DEF 14A of Aehr Test Systems
Filed Sep 11, 2024 · FY20240001654954-24-011751
TABLE OF CONTENTS
| PROPOSAL 1: ELECTION OF DIRECTORS | 10 | | DIRECTOR COMPENSATION | 12 | | PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 17 | | PROPOSAL 3: APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS | 18 | | EXECUTIVE OFFICERS | 19 | | EXECUTIVE COMPENSATION | 20 | | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 32 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 32 | | REPORT OF AUDIT COMMITTEE | 33 | | COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 | 34 | | FINANCIAL STATEMENTS | 34 | | OTHER MATTERS | 34 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS At the Annual Meeting, six directors are to be elected to hold office until the next Annual Meeting or until their successors are elected and qualified. The Board has nominated each of the six nominees listed below to stand for re-election to serve until the annual stockholders meeting in 2025 and until his or her successor is elected and qualified, or until his or her earlier retirement, resignation, disqualification, removal, or death. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the election of the six nominees named below. Each nominee has consented to be named a nominee in this Proxy Statement and to continue to serve as a director, if elected. Should any nominee become unable or decline to serve as a director or should additional persons be nominated at the meeting, the proxy holders intend to vote all proxies received by them in such a manner as will assure the election of as many nominees listed below as possible (or, if new nominees have been designated by the Board, in such a manner as to elect such nominees) and the specific nominees to be voted for will be determined by the proxy holders. The Company is not aware of any reason that any nominee will be unable or will decline to serve as a director. There are no arrangements or understandings between any director or executive officer and any other person pursuant to which he or she is or was to be selected as a director or officer of the Company. The names of the nominees, ages as of May 31, 2024, and certain information about them as of the Record Date are set forth below:
ELECTION OF DIRECTORS
| Name of Nominee | Age | Position | Director Since | | Rhea J. Posedel | 81 | Chairman | 1977 | | Gayn Erickson | 59 | President and Chief Executive Officer | 2012 | | Fariba Danesh (2)(3) | 66 | Director | 2021 | | Laura Oliphant (1)(2)(3) | 61 | Director | 2019 | | Geoffrey G. Scott (1)(3) | 75 | Director | 2020 | | Howard T. Slayen (1)(2) | 77 | Director | 2008 |
ELECTION OF DIRECTORS
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ELECTION OF DIRECTORS
| (1) Member of the Audit Committee | | (2) Member of the Compensation Committee | | (3) Member of the Corporate Governance and Nominating Committee |
ELECTION OF DIRECTORS
RHEA J. POSEDEL is a founder of the Company and has served as the Chairman of the Board since the Company’s inception in 1977. He also served as Executive Chairman of the Company from January 2012 to March 2013. Mr. Posedel served as Chief Executive Officer of the Company since the Company’s inception in 1977 until January 2012. From the Company’s inception through May 2000, Mr. Posedel also served as President of the Company. Prior to founding the Company, Mr. Posedel held various project engineering and engineering managerial positions at Lockheed Martin Corporation, Ampex Corporation, and Cohu, Inc. Mr. Posedel received a B.S. in Electrical Engineering from the University of California, Berkeley, an M.S. in Electrical Engineering from San Jose State University and an M.B.A. from Golden Gate University. Mr. Posedel brings to the Board senior leadership experience, industry and technical expertise, and a deep knowledge of the Company’s operations, strategy and vision. GAYN ERICKSON has served as President, Chief Executive Officer and a member of the Board since January 2012. Prior to joining the Company, Mr. Erickson served as corporate officer, Senior Vice President and General Manager of Verigy Ltd.’s memory test business from February 2006 until October 2011. Prior to that, he was Vice President of Marketing and Sales for Agilent Technologies' Semiconductor Memory Test products. He has over 35 years of executive and general management, operations, marketing, sales and R&D program management experience, dating back to the late 1980s when he began his career in semiconductor test with Hewlett-Packard's Automated Test Group. Mr. Erickson received a B.S. in Electrical Engineering from Arizona State University. Mr. Erickson brings to the Board senior leadership experience, semiconductor test industry and technical expertise, and strategic business development experience.
ELECTION OF DIRECTORS
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ELECTION OF DIRECTORS
FARIBA DANESH has been a director of the Company since May 2021. Ms. Danesh is currently Chief Operating Officer at PsiQuantum, a quantum computing startup based in Palo Alto, California that is using silicon photonics to build the world’s first useful quantum computer, applying existing semiconductor and photonics manufacturing processes. Prior to joining PsiQuantum in January 2021, Ms. Danesh served for nine years as Chief Executive Officer of Glo AB, a venture-funded photonics/compound semiconductor company that designs and develops microLEDs chips and panels suitable for high brightness display applications. Prior to that, she was SVP, General Manager Fiber Optics Products Division of Avago Technologies (now Broadcom) for three years, where she had complete P&L responsibility for a $400 million annual revenue photonics business. Prior to Avago, Ms. Danesh held executive positions as EVP of global operations at Maxtor Corp, COO of Finisar, and CEO of Genoa Corp. Ms. Danesh received a BS in Biochemistry from Santa Clara University. As a technology industry veteran, with 30 years of executive-level technology and operating leadership in multiple enterprise and consumer hardware markets, with special emphasis on semiconductor, photonics, telecommunications, and data storage, Ms. Danesh brings to the Board extensive knowledge, experience, and contacts in the compound semiconductor and optical semiconductor spaces. LAURA OLIPHANT has been a director of the Company since July 2019. From 2016 to 2018, she was the Chief Executive Officer of Translarity, a venture funded probe card company. From 2001 to 2016, she served as an Investment Director at Intel Capital, Intel’s venture capital organization, where she made and managed investments in the semiconductor capital equipment and materials area and received Intel’s highest award for the strategic impact of her contributions. Prior to 2001, Laura was a Process Engineer and a Supply Chain Manager in Intel’s Technology and Manufacturing Group. Dr. Oliphant is National Association of Corporate Directors (NACD), Directorship Certified® and was named to the 2022 NACD Directorship 100 for her strategic impact in the boardroom. She received a BE in Chemical Engineering from Manhattan College in Riverdale, New York, and PhD in Chemical Engineering from the University of California, Berkeley. As a Process Engineer and an Investment Director of the venture capital arm of one of the world’s largest semiconductor companies, Dr. Oliphant brings to the Board a broad range of experience in the semiconductor equipment space and a strong background in business development and financing and investment activities. GEOFFREY G. SCOTT has been a director of the Company since September 2020. Since his retirement from Scott Asset Management in 2017, Mr. Scott has been a private investor. From 1995 to 2017, he was President of Scott Asset Management, an investment group focused on industry leading small cap companies. From 1991 to 1995, he served as Vice President of Merrill Lynch in the Capital Markets Group. From 1973 to 1990, he was employed by Chase Manhattan Bank in the Corporate Banking Group. He received a B.A. from Dartmouth College. With past board experience with emerging, fast growth companies, Mr. Scott brings to the Board extensive experience both in corporate finance and as a long-term investor. HOWARD T. SLAYEN has been a director of the Company since 2008. Since June 2001, Mr. Slayen has been providing independent financial consulting services to various organizations and clients. From October 1999 to May 2001, Mr. Slayen served as Executive Vice President and Chief Financial Officer of Quaartz Inc., a web-hosted communications company. From 1971 to September 1999, Mr. Slayen held various positions with PricewaterhouseCoopers/Coopers & Lybrand, including his last position as a Corporate Finance Partner. Mr. Slayen currently serves as a director or committee member for several non-profit organizations. Mr. Slayen received a B.A. from Claremont McKenna College and a J.D. from the University of California, Berkeley School of Law. As the former Vice President and Chief Financial Officer of a high-tech company, former Corporate Finance Partner for a large international accounting firm, and former chair of the audit committee of two other public technology companies, Mr. Slayen brings to the Board senior leadership experience, expertise in accounting and financial reporting, financing and investing activities, and internal control and compliance. Mr. Slayen also brings to the Board a strong background in advising high-tech companies through his prior public company board experience.
Director Compensation
Director Compensation Gayn Erickson, an inside director of the Company who served as the Company’s President and Chief Executive Officer during fiscal year 2024, did not receive any compensation for his services as member of the Board. An inside director is a director who is a regular employee of the Company, whereas an outside director is not an employee of the Company, and only our outside directors received compensation for their services as a director in fiscal year 2024. On July 11, 2023, the Board approved changes to compensation arrangements with non-employee directors effective for fiscal year 2024. The Board eliminated per meeting fees for all the directors. Upon re-election to the Board, the Company’s Chairman will receive an annual cash retainer of $87,500 and an annual grant of RSUs totaling $160,000 vesting over two years from the date of grant. The Audit Committee Chair and the Compensation Committee Chair will each receive an annual cash retainer of $72,500 and an annual grant of RSUs totaling $140,000 vesting over two years from the date of grant. The Corporate Governance and Nominating Committee Chair will receive an annual cash retainer of $67,500 and an annual grant of RSUs totaling $140,000 vesting over two years from the date of grant. The other directors of the Board will each receive an annual cash retainer of $65,000 and an annual grant of RSUs totaling $140,000 vesting over two years from the date of grant. The number of RSUs will be calculated based upon the Company’s stock price at each grant date. Each award of RSUs vests as to 1/8th of the total number of RSUs on each quarterly anniversary of the grant date, subject to continued service. All directors are required to maintain ownership of the Company’s stock equivalent to at least one year of their cash compensation. Additionally, Rhea Posedel is eligible to participate in certain of the Company’s health and welfare benefit plans. Pursuant to the foregoing compensation arrangements, in October 2023 Rhea Posedel was granted an award of 5,097 RSUs, and each other outside director was granted an award of 4,460 RSUs. The following table sets forth the compensation paid by the Company during the fiscal year ended May 31, 2024 to the Company’s outside directors:
Director Compensation
| Director Compensation | | | | | | | | | | Fees Earned | Option | Stock | All Other | Total | | | | or Paid in | Awards | Awards | Compensation | Compensation | | Name | Fiscal Year | Cash ($) | ($) (1) | ($) (2) | ($) | ($) | | Fariba Danesh | 2024 | 63,500 | - | 140,000 | - | 203,500 | | Laura Oliphant | 2024 | 72,750 | - | 140,000 | - | 212,750 | | Rhea J. Posedel | 2024 | 87,500 | - | 160,000 | 21,904(3) | 269,404 | | Geoffrey G. Scott | 2024 | 68,750 | - | 140,000 | - | 208,750 | | Howard T. Slayen | 2024 | 72,250 | - | 140,000 | - | 212,250 |
Director Compensation
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Director Compensation
| (1) At the end of fiscal year 2024, the aggregate number of option awards outstanding for each director was as follows: 15,000 held by Fariba Danesh; 71,956 held by Rhea Posedel and 25,000 held by Geoffrey Scott. | | (2) The amounts reported represent the aggregate grant date fair value of RSU awards granted in the fiscal year, as determined pursuant to ASC 718. The assumptions used to calculate the value of awards are set forth in Note 11 of the Notes to the Consolidated Financial Statements included in Aehr's Annual report on Form 10-K for fiscal 2024 filed with the SEC on July 30, 2024. At the end of fiscal year 2024, Fariba Danesh, Laura Oliphant, Geoffrey Scott and Howard Slayen each held 3,345 RSUs, and Rhea Posedel held 3,823 RSUs. | | (3) Includes health and life insurance premiums and medical costs paid by the Company in the amount of $21,904. |
Director Compensation
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Role of Compensation Committee
| 1. | reviewing and approving the annual base salary for the Company’s executive officers, as well as any other benefits, compensation or employment-related arrangements, including (i) annual or special incentive bonuses, including the specific goals and amounts, (ii) equity compensation, and/or (iii) employment agreements, severance arrangements, and change in control agreements; | | 2. | making recommendations to the Board with respect to incentive compensation plans, including reservation of shares for issuance under employee benefit plans; | | 3. | reviewing the performance of the Company’s Chief Executive Officer; | | 4. | making recommendations to the Board on the Company’s executive compensation practices and policies, including the evaluation of performance by the Company’s executive officers and issues of management succession. |
Elements of Compensation
Elements of Compensation In structuring the Company’s compensation program, the Compensation Committee seeks to select the types and levels of compensation that will further its goals of rewarding performance, linking executive officer compensation to the creation of shareholder value, attracting and retaining highly qualified executive officers and maximizing long-term shareholder returns. The Company designs base salary to provide the essential reward for an executive officer’s work. Once base salary levels are initially determined, increases in base salary are provided to recognize an executive officer’s specific performance achievements. The Company utilizes equity-based compensation, including stock options and restricted stock units (“RSUs”), to ensure that the Company has the ability to retain executive officers over a longer period of time, and to provide executive officers with a form of reward that aligns their interests with those of the Company’s shareholders. Executive officers whose skills and results the Company deems to be critical to the Company’s long-term success are eligible to receive higher levels of equity-based compensation.
Elements of Compensation
| • | Cash-based programs: base salary, annual bonus plan and commission plans; and | | • | Equity-based programs: The 2023 Equity Incentive Plan (the “2023 Plan”), the Amended and Restated 2006 Employee Stock Purchase Plan (“ESPP”), and the ESOP. |
Elements of Compensation
These programs apply to all executive level positions, except for the commission plans, which only applies to Gayn Erickson, the President and Chief Executive Officer, and Vernon Rogers, the Executive Vice President of Sales and Marketing. Periodically, but at least once near the close of each fiscal year, the Compensation Committee reviews the existing plans and recommends those that should be used for the subsequent year. Consistent with the Company’s compensation philosophy, the Company has structured each element of the Company’s executive officer compensation program as described below. Base Salary The Company creates a set of base salary structures that are both affordable and competitive in relation to the market. The Company determines the Company’s executive officer salaries based on job responsibilities and individual experiences. The Company monitors base salary levels within the market and makes adjustments to the Company’s structures as needed after considering the recommendations of management. The Company’s Compensation Committee reviews the salaries of the Company’s executive officers annually, and the Company’s Compensation Committee grants increases in salaries based on individual performance during the prior calendar year, provided that any increases are within the guidelines determined by the Compensation Committee for each position. In fiscal 2024, the base salary amount for Gayn Erickson, Chris P. Siu, and Vernon Rogers was $456,000, $336,000, and $283,500, respectively. Annual Bonus The Company’s executive annual bonus plan provides for cash bonus awards, dependent upon attaining stated corporate objectives and personal performance goals. The Company’s executive officers are eligible to receive cash bonuses based upon the Company’s achievement of certain financial and performance goals set by the Compensation Committee. The Compensation Committee approves the performance criteria on an annual basis and these financial and performance goals typically have a quarterly or one-year time horizon. The Compensation Committee believes that the practice of awarding incentive bonuses based on the achievement of performance goals furthers the Company’s goal of strengthening the connection between the interests of management and the Company’s shareholders.
Elements of Compensation
In fiscal 2024, the Company’s Compensation Committee determined the maximum eligible cash bonus levels based upon the Company’s achievement of certain financial goals for Gayn Erickson, the Chief Executive Officer, Chris P. Siu, the Executive Vice President of Finance and Chief Financial Officer, and Vernon Rogers, the Executive Vice President of Sales and Marketing were up to 111.8%, 120% and 45.9% of their base salaries, respectively. Based on the Company performance for the year, the Compensation Committee determined that Gayn Erickson, Chris P. Siu, and Vernon Rogers did not earn a Company performance cash bonus for fiscal 2024. Additionally, in fiscal 2024, the Compensation Committee approved a personal performance cash bonus for Gayn Erickson, Chris P. Siu, and Vernon Rogers at a target level of $130,000, $70,400 and $90,000 respectively. Based upon personal performance against milestones for fiscal 2024, the Compensation Committee awarded personal performance bonuses of $70,000, $60,400 and $42,360 to Gayn Erickson, Chris P. Siu and Vernon Rogers, respectively. The annual incentive bonus plan is discretionary, and the Compensation Committee may modify, suspend, eliminate or adjust the plan, the goals and the total or individual payouts at any time. Booking Commission During fiscal 2024, Gayn Erickson and Vernon Rogers were eligible to receive a booking commission based on achievement of booking objectives or quotas. Gayn Erickson receives a standard commission rate of 0.0833% for bookings less than or equal to $120 million and double commission rates on bookings above quota. Vernon Rogers receives a standard commission rate of 0.1% for bookings less than or equal to $120 million and double commission rates on bookings above quota. Commissions are considered earned at the time of booking and are paid in the following month. Under this plan in fiscal 2024, Gayn Erickson and Vernon Rogers earned $40,642 and $48,773, respectively, which is included in the annual non-equity incentive plan compensation column in the Summary Compensation Table on page 26. Equity Compensation The Company awards equity compensation to the Company’s executive officers based on the performance of the executive officer and guidelines related to each executive officer’s position in the Company. The Board determines the Company’s equity compensation guidelines based on information derived from the Company’s experience with other companies and, with respect to the Company’s executive officers, market data of companies in the Company’s industry. The Company typically bases awards to newly hired executive officers and for continuing executive officers on these guidelines as well as an executive officer’s performance for the prior fiscal year. The Company evaluates each executive officer’s awards based on the factors described above and competitive practices in the Company’s industry. The Company believes that equity awards are an important factor in aligning corporate and individual goals. The Company utilizes equity-based compensation, including stock options and RSUs, to encourage long-term performance with corporate performance and extended executive officer tenure producing potentially significant value. The Company’s Compensation Committee has historically granted stock options and RSUs to executive officers, and in fiscal 2024, only RSUs were granted to executive officers under the 2023 Plan. Such grants are typically made at the first meeting of the Board held each fiscal year. The Company believes annual awards at this time allow the Compensation Committee to consider a number of factors related to the equity award decisions, including corporate performance for the prior fiscal year, executive officer performance for the prior fiscal year and expectations for the upcoming fiscal year. With respect to newly hired executive officers, the Company’s standard practice is to grant RSUs (including performance-based RSUs) effective on or shortly after the executive officer’s hire date. The Company’s Compensation Committee does not apply a formula for allocating equity awards to executive officers. Instead, the Company’s Compensation Committee considers the role and responsibilities of the executive officers, competitive factors, the non-equity compensation received by the executive officers and the total number of equity awards to be granted in the fiscal year.
Elements of Compensation
On September 1, 2023, Chris P. Siu was granted an award of 15,572 RSUs, which vested as to 1/16th of the total number of RSUs on the grant date, and vests as to an additional 1/16th of the total number of RSUs every three months thereafter, subject to continued service. On October 27, 2023, Gayn Erickson and Vernon Rogers were granted awards of 25,239 and 6,200 RSUs, respectively. Each award vests as to 1/16th of the total number of RSUs every three months after the grant date, subject to continued service. Additionally, on October 27, 2023, Gayn Erickson, Chris P. Siu, and Vernon Rogers were granted awards of 30,431, 5,167, and 5,167 performance-based RSUs, respectively. Each award vests as to 100% of the RSUs upon the achievement of a performance condition related to the Company’s cumulative revenue target for certain markets from the grant date to May 31, 2026, subject to continued service through the achievement date. Pay for Performance/At-Risk Pay Our executive compensation program is designed to reward achievement of the specific strategic goals that we believe will advance our business strategy and create long-term value for our shareholders. Consistent with our goal of attracting, motivating, and retaining a high-caliber executive team, our executive compensation program is designed to pay for performance. We utilize compensation elements that meaningfully align our named executive officers’ interests with those of our shareholders to create long-term value. As such, a significant portion of our Chief Executive Officer’s and other named executive officers’ compensation is “at-risk”, performance-based compensation, in the form of long-term equity awards and annual cash incentives that are only earned if we achieve measurable corporate metrics. Other Benefits Executive officers are eligible to participate in all of the Company’s employee benefit plans, such as medical, dental, group life, disability, and accidental death and dismemberment insurance, the Company’s 401(k) plan, the Company’s 2023 Equity Incentive Plan, the ESOP, and the ESPP. The executive officers participate on the same basis as other employees, except that the Company makes payments for a supplemental insurance to cover the uninsured out-of-pocket amounts related to healthcare for the executive officers. Other than these payments, there were no other special benefits or perquisites provided to any executive officer in fiscal 2024, except that Vernon Rogers received auto allowance payments. During fiscal 2024, the Company made payments for health and life insurance premiums and medical costs as reflected in the Summary Compensation Table below under the “All Other Compensation” column. The Company does not maintain any pension plan, retirement benefit or deferred compensation arrangement other than the Company’s 401(k) plan and the ESOP. The Company is not required to make contributions to the 401(k) plan and did not make any during fiscal 2024. Severance Benefits The Company entered into new Change in Control and Severance Agreements (each, a “Severance Agreement”) on August 31, 2024 with Mr. Erickson, Mr. Siu and Mr. Rogers, pursuant to which the executives will be entitled to severance benefits in the event of certain qualifying terminations of employment, or a termination of employment due to death or disability, as described below. Each Severance Agreement supersedes and replaces each executive’s prior change in control and severance agreement with the Company. A “qualifying termination of employment” for purposes of the Severance Agreements means an involuntary termination of the executive’s employment by the Company without “cause”, or the executive’s resignation from employment with the Company for “good reason” (each as defined in the applicable Severance Agreement). As described below, each Severance Agreement provides for enhanced severance benefits if an executive undergoes a qualifying termination of employment during a “change in control period,” which means the period beginning three months before and ending 24 months (for Mr. Erickson), 18 months (for Mr. Siu) or 12 months (for Mr. Rogers) after a change in control of the Company. Payments and benefits under each Severance Agreement are contingent on the applicable executive timely providing us with (and not revoking) a general release of claims.
Elements of Compensation
| • | a cash payment equal to 12 months (for Mr. Erickson), nine months (for Mr. Siu) or six months (for Mr. Rogers) of the executive’s annual base salary; | | • | a cash payment equal to the prorated amount of the executive’s target annual cash incentive opportunity for the fiscal year in which the employment termination occurs, determined by the portion of the fiscal year during which the executive was employed by the Company; | | • | 12 months’ (for Mr. Erickson), nine months’ (for Mr. Siu) or six months’ (for Mr. Rogers) accelerated vesting of unvested outstanding equity awards (with any performance-based conditions deemed achieved at target levels); and | | • | up to 12 months (for Mr. Erickson), nine months (for Mr. Siu) or six months (for Mr. Rogers) of continued healthcare coverage paid by the Company. |
Elements of Compensation
If the employment of Mr. Erickson, Mr. Siu or Mr. Rogers terminates due to the executive’s death, the executive (and his estate) will be eligible to receive the same severance benefits the executive would be eligible for in connection with a qualifying termination of employment outside of a change in control period (described above), except for continued healthcare coverage paid by the Company. If the employment of Mr. Erickson, Mr. Siu or Mr. Rogers terminates due to the executive’s disability (as defined in the applicable Severance Agreement), the executive will be eligible for the same severance benefits the executive would be eligible for in connection with a qualifying termination of employment outside of a change in control period (described above), except that during the 12-month (for Mr. Erickson), nine-month (for Mr. Siu) or six-month (for Mr. Rogers) period following the employment termination, the executive will continue to participate at the Company’s cost in the Company’s ArmadaCare supplemental benefits plan (or any similar replacement or successor supplemental benefits plan).
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total ($) | | Gayn Erickson | 2024 | 459,508 | - | 751,870 | 127,742 | 45,317(4) | 1,384,437 | | President and Chief Executive Officer | 2023 | 348,270 | - | 990,000 | 266,758 | 47,760 | 1,652,788 | | Chris P. Siu | 2024 | 336,000 | - | 804,138 | 73,000 | 47,924(5) | 1,261,062 | | Executive Vice President of Finance and Chief Financial Officer | 2023 | - | - | - | - | - | - | | Vernon Rogers | 2024 | 296,311 | - | 184,698 | 106,764 | 67,595(6) | 655,368 | | Executive Vice President of Sales and Marketing | 2023 | 268,561 | - | 216,000 | 159,195 | 66,640 | 710,396 |
Summary Compensation Table
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Summary Compensation Table
| (1) The amounts reported represent the aggregate grant date fair value of RSUs or options granted in the respective fiscal years, as determined pursuant to ASC 718. The assumptions used to calculate the value of awards are set forth in Note 13 of the Notes to the Consolidated Financial Statements included in the Company s Annual report on Form 10-K for fiscal 2024 filed with the SEC on July 30, 2024. | | (2) For fiscal 2024, represents (i) amounts earned under our annual bonus and profit sharing programs and (ii) for Messrs. Erickson and Rogers, booking commissions earned. | | (3) For fiscal 2024, consists of contributions made by the Company under the ESOP, health and life insurance premiums, medical costs and auto allowance paid by the Company. | | (4) Includes health and life insurance premiums and medical costs paid by the Company in the amount of $36,346 and Company ESOP contributions of $8,771. | | (5) Includes health and life insurance premiums and medical costs paid by the Company in the amount of $39,363 and Company ESOP contributions of $8,360. | | (6) Includes health and life insurance premiums and medical costs in the amount of $46,624, Company ESOP contributions of $8,771 and auto allowance in the amount of $12,000 paid by the Company. |
Summary Compensation Table
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Outstanding Equity Awards at Fiscal 2024 Year-End
Outstanding Equity Awards at Fiscal 2024 Year-End The following table presents certain information concerning the outstanding equity awards held as of May 31, 2024 by each named executive officer.
Outstanding Equity Awards at Fiscal 2024 Year-End
Outstanding Equity Awards at Fiscal 2024 Year-End
Outstanding Equity Awards at Fiscal 2024 Year-End
| | | Option Awards | | | | Stock Awards | | | | | | | Number of Securities Underlying Unexercised Options (1) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Number of unearned Shares or Units of Stock That Have Not Vested (#) | Market Value of unearned Shares or Units of Stock That Have Not Vested ($) (2) | | Name | Date of Grant | Exercisable (#) | Unexercisable (#) | | | | | | | | Gayn Erickson | 7/16/2019 | 16,251 | - | $1.635 | 7/16/2026 | | | | | | | 7/16/2019 | 3,338 | - | $1.635 | 7/16/2026 | | | | | | | 7/14/2020 | | | | | 4,845(3) | 55,766 | | | | | 7/13/2021 | | | | | 16,167(3) | 186,082 | | | | | 7/14/2022 | | | | | 46,403(3) | 534,099 | | | | | 7/14/2022 | | | | | 23,203(4) | 267,067 | | | | | 10/27/2023 | | | | | 22,084(3) | 254,187 | | | | | 10/27/2023 | | | | | | | 30,431(5) | 350,261 | | Chris P. Siu | 9/1/2023 | | | | | 12,652(3) | 145,625 | | | | | 10/27/2023 | | | | | | | 5,167(5) | 59,472 | | Vernon Rogers | 10/23/2018 | 110,283 | - | $2.030 | 10/23/2025 | | | | | | | 10/23/2018 | 185 | - | $2.030 | 10/23/2025 | | | | | | | 7/16/2019 | 15,262 | - | $1.635 | 7/16/2026 | | | | | | | 7/16/2019 | 24,738 | - | $1.635 | 7/16/2026 | | | | | | | 7/14/2020 | | | | | 1,263(3) | 14,537 | | | | | 7/13/2021 | | | | | 4,199(3) | 48,330 | | | | | 7/14/2022 | | | | | 10,125(3) | 116,539 | | | | | 7/14/2022 | | | | | 5,061(4) | 58,252 | | | | | 10/27/2023 | | | | | 5,425(3) | 62,442 | | | | | 10/27/2023 | | | | | | | 5,167(5) | 59,472 |
Outstanding Equity Awards at Fiscal 2024 Year-End
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Outstanding Equity Awards at Fiscal 2024 Year-End
| (1) Stock options vest and become exercisable as to 1/48th of the underlying shares each month after the date of grant, with full vesting occurring on the fourth anniversary of the date of grant, subject to continued service through the applicable vesting date. | | (2) Market value was based on the closing price of the Company’s Common Stock on May 31, 2024 of $11.51. | | (3) RSU awards vest as to 1/16th of the total number of RSUs every three months after the date of grant, with full vesting occurring on the fourth anniversary of the date of grant, subject to continued service through the applicable vesting date. | | (4) RSU awards vested as to 25% of the total number of RSUs on May 31, 2023 based upon the Company’s achievement of certain financial goals, and vest as to an additional 1/16th of the total number of RSUs every three months thereafter, over the next three years, subject to continued service through the applicable vesting date. | | (5) Performance-based RSU award will vest as to 100% of the RSUs upon the achievement of a performance condition related to the Company’s cumulative revenue target for certain markets from the grant date to May 31, 2026, subject to continued service through the achievement date. As of May 31, 2024, the performance condition was not yet satisfied. |
Outstanding Equity Awards at Fiscal 2024 Year-End
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Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(v) of Regulation S-K, we provide the following disclosure regarding executive compensation actually paid (“CAP”) to our principal executive officer (“PEO”) and Non-PEO named executive officers (“NEOs”) and the Company’s performance for the fiscal years listed below. This disclosure is intended to comply with the requirements of Item 402(v) of Regulation S-K applicable to “smaller reporting companies.” The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. For additional information about our pay for performance compensation philosophy and how the Company seeks to align executive compensation with the Company’s performance, refer to the section above titled “Executive Compensation.”
Pay Versus Performance
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Pay Versus Performance
The following table sets forth additional compensation information of our Principal Executive Officer (PEO) and our other (non-PEO) NEOs along with total shareholder return, and net income performance results for our fiscal years 2024, 2023 and 2022.
Pay Versus Performance
| Year (1) | Summary Compensation Table Total for PEO (2) | Compensation Actually Paid to PEO (3)(4) | Average Summary Compensation Table Total for non-PEO NEOs(2) | Average Compensation Actually Paid to non-PEO NEOs (3)(5) | Value of Initial Fixed $100 Investment based on TSR (6) | Net Income ($ Thousands) (7) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2024 | $1,384,437 | $(927,657) | $958,215 | $424,516 | $512 | $33,156 | | 2023 | $1,652,788 | $6,947,121 | $720,333 | $2,487,538 | $1,468 | $14,557 | | 2022 | $4,178,981 | $6,057,733 | $751,729 | $1,811,695 | $372 | $9,450 |
Pay Versus Performance
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Pay Versus Performance
| (1) NEOs included in the above compensation columns reflect the following: |
Pay Versus Performance
| Year | PEO | Non-PEO NEOs | | 2024 | Mr. Erickson | Messrs. Siu and Rogers | | 2023 | Mr. Erickson | Messrs. Spink (a) and Rogers | | 2022 | Mr. Erickson | Messrs. Spink (a) and Rogers |
Pay Versus Performance
| (a) Mr. Spink retired on August 31, 2023. | | (2) Amounts reported in column (b) represent the total compensation as reported in the Summary Compensation Table for the applicable year in the case of our PEO (for each year where he served as principal executive officer) and in column (d) represent the average of the total compensation as reported in the Summary Compensation Table for the Company’s other NEOs for the applicable year. | | (3) SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine “compensation actually paid” as reported in the Pay Versus Performance Table. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In general, “compensation actually paid” amounts in columns (c) and (e) are calculated as Summary Compensation Table total compensation adjusted to include the fair market value of equity awards as of the last day of the applicable fiscal year or, if earlier, the vesting date (rather than the grant date). The fair values of RSUs and stock options are calculated at the required measurement dates, consistent with the approach used to value the awards at the grant date as described in our Annual Report on Form 10-K for fiscal 2024 filed with the SEC on July 30, 2024. Any changes to the RSU fair values from the grant date (for current year grants) and from prior year-end (for prior year grants) are based on our updated stock price at the respective measurement dates and updated performance metric projections (for performance-based RSUs). Changes to the stock option fair values are based on the updated stock price at the respective measurement dates, in addition to updated expected option term, implied volatility of our stock over the updated expected option term, and risk-free rate assumptions. |
Pay Versus Performance
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Pay Versus Performance
| (4) Compensation Actually Paid to our PEO reflects the following adjustments from “Total” compensation reported in the Summary Compensation Table: |
Pay Versus Performance
| | 2024 | 2023 | 2022 | | Total Reported in Summary Compensation Table (SCT) | $1,384,437 | $1,652,788 | $4,178,981 | | Less, value of Stock Awards and Options Awards reported in SCT | $(751,870) | $(1,007,281) | $(378,370) | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | $604,448 | $3,580,299 | $930,406 | | Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | $(1,949,193) | $1,448,167 | $555,415 | | Plus, FMV of Awards Granted in the applicable year and that Vested in the applicable year | $44,625 | $371,880 | $140,808 | | Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested in the applicable year | $(260,104) | $901,269 | $630,492 | | Less, Prior Year Fair Value of Prior Year awards that Failed to vest in the applicable year | $- | $- | $- | | Total Adjustments | $(2,312,094) | $5,294,333 | $1,878,752 | | Compensation Actually Paid | $(927,657) | $6,947,121 | $6,057,733 |
Pay Versus Performance
| (5) The average Compensation Actually Paid to our non-PEO NEOs reflects the following adjustments from “Total” compensation reported in the Summary Compensation Table: |
Pay Versus Performance
| | 2024 | 2023 | 2022 | | Total Reported in Summary Compensation Table (SCT) | $958,215 | $720,333 | $751,729 | | Less, value of Stock Awards and Options Awards reported in SCT | $(494,418) | $(284,434) | $(233,810) | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | $163,505 | $1,004,076 | $599,131 | | Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | $(222,069) | $515,444 | $258,711 | | Plus, FMV of Awards Granted in the applicable year and that Vested in the applicable year | $50,924 | $102,374 | $50,245 | | Plus, Change in Fair Value (from prior year-end) of Prior Year awards that Vested in the applicable year | $(31,641) | $429,745 | $385,689 | | Less, Prior Year Fair Value of Prior Year awards that Failed to vest in the applicable year | $- | $- | $- | | Total Adjustments | $(533,699) | $1,767,205 | $1,059,966 | | Compensation Actually Paid | $424,516 | $2,487,538 | $1,811,695 |
Pay Versus Performance
| (6) Reflects a fixed investment of $100 in the Company on May 28, 2021 with the value measured at the end of the listed fiscal year. Historical stock performance is not necessarily indicative of future stock performance. | | (7) The amounts reported represent net income as reflected in the Company’s audited financial statements for the applicable fiscal year. |
Pay Versus Performance
Description of Relationship Between PEOs and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) and Net Income. The following charts set forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s (i) cumulative TSR and (ii) net income over the three most recently completed fiscal years. TSR amounts reported in the first chart assume an initial fixed investment of $100.
Pay Versus Performance
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Pay Versus Performance
The information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
Pay Versus Performance
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