Key Features of the 2019 Stock Plan

We designed the 2019 Plan to conform to best practices in equity incentive plans, including:

Required Vote

The approval of the Amendment requires the affirmative vote of a majority of the shares of QuickLogic common stock present in person or represented by proxy and entitled to vote on the proposal at the Annual Meeting.

Recommendation of the Board of Directors

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE AMENDMENT OF THE QUICKLOGIC CORPORATION 2019 STOCK PLAN

Summary of the 2019 Stock Plan

The following is a summary of the principal features of the 2019 Plan and its operation, assuming stockholder approval of this proposal. This summary is qualified in its entirety by reference to the 2019 Plan itself set forth in Appendix A.

General. The 2019 Plan provides for the grant of equity awards to employees, directors and consultants. Options granted under the 2019 Plan may either be “incentive stock options” as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or nonstatutory stock options, as determined by the Administrator (as defined below).

Purpose. The general purposes of the 2019 Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to the employees, directors and consultants of the Company and to promote the success of the Company’s business.

Administration. The 2019 Plan is administered by the Board or a committee (“Committee”) designated by the Board (in either case, the “Administrator”).

Eligibility. The 2019 Plan provides that nonstatutory stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units may be granted to employees, directors and consultants of the Company and any parent or subsidiary of the Company. Incentive stock options may be granted only to employees. ThereAs of March 14, 2022 , there are 48 employees, 68 non-employee directors, and 2three consultants of the Company and any parent or subsidiary of the Company that are eligible to participate in the 2019 Plan. The Administrator determines which eligible persons will be granted awards.

Shares Limit under the 2019 Plan. The maximum aggregateIf stockholders approve the Amendment, the number of shares that currently may be awardedavailable for future awards under the 2019 Plan is 907,143as of the date of the Annual Meeting would be the sum of (1) 900,000, (2) the number of shares (but increased to 1,507,143available for future awards under the plan immediately before such approval (as of March 14, 2022, 542,607 shares if Proposal Two is approved) pluswere available for future awards under the 2019 Plan) and (3) any shares subject to any outstanding options or other awards granted under the 2019 Plan or the 2009 Plan, that expire, are terminated, canceled, surrendered or forfeited cancelled, returned(as of March 14, 2022, 606,481 shares were subject to the Company for failure to satisfy vesting requirements, settled for cash or otherwise terminated without payment being made thereunder. Any shares that again become available for grant will be added back as one share tooutstanding awards under the 2019 Plan share reserve. The shares may be authorized, but unissued, or reacquired common stock.and the 2009 Plan).

Any shares subject to options or SARs and any grants of restricted stock or restricted stock units shall be counted against the 2019 Plan share pool as one share for every share subject thereto. The maximum number of shares that may be issued upon the exercise of incentive stock options shall equal the maximum aggregate share number under the 2019 Plan, as described above.

If an award expires without being exercised in full or becomes unexercisable without having been exercised in full, or, with respect to restricted stock or restricted stock units, is forfeited to or repurchased by the Company due to its failure to vest, the unpurchased or unissued shares (or forfeited or repurchased shares) which were subject to such awards will become available for future grant under the 2019 Plan (unless the 2019 Plan has terminated).

Upon exercise of a SAR settled in shares, the gross number of shares covered by the portion of the award so exercised will cease to be available under the 2019 Plan. Shares actually issued under the 2019 Plan will not be returned to the 2019 Plan, except that if unvested shares of restricted stock isare repurchased by the Company at their original price or forfeited to the Company due to their failure to vest, such shares will become available for future grant under the 2019 Plan. Shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award will not become available for future grant or sale under the 2019 Plan. To the extent that an award under the 2019 Plan is paid out in cash, rather than shares, such cash payment will not result in reduction of the shares available for issuance under the 2019 Plan.

We intend to file a Registration Statement on Form S-8 relating to the issuance of the 600,000900,000 additional shares requested pursuant to the Amendment with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the Amendment by our stockholders.

Prohibition on Repricings and Option or SAR Exchanges. Other than pursuant to an adjustment in connection with a change in capitalization, the exercise price for an option or SAR granted under the 2019 Plan may not be reduced without the prior consent of the Company’s stockholders. This includes, without limitation, a repricing of the option or SAR as well as an option or SAR exchange program whereby the participant agrees to cancel an existing option in exchange for an option, SAR or other award or cash payment.

Option Exercise Price. The exercise price of options granted under the 2019 Plan is determined by the Administrator and must not be less than 100% of the fair market value of the Company’s common stock on the date of grant. Options granted under the 2019 Plan expire as determined by the Administrator, but in no event later than 10 years from date of grant. No option may be exercised by any person after its expiration. Incentive stock options granted to stockholders owning more than 10% of the voting stock of the Company must have an exercise price per share no less than 110% of the fair market value at the time of grant and the term of such option may be no more than 5 years from the date of grant. The fair market value of the common stock is generally determined with reference to the closing sale price for the common stock (or the mean between the high bid and the low asked prices if no sales were reported) on the last market trading day on or before the date the option is granted. As of March 15, 2021,14, 2022, the closing price of our common stock as reported on the Nasdaq Capital Market was $8.41$4.80 per share, and the aggregate value on such date for the additional 600,000900,000 shares requested in this proposal iswas approximately $5.0$4.3 million. 

Exercise of Options. Options become exercisable at such times as are determined by the Administrator and are set forth in the individual option agreements. An option is exercised by giving written notice to the Company specifying the number of full shares of common stock to be purchased and tendering payment of the purchase price. The method of payment of the exercise price for the shares purchased upon exercise of an option will be determined by the Administrator. The 2019 Plan permits payment to be made by cash, check, other shares of common stock, cashless exercise, any other form of consideration permitted by applicable law, or any combination thereof.

Exercise Price and Other Terms of Stock Appreciation Rights. The Administrator, subject to the provisions of the 2019 Plan, will have complete discretion to determine the terms and conditions of SARs granted under the 2019 Plan; provided that no SAR may have a term of more than 10 years from the date of grant and that the exercise price of a SAR may not be below 100% of the fair market value of the common stock on the grant date. No SAR can be exercised by any person after its expiration.

Payment upon Exercise of Stock Appreciation Right. Any SARs will typically be settled only in shares of our common stock. At the discretion of the Administrator, however, and as set forth in the applicable SAR agreement, payment to the holder of a SAR may be in cash, shares of our common stock or a combination thereof. In the event that payment to the holder of a SAR is settled in cash, the shares available for issuance under the 2019 Plan will not be diminished as a result of the settlement. Upon exercise of a SAR, the value of the payment to the holder will be determined by multiplying (i) the difference between the fair market value of a share on the date of exercise over the exercise price; times (ii) the number of shares with respect to which the SAR is exercised.

Stock Appreciation Right Agreement. Each SAR grant will be evidenced by an agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

Termination of Service. The 2019 Plan gives the Administrator the authority to vary the terms of the individual option and SAR agreements. However, generally, if a participant ceases to provide ongoing service as an employee, director or consultant for any reason other than death or disability or is provided with notice of termination of employment and ceases to provide ongoing service during the notice period, then the participant will generally have the right to exercise his or her outstanding options, to the extent vested on the earlier of the date of such cessation as a service provider or the last date of ongoing service after receiving a notice of termination of employment or such later date as required by applicable law, for the amount of time set forth in his or her option agreement. In the absence of a specified time in the award agreement, the option or SAR will remain exercisable for 3 months after the date of termination, but only to the extent that the participant was entitled to exercise such option or SAR at the date of such termination. If such termination is due to death or disability, the participant (or the participant’s legal representative) will have the right to exercise an existing unexercised option or SAR during the time set forth in his or her award agreement. In the absence of a specified time in the award agreement, the option or SAR will remain exercisable following a termination due to death or disability for 12 months following the termination date, but only to the extent that the participant was entitled to exercise such option or SAR at the date of such termination. In no event will an option or SAR be exercisable beyond its term.

Grant of Restricted Stock. Restricted stock awards may be granted to our employees, directors or consultants, either alone, in addition to, or in tandem with other awards granted under the 2019 Plan and/or cash awards made outside of the 2019 Plan, at any time and from time to time as will be determined by the Administrator, in its sole discretion. Subject to the 2019 Plan fiscal year limits, the Administrator will have complete discretion to determine (i) the number of shares subject to a restricted stock award granted to any participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on continued provision of services but may include a performance-based component upon which is conditionedin order for the grant or vesting of restricted stock.stock to vest.  Once restricted stock is granted, the participant will have the rights equivalent to those of a stockholder and shall be a stockholder when the grant is entered on the records of the duly authorized transfer agent of the Company.

Restricted Stock Agreement. Each restricted stock grant will be evidenced by a restricted stock purchase agreement that will specify the purchase price (if any), vesting provisions, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

Grant of Restricted Stock Units. Restricted stock units may be granted to our employees, directors or consultants at any time and from time to time as determined by the Administrator. Restricted stock units result in a payment to a participant only if the vesting criteria the Administrator establishes are satisfied. For example, the Administrator may set vesting criteria based on the achievement of Company-wide, business unit, or individual goals (including continued employment), or any other basis determined by the Administrator in its discretion. The restricted stock units will vest at a rate determined by the Administrator; provided, however, that after the grant of restricted stock units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria for such restricted stock units. Upon satisfying the applicable vesting criteria, the participant will be entitled to the payout specified in the restricted stock unit agreement as soon as practicable. The Administrator, in its sole discretion, may pay earned restricted stock units in cash, shares, or a combination thereof. Restricted stock units that are fully paid in cash will not reduce the number of shares available for grant under the 2019 Plan.

Restricted Stock Unit Agreement. Each restricted stock unit grant will be evidenced by an agreement that will specify such terms and conditions as the Administrator, in its sole discretion, will determine. On the date set forth in the restricted stock unit agreement, all unearned restricted stock units will be forfeited to the Company.

Performance Goals. The granting and/or the vesting of awards may be made subject to the attainment of performance goals determined by the Administrator relating to one or more business criteria and may provide for a targeted level or levels of achievement.

Individual Director Limits. No non-employee director will be granted, in any period of one calendar year, awards under the 2019 Plan (excluding awards made at the election of the director in lieu of all or a portion of annual and committee cash retainers) having an aggregate maximum value at the date of grant (calculating the value of any such awards based on the grant date fair value for financial reporting purposes), taken together with any cash fees payable to such non-employee director during the fiscal year, in excess of $200,000. Notwithstanding the foregoing, in the event of extraordinary circumstances (as determined by the Board), the amount set forth in the preceding sentence shall be increased to $300,000, provided that such increase may apply only if any non-employee director receiving additional compensation as a result of such extraordinary circumstances does not participate in the determination that extraordinary circumstances exist, in the decision to award such compensation or in other contemporaneous compensation decisions involving non-employee directors.

Non-Transferability of Awards. Unless determined otherwise by the Administrator, an award granted under the 2019 Plan may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes an award granted under the 2019 Plan transferable, such award will contain such additional terms and conditions as the Administrator deems appropriate.

Adjustments upon Change in Capitalization. Subject to any required action by the Company’s stockholders, the number of shares covered by each outstanding award, the shares issuable under the 2019 Plan, and the price per share of common stock covered by each outstanding award shall be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a change in the Company’s capitalization, such as a stock split, reverse stock split, stock dividend, combination, reclassification or other similar change in the capital structure of the Company effected without the receipt of consideration. Such adjustment will be made by the Board, whose determination will be final and binding.

Adjustments upon Liquidation or Dissolution. In the event of a proposed liquidation or dissolution, the Administrator will notify each participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide that each participant will have the right to exercise all of his or her options or SARs, including those not otherwise exercisable, until the date 10 days prior to the consummation of the liquidation or dissolution. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any award will lapse 100% and that any award vesting will accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent that an award has not been previously exercised (with respect to options and SARs) or vested (with respect to other awards), an award will terminate immediately prior to the consummation of such proposed action.

Change of Control.

Options and SARs. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding option or SAR will be assumed or an equivalent option or SAR substituted by the successor corporation or any parent or subsidiary of the successor corporation. If such options or SARs are not assumed, the participant will be notified that the option or SAR will be fully vested and exercisable for 15 days from the date of such notice, and the option or SAR will terminate upon the expiration of such period, or such earlier date as specified in the award agreement.

Restricted Stock and Restricted Stock Units. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding restricted stock and restricted stock unit award will be assumed or an equivalent restricted stock or restricted stock unit award substituted by the successor corporation or any parent or subsidiary of the successor corporation. If any such restricted stock or restricted stock unit award is not assumed, the participant will fully vest in such award including as to shares of common stock which would not otherwise be vested, and all restrictions will lapse immediately prior to the closing date of the transaction.

Amendment or Termination of the 2019 Plan. The Administrator may amend, alter, suspend or terminate the 2019 Plan or any part thereof from time to time, except that stockholder approval will be required for any amendment to the 2019 Plan to the extent required by any applicable laws. No amendment, alteration, suspension or termination of the 2019 Plan may impair the rights of any participant without their written consent. The 2019 Plan will terminate on April 24, 2029 except with respect to awards that are then outstanding.

Number of Awards Granted to Employees and Directors

The number of awards that an employee, director or consultant may receive under the 2019 Plan is determined at the discretion of the Administrator and therefore cannot be determined in advance. The following table sets forth, for the persons and categories of persons listed, the aggregate number of shares granted subject to restricted stock and restricted stock units. There have been no options or SARs granted under the 2019 Plan.

________________

(1) Includes performance restricted stock units or PRSUs. Of the awards reported in this column that were granted since the effective date of the 2019 Plan, awards representing 361,442390,446 shares have been cancelled or forfeited following their grant, with these shares again being available for awards under the 2019 Plan.

Equity Compensation Plan Summary

For more information with respect to our equity plans as of January 3, 2021,2, 2022, please see "Equity Compensation Plan Summary" below.

U.S. Federal Income Tax Information

Nonstatutory Stock Options. No taxable income is recognized when a nonstatutory stock option with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any taxable income recognized in connection with an option exercise by an employee of the Company is subject to tax withholding by the Company. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Incentive Stock Options. No taxable income is recognized when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case taxation is generally similar to nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of the shares more than 2 years after the grant date and more than 1 year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the 2 or 1 year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option.

Stock Appreciation Rights (SAR). No taxable income is recognized when a SAR with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Restricted Stock and Restricted Stock Units. A participant generally will not have taxable income at the time an award of restricted stock or restricted stock units is granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture, in either case, in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date of such event. However, the recipient of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted.

Potential Limitation on Deductions. The Company generally will be entitled to a tax deduction in connection with an award under the 2019 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain “covered employees” in a taxable year to the extent that compensation to each covered employee exceeds $1,000,000. It is possible that compensation attributable to awards, when combined with all other types of compensation received by a covered employee from the Company, may cause this limitation to be exceeded in any particular year. Historically, compensation that qualified as “performance-based compensation” under the detailed requirements of Section 162(m) of the Code could be excluded from this $1,000,000 limit. The “performance-based compensation” exclusion has now been repealed, effective for taxable years beginning after December 31, 2017, unless transition relief is available for written binding contracts that were in effect (and not subsequently modified) in place as of November 2, 2017.

Code Section 409A. Section 409A of the Code ("Section 409A"), imposes requirements on non-qualified deferred compensation arrangements. These include requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, subject to certain exceptions, Section 409A requires that such individual’s distribution commence no earlier than 6 months after such officer’s separation from service.

Awards granted under the 2019 Plan with a deferral feature will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may occur prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with the provisions of Section 409A, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on deferred compensation. In addition, certain states such as California have adopted similar provisions. 

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND THE COMPANY WITH RESPECT TO AWARDS UNDER THE 2019 PLAN. THE FOREGOING DOES NOT PURPORT TO BE COMPLETE AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.

PROPOSAL THREE

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

The Audit Committee of the Board of Directors has appointed Moss Adams LLP (“Moss Adams”), an independent registered public accounting firm, to audit QuickLogic’s consolidated financial statements for the fiscal year ending January 2, 20222023 and, as a matter of good corporate governance, seeks ratification of such appointment. In the event of a negative vote on such ratification, the Audit Committee will reconsider its appointment.

Representatives of Moss Adams are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.

Fees billed to QuickLogic by Moss Adams during Fiscal Year 20202021 and Fiscal Year 20192020

Moss Adams, the Company’s current independent registered public accounting firm, billed QuickLogic for the following professional services for fiscal years 20202021 and 2019:2020:

The Audit Committee pre-approved all services and fees provided by Moss Adams during fiscal years 20202021 and 2019.2020.

Descriptions of fees billed are as follows:

Audit Fees

Audit fees consist of fees for the integrated audit of QuickLogic’s annual consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting, reviews of QuickLogic’s unaudited condensed consolidated interim financial statements included in the Company’s quarterly Form 10-Q filings, and fees relating to the filings of the Company’s Registration Statements on Form S-3, acquisition and the associated comfort letters during fiscal years 20202021 and 20192020.

Tax Fees

Tax fees consist of fees for tax compliance, tax advice and tax planning.

Pursuant to the Audit Committee Charter, the Audit Committee must pre-approve all audit and non-audit services, and related fees, provided to QuickLogic by our independent registered public accounting firm, or subsequently approve non-audit services in those circumstances where a subsequent approval is necessary and permissible under the Securities Exchange Act of 1934, as amended, or the rules of the SEC. The Audit Committee pre-approved these services and fees regularly throughout the year.

The Audit Committee must approve all audit-related and permitted non-audit services to be performed by the independent auditors prior to the commencement of such services. The Audit Committee approves such services on the basis that the services are compatible with the maintenance of the auditor’s independence in the conduct of its auditing functions. The independent auditors present a fee proposal to the Audit Committee at mid-year for review. The approved fees determine the scope of their fiscal year services. Any audit or non-audit services outside that scope (whether service or amount) must be approved by the Audit Committee.

The affirmative vote of the holders of a majority of the votes cast will be required to ratify the appointment of Moss Adams as the Company’s independent registered public accounting firm for the fiscal year ending January 2, 2022.2023.

Recommendation of the Board of Directors

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP AS QUICKLOGIC’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JANUARY 2, 2022.2023.

REPORT OF THE AUDIT COMMITTEE

This section shall not be deemed to be “soliciting material,” or to be “filed” with the Securities and Exchange Commission, is not subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of QuickLogic under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, regardless of date or any other general incorporation language in such filing.

In accordance with the written charter adopted by the Audit Committee on December 20, 2004, the Audit Committee consists of at least three members and operates under such written charter.

Membership of the Audit Committee

Throughout fiscal year 2020,2021, the Audit Committee consisted of Michael R. Farese, Arturo Krueger and Christine Russell. Ms. Russell became Chairman of the Committee in April 2006. Dr. Farese, Mr. Krueger, and Ms. Russell, have been determined by our Board of Directors to be independent according to SEC rules and the Nasdaq Capital Market’s listing standards. Joyce Kim was appointed to the Audit Committee subsequent to her appointment as a Company Director on December 8, 2021.

Audit Committee Financial Expert

Our Board of Directors has determined that Ms. Russell is an “Audit Committee Financial Expert”, as defined in the SEC rules and regulations and also meets the standards of independence adopted by the SEC and the Nasdaq Capital Market for membership on an audit committee.

Role of the Audit Committee

Management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”). Our independent registered public accounting firm is responsible for auditing those financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States. Our independent registered public accounting firm is also responsible for auditing our system of internal control over financial reporting. The Audit Committee’s responsibility is: (i) to monitor and review these processes; (ii) to provide our Board of Directors with the results and recommendations derived from this monitoring; and (iii) to select, appoint for ratification by the Company’s stockholders and compensate the independent registered public accounting firm. However, the members of the Audit Committee are not professionally engaged in the practice of accounting or auditing and are not experts in the fields of accounting or auditing, including with respect to the independence of the registered public accounting firm. The Audit Committee relies, without independent verification, on the information provided to it and on the representations made by management and the independent registered public accounting firm.

The Audit Committee held fourfive meetings during 2020.2021. The meetings were designed to, among other things, facilitate and encourage communication among the Audit Committee, management and QuickLogic’s independent registered public accounting firm for fiscal year 2020,2021, Moss Adams. The Audit Committee discussed with Moss Adams the overall scope and plans for their audits and met with Moss Adams, with and without management present, to discuss the results of their examinations and their evaluation of QuickLogic’s internal controls. The purpose of the Audit Committee is to fulfill the Board of Director’s oversight responsibilities relating to our corporate accounting and reporting practices, the quality and integrity of our financial reports, compliance with laws, the maintenance of ethical standards and effective internal controls. During the meetings held in 2020 and thereafter, the Audit Committee reviewed and discussed, among other things:

Review of QuickLogic’s Audited Financial Statements for the Fiscal Year Ended January 3, 20212, 2022

The Audit Committee reviewed and discussed the 2020fiscal 2021 audited financial statements and the Company’s internal control over financial reporting with management and Moss Adams, the Company’s independent registered public accounting firm. Specifically, the Audit Committee discussed with Moss Adams the matters required to be discussed by Statement of Financial Accounting Standards No. 16. In addition, the Audit Committee discussed with Moss Adams, Moss Adams’ independence from management and QuickLogic, including the matters covered by the written disclosures and letter received by QuickLogic from Moss Adams as required by the applicable requirements of the Public Company Accounting Oversight Board.

On March 15, 2021,14, 2022, the Audit Committee reviewed QuickLogic’s audited financial statements and footnotes for inclusion in QuickLogic’s Annual Report on Form 10-K for the fiscal year ended January 3, 20212, 2022 and the Company’s internal control over financial reporting. Based on this review and prior discussions with management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that QuickLogic’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended January 3, 2021,2, 2022, for filing with the SEC.

MEMBERS OF THE AUDIT COMMITTEE

Christine Russell Chairman(Chairman)

Arturo Krueger

Joyce Kim

Michael R. Farese

Arturo Krueger

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

QuickLogic is a "smaller reporting company" under Item 10 of Regulation S-K promulgated under the Exchange Act and the following compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies.  Although the rules allow the Company to provide less detail about its executive compensation program, the Compensation Committee is committed to providing the information necessary to help stockholders understand its executive compensation-related decisions.  Accordingly, this section includes supplemental narratives that describe the 2021 executive compensation program for our named executive officers. 

Overview

QuickLogic’s compensation program is overseen and administered by the Compensation Committee of the Board of Directors (for purposes of this Compensation Discussion and Analysis, the Compensation Committee is referred to as the “Committee”), which consists entirely of independent directors as determined in accordance with various SEC and Nasdaq rules. The Committee operates under a written charter adopted by our Board. A copy of the charter is available free of charge at http://www.quicklogic.com/corporate/management/. The Committee has the responsibility of setting the compensation and evaluating the performance of our executive officers including our named executive officers (“NEOs”). Our NEOs for 2020, who also constitute our executive officers for 2020,2021 were:

(1) Suping (Sue) Cheung voluntarily separated from the Company on February 17, 2021. Her role was subsequently filled by Elias Nader, CFO, SVP Finance on February 1, 2022.

For further information regarding each current NEO’s professional background, please refer to the section “Information About Our Executive Officers and Directors” under Item 1 of our Annual Report on Form 10-K for the year ended January 3, 2021,2, 2022, filed with the SEC on March 23, 2021.22, 2022.

Executive Summary

Our pay-for-performance philosophy forms the foundation of all decisions regarding the compensation of our NEOs and is important to our ability to attract and retain the highly qualified executive officers required to guide us as we continue to develop and execute on our strategic plan to build a solid revenue base and strategic relationships with key customers and leading silicon suppliers.

In 2020,2021, we continued to provide compensation consistent with our philosophy, policies and objectives:

In addition, our compensation program reflects a number of “best practices” including:

Results of Prior Advisory Vote

At the 2020 Annual Meeting of Stockholders of the Company, a majority of the Company’s stockholders voting on the non-binding advisory resolution on the frequency of a say-on-pay vote chose in favor of holding “say-on-pay” advisory votes every three years. Our most recent say-on-pay vote was in 2020.2021. At the 20202021 Annual Meeting of Stockholders of the Company, our stockholders overwhelmingly approved the compensation of our NEOs, with over 90% of stockholder votes cast in favor of our say-on-pay proposal. We considered the strong support our stockholders expressed in our approach to setting reasonable executive compensation that both retains and motivates our NEOs and closely aligns their interests with those of our stockholders. Accordingly, we determined to retain the general philosophy and structure of our executive compensation program for 2020.2021. We will continue to consider the outcome of our say-on-pay votes when making compensation decisions for our NEOs.

Compensation Philosophy and Objectives

The Company’s philosophy in setting its compensation policies for executive officers is to maximize stockholder value over time. The executive compensation programs and practices of the Company also are designed to, among other things:

Elements of Executive Compensation

The key elements of the compensation program for our NEOs are:

The Committee sets base salary with the goal of attracting and retaining highly qualified executive officers, including our NEOs, and adequately compensating and rewarding them on a day-to-day basis for the time they spend, the services they perform, and the skills and experience they bring to the Company. The Committee sets target cash incentive compensation and performance objectives to motivate our executive officers, including our NEOs, to achieve the performance objectives, thereby directly and meaningfully linking the achievement of the Company’s goals with their compensation. The Committee grants executive officers, including our NEOs, equity incentives to provide an incentive and reward for performance of key long-term business objectives and to help attract and retain these individuals. The Committee believes that the cash and equity incentive performance objectives and equity incentives align the interests of our NEOs and our stockholders while not encouraging our NEOs to expose the Company to excessive risk. In setting individual compensation levels for our NEOs, the Committee considers competitive market factors such as comparable compensation of similar individuals in similar companies as well as qualitative factors, such as experience, level of contribution, potential impact on company performance, and relative internal pay; and quantitative factors relating to corporate and individual performance. The Committee does not base its compensation decisions on any one single performance factor nor does it specifically assign relative weights to any one performance factor; rather, it considers a mix of factors and individual performance is evaluated against that mix of performance factors.

Each of our NEOs is a party to a change in control arrangement. These arrangements are designed to provide our NEOs with certain payments and benefits if their employment with the Company is terminated in connection with a change of control. These arrangements are discussed in detail under the heading “Change of Control Severance Arrangements” below. The Board has determined that such payments and benefits are necessary to attract and retain our NEOs.

The Committee believes that our key elements of compensation, when combined, are effective, and will continue to be effective, in achieving the objectives of the Company’s compensation program.

Peer Group

In 2018, the Committee, based on the recommendations of Compensia, established the criteria for and selected 18 publicly traded companies constituting the peer group to be used by the Committee when evaluating executive compensation, Board of Director compensation, and equity trends (“Compensation Peer Group”). The Compensation Peer Group was selected based on industry and financial comparability on the key metrics of (a) revenue of less than $100 million over the prior four quarters and (b) a 30-day market capitalization of $60 to $450 million. Although the parameters enabled the potential inclusion of a diverse set of companies, ultimately the Committee focused on those companies that were similar in revenue and market capitalization, while also including those companies with which we compete for executive talent and/or compete with respect to business. Other criteria considered included whether the company was based in California, whether the company was included in QuickLogic’s prior peer group, whether the company identified QuickLogic as a peer for compensation purposes and whether the company was a fabless semiconductor company. These additional factors assisted the Committee in choosing companies that would allow meaningful comparison given the primary region from which QuickLogic recruits key talent and the similarities in the business and operations with and among other fabless companies. WeFor 2021, we continued to use the same Compensation Peer Group, adjusted for changes proposed by Compensia, for 2020. Compensia.  MoSys Inc, having previously been in the Peer Group, has been excluded due to its business combination with Peraso Technologies, Inc in December 2021. 

That compensation group is as follows:

The Committee used the Compensation Peer Group as one of various factors in determining the total target cash compensation, base salary and target cash incentive compensation of our NEOs in 2020.2021.

Cash-Based Compensation

Total Target Cash Compensation

NEO total target cash compensation consists of base salary and target cash incentive compensation. The Committee determines the base salary and target cash incentive compensation of the President and Chief Executive Officer and reviews and approves the base salaries and target cash incentive compensation for each of our other NEOs. The President and Chief Executive Officer may make recommendations to the Committee with respect to these elements of compensation of the NEOs other than himself, although the Committee retains complete discretion to accept or reject any recommendations.

No

Due to continued fiscal discipline and cost controls, no adjustments were made to increase the base salaries and target cash incentive compensation of our NEOs during 2020.2021. In 2020,2021, the total target cash compensation of our NEOs was as follows:

* Effective February 17, 2021, Ms. Cheung's employment with the Company was terminatedended upon her resignationvoluntary separation from the Company in order to join a company in another industry.

Cash Incentive Compensation

20202021 Bonus Program

Under our 2005 Executive Bonus Plan (the “Bonus Plan”), as amended, our NEOs participate in a performance-based cash and equity incentive compensation plan. Our Bonus Plan is a pay for performance plan that places each NEO’s incentive compensation at risk. Our Bonus Plan is intended to: (i) increase stockholder value and the success of the Company by motivating key employees to perform to the best of their abilities and work to achieve or exceed the Company’s objectives; and (ii) to reward achievement of the Company’s short-term and long-term business goals. Under the Bonus Plan, our NEOs are eligible to earn cash bonus incentive compensation based upon achieving certain performance goals and objectives relating to the Company. In addition, the Bonus Plan allows for increases in the payouts for incentive awards as performance increases versus Bonus Plan objectives. We have designed our Bonus Plan with the intent of encouraging NEOs to rise to a high level of performance and to motivate performance in line with the Company’s approved operating plan. The Company’s operating plan is developed by management and reviewed and approved by our Board on an annual basis. Achievement of the objectives set forth in the operating plan requires significant effort and skillful execution, because these objectives are intended to be challenging in order to foster the growth and development of QuickLogic. Likewise, the performance goals established under the Bonus Plan are intended to be greatly challenging and require very high levels of performance to achieve at target levels. The Committee has discretion to increase, reduce or eliminate bonuses under the Bonus Plan.

In February 2020,2021, the CommitteeCommittee established the target bonuses and performance objectives under the Bonus Plan for 2020. 2021. The Committee determined that the primary business objectives for 20202021 were to achieve proforma operating income/loss and SensiML starter kit goals, which were weighted 66.7% and 33.3% respectively.cash flow break-even, or better.  Subsequently, on July 4, 2021,  the Committee refined the performance objectives to include the acquisition of a major customer.   Bonuses could be earned depending on the degree to which the Company met or exceeded the performance targets, without specified thresholds or maximum goals that have been used in past years. In July 2020, in light of the COVID-19 pandemic’s impact to our business, the Committee reduced the operating income goals in order to adequately incentivize performance.

20202021 Bonus Plan Results

Based on our level of achievement of the established proforma operating income/loss improvement and SensiML starter kit2021 performance goals, each NEO earned paymentcompensation of approximately 36%100% of the NEO's target cash incentive.incentive and 100% of the NEOs equity-based performance targets. 

Discretionary Bonuses

In addition to compensation under the Bonus Plan, the Committee may award special bonuses to NEOs based on a number of factors, including performance, market demands and retention. In recognition of the NEOs demonstrating leadership through the numerous challenges during 2020,202, on January 14, 2021,  the Committee approved discretionary cash bonuses and discretionary awards of fully vested RSUs to the NEOs, with each of the NEOs receiving both a cash bonus and RSUs, with respective award values of $10,000 each for Mr. Faith and $5,000 each for Ms. Cheung and Mr. Saxe. 

Equity-Based Compensation

The Committee believes that equity awards are an essential component of executive compensation. Equity awards are subject to vesting provisions to encourage our NEOs to remain employed with the Company and to align their interests with the long-term interests of our stockholders.

Our NEOs generally receive an equity award, approved by the Committee or the Board of Directors, when they join the Company. During each fiscal year, the Committee may grant our NEOs additional stock options or other equity awards. The Committee takes into consideration the NEOs’ relative responsibility, performance and anticipated future contribution to Company performance. The Committee receives recommendations from the President and Chief Executive Officer on the amounts and terms of equity compensation to be awarded to the other NEOs. The Chief Executive Officer’s recommendations are based on the NEOs’ anticipated future performance, responsibilities, and potential impact on Company results. The Committee takes these factors as well as the Compensation Peer Group data into account when approving such awards.

The Committee also reviews prior equity awards to each NEO, including the number of shares that continue to be subject to vesting under prior equity awards, in determining the size of equity awards to each of our NEOs. If we grant stock options, they are granted with an exercise price per share equal to the closing market price of the Company’s common stock on the date of grant. While the Committee did not approve the grant of anyperformance-based stock awards in 2021, 2020 and 2018, no additional stock options or other equity awards for our NEOs during 2019, the Committee haswere granted performance-based stock awards in 2018 and granted performance-based stock awards in 2020.2019. 

On August 6, 2020,July 14, 2021, after taking into account the impacts on our business due to the COVID-19 pandemic, the Committee granted NEOs performance-based stock awards that could be earned upon the achievement of operating income/losscash flow improvement, SensiML revenue and open source development kit sales targetsthe acquisition of a major customer, in the 2021 fiscal year 2020.year.   The NEOs performance-based stock awards consisted of  175,000 PRSUs awarded at July 15, 2021 with vesting upon meeting or exceeding the entire performance goals for the 2021 fiscal year.  The PRSUs were awarded as follows:  Brian C. Faith, 100,000 PRSUs; Rajiv Jain,  25,000 PRSUs and Timothy Saxe, 50,000 PRSUs. Based on significant improvement in operating loss frommeeting all performance targets for the first half to the second half of fiscal year 2020, the improvement in SensiML SaaS users and the shipment of a significant number of open source development systems, these2021 year.  The awards were considered earned and vested on JanuaryFebruary 14, 2021,2022, at approximately half of their target level.one-hundred percent. These grants are further described in the Grants of Plan-Based Awards table below.  Vesting of the NEOs' PRSUs was at $5.47 per share at the vesting date. 

Performance-based stock units or PSUs were previously granted on March 8, 2018, subject to the achievement

Stock-based Policies

We do not currently have any equity or other security ownership policy that mandates ownership of certain amounts of our common stock by our NEOs. Under our insider trading policy, directors, officers or employees are not allowed to margin the Company’s securities, use the Company’s securities as collateral to purchase the Company’s securities or the securities of any other issuer, short sell Company securities, either directly or indirectly, or trade in derivative securities related to the Company’s securities.

Change of Control Severance Arrangements

Consistent with our goals to attract and retain highly qualified executive officers and maintain a competitive executive compensation program, we previously entered into change of control agreements with each of our NEOs. These arrangements provide for certain “double trigger” severance benefits in connection with a change of control, as discussed in detail under the heading “Change of Control Agreements” below. It is expected that from time to time, we may consider the possibility of a corporate transaction such as a change of control. These transactions may be a distraction to our NEOs and can cause our NEOs to consider alternative employment opportunities. We entered into these change of control agreements in order to better ensure their continued dedication and objectivity notwithstanding the possibility or threat of a change of control, provide incentive for each NEO to continue employment with us and maximize stockholder value, and provide each NEO with enhanced financial security in these specified circumstances. The Committee believes that these change of control severance benefits are appropriate and reasonable as they are provided only upon an involuntary termination in connection with a change of control and do not become payable merely upon the occurrence of a change of control; provide for no tax gross-up or other excessive benefits to the NEOs; and are subject to the condition that each NEO agree to a release of claims in our favor. These benefits generally do not affect the Committee’s decisions regarding other elements of compensation.

Executive Perquisites

The Company’s NEOs are eligible to participate in the Company’s 401(k) Plan and other benefits available generally to other employees of the Company. Mr. Saxe receiveswill cease to receive a car allowance. Mr. Faith and Ms. Cheung do not receive car allowances. Our NEOs do not receive club memberships, personal use of corporate aircraft, or any other perquisites or personal benefits.

Tax Considerations

Our Board has reviewed the impact of tax and accounting treatment on the various components of our executive compensation program and has determined that limitations on deductibility of compensation may occur under Section 162(m) of the Internal Revenue Code, which generally limits the tax deductibility of compensation paid by a public company to its chief executive officer and other highly compensated executive officers to one million dollars per individual, per year. On December 22, 2017, the Tax Cuts and Jobs Act repealed the exception to the limit on deductibility for performance-based compensation that met certain requirements.

Although deductibility of compensation is preferred, tax deductibility is not a primary objective of our compensation programs, due in part to the large net operating loss carry forward available to the Company for tax reporting purposes. We believe that achieving the compensation objectives discussed earlier is more important than the benefit of tax deductibility and our executive compensation programs may, from time to time, limit the tax deductibility of compensation.

Equity Incentive Grant Policies

The Committee administers our equity-based plans, although either our Board or the Committee may grant stock options or other equity awards to our NEOs. During 2020,2021, equity awards were granted to our NEOs in the form of performance-based stock units. Our NEOs are generally granted equity awards when they join the Company and they may receive additional equity grants as part of a refresh grant, upon promotion or for individual performance. Our President and Chief Executive Officer recommends the timing, size and terms of equity awards for NEOs other than himself, although the Committee is not obligated to approve these recommendations. Individual grants are based on position, individual performance, expected contribution and market data for similar positions, if available.

The Compensation Committee has implemented certain general policies relating to grants of stock options, RSUs and other awards, which policies apply to our NEOs. Specifically, the Committee has determined that, whenever stock options are granted, they shall be granted on: (i) the second and fourth Thursdays of the Company’s fiscal month (each a “Regular Grant Date”), or on the date the last director or Committee member approves such grants if not approved prior to the Regular Grant Date; (ii) on the date of a pre-scheduled Board of Directors or Committee meeting; or (iii) on such other date established in advance by the Board of Directors or Committee. The Company intends that future equity awards be made on a similar schedule. Option grants or other equity awards to NEOs may be approved at a properly constituted meeting of the Board of Directors or Committee or by the unanimous written consent of the directors or Committee members. Generally, our unanimous written consents are executed electronically, to ensure the date of approval is certain. All required documentation, including the list of recommended equity awards by recipient and the terms of the award, are sent to the Board of Directors or Committee prior to the meeting. The Committee believes that this practice will ensure that the exercise price of the options or other awards are based on the fair market value of our common stock on the date of grant and that the approval process results in grants made on a planned grant date. We have not and do not plan in the future to coordinate the timing of the release of material non-public information for the purpose of affecting the value of executive compensation (including equity award grants).

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with our management.

Based on the Compensation Committee’s review and discussion noted above, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A.

MEMBERS OF THE COMPENSATION COMMITTEE

Gary H. Tauss (Chairman)

Michael R. Farese

Daniel A. Rabinovitsj

Christine Russell

Michael R. Farese

Radhika Krishnan

SUMMARY COMPENSATION TABLE

For Fiscal Years Ended January 2, 2022 and January 3, 2021 and December 29, 2019

The following table sets forth 2020fiscal 2021 and  2019fiscal 2020 compensation information for our  2020fiscal 2021 NEOs. We have elected to follow the scaled disclosure requirements applicable to Smaller Reporting Companies with respect to the Summary Compensation Table.

GRANTS OF PLAN-BASED AWARDS

For Fiscal Year Ended January 3, 20212, 2022

The following table sets forth, for the fiscal year ended January 3, 2021,2, 2022, certain information regarding incentive awards granted to the NEOs.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

FOR FISCAL YEAR ENDED JANUARY 3,2, 2021

The following table sets forth certain information concerning outstanding equity awards held by the NEOs as of January 3, 2021:2, 2022:

OPTION EXERCISES AND STOCK VESTED

For Fiscal Year Ended January 3, 20212, 2022

The following table sets forth the number of option awards exercised by and stock awards vested for each of our NEOs during fiscal year 2020:2021:

_____________

Equity Compensation Plan Summary 

The following table sets forth certain information as of the end of the most recently completed fiscal year (January 3, 2021)2, 2022) with respect to compensation plans (including individual compensation arrangements) under which equity securities of the registrant are authorized for issuance, aggregated as follows:

Post-Employment and Change of Control Compensation

Payments Made Upon Termination

Regardless of the manner in which a NEO’s employment terminates, he or she is entitled to receive amounts earned during his or her term of employment, including base salary, incentive compensation (provided the NEO is employed on the last day of the performance period), and the vested portion of his or her equity awards. Our Compensation Committee may, at its discretion, approve the payment of incentive compensation if a NEO is not employed on the last day of the reporting period. Except for compensation payments associated with our standard change of control agreements or payments made to a third party arising from indemnification, the Company does not have any written or unwritten payment obligations to our NEOs upon their resignation, severance or retirement. The Compensation Committee may decide to approve such payments in the future. The Company is not aware of any existing arrangements, the operation of which may result in a change of control of the Company.

Change of Control Agreements

The Company has entered into a change of control severance agreement (“Change of Control Agreement” or “Agreement”) with each of the NEOs. The Compensation Committee of the Board of Directors reviews the form of these agreements every year. The Company’s standard form of Change of Control Agreement is attached as an exhibit to our annual report on Form 10‑K for the period ended December 30, 2007. The Agreements provide that if the Company experiences a change of control, as defined in the Agreements, and such executive officer’s employment with the Company terminates as a result of an “Involuntary Termination” within three months prior to or twelve months following the change of control, the Company will provide the following to the NEO:

The terms of the Change of Control Agreements also provide:

The following table describes the severance benefits which would be owed by the Company to each of the NEOs upon their Involuntary Termination at any time three months prior to or twelve months after a change of control, as defined in our Change of Control Agreements with our NEOs. The amounts shown are based upon target cash compensation and in-the-money unvested equity awards outstanding for each individual assuming that each NEO’s Involuntary Termination occurred on January 3, 2021. Following the end of the 2020 fiscal year,2, 2022. Ms. Cheung voluntarily resigned from her position as Chief Financial Officer effective February 17, 2021, and she received no severance benefits in connection with her departure.

In addition to the indemnification provided for in the Company’s certificate of incorporation and bylaws, the Company has entered into agreements to indemnify its current and former directors and executive officers. These agreements, among other things, provide for indemnification of the Company’s directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive officer of the Company, any subsidiary of the Company or any other company or enterprise to which the person provided services at the Company’s request.

CEO Pay Ratio

For the 20202021 fiscal year, the ratio of the annual total compensation of Brian C. Faith, our President and Chief Executive Officer (“CEO Compensation”), to the median of the annual total compensation of all of our employees other than our Chief Executive Officer (“Median Annual Compensation”) was 5.164.75 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized below. In this summary, we refer to the employee who received such Median Annual Compensation, who was selected in a manner consistent with Item 402(u) of Regulation S-K, as the “Median Employee.” For purposes of this disclosure, the date used to identify the Median Employee was January 3, 20212, 2022 (the “Determination Date”).

CEO Compensation for purposes of this disclosure represents the total compensation reported for Mr. Faith in the “Summary Compensation Table” for the 20202021 fiscal year. For the purposes of this disclosure, Median Annual Compensation was $163,114,$165,309, and was calculated by totaling for our MedianMedian Employee all applicableapplicable elements of compensation for the 20202021 fiscal year in accordance with Item 402(c)(2)(x) of Regulation S-K.

To identify the Median Employee, we first determined our employee population as of the Determination Date for purposes of the calculation. We measured compensation for 47 employees (with 35 employees in the U.S. and 12 employees outside the U.S.), representing all full-time, part-time, seasonal and temporary employees of us and our consolidated subsidiaries as of the Determination Date, excluding Mr. Faith and, as permitted by Item 402(u) of Regulation S-K, excluding (i) any independent contractors or “leased” workers and (ii) two non-U.S. employees (consisting of 1 employee in China and 1 employee in Japan). We then measured compensation for the period beginning on December 30, 2019January 4, 2021 and ending on January 3, 20212, 2022 for these employees. This compensation measurement was calculated by totaling, for each employee, gross taxable earnings, including salary, wages, tips and other compensation as shown in our payroll and human resources records for 2020.2021. A portion of our employee workforce worked for less than the full fiscal year due to commencing employment after the beginning of the fiscal year. In determining the Median Employee, we annualized the compensation for such individuals.

Compensation of Non-Employee Directors 

The following table sets forth the annual compensation paid or accrued by the Company to or on behalf of the non-employee directors of the Company for the fiscal year ended January 3, 2021.2, 2022.