(2)
| The amounts included in the table for stock awards is the dollar amount recognized for financial statement reporting purposes with respect to the applicable fiscal year in accordance with FASB ASC Topic 718. These dollar amounts reflect NI’s accounting expense for these stock awards and may not correspond to the actual value that will be recognized by the Named Executive Officers. The dollar amount recognized for financial statement reporting purposes is the aggregate grant date fair value, which is expensed monthly based on the estimated vesting period of the corresponding grant. The estimated vesting period of grants of RSUs to Named Executive Officers ranges from 36 months to 108 months. The fair values of target PRSUs at the grant date are estimated using a Monte Carlo simulation. The determination of fair value of PRSUs was estimated using a Monte Carlo simulation model. The determination of fair value of the PRSU is affected by our stock price and a number of assumptions including the expected volatility, expected dividend yield, and the risk-free interest rate. Our expected volatility at the date of grant was based on the historical volatilities of our common stock and the companies included in the Index over the performance period.Compensation Committee Report The Compensation Committee has reviewed and discussed with management the disclosures contained in the “Compensation Discussion and Analysis.” Based upon such review and discussion, the Compensation Committee recommended to our Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting. Respectfully Submitted, Duy-Loan T. Le, Chair
James E. Cashman, III
Gayla J. Delly
Dr. Gerhard P. Fettweis TABLE OF CONTENTS Executive Compensation Tables 2022 SUMMARY COMPENSATION TABLE The following table shows the total compensation earned by our Named Executive Officers during the years ended December 31, 2022, December 31, 2021, and December 31, 2020. Information is not included for Ms. Favre for the year ended December 31, 2020 as she was not a Named Executive Officer in such year: | Eric H. Starkloff
President and CEO | | | 2022 | | | 735,000 | | | — | | | 7,266,432 | | | 385,191 | | | 11,881 | | | 8,398,504 | | | 2021 | | | 735,000 | | | — | | | 6,659,514 | | | 785,763 | | | 10,108 | | | 8,190,385 | | | 2020 | | | 629,271 | | | — | | | 10,414,680 | | | 411,075 | | | 10,608 | | | 11,465,634 | | | Karen M. Rapp*
Former Executive Vice President
and Chief Financial Officer | | | 2022 | | | 500,000 | | | 100,000 | | | 1,865,759 | | | 194,100 | | | 7,860 | | | 2,667,719 | | | 2021 | | | 480,000 | | | — | | | 3,580,931 | | | 380,112 | | | 8,260 | | | 4,449,303 | | | 2020 | | | 439,795 | | | — | | | 1,677,021 | | | 159,703 | | | 8,093 | | | 2,284,612 | | | Jason E. Green*
Former Chief Revenue Officer
and Executive Vice President | | | 2022 | | | 595,000 | | | — | | | 2,114,486 | | | — | | | 1,476,812 | | | 4,186,298 | | | 2021 | | | 575,000 | | | 200,000 | | | 2,088,851 | | | 364,274 | | | 10,110 | | | 3,238,235 | | | 2020 | | | 551,042 | | | 100,284 | | | 1,197,918 | | | 193,200 | | | 10,110 | | | 2,052,554 | | | Scott A. Rust
Executive Vice President,
Global Operations | | | 2022 | | | 425,000 | | | — | | | 1,368,223 | | | 164,985 | | | 15,423 | | | 1,973,631 | | | 2021 | | | 415,625 | | | — | | | 979,152 | | | 243,386 | | | 13,485 | | | 1,651,648 | | | 2020 | | | 383,717 | | | 1,000 | | | 958,313 | | | 113,213 | | | 11,760 | | | 1,468,003 | | | Ritu Favre
Executive Vice President & GM,
Business Units | | | 2022 | | | 450,000 | | | — | | | 1,741,354 | | | 174,690 | | | 13,860 | | | 2,415,377 | | | 2021 | | | 425,000 | | | — | | | 1,566,666 | | | 336,558 | | | 11,760 | | | 2,339,984 | |
*
| Mr. Rapp resigned as our Executive Vice President and Chief Executive Officer, effective January 9, 2023. Mr. Green departed from the Company as our Chief Revenue Officer and Executive Vice President, effective December 31, 2022. |
(1)
| In 2022, Ms. Rapp received a $100,000 retention cash bonus paid in four quarterly installments during 2022. |
In 2021, Mr. Green received a $200,000 performance bonus based on the Portfolio BU’s performance during that year. In 2020, Mr. Green received a service award of $284 and a $100,000 transition payment as the Compensation Committee approved transferring Mr. Green from a sales-based incentive compensation plan to the EIP. The transition payment was intended to compensate Mr. Green for the short-term negative impact on his compensation caused by his being transferred to the EIP. In 2020, Mr. Rust received a service award of $1,000. All employees, including executives, are eligible under our service award program pursuant to which employees may receive awards based on the number of years of continued employment with us. Awards under the service award program have historically been in the range of $100 to $1,000 per award, with employees receiving $100 in cash at their 5th anniversary of service with us and $1,000 in cash at their 10th, 15th, 20th and 25th anniversaries of service with us. (2)
| The amounts represent the aggregate grant date fair value of awards granted in each fiscal year, as computed in accordance with FASB ASC 718. The grant date fair value for time-based RSUs is measured in accordance with FASB ASC 718 and based on the closing price of our common stock on the date preceding the date of grant. The grant date fair value for PRSUs is calculated using a Monte-Carlo model for each award on the date of grant, as determined under FASB ASC 718, based on the probable outcome of the performance condition as of the grant date. The fair value for each award may differ based on the applicable data, assumptions, and estimates used in the model. Our expected volatility at the date of grant was based on the historical volatilities of our common stock and the companies included in the Index over the performance period. Although the assumed probable outcome as of the grant date was achievement at the target level, the terms of the awards for PRSUs also provide for achievement of up to 200% of the target amount (the “maximum”). See Note 5 below for additional information regarding Mr. Davern's equity awards. The table below presents the aggregate grant date fair value of stockthe PRSU awards for the periods presentedgranted in 2022, assuming achievement atof the maximum performance level for PRSUs:of 200%, would have been: Mr. Starkloff: $9,953,782; Ms. Rapp: $2,555,765; Mr. Green: $2,896,518; Mr. Rust: $1,874,260; and Ms. Favre: $2,385,389. |
| Alexander M. Davern Chief Executive Officer | | | 2019 | | | $2,343,660 | | | $4,687,320 | | | $7,030,980 | | | 2018 | | | 2,213,100 | | | — | �� | | 2,213,100 | | | 2017 | | | 6,364,500 | | | — | | | 6,364,500 | | | Eric H. Starkloff President and Chief Operating Officer | | | 2019 | | | 762,589 | | | 1,525,178 | | | 2,287,767 | | | 2018 | | | 2,156,673 | | | — | | | 2,156,673 | | | 2017 | | | 855,750 | | | — | | | 855,750 | | | Karen M. Rapp Executive Vice President, Chief Financial Officer and Treasurer | | | 2019 | | | 596,585 | | | 1,193,170 | | | 1,789,755 | | | 2018 | | | 983,600 | | | — | | | 983,600 | | | 2017 | | | 861,000 | | | — | | | 861,000 | | | Scott A. Rust Senior Vice President, Global Product Research and Development | | | 2019 | | | 389,069 | | | 778,139 | | | 1,167,208 | | | 2018 | | | 801,880 | | | — | | | 801,880 | | | 2017 | | | 684,600 | | | — | | | 684,600 | | | John C. Roiko Vice President, Finance and Chief Accounting Officer | | | 2019 | | | 77,796 | | | 155,591 | | | 233,387 | | | 2018 | | | 149,704 | | | — | | | 149,704 | | | 2017 | | | 136,920 | | | — | | | 136,920 | |
(3)
| These amounts reflect the sum of the amounts earned by Named Executives Officers under the CPB and AIP for 2019, 2018 and 2017, as shown in the table below: |
| Alexander M. Davern | | | 2019 | | | $— | | | $ 213,332 | | | $ 213,332 | | | 2018 | | | 48,581 | | | 551,003 | | | 599,584 | | | 2017 | | | 37,800 | | | 392,000 | | | 429,800 | | | Eric H. Starkloff | | | 2019 | | | — | | | 106,116 | | | 106,116 | | | 2018 | | | 29,313 | | | 199,500 | | | 228,813 | | | 2017 | | | 21,804 | | | 150,000 | | | 171,804 | | | Karen M. Rapp | | | 2019 | | | — | | | 77,520 | | | 77,520 | | | 2018 | | | 26,381 | | | 149,625 | | | 176,006 | | | 2017 | | | 13,046 | | | 67,500 | | | 80,546 | | | Scott A. Rust | | | 2019 | | | — | | | 42,350 | | | 42,350 | | | 2018 | | | 24,832 | | | 140,836 | | | 165,668 | | | 2017 | | | 19,170 | | | 106,500 | | | 125,670 | | | John C. Roiko | | | 2019 | | | — | | | 32,625 | | | 32,625 | | | 2018 | | | 18,584 | | | 52,702 | | | 71,286 | | | 2017 | | | 14,472 | | | 36,180 | | | 50,652 | |
TABLE OF CONTENTS For Mr. Starkloff, the amount reflected in the “Stock Awards” column above for 2020 includes a one-time promotional grant of 75,000 PRSUs and 75,000 RSUs, granted pursuant to the Starkloff Executive Employment Agreement, in connection with appointment of Mr. Starkloff as our President and CEO. For Mr. Rapp, the amount reflected in the “Stock Awards” column above for 2021 includes a one-time retention award of 27,700 RSUs granted on April 20, 2021, with a grant date fair value of $1,230,988. (3)
| The amounts represent the cash bonus earned by Named Executive Officers pursuant to the EIP for 2022, 2021, and 2020. |
(4)
| TheseThe amounts represent NICompany contributions to the Section 401(k) Plan on behalf of the Named Executive Officers, the full dollar value of premiums paid by NIus for term life insurance on behalf of the Named Executive Officers for 2019, 2018 and 2017, and certain other payments in the amounts shown below: |
| Named Executive Officer | | Year | | NI Contributions to 401(k) Plan | | Term Life Insurance Premium Paid by NI for Benefit of the Insured | | Other * | | Total | | Named Executive Officer | | Year | | NI
Contributions
to 401(k)
Plan ($) | | Term Life
Insurance
Premium Paid
by NI for
Benefit of the
Insured ($) | | Other ($) * | | Total ($) | | | Alexander M. Davern | | | 2019 | | td0,800 | | $360 | | $11,936 | | td3,096 | | Eric H. Starkloff | | | 2022 | | 9,958 | | 360 | | 1,563 | | 11,881 | | | 2018 | | 10,800 | | 408 | | — | | 11,208 | | | 2021 | | 8,748 | | 360 | | 1,000 | | 10,108 | | | 2017 | | 10,800 | | 408 | | — | | 11,208 | | | 2020 | | 8,748 | | 360 | | 1,500 | | 10,608 | | | Eric H. Starkloff | | | 2019 | | 8,748 | | 360 | | 41,537 | | 50,645 | | Karen M. Rapp | | | 2022 | | 7,500 | | 360 | | — | | 7,860 | | | 2018 | | 8,748 | | 408 | | 10,187 | | 19,343 | | | 2021 | | 7,900 | | 360 | | — | | 8,260 | | | 2017 | | 8,748 | | 408 | | 27,039 | | 37,195 | | | 2020 | | 7,733 | | 360 | | — | | 8,093 | | | Karen M. Rapp | | | 2019 | | 10,088 | | 360 | | — | | 10,448 | | Jason E. Green | | | 2022 | | 13,500 | | 360 | | 1,462,952 | | 1,476,812 | | | 2018 | | 4,594 | | 408 | | — | | 5,002 | | | 2021 | | 9,750 | | 360 | | — | | 10,110 | | | 2017 | | — | | 318 | | 40,000 | | 40,318 | | | 2020 | | 9,750 | | 360 | | — | | 10,110 | | | Scott A. Rust | | | 2019 | | 10,800 | | 360 | | — | | 11,160 | | Scott A. Rust | | | 2022 | | 13,500 | | 360 | | 1,563 | | 15,423 | | | 2018 | | 10,180 | | 408 | | — | | 10,588 | | | 2021 | | 11,625 | | 360 | | 1,500 | | 13,485 | | | 2017 | | 8,640 | | 408 | | 23,751 | | 32,799 | | | 2020 | | 11,400 | | 360 | | — | | 11,760 | | | John C. Roiko | | | 2019 | | 9,183 | | 360 | | — | | 9,543 | | Ritu Favre | | | 2022 | | 13,500 | | 360 | | — | | 13,860 | | | 2018 | | 8,956 | | 408 | | — | | 9,364 | | | 2021 | | 11,400 | | 360 | | — | | 11,760 | | | 2017 | | 8,818 | | 408 | | 50,000 | | 59,226 | | |
*
| The dollar amounts listed in “Other” for Mr. Starkloff reflect fees and expenses paid related to contributions by us to Mr. Starkloff’s health spending account paid in 2022, 2021 and 2020. |
The dollar amounts listed in “Other” for Mr. Green reflect: the payments and benefits provided to Mr. Green in connection with his departure from the Company effective December 31, 2022 as required by the terms of the Green Transition and Separation Agreement, consisting of: (i) the payment of $10,000 for executive transition services; (ii) a lump sum payment in the amount of $595,000, which is the equivalent to 100% of his 2022 target cash incentive bonus opportunity (which was established at 100% of his annual base salary), paid at the same time as the other executive officers, (iii) the reimbursement, or payment directly on his behalf, for the premiums for COBRA through December 31, 2023, or the date that he becomes eligible for coverage under a subsequent employer’s plan (estimated at $24,676) and (iv) $833,276, representing the value of the portion of Mr. Green’s outstanding time-based RSU awards that were accelerated as of his date of termination. For more information about Mr. Green’s severance payments and benefits, see “Potential Payments Upon Termination or Change in Control” below. The dollar amounts listed in “Other” for Mr. Rust reflect Mr. Rust’s health spending account for 2022 and 2021. The dollar amounts listed in “Other” for Ms. Favre reflect amount paid by NI in connection with Ms. Favre’s participation in an incentive award trip. Other than the foregoing, for 2019, 2018 and 2017, NI did not provide its Named Executive Officers with any form of compensation that would be reportable under Item 402(c)(2)(ix) of Regulation S-K.S-K for the years reported in the table. NI does not pay or accrue cash dividends on unvested RSUs. *
| For 2019, the dollar amounts listed in “Other” reflect fees and expenses paid by NI related to the negotiation of Mr. Davern's Transition Agreement and Mr. Starkloff's Executive Employment Agreement and amounts paid by NI in connection with Mr. Starkloff’s participation in an incentive award trip. For 2018, the dollar amounts listed in “Other” reflect amounts paid by NI in connection with Mr. Starkloff’s participation in an incentive award trip. For 2017, the dollar amounts listed in “Other” reflect amounts paid by NI in connection with Mr. Starkloff and Mr. Rust’s participation in an incentive award trip, a signing bonus paid to Ms. Rapp upon her employment as Chief Financial Officer and a bonus paid to Mr. Roiko as Interim Chief Financial Officer. |
(5)
| The disclosed number reflects a calculation made pursuant to FASB ASC Topic 718 which requires disclosure of the combined value of Mr. Davern's Original Grant Value (defined below) and the incremental fair value of the unvested RSUs described below. Mr. Davern, our Chief Executive Officer during 2019, was granted 53,000 RSUs and 53,000 PRSUs in February 2019 with an aggregate grant date fair value of $5,340,969 (“Original Grant Value”). On October 29, 2019, we announced that Mr. Davern would remain as CEO of NI until January 31, 2020, and then transition from his service as CEO of NI into a strategic advisory role until May 5, 2020. Pursuant to Mr. Davern’s Transition Agreement, effective October 28, 2019, all of Mr. Davern’s PRSUs are forfeited and Mr. Davern is expected to receive upon signing of his Separation Agreement in May 2020, accelerated vesting of all outstanding equity awards subject solely to service-based vesting that would have vested from October 29, 2019 through May 5, 2021. All of Mr. Davern’s unvested RSUs subject to outstanding equity awards other than those subject to such accelerated vesting are forfeited as of the Termination Date pursuant to his Transition Agreement. The amount included in the table for Mr. Davern’s stock awards in 2019 reflects the incremental fair value, computed in accordance with FASB ASC Topic 718, associated with the acceleration of such RSUs of $2,133,823 plus the Original Grant Value. Such amount does not deduct a value for RSUs or PRSUs forfeited by Mr. Davern upon signing of the Separation Agreement. The total aggregate grant date fair value of the forfeited RSUs and PRSUs is $5,161,310. Had the total aggregate fair value of the forfeited RSUs and PRSUs been deducted, the amount included in the table for stock awards would have been $2,313,482. |
TABLE OF CONTENTS GRANTS OF PLAN-BASED AWARDS TABLE
FOR FISCAL YEAR ENDED DECEMBER 31, 20192022 | Name | | Grant Date (1) | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards: Number of Shares of Stock or Stock Units | | | All Other Stock Awards: Number of Shares of Stock or Units (5) | | Aggregate Grant Date Fair Value of Stock Awards | | Named Executive Officer(1) | | Grant
Date | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards (2) | | Estimated Future Payouts Under
Equity Incentive Plan Awards: Number
of Shares of Stock or Stock Units | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#) (3) | | Aggregate
Grant Date
Fair Value
of Stock
Awards (#) | | | Threshold (2) | | Target (3) | | Maximum (4) | | Threshold | | Target | | Maximum | | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | Alexander M. Davern | | | | | | | | | | | | | | | | | | | | Eric H. Starkloff
| | | | | | | | | | | | | | | | | | | Annual Incentive Program (AIP) | | | | — | | $775,754 | | $1,551,508 | | | | | | | | — | | — | | Executive Incentive Program (EIP) | | | | $992,250 | | $1,984,5000 | | — | | — | | — | | — | | — | | | Annual Company Performance Bonus Program (CPB) | | | | — | | — | | — | | | | | | | | — | | — | | 2020 Incentive Plan - RSUs | | 1/19/2022 | | — | | — | | — | | — | | — | | 56,351 | | $2,289,541 | | | 2015 Incentive Plan - 2019 RSU Grant | | 2/1/2019 | | — | | — | | — | | | | | | | | 53,000 | | $2,343,660 | | 2020 Incentive Plan - PRSUs | | 1/19/2022 | | — | | — | | 42,263 | | 84,526 | | 169,052 | | — | | 4,976,891 | | | 2015 Incentive Plan - 2019 PRSU Grant | | 2/1/2019 | | — | | — | | — | | 26,500 | | 53,000 | | 106,000 | | 53,000 | | 2,997,309 | | Karen M. Rapp
| | | | | | | | | | | | | | | | | | | RSU Modification (6) | | | | | | | | | | | | | | | | 52,108 | | 2,133,823 | | Executive Incentive Program (EIP) | | | | $500,000 | | $1,000,000 | | — | | — | | — | | — | | — | | | Eric H. Starkloff | | | | | | | | | | | | | | | | | | | | 2020 Incentive Plan - RSUs | | 1/18/2022 | | — | | — | | — | | — | | — | | 14,091 | | 587,877 | | | Annual Incentive Program (AIP) | | | | — | | 385,875 | | 771,750 | | | | | | | | — | | — | | 2020 Incentive Plan - PRSUs | | 1/18/2022 | | — | | — | | 10,568 | | 21,136 | | 42,272 | | — | | 1,277,883 | | | Annual Company Performance Bonus Program (CPB) | | | | — | | — | | — | | | | | | | | — | | — | | Jason E. Green
| | | | | | | | | | | | | | | | | | | 2015 Incentive Plan - RSUs | | 1/22/2019 | | — | | — | | — | | | | | | | | 16,625 | | 762,589 | | Executive Incentive Program (EIP) (4) | | | | $595,000 | | $1,190,000 | | — | | — | | — | | — | | — | | | 2015 Incentive Plan - PRSUs | | 1/22/2019 | | — | | — | | — | | 8,312.5 | | 16,625 | | 33,250 | | 16,625 | | 975,274 | | 2020 Incentive Plan – RSUs (5) | | 1/18/2022 | | — | | — | | — | | — | | — | | 15,969 | | 666,227 | | | Karen M. Rapp | | | | | | | | | | | | | | | | | | | | 2020 Incentive Plan – PRSUs (5) | | 1/18/2022 | | — | | — | | 11,977 | | 23,954 | | 47,908 | | — | | 1,448,259 | | | Annual Incentive Program (AIP) | | | | — | | 206,719 | | 392,766 | | | | | | | | — | | — | | Scott A. Rust
| | | | | | | | | | | | | | | | | | | Annual Company Performance Bonus Program (CPB) | | | | — | | — | | — | | | | | | | | — | | — | | Executive Incentive Program (EIP) | | | | $425,000 | | $850,000 | | — | | — | | — | | — | | — | | | 2015 Incentive Plan - RSUs | | 1/22/2019 | | — | | — | | — | | | | | | | | 13,006 | | 596,585 | | 2020 Incentive Plan - RSUs | | 1/18/2022 | | — | | — | | — | | — | | — | | 10,333 | | 431,093 | | | 2015 Incentive Plan - PRSUs | | 1/22/2019 | | — | | — | | — | | 6,503 | | 13,006 | | 26,012 | | 13,006 | | 762,972 | | 2020 Incentive Plan - PRSUs | | 1/18/2022 | | — | | — | | 7,750 | | 15,500 | | 31,000 | | — | | 937,130 | | | Scott A. Rust | | | | | | | | | | | | | | | | | | | | Ritu Favre
| | | | | | | | | | | | | | | | | | | Annual Incentive Program (AIP) | | | | — | | 154,000 | | 308,000 | | | | | | | | — | | — | | Executive Incentive Program (EIP) | | | | $450,000 | | $900,000 | | — | | — | | — | | — | | — | | | Annual Company Performance Bonus Program (CPB) | | | | — | | — | | — | | | | | | | | — | | — | | 2020 Incentive Plan - RSUs | | 1/18/2022 | | — | | — | | — | | — | | — | | 13,151 | | 548,660 | | | 2015 Incentive Plan - RSUs | | 1/22/2019 | | — | | — | | — | | | | | | | | 8,482 | | 389,069 | | 2020 Incentive Plan - PRSUs | | 1/18/2022 | | — | | — | | 9,864 | | 19,727 | | 39,454 | | — | | 1,192,694 | | | 2015 Incentive Plan - PRSUs | | 1/22/2019 | | — | | — | | — | | 4,241 | | 8,482 | | 16,964 | | 8,482 | | 497,580 | | | | John C. Roiko | | | | | | | | | | | | | | | | | | | | | | Annual Incentive Program (AIP) | | | | — | | 87,000 | | 165,300 | | | | | | | | — | | — | | | | Annual Company Performance Bonus Program (CPB) | | | | — | | — | | — | | | | | | | | — | | — | | | | 2015 Incentive Plan - RSUs | | 1/22/2019 | | — | | — | | — | | | | | | | | 1,696 | | 77,796 | | | | 2015 Incentive Plan - PRSUs | | 1/22/2019 | | — | | — | | — | | 848 | | 1,696 | | 3,392 | | 1,696 | | 99,493 | | |
(1)
| In accordance with Item 402(d)(2)(ii) of Regulation S-K, only grant datesThe table shows information regarding the incentive compensation awards granted to the Named Executive Officers for equity-based awards are reported in this table.2022 |
(2)
| The AIPRepresents the range of possible cash payouts under the EIP. Cash payouts are on a linear slope. Cash payouts are capped at the maximum of 200% and the CPB did not set a threshold amount. Seecan be as low as zero. Actual cash payouts are based on attainment of pre-established corporate financial and operational objectives, as described under “Compensation Discussion and Analysis”Analysis – Executive Compensation Program” above. There is no threshold level of performance for a descriptionthe EIP. The amounts shown in the “maximum” column are payouts at 200%, which is the maximum possible payout. The actual amounts awarded to our NEOs under the EIP for 2022 are included in the “Non-Equity Incentive Plan Compensation” column of these programs.the Executive Compensation – Summary Compensation Table for Fiscal Year 2022. |
(3)
| The AIP and the CPB do not set target amounts. See “Compensation Discussion and Analysis” for a further description of these programs. In accordance with Instruction 2 to Item 402(d) of Regulation S-K, the amounts included under the “Target” column represent the amounts earned in the fiscal year ended December 31, 2019 by the named executive officer under the AIP and the CPB, as applicable. |
(4)
| The CPB does not set maximum amounts. See “Compensation Discussion and Analysis” for a further description of this program. The amounts set forth in the table above represent the maximum amounts that were achievable under the AIP for 2019. |
(5)
| For 2019,2022, the RSU awards granted to the Named Executive Officer RSU grants hadOfficers have three-year annual vesting with a vesting commencement date of May 1, 2019.2022. |
(6) (4)
| We granted these RSUsMr. Green departed from the Company effective December 31, 2022. Pursuant to the Green Transition and Separation Agreement, Mr. Davern under our equity incentive plans between 2011 and 2019. Their vesting is expectedGreen received a lump sum payment in the amount of $595,000, representing his target EIP award, less applicable withholdings, paid at the same time the EIP bonus was paid to be accelerated upon signingother senior executives of the Company. |
(5)
| Pursuant to the Green Transition and Separation Agreement, in connectionthe portion of the 2022 RSU award that would have vested had Mr. Green remained employed through December 31, 2023 (representing 5,323 units) were accelerated and vested upon his departure on December 31, 2022. The remaining portions of the 2022 RSU with vesting dates after December 31, 2023 (representing 10,646 units) were forfeited upon his departure on December 31, 2022. Additionally, Mr. Davern’s Transition Agreement, as described in Note (5) to the Summary Compensation Table. The Transition AgreementGreen’s 2022 PRSU award (representing 23,954 units) was effective as of October 28, 2019. The amount shown in the “Aggregate Grant Date Fair Value of Stock Awards” column represents the incremental change in the grant date fair value under FASB ASC Topic 718 that resulted from the acceleration of vesting.forfeited upon his departure on December 31, 2022. |
Summary Compensation Table and Grants of Plan-Based Awards Table Discussion The terms of each Named Executive Officer’s employment include severance payments and benefits and payments and benefits that may be triggered by a change in control of the Company. See the “Employment Arrangements and Post-Employment Compensation” above and “Potential Payments Upon Termination or Change in Control” below for more detailed discussion of such arrangements. We have not repriced or made any material modifications to any equity-based awards to our Named Executive Officers. TABLE OF CONTENTS Summary Compensation Table and Grants of Plan-Based Awards Table DiscussionThe level of salary and bonus in proportion to total compensation ranged from approximately 12% to 57% for each of the Named Executive Officers in 2019.
The terms of Mr. Davern’s and Mr. Starkloff’s employment include severance payments and payments that may be triggered by a change in control of NI. None of NI’s other employees have employment agreements, severance payment arrangements or other payment arrangements that would be triggered by a merger or other change in control of NI. However, the terms of Mr. Rust’s employment provide for the acceleration of certain restricted stock units in the event of his termination under certain circumstances. See “Potential Payments Upon Termination or Change of Control” for a more detailed discussion of such arrangements.
NI has not repriced or made any material modifications to any equity-based awards to its Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL 20192022 YEAR-END TABLE* | Alexander M. Davern | | | 163,624 | | | $6,927,840 | | | 53,000 | | | $1,862,228 | | | Eric H. Starkloff | | | 113,423 | | | 4,802,330 | | | 16,625 | | | 605,938 | | | Karen M. Rapp | | | 38,006 | | | 1,609,174 | | | 13,006 | | | 474,035 | | | Scott A. Rust | | | 55,589 | | | 2,353,638 | | | 8,482 | | | 309,147 | | | John C. Roiko | | | 13,875 | | | 587,468 | | | 1,696 | | | 61,815 | |
The following table provides information regarding stock and equity incentive plan awards for each Named Executive Officer that, as of December 31, 2022, had not vested: | Eric H. Starkloff | | | RSU | | | 1/19/22 | | | 56,351 | | | 2,079,352 | | | — | | | — | | | RSU | | | 2/17/21 | | | 29,982 | | | 1,106,336 | | | — | | | — | | | RSU | | | 4/29/2020 | | | 8,490 | | | 313,281 | | | — | | | — | | | RSU | | | 2/1/2020 | | | 25,000 | | | 922,500 | | | — | | | — | | | RSU | | | 4/26/2016 | | | 7,031 | | | 259,444 | | | — | | | — | | | RSU | | | 4/21/2015 | | | 6,015 | | | 221,954 | | | — | | | — | | | RSU | | | 4/22/2014 | | | 1,919 | | | 70,811 | | | — | | | — | | | RSU | | | 4/23/2013 | | | 192 | | | 7,085 | | | — | | | — | | | PRSU | | | 1/19/2022 | | | — | | | — | | | 84,526 | | | 3,119,009 | | | PRSU | | | 2/17/2021 | | | — | | | — | | | 67,461 | | | 2,489,311 | | | Karen M. Rapp | | | RSU | | | 1/18/2022 | | | 14,091 | | | 519,958 | | | — | | | — | | | RSU | | | 4/20/2021 | | | 13,850 | | | 511,065 | | | — | | | — | | | RSU | | | 1/19/2021 | | | 14,028 | | | 517,633 | | | — | | | — | | | RSU | | | 2/19/2020 | | | 5,219 | | | 192,581 | | | — | | | — | | | PRSU | | | 1/18/2022 | | | — | | | — | | | 21,136 | | | 779,918 | | | PRSU | | | 1/19/2021 | | | — | | | — | | | 21,043 | | | 776,487 | | | Scott A. Rust | | | RSU | | | 1/18/2022 | | | 10,333 | | | 381,288 | | | — | | | — | | | RSU | | | 1/19/2021 | | | 5,845 | | | 215,681 | | | — | | | — | | | RSU | | | 2/19/2020 | | | 2,982 | | | 110,036 | | | — | | | — | | | RSU | | | 4/26/2016 | | | 4,217 | | | 155,607 | | | — | | | — | | | RSU | | | 4/21/2015 | | | 3,610 | | | 133,209 | | | — | | | — | | | RSU | | | 4/22/2014 | | | 640 | | | 23,616 | | | — | | | — | | | RSU | | | 4/23/2013 | | | 116 | | | 4,280 | | | — | | | — | | | PRSU | | | 1/18/2022 | | | — | | | — | | | 15,500 | | | 571,950 | | | PRSU | | | 1/19/2021 | | | — | | | — | | | 8,768 | | | 323,539 | | | Ritu Favre | | | RSU | | | 1/18/2022 | | | 13,151 | | | 485,272 | | | — | | | — | | | RSU | | | 1/19/2021 | | | 9,352 | | | 345,089 | | | — | | | — | | | RSU | | | 4/28/2020 | | | 6,398 | | | 236,086 | | | — | | | — | | | RSU | | | 10/22/2019 | | | 3,000 | | | 110,700 | | | — | | | — | | | PRSU | | | 1/18/2022 | | | — | | | — | | | 19,727 | | | 727,926 | | | PRSU | | | 1/19/2021 | | | — | | | — | | | 14,029 | | | 517,670 | |
*
| Information regarding the PRSUs granted to Mr. Starkloff, Ms. Rapp, and Mr. Rust on January 1, 2020, which vested on December 31, 2022, is not included in the table. |
Information regarding the RSUs and PRSUs previously granted to Mr. Green was not included in the table. As previously noted, pursuant to the Green Transition and Separation Agreement, the portion of the RSU awards that would have vested had Mr. Green remained employed through December 31, 2023, (representing 22,582 units), were accelerated and vested upon his departure on December 31, 2022. The remaining portion of the RSU awards granted to Mr. Green with vesting dates after December 31, 2023 (representing 20,941 units) were forfeited upon his departure on December 31, 2022. Additionally, the PRSUs granted to Mr. Green that were scheduled to vest after December 31, 2022 (such as the PRSUs granted in 2021 and 2022) (representing 42,659 units), were forfeited upon his departure. (1)
| Reflects RSUs granted. The RSUs were granted under the 2010 Incentive Plan, 2015 Incentive Plan, and 20152020 Incentive Plan. RSUs granted under the 2010 Incentive Plan and 2015 Incentive Plan prior to April 2016 vest as to 1/10th of the RSUs on each anniversary of the vesting commencement date, subject to acceleration of vesting in the event that NI achieveswe achieve certain financial performance goals. The maximum amount of vesting acceleration is an additional 10% of the award per year. For grants made |
TABLE OF CONTENTS award per year. For awards granted pursuant to the 2010 Incentive Plan prior to April 2016, the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which we attain a 40% year over year Revenue Growth and 18% non-GAAP operating profit as a percentage of revenue. Specifically, if we achieve a 40% year over year Revenue Growth and a 18% non-GAAP operating profit as a percentage of revenue, then 10% of the total number of RSUs subject to the award will accelerate. For awards granted pursuant to the 2015 Incentive Plan prior to April 2016, the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which we attain 20% year over year Revenue Growth and 18% non-GAAP operating profit as a percentage of revenue. Specifically, if we achieve a 20% year-over-year Revenue Growth and a 18% non-GAAP operating profit as a percentage of revenue, then 10% of the total number of RSUs subject to the award accelerates. The earliest an award eligible for acceleration may fully vest is in five years. RSUs granted under the 2010 Incentive Plan and 2015 Incentive Plan prior to April 2016 have a vesting term of ten years. RSUs granted pursuant to the 2015 Incentive Plan from April 2016 to April 2018 vest as to 25% of the units subject to the RSUs on each anniversary of the vesting commencement date. In 2019, RSUs for our Named Executive Officers at that time were granted under the 2015 Incentive Plan and vest as to 1/3rd of the units subject to the RSUs on each anniversary of the vesting commencement date. For Mr. Green, RSUs granted in 2019 were granted under the 2015 Incentive Plan and vest as to 1/4th of the units subject to the RSUs on each anniversary of the vesting commencement date. RSUs granted in 2020 were granted pursuant to the 2015 Equity Incentive Plan and vest as to 1/3rd of the units subject to the RSUs on each anniversary of the vesting commencement date. RSUs granted in 2021 (other than the Rapp April 2021 Award) were granted pursuant to the 2020 Equity Incentive Plan and vest as to 1/3rd of the units subject to the RSUs on each anniversary of the vesting commencement date. In April 2021, Ms. Rapp received 27,700 RSUs granted under the 2020 Incentive Plan, which vest as to 1/2 of the RSUs on each anniversary of the vesting commencement date. RSUs granted in 2022 were granted pursuant to the 2020 Equity Incentive Plan and vest as to 1/3rd of the RSUs on each anniversary of the vesting commencement date. RSUs are subject to the continued service of the Named Executive Officer on each such vesting date. PRSUs granted in 2021 and 2022 were granted under the 2020 Incentive Plan, while PRSUs granted in 2020 were granted under the 2015 Incentive Plan. Outstanding PRSU awards may be earned and eligible for vesting in a single installment following the end of the applicable three-year performance period from the beginning of the performance period starting on January 1. TABLE OF CONTENTS The following table (part of note 1), sets forth the grant date and vesting commencement date or performance period commencement date for the unvested stock awards listed in the table above. | Eric H. Starkloff | | | 56,351 | | | 1/19/22 | | | 5/2/2022 | | | 29,982 | | | 2/17/2021 | | | 5/1/2021 | | | 8,490 | | | 4/29/2020 | | | 5/1/2020 | | | 25,000 | | | 2/1/2020 | | | 2/1/2020 | | | 7,031 | | | 4/26/2016 | | | 5/1/2016 | | | 6,015 | | | 4/21/2015 | | �� | 5/1/2015 | | | 1,919 | | | 4/22/2014 | | | 5/1/2014 | | | 192 | | | 4/23/2013 | | | 5/1/2013 | | | 84,526 | | | 1/19/2022 | | | 1/1/2022 | | | 67,461 | | | 2/17/2021 | | | 1/1/2021 | | | Karen M. Rapp | | | 14,091 | | | 1/18/2022 | | | 5/2/2022 | | | 13,850 | | | 4/20/2021 | | | 2/28/2021 | | | 14,028 | | | 1/19/2021 | | | 5/1/2021 | | | 5,219 | | | 2/19/2020 | | | 5/1/2020 | | | 21,136 | | | 1/18/2022 | | | 1/1/2022 | | | 21,043 | | | 1/19/2021 | | | 1/1/2021 | | | Scott A. Rust | | | 10,333 | | | 1/18/2022 | | | 5/2/2022 | | | 5,845 | | | 1/19/2021 | | | 5/1/2021 | | | 2,982 | | | 2/19/2020 | | | 5/1/2020 | | | 4,217 | | | 4/26/2016 | | | 5/1/2016 | | | 3,610 | | | 4/21/2015 | | | 5/1/2015 | | | 640 | | | 4/22/2014 | | | 5/1/2014 | | | 116 | | | 4/23/2013 | | | 5/1/2013 | | | 15,500 | | | 1/18/2022 | | | 1/1/2022 | | | 8,768 | | | 1/19/2021 | | | 1/1/2021 | | | Ritu Favre | | | 13,151 | | | 1/18/2022 | | | 5/2/2022 | | | 9,352 | | | 1/19/2021 | | | 5/1/2021 | | | 6,398 | | | 4/28/2020 | | | 5/1/2020 | | | 3,000 | | | 10/22/2019 | | | 5/1/2019 | | | 19,727 | | | 1/18/2022 | | | 1/1/2022 | | | 14,029 | | | 1/19/2021 | | | 1/1/2021 | |
(2)
| Calculated by multiplying the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which NI attains 40% year over year revenue growth and 18% non-GAAP operating profit as a percent of revenue. Specifically, if NI achieves 40% year over year revenue growth and 18% non-GAAP operating profit as a percent of revenue, then 10% of the total number of RSUsunits subject to the award shall accelerate.RSUs by $36.90, the closing market price of our common stock on December 31, 2022. |
(3)
| Reflects PRSUs granted at target performance level. The PRSUs are reported at the target level because we are required by SEC rules to compare our performance through 2022 under the PRSU awards against the threshold, target and maximum performance levels for the grant and report the applicable potential share number. If the performance is between levels, we are required to report the potential payout at the next highest level. For grants made pursuant toexample, if performance through the 2015 Incentive Plan prior to April 2016,previous year exceeded target, even by only a modest amount, and even if it is unlikely that we will achieve the number of RSUsresults that can have vesting acceleration each year is determined based uponwould dictate the extent to which NI attains 20% year over year revenue growth and 18% non-GAAP operating profit as a percent of revenue. Specifically, if NI achieves 20% year-over-year revenue growth and 18% non-GAAP operating profit as a percent of revenue, then 10%payment of the total numbermaximum amount, we are required by SEC rules to report the maximum potential payouts. For the first year of RSUs subjectthe 2022-2024 and the first two years of the 2021-2023 performance period, we tracked between the threshold and target levels of performance against the PRSU performance goals on a combined basis and have accordingly reported the PRSUs at the target award levels. |
TABLE OF CONTENTS STOCK VESTED
FOR FISCAL YEAR ENDED DECEMBER 31, 2022 TABLE* | Eric H. Starkloff | | | 25,000 | | | $1,030,500 (1) | | | 45,487 | | | 1,643,900 (2) | | | 89,419 | | | 3,299,561 (5) | | | Karen M. Rapp | | | 21,569 | | | 779,504 (2) | | | 13,850 | | | 556,632 (3) | | | 13,934 | | | 514,165 (5) | | | Jason E. Green | | | 22,962 | | | 829,847 (2) | | | 9,953 | | | 367,266 (5) | | | 22,582 | | | 833,276 (6) | | | Scott A. Rust | | | 18,996 | | | 686,515 (2) | | | 7,962 | | | 293,798 (5) | | | Ritu Favre | | | 10,876 | | | 393,059 (2) | | | 2,860 | | | 109,195 (4) | |
*
| Includes PRSUs granted to the award shall accelerate. Mr. Starkloff, Ms. Rapp, Mr. Green and Mr. Rust in January or February 2020, all of which vested on December 31, 2022. We do not grant stock options. |
(1)
| The earliest an award eligible for acceleration may fully vest is in five years. RSUs granted under the 2010 Incentive Plan and 2015 Incentive Plan prior to April 2016 have a vesting term of ten years. RSUs granted under the 2015 Incentive Plan from April 2016 to April 2018 vest as to 25%value of the RSUs on each anniversarywas calculated by using the closing price of our common stock for the day immediately preceding the vesting commencement date. In October 2018, Mr. Starkloff received a 25,000 RSU award that will vest 100% on the anniversarydate of the vesting commencement date. In January 2019 and thereafter RSUs vest as to 1/3rdFebruary 1, 2022, which was $41.22 per share. |
(2)
| The value of the RSUs on each anniversarywas calculated by using the closing price of our common stock for the day immediately preceding the vesting date of May 2, 2022, which was $36.14 per share. |
(3)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting commencement date. These RSUs are subject to the continued servicedate of February 28, 2022, which was $40.19 per share. |
(4)
| The value of the Named Executive Officer on each suchRSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date. The vesting commencement dates for these awards are set forth in the table below.date of November 1, 2022, which was $38.18 per share. |
(5)
| The value of the PRSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of December 31, 2022, which was $36.90 per share. |
(6)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of December 31, 2022, which was $36.90 per share. |
Pension Benefits and Nonqualified Deferred Compensation We do not maintain any pension plans, non-qualified defined contribution plans, or non-qualified deferred compensation plans. Potential Payments Upon Termination or Change in Control Termination and Change in Control Severance Arrangements with our Named Executive Officers Our employment arrangements with each of Mr. Starkloff, Ms. Rapp, Mr. Green, Ms. Favre, and Mr. Rust, summarized below, include severance or other payment arrangements that would be triggered by a termination of employment or change in control of the Company on December 31, 2022. TABLE OF CONTENTS Arrangements with Mr. Starkloff: On October 28, 2019, we entered into the Executive Employment Agreement with Mr. Starkloff, pursuant to which Mr. Starkloff was appointed as our President and Chief Executive Officer, effective February 1, 2020 (the “Starkloff Executive Employment Agreement”). In the event of an involuntary termination of Mr. Starkloff’s employment by the Company or a successor without Cause or resignation for Good Reason (as such terms are defined in the Starkloff Executive Employment Agreement), subject to him executing and not revoking a release of claims in favor of the Company and meeting other requirements in the Starkloff Executive Employment Agreement, Mr. Starkloff would be entitled to receive the following (the “Starkloff Employment Agreement Severance Entitlements”): (i)
| Namedcontinuing severance pay at a rate equal to 100% of his annual base salary, as then in effect, for a period of 18 months from the date of such termination of employment, paid in accordance with our normal payroll practices (but if such a termination occurs within the period beginning three months prior to a Change in Control (as defined in the Starkloff Executive Officer
| | | Number of
Shares or Units
of Stock That
Have Not
Vested
| | | Grant Date
| | | Vesting
Commencement
Date
| | | Alexander M. Davern
| | | 53,000
| | | 2/1/2019
| | | 5/1/2019
| | | | | | 33,750
| | | 4/25/2018
| | | 5/1/2018
| | | | | | 25,000
| | | 4/25/2017
| | | 5/1/2017
| | | | | | —
| | | 1/24/2017
| | | 12/15/2017
| | | | | | 16,295
| | | 4/26/2016
| | | 5/1/2016
| | | | | | 14,397
| | | 4/21/2015
| | | 5/1/2015
| | | | | | 6,948
| | | 4/22/2014
| | | 5/1/2014
| | | | | | 5,415
| | | 4/23/2013
| | | 5/1/2013
| | | | | | 6,127
| | | 4/18/2012
| | | 5/1/2012
| | | | | | 2,692
| | | 4/20/2011
| | | 5/1/2011
| | | Eric H. Starkloff
| | | 16,625
| | | 1/22/2019
| | | 5/1/2019
| | | | | | 25,000
| | | 10/23/2018
| | | 5/1/2019
| | | | | | 16,305
| | | 4/25/2018
| | | 5/1/2018
| | | | | | 12,500
| | | 4/25/2017
| | | 5/1/2017
| | | | | | 16,295
| | | 4/26/2016
| | | 5/1/2016
| | | | | | 14,397
| | | 4/21/2015
| | | 5/1/2015
| | | | | | 6,948
| | | 4/22/2014
| | | 5/1/2014
| | | | | | 2,707
| | | 4/23/2013
| | | 5/1/2013
| | | | | | 1,838
| | | 4/18/2012
| | | 5/1/2012
| | | | | | 808
| | | 4/20/2011
| | | 5/1/2011
| | | Karen M. Rapp
| | | 13,006
| | | 1/22/2019
| | | 5/1/2019
| | | | | | 15,000
| | | 4/25/2018
| | | 5/1/2018
| | | | | | 10,000
| | | 7/25/2017
| | | 5/1/2017
| | | Scott A. Rust
| | | 8,482
| | | 1/22/2019
| | | 5/1/2019
| | | | | | 12,228
| | | 4/25/2018
| | | 5/1/2018
| | | | | | 10,000
| | | 4/25/2017
| | | 5/1/2017
| | | | | | 9,776
| | | 4/26/2016
| | | 5/1/2016
| | | | | | 8,639
| | | 4/21/2015
| | | 5/1/2015
| | | | | | 2,316
| | | 4/22/2014
| | | 5/1/2014
| | | | | | 1,625
| | | 4/23/2013
| | | 5/1/2013
| | | | | | 1,715
| | | 4/18/2012
| | | 5/1/2012
| | | | | | 808
| | | 4/20/2011
| | | 5/1/2011
| | | John C. Roiko
| | | 1,696
| | | 1/22/2019
| | | 5/1/2019
| | | | | | 2,283
| | | 4/25/2018
| | | 5/1/2018
| | | | | | 2,000
| | | 4/25/2017
| | | 5/1/2017
| | | | | | 2,608
| | | 4/26/2016
| | | 5/1/2016
| | | | | | 2,303
| | | 4/21/2015
| | | 5/1/2015
| | | | | | 867
| | | 4/23/2013
| | | 5/1/2013
| | | | | | 1,471
| | | 4/18/2012
| | | 5/1/2012
| | | | | | 647
| | | 4/20/2011
| | | 5/1/2011
| Employment Agreement) and ending 12 months following a Change in Control, then he would be entitled to receive the severance amount in a lump sum on the 60th day following the termination date); |
(2) (ii)
| Calculated by multiplyingto the numberextent not already earned and accrued, a lump sum equivalent to 100% of shareshis EIP bonus as in effect at the time of RSUs by $42.34, the closing price ofapplicable termination or resignation, paid at such time annual bonuses are paid to our Common Stock on December 31, 2019.other senior executives; |
(3) (iii)
| Reflects PRSU awards granted. The PRSU awards were made underaccelerated vesting of Mr. Starkloff’s outstanding time-based RSUs that would have vested had he remained employed by the 2015 Incentive Plan. As previously noted, Mr. Davern's PRSUs are forfeited as ofCompany or a successor for 12 months following the Termination Date pursuanttermination date, and subject to the Transition Agreement.any required approval by our Board; and |
(4) (iv)
| The fair valuesprovided he timely elects healthcare continuation coverage under COBRA, reimbursement of PRSUs are asMr. Starkloff for, or direct payment of, on December 31, 2019 and estimated using a Monte Carlo simulation. The determinationhis COBRA premiums (at the coverage level in effect immediately prior to his termination) until the earlier of fair value of18 months following the PRSUs is affected by our stock price and a number of assumptions including the expected volatility, expected dividend yield and the risk-free interest rate. Our expected volatility attermination date or the date Mr. Starkloff becomes covered under similar plans. If we determine, in our sole discretion, that we cannot provide the foregoing benefit related to COBRA premiums without potentially violating or being subject to an excise tax under applicable law, we would instead provide a taxable monthly payment of grant was based onan equivalent amount, which would be made regardless of whether Mr. Starkloff elects COBRA, and continue until the historical volatilitiesearlier of our stock and18 months following termination or the companies included in the Index over the performance period. As previously noted,date Mr. Davern's PRSUs are forfeited as of the Termination Date pursuant to the Transition Agreement.Starkloff becomes covered under similar plans. |
If Mr. Starkloff’s employment had been terminated by the Company or a successor without Cause or Mr. Starkloff resigned for Good Reason, in either case on December 31, 2022, the Starkloff Employment Agreement Severance Entitlements would have had an estimated value of $4,352,305 (including $2,831,854, which is the estimated value of accelerated time-based RSUs based upon the closing market price of our common stock on December 31, 2022, which was $36.90 per share (the “Applicable Price”). For avoidance of doubt, Mr. Starkloff’s equity awards remain subject to the Change in Control vesting or other treatment as provided for pursuant to the terms of our equity plan and his equity award agreements, as applicable, notwithstanding his eligibility to receive vesting acceleration set forth in (iii) above. These entitlements are described below under “—Equity Awards of Named Executive Officers.” If a Change in Control had occurred as of December 31, 2022, in connection with a termination of employment that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $10,589,082. Arrangements with Ms. Rapp: On February 22, 2021, we entered into the Executive Employment Agreement with Ms. Rapp (the “Rapp Executive Employment Agreement”) who resigned as our Executive Vice President and Chief Financial Officer in January 2023 and transitioned to a strategic advisor role. Pursuant to the Rapp Executive Employment Agreement, in the event of involuntary termination of Ms. Rapp’s employment by the Company or a successor without Cause or TABLE OF CONTENTS STOCK VESTED
FOR FISCAL YEAR ENDED DECEMBER 31, 2019resignation for Good Reason (as such terms are defined in the Rapp Executive Employment Agreement), subject to her executing and not revoking a release of claims in favor of the Company and meeting other requirements in the Rapp Executive Employment Agreement, Ms. Rapp would have been entitled to receive the following (the “Rapp Employment Agreement Severance Entitlements”):
| Alexander M. Davern (1) | | | 38,831 | | | $1,828,940 | | | Alexander M. Davern (2) | | | 50,000 | | | 2,127,500 | | | Eric H. Starkloff (1) | | | 21,946 | | | 1,033,657 | | | Karen M. Rapp (1) | | | 10,000 | | | 471,000 | | | Scott A. Rust (1) | | | 15,403 | | | 725,481 | | | John C. Roiko (1) | | | 4,356 | | | 205,168 | |
(1) (i)
| Calculated by usingcontinuing severance pay at a rate equal to 100% of her annual base salary for a period of 12 months from the NI common stock closing price for the day immediately preceding the vesting date of May 1, 2019, which was $47.10 per share.termination of employment (but if such a termination occurs within the period beginning three months prior to a Change in Control (as defined in the Rapp Executive Employment Agreement) and ending 12 months following a Change in Control, then she would have been entitled to receive the severance amount in a lump sum on the 60th day following the termination date); |
(2) (ii)
| Calculatedto the extent not already earned and accrued, a lump sum equivalent to 100% of her EIP bonus as in effect at the time of the applicable termination or resignation, paid at such time annual bonuses are paid to our other senior executives; |
(iii)
| accelerated vesting of her outstanding time-based RSUs that would have vested had she remained employed by using the NI common stock closing priceCompany or a successor for 12 months following the daytermination date, and subject to any required approval by the Compensation Committee; and |
(iv)
| provided she timely elected healthcare continuation coverage under COBRA, we would have reimbursed her for, or direct payment of, her COBRA premiums (at the coverage level in effect immediately precedingprior to her termination) until the vestingearlier of 12 months following the termination date or the date she becomes covered under similar plans. If we determined in our sole discretion, that we could not provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we instead would have provided a taxable monthly payment of December 16, 2019,an equivalent amount, which was $42.55 per share.would be made regardless of whether she elected COBRA and would continue until the earlier of 12 months following termination or the date she becomes covered under similar plans. |
Pension Benefits and Nonqualified Deferred CompensationNI does not have any pension plans, non-qualified defined contribution plansIf Ms. Rapp’s employment had been terminated by the Company or non-qualified deferred compensation plans.
Potential Payments Upon Termination or Change in ControlOur employment arrangements with each of Mr. Davern and Mr. Starkloff, summarized below, include severance or other payment arrangements that would be triggered by a termination, merger or other change in control of NI.
Arrangements with Mr. Davern: NI entered into an employment agreement with Mr. Davern in connection with his appointment as CEO (the “Davern CEO Agreement”). Under the Davern CEO Agreement, the initial term of Mr. Davern’s employment as Chief Executive Officer extended from January 1, 2017 through December 31, 2019.
On October 28, 2019, NI entered into a Transition Agreement with Mr. Davern pursuant to which Mr. Davern transitioned from his service as Chief Executive Officer on January 31, 2020 into a strategic advisory role whereby he is providing certain transition and advisory services to NI through May 5, 2020 (the “Transition Period”). The Transition Agreement superseded and replaced the CEO Agreement as of October 28, 2019. During the Transition Period, if either NI terminates the employment of Mr. Davernsuccessor without Cause (as definedor Ms. Rapp resigned for Good Reason, in the Transition Agreement) or the parties mutually agree to terminate prior to May 5, 2020, Mr. Davern will receive a lump sum equal to $267,063, reflecting any remaining base salary that would have been received under the Transition Agreement and, provided Mr. Davern signs his Separation Agreement, the benefits offered under such Separation Agreement. If such termination occurredeither case, on December 31, 2019 and, assuming Mr. Davern2022, the Rapp Employment Agreement Severance Entitlements would have had signed his Separation Agreement on December 31, 2019, Mr. Davern’s equity awards that are subject only to service-based vesting, and scheduled to vest prior to May 5, 2021, would accelerate vesting as of the termination date for an amount equal to $4,510,269, based upon the closing market price of NI’s common stock at December 31, 2019, which was $42.34 per share (the “Applicable Price”). Mr. Davern's unvested PRSUs would be forfeited pursuant to the Transition Agreement. Mr. Davern’s health continuation coverage costs will be paid through May 31, 2021 under the Separation Agreement for aestimated value of $33,821, assuming a termination occurred as$1,840,544 (including $1,135,782, which is the estimated value of December 31, 2019. accelerated time-based RSUs at the Applicable Price).
If a Change in Control had occurred as of December 31, 20192022 in connection with a termination of employment that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would have been $3,297,642. In connection with Ms. Rapp’s resignation as our Executive Vice President and Chief Financial Officer, we entered into the Rapp Offer Letter, which superseded and replaced the Rapp Executive Employment Agreement. Ms. Rapp did not receive any severance payments or benefits in connection with her resignation. Arrangements with Ms. Favre: On February 22, 2021, we entered into the Executive Employment Agreement with Ms. Favre (the “Favre Executive Employment Agreement”). In the event of involuntary termination of Ms. Favre’s employment by the Company or a successor without Cause or resignation for Good Reason (as such terms are defined in the Favre Executive Employment Agreement ), subject to her executing and not revoking a release of claims in favor of the Company and meeting other requirements in the Favre Executive Employment Agreement, Ms. Favre would be as set forth underentitled to receive the “Potential Valuefollowing (the “Favre Employment Agreement Severance Entitlements”): (i) continuing severance pay at a rate equal to 100% of Equity Awards Uponher annual base salary for a period of 12 months from the date of termination of employment (but if such a termination occurs within the period beginning three months prior to a Change in Control” table below. Arrangements with Mr. Starkloff: NI entered into an offer letter with Mr. Starkloff, dated October 23, 2018,Control (as defined in connection with his appointmentthe Favre Executive Employment Agreement) and ending 12 months following a Change in Control, then she would be entitled to receive the severance amount in a lump sum on the 60th day following the termination date); (ii) to the extent not already earned and accrued, a lump sum equivalent to 100% of her EIP bonus as President and Chief Operating Officer (the “Offer Letter”). Underin effect at the Offer Letter, Mr. Starkloff’s employment was “at-will” for no specific time period and could have been terminated by Mr. Starkloffof the applicable termination or NIresignation, which amount would be paid at anysuch time with or without cause or advance notice. In the event Mr. Starkloff’s employment was terminated by NIannual bonuses are paid
TABLE OF CONTENTS to our other thansenior executives of the Company; (iii) accelerated vesting of her outstanding time-based RSUs that would have vested had she remained employed by the Company or a successor for 12 months following the termination date, and subject to any required approval by the Compensation Committee; and (iv) provided she timely elects healthcare continuation coverage under COBRA, we would reimburse her for, or direct payment of, her COBRA premiums (at the coverage level in effect immediately prior to her termination) until the earlier of 12 months following the termination date or the date she becomes covered under similar plans. If we determine in our sole discretion, that we cannot provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we would instead provide a taxable monthly payment of an equivalent amount, which would be made regardless of whether she elects COBRA and continue until the earlier of 12 months following termination or the date she becomes covered under similar plans. If Ms. Favre’s employment had been terminated by the Company or a successor without Cause or Disability (eachMs. Favre resigned for Good Reason, in either case on December 31, 2022, pursuant to the Favre Executive Employment Agreement, the Favre Employment Agreement Severance Entitlements would have had an estimated value of $1,200,440 (including $563,057, which is the estimated value of accelerated time-based RSUs at the Applicable Price). If a Change in Control had occurred as definedof December 31, 2022 in connection with a termination of employment that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the Offer Letter)termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $2,422,743. Arrangements with Mr. Rust: On December 15, 2022, we entered into the Rust Executive Employment Agreement with Mr. Rust in connection with his new role of Executive Vice President, Global Operations of the Company, effective December 15, 2022. The Rust Executive Employment Agreement replaced and superseded Mr. Rust’s prior Executive Employment Agreement dated September 28, 2021, effective October 1, 2021. In the event of involuntary termination of Mr. Rust’s employment by the Company or death,a successor without Cause or by Mr. Starkloffresignation for Good Reason (as such terms are defined in the Offer Letter),Rust Executive Employment Agreement ), subject to himhis executing and not revoking a release of claims in favor of NIthe Company and meeting other requirements in the Offer Letter,Rust Executive Employment Agreement, Mr. StarkloffRust would have beenbe entitled to receive the following (the “Rust Employment Agreement Severance Entitlements”): (i) continuing severance pay at a cash payment (the “Starkloff COO Severance Payment”), which is equal to the sum of (i) a lump-sum paymentrate equal to 100% of his annual base salary for a period of 12 months from the date of termination of employment (but if such a termination occurs within the period beginning three months prior to a Change in Control (as defined in the Rust Executive Employment Agreement) and ending 12 months following a Change in Control, then he would be entitled to receive the severance amount in a lump sum on the 60th day following the termination date); (ii) to the extent not already earned and accrued, a lump sum equivalent to 100% of his EIP bonus as in effect onat the time of the applicable termination or resignation, which amount would be paid at such time annual bonuses are paid to other senior executives of the Company; (iii) accelerated vesting of his outstanding time-based RSUs that would have vested had he remained employed by the Company or a successor for 12 months following the termination date, (ii) a lump-sum payment equaland subject to (A)any required approval by the AIP bonus at target level for the year of termination, multiplied by (B) the average of actual AIP performance percentage over the previous three completed performance years (determined based on the actual payout as a percentage of the target AIP bonus for each such year),Compensation Committee; and (iii) payment of monthly premiums for continued medical, dental and vision insurance(iv) provided he timely elects healthcare continuation coverage under COBRA, (if Mr. Starkloff had timely electedwe would reimburse him for, or direct payment of, his COBRA coverage)premiums (at the coverage level in effect immediately prior to his termination) until the earlier of 12 months following the termination date or the date he becomes covered under similar plans. If we determine in our sole discretion, that we cannot provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we would instead provide a taxable monthly payment of an equivalent amount, inwhich would be made regardless of whether he elects COBRA and continue until the event providing such payment would violate any applicable lawearlier of 12 months following termination or result in an excise tax to the company,date he becomes covered under similar plans. If Mr. Rust’s employment had been terminated by the Company or a successor without Cause or Mr. Rust resigned for Good Reason, in either case until the earliest of (A) the date that was twelve months following the Termination Date, (B) the date when Mr. Starkloff was offered substantially equivalent health insurance coverage in connection with new employment, or (C) the date upon which Mr. Starkloff ceased to be eligible for coverage under COBRA or other applicable law or policy governing such coverage. In addition, Mr. Starkloff would have received accelerated vesting of the number of outstanding RSUs, excluding the Promotion RSUs (as defined in the Offer Letter) which would not have been subject to acceleration under this paragraph, that would have vested if Mr. Starkloff had remained employed by the company for twelve (12) months following the termination date. A Starkloff COO Severance Payment of $814,466 would have been payable to Mr. Starkloff if a termination event had occurred on December 31, 2019. If such termination event2022, the Rust Employment Agreement Severance Entitlements would have had occurred on December 31, 2019, thean estimated value of such$1,140,034 (including $536,046, which is the estimated value of accelerated time-based RSUs would have been $1,099,866, based uponat the Applicable Price. Price). If a Change in Control had occurred as of December 31, 20192022 in connection with a termination that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be as set forth under the “Potential Value of Equity Awards Upon a Change in Control” table below.$1,919,206. TABLE OF CONTENTS Arrangements with Mr. Green: On October 28, 2019, NIFebruary 22, 2021, we entered into the Starkloff Executive Employment Agreement with Mr. Starkloff, pursuantGreen (the “Green Executive Employment Agreement”) who departed, by mutual agreement of Mr. Green and the Company, as the Company’s Chief Revenue Officer and Executive Vice President, effective December 31, 2022. Pursuant to which Mr. Starkloff was appointed as our Chief Executive Officer, effective February 1, 2020. The Starkloffthe Green Executive Employment Agreement, initially entitled Mr. Starkloff to participate in the AIP and the CPB with an AIP targetevent of 110% of his base salary and an CPB target of 25% of his base salary. On February 3, 2020, the Starkloff Executive Employment Agreement was amended to reflect the implementation of the EIP. Pursuant to the amendment, in lieuinvoluntary termination of Mr. Starkloff’s participation inGreen’s employment by the AIP and CPB, Mr. Starkloff will have an annual EIP target of 135% of his base salary. In the event Mr. Starkloff’s employment is terminated either by NICompany or a successor without Cause or Mr. Starkloff resignsresignation for Good Reason (as such terms are defined in the Green Executive Employment Agreement),Agreement ), subject to himhis executing and not revoking a release of claims in favor of NI and meeting other requirements in the StarkloffGreen Executive Employment Agreement, Mr. Starkloff will beGreen would have been entitled to receive the following (the “Starkloff“Green Employment Agreement Severance Payment”Entitlements”): (i) continuing severance pay at a rate equal to one-hundred percent (100%)100% of his Base Salary,base salary, as then in effect, (less applicable withholding), for a period of eighteen (18)12 months from the date of termination (but if such a termination paidoccurs in accordance with NI’s normal payroll practices;a period beginning 3 months prior to a Change in Control (as defined in his employment agreement) and ending 12 months following a Change in Control, then he would be entitled to receive the severance amount in a lump sum in 60 days); (ii) to the extent not already earned and accrued, a lump sum equivalent to one hundred percent (100%)100% of his EIP bonus as in effect at the time of the applicable termination or resignation, less applicable withholding, which amount shall be paid at such time annual bonuses are paid to other senior executives of NI (for avoidance of doubt in no case would Mr. Starkloff be entitled to more than one EIP bonus payment under the terms of this provision);resignation; (iii) accelerated vesting of Mr. Starkloff’shis outstanding service-based RSUs that would have vested had he remained employed by NI for twelve (12)12 months following the termination date, and subject to any required approval by the Board;Compensation Committee; and (iv) provided he timely elects healthcare continuation coverage under COBRA, NI reimbursement of Mr. Starkloffwe will reimburse him for, or direct payment of, his COBRA premiums (at the coverage level in effect immediately prior to his termination) until the earlier of eighteen (18)12 months following the termination date or the date Mr. Starkloffhe becomes covered under similar plans. If NI determines,we determined in itsour sole discretion, that itwe cannot provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, NI willwe would have instead provideprovided a taxable monthly payment of an equivalent amount, which willwould be made regardless of whether Mr. Starkloffhe elects COBRA and continue until the earlier of eighteen (18)12 months following termination or the date Mr. Starkloffthe executive becomes covered under similar plans. If In connection with Mr. Green’s departure from the StarkloffCompany as our Chief Revenue Officer and Executive EmploymentVice President, effective December 31, 2022, we entered into (i) the Transition Agreement had been in effectand Release with Mr. Green on November 14, 2022, which became effective on November 22, 2022 (the “Transition Agreement”), and (ii) the Separation Agreement and Release with Mr. Green, attached as an exhibit to the Transition Agreement, on December 23, 2022, which became effective on December 31, 2019,2022 (the “Separation Agreement,” and together with the Starkloff EmploymentTransition Agreement, Severance Payment would have been $4,184,576 (including the value of accelerated RSUs at“Green Transition and Separation Agreement”). The Green Transition and Separation Agreement superseded and replaced the Applicable Price of $2,158,366). Notwithstanding any contrary provision, if a termination described in the Starkloff Executive Employment Agreement occurs within the period beginning three months prior to a Change in Control (as such term is defined in the StarkloffGreen Executive Employment Agreement as amended) and ending twelve (12) months following a Change in Control, thenof November 22, 2022. Pursuant to the Separation Agreement, Mr. Starkloff will beGreen received (i) the Green Employment Agreement Severance Entitlements to which he was entitled pursuant to receive the same severance described in the preceding paragraph except the severance amount set forth TABLE OF CONTENTS
in (i) above will be paid in a lump-sum on the sixtieth (60th) day following the termination date. For avoidanceSection 6(a) (Termination Without Cause or Resignation for Good Reason) of doubt, Mr. Starkloff’s equity awards will remainhis existing Green Executive Employment Agreement (effective February 22, 2021) subject to Mr. Green agreeing to a release of claims in favor of the Change in Control vesting or other treatment as provided for pursuantCompany and reaffirming his commitment to comply with his existing non-compete and no solicitation covenants and confidentiality obligations and (ii) a Company-owned laptop. Pursuant to the termsTransition Agreement, Mr. Green received a lump sum payment of NI’s equity plan$10,000 for executive transition services (paid in December 2022) subject to Mr. Green agreeing to a release of claims in favor of the Company and reaffirming his equity award agreements, as applicable, notwithstandingcommitment to comply with his eligibilityexisting non-compete and no solicitation covenants and confidentiality obligations. See the section entitled “Payments and Benefits Provided to receive vesting acceleration set forth in (iii) above. If a Change in Control had occurred as of December 31, 2019Mr. Green In Connection with his Departure” below for more information about his severance payments and benefits received in connection with a termination that resulted inhis departure.
Equity Awards of Named Executive Officers Our Named Executive Officers may benefit along with non-executive employees from acceleration provisions under the terms of our equity incentive plans2010 Incentive Plan, 2015 Incentive Plan, 2020 Incentive Plan and equity award agreements of2022 Incentive Plan that are applicable to all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards included with such termination benefits would be as set forth under the “Potential Value of Equity Awards Upon a Change in Control” table below. Other arrangements: None of NI’s other executives have employment agreements, severance payment arrangements or other payment arrangements that would be triggered by a termination, merger or other change of control of NI. However, the terms of Mr. Rust’s employment provides for acceleration of certain restricted stock units in the event of his termination under certain circumstances andparticipating employees. Further, each of our Named Executive Officers also have PRSUs under our 2015 Incentive Plan, 2020 Incentive Plan, and 2022 Incentive Plan with special vesting terms upon a change of control and may benefit, along with non-executive employees, from accelerated vesting underof the terms of our 2015 Incentive Plan and 2010 Incentive Plan that are applicable to all participating employees,Company, as further described below.
Mr. Rust is a party to an Acceleration Agreement with NI. The Acceleration Agreement provides for the immediate vesting of all of Mr. Rust’s then outstanding restricted stock units in the event Mr. Rust’s employment is terminated without Cause or he resigns for Good Reason (as defined in the Acceleration Agreement), subject to him executing and not revoking a release of claims in favor of NI and meeting other requirements in the Acceleration Agreement. If a termination event had occurred on December 31, 2019, the value of such accelerated restricted stock units would have been $2,712,766, based upon the Applicable Price.
Additionally, NI’s Named Executive Officers may benefit along with non-executive employees of NI from acceleration provisions under NI’s equity incentive plans. The 2010 Incentive Plan provides for acceleration of all unvested restricted stock units in the event of a change of control of NI or the award recipient’s death or disability (each, an “acceleration event”).Company. A change of control under the 2010 Incentive Plan means any of the following events:
any person becomes the beneficial owner of fifty percent (50%)50% or more of the total voting power represented by NI’sour outstanding voting securities; existing members of NI’sour Board of Directors cease to constitute at least a majority of the Board of Directors;Board; TABLE OF CONTENTS a public announcement is made of a tender or exchange offer for fifty percent (50%)50% or more of the outstanding voting securities of NI and it is not opposed by NI’s Board of Directors;our Board; theour stockholders of NI approve a merger or consolidation of NI with any other corporation or partnership, unless NIour stockholders prior to such transaction will hold a majority of the voting power of the surviving or acquiring entity; or
theour stockholders of NI approve a plan of complete liquidation of NI or an agreement for the sale or disposition by NI of all or substantially all of NI’sour assets.
In the case of unvested restricted stock units under the 2010 Incentive Plan, 100% of the restricted stock units that have not vested as of the date of death or disability will immediately vest.vest (provided that such death or disability occurs prior to the 15th anniversary of the vesting commencement date). Pursuant to the 2015 Incentive Plan, 2020 Incentive Plan and 2022 Incentive Plan, in the event of a change in control of NI,the Company, awards will be treated as determined by the administrator, including that each award be assumed or substituted by the successor corporation; provided that, in the event the successor corporation does not assume or substitute awards, the restriction period of any award of restricted stock or restricted stock units shallwill immediately be accelerated, and the restrictions shall expire.will expire, and, with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. With the exception of the two forms of award agreement under the 2015 Incentive Plan, the PRSU award agreements under the 2015 Incentive Plan, 2020 Incentive Plan and 2022 Incentive Plan provide that the number of PRSUs eligible to vest at 100% of target levels will be scheduled to vest in equal monthly installments following the change of control over the remainder of the original performance period, except that they will immediately vest if the PRSUs are not assumed or substituted in connection with the change in control. Following any such assumption or substitution of awards in connection with a change in control, if an employee is terminated without Cause (as defined in the 2015 Incentive Plan)applicable plan) within twenty-four (24)24 months following the change in control, then the vestingrestriction period of such employee’s awards will accelerate and theany award of restricted stock or restricted stock units will immediately become fully vested.be accelerated, and the restrictions will expire, and, with respect to the respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. In the event of a change in control involves a restructuring (as such term is defined in the plans) or occurs in connection with a series of related transactions involving a restructuring, and if the Company is not the surviving entity, and as a part of the restructuring stock, other securities, cash, or property are exchanged for shares of Company stock, then the award recipient shall be entitled to purchase or receive, as appropriate for the form of award, the number of shares, other securities, cash, or property to which that number of shares of Company stock would have been entitled in connection with such restructuring. Additionally, award agreements under the 2015 Incentive Plan, 2020 Incentive Plan and 2022 Incentive Plan provide for acceleration of all unvested time-based RSUs in the event of the award recipient’s death or disability (provided that such death or disability occurs prior the 15th anniversary of the vesting commencement date), except that both time-based RSUs and PRSUs vest under one of the 2015 Incentive Plan forms of award agreement. A change in control under the 2015 Incentive Plan, 2020 Incentive Plan and 2022 Incentive Plan means any of the following events: any person becomes the beneficial owner of fifty percent (50%)50% or more of the total voting power represented by NI’sour outstanding voting securities; the sale or disposition by NIus of all or substantially all of itsour assets; existing members of NI’sour Board of Directors cease to constitute at least a majority of the Board of Directors;Board; or TABLE OF CONTENTS
the consummation of a merger or consolidation of NIus with any other corporation, unless NIour stockholders prior to such transaction will hold at least 50% of the voting power of the surviving or acquiring entity. TABLE OF CONTENTS Estimated Values of Termination and Change in Control Severance Payments to Named Executive Officers The following table, footnotes and narrative set forth our payment obligations pursuant to the provisionscompensation arrangements of our NEOs, under the 2015 Incentive Plan,circumstances described below, assuming their employment was terminated on December 31, 2022. Because Mr. Green’s employment terminated on December 31, 2022, his arrangements are not discussed in this section. Mr. Green’s severance package is described below under “Payments and Benefits Provided to Mr. Green in Connection with His Departure.” Ms. Rapp did not receive any severance payments or benefits in connection with her resignation. | Eric H. Starkloff | | | — | | | 10,589,082 | | | 4,352,305 | | | 12,109,533 | | | 10,589,082 | | | Karen M. Rapp | | | — | | | 3,297,642 | | | 1,840,544 | | | 4,002,404 | | | 3,297,642 | | | Ritu Favre | | | — | | | 2,422,743 | | | 1,200,440 | | | 3,060,126 | | | 2,523,194 | | | Scott A. Rust | | | — | | | 1,919,206 | | | 1,140,034 | | | 2,523,194 | | | 1,919,206 | |
(1)
| Voluntary Termination. The Company does not pay severance benefits upon voluntary termination. |
(2)
| Change in Control. The Company has not entered into any arrangements with any of its executive officers to provide “single trigger” severance payments upon a change in control. The Company’s equity incentive plans generally provide for the acceleration of vesting of awards granted under the plans upon a change in control only if the successor entity does not agree to assume or substitute for the awards. These provisions generally apply to all holders of awards under the equity incentive plans. |
The amounts in this column represent the aggregate value of accelerated vesting in respect toof unvested time-based RSUs and unvested PRSUs ifheld by the NEOs (other than Mr. Green), calculated based on the Applicable Price assuming that (i) a change in control occurs before the last day of the performance period, and such PRSUs are accelerated, rather than vesting based on our TSR relative to the Index during the performance period, the number of PRSUs eligible to vest will equal 100% of the target number of PRSUs. The number of PRSUs so determined will be scheduled to vest in equal monthly installments following the change in control over the remainder of the original performance period. Following any assumption or substitution of any equity awards, if the employment of an employee is terminated without “cause” (as defined in the 2015 Incentive Plan) within 24 months following the change in control of NI, then the vesting of such employee’s award will immediately accelerate and the restricted stock, RSUs and PRSU awards will immediately become fully vested. No PRSUs were awarded prior to 2019.
If a Change in Controltransaction had occurred as of December 31, 2019 that resulted2022, and (ii) the successor entity did not assume or substitute for the NEOs’ outstanding equity awards and their respective unvested and outstanding awards fully accelerated upon such change in control, and, with respect to awards with performance-based vesting, all performance goals or other vesting criteria were deemed achieved at one hundred percent (100%) of target levels.
| Eric H. Starkloff | | | $4,980,762 | | | $5,608,320 | | | Karen M. Rapp | | | 1,741,237 | | | 1,556,405 | | | Ritu Favre | | | 1,177,147 | | | 1,245,596 | | | Scott A. Rust | | | 1,023,717 | | | 895,489 | |
(3)
| Involuntary Termination Outside of a Change in Control. We have entered into certain termination severance arrangements with our NEOs as described above under “—Termination and Change in Control Severance Arrangements with our Named Executive Officers.” The following table shows a breakdown of payments that would have been due to our NEOs (other than Mr. Green) if an involuntary termination outside of a change of control had occurred as of December 31, 2022. |
| Eric H. Starkloff | | | 1,102,500 | | | 385,191 | | | 32,760 | | | 2,831,854 | | | 4,352,305 | | | Karen M. Rapp | | | 500,000 | | | 194,100 | | | 10,662 | | | 1,135,782 | | | 1,840,544 | | | Ritu Favre | | | 450,000 | | | 174,690 | | | 12,693 | | | 563,057 | | | 1,200,440 | | | Scott A. Rust | | | 425,000 | | | 164,985 | | | 14,003 | | | 536,046 | | | 1,140,034 | |
The amounts in the acceleration undertable above in the termscolumn entitled “Accelerated RSUs” represent the aggregate value of out equity incentive plans and equity award agreementsaccelerated vesting in respect of all unvested awards outstanding time-based RSUs held by the NEOs (other than Mr. Green). (4)
| Involuntary Termination in Connection with a Change in Control. |
The following table shows a breakdown of payments that would have been due to our NEOs (other than Mr. Green) if an involuntary termination in connection with a change of control had occurred as of December 31, TABLE OF CONTENTS 2022, assuming (i) the successor entity had not assumed or substituted for outstanding equity awards in connection with such date,change in control transaction and (ii) an involuntary termination in connection with a change of control had occurred as of December 31, 2022. | Eric H. Starkloff | | | 1,102,500 | | | 385,191 | | | 32,760 | | | 4,980,762 | | | 5,608,320 | | | 12,109,533 | | | Karen M. Rapp | | | 500,000 | | | 194,100 | | | 10,662 | | | 1,741,237 | | | 1,556,405 | | | 4,002,404 | | | Ritu Favre | | | 450,000 | | | 174,690 | | | 12,693 | | | 1,177,147 | | | 1,245,596 | | | 3,060,126 | | | Scott A. Rust | | | 425,000 | | | 164,985 | | | 14,003 | | | 1,023,717 | | | 895,489 | | | 2,523,194 | |
The following table shows a breakdown of the aggregate value of such accelerated awardsvesting in respect of unvested RSUs and unvested PRSUs held by our NEOs (other than Mr. Green) that were executive officers of the Company as of December 31, 2022, calculated based on the Applicable Price, assuming (i) the successor entity had assumed or substituted for outstanding equity awards in connection with such change in control transaction and (ii) an involuntary termination in connection with a change of control had occurred as of December 31, 2022. | Eric H. Starkloff | | | $1,909,354 | | | $— | | | Karen M. Rapp | | | 1,135,782 | | | — | | | Ritu Favre | | | 563,057 | | | — | | | Scott A. Rust | | | 536,046 | | | — | |
(5)
| Death or Disability. The Company has not entered into any arrangements with any of its executive officers to provide severance payments upon a death or disability. The 2010 Incentive Plan provides for acceleration of all unvested restricted stock units in the event of the award recipient’s death or disability. The 2022 Incentive Plan provides that vesting and other restrictions may be accelerated in the event of the award recipient’s death or disability at the plan administrator’s sole discretion. The NEO’s time-vesting RSUs provide for accelerated vesting if a termination due to death or disability occurs prior to the 15th anniversary of the vesting commencement date. |
The amounts in this column represent the aggregate value of accelerated vesting in respect of unvested equity awards held by the NEOs (other than Mr. Green), calculated based on the Applicable Price assuming that a death or disability had occurred as of December 31, 2022 and the plan administrator elected to accelerate vesting of the NEOs’ awards. Payments and Benefits Provided to Mr. Green In Connection with his Departure Mr. Green, our Namedformer Chief Revenue Officer and Executive OfficersVice President, Portfolio Business Unit, departed from the Company, effective December 31, 2022, by mutual agreement of Mr. Green and the Company. In connection with his departure from the Company, we entered into the Green Transition and Separation Agreement, which superseded and replaced the Green Executive Employment Agreement. Pursuant to the Separation Agreement, Mr. Green received the following: The Green Employment Agreement Severance Entitlements to which he was entitled pursuant to Section 6(a) (Termination Without Cause or Resignation for Good Reason) of his existing Green Executive Employment Agreement consisting of the following: ○ | payments of $595,000, less applicable withholding, representing 12 months of his annual base salary (paid in the form of salary continuation from December 31, 2022 to December 31, 2023); |
○ | a lump sum payment in the amount of $595,000, representing 100% of his annual cash incentive bonus payment, which was paid in March 2023 at the same time the EIP bonus was paid to other senior executives of the Company; and |
○ | reimbursement, or payment directly on his behalf, of COBRA premiums through December 31, 2023, or the date that he becomes eligible for coverage under a subsequent employer’s plan; and |
A Company-owned laptop. TABLE OF CONTENTS Pursuant to the Transition Agreement, Mr. Green received the payment of $10,000 for executive transition services (paid as a lump sum in December 2022) as well as continued employment from November 15, 2022 to December 31, 2022. In addition, pursuant to Separation Agreement, the portion of Mr. Green’s outstanding time-based RSU awards that would have beenvested had Mr. Green remained employed through December 31, 2023 (representing 22,582 units, which would have had a value of $833,276 at the Applicable Price) were accelerated and vested upon his departure on December 31, 2022. The remaining portions of his time-based RSU awards with vesting dates after December 31, 2023 were forfeited upon his departure on December 31, 2022. Additionally, the PRSUs that were scheduled to vest after December 31, 2022 (such as set forththe PRSUs granted in the table below:2021 and 2022) were forfeited. Potential Value of Equity Awards Upon a Change of Control | Alexander M. Davern | | | $6,927,840 | | | $2,244,020 | | | Eric H. Starkloff | | | 4,802,330 | | | 703,903 | | | Karen M. Rapp | | | 1,609,174 | | | 550,674 | | | Scott A. Rust | | | 2,353,638 | | | 359,128 | | | John C. Roiko | | | 587,468 | | | 71,809 | |
TABLE OF CONTENTS As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO for fiscal year 2019, Alex Davern. For 2019, our last completed fiscal year, we have estimated the median of the annual total compensation of all employees of our company (other than our CEO), was $49,581; and the annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $8,487,974.
Based on this information, for fiscal year 2019, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of employees was 171 to 1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
To identify the median of the annual total compensation of all our employees as well as to(other than our President and CEO) and the annual total compensation of our President and CEO, who was serving in that position on December 31, 2022.
To determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments, and estimates that we used were as follows: We selected December 6, 2017,31, 2020, the date of the most recent and validated global employee data file, as the date upon which we identified the median employee. We used the same median employee as lastused in our disclosure for fiscal year 2020 and 2021 because we believeduring fiscal year 2022 there has beenwas no change in our employee population or employee compensation arrangements during 2019 that we reasonably believe would significantly impact theour pay ratio disclosure. We identified the “median employee” by taking all employees, excluding our President and CEO and the other excluded groups described below, and ranking them based on annualized U.S. dollar equivalent direct compensation, including the value of stock awards, and converting the base salary and bonus payouts in local currency utilizing the latest exchange rate table provided by our finance team. In performing our analysis, we excluded those individuals that perform work for us but are paid by a third-party. The total number of U.S. and non-U.S. employees used for our de minimis calculation was 7,035. We then excluded employees in those countries that representedhad less than 0.5% of our total global population.75 employees. The total number of employees subject to this exclusion equaled 4.6%4.5% of our total global population, as permitted by the applicable SEC de minimis rule. The jurisdictions from which those employees are being excluded, and the approximate number of employees excluded from each jurisdiction, are as follows: Singapore, 51; Italy, 50; Mexico, 39; Ireland, 25; Belgium, 22; Brazil, 21; Philippines, 20; Russian Federation, 18; Canada, 10; Sweden, 9; Netherlands, 8; Switzerland, 7; Austria, 5; Lebanon, 34, Canada, 31, Sweden, 29, Netherlands, 27, Ireland, 24, Australia, 22, Switzerland, 22, Philippines, 20, Spain, 18, Finland, 16, Poland, 14, Belgium, 12, Israel, 11, Thailand, 11,5; Colombia, 4; Czech Republic, 10,4; Hong Kong, 10, Austria, 9,4; Thailand, 4; Denmark, 3; Poland, 3; Spain, 2; Vietnam, 2; Finland, 1; and Indonesia, 9, Colombia, 8, Turkey, 8, South Africa, 7, Denmark, 5, Viet Nam, 5, Egypt, 3, Slovenia, 3, Chile, 2, New Zealand, 2,1. We have estimated the median of the annual total compensation of all employees of our Company (other than our President and Norway, 2. TheCEO) was $51,375 (using a consistently applied compensation measure of base salary, plus bonus, target commission, and the value of stock awards, as applicable). We then calculated all the elements of such median employee’s compensation for fiscal year 2022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total numbercompensation of U.S.$63,362, which includes the median employee’s total compensation as previously calculated and non-U.S.including additional elements such as term life insurance premiums paid by the Company and overtime. In determining our calculation, the annual total compensation of our President and CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $8,398,504. Based on this information, for fiscal year 2022, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was 133 to 1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. TABLE OF CONTENTS PAY VERSUS PERFORMANCE
As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between the compensation actually paid to our named executive officers and the financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” 2022 Pay Versus Performance Table | 2022 | | | $8,398,504 | | | $5,219,573 | | | — | | | — | | | $2,765,286 | | | $1,846,979 | | | $87 | | | $80 | | | $139.6 | | | 11.0% | | | 2021 | | | $8,190,385 | | | $5,028,215 | | | — | | | — | | | $2,919,793 | | | $2,434,470 | | | $102 | | | $115 | | | $89.3 | | | 13.4% | | | 2020 | | | $11,465,634 | | | $11,818,530 | | | $461,768 | | | $(4,713,424) | | | $1,843,737 | | | $1,839,488 | | | $107 | | | $120 | | | $143.7 | | | -6.0% | |
1
| The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Starkloff (our President and CEO) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.” |
2
| The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Starkloff, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Starkloff during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Starkloff’s total compensation as reported in the Summary Compensation Table for each year to determine the compensation actually paid: |
| 2022 | | | $8,398,504 | | | ($7,266,432) | | | $4,087,501 | | | $5,219,573 | | | 2021 | | | $8,190,385 | | | ($6,659,514) | | | $3,497,344 | | | $5,028,215 | | | 2020 | | | $11,465,634 | | | ($10,414,680) | | | $10,767,576 | | | $11,818,530 | |
(a)
| The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
TABLE OF CONTENTS (b)
| The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair value did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
| 2022 | | | $6,816,189 | | | $(1,488,915) | | | $— | | | $(889,312) | | | $(350,460) | | | $— | | | $4,087,501 | | | 2021 | | | $5,883,499 | | | $(1,884,822) | | | $— | | | $(196,363) | | | $(304,970) | | | $— | | | $3,497,344 | | | 2020 | | | $10,639,879 | | | $327,527 | | | $— | | | $(199,830) | | | $— | | | $— | | | $10,767,576 | |
3
| Mr. Davern ceased to be our CEO, effective January 31, 2020, and continued to serve on our Board. The dollar amount reported in column (d) is the amount of total compensation reported for Mr. Davern for 2020 in the “Total” column of the 2020 Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table” in our proxy statement for our 2021 Annual Meeting of Stockholders. As Mr. Davern was not a Named Executive Officer for 2021 and 2022, we did not provide compensation information for such years. |
4
| The dollar amount reported in column (e) represents the amount of “compensation actually paid” to Mr. Davern in 2020, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amount does not reflect the actual amount of compensation earned by or paid to Mr. Davern during 2020. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Davern’s total compensation as reported in the Summary Compensation Table compensation for 2020 to determine the compensation actually paid in 2020: |
| 2020 | | | $461,768 | | | ($131,252) | | | $(5,043,940) | | | $(4,713,424) | |
(a)
| The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for 2020. |
(b)
| The equity award adjustments for 2020 include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in 2020 that are outstanding and unvested as of December 31, 2020; (ii) the amount of change as of December 31, 2020 (from the end of December 31, 2019) in fair value of any awards granted in prior years that are outstanding and unvested as of December 31, 2020; (iii) for awards that are granted and vest in 2020, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in 2020, the amount equal to the change as of the vesting date (from the end of the December 31, 2019) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during 2020, a deduction for the amount equal to the fair value at the end of December 31, 2019; and (vi) the dollar value of any dividends or other earnings paid on stock awards in 2020 prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other |
TABLE OF CONTENTS employees irrespectivecomponent of total compensation for 2020. The valuation assumptions used to calculate fair value did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
| 2020 | | | $156,251 | | | $— | | | $— | | | $(499,909) | | | $(4,700,282) | | | $— | | | $(5,043,940) | |
5
| The dollar amounts reported in column (f) represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. Starkloff who has served as our President and CEO since February 2020 and Mr. Davern who served as our CEO through January 2020) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Starkloff and Mr. Davern, as applicable) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022 and 2021, Karen Rapp, Jason Green, Scott Rust and Ritu Favre and (ii) for 2020, Karen Rapp, Jason Green, Scott Rust and Carla Pineyro Sublett. |
6
| The dollar amounts reported in column (g) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Starkloff and Mr. Davern), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Starkloff and Mr. Davern) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation as reported in the Summary Compensation Table compensation for the NEOs as a group (excluding Mr. Starkloff and Mr. Davern) for each year to determine the compensation actually paid, using the same methodology described above in Footnote 2: |
| 2022 | | | $2,765,286 | | | $(1,772,455) | | | $854,148 | | | $1,846,979 | | | 2021 | | | $2,919,793 | | | $(2,053,900) | | | $1,568,578 | | | $2,434,470 | | | 2020 | | | $1,843,737 | | | $(1,182,923) | | | $1,178,674 | | | $1,839,488 | |
(a)
| The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
| 2022 | | | $1,619,185 | | | $ (272,630) | | | $— | | | $(280,159) | | | $(212,248) | | | $— | | | $854,148 | | | 2021 | | | $1,893,716 | | | $(171,934) | | | $— | | | $(54,649) | | | $(98,555) | | | $— | | | $1,568,578 | | | 2020 | | | $1,158,516 | | | $70,246 | | | $— | | | (50,088)
| | | $— | | | $— | | | $1,178,674 | |
7
| Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
8
| The peer group used for this purpose is the following published industry index: Russell 2000 Index. |
TABLE OF CONTENTS 9
| The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
10
| Non-GAAP organic revenue growth (“Revenue Growth”) is defined as GAAP revenue (excluding (i) any acquisitions by the Company other than N H Research, LLC or (ii) any dispositions by the Company). While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Revenue Growth is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. |
Tabular List of Financial Performance Measures
As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The performance measures that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows: Revenue Growth
Non-GAAP operating margin levels based on organic results (“Operating Margin”) Recurring billed value of all termed software subscription license agreements and perpetual maintenance agreements normalized to a one-year period (“Software Annual Recurring Revenue”). Analysis of the exemption was 8,050. The number of U.S. and non-U.S. employees used for the de minimis calculation was 374. We also excluded those employees classified as “contingent workers” as well as employees with termination dates during December 2017 to January 2018, as they would not be activeInformation Presented in the futurePay versus Performance Table
As described in more detail in the section “Executive Compensation – Compensation Discussion and shouldAnalysis,” the Company’s executive compensation program reflects a variable “pay-for-performance” philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not be eligible for selection as our “median” employee. We identifiedpresented in the “median employee” taking all employees, excludingPay versus Performance Table. Moreover, the CEOCompany generally seeks to incentivize long-term performance, and therefore does not specifically align the other excluded groups described above, and ranking them based on annualized U.S. dollar equivalent base salary, converting the base salary in local currency utilizing the latest exchange rate table provided by our finance team.
After identifying the “median employee,” we identified and calculated the elements of such employee’sCompany’s performance measures with compensation for fiscal year 2019that is actually paid (as computed in accordance with the requirementsItem 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(c)(2)(x)402(v) of Regulation S-K, resultingthe Company is providing the following descriptions of the relationships between information presented in annualthe Pay versus Performance Table.
TABLE OF CONTENTS Compensation Actually Paid and Cumulative TSR
As demonstrated by the following graph, the amount of compensation actually paid to our principal executive officer (or, in 2020, paid to both Mr. Starkloff and Mr. Davern) and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Starkloff and Mr. Davern) is aligned with the Company’s cumulative TSR over the three years presented in the table. The alignment of compensation actually paid with the Company’s cumulative TSR over the period presented is because a significant portion of the compensation actually paid to Ms. Starkloff and to the other NEOs is comprised of equity awards. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” in 2022, the Company targeted that approximately 78% of the value of the total compensation awarded to our President and CEO and 60% of $49,581.the value of the total compensation awarded to our other NEOs was to be comprised of equity awards, including RSUs and PRSUs. With respect
TABLE OF CONTENTS Compensation Actually Paid and Net Income
As demonstrated by the following graph, the amount of compensation actually paid to our principal executive officer (or, in 2020, paid to both Mr. Starkloff and Mr. Davern) and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Starkloff and Mr. Davern) is generally aligned with the Company’s net income over the three years presented in the table. While the Company does not use net income as a performance measure in the overall executive compensation program, the measure of net income is correlated with the measure Revenue Growth. As discussed earlier, EIP payout to NEOs is determined based on the attainment of key corporate financial and operational objectives, including Revenue Growth. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the Company targets that approximately 22% of the value of total compensation awarded to our principal executive officer consists of amounts determined under the Company short-term incentive compensation program and approximately 40% of the average value of total compensation awarded to our other NEOs consists of amounts determined under the Company short-term incentive compensation program.
TABLE OF CONTENTS Compensation Actually Paid and Revenue Growth
As demonstrated by the following graph, the amount of compensation actually paid to our principal executive officer (or, in 2020, paid to both Mr. Starkloff and Mr. Davern) and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Starkloff and Mr. Davern) is generally aligned with the Company’s Revenue Growth over the three years presented in the table. As described above, Revenue Growth is defined as non-GAAP organic revenue growth (excluding any acquisitions or dispositions by the Company). While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Revenue Growth is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the annualCompany’s NEOs, for the most recently completed fiscal year, to Company performance. The Company utilizes Revenue Growth when determining the EIP payout to our NEOs. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” in 2022, the Company targets that approximately 22% of the value of total compensation forawarded to our principal executive officer consists of amounts determined under the Company short-term incentive compensation program and approximately 40% of the average value of total compensation awarded to our other NEOs consists of amounts determined under the Company short-term incentive compensation program. Additionally, in 2022, the Company targeted that approximately 78% of the value of the total compensation awarded to our President and CEO we usedand 60% of the amount reportedvalue of the total compensation awarded to our other NEOs was to be comprised of equity awards, including RSUs and PRSUs.
TABLE OF CONTENTS Cumulative TSR of the Company and Cumulative TSR of the Peer Group
As demonstrated by the following graph, the Company’s cumulative TSR over the three-year period presented in the “Total” columntable was -13%, while the cumulative TSR of our 2019 Summarythe peer group presented for this purpose, the Russell 2000, was -21% over the three years presented in the table. The Company’s cumulative TSR remained relatively steady compared to the Russell 2000 during the three years presented in the table, including in fiscal 2022 despite a challenging geopolitical and macroeconomic environment, including global supply chain disruptions, inflationary pressure and ongoing impacts from the COVID-19 pandemic, representing the Company’s resilient performance as compared to the companies comprising the Russell 2000 peer group. For more information regarding the Company’s performance and the companies that the Compensation Table.Committee considers when determining executive compensation, please see the section entitled “Executive Compensation – Compensation Discussion and Analysis.”
DELINQUENT SECTION 16(A)16(a) REPORTS Section 16(a) of the Exchange Act requires NI’sour officers and directors, and persons who own more than 10% of a registered class of NI’sour equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors and 10% stockholders are also required by SEC rules to furnish NIus with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, NI believeswe believe that, during the fiscal year ended December 31, 2019,2022, all Section 16(a) filing requirements applicable to itsour officers, directors and 10% stockholders were satisfied except that there were two late Forms 4 filed for Mr. Kodosky with respect to four transactions, each.satisfied. EQUITY COMPENSATION PLAN INFORMATION The number of shares issuable upon exercise of outstanding RSUrestricted stock unit awards (RSUs and PRSUs) granted to employees and non-employee directors, as well as the number of shares remaining available for future issuance, under NI’sour equity compensation plans as of December 31, 2019,2022, are summarized in the table below. NIWe had no outstanding options, warrants or other rights under equity compensation plans that have not been approved by stockholders as of such date. | Plan category | | Number of shares to be issued upon vesting of outstanding options, warrants and rights | | Weighted- average exercise price of outstanding options, warrants and rights (2) | | Number of shares remaining for future issuance under equity compensation plans | | Plan category | | Number of
shares to
be issued
upon
vesting of
outstanding
options, warrants
and rights (1) | | Weighted-
average
exercise
price of
outstanding
options, warrants
and rights (2) | | Number of
shares
remaining for
future
issuance
under equity
compensation
plans (3) | | | Equity compensation plans approved by stockholders | | 3,289,637(1) | | — | | 6,006,541(3) | | Equity compensation plans approved by stockholders | | 4,020,452 | | — | | 10,249,246 | | | Equity compensation plans not approved by stockholders | | — | | — | | — | | Equity compensation plans not approved by stockholders | | — | | — | | — | | | Total | | 3,289,637 | | — | | 6,006,541 | | Total | | 4,020,452 | | — | | 10,249,246 | |
(1)
| Includes 3,289,6374,020,452 shares to be issued upon the vesting of outstanding RSUs.restricted stock units. |
(2)
| All awards were RSUsrestricted stock units which do not have an exercise price. The weighted average grant date fair value per share of outstanding RSUs was $41.01. |
(3)
| Includes 1,920,7716,176,156 shares available for future issuance under the 20152022 Incentive Plan and 4,085,7704,073,090 shares available for future issuance under the ESPP. |
TABLE OF CONTENTS REPORT OF THE AUDIT COMMITTEE*COMMITTEEThe Audit Committee operates under a written charter adopted by the Board of Directors. The members of the Audit Committee are CharlesGayla J. Roesslein,Delly, James E. Cashman, III, Dr. Gerhard P. Fettweis and Michael E. McGrath. All members of the Audit Committee meet the independence requirements of the Nasdaq listing standards. Management is responsible for NI’s internal controls and the financial reporting process. NI’s independent registered public accounting firm is responsible for performing an independent audit of NI’s consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) and for issuing opinions on the conformity of those audited financial statements with U.S. generally accepted accounting principles and the effectiveness of NI’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes. The Audit Committee schedules its meetings and conference calls with a view to ensuring it devotes appropriate attention to all of its tasks. The Audit Committee met five5 times during fiscal 20192022 to carry out its responsibilities. The Audit Committee regularly meets privately with NI’s independent registered public accounting firm, internal audit personnel, and management, each of whom has unrestricted access to the Audit Committee. The Audit Committee evaluated the performance of the items enumerated in the Audit Committee Charter, which includes oversight of NI’s internal audit function. As part of its oversight of NI’s financial statements, the Audit Committee reviewed and discussed with both management and the independent registered public accounting firm NI’s quarterly and audited fiscal year financial statements, including a review of NI’s Annual Report on Form 10-K. The Audit Committee also reviewed and approved the independent registered public accounting firm’s work plan, audit fees, and all non-audit services performed by the independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm any matters required to be discussed by Auditing Standard No. 1301, Communication with Audit Committees, as amended. The Audit Committee has also received the written disclosures from Ernst & Young LLP required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and the Audit Committee has discussed the independence of Ernst & Young LLP with that firm. The Audit Committee has implemented a procedure to monitor the independence of NI’s independent registered public accounting firm. Based upon the Audit Committee’s discussions with management and Ernst & Young LLP and the report of Ernst & Young LLP to the Audit Committee, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in NI’s Annual Report on Form 10-K for the year ended December 31, 2019,2022, which washas been filed with the SEC. AUDIT COMMITTEE CharlesGayla J. Roesslein,Delly, Chair
James E. Cashman, III
Dr. Gerhard P. Fettweis
Michael E. McGrath *
| The foregoing Report of the Audit Committee is not to be deemed to be “soliciting material” or to be “filed” with the Securities Exchange Commission or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent we specifically request that such information be treated as soliciting material or we specifically incorporate it by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
TABLE OF CONTENTS PROPOSAL TWO: APPROVAL OF THE NATIONAL INSTRUMENTS CORPORATION2020 EQUITY INCENTIVE PLANEXECUTIVE COMPENSATIONOurIn accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders are being askedhave the opportunity to cast an annual advisory vote to approve the National Instruments Corporation 2020 Equity Incentive Plan (the “2020 Incentive Plan”compensation of our Named Executive Officers as disclosed pursuant to the SEC’s compensation disclosure rules (commonly referred to as a “Say-on-Pay”) so.
As described under the heading “Executive Compensation — Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, retain and motivate our Named Executive Officers, who are critical to our success. We believe that it maythe various elements of our executive compensation program work together to promote our goal of ensuring that total compensation should be usedrelated to achieve NI's compensatory goals. Our current equity plan,both NI’s performance and individual performance. Stockholders are urged to read the 2015 Incentive Plan, is scheduled to terminate upon“Executive Compensation — Compensation Discussion and Analysis” section of this Proxy Statement, which discusses how our executive compensation policies implement our compensation philosophy, and the date“Executive Compensation — Summary Compensation Table” section of this Proxy Statement, which contains tabular information and narrative discussion about the Annual Meeting (the “Annual Meeting Date”). The 2020 Incentive Plan would replace the 2015 Incentive Plan, although the 2015 Incentive Plan will continue to govern outstanding awards previously granted thereunder. On October 23, 2019, the Boardcompensation of Directors of NI approved the 2020 Incentive Plan, subject to approval from the stockholders at the Annual Meeting. Approval of the 2020 Incentive Plan requires the affirmative vote of a majority of the shares of common stock that are present, in person or by proxy, and entitled to vote on the proposal. NI'sour Named Executive Officers and directors have an interestadditional details about our executive compensation programs, including information about fiscal year 2022 compensation of our Named Executive Officers. The Compensation Committee and our Board believe that these policies are effective in implementing our compensation philosophy and in achieving its goals.
We are asking our stockholders to indicate their support for our executive compensation as described in this Proxy Statement. This Say-on-Pay proposal as theygives our stockholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are expectedasking our stockholders to receive Awards (defined below) underapprove, on an advisory basis, the 2020 Incentive Plan. In connection with the approvalcompensation of the 2020 Incentive Plan, we are requesting stockholder approval of a share reserve under the 2020 Incentive Plan of 4,500,000 shares of NI common stock, plus (i) the number of shares which have been reserved, but not issued under the 2015 Incentive Plan, the 2010 Incentive Plan and the 2005 Incentive PlanNamed Executive Officers, as of the Annual Meeting Date, and (ii) any shares returned to the 2015 Incentive Plan, the 2010 Incentive Plan or the 2005 Incentive Plan, as a result of the expiration or termination of Awards (as defineddisclosed in the 2020 Incentive Plan), or the forfeiture or repurchase of the underlying shares, after the Annual Meeting Date.
By approving the 2020 Incentive Plan, the stockholders will be approving, among other things, a provision that prohibits any Non-Employee Director (defined below) from being granted, in any fiscal year, Awards covering more than 20,000 shares, exclusive of Awards received as an employee or consultant.
We strongly believe that the approval of the 2020 Incentive Plan is essential to NI's continued success. Our service providers are our most valuable asset. Grants of restricted stock units and restricted stockthis Proxy Statement pursuant to the provisionscompensation disclosure rules of the 2020 Incentive Plan are crucial to our ability to attractSEC, including the Compensation Discussion and retain highly skilled individualsAnalysis, the Summary Compensation Table and to provide additional incentives to achieve NI's goals. We ask the stockholders to approve the 2020 Incentive Plan. The Board of Directors has not determined what action it will take if the proposal is not approved by the stockholders.
Summary of the 2020 Incentive Planother related tables and disclosure.
The following paragraphs provide a summary of the principal features of the 2020 Incentive PlanSay-on-Pay vote is advisory, and its operation. The following summary is qualified by, and should be read together with, the complete copy of the 2020 Incentive Plan set forth in Exhibit A. Grants of Awards. The 2020 Incentive Plan provides for the grant of the following types of Awards: (i) restricted stock and (ii) restricted stock units, collectively referred to as “Awards.” Awards may be granted under the 2020 Incentive Plan to employees, directors and consultants oftherefore not binding on NI, and of any parent or subsidiary entity. Subject to the terms of the 2020 Incentive Plan, including the Administrator’s authority to delegate its authority, the Administrator has the sole discretion to determine which service providers will receive Awards, to determine the terms and conditions of those Awards, and to approve forms of agreement for use under the 2020 Incentive Plan.
As of March 6, 2020, approximately 4,959 persons, including approximately 4,947 employees, 5 executive officers and 7 non-employee directors were eligible to receive awards under the 2020 Incentive Plan.
Number of Shares of Common Stock Available Under the 2020 Incentive Plan. Upon stockholder approval, the 2020 Incentive Plan share reserve will include 4,500,000 shares of NI's common stock plus (i) the number of shares which have been reserved but not issued under the 2015 Incentive Plan, the 2010 Incentive Plan and the 2005 Incentive Plan as of the Annual Meeting Date, and (ii) any shares returned to the 2015 Incentive Plan, the 2010 Incentive Plan or the 2005 Incentive Plan, as a result of the expiration or termination of Awards, or the forfeiture or repurchase of the underlying shares, after the Annual Meeting Date.
If any Award granted under the 2020 Incentive Plan expires, is surrendered pursuant to an exchange program or otherwise terminates, or if any restricted shares are otherwise forfeited or repurchased by the company, the shares subject to such Award will become available for future Award grants under the 2020 Incentive Plan. Additionally, shares used to satisfy the tax withholding obligations of an Award will become available for future grant under the 2020 Incentive Plan.
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Adjustment of Reserve and Awards. The number of shares authorized and available for issuance under the 2020 Incentive Plan (and represented by outstanding Awards) shall be adjusted in the event of a stock split, stock dividend, recapitalization, reorganization or similar action.
Administration of the 2020 Incentive Plan. The 2020 Incentive Plan will be administered by the Board, the Compensation Committee, or another committeeour Board. However, our Board and our Compensation Committee value the opinions of the Board (the “Administrator”). The Administrator may, in its discretionour stockholders and to the extent permitted by applicable laws, delegate to a committee, including, but not limited to, one comprised of one or more executive officers of NI,there is any significant vote against the authority to grant one or more Awards, without further approval of the Administrator. To qualify grants to certain NI officers and employeesNamed Executive Officer compensation as exempt from Rule 16b-3 of the Securities Exchange Act of 1934 (the “Exchange Act”), however, the members of such committee must qualify as “non-employee directors” under Rule 16b-3 (“Non-Employee Directors”).
Restricted Stock. Awards of restricted stock resultdisclosed in the issuance of shares of NI common stock to the recipient, which vest in accordance with the terms and conditions established by the Administrator. Each Award of restricted stockthis Proxy Statement, we will be evidenced by a written agreement between NIconsider our stockholders’ concerns and the participant specifying the number of shares subjectCompensation Committee will evaluate whether any actions are necessary to the Awardaddress those concerns. The Say-on-Pay vote is conducted annually, and the other terms and conditions of the Award as determined by the Administrator. Generally, shares of restricted stocknext such vote will be held by NI in an escrow account until the restrictions on the shares of restricted stock have lapsed. Unless otherwise determined by the Administrator, holders of restricted stock subject to restrictions may exercise voting rights and will be entitled to dividends paid on shares during the restriction period.
Restricted Stock Units. The Administrator may grant restricted stock units, which represent a right to receive cash, shares, or a combination of both at a future date. Restricted stock units will result in a payment to a participant only if the performance goals or other vesting criteria are achieved or the Awards otherwise vest in accordance with their terms. Earned restricted stock units may be paid out in cash, shares of common stock or any combination thereofoccur at the sole discretion2024 annual meeting of the Administrator.
Performance Goals. In the Administrator’s discretion, Awards granted under the 2020 Incentive Plan may be made subject to the attainment of performance goals, which may include achievement of company-wide, business unit, or individual goals and which may differ from participant to participant and from Award to Award.
Transferability of Awards. Generally, and unless otherwise determined by the Administrator, no Award granted under the 2020 Incentive Plan may be transferred other than by the laws of descent and distribution and all rights with respect to an Award will generally be available only to the participant receiving such Award.
Change in Control. In the event of a Change in Control (as defined in the 2020 Incentive Plan), all outstanding and unvested equity awards will be treated as determined by the Administrator, including that each award be assumed or substituted by the successor corporation; provided, that, in the event the successor corporation does not assume or substitute awards, the restriction period of any award of restricted stock or restricted stock units shall immediately be accelerated and the restrictions shall expire. Following any such assumption or substitution of awards, if an employee is terminated without Cause (as defined in the 2020 Incentive Plan) within twenty-four (24) months following the change in control, then the vesting of such employee’s awards will accelerate and the restricted stock units will immediately become fully vested.
Restructuring. The Award is not affected by a Restructuring (as defined in the 2020 Incentive Plan) that does not occur in connection with a Change in Control, unless otherwise determined by the Administrator in accordance with the terms of the 2020 Incentive Plan.
Amendment and Termination of the 2020 Incentive Plan. The Administrator will have the authority to amend, alter, suspend or terminate the 2020 Incentive Plan, except that stockholder approval will be required to the extent necessary to comply with any applicable laws. Any amendment, alteration, suspension or termination will not, without the consent of the participant, impair the rights or obligations under any Award granted under the 2020 Incentive Plan. The 2020 Incentive Plan will terminate upon NI’s Annual Meeting of Stockholders held in 2025 but no later than December 31, 2025, unless terminated earlier by the Administrator.
Number of Awards Granted
The number of Awards that any employee, consultant or director receives is in the discretion of the Administrator and cannot be determined in advance (other than awards for non-employee directors described in the section titled “Board Compensation—Restricted Stock Unit Awards” above). Future Awards that would be received under the 2020 Incentive Plan by an employee, consultant or director are discretionary and are therefore not determinable at this time.
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We have not approved any Awards that are conditioned on stockholder approval of the 2020 Incentive Plan. If stockholders approve the 2020 Incentive Plan at the Annual Meeting, it is expected that each individual continuing as a non-employee director will receive a grant described in the section titled “Board Compensation—Restricted Stock Unit Awards” above.
The following table sets forth information with respect to the grant of RSUs and PRSUs under the 2015 Incentive Plan during fiscal 2019 (no other type of award was granted under the 2015 Incentive Plan during fiscal 2019) to each of our named executive officers during fiscal 2019 (with roles held during 2019), all current executive officers as a group, all current Non-Employee Directors as a group, and all employees who are not executive officers as a group:
| Alexander M. Davern Former Chief Executive Officer | | | 53,000 | | | $2,343,660 | | | 106,000 | | | $4,687,320 | | | Eric H. Starkloff President and Chief Executive Officer | | | 16,625 | | | 762,589 | | | 33,250 | | | 1,525,178 | | | Karen M. Rapp Executive Vice President, Chief Financial Officer and Treasurer | | | 13,006 | | | 596,585 | | | 26,012 | | | 1,193,170 | | | Scott A. Rust Senior Vice President, Global Product Research and Development | | | 8,482 | | | 389,069 | | | 16,964 | | | 778,139 | | | John C. Roiko Vice President, Finance and Chief Accounting Officer | | | 1,696 | | | 77,796 | | | 3,392 | | | 155,591 | | | All current executive officers as a group (5 people) | | | 77,297 | | | 3,554,181 | | | 76,226 | | | 3,496,487 | | | All current non-employee directors as a group (7 people) | | | 29,592 | | | 1,400,293 | | | — | | | — | | | All employees who are not executive officers as a group | | | 1,106,689 | | | 50,863,360 | | | 109,392 | | | 4,842,911 | |
(1)
| Amounts indicated are based on maximum achievement of the applicable performance goals. |
Federal Tax Aspects
The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the 2020 Incentive Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As a result, tax consequences for any particular individual may be different.
Restricted Stock Awards. There are no immediate tax consequences of receiving an Award of restricted stock for which the recipient does not make an 83(b) election pursuant to the Code. A participant acquiring restricted stock generally will recognize ordinary income equal to the fair market value of the shares on the vesting date. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. However, the participant may elect, pursuant to Code Section 83(b), to be taxed on the fair market value of the shares on the grant date. Upon subsequent sale of the shares, the participant will recognize gain or loss equal to the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, and such amount will be taxed as short-term or long-term capital gain or loss depending on the holding period for such shares.
Restricted Stock Units. There are no immediate tax consequences of receiving an Award of restricted stock units. A participant who is awarded restricted stock units will be required to recognize ordinary income in an amount equal to the fair market value of the shares issued or cash paid to such participant on the settlement date (i.e. generally, shortly following the vesting event). Any additional gain or loss recognized upon any later disposition of any shares received would be short-term or long-term capital gain or loss depending on the holding period for such shares.
Section 409A. Code Section 409A provides requirements for non-qualified deferred compensation arrangements. If an Award is subject to and fails to satisfy the requirements of Code Section 409A, the recipient of that Award may recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may be prior to when
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the compensation is actually or constructively received. Also, if an Award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. Restricted stock is not subject to Code Section 409A. The RSU Awards will generally be designed with the intent to be exempt from Code Section 409A.
Medicare Surtax. A participant’s annual “net investment income”, as defined in Section 1411 of the Code, may be subject to a 3.8% federal surtax (generally referred to as the “Medicare Surtax”). Net investment income may include capital gain and/or loss arising from the disposition of shares issued under an Award. Whether a participant’s net investment income will be subject to the Medicare Surtax will depend on the participant’s level of annual income and other factors.
Tax Effect for NI. NI generally will be entitled to an income tax deduction in connection with an Award under the 2020 Incentive Plan at the time the participant recognizes such income (for example, the vesting of restricted stock). The amount of such tax deduction generally equals the amount of ordinary income realized by a participant. Special rules limit the deductibility of compensation paid to our chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000.stockholders.
Vote Required; Recommendation of the Board of Directors Approval of the National Instruments Corporation 2020 Equity Incentive PlanNI’s executive compensation program requires the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote who are present, in person or by proxy, on the proposal. The Board of Directors unanimously recommends a vote “FOR” the approval of the National Instruments Corporation 2020 Equity Incentive Plan.Corporation's Executive Compensation Program, as described in this Proxy Statement. TABLE OF CONTENTS PROPOSAL THREE: APPROVAL OF
FREQUENCY OF STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION As described in Proposal Two above, our stockholders have the opportunity to cast an advisory vote to approve the compensation of our Named Executive Officers. In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, this Proposal Three affords stockholders the opportunity to cast an advisory vote on how often we should include a Say-on-Pay proposal in our proxy materials for future annual stockholder meetings or any special stockholder meeting for which we must include executive compensation information in the proxy statement for that meeting. Under this Proposal Three, stockholders may vote to have the Say-on-Pay vote every year, every two years, or every three years. Our stockholders voted on a similar proposal in 2017 with most stockholders voting to hold the Say-on-Pay vote every year. Our Board and Compensation Committee continue to believe that Say-on-Pay advisory votes should be conducted each year so that our stockholders may express their views on our executive compensation program and the Compensation Committee can consider such views in its compensation planning for the fiscal year following the Say-on-Pay advisory vote. Stockholders may cast their advisory vote to conduct advisory votes on executive compensation every “1 Year,” “2 Years,” or “3 Years,” or “Abstain.” It is expected that the next Say-on-Pay frequency vote will occur at the 2029 annual meeting of stockholders. Vote Required; Recommendation of the Board of Directors The selection regarding the frequency of the stockholder vote on executive compensation receiving the highest number of “FOR” votes shall be considered the frequency of the stockholder vote on executive compensation that is preferred by our stockholders. As an advisory vote, this proposal is not binding on NI, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by stockholders and will consider the outcome of the vote when making a decision regarding the frequency of conducting a Say-on-Pay vote. The Board recommends that on Proposal Three you vote for future advisory votes on executive compensation to occur every “1 Year.” TABLE OF CONTENTS PROPOSAL FOUR: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The charter of our Audit Committee provides that the Audit Committee shall appoint, compensate, retain and oversee NI’s independent registered public accounting firm. The Audit Committee has selected Ernst & Young LLP (“E&Y”) as NI’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023. The Board of Directors is asking the stockholders to ratify this appointment. The affirmative vote of a majority of the shares represented and voting at the Annual Meeting is required to ratify the selectionappointment of E&Y, which has served as NI’s independent registered public accounting firm since June 2005. In the event the stockholders fail to ratify the appointment, our Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of NI and NI’s stockholders. A representative of E&Y is expected to be available at the Annual Meeting to make a statement if such representative desires to do so and to respond to appropriate questions. Audit Fees The aggregate fees billed for professional services rendered for the integrated audits of NI’s annual financial statements for the fiscal years ended December 31, 20192022 and 2018,2021, for the reviews of the financial statements included in NI’s Quarterly Reports on Form 10-Q for those fiscal years, for the audit of NI’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 for those fiscal years, and for statutory audits in various countries were approximately $1,675,000$2,971,000 and $1,883,000,$1,954,000, respectively. Audit-Related Fees Audit-related fees for 2019each of 2022 and 2021 were $5,000. There were no fees billed for audit-related services in 2018.$0. The services rendered related to professional services that are reasonably related to the performance of the world-wide audit or review of NI's financial statements. Tax Fees The aggregate fees billed for professional tax services rendered for 20192022 and 20182021 were approximately $490,000$757,000 and $440,000,$458,000, respectively. Included in the foregoing tax fees are such services as tax compliance, tax advice and tax planning. All Other Fees There were no fees billed for other services in 20192022 or 2018.2021. Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors The Audit Committee’s policy is to pre-approve all services provided by NI’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis. The independent registered public accounting firm is required to periodically report to the Audit Committee regarding the extent of services provided by such firm in accordance with such pre-approval. The Audit Committee may also delegate pre-approval authority to one of its members. Such member(s) must report any decisions to the Audit Committee at the next scheduled meeting. During 2019,2022 and 2021, the Audit Committee approved in advance all audit, audit-related, and tax services to be provided by E&Y. E&Y has not performed any “prohibited activities” as such term is defined in Section 201 of the Sarbanes Oxley Act of 2002. TABLE OF CONTENTS Vote Required; Recommendation of the Board of Directors Ratification of the appointment of E&Y as National Instruments Corporation’s independent registered public accounting firm requires the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote who are present in personat the meeting (electronically) or by proxy, on the proposal. Upon the recommendation of the Audit Committee, the Board of Directors unanimously recommends a vote “FOR” the ratification of the Appointment of E&Y as National Instruments Corporation's Independent Registered Public Accounting Firm.Firm for the fiscal year ending December 31, 2023. TABLE OF CONTENTS
PROPOSAL FOUR: APPROVAL OF EXECUTIVE COMPENSATIONThe Dodd-Frank Act enables our stockholders to vote to approve, on an advisory (non-binding) basis, pursuant to Section 14A of the Exchange Act, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s rules (commonly referred to as a “Say-on-Pay”).
As described under the heading “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, retain and motivate our Named Executive Officers, who are critical to our success. We believe that the various elements of our executive compensation program work together to promote our goal of ensuring that total compensation should be related to both NI’s performance and individual performance.
Stockholders are urged to read the “Executive Compensation—Compensation Discussion and Analysis” section of this Proxy Statement, which discusses how our executive compensation policies implement our compensation philosophy, and the “Executive Compensation—Summary Compensation Table” section of this Proxy Statement, which contains tabular information and narrative discussion about the compensation of our Named Executive Officers and additional details about our executive compensation programs, including information about fiscal year 2019 compensation of our Named Executive Officers. The Compensation Committee and the NI Board of Directors believe that these policies are effective in implementing our compensation philosophy and in achieving its goals.
We are asking our stockholders to indicate their support for our executive compensation as described in this Proxy Statement. This Say-on-Pay proposal gives our stockholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.
The Say-on-Pay vote is advisory, and therefore not binding on NI, the Compensation Committee or our Board of Directors. However, our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the Named Executive Officer compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. The Say-on-Pay vote is conducted annually, and the next such vote will occur at the 2021 Annual Meeting of Stockholders.
Vote Required; Recommendation of the Board of Directors
Approval of NI’s executive compensation program requires the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote who are present, in person or by proxy, on the proposal.
The Board of Directors unanimously recommends a vote “FOR” the approval of the National Instruments Corporation's Executive Compensation Program, as described in this Proxy Statement.
TABLE OF CONTENTS In February 2012, NI’sOur Board of Directors adopted a Code of Ethics that applies to all directors and employees, including NI’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics incorporated several corporate policies which had been in effect since 1994. The Code of Ethics is available on NI’s website at www.ni.com/nati/corporategovernance/code_of_ethics.htm. NI intends to disclose future amendmentsany changes to provisions of the Code of Ethics, or waivers of such provisions grantedfrom this code by posting to executive officers, on NI’sour website within four business days following the date of such amendmentif disclosure is required by SEC or waiver.Nasdaq rules.
NI knows of no other matters to be submitted at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed proxy to vote the shares they represent as the Board of Directors may recommend. BY ORDER OF THE BOARD OF DIRECTORS /s/
R. Eddie Dixon, Jr.
Chief Legal Officer, Senior Vice President & Secretary Austin, Texas
March 24, 202027, 2023 TABLE OF CONTENTS Exhibit AForward Looking StatementsNATIONAL INSTRUMENTS CORPORATION
2020 Equity Incentive Plan
(This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as approved byamended, and Section 21E of the Board of Directors,Exchange Act that are subject to stockholder approval)
risks and uncertainties. Any statements contained herein regarding our future financial performance, operations, strategy and goals relating to Engineering Hope and our corporate impact strategy or other matters (including, without limitation, statements to the effect that we “believe,” “expect,” “plan,” “may,” “could,” “will,” “intend to,” “project,” “predict,” “anticipate,” “continue,” “seek to,” “strive to,” “endeavor to,” “are committed to,” “remain committed to,” “focus on,” “are encouraged by,” “remain cautious,” “remain optimistic” or “estimate”; statements of “goals,” “initiatives,” “commitments,” “strategy”, “focus” or “visions”; or other variations thereof or comparable terminology or the negative thereof) should be considered forward-looking statements. All forward-looking statements are based on current expectations and projections of future events. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not guarantees of performance and actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors which could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties include without limitation: the global shortage of key components; effect of the global economic and geopolitical conditions; our international operations and foreign economies; adverse public health matters, including epidemics and pandemics such as the COVID-19 pandemic; our ability to effectively manage our partners and distribution channels; interruptions in our technology systems or cyber-attacks on our systems; the dependency of our product revenue on certain industries and the risk of contractions in such industries; concentration of credit risk and uncertain conditions in the global financial markets; our ability to compete in markets that are highly competitive; our ability to release successful new products or achieve expected returns; the risk that our manufacturing capacity and a substantial majority of our warehousing and distribution capacity are located outside of the U.S.; our dependence on key suppliers and distributors; longer delivery lead times from our suppliers; risk of product liability claims; dependence on our proprietary rights and risks of intellectual property litigation; the continued service of key management, technical personnel and operational employees; our ability to comply with environmental laws and associated costs; our ability to maintain our website; the risks of bugs, vulnerabilities, errors or design flaws in our products; our restructuring activities; our exposure to large orders; our shift to more system orders; our ability to effectively manage our operating expenses and meet budget; fluctuations in our quarterly results due to factors outside of our control; our outstanding debt; the interest rate risk associated with our variable rate indebtedness; seasonal variation in our revenues; our ability to comply with laws and regulations; changes in tax rates and exposure to additional tax liabilities; our ability to make certain acquisitions or dispositions, integrate the companies we acquire or separate the companies we sold and/or enter into strategic relationships; risks related to currency fluctuations; provisions in charter documents and Delaware law that delay or prevent our acquisition; and risks related to our strategic review process. We direct readers to our Form 10-K for the year ended December 31, 2022 and the other documents we file with the SEC for other risks associated with our future performance. You should not place undue reliance on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. TABLE OF CONTENTS NATIONAL INSTRUMENTS CORPORATION2020 EQUITY INCENTIVE PLANANNEX I
1. PurposesNON-GAAP FINANCIAL MEASURES
Below is a reconciliation of the Plan. The purposes of this Plan are:certain non-GAAP financial measures discussed in our 2022 Proxy Statement. to attract and retain the best available personnel for positions of substantial responsibility,Non-GAAP Organic Revenue
| Revenue, as reported | | | 1,656,975 | | | Impact of acquisition related fair value adjustments | | | 956 | | | Non-GAAP revenue | | | 1,657,931 | | | Acquisitions/divestitures (other than the acquisition of N H Research, LLC) | | | (24,439) | | | Organic revenue | | | 1,633,492 | |
to provide incentives to individuals who perform services to the Company, andNon-GAAP Operating Margin
to promote the success of the Company’s business.
The Plan permits the grant of Restricted Stock and Restricted Stock Units.
2. Definitions. As used herein, the following definitions will apply:
(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
(c) “Award” means, individually or collectively, a grant under the Plan of Restricted Stock or Restricted Stock Units.
(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(e) “Board” means the Board of Directors of the Company.
(f) “Cause” means (i) the commission of any act of fraud, embezzlement or theft by the Participant in connection with such Participant’s responsibilities as a Service Provider; (ii) conviction of, or a plea of “guilty” or “nolo contendere” to, a felony under the laws of the United States or any state thereof or a comparable offense under Applicable Laws for non-U.S. Service Providers; (iii) any unauthorized use or disclosure by Participant of proprietary information or trade secrets of the Company (or any Parent or Subsidiary); (iv) a willful act by Participant which constitutes misconduct and is materially injurious to the Company (or any Parent or Subsidiary); or (v) continued violations by Participant of Participant’s obligations to the Company after there has been delivered to the Service Provider a written demand for performance from the Company.
(g) “Change in Control” means the occurrence of any of the following events:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities; or
(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or
(iii) A change in the composition of the Board as a result of which fewer than a majority of the directors are Incumbent Directors; or
(iv) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. | Operating margin, as reported | | | 11.6% | | | Stock-based compensation | | | 4.7% | | | Amortization of acquisition-related intangibles and fair value adjustments | | | 2.8% | | | Acquisition transaction and integration costs, restructuring charges and other | | | 0.5% | | | Net amortization of internally developed software costs | | | 0.3% | | | Non-GAAP operating margin | | | 19.9% | | | Acquisitions/divestitures | | | 0.5% | | | Organic operating margin | | | 20.4% | |
TABLE OF CONTENTS (h) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or Treasury Regulation thereunder will include such section or regulation, any valid regulation or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(i) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.
(j) “Common Stock” means the common stock of the Company.
(k) “Company” means National Instruments Corporation, a Delaware corporation, or any successor thereto.
(l) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary of the Company to render services to such entity.
(m) “Director” means a member of the Board.
(n) “Disability” shall have the meaning given it in the employment agreement of the Participant; provided, however, that if that Participant has no employment agreement, “Disability” shall mean, as determined by the Administrator in the sole discretion exercised in good faith of the Board, a physical or mental impairment of sufficient severity that either the Participant is unable to continue performing the duties he or she performed before such impairment or the Participant’s condition entitles him or her to disability benefits under any insurance or employee benefit plan of the Company or its Subsidiaries and that impairment or condition is cited by the Company as the reason for termination if the Participant ceases to be a Service Provider.
(o) “Employee” means any person, including Officers and Directors, employed by the Company or a Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q) “Exchange Program” means a program under which outstanding Awards are surrendered or cancelled in exchange for Awards of the same type, a different type of award, and/or cash. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion.
(r) “Fair Market Value” means, as of any date, the value of Common Stock as the Administrator may determine in good faith.
(s) “Fiscal Year” means the fiscal year of the Company.
(t) “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
(u) “Non-Surviving Event” means an event of Restructuring as described in Section 2(dd)(ii).
(v) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(w) “Outside Director” means a Director who is not an Employee.
(x) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(y) “Participant” means the holder of an outstanding Award.
(z) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
(aa) “Plan” means this 2020 Equity Incentive Plan.
(bb) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 6 of the Plan.
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(cc) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 7. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(dd) “Restructuring” means the occurrence of any one or more of the following:
(i) The merger or consolidation of the Company with any person, whether effected as a single transaction or a series of related transactions, with the Company remaining the continuing or surviving entity of that merger or consolidation and the Shares remaining outstanding and not changed into or exchanged for stock or other securities of any other person or of the Company, cash, or other property; or
(ii) The merger or consolidation of the Company with any person, whether effected as a single transaction or a series of related transactions, with (i) the Company not being the continuing or surviving entity of that merger or consolidation or (ii) the Company remaining the continuing or surviving entity of that merger or consolidation but all or a part of the outstanding Shares are changed into or exchanged for stock or other securities of any other person or the Company, cash, or other property.
(ee) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(ff) “Section 16(b)” means Section 16(b) of the Exchange Act.
(gg) “Section 409A” means Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
(hh) “Service Provider” means an Employee, Director or Consultant. The Administrator shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be a Service Provider and the effective date of such individual’s status as, or cessation of status as, a Service Provider. For purposes of an individual’s rights, if any, under the Plan as of the time of the Administrator’s determination, all such determinations by the Administrator shall be final, binding and conclusive.
(ii) “Share” means a share of the Common Stock, as adjusted in accordance with Section 11 of the Plan.
(jj) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(kk) “Voting Securities” means any securities that are entitled to vote generally in the election of Directors, in the admission of general partners or in the selection of any other similar governing body.
3. Stock Subject to the Plan.
(a) Stock Subject to the Plan. Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares that may be awarded and sold under the Plan is 4,500,000 plus (i) such number of Shares which have been reserved but not issued under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”), the Company’s 2010 Incentive Plan (the “2010 Plan”) and the Company’s 2005 Incentive Plan (the “2005 Plan”) as of the date stockholders approve the Plan, and (ii) any Shares subject to awards under the Company’s 2015 Plan, 2010 Plan or 2005 Plan that, after the date stockholders approve the Plan, expire or otherwise terminate without having been vested in full or Shares issued under such plans that are forfeited to or repurchased by the Company due to failure to vest. Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. The Shares may be authorized, but unissued, or reacquired Common Stock.
(b) Lapsed Awards. If an Award expires, is surrendered pursuant to an Exchange Program, is forfeited to or repurchased by the Company or otherwise terminates, the forfeited, repurchased or unissued Shares which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the tax withholding obligations related to an Award or the purchase price of an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.
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(c) Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
(iii) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. The Administrator may, in its discretion and to the extent permitted by Applicable Laws, delegate to a Committee, including but not limited to, a Committee comprised of one or more Officers, the authority to grant one or more Awards, without further approval of the Administrator, on such terms and conditions as the Administrator, in its discretion, deems appropriate. To the extent of any delegation by the Administrator, references to the Administrator in the Plan and any Award Agreement shall be deemed also to include reference to the applicable delegate(s).
(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms may include, but are not limited to, performance goals applicable to an Award, which may differ from Participant to Participant and from Award to Award;
(iv) to approve forms of agreement for use under the Plan;
(v) to institute an Exchange Program;
(vi) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws;
(viii) to modify or amend each Award (subject to Section 16(c) of the Plan);
(ix) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 12 of the Plan;
(xi) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Administrator may determine; and
(xii) to make all other determinations deemed necessary or advisable for administering the Plan.
(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.
(d) No Liability. Under no circumstances shall the Company, its Parent or Subsidiary companies, the Administrator, or the Board incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan or the Company’s, its Parent or Subsidiary companies’, the Administrator’s or the Board’s roles in connection with the Plan.
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5. Eligibility. Restricted Stock and Restricted Stock Units may be granted to Service Providers.
6. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed.
(c) Transferability. Except as provided in this Section 6, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
(e) Removal of Restrictions. Except as otherwise provided in this Section 6, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its sole discretion, may reduce or waive any restrictions for such Award and may accelerate the time at which any restrictions will lapse or be removed.
(f) Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise any voting rights with respect to those Shares, unless the Administrator determines otherwise.
(g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive any cash dividends paid with respect to such Shares, unless the Administrator determines otherwise. During the Period of Restriction, if dividends or distributions are paid in Shares, Service Providers holding Shares of Restricted Stock will be entitled to such dividends or distributions. The Shares received pursuant to any such dividend or distribution will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were issued.
(h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.
7. Restricted Stock Units.
(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in writing or electronically of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units and the form of payout, which, subject to Section 7(d), may be left to the discretion of the Administrator.
(b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its discretion.
(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout and may accelerate the time at which any restrictions will lapse or be removed.
(d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) set forth in the Award Agreement. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof.
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(e) Cancellation. On the date set forth in the Restricted Stock Unit Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.
8. Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise and except as required by Applicable Laws, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.
9. Outside Director Limitations. No Outside Director may be granted, in any Fiscal Year, Awards covering more than 20,000 Shares. Any Awards provided to an individual for his or her services as an Employee, or for his or her services as a Consultant other than an Outside Director, will be excluded for purposes of this Section 9.
10. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
11. Adjustments; Dissolution or Liquidation; Merger or Change in Control.
(a) Adjustment of Awards and Authorized Shares. The terms of an Award and the number of Shares authorized pursuant to Section 3 for issuance under the Plan and the numerical Share limit set forth in Section 9 shall be subject to adjustment from time to time, in accordance with the following provisions:
(i) If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a stock split, by the issuance of a distribution on Shares payable in Shares, or otherwise) the number of Shares then outstanding into a greater number of Shares, then (i) the maximum number of Shares available for the Plan as provided in Section 3 and the numerical Share limit set forth in Section 9 shall be increased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (ii) the number of Shares (or other kind of shares or securities) that may be acquired under any Award shall be increased proportionately, and (iii) the price, if any, for each Share (or other kind of shares or securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.
(ii) If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, reverse stock split, or otherwise) the number of Shares then outstanding into a lesser number of Shares, then (i) the maximum number of Shares available for the Plan as provided in Section 3 and the numerical Share limit set forth in Section 9 shall be decreased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (ii) the number of Shares (or other kind of shares or securities) that may be acquired under any Award shall be decreased proportionately, and (iii) the price, if any, for each Share (or other kind of shares or securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate purchase price, if any, or value as to which outstanding Awards remain exercisable or subject to restrictions.
(iii) Whenever the number of Shares subject to outstanding Awards and the price, if any, for each Share subject to outstanding Awards are required to be adjusted as provided in this Section 11(a), the Administrator shall promptly prepare a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of Shares, other securities, cash, or property purchasable subject to each Award after giving effect to the adjustments. The Administrator shall promptly give each Participant such a notice.
(iv) Adjustments under Sections 11(a)(i) and 11(a)(ii) shall be made by the Administrator, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. No fractional interest shall be issued under the Plan on account of any such adjustments.
(v) Except as set forth in Sections 11(a)(i) and 11(a)(ii), in the event that any dividend or other distribution (whether in the form of Shares, other securities, or other property), recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the
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Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limit set forth in Section 9.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction.
(c) Change in Control. In the event of a Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that each Award be assumed or an equivalent right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. The Administrator will not be required to treat all Awards similarly in the transaction. Notwithstanding the foregoing, in the event that the successor corporation does not assume or substitute for the Award, the restriction period of any Award of Restricted Stock or Restricted Stock Units shall immediately be accelerated and the restrictions shall expire, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
Following such assumption or substitution in connection with a Change in Control, if a Participant’s status as Service Provider is terminated without Cause within twenty four (24) months following the Change in Control, then the restriction period of any Award of Restricted Stock or Restricted Stock Units shall immediately be accelerated and the restrictions shall expire, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
If a Change in Control involves a Restructuring or occurs in connection with a series of related transactions involving a Restructuring and if such Restructuring is in the form of a Non-Surviving Event and as a part of such Restructuring, stock, other securities, cash, or property shall be issuable or deliverable in exchange for Shares, then the Participant shall be entitled to purchase or receive (in lieu of the Shares that the Participant would otherwise be entitled to purchase or receive), as appropriate for the form of Award, the number of shares, other securities, cash, or property to which that number of Shares would have been entitled in connection with such Restructuring.
Notwithstanding anything in this Section 11(c) to the contrary, if a payment under an Award Agreement is subject to Section 409A of the Code and if the change in control definition contained in the Award Agreement or other agreement related to the Award does not comply with the definition of “change in control” for purposes of a distribution under Code Section 409A, then any payment of an amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Code Section 409A without triggering any penalties applicable under Code Section 409A.
(d) Restructuring Without a Change in Control. In the event a Restructuring shall occur at any time while there is any outstanding Award hereunder and that Restructuring does not occur in connection with a Change in Control or a series of related transactions involving a Change in Control, then:
(i) the restriction period of any Award of Restricted Stock or Restricted Stock Units shall not immediately be accelerated, and the restrictions shall not expire, merely because of the occurrence of the Restructuring; and
(ii) at the option of the Administrator, the Administrator may (but shall not be required to) cause the Company to take any one or more of the following actions:
(1) accelerate in whole or in part the expiration of some or all of the restrictions on any Restricted Stock Award;
(2) if the Restructuring is in the form of a Non-Surviving Event, cause the surviving entity to assume in whole or in part any one or more of the outstanding Awards upon such terms and provisions as the Administrator deems desirable; or
(3) redeem in whole or in part any one or more of the outstanding Awards (whether or not then exercisable) in consideration of a cash payment, as such payment may be reduced for tax withholding obligations in an amount equal to the Fair Market Value, determined as of the date immediately preceding the consummation of the Restructuring, of the aggregate number of Shares subject to the Award and as to which the Award is being redeemed.
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The Company shall promptly notify each Participant of any election or action taken by the Company under this Section 11(d). In the event of any election or action taken by the Company pursuant to this Section 11(d) that requires the amendment or cancellation of any Award Agreement as may be specified in any notice to the Participant thereof, that Participant shall promptly deliver that Award Agreement to the Company in order for that amendment or cancellation to be implemented by the Company and the Administrator. The failure of the Participant to deliver any such Award Agreement to the Company as provided in the preceding sentence shall not in any manner affect the validity or enforceability of any action taken by the Company and the Administrator under this Section 11(d), including without limitation any redemption of an Award as of the consummation of a Restructuring. Any cash payment to be made by the Company pursuant to this Section 11(d) in connection with the redemption of any outstanding Awards shall be paid to the Participant thereof currently with the delivery to the Company of the Award Agreement evidencing that Award; provided, however, that any such redemption shall be effective upon the consummation of the Restructuring notwithstanding that the payment of the redemption price may occur subsequent to the consummation. If all or any portion of an outstanding Award is to be accelerated upon or after the consummation of a Restructuring that does not occur in connection with a Change in Control and is in the form of a Non-Surviving Event, and as a part of that Restructuring shares of stock, other securities, cash, or property shall be issuable or deliverable in exchange for Shares, then the Participant shall thereafter be entitled to purchase or receive (in lieu of the number of Shares that the Participant would otherwise be entitled to purchase or receive) the number of shares of stock, other securities, cash, or property to which such number of Shares would have been entitled in connection with the Restructuring and such Award shall be subject to adjustments that shall be as nearly equivalent as may be practical to the adjustments provided for in this Section 11.
(e) Notice of Restructuring. The Company shall attempt to keep all Participants informed with respect to any Restructuring or of any potential Restructuring to the same extent that the Company’s stockholders are informed by the Company of any such event or potential event.
12. Tax
(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).
(b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the amount required to be withheld, (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld, provided the delivery of such Shares will not result in any adverse accounting consequences as the Administrator determines in its sole discretion, or (d) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
(c) Compliance With Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A.
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13. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
14. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
15. Term of Plan. Subject to Section 19 of the Plan, the Plan will become effective upon approval of the Plan by the stockholders of the Company at the 2020 annual stockholder meeting. It will continue in effect until the Company’s annual stockholder meeting in 2025, but in no event beyond December 31, 2025, unless terminated earlier under Section 16 of the Plan.
16. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
17. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
18. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.
19. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
20. Forfeiture Events. The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to the reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Notwithstanding any provisions to the contrary under this Plan, an Award will be subject to the Company’s clawback policy as may be established and/or amended from time to time (the “Clawback Policy”). The Administrator may require a Participant to forfeit, return or reimburse the Company all or a portion of the Award and any amounts paid thereunder pursuant to the terms of the Clawback Policy or as necessary or appropriate to comply with Applicable Laws.
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