DEF 14A of QUICKLOGIC Corp
Filed Mar 28, 2024 · FY20230001437749-24-009659
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS QuickLogic’s Board of Directors (the “Board”) is currently comprised of seven members, divided into three classes with overlapping three-year terms. As a result, a portion of our Board of Directors will be elected each year. Michael R. Farese and Andrew J. Pease have been designated as Class I directors whose terms expire at the 2024 Annual Meeting of Stockholders, Gary H. Tauss and Joyce Kim have been designated as Class II directors whose terms expire at the 2025 Annual Meeting of Stockholders, and Christine Russell, Brian C. Faith, and Radhika Krishnan have been designated as Class III directors whose terms expire at the 2026 Annual Meeting of Stockholders. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of an equal number of directors. There are no family relationships between any of our directors or executive officers. The Nominating and Governance Committee is committed to continuing to identify and recruit highly qualified director candidates with diverse experiences, perspectives, and backgrounds to join our Board. The table below provides certain information regarding the composition of our Board. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f) and related instructions.
ELECTION OF DIRECTORS
| Board Diversity Matrix As of March 11, 2024 | | | | | | Total Number of Directors | | | | | | | Female | Male | Non-Binary | Did not Disclose Gender | | Directors | 3 | 4 | - | - | | Demographic Information: | | | | | | African American or Black | - | - | - | - | | Alaskan Native or Native American | - | - | - | - | | Asian | 2 | - | - | - | | Hispanic | - | - | - | - | | Native Hawaiian or Pacific Islander | - | - | - | - | | White | - | 4 | - | - | | Two or More Races or Ethnicities | - | - | - | - | | LGBTQ+ | - | - | - | - | | Did not disclose demographic background | 1 | - | - | - |
Nominees for Class I Directors
Nominees for Class I Directors Two Class I directors are to be elected at this Annual Meeting of Stockholders for a three-year term ending in 2027. Pursuant to action by the Nominating and Corporate Governance Committee, the Board of Directors has nominated Michael R. Farese and Andrew J. Pease. Unless otherwise instructed, the persons acting as proxies intend to vote proxies received by them for the election of Michael R. Farese and Andrew J. Pease. QuickLogic expects that Michael R. Farese and Andrew J. Pease will serve if elected. In the event that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, proxies will be voted for a substitute nominee or nominees designated by the Nominating and Corporate Governance Committee of the Board of Directors. The term of office of each person elected as director will continue until such director’s term expires in 2027 or until such director’s successor has been elected and qualified or until such director’s earlier death, resignation, or removal.
THE CLASS I DIRECTOR NOMINEES LISTED ABOVE
THE CLASS I DIRECTOR NOMINEES LISTED ABOVE
Directors and Nominees for Director
Directors and Nominees for Director The following table sets forth information concerning the nominees for Class I director.
Nominees for Class I Director
Nominees for Class I Director
Nominees for Class I Director
| Name | Age | Position | | Michael R. Farese | 77 | Chairman of the Board | | Andrew J. Pease | 73 | Director |
Nominees for Class I Director
Michael R. Farese (Ph.D.) has been serving as a member of our Board of Directors since April 2008, and as our Chairman since December 6, 2019. Dr. Farese also served as Chairman of the Nominating and Corporate Governance Committee from August 2014 until February 2021 and as QuickLogic lead independent director. From January 2015 to December 2016 when it was acquired, Dr. Farese was Chief Scientist of Antenna 79, a company creating advanced antenna technology for wireless devices. From June 2010 to December 2014, Dr. Farese served as Chief Technology Officer and Senior Vice President of Global Engineering at Entropic Communications Inc., a fabless semiconductor company that invented the MoCA multimedia over coax standard to enable all room DVR and connected home entertainment and which was acquired by Maxlinear Inc.. From September 2007 to May 2010, he was President and Chief Executive Officer and member of the Board of Directors of BitWave Semiconductor, Inc., a fabless semiconductor company and innovator of programmable radio frequency semiconductors. From September 2005 to September 2007, Dr. Farese was Senior Vice President, Engineering, of Palm, Inc., the developer of the Treo line of smartphones and which was subsequently acquired by HP Inc. Dr. Farese also served as President and Chief Executive Officer and board member of WJ Communications, a radio frequency (RF) semiconductor company, from March 2002 to July 2005 and President and CEO and board member of Tropian Inc., a developer of high efficiency RF ASICs for 2.5 and 3G cellular phones, from October 1999 to March 2002. Prior to that time, Dr. Farese held senior management positions at Motorola Corp., Ericsson Inc., Nokia Corp., and ITT Corp. Dr. Farese also held management positions at AT&T Corp. and Bell Laboratories. and has been in the telecommunications and semiconductor industry for more than 45 years. Dr. Farese also served on the board of PMC-Sierra, Inc., an Internet infrastructure semiconductor solution provider, from May 2006 until its acquisition in January 2016 by Microsemi Corp. Dr. Farese holds a B.S.E.E. and Ph.D. degree in Electrical Engineering from Rensselaer Polytechnic Institute and a M.S. degree in Engineering from Princeton University. Dr. Farese has extensive executive experience and knowledge of the wireless industry, cellular and wireless technologies, and the design, development and use of semiconductors for the wireless industry. His executive experience, business acumen, and strong technical and strategic planning skills bring an invaluable perspective to the Board. Andrew J. Pease has been serving as a member of our Board of Directors since April 2011 and Chairman of the Nominating and Corporate Governance Committee since February 2021. He joined QuickLogic in November 2006 and served as our President and Chief Executive Officer from January 2011 to his retirement in June 2016, and as our President from March 2009 to his retirement in June 2016. From November 2006 to March 2009, Mr. Pease served as our Vice President of Worldwide Sales. From July 2003 to June 2006, Mr. Pease was Senior Vice President of Worldwide Sales at Broadcom Corporation, a global leader in semiconductors for wired and wireless communications. From March 2000 to July 2003, Mr. Pease was Vice President of Sales at Syntricity, Inc., a company providing software and services to better manage semiconductor production yields and improve design-to-production processes. From 1984 to 1996, Mr. Pease served in a number of sales positions at Advanced Micro Devices, or AMD, a global semiconductor manufacturer, where his last assignment was Group Director, Worldwide Headquarters Sales and Operations. Mr. Pease previously held Vice President of Sales positions at Integrated Systems Inc., an embedded software manufacturer (1996-1997), and Vantis Corporation, a programmable logic subsidiary of AMD (1997-1999). Mr. Pease holds a B.S. degree from the United States Naval Academy and an M.S. in computer science from the Naval Postgraduate School in Monterey, California. Mr. Pease has many years of executive experience in the semiconductor industry, primarily in sales and operations. His vast understanding of the semiconductor industry coupled with his in-depth knowledge of the day-to-day operation and strategic direction of the Company makes him an invaluable resource and contributor to the Board.
Incumbent Class II Directors Whose Terms Expire in 2025
Incumbent Class II Directors Whose Terms Expire in 2025
Incumbent Class II Directors Whose Terms Expire in 2025
| Name | Age | Position | | Joyce Kim | 53 | Director | | Gary Tauss | 69 | Director |
Incumbent Class II Directors Whose Terms Expire in 2025
Gary H. Tauss has been serving as a member of our Board of Directors since June 2002. Mr. Tauss has also served as a board member for Hootsuite Inc., a social media dashboard company from January 2010 to 2020 and currently as a board observer. In January 2017, Mr. Tauss joined the board of NetForecast, Inc., a network infrastructure performance and customer satisfaction monitoring and analysis firm. From January 2010 to March 2014, Mr. Tauss served as the Executive Director and Chief Executive Officer of BizTech, a not-for-profit technology-focused business incubator. From October 2006 until February 2008, Mr. Tauss served as President and Chief Executive Officer of Mobidia Technology, Inc., a provider of performance management software that enables wireless operators to provide users with high-quality mobile content. From May 2005 until the sale of its assets to Transaction Network Services, Inc. in March 2006, Mr. Tauss served as President, Chief Executive Officer and director of InfiniRoute Networks Inc., a provider of software peering services for wireline and wireless carriers. From October 2002 until April 2005, Mr. Tauss served as President and Chief Executive Officer of LongBoard, Inc., a company specializing in fixed-to-mobile convergence application software for leading carriers and service providers. From August 1998 until June 2002, Mr. Tauss was President, Chief Executive Officer, and a director of TollBridge Technologies, Inc., a developer of voice-over-broadband products. Prior to co-founding TollBridge, Mr. Tauss was Vice President and General Manager of Ramp Networks, Inc., a provider of Internet security and broadband access products, with responsibility for engineering, customer support and marketing. Mr. Tauss earned both a B.S. and an M.B.A. degree from the University of Illinois. Mr. Tauss has a strong executive background with technology companies providing products for the mobile market. His in-depth understanding of the important attributes of products for the mobile market make him an invaluable resource as QuickLogic develops and markets devices for the mobile market. Joyce Kim brings over two decades of experience scaling commercial innovation and growth in the technology sector through large scale digital transformation and brand elevation strategies. Her expertise spans all facets of Go-To-Market including digital, brand, communications, channels and product strategy for global hardware and SaaS companies. Currently, she serves as the Chief Marketing Officer for Zscaler (ZS), a publicly traded company with over $2B in revenue and is responsible for driving market expansion and revenue diversification strategies including customer acquisition, engagement, and channel growth. Prior to Zscaler , she was Chief Marketing Officer at Twilio, (TWLO) publicly traded company over $4B in revenues and Genesys, PE-backed SaaS software company. Ms. Kim also served as Chief Digital & Marketing Officer for Arm, where she led the enterprise-wide digital transformation and digital GTM strategy for new SaaS and IoT platform. Ms. Kim also successfully launched multiple microprocessor IP products in Japan and China alongside one of the largest partner ecosystems in the world. Prior to Arm, Ms. Kim was at write, a Citrix company from 2015 to 2016 as the Chief Marketing Officer. From 2008 to 2015 she led marketing for global brands such as Skype and Skype for Business at Microsoft as well as product communications and partnerships for Chromebooks and WebRTC/Google Hangouts at Google. From 2000 to 2007, she held multiple marketing and product management leadership positions for several startup and mid-sized companies including Symmetricom, and Internap. She has demonstrated her thought leadership as an active member of the CMO Council, Executive Council Member of the Forbes CMO Practice, McKinsey CMO Advisory Council, and as part of the Fast Company Executive Board. She also serves as a member of the board of directors at Bring Me A Book, a non-profit focused on bringing the joy and transformational power of books to all children in under-resourced communities. She also serves as an advisory board member for Sparklabs Frontier program at Arizona State University. Ms. Kim earned a double major from California Polytechnic State University San Luis Obispo with Bachelor of Science degrees in Finance and Architecture. The Company believes that Ms. Kim's expertise in increasing brand value and revenue growth, by advancing a data-driven organization, will add significant value to her role on our Board.
Incumbent Class III Directors Whose Terms Expire in 2026
Incumbent Class III Directors Whose Terms Expire in 2026
Incumbent Class III Directors Whose Terms Expire in 2026
| Name | Age | Position | | Brian C. Faith | 49 | Director | | Radhika Krishnan | 53 | Director | | Christine Russell | 74 | Director |
Incumbent Class III Directors Whose Terms Expire in 2026
Brian C. Faith was promoted to Chief Executive Officer and was elected as a director in June 2016 after having served as Vice President of Worldwide Marketing and Vice President of Worldwide Sales & Marketing between 2008 and 2016. Mr. Faith has been with QuickLogic since 1996, and during the last 21 years has held a variety of managerial and executive leadership positions in engineering, product line management, marketing, and sales. Mr. Faith has also served as a board member of the Global Semiconductor Alliance (GSA) and the Chairman of the Marketing Committee for the CE-ATA Organization. He holds a B.S. degree in Computer Engineering from Santa Clara University and was an Adjunct Lecturer at Santa Clara University for Programmable Logic courses. Mr. Faith’s vast understanding of the semiconductor industry coupled with his in-depth knowledge of the day-to-day operation and strategic direction of the Company makes him an invaluable resource and contributor to the Board. Radhika Krishnan is a versatile product and general management executive with a strong track record of building new businesses at both startups and Fortune 500 companies. Her prior accomplishments and success are based on a combination of deep technical expertise and business acumen, as well as hands-on experience across engineering, QA, product management, messaging, go to market and ecosystem building. Ms. Krishnan currently serves as General Manager at Amazon Web Services (AWS) within their data and AI business. Prior to joining AWS, Ms. Krishnan served as the Chief Product Officer and General Manager at Hitachi Vantara from 2020 to 2023. From 2019 to 2020, Ms. Krishnan served as the Executive Vice President and General Manager of Software at 3D Systems Corporation. From 2018 to 2020, Ms. Krishnan was Vice President and General Manager of software defined infrastructure at Lenovo. Previously, she was Vice President, Solutions and Product Alliances at Nimble Storage from 2013 to 2018. At Network Appliance she was a Product Manager from 2009 to 2013 having previously been at Cisco Systems as an Interconnect and Switches Product Manager for one year. She started her career at Hewlett Packard, Co where she had various Senior Management roles from 1998 to 2008. Ms. Krishnan holds a bachelor's degree in Electrical and Electronics Engineering from Birla Institute of Technology and Science, Pilani and an MBA from San Jose State University. Her experience across multiple facets of the cloud infrastructure, gained from working with best-in-class providers, provides her with a valuable skill set to help the Company create practical and winning customer solutions. Christine Russell has been serving as a member of our Board of Directors since June 2005. In July 2022, Ms. Russell was elected as a member of the Board of Directors of MariaDB plc, and resigned her position after the company was substantially acquired in October 2023. In December 2019, Ms. Russell was elected as member of the Board of Directors of AXT, Inc. From July 2018 to March 2020, Ms. Russell was Chief Financial Officer at PDF Solutions, which offers yield process SaaS software to the semiconductor industry and their supply chain using proprietary AI and data mining software technology. In February 2017, she became a member of the Board of Directors of eGain Corporation, a Nasdaq traded SaaS company providing knowledge-based software for call center and customer support organizations. From May 2015 through March 2018, she served as Chief Financial Officer at UniPixel, Inc., a precision engineered film company whose products include touch-screen films. From May 2014 to March 2015, Ms. Russell served as Chief Financial Officer of Vendavo, Inc., a pricing optimization enterprise software company, which was sold in late 2014 to a private equity firm. From May 2009 to October 2013, Ms. Russell was Chief Financial Officer of Evans Analytical Group, a leading international provider of materials characterization and microelectronic failure analysis and “release to production” services. From June 2006 to April 2009, Ms. Russell was CFO at Virage Logic Corporation (Nasdaq VIRL), a provider of memory IP for the design of integrated circuits, where she served as Executive Vice President of Business Development from September 2008 and as Vice President and Chief Financial Officer from June 2006 to September 2008. Ms. Russell served as Senior Vice President and Chief Financial Officer of OuterBay Technologies, Inc., a privately held software company enabling information lifecycle management for enterprise applications, from May 2005 until February 2006, when OuterBay was acquired by Hewlett-Packard Company. From October 2003 to May 2005, Ms. Russell served as the Chief Financial Officer of Ceva, Inc., a company offering DSP IP and application software. Prior to 2005, Ms. Russell served as Chief Financial Officer and in various senior financial management positions with a number of technology companies for a period of more than twenty years. Ms. Russell holds a B.A. degree and an M.B.A. degree from the University of Santa Clara. Ms. Russell’s extensive executive experience in corporate finance, accounting and operations, and her involvement in governance issues for boards of directors in her role as Board Member of the SVDX (Silicon Valley Directors Exchange), an organization that fosters excellence in corporate governance for directors and past service as President of the NACD, Silicon Valley Chapter, make her an important asset to the Company. In addition, her career background in semiconductor intellectual property companies provides her with specific industry knowledge.
Executive Summary
| • | A significant portion of our NEOs’ total compensation package was “at risk.” | | • | Our NEOs received cash bonuses for 2023 based on company performance on measures related to revenues and non-GAAP operating profitability |
Executive Summary
| • | reasonable, “double trigger” change of control severance benefits that become payable only upon an involuntary termination in connection with a change of control of the Company; |
Executive Summary
| • | no tax gross ups in connection with a change of control of the Company; | | • | clawback policy covering equity and cash incentive compensation of all Section 16 officers, including in compliance with Rule 10D-1 and related Nasdaq listing standards |
Compensation Philosophy and Objectives
| • | motivate executive officers to achieve the Company’s business objectives through the use of an annual cash incentive compensation plan based on performance metrics tied to those objectives; |
Compensation Philosophy and Objectives
| • | reward achievement of the Company’s short-term and long-term goals; |
Compensation Philosophy and Objectives
| • | align the interests of executive officers with the long-term interests of stockholders through executive participation in equity-based compensation plans, and by making a significant amount of compensation dependent upon the achievement of business objectives; and |
Elements of Executive Compensation
| • | performance-based incentive cash and equity compensation earned based on achieving corporate objectives; and, |
Elements of Executive Compensation
The Committee sets base salary with the goal of attracting and retaining highly qualified executive officers, including our NEOs, and adequately compensating and rewarding them on a day-to-day basis for the time they spend, the services they perform, and the skills and experience they bring to the Company. The Committee sets target cash incentive compensation and performance objectives to motivate our executive officers, including our NEOs, to achieve the performance objectives, thereby directly and meaningfully linking the achievement of the Company’s goals with their compensation. The Committee grants executive officers, including our NEOs, equity incentives to provide an incentive and reward for performance of key long-term business objectives and to help attract and retain these individuals. The Committee believes that the cash and equity incentive performance objectives and equity incentives align the interests of our NEOs and our stockholders while not encouraging our NEOs to expose the Company to excessive risk. In setting individual compensation levels for our NEOs, the Committee considers competitive market factors such as comparable compensation of similar individuals in similar companies as well as qualitative factors, such as experience, level of contribution, potential impact on company performance, and relative internal pay; and quantitative factors relating to corporate and individual performance. The Committee does not base its compensation decisions on any one single performance factor, nor does it specifically assign relative weights to any one performance factor; rather, it considers a mix of factors and individual performance is evaluated against that mix of performance factors. Each of our NEOs is a party to a change in control arrangement. These arrangements are designed to provide our NEOs with certain payments and benefits if their employment with the Company is terminated in connection with a change of control. These arrangements are discussed in detail under the heading “Change of Control Severance Arrangements” below. The Board has determined that such payments and benefits are necessary to attract and retain our NEOs. The Committee believes that our key elements of compensation, when combined, are effective, and will continue to be effective, in achieving the objectives of the Company’s compensation program.
Peer Group
Peer Group In 2017, the Committee, based on the recommendations of Compensia, an independent compensation consultant, established the criteria for and selected 20 publicly traded companies constituting the peer group to be used by the Committee when evaluating executive compensation, Board of Director compensation, and equity trends (“Compensation Peer Group”). The Compensation Peer Group was selected based on industry and financial comparability on the key metrics of (a) revenue of less than $100 million over the prior four quarters and (b) a 30-day market capitalization of $60 to $450 million. Although the parameters enabled the potential inclusion of a diverse set of companies, ultimately the Committee focused on those companies that were similar in revenue and market capitalization, while also including those companies with which we compete for executive talent and/or compete with respect to business. Other criteria considered included whether the company was based in California, whether the company was included in QuickLogic’s prior peer group, whether the company identified QuickLogic as a peer for compensation purposes and whether the company was a fabless semiconductor company. These additional factors assisted the Committee in choosing companies that would allow meaningful comparison given the primary region from which QuickLogic recruits key talent and the similarities in the business and operations with and among other fabless companies. For 2023 compensation decisions, we continued to use the same Compensation Peer Group as in 2022, as follows:
Peer Group
| Aware | Interlink Electronics | | BK Technologies | Micropac Industries | | Cavitation Technologies | Neonode | | CVD Equipment | Network-1 Technologies | | Electro-Sensors | Pixelworks | | eMagin | Resonant | | Energous | Rubicon Technology | | Everspin Technologies | SCI Engineered Materials | | IFH | Sono-Tek | | Inrad Optics | WiSA Technologies (formerly Summit Wireless Technologies) |
Peer Group
The Committee used the Compensation Peer Group as one of various factors in determining the total target cash compensation, base salary and target cash incentive compensation of our NEOs in 2023.
Total Target Cash Compensation
| Name | Base Salary | Target Bonus as a Percentage of Base Salary | Target Bonus Amount | Total Target Cash Compensation | | Brian C. Faith | $354,432 | 50% | $177,216 | $531,648 | | Elias Nader | $312,000 | 50% | $156,000 | $468,000 | | Timothy Saxe | $276,640 | 45% | $124,488 | $401,128 |
Cash Incentive Compensation
Cash Incentive Compensation 2023 Bonus Program Under our 2005 Executive Bonus Plan (the “Bonus Plan”), as amended, our NEOs participate in a performance-based cash and equity incentive compensation plan. Our Bonus Plan is a pay for performance plan that places each NEO’s incentive compensation at risk. Our Bonus Plan is intended to: (i) increase stockholder value and the success of the Company by motivating key employees to perform to the best of their abilities and work to achieve or exceed the Company’s objectives; and (ii) to reward achievement of the Company’s short-term and long-term business goals. Under the Bonus Plan, our NEOs are eligible to earn cash bonus incentive compensation based upon achieving certain performance goals and objectives relating to the Company. In addition, the Bonus Plan allows for increases in the payouts for incentive awards as performance increases versus Bonus Plan objectives. We have designed our Bonus Plan with the intent of encouraging NEOs to rise to a high level of performance and to motivate performance in line with the Company’s approved operating plan. The Company’s operating plan is developed by management and reviewed and approved by our Board on an annual basis. Achievement of the objectives set forth in the operating plan requires significant effort and skillful execution, because these objectives are intended to be challenging to foster the growth and development of QuickLogic. Likewise, the performance goals established under the Bonus Plan are intended to be greatly challenging and require very high levels of performance to achieve at target levels. The Committee has discretion to increase, reduce, or eliminate bonuses under the Bonus Plan. In August 2023, the Committee established the target bonuses and performance objectives under the Bonus Plan for 2023. The Committee determined that the primary business objectives for 2023 were to achieve revenue of $21.06 million for Fiscal Year 2023 and a proforma (non-GAAP) operating income of $2.256M. Each objective would be equally weighed on a non-linear, percentage basis. For the revenue target, the payout factor ranged from zero to 2.75 corresponding to revenue of less than $15.80 million to $31.59 million, respectively. The proforma operating income payout factor ranged from zero to 5.00 for proforma operating income below $2.26 million to $6.77 million, respectively. Bonuses could be earned depending on the degree to which the Company met or exceeded the performance targets, 2023 Bonus Plan Results Based on our level of achievement of the established 2023 performance goals, each NEO earned compensation of 102.3% of the NEOs' target revenue cash incentive and 177.6% of the NEOs' target operating income cash incentive. Equal weighing resulted in a 51.2% payout component for revenue and 88.8% for proforma operating income. Hence, the net performance payout was based on a 140.0% achievement of performance targets.
Equity-Based Compensation
Equity-Based Compensation The Committee believes that equity awards are an essential component of executive compensation. Equity awards are subject to vesting provisions to encourage our NEOs to remain employed with the Company and to align their interests with the long-term interests of our stockholders. Our NEOs generally receive an equity award, approved by the Committee or the Board of Directors, when they join the Company. During each fiscal year, the Committee may grant our NEOs additional stock options or other equity awards. The Committee takes into consideration the NEOs’ relative responsibility, performance, and anticipated future contribution to Company performance. The Committee receives recommendations from the President and Chief Executive Officer on the amounts and terms of equity compensation to be awarded to the other NEOs. The Chief Executive Officer’s recommendations are based on the NEOs’ anticipated future performance, responsibilities, and potential impact on Company results. The Committee takes these factors as well as the Compensation Peer Group data into account when approving such awards. The Committee also reviews prior equity awards to each NEO, including the number of shares that continue to be subject to vesting under prior equity awards, in determining the size of equity awards to each of our NEOs. If we grant stock options, they are granted with an exercise price per share equal to the closing market price of the Company’s common stock on the date of grant. The Committee did not grant any performance-based stock awards in 2023 and 2022. On August 10, 2023, the Compensation committee voted to approve refresh retention RSU grants to the NEOs with such awards to be made at the Company's next regularly scheduled grant date. The RSU refresh, retention grants were subsequently issued on August 24, 2023, with a grant date of August 24, 2023. The RSUs vest over a two-year period with 50% vesting on the one-year anniversary of the grant date and 50% vesting on the second-year anniversary of the grant date, subject to each NEO's continued service through the applicable vesting dates.
Change of Control Severance Arrangements
Change of Control Severance Arrangements Consistent with our goals to attract and retain highly qualified executive officers and maintain a competitive executive compensation program, we previously entered into change of control agreements with each of our NEOs. These arrangements provide for certain “double trigger” severance benefits in connection with a change of control, as discussed in detail under the heading “Change of Control Agreements” below. It is expected that from time to time, we may consider the possibility of a corporate transaction such as a change of control. These transactions may be a distraction to our NEOs and can cause our NEOs to consider alternative employment opportunities. We entered into these change of control agreements to better ensure their continued dedication and objectivity notwithstanding the possibility or threat of a change of control, provide incentive for each NEO to continue employment with us and maximize stockholder value, and provide each NEO with enhanced financial security in these specified circumstances. The Committee believes that these change of control severance benefits are appropriate and reasonable as they are provided only upon an involuntary termination in connection with a change of control and do not become payable merely upon the occurrence of a change of control; provide for no tax gross-up or other excessive benefits to the NEOs; and are subject to the condition that each NEO agree to a release of claims in our favor. These benefits generally do not affect the Committee’s decisions regarding other elements of compensation.
Equity Incentive Grant Policies
Equity Incentive Grant Policies The Committee administers our equity-based plans, although either our Board or the Committee may grant stock options or other equity awards to our NEOs. During 2023, equity awards were granted to our NEOs in the form of restricted stock units that vest based on continued service. Our NEOs are generally granted equity awards when they join the Company and they may receive additional equity grants as part of a refresh grant, upon promotion, or for individual performance. Our President and Chief Executive Officer recommends the timing, size, and terms of equity awards for NEOs other than himself, although the Committee is not obligated to approve these recommendations. Individual grants are based on position, individual performance, expected contribution, and market data for similar positions, if available. The Compensation Committee has implemented certain general policies relating to grants of stock options, RSUs and other awards, which policies apply to our NEOs. Specifically, the Committee has determined that, whenever stock options, RSUs and other awards are granted, they shall be granted on: (i) the second and fourth Thursdays of the Company’s fiscal month (each a “Regular Grant Date”), or on the date the last director or Committee member approves such grants if not approved prior to the Regular Grant Date; (ii) on the date of a pre-scheduled Board of Directors or Committee meeting; or (iii) on such other date established in advance by the Board of Directors or Committee. The Company intends that future equity awards be made on a similar schedule. Option grants or other equity awards to NEOs may be approved at a properly constituted meeting of the Board of Directors or Committee or by the unanimous written consent of the directors or Committee members. Generally, our unanimous written consents are executed electronically, to ensure the date of approval is certain. All required documentation, including the list of recommended equity awards by recipient and the terms of the award, are sent to the Board of Directors or Committee prior to the meeting. The Committee believes that this practice will ensure that the exercise price of the options or other awards are based on the fair market value of our common stock on the date of grant and that the approval process results in grants made on a planned grant date. We have not and do not plan in the future to coordinate the timing of the release of material non-public information for the purpose of affecting the value of executive compensation (including equity award grants).
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
FOR FISCAL YEARS ENDED DECEMBER 31, 2023 AND JANUARY 1, 2023
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) (4) | Total ($) | | Brian C. Faith | 2023 | $354,432 | $— | $846,528 | $— | $244,432 | $— | $— | $1,445,392 | | President & CEO | 2022 | $340,800 | $— | $854,730 | $— | $142,606 | $— | $— | $1,338,136 | | Elias Nader | 2023 | $312,000 | $— | $309,727 | $— | $215,169 | $— | $— | $836,896 | | CFO, SVP Finance | 2022 | $300,000 | $— | $54,785 | $— | $124,125 | $— | $— | $478,910 | | Timothy Saxe | 2023 | $276,640 | $— | $448,974 | $— | $171,705 | $— | $9,000 | $906,319 | | Sr. VP of Engineering and CTO | 2022 | $266,000 | $— | $518,045 | $— | $96,364 | $— | $9,000 | $889,409 |
FOR FISCAL YEARS ENDED DECEMBER 31, 2023 AND JANUARY 1, 2023
| (3) The Company does not have a defined benefit pension plan or a non-qualified deferred compensation plan. |
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS The following table sets forth, for the fiscal year ended December 31, 2023, certain information regarding incentive awards granted to the NEOs.
GRANTS OF PLAN-BASED AWARDS
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | | | | | Name | Approval Date | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Grant Date Fair Value of Stock and Option Awards ($) | | Brian C. Faith | 8/10/2023 | 8/24/2023 | — | $177,216 | — | — | — | — | 68,913 | — | 577,491 | | Elias Nader | 8/10/2023 | 8/24/2023 | — | $156,000 | — | — | — | — | 26,252 | — | 219,992 | | Timothy Saxe | 8/10/2023 | 8/24/2023 | — | $124,488 | — | — | — | — | 32,816 | — | 274,998 |
GRANTS OF PLAN-BASED AWARDS
| (1) Represents cash incentive award opportunities for our NEOs under the Bonus Plan. There were no thresholds or maximum payment amounts in 2023. A description of the Bonus Plan for Fiscal Year 2023 is included in the "Compensation Discussion and Analysis" above. | | (2) Represents target award opportunities under performance restricted stock units (PRSUs) awards under the 2019 Stock Plan. No PRSUs were awarded or granted in 2023. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The following table sets forth certain information concerning outstanding equity awards held by the NEOs as of December 31, 2023:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (1) Exercisable | Number of Securities Underlying Unexercised Options (1) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (1) | 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 | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | Brian C. Faith(2) | 3,158 | — | — | $44.80 | 12/17/2024(4) | 43,032 | $596,424 | — | — | | (3) | 41,480 | — | — | $12.05 | 9/7/2026(5) | 68,913 | $955,134 | — | — | | Elias Nader | — | — | — | — | —(6) | 23,365 | $323,839 | — | — | | | — | — | — | — | —(4) | 16,393 | $227,207 | — | — | | | — | — | — | — | —(5) | 26,252 | $363,853 | — | — | | Timothy Saxe(2) | 1,958 | — | — | $44.80 | 12/17/2024(4) | 20,491 | $284,005 | — | — | | (3) | 6,222 | — | — | $12.05 | 9/7/2026(5) | 32,816 | $454,830 | — | — |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| (1) The market value of unvested and unearned units is based on the closing share price of $13.86, which was the closing price of our common stock as quoted on the Nasdaq Capital Market on December 29, 2023. | | (2) 25% of these options vested one year after December 18, 2014 and 1/48th per month of service thereafter. | | (3) 25% of these options vested one year after September 8, 2016 and 1/48th per month of service thereafter. | | (4) 50% of these RSUs vested one year after November 28, 2022 and 50% vests on the second year of service thereafter. | | (5) 50% of these RSUs vest one year after August 24, 2023 and 50% vests on the second year of service thereafter. | | (6) 25% of these RSUs vest one year after February 10, 2022 and 25% vests per year of service thereafter. |
OPTION EXERCISES AND STOCK VESTED
OPTION EXERCISES AND STOCK VESTED The following table sets forth the number of option awards exercised by, and stock awards vested for each of our NEOs during Fiscal Year 2023:
OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | Stock Awards | | | Name | Number of shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | | Brian C. Faith | — | $— | 77,162 | $846,528 | | Elias Nader | — | $— | 33,215 | $309,727 | | Timothy Saxe | — | $— | 41,823 | $448,974 |
OPTION EXERCISES AND STOCK VESTED
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OPTION EXERCISES AND STOCK VESTED
| (1) Represents the number of shares that vested during Fiscal Year 2023 multiplied by the closing price of our common stock as reported on the Nasdaq Capital Market on the applicable vesting date, excluding any tax obligations incurred in connection with such vesting. |
Post-Employment and Change of Control Compensation
| • | Full vesting acceleration of outstanding equity awards granted by the Company prior to the change in control and a post-termination exercisability period of up to 3 months with respect to any such stock options. |
CEO Pay Ratio
CEO Pay Ratio For the 2023 fiscal year, the ratio of the annual total compensation of Brian C. Faith, our President and Chief Executive Officer (“CEO Compensation”), to the median of the annual total compensation of all of our employees other than our Chief Executive Officer (“Median Annual Compensation”) was 4.78 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized below. In this summary, we refer to the employee who received such Median Annual Compensation, who was selected in a manner consistent with Item 402(u) of Regulation S-K, as the “Median Employee.” For purposes of this disclosure, the date used to identify the Median Employee was December 31, 2023 (the “Determination Date”). CEO Compensation for purposes of this disclosure represents the total compensation reported for Mr. Faith in the “Summary Compensation Table” for the 2023 fiscal year. For the purposes of this disclosure, Median Annual Compensation was $195,004 and was calculated by totaling for our Median Employee all applicable elements of compensation for the 2023 fiscal year in accordance with Item 402(c)(2)(x) of Regulation S-K. To identify the Median Employee, we first determined our employee population as of the Determination Date for purposes of the calculation. We measured compensation for 48 employees (44 employees in the U.S. and 4 employees outside the U.S.), representing all full-time, part-time, seasonal and temporary employees of us and our consolidated subsidiaries as of the Determination Date, excluding Mr. Faith and, as permitted by Item 402(u) of Regulation S-K, excluding any independent contractors or “leased” workers and (ii) 4 non-U.S. employees (consisting of 2 employees in the UK, 1 employee in Taiwan, and 1 employee in Japan). We then measured compensation for the period beginning on January 2, 2023, and ending on December 31, 2023, for these employees. This compensation measurement was calculated by totaling, for each employee, gross taxable earnings, including salary, wages, tips, and other compensation as shown in our payroll and human resources records for 2023. A portion of our employee workforce worked for less than the full fiscal year due to commencing employment after the beginning of the fiscal year. In determining the Median Employee, we annualized the compensation for such individuals.
Pay Versus Performance
Pay Versus Performance The following table sets forth compensation information and financial performance measures for the three most recent fiscal years. We have elected to follow the scaled disclosure requirements applicable to Smaller Reporting Companies with respect to the Pay Versus Performance Table. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” Fair value amounts below are computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under generally accepted accounting principles. Total shareholder return has been calculated in a manner consistent with Item 402(v) of Regulation S-K.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Total Shareholder Return | Net Income (Loss) | | (a) | (b) | (c) | (d) | (e) | (f) | (h) | | 2023 | $1,445,392 | $1,439,624 | $871,608 | $866,818 | $365.70 | $(263,000) | | 2022 | $1,338,136 | $1,310,401 | $684,160 | $599,787 | $97.35 | $(4,267,000) | | 2021 | $699,349 | $699,306 | $324,904 | $326,535 | $141.94 | $(6,616,000) |
Pay Versus Performance
| (1) For all years in question, our Principal Executive Officer (PEO) was the Company’s President and Chief Executive Officer, Brian C. Faith. | | (2) Compensation Actually Paid to PEO reflects the exclusions and inclusions related to timing variations. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Equity Awards column are the totals from the Stock Awards column set forth in the Summary Compensation Table. |
Compensation of Non-Employee Directors
Compensation of Non-Employee Directors The following table sets forth the annual compensation paid or accrued by the Company to or on behalf of the non-employee directors of the Company for the fiscal year ended December 31, 2023.
Compensation of Non-Employee Directors
| Name (1) | Fees Earned or Paid in Cash ($) (2) | Stock Awards ($) (3) | All Other Compensation ($) | Total ($) | | Michael R. Farese | $56,300 | $58,911 | $ — | $115,211 | | Joyce Kim | $32,300 | $23,950 | $ — | $56,250 | | Radhika Krishnan | $32,300 | $23,950 | $ — | $56,250 | | Andrew J. Pease | $33,800 | $34,953 | $ — | $68,753 | | Christine Russell | $35,300 | $34,953 | $ — | $70,253 | | Gary H. Tauss | $32,800 | $34,953 | $ — | $67,753 |
Compensation of Non-Employee Directors
| (1) Brian C. Faith, the Company’s President and Chief Executive Officer is not included in this table. Mr. Faith was an employee of the Company during Fiscal Year 2023 and therefore received no compensation for his services as a director. The compensation received by Mr. Faith as an employee of the Company is shown in the Summary Compensation Table in this Proxy Statement. |
Compensation of Non-Employee Directors
| (2) Directors who are not employees of the Company received an annual retainer of $30,800 for serving as a director of the Company. Directors receive annual leadership compensation awards as follows: Chairman of the Board, Chairman of the Audit Committee, Chairman of the Compensation Committee, Chairman of the Nominating and Corporate Governance Committee, members of the Audit Committee, and members of the Compensation Committee, receive annual leadership compensation awards of $22,500, $3,000, $2,000, $1,500, $1,500, and $1,500, respectively. Only one leadership compensation award per committee is earned by each director. Retainers are paid quarterly. The Company reimburses all directors for travel, lodging, and other expenses related to their service on the Board. |
Compensation of Non-Employee Directors
| (3) On August 24, 2023, the Company granted RSUs to the members of the Board of Directors as follows: Chairman Michael R. Farese was granted 7,030 RSUs with a grant date value of $58,911, Directors Andrew J. Pease, Christine Russell and Gary H. Tauss were each granted 4,171 RSUs with a grant date value of $34,953, and Directors Joyce Kim and Radhika Krishnan were each granted 2,858 RSUs with a grant date value of $23,950. The fair market value of the Company's stock at the grant date of August 24, 2023, was $8.38. |
Compensation of Non-Employee Directors
The following table reports the outstanding RSUs, and outstanding stock options held by non-employee directors on December 31, 2023:
Compensation of Non-Employee Directors
| Name | RSUs | Stock Options | | Directors: | | | | Michael R. Farese | 7,030 | 714 | | Christine Russell | 4,171 | 714 | | Gary H. Tauss | 4,171 | 714 | | Andrew J. Pease | 4,171 | — | | Radhika Krishnan | 2,858 | — | | Joyce Kim | 2,858 | — |
Compensation of Non-Employee Directors
QuickLogic has agreed to indemnify each director and NEO against certain claims and expenses for which the director or NEO might be held liable in connection with past or future services to QuickLogic and its subsidiaries. QuickLogic maintains insurance policies insuring its directors and NEOs against such liabilities.