Our Board exercises its oversight responsibility for risk both directly and through its standing committees. Strategic, operational and competitive risks also are presented and discussed at our Board’s quarterly meetings, and more often as needed. On at least an annual basis, our Board conducts a review of our long-term strategic plans and members of our executive team report on our top risks and the steps management has taken or will take to mitigate these risks. On a regular basis between Board meetings, our Chief Executive Officer provides updates to the Board on the critical issues we face and recent developments in our principal markets.
Risk Management
Our Board oversees risk management.
Our Board and standing committees spend a portion of their time reviewing and discussing specific risk topics.
| | |
Risk Management
•Our Board oversees risk management.
•Our Board and standing committees spend a portion of their time reviewing and discussing specific risk topics.
•Company management is charged with managing risk through internal processes and controls.
|
Our Audit Committee is responsible for reviewing our risk management framework and programs, as well as the framework by which management discusses our risk profile and risk exposures with our full Board and its committees. Our Audit Committee meets regularly with our Chief Financial Officer, our independent auditor, our General Counsel, and other members of senior management to discuss our major financial risk exposures, financial reporting, internal controls, credit and liquidity risk, compliance risk, key operational risks,
cybersecurity risk and our risk management framework and programs. Other responsibilities include at least annually reviewing the implementation and effectiveness of our compliance and ethics program and our business continuity plan and test results. Our Audit Committee meets regularly in separate executive sessions with the independent auditor, as well as with Audit Committee members only, to facilitate a full and candid discussion of risk and other issues.
Our Compensation Committee is responsible for overseeing human capital and compensation risks, including evaluating and assessing risks arising from our compensation policies and practices for all employees and ensuring executive compensation is aligned with performance. Our Compensation Committee also is charged with monitoring our incentive and equity-based compensation plans, including
employee benefit plans. For additional information regarding the Compensation Committee’s review of compensation-related risk, please see the section of this proxy statement entitled “Compensation Discussion and Analysis—Risk Assessment of Compensation Programs.”
Our Nominating and Corporate Governance Committee oversees risks related to our overall corporate governance, including Board and committee composition, Board size and structure, director independence, and our corporate governance profile and ratings. Our Nominating and Corporate Governance Committee also is actively engaged in overseeing risks associated with succession planning for our Board and management.
Our Strategy Committee provides assistance to our Board
in various matters, including fulfilling its responsibilities with respect to reviewing, evaluating and
Committee Self-Evaluationsmaking recommendations to the Board regarding the Company’s corporate strategy, capital allocation, cost structure, business opportunities and related matters.
Our Board
and each of the Audit, Compensation and Nominating and Corporate Governance Committees conduct an annual self-evaluation, which includes a qualitative assessment by each director of the performance of our Board and the committee or committees on which the director sits. Our Board also conducts an annual evaluationbelieves that one of its
Chairman. Ourprimary responsibilities is to oversee the development and retention of executive talent and to ensure that an appropriate succession plan is in place for our Chief Executive Officer and other members of management. Each year, the Nominating and Corporate Governance Committee
meets with our Human Resources department and our executives to discuss management succession planning and to address potential vacancies in senior leadership. The Nominating and Corporate Governance Committee also annually reviews with the Board succession planning for our Chief Executive Officer. In addition to executive and management succession, the Nominating and Corporate Governance Committee regularly oversees
and plans for director succession and refreshment of the
evaluation processesBoard to ensure a mix of skills, experience, tenure, and
reportsdiversity that promote and support our long-term strategy. In doing so, the
resultsNominating and Corporate Governance Committee takes into consideration the overall needs, composition and size of the Board, as well as the criteria adopted by the Board regarding director candidate qualifications. Individuals identified by the Nominating and Corporate Governance Committee as qualified to become directors are then recommended to the
committees and full Board
following the completion of such evaluations.Code of Business Conduct and Ethics
for nomination or election.
Company Policies
Our Board has adopted aseveral policies governing directors, employees, and/or officers: (i) the Code of Business Conduct and Ethics that outlines the principles of legal and ethical business conduct. Thisconduct, which was updated as of September 2020; (ii) the Stock Ownership Policy, which requires our executives and non-employee directors to have a direct ownership in Immersion’s common stock; (iii) the Insider Trading Policy, which outlines the procedures and guidelines governing securities trades by our employees; and (iv) the Immersion Environmental and Social Policy.
The Code
whichof Business Conduct and Ethics is applicable to all of our directors, employees, and officers
and is available on our website at
http: https://ir.immersion.com/governance.cfm.corporate-governance. Any substantive amendment or waiver of this
codepolicy may be made only by our Board upon a recommendation of the Audit Committee and, as required by applicable SEC rules, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K by disclosing such information on our website.
The Stock Ownership Policy is applicable to our executives and non-employee directors and is available on our website at https://ir.immersion.com/corporate-governance. This policy requires that these individuals hold stock equal in value to, in the case of our CEO and non-employee directors, three times, and our other executives, one times, the amount of their annual cash retainer/base salary. This is calculated once a year and there is a five-year period in which to comply. If it is determined that a particular person does not comply with the policy, the individual will be notified and will be required to retain 50% of the net shares received as a result of any exercise, vesting or payment of any equity awards until he or she becomes compliant.
The Insider Trading Policy applies to all of our current and former employees, directors, independent contractors, agents and consultants. The Insider Trading Policy prohibits short sales, the buying or selling
of puts, calls or other derivative or similar securities of the Company or engaging in any other hedging transaction, using the Company’s securities as collateral in a margin account, or pledging the Company’s securities as collateral for a loan (or modifying an existing pledge).
Communications by Stockholders with Directors
Stockholders may communicate with any and all directors by transmitting correspondence by mail,
facsimile, or e-mail, addressed as follows: Board or individual director, c/o Corporate Secretary, Immersion Corporation,
50 Rio Robles,330 Townsend Street, Suite 234, San
Jose, California 95134;Francisco, CA 94107; Fax: (408) 467-1901; E-mail Address: corporate.secretary@immersion.com. Our Corporate Secretary will maintain a log of such communications and transmit as soon as practicable such communications to the identified director addressee(s). The acceptance and forwarding of a communication to any director does not imply that the director owes or assumes any fiduciary duty to the person submitting the communication, all such duties being only as prescribed by applicable law.
Board Meetings and Committees of the Board
Attendance at Board, Committee and Annual Stockholder Meetings
Our Board and its committees meet throughout the year on a set schedule, hold special meetings as needed, and act by written consent from time to time. The Board met
seveneleven times during
2015.2020. Each director attended at least 75% of the meetings of the Board and of any committees of the Board on which he serves. The total number of meetings held by each committee is set forth below under “Committees of the Board.”
We make every effort to schedule our annual meeting of stockholders at a time and date to accommodate attendance by directors, taking into account the directors’ schedules. All directors are encouraged to attend the annual meeting of stockholders. Five
directors(5) of our then-current director nominees attended our
20152020 annual meeting of stockholders.
Executive Sessions of the Board
The non-executive members of our Board and all committees of our Board meet in executive session without management present at each regularly scheduled in-person Board and committee meeting.
The Board has a separately-designated standing Audit Committee, Compensation Committee,
and Nominating and Corporate Governance
Committee, and Strategy Committee.
The Board has also adopted a written charter for each of the Board committees.Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Each written charter is available on our website athttp: https://ir.immersion.com/governance.cfm.corporate-governance.
In each case, our Board has delegated the responsibilities set forth below to the respective committee; however, our Board may from time to time, perform the duties itself.
The table below provides current membership (M) and chairmanship (C) information for each standing committee.
| | | | | | | | | | | | | | |
| Name | | Audit | | Compensation | | Nominating and
Corporate Governance | Strategy Committee |
Victor Viegas
| | | | | | |
David Habiger
| | | Sumit Agarwal | M | | M | |
| Stephen Domenik | | M | C | M |
Jack Saltich
Franz Fink | M | | | |
| Matthew Frey | C | | C | |
Carl Schlachte
Sharon Holt | | | M | |
| William Martin | | C | | M |
David Sugishita
Eric Singer | | C | | M | | |
John Veschi
| | M | | | | M |
Audit Committee and Audit Committee Financial Expert
| | | | | | | | |
| Members: | | David Sugishita
Mathew Frey (Chairman) John Veschi
Carl Schlachte
Franz Fink Sumit Agarwal |
Number of Meetings in Fiscal Year 2015:2020: | | 6
8 |
| Independence: | | Our Board has determined that each member of the Audit Committeemeets the independence criteria set forth in the applicable rules of The NASDAQNasdaq Stock Market and the SEC for Audit Committee membership. |
| Financial Expert: | | Our Board has determined that all members of the Audit Committee possess the level of financial literacy required by applicable NASDAQNasdaq Stock Market and SEC rules and that in accordance with section 407 of the Sarbanes-Oxley Act of 2002, at least one member of the Audit Committee, Mr. Sugishita,Frey, is an “audit committee financial expert,” as defined in the rules of the SEC. |
| | |
| Responsibilities: | | Our Audit Committee provides assistance to our Board in various matters, including fulfilling its responsibilities with respect to the following: |
| |
•retaining, overseeing, compensating, communicating with, determining the independence of, and, if necessary, terminating and replacing our independent registered public accounting firm;
•reviewing the scope of audit and pre-approving permissible non-audit services by our independent registered public accounting firm;
•reviewing the accounting principles and auditing practices and procedures to be used for our financial statements;statements and related disclosures;
•preparing the audit committee report to be included in our annual proxy statement as required by the SEC;
•overseeing cybersecurity initiatives;
•overseeing procedures for the treatment of complaints on accounting, internal controls, or audit matters;
•reviewing the results of the audits of our financial statements;
•reviewing risk management framework and programs; and
•reviewing related party transactions.
|
| | | | | | | | |
| Members: | | Jack Saltich
William Martin (Chairman) David Habiger
David Sugishita
Eric Singer Stephen Domenik
|
Number of Meetings in Fiscal Year 2015:2020: | | 4 |
| Independence: | | Our Board has determined that each member of the Compensation Committee meets the independence criteria set forth in the applicable NASDAQNasdaq Stock Market rules isas a “non-employee director,” as defined in Rule 16b-3 under Section 16 of the Exchange Act, and is an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended. Act. |
| Responsibilities: | | Our Compensation Committee provides assistance to our Board in various matters, including with respect to the following:
•overseeing our general compensation structure, policies and programs, and assessing whether our compensation structure establishes appropriate incentives for management and employees and properly aligning executive compensation with stockholder interests and business performance; |
| | |
| |
•making recommendations to the Board with respect to and administration of our equity-based compensation plans, including our equity incentive plans and employee stock purchase plan;
•reviewing the “Compensation Discussion and Analysis” to be included in the Company’s public filings;
•reviewing and approving compensation packages for our executive officers;
•reviewing and approving employment and retention agreements and severance arrangements for executive officers, including change-in-control provisions, plans or agreements; and
•reviewing the compensation of directors for service on the Board and its committees and recommending changes in compensation to the Board.
Other than the delegation to the Chief Executive Officer of the authority to grant awards under certain equity plans pursuant to guidelines set by the Board, our Compensation Committee has not delegated any of its duties under its charter. The Compensation Committee may, however, from time to time, delegate duties or responsibilities to subcommittees or to one member of the Compensation Committee. |
Nominating and Corporate Governance Committee
| | | | | | | | |
| Members: | | Jack Saltich (Chairperson)
David Habiger
Carl Schlachte
John Veschi
Stephen Domenik (Chairman) Sharon Holt Sumit Agarwal |
Number of Meetings in Fiscal Year 2015:
2020: | | 1
3 |
| Independence: | | Our Board has determined that each member of the Nominating and Corporate Governance Committee meets the criteria for independent Board members set forth in the applicable NASDAQNasdaq Stock Market rules. |
| | |
| Responsibilities: | | Our Nominating and Corporate Governance Committee provides assistance to our Board in various matters, including fulfilling its responsibilities with respect to the following:
•identifying, evaluating, recruiting, and recommending candidates for Board positions to our Board and recommending to our Board policies on Board and committee composition and criteria for Board membership;
•recommending to our Board, and reviewing on a periodic basis, our succession plan, including policies and principles for selection and succession of the Chief Executive Officer in the event of an emergency or the resignation or retirement of our Chief Executive Officer;
•reviewing the independence of each director;
•periodically reviewing policies and the compliance of senior executives with respect to these policies;
•reviewing our compliance with corporate governance listing requirements of The NASDAQNasdaq Stock Market; and
•assisting our Board in developing criteria for the annual evaluation of our Chief Executive Officer, director and committee performance. |
Strategy Committee
| | | | | | | | |
| Members: | | Eric Singer William Martin Stephen Domenik |
| Number of Meetings in Fiscal Year 2020: | | 8 |
| Independence: | | Our Board has determined that each member of the Strategy Committee meets the criteria for independent Board members set forth in the applicable Nasdaq Stock Market rules. |
| Responsibilities: | | Our Strategy Committee provides assistance to our Board in various matters, including fulfilling its responsibilities with respect to the following: · •reviewing, evaluating and making recommendations to the Board regarding the Company’s corporate strategy, capital allocation, cost structure, business opportunities and related matters.
|
RELATED PERSON TRANSACTIONS
In accordance with our Audit Committee charter, our Audit Committee is responsible for reviewing and approving the terms and conditions of any related party transactions. Review of any related party transaction would include reviewing each such transaction for potential conflicts of interests and other improprieties. Except as described in “Director Compensation” above and
in “Executive Compensation” below, since January 1,
2015,2020, there has not been, nor is there currently proposed, any transaction or series of similar transactions, to which we are or were a party, in which the amount involved exceeds $120,000 and in which any of our directors, executive officers, or holders of more than 5% of our capital stock, or any of the immediate family members of such persons, had or will have a direct or indirect material interest.
In addition to indemnification provisions in our Bylaws, we have entered into agreements to indemnify our directors and executive officers. These agreements provide for indemnification of our directors and executive officers for
somecertain types of expenses, including
attorney’sattorneys’ fees, judgments, fines, and settlement amounts incurred by persons in any action or proceeding, including any action by us or in our right, arising out of their services as our director or executive officer. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.
Interest of Certain Persons in Matters to Be Acted Upon
No person who has served as an officer or director of the Company since January 1, 2020 nor any director nominee, and no associate of such a person, has any substantial interest in the matters to be acted upon at the Annual Meeting, other than (i) as a result of his or her role as an officer or director of the Company, or (iii) in his or her role as a shareholder in proportion to his or her percentage shareholding.
OWNERSHIP OF OUR EQUITY SECURITIES
Directors and Executive Officers
The following table sets forth information regarding beneficial ownership of Immersion Corporation common stock by each director, each director nominee, each individual named in the 20152020 Summary Compensation Table on page 43,51, and our directors, director nominees and executive officers as a group, all as of March 31, 2016.19, 2021. Unless otherwise noted, voting power and investment power in Immersion Corporation common stock are held solely by the named person. The address of each of the individuals named below is c/o Immersion Corporation, 50 Rio Robles,330 Townsend Street, Suite 234, San Jose, California 95134. | | | | | | | | | | |
| Name | | Aggregate Number of Shares Beneficially Owned | | | Percent of Outstanding Shares 1 | | | Additional Information |
Victor Viegas | | | 1,269,095 | | | | 4.40% | | | Includes 1,193,708 shares that may be acquired upon exercise of options on or before May 30, 2016. |
Paul Norris | | | 46,751 | | | | * | | | Includes 39,166 shares that may be acquired upon exercise of options on or before May 30, 2016. |
Jason Patton | | | 70,208 | | | | * | | | Includes 70,208 shares that may be acquired upon exercise of options, or shares that vest pursuant to restricted stock units, on or before May 30, 2016. |
Mahesh Sundaram | | | 89,495 | | | | * | | | Includes 79,166 shares that may be acquired upon exercise of options on or before May 30, 2016 |
Carl Schlachte | | | 57,307 | | | | * | | | Includes 40,000 shares that may be acquired upon exercise of options on or before May 30, 2016. |
David Habiger | | | 16,666 | | | | * | | | Includes 16,666 shares that may be acquired upon exercise of options on or before May 30, 2016. |
Jack Saltich | | | 123,713 | | | | * | | | Includes 47,000 shares that may be acquired upon exercise of options on or before May 30, 2016. |
David Sugishita | | | 44,300 | | | | * | | | Includes 10,834 shares that may be acquired upon exercise of options on or before May 30, 2016. |
John Veschi | | | 0 | | | | * | | | - |
All directors, director nominee and executive officers as a group (9 persons) | | | 1,719,390 | | | | 5.97% | | | Includes 1,496,748 shares that may be acquired upon exercise of options on or before May 30, 2016. |
Francisco, CA 94107.
| | | | | | | | | | | |
| Name | Aggregate
Number of
Shares
Beneficially
Owned | Percent of Outstanding Shares(1) | Additional Information |
Sumit Agarwal(2) | 45,466 | | * | |
Stephen Domenik(3) | 22,763 | | * | |
Franz Fink(4) | 22,763 | | * | |
Matthew Frey(5) | 32,030 | | * | |
Ramzi Haidamus(6) | 65,008 | | * | |
Sharon Holt(7) | 51,390 | | * | |
William Martin(8) | 2,254,119 | | 7.3% | |
Michael Okada(9) | 32,067 | | * | |
Aaron Akerman(10) | 52,388 | | * | |
Eric Singer(11) | 521,642 | | 1.7% | |
Jared Smith(12) | 67,909 | | * | |
| Len Wood | — | | * | |
| Mary Dotz | — | | * | |
All directors, director
nominees and executive
officers as a group
(15 persons) | 3,167,545 | | 10.2% | |
* Less than 1% of issued and outstanding shares of Immersion Corporation common stock.
1
(1) Calculated on the basis of 28,818,87030,867,177 shares of Immersion Corporation common stock outstanding as of March 31, 2016,19, 2021, provided that any additional shares of Immersion Corporation common stock that a stockholder has the right to acquire within 60 days after March 31, 2016, or May 30, 2016,19, 2021 are deemed to be outstanding for the purpose of calculating that stockholder’s percentage of beneficial ownership.
(2) Consists of (i) 26,923 shares of common stock and (ii) 18,543 RSAs.
(3) Consists of (i) 4,220 shares of common stock and (ii) 18,543 RSAs.
(4) Consists of (i) 4,220 shares of common stock and (ii) 18,543 RSAs.
(5) Consists of (i) 13,487 shares of common stock and (ii) 18,543 RSAs.
(6) Consists of 65,008 shares of common stock.
(7) Consists of 51,390 shares of common stock.
(8) Consists of (i) 2,235,576 shares of common stock and (ii) 18,543 RSAs. Includes common stock held directly by Raging Capital Master Fund, Ltd. ("Raging Master"). Raging Capital Management, LLC ("Raging Capital") is the Investment Manager of Raging Master. William C. Martin is the Chairman, Chief Investment Officer and Managing Member of Raging Capital. William Martin may be deemed to beneficially own the securities held by Raging Master and Raging Capital.
(9) Consists of (i) 21,817 shares of common stock, (ii) options to purchase 3,417 shares of common stock and (iii) options to purchase 6,833 shares of common stock subject to vesting conditions expected to occur within 60 days of March 19, 2021.
(10) Consists of (i) 5,722 shares of common stock, (ii) options to purchase 40,833 shares of common stock and (iii) options to purchase 5,833 shares of common stock subject to vesting conditions expected to occur within 60 days of March 19, 2021.
(11) Consists of (i) 503,099 shares of common stock and (ii) 18,543 RSAs. Includes common stock beneficially owned directly by VIEX Opportunities Fund, LP - Series One (“Series One”). VIEX GP, LLC, as the general partner of Series One, may be deemed the beneficial owner of the shares of common stock beneficially owned by Series One. VIEX Capital Advisors, LLC, as the investment manager of Series One, may be deemed the beneficial owner of the shares of common stock beneficially owned by Series One. Mr. Singer, as the managing member of each of VIEX GP, LLC, and VIEX Capital Advisors, LLC, may be deemed the beneficial owner of the shares of Common Stock beneficially owned by Series One.
(12) Consists of (i) 26,034 shares of common stock, (ii) options to purchase 35,625 shares of common stock and (iii) options to purchase 6,250 shares of common stock subject to vesting conditions expected to occur within 60 days of March 19, 2021.
Set forth in the table below is information about the number of shares held by persons we know to be the beneficial owners of more than 5% of the issued and outstanding Immersion Corporation common stock. Unless otherwise noted, to our knowledge, voting power and investment power in Immersion Corporation common stock are held solely by the named entity.
| | | | | | | | | | |
Name and Address | | Aggregate Number of
Shares Beneficially
Owned | | | Percent of Outstanding Shares 1 | | | Additional Information |
Senvest Management, LLC 540 Madison Ave, 32nd Floor NY, NY 10022 | | | 4,446,597 | | | | 15.43% | | | Based solely on a Schedule 13G/A filed with the SEC on February 12, 2016, Senvest Management LLC and Richard Marshaal have shared voting and dispositive power with respect to these shares. |
Kingdom Ridge Capital, LLC 81 Main Street, Suite 209 White Plains, NY 10601 | | | 2,527,998 | | | | 8.77% | | | Based solely on a Schedule 13G/A filed with the SEC on February 16, 2016, Christopher Zepf and Kingdom Ridge Capital, LLC have shared voting and dispositive power with respect to 2,527,998 shares, and Kingdom Ridge Capital Master Fund, Ltd. has shared voting and dispositive power as to 2,519,998 shares. The address for Kingdom Ridge Capital Master Fund, Ltd. is Gardenia Court, Suite 3307, 45 Market St., Camana Bay, P.O. Box 896, Grand Cayman KY1-1103, Cayman Islands |
Shannon River Partners, LP 850 Third Ave., 11th Floor NY, NY 10022 | | | 2,445,194 | | | | 8.48% | | | Based solely on a Schedule 13G/A filed with the SEC on February 16, 2016, Spencer Waxman, Shannon River Partners, LP, Shannon River Fund Management Co LLC, and Shannon River Capital Management LLC have shared voting and dispositive power with respect to 179,668 shares, Spencer Waxman, Shannon River Master Fund, LP and Shannon River Global Management LLC have shared voting and dispositive power as to 669,503 shares, and Spencer Waxman, Doonbeg Master Fund, LP and Doonbeg Global Management LLC have shared voting and dispositive power as to 1,596,023 shares. |
BlackRock, Inc. 55 East 52nd St. NY, NY 10055 | | | 1,601,672 | | | | 5.56% | | | Based solely on a Schedule 13G/A filed with the SEC on January 26, 2016, Blackrock Inc. has the sole voting power with respect to 1,548,075 shares and the dispositive power as to 1,601,672 shares. |
1
| | | | | | | | | | | |
| Name and Address | Aggregate
Number of
Shares
Beneficially
Owned | Percent of Outstanding Shares(1) | Additional Information |
Raging Capital Management, LLC Ten Princeton Ave., P.O. Box 228 Rocky Hill, NJ 08553 | 2,254,119 | 7.3% | Based solely on a Schedule 13D/A filed with the SEC on March 11, 2021, Raging Capital Management LLC and William C. Martin have shared voting and dispositive power with respect to 2,222,089 shares, and William C. Martin has sole voting power with respect to 32,030 shares. |
Acacia Research Corporation
4 Park Plaza, Suite 550
Irvine, CA 92614 | 1,533,991 | 5.0% | Based solely on a Schedule 13D/A filed with the SEC on December 26, 2019, Acacia Research Corporation has sole voting and disposition power with respect to 1,533,991 shares. |
(1)Calculated on the basis of 28,818,87030,867,177 shares of common stock outstanding as of March 31, 2016.SECTION19, 2021.
Delinquent Section 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCEReports
Section 16(a) of the Exchange Act requires ourexecutive officers and directors and persons who beneficially own more than 10% of our common stock (the “Reporting Persons”) to file initial reports of ownership and reports of changes in ownership with the SEC. These personsReporting Persons are required by SEC regulationsrules to furnish usthe Company with copies of all Section 16(a) forms filed by such persons.they file. Based solely on oura review of the copies of such forms furnished to usthe Company and written representations from certain reporting persons, we believethe executive officers and directors, the Company believes that the Reporting Persons complied with all Section 16(a) filing requirements applicablesince January 1, 2020, except that Mr. Fink filed late reports on Forms 3 and 4 with respect to our officers, directors,his appointment as a director and persons who beneficially own more than 10% of our common stock were compliedhis initial RSA grant in connection with during the fiscal year ended December 31, 2015.
COMPENSATION DISCUSSION AND ANALYSIS
This section describes our fiscal year 2015 (“fiscal 2015”) compensation program as it relates to the following executive officers, all of whom we refer to collectively as our “named executive officers.” Our named executive officers for fiscal 2015 are as follows:
such appointment.
EXECUTIVE OFFICERS
| | |
Name | | Title |
Victor Viegas (1)
| | Chief Executive Officer, Interim Chief Financial Officer and Director |
Paul Norris (1)
| | Former Chief Financial Officer |
Mahesh Sundaram (2)
| | Vice President, Worldwide Sales and Customer Support |
Jason Patton (2)
| | Former Vice President & General Manager, Content & Media Business |
(1) Effective February 26,
This section includes biographical information for our current executive officers.
| | | | | | | | | | | |
| Name | Age | Positions | Officer Since |
| Michael Okada | 56 | General Counsel and Senior Vice President, IP Licensing and Legal Affairs | 2019 |
| Jared Smith | 59 | Interim Chief Executive Officer and Vice President, Worldwide Sales | 2019 |
| Aaron Akerman | 52 | Chief Financial Officer and Treasurer | 2020 |
Michael Okada
Education: J.D. from the University of Southern California and an A.B. in Economics from Columbia University
Professional Experience: Prior to joining Immersion Corporation in May 2019, Mr. Okada held the position of Vice President, IP Transactions and Legal Affairs, at Dolby Laboratories, Inc., an audio, visual and voice technologies company, from December 2006 to May 2019, where he led a global team supporting the company’s audio and imaging technology businesses. Prior to working at Dolby, Mr. Okada was a partner at Wilson, Sonsini, Goodrich & Rosati from 1994-2006 where he was a member of the firm's Technology Transactions Group where his practice focused on domestic and international intellectual property and commercial transactions.
Jared Smith
Education: M.B.A. from Santa Clara University and a BSChE in Chemical Engineering from the University of Michigan.
Professional Experience: Prior to joining Immersion Corporation in June 2019, Mr. Smith held the position of Vice President, Strategic Alliances, at Arm Limited, a semiconductor and software design company, from March 2016 to May 2019. Prior to working at Arm, Mr. Norris resigned andSmith held the position of Vice President, Business Development, at Pelican Imaging Corporation, a camera technology company, from January 2013 until July 2015. From 2001 to 2012, Mr. Viegas was appointed Interim Chief Financial Officer.(2) On November 20, 2015, we combined our Content & Media Business and our OEM Sales Organization withinSmith held the company reporting to Mr. Sundaram, who was formerly ourposition of Vice President of Worldwide OEM Sales.Licensing & Business Development at Rambus Incorporated, a semiconductor IP company.
Aaron Akerman
Education: Bachelor of Commerce, Finance and Accounting and a Graduate Diploma in Public Accountancy from McGill University
Professional Experience: Prior to joining Immersion Corporation in January 2020, Mr. Patton’s last day with usAkerman was December 31, 2015.Executive Summary
CFO of Hypertec Group, a global provider of IT solutions, products and services from May 2019 to January 2020 and VP of Finance of Hypertec Group from November 2017 to May 2019. From February 2010 to October 2016, Mr. Akerman served as CFO of Lasik MD Group, a provider of laser vision correction services. As CFO of Lasik MD Group, Mr. Akerman played an active role in the M&A team, including overseeing the completion of several acquisitions. From 2003 to 2009, Mr. Akerman served as the VP of Finance of OZ Communications Inc., a developer of mobile messaging software. Mr. Akerman is also a Chartered Professional Accountant and CFA
® charterholder.
CFA® is a registered trademark owned by CFA Institute.
COMPENSATION DISCUSSION AND ANALYSIS
In this Compensation Discussion and Analysis (“CD&A”), we summarize our objectives regarding the compensation of our named executive officers, including how we determine the elements and amounts of executivetheir compensation. Included below are discussions regarding how our executive compensation program ties to our strategic goals and objectives and supports stockholder value creation. Specifically, we will discuss our compensation philosophy (including our pay-for-performance philosophy), our compensation approach, our compensation determinations and our policies and practices related to executive compensation. Our executive compensation program reflects a commitment to: •align compensation with our annual and long-term business objectives and performance;
•enable us to attract, retain and reward executive officers and other key employees who contribute to our long-term success;
•motivate our executive officers to enhance long-term stockholder value; and
•position us competitively among the companies against which we recruit and compete for talent.talent..
2015
Our named executive officers for fiscal 2020 were as follows:
| | | | | |
| Name | Title |
Jared Smith(1) | Interim Chief Executive Officer and Vice President, Worldwide Sales |
Aaron Akerman(2) | Chief Financial Officer |
| Michael Okada | General Counsel and Senior Vice President, IP Licensing and Legal Affairs |
Ramzi Haidamus(3) | Former Chief Executive Officer |
Len Wood(4) | Former Interim Chief Financial Officer |
(1) Mr. Smith was appointed Interim Chief Executive Officer effective November 3, 2020.
(2) Mr. Akerman was appointed Chief Financial Officer effective January 13, 2020.
(3) Mr. Haidamus resigned as Chief Executive Officer effective November 3, 2020, at which time Jared Smith, Vice President, Worldwide Sales, was appointed Interim Chief Executive Officer.
(4) Mr. Wood served as Interim Chief Financial from July 30, 2019 through January 13, 2020 at which point Aaron Akerman was appointed Chief Financial Officer.
Executive Summary
The past year was a pivotal time for Immersion’s transition. We have had change at the top of the organization including the appointment of our Interim Chief Executive Officer in late 2020 and our Chief Financial Officer joining in early 2020. We have an opportunity for our talented team to capitalize on our intellectual property assets and lead the widespread adoption of touch feedback and related technologies in a broad array of products and markets.
As will be shown throughout this CD&A, the Board and the Compensation Committee made difficult compensation-related decisions in this transitional year. We believe that the decisions made were not only appropriate for our circumstances but also have enabled Immersion to stabilize and retain a talented management team to lead our growth going forward.
Shareholder Feedback and Executive Compensation
Program.Re-Design
Beyond communicating our perspectives, we also believe in the value of listening to our shareholders. Over the past several years, feedback from shareholders has helped the Board evaluate and improve Immersion’s executive compensation program. Each year, we conduct outreach to shareholders to receive feedback on matters regarding our executive compensation and corporate governance practices. Throughout the year our CFO also engages with our shareholders, frequently along with our CEO. Additionally, our two largest shareholders (as of April 7, 2020) are represented on our Compensation Committee and have played a significant role in re-designing our compensation practices.
To communicate broadly with our shareholders, we also seek to transparently share information relevant to our shareholders through our Investor Relations website, our Annual Report, and this Proxy Statement.
During fiscal year 2020, our Board and members of management engaged with a cross-section of shareholders to solicit meaningful feedback on our executive compensation program. Based on the feedback received, we concluded that the following two items were of most concern to our shareholders:
•The allocation of equity grants among performance shares, stock options and restricted stock units; and
•A lack of alignment between total shareholder returns and our incentive awards.
Considering this feedback and the results of the advisory vote on executive compensation at our 2020 Annual Meeting, senior management and the Compensation Committee conducted a comprehensive review of our executive compensation program as applicable to our named executive officers. Following this review, significant changes were made to the allocation among our incentive award components. In particular, the Compensation Committee approved the following changes to further align pay and performance:
•A change to the long-term incentive award mix by increasing the overall weighting of performance-based restricted stock units that vest based on the achievement of time-based and price-based targets;
•The cancellation of our former CEO’s annual housing and transportation allowance;
•The cancellation of our short-term incentive awards with respect to fiscal year 2020; and
•A modification to the peer group to add four companies that match well to Immersion.
•We expect that these modifications will enhance the link between pay and performance and will better align management with our shareholders.The modifications are explained in more detail in the pages that follow.
Ongoing Business Transformation
Over the past few years, we have undertaken a strategic transformation of our business, and in turn, our executive leadership team and organizational structure, to effectively position ourselves to compete in a rapidly-evolving technology environment. Our overarching executive compensation objectives are to effectively align our compensation program design to our business strategy, and to attract, develop and retain executives with the background and experience required to lead us forward and provide the best opportunity to achieve sustained growth and profitability. This goal is difficult to accomplish for any business, but it can be particularly complicated when facing a global pandemic and challenging and volatile industry and business dynamics.
As of a result of our ongoing transformation efforts, we have two key leadership team members who are relatively new to their current roles. As described below, at the end of 2020, we promoted Jared Smith to be our Interim Chief Executive Officer, in addition to serving as our Vice President, Worldwide Sales. Mr. Smith is a seasoned executive who has held numerous senior management positions in licensing and business development roles in the technology industry. Additionally, at the beginning of 2020, Aaron Akerman joined the Company as Chief Financial Officer. Mr. Akerman has extensive industry experience in finance, strategic planning and corporate development experience. We have also made other changes within our executive leadership team and broader organization over the past few years.
To understand the design of our executive compensation program, it is important to consider our guiding compensation objectives in the context of our evolving business and management team transition. For 2020, the Compensation Committee focused on attracting, developing and retaining our executive team while incentivizing them to focus on building long-term value for stockholders. These considerations, along with a review of peer group and industry practices, resulted in a portion of our equity awards for 2020 being issued in the form of awards that vest based on the achievement of time-based and price-based targets.
2020 Chief Executive Officer Transition
The past year involved a managerial transition at the Chief Executive Officer position. As disclosed in the Company’s Form 8-K, filed with the SEC on November 5, 2020, Ramzi Haidamus departed as Chief Executive Officer and director of the Company, effective November 3, 2020. Jared Smith, the Company’s Vice President, Worldwide Sales, was appointed as Interim Chief Executive Officer, effective November 3, 2020. In connection with Mr. Smith’s appointment as Interim Executive Officer, the Compensation Committee approved an increase to Mr. Smith’s then-current annual base salary from $283,500 to $365,000, effective as of November 10, 2020. Additionally, Mr. Smith was granted an award of PSUs covering 100,000 shares of common stock.
2020 Chief Financial Officer
The past year also involved the successful conclusion of a search for a permanent Chief Financial Officer, which began in March 2019. Mr. Aaron Akerman was appointed as Chief Financial Officer effective as of January 13, 2020. Previously, Mr. Len Wood served as Interim Chief Financial Officer since July 2019. Our Board believes Mr. Akerman’s financial expertise is vital to our ongoing business transformation.
In connection with Mr. Akerman’s appointment, he received a base salary of CAD $310,000 per year (which was reduced to CAD $279,000 in light of the Company’s COVID-19-related cost-cutting initiatives described below), a sign-on bonus in the amount of CAD $40,000 and a target annual bonus opportunity under the Company’s Executive Incentive Plan of 50% of his then-current base salary.
Additionally, in connection with his appointment, the Company granted Mr. Akerman an option to purchase 140,000 shares of common stock with an exercise price equal to the fair market value of the Company’s common stock on his January 13, 2020 employment start date that will vest over four years
with 1/4th of the total shares subject to the option vesting on the first anniversary of his employment start date and an additional 1/48th of the total shares subject to the option vesting each month thereafter, subject to Mr. Akerman’s continued employment on the applicable vesting dates. Mr. Akerman also received an RSU award covering 70,000 shares of common stock. The RSU will vest over three years, with one third of the total shares subject to the RSU vesting on each of the first, second and third anniversaries of Mr. Akerman’s employment start date, subject to his continued employment with the Company on the applicable vesting dates. Mr. Akerman was also granted an award of performance-based restricted stock units covering 30,000 shares of common stock.
COVID-19 Responsive Actions
On March 11, 2020, the World Health Organization declared a novel strain of coronavirus (“COVID-19”) a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. Management responded quickly during the year to safeguard employees, avoid layoffs, preserve capital and maintain operations, while protecting shareholder interests. In response to the economic challenges resulting from COVID-19, the Company engaged in several initiatives designed to mitigate the impact of COVID-19 on the Company and to position the Company for longer-term growth while preserving our financial strength throughout this period of global uncertainty.
As part of the broader effort to address the near-term economic challenges brought on by the pandemic, the Company approved a reduction of officers’ salaries and its non-employee directors’ cash compensation. Specifically, effective as of April 1, 2020, the Board enacted a 25% reduction in each director’s cash compensation for service on the Board and each of its committees and, effective as of April 25, 2020, the Company implemented a 10% reduction in the base salaries of the Company’s executive officers along with other members of the Company’s senior management. Additionally, effective as of June 25, 2020, the Compensation Committee exercised its discretion to cancel the Company’s 2020 Executive Incentive Plan.
Finally, the Company also suspended its 401(k) matching program.
The Compensation Committee will continue to evaluate whether and when to reverse any of these changes and whether to make any changes to our compensation program for 2021.
2020 Business Highlights
The following are some of the highlights of our business results in 2020:
•Net income for 2020 was $5.4 million, or $0.19 per diluted share, compared to net loss of $20.0 million, or $0.64 per diluted share, for 2019.
•Announced commercial partnership with Faurecia for the use of Immersion’s haptic technologies and solutions for interactive haptic user interfaces for the car.
•Signed a multi-year license agreement with Woory Industrial Co. Ltd., a leading automotive supplier in Korea, for haptic technology use in automotive touchscreens.
•Executed renewal agreement with Abtivan, an innovative game peripheral OEM that offers force feedback steering wheel and related racing and flight simulator equipment.
•Signed a multi-year licensing agreement with SenseArena, a provider of VR products for athletes designed to improve reaction time and performance.
•Announced a collaboration agreement with StrikerVR, a developer of cutting-edge force feedback peripherals for the use of new adaptive trigger capabilities in StrikerVR’s next generation VR and gaming peripheral devices.
•Named a Top 100 Global Innovator 2021 by Clarivate for the second year in a row. Clarivate is a global leader in providing trusted insights and analytics on research and intellectual property.
2020 Compensation Highlights
The following are some of the highlights related to the 2020 compensation of our named executive officers:
•The Compensation Committee granted PSUs to our executive officers and changed the long-term incentive award mix by increasing the overall weighting of PSUs in order to better align the compensation of our named executive officers with the creation of long-term stockholder value.
•The Compensation Committee exercised its discretion to cancel the 2020 Executive Incentive Plan, in light of COVID-19 and related events.
•The Board approved a 10% reduction in the base salaries of our executive officers.
•Based on the feedback we received from shareholders and the results of the advisory vote on executive compensation at our 2020 Annual Meeting, we made a number of changes to our executive compensation program to further align pay and performance. These changes included the cancellation of our former CEO’s annual housing and transportation allowance and a modification to the peer group to add four companies that match well to Immersion.
Overview of our Executive Compensation Program.
In determining the compensation of our named executive officers,
for fiscal 2015, the Compensation Committee
evaluatedevaluates various factors, including the following:
•our overall business and financial performance;
•how our compensation program can drive our strategic goals and support stockholder value creation;
•the individual’s performance, experience and skills;
•compensation previously paid or awarded to the individual; and
•competitive market data for similar positions based on an analysis consisting of a blend of data from our compensation peer group and the technology survey data from Radford Associates, a unit of Aon Hewitt; andConsulting.
voting results from our 2014 “Say-on-Pay” vote on the compensation of our named executive officers.
For fiscal 2015, the
The Compensation Committee approvedhas established an executive compensation program that consistedconsists of three principal elements: base salary, short term cash incentive awards under our executive incentive plansplan (“EIP”EIP”) and long-term equity-based incentive awards (“LTI”LTI”). OurThe Compensation Committee believes that by allocating compensation among these elements, our overall executive compensation program appropriately balances compensation-related risk and the desire to focus our named executive officers on specific short-term and long-term goals important to our overall success. Consistent with our pay-for-performance philosophy, a significant portion of the compensation of our named executive officers in fiscal 2015 was variable or at-risk. For our Chief Executive Officer, 74% of his target total direct compensation was subject to annual performance goals or tied to the appreciation in value of our common stock. For our other named executive officers as a group, 47% of their target total direct compensation was subject to annual performance goals or tied to the appreciation in value of our common stock.
| | | | | | | | |
 | |  |
| Annual Cash Incentives | | Annual cash incentives are intended to motivate and reward our executives for the achievement of corporate, litigation and individual objectives. For 2020, corporate goals were based on Revenue and non-GAAP Operating Expenses. |
| Long-Term Equity Incentives | | Long-term equity awards incentivize executives to deliver long-term shareholder value, while also providing a retention vehicle for our top executive talent. In 2020, equity awards were delivered as stock options, restricted stock units and performance-based restricted stock units. |
The following table summarizes total direct compensation for our named executive officers in fiscal 2015:
| | | | | | | | | | | | | | |
| | | Base Salary | | Executive Incentive Plan
(EIP) | | | Equity Award (3) | |
| Name | | 2015 Base
Salary
($) (1) | | Percent
Change
Compared
to 2014 | | 2015 EIP
Award Target
($) | | 2015 EIP
Award
Payout
($) | | | 2015 Equity
Award ($) | |
Victor Viegas (2) | | 350,000 | | --- | | 402,500 | | | 424,976 | | | | 572,595 | |
Paul Norris | | 300,472 | | 4% | | 165,260 | | | 173,334 | | | | 199,454 | |
Mahesh Sundaram | | 325,000 | | 2% | | 195,000 | | | 204,528 | | | | --- | |
Jason Patton (4) | | 242,050 | | 3% | | 121,025 | | | --- | | | | 78,623 | |
(1) Differs from actual paid as set forth in Summary Compensation Table due to payroll period allocation.
(2) Mr. Viegas has never received an increase in his base salary since he was hired in October 2009.
(3) Equity award value is grant value as reported in the Summary Compensation Table.
(4) Mr. Patton’s last day with the company was December 31, 2015 and thus, was not eligible to receive a payout under the 2015 Executive Incentive Plan.
Executive Compensation Governance
Policies and
Best Practices
In designing our executive compensation program, we have implemented
programspolicies and
policiespractices to create alignment with our stockholders and that support our commitment to good
compensationcorporate governance as follows:
•Clawback Policy. We haveOur Executive Incentive Plan provides the Company with the authority to require repayment of certain annual cash incentivesincentive awards in instances of executive misconduct.fraudulent activity and/or misstated financials or otherwise inaccurate financial reporting.
•No Tax Gross-Ups. Tax gross-ups are not provided to our executive officers for personal expenses or in the event thatif excise taxes are incurred following a qualifying termination of employment in connection with a change in control.control of the Company.
•Independent Compensation Consultant. The Compensation Committee has engaged Compensia, Inc. (“Compensia”Compensia”) to act as its independent compensation consultant. Compensia provides services only to the Compensation Committee and provided no other services to us during fiscal 2015.2020.
•Stock Ownership Guidelines. We have established stock ownership guidelines to further align our CEO’sexecutive officers’ interests with those of our stockholders. The guidelines require our CEOexecutive officers to acquire and hold shares of our common stock having a meaningful ownership interestvalue equal to three, in the case of our company.CEO, and one, in the case of our other executive officers, times their base salary divided by the average closing price for the 12-month period ending on December 31.
•Capped Award Payouts. We set maximum award levels on our executive cash incentive plans.
•No Repricing of Underwater Options. Repricing of stock options is expressly prohibited by our equity incentive plan without the approval of our stockholders.
•No Executive Pension Benefits. Named executive officers participate in the same defined contribution retirement plans as our other employees.
•Anti-Hedging and Anti-Pledging Policy. Our named executive officers are subject to our Insider Trading Policy, which prohibits short sales, hedging or pledging of stock.
•Double Trigger Vesting. The equity awards held by our named executive officers are subject to “double trigger” vesting meaning that there needs to be both a termination of employment and change in control for the awards to vest.
•Annual Say-on-Pay.We annually submit “say on pay” advisory votes for shareholder consideration and vote.
The Compensation Committee believes that the
programspolicies and
policiespractices described above clearly demonstrate our commitment to, and consistent execution of, an effective performance-oriented executive compensation program.
2014
At the annual meeting of our stockholders held in June 2014, which is the last time our stockholders considered our named executive officers’ compensation,2020, approximately 54%72% of the total stockholders’ votes cast were castvoted in favor of the fiscal 2020 compensation of our named executive officers’ 2013 compensation. In response toofficers. While this result,vote was not binding on the Company, the Board, or the Compensation Committee, has continuedwe believe that it is important for our shareholders to modify key elementshave an opportunity to vote on this proposal on an annual basis to express their views regarding executive compensation.
Additionally, in the executiveevaluating our compensation program, we routinely have discussions with our largest shareholders regarding many topics, which include discussions related to addressour compensation strategies.
We have determined that our stockholders should vote on a say on pay proposal each year, consistent with the
stockholders’ concerns, including (1) overpreference expressed by our stockholders at the
last two years, increasing the percentage of the total cash compensation of the Chief Executive Officer that is subject to performance by increasing the targeted award of the executive incentive plan in lieu of increasing base salary; (2) granting the Chief Executive Officer an option grant with 100% performance-based vesting as compared to the time-based vesting used in the past; and (3) targeting just under the 50th percentile of the benchmark data for determining the value of the Chief Executive Officer’s grant.2017 annual meeting.
The primary objective of our executive compensation program is to align compensation with our overall business goals and stockholder interests. Our compensation objective is to attract and retain top tier executive talent capable of managing in a dynamic business environment and motivate them to achieve above-market performance with a long-term view in creating stockholder value. To this end, our executive compensation philosophy reflects:
•a pay-for-performance model that delivers paya significant portion of an executive’s total cash compensation based on overall companyCompany and individual performance;
•an emphasis on long-term equity-based incentive awards that link a meaningful portion of executive compensation to the appreciation in value of our common stock; and
•evaluation of our pay levels and compensation practices against a peer group that is reasonable and appropriate for our company.Company.
Our named executive officers’ total compensation includes base salary, an annual incentive cash award, and long-term equity incentive compensation.
| | | | | | | | | | |
Compensation Element | | | | Objectives | | | | | | Key Features |
Base Salaries | | | | To provide a fixed level of cash compensation to reward demonstrated experience, skills and competencies relative to the market value of the job.
| | | | | | Adjustments are considered annually based on individual performance, level of pay relative to market and internal pay equity.
|
Short-Term Cash Incentive Awards
| | | | Rewards annual corporate and individual performance and achievement of strategic goals.
Aligns named executive officers’ interests with those of our stockholders by promoting strong annual results through revenue growth and operating efficiency.
| | | | | | Short-term cash incentive payments are cash awards based on financial targets—Revenue and Non-GAAP Net Income (as defined below in the section entitled “Executive Incentive Plans”)—for all named executive officers. A portion of the cash incentive award is also based on individual performance evaluated against individual
|
| | | | | | | | | | |
Compensation Element | | | | Objectives | | | | | | Key Features |
| | | | Retains named executive officers by providing market-competitive compensation.
| | | | | | performance goals. Annual incentive awards can vary from 0% to 216% of the target amount for the Chief Executive Officer and 0% to 204% for all other Named Executive Officers. For payment to have been made under the objective component of the plans, the minimum revenue and Non-GAAP Net Income targets need to have been met.
|
Long-Term Incentive Awards (Equity Awards)
| | | | Aligns named executive officers’ interests with long-term stockholder interests by linking part of each named executive officers’ compensation to stock price performance.
Provides opportunities for wealth creation and ownership which promotes retention and enables us to attract and motivate our named executive officers.
Retention of named executive officers through multi-year vesting of equity granted and multi-year performance periods.
| | | | | | Utilizes different equity types, including stock options and restricted stock units to balance stockholder interests and retention.
Long-term equity awards generally vest in increments over a three or four-year period.
In the case of our CEO, vesting is linked to performance-based conditions.
|
Our executive officers are also eligible to participate in our health and benefits plans, retirement savings plans and our employee stock purchase plan, which are generally available to all of our employees.
Although
ourthe Compensation Committee has not established a fixed policy for the allocation between cash and equity compensation or short-term and long-term compensation,
ourthe Compensation Committee, as part of its evaluation of the compensation of our executive officers, reviews not only the individual elements of compensation, but also total compensation.
Pay-for-Performance
Our executive compensation program rewards executive officers for achievement of annual and long-term goals, based on their individual performance and their contribution to the overall performance of the Company. It is intended to balance annual performance incentives through salary and annual cash incentives with rewards for long-term performance through an equity incentive plan.In prior years, the equity incentive plan has utilized primarily stock option awards and awards of time-based restricted stock unit awards.As discussed below, commencing in 2020, we will also use performance-based restricted stock unit awards that vest over four years for long-term incentive compensation.
While performance drives all aspects of our executive officers’ total direct compensation, in 2020, approximately 78% of the target total direct compensation of our CEO and other named executive officers was variable or performance-based, reflecting our pay-for-performance philosophy.
(1)The charts reflect the value of the 2020 target total direct compensation opportunity as considered by our Compensation Committee as follows with respect to our CEO and other NEOs: (i) annual salary for 2020; (ii) target 2020 Executive Incentive Plan bonus opportunity; and (ii) the grant date fair value of equity awards granted during 2020 under the 2011 Equity Incentive Plan.
As described under “Long-Term Equity Incentive Awards – PSUs”, in 2020, the Company altered its practices with respect to long-term equity incentive compensation. Our long-term incentive plan now employs a combination of stock options, restricted stock units and performance-based restricted stock units which vest over time to motivate and reward long-term, multi-year performance and facilitate retention of our executives. Stock options (which generally vest ratably over a four-year period) and restricted stock units awards (which generally vest ratably over a three or four-year period) create a balanced focus on the achievement of short-term and long-term financial and operational goals and stock price performance.Performance-based restricted stock units are earned based on multi-year performance over a four-year performance cycle.The performance-based restricted stock units vest based on attainment of stock price targets.The use of stock price targets as the vesting criteria for the performance-based restricted stock units ensures alignment between shareholders and participants.The Compensation Committee believes that by adopting this practice, it will serve to incentivize and reward executives for strong performance over the long-term.
Compensation Determination Process
Role of Compensation Committee
The Compensation Committee reviews and recommends to the Board for approval all compensation programs (including equity compensation) applicable to our named executive officers and directors, our overall strategy for employee compensation, and the specific compensation of our Chief Executive Officer.
The Compensation Committee approves the compensation of all other executive officers. The Compensation Committee has the sole authority to select
and retain
and terminate specialconsultants, consulting firms, legal counsel,
accounting and other
experts (including compensation consultants),advisers, as
the Compensation Committeeit deems appropriate.
Role of Chief Executive Officer in Compensation Decisions
While the Compensation Committee determines our overall compensation philosophy, our Board sets the compensation for our Chief Executive Officer. Our Chief Executive Officer also provides our Board and our
the Compensation Committee with his perspective on the performance of our named executive officers as part of the determination of the individual portion payable under the executive incentive plans (as described below) and the annual personnel review as well as a self-assessment of his own performance. Our Chief Executive Officer is not present during
any discussions by
ourthe Compensation Committee or our Board relating to his own compensation. Our Chief Executive Officer recommends to
ourthe Compensation Committee specific compensation amounts for named executive officers other than himself, and
ourthe Compensation Committee considers those recommendations and the information provided by its compensation consultant concerning peer group comparisons and industry trends
and makes the ultimatewhen making its compensation decisions. Our Chief Executive Officer,
Vice Presidentmembers of
our Human Resources
department, and General Counsel regularly attend
ourportions of the Compensation Committee’s meetings to provide perspectives on the competitive landscape and the needs of the business, information regarding our performance, and technical advice. Members of
ourthe Compensation Committee also participate in our Board’s annual review of the Chief Executive Officer’s performance and its setting of annual performance goals, in each case led by our independent
Executive Chairman of the
Board. See “Board Structure” above for further details.Board or previously our Lead Independent Director.
Role of the Compensation Consultant
The Compensation Committee uses a compensation consultant primarily to provide input on compensation trends and developments and to assist with
the analysis of competitive executive compensation
benchmarking.levels and trends. The compensation consultant also provides a valuable outside perspective on executive compensation practices.
In establishing executive compensation for fiscal
2015,2020, the Compensation Committee engaged Compensia to serve as its
independent compensation consultant. During fiscal
2015,2020, Compensia advised
ourthe Compensation Committee on executive compensation matters, including performing an executive compensation assessment,
a peer group
methodology,review and development, the structure of our compensation program, risk mitigation,
advice on CEO and CFO compensation and disclosure about executive compensation. Compensia was engaged directly by the Compensation Committee and does not provide any other unrelated products or services to us.
NoBased on its review of the factors set forth in the Nasdaq listing standards, the Compensation Committee has determined that the work performed by Compensia during fiscal year
2015 raised2020 did not raise a conflict of interest.
Peer Group and
BenchmarkingCompetitive Positioning
In performing the executive compensation assessment for our Chief Executive Officer and Chief Financial Officer, Compensia used market data that reflected a 50/50 blend of (1) compensation data from the peer group below and (2) a blend of national Radford technology survey data for companies with under $50 million in revenues and $50 to $199.99$200 million in revenues. In performing the executive compensation assessment for all other executive officers, Compensia used the national Radford technology survey data for companies with $50 to $200 million in revenues. Compensia also reviewed for all executive officers the same blend using Bay Area Radford technology survey data.
The companies comprising the peer group used by Compensia to aid in
benchmarkingevaluating the compensation
of our executive officers for
20152020 were:
| | | | | | | | |
Audience | Acacia Research | CEVA Inc. | | Digimarc Corp.CyberOptics |
DTSDigimarc | Finjan Holdings | GSI Technology | | IntermolecularTechnologies (new) |
MoSysImpinj | Intelligent Systems (new) | NeonodeLuna Innovations (new) |
| Mitek Systems | MobileIron | NVE |
| PDF Solutions | Pixelworks | Universal DisplaySeaChange International (new) |
| VirnetX Holding Corp (new) | | Wi-Lan |
In determining the peer group for
fiscal 2015,2020, the Compensation Committee reviewed the peer group used in fiscal
20142019 against the objective criteria used for selecting peers in
20142019 including companies in the IP licensing,
or semiconductor,
industrysoftware, technology hardware, storage and peripherals, and other technology/hardware equipment industries with revenues that were approximately one-half to three
times our estimated revenues for 20132019 and market capitalizations equal to approximately one-half to three times our market capitalization. Although several ofThe following companies were deleted from the companies did not meet the criteriapeer group in fiscal 2015,2020: Aquantia, Datawatch, Agilysys, Mesa Laboratories and USA Technologies.
While the Compensation Committee
elected to keep the companies as part of the peer group due to the overlap of companies with the ISS-defined peer group and the lack of other similarly-situated companies.Compensation Determinations
The Compensation Committee made compensation determinations for our named executive officers for fiscal 2015 based on the analysis of pay levels compared to the data provided by Compensia as described above. In making these determinations, our general approach is to position the target compensation for our named executive officers based on benchmark data. While we believebelieves that comparisons to benchmarkcompetitive market data are a useful tool, we doit does not believe that it is appropriate to establish executive compensation levels based solely on a comparison to market data. Due to the variations between companies’ reporting and the roles for which compensation for these companies is ultimately disclosed, directly comparable information is not available from each peer group company with respect to each of our named executive officers. In considering market compensation data, the Compensation Committee recognizes that executives at different companies can play significantly different roles, with different responsibilities and scopes of work, even though they may hold similar titles or nominal positions. The Compensation Committee therefore uses the competitive market data as a starting point while also considering subjective factors such as experience, skills, competencies and performance. After reviewing these various factors, the
Elements of Compensation Committee relies upon the judgment of its members and makes adjustments to an executive’s compensation below or above the targeted percentile ranges. As a result, target compensation for each of our
Our named executive
officers may fall below or above positioning relative to the peer groupofficers’ total compensation includes base salary, short term cash incentive awards under our executive incentive plan (other than for
a particular element ofour Interim Chief Executive Officers), and long-term equity incentive compensation.
| | | | | | | | |
| Element | Objectives | Key Features |
| Base Salary | • To provide a fixed level of cash compensation to attract and retain executive officers, and reward demonstrated experience, skills and competencies relative to the market value of the job. | •Adjustments are considered annually based on individual performance, level of pay relative to market and internal pay equity. |
| Short-Term Cash Incentive Awards | • Rewards annual corporate and individual performance.
• Aligns compensation with performance against the board-approved annual operating plan | •Short-term cash incentive payments are based on financial, litigation and individual performance
•For 2020, financial measures were: ◦Revenue ◦Non-GAAP Operating Expenses
•Earned annual incentive awards can vary from 0% to 240% of the target amount for our CEO and 0% to 204% for all named executive officers. With respect to the fiscal 2020 Executive Incentive Plan, no awards were paid out to our named executive officers because the 2020 Executive Incentive Plan was cancelled. |
| Long-Term Incentive Awards (Equity Awards) | •Aligns named executive officers’ interests with long-term stockholder interests by linking part of executive compensation to stock price performance.
• Provides opportunities for wealth creation and ownership which promotes retention and enables us to attract and motivate our named executive officers.
• Provides a retention vehicle through multi-year vesting of equity granted and multi-year performance periods. | •Uses different equity types, including stock options, restricted stock unit (“RSU”) awards and performance-based restricted stock unit awards (“PSU”) to balance stockholder interests and retention.
•Long-term equity awards generally vest in increments over three years for RSUs or four years for stock options and PSUs. |
In determining base salaries for our named executive officers, the Compensation Committee considered the market data for
executives serving in similar
position, thepositions, as well as individual performance, experience and
skill. These increases were effective February 1, 2015. Mr. Viegas’ base salary is positioned at approximately the 50th percentile of the comparator group, and Mr. Norris and Mr. Patton are positioned at just above the 60th percentile of the comparator group, and Mr. Sundaram’s salary is outside the range of the comparator group due to previously disclosed employment arrangements which were negotiated upon hiring.skills.
The named executive officers’ base salaries for
2015,2020, as compared to
2014,2019, were as follows:
| | | | | | |
| Name | | 2014 Base Salary ($) (1) | | 2015 Base Salary ($) (1) | | % Increase |
Victor Viegas (2) | | 350,000 | | 350,000 | | -- |
Paul Norris | | 289,433 | | 300,472 | | 4 |
Mahesh Sundaram | | 320,000 | | 325,000 | | 2 |
Jason Patton | | 235,000 | | 242,050 | | 3 |
| | | | | | | | | | | | | | |
| Name | | 2019 Base Salary ($) | 2020 Base Salary ($)(1) | % Increase |
| Ramzi Haidamus | | 525,000 | 525,000 | — |
Aaron Akerman(2) | | — | 231,386 | — |
| Michael Okada | | 375,000 | 381,000 | 1.6% |
Jared Smith(3) | | 310,000 | 315,000 | 1.6% |
Len Wood(4) | | — | — | — |
(1) DiffersThese base salaries were prior to the 10% base salary reduction noted above in “COVID-19 Responsive Actions.”
(2)Amounts paid in Canadian dollars have been converted to U.S. dollars using the average daily exchange rates from actualJanuary 1, 2020 to December 31, 2020 of CAD $1 to USD $0.75.
(3)The Compensation Committee approved an increase to Mr. Smith’s base salary to $365,000, effective as of November 10, 2020, in connection with Mr. Smith’s service as Interim Chief Executive Officer.
(4)Mr. Wood was paid as set forthan hourly contractor.
As noted above in Summary“COVID-19 Responsive Actions,” in light of COVID-19 and related events and their impact on the Company’s business, the Board approved a 10% reduction in the base salaries of the Company’s executive officers, including Messrs. Haidamus, Akerman, Okada, and Smith, along with other members of the Company’s senior management reporting directly to Mr. Haidamus, with such reduction effective April 15, 2020.
As disclosed in the Company’s Form 8-K, filed with the SEC on November 16, 2020, in connection with Mr. Smith’s appointment as Interim Executive Officer, the Compensation
Table due to payroll period allocation.(2) Mr. Viegas has never receivedCommittee approved an increase into Mr. Smith’s then-current annual base salary from $283,500 to $365,000, effective as of November 10, 2020, representing a 28.7% increase over his then-current base salary and a 17.7% increase over his base salary sincein fiscal year 2019.
Mr. Wood billed at $200 per hour during the time that he
was hired in October 2009.served as Interim Chief Financial Officer.
Annual Cash Incentives
The 2020 Executive Incentive
Plans.The executive incentive plans arePlan is a cash incentive programsprogram designed to align executive compensation with annual performance and to enable us to attract, retain, and reward individuals who contribute to our success and to motivate such individuals to enhance our value. OurThe Compensation Committee
believes that aggregate incentive payouts should be tightlyclosely linked to our overall financial performance, with individual compensation differentiated based on individual performance. As a result,Thus, funding and payouts under the executive incentive plans aresuch plan is dependent and based on both corporate and individual performance further reinforcing our performance and each individual’s performance. Our Compensation Committee reserves the right to cancel, suspend, amend or revise all or any part of the executive incentive plans for any reason at any time.
pay-for-performance philosophy.
The Compensation Committee established a target award value as a percentage of base cash compensation for each of our named executive officersMessrs. Okada, Smith, Haidamus and Akerman for fiscal 20152020 based on its review of competitive market data for similar positions and various other factors, including individual performance in the prior year and the terms of employment arrangements with the individual. Target awards are expressed as a percentageMr. Wood did not participate in the 2020 Executive Incentive Plan. Thus, the remainder of base salary. In establishingthis section sets forth the target award value,Company’s annual cash incentive compensation philosophy generally and describes the specific metrics and criteria that were established by the Compensation Committee consideredfor 2020 prior to the 65th to 75th percentileonset of target total cash compensation of the peer group. Both Mr. ViegasCOVID-19.
Messrs. Haidamus’, Smith’s and Mr. Norris received an increase in theirOkada’s target award percentages. In order to further alignpercentages for 2020 remained the same as 2019 at 100%, 60% and 50% of their base salary as of March 2, 2020, respectively. Mr. Viegas’ cash compensation with the interests of the stockholders, the Board increased his 2015Akerman’s target award from 100% of his base salary to 115%. The target award, although slightly higher than the benchmark,percentage was deemed appropriate in lieu of not raising his base salary. The Board felt that this incentive structure better promotes strong annual results, revenue growth and operating efficiency. Mr. Norris’ award was increased fromset at 50% of his base salary to 55%, putting his target total cash compensation at the 75th percentile of the benchmark usedsalary.
As noted in setting compensation. Mr. Sundaram’s and Mr. Patton’s total target cash was higher than the benchmark used as they reflect previously disclosed employment arrangements which were negotiated upon hiring.For fiscal 2015, target awards under the executive incentive plans represented a significant portion of total cash compensation for our named executive officers, which aligns more of the named executive officers’ compensation with the interests of the stockholders. In the case of Mr. Viegas,“COVID-19 Responsive Actions,” the Compensation Committee increased his target awardexercised its discretion to cancel the Company’s 2020 Executive Incentive Plan, effective June 25, 2020, in light of COVID-19 and related events and their impact on the Company’s business. As a result, Messrs. Haidamus, Smith, Okada and Akerman did not receive any payouts under the executive incentive plan2020 Executive Incentive Plan. As discussed in lieu“
Elements of increasing his base salaryCompensation – Long-Term Equity Incentive Awards”, the Compensation Committee reserved its discretion to approve other incentives that better aligned with performance and stockholder interests, and in 2015November 2020, the Compensation Committee granted performance-based restricted stock units tied to further align his interests with thosethe Company’s stock price to each of the stockholders.Messrs. Smith, Okada, and Akerman.
2020 Executive
2015 EIP Payments.Incentive Plan Payments
The following table sets forth the determinations of
ourthe Compensation Committee in February
20162020 with respect to the
executive incentive planExecutive Incentive Plan targets for fiscal
2015,2020 prior to the emergence of COVID-19, as well as the actual amount of the cash incentive awards received by our named executive officers upon payout of the fiscal
2015 executive incentive plan. | | | | | | |
| | | Fiscal 2015 EIP Target |
| Name | | Percentage of
Base Salary Rate | | Award Value at
Target ($) | | Fiscal 2015 EIP
Award Payout ($) |
Victor Viegas | | 115% | | 402,500 | | 424,976 |
Paul Norris | | 55% | | 165,260 | | 173,334 |
Mahesh Sundaram | | 60% | | 195,000 | | 204,528 |
Jason Patton* | | 50% | | 121,025 | | -- |
*Mr. Patton was no longer an employee in February 2016 when the Compensation Committee made its determinations of the payout under the 20152020 Executive Incentive Plans and thereforePlan (which was ineligible$0 since the 2020 Executive Incentive Plan was cancelled).
| | | | | | | | | | | |
Name(1) | Target Incentive Opportunity (as a % of base salary) | Target Award Value) ($)(2) | 2020 Earned
Awards
($) |
| Ramzi Haidamus | 100% | 525,000 | — |
| Michael Okada | 50% | 190,500 | — |
| Jared Smith | 60% | 186,000 | — |
| Aaron Akerman | 50% | 115,693 | — |
(1)Mr. Wood did not participate in the 2020 Executive Incentive Plan
(2)Amounts payable in Canadian dollars have been converted to participate.OurU.S. dollars using the average daily exchange rates from January 1, 2020 to December 31, 2020 of CAD $1 to USD $0.75.
The Compensation Committee, with input from our Chief Executive Officer,
for all named executive officers other than our Chief Executive Officer, establishes (1)
the performance measures based on business criteria and target levels of performance and (2) a formula for calculating each participant’s award based on
our actual performance compared to the pre-established performance goals.
Performance measures may be based on a wide variety of business metrics.
Our 20152020 Executive Incentive Plan for our named executive incentive plans wereofficers, except for Messrs. Haidamus and Akerman, was based on two independent components. A percentage of the bonus was based on the achievement by us of certaincomponents: (i) corporate financial metrics in 2015 as set forth below, and the remainder of the bonus was based on(ii) the achievement of individual management objectives. For payment to have been made under the objectivecorporate component and individual management objectives of the plans, we must have met the minimum GAAP revenue and Non-GAAP Net Income targetsOperating Expenses target levels set forth in the matrix below. If minimum GAAP revenue and Non-GAAP Net Income isOperating Expenses were not achieved, then the plan doeswould not fund.be funded. The maximum level of payout for the corporate component of the bonus was 200%. In addition, ourthe Compensation Committee determined the performance weighting factorsfactor to be applied to the initial calculation of each executive’s two independent components of thenamed executive officer’s bonus, which weighting factors arefactor was based on each executive’snamed executive officer’s overall individual annual performance as determined by ourthe Compensation Committee. EachThe standard weighting factor iswas 1.0 but cancould be increased or decreased by 0.2 at the Compensation Committee’s discretion, as applicable.discretion. If each such weighting factor iswas increased or decreased from the standard weighting factor of 1.0, then such modified weighting factor is then multiplied bywas applied to (i) corporate financial metrics and (ii) the applicable independently determined componentachievement of such executive’s incentive planindividual management objectives to determine the total incentive payment. As a result, the Chief Executive Officer isour named executive officers were eligible to receive a maximum cash award of 0%-216%204% ((70% corporate bonus x 200% maximum payout = 140% x 1.2 maximum weighting factor = 168%) plus (30% maximum individual component x 1.2 maximum weighting factor = 36%) = 204% aggregate maximum bonus) of his executive incentive plan
their respective target award based on the achievement of corporate financial goals and individual performance goalsgoals.
Our 2020 Executive Incentive Plan for Messrs. Haidamus and
all other named executive officers areAkerman did not include the individual management objectives component and instead was entirely based on the corporate financial metrics component. As a result, Messrs. Haidamus and Akerman were eligible to receive a
maximum cash award of
0%-204%240% (100% corporate bonus x 200% maximum payout = 200% x 1.2 maximum weighting factor = 240% aggregate maximum bonus) of their respective
executive incentive plan target
awards based on the achievement of corporate financial and individual performance goals.awards.
The GAAP revenue and Non-GAAP
Net IncomeOperating Expenses matrix for the corporate objectives of the
2015 executive incentive plans2020 Executive Incentive Plans was set by the Compensation Committee and was based on our annual operating plan. The matrix was as follows:
| | | | | | | | | | |
| GAAP Revenue ($) / Non-GAAP Net Income Targets ($) | | 50,120,000 | | 56,385,000 | | 62,650,000 | | 68,915,000 | | 75,180,000 |
11,192,878 | | 125.0% | | 137.5% | | 150.0% | | 175.0% | | 200.0% |
10,260,138 | | 100.0 | | 112.5 | | 125.0 | | 150.0 | | 175.0 |
9,327,398 | | 75.0 | | 87.5 | | 100.0 | | 125.0 | | 150.0 |
8,394,658 | | 62.5 | | 75.0 | | 87.5 | | 112.5 | | 137.5 |
7,461,918 | | 50.0 | | 62.5 | | 75.0 | | 100.0 | | 125.0 |
| | | | | | | | | | | | | | | | | |
| Revenue (Weighted 50%) | Threshold | | Target | | Maximum |
| Revenue | $28,700,800 | $32,288,400 | $35,876,000 | $39,463,600 | $43,051,200 |
| % of target achievement | 80% | 90% | 100% | 110% | 120% |
| Payout (as % of target) | 50% | 75% | 100% | 150% | 200% |
| | | | | |
| Non-GAAP Operating Expenses (Weighted 50%) | Threshold | | Target | | Maximum |
| Non GAAP Operating Expenses | $28,621,317 | $27,320,348 | $26,019,380 | $24,718,411 | $23,417,442 |
| % of target achievements | 90% | 95% | 100% | 105% | 110% |
| Payout (as % of target) | 50% | 75% | 100% | 150% | 200% |
For purposes of the
executive incentive plans, GAAP revenuefiscal 2020 Executive Incentive Plan, “GAAP revenues” means revenue recognized by us for the applicable period in accordance with GAAP and as reported in our audited financial statements, and
Non-GAAP Net Income“Non-GAAP Operating Expenses” is GAAP
Net IncomeOperating Expenses adjusted to
reflect an expected long-term effective tax rate of 19% less stock basedexclude stock-based compensation,
expense. Non-GAAP Net Income also excludes certain non-recurringlitigation, restructuring, depreciation, executive incentive plan bonus and rank-and-file employee bonus payments and other charges
including discontinued operations, restructuring charges and one-time income tax charges resulting from strategic tax reorganizations.as determined by the Compensation Committee. By excluding certain one-time items from the calculations, the Compensation Committee sought to
reward management for achieving the annual executive incentive plan goals, while at the same time focusing on actionsutilize an operating performance metric that
drive long-term stockholder value.excludes certain non-cash expenses and other special charges that many investors feel may obscure our true operating performance.
Our performance for
2015fiscal 2020 resulted in GAAP revenues of
$63.4$30.18 million and Non-GAAP
Net IncomeOperating Expenses of
$9.074$20.81 million.
Interpolating this resultThus, our revenue fell between
the revenue levels of $62.65$28.70 million and
$68.915$32.29 million and
between the $8.394 million and $9.327 millionour Non-GAAP
Net Income levels on the table above resulted in a payout percentage of 106.98% of target for this measure.Operating Expenses fell below $23.42 million.
For the individual performance of each named executive officer
except for Messrs. Haidamus and Akerman, the Compensation Committee
in February 2020 approved the structure of each named executive officer’s respective 2020 Executive Incentive Plan in terms of what percentage of the target bonus award would be based on corporate financial metrics and what percentage of the target bonus award would be based on MBOs (which the Board had set
management by objectives (MBOs) for
2015Messrs. Okada and Smith in
February 2015 and scored the individual based on the completion of such MBOs as of the end of fiscal 2015. In the case ofDecember 2019). Mr.
Viegas, the Compensation Committee set MBOs that included certain litigation milestones, various licensing milestones, substantially growing our OEM mobile customer base and increasing mobile pricing, effectively going to market with a wearables solution, engaging with and entering agreements with key strategic accounts, conducting pilot studies for the mobile content business, growing our Board of Directors, retooling the marketing department and achieving 2015 financial targets. Mr. Sundaram’sOkada’s MBOs included
achieving the 2015 revenue plan, making progress with mediumelements related to
long term business development,subsidiary restructuring, patent review and cost management, and matters relating to ongoing legal proceedings. Mr. Smith’s MBOs included initiatives related to strategic customer and partner engagements and sales
organizational health, discipline and development. Mr. Norris’ MBOs included certain key licensing activities, assisting with implementing the content and OEM business strategy
managing our compliance program, playing a lead role in
investor relations, developing team members, managing information technology, implementing the international tax planning strategy and continuing to monitor and lead cost reduction efforts. Mr. Patton’s MBOs included creating and maintaining a content team, creating and developing our strategy for the content business, tracking and executing against key quarterly sales goals, driving process for analytics and content and creating an improved industry and online presence.The following table set forth the amounts earned under each component of the 2015 executive incentive plans by the named executive officers:
| | | | | | | | | | | | | | |
| | | CORPORATE COMPONENT
ACHIEVEMENT AT 106.98% | | INDIVIDUAL COMPONENT
ACHIEVEMENT AT 100% | | |
| Name (1) | | Percentage
of Target | | Multiplier | | Actual
Corporate
Component | | Percentage
of Target | | Individual
Component
Multiplier | | Actual
Individual
Component | | Total 2015
Award |
Victor Viegas | | 80% | | 1.0 | | $344,476 | | 20% | | 1.0 | | $80,500 | | $424,976 |
Paul Norris | | 70% | | 1.0 | | $123,756 | | 30% | | 1.0 | | $49,578 | | $173,334 |
Mahesh Sundaram | | 70% | | 1.0 | | $146,028 | | 30% | | 1.0 | | $58,500 | | $204,528 |
(1) Mr. Patton was ineligible as his last day with the company was December 31, 2015 and thus was not eligible to receive a payout under the 2015 Executive Incentive Plan.
China.
Long-Term Equity Incentive
Awards.The Compensation Committee approved annual equity awards to our named executive officers in the fiscal year 2015 after considering individual and corporate performance generally, the total compensation levels by our executives and the need to retain executives. Our Compensation Committee considers both executive and corporate performance as well as the actual compensation levels of our compensation peer companies when determining the size of equity awards.
In an effort to further align Mr. Viegas’ compensation to our performance and stockholder value creation, the Compensation Committee granted Mr. Viegas a stock option that would vest and become exercisable only if the closing price of a share of our common stock equals or exceeds $10.52 for 30 consecutive trading days on or prior to March 3, 2017, after which the option would vest pursuant to our normal and customary four-year time-based vesting schedule. This stock option has a grant date fair value of $572,595, just under the 50th percentile of our median peer group. As of December 31, 2015, this performance condition had not yet been met.
After taking into account their total cash compensation which was higher than the benchmark used, the Compensation Committee granted Mr. Norris an annual stock option grant with a grant date fair value of $199,454 that fell between the 25th and 50th percentile of our peer group and granted Mr. Patton an annual stock option grant with a grant date fair value of $38,173 and restricted stock unit grant with a grant date fair value of $40,450, which when combined also fell between the 25th and 50th percentile of our peer group.
Mr. Sundaram did not receive an equity grant because he had received a new hire grant in November 2014.
Awards
Stock options are intended to align executivesour named executive officers’ interests with the interests of stockholders in increasing sustainable, long-term stockholder value. We view stock options as an element of performance-based compensation because a stock option provides no realizable value upon grant. These instrumentsthey only deliver value to a recipient if the price of our common stock increases above the price of our common stock at the time of grant and the vesting requirements have been met. Our stock options are granted with an exercise price equal to the closing market price for our common stock on the date of grant and provide no cash benefit if the option is not exercised when the price of the stock exceeds the grant price during the option’s term.grant. Our stock options typically vest over a period of four years with 25% of the shares of our common stock subject to the grant vesting after the first year and 1/48th of the shares subject to the grant vesting monthly thereafter.RSUs.
We grant our executives restricted stock units (“RSUs”)
RSUs
RSUs are intended primarily to
aid in management retention, and ensure that,
coupled with our
stock ownership guidelines, executives maintain an ownership stake in our
company. Bycompany that is tied to stock price performance. The Compensation Committee believes that by providing an ownership stake, RSUs
align executives’ financial interests with stockholders’ interests. We believe RSUs alsoincentivize executives to drive our stock price performance, aid in retention and provide value to our
executives, given that we do not provide pensions.executive officers directly aligned with stockholder value. Our RSUs typically vest over a period of three
years, with one-third of the shares subject to the award vesting on each of the first three anniversaries of the grant date.2015 Executive Equity Awards.
or four years.
The
following table sets forth the determinations of our Compensation Committee
in February 2015 with respect to the fiscal 2015approved annual
long term incentive equity awards
forto our named executive
officers: | | | | | | |
| Name | | Position | | Shares Subject to
Stock Options | | Shares Subject to
Restricted Stock
Units |
Victor Viegas | | CEO | | 150,000(1) | | -- |
Paul Norris | | CFO | | 52,250 | | -- |
Mahesh Sundaram | | VP, Worldwide Sales &
Customer Support | | -- | | -- |
Jason Patton | | VP & GM, Content &
Media | | 10,000 | | 5,000 |
(1) Subject to vesting as follows: 100%officers in fiscal 2020 after considering individual and corporate performance generally, the total compensation levels of our executive officers and our retention objectives. The Compensation Committee also considered the compensation practices and levels of the companies in our peer group when determining the size of equity awards.
PSUs
PSUs are intended to align our named executive officers’ interests with the interests of stockholders in increasing sustainable, long-term stockholder value. The Compensation Committee views PSUs as an element of performance-based compensation because they only deliver value to a recipient if the weighted average price of our common stock meets certain stock price targets and the vesting requirements have been met.
As disclosed in the Company’s Form 8-K, filed with the SEC on November 16, 2020, the Compensation Committee granted PSUs to Messrs. Smith, Okada and Akerman in order to better align the compensation of our named executive officers with the creation of long-term stockholder value, thereby further reinforcing our pay-for-performance philosophy.
Mr. Smith was granted an award of PSUs covering 100,000 shares would onlyof common stock, and each of Messrs. Okada and Akerman were granted awards of PSUs covering 30,000 shares of common stock
Each PSU will become eligible to vest and become exercisable upon the achievement of performance conditionscertain stock price targets as set forth below (each, a “Performance Milestone”). Vesting is also subject to continued employment with the Company through the applicable vesting dates, which occur upon the later of: (i) the date of achievement of the applicable Performance Milestone, or (ii) the service vesting date, which service vesting date occurs over a four-year period commencing on November 10, 2020, with 25% of the shares eligible to vest on November 10, 2021 and the remaining shares eligible to vest in equal installments each quarterly anniversary thereafter.
| | | | | |
| Stock Price Target | Amount of PSU Award Eligible to Vest |
| $8.00 | 33.33% |
| $9.25 | 33.33% |
| $10.50 | 33.34% |
Each stock price target will be achieved if the volume weighted average price of the Common Stock meets or
before March 3, 2017.exceeds such stock price target in any one hundred calendar day-period falling within the period beginning on November 10, 2020 and ending on November 10, 2025.
Notwithstanding the foregoing, upon a change of control, the PSUs will immediately vest with respect to any stock price target achieved by such transaction, and any unvested portion of the PSUs will be cancelled upon the consummation of such change of control.
Additional Compensation Policies and Practices
Severance and Change in Control Payments
We have, from time to time, entered into offer letters or employment agreements that contain certain benefits payable, in certain situations, upon termination or change in control of our company. All such benefits extended to our executive officers are approved by our Compensation Committee in order to be competitive in our hiring and retention of executive officers, in comparison with companies with which we compete for talent. All such agreements with the named executive officers are described in “Potential Payments upon Termination or Change in Control” elsewhere in this proxy statement.
We have entered into retention and change in control agreements with our named executive officers with the goal of retaining such executive officers during the pendency of a proposed change of control transaction, and in order to align the interests of the executive officers with the interests of our stockholders in the event of a change in control. We believe that a proposed or actualpotential change in control transaction can adversely impactof the moraleCompany. These arrangements are intended to attract and retain qualified executives who could have other job alternatives that may appear to them to be less risky absent these arrangements, particularly given the significant level of acquisition activity in our industry. Our severance arrangements for our named executive officers, except for Len Wood, Ramzi Haidamus, and create uncertainty regarding their continued employment. WithoutAaron Akerman, outside of a change of control of the benefits underCompany provide for cash severance equal to six months’ base salary and reimbursement of health insurance premiums for up to six months. In the case of Mr. Haidamus, cash severance equals 12 months’ base salary, we reimburse for 12 months of health insurance premiums, provide 100% of his bonus for the then-current fiscal year, and immediately vest the stock options and RSUs that would have vested during the following 12 months. In the case of Mr. Akerman, cash severance equals 12 months’ base salary and we reimburse for 12 months of health insurance premiums.
All of our change of control arrangements are “double trigger,” meaning that severance payments and acceleration of vesting of equity awards are not awarded upon a change of control unless, within 12 months following the change of control, the executive’s employment is terminated without cause or as a result of good reason, each as defined in the applicable agreement.
We believe the structure of our “double trigger” change of control
agreements,arrangements protects stockholder value by allowing us the opportunity to deliver an intact and motivated management team to any potential acquirer. If we did not offer any such change of control arrangements, our executives could be less motivated to pursue a potential acquisition even if such a transaction would benefit our stockholders, because of the possibility that they would lose the potential value of their unvested equity compensation or future cash compensation upon an acquisition. If we offered “single trigger” change of control arrangements, meaning that our executives would receive benefits upon an acquisition even if their employment was not terminated, we could become less attractive to potential acquirers, who may place significant value on retaining members of our executive
officersteam and who may
perceive this goal to be
temptedundermined if executives receive acceleration payments in connection with such a transaction and would no longer be required to
leavecontinue employment to earn the remainder of their equity awards. We believe the “double trigger” structure strikes an appropriate balance between these alternatives because it motivates our
employment priorexecutives to both pursue transactional opportunities that would provide the greatest benefit to stockholders, and to continue providing services to the
closing of the change in control, especially if they believe they will be terminated after thesurviving Company following such a transaction,
closes,increasing our value to potential acquirers and,
any such departures could jeopardize the consummation of the transaction oras a result, to our
interests if the transaction does not close and we remain independent. Ourstockholders. The Compensation Committee believes that these
payments and benefits
therefore serve to enhance stockholder value and align
theour executive officers’ interests with those of our stockholders in change in control transactions.
All such agreements with the named executive officers are described in “Potential Payments upon Termination or Change in Control” elsewhere in this proxy statement.
Perquisites and Other Benefits
We provide certain
named executive officers with perquisites and other personal benefits that
ourthe Compensation Committee believes are reasonable and consistent with our overall compensation programs and philosophy and which benefits are generally available to all
of our employees. These benefits are provided
in order to enable us to attract and retain these
executives. Ourexecutive officers. The Compensation Committee periodically reviews the levels of these benefits provided to our executive officers. These benefits include participation in our health and benefits plans, retirement savings plans, housing assistance, reimbursement of certain living and education-related expenses,
car services,travel expense assistance, immigration assistance, relocation assistance, and our employee stock purchase plan.
Equity Compensation Grant Practices
We do not have any program, plan, or practice to select equity compensation (including stock option) grant dates in coordination with the release of material non-public information, nor do we time the release of information for the purpose of affecting value. For stock options issued pursuant to our 2011 Equity Incentive Plan, employees have seven years from the date of the grant to exercise vested options, assuming they remain an employee of or service provider to us or our subsidiaries
Stock Ownership Policy
Our executive officers and
non-employee directors are subject to
any requirements of local law. For all othera stock
options, employees have ten years from the date of the grant to exercise vested options, assuming they remain an employee of or service provider to us orownership policy that is available on our
subsidiaries and subject to any requirements of local law.New Hire Grants.
New hire grants of equity compensation are made to eligible employees in connection with the commencement of employment. New hire grants become effective on and are priced as of the 10th business day of the month following the month of hire. These grants generally become fully vested
after four years, with 25% of the grant vesting on the first anniversary of the date of commencement of employment and 1/48th of the grant vesting monthly thereafter. Grants to individuals of 50,000 shares or less, not to exceed an aggregate of 300,000 shares in any fiscal quarter, are made by the Chief Executive Officer pursuant to the delegation of power by the Compensation Committee. Such grants must be granted on the 10th business day of each month for individuals who were employees as of the last day of the previous month. All other grants are made by our Compensation Committee.
Annual Grants.
Annual RSU grants are awardedwebsite at our regularly scheduled Board meeting held in February and are made on the second business day after the release of our year-end earnings release. These grants typically vest as to 1/3rd of shares on an annual basis assuming continued service and subject to any requirements of local law.
https://ir.immersion.com/corporate-governance. See “Corporate Governance—Company Policies” above.
Impact of Accounting and Tax Requirements on Compensation
We are limited by
Section 162(m) of the Internal Revenue Code limits the deductibility of 1986, as amended, to a deduction for federal income tax purposes of up to $1,000,000certain items of compensation paid to our namedthe CEO and certain other highly compensated executive officers (together, the “covered officers”) to $1,000,000 annually, but in a taxable year. Compensation above $1,000,000 may be deducted if, by meeting certain technical requirements, it can be classifiedyears prior to 2018 there was an exception to such limit for compensation that qualified as “performance-based compensation.” The stock optionscompensation”. Effective for 2018, the Tax Cuts and RSU awards granted under our 2007 Equity Incentive PlanJobs Act amended Section 162(m) to, among other things, extend the deduction limitation to the Chief Financial Officer and 2011 Equity Incentive Plan are intended to be treated under current federal tax law aseliminate the exception for performance-based compensation, exempt from limitation on deductibility. Althoughexcept for certain qualifying arrangements in place as of November 2, 2017.
Favorable accounting and tax treatment of the various elements of our
Compensation Committee uses the requirements of Section 162(m) as a guideline, deductibility istotal compensation program was an important, but not the sole,
factor it considers in assessing the appropriate levels and types of executive compensation and it will elect to forego deductibility when it believes it to be in our and our stockholders’ best interests.In addition to considering the tax consequences, our Compensation Committee considers the accounting consequences of, including the impact of the FASB ASC Topic 718,consideration in its decisions in determiningdesign. The Committee reserves the forms of different awards and generally attemptsright to keep the value of awards equivalent regardless of type.
provide for compensation to executive officers that may not be deductible pursuant to Section 162(m).
Risk Assessment of Compensation Programs
The Compensation Committee considers potential risks when reviewing and approving
our compensation programs. We have designed our compensation programs, including our incentive compensation plans, with specific features to address potential risks while rewarding
our employees for achieving financial and strategic objectives through prudent business judgment and appropriate risk taking. The following elements have been incorporated in our
compensation programs
available for our named executive officers:
| • | | A Balanced Mix of Compensation Components – The target compensation mix for our executive officers is composed of salary, annual cash incentives and long-term equity incentives, representing a mix that is not overly weighted toward short-term cash incentives.
|
| • | | Multiple Performance Factors – Our incentive compensation plans use both company-wide
•A Balanced Mix of Compensation Components – The target compensation mix for our named executive officers is composed of base salary, short-term cash incentive awards and long-term equity incentives, representing a mix that is not overly weighted toward short-term cash incentives.
•Multiple Performance Factors – Our short-term and long-term incentive compensation plans use both Company-wide metrics and individual performance, which encourage focus on the achievement of objectives for our overall benefit.
◦The executive incentive plan is designed to use multiple performance metrics including GAAP revenue and Non-GAAP Operating Expenses, as well as individual performance goals related to specific strategic or operational objectives and the corporate metric portion of the incentive plan does not pay out unless the target levels of the pre-established financial metrics are met.
◦The long-term incentives are equity-based, generally with three- or four-year vesting to complement our short-term cash incentive awards.
•Capped Incentive Awards – Awards under the executive incentive plans are generally capped at the sum of: (1) 200% of the target bonus attributable to Company-wide metrics (with a maximum multiplier of 1.2), plus (2) 100% of the target bonus attributable to individual performance (with a maximum multiplier of 1.2).
•Clawback – Our Board has the authority to recoup past incentive compensation in the event of a material restatement of our financial results due to fraud, intentional misconduct or gross negligence of the named executive officer.
Additionally, the achievement of objectives for our overall benefit: |
| ú | | The executive incentive plans are dependent on multiple performance metrics including GAAP revenue and Non-GAAP Net Income, as well as individual goals related to specific strategic or operational objectives and the corporate metric portion of the incentive plan does not pay out unless certain financial metrics are met.
|
| ú | | The long-term incentives are equity-based, with three and four year vesting to complement our annual cash based incentives. The long-term incentives for our Chief Executive Officer are subject to performance conditions related to our stock price.
|
| • | | Capped Incentive Awards – Awards under the executive incentive plans are generally capped at the sum of: (1) 200% of the target bonus attributable to company-wide metrics (with a maximum multiplier of 1.2), plus (2) 100% of the target bonus attributable to individual performance (with a maximum multiplier of 1.2).
|
| • | | Clawback Provision – The clawback provision provides our Board with the authority to recoup past incentive compensation in the event of a material restatement of Immersion’s financial results due to fraud, intentional misconduct or gross negligence of an executive officer.
|
Additionally, our Compensation Committee considered an assessment of the compensation-related risks arising from our compensation programs for all of our employees. Based on this assessment and the factors noted above, ourthe Compensation Committee concluded that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on us. In making this evaluation, ourthe Compensation Committee reviewed the key design elements of our compensation programs in relation to industry “best practices” as presented by Compensia, as well as the means by whichhow any potential risks may be mitigated, such as through our internal controls and oversight by management and theour Board.
Conclusion
In evaluating the individual components of overall compensation for each of our executive officers, the Compensation Committee reviews not only the individual elements of compensation, but also total compensation. Through the compensation programs described above, a significant portion of the compensation awarded to our executive officers is contingent upon each individual’s and our performance. Our Compensation Committee remains committed to this philosophy of pay-for-performance and will continue to review executive compensation programs to ensure that the interests of our stockholders are served.
COMPENSATION COMMITTEE REPORT
The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that we specifically incorporate it by reference into such filing.
We, the Compensation Committee of the Board of Directors of Immersion Corporation, have reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on such review and discussion, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31,
2015.2020.
| | | | | |
| | COMPENSATION COMMITTEE |
| | |
| | Jack Saltich,William Martin, Chairman | | |
| | David Habiger | | |
| | David Sugishita | | Eric Singer Stephen Domenik |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jack Saltich, David Habiger
William Martin, Eric Singer, Stephen Domenik, Jonathan Visbal, and
David SugishitaSharon Holt were members of our Compensation Committee during the
20152020 fiscal year. None of the individuals serving on our Compensation Committee were at any time during
2015,2020, or at any other time, an officer or employee of us, nor did they have any relationships requiring disclosure by us under the SEC’s rules requiring disclosure of certain relationships and related party transactions. None of our executive officers serve as a member of the
Boardboard of
Directorsdirectors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or our Compensation Committee.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2015 concerning our equity compensation plans:
| | | | | | | | | | |
| | | Number of
Securities to be
Issued Upon Exercise of
Outstanding Options, | | | | Weighted-Average
Exercise Price of Outstanding
Options | | Number of
Securities to be
Issued Upon Settlement
of Outstanding Restricted
Awards/Units | | Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a)) |
Plan Category | | (a) | | | | (b) | | (c) | | (d) |
Equity Compensation Plans Approved by Security Holders (1) | | 3,755,503 | | | | $ 8.50 | | (2) 508,779 | | (3) 1,719,021 |
Equity Compensation Plans Not Approved by Security Holders (4) | | 41,030 | | | | 6.29 | | -- | | -- |
| | | | | | | | | | |
TOTAL | | 3,796,533 | | | | | | 508,779 | | 1,719,021 |
|
1 | Consists of three plans: the Immersion Corporation 1997 Stock Option Plan, the 2007 Equity Incentive Plan and the 2011 Equity Incentive Plan. Excludes purchase rights under the Employee Stock Purchase Plan.
|
2 | These RSUs and awards have no exercise price.
|
3 | Includes 396,442 shares available for future issuance under the Employee Stock Purchase Plan
|
4 | As of December 31, 2015, we had issued and outstanding 41,030 shares of common stock for issuance pursuant to the 2008 Employment Inducement Award Plan. Each option granted pursuant to the 2008 Employment Inducement Award Plan has a 10-year term and vests at the rate of 1/4 of the shares on the first anniversary of the date of commencement of employment and 1/48th of the shares monthly thereafter.
|
EXECUTIVE COMPENSATION
2015
2020 Summary Compensation Table
The following table sets forth information concerning the compensation earned during the years ended December 31, 2015, 20142020, 2019, and 20132018 by our named executive officers for 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Fiscal Year | | Salary
($) | | Bonus
($) | | Stock Awards(1) ($) | | Option Awards(1) ($) | | Non-Equity Incentive Plan Compensation(2) ($) | | All Other Compensation
($) | | Total
($) |
Jared Smith Interim Chief Executive Officer and Vice President, Worldwide Sales | | 2020 | | 303,517 | | — | | 907,931 | (7) | — | | — | | 2,118 | (19) | 1,213,566 |
| | 2019 | | 180,536 | | — | | 596,800 | (8) | 489,990 | (14) | 80,158 | | 25,000 | (20) | 1,372,484 |
Aaron Akerman(3) Chief Financial Officer | | 2020 | | 214,871 | | 29,856 | (6) | 722,900 | (9) | 452,102 | (15) | — | | 193 | (21) | 1,419,923 |
Michael Okada General Counsel and SVP, IP Licensing and Legal Affairs | | 2020 | | 352,822 | | — | | 484,987 | (10) | — | | — | | 1,925 | (22) | 839,734 |
| | 2019 | | 211,207 | | — | | 580,388 | (11) | 535,722 | (16) | 90,819 | | — | | 1,418,136 |
Ramzi Haidamus(4) President and Chief Executive Officer | | 2020 | | 411,784 | | — | | 239,876 | (12) | 559,008 | (17) | — | | 552,467 | (23) | 1,763,136 |
| | 2019 | | 496,839 | | — | | 2,766,903 | (13) | 1,250,000 | (18) | 397,471 | | 47,318 | (24) | 4,958,531 |
Len Wood(5) Interim Chief Financial Officer | | 2020 | | — | | — | | — | | — | | — | | 309,058 | (25) | 309,058 |
| | 2019 | | — | | — | | — | | — | | — | | 271,658 | (26) | 271,658 |
(1) The amounts in this column represent the aggregate grant date fair value of the awards, computed in accordance with FASB ASC Topic 718. See Note 6 of the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our assumptions in determining the FASB ASC Topic 718 values.
(2) Consists of bonus awards under our Executive Incentive Plan. See “Compensation Discussion and Analysis” above for a description of our 2020 Executive Incentive Plan. However, effective June 25, 2020, the Compensation Committee exercised its discretion to cancel the 2020 Executive Incentive Plan, in light of COVID-19 and related events and their impact on the Company’s business.
(3) Amounts paid in Canadian dollars have been converted to U.S. dollars using the average daily exchange rates from January 1, 2020 to December 31, 2020 of CAD $1 to USD $0.75.
(4) Mr. Haidamus served as our Chief Executive Officer our Chief Financial Officer, our VP, Worldwide Sales & Customer Support,from January 21, 2019 to November 3, 2020.
(5) Mr. Wood was paid as an hourly contractor.
(6) Mr. Akerman received a sign-on bonus of CAD $40,000.
(7) Consists of (i) 53,026 RSUs with a grant date fair value of $287,931, and VP & GM(ii) 100,000 PSUs with a grant date fair value of Content & Media. No other officer met$620,000. Assuming that the definitionhighest level of named executive officerperformance conditions with respect to the PSUs will be achieved, the value of the PSUs at grant date was $925,013.
(8) Mr. Smith received RSUs with a grant date fair value of $596,800 upon joining Immersion.
(9) Consists of (i) 70,000 RSUs with a grant date fair value of $536,900, and (ii) 30,000 PSUs with a grant date fair value of $186,000. Assuming that the highest level of performance conditions with respect to the PSUs will be achieved, the value of the PSUs at grant date was $277,504.
(10) Consists of (i) 55,062 RSUs with a grant date fair value of $298,987, and (ii) 30,000 PSUs with a grant date fair value of $186,000. Assuming that the highest level of performance conditions with respect to the PSUs will be achieved, the value of the PSUs at grant date was $277,504.
(11) Mr. Okada received RSUs with a grant date fair value of $580,388 upon joining Immersion.
(12) Consists of 44,176 RSUs with a grant date fair value of $239,876.
(13) Mr. Haidamus received RSUs with a grant date fair value of $2,766,903 upon joining Immersion.
(14) Upon joining Immersion, Mr. Smith received an option to purchase 150,000 shares with an exercise price of $7.46 per share, which option expires on July 15, 2026.
(15) Upon joining Immersion, Mr. Akerman received an option to purchase 140,000 shares with an exercise price of $7.67 per share, which option expires on January 13, 2027.
(16) Upon joining Immersion, Mr. Okada received an option to purchase 164,000 shares with an exercise price of $7.46 per share, which option expires on July 15, 2026.
(17) Consists of an option to purchase 316,056 shares with an exercise price of $7.54 per share, which option expires on March 9, 2027.
(18) Upon joining Immersion, Mr. Haidamus received an option to purchase 268,992 shares with an exercise price of $9.82 per share, which option expires on February 14, 2026.
(19) Consists of: (i) $1,923 in contributions by the Company to Mr. Smith's 401(k) account; and (ii) $194 in premiums paid by the Company with respect to life insurance for 2015. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name &
Principal
Position | | Fiscal
Year | | | Salary
(1) ($) | | | Stock
Awards (2) ($) | | | Option Awards
(2) ($) | | | Non-Equity
Incentive Plan
Compensation (3)
($) | | | All Other
Compensation
($) | | | Total ($) | |
| |
Victor Viegas | | | 2015 | | | $ | 351,346 | | | $ | -- | | | $ | 572,595 | | | $ | 424,976 | | | | -- | | | $ | 1,348,917 | |
Chief Executive Officer and Interim | | | 2014 | | | | 351,346 | | | | -- | | | | 570,850 | | | | -- | | | | -- | | | | 922,196 | |
| | | 2013 | | | | 351,346 | | | | -- | | | | 3,234,720 | | | | 563,556 | | | | | | | | 4,149,622 | |
Chief Financial Officer (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Paul Norris | | | 2015 | | | | 300,644 | | | | -- | | | | 199,454 | | | | 173,334 | | | | | | | | 673,432 | |
Chief Financial Officer | | | 2014 | | | | 289,288 | | | | 119,400 | | | | 114,170 | | | | -- | | | | -- | | | | 522,858 | |
| | | 2013 | | | | 281,071 | | | | 95,300 | | | | 210,208 | | | | 214,672 | | | | | | | | 801,251 | |
Mahesh Sundaram | | | 2015 | | | | 325,827 | | | | -- | | | | -- | | | | 204,528 | | | | 145,431(7) | | | | 675,786 | |
Vice President, Worldwide Sales & Customer Support (5) | | | 2014 | | | | 59,074 | | |
| 459,500
|
| | | 876,200 | | | | -- | | |
| 67,934(8)
|
| | | 1,462,708 | |
Jason Patton | | | 2015 | | | | 259,435 | | | | 40,450 | | | | 38,173 | | | | -- | | | | 132,837(9) | | | | 470,895 | |
Former Vice President and General Manager Content & Media (6) | | | 2014 | | | | 233,193 | | |
| 112,400
|
| | | 671,725 | | | | -- | | |
| 45,000(10)
|
| | | 1,062,318 | |
| |
(1) | Differs from salary reported in the “Compensation Discussion & Analysis” above due to pay period allocation.
|
(2) | The amounts in this column represent the aggregate grant date fair value of the awards, computed in accordance with FASB ASC Topic 718. See note 9 of the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015 for a discussion of our assumptions in determining the FASB ASC Topic 718 values.
|
(3) | Consists of bonus awards under our executive incentive plans. See “Compensation Discussion and Analysis” above for a description of our executive incentive plans.
|
(4) | On February 26, 2016, Mr. Viegas was appointed Interim Chief Financial Officer.
|
(5) | Mr. Sundaram was appointed Vice President of Worldwide OEM Sales effective October 27, 2014; on November 20, 2015, we combined our Content & Media Business and OEM Sales Organization within the company reporting to Mr. Sundaram, whose title was changed to Vice President, Worldwide Sales & Customer Support.
|
(6) | Mr. Patton was appointed Vice President and General Manager, Content & Media effective January 6, 2014; on November 20, 2015, we combined our Content & Media Business and OEM Sales Organization within the company reporting to Mr. Sundaram; Mr. Patton’s last day with the company was December 31, 2015.
|
(7) | Consists of $57,353 for an expatriate premium allowance, $35,662 for a housing allowance, $26,968 for a vehicle allowance and $25,448 for a relocation allowance.
|
(8) | Consists of $17,647 for an expatriate premium allowance, $36,010 for housing assistance and living allowance and $14,277 for a company provided car and driver.
|
(9) | Consists of $121,025 severance payment and COBRA amounts of $11,812 pursuant to a Retention and Ownership Change Event Agreement.
|
(10) | Consists of a $25,000 sign on bonus and a $20,000 relocation subsidy.
|
2015the benefit of Mr. Smith.
(20) Mr. Smith received a $25,000 one-time relocation payment upon joining Immersion.
(21) Consists of CAD $258 in premiums paid by the Company with respect to life insurance for the benefit of Mr. Akerman.
(22) Consists of: (i) $1,731 in contributions by the Company to Mr. Okada's 401(k) account; and (ii) $194 in premiums paid by the Company with respect to life insurance for the benefit of Mr. Okada.
(23) Consists of: (i) $537,961 in certain severance payments pursuant to that certain Separation Agreement and General Release, dated November 3, 2020, by and between Mr. Haidamus and the Company; and ADEA Release, dated November 3, 2020, by and between Mr. Haidamus and the Company; (ii) $1,923 in contributions by the Company to Mr. Haidamus' 401(k) account; (iii) $178 in premiums paid by the Company with respect to life insurance for the benefit of Mr. Haidamus; and (iv) $12,404.58 in travel and housing allowance, which allowance was terminated on March 31, 2020.
(24) Mr. Haidamus received a pro rata portion of a $50,000 annual housing and transportation allowance. This allowance was terminated on March 31, 2020.
(25) Consists of hourly fees paid to Mr. Wood.
(26) Consists of hourly fees paid to Mr. Wood.
2020 Grants of Plan-Based Awards
The following table sets forth information concerning each grant of an award made to a named executive officer during the year ended December 31,
2015: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1) | | | All other
Stock
Awards: Number of
Shares of Stock or
Units (2) (#) | | | All Other
Option
Award Number of
Securities Underlying Options (3) (#) | | | Exercise or Base Price
of Option Awards ($/sh) | | | Grant Date Fair Value of
Stock and Option Awards ($) | |
Name | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | |
| |
Victor Viegas | | | 2/25/2015 | | | | 193,200 | | | | 402,500 | | | | 869,400 | | | | | | | | | | | | | | | | | |
| | | 3/3/2015 | | | | | | | | | | | | | | | | | | | | 150,000 | | | | 8.09 | | | | 572,595 | (4) |
| | | | | | | | |
Paul Norris | | | 2/25/2015 | | | | 85,930 | | | | 165,260 | | | | 337,110 | | | | | | | | | | | | | | | | | |
| | | 3/3/2015 | | | | | | | | | | | | | | | | | | | | 52,250 | | | | 8.09 | | | | 199,454 | |
| | | | | | | | |
Mahesh Sundaram | | | 2/25/2015 | | | | 101,400 | | | | 195,000 | | | | 397,800 | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Jason Patton | | | 3/3/2015 | | | | | | | | | | | | | | | | 5,000 | | | | | | | | | | | | 40,450 | |
| | | 3/3/2015 | | | | | | | | | | | | | | | | | | | | 10,000 | | | | 8.09 | | | | 38,173 | |
| | | 2/25/2015 | | | | 62,946 | | | | 121,025 | | | | 246,942 | | | | | | | | | | | | | | | | | |
| |
| (1) | These awards were made pursuant to the 2015 executive incentive plans for each of Mr. Viegas, Mr. Norris, Mr. Sundaram, and Mr. Patton. For a description of the criteria upon which the awards are determined, see “Compensation Discussion and Analysis” above.
|
| (2) | These RSUs are long-term equity incentive awards granted pursuant to our 2011 Equity Incentive Plan. For more information related to these awards, including the vesting schedule, see “Compensation Discussion and Analysis” above.
|
| (3) | These options are long-term equity incentive awards granted pursuant to our 2011 Equity Incentive Plan. For more information related to these awards, including the vesting schedule, see “Compensation Discussion and Analysis” above.
|
| (4) | Subject to vesting as follows: 100% of the shares would only vest and become exercisable upon the achievement of performance conditions on or before March 3, 2017.
|
2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock or Units(2) (#) | All Other Option Awards: Number of Securities Underlying Options(3) (#) | Exercise or
Base Price
of Option
Awards
($/sh) | Grant Date Fair Value of Stock and Option Awards(4) ($) |
| Name | Compensation Committee
Approval Date | Grant Date | Threshold ($) | Target
($) | Maximum ($) |
| Ramzi Haidamus | 3/4/2020 | 3/4/2020 | — | — | — | | | | |
| 3/4/2020 | 3/9/2020 | | | | | 316,056 | 7.54 | 559,008 |
| 3/4/2020 | 3/9/2020 | | | | 44,176 | | | 239,876 |
| Michael Okada | 2/24/2020 | 2/24/2020 | — | — | — | | | | |
| 2/25/2020 | 3/9/2020 | | | | 55,062 | | | 298,987 |
| 11/10/2020 | 11/10/2020 | | | | 30,000 | | | 186,000 |
| Jared Smith | 2/24/2020 | 2/24/2020 | — | — | — | | | | |
| 2/25/2020 | 3/9/2020 | | | | 53,026 | | | 287,931 |
| 11/10/2020 | 11/10/2020 | | | | 100,000 | | | 620,000 |
| Aaron Akerman | 11/22/2019 | 1/13/2020 | | | | | 140,000 | 7.67 | 452,102 |
| 11/22/2019 | 1/13/2020 | | | | 70,000 | | | 536,900 |
| 2/24/2020 | 2/24/2020 | — | — | — | | | | |
| 11/10/2020 | 11/10/2020 | | | | 30,000 | | | 186,000 |
(1) Effective June 25, 2020, the Compensation Committee exercised its discretion to cancel the 2020 Executive Incentive Plan, in light of COVID-19 and related events and their impact on the Company’s business. Mr. Wood did not participate in the 2020 Executive Incentive Plan. For a description of the criteria upon which the awards are determined, see “Compensation Discussion and Analysis” above.
(2) Consists of RSUs and PSUs granted pursuant to our 2011 Equity Incentive Plan. RSUs typically vest over a period of three or four years. PSUs become eligible to vest upon the achievement of certain stock price targets. Vesting is also subject to continued employment with the Company through the applicable vesting dates, with 25% of the shares eligible to vest on the one-year anniversary of the grant date and the remaining shares eligible to vest in equal installments each quarterly anniversary thereafter. For more information related to these awards, see “Compensation Discussion and Analysis” above.
(3) These options are long-term equity incentive awards granted pursuant to our 2011 Equity Incentive Plan and vest as to 25% of the shares on the one-year anniversary of the grant date and 1/48th of the shares monthly thereafter. For more information related to these awards, see “Compensation Discussion and Analysis” above.
(4) The amounts in this column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. See Note 6 of the notes to our consolidated financial statements contained in our Annual Report on form 10-K for the year ended December 31, 2020 for a discussion of our assumptions in determining the FASB ASC Topic 718 values.
Outstanding Equity Awards at December 31, 20152020
The following table sets forth information concerning the outstanding equity awards held as of December 31,
20152020 by our named executive officers:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | Option Awards (1) | | Stock Awards (2) | |
| | | | | Number of Securities
Underlying Unexercised
Options | | | Option Exercise
Price
($/sh) | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock that
Have Not
Vested
(#) | | | Market Value
of Shares or
Units of
Stock that
Have Not
Vested (3)
($) | |
| | | Stock Option
Grant Date | | Exerciseable
(#) | | | Unexerciseable
(#) | | | | | |
|
| |
Victor Viegas | | 6/5/2006 | | | 100,000 | | | | — | | | 6.11 | | 6/5/2016 | | | — | | | | — | |
| | 3/3/2008 | | | 10,000 | | | | — | | | 8.61 | | 3/3/2018 | | | — | | | | — | |
| | 3/4/2009 | | | 8,500 | | | | — | | | 2.70 | | 3/4/2019 | | | — | | | | — | |
| | 11/13/2009 | | | 600,000 | | | | — | | | 3.85 | | 11/13/2019 | | | — | | | | — | |
| | 3/14/2011 | | | 43,333 | | | | — | | | 6.61 | | 3/14/2021 | | | — | | | | — | |
| | 3/8/2013 | | | 240,000 | | | | 360,000 | | | 9.53 | | 3/8/2020 | | | — | | | | — | |
| | 2/24/2014 | | | 22,916 | | | | 77,084 | | | 11.94 | | 2/24/2021 | | | — | | | | — | |
| | 3/3/2015 | | | — | | | | 150,000 | | | 8.09 | | 3/3/2022 | | | — | | | | — | |
Paul Norris | | 6/14/2012 | | | 223,958 | | | | 26,042 | (4) | | 6.12 | | 6/14/2019 | | | — | | | | — | |
| | 3/8/2013 | | | 27,500 | | | | 12,500 | | | 9.53 | | 3/8/2020 | | | — | | | | — | |
| | 3/8/2013 | | | — | | | | — | | | — | | — | | | 3,333 | | | | 38,863 | |
| | 2/24/2014 | | | 9,166 | | | | 10,834 | | | 11.94 | | 2/24/2021 | | | — | | | | — | |
| | 2/24/2014 | | | — | | | | — | | | — | | — | | | 6,666 | | | | 77,726 | |
| | 3/3/2015 | | | — | | | | 52,250 | | | 8.09 | | | | | | | | | | |
Mahesh Sundaram | | 11/14/2014 | | | 58,333 | | | | 141,667 | | | 9.19 | | 11/14/2021 | | | — | | | | — | |
| | 11/14/2014 | | | — | | | | — | | | — | | — | | | 33,333 | | | | 388,663 | |
Jason Patton | | 2/14/2014 | | | 59.895 | | | | 65.105 | (4) | | 11.24 | | 2/24/2021 | | | — | | | | — | |
| | 2/14/2014 | | | — | | | | — | | | — | | — | | | 6,666 | | | | 77,726 | |
| | 3/3/2015 | | | — | | | | 10,000 | | | 8.09 | | 3/3/2022 | | | — | | | | — | |
| | 3/3/2015 | | | — | | | | — | | | — | | — | | | 5,000 | | | | 58,300 | |
(1) | Except as otherwise indicated, options vest as to 25% of the shares on the one year anniversary of the grant date and the remaining vest at a rate of 1/48th of the shares monthly thereafter.
|
(2) | The RSUs vest in three equal installments on each of the first three anniversaries of the date of grant.
|
(3) | Based on the closing price of our common stock of $11.66 per share on The NASDAQ Global Market on December 31, 2015.
|
(4) | Option vests as to 25% of the shares on the one year anniversary of the date of commencement of employment and the remaining vest at a rate of 1/48th of the shares monthly thereafter.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards(1) | | Stock Awards |
| | | Number of Securities
Underlying Unexercised
Options | | | | | | Number of
Shares or
Units of
Stock that
Have Not Vested
(#) | | Market Value of Shares or Units of Stock that Have Not Vested(4) ($) |
| Name | Stock Option
Grant Date | | Exercisable
(#) | | Unexercisable
(#) | | Option Exercise Price
($/share) | | Options Expiration
Date | | |
| Ramzi Haidamus | 2/14/2019 | | 128,892 | | | — | | | 9.82 | | 2/14/2026 | | | | |
| Michael Okada | 7/15/2019 | | — | | 102,500 | | | 7.46 | | 7/15/2026 | | | | |
| 7/15/2019 | | | | | | | | | | 51,866 | | (2) | 585,567 | |
| 3/9/2020 | | | | | | | | | | 55,062 | | (2) | 621,650 | |
| 11/10/2020 | | — | | — | | — | | — | | 30,000 | | (3) | 338,700 | |
| Jared Smith | 7/15/2019 | | 56,250 | | | 93,750 | | | 7.46 | | 7/15/2026 | | | | |
| 7/15/2019 | | | | | | | | | | 53,333 | | (2) | 602,130 | |
| 3/9/2020 | | | | | | | | | | 53,026 | | (2) | 598,664 | |
| 11/10/2020 | | | | | | | | | | 100,000 | | (3) | 1,129,000 | |
| Aaron Akerman | 1/13/2020 | | — | | | 140,000 | | | 7.67 | | 1/13/2027 | | | | |
| 1/13/2020 | | | | | | | | | | 70,000 | | (2) | 790,300 | |
| 11/10/2020 | | | | | | | | | | 30,000 | | (3) | 338,700 | |
(1) Except as otherwise indicated, options vest as to 25% of the shares on the one-year anniversary of the grant date and the remaining vest at a rate of 1/36th of the shares monthly thereafter. Vesting is subject to continued service through each vesting date.
(2) These RSUs vest in three equal installments on each of the first three anniversaries of the date of grant.
(3) PSUs become eligible to vest upon the achievement of certain stock price targets. Vesting is also subject to continued employment with the Company through the applicable vesting dates, with 25% of the shares eligible to vest on the one-year anniversary of the grant date and the remaining shares eligible to vest in equal installments each quarterly anniversary thereafter. For more information related to these awards, see “Compensation Discussion and Analysis” above.
(4) Based on the closing price of our common stock of $11.29 per share on The Nasdaq Global Market on December 31, 2020.
Stock Vested
Inin Fiscal
20152020
The following table provides information concerning the vesting of restricted stock units issued to our named executive officers during the year ended December 31,
2015: | | | | | | | | |
| | | Stock Awards | |
| Name | | Number
of Shares
Acquired
on
Vesting(#) | | | Value
Realized
on
Vesting
(1)($) | |
Victor Viegas | | | 30,000 | | | | 252,000 | |
Paul Norris | | | 6,667 | | | | 54,970 | |
Mahesh Sundaram | | | 16,667 | | | | 185,170 | |
Jason Patton | | | 3,334 | | | | 28,872 | |
| | | | | | | | | | | | | | |
| | Stock Awards |
| Name | | Number of Shares Acquired on Vesting
(#) | | Value Realized on Vesting(1) ($) |
| Ramzi Haidamus | | 123,271 | | 889,841 |
| Michael Okada | | 25,934 | | 177,129 |
| Jared Smith | | 26,667 | | 181,336 |
| Len Wood | | — | | — |
| Aaron Akerman | | — | | — |
(1) Calculated by multiplying the number of vested RSUs by the market value of our common stock on the vesting date, which was the closing price of our common stock on such date as traded on the Nasdaq Global Market
Stock Options Exercised in Fiscal 2020
| (1) | Calculated by multiplying the number of vested RSUs by the market value of our common stock on the vesting date.
|
|
The following table provides information concerning the exercise of stock options issued to our named executive officers during the year ended December 31, 2020:
| | | | | | | | | | | | | | |
| | Stock Options Exercised |
| Name | | Number of Shares Acquired on Exercise
(#) | | Value Realized on Exercise(1) ($) |
| Ramzi Haidamus | | — | | — |
| Michael Okada | | 61,500 | | 94,276 |
| Jared Smith | | — | | — |
| Len Wood | | — | | — |
| Aaron Akerman | | — | | — |
(1) Calculated by multiplying the number of exercised stock options by the sale price of our common stock on the exercise date, less the exercise price for the stock option.
Potential Payments upon Termination or Change in Control
We have entered into the following agreements with each of
our named executive officersMessrs. Smith, Okada and Akerman that provide for severance and additional benefits in connection with
ourtermination or change in control:
Mr.
Victor ViegasEffective October 20, 2009,Jared Smith and Mr. Viegas became our Interim Chief Executive Officer. In connection with his appointment, weMichael Okada
We entered into
an employment agreementRetention and Ownership Change Event Agreements with Mr.
Viegas pursuant toSmith and Mr. Okada, which
he receives an annual base salary of $350,000 and is eligible to receive an annual bonus of up to 60% of his base salary. In 2012,provide that in the
Compensation Committee increased Mr. Viegas’ target annual bonus to 80% of his salary and in 2013, the Compensation Committee increased the target to 100% of his base salary. In 2015, the Compensation Committee increased Mr. Viegas’ target annual bonus to 115% of his base salary. Mr. Viegas became our Chief Executive Officer in April 2010 and our Interim Chief Financial Officer in February 2016 and the terms of hisevent their employment
agreement continue to apply.If the employment of Mr. Viegas is terminated without “cause,” as defined in the agreementcause or he resignsthey resign for “constructivegood reason,” as defined in the agreement, he they would be entitled to receive as(i) a lump sum severance a payment equal to 126 months of his base salary at their final base salary rate; and health insurance premium(ii) payments for 12 months. In addition, Mr. Viegas will also be entitledCOBRA premiums for up to immediate vesting of 70% of his then unvested equity awards, and a post-termination exercise period of 24 months.
6 months following their termination date.
In the event that,
within one year following a change in control, Mr.
ViegasSmith or Mr. Okada’s employment is terminated without cause or
resignsthey resign for
constructivegood reason,
within three months of, or within 1 year following, a “change of control,” as defined in the agreement, Mr. Viegas willthey would be entitled to receive
(a) a lump sum severance payment equal to 12 months base salary
andat their final base salary rate; (b) health insurance premium payments for
up to 12
months. In addition, Mr. Viegas will also be entitled tomonths following their terminate date; and (c) immediate vesting of
70%100% of
his then unvestedtheir then-unvested equity
awards held by him, and a post-termination exercise period of 24 months.awards.
Payment of the foregoing benefits
will beis conditioned upon
Mr. Viegas’ execution of a general release of claims.
Mr.
Mahesh SundaramEffective October 27, 2014, Mr. Sundaram became our Vice President of Worldwide OEM Sales. In connection with his appointment, we entered into an offer letter with Mr. Sundaram pursuant to which he receives an annual base salary of $320,000 and is eligible to receive an annual bonus with a target of 60% of his base salary. In connection with his hiring, Mr. Sundaram also received an expatriate premium allowance of $9375 per month for the first eight months of his employment with Immersion. He also received the following assistance: housing assistance up to $1500 per month for an apartment in Shanghai through June 2015, payment of $9000 per month living allowance for the period November 2014 through June 2015 while he resided in Beijing, reimbursement of school tuition fees to his employer in the amount up to $55,500 (if required), a company-provided car and driver, cost of which would be no more than $5,000 per month for the period November 2014 through June 2015 while he was residing in Beijing, immigration assistance with our outside legal counsel and a supplemental benefits policy for him and his family while he remained in Beijing. In addition, Mr. Sundaram was provided with relocation assistance not to exceed $25,000, a one-time moving allowance for incidentals in the amount of $25,000, air transportation for him and his family from Beijing to California and 30 days temporary living expenses upon his move to California. In 2015, Mr. Sundaram’s base salary was increased to $325,000.
In addition, weAaron Akerman
We entered into a Retention and Ownership Change Event Agreement with Mr. Sundaram,Akerman, which provides that in the event that his employment is terminated without “cause,” as defined in the agreement, Mr. Sundaram will be entitled to receive a lump sum severance payment equal to six months base salary and payments of health insurance premiums for the earlier of six months or the date on which Mr. Sundaram first becomes eligible to obtain other group health insurance coverage. In the event Mr. Sundaram’s employment is terminated without cause or is terminated by him with “goodhe resigns for good reason,” as defined in the agreement, in either case, in connection with an ownership change event of our company, then Mr. Sundaram will also he would be entitled to receive (i) a lump sum severance payment equal to 12 months base salary;salary at his final base salary rate; and (ii) payments of health insurance premiumspremium payments for the earlier ofup to 12 months following his termination date.
In the event that, within one year following a change in control, Mr. Akerman’s employment is terminated without cause or the date on which Mr. Sundaram first becomes eligiblehe resigns for good reason, he would be entitled to obtain other groupreceive (a) a lump sum severance payment equal to 12 months base salary at his final base salary rate; (b) health insurance coverage;premium payments for up to 12 months following his terminate date; and (iii)(c) immediate vesting of 50%100% of his unvestedthen-unvested equity awards held by him. awards.
Payment of the foregoing benefits
will beis conditioned upon
Mr. Sundaram’s execution of a general release of claims.
Mr. Jason Patton
On November 20, 2015, we combined
The following table sets forth the benefit that would have been realized by our
Content & Media Business and OEM Sale Organization within the company reporting to Mr. Sundaram. The changenamed executive officers as of
Mr. Patton’sDecember 31, 2020, if such officer’s employment
status was treated as a termination without “cause” under the Retention and Ownership Change Event Agreement. Under the agreement he received a lump sum severance payment equal to six months base salary and payments of health insurance premiums for six months. His employment with ushad been terminated on
that date (other than for cause), and the benefit that would have been realized by each named executive officer as of December 31,
2015. | | | | | | |
| | | Event |
Named Executive Officer | | Termination without
cause or resignation
for “good reason” or
constructive reason | | | | Termination without
cause or resignation
for “good reason” or
constructive reason
occurs due to a
change in control |
Victor Viegas | | | | | | |
Severance | | $350,000 | | | | $350,000 |
COBRA Benefits | | 28,590 | | | | 28,590 |
Equity Acceleration | | 911,610 | | | | 911,610 |
TOTAL | | $1,290,200 | | | | $1,290,200 |
Mahesh Sundaram | | | | | | |
Severance | | $162,500 | | | | $325,000 |
COBRA Benefits | | 14,295 | | | | 28,590 |
Equity Acceleration | | -- | | | | 369,290 |
TOTAL | | $176,795 | | | | $722,880 |
2020, if a change in control had occurred on or before such date:
| | | | | | | | | | | | | | |
| | Event |
| Named Executive Officer | | Termination without cause or resignation for “good reason” or constructive reason | | Termination without cause or resignation for “good reason” or constructive reason occurs due to a change in control |
| Michael Okada | | | | |
| Severance | | 171,450 | | 342,900 |
| COBRA Benefits | | 15,957 | | 31,915 |
| Equity Acceleration | | — | | 1,938,492 |
| TOTAL | | 187,407 | | 2,313,307 |
| Jared Smith | | | | |
| Severance | | 182,500 | | 365,000 |
| COBRA Benefits | | 24,847 | | 49,693 |
| Equity Acceleration | | — | | 2,688,856 |
| TOTAL | | 207,347 | | 3,103,549 |
Aaron Akerman(1) | | | | |
| Severance | | 208,247 | | 208,247 |
| Health Insurance Benefits | | 4,110 | | 4,110 |
| Equity Acceleration | | — | | 1,635,800 |
| TOTAL | | 212,357 | | 1,848,157 |
(1) Amounts payable in Canadian dollars have been converted to U.S. dollars using the average daily exchange rates from January 1, 2020 to December 31, 2020 of CAD $1 to USD $0.75.
Dollar amounts include potential severance payout, potential
COBRAhealth insurance payments and potential equity award acceleration based on the fair market value of our common stock on December 31,
20152020 less the exercise price in the case of stock options.
Mr. Ramzi Haidamus
Effective on November 3, 2020, Mr. Haidamus departed as Chief Executive Officer and director of the Company. In connection with his departure, the Company and Mr. Haidamus entered into a Separation Agreement and General Release, dated November 3, 2020 (the “Separation Agreement”), pursuant to which, in consideration for a general release in favor of the Company and Mr. Haidamus’ continuing observation and performance of the terms of the Separation Agreement:
•Mr. Haidamus received a lump sum payment in the amount of $472,498, subject to all legally required payroll withholdings; and
•Mr. Haidamus will be reimbursed for COBRA premiums (inclusive of medical, dental and vision) for the thirteen-month period from December 1, 2020 through December 31, 2021, subject to conditions set forth in the Separation Agreement.
In consideration for a release of claims from Mr. Haidamus relating to the Age Discrimination in Employment Act of 1967 in favor of the Company, Mr. Haidamus received a lump sum payment of approximately $65,463.36, subject to all legally required payroll withholdings. In addition, 11,208 unvested shares of the Company’s common stock subject to an option granted to Mr. Haidamus on February 14, 2019 accelerated and became vested.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer (CEO) for 2020. We had two CEOs during 2020: Mr. Ramzi Haidamus, our former CEO, and Mr. Jared Smith, our current Interim CEO. In accordance with Item 402(u) of Regulation S-K, we have elected to identify the median employee as of December 31, 2020. Accordingly, we have used Mr. Smith’s compensation for purposes of calculating our CEO pay ratio, as described below.
For 2020:
•the annual total compensation of the employee identified at the median of our company (other than our current CEO) was $117,710;
•the annual total compensation of our CEO (Mr. Smith, as described below) for purposes of determining the CEO Pay Ratio was $1,275,049;
•the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our median employee was estimated to be 11 to 1.
We believe this ratio which was calculated in a manner consistent with SEC rules to be a reasonable estimate based upon the assumptions and adjustments described below.
.
Multiple CEOs. We had two CEOs during 2020: Mr. Ramzi Haidamus, our former CEO, served until November 3, 2020 at which time we appointed Mr. Jared Smith as Interim Chief Executive Officer. Due to
the fact that Mr. Smith was our CEO on the date we used to identify our median employee, we have used Mr. Smith’s compensation as Interim CEO (including his base salary as of December 31, 2020), but annualized, as if he had been employed as Interim CEO for the entire measurement period, to calculate the pay ratio listed above.
Calculation Methodology. For 2020, we identified the employee with compensation at the median of the annual total compensation of all our employees using the following methodology:
In determining our employee population, we considered the individuals, excluding our CEO, who were employed by us and our consolidated subsidiaries on December 31, 2020, whether employed on a full-time, part-time, seasonal or temporary basis. We did not include any contractors or other non-employee workers in our employee population. Our employee population consisted of 53 individuals globally (excluding our CEO) as of December 31, 2020.
To identify the “median employee” from our employee population, we chose to use a consistently-applied compensation measure, which we selected as base salary or wages paid to each of our employees during the 12-month period ending December 31, 2020. For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using foreign exchange rates in effect on December 31, 2020. For permanent employees hired during 2020, we annualized their base salary or wages as if they had been employed for the entire measurement period. We did not make any cost-of-living adjustments for employees outside of the United States.
Using this methodology, we identified the individual at the median of our employee population who was based in the United States. We then calculated the annual total compensation for this individual using the same methodology we use to calculate the amount reported for our CEO as described above.
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. As such, 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 utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2020 concerning our equity compensation plans:
| | | | | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options Warrants and Rights
(a) | | Weighted-
Average
Exercise
Price of
Outstanding
Options
Warrants and
Rights
(b) | | Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a))
(c) | |
Equity Compensation Plans Approved by Security Holders(1) | | 828,188 | | 8.16 | | 3,252,702 | (2) |
Equity Compensation Plans Not Approved by Security Holders(3) | | — | | — | | — | |
| TOTAL | | 828,188 | | 8.16 | | 3,252,702 | |
(1) Consists of two plans: the Immersion Corporation 2007 Equity Incentive Plan and the 2011 Equity Incentive Plan. Excludes purchase rights under the Employee Stock Purchase Plan.
(2) Includes 230,881 shares available for future issuance under the Employee Stock Purchase Plan.
(3) As of December 31, 2020, there were no equity compensation plans not approved by security holders.
This report of the Audit Committee is required by the Securities and Exchange Commission, and is not to be deemed “soliciting material,” is not to be deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any filing of Immersion Corporation under the 1933 Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any filing.
Under the guidance of a written charter adopted by our Board, the purpose of our Audit Committee is to retain an independent registered public accounting firm, to make such examinations as are necessary to monitor the corporate financial reporting of the internal and external audits and its subsidiaries, to provide to the Board the results of its examinations and recommendations derived
therefrom,there from, to outline to the Board the improvements made, or to be made, in internal accounting controls, and to provide the Board with such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board.
Management is primarily responsible for the system of internal controls and the financial reporting process. The independent registered public accounting firm is responsible for expressing an opinion on the financial statements based on an audit conducted in accordance with generally accepted auditing standards. Our Audit Committee is responsible for monitoring and overseeing these processes.
In this context and in connection with the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31,
2015,2020, our Audit Committee:
•reviewed and discussed the audited financial statements with management;
| • | | discussed with Deloitte & Touche LLP, with and without management present, the matters required to be discussed under the Statement of Auditing Standards No. 61, as amended, (AICPA,Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T;
|
•discussed with Armanino LLP, with and without management present, the matters required to be discussed by Auditing Standard No. 1301 adopted by the Public Company Accounting Oversight Board (United States) regarding “Communications with Audit Committees”;
•received the written disclosures and the letter from Deloitte & ToucheArmanino LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’saccountant's communications with the Audit Committee concerning independence; discussed with the independent registered public accounting firm its independence; and concluded that the nonauditnon-audit services performed by Deloitte & ToucheArmanino LLP are compatible with maintaining its independence; and
•based on the foregoing reviews and discussions, recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed2020 for filing with the SEC.
| | | | | |
| AUDIT COMMITTEE |
| | AUDIT COMMITTEE
Mathew Frey (Chairman) |
| Franz Fink |
| | David Sugishita, Chairman
|
| | Carl Schlachte
|
| | John VeschiSumit Agarwal |
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM (PROPOSAL 2)
We are asking our stockholders to ratify the Audit Committee’s engagement of
Deloitte & ToucheArmanino LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2016.2021. In the event the stockholders fail to ratify the appointment, our Audit Committee will reconsider its engagement. Even if the engagement is ratified, our Audit Committee, in its discretion, may direct the engagement of a different independent registered public accounting firm at any time during the year if our Audit Committee feels that such a change would be in our and our stockholders’ best interest.
Deloitte & Touche LLP has been the independent registered public accounting firm that audits our financial statements since 1997.
In accordance with standing policy,
Deloitte & ToucheArmanino LLP periodically changes the personnel who work on the audit.
On April 8, 2020, the Audit Committee dismissed Deloitte & Touche LLP as the Company’s independent registered public accounting firm, effective upon completion of Deloitte’s review of the Company’s interim condensed consolidated financial information as of and for the three-month period ended March 31, 2020.
On April 8, 2020, the Audit Committee appointed Armanino LLP as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020.
Deloitte’s reports on the Company’s consolidated financial statements for the fiscal year ended December 31, 2019 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principle.
During the fiscal year ended December 31, 2019, and the subsequent interim periods through April 8, 2020, there were (i) no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which, if not resolved to Deloitte’s satisfaction, would have caused Deloitte to make reference thereto in their report on the financial statements for such fiscal year, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
Other than as disclosed in the next paragraph, during the fiscal year ended December 31, 2019, and the subsequent interim periods through April 8, 2020, neither the Company nor anyone on its behalf consulted with Armanino regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report or oral advice was provided to the Company that Armanino concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.
During the fiscal year ended December 31, 2019, and the subsequent interim periods through April 8, 2020, Armanino provided tax services to the Company consisting of a review of the Company’s quarterly and annual tax provision calculations, preparation of our annual tax returns and providing advice regarding the Company’s international tax structure. In approving the selection of Armanino as the Company’s independent registered public accounting firm, the Audit Committee considered these services previously provided by Armanino and concluded that such services would not adversely affect the independence of Armanino.
Audit Fees and All Other Fees
The following table sets forth the aggregate fees billed to us for the fiscal years ended December 31, 20152020 and 20142019 by our principal accounting firm, Deloitte & Touche LLP,Deloitte:
| | | | | | | | | | | | | | |
| | 2020 Fees | | 2019 Fees |
| Audit Fees | | $ 57,750 | | $ 930,949 |
| Audit-Related Fees | | 87,450 | | 172,668 |
| Tax Fees | | — | | 14,125 |
| All Other Fees | | 2,099 | | — |
| Total Fees | | $ 147,299 | | $ 1,117,742 |
The following table sets forth the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates: | | | | | | | | | | |
| | | | | 2015 Fees | | | 2014 Fees | |
Audit Fees | | | | $ | 694,147 | | | $ | 601,019 | |
Audit-Related Fees | | | | | 15,000 | | | | 7,500 | |
Tax Fees | | | | | | | | | | |
| | Tax Compliance/Preparation | | | 18,436 | | | | 11,753 | |
| | Other Tax Services | | | 737,543 | | | | 195,143 | |
All Other Fees | | | | | -- | | | | -- | |
Total Fees | | | | $ | 1,465,126 | | | $ | 815,414 | |
| |
aggregate fees billed to us for the fiscal year ended December 31, 2020 by Armanino:
| | | | | | | | |
| | 2020 Fees |
| Audit Fees | | $ 321,750 |
| Audit-Related Fees | | — |
| Tax Fees | | 54,574 |
| All Other Fees | | 180,857 |
| Total Fees | | $ 557,182 |
Audit Fees. This category consists of the aggregate fees billed, or expected to be billed, for professional services rendered for the audits of our consolidated financial statements and the effectiveness of our internal controls over financial reporting, along with reviews of interim condensed consolidated financial statements included in quarterly reports, services that are normally provided by Deloitte & Touche LLPour independent registered accounting firm in connection with statutory and regulatory filings or engagements, and attestation services.
Audit-Related Fees. This category consists of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”
Tax Fees. This category consists of the aggregate fees billed for tax compliance/preparation and other tax services. Tax compliance/preparation consists of fees billed forincludes tax return preparation, claims for refunds, and tax payment planning services related to federal, state, and international taxes. Other tax services consist of fees billed for services includinginclude tax advice, tax strategy and other miscellaneous tax consulting and planning primarily related to our reorganization of international operations. For the fiscal year ended December 31, 2014 and December 31, 2015, our domestic tax returns were and are being handled by Armanino McKenna LLP.
All Other Fees. This category consists of the aggregate fees for all other services other than those reported above. Our intent is to minimize services in this category.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Our Audit Committee has determined that all services performed by Deloitte & Touche LLPArmanino are compatible with maintaining the independence of Deloitte & Touche LLP.Armanino. In addition, since the effective date of the SEC rules stating that an independent public accounting firm is not independent of an audit client if the services it provides to the client are not appropriately approved, our Audit Committee has approved, and will continue to pre-approvepre-
approve all services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services, and other services. None of the services described above were approved by our Audit Committee pursuant to the waiver of pre-approval provisions set forth in applicable rules of the SEC.
Our Audit Committee has adopted a policy for the pre-approval of services provided by the independent registered public accounting firm, pursuant to which it may pre-approve certain audit fees, audit-related fees, tax fees, and fees for other services. Under the policy, our Audit Committee may also delegate authority to pre-approve certain specified audit or permissible non-audit services to one or more of its members. A member to whom pre-approval authority has been delegated must report his pre-approval decisions, if any, to our Audit Committee at its next meeting. Unless our Audit Committee determines otherwise, the term for any service pre-approved by a member to whom pre-approval authority has been delegated is twelve months.
We have been advised by
Deloitte & ToucheArmanino LLP that neither the firm, nor any member of the firm, has any financial interest, direct or indirect, in any capacity in us or our subsidiaries.
One or more representatives of
Deloitte & Touche LLPArmanino will be present at this year’s Annual Meeting. The representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Ratification of the appointment of the independent public accounting firm requires the affirmative vote of
athe majority of the
votes cast by the holders of Immersion Corporation common stock votingshares present in person or
represented by proxy at the Annual
Meeting.Meeting and entitled to vote on Proposal 2. Abstentions will have the same effect as a vote “AGAINST” Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THERATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHEArmanino LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
IMPORTANT ANNUAL MEETING INFORMATION 000004
ENDORSEMENT LINE SACKPACK
ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (PROPOSAL 3)
MR A SAMPLEDESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6C123456789000000000.000000 ext 000000000.000000 ext000000000.000000 ext 000000000.000000 ext000000000.000000 ext 000000000.000000 extElectronic Voting InstructionsAvailable 24 hours a day, 7 days a week!Instead of mailing your proxy, you may choose oneIn accordance with Section 14A of the voting methods outlined belowExchange Act, we seek a non-binding advisory vote from our stockholders to vote your proxy.VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.Proxies submitted byapprove the Internet or telephone must be received by 11:59 PM, Eastern Time,compensation of our named executive officers as disclosed pursuant to Item 402 of Regulation S-K in the Compensation Discussion and Analysis section beginning on June 2, 2016.page Vote by Internet31Go and the Executive Compensation section beginning on page 50. We have designed our compensation programs to www.envisionreports.com/IMMROr scanalign compensation with our annual and long-term business objectives and performance and to motivate executive officers to enhance long-term stockholder value. Consistent with the QR code with your smartphoneFollow the steps outlinedstockholders’ 2017 advisory vote on the secure websiteVote by telephoneCall toll free 1-800-652-VOTE (8683) withinfrequency of holding an advisory vote on the USA, US territories & Canadacompensation of our named executive officers, we are seeking an advisory vote on a touch tone telephoneFollowexecutive compensation every year until the instructions provided bynext required stockholder vote on the recorded messagefrequency of stockholder votes on executive compensation.
At the annual meeting of our stockholders held in June 2020, approximately 72% of the total stockholders’ votes cast were cast in favor of the fiscal 2019 compensation of our named executive officers. The Compensation Committee has and will consider this result in future executive compensation decisions.
The Board recommends that the stockholders vote FOR the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative.”
Because your vote is advisory, it will not be binding upon the Company, the Board or the Compensation Committee. However, the Board values stockholders’ opinions and the Compensation Committee will consider the outcome of the vote when considering future executive compensation decisions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADVISORY VOTE TO APPROVE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS.
William Martin 03 - Eric Singer
For Withhold For Withhold For Withhold
Using a black ink pen, mark your votes with an X as shown in this example.
Please do not write outside the designated areas. X
Annual Meeting Proxy Card 1234 5678 9012 345
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Election of Directors — The Board of Directors recommends a vote FOR the listed nominees.
1. Election of two (2) Class II directors.
For Withhold
01 - David Sugishita (Class II director)
02 - John Veschi (Class II director)
B Issues — The Board of Directors recommends a vote FOR the following proposal.
For Against Abstain
2. Ratification of appointment of Deloitte & Touche LLP as Immersion Corporation’s independent registered public accounting firm for fiscal 2016.
C Non-Voting Items
Change of Address — Please print new address below.
Meeting Attendance
Mark box to the right if you plan to attend the Annual Meeting.
D Authorized Signatures — Sign Here — This section must be completed for your instructions to be executed.
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This Proxy should be marked, dated and signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary
capacity should so indicate. If shares are held by joint tenants or as community property, all such stockholders should sign.
Date (mm/dd/yyyy) — Please print date below.
Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature
Date (mm/dd/yyyy) — Please print date below. within the box.
C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND1UPX 2707681 MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND +029UMB
B Authorized Signatures — Sign Here — This section must be completed for your instructions to be executed.
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
ENVELOPE.q
Annual Meeting Proxy Card
A Proposals — IMMERSION CORPORATIONThe Board of Directors recommends a vote FOR the listed nominees.
2. Ratification of appointment of Armanino LLP as Immersion
Corporation’s independent registered public accounting firm for
fiscal 2021.
3. Advisory vote on the compensation of our named executive
officers.
1. Election of four (4) directors.
For Against Abstain For Against Abstain
B Issues — The Board of Directors recommends a vote FOR proposals 2 and 3.
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DESIGNATION (IF ANY)
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If no electronic voting,
delete QR code and control #
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You may vote online or by phone instead of mailing this card.
Online
Go to www.envisionreports.com/IMMR
or scan the QR code — login details are
located in the shaded bar below.
Save paper, time and money!
Sign up for electronic delivery at
www.envisionreports.com/IMMR
Phone
Call toll free 1-800-652-VOTE (8683) within
the USA, US territories and Canada
Votes submitted electronically must be
received by 11:59 PM, Eastern Time, on
May 12, 2021.
Your vote matters – here’s how to vote!
Small steps make an impact.
Help the environment by consenting to receive electronic
delivery, sign up at www.envisionreports.com/IMMR
ANNUAL MEETING OF STOCKHOLDERS
to be held on June 3, 2016
May 13, 2021
This Proxy is solicited on behalf of the Board of Directors
The undersigned stockholder of IMMERSION CORPORATION, a Delaware corporation (the “Company”), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each
dated April 19, 2016,1, 2021, and hereby appoints Victor ViegasMichael Okada, Jared Smith and Anne Peters,any person then-serving in the role of Chief Executive Officer or eitherGeneral Counsel of
the Company, or any of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the Annual Meeting of Stockholders of IMMERSION CORPORATION to be held on Friday, June 3, 2016,Thursday, May 13, 2021, at 9:30 a.m., Pacific Daylight time,Time, at Immersion Corporation, 50 Rio Robles,330
Townsend Street, Suite 234, San Jose, California 95134,Francisco, CA 94107, and for any adjournment or adjournments thereof, and to vote all shares of common stock, which the
undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side. Under Delaware law and the Company’s
bylaws, no business shall be transacted at an annual meeting other than the matters stated in the accompanying Notice of Meeting, which matters are set forth
on the reverse side. However, should any other matter or matters properly come before the Annual Meeting, or any adjournment or adjournments thereof, it
is the intention of the proxy holders named above to vote the shares they represent upon such other matter or matters at their discretion.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR APPROVAL OF THE PROPOSAL TO ELECT TWO FOUR
DIRECTORS AND FOR PROPOSALPROPOSALS 2 AND 3 AND AT THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Please mark, sign, date and return the proxy card promptly, using the enclosed return-addressed postage-paid envelope.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Proxy — IMMERSION CORPORATION
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
C Non-Voting Items
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Online
Go to www.envisionreports.com/IMMR
or scan the QR code — login details are located
in the shaded bar below.
The Sample Company
Stockholder Meeting Notice
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Important Notice Regarding the Availability of Proxy Materials for the
Immersion Corporation Stockholder Meeting to be Held on May 13, 2021
Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual
stockholders’ meeting are available on the Internet. Follow the instructions below to view the materials and vote online or
request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important!
This communication presents only an overview of the more complete proxy materials that are available to you on the Internet.
We encourage you to access and review all of the important information contained in the proxy materials before voting. The
Proxy Statement and Annual Report to stockholders are available at:
Obtaining a Copy of the Proxy Materials – If you want to receive a copy of these documents, you must
request one. There is no charge to you for requesting a copy. Please make your request for a copy as
instructed on the reverse side on or before April 15, 2021 to facilitate timely delivery.
2 N O T
Easy Online Access — View your proxy materials and vote.
When you go online, you can also help the environment by consenting to receive electronic delivery of future materials.
Votes submitted electronically must be received
by 11:59 PM, Eastern Time, on May 12, 2021.
Step 4: Make your selections as instructed on each screen for your delivery preferences.
Step 5: Vote your shares.
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Here’s how to order a copy of the proxy materials and select delivery preferences:
Current and future delivery requests can be submitted using the options below.
If you request an email copy, you will receive an email with a link to the current meeting materials.
PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a copy of the proxy materials.
— Internet – Go to www.envisionreports.com/IMMR. Click Cast Your Vote or Request Materials.
— Phone – Call us free of charge at 1-866-641-4276.
— Email – Send an email to investorvote@computershare.com with “Proxy Materials Immersion Corporation” in the subject line. Include
your full name and address, plus the number located in the shaded bar on the reverse side, and state that you want a paper copy of
the meeting materials.
To facilitate timely delivery, all requests for a paper copy of proxy materials must be received by April 15, 2021.
Immersion Corporation Annual Meeting of Stockholders will be held on May 13, 2021 at 330 Townsend Street, Suite 234,
San Francisco, CA 94107, at 9:30 a.m. Pacific Time.
Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations.
The Board of Directors recommend a vote FOR all the nominees listed and FOR the following proposals:
1. Election of four (4) directors.
2. Ratification of appointment of Armanino LLP as Immersion Corporation’s independent registered public accounting firm for fiscal 2021.
3. Advisory vote on the compensation of our named executive officers.
PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must go online or request a paper copy of the proxy materials to
receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you.
Stockholder Meeting Notice
Directions to the Immersion Corporation 2021 Annual Meeting
Directions to the Immersion Corporation 2021 Annual Meeting can be viewed at www.envisionreports.com/IMMR
