DEF 14A of Navitas Semiconductor Corp
Filed Apr 26, 2024 · FY20230001821769-24-000052
NAVITAS SEMICONDUCTOR CORPORATION
| CONTENTS | | | Notice of Annual Stockholders’ Meeting and Proxy Statement | | | PROXY STATEMENT | | | MEETING AND VOTING INFORMATION | | | Proposals to be Presented at the Meeting | 1 | | How to Vote | 2 | | Your Proxy Can Be Revoked | 2 | | Voting Rights of Stockholders | 3 | | CORPORATE GOVERNANCE | | | Board Structure and Directors’ Terms of Office | 5 | | Biographical Information for Directors | 6 | | Director Independence | 8 | | Code of Business Conduct and Ethics | 8 | | Board Leadership Structure and Role in Risk Oversight | 8 | | Restrictions on Hedging, Short Sales and Speculative Transactions | 9 | | Insider Trading Policy | 9 | | Policies Related to Granting Equity Awards in Proximity to Material Disclosures | 9 | | Communications with Directors | 10 | | Board Meetings and Committees | 10 | | Oversight of Sustainability Initiatives | 12 | | Board Diversity | 13 | | Stockholder Recommendations for Director Nominees | 13 | | Proposal 1 - Election of Class III Directors | 14 | | EXECUTIVE OFFICERS | | | Biographical Information | 15 | | EXECUTIVE AND DIRECTOR COMPENSATION | | | 2023 Summary and Highlights | 16 | | Summary Compensation Table | 17 | | Employment Arrangements with Named Executive Officers | 17 | | Annual Incentive Bonus | 18 | | Executive Severance Plan | 18 | | Outstanding Equity Awards at Fiscal Year End | 20 | | Long-Term Incentive Performance Awards to Executive Officers | 21 | | Pay Versus Performance | 23 | | Director Compensation | 25 | | Equity Compensation Plan Information | 26 | | Proposal 2 - Advisory Vote on Executive Compensation (“Say-On-Pay”) | 27 | | Proposal 3 - Advisory Vote on Frequency of Future Say-On-Pay Votes (“Say-When-On-Pay”) | 28 | | BENEFICIAL OWNERSHIP BY DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS | 29 | | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 31 | | Related Persons Transaction Policy | 36 | | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | Auditor Fees | 37 |
Class III Directors Nominated for Reelection for Terms Expiring at the 2027 Annual Stockholders’ Meeting
Class III Directors Nominated for Reelection for Terms Expiring at the 2027 Annual Stockholders’ Meeting Richard J. Hendrix. Mr. Hendrix is a Class III member of our board whose term of office as a director is scheduled to expire at the upcoming 2024 annual stockholders’ meeting. Mr. Hendrix has been a member of our board, chair of the audit committee and a member of the compensation committee since October 2021. He served as chief executive officer and a member of the board of directors of the registrant (then named Live Oak Acquisition Corp. II) from August 2020 to the closing of the Business Combination in October 2021. Mr. Hendrix has been operating executive for Crestview Advisors, a middle market focused private equity firm, since 2017. From January 2020 to December 2020, Mr. Hendrix served as an officer and director of Live Oak Acquisition Corp., a blank check company that consummated a business combination with Meredian Holdings Group, Inc., which was renamed Danimer Scientific, Inc. at the closing of the business combination. Mr. Hendrix continues to serve as a director of Danimer Scientific, Inc. From January 2021 to March 2023, Mr. Hendrix was chief executive officer and a member of the board of directors of Live Oak Mobility Acquisition Corp., a blank check company that redeemed all of its outstanding public shares in March 2023. From February 2021 to November 2023, Mr. Hendrix was chief executive officer and a director of Live Oak Crestview Climate Acquisition Corp., a blank check company which redeemed its shares in 2023. Mr. Hendrix previously was an executive at FBR & Co., a capital markets firm, in a variety of roles from 1999 to 2008 and as chief executive officer from 2009 to FBR’s sale in 2017, including serving as chairman from 2012 to 2017. Prior to FBR, Mr. Hendrix was a Managing Director in PNC Capital Markets’ investment banking group and headed PNC’s asset-backed securities business. Mr. Hendrix received his B.S. in Finance from Miami University. We believe Mr. Hendrix is qualified to serve on our board due to his extensive finance, investment and advisory background. Gary K. Wunderlich, Jr. Mr. Wunderlich is a Class III member of our board whose term of office as a director is scheduled to expire at the upcoming 2024 annual stockholders’ meeting. He also serves as a member of the nominating and governance committee. Since December 2023, Mr. Wunderlich has been President and CEO of PNFP Capital Markets, Inc. a wholly owned subsidiary of Pinnacle Financial Partners Inc (NASDAQ: PNFP). Mr. Wunderlich served as an officer of Live Oak Acquisition Corp. II from August 2020 to the consummation of the Business Combination on October 19, 2021. Since February 2022 Mr. Wunderlich has served as a Director of Valuence Merger Corp. I (NASDAQ: VMCA), a blank check company focused on combining with a merger target based in Asia (excluding China, Hong Kong and Macau). From February 2021 to November 2023, Mr. Wunderlich was President, Chief Financial Officer, Secretary and a member of the board of directors of Live Oak Crestview Climate Acquisition Corp., a blank check company which redeemed its shares in 2023. From January 2020 to December 2020, Mr. Wunderlich served as an officer of Live Oak Acquisition Corp., a blank check company that consummated a business combination with Meredian Holdings Group, Inc., which was renamed Danimer Scientific, Inc. at the closing of the business combination. Mr. Wunderlich is co-founder and managing partner of Live Oak Merchant Partners, a merchant bank providing capital and advisory services to middle market companies across a wide range of industries. Prior to co-founding Live Oak in 2019, Mr. Wunderlich was the founder and Chief Executive Officer of Wunderlich Securities, Inc. (“WSI”), a full-service investment banking and brokerage firm, from 1996 until its merger in 2017 with B. Riley Financial, Inc. From 2016 to 2018 Mr. Wunderlich was a member of the Securities Industry and Financial Markets Association’s (“SIFMA”) National Board of Directors. He was also a founding board member of the American Securities Association from its inception in 2016 until 2018. Mr. Wunderlich also served in various capacities with the Financial Industry Regulatory Authority (FINRA) including serving on the National Advisory Board, serving on the District 5 Committee as both a Member and Chairman, and serving as a Member of the National Membership Committee. Mr. Wunderlich received a B.A. in Economics from the University of Virginia and an M.B.A. from the University of Memphis. We believe Mr. Wunderlich is qualified to serve on our board due to his extensive investment and securities background.
Class I Directors Continuing in Office until the 2025 Annual Stockholders’ Meeting
Class I Directors Continuing in Office until the 2025 Annual Stockholders’ Meeting Gene Sheridan. Mr. Sheridan is our President and Chief Executive Officer, and is the Chair and a Class I member of our board of directors. His current term of office as a director is scheduled to expire at the 2025 annual stockholders’ meeting. Mr. Sheridan co-founded Navitas and has served as President, Chief Executive Officer and member of the Navitas board since 2014. Mr. Sheridan has over 30 years of experience in the power management and semiconductor industry. From 2013 through 2015, Mr. Sheridan served as Chief Executive Officer of Empower Semiconductor, a provider of power management services, and since then has served as its executive chairman. From 2011 through 2013, he served as Senior Vice President and General Manager, Wireless Products Group at SMSC (now part of Microchip Technology, Inc.), a provider of mixed-signal, analog and Flash-IP solutions. From 2006 to 2011, he served as Chief Executive Officer of BridgeCo (now part of Microchip Technology, Inc.), a networking media semiconductor company. Prior to that, Mr. Sheridan held various roles at International Rectifier, a power management technology company (now part of Infineon Technologies), from 1988 to 2006, including Vice President, Processor Power Group and Vice President, Consumer & Communications Business Unit. Mr. Sheridan received a Bachelor of Science, Electrical Engineering (BSEE) in 1988 from Clarkson University. We believe Mr. Sheridan is qualified to serve on our board due to his extensive executive management and power management and semiconductor industry leadership experience as well as his deep knowledge of Navitas’ technology and business operations. Dan Kinzer. Mr. Kinzer is our Chief Operating Officer and our Chief Technology Officer and is a Class I member of our board whose term of office as a director is scheduled to expire at the 2025 annual stockholders’ meeting. He co-founded Navitas and has been a member of the Navitas board since 2014. He has served as Navitas’ Chief Technology Officer and Chief Operating Officer since 2014. Mr. Kinzer has over 30 years of experience as a senior technology executive leading research and development at semiconductor and power electronics companies. His experience includes developing advanced power device and IC platforms, wide bandgap gallium nitride (GaN) and silicon carbide (SiC) device design, integrated circuit (IC) and power device fabrication processes, advanced IC design, semiconductor package development and assembly processes, and design of electronic systems. From 2007 through 2014, Mr. Kinzer was Senior Vice President and Chief Technology Officer at Fairchild Semiconductor (now part of ON Semiconductor). Prior to that, he served in various positions, including Vice President of Research & Development and Director of Power IC Development at International Rectifier from 1988 through 2007. Mr. Kinzer holds a Bachelor of Science in Engineering, Department of Aerospace and Mechanical Sciences Program in Engineering Physics, from Princeton University. We believe Mr. Kinzer is qualified to serve on our board due to his executive management and semiconductor and power electronics industry leadership experience as well as his deep knowledge of Navitas’ technology and business operations as Chief Technology Officer and Chief Operating Officer.
Class II Directors Continuing in Office until the 2026 Annual Stockholders’ Meeting
Class II Directors Continuing in Office until the 2026 Annual Stockholders’ Meeting Brian Long. Mr. Long is a Class II member of our board whose term of office as a director is scheduled to expire at the 2026 annual stockholders’ meeting. Mr. Long has been a member of our board of directors since 2015 and, since the consummation of the Business Combination he has served as Lead Independent Director. He is a member of the audit committee, compensation committee, and nominating and governance committee. Mr. Long is a founder and has served as Managing Partner of Atlantic Bridge Capital, a venture capital firm, since 2004. Prior to that, he co-founded and from 1993 to 2003 served as Chief Executive Officer of CEVA (Parthus), a semiconductor company which went public. Mr. Long also co-founded and was chairman of GloNav Inc. (now part of NXP), from 2006 to 2008, which developed the first single-chip GPS solutions used on Samsung Galaxy mobile phones. Mr. Long is an investor and currently serves as a board member of various technology companies, including Intel Movidius since 2013, Quixey since 2012 and Hedvig Inc. since 2013. Previous investment and board seats include Maginatics, Inc. (now part of EMC), Ozmo Devices (now part of Atmel), BridgCo (now part of SMSC), Silicon Blue Technologies (now part of Lattice Semiconductor) and Osmetta Inc. (now part of Facebook). Mr. Long holds a Master’s in Electronic Engineering from Trinity College, Dublin. We believe Mr. Long is qualified to serve on our board based on his experience as a board member of technology companies and his investing experience. David Moxam. Mr. Moxam is a Class II member of our board whose term of office as a director is scheduled to expire at the 2026 annual stockholders’ meeting. He is also chair of the compensation committee and a member of the audit committee. He has been a member of our board of directors since 2014. Mr. Moxam is a founder and has been the Managing Partner of Malibu IQ, LLC, a venture capital firm, since 2011. Malibu IQ was an original investor in Navitas. Mr. Moxam was a founder of Authentix, Inc., a global provider of authentication and information services to central banks and global pharmaceutical and energy companies, and served as its Chief Executive Officer from 2002 to 2012. Prior to Authentix, he was President of the Global Financial division of EDS Corp., which went public in 1996. He is the Executive Chairman and serves as a board director at Decisio Health, Inc., the first FDA-accepted clinical decision support software platform for clinical care in hospitals that aims to improve clinical outcomes. Mr. Moxam was a founding member of the board of directors at PeopleShores PBC, a technology services provider and impact sourcing partner for socially conscious corporations, since 2017. Mr. Moxam has received various recognitions, including the Queen’s Award for Enterprise in the U.K., and he was an Ernst & Young Entrepreneur of the Year for Technology in the U.S. Mr. Moxam holds graduate diplomas in Physics and Business Administration from Laurentian University in Canada and has participated in corporate executive programs with INSEAD, an international business school in France. We believe Mr. Moxam is qualified to serve on our board based on his experience as a member of the Navitas board and his executive and board level experience at disruptive technology companies. Dipender Saluja. Mr. Saluja is a Class II member of our board whose term of office as a director is scheduled to expire at the 2026 annual stockholders’ meeting. He is also chair of the nominating and governance committee. He has been a member of our board since 2015. Mr. Saluja has served as Managing Director of Capricorn Investment Group, an investment firm, since 2006. Prior to Capricorn Investment Group, he served in various operating roles at Cadence Design Systems, an electronic design company, from 1990 to 2006. Mr. Saluja currently serves on the boards of QuantumScape (NYSE: QS), Joby Aviation, Inc. (NYSE: JOBY) and several private companies. Mr. Saluja also currently serves as a Commissioner of the Global Commission to End Energy Poverty (GCEEP), on the leadership council of Cyclotron Road, on the Investment Advisory Committee of the PRIME Coalition, on the Investment Council of CalStart, and on the Advisory board of the Institute On The Environment. We believe Mr. Saluja is qualified to serve on our board because of his extensive operational, management, strategy, investment and directorship experience, particularly in the areas of technology, electronics, semiconductors, transportation, renewable energy and cleantech.
Policies and Practices Related to Stock Option and Similar Awards in Proximity to Material Disclosures
Policies and Practices Related to Stock Option and Similar Awards in Proximity to Material Disclosures In September 2022 we adopted a policy and procedures for granting of equity-based awards, which applies to all equity-based awards to officers, employees and consultants under our equity plans, including stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units. Although our equity incentive plan provides for the issuance of stock options, virtually all of our equity-based awards consist of RSUs, with the notable exception of LTIP option awards granted to three of our executive officers in 2021 and 2022 as discussed below under “Executive and Director Compensation—Long-Term Incentive Performance Awards to Executive Officers.” Under the policy, it is the intent of the company not to manipulate the timing of the public release of material information or of any equity-based award with the intent of benefiting an award recipient. Further, it is the intent of the policy that all equity-based awards be made during “open trading windows”, i.e., at times when trading in Navitas securities is otherwise generally permitted under our Insider Trading Policy. The policy provides that annual equity-based awards are made on a fixed date each year, following the public announcement of the previous year’s financial results. The board of directors or its compensation committee may change the annual grant date for any particular year if the company is in possession of material non-public information or if the board or the compensation committee otherwise determines that making grants on such date would not be in the company’s best interests. We have never timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Our Policy and Procedures for Granting of Equity-Based Awards has been filed as Exhibit 19.2 to our 2023 Annual Report. During our last completed fiscal year we did not award stock options, stock appreciation rights or similar awards to any of our executive officers.
Board Meetings and Committees
Board Meetings and Committees During our last fiscal year ended December 31, 2023, our board of directors held 11 meetings, the audit committee held eight meetings, the compensation committee held five meetings, and the governance and sustainability committee held two meetings. Each director attended at least 75% of the aggregate of the total number of meetings of the board of directors and the total number of meetings held by all committees of the board on which such director served during the periods that the director served on such committees. It is the policy of our board to regularly have separate meeting times for independent directors without management present. Our board of directors has a standing audit committee, compensation committee, and governance and sustainability committee (formerly named the nominating and governance committee). The composition and responsibilities of each of the committees of our board is described below. Members serve on these committees until their resignation or until otherwise determined by the board. Since, in our board members’ experience, holders of the vast majority of shares in public companies similar in size and nature to Navitas choose to vote their shares through the proxy process and, generally, do not themselves attend annual meetings of stockholders, our board has not adopted a formal policy regarding attendance by members of our board of directors at annual stockholders’ meetings. Two members of our board attended the 2023 annual stockholders’ meeting in person and the other five members participated virtually. Audit Committee The members of our audit committee are Richard J. Hendrix (chair), Brian Long and David Moxam. The board has determined that each committee member satisfies the requirements for independence and financial literacy under the applicable rules and regulations of the SEC and Nasdaq. The board has also determined that Mr. Hendrix is an “audit committee financial expert,” as that term is defined in SEC rules, among other reasons because of his extensive finance, investment and advisory background as described above under “Biographical Information for Directors—Richard J. Hendrix.” Our audit committee oversees our corporate accounting and financial reporting process and assists our board of directors in monitoring our financial systems and our legal compliance. Our audit committee responsibilities also include, among other things: •selecting and hiring the independent registered public accounting firm to audit our financial statements; •overseeing the performance of the independent registered public accounting firm and taking those actions as it deems necessary to satisfy itself that the accountants are independent of management; •reviewing financial statements and discussing with management and the independent registered public accounting firm our annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews, and the reports and certifications regarding internal control over financial reporting and disclosure controls; •reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; •overseeing our policies on risk assessment and risk management; •reviewing related party transactions; and •approving or, as required, pre-approving, all audit and all permissible non-audit services and fees to be performed by the independent registered public accounting firm. Our audit committee operates under a written charter approved by our board of directors and that satisfies the applicable rules and regulations of the SEC and Nasdaq listing standards. A current copy of the charter is available on our website at https://ir.navitassemi.com/corporate-governance/documents-charters. This reference to our website does not include or incorporate by reference the information on that website into this proxy statement. Compensation Committee The members of our compensation committee are David Moxam (chair), Brian Long and Richard J. Hendrix. The board has determined that each committee member satisfies the requirements for independence under the applicable rules and regulations of the SEC and Nasdaq. Our compensation committee oversees our corporate compensation programs. The compensation committee responsibilities also include, among other things: •reviewing, and recommending to the board for approval, the compensation of our chief executive officer; •reviewing and approving the compensation of our other executive officers; •reviewing, and recommending to the board for approval, the compensation of directors; •overseeing our overall compensation philosophy and compensation policies, plans and benefit programs for employees, including our executive officers; •reviewing, approving and making recommendations to our board of directors regarding incentive compensation and equity plans; and •overseeing the administration our equity compensation plans. Our compensation committee operates under a written charter approved by our board of directors which satisfies the applicable SEC rules and regulations and Nasdaq listing standards. A current copy of the charter is available on our website at https://ir.navitassemi.com/corporate-governance/documents-charters. This reference to our website does not include or incorporate by reference the information on that website into this proxy statement. The compensation committee generally reviews all elements of executive officer compensation in the first quarter of each year, in connection with the company’s annual performance review process and the board’s review of the company’s performance in the previous year. As part of this review the committee receives reports from, and consults with, an independent compensation consultant regarding current benchmarks and customary compensation levels and practices by similarly situated companies. The committee considers recommendations of the chief executive officer regarding the elements of compensation of executive officers based on such benchmark information. The committee does not delegate to any other persons any of its authority over executive compensation under the committee’s charter. Governance and Sustainability Committee The members of our governance and sustainability committee are Dipender Saluja (chair), Brian Long and Gary K. Wunderlich, Jr. The board has determined that each committee member satisfies the requirements for independence under the applicable rules and regulations of the SEC and Nasdaq. The nominating and governance committee is responsible for, among other things: •identifying, evaluating and selecting, or making recommendations to the board of directors regarding, nominees for election to the board of directors and its committees; •reviewing and providing oversight over Navitas’ environmental, social and governance (ESG) framework, including in connection with with climate- and sustainability-related initiatives and other actions associated with the environment (see below under “Oversight of Sustainability Initiatives”); •evaluating the performance of the board of directors and of individual directors; •considering, and making recommendations to the board of directors regarding, the composition of the board of directors and its committees; •reviewing developments in corporate governance practices; •evaluating the adequacy of the corporate governance practices and reporting; and •developing, and making recommendations to the board of directors regarding, corporate governance guidelines and matters.
ELECTION OF CLASS III DIRECTORS
ELECTION OF CLASS III DIRECTORS In accordance with our certificate of incorporation, our board of directors is divided into three classes with staggered three-year terms. For more information on the structure and composition of the board, see “Board of Directors and Corporate Governance,” above. At the 2024 annual stockholders’ meeting, two Class III directors will be elected to our board of directors by the holders of our common stock, each to serve for a three-year term expiring at the 2027 annual stockholders’ meeting, or until the election and qualification of the director’s successor or such director’s earlier death, resignation or removal.
Nominees for Director
Nominees for Director Our board of directors has nominated Richard J. Hendrix and Gary K. Wunderlich, Jr., who are current Class III directors, as nominees for reelection to our board of directors at the annual meeting as Class III directors. If elected, Mr. Hendrix and Mr. Wunderlich will each continue to serve as a Class III director until the 2027 annual stockholders’meeting and until his successor is duly elected and qualified or until his earlier death, resignation or removal. For more information concerning the nominees, please see the biographical information in “Biographical Information for Directors,” above. Mr. Hendrix and Mr. Wunderlich have agreed to serve, if elected, and management has no reason to believe that either will be unavailable to serve. In the event a nominee is unable or declines to serve as a director at the time of the annual meeting, proxies will be voted for any nominee who may be proposed by the governance and sustainability committee and designated by the present board of directors to fill the vacancy. Proxies may not be voted for more than two nominees.
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Policies and Practices
| What We Do | | What We Don’t Do | | | ☑ | Independent Compensation Committee. Our compensation committee is comprised solely of directors determined to be independent under applicable SEC and Nasdaq rules. | ☒ | No Hedging. We prohibit employees, including our executive officers, from engaging in transactions or arrangements that are intended to increase in value based on a decrease in value of company stock. | | ☑ | Independent Compensation Advisor. Our compensation committee has engaged an independent compensation consultant to provide the committee with independent guidance and analysis. | ☒ | No Repricing. Our equity incentive plan prohibits repricing of out-of-the-money options or stock appreciation rights to a lower exercise or strike price without approval of our stockholders. | | ☑ | Annual Review. Our compensation committee annually reviews executive compensation against industry benchmarks and survey data, analyzed by the independent compensation advisor. | ☒ | No Executive Perqs. We do not generally provide perquisites to executives other than benefits with broad-based employee participation that are standard in our industry. | | ☑ | Pay-for-Performance Approach. A majority of our executive officers’ total compensation is subject to annual as well as long-term performance conditions. | ☒ | No Defined Benefit Plan or SERP. We do not provide a defined benefit plan or Supplemental Executive Retirement Plan (SERP). | | ☑ | Clawback Policy.Our board of directors has implemented a clawback policy to recoup any elements of incentive compensation in the event of a financial restatement involving performance measures upon which compensation was paid. | ☒ | No Change-of-Control Gross-Ups. We do not provide excise tax gross-ups related to a change of control of the Company. |
Summary Compensation Table
Summary Compensation Table The following table sets forth information concerning the compensation earned for the years indicated by (i) our chief executive officer and (ii) the two most highly compensated executive officers in 2023, other than the chief executive officer, who were serving as executive officers at the end of 2023 (our “named executive officers” or “NEOs”).
Summary Compensation Table
| Name and principal position | Fiscal Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (1)(2) | Option Awards ($)(2) | All Other Compensation ($) (3) | Total ($) | | Gene Sheridan President and Chief Executive Officer, and Class I Director | 2023 | $541,669 | — | $504,970 | — | $13,362 | $1,060,001 | | | 2022 | $443,750 | — | $250,000 | — | $12,200 | $705,950 | | Dan Kinzer Chief Operating Officer and Chief Technology Officer, and Class I Director | 2023 | $443,751 | — | $309,868 | — | $13,362 | $766,981 | | | 2022 | $372,917 | — | $150,000 | — | $12,200 | $535,117 | | Ranbir Singh(4) Executive Vice President, GeneSiC Business | 2023 | $366,041 | — | $192,525 | — | $13,362 | $571,928 | | | 2022 | $131,250 | — | $27,956 | $8,157,500(5) | $4,667 | $8,321,373 |
Summary Compensation Table
(1) Annual bonus amounts are shown in the “Stock Awards” column and reflect performance-based bonuses earned in respect of the year indicated and paid in March of the following year in the form of vested restricted stock units. Amount shown for Dr. Singh for 2022 reflects prorated amount based on the portion of the year during which he was employed. For additional information, see “Annual Bonus” below. (2) For information regarding the assumptions made in the valuation of stock awards and option awards, see Note 8, Share Based Compensation, to our consolidated financial statements included in Item 8 of Part II of our 2023 Annual Report. (3) Reflects employer matching contributions under Navitas’ 401(k) plan and, for 2023, the dollar value of life insurance premiums paid by the company. (4) Dr. Singh joined the company and became an executive officer upon Navitas’ acquisition of GeneSiC Semiconductor Inc. on August 15, 2022. (5) Reflects grant date fair value of long-term incentive performance (“LTIP”) option award upon Dr. Singh’s employment in connection with Navitas’ acquisition of GeneSiC Semiconductor Inc. For additional information, see “Outstanding Equity Awards at 2023 Fiscal Year End” and “Long-Term Incentive Performance Awards to Executive Officers” below.
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End The following table provides information on all outstanding option and stock awards held by our named executive officers as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year End
| | | Option awards | | | Stock awards | | | Name | Grant date | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)(1) | Option exercise price per share ($) | Option expiration date | Number of shares or units of stock that have not vested (#)(2) | Market value of shares or units of stock that have not vested ($) (3) | | Gene Sheridan | 12/29/21 | 3,250,000 | $15.51 | 12/29/31 | | | | | 8/25/21 | | | | 912,000 | $7,359,840 | | Dan Kinzer | 12/29/21 | 3,250,000 | $15.51 | 12/29/31 | | | | | 8/25/21 | | | | 364,800 | $2,943,936 | | Ranbir Singh | 8/15/22 | 3,250,000 | $10.00 | 8/15/32 | | |
Outstanding Equity Awards at 2023 Fiscal Year End
(1) Consists of long-term incentive performance (“LTIP”) option awards under the Equity Plan. The awards are structured as non-qualified stock options subject to vesting based on the achievement of share price targets and financial performance goals over a seven-year performance period from 2022 through 2028, inclusively. For more information, see “Long-Term Incentive Performance Awards to Executive Officers” below. (2) Consists of earned and unvested restricted stock units (“RSUs”) granted on August 25, 2021 under the Amended and Restated Navitas Semiconductor Limited 2020 Equity Incentive Plan. A total of 2,736,000 RSUs were granted to Mr. Sheridan and 1,094,400 RSUs were granted to Mr. Kinzer under these awards, in each case after giving effect to the exchange ratio applicable to Legacy Navitas equity interests in the Business Combination. Pursuant to the terms of the awards, RSUs would become “earned” and thus eligible for vesting based on the aggregate market value of Navitas common stock following October 19, 2022, the first anniversary of the closing of the Business Combination. Specifically, if the market value of our outstanding common stock equaled or exceeded one or more of the values in the table below between October 19, 2022 and the 24-month anniversary of the grant date (August 25, 2023), the corresponding number of RSUs would become earned and thus eligible for vesting as described below.
Outstanding Equity Awards at 2023 Fiscal Year End
| Aggregate market value of our common stock on or after October 19, 2022 | Total RSUs earned and eligible for vesting for Mr. Sheridan | Total RSUs earned and eligible for vesting for Mr. Kinzer | | $500,000,000 | 2,407,680 | 809,856 | | $550,000,000 | 2,489,760 | 886,464 | | $600,000,000 | 2,571,840 | 952,128 | | $650,000,000 | 2,653,920 | 1,028,736 | | $700,000,000 | 2,736,000 | 1,094,400 |
Outstanding Equity Awards at 2023 Fiscal Year End
Based on the aggregate market value of our common stock, by November 11, 2022 all of the RSUs had become earned and eligible for vesting. Pursuant to the terms of the awards, earned RSUs would vest in one-third increments on each of October 19, 2022, August 25, 2023 and August 25, 2024, or, if later, the date such one-third increment would become earned as discussed above. In all cases vesting is subject to the executive remaining a Navitas employee on the vesting date. The vesting of each increment would be accelerated if the closing price per share of our common stock on any 20 trading days (whether or not consecutive) within any 30 consecutive trading day period reached at least $12.00, $17.00 or $20.00, respectively. Based on the foregoing and the aggregate market value of our common stock, one-third of the RSUs vested between October 19, 2022 and November 11, 2022, an additional one-third vested on August 25, 2023, and the final one-third is scheduled to vest on August 25, 2024. Vesting results in the delivery of one share of common stock per vested RSU following the vesting date, before sales of settled shares to cover withholding taxes incurred upon settlement, and subject to the Equity Plan and applicable company policies. (3) In accordance with SEC regulations, amounts in this column equal the closing market price per share of our common stock on December 29, 2023 ($8.07), the last trading day of the fiscal year, multiplied by the number of shares underlying the RSU award shown in the adjacent column. Amounts shown in this column do not necessarily represent the fair value for expensing purposes or the fair value of corresponding awards that were expected to vest as of December 31, 2023.
Pay Versus Performance
Pay Versus Performance The following table shows (i) the total compensation reported for our CEO and the average total compensation reported for our other named executive officers, or “NEOs,” for the past two fiscal years, as reported in the summary compensation table; (ii) the “compensation actually paid” or “CAP” to our CEO and the average CAP to our other NEOs in the corresponding year; (iii) our cumulative total stockholder return or “TSR”; and (iv) our net income for each year, in each case calculated and presented according to SEC rules. Whereas amounts shown in the summary compensation table on page 17 of this proxy statement reflect fair values of equity awards on the applicable grant dates, the SEC rules governing “pay-versus-performance” disclosure aim to show the relationship between CAP and financial performance in a given year, taking into account changes in the value of equity awards from year to year. CAP calculations are described in further detail in note 2 below, which includes reconciliations to amounts shown in the summary compensation table.
Pay Versus Performance
| Fiscal Year (a) | Summary Compensation Total for CEO (b)(1) | Compensation Actually Paid (CAP) to CEO (c)(2) | Average Summary Compensation Total for non-CEO NEOs (d)(1) | Average Summary Compensation Actually Paid (CAP) to non-CEO NEOs (e)(2) | Value of Initial Fixed $100 Investment Based on Total Stockholder Return (TSR) (f) | Net Income (h)(3) | | 2023 | $1,060,001 | $11,764,262 | $669,455 | $4,744,960 | $47.44 | $(145,433,000) | | 2022 | $705,950 | $(44,011,320) | $5,502,654 | $1,897,421 | $20.63 | $72,887,000 |
Pay Versus Performance
(1) Amounts shown in column (b) reflect total compensation reported for our CEO, Mr. Sheridan, for each year in the summary compensation table on page 17 of this proxy statement. Amounts shown in column (d) reflect the average amount of total compensation reported for our non-CEO NEOs in the corresponding year, as reflected in the applicable summary compensation table. For 2023, the non-CEO NEOs were Mr. Kinzer and Dr. Singh; refer to the summary compensation table on page 17 of this proxy statement. For 2022, the non-CEO NEOs were Dr. Singh and Mr. Shelton; refer to the summary compensation table on page 14 of the definitive proxy statement on Schedule 14A for our 2023 annual stockholders’ meeting, filed with the SEC on April 28, 2023. Each of Dr. Singh and Mr. Shelton joined the company in 2022, hence the values for that year include the grant date fair values of recruitment equity awards for each executive. (2) Amounts shown in columns (c) and (e) represent “compensation actually paid” or “CAP” to our CEO, and the average CAP to our non-CEO NEOs. The calculation of CAP according to SEC rules, and reconciliations to total amounts reported in the applicable summary compensation table, are shown in the table below. CAP does not necessarily represent cash or equity value transferred to an NEO without restriction, but rather is a value calculated according to SEC rules by adding or subtracting the accounting values shown below. We do not have a defined benefit plan, so no adjustment for pension benefits is included. Similarly, no awards granted in any prior year failed to meet vesting conditions during any year shown, and no dividends or other earnings have been paid on stock or on equity awards, so no adjustments are included for those items. Fair values were computed in accordance with Accounting Standards Codification (ASC) 718, Stock Compensation, as of the dates indicated.
Pay Versus Performance
| | 2023 | | 2022 | | | | CEO | Other NEOs (Average) | CEO | Other NEOs (Average) | | Total reported in summary compensation table | $1,060,001 | $669,455 | $705,950 | $5,502,654 | | (Subtract) grant date fair value of equity awards included in summary compensation table total | (504,970) | (251,197) | (250,000) | (5,332,608) | | Add year-end fair value of equity awards granted in the reported year that were unvested at year-end | — | — | — | 1,727,375 | | Add (subtract) change in fair value of prior-year awards that did not vest during the reported year, from the end of the prior year to the end of the reported year | 6,417,470 | 3,329,369 | (32,656,870) | — | | Add (subtract) change in fair value of prior-year awards that vested during the reported year, from the end of the prior year to the vesting date | 4,541,760 | 908,352 | (11,810,400) | — | | Add fair value of awards that were granted and vested in the reported year, as of the vesting date | 250,001 | 88,981 | — | — | | Compensation actually paid (CAP) | $11,764,262 | $4,744,960 | $(44,011,320) | $1,897,421 |
Pay Versus Performance
(3) Net income in the reported years was significantly affected by non-operating gains and losses. Specifically, net income in 2022 included a gain of $121.7 million from a change in fair value of earnout liabilities and a gain of $51.8 million from a change in fair value of our previously issued warrants. Net income in 2023 included a loss of $33.8 million from a change in fair value of earnout liabilities. For more information, see our consolidated financial statements included in Item 8 of Part II of our 2023 Annual Report. The charts below show, for the past two years, the relationships between compensation actually paid (CAP) and cumulative total stockholder return, and between CAP and net income. Note that changes in CEO CAP from year to year result from the relationship between the fair values of Mr. Sheridan’s outstanding LTIP option award and stock price movement. For additional information about the LTIP award, see “Outstanding Equity Awards at 2023 Fiscal Year End ” and “Long-Term Incentive Performance Awards to Executive Officers,” above.
Director Compensation in Fiscal Year 2023
Director Compensation in Fiscal Year 2023 The following table sets forth information concerning the compensation of our non-employee directors for the year ended December 31, 2023. The compensation of directors Gene Sheridan and Dan Kinzer, who are employees of the company, is fully reflected in the summary compensation table on page 17 and related discussion above. Mr. Sheridan and Mr. Kinzer do not receive additional compensation for their service as directors.
Director Compensation in Fiscal Year 2023
| Non-employee director | Fees earned or paid in cash ($) (1) | Stock awards ($) (2) | Total ($) | | Brian Long | $87,500 | $140,000 | $227,500 | | Richard J. Hendrix | $72,500 | $140,000 | $212,500 | | David Moxam | $70,000 | $140,000 | $210,000 | | Dipender Saluja | $55,000 | $140,000 | $195,000 | | Gary K. Wunderlich, Jr. | $50,000 | $140,000 | $190,000 |
Director Compensation in Fiscal Year 2023
(1) Reflects the total amount of annual fees for the applicable roles set forth in the table below. Cash fees are paid to non-employee directors on a quarterly basis in arrears. The following components of non-employee director compensation were approved by the board of directors based on advice received from the company’s compensation consultant. Committee chairs receive two times the fee paid to other committee members.
Director Compensation in Fiscal Year 2023
| Component | Fee Per Year | | Non-employee director annual retainer | $45,000 | | Lead independent director | $20,000 | | Audit committee member (chair paid 2x) | $10,000 | | Compensation committee member (chair paid 2x) | $7,500 | | Governance and sustainability committee member (chair paid 2x) | $5,000 |
Director Compensation in Fiscal Year 2023
(2) Reflects awards of 15,021 restricted stock units (“RSUs”) for the 2023-2024 board term, which were granted to each non-employee director on June 8, 2023, the date of the 2023 annual stockholders’ meeting. Under Navitas’ non-employee director compensation program, non-employee directors receive annual RSU grants with an aggregate fair market value on the grant date of $140,000. Awards are granted under and subject to the Equity Plan and customary award agreements under the Equity Plan. Unless modified or rescinded by the board of directors before the grant date, RSU awards are granted automatically to reelected and continuing non-employee directors on the date of the annual stockholders’ meeting. Awards vest in full immediately prior to the director election at the subsequent annual stockholders’ meeting, subject to the director’s continued service on the board at that time and provided the subsequent meeting is held within 30 days of the anniversary of the previous year’s meeting (otherwise the awards vest one year following the grant date, subject to the director’s continued service at that time). Vesting results in the delivery of one share of common stock on or promptly following the vesting date, subject to the terms and conditions of the Equity Plan and applicable company policies. The board of directors retains the discretion to rescind or limit non-employee director RSU awards prior to the grant date, or to modify the non-employee director compensation program.