DEF 14A of Quantum Corp /De/

Filed Jul 27, 2023 · FY20210001539497-23-001309

Open on EDGAR

Table of Contents
| FISCAL 2023 COMPENSATION TABLES | | | | Fiscal 2023 Summary Compensation Table | | 54 | | Fiscal 2023 Grants of Plan-Based Awards | | 55 | | Outstanding Equity Awards at Fiscal 2023 Year End | | 56 | | Fiscal 2023 Options Exercised and Stock Vested | | 58 | | Potential Payments Upon Termination or Change of Control for Fiscal 2023 | | 58 | | Equity Compensation Plan Information | | 60 | | CEO Pay Ratio | | 60 | | Security Ownership of Certain Beneficial Owners and Management | | 60 | | Pay Versus Performance | | 62 | | BOARD COMMITTEE REPORTS AND RELATED INFORMATION | | | | Report of the Leadership and Compensation Committee of the Board of Directors | | 67 | | Report of the Audit Committee of the Board of Directors | | 67 | | Independent Registered Public Accounting Firm | | 67 | | Related Party Transactions | | 68 | | INFORMATION CONCERNING SOLICITATION, VOTING, AND COMMUNICATION | | | | General Information | | 71 | | Notice and Access | | 71 | | Record Date and Outstanding Shares | | 71 | | Voting Procedures | | 71 | | Householding | | 72 | | Solicitation | | 73 | | Communicating with the Company | | 73 | | Shareholder Proposals for Our 2024 Annual Meeting | | 73 | | APPENDICES | | | | A | 2023 Long-Term Incentive Plan | 75 | | B | Amended and Restated Employee Stock Purchase Plan | 91 | | PROXY CARD | | 100 |
Board of Directors and Committees
Board of Directors and Committees
Board of Directors and Committees
| | James J. Lerner President and Chief Executive Officer Chairman of the Board |
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| | Marc E. Rothman Chair, Audit Committee INDEPENDENT |
Board of Directors and Committees
| | Rebecca J. Jacoby Chair, Leadership and Compensation Committee INDEPENDENT |
Board of Directors and Committees
| | Yue Zhou (Emily) White Board Member INDEPENDENT |
Board of Directors and Committees
| | Christopher D. Neumeyer Chair, Corporate Governance and Nominating Committee INDEPENDENT |
Board of Directors and Committees
| | Donald J. Jaworski Board Member INDEPENDENT |
Board of Directors and Committees
| | Hugues Meyrath Chair, Technology Advisory Committee INDEPENDENT |
Board of Directors and Committees
The key roles for our Board include, but are not limited to:
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| • | Selecting and evaluating the Company’s Chief Executive Officer (CEO). |
Board of Directors and Committees
| • | Reviewing and approving the CEO’s objectives and compensation. |
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| • | Overseeing CEO succession planning. |
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| • | Advising the CEO and management on the Company’s fundamental strategies. |
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| • | Approving acquisitions, divestitures, important organizational changes, and other significant corporate actions. |
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| • | Approving the annual operating plan. |
Board of Directors and Committees
Mr. Lerner currently presides as the Chairman of the Board and Mr. Rothman serves as Lead Independent Director. For the April 1 – August 16, 2022 portion of the fiscal year ended March 31, 2023 (Fiscal 2023), Mr. Raghavendra Rau served on the Board as our Lead Independent Director. Mr. Rau did not stand for re-election at our 2022 shareholder meeting. Mr. Rothman was named Lead Independent Director in August 2022. Each of our directors, excluding Rebecca J. Jacoby, have been nominated for election at the Annual Meeting. Ms. Jacoby does not have any disagreements with the Board or Quantum management team on any matter relating to the Company’s operations, policies, or practices. There are no familial relationships between any directors or executive officers of the Company.
Board of Directors and Committees
| James J. Lerner President and Chief Executive Officer Chairman of the Board Age: 53 | |
Board of Directors and Committees
Mr. Lerner has served as our President and Chief Executive Officer since July 2018. He was appointed to the Board at that time and named Chairman in August 2018. Some of Quantum’s key accomplishments during Mr. Lerner’s tenure include:
Board of Directors and Committees
| • | Beginning and progressing in its transition from one-time hardware sales to a recurring software revenue model; |
Board of Directors and Committees
| • | Acquiring several technology features, products, and businesses that introduced incremental performance capabilities to Quantum’s product line; and |
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| • | Launching more than 20 new products, including Quantum Myriad(TM), an all-flash file and object storage platform. |
Board of Directors and Committees
Mr. Lerner previously served in senior leadership positions at Pivot3 Inc., a smart infrastructure solutions company. He held the roles of Vice President and Chief Operating Officer from March 2017 to June 2018 and Chief Revenue Officer from November 2016 to March 2017. Prior to Pivot3, from March 2014 to August 2015, he served as President of Cloud Systems and Solutions at Seagate Technology Public Limited Company, a publicly-traded data storage company. Before working at Seagate, Mr. Lerner served in various executive roles at Cisco Systems, Inc., a publicly-traded networking hardware and software manufacturing company, including as Senior Vice President and General Manager of the Cloud & Systems Management Technology Group. Prior to beginning his career as a technology company executive, he was a Senior Consultant at Andersen Consulting, a financial advisory and consulting firm. From 2011 to 2022, Mr. Lerner served on the Board of Trustees (including serving as Chair) of Astia, a global not-for-profit organization built on a community of men and women dedicated to the success of women-led, high-growth ventures. Mr. Lerner earned a Bachelor of Arts in Quantitative Economics and Decision Sciences from the University of California, San Diego. We believe Mr. Lerner’s extensive history in our industry and his understanding of our business given his role as our Chief Executive Officer, combined with his executive-level experience at large, well-established companies qualifies him to serve on our Board. He does not sit on any Board committees.
Board of Directors and Committees
| Marc E. Rothman Chair, Audit Committee INDEPENDENT Age: 58 | |
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| | Lead Independent Director | | | Chair Audit Committee | | | Member Corporate Governance & Nominating Committee |
Board of Directors and Committees
Mr. Rothman has served as a member of our Board since May 2017. He has been Senior Vice President and Chief Financial Officer at BMC Software, Inc. (BMC), a company that develops, delivers, and services IT operations management software, since October 2020. Before joining BMC, Mr. Rothman served as Executive Vice President and Chief Financial Officer of Verifone Systems, Inc., a multinational company providing technology for electronic payment transactions from 2013 to July 2020. Prior to Verifone, Mr. Rothman served in various capacities, including as Senior Vice President and Chief Financial Officer at Motorola Mobility, Inc., a consumer electronics and telecommunications company, from 2000 to 2012. From 1995 to 2000, Mr. Rothman served in multiple leadership finance roles at General Instrument Corporation, which developed integrated and interactive broadband access solutions, including as Vice President and Corporate Controller. From 1987 through 1995, he was with Deloitte & Touche LLP, a professional services company. Mr. Rothman graduated with a bachelor’s degree in Business from Stockton University (formerly Richard Stockton College) with Distinction and is a Certified Public Accountant in California (inactive). We believe that Mr. Rothman possesses specific attributes that qualify him to serve as a member of the Board, including his executive leadership experience and deep financial expertise in:
Board of Directors and Committees
| • | Corporate finance, accounting, and treasury; |
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| • | Restructuring, mergers, and acquisitions; and |
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| • | Capital markets. |
Board of Directors and Committees
| Yue Zhou (Emily) White Board Member INDEPENDENT Age: 51 | |
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| | Member Leadership & Compensation Committee |
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Ms. White was elected to our Board in September 2021. She has served as Vice President of Enterprise Data and Analytics at NIKE, Inc., a public company that manufactures and sells athletic apparel, since April 2020. Prior to NIKE, from February 2017 to April 2020, Ms. White served as Vice President of Enterprise Data Engineering at Synchrony Financial, a publicly-traded consumer financial services company. Ms. White previously held multiple positions at General Electric entities. From November 2013 to June 2015, she served as Data Science Director and Global Commercial IT Director at General Electric Healthcare, a company that manufactures and distributes medical imaging modalities. From May 2007 to October 2013, she was Global Enterprise Resource Director and Senior Global Business Intelligence Program Manager for General Electric Transportation, a company that manufactures equipment for energy generation industries. Ms. White’s education includes a:
Board of Directors and Committees
| • | Bachelor of Science degree in Accounting and Finance from Shengyang Polytechnic University; |
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| • | Master of Business Administration degree from Huron University; |
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| • | Master of Applied Mathematics degree in Computer Science at the University of Central Oklahoma; and |
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| • | Certificate in Health Economics & Outcomes Research from the University of Washington. |
Board of Directors and Committees
We believe Ms. White’s extensive senior management experience, particularly in data science and analytics, brings valuable perspective to our Board and to the oversight of these functions within Quantum.
Board of Directors and Committees
| Christopher D. Neumeyer Chair, Corporate Governance and Nominating Committee INDEPENDENT Age: 42 | |
Board of Directors and Committees
| | Chair Corporate Governance & Nominating Committee |
Board of Directors and Committees
Mr. Neumeyer was elected to our Board in August 2022 and previously served as a non-voting Board observer since 2016. He is an executive vice president and portfolio manager at Pacific Investment Management Company, LLC (PIMCO), a global investment management firm that provides investment solutions to companies, educational institutions, foundations, and endowments across the world. Since joining PIMCO in January 2010, Mr. Neumeyer has held multiple roles and is currently responsible for identifying, originating, and structuring corporate investments across the capital structure in a variety of industries for various PIMCO-managed investment funds. Mr. Neumeyer’s previous experience includes:
Board of Directors and Committees
| • | Various positions at The Blackstone Group, a leading global investment business from April 2004 to May 2009. |
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| • | Work in the investment banking division of Credit Suisse First Boston, a global investment bank, from July 2002 to April 2004. |
Board of Directors and Committees
Mr. Neumeyer earned a Bachelor of Science degree in business from Indiana University and is a CFA® charterholder. We believe Mr. Neumeyer is qualified to serve on the Board due to his financial expertise. In addition, we expect his experience conveying shareholder interests to boards and management teams will bring valuable shareholder perspectives to our Board oversight and decision-making processes.
Board of Directors and Committees
| Donald J. Jaworski Board Member INDEPENDENT Age: 64 | |
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| | Member Leadership & Compensation Committee Technology Advisory Committee |
Board of Directors and Committees
Mr. Jaworski was appointed to our Board in November 2022. Mr. Jaworski is President and Chief Operating Officer of Lacuna Technologies, Inc., a leader in software that helps municipalities to operationalize digital infrastructure and manage transportation, since March 2021. Mr. Jaworski leads execution and is focused on delivering value to Lacuna’s customers. Prior to joining Lacuna, from January 2015 to March 2020, he was CEO of SwiftStack, Inc., an open-source cloud data management company focused on large scale data applications, which was acquired by NVIDIA Corporation, a publicly-traded multinational technology company, in March 2020. Mr. Jaworski previously served as:
Board of Directors and Committees
| • | Senior Vice President and General Manager of the core platform business at NetApp, Inc. from August 2010 through January 2012, where the team focused on the transition to scale-out systems. |
Board of Directors and Committees
| • | Senior Vice President Product at Brocade Communications Systems, Inc. |
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| • | General Manager of the Enterprise Security business unit at Nokia Corporation. |
Board of Directors and Committees
Mr. Jaworski’s early career included management positions at Sun Microsystems, Inc. and Amdahl Corporation. Mr. Jaworski has been an advisor and board member for a number of early-stage companies. He received a B.S. in Computer Science from Bowling Green State University and an MBA from Santa Clara University. We believe Mr. Jaworski brings strength to our Board through his broad and deep technology and product development experience.
Board of Directors and Committees
| Hugues Meyrath Chair, Technology Advisory Committee INDEPENDENT Age: 53 | |
Board of Directors and Committees
| | Chair Technology Advisory Committee |
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| | Member Audit Committee Corporate Governance & Nominating Committee |
Board of Directors and Committees
Mr. Meyrath was appointed to our Board in November 2022. Mr. Meyrath has developed an extensive background in various leadership roles at global technology companies, most notably in the networking and data storage segments. Most recently, he served as Chief Product Officer of ServiceChannel Holdings Inc., a provider of SaaS-based multi-site solutions, which was acquired by Fortive Corporation, a publicly-traded provider of connected workflow solutions, in 2021. From January 2014 to January 2017, Mr. Meyrath was Vice President at Dell Technologies Capital, a venture capital arm of Dell Technologies that invests in enterprise and cloud infrastructure, where he was responsible for driving venture funding, mergers and acquisitions, and other advisory roles for a diverse set of portfolio companies. He also held the role of Vice President of Product Management and Business Development for Dell EMC’s Backup and Recovery Services, which offers data protection and business continuity products. Mr. Meyrath’s experience also includes executive roles at:
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| • | Juniper Networks, Inc. |
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| • | Brocade Communications Systems, Inc. |
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| • | Strategic Business Systems, Inc. |
Board of Directors and Committees
He was previously a Quantum employee from January 2002 to September 2003. We believe Mr. Meyrath’s extensive work in product portfolio and technology development, and in particular his experience with data storage technologies, provides valuable experience and perspective to our Board.
Identifying and Evaluating Director Nominees
Identifying and Evaluating Director Nominees The Corporate Governance and Nominating Committee uses the following procedures to identify and evaluate potential director nominees:
Identifying and Evaluating Director Nominees
| • | Regularly reviewing the Board’s size, composition, and collective performance, in addition to individual member performance and qualifications. |
Identifying and Evaluating Director Nominees
| • | Determining whether to retain or terminate any third-party search firm used to identify director candidates, including approving the fees paid. |
Identifying and Evaluating Director Nominees
| • | Reviewing qualifications of any properly identified, recommended, or nominated candidate. The committee’s review, in its discretion, may consider only the information provided to it or include discussions with third parties familiar with the candidate, candidate interviews, or other actions the committee deems proper. |
Identifying and Evaluating Director Nominees
| • | Evaluating each candidate according to the General and Specific Considerations outlined to the left. |
Identifying and Evaluating Director Nominees
| • | Recommending a slate of director nominees to be approved by the Board. |
Identifying and Evaluating Director Nominees
| • | Endeavoring to promptly notify director candidates of its decision regarding whether to nominate a candidate for Board election. |
Identifying and Evaluating Director Nominees
The Board has not historically maintained a formal diversity policy for its members. However, in evaluating the Board’s composition, the Board and Corporate Governance and Nominating Committee consider diversity of:
Identifying and Evaluating Director Nominees
| | Knowledge |
Identifying and Evaluating Director Nominees
| | Culture |
Identifying and Evaluating Director Nominees
| | Race |
Identifying and Evaluating Director Nominees
| | Gender |
Identifying and Evaluating Director Nominees
| | Age |
Identifying and Evaluating Director Nominees
The Board believes that directors with a diverse range of perspectives, skills, and experiences enable it to more effectively oversee all aspects of Quantum’s business. The Board considers underrepresented populations when seeking candidates for future nomination to the Board, and seeks to include women and members of underrepresented groups in each nominee candidate pool.
NON-EMPLOYEE DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTOR COMPENSATION The Board and Leadership and Compensation Committee (Committee) determine the amount and form of non-employee director compensation. Management provides information and recommendations regarding competitive market practices, target compensation levels, and compensation program design. The Committee also retains an independent compensation consultant to provide analysis and advice regarding:
NON-EMPLOYEE DIRECTOR COMPENSATION
| • | Specific compensation recommendations. |
NON-EMPLOYEE DIRECTOR COMPENSATION
| • | The market competitiveness of our compensation program, including current compensation trends and developments. |
NON-EMPLOYEE DIRECTOR COMPENSATION
| • | Benchmarking against peer group and technology industry practices. |
NON-EMPLOYEE DIRECTOR COMPENSATION
While the Committee carefully considers the information and recommendations it receives, the Board maintains ultimate authority for decisions relating to non-employee director compensation. Mr. Lerner is the only Quantum employee on the Board and receives no additional compensation for his Board service. The Committee generally conducts a comprehensive periodic review of the Company’s compensation program, most recently in Fiscal 2023. Quantum engaged Compensia to complete an independent review, which compared the Company’s compensation program, design, and practices to those of our peer group. Our current non-employee director compensation program elements include:
NON-EMPLOYEE DIRECTOR COMPENSATION
We have executed change of control agreements with each of our non-employee directors. The agreements provide for automatic accelerated vesting of equity-based awards if the director’s service with the Company ends within 12 months following a change of control (other than for termination due to death or disability). We allow our non-employee directors to defer some or all of their cash fees, which defers federal and state income taxes. Plan participants direct the deemed investment of their deferred accounts among a preselected group of investment funds which excludes Quantum’s common stock. The deemed investment accounts mirror the investment options available under Quantum’s 401(k) Savings Plan. Plan participants’ deferred accounts are credited with interest based on their selected deemed investments. During Fiscal 2023, only Ms. White elected to participate in the deferred compensation plan, for only the first and second fiscal quarters.
Fiscal 2023 Non-Employee Director Compensation Tables
Fiscal 2023 Non-Employee Director Compensation Tables The following tables detail the Fiscal 2023 annual cash retainers, applicable committee service fees, and applicable Chair retainers paid to our directors. Quantum does not pay meeting fees to our Board members.
Fiscal 2023 Non-Employee Director Compensation Tables
The non-employee directors held the following outstanding and unvested equity awards as of March 31, 2023:
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Quantum has nominated six directors to be elected to the Board at the Annual Meeting, to serve until the 2024 annual meeting or until their successors are duly qualified and elected. The size of the Board will be reduced from seven to six directors following the Annual Meeting. The Corporate Governance and Nominating Committee recommended all nominees and the Board nominated all for election. The nominees are:
PROPOSAL 1: ELECTION OF DIRECTORS
| | | | | | | | James J. Lerner | Marc E. Rothman | Yue Zhou (Emily) White | Christopher D. Neumeyer | Donald J. Jaworski | Hugues Meyrath |
Material Terms of the 2023 Long-Term Incentive Plan
| • | Shares purchased in the open market with proceeds from option exercises will not become available for issuance under the 2023 Plan. |
EXECUTIVE COMPENSATION PHILOSOPHY
| | Attract and Retain top talent and compete against our peer companies. | | | Motivate desired behaviors that allow our team to drive Company success. | | | Reward achieving the Company’s short- and long-term objectives. | | | Align executive and shareholder interests to drive long-term value. |
COMPETITIVE POSITIONING
COMPETITIVE POSITIONING Market competitiveness is an important feature of our executive compensation program and helps motivate and retain our executive officers. In assessing competitiveness, we compare individual elements including base salary, target annual incentive opportunity, annual equity awards, and total aggregate compensation for each executive officer, to those of executive officers holding similar positions or comparable levels of responsibility in our Peer Group and other similarly sized technology companies. The Company uses applicable compensation data from our Peer Group as well as the Radford Global Compensation Database of technology companies with annual revenue less than $1 billion.
Peer Group
Peer Group We annually evaluate our competitive peer group to identify companies similar in financial scope, size, and industry (Peer Group). Peer Group selection criteria include revenue, market capitalization, industry, and companies with which we compete in recruiting new employee talent. We also consider shareholder perspective by including companies with similar business structures, end markets, and competitors that align with our business. The Committee approves the Peer Group and uses it to guide executive compensation decisions for the associated fiscal year, following compensation assessments, performance evaluations, and potential pay gap resolutions. The Peer Group is not the only determinant for executive compensation decisions, which are also influenced by:
Peer Group
| | Company and Individual Performance | | | Compensation Program Affordability | | | Market Conditions |
Peer Group
With assistance and input from independent compensation consultant Compensia, the Committee reviewed relevant considerations and approved the following Peer Group for Fiscal 2023, which was also used for fiscal 2022 compensation decisions:
COMPENSATION ELEMENTS
| | Annual Base Salary as a fixed compensation element determined in comparison to the Peer Group and intended to competitively attract and retain executive talent. | | | Target Variable Cash via annual cash-based incentives structured to reward achieving short-term strategic goals and paid based on Company and individual performance. | | | Long-Term Equity Grants consisting of both time- and performance-based restricted stock units used to attract and retain executives while creating long-term shareholder value. |
Projected Mix(1)
Projected Mix(1) (1)Projected Mix Company excludes Fiscal 2023 Target Variable Cash and ARR-measured performance-based RSUs not earned in Fiscal 2023. Mr. Moorehead’s Long-Term Incentives include the retention bonus paid to him in Fiscal 2023, as more fully described in Fiscal 2023 Compensation Tables.
Fiscal 2023 Annual Base Salary
Fiscal 2023 Annual Base Salary Our executive officers receive base salaries approximating the midpoint of our Peer Group. The Committee annually reviews our named executive officers’ base salaries with Compensia. In the second quarter of Fiscal 2023, the Committee reviewed the competitiveness of Mr. Lerner’s compensation against the Peer Group, considered his prior year performance, and consulted with Compensia regarding independent compensation recommendations. Following review, the Committee determined that increasing Mr. Lerner’s base salary was appropriate given his contributions, as well as necessary to remain competitive in the market. At the end of August 2022, Mr. Cabrera was promoted to Chief Administrative Officer from his prior position of Chief Legal and Compliance Officer. Mr. Lerner and the Committee reviewed additional Peer Group benchmarking information relevant to Mr. Cabrera’s expanded responsibilities and approved a modest increase in his base salary. Mr. Moorehead also received a small base salary increase in Fiscal 2023 to reward his work in improving the Company’s debt covenants. No other named executive officers base salaries were adjusted. Named executive officer annual base salaries in Fiscal 2023 were:
Fiscal 2023 Quantum Incentive Plan
Fiscal 2023 Quantum Incentive Plan The Quantum Incentive Plan (QIP) is the Company’s short-term incentive bonus program, structured to competitively compensate our executive officers for achieving predetermined corporate and individual performance goals. The Committee annually approves financial performance metrics that include threshold, target, and maximum levels of performance that serve as the bonus structure for the year and must be achieved to fund the plan. The Committee also ensures that QIP metrics align with our pay-for-performance philosophy. All of our executive officers participate in the QIP and each has an annual bonus target expressed as a percentage of his or her base salary. QIP payments are linked to both Company and individual performance. The Committee’s annual total executive compensation market assessment also considers short-term incentive bonus targets. As part of the review of Mr. Lerner’s compensation described above, considering Peer Group pay practices, and in consultation with Compensia, the Committee determined it was appropriate to increase Mr. Lerner’s Fiscal 2023 bonus target from 100% of his annual base salary to 125%.
Fiscal 2023 Quantum Incentive Plan
The annual target cash incentives for each of our named executive officers were:
Fiscal 2023 QIP Performance Metrics
Fiscal 2023 QIP Performance Metrics The Committee sets annual QIP performance metrics that incorporate challenging financial targets requiring consistent high performance before any payout is triggered. However, at the time the targets were approved, the Quantum management team and the Committee believed the targets to be achievable and aligned with Quantum’s growth strategy. The Fiscal 2023 QIP financial performance metrics approved by the Committee are detailed below. Achieving the Adjusted EBITDA Threshold Goal listed below served as a gate to any bonus payout. Our final Fiscal 2023 Adjusted EBITDA measurement was $11.7 million, or 84% of the related Threshold Goal. We defined Adjusted EBITDA as net loss before interest expense, net, provision for income taxes, depreciation and amortization expense, stock-based compensation expense, restructuring charges, and other non-recurring expenses. As a result, even though final Fiscal 2023 revenue performance exceeded its Threshold Goal and attained 99.5% of its Target Goal, no QIP payment was earned.
Fiscal 2023 Equity Overview
Fiscal 2023 Equity Overview All of our executive officers are eligible to receive long-term equity awards granted in alignment with our pay-for-performance philosophy, rewarding executives for achieving performance goals resulting in long-term shareholder value. The Committee oversees all aspects of our equity program, including actual and projected share balances, eligibility to participate in the Company’s long-term incentive plan, the size and mix of equity awards, and the annual structure of performance-based stock unit metrics. Quantum management and Compensia advise the Committee on the appropriate mix of time- and performance-based restricted stock units granted to our officers, senior leaders, and key new hires during the fiscal year. The Committee monitors the use of equity awards throughout the fiscal year, as well as their impact to burn rate, dilution, and the financial accounting for compensation expense. We offer two types of equity awards, both using RSUs: Time-Based RSUs allow us to:
Fiscal 2023 Equity Overview
| • | Provide long-term retention interests to our executive team. |
Fiscal 2023 Equity Overview
| • | Adhering to industry-wide best practice among our Peer Group and other technology companies. |
Fiscal 2023 Equity Overview
Generally speaking, annual refresh equity grants for executive officers have consisted of 50% RSUs and 50% PSUs.
Vesting
Vesting Both RSU and PSU grants typically include three-year vesting schedules, subject to satisfying pre-established performance goals and maintaining ongoing employment.
Grant Values
| • | The number of shares of Quantum’s common stock that are available to be granted under our 2012 Long Term Incentive Plan, and how long those shares are expected to last. |
Grant Values
| • | The grant date fair value(1)of equity awards granted to executive officers in similar positions in our Peer Group and technology companies of similar size. |
Grant Values
| • | Internal parity with the size of the equity awards among the executive officers. |
Grant Values
| • | The number, type, and current retentive value of the outstanding equity awards held individually by each of the executive officers. |
Grant Values
| • | Other internal and external factors impacting the appropriate amount and mix of RSUs and PSUs to award. |
Fiscal 2023 Equity Awards
Fiscal 2023 Equity Awards The Committee met early in Fiscal 2023 to determine appropriate equity awards for our executive officers based on the described criteria. After considering management’s recommendations and Compensia’s advice, the Committee approved the Fiscal 2023 equity awards listed in the following table.
Time-Based Restricted Stock Units
Time-Based Restricted Stock Units All named executive officers other than Mr. Gianella were granted 50% of their total Fiscal 2023 equity awards in RSUs scheduled to vest in equal installments on each grant date anniversary, with full vesting after three years, subject to continued employment.
Performance-Based Restricted Stock Units
Performance-Based Restricted Stock Units The Committee received recommendations from Quantum management, outside legal counsel, and Compensia regarding structuring PSU metrics that were challenging but achievable and aligned our long-term executive performance to the Company’s (1)The grant date fair value equals the number of RSUs awarded multiplied by the market price of Quantum’s common stock on the grant date.
Performance-Based Restricted Stock Units
strategic objectives and shareholders’ interests. The Committee approved three Fiscal 2023 PSU metrics, and included separate time-based vesting requirements subject to continued employment on any PSUs deemed earned according to the performance metrics:
$3.00 100-Day Calendar Average Stock Price
The Committee considered the Company’s fiscal year 2022 financial performance and executive compensation plan when setting the Fiscal 2023 PSU metrics, seeking to make them challenging yet achievable. The ARR and gross margin PSU metrics were included in Fiscal 2023 as they reflected key areas of Fiscal 2023 performance growth potential and aligned executive compensation interests with the Company’s performance and shareholder interests. Although the Fiscal 2023 annual recurring revenue metric was 90.5% attained, PSUs granted subject to fully achieving that performance metric were cancelled and returned to Quantum’s long-term equity plan. Any remaining PSU metrics not achieved by their respective performance deadlines will be forfeited. A summary of the Fiscal 2023 performance-based equity grants and PSU metrics is provided in the following table.
Non-Qualified Deferred Compensation Plan
Non-Qualified Deferred Compensation Plan We maintain a non-qualified deferred compensation plan which enables select employees, including our executive officers, to defer a portion of their base salary and annual bonus payouts, and associated federal and state income taxes. Plan participants direct the deemed investment of their deferred accounts among a preselected group of investment funds which excludes shares of Quantum common stock. The deemed investment accounts mirror the investment options available under Quantum’s 401(k) Savings Plan, including the ability to make daily changes to elected investments. Plan participants’ deferred accounts are credited with interest based on their selected deemed investments. We do not make employer or matching contributions to the non-qualified deferred compensation accounts, but offer the plan as a competitive practice enabling us to attract and retain top talent. None of our executive officers participated in the plan in Fiscal 2023.
Executive Compensation Consultant Role
Executive Compensation Consultant Role In Fiscal 2023, the Committee also engaged Compensia on a number of matters, including setting executive compensation. Compensia performs services only for the Committee, at its discretion. The Committee regularly reviews its advisors’ independence and determined that no relationship or conflict of interest exists that would preclude Compensia from independently advising the Committee.
Peer Group Role
Peer Group Role The Committee examines Peer Group pay practices and programs and compares the total target compensation for our CEO and officers to similar roles as market reference points. While it is the Committee’s goal to ensure our compensation practices are competitive, the Committee also considers other factors when making compensation decisions, including Quantum’s financial position and individual and Company performance.
Pay-for Performance
| • | 50% of Fiscal 2023 equity awards (other than Mr. Gianella’s new hire awards) were performance-based, and one-third of those were tied to Company stock price performance. |
Risk Mitigation
| • | Independent compensation consultant. |
Compensation Program Features
| • | Competitive benchmarking against Peer Group and Radford survey data. |
Compensation Program Features
| • | No single-trigger change of control. |
Compensation Program Features
| | Independent Consultant The Committee regularly engages with our external independent compensation consultant on Board and executive compensation matters. | | | Clawback Policy • Covers cash and equity incentive or bonus compensation paid to all Section 16 executive officers, all officers who directly report to the CEO, and the Vice President of Supply Chain (Covered Employees). • Entitles recovery of any bonus or other incentive- or equity-based compensation paid to involved Covered Employees during the twelve months following first filing of financial statement containing errors requiring material restatement arising from knowing misconduct of Covered Employees. • Allows recovery of any net profits Covered Employees realized from selling Quantum securities during that twelve-month period. • We also plan to amend our clawback policies to comply with the final Nasdaq listing standards implementing the Dodd-Frank Act clawback provisions prior to December 1, 2023. | | | Stock Ownership Guidelines Please refer to page 22 for an explanation of our director and officer stock ownership guidelines. | | | Anti-Hedging and Anti-Pledging Policies • Insider Trading Policy expressly prohibits buying Quantum securities on margin or using or pledging owned shares as collateral for loans, in addition to engaging in transactions in publicly traded options, puts and calls, and other derivatives of the Company’s stock. |
Compensation Program Features
| • | Extends prohibition to any hedging or similar transaction designed to decrease the risks associated with holding Company securities. | | | Insider Trading Policy • Prohibits trading during a closed window. • Precludes buying stock on margin. • Prohibits pledging shares owned as loan collateral. • Applies to all directors and employees. | | | No Single-Trigger Change of Control Our change of control policy maintains that a double-trigger event must occur before an executive is entitled to specified compensation and benefits. | | | Annual Risk Assessment We conduct an annual risk assessment of our executive compensation practices and believe our Fiscal 2023 programs were appropriate and discouraged excessive risk taking. | | | Pay Mix • Retaining our executive officers remains a primary focus as internal and external factors impact our business. • For Fiscal 2023, our long-term incentive mix was equally balanced between performance- and time- based awards. • Performance-based awards align our executives’ interests with Company performance goals. • Time-based awards help address potential retention concerns. | | | Perquisites We grant only limited perquisites to our officers, as more fully described on page 49. |
CHANGE OF CONTROL SEVERANCE POLICY, EMPLOYMENT AGREEMENTS, AND SEVERANCE AGREEMENTS
CHANGE OF CONTROL SEVERANCE POLICY, EMPLOYMENT AGREEMENTS, AND SEVERANCE AGREEMENTS
Change of Control Agreements
Change of Control Agreements Our change of control agreements are designed to promote the best interests of the Company and our shareholders by maintaining the continued dedication and objectivity of key employees during a possible or actual change of control. The agreements provide eligible employees with compensation and stock benefits upon an involuntary termination (as defined in the agreement), providing financial security and encouraging them to stay at Quantum during times of uncertainty.
Employment Agreements
Employment Agreements We have employment agreements with all of our named executive officers. These agreements provide for certain severance benefits in the event of a qualifying termination of employment not associated with a change of control. Each named executive officer is employed at will and may be terminated at any time and for any reason, with or without notice. Our current change of control and employment agreements are described further in Potential Payments Upon Termination or Change of Control on page 58.
RISKS RELATED TO COMPENSATION POLICIES AND PRACTICES
| • | The Committee’s annual review of target compensation levels for our executive officers based on a reasonable competitive Peer Group and other market data, including evaluating the alignment of executive compensation with performance. |
RISKS RELATED TO COMPENSATION POLICIES AND PRACTICES
| • | A balanced mix of compensation programs that focuses our employees on achieving both short and long-term objectives. |
RISKS RELATED TO COMPENSATION POLICIES AND PRACTICES
| • | Multiyear service-based vesting requirements for equity awards. |
FISCAL 2023 SUMMARY COMPENSATION TABLE
FISCAL 2023 SUMMARY COMPENSATION TABLE The following table displays our named executive officer compensation as of the end of Fiscal 2023 for fiscal years 2023, 2022, and 2021.
FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
FISCAL 2023 GRANTS OF PLAN-BASED AWARDS The table below presents information on incentive plan-based awards granted to our named executive officers.
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END The following table provides information regarding outstanding restricted stock unit awards held by our named executive officers as of March 31, 2023. There were no outstanding stock options held by our named executive officers at that time.
FISCAL 2023 OPTIONS EXERCISED AND STOCK VESTED
FISCAL 2023 OPTIONS EXERCISED AND STOCK VESTED The table below provides information on Fiscal 2023 restricted stock and RSU vesting for our named executive officers. There were no outstanding stock options held by our named executive officers. Our executive officers did not exercise option awards in Fiscal 2023.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL FOR FISCAL 2023
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL FOR FISCAL 2023 We maintain change of control agreements with all of our named executive officers, and their employment agreements provide for certain severance benefits in the event of a qualifying employment termination not associated with a change of control. While the Board approved some administrative updates to the agreements in Fiscal 2023, the material terms have remained unchanged since fiscal year 2019, and are explained in the tables.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL FOR FISCAL 2023
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Fiscal 2023 Potential Severance Benefits
Fiscal 2023 Potential Severance Benefits
EQUITY COMPENSATION PLAN INFORMATION
EQUITY COMPENSATION PLAN INFORMATION The table below presents information relating to compensation plans under which we may issue shares of our common stock, as of March 31, 2023.
CEO PAY RATIO
CEO PAY RATIO To calculate our Fiscal 2023 CEO pay ratio, we identified our median employee in Fiscal 2023 by:
CEO PAY RATIO
| • | Identifying all active Quantum employees on March 31, 2023. |
CEO PAY RATIO
| • | Sorting all identified employees, excluding our CEO, by their total target cash compensation valued in United States dollars, which identified two median employees. |
CEO PAY RATIO
| • | Selecting the median employee used for the pay ratio calculation based on the older hire date. |
CEO PAY RATIO
| • | Comparing that employee’s total target cash compensation to Mr. Lerner’s total compensation earned in Fiscal 2023. |
CEO PAY RATIO
As of that date, we employed 847 people globally, with 54% based in North America, 23% in Europe, the Middle East and Africa, and 23% in Asia Pacific. Mr. Lerner’s total Fiscal 2023 as calculated in the Summary Compensation table was $1,685,585, while the total target cash compensation for the median employee on that date was $119,391. The ratio of these amounts is 13.7 to 1. This ratio is a reasonable estimate calculated in a manner consistent with the U.S. Securities Exchange Act of 1934, Regulation S-K, Item 402(u). SEC rules for identifying the median employee allow companies to apply various methodologies and assumptions, so the pay ratio we report may not be comparable to those reported by other companies.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As discussed in our Compensation Disclosure and Analysis, our executive compensation program is designed to reflect a strong focus on pay-for-performance to align our executives’ interests with those of our shareholders. As required by Item 402(v) of Regulation S-K, we are providing information about the relationship between executive “compensation actually paid” (CAP) computed in accordance with Item 402(v) of Regulation S-K and certain financial performance metrics of the Company. The Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Tabular List of Performance Measures
Tabular List of Performance Measures While we utilize several performance measures to align executive compensation with our performance, not all of these measures are presented in the Pay Versus Performance table shown below. We consider achievements related to the following metrics to be the most important links between performance and the compensation paid to our named executive officers for the most recently completed fiscal year:
Tabular List of Performance Measures
| | Revenue | | | Adjusted EBITDA | | | Subscription-Based Annual Recurring Revenue | | | Gross Margin | | | Stock Price |
Tabular List of Performance Measures
| | | | Average | | Value of Initial Fixed $100 | | | | | | | | Summary | Average | Investment Based on: | | | | | | Summary | | Compensation | Compensation | | | | | | | Compensation | Compensation | Table Total for | Actually Paid to | | | Net Income | | | Fiscal | Table Total for | Actually Paid to | Non-PEO NEOs | Non-PEO NEOs(3) | Company | Peer Group | ($) (in | Stock Price(6) | | Year(1) | PEO ($) | PEO(2)($) | ($) | ($) | TSR(4)($) | TSR(5)($) | thousands) | ($) | | 2023 | 1,635,508 | 613,584 | 698,916 | 469,781 | 17 | 439 | (37,943) | 1.15 | | 2022 | 2,526,902 | (2,063,248) | 1,437,464 | 467,884 | 33 | 468 | (32,280) | 2.27 | | 2021 | 2,989,619 | 9,101,583 | 919,011 | 2,232,959 | 115 | 332 | (35,459) | 8.33 |
Tabular List of Performance Measures
| (1) Mr. Lerner served as our Chief Executive Officer and our principal executive officer (PEO) through the entire reporting period. The named executive officers included in the non-PEO named executive officer (NEO) average for each year are as follows: • Fiscal 2023: Kenneth P. Gianella, Brian E. Cabrera, John Hurley, Lewis W. Moorehead, and J. Michael Dodson • Fiscal year 2022: J. Michael Dodson, Brian E. Cabrera, John Hurley, and Lewis W. Moorehead • Fiscal year 2021: J. Michael Dodson, Regan J. MacPherson, Elizabeth P. King, and Lewis W. Moorehead | | (2) See Table A for the explanation of adjustments to the Summary Compensation Table totals to derive CAP for Mr. Lerner 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 to Mr. Lerner during the applicable year. | | (3) See Table B for the explanation of adjustments to the Summary Compensation Table totals to derive the average CAP for our non-PEO NEOs as computed in accordance with Item 402(v) of Regulation S-K. | | (4) Represents the Company’s common stock cumulative total shareholder return (TSR) on a fixed investment of $100 over the fiscal year starting from the market close on the last trading day of fiscal 2020 (March 31, 2020) through the end of each applicable fiscal year in the table. | | (5) Represents the cumulative TSR of the S&P 500 Technology Hardware & Peripherals Index on a fixed investment of $100 over the fiscal year starting from the market close on the last trading day of fiscal 2020 through the end of each applicable fiscal year in the table. | | (6) As noted in our Compensation Disclosure and Analysis, for Fiscal 2023 the Committee determined that the Company’s common stock price continues to be viewed as a key metric of our business performance and aligned with long term shareholder value creation. Values listed reflect the Company’s common stock price at market close on March 31 of each fiscal year. |
Table A
| PEO | | | | | | | | | Fiscal Year | Fiscal Year | | | | Fiscal 2023 | 2022 | 2021 | | | Summary Compensation Table – Total Compensation(a) | $1,635,508 | $2,526,902 | $2,989,619 | | - | (Minus) Grant Date Fair Value of Equity Awards Granted in Fiscal year(b) | $(953,194) | $(1,939,820) | $(2,013,600) | | + | Plus Fair Value at Fiscal Year End of Outstanding and Unvested Equity Awards Granted in Fiscal Year(c) | $768,870 | $718,000 | $4,652,000 | | +/- | Plus (Minus) Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years(d) | $(584,266) | $(2,100,796) | $2,418,732 | | +/- | Plus (Minus) Change in Fair Value as of Vesting Date for Which Application Vesting Conditions Were Satisfied During Fiscal year(e) | $(253,333) | $(1,267,534) | $1,054,832 | | - | (Minus) Fair Value as of Prior Fiscal Year End That Failed to Meet Applicable Vesting Conditions During Fiscal Year(f) | - | - | - | | = | Compensation Actually Paid | $613,584 | $(2,063,248) | $9,101,583 |
Table A
| (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 the PEO during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (c) Represents the aggregate fair value as of the indicated fiscal year-end of the PEO’s 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 the PEO as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718 and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. | | (e) 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 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. | | (f) Represents the aggregate fair value as of the last day of the prior fiscal year of the PEO’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. |
Table B
| NEO Average | | | | | | | | | Fiscal Year | Fiscal Year | | | | Fiscal 2023 | 2022 | 2021 | | | Summary Compensation Table – Total Compensation(a) | $698,916 | $1,437,464 | $919,011 | | - | (Minus) Grant Date Fair Value of Equity Awards Granted in Fiscal year(b) | $(310,778) | $(684,225) | $(420,535) | | + | Plus Fair Value at Fiscal Year End of Outstanding and Unvested Equity Awards Granted in Fiscal Year(c) | $238,218 | $332,569 | $966,038 | | +/- | Plus (Minus) Change in Fair Value of Outstanding and Unvested Equity Awards Plus (Minus) Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years (d) $(100,083) Granted in Prior Fiscal Years(d) | $(100,083) | $(475,494) | $526,285 | | +/- | Plus (Minus) Change in Fair Value as of Vesting Date of Equity Awards Granted in Prior Fiscal years for Which Application Vesting Conditions Were Satisfied During Fiscal year(e) | $(56,493) | $(142,429) | $242,161 | | - | (Minus) Fair Value as of Prior Fiscal Year End of Equity Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year(f) | - | - | - | | = | Compensation Actually Paid | $469,781 | $467,884 | $2,232,959 |
Table B
| (a) Represents the average Total Compensation as reported in the Summary Compensation Table for the reported NEOs in the indicated fiscal year. | | (b) Represents the average aggregate grant date fair value of the stock awards and option awards granted to the reported NEOs during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (c) Represents the average aggregate fair value as of the indicated fiscal year-end of the reported NEOs’ 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 as of the last day of the indicated fiscal year, computed in accordance with FASB ASC 718 and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. | | (e) 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 that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with FASB ASC 718. | | (f) Represents the average aggregate fair value as of the last day of the prior fiscal year of the reported NEOs’ 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. |
Description of Relationship Between Pay and Performance
| • | The compensation actually paid to our named executive officers versus our total shareholder return. |
Description of Relationship Between Pay and Performance
| • | The compensation actually paid to our named executive officers versus our net income. |
Description of Relationship Between Pay and Performance
| • | The compensation actually paid to our named executive officers versus our common stock price. |
RELATED PARTY TRANSACTIONS
| | Executive Officer Employment Agreements | | | Director Compensation | | | Transactions Generally Available to All Employees | | | All Holders of Common Stock Receiving the Same Benefits on a Pro-Rata Basis |
Equity Award Grants to Directors and Executive Officers
Equity Award Grants to Directors and Executive Officers We have granted RSUs and PSUs as described under Corporate Governance, Compensation Discussion and Analysis, and Fiscal 2023 Compensation Tables.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN (Adopted on July 23, 2023) 1. Purposes of the Plan; Award Types. The purposes of this Plan are to attract, retain and incentivize the best available personnel for positions of substantial responsibility, and to promote the success of the Company’s business. The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, and Performance Awards. 2. Definitions. As used herein, the following definitions will apply: (a) “Administrator” has the meaning set forth in Section 4(a) of the Plan. (b) “Affiliate” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company. (c) “Applicable Laws” means the legal and regulatory requirements relating to the administration of equity-based awards, including but not limited to the related issuance of Shares under U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and, only to the extent applicable with respect to an Award or Awards, the tax, securities, exchange control, and other laws of any jurisdictions other than the United States where Awards are, or will be, granted under the Plan. Reference to a section of an Applicable Law or regulation related to that section shall include such section or regulation, any valid regulation issued under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. (d) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, or Performance Awards. (e) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. (f) “Board” means the Board of Directors of the Company. (g) “Change in Control” means the occurrence of any of the following events: (i) A change in the ownership of the Company that occurs on the date that any one person, or more than one person acting as a group (a “Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), (1) the acquisition of beneficial ownership of additional stock by any one Person who is considered to beneficially own more than fifty percent (50%) of the total voting power of the stock of the Company at the time of the acquisition if the additional stock will not be considered a Change in Control; and (2) if the stockholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the stock of the Company, such event shall not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership shall include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; (ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or (iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection. For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. For purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. A transaction will not be deemed a Change in Control (x) unless the transaction qualifies as a change in control event within the meaning of Section 409A, or (y) if its primary purpose is to (A) change the jurisdiction of the Company’s incorporation, or (B) create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction. (h) “Code” means the Internal Revenue Code of 1986, as amended. (i) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4(a) of the Plan. (j) “Common Stock” means the common stock of the Company. (k) “Company” means Quantum Corporation, a Delaware corporation, or any successor thereto. (l) “Company Group” means the Company, any Parent or Subsidiary of the Company, and any Affiliate. (m) “Consultant” means any person engaged by a member of the Company Group to render bona fide services to such entity. A Consultant must be a person to whom the issuance of Shares registered on Form S-8 under the Securities Act is permitted. (n) “Director” means a member of the Board. (o) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. (p) “Dividend Equivalent” means a credit, made at the discretion of the Administrator or as otherwise provided by the Plan, to the account of a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by a Restricted Stock Unit (including a Restricted Stock Unit granted as a Performance Award) held by such Participant. (q) “Effective Date” has the meaning provided in Section 18 of the Plan.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(r) “Employee” means any person, including officers and Directors, employed by the Company or any member of the Company Group. However, with respect to Incentive Stock Options, an Employee must be employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. (s) “Exchange Act” means the Securities Exchange Act of 1934, as amended. (t) “Exchange Program” means a program under which (i) outstanding awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer for value any outstanding Awards to a financial institution or other person or entity selected by the Administrator (excluding for bona fide estate planning purposes as approved by the Administrator), and/or (iii) the exercise price of an outstanding Award is reduced (for example, the downward “repricing” of an underwater stock option). The term Exchange Program excludes any action permitted under Section 14 of the Plan. The Administrator will determine the terms and conditions of any Exchange Program in its discretion, but only to the extent permitted by the Company’s stockholders. (u) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last Trading Day such bids and asks were reported), as reported in the Wall Street Journal or such other source as the Administrator deems reliable; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator. Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend, holiday, or other day other than a Trading Day, the Fair Market Value will be the price as determined under subsections (i) or (ii) above on the immediately preceding Trading Day, unless otherwise determined by the Administrator. In addition, for purposes of determining the Fair Market Value of shares for any reason other than the determination of the Exercise Price of Options or Stock Appreciation Rights, Fair Market Value will be determined by the Administrator in a manner compliant with Applicable Laws and applied consistently for such purpose. Note that the determination of Fair Market Value for purposes of tax withholding may be made in the Administrator’s sole discretion subject to Applicable Laws and is not required to be consistent with the determination of Fair Market Value for other purposes. (v) “Fiscal Year” means the fiscal year of the Company. (w) “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. (x) “ISO Limit” has the meaning provided in Section 3(c) of the Plan. (y) “Maximum Share Limit” has the meaning provided in Section 3(a) of the Plan. (z) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(aa) “Option” means a stock option granted pursuant to the Plan. (bb) “Outside Director” means a Director who is not an Employee or Consultant. (cc) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. (dd) “Participant” means the holder of an outstanding Award. (ee) “Performance Award” means an Award granted pursuant to Section 11 of the Plan which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be cash- or stock-denominated and may be settled for cash, Shares, or other securities or a combination of the foregoing. (ff) “Plan” means this 2023 Long-Term Incentive Plan. (gg) “Prior Plan” means the Quantum Corporation Amended and Restated 2012 Long-Term Incentive Plan. (hh) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 8 of the Plan, or issued pursuant to the early exercise of an Option. (ii) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value (of one Share or a cash amount), granted pursuant to Section 9 of the Plan. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. (jj) “Section 409A” means Section 409A of the Code. (kk) “Securities Act” means U.S. Securities Act of 1933, as amended. (ll) “Service Provider” means an Employee, Director or Consultant. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be a Service Provider and the effective date of such individual’s status as, or cessation of status as, a Service Provider. For purposes of an individual’s rights, if any, under the Plan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination. (mm) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan. (nn) “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, that pursuant to Section 10 of the Plan is designated as a Stock Appreciation Right. (oo) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. (pp) “Substitute Awards” means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company Group or with which a member of the Company Group combines. (qq) “Tax Obligations” means tax and social insurance liability obligations and requirements in connection with the Awards, including (i) all federal, state, and local taxes (including the Participant’s Federal Insurance Contributions Act (FICA) obligation) that are required to be withheld by the Company or the employing Affiliate, (ii) the Participant’s and, to the extent required by the Company (or Affiliate), the Company’s (or Affiliate’s) fringe benefit tax liability, if any, associated with the grant, vesting, or exercise of an Award or sale of Shares, and (iii) any other Company (or Affiliate) taxes or social insurance liabilities the
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
responsibility for which the Participant has, or has agreed to bear, with respect to such Award (or exercise thereof or issuance of Shares thereunder). (rr) “Trading Day” means a day on which the primary stock exchange or national market system (or other trading platform, as applicable) on which the Common Stock trades is open for trading.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 3. | Stock Subject to the Plan. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan regarding adjustments, the maximum aggregate number of Shares that may be issued under the Plan is 6,000,000 plus (i) any Shares that, as of the date stockholders initially approve the Plan (the “Approval Date”), have been reserved but not issued pursuant to any awards granted under the Prior Plan and are not subject to any awards granted thereunder, and (ii) any Shares subject to awards granted under the Prior Plan that, after the Approval Date (x) expire or otherwise terminate without having been vested or exercised in full, (y) are forfeited to or repurchased by the Company due to failure to vest, and (z) would have, but for the termination of the Prior Plan, again become available for future use under the terms of the Prior Plan (the “Maximum Share Limit”). Notwithstanding the foregoing, the maximum number of Shares to be added to the Plan pursuant to clauses (i) and (ii) of the prior sentence shall be equal to 5,957,921 Shares. The Shares may be authorized but unissued Common Stock, or Common Stock issued and then reacquired by the Company.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| (b) Share Recycling. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(i) If an Option or SAR expires or becomes unexercisable without having been exercised in full or is surrendered pursuant to an Exchange Program, the unpurchased Shares subject to the Option or SAR will become available for future issuance under the Plan. Upon exercise of a SAR settled in Shares, the gross number of Shares covered by the portion of the Award so exercised, whether or not actually issued pursuant to such exercise will cease to be available under the Plan. (ii) Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that unvested Shares issued pursuant to Awards that are reacquired by the Company or are forfeited to the Company due to failure to vest will become available for future issuance under the Plan. (iii) Shares used to pay the exercise price or purchase price of an Award will not become available for future grant and/or sale under the Plan. Shares purchased in the open market with proceeds from Option exercises will not become available for issuance under the Plan. (iv) Shares used to satisfy the Tax Obligations related to an Award of Restricted Stock or Restricted Stock Units will not become available for future grant or sale under the Plan. Shares used to satisfy the Tax Obligations under an Option or SAR will not become available for future grant or sale under the Plan. (v) If any portion of an Award is paid to a Participant in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. (c) Incentive Stock Option Limit. Subject to adjustment as provided in Section 14 of the Plan, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the Maximum Share Limit.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(d) Substitute Awards. In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Administrator may grant Awards in substitution for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards will not count against the Maximum Share Limit (nor will Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided above), except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees, Consultants or Directors prior to such acquisition or combination. (e) Reservation of Shares; Fractional Shares. The Company shall at all times reserve a number of Shares sufficient to cover the Company’s obligations and contingent obligations to deliver Shares with respect to Awards then outstanding under the Plan (exclusive of any obligations to the extent the Company has the right to settle such rights in cash). Unless the Administrator provides otherwise, no fractional Shares shall be issuable pursuant to the exercise or settlement of Awards under the Plan. The Administrator shall also have the authority to determine whether fractional Shares shall be rounded down or a cash payment shall be made in lieu of fractional Shares.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 4. | Administration of the Plan. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Administrator. The Plan will be administered by the Board or a Committee consisting of two or more directors of the Company (the “Administrator”). The Board will retain the authority to concurrently administer the Plan with a Committee and may revoke the delegation of some or all authority previously delegated. In addition, to the extent required by the Board, the composition of a Committee responsible for administering the Plan will satisfy such requirements of the New York Stock Exchange or the Nasdaq Stock Market, as applicable, and as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 under the Exchange Act. (b) Delegation. To the extent permitted by Applicable Laws, the Board or the Committee may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards, and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board or the Committee shall specify the total number of Awards that such officers may so award. This delegation may be revoked at any time by the Administrator. (c) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, any limitations specified by the Board, and any requirements imposed by Applicable Laws, the Administrator will have the authority, in its sole discretion, to construe and interpret the terms of the Plan and make any determinations and perform any actions deemed necessary or advisable to administer the Plan, including: (i) to determine the Fair Market Value; (ii) to select the Service Providers to whom Awards may be granted hereunder; (iii) to determine the number of Shares to be covered by each Award granted hereunder; (iv) to approve forms of Award Agreements for use under the Plan;
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the method of payment for Shares purchased under any Award, the method for satisfaction of any Tax Obligation arising in connection with an Award, the time or times when Awards may be exercised or settled (which may be based on performance criteria), whether an Award will be settled in Shares, cash or a combination thereof, any vesting acceleration or waiver of forfeiture restrictions, and any restriction, limitation or requirement regarding any Award or the Shares relating to an Award (for example, any holding period or ownership requirement); (vi) to institute and determine the terms and conditions of any Exchange Program with the consent of the Company’s stockholders; (vii) to establish, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying or facilitating compliance with applicable foreign laws, easing the administration of the Plan and/or for qualifying for favorable tax treatment under applicable foreign laws; (viii) to interpret, modify or amend each Award (subject to Section 21 of the Plan); (ix) to allow Participants to satisfy Tax Obligations in such manner as prescribed in Section 18 of the Plan; (x) to delegate ministerial duties to any of the Company’s employees, and to authorize any person to take any steps and execute, on behalf of the Company, any documents required for an Award previously granted by the Administrator to be effective; (xi) to allow a Participant, in compliance with all Applicable Laws (including Section 409A), to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; (xii) to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including (A) restrictions under an insider trading policy, and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers; (xiii) to temporarily suspend the exercisability of an Award if the Administrator deems such suspension to be necessary or appropriate for administrative purposes, including in connection with Section 16 of the Plan, provided that, unless prohibited by Applicable Laws, such suspension not in connection with a transaction described under Section 16 of the Plan shall be lifted not less than ten (10) Trading Days before the last date that the Award may be exercised; (xiv) to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement and to make all other determinations and take such other actions with respect to the Plan or any Award deemed necessary or advisable for administering the Plan. (d) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards and shall be given the maximum deference permitted by Applicable Law.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 5. | Eligibility and Award Limitations. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, and Performance Awards may be granted to Service Providers. Incentive Stock Options may be granted only to Employees of the Company or Parent or Subsidiary of the Company. (b) Fiscal Year Limit on Employee/Consultant Awards. Subject to adjustment as provided in Section 14 of the Plan, during any Fiscal Year, no Employee or Consultant will be granted:
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(i) Options and/or SARs (including Performance Awards structured as Options or SARs) covering more than a total of 1,000,000 Shares; provided, however, that in connection with his or her initial employment or engagement, such Participant may be granted Options and/or SARs covering an additional 1,000,000 Shares in the Fiscal Year in which his or her service first commences; (ii) Restricted Stock and/or Restricted Stock Units (including Performance Awards structured as Restricted Stock or Restricted Stock Units) covering more than 750,000 Shares; provided, however, that in connection with his or her initial employment or engagement, such Participant may be granted Restricted Stock or Restricted Stock Units covering up to a total of 750,000 additional Shares in the Fiscal Year in which his or her service first commences; and (iii) Cash-denominated Performance Awards having an initial value greater than $10,000,000; provided, however, that in connection with his or her initial employment or engagement, such Participant may be granted additional cash-denominated Performance Awards in the Fiscal Year in which his or her service first commences having an initial value no greater than an additional $10,000,000. (c) Fiscal Year Limit on Outside Director Awards. Subject to adjustment as provided in Section 14 of the Plan, no Outside Director may be granted, in any Fiscal Year, Awards (the value of which will be based on their grant date fair value determined in accordance with generally accepted accounting principles) which, in the aggregate, exceed $500,000, provided that such amount is increased to $750,000 in the Fiscal Year of his or her initial service as an Outside Director. Any Awards or other compensation provided to an individual for his or her services as an Employee, or for his or her services as a Consultant other than as an Outside Director, will be excluded for purposes of applying the preceding limit.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 6. | Stock Options. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Stock Option Award Agreement. Each Option will be evidenced by an Award Agreement that will specify the number of Shares subject to the Option, per share exercise price, its expiration date, and such other terms and conditions as the Administrator determines. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. An Option not designated as an Incentive Stock Option is a Nonstatutory Stock Option. (b) Term of Option. The term of each Option will be stated in the Award Agreement; provided, however, that the term will be no more than seven (7) years from the date of grant hereof. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| (c) Option Exercise Price and Consideration. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following: (1) In the case of an Incentive Stock Option (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. (B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. (iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a cashless exercise program (whether through a broker, net exercise program or otherwise) implemented by the Company in connection with the Plan; (6) by reduction in the amount of any Company liability to the Participant, (7) by net exercise; (8) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (9) any combination of the foregoing methods of payment. (d) Exercise of Option. (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends, Dividend Equivalents or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend, Dividend Equivalent or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for ninety (90) days following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will be forfeited and revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Award Agreement, this Plan or the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. (iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will be forfeited and revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. (iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will be forfeited and revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. (e) Tolling of Expiration. If exercising an Option prior to its expiration is not permitted because of Applicable Laws, other than the rules of any stock exchange or quotation system on which the Common Stock is listed or quoted, the Option will remain exercisable until thirty (30) days after the first date on which exercise no longer would be prevented by such provisions; provided, however, that this tolling of expiration shall not apply if and to the extent the holder of such Option is a United States taxpayer and the tolling would result in a violation of Section 409A such that the Option would be subject to additional taxation or interest under Section 409A. If this would result in the Option remaining exercisable past its Expiration Date, then unless earlier terminated pursuant to Section 16 of the Plan relating to a merger or Change in Control, the Option will remain exercisable only until the end of the later of (x) the first day on which its exercise would not be prevented by Section 22(a) of the Plan relating to legal compliance and (y) its expiration date. (f) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. If for any reason an Option (or portion thereof) designated as an Incentive Stock Option shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonstatutory Stock Option granted under the Plan. Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. (g) No Reload Options. No Option granted under the Plan shall contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 7. | Restricted Stock. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Restricted Stock Award Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the number of Shares subject to the Award of Restricted Stock and such other terms and conditions as the Administrator determines. For the avoidance of doubt, Restricted Stock may be granted without any vesting requirements (e.g., vested stock bonuses). Unless the Administrator determines otherwise, Shares of Restricted Stock will be held in escrow while unvested. (b) Transferability. Except as provided in this Section 7 or Section 12 of the Plan, or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable vesting period (if any). (c) Escrow; Other Restrictions. Restricted Stock may be granted with or without any vesting requirements (e.g., vested stock bonuses). Unless the Administrator determines otherwise, Shares of Restricted Stock will be held in escrow while unvested. The Administrator, in its sole discretion, may impose prior to grant, such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate. Unless the Administrator determines otherwise, the Company as escrow agent will hold
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
Shares of Restricted Stock until the restrictions on such Shares, if any, have lapsed. Shares of Restricted Stock will be released from escrow as soon as practicable after the last day of the vesting period or at such other time as the Administrator may determine. (d) Voting Rights. During the vesting period, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. (e) Dividends and Other Distributions. During the vesting period, Participants holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. Any such dividends or other distributions credited/payable in connection with Shares of Restricted Stock that are not yet vested will be subject to the same restrictions and risk of forfeiture as the underlying Award and will not be paid until the underlying Award vests. At the Administrator’s discretion, the Restricted Stock Award Agreement may require that the holder of Restricted Stock invest any cash dividends received in additional Shares of Restricted Stock. Such additional Shares of Restricted Stock shall be subject to the same conditions as the Award with respect to which the dividend was paid. Shares of Restricted Stock may not receive Dividend Equivalents. (f) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and, subject to Section 3 of the Plan, again will become available for grant under the Plan.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 8. | Restricted Stock Units. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Restricted Stock Unit Award Agreement. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the number of Restricted Stock Units subject to the Award and such other terms and conditions as the Administrator determines. (b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. (c) Form and Timing of Payment. Payment of vested Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement; provided, however, that the timing of payment shall in all cases comply with Section 409A to the extent applicable to the Award. The Administrator, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both. (d) Voting Rights. Participants shall have no voting rights with respect to Shares represented by Restricted Stock Units until the date of the issuance of such Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). (e) Dividend Equivalent Rights. An award of Restricted Stock Units may, at the Administrator’s discretion, include a right to Dividend Equivalents. Such right, if awarded, entitles the Participant to be credited with an amount equal to all cash dividends paid on one Share while the Restricted Stock Unit is outstanding. Settlement of Dividend Equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Dividend Equivalents may also be converted into additional Restricted Stock Units at the Administrator’s discretion. Dividend Equivalents shall not be distributed prior to settlement of the Restricted Stock Unit to which the Dividend Equivalents pertain. Prior to distribution, any Dividend Equivalents shall be subject to the same conditions and restrictions (including any forfeiture conditions) as the Restricted Stock Units to which they attach. The value of Dividend Equivalents payable or distributable with respect to any unvested Restricted Stock Units that do not vest will be forfeited. Any entitlement to Dividend Equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the applicable requirements of Section 409A to the extent applicable to the Participant. All such Dividend Equivalent payments will be made no later than March 15 of the calendar year following the calendar year in which the right to the Dividend Equivalent payment becomes nonforfeitable, unless determined otherwise by the Administrator or unless deferred in a manner intended to comply with Section 409A of the Code. (f) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company and, subject to Section 3 of the Plan, again will become available for grant under the Plan.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 9. | Stock Appreciation Rights. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Stock Appreciation Right Award Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the number of Shares subject to the Stock Appreciation Right, its per share exercise price, its expiration date, and such other terms and conditions as the Administrator determines. (b) Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing, Stock Appreciation Rights may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan. Until Shares are issued in respect of a Stock Appreciation Right (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends, Dividend Equivalents or any other rights as a stockholder will exist with respect to the Shares subject to a Stock Appreciation Right. (c) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 7(a) of the Plan relating to the maximum term and Sections 7(c) and 7(d) of the Plan relating to exercise also will apply to Stock Appreciation Rights. (d) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: (i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times (ii) The number of Shares with respect to which the Stock Appreciation Right is exercised. At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 10. | Performance Awards. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Award Agreement. Each Performance Award will be evidenced by an Award Agreement that will specify the period during which any performance objectives or other vesting provisions will be measured (the “Performance Period”), and such other terms and conditions as the Administrator determines. Each Performance Award’s threshold, target, and maximum payout values (as applicable) will be established by the Administrator on or before the grant date of the Award. (b) Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions in its discretion which, depending on the extent to which they are met, will determine the number of Shares or value of the payout for the Performance Award. The Administrator may set vesting criteria based upon continued employment or service, the achievement of specific performance objectives (such as Company-wide, departmental, divisional, business unit, or individual goals), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion. Performance Awards that are Restricted Stock Units may contain Dividend Equivalent rights, subject to the provisions of Section 8(e) of the Plan. (c) Earning Performance Awards. After the applicable Performance Period has ended, the holder of a Performance Award will be entitled to receive a payout of the number of Shares or cash, as applicable, earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. (d) Form and Timing of Payout. Payment of earned Performance Awards will be made at the time(s) specified in the Award Agreement. Payment with respect to earned Performance Awards will be made in cash, in Shares of equivalent value,
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
or any combination of cash and Shares, with the determination of form of payment made by the Administrator at the time of grant (unless otherwise provided in the Award Agreement). (e) Cancellation of Awards. On the date set forth in the Award Agreement, all unearned or unvested Shares subject to a Performance Award will be forfeited to the Company, and, subject to Section 3 of the Plan, again will be available for grant under the Plan. 11. Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise or as otherwise required by Applicable Law, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence, such that vesting shall cease on the first day of any such unpaid leave of absence and shall only recommence upon return to active service. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company and any member of the Company Group. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 12. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant (or the Participant’s guardian or legal representative). If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. 13. Capitalization Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property, but excepting normal cash dividends), recapitalization, stock split, reverse stock split, reorganization, reincorporation, reclassification, merger, consolidation, split-up, split-off, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of shares of stock that may be delivered under the Plan and/or the number, class, and price of shares of stock covered by each outstanding Award, the numerical Share limits in Section 3 of the Plan and the per person numerical Share limits in Section 6 of the Plan. Adjustments to Awards and the grant of new Awards (including, but not limited to, substitute Awards) under this Section 14 will not count against the per person numerical Share or dollar limits in Section 6 of the Plan. Any fractional share resulting from an adjustment pursuant to this Section 14 shall be rounded down to the nearest whole number, and in no event may the exercise or purchase price under any Award be decreased to an amount less than the par value, if any, of the stock subject to such Award. 14. Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised (with respect to an Option or SAR) or vested (with respect to an Award other than an Option or SAR), an Award will terminate immediately prior to the consummation of such proposed action.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 15. | Merger or Change in Control. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) General. In the event of a merger of the Company with or into another corporation or other entity or a Change in Control (a “Transaction”), each outstanding Award will be treated as the Administrator determines (subject to the provisions of this Section) without a Participant’s consent, including that each Award be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation (or an affiliate thereof). The Administrator will not be required to treat all Awards or portions thereof similarly in the Transaction. (b) Continuation or Assumption. An Award will be considered assumed if, following the Transaction, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Transaction by holders of Common Stock for each Share held on the effective date of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
Transaction is not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit or Performance Award, for each Share subject to such Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the Transaction. An Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Transaction corporate structure will not be deemed to invalidate an otherwise valid Award assumption. (c) Non-Continuation. In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in (and have the right to exercise) all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period. (d) Outside Director Awards. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Performance Awards, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 16. | Tax Matters. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any Tax Obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all Tax Obligations. (b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may designate the method or methods by which a Participant may satisfy such Tax Obligations. As determined by the Administrator in its discretion from time to time, these methods may include one or more of the following (i) paying cash, check, or other cash equivalents, (ii) having the Company withhold otherwise deliverable cash (including cash from the sale of Shares issued to the Participant) or Shares having a Fair Market Value equal to the amount required to be withheld or such greater amount (including up to a maximum statutory amount) as the Administrator may determine or permit if such amount does not result in unfavorable financial accounting treatment, as the Administrator determines in its sole discretion, (iii) forcing the sale of Shares issued pursuant to an Award (or exercise thereof) having a Fair Market Value equal to the minimum statutory amount applicable in a Participant’s jurisdiction or a greater amount as the Administrator may determine or permit if such greater amount would not result in unfavorable financial accounting treatment, as the Administrator determines in its sole discretion, (iv) requiring the Participant to deliver to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld or a greater amount as the Administrator may determine or permit if such greater amount would not result in unfavorable financial accounting treatment, as the Administrator determines in its sole discretion, (v) requiring the Participant to engage in a cashless exercise transaction (whether through a broker or otherwise) implemented by the Company in connection with the Plan, (vi) having the Company or a member of the Company Group withhold from wages or any other cash amount due or to become due to the Participant and payable by the Company or any a member of the Company Group, or (vii) such other consideration and method of payment to meet Tax Obligations as the Administrator may determine to the extent permitted by Applicable Laws. In all instances, the satisfaction of the Tax Obligations will not result in any adverse accounting consequence to the Company, as the Administrator may determine in its sole discretion. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date the amount of tax to be withheld is calculated or such other date as Administrator determines is
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
applicable or appropriate with respect to the Tax Obligation calculation, and will be rounded up to the nearest whole Share, with no refund provided in the U.S. for any value of the Shares withheld in excess of the Tax Obligations as a result of such rounding. (c) Compliance With Section 409A. Unless the Administrator determines that compliance with Section 409A is not necessary, it is intended that Awards will be designed and operated so that they are either exempt or excepted from the application of Section 409A or comply with any requirements necessary to avoid the imposition of additional tax under Section 409A(a)(1)(B) so that the grant, payment, settlement, or deferral will not be subject to the additional tax or interest applicable under Section 409A and the Plan and each Award Agreement will be interpreted consistent with this intent. This Section is not a guarantee to any Participant of the consequences of his or her Awards. In no event will the Company have any responsibility, liability or obligation to reimburse, indemnify, or hold harmless Participant for any taxes that may be imposed or other costs that may be incurred, as a result of Section 409A.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 17. | Other Plan Terms. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Electronic Delivery. The Company may deliver by e-mail or other electronic means (including posting on a website maintained by the Company or by a third party under contract with the Company or another member of the Company Group) all documents relating to the Plan or any Award and all other documents that the Company is required to deliver to its security holders (including prospectuses, annual reports, and proxy statements). (b) No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws. (c) Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant. (d) Interpretation and Construction. Captions and titles contained in the Plan are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. The words “include,” “includes,” and “including” when used in the Plan shall be deemed in each case to be followed by the words “without limitation.” (e) Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby. 18. Term of the Plan. Unless earlier terminated by the Board, the Plan will become effective July 25, 2023 (the “Effective Date”), subject to stockholder approval as provided in Section 22 of the Plan, and will remain in effect until the tenth anniversary of the Effective Date unless terminated earlier under Section 21 of the Plan.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 19. | Amendment and Termination. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Amendment and Termination of the Plan. The Administrator may at any time amend, alter, suspend or terminate the Plan. (b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. (c) Consent of Participants Generally Required. Subject to subsection (d) below, no amendment, alteration, suspension or termination of the Plan or an Award under it will materially impair the rights of any Participant, unless mutually agreed between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. (d) Exceptions to Consent Requirement. A Participant’s rights will not be deemed to have been impaired by any amendment, alteration, suspension, or termination if the Administrator, in its sole discretion, determines that the amendment, alteration, suspension, or termination taken as a whole does not materially impair the Participant’s rights. Subject to any limitations of Applicable Laws, the Administrator may amend the terms of any one or more Awards without the affected Participant’s consent even if it does materially impair the Participant’s rights if such amendment is done (i) in a manner specified by the Plan, (ii) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code, (iii) to change the terms of an Incentive Stock Option, if such change results in impairment of the Award only because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code, (iv) to clarify the manner of exemption from Section 409A or compliance with any requirements necessary to avoid the imposition of additional tax or interest under Section 409A(a)(1)(B), or (v) to comply with other Applicable Laws.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 20. | Conditions Upon Issuance of Shares. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) Legal Compliance. The Company will make good faith efforts to comply with all Applicable Laws related to the issuance of Shares. Shares will not be issued pursuant to an Award, including upon exercise or vesting, as applicable, unless the issuance and delivery of such Shares and exercise or vesting of the Award, as applicable, will comply with Applicable Laws. If required by the Administrator, issuance will be further subject to the approval of counsel for the Company with respect to such compliance. If the Company determines it to be impossible or impractical to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any Applicable Laws, registration or other qualification of the Shares under any state, federal or foreign law or under the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, the Company will be relieved of any liability regarding the failure to issue or sell such Shares as to which such authority, registration, qualification or rule compliance was not obtained and the Administrator reserves the authority, without the consent of a Participant, to terminate or cancel Awards with or without consideration in such a situation. (b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
| 21. | Forfeiture Events. |
QUANTUM CORPORATION 2023 LONG-TERM INCENTIVE PLAN
(a) All Awards (including, without limitation, any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) will be subject to any provisions of Applicable Laws providing for the recoupment or clawback of incentive compensation; the terms of any Company recoupment, clawback or similar policy in effect at the time of grant of the Award, and any recoupment, clawback or similar provisions that may be included in the applicable Award Agreement. (b) Unless this Section is specifically mentioned and waived in an Award Agreement or other document, no reduction, forfeiture, or recoupment of compensation under a Company clawback policy or otherwise will be an event that triggers or contributes to any right of a Participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or a member of the Company Group. 22. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
QUANTUM CORPORATION EMPLOYEE STOCK PURCHASE PLAN
| (f) “Compensation” shall mean all regular straight time earnings, payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, and commissions (except to the extent that the exclusion of any such items for all participants is specifically directed by the Board or a committee appointed by the Board). The Board or a committee appointed by the Board shall have the power and discretion to (i) change the definition of Compensation for future Offering Periods, and (ii) determine what constitutes Compensation for Employees outside of the United States. |

DEF 14A of Quantum Corp /De/

Table of Contents

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Board of Directors and Committees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees

Identifying and Evaluating Director Nominees