DEF 14A of Inspired Entertainment, Inc.
Filed Apr 26, 2024 · FY20230001493152-24-016781
Directors and Executive Officers
Directors and Executive Officers Our current directors and executive officers are as follows:
Directors and Executive Officers
| Name | Age * | Position | | A. Lorne Weil | 78 | Executive Chairman of the Board of Directors | | Michael R. Chambrello | 66 | Director | | Ira H. Raphaelson | 70 | Director | | Desirée G. Rogers | 64 | Director | | Steven M. Saferin | 75 | Director | | Katja Tautscher | 52 | Director | | John M. Vandemore | 50 | Director | | Brooks H. Pierce | 62 | President and Chief Executive Officer | | Marilyn Jentzen | 57 | Interim Chief Financial Officer | | Carys Damon | 47 | Executive Vice President, General Counsel and Corporate Secretary |
Directors and Executive Officers
| * As of April 15, 2024 |
Directors and Executive Officers
A. Lorne Weil has served as our Executive Chairman since the consummation of the business combination that created the current Inspired Entertainment, Inc. in December 2016. Mr. Weil was the co-sponsor and founder of Inspired’s predecessor, Hydra Industries Acquisition Corp, and served as its Chairman and Chief Executive Officer since its formation in 2014. Mr. Weil has been a principal of Hydra Management, an investment vehicle he formed, since September 2014. Mr. Weil was Chairman of the Board of Scientific Games Corporation (and its predecessor, Autotote Corporation) from October 1991 to November 2013. Scientific Games Corporation is a supplier of technology-based products, systems and services to gaming markets worldwide. Mr. Weil also served as the Chief Executive Officer of Scientific Games Corporation from 1992 to 2008 and from November 2010 to November 2013 and as the President from August 1997 to June 2005. Under Mr. Weil’s stewardship, the company made a number of significant acquisitions and joint ventures, including the privatization of the off-track betting operations of the State of Connecticut, and the acquisitions of Scientific Games Holdings Corp., IGT Online Entertainment Systems, Global Draw and WMS Industries, and the privatization of the Illinois, New Jersey and Italian lotteries. Prior to joining Scientific Games, Mr. Weil was President of Lorne Weil, Inc., a firm he founded which provided strategic planning and corporate development services to technology-based industries, a role he maintained from 1979 to November 1992. From 1974 to 1979, Mr. Weil was Vice President — Corporate Development at General Instrument Corporation. From 1970 to 1974, Mr. Weil was a manager with the Boston Consulting Group. Mr. Weil received his undergraduate degree from the University of Toronto, an M.S. degree from the London School of Economics and an M.B.A. from Columbia University, where he served for more than 10 years on the Board of Overseers. In 2012, Mr. Weil was the sponsor and Chairman of the Board of Andina Acquisition Corp., a NASDAQ-listed blank check company, and is currently the Chairman of its successor entity, Tecnoglass Inc. Mr. Weil served as Executive Chairman of Leisure Acquisition Corp., a blank check company from September 2017 until it completed a business combination in June 2021. We believe Mr. Weil is well qualified to serve as a member of our Board due to his extensive business and leadership experience, particularly in the gaming industry. Michael R. Chambrello has been a director since January 2019. Mr. Chambrello is principal of Wickford Strategic Investment, LLC. Mr. Chambrello served as the Chief Executive Officer of North America Lottery for International Game Technology PLC from March 2015 until December 2017, where he was responsible for the development and delivery of all lottery technology solutions globally, the strategic development and management of the lottery business in the U.S. and Canada and the global instant ticket printing business. From July 2005 to December 2013, Mr. Chambrello served in various roles at Scientific Games Corporation, including Chief Operating Officer, President and Chief Executive Officer, and most recently as the Chief Executive Officer–Asia-Pacific Region. He served as President and CEO of Environmental Systems Products Holdings from November 2000 to June 2005 and as CEO of Transmedia Asia Pacific, Inc. and Transmedia Europe Inc. from 1998 to 1999. He served in various roles at GTECH Holdings Corporation and its subsidiaries, most recently as President of GTECH Corporation and Executive Vice President of GTECH Holdings Corporation, from 1981 to 1998. Mr. Chambrello has served on the board of directors of various public and private companies, most recently as chairman of the board of directors of Meridian Lightweight Technologies. He has also served on the board of numerous not-for-profit organizations, and currently sits on the executive committees of the Petit Family Foundation and the Southern Connecticut State University Foundation. Mr. Chambrello earned a Bachelor of Science degree in Economics from Southern Connecticut State University. We believe Mr. Chambrello is well qualified to serve as a member of our Board due to his extensive business experience, including significant operational experience with public companies in the gaming industry. Ira H. Raphaelson has been a director since December 2016. Mr. Raphaelson was Senior Counsel at the law firm of White & Case LLP, in Washington, D.C and Chicago, Illinois until June 30 2023. Mr. Raphaelson also served as an adjunct professor of law at Northwestern University’s Pritzker School of Law from September 2017 to February 2023. Mr. Raphaelson served as Executive Vice President and Global General Counsel of Las Vegas Sands Corp. from November 2011 and as the company’s Secretary from January 2015 until August 2016. Mr. Raphaelson served as vice president and general counsel of Scientific Games Corp. from February 2006 until October 2011 and as its secretary from June 2006 until October 2011. Mr. Raphaelson was a partner in and helped manage the Washington D.C. office of the law firm of O’Melveny & Myers LLP for ten years and a partner in the Washington D.C. office of Shaw Pittman for three years. Prior to entering private practice, he was a state and federal prosecutor for 15 years, serving the last two years as a Presidentially appointed Special Counsel for Financial Institutions Crime within the Department of Justice. Mr. Raphaelson earned an undergraduate degree and a law degree from Northwestern University. We believe Mr. Raphaelson is well-qualified to serve as a member of our Board due to his extensive legal and business experience, including his experience with public companies and advising with respect to legal compliance.
Directors and Executive Officers
Desirée G. Rogers has been a director since August 2018. Ms. Rogers is the Chief Executive Officer and Co-Owner of Black Opal, LLC, a cosmetics company with two separate brands, Fashion Fair and Black Opal specifically designed for the ethnic market. From August 2010 until May 2017, Ms. Rogers was the Chief Executive Officer of Johnson Publishing Company, LLC, a lifestyle company inspired by the African American experience, from August 2010 until May 2017. Since May 2013, Ms. Rogers has served as the Chair of the Chicago tourism bureau, Choose Chicago, from 2013 until 2019. Ms. Rogers was the White House Social Secretary for President Obama from January 2009 to April 2010. She served as President of Social Networking for Allstate Financial, a business unit of the Allstate Corporation, from July 2008 to December 2008; as President of Peoples Gas and North Shore Gas, two utility companies owned by Peoples Energy Corporation (a public company acquired by Integrys Energy Group), from 2004 to July 2008; as Senior Vice President and Chief Marketing Officer and Vice President of Peoples Energy Corporation from 1997 to 2004; and as a Director of the Illinois Lottery from 1991 to 1997. In addition, Ms. Rogers served on the Board of Trustees of Equity Residential, a public real estate investment trust, from October 2003 to January 2009. She has also served on the board of Blue Cross Blue Shield, Pinnacle Entertainment, Inc. (until its merger with Penn National Gaming, Inc. in October 2018), Act II Global Acquisition Corp., Star Peak Corp. II and Star Peak Energy Transition Corp, and as the Vice Chairman of the Lincoln Park Zoo and the Museum of Science and Industry in Chicago, Illinois. She currently serves on the boards of Donors Choose, Northwestern Memorial Foundation, the Economic Club, the Commercial Club, World Business Chicago and on the board of Stagwell Inc. She has an undergraduate degree from Wellesley College and an M.B.A. from Harvard Business School. We believe Ms. Rogers is well qualified to serve as a member of our Board due to her extensive experience as a senior executive in the public and private sectors. Steven M. Saferin has been a director since August 2018. Mr. Saferin is Managing Director of Entertainment and Sports Gaming Network, LLC, a gaming licensing consultancy firm he founded in 2019. Mr. Saferin previously founded Media Drop-In Productions (later named MDI Entertainment), a licensed lottery games and promotions business in 1986, where he served as President and Chief Executive Officer until 2003, when he sold the company to Scientific Games Corporation. Following the sale, Mr. Saferin continued to lead MDI as a division president and also assumed the position of Chief Creative Officer for Scientific Games in 2009 until his retirement in 2016. Prior to founding MDI, Mr. Saferin was the Director of Program Acquisitions at ESPN from 1982 to 1986 and served as a vice president with both Viacom Communications and Warner Amex Cable from 1978 to 1982. Mr. Saferin was an attorney for the Federal Communications Commission and for Viacom International Inc. between 1974 and 1978. He has a journalism degree from American University and was a sportswriter at the Washington Post. Mr. Saferin endowed the Sports Communication Program at American University. He holds a law degree from the University of Maryland. He has been recognized by the Lottery Hall of Fame for innovations in lottery advertising and the invention and implementation of licensed games in the lottery industry. We believe Mr. Saferin is well qualified to serve as a member of our Board due to his extensive experience in business, brand marketing and as a lottery products innovator. Katja Tautscher has been a director since February 2021. Ms. Tautscher has served as the General Counsel of OMV Group, an Austrian multinational integrated oil, gas and petrochemical company, which is headquartered in Vienna, Austria, and listed on the Vienna Stock Exchange, since June 2022. In this capacity, Ms. Tautscher leads the legal team and provides respective services to the senior management and the different business units and functions. Prior to that, Ms. Tautscher was the Chief Legal and Compliance Officer of Borealis AG, one of the world’s leading providers of advanced and circular polyolefin solutions and a European market leader in base chemicals, fertilizers and the mechanical recycling of plastics. Ms. Tautscher joined Borealis AG in 2008 as General Counsel and served as Chief Legal and Procurement Officer to the Borealis Group, where she, next to her responsibilities to oversee all legal activities of the group, was also accountable for the cost efficient sourcing of all technical goods and services, raw materials and business services for the entire group, from 2014 to 2020. Prior to joining Borealis AG, Ms. Tautscher worked as Assistant General Counsel to Scientific Games Inc, a global leader in the gaming and lottery industries, from 2006. In this capacity, she conducted EU gaming regulatory work and was supervising UK legal operations. Before that, Ms. Tautscher worked as an associate and partner in Austrian and European magic circle law firms focusing on regulatory topics, including gaming and betting laws as well as competition and antitrust matters. Ms. Tautscher was previously a supervisory board member of Borealis Agrolinz Melamine GmbH. Ms. Tautscher currently serves as director of OMV Petrom S.A., a company based in Bucharest, Romania and listed on the Romanian Stock Exchange, as chairwoman of OMV Downstream GmbH and OMV Exploration and Production GmbH, both based in Vienna, Austria. Ms. Tautscher has a legal degree from the University of Vienna, Austria, and holds an LL.M. from London School of Economics and an M.B.A from INSEAD (Fontainebleau). She is admitted to the bar of Austria and is a solicitor of England and Wales. We believe that Ms. Tautscher is well qualified to serve as a member of the Board of Directors because of her extensive European legal and business experience, including her prior experience in the gaming industry. John M. Vandemore has been a director since December 2016. Mr. Vandemore has served as Chief Financial Officer of Skechers, a globally branded casual footwear design and marketing company, since November 2017. Previously, he served as Executive Vice President, Divisional Chief Financial Officer of Mattel, from September 2015 until October 2017. Prior to that, he served as Chief Financial Officer and Treasurer of International Game Technology from 2012 until 2015. Prior to that, from 2007 to 2012, Mr. Vandemore served as Vice President and Chief Financial Officer of Walt Disney Imagineering, a division of The Walt Disney Company, a global entertainment company. From 2005 to 2007, Mr. Vandemore served as Vice President and Director, Operations Planning & Analysis of The Walt Disney Company. Prior to 2005, Mr. Vandemore held various positions at AlixPartners, Goldman Sachs, and PricewaterhouseCoopers. Mr. Vandemore earned a Bachelor of Business Administration degree with a major in Accountancy from the University of Notre Dame and a Master of Business Administration degree from the J.L. Kellogg Graduate School of Management at Northwestern University. We believe Mr. Vandemore is well qualified to serve as a member of our Board due to his extensive financial, accounting and business experience, including his experience as a chief financial officer.
Directors and Executive Officers
Brooks H. Pierce has been our President since May 2018 and our Chief Executive Officer since January 2023 (previously serving as our Chief Operating Officer from May 2018 until January 2023) and he is a member of our Office of the Executive Chairman. Mr. Pierce joined the Company as Senior Vice President, North America, in April 2018. He previously held the position of Chief Executive Officer of BHP Consulting Group, LLC, a sales, marketing and leadership consulting firm that provided consulting services to the Company from May 2017 through March 2018. From 2015 to 2017, Mr. Pierce was Managing Director of the Americas for Aristocrat Technologies, Inc. He was Chief Revenue Officer for the gaming division of Scientific Games Corporation from 2012 to 2015 and held various other roles within Scientific Games from 1991 to 2010, including Senior Vice President of Marketing and President of Scientific Games Racing. From 2010 to 2012, Mr. Pierce was the President and Chief Business Development Officer of Sportech PLC, a U.K.-based gaming equipment and systems supplier. He is currently a Member of the Advisory Board of Leading Edge Ventures, a Wilmington, Delaware-based venture capital fund, as well as an Advisory Board Member of the Horn Entrepreneurial Program at the University of Delaware. He received his BA from the University of Delaware and is a graduate of the Columbia Business School Senior Executive Program. Marilyn Jentzen has been our Interim Chief Financial Officer since December 2023 and is a member of our Office of the Executive Chairman. Ms. Jentzen is a senior executive and consultant with over 30 years of experience leading efforts across finance and transformation for both public and private companies of all sizes. Ms. Jentzen spent 10 years, from 1998 to 2008, with Deloitte LLP in consulting, business operations and strategy, including leading strategic business financial planning and analysis and projects for the US Firm’s CFO office, and as the Controller for the Southeast region. In 2010, Ms. Jentzen joined Thomson Reuters Corporation, where she was responsible for operating strategy in global operations centers in Asia, India, Europe and Latin America. From 2014 to 2015, Ms. Jentzen served as Vice President of Finance of International Game Technology Inc, where she led all global accounting, internal audit and tax activities, including SEC reporting. Since 2015, Ms. Jentzen has been the Founder and CEO of Innovative Impact Consulting, leading global business transformation programs in the areas of Finance, Operations and Information Technology. From October 2023 to December 2023, Ms. Jentzen was employed by the Company as a Transformation Executive. During such period, Ms. Jentzen provided her services through Highpoint Consulting, where she worked as a consultant from February 2023 to October 2023. Ms. Jentzen holds an MBA from The Wharton School of the University of Pennsylvania, with concentrations in accounting and operations, and a BS from the College of William and Mary. Carys Damon has been our General Counsel and Corporate Secretary since September 2017, Executive Vice President since 2021 and is a member of our Office of the Executive Chairman. Effective July 1, 2024, Ms. Damon will cease to serve as Executive Vice President and General Counsel. Ms. Damon will continue to be employed by the Company as Corporate Secretary. Prior to being appointed General Counsel in 2017, Ms. Damon served as Assistant General Counsel from 2015 to 2017 and as Legal Counsel from 2012 to 2015. Prior to joining Inspired, from 2003 to 2012, Ms. Damon held the role of Senior Associate at Marriott Harrison LLP in the Media & Technology Department advising clients predominantly in the music, film and television industries on a host of commercial and intellectual property matters, both contentious and non-contentious. Ms. Damon is a Solicitor of the Supreme Court of England and Wales and a member of the New York State Bar. As General Counsel, Ms. Damon is responsible for Inspired’s legal and compliance and information security functions.
Board of Directors
Board of Directors The Board is comprised of seven directors, each of whom is a nominee for election at the Annual Meeting. During the fiscal year ended December 31, 2023, the Board met five times and all directors attended at least 75% of the total number of meetings of the Board and committees of the Board on which they served. We do not have a policy regarding director attendance at annual meetings, but encourage directors to attend if possible. All of the directors then serving on the Board attended our 2023 virtual annual meeting of stockholders.
Executive Compensation Oversight and Objectives
| ● | to attract and retain key executive talent by providing competitive compensation; |
Executive Compensation Oversight and Objectives
| ● | to reward executive officers based upon the achievement of Company performance goals and individual performance goals; and |
Compensation Consultant
Compensation Consultant The Compensation Committee retains Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent compensation consultant. Representatives of FW Cook regularly attend Compensation Committee meetings and communicate with the Chair of the Compensation Committee between meetings. FW Cook reports directly to the Compensation Committee and the Compensation Committee oversees the fees paid for its services. FW Cook provides the Compensation Committee with independent and objective guidance on a variety of matters related to our executive and director compensation programs and general compensation and benefits matters. FW Cook does not provide any consulting services to the Company beyond its role as a consultant to the Compensation Committee. The Compensation Committee conducts an assessment of the independence of its compensation consultant annually, pursuant to SEC rules and, following its most recent assessment, concluded that no conflict of interest exists that would prevent FW Cook from serving as an independent consultant to the Compensation Committee. During 2023, FW Cook provided the following services to the Compensation Committee: (1) prepared a compensation risk assessment; (2) reviewed the Company’s short- and long-term incentive plans for 2023; (3) advised the Compensation Committee regarding clawback policy including in connection with the Company’s financial restatements which were filed with the SEC in February 2024; and (4) advised the Compensation Committee in relation to pay vs performance.
Executive Compensation Elements
| ● | base salary; | | ● | short-term cash bonus awards; | | ● | long-term equity awards; | | ● | personal benefits; and | | ● | termination and change in control provisions. |
Incentive-based Compensation
Incentive-based Compensation Overview of Short- and Long-Term Incentive Plans The Company’s short-term incentive plan (STIP) is based on attainment of an Adjusted Earnings Before Interest, Tax, Depreciation, Amortization and Bonus (“Adjusted EBITDAB”) target. The STIP for 2023 had various target eligibility levels across multiple tiers of management levels ranging from 10% to 120% of base salary depending on business segment performance, corporate performance and measurements against specific individual performance objectives. Bonus eligibility for the Company’s executive officers for 2023 was based on corporate performance criteria. The Company’s long-term incentive plan (LTIP) contemplates an aggregate award of restricted stock units with a value equal to a percentage of base salary depending on management levels and ranging from 10% to 100%. Half of the awards are time vested and half are subject to performance criteria. The time-vested restricted stock units vest as to 1/3 in each year beginning in the year of grant, and performance-based restricted stock units vest on December 31 of the third year after the grant, provided that such shares are earned by meeting the performance criteria set at the time of the grant for the initial year. The performance criteria are based on Adjusted EBITDAB targets.
Short-Term Cash Bonus Awards
Short-Term Cash Bonus Awards 2023 Short-Term Cash Bonus Awards As part of the STIP adopted by the Compensation Committee, the named executive officers were eligible to receive performance-based cash bonuses for 2023 based on a formula that involved attainment of the Company’s financial performance metrics. The target bonus opportunity for Mr. Weil for 2023 was equal to 120% of his base salary and his maximum bonus opportunity was equal to 240% of his base salary. The target bonus opportunity for Mr. Pierce was equal to 110% of his base salary and his maximum bonus opportunity was equal to 220% of his base salary. Ms. Damon had a target bonus opportunity for 2023 equal to 100% of her base salary and her maximum bonus opportunity was equal to 200% of her base salary. Mr. Silvers, who left the Company in January 2023, as discussed in last year’s proxy statement, previously had a target bonus opportunity of 100% of base salary and a maximum bonus opportunity of 200% of base salary. In adopting the budget and bonus structure for 2023, the Compensation Committee, on recommendation of the executive team, adopted a budget with an Adjusted EBITDA target of $110.6 million (based on prevailing exchange rate on approval date). In February 2024, the Compensation Committee reviewed the 2023 performance of the executive officers and other eligible employees. In view of the Company’s financial performance (as measured by Adjusted EBITDAB), at 90% of the target, the Compensation Committee determined, on management’s recommendation, to approve awards equal to 40% of each eligible participant’s target award opportunity for attainment of the corporate performance target for the year. In making these awards, the Compensation Committee exercised its negative discretion to reduce the amount of the awards from approximately 47%. In making such determination, the Committee considered a number of factors, including the amount of time and expense spent by the Company on the restatements. 2024 Short-Term Cash Bonus Awards In adopting the budget and bonus structure for 2024, the Compensation Committee, on recommendation of the executive team, adopted a budget with an Adjusted EBITDA target metric. Additional Criteria for Finance Team The Committee also adopted additional performance criteria for members of the finance team, with regards to 50% of their eligible STIP (including any maximum STIP), of (i) substantial remediation of material accounting and SOX weaknesses by year end; and (ii) achievement of proficiency training in U.S. GAAP accounting, each of which will be on management’s recommendation as to achievement and subject to the Committee’s determination save in respect of the Interim CFO for whom the entire bonus potential (of $100,000) is dependent on this criteria being met.
Long-Term Equity Awards
Long-Term Equity Awards 2023 Awards In February 2023, the Compensation Committee resolved to award RSUs to management (having an aggregate award value equal to approximately 100% of base salary in the case of the Named Executive Officers, subject to certain caps and a different formula price methodology in the case of Mr. Weil), half of which will be time vested and half of which will have performance criteria, with time-vested shares vesting 1/3 each year beginning in year of grant, and performance shares vesting on December 31 of the third year after the grant, provided that such shares are earned by meeting the performance criteria set at the time of the grant for the initial year. Given that awards for 2021 and 2022 had eliminated the ability for participants to be awarded over target of 100%, the Compensation Committee determined to reinstate the ability to achieve maximum of 200% for performance awards (150% of aggregate award value). The Company calculated the value of the Common Stock for the formula awards at $15.00, which was the highest of (i) the 20-day average through the grant date (February 14, 2023), (ii) the 20-day average preceding the highest price for the prior year, and (iii) the floor of $7.00. In Mr. Weil’s case, pursuant to the terms of his employment agreement, the formula price was determined to be $15.95 (the closing price prior to the date of grant). In February 2024, the Compensation Committee determined to award the LTIP performance metric for 2023 at approximately 47% of their target award eligibility to the Named Executive Officers and other eligible employees based on the level of attainment of the Company financial performance metrics (as measured by Adjusted EBITDAB). These awards remain subject to a service vesting period through December 2025. 2024 Awards In February 2024, the Compensation Committee approved formula awards for 2024 as described above except that the floor was set at 80% of the formula price at which the prior year’s formula awards were granted. Accordingly, the formula price used to determine the number of shares subject to awards for 2024 was determined to be $15.73, in comparison to the closing price of $9.17 of our stock on the date of grant. In Mr. Weil’s case, pursuant to the terms of his employment agreement, the formula price was determined to be $9.18 (the closing price prior to the date of grant) and the number of shares was capped at 80,000. Extra Criteria for Finance Team The Committee also adopted additional performance criteria for existing members of the finance team, as described above under the STIP section which shall also apply to their 2024 formula awards of RSUs.
Employment Agreements, including Termination and Change in Control Provisions
Employment Agreements, including Termination and Change in Control Provisions The employment service agreements entered into with our Named Executive Officers establish the overall framework for each such officer’s compensation, including base salary and target and maximum bonus amounts.
Employment Agreement with A. Lorne Weil, Executive Chairman
Employment Agreement with A. Lorne Weil, Executive Chairman On October 9, 2020, the Company entered into an employment agreement with A. Lorne Weil, the Company’s Executive Chairman, which replaced his prior agreement. The employment agreement was amended June 21, 2021 and subsequently amended in a second addendum dated January 12, 2023. The agreement, as amended, has a term ending December 31, 2027. Under the second addendum, Mr. Weil’s base salary rate was increased from $750,000 to $800,000, effective January 1, 2023, which he elected to defer until April 1, 2023 (though the full $800,000 rate was used for the purposes of STIP and LTIP calculations for 2023). Mr. Weil’s opportunity to earn an annual target bonus is 120% of his annual salary and his maximum bonus opportunity is 240% of his annual salary. Mr. Weil is eligible to receive formula awards of RSUs under the Company’s LTIP program in amounts up to 80,000 RSUs for any fiscal year (increased from 75,000 as of January 1, 2023). Mr. Weil’s employment agreement provides for special equity grants – he was awarded 100,000 RSUs under the 2018 Omnibus Incentive Plan upon execution of the agreement in October 2020 (subject to a time-based service condition through June 30, 2021) and received an additional 750,000 RSUs, subject to stockholder approval of the 2021 Omnibus Incentive Plan which was obtained at the 2021 Annual Meeting of Stockholders. The 750,000 RSUs, as modified under the first addendum to his employment agreement, were as follows:
Employment Agreement with A. Lorne Weil, Executive Chairman
| ● | Time-Based RSUs — 165,000 time-based RSUs as to which 80,000 RSUs vested on December 31, 2023 and 85,000 RSUs are scheduled to vest on December 31, 2024. |
Employment Agreement with A. Lorne Weil, Executive Chairman
| ● | Adjusted EBITDA Based RSUs — 187,500 RSUs may be earned based on the Company’s achievement of EBITDA Targets in increments of 62,500 RSUs for each of the calendar years from 2022 through 2024, such targets to be consistent with the Company’s STIP, provided the proration of the award would begin upon achievement of 70% of the annual target, as adjusted. For each year in which the Compensation Committee determines that the STIP target has been exceeded, the excess EBITDA would be applied to the subsequent year in determining whether Mr. Weil has met the subsequent year’s EBITDA Target. The EBITDA Target for 2022 was met and for 2023 after factoring carryover for performance in excess of the target for 2022. |
Employment Agreement with A. Lorne Weil, Executive Chairman
| ● | Stock Price Based RSUs – 397,500 RSUs that may be earned by meeting certain stock price targets (as measured over a consecutive 45-day calendar period) as follows: 80,000 RSUs — $6.25 stock price target; 85,000 RSUs — $8.25 stock price target; 135,000 RSUs — $15.00 stock price target; 50,000 RSUs — $17.50 stock price target; and 47,500 RSUs — $20.00 stock price target. The stock price targets applicable to the first three increments were attained. |
Employment Agreement with A. Lorne Weil, Executive Chairman
Mr. Weil was awarded a further special equity grant under the second addendum, subject to approval by the stockholders of the Company of the 2023 Omnibus Incentive Plan at the 2023 Annual Meeting, of an aggregate of 250,000 RSUs, as to which 125,000 are Adjusted EBITDA Based RSUs that may be earned in one-third increments for each of the calendar years from 2025 to 2027, and 125,000 are Stock Price Based RSUs that may be earned in one-quarter increments by meeting certain stock price targets (as measured over a consecutive 45-day calendar period) ranging from a price target of $15.00 to $22.50. The stock price target applicable to the first increment was achieved in February 2023. In the event the Company elects to terminate Mr. Weil’s employment without cause, or if Mr. Weil terminates his employment for good reason, Mr. Weil would receive his salary and target bonus amount through the earlier of (i) his contract termination date and (ii) eighteen months (or thirty months if the termination constituted a “change in control termination event” as defined), he would receive a prorated target bonus for the year of termination and his unvested equity awards (excluding his 750,000 special sign-on RSUs (as to which 245,000 remains unvested) and the 250,000 RSUs under the second addendum as to which 218,750 remains unvested) would remain outstanding subject to potential vesting in accordance with the time, performance or other conditions applicable to the awards. With respect to the special sign-on RSUs and the additional 250,000 RSUs, if Mr. Weil’s employment terminates prior to the end of the agreement, the unvested portion would lapse in circumstances other than death, a “change in control termination event” or if the Company’s stock is no longer publicly traded, in which case all or a portion of the outstanding balance would vest. In addition, in accordance with the terms of Mr. Weil’s agreement, term life insurance coverage was obtained in December 2020 in order to provide Mr. Weil with a death in service benefit equal to four times his base salary, which is equivalent to the coverage offered to other executives of the Company under a group policy. The annual cost of the coverage to the Company is approximately $74,000. Under the employment agreement, Mr. Weil will remain subject to certain covenants, including, among other things, a covenant not to enter into a directly competing business or solicit employees of the Company for a period of eighteen months after termination of his employment (or twelve months in the event of a “change in control termination event”), as well as a covenant not to disclose certain confidential information of the Company.
Employment Agreement with Brooks H. Pierce, President and Chief Executive Officer
Employment Agreement with Brooks H. Pierce, President and Chief Executive Officer On February 17, 2020, the Company entered into an employment agreement with Brooks H. Pierce, the Company’s President and Chief Executive Officer, which replaced his prior agreement. The employment agreement was amended on July 21, 2021 and on January 13, 2023 when the Company promoted Mr. Pierce from his role as President and Chief Operating Officer to serve as President and Chief Executive Officer, extending his duties to include oversight for the corporate strategy of the Company reporting directly to the Company’s Board and Mr. Weil. The agreement, as amended, has a term of employment through December 31, 2026. Under the second amendment, Mr. Pierce’s base salary rate was increased from $525,000 to $585,000, effective January 1, 2023, which he elected to defer until April 1, 2023 (though, the full rate of $585,000 was used for the purposes of STIP and LTIP calculations for 2023), and his annual bonus opportunity was increased from 100% to 110% of base salary as a target bonus and from 200% to 220% of base salary as a maximum bonus. Mr. Pierce is also eligible to receive incentive and equity-based compensation and any other benefits determined by the Compensation Committee, including participation in the Company’s long-term incentive plan available for senior executives. Mr. Pierce’s agreement provided for him to receive a special sign-on equity grant of an aggregate of 200,000 RSUs (which was awarded on February 17, 2020), one-half in the form of time-based RSUs (vesting as to 75,000 on December 31, 2022 and 25,000 on December 31, 2023) and one-half in the form of performance-based RSUs (25,000 RSUs per year for the years 2020 through 2023, based on the Company’s achievement of annual adjusted EBITDA targets). With respect to the performance-based tranche for 2023, Mr. Pierce earned an amount equal to approximately 47% of the target award. He received an additional special sign-on grant in July 2021 in connection with an amendment to extend the term of his agreement, which covers an aggregate of 75,000 time-based RSUs that are scheduled to vest on December 31, 2024. Subject to approval by the stockholders of the Company of the 2023 Omnibus Incentive Plan at the 2023 Annual Meeting, Mr. Pierce will receive a further grant of 125,000 Adjusted EBITDA Based RSUs, half of which may be earned in 2025 and the remaining half of which may be earned in 2026 based on the Company achieving targets based on adjusted EBITDA for such years. Any earned RSUs will vest on the last day of the performance period, if Mr. Pierce is then employed by the Company. In the event the Company elects to terminate the agreement other than for cause, or if Mr. Pierce terminates the agreement for good reason, Mr. Pierce will receive accrued benefits, a salary for 12 months and a prorated bonus for the year of termination (or 18 months in the event of a change in control transaction, plus 1.5 times target bonus), and his outstanding equity awards will vest in accordance with the terms set forth in the agreement. Under the employment agreement, Mr. Pierce will remain subject to certain covenants, including, among other things, a covenant not to enter into a directly competing business or solicit employees of the Company for a period of one year after termination of his employment, as well as a covenant not to disclose certain confidential information of the Company.
Employment Agreement with Carys Damon, Executive Vice President, General Counsel and Corporate Secretary
Employment Agreement with Carys Damon, Executive Vice President, General Counsel and Corporate Secretary On August 3, 2021, Inspired Gaming (UK) Limited (“IG UK”), a subsidiary of the Company, entered into an employment agreement with Ms. Damon, the Company’s Executive Vice President, General Counsel and Corporate Secretary, which was amended in March 2024. Pursuant to the amendment, Ms. Damon will cease serving as Executive Vice President and General Counsel as of June 30, 2024 and remain as Corporate Secretary for the remainder of 2024 and until either party terminates the agreement on not less than one month’s notice. Ms. Damon’s annual base salary is £312,476, with a target annual bonus of not less than 100%, and a maximum annual bonus of not more than 200%, of her base salary, subject to performance goals determined by the Compensation Committee. Ms. Damon’s salary rate will decrease to £102,000 effective July 1, 2024 in connection with her resignation as General Counsel and her bonus from that effective date will be based on her target opportunity with her bonus for 2024 payable on January 15, 2025. In consideration of Ms. Damon entering into the 2021 employment agreement, she was awarded a sign-on equity grant of 75,000 RSUs which are scheduled to vest in full on December 31, 2024. Ms. Damon is subject to certain restrictive covenants, including, among other things, non-solicitation and non-competition restrictions for a period of twelve months after termination of her employment and confidentiality obligations. The Employment Agreement, as amended, is governed by and construed in accordance with the law of England and Wales.
Arrangements with Daniel B. Silvers, former Executive Vice President and Chief Strategy Officer
Arrangements with Daniel B. Silvers, former Executive Vice President and Chief Strategy Officer Effective January 10, 2023, Mr. Silvers stepped down from his position as Executive Vice President and Chief Strategy Officer of the Company. Pursuant to Mr. Silvers’ employment agreement dated December 14, 2016, as amended, Mr. Silvers was entitled to receive a base salary at a rate of $385,000 per year, a target annual bonus of not less than 100% of his base salary and a maximum annual bonus of 200% of his base salary. He was also entitled to reimbursement for private medical insurance and to severance benefits described below. In accordance with the terms of his employment agreement (including the three-month notice period thereunder) and his separation and release agreement with the Company dated January 10, 2023, the following amounts were payable to Mr. Silvers following his employment terminating: (i) a pro-rated maximum annual bonus for the year 2023 (calculated based on 100 out of 365 days which includes the notice period under his agreement), (ii) continued payment of his salary for two years, (iii) two times his maximum annual bonus (payable over a period of two years) and (iv) acceleration of 100% vesting of his equity awards (with respect to the service period conditions) including with respect to the formula awards he received for 2023 during the notice period. The Company also agreed to continue to reimburse his private health care benefits and insurance as it did under his employment agreement until the earlier of (a) the date on which he is in receipt of healthcare benefits from another employer (other than Matthews Lane Capital Partners LLC) or (b) 18 months. Mr. Silvers remains subject to certain terms and conditions of his employment agreement, including, among other things, a covenant not to enter into a competing business, for any period after termination of his employment during which he receives certain specified termination payments, as well as a covenant not to disclose certain confidential information of the Company.
Summary Compensation Table
Summary Compensation Table The following table sets forth information concerning compensation awarded to, earned by or paid to our Named Executive Officers for the years specified.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) (3) | Option Awards ($) | Nonequity Incentive Plan Compensation (4) ($) | All Other Compensation (5) ($) | Total ($) | | A. Lorne Weil | 2023 | 787,500 | — | 3,158,337 | — | 384,000 | 103,922 | 4,433,759 | | Executive Chairman | 2022 | 750,000 | — | 1,658,317 | — | 1,215,000 | 128,876 | 3,752,193 | | | 2021 | 671,951 | — | 5,474,350 | — | 900,000 | 125,540 | 7,171,841 | | Brooks H. Pierce | 2023 | 570,000 | — | 1,009,920 | — | 257,400 | 111,016 | 1,948,336 | | President and CEO | 2022 | 525,000 | — | 905,165 | — | 708,750 | 149,455 | 2,288,370 | | | 2021 | 456,639 | — | 1,972,280 | — | 500,000 | 108,254 | 3,037,173 | | Carys Damon | 2023 | 389,632 | — | 399,755 | — | 152,000 | 64,161 | 1,005,548 | | Executive VP and GC | | | | | | | | | | Daniel B. Silvers | 2023 | 10,548 | — | 405,009 | — | | 2,736,803 | 3,152,360 | | Former Executive VP and CSO | 2022 | 385,000 | — | 394,096 | — | 519,750 | 81,502 | 1,380,348 |
Summary Compensation Table
| (1) Ms. Damon was not a named executive officer for 2022 (and, accordingly, her compensation is shown only for 2023). Ms. Damon is based in the U.K. and her cash compensation was paid in British pounds, which have been converted into U.S. dollars using the average exchange rate during the year, of 1.2478 US dollars to one Pound Sterling, except that, in the case of her STIP bonus, the rate at the end of the year was used (1.2747). | | Mr. Silvers was not a named executive officer for 2021 (and, accordingly, his compensation is shown only for 2022 and 2023). Mr. Silvers left the Company on January 10, 2023. | | (2) The stock awards for 2023 consist of (i) formula awards of time-based RSUs and performance-based RSUs to each of the Named Executive Officers, (ii) special awards of stock price RSUs to Mr. Weil pursuant to his employment agreement, and (iii) tranches of performance-based RSUs subject to 2023 performance criteria which were approved in previous years for each of Mr. Weil and Mr. Pierce pursuant to their employment agreements but as to which the accounting grant date for such tranches did not occur until 2023 (see footnote 3 below). The values shown reflect the grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For the time-based RSUs and performance-based RSUs, the values were determined by multiplying the number of shares subject to the awards by the closing price of the Common Stock on the grant date and, with respect to the performance-based RSUs (as to which the number of RSUs eligible to vest depends on the performance level attained), the amount reflects the Company’s assessment at the time of grant as to the probable outcome of the performance condition, which was determined to be 100% of the target amount. If the formula performance-based RSUs (which had a maximum opportunity of 200%) had instead been valued assuming attainment of the maximum performance level, the grant date fair value of such RSUs would have been as follows: Mr. Weil, $791,462, Mr. Pierce, $615,420, Ms. Damon $399,739 and Mr. Silvers, $405,009. All other performance awards for 2023 are capped at 100% of the target amount. In the case of the stock price RSUs, the fair value was determined using the Monte Carlo simulation method. For additional information, see our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Summary Compensation Table
| (3) The amounts included in historical stock awards columns for 2020, 2021 and 2022 have been revised to reflect that certain tranches of performance-based RSUs that had been approved in 2021 for Mr. Weil and in 2020 for Mr. Pierce pursuant to their employment agreements should not have been considered granted for purposes of measuring compensation expense under FASB ASC Topic 718 until the date the applicable targets for the tranches were established. As a result, with respect to: |
Summary Compensation Table
| ● | Mr. Weil, $1,575,000 was removed from the stock awards column for 2021 (relating to tranches subject to performance conditions for 2022, 2023 and 2024), $919,375 was added to the stock awards column for 2022 and $986,250 to the column for 2023 (reflecting the targets for the 2022 and 2023 tranches being set) and | | ● | Mr. Pierce, $444,000 was removed from the stock awards column for 2020 (relating to tranches subject to performance conditions for 2021, 2022 and 2023), $292,000 was added to the stock awards column for 2021, $367,750 to the column for 2022 and $394,500 to the column for 2023 (reflecting the targets for the 2021, 2022 and 2023 tranches being set). |
Summary Compensation Table
These adjustments do not reflect any change to the number of shares subject to these awards or their terms.
Summary Compensation Table
| (4) The nonequity incentive compensation awards shown reflect amounts earned under the Company’s STIP bonus program and paid after year end. The payout level approved was 40% of the Named Executive Officer’s target bonus for fiscal 2023, 135% for fiscal 2022 and 100% for fiscal 2021, based on the attainment of performance targets for the applicable year. | | (5) The amounts shown under “All Other Compensation” for 2023 include the following: (i) Mr. Weil, $13,200 in matching contributions allocated to a defined contribution plan, $74,037 for term life insurance coverage, $12,685 relating to health insurance costs and $4,000 provided as a health insurance benefits supplement; (ii) Mr. Pierce, $13,200 in matching contributions allocated to a defined contribution plan, $4,165 for life insurance premiums, $9,134 relating to health insurance costs, $4,000 provided as a health insurance benefits supplement and tax equalization in the estimated amount of $80,516; (iii) Ms. Damon, $58,445 in contributions to a defined contribution plan, $2,942 for health insurance premiums and $2,774 for life insurance premiums; and (iv) Mr. Silvers, $4,390 in matching contributions allocated to a defined contribution plan, $914 for life insurance premiums, $112,444 relating to health insurance costs and $2,619,055 reflecting amounts accrued during 2023 in connection with Mr. Silvers’ separation from the Company pursuant to his employment agreement and his separation and release agreement, including a pro-rated maximum bonus for 2023 (calculated based on 100 out of 365 days which includes the three-month notice period under his agreement) and salary and maximum bonus for a period of two years. With respect to the health insurance costs specified above for each of the Named Executive Officers, the amounts reflect the incremental cost to the Company of providing health insurance coverage to these executives in comparison to the amounts incurred for coverage that’s available generally to the Company’s salaried employees. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table sets forth information concerning outstanding equity awards held by our Named Executive Officers as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Option Awards | | | | | Stock Awards (1)(2)(3) | | | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | | A. Lorne Weil | — | — | — | — | — | 146,902 | 1,451,392 | 191,250 | 1,889,550 | | Brooks H. Pierce | — | — | — | — | — | 121,448 | 1,199,906 | — | — | | Carys Damon | — | — | — | — | — | 106,980 | 1,056,962 | — | — | | Daniel B Silvers | — | — | — | — | — | — | — | — | — |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Consists of the following unvested awards: |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (i) RSUs granted on May 11, 2021 to Mr. Weil in connection with his employment agreement, as modified on June 21, 2021, comprised of (1) a tranche of 85,000 time-based RSUs scheduled to vest on December 31, 2024 and (2) two tranches totaling 97,500 stock-price based RSUs (50,000 RSUs vesting at a stock price $17.50 per share and 47,500 RSUs vesting at a stock price of $20.00 per share). |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (ii) | RSUs granted on July 21, 2021 to Mr. Pierce in connection with an extension of his employment agreement in the amount of 75,000 time-based RSUs, which are scheduled to vest on December 31, 2024. | | (iii) | RSUs granted on August 4, 2021 to Ms. Damon in connection with her employment agreement in the amount of 75,000 time-based RSUs, which are scheduled to vest on December 31, 2024. | | (iv) | RSUs granted on February 14, 2022 to Mr. Weil, Mr. Pierce and Ms. Damon in the original amounts of 25,117, 18,267 and 13,222, respectively, as to which one-third vested on each of December 30, 2022 and December 29, 2023, and the final tranche is scheduled to vest on December 31, 2024. | | (v) | RSUs granted as performance-based RSUs on February 14, 2022 to Mr. Weil, Mr. Pierce and Ms. Damon in the target amounts of 25,117, 18,267 and 13,221, respectively, as to which vesting was conditioned on attainment of pre-established performance criteria for 2022. The performance criteria applicable to the RSUs was met at the target level. The awards remain subject to a time-based vesting schedule (i.e., vesting in one installment on December 31, 2024). |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (vi) | RSUs granted on February 14, 2023 to Mr. Weil, Mr. Pierce and Ms. Damon in the original amounts of 25,078, 19,500 and 12,667, respectively, as to which one-third vested on December 29, 2023 and one-third is scheduled to vest on each of December 31, 2024 and December 31, 2025. | | (vii) | RSUs granted as performance-based RSUs on February 14, 2023 to Mr. Weil, Mr. Pierce and Ms. Damon in the target amounts of 25,078, 19,500 and 12,666, respectively, as to which vesting was conditioned on attainment of pre-established performance criteria for 2023. The performance criteria applicable to the RSUs was met at approximately 46.63%. The awards remain subject to a time-based vesting schedule (i.e., vesting in one installment on December 31, 2025). | | (viii) | RSUs granted on May 9, 2023 to Mr. Weil in connection with his employment agreement in the amount of 125,000 stock price based RSUs (vesting in four equal installments conditioned on attainment of specified price targets ($15.00 per share, $17.50 per share, $20.00 per share and $22.50 share). The first stock price target has been met and the tranche was vested on May 9, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) The values shown were calculated by multiplying the number of shares subject to the awards by the closing price of the Company’s Common Stock on December 29, 2023 ($9.88). In the case of performance RSUs under the Equity Incentive Plan Awards Value column, the value shown was calculated based on target performance. | | (3) In addition to the awards reflected in the table (i.e., unvested RSUs as of December 31, 2023), the Named Executive Officers held the following vested (but unsettled) RSUs as of December 31, 2023: Mr. Weil, 1,529,253 RSUs; Mr. Pierce, 196,865 RSUs; Ms. Damon, 64,603 RSUs; and Mr. Silvers, 77,810 RSUs. A portion of these RSUs settled in February 2024 (Mr. Weil, 66,731; Mr. Pierce, 85,208; Ms. Damon, 39,603; and Mr. Silvers, 45,409) and a portion settled in April 2023 (Mr. Pierce, 11,657 RSUs), and Mr. Silvers remaining RSUs are scheduled to settle between December 2024 and December 2025. The balance of vested RSUs are subject to settlement deferral during the employment of the award recipient. Mr. Weil and Mr. Pierce also have certain tranches of performance-based RSUs under the terms of their employment agreements relating to performance periods later than 2023 (Mr. Weil has four tranches totaling 187,500 RSUs subject to performance criteria for 2024, 2025, 2026 and 2027; and Mr. Pierce has two tranches totaling 125,000 RSUs subject to performance criteria for 2025 and 2026) as to which the targets (and, accordingly, the accounting grant dates) were not established on or before December 31, 2023. The targets for each tranche are anticipated to be set in February of the performance year for the tranche (e.g., February 2024 for the tranche relating to 2024 performance). |
Pay Versus Performance
Pay Versus Performance Pursuant to Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information regarding “compensation actually paid”, as defined in Item 402(v), and certain financial performance of the Company. In accordance with SEC rules, the “compensation actually paid” amounts shown in the table below for each applicable year reflect certain adjustments to the values reported in the Summary Compensation Table of the proxy statement as described in the footnotes to the following table.
Pay Versus Performance
| 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: Total Shareholder Return(3) | Net Income (millions)(4) | Adjusted EBITDA (millions)(4)(5) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | 2023 | $4,433,759 | $2,893,424 | $2,035,415 | $1,436,436 | $150.15 | $7.6 | $100.5 | | 2022 | $3,752,193 | $3,329,440 | $1,834,359 | $1,686,664 | $192.55 | $20.6 | $99.0 | | 2021 | $7,171,841 | $10,943,754 | $2,563,611 | $3,864,449 | $196.96 | $-40.6 | $61.9 |
Pay Versus Performance
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Weil in the “Total” column of the Summary Compensation Table for each applicable year. Mr. Weil was our Principal Executive Officer (PEO) for all applicable years. The dollar amounts reported in column (d) represent the average of the amounts reported for our Named Executive Officers (NEOs), other than our PEO, in the “Total” column of the Summary Compensation Table in each applicable year. Our NEOs, other than our PEO, were as follows —for 2021, Mr. Pierce and Mr. Baker; for 2022, Mr. Pierce and Mr. Silvers; and for 2023, Mr. Pierce, Ms. Damon and Mr. Silvers. Refer to “Executive Compensation – Summary Compensation Table,” including footnote 3 which discusses certain revisions that were made to the historical amounts reported. |
Pay Versus Performance
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Weil, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs, other than our PEO, as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to determine the “compensation actually paid” amounts reported above for the PEO and the average paid to the other NEOs: |
Adjustments to Summary Compensation Total to Determine Compensation Actually Paid
Adjustments to Summary Compensation Total to Determine Compensation Actually Paid
Adjustments to Summary Compensation Total to Determine Compensation Actually Paid
| | Year | Amounts Reported under the Summary Compensation Table Total column | Deduction for Amounts included in the prior column for “Stock Awards” (a) | Inclusion of Equity Values (b) | Compensation Actually Paid | | PEO | 2023 | $4,433,759 | $(3,158,337) | $1,618,002 | $2,893,424 | | | 2022 | $3,752,193 | $(1,658,317) | $1,235,564 | $3,329,440 | | | 2021 | $7,171,841 | $(5,474,350) | $9,246,263 | $10,943,754 | | Average for Other NEOs | 2023 | $2,035,415 | $(604,895) | $5,916 | $1,436,436 | | | 2022 | $1,834,359 | $(649,630) | $501,935 | $1,686,664 | | | 2021 | $2,563,611 | $(1,683,466) | $2,984,304 | $3,864,449 |
Adjustments to Summary Compensation Total to Determine Compensation Actually Paid
| (a) Represents the grant date fair value of equity compensation included in the Summary Compensation Table “Total” column as “Stock Awards” for the applicable year for the PEO and the average for the other NEOs. | | (b) The amounts reported in column (b) were computed as follows: |
Compensation Actually Paid and Cumulative TSR
Compensation Actually Paid and Cumulative TSR The following graph illustrates the amount of “compensation actually paid” (“CAP”) to Mr. Weil and the average amount of CAP to the Company’s NEOs as a group (excluding Mr. Weil) relative to the Company’s cumulative total shareholder return (TSR) over the three years presented in the table. A significant portion of the CAP is comprised of equity awards, with special sign-on awards granted in the 2021 year to Mr. Weil, Mr. Pierce and Mr. Baker as part of new employment agreements or extensions. Approximately 50% of the sign-on RSUs awarded to Mr. Weil were conditioned on attainment of stock price targets and approximately 25% were conditioned on attainment of Adjusted EBITDA targets.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income As demonstrated by the following table, the amount of CAP to Mr. Weil and the average amount of CAP to the Company’s NEOs as a group (excluding Mr. Weil) is not aligned with the Company’s net income over the three years presented in the table. The Company has not used net income as a performance measure in the overall executive compensation program.
Compensation Actually Paid and Adjusted EBITDA
Compensation Actually Paid and Adjusted EBITDA The Company utilizes Adjusted EBITDA when setting goals for the Company’s annual performance bonuses and for the performance-based RSUs that are awarded to the NEOs. Approximately 51% of the value of total compensation awarded for target level performance to the NEOs is in the form of performance-based bonuses and restricted stock units tied to Adjusted EBITDA.
Director Compensation
Director Compensation The Company’s non-employee director compensation program was as follows in 2023:
Director Compensation
| | Annual Cash Retainer | Annual RSU Award | | Board Members | $50,000 | $100,000 | | Lead Independent Director Additional Retainer and Equity | $10,000 | $10,000 | | Committee Chair Additional Retainer and Equity | $10,000 | $10,000 |
Director Compensation
With respect to the annual awards of RSUs for 2023, the number of RSUs granted was determined by dividing the award value (as shown in the table) by the closing price of the Company’s stock on the grant date (the first business day of the year) (which was $12.85). The RSUs vest in four equal installments, one-quarter on the date of grant and the remaining three quarters on the first day of each calendar quarter (i.e., April 1, July 1 and October 1). Directors may elect whether or not they wish to defer settlement of vested RSUs. The compensation paid to individuals who served as non-employee directors is shown below for 2023:
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards (1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | Michael R. Chambrello | 60,000 | 109,996 | — | — | — | 169,996 | | Ira H. Raphaelson | 60,000 | 109,996 | — | — | — | 169,996 | | Desirée G. Rogers | 50,000 | 99,999 | — | — | — | 149,999 | | Steven M. Saferin | 60,000 | 109,996 | — | — | — | 169,996 | | Katja Tautscher | 50,000 | 99,999 | — | — | — | 149,999 | | John M. Vandemore | 60,000 | 109,996 | — | — | — | 169,996 |
Director Compensation
| (1) Represents annual grants of RSUs. The grant date fair value was computed in accordance with FASB ASC Topic 718, by multiplying the number of shares subject to the award by the closing price of the common stock on the grant date. For additional information, see our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Director Compensation
During 2023, the Company revised the methodology to be used for determining the number of RSUs subject to annual formula awards such that, rather than dividing the formula award value (e.g., $100,000) by the closing price of our Common Stock on the date of the award, the award value would instead be divided by a market value determined based on the higher of (x) the twenty trading day average closing price of the immediately preceding year’s high closing price of our Common Stock and (y) the twenty trading day average closing price of our Common Stock before the date of grant, but in any event at a price no lower than 80% of the price at which the formula RSUs were granted for the immediately preceding year. Based on this revised methodology, the market value used to determine the number of RSUs granted to our non-employee directors for 2024 formula awards was $15.73, in comparison to the closing price on the date of grant which was $9.17, resulting in the awards for 2024 having an aggregate grant date fair value that was approximately 40% less than the grant date fair value of the prior year’s awards. As of December 31, 2023, the aggregate stock awards, consisting of RSUs, held by our non-employee directors were as follows:
Director Compensation
| Name | Total Number of RSUs (1) | | Michael R. Chambrello | 22,555 | | Ira H. Raphaelson | 42,716 | | Desirée G. Rogers | 43,033 | | Steven M. Saferin | 47,104 | | John M. Vandemore | 56,107 | | Katja Tautscher | 20,539 |
Director Compensation
| (1) All outstanding RSUs held by the directors were vested as of fiscal year-end. |
Director Nominees
Director Nominees The Board proposes the election of the following seven individuals to serve on the Board until the 2025 annual meeting of stockholders or until their respective successors are duly elected and qualified: A. Lorne Weil, Michael R. Chambrello, Ira H. Raphaelson, Desiree G. Rogers, Steven M. Saferin, Katja Tautscher and John M. Vandemore. Each of these individuals currently serves on the Company’s Board. Pursuant to a stockholders agreement dated December 23, 2016 by and among the Company, the sponsors of the Company’s initial public offering and certain other parties, Mr. Weil is the designated director of the Hydra Sponsor; and Messrs. Chambrello and Raphaelson are the joint designees of the Macquarie Sponsor and Hydra Sponsor. Brief statements as to each nominee’s background and a statement as to why the Board considers such nominee to be qualified and recommends such nominee for election are set forth above under the heading “Directors, Executive Officers and Corporate Governance.” Each nominee has advised us that he or she is willing to be named as a director nominee and to serve as a director if elected.