DEF 14A of SES AI Corp
Filed Apr 23, 2024 · FY20230001819142-24-000018
PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1—ELECTION OF DIRECTORS Under our Certificate of Incorporation (the “Certificate of Incorporation”) and Bylaws (the “Bylaws”), the Board is divided into three classes. Only one class of directors is elected in each year and each class serves a three-year term. The term length of each Class is, for each Class II director, a term that expires at this annual meeting of stockholders; for each Class III director, a term that expires at the Company’s 2025 annual meeting of stockholders; and, for each Class I director, a term that expires at the Company’s 2026 Annual Meeting. The Board currently consists of seven directors: Dr. Qichao Hu, Dr. Jang Wook Choi, Anirvan Coomer, Eric Luo, Brian Krzanich, Dr. Jiong Ma and Michael Noonen. Mr. Coomer was nominated by GM Ventures pursuant to its contractual nominating rights. For more information, see “Transactions with Related Persons—Director Nomination Agreement.” Upon the recommendation of the Nominating and Corporate Governance Committee of the Board (the “Nominating and Corporate Governance Committee”), the Board has considered and nominated the following slate of Class II director nominees, each for a three-year term expiring at the Company’s 2027 annual meeting of stockholders: Dr. Choi and Mr. Coomer. Action will be taken at the Annual Meeting for the election of these director nominees. It is intended that the proxies delivered pursuant to this solicitation will be voted by the proxy holders in favor of the election of Dr. Choi and Mr. Coomer except where proxies bear contrary instructions. In the event that these director nominees should become unavailable for election due to any presently unforeseen reason, the proxy holders will have the right to use their discretion to vote for a substitute or substitutes.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS IN 2024 The following information describes the offices held and other business directorships of each director nominee. Information regarding each nominee’s beneficial ownership of equity securities is shown under “Security Ownership of Certain Beneficial Owners and Management” below. Ages set forth below are as of April 1, 2024. Directors are elected by a plurality of the votes cast for the election of each director at the Annual Meeting. Dr. Jang Wook Choi, 48, serves as a director of the Company, a position he has held since February 2022. Since September 2020, Dr. Choi has served as Professor at Seoul National University, where he was previously Associate Professor from 2017 to 2020. Prior to joining Seoul National University, he was Associate Professor from 2012 until 2017 and Assistant Professor from 2010 until 2012 at Korea Advanced Institute of Science and Technology. Dr. Choi received his PhD in Chemical Engineering from California Institute of Technology and BS in Chemical Engineering from Seoul National University. We believe that Dr. Choi is qualified to serve as a director of our Board because of his extensive academic experience and expertise in chemistry, engineering and battery technologies. Anirvan Coomer, 50, serves as a director of the Company, a position he has held since November 2023. Mr. Coomer has served as Managing Director of GM Ventures since May 2023. Prior to that, Mr. Coomer worked in various leadership roles within GM in China, the United States, Mexico and India over the past 20 years, including as Executive Director – Electrification and Fuel Cell Systems Purchasing from September 2020 through April 2023, Executive Director – Strategy, Planning and Operations, Global Purchasing and Supply Chain (GPSC) from July 2018 through August 2020, Vice President, GM China GPSC from July 2016 through June 2018, Vice President, GM India GPSC from January 2013 through June 2016 and Executive Director – Thermal Purchasing and GM Mexico GPSC from August 2010 through December 2012. Mr. Coomer received his B.S. in Electrical Engineering from Indian Institute of Technology (IIT Kharagpur) and M.B.A. from India Institute of Management (IIT Ahmedabad). We believe that Mr. Coomer is qualified to serve as a director of our Board because of his experience in executive leadership positions and expertise in automotive electrification and supply chain management. OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
Continuing Members of the Board of Directors
Continuing Members of the Board of Directors In addition to the directors nominated for election at the Annual Meeting, the directors listed below currently serve on our Board. Ages set forth below are as of April 1, 2024.
Class I directors, with a term expiring at the 2026 Annual Meeting of Stockholders
Class I directors, with a term expiring at the 2026 Annual Meeting of Stockholders Dr. Jiong Ma, 60, serves as a director of the Company, a position she has held since February 2022. Since 2021, Dr. Ma has served as a Founder and Chief Executive Officer of Chavant Capital Acquisition Corp. (NASDAQ: CLAY) (“Chavant”), a special purpose acquisition company seeking to invest in a high growth technology companies. From 2008 to 2020, Dr. Ma served as a Partner at Braemar Energy Ventures (“Braemar”), a venture capital firm investing in early to mid-stage technology companies operating in the mobility, power, resources and infrastructure sectors. At Braemar, Dr. Ma focused on investments in digitization of industry, resource efficiency, mobility, renewable energy infrastructure, and deeptech. Prior to joining Braemar, Dr. Ma served in the Venture Capital Group at 3i Group plc (“3i”), a global private equity firm, from 2004 to 2008, where she was responsible for investment in the information technology and cleantech sectors. Prior to 3i, Dr. Ma served as Senior Manager of the Optical Networking Group, Technology and Business Leadership at Lucent Technologies and Bell Labs, where she was responsible for product portfolio strategy, new product launches for Optical and Data Networking, and research and product development. Dr. Ma was also a founding team member of Onetta, a fiber networks company. Dr. Ma has served on the boards of Chavant and Anavex Life Sciences (NASDAQ: AVXL) since 2021. Dr. Ma received her PhD in electrical engineering from the University of Colorado at Boulder, MS in electrical engineering from the Worcester Polytechnic Institute in Massachusetts and BS in Physics from Lanzhou University. We believe that Dr. Ma is qualified to serve as a director of our Board because of her extensive experience in research, operations and venture capital, particularly in the technology industry. Michael Noonen, 61, serves as a director of the Company, a position he has held since February 2022. Since October 2022, Mr. Noonen has served as Chief Executive Officer of Swave Photonics, based in Leuven, Belgium. Previously, Mr. Noonen has served as Chief Executive Officer of MixComm Inc., a leader in RFSOI mmWave solutions based in New Jersey, which was acquired by Sivers Semiconductors in February 2022. Mr. Noonen brings 25 years of experience in leading technology businesses. Mr. Noonen has held various leadership positions, including as chairman and co-founder of Silicon Catalyst from 2013 to 2015, the world’s first semiconductor incubator and the EE Times 2015 Start-up of the Year, and as chairman of the board of Socle in Taiwan in 2013 (which was acquired by Foxconn), and was also previously Executive Vice President of Global Products, Design, Sales & Marketing at GlobalFoundries from 2011 to 2013. From 2008 and 2011, Mr. Noonen served as Executive Vice President of Worldwide Sales and Marketing at NXP Semiconductors (NASDAQ: NXPI). He has served on the board of SK Growth Opportunities Corporation (NASDAQ: SKGR) since June 2022 and previously served on the board of Energous (NASDAQ: WATT) from 2019 to 2021. Mr. Noonen received his B.S. from Colorado State University in Electrical Engineering and was named the College of Engineering Distinguished Alumni in 2012, was elected to the Global Semiconductor Alliance Board of Directors and holds multiple patents in the areas of Internet telephony and video communications. We believe Mr. Noonen is qualified to serve as a director of our Board because of his experience in executive leadership positions and expertise in information technology, innovation and the electronics industry. Eric Luo, 58, serves as a director of the Company, a position he has held since February 2022. From 2017 until 2021, Mr. Luo served as Chairman and Chief Executive Officer of GCL System Integration Limited, GCL New Energy USA (“GCL”), an international energy conglomerate specializing in clean and sustainable energy. Prior to his position at GCL, Mr. Luo served as the Chief Executive Officer and Board Member of Shunfeng International Clean Energy Limited (SFCE), a Hong Kong-based supplier of law-carbon and energy saving integrated solutions from 2015 to 2017. Mr. Luo received his MBA from Michigan State University and BS in Operational Management from Zhejiang Gongshang University. We believe that Mr. Luo is qualified to serve as a director of our Board because of his experience in executive leadership positions and expertise in clean and sustainable energy.
Class III directors, with a term expiring at the 2025 Annual Meeting of Stockholders
Class III directors, with a term expiring at the 2025 Annual Meeting of Stockholders Dr. Qichao Hu, 38, serves as the Company’s Chief Executive Officer (“CEO”) and Chairman of the Board. Dr. Hu has served as Founder, Chief Executive Officer and Director of SES since 2012. Dr. Hu is also a board member on the MIT Enterprise Forum Cambridge. Dr. Hu is recipient of MIT Technology Review’s “Innovators Under 35” and was named among the 2013 Forbes “30 Under 30.” Dr. Hu earned his PhD in Applied Physics from Harvard University, and his BS in Physics from MIT. We believe that Dr. Hu is qualified to serve both as a member of our management team and the Board because of his visionary leadership of SES from inception to date, his scientific and managerial expertise in the EV battery development industry, his innovative plans for SES’s future and his ability to execute on those plans. Brian Krzanich, 63, serves as a director of the Company, a position he has held since January 2024. From 2018 until 2022, Mr. Krzanich served as President and Chief Executive Officer of CDK Global, an automotive software provider. Prior to that, Mr. Krzanich served in a variety of roles at Intel Corporation since 1982, eventually ascending to the role of Chief Executive Officer, a position he held from 2013 to 2018. Mr. Krzanich previously served on the boards of Electric Last Mile Solutions, Inc. (Nasdaq: ELMS) from 2021 to 2022, Intel Corporation (Nasdaq: INTC) from 2013 to 2018 and Deere & Company (NYSE: DE) from 2016 to 2018. Mr. Krzanich holds a Bachelor’s Degree in Chemistry from San Jose State University. `We believe Mr. Krzanich is qualified to serve as a director on our Board because of his extensive leadership experience in the technology sector and his expertise in next-generation technologies.
Compensation Philosophy and Objectives
| ● | Pay for Performance. Align executive compensation with performance against our short-term and long-term company performance objectives by rewarding results that meet or exceed our growth and profitability goals. |
Compensation Philosophy and Objectives
| ● | Competitive Compensation. Set executive compensation at levels competitive with peer companies and consistent with market practice. |
Compensation Philosophy and Objectives
| ● | Stockholder Alignment. Align executive interests with those of our stockholders to create long-term value by rewarding our executives for their contributions to the Company. |
Compensation Governance
Compensation Governance Role of the Compensation Committee and Management Executive compensation and related decisions, including the strategic oversight of our compensation and benefit programs, are made by the Compensation Committee. The Compensation Committee is responsible for establishing and overseeing the overall compensation structure, policies and programs of the company and assessing whether our compensation structure resulted in appropriate compensation levels and incentives for the executive management of the company. The Compensation Committee works with the CEO and the CFO, who make recommendations consistent with the guidelines established by the Compensation Committee for each element of compensation for our executives. The Compensation Committee evaluates the total compensation packages for our executives after considering these recommendations and evaluating the competitive market for executive talent, the Company’s performance relative to its competitors and the past compensation paid to each of our executives. After considering such factors as the nature and responsibilities of each named executive officer’s position, the named executive officer’s experience, the Company’s achievement of corporate goals, the named executive officer’s achievement of individual goals and other relevant considerations, together with consideration of the executive compensation philosophy described above, the Compensation Committee sets the annual compensation of our named executive officers. The compensation for each of our named executive officers is set and recommended for adoption at meetings of the Compensation Committee generally held in the first half of each year. Role of the Compensation Consultant The Compensation Committee has engaged an independent compensation consultant, Mercer, to assist the Committee in evaluating the recommendations and guidance being provided in the development and creation of the executive compensation plan. Mercer regularly participates in the Compensation Committee meetings and provides guidance and advice to the Compensation Committee. The Compensation Committee has evaluated whether any work provided by Mercer raised any conflict of interest and determined that it did not. The Company has separately engaged Mercer as its compensation consultant to assist in the development of SES’s compensation strategy and to provide guidance in building the executive compensation structure. As part of this consulting arrangement, Mercer provides compensation market data, executive compensation guidance, recommendations on compensation structures, as well as ongoing guidance with performance based executive compensation programs. In February 2023 the Compensation Committee reviewed the existing peer group and potential changes to the peer group with the assistance of Mercer. As part of its review, with the assistance of Mercer, the Compensation Committee considered revenue and enterprise value, with a focus on technology and automotive and electronic equipment companies. After considering these factors, the Compensation Committee made the following changes to the peer group, including to remove companies that no longer fit the peer criteria or who had been acquired:
Compensation Governance
The newly constituted peer group was reviewed and approved by the Compensation Committee, was selected based on weighted parameters and the financial and other information discussed above and was intended to ensure that the Company remains within a reasonable range of the peer median (our “Fiscal 2023 Peer Group”).
Compensation Governance
| | Fiscal 2023 Peer Group | | | Amprius Technologies Inc. Blink Charging Co. Canoo Inc. Dragonfly Energy Holdings Corp. Enovix Corporation | Eos Energy Enterprises, Inc. Fisker Inc. FuelCell Energy, Inc. Hyliion Holdings Corp. Luminar Technologies, Inc. Microvast Holdings, Inc. | Navitas Semiconductor Corp. Nikola Corporation nLight, Inc. Quantumscape Corporation SiTime Corporation |
Components of Compensation
| ● | annual cash incentive opportunities; and |
Components of Compensation
The first component of our named executive officers’ compensation is base salary, which is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. The second component is an annual cash incentive opportunity, which is based on both individual performance of the named executive officer and the overall performance of SES, generally in accordance with performance milestones established by the Compensation Committee. The performance goals differ from executive to executive, and each executive’s target annual bonus opportunity is equal to a predetermined percentage of his or her base salary. These annual cash incentive opportunities are intended to link the pay of each named executive officer directly to the achievement of annual performance objectives. We believe this compensation component aligns the interests of our named executive officers with the interests of our stockholders in the pursuit of short- to medium-term performance that should create value for our stockholders. The third component is equity-based awards, which provide a long-term incentive component to the compensation packages of our named executive officers. The equity-based awards that we grant to our named executive officers align a portion of our named executive officers’ compensation to the interests of our investors and to each other, further reinforcing collaborative efforts for their mutual success. We believe that equity-based compensation also fosters a long-term commitment from our named executive officers to the Company and balances the shorter-term cash components of compensation that we provide. Base Salary We provide each named executive officer with a base salary for the services that the executive officer performs for us. This compensation component constitutes a stable element of compensation while other compensation elements are variable. Base salaries are reviewed annually and may be increased based on the individual performance of the named executive officer, company performance, any change in the executive’s position within our business, the scope of their responsibilities and market data. In April 2023, the Compensation Committee approved an increase in the base salary of Mr. Pilkington, our Chief Legal Officer, effective May 1, 2023, from $300,000 to $350,000, in order to recognize his performance and to align his base salary with the competitive marketplace. For fiscal 2023, the base salaries of our other named executive officers were the same as for fiscal 2022 and were as follows: for Dr. Hu, $530,000; for Ms. Nealis, $470,000; for Mr. Makharia, $505,000; and for Dr. Gan, $335,000. Annual Cash Incentive Program We maintain an Annual Incentive Plan (the “AIP”) for executive officers providing them the opportunity to receive competitive annual cash bonuses based on the achievement of short-term performance goals which we believe are critical to the creation of long-term stockholder value. Historically, the annual bonuses have covered performance from April 1 of one fiscal year until March 31 of the following fiscal year. Beginning in 2022, the Compensation Committee changed the performance period to align with our fiscal year ending on December 31 each year. Near the beginning of each year, the Compensation Committee selects the performance targets, target amounts, target award opportunities and other terms and conditions of annual cash incentive opportunities for the named executive officers, subject to the terms of their employment agreements. Following the end of each year, the Compensation Committee determines the extent to which the performance targets were achieved and the amount of the award that is payable to the named executive officers. The annual cash incentives may be paid in cash or equity at the discretion of the Compensation Committee. Cash Incentive Target Amounts. Under the AIP for fiscal 2023, each named executive officer’s annual target incentive opportunity was a percentage of their eligible base salary, that were targeted at a level that represented a meaningful portion of each named executive officer’s base salary and were competitive with our peers. The target awards as a percentage of salary were as follows: for Dr. Hu, 100%, for Ms. Nealis, 60%, for Mr. Pilkington, 50%, for Dr. Gan, 50%; and for Mr. Makharia, 60%. These target percentages were unchanged from fiscal 2022. Due to the payout of interim bonuses for performance in the period from January 1, 2023 through March 31, 2023 (as described below), the Compensation Committee determined that annual cash incentives for fiscal 2023 for named executive officers would be determined based on performance during the nine-month period from April 1, 2023 through December 31, 2023 and any amounts to be paid shall be pro-rated for this period of nine months. Key Performance Targets. The amount that each named executive officer was eligible to earn under the fiscal 2023 AIP was based 100% on such executive officer’s achievement against key performance targets. We undergo a rigorous process to ensure our targets are challenging, aligning management incentives with enhancement of long-term stockholder value. We believe that these high and demanding targets, when looked against the payouts, helped to maintain a solid and balanced incentive structure. The key performance targets are shown below.
Components of Compensation
Following its review of the achievement of the key performance targets listed above as of December 31, 2023, the Compensation Committee determined all of the key performance targets had been achieved, representing 100% of the key performance targets and therefore that the maximum payout percentage for any named executive officer for performance in fiscal 2023 would be 100% of their target incentive opportunity, pro-rated for the nine-month performance period from April 1, 2023 through December 31, 2023. AIP Payouts for Fiscal 2023. The Compensation Committee considered each named executive officer’s performance during the fiscal year against the pre-established individual key performance targets discussed above. Following this review, the Compensation Committee determined that each of Dr. Hu, Ms. Nealis Dr. Gan, and Mr. Pilkington achieved 100% of their respective key performance targets and that Mr. Makharia achieved 0% of his key performance targets (as responsibility for achieving Mr. Makharia’s key performance target was transferred to another employee prior to the end of 2023). Therefore, the Compensation Committee determined that the payout percentage earned for Dr. Hu was 100 percent, for Ms. Nealis was 100 percent, for Mr. Pilkington was 100 percent, for Dr. Gan was 100 percent, and for Mr. Makharia was 0 percent. Based on the performance results described above, Dr. Hu earned an AIP cash payout of $397,863 (based on the 100% performance factor earned), Ms. Nealis earned an AIP cash payout of $211,693 (based on the 100% performance factor earned), Mr. Pilkington earned an AIP cash payout of $131,370 (based on the 100% performance factor earned), Dr. Gan earned an AIP cash payout of $125,740 (based on the 100% performance factor earned). Mr. Makharia did not earn an AIP cash payout for fiscal 2023 as his performance did not meet the minimum threshold for his pre-established key performance targets. In addition, in view of the importance of certain of the key performance targets relating to battery development, 40% of which had not been achieved by the end of fiscal 2022, the Compensation Committee approved the opportunity for the Company’s named executive officers to achieve a special interim bonus for performance in the period from January 1, 2023 through March 31, 2023 based on the same key performance targets applicable for fiscal 2022 and the same target percentages of base salary, for the prorated three month period, as disclosed in our definitive proxy statement filed with the SEC on April 21, 2023 (the “2022 Proxy Statement”) under the section titled “Compensation Discussion and Analysis—Components of Compensation—Annual Cash Incentive Program.”. The Compensation Committee considered the eligibility of the named executive officers for a special bonus based on its review of achievement of these key performance targets as of March 31, 2023. Based on this review, the Compensation Committee approved a special interim bonus of $79,500 for Dr. Hu, $42,300 for Ms. Nealis, $34,088 for Mr. Makharia, $25,125 for Dr. Gan and $17,035 for Mr. Pilkington, (in each case, based on the 15% of the total fiscal 2022 performance factor earned). Equity Incentive Awards SES previously maintained the 2021 Share Incentive Plan (the “Old 2021 Plan”), which provided for the discretionary grant of incentive stock options, non-statutory stock options, and restricted share awards to eligible employees, officers, directors, consultants or advisors of SES, including the named executive officers. Following its approval by stockholders in the Business Combination Closing, the Company adopted the 2021 Incentive Award Plan (the “New 2021 Plan”). The New 2021 Plan enables the Company to grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, other share based awards and cash awards to directors, employees, consultants and advisors to improve the ability of the Company to attract and retain key personnel upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. While awards remain outstanding under the Old 2021 Plan, we stopped making grants under the Old 2021 Plan following the adoption of the New 2021 Plan. In fiscal 2023, each of the named executive officers were granted equity incentive awards under the New 2021 Plan. These awards are designed to align a portion of our named executive officers’ compensation with the interests of our existing stockholders and to build retention value by incentivizing our named executive officers to remain in our service. In April 2023, the Compensation Committee granted equity grants to each of our named executive officers under the New 2021 Plan. The grants are composed 50% of RSUs and 50% of PSUs, with the following aggregate grant date fair values: for Dr. Hu, $2,368,201; for Ms. Nealis, $592,050; for Mr. Makharia, $293,934; for Dr. Gan, $592,050 and for Mr. Pilkington, $473,640. Mr. Makharia forfeited the RSUs and PSUs granted to him in fiscal 2023 upon his departure from the Company in January 2024. These grant date fair values assume a payout of 100% of PSUs granted, which is the maximum amount that may be earned. The RSUs vest in three equal annual installments starting one year from the date of grant, subject to the executive officer’s continued service on each such vesting date. The PSUs vest in one installment following a three-year performance period from the date of grant, subject to the achievement of share price performance targets and the executive officer’s continued service on such vesting date. A specified percentage of the target number of PSUs will vest based on the average closing price of our shares of Class A Common Stock (the “Average Closing Price”) during any consecutive 100-calendar-day period within the three-year performance period (with the percentage vesting based on certain threshold Average Closing Prices (the “Share Price Thresholds”)), assuming that the Average Closing Price during the last 30-calendar-day period in the three-year performance period also exceeds the highest Share Price Threshold achieved during any 100-calendar-day period. Otherwise, the number of PSUs that vest at the end of the three-year performance period is based upon the Average Closing Price during the last 30 calendar days, using the same list of Share Price Thresholds. Any incremental shares of Class A Common Stock that do not vest based on the Average Closing Price in the last 30 calendar days, but would have vested based on the 100-calendar-day Average Closing Price, will subsequently be eligible to vest (subject to the executive officer’s continued service through the vesting date) if, at any point before the fifth anniversary of the grant date, the Average Closing Price during a 30-calendar-day period ends up exceeding the highest Share Price Threshold previously achieved during the 100-calendar-day period. The Share Price Thresholds are as follows: under $12.5, 0%; $12.5 or greater, 25%; $15 or greater, 50%; $17.5 or greater, 75%; and $20 or greater, 100%. Fiscal 2024 Compensation In addition, the Compensation Committee conducted its annual executive compensation review and approved the compensation of our named executive officers for the year. The Compensation Committee considered, among other factors, our corporate and stock price performance, our named executive officers’ individual performance, and market data provided by Mercer.
Components of Compensation
The Compensation Committee granted equity awards of 1,779,661 RSUs and 1,779,661 PSUs to Dr. Hu, 610,593 RSUs and 610,593 PSUs to Ms. Nealis, 423,728 RSUs and 423,728 PSUs to Dr. Gan and 338,983 RSUs and 338,983 PSUs to Mr. Pilkington for fiscal 2024, while using the same vesting schedule for the RSUs and the same Average Closing Price and Share Price Thresholds for the PSUs. Pension Benefits SES’s named executive officers did not in fiscal 2023 and currently do not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by SES. Nonqualified Deferred Compensation SES’s named executive officers did not in fiscal 2023 and currently do not participate in, or earn any benefits under, a non-qualified deferred compensation plan sponsored by SES. Retirement Plan SES maintains a qualified contributory retirement plan, established to qualify as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended. The plan covers all US-based employees, including SES’s named executive officers, who may contribute up to the maximum statutory limits imposed by the Internal Revenue Code (including in the fiscal year ended December 31, 2020). Beginning January 1, 2023, SES began providing matching contributions of up to 5% of pre-tax salary for all US-based employees under the 401(k) plan, including SES’s named executive officers. The amount of matching contributions provided to each named executive officer is set forth above in the Summary Compensation Table in the column entitled “All Other Compensation.” Other Benefits The health, safety and well-being of employees is paramount at SES. SES provided in fiscal 2023 and currently provides to all of its employees, including its named executive officers, certain broad-based benefits that are intended to attract and retain employees while providing them with health and welfare security. Other than the retirement plan discussed above, broad-based employee benefits include medical, dental and other benefits. In addition, for Dr. Hu, the Company reimburses his rental expenses for an apartment in Boston, Massachusetts and he is provided with a monthly allowance for a car in Boston, Massachusetts that can be used for both business and personal travel. During 2023, the Company also made a charitable donation in Dr. Hu’s name and reimbursed certain medical care costs. The actual amounts for 2023 are set forth above in the Summary Compensation Table in the column entitled “All Other Compensation.” We believe the benefits and perquisites described above are necessary and appropriate to provide a competitive compensation package to Dr. Hu. Severance Please see the section titled “Potential Payments Upon Termination or Change in Control” for more information regarding applicable compensatory provisions related to a termination or change in control. The compensation and benefits ultimately awarded in connection with a separation are determined at the discretion of the Compensation Committee and may be based on the executive, their position, nature of the potential separation and such executive’s compliance with any applicable post-termination restrictive covenants.
Compensation Risk Mitigation
Compensation Risk Mitigation Policy on Hedging and Pledging Pursuant to the Company’s Compliance with United States Federal Securities Laws Regarding Insider Trading: Security Trading Policy (the “Insider Trading Policy”), all directors, officers and employees of the Company, together with its subsidiaries and affiliates reported on a consolidated basis, are prohibited from entering into hedging, monetization transactions or similar arrangements with respect to Company securities, and, subject to limited exceptions that may be granted by the Company, all directors, officers and employees of the Company, together with its subsidiaries and affiliates reported on a consolidated basis, are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan. Claw-back Policy We maintain a robust compensation claw-back policy covering each of our executive officers. In August 2023, the Compensation Committee recommended and the Board approved amendments to the claw-back policy to align with new rules and regulations of the SEC and NYSE listing standards implementing Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Our claw-back policy covers each of our current and former executive officers. The policy provides that, subject to the limited exemptions provided by the NYSE rules, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the Compensation Committee must reasonably and promptly seek recovery of any cash- or equity-based incentive compensation (including vested and unvested equity) paid or awarded to the executive officer, to the extent that the compensation (i) was based on erroneous financial data and (ii) exceeded what would have been paid to the executive officer under the restatement. Recovery applies to any such excess cash- or equity-based bonus/other incentive compensation received by any covered executive officer, while he/she was an executive officer, on or after October 2, 2023 during the three completed fiscal years immediately preceding the date on which the Company determines an accounting restatement is required. For more information, see the full text of our claw-back policy, which is filed as Exhibit 97.1 to our Annual Report on Form 10-K. NEO Stock Ownership Guidelines and Share Retention Requirements Beginning in fiscal 2022, we adopted stock ownership guidelines intended to align further the interests of our NEOs with those of our stockholders. The guidelines require covered roles to hold our Class A Common Stock (including Class A Common Stock held in trust, by certain family members or in the Company’s 401(k) plan and stock underlying unvested RSUs, restricted stock awards and unvested or unearned PSUs or other performance stock awards, but excluding stock underlying options or stock appreciation rights) worth a value expressed as a multiple of their salary. For our CEO, the multiple is five times his annual base salary and for all other executive officers, the multiple is three times their annual base salary. Each of our NEOs is required to meet these ownership levels by five years after his or her initial designation as an executive officer of the Company (or, for those executive officers serving at the time of adoption of these ownership guidelines, within five years after such adoption). Until reaching the required ownership level, NEOs are required to retain at least 100% of the shares, net of applicable tax withholding and the payment of any exercise or purchase price (if applicable), received upon the vesting or settlement of equity awards or the exercise of stock options. As of April 1, 2024, all of our current NEOs had timely met the stock ownership requirement or were within the five-year grace period to come into compliance with it.
Summary Compensation Table
Summary Compensation Table The following table summarizes the compensation earned by each of our named executive officers for the fiscal years indicated.
Summary Compensation Table
| | | | | | | Non-Equity | | | | | | | | Stock | Option | Incentive Plan | All Other | | | Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Awards ($)(2) | Awards ($) | Compensation ($)(3) | Compensation ($)(4) | Total ($) | | Dr. Qichao Hu | | | | | | | | | | Founder, Chief Executive Officer and Director | 2023 | 530,000 | — | 2,368,201 | — | 477,363 | 152,488 | 3,528,052 | | | 2022 | 524,231 | — | 7,925,081 | — | 361,750 | 93,678 | 8,904,740 | | | 2021 | 328,333 | — | — | — | 166,667 | 184,446 | 679,446 | | Jing Nealis | | | | | | | | | | Chief Financial Officer | 2023 | 470,000 | — | 592,050 | — | 253,993 | 17,765 | 1,333,808 | | | 2022 | 466,154 | — | 3,170,024 | — | 195,450 | — | 3,831,628 | | | 2021 | 289,423 | 150,000 | 7,480,000 | 112,809 | 78,750 | 100,000 | 8,120,982 | | Rohit Makharia | | | | | | | | | | Former Chief Operating Officer | 2023 | 505,000 | — | 293,934 | — | 34,088 | 19,854 | 852,876 | | | 2022 | 499,231 | — | — | — | 160,725 | — | 659,956 | | | 2021 | 275,000 | 150,000 | — | 674,170 | 73,125 | 156,448 | 1,328,743 | | Dr. Hong Gan | | | | | | | | | | Chief Science Officer | 2023 | 335,000 | — | 592,050 | — | 150,865 | 11,747 | 1,089,662 | | | 2022 | 333,077 | — | 3,962,533 | — | 121,125 | — | 4,416,735 | | Kyle Pilkington | | | | | | | | | | Chief Legal Officer | 2023 | 338,462 | — | 473,640 | — | 148,405 | 17,027 | 977,534 |
Summary Compensation Table
| (1) The amount reflects the named executive officer’s base salary earned during fiscal 2023. |
Summary Compensation Table
| (2) Amount represents the aggregate grant date fair value of the applicable equity awards made to the named executive officer computed in accordance with Financial Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“FASB ASC Topic 718”). $1,882,845, $470,711, $233,265, $470,711, and $376,569 represent the grant date fair value of all RSU awards to each of Dr. Hu, Ms. Nealis, Mr. Makharia, Dr. Gan and Mr. Pilkington, respectively, which are calculated in accordance with the accounting standards for share-based compensation using SES’s closing stock price on the date of grant. Each RSU represents the right to receive one share of Common Stock upon vesting. The “Stock Awards” column above also reflects the $485,356, $121,339, $60,670, $121,339, and $97,071 grant date fair values of the target number of PSUs for each of Dr. Hu, Ms. Nealis, Mr. Makharia, Dr. Gan and Mr. Pilkington, respectively, that are subject to the achievement of certain Class A Common Stock price milestones and the executive officer’s continued service with the Company through the vesting date, which for accounting purposes is based on the probable outcome (determined as of the grant date) of the performance-based condition applicable to the grant, determined by using a Monte Carlo valuation model. Assuming the maximum level of performance achievement for the PSUs, which is 100% of the target number of PSUs granted, the aggregate values of PSUs for our named executive officers in 2023 would be $16,736,400, $4,184,100, $2,092,060, $4,184,100, and $3,347,280 for each of Dr. Hu, Ms. Nealis, Mr. Makharia, Dr. Gan and Mr. Pilkington, respectively. The assumptions made when calculating the amounts are found in Note 17 to the consolidated audited financial statements for the year ended December 31, 2023. For more information on the Company’s annual cash bonus determinations, see the section titled “Compensation Discussion and Analysis—Components of Compensation—Equity Incentive Awards.” See also “Grants of Plan-Based Awards in Fiscal 2023” for information on awards reported in these columns. |
Summary Compensation Table
| (3) Amount reflects (i) in the case of Dr. Hu, a $79,500 performance bonus for performance from January 1, 2023 to March 31, 2023 and a $397,863 annual performance bonus for the period from April 1, 2023 to December 31, 2023; (ii) in the case of Ms. Nealis, a $42,300 performance bonus for performance from January 1, 2023 to March 31, 2023 and a $211,693 annual performance bonus for the period from April 1, 2023 to December 31, 2023; (iii) in the case of Mr. Makharia, a $34,088 performance bonus for performance from January 1, 2023 to March 31, 2023; (iv) in the case of Dr. Gan, a $25,125 performance bonus for performance from January 1, 2023 to March 31, 2023, and a $125,740 annual performance bonus for the period from April 1, 2023 to December 31, 2023; and (v) in the case of Mr. Pilkington, a $17,035 performance bonus for performance from January 1, 2023 to March 31, 2023 and a $131,370 annual performance bonus for the period from April 1, 2023 through December 31, 2023. For more information on the Company’s annual cash bonus determinations, see the section titled “Compensation Discussion and Analysis—Components of Compensation—Annual Cash Incentive Program.” See also “Grants of Plan-Based Awards in fiscal 2023” for information on the amounts reported in these columns. |
Summary Compensation Table
| (4) The amounts reported in the “All Other Compensation” column for fiscal 2023 reflect, for Dr. Hu, reimbursement of rent expenses for an apartment in Boston, Massachusetts (in the amount of $97,553), 401(k) matching contributions of $17,519, a charitable donation of $25,000 made by the Company in Dr. Hu’s name, and the remainder was for an allowance for a personal use of a car and reimbursed medical care costs; for Ms. Nealis, 401(k) matching contributions of $17,765; for Mr. Makharia, 401(k) marching contributions of $19,854 for Dr. Gan, 401(k) matching contributions of $11,747, and, for Mr. Pilkington, 401(k) matching contributions of $17,027 . For more information, see the section titled “Compensation Discussion and Analysis—Components of Compensation—Other Benefits.” |
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023 The following table provides information relating to awards granted under the AIP and time- and performance-based awards of our Class A Common Stock granted during fiscal 2023.
Grants of Plan-Based Awards in Fiscal 2023
| | | Estimated Future | | | Estimated Future | | | All Other | | | | | Payouts Under Non-Equity | | | Payouts Under Equity | | | Stock Awards: | Grant Date Fair | | | Grant | Incentive Plan Awards(1) | | | Incentive Plan Awards(2) | | | Number of Shares | Value of Stock and | | Name | Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | or Units(3) (#) | Option Awards ($)(4) | | Dr. Qichao Hu | 4/14/2023 | — | 530,000 | — | | | | | | | | 4/14/2023 | | | | 83,682 | 418,410 | 836,820 | | 485,356 | | | 4/14/2023 | | | | | | | 836,820 | 1,882,845 | | Jing Nealis | 4/14/2023 | — | 282,000 | — | | | | | | | | 4/14/2023 | | | | 20,921 | 104,603 | 209,205 | | 121,339 | | | 4/14/2023 | | | | | | | 209,205 | 470,711 | | Rohit Makharia(5) | 4/14/2023 | — | 303,000 | — | | | | | | | | 4/17/2023 | | | | 10,460 | 52,302 | 104,603 | | 60,670 | | | 4/17/2023 | | | | | | | 104,603 | 233,265 | | Dr. Hong Gan | 4/14/2023 | — | 167,500 | — | | | | | | | | 4/14/2023 | | | | 20,921 | 104,603 | 209,205 | | 121,339 | | | 4/14/2023 | | | | | | | 209,205 | 470,711 | | Kyle Pilkington | 4/14/2023 | — | 150,000 | — | | | | | | | | 4/14/2023 | | | | 16,736 | 83,682 | 167,364 | | 97,071 | | | 4/14/2023 | | | | | | | 167,364 | 376,569 |
Grants of Plan-Based Awards in Fiscal 2023
| (1) The amounts reported in these columns reflect the annual cash incentive award opportunity under the AIP for fiscal 2023, the terms of which are summarized under “Compensation Discussion and Analysis—Annual Cash Incentive Program.” There are no threshold or maximum levels for these awards. For more information on the Company’s annual cash bonus determinations, see the section titled “Compensation Discussion and Analysis—Annual Cash Incentive Program.” |
Grants of Plan-Based Awards in Fiscal 2023
| (2) These columns report the number of PSUs that may be earned pursuant to the awards originally granted under the New 2021 Plan. The amounts reflect threshold (10%) and maximum (100%) performance levels. Additionally, while the PSUs do not have a target amount, as they may be earned at various increments, the target column shows the number of PSUs that would be earned at the 50% performance level. The PSUs vest in one installment following a three-year performance period commencing on the date of grant, subject to the achievement of certain Class A Common Stock price milestones and the executive officer’s continued service with the Company through the vesting date. For more information regarding these PSUs, see the section titled “Compensation Discussion and Analysis—Components of Compensation—Equity Incentive Awards.” |
Grants of Plan-Based Awards in Fiscal 2023
| (3) This column reports the number of RSUs that may be earned pursuant to the awards originally granted under the New 2021 Plan. The RSUs vest in three equal annual installments starting one year from the date of grant, subject to the executive officer’s continued service on each such vesting date. For additional information regarding these RSUs, see the section titled “Compensation Discussion and Analysis—Equity Incentive Awards.” |
Grants of Plan-Based Awards in Fiscal 2023
| (4) The amounts in this column represents the aggregate grant date fair value of stock awards granted during fiscal 2023, computed in accordance with the FASB ASC Topic 718, without taking into account estimated forfeitures. The grant date fair value of RSU awards is calculated in accordance with the accounting standards for share-based compensation using SES’s closing stock price on the date of grant. The grant date fair value of PSU awards is calculated based on the probable outcome (determined as of the grant date) of the performance-based condition applicable to the grant, determined by using a Monte Carlo valuation model. The assumptions made when calculating the amounts are found in Note 17 to the consolidated audited financial statements for the year ended December 31, 2023. The holder of the RSU and PSU award does not have any voting, dividend or other ownership rights in the shares of Class A Common Stock subject to the award, unless and until the award vests and the shares are issued. |
Grants of Plan-Based Awards in Fiscal 2023
| (5) Mr. Makharia separated from the Company effective January 26, 2024 and forfeited all RSUs and PSUs granted in fiscal 2023. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table provides information regarding outstanding equity awards held by each of our named executive officers as of December 31, 2023
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Option Awards | | | | | | Stock Awards | | | | | | | | | | | | | | | Equity | | | | | | | | | | | | Incentive | | | | | | | | | | | Equity | Plan | | | | | | | | | | | Incentive | Awards: | | | | | | | | | | | Plan | Market or | | | | | | Equity | | | | | Awards: | Payout | | | | | | Incentive | | | | | Number of | Value of | | | | | | Plan | | | | | Unearned | Unearned | | | | | | Awards: | | | Number | Market | Shares, | Shares, | | | | Number of | Number of | Number | | | of Shares | Value of | Units or | Units or | | | | Securities | Securities | of Securities | | | or Units | Shares or | Other | Other | | | | Underlying | Underlying | Underlying | | | of Stock | Units of | Rights | Rights | | | | Unexercised | Unexercised | Unexercised | Option | Option | That Have | Stock That | That Have | That Have | | | Grant | Options (#) | Options (#) | Unearned | Exercise | Expiration | Not | Have Not | Not | Not | | Name | Date | Exercisable | Unexercisable | Options (#) | Price ($) | Date | Vested (#) | Vested ($)(1) | Vested (#)(2) | Vested ($)(1) | | Dr. Qichao Hu | 4/1/2020(3) | 91,554 | | | 0.14 | 3/31/2030 | | | | | | | 2/3/2022(4) | | | | | | | | 9,182 | 16,803 | | | 4/18/2022(5) | | | | | | 372,441 | 681,567 | | | | | 4/18/2022(6) | | | | | | | | — | — | | | 4/14/2023(5) | | | | | | 836,820 | 1,531,381 | | | | | 4/14/2023(6) | | | | | | | | — | — | | Jing Nealis | 2/10/2021(7) | 840,476 | 346,079 | 346,079 | 0.16 | 2/10/2031 | | | | | | | 8/16/2021(8) | | | | | | 617,998 | 1,130,936 | | | | | 2/3/2022(4) | | | | | | | | 267,755 | 489,992 | | | 4/18/2022(5) | | | | | | 148,976 | 272,626 | | | | | 4/18/2022(6) | | | | | | | | — | — | | | 4/14/2023(5) | | | | | | 209,205 | 382,845 | | | | | 4/14/2023(6) | | | | | | | | — | — | | Rohit Makharia | 3/1/2021(7)(9) | 3,964,713 | 2,215,963 | 2,215,963 | 0.16 | 3/1/2031 | | | | | | | 2/3/2022(4) | | | | | | | | 711,180 | 2,240,217 | | | 4/17/2023(5) | | | | | | 104,603 | 191,423 | | | | | 4/17/2023(6) | | | | | | | | — | — | | Dr. Hong Gan | 3/14/2019(7) | 418,277 | | | 0.15 | 3/14/2029 | | | | | | | 2/10/2021(7) | 840,476 | 346,079 | 346,079 | 0.16 | 2/10/2031 | | | | | | | 2/3/2022(4) | | | | | | | | 186,950 | 342,119 | | | 4/18/2022(5) | | | | | | 186,220 | 340,783 | | | | | 4/18/2022(6) | | | | | | | | — | — | | | 4/14/2023(5) | | | | | | 209,205 | 382,845 | | | | | 4/14/2023(6) | | | | | | | | — | — | | Kyle Pilkington | 4/18/2022(5) | | | | | | 20,111 | 36,803 | | | | | 8/8/2022(5) | | | | | | 24,539 | 44,906 | | | | | 4/14/2023(5) | | | | | | 167,364 | 306,276 | | | | | 4/14/2023(6) | | | | | | | | — | — |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Based on the closing market price of the Company’s Class A Common Stock on December 29, 2023 of $1.83. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) For more information, see footnote 2 to “Grants of Plan-Based Awards in Fiscal 2023” and “Compensation Discussion and Analysis—Components of Compensation—Equity Incentive Awards.” |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) Reflects stock options that were granted under the Company’s 2018 Share Incentive Plan (the “2018 Plan”) to compensate grantees, including Dr. Hu, for COVID-19-related salary cuts. The stock options became fully vested on the date of grant. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (4) Reflects the right to receive earn-out shares of Class A Common Stock (the “Earn-Out Restricted Shares”) pursuant to the Business Combination Agreement (the “Business Combination Agreement”) by and among Ivanhoe Capital Acquisition Corp., Wormhole Merger Sub Pte. Ltd. and SES Holdings Pte. Ltd. The Earn-Out Restricted Shares were placed into escrow at the closing of the Business Combination Agreement on February 3, 2022 (the “Closing”) and will vest on the date that the closing price of the shares of the Class A common stock equals or exceeds $18.00 during the period beginning on the date that is one year following the Closing and ending on the date that is five years following |
Outstanding Equity Awards at 2023 Fiscal Year-End
| the Closing. The vesting of the Earn-Out Restricted Shares is also subject to the executive officer’s continued service on the vesting date. For more information regarding the vesting of the Earn-Out Restricted Shares, see Note 2 to the consolidated audited financial statements for the year ended December 31, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5) Reflects RSUs that were granted pursuant to the 2021 Plan. The RSUs will vest, and an equal number of shares of Class A Common Stock will be deliverable, in three equal installments on the first, second and third anniversaries of the grant date, subject to the executive officer’s continued employment or service through each applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6) Reflects, with respect to the PSUs that were granted pursuant to the 2021 Plan in April 2022 and April 2023, an outstanding amount of zero PSUs, because as of December 31, 2023, the minimum stock price milestones required for any portion of such PSUs to vest had not been met. The PSUs granted in each of 2022 and 2023 vest in one installment following the end of a three-year period (the "Initial Performance Period") commencing on the grant date, subject to the achievement of certain Class A Common Stock price milestones and the executive officer’s continued employment or service through such date. If following the applicable Initial Performance Period there are PSUs that have not vested, then such PSUs remain eligible to vest in an additional installment following the end of a five-year period commencing on the grant date, subject to the achievement of certain Class A Common Stock price milestones and the reporting person’s continued employment or service through such date. For more information regarding the PSUs granted in 2023, including the stock price milestones, see the section titled “Compensation Discussion and Analysis—Equity Incentive Awards.” The PSUs granted in 2022 have the same vesting terms as the PSUs granted in 2023, except that they have the following stock price milestones: under $12.5, 0%; $12.5 or greater, 10%; $15 or greater, 20%; $17.5 or greater, 30%; $20 or greater, 40%; $22.5 or greater, 50%; $25 or greater, 60%; $27.5 or greater, 70%; $30 or greater, 80%; $32.5 or greater, 90%; and $35 or greater, 100%. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7) Reflects time-based stock options that were granted under the 2018 Plan and vest 25% on the first anniversary of the grant date and in equal monthly installments over the following 36 months. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (8) Reflects a restricted share award that was granted under the 2021 Plan and vests 25% on the first anniversary of the grant date and in equal monthly installments over the following 36 months. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (9) Upon Mr. Makharia’s separation from the Company effective January 26, 2024, 1,034,116 stock options accelerated and became fully vested with an expiration date of December 31, 2024. |
Option Exercises and Stock Vested in Fiscal 2023
Option Exercises and Stock Vested in Fiscal 2023 The following table provides information regarding the exercise of option awards and vesting of equity awards for each of our named executive officers during fiscal 2023.
Option Exercises and Stock Vested in Fiscal 2023
| | Option Awards | | Stock Awards | | | | Number of | | Number of Shares | Value | | | Shares Acquired on | Value Realized on | Acquired on | Realized on | | Name | Exercise (#) | Exercise (1) ($) | Vesting (#) | Vesting(2) ($) | | Dr. Qichao Hu | — | — | 186,218 | 389,196 | | Jing Nealis | — | — | 445,285 | 1,054,245 | | Rohit Makharia | 495,810 | 971,521 | — | — | | Dr. Hong Gan | 175,000 | 347,250 | 93,109 | 194,598 | | Kyle Pilkington | — | — | 22,326 | 53,410 |
Option Exercises and Stock Vested in Fiscal 2023
| (1) The value realized on the exercise of a stock option is calculated by multiplying the number of shares underlying the stock option exercised by the difference between (i) the closing price of our Class A Common Stock on the exercise date and (ii) the exercise price of the stock option, and does not necessarily reflect actual proceeds received. |
Option Exercises and Stock Vested in Fiscal 2023
| (2) Based on the closing market price of the Company’s Class A Common Stock on each applicable vesting date. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The following summaries and table describe and quantify the potential payments and benefits that the Company would provide to our named executive officers in connection with their termination of employment and/or change in control. In determining amounts payable, we have assumed in all cases that the terms of the executive’s current equity award and any employment agreements with us were in effect on, and the termination of employment and/or change in control occurred on, December 29, 2023, the last business day of fiscal 2023.
Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO, Dr. Qichao Hu, to the annual total compensation of our median employee. The 2023 annual total compensation of our CEO is $3,528,052, the 2023 annual total compensation of our median compensated employee is approximately $87,354, and the ratio of these amounts is 40 to 1. For purposes of identifying our median compensated employee, we used our global employee population as of December 31, 2023. Our methodology in calculating the annual total compensation for employees (other than our CEO) included the following compensation components: salary, cash bonus, the grant date fair value of equity grants, if applicable, and 401(k) plan (employer’s portion for employees in the U.S.) and retirement benefits (for employees outside the U.S.). In identifying the median employee and determining total compensation or any elements of total compensation, we did not make any cost-of-living adjustments or any other material assumptions, adjustments or estimates, except as otherwise disclosed herein. This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Act and based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to our pay ratio as disclosed above.
PAY VERSUS PERFORMANCE(1)
PAY VERSUS PERFORMANCE(1) The following table provides information required by Item 402(v) of Regulation S-K. For information regarding the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”
PAY VERSUS PERFORMANCE(1)
| | Summary | | Average Summary | | Value of Initial Fixed $100 | | | | | | Compensation | Compensation | Compensation | Average Compensation | Investment Based On(6): | | Net Income | | | | Table Total | Actually Paid | Table Total for | Actually Paid to | | Peer Group | (Loss) | Company-Selected | | Year | for CEO(2) | to CEO(4) | Non-CEO NEOs(3) | Non-CEO NEOs(5) | TSR | TSR(7) | (in thousands) | Measure(8) | | 2023 | $3,528,052 | $2,933,023 | $1,063,470 | $(1,494,452) | $18 | $31 | (53,400) | | | 2022 | 8,904,740 | 4,499,211 | 3,319,548 | 5,627,953 | 44 | 54 | (50,993) | |
PAY VERSUS PERFORMANCE(1)
| (1) On January 11, 2021, the Company consummated its IPO and on February 3, 2022, the Business Combination closed. None of IVAN’s executive officers received any compensation for services rendered to IVAN prior to the Business Combination Closing. |
PAY VERSUS PERFORMANCE(1)
| (2) Dr. Hu was our CEO for 2023 and 2022. Amounts presented reflect compensation paid to Dr. Hu during fiscal 2023 and fiscal 2022, as applicable. |
PAY VERSUS PERFORMANCE(1)
| (3) During 2023, our non-CEO named executive officers consisted of Ms. Nealis, Mr. Makharia, Mr. Son, Dr. Gan and Mr. Pilkington. During 2022, our non-CEO named executive officers consisted of Ms. Nealis, Mr. Makharia, Mr. Yongkyu Son, Dr. Gan and Ms. Joanne Ban. Amounts presented reflect the average of the total compensation paid to our non-CEO named executive officers during the applicable fiscal year. |
PAY VERSUS PERFORMANCE(1)
| (4) Compensation “actually paid” is calculated in accordance with Item 402(v) of Regulation S-K. The table below sets forth each adjustment made during fiscal 2023 presented in the table to calculate the compensation “actually paid” to our CEO during fiscal 2023 in the table: |
PAY VERSUS PERFORMANCE(1)
| Adjustments to Determine Compensation “Actually Paid” for CEO | 2023 | | Equity Awards | | | Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | (2,368,201) | | Fair value of awards granted during year that remain outstanding as of covered year end | 3,062,761 | | Increase (decrease) for fair value of awards granted during year that vested during covered year | — | | Increase (decrease) for change in fair value from prior year-end to covered year-end of awards granted prior to covered year that were outstanding and unvested as of year-end | (1,241,172) | | Increase (decrease) for change in fair value from prior year-end to vesting date of awards granted prior to covered year that vested during covered year | (48,417) |
PAY VERSUS PERFORMANCE(1)
| Increase (decrease) of fair value of awards granted prior to covered year that were forfeited during covered year | — | | Increase (decrease) based upon incremental fair value of awards modified during year | — | | Total Adjustments | (595,028) |
PAY VERSUS PERFORMANCE(1)
| (5) Compensation “actually paid” is calculated in accordance with Item 402(v) of Regulation S-K. The table below sets forth each adjustment made during each year presented in the table to calculate the compensation “actually paid” to our non-CEO named executive officers during the applicable fiscal year in the table: |
PAY VERSUS PERFORMANCE(1)
| Adjustments to Determine Compensation “Actually Paid” for Non-CEO NEOs | 2023 | | Equity Awards | | | Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | (487,919) | | Increase for fair value of awards granted during year that remain outstanding as of covered year end | 631,695 | | Increase for fair value of awards granted during year that vested during covered year | — | | Increase (decrease) for change in fair value from prior year-end to covered year-end of awards granted prior to covered year that were outstanding and unvested as of year-end | (1,839,632) | | Increase (decrease) for change in fair value from prior year-end to vesting date of awards granted prior to covered year that vested during covered year | (862,066) | | Deduction of fair value of awards granted prior to covered year that were forfeited during covered year | — | | Increase based upon incremental fair value of awards modified during year | — | | Total Adjustments | (2,557,922) |
PAY VERSUS PERFORMANCE(1)
(6) Assumes $100 invested in our common shares on December 31, 2021, and reinvestment of all dividends. Total shareholder return is cumulative for the measurement periods beginning on December 31, 2021 and ending on December 31 of each of 2023 and 2022, respectively. (7) The peer group used by the Company consists of our Fiscal 2023 Peer Group discussed above under “Executive Compensation – Compensation Governance – Role of the Compensation Consultant.” Assumes $100 invested in our Fiscal 2023 Peer Group on December 31, 2022, and reinvestment of all dividends. The peer group used by the Company for fiscal 2022 consisted of our Fiscal 2022 Peer Group discussed in our 2022 Proxy Statement under “Executive Compensation – Compensation Governance – Role of the Compensation Consultant.” The Compensation Committee approved changes to the peer group in fiscal 2023 due to certain companies in the peer group from fiscal 2022. See discussion above under “Executive Compensation – Compensation Governance – Role of the Compensation Consultant” regarding the reasons for the changes to our peer group in 2023 compared to 2022. (8) SES does not use any financial performance measures other than its own stock price performance in setting the compensation of its CEO or for its non-CEO named executive officers.
Relationship between Compensation Actually Paid and Performance Measures
Relationship between Compensation Actually Paid and Performance Measures As discussed in more detail in the Compensation Discussion and Analysis, our executive compensation program prioritizes stock-based compensation that vests over time or that vests, if at all, based on predetermined increases in our stock price. Accordingly, we do not tie our cash or equity compensation to one or more financial performance goals, and instead we focus on long-term shareholder value that is realized by our stock price appreciation. We also provide incentive based compensation that is tied to key performance targets that are operational and not financial in nature. As an early-stage growth company in the pre-commercialization stage of development that has not generated any revenue from sales to customers to date and has only generated net losses, we do not view our net income (loss) as a meaningful measure of our performance that is relevant to our executive compensation program. For fiscal 2023, the compensation actually paid to our CEO was $2,933,023, the average compensation actually paid to our Non-CEO NEOs was $(1,494,452), and our Net Income (Loss) for fiscal 2023 was $(53,400) (in thousands). The TSR of our stock was $18 and the TSR of our Fiscal 2023 Peer Group was $31, assuming $100 invested in our stock and the stock of our Fiscal 2023 Peer Group occurred on December 31, 2021, and the reinvestment of all dividends and is cumulative for the measurement period ending on December 31, 2023. The TSR of the Fiscal 2022 Peer Group was $38, assuming $100 was invested on December 31, 2021, and reinvestment of all dividends and is cumulative for the measurement period ending on December 31, 2023. For fiscal 2022, the compensation actually paid to our CEO was $4,499,211, the average compensation actually paid to our Non-CEO NEOs was $5,627,953, and our Net Income (Loss) for fiscal 2022 was $(50,993) (in thousands). The TSR of our stock was $44 and the TSR of our Fiscal 2022 Peer Group was $54, assuming $100 invested in our stock and the stock of our Fiscal 2022 Peer Group occurred on December 31, 2021, and the reinvestment of all dividends, for the measurement period ending on December 31, 2022. As a result of our share price performance during fiscal 2023 and 2022, which declined and was also lower than our Fiscal 2023 Peer Group and Fiscal 2022 Peer Group, respectively, the compensation actually paid to our named executive officers was relatively limited.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Our Non-Employee Director Compensation Program, approved by the Board in March 2022, provides for the following compensation in accordance with industry practice and standards:
DIRECTOR COMPENSATION
| ● | An annual cash fee of $45,000, with supplemental cash fees of (i) $10,000, $7,500 and $5,000 for non-Chairperson members of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee, respectively, (ii) $22,500, $15,000 and $15,000 for the Chairpersons of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee respectively and (iii) $20,000 for the Lead Director. Cash fees will be paid quarterly, with a pro rata fee applicable to service for less than a whole quarter. Additionally, if the Chairperson of our Board is a non-employee director, he/she will receive an additional $50,000 annually. |
DIRECTOR COMPENSATION
| ● | Annual equity grant of RSUs with an award value of $150,000 starting in the second year of board service, and initial equity grant of restricted stock units with an award value of $300,000. All such RSUs will vest, vesting fully in one installment one year after the grant date subject to the director’s continued service on such vesting date. |
DIRECTOR COMPENSATION
The Compensation Committee recommends to the Board the annual compensation to be paid to the directors of our Board and may, in its discretion, revise or replace the compensation program described above. The Company reimburses each director for any reasonable transportation and lodging expenses actually incurred to attend meetings of our board or committees. The following table sets forth the total compensation paid to each of our non-employee directors who served during fiscal 2023 for service on the Board during that period. Mr. Krzanich is not included because he joined the Board in January 2024.
DIRECTOR COMPENSATION
| | Fee Earned or Paid | Stock | | | Name(1) | in Cash ($) | Awards($)(2) | Total ($) | | Dr. Jang Wook Choi | $45,000 | $141,215 | $186,215 | | Robert Friedland(3) | $9,315 | $— | $9,315 | | Anirvan Coomer(4) | $— | $— | $— | | Kent Helfrich(4) | $— | $— | $— | | Eric Luo | $80,000 | $141,215 | $221,215 | | Dr. Jiong Ma | $95,000 | $141,215 | $236,215 | | Michael Noonen | $63,100 | $141,215 | $204,315 |
DIRECTOR COMPENSATION
| (1) Represents all non-employee directors who served on our Board during fiscal 2023. Dr. Qichao Hu, our Founder and Chief Executive Officer, does not receive any additional compensation for his service as a director. |
DIRECTOR COMPENSATION
| (2) The amounts in this column represents the aggregate grant date fair value of RSUs granted during each of the years presented, computed in accordance with FASB ASC Topic 718, without taking into account estimated forfeitures. The |
DIRECTOR COMPENSATION
| assumptions made when calculating the amounts are found in Note 17 to the consolidated audited financial statements for the year ended December 31, 2023. |
DIRECTOR COMPENSATION
| (3) Because Mr. Friedland resigned from our Board effective March 15, 2023, his cash fees reflect a prorated amount through that date. |
DIRECTOR COMPENSATION
| (4) Mr. Helfrich and his successor Mr. Coomer, who are each affiliated with GM Ventures, elected to forgo all of their compensation for Fiscal 2023. |
DIRECTOR COMPENSATION
The below table lists all outstanding equity awards held by our non-employee directors as of December 31, 2023.
DIRECTOR COMPENSATION
| Name | Stock Awards(1) | | Dr. Jang Wook Choi | 62,762 | | Anirvan Coomer | — | | Eric Luo | 62,762 | | Dr. Jiong Ma | 62,762 | | Michael Noonen | 62,762 |
DIRECTOR COMPENSATION
| (1) Includes RSUs unvested as of December 31, 2023. The RSUs were granted to each non-employee director on April 14, 2023 and vest in full on the first anniversary of the grant date, subject to the director’s continued service through such vesting date. |
DIRECTOR COMPENSATION
Regarding the two directors included in the first table above who left the Board in 2023, Mr. Friedland’s unvested RSUs were cancelled on March 15, 2023 when he retired as a director, and Mr. Helfrich had no outstanding equity awards upon his departure because, as discussed above, he elected to forgo all of his compensation for Fiscal 2023.
2024 Director Compensation
2024 Director Compensation In February 2024, upon the recommendation of the Compensation Committee, the Board approved amendments to the Non-Employee Director Compensation Program which increase the annual cash fee to $50,000, the annual equity grant of RSUs to an award value of $160,000 starting in the second year of board service and an initial equity grant of RSUs with an award value of $320,000. All other aspects of the Non-Employee Director Compensation Program remained unchanged. These changes will be effective after the 2024 annual meeting of stockholders of the Company.