue growth targets over a three-year performance period starting fiscal 2023 to fiscal 2025. From 50% to 200% of the target PSUs will vest after the Compensation Committee certifies the achievement of the performance measure. Vesting of these PSUs is dependent on continuous employment through the vesting date in August 2025. (6) PSUs subject to three-year cliff vesting from date of grant assuming achievement of TSR and revenue growth targets over a three-year performance period starting fiscal 2022 to fiscal 2024. From 50% to 200% of the target PSUs will vest after the Compensation Committee certifies the achievement of the performance measure. Vesting of these PSUs is dependent on continuous employment through the vesting date. (7) The award value for PSUs included in the table above is based on the grant date fair value assuming target level achievement, which we have determined to be the probable level of achievement of the performance metrics underlying the awards as of the grant date.
Fiscal Year 2024 Option Exercised and Stock Vested Table
Fiscal Year 2024 Option Exercised and Stock Vested Table The following table provides information for each of our Named Executive Officers regarding the number of shares of our common stock acquired upon exercising vested options or release of stock awards during fiscal year 2024.
Fiscal Year 2024 Option Exercised and Stock Vested Table
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Received on Vesting ($) | | Peter A. Smith | — | — | 84,011 | 2,869,416 | | Michael Connaway | — | — | — | — | | Erin Boase | — | — | 10,782 | 375,988 | | Gary Croke | — | — | 8,686 | 313,999 | | David Gray | — | — | 2,817 | 81,367 | | Bryan Tucker | 36,264 | 335,907 | 20,366 | 736,231 |
Fiscal Year 2024 Option Exercised and Stock Vested Table
(1) Vested number of shares of RSUs and PSUs.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control The employment agreements entered into with our Named Executive Officers provide for such executive officers to receive certain payments and benefits in the event of certain terminations of employment. These arrangements are set forth in more detail below and assume an applicable termination event (and Change of Control event, as defined in the corresponding employment agreements) on June 28, 2024 (the last business day of our fiscal year) and refer to our stock price on that date. The Board has determined that such payments and benefits are an integral part of a competitive compensation package for our executive officers. The table below reflects the compensation and benefits due to each of Messrs. Smith, Connaway, and Croke and Ms. Boase in the event of termination of employment by us without Cause (as defined below), due to the executive’s death or Disability (as defined below) or a resignation by the executive for Good Reason (as defined below) (other than within the three months preceding or the 12 months following a Change of Control (as defined below) so long as the respective executive officer signs a general release of all claims in favor of the Company). The table further reflects compensation and benefits due to Messrs. Smith, Connaway, and Croke and Ms. Boase in the event of termination of employment by us without Cause, due to death or Disability or a resignation, or by the executive for Good Reason within the three months preceding or the 12 months following a Change of Control. The amounts shown in the table are estimates of the amounts that would be paid upon such termination of employment. There are currently no compensation and benefits due to any Named Executive Officer under his or her employment agreement in the event of a termination of employment by us for Cause (as defined below) or voluntary termination (except in the case of Good Reason). The actual amounts would be determined only at the time of the termination of employment. Mr. Gray and Mr. Tucker are not included in the table because their employment with us ended during fiscal year 2024. The payments and benefits they received on their respective resignation and retirement are discussed in more detail below.
Potential Payments Upon Termination or Change of Control
| Name | Conditions for Payouts | Base Salary Component(1) | Cash Incentive Component(2) | Accelerated Equity Vesting(3) | Insurance Benefit(4) | Out-Placement Services(5) | Total | | | | ($) | ($) | ($) | ($) | ($) | ($) | | Peter A. Smith | Termination without cause or for good reason, or due to death or disability. | 650,000 | 925,000 | — | 42,091 | 30,000 | 1,647,091 | | | Within 3 months preceding or 12 months following a Change of Control | 975,000 | 1,387,500 | 7,355,944 | 63,136 | 30,000 | 9,811,580 | | Michael Connaway | Termination without cause or for good reason, or due to death or disability. | 525,000 | 420,000 | — | 11,301 | 30,000 | 986,301 | | | Within 3 months preceding or 12 months following a Change of Control | 525,000 | 420,000 | 932,109 | 16,592 | 30,000 | 1,923,701 | | Erin Boase | Termination without cause or for good reason, or due to death or disability. | 318,000 | 127,200 | — | 24,268 | 30,000 | 499,468 | | | Within 3 months preceding or 12 months following a Change of Control | 318,000 | 127,200 | 932,109 | 36,402 | 30,000 | 1,443,711 | | Gary Croke | Termination without cause or for good reason, or due to death or disability. | 259,998 | 103,999 | — | 42,091 | 30,000 | 436,088 | | | Within 3 months preceding or 12 months following a Change of Control | 259,998 | 103,999 | 370,503 | 63,136 | 30,000 | 827,636 |
Potential Payments Upon Termination or Change of Control
(1) The base salary component represents the applicable multiple of the respective Named Executive Officer's base salary amount in effect as of June 28, 2024, in accordance with the respective Named Executive Officer's employment agreement. (2) The cash incentive component represents the cash bonus due under the fiscal year 2024 AIP for a termination absent a Change in Control and the target cash bonus amount under the fiscal year 2024 AIP as reflected in the respective executive officer's employment agreement for a termination in connection with a Change in Control. (3) Reflects acceleration of all outstanding equity awards held by the executive officer as of June 28, 2024. (4) The insurance benefit provided is paid directly to the insurer benefit provider and includes amounts for COBRA. (5) The estimated dollar amounts for outplacement services would be paid directly to an outplacement provider selected by us.
CEO Pay Ratio
CEO Pay Ratio Pursuant to Item 402(u) of Regulation S-K, the Company is required to provide the following information with respect to the year ended June 28, 2024: • The median of the annual total compensation of all employees of the Company (other than Mr. Smith’s the Company’s Chief Executive Officer) was $59,822. • The annualized total compensation of Mr. Smith, the Company’s Chief Executive Officer, was $4,609,938. • Based on this information, the ratio of the annual total compensation of the Company’s Chief Executive Officer to the median of the annual total compensation of all employees was 77.06:1. To identify the median paid employee and determine such employee’s annual total compensation in the last fiscal year, the Company assessed its employee population as of June 28, 2024, and determined employee compensation using the 12-month period ending June 28, 2024. On this date, the Company’s employee population consisted of 912 individuals. The Company determined its median employee by: (i) calculating total target cash compensation as the sum of salary and target variable compensation, including target sales bonus, for each of the Company’s employees; (ii) ranking the total target cash compensation of all employees except for the Chief Executive Officer from lowest to highest; and (iii) picking the employee who was in the middle of the list.
Election of Directors
Election of Directors At the Annual Meeting, directors are being nominated for election to serve until the 2025 Annual Meeting or until their successors are elected and qualified. In the unanticipated event that a nominee is unable or declines to serve as a director at the time of the Annual Meeting, all proxies received by the proxy holders will be voted for any subsequent nominee named by the Board to fill the vacancy created by the earlier nominee’s withdrawal from the election. As of the date of this Proxy Statement, the Board is not aware of any director nominee who is unable or will decline to serve as a director. Each of the nominees has consented to being named in this Proxy Statement and to serve as a director if elected. Ages are as of the date of this Proxy Statement.
Director Nominees
Director Nominees
Director Nominees
| Name | Title | Age | Tenure | | John Mutch | Chair of the Board | 68 | 9 years, 8 months | | Laxmi Akkaraju | Director | 55 | 10 months | | Asako Aoyama | Director | 52 | — | | Bryan Ingram | Director | 60 | 2 years, 10 months | | Michele Klein | Director | 75 | 3 years, 4 months | | Peter A. Smith | Director | 58 | 4 years, 7 months | | Bruce Taten | Director | 68 | 2 years, 6 months |