DEF 14A of AvePoint, Inc.
Filed Mar 19, 2024 · FY20230001437749-24-008452
By Order of the Board of Directors
| Report of the Compensation Committee of the Board of Directors of AvePoint, Inc. | 34 | | Summary Compensation Table | 34 | | Grants of Plan Based Awards in Fiscal Year 2023 | 35 | | Outstanding Equity Awards at Fiscal-Year End | 36 | | Option Exercises and Stock Vested in Fiscal Year 2023 | 37 | | Equity Compensation Plan Information | 40 | | CEO Pay Ratio | 40 | | Pay Versus Performance Disclosure | 41 | | The Company’s Compensation Policies and Practices as They Relate to Risk | 44 | | Advisory Vote on Executive Compensation (Proposal 2) | 44 | | Approval of Proposal 2 | 44 | | Advisory Vote on Frequency of Vote on Executive Compensation (Proposal 3) | 45 | | Approval of Proposal 3 | 45 | | Report of the Audit Committee of the Board of Directors of AvePoint, Inc. | 46 | | Independent Registered Public Accounting Firm | 47 | | Principal Accounting Fees and Services | 47 | | Pre-Approval Policy | 47 | | Ratification of Appointment of Independent Registered Public Accounting Firm for the 2024 Fiscal Year (Proposal 4) | 48 | | Approval of Proposal 4 | 48 | | Approval of the Adoption of the Third Amended and Restated Certificate of Incorporation to Reflect New Delaware Law Provisions Regarding Exculpation of Officers (Proposal 5) | 48 | | Approval of Proposal 5 | 49 | | Transactions with Related Persons | 49 | | Delinquent Section 16(a) Reports | 50 | | Delivery of Documents to Stockholders Sharing an Address | 50 | | Other Matters | 51 |
Board of Directors
Board of Directors The following table provides summary information about each director.
Board of Directors
| Director Occupation | Age | Director Since | Board Independent | Other Public Boards | Committee Memberships | | | Up for Re- Election at Current Annual Meeting | | | | | | | AC | CC | NCGC | | | Xunkai Gong, Executive Chairman, AvePoint, Inc. | 61 | 2001 | No | 0 | | | | Yes | | Tianyi Jiang, Chief Executive Officer, AvePoint, Inc. | 49 | 2004 | No | 0 | | | | No | | Brian M. Brown, Chief Legal and Compliance Officer, Secretary, AvePoint, Inc. | 51 | 2008 | No | 0 | | | | No | | Jeff Epstein, Operating Partner, Bessemer Venture Partners | 67 | 2021 | Yes | 3 | | C | M | No | | Jeff Teper, Lead Independent Director, AvePoint, Inc. President, Microsoft, Inc. | 59 | 2014 | Yes | 1 | M | M | C | Yes | | John Ho, Founder and Chief Industrialist, Janchor Partners | 47 | 2021 | Yes | 1 | C F | | | No | | Janet Schijns, Chief Executive Officer and Co-Founder, JS Group | 61 | 2022 | Yes | 0 | M | M | M | No |
Board of Directors
| AC | Audit Committee | C | Chairperson | | CC | Compensation Committee | M | Member | | NCGC | Nominating and Corporate Governance Committee | F | Financial expert |
Election of Directors
Election of Directors
(Proposal 1)
(Proposal 1)
Nominees for Election as Directors
Nominees for Election as Directors The Company’s Second Amended and Restated Certificate of Incorporation provides that the Board is to be divided into three classes of directors, with the classes to be as nearly equal in number as possible. The current terms of office of the three current classes of directors expire at this Annual Meeting for the “Class III” directors, at the annual meeting of stockholders in 2025 for the “Class I” directors, and at the annual meeting of stockholders in 2026 for the “Class II” directors. Upon the expiration of the term of office of each class, the nominees for such class will be elected for a term of three years to succeed the directors whose terms of office expire. In accordance with the recommendation of the Nominating and Corporate Governance Committee, Mr. Gong and Mr. Teper have been nominated by the Board for election to Class III with a three-year term that will expire at the annual meeting of stockholders in 2027. Each is an incumbent director.
Approval of Nominees
Approval of Nominees Approval of the nominees requires a plurality of the votes cast at the Annual Meeting, at which a quorum is present. The term “plurality” for purposes of election of directors means that the nominees who receive the greatest number of votes for each open seat will be elected. Votes may be cast in favor of the election of directors or withheld. Votes that are withheld will be counted for the purposes of determining the presence or absence of a quorum but will have no effect on the election of directors. The election of directors is a non-routine matter; therefore, brokers, banks and other nominees may not vote their shares in favor of director nominees if they have not received voting instructions from the beneficial owners of the shares. Broker non-votes will not be treated as votes cast on this matter, and therefore will not have any effect on the election of directors. If any of the nominees should become unable or unwilling to serve as a director, the persons named in the proxy intend to vote for the election of such substitute nominee for director as the Board may recommend. In lieu of designating a substitute, the Board may reduce the number of directors. It is not anticipated that any of the nominees will be unable or unwilling to serve as a director. The Board unanimously recommends that the stockholders of AvePoint vote FOR the election of the nominees to serve as directors.
Information About Nominees and Continuing Directors
Information About Nominees and Continuing Directors Biographical information concerning each of the nominees and each of the directors continuing in office is presented below.
Board of Directors
Board of Directors The Board currently consists of seven (7) directors. The Board has three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. During AvePoint’s 2023 fiscal year, the Board held six (6) meetings, the Audit Committee held five (5) meetings, the Compensation Committee held four (4) meetings, and the Nominating and Corporate Governance Committee held four (4) meetings. During 2023, each director attended at least 75% of the aggregate of the total number of meetings of the Board and of each committee of the Board on which such director served. It is AvePoint’s policy that all directors should attend annual meetings of AvePoint’s stockholders. All directors attended the 2023 Annual Meeting of Stockholders. In determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee considers the director’s participation in and contributions to the activities of the Board. The guidelines for the annual Board evaluation, meeting attendance, and the other criteria for Board membership are described in the Board’s Corporate Governance Guidelines, available at https://ir.avepoint.com/governance/governance-documents/default.aspx. Each director is encouraged to be involved in continuing director education on an ongoing basis to enable them to better perform their duties and to recognize and appropriately address issues that arise. Board members are encouraged to attend seminars, conferences, and other continuing education programs designed especially for directors of public companies, including, but not limited to, accredited director education programs.
Non-Employee Director Compensation
Non-Employee Director Compensation The Compensation Committee is responsible for making recommendations to the Board regarding non-employee director compensation. In accordance with this authority, the Compensation Committee utilizes the independent compensation consultant, Compensia, Inc. (“Compensia”), to advise the Compensation Committee on matters related to director compensation. The Company’s director compensation program was reviewed by Compensia in 2023 relative to a peer group of companies (the “Peer Group”). The Peer Group was reviewed by Compensia prior to each compensation review. After review, the Compensation Committee resolved to provide the following compensation to non-employee directors for their service as members of the Board and as members of the various Board committees effective as of May 25, 2023:
Non-Employee Director Compensation
| ■ | An annual cash retainer of $36,000; |
Non-Employee Director Compensation
| ■ | A $4,000 cash incentive payment for service as a member of the Nominating and Corporate Governance Committee; | | ■ | A $10,000 cash incentive payment for service as a member of the Audit Committee; | | ■ | A $6,000 cash incentive payment for service as a member of the Compensation Committee; |
Non-Employee Director Compensation
| ■ | A $20,000 cash incentive payment for service as the Audit Committee Chairperson; |
Non-Employee Director Compensation
| ■ | A $12,000 cash incentive payment for service as the Compensation Committee Chairperson; |
Non-Employee Director Compensation
| ■ | A $10,000 cash incentive payment for service as the Nominating and Corporate Governance Committee Chairperson; |
Non-Employee Director Compensation
| ■ | A $175,000 one-time restricted stock unit (“RSU”) grant for the initial year of service on the Board, which vests one year after the grant is awarded; and |
Non-Employee Director Compensation
| ■ | Annual $175,000 RSU grants for each additional year of service on the Board (subject to the annual approval of such grant amounts by the Compensation Committee), in each case vesting annually. |
Non-Employee Director Compensation
Non-employee directors receive stock-based compensation under the 2021 Plan. We also reimburse our directors for reasonable out-of-pocket and travel expenses incurred in connection with their service on the Board. The following table sets forth information regarding the compensation earned for service on our Board during the year ended December 31, 2023, by non-employee directors. Mr. Gong, Dr. Jiang, and Mr. Brown also served as directors but did not receive any additional compensation for their service as directors. Their compensation as executive officers is set forth below in the “Summary Compensation Table.”
Non-Employee Director Compensation
| Non-Employee Director | Fees Earned or Paid in Cash (US$)(1) | Stock Awards (US$) (2) | Total (US$) | | Jeff Epstein | $56,000 | $175,000 | $231,000 | | Jeff Teper | $62,000 | $175,000 | $237,000 | | John Ho | $60,500 | $175,000 | $235,500 | | Janet Schijns | $52,000 | $175,000 | $227,000 |
Non-Employee Director Compensation
| (1) This column represents the cash retainers, committee fees and committee chairperson fees, where applicable, paid to each non-employee director in 2023. | | (2) The amounts reported in this column represent the grant date fair value of the RSU awards made to each non-employee director on the date of grant, June 1, 2023, calculated in accordance with FASB ASC Topic 718. Aside from the 26,636 RSUs granted to each non-employee director on June 1, 2023, Jeff Teper also had 479,048 share subject to options outstanding as of the end of fiscal year 2023. |
Non-Employee Director Compensation
The annual director fee and the annual committee fees are paid in four equal quarterly installments in arrears on the first business day following each quarter of the fiscal year in which the eligible director completes board or committee service. Such fees are paid in the form of cash, provided that a director may elect to receive all or any portion of such fees in the form of a grant of RSUs (as determined by the Compensation Committee). The fiscal year for granting outside directors’ equity is June 1 through May 30. The annual equity grants are typically made on the first business day in the month of June of each year. All grants of RSUs vest one year after the grant is awarded, provided that the grants will immediately vest in the event of death, disability, retirement, or termination in connection with a change in control. The compensation paid to our non-employee directors is designed to deliver compensation of approximately 25% in cash and 75% in equity (assuming a director does not elect to receive additional equity in lieu of cash, as described above), with the objective of appropriately balancing the pay of non-employee directors for their service while linking their compensation closely to returns to stockholders through the potential for enhanced value from future stock price appreciation. The Company does not provide pensions, medical benefits or other benefit programs to non-employee directors.
What are AvePoint’s executive compensation principles and objectives?
| ■ | Pay-for-performance: The Compensation Committee structures the executive compensation program to balance annual and long-term corporate objectives, including specific measures which focus on financial performance, with the goal of fostering stockholder value creation in the short and long-term. In addition, the Company plans to introduce performance-based RSUs as a component of the long-term equity compensation for its name executive officers for 2024. |
What are AvePoint’s executive compensation principles and objectives?
| ■ | Create an ownership culture: The Compensation Committee believes that using equity compensation to instill an ownership culture effectively aligns the interests of management and stockholders. To promote this alignment, the Compensation Committee granted equity awards in 2023 which were comprised of time-based stock options and time-based RSUs to provide incentives for named executive officers to enhance stockholder value. |
What are AvePoint’s executive compensation principles and objectives?
| ■ | Utilize a total compensation perspective: The Compensation Committee considers all of the compensation components — base salary, annual cash incentive, long-term equity incentives, benefits and perquisites — in total. |
How Do We Determine Executive Pay?
How Do We Determine Executive Pay? Comparison Data: Benchmarking in comparison to the Peer Group is one of several factors considered in the compensation process but is not in and of itself determinative. The relative position of an individual named executive officer in comparison to the Peer Group is based on their respective competencies, experience and performance. While we do not establish executive pay based solely on benchmarking data, we believe that our pay levels and practices should be within a range of competitiveness with our Peer Group and benchmarking provides us with an assessment of reasonableness and competitiveness; however, each individual’s actual compensation is based on numerous factors including the individual’s level of experience in the role and the annual and long-term performance of both AvePoint and the individual. The Compensation Committee reviews target total direct compensation, which consists of base salary, target annual cash incentive, and long-term equity incentives, to the Peer Group. The Compensation Committee utilizes this comparison data for its named executive officer compensation because the Compensation Committee believes this is the best way to determine whether such compensation is competitive with AvePoint’s labor market for executive talent. Peer Group: The Compensation Committee takes into account a number of factors for each potential Peer Group company including, but not limited to, size (revenues, growth rates, market capitalization and number of employees), nature of business (business comparators and similar customer base), organizational complexity and business model (span and scope of the organization), competition for executive talent (organizations from which executives may be recruited to and from) and location. While all of the aforementioned factors are taken into account, the Compensation Committee considered the most important factors to be size, market capitalization, nature of business and competition for executive talent as these provide the most meaningful insight into competitive practices. The Peer Group for fiscal year 2023 included the following companies:
Base Salary
Base Salary Base salary is annual fixed cash compensation, and is a standard element of compensation necessary to attract and retain talent. Base salary is the principal non-variable element of AvePoint’s total compensation program. Base salaries reflect each named executive officer’s responsibilities, the impact of each named executive officer’s position, and the contributions each named executive officer delivers to AvePoint. Base salaries are determined by competitive levels in the market, based on AvePoint’s Peer Group and the results of executive compensation surveys, for executives with comparable responsibilities and job scope. Base salary increases, if any, are based on individual performance, market conditions and Company performance. To gauge market conditions, the Compensation Committee evaluates the Peer Group and market data compiled by its consultant. Base salaries are set following review of this data upon consideration of the named executive officer’s experience, tenure, performance, and potential. The annualized base salaries of the named executive officers are as follows:
Annual Incentive Plan
Annual Incentive Plan The Annual Incentive Plan (“AIP”) is a cash incentive that provides our executive officers with the opportunity to be rewarded annually based on the achievement of AvePoint’s key financial goals. The Compensation Committee sets the target annual cash bonus for each named executive officer as a percentage of the executive’s annual base salary. Award opportunities are established at threshold, target and maximum levels. The maximum level for each performance criterion under the AIP is typically capped at 150% of target. The actual amount of the award is determined based on the level of achievement against each financial goal after the completion of the performance period. For 2023, the Compensation Committee approved the following target incentive percentages for each named executive officer:
Annual Incentive Plan
| Named Executive Officer | Target Incentive as a % of Base Salary | | Xunkai Gong | 100% | | Tianyi Jiang | 80% | | Brian M. Brown | 100% | | James Caci | 90% |
Annual Incentive Plan
2023 Goals, Target Setting and Results. In February 2023, the Compensation Committee selected annual recurring revenue (“ARR”), total revenue and non-GAAP operating income as the key financial performance measures to determine the level of payout for each named executive officer. For purposes of this section, “non-GAAP operating income” means GAAP operating income plus stock-based compensation expense and the amortization of acquired intangible assets. The Compensation Committee set target goal values that aligned with the Company’s growth objectives and financial guidance. The goals, target values and financial results appear below:
Annual Incentive Plan
| Goal ($ in millions) | Weight | Fiscal Year 2023 Award Targets | | | Fiscal Year 2023 Results | Payout as a % of Target Incentive | | | | Threshold | Target | Maximum | | | | Total Revenue | 40% | $248.7 | $270.3 | $291.9 | $271.8 | 101.6% | | ARR | 40% | $242.9 | $264.0 | $285.1 | $264.5 | 101.2% | | Non-GAAP Operating Income | 20% | $9.8 | $19.6 | $29.4 | $22.2 | 114.8% | | Payout (as a % of target annual bonus opportunity) | | 50% | 100% | 150% | | | | Weighted Average payout as a % of Target | | | | | | 104.1% |
Annual Incentive Plan
2023 Payouts. The Company’s fiscal year 2023 results exceeded all bonus targets, and the bonus payout amount was calculated to be 104.1%. The payout amount was calculated using the bonus targets and payout structure approved by the Compensation Committee in February 2023. The individual named executive officer bonus payout amounts were then reviewed and approved by the Compensation Committee. Actual payouts to each of the named executive officers in February 2024 were calculated as follows:
Annual Incentive Plan
| Named Executive Officer | 2023 Base Salary | Target Annual Cash Incentive (as a % of Base Salary) | Target Annual Cash Incentive | Annual Cash Incentive Payout Percentage | 2023 Annual Cash Incentive | | Xunkai Gong | $400,000 | 100% | $400,000 | 104.1% | $416,400 | | Tianyi Jiang | $450,000 | 80% | $360,000 | 104.1% | $374,760 | | Brian M. Brown | $350,000 | 100% | $350,000 | 104.1% | $364,350 | | James Caci | $350,000 | 90% | $315,000 | 104.1% | $327,915 |
Long-Term Equity Compensation
Long-Term Equity Compensation We believe that long-term equity compensation provides appropriate motivational tools to achieve certain long-term Company goals. The long-term equity compensation plan is designed to align the interests of named executive officers with those of stockholders, motivate each named executive officer to achieve key financial goals and reward superior performance. The design of the program, which is similar to the program used with the larger employee base, helps to reduce turnover and to retain the knowledge and skills of AvePoint’s valued employees. In structuring the amount of long-term equity compensation awards, the Compensation Committee seeks to balance such awards and the interests of AvePoint’s stockholders under a policy that moderates the dilutive effects of annual equity awards against the need to provide attractive and competitive incentive compensation. The Compensation Committee approves annual equity awards to named executive officers and other key employees at the February Compensation Committee meeting, with the grant date following the resumption of the open trading window in March. The Company does not time the grant in coordination with the release of material non-public information. Elements of Long-Term Equity Compensation: Time-Based RSUs. RSUs are similar to time-based restricted shares, with the principal difference being that with RSUs, the shares are not actually issued until vesting. The RSUs have a four-year vesting period, vesting one-fourth after the first year with the remaining three-fourths vesting quarterly over the next twelve quarters. The number of RSUs granted is based on the approved target dollar amount of the award, divided by the fair market value of AvePoint’s common stock on the date of the grant. Upon vesting, each RSU will equal the right to receive one share of AvePoint’s stock. RSUs facilitate retention by providing value if the named executive officer remains with AvePoint over the vesting period. In addition, RSUs provide alignment with stockholders through stock ownership, and the potential for future growth. Lastly, the Company plans to introduce performance-based RSUs as a component of the long-term equity compensation for its named executive officers for 2024. Stock Options. Stock options (“options”) are grants which give the holder the right to receive stock in AvePoint upon paying the exercise price determined at the time of grant. The grant price is the closing market price of AvePoint’s common stock on the grant date. Options have a four-year vesting period, vesting one-fourth after the first year with the remaining three-fourths vesting quarterly over the next twelve quarters. The number of options issued is based on the approved target dollar amount of options to be awarded, divided by the value of one option, which is equal to the Black-Scholes value of an equivalent stock option. Options have a term of ten years. Options motivate executive efforts to achieve results that produce long-term increases (since executives have up to 10 years to exercise their options) in common stock. The four-year option vesting period encourages named executive officers to work with a long-term view of AvePoint’s performance and reinforces their long-term affiliation with AvePoint. Named executive officers receive value in the option grants only when the share price increases above the grant price, which strengthens their alignment with stockholder interests. The award agreements for RSUs and stock options provide that if a participant’s employment with AvePoint is terminated due to death, permanent and total disability, retirement, by AvePoint without “cause,” or by the participant with “good reason” (with “cause” and “good reason” being defined in the award agreements), any unvested awards held by a participant at termination will vest. The award agreements and the change in control provisions in the employment agreements further provide that in the event of a change in control of AvePoint, any unvested awards held by the participant at the time of the change in control will vest immediately. 2022 Equity Awards. In February 2022, the Compensation Committee considered each named executive officers’ role, market data and awards made in 2021 in connection with the Apex Business Combination on July 2, 2021, making AvePoint a public company. With all factors weighted, the Compensation Committee made a determination to make the awards as set forth in the table below in fiscal year 2022. 2023 Equity Awards. The equity awards reviewed and approved by the Compensation Committee in February 2023 were granted conservatively compared to the market and the prior year awards. The grant amounts were determined by taking into consideration Company performance and individual relativity to market data as well as the desire to manage the overall stock-based compensation expense for the Company.
Long-Term Equity Compensation
| Named Executive Officer | Year | Option Award Value (US$)(1) | RSU Award Value (US$)(2) | Total Value (US$) | | Xunkai Gong | 2023 2022 | 499,999 375,000 | 499,998 1,125,003 | 999,997 1,500,003 | | Tianyi Jiang | 2023 2022 | 499,999 375,000 | 499,998 1,125,003 | 999,997 1,500,003 | | Brian M. Brown | 2023 2022 | 250,001 107,501 | 750,000 322,500 | 1,000,001 430,001 | | James Caci | 2023 2022 | 350,001 225,000 | 1,049,999 675,000 | 1,400,000 900,000 |
Long-Term Equity Compensation
| (1) The amounts reported in this column represent the aggregate grant date fair value of time-based option grants awarded to the named executive officers in 2023 and 2022, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. This calculation assumes that the named executive officer will perform the requisite service for the award to vest in full as required by SEC rules. The assumptions used in calculating the grant date fair values of the equity awards reported in this column are set forth in Note 14 of our audited Consolidated Financial Statements for the year ended December 31, 2023, appearing in the Annual Report on Form 10-K for the year ended December 31, 2023. The amounts reported in this column reflect the accounting cost for these equity awards and do not correspond to the actual economic value that may be realized by our named executive officers upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options. | | (2) The amounts reported in this column represent the aggregate grant date fair value of time-based RSU grants awarded to the named executive officer in 2023 and 2022, calculated by reference to the closing price of our Common Stock on the grant date of such awards (March 13, 2023 and March 21, 2022, respectively) as reported on Nasdaq. |
Severance or Change-in-Control Agreements with Named Executive Officers
Severance or Change-in-Control Agreements with Named Executive Officers The named executive officers have severance provisions in their respective employment agreements, which provide for certain benefits upon an involuntary termination. These agreements promote retention of high-performing individuals and also assist in recruiting and retaining key employees by providing competitive arrangements. In addition, equity awards provided to these named executive officers provide for an acceleration of equity grants upon a change in control of AvePoint. Change in control provisions are designed to protect executives in the event of a change in control and provide security for executives against sudden or arbitrary termination in connection with a change in control. The provisions of each agreement were determined by an analysis of the Peer Group and market trends and practices and are set at competitive levels with industry practice.
Summary Compensation Table
Summary Compensation Table The following table provides information regarding total compensation awarded to, earned by, and paid to our named executive officers for services rendered in all capacities for the fiscal years ended December 31, 2023, 2022 and 2021. All figures shown are in U.S. Dollars.
Summary Compensation Table
| Named Executive Officer | Year | Salary (1) ($) | Stock Awards (2) ($) | Option Awards (3) ($) | Non-equity incentive plan compensation (4) ($) | Total ($) | | Xunkai Gong | 2023 | 400,000 | 499,998 | 499,999 | 416,400 | 1,816,397 | | Executive Chairman | 2022 | 400,000 | 1,125,003 | 375,000 | 280,000 | 2,180,003 | | | 2021 | 380,000 | 2,999,997 | 3,069,293 | 360,000 | 6,809,290 | | Tianyi Jiang | 2023 | 450,000 | 499,998 | 499,999 | 374,760 | 1,824,757 | | Chief Executive Officer | 2022 | 450,000 | 1,125,003 | 375,000 | 252,000 | 2,202,003 | | | 2021 | 390,000 | 2,999,997 | 3,069,293 | 324,000 | 6,783,290 | | Brian Michael Brown | 2023 | 350,000 | 750,000 | 250,001 | 364,350 | 1,714,351 | | Chief Legal and Compliance Officer | 2022 | 350,000 | 322,500 | 107,501 | 245,000 | 1,025,001 | | | 2021 | 295,000 | 2,499,999 | 2,557,740 | 315,000 | 5,667,739 | | James Caci | 2023 | 350,000 | 1,049,999 | 350,001 | 327,915 | 2,077,915 | | Chief Financial Officer | 2022 | 315,000 | 675,000 | 225,000 | 199,500 | 1,414,500 | | | 2021 | 113,481 | 999,996 | - | 118,125 | 1,231,604 |
Summary Compensation Table
| (1) Salary amounts reflect the actual base salary payments made in fiscal years 2023, 2022 and 2021, as applicable to the named executive officer. | | (2) The amounts reported in this column represent the aggregate grant date fair value of time-based RSU grants awarded to the named executive officer in 2023, 2022 and 2021, calculated by reference to the closing price of our common stock on the grant date of such awards (March 13, 2023, March 21, 2022 and September 1, 2021, respectively) as reported on Nasdaq and calculated in accordance with FASB ASC Topic 718. | | (3) The amounts reported in this column represent the aggregate grant date fair value of time-based option grants awarded in 2023, 2022 and 2021, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. This calculation assumes that the named executive officer will perform the requisite service for the award to vest in full as required by SEC rules. | | (4) The amounts reported in this column represent performance-based bonuses paid under the annual incentive plan for 2023, 2022 and 2021. |
Summary Compensation Table
See the “Compensation Discussion and Analysis” above for a description of the material terms of each grant disclosed in the table above.
Grants of Plan-Based Awards in Fiscal Year 2023
Grants of Plan-Based Awards in Fiscal Year 2023 The following table shows all plan-based awards granted to the named executive officers during fiscal year 2023. In accordance with SEC rules, this table presents performance awards as having been granted in the year in which the performance goals were established, and if an award has multiple performance periods, the portion relating to each performance period is treated as a separate grant. The equity awards granted in fiscal year 2023 identified in the table below are also reported in “Outstanding Equity Awards at 2023 Fiscal Year End.” For additional information regarding incentive plan awards, please refer to the “Annual Incentive Plan” and “Long Term Equity Compensation” sections of our “Compensation Discussion and Analysis..”
Grants of Plan-Based Awards in Fiscal Year 2023
| Named Executive Officer | Type of Award | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($) | | | | | Threshold ($) | Target ($) | Maximum ($) | | | | | | Xunkai Gong | Annual Incentive Plan Award | | 200,000 | 400,000 | 600,000 | | | | | | | RSU | 13-Mar-2023 | | | | 118,483 | | | 499,998.00 | | | NQ Stock Option | 13-Mar-2023 | | | | | 200,959 | $4.22 | 499,999.00 | | Tianyi Jiang | Annual Incentive Plan Award | | 180,000 | 360,000 | 540,000 | | | | | | | RSU | 13-Mar-2023 | | | | 118,483 | | | 499,998.00 | | | NQ Stock Option | 13-Mar-2023 | | | | | 200,959 | $4.22 | 499,999.00 | | Brian Michael Brown | Annual Incentive Plan Award | | 175,000 | 350,000 | 525,000 | | | | | | | RSU | 13-Mar-2023 | | | | 177,725 | | | 750,000.00 | | | NQ Stock Option | 13-Mar-2023 | | | | | 100,480 | $4.22 | 250,001.00 | | James Caci | Annual Incentive Plan Award | | 157,000 | 315,000 | 472,500 | | | | | | | RSU | 13-Mar-2023 | | | | 248,815 | | | 1,049,999.00 | | | NQ Stock Option | 13-Mar-2023 | | | | | 140,672 | $4.22 | 350,001.00 |
Outstanding Equity Awards at Fiscal-Year End
Outstanding Equity Awards at Fiscal-Year End
Outstanding Equity Awards at Fiscal-Year End
| | | Option Awards | | | Stock Awards | | | | Named Executive Officer | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares that Have Not Vested (#)(1) | Market Value of Shares that Have Not Vested ($)(2) | | Xunkai Gong | 01-Jul-2016 | 949,442 | -(3) | $1.3357 | 01-Jul-2026 | - | - | | | 10-Jan-2019 | 521,487 | -(4) | $1.5866 | 10-Jan-2029 | - | - | | | 12-Aug-2020 | 1,319,639 | 148,832(5) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 468,069 | 107,998(6) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 12,365 | 25,608(7) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 72,246 | 149,620(8) | $3.9049 | 12-Aug-2030 | - | - | | | 01-Sep-2021 | 421,812 | 328,076(6) | $9.64 | 01-Sep-2031 | - | - | | | 01-Sep-2021 | - | - | - | - | 136,150 | 1,117,792 | | | 21-Mar-2022 | 60,486 | 77,764(6) | $5.88 | 21-Mar-2032 | - | - | | | 21-Mar-2022 | - | - | - | - | 107,621 | 883,568 | | | 13-Mar-2023 | - | 200,959(6) | $4.22 | 13-Mar-2033 | - | - | | | 13-Mar-2023 | - | | | | 118,483 | 972,745 | | Tianyi Jiang | 01-Jul-2016 | 869,142 | -(3) | $1.3357 | 01-Jul-2026 | - | - | | | 10-Jan-2019 | 521,484 | -(4) | $1.5866 | 10-Jan-2029 | - | - | | | 12-Aug-2020 | 12,366 | 25,608(7) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 2,025,819 | 311,796(9) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 468,069 | 107,990(6) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 72,246 | 149,620(10) | $3.9049 | 12-Aug-2030 | - | - | | | 01-Sep-2021 | 421,812 | 328,076(6) | $9.64 | 01-Sep-2031 | - | - | | | 01-Sep-2021 | - | - | - | - | 136,150 | 1,117,792 | | | 21-Mar-2022 | 60,486 | 77,764(6) | $5.88 | 21-Mar-2032 | - | | | | 21-Mar-2022 | - | - | - | - | 107,621 | 883,568 | | | 13-Mar-2023 | - | 200,959(6) | $4.22 | 13-Mar-2033 | - | - | | | 13-Mar-2023 | - | - | - | - | 118,483 | 972,745 | | Brian Michael Brown | 01-Jul-2016 | 82,803 | -(3) | $1.3357 | 01-Jul-2026 | - | - | | | 10-Jan-2019 | 391,113 | -(4) | $1.5866 | 10-Jan-2029 | - | - | | | 12-Aug-2020 | 593,308 | -(11) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 174,652 | 40,295(6) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 15,674 | 25,608(7) | $3.9049 | 12-Aug-2030 | - | - | | | 12-Aug-2020 | 91,579 | 136,052(12) | $3.9049 | 12-Aug-2030 | - | - | | | 01-Sep-2021 | 351,512 | 273,394(6) | $9.64 | 01-Sep-2031 | - | - | | | 01-Sep-2021 | - | - | - | - | 30,851 | 253,287 | | | 21-Mar-2022 | 17,339 | 22,293(6) | $5.88 | 21-Mar-2032 | - | - | | | 21-Mar-2022 | - | - | - | - | 100,480 | 824,941 | | | 13-Mar-2023 | - | 100,480(6) | $4.22 | 13-Mar-2033 | - | - | | | 13-Mar-2023 | | - | - | - | 177,725 | 1,459,122 | | James Caci | 01-Sep-2021 | - | - | - | - | 25,932 | 212,902 | | | 21-Mar-2022 | 82,950 | 36,293(6) | $5.88 | 21-Mar-2032 | - | - | | | 21-Mar-2022 | - | - | - | - | 64,571 | 530,128 | | | 13-Mar-2023 | - | 140,627(6) | $4.22 | 13-Mar-2033 | - | - | | | 13-Mar-2023 | - | - | - | - | 248,815 | 2,042,771 |
Outstanding Equity Awards at Fiscal-Year End
| (1) The RSU awards in this column vest as to 25% of the shares underlying the option on the first anniversary of the date of grant, with the remainder vesting in 12 equal quarterly installments thereafter. | | (2) The values presented in this column were valued using the closing stock price on December 29, 2023, which was $8.21 per share. | | (3) This award was fully vested as of July 1, 2020. |
Outstanding Equity Awards at Fiscal-Year End
| (4) This award was fully vested as of January 10, 2023. |
Outstanding Equity Awards at Fiscal-Year End
| (5) The remaining unvested options under this award vest per the following schedule: 40,815 shares vest May 12, 2024, and 108,017 shares vest August 12, 2024. |
Outstanding Equity Awards at Fiscal-Year End
| (6) This option award vests as to 25% of the shares underlying the option on the first anniversary of the date of grant, with the remainder vesting in 12 equal quarterly installments thereafter. |
Outstanding Equity Awards at Fiscal-Year End
| (7) The remaining unvested options under this award vest per the following schedule: 25,608 will vest February 12, 2024. |
Outstanding Equity Awards at Fiscal-Year End
| (8) The remaining unvested options under this award vest per the following schedule: 82,418 will vest February 12, 2024 and 67,202 will vest May 12, 2024. |
Outstanding Equity Awards at Fiscal-Year End
| (9) The remaining unvested options under this award vest per the following schedule: 95,762 will vest February 12, 2024, 108,017 will vest May 12, 2024 and 108,017 will vest August 12, 2024. |
Outstanding Equity Awards at Fiscal-Year End
| (10) The remaining unvested options under this award vest per the following schedule: 40,978 will vest February 12, 2024, 54,321 will vest May 12, 2024 and 54,321 will vest August 12, 2024. |
Outstanding Equity Awards at Fiscal-Year End
| (11) This award was fully vested as of November 12, 2023. |
Outstanding Equity Awards at Fiscal-Year End
| (12) The remaining unvested options under this award vest per the following schedule: 28,279 will vest February 12, 2024 and 53,886 will vest May 12, 2024 and 53,887 will vest August 12, 2024. |
Option Exercises and Stock Vested in Fiscal Year 2023
Option Exercises and Stock Vested in Fiscal Year 2023 This table provides information on an aggregate basis about stock awards that vested during the fiscal year ended December 31, 2023 for each of the named executive officers. The value realized on vesting of stock awards is based on the closing market price of our common stock as reported on Nasdaq on the vesting date of the stock-settled awards. No named executive officers exercised any stock options during the fiscal year ended December 31, 2023.
Option Exercises and Stock Vested in Fiscal Year 2023
| Named Executive Officer | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Xunkai Gong | 161,507 | 968,971.00 | | Tianyi Jiang | 161,507 | 968,971.00 | | Brian Michael Brown | 88,832 | 561,894.44 | | James Caci | 76,157 | 430,407.98 |
Pension Benefits
Pension Benefits Our named executive officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by us during 2023.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation Our named executive officers did not participate in, or earn any benefits under, a nonqualified deferred compensation plan sponsored by us during 2023.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control This table shows the amounts that would have been payable to our named executive officers on December 31, 2023, upon a termination of employment without cause, or a termination of employment by a named executive officer for good reason, or a change in control, or a termination due to retirement, or a termination due to death or disability, pursuant to our executive employment agreements. The equity values presented in the table below were valued using the closing stock price on December 29, 2023, which was $8.21 per share.
Potential Payments Upon Termination or Change in Control
| Named Executive Officer | Without Cause ($) | For Good Reason ($) | Change in Control ($) | Retirement ($) | Death or Disability ($) | | Xunkai Gong | 6,001,221(1) | 6,001,221(1) | 5,817,175(4) | - | - | | Tianyi Jiang | 6,334,759(2) | 6,334,759(2) | 6,518,717(4) | - | - | | Brian Michael Brown | 3,871,896(2) | 3,871,896(2) | 3,966,177(4) | - | - | | James Caci | 116,667(3) | 116,667(3) | 3,455,793(5) | - | - |
Potential Payments Upon Termination or Change in Control
| (1) Amounts included under the “Without Cause” and “For Good Reason” columns for Xunkai Gong include an amount equal to his then current base salary and annual bonus (based on the average of the annual bonus earned in the two years prior to termination) for twenty-four (24) months, less all applicable withholdings and deductions, and paid in equal installments beginning on the Company’s first regularly scheduled payroll date following the release effective date, with the remaining installments occurring on the Company’s regularly scheduled payroll dates thereafter. Xunkai Gong would also be eligible for continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for himself and his dependents under the Company’s group health plans following such termination, then the Company will pay the COBRA premiums necessary to continue Mr. Gong’s and his covered dependents’ health insurance coverage in effect on the termination date until the earliest of: (i) twenty-four (24) months following the termination date; (ii) the date when he becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment; or (iii) the date he ceases to be eligible for COBRA continuation coverage for any reason, including plan termination (such period from the termination date through the earlier of (i)-(iii), the “COBRA Payment Period”). Notwithstanding the foregoing, if at any time the Company determines that its payment of COBRA premiums on Mr. Gong’s behalf would result in a violation of applicable law (including, but not limited to, the 2010 Patient Protection and Affordable Care Act, as amended by 5 242230445 v1 the 2010 Health Care and Education Reconciliation Act), then in lieu of paying COBRA premiums, the Company shall pay Mr. Gong on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding, for the remainder of the COBRA Payment Period. Additionally, each unvested equity award (excluding any equity award subject to the achievement of any performance-based or other similar vesting criteria) then held by Mr. Gong will immediately accelerate vesting and, to the extent applicable, exercisability, as to the number of shares that would have become vested had he remained employed by the Company through the date that is eighteen (18) months following his termination date. | | (2) Amounts included under the “Without Cause” and “For Good Reason” columns for Tianyi Jiang and Brian Michael Brown include an amount equal to their then current base salary and annual bonus (based on the average of the annual bonus earned in the two years prior to termination) for eighteen (18) months, less all applicable withholdings and deductions, and paid in equal installments beginning on the Company’s first regularly scheduled payroll date following the release effective date, with the remaining installments occurring on the Company’s regularly scheduled payroll dates thereafter. Tianyi Jiang and Brian Michael Brown would be eligible for continued coverage under the COBRA for themselves and their dependents under the Company’s group health plans following such termination, then the Company will pay the COBRA premiums necessary to continue their and their covered dependents’ health insurance coverage in effect on the termination date until the earliest of: (i) eighteen (18) months following the termination date; (ii) the date when they become eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment; or (iii) the date they cease to be eligible for COBRA continuation coverage for any reason, including plan termination (such period from the termination date through the earlier of (i)-(iii), COBRA Payment Period). Notwithstanding the foregoing, if at any time the Company determines that its payment of COBRA premiums on either Mr. Jiang’s and Mr. Brown’s behalf would result in a violation of applicable law (including, but not limited to, the 2010 Patient Protection and Affordable Care Act, as amended by 5 242230445 v1 the 2010 Health Care and Education Reconciliation Act), then in lieu of paying COBRA premiums, the Company shall pay him on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding, for the remainder of the COBRA Payment Period. Additionally, each unvested equity award (excluding any equity award subject to the achievement of any performance-based or other similar vesting criteria) then held by Mr. Jiang and Mr. Brown will immediately accelerate vesting and, to the extent applicable, exercisability, as to the number of shares that would have become vested had they remained employed by the Company through the date that is eighteen (18) months following the termination date. |
Potential Payments Upon Termination or Change in Control
| (3) Amounts included under the “Without Cause” and “For Good Reason” columns for James Caci includes four (4) months of base salary. | | (4) Amounts included under the “Change in Control” column for Xunkai Gong, Tianyi Jiang and Brian Michael Brown include the acceleration in full of the employee’s equity awards, provided the employee remains in continuous service through the closing of a Change in Control, or the employee is terminated without Cause or resigns for Good Reason during the three-month period immediately prior to the closing of a Change in Control. | | (5) Amounts included under the “Change in Control” column for Jim Caci include the acceleration in full of the employee’s equity awards, provided the Change of Control occurs while employed by the Company. |
CEO Pay Ratio
CEO Pay Ratio For fiscal year 2023, the annual total compensation for the median employee of the Company (other than our CEO) was $33,732 and the annual total compensation of our CEO was $1,824,757. Based on this information, for fiscal year 2023 the ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 54 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Exchange Act of 1934. We identified our median employee from among our employees as of December 31, 2023, the last day of our fiscal year. To identify our median employee, we used a “total direct compensation” measure consisting of: (i) fiscal year 2023 annual base pay and (ii) bonuses and cash incentives paid during the fiscal year 2023. Compensation amounts were determined from our human resources and payroll systems of record. Payments not made in U.S. dollars were converted to U.S. dollars using 12-month average exchange rates for the year. To identify our median employee, we then calculated the total direct compensation for our global employee population.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In the below Pay Versus Performance Table, we provide information about the compensation of our named executive officers (“NEOs”) and the results of certain financial performance measures for each of the last three fiscal years. The amounts shown below are calculated in accordance with Rule 402(v) of Regulation S-K. For further information concerning our pay-for-performance philosophy and how we align executive compensation with our performance, refer to our “Compensation Discussion and Analysis”.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(2) ($) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($) | Company Selected Measure: ARR ($) | | | | | | | TSR | Peer Group TSR | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 1,824,757.00 | 8,144,996.11 | 1,869,554.33 | 5,193,364.25 | 68.70 | 114.01 | (26.3) | 264.5 | | 2022 | 2,202,003.00 | (3,454,799.18) | 1,539,834.67 | (938,597.40) | 34.39 | 68.13 | (38.7) | 214.7 | | 2021 | 6,783,290.00 | (23,866,881.25) | 4,569,543.67 | (3,833,254.49) | 52.64 | 108.35 | (33.2) | 167.2 |
Pay Versus Performance Disclosure
| (1) Dr. Tianyi Jiang was our principal executive officer (“PEO”) for all of fiscal years 2021, 2022 and 2023. The other NEOs were Xunkai Gong, Brian Michael Brown and James Caci for all of fiscal years 2021, 2022 and 2023. |
Pay Versus Performance Disclosure
| (2) The following table shows the amounts deducted from and added to the Summary Compensation Table (“SCT”) total compensation to calculate “compensation actually paid” to our PEO and non-PEO NEOs in accordance with the pay versus performance rules. There were no equity awards that failed to meet vesting conditions during 2021, 2022 or 2023 for any of our NEOs. |
Pay Versus Performance Disclosure
| Year | Named Executive Officer | SCT Total for Covered Year | Subtract Stock Award and Option Award Value as Reported in SCT for Covered Year | Add Covered Year-End Value of Awards Granted in Covered Year and Outstanding and Unvested as of Covered Year-End | Change in Value as of Covered Year-End (as Compared to Prior Year-End) of Equity Awards Granted Prior to Covered Year and Outstanding and Unvested as of Covered Year-End | Change in Value as of Covered Year-End (as Compared to Prior Year-End) of Equity Awards Granted Prior to Covered Year that Vested During Covered Year | Compensation Actually Paid | | | | ($) | ($) | ($) | ($) | ($) | ($) | | 2023 | PEO | 1,824,757.00 | 999,997.00 | 1,774,571.84 | 3,620,208.62 | 1,925,455.65 | 8,144,996.11 | | | Non-PEO NEOs | 1,869,554.33 | 1,133,332.67 | 2,079,553.91 | 1,634,493.01 | 743,095.67 | 5,193,364.25 | | 2022 | PEO | 2,202,003.00 | 1,500,003.00 | 786,353.97 | (3,564,175.24) | (1,378,977.91) | (3,454,799.18) | | | Non-PEO NEOs | 1,539,834.67 | 943,334.67 | 494,528.90 | (1,439,196.76) | (590,429.41) | (938,597.40) | | 2021(1) | PEO | 6,783,290.00 | 6,069,290.00 | 1,957,466.87 | (13,271,308.90) | (13,267,039.22) | (23,866,881.25) | | | Non-PEO NEOs | 4,569,543.67 | 4,042,341.67 | 1,413,725.72 | (4,907,531.45) | (849,984.10) | (3,833,254.49) |
Pay Versus Performance Disclosure
| (1) The prior year-end date used for 2021 is July 2, 2021, the date of the Company’s stock was listed on the Nasdaq. |
Relationship Between Financial Performance Measures and Compensation Actually Paid
Relationship Between Financial Performance Measures and Compensation Actually Paid The following graphs show how compensation actually paid to our PEO and other NEOs compare to the Company’s TSR, the Company’s peer group TSR, the Company’s net operating income, and the Company’s ARR.