Term expiring at the 2020 Annual Meeting of Stockholders (Class I)
Name
| | Age
| | Present Position with Airgain, Inc.
| Charles Myers
| | 55
| | President, Chief Executive Officer and Director2024 Annual Meeting of Stockholders (Class II)
| | | | | | James K. Sims
| | 70
| | Chairman of the Board of Directors
|
Charles Myers has served as our President and Chief Executive Officer and as a member of our board of directors since May 2011. Prior to joining Airgain, Mr. Myers served as a consultant in sourcing opportunities to private equity companies from 2009 to January 2011 and as the Acting Chief Executive Officer of the Wireless Business Unit at VeriSign, Inc., a Web domain names and Internet security company, from November 2007 to January 2009. Mr. Myers also served as Chief Executive Officer of Awarepoint, a developer of location based hardware and software for the healthcare industry, and Founder and Chief Executive Officer of NetworkCar, a wireless automotive technology company. Mr. Myers began his career with Science Applications International Corporation, a Fortune 500 company, where he rose to the position of Corporate Vice President. He holds a M.S. degree from Massachusetts Institute of Technology. Mr. Myers’ extensive knowledge of our business and prior executive
management experience contributed to our board of directors’ conclusion that he should serve as a director of our company.
James K. Sims has served as our chairman of the board of directors since November 2003. Mr. Sims has served as the Chairman and Chief Executive Officer of GEN3 Partners, a consulting company that specializes in science-based technology development, since 1999, and as Managing Partner of its affiliated private equity investment fund, GEN3 Capital, LLP, since 2005. Mr. Sims founded Silicon Valley Data Science (SVDS) in 2012 where he is currently the Chairman. Mr. Sims also founded Cambridge Technology Partners in 1991 where he held the position of Chief Executive Officer. Prior to Cambridge Technology Partners, Mr. Sims also founded Concurrent Computer Corporation. Mr. Sims currently serves on the board of directors of various private companies including EPAY Systems, Inc., where he is currently the Chairman of the Board, Connections 365, Inc. and Bright Volt, Inc. and has previously served on the board of directors of public companies including Cambridge Technology Partners, RSA Security, Inc., where he was the Chairman, and Electronic Data Systems Corporation. Mr. Sims’ extensive experience as a director of numerous public and private companies, as well as his extensive experience as a founder and venture capital investor in the technology industry, contributed to our board of directors’ conclusion that he should serve as a director of our company.
Members of the Board of Directors Continuing in Office
Term Expiring at the
2018 Annual Meeting of Stockholders (Class II)
Name | | Age | | Present Positionposition with Airgain, Inc. | Francis X. EganJoan H. Gillman
| | 61
| | Director
| 60 | | | | Director | Arthur M. Toscanini | | 74
| | Director
|
Francis X. Egan has served on our board of directors since May 2010. Mr. Egan currently serves as the Managing Partner of Lake Bridge Capital Management LLC, an investment advisory firm, a position he has held since 2016, as a Managing Director of GEN3 Capital, a position he has held since 2005 and as Director of Ioxus, Inc., a position he has held since 2011. Mr. Egan previously served as the Managing Director of Northwater Capital, Inc., an intellectual property focused venture capital company, a position he held from 2006 through August 2016. Prior to GEN3 Capital, Mr. Egan served as Senior Vice President with PaineWebber (UBS), Kemper Securities Inc. and Dain Rauscher Wessels. Mr. Egan currently serves on the board of directors of various private companies including Arctic Sand Technologies, Inc., Aquilon Energy Services, Inc., EPAY Systems, Red Wave Energy, Inc., MTPV Power Corporation, Ioxus, Inc., R3 Fusion, Inc., Legend 3D, Inc., Solicore, Inc. and VanDyne Super Turbo Powermeters. Mr. Egan holds a B.A. from Marquette University, Milwaukee, Wisconsin. Mr. Egan’s extensive experience as a venture capital investor in the technology industry, as well as his extensive experience as a board member of numerous companies, contributed to our board of directors’ conclusion that he should serve as a director of our company.
Arthur M. Toscanini has served on our board of directors since 2005. Mr. Toscanini is the Chief Financial Officer of GEN3 Partners, a position he has held since 2000. Prior to GEN3 Partners, he was with Cambridge Technology Partners from 1991 to 2000, where he served as the Chief Financial Officer. Mr. Toscanini also served as Vice President and Controller of Concurrent Computer Corporation from 1986 to 1991. Prior to Concurrent Computer Corporation, he worked at Perkin-Elmer Data Systems Group. Mr. Toscanini currently serves on the board of directors of EPAY Systems. He holds a B.A. in accounting from Pace University and an M.A. in management from Monmouth University. Mr. Toscanini’s extensive knowledge of our business and experience as a chief financial officer contributed to our board of directors’ conclusion that he should serve as a director of our company.
Term Expiring at the
2019 Annual Meeting of Stockholders (Class III)
Name
| | Age
| | Present Position with Airgain, Inc.
| Joan Gillman
| | 53
| | Director
| 81 | | | | | Frances Kordyback
| | 63
| | Director
| | | | | | Thomas A. Munro
| | 60
| | Director |
Joan H. Gillmanhas served on our board of directorsBoard since November 2016. Ms. Gillman has served as Executive Vice President and Chief Operating Officer of Time Warner Cable Media from September 2006 to June 2016. She first joined Time Warner Cable as a new product and marketing consultant in January 2004 and served from May 2005 to September 2006 as Vice President of Interactive TV and Advanced Advertising. Prior to Time Warner Cable Ms. Gillman served in senior executive roles at OpenTV Corporation, British Interactive Broadcasting Holdings Limited, and Physicians’ Online Inc. She has also held two of the top senior roles in the Officeoffice of then U.S. Senator Chris Dodd, Dodd—State Director and Legislative Director. Ms. Gillman currently serves on the board of directors of Centrica PLC, InterDigital, (IDCC)Inc. and, The Jesuit Volunteer Corp.Cumulus Media Inc. She has previously served on the board of directors of variousCentrica PLC, as well as private companies such as BIA Communications (Boldyn Networks), Transit Wireless LLC, BlackArrow LLC and National Cable Communications (NCC), industry associations such as the Interactive Advertising Bureau (IAB), and not-for-profits, includingnon-profits such as the Jesuit Volunteer Corp, the College of the Holy Cross The CityParks Foundation, National Cable Communications (NCC) LLCBoard of Trustees, and the Interactive Advertising Bureau (IAB). CityParks Foundation. Ms. Gillman’s extensive experience as an operating executive in the cable and technology industries, as well as her service as a director of numerousseveral public and private companies, contributed to our board of directorsBoard’s conclusion that she should serve as a director of our company.Company. Arthur M. Toscanini has served on our Board since 2005. Mr. Toscanini is the Chief Financial Officer of GEN3 Partners, a position he has held since 2000. Prior to GEN3 Partners he was Chief Financial Officer with Cambridge Technology Partners from 1991 to 2000. Mr. Toscanini also served as Vice President and Controller of Concurrent Computer Corporation from 1986 to 1991. Prior to Concurrent Computer Corporation, he worked at Perkin-Elmer Data Systems Group. Mr. Toscanini previously served on the board of directors of EPAY Systems. He holds a BA in accounting from Pace University and an MA in management from Monmouth University. Frances KordybackMr. Toscanini’s extensive knowledge of our business and experience as a chief financial officer contributed to our Board’s conclusion that he should serve as a director of our Company.
Members of the Board Continuing in Office | | | | | Term expiring at the | 2025 Annual Meeting of Stockholders (Class III) | | | | | Name | Age | | Present position with Airgain, Inc. | Jacob Suen | | 50 | | Director, President and Chief Executive Officer | Kiva A. Allgood | | 51 | | Director | Thomas A. Munro | | 67 | | Director |
Jacob Suenhas served on our Board and as Chief Executive Officer since August 2019 and as our President since January 2019. He previously served as our Senior Vice President, Worldwide Sales from May 2017 through January 2019. Mr. Suen started with the Company in April 2006 as the Vice President of Asia Pacific Sales. He previously served as the Director of Business Development from 1998 to 2005 at Paradyne Corporation. Prior to Paradyne, Mr. Suen was a development engineer at GVN Technologies in 1998. From 1997 to 1998 Mr. Suen was a software development engineer for Motorola, Inc. Mr. Suen received his MBA from the University of Colorado, MS and Management from the University of South Florida, and BS in Computer and Electrical Engineering from the University of Florida. Mr. Suen’s extensive technical background in communication, product knowledge, extensive experience in the industries we operate and experience at our business contributed to our Board’s conclusion that he should serve as a director of our Company. Kiva A. Allgood has served on our board of directors since November 2005.July 2021. Ms. Kordyback is a Commissioner with the Ontario Securities Commission, a position she has held since November 2016. Ms. Kordyback previouslyAllgood served as President and Chief Executive Officer, and as a Managing Directormember of Northwater Capital Management Inc., a position she held from January 2005 through September 2016. Prior to Northwater Capital Management, she served as the Managing Director of CCFL Parklea Capital Inc. from January 2003 to December 2004. Ms. Kordyback was a partner in Plaxton & Co. Limited from February 1999 to December 2001. Ms. Kordyback also serves on the board of directors of Sarcos Technology and Robotics Corporation, a manufacturer of advanced robotic systems, from December 2021 to June 2023, and prior to that served as Global Head of IoT and Automotive for Ericsson (NASDAQ: ERIC), a global provider of communications technology from April 2019 to July 2021. Prior to her time with Ericsson, she served as Chief Commercial Development Officer, GE Business Innovations and as Managing Director, GE Ventures for GE Ventures and Business Innovation, a corporate venture company and innovation group of General Electric Company (NYSE: GE). Ms. Allgood also served as President, Qualcomm Intelligent Solutions and Vice President, New Business Development for Qualcomm Incorporated (NASDAQ: QCOM), a global provider of foundational technologies and products used in mobile devices and other wireless products. Ms. Allgood previously served on the Ontario Securities Commission. board of Synaptics Incorporated (NASDAQ: SYNA). Ms. Kordyback holdsAllgood has an MBA from the Kellogg School of Management at Northwestern University and a Bachelor of MathematicsScience degree from theNorthwestern University of Waterloo. . Ms. Kordyback’sAllgood’s extensive experience as a venture capitalist investingan operating executive in the communications technology industry and her governance and regulatory experienceindustries contributed to our board of directors’Board’s conclusion that she should serve as a director of our company.Company. Thomas A. Munrohas served on our board of directorsBoard since 2004. Mr. Munro iswas the Chief Executive Officer of Verimatrix, Inc., an Internetinternet security technology company, a position he has held sincefrom April 2005.2005 to March 2019. Prior to Verimatrix Mr. Munro was the President of Wireless Facilities, Inc. from 2001 to 2003 and Chief Financial Officer from 1997 to 2001. Previously he was the Chief Financial Officer of Precision Digital Images from 1994 to 1995, and Chief Financial Officer of MetLife Capital Corporation from 1992 to 1994. Mr. Munro currently serves on the board of directors of BandwidthX, Inc., a private company, andhas previously served on the board of directors of private companies Kineticom, Inc., CommNexus, Shadowbox and CommNexus.BandwidthX, Inc. Mr. Munro holds a B.A.BA in business and an M.B.A.MBA from the University of Washington. Mr. Munro’s extensive knowledge of our business and history and experience in the wireless technology industry contributed to our board of directors’Board’s conclusion that he should serve as a director of our company.Company.
| | | | | For a three-year term expiring at the | 2026 Annual Meeting of Stockholders (Class I) | | | | | Name | Age | | Present position with Airgain, Inc. | James K. Sims | | 77 | | Chair of the Board of Directors | Tzau-Jin Chung | | 61 | | Director |
James K. Sims has served as our Chair of the Board since November 2003. He served as our Chief Executive Officer from March 2019 to August 2019, as our interim Chief Executive Officer from May 2018 to March 2019, and as our Executive Chair from October 2018 to March 2019. Mr. Sims has served as the Chair and Chief Executive Officer of GEN3 Partners, a consulting company that specializes in science-based technology development, since 1999, and as Managing Partner of its affiliated private equity investment fund, GEN3 Capital, LLP, since 2005. In 2017 Mr. Sims was the founding partner of Silicon Valley Data Capital. Mr. Sims also founded Cambridge Technology Partners in 1991, where he held the position of Chief Executive Officer. Prior to Cambridge Technology Partners, Mr. Sims also founded Concurrent Computer Corporation. Mr. Sims currently serves on the board of directors of various private companies including Connections 365, Inc., Bright Volt, Inc. and G Bank. He has previously served on the board of directors of public companies including Cambridge Technology Partners, Electronic Data Systems Corporation, and RSA Security, Inc., where he was the Chair. Mr. Sims’ extensive experience as a director of several public and private companies, as well as his experience as a founder and venture capital investor in the technology industry, contributed to our Board's conclusion that he should serve as a director of our Company. TJ Chung has served on our Board since October 2018. Mr. Chung is currently a Senior Partner at Core Industrial Partners LLC, a private equity firm investing in North American lower middle-market industrial and manufacturing businesses, a position he has held since July 2017. From January 2013 until his retirement in May 2016, Mr. Chung served as Chief Executive Officer of Teletrac-Navman, a leading global Software as a Service provider of commercial telematics solutions. From July 2007 to December 2012, Mr. Chung was Chief Executive Officer of Navman Wireless. Previously Mr. Chung served as President of the New Technologies Division of Brunswick Corporation from 2002 to 2007. Prior to that he served as Chief Strategy Officer of Brunswick Corporation and Senior Vice President of Brunswick Corporation’s Mercury Marine Division. Before joining Brunswick Corporation Mr. Chung was an executive at Emerson Electric. Mr. Chung currently serves on the boards of directors of Littelfuse, Inc. and Fathom Digital Manufacturing Corp. Mr. Chung earned his BS in electrical and computer engineering from the University of Texas at Austin. He holds an MS in computer science from North Carolina State University and an MBA from the Fuqua School of Business at Duke University. Mr. Chung’s extensive experience as an operating executive in the telecommunications, wireless, and technology industries contributed to our Board’s conclusion that he should serve as a director of our Company. Board Independence Our boardBoard currently consists of directorsseven members. Our Board has determined that all of our directors are independent directors within the meaning of the applicable NASDAQ CapitalNasdaq Stock Market LLC, or Nasdaq, listing standards, except for Charles Myers,Mr. Suen, our President and Chief Executive Officer. The Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his/her family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our Board has made a subjective determination as to each independent director that no relationships exist which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations our Board reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.
Board Leadership Structure Our board of directorsBoard is currently led by its chairman,Chair, James K. Sims. Our board of directorsBoard recognizes that it is important to determine an optimal board leadership structure to ensure the independent oversight of management as the companyCompany continues to grow. We separate Pursuant to our Corporate Governance Guidelines the rolesBoard determines the best board leadership structure for our Company from time to time. As part of chief executive officer and chairman ofour annual board self-evaluation process, we evaluate our leadership structure to ensure that the board of directors in recognition of the differences between the two roles. The chief executive officer is responsible for setting the strategic direction for the company and the day-to-day leadership and performance of the company, while the chairman of the board of directors provides guidancecontinues to the chief executive officer and presides over meetings of the full board of directors. We believe that this separation of responsibilitiesit provides a balanced approach to managing the optimal structure for our Company and stockholders. We recognize that different board of directors and overseeing the company. Our board of directors has concluded thatleadership structures may be appropriate for companies in different situations. We believe our current leadership structure is appropriatethe optimal structure for our Company at this time. However, our board
Each of the directors, will continueother than Mr. Suen, is independent, and the Board believes that the independent directors provide effective oversight of management. Moreover, in addition to periodically review our leadership structurefeedback provided during Board meetings, the independent directors have regular executive sessions. Following an executive session of independent directors, the independent directors communicate with Mr. Suen directly regarding any specific feedback or issues, provide Mr. Suen with input regarding agenda items for Board and may make such changesBoard committee meetings, and coordinate with Mr. Suen regarding information to be provided to the independent directors in performing their duties. The Board believes that this approach appropriately and effectively complements the future as it deems appropriate.combined Chief Executive Officer/Director structure. Role of Board in Risk Oversight Process Our board of directorsBoard has responsibility for the oversight of the company’sCompany’s risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business, and the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our board of directorsBoard to understand the company’sCompany’s risk identification, risk management, and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic, and reputational risk. The audit committee reviews information regarding liquidity and operations and oversees our management of financial risks. Periodically the audit committee reviews our policies with respect to risk assessment, risk management, loss prevention, and regulatory compliance. Oversight by the audit committee includes direct communication with our external auditors and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor, or control such exposures. The compensation committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board of directorsBoard is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our board of directorsBoard as a whole. Board of Directors Meetings During fiscal year 2016,2023, our board of directorsBoard met five times, including telephonic meetings.seven times. In that year,2023, each director attended at least 75%94% of the total number of meetings held during such director’s term of service by the board of directorsBoard and each committee of the board of directorsBoard on which such director served. Board Committees and Independence Our board of directorsBoard has established three standing committees—audit, compensation, and nominating and corporate governance – governance—each of which operatesoperating under a charter that has been approved by our boardBoard. The table below provides current committee membership information for each of directors.the Board committees.
| | | | | Committees | Name | Audit | Compensation | Nominating and Corporate Governance | James K. Sims | | X | | Kiva A. Allgood | | | X | Tzau-Jin Chung | | X | | Joan H. Gillman | X | | Chair | Thomas A. Munro | X | Chair | | Arthur M. Toscanini | Chair | | | Number of committee meetings held in 2023 | 4 | 2 | 2 |
Audit Committee The audit committee’s main function is to oversee our accounting and financial reporting processes and the audits of our financial statements. This committee’s responsibilities include, among other things: •appointing our independent registered public accounting firm; •evaluating the qualifications, independence, and performance of our independent registered public accounting firm; •approving the audit and non-audit services to be performed by our independent registered public accounting firm; •reviewing the design, implementation, adequacy, and effectiveness of our internal accounting controls anand our critical accounting policies; •discussing with management and the independent registered public accounting firm the results of our annual audit and the review of our quarterly unaudited financial statements; •reviewing, overseeing, and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; •reviewing on a periodic basis, basis—or as appropriate, appropriate—any investment policy and recommending to our board of directorsBoard any changes to such investment policy; •reviewing any earnings announcements and other public announcements regarding our results of operations; •preparing the report that the SEC requires in our annual proxy statement; •discussing the Company’s policies with respect to risk assessment and risk management, including with respect to cybersecurity; •reviewing and approving any related party transactions and reviewing and monitoring compliance with our code of conduct and ethics; and •reviewing and evaluating, evaluating—at least annually, annually—the performance of the audit committee and its members including compliance of the audit committee with its charter. TheOur Board has determined that all members of ourthe audit committee are Ms. Gillman, Ms. Kordybackindependent directors under the applicable rules and Mr. Toscanini. Mr. Toscanini servesregulations of Nasdaq and by Rule 10A-3 of Securities and Exchange Act of 1934, as the chairperson of the committee. The audit committee met two times during fiscal year 2016. Mr. Munro served as a member of the committee throughout 2016 and until April 2017, at which time Ms. Kordyback joined the committee. Allamended (the Exchange Act). In addition, all members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and The NASDAQ Capital Market.Nasdaq. Our board of directorsBoard has determined that each of Mr. Toscanini and Mr. Munro is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable NASDAQNasdaq rules and regulations. Our board of directors has determined that Ms. GillmanBoth our external auditor and Ms. Kordyback are independent underinternal financial personnel meet privately with the applicable rules of the SEC and The NASDAQ Capital Market relating to audit committee independence. Under the applicable NASDAQ Capital Market rules, we are permittedand have unrestricted access to phase in our compliance with the independent audit committee requirements of The NASDAQ Capital Market on the same schedule as we are permitted to phase in our compliance with the independent audit committee requirements pursuant to Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act, which requires all members to be independent within one year of listing. We will comply with the phase-in requirements of the NASDAQ Capital Market rules and within one year of our listing on the NASDAQ Capital Market, all members of our audit committee will be independent under NASDAQ rules and Rule 10A-3.this committee. The audit committee operates under a written charter that satisfies the applicable standards of the SEC and The NASDAQ Capital Market.Nasdaq, which the audit committee will review and evaluate at least annually.
Compensation Committee OurThe compensation committee approves or recommends to our board of directors,Board, policies and programs relating to compensation and benefits of our officers and employees. The compensation committee (a) approves or recommends to our board of directors,Board annual corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, (b) evaluates the performance of these officers in light ofrelative to those goals and objectives, and(c) approves or recommends to our board of directors,Board the compensation of these officers, based on such evaluations. The compensation committee alsoand (d) approves or recommends to our board of directors,Board the issuance of stock options and otherequity awards under our equity plan. The compensation committee will review and evaluate, at least annually, the performance
Our Board has determined that all members of the compensation committee and its members, including compliance by the compensation committee with its charter. The members of our compensation committee are Mr. Egan, Mr. Munro and Mr. Sims. Mr. Munro serves as the chairperson of the committee. The compensation committee met two times during fiscal year 2016. Ms. Gillman served as a member of the committee from November 2016 through April 2017, at which time Mr. Egan joined the committee. Our board of directors has determined that Mr. Egan, Mr. Munro and Mr. Sims are independent under the applicable rules and regulations of The NASDAQ Capital MarketNasdaq relating to compensation committee independence.independence and “non-employee directors” as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. The compensation committee operates under a written charter which the compensation committee will review and evaluate at least annually.
Nominating and Corporate Governance Committee The nominating and corporate governance committee is responsible for assisting our board of directorsBoard in discharging the board’sits responsibilities regarding the identification of qualified candidates to become board members of our Board, the selection of nominees for election as directors at our annual meetingsmeeting of stockholders (or special meetingsmeeting of stockholders at which directors are to be elected), and the selection of candidates to fill any vacancies on our board of directorsBoard and any committees thereof. In addition, the nominating and corporate governance committee is responsible for overseeing our corporate governance policies, reporting and making recommendations to our board of directorsBoard concerning governance matters and oversight of the evaluation of our board of directors.Board, and concerning environmental, social, and governance (ESG) matters and initiatives. TheOur Board has determined that all members of ourthe nominating and corporate governance committee are Ms. Gillman, Mr. Munro and Mr. Sims. Mr. Sims serves as the chairman of the committee. The nominating and corporate governance committee met three times during fiscal year 2016. Our board of directors has determined that Ms. Gillman, Mr. Munro and Mr. Sims are independent under the applicable rules and regulations of The NASDAQ Capital Market.Nasdaq. The nominating and corporate governance committee operates under a written charter which the nominating and corporate governance committee will review and evaluate at least annually.
Report of the Audit Committee of the Board of Directors
The audit committee oversees the company’s financial reporting process on behalf of our board of directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the audit committee reviewed the audited financial statements in the company’s annual report with management, including a discussion of any significant changes in the selection or application of accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements and the effect of any new accounting initiatives.
The audit committee reviewed with KPMG LLP, which is responsible for expressing an opinion on the conformity of the company’s audited financial statements with generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of the company’s accounting principles and such other matters as are required to be discussed with the audit committee under generally accepted auditing standards and the matters listed in Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees. In addition, the audit committee has discussed with KPMG LLP, its independence from management and the company, has received from KPMG LLP the written disclosures and the letter required by applicable requirements of the
Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the audit committee concerning independence, and has considered the compatibility of non-audit services with the auditors’ independence.
The audit committee met with KPMG LLP to discuss the overall scope of its services, the results of its audit and reviews, and the overall quality of the company’s financial reporting. KPMG LLP, as the company’s independent registered public accounting firm, also periodically updates the audit committee about new accounting developments and their potential impact on the company’s reporting. The audit committee’s meetings with KPMG LLP were held with and without management present. The audit committee is not employed by the company, nor does it provide any expert assurance or professional certification regarding the company’s financial statements. The audit committee relies, without independent verification, on the accuracy and integrity of the information provided, and representations made, by management and the company’s independent registered public accounting firm.
In reliance on the reviews and discussions referred to above, the audit committee has recommended to the company’s board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2016. The audit committee and the company’s board of directors also have recommended, subject to stockholder approval, the ratification of the appointment of KPMG LLP as the company’s independent registered public accounting firm for 2017.
This report of the audit committee is not “soliciting material,” shall not be deemed “filed” with the SEC and shall not be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.
The foregoing report has been furnished by the audit committee.
| | | | | Respectfully submitted,
| | | | | | The Audit Committee of the Board of Directors
| | | Arthur M. Toscanini (chairman)
| | | Joan Gillman
| | | Thomas A. Munro
|
Compensation Committee Interlocks and Insider Participation Thomas A. Munro (chairperson), Francis X. Egan, Joan Gillman and James K. Sims served on our compensation committee during the 2016 fiscal year. None of the members of our compensation committee during the 2016 fiscal year2023 has ever been one of our officers or employees.employees, other than Mr. Sims who served as our Chief Executive Officer from March 2019 to August 2019, our interim Chief Executive Officer from May 2018 to March 2019, and our Executive Chair from October 2018 to March 2019 (Mr. Sims was not a member of our compensation committee during any of such periods). None of our executive officers currently serves, or has served, as a member of the board of directorsBoard or compensation committee of any entity that has one or more executive officers servingwho have served as a member of our board of directorsBoard or compensation committee.
Board Diversity and Director Nomination Process Director Qualifications
Our nominating and corporate governance committee is responsible for reviewing with the board of directors,Board, on an annual basis, the appropriate characteristics, skills, and experience required for the board of directorsBoard as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the nominating and corporate governance committee, in recommending candidates for election, and the board of directors,Board, in approving (and, in the case of vacancies, appointing) such candidates, will take into account manyconsider factors, including the following: •personal and professional integrity, ethics, and values; •experience in corporate management, such as serving as an officer or former officer of a publicly-held company; •experience as a board member or executive officer of another publicly-held company; •strong finance experience;
diversity of expertiseprofessional and academic experience in substantive matters pertainingrelevant to our business relative to other members of our board of directors;
industry;•strong leadership skills;
•diversity of background and perspective, including but not limited to, with respect to age, gender, race, place of residence, and specialized experience; •experience relevant to our business industryin finance and with relevant social policy concerns;accounting and/or executive compensation practices; and •relevant academic expertise or other proficiency in an area of our business operations.
whether the candidate has the time required for preparation, participation and attendance at Board meetings and committee meetings, if applicable. Currently our board of directorsBoard evaluates each individual in the context of the board of directorsBoard as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas. Four of the seven members of our current Board are either female or self-identify as members of an underrepresented community. Other than the foregoing there are no stated minimum criteria for director nominees, although the nominating and corporate governance committee may also consider such other factors as it may deem to be in the best interests of our companyCompany and our stockholders. The nominating and corporate governance committee does, however, believe it appropriate for at least one, and preferably, several members of our board of directorsBoard to meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that a majority of the members of our board of directorsBoard meet the definition of “independent director” under NASDAQNasdaq qualification standards. The nominating and corporate governance committee also believes it is appropriate for our President and Chief Executive Officer and President to serve as a member of our board of directors.Board. The following Board Diversity Matrix presents our Board diversity statistics in accordance with Nasdaq Rule 5606, as self-disclosed by our directors: | | | | | Board Diversity Matrix (As of April 25, 2024) | Total Number of Directors | 7 | | Female | Male | Non-Binary | Did Not Disclose Gender | Part I: Gender Identity | Directors | 2 | 5 | | | Part II: Demographic Background | African American or Black | | | | | Alaskan Native or Native American | | | | | Asian | | 2 | | | Hispanic or Latinx | | | | | Native Hawaiian or Pacific Islander | | | | | White | 2 | 3 | | | Two or More Races or Ethnicities | | | | | LGBTQ+ | | Did Not Disclose Demographic Background | |
Identification and Evaluation of Nominees for Directors The nominating and corporate governance committee identifies nominees for director by first evaluating the current members of our board of directorsBoard willing to continue in service. Current members with qualifications and skills that are consistent with the nominating and corporate governance committee’s criteria for board of director service and who are willing to continue in service are considered for re-nomination while, at the same time, balancing the value of continuity of service by existing members of our board of directorsBoard with that of obtaining a new perspective or expertise. If any member of our board of directorsBoard does not wish to continue in service, or if our board of directorsBoard decides not to re-nominate a member for re-election, or if the board of directorsBoard decides to expand the size of the board,Board, the nominating and corporate governance committee identifies the desired skills and experience of a new nominee in light of the criteria above. The nominating and corporate governance committee generally polls our board of directorsBoard and members of management for their recommendations. The nominating and corporate governance committee may also review the composition and qualification of the boards of directors of our competitors and may seek input from industry experts or analysts. The nominating and corporate governance committee reviews the qualifications, experience, and background of the candidates. Final candidates are interviewed by the members of the
nominating and corporate governance committee and by certain of our other independent
directors and executive management. In making its determinations the nominating and corporate governance committee evaluates each individual in the context of our board of directorsBoard as a whole, with the objective of assembling a group that can best contribute to the success of our companyCompany and represent stockholder interests through the exercise of sound business judgment. After review and deliberation of all feedback and data, the nominating and corporate governance committee makes its recommendation to our board of directors. Historically, the nominating and corporate governance committee has not relied on third-party search firms to identify director candidates. The nominating and corporate governance may in the future choose to do so in those situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate.Board. The nominating and corporate governance committee evaluates nominees recommended by stockholders in the same manner as it evaluates other nominees. We have not received director candidate recommendations from our stockholders and we do not have a formal policy regarding consideration of such recommendations. However, any recommendations received from stockholders will be evaluated in the same manner that potential nominees suggested by members of our board of directors,Board, management, or other parties are evaluated. Under our amended and restated bylaws, a stockholder wishing to suggest a candidate for director should write to our corporate secretary and provide such information about the stockholder and the proposed candidate as is set forth in our amended and restated bylaws and as would be required by SEC rules to be included in a proxy statement. In addition, the stockholder must include the consent of the candidate and describe any arrangementsarrangement or undertakings between the stockholder and the candidate regarding the nomination. In order to give the nominating and corporate governance committee sufficient time to evaluate a recommended candidate and include the candidate in our proxy statement for the 20182025 annual meeting, the recommendation should be received by our corporate secretary at our principal executive offices in accordance with our procedures detailed in the section below entitled “Stockholder Proposals.” Director Attendance at Annual Meetings Although we do not have a formal policy regarding attendance by members of our board of directorsBoard at our annual meeting, we encourage all of our directors to attend. We did not hold anFive members of our Board at the time attended our annual meeting of stockholders in 2016.2023. Communications with our Board of Directors Stockholders seeking to communicate with our board of directorsBoard should submit their written comments to our corporate secretary, Airgain, Inc., 3611 Valley Centre Drive, Suite 150, San Diego, CA 92130. The corporate secretary will forward such communications to each member of our board of directors;Board; provided that, if in the opinion of our corporate secretary it would be inappropriate to send a particular stockholder communication to a specific director, such communication will only be sent to the remaining directors (subject to the remaining directors concurring with such opinion). Prohibition Against Pledging and Hedging We maintain an Insider Trading Compliance Policy that prohibits our officers, directors, and employees pledging our stock as collateral to secure loans and from engaging in hedging transactions, including prepaid variable forward contracts, equity swaps, collars and exchange funds. It further prohibits margin purchases of our stock or placing our stock in a margin account, short sales of our stock, and any transactions in puts, calls, or other derivative securities involving our stock. Corporate Governance Our company’sCompany’s Code of Business Conduct and Ethics, Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, and Nominating and Corporate Governance Committee Charter are available, free of charge, on our website at www.airgain.com. Please note, however, that the information contained on the website is not incorporated by reference in, or considered part of, this proxy statement. We will also provide copies of these documents as well as our company’sCompany’s other corporate governance documents, free of charge, to any stockholder upon written request to Airgain, Inc., 3611 Valley Centre Drive, Suite 150, San Diego, CA 92130.92130, Attention: Corporate Secretary.
Director Compensation Our board of directorsBoard has approved a compensation policy for our non-employee directors. The non-employee director compensation policy provides for annual retainer fees and long-term equity awards for our non-employee directors. Pursuant to the terms of the non-employee director compensation policy, commencing witheach
non-employee director, other than the date of our initial public offering, each non-employee directorChair, will receive an annual retainer of $30,000, with$32,000. Our Chair of the Board receives an additional $25,000 annual retainer payable to the chairman of the board of directors.$58,500. Non-employee directors serving as the chairs of the audit, compensation, and nominating and corporate governance committees will receive additional annual retainers of $15,000, $10,000$16,000, $10,600, and $7,500,$8,000, respectively. Non-employee directors serving as members of the audit, compensation, and nominating and corporate governance committees will receive additional annual retainers of $7,500, $5,000$8,000, $5,300 and $3,750,$4,000, respectively. The Each non-employee director who is newly elected or appointed to the Board will also receive, effective on the date of such election or appointment (or such other date specified by the Board), (1) an initial grant of options to purchase 10,000a number of shares of our common stock upon election tohaving a value of $50,000, calculated as of the boarddate of directors, vestinggrant in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that we utilize in preparation of our financial statements and the thirty calendar day trailing average trading price of our common stock preceding the date of grant, or the Thirty-Day Trailing Average, plus (2) such number of restricted stock units (RSUs) as is determined by dividing (A) $50,000 by (B) the Thirty-Day Trailing Average, which initial awards will vest in substantially equal installments on each of the first three anniversaries of the date of grant. Thereafter, eachNon-employee director’s initial awards shall vest in full immediately prior to the occurrence of a change in control, to the extent outstanding at such time. The Thirty-Day Trailing Average refers to the thirty trading days preceding the date of grant. Each non-employee director will receive an annual grant of options to purchase 5,000 shares of our common stock, with the chairman of the board of directors receiving an additional option to purchase 2,500 shares of our common stock, vestingaward on the first trading day in February of each year of (1) a number of stock options having a value of $30,000 (with the award to occurthe Chair of the Board having a value of $45,000), calculated as of the date of grant in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that we use in preparation of our financial statements and the Thirty-Day Trailing Average), plus (2) such number of RSUs as is determined by dividing (A) $30,000 (with the award to the Chair of the Board having a value of $45,000) by (B) the Thirty-Day Trailing Average, which annual awards will vest on the first anniversary of the date of grant orgrant. All of the next occurringnon-employee directors' awards shall vest in full immediately prior to the occurrence of a change in control, to the extent outstanding at such time. In December 2023, our Board approved the payment of all cash retainers otherwise payable for service as a non-employee director during the fourth quarter of 2024 in the form of fully-vested RSUs. Such RSUs were granted on January 2, 2024, and each non-employee director received a number of RSUs determined by dividing the quarterly cash retainers payable to such director divided by the Thirty-Day Trailing Average. In addition, the non-employee director compensation policy contains an ownership guideline requiring members of the Board to own shares with a value of at least three times the then-current annual meeting of our stockholders. retainer. A newly appointed director is subject to this guideline within three years after the director’s first appointment to the Board. Compensation under our non-employee director compensation policy is subject to the annual limits on non-employee director compensation set forth in our 2016 Incentive Award Plan, referred to herein as the 2016 Plan. Our board of directorsBoard or its authorized committee may modify the non-employee director compensation programpolicy from time to time in the exercise of its business judgment, taking into accountconsidering such factors circumstances and considerationscircumstances as it shall deem relevant from time to time, subject to the annual limit on non-employee director compensation set forth in the 2016 Plan. As provided in the 2016 Plan, our board of directorsBoard or its authorized committee may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the board of directorsBoard or its authorized committee may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other compensation decisions involving non-employee directors. Mr. Myers,Suen, who isserves as our President and Chief Executive Officer receivedand a member of our Board receives no additional compensation for his service as a director. The compensation received by Mr. Myers as an employee is presented in “Executive Compensation—Summary Compensation Table.”
The following table sets forth information for the year ended December 31, 20162023, regarding the compensation awarded to, earned by, or paid to our non-employee directors who served on our board of directorsBoard during 2016.2023: | Name | | Fees Earned or Paid in Cash($) | | | Option Awards ($)(1) | | | All Other Compensation($) | | | Total($) | | | Fees earned or paid in cash(1) | | Option
awards(2) | | Stock
awards(2) | | All other
compensation | | Total | | Kiva A. Allgood | | | $ | 36,000 | | $ | 34,431 | | $ | 35,880 | | $ | — | | $ | 106,311 | | Tzau-Jin Chung | | | $ | 40,000 | | $ | 34,431 | | $ | 36,040 | | $ | — | | $ | 110,471 | | Joan H. Gillman | | | $ | 48,000 | | $ | 34,431 | | $ | 36,354 | | $ | — | | $ | 118,785 | | Thomas A. Munro | | | $ | 46,600 | | $ | 34,431 | | $ | 36,302 | | $ | — | | $ | 117,333 | | James K. Sims | | $ | 16,875 | | | $ | 7,419 | | | | — | | | $ | 24,294 | | | $ | 63,800 | | $ | 51,652 | | $ | 54,214 | | $ | — | | $ | 169,666 | | Francis X. Egan | | | 7,500 | | | | 5,236 | | | | — | | | | 12,736 | | | Frances Kordyback | | | 7,500 | | | | 5,237 | | | | — | | | | 12,737 | | | Thomas A. Munro | | | 12,813 | | | | 6,109 | | | | — | | | | 18,921 | | | Arthur M. Toscanini | | | 11,250 | | | | 6,109 | | | | — | | | | 17,359 | | | $ | 53,300 | | $ | 34,431 | | $ | 36,567 | | $ | — | | $ | 124,298 | | Joan Gillman(2) | | | 11,563 | | | | 48,558 | | | | — | | | | 60,121 | | |
(1)
| Amounts reflect the full grant-date fair value of stock options granted during 2016 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all option awards made to our directors in Note 11 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 and filed with the SEC on March 15, 2017. In May 2016, each of our non-employee directors was granted options to purchase shares of our common stock (other than Joan Gillman, who received options to purchase shares of our common stock in November 2016).
|
(2)
| Ms. Gillman was appointed to our board of directors effective November 7, 2016.(1) As described above, our Board approved the payment of all cash retainers otherwise payable for service as a non-employee director during the fourth quarter of 2024 in the form of fully-vested RSUs. Such RSUs were granted on January 2, 2024, and each non-employee director received a number of RSUs determined by dividing the quarterly cash retainers payable to such director divided by the Thirty-Day Trailing Average. As required by SEC rules, these cash retainer amounts are reflected in this column as follows: Ms. Allgood, $9,000; Mr. Chung, $10,000; Ms. Gillman, $12,000; Mr. Munro, $11,650; Mr. Sims, $15,590; and Mr. Toscanini, $13,325. (2) Amounts reflect the full grant-date fair value of stock awards and stock options granted during 2023 computed in accordance with Accounting Standards Codification, or ASC, Topic 718, rather than the amounts paid to or realized by the named individual. In addition, the grant date fair value of the RSUs granted to the non-employee directors in lieu of the cash retainers otherwise payable for service as a non-employee director during the fourth quarter of 2024, as determined under ASC Topic 718, was greater than the cash retainers otherwise payable. The amount by which the grant date fair value of the fully vested RSUs granted to the non-employee directors on January 2, 2024 in lieu of the cash retainers otherwise payable for the fourth quarter of 2024 exceeded the cash retainers to be paid in the form of equity is reflected in the Stock awards column above in the following amounts: Ms. Allgood, $1,424; Mr. Chung, $1,584; Ms. Gillman, $1,898; Mr. Munro, $1,846; Mr. Sims, $2,526; and Mr. Toscanini, $2,111. We provide information regarding the assumptions used to calculate the value of all option awards made to our directors in Note 15 to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 6, 2024.
|
The table below shows the aggregate numbers of RSU and stock option awards outstanding held as of December 31, 2016 by each non-employee director who was serving as oflisted in the table above outstanding at December 31, 2016.2023: Name
| | Options
Outstanding at
Year End
| | James K. Sims
| | | 72,880
| | Francis X. Egan
| | | 17,680
| | Frances Kordyback
| | | 71,948
| | Thomas A. Munro
| | | 71,313
| | Arthur M. Toscanini
| | | 54,179
| | Joan Gillman
| | | 10,000
| |
| | | | | | | | Name | | Options | | Restricted Stock Units | | Kiva A. Allgood | | | 18,134 | | | 5,140 | | Tzau-Jin Chung | | | 41,718 | | | 4,307 | | Joan H. Gillman | | | 58,884 | | | 4,307 | | Thomas A. Munro | | | 89,365 | | | 4,307 | | James K. Sims | | | 336,863 | | | 6,461 | | Arthur M. Toscanini | | | 91,564 | | | 4,307 | |
Vote Required; Recommendation of the Board of Directors If a quorum is present and voting at the annual meeting,2024 Annual Meeting, directors shall be elected by a plurality of votes cast, meaning that the two nominees receiving the highest number of votesshares voted “For” their election will be elected to our board of directors.Board. Votes withheld from any nominee, abstentions, and broker non-votes will be counted only for purposes of determining a quorum.quorum and are not considered votes cast for the foregoing purpose. Broker non-votes will have no effect on this proposal as brokers or other nominees are not entitled to vote on such proposals in the absence of voting instructions from the beneficial owner. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF CHARLES MYERS AND JAMES K. SIMS. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARDS.Our Board unanimously recommends that the stockholders vote “for” the election of Joan H. Gillman and Arthur M. Toscanini. Proxies solicited by the Board will be so voted unless stockholders specify otherwise.
PROPOSALProposal 2: Ratification of Appointment of
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMIndependent Registered Public Accounting Firm
The audit committee has selected KPMGapproved the appointment of Grant Thornton LLP as the company’sCompany’s independent registered public accounting firm for the year ending December 31, 20172024, and has further directed that management submit the selectionappointment of independent registered public accounting firm for ratification by the stockholders at the annual meeting. KPMG2024 Annual Meeting. Grant Thornton LLP has audited the company’s financial statementsserved as our independent registered public accounting firm since 2012.May 2022. Representatives of KPMGGrant Thornton LLP are expected to be present at the annual meeting,Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions. Prior to that, KPMG LLP audited the Company’s financial statements from 2012 to May 2022. Stockholder ratification of the selectionappointment of KPMGGrant Thornton LLP as the company’sCompany’s independent registered public accounting firm is not required by Delaware law, the company’sCompany’s amended and restated certificate of incorporation, or the company’sCompany’s amended and restated bylaws. However, the audit committee is submitting the selectionappointment of KPMGGrant Thornton LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection,appointment the audit committee will reconsider whether to retain that firm. Even if the selectionappointment is ratified, the audit committee in its discretion may direct the appointment of a different independent registered accounting firm at any time during the year if the audit committee determines that such a change would be in the best interests of the companyCompany and its stockholders. Change of Independent Registered Public Accounting Firm In the first quarter of 2022, the audit committee completed a competitive process to review the appointment of the Company’s independent registered public accounting firm for the year ending December 31, 2022. As a result of this process, effective May 2, 2022, and as disclosed on the Company’s Current Report on Form 8-K filed with the SEC on May 2, 2022 (“Form 8-K”), the audit committee approved the appointment of Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm for the year ending December 31, 2022, with such appointment effective immediately following the filing of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2022 (“Q’1 2022 Form 10-Q”). In connection with the appointment of Grant Thornton, management notified KPMG LLP (“KPMG”) that the auditor-client relationship would cease immediately upon filing of the Q’1 2022 Form 10-Q. During the Company’s 2021 fiscal year and through the date of the Form 8-K, (i) there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to KPMG’s satisfaction, would have caused them to make reference in connection with their opinion to the subject matter of the disagreement; and (ii) there were no “reportable events” within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K. The audit reports of KPMG on the consolidated financial statements of the Company as of and for the year ended December 31, 2021 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except as follows: KPMG's report on the consolidated financial statements of Airgain, Inc. and subsidiary as of and for the year ended December 31, 2021, contained a separate paragraph stating that "As discussed in Notes 2 and 11 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2021 due to the adoption of Accounting Standards Codification Topic 842, Leases.” The Company provided KPMG with a copy of the disclosures in the Form 8-K and requested that KPMG furnish it with a letter addressed to the SEC stating whether or not KPMG agreed with the Company’s statements in Item 4.01 of the Form 8-K, which letter is attached as Exhibit 16.1 to the Form 8-K. In addition, during the Company’s fiscal year ending December 31, 2021 and through the date of the Form 8-K, neither the Company, nor anyone on the Company’s behalf, consulted Grant Thornton with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of the audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company that Grant Thornton concluded was an important factor considered by the
Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of any “disagreement,” as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto, between us and KPMG, or a “reportable event,” as defined in Item 304(a)(1)(v) of Regulation S-K. Independent Registered Public Accounting Firm’s Fees The following table represents aggregate fees billed to us for services related to the fiscal years ended December 31, 2016 and 2015, by KPMGGrant Thornton LLP, our independent registered public accounting firm. | | Year Ended December 31, | | | | 2016 | | | 2015 | | Audit Fees(1) | | $ | 952,776 | | | $ | 335,350 | | Audit Related Fees | | | | | | | | | Tax Fees | | | | | | | | | All Other Fees | | | | | | | | | Total | | $ | 952,776 | | | $ | 335,350 | |
(1)
| Audit Fees consist of fees billed for professional services performed by KPMG LLP for the audit of our annual financial statements, the review of our registration statements on Form S-1, the quarterly review of our financial statements,firm since 2022, and related services that are normally provided in connection with statutory and regulatory filings or engagements.
|
The audit committee has considered whether the provision of non-audit services is compatible with maintaining the independence of KPMG LLP, and has concluded that the provision of such services is compatible with maintaining the independence of our auditors.
Pre-Approval Policies and Procedures
Our audit committee has established a policy that all audit and permissible non-audit services provided by ourprevious independent registered public accounting firm, will be pre-approved byfor services related to the audit committee, and all such services were pre-approved in accordance with this policy during the fiscal years ended December 31, 20162023 and 2015. These2022, respectively (in thousands):
| | | | | | | | 2023 | | 2022 | | Audit fees | $ | 423 | | $ | 544 | | Tax fees | | 175 | | | 228 | | Total | $ | 598 | | $ | 772 | |
Audit fees. Amounts include fees to audit and review the Company’s annual and quarterly reports filed with the SEC, as well as regulatory filings. For the year ended December 31, 2022, fees also include amounts related to the audit procedures over the purchase accounting valuations of the acquisition of NimbeLink Corp. Tax fees. Amounts consist of professional services may includerendered for tax compliance, tax advice, and tax planning. This category includes fees for completion of R&D tax credit studies, I.R.C. Section 382 Analysis and consulting on tax matters related to our international operations. The audit committee’s policy is to pre-approve all audit and non-audit services audit-related services, tax servicesprovided by the independent registered public accounting firm, including the estimated fees and other services.terms of any such engagement. The audit committee considers whether the provision of each non-audit service is compatible with maintaining the independence of our auditors. Pre-approvalDuring 2023 the audit committee pre-approved all audit and permitted non-audit services provided by Grant Thornton LLP. Audit Committee Report The Audit Committee oversees the Company’s financial reporting process on behalf of our Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in the Company’s annual report with management, including a discussion of any significant changes in the selection or application of accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements, and the effect of any new accounting initiatives. The Audit Committee reviewed with Grant Thornton LLP, who is detailedresponsible for expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles, its judgments as to the particular service or categoryquality, and not just the acceptability, of the Company’s accounting principles, and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards and the matters listed in Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees. In addition, the Audit Committee has discussed with Grant Thornton LLP its independence from management, and the Company has received from Grant Thornton LLP the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding Grant Thornton LLP’s communications with the Audit Committee concerning independence, and has considered the compatibility of non-audit services with the auditors’ independence. The Audit Committee met with Grant Thornton LLP to discuss the overall scope of its services, the results of its audit and is generally subject to a specific budget. Ourreviews, and the overall quality of the Company’s financial reporting. Grant Thornton LLP, as the Company’s independent registered public accounting firm, also periodically updates the Audit Committee about new accounting developments and their potential impact on the Company’s reporting. The Audit Committee’s meetings with Grant Thornton LLP were held with and without management are requiredpresent. The Audit Committee is not employed by the Company, nor does it provide any expert assurance or professional certification regarding the Company’s financial statements. The Audit Committee relies, without independent verification, on the accuracy
and integrity of the information provided, and representations made, by management and the Company’s independent registered public accounting firm. In reliance on the reviews and discussions referred to periodically reportabove, the Audit Committee has recommended to the audit committee regardingCompany’s Board that the extentaudited financial statements be included in our 2023 Annual Report. The Audit Committee and the Company’s Board have recommended, subject to stockholder approval, the ratification of services provided by the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for 2024. This report of the Audit Committee is not “soliciting material,” shall not be deemed “filed” with the SEC, and shall not be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in accordance withany such filing, except to the extent that we specifically incorporate this pre-approval,information by reference, and shall not otherwise be deemed filed under such acts. The foregoing report has been furnished by the fees for the services performed to date.Audit Committee.
| | | | | AUDIT COMMITTEE | | | Arthur M. Toscanini | | | Tzau-Jin Chung (former member) | | | Joan H. Gillman |
Vote Required; Recommendation of the Board of Directors The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively on the proposal will be required to ratify the selectionappointment of KPMG LLP.Grant Thornton LLP, meaning the number of shares voted “For” the proposal must exceed the number of shares voted “Against” the proposal. Abstentions will not be counted toward the tabulation of votes cast on this proposal and will have no effect on the proposal. The approval of Proposal 2 is a routine proposal on which a broker or other nominee has discretionary authority to vote. Accordingly, no broker non-votes will likely result from this proposal. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE TO RATIFY THE SELECTION OF KPMGOur Board unanimously recommends that the stockholders vote “for” the ratification of the appointment of Grant Thornton LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBERas our independent registered public accounting firm for the fiscal year ending December 31, 2017. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARDS.2024. Proxies solicited by the Board will be so voted unless stockholders specify otherwise.
Proposal 3: Advisory Vote on the Compensation Paid to Our Named Executive Officers Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, our stockholders are entitled to vote at the annual meeting to provide advisory approval of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC. Pursuant to the Dodd-Frank Act, the stockholder vote on executive compensation is an advisory vote only, and it is not binding on us or our Board. Although the vote is non-binding, our compensation committee and Board value the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions. As described more fully in the “Executive Compensation and Other Information” section of this proxy statement, our executive compensation program is designed to attract, retain and motivate individuals with superior ability, experience and leadership capability to deliver on our annual and long-term business objectives necessary to create stockholder value. We urge stockholders to read the “Executive Compensation and Other Information” section of this proxy statement, which describes in detail how our executive compensation policies and procedures operate and are intended to operate in the future. The compensation committee and the Board believe that our executive compensation program fulfills these goals and is reasonable, competitive and aligned with our performance and the performance of our executives. We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask that our stockholders vote “FOR” the following resolution: SECURITY OWNERSH“RESOLVED, that Airgain, Inc.’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in Airgain, Inc.’s Proxy Statement for the IP OF CERTAIN2024 Annual Meeting.”
BENEFICIAL OWNERS AND MANAGEMENTVote Required; Recommendation of the Board
The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively on the proposal will be required to approve the advisory vote regarding the compensation of the named executive officers. Abstentions will not be counted toward the tabulation of votes cast on this proposal and will have no effect on the proposal. Broker non-votes will have no effect on this proposal as brokers or other nominees are not entitled to vote on such proposal in the absence of voting instructions from the beneficial owner. Our Board unanimously recommends that the stockholders vote “FOR” the approval of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC.
Security Ownership of Certain Beneficial Owners and Management The following table sets forth information relating to the beneficial ownership of our common stock as of April 18, 2017,15, 2024, by: •each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding shares of common stock; •each of our named executive officers; and •all directors and executive officers as a group. The number of shares beneficially owned by each stockholder, executive officer, or director is determined in accordance with SEC rules. Under such rules, beneficial ownership includes any shares over which the person or entity has sole or shared voting power or investment power as well as any shares that the person has the right to acquire within 60 days of April 18, 201715, 2024, through the exercise of any stock options, warrants, or other rights. Except as otherwise indicated, and subject to applicable community property laws, to our knowledge, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by that person.Forperson. For purposes of calculating each person’s or group’s percentage ownership, stock options, warrants, and other rights exercisable within 60 days afterof April 18, 201715, 2024, are included for that person o but not for any other person. The percentage of shares beneficially owned is based on 9,488,05710,764,917 shares of our common stock outstanding as of April 18, 2017.15, 2024. Unless otherwise noted below, the address of each person listed on the table is c/o Airgain, Inc., 3611 Valley Centre Drive, Suite 150, San Diego, CA 92130. | | | | | | | | | | Shares Beneficially Owned | | Name and Address of Beneficial Owner | | Number of Shares | | Percentage of Shares | | 5% and Greater Stockholders | | | | | | William Blair & Company, L.L.C.(1) | | | 837,679 | | | 7.8 | % | Marathon Micro Fund, L.P.(2) | | | 732,205 | | | 6.8 | % | Entities affiliated with Ameriprise Financial, Inc.(3) | | | 618,019 | | | 5.7 | % | | | | | | | Named Executive Officers and Directors | | | | | | Kiva A. Allgood(4) | | | 28,317 | | * | | Tzau-Jin Chung(5) | | | 69,889 | | * | | Michael Elbaz(6) | | | 63,893 | | * | | Joan H. Gillman(7) | | | 74,316 | | * | | Thomas A. Munro(8) | | | 104,683 | | | 1.0 | % | Ali Sadri(9) | | | 71,958 | | * | | James K. Sims(10) | | | 703,932 | | | 6.3 | % | Jacob Suen(11) | | | 663,165 | | | 5.8 | % | Arthur M. Toscanini(12) | | | 164,935 | | | 1.5 | % | All current directors and executive officers as a group (9 persons) | | | 1,945,088 | | | 16.1 | % |
* Indicates beneficial ownership of less than 1% of the total outstanding common stock. (1) Based on information disclosed in the Schedule 13G/A filed with the SEC on February 12, 2024 by William Blair & Company, L.L.C. This schedule reported that William Blair & Company, L.L.C. has sole voting power with respect to 771,954 shares and sole dispositive power with respect to 837,679 shares. The address for this entity is 150 North Riverside Plaza, Chicago, IL 60606. (2) Based on information disclosed in the Schedule 13G filed with the SEC on December 15, 2023 by Marathon Micro Fund, L.P. This schedule reported that Marathon Micro Fund, L.P. has sole voting power with respect to 732,205 shares and sole dispositive power with respect to 732,205 shares. The address for this entity is 4 North Park Drive, Suite 106, Hunt Valley, MD 21030. (3) Based on information disclosed in the Schedule 13G/A filed with the SEC on February 14, 2024 by Ameriprise Financial, Inc., or AFI, and Columbia Management Investment Advisors, LLC, or CMIA. This schedule reported that AFI and CMIA have shared voting power with respect to 616,719 shares and that AFI and CMIA have shared Name and Address of Beneficial Owner | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | 5% and Greater Stockholders | | | | | | | | | Entities affiliated with GEN3 Capital (1) | | | 1,406,041 | | | | 14.8 | % | | | | | | | | | | Named Executive Officers and Directors | | | | | | | | | Charles Myers (2) | | | 318,048 | | | | 3.3 | % | Leo Johnson (3) | | | 67,430 | | | * | | Glenn Selbo (4) | | | 96,219 | | | | 1.0 | % | James K. Sims (1)(5) | | | 1,615,930 | | | | 16.9 | % | Francis X. Egan (1)(6) | | | 419,981 | | | | 4.4 | % | Joan Gillman | | | — | | | * | | Frances Kordyback | | | — | | | * | | Thomas A. Munro (7) | | | 49,313 | | | * | | Arthur M. Toscanini (1)(8) | | | 476,964 | | | | 5.0 | % | All current directors and executive officers as a group (9 persons) (9) | | | 2,318,731 | | | | 23.4 | % |
25
*
| Indicates beneficial ownership of less than 1% of the total outstanding common stock.
|
(1)
| Includes (a) 1,043,464 shares of common stock held by GEN3 Capital I, LP, or GEN3 Capital, and (b) 362,577 shares of common stock held by Gen 3 Partners, Inc., or Gen 3 Partners. The general partner of GEN3 Capital is GEN3 Capital Partners, LLC, or GEN3 LLC, and James K. Sims is the Managing Member of GEN3 LLC. As a result, each of GEN3 LLC and Mr. Sims may be deemed to share beneficial ownership of the shares held by GEN3 Capital. Mr. Sims, Francis X. Egan, Arthur M. Toscanini may be deemed to share beneficial ownership of the shares held by Gen 3 Partners in their capacity as directors of Gen 3 Partners.
|
| Each of such persons disclaims beneficial ownership of the shares held by Gen 3 Partners and GEN3 Capital, except to the extent of their respective pecuniary interest therein.
|
(2)
| Includes 107,124 shares of common stock that Mr. Myers has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(3)
| Includes 56,530 shares of common stock that Mr. Johnson has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(4)
| Includes 78,644 shares of common stock that Mr. Selbo has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(5)
| Includes 47,313 shares of common stock that Mr. Sims has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(6)
| Includes 17,680 shares of common stock that Mr. Egan has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(7)
| Includes 47,313 shares of common stock that Mr. Munro has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(8)
| Includes 52,179 shares of common stock that Mr. Toscanini has the right to acquire from us within 60 days of April 18, 2017 pursuant to the exercise of stock options.
|
(9)
| Includes shares of common stock issuable upon the exercise of outstanding options, as set forth in the previous footnotes.
|
dispositive power with respect to 618,019 shares and 616,719 shares, respectively. AFI is the parent company of CMIA and may be deemed to beneficially own the shares reported by CMIA. Each of AFI and CMIA disclaims beneficial ownership of the shares. The address for AFI is 145 Ameriprise Financial Center, Minneapolis, MN 55474. The address for CMIA is 290 Congress Street, Boston, MA 02210.
EXECUTIVE COMPENSATION (4)AND OTHER INFORMATION Includes 16,476 shares of common stock that Ms. Allgood has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. Beneficial ownership includes 4,307 shares of common stock underlying RSUs the issuance of which has been deferred.
Our (5) Includes 41,718 shares of common stock that Mr. Chung has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options.
(6) Includes 44,449 shares of common stock that Mr. Elbaz has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. (7) Includes 58,884 shares of common stock that Ms. Gillman has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. Beneficial ownership includes 8,693 shares of common stock underlying RSUs the issuance of which has been deferred (8) Includes 87,364 shares of common stock that Mr. Munro has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. Beneficial ownership includes 8,693 shares of common stock underlying RSUs the issuance of which has been deferred (9) Includes 45,959 shares of common stock that Mr. Sadri has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. Beneficial ownership includes 3,000 shares of common stock underlying RSUs will vest within 60 days of April 15, 2024. (10) Includes 332,862 shares of common stock that Mr. Sims has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. Beneficial ownership includes 6,461 shares of common stock underlying RSUs the issuance of which has been deferred (11) Includes 573,982 shares of common stock that Mr. Suen has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. (12) Includes 89,563 shares of common stock that Mr. Toscanini has the right to acquire from us within 60 days of April 15, 2024, pursuant to the exercise of stock options. Executive Officers The following table sets forth information regarding our executive officers as of April 18, 2017:15, 2024: | | | | | Name | | Age | | Position(s)Position
| Charles MyersJacob Suen
| | 5550
| | President and Chief Executive Officer and Director | Leo JohnsonMichael Elbaz
| | 6259
| | Chief Financial Officer and Secretary | Glenn SelboAli S. Sadri
| | 5460
| | Chief OperatingTechnology Officer |
The biography of Charles Myersfor Mr. Suen can be found under “Proposal 1—Election of Directors.” Leo Johnson has servedMichael Elbaz joined Airgain as our Chief Financial Officer since July 2014. From December 2012 to June 2014,and Secretary in October 2022. Previously, Mr. Johnson served asElbaz was the Vice President of Finance at Cohu, Inc., a consultant to us. From September 2001 to November 2011, Mr. Johnson held several financial positions at Verisign, Inc. including Director of Finance,public semiconductor equipment company, a position he held since 2003. From 1998 to 2001, Mr. Johnson served as Chief Financial Officer at Planning Technologies, Inc., a professional services company focused on network infrastructure and architecture that was acquired by Red Hat Inc. Mr. Johnson holds a B.B.A. in Accounting from the University of Georgia, Athens, Georgia.
Glenn Selbo has served as our Chief Operating Officer since June 2012. He has been with the company since its inception in November 2003, serving as Vice President, Business Development and Marketing from October 20062019 until October 2022. Prior to June 2012 and Vice President, Sales & Marketing from January 2004 to October 2006. Previously,that, Mr. Selbo served as Senior Director of Sales and Marketing for Powerwave Technologies, where he oversaw marketing and product management activities for cellular power amplifier solutions and asElbaz was the Vice President of Strategic MarketingFinance at AMN Healthcare Services, Inc., a public healthcare solutions company, from February 2012 to October 2019. He also served as the Vice President of Finance and Chief Accounting Officer at Conexant Systems, Inc., a public semiconductor company from February 2009 to June 2011. Prior to 2009, Mr. Elbaz held various finance leadership positions at NextWave Wireless Inc. and Conexant Systems, Inc. Mr. Elbaz holds a Bachelor of Science in Business Administration from California State University, Chico and a Master of Business Administration from San Diego State University.
Ali S. Sadri, Ph.D. joined Airgain in 2021 as its Senior Vice President, Engineering and as appointed Chief Technology Officer in January 2022, bringing over 30 years of advanced scientific and engineering management experience and is responsible for Wireless Facilities, a wireless network services firm. Mr. Selbo alsodeveloping solutions to support Airgain’s current and future businesses. Prior to joining Airgain, Dr. Sadri most recently served as Vice President of Marketing for VoltDelta, an application service provider inEngineering at SOLiD Inc. from 2020 to
2021. Prior to that, Mr. Sadri held several executive positions at various technology companies, most notably at Intel where he served as a senior director heading the wireless space,communications standards group and the mmWave advanced technology development group from 2015 to 2019. Prior to Intel, Dr. Sadri also held executive positions at WiGig Alliance as founder and Chairman of the Board, and as Director of Global Market Development for Unisys Corporation.Communications Standards at IBM from 1990 to 2000. In addition, Mr. Selbo began his wireless career with AirTouch Communications, whereSadri has served as an industry international advisor at Tokyo Institute of Technology since 2018, and in 2000 he held several marketing and business development positions in the company’s U.S. and international operations. Mr. Selboserved as a visiting assistant professor at Duke University. Dr. Sadri received his M.B.A.BS, MS, and PhD in Electrical Engineering, with a minor in business from the University of Southern CaliforniaNorth Carolina State University. Executive Compensation and B.A. in Finance from California State University, Fullerton. OverviewOther Information
This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below. In 2016,For 2023 our “named executive officers” and their positions were as follows: Charles Myers, President and Chief Executive Officer;
| | | Name | | Position | Jacob Suen | | President and Chief Executive Officer | Michael Elbaz | | Chief Financial Officer | Ali Sadri | | Chief Technology Officer |
Leo Johnson, Chief Financial Officer and Secretary; and
Glenn Selbo, Chief Operating Officer.
This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations, and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in this discussion. As a “smaller reporting company” as defined under SEC rules, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to smaller reporting companies. Company Overview Airgain is a premier provider of wireless connectivity solutions, offering a range of embedded components, external antennas, and integrated systems worldwide. We streamline wireless connectivity across devices and markets, with a focus on solving complex connectivity challenges, expediting time to market, and optimizing wireless signals. Our mission is to connect the world through optimized, integrated wireless solutions. Our product portfolio focuses on three key markets: enterprise, consumer, and automotive. Our current enterprise products include embedded cellular modems, antennas for access points and Internet of Things (IoT) applications, and asset trackers. We expect to expand our product offering with fixed wireless access solutions and Smart Network Controlled Cellular Repeaters (Smart NCRs). Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and fixed wireless access devices. Our current automotive products include aftermarket antennas that are typically connected to third-party cellular and Wi-Fi-enabled routers, digital video evidence devices, and telematics gateways. We also recently launched a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted 5G vehicle gateway, combining a cellular modem, antennas, and additional features into a single device. We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs). With the addition of NimbeLink products in 2021, we expanded our capabilities to include embedded cellular modems, asset trackers and custom IoT systems. We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver new and differentiated products. In 2022, we transitioned to an outsource manufacturing model for our products while maintaining oversight for quality, test, and delivery timeline. We also maintain an intellectual property strategy that includes patent and trademark filings in multiple jurisdictions. As of December 31, 2023, we had over 280 issued and pending patents worldwide.
2023 Business Highlights We faced a challenging macro-economic environment in 2023 as our sales decreased by 26% compared to 2022, primarily driven by excess inventory correction across all markets. Despite this challenge, we remained focused on our mission to connect the world through optimized, and integrated wireless solutions, and we continued to transition our company from a component to a wireless system solution business. Below are highlights: •Launched our outdoor 5G LanternTM Fixed Wireless Access (FWA) device designed to address 5G connectivity challenges, •Announced our Lighthouse™ smart repeaters platform designed to reduce an operator’s capital expenses for extending range, while enhancing 5G coverage, •Made significant strides in the development of our next-generation vehicle gateway product line, AirgainConnect Fleet (AC-Fleet), •Expanded our existing Consumer, Automotive and Enterprise product offerings, •Secured Mobile Network Operator (MNO) indoor FWA antenna design win. Secured railcar
leader asset tracker project, and •Added filings directed to innovative 5G technologies to our patent portfolio. Our Executive Compensation Best Practices We endeavor to maintain sound executive compensation policies and practices consistent with our executive compensation philosophy. The following table highlights some of our executive compensation policies and practices, which are structured to drive performance and align our executives’ interests with our stockholders’ long-term interests: WHAT WE DO | | | | ü | Pay for Performance. We design our executive compensation program to align pay with company performance. | | | | | ü | A Significant Portion of Compensation is at Risk. Under our executive compensation program, a significant portion of compensation is “at risk” based on our performance, including short-term cash incentives and long-term equity incentives, to align the interests of our executive officers and stockholders. | | | | | ü | Independent Compensation Committee. The compensation committee is comprised solely of independent directors under applicable stock exchange rules. | | | | | ü | Independent Compensation Advisor Reports Directly to the Compensation Committee. The compensation committee engages its own compensation consultant to provide market perspective and insights. | | | | | ü | Annual Market Review of Executive Compensation. The compensation committee and its compensation consultant annually assess competitiveness and market alignment of our compensation plans and practices. | | | | | ü | Multi-Year Vesting Requirements. The equity awards granted to our executive officers generally vest over multi-year periods, consistent with current market practice and our retention objectives. | | | | | ü | Minimize Inappropriate Risk Taking. Our compensation program is weighted toward long-term incentive compensation to discourage short-term risk taking, and it includes multiple performance measures. | | | |
| | | | ü | Competitive Peer Group. Our compensation committee selects our peers from technology companies that are similar to us with respect to market capitalization, revenue and other criteria. | | | | | ü | Stock Ownership Guidelines for Directors. We maintain stock ownership guidelines for our directors to encourage ownership of our common stock and alignment with the long-term interests of our stockholders. | | | | | ü | Clawback Provision. We implemented a claw back provision for our executive compensation in October 2023 that recovers any incentive-based compensation that was erroneously awarded as a result of a restatement of our financial statements. | | | |
WHAT WE DON’T DO | | | | x | No Special Health or Welfare Benefits for Executives. Our executive officers participate in broad-based, company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees. Executives do not have access to special benefits programs. | | | | | x | No Post-Employment Tax Gross-Ups. We do not provide any post-employment tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits. | | | | | x | No “Single Trigger” Change in Control Cash Severance Benefits. The employment agreements with our named executive officers do not include any “single trigger” change in control cash severance benefits. | | | | | x | No Hedging and Pledging. Our insider trading policy prohibits our employees (including executive officers) and directors from engaging in hedging or short-term speculative transactions involving our securities. |
Executive Compensation Philosophy and Objectives: Airgain’s compensation philosophy for its executives is intended to •Attract, retain, and motivate our executive team members •Differentiate total rewards based on individual knowledge, skills, performance and impact •Incentivize our executives to drive both short and long-term value for all our shareholders and •Align rewards with performance, both company performance and individual performance and impact Our total rewards philosophy includes market-competitive cash compensation in the form of base salaries and target annual incentive, as well as long-term incentives in the form of equity that encourage value creation and share-price appreciation. In general, our total target annual cash compensation is targeted between the 40th and 65th percentiles of our market peers. Our equity compensation for the past two years has generally been delivered in stock options and restricted stock units (RSUs), each weighted at 50%, and in 2022 we introduced a 3-year performance based RSU (PSU) program with the vesting tied to share price appreciation and gated by certain financial thresholds. Our target annual equity award value is between the 45th and 75thpercentile of our market peers. 2023 Compensation Review and Decisions: Each year our compensation committee engages an independent compensation consulting firm to assist in identifying an appropriate peer group. With that peer group, the consultant provides an analysis of our executive compensation relative to market and provides insights and perspective on executive compensation practices and trends.
Our peer group is updated each year to reflect companies in the same or similar industry that have similar operating models and comparable financials, e.g., annual revenue and market cap. Below is a summary of the results of our executive compensation program for 2023: •No Cash Compensation Adjustments; Voluntary Salary Reductions. For 2023, based on the market benchmarks, we made no changes to the base salaries and target bonuses of our named executive officers from 2022 levels. In addition, each of our named executive officers agreed to a voluntary 15% base salary reduction for the period from July 1, 2023 through December 31, 2023. •Annual Bonus Payouts Tied to Performance, Resulting in No Payouts. For 2023, the financial objectives constituted 80% of the total annual bonus opportunity for our named executive officers, with revenue performance weighted at 40% of the total bonus opportunity and adjusted EBITDA weighted at 40% of the total bonus opportunity. Key strategic objectives made up the remaining 20% of the annual bonus opportunity. There were no annual bonuses paid to our named executive officers for 2023as the revenue and adjusted EBITDA threshold objectives were not achieved and the component of the bonus tied to strategic objectives required that the adjusted EBITDA threshold level of achievement had to be satisfied for any credit to be given for that component. As a result of the foregoing, no annual bonuses were paid to the named executive officers for 2023. The 0% bonus payout, we believe, reflects our true pay-for-performance philosophy. •Equity Incentives. In 2023, our named executive officers received annual equity awards in the form of stock options and RSUs. The total value of the 2023 equity awards were delivered 50% in stock options and 50% in RSUs. oStock options are an important vehicle for tying executive pay to performance, because they deliver future value only if the value of our common stock increases above the exercise price. As a result, they provide strong incentives for our named executive officersto increase the value of our common stock over the long term, and they tightly align the interests of our executives with those of our stockholders. oRSU awards are granted because they are less dilutive to our stockholders, as fewer shares of our common stock are granted to achieve an equivalent value relative to stock options, and because RSU awards are an effective retention tool that maintain value even in cases where the share price is trading lower than the initial grant price. oIn 2022, in an effort to increase the long-term focus, we implemented a PSU program for our executive equity awards. In 2022, we granted approximately 40.3% of our named executive officers' annual equity awards in the form of PSU awards to further align our equity program with market practices and stockholder expectations. Mr. Elbaz also received PSUs as part of his new hire equity award package, with the PSUs (assuming “target” performance) representing approximately 15% of his new hire equity awards (excluding his sign-on bonus which was paid in the form of fully vested shares of our common stock). The performance goals for the PSU awards are based on both stock price appreciation and revenue objectives over a performance period ending on March 31, 2025. Up to 150% of the target PSUs will be eligible to vest based on company performance.
Summary Compensation Table The following table presents information regarding compensation earned by or awards to our named executive officers during 2015the fiscal years ended December 31, 2023 and 2016.2022: Name and Principal Position | | Year | | Salary($) | | | Bonus($) | | | | Stock Awards($)(1) | | | Option Awards($)(2) | | | Non-Equity Incentive Plan Compensation($) | | | All Other Compensation($)(3) | | | Total($) | | Charles Myers, | | 2016 | | | 360,000 | | | | 800,000 | | (4) | | | — | | | | 22,935 | | | | — | | | | 20,000 | | | | 1,202,935 | | President, Chief Executive Officer and Director | | 2015 | | | 310,000 | | | | 260,000 | | | | | — | | | | 110,000 | | | | — | | | | 522,696 | | | | 1,202,696 | | Leo Johnson, | | 2016 | | | 225,000 | | | | 200,000 | | | | | 40,756 | | | | 45,868 | | | | — | | | | — | | | | 511,624 | | Chief Financial Officer | | 2015 | | | 225,000 | | | | 125,000 | | | | | — | | | | — | | | | — | | | | — | | | | 350,000 | | Glenn Selbo, | | 2016 | | | 225,000 | | | | 125,000 | | | | | 71,322 | | | | 22,935 | | | | — | | | | — | | | | 444,257 | | Chief Operating Officer | | 2015 | | | 225,000 | | | | 125,000 | | | | | — | | | | 15,000 | | | | — | | | | — | | | | 365,000 | |
| | | | | | | | | | | | | | | | | | | | | | | Name and principal position | Year | Salary | | Bonus(1) | | Stock
awards(2) | | Option awards(2) | | Non-equity
incentive plan
awards(3) | | All other
compensation (4) | | Total | | Jacob Suen, President and Chief Executive Officer | 2023 | $ | 386,469 | | $ | — | | $ | 211,926 | | $ | 212,008 | | $ | — | | $ | 14,958 | | $ | 825,361 | | | 2022 | $ | 383,078 | | $ | — | | $ | 324,422 | | $ | 254,354 | | $ | 315,400 | | $ | 13,882 | | $ | 1,291,136 | | | | | | | | | | | | | | | | | | Michael Elbaz, Chief
Financial Officer | 2023 | $ | 293,344 | | $ | — | | $ | 85,850 | | $ | 85,885 | | $ | — | | $ | 10,062 | | $ | 475,141 | | | 2022 | $ | 65,625 | | $ | 220,000 | | $ | 369,056 | | $ | 341,824 | | $ | — | | $ | 15 | | $ | 996,520 | | | | | | | | | | | | | | | | | | Ali Sadri, Chief Technology Officer | 2023 | $ | 302,656 | | $ | — | | $ | 146,356 | | $ | 146,410 | | $ | — | | $ | 8,190 | | $ | 603,612 | | | | | | | | | | | | | | | | | |
(1)
| Amounts reflect the full grant-date fair value of stock awards granted during the relevant fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all stock awards made to our named executive officers in Note 11 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 and filed with the SEC on March 15, 2017. The performance objectives to which the vesting of the performance-based restricted stock awards granted during 2015 to Messrs. Johnson and Selbo awards were deemed probable of achievement as of the date of grant and the full grant date fair value of such awards, assuming achievement of the applicable performance objectives at maximum levels is reflected in the table above.
|
(2)
| Amounts reflect the full grant-date fair value of stock options granted during the relevant fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all option awards made to our named executive officers in Note 11 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 and filed with the SEC on March 15, 2017. The performance objectives to which the vesting of the performance-based stock option awards granted during 2016 to the named executive officers were subject were deemed probable of achievement as of the date of grant and the full grant date fair value of such awards, assuming achievement of the applicable performance objectives at maximum levels, is reflected in the table above.
|
(3)
| For 2016 for Mr. Myers, represents $5,500 paid for an annual executive medical program for Mr. Myers, $5,000 paid for health club dues and a personal trainer for Mr. Myers, and $9,500 in annual reimbursements for Mr. Myers’ vehicle payments, and the costs of maintenance and operation of such vehicle. For 2015 for Mr. Myers, includes $266,282 for the forgiveness by us of a loan to Mr. Myers, a gross-up payment of $236,414 for taxes arising from the forgiveness of the loan, $5,500 paid for an annual executive medical program for Mr. Myers, $5,000 paid for health club dues and a personal trainer for Mr. Myers, and $9,500 in annual reimbursements for Mr. Myers’ vehicle payments, and the costs of maintenance and operation of such vehicle.
|
(4)
| The “Bonus” column for 2016 for Mr. Myers includes a $500,000 cash bonus paid to him upon consummation of our initial public offering in August 2016, pursuant to the terms of his employment agreement.
|
Narrative Disclosure to Summary Compensation Table
Employment and Consulting Agreements
We have entered into employment agreements with each of our executive officers.
Employment Agreement with Mr. Myers
Pursuant to his employment agreement, effective for 2016, Mr. Myers was entitled to an annual base salary of $360,000 and a target annual bonus in the amount of 75% of his annual base salary. On April 25, 2017, our Compensation Committee approved an increase to Mr. Myers’ annual base salary to $400,000 and an increase to his target annual bonus to 90% of his annual base salary.
Pursuant to the employment agreement with Mr. Myers, if we terminate his employment without cause (as defined below) or he resigns for good reason (as defined below), he is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; (2) a lump sum cash payment in an amount equal to 12 months of his base salary as in effect immediately prior to the date of termination; (3) a lump sum cash payment in an amount equal to his “earned” bonus for the calendar year during which his date of termination occurs calculated as of the date of termination (wherein “earned” means that he has met the applicable bonus metrics as of date of such termination, as determined by the board of directors), prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination; (4) a lump sum cash payment in an amount equal to 12 multiplied by the monthly premium payable by Mr. Myers (or by us on his behalf) for disability insurance under our disability insurance plans in which Mr. Myers was participating immediately prior to the date of termination, payable in a lump sum on the date that is 30 days following the date of termination; and (5) continuation of health benefits at our expense for a period of 12 months following the date of termination.
In the event Mr. Myers termination without cause or resignation for good reason occurs within 12 months following a change in control, he is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; (2) a lump sum cash payment in an amount equal to 18 months of his base salary as in effect immediately prior to the date of termination; (3) a lump sum cash payment in an amount equal to his target bonus for the year in which the termination of his employment occurs; (4) continuation of health benefits at our expense for a period of 18 months following the date of termination; and (5) a lump sum cash payment in an amount equal to 18 multiplied by the monthly premium payable by Mr. Myers (or by us on his behalf) for disability insurance under our disability insurance plans in which Mr. Myers was participating immediately prior to the date of termination, payable in a lump sum on the date that is thirty (30) days following the date of termination.
If Mr. Myers’ employment is terminated as a result of his death or following his permanent disability, Mr. Myers or his estate, as applicable, is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; and (2) a lump sum cash payment in an amount equal to his “earned” bonus for the calendar year during which his date of termination occurs calculated as of the date of termination (wherein “earned” means that he has met the applicable bonus metrics as of date of such termination, as determined by the board of directors), prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination.
Pursuant to his employment agreement Mr. Myers receivedElbaz was eligible to receive a one-time cash retentionsign-on bonus, paid in the form of fully vested shares of common stock, in the amount equal to $220,000. In satisfaction of $500,000this obligation, 43,392 shares were issued to him in March 2023 at the time annual bonuses for 2022 were paid and were granted under the Airgain, Inc. 2021 Employment Inducement Incentive Award Plan, or the Inducement Plan. The number of shares issued to him was calculated by dividing the final sign-on bonus amount by the closing price per share of our common stock on the closinggrant date. The grant date fair value of the shares awarded to Mr. Elbaz was equivalent to the sign-on bonus amount reflected in the table above. (2) Amounts reflect the full grant-date fair value of stock and option awards granted during the relevant fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. With respect to the PSUs granted in 2022, the quantitative performance objectives applicable to those awards are both performance-based and market-based. We use a Monte Carlo simulation model to value these PSUs based upon the then-probable outcome of the qualitative and quantitative performance objectives at the time of grant, which incorporated the following significant inputs: (i) the stock price on the date of grant ($7.60); (ii) an expected term of three years; (iii) a risk-free interest rate derived from the yield on U.S. government bonds of appropriate term from the U.S. Department of Treasury of 2.61%; (iv) a dividend yield based on historic and future dividend yield estimates of 0%; (v) our stock price volatility over the time horizons matching the performance period (62.5%); and (e) a 10.5% assumed cost of equity. The highest level of performance that may be achieved for the PSUs is 150% of the target. The grant date fair values for the PSUs granted during 2022 (assuming achievement of all performance objectives under the PSUs) was $63,775 for Mr. Suen and $23,380 for Mr. Elbaz. We provide information regarding the assumptions used to calculate the value of all awards made to our named executive officers in Note 15 to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 6, 2024. (3) The amount represents annual performance bonuses earned by the named executive officers for performance during 2022. Annual bonuses for 2022 were paid in the form of fully vested shares of our initial publiccommon stock, which shares were granted to our named executive officers on March 15, 2023. The 2022 annual bonuses were paid to our named executive officers in the form of fully vested shares of common stock under the Company’s 2016 Incentive Award Plan granted on March 15, 2023, with the number of shares issued calculated by dividing the annual bonus amount payable to the named executive officer by the closing price per share of our common stock on the grant date. In satisfaction of this obligation, 62,209 shares were issued to Mr. Suen on March 15, 2023. The grant date fair value of the shares awarded to the named executive officers was equivalent to the annual performance bonus amounts reflected in the table above. (4) For 2023, this represents Company paid contributions to 401(k) retirement savings plan accounts and the cost of company paid life insurance for each named executive officers.
Narrative Disclosure to Compensation Tables Overview The primary elements of compensation for our named executive officers are base salary, annual bonuses and long-term incentive awards in the form of equity awards. The named executive officers also participate in employee benefit plans and programs that we offer to our other employees, as described below. The compensation committee of our Board develops, reviews and approves each of the elements of our executive compensation program. The compensation committee also regularly assesses the effectiveness and competitiveness of our compensation programs. The compensation committee is authorized to retain the services of third-party compensation consultants and other outside advisors, from time to time, to assist in its evaluation of executive compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. In 2023, the compensation committee retained Compensia, an independent third-party compensation consulting firm for guidance in making its executive compensation decisions. Compensia did not provide any other services to us in 2023 beyond its engagement as an advisor to the Compensation committee on executive compensation matters. The compensation committee assessed the independence of Compensia pursuant to SEC and Nasdaq rules and concluded that no conflict of interest existed that would have prevented Compensia from serving as an independent consultant to the compensation committee currently or during 2023. In addition, in the second half of 2023 and first quarter of 2024, Airgain management conducted a shareholder outreach program, seeking to engage its major institutional shareholders in discussion regarding a range of topics, including, board structure and composition, executive leadership, executive compensation, corporate governance and ESG-related topics. The Company intends to continue a regular cadence of outreach to its major shareholders. Executive Compensation Components The compensation committee and the Board believe in a "Total Rewards" strategy for our named executive officers, which means that they consider the total value of each executive's (i) base salary, (ii) target and actual annual bonus, (iii) equity compensation and iv) health and welfare benefits. As such, each element of Total Rewards is considered independently and in aggregate when considering new hire and ongoing compensation for the named executive officers. Our overall strategy is to provide Total Rewards that are competitive in the markets in which we compete for talent and fair and equitable based on the executive’s role, qualifications, and competitive market benchmarks. The following describes each component of our executive compensation program, the rationale for each, and how compensation amounts are determined. Mr. Suen is not present for the deliberations or decision by our Board when it approves his compensation arrangements. Annual Base Salary In general, base salaries for our named executive officers are established at the time the executive is hired, based on such executive’s position scope, qualifications, experience internal alignment and competitive market benchmarks for the executive's position, and through arm's length negotiation. Similarly, base salaries of our named executive officers are reviewed and approved annually or in the case of a promotion or other significant change in responsibility as needed by our compensation committee or Board. Adjustments to base salaries are considered based on the scope of an executive’s responsibilities, qualifications and experience, individual contribution, sustained positive impact, internal alignment, other compensation elements, and external market benchmarks relative to our designated peer group. Base salary adjustments are considered in the context of Total Rewards and are awarded only if the compensation committee or the Board believes that there is support for such adjustment. This approach is consistent with our intent of offering in August 2016.compensation that is competitive and contingent on the achievement of performance objectives. Employment Agreements with Messrs. JohnsonIn January 2023, the compensation committee reviewed the base salaries of our named executive officers and Selbo
Pursuantdetermined that no adjustments to his employment agreement,the executive base salaries would be made for 2016,2023 at that time. Mr. Selbo was entitled to anElbaz’s
2022 annual base salary of $225,000, and a target annual bonus in the amount of 50% of his annual base salary. On April 25, 2017, our Compensation Committee approved an increase to Mr. Selbo’s annual base salary to $300,000 and an increase to his target annual bonus to 75% of his annual base salary. Mr. Johnson entered into his employment agreement effective July 28, 2014, the date he commenced employment with us. Pursuant to his employment agreement, for 2016, Mr. Johnson$315,000 was entitled to an annual base salary of $225,000 and a target annual bonus in the amount of 50% of his annual base salary. On April 25, 2017, our Compensation Committee approved an increase to Mr. Johnson’s annual base salary to $300,000 and an increase to his target annual bonus to 60% of his annual base salary. Pursuant to their employment agreements, if we terminate such officer’s employment without cause (as defined below) or such officer resigns for good reason (as defined below), the executive officer is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; (2) a lump sum cash payment in an
amount equal to 6 months of his base salary as in effect immediately prior to the date of termination; and (3) continuation of health benefits at our expense for a period of 6 months following the date of termination.
In the event an officer’s termination without cause or resignation for good reason occurs within 12 months following a change in control, the executive officer is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; (2) a lump sum cash payment in an amount equal to 12 months of his base salary as in effect immediately prior to the date of termination; (3) a lump sum cash payment in an amount equal to his target bonus for the year in which the termination of his employment occurs; and (4) continuation of health benefits at our expense for a period of 18 months following the date of termination.
If an officer’s employment is terminated as a result of his death or following his permanent disability, the executive officer or his estate, as applicable, is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; and (2) a lump sum cash payment in an amount equal to his “earned” bonus for the calendar year during which his date of termination occurs calculated as of the date of termination (wherein “earned” means that the executive officer has met the applicable bonus metrics as of date of such termination, as determinedestablished by the board of directors), prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination.
Defined Terms Applicable to Executive Employment Agreements
For purposes of the executive employment agreements, “cause” generally means an executive officer’s (1) material breach of his employment agreement, his confidentiality and inventions assignment agreement or the definitive agreements relating to his stock option awards; (2) continued substantial and material failure or refusal to perform according to, or to comply with, the policies, procedures or practices established by us; (3) appropriation (or attempted appropriation) of a material business opportunity of the company, including attempting to secure or securing any personal profitcompensation committee in connection with any transaction entered into onhis commencement of employment in October 2022.
In July 2023, our behalf; (4) misappropriation (or attempted appropriation)named executive officers agreed to a voluntary 15% base salary reduction for the second half of any2023. The 2023 base salaries of our funds or property of any kind; (5) willful gross misconduct; or (6) conviction of a felony involving moral turpitude that is likelynamed executive officers are reflected in the table below (which numbers to inflict or has inflicted material injury on our business; provided, however, that except for Cause being the result of item (6) above, we will provide written noticenot give effect to the executive officer, which notice specifically identifies the nature of the alleged cause claimed by us with enough specificity for the executive officer to be able to cure, and the executive officer will have 15 days to cure the purported ground(s) for cause.voluntary 15% base salary reduction that was in effect from July 1, 2023 through December 31, 2023): For purposes of the executive employment agreements, “good reason” generally means (1) a material reduction in the executive officer’s authority, duties or responsibilities relative to the executive officer’s authority, duties or responsibilities in effect immediately prior to such reduction; as set forth in his employment agreement; (2) a material reduction in the executive officer’s annual base salary (or, for Mr. Myers, his target cash compensation); (3) a relocation of the executive officer’s or our principal executive offices to a location outside of San Diego County, if the executive officer’s principal office is at such offices; (4) any material breach by us or any successor or affiliate of obligations to the executive officer under the employment agreement; or (5) for Mr. Myers, the assignment to him of any duties materially inconsistent with his status as an executive officer.
For purposes of the employment agreements, “change in control” generally means (1) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than us, any of our subsidiaries, or any existing shareholder) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of our securities representing 50% or more of the total voting power represented by our then outstanding voting securities, (2) the consummation of the sale, liquidation or disposition by us of all or substantially all of our assets, (3) the consummation of a merger, consolidation, reorganization or other similar transaction involving us, in each case in which our voting securities outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least 50%
of the power represented by our voting securities or such surviving entity or its parent outstanding immediately after such transaction, or (4) for Mr. Myers, during any period of two consecutive years, individuals who, at the beginning of such period, constitute the board of directors together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with us to effect a transaction described in clause (1) or (3) of this definition) whose election by the board of directors or nomination for election by our shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof.
| | | | | | | Name | 2023 Base Salary | | Percentage change from 2022 | | Mr. Suen | $ | 415,000 | | | 0.0 | % | Mr. Elbaz | $ | 315,000 | | | 0.0 | % | Mr. Sadri | $ | 275,000 | | | 0.0 | % |
Annual Cash Bonus For 2016,In January 2023 the compensation committee adopted a 2023 annual bonus program for our named executive officers. The target bonus as a percentage of annual base salary was 100% for Mr. Myers,Suen and 60% for Mr. JohnsonElbaz and Mr. Selbo were eligibleSadri.
Under the 2023 annual bonus program, each executive’s annual bonus was based on two financial metrics: i) corporate revenue (weighted at 40%), and ii) adjusted EBITDA performance (weighted at 40%), for target bonuses equala total weighting of 80% for the financial metrics. The remaining 20% of the executive’s annual bonus was based on Company performance relative to 75%, 50% and 50% of their respective base salaries. The executives’ bonuses for 2016 were determinedsix key strategic objectives, as set forth in the discretiontable below, with a maximum payout level of 125%. The financial metrics (corporate revenue and adjusted EBITDA) incorporated “Threshold,” “Target” and “Maximum” performance levels corresponding to the payout levels. Target performance paid at 100%, Maximum paid at 125% and Threshold at 70%; no payout was earned if Threshold performance was not achieved on any metric, as illustrated in the table below. As noted above, the strategic objectives portion of the bonus was gated by achievement of a threshold adjusted EBITDA level, which was not achieved. The financial performance targets and the actual achievement of such objectives for 2023 were as set forth in the table below. The objectives were each intended to be rigorous, with threshold payout levels requiring significant year over year growth to result in payouts and maximum payouts representing significant and difficult objectives that would be achieved only with extraordinary effort. | | | | | | | Performance Components | Threshold
(70% payout) | Between Threshold and Target
(85% payout) | Target
(100% payout) | Maximum
(125% payout) | Actual | % of Target Payout
Attained | Revenue | >$75.9 million | >$78.0 million | >$80.0 million | >$88.0 million | $56.0 million | 0.0% | | | | | | | | Adjusted EBITDA(1) | $1.5 million | >$2.0 million | >$3.0 million | >$3.0 million | $-4.5 million | 0.0% |
(1) Adjusted EBITDA is a non-GAAP measure that our compensation committee and Board determined to use in connection with the annual bonus program because, by excluding certain non-cash expense, adjusted EBITDA allows for meaningful comparisons between our core business operating results and those of other companies, as well as providing us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time. Management considers these types of expenses and adjustments, to a great extent, to be unpredictable and dependent on a significant number of factors that are outside of our boardcontrol and are not necessarily reflective of directorsoperational performance during a period. For purposes of our 2023 annual bonus program, adjusted EBITDA represents our earnings before interest, taxes, depreciation, amortization, and also excludes stock-based compensation expense, which represents non-cash charges for the fair value of stock awards, and other income as well as interest income offset by interest expense. With respect to the key strategic objectives, seven strategic objectives were established by our compensation committee in early 2023, with payout levels ranging from 0% to 125% depending on how many of the strategic objectives were met during the year, as set forth in the table below.
| | | | Payout % Based on # Strategic Objectives Met | # Objectives Met and Payout Level | 2023 Strategic Objective | Achieved/Not Achieved | 0% | 0-1 | Successful inventory management | Achieved | 25% | 2 | Increased IP generation as measured by filing 3 complete and full patent applications to new and significant innovations | Achieved | 50% | 3 | Secure 2 customer wins within new product launch | Achieved | 75% | 4 | Minimum non-GAAP gross margin rate of 40%(1) | Not Achieved | 100% | 5 | Voluntary attrition rate for 2023 not to exceed 20% | Achieved | 125% | 6 | ESG program progress: Complete phase 1-establish/approved ESG program goals | Partially Achieved |
(1) Gross margin is a non-GAAP measure that our compensation committee and Board determined to use in connection with the annual bonus program. For purposes of our 2023 annual bonus program, the non-GAAP gross margin rate is the sum of our GAAP gross margin rate, the stock-based compensation rate, and the intangible assets amortization rate. In January 2024, our compensation committee determined that, based on its subjective assessmentthe lack of bothachievement of the revenue and adjusted EBITDA objectives, there would be no bonus paid on those objectives, and while four of the six strategic objectives were met, and one partially met, because the adjusted EBITDA threshold was not achieved, the achievement level for the strategic objectives was also 0%, resulting in no 2023 bonus paid to any executive. We again reiterate, this reflects our corporate performancecommitment to the alignment of pay and their individual performance. Based on this assessment, our board of directors determined to award Mr. Myers a bonus of $300,000 for 2016, representing 83% of his base salary for 2016, determined to award Mr. Johnson a bonus of $200,000 for 2016, representing 89% of his base salary for 2016, and determined to award Mr. Selbo a bonus of $125,000 for 2016, representing 56% of his base salary for 2016. Equity Compensation We primarily offer stock optionsThe goals of our long-term, equity-based incentive awards are to align the interests of our named executive officers and other employees, non-employee directors and consultants with the interests of our stockholders. Because vesting is based on continued employment over multiple years, our equity-based incentives also encourage the retention of our named executive officers through the vesting period of the awards. In determining the size of the long-term equity incentives to be awarded to our named executive officers, as the compensation committee takes into account several factors, including the relative job scope, the size and value of existing long-term incentive componentawards, individual performance history, prior contributions to the Company, as well as market data for equity award for comparable companies and our peer group. We do not maintain a program, plan or practice that times equity grants to named executive officers to coincidewith the release of material non-public information.
We use equity awards to compensate our named executive officers primarily in the form of initial grants in connection with the commencement of employment and annual incentive grants. However, while we intend that the majority of equity awards to our employees be made pursuant to initial grants or our annual grant program, the compensation committee retains discretion to make equity awards to employees at other times, including in connection with the promotion of an employee, to reward an employee, for retention purposes or for other circumstances recommended by management or the compensation committee. Our compensation committee approves all initial awards to new hires and typically approves the annual equity awards during the first quarter of each year for grant on March 15 each year. Annual equity awards are granted under our 2016 Plan or our Inducement Plan, using a mix of different equity instruments to further its goal of attracting and retaining top performers and to balance the relative advantages of different instruments. Our Board has adopted, and our stockholders have approved, the 2016 Plan, in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our compensation program.Company and certain of its affiliates and to enable our Company and certain of its affiliates to obtain and retain services of these individuals, which is essential to our long-term success. •Stock options are an important vehicle for tying executive pay to performance, because they deliver future value only if the value of our common stock increases above the exercise price. As a result, they provide strong incentives for our executive officers to increase the value of our common stock over the long term, and they tightly align the interests of our executives with those of our stockholders. Our stock options allow employees to purchase shares of our common stock at a price per share equal to the fair market value of our common stock on the date of grant and may or may
not be intended to qualify as “incentive stock options” for U.S. federal income tax purposes. In the past, our board of directors has determined the fair market value of our common stock based upon inputs including valuation reports prepared by third-party valuation firms from time to time. Generally, the stock options we grant vest over four years, subject to the employee’s continued employment with us on the vesting date. We also, when appropriate, grant restricted stock to our executives.Our board of directors has adopted, and our stockholders have approved, the 2016 Incentive Award Plan, referred to herein as the 2016 Plan, in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our company and certain of its affiliates and to enable our company and certain of its affiliates to obtain and retain services of these individuals, which is essential to our long-term success.
In May 2016, each of Mr. Myers, Mr. Selbo and Mr. Johnson received stock option awards. The options were granted with an exercise price per share of $1.90, which was equal to the fair market value per share of our common stock at the time of the grant, as determined pursuant to an independent third party valuation. The options have a term of ten years from the date of grant. Mr. Myers was granted time-based stock options to purchase 26,125 shares of our common stock, which stock option vests over four years, with 25% of the shares subject to the option vesting on the first anniversary of the date of grant and the remainder vesting in equal monthly installments over a period of three years thereafter, subject to his continued employment with us on each vesting date. The time-based options will vest on an accelerated basis in the event of a change in control (as defined in his employment agreement), or in the event of Mr. Myers’ termination of employment by us without cause (as defined in his employment agreement), his resignation for good reason (as defined in his employment agreement), his death or his termination of employment by reason of his disability (as defined in his employment agreement).
Each of Mr. Selbo and Mr. Johnson was granted 13,062 time-based stock options, which also vest over four years. These time-based options will vest on an accelerated basis in the event of the employee’s termination of employment by us without cause (as defined in his employment agreement) or his resignation for good reason (as defined in his employment agreement), in each case following a change in control.
Mr. Myers also received performance-based stock options to purchase 26,125 shares of our common stock, which stock option vests over four years, with 25% of the shares subject to the option vested on the first anniversary of thecommencement date, of grant and the remainder vesting in equal monthly installments over a period of three years thereafter, subject to his continued employment with us on each vesting date; provided, however, that the number of shares subject to the option that would have been eligible to vest in accordance with the foregoing schedule was to be determined based on our revenues and net income for 2016 in accordance with the following table (with results not to be interpolated between the listed data points). As a result, our revenues and net income were required to both equal or exceed the levels set forth above in order for vesting to occur at such level.
2016 Revenues and Net Income
| | Percentage of Options
Eligible to Vest
| | $35,000,000 in revenues and $1,000,000 in
net income
| | | 80
| %
| $36,000,000 in revenues and $1,800,000 in
net income
| | | 100
| %
|
Notwithstanding the foregoing, the vesting eligible shares subject to the option would have become fully vested and exercisable in the event of a change in control; provided that, to the extent such change in control occurred during 2016, Mr. Myers would have vested in 100% of the shares subject to the option on the date of such change in control. In addition, the vesting eligible shares would have become fully vested and exercisable in the event of Mr. Myers’ termination of employment by us without cause (as defined in his employment agreement), his resignation for good reason (as defined his employment agreement), his death or his termination of employment by reason of his disability (as defined in his employment agreement); provided that, to the extent such termination of employment occurred during 2016, Mr. Myers would have vested in 100% of the shares subject to the option on the date of such termination of employment. For 2016, our revenues exceeded $43.4 million and our net income exceeded $3.7 million resulting in 100% of these options becoming eligible to vest pursuant to the time-based schedule described above at the end of 2016 based on such performance.
Each of Mr. Selbo and Mr. Johnson also received performance-based stock options to purchase 13,062 shares of our common stock, which stock options vest over four years, with 25% of the shares subject to the options vesting on the first anniversary of the date of grant and the remainder vesting in equal monthly installments over a period of three years thereafter, subject to the employee’srecipient’s continued employment with usor service on each vesting date; provided, however,date. Options have a term of ten years from the date of grant.
•RSU awards are granted because they are less dilutive to our stockholders, as fewer shares of our common stock are granted to achieve an equivalent value relative to stock options, and because RSU awards are an effective retention tool that maintain value even in cases where the number of sharesshare price is trading lower than the initial grant price. Generally, the RSUs we grant vest in equal annual increments over four years, subject to the option that would have beenrecipient’s continued employment or service on each vesting date. •PSU awards are granted to further align the long-term interests and compensation of our named executive officers with our stockholders. In 2022, in an effort to increase the long-term focus, we implemented a PSU program for our executive equity awards. In 2022, we granted approximately 40.3% of our named executive officers' annual equity awards in the form of PSU awards to further align our equity program with market practices and stockholder expectations. Mr. Elbaz also received PSUs as part of his new hire equity award package, with the PSUs representing approximately 15% of his new hire equity awards (excluding his sign-on bonus which was paid in the form of fully vested shares of our common stock). The performance goals for the PSU awards are based on both stock price appreciation and revenue objectives over a performance period ending on March 31, 2025. Up to 150% of the target PSUs will be eligible to vest in accordance with the foregoing schedule were to be determined based on our revenues for 2016 in accordance with the following table (with results not to be interpolated between the listed data points). As a result, our revenues and net income were required to both equal or exceed the levels set forth above in order for vesting to occur at such level.2016 Revenues and Net Income
| | Percentage of Options
Eligible to Vest
| | $35,000,000 in revenues and $1,000,000 in
net income
| | | 80
| %
| $36,000,000 in revenues and $1,800,000 in
net income
| | | 100
| %
|
company performance.Notwithstanding the foregoing, if a change in control occurred during 2016, 100% of the shares subject to the option would have been deemed to be vesting eligible shares and would have been eligible to vest in accordance with the foregoing time-based schedule and the foregoing performance vesting provisions would have ceased to apply. The vesting eligible shares, if any, would have become fully vested and exercisable in the event of the employee’s termination of employment by us without cause (as defined in his employment agreement) or his resignation for good reason (as defined in his employment agreement), in each case following a change in control. For 2016, our revenues exceeded $43.4 million and our net income exceeded $3.7 million resulting in 100% of these options becoming eligible to vest pursuant to the time-based schedule described above at the end of 2016 based on such performance.
In May 2016, each of Mr. Selbo and Mr. Johnson received performance-based restricted stock awards with respect to 36,575 and 20,900 shares, respectively. The shares vested on February 7, 2017, the date that was six months and one day following the closing date of our initial public offering. In addition, the shares also would have vested in the event of a change in control prior to December 31, 2016, or in the event of the employee’s termination of employment by us without cause (as defined in his employment agreement), or his resignation for good reason (as defined in his employment agreement).
Stock awards granted to our named executive officers may be subject to accelerated vesting in certain circumstances. For additional discussion, please see “—Employment Agreements” above, “—Changeabove. The PSUs will be eligible to vest upon a change of control based on the performance criteria met at the time of the change in Control Benefits” belowcontrol. In January 2023, the compensation committee approved the annual equity awards for our named executive officers in a combination of stock options and RSU awards. The stock option and RSU awards granted to our named executive officers during 2023 are described in the “Outstanding Equity Awards at the End of 2016”2023” table below. Other Elements of Compensation We currently maintain a 401(k) retirement savings plan that allows eligible employees to defer a portion of their compensation, within limits prescribed by the Internal Revenue Code, or the Code, on a pre-tax basis through contributions to the plan. Our named executive officers are eligible to participate in the 401(k) plan. We may make discretionary matching contributions under the 401(k) plan, but we have not done so to date.plan. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our named executive officers in accordance with our compensation policies. The Company provides a safe harbor match of up to 4% of our eligible employee’s salary. •Employee Benefits and Perquisites Our named executive officers are eligible to participate in our health and welfare plans. In addition, pursuant to his employment agreement, Mr. Myers is entitled to receive the following additional benefits with an aggregate annual cost not to exceed $20,000: (1) annual executive medical program; (2) health club dues/personal trainer; and (3) reimbursement of monthly vehicle payment, plus the costs of maintenance and operation of such vehicle. We do not provide our named executive officers with any other significant perquisites or other personal benefits. •Termination or Change in Control Benefits Our named executive officers may become entitled to certain benefits or enhanced benefits in connection with certain terminations of employment or a change in control of our company. Each of our named executive officers’ employment agreements entitles them to accelerated vesting of all outstanding equity awards, as well as certain other benefits, upon a change in control of our company.Company. For additional discussion, please see “—Employment Agreements” above.
Outstanding Equity Awards at the End of 20162023 The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2016.2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | Grant
date | Number of securities underlying unexercised options exercisable(1)
# | | Number of securities underlying unexercised options unexercisable(1)
# | | Option exercise price
$ | | Expiration date | | | Number of shares or units of stock that have not vested(2)
# | | Market value of shares or units of stock that have not vested(3)
$ | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(4)
(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3)
$ | | Jacob Suen | 1/22/2014 | | 4,200 | | | — | | | 2.20 | | 1/22/2024 | | | | — | | | — | | | — | | | — | | | 3/18/2015 | | 12,102 | | | — | | | 2.00 | | 3/18/2025 | | | | — | | | — | | | — | | | — | | | 5/24/2016 | | 4,573 | | | — | | | 1.90 | | 5/24/2026 | | | | — | | | — | | | — | | | — | | | 4/25/2017 | | 25,000 | | | — | | | 15.20 | | 4/25/2027 | | | | — | | | — | | | — | | | — | | | 1/19/2018 | | 45,000 | | | — | | | 10.94 | | 1/19/2028 | | | | — | | | — | | | — | | | — | | | 5/16/2018 | | 25,000 | | | — | | | 8.17 | | 5/16/2028 | | | | — | | | — | | | — | | | — | | | 1/16/2019 | | 87,500 | | | — | | | 11.46 | | 1/16/2029 | | | | — | | | — | | | — | | | — | | | 8/12/2019 | | 250,000 | | | — | | | 12.07 | | 8/12/2029 | | | | — | | | — | | | — | | | — | | | 1/16/2020 | | — | | | — | | | — | | | — | | | | 12,500 | | | 44,500 | | | — | | | — | | | 1/28/2021 | | 61,177 | | | 22,723 | | | 24.18 | | 1/28/2031 | | | | 20,250 | | | 72,090 | | | — | | | — | | | 2/1/2022 | | 23,695 | | | 28,003 | | | 9.46 | | 2/1/2032 | | | | — | | | — | | | — | | | — | | | 3/1/2022 | | — | | | — | | | — | | | — | | | | 19,608 | | | 69,804 | | | — | | | — | | | 4/1/2022 | | — | | | — | | | — | | | — | | | | — | | | — | | | 29,032 | | | 103,354 | | | 3/15/2023 | | — | | | 84,803 | | | 5.07 | | 3/15/2033 | | | | 41,800 | | | 148,808 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael Elbaz | 10/17/2022 | | 25,369 | | | 61,609 | | | 7.11 | | 10/17/2032 | | | | 35,230 | | | 125,419 | | | 17,448 | | | 62,115 | | | 3/15/2023 | | — | | | — | | | — | | | — | | | | 16,933 | | | 60,281 | | | — | | | — | | | 3/15/2023 | | — | | | 34,354 | | | 5.07 | | 3/15/2033 | | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ali Sadri | 6/30/2021 | | 12,916 | | | 7,084 | | | 20.62 | | 6/30/2031 | | | | 6,000 | | | 21,360 | | | — | | | — | | | 2/1/2022 | | 10,578 | | | 12,501 | | | 9.46 | | 2/1/2032 | | | | — | | | — | | | — | | | — | | | 3/1/2022 | | — | | | — | | | — | | | — | | | | 8,753 | | | 31,161 | | | — | | | — | | | 4/1/2022 | | — | | | — | | | — | | | — | | | | — | | | — | | | 22,580 | | | 80,385 | | | 3/15/2023 | | — | | | 58,564 | | | 5.07 | | 3/15/2033 | | | | 28,867 | | | 102,767 | | | — | | | — | |
(1) Except as specified below, all options have a term of ten years from the date of grant and vest over four years, with 25% of the shares underlying the options vesting on the first anniversary of the vesting commencement date and the remaining shares underlying the options vesting monthly over the three-year period thereafter, subject to the holder’s continuous employment or service. The options granted on January 16, 2019, have a vesting commencement date of January 1, 2019. For all other options, the vesting commencement date is generally the grant date. The options are eligible to vest on an accelerated basis as provided in the named executive officers’ employment agreements described below. (2) RSU awards vest in four equal installments on the anniversary date for four years following the date of grant, subject to the holder’s continuous employment or service. The awards are eligible to vest on an accelerated basis as provided in the named executive officers’ employment agreements described below. (3) Market value is calculated based on the closing price of our common stock of $3.56 per share on December 29, 2023, times the number of shares subject to the award. (4) Represents PSUs that vest based on both stock price appreciation and revenue objectives over a performance period ending on March 31, 2025. Up to 150% of the target PSUs will be eligible to vest based on company performance. The PSUs are reflected in the table above at “target” levels. | | | | | | | | | Option Awards | | Stock Awards | | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | | | | Number of Securities Underlying Unexercised Options (#) Unexercisable (1) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options(#) | | | | Option Exercise Price ($) | | | 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 ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | Charles Myers | | 3/18/2015 | | | 10,937 | | | | | 14,063 | | | | — | | | | $ | 2.00 | | | 3/18/2025 | | | — | | | | — | | | | — | | | | | — | | | | | 3/18/2015 | | | 80,000 | | | | | — | | | | — | | | | $ | 2.00 | | | 3/18/2025 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | 26,125 | | | | — | | | | $ | 1.90 | | | 5/24/2026 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | — | | | | 26,125 | | (2) | | $ | 1.90 | | | 5/24/2026 | | | — | | | | — | | | | — | | | | | — | | | Leo Johnson | | 8/27/2014 | | | 50,000 | | (3) | | | — | | | | — | | | | $ | 2.00 | | | 8/26/2024 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | 13,063 | | | | — | | | | $ | 1.90 | | | 5/24/2026 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | — | | | | 13,063 | | (4) | | $ | 1.90 | | | 5/24/2026 | | | — | | | | — | | | | | | | | | | | | | | 5/24/2016 | | | — | | | | | — | | | | — | | | | | — | | | 5/24/2026 | | | — | | | | — | | | | 20,900 | | (5) | | $ | 300,960 | | (6) | Glenn Selbo | | 9/20/2007 | | | 9,000 | | | | | — | | | | — | | | | $ | 2.20 | | | 9/20/2017 | | | — | | | | — | | | | — | | | | | — | | | | | 12/11/2007 | | | 10,000 | | | | | — | | | | — | | | | $ | 2.20 | | | 12/11/2017 | | | — | | | | — | | | | — | | | | | — | | | | | 11/19/2008 | | | 5,000 | | | | | — | | | | — | | | | $ | 2.60 | | | 11/19/2018 | | | — | | | | — | | | | — | | | | | — | | | | | 3/17/2009 | | | 10,000 | | | | | — | | | | — | | | | $ | 2.60 | | | 3/18/2019 | | | — | | | | — | | | | — | | | | | — | | | | | 1/22/2014 | | | 16,406 | | | | | 6,094 | | | | — | | | | $ | 2.20 | | | 1/21/2024 | | | — | | | | — | | | | — | | | | | — | | | | | 5/13/2014 | | | 10,333 | | | | | 5,667 | | | | — | | | | $ | 3.10 | | | 5/12/2024 | | | — | | | | — | | | | — | | | | | — | | | | | 3/18/2015 | | | 5,469 | | | | | 7,031 | | | 0 | | | | $ | 2.00 | | | 3/18/2025 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | 13,063 | | | | — | | | | $ | 1.90 | | | 5/24/2026 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | — | | | | 13,063 | | | | $ | 1.90 | | | 5/24/2026 | | | — | | | | — | | | | — | | | | | — | | | | | 5/24/2016 | | | — | | | | | — | | | | — | | | | | — | | | 5/24/2026 | | | — | | | | — | | | | 36,575 | | (5) | | $ | 526,680 | | (6) |
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Employment Arrangements with our Named Executive Officers Employment Agreements with Jacob Suen and Michael Elbaz We have entered into employment agreements with Messrs. Suen and Elbaz. The employment agreements provide for an indefinite term and for at-will employment. The agreements also set forth each executive’s annual base salary and target bonus opportunity and provide that each executive will be entitled to the benefits provided to employees generally. Pursuant to the employment agreements, if we terminate the executive’s employment without cause or the executive resigns for good reason, the executive is entitled to the following payments and benefits: (1) fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which the executive is entitled; (2) a lump sum cash payment in an amount equal to 12 months of base salary as in effect immediately prior to the date of termination plus an amount equal to the executive's target bonus for the calendar year during which the date of termination occurs, prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination; and (3) continuation of health benefits at our expense for a period of 12 months following the date of termination. In the event an executive’s termination without cause or resignation for good reason occurs within 12 months following a change in control, the executive is entitled to the following payments and benefits: (1) fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which the executive is entitled; (2) a lump sum cash payment in an amount equal to 12 months of base salary as in effect immediately prior to the date of termination; (3) a lump sum cash payment in an amount equal to the executive's target bonus for the year in which the termination of employment occurs; and (4) continuation of health benefits at our expense for a period of 18 months following the date of termination. All of an executive’s outstanding equity awards, other than PSUs, will become fully vested and exercisable in the event of a termination without cause or resignation for good reason at any time following a change in control (or, for awards granted to our named executive officers after April 2020, such a termination within 60 days prior to a change in control or at any time following a change in control). PSUs will be eligible to vest upon a change of control based on the performance criteria met at the time of the change in control. If the executive’s employment is terminated as a result of death or following permanent disability, the executive's estate, as applicable, is entitled to the following payments and benefits: (1) any fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which the executive is entitled; and (2) a lump sum cash payment in an amount equal to the “earned” bonus for the calendar year during which the date of termination occurs calculated as of the date of termination (wherein “earned” means that the executive has met the applicable bonus metrics as of date of such termination, as determined by the Board), prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination. Severance Agreement with Ali Sadri We have entered into a severance agreement with Mr. Sadri. Pursuant to the severance agreement, if we terminate Mr. Sadri’s employment without cause at any time, or if he resigns for good reason within 12 months following a change in control, he is entitled to the following payments and benefits: (1) fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other amounts under any compensation plan or practice to which he is entitled; (2) a lump sum cash payment in an amount equal to 12 months of base salary as in effect immediately prior to the date of termination plus an amount equal to his target bonus for the calendar year during which the date of termination occurs, prorated for such portion of the calendar year during which such termination occurs that has elapsed through the date of termination; (3) continuation of health benefits at our expense for a period of 12 months following the date of termination; and (4) accelerated vesting of his outstanding equity awards that would have vested during the 12 months following the date of his termination of employment had he remained continuously employed with us during such period. Defined Terms Applicable to Executive Employment Arrangements For purposes of the executive employment arrangements, “cause” generally means an executive officer’s (1) material breach of his employment agreement, his confidentiality and inventions assignment agreement or the definitive agreements relating to his stock option awards; (2) continued substantial and material failure or refusal
to perform according to, or to comply with, the policies, procedures or practices established by the Company; (3) appropriation (or attempted appropriation) of a material business opportunity of the Company, including attempting to secure or securing any personal profit in connection with any transaction entered into on our behalf; (4) misappropriation (or attempted appropriation) of any of our funds or property of any kind; (5) willful gross misconduct; or (6) conviction of a felony involving moral turpitude that is likely to inflict or has inflicted material injury on our business; provided, however, that except for cause being the result of item (6) above, we will provide written notice to the executive officer, which notice specifically identifies the nature of the alleged cause claimed by us with enough specificity for the executive officer to be able to cure, and the executive officer will have 15 days to cure the purported ground(s) for cause. For purposes of the executive employment arrangements, “good reason” generally means (1) a material reduction in the executive officer’s authority, duties or responsibilities relative to the executive officer’s authority, duties or responsibilities in effect immediately prior to such reduction; as set forth in the executive's employment agreement; (2) a material reduction in the executive officer’s annual base salary; (3) a relocation of the executive officer’s or our principal executive offices by more than 25 miles, or (4) any material breach by us or any successor or affiliate of obligations to the executive officer under the employment agreement. For purposes of the employment arrangements, “change in control” generally means (1) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than us, any of our subsidiaries, or any existing stockholder) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of our securities representing 50% or more of the total voting power represented by our then outstanding voting securities, (2) during any period of two consecutive years, individuals who, at the beginning of such period, constitute our board together with any new directors whose election by the board or nomination for election was approved by aa vote of at least 2/3 of the then-current board members who were directors at the beginning of the period or whose election or appointment was so approved, cease for any reason to constitute a majority of the Board, or (3) the consummation of the sale or disposition by us of all or substantially all of our assets, or the consummation of a merger, consolidation, reorganization business combination, or acquisition of assets or stock of another entity, in each case in which our voting securities outstanding immediately prior thereto do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least a majority of the combined voting power of such surviving entity or its parent outstanding immediately after such transaction and no “person” owns 50% or more of the surviving entity or its parent. Pay Versus Performance Table The following table sets forth information concerning the compensation of our NEOs for each of the fiscal years ended December 31, 2023, 2022 and 2021, and our financial performance for each such fiscal year: | | | | | | | | | | | | | | | | | | | | | | | | | Year | | Summary Compensation Table Total for PEO ($) | | | Compensation Actually Paid to PEO ($)(1)(2) | | | Average Summary Compensation Table Total for Non-PEO NEOs ($) | | | Average Compensation Actually Paid to Non-PEO NEOs ($)(1)(2) | | | Value of Initial Fixed $100 Investment Based on:
Total Shareholder Return ($) | | | Net Income (Loss) ($) | | 2023 | | $ | 825,361 | | | $ | (308,386 | ) | | $ | 539,377 | | | $ | 187,599 | | | $ | 21 | | | $ | (12,428,000 | ) | 2022 | | $ | 1,291,136 | | | $ | (20,615 | ) | | $ | 1,048,662 | | | $ | 931,271 | | | $ | 38 | | | $ | (8,659,000 | ) | 2021 | | $ | 2,511,553 | | | $ | (100,173 | ) | | $ | 1,178,762 | | | $ | 438,912 | | | $ | 62 | | | $ | (10,087,000 | ) |
(1)Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our remaining NEOs for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year: | | | (1)Year
| Except as specified below, all options have a term of ten years from the date of grantPEO
| Non-PEO NEOs | | | | 2023 | Jacob Suen | Michael Elbaz and vest over four years, with 25% of the shares underlying the options vesting on the first anniversary of the date of grantAli Sadri | 2022 | Jacob Suen | Michael Elbaz and the remaining shares underlying the options vesting monthly over the three-year period thereafter, subject to the option holder’s continuous employment or service. The options granted to Mr. Myers in 2015 are also eligible to vest on an accelerated basis in the event of a change in control (as defined in his employment agreement), Mr. Myers’ termination of employment by us without cause (as defined in his employment agreement), his resignation for good reason (as defined his employment agreement), his death or his termination of employment by reason of his disability (as defined in his employment agreement). The options granted to Mr. Selbo in 2014Morad Sbahi | 2021 | Jacob Suen | David Lyle and 2015 are also eligible to vest on an accelerated basis in the event of his termination of employment by us without cause (as defined in the executive’s employment agreement) or his resignation for good reason (as defined in the executive’s employment agreement), in each case following a change in control.Morad Sbahi |
Compensation actually paid to our NEOs represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | 2022 | | | 2023 | | Adjustments | | PEO | | | Average Non-PEO NEOs | | | PEO | | | Average Non-PEO NEOs | | | PEO | | | Average Non-PEO NEOs | | Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY | | $ | (1,929,367 | ) | | $ | (830,762 | ) | | $ | (578,776 | ) | | $ | (731,346 | ) | | $ | (423,934 | ) | | $ | (232,251 | ) | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | | | 833,353 | | | | 348,228 | | | | 526,000 | | | | 712,058 | | | | 314,424 | | | | 172,256 | | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | | | (1,695,827 | ) | | | (312,724 | ) | | | (1,110,932 | ) | | | (86,707 | ) | | | (1,041,637 | ) | | | (251,046 | ) | Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | | | 180,115 | | | | 55,408 | | | | (148,043 | ) | | | (11,396 | ) | | | 17,401 | | | | (40,738 | ) | Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Increase based on Incremental Fair Value of Options/SARs Modified during Applicable FY | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Total adjustments | | $ | (2,611,726 | ) | | $ | (739,850 | ) | | $ | (1,311,751 | ) | | $ | (117,391 | ) | | $ | (1,133,746 | ) | | $ | (351,779 | ) |
(2)Fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns was determined by reference to (i) for solely service-vesting RSU awards, the closing price per share on the applicable year-end date(s) or, in the case of vesting dates, the closing price per share on the applicable vesting date(s); (ii) for PSU awards, the valuation technique utilized at the grant dates was the Monte Carlo simulation model, which utilized multiple input variables, including expected volatility of our stock price and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the performance objective established for the award, including our stock price volatility over the time horizons matching the performance period and a risk-free interest rate derived from the yield on U.S. government bonds of appropriate term from the U.S. Department of Treasury, and a dividend yield based on historic and future dividend yield estimates. The PSU fair values were calculated as of the applicable year-end date(s) by valuation techniques that did not differ materially from the technique used at the grant dates, and (iii) for stock options, a Black Scholes value as of the applicable year-end or vesting date(s), determined based on the same methodology as used to determine grant date fair value but using the closing stock price on the applicable revaluation date as the current market price and with an expected life set equal to the remaining life of the award in the case of underwater stock options and, in the case of in the money options, an expected life equal to the original ratio of expected life relative to the ten year contractual life multiplied times the remaining life as of the applicable revaluation date, and in all cases based on volatility and risk free rates determined as of the revaluation date based on the expected life period and based on an expected dividend rate of 0%. We provide information regarding the assumptions used to calculate the value of all awards (2)
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| Represents performance-based stock options, which stock options vest over four years, with 25% of the shares subject to the option vested immediately on the date of grant and the remainder vesting in equal monthly installments over a period of three years thereafter, subject to his continued employment with us on each vesting date; provided, however, that the number of shares subject to the option that would have been eligible to vest in accordance with the foregoing schedule were to be determined based on our revenues and net income for 2016 as described above under “Equity Compensation.” Notwithstanding the foregoing, the vesting eligible shares subject to the option would have become fully vested and exercisable in the event of a change in control; provided that, to the extent such change in control occurred during 2016, Mr. Myers would have vested in 100% of the shares subject to the option on the date of such change in control. In addition, the vesting eligible shares would have become fully vested and exercisable in the event of Mr. Myers’ termination of employment by us without cause (as defined in his employment agreement), his resignation for good reason (as defined his employment agreement), his death or his termination of employment by reason of his disability (as defined in his employment agreement); provided that, to the extent such termination of employment occurred during 2016, Mr. Myers would have vested in 100% of the shares subject to the option on the date of such termination of employment. For 2016, our revenues exceeded $43.4 million and our net income exceeded $3.7 million, resulting in 100% of these options becoming eligible to vest pursuant to the time-based schedule described above at the end of 2016 based on such performance.
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made to our named executive officers in Note 13 to the financial statements included in our 2023 Annual Report filed with the SEC on March 6, 2024. Narrative Disclosure to Pay Versus Performance Table Relationship Between Financial Performance Measures The graphs below compare the compensation actually paid to our PEO and the average of the compensation actually paid to our remaining NEOs, with (i) our cumulative TSR,and (ii) our net income (loss), in each case, for the fiscal years ended December 31, 2023 and 2022. TSR amounts reported in the graph assume an initial fixed investment of $100, and that all dividends, if any, were reinvested. 
(3)
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| The options have a term of ten years from the date of grant and were fully vested as of August 27, 2016. The options were originally granted with an exercise price per share of $4.20, which was equal to the fair market value per share of our common stock at the time of the grant, as determined pursuant to an independent third party valuation. In March 2015, the option was amended to reduce the exercise price per share to $2.00 per share, which represented the fair market value per share of our common stock at the time of such amendment, as determined pursuant to an independent third party valuation.
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(4)
| Represents performance-based stock options, which stock options vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of the date of grant and the remainder vesting in equal monthly installments over a period of three years thereafter, subject to his continued employment with us on each vesting date; provided, however, that the number of shares subject to the option that would have been eligible to vest in accordance with the foregoing schedule were to be determined based on our revenues and net income for 2016 as described above under “Equity Compensation.” Notwithstanding the foregoing, if a change in control occurred during 2016, 100% of the shares subject to the option would have been deemed to be vesting eligible shares and would have been eligible to vest in accordance with the foregoing time-based schedule and the foregoing performance vesting provisions would have ceased to apply. The vesting eligible shares would have become fully vested and exercisable in the event of the executive’s termination of employment by us without cause (as defined in the executive’s employment agreement) or his resignation for good reason (as defined in the executive’s employment agreement), in each case following a change in control. For 2016, our revenues exceeded $43.4 million and our net income exceeded $3.7 million, resulting in 100% of these options becoming eligible to vest pursuant to the time-based schedule described above at the end of 2016 based on such performance.
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(5)
| Represents shares of restricted stock. The shares were eligible to vest on the date that was six months and one day following the closing date of our initial public offering (provided such offering occurred on or before December 31, 2016, subject to the recipient’s continued employment or service to us on such vesting date. Notwithstanding the foregoing, the shares would have become fully vested in the event of a change in control prior to December 31, 2016. In addition, the shares would have become fully vested in the event of the employee’s termination of employment by us without cause (as defined in his employment agreement), or his resignation for good reason (as defined his employment agreement), in each case following the closing of the initial public offering. These shares vested in February 2017 in accordance with their terms.
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(6)
| The market value was computed using $14.40 per share, which was the closing price per share of our common stock on December 30, 2016, the last trading day of 2016.
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Equity Compensation Plan Information The following table provides information on our equity compensation plans as of December 31, 2016.
As of December 31, 2016,2023, we had four equity compensation plans in place under which equity awards were outstanding or shares of our common stock were authorized for issuance detailed as follows: Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | | Weighted- average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) | | | | | (a) | | | | (b)(1) | | | (c) | | | Equity compensation plans approved by security holders | | | 1,040,387 | | (2) | | $ | 2.25 | | | | 809,750 | | (3) | Equity compensation plans not approved by security holders | | | — | | | | $ | — | | | | — | | |
| | | | | | | | | | | | Plan Category | Number of securities to be issued upon exercise of outstanding options and rights | Weighted-average exercise price of outstanding options | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | (a) | | | (b) | | (c) | | | Equity compensation plans approved by security holders | | 2,417,330 | | (1) | $ | 10.11 | | | 572,410 | | (2) | Equity compensation plans not approved by security holders | | 495,779 | | (3) | $ | 10.60 | | | 179,747 | | (4) |
(1)
| Represents the weighted-average exercise price of outstanding options.
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(2)
| Includes 20,000 shares of common stock that were subject to option awards as of December 31, 2016 under the 2016 Plan, 907,337 shares subject to option awards under the Company’s 2013 Equity Incentive Plan, or(1)Includes 1,767,923 shares of common stock that were subject to option awards and 575,215 shares of common stock that were subject to RSUs and 74,192 shares of common stock that were subject to PSUs (at “target”), under the 2016 Plan and the 2013 Plan and 113,050 shares subject to option awards under the Company’s 2003 Equity Incentive Plan. Does not include the 57,475 shares subject to restricted stock awards outstanding as of December 31, 2016.
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(3)
| Includes 709,750 shares of common stock available for issuance under the 2016 Plan and 100,000 shares of common stock available for issuance under our Employee Stock Purchase Plan. This amount does not include any additional shares that may become available for future issuance under the 2016 Plan pursuant to the automatic increase to the share reserve on January 1 of each of our calendar years beginning 2017 and continuing through 2026 by the number of shares equal to the lesser of (i) 4% of the total outstanding shares of our common stock and common stock equivalents as of the immediately preceding December 31 and (2) such smaller number of shares as determined by our board of directors.
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Additional Narrative Disclosure(2) Includes 55,303 shares of common stock available for issuance under the 2016 Plan and 517,107 shares of common stock available for issuance under our Employee Stock Purchase Plan (all of which were eligible to be purchased during the offering period in effect under the Employee Stock Purchase Plan on such date). This amount does not include any additional shares that may become available for future issuance under the 2016 Plan or the Employee Stock Purchase Plan pursuant to the automatic increases to the share reserves under such plans on January 1 of each year pursuant to their terms.
For a description(3) Represents 328,560 shares of common stock that were subject to option awards, 130,988 shares of common stock that were subject to RSUs and 36,231 shares of common stock that were subject to PSUs (at “target”) under the Inducement Plan. The material termsfeatures of our retirement plansInducement Plan are more fully described in Note 10 to the financial
statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, and filed with the change-in-controlSEC on March 6, 2024. (4) Represents shares remaining available for issuance under the Inducement Plan. Certain Relationships and severance provisions of the employment agreements with our named executive officers, please see above under “Narrative Disclosure to Summary Compensation Table.”
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONSRelated Person Transactions
We describe below the transactions and series of similar transactions, since January 1, 2016,2022, to which we were a party or will be a party, in which: which the amounts involved exceeded or will exceed $120,000;$120,000 (or, if less, 1% of the average of our total assets at year-end for the last two completed fiscal years), and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock holders or any member of their immediate family had or will have a direct or indirect material interest. Convertible Noteinterest, other than equity and Warrant Financing
Convertible Noteother compensation, termination, change in control and Warrant Financing. From 2010 through 2011, we sold to investors in private placements an aggregate of $3.0 million of convertible promissory notes, or the 2011 Notes, and 8,099,723 warrants to purchase shares of our Series G preferred redeemable convertible stock, or the 2011 Warrants. In June 2012, in accordance with the terms of the 2011 Notes, the principal and accrued interest balance totaling $7.1 million converted into 6,680,463 shares of our Series G preferred redeemable convertible stock at a conversion price of $1.04 per share. In May 2016, the 2011 Warrants were amended to provide for the automatic net exercise of the 2011 Warrants into shares of our common stock, and we issued an aggregate of 127,143 shares of our common stock in connection with such net exercise. The following table sets forth the aggregate number of 2011 Warrants and shares of common stock acquired by members of our board of directors and the holders of more than 5% of our capital stock or their affiliates.
Directors and 5% or Greater Stockholders(1) | | Series G Warrants | | | Number of Shares of Common Stock Issued Upon Net Exercise of Warrants | | GEN3 Capital I, LP | | | 3,177,265 | | | | 51,245 | | Arthur Toscanini | | | 57,692 | | | | 930 | |
(1)
| Additional details regarding these stockholders and their equity holdings are provided in “Security Ownership of Certain Beneficial Owners and Management” above.
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James K. Sims, Francis X. Egan and Arthur M. Toscanini, members of our board of directors,other arrangements, which are affiliated with GEN3 Capital.
Investors’ Rights Agreement
We entered into a fourth amended and restated investors’ rights agreement in May 2008 with the holders of our preferred stock, including entities with which certain of our directors are affiliated. This agreement provides for certain registration rights that will terminate three years following the closing of our initial public offering, or August 17, 2019, or for any particular holder with registration rights, at such time following this offering when such holder may sell all of such shares pursuant to Rule 144(b)(1)described under the Securities Act of 1933, as amended, or the Securities Act.
Participation in Offering
In December 2016, Northwater Intellectual Property Fund L.P. 1 and Mr. Myers sold 1,000,000 and 50,000 of shares of our common stock, respectively, in our public offering at the public offering price of $17.00 per share.
Director and “ ““Executive Officer Compensation
Please see “Proposal 1—Director Compensation” for additional information regarding compensation of our directors. Please see “Executive Compensation and Other Information” for additional information regarding compensationand “Proposal 1—Election of our executive officers.
Employment Agreements
We have entered into employment agreements with our executive officers. For more information regarding these agreements, see “Executive CompensationDirectors—Director Compensation” and Other Information—Narrative Disclosure to Summary Compensation Table—Employment Agreements.”above.
Indemnification Our amended and restated certificate of incorporation and our amended and restated bylaws provide that we will indemnify each of our directors and officers to the fullest extent permitted by the Delaware General Corporation Law. Further, we have entered into indemnification agreements with each of our directors and officers, and we have purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement, or payment of a judgment under certain circumstances. Stock Option Grants to Executive Officers and Directors
We have granted stock options to our executive officers and certain of our directors as more fully described in the section entitled “Executive Compensation and Other Information” and “Proposal 1—Director Compensation.”
Policies and Procedures Regarding Related Party Transactions Our board of directorsBoard has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related-person transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 (or, if less, 1% of the average of our total assets at year-end for the last two completed fiscal years) and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. All of the transactions described in this section occurred prior to the adoption of this policy.
SECTION 16(A) BENEFICIAL OWNSERSHIP REPORTING COMPLIANCEtockholder Proposals
Under Section 16(a) of the Exchange Act, directors, executive officers and beneficial owners of 10% or more of our common stock, or reporting persons, are required to report to the SEC on a timely basis the initiation of their status as a reporting person and any changes with respect to their beneficial ownership of our common stock. Based solely on our review of copies of such forms that we have received, or written representations from reporting persons, we believe that during the fiscal year ended December 31, 2016, all executive officers, directors and greater than 10% stockholders complied with all applicable filing requirements.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at our annual meeting of stockholders to be held in 20182025, including nominations of any person for election to our Board, must be received by us no later than December 29, 2017,January 1, 2025, which is 120 days prior to the firstone-year anniversary of the mailing date of thisthe proxy statement for the 2024 Annual Meeting, in order to be included in our proxy statement and form of proxy card relating to that meeting, unless the date of the 20182025 annual meeting of stockholders is changed by more than 30 days from the anniversary of our 2017 annual meeting,2024 Annual Meeting, in which case the deadline for such proposals will be a reasonable time before we begin to print and send our proxy materials. These proposals must comply with the requirements as to form and substance established by the SEC in Rule 14a-8 of the Exchange Act for such proposals in order to be included in the proxy statement. In addition, our amended and restated bylaws establish an advance notice procedure with regard to certain matters, including stockholder proposals and nominations of any person for election to our Board not included in our proxy statement, to be brought before an annual meeting of stockholders. In general, notice meetthat meets the requirements set forth in our amended and restated bylaws and must be received at our principal executive offices not less than 90 calendar days before nor more than 120 calendar days prior to the first anniversary of the
preceding year’s annual meeting. Therefore, to be presented at our 20182025 annual meeting of stockholders, such a proposal must be received by us no earlier than December 29, 2017February 12, 2025, and no later than January 28, 2018.March 14, 2025. However, if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice must be received notno earlier than the close of business on the 120th calendar day prior to such annual meeting and not later than the later of the close of business on the 90th calendar day prior to such annual meeting and the close of business on the tenth calendar day following the day on which public disclosure of the date of such annual meeting was first made. If the stockholder fails to give notice by these dates, then the persons named as proxies in the proxies solicited by the board of directorsBoard for the 20182025 annual meeting may exercise discretionary voting power regarding any such proposal. Stockholders are advised to review our amended and restated bylaws which also specify requirements as to the form and content of a stockholder’s notice. In addition to satisfying the foregoing requirements under our amended and restated bylaws, to comply with the universal proxy rules (once they become effective), shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 13, 2025. We intend to file a proxy statement and WHITE proxy card with the SEC in connection with our solicitation of proxies for our 2025 annual meeting. Stockholders may obtain our proxy statement (and any amendments and supplements thereto) and other documents as and when filed by the Company with the SEC without charge from the SEC’s website at: www.sec.gov. ANNUAL REPORT
Our Annual Report on Form 10-K forWe reserve the year ended December 31, 2016 will be mailedright to stockholdersreject, rule out of record onorder or about April 28, 2017. Our Annual Report on Form 10-Ktake other appropriate action with respect to any proposal that does not constitute, and should not be considered, a part of this proxy solicitation material.comply with these or other applicable requirements.
Annual Report Any person who was a beneficial owner of our common stock on the record date may request a copy of our 2023 Annual Report on Form 10-K for the year ended December 31, 2016, and it will be furnished without charge upon receipt of a written request identifying the person so requesting a report as a stockholder of our companyCompany at such date. Requests should be directed to Airgain, Inc., 3611 Valley Centre Drive, Suite 150, San Diego, CA 92130, Attention: Corporate Secretary.
STOCKHOLDERS SHARING You also may access this proxy statement and our 2023 Annual Report at THE SAME ADDRESSwww.proxydocs.com/AIRG. We make available free of charge on our website all of our filings that are made electronically with the SEC, including our 2023 Annual Report. These materials can be found in the “Investors—SEC Filings” section of our website at www.airgain.com.
Stockholders Sharing the Same Address The SEC’s rules promulgated by the SEC permit companies, brokers, banks or other intermediariesus to deliver a single copyInternet Notice or set of a proxy statement and annual reportmaterials to households at whichone address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Internet Notice or one set of proxy materials to multiple stockholders reside. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Stockholders sharingwho share an address, who have been previously notified by their broker, bankunless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or other intermediary and have consented to householding will receive only oneoral request, a separate copy of ourthe Internet Notice or proxy statement and annual report.materials, as requested, to any stockholder at the shared address to which a single copy of those documents was delivered. If you would likeprefer to opt out of this practice for future mailings and receive separate copies of the Internet Notice or proxy statements and annual reports for each stockholder sharing the same address, please contact your broker, bank or other intermediary. You may also obtain a separate proxy statement or annual report withoutmaterials, we will provide copies of these documents, free of charge, by sending aupon written request to Airgain, Inc., 3611 Valley Centre Drive, Suite 150, San Diego, CA 92130, 92130.
Attention: Corporate Secretary or by calling (760) 579-0200. We will promptly send additional copiesSuch requests by street name holders should be made through their bank, broker or other holder of the proxy statement or annual report upon receipt of such request.record. Stockholders sharing an address that are receiving multiple copies of the proxy statement or annual reportInternet Notice can request delivery of a single copy of the proxy statement or annual report or Internet Notice by contacting their broker, bank, or other intermediary or sending a written request to Airgain, Inc. at the address above or by calling (760) 579-0200. OTHER MATTERSOther Matters
We do not know of any business other than that described in this proxy statement that will be presented for consideration or action by the stockholders at the annual meeting.2024 Annual Meeting. If, however, any other business is properly brought before the meeting, shares represented by proxies will be voted in accordance with the best judgment of the persons named in the proxies or their substitutes. All stockholders are urged to vote their shares via the toll-free telephone number or over the Internet, as described in this proxy statement. If you received a copy of the proxy card by mail, we urge you to complete, sign, and return the accompanying proxy card in the enclosed envelope. | | | | | By Order of the Board of Directors, | | | | | | /s/ Charles MyersJames K. Sims | | | Charles MyersJames K. Sims
| | | President, Chief Executive Officer and DirectorChair of the Board of Directors
| | | | San Diego, California | | | April 25, 2024 | | |
San Diego, California
April 28, 2017ess you sign and return this card.
EVENT # CLIENT # PROXY TABULATOR FOR Airgain, INC. P.O. BOX 8016 CARY, NC 27512-9903 The undersigned hereby appoints Charles Myers and Leo Johnson, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Airgain, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1 AND FOR THE PROPOSALS IN ITEMS 2. All votes must be received by 5:00 P.M., Eastern Time, June 14, 2017. MAIL OR • Mark, sign and date your Proxy Card/Voting Instruction Form. • Detach your Proxy Card/Voting Instruction Form. • Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided. OR Go To www.proxypush.com/AIRG • Cast your vote online. • View Meeting Documents. • Use any touch-tone telephone. • Have your Proxy Card/Voting Instruction Form ready. • Follow the simple recorded instructions. 866-829-5171 INTERNET TELEPHONE VOTE BY: Annual Meeting of Airgain, Inc. to be held on Wednesday, June 15, 2017 for Holders as of April 18, 2017 This proxy is being solicited on behalf of the Board of Directors Please separate carefully at the perforation and return just this portion in the envelope provided. Date: June 15, 2017 Time: 9:00 A.M. (Local Time) Place: Offices of Latham and Watkins LLP, 12670 High Bluff, San Diego, CA. 92130 Annual Meeting of AIRGAIN, INC. Please Sign Here Please Date Above Please Sign Here Please Date Above Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. Authorized Signatures - This section must be completed for your Instructions to be executed. For 4: To transact such other business as may be For properly brought before the meeting or any adjournment or postponement thereof. 3: To consider and vote upon the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017; and 2: To elect two directors to serve as Class I directors for a three-year term to expire at the 2020 annual meeting of stockholders; For For For For Against Abstain Directors Recommend Withhold Please make your marks like this: Use dark black pencil or pen only 01 Charles Myers 02 James K. Sims Board of Directors Recommends a Vote FOR proposals 1 and 2. 1: Election of Class A and B Directors For Call
To attend the meeting and vote your shares in person, please mark this box. Proxy — Airgain, inc. Annual Meeting of Stockholders June 15, 2017, 9:00 a.m. (PST) This Proxy is Solicited on Behalf of the Board of Directors The undersigned appoints Charles Myers and Leo Johnson (the “Named Proxies”) and each of them as proxies for the undersigned, with full power of substitution, to vote the shares of common stock of Airgain, Inc., a Delaware corporation (“the Company”), the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the offices of Latham and Watkins LLP, 12670 High Bluff, San Diego, CA. 92130, on Thursday, June 15, 2017 at 9:00 a.m. (PST) and all adjournments thereof. The purpose of the Annual Meeting is to take action on the following: 1. To elect two directors to serve as Class I directors for a three-year term to expire at the 2020 annual meeting of stockholders; 2. To consider and vote upon the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017; and 3. To transact such other business as may be properly brought before the meeting or any adjournment or postponement thereof. The (Number) directors up for re-election are: Charles Myers and James K. Sims. The Board of Directors of the Company recommends a vote “FOR” all nominees for director and “FOR” each proposal. This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted “FOR” all nominees for director and “FOR” each proposal. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the Annual Meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign and return this card. Please separate carefully at the perforation and return just this portion in the envelope provided.
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