UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

Check the appropriate box:

AWARE, INC.

(Name of Registrant as Specified In Its Charter)

NOT APPLICABLE

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

* * * * *

Aware, Inc.

Notice of Annual Meeting of Stockholders

to be held on May 22, 201920, 2020

Aware, Inc. hereby gives notice that it will hold its annual meeting of stockholders at the offices of Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts on Wednesday, May 22, 2019,20, 2020, beginning at 10:00 a.m., local time, for the following purposes:

The board of directors has fixed the close of business on April 3, 20191, 2020 as the record date for the determination of the stockholders of Aware entitled to receive notice of the annual meeting and to vote at the meeting. Only stockholders of record on that date are entitled to receive notice of the annual meeting and to vote at the meeting or any adjournment thereof.

April 12, 20199, 2020

Bedford, Massachusetts

YOUR VOTE IS IMPORTANT

Please sign and return the enclosed proxy or vote your proxy over the Internet or by telephone,

whether or not you plan to attend the meeting.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of

Stockholders to Be Held on May 22, 2019.20, 2020. The Proxy Statement and our 20182019 Annual
Report to Stockholders are available on the following web sites:

www.envisionreports.com/AWRE for registered holders and
www.edocumentview.com/AWRE for street holders.

Aware, Inc.

40 Middlesex Turnpike

Bedford, Massachusetts 01730

(781) 276-4000

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

to be held on May 22, 201920, 2020

This proxy statement relates to the 20192020 annual meeting of stockholders of Aware, Inc. The annual meeting will take place as follows:

The board of directors of Aware is soliciting proxies for the annual meeting and adjournments of the annual meeting. If a stockholder returns a properly executed proxy or votes his or her proxy over the Internet or by telephone, the shares represented by the proxy will be voted in accordance with the stockholder’s directions. If a stockholder does not specify a vote on any proposal, the shares covered by his or her proxy will be voted on that proposal as management recommends.

Aware encourages its stockholders to vote on all proposals. A stockholder may revoke his, her or its proxy at any time before it has been exercised.

Aware is mailing this proxy statement and the enclosed form of proxy to stockholders on or about April 12, 2019.9, 2020.

PROXY STATEMENT

table of contentsTABLE OF CONTENTS

Annual Meeting of Stockholders

Purpose of the annual meeting

At the annual meeting, Aware will submit two proposals to the stockholders:

Proposal One: To elect two Class IIIII directors for three-year terms; and

Proposal Two: An advisory vote to approve named executive officer compensation.

Currently, Aware does not intend to submit any other proposals to the stockholders at the annual meeting. The board of directors was not aware, a reasonable time before mailing this proxy statement to stockholders, of any other business that may be properly presented for action at the annual meeting. If any other business comes before the annual meeting, the persons present will have discretionary authority to vote the shares they own or represent by proxy in accordance with their judgment, to the extent authorized by applicable regulations.

Record date

The board of directors of Aware has fixed the close of business on April 3, 20191, 2020 as the record date for the annual meeting. Only stockholders of record at the close of business on that date are entitled to receive notice of the meeting and to vote at the meeting or any adjournment of the meeting. At the close of business on the record date, there were issued and outstanding 21,551,44521,521,886 shares of Aware’s common stock, which are entitled to cast 21,551,44521,521,886 votes. A list of stockholders entitled to notice of the 20192020 annual meeting is available for inspection by any stockholder at our principal office at 40 Middlesex Turnpike, Bedford, MA.

Methods of voting

The shares represented by your properly signed proxy card will be voted in accordance with your directions. If you do not specify a choice with respect to a proposal for which our board of directors has made a recommendation, the shares covered by your signed proxy card will be voted as recommended in this proxy statement. We encourage you to vote on all matters to be considered.

Voting by mail:

By signing and returning the proxy card in the enclosed envelope, you are enabling the individuals named on the proxy card (known as “proxies”) to vote your shares at the meeting in the manner you indicate. We encourage you to sign and return the proxy card even if you plan to attend the meeting. In this way, your shares will be voted even if you are unable to attend the meeting. If you received more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

Voting by telephone:

To vote by telephone, please follow the instructions included on your proxy card. If you vote by telephone, you do not need to complete and mail your proxy card.

Voting on the Internet:

To vote on the Internet, please follow the instructions included on your proxy card. If you vote on the Internet, you do not need to complete and mail your proxy card.

Voting in person at the meeting:

If you plan to attend the meeting and vote in person, we will provide you with a ballot at the meeting. If your shares are registered directly in your name, you are considered the stockholder of record and you have the right to vote in person at the meeting. If your shares are held in the name of your broker or other nominee, you are considered the beneficial owner of the shares held in street name. If you wish to vote shares held in street name at the meeting, you will need to bring with you to the meeting a legal proxy from your broker or other nominee authorizing you to vote your shares.

Quorum

Aware’s by-laws provide that a quorum at the annual meeting will be a majority in interest of all stock issued, outstanding and entitled to vote at the meeting. Aware will treat shares of common stock represented by a properly signed and returned proxy or a proxy properly delivered over the Internet or by telephone as present at the meeting for purposes of determining the existence of a quorum at the meeting. In general, Aware will count votes withheld from any nominee for election as director, abstentions and broker “non-votes” as present or represented for purposes of determining the existence of a quorum at the meeting. A broker “non-vote” occurs when a broker or nominee holding shares for a beneficial owner does not vote on a proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner with respect to that proposal.

Vote required; tabulation of votes

A plurality of the votes properly cast at the annual meeting will be necessary to elect the two Class IIIII directors to a three-year term. A majority of the votes properly cast at the annual meeting will be necessary to approve, on an advisory basis, the compensation paid to Aware’s named executive officers. Abstentions and broker non-votes will not count as votes cast for or against the applicable proposal and accordingly will not affect the outcome of the vote.

Aware’s transfer agent, Computershare Trust Co., Inc., will tabulate the votes at the annual meeting. Computershare will tabulate separately the vote on each matter submitted to stockholders.

Revocation of proxies

A stockholder who has executed a proxy may revoke the proxy at any time before it is exercised at the annual meeting in three ways:

Aware, Inc.
40 Middlesex Turnpike

Bedford, Massachusetts 01730
Attention: Secretary

Mere attendance at the annual meeting will not in and of itself revoke the proxy. Accordingly, stockholders who have delivered proxies in advance of the annual meeting may change their votes at any time before or at the annual meeting.

Solicitation of proxies

Aware will bear all costs incurred in connection with the solicitation of proxies for the annual meeting. Aware will reimburse brokers, banks, fiduciaries, nominees and others for the out-of-pocket expenses and other reasonable clerical expenses they incur in forwarding proxy materials to beneficial owners of common stock held in their names. In addition to this solicitation by mail, Aware’s directors, officers and employees may solicit proxies, without additional remuneration, by telephone, facsimile, electronic mail, telegraph and in person. Aware expects that the expenses of any special solicitation will be nominal. At present, Aware does not expect to pay any compensation to any other person or firm for the solicitation of proxies.

Internet access to proxy materials

The notice of annual meeting, this proxy statement and our 20182019 annual report to stockholders are available on the Internet at www.envisionreports.com/AWRE for registered holders and www.edocumentview.com/AWRE for street holders. These web sites do not use “cookies” to track or identify visitors to the web site.

Directions to annual meeting

If you are planning to attend our 20192020 annual meeting of stockholders, below are directions to Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts:

From Boston
Take I-93 North to Exit 37B (I-95/Route 128 South). Follow I-95/Route 128 South to Exit 32A (Route 3 North). Take Exit 26, Route 62 and turn right at bottom of the ramp onto Route 62. Follow approximately one halfone-half mile to the second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Manchester
New Hampshire Route 3 South to Exit 26 (Route 62/Bedford-Burlington). Turn left at the bottom of the ramp onto Route 62. Follow to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Bedford/ Laurence G Hanscom Field, Massachusetts
Take I-95/Route 128 North to Exit 32A (Route 3 North). Take Exit 26, Route 62 and turn right at

the bottom of the ramp onto Route 62. Follow approximately one halfone-half mile to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Worcester
Take I-290 E toward Marlboro/I-190. Merge onto I-495 N via Exit 26B on the left toward Lowell. Merge onto US-3 S via Exit 35A toward Burlington. Take the Route 62 exit (Exit 26) toward Bedford/Burlington. Turn left at the bottom of the ramp onto Route 62. Follow to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

From Boston/Cambridge
Take Route 2 West to I-95/Route 128 North. Follow I-95/Route 128 North to Exit 32A (Route 3 North). Take Exit 26, Route 62 and turn right at the bottom of the ramp onto Route 62. Follow approximately one halfone-half mile to second set of traffic lights; turn left on Middlesex Turnpike. Aware, Inc. is on the left.

Matters To Be Considered At The Annual Meeting

Proposal ONE—Election of Directors

The board of directors, upon the recommendation of the nominating and corporate governance committee, has nominated for election as Class IIIII directors Brent P. JohnstoneRobert A. Eckel and John S. Stafford, IIIPeter R. Faubert, each of whom is currently a Class IIIII director of Aware. The directors elected at the annual meeting will hold office until the annual meeting of stockholders in 20222023 and until their successors are duly elected and qualified.

Each nominee has agreed to serve if elected, and Aware has no reason to believe that a nominee will be unable to serve. If a nominee is unable or declines to serve as a director at the time of the annual meeting, proxies will be voted for another nominee that our board’s nominating and corporate governance committee will designate at that time. Proxies cannot be voted for more than one nominee.

The board of directors recommends that you voteFOR the election of Brent P. JohnstoneRobert A. Eckel and John S. Stafford, III,Peter R. Faubert, as Class IIIII directors of Aware.

Proposal two—ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are asking our stockholders to provide advisory approval of the compensation of our named executive officers, as we have described it in the “Executive Compensation” section of this proxy statement, beginning on page 21.16. While this vote is advisory, and not binding on our company, it will provide information to our people and compensation committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the committee will be able to consider when determining executive compensation for the remainder of fiscal 20192020 and beyond. See the “Compensation Discussion and Analysis” section beginning on page 15 for more information on the determination of our 2018 executive compensation program.

At our 2017 annual meeting of stockholders, our stockholders voted to approve, on an advisory basis, every two years as the preferred frequency of our holding advisory stockholder

votes to approve the compensation paid to our named executive officers. Although our stockholders approved holding advisory stockholder votes every two years, our board of directors has decided to hold advisory stockholder votes to approve the compensation paid to our named executive officers every year. The board believes that it is a good corporate governance practice and is in the best interests of our stockholders to give our stockholders the right to cast an advisory vote every year on their approval of the compensation arrangements of our named executive officers, allowing them to provide us on an annual basis with their input on our executive compensation philosophy, policies and practices as disclosed in our proxy statement.

Your vote is requested. We believe that the information we have provided above and within the Executive Compensation Discussion and Analysis section of this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, the Board of Directors recommends that stockholders approve the executive compensation program by approving the following advisory resolution:

RESOLVED, that the stockholders of Aware, Inc. approve, on an advisory basis, the compensation of the individuals identified in the Summary Compensation Table, as disclosed in the Aware, Inc. 20192020 proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure includes the Compensation Discussion and Analysis section, the compensation tables and the accompanying footnotes and narratives within the Executive Compensation section of this proxy statement).

The Board of Directors recommends that you vote “FOR” the Advisory (Non-Binding) Vote approving Named Executive Officer Compensation.

Corporate Governance

In designing its corporate governance structure, Aware seeks to identify and implement the best practices that will serve the interests of Aware’s business and stockholders, including practices mandated by the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission and the Nasdaq Stock Market. You can find Aware’s current corporate governance principles, including Aware’s code of ethics and the charters for the standing committees of Aware’s board of directors, on Aware’s website at www.aware.com. The code of ethics applies to not only Aware’s principal executive officer, principal financial officer and principal accounting officer, but also all other employees, executive officers and directors of Aware. The code of ethics includes, among other things, provisions covering compliance with laws and regulations, conflicts of interest, insider trading, proper use of Aware’s assets, confidentiality, discrimination and harassment, accounting and record keeping, the reporting of illegal or unethical behavior, enforcement of the code of ethics and discipline for violations of the code of ethics. Aware intends to continue to modify its policies and practices to address ongoing developments in the area of corporate governance. Many features of Aware’s corporate governance principles are discussed in other sections of this proxy statement. Some of the highlights of Aware’s corporate governance principles are:

Directors and Executive Officers

Directors and executive officers

The following table provides information regarding Aware’s directors and executive officers as of April 1, 2019:2020:

(1) Member of the executive committee

(2) Member of the audit committee

(3) Member of the compensation committee

(4) Member of the nominating and corporate governance committee

Brent P. Johnstone has been a director of Aware since May 2012 and as chairman since March 2019.  Mr. Johnstone serves as a managing director for Quarry Capital Management LLC, a private investment firm which he co-founded in 2005.  Mr. Johnstone served as CEO of Royal Pet Supplies, a portfolio company of Quarry Capital Management, from June 2010 to June 2012. Mr. Johnstone has also served as a board member of Royal Pet Supplies since March 2009.  Prior to Quarry Capital Management LLC, Mr. Johnstone served as a vice president in the investment management division at Thomson Financial from 2003 to 2005.  From 2002 to 2003, Mr. Johnstone served as general manager of TheMarketsPro at TheMarkets.com.  Prior to TheMarkets.com, Mr. Johnstone co-founded and launched BulldogResearch.com, a financial website.  Prior to co-founding BulldogResearch.com, Mr. Johnstone worked in private client services at Lehman Brothers from 1998 to 1999 and worked as a strategic marketing associate at SystemSoft Corporation from 1995 to 1996.  Prior to SystemSoft, Mr. Johnstone worked in investment banking in Morgan Stanley’s real estate and technology corporate finance teams from 1993 to 1995.  Mr. Johnstone received a B.A. from Harvard College and an M.B.A. from the Harvard Business School. Our board benefits from Mr. Johnstone’s 2526 years’ experience in the investment and financial services industries and his expertise in finance.

Brian D. Connollyhas served as a director of Aware since January 2012.  Mr. Connolly is currently a portfolio manager for Millstreet Capital Management LLC, an investment firm which he co-founded in 2010.  Prior to Millstreet Capital Management LLC, Mr. Connolly served as a senior analyst at Regiment Capital Advisors, LP from 2005 to 2008.  From 2000 to 2005, Mr. Connolly served as a research analyst at Fidelity Management & Research

Company.  Mr. Connolly received a B.A. from Harvard University and an M.B.A. from the Massachusetts Institute of Technology Sloan School of Management. Our board benefits from Mr. Connolly’s over 2122 years of experience in the financial services and investing field and his expertise in finance.

Peter R. Faubert has been a director of Aware since March 27, 2020. Mr. Faubert currently serves as the Chief Financial Officer, Treasurer and Secretary of Evolv Technology, Inc., a leader in free-flow threat detection technology. He has held these positions at Evolv since October 15, 2019. He brings over twenty years of extensive finance leadership for public and private software companies that focused on security technology, video service providers, mobility, gaming and enterprise computing. Prior to Evolv, Mr. Faubert served as Chief Financial Officer, Senior Vice President and Treasurer of SeaChange International, Inc. from July 7, 2016 to October 8, 2019, and from February 25, 2019 to April 4, 2019, served in the Office of the CEO. Mr. Faubert served as Chief Financial Officer of This Technology, Inc. from December 2013 to August 2015 when This Technology was acquired by Comcast Corporation (“Comcast”). Mr. Faubert providing consulting services to Comcast until June 2016. Prior to This Technology, Mr. Faubert served as Chief Financial Officer and Treasurer of Vision Government Solutions, Inc. from October 2012 to December 2013, Chief Financial Officer of JNJ Mobile (MocoSpace) from February 2009 to July 2012 and Chief Financial Officer and Treasurer at Turbine, Inc. from August 2005 to January 2009. Prior to that Mr. Faubert held various senior finance positions with Viisage Technology Inc., Burntsand Inc. and Ariba Inc. Mr. Faubert is also a Certified Public Accountant. Mr. Faubert received a bachelor’s degree in accounting from Northeastern University. Mr. Faubert is a member of the Audit Committee and will became chairman of the Audit Committee when Mr. Kruse’s term as a director of Aware ends on May 20, 2020. Our board benefits from Mr. Faubert’s over 15 years as a chief financial officer and senior finance professional in addition to his experience with several high technology companies.

Adrian F. Kruse has been a director of Aware since October 2003. On March 27, 2020, Mr. Kruse was an audit partnerinformed our board of Ernst & Young LLP, serving clients principally in the financial services industry, from 1976 untildirectors of his retirement in March 1998. From 1967intent to 1976, he served audit clients of Ernst & Young LLP in various capacities. Mr. Kruse is a Certified Public Accountant and holds a B.B.A. degree from the University of Wisconsin and a J.D. degree from the University of Wisconsin School of Law. Mr. Kruse also servesnot seek re-election as a lifeClass III director of the Presbyterian Homes andin 2020, which means his term as a director of MEI, Inc. Our board benefits from Mr. Kruse’s accounting and auditing experienceAware will end effective May 20, 2020.

David J. Martinhas served as chief financial officer of Aware since March 2017. He has served as Aware'sAware’s corporate controller since October 2006. Mr. Martin previously served as Aware'sAware’s corporate controller from October 1996 to September 2005. Prior to rejoining Aware, Mr. Martin served as director of finance at Crossbeam Systems, Inc. from October 2005 to September 2006. Prior to joining Aware, Mr. Martin served as controller at Logicraft Information Systems Inc. from 1994 to 1996. Mr. Martin received a Bachelor's Degreebachelor’s degree in accounting from Boston College.

Richard P. Moberg has served On March 27, 2020, Mr. Martin informed our board of directors of his intent to retire from his position as a director of Aware since October 2011. Mr. Moberg previously served as Aware’s co-chief executive officer and co-president from April 2011 to March 2017. He served as Aware’sour chief financial officer from February 2008 to March 2017.officer. Mr. Moberg previously served as Aware’s chief financial officer from June 1996 to October 2003. Prior to rejoiningMartin will retire in 2020 after assisting Aware Mr. Moberg served as chief financial officer at Crossbeam Systems, Inc. from October 2003 to June 2006. From June 2006 to November 2007, Mr. Moberg served as managing director at Fenway Consulting Group. From January 2008 to February 2008, Mr. Moberg served as a consultant to Aware. From December 1990 to June 1996, Mr. Moberg held a number of positions at Lotus Development Corporation, including corporate controller from June 1995 to June 1996, assistant corporate controller from May 1993 to June 1995, and director of financial services from December 1990 to May 1993. Mr. Moberg received an M.B.A. from Bentley College and a B.B.A. in accounting from the University of Massachusetts at Amherst. Our board benefits from Mr. Moberg’s understanding of our people, products and culture acquired over 16 years of service as an employee of Aware.hiring his replacement.

Kevin T. Russellhas served as a director of Aware since October 2011. Mr. Russell has been Aware’s chief legal and administrative officer since September 2019. Mr. Russell previously served as chief executive officer and president sincefrom March 2017.2017 to September 2019. Mr. Russell previously served as Aware’s co-chief executive officer and co-president from April 2011 to March 2017. He has served as Aware’s general counsel since September 2005. Mr. Russell previously served as Aware’s corporate counsel from April 2000 to September 2005. Prior to joining Aware, Mr. Russell served as legal counsel at IRIS Graphics, Inc. from November 1994 to April 2000. Mr. Russell received a J.D. from Boston University School of Law and a B.B.A. from the University of Massachusetts at Amherst. Our board benefits from Mr. Russell’s understanding of our people, products and culture acquired over 1819 years of service as an employee of Aware. On March 27, 2020, Mr. Russell informed the our board of directors of his intent to resign from his position as our chief legal and administrative officer. Mr. Russell has agreed to continue to serve in that position during a transition period, during which time Mr. Russell will assist Aware to find a senior legal counsel to replace him. It is anticipated that Mr. Russell will continue to serve on our board of directors during this transition period, but he will not stand for re-election to our board when his current term expires at Aware’s 2020 annual meeting of shareholders scheduled to take place on May 20, 2020.

John S. Stafford, III has served as a director of Aware since January 2011. Since 2001, Mr. Stafford has served as Chief Executive Officer of Ronin Capital, LLC, a registered broker dealer with proprietary trading operations encompassing equity, fixed income and derivative securities. Since 2012, Mr. Stafford has served as Chief Executive Officer of Ronin Trading LLC, a non-registered entity with proprietary trading operations in various financial instruments. Mr. Stafford has also previously served as a board member of Xencor, Inc. Mr. Stafford has also made investments in over 40 private companies and has served as a board member on several of these companies. Our board benefits from Mr. Stafford’s investing experience, his experience as a member of other boards of directors, and the fact that, as one of our significant stockholders, his and our stockholders’ interests in the success of Aware are aligned.

The board of directors is divided into three classes, referred to as Class I, Class II and Class III, each consisting of approximately one-third of the directors. One class is elected each year at the annual meeting of stockholders to hold office for a term of three years and until their respective successors have been duly elected and qualified. The number of directors has been fixed at seven, and there is currently one vacancy on the board of directors.seven. The current terms of Messrs. Eckel, Faubert, Kruse and Russell, Aware’s Class III directors, will expire at the annual meeting to be held in 2020. Messrs. Kruse and Russell will not be standing for re-election at our 2020 annual meeting. The current termsterm of Messrs.Mr. Connolly, and Moberg,

Aware’s Class I directors,director, will expire at the annual meeting to be held in 2021. The current terms of Messrs. Johnstone and Stafford, III, Aware’s Class II directors, will expire at the annual meeting to be held in 2022. Richard P. Moberg, who had served as a Class I director of Aware since October 2011, retired as member of our board of directors on May 22, 2019.March 27, 2020.

Executive officers are elected annually by the board of directors and serve at the discretion of the board or until their respective successors have been duly elected and qualified. There are currently no family relationships among Aware’s directors and executive officers. Mr. Stafford, III is the son of John S. Stafford, Jr., who retired as chairman and a member of our board of directors in March 2019.

Board leadership structure and role in risk oversight

The board of directors believes that Aware and its stockholders are best served at this time by having Mr. Johnstone serve as our chairman and Mr. RussellEckel serve as chief executive officer and president. In his role as chairman, Mr. Johnstone oversees key strategic, corporate and governance activities. In his position as chief executive officer and president, Mr. Russell,Eckel, oversees the day-to-day operations of Aware. The board of directors believes that having a non-employee, independent director as chairman is an important aspect of effective corporate governance. In his role as chairman, Mr. Johnstone’s responsibilities include the following:

Aware’s management is responsible for the day-to-day management of the risks that we face, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board is responsible for satisfying itself that the risk management processes are adequate and functioning as designed. The board’s involvement in risk oversight includes receiving regular reports from members of senior management and evaluating areas of material risk to Aware, including operational, financial, legal, regulatory, strategic and reputational risks.

Certain relationships and related transactions

In March 2007, the Board formally adopted a written policy with respect to related person transactions to document procedures pursuant to which such transactions are reviewed and approved. The policy applies to any transaction in which (1) the Company is a participant, (2) any related person has a direct or indirect material interest and (3) the amount involved

exceeds $120,000, but excludes any transactions available to all employees or stockholders of Aware on the same terms. The audit committee, with assistance from Aware’s General Counsel, is responsible for reviewing and approving any related person transaction. The policy requires that the audit committee must approve any related person transaction subject to the policy before commencement of the related person transaction. The policy states that the audit committee will approve only those related person transactions that the audit committee determines are beneficial to Aware and the terms of which are fair to Aware.

In 2018,2019 and the portion of 2020 through the date of this proxy statement, Aware did not have any transactions with a related person.

Committees and meetings of the board

During 2018,2019, the board of directors met twosix times and took no action by written consent one time.consent. No incumbent director attended fewer than 75% of the total number of meetings held by the board and committees of the board on which he served. Aware has a compensation committee, an audit committee, an executive committee, and a nominating and corporate governance committee.

Executive Committee. Aware’s executive committee is currently composed of Richard P. Moberg,Robert A. Eckel, Kevin T. Russell, Brent P. Johnstone and John S. Stafford, III. The executive committee has all of the powers of the board of directors except the power to: change the number of directors or fill vacancies on the board of directors; elect or fill vacancies in the offices of president, treasurer or secretary; remove any officer or director; amend the by-laws of Aware; change the principal office of Aware; authorize the payment of any dividend or distribution to stockholders of Aware; authorize the reacquisition of capital stock for value; and authorize a merger. In 2018,2019, the executive committee did not meet and took no action by written consent. John S. Stafford, Jr.Richard P. Moberg served on the executive committee during 20182019 and 2020 and until his retirement from Aware’s board of directors in March 2019.2020.

Compensation Committee. Aware’s compensation committee is currently composed of three outside directors, John S. Stafford, III, who serves as chairman, Brent P. Johnstone and Brian D. Connolly. In 2018,2019, the compensation committee held twothree meetings and took action by written consent twofour times. In March 2004, Aware’s board of directors adopted a Compensation Committee Charter, which it amended in March 2019. The Compensation Committee Charter, as amended, is available on Aware’s website at www.aware.com. John S. Stafford, Jr. served on the compensation committee during 2018 and2019 until his retirement from Aware’s board of directors in March 2019.

Audit Committee. Aware’s audit committee is currently composed of Adrian F. Kruse, who serves as chairman, Brian D. Connolly, Peter R. Faubert and Brent P. Johnstone. Aware’s board of directors has determined that Mr. Kruse and Mr. Faubert is each an audit committee financial expert under Securities and Exchange Commission rules. In 2018,2019, the audit committee met seven times and took no action by written consent. In March 2004, Aware’s board of directors adopted an Audit Committee Charter, which it amended in March 2019. The Audit Committee Charter, as amended, is available on Aware’s website at www.aware.com.

Nominating and Corporate Governance Committee. Aware’s nominating and corporate governance committee is currently composed of three outside directors, Brent P. Johnstone, who serves as chairman, Brian D. Connolly and Adrian F. Kruse. In 2018,2019, the nominating and corporate governance committee held two meetings and took no action by written consent. In March 2004, Aware’s board of directors adopted a Nominating and Corporate Governance Committee Charter, which it amended in March 2019. The Nominating and Corporate Governance Committee Charter, as amended, is available on Aware’s website at www.aware.com. John S. Stafford, Jr. served on the nominating and corporate governance committee during 2018 and2019 until his retirement from Aware’s board of directors in March 2019.

The nominating and corporate governance committee, in consultation with our president and chief executive officer, identifies and reviews candidates for our board of directors and recommends to our full board candidates for election to our board. In selecting new directors, the committee considers any requirements of applicable law or listing standards, a candidate’s strength of character, judgment, business experience and specific area of expertise, factors relating to the composition of the board (including its size and structure), principles of diversity, and such other factors as the committee shall deem appropriate.

The committee reviews from time to time the appropriate skills and characteristics required of board members in the context of the current make-up of the board, including such factors as business experience, diversity, and personal skills in technology, finance, marketing, international business, financial reporting and other areas that contribute to an effective board.

The committee, in consultation with our president and chief executive officer, considers and recruits candidates to fill positions on the board, including as a result of the removal, resignation or retirement of any director, an increase in the size of the board or otherwise. The committee also reviews any candidate recommended by stockholders of Aware in light of the committee’s criteria for selection of new directors. Stockholders may make nominations for the election of directors by delivering notice in writing to the Secretary of Aware not less than 60 days nor more than 90 days prior to any meeting of the stockholders called for the election of directors. As part of this responsibility, the committee is responsible for conducting, subject to applicable law, any and all inquiries into the background and qualifications of any candidate for the board and such candidate’s compliance with the independence and other qualification requirements established by the committee or imposed by applicable law or listing standards. The committee also develops and recommends to the Board governance principles applicable to the Company and is responsible for leading an annual review of the performance of both the Board as a whole and its individual members. The annual Board review took place in December 2018.2019.

The board of directors, upon the recommendation of the nominating and corporate governance committee, has nominated for election at the 20192020 annual meeting of stockholders as Class IIIII directors Brent P. JohnstoneRobert A. Eckel and John S. Stafford, III,Peter R. Faubert, each of whom is currently a Class IIIII director of Aware. In nominating Mr. Johnstone,Eckel, the board and committee took into account Mr. Johnstone’sEckel’s experience as our chief executive officer and president since September 2019, as well as his over twenty-five years of30 years’ experience in the financial services and investing field and his expertise in finance.technology companies. In nominating Mr. Stafford, III,Faubert, the board and committee took into account Mr. Stafford, III’s manyFaubert’s over twenty years of businessextensive finance leadership

for public and investment experience, as well as the factprivate software companies that as one of the largest stockholders, hisfocused on security technology, video service providers, mobility, gaming and our stockholders’ interests in the success of Aware are aligned.enterprise computing.

Policy regarding board attendance

To the extent reasonably practicable, directors are expected to attend board meetings and meetings of committees on which they serve. Directors are encouraged to attend Aware’s annual meeting of stockholders. Last year, two of our directors attended the annual meeting.

Communications with our board of directors

Aware’s board of directors has established the following process for stockholders to communicate directly with the board, and this process has been approved by a majority of Aware’s independent directors. Stockholders wishing to communicate with the board of directors should send correspondence to the attention of the Chairman of the Board at Aware, Inc., 40 Middlesex Turnpike, Bedford, Massachusetts 01730, and should include with the correspondence evidence that the sender of the communication is one of Aware’s stockholders. Satisfactory evidence would include, for example, contemporaneous correspondence from a brokerage firm indicating the identity of the stockholder and the number of shares held. Aware’s chairman will review all correspondence confirmed to be from stockholders and decide whether or not to forward the correspondence or a summary of the correspondence to the board or a committee of the board. Accordingly, Aware’s chairman will review all stockholder correspondence, but the decision to relay that correspondence to the board or a committee of the board will rest entirely within his discretion.

Code of ethics

Aware has adopted a code of ethics that applies to all employees, officers and directors. The code of ethics also contains special ethical obligations which apply to employees with financial reporting responsibilities, including Aware’s principal executive officer, principal financial officer and principal accounting officer. Aware’s code of ethics includes, among other things, provisions covering compliance with laws and regulations, conflicts of interest, insider trading, proper use of Aware’s assets, confidentiality, discrimination and harassment, accounting and record keeping, the reporting of illegal or unethical behavior, enforcement of the code of ethics and discipline for violations of the code of ethics. Aware’s code of ethics is available on Aware’s website at www.aware.com. Any waiver of any provision of the code of ethics granted to an executive officer or director may only be made by the board of directors and will be promptly disclosed on our website at www.aware.com.

Compensation committee interlocks and insider participation

Aware’s compensation committee is currently composed of Messrs. Johnstone, Connolly and Stafford, III. John S. Stafford, Jr. served on the compensation committee during 2018 and until his retirement from Aware’s board of directors in March 2019. In 2018,2019, no officer or employee of Aware, including Aware’s executives, participated in the deliberations of the compensation committee concerning the compensation of Aware’s executive officers. No interlocking relationship existed between Aware’s board of directors or compensation committee and the board of directors or compensation committee of any other company in 2018.2019.

Compensation of Executive Officers and Directors

Compensation Discussion and Analysis

Overview.The Compensation Committee has the responsibility to review the performance and development of Company management in achieving corporate goals and objectives and to assure that senior executives of the Company are compensated effectively in a manner consistent with the strategy of the Company, competitive practice, and the requirements of the appropriate regulatory bodies. Toward that end, the Compensation Committee oversees, reviews and administers all compensation, equity and employee benefit plans and programs of the Company. The Compensation Committee is responsible for reviewing annually and determining the individual elements of total compensation for the Company’s president and chief executive officer and any other corporate officers. The Compensation Committee may delegate any of its responsibilities to a subcommittee of one or more members of the Committee, the president and chief executive officer or to a committee of senior executive officers when appropriate and consistent with applicable law. The Compensation Committee acts pursuant to a charter that has been approved by the board of directors.

In 2018, the following persons served as our executive officers: Kevin T. Russell, president and chief executive officer, general counsel; and David J. Martin, chief financial officer. On February 27, 2017, the Board of Directors of the Company appointed Mr. Russell to serve as Chief Executive Officer, President and General Counsel, effective March 3, 2017. Mr. Russell continues to serve as a member of the Board of Directors of the Company. Mr. Russell has been with the Company since April 2000 and has served as Aware’s Chief Executive Officer and President, General Counsel since March 2017.

On February 27, 2017, the Board of Directors of the Company appointed David J. Martin, Aware’s Controller to serve as Chief Financial Officer and Treasurer, effective March 3, 2017. Mr. Martin has served as Aware’s Controller since October 2006 and previously served as Aware’s Controller from October 1996 to October 2005.

Compensation program objectives. The objectives of the Company’s executive compensation programs are to attract, motivate and retain executives who drive the Company’s success and to assure that senior executives of the Company are compensated effectively in a manner consistent with the strategy of the Company, competitive practice, and the requirements of appropriate regulatory bodies. The executive compensation programs are designed to reward individuals for advancing business strategies, further developing the Company and its people, and the achievement of individual and Company performance goals. The Compensation Committee also takes into consideration the individual’s performance in determining the compensation elements for each of the Company’s Named Executive Officers.

Role of executive officers in determining executive compensation.In 2018, no executive officer assisted the Compensation Committee in determining executive compensation, including recommendations for executive officer compensation. The Compensation Committee makes the final determination on executive compensation for all the Company’s executives, including the Named Executive Officers shown in the tables under Executive Compensation.

Corporate performance goals.In prior years, the Company has utilized corporate performance goals in reviewing the overall compensation for executives. More specifically, the Compensation Committee has utilized corporate performance goals primarily in determining the amount of a cash incentive award to give to executives. On July 25, 2018, the Compensation Committee approved a cash incentive program for executives based upon the Company’s achievement in 2018 of a profits before taxes (PBT) target determined by the Compensation Committee.

Equity compensation grant timing/pricing. The Company’s practice with regard to the granting of equity awards has been to grant stock equity awards to directors upon their initial election to the Company’s board of directors. Since 2013, the Company has granted stock equity awards to directors and officers on an annual basis in recognition of their contributions to the Company.

Compensation benchmarking.In 2018, the Compensation Committee did not retain a third party compensation consultant to compile compensation benchmark data. The Compensation Committee determined that the combination of a cash base salary, cash incentive program and unrestricted stock awards to its executive officers were sufficient compensation for 2018 and therefore elected not to retain a third party compensation consultant to compile compensation benchmark data.

Compensation program elements.The Company’s executive compensation package for 2018 consisted of three principal elements: 1) a cash base salary 2) a stock-based equity incentive award; and 3) a cash incentive program.

Salary

The salary element of the Company’s executive compensation policy is designed to give executives assurance of a base level of compensation commensurate with the executive’s position and duration of employment with the Company and competitive with salaries for officers holding comparable positions in the industry. On February 27, 2017, the Board of Directors of the Company appointed Mr. Russell, Aware’s co-Chief Executive Officer and co-President, General Counsel and a member of the Board of Directors of the Company to serve as Chief Executive Officer, President and General Counsel, effective March 3, 2017. On February 27, 2017, the Board of Directors of the Company appointed David J. Martin, Aware’s Controller to serve as Chief Financial Officer and Treasurer, effective March 3, 2017. On February 27, 2017, our Board of Directors approved an increase in Mr. Russell’s base annual salary from $250,000 to $275,000 and an increase in Mr. Martin’s base annual salary from $193,816 to $210,000, effective March 3, 2017. Mr. Russell’s and Mr. Martin’s base annual salaries remained unchanged during 2018 at $275,000 and $210,000, respectively. In March, 2018, the Compensation Committee approved a bonus in the amount of $30,000 to Mr. Martin for his efforts in leading the Company through the ASC 606 new revenue standard implementation process.

Stock-based equity incentive compensation

The Company emphasizes long-term equity incentive compensation in order to align the interests of management with the stockholders’ interests in the financial performance of the Company for fiscal quarters, the fiscal year and the longer term. In determining long-term equity incentive grants, the Company has in the past considered the three-year average value resulting from long-term incentive compensation such as restricted stock grants, performance plans, stock appreciation rights and stock option grants made at comparable companies. The value of any stock options is based upon the Black-Scholes formula. The Company also considers in part the value of options and prior stock awards held by the executive officers and the extent to which the Company believed those options and stock grants would provide sufficient motivation to the executive officers to achieve the Company’s goals. Beginning in 2013, the Company granted unrestricted stock awards to its executive officers in recognition of the executive officers’ ongoing contributions to the Company. In February 2017, the Compensation Committee granted unrestricted stock awards in the amounts of 30,000 and 15,000 shares to Mr. Russell and Mr. Martin, respectively, in recognition of their ongoing contributions to the Company. The unrestricted shares were to be issued in two (2) equal installments on June 30, 2017 and December 31, 2017 provided each officer was serving as a director, officer or employee of the Company or any subsidiary of the Company on said dates. In March, 2018, the Compensation Committee granted unrestricted stock awards in the amounts of 30,000 and 15,000 shares to Mr. Russell and Mr. Martin, respectively, in recognition of their ongoing contributions to the Company. The unrestricted shares were to be issued in two (2) equal installments on June 30, 2018 and December 31, 2018 provided each officer was serving as a director, officer or employee of the Company or any subsidiary of the Company on said dates. In March, 2019, the Compensation Committee granted unrestricted stock awards in the amounts of 30,000 and 15,000 shares to Mr. Russell and Mr. Martin, respectively, in recognition of their ongoing contributions to the Company. The unrestricted shares were to be issued in two (2) equal installments on June 30, 2019 and December 31, 2019 provided each officer was serving as a director, officer or employee of the Company or any subsidiary of the Company on said dates.

Cash Incentive Compensation

The cash incentive program is designed to provide executives with competitiveExecutive compensation linked to Company performance goals. On July 25, 2018, the Compensation Committee approved potential bonuses for 2018 of up to $100,000 and $70,000 to Messrs. Russell and Martin, respectively, subject to the Compensation Committee’s discretion, based upon the Company achieving in 2018 of a PBT target of $1,235,000. The amount of bonus payable was subject to linear interpolation in the event that the Company’s actual 2018 PBT fell between the 2018 Plan PBT Goal and 125% of 2018 Plan PBT Goal or between 125% of 2018 Plan PBT Goal and 150% of 2018 Plan PBT Goal.

On March 25, 2019, the Compensation Committee approved awards of $27,838.30 and $17,270.64 to Mr. Russell and Mr. Martin, respectively based upon the Company’s achievement of 2018 PBT of $1,270,053.00 or 102.838% of 2018 Plan PBT. The amount of bonus payable was subject to linear interpolation to reflect actual 2018 PBT between the 2018 Plan PBT Goal and 125% of 2018 Plan PBT Goal.

Other Compensation

The Company’s executive officers are also eligible to participate in other employee benefit plans, including health and life insurance plans and a 401(k) retirement plan, on substantially the same terms as other employees who met applicable eligibility criteria, subject to any legal limitations on the amounts that could have been contributed or the benefits that could have been paid under these plans.

Salary in Proportion to Total Compensation

In 2018, the base salary paid to Mr. Russell represented approximately 63% of his total compensation. In 2018, the base salary paid to Mr. Martin represented approximately 64% of his total compensation.

Compensation program elements rationale.Historically, in establishing compensation for executives, the Company’s Compensation Committee has monitored salaries, other cash compensation and long-term equity incentive compensation at other companies, particularly companies with similar enterprise value and companies in the same industry. In addition, for each executive the Compensation Committee considers historic salary levels, work responsibilities and compensation relative to other employees at the Company. The Compensation Committee also considers general economic conditions, the Company’s performance and each individual’s performance.

The Company’s selection of cash, cash incentive and stock-based equity incentive as the primary elements of executive compensation is in furtherance of the Company’s compensation program objectives. The cash element, including the base salary and cash incentive element along with the stock-based equity incentive element, help the Company to achieve the objective of attracting, motivating and retaining executives who drive the Company’s success. The Company has determined that the aforementioned elements help to achieve the Company’s compensation objectives and that additional compensation elements are not required. The Company reviewed the results of the “say on pay” votes at recent stockholders’ meetings and determined that no adjustments to the Company’s overall philosophy of executive compensation were necessary.

Impact of accounting and tax treatments on compensation.The Company reviews the compensation provided to executive officers in conjunction with the potential tax consequences that may result with respect to certain compensation elements. For example, with respect to 2018, Section 162(m) of the Internal Revenue Code limits the Company’s ability to deduct, for income tax purposes, compensation in excess of $1.0 million paid to the chief executive officer and the other three most highly compensated executive officers of the Company (other than the chief financial officer) in any year, unless the compensation qualifies as “performance-based compensation.” In 2018, the aggregate base salaries, bonuses and other non-equity compensation of the Company’s executive officers did not exceed the $1.0 million limit. Starting in 2018, Section 162(m) of the Internal Revenue Code will limit the Company’s ability to deduct, for income tax purposes, compensation in excess of $1.0 million paid to the chief executive officer, the chief financial officer and the other three most highly compensated executive officers of the Company in any year. The Compensation Committee’s policy with respect to Section 162(m) is that it would prefer to cause compensation to be deductible by the Company; however, the Compensation Committee also weighs the need to provide appropriate incentives to the Company’s executive officers against the potential adverse tax consequences that may result under Section 162(m). The Compensation Committee does not expect that compensation will exceed the $1.0 million limit in the foreseeable future.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis with management, and 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.

Pay Ratio Disclosure Rule

In August 2015 pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (‟PEO”). The Company’s PEO is Mr. Russell.  Registrants must comply with the pay ratio rule for the first fiscal year beginning on or after January 1, 2017.  The purpose of the new required disclosure is to provide a measure of the equitability of pay within the organization. Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our PEO to the median of the annual total compensation of our other employees.

Median Employee annual total compensation   $118,866

Mr. Russell (‟PEO”) annual total compensation   $438,249

Ratio of PEO to Median Employee Compensation 3.69:1

In determining the median employee, a listing was prepared of all employees (but excluding the PEO) as of December 31, 2018. Employees on leave of absence were excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2018.  The median amount was selected from the annualized list.  For simplicity, the value of the Company’s 401(k) plan and medical benefits provided was excluded as all employees including the PEO are offered the same benefits and the Company utilizes the Internal Revenue Service safe harbor provision for 401(k) discrimination testing.  As of December 31, 2018 the Company employed 67 persons of which 47 are engineers.

Executive compensation

The following table provides summary information concerning compensation earned for services rendered to Aware in all capacities for the fiscal year ended December 31, 20182019 by Aware’s chief executive officer, chief legal and administrative officer, chief financial officer, chief commercial officer and chief financialtechnology officer:

Summary Compensation Table