1.
| To elect to the Board of Directors George B. Hanna
Corporate Secretary
May 11, 2022
| YOUR VOTE IS IMPORTANT
| | | Whether or not you plan to attend Secureworks’ annual meeting, please submit your proxy or voting instructions as soon as possible. Under stock exchange rules, if you hold your shares of Class A common stock through a bank, brokerage firm or other nominee, your nominee holding shares on your behalf will NOT be able to vote your shares on Proposal 1 (election of directors), Proposal 3 (advisory vote to approve named executive officer compensation as disclosed in the accompanying proxy statement) or Proposal 4 (advisory vote on the frequency of future advisory votes to approve named executive officer compensation) unless it receives specific instructions from you. We strongly encourage you to submit your voting instructions.
| | | We encourage you to submit your proxy or voting instructions via the internet. For instructions on how to submit your proxy or voting instructions and how to vote your shares, please refer to the section entitled “Questions and Answers About the Annual Meeting” beginning on page 55 of the accompanying proxy statement. | | | | the two nominees specified in the accompanying proxy statement to serve as Class I directors, each for a three-year term expiring at the 2026 Annual Meeting of Stockholders or until such director’s successor is duly elected and qualified |
TABLE OF CONTENTS
2022 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
TABLE OF CONTENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2.
| To ratify the appointment of PricewaterhouseCoopers LLP as Secureworks’ independent registered public accounting firm for the fiscal year ending February 2, 2024 |
3.
| To approve, on a non-binding, advisory basis, the compensation of the named executive officers of Secureworks as disclosed in the accompanying proxy statement |
4.
| To approve an amendment to increase the number of shares of Class A common stock issuable under the SecureWorks Corp. 2016 Long-Term Incentive Plan |
In addition, stockholders will consider and take action upon any other business that may properly come before the annual meeting or any adjournment or postponement thereof. The holders of record of the outstanding Class A common stock and Class B common stock of Secureworks as of the close of business on April 28, 2023, which is the record date fixed by the Board of Directors, are entitled to notice of and to vote at the annual meeting or at any adjournment or postponement thereof. We encourage you to access the annual meeting before the start time of 11:00 a.m., Eastern Time, on June 27, 2023. Please allow ample time for online check-in, which will begin at 10:45 a.m., Eastern Time, on June 27, 2023. A complete list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder for at least ten days before the meeting during ordinary business hours at our headquarters located at One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328. In addition, the list will be available to any stockholder during the annual meeting at the meeting website listed above using the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. Whether or not you plan to attend the annual meeting, your Board of Directors urges you to read the proxy statement and submit a proxy for your shares of Class A common stock or voting instructions via the internet or by telephone, or complete, date, sign and return your proxy card or voting instruction form in the pre-addressed, postage-paid envelope provided. We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs. This Notice of Annual Meeting of Stockholders and the proxy statement are accompanied by the annual report of Secureworks on Form 10-K for the fiscal year ended February 3, 2023, which is our annual report to stockholders for our 2023 fiscal year. If you have questions about the annual meeting, require assistance in submitting your proxy or voting your shares, or need additional copies of the accompanying proxy statement or the proxy card, please contact Investor Relations at (404) 639-9191 or investorrelations@secureworks.com. If a bank, brokerage firm or other nominee holds your shares of Class A common stock, you also should contact your nominee for additional information. TABLE OF CONTENTS
SECUREWORKS CORP.
PROXY STATEMENT |
May 17, 2023 Dear fellow stockholders: On behalf of the Board of Directors, it is my pleasure to invite you to SecureWorks Corp.’s 2023 Annual Meeting of Stockholders. The meeting will be held virtually on Tuesday, June 27, 2023, at 11:00 a.m., Eastern Time. The meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2023, where you may listen to the meeting live, submit questions and vote online. You will find information regarding the matters to be voted on in the accompanying Notice of Annual Meeting of Stockholders and proxy statement. We are sending many of our stockholders a notice regarding the availability of this proxy statement, our annual report on Form 10-K for the fiscal year ended February 3, 2023 and other materials via the internet. A paper or electronic copy of these materials may be requested using one of the methods described in the proxy statement or in the Notice of Internet Availability of Proxy Materials. You may visit investors.secureworks.com to access various web-based reports, executive messages and timely information on our global business. Whether or not you plan to attend the annual meeting, please submit your proxy for your shares of Class A common stock or voting instructions using one of the voting methods described in the proxy statement. Submitting your proxy or voting instructions by any of these methods will not affect your right to attend the virtual meeting and vote your shares at the virtual meeting if you wish to do so. If you have questions about the annual meeting, require assistance in submitting your proxy or voting your shares, or need additional copies of the proxy statement or the proxy card, please contact Investor Relations at (404) 639-9191 or investorrelations@secureworks.com. If your bank, brokerage firm or other nominee holds your shares of Class A common stock, you also should contact your nominee for additional information. Sincerely, Michael S. Dell
Chairman of the Board of Directors TABLE OF CONTENTS NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To the Stockholders of SecureWorks Corp.: NOTICE IS HEREBY GIVEN that the 2023 Annual Meeting of Stockholders of SecureWorks Corp., or Secureworks, will be held virtually on Tuesday, June 27, 2023, at 11:00 a.m., Eastern Time. The annual meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2023, where you will be able to listen to the annual meeting live, submit questions and vote online. The annual meeting is being held for the following purposes: This summary highlights information contained elsewhere in this proxy statement. For more complete information, we encourage you1.
| To elect to review the entire proxy statement and Secureworks’ Annual Report on Form 10-K for the fiscal year ended January 28, 2022.The Notice of Internet Availability of Proxy Materials is first being distributed to stockholders on or about May 11, 2022. On or about May 12, 2022, we will begin mailing a full set of proxy materials to some of our stockholders. All references to “Secureworks,” “we,” “us,” “our” and “Company” in this proxy statement refer to SecureWorks Corp.
Annual Meeting of Stockholders
•
| | | Date:
| | | Tuesday, June 21, 2022
| •
| | | Time:
| | | 12:00 p.m., Eastern Time
| •
| | | Record Date:
| | | April 26, 2022
| •
| | | Webcast:
| | | The meeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2022, where you will be able to listen to the meeting live, submit questions and vote online.
| •
| | | Voting Methods:
|
| | |
| | | | | |
| | | | | | | | | | | | | | | | | Submit your proxy
or voting
instructions by
internet
| | | Submit your proxy
by mobile device
| | | Submit your proxy
or voting
instructions by
telephone
| | | Submit your proxy
or voting
instructions by
mail
| | | Submit your vote
online during the
meeting
| Go to www.proxyvote.com and enter the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
| | | Scan this QR code to vote with your mobile device. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
| | | Call the number on your proxy card or voting instruction form. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
| | | Complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed, postage-paid envelope.
| | | See the instructions in the section captioned “Webcast” above regarding attendance at the virtual annual meeting to vote online. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials.
|
We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs.
TABLE OF CONTENTS
Meeting Proposals and Voting Recommendations
Election of the Class III director nominees specified in this proxy statement
| | | FOR ALL NOMINEES
| | | | | | | | | | | Ratification of appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending February 3, 2023
| | | FOR
| | | | | | | | | | | Non-binding, advisory vote to approve named executive officer compensation as disclosed in this proxy statement, or Say-on-Pay
| | | FOR
| | | | | | | | | | | Non-binding, advisory vote on whether Secureworks should hold an advisory vote by stockholders to approve the Company’s named executive officer compensation every 1, 2 or 3 years, or Say-on-Pay Frequency
| | | FOR EVERY 1 YEAR
| | | |
The holders of our Class A common stock and Class B common stock will vote together as a single class on these proposals and any other business that properly comes before the stockholders for a vote at the meeting.
Election of Director Nominees (Proposal 1)
The Board of Directors is asking you to vote “FOR” the election of each oftwo nominees specified in the director nominees listed belowaccompanying proxy statement to serve as Class IIII directors, as described under “Proposal 1 – Election of Directors.” Each nominee will be elected to serveeach for a three-year term expiring at the 20252026 Annual Meeting of Stockholders or until such director’s successor is duly elected and qualified.
Each nominee currently servesqualified
|
2.
| To ratify the appointment of PricewaterhouseCoopers LLP as Secureworks’ independent registered public accounting firm for the fiscal year ending February 2, 2024 |
3.
| To approve, on a membernon-binding, advisory basis, the compensation of the Boardnamed executive officers of Secureworks as disclosed in the accompanying proxy statement |
4.
| To approve an amendment to increase the number of shares of Class A common stock issuable under the SecureWorks Corp. 2016 Long-Term Incentive Plan |
In addition, stockholders will consider and take action upon any other business that may properly come before the annual meeting or any adjournment or postponement thereof. The holders of record of the outstanding Class A common stock and Class B common stock of Secureworks as of the close of business on April 28, 2023, which is the record date fixed by the Board of Directors, are entitled to notice of and to vote at the annual meeting or at any adjournment or postponement thereof. We encourage you to access the annual meeting before the start time of 11:00 a.m., Eastern Time, on June 27, 2023. Please allow ample time for online check-in, which will begin at 10:45 a.m., Eastern Time, on June 27, 2023. A complete list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder for at least ten days before the meeting during ordinary business hours at our headquarters located at One Concourse Parkway NE, Suite 500, Atlanta, Georgia 30328. In addition, the list will be available to any stockholder during the annual meeting at the meeting website listed above using the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. Whether or not you plan to attend the annual meeting, your Board of Directors urges you to read the proxy statement and submit a proxy for your shares of Class A common stock or voting instructions via the internet or by telephone, or complete, date, sign and return your proxy card or voting instruction form in the pre-addressed, postage-paid envelope provided. We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs. This Notice of Annual Meeting of Stockholders and the proxy statement are accompanied by the annual report of Secureworks on Form 10-K for the fiscal year ended February 3, 2023, which is our annual report to stockholders for our 2023 fiscal year. If you have questions about the annual meeting, require assistance in submitting your proxy or voting your shares, or need additional copies of the accompanying proxy statement or the proxy card, please contact Investor Relations at (404) 639-9191 or investorrelations@secureworks.com. If a bank, brokerage firm or other nominee holds your shares of Class A common stock, you also should contact your nominee for additional information. By Order of the Board of Directors George B. Hanna
Corporate Secretary
May 17, 2023 | | YOUR VOTE IS IMPORTANT | | | | Whether or not you plan to attend Secureworks’ annual meeting, please submit your proxy or voting instructions as soon as possible. Under stock exchange rules, if you hold your shares of Class A common stock through a bank, brokerage firm or other nominee, your nominee holding shares on your behalf will NOTbe able to vote your shares on Proposal 1 (election of directors), Proposal 3 (advisory vote to approve named executive officer compensation as disclosed in the accompanying proxy statement) or Proposal 4 (approval of the share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan) unless it receives specific instructions from you. We strongly encourage you to submit your voting instructions. | | | | We encourage you to submit your proxy or voting instructions via the internet. For instructions on how to submit your proxy or voting instructions and how to vote your shares, please refer to the section entitled “Questions and Answers About the Annual Meeting” beginning on page 67 of the accompanying proxy statement. | | | | | |
TABLE OF CONTENTS 2023 ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT TABLE OF CONTENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael S. Dell
Chairman and Chief Executive Officer of Dell Technologies Inc. | | | 57 | | | 2015 | | | III | | | | | | | Mark J. Hawkins
Former President and CFO Emeritus of Salesforce.com, Inc. | | | 63 | | | 2016 | | | III | | | √ | | | Audit (Chair)
Compensation |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
TABLE OF CONTENTS SECUREWORKS CORP. PROXY STATEMENT This summary highlights information contained elsewhere in this proxy statement. For more complete information, we encourage you to review the entire proxy statement and the annual report of Secureworks on Form 10-K for the fiscal year ended February 3, 2023. The Notice of Internet Availability of Proxy Materials is first being distributed to stockholders on or about May 17, 2023. On or about May 18, 2023, we will begin mailing a full set of proxy materials to some of our stockholders. All references to “Secureworks,” “we,” “us,” “our” and “Company” in this proxy statement refer to SecureWorks Corp. Annual Meeting of Stockholders • | | | Date: | | | Tuesday, June 27, 2023 | • | | | Time: | | | 11:00 a.m., Eastern Time | • | | | Record Date: | | | April 28, 2023 | • | | | Webcast: | | | The Boardmeeting can be accessed by visiting www.virtualshareholdermeeting.com/SCWX2023, where you will be able to listen to the meeting live, submit questions and vote online. | • | | | Voting Methods: |
| | |
| | | | | |
| | | | | | | | | | | | | | | | | Submit your proxy
or voting
instructions by
internet | | | Submit your proxy
by mobile device | | | Submit your proxy
or voting
instructions by
telephone | | | Submit your proxy
or voting
instructions by
mail | | | Submit your vote
online during the
meeting | | | | | | | | | | | | | | Go to www.proxyvote.com and enter the 16-digit control number provided on your proxy card, voting instruction form or Notice of Directors is asking youInternet Availability of Proxy Materials. | | | Scan this QR code to vote “FOR”with your mobile device. You will need the ratification16- digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. | | | Call the number on your proxy card or voting instruction form. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. | | | Complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed, postage-paid envelope. | | | See the instructions in the section captioned “Webcast” above regarding attendance at the virtual annual meeting to vote online. You will need the 16-digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials. |
We encourage you to submit your proxy or voting instructions via the internet, which is convenient, helps reduce the environmental impact of our annual meeting and saves us significant postage and processing costs. TABLE OF CONTENTS Meeting Proposals and Voting Recommendations Election of the Class I director nominees specified in this proxy statement | | | FOR ALL NOMINEES | | | | | | | | | | | Ratification of appointment of PricewaterhouseCoopers LLP or PwC, as our independent registered public accounting firm for the fiscal year ending February 3, 2023, or Fiscal 2023. All PwC fees incurred in connection with professional services rendered2, 2024 | | | FOR | | | | | | | | | | | Non-binding, advisory vote to Secureworks during our fiscal year ended January 28, 2022, or Fiscal 2022, and our fiscal year ended January 29, 2021, or Fiscal 2021, are summarized under “Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm.” Say-on-Pay (Proposal 3)
The Board of Directors is asking you to vote, on a non-binding, advisory basis, “FOR” the approval of the compensation of ourapprove named executive officersofficer compensation as disclosed in this proxy statement, includingor Say-on-Pay
| | | FOR | | | | | | | | | | | Vote to approve the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure beginning on page 27. The Compensation Committee and the Board of Directors value the views of the Company’s stockholders and will take the outcome of the advisory vote into account when considering future executive compensation matters. TABLE OF CONTENTS
Say-on-Pay Frequency (Proposal 4)
The Board of Directors is asking you to vote, on a non-binding, advisory basis, on whether future non-binding, advisory votes on the compensation of our named executive officers as disclosed in the Company’s annual proxy statement should be held every 1 year, every 2 years or every 3 years. The Board of Directors unanimously recommends that stockholders vote “FOR” “Every 1 year” as the frequency with which Secureworks should hold this vote.
Stockholder Proposals for 2023 Annual Meeting of Stockholders
Deadline for stockholder proposals to be included in our 2023 proxy statement: January 12, 2023
Deadline for proposed business and nominations for director that will not be included in our 2023 proxy statement: February 21, 2023 – March 23, 2023
Deadline for noticeshare increase amendment under the SEC’s universal proxy rules for solicitation of proxies in connection with our 2023 annual meeting in support of director nominees other than the Company’s nominees: April 22, 2023SecureWorks Corp. 2016 Long-Term Incentive Plan
| | | Important Notice Regarding the Availability of Proxy Materials for
FOR
the Annual Meeting of Stockholders to Be Held on Tuesday, June 21, 2022:
The accompanying notice of the 2022 Annual Meeting of Stockholders,
proxy statement, form of proxy card and Secureworks Annual Report on Form 10-K
for the fiscal year ended January 28, 2022, are available electronically
on our website at investors.secureworks.com
and at www.proxyvote.com.
| | | |
The holders of our Class A common stock and Class B common stock will vote together as a single class on these proposals and any other business that properly comes before the stockholders for a vote at the meeting. Election of Director Nominees (Proposal 1) The Board of Directors is asking you to vote “FOR” the election of each of the director nominees listed below to serve as Class I directors, as described under “Proposal 1 – Election of Directors” beginning on page 5. Each nominee will be elected to serve for a three-year term expiring at the 2026 Annual Meeting of Stockholders or until such director’s successor is duly elected and qualified. Each nominee currently serves as a member of the Board of Directors as a Class I director. Set forth below is summary information about each director nominee. Yagyensh (Buno) C. Pati
Chief Executive Officer of Infoworks.io Partner of Centerview Capital Technology | | | 59 | | | 2016 | | | I | | | √ | | | Audit (Chair)
Compensation
Nominating and Governance | Wendy K. Thomas
Chief Executive Officer of SecureWorks Corp. | | | 51 | | | 2021 | | | I | | | | | | |
Ratification of Independent Registered Public Accounting Firm (Proposal 2) The Board of Directors is asking you to vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP, or PwC, as our independent registered public accounting firm for the fiscal year ending February 2, 2024, or Fiscal 2024. All PwC fees incurred in connection with professional services rendered to Secureworks during our fiscal year ended February 3, 2023, or Fiscal 2023, and our fiscal year ended January 28, 2022 are summarized under “Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm” on page 22. Say-on-Pay (Proposal 3) The Board of Directors is asking you to vote, on a non-binding, advisory basis, “FOR” the approval of the compensation of our named executive officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure beginning on page 37. The Compensation Committee and the Board of Directors value the views of the Company’s stockholders and will take into account the results of the advisory vote when considering future executive compensation matters. Share Increase Amendment Under the SecureWorks Corp. 2016 Long-Term Incentive Plan (Proposal 4) The Board of Directors is asking you to vote “FOR” the approval of an amendment to the SecureWorks Corp. 2016 Long-Term Incentive Plan to increase the number of shares of Class A common stock issuable under the plan, as described under “Proposal 4 – Approval of Share Increase Amendment Under the SecureWorks Corp. 2016 Long-Term Incentive Plan” beginning on page 24. TABLE OF CONTENTS Stockholder Proposals for 2024 Annual Meeting of Stockholders Deadline for stockholder proposals to be included in our 2024 proxy statement: January 18, 2024 Deadline for proposed business and nominations for director that will not be included in our 2024 proxy statement: February 28, 2024 – March 29, 2024 Deadline for notice under the SEC’s universal proxy rules for solicitation of proxies in connection with our 2024 annual meeting in support of director nominees other than the Company’s nominees: April 28, 2024 Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Stockholders to Be Held on Tuesday, June 27, 2023:
The accompanying notice of the 2023 Annual Meeting of Stockholders,
proxy statement, form of proxy card and Secureworks annual report on
Form 10-K for the fiscal year ended February 3, 2023 are available electronically
on our website at investors.secureworks.com and at www.proxyvote.com. TABLE OF CONTENTS We strive to create a positive and lasting impact in our communities and within our society at large by advancing sustainability, cultivating and advancing inclusion and community involvement, and maintaining a strong commitment to ethical governance practices. | • | We strive to create a positive and lasting impact in our communities and within our society at large by advancing sustainability, cultivating and advancing inclusion and community involvement, and maintaining a strong commitment to ethics. We also recognize that effective governance is an essential part of our corporate responsibility strategy.
Advancing Sustainability– We acknowledge that we have aour responsibility to contribute to the health and prosperity of our society and our customers, suppliers and communities. We are reducing our carbon footprint by migrating our workloads to a more efficient and sustainable public cloud /and Software-as-a-Service, or SaaS, environment.environments. We also believe an efficient office footprint contributes to reducing our carbon footprint. To this end, we regularly analyzetune our facility usage to better rationalizesatisfy our space needs.needs, while deploying a remote-friendly work environment that helps us reduce our energy usage. |
| • | Upholding Ethics– Ethics and integrity help us establish a strong foundation for positive social impact. Our internal policies reflect our commitment to acting ethically and with integrity in our own operations and all our business relationships. We endeavor to embed ethical practices ininto all that we do and to take ownershipresponsibility for our actions, while enhancing wherever andour ethical governance practices whenever possible. |
| • | Cultivating Inclusion– We believe that ourstrive for a company culture should focus ongrounded in respecting and celebrating teammates,colleagues, learning from each otherone another and allowing people to be themselves.their true selves. Secureworks is committed to educating our teammates,team members, enabling inclusion and enhancing diversity. To further these goals, we have created an internal work group to evolvedevelop diversity and inclusion programs, which supports the development of our continued efforts to create an inclusive work environment. Additionally, we actively celebrate our employees’ diverse backgrounds throughout the year and strive to use more inclusive language within our business. We encourage employees to participate in a variety of employee resource groups, which help foster inclusion by facilitating dialogue and creating opportunities to learn and engage with othersthose who can provide valuable insights, experience and perspective. Our commitment to diversity and inclusion starts at the top, with a highly skilled and diverse Board of Directors.Directors, or Board. As of the date of this proxy statement, three of our six directors qualify as “Diverse” under the board diversity rule adopted by the Nasdaq Stock Market, or Nasdaq. In Fiscal 2021, we institutedMarket. We are an equal opportunity employer fully committed to providing and promoting a talent acquisition policy aimedculturally diverse workplace at ensuringall levels. We continue to see a steady increase in the diversity of our teammates and believe that at least one candidate from an underrepresented group is included in external candidate interview slates, including at the executive officer level. We believe diversity helps fostera culturally diverse workforce fosters creativity, increases collaboration and enhances innovation asinnovation. As we continue to evolve our company and fortify our technology; therefore,technology, we will continueremain committed to pursuepursuing inclusive employment policies that support women and diverse members of underrepresented groups.teammates. |
| • | Community Involvement– We aim to give back to the communities where we live and work, and we believe that this commitment helps in our efforts to attract and retain employees. We partner with a variety of universities and inclusion-focused programs in the United States and abroadinternationally to promote STEM education for all. Additionally, when humanitarian crises or other natural disasters have occurred, Secureworks has supplemented donations made by our employees to support affected communities. Most recently, we launched an employee donation campaign in response to the humanitarian crisis in Ukraine. Beyond financial contributions, our team membersemployees participate in local events and provide volunteer services. We believe that our contributions make a meaningful difference in theseour communities throughout the year. |
| • | Governance– In our commitment to govern with integrity and honesty, while putting our customers first, we have established standards and practices to which our Board, of Directors, executives and employees are obligated to adhere. The Board of Directors is tasked with overseeing the establishment and maintenance of our governance, compliance and risk oversight processes and procedures to promote conductingthe conduct of our business with the highest standards of responsibility, ethics and integrity. Guided by an integrated perspective and approach to corporate responsibility, the Board’s Audit Committee, Compensation Committee and Nominating and Governance Committee all support the oversight, development, implementation and implementationperformance of the Company’s policies and management systems relating to environmental, social and governance issues to promote ourthe Company’s compliance with applicable laws and best practices and to measure ourthe Company’s performance against objectives established under those policies and systems.its objectives. We present additional information about our commitment to corporate responsibility in our Annual Report on Form 10-K for Fiscal 2022.
|
We present additional information about our commitment to corporate responsibility in our annual report on Form 10-K for Fiscal 2023. TABLE OF CONTENTS PROPOSAL 1 – ELECTION OF DIRECTORS In this Proposal 1, stockholders are being asked to vote for the election of the two nominees to the Board of Directors. Upon the recommendation of our Nominating and Governance Committee, consisting exclusively of independent directors, the Board of Directors has nominated Yagyensh (Buno) C. Pati and Wendy K. Thomas for election to the Board as Class I directors at this annual meeting. Each nominee is currently serving as a Class I director. The directors to be elected at this annual meeting will serve a three-year term until the 2026 Annual Meeting of Stockholders and until their successors are elected and qualified. As of the date of this proxy statement, our Board of Directors is composed of six members. Our certificate of incorporation provides that the number of directors will be fixed by resolution of the Board, but it may not be fewer than three directors or more than 15 directors. The Board of Directors is divided into the following three classes that serve staggered three-year terms: Class I directors, whose term will expire at this 2023 Annual Meeting of Stockholders Class II directors, whose term will expire at the 2024 Annual Meeting of Stockholders Class III directors, whose term will expire at the 2025 Annual Meeting of Stockholders The following directors currently serve on the Board of Directors: Yagyensh (Buno) C. Pati and Wendy K. Thomas serve as Class I directors. Pamela Daley and Kyle Paster serve as Class II directors. Michael S. Dell and Mark J. Hawkins serve as Class III directors. Directors of each class hold office until the annual meeting for the year in which their term expires (as indicated above) and until their successors are elected and qualified, subject to the prior death, resignation, retirement, disqualification or removal of a director from office. The number of directors in each class may be changed only by resolution adopted by the affirmative vote of a majority of the authorized number of directors. Any additional directorships resulting from an increase in the number of directors are required to be distributed among the three classes to ensure that the classes are as nearly equal in number as permitted by the then-authorized number of directors constituting the full Board of Directors. Each director nominee has consented to serve as a nominee, to serve as a director if elected and to be named as a nominee in this proxy statement. If any nominee is unavailable for election or unable to serve upon election, the Company’s proxy holders will vote the shares of Class A common stock for which they have received validly executed proxies for any substitute nominee proposed by the Board, unless the Board of Directors chooses to reduce the number of directors on the Board in accordance with our certificate of incorporation or to leave unfilled the resulting vacancy. Biographical and qualification information about each nominee is included under “– Directors Standing for Election.” The Board’s recommendation of its director nominees is based on its carefully considered judgment that the qualifications and experience of the nominees, particularly in areas relevant to the strategy and operations of Secureworks, make them suitable candidates to serve on the Board. The Board of Directors unanimously recommends a vote “FOR” each of the Board’s nominees for Class I director. Director Qualifications and Information Director Qualifications – The Board of Directors believes that, as set forth in our Corporate Governance Principles, individuals who serve on the Board should have demonstrated notable or significant achievements in business, education or public service; should possess the requisite intelligence, education, experience and judgment to make a significant contribution to the Board and bring a range of skills and diverse perspectives and backgrounds to its deliberations; and should have the highest standards of ethics and integrity, a strong sense of professionalism and intense dedication to serving the interests of our stockholders. TABLE OF CONTENTS PROPOSAL 1 – ELECTION OF DIRECTORSUpon the recommendation of our Nominating and Governance Committee, consisting exclusively of independent directors, the Board of Directors has nominated Michael S. Dell and Mark J. Hawkins for election to the Board as Class III directors at this annual meeting. Stockholders are being asked to vote for the election of the two nominees to the Board. Each nominee is currently serving as a Class III director. The directors to be elected at this annual meeting will serve a three-year term until the 2025 Annual Meeting of Stockholders and until their successors are elected and qualified.
As of the date of this proxy statement, our Board of Directors is composed of six members. Our certificate of incorporation provides that the number of directors will be fixed by resolution of the Board of Directors and may be no fewer than three directors or more than 15 directors.
The Board of Directors is divided into the following three classes that serve staggered three-year terms:
Class I directors, whose term will expire at the 2023 Annual Meeting of Stockholders
Class II directors, who were elected at last year’s annual meeting and whose term will expire at the 2024 Annual Meeting of Stockholders
Class III directors, whose term will expire at this 2022 Annual Meeting of Stockholders
The following directors currently serve on the Board of Directors:
Yagyensh C. (Buno) Pati and Wendy K. Thomas serve as Class I directors.
Pamela Daley and Kyle Paster serve as Class II directors.
Michael S. Dell and Mark J. Hawkins serve as Class III directors.
Directors of each class hold office until the annual meeting for the year in which their term expires (as indicated above) and until their successors are elected and qualified, subject to the prior death, resignation, retirement, disqualification or removal of a director from office. The number of directors in each class may be changed only by resolution adopted by the affirmative vote of a majority of the authorized number of directors. Any additional directorships resulting from any increase in the number of directors are required to be distributed among the three classes to ensure that the classes are as nearly equal in number as permitted by the then-authorized number of directors constituting the full Board of Directors.
Each director nominee has consented to serve as a nominee, to serve as a director if elected and to be named as a nominee in this proxy statement. If any nominee is unavailable for election or unable to serve upon election, the Company’s proxy holders will vote the shares of Class A common stock for which they have received validly executed proxies for any substitute nominee proposed by the Board of Directors, unless the Board of Directors chooses to reduce the number of directors on the Board in accordance with our certificate of incorporation or to leave unfilled the resulting vacancy on the Board.
Biographical and qualification information about each nominee is included under “– Directors Standing for Election.” The Board’s recommendation of its director nominees is based on its carefully considered judgment that the qualifications and experience of the nominees, particularly in areas relevant to Secureworks’ strategy and operations, make them suitable candidates to serve on the Board.
The Board of Directors unanimously recommends a vote “FOR” each of the Board’s nominees for Class III director.
Director Qualifications and InformationDirector Qualifications – The Board of Directors believes that, as set forth in our Corporate Governance Principles, individuals who serve on the Board should have demonstrated notable or significant achievements in business, education or public service; should possess the requisite intelligence, education, experience and judgment to make a significant contribution to the Board and bring a range of skills, diverse perspectives and
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backgrounds to its deliberations; and should have the highest standards of ethics and integrity, a strong sense of professionalism and intense dedication to serving the interests of our stockholders. The following are qualifications, experience and skills for Board members that are important to our business and our future:
| • | Leadership Experience – Secureworks seeks directors who demonstrate extraordinary leadership qualities. Strong leaders bring vision, strategic agility, diverse and global perspectives, and broad business insight to the Company. They demonstrate practical management experience, skills for managing change and deep knowledge of industries, geographies and risk management strategies relevant to the Company. They have experience in identifying and developing our current and future leaders. |
| • | Industry Experience – Secureworks also seeks directors who have relevant industry experience. We value experience in our high-priority areas, including new or expanding services and solutions, client segments or geographies, organic and inorganic growth strategies and existing and new technologies; deep or unique understanding of Secureworks’ business environments; and experience with, exposure to or reputation among a broad subset of our client base. |
| • | Financial Experience – Secureworks believes that all directors should possess an understanding of finance and related corporate reporting processes. We also seek directors who qualify as “audit committee financial experts,” as defined in the SEC’s rules, for service on the Audit Committee. |
| • | International Experience – Secureworks seeks directors with a global mindset and experience in emerging markets to help guide our growth. In addition, we seek directors with operational experience to understand the competitive dynamics of our business strategy and execution and key business processes. |
| • | Diversity of Background – A current strength of the Board stems from the diversity of perspectives and understanding that arises from discussions involving individuals ofwith varied backgrounds and experience. WhileAlthough the Board of Directors has not established any formal diversity policy to be used to identifyfor identifying director nominees, when assessing a candidate’s background and experience, the Nominating and Governance Committee takes into consideration a broad range of factors, including a candidate’s gender, age, race and ethnicity. The Board seeks to include in the pool from which director nominees are chosen highly qualified diverse candidates. Although the Board of Directors has not establishedethnicity, when assessing a formal diversity policy to identify nominees, incandidate’s background and experience. In compliance with the Nasdaq board diversity rule, we have obtained self-identifying information from our Board of Directors and have determined that three of our six directors qualify as “Diverse” under the rule, as discussed below under “— Board Diversity Matrix.” |
Director Matrix – The Nominating and Governance Committee evaluates, selects and recommends to the full Board of Directors qualified candidates for election or appointment to the Board. The following matrix outlines specific qualifications and attributes through which our directors bring to the Board a diversity of experience, background and international perspective and enables the committee to identify areas of expertise and experience that may benefit the Board of Directors in the future as well as gaps in those areas that may arise as directors retire. The matrix below shows how the current directors (including the nominees for election at this annual meeting) contribute the various skills, experiences and perspectives that the Board and the Nominating and Governance Committee consider important. TABLE OF CONTENTS Wendy K. Thomas
Board Diversity Matrix — To qualifyClass I Director
Term expires: 2023 Annual Meeting
Age: 51
Director since July 2021
| | | Ms. Thomas has served as “Diverse” underour Chief Executive Officer since September 2021. Prior to this appointment, Ms. Thomas served in a number of critical positions at Secureworks, including as President and Chief Executive Officer from September 2021 to February 2023, as President, Customer Success from April 2020 to September 2021, as Chief Product Officer from June 2019 to April 2020, as Senior Vice President, Business and Product Strategy, from March 2018 to June 2019, as Vice President, Strategic and Financial Planning, from March 2017 to March 2018, and as Vice President, Financial Planning and Analysis from July 2015 to March 2017 and from June 2008 to June 2011. In addition, Ms. Thomas served as Chief Financial Officer of Bridgevine, Inc. (currently known as Updater Inc.), a marketing software company, from November 2013 to July 2015, and as Vice President, Financial Planning and Analysis, at First Data Corporation (currently known as Fiserv, Inc.), a payment processing and financial services technology company, from July 2011 to October 2013. Earlier in her career, Ms. Thomas held other positions, including multiple finance roles at BellSouth Corporation, a telecommunications company, culminating in the Nasdaqposition of Director, Finance.
Ms. Thomas currently serves as a member of the board diversity rule,of directors of IonQ, Inc., a quantum computing company.
Director Qualifications
Leadership Experience – Principal executive officer of Secureworks since 2021
Finance Experience – Experience as former chief financial officer and with strategic acquisitions within the software and technology industries
Industry Experience – Over 25 years of experience in strategic and functional leadership roles across multiple technology-driven companies |
TABLE OF CONTENTS Michael S. Dell
Class III Director
Term expires: 2025 Annual Meeting
Age: 58
Director since December 2015
| | | Mr. Dell has served as a director must self-identify as “Female,” as an “Underrepresented Minority” or as “LGBTQ+,” as those terms are defined in the rule. The Board Diversity Matrix below shows the self-identifying characteristics provided by membersand our non-executive Chairman of the Board since December 11, 2015. Mr. Dell serves as Chairman of Directorsthe Board and Chief Executive Officer of Dell Technologies Inc., or Dell Technologies. Mr. Dell also served as Chief Executive Officer of May 1, 2022, whichDell Inc., a wholly-owned subsidiary of Dell Technologies, from 1984 until July 2004 and resumed that role in January 2007. In 1998, Mr. Dell formed MSD Capital, L.P., a private investment firm, for the purpose of managing his and his family’s investments, and, in 1999, he and his wife established the Michael & Susan Dell Foundation to provide philanthropic support to a variety of global causes.
He is unchangedan honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. He is also a member of the Technology CEO Council and the Business Roundtable. He serves on the advisory board of Tsinghua University’s School of Economics and Management in Beijing, China, on the governing board of the Indian School of Business in Hyderabad, India, and is on the board of Catalyst, a non-profit organization that promotes inclusive workplaces for women. In June 2014, Mr. Dell was named the United Nations Foundation’s first Global Advocate for Entrepreneurship.
Mr. Dell continues to serve as Chairman of the board of directors of VMware, Inc., a cloud infrastructure and digital workspace technology company, following the spin-off of VMware from January 28, 2022,Dell Technologies in 2021. He was a director of Pivotal Software, Inc., formerly a public majority-owned subsidiary of Dell Technologies that provided a cloud-native platform, from September 2016 until it merged with VMware, Inc. in December 2019.
Director Qualifications
Leadership Experience – Founder of Dell Inc. and Chairman of the endBoard and CEO of our most recent fiscal year.Dell Technologies
Board Diversity Matrix (As
Industry Experience – Deep knowledge of May 1, 2022)new and existing technologies and the information technology industry Total Number of Directors | | | 6 | Part I: Gender Identity
| | | | | | | | | | | | | Directors | | | 2 | | | 4 | | | 0 | | | 0 | Part II: Demographic Background
| | | | | | | | | | | | | African American or Black | | | 0 | | | 0 | | | 0 | | | 0 | Alaskan Native or Native American | | | 0 | | | 0 | | | 0 | | | 0 | Asian | | | 0 | | | 1 | | | 0 | | | 0 | Hispanic or Latinx | | | 0 | | | 0 | | | 0 | | | 0 | Native Hawaiian or Pacific Islander | | | 0 | | | 0 | | | 0 | | | 0 | White | | | 2 | | | 3 | | | 0 | | | 0 | Two or More Races or Ethnicities | | | 0 | | | 0 | | | 0 | | | 0 | LGBTQ+ | | | 0 | Did Not Disclose Demographic Background | | | 0 |
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TABLE OF CONTENTS Mark J. Hawkins
Set forth belowClass III Director
Term expires: 2025 Annual Meeting
Age: 64
Director since April 2016
Board committees:
• Audit
• Compensation (Chair)
| | | Mr. Hawkins was President and Chief Financial Officer of Salesforce.com, Inc., a provider of enterprise cloud computing solutions, from August 2014 to January 2021, where he was responsible for leading the company’s global finance organization and was a member of the company’s executive committee. In February 2021, Mr. Hawkins was named President and CFO Emeritus at Salesforce.com, Inc. and served in this capacity until his retirement in November 2021. Prior to his time at Salesforce, Mr. Hawkins served as Chief Financial Officer and Executive Vice President at Autodesk, Inc., a provider of three-dimensional design, engineering and entertainment software, from April 2009 to July 2015. At Autodesk, Mr. Hawkins led the global finance, information technology and procurement organizations. From April 2006 to April 2009, he was Chief Financial Officer and Senior Vice President of Finance & IT at Logitech International SA, a global provider of personal computer and tablet accessories. From January 2000 to March 2006, Mr. Hawkins served as Vice President for Dell Inc.’s worldwide procurement and logistics organization, as well as Vice President of Finance for Dell Inc.’s U.S. Home Segment. Before joining Dell Inc., he spent over 18 years at Hewlett-Packard Company, a global IT company, where he held a variety of finance and business management roles.
Mr. Hawkins currently serves as a member of the board of directors of Workday, Inc., an enterprise cloud applications company, Toast Inc., a cloud-based restaurant software company, and Cloudflare, Inc., a global cloud services provider. In addition, Mr. Hawkins served during 2021 as a director for Fidelity National Information Services, Inc., a provider of technology solutions for merchants, banks and capital markets firms, before stepping down from the role.
Mr. Hawkins also sits on the NYSE Listed Company Advisory Board, is biographicala founding member of the USA Chapter of The Prince of Wales’ Accounting for Sustainability Project CFO Leadership Network and chairs the A4S Global Advisory Council. Mr. Hawkins also serves on the board of directors of the Ocean Cleanup North Pacific.
Director Qualifications
Finance Experience – Over 35 years of experience with leading finance organizations at public global software and technology companies
Leadership Experience – Decades of executive management experience and expertise providing leadership and insight in finance, information technology, global operations and global capital markets
Industry Experience – Extensive experience serving in top positions with leading global software and technology companies |
TABLE OF CONTENTS Pamela Daley
Class II Director
Term expires: 2024 Annual Meeting
Age: 70
Director since April 2016
Board committees:
• Audit
• Nominating and Governance (Chair)
| | | Before her retirement on January 1, 2014 from the General Electric Company, or GE, one of the world’s largest infrastructure and financial services companies, Ms. Daley served with GE in a number of roles, including Senior Vice President and Senior Advisor to the Chairman from April 2013 to January 2014, Senior Vice President of Corporate Business Development from August 2004 to March 2013 and Vice President and Senior Counsel for Transactions from 1991 to July 2004. As Senior Vice President for Corporate Business Development, Ms. Daley was responsible for GE’s merger, acquisition and divestiture activities worldwide. Before she joined GE in 1989 as Tax Counsel, Ms. Daley was a partner at Morgan, Lewis & Bockius, an international law firm, where she specialized in domestic and cross-border tax-oriented financings and commercial transactions.
Ms. Daley also serves as a director of May 1, 2022, aboutBlackRock, Inc., a global asset management company, and BP plc, one of the persons nominatedfive integrated supermajors in oil and gas and energy. She was a director of BG Group plc, an international gas and oil company traded on the London Stock Exchange, until BG Group plc was acquired by Royal Dutch Shell plc in February 2016. Ms. Daley was also a director of Patheon N.V., a global pharmaceutical contract development and manufacturing organization, until August 2017, when Patheon was acquired by Thermo Fisher Scientific Inc.
Director Qualifications
Leadership Experience – Over 20 years of service as an executive with GE
Strategic and Transactional Experience – Over 35 years of experience in leadership development, international operations, transactions, business development and global strategy
In selecting Ms. Daley for service on the Board of Directors, for election at the annual meeting and the continuing directors, including the qualifications, experience and skills the Board also considered Ms. Daley’s gender in determining that each such person should serve asthe context of the Board’s diversity considerations for Board membership. |
TABLE OF CONTENTS Kyle Paster
Class II Director
Term expires: 2024 Annual Meeting
Age: 36
Director since May 2020
| | | Mr. Paster is a director.Managing Director of Silver Lake, a global technology investment firm, where he has worked since July 2011. Previously, he worked in the Technology Investment Banking Group at Credit Suisse in San Francisco from July 2009 to June 2011. Mr. Paster currently serves on the board of directors of Entrata, Inc., a provider of comprehensive property management software. He served on the board of directors of ServiceMax, Inc., a cloud-based field service management software company, until January 2023.
Directors Standing for ElectionMichael S. Dell
Class III Director
Term expires: 2022 Annual Meeting
Age: 57
Director since December 2015
| | | Mr. Dell has served as a director and our non-executive Chairman of the Board since December 11, 2015. Mr. Dell serves as Chairman of the Board and Chief Executive Officer of Dell Technologies Inc., or Dell Technologies. Mr. Dell also served as Chief Executive Officer of Dell Inc. from 1984 until July 2004 and resumed that role in January 2007. In 1998, Mr. Dell formed MSD Capital, L.P. for the purpose of managing his and his family’s investments, and, in 1999, he and his wife established the Michael & Susan Dell Foundation to provide philanthropic support to a variety of global causes.
He is an honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. He is also a member of the Technology CEO Council and the Business Roundtable. He serves on the advisory board of Tsinghua University’s School of Economics and Management in Beijing, China, on the governing board of the Indian School of Business in Hyderabad, India, and is a board member of Catalyst, a non-profit organization that promotes inclusive workplaces for women. In June 2014, Mr. Dell was named the United Nations Foundation’s first Global Advocate for Entrepreneurship.
Mr. Dell continues to serve as Chairman of the Board of Directors of VMware, Inc., a cloud infrastructure and digital workspace technology company, following the spin-off of VMware from Dell Technologies in 2021. He was a director of Pivotal Software, Inc., formerly a public majority-owned subsidiary of Dell Technologies that provided a cloud-native platform, from September 2016 until it merged with VMware, Inc. in December 2019.
Director Qualifications
Leadership Experience - Founder of Dell Inc. and Chairman of the Board and CEO of Dell Technologies
Industry Experience - Deep knowledge of new and existing technologies and the information technology industry
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Director Qualifications
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Industry and Finance Experience – Experience in technology and finance |
TABLE OF CONTENTS Mark J. Hawkins
Class III Director
Term expires: 2022 Annual Meeting
Age: 63
Director since April 2016
Board committees:
• Audit (Chair)
• Compensation
| | | As President and Chief Financial Officer of Salesforce.com, Inc., a provider of enterprise cloud computing solutions, from August 2014 to January 2021, Mr. Hawkins was responsible for leading the company’s global finance organization and was a member of the company’s executive committee. Mark was named President and CFO Emeritus at Salesforce.com, Inc. in February 2021 and served in this capacity until his retirement in November 2021.
Prior to his time at Salesforce, Mark served as CFO and Executive Vice President at Autodesk, Inc., a provider of three-dimensional design, engineering and entertainment software, from April 2009 to July 2015. At Autodesk, Mr. Hawkins led the global finance, information technology and procurement organizations. From April 2006 to April 2009, he was CFO and Senior Vice President of Finance & IT at Logitech International SA, a global provider of personal computer and tablet accessories. From January 2000 to March 2006, Mr. Hawkins served as Vice President for Dell Inc.’s worldwide procurement and logistics organization, as well as Vice President of Finance for Dell Inc.’s U.S. Home Segment. Before joining Dell, he spent over 18 years at Hewlett-Packard Company, a global IT company, where he held a variety of finance and business management roles.
Currently, Mr. Hawkins is a member of the Board of Directors at Toast Inc., a cloud-based restaurant software company. In addition, Mark served briefly during 2021 as a director for Fidelity National Information Services, Inc., a provider of technology solutions for merchants, banks and capital markets firms, before stepping down from the role.
Director Qualifications
Finance Experience – Decades of experience with leading finance organizations at public global software and technology companies
Leadership Experience – Decades of executive management experience and expertise providing leadership and insight in finance, information technology, global operations and global capital markets
Industry Experience – Extensive experience serving in top positions with leading global software and technology companies
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Continuing DirectorsPamela Daley
Class II Director
Term expires: 2024 Annual Meeting
Age: 69
Director since April 2016
Board committees:
• Audit
• Nominating and Governance (Chair)
| | | Before her retirement on January 1, 2014 from the General Electric Company, or GE, one of the world’s largest infrastructure and financial services companies, Ms. Daley served with GE in a number of roles, including Senior Vice President and Senior Advisor to the Chairman from April 2013 to January 2014, Senior Vice President of Corporate Business Development from August 2004 to March 2013 and Vice President and Senior Counsel for Transactions from 1991 to July 2004. As Senior Vice President for Corporate Business Development, Ms. Daley was responsible for GE’s merger, acquisition and divestiture activities worldwide. Before she joined GE in 1989 as Tax Counsel, Ms. Daley was a partner at Morgan, Lewis & Bockius, an international law firm, where she specialized in domestic and cross-border tax-oriented financings and commercial transactions.
Ms. Daley also serves as a director of BlackRock, Inc., a global asset management company, and BP plc, one of the five integrated supermajors in oil and gas and energy. She was a director of BG Group plc, an international gas and oil company traded on the London Stock Exchange, until BG Group was acquired by Royal Dutch Shell plc in February 2016. Ms. Daley was also a director of Patheon N.V., a global pharmaceutical contract development and manufacturing organization, until August 2017, when Patheon was acquired by Thermo Fisher Scientific Inc.
Director Qualifications
Leadership Experience – Over 20 years of service as an executive with GE
Strategic and Transactional Experience – Over 35 years of experience in leadership development, international operations, transactions, business development and global strategy
In selecting Ms. Daley for service on the Board of Directors, the Board also considered Ms. Daley’s gender in the context of the Board’s diversity considerations for Board membership.
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10Corporate Governance Principles – The Board of Directors is committed to achieving business success and increasing long-term stockholder value with the highest ethical standards. The Board maintains the Company’s Corporate Governance Principles to provide a corporate governance framework for the Company. The Corporate Governance Principles reflect a set of core values that provide the foundation for our governance and management systems and our interactions with others. A copy of those principles can be found on the Company’s website at investors.secureworks.com in the Governance section under Documents & Charters. Controlled Company Status – The Company’s Class A common stock is listed on the Nasdaq Global Select Market of the Nasdaq Stock Market, or Nasdaq, under the ticker symbol “SCWX.” Accordingly, Secureworks is subject to corporate governance requirements under Nasdaq rules. Secureworks is a “controlled company” under Nasdaq corporate governance standards. As a result, it qualifies for an exemption from, and is entitled to elect not to comply with, certain corporate governance requirements under Nasdaq rules, including the requirements that Secureworks have a board of directors that is composed of a majority of “independent directors,” as defined under Nasdaq rules, and maintain a compensation committee and a nominating committee that are each composed solely of independent directors. Even though Secureworks is a controlled company, it is required to comply with SEC and Nasdaq rules relating to the membership, qualifications and operations of its Audit Committee, as discussed below. In reliance on the controlled company exemption, Secureworks has elected not to maintain a majority of independent directors on the Board of Directors. Nasdaq rules define a “controlled company” as a company of which more than 50% of the voting power is held by an individual, a group or another company. As of the record date for the annual meeting, Dell Technologies held no shares of our outstanding Class A common stock and, through an indirect wholly-owned subsidiary, all 70,000,000 outstanding shares of our Class B common stock, which as of that date represented approximately 81.4% of our total outstanding shares of common stock and approximately 97.8% of the combined voting power of both classes of our outstanding common stock. Notwithstanding our eligibility for the exemption from these requirements, our Compensation Committee and our Nominating and Governance Committee are each currently composed solely of independent directors. We are not required to maintain compliance with Nasdaq’s composition requirements for these committees that are applicable to a listed company that is not a controlled company. We may choose to change our committee composition or other arrangements in the future to manage these aspects of our corporate governance in accordance with the controlled company exemption. If we cease to be a controlled company and the Class A common stock continues to be listed on Nasdaq, we will be required to comply with Nasdaq’s corporate governance requirements applicable to listed companies generally, subject to a phase-in period during the first year after we cease to be a controlled company. Director Independence – The Board of Directors has affirmatively determined that Ms. Daley, Mr. Hawkins and Mr. Pati, constituting three of our six directors, are independent under Nasdaq rules and the standards for independent directors established in our Corporate Governance Principles, which incorporate the director independence requirements of Nasdaq rules. Nasdaq rules provide that, in order to determine that a director is independent, the Board must determine that the director has no relationship which, in the Board’s opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Board Leadership Structure – Our current leadership structure separates the role of the Chairman of the Board, which is held by Mr. Dell, and the role of the Chief Executive Officer, which is held by Ms. Thomas. The Chairman of the Board presides over meetings of the Board of Directors. The Chief Executive Officer has management responsibility for the business and affairs of the Company. The Board has determined that this separation is appropriate for Secureworks and our stockholders under current circumstances because it allows for a division of responsibilities and a sharing of ideas between directors with different perspectives. As reflected in our Corporate Governance Principles, the Board observes a number of practices to maintain independent oversight of management, including the following: Executive sessions without management and non-independent directors present are a standing Board agenda item at no fewer than two regular meetings of the Board each year. Executive sessions of the TABLE OF CONTENTS Kyle Pasterindependent directors are held at any time requested by a majority of the independent directors. The agenda for each executive session focuses principally on whether management is performing its responsibilities in a manner consistent with the Board’s direction. All Board committee members are independent directors. The committee Chairs have authority to hold executive sessions without management and non-independent directors present. Board Committees – The Board maintains three standing committees, each of which is composed solely of independent directors. The Board’s three standing committees are the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. These committees assist the Board in discharging its oversight and governance responsibilities. The Board has adopted a written charter for each of the committees. These charters form an integral part of our Corporate Governance Principles. A copy of each charter can be found on our website at investors.secureworks.com in the Governance section under Documents & Charters. In addition to its standing committees, the Board may form additional committees from time to time for specific purposes. The following table shows, as of April 28, 2023, the members of the Board of Directors and the standing committees of the Board to which they belong. The table also identifies the directors determined by the Board to be independent under Nasdaq rules and our Corporate Governance Principles, which incorporate the director independence requirements of Nasdaq rules. Class II Director
Term expires: 2024 Annual Meeting
Age: 35
Director since May 2020
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Yagyensh C. (Buno) Pati
Class I Director
Term expires: 2023 Annual Meeting
Age: 58
Director since September 2016
Board committees:
• Audit
• Compensation (Chair)
• Nominating and Governance
| | | Mr. Pati is currently the Chief Executive Officer of Infoworks.io, an enterprise software company, and has served as its Chairman from its inception, and as its Executive Chairman from September 2017 through January 2019. Mr. Pati also has been a Partner of Centerview Capital Technology, or Centerview, a private investment firm, since May 2016. At Centerview, Mr. Pati’s investment focus is on cybersecurity and data and analytics. Previously, Mr. Pati served as an Advisor to Centerview from June 2014 to May 2016. Before his association with Centerview, Mr. Pati founded Numerical Technologies, Inc., a company that redefined how integrated circuits are designed and manufactured, and served as the company’s Chief Executive Officer from October 1995 to August 2002 and as Chairman from August 2002 to March 2003, when the company was acquired by Synopsys, Inc. He helped launch Nexus Venture Partners, a pioneer in Indian venture capital, and has served as Advisor to that firm since January 2012. Mr. Pati also founded Sezmi Corporation, a company that developed and marketed video services offerings for telecommunications service providers and served as Chief Executive Officer and a director of the company from June 2006 to December 2011.
Director Qualifications
Leadership Experience – Founder and CEO of two technology companies; experience as chairman or advisor to several other companies
Industry Experience – Extensive knowledge of hardware and software technologies; specialization in technology investment in cybersecurity and data and analytics sectors
In selecting Mr. Pati for service on the Board of Directors, the Board also considered Mr. Pati’s ethnic background in the context of the Board’s diversity considerations for Board membership.
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Wendy K. Thomas
Class I Director
Term expires: 2023 Annual Meeting
Age: 50
Director since July 2021
| | | Ms. Thomas has served as our President and Chief Executive Officer since September 2021. Prior to this appointment, Ms. Thomas served in a number of critical positions at Secureworks, including as President, Customer Success from April 2020 to September 2021, as Chief Product Officer from June 2019 until April 2020, as Senior Vice President, Business and Product Strategy, from March 2018 to June 2019, as Vice President, Strategic and Financial Planning, from March 2017 to March 2018, and as Vice President, Financial Planning and Analysis from July 2015 to March 2017 and from June 2008 to June 2011. In addition, Ms. Thomas served as Chief Financial Officer of Bridgevine, Inc. (currently Updater Inc.), a marketing software company, from November 2013 to July 2015, and as Vice President, Financial Planning and Analysis, at First Data Corporation (currently Fiserv, Inc.), a payment processing and financial services technology company, from July 2011 to October 2013. Earlier in her career, Ms. Thomas held other positions, including multiple finance roles at BellSouth Corporation, a telecommunications company, culminating in the position of Director, Finance.
Director Qualifications
Leadership Experience Principal executive officer of Secureworks since 2021
Finance Experience Experience as former chief financial officer and with strategic acquisitions within the software and technology industry
Industry Experience – Strategic and cross-functional leadership experience across multiple technology-driven companies
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Corporate Governance Principles – The Board of Directors is committed to achieving business success and increasing long-term stockholder value with the highest standards of ethics. The Board of Directors maintains Secureworks’ Corporate Governance Principles to provide an effective corporate governance framework for the Company. The Corporate Governance Principles reflect a set of core values that provide the foundation for our governance and management systems and our interactions with others. A copy of those principles can be found on the Company’s website at investors.secureworks.com in the Governance section under Documents & Charters.
Controlled Company Status – The Class A common stock is listed on the Nasdaq Global Select Market under the ticker symbol “SCWX.” Accordingly, Secureworks is subject to corporate governance requirements under the Nasdaq rules.
Secureworks is a “controlled company” under Nasdaq corporate governance standards. As a result, it qualifies for an exemption from, and is entitled to elect not to comply with, certain corporate governance requirements under the Nasdaq rules, including the requirements that Secureworks have a board of directors that is composed of a majority of “independent directors,” as defined under the Nasdaq rules, and maintain a compensation committee and a nominating committee that are each composed solely of independent directors. Even though Secureworks is a controlled company, it is required to comply with SEC and Nasdaq rules relating to the membership, qualifications and operations of its Audit Committee, as discussed below. In reliance on the controlled company exemption, Secureworks has elected not to maintain a majority of independent directors on the Board of Directors.
The Nasdaq rules define a “controlled company” as a company of which more than 50% of the voting power is held by an individual, a group or another company. As of the record date for the annual meeting, Dell Technologies held no shares of our outstanding Class A common stock and, through an indirect wholly-owned subsidiary, all 70,000,000 outstanding shares of our Class B common stock, which as of that date represented approximately 82.5% of our total outstanding shares of common stock and approximately 97.9% of the combined voting power of both classes of our outstanding common stock.
Notwithstanding our eligibility for the exemption from these requirements, we currently have a Compensation Committee and a Nominating and Governance Committee that is each composed solely of independent directors. We are not required to maintain compliance with Nasdaq’s composition requirements for these committees applicable to a listed company that is not a controlled company. We may choose to change our committee composition or other arrangements in the future to manage these aspects of our corporate governance in accordance with the controlled company exemption. If we cease to be a controlled company and the Class A common stock continues to be listed on Nasdaq, we will be required to comply with Nasdaq’s corporate governance requirements applicable to listed companies generally, subject to a phase-in period during the first year after we cease to be a controlled company.
Director Independence – The Board of Directors has affirmatively determined that Ms. Daley, Mr. Hawkins and Mr. Pati, constituting three of our six directors, are independent under the Nasdaq rules and the standards for independent directors established in our Corporate Governance Principles, which incorporate the director independence requirements of the Nasdaq rules. The Nasdaq rules provide that, in order to determine that a director is independent, the Board of Directors must determine that the director has no relationship which, in the Board’s opinion, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Board Leadership Structure – Our current leadership structure separates the role of the Chairman of the Board, which is held by Mr. Dell, and the role of the Chief Executive Officer, which is held by Ms. Thomas. The Chairman of the Board presides over meetings of the Board of Directors. The Chief Executive Officer has management responsibility for the business and affairs of the Company. The Board of Directors has determined that this separation is appropriate for Secureworks and our stockholders under current circumstances because it allows for a division of responsibilities and a sharing of ideas between directors with different perspectives.
As reflected in our Corporate Governance Principles, the Board observes a number of practices to maintain effective and independent oversight of management, including the following:
Executive sessions without management and non-independent directors present are a standing Board agenda item at no fewer than two regular meetings of the Board each year. Executive sessions of the
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independent directors are held at any time requested by a majority of the independent directors. The agenda for each executive session focuses principally on whether management is performing its responsibilities in a manner consistent with the Board’s direction.
All Board committee members are independent directors. The committee chairs have authority to hold executive sessions without management and non-independent directors present.
Board Committees – The Board maintains three standing committees composed solely of independent directors that consist of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. These committees assist the Board in discharging its oversight and governance responsibilities. The Board has adopted a written charter for each of the committees. These charters form an integral part of our Corporate Governance Principles. A copy of each charter can be found on Secureworks’ website at investors.secureworks.com in the Governance section under Documents & Charters. In addition to the foregoing standing committees, the Board may form additional committees from time to time for specific purposes.
The following table shows, as of May 11, 2022, the members of the Board of Directors and the standing committees of the Board to which they belong. The table also identifies the directors determined by the Board of Directors to be independent under the Nasdaq rules and our Corporate Governance Principles, which incorporate the director independence requirements of the Nasdaq rules.
Pamela Daley | | | ✔ | | | ✔ | | | | | | Chair | Michael S. Dell | | | | | | | | | | | | | Kyle Paster | | | | | | | | | | | | | Mark J. Hawkins | | | ✔ | | | ✔ | | | Chair | | | | Yagyensh (Buno) C. Pati | | | ✔ | | | Chair | | | ✔ | | | ✔ | Wendy K. Thomas | | | | | | | | | | | | | Kyle Paster
| | | | | | | | | | | | | Mark J. Hawkins
| | | ✔
| | | |
Descriptions of the primary responsibilities of each standing committee are set forth below. Additional information about the responsibilities of each of the committees can be found in each committee’s charter. Audit Committee The Audit Committee is composed entirely of directors who satisfy the standards of independence for independent directors under Nasdaq rules as well as additional independence standards applicable to audit committee members established in accordance with Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act, and the Nasdaq standards applicable to the independence of audit committee members. The Board has further determined that Mr. Pati and Mr. Hawkins meet the financial sophistication requirement for audit committee service under Nasdaq rules and that each is an “audit committee financial expert” within the meaning of the applicable SEC rules. The Board also has determined that each Audit Committee member meets the financial literacy requirement for audit committee members established under Nasdaq rules. The Audit Committee’s primary responsibilities include, among other matters: reviewing with our independent registered public accounting firm the scope and results of the firm’s annual audit of our financial statements; overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; overseeing and discussing with management the policies and guidelines to govern the process by which risk assessment and risk management, including legal and regulatory risk, is undertaken; overseeing our compliance with legal and regulatory requirements, including, among others, compliance with federal banking laws and regulations applicable to us in connection with the solutions we provide to financial institutions regulated by the member agencies of the Federal Financial Institutions Examination Council, including that agency’s examination of the Company; TABLE OF CONTENTS reviewing our accounting and financial reporting policies and practices and accounting controls, including any analysis prepared by management and/or the independent audit firm to address any significant issues; reviewing with our management the scope and results of management’s evaluation of our disclosure controls and procedures and management’s assessment of our internal control over financial reporting, including the related certifications to be included in the periodic reports we file with the SEC; establishing adequate procedures for the confidential or anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters, or other ethics or compliance issues; and monitoring the compliance by our directors and executive officers with our Code of Conduct. The Audit Committee also appoints, retains, approves the compensation of and oversees the Company’s independent registered public accounting firm and pre-approves all audit and permissible non-audit services to be performed by that firm that are required to be approved by the Company’s policies and SEC rules. Further, in conjunction with the mandatory rotation of the audit firm’s lead engagement partner or the partner responsible for reviewing the audit, the Audit Committee and its Chair | | | ✔
| | | | Yagyensh C. (Buno) Pati
| | | ✔
| | | ✔
| | | Chair
| | | ✔
| Wendy K. Thomas
| | | | | | | | | | | | |
Descriptions of the primary responsibilities of each standing committee are set forth below. Additional information about the responsibilities of each of the committees can be found in each committee’s charter.
Audit Committee
The Audit Committee is composed entirely of directors who satisfy the standards of independence for independent directors under Nasdaq rules as well as additional independence standards applicable to audit committee members established in accordance with Rule 10A-3 under the Exchange Act and Nasdaq standards applicable to the independence of audit committee members. The Board of Directors has further determined that Mr. Hawkins meets the financial sophistication requirement for audit committee service under Nasdaq rules and is an “audit committee financial expert” within the meaning of the applicable SEC rules. The Board also has determined that each Audit Committee member meets the financial literacy requirement for audit committee members established under Nasdaq rules.
The Audit Committee’s primary responsibilities include, among other matters:
reviewing with our independent registered public accounting firm the scope and results of the firm’s annual audit of our financial statements;
overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC;
overseeing and discussing with management the policies and guidelines to govern the process by which risk assessment and risk management, including legal and regulatory risk, is undertaken;
overseeing our compliance with legal and regulatory requirements, including, among others, compliance with federal banking laws and regulations applicable to us in connection with the solutions we provide to financial institutions regulated by the member agencies of the Federal Financial Institutions Examination Council, including that agency’s examination of the Company;
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reviewing our accounting and financial reporting policies and practices and accounting controls, including any analysis prepared by management and/or the independent audit firm to address any significant issues;
reviewing with our management the scope and results of management’s evaluation of our disclosure controls and procedures and management’s assessment of our internal control over financial reporting, including the related certifications to be included in the periodic reports we file with the SEC;
establishing adequate procedures for the confidential or anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters, or other ethics or compliance issues; and
monitoring the compliance by our directors and executive officers with our Code of Conduct.
The Audit Committee also appoints, retains, compensates and oversees the Company’s independent registered public accounting firm and pre-approves all audit and permissible non-audit services to be performed by that firm that are required to be approved by the Company’s policies and SEC rules. Further, in conjunction with the mandatory rotation of the audit firm’s lead engagement partner or the partner responsible for reviewing the audit, the Audit Committee and its chair oversee the selection and evaluation of the independent registered public accounting firm’s new lead engagement partner.
Compensation Committee Although we are not required to maintain a compensation committee composed solely of independent directors due to our status as a controlled company under the Nasdaq rules, our Board of Directors has determined that each member of our Compensation Committee is independent under the standards of independence for independent directors under Nasdaq rules as well as additional independence standards applicable to compensation committee members established under SEC and Nasdaq rules. The Compensation Committee’s primary responsibilities include, among other matters: annually reviewing and approving our executive compensation plans, programs and policies; annually reviewing and recommending all forms of compensation for our Chief Executive Officer for approval by the Board of Directors; annually reviewing and approving all forms of compensation for our other executive officers; evaluating the need for, and provisions of, employment contracts or severance arrangements for our executive officers; acting as administrator of our equity-based and other incentive plans; reviewing the compensation of our non-employee directors for service on the Board of Directors and its committees at least once each year and recommending any changes to such compensation to the Board of Directors;Board; reviewing and (except in the case of our Chief Executive Officer) approving our management succession plan, and discussing with the full Board the succession plan and the Company’s leadership development strategies and executive retention and diversity strategies, in each case at least annually; and monitoring summary data concerning employees of the Company and its subsidiaries and overseeing the Company’s policies and practices with respect to human capital management and diversity, equity and inclusion. Subject to applicable legal requirements, the Compensation Committee may delegate authority to undertake any of its responsibilities to a subcommittee consisting of one or more of its members. The committee did not delegate authority to a subcommittee in Fiscal 2022.2023. In addition, the Compensation Committee may delegate its authority to make awards under the SecureWorks Corp. 2016 Long-Term Incentive Plan to the Chief Executive Officer or any other officer of the Company, subject to specified exceptions and applicable law. These exceptions provide, among other matters, that the Compensation Committee may not delegate to any officer the authority to make awards under the plan to the Company’s directors or executive officers or to interpret the terms of the plan or any award agreement. The Compensation TABLE OF CONTENTS
Committee has delegated to the Chief Executive Officer authority to make offers of equity-based awards under the plan to individuals who are not executive officers or senior vice presidents who report to the CEO, TABLE OF CONTENTS Chief Executive Officer, up to a specified number of shares annually, which awards become effective only upon subsequent approval by the Compensation Committee. In addition, the Compensation Committee has authorized the Chief Executive Officer to delegate to the Company’s Chief Legal and Administrative Officer any or all of the authority to make offers of equity-based awards delegated to the Chief Executive Officer by the Compensation Committee as described above, subject to compliance by the Chief Legal and Administrative Officer with the requirements established by the Compensation Committee. The Compensation Committee also may delegate some or all of its authority under the SecureWorks Corp. Amended and Restated Incentive Bonus Plan, or the Incentive Bonus Plan, to our management employees, except with respect to determinations regarding our executive officers. Determinations under the Incentive Bonus Plan regarding our Chief Executive Officer are made by the Board of Directors upon the recommendation of the Compensation Committee. Determinations under the Incentive Bonus Plan regarding our other executive officers and other senior vice presidents who report to the CEO are made by the Compensation Committee. The Compensation Committee has delegated certain aspects of its authority under the Incentive Bonus Plan to our Chief Executive Officer and our Chief Legal and Administrative Officer to make specified determinations with respect to other eligible employees. For additional information about the Incentive Bonus Plan and the SecureWorks Corp. 2016 Long-Term Incentive Plan, see “Compensation Discussion and Analysis – Individual Compensation Components – Annual Bonus Plan – Amended and Restated Incentive Bonus Plan” and “Compensation of Executive Officers – Stock Incentive Plan.Equity Incentives.” The Compensation Committee engaged Frederic W. Cook & Co., Inc., or FW Cook, an independent consultant, to perform services for the committeeCompensation Committee in Fiscal 2022,2023, which included advice on the amount and form of executive and director compensation and the provision of market and peer company compensation data and analysis. Frederic W.FW Cook & Co., Inc. was engaged directly by the committeeCompensation Committee and does not provide services to our management or other services to the Company. Our Chief Executive Officer provides the Compensation Committee with recommendations on the total compensation opportunities for all other executive officers and other senior vice presidents who report to the CEOChief Executive Officer and her views regarding (1) the individual performance of those individuals in connection with the committee’sCompensation Committee’s determination of amounts to be paid under our annual incentive bonus and equity-based long-term incentive programs and (2) the performance goals used to assess our financial performance under those programs. Nominating and Governance Committee Although we are not required to maintain a nominating committee composed solely of independent directors due to our status as a controlled company under Nasdaq rules, our Board of Directors has determined that each member of our Nominating and Governance Committee is independent under those rules. The Nominating and Governance Committee’s primary responsibilities include, among other matters: identifying and evaluating potential candidates to be considered for appointment or election to the Board, of Directors, including the consideration and inclusion of diverse candidates; making recommendations to the Board of Directors regarding the selection and approval by the Board of nominees to be submitted for election by a stockholder vote; monitoring and reviewing any issues regarding the independence of our non-employee directors or involving potential conflicts of interest affecting these directors; reviewing the Board’s committee structure and composition and making recommendations annually to the Board of Directors regarding the appointment of directors to serve as members of each committee; reviewing our Corporate Governance Principles at least annually and recommending any changes to these principles to the Board of Directors;Board; reviewing, overseeing, approving, ratifying or disapproving any transactions with related persons in accordance with Secureworks’the Company’s policy relating to these transactions; periodically reviewing and approving changes to our Code of Conduct and other policies with respect to legal compliance, conflicts of interest and ethical conduct; and overseeing the development and implementation of policies and management systems relating to environmental, social and governance issues to ensure compliance with applicable law and best practices. TABLE OF CONTENTS The Nominating and Governance Committee’s policies and processes for identifying, evaluating and recommending director candidates for approval by the Board of Directors, including candidates recommended by stockholders, are described under “Additional Information – Director Nomination Process.” Compensation Committee Interlocks and Insider Participation – No member of the Compensation Committee is or has been an officer or employee of Secureworks. None of our executive officers served on the board of directors or compensation committee (or other committee serving an equivalent function) of any other entity that has or had one or more executive officers who served as a member of the Board of Directors or the Compensation Committee during Fiscal 2022.2023. Board and Committee Oversight of Risk Oversight Management – The Board oversees and maintains Secureworks’the Company’s governance and compliance processes and procedures to promote the conduct of Secureworks’our business in accordance with applicable laws and regulations and with the highest standards of responsibility, ethics and integrity. The Company believes that this oversight is imperative for the effective design and execution of our business strategy, ultimately creating long-term value for our stockholders. The Board, also is responsible for overseeing the assessment, managementdirectly and mitigation ofthrough its standing committees, oversees, assesses, manages and mitigates risks facing the Company. An analysis of strategic and operational risks is presented to the Board in reports submitted on a regular basis by the Chief Executive Officer, the Chief Financial Officer, the Chief Legal and Administrative Officer and the chairChair of each of the Board’s standing committees. Directors of the Board also have complete and open access to all Secureworks employees and are free to communicate, and do communicate, directly with management. The Board of Directors discharges its risk oversight responsibilities in part through its committees, including with respect to the following specific areas of risk.risk: The Audit Committee is responsible for the oversight of risk policies and risk assessment monitoring and mitigation measures relating to Secureworks’ financial statements and financial reporting, major information technology risk exposures (including cybersecurity risks), financial risk and compliance risk.risks relating to ethics and compliance. The Audit Committee reviews and discusses with senior members of management and Secureworks’ independent registered public accounting firm significant risks to Secureworks and the steps management has taken or plans to take to minimize or manage such risks. TheQuarterly, the Audit Committee receives or participates in updates by: the Chief Audit Executive regarding audit status, industry insights and key audit findings, as well as other issues or concerns; the Chief Security Officer, the Chief Information Security Officer or other senior members of the Company’s security team regarding cybersecurity and other data and physical security risks; members of the Company’s risk, ethics and compliance team who report to the Chief Legal and Administrative Officer relating to ethics investigations, compliance programs, enterprise and third-party risk management and other related matters; and the Chief Legal and Administrative Officer regarding legal or regulatory matters. Additionally, the Audit Committee generally meets in executive session with members of senior management, where necessary,when appropriate, and with the independent registered public accounting firm at regular meetings of the committee. The Compensation Committee oversees the assessment and management of risks associated with succession planning and leadership development and with our compensation plans and arrangements. In this role, the Compensation Committee evaluates the effect that Secureworks’the Company’s incentive compensation arrangements may have on risk decisions and reviews the relationship between risk management practices and compensation. The Nominating and Governance Committee oversees the assessment and management of risks related to Secureworks’the Company’s governance structure and process. The committees report regularly to the full Board of Directors on matters relating to their risk oversight activities.discussed during each of the committee meetings, including significant issues discussed and the actions taken by the committee. Although the Board of Directors is responsible for risk oversight, management is responsible for risk management. Secureworks seeks to maintain an effective internal control environmentdesigning processes and has processesprocedures to identify, assess and manage risks posed to the Company on a daily basis. TABLE OF CONTENTS Management has implemented an enterprise risk including through a committee composed of members of management, or ERM, program, that exercises oversight of the various risk monitoring and controls processesis designed to work across the Company. These includebusiness to identify, assess, govern and manage the Company’s strategic, operational, financial and compliance risks. In addition, the Company’s Risk and Compliance team performs an annual risk assessment process that supportsis informed by Company data, industry analysis, insights from third-party risk reporting companies, peer benchmarking, and interviews with senior members of the annual internal audit plan.Company’s management team. Secureworks also maintains and enforces a Code of Conduct, a Code of Ethics for Senior Financial Officers and a Code of Conduct and an ethics and compliance program.program for all employees. The Company’s Risk and Compliance team presents the results of the annual risk assessment to the Board’s Audit Committee and reviews the key risks identified by the ERM program on a quarterly basis. Further, the Board receives updates from management on risk topics at the Board’s regularly scheduled meetings and at other times, where needed. Given the Federal Financial Institutions Examination Council’s, or FFIEC’s, oversight and supervision of the Company as a Technology Service Provider of the Company’s customers who are considered financial institutions, the Company undergoes recurring FFIEC examinations that focus on the following risk areas: technology management, data integrity, confidentiality, availability, compliance and financial stability. After each FFIEC examination, the Board’s Audit Committee receives a report regarding the examination results and any required action items from the Company’s management team as a part of the Company’s risk oversight responsibilities. The Board, directly and indirectly through its standing committees, also considers the input from third-party advisors and experts and reports made by management in evaluating current and anticipated risks to our business and strategy. CEO Succession Planning; Leadership Development – The Board of Directors has the responsibility to ensure that the leadership of Secureworks meets the needs of the Company now and can meet those needs in the future. The Board of Directors reviews succession planning for the CEO at least annually. The Board (upon the recommendation of the Compensation Committee, where applicable): maintains a plan to address any unexpected short-term absence of the CEO and identifies candidates who could act as interim CEO in the event of any such unexpected absence; and identifies potential successors to the CEO and, for internal candidates, reviews each candidate’s performance and development plan against the criteria and profile for the CEO role. TABLE OF CONTENTS
TheTypically, the Compensation Committee reviews and, except in the case of the CEO, approves the Company’s management succession plans and leadership development strategies. During Fiscal 2023, however, the Board of Directors reviewed and approved the Company’s leadership development strategies for the CEO and management succession plans, while the Compensation Committee reviewed and approved leadership development strategies for the rest of the Company’s management. The CEO reviews the annual performance of each member of the management team with the Compensation Committee, which engages in a discussion with the CEO and the Chief Legal and Administrative Officer regarding each team member and that team member’s development.
Meetings and Attendance – During Fiscal 2022,2023, the full Board of Directors met fourfive times, the Audit Committee met nine times, the Compensation Committee met five times, and the Nominating and Governance Committee met one time. In Fiscal 2022,2023, each member of the Board of Directors who served as a director during Fiscal 20222023 attended at least 75% of the total number of the meetings of the Board of Directors and each Board committee held during the period in which such member served as a director of Secureworks or as a member of such committee. Our policy is that each director is encouraged to attend our annual meeting of stockholders each year.stockholders. All six of our directors then serving on the Board of Directors attended last year’s annual meeting held on June 21, 2021.2022. Communications withWith Directors – Our stockholders may send communications to the Board as a whole, the independent directors as a group, any Board committee or any individual member of the Board. Any stockholder who wishes to send such a communication may obtain the appropriate contact information at Secureworks_Board_of_Directors@secureworks.com. In addition, any person who has a concern about our conduct, accounting financial reporting, internal controlsmatters (including accounting controls), or auditing matters may communicate that concern directly to our independent directors or to the Audit Committee (through the committee chair)Committee Chair). These communications should be sent c/o Global Ethics and Compliance Office or to the Corporate Secretary at SecureWorks Corp., One Concourse Parkway NE, Suite 500, TABLE OF CONTENTS Atlanta, Georgia 30328, and may be made on a confidential and anonymous basis. All such concerns will be forwarded to the appropriate directors for their review under our guidelines and will be simultaneously reviewed and addressed by the Global Ethics and Compliance Office through the same process our management uses to address other concerns.Office. The status of all outstanding concerns addressed to the independent directors or to the Audit Committee will be reported to the full Board of Directors on a quarterly basis. The independent directors or the Audit Committee may undertake special action, including the retention of outside advisors or counsel, with respect to any concern addressed to them. Our Code of Conduct prohibits any employee from retaliating against any person who, with a reasonable basis, raises concerns or participates in the Company’s ethics process. Our Board of Directors has adopted a compensation policy for our independent directors that we believe enables us to attract and retain qualified directors, provides them with compensation at a level that is consistent with our compensation objectives and encourages their ownership of our Class A common stock to further the alignment of their interests with the interests of our stockholders. In accordance with the independent director compensation policy in effect for Fiscal 2022,2023, our compensation program for independent directors included the following elements: an annual cash retainer of $35,000;$40,000; an additional annual cash retainer for service as a member (but not chair)Chair) of the Audit Committee, Compensation Committee or Nominating and Governance Committee of $10,000, $6,000 or $4,000, respectively; an additional annual cash retainer for service as chairChair of the Audit Committee, Compensation Committee or Nominating and Governance Committee of $20,000, $12,000 or $8,000, respectively; an initial equity retainer upon the director’s appointment to the Board of Directors, in the form of a restricted stock unit, or RSU, award, with a value of $400,000 that will settle in shares of our Class A common stock and that will vest as described below; and an annual equity retainer with a value of $180,000$200,000 in each year of service, in the form of an RSU award that will vest as described below. TABLE OF CONTENTS
Effective as of March 15, 2022,20, 2023, and upon the recommendation of our Compensation Committee, ourthe Board of Directors approved the following changes to our compensation policy for independent directors: independentan increase in the amount of the annual cash retainer from $40,000 to $50,000;
an increase in the amount of the additional annual retainer for service as a member (but not Chair) of the Audit Committee, Compensation Committee, or Nominating and Governance Committee from $10,000, $6,000 or $4,000, respectively, to $15,000, $10,000 or $8,000, respectively; and an increase in the amount of the additional annual cash retainer for service as Chair of the Audit Committee, Compensation Committee or Nominating and Governance Committee from $20,000, $12,000 or $8,000, respectively, to $30,000, $20,000 or $15,000, respectively. Independent directors will be able tomay elect to receive all or a portion of each of the (1) annual cash retainer (2)and any additional annual cash retainer for service as a member (but not chair) of a committee and (3) cash retainer for service as chair of a committee in the form of (a) a deferred stock unit, or DSU, award that settles in shares of Class A common stock in the manner described below, (b) shares of Class A common stock, or (c) cash, or a combination thereof;thereof. In addition, independent directors will be able tomay elect to receive all or a portion of the annual equity retainer in the form of a DSU award or in the form of an RSU award, or a combination thereof; the amount of the annual cash retainer was increased from $35,000 to $40,000; and
the value of the annual equity retainer was increased from $180,000 to $200,000.thereof.
All of the equity-based awards to our independent directors are granted under the SecureWorks Corp. 2016 Long-Term Incentive Plan, as it may be amended from time to time.which is described in Proposal 4. Each equity-based award vests in full on the first anniversary of the grant date, subject to the director’s continued service, except that (1) the initial equity retainer award of RSUs will vest,vests, subject to the director’s continued service, in three equal annual installments beginning with the first anniversary of the grant date and (2)date. DSU awards will settle on the earlier of the termination of the applicable director’s Board service for any reason and a change in control of SecureWorks Corp. TABLE OF CONTENTS An independent director elected to the Board, of Directors, other than through election at an annual meeting of stockholders, will be awarded (1) a pro-rated portion of each applicable annual cash retainer (including pro-rated fees for committee service and service as a committee chair)Chair), (2) at the discretion of the Board of Directors, a pro-rated annual equity retainer, and (3) the full amount of the initial equity retainer. The Board of Directors determines fees payable to our independent directors for service on ad hoc committees of the Board. In addition, we reimburse our directors for their reasonable expenses incurred in attending meetings of our Board of Directors or its committees. The retainers, fees and grants provided forpayable under our independent director compensation policy may be modified or adjusted from time to time as determined by the Board of Directors on the recommendation of the Compensation Committee. We also provide our directors with liability insurance coverage for their activities as directors. Our bylaws provide that all directors are entitled to indemnification and advancement of expenses from us to the fullest extent permitted by Delaware law. We have entered into indemnification agreements with our directors to afford them contractual assurances regarding the scope of their indemnification and to provide procedures for the determination of a director’s right to receive indemnification. TABLE OF CONTENTS
The following table sets forth the compensation earned by or paid to our independent directors for Fiscal 2022.2023. Fiscal 2022 Director Compensation
Name | | Fees earned
or paid in
cash(1)
($) | | Stock
awards(2)(3)
($) | | Option
awards(3)
($) | | Total
($) | | Fees Earned
or Paid in
Cash(1)
($) | | Cash Fees Elected
to be Paid
in Stock(2)
($) | | Stock
Awards(3)(4)
($) | | Total
($) | Pamela Daley | | 53,000 | | 179,998 | | — | | 232,998 | | 58,000 | | — | | 199,995 | | 257,995 | Mark J. Hawkins | | 61,000 | | 179,998 | | — | | 240,998 | | 66,000 | | — | | 199,995 | | 265,995 | Yagyensh C. (Buno) Pati | | 61,000 | | 179,998 | | — | | 240,998 | | Yagyensh (Buno) C. Pati | | | — | | 65,994 | | 199,995 | | 265,989 |
(1)
| Amounts reported in this column include compensation for committee service during Fiscal 2022.2023. |
(2)
| Amounts reported in this column reflectDirectors were entitled to receive up to 100% of the aggregate grant date fair value of each RSU award granted to the director during Fiscal 2022, computed in accordance with FASB ASC Topic 718. These awards represent annual equitycash retainer awardsand, if applicable, cash committee Chair retainer fees and cash committee membership fees in the form of RSUsvested shares of Class A common stock or deferred stock units that settle in shares of Class A common stock, in each case determined by dividing the applicable portion of the aggregate retainer amount by the closing price of the Class A common stock as reported on Nasdaq on June 22, 2022. For service in Fiscal 2023, Mr. Pati received 5,835 vested shares of Class A common stock. |
(3)
| Stock awards were made in the form of restricted stock units that settle in shares of Class A common stock, subject to each director’s right to elect to receive a specified portion in deferred stock units that settle in shares of Class A common stock. Restricted stock units and deferred stock units, if elected, will vest on June 22, 2023. For service in Fiscal 2023, each of Ms. Daley, Mr. Hawkins and Mr. Pati received 17,683 restricted stock units. The assumptions usedaggregate grant data fair value, computed in accordance with U.S. generally accepted accounting principles, of the restricted stock units awarded to each of Ms. Daley, Mr. Hawkins and Mr. Pati was $199,995, in each case determined by us in calculating these amounts are incorporated hereindividing the applicable portion of the aggregate retainer amount by reference to Note 11 to our consolidated financial statements in our Annual Reportthe closing price of Class A common stock as reported on Form 10-K for Fiscal 2022, filed with the SECNasdaq on March 23,June 22, 2022. As of February 3, 2023, each of Ms. Daley, Mr. Hawkins and Mr. Pati held an aggregate of 17,683 outstanding restricted stock units. |
(3)
(4)
| The table below sets forth the aggregate numberAs of unexercised stock option awards and the aggregate number of unvested stock awards (in the form of RSUs) held byFebruary 3, 2023, each of our independent directors that wereMs. Daley and Mr. Hawkins held an aggregate of 48,143 outstanding asoptions, and Mr. Pati held an aggregate of January 28, 2022.49,916 outstanding options. |
Pamela Daley | | | 48,143 | | | 8,314 | Mark J. Hawkins | | | 48,143 | | | 8,314 | Yagyensh C. (Buno) Pati | | | 49,916 | | | 8,314 |
TABLE OF CONTENTS PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TheIn this Proposal 2, the Board of Directors is asking stockholders to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP, or PwC, as Secureworks’ independent registered public accounting firm for the fiscal year ending February 3, 2023,2, 2024, or Fiscal 2023.2024.
PwC is a registered independent public accounting firm and has served as Secureworks’ independent registered public accounting firm since 2014. Although current law, rules and regulations, as well as the Audit Committee’s charter, require Secureworks’ independent registered public accounting firm to be engaged, retained and supervised by the Audit Committee, the Board considers the selection of an independent registered public accounting firm to be an important matter of stockholder concern and considers a proposal for stockholders to ratify suchthe selection to be an opportunity for stockholders to provide direct feedback to Secureworks on an important issue of corporate governance. If stockholders do not ratify the selection of PwC, the Audit Committee will take the vote into consideration in determining whether to retain PwC and whether to engage the firm in future years, but the Audit Committee may continue to retain PwC. If the appointment is ratified by stockholders, the Audit Committee in its discretion nevertheless may change the appointment at any time during the current fiscal year if it determines that a change would be in the best interests of the Company and its stockholders. Representatives of PwC are expected to be present at the annual meeting and available to respond to appropriate questions, and they will have an opportunity to make a statement if they desire to do so. The Board unanimously recommends a vote “FOR” the ratification of PwC as Secureworks’ independent registered public accounting firm for Fiscal 2023.2024. In addition to retaining PwC to conduct an independent audit of the consolidated financial statements, Secureworks engages PwC from time to time to perform other permissible services. The following table sets forth all fees incurred in connection with professional services rendered to Secureworks by PwC for the fiscal year ended February 3, 2023, or Fiscal 2023, and the fiscal year ended January 28, 2022, or Fiscal 2022, and the fiscal year ended January 29, 2021, or Fiscal 2021.2022. Independent Registered Public Accounting Firm Fees Fee Type | | Fiscal 2022
($) | | Fiscal 2021
($) | | Fiscal 2023
($) | | Fiscal 2022
($) | Audit Fees(a) | | 2,373,000 | | 1,950,000 | | 2,354,500 | | 2,373,000 | Audit-Related Fees(b) | | — | | 160,000 | | 50,000 | | — | Tax Fees | | — | | — | | — | | — | All Other Fees | | — | | — | | | 4,150 | | — | Total | | 2,373,000 | | 2,110,000 | | 2,408,650 | | 2,373,000 |
(a)
| This category includes fees incurred for professional services rendered in connection with the audit of the annual financial statements, review of the quarterly financial statements and services that are normally provided in connection with statutory audits of international subsidiaries. |
(b)
| This category includes fees incurred for professional services rendered by PwC to Secureworks in connection with Secureworks’ preparationto preimplementation insights provided. |
(c)
| This category consists of fees for compliance with Section 404(b)all services other than the services reported in notes (a) through (b) above, and primarily includes fees incurred for licenses to information and research services. These services were evaluated by the Audit Committee to be permissible services and determined not to impact the independence and objectivity of the Sarbanes-Oxley Act of 2002, which is now applicable as of Fiscal 2022.independent registered public accounting firm. |
The Audit Committee pre-approvedpre-approves performance by PwC of the foregoing services that wereas required to be pre-approved under SEC rules. The Audit Committee has adopted a policy requiring pre-approval by the committee of all audit and non-audit services to be provided by Secureworks’ independent registered public accounting firm, other than pursuant to a limited exception provided under SEC rules. In accordance with that policy, the Audit Committee has given its approval for the provision of audit services by PwC for Fiscal 2023,2024, including audit fees, and has given its approval for up to one year in advance for the provision by PwC of particular categories or types of audit-related, tax and other permitted non-audit services. With respect to circumstances in whichIf the provision of any services is not covered by one of those approvals, the Audit Committee has delegated authority to the chairChair of the Audit Committee or other designated members of the Audit Committee to pre-approve PwC’s services. Any pre-approvals granted under this delegated authority must be communicated to the full Audit Committee. TABLE OF CONTENTS PROPOSAL 3 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION In this Proposal 3, in accordance with Section 14A of the Exchange Act and the SEC’s rules thereunder, the Board of Directors is asking stockholders to approve, on a non-binding, advisory basis, the compensation of Secureworks’the named executive officers of Secureworks as disclosed in this proxy statement, in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosures beginning on page 2737., other than under “Compensation of Executive Officers – Pay Versus Performance Disclosure.”The Board of Directors unanimously recommends a vote “FOR” approval of Secureworks’the compensation of itsthe named executive officers of Secureworks as disclosed in this proxy statement. As described below in the sections of this proxy statement under “Compensation Discussion and Analysis” and “Compensation of Executive Officers,” the Compensation Committee has structured Secureworks’the Company’s executive compensation program to emphasize long-term, performance-dependent pay to motivate and reward long-term value creation for Secureworks’its stockholders. Secureworks’the Company’s executive compensation program has a number of features designed to ensure adherence to the Company’s pay-for-performance philosophy. The Board of Directors encourages stockholders to read the Compensation Discussion and Analysis section below, which describes in detail how Secureworks’the Company’s executive compensation practices operate and how such practices are designed to achieve Secureworks’the Company’s core executive compensation objectives. The Board also encourages stockholders to review the Fiscal 20222023 Summary Compensation Table and other compensation tables and the narrative disclosures accompanying the tables appearing under “Compensation of Executive Officers,” which provide detailed information about the compensation of our named executive officers. The Compensation Committee and the Board of Directors believe that the compensation practices described in the Compensation Discussion and Analysis are effective in achieving Secureworks’the Company’s core executive compensation objectives and that the compensation of its named executive officers as disclosed in this proxy statement reflects and supports the appropriateness of Secureworks’its executive compensation philosophy and practices. In accordance with Section 14A of the Exchange Act and the SEC’s rules thereunder, Secureworks is asking stockholders to approve this proposal by approving the following non-binding resolution: RESOLVED, that the compensation paid to Secureworks’ named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.approved. A vote on this resolution, commonly referred to as a Say-on-Pay resolution, is not binding on the Compensation Committee or the Board of Directors. Although the vote is advisory in nature and non-binding, the Compensation Committee and the Board of Directors value the views of the Company’s stockholders and will take the outcomeresults of the advisory vote into account when considering future executive compensation matters. TABLE OF CONTENTS PROPOSAL 4 – ADVISORY VOTE ONAPPROVAL OF SHARE INCREASE AMENDMENT UNDER THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATIONSECUREWORKS CORP. 2016 LONG-TERM INCENTIVE PLANIn this Proposal 3,4, stockholders are being asked to consider and vote upon a proposal to amend the SecureWorks Corp. 2016 Long-Term Incentive Plan, as amended and restated, which we refer to as the plan, to increase by 7,500,000 shares the total number of shares of Class A common stock authorized and available for issuance under the plan. We refer to the amendment as the share increase amendment. Secureworks is seeking approval of the share increase amendment to comply with Nasdaq stockholder approval requirements applicable to material amendments to equity plans that have been approved by stockholders. The Board of Directors approved the share increase amendment, upon the recommendation of the Compensation Committee and subject to stockholder approval at this annual meeting, on May 10, 2023. If approved by the stockholders at the annual meeting, the share increase amendment will be effective at the time of stockholder approval. As of April 28, 2023, 2,818,496 shares remained available for issuance pursuant to future awards under the plan. The Board of Directors believes that approval of the share increase amendment is in the best interests of Secureworks and its stockholders. Approval of this proposal is necessary to enable us to recruit and retain key employees critical to our success and to align the interests of our management with the interests of our stockholders. Our executive officers and directors have an interest in this proposal as they would be eligible to receive equity awards under the plan representing an interest in shares authorized by the share increase amendment. In addition, on February 22, 2023 and March 13, 2023, in connection with annual compensation determinations, the Compensation Committee awarded certain executive officers and other eligible employees of the Company time-based RSUs and performance stock units, or PSUs, that were granted subject to stockholder approval of the share increase amendment. On March 20, 2023, the Board of Directors is asking stockholdersawarded the Chief Executive Officer time-based restricted stock units, or RSUs, and PSUs that were granted subject to vote, on a non-binding, advisory basis, to approve the compensation of Secureworks’ named executive officers as disclosed in this proxy statement. Secureworks is required under Section 14Astockholder approval of the Exchange Act and the SEC’s rules thereunder to hold this advisory Say-on-Pay vote at least once every three years and to hold an advisory vote regarding the frequency with which Say-on-Pay votes will be included in the Company’s annual proxy statement at least once every six years.share increase amendment. In accordance with the terms of these requirements, the Boardawards, if stockholder approval of Directors is asking stockholders in this Proposal 4 is not obtained, each of the RSUs and PSUs will be canceled, and no shares of Class A common stock will be issued in connection with these awards. For information about these awards as well as other awards under the plan previously granted to vote, on a non-binding, advisory basis, on whether future advisory votes on namedour directors, executive officer compensation should occur every 1 year, every 2 years or every 3 years (sometimes referredoffices and other employees, see “– Plan Benefits” below. Stockholders are encouraged to read this entire proposal and the complete plan document, which is attached as “Say-on-Pay Frequency”).Annex A to this proxy statement, in the form in which it would be effective upon approval of the share increase amendment by stockholders. The Board of Directors unanimously recommends that stockholdersa vote “FOR” “Every 1 year” asapproval of the frequency with which Secureworks should hold a stockholder advisory voteshare increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan. How Our Plan is Designed to approve the compensation of its named executive officers as disclosed in the Company’s annual proxy statement.Protect Stockholder Interests After careful consideration, the Board of Directors has determined to recommend that future advisory votes on named executive officer compensation occur every 1 year (annually). Although Secureworks’ executive compensation program is designed to promote a long-term connection between pay and performance, the Company’s public disclosures on executive compensation are made annually. The Board of Directors has considereddesigned the plan to include terms that an advisory voteit believes reinforce the alignment between our equity-based compensation arrangements and the interests of our stockholders. These terms generally provide for the following:
| • | No “evergreen” provision: The plan does not permit an automatic increase in the number of shares available for issuance without stockholder approval. |
| • | No “reload” stock options: The plan does not contain any term providing that the exercise of a stock option can automatically trigger the grant of a new stock option with respect to the number of shares used to pay for the exercise of the initial stock option. |
| • | Maximum term of stock options and SARs: The maximum term of nonqualified stock options and stock appreciation rights that may be granted under the plan is ten years. |
| • | No stock option or SAR repricing: The plan prohibits repricing of stock options and stock appreciation rights without stockholder approval, whether by reducing the exercise price or by exchanging the stock option or stock appreciation right for cash or a new award with a lower (or no) exercise price. |
TABLE OF CONTENTS | • | No discounting: Stock options and stock appreciation rights granted under the plan generally must have an exercise price not lower than the fair market value of the underlying shares of Class A common stock on the grant date. |
| • | Performance-based vesting of dividends and dividend equivalent rights: Dividends and dividend equivalent rights granted as a component of awards which vest or are earned based on the achievement of performance goals may not vest unless the performance goals for the underlying awards are achieved. |
| • | Clawback requirement: The plan provides for the mandatory repayment of any award to the extent necessary to comply with any clawback, recoupment or similar policy adopted by the Board of Directors or Compensation Committee or to comply with applicable law. |
| • | Forfeiture provisions: The Compensation Committee is authorized to cancel any outstanding award if the participant is terminated for “cause.” |
Share Authorization and Dilution As of April 28, 2023, approximately 2,818,496 shares of Class A common stock remained available for issuance for future awards under the plan. The following table illustrates the potential dilutive impact on named executive officer compensation annually will allowawards under the plan if stockholders approve this proposal. Plan Share Authorization (shares in millions) Shares of Class A common stock available for future awards if proposal is approved(1) | | | 10.3 | | | 12% |
(1)
| Reflects shares of Class A common stock that remain available for issuance for future awards under the plan as of April 28, 2023 and additional shares that will be available for future awards if stockholders approve this proposal (but does not reflect awards of RSUs and PSUs to certain executive officers and employees of the Company granted subject to stockholder approval of the share increase amendment as discussed under “—Plan Benefits” below). For more information about our outstanding awards and shares of Class A common stock available for future awards as of the end of Fiscal 2023, see “—Equity Compensation Plan Information” below. |
(2)
| As of April 28, 2023, Secureworks had issued and outstanding 86,031,349 shares of common stock, consisting of 16,031,349 shares of Class A common stock and 70,000,000 shares of Class B common stock. |
Summary of Material Provisions of Plan The following summary of material provisions of the plan is qualified in its entirety by reference to provide more immediate feedback on Secureworks’ compensation philosophy, objectives and practices as disclosedthe complete text of the plan in the Company’s annualform in which it would become effective upon approval of this proposal. The text of that form is attached as Annex A to this proxy statement. Stockholdersstatement and incorporated by reference into this proposal. You are not voting inurged to read this proposal to approve or disapproveand the Board’s recommendation. Stockholders will be able to specify onetext of the following four choices for this proposalplan in their entirety.
Effective Date and Term. The plan became effective on the proxy card or voting instruction form: a Say-on-Pay advisory vote every 1 year;
a Say-on-Pay advisory vote every 2 years;
a Say-on-Pay advisory vote every 3 years; or
abstention from voting.
Generally, a proposal presented to stockholders, such as Proposal 4,April 18, 2016 and will be approvedterminate on April 18, 2026 unless it is terminated earlier by the affirmative vote of holders of a majority of the voting power of the shares of common stock present or represented by proxy at the annual meeting and entitled to vote on the proposal. However, because the vote on this proposal is not binding on the Board of Directors or Secureworks, if nonein connection with a change in control of Secureworks.
Purpose and Types of Awards. We believe that maintenance of the specified frequency options – every 1 year, every 2 years or every 3 years – receivesplan assists us in recruiting, rewarding and retaining employees, officers, non-employee directors and other service providers. We believe that granting awards under the affirmative voteplan provides recipients with an incentive to contribute to the success of holders of a majority of the voting power of the shares present or represented by proxy, the option receiving the greatest number of votes will be considered the frequency preferred by the stockholders. Although this vote is not binding on the Board of Directors, the Board will consider the outcome of this vote in making a determination on the frequency with which advisory votes on named executive officer compensation will be included in the Company’s annual proxy statement. Notwithstanding the Board’s recommendationSecureworks and the outcome of the stockholder vote, the Board in the future may decide to conduct advisory votes on a more or less frequent basis.
Following the annual meeting, the Board of Directors will make its frequency determinationoperate and disclose that determination to stockholdersmanage our business in a current report on Form 8-K.manner that will provide for our long-term growth and profitability to benefit our stockholders and other important stakeholders, including our employees and customers, and will ensure that key personnel act in our best interests during and after their service to our company as a condition of enjoying the benefits of such rewards.
The plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals. TABLE OF CONTENTS Administration. The plan is administered by the Compensation Committee. During any period of time in which we do not have a Compensation Committee, the plan will be administered by the Board of Directors or by another committee appointed by the Board. With certain exceptions and if permitted by applicable law, the Compensation Committee may delegate some of its authority to our Chief Executive Officer or any other officer. The Compensation Committee has full power and authority to take all actions and to make all determinations required or provided for under, and to interpret all provisions of, the plan and any award or award agreement thereunder. The Compensation Committee also determines who will receive awards under the plan, the type of award and its terms and conditions, and the number of shares of Class A common stock subject to the award or to which an award relates, except with respect to awards to our Chief Executive Officer, which are approved by the Board of Directors upon the recommendation of the Compensation Committee. Eligibility. Awards may be granted under the plan to individuals who are employees, officers, or non-employee directors of Secureworks or any of our affiliates, consultants and advisors who perform services for Secureworks or any of our affiliates, and any other individual whose participation in the plan is determined to be in the best interests of Secureworks by the Compensation Committee in connection with our incentive and compensation programs. As of April 28, 2023, approximately 1,616 individuals were eligible to participate in the plan, consisting of the following: four executive officers (including our Chief Executive Officer, who is also a director); three non-employee directors; and the balance of approximately 1,609 eligible participants, employees of Secureworks and its subsidiaries (excluding our employee director and our executive officers). No consultants or advisors who perform services for Secureworks or our affiliates currently participate in the plan. Share Authorization and Usage. If this proposal is approved, subject to adjustments for changes in our capitalization and the other plan provisions described below, the aggregate number of shares of Class A common stock issuable pursuant to all awards granted on or after the date of stockholder approval will not exceed the sum of: 7,500,000 shares of Class A common stock authorized by the share increase amendment, plus any shares of Class A common stock remaining available for issuance for future awards under the plan as of the date of stockholder approval of the share increase amendment. As of April 28, 2023, 2,818,496 shares remained available for issuance pursuant to future awards. The foregoing number of shares of Class A common stock shown as available for issuance pursuant to future awards does not reflect shares issuable in connection with awards of RSUs and PSUs made to certain executive officers and employees on February 22, 2023, March 13, 2023 and March 20, 2023 that were granted subject to stockholder approval of the share increase amendment, as described below under “- Plan Benefits.” If this Proposal 4 is not approved, such RSU and PSU awards will be cancelled. Any shares of Class A common stock covered by outstanding awards granted under the plan that terminate by expiration, forfeiture, cancellation, settlement in cash in lieu of shares, or otherwise without the issuance of such shares, in each case, in accordance with the plan, will again become available for issuance under the plan. The share limit described above also will be increased by the number of shares of Class A common stock subject to awards assumed by Secureworks, at the direction of the Compensation Committee, in connection with certain mergers, reorganizations, separations or similar transactions and any substitute awards issued for those awards. The number of shares of Class A common stock available for issuance under the plan, however, will not be increased by the number of shares: tendered, withheld or subject to an award granted under the plan and that are surrendered in connection with the purchase of shares of Class A common stock upon the exercise of an option; not issued upon the net settlement or net exercise of a stock appreciation right granted under the plan that settled in shares; deducted or delivered from payment of an award granted under the plan in connection with our tax withholding obligations; or purchased by us with the proceeds from option exercises. EQUITY COMPENSATION PLAN INFORMATIONTABLE OF CONTENTS Shares that are subject to awards granted under the plan will be counted against the share limit described above as one share of Class A common stock for every one share of Class A common stock subject to the award. An award that, by its terms, may not be settled in shares of Class A common stock will not count against the plan share limit. References to shares of our Class A common stock above include any security into which the shares may be changed or for which the shares may be exchanged in connection with a change in capitalization of the Company as set forth in the plan and as described below. The shares of Class A common stock to be issued under the plan may be authorized and unissued shares of Class A common stock, treasury shares or any combination of the foregoing. Limits on Awards. The maximum number of shares of Class A common stock subject to options or stock appreciation rights that may be granted under the plan to any person in any single calendar year is 2,000,000 shares. The maximum number of shares of Class A common stock that may be granted under the plan to any person pursuant to awards, other than pursuant to options or stock appreciation rights, that are stock-denominated and are either stock settled or cash-settled in any single calendar year is 1,500,000 shares. The maximum amount that may be paid as annual incentive awards (whether or not cash-settled) in a calendar year to any person eligible for an award is $5 million, and the maximum amount that may be paid as cash-denominated performance awards (whether or not cash settled) for a performance period of greater than 12 months to any person eligible for an award is $10 million. Adjustments for Certain Events. The Compensation Committee will make appropriate adjustments in outstanding awards and the number of shares of Class A common stock reserved and available for issuance under the plan, including the individual limitations on awards, to reflect certain changes in our stock on account of mergers, reorganizations, recapitalizations, reclassifications, stock splits, spin-offs, combinations of stock, exchanges of stock, stock dividends and other, similar events. Fair Market Value Determination. For so long as our Class A common stock remains listed on the Nasdaq Global Select Market (or is listed on any other established stock exchange or publicly traded on any other securities market), the fair market value of a share of our Class A common stock, as of any date of determination, will be as follows: if there is a reported closing price on that date, the closing price for a share of Class A common stock as reported on that exchange or market (if there is more than one stock exchange or securities market on which our Class A common stock is listed or traded, the Compensation Committee will designate the appropriate stock exchange or securities market for purposes of the fair market value determination); and if there is no reported closing price on that date, the closing price for a share of Class A common stock on the next preceding date on which any sale of our Class A common stock was reported. If on such a date our Class A common stock is not listed on an established stock exchange or traded on an established securities market, the Compensation Committee will determine the fair market value by the reasonable application of a reasonable valuation method in a manner consistent with Section 409A of the Internal Revenue Code, or Code. Options. The plan permits the grant of incentive stock options (under Section 422 of the Code) and options that do not qualify as incentive stock options, which we refer to as nonqualified stock options. Any or all of the shares of Class A common stock reserved for issuance under the plan are available for issuance pursuant to incentive stock options, but incentive stock options may be granted only to our employees and employees of our corporate subsidiaries. The exercise price of each option will be determined by the Compensation Committee, except that the exercise price may not be less than 100% (or, for incentive stock options granted to any person who owns more than 10% of the total combined voting power of all classes of our voting stock, 110%) of the fair market value of a share of Class A common stock on the date on which the option is granted. If the aggregate fair market value of shares of Class A common stock determined on the date of grant with respect to which incentive stock options are exercisable for the first time during any calendar year exceeds $100,000, the option, or such excess portion of the option, will be treated as a nonqualified stock option. TABLE OF CONTENTS The term of an option may not exceed ten years (or, for incentive stock options granted to any greater than 10% stockholder as described above, five years) from the date of grant. The Compensation Committee determines the time or times at which each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may be made exercisable in installments, and the exercisability of options may be accelerated by the Compensation Committee. Awards of options are nontransferable, except for transfers by will or the laws of descent and distribution or, if authorized in the applicable award agreement, for transfers of nonqualified stock options, not for value, to family members pursuant to the terms and conditions of the plan. Stock Appreciation Rights. The plan permits the grant of stock appreciation rights. A stock appreciation right represents the participant’s right to receive a compensation amount, based on the value of the appreciation in our Class A common stock from the date of grant to the date of exercise, if vesting criteria or other terms and conditions established by the Compensation Committee are met. The exercise price of each stock appreciation right is determined by the Compensation Committee, except that the exercise price may not be less than 100% of the fair market value of a share of Class A common stock on the date on which the stock appreciation right is granted, and the term of a stock appreciation right may not exceed ten years from the date of grant. A participant who receives stock appreciation rights will have no rights of a stockholder as to the shares of Class A common stock on which the stock appreciation right is based. If the vesting criteria or other terms and conditions are met, we will settle stock appreciation rights in cash, shares of Class A common stock, or a combination of the two. Awards of stock appreciation rights are nontransferable, except for transfers by will or the laws of descent and distribution or, if authorized in the applicable award agreement, for transfers not for value to family members pursuant to the terms and conditions of the plan. No Repricing. The Compensation Committee may not amend the terms of outstanding options or stock appreciation rights to reduce the applicable exercise price, cancel outstanding options or stock appreciation rights in exchange for or substitution of options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights, or cancel outstanding options or stock appreciation rights with an exercise price above the current fair market value of a share of our Class A common stock in exchange for cash or other securities, in each case, unless such action is subject to and approved by our stockholders or would not be deemed to be a repricing under the rules of any stock exchange on which our Class A common stock is listed. Restricted Stock. The plan permits the grant (or sale at the purchase price determined by the Compensation Committee) of restricted stock awards. A restricted stock award is an award of shares of Class A common stock that may be subject to restrictions on transferability and other restrictions as the Compensation Committee determines in its sole discretion on the date of grant. The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments, or otherwise, as the Compensation Committee may determine. Unless otherwise provided in an award agreement, a participant who receives restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares of Class A common stock, except that the Compensation Committee may require any dividends to be withheld and accumulated contingent on vesting of the underlying shares or reinvested in shares of restricted stock. Dividends paid on shares of restricted stock which vest or are earned based on the achievement of performance goals will not vest unless the applicable performance goals are achieved. During the period, if any, in which shares of restricted stock are nontransferable or forfeitable, a participant is prohibited from selling, transferring, assigning, pledging or otherwise encumbering or disposing of the participant’s shares of restricted stock. Restricted Stock Units and Deferred Stock Units. The plan permits the grant of restricted stock units and deferred stock units. Restricted stock units represent the participant’s right to receive a compensation amount, based on the value of the shares of Class A common stock, if vesting criteria or other terms and conditions established by the Compensation Committee are met. If the vesting criteria or other terms and conditions are met, we will settle restricted stock units in cash, shares of Class A common stock or a combination of the two. Deferred stock units are restricted stock units that provide for the settlement and delivery of cash, shares of Class A common stock or a combination of the two after the date of vesting, consistent with the terms of Section 409A of the Code. A participant who receives restricted stock units or deferred stock units will have no rights of a stockholder as to the shares of Class A common stock on which the restricted stock unit or deferred stock unit is based, though the Compensation Committee may provide that a recipient of restricted stock units or deferred stock units will be entitled to receive dividend equivalent TABLE OF CONTENTS rights paid on an equivalent number of shares of Class A common stock. The Compensation Committee may provide that any such dividend equivalent rights will be deemed withheld and accumulated contingent on vesting of the underlying award or reinvested in shares of restricted or deferred stock or other awards. Dividend equivalent rights paid on restricted stock units or deferred stock units which vest or are earned based on the achievement of performance goals will not vest unless the applicable performance goals are achieved. During the period, if any, in which restricted stock units or deferred stock units are nontransferable or forfeitable, a participant is prohibited from selling, transferring, assigning, pledging or otherwise encumbering or disposing of the participant’s restricted stock units or deferred stock units. Unrestricted Stock and Other Equity-Based Awards. The plan permits the grant (or, for unrestricted stock, sale at the purchase price determined by the Compensation Committee) of unrestricted stock and other types of Class A common stock-based awards. An unrestricted stock award is an award of shares of Class A common stock free of any restrictions. Other equity-based awards are payable in cash, shares of Class A common stock or other equity, or a combination thereof, and may be restricted or unrestricted, as determined by the Compensation Committee. The terms and conditions that apply to other equity-based awards are determined by the Compensation Committee. Dividend Equivalent Rights. The plan permits the grant of dividend equivalent rights in connection with the grant of any equity-based award, other than options and stock appreciation rights. Dividend equivalent rights are rights to receive (or to receive credits for the future payment of) cash, shares of Class A common stock, other awards or other property equal in value to dividend payments or distributions paid or made with respect to a specified number of shares of Class A common stock. The Compensation Committee will determine the terms and conditions of any dividend equivalent rights, except that, as described above, dividend equivalent rights granted as a component of an award which vests or is earned based on the achievement of performance goals will not vest unless the applicable performance goals are achieved. Performance Awards. The plan permits the grant of performance awards and annual incentive awards in such amounts and upon such terms as the Compensation Committee may determine. Each grant of a performance award will have an initial actual or target cash value or an actual or target number of shares of Class A common stock that is established by the Compensation Committee at the time of grant. The Compensation Committee may set performance goals in its discretion which, depending on the extent to which they are met, will determine the amount of cash or value and/or number of shares of Class A common stock that are earned by a participant under such performance awards and annual incentive awards. The Compensation Committee will establish the performance periods for performance awards and annual incentive awards, which may be payable in cash or shares of Class A common stock, or a combination thereof, as determined by the Compensation Committee. The plan identifies some conditions that may warrant revision or alteration of performance goals after they are established by the Compensation Committee. Such conditions may include the following: asset write-downs; litigation or claims, judgments or settlements; the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; any reorganization or restructuring events or programs; extraordinary, unusual, non-core, non-operating or non-recurring items and items that are either of an unusual nature or of a type that indicates infrequency of occurrence as a separate component of income from continuing operations; acquisitions or divestitures; foreign exchange gains and losses; impact of repurchase of shares of Class A common stock acquired through share repurchase programs; tax valuation allowance reversals; impairment expense; and TABLE OF CONTENTS environmental expense. Performance Measures. Under the plan, one or more of the following performance measures may be used by the Compensation Committee in establishing performance goals: net earnings or net income; operating earnings; pretax earnings; earnings per share; share price, including growth measures and total stockholder return; earnings before interest and taxes; earnings before interest, taxes, depreciation and/or amortization; earnings before interest, taxes, depreciation and/or amortization as adjusted to exclude any one or more of the following: stock-based compensation expense; income from discontinued operations; gain on cancellation of debt; debt extinguishment and related costs; restructuring, separation and/or integration charges and costs; reorganization and/or recapitalization charges and costs; impairment charges; merger-related events; impact of purchase accounting; gain or loss related to investments; amortization of intangible assets; sales and use tax settlements; legal proceeding settlements; gain on non-monetary transactions; and adjustments for the income tax effect of any of the preceding adjustments; sales or revenue growth or targets whether in general or by type of product, service or customer; gross or operating margins; return measures, including return on assets, capital, investment, equity, sales or revenue; cash flow, including: operating cash flow; free cash flow, defined as operating cash flow less capital expenditures or as earnings before interest, taxes, depreciation and/or amortization (as adjusted to exclude any one or more of the items that may be excluded pursuant to the performance measure specified in the eighth bullet point above) less capital expenditures; leveraged free cash flow, defined as free cash flow less interest expense; cash flow return on equity; and cash flow return on investment; productivity ratios; costs, reductions in cost and cost control measures; expense targets; market or market segment share or penetration; financial ratios as provided in any credit agreements of Secureworks and its subsidiaries; working capital targets; completion of acquisitions of businesses, companies or assets or completion of integration activities following an acquisition of businesses, companies or assets; completion of divestitures and asset sales; regulatory achievements or compliance; customer satisfaction measurements; execution of contractual arrangements or satisfaction of contractual requirements or milestones; product development achievements; monthly recurring revenue; revenue retention rates; and any combination of the foregoing business criteria. TABLE OF CONTENTS The Compensation Committee may establish performance goals on a company-wide basis or with respect to one or more business units, divisions, affiliates or operating segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The Compensation Committee has the authority to provide for accelerated vesting of any performance award or annual incentive award based on the achievement of performance goals pursuant to the performance measures and the discretion to adjust awards, either on a formula or discretionary basis, or on any combination thereof. Change in Control. Unless otherwise provided in an applicable award agreement, if we experience a change in control in which outstanding awards will not be assumed or continued by the surviving entity: except for performance awards and annual incentive awards, immediately before the change in control, all outstanding shares of restricted stock and all restricted stock units, deferred stock units and dividend equivalent rights will vest, and the shares of Class A common stock underlying, or cash payment promised under, such awards will be delivered; and at the discretion of the Compensation Committee, either or both of the following will occur: (1) all options and stock appreciation rights will become exercisable at least 15 days before the change in control and terminate, if unexercised, upon the completion of the change in control; or (2) all options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units and dividend equivalent rights will be canceled in exchange for cash and/or shares of our stock; and in the case of performance awards and annual incentive awards, if less than half of the performance period has lapsed, the awards will be treated as though target performance thereunder has been achieved, if at least half of the performance period has lapsed, actual performance to date (if determinable) will be determined and treated as achieved, and if actual performance is not determinable, the awards will be treated as though target performance thereunder has been achieved. Other equity-based awards will be governed by the terms of the applicable award agreement. Unless otherwise provided in an applicable award agreement, if we experience a change in control in which outstanding awards will be assumed or continued by the surviving entity, the plan and awards granted thereunder will continue under their terms, with appropriate adjustments to the number of shares subject to or underlying an award and to the exercise prices of options and stock appreciation rights. For purposes of the plan, a “change in control” of the Company means the occurrence of any of the following events: a transaction or series of related transactions pursuant to which any person or group within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act (other than one or more of Dell Technologies Inc. and its affiliates, Michael S. Dell and his affiliates and other related persons, the Company, or any affiliate of the Company) becomes the beneficial owner of more than 50% of the total voting power of the voting stock of the Company, on a fully diluted basis; individuals who, as of April 28, 2016, constitute the Board, referred to as the Incumbent Board (together with any new directors whose election by such Incumbent Board or whose nomination by such Incumbent Board for election by the stockholders of the Company was approved by a vote of at least a majority of the members of such Incumbent Board then in office who either were members of such Incumbent Board or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of such Board then in office; the Company consolidate with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company (regardless of whether the Company is the surviving person), other than any such transaction in which the holders of 100% of the voting power of the Company immediately prior to such transaction own directly or indirectly at least a majority of the voting power of the voting stock of the surviving person in such merger or consolidation immediately after such transaction; the consummation of any direct or indirect sale, lease, transfer, conveyance, or other disposition (other than by way of reorganization, merger, or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any person or group within the meaning of Section 13(d) and 14(d)(2) of the Exchange Act TABLE OF CONTENTS (other than the Company or any affiliate thereof), except any such transaction or series of transactions in which the holders of 100% of the voting power of the Company immediately prior to such transaction own directly or indirectly at least a majority of the voting power of the voting stock of such person or group immediately after such transaction or series of transactions; or the stockholders of the Company adopt a plan or proposal for the liquidation, winding up, or dissolution of the Company. Forms of Payment. The exercise price for any option or the purchase price (if any) for restricted stock, restricted stock units and deferred stock units is generally payable as follows: in cash or cash equivalents acceptable to us; if the applicable award agreement so provides, by the surrender of shares of our Class A common stock (or attestation of ownership of shares of our Class A common stock) with an aggregate fair market value, on the date of the surrender, of the exercise price or purchase price; if permissible by applicable law and if the award agreement so provides, by payment through a broker in accordance with the procedures set by us; or if the applicable award agreement so provides and/or unless otherwise specified in an award agreement, any other form permissible by applicable law, including net exercise or net settlement and service rendered to us or our affiliates. Amendment, Suspension or Termination. The Board of Directors may, at any time and from time to time, amend, suspend or terminate the plan so long as no amendment, suspension or termination impairs the rights or obligations under any outstanding award without the affected participant’s consent. The effectiveness of any future amendment to the plan will be conditioned on approval of such amendment by our stockholders if provided by the Board of Directors or required by applicable laws (including, for so long as our Class A common stock is listed on a stock exchange, the rules of that stock exchange). Summary of Material U.S. Federal Income Tax Consequences The following is a summary of material U.S. federal income tax consequences of the plan under current U.S. federal income tax law. This summary deals with the general tax principles applicable to the plan and is based on laws, regulations, rulings and decisions currently in effect, all of which are subject to change. This summary does not address foreign, state and local tax laws or employment, estate and gift tax considerations, which may vary depending on individual circumstances and from jurisdiction to jurisdiction. Nonqualified Stock Options. There are no immediate U.S. federal income tax consequences of receiving an award of nonqualified stock options under the plan. Upon exercise of the option, the difference between the exercise price and the fair market value of the shares subject to the option on the exercise date will constitute ordinary income taxable to the participant. Upon the participant’s disposition of shares acquired upon exercise, any gain realized in excess of the amount reported as ordinary income will be reportable by the participant as a capital gain, and any loss will be reportable as a capital loss. The capital gain or loss will be long-term if the participant held the shares for more than one year. Otherwise, the capital gain or loss will be short-term. Incentive Stock Options. There are no immediate U.S. federal income tax consequences of receiving an award of incentive stock options under the plan. In addition, a participant generally will not recognize taxable income upon the exercise of an incentive stock option. However, unless the participant sells the shares received in the calendar year of exercise, the participant’s alternative minimum taxable income will be increased by the amount by which the aggregate fair market value of the shares underlying the option, which is generally determined as of the exercise date, exceeds the aggregate exercise price. Further, except in the case of the participant’s death or disability, if an option is exercised more than three months after the participant’s termination of employment, the option will cease to be treated as an incentive stock option and will be subject to taxation under the rules applicable to nonqualified stock options. If a participant sells the shares acquired upon exercise of an incentive stock option at least two years after the date on which the incentive stock option was granted and at least one year after the date on which the incentive stock option was exercised, any excess of the sale price of the option shares over the exercise price will be treated as long-term capital gain taxable to the option holder at the time of the sale. If the disposition TABLE OF CONTENTS occurs before the completion of the two-year and one-year periods, the excess of the fair market value of the option shares on the disposition date over the exercise price will be taxable income to the option holder at the time of the disposition. Of that income, the amount up to the excess of the fair market value of the shares at the time the option was exercised over the exercise price will be ordinary income for U.S. federal income tax purposes, and the balance, if any, will be long-term or short-term capital gain, depending upon whether or not the shares were sold more than one year after the option was exercised. We will not be entitled to a business expense deduction with respect to an incentive stock option unless the participant engages in a disqualifying disposition, at which time we will be entitled to a deduction equal to the amount of the ordinary income taxable to the participant. Stock Appreciation Rights. There are no immediate U.S. federal income tax consequences of receiving an award of stock appreciation rights under the plan. Upon exercise of stock appreciation rights, the distribution of shares of Class A common stock or the cash payment in satisfaction of the stock appreciation rights will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the shares of Class A common stock determined as of the date they are received or, in the case of a cash award, the amount of the cash payment. Restricted Stock. Generally, a participant under the plan will not recognize any taxable income for U.S. federal income tax purposes in the year of the restricted stock award if the shares of Class A common stock subject to the award are nontransferable and subject to a substantial risk of forfeiture. A participant, however, may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the shares on the award date, determined without regard to the restrictions. If a participant does not make a Section 83(b) election, the fair market value of the shares on the date on which the restrictions lapse will be treated as compensation income to the participant and will be taxable in the year in which the restrictions lapse. Dividends and distributions paid on restricted stock for which a participant has not made a Section 83(b) election are taxed as compensation income subject to withholding taxes. After the restricted stock vests (or earlier upon a participant’s timely Section 83(b) election), dividends and distributions paid on the restricted stock will no longer be considered compensation income. Restricted Stock Units and Deferred Stock Units. There are no immediate U.S. federal income tax consequences of receiving an award of restricted stock units or deferred stock units under the plan. A distribution of shares of Class A common stock or payment of cash in satisfaction of an award of restricted stock units or deferred stock units will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the shares of Class A common stock determined as of the date they are received or, in the case of a cash award, the amount of the cash payment. Unrestricted Stock. If a participant under the plan receives an award of unrestricted stock, the participant will be required to recognize ordinary income for U.S. federal income tax purposes in an amount equal to the fair market value of the shares on the award date, reduced by the amount, if any, paid for the shares. Upon the participant’s disposition of shares of unrestricted stock, any gain realized in excess of the amount reported as ordinary income will be reportable by the participant as a capital gain, and any loss will be reportable as a capital loss. The capital gain or loss will be long-term if the participant held the shares for more than one year. Otherwise, the capital gain or loss will be short-term. Dividend Equivalent Rights. There are no immediate U.S. federal income tax consequences of receiving an award of dividend equivalent rights under the plan. A participant who receives dividend equivalent rights will recognize ordinary income on the date of payment in the amounts distributed to the participant pursuant to the award. Performance Awards. There are no immediate U.S. federal income tax consequences of receiving a performance or an annual incentive award under the plan. A distribution of shares of Class A common stock or payment of cash in satisfaction of a performance or an annual incentive award will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the shares of Class A common stock determined as of the date they are received or, in the case of a cash award, the amount of the cash payment. Business Expense Deductions. If we comply with applicable reporting requirements, we will generally be entitled to a business expense deduction in the same amount and generally at the same time as participants TABLE OF CONTENTS recognize ordinary income arising out of their awards, subject to the limitation on deductibility under Section 162(m) of the Code. Section 162(m) of the Code generally limits to $1 million the federal tax deductibility of compensation paid in one year to individuals who have been the chief executive officer, the chief financial officer or the three other most highly compensated executive officers. Certain payments may be exempt from this limitation under grandfathering provisions of a prior version of Section 162(m) of the Code. While tax deductibility is one consideration, the Compensation Committee may exercise its discretion to award compensation, including under the plan, that is not deductible. Section 280G of the Code. If payments which are deemed contingent on a change in control of our company are determined to exceed certain limitations set forth in Section 280G of the Code, those payments may be subject to a 20% excise tax, and our deduction with respect to the associated compensation expense may be disallowed in whole or in part. The plan includes a Section 280G “best after tax” provision. Under this provision, if any of the payments under the plan or otherwise would constitute parachute payments within the meaning of Section 280G of the Code and would be subject to the excise tax imposed under Section 4999 of the Code, the payments will be reduced by the amount required to avoid the excise tax if the reduction would give the participant a better after-tax result than if the participant received the payments in full. The number of shares of Class A common stock or other equity-based awards that will be awarded to plan participants other than independent directors under the plan in the future is not currently determinable, except as to awards of time-based RSUs and PSUs made to certain executive officers and other eligible employees of the Company by the Compensation Committee on February 22, 2023 and March 13, 2023 in connection with annual compensation determinations, and awards granted by the Board of Directors to the Chief Executive Officer on March 20, 2023, that were granted subject to stockholder approval of the share increase amendment, as described below. Future awards are within the discretion of the Compensation Committee, and the Compensation Committee has not determined such awards or the plan participants who might receive them. Under our current independent director compensation policy, each of our independent directors receives annual equity awards with a value of $200,000 under the plan in the form of restricted stock units or deferred stock units that settle in shares of Class A common stock. For additional information about the compensation of our independent directors, see “Proposal 1 – Election of Directors – Director Compensation.” The following table sets forth the number of RSUs and PSUs awarded by the Compensation Committee subject to stockholder approval of the share increase amendment, as of May 17, 2023. In accordance with the terms of these awards, if stockholder approval of this Proposal 4 is not obtained, each of the RSUs and PSUs will be canceled, and no shares of Class A common stock will be issued in connection with these awards. Wendy Thomas
Chief Executive Officer
| | | $7,290,530 | | | 1,002,824(2) | George B. Hanna
Chief Legal & Administrative Officer
| | | $2,567,088 | | | 353,107(3) | Steve Fulton
President, Customer Success
| | | $3,850,635 | | | 529,661(4) | Christian Grant
Vice President, Interim Chief Financial Officer & Chief Accounting Officer
| | | $541,494 | | | 71,718(6) | All current executive officers as a group | | | $13,708,254 | | | 1,885,592 | All current directors who are not executive officers, as a group | | | — | | | — | All employees, including all current officers who are not executive officers, as a group | | | $37,527,049 | | | 5,161,905 |
(1)
| Based on the closing price per share of Class A common stock of $7.27 on March 13, 2023, as reported on Nasdaq. |
(2)
| Amount reflects (a) 501,412 time-based RSUs and (b) 501,413 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 1,002,824 PSUs may be earned in connection with this award). |
(3)
| Amount reflects (a) 176,554 time-based RSUs and (b) 176,553 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 353,106 PSUs may be earned in connection with this award). |
(4)
| Amount reflects (a) 264,831 time-based RSUs and (b) 264,830 PSUs (the foregoing assumes that the awarded PSUs are earned at 100% of target; assuming maximum payout, a total of 529,660 PSUs may be earned in connection with this award). |
TABLE OF CONTENTS (5)
| On April 27, 2023, we reported that the Company had appointed Ms. Alpana Wegner as Chief Financial Officer of the Company, effective June 9, 2023. In connection with her appointment, Ms. Wegner will receive units of RSUs in value equal to approximately $4 million, which will be granted upon the effective date of her employment with the Company. |
(6)
| Amount reflects (a) 35,868 time-based RSUs granted on February 22, 2023 and (b) 35,310 time-based RSUs granted on March 13, 2023, based on the closing price per share of Class A common stock of $7.94 on February 22, 2023 and $7.27 on March 13, 2023, respectively, as reported on Nasdaq. |
We granted stock options under the plan to the following persons from April 18, 2016, which was the effective date of the plan, through May 5, 2023: Wendy K. Thomas, 55,030; George B. Hanna, 117,921; Stephen Fulton, 0; Chris Grant, 0; all current executive officers, as a group, 172,951; all current directors who are not executive officers, as a group, 146,202; each nominee for election as a director who is not an executive officer: Mr. Pati, 49,916; and all employees of Secureworks and our subsidiaries, including all current officers who are not executive officers, as a group, 2,496,837. For information about the material terms of the options awarded to our named executive officers under the plan, see “Compensation of Executive Officers – Outstanding Equity Awards at End of Fiscal 2023.” On April 28, 2023, the closing price per share of our Class A common stock as reported on Nasdaq was $9.07. Equity Compensation Plan Information The following table sets forth certain information about our equity compensation plans as of the end of Fiscal 2022.2023. Plan category | | Number of
securities
to be issued upon
exercise of
outstanding
options,
warrants and rights | | Weighted-
average
exercise price
of outstanding
options,
warrants and
rights | | Number of
securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in first column) | | Plan Category | | | Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights | | Weighted-average
exercise price of
outstanding
options, warrants
and rights | | Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
the first column) | Equity compensation plans approved by security holders | | 4,088,426(1) | | $14.00(2) | | 5,091,131(3) | | 5,449,427(1) | | $14.00(2) | | 2,435,679(3) | Equity compensation plans not approved by security holders | | — | | — | | — | | — | | — | | — | Total: | | 4,088,426 | | $14.00 | | 5,091,131 | | Total | | | 5,449,427 | | $14.00 | | 2,435,679 |
(1)
| Represents, as of the end of Fiscal 2022,2023, the aggregate number of shares of Class A common stock that were issuable upon the exercise or settlement of 161,925 outstanding options and 3,926,501 outstanding RSUs granted under the plan. |
(2)
| Weighted-average exercise prices do not reflect shares issuable in connection with the settlement of RSUs, as RSUs have no exercise price. |
(3)
| Represents, as of the end of Fiscal 2022,2023, the aggregate number of shares of Class A common stock that were available for future issuance in connection with grants of options, stock appreciation rights, restricted stock, RSUs, deferred stock units, unrestricted stock, dividend equivalent rights and other equity-based awards under the plan. |
TABLE OF CONTENTS COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board of Directors of SecureWorks Corp. for the fiscal year ended January 28, 2022,February 3, 2023, has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into SecureWorks Corp.’s annual report on Form 10-K for the fiscal year ended January 28, 2022.February 3, 2023. | | | COMPENSATION COMMITTEE | | | | | | | | Yagyensh C. (Buno) Pati, Mark J. Hawkins, Chair
| | | | Mark J. HawkinsYagyensh (Buno) C. Pati
|
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis is intended to provide our stockholders with an understanding of Secureworks’ compensation philosophy and principles, and the compensation paid for Fiscal 20222023 to our named executive officers. Secureworks’The Company's compensation structure is designed to attract, retain and reward high-performing executives capable of achieving Secureworks’its long-term financial goals and strategic objectives. The composition of Secureworks’the compensation program of Secureworks is focused on Company and individual performance by using long-term incentive awards and performance-based compensation. Secureworks believes that its compensation philosophy, strategy and structure align the interests of our named executive officers with the interests of our stockholders.
Effective September 3, 2021, the position of Chief Executive Officer, or CEO, transitioned from Michael R. Cote to our President and Senior Vice President of Customer Success, Wendy K. Thomas. Our named executive officers for Fiscal 20222023 consisted of the following:
Wendy K. Thomas | | | President and Chief Executive Officer | Paul M. Parrish | | | Chief Financial Officer | Michael R. CoteGeorge B. Hanna
| | | Chief ExecutiveLegal & Administrative Officer (former) |
The foregoing individuals were the only persons serving as executive officers during Fiscal 2022. In2023. Fiscal 2023 was the first quarteryear of Fiscal 2023, we designated an additionalMr. Hanna’s service as a named executive officer. Highlights of Fiscal 20222023 Performance InDuring Fiscal 2022,2023, Secureworks continued itstransitioning our subscription customers to our Taegis solutions from our non-strategic, lower margin other managed security subscription services. The transition resulted in the growth of our Taegis portfolio of technology-driven information security solutions offered to customers of all sizes and across all industries.
Our proprietary Taegis security platform was purpose-built as a cloud-native software platform that combines the power of machine-learning with security analytics and threat intelligence to unify detection and response across endpoint, network, cloud, email and other systems for better security outcomes and simpler security operations. The Taegis platform is a core element of our SaaS solutions, which leverage workflows designed from our extensive security operations expertise and our integrated orchestration and automation capabilities to increase the speed of response actions. Our technology-driven security solutions offer an innovative approach to prevent, detect and respond to security breaches. The platform collects, aggregates, correlates and analyzes billions of security events daily from our extensive customer base utilizing sophisticated algorithms to detect malicious activity and deliver security countermeasures, dynamic intelligence and valuable context regarding the intentions and actions of cyber adversaries. Through our Taegis solutions, we provide global visibility and insight into malicious activity, enabling our customers to detect, respond to and expansion of, the Taegis cloud-native security platform and customer base. Taegis is designed with a Big Data plus Fast Data, cloud-native architecture and is optimized to deliver comprehensive answers to security challenges and allow for expanded visibility and timely detection.effectively remediate threats quickly. Our Fiscal 20222023 financial results included the following highlights: Taegis revenue grew 167% to $85.6 million from $32.1$261 million in Fiscal 2021.annual recurring revenue (ARR), a 58% year-over-year increase Taegis represents approximately 82% of Secureworks total ARR Net revenue was $535.2of $463 million, a decrease of 4.6% fromcompared with net revenue of $561.0$535.2 million infor Fiscal 2021, reflective of2022, reflecting our continued shift to higher-margin business.reduction in non-strategic service offerings, which offset triple digit year-over-year growth in Taegis revenue Gross profit was $318.1Net loss of $114.5 million, compared with $318.9 million in Fiscal 2021. Non-GAAP gross profit increased to $335.3 million from $334.8 million in the prior fiscal year.
Gross margin was 59.4%, compared with 56.8% in Fiscal 2021. Non-GAAP gross margin was 62.6%, compared with 59.7% in the prior fiscal year.
Netnet loss wasof $39.8 million or $0.48 per share, compared with $21.9 million, or $0.27 per share, infor Fiscal 2021. Non-GAAP net income was $8.7 million, or $0.11 per share, compared with net income of $17.9 million, or $0.22 per share, in the prior fiscal year.2022
Adjusted EBITDA was $18.6loss of $59 million, compared with $33.2 million in Fiscal 2021. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income and adjusted EBITDA areof $18.6 million for Fiscal 2022
Adjusted EBITDA is a non-GAAP financial measuresmeasure provided as a supplement to the results presented in our financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP. A reconciliation of the foregoing non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP is set forth in Annex A to this proxy statement. Fiscal 2022 Executive Compensation HighlightsIn June 2021, we announced that Mr. Cote would be retiring from his position as Chief Executive Officer of the Company and that Ms. Thomas would assume that role effective September 3, 2021. At
TABLE OF CONTENTS that time, we entered into a severance agreement and release with Mr. Cote and announced an adjustmentAmerica, or GAAP. A reconciliation of the salary and bonus opportunity of Ms. Thomas. Ms. Thomas also was awarded a special equity grantforegoing non-GAAP financial measure to the most comparable financial measure calculated in connectionaccordance with her assumption of the Chief Executive Officer role.
In July 2021, Mr. Parrish received a grant of performance-based and time-based equity awards supplementalGAAP is set forth in Annex B to his annual grant to ensure a competitive compensation opportunity and to secure his continued service in the key role of Chief Financial Officer.
After the end of Fiscal 2022, our Compensation Committee determined, based on our financial performance for the year, that the corporate modifier applicable to both cash and equity awards granted to our named executive officers during the fiscal year would be 70.8%.this proxy statement.
Executive Compensation Philosophy, Core Objectives and Practices TheFor Fiscal 2023, the Compensation Committee of the Board of Directors iswas composed of Buno Pati, who servesserved as Chair, and Mark Hawkins. Upon the recommendation of the Nominating and Governance Committee to the Board, Mr. Hawkins became Chair of the Compensation Committee, effective as of March 20, 2023, and Mr. Pati continues to serve as a member of the Compensation Committee. References to the “Committee” in this Compensation Discussion and Analysis and “Compensation of Executive Officers” below refer to the Compensation Committee.
To promote the alignment of theWe have designed our executive compensation programs to align our executive officers’ interests with those of our executive officers with the interests of our stockholders, and to advance our long-term business strategy as a leading cybersecurity software solutions provider and manage risk, we:as demonstrated below:
Things We Do structure our executive compensation to focus on drivingdrive the Company’s strategic revenue growth and long-term value; link Company and individual performance through compensation based on achievement of our financial goals and strategic objectives; conduct an annual compensation review and risk assessment to ensure that our executive compensation strategy aligns individual performance with the Company’s long-term business strategy, and discourageswhile discouraging excessive risk-taking at the expense ofthat may impact long-term results; provide compensation opportunities, including cash and equity incentives, that are competitive with those offered by companies with which Secureworks competes for executive talent; engage anwork with the independent compensation committee advisor to supportconsultant engaged by the Committee in making its executive compensation determinations; and
maintain an independent Compensation Committee composed solely of independent directors with industry knowledge and experience. Consistent with our compensation philosophy and objectives, we do not:Things We Do Not Do
guarantee annual base salary increases or annual bonuses; provide for single-trigger vesting of equity or other payments in connection with a change in control; permit hedging or pledging of our stock; permit short-selling of our stock; or provide dividend equivalents on unvested equity awards. Executive Compensation Overview Elements of Total Compensation Package – The primary components of the Secureworks compensation program for named executive officers consistprimarily consists of base salary, annual incentive bonuses, and equity incentives that are both time-based and performance-based, andas well as limited benefits and perquisites. Secureworks aligns executive compensation practices with the competitive market and evaluates each executive officer individually, which includes considering such factors as individual level of responsibility as well asand internal pay equity considerations. Compensation Consultants – Under its charter, the Committee has the authority to select, retain and obtain the advice of compensation consultants and such other advisers as it considers necessary or appropriate to fulfill its duties and responsibilities. Pursuant to this authority,Accordingly, the Committee has engaged a compensation consultant, Frederic W. Cook & Co., Inc., or FW Cook, to provide independent analysis and recommendations on executive TABLE OF CONTENTS
compensation matters, including information regarding competitive market practices, trends and advice on the design and structure of the executive compensation program. FW Cook attends the meetings of the Committee and provides updates on compensation best practices, regulatory issues and industry developments. FW Cook also communicates with the Committee Chair outside of regular meetings on an as-needed basis. TABLE OF CONTENTS The Committee has evaluated the independence of FW Cook by considering the requirements adopted by Nasdaq and the SEC, and it has determined that FW Cook is independent, and its work is free of any conflicts of interest. As a part of that determination process, FW Cook supplied the Committee with written confirmation of FW Cook’s assessment of its independence and existence of any conflicts of interest pursuant to Nasdaq and SEC rules. Process for Evaluating and Determining Named Executive Officer Compensation – Secureworks conducts a thorough evaluation of the performance of each named executive officer annually based on objective and subjective factors and then makes a recommendation to the Committee regarding such officer’s compensation for the current year. Following input from management, including the human resources team, and its independent consultant, the Committee determines the individual cash compensation elements and associated amounts as well as the equity award value for each named executive officer (other than the Chief Executive Officer, for whom the Committee makes a recommendation towhose compensation is determined by the Board of Directors)Directors as described below). When making individual compensation decisions for an executive officer (including the recommendations pertaining to the Chief Executive Officer), the Committee considers a variety of factors, including: the annual performance of Secureworks as well as the performance of the executive officer’s business unit;functional area; the executive officer’s performance, experience and ability to contribute to Secureworks’the Company’s long-term strategic goals; the historical compensation of the executive officer; internal pay equity; retention considerations; and retention considerations.market-competitive compensation practices and amounts.
Matters regarding the Chief Executive Officer’s compensation are subject to review and approval by the Board of Directors following thean evaluation and recommendation ofby the Committee. Use of Competitive Market Compensation Data – The Committee believes that it is important to be informed about current market practices utilizedfollowed by comparable public companies with respect to properly assess executive compensation packages, policies and best practices utilized by similarly-situated organizations. During Fiscal 2021,practices. FW Cook, the Committee’s independent compensation consultant, proposed, and the Committee approved, a group of peer companies that would be appropriate peers based on the Company’s industry, focus and size.to provide a reference point when making executive pay decisions for Fiscal 2023. Based on input from the Committee, FW Cook compiled athe following list of 15 software companies that haveare similar to Secureworks in terms of their focus on software, size and complexity. The resultingAt FW Cook’s recommendation, nine companies from last year’s peer group, used byconsisting of Blackberry Limited, CrowdStrike Holdings, Inc., FireEye, Inc., Forescout Technologies, Fortinet, Inc., Palo Alto Networks, Inc., Proofpoint, Inc., Splunk Inc. and Zscaler, Inc., were removed because their market cap or revenue exceed the Committee in making executive pay decisions for Fiscal 2022 consistedscope of the following companies:comparable size and eight companies were added based on their revenue size and business offerings. A10 Networks, Inc. | | | Palo Alto Networks,Mandiant, Inc.
| Blackberry Limited
| | | Proofpoint,Rapid7, Inc.
| ACI Worldwide, Inc. | | | New Relic, Inc. | | | SailPoint Technologies Holdings, Inc. | Blackbaud, Inc. | | | OneSpan, Inc. | | | Tenable Holdings, Inc. | Commvault Systems, Inc. | | | Qualys, Inc.
| CrowdStrike Holdings, Inc.
| | | Rapid7, Inc.
| FireEye, Inc.
| | | Splunk Inc.
| Forescout TechnologiesProgress Software Corporation
| | | Varonis Systems, Inc. | Fortinet,Guidewire Software, Inc.
| | | Qualys, Inc. | | | Verint Systems, Inc. | OneSpan Inc.
| | | Zscaler, Inc.
|
Using market data compiled by FW Cook from peer companies, FW Cook completed and reviewed the Company’s executive compensation program and provided comparisons against aggregated data to inform the Committee’s determination regarding executive compensation for Fiscal 2022.2023. The market data included reference points with respect to base salary, annual performance bonuses and performance metrics, equity awards and award structure and performance metrics, total cash compensation and target total direct compensation. The Committee evaluated the peer group data when considering the aggregate compensation as well as the mix of base salary, annual incentive bonus, and equity incentives for our named executive officers. The Committee also considered other factors described above in “– Process for Evaluatingthis Compensation Discussion and Determining Named Executive Officer Compensation.”
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In light of the Company’s strategic transition to providing SaaS-based software services, we modified our peer group in Fiscal 2022 to review other SaaS-based software companies with similar revenue and market capitalization in order to make executive pay decisions for Fiscal 2023.Analysis.
Compensation Risk Oversight – The Committee has undertaken a review of the Company’s material compensation processes, policies and programs for all employees across the following categories: compensation TABLE OF CONTENTS mix; short-term and long-term incentive plan design; performance measures; clawback and recoupment policies; severance orand change-in-control policies under the executive compensation programs; and oversight. Based on its review, the Committee has determined that those processes, policies and programs do not encourage unnecessary or excessive risk, manipulation of financial measures to impact personal financial rewards or behavior that focuses on short-term results at the expense of long-term value creation. Consideration of Say-on-Pay Results – We value our stockholders’ continued interest and feedback. We are committed to maintaining an active dialogue to understand the priorities and concerns of our stockholders on the topic of executive compensation and corporate governance. We believe ongoing engagement and communication builds mutual trust and understanding. We have previously filed our proxy statement under the reduced reporting rules applicable to emerging growth companies. As of the close of Fiscal 2022, we ceased to be an emerging growth company and are now required by Section 14A of the Exchange Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act to take an advisory vote on the compensation of our named executive officers, as disclosed in this proxy statement (commonly referred to as a “say-on-pay” vote). Our Committee will review After reviewing the results of the say-on- paysay-on-pay advisory vote taken at the upcoming 2022 Annual Meeting, and considerin which 98.81% of the feedback onvotes were in favor of our executive compensation program, provided by our stockholders.the Committee considered the feedback received from stockholders on the Company’s executive compensation as confirmation that the Committee should continue in its current approach to executive compensation.
Individual Compensation Components Elements of Total Compensation Package The primary components of the Secureworks compensation program for named executive officers consist of base salary, annual incentive bonuses, equity incentives that are both time-based and performance-based and limited benefits and perquisites. Secureworks aligns executive compensation practices with the competitive market and evaluates each executive officer individually, which includes considering such factors as individual level of responsibility as well as internal pay equity considerations. Base Salary We use base salary to attract and retain talented executive officers needed to manage the business. Base salaries for each named executive officer (other than the Chief Executive Officer) are determined annually by the Committee, and no increases are guaranteed. The base salaries of our named executive officers vary based on each named executive officer’s level of responsibility, performance, experience, retention considerations, historical compensation, industry practice among our peers and internal equity considerations. Ms. Thomas’s base salary was setremained unchanged in Fiscal 2023 from the amount established at an annual rate of $500,000 effective June 3, 2021, when the announcementcommencement of her appointment to CEO was made. Her salary was pro-rated through the end of the fiscal year.effective June 3, 2021. Ms. Thomas’s base salary is subject to annual review by the Committee and must be approvedapproval by the Board of Directors. Mr. Cote’sParrish’s salary which alsoincreased in Fiscal 2023 to $463,500, effective on April 30, 2022. Mr. Hanna first served as a named executive officer in Fiscal 2023. His salary was recommendedestablished at an annual rate of $425,000 effective April 30, 2022. Mr. Parrish’s and Mr. Hanna’s base salaries are subject to annual review and approval by the Committee and approved by the Board of Directors, was paid through the September 3, 2021 effective date of his retirement as Chief Executive Officer. Mr. Parrish’s salary remained unchanged in Fiscal 2022 from the amount set at the commencement of his employment on December 9, 2019.Committee. The table below summarizes the annual base salary rate of each named executive officer at the end of Fiscal 2022.2023. Wendy K. Thomas | | | 500,000(1) | Paul M. Parrish | | | 450,000463,500
| Michael R. CoteGeorge B. Hanna
| | | 500,000(2)425,000
|
(1)
| Ms. Thomas’s appointment to Chief Executive Officer, effective September 3, 2021, was announced on June 3, 2021. Her salary increase was effective June 3, 2021 and was pro-rated through fiscal year end. |
(2)
| Mr. Cote’s salary was paid through the September 3, 2021 effective date of his retirement as Chief Executive Officer. See “—Other Compensation Matters—Severance and Change-in-Control Arrangements Applicable to Named Executive Officers—Severance Agreement with Michael Cote” below for a discussion of Mr. Cote’s severance arrangements. |
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Annual Bonus Plan In Fiscal 2022,2023, each named executive officer was eligible to receive a payment under our Amended and Restated Incentive Bonus Plan, or IBP. Amended and Restated Incentive Bonus Plan The IBP provides a means for us to reward our named executive officers and other eligible employees for helping us meet or exceed our pre-defined performance goals, for delivering strong individual performance over the course of our fiscal year and for acting in a manner consistent with our mission and values. TABLE OF CONTENTS The IBP is designed to align the pay of each executive officer pay with Secureworks’the Company’s short-term financial and strategic results, while also serving to attract, retain and motivate our executive officers. The IBP is administered by the Committee. Decisions regarding our Chief Executive Officer’s incentive bonus are made by the Board of Directors upon consideration of the recommendations of the Committee.Committee’s recommendations. Annual bonuses are awarded to those eligible employees who are selected to participate during our fiscal year, so long as our corporate performance goals are achieved at a level sufficient to fund the bonus pool and the eligible employee’s individual performance goals are satisfied. Eligible employees received their applicable bonuses under the IBP for Fiscal 2022.2023. IBP Formula The following formula illustrates how the IBP payout is calculated based on the eligible earnings of each participant, the target incentive opportunity as a percentage of eligible earnings and the corporate and individual performance modifiers. The Committee may considerconsiders the potential payout produced by the formula and such other factors as it deems appropriate, including significant business considerations and macroeconomic conditions, to ensure that the actual bonus payout appropriately takes into accountaccounts for those factors. IBP Target Incentive Opportunity The Committee establishes a target incentive opportunity annually for each named executive officer expressed as a percentage of eligible earnings for that fiscal year. Ms. Thomasyear, which is eligible for anthe executive officer’s annual bonus with a target opportunity equal to 100% of her base salary.bonus. For Fiscal 2022,2023, the target annual incentives for our named executive officers were as follows: Wendy K. Thomas | | | 100% | Paul M. Parrish | | | 60%(1) | Michael R. CoteGeorge B. Hanna
| | | 100%(2)60%
|
(1)
| Mr. Parrish’s bonus incentive opportunity increased for Fiscal 2022 to 60% from 55%. This increase was approved by the Committee based on analysis of individual performance and alignment with competitive market compensation. |
(2)
| Mr. Cote’s incentive bonus opportunity for Fiscal 2022 was not realized due to his retirement effective September 3, 2021, but Mr. Cote’s severance arrangements included cash compensation commensurate with a portion of this opportunity. See “—Other Compensation Matters—Severance and Change-in-Control Arrangements Applicable to Named Executive Officers—Severance Agreement with Michael Cote” below for a discussion of Mr. Cote’s severance arrangements. |
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IBP Corporate Performance Modifier The Committee establishes corporate performance modifiers and target goals annually. For Fiscal 2022,2023, the corporate performance measures were designed to drive growth and adoption forof our Taegis platform. The Committee approved performance measures for Fiscal 20222023 consisting of new Taegis Annual Contract Value, or ACV, and Taegis Annual Recurring Revenue, or ARR, with a possible supplemental “booster” for Gross Revenue Retention, or GRR, as those terms are defined below. The IBP was split into two six-month performance periods for the first half and second half of the year, with each performance period achievement weighted equally and subject to the same performance measures with the respective weightings described below. Payment at year-end was based on achievement with respect to each performance period. For Fiscal 2022,2023, “Taegis ACV” was defined as the annual contract value of Taegis sales to new customers and Taegis cross-sales and up-sells within our existing customer base. Cross-sales and up-sells include incremental ACV from migrating existing customers from our legacy Counter Threat Platform, or CTP, to our Taegis platform. Taegis ACV was weighted at 70%60% of the corporate performance modifier for both six-month performance periods. “Taegis ARR” was defined as the annual value of our Taegis subscription contracts as of a particular date and includes existing customers who migrate from CTP to the Taegis platform. For both six-month performance periods, Taegis ARR was weighted at 30%40% of the corporate performance modifier. GRR for Fiscal 2022 was defined as the annual revenue from our existing customer base, not including any benefits from price increases. GRR is a representation of our success in retaining our existing customers. As a supplement, this measure is intended to be additive to the overall achievement for the two performance periods, and would increase, or “boost,” the modifier by 0.5% for each 1% by which Secureworks exceeds the threshold amount set by the Committee. The Committee sets the threshold and target amounts for each performance measure at levels which it expects to challenge the executive officers of Secureworks, and the Committee also retains discretion to adjust IBP measures as it determines appropriate. TABLE OF CONTENTS For the first half of Fiscal 2022,2023, Secureworks ended the period with $100.6$201.2 million in Taegis ARR, exceeding bothbetween the threshold and target amounts set by the Committee. For the second half of Fiscal 2022,2023, Secureworks ended the period with $164.6$261.5 million in Taegis ARR, exceedingbetween the threshold amount, but not reachingand target amounts set by the Committee’s target amount.Committee. Taegis ACV for the first half of Fiscal 2022 exceeded both2023 was between the threshold and target amounts for that performance period. For the second half of Fiscal 2022,2023, the Company’s Taegis ACV was belowabove the second half thresholdTarget amount set by the Committee. The threshold for the GRR supplemental “booster” was not achieved in either the first half or second half of Fiscal 2022, and therefore did not contribute to the calculation of the modifier. We do not disclose the threshold, target or actual amounts for Taegis ACV, or for GRR, or the threshold or target amounts for Taegis ARR, because these amounts represent confidential financial information, the disclosure of which would result in competitive harm by, among other matters, providing our competitors with insight into sensitive aspects of our financial modeling, short-term and long-term forecasts and sales strategies. As a result of the performance described above, and taking into account the relative weighting of Taegis ARR and Taegis ACV, the resulting companycorporate performance modifier for the named executive officers for Fiscal 20222023 was 70.8%95.0%. IBP Individual Performance Modifier Given the potential for the executive officers to influence corporate performance, the Committee (or, inwith regard to our Chief Executive Officer, the Board of Directors) takes into account personal performance in determining executive officers’ bonus amounts, assigning each executive officer an individual modifier from 0% to 150% following the end of the preceding fiscal year. In determining individual performance modifiers, the Committee orand the Board as applicable, considered such factors as achievement of financial targets for the business, cost management, strategic and transformational objectives relating to the executive officer’s business unit or function, and ethics and compliance. The Committee does not place specific weightings on any such objective, but it assigns each individual executive officer an individual performance modifier based on a holistic and subjective assessment of the officer’s performance, taking into account the recommendations of the Chief Executive Officer for those individuals reporting to her. The individual performance modifiers and the resulting bonus payment amounts for the named executive officers are as follows: TABLE OF CONTENTS
IBP Payouts for Fiscal 20222023 Name | | Target
IBP
($) | | Corporate
Modifier
(%) | | Individual
Modifier
(%) | | Bonus
Payment
($) | | Target
IBP
($) | | Corporate
Modifier
(%) | | Individual
Modifier
(%) | | Bonus
Payment
($) | Wendy K. Thomas(1) | | 414,327 | | 70.8 | | 115 | | 337,345 | | 519,231 | | 95.0 | | 110 | | 542,596 | Paul M. Parrish | | 270,000 | | 70.8 | | 115 | | 219,834 | | 286,615 | | 95.0 | | 100 | | 272,285 | Michael R. Cote(2) | | NA | | NA | | NA | | NA | | George B. Hanna | | | 260,769 | | 95.0 | | 110 | | 272,504 |
(1)
| Ms. Thomas’s base salary was increased to $500,000 effective June 3, 2021. As a result, Ms. Thomas’s eligible earnings represent a combination of her salary prior to the announcement of her appointment as CEO and her salary from June 3, 2021 through the end of the fiscal year. |
(2)
| Mr. Cote’s incentive bonus opportunity for Fiscal 2022 was not realized due to his retirement effective September 3, 2021, but Mr. Cote’s severance arrangements included cash compensation commensurate with a pro-rated portion of this opportunity. See “—Other Compensation Matters—Severance and Change-in-Control Arrangements Applicable to Named Executive Officers—Severance Agreement with Michael Cote” below for a discussion of Mr. Cote’s severance arrangements. |
For Fiscal 2022, Ms. Thomas’s award was calculated by multiplying (1)2023 consisted of 53 weeks. The extra pay period increased the sum of (a) her target bonus amount of 100% of her pro-rated base salary aftereligible earnings to be applied to the announcement of her appointment as Chief Executive Officer on June 3, 2021 and (b) her target bonus amount of 55% of her pro-rated base salary prior to June 3, 2021, by (2) a corporate modifier of 70.8% and by (3) an individual performance modifier of 115%, resulting in a payment of $337,345.
For Fiscal 2022, Mr. Parrish’s award was calculated by multiplying (1) his target bonus amount of 60% of base salary by (2) a corporate modifier of 70.8% and by (3) an individual performance modifier of 115%, resulting in a payment of $219,834.IBP calculation for all employees, including executive officers.
Equity Incentives Equity incentive opportunities are the most significant component of total target compensation for executive officer compensation.officers. The provision of equity incentive opportunities is consistent with our compensation philosophy and reflects our core compensation objectives by aligning compensation with stockholders’ interests, creating a culture of meritocracy and enhancing our ability to attract and retain executive talent. Equity grants under the 2016 Plan (as defined below) made in each of Fiscal 2020, Fiscal 2021 and Fiscal 2022 to Mr. Cote were in the form of restricted shares (subject to forfeiture) of Class A common stock and grants to Mr. Parrish and Ms. Thomas were in the form of restricted stock units that settle in shares of Class A common stock. Generally, the equity grants to our other employees consist of restricted stock units.
For Fiscal 2022,2023, our named executive officers (other than Mr. Cote) and other senior vice presidents received a combination of time-based restricted stock units, or RSUs, and performance-based restricted stock units, or PSUs,PSUs. The allocation of the annual grants for Fiscal 20222023 consisted of 50% in the form of performance-based PSUs and 50% in the form of time-based RSUs. Consistent with past practice, the allocation of the annual grant for Mr. Cote consisted of 50% performance-based restricted shares (rather than PSUs) and 50% time-based restricted shares (rather than RSUs). Ms. Thomas, Mr. Parrish and Mr. Hanna received hertheir annual grantgrants for Fiscal 20222023 in March 2021. Ms. Thomas also received a special grant in June 2021 following the announcement of her promotion to Chief Executive Officer. This grant was approved by the Board of Directors, based on the Committee’s recommendation, which included consideration of market compensation practices for the chief executive role along with retention considerations. The allocation of PSUs and RSUs for the special grant was the same as the allocation for the annual grant.2022. Mr. Parrish received his annual grant for Fiscal 2022 in March 2021. Mr. Parrish received an additional grant of PSUs and RSUs in July 2021 to ensure a competitive compensation opportunity and to secure his continued service in a key leadership role for the Company. To ensure continued service and alignment with the Company’s Fiscal 2022 performance objectives, the allocation of PSUs and RSUs for the special grant was the same as the allocation for the annual grant.
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Time-based RSUs and performance-based PSUs vest ratably over a three-year period. The number of PSUs that are earned, PSUs, if any, is calculated in the year following the year in which they are awarded based on the levels of financial performance achieved during the first half of the Fiscal 2022 performance period (weighted 50%) plus the levels of financial performance achieved during the second half of the Fiscal 2022 performance period (weighted 50%). The financial measures for PSUs awarded in Fiscal 20222023 correspond to the financial measures used for our IBP TABLE OF CONTENTS awards for Fiscal 2022.2023. PSUs have a maximum vesting opportunity of up to 200% of the target number of shares. There is no guaranteed level of performance, so if performance is below threshold across each of the performance measures, the entire amount of PSUs could be forfeited. Restricted shares granted to Mr. Cote have substantially the same terms. We believe our use of two half-year performance periods for financial performance measures effectively aligns our executives with the Company’s short-term and long-term financial goals and adjusts for factors outside of the Company’s control. Based on the achievement of first and second half Fiscal 20222023 financial performance goals relative to targets, the corporate modifier resulted in a combined 70.8% achievement level.was 95.0%. A corresponding number of the PSUs will beawarded in Fiscal 2023 are eligible to vest ratably over a three-year period for Ms. Thomas, Mr. Parrish and Mr. Parrish.Hanna. Accordingly, Ms. Thomas’s PSUs in the amount of 173,636230,519 units vest in three equal installments on each of the first, second and third anniversaries of the grant date (83,328 beginning on March 15, 2022 and 90,308 beginning on June 3, 2022), contingent on continued service.2023. Mr. Parrish’s PSUs in the amount of 57,11097,402 units vest in three equal installments on each of the first, second and third anniversaries of the grant date (40,676 beginning ofon March 9, 20222023. Mr. Hanna’s PSUs in the amount of 81,168 units vest in three equal installments on each of the first, second and 16,434third anniversaries of the grant date beginning on July 26, 2022), contingent on continued service. A corresponding number of performance-based restricted shares also are eligible to vest pursuant to Mr. Cote’s Fiscal 2022 equity award, but under the terms of his severance agreement and consulting arrangement, we expect only the first tranche of such restricted shares (55,064 of 165,191 shares) to vest.March 9, 2023. Other Compensation Components Benefits and Perquisites Secureworks provides limited benefits and perquisites to its executive officers. While such benefits and perquisites are not a significant part of Secureworks’ executive officer compensation on a dollar value basis, the Committee (or, with respect to the Chief Executive Officer,and the Board of Directors) believesbelieve that these elements of compensation are important to delivering a competitive package to attract and retain qualified executive officers. Benefits and perquisites include those described below. Annual Physical| • | Annual Physical – Secureworks pays for a comprehensive annual physical for each executive officer and the executive officer’s spouse or domestic partner and reimburses the executive officer’s related travel and lodging costs, each subject to an annual maximum payment of $5,000 per person. Other – The executive officers participate in Secureworks’ other benefit plans on the same terms as other employees. These plans include medical, dental and life insurance benefits, and the Secureworks 401(k) Plan. For additional information, see “Compensation of Executive Officers – Other Benefit Plans.”
|
| • | Other – Executive officers participate in Secureworks’ other benefit plans on the same terms as other employees. These plans include medical, dental and life insurance benefits, and the Secureworks 401(k) Plan. For additional information, see “Compensation of Executive Officers – Other Benefit Plans.” |
Other Compensation Matters Stock Ownership Guidelines The Board of Directors has not adopted stock ownership requirements for our directors or executive officers. The Board of Directors and the Committee believe that the design of Secureworks’ equity compensation strategy and structure for its executive officers, including named executive officers, sufficiently links the long-term interests of Company executive officers with that of its stockholders. Policy on Hedging Transactions and Pledging of Securities Secureworks maintains a securities trading policy that applies to our directors and employees, including our named executive officers and other officers, and prohibits certain activities relating to specified securities, as described below. The policy also generally applies to family members who reside with any director or employee, any other person who lives in the director or employee’s household, and any other family members whose transactions in securities are directed by, or subject to the influence or control of, the director or employee, as well as entities, such as a corporation, partnership or trust, controlled by the director or employee. TABLE OF CONTENTS
The activities prohibited by the policy include hedging and monetization transactions that would permit any such person to continue to own the securities without the full risks and rewards of ownership; transactions in put options, call options or other derivative securities on an exchange or in any other organized market; and the holding of the securities in a margin account or other pledging of the securities as collateral for a loan. The policy prohibits hedging and monetization transactions without considering how they are accomplished, whether through financial instruments such as prepaid variable forwards, equity swaps, collars or exchange funds or otherwise, including short sales, option positions and pledges arising from certain types of hedging transactions. The foregoing provisions of the securities trading policy apply to transactions in all securities, including equity securities, issued by Secureworks that are held by any person covered by the policy. Equity securities subject to the policy include awards granted under equity compensation plans, as well as derivative securities that are not issued by Secureworks, such as exchange-traded put or call options or swaps relating to Secureworks’the Company’s securities. TABLE OF CONTENTS The administrator of the policy has the discretion, on a case-by-case basis and in appropriate circumstances, to waive or modify the restrictions and prohibitions on the hedging and other transactions described above. Recoupment Policy for Performance-Based Compensation The Company and its Board of Directors havehas not adopted a recoupment policy for payments of bonuses and other cash or equity awards made to executive officers, including named executive officers, in connection with restated or amended financial results. Pursuant to a new rule adopted by the SEC in October 2022, we will update our compensation policies as necessary to comply with the requirements of the new mandatory recoupment rule issued by Nasdaq when it is finalized. Individual long-term incentive awards do allowcurrently provide for recoupment in accordance with Company policy and/or applicable law. Severance and Change-in-Control Arrangements Applicable to Named Executive Officers SecureWorks Corp. Amended and Restated Severance Pay Plan for Executive Employees Our Amended and Restated Severance Pay Plan for Executive Employees, or Severance Pay Plan, generally provides for severance benefits payable to our named executive officers and other eligible participants equal to twelve months of base salary, twelve months of subsidized COBRA coverage, six months of executive outplacement services and additional amounts equal to a portion of the value of certain outstanding short-term and long-term incentive awards. Benefits under the plan are available only in the case of a termination of employment pursuant to a workforce reduction and are offset by other severance payments. Severance Agreement with Paul Parrish As reported in February 2023, Mr. Parrish retired from his position as Chief Financial Officer of the Company on May 5, 2023. On March 21, 2023, we entered into a severance agreement and release with Mr. Parrish, which is described below under “Compensation of Executive Officers – Potential Payments Upon Termination of Employment or Change in Control – Separation Agreement with Mr. Parrish.” Non-Solicitation and Non-Competition Agreements Applicable to Named Executive Officers Each of our named executive officers has entered into a Protection of Sensitive Information, Noncompetition and Nonsolicitation Agreement, which we refer to below as the Agreement, with us. Under the terms of the Agreement, each of the foregoing named executive officers shallwill be entitled to severance pay which equalsequal to twelve months of his or her current base salary, payable in four substantially equal quarterly installments if the named executive officer is not terminated forwithout Cause (as defined in the Agreement), the severance agreement isnamed executive officer executes, and does not terminated duringrevoke within seven days of execution, a Severance Agreement and Release in a form acceptable to the revocation periodCompany and the named executive officer does not resign. Under the Agreement, “Cause” means: a violation of obligations regarding confidentiality or protection of sensitive, confidential or proprietary information, or trade secrets; an act or omission resulting in the named executive officer being charged with a criminal offense which constitutes a felony or involves moral turpitude or dishonesty; conduct which constitutes poor performance, gross neglect, insubordination, willful misconduct or a breach of the Company’s Code of Conduct or a fiduciary duty to the Company or its shareholders;stockholders; or the Company determined that the named executive officer violated state or federal law relating to the workplace environment, including, without limitation, laws relating to sexual harassment or age, sex, race or other prohibited discrimination. TheEach of the named executive officers’ Agreements also includeincludes non-competition and non-solicitation obligations. Under
In addition, the Agreement, if the executive’s employment was terminated by us without “Cause,” we would be TABLE OF CONTENTS
required to pay the executive an amount equal to twelve months’ base salary, as severance, subject to specified conditions. The Agreement obligates the executive to comply with specified non-competition and non-solicitation obligations for a period of twelve months following the termination of the executive’s employment. During this
TABLE OF CONTENTS twelve-month period, the named executive officer may not work in a specified geographic region or for a Direct Competitor (as defined in the Agreement) with duties or services substantially similar to those that the named executive officer performed for Secureworks during the prior twenty-four months. Additionally, for a twelve-month period, the Company’s named executive officers may not solicit business from the Company’s customers for the purpose of providing competing products or services or attempt to solicit any of the Company’s employees, contractors or consultants, or any person employed or who contracted or consulted with Secureworks within the last twenty-four months, to end such person’s employment or relationship with the Company. The Company believes that the terms of the Agreement, specifically the non-solicitation and non-competition provisions, are reasonable and necessary to protect Secureworks’ sensitive information, goodwill and legitimate business interests. Change-in-Control Terms Applicable to Named Executive Officers None of the named executive officers’ Agreements have a change-in-control severance provision, but theprovision. The Performance Stock Unit Agreements for Executives, or PSU Agreements, and Restricted Stock Unit Agreements for Executives, or RSU Agreements, doeach include a change-in-control provision. Under the PSU Agreements of named executive officers, the PSUs become earned based upon the greater of (1) deemed attainment of the performance goals at target or (2) actual attainment of the performance goals as of the change-in-control,change in control, and they become 100% vested as of the date of an involuntary termination (if it(that occurs within twelve months of the change-in-control). An “involuntary termination” is a defined termchange in the PSU Agreements.control). The change-in-control provision applicable to the RSU Agreements of the Company’s named executive officers alsosimilarly provides that the RSUs vest upon an involuntary termination within twelve months following a change in control, with involuntary termination being a defined term within each applicable RSU Agreement. control. An involuntary termination event under the PSU Agreements and RSU Agreements includes involuntary dismissal for reasons other than “Cause” (as defined for purposes of the Agreement) and voluntary resignation for a “good reason” (as “Cause” and “good reason” are defined in the applicable RSU Agreement or PSU Agreement), examples of which are listed below.. Under the PSU Agreements and RSU Agreements, “good reason” generally is defined as any of the following events if, in each case, not timely cured: a material reduction in compensation (base salary, target annual compensation or long-term incentive compensation) or health or welfare benefits (unless such reduction is an across-the-board reduction for all employees of the same pay grade); a demotion of more than one pay grade; and a relocation of the named executive officer’s work location of more than 50 miles. In addition to the above, we have agreed with Mr. Parrish that, for purposes of any employment or compensatory agreement with us (including the award agreements referred to above), the definition of “good reason” will be expanded to include a change in reporting to any person other than the Chief Executive Officer of Secureworks.Officer. For more information about potential payments to the Company’s named executive officers, see “Compensation of Executive Officers – Potential Payments Upon Termination of Employment or Change in Control.” Severance Agreement with Michael Cote
In June 2021, we announced that Mr. Cote would be retiring from his position as Chief Executive Officer of the Company on September 3, 2021. On June 1, 2021, we entered into a severance agreement and release with Mr. Cote. The severance agreement provides for the payment of severance pay and benefits to Mr. Cote in installments following his departure, including amounts equal to a portion of the value of certain outstanding
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non-equity incentive awards, substantially equivalent to those that would be payable under the Severance Pay Plan (as defined above) in connection with termination of employment pursuant to a workforce reduction, subject to specified conditions. The severance agreement also provides for a one-year consulting arrangement beginning on September 3, 2021 and ending on October 2, 2022 with fees payable of $200,000.
For additional information regarding amounts payable under the severance agreement and release with Mr. Cote, see “Compensation of Executive Officers – Potential Payments Upon Termination of Employment or Change in Control—Severance Agreement with Michael Cote.”
TABLE OF CONTENTS COMPENSATION OF EXECUTIVE OFFICERS Fiscal 20222023 Summary Compensation Table The following table shows the total compensation paid for the fiscal years indicated by Secureworks to the following persons, each of whom was an executive officer of Secureworks in Fiscal 2022:2023: Wendy K. Thomas, who was appointed President of Customer Success effective June 27, 2020 and served as our principal executive officer from September 3, 2021 Paul M. Parrish, who served as our principal financial officer Michael R. Cote,George B. Hanna, who served as our principal executive officer until September 3, 2021Chief Legal & Administrative Officer
We refer to these executive officers as our named executive officers. Fiscal 2023 was Mr. Hanna’s first year of service as a named executive officer. Name and Principal Position | | Year | | Salary
($) | | Bonus
($) | | Stock
Awards(1)
($) | | Non-Equity
Incentive Plan
Compensation(2)
($) | | All Other
Compensation
($) | | Total
($) | | Year | | Salary
($) | | Bonus
($) | | Stock
awards(1)
($) | | Non-equity
incentive plan
compensation(2)
($) | | All other
compensation
($) | | Total
($) | Wendy K. Thomas
President and Chief
Executive Officer
| | | | 2023 | | 519,230 | | — | | 5,521,546 | | 542,596 | | 14,538 | | 6,597,910 | | | | 2022 | | 473,173(3) | | — | | 9,538,959 | | 337,345 | | 9,963 | | 10,359,440 | | 2022 | | 473,173(3) | | — | | 9,538,959 | | 337,345 | | 9,963 | | 10,359,440 | | | 2021 | | 381,592(4) | | — | | 2,540,912 | | 321,453 | | 11,652 | | 3,255,609 | | 2021 | | 381,592(4) | | — | | 2,540,912 | | 321,453 | | 11,652 | | 3,255,609 | Paul M. Parrish
Chief Financial Officer
| | | 2022 | | 450,000 | | — | | 3,442,492 | | 219,834 | | 14,632 | | 4,126,958 | | | 2023 | | 477,692 | | — | | 2,614,492 | | 272,285 | | 18,759 | | 3,383,228 | | | 2021 | | 450,000 | | — | | 1,524,550 | | 307,395 | | 12,041 | | 2,293,986 | | 2022 | | 450,000 | | — | | 3,442,492 | | 219,834 | | 14,632 | | 4,126,958 | | | 2020 | | 67,500(5) | | 260,000(6) | | 3,226,372 | | — | | 10,083 | | 3,563,954 | | 2021 | | 450,000 | | — | | 1,524,550 | | 307,395 | | 12,041 | | 2,293,986 | Michael R. Cote
Former Chief Executive Officer
| | | 2022 | | 307,692(7) | | — | | 7,535,134 | | — | | 830,824 | | 8,823,750 | | | | 2021 | | 500,000 | | — | | 5,863,643 | | 664,200 | | 20,744 | | 7,048,587 | | | | 2020 | | 500,000 | | — | | 3,421,250 | | 541,100 | | 19,923 | | 4,482,273 | | George B. Hanna
Chief Legal &
Administrative Officer
| | | | 2023 | | 434,615 | | — | | 2,178,734 | | 272,504 | | 15,352 | | 2,901,205 | | | 2022 | | __ | | __ | | __ | | __ | | __ | | __ | | | 2021 | | __ | | __ | | __ | | __ | | __ | | __ |
(1)
| Amounts reported for Fiscal 2023 represent restricted stock units granted on March 9, 2022 to Mr. Parrish and Mr. Hanna and on March 15, 2022 to Ms. Thomas. Amounts reported for Fiscal 2022 represent restricted shares of Class A common stock units granted on March 15,9, 2021 and June 3, 2021 to Mr. Cote,Ms. Thomas and restricted stock units granted on March 9, 2021 and July 26, 2021 to Mr. Parrish andParrish. Amounts reported for Fiscal 2021 represent restricted stock units granted on March 9, 2021 and June 3, 2021 to Ms. Thomas.Thomas and Mr. Parrish on April 16, 2020. The fair value for restricted stock units under the SecureWorks Corp. 2016 Long-Term Incentive Plan, or long-term incentive plan is generally based on the closing price of our Class A common stock as reported on Nasdaq, on the grant date. In accordance with FASB ASC Topic 718, the time-based restricted stock unit awards granted on March 9, 2021 and June 3, 2021 are valued as of June 21, 2021, the date stockholders approved thea share increase amendment under the SecureWorks Corp. 2016 Long-Term Incentive Plan. Amounts reported for Fiscal 2021 represent restricted shares of Class A common stock granted on April 17, 2020 to Mr. Cote and restricted stock units granted on April 16, 2020 to Mr. Parrish and Ms. Thomas. The fair value for restricted stock awards and restricted stock units under the Company’s plan is generally based on the closing price of the Company’s Class A common stock as reported on the Nasdaq Global Select Market, or Nasdaq, on the grant date. Amounts for Ms. Thomas and Mr. Parrish were contingent upon shareholder approval. Fair value was determined after the shareholder approval contingency was lifted on June 21, 2021. Amounts reported for Fiscal 2020 represent restricted shares of Class A common stock granted on April 2, 2019 to Mr. Cote and restricted stock units granted on December 13, 2019 to Mr. Parrish. Assuming achievement of the highest level of the performance conditions for the performance-based awards included in each grant, the grant date fair value reported would have been (a) for Mr. Cote, $11,698,765, $8,795,465 and $5,987,188 for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively, (b) for Mr. Parrish, $3,683,248, $1,477,043 and $1,905,687 for the first grant in Fiscal 2022, the additional grant in Fiscal 2022 and the grant in Fiscal 2021, respectively and (c) for Ms. Thomas, $7,545,426, $6,907,103 and $3,176,137 for the first grant in Fiscal 2022, the special grant in Fiscal 2022 and the grant in Fiscal 2021, respectively. None of the stock units included in Mr. Parrish’s Fiscal 2020 award were subject to performance conditions.long term incentive plan. |
(2)
| Amounts reported represent awards earned under the SecureWorks Corp. Amended and Restated Incentive Bonus Plan. |
(3)
| Ms. Thomas’s appointment to Chief Executive Officer, effective September 3, 2021, was announcedreported on June 3, 2021. Her salary increase was effective on June 3, 2021, and it was pro-rated through fiscal year end. |
(4)
| Ms. Thomas was appointed President of Customer Success effective June 27, 2020. Her salary increase was effective as of that date and was pro-rated through fiscal year end. |
(5)
| Mr. Parrish commenced employment with us as our Chief Financial Officer effective on December 9, 2019. Mr. Parrish’s annual base salary, which is $450,000, was pro-rated from the date of his commencement of employment through fiscal year end. The amount shown for Mr. Parrish for Fiscal 2020 includes compensation in the amount of $6,923 for consulting services he provided to us in December 2019 prior to his appointment as Chief Financial Officer. |
(6)
| Represents a signing bonus for Mr. Parrish. |
(7)
| Mr. Cote’s employment as our Chief Executive Officer ended September 3, 2021. |
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All Other Compensation Table The following table summarizes the information included in the All Other Compensation column for Fiscal 20222023 in the Fiscal 20222023 Summary Compensation Table. Name | | 401(k) Plan
Matching
Contribution ($) | | Benefit Plans
($) | | Severance
Benefits
($) | | Consulting Fees
($) | | Total
($) | | 401(k) plan
matching
contribution ($) | | Benefit plans(1)
($) | | Total
($) | Wendy K. Thomas | | 7,500 | | 2,463 | | — | | — | | 9,963 | | 7,500 | | 7,038 | | 14,538 | Paul M. Parrish | | 7,500 | | 7,132 | | — | | — | | 14,632 | | 7,500 | | 11,259 | | 18,759 | Michael R. Cote | | 5,577 | | 4,880 | | 770,467 | | 50,000(1) | | 830,824 | | George B. Hanna | | | 7,500 | | 7,852 | | 15,352 |
(1)
| For consulting services from September 3, 2021 through January 28, 2022.Represents fitness benefits available to all employees, Company-provided long-term disability benefits and costs related to executive physicals. |
TABLE OF CONTENTS Grants of Plan-Based Awards in Fiscal 20222023The following table sets forth certain information about grants of plan-based awards that Secureworks made to itsthe named executive officers in Fiscal 2022.2023. For more information about the plans under which these awards were granted, see “Compensation Discussion and Analysis – Individual Compensation Components – Annual Bonus Plan – Amended and Restated Incentive Bonus Plan” and “– Equity Incentives.” Name | | Type of
award(1) | | Grant
date | | | Estimated future payouts
under non-equity incentive
plan awards(2) | | Estimated future payouts
under equity incentive
plan awards(3) | | | All other
stock
awards:
Number
of shares
of stock
or units
(#) | | Grant
date fair
value of
stock and
option
awards
($) | | Type of
award(1) | | Grant
Date | | | Estimated future payouts
under non-equity incentive
plan awards(2) | | Estimated future payouts
under equity incentive
plan awards(3) | | | All other
stock
awards:
Number
of shares
of stock
or units
(#) | | Grant
date fair
value of
stock and
option
awards
($) | | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | Wendy K. Thomas | | | IBP | | — | | — | | 414,327 | | — | | — | | — | | — | | — | | — | | | | PSU(4) | | 3/9/2021 | | — | | — | | — | | — | | 117,695 | | 235,390 | | — | | 2,510,434 | | | IBP | | — | | — | | 519,230 | | — | | — | | — | | — | | — | | — | | | RSU(5) | | 3/9/2021 | | — | | — | | — | | — | | — | | — | | 117,695 | | 2,524,558 | | PSU(4) | | 3/15/2022 | | — | | — | | — | | — | | 121,326 | | 242,652 | | — | | 1,503,229 | | | PSU(4) | | 6/3/2021 | | — | | — | | — | | — | | 127,555 | | 255,110 | | — | | 2,403,136 | | RSU(5) | | 3/15/2022 | | — | | — | | — | | — | | — | | — | | 242,652 | | 3,006,458 | | | RSU(5) | | 6/3/2021 | | — | | — | | — | | — | | — | | — | | 127,555 | | 2,100,831 | | PSU(4) | | 9/20/2022 | | — | | — | | — | | — | | 121,326 | | 242,652 | | — | | 1,011,859 | Paul M. Parrish | | | IBP | | — | | — | | 270,000 | | — | | — | | — | | — | | — | | — | | | IBP | | — | | — | | 286,615 | | — | | — | | — | | — | | — | | — | | | PSU(4) | | 3/9/2021 | | — | | — | | — | | — | | 57,452 | | 114,904 | | — | | 1,225,451 | | PSU(4) | | 3/9/2022 | | — | | — | | — | | — | | 51,265 | | 102,530 | | — | | 728,988 | | | RSU(5) | | 3/9/2021 | | — | | — | | — | | — | | — | | — | | 57,452 | | 1,232,345 | | RSU(5) | | 3/9/2022 | | — | | — | | — | | — | | — | | — | | 102,529 | | 1,457,962 | | | PSU(4) | | 7/26/2021 | | — | | — | | — | | — | | 23,213 | | 46,426 | | — | | 492,348 | | PSU(4) | | 9/20/2022 | | — | | — | | — | | — | | 51,264 | | 102,528 | | — | | 427,542 | | | RSU(5) | | 7/26/2021 | | — | | — | | — | | — | | — | | — | | 23,213 | | 492,348 | | Michael R. Cote | | | IBP | | — | | — | | — | | — | | — | | — | | — | | — | | — | | | | PSU(4) | | 3/15/2021 | | — | | — | | — | | — | | 233,322 | | 466,644 | | — | | 4,161,298 | | | | RSU(5) | | 3/15/2021 | | — | | — | | — | | — | | — | | — | | 233,322 | | 3,373,836 | | George B. Hanna | | | | IBP | | — | | — | | 260,769 | | — | | — | | — | | — | | — | | — | | | PSU(4) | | 3/9/2022 | | — | | — | | — | | — | | 42,720 | | 85,442 | | — | | 607,478 | | | RSU(5) | | 3/9/2022 | | — | | — | | — | | — | | — | | — | | 85,441 | | 1,214,971 | | | PSU(4) | | 9/20/2022 | | __ | | __ | | __ | | __ | | 42,720 | | 85,440 | | — | | 356,285 |
(1)
| Of the awards shown in the table: |
“IBP” refers to the SecureWorks Corp. Amended and Restated Incentive Bonus Plan. “PSU” refers to Fiscal 20222023 performance-based stock units eligible to vest based on achievement measured against financial
performance goals for Fiscal 2022.2023. See note 4 below. “RSU” refers to time-based restricted stock units. (2)
| Each named executive officer participated in the IBP. Awards under this plan were funded at 70.8%95.0% based on the corporate modifier. An individual modifier was applied for Ms. Thomas, Mr. Parrish and Mr. Parrish.Hanna. |
(3)
| The amounts shown in the Threshold, Target and Maximum columns reflect the minimum, target, and maximum number, respectively, of Fiscal 20222023 performance-based stock units that are eligible to vest subject to the achievement of Fiscal 20222023 performance goals. Plan participants must exceed the threshold goal in order to earn an award. The maximum number of shares is 200% of the target number of shares. If any of these units become eligible to vest, one-third of the restricted stock units would vest on the first anniversary of the grant date and the remaining two-thirds would vest in equal installments on the second and third anniversaries of the grant date. For more information about these performance-based stock units, see “Compensation Discussion and Analysis – Individual Compensation Components – Equity Incentives.” |
(4)
| The amounts shown represent the shares subject to restricted stock unit awards that may be eligible to vest upon achievement of corporatethe financial performance measuresgoals based on Taegis ACV and Annual Recurring Revenue for Fiscal 2022.2023. For more information about these performance-based stock units, see “Compensation Discussion and Analysis – Individual Compensation Components – Equity Incentives.” The grant date fair value is based on the closing price of the Class A common stock as reported on Nasdaq of $14.22 for awards granted on March 9, 2022, $12.39 for awards granted on March 15, 2022, and $8.34 for awards granted on September 20, 2022. |
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price of the Class A common stock as reported on Nasdaq of $21.33 for awards granted on March 9, 2021, $17.84 for awards granted on March 15, 2021, $18.84 for awards granted on June 3, 2021 and $21.21 for awards granted on July 26, 2021.
(5)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the grant date. |
TABLE OF CONTENTS Outstanding Equity Awards at End of Fiscal 20222023The following table sets forth information with respect to our named executive officers’ outstanding equity awards as of the end of Fiscal 2022.2023. | | | Stock Awards | | Name | | Number of Shares or
Units of Stock That
Have Not Vested (#) | | Market Value of Shares
or Units of Stock That
Have Not Vested ($)(1) | | Equity Incentive Plan
Awards: Number of
Unearned Shares, Units
or Other Rights That
Have Not Vested (#) | | Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights That
Have Not Vested ($)(1) | | Number of shares or
units of stock that
have not vested (#) | | Market value of shares
or units of stock that
have not vested ($)(1) | | Equity incentive plan
awards: Number of
unearned shares, units
or other rights that
have not vested (#) | | Equity incentive plan
awards: Market or
payout value of
unearned shares, units
or other rights that
have not vested (#)(1) | Wendy K. Thomas | | | 8,334(2) | | $117,259 | | — | | — | | | 56,818(2) | | 484,089 | | — | | — | | | 8,334(3) | | $117,259 | | — | | — | | 20,452(3) | | 174,149 | | — | | — | | | 16,667(4) | | $234,505 | | — | | — | | 78,462(4) | | 668,496 | | — | | — | | | 40,906(5) | | $575,547 | | — | | — | | 55,552(5) | | 473,303 | | — | | — | | | 113,636(6) | | td,598,859 | | — | | — | | 85,035(6) | | 724,498 | | — | | — | | | 117,695(7) | | td,655,969 | | 117,695(8) | | td,655,969 | | 60,204(7) | | 512,938 | | — | | — | | | 127,555(9) | | td,794,699 | | 127,555(10) | | td,794,699 | | 473,171(8) | | 4,029,051 | | — | | — | Paul M. Parrish | | | 115,476(11) | | td,624,747 | | — | | — | | | 34,091(2) | | 290,455 | | — | | — | | | 24,542(12) | | $345,306 | | — | | — | | 12,270(3) | | 104,540 | | — | | — | | | 68,182(13) | | $959,321 | | — | | — | | 38,300(4) | | 326,316 | | — | | — | | | 57,452(14) | | $808,350 | | 57,452(15) | | $808,350 | | 27,117(5) | | 231,036 | | — | | — | | | 23,213(16) | | $326,607 | | 23,213(17) | | $326,607 | | 15,475(10) | | 131,847 | | — | | — | Michael R. Cote | | | 29,167(18) | | $410,380 | | — | | — | | | | 29,167(19) | | $410,380 | | — | | — | | | | 163,634(20) | | td,302,330 | | — | | — | | | | 151,514(21) | | td,131,802 | | — | | — | | | | 233,322(22) | | $3,282,841 | | 233,322(23) | | $3,282,841 | | Paul M. Parrish | | | | 10,955(11) | | 93,336 | | — | | — | | | 199,931(12)(13) | | 1,703,412 | | — | | — | | | 57,738 | | 491,639 | | — | | — | | | 45,454(2) | | 387,268 | | — | | — | | | 16,362(3) | | 139,404 | | — | | — | | | 48,149(4) | | 409,989 | | — | | — | | | 45,020(5) | | 383,570 | | — | | — | | | 15,475(10) | | 131,847 | | — | | — | George B. Hanna | | | | 14,469 (14) | | 123,275 | | — | | — | | | 166,609(12) | | 1,419,508 | | — | | — |
(1)
| Based on the closing price per share of Class A common stock of $14.07 as of January 28, 2022$8.52 on February 3, 2023, as reported on Nasdaq. |
(2)
| Reflects award of performance-based restricted stock units granted on April 2, 2019. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee on February 26, 2020. Based on the certification by the Committee, 100% of the 25,000 shares granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date. |
(3)
| Reflects award of time-based restricted stock units.units granted on April 16, 2020. The grant vests ratably over a three-year period beginningfinal vesting of these shares occurred on the first anniversary of the April 2, 2019 grant date.16, 2023. |
(4)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the September 26, 2019 grant date. |
(5)
(3)
| Reflects award of performance-based restricted stock units granted on April 16, 2020. Under the applicable award agreement, restricted stock units were earned in connection with the certificationThe final vesting of achievement of the applicable performance goals by the Committeethese shares occurred on February 23, 2021. Based on the certification by the Committee, 108.0% of the 56,818 restricted stock units granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.April 16, 2023. |
(6)
(4)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginningunits granted on March 9, 2021. One-half of these shares vested on March 9, 2023 and the first anniversary of the April 16, 2020 grant date.remaining shares will vest on March 9, 2024, subject to continued service. |
(7)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2021 grant date. |
(8)
(5)
| Reflects award of performance-based restricted stock units granted on March 9, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee on February 16, 2022. Based on the certification by the Committee, 70.8% of the 117,695 restricted stock units granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date. |
(9)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the June 3, 2021 grant date. |
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(10)
| Reflects award of performance-based restricted stock units granted on June 3, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee on February 16, 2022. Based on the certification by the Committee, 70.8% of the 127,555 restricted stock units granted were earned. The earned restricted stock units vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date. |
(11)
| Reflects award of time-based restricted stock units. The grant vests ratably over a four-year period beginning on the first anniversary of the December 13, 2019 grant date. |
(12)
| Reflects award of performance-based restricted stock units granted on April 16, 2020. Under the applicable award agreement, restricted stock units were earned in connection with the certification of achievement of the applicable performance goals by the Committee on February 23, 2021. Based on the certification of achievement of the applicable performance goals by the Committee 108.0%in February 2022, 70.8% of the 34,091 restricted stock units granted were earned. The earned restricted stock unitsOne-half of these shares vested oron March 9, 2023 and the remaining shares will vest in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.March 9, 2024, subject to continued service. |
(13)
(6)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginningunits granted on June 3, 2021. One-half of these shares will vest on June 3, 2023 and the first anniversary of the April 16, 2020 grant date.remaining shares will vest on June 3, 2024, subject to continued service. |
(14)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginning on the first anniversary of the March 9, 2021 grant date. |
(15)
(7)
| Reflects award of performance-based restricted stock units granted on March 9,June 3, 2021. Under the applicable award agreement, restricted stock units were earned in connection withBased on the certification of achievement of the applicable performance goals by the Committee onin February 16, 2022. Based on the certification by the Committee,2022, 70.8% of the 57,452 restricted stock units granted were earned. The earned restricted stock units vested, orOne-half of these shares will vest in accordance withon June 3, 2023 and the terms of the award agreement in three equal installmentsremaining shares will vest on the first, second and third anniversaries of the grant date.June 3, 2024, subject to continued service. |
(16)
(8)
| Reflects award of time-based restricted stock units. The grant vests ratably over a three-year period beginningunits granted on the first anniversaryMarch 15, 2022. One-third of the July 26, 2021 grant date.earned restricted stock units vested on March 15, 2023 and the remaining two-thirds will vest in equal installments on March 15, 2024 and March 15, 2025, subject to continued service. |
(17)
(9)
| Reflects award of performance-based restricted stock units granted on July 26, 2021. Under the applicable award agreement, restricted stock units were earned in connection with the certification by the Committee on February 16,March 15, 2022. Based on the certification of achievement of the applicable performance goals by the Committee 70.8%in February 2023, 95% of the 23,213 restricted stock units granted were earned. TheOne-third of the earned restricted stock units vested oron March 15, 2023 and the remaining two-thirds will vest in accordance with the terms of the award agreement in three equal installments on the first, secondMarch 15, 2024 and third anniversaries of the grant date.March 15, 2025, subject to continued service. |
(18)
(10)
| Reflects award of time-based restricted stock units granted on July 26, 2021. One-half of these shares of Class A common stockwill vest on July 26, 2023 and the remaining shares will vest on July 26, 2024, subject to performance-based restricted share awards granted on April 2, 2019. Under the applicable award agreement, shares were earned in connection with the certification by the Committee on February 26, 2020. Based on the certification of achievement of the applicable performance goals by the Committee, 100% of the 87,500 shares granted were earned. The earned shares vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date.continued service. |
(19)
(11)
| Reflects sharesaward of Class A common stock subject to time-based restricted share awards. The grant vests ratably over a three-year period beginning on the first anniversary of the April 2, 2019 grant date. |
(20)
| Reflects shares of Class A common stock subject to performance-based restricted share awardsstock units granted on April 17, 2020. Under the applicable award agreement, shares were earned in connection with the certification of achievement of the applicable performance goals by the Committee on February 23, 2021. Based on the certification by the Committee, 108.0% of the 227,273 shares granted were earned. The earned shares vested, or will vest, in accordance with the terms of the award agreement in three equal installments on the first, second and third anniversaries of the grant date. |
(21)
| Reflects shares of Class A common stock subject to time-based restricted share awards. The grant vests ratably over a three-year period beginning on the first anniversary of the April 17, 2020 grant date. |
(22)
| Reflects shares of Class A common stock subject to time-based restricted share awards. The grant vests ratably over a three-year period beginning on the first anniversary of the March 15, 2021 grant date. |
(23)
| Reflects shares of Class A common stock subject to performance-based restricted share awards granted on March 15, 2021. Under the applicable award agreement, shares were earned in connection with the certification by the Committee on February 16,July 26, 2021. Based on the certification of achievement of the applicable performance goals by the Committee in February 2022, 70.8% of the 233,322 sharesrestricted stock units granted were earned. TheOne-half of these shares will vest on July 26, 2023 and the remaining shares will vest on July 26, 2024, subject to continued service. |
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| Reflects award of time-based restricted stock units granted on March 9, 2022. One-third of the earned sharesrestricted stock units vested oron March 9, 2023 and the remaining two-thirds will vest in accordance with the terms of the award agreement in three equal installments on March 9, 2024 and March 9, 2025, subject to continued service. |
(13)
| Reflects award of performance-based restricted stock units granted on March 9, 2022. Based on the first, second and third anniversariescertification of achievement of the grant date.applicable performance goals by the Committee in February 2023, 95% of the restricted stock units granted were earned. One-third of the earned restricted stock units vested on March 9, 2023 and the remaining two-thirds will vest in equal installments on March 9, 2024 and March 9, 2025, subject to continued service. |
(14)
| Reflects award of performance-based restricted stock units granted on July 26, 2021. Based on the certification of achievement of the applicable performance goals by the Committee in February 2022, 93.5% of the restricted stock units granted were earned. One-half of these shares will vest on July 26, 2023 and the remaining shares will vest on July 26, 2024, subject to continued service. |
Option Exercises and Stock Vested The following table sets forth certain information about option exercises and vesting of restricted stock or restricted stock units during Fiscal 20222023 for each of the named executive officers on an aggregate basis. | | | Stock Options | | Stock Awards | | | Stock options | | Stock awards | | | | Number of shares
acquired on exercise (#) | | Value realized on
exercise ($)(1) | | Number of shares
acquired on vesting (#) | | Value realized on
vesting ($)(2) | | Name | | | Number of shares
acquired on exercise (#) | | Value realized on
exercise ($) | | Number of shares
acquired on vesting (#) | | Value realized on
vesting ($)(1) | Wendy K. Thomas | | 55,030 | | 370,902 | | 136,647 | | 2,101,618 | | — | | — | | 250,241 | | 3,180,102 | Paul M. Parrish | | — | | — | | 104,104 | | 1,574,348 | | — | | — | | 150,029 | | 1,552,505 | Michael R. Cote | | 889,183 | | 4,911,438 | | 379,369 | | 5,347,205 | | George B. Hanna | | | — | | — | | 160,878 | | 2,011,576 |
(1)
| Represents the difference between the exercise price and the price of our Class A common stock, as reported on Nasdaq, at the time of exercise for each option. |
(2)
| Represents the closing price of our Class A common stock, as reported on Nasdaq on the immediately preceding trading date, multiplied by the number of shares of stock vesting on the applicable vesting date. |
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The SecureWorks Corp. 2016 Long-Term Incentive Plan, or the 2016 Plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals. The 2016 Planplan is administered by the Committee, except that decisions regarding awards to our Chief Executive Officer are made by the Board of Directors upon consideration of the recommendations of the Committee. See Proposal 4 for a description of the material terms of this plan. Retirement Benefit Plan Our employees, including our named executive officers, currently may participate in the Dell Inc. 401(k) retirement savings plan.Plan. Participants will receive matching contributions, in which they will vest immediately, equal to 100% of each participant’s voluntary contributions, up to a maximum of 6% of the participant’s eligible compensation, not to exceed $7,500 in a calendar year. Matching contributions reported under “–in the Fiscal 20222023 Summary Compensation Table”Table are based on the fiscal year. Participants may invest their contributions and the matching contributions in a variety of investment vehicles. Deferred Compensation Plan Secureworks does not maintain a deferred compensation plan. Potential Payments Upon Termination of Employment or Change in Control SeveranceSeparation Agreement with Michael CotePaul Parrish
As discussed above, and as reported in June 2021, we announced thatFebruary 2023, Mr. Cote would be retiringParrish retired from his position as Chief ExecutiveFinancial Officer of the Company effective on September 3, 2021.May 5, 2023. On June 1, 2021,March 21, 2023, we entered into a severance agreement and release with Mr. Cote. The severance agreementParrish that provides for the payment of severance pay and benefits to Mr. Cote in installments following his departure, including amounts equal to a portion of the value of certain outstanding non-equity incentive awards, substantially equivalent to those that would be payable under the Severance Pay Plan in connection with a qualifying termination, including payment of employment pursuant to a workforce reduction, subject to specified conditions. Accordingly, twelve months of his salary, prorated payouts of his annual bonus and payment of his restricted stock units that otherwise would have vested within 90 days of his termination date.
TABLE OF CONTENTS Mr. CoteParrish is eligible to receive severance payments in the aggregate amount of $500,000$425,000 (payable in four installments following September 3, 2021) and additional amounts of severance pay equal to $220,467, commensurate withMay 5, 2023), a pro-rated payout of Mr. Cote’sprorated short-term incentive award underpayment equal to $158,937, and payment of the Company’s IBP if he had remained an executive officer through the endunvested portion of Fiscal 2022. his restricted stock units that would have vested within 90 days of his termination date. The severanceseparation agreement also provides for a one-year consulting arrangement beginning on September 3, 2021 and ending on October 2, 2022 with fees payable in four quarterly installments of $50,000, as well as $50,000approximately $13,884 to offset COBRA premiums. Mr. Parrish’s retirement did not constitute a payment triggering event discussed in this section and, accordingly, Mr. Parrish will not receive the potential payments upon certain terminations as of February 3, 2023 described below. Potential Payments Upon Termination or Change in Control The following table sets forth the amount of compensation that would become payable to each named executive officer serving as an executive officer as of January 28, 2022February 3, 2023 under existing plans and arrangements if one of the events described in the table had occurred on that date. Amounts are calculated based on the named executive officer’s compensation as of that date and, if applicable, based on the amount of outstanding equity-based awards held by the named executive officer as of that date and on the fair market value of the Class A common stock as of that date. These payments and benefits are in addition to benefits available before the occurrence of any termination of employment or change in control of Secureworks, including benefits available generally to our salaried employees. In addition, in connection with any actual termination of employment or change-in-control transaction, Secureworks may determine to enter into an agreement or to establish an arrangement providing additional benefits or amounts, or altering the terms of benefits described below, as our Board of Directors or the Committee determines appropriate. TABLE OF CONTENTS
In the case of Ms. Thomas and Mr. Parrish, theThe actual amounts that would be paid upon the executive’s termination of employment or in connection with a change in control can be determined only at the time of any such event. Because of the number of factors that affect the nature and amount of any benefits, any actual amounts paid or distributed may be higher or lower than those reported below. Factors that could affect these amounts include, among others, the timing during the fiscal year of any such event, the executive’s current base salary, the amount of equity-based awards held by the executive at such time and the fair market value of the Class A common stock. Further, as noted above, Mr. Parrish’s retirement from the Company after the end of Fiscal 2023 did not entitle him to receive any of the potential payments presented in the following tables.
The Secureworks form of confidentiality, non-solicitation and non-competition agreement provides for severance payments in specified circumstances and subject to execution of a severance agreement and release in addition to compliance with the agreement’s non-solicitation and non-competition provisions, as described under “—“Compensation Discussion and Analysis – Other Compensation Matters—Matters – Non-Solicitation and Non-Competition Agreements Applicable to Named Executive Officers.” Our Severance Pay Plan for Executive Employees provides for severance payments in connection with termination without cause pursuant to a workforce reduction, subject to execution of a separation agreement and release as described under “—“Compensation Discussion and Analysis – Other Compensation Matters – Severance and Change-in-Control Arrangements Applicable to Named Executive Officers—Officers – SecureWorks Corp. Amended and Restated Severance Pay Plan for Executive Employees.” The RSU award agreements under ourthe SecureWorks Corp. 2016 Long-Term Incentive Plan entered into with the named executive officers provide for acceleration of vesting of equity awards in connection with an involuntary termination of employment within twelve months following a change in control, as described under “—Severance“Compensation Discussion and Change-in-Control Arrangements Applicable to Named Executive Officers—Analysis – Other Compensation Matters – Change-in-Control Terms Applicable to Named Executive Officers.”’’ No payments are due in the event of a voluntary termination without good reason, a termination for cause, death or disability, or in connection with the retirement of a named executive officer. TABLE OF CONTENTS Wendy K. Thomas | | | Involuntary
Termination
Without
Cause | | Termination
after
Change-in-
Control | | Voluntary
Termination
for Good
Reason | | Voluntary
Termination
Without
Good
Reason | | Termination
for Cause | | Termination
upon Death
or Disability | | Retirement | | | Involuntary
termination
without
cause | | Termination
after
change in control | | Voluntary
termination
for good
reason | Cash Severance | | 500,000(1) | | 500,000(1) | | 500,000(1) | | — | | — | | — | | — | | 500,000(1) | | 500,000(1) | | — | Pro-rata Bonus | | — | | — | | — | | — | | — | | — | | — | | 375,000 | | 375,000 | | — | Equity | | — | | 8,537,155(2) | | 8,537,155(2) | | — | | — | | — | | — | | 1,752,311 | | 6,832,350(2) | | 6,832,350(2) | Health Care Benefits | | — | | — | | — | | — | | — | | — | | — | | 13,884 | | 13,884 | | — | Disability Benefits | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | Other Perquisites | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | Tax Gross-Up | | — | | — | | — | | — | | — | | — | | — | | | — | | — | | — | Total | | 500,000 | | 9,037,155 | | 9,037,155 | | — | | — | | — | | — | | 2,641,195 | | 7,721,234 | | 6,832,350 |
Paul M. Parrish | | | Involuntary
Termination
Without
Cause | | Termination
after
Change-in-
Control | | Voluntary
Termination
for Good
Reason | | Voluntary
Termination
Without
Good
Reason | | Termination
for Cause | | Termination
upon Death
or Disability | | Retirement | | | Involuntary
termination
without
cause | | Termination
after
change in control | | Voluntary
termination
for good
reason | Cash Severance | | 450,000 | | 450,000(4) | | 450,000(4) | | — | | — | | — | | — | | 463,500 | | 463,500 | | — | Pro-rata Bonus | | 202,500 | | 202,500(4) | | 202,500(4) | | — | | — | | — | | — | | 270,000 | | 270,000 | | — | Equity | | 845,103 | | 4,867,868(2) | | 4,867,868(2) | | — | | — | | — | | — | | 931,125 | | 3,372,881 | | 3,372,881 | Health Care Benefits | | 17,756 | | 17,756(4) | | 17,756(4) | | — | | — | | — | | — | | 13,884 | | 13,884 | | — | Disability Benefits | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | Other Perquisites | | 1,845 | | 1,845(4) | | 1,845(4) | | — | | — | | — | | — | | — | | — | | — | Tax Gross-Up | | — | | — | | — | | — | | — | | — | | — | | | — | | — | | — | Total | | 1,517,204(3) | | 5,539,969 | | 5,539,969 | | — | | — | | — | | — | | 1,678,509 | | 4,120,265 | | 3,372,881 |
George B. Hanna Cash Severance | | | 425,000 | | | 425,000 | | | — | Pro-rata Bonus | | | 255,000 | | | 255,000 | | | — | Equity(2) | | | 1,114,128 | | | 3,092,377(2) | | | 3,092,377(2) | Health Care Benefits | | | 13,884 | | | 13,884 | | | — | Disability Benefits | | | — | | | — | | | — | Other Perquisites(3) | | | — | | | — | | | — | Tax Gross-Up | | | — | | | — | | | — | Total | | | 1,808,009(6) | | | 3,786,261(7) | | | 3,092,377 |
(1)
| Reflects payments under a confidentiality, non-solicitation and non-competition agreement with Ms. Thomas in the event of a termination of employment without cause. |
(2)
| Reflects the value of accelerated equity awards in the event of an involuntary termination of employment within twelve12 months following a change in control of Secureworks, based on the closing price of $14.07$8.52 per share of the Class A common stock as of January 28, 2022,on February 3, 2023, as reported on Nasdaq. |
TABLE OF CONTENTS
(3)
| Does not include the cost of outplacement services, which is dependent on an executive’s usage of those services. |
(4)
| Reflects payments under our Severance Pay Plan, assuming employment is terminated without cause pursuant to a workforce reduction. Payments under this plan include amounts equal to a portion of the value of certain outstanding short-term and long-term equity and non-equity incentive awards. In the event of a termination of employment without cause that is not a qualifying termination under this plan, pursuant to his confidentiality, non-solicitation and non-competition agreement with us, Mr. Parrish would have been entitled to receive a severance amount equal to twelve months’ base salary ($450,000)463,500), subject to specified conditions. |
TABLE OF CONTENTS (4)
(5)
| Reflects payments under our Severance Pay Plan, assuming employment is terminated pursuant to a workforce reduction, after giving effect under the plan to the acceleration of equity awards in the event of an involuntary termination of employment within twelve months following a change in control of Secureworks. In the event of a termination of employment that is not a qualifying termination under the plan, pursuant to his confidentiality, non-solicitation and non-competition agreements with us, Mr. Parrish would have been entitled to receive a severance amountsamount equal to twelve months’ base salary ($450,000)463,500), subject to specified conditions. |
(6)
| Reflects payments under our Severance Pay Plan, assuming employment is terminated without cause pursuant to a workforce reduction. Payments under this plan include amounts equal to a portion of the value of certain outstanding short-term and long-term equity and non-equity incentive awards. In the event of termination of employment without cause that is not a qualifying termination under this plan, pursuant to his confidentiality, non-solicitation and non-competition agreement with us, Mr. Hanna would receive a severance amount equal to twelve months’ base salary ($425,000), subject to specified conditions. |
(7)
| Reflects payments under our Severance Pay Plan, assuming employment is terminated pursuant to a workforce reduction, after giving effect under the plan to the acceleration of equity awards in the event of an involuntary termination of employment within twelve months following a change in control of Secureworks. In the event of a termination of employment that is not a qualifying termination under the plan, pursuant to his confidentiality, non-solicitation and non-competition agreements with us, Mr. Hanna would receive a severance amount equal to twelve months’ base salary ($425,000), subject to specified conditions. |
TABLE OF CONTENTS In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee.employee, excluding our CEO. For Fiscal 2022,2023, as determined under Item 402 of the SEC’s Regulation S-K, the annual total compensation for our CEO, Ms. Thomas, was $10,456,022,$6,597,910, the annual total compensation for our median employee was $122,377,$130,477, and the ratio of our CEO’s annual total compensation to our median employee’s annual total compensation for Fiscal 20222023 was 8550 to 1. In accordance with FASB ASC Topic 718, Ms. Thomas’ Fiscal 20222023 compensation includes an award of time-based restricted stock units valued at $2,510,434$3,006,458 based on our stock price of $21.33$14.22 on June 21, 2021, the date stockholders approved the share increase amendment under the 2016 Plan. This award was granted on March 9, 2021 with a stock price of $15.12, at which time it was valued at $1,779,548.2022 grant date as reported on Nasdaq. We believe the ratio presented above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Based on the Company’s belief that there had not been any changes to our workforce, our employee compensation arrangements, or the Fiscal 2022 median employee’s circumstances that would result in a significant change to the pay ratio, we used the same median employee used for our Fiscal 2022 pay ratio calculation to calculate our Fiscal 2023 pay ratio. In identifying our median employee, we calculated annual total target cash compensation of each employee as of December 31, 2021 for the twelve-month period that ended on January 28, 2022. In addition, we excluded countries with the lowest base salaries (within the 5% limit provided by the regulations). The countries excluded were Brazil, Costa Rica, Georgia, Hong Kong, India, Malaysia, Mexico and Morocco, collectively the “Excluded Countries.” The number of employees excluded in the Excluded Countries totaled 122, or approximately 4.7% of our entire employee population of 2,599 employees. Total target cash compensation for this purpose consisted of base salary, target annual bonus and commission incentive and was calculated using internal human resources records. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Pay Versus Performance Disclosure
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we provide the following disclosure regarding executive compensation for our principal executive officer, or PEO, and our non-PEO named executive officers and the Company’s performance for our three most recent fiscal years, referred to as the covered years. The Compensation Committee and the Board did not consider the pay versus performance disclosure below in making pay decisions for any of the years presented. See “Compensation Discussion and Analysis” for information about the pay decisions made with respect to NEO compensation for each of those years. 2023(1) | | | $6,597,910 | | | N/A | | | $2,800,449 | | | N/A | | | $3,142,217 | | | $854,253 | | | 54.16 | | | 110.24 | | | -114.5 | | | 261 | 2022(2) | | | $10,359,440 | | | $8,823,750 | | | $7,051,173 | | | $6,981,849 | | | $4,126,958 | | | $2,804,394 | | | 89.45 | | | 124.92 | | | -39.79 | | | 165 | 2021(3) | | | N/A | | | $7,048,587 | | | N/A | | | $5,333,719 | | | $2,774,798 | | | $2,806,470 | | | 87.98 | | | 140.25 | | | -21.9 | | | 55 |
(1)
| For Fiscal 2023, Wendy K. Thomas served as the PEO and Paul M. Parrish and George B. Hanna served as the non-PEO NEOs. Ms. Thomas is referred to as the first PEO in the table. |
(2)
| For Fiscal 2022, Michael R. Cote, referred to as the second PEO in the table, served as the PEO through September 3, 2021 on which date he was succeeded as PEO by Ms. Thomas. Ms. Thomas served as a non-PEO NEO prior to that date, but Ms. Thomas’s compensation as PEO for Fiscal 2022 is the only compensation shown for her in the table for that fiscal year. Excluding Ms. Thomas’s service as a non-PEO NEO for a portion of Fiscal 2022, Mr. Parrish was the sole non-PEO NEO for Fiscal 2022. |
TABLE OF CONTENTS (3)
| For Fiscal 2021, Mr. Cote served as the PEO, and Ms. Thomas and Mr. Parrish served as the non-PEO NEOs. For more information regarding Mr. Cote’s compensation represented in this table, please refer to the Compensation Discussion and Analysis section in the Company’s proxy statement for Fiscal 2022. |
(4)
| The cumulative total shareholder return, or TSR, for the Company 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 at the beginning of the measurement period, by the Company’s share price at the beginning of the measurement period. Each of these percentage changes was applied to a deemed fixed investment of $100 at the beginning of the measurement period to produce the covered year-end values of such investment as of the end of Fiscal 2023, 2022 and 2021. |
(5)
| Peer group total shareholder return represents the total shareholder return of the PureFunds ISE Cyber Security ETF Index, a published industry index which we present in the stock performance graph required by Item 201(e) of Regulation S-K included in our annual report on Form 10-K for Fiscal 2023. |
(6)
| We determined Taegis annual recurring revenue, or ARR, to be the most important financial performance measure used to link compensation actually paid to our PEO and average compensation actually paid to our non-PEO NEOs to Company performance for Fiscal 2023. Taegis ARR represents recurring revenue derived from Taegis subscription contracts. Because the Company uses recurring revenue as the leading indicator of future annual revenue, recurring revenue includes operational backlog. Operational backlog is defined as the recurring revenue associated with pending contracts, which are contracts that have been sold but for which the service period has not yet commenced. |
(7)
| Grant date fair values of stock awards reported in the SCT are calculated based on the following: |
for time-based RSUs, the closing price of the Class A common stock on the grant date as reported on Nasdaq (or on the trade date immediately preceding the grant date, if the grant date occurs on a non-trading day); for performance-based RSUs, the closing price of the Class A common stock on the accounting grant date as reported on Nasdaq, assuming target performance; and for stock options, a Black-Scholes valuation based on a grant date closing price of the Class A common stock as reported on Nasdaq. (8)
| At each fiscal year-end, adjustments to previous stock award fair values are calculated based on the following: |
for time-based RSUs, the closing price of the Class A common stock on the last day of the fiscal year, as reported on Nasdaq; for performance-based RSUs, the closing price of the Class A common stock on the last day of the fiscal year, as reported on Nasdaq and the related accrued performance modifier as of fiscal year-end; and for stock options, a Black-Scholes valuation based on the grant date closing price of the Class A common stock as reported on Nasdaq. (9)
| Adjustments to stock awards for each vesting date are calculated based on the following: |
for time-based RSUs, the closing price of the Class A common stock on the trade date immediately preceding the vesting date as reported on Nasdaq; for performance-based RSUs, the closing price of the Class A common stock on the trade date immediately preceding the vesting date as reported on Nasdaq and the related realized performance modifier; and for stock options, a Black-Scholes valuation based on the closing price of the Class A common stock on the trade date immediately preceding the vesting date as reported on Nasdaq. PEO
| | | | | | | | | | | | | SCT total compensation ($) | | | 6,597,910 | | | 10,359,440 | | | 8,823,750 | | | 7,048,587 | Less: stock award values reported in SCT for the covered year ($) | | | (5,521,546) | | | (9,538,959) | | | (7,535,134) | | | (5,863,643) | Plus: fair value for stock awards granted in the covered year ($) | | | 4,029,051 | | | 5,893,726 | | | 5,607,078 | | | 6,458,671 | Change in fair value of outstanding unvested stock awards from prior years ($) | | | (1,980,480) | | | 43,212 | | | 84,507 | | | (892,154) | Change in fair value of stock awards from prior years that vested in the covered year ($) | | | (324,486) | | | 293,754 | | | 1,648 | | | (1,417,742) | Compensation actually paid ($) | | | 2,800,449 | | | 7,051,173 | | | 6,981,849 | | | 5,333,719 |
Non-PEO NEOs
| | | | | | | | | | SCT total compensation ($) | | | 3,142,217 | | | 4,126,958 | | | 2,774,798 | Less: stock award values reported in SCT for the covered year ($) | | | (2,396,613) | | | (3,442,492) | | | (2,032,731) | Plus: fair value for stock awards granted in the covered year ($) | | | 1,560,544 | | | 1,938,494 | | | 2,566,690 | Change in fair value of outstanding unvested stock awards from prior years ($) | | | (1,057,880) | | | 47,886 | | | 251,293 | Change in fair value of stock awards from prior years that vested in the covered year ($) | | | (394,015) | | | 133,548 | | | (250,994) | Compensation actually paid ($) | | | 854,253 | | | 2,804,394 | | | 2,806,470 |
TABLE OF CONTENTS Discussion of Information Presented in Pay Versus Performance Table
While the Company utilizes several performance measures to align executive compensation with Company performance, all of the Company’s measures are not presented in the pay versus performance table. Moreover, the Company seeks to incentivize long-term performance in alignment with the Company’s strategic transformation from a services organization to a business primarily focused on selling its subscription-based Taegis security software platform. Therefore, the Company’s performance measures do not specifically align with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular fiscal year.
We provide information below about the relationship between the compensation actually paid to our PEO and average compensation actually paid to our non-PEO NEOs for the covered years as shown in the pay versus performance table above and: our cumulative TSR; our net loss; and our Taegis ARR. Compensation Actually Paid to our PEO and Pay Versus Performance Measures
The following chart shows the compensation actually paid to our PEO in relation to our TSR for each fiscal year presented, as well as our TSR compared to our peer group TSR for each such fiscal year. TABLE OF CONTENTS
The following chart shows the compensation actually paid to our PEO in relation to our GAAP net income and Taegis ARR for each fiscal year presented. Average Compensation Actually Paid to our Non-PEO NEOs and Pay Versus Performance Measures
The following chart shows the average compensation actually paid to our PEO NEOs in relation to our TSR for each fiscal year presented, as well as our TSR compared to our peer group TSR for each such fiscal year. TABLE OF CONTENTS
The following chart shows the average compensation actually paid to our non-PEO NEOs in relation to our GAAP net income and Taegis ARR for each fiscal year presented. Most Important Financial Performance Measures
We set forth below the two financial performance measures that represent the most important measures used to link compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs (as calculated in accordance with Item 402(v) of Regulation S-K) to Company performance for Fiscal 2023. Pursuant to Item 402(v)(6)(ii), we are only disclosing two financial performance measures because these two measures were the only ones used by the Company to link compensation actually paid to our named executive officers to Company performance for Fiscal 2023. Taegis Annual Recurring Revenue | Taegis Annual Contract Value |
As discussed in our “Compensation Discussion and Analysis,” these measures were used to evaluate the performance of our NEOs under our incentive plans and to incentivize the NEOs to increase long-term value for our stockholders in line with the Company’s strategic business model shift to a business centered on the Company’s Taegis software security platform. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table presents, as of April 26, 2022,28, 2023, except as otherwise indicated below, information based on filings with the SEC and our records regarding the beneficial ownership of our common stock by: each director and director nominee; each executive officer named in the Fiscal 20222023 Summary Compensation Table under “Compensation of Executive Officers”; all of our executive officers and directors as a group; and each person known by us to own beneficially more than 5% of the outstanding shares of either class of our common stock. We are authorized under our certificate of incorporation to issue shares of the following classes of common stock: 2,500,000,000 shares of Class A common stock, of which 14,860,32416,031,349 shares were issued and outstanding as of April 26, 2022;28, 2023; and 500,000,000 shares of Class B common stock, of which 70,000,000 shares were issued and outstanding as of April 26, 2022.28, 2023. The Class A common stock is registered under the Exchange Act and listed on the Nasdaq Global Select Market. The Class B common stock is not registered under the Exchange Act or listed on any securities exchange. The calculation of beneficial ownership is made in accordance with SEC rules. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. Beneficial ownership as of any date includes any shares as to which a person has the right to acquire voting or investment power as of that date or within 60 days thereafter through the exercise of any stock option or other right or the vesting of any RSU, withoutt regard to whether such right expires before the end of such 60-day period or continues thereafter. Under our certificate of incorporation, a holder of the Class B common stock has the right at any time to convert all or any shares of such Class B common stock into Class A common stock on a share-for-share basis. If two or more persons share voting power or investment power with respect to specific securities, then all such persons may be deemed to be beneficial owners of such securities.
The percentage of beneficial ownership as to any person as of April 26, 202228, 2023 (except as otherwise indicated below) is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power as of or within 60 days after April 26, 2022,28, 2023, by the sum of the number of shares outstanding as of April 26, 202228, 2023 plus the number of shares as to which such person has the right to acquire voting or investment power as of or within 60 days after April 26, 2022.28, 2023. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, Secureworks believes that the beneficial owners of the common stock listed below, based on information furnished by such beneficial owners, have sole voting and investment power with respect to the shares shown. Name of Beneficial Owner | | Number of Shares
of Class A
Beneficially
Owned(1) | | Percentage of
Shares of
Class A
Beneficially
Owned(1) | | Number of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Total
Voting
Power(1) | | Number of Shares
of Class A
Beneficially
Owned(1) | | Percentage of
Shares of
Class A
Beneficially
Owned(1) | | Number of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Total
Voting
Power(1) | Principal Stockholders:
| | | | | | | | | | | | | | | | | | | | | Michael S. Dell(2) | | 70,000,000 | | 82.5% | | 70,000,000 | | 100% | | 97.9% | | 70,000,000 | | 81.4% | | 70,000,000 | | 100% | | 97.8% | Dell Technologies Inc.(3) | | 70,000,000 | | 82.5% | | 70,000,000 | | 100% | | 97.9% | | 70,000,000 | | 81.4% | | 70,000,000 | | 100% | | 97.8% | Dell Marketing L.P.(3) | | 70,000,000 | | 82.5% | | 70,000,000 | | 100% | | 97.9% | | 70,000,000 | | 81.4% | | 70,000,000 | | 100% | | 97.8% | Centerview Entities(4) | | 871,070 | | 5.9% | | — | | — | | * | | 871,070 | | 5.4% | | — | | — | | * | Neil Gagnon(5) | | 1,643,234 | | 11.1% | | — | | — | | * | | 2,052,467 | | 12.8% | | — | | — | | * | Royce & Associates, LP(6) | | 753,980 | | 5.1% | | — | | — | | * | | 882,595 | | 5.5% | | — | | — | | * | The Vanguard Group(7) | | 997,585 | | 6.7% | | — | | — | | * | | 1,090,096 | | 6.8% | | — | | — | | * | Michael R. Cote(8) | | | 1,117,294 | | 7.0% | | — | | — | | * |
TABLE OF CONTENTS Name of Beneficial Owner | | Number of Shares
of Class A
Beneficially
Owned(1) | | Percentage of
Shares of
Class A
Beneficially
Owned(1) | | Number of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Total
Voting
Power(1) | | Number of Shares
of Class A
Beneficially
Owned(1) | | Percentage of
Shares of
Class A
Beneficially
Owned(1) | | Number of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Shares of
Class B
Beneficially
Owned(1) | | Percentage of
Total
Voting
Power(1) | Executive Officers and Directors:
| | | | | | | | | | | | | | | | | | | | | Michael R. Cote(8) | | 1,540,540 | | 10.4% | | — | | — | | * | | Pamela Daley(9) | | 217,548 | | 1.5% | | — | | — | | * | | 235,231 | | 1.5% | | — | | — | | * | Michael S. Dell(2) | | 70,000,000 | | 82.5% | | 70,000,000 | | 100% | | 97.9% | | 70,000,000 | | 81.4% | | 70,000,000 | | 100% | | 97.8% | George B. Hanna | | | 207,345 | | 1.3% | | — | | — | | * | Mark J. Hawkins(10) | | 172,905 | | 1.2% | | — | | — | | * | | 190,588 | | 1.2% | | — | | — | | * | Paul M. Parrish | | 156,833 | | 1.1% | | — | | — | | * | | 290,253 | | 1.8% | | — | | — | | * | Wendy K. Thomas(11) | | 312,129 | | 2.1% | | — | | — | | * | | Kyle Paster | | — | | — | | — | | — | | — | | — | | — | | — | | — | | — | Yagyensh C. (Buno) Pati(12) | | 125,577 | | * | | — | | — | | * | | All executive officers and directors as a group (9 persons)(13) | | 72,610,677 | | 85.3% | | 70,000,000 | | 100% | | 98.3% | | Yagyensh (Buno) C. Pati(11) | | | 149,095 | | * | | — | | — | | * | Wendy K. Thomas(12) | | | 546,005 | | 3.4% | | — | | — | | * | All executive officers and directors as a Group (9 persons)(13) | | | 71,748,361 | | 83.1% | | 70,000,000 | | 100% | | 98.0% |
(1)
| Represents the percentage of Class A common stock and Class B common stock beneficially owned by each stockholder included in the table based on the number of shares of each such class outstanding as of April 26, 202228, 2023 and, except as stated below, without giving effect to the conversion of any shares of Class B common stock into shares of Class A common stock, as described in the introduction to this table. |
(2)
| Represents shares of Class B common stock held directly by Dell Marketing L.P. Mr. Dell is the Chairman of the Board and Chief Executive Officer of Dell Technologies and, as of April 26, 2022,28, 2023, was the beneficial owner of Dell Technologies common stock representing a majority of the total voting power of the outstanding shares of all outstanding classes of common stock of Dell Technologies. As a result of the foregoing, Mr. Dell may be deemed to be the beneficial owner of all of the shares of our common stock beneficially owned by Dell Technologies. Shares of Class A common stock shown as beneficially owned by Mr. Dell are issuable upon conversion of the same number of shares of Class B common stock deemed to be beneficially owned by Mr. Dell. Mr. Dell’s address is c/o Dell Technologies Inc., One Dell Way, Round Rock, Texas 78682. |
(3)
| Dell Marketing L.P. is the direct owner and holder of record of all of our outstanding Class B common stock. Dell Marketing L.P. is indirectly wholly owned by Dell Technologies through directly and indirectly held wholly-owned subsidiaries of Dell Technologies, consisting of Denali Intermediate Inc., Dell Inc., Dell International L.L.C. and Dell Marketing Corp. Dell Marketing Corp. directly owns all of the outstanding membership interests of each of Dell Marketing GP L.L.C. and Dell Marketing LP L.L.C. Dell Marketing GP L.L.C. is the sole general partner of, and owns a 1% general partnership interest in, Dell Marketing L.P. Dell Marketing LP L.L.C. is the sole limited partner of, and owns a 99% limited partnership interest in, Dell Marketing L.P. The shares of our common stock beneficially owned by Dell Technologies and directly owned and held of record by Dell Marketing L.P. may be deemed to be beneficially owned by each other direct or indirect wholly-owned subsidiary of Dell Technologies described above in addition to Dell Marketing L.P. Shares of Class A common stock shown as beneficially owned by Dell Technologies and Dell Marketing L.P. are issuable upon conversion of the same number of shares of Class B common stock beneficially owned by such stockholders. The address of each of the foregoing entities is One Dell Way, Round Rock, Texas 78682. |
(4)
| The information concerning the Centerview Entities is based on a Schedule 13G filed with the SEC on February 13, 2017, as updated to reflect information reported on a Form 4 filed with the SEC on October 18, 2021. The shares of Class A common stock shown as beneficially owned by the Centerview Entities are beneficially owned by Centerview Capital Technology Fund (Delaware), L.P., or CCTF, Centerview Capital Technology Fund-A (Delaware), L.P., or CCTFA, Centerview Capital Technology Employee Fund, L.P., or CCTE, and together with CCTF and CCTFA, referred to as the CCT Funds, Centerview Capital Technology Fund GP (Delaware), L.P., or CCTF GP, and Centerview Capital Technology Ltd., or CCT (referred to collectively as the Centerview Entities). The Centerview Entities are investment funds associated with Centerview Capital Technology, a private investment firm of which Mr. Pati serves as a partner. Based on information provided in its Form 4 filing, CCTF reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 608,615 shares of Class A common stock. CCTFA reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 218,902 shares of Class A common stock. CCTE reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 43,553 shares of Class A common stock. Each of CCTF GP and CCT reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 871,070 shares of Class A common stock. The Centerview Entities report that CCTF GP, in its capacity as the general partner of the CCT Funds, has the ability to direct the decisions regarding the voting or disposition of securities directly held by the CCT Funds. Therefore, CCTF GP may be deemed to share voting and investment power with respect to the shares of Class A common stock held by the CCT Funds. The Centerview Entities further report that CCT, in its capacity as the general partner of CCTF GP, has the power to direct the decisions of CCTF GP regarding the voting or disposition of securities directly held by the CCT Funds. Therefore, CCT may be deemed to share voting and investment power with respect to the shares of Class A common stock held by the CCT Funds. The address of each of the Centerview Entities is 600 Ramona Street, 2nd Floor, Palo Alto, California 94301. |
TABLE OF CONTENTS
it had shared voting power and shared dispositive power over 608,615 shares of Class A common stock. CCTFA reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 218,902 shares of Class A common stock. CCTE reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 43,553 shares of Class A common stock. Each of CCTF GP and CCT reports that, as of September 24, 2021, it had shared voting power and shared dispositive power over 871,070 shares of Class A common stock. The Centerview Entities report that CCTF GP, in its capacity as the general partner of the CCT Funds, has the ability to direct the decisions regarding the voting or disposition of securities directly held by the CCT Funds. Therefore, CCTF GP may be deemed to share voting and investment power with respect to the shares of Class A common stock held by the CCT Funds. The Centerview Entities further report that CCT, in its capacity as the general partner of CCTF GP, has the power to direct the decisions of CCTF GP regarding the voting or disposition of securities directly held by the CCT Funds. Therefore, CCT may be deemed to share voting and investment power with respect to the shares of Class A common stock held by the CCT Funds. The address of each of the Centerview Entities is 600 Ramona Street, 2nd Floor, Palo Alto, California 94301.
(5)
| The beneficial ownership information concerning Neil Gagnon and related entities is based on a Schedule 13G/A filed with the SEC on February 3, 2022.6, 2023. Mr. Gagnon reports that, as of December 31, 2021,2022, of the shares of Class A common stock shown as beneficially owned, he had sole voting power over 191,146221,098 shares, shared voting power over 1,426,7081,797,099 shares, sole dispositive power over 191,146221,098 shares and shared dispositive power over 1,452,2341,831,369 shares. Mr. Gagnon reports that he is the managing member and principal owner of Gagnon Securities LLC, or Gagnon Securities, which is registered with the SEC as an investment adviser and a registered broker-dealer, in its role as investment manager to customer accounts, foundations, partnerships and trusts (collectively referred to as the accounts), to which it furnishes investment advice. Mr. Gagnon reports that he and Gagnon Securities may be deemed to share voting power with respect to 870,100 shares of Class A common stock held in the accounts and dispositive power with respect to 888,800 shares of Class A common stock held in the accounts. Gagnon Securities and Mr. Gagnon disclaim beneficial ownership of all securities held in the accounts. Mr. Gagnon also reports that he is the Chief Executive Officer of Gagnon Advisors, LLC, or Gagnon Advisors, which is registered with the SEC as an investment adviser. Mr. Gagnon reports that he and Gagnon Advisors, in its role as investment manager to Gagnon Investment Associates, LLC, or GIA, which is a private investment fund, may be deemed to share voting and dispositive power with respect to the 468,599 |
TABLE OF CONTENTS voting power with respect to 1,088,298 shares of Class A common stock held in the accounts and dispositive power with respect to 1,113,458 shares of Class A common stock held in the accounts. Gagnon Securities and Mr. Gagnon disclaim beneficial ownership of all securities held in the accounts. Mr. Gagnon also reports that he is the Chief Executive Officer of Gagnon Advisors, LLC, or Gagnon Advisors, which is registered with the SEC as an investment adviser. Mr. Gagnon reports that he and Gagnon Advisors, in its role as investment manager to Gagnon Investment Associates, LLC, or GIA, which is a private investment fund, may be deemed to share voting and dispositive power with respect to the 590,730 shares of Class A common stock held by GIA. Gagnon Advisors and Mr. Gagnon disclaim beneficial ownership of all securities held by GIA. The address of Mr. Gagnon is 1370 Avenue of the Americas, 24th Floor, New York, New York 10019. |
