DEF 14A of Applied Digital Corp., Oct 23, 2024

DEF 14A of Applied Digital Corp.

Filed Oct 23, 2024 · FY20240001493152-24-042122

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our Board, upon recommendation of our Nominating and Corporate Governance Committee, has nominated Wes Cummins, Ella Benson, Chuck Hastings, Rachel Lee, Douglas Miller and Richard Nottenburg for election as directors of the Board. Our Third Amended and Restated Bylaws (“Bylaws”) permit the Board to set the size of the Board, having at least one (1) or more members. Our Board currently consists of seven directors, six of whom are being nominated for reelection at this Annual Meeting. Each of our current directors serves until the next annual meeting of our stockholders or the earlier death, resignation or removal of such director. Despite the expiration of a director’s term, however, the director shall continue to serve until such director’s successor is elected and qualified or until there is a decrease in the number of directors. Our Bylaws provide that directors will be elected by a plurality of the votes cast. Thus, when the number of director nominees equals the number of directorships on the Board, each nominee needs at least one affirmative vote to be elected to the Board. As discussed below, we believe that each of our director nominees possesses the experience, skills and qualities to fully perform his or her duties as a director and contribute to our success. Our director nominees were nominated because each is of high ethical character, is highly accomplished in his or her field with superior credentials and recognition, has a reputation, both personal and professional, that is consistent with our image and reputation, has the ability to exercise sound business judgment, and is able to dedicate sufficient time to fulfilling his or her obligations as a director. Each director nominee’s principal occupation and other pertinent information about such director’s particular experience, qualifications, attributes and skills that led the Board to conclude that such person should serve as a director, appears on the following pages. There are no family relationships between any of our directors or executive officers.

  2. Nominees for Election Until the Next Annual Meeting

    Nominees for Election Until the Next Annual Meeting The following table sets forth the name, age, position and tenure of each of the nominees at the Annual Meeting:

  3. Nominees for Election Until the Next Annual Meeting

    | Name | Age | Position(s) Held With Applied Digital Corporation | Period of Service | | Wes Cummins | 46 | Chief Executive Officer and Chairman of the Board | Director from February 2007 to December 2020 and March 2021 to Present, sole officer from March 2012 to December 2020 and CEO, Secretary and Treasurer from March 2021 to Present | | Ella Benson | 39 | Director | May 2024 to Present | | Chuck Hastings | 46 | Director | April 2021 to Present | | Rachel Lee | 40 | Director | February 2024 to Present | | Douglas Miller | 67 | Director | April 2021 to Present | | Richard Nottenburg | 70 | Director | June 2021 to Present |

  4. Wes Cummins

    Wes Cummins Mr. Cummins has served as a member of our Board from 2007 until 2020 and from March 11, 2021 through present. During that time Mr. Cummins also served in various executive officer positions and he is currently serving as our chairman of the Board and Chief Executive Officer. Mr. Cummins is also the founder and CEO of 272 Capital LP, a registered investment advisor, which he sold to B. Riley Financial, Inc. (NASDAQ: RILY) in August 2021. Following the sale, Mr., Cummins served as President of B. Riley Asset Management until February 2024. Mr. Cummins has been a technology investor for over 20 years and held various positions in capital markets including positions at investment banks and hedge funds. Prior to founding 272 Capital and starting our operating business, Mr. Cummins was an analyst with Nokomis Capital, L.L.C., an investment advisory firm, a position he held from October 2012 until February 2020. Mr. Cummins also served as president of B. Riley & Co., from 2002 to 2011. Mr. Cummins also serves as a member of the board of Sequans Communications S.A. (NYSE: SQNS), a fabless designer, developer and supplier of cellular semiconductor solutions for massive, broadband and critical Internet of Things (IoT) markets. Mr. Cummins served on the board of Telenav (NASDAQ: TNAV) from August 2016 until February 2021. Mr. Cummins also served on the board of Vishay Precision Group, Inc. (NYSE: VPG) from July 2017 to June 2024. He holds a BSBA from Washington University in St. Louis where he majored in finance and accounting. We believe Mr. Cummins is qualified to serve on our Board because of his business and leadership experience, as well as a result of having served as a director since starting our operating business.

  5. Board Committees

    | ● | reviewing and recommending to our Board the compensation of our directors; | | ● | administering our stock and equity incentive plans; | | ● | reviewing and approving, or making recommendations to our Board with respect to, incentive compensation and equity plans; and | | ● | establishing our overall compensation philosophy. |

  6. Overview

    | ● | Attract, motivate, incentivize, and retain employees at the executive level who contribute to our long-term success; | | ● | Provide compensation packages to our executives that are competitive, reward the achievement of our business objectives and effectively align their interests with those of our stockholders; and | | ● | Focus on long-term equity incentives that correlate with the growth of sustainable long-term value for our stockholders. |

  7. Peer Group

    Peer Group The Compensation Committee reviews market data of companies that we believe are comparable to us. With Compensia’s assistance, the Compensation Committee developed a peer group for use when making its compensation decisions for the fiscal year ending May 31, 2024, which consisted of publicly traded technology companies headquartered in the U.S. that generally had a market capitalization between 0.25x and 4.0x the Company’s market capitalization. The Compensation Committee referred to compensation data from this peer group and broader survey data (for similarly-sized companies) when making base salary, cash bonus and equity award decisions for our executive officers for the fiscal year ending May 31, 2024. The following is a list of the public companies that composed our peer group for the fiscal year ending May 31, 2024:

  8. Peer Group

    | Alkami Technology | CleanSpark | Paya | | Backblaze | Couchbase | Riot Platforms | | Bakkt Holdings | Fastly | Stronghold Digital Mining | | Bit Digital | Greenidge Generation Holdings | Sumo Logic | | Cantaloupe | IronNet | TeraWulf | | Cipher Mining | Marathon Digital Holdings | Veritone |

  9. Summary Compensation Table

    Summary Compensation Table The following table presents information regarding the total compensation awarded to, earned by, or paid to Named Executive Officers as of May 31, 2024 and May 31, 2023 for services rendered in all capacities to us for the years ended May 31, 2024 and May 31, 2023.

  10. Summary Compensation Table

    | Name and Principal Position(s) | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation (1) | All Other Compensation(2) | Total(3) | | Wes Cummins | 2024 | $600,000 | $600,000 | $— | $— | $37,002 | $1,237,002 | | Chief Executive Officer, President, Secretary and Treasurer | 2023 | $312,500 | $150,000 | $5,455,000 | $— | $37,078 | $5,954,578 | | David Rench | 2024 | $475,000 | $475,000 | $— | $— | $37,002 | $987,002 | | Former Chief Financial Officer (4) | 2023 | $272,292 | $339,375 | $2,061,500 | $— | $37,078 | $2,710,245 | | Michael Maniscalco | 2024 | $375,000 | $367,875 | $1,028,000 | $— | $12,334 | $1,783,209 | | Chief Technology Officer (5) | 2023 | $200,000 | $92,500 | $842,582 | $— | $12,359 | $1,147,441 |

  11. Summary Compensation Table

    | (1) Consists of value of restricted stock unit (“RSU”) awards made outside of the Applied Blockchain, Inc. 2022 Incentive Plan (the “Incentive Plan”). | | (2) Consists of value of health care premiums paid by the Company, and corrects previously disclosed “All Other Compensation” amount reported in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, filed with the SEC on August 30, 2024, which erroneously included the value of RSUs that were previously granted under the Incentive Plan (which were unvested as of May 31, 2024). | | (3) The “Total” compensation for each of the NEOs has been re-calculated, using the grant date fair value of RSUs granted in fiscal year, rather than the fair value of such stock awards at fiscal year end, as required by Regulation S-K promulgated under the Securities Act, and replaces the previously disclosed corresponding values set forth under “Total” compensation in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, filed with the SEC on August 30, 2024. | | (4) Effective October 15, 2024, Mr. Rench transitioned to a new role with the Company of Chief Administrative Officer and is no longer the Chief Financial Officer of the Company as of such date. | | (5) Mr. Maniscalco joined the Company in September 2021 as EVP, Technology, and became Chief Technology Officer on July 5, 2023. |

  12. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control In addition to any payments provided by the Named Executive Officers’ employment agreements, as described above, under the terms of each Named Executive Officer’s restricted stock unit award (each, an “Award”), the Named Executive Officer’s employment terminates before the Award is vested and the termination is on account of the Named Executive Officer’s death, disability or termination by the Company without Cause (as defined in the Award), a portion of the unvested Award will vest in accordance with the applicable award agreement. Under the terms of each Named Executive Officer’s performance share unit award (“PSU Award”), the portion of the Target Award that will be earned and vested is determined based on both the months of employment completed as of the termination date and on achievement of certain performance factors defined in the Award during the period prior to the termination of employment. In addition, if there is a change in control of the Company (as defined in the Award, a “Change in Control”) while the Award remains unvested, the Award will be treated in accordance with one of the following, as determined by the Compensation Committee: (1) the Award may be replaced with a new award that constitutes a “Replacement Award” under the terms of the Award and relevant tax rules; (2) if the Company’s stock continues to be publicly traded on the Nasdaq (or another established securities market) after the Change in Control, then the Award will continue in place and be treated as a Replacement Award; or (3) if, following the Change in Control, the Company’s stock is no longer publicly traded on The Nasdaq (or another established securities market) and no Replacement Award is granted, the unvested portion of the Award shall become vested immediately prior to the consummation of the Change in Control. Notwithstanding any of the foregoing, the Committee may determine that any unvested portion of the Award will be cancelled and terminated for consideration instead. Notwithstanding the foregoing, for performance share unit awards (“PSU Awards”), if the Change in Control occurs prior to the date that the Committee determines the number of units earned under the Award, a portion of the Award will vest based on the months of employment completed as of the Change in Control, applied to the higher of 100% of the target Award and the amount earned based on actual performance as of the end of the last full calendar quarter preceding the Change in Control date. As described in the Equity Compensation Plan Information section - Footnote 1 to the Securities Authorized for Issuance Under Equity Compensation Plans table, the PSU Awards described above were subsequently canceled. If payment of an Award in connection with a Change in Control would result in liability for an excise tax under Section 4999 of the Code for “excess parachute payments” as defined in Section 280G of the Code, the amount of the Award may be reduced to avoid imposition of the excise tax, if such reduction results in a greater post-tax benefit to the Named Executive Officer as compared to payment of the full amount of the Award and imposition of the excise tax.

  13. Outstanding Equity Awards At May 31, 2024

    Outstanding Equity Awards At May 31, 2024 The following table summarizes, for each of the Named Executive Officers, the number of shares of common stock underlying outstanding stock awards held as of May 31, 2024.

  14. Outstanding Equity Awards At May 31, 2024

    | | STOCK AWARDS | | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (8) | | Wes Cummins | 8/5/2022 | 250,000(1) | $1,057,500 | | | 4/4/2023 | 400,000(2) | $1,692,000 | | David Rench | 8/5/2022 | 125,000(3) | $528,750 | | | 4/4/2023 | 140,000(4) | $592,200 | | Michael Maniscalco | 8/5/2022 | 70,833(5) | $299,624 | | | 4/4/2023 | 50,000(6) | $211,500 | | | 1/31/2024 | 200,000(7) | $846,000 |

  15. Outstanding Equity Awards At May 31, 2024

    | (1) As of May 31, 2024, consists of RSUs that vest as follows: 83,333 on each of August 5, 2024 and February 5, 2025 and 83,334 on August 5, 2025. | | (2) As of May 31, 2024, consists of RSUs that vest as follows: 100,000 on each of October 4, 2024, April 4, 2025, October 4, 2025 and April 4, 2026. | | (3) As of May 31, 2024, consists of RSUs that vest as follows: 41,667 on each of February 5, 2025 and August 5, 2025 and 41,666 on August 5, 2024. | | (4) As of May 31, 2024, consists of RSUs that vest as follows: 35,000 on each of October 4, 2024, April 4, 2025, October 4, 2025 and April 4, 2026. | | (5) As of May 31, 2024, consists of RSUs that vest as follows: 23,611 on February 5, 2025, 23,610 on August 5, 2024 and 23,612 on August 5, 2025. | | (6) As of May 31, 2024, consists of RSUs that vest as follows: 12,500 on each of October 4, 2024, April 4, 2025, October 4, 2025 and April 4, 2026. | | (7) As of May 31, 2024, consists of RSUs that vest as follows: 33,333 on each of July 31, 2024, January 31, 2025, January 31, 2026 and July 31, 2026 and 33,334 on each of July 31, 2025 and January 31, 2027. | | (8) The values set forth in “Market Value of Shares or Units of Stock That Have Not Vested” have been re-calculated, using the fair value at fiscal year end of outstanding and unvested RSUs granted in the applicable fiscal year, rather than the grant date fair value of such awards, as required by Regulation S-K promulgated under the Securities Act, and replace the previously disclosed corresponding values set forth under “Market Value of Shares or Units of Stock That Have Not Vested” in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, filed with the SEC on August 30, 2024. |

  16. PAY Versus Performance

    PAY Versus Performance

  17. Pay Versus Performance Table

    Pay Versus Performance Table As required by 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 about the relationship between “compensation actually paid” (“CAP”) to our principal executive officer (“PEO”) and to our non-PEO NEOs and certain financial performance of the Company. The data included in the CAP columns does not reflect the actual amount of compensation earned or paid to our executive officers during the applicable fiscal year and it is reported solely pursuant to the new SEC rules. The CAP amount also does not represent amounts that have actually been earned or realized, including with respect to certain equity awards, for which performance conditions for these equity awards have not yet been satisfied. To this end, information in the following table may not reflect whether compensation actually realized is aligned with performance. The Compensation Committee did not consider the pay versus performance disclosure in making its pay decisions for any of the years shown. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Overview of Executive Compensation above.

  18. Pay Versus Performance Table

    | 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 (3) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (4) | Net Income (Loss) (millions) (5) | | 2024 | $1,237,002 | $(2,864,834) | $1,385,106 | $98,090 | $220 | $(149,274) | | 2023 | $5,954,578 | $19,471,246 | $1,928,843 | $5,883,078 | $173 | $(44,646) | | 2022 | $4,599,167 | $2,994,167 | $1,371,847 | $943,852 | $100 | $(23,520) |

  19. Pay Versus Performance Table

    | (1) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Wes Cummins and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year for the Company’s NEOs for the applicable year other than the PEO for such years. | | (2) Amounts reported in this column represent the CAP to Wes Cummins as the Company’s PEO in the indicated fiscal years, as calculated per the SEC disclosure rules based on his total compensation reported in the Summary Compensation Table for the indicated fiscal years and adjusted as shown in the table below: |

  20. Pay Versus Performance Table

    | PEO | 2022 | 2023 | 2024 | | Summary Compensation Table - Total Compensation (a) | $4,599,167 | $5,954,578 | $1,237,002 | | Minus | | | | | Grant Date Fair Value of Stock Awards and Option Awards Granted in Fiscal Year (b) | $4,020,000 | $5,455,000 | $— | | Plus | | | | | Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards and Option Awards Granted in Fiscal Year (c) | $2,415,000 | $20,227,503 | $— | | Plus | | | | | Change in Fair Value of Outstanding and Unvested Stock Awards and Option Awards Granted in Prior Fiscal Years (d) | $— | $— | $(2,691,000) | | Plus | | | | | Fair Value at Vesting of Stock Awards and Option Awards Granted in Fiscal Year That Vested During Fiscal Year (e) | $— | $274,166 | $— | | Plus | | | | | Change in Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year (f) | $— | $(1,530,000) | $(1,410,836) | | Minus | | | | | Fair Value as of Prior Fiscal Year End of Stock Awards and Option Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year (g) | $— | $— | $— | | Compensation Actually Paid | $2,994,167 | $19,471,247 | $(2,864,834) |

  21. Pay Versus Performance Table

    | (a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. | | (b) Represents the aggregate grant date fair value of the stock awards and option awards granted to Wes Cummins during the indicated fiscal year, computed in accordance with FASB ASC 718. Amounts shown are the amounts reported in the Summary Compensation Table. | | (c) Represents the aggregate fair value as of the indicated fiscal year-end of Wes Cummins outstanding and unvested stock awards and option awards granted during such fiscal year, computed in accordance with FASB ASC 718. | | (d) Represents the aggregate change in fair value during the indicated fiscal year of the outstanding and unvested stock awards and option awards held by Wes Cummins as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718. | | (e) Represents the aggregate fair value at vesting of the stock and option awards that were granted to Wes Cummins and vested during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (f) Represents the aggregate change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award and option award held by Wes Cummins that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (g) Represents the aggregate fair value as of the last day of the prior fiscal year of Wes Cummins’s stock awards and option awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with FASB ASC 718. |

  22. Pay Versus Performance Table

    | (3) Amounts reported in this column represent the average CAP to the Company’s Non-PEO NEOs in the indicated fiscal years, as calculated per the SEC disclosure rules based on his total compensation reported in the Summary Compensation Table for the indicated fiscal years and adjusted as shown in the table below: |

  23. Pay Versus Performance Table

    | NEO Average | 2022 | 2023 | 2024 | | Summary Compensation Table - Total Compensation (a) | $1,371,847 | $1,928,843 | $1,385,106 | | Minus | | | | | Grant Date Fair Value of Stock Awards and Option Awards Granted in Fiscal Year (b) | $1,071,994 | $1,299,790 | $514,000 | | Plus | | | | | Fair Value at Fiscal Year End of Outstanding and Unvested Stock Awards and Option Awards Granted in Fiscal Year (c) | $643,998 | $5,440,483 | $423,000 | | Plus | | | | | Change in Fair Value of Outstanding and Unvested Stock Awards and Option Awards Granted in Prior Fiscal Years (d) | — | — | $(798,674) | | Plus | | | | | Fair Value at Vesting of Stock Awards and Option Awards Granted in Fiscal Year That Vested During Fiscal Year (e) | — | $68,541 | — | | Plus | | | | | Change in Fair Value as of Vesting Date of Stock Awards and Option Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year (f) | — | $(254,999) | $(397,341) | | Minus | | | | | Fair Value as of Prior Fiscal Year End of Stock Awards and Option Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year (g) | — | — | — | | Compensation Actually Paid | $943,851 | $5,883,078 | $98,090 |

  24. Pay Versus Performance Table

    | (a) Represents the average Total Compensation as reported in the Summary Compensation Table for the reported NEOs other than the PEO in the indicated fiscal year. |

  25. Pay Versus Performance Table

    | (b) Represents the average aggregate grant date fair value of the stock awards and option awards granted to the reported NEOs excluding the PEO during the indicated fiscal year computed in accordance with FASB ASC 718. Amounts shown are the amounts reported in the Summary Compensation Table. | | (c) Represents the average aggregate fair value as of the indicated fiscal year-end of the reported NEOs’ (excluding the PEO) outstanding and unvested stock awards and option awards granted during such fiscal year, computed in accordance with FASB ASC 718. | | (d) Represents the average aggregate change in fair value during the indicated fiscal year of the outstanding and unvested stock awards and option awards held by the reported NEOs excluding the PEO as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718. | | (e) Represents the average aggregate fair value at vesting of the stock awards and option awards that were granted to the reported NEOs (excluding the PEO) and vested during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (f) Represents the average aggregate change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock award and option award held by the reported NEOs (excluding the PEO) that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (g) Represents the average aggregate fair value as of the last day of the prior fiscal year of the reported NEOs’ (excluding the PEO) stock awards and option awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year computed in accordance with FASB ASC 718. |

  26. Pay Versus Performance Table

    | (4) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. No dividends were paid on stock or option awards in fiscal 2024, 2023 or 2022. | | (5) The dollar amounts reported represent the amount of net loss reflected in our consolidated audited financial statements for the applicable year. |

  27. Pay Versus Performance Relationships Descriptions

    Pay Versus Performance Relationships Descriptions In accordance with Item 402(v) of Regulation S-K, the graphs below compare the compensation actually paid to our PEO and the average of the compensation actually paid to our Non-PEO NEOs, with (i) our TSR, and (ii) our net income, in each case, for the fiscal years ended May 31, 2024, May 31, 2023 and May 31, 2022. TSR amounts reported in the graph assume an initial fixed investment of $100. A portion of our NEO’s compensation consists of equity awards. As a result, the change between the values disclosed in our Summary Compensation Table and CAP tends to be directionally aligned with changes in our TSR. All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference in any filing of our company under the Securities Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

  28. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  29. Director Compensation Table

    Director Compensation Table The following table sets forth information concerning the compensation paid to certain of our non-employee directors who served on our Board during fiscal year ended May 31, 2024:

  30. Director Compensation Table

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) | Total ($) | | Ella Benson (2) | $3,634 | $332,792(7) | $— | $336,426 | | Charles Hastings | $41,667 | $329,148(8) | $— | $370,815 | | Rachel Lee (3) | $14,605 | $343,018(9) | $1,955 | $359,578 | | Kelli McDonald (4) | $30,132 | $329,148(10) | $— | $359,280 | | Douglas Miller | $77,083 | $329,148(11) | $— | $406,231 | | Virginia Moore (5) | $33,511 | $329,148(12) | $— | $362,659 | | Richard Nottenburg | $59,167 | $1,373,148(13) | $2,300 | $1,434,615 | | Kate Reed (6) | $20,000 | $360,011(14) | $— | $380,011 |

  31. Director Compensation Table

    | (1) Amounts shown represent the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, of awards of restricted stock granted during fiscal year ended May 31, 2024. | | (2) Ms. Benson has served as a director since May 2024. | | (3) Ms. Lee has served as a director since February 2024. | | (4) Ms. McDonald served as director through February 2024. | | (5) Ms. Moore served as director through February 2024. | | (6) Ms. Reed was appointed the Chief Growth Officer of the Company in May of 2024. Ms. Reed will not be standing for re-election at the Annual Meeting. | | (7) Ms. Benson held unvested restricted stock awards for 101,461 shares of common stock as of May 31, 2024. | | (8) Mr. Hastings held unvested restricted stock awards for 33,685 shares of common stock as of May 31, 2024. | | (9) Ms. Lee held unvested restricted stock awards for 79,219 shares of common stock as of May 31, 2024. | | (10) 33,685 shares of common stock associated with unvested restricted stock awards were forfeited upon Ms. McDonald’s resignation from the Company’s Board of Directors effective February 2024. | | (11) Mr. Miller held unvested restricted stock awards for 33,685 shares of common stock as of May 31, 2024. | | (12) 33,685 shares of common stock associated with unvested restricted stock awards were forfeited upon Ms. Moore’s resignation from the Company’s Board of Directors effective February 2024. | | (13) Dr. Nottenburg held unvested restricted stock awards for 333,685 shares of common stock as of May 31, 2024. | | (14) Ms. Reed held unvested restricted stock awards for 57,160 shares of common stock and unvested restricted stock units of 300,000 shares of common stock as of May 31, 2024. |

  32. Non-Employee Director Compensation Policy

    Non-Employee Director Compensation Policy The following table shows the annual cash retainer fees for non-employee directors:

  33. Non-Employee Director Compensation Policy

    | Base retainer | $40,000 | | Audit Committee Chair | $20,000 | | Audit Committee Member | $10,000 | | Compensation Committee Chair | $15,000 | | Compensation Committee Member | $7,500 | | Nominating and Corporate Governance Committee Chair | $12,000 | | Nominating and Corporate Governance Committee Member | $6,000 | | Lead Independent Director | $25,000 |

  34. Non-Employee Director Compensation Policy

    Directors serving in multiple leadership roles receive incremental compensation for each role. Directors are not expected to receive additional compensation for attending regularly scheduled Board or committee meetings. For less than full years of service, the compensation paid to the non-employee directors will be prorated based on the number of days of service. Directors also receive customary reimbursement for reasonable out-of-pocket expenses related to Board service. In addition to the annual cash retainer fees, directors also receive an annual grant of restricted stock awards valued at $160,000, calculated using the closing price of the common stock on the Nasdaq Global Select Market on the date of grant, which is the date of each annual meeting of stockholders, and vesting on the first anniversary of the date of grant. On November 9, 2023, each director received a grant of restricted stock awards for 33,685 shares of common stock that will vest on November 9, 2024 in order to compensate such elected or re-elected director (at the Annual Meeting of the Company’s stockholders held on November 9, 2023) to serve on the Company’s Board for the subsequent 12 months. Directors who are employees of the Company do not receive any additional compensation for Board service.