SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
the Securities Exchange Act of 1934
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☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to § 240.14a-12 |
PCTEL, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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A LETTER FROM OUR CEO
Dear Fellow Stockholders,
I would like to thank you for your investment in PCTEL and I hope this letter finds you safe and healthy. We appreciate your confidence in our business, and we look forward to delivering on our objectives and driving growth as the global economy improves through 2021.
The coronavirus pandemic created wide-ranging social and economic impacts in 2020. Reduced real time interaction, work from home initiatives, and limited access to industrial infrastructure reinforced the importance of reliable wireless connectivity and automation. Our wireless technologies and products are needed more than ever as our customers transition to remote monitoring, analytics and control solutions facilitated by wireless and industrial IoT applications.
Our first priority early in 2020 was to keep our employees safe during the pandemic. We quickly implemented work from home programs, added safety equipment, and updated our policies to support our onsite employees. Our second priority was to keep in close contact with our customers and suppliers to limit potential disruptions. The organization responded quickly and we were able to keep our factories operational, manage supply chains and meet customers’ needs.
By protecting our workforce and working closely with customers, we were able to continue development of important products, including our industry-leading 5G scanning receivers and industrial IoT (IIoT) products. The demand for our 5G test and measurement tools for both legacy frequency ranges and mmWave bands remained strong across North America and Northeast Asia, including China, Korea, Japan and Taiwan. We won significant bids for antennas with integrated electronics and we introduced our IIoT devices, including access points, interface cards and wireless sensors, to existing and new customers for integration into their solutions.
Despite our progress during the pandemic, it extended the development cycle for our antenna products and created challenges in supply chains and shipping which impacted our financial results. Although our 2020 financial performance did not meet our expectations, the underlying need for reliable wireless connectivity across our target markets remains strong. We continue to execute our strategies to develop IIoT connectivity solutions, develop antenna systems with more active electronics and deploy leading 5G test and measurement systems globally. As general economic conditions improve in 2021, we believe that we are well-positioned to address the complex RF challenges of wireless connectivity to grow the business and create value for all shareholders.
Your vote is important. Whether or not you plan on attending the annual meeting virtually, we encourage you to vote your shares to make certain that you are represented at the meeting.
Sincerely, |
David A. Neumann |
Chief Executive Officer |
Bloomingdale, IL
April 12, 2021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 26, 2021
11:00 a.m. Central Time
To Our Stockholders:
The 20162021 annual meeting of stockholders of PCTEL, Inc., a Delaware corporation, will be held on Tuesday, June 14, 2016Wednesday, May 26, 2021 at 4:30 p.m. local time at Millennium Broadway Hotel, 145 West 44th Street, New York, New York 1003611:00 a.m. Central Time virtually via live audiocast, for the following purposes:
2. A non-binding, advisory vote to approve the Company’s named executive officer compensation;
3. The ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and 4. The transaction of such other business as may properly come before the meeting or any adjournment or postponement thereof. |
The foregoing items of business are more fully described in the proxy statement accompanying this notice. Only stockholders of record at the close of business on April 20, 2016March 29, 2021 are entitled to notice of, and to vote at, the meeting.
Pursuant to the rules promulgated by the Securities and Exchange Commission, we have elected to provide access to our proxy materials over the Internet. Accordingly, we will mail, on or about May 4, 2016, a Notice of Internet Availability of Proxy Materials to our stockholders of record and beneficial owners at the close of business on April 20, 2016. On the date of mailing of the Notice of Internet Availability of Proxy Materials, all stockholders and beneficial owners will have the ability to access all of the proxy materials on a website referred to in the Notice of Internet Availability of Proxy Materials. These proxy materials will be available free of charge.
Your participation in the annual meeting is important. You can vote by telephone, Internet or, if you request that proxy materials be mailed to you, by completing and signing the proxy card enclosed with those materials and returning it in the envelope provided. If you wish to attend the annual meeting in person, you must bring evidencevirtually, instructions for doing so via the Internet, including how to demonstrate proof of yourstock ownership, asare posted at www.virtualshareholdermeeting.com/PCTI2021. Stockholders may vote and submit questions while attending the annual meeting virtually via the Internet.
A list of April 20, 2016, or a valid proxy showing that you are representing a shareholder.
All stockholders are cordially invitedentitled to attend the meeting in person. However, to assure your representationvote at the meeting you are urgedwill be available for examination by any stockholder for any purpose relevant to deliver your proxy by telephone or the Internet or to mark, sign, date and return the proxy card as promptly as possible. Any stockholder attending the meeting may votefor at least ten days prior to May 26, 2021. Please e-mail company.secretary@pctel.com if you wish to examine the stockholder list prior to the virtual annual meeting. The stockholder list will be available in person, even if he or she has previously returned a proxy.electronic form during the annual meeting online at www.virtualshareholdermeeting.com/PCTI2021.
Sincerely, | |
Senior Vice President, Chief and |
Bloomingdale, IL
May 4, 2016April 12, 2021
YOUR VOTE IS IMPORTANT. |
PLEASE SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE BY FOLLOWING THE INSTRUCTIONS LOCATED ON THE NOTICE AVAILABILITY OF PROXY MATERIALS OR THE PROXY CARD. |
Important Notice Regarding the Availability of Proxy Materials for the |
PCTEL, INC.
471 Brighton Drive
Bloomingdale, Illinois 60108 TABLE OF CONTENTS
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DISCRETIONARY VOTING AUTHORITY
PCTEL, INC.
PROXY STATEMENT FOR THE
2021 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors of PCTEL, Inc. is soliciting proxies for the 20162021 annual meeting of stockholders. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the annual meeting. Please read it carefully.
Our Board of Directors has set April 20, 2016March 29, 2021 as the record date for the meeting.annual meeting (the “Record Date”). Stockholders of record at the close of business on April 20, 2016the Record Date are entitled to attend and vote at and attend the annual meeting, with each share entitled to one vote. There were 17,264,58618,518,515 shares of our common stock outstanding on the record date. On the record date, theRecord Date. The closing price of our common stock on the NASDAQNasdaq Global Select Global Market on the Record Date was $4.65$7.25 per share.
This proxy statement is being made available on or about May 4, 2016April 12, 2021 to stockholders entitled to vote at the annual meeting.
In this proxy statement:
“We,” “Company”“Company,” “our,” and “PCTEL” each means PCTEL, Inc.
If you hold shares in “street name,” it means that your shares are held in an account at a brokerage firm, bank, broker dealer or other similar organization and record ownership is not in your name.
“SEC” means the Securities and Exchange Commission.
“Beneficial ownership” of stock is defined under various SEC rules in different ways for different purposes, but it generally means that, although you (or the person or entity in question) do not hold the shares of record in your name, you do have investment or voting control, and/or an economic or “pecuniary” interest, in the shares through an agreement relationship or the like.relationship.
Q: | When and where is the |
A: | Our annual meeting |
Q: | How do I attend the annual meeting? |
A: | You may virtually attend and participate in the annual meeting, including submitting questions and voting shares, if you were a PCTEL stockholder as of the close of business on the Record Date or you hold a valid proxy from such a stockholder for the annual meeting. You may also attend the annual meeting as a guest; however, guests at the annual meeting will be in “listen only” mode and will not be able to submit questions or vote shares. Instructions for attending the meeting via the Internet, including how to demonstrate proof of stock ownership, vote, and ask questions, are posted at www.virtualshareholdermeeting.com/PCTI2021. You will need the 16-digit control number indicated on the Notice Regarding the Availability of Proxy Materials (the “Notice of Availability”) in order to participate in the annual meeting and submit questions or vote shares. You will not be able to attend the annual meeting in person. |
Q: | How will the annual meeting be conducted? |
A: | The annual meeting will be conducted entirely virtually through the Internet with audio participation only. Our directors, relevant executive officers and representatives of our auditors will attend the meeting and be |
available for questions. If you were a PCTEL stockholder as of the close of business on the Record Date or you hold a valid proxy from such a stockholder, you will be able to attend the meeting online, vote your shares electronically, and submit questions electronically during the meeting. In addition, you may submit questions electronically in advance of the annual meeting until 11:59 p.m. Eastern Time on May 25, 2021 through http://www.proxyvote.com after logging in with your 16-digit control number indicated on the Notice of Availability. |
Q: | Why did I receive a “Notice Regarding the Availability of Proxy Materials”? |
A: | We are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. By doing so, we save costs and reduce the environmental impact of our annual meeting. On or about |
Q: | How do I request paper copies of the proxy materials? |
A: | You may request, free of charge, paper copies of the proxy materials for the annual meeting by following the instructions listed on the Notice of Availability. In addition, we will provide you, free of charge, a copy of our Annual Report on Form 10-K, upon written request sent to PCTEL, Inc., 471 Brighton Drive, Bloomingdale, Illinois 60108, Attention: |
Q: | What information is included in this proxy statement? |
A: | This proxy statement describes issues on which we would like you, as a stockholder, to vote. It |
Q: | How do proxies work? |
A: | The Board of Directors is requesting your proxy. Giving your proxy means that you authorize each of the persons named as proxies therein |
Q: | What is the difference between holding shares as a beneficial owner in street name and as a stockholder of record? |
A: | If your shares are held in street name through a broker, bank, trustee or other nominee, you are considered the beneficial owner of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee how to vote your shares. A beneficial owner may also attend the annual meeting and vote by following the instructions for attending the annual meeting via the Internet, including how to demonstrate proof of stock ownership, posted at www.virtualshareholdermeeting.com/PCTI2021. See also the answers to “How do I attend the annual meeting?” above and “How do I vote?” below. |
If your shares are registered directly in your name, you are considered to be a stockholder of record with respect to those shares. As a stockholder of record, you have the right to grant your voting proxy directly to persons designated by the Company (as specified in the answer to the immediately preceding question) or to a third party. You may also attend the annual meeting and vote by following the instructions for attending the meeting via the Internet, including how to demonstrate proof of stock ownership, posted at the Internet site listed in the preceding paragraph. See also the answers to “How do I attend the annual meeting?” above and “How do I vote?” below.
Q: | What am I voting on? |
A: |
You are being asked to vote on the following proposals: |
The election of the two Class III director nominees named in this proxy statement to serve as directors for three-year terms that will expire at the 20192024 annual meeting of stockholders (Proposal #1);
A non-binding, advisory vote to approve the Company’s named executive officer compensation (Proposal #2); and
The ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20162021 (Proposal #3).
Q: | How do I vote? |
A: | If you are a stockholder of record, you may vote by proxy or |
If you hold your shares in street name, you should follow the voting instructions provided to you by the organization that holds your shares.
A beneficial owner may also attend the annual meeting and vote. Instructions for attending the annual meeting via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/PCTI2021.
Q: |
What does it mean if I receive more than one Notice of Availability or set of proxy materials? |
A: | You may receive more than one Notice of Availability or more than one paper copy of the proxy materials, depending on how you hold your shares. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice of Availability or a separate set of proxy materials for each brokerage account in which you hold your shares. To vote all of your shares by proxy, you must vote at the Internet site address listed on the |
Q: | What if I change my mind after I return my proxy? |
A: | You may revoke your proxy (that is, cancel it) and change your vote |
Voting in person at the meeting; or
Voting again via the Internet or by telephonetelephone. Telephone and Internet voting facilities will close at 11:59 p.m. Eastern time on a date after the date on your proxy (your latest proxy is counted).May 25, 2021.
Q: |
| What is a “broker non-vote”? |
A: | Under the rules that govern brokers who have record ownership of shares that are held in |
Q: |
| How are broker non-votes counted? |
A: | Broker non-votes are counted for the purpose of determining the presence or absence of a quorum but are not counted for determining the number of votes cast |
Q: | Will my shares be voted if I do not submit a proxy? |
A: | Stockholders of record —If you are a stockholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the annual meeting. |
Beneficial owners — If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of directors (Proposal #1), and the non-binding, advisory vote to approve the Company’s named executive officer compensation (Proposal #2), both of which are considered “non-routine” matters. If you do not provide specific voting instructions, the broker, trustee or nominee that holds your shares cannot vote on these non-routine matters. The broker, trustee or nominee that holds your shares will, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of our independent registered public accounting firm (Proposal #3), which is considered a routine matter.
Q: |
How many votes can be cast at the meeting? |
A: | As of the |
Q: | What is a “quorum”? |
A: | A “quorum” is the number of shares that must be present |
common stock outstanding on the |
Q: | What is the required vote for each of the proposals to pass? |
A: | The required vote and effect of broker non-votes and abstentions are as follows: |
Proposal | Voting Options | Vote Required to Adopt | Effect of Broker | Effect of Abstentions | ||||
#1 Election of | FOR ALL, WITHHOLD ALL or FOR ALL EXCEPT | A plurality of the common stock present or represented by proxy and entitled to vote |
N/A | ||||||||
#2 Non-binding advisory vote to approve the | FOR, AGAINST or ABSTAIN | Affirmative vote |
Treated as votes against | ||||||||
#3 Ratification of the appointment of | FOR, AGAINST or ABSTAIN | Affirmative vote | No effect | Treated as |
Q: | Who is soliciting my vote? |
A: | The Board of Directors is making this proxy solicitation and PCTEL will bear the entire cost of it, including the preparation, assembly, printing, posting and mailing of proxy materials. PCTEL may reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding these proxy materials to you. PCTEL expects Broadridge Financial Solutions, Inc. to tabulate the |
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS AND NOMINATIONS FOR
Deadline for Receipt of Stockholder Proposals and Nominations for 2017 Annual Meeting of Stockholders
2022 ANNUAL MEETING OF STOCKHOLDERS
Stockholders are entitled to present proposals for action and director nominations at the 20172022 annual meeting of stockholders only if they comply with applicable requirements of the proxy rules established by the SEC and the applicable provisions of our bylaws. Stockholders must ensure that such proposals and nominations are received by our CorporateCompany Secretary at the following address: 471 Brighton Drive, Bloomingdale, Illinois 60108, Attention: John W. Schoen, CorporateShelley J. Bacastow, Company Secretary, on or prior to the deadline for receiving such proposals and nominations.
Proposals for the 20172022 annual meeting of stockholders that are intended to be considered for inclusion in the proxy statement and form of proxy relating to such meeting must be received no later than January 4, 2017,December 13, 2021 and must comply with the procedures of Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”) and the provisions of our bylaws.
If a stockholder intends to submit a proposal or director nomination for consideration at our 20172022 annual meeting of stockholders outside the procedures of Rule 14a-8 under the Exchange Act, the stockholder must comply with the requirements of our bylaws. We are not currently required to include such a proposal or nomination in the proxy statement and form of proxy relating to such meeting. Our bylaws contain an advance notice provision that requires stockholders to submit a written notice containing certain information not less than 120 days prior to the first anniversary of the date of our proxy statement for the previous year’s annual meeting of stockholders. For purposes of the 20172022 annual meeting of stockholders, this means that such proposals or nominations must also be received by January 4, 2017.December 13, 2021. A copy of the relevant bylaw provision is available upon written request to our CorporateCompany Secretary at the address provided above.
Discretionary Voting Authority
DISCRETIONARY VOTING AUTHORITY
The accompanying proxy card grants the proxy holders discretionary authority to vote onupon any business raisedother matter properly presented at the annual meeting. If you failmeeting, or any postponement or adjournment thereof, and they may name others to comply withtake their place. In the advance notice provisions set forth above in submittingevent that any of the nominees is unable or declines to serve as a proposal or nomination fordirector at the 2017time of the annual meeting, of stockholders, the proxy holdersproxies will be allowedvoted for any nominee who shall be designated by the present Board of Directors to use their discretionary voting authority if such a proposal or nomination is raised at that meeting.fill the vacancy.
The Board of Directors has included three proposals on the agenda for our 20162021 annual meeting of stockholders. The following is a brief summary of the matters to be considered and voted upon by the stockholders.
Proposal #1: Election of Directors
The Company has a classified Board of Directors. Each director serves a three-year term. The first proposal on the agenda for the annual meeting is the election of two Class III directors to serve until the 20192024 annual meeting of stockholders. The Board of Directors has nominated Gina HaspilaireCindy K. Andreotti and M. Jay SinderCynthia A. Keith to serve as the Class III directors. The Company has three classes of directors with staggered three-year terms. Additional information about the election of directors and a biography of each nominee begins on page 6.8. Additional information about the Company’s corporate governance practices begins on page 18.
The Board of Directors recommends athat stockholders vote “FOR” the election of each of the twoClass I director nominees.
Proposal #2:Non-binding Advisory Vote to Approve the Company’s Named Executive Officer Compensation(“Say-on-Pay”)
The Companysecond proposal on the agenda for the annual meeting is providing its stockholders with the opportunity to cast a non-binding advisory vote on the Company’s proposed compensation for its named executive officers, as described in this proxy statement, in accordance with SEC rules.statement. The Company’s overall philosophy is to offer competitive compensation opportunities that enable the Company to attract, motivate and retain highly experiencedhighly-experienced executive officers who will provide leadership for the Company’s success and enhance stockholder value. The Company believes that its compensation for named executive officers, which includes short-term and long-term elements, fulfills this goal and is closely aligned with the long-term interests of its stockholders. More information about this proposal begins on page 10.14.
The Board of Directors recommends athat stockholders vote “FOR” approval of the Company’s named executive officer compensation.
Named Executive Officer Compensation.
Proposal #3: Ratification of the appointmentAppointment of theour Independent Registered Public Accounting Firm
The third proposal on the agenda for the annual meeting is the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016.2021. More information about this proposal begins on page 11.15.
The Board of Directors recommends athat stockholders vote “FOR” the ratification of the appointment
of Grant Thornton LLP as the Company’s independent registered public accounting firm.
Other Matters
Other than the proposals listed above, the Board of Directors does not currently intend to present any other matters to be voted on at the meeting. The Board of Directors is not currently aware of any other matters that will be presented by others for action at the meeting. However, if other matters are properly presented at the meeting and you have signed and returned your proxy card or votedsubmitted proxy voting instructions on the Internet or by telephone, the proxies will have discretion to vote your shares on these matters to the extent authorized under the Exchange Act.
ELECTION OF DIRECTORS
Classification of Board of Directors
PCTEL has a classified Board of Directors, currently consisting of three classes. At each annual meeting of stockholders, one classclasses of directors is elected for a term of three years to succeed thoseserve staggered three-year terms. There are currently two Class I directors whose terms expire on theare expiring at this 2021 annual meeting, date. There are currently threetwo Class III directors whose terms will expire at the 2018 annual stockholder meeting, two Class II directors whose terms are expiring at this 2016 stockholder2022 annual meeting, and three Class III directors whose terms are expiringwill expire at the 20172023 annual stockholdermeeting.
Nominees
The Board of Directors has nominated current Class I directors Cindy K. Andreotti and Cynthia A. Keith for election at this 2021 annual meeting. In order to create continuity onMs. Andreotti joined the Board of Directors in anticipation2013 and currently serves as Chairman of a planned retirement at this 2016 annual meeting of Carl Thomsen, who has servedthe Nominating and Governance Committee and as a Class II director since 2001, in November 2015member of the number of directors was expanded to eight andCompensation Committee. Ms. Keithjoined the Board of Directors appointed Ms. Gina Haspilairein 2018 and currently serves as the third Class I director. The Board has nominated Ms. Haspilaire to fill the Class II vacancy. The result of her nomination is to change Ms. Haspilaire from a Class I director to a Class II director, to reduce the number of directors from eight to seven, and to return the configurationmember of the Board to two directors in Classes IAudit and IINominating and three directors in Class III. The nominees for Class II directors are indicated in the section “Nominees” immediately below.
Nominees
On the recommendation of the Board of Directors,Governance Committees. Information about the nominees for election at the 2016 annual meeting of stockholders as Class II directors are Gina Haspilaire and M. Jay Sinder whose biographies areis set forth below in “Directors“Board Composition, Experience and Nominees” below.Diversity.” If elected, each of the nominees will continue as a director until the expiration of theher three-year term at the annual meeting of stockholders in 2019.
2024 and until a successor is duly elected and qualified, or until her earlier resignation, removal or death.
The proxy holders may not vote the proxies for a greater number of persons than the number of nominees named.named in this Proxy Statement. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the two Class III director nominees. In the event that either of the nominees is unable or declines to serve as a director at the time of the annual meeting, the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill the vacancy. We are not aware of any nominee who will be unable or will decline to serve as a director.
Board Composition, Experience and Diversity
The Nominating and Governance Committee has sought diversity in Board members’ skill sets, business experience, financial and accounting experience, educational achievements, potential contributions, gender, race and ethnicity with a goal of bringing diverse business experience, knowledge and perspectives to the Board of Directors. The Company believes diversity on the Board of Directors better reflects the diversity of the Company’s employees, customers and other stakeholders, and promotes improved employee recruiting and retention. The Board is currently comprised of three women and four men. The Board members also have diverse business experience and areas in which they contribute expertise as indicated in the chart below.
Board of Directors
Composition, Experience and Diversity
Class I | Class II | Class III | ||||||||||||||||||||||||||
Cindy K. Andreotti | Cynthia A. Keith | Gina Haspilaire | M. Jay Sinder | Steven D. Levy | Giacomo Marini | David A. Neumann | ||||||||||||||||||||||
Skills & Experience | ||||||||||||||||||||||||||||
Audit/Finance Expertise | ● | ● | ||||||||||||||||||||||||||
Corporate Governance/Public Company Management | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
Human Resource Management | ● | ● | ● | ● | ||||||||||||||||||||||||
Mergers & Acquisitions | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
Operations/Supply Chain Management | ● | ● | ● | |||||||||||||||||||||||||
P&L Responsibility | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||
Risk Management | ● | ● | ● | |||||||||||||||||||||||||
Sales/Marketing/Product Management | ● | ● | ● | ● | ● | |||||||||||||||||||||||
Strategic Planning | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
Telecommunications Industry Experience | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||
Demographic Information | ||||||||||||||||||||||||||||
Age | 65 | 64 | 58 | 54 | 64 | 69 | 55 | |||||||||||||||||||||
Gender | ||||||||||||||||||||||||||||
Female | ● | ● | ● | |||||||||||||||||||||||||
Male | ● | ● | ● | ● | ||||||||||||||||||||||||
Race/Ethnicity | ||||||||||||||||||||||||||||
American Indian/Alaskan Native | ||||||||||||||||||||||||||||
Asian | ||||||||||||||||||||||||||||
Black/African American | ● | |||||||||||||||||||||||||||
Hispanic/Latino | ||||||||||||||||||||||||||||
Native Hawaiian/other Pacific Islander | ||||||||||||||||||||||||||||
White | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
Joined Board | 2013 | 2018 | 2015 | 2014 | 2006 | 1996 | 2017 |
The following sets forth biographical information as to the business experience and directorships of each of the nominees for Class I of our Board of Directors and each of our directors for the past five years.
Nominees for Class I Directors | ||
Name and Position | Background Information | |
Cindy K. Andreotti Independent Director | • President and Chief Executive Officer of The Andreotti Group, a strategic business advisory firm, since 2005 • Enjoyed a 26-year career in the telecommunications industry (12 years with AT&T Inc. and 14 years with MCI Telecommunications Inc.) • Served on the Board of Directors of APAC Customer Services, Inc., a public company providing customer interactive solutions, from 2005 to 2011 • Serves on the board of several private companies and charitable organizations • Bachelor of Arts degree in Business Administration and Women in Management from the College of St. Catherine | |
Discussion of individual experience, qualifications, attributes, and skills | Ms. Andreotti’s industry experience in telecommunications sales, marketing, operations and management qualify her to serve on the Company’s Board of Directors, as Chair of the Nominating and Governance Committee and as a member of the Compensation Committee. | |
Cynthia A. Keith Independent Director | • 25-year career with PricewaterhouseCoopers, LLP (“PwC”), the world’s largest multinational professional services firm, and became a partner in 2000 • Specialized in audits of and consulting with technology and communications clients, including global public companies focused on mergers and acquisitions as well as companies in various stages of growth • Has served on the Board of Directors of City Bank of Texas since 2016 and the Board of Directors of South Plains Financial (SPFI), the public holding company of City Bank of Texas, since January 2019 • Serves on boards of several charitable organizations supporting entrepreneurial and educational causes • Bachelor of Science in Business Administration with a concentration in Accounting from University of Texas at Dallas • Certified Public Accountant in the State of Texas | |
Discussion of individual experience, qualifications, attributes, and skills | The depth and breadth of Ms. Keith’s 25 years of experience as a CPA serving technology and communications companies, as well as her leadership positions with PwC, qualify her to serve on the Company’s Board of Directors and as a member of the Audit and Nominating and Governance Committees. |
Class II Directors | ||
Name and Position | Background Information | |
Gina Haspilaire Independent Director | • Joined Netflix, Inc., a media-services provider and production company, in October 2019 as Vice President of Open Connect Partnerships and Planning and leads the worldwide operator partnerships and infrastructure strategy and planning • Served as Chief Human Resources Officer of Reliance Communications (Enterprise) and Global Cloud Xchange, a global data communications service provider and led the company’s global human resources, facilities management, and sales operations from January 2015 to September 2019 • Previously held executive positions at Henkel Adhesive Technologies, a leading solution provider for adhesives, sealants and functional coatings, Pacnet Limited, a global telecommunications service provider, and Heidrick & Struggles, an executive search firm • Served on advisory boards of several companies and organizations • Bachelor of Science degree in Mathematics/Computer Science from St. John’s University in New York and MBA from Columbia University | |
Discussion of individual experience, qualifications, attributes, and skills | Ms. Haspilaire’s telecommunications services experience in general management, global strategy, business development, sales and marketing, human resources and customer service, together with her manufacturing sector experience, qualify her to serve on the Company’s Board of Directors, as Chair of the Compensation Committee and as a member of the Nominating and Governance Committee. | |
M. Jay Sinder Independent Director | • Chief Financial Officer of DialogTech, Inc, a marketing analytics company that enables companies to optimize their inbound phone calls, since July 2020 • General Manager of Verint ForeSee (Nasdaq: VRNT), a voice of customer SaaS company, from December 2018 to January 2020, as Chief Executive Officer of ForeSee Results, Inc. from November 2018 to December 2018 when the company was purchased by Verint Systems Inc., and as its Chief Financial Officer from August 2017 through November 2018 • Chief Financial Officer of ByteGrid Holdings LLC, a data center and managed services company, from July 2015 through July 2017 • Previously served as a consultant to various start-up and venture capital-backed software companies and in executive and financial positions for various companies, including as Chief Executive Officer, Chief Financial Officer, Treasurer, and Vice President of Corporate Development • Serves on the Board of Directors of Contec Ltd. and has previously served on the boards of several other private companies • Bachelor of Science degree from the University of Michigan and a Master’s degree in Business Administration from the University of Chicago Booth School of Business |
Discussion of individual experience, qualifications, attributes, and skills | Mr. Sinder’s financial knowledge and expertise, and his experience serving in a variety of senior executive and financial positions at various companies, qualify Mr. Sinder to serve on the Company’s Board of Directors and as Chair of the Audit Committee. | |
Class III Directors | ||
Name and Position | Background Information | |
Steven D. Levy Independent Director | • Chairman of the Board of the Company since 2017 • Managing Director and Global Head of Communications Technology Research at Lehman Brothers from 1998 to 2005 • Previously served in management positions related to telecommunications research and analysis for Salomon Brothers, Oppenheimer & Co. and Hambrecht & Quist • Has served on the Board of Directors of Allot Communications, an Israeli public company providing network intelligence and security solutions, since 2007, and of Edison Properties, a privately held real estate company since 2015 • Previously served on the boards of several other private companies, including technology companies • Master’s degree in Business Administration and a Bachelor of Science degree in Materials Engineering from Rensselaer Polytechnic Institute | |
Discussion of individual experience, qualifications, attributes, and skills | Mr. Levy’s investment banking experience related to the telecommunications industry, extensive experience analyzing business strategies and financial results, and knowledge of financial markets and competitive data analysis qualify him to serve on the Company’s Board of Directors, as the Chairman of the Board of Directors and as a member of the Audit Committee. | |
Giacomo Marini Independent Director | • Chairman and Managing Director of Noventi LLC, a Silicon Valley-based technology investment firm, since he founded the firm in 2002 • Chairman and Chief Executive Officer of Neato Robotics, a home robotics company, from February 2013 to December 2017 • Previously served as Chief Executive Officer of FutureTel and of No Hands Software • Co-founder, former board member and former Chief Operating Officer of Logitech, a personal computer peripherals company • Has served on the Board of Directors of NextLabs, Inc. since July 2018 • Served as Chairman of Velomat S.r.l. from 2012 to 2020 and previously served on the board of directors of several other technology companies • Served on the Board of Trustees of the University of California at Davis Foundation from 2014 to 2020 • Computer Science “Laurea” degree from the University of Pisa, Italy | |
Discussion of individual experience, qualifications, attributes, and skills | Mr. Marini’s experience with a wide variety of business situations as a Chief Executive Officer and in other senior management roles, as well as an active board member and investor, qualify him to serve on the Company’s Board of Directors and as a member of the Compensation Committee. |
David Neumann Chief Executive Officer Director | • Chief Executive Officer and Board member of the Company since January 2017 • Senior Vice President and General Manager of the RF Solutions segment of the Company from 2015 to 2016, and other management positions related to the Company’s test and measurement product line from 2009 • Previously held leadership roles in engineering services, product management and/or sales at E-magine Communications, LLC, X-TEL Communications, Inc., Acterna, Intelinet, Inc. and SAFCO Technologies, Inc. • Bachelor of Science degree in Electrical Engineering from The Pennsylvania State University and a Master’s degree in Business Administration from the University of Chicago Booth School of Business | |
Discussion of individual experience, qualifications, attributes, and skills | Mr. Neumann’s roles with the Company, including as Chief Executive Officer, his extensive experience in leadership, sales and marketing roles with other companies, as well as his education in electrical engineering and business administration qualify him to serve on the Company’s Board of Directors and as the Company’s Chief Executive Officer. |
Vote Required and Board of Director’s Recommendation
If a quorum is present and voting, the two nominees receiving the highest number of votes will be elected to the Board of Directors. Abstentions and “broker non-votes” are not counted in the election of directors.
The Board of Directors has approved the director nominees and recommends
that stockholders vote “FOR” the election of each of the Class I director nominees listed above.
Directors and Nominees
The following table sets forth certain information regarding the current directors and director nominees to be elected at the 2016 annual meeting of stockholders:
Name | Age | Position with PCTEL | Since | |||
Class I directors whose terms will expire at the 2018 annual meeting of stockholders: | ||||||
Cindy K. Andreotti | 60 | Director | 2013 | |||
Brian J. Jackman | 75 | Director | 2002 | |||
Class II director nominees to be elected at the 2016 annual meeting of stockholders whose terms will expire at the 2019 annual meeting of stockholders: | ||||||
Gina Haspilaire | 53 | Director/Nominee | 2015 | |||
M. Jay Sinder | 49 | Director/Nominee | 2014 | |||
Class III director nominees whose terms will expire at the 2017 annual meeting of stockholders: | ||||||
Steven D. Levy | 59 | Director | 2006 | |||
Giacomo Marini | 64 | Director | 1996 | |||
Martin H. Singer | 64 | Chief Executive Officer, Chairman of the Board | 1999 |
Class I Directors
Ms. Andreottibecame a director in 2013. She is the President and Chief Executive Officer of The Andreotti Group LLC, a strategic business advisory firm serving domestic and global enterprise clients, private equity and institutional firms and international investment groups. Prior to launching The Andreotti Group in 2005, Ms. Andreotti enjoyed a 26-year career in the telecommunications industry (12 years with AT&T Inc. and 14 years with MCI Telecommunications Inc.). While at MCI, Ms. Andreotti managed a $14 billion operation. In her last leadership role at MCI, she served as President, Enterprise Markets, which included the Global Accounts Segment, Government Markets, the Conferencing Business Unit and MCI Solutions (the managed services division of MCI). Before joining MCI, Ms. Andreotti managed national accounts at AT&T, most notably Dayton-Hudson Corporation (currently Target Corporation). She delivered the first-touch sensitive personal digital assistants or PDAs with related back office systems and network into Dayton Hudson’s retail operation. Ms. Andreotti has served as Vice Chairman of the Japan American Society since 2007, a member of the Board of Trustees for the Americans in Wartime Museum since 2010, a member of the Board of Directors for the Community Foundation for Northern Virginia since November 2014, and a Senior Advisor and Executive Coach for WJM Associates, Inc. since 2009. Ms. Andreotti is also a past member of the Board of Directors for DiaXsys Inc., where she served on the Audit and Compensation Committees between 2011 and 2014, and a past member of the Board of Directors for APAC Customer Services, Inc., where she served as chair of the Compensation Committee and served on the Audit and Nominating and Corporate Governance Committees between 2005 and 2011. She also served on the Audit Committee of the Board of Directors of Rivermine Software Inc. between 2006 and 2011. Ms. Andreotti earned a Bachelor of Arts degree in Business Administration and Women in Management from the College of St. Catherine. She has also attended executive management training at the Aspen Institute, the Menninger Foundation and the Stanford School of Business Executive Leadership Program. Ms. Andreotti’s industry experience in telecommunications sales, marketing, operations and management qualify her to serve on the Company’s Board of Directors.
Mr. Jackmanhas been a director since February 2002. He is currently the President of The Jackman Group, Inc., a management consulting company that he formed in 2005. In September 2001, Mr. Jackman retired from Tellabs Inc., a communications company he had been with since 1982. Mr. Jackman served as President, Global Systems and Technology, and Executive Vice President of Tellabs since 1998 and as President of Tellabs Operations from 1993 to 1998. Between 1965 and 1982, Mr. Jackman held various management positions in sales and marketing for IBM. Commencing in January 2003, he joined the Board of Directors of Open Text, Inc., an enterprise content management solutions company, where he currently serves on the Compensation Committee. Commencing in January 2005 through December 2010, Mr. Jackman served on the Board of Directors of Keithley Instruments Inc., a test and measurement equipment company. In total, Mr. Jackman has served on the boards of eight companies in the technology sector. In addition, Mr. Jackman served on the Board of Trustees of Gannon University in Erie, Pennsylvania from May 2001 to May2010. Mr. Jackman holds a Bachelor of Arts degree in English Literature from Gannon University and a Master’s degree in Business Administration from Pennsylvania State University. Mr. Jackman’s specific experience with a test and measurement equipment company as well as his extensive experience in sales, marketing and management functions with telecommunications and high tech companies, and his current and prior service on the board of directors of other companies, make him qualified to serve on the Company’s Board of Directors and as the Lead Independent Director.
Class II Directors/Nominees
Ms. Haspilairewas appointed to serve as a Class I member of the Board of Directors in November 2015, and has been nominated for election at the 2016 Annual Meeting of Shareholders to serve as a Class II member of the Board of Directors. Since January 2015, she has served as Chief Human Resources Officer of Reliance Communications Ltd. (Enterprise) and Global Cloud Xchange, a global data communications service provider, and is responsible for human resources, corporate affairs and facilities management. Prior to that, she was Vice President of Sales for the Americas at Henkel Adhesive Technologies, a division of Henkel AG & Co. KGaA and a leading solution provider for adhesives, sealants and functional coatings worldwide. Between 2002 and 2013, she served as Vice President and Managing Director at Pacnet Limited, a global telecommunications service provider. Ms. Haspilaire has more than 25 years of experience in general management, global strategy, business development, investor relations, sales and marketing, human resources and customer service. She has held executive and leadership positions at Heidrick & Struggles and AT&T. Since 1999, she has served as an Advisory Board Member for PearlNet, Inc. Between 2011 and 2013, she also served on the Service Provider Advisory Board of Telx. Also, since 2010 she has been a Board Member and Chair of NANOG (North American Network Operators Group) Development Team. In 2011, Ms. Haspilaire served on the Advisory Board of SoHo Colo. She earned a Master’s degree in Business Administration from Columbia University and a Bachelor of Science degree in Mathematics/Computer Science from St. John’s University in New York. Ms. Haspilaire’s telecommunications experience in sales, marketing and management functions with extensive operational experience and industry contacts qualify her to serve on the Company’s Board of Directors.NON-BINDING
Mr. Sinderhas been a director since December 2014. Mr. Sinder is a telecommunications industry veteran with executive and financial experience at both public and private companies. Since July 2015, he has served as Chief Financial Officer of ByteGrid Holdings LLC, a data center and managed services company. Since September 2013, he has served as a member of the Board of Directors of Contec, LTD, a cable set-top box repair company based in New York, and since December 2015, as a member of the Board of Directors and the Audit and Compensation Committees of Impact Telecom, Inc., a national telecommunications company. Between 2014 and 2015, Mr. Sinder served on the Board of Directors of TNCI Operating Company, LLC, a national telecommunications company based in California, which merged with Impact Telecom in December 2015. From 2012 to 2013, he served as Chief Executive Officer of CoreLink Data Centers LLC. Prior to his promotion to Chief Executive Officer, Mr. Sinder was Chief Financial Officer of CoreLink from 2010 to 2012. Mr. Sinder also served as Chief Financial Officer at Hostway Corporation from 2009 to 2010 and at Hu-Friedy Mfg. Co., Inc. from 2005 to 2008. From 1998 to 2004, he served at Focal Communications Corporation in a variety of executive and financial positions, including Chief Financial Officer, Treasurer, and Vice President, Corporate Development. Prior to joining Focal, Mr. Sinder held finance positions at Ameritech, MCI Communications, Telephone and Data Systems and IBM. Mr. Sinder holds a Bachelor of Science degree from the University of Michigan and a Master’s degree in Business Administration from the University of Chicago. Mr. Sinder’s financial knowledge and expertise and his experience serving in a variety of executive and financial positions at various corporations, including as Chief Executive Officer, Chief Financial Officer and Treasurer, make him qualified to serve on the Company’s Board of Directors and Audit Committee.
Class III Directors
Mr. Levyhas been a director since March 2006. He served as a Managing Director and Global Head of Communications Technology Research at Lehman Brothers from July 1998 until September 2005. Before joining Lehman Brothers, Mr. Levy was a Director of Telecommunications Research at Salomon Brothers from March 1997 to July 1998, a Managing Director and Head of the Communications Research Team at Oppenheimer & Co. from July 1994 to March 1997, and a senior communications analyst at Hambrecht & Quist from July 1986 to July 1994. As a securities analyst for almost 20 years, Mr. Levy became proficient in analyzing business strategies and financial results, having evaluated well over 100 companies. In November 2015, Mr. Levy joined the Board of Directors of Edison Properties, a privately and closely held real estate company. He is also currently a member of the Board of Directors and the Audit Committee and chairs both the Compensation and Governance Committee of Allot Communications, a data communications provider for carriers, and also a member of the Board of Directors of privately held GENBAND Inc., an innovator of IP Infrastructure. From January 2007 to February 2010, he served on the Board of Directors of Zhone Technologies, Inc., a broadband technology company, and commencing September 2005 as a board member of Tut Systems, Inc., a technology company providing advanced content processing and distribution products and system integration services, prior to its March 2007 acquisition by Motorola, Inc. In total, Mr. Levy has served on six boards of directors and has been a member of the audit committee of each company. Mr. Levy holds a Master’s degree in Business Administration and a Bachelor of Science degree in Materials Engineering from Rensselaer Polytechnic Institute. Mr. Levy provides a unique perspective to Company’s Board of Directors, its Compensation Committee, and to its Nominating and Governance Committee which he chairs, as a result of his investment banking experience related to the telecommunications industry and his analytical skills. The Company benefits from his knowledge of financial markets, business strategies and competitive data analysis.
Mr. Marinihas been a director since October 1996. Mr. Marini has been Chairman and Chief Executive Officer of Neato Robotics, a home robots company, since February 2013. He is also the founder and Managing Director of Noventi Ventures, a Silicon Valley-based early stage technology venture capital firm begun in March 2002. Mr. Marini also served as interim Chief Executive Officer of FutureTel, a digital video capture company, and as President and Chief Executive Officer of No Hands Software, an electronic publishing software company. Prior to this, Mr. Marini was the co-founder, Executive Vice President and Chief Operating Officer of Logitech International SA, a computer peripherals company. Previously, he held technical and management positions with Olivetti and IBM. Mr. Marini has extensive and broad executive operating experience. At Neato he leads a fast growing company with complex technology products and a broad worldwide sales network. At Logitech he managed engineering, operations and finance as the company grew from inception to over $200M in annual revenues, effected an initial public offering and expanded manufacturing and development in North America, Asia and Europe and sales presence in over 30 countries worldwide. At FutureTel (1998-1999) and No Hands Software (1993-1994) he managed rapid product development, decisive restructuring, new markets and product entries. Over the last 15 years he has also been managing venture capital investments in technology companies. This activity entails evaluating business plans, making investment decisions, assisting management in the formulation and execution of operating and strategic plans involving all facets of company operations. It also includes continuous evaluation of the performance of management teams, directing management changes and helping in recruiting executives for portfolio companies. Further, it requires the identification, evaluation and execution of exit strategies, such as acquisitions by other companies or initial public offerings. He has directed investments in over 15 companies, some of which have been acquired by market leaders such as BEA Systems, Cisco, HP and Symantec. He currently serves on the Board of Trustees of the University of California at Davis
Foundation and on the boards of Neato Robotics, Inc. since December 2006 and Velomat S.r.l since April 2012. Other past board service included Ecrio Inc. from March 1999 through December 2015; TES S.p.A. from September 1994 to January 2012; Minerva Networks, Inc. from May 2003 through March 2013; Aurora Algae, Inc. from January 2007 to August 2012; Cosmo Industrie S.p.A. from December 2007 to December 2011; Windspire Energy, Inc. beginning December 2008 through March 2012; and Lumenergi, Inc. beginning February 2008 to May 2013. Mr. Marini holds a Computer Science “Laurea” degree from the University of Pisa, Italy. Overall, Mr. Marini brings experience with a wide variety of company situations both as a general management executive and as active board member and investor. These qualifications provide a solid basis for serving as a director, and member of the Audit Committee of a technology company, dealing with issues of growth, product and marketing strategy, international expansion and merger and acquisition activities.
Dr. Singerhas served as the Company’s Chief Executive Officer and Chairman of the Board since October 2001. From February 2001 until October 2001, he served as the Company’s non-executive Chairman of the Board, and he has been a director of the Company since August 1999. From December 1997 to August 2000, Dr. Singer served as President and Chief Executive Officer of SAFCO Technologies, Inc., a wireless communications company acquired by Agilent Technologies in August, 2000. Prior to SAFCO Technologies, Dr. Singer served as Vice President within the Cellular Infrastructure Group of Motorola, a communications equipment company. He also held senior management and technical positions at Tellabs, AT&T and Bell Labs. Dr. Singer holds a Bachelor of Arts degree in Psychology from the University of Michigan and a Master of Arts degree and Ph.D. in Experimental Psychology from Vanderbilt University. He served on the Standing Advisory Group for the Public Company Accounting Oversight Board and on the Advisory Board for the MMM program at Kellogg School of Business. From March 2009 until September 2010, he served on the Board of Directors of Westell Technologies, Inc., a leading provider of broadband products, gateways and conferencing services, and was Chair of Westell’s Compensation Committee. In 2006, Dr. Singer was appointed to the Board of Directors of ISCO International, a provider of spectrum conditioning solutions to wireless and cellular providers worldwide, where he also chaired the Compensation Committee until he left the board in 2007. In 2012, he was elected to the Board of Directors of Multiband Corporation, and served as Chair of the Compensation Committee until the sale of Multiband in 2013. Dr. Singer is a member of the Economic Club of Chicago and now serves on the University of Illinois at Chicago (UIC) College of Engineering’s Advisory Board. Dr. Singer has nine patents in telecommunications and has written several essays on the telecommunications industry. He provides expertise in business strategy, intellectual property, strategic alliances and communications technology.
PROPOSAL#2
ADVISORY VOTE TO APPROVE
THE COMPANY’S
NAMED EXECUTIVE OFFICER COMPENSATION
As required by Section 14A of the Exchange Act and related SEC rules, theThe Board of Directors is requesting that the stockholders approve on a non-binding, advisory basis, the following resolution relative to the compensation of the Company’s named executive officers:officer compensation by a non-binding, advisory vote, as required by the Dodd-Frank Act. This non-binding, advisory vote is commonly referred to as “say-on-pay.” Although the vote is not binding on the Company or the Board of Directors, the vote provides stockholders with an additional means to express their views about compensation for the named executive officers. The outcome of the annual vote has been and will continue to be taken into account by the Board of Directors and the Compensation Committee in making future determinations about named executive officer compensation. The Board is requesting that the stockholders approve the following resolution on an advisory basis:
“RESOLVED, that the stockholders hereby APPROVEshareholders of PCTEL, Inc. approve, on an advisory basis, the compensation ofpaid to the Company’s named executive officers, as disclosed pursuant toin PCTEL’s Proxy Statement for the compensation rules2021 annual meeting of the SEC,stockholders, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion disclosed in this proxy statement.”
discussion.
The compensation of the Company’s named executive officers is described in theunder “Executive Compensation Discussion and Analysis section of this proxy statement, including the compensation tables that accompany the narrative.Other Matters,” commencing on page 27. The Company’s overall objectives of the executive compensation programphilosophy is to offer competitive compensation opportunities that enable the Company to attract, motivate and retain highly-experienced executive officers who will provide incentives to motivateleadership for the Company’s executive officerssuccess and key managers to perform to the best of their abilities and to closely align their interests with those of the Company’s stockholders, with the objective of enhancingenhance stockholder value and promoting long-term, sustainable growth. The long-term incentives are also designed to retain executive talent.value. A significant portion of each named executive officer’s overall compensation is performance-based and tied to the achievement of defined goals. PaymentsThe goals for boththe long-term and short-term incentivesincentive plans were defined in February 2020. Although the COVID-19 pandemic and long-term incentives will be made in restricted stock.
The proposal to approve the compensation ofrelated global economic recession impacted the Company’s named executive officers requiresbusiness, the Compensation Committee did not modify the defined 2020 goals. Short-term incentives are paid 50% in the Company’s common stock and 50% in cash; however, no payment was made pursuant to the 2020 Short-Term Incentive Plan. Long-term incentives are awarded in the Company’s common stock.
Vote Required and Recommendation
The affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy and entitled to vote at the annual meeting. Accordingly, broker non-votes will not be relevant to the outcome. Abstentionsmeeting will be counted as being present and entitledrequired to vote for purposes of Proposal #2 and, therefore, will have the same effect as a vote against Proposal #2. Becauseapprove this vote isnon-binding advisory it will not be binding on the Compensation Committee or the Board of Directors. However, the Board of Directors and the Compensation Committee will carefully evaluate the voting results and take them into account when considering future executive compensation matters.proposal.
The Board of Directors recommends athat stockholders vote “FOR” the approval of the Company’s
named executive officer compensation, as disclosed in this proxy statement.
PROPOSAL#3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Grant Thornton LLP, an independent registered public accounting firm (“Grant Thornton”), to audit and express an opinion on the Company’s financial statements and internal control over financial reporting for the fiscal year ending December 31, 2016.2021. This appointment is being presented to the stockholders for ratification at the 20162021 annual meeting of stockholders.
Before selecting Grant Thornton LLP as the independent registered public accounting firm for the Company forCompany’s 2021 fiscal year2016,year, the Audit Committee carefully considered the firm’s qualifications as independent auditors.auditors and its past performance for the Company. This included a review of the qualifications of the engagement team, the quality control procedures the firm has established, and its reputation for integrity and competence in the fields of accounting and auditing.auditing, its experience with similarly-sized companies and similar industries, and its cost effectiveness. The Audit Committee’s review also included matters required to be considered under the SEC’s rules on auditor independence, including the nature and extent of non-audit services, to ensure that Grant Thornton LLP’sThornton’s independence will not be impaired. Grant Thornton LLP has been conducting independent audits of the Company’s financial statements since May 2006. The Audit Committee believes that the tenure of Grant Thornton as the Company’s auditor results in higher audit quality due to greater institutional knowledge and familiarity with the industries in which the Company competes and saves management’s time and resources. Grant Thornton conducts periodic internal reviews of its audit work, assesses the adequacy of its partners and other personnel working on the Company’s audit and rotates the lead audit partner consistent with independence requirements. Representatives of Grant Thornton LLP are expected to be available by telephone atwill attend the 20162021 annual meeting of stockholders to answer appropriate questions from stockholders.stockholders and will have the opportunity to make a statement if they desire to do so.
Notwithstanding the selection by the Audit Committee of Grant Thornton or stockholder ratification of that selection, the Audit Committee may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interest of the Company and the stockholders. While stockholder ratification of Grant Thornton’s appointment is not required by law or otherwise, if the selection of Grant Thornton is not ratified at the annual meeting, the Audit Committee will investigate the reason for the rejection and reconsider the appointment.
Summary of Fees
The following table summarizes the aggregate fees billed to the Company by Grant Thornton LLP for the Company’s 20142020 and 20152019 fiscal years:
Type of Fees | Fiscal Year 2015 ($) | Fiscal Year 2014 ($) | ||||||
Audit Fees(1) | 829,758 | 682,618 | ||||||
Audit-Related Fees(2) | 283,193 | 216,818 | ||||||
All Other Fees(3) | 4,900 | 5,000 | ||||||
Total Fees | 1,117,851 | 904,436 |
Type of Fees | Fiscal Year 2020 $ | Fiscal Year 2019 $ | ||||||
Audit fees (1) | 644,924 | 682,580 | ||||||
Audit related fees (2) | 14,070 | 13,650 | ||||||
All other fees (3) | — | — | ||||||
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| |||||
658,994 | 696,230 | |||||||
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(1) | Audit Fees —These are fees for professional services for fiscal years |
(2) | Audit-Related Fees —These are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported as “Audit Fees” above. For fiscal |
(3) | All Other Fees —These are fees for permissible services that do not fall within the above categories. |
Pre-Approval of Independent Auditor Services and Fees
The Audit Committee reviewed and pre-approved all audit and non-audit fees for services provided to the Company by Grant Thornton LLP and has determined that the firm’s provision of such services to the Company during fiscal year 2015 is compatible with and did not impair Grant Thornton LLP’s independence. It is the practice of the Audit Committee to consider and approve in advance all auditing and non-auditing services provided to the Company by the independent registered public accounting firm in accordance with the applicable requirements of the SEC. The Audit Committee reviewed and approved all audit, audit-related and other fees for services provided to the Company by Grant Thornton during fiscal 2020 and has determined that the firm’s provision of such services to the Company is compatible with, and did not impair, Grant Thornton’s independence.
Vote Required and Recommendation
Stockholder ratification of the selection of Grant Thornton LLP as the independent registered public accounting firm for the Company is not required by the Company’s bylaws or other applicable legal requirement. However, the Board of Directors is submitting the selection of Grant Thornton LLP to the stockholders for ratification as a matter of good corporate practice. The affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy and entitled to vote at the annual meeting will constitutebe required to approve this non-binding advisory proposal.
The Board of Directors recommends that stockholders vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm under Proposal #3. Abstentions will be counted as present and entitledfor the fiscal year ending December 31, 2021.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to vote for purposesthe contrary in any of Proposal #3 and, therefore, will haveour previous or future filings with the same effect as a vote against Proposal #3. Notwithstanding the selection bySEC, this report of the Audit Committee of the Board of Directors shall not be deemed “filed” with the SEC or “soliciting material” under the Securities Exchange Act of 1934, and shall not be incorporated by reference into any such filings.
During the Company’s 2020 fiscal year, the Audit Committee of our Board of Directors consisted of Mr. Sinder (Chair), Ms. Keith and Mr. Levy, each of whom meets the Nasdaq independence and experience requirements. The Audit Committee operates under a written charter. A new Audit Committee charter was adopted by the Board of Directors at the recommendation of the Audit Committee in February 2021. A current version of the Audit Committee charter is available on our website at http://investor.pctel.com/documents.cfm.
The Audit Committee reviews management’s procedures for the design, implementation, and maintenance of a comprehensive system of disclosure controls and procedures focused on the accuracy of our financial statements and disclosures contained in our periodic reports, as well as the integrity of our financial reporting systems. As part of this review, the Audit Committee discusses with management and Grant Thornton LLP or stockholder ratification of that selection, the Audit Committee may direct the appointment of a new(“Grant Thornton”), our independent registered public accounting firm, at any time duringtheir evaluation of the year ifeffectiveness of our internal control over financial reporting (including improvements to our internal control that may be warranted) and the overall quality of the Company’s financial reporting. The Audit Committee provides our Board of Directors with the results of the Committee’s examinations and recommendations and reports to the Board of Directors as the Committee may deem necessary to make the Board of Directors aware of significant financial matters that require the Board of Directors’ attention.
The Audit Committee relies on management’s representation that our financial statements have been prepared accurately and in conformity with United States generally accepted accounting principles, on the representations of Grant Thornton included in its report on our financial statements, and on the effectiveness of our internal control over financial reporting, and does not itself conduct auditing reviews or audit procedures. The Audit Committee has adopted a written policy that is intended to encourage our employees to bring to the attention of management and the Audit Committee determines that such a change would be inany complaints regarding the best interestintegrity of our internal financial controls or the Companyaccuracy or completeness of financial or other information related to our financial statements.
The Audit Committee reviews reports from, and the stockholders. If the selection ofprovides guidance to, Grant Thornton LLPwith respect to their annual audit and approves all audit and non-audit services provided by Grant Thornton in accordance with applicable regulatory requirements. The Audit Committee considers whether the provision of particular non-audit services is not approved at the annual meeting,compatible with maintaining Grant Thornton’s independence as our independent public accounting firm.
In accordance with its responsibilities, the Audit Committee will investigatehas reviewed and discussed with management the reasonaudited financial statements for the rejectionyear ended December 31, 2020 and reconsider the appointment.process designed to achieve compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The Audit Committee has also discussed with Grant Thornton the matters required to be discussed by the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. The Audit Committee has received the written disclosures and the letter from Grant Thornton required by applicable requirements of the PCAOB regarding Grant Thornton’s communications with the Audit Committee concerning independence and has discussed with Grant Thornton its independence.
Based on these reviews and discussions, the Audit Committee recommended to our Board of Directors that our audited financial statements for the year ended December 31, 2020 be included in our Annual Report on Form 10-K.
Respectfully submitted by:
THE AUDIT COMMITTEE
M. JAY SINDER (CHAIR)
CYNTHIA A. KEITH
STEVEN D. LEVY
PCTEL is committed to corporate governance practices that serve the long-term interests of our stockholders, that facilitate effective Board oversight of our business, that are transparent, and that reinforce our accountability to stockholders. PCTEL is also committed to engaging in ongoing, open dialogue with stockholders.
Independence
The Board of Directors recommendshas determined that stockholders vote “FOR”each of the ratificationnon-employee directors is an “independent director” based on the Nasdaq listing standards and that the members of the Audit and Compensation Committees fulfill additional SEC and Nasdaq independence standards applicable to members of those committees. Only independent directors may serve on the Audit, Compensation and Nominating and Governance Committees. In determining the independence of the directors, the Board of Directors affirmatively determines whether a non-employee director has a relationship that would interfere with that director’s exercise of independent judgment in carrying out the responsibilities of being a director.
Certain Relationships and Related Person Transactions
For each of Grant Thornton LLP asthe last two completed fiscal years of the Company, no director, director nominee, executive officer, beneficial owner of more than 5% of PCTEL common stock, or any person who is the immediate family member or shares the household (other than a tenant or employee) of any of the foregoing persons, had any material interest, direct or indirect, in any transaction or proposed transaction of the Company which involved an amount exceeding the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years.
Board Leadership Structure
The roles of Chairman of the Board and Chief Executive Officer are separated in order to allow the Chief Executive Officer to focus on setting the strategy for the Company, providing day-to-day leadership to the Company’s employees, driving the Company’s performance and engaging with stockholders. The Chairman of the Board provides guidance and independent registered public accounting firm.oversight, approves Board meeting agendas, serves as a liaison between directors and management, coordinates communication among the committees and the directors, presides over the meetings of the Board of Directors and participates in certain negotiations involving potential combination transactions. Mr. Levy was elected effective January 2, 2017 to serve as independent Chairman of the Board until such time as a successor is elected. The Board of Directors evaluates the chairmanship of the Board of Directors each year and confirmed Mr. Levy as Chairman of the Board in February 2021.
CORPORATE GOVERNANCE
Board and Committee Meetings
The Board of Directors currently has an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee. The members of each of the committees are listed in the table below. Each member of the Audit Committee, the Compensation Committee and the Nominating and Governance Committeethese committees meets the applicable SEC and NASDAQ Global Select Market (“NASDAQ”)Nasdaq independence requirements. The Board of Directors has determined that each of Mr. ThomsenMs. Keith and Mr. Sinder qualifieseach qualify as an “audit committee financial expert” as defined under the rules and regulations of the SEC, and that all members of the Audit Committee meet the NASDAQNasdaq financial literacy requirements.
The Board of Directors held a total of eightnine meetings during fiscal 2015, including one meeting2020 and a subcommittee of the subcommittee formed to consider the acquisitionBoard of Nexgen Wireless, Inc.Directors held four additional meetings. During 2015,2020, each of the directors other than Ms. Haspilaire who became a director in November 2015, attended at least 75%100% of the total number of meetings of the Board of Directors and any committeethe meetings of the subcommittee and standing committees on which such director served. The Company encourages its directors to attend the annual meeting of stockholders, and all directors were in attendance at the 2020 virtual annual meeting of stockholders.
Committee | Members During Fiscal 2020 | Purpose of Committee | Meetings Held in Fiscal 2020 | ||||||
Audit | M. Jay Sinder (Chair) Cynthia A. Keith Steven D. Levy | The purpose of the Audit Committee is to oversee the following: • the quality and integrity of the Company’s annual and quarterly financial statements • the Company’s financial reporting processes and financial statement audits • the Company’s accounting policies and procedures • the qualifications, performance, and independence of the Company’s independent auditor • the Company’s compliance with legal and regulatory requirements and the Company’s ethical standards | 8 | * | |||||
Compensation | Gina Haspilaire (Chair) Cindy K. Andreotti Giacomo Marini | The purpose of the Compensation Committee is the following: • Recommend to the Board of Directors compensation for the independent members of the Board of Directors and the CEO • Approve compensation for each of the executive officers and other employees reporting directly to the CEO • Provide general guidance regarding compensation for other employees • Provide oversight and serve as administrator of the Company’s equity plans • Oversee policies and strategies related to human capital | 7 | * | |||||
Nominating and Governance | |||||||||
Cindy K. Andreotti (Chair) Gina Haspilaire Steven D. Levy (until February 5, 2020) Cynthia A. Keith (commencing February 6, 2020) | |||||||||
The purpose of the | |||||||||
• Ensure that the Company has and follows appropriate governance standards • Maintain and improve corporate governance guidelines • Establish appropriate procedures to ensure that the Board of Directors and its committees are properly constituted • Review and make recommendations to the Board of Directors | |||||||||
interest | |||||||||
4 | |||||||||
* | Includes the Joint Meeting of the Audit Committee and Compensation Committee to address risk management, as described in “Risk Management” on page 22. |
A copy of the charter for each of the committees of the Board of Directors is available on our website located at http://investor.pctel.com/documentsdisplay.cfm. The meetings indicated indocuments.cfm.
Director Nomination Process
Stockholder Recommendations. It is the chart above include a joint meetingpolicy of the membersNominating and Governance Committee to consider director candidates recommended by the stockholders holding on the date of submission of such recommendation at least 1% of the Auditthen-outstanding shares of PCTEL common stock continuously for at least 12 months prior to such date.
Stockholders desiring to recommend a candidate for election to the Board of Directors should send their recommendation in writing to the attention of Company Secretary at the Company’s office located at 471 Brighton Drive, Bloomingdale, Illinois 60108. This written recommendation must include the information and materials required by the bylaws as well as our Policies and Procedures for Director Candidates. A copy of the Company’s bylaws is available upon written request to the Company Secretary at the address provided above. For a description of the advance notice provision of the Company’s bylaws, see “Deadline for Receipt of Stockholder Proposals and Nominations for 2022 Annual Meeting of Stockholders” beginning on page 5. Our Policies and Procedures for Director Candidates are available at http://investor.pctel.com/documents.cfm.
Identifying and Evaluating Nominees for Director. The Nominating and Governance Committee and Compensation Committee in November 2015.
Board Leadership Structureevaluates potential director nominees, whether recommended by stockholders or other sources, based upon the following criteria:
The current size and composition of the Board of Directors;
The needs of the Board of Directors and its committees;
The candidate’s judgment, independence, character, integrity, education, area of expertise, knowledge of the relevant industries and markets, experience with businesses and other organizations of comparable size, diversity, length of service, conflicts of interests, understanding of fiduciary and governance responsibilities in publicly held companies, and number of board positions held with other companies;
Skills which are complementary to those of the existing members of the Board of Directors believeDirectors; and
Other factors that their familiaritythe Committee considers appropriate.
The Nominating and Governance Committee seeks diversity in Board members’ skill sets, business experience, financial and accounting experience, educational achievements, potential contributions, gender, race and ethnicity with a goal of bringing diverse business experience, knowledge and perspectives to the Board of Directors.
Compensation of Directors
We structure director compensation to attract and retain qualified non-employee directors and to further align the interests of directors with the Company, their insight intointerests of stockholders. The Compensation Committee annually reviews surveys of non-employee director compensation trends and a competitive analysis of peer company practices prepared by Willis Towers Watson LLP, the industries in whichindependent compensation consultant engaged by the Company is engaged, and their knowledge of the challenges and opportunities arising in this evolving economy placeCompensation Committee. The Committee makes recommendations to the Board of Directors on cash and stock compensation for non-employee directors. Each element of director compensation is described in this section.
Non-employee directors receive an annual cash retainer of $25,000 and shares of common stock with a grant date fair value of $55,000. Non-employee directors also receive $1,500 per regularly-scheduled Board meeting attended and $1,000 for all other Board meetings and all committee meetings attended. In addition, non-employee directors receive the best position to determine the optimalfollowing annual compensation for Board leadership structure for the Company. The Board of Directors has determined that combining the roles ofand committee membership:
the Chairman of the Board of Directors receives a cash retainer of $10,000 and Chief Executive Officer is shares of common stock with a grant date fair value of $15,000;
the optimal structure forChair of the Company at this time. Mr. Singer, who currently fills both roles, commenced his involvementAudit Committee receives shares of common stock with a grant date fair value of $10,000;
the CompanyChair of the Compensation Committee receives shares of common stock with a grant date fair value of $10,000;
the Chair of the Nominating and Governance Committee receives shares of common stock with a grant date fair value of $7,000; and
each other non-employee member of any of the foregoing committees receives shares of common stock with a grant date fair value of $5,000.
All the grants of common stock to the non-employee directors, as a Directordescribed above, are awarded on the Company’s Board in 1999, becamedate of the non-executiveannual meeting and vest immediately. Non-employee directors who become Chairman of the Board, chair of a committee, or a committee member between annual meetings receive a pro-rated grant of common stock on the first day of service in February 2001, and subsequently becamesuch role. The number of shares granted is based on the Chief Executive Officertotal dollar value divided by the closing price of PCTEL common stock on the Nasdaq Global Select Market on the date of grant.
In addition to the above-referenced grants, new non-employee directors receive a one-time grant of restricted stock with a grant date fair value of $50,000 based upon the closing price of PCTEL common stock on the Nasdaq Global Select Market as of the first date of service, which vests in October 2001. equal annual installments over three years.
2020 Director Compensation
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | |||||||||
Cindy K. Andreotti | 38,000 | 66,994 | 104,994 | |||||||||
Gina Haspilaire | 38,000 | 69,999 | 107,999 | |||||||||
Cynthia A. Keith | 38,532 | 64,997 | 103,529 | |||||||||
Steven D. Levy | 43,000 | 74,994 | 117,994 | |||||||||
Giacomo Marini | 34,000 | 59,995 | 93,995 | |||||||||
M. Jay Sinder | 35,000 | 64,997 | 99,997 |
(1) | The values shown reflect the grant date fair value of the award, computed in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions, see Note 9 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020. |
Director Stock Ownership Guidelines
The Board of Directors believes that ownership of PCTEL common stock by directors demonstrates their commitment to the stockholders are best servedCompany and optimism for its future. Accordingly, the Board of Directors adopted Stock Ownership Guidelines for Directors (“Guidelines”) that require each director to achieve ownership of PCTEL common stock with a value equal to three times the annual cash retainer paid by Mr. Singer fulfilling both roles, thereby unifying the leadership and directionCompany to non-employee directors for their service on the Board of Directors (currently $75,000). Non-employee directors have five years from their initial date of service to achieve compliance. All of the directors to whom the Guidelines currently apply have achieved compliance with the Guidelines.
Stockholder Communications with the Board of Directors
Stockholders who wish to communicate with any of the directors may do so by sending an e-mail message to the Chief Legal Officer at clo@pctel.com. The Chief Legal Officer monitors these communications, consults with the independent Chairman of the Board and provides a summary of messages received to the Board of Directors at its regularly scheduled meetings. Where the nature of the communication warrants, the Chief Legal Officer may obtain more immediate attention of the matter from the appropriate committee or the Chairman of the Board, independent advisors, or management. The Chief Legal Officer, in consultation with the managementChairman of the Board, will decide what, if any, response is warranted.
Political Contributions; Lobbying
The Company has not made any contribution to any political party, political action committee, or candidate running for a political office at any level in any country. The Company does not engage in any individual lobbying efforts and does not belong to any organization whose primary function is to lobby for political causes.
Code of Ethics
The Company’s Code of Ethics and Business Conduct (the “Code of Ethics”) applies to the Board of Directors and all employees of the Company and enablingits subsidiaries, including our principal executive officer,
principal financial officer and principal accounting officer. It provides guidance and standards for maintaining ethical behavior, requires that employees and directors comply with applicable laws and regulations, and prohibits conflicts of interests. The Code of Ethics is posted on the Company’s website at http://investor.pctel.com/documents.cfm. In addition, the Company to move decisively to meet challenges and maximize opportunitieshas made available an ethics hotline for growth. The Board of Directors maintains independent and effective oversightanonymously reporting violations of the Company’s business through the strong leadership provided by the Lead Independent Director (as defined in the immediately succeeding paragraph)Code of Ethics or any other policies and the Board committees, and through the composition of the Board, with all directors other than theprocedures. The Chairman being independent directors.
Mr. Jackman is currently the lead independent director of the Board of Directors, (“Lead Independent Director”). As Lead Independent Director, his principal responsibilities are (i) working withChair of the Chairman and Chief Executive OfficerAudit Committee, and the other members of the Board of Directors to set the agenda for each meeting of the Board of Directors, (ii) serving as a liaison for communications between the Board of Directors and the Chief Executive Officer, (iii) acting as the chair for executive sessions held at regularly scheduled meetings of the Board of Directors, and (iv) consulting with theCompany’s General Counsel regarding communications received fromor Chief Legal Officer address all matters submitted pursuant to the stockholders.ethics hotline.
Independence
Hedging
The Board of Directors has determinedbelieves that hedging transactions that allow holders to own the non-employee directors are “independent directors” based onCompany’s securities without the NASDAQfull risks and SEC standards for independence. Only independent directors may serve onrewards of ownership separate the Audit, Compensation and Nominating and Governance Committees. In determining the independenceholder’s interest from those of the directors,other stockholders. Accordingly, the Board of Directors affirmatively determines whetherhas adopted a non-employee director has a relationship that would interfere with that director’s exercise of independent judgment in carrying out the responsibilities of being a director. In coming to that decision, the Board of Directors is informedpolicy forbidding directors, officers, and employees of the NASDAQCompany or its subsidiaries and SEC rulesany independent contractor to the Company or its subsidiaries or any person acting on their behalf from purchasing any financial instrument (e.g., prepaid variable forward contracts, equity swaps, collars or exchange funds) or otherwise engaging in any transactions that disqualify a person from being considered as independent, considershedge or offset any decrease in the responses to an annual questionnaire from each director, and reviews the applicable standards with each membermarket value of the BoardCompany’s securities or limit such person’s ability to profit from an increase in the market value of Directors.the Company’s securities.
Risk Management
WhileThe Chief Risk Officer and the other executive officers of the Company are responsible for the day-to-day management of the material risks facing the Company. The Company has adopted a system of identifying, classifying, monitoring and mitigating risks. Risks identified through surveys of executive officers and key managers are classified in the following categories: no serious concern, a potential concern, or a serious concern. Each risk is then assigned to an individual employee to monitor and, where possible, to mitigate. The individual to whom each risk is assigned reports to the Chief Risk Officer each fiscal quarter as to (i) whether the assigned risk has increased, decreased, remained the same or should be removed from consideration as a significant risk, and (ii) steps taken to address the assigned risk. The Chief Risk Officer provides a report to the Board of Directors at regularly-scheduled Board meetings on the Company’s efforts to identify, classify, monitor and mitigate its most significant enterprise risks and gives a more in-depth report from time-to-time to the Nominating and Governance Committee and annually at the joint meeting of the Audit and Compensation Committees regarding risk.
The Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its oversight role, the Board of Directors has the responsibility to determine whether the risk management processes designed and implemented by management are adequate and functioning as designed. The involvement of the full Board of Directors in setting the Company’s business strategy and its determination at least annually is a key part of its oversight of risk management, its assessment of management’s risk appetite, and its determination of what constitutes an appropriate level of risk for the Company.Company are key parts of its oversight of risk management. The Board of Directors has assigned to the Nominating and Governance Committee the responsibility of working with Company management to identify, assess, and quantify risks facing the Company in order to create meaningful but cost-effective strategies to manage the Company’s most significant risks. The NominatingIn addition, the Audit and Governance Committee updates the full Board of Directors semiannually at Board meetings regarding itsCompensation Committees hold a joint meeting focused on management’s efforts to manageaddress enterprise risks and reports extensively on these efforts atrisks. At the most recent joint annual meeting of the Audit and Compensation Committees.Committees, the members of both Committees focused on, among other topics, self-assessment of the Company’s enterprise risk management program; the impact of certain changes in the Company’s business strategy on management’s assessment of certain risks; the Company’s approach and preparedness to address unexpected or adverse events; cyber risk mitigation; fraud risk mitigation; and disaster recovery plans by product line. The Board of Directors also regularly receives updates from management regarding certain of the significant risks facing the Company, including litigation and various operating and competitive risks.
In addition to the Nominating and Governance Committee’s overall enterprise risk management efforts, eachEach committee of the Board of Directors oversees certain aspects of enterprise risk management. For example,In addition to its role in working with management in the overall enterprise risk mitigation efforts, the Nominating
and Governance Committee oversees governance related risks, board independence, and management and director succession planning. The Audit Committee is responsible for overseeing risk management of financial matters, financial reporting, the audit process, the adequacy of internal controlscontrol over financial reporting, and disclosure controls and procedures.procedures, and related party transactions. The Compensation Committee oversees risks related to the compensation policies and practices.practices and human capital. In its oversight, the Compensation Committee examines whether the Company’s compensation practice is consistent with the Compensation Committee’s responsibilities (as set forth in “Compensation Discussionpolicies and Analysis — Overiew and Responsibilities of the Compensation Committee”) and its philosophy (as set forth in “Compensation Discussion and Analysis — Compensation Philosophy”) and ispractices are aligned with the Company’s goals and risk tolerance.
Environmental, Social and Governance
Acting with integrity, fairness and respect is one of our core values. This core value guides us in dealing with our stakeholders, customers, suppliers and the communities in which we conduct our business. It is the basis upon which we examine how we treat our employees, other stakeholders and the environment. In evaluating2020, the compensation policies and practices, the Compensation Committee seeks advice and data regarding the Company’s peer group from its independent compensation consultant. In addition to its role in working with management in the overall enterprise risk mitigation efforts, the NominatingCompany adopted an Environment, Social and Governance Committee oversees(ESG) statement to establish a benchmark for our efforts in protecting the environment, promoting the health, safety and employment opportunities of our employees and engaging in corporate governance related risks, such as board independencepractices that reflect ethical and conflictsresponsible behavior and to encourage continuous improvement in these areas.
Environment. PCTEL is committed to environmental stewardship. We have invested in capital improvements to our facilities, making them safer for the environment and our employees. Recently, we have taken additional energy saving measures, including streamlining and automating many of interest,our production processes and installing LED lights, programmable thermostats, a new roof, and more efficient HVAC units on our premises. We recycle electronics, plastic, paper, cardboard, and metals, as well as managementcustomer products that are returned to PCTEL for trade-in or disposal. We have eliminated many plastic packing materials and director succession planning. The committees report their findingsreplaced them with cardboard material and installed box-making machinery to reduce cardboard consumption. We reduced the use of packaging foam and substituted biodegradable material. In addition, we have retained experts to advise us in connection with the protected wetlands near our Bloomingdale, Illinois production facility. Our goal is to continue to seek cost-effective methods to reduce our environmental impact.
Social. PCTEL is committed to the full Boardhealth and safety of Directors.
At its most recent joint meetingour employees. We are proud to report that during the COVID-19 pandemic, we proactively took protective measures and were successful in preventing an outbreak of the Audit and Compensation Committees, the members of both Committees reviewed risks applicablevirus among our production employees. We provided paid leave to US-based production employees who were exposed to the Company, focusing on (i)virus beyond federal and state requirements and proactively closed the resultsproduction facilities for two weeks during an expected surge in COVID-19 cases. In addition, we extended paid leave throughout 2020 for employees deemed “at-risk” so they would not feel compelled to report to work for economic reasons. We installed automated or touchless doors, drinking fountains, faucets, toilets, and dispensers and established new operating procedures for working distantly but together in our production facilities and offices. As a result of these measures, our production facilities continued to operate throughout 2020 and we did not furlough or terminate any employees as a result of the enterprise risk surveyCOVID-19 pandemic. During the second quarter of 2020, the Company began conducting surveys of employees’ issues and concerns related to the COVID-19 pandemic and the CEO hosted bi-monthly “town hall” meetings at which he informed employees of the Company’s challenges and progress throughout the pandemic and addressed their written comments and questions. The Company believes that this outreach helped to connect employees and align the Company’s and employees’ interests during the pendency of the pandemic.
More generally, PCTEL is committed to protecting, educating, training, and supporting our employees and encouraging them to be involved and make a difference in their communities. We provide our employees with healthcare and other wellness benefits that exceed the norms for our industry and size, including quality comprehensive health and dental care insurance, Company-paid vision insurance for employees, their families and domestic partners, and Company-paid life insurance and short and long-term disability insurance. In recent years, we have developed and refined programs to provide training and to encourage our employees to be good corporate citizens and stewards of our assets, including our reputation. These programs include a leadership
development and mentoring program in which Board members, executives, and key managers participated, which identified the participants’ view of the most significant risks that the Company faces, and (ii) the results of a security audit performed by a third party, which identified key areas for the Company to focus its efforts relating to cybersecurity. Management discussed with the joint committees cost-effective steps that will improve security and mitigate identified risks. The NEOs (as identified in “Compensation Discussion and Analysis—Named Executive Officers”) and certain other executive officers attend Board of Directors and committee meetings as needed, and are availableprovide one-on-one guidance to address any questions or concerns raised by the Board on risk management-related matters.
Director Nomination Process
Stockholder Recommendation and Nominations. It is the policy of the Nominating and Governance Committee to consider director candidates recommended by the stockholders holding on the date of submission of such recommendation at least 1% of the then-outstanding shares of PCTEL common stock continuously for at least 12 months prior to such date.
Stockholders desiring to recommend a candidate for election to the Board of Directors should send their recommendation in writing to the attention of the Corporate Secretary, at the Company’s office located at 471 Brighton Drive, Bloomingdale, Illinois 60108. This written recommendation must include the information and materials required by the bylaws as well as the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidateour future leaders and the Company within the last three yearsprovides professional group coaching and evidence of the required ownershiptraining related to expected behavior of PCTEL common stock by the recommending stockholder. A copy of the Company’s bylaws is available upon written request to the Corporate Secretary at the address provided above. For a description of the advance notice provision of the Company’s bylaws, see “Deadline for Receipt of Stockholder Proposalsdirectors, officers and Nominations for 2017 Annual Meeting of Stockholders” immediately following the “Questions and Answers” section above. Additional information regarding stockholder recommendations for director candidates is set forth in the document entitled “Policies and Procedures for Director Candidates” available at http://investor.pctel.com/documentsdisplay.cfm.
Identifying and Evaluating Nominees for Director. The Nominating and Governance Committee uses the following procedures for identifying and evaluating any individual recommended or offered for nomination to the Board of Directors:
Diversity
In addition to the qualifications set forth above, in evaluating the suitability of candidates for the Board of Directors, the Nominating and Governance Committee considers the diversity of the candidates, and of the Board of Directors as a whole, based on factors such as business background, experience and potential contributions to the Board of Directors, in addition to balancing the gender, ethnicity and racial composition of its members. The Nominating and Governance Committee seeks to ensure that the Board of Directors is comprised of individualsemployees consistent with experience in industries that are complementary to the Company’s business and individuals with financial and accounting experience in order to bring diverse business experience, knowledge and perspectives to the Board of Directors.
Compensation of Directors
Cash and Stock Compensation. The non-employee directors received an annual cash retainer of $25,000 and shares of common stock with value equivalent to $35,000 covering the period from the 2015 annual meeting until this 2016 annual meeting. (Commencing with this 2016 annual meeting, in addition to the annual cash retainer, the non-employee directors will receive shares of common stock with value equivalent to $55,000.) The non-employee directors also received $1,500 per Board meeting attended (unless the Board meeting was conducted by teleconference, in which case directors received $1,000 for each telephonic meeting in which they participated) and $1,000 per committee meeting attended. In addition, the non-employee directors received the following additional shares of common stock:
All the grants of common stock to the non-employee directors, as described above, were awarded on the date of the annual meeting (i.e., June 10, 2015) and vest immediately. The number of shares granted was based on the total dollar value divided by the closing price of PCTEL common stock as presented by NASDAQ on the date of grant.
In addition to the above-referenced grants, new non-employee directors receive a one-time grant of restricted shares equivalent to $50,000 based upon the closing price of PCTEL common stock as presented by NASDAQ as of the first date of service, which vests in equal annual installments over three years.
Reimbursements. Each of the non-employee directors is reimbursed for all reasonable out-of-pocket expenses incurred in connection with his or her service on the Board of Directors.
Non-Employee Directors’ Compensation for the Fiscal Year Ended December 31, 2015
Name | Fees Earned or Paid in Cash ($) |
Stock Awards(1) ($) | Stock Options | All Other Compensation(2) ($) |
Total ($) | |||||
Cindy K. Andreotti | 46,000 | 44,994 | — | 651 | 91,645 | |||||
Gina Haspilaire(3) | 15,000 | 69,992 | — | — | 84,992 | |||||
Brian J. Jackman | 46,000 | 59,999 | — | — | 105,999 | |||||
Steven D. Levy | 45,000 | 46,994 | — | — | 91,994 | |||||
Giacomo Marini | 42,000 | 39,999 | — | — | 81,999 | |||||
M. Jay Sinder | 41,000 | 39,999 | — | 1,200 | 82,199 | |||||
Carl A. Thomsen | 42,000 | 44,994 | — | — | 86,994 |
Director Stock Ownership Guidelines
The Board of Directors believes that ownership of PCTEL common stock by directors demonstrates to the stockholders their commitment to the Company and optimism for its future. Accordingly, the Board of Directors adopted a policy that requires each director to achieve ownership of PCTEL common stock with a value equal to three times the annual cash retainer paid by the Company to the Directors for their service on the Board. Directors have five years from their initial date of service to achieve compliance. All of the Directors to whom the Guidelines currently apply have achieved compliance with the Guidelines.
Stockholder Communications with the Board of Directors
Stockholders who wish to communicate directly with the independent directors may do so by sending an e-mail message to the General Counsel at general.counsel@pctel.com. The General Counsel monitors these communications, consults with the Lead Independent Director, and provides a summary of messages received to the Board of Directors at its regularly scheduled meetings. Where the nature of the communication warrants, the General Counsel may obtain more immediate attention of the matter from the appropriate committee, Lead Independent Director, independent advisors, or management. The General Counsel, in consultation with the Lead Independent Director, may decide whether a response to any stockholder communication is necessary.
Attendance at the Annual Meeting of Stockholders
All directors are welcome to attend the 2016 annual meeting of stockholders. At the 2015 annual meeting of stockholders, Mr. Sinder, Mr. Singer, and Mr. Thomsen were in attendance.
Code of Ethics
The Company’sour Code of Ethics and Business Conduct (the “CodeConduct. We also provide training on a variety of Ethics”) appliestopics from diversity and inclusion, effective sales strategies, cyber-security, and anti-bribery to alltraining aimed at understanding what sexual harassment is and how it negatively impacts both employees and directorsthe Company. We have tuition reimbursement programs to assist our employees in furthering their education. We periodically arrange for our employees to participate in programs to help those in need in our community such as a program to provide holiday gifts to those in need, team volunteer programs for food banks, and the like. In addition, our employees receive paid time off to volunteer at a charitable program of their choice.
Governance. PCTEL is committed to corporate governance that serves the Companylong-term interests of our stockholders, facilitates effective Board oversight, and its subsidiaries. The Codereinforces our accountability to stockholders. We have adopted policies, guidelines and programs to ensure we are prepared to address risks and act in the best interest of Ethics, which provides guidance and standards for maintaining ethical behavior, requires that employees and directors comply with applicable laws and regulations, and prohibits conflictsour stockholders. Many of interests. The Company also has made available an ethics hotline for anonymously reporting violations of the Company’sthese policies and procedures. The Codeguidelines are described above in this Corporate Governance section beginning on page 18.
PCTEL is committed to diversity in our workforce, on our leadership team, and on our Board of Ethics is postedDirectors. We evaluate the diversity, independence, and qualifications of our Board of Directors because we believe diversity on the Company’s website at http://investor.pctel.com/documentdisplay.cfm. The Code of Ethics was revised by the Board of Directors in 2015. Any additional approved revisions tobetter reflects the Codediversity of Ethics will be posted on the Company’s website.
Compensation Committee Interlocksour employees, customers, and Insider Participation
During 2015, none of Ms. Andreotti, Ms. Haspilaire, Mr. Jackman or Mr. Levy was an officer orother stakeholders, and promotes employee of the Company while serving asrecruiting and retention. For example, we have maintained a member of the Compensation Committee. In addition, no executive officer of the Company served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company’sdiverse Board of Directors (see “Board Composition, Experience and Diversity” in Proposal #1 on page 8) and strive to maintain a diverse workforce through our hiring practice requiring interviewing and considering a minority or woman candidate for each open position in our workforce, and other hiring, training and retention efforts. The Compensation Committee.Committee monitors and encourages diversity at all levels of our workforce.
At PCTEL, we seek to make continuous progress in our ongoing efforts to protect our environment, promote the health and safety of our employees and our community, maintain a culture of openness and inclusion in our workforce, and act responsibly in the best interests of our stockholders.
Under the Company’s insider trading policy insiders are prohibited from trading in PCTEL common stock while in possession of material non-public information. To obviate the possibility of hedging the economic risk of ownership, this prohibition extends to trading in derivative securities of the Company, including any put or call options.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of PCTEL common stock based on a review of filings made with the Securities and Exchange Commission as of
April 20, 2016 March 29, 2021 by:
Each stockholder known by PCTEL to beneficially own more than 5% of the common stock;
Each director, including director nominees;
Each Section 16 reportingnamed executive officer; and
All of the directors, director nominees and Section 16 reportingnamed executive officers as a group, including director nominees.group.
Beneficial ownership is determined based on the rules of the SEC. Percent of beneficial ownershipshares beneficially owned is based upon 17,264,58618,518,515 shares of common stock outstanding as of April 20, 2016.March 29, 2021. In addition, options for shares of common stock underlying options that are exercisable as of April 20, 2016March 29, 2021 or that will become exercisable on or before June 19, 2016May 28, 2021 (60 days subsequent to April 20)March 29, 2021) are treated as outstanding and beneficially owned by the person holding the options for the purpose of computing the percentage ownership of such person and are listed below under the “Number of Shares Underlying Options” column, but those option shares underlying options are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the Company believes that the stockholders listed below have sole voting or investmentand dispositive power with respect to all shares listed beside each stockholder’s name, subject to applicable community property laws.
Shares Outstanding as of 4/20/16 | 17,264,586 | |||||||
Beneficial Owners | Number of Shares Beneficially Owned | Number of Shares Underlying Options | Total Shares Beneficially Owned | Percent of Shares Beneficially Owned (%) | ||||
5% Stockholders | ||||||||
Ariel Investments, LLC , 200 East Randolph Drive, Chicago, IL 60601(1) | 2,915,815 | — | 2,915,815 | 16.89% | ||||
The Killen Group, 1189 Lancaster Ave., Berwyn, PA 19312(2) | 1,668,013 | — | 1,668,013 | 9.66% | ||||
Dimensional Fund Advisors LP, Palisades West, Building One, | ||||||||
6300 Bee Cave Road, Austin, TX 78746(3) | 1,547,941 | — | 1,547,941 | 8.97% | ||||
Renaissance Technologies LLC, 800 Third Street, New York, NY 10022(4) | 1,103,599 | — | 1,103,599 | 6.39% | ||||
BlackRock Inc., 55 East 52nd Street, New York, NY 10055(5). | 980,300 | — | 980,300 | 5.68% | ||||
Directors and Section 16 Officers | — | |||||||
Martin H. Singer(6) | 410,975 | 252,844 | 663,819 | 3.79% | ||||
Rishi Bharadwaj | 171,739 | 27,000 | 198,739 | 1.15% | ||||
David A. Neumann | 165,581 | 30,031 | 195,612 | 1.13% | ||||
John W. Schoen(7) | 143,445 | 32,033 | 175,478 | 1.01% | ||||
Kevin McGowan. | 91,464 | 22,500 | 113,964 | * | ||||
Jeffrey A. Miller | 89,757 | 40,041 | 129,798 | * | ||||
Brian J. Jackman | 77,300 | 20,000 | 97,300 | * | ||||
Giacomo Marini(8) | 54,490 | 20,000 | 74,490 | * | ||||
Steven D. Levy(9) | 51,391 | 35,000 | 86,391 | * | ||||
Shelley Bacastow | 35,768 | 10,875 | 46,643 | * | ||||
Cindy K. Andreotti | 20,776 | — | 20,776 | * | ||||
Carl A. Thomsen(10) | 17,806 | 10,000 | 27,806 | * | ||||
M. Jay Sinder | 13,800 | — | 13,800 | * | ||||
Gina Haspilaire | 13,697 | — | 13,697 | * | ||||
All directors, director nominees and current executive officers as a group (14 persons). | 1,357,989 | 500,324 | 1,858,313 | 10.46% |
Beneficial Owners | Number of Shares Beneficially Owned | Number of Shares Underlying Options | Total Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||||||||
5% Stockholders | ||||||||||||||||
Renaissance Technologies LLC/Renaissance Technologies Holdings Corporation (1) | 1,551,437 | — | 1,551,437 | 8.38 | % | |||||||||||
Chain of Lakes Investment Fund, LLC / Christopher B. Woodruff(2) | 1,527,272 | — | 1,527,272 | 8.25 | % | |||||||||||
Blackrock, Inc.(3) | 1,406,178 | — | 1,406,178 | 7.59 | % | |||||||||||
Royce & Associates, LP(4) | 1,282,649 | — | 1,282,649 | 6.93 | % | |||||||||||
Dimensional Fund Advisors LP (5) | 1,247,881 | — | 1,247,881 | 6.74 | % | |||||||||||
Directors and Named Executive Officers | ||||||||||||||||
David A. Neumann | 270,475 | — | 270,475 | 1.46 | % | |||||||||||
Rishi Bharadwaj | 217,531 | — | 217,531 | 1.17 | % | |||||||||||
Arnt Arvik | 39,398 | — | 39,398 | 0.21 | % | |||||||||||
Giacomo Marini (6) | 106,198 | — | 106,198 | * | ||||||||||||
Steven D. Levy (7) | 102,303 | — | 102,303 | * | ||||||||||||
Cindy K. Andreotti | 78,101 | — | 78,101 | * | ||||||||||||
Gina Haspilaire | 72,067 | — | 72,067 | * | ||||||||||||
M. Jay Sinder | 69,658 | — | 69,658 | * | ||||||||||||
Cynthia A. Keith | 41,040 | — | 41,040 | * | ||||||||||||
All directors, director nominees and named executive officers as a group (9 persons) | 996,771 | — | 996,771 | 5.38 | % |
(1) | Information with respect to the number of shares of PCTEL common stock beneficially owned is based solely on the Schedule |
(2) | Information with respect to the number of shares of PCTEL common stock beneficially owned is based solely on the Schedule |
(3) |
Information with respect to the number of shares of PCTEL common stock beneficially owned is based solely on the Schedule |
(4) | Information with respect to the number of shares of PCTEL common stock |
(5) | Information with respect to the |
(6) | Includes |
(7) | Includes 5,000 shares of PCTEL common stock held by Beena M. Levy, spouse of Steven D. Levy. |
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSISOTHER MATTERS
The Company qualifies as a “smaller reporting company” and is providing scaled disclosure on that basis in this section of the proxy statement.
Named Executive Officers
The purpose of this Compensation Discussion and Analysissummary of our executive compensation is to discuss material information relating to compensation awarded to the following individuals who have been identified by the Compensation Committee as the Company’s “Named Executive Officers” or “NEOs” for the fiscal year ended December 31, 2015:2020:
Name | Title as of December 31, | ||
David A. Neumann | |||
Rishi Bharadwaj | |||
Senior Vice President and | |||
Arnt Arvik | Vice President and Chief |
Information About Our Executive Officers
Because Mr. SingerNeumann is the Chairmana member of the Board in addition to Chief Executive Officer (“CEO”),of Directors and a director, his biographical information is included under Proposal #1 “Election of Directors — Directors and Nominees.”Directors” on page 13.
Mr. John W. Schoen, 60, has been the Company’s Chief Financial Officer, Vice President and Corporate Secretary since November 2001. In September 2013, Mr. Schoen was promoted to Senior Vice President, Chief Financial Officer and Corporate Secretary. Mr. Schoen served as a Business Development Manager at Agilent Technologies, Inc. from July 2000 to November 2001. From May 1999 to July 2000, Mr. Schoen served as Chief Operating Officer and Chief Financial Officer of SAFCO Technologies, Inc. before its acquisition by Agilent Technologies Inc. Prior to this period, Mr. Schoen held various financial positions for over 19 years at Motorola, Inc., including Controller of its Wireless Access and Business Development within Motorola’s Cellular Infrastructure Group. Mr. Schoen received a Bachelor of Science degree in Accounting from DePaul University and is a Certified Public Accountant.
Name, Position and Age | Background Information | |
Arnt Arvik Vice President and Chief Sales Officer Age: 56 | PCTEL Experience • Vice President and Chief Sales Officer since August 2018 with responsibility for the Company’s worldwide sales efforts • Vice President of Global Sales for RF Solutions from January 2017 to August 2018; and Vice President of Americas Sales and Engineering Services for RF Solutions from September 2016 to January 2017 Other Experience • Leadership positions, including Vice President of Americas Sales and Operations and Global Supply with Ascom Network Testing, a leader in optimization solutions for mobile networks, from 2009 to 2016 • Director of Business Development for the TEMS product line in the Americas with Ericsson Inc. from 2000 to 2009 Education and Credentials • Maritim Ingeniør (Maritime Engineering) degree from Aalesund Maritime College • Business Management degree from BI, a Norwegian business school | |
Shelley J. Bacastow Senior Vice President and Chief Legal Officer Age: 61 | PCTEL Experience • Senior Vice President and Chief Legal Officer since February 2020 with responsibility for addressing the Company’s legal matters worldwide • Vice President and General Counsel from January 2015 to February 2020; Assistant General Counsel from June 2014 to December 2014; Senior Corporate Counsel from October 2006 to June 2014; and outside counsel to the Company from April 2003 to October 2006 |
Name, Position and Age | Background Information | |
Other Experience • Senior Counsel with Motorola, Inc. from June 1996 to June 2002 and the head of the Global Finance Group in the law department from 1999 to 2002 • Senior Attorney with MCI Telecommunications, Inc. from June 1995 to June 1996 • Attorney with Chapman and Cutler, a Chicago-based law firm, from May 1984 to June 1995 Education and Credentials • Bachelor of Arts degree in Political Science from University of Wisconsin – Madison • Juris Doctor degree from Notre Dame Law School | ||
Rishi Bharadwaj Senior Vice President and Chief Operating Officer Age: 46 | PCTEL Experience • Senior Vice President and Chief Operating Officer since August 2018 with responsibility for the Company’s worldwide operations • Senior Vice President and General Manager-Connected Solutions from November 2016 to August 2018; Vice President and General Manager-Connected Solutions from March 2015 to November 2016; Vice President, Global Sales-Connected Solutions from March 2014 to March 2015; Vice President, Global Sales and Product Management from January 2014 to March 2014; and other leadership positions in the Connected Solutions segment from July 2003 to January 2014 Other Experience • RF and software engineering roles, developing data collection and data analytics tools for the cellular industry, with other companies from 1996 to 2003 Education and Credentials • Bachelor of Science degree in Electrical Engineering and Master’s degree in Electrical and Computer Engineering from Illinois Institute of Technology • Master’s degree in Business Administration from Northwestern University’s Kellogg School of Management | |
Suzanne Cafferty Vice President, Global Marketing Age: 52 | PCTEL Experience • Vice President, Global Marketing since April 2020 • Senior Director, Corporate Marketing from February 2019 to April 2020 Other Experience • Director of Marketing, Univar Solutions, a global leader in specialty chemical and ingredient distribution, from July 2017 to December 2018 • Senior Director, Global Marketing, Motorola Solutions, a leader in mission-critical communications products, solutions and services, from November 2015 to June 2017 • Various management roles including strategic marketing, brand and product marketing with Motorola Solutions from June 1993 to November 2015 |
Mr. Rishi Bharadwaj, 42, was promoted
Name, Position and Age | Background Information | |
Education and Credentials • Bachelor of Arts degree in English and History from University College Dublin, Ireland • Post Graduate Diploma in Marketing Management from Dublin Institute of Technology, Ireland • Master of Business Administration from Lake Forest Graduate School of Management, Illinois | ||
Kevin J. McGowan Vice President and Chief Financial Officer Age: 55 | PCTEL Experience • Vice President and Chief Financial Officer since December 2018 • Vice President of Finance and Corporate Controller from August 2011 to December 2018; and Controller from February 2005 to August 2011 Other Experience • Various finance and controller roles with Andrew Corporation, a manufacturer of hardware for communications networks, from 1992 to 2005 • Auditor with Arthur Anderson from 1988 to 1992 Education and Credentials • Bachelor of Arts degree in Accounting from the University of Notre Dame • Master’s degree in Business Administration from the University of Chicago Booth School of Business • Certified Public Accountant | |
Sumeet Paul Vice President and Chief Information Officer Age: 46 | PCTEL Experience • Vice President and Chief Information Officer of PCTEL since January 2017, with responsibility for the Company’s IT, software, and technology development and processes • Vice President and General Manager of data analytics from December 2015 to January 2017 • Director of Connectivity Solutions in the Mobility Solutions Group with responsibility for product engineering and IT and Product Owner for Segue Products, from January 2004 to January 2008, when Mobility Solutions Group was sold to SmithMicro • Engineering Manager, Mobility Solutions Group with responsibility for product engineering and IT from January 2002 until January 2004 Other Experience • Chief Software Architect for Connected Devices at Synchronoss Technologies, Inc., a digitization and cloud content management company for telecommunications, media and technology companies, from March 2011 to December 2015 • Co-Founder, Chief Technology Officer and Chief Financial Officer of Sapience Knowledge Systems, Inc. from September 2009 until March 2011 |
Name, Position and Age | Background Information | |
• Software development, software management, and IT management positions with SmithMicro Software, Inc., Agilent Technologies, and SAFCO Technologies, Inc. Education and Credentials • Bachelor of Science degree in Electrical Engineering from Northwestern University | ||
Leslie Sgnilek Vice President of Corporate Resources and Chief Risk Officer Age: 72 | PCTEL Experience • Vice President of Corporate Resources since June 2009, providing leadership for human resources and certain corporate functions • Chief Risk Officer since May 2013 • Variety of positions, including Corporate Treasurer, Vice President of Finance, and Director of Human Resources and Information Technology, from January 2001 to June 2009 Other Experience • Assistant Treasurer with Sea-Land Corporation, Corporate Treasurer with Trafalgar House Services, and Corporate Treasurer with Brown & Sharpe Manufacturing Company • Auditor with Grant Thornton Education and Credentials • Bachelor of Business Administration degree in Accounting from Baruch College • Master’s degree in Business Administration from St. John’s University in New York • Certified Public Accountant |
Annual Compensation Process
The Role of the Connected Solutions segment of the Company in March 2015. Prior to his promotion, Mr. Bharadwaj served as Vice President, Global Sales – Connected Solutions from March 2014 to March 2015; Vice President, Global Sales and Product Management from January 2014 to March 2014; Vice President, Product Management – Connected Solutions from July 2012 to January 2014; and Vice President, Product Management – Antenna Product Group from April 2010 to July 2012. Between July 2003 and April 2010, Mr. Bharadwaj held other leadership positions in the Connected Solutions segment. Between September 1996 and June 2003, he held several RF and software engineering roles where he developed data collection and data analytics tools for the cellular industry. Mr. Bharadwaj earned a Bachelor of Science degree in Electrical Engineering and a Master of Electrical and Computer Engineering degree from the Illinois Institute of Technology. He also holds a Master’s degree in Business Administration from Northwestern University’s Kellogg School of Management. He holds a patent for measuring data quality in wireless communication networks.
Mr. Jeffrey A. Miller, 60, has served as Senior Vice President, Global Sales--RF Solutions since July 2015. Previously he served as Senior Vice President, Global Sales--Connected Solutions from March 2015 to July 2015; Senior Vice President and General Manager, Site Solutions, from November 2014 through March 2015; President, Connected Solutions from December 2012 through November 2014; and prior to that as the Senior Vice President, Sales and Marketing of the Company since April 2010. From October 2006 until April 2010, Mr. Miller was Vice President and General Manager of the Company’s Antenna Products Group. From November 2001, when he joined PCTEL, until October of 2006, Mr. Miller served in a number of roles, from Vice President of Engineering through leadership roles in product management, new technology and global sales. Prior to joining PCTEL, Mr. Miller was Functional Manager of Wireless Optimization Products, Wireless Network Test Division of Agilent Technologies Inc. from July 2000 to November 2001. From January 1998 to July 2000, Mr. Miller served as Vice President of Engineering of SAFCO Technologies, Inc. and led its Test and Measurement Group before its acquisition by Agilent Technologies Inc. From September 1992 to January 1998, Mr. Miller was a PrincipalIndependent Compensation Consultant with Malcolm, Miller & Associates providing consulting services to wireless network operators and infrastructure suppliers. From 1978 through September of 1992, Mr. Miller held various technical and management positions at Motorola, Inc.’s Cellular Infrastructure Group. Mr. Miller received a Bachelor of Science degree in Computer Science from the University of Illinois.
Mr. David A. Neumann, 50, was promoted to Senior Vice President and General Manager of the RF Solutions segment of the Company in March 2015. Prior to his promotion, Mr. Neumann served as Vice President and General Manager, RF Solutions from January 2013 through March 2015, and previously as Global Vice President of Sales for RF Solutions since April 2010. From February 2009, when he joined PCTEL, until April 2010, Mr. Neumann served as Senior Director of Sales within RF Solutions. Prior to joining PCTEL, Mr. Neumann was the Managing Director of E-magine Communications, LLC, from January 2006 to February 2009. From January 2002 to January 2006, Mr. Neumann served as the Vice President of Sales and Marketing for X-TEL Communications, Inc. From July 1999 to January 2002, Mr. Neumann was the Market Development Director for Acterna, which was later purchased by JDSU. From May 1997, to July 1999, Mr. Neumann was a Principal at Intelinet, Inc. From January 1991 to May 1997, Mr. Neumann served in a number of roles from Vice President of Sales, Marketing and Support through leadership roles in engineering services, product management and sales at SAFCO Technologies, Inc. From June 1987 to January 1991, Mr. Neumann served as a Systems Engineer at Westinghouse Electric Corporation. Mr. Neumann holds a Bachelor of Science degree in Electrical Engineering from . The Pennsylvania State University and a Master of Business Administration from the University of Chicago Booth School of Business.
Compensation Philosophy
The Compensation Committee’s philosophy in setting compensation policies for the CEO, the other NEOs and certain Vice Presidents (collectively referred to as “executive officers”) and the employees designated as key managers by the CEO based upon their responsibilities and performance (hereinafter referred to as “key managers”) is the following:
Overview and Responsibilities of the Compensation Committee
The Compensation Committee of the Board of Directors currently consists of Mr. Jackman, Ms. Andreotti, Ms. Haspilaire, and Mr. Levy, each of whom is an independent, non-employee director of the Company. The Compensation Committee reviews its charter on an annual basis and has modified it from time to time, most recently in March 2013. The charter of the Compensation Committee is located on the Company’s website at http://investor.pctel.com/documentdisplay.cfm. The Committee’s primary duties are to (i) provide guidance with respect to general compensation goals and philosophies for the Company’s employees at all levels; (ii) balance the portion of executive compensation at risk and tied to achievement of corporate and business segment financial performance goals established by the Board of Directors with overall enterprise risk; (iii) make recommendations to the Board of Directors with respect to the compensation of the CEO; (iv) reviewCEO and the compensation criteria and proposed total compensation (including salary, bonus, benefits, and incentive compensation) recommended byother executive officers is established prior to the CEO for eachend of the executive officers and key managersfirst quarter of the Company, and approve an appropriate compensation package for each named executive officer which shall be structured consistent with the compensation philosophy (as described in “Compensation Philosophy” above); (v) review the internal pay equity among the CEO, the officers and the key managers; (vi) make recommendations from time to time to the Board of Directors regarding general equity and cash compensation for the outside directors on the Board of Directors; (vii) act as administrator of the Company’s equity incentive plans; and (viii) retain outside consulting, legal or other advisors to assist the Compensation Committee in the execution of its responsibilities.
The Compensation Committee meets at regularly-scheduled quarterly meetings and from time-to-time between quarterly meetings in order to address matters that fall within the Compensation Committee’s responsibilities. Minutes are recorded of all Compensation Committee meetings. The Compensation Committee reports to the Board of Directors regarding recommendations of the Compensation Committee and actions taken by the Compensation Committee pursuant to delegated authority. The Compensation Committee met a total of eight times in 2015, including a joint session with the Audit Committee.
It is the Compensation Committee’s practice to review at least annually all components of compensation for the executive officers and key managers to ensure that the amount and structure of total compensation for each is consistent with its compensation philosophies and objectives. Internal pay equity among the executive officers and key managers is also a factor in the Committee’s assessment of total compensation. With these considerations in mind, the general strategy of the Compensation Committee has been to (i) target executive compensation between the median and the 75th percentile of total direct compensation in reference to a peer group of publicly-traded companies and in accordance with other competitive market information in order to attract high-performing executives and key managers who also have opportunities with larger multinational companies, (ii) establish a strong correlation between the level of compensation and the financial performance of the Company compared against its peer group and other companies, and (iii) create incentives that closely align executive compensation with long-term interests of the Company’s stockholders.
Independent Compensation Consultant.fiscal year. The Compensation Committee relies upon the services of anWillis Towers Watson LLP, a global professional services company that serves as independent compensation consultant in applyingto the Compensation Committee (the “Independent Compensation Consultant”), to inform its judgmentdecisions as to appropriate levels and componentselements of compensation for the NEOs and other executive officers and key managers. Willis Towers Watson, a global professional services company formerly known as Towers Watson (the “Independentofficers. The Independent Compensation Consultant”),Consultant provides executive compensation consulting services to the Committee, including (i) assistanceassisting with establishing the Company’s compensation goals and objectives, (ii) providing relevant peer group and survey data on the compensation, practices of the participating companies, and (iii) advising on industry trends in executive compensation. The Independent Compensation Consultant provides no services to the Company other than the services it provides to the Compensation Committee. The Compensation Committee’s practice is to invite a representative of the Independent Compensation Consultant to attend substantially all Compensation Committee meetings.
The Independent Compensation Consultant has conducted an internal review and has certified that it is an independent advisorIn providing these services to the Compensation Committee, and that no conflict of interest exists. Although the fees of the Independent Compensation Consultant are paid by the Company, the Independent Compensation Consultant is accountable and has direct reporting responsibility to the Compensation Committee. The Independent Compensation Consultant provides no services to the Company other than the servicesanalyzes compensation information for comparable executive officers, which it provides to the Compensation Committee.
Survey Data, Peer Groups and Use of Industry Benchmarking Data. The Compensation Committee uses benchmarking information to evaluate “total compensation” of the Company’s NEOs (i.e., principally annual salary and short-term and long-term incentive awards). The benchmarking information is comprised of survey data which is derivedderives from two independent executive compensation surveys compiled by recognized compensation firms as well as publicly-available data from a peer group. The peer group is composed of publicly- traded15 publicly-traded companies that are comparable to the Company. The survey data used by the Independent Compensation Consultant is derived from different databasesCompany in terms of companies that compare to the Company only in general terms, including broad industry sectors, size and size of company.
The peer group information is designed to be more specific. The Compensation Committee,business complexity, and who compete with assistance from the Company’s management and guidance from the Independent Compensation Consultant, is responsible for selecting the companies that are included within this peer group and for compiling relevant executive compensation and corporate performance data. Due in part to the lack of small public companies involved in the same combination of industries as the Company it is not possible to construct a groupfor talent.
Consideration of companies with characteristics entirely similar to the Company. The Independent Compensation Consultant therefore compiles data from public companies that, based upon its expertise, are the most similar in terms of industry sector, revenue level, market capitalization, operating and financial characteristics and other relevant factors, and provide a meaningful comparison for the Compensation Committee.
The peer group of companies that was in effect for the Company at the time when the Compensation Committee set the 2015 executive compensation consists of the 17 companies listed below (the “2015 Peer Group”) with revenues for the most recent publicly available financial information ranging from approximately $44.5 million to $235.9 million and median revenues of approximately $105.7 million:
In September 2015, the Committee revised the peer group to eliminate five companies, each of which was acquired since the establishment of the 2015 Peer Group rendering relevant information for such companies unobtainable. In order to maintain a robust peer group for purposes of comparison, the following three companies were added to the Company’s peer group: Aerohive Networks, Inc., Clearfield, Inc., and Novatel Wireless, Inc. The resulting 15 members of the peer group in effect at the time the Compensation Committee set the 2016 executive compensation (the “2016 Peer Group”) are set forth below:
The compensation data derived from the 2015 Peer Group and the 2016 Peer Group consisted of the then-most recent publicly available annual and long-term compensation amounts. The financial performance data derived from the 2015 Peer Group and 2016 Peer Group included (i) one-year and three-year revenue change, (ii) net income change, (iii) net profit margin, (iv) return on invested capital, and (v) one-year, three-year and five-year total stockholder return. The Independent Compensation Consultant provided a comprehensive pay-for-performance analysis in connection with the Compensation Committee’s evaluation of executive compensation, comparing levels of compensation, expressed in dollars and percentages, against both compensation and performance data contained in the survey and peer group information.
Annual Compensation Process
Say-On-Pay Results. The Company considered the results of the Say-on-Pay proposal presented to the shareholdersstockholders for approval in 2015.2020. In light of the 98.7% support the proposal received in 2020,
the Company’s compensation policies and decisions explained in detail in this Compensation Discussion and Analysis, continue to beremain focused on long-termrewarding sustainable financial performance to drive stockholder value. The Company intends to hold an advisory vote on executive compensation (Say-on-Pay) on an annual basis.
The compensation of the CEO the other executive officers and the key managers is established prior to the end of the first quarter of the fiscal year. The Compensation Committee has full authority to determine the compensation of the executive officers (other than the CEO) and key managers of the Company.. The CEO’s compensation must be approved each year by the non-employee directors of theindependent Board of Directorsmembers based on the recommendation of the Compensation Committee. In making its recommendation with respect to the CEO’s compensation, the Compensation Committee takes into consideration, among other factors, the Company’s financial results and the results of a performance evaluation of the CEO for the preceding year. The annual evaluation of the CEO’s performance is based upon evaluation forms circulatedconducted by the Nominating and Governance Committee andthrough an electronic survey completed by all non-employee directors with respectindependent Board members. It requires each independent Board member to assess the CEO’s performance, as measured by the ability to meet the Company’s financial performance objectives, of the Company, conduct succession planning, execute strategic plans, exhibit leadership, create value, and maintain good relationships with the stockholders, the Board of Directors, and other stakeholders of the Company. At the time of this performance evaluation, the Compensation Committee solicits guidance from the Board of Directors as to the general elements that should be addressed in the CEO’s total compensation package for the upcoming year. In addition, theThe Chair of the CompensationNominating and Governance Committee as well asreports the Lead Independent Director, will solicit input fromresults to the CEOother independent Board members in the course of the Compensation Committee’s formulation of its recommendation.
executive session and moderates a discussion thereof. In formulating its recommendation to the Board of Directors with respect to the CEO’s compensation, the Compensation Committee exercises its judgment, taking into account the results of the Nominating and Governance Committee’s survey and the discussion thereof, any investor input that may have been received, and the comparative data and advice of the Committee’s Independent Compensation Consultant (as described in “Overview and Responsibilities of the Compensation Committee–Independent Compensation Consultant” above).Committee. The Compensation Committee’s discussions of the elements of compensation for the CEO are conducted in a closed session, typically with itsthe Independent Compensation Consultant in attendance but with no Company employees present. The Chair of the Compensation Committee solicits input from the CEO in the course of the Compensation Committee’s formulation of its recommendation; however, the CEO is not permitted to participate in the deliberations by the Board of Directors in its evaluationconsideration of the Compensation Committee’s recommendation for CEO compensation.
In establishingOther Executive Compensation. The Compensation Committee has full authority to determine the compensation forof the NEOs and other executive officers (other than the CEO),. In establishing compensation for such executive officers, the Compensation Committee relies on (i) insights provided by the CEO as to their respectiveCEO’s evaluation of each executive officer’s individual performance, (ii) the compensationbenchmarking data compiled by the Independent Compensation Consultant, and (iii) the Company’s compensation philosophy, as described in “Compensation Philosophy” above.philosophy. The CEO attended 6five of the 8seven Compensation Committee meetings in 20152020 in order to provide his insight on the contributions made by variouseach executive officers and key managers.officer. After consulting with itsthe Independent Compensation Consultant and considering the CEO,benchmarking data, the Compensation Committee, in its discretion, setsapproves the annual compensation for NEOs and the other executive officers (other than the CEO), including salary and short-term and long-term incentives.
Principal Elements of Executive Compensation
The principal elements of executive compensation are briefly described below:
Compensation Element | Description | |
Base salary | • Principal element of cash compensation that is not “at risk” • The Compensation Committee considers the performance, experience, and responsibilities of the executive officers in setting base salaries. • The Compensation Committee seeks to establish base salaries that are competitive with those paid to comparable executive officers based upon benchmarking data provided by the Independent Compensation Consultant. | |
Short-Term Incentive Plan | • Annual performance-based incentive plan designed to motivate achievement of specifically-identified, short-term corporate objectives • The Company’s annual financial plan plays an important role in establishing the objectives and target performance for this plan. • Awards are denominated in cash but may be paid in cash, shares or a combination of both. • Not available to sales executives or sales team | |
Sales Compensation Plan | • Variable compensation linked to the sales team’s success in generating profitable sales • Determined based upon the achievement of the assigned sales quota and level of earnings • Paid in cash • Available only to sales executives and sales team | |
Long-Term Incentive Plan | • Designed to encourage sustainable growth, consistent earnings, and management retention through consistency in long-term incentives • Equity awards can be performance-based, service-based or a combination of both. • Performance-based incentive awards are generally based upon a multiple year performance period. | |
Change of control benefits | • Intended to induce certain executive officers to continue to contribute to the success of the Company in connection with an event resulting in (i) the majority of the voting control of the Company being transferred (whether by way of merger, reorganization, or acquisition) or (ii) the sale of all or substantially all of the Company’s assets • Includes salary continuation and Company-paid healthcare benefits for a specified period of time and vesting of certain restricted stock previously awarded under the Short-Term and Long-Term Incentive Plans • Triggered if the executive officer is involuntarily terminated within twelve months of a change of control (i.e., a “double trigger”) | |
Severance benefits | • Intended to compensate certain executive officers in the event of an involuntary termination of his/her employment unrelated to a change of control • Includes salary continuation and Company-paid healthcare benefits for a specified period of time and vesting of certain restricted stock previously awarded under the Short-Term and Long-Term Incentive Plans | |
Other benefits | • Medical, dental, and vision benefits and term life and long-term disability insurance are provided with all or a substantial portion of the cost thereof paid by the Company. • Employee Stock Purchase Plan allows employees of the Company to participate electively in a plan under which, through individual payroll deductions, they are permitted twice a year to buy shares of the Company’s common stock at prices discounted from the market price. • The Company maintains a 401(k) plan and matches the contribution of a plan participant up to the first 4% of the participant’s compensation. The Company match vests immediately. |
2020 Compensation
The following table presents the compensation of the NEOs for the years indicated below:
Summary Compensation Table
Name and Principal Position | Year | Salary(1) ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | ||||||||||||||||||
David A. Neumann | 2020 | 358,625 | 318,875 | — | 38,932 | 716,432 | ||||||||||||||||||
Chief Executive Officer | 2019 | 375,000 | 157,447 | 495,938 | 51,533 | 1,079,918 | ||||||||||||||||||
Rishi Bharadwaj | 2020 | 308,750 | 133,696 | — | 36,679 | 479,125 | ||||||||||||||||||
Senior Vice President & Chief Operating Officer | 2019 | 322,500 | 94,860 | 326,988 | 47,323 | 791,671 | ||||||||||||||||||
Arnt Arvik(5) . . . . . . . . . . . . . . . . .. . . . . . . . . . | 2020 | 237,500 | 116,900 | 99,072 | 28,632 | 482,104 | ||||||||||||||||||
Vice President & Chief Sales Officer |
(1) | The amounts shown reflect the actual amounts paid as salary during fiscal years 2020 and 2019. The decrease shown in 2020 reflects a temporary 10% salary reduction instituted by the Board of Directors on April 1, 2020 to address the economic disruption caused by the COVID-19 pandemic. Concurrently with the salary reduction, the executive officers received shares of the Company’s common stock with equivalent value to 5% of salary which vest on April 1, 2021. The Board of Directors restored 5% of salary effective July 1, 2020. |
(2) | The amounts shown do not reflect compensation actually received by the NEO in the year indicated. Instead, the amounts shown represent the aggregate grant date fair value of the restricted stock granted in the year indicated, calculated pursuant to FASB ASC Topic 718, excluding the effect of estimated forfeitures, and with performance-based shares valued at target. For a discussion of the valuation assumptions, see Note 9 to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020. |
The stock awards are restricted stock granted pursuant to the Long-Term Incentive Plan in effect for the year indicated. The award for each participant under the 2020 Long-Term Incentive Plan (“2020 LTIP”) is comprised of a performance-based incentive award (67%) and a service-based award (33%). The table below shows the maximum number and value of performance-based shares that may vest and be received under the 2020 LTIP. Performance-based shares are earned and vest, if at all, in 2023 based upon the Company’s performance over a three-year period. Performance is measured against a specified revenue target with a penalty if Adjusted EBITDA, a non-GAAP measure, as a percentage of revenue falls below specified levels. The table indicates the maximum number of performance shares that would be awarded at the completion of the performance period with performance at or above the maximum revenue goal (without an Adjusted EBITDA penalty), and corresponding values using the closing price of a share of PCTEL common stock on the grant date. For the number of performance shares at target, see “Awards Under the 2019 Long-Term Incentive Plan” on page 35. No additional shares will be awarded under the 2020 LTIP for performance exceeding the maximum performance goal. Each NEO must be an employee, director or contractor of the Company on the performance determination date to receive the stock award.
Name | Year | Maximum (# of Shares) | Value @ Maximum ($) | |||||||||
David A. Neumann | 2020 | 41,981 | 365,233 | |||||||||
Rishi Bharadwaj | 2020 | 15,750 | 137,025 | |||||||||
Arnt Arvik | 2020 | 14,000 | 121,800 |
(3) | For Mr. Neumann and Mr. Mr. Bharadwaj, the amounts shown reflect the value of grants awarded pursuant to the 2020 and 2019 STIP. The 2020 STIP is discussed under “Awards Under the2020 Short-TermIncentivePlan” below. For Mr. Arvik, the amount shown reflects variable compensation earned under his 2020 Sales Compensation Plan, which is discussed under “Variable Compensation under 2020 Sales CompensationPlan” below. |
(4) | All Other Compensation represents matching contributions under the 401(k) plan, group life, accident and disability insurance premiums, healthcare insurance premiums and contributions to Health Savings Accounts, and dividends on unvested restricted stock awards. |
(5) | Mr. Arvik was not a NEO during the fiscal year ended December 31, 2019. |
Awards Under the 2020 Short-Term Incentive Plan. The 2020 Short-Term Incentive Plan (“2020 STIP”) was designed to provide incentive awards for the NEOs and other executive officers based on the achievement of
the specifically-identified corporate Adjusted EBITDA and revenue goals. The design of the 2020 STIP weighted achievement of the Adjusted EBITDA goal at 70% and achievement of the revenue goal at 30%. The target Adjusted EBITDA and revenue goals were consistent with the Company’s 2020 financial plan targets. The threshold Adjusted EBITDA was 16% below the target and the maximum Adjusted EBITDA was 30% above the target. The threshold revenue was 7% below the target and the maximum revenue was 7% above the target. Incentive awards for achievements between the threshold and target goals or between the target and maximum goals were determined on a straight-line basis. The 2020 STIP was designed with no incentive award for performance below the threshold and no increased incentive for performance above the maximum. The 2020 STIP awards were payable 50% in the Company’s common stock and 50% in cash for NEOs, other executive officers and key managers includingand 100% in cash for all other participants. The percentage of base salary short-term equity incentivespaid as the incentive award at the three levels of achievement is assigned to participants by job category and long-term equity incentives.
Summary of Principal Elements of Executive Compensation
responsibilities.
The principal elementsdetermination of Adjusted EBITDA for 2020 incorporates the actual cash payout made to participants under the 2020 STIP, thereby aligning the 2020 STIP participants’ interests directly with those of the stockholders. “Adjusted EBITDA” is a non-GAAP measure that the Company defines as GAAP operating profit, excluding stock compensation expenses, amortization of intangible assets, depreciation, restructuring charges, impairment charges, gain/loss on sale of product lines, and expenses included in executive compensationGAAP operating profit to the extent their recovery is recorded below operating profit. We believe that use of this non-GAAP measure facilitates comparability of results over different periods.
The Compensation Committee established the 2020 STIP Adjusted EBITDA and revenue goals for the executive officersCompany in February 2020 and key managersbelieved that they were challenging but achievable with significant effort. Continued success of the Company’s higher-margin test and measurement products associated with 5G and other emerging technologies was more than offset by the global recession attributable to the COVID-19 pandemic. The Compensation Committee did not adjust either of the goals. The Company achieved Adjusted EBITDA of $9,106,000 on revenue of $77,456,000, falling in both cases below the relevant threshold. Thus, no incentive awards were paid under the 2020 STIP.
The threshold, target, maximum and actual 2020 STIP awards for Mr. Neumann and Mr. Bharadwaj are summarized in the following, each of which is briefly describedtable below:
1. Annual salary;
At Threshold | At Target | At Maximum | Actual | |||||||||||||||||||||||||||||
Name | (% of base salary) (1) (%) | $ | (% of base salary) (%) | $ | (% of base salary) (2) (%) | $ | (% of base salary) (%) | Award ($) | ||||||||||||||||||||||||
David A. Neumann | 37.50 | 134,484 | 75.00 | 268,969 | 150 | 537,938 | — | — | ||||||||||||||||||||||||
Rishi Bharadwaj | 28.75 | 88,766 | 57.50 | 177,531 | 115 | 355,063 | — | — |
(1) | The threshold award is equal to 50% of the target award. |
2. Annual incentive awards administered
(2) | The maximum award is equal to 200% of the target award. |
Variable Compensation under 2020 Sales Compensation Plan. As Chief Sales Officer, Mr. Arvik had a 2020 Sales Compensation Plan intended to more directly link his compensation to the performance of the Company’s sales team in generating profitable sales. Mr. Arvik’s variable compensation under his 2020 Sales Compensation Plan was determined based upon the achievement of the assigned sales quota and Adjusted EBITDA (as defined under “Awards Under the 2020 Short-Term Incentive Plan;
3. Equity awards administered underPlan” above) goals. Mr. Arvik’s sales quota was based upon the Long-Term Incentive Plan;
4. Change of Control and severance benefits; and
5. Medical and other standard benefits.
1. Annual Salary.Company’s total revenue, with the target consistent with the Company’s 2020 financial plan target. Likewise, the target Adjusted EBITDA goal was consistent with the Company’s 2020 financial plan target. The Compensation Committee uses salarypayout factor on each goal accelerates as the principal element of cash compensation which is not “at risk.” In determining the level of annual salary,revenue and Adjusted EBITDA increases, and payouts are capped as described in the table below.
The target, maximum and actual variable compensation under Mr. Arvik’s 2020 Sales Compensation Committee considersPlan are summarized in the performance, experience and responsibilities of the executive officer or key manager, and seeks to establish an annual salary that is competitive with those paid to comparable executive officers and key managers at its benchmark companies. A competitive annual salary is essential to the Company’s ability to hire and retain executive officers and key managers.table below:
2.Short-Term Incentive Plan. The Short-Term Incentive Plan is an annual performance-based incentive plan designed to incentivize achievement of specifically-identified, short-term corporate and business segment objectives. In establishing the objectives and setting the targets under the Short-Term Incentive Plan, the Compensation Committee takes into consideration the following factors:
Name | At Target | At Maximum | Actual | |||||||||||||||||||||
(% of base salary) (%) | $ | (% of base salary) (1) (%) | $ | (% of base salary) (%) | Award ($) | |||||||||||||||||||
Arnt Arvik | 67 | 159,125 | 168 | 397,813 | 42 | 99,072 |
(1) | The maximum variable compensation would be payable if the Company had both revenue and Adjusted EBITA equal to or exceeding 200% of the relevant targets. |
Awards Under the Company and specific business segments;
The Short-Term Incentive Plan allows for the incentive awards to be paid in cash, restricted stock or a combination of both.
3.2020 Long-Term Incentive Plan. The Company also grants long-term equityLong-Term Incentive Plan for 2020 (“2020 LTIP”), like the Long-Term Incentive Plan for 2019, featured a substantial percentage of awards on an annual basis through the grant ofsubject to performance-based vesting: 67% is a performance incentive award with restricted stock and/or stock options undershares vesting based upon the Company’s Stock Plan (as further describedrevenue growth over a three-year period (the “performance period”) and 33% is a service-based award with restricted shares vesting over three years in “General Termsequal annual installments. Target performance requires achievement of Equity Grants—Stock Plan”)compound annual growth in revenue of 8% over the performance period (i.e., revenue in 2022 must reflect 8% compound annual growth over revenue in 2019). AlthoughIf the name and structureCompany achieves the target performance over the performance period, the NEOs will receive the number of performance-based shares indicated in the table below at the conclusion of the long term incentive plan changes over the years, in general the awards under this plan are made to encourage long-term growth, consistent earnings, and management retention through consistency in long-term incentives.
4.Change of Control and Severance Benefits.The Company offers retention benefitsperformance period, subject to the executive officers in orderpotential reduction described below relating to induce the executive officers to continue to contribute to the success of the Company in connection with an event resulting in the majority of the voting control of the Company being transferred (whether by way of merger, reorganization, acquisition, or sale of all or substantially all of the Company’s assets). These benefits are contractually available to certain executive officers if such an event occurs and within twelve months after such occurrence, the executive officer is involuntarily terminated (i.e., a “double trigger”). Although the benefits vary among the executive officers participating, the benefits generally include lump sum paymentachievement of a specified percentage of annual salary, acceleration of 100% of any then unvested equity incentives, and Company-paid healthcare benefits for a specified period of time.
Certain executive officers are also entitled to severance benefits in connection withAdjusted EBITDA goal over the involuntary termination of their employment unassociated with a Change of Control.performance period. The severance benefits include salary continuation and Company-paid healthcare benefits for a specified period of time, and vesting of certain restricted shares previously awarded under short-term and long-term incentive programs.
5.Medical and Other Standard Benefits. The Company offers standard benefits to its executives and key managers, including medical, dental, and vision benefits, and term life and long-term disability insurance, a substantial portion of which are paid by the Company. The Company’s Employee Stock Purchase Plan allows employeesvalue of the Company to participate electivelyshares in a plan under which, through individual payroll deductions, they are permitted twice a year to buy shares at prices discounted from the tradingtable below is calculated using the closing price of the stock. In addition, the Company maintains a 401(k) plan for PCTEL employees, administered by an independent plan administrator, which provides a selection of investment alternatives from which plan participants may choose. The Company matches up to the first 4% of compensation contributed by a plan participant, which vests immediately.
Summary of 2015 Company Financial Performance and Equity Compensation
2015 Company Financial Performance. Revenues were approximately $106.6 million for the year ended December 31, 2015, a decrease of 0.5% from the prior year. The RF Solutions segment revenue increased $2.1 million (6%) in 2015 over 2014. Revenue from scanning receivers and in-building engineering services was lower than 2014, but the decrease was offset by the revenue generated from engineering services related to drive testing and staffing resulting from the acquisition of substantially all the assets of Nexgen Wireless, Inc. (“Nexgen”) in the first quarter of 2015. The Connected Solutions segment revenue decreased $2.8 million, or 4%. Within the Connected Solutions segment, revenue declined for cellular kitting and mobile tower products but increased for antenna products. PCTEL sold its mobile tower business assets in July 2015 and is no longer maintaining its mobile tower product portfolio.
Non-GAAP earnings per share of PCTEL common stock were $0.11 foron the year ended December 31, 2015, a decrease of $0.37 per share, or 77%, from the prior year. The decrease reflects lower gross profit from lower revenue for scanners, in-building engineering services, cellular kitting and mobile towers, combined with higher operating costs from the acquisition of Nexgen Wireless in 2015 compared to the prior year.grant date.
Service- Based Shares | Value of Service- Based Shares | Performance- Based Shares | Value of Performance- Based Shares | Total # of Shares | Value of Shares Total | |||||||||||||||||||
David A. Neumann | 10,494 | $ | 91,298 | 23,989 | $ | 208,704 | 34,483 | $ | 300,002 | |||||||||||||||
Rishi Bharadwaj | 4,500 | $ | 39,150 | 9,000 | $ | 78,300 | 13,500 | $ | 117,450 | |||||||||||||||
Arnt Arvik | 4,000 | $ | 34,800 | 8,000 | $ | 69,600 | 12,000 | $ | 104,400 | |||||||||||||||
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59,983 | $ | 521,852 | ||||||||||||||||||||||
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PCTEL’s financial performance
The actual number of performance-based shares awarded will be greater or less than indicated in 2015 as compared with its peer group was at the median for net profit margin, three-year total shareholder return and five-year total shareholder return, and between the 25th percentile and median for one-year revenue growth, three-year revenue growth, return on invested capital and one-year total shareholder return, alltable above based upon the most recently publicly-available data collected byCompany’s performance relative to target. If the Independent Compensation Consultant.Company achieves greater than the target performance over the performance period, the NEOs will receive more performance-based shares than indicated in the table above, determined in accordance with the table below. The 2020 LTIP payout ranges from 0% to 175% of the target performance award. Award percentages at growth rates between those in the table will be mathematically interpolated.
Revenue Growth for Performance Period | % of Target Performance Award | |
0.00% or less | 0.00% | |
1.00% | 12.50% | |
2.00% | 25.00% | |
3.00% | 37.50% | |
4.00% | 50.00% | |
5.00% | 62.50% | |
6.00% | 75.00% | |
7.00% | 87.50% | |
8.00% | 100.00% | |
9.00% | 118.75% | |
10.00% | 137.50% | |
11.00% | 156.25% | |
12.00% or more | 175.00% |
The foregoing notwithstanding, the number of performance-based shares earned will be reduced by 20% if the Company’s Adjusted EBITDA (as defined in “Awards Under the 20152020 Short-Term Incentive Plan” on page 34) as a percentage of the Company’s revenue for the performance period is less than 8%. Each NEO must be an employee, director or contractor of the Company on the performance determination date in order to receive the performance-based award and on the vesting date in order to receive the service-based award.
Equity Plans and Awards
Stock Plan. ForEquity issued by the purposes of determiningCompany under the annual incentive award2020 LTIP is issued under the PCTEL, Inc. 2019 Stock Incentive Plan (the “2019 Stock Incentive Plan”). The 2019 Stock Incentive Plan replaced the PCTEL, Inc. Stock Plan adopted in 2015 (the “2015 Stock Plan”). Equity awards granted under the 2015 Short-TermStock Plan that are earned or vest subsequent to adoption of the 2019 Stock Incentive Plan (“are nevertheless issued from shares remaining in the 2015 STIP”)Stock Plan.
Although the Compensation Committee can grant stock options under the 2019 Stock Incentive Plan, no stock options were granted to executive officers during 2019 and 2020. The Compensation Committee has never re-priced previously granted stock options, and both the 2015 Stock Plan and the 2019 Stock Incentive Plan expressly prohibit such re-pricing of previously granted stock options. The 2019 Stock Incentive Plan includes further provisions reflecting equity incentive plan “best practices” intended to protect the interests of our stockholders, including (i) limits on the shares that can be issued to an individual in a calendar year, (ii) no “evergreen” provision that automatically increases the number of shares authorized under the plan, (iii) no “recycling” of shares used to, for example, satisfy tax withholding obligations, and (iv) a limit (i.e., 5% of the Company’s performance was measured by (i) revenue growth in 2015 over 2014 revenue, and (ii)aggregate shares available for issuance under the increaseplan) on the number of non-GAAP earnings per shareshares that can be issued without a vesting period of at least one year.
The following table provides information as of December 31, 2020 about PCTEL common stock that may be issued upon the exercise of outstanding awards and shares remaining for issuance in 2015 over 2014 non-GAAP earnings per share. (The difference between non-GAAP earnings per shareconnection with future awards:
Plan Category | Securities to be (#) | Weighted Average Exercise ($) | Securities Remaining Available (#) | |||||||||
Equity compensation plans approved by stockholders | 460,171 | (1) | 6.71 | (2) | 4,051,457 | (3) | ||||||
Equity compensation plans not approved by stockholders | — | — | — |
(1) | Includes options to purchase, and unvested restricted stock awards and restricted stock units with respect to, 460,171 shares. Does not include purchase rights under the PCTEL, Inc. Employee Stock Purchase Plan (the “ESPP”) . |
(2) | Reflects the weighted average exercise price of options to purchase shares. Does not include purchase rights under the ESPP, restricted stock awards or restricted stock units. |
(3) | Includes 299,979 shares remaining available under the 2015 Stock Plan; 2,109,184 shares available under the 2019 Stock Incentive Plan; and 1,642,294 shares available for issuance under the ESPP. |
Stock Retention Guidelines. In order to align further the interests of the Company’s NEOs and GAAP earnings per share isother Section 16 officers with the exclusion from non-GAAP earningsinterests of stock-based compensation expense, amortization of intangible assets, restructuring charges, impairment charges, gain/ loss on the sale of product lines, non-cash income tax expense, legal settlement income beyond the related costs, and non-cash other income.) As has been the case over the past several years,stockholders, the Board of Directors adopted a sliding scale onstock retention policy that prohibits (i) the CEO from selling or otherwise disposing of PCTEL common stock unless, after giving effect to the sale, he holds shares with a non-linear basismarket value equal to twice his annual base salary, and (ii) the other NEOs and Section 16 officers from selling or otherwise disposing of PCTEL common stock unless, after giving effect to the sale, such officer holds shares with a market value equal to his/her annual base salary.
Outstanding Equity Awards. The following table indicates the unexercised options, unvested stock and equity incentive plan awards for determining the incentive award under the 2015 STIP in order to produce no incentive award for low revenue and earnings growth, a small incentive award for average or slightly above-average revenue and earnings growth, and a sharply increasing incentive award for superior revenue and earnings growth. The payout factor (also referred toeach NEO outstanding as the “target award percentage”) for 2015 if the Company achieved both metrics of the 2015 financial plan at target was 20%.December 31, 2020:
Market Value of Shares or Units of Stock That Have Not Vested(2) ($) Equity Incentive Awards: Unearned Shares, or Other Rights Have Not Vested(3) (#) David A. Neumann — — — — — 32,733 215,056 43,906 288,462 Rishi Bharadwaj — — — — — 17,531 115,179 21,000 137,970 Arnt Arvik 9/14/2016 5,000 — 5.06 9/14/2023 14,866 97,670 18,700 122,859 The target award percentages actually achieved by the Company in 2015 were below the threshold established by the aggressive 2015 STIP. Consequently, none of the participants received any payment under the 2015 STIP, as summarized in the table below: Option Awards Stock Awards Name Grant
Date
Securities
Underlying
Unexercised
Options
(Exercisable)
(#)
Securities
Underlying
Unexercised
Options
(Unexercisable)
(#) Option
Exercise
Price
($) Option
Expiration
Date
Shares
or
Units of
Stock
That
Have
Not
Vested(1)
(#)
Plan
Units
That Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested (2)
($)
Results of 2015 Short-Term Incentive Plan
Name | Maximum 2015 Potential Award | Maximum 2015 Potential Award ($) | 2015 Target Award(1) | Award Paid ($) | Award Paid | |||||
Martin H. Singer | 130 | 579,150 | 115,830 | — | — | |||||
John W. Schoen | 100 | 261,000 | 52,200 | — | — | |||||
Rishi Bharadwaj | 90 | 204,930 | 40,986 | — | — | |||||
Jeffrey A. Miller | 100 | 291,000 | 58,200 | — | — | |||||
David A. Neumann | 100 | 238,500 | 47,700 | — | — | |||||
Jigar Thakkar | 80 | 158,400 | 31,680 | — | — |
(1) | The |
David A. Neumann | Rishi Bharadwaj | Arnt Arvik | ||||||||||||||||||||||||||||||
Grant Date | Vesting Date | Number of Shares Vesting | Grant Date | Vesting Date | Number of Shares Vesting | Grant Date | Vesting Date | Number of Shares Vesting | ||||||||||||||||||||||||
2/7/2018 | 2/11/2021 | 12,078 | 2/7/2018 | 2/11/2021 | 6,000 | 2/7/2018 | 2/11/2021 | 5,000 | ||||||||||||||||||||||||
2/6/2019 | 2/6/2021 | 3,320 | 2/6/2019 | 2/6/2021 | 2,000 | 2/6/2019 | 2/6/2021 | 1,767 | ||||||||||||||||||||||||
2/6/2019 | 2/6/2022 | 3,320 | 2/6/2019 | 2/6/2022 | 2,000 | 2/6/2019 | 2/6/2022 | 1,767 | ||||||||||||||||||||||||
3/15/2019 | 2022 | 19,917 | 3/15/2019 | 2022 | 12,000 | 3/15/2019 | 2022 | 10,700 | ||||||||||||||||||||||||
2/5/2020 | 2/5/2021 | 3,498 | 2/5/2020 | 2/5/2021 | 1,500 | 2/5/2020 | 2/5/2021 | 1,333 | ||||||||||||||||||||||||
2/5/2020 | 2/5/2022 | 3,498 | 2/5/2020 | 2/5/2022 | 1,500 | 2/5/2020 | 2/5/2022 | 1,333 | ||||||||||||||||||||||||
2/5/2020 | 2/5/2023 | 3,498 | 2/5/2020 | 2/5/2023 | 1,500 | 2/5/2020 | 2/5/2023 | 1,334 | ||||||||||||||||||||||||
2/5/2020 | 2023 | 23,989 | 2/5/2020 | 2023 | 9,000 | 2/5/2020 | 2023 | 8,000 | ||||||||||||||||||||||||
4/1/2020 | 4/1/2021 | 3,521 | 4/1/2020 | 4/1/2021 | 3,031 | 4/1/2020 | 4/1/2021 | 2,332 |
(2) | The market value is calculated by multiplying |
Awards under the 2015 Long-Term Incentive Plan. The 2015 Long-Term Incentive Plan (the “2015 LTIP”) has a four year revenue goal to encourage long-term growth and imposes a penalty for failure to maintain consistent Adjusted EBITDA (as hereinafter defined). The 2015 LTIP is designed so that at the end of the initial two-year interim measuring period, the participants will receive an equity award if the Company’s actual revenue at the conclusion of that interim period exceeds the revenue threshold for such interim period. Because the first interim period for the 2015 LTIP will not end until December 31, 2016, no equity awards have yet been determined under the 2015 LTIP; however, the Company is not recording an expense for future awards under the 2015 LTIP at this time and the 2015 LTIP does not permit a “catch-up” in the second interim measuring period to compensate for a shortfall if there should be one in the first interim period ended on December 31, 2016.
The threshold revenue required for the 2014 LTIP was not reached at the conclusion of the first two-year measuring period on December 31, 2015, and accordingly the participants did not receive an award thereunder. The participants may receive an award under the 2014 LTIP if the revenue generated by the Company in the second two-year measuring period ending on December 31, 2017 exceeds the threshold; however, the Company is not recording an expense for future awards under the 2014 LTIP at this time. The 2014 LTIP does not permit a “catch-up” in the second interim measuring period to compensate for the shortfall in the first interim period that ended on December 31, 2015.
Other Equity Granted. As previously reported, in September 2015, the Board approved a one-time, serviced-based equity grant of 200,000 restricted shares to Mr. Singer, Chairman and Chief Executive Officer, not associated with the Company’s short- term or long-term incentive programs. The restricted shares vest on September 10, 2017 if Mr. Singer remains an employee on the date of vesting.
As previously reported, in November 2015 the Board approved a serviced-based equity grant of 75,000 restricted shares to each of Mr. Neumann, Senior Vice President and General Manager, RF Solutions, and Mr. Rishi Bharadwaj, Vice President and General Manager, Connected Solutions not associated with the Company’s short-term or long-term incentive programs. The restricted shares vest over four (4) years, with no restricted shares vesting in the first two years and 50% of the restricted shares vesting on each of the third and fourth anniversaries of the grant. Each recipient must be an employee of the Company on the applicable vesting date in order for his award to vest.
In addition, as previously reported in order to better align compensation incentives with long-term shareholder interest, reduce operating expenses and improve earnings, effective August 31, 2015, the Board of Directors approved a reduction in the base salary of each NEO and concurrently granted shares of the Company’s common stock correlated to the amount of the salary reduction, as further described in “2016 Implementation of the Principal Elements of Executive Compensation—Annual Salaries in 2016.”
2016 Implementation of the PrincipalElementsof ExecutiveCompensation
1.Annual Salaries in 2016.
CEO Salary.The salary of the Chief Executive Officerfor 2016, 2015, and 2014 are set forth below:
Name | 2016 $ | 2015 $ | 2014 $ | |||
Martin H. Singer(1) | 445,500 | 495,000 | 495,000 |
on December 31, 2020.
SalariesforOtherNamedExecutiveOfficers.ThesalariesoftheotherNEOsfor2016,2015,and2014aresetforthbelow:
Salaries forOtherNamed Executive Officers
Name | 2016 $ | 2015 $ | 2014 $ | |||
JohnW. Schoen(1) | 261,000 | 290,000 | 290,000 | |||
Rishi Bharadwaj(1)(2) | 227,700 | 230,000 | — | |||
Jeffrey A. Miller(1)(3) | 230,000 | 300,000 | 300,000 | |||
DavidA. Neumann(1) | 235,500 | 265,000 | 251,000 | |||
JigarThakkar(1)(4) | — | 220,000 | — |
(3) | The number of performance-based shares is based on achievement of target performance goals. The vesting date for performance-based shares is dependent on the timing of the completion of the Company’s audit of the final year in the performance period. |
2.2016Short-TermIncentivePlan.ThemetricsusedbytheCompanytomeasureitsfinancialperformancewillbe:(1) 2016revenue,and(2)theincreaseofnon-GAAPearningspershareofPCTELcommonstockin2016overactual2015non-GAAP earningspershare,whichisconsistentwiththe2015 STIP.
Inordertodriveandrewardhighergrowthinrevenueandearningspershare,forseveralyearstheCompensationCommittee hasusedaslidingscaleonanon-linearbasisfordeterminingtheincentiveawardunderShort-TermIncentivePlan.Asisevidenced bythelackofawardsearnedunderthe2015STIP,thenon-linearnatureofthepayoutfactorsassuresthatthere willbenoincentive award for low revenue and earnings growth, a small incentive award for average or slightly above-average revenue and earnings growth anda sharplyincreasingincentive awardfor superior revenueandearnings growth.
For2016,theCompensationCommitteecontinuedthedifferentiationamongtheNEOsbaseduponachievementofspecific businesssegmentgoals.ThoseNEOswithbusinesssegmentresponsibilitieswillcontinuetohaveachievementofbusinesssegment goalsweightedmoreheavilythanachievementofcorporategoals,andnon-GAAPoperatingprofit willcontinuetobeweighted moreheavilythanrevenuegeneration.(Non-GAAP earningspersharediffersfromGAAP earningspersharebytheexclusionof stock-basedcompensationexpense, amortization of intangible assets, restructuring charges,impairmentcharges,gain/loss on the sale ofproductlines,non-cashincometaxexpense,legalsettlement incomebeyondtherecoveryofrelated costs,and non-cashother income.Thedifferencebetweennon-GAAPearningspershareatthecorporatelevelandnon-GAAPoperatingprofit atthebusiness segmentlevelis(i) corporate expenses, (ii) otherincome and expenses, and (iii) income taxes.)
Thechartbelowdepictstheresultingpayoutfactorsatvariousachievementlevelsofrevenueandnon-GAAPearnings pershareoftheCompanyforthecorporategoalsofMr.SingerandMr.Schoen.Aswasthecasefor2015,in2016thesecorporate goalswillbeweighted100%forMr.SingerandMr.Schoen,andcorporatenon-GAAP earningspersharewillbeweighted80% withcorporaterevenueweighted20%.
Corporate— Mr.Singer& Mr.Schoen
Weight 20% | Weight 80% | ||||||||||||
Revenue $ Millions | % Earned | Non-GAAP EPS | % Earned | ||||||||||
113.0 | 20.0% | $0.47 | 80.0% | ||||||||||
112.0 | 17.0% | $0.45 | 68.0% | ||||||||||
111.0 | 15.0% | $0.43 | 60.0% | ||||||||||
110.0 | 13.0% | $0.41 | 52.0% | ||||||||||
109.0 | 11.0% | $0.39 | 44.0% | ||||||||||
108.0 | 9.0% | $0.37 | 36.0% | ||||||||||
Target | 107.0 | 7.0% | $0.35 | 28.0% | Target | ||||||||
<107.0 | 0.0% | $0.24 | 24.0% | ||||||||||
$0.20 | 20.0% | ||||||||||||
$0.15 | 8.0% | ||||||||||||
$0.11 | 0.0% |
Thechartbelow depictstheresultingpayout factors which areapplicabletoMr.Neumannatvariousachievementlevels of(i)revenueandnon-GAAPearningspershareatthecorporateleveland(ii)revenueandnon-GAAPoperatingprofit forthe Company’sRFSolutionsbusinesssegment.TheRFSolutionsbusinesssegment’sgoals willbe weighted70%(rather than60% as was the case in 2015) with the corporate goals weighted 30%; however, the weighting of the business segment’s non-GAAP operating profit goal has remained 80% with its revenue goal weighted 20%.
RF Solutions Segment — Mr.Neumann
Total PCTEL | RF Solutions Segment | ||||||||||||||||||||||||
Weight 6% | Weight 24% | Weight 14% | Weight 56% | ||||||||||||||||||||||
Revenue $ Millions | % Earned | Non-GAAP EPS | % Earned | Revenue $ Millions | % Earned | Non-GAAP Op. Profit($M) | % Earned | ||||||||||||||||||
113.0 | 6.0% | $0.47 | 24.0% | 41.2 | 14.0% | 8.3 | 56.0% | ||||||||||||||||||
112.0 | 5.1% | $0.45 | 20.4% | 40.8 | 11.9% | 7.9 | 47.6% | ||||||||||||||||||
111.0 | 4.5% | $0.43 | 18.0% | 40.5 | 10.5% | 7.6 | 42.0% | ||||||||||||||||||
110.0 | 3.9% | $0.41 | 15.6% | 40.1 | 9.1% | 7.2 | 36.4% | ||||||||||||||||||
109.0 | 3.3% | $0.39 | 13.2% | 39.7 | 7.7% | 6.9 | 30.8% | ||||||||||||||||||
108.0 | 2.7% | $0.37 | 10.8% | 39.4 | 4.0% | 6.5 | 25.2% | ||||||||||||||||||
Target | 107.0 | 2.1% | $0.35 | 8.4% | 39.0 | 2.8% | 6.2 | 19.6% | Target | ||||||||||||||||
<107.0 | 0.0% | $0.24 | 7.2% | <39.0 | 0.0% | 4.2 | 16.8% | ||||||||||||||||||
0.0% | $0.20 | 6.0% | 0.0% | 3.5 | 14.0% | ||||||||||||||||||||
0.0% | $0.15 | 2.4% | 0.0% | 2.6 | 5.6% | ||||||||||||||||||||
0.0% | $0.11 | 0.0% | 0.0% | 1.9 | 0.0% |
The chart below depicts the resulting payout factors which are applicable to Mr. Bharadwaj at various achievement levels of (i) revenue and non-GAAP earnings per share at the corporate level and (ii) revenue and non-GAAP operating profit for the Company’s Connected Solutions business segment. The weighting of Connected Solutions business segment’s goals will be weighted 70% (rather than 60% as was the case in 2015) with the corporate goals weighted 30%; however, the weighting of the business segment’s non-GAAP operating profit goal has remained 80% with its revenue goal weighted 20%.
Connected Solutions Segment — Mr. Bharadwaj
Total PCTEL - Corporate | Connected Solutions Segment | ||||||||||||||||||||||
Weight 6% | Weight 24% | Weight 14% | Weight 56% | ||||||||||||||||||||
Revenue | % | Non-GAAP | % | Revenue | % | Non-GAAP | % | ||||||||||||||||
$ Millions | Earned | EPS | Earned | $ Millions | Earned | Op. Profit ($M) | Earned | ||||||||||||||||
113.0 | 6.0% | $0.47 | 24.0% | 73.9 | 14.0% | 13.8 | 56.0% | ||||||||||||||||
112.0 | 5.1% | $0.45 | 20.4% | 73.3 | 11.9% | 13.2 | 47.6% | ||||||||||||||||
111.0 | 4.5% | $0.43 | 18.0% | 72.6 | 10.5% | 12.7 | 42.0% | ||||||||||||||||
110.0 | 3.9% | $0.41 | 15.6% | 72.0 | 9.1% | 12.1 | 36.4% | ||||||||||||||||
109.0 | 3.3% | $0.39 | 13.2% | 71.3 | 7.7% | 11.5 | 30.8% | ||||||||||||||||
108.0 | 2.7% | $0.37 | 10.8% | 70.7 | 6.3% | 10.9 | 25.2% | ||||||||||||||||
Target | 107.0 | 2.1% | $0.35 | 8.4% | 70.0 | 4.9% | 10.3 | 19.6% | Target | ||||||||||||||
<107.0 | 0.0% | $0.24 | 7.2% | <70.0 | 0.0% | 7.1 | 16.8% | ||||||||||||||||
$0.20 | 6.0% | 5.9 | 14.0% | ||||||||||||||||||||
$0.15 | 2.4% | 4.4 | 5.6% | ||||||||||||||||||||
$0.11 | 0.0% | 3.2 | 0.0% |
The 2016 financial plan results in a 35% payout factor at the targeted 0.4% revenue growth and $0.24 non-GAAP earnings per share growth over 2015 revenue and non-GAAP earnings per share. This compares to the 2015 STIP that provided for a payout factor of 20% for achieving targeted 27.8% revenue growth and $0.12 non-GAAP earnings per share growth over 2014. The change in the payout factor was made to reflect the aggressive 218% increase in targeted non-GAAP earnings per share in 2016 over non-GAAP earnings per share in 2015. The Compensation Committee believes that the financial plan targets are challenging, but achievable with significant effort. The financial plan is determined by management and the Compensation Committee based upon recent performance levels, sales expectations, technology and industry factors, and overall economic conditions. It is approved by the Board of Directors.
In order to determine the actual incentive award amount received by any participant in the 2016 Short-Term Incentive Plan (“2016 STIP”), the payout factor determined by the tables above are weighted as applicable and multiplied by the participant’s maximum percentage of salary that can be earned as an incentive award (as determined by the Compensation Committee on an individual basis based upon performance and job responsibilities) and then multiplied by such participant’s annual salary. The Compensation Committee increased the maximum percentage of salary that can be earned as an incentive award in 2016 by 10% for Mr. Bharadwaj. The participation in the 2016 STIP by the NEOs is summarized in the table below:
2016 Maximum Potential Award | 2016 Target Award Upon Full Achievement of Financial Plan(1) | |||||||||
Name | 2016 Salary ($) | As a % of Salary | ($) | As a % of Salary | ($) | |||||
Martin H. Singer | 445,500 | 130 | 579,150 | 46 | 202,703 | |||||
John W. Schoen | 261,000 | 100 | 261,000 | 35 | 91,350 | |||||
Rishi Bharadwaj | 227,700 | 100 | 227,700 | 35 | 79,695 | |||||
David A. Neumann | 238,500 | 100 | 238,500 | 35 | 83,475 |
The incentive award amount under the 2016 STIP will be paid to the participants in restricted shares. The number of shares granted will be based on the total dollar value of the award divided by the closing price of PCTEL common stock as presented by NASDAQ on the date of grant.
4.2016 Long-Term Incentive Plan. Under the respective long-term incentive plans adopted in 2014 (“2014 LTIP”) and 2015 (“2015 LTIP”), a four-year revenue goal was set with two-year interim measuring periods at which awards based upon revenue attainment would be granted. The interim measuring periods under the 2014 LTIP end on December 31, 2015 and 2017, and the interim measuring periods for the 2015 LTIP end on December 31, 2016 and 2018. By design, no awards were available in the first year of the 2014 LTIP or the 2015 LTIP. Primarily as a result of the unexpected loss of the principal customer of its newly-acquired analytics and services business in 2015, as well as unanticipated declines in network engineering services due to reduced capital spending by telecommunications carriers, slower than expected capital spending in China, and the weakened demand for mobile towers resulting from the drop in oil prices, the Company did not reach its 2015 revenue goals. As a result, there was no payment to any participant under the 2014 LTIP at the end of the first interim period on December 31, 2015. The Company is not recording any expense under GAAP in connection with the second interim period of the 2014 LTIP or the 2015 LTIP at this time.
In addition to no payments being made in 2014 or 2015 under the LTIP programs, there were no payments under the 2015 Short-Term Incentive Plan (see “Summary of 2015 Company Financial Performance and Equity Compensation—Awards under the 2015 Short-Term Incentive Plan) and no salary increases in 2016 (see “2016 Implementation of the Principal Elements of Executive Compensation—Annual Salaries in 2016”). Accordingly, the Compensation Committee has adopted a new design for the 2016Long-Term Incentive Plan (“2016 LTIP”). While the Compensation Committee has continued to set aggressive revenue and non- GAAP earnings goals for the 2016 Short-Term Incentive Plan, the Compensation Committee focused on (i) simplifying and creating consistency in the Company’s long-term incentives, (ii) eliminating the overlap with the Short-Term Incentive Plan metrics, and (iii) retaining executive talent important to the Company’s future. The 2016 LTIP adopted by the Committee is service-based with the incentives vesting in equal annual increments over a four-year period. Each NEO must be an employee of the Company on the respective vesting dates in order for him to receive the vested portion of the incentive.
2016 Long-Term Incentive
Overall, the total long-term equity to be granted by the Company to Mr. Bharadwaj and Mr. Neumann, general managers of the respective segments of the Company, under the 2016 LTIP is between the median and the 75th percentile for long-term incentives based on survey data provided by the Compensation Committee’s Independent Compensation Consultant. The total long- term equity to be granted by the Company to Mr. Schoen and Mr. Miller under the 2016 LTIP is at or near the 25th percentile for long-term incentives based on survey data provided by the Compensation Committee’s Independent Compensation Consultant. See “Responsibilities of the Compensation Committee—Survey Data, Peer Groups and the Use of Industry Benchmarking Data.” Mr. Singer is not participating in the 2016 LTIP, but received an equity grant in 2015 which will vest in 2017 upon satisfaction of the condition pertaining thereto. (See “Summary of 2015 Company Financial Performance and Equity Compensation—Other Equity Granted”.)
5.Change of Control and Severance Arrangements. Benefits
The Company offershas entered into Management Retention Agreements to provide retention benefits to its NEOs and certain of its other executive officers upon the occurrence of certain events surrounding a Change of Control in order toControl. These retention benefits are intended induce the executivesexecutive officers to continue to contribute to the success of the Company in the transition period and the post-acquisition period to the extent permitted by the successor or acquirer. A “Change of Control” is anyan event resulting in (i) the majority of the voting control of the Company being transferred (whether by way of merger, reorganization, or acquisition ofacquisition) or (ii) the Company (including by way of sale of all or substantially all of the Company’s assets) in which a majority of the voting control of the Company is transferred.assets. The retention benefits offered by the Company to certain executive officers in connection with a Change of Control are based on a “double trigger” structure requiring both (i) a completed Change of Control event, and (ii) within 12 months following such Change of Control event, either (x) an involuntary termination of such executive officer’s employment within 12 months following such Change of Control event other than as a result of cause, disabilitydeath or death (an “Involuntary Termination”),disability, or (y) a termination by the executive officer of his or her employment pursuant to a Voluntary“Voluntary Termination for Good ReasonReason” (as such capitalized terms are defined in the applicable Management Retention Agreement)management retention agreement). The principal retention benefits available to the NEOs and participating executive officers upon satisfaction of both triggers are a lump sum payment of a specified percentage of annualbase salary, acceleration of 100% of any then unvested equity incentives, and Company-paid healthcare benefits for a specified period of time, all as indicated in the table below. The Company does not provide any tax gross-up on retention benefits. The Compensation Committee believes that the level of these benefits would not, in the aggregate, represent a financial deterrent to a buyer or successor entity in considering a combination transaction with the Company.
The description of the Management Retention Agreements and the benefits payable thereunder is qualified in its entirety by reference to the Form of Management Retention Agreement, and in the case of Mr. Neumann, the Amended and Restated Management Retention Agreement dated April 9, 2013 between PCTEL, Inc. and David A. Neumann and First Amendment thereto dated December 13, 2016, filed as exhibits to our Form 10-K.
Under their employment and/or severance benefit agreementsbenefits letters with the Company (and in the case of Mr. Neumann, his employment agreement with the Company), the NEOs and certain other executive officers are also entitled to severance and related benefits in connection with (i) the Involuntary Terminationan involuntary termination of theirsuch executive officer’s employment other than as a result of cause, death or disability, and (ii) a termination by the NEOexecutive officer of his or her employment pursuant to a Voluntary“Voluntary Termination for Good ReasonReason” (as defined in the applicable Management Retention Agreement)severance benefits letter or employment agreement) in each case, unassociated with a Change of Control. The principal severance benefits
include salary continuation, acceleration of the vesting of certain equity awards, and Company-paid healthcare benefits for a specified period of time. In addition,Mr. Neumann would also receive a short-term incentive or other bonus based upon the occurrenceCompany’s actual performance for the performance period pro-rated for the period of an involuntary termination (or, with respectemployment. The Company does not provide any tax gross-up on severance benefits. The description of the severance benefits letters and the benefits payable thereunder is qualified in its entirety by reference to the CEO, death or disability), severance benefits include vestingForm of any equity awards which are scheduledSeverance Benefits Letter filed as an exhibit to vest within the following 12 months.
In the caseour Form 10-K. The description of the CEO, severance benefits resulting from involuntary termination also include payment of the maximum potential incentive award under the Short-Term Incentive Plan; in the event of death or disability, the amount of the incentive award that would be paid under the Short-Term Incentive Plan would be based on the actual amount of the incentive award determined for the year in which death or disability occurred, pro-rated for such year based on the date of death or disability. The Company’s currentMr. Neumann’s employment agreement with Mr. Singer also imposes a non-competition and non-solicitation covenant for a period of 12 months from his termination datethe benefits payable thereunder is qualified in connection with his separation fromits entirety by reference to the Company, including in the event of a Change of Control that is followed by the involuntary termination of his employment.
Employment Agreement dated December 5, 2016 between PCTEL, Inc. and David A. Neumann filed as an exhibit to our Form 10-K.
The table below andsummarizes the summary of retention arrangements related to benefits associated with severance or aand Change of Control of the Company should be read in conjunction with the tables entitled “Potential Payments Upon Terminationbenefits for our Named Executive Officers as of December 31, 2015” and “Potential Payments Upon Change of Control as of December 31, 2015” in “Executive Compensation and Other Matters” on page 39.2020:
Severance Benefits ( i.e., Involuntary Termination | Change of Control Benefits (i.e., Involuntary Termination | |||||||||||||||
Not Related to a Change of Control) | Within 12 Months of a Change of Control) | |||||||||||||||
Acceleration | Acceleration | Multiple of | Acceleration | |||||||||||||
of Unvested | of Unvested | Annual Salary | Acceleration | of Unvested | ||||||||||||
Salary | Healthcare | Options | Restricted Shares | (Paid in | Healthcare | of Unvested | Restricted | |||||||||
Name | Continuation | (in months) | (in months) | (in months)(2) | Lump Sum) | (in months) | Options | Shares(3) | ||||||||
Martin H. Singer | 12 months(1) | Up to 18 months | 12 months | 12 months | 2.75x | Up to 12 months | 100% | 100% | ||||||||
John W. Schoen | 12 months | Up to 12 months | 12 months | 12 months | 2x | Up to 12 months | 100% | 100% | ||||||||
Rishi Bharadwaj | 12 months | Up to 12 months | 12 months | 12 months | 2x | Up to 12 months | 100% | 100% | ||||||||
Jeffrey A. Miller | 12 months | Up to 12 months | 12 months | 12 months | 2x | Up to 12 months | 100% | 100% | ||||||||
David A. Neumann | 12 months | Up to 12 months | 12 months | 12 months | 2x | Up to 12 months | 100% | 100% | ||||||||
Jigar Thakkar(4) | NA | NA | NA | NA | NA | NA | NA | NA |
Severance Benefits (i.e., Involuntary Termination Unrelated Related to a Change of Control) | Change of Control Benefits (i.e., Involuntary Termination Within 12 Months of a Change of Control) | |||||||||||||||||||||||||||||||||||
Name | Salary Continuation | Short-Term Incentive Plan | Healthcare (in months) | Acceleration of Unvested Options | Acceleration of Unvested Restricted Shares(1) | Multiple of Annual Salary (Paid in Lump Sum) | Healthcare (in months) | Acceleration of Unvested Options | Acceleration of Unvested Restricted Shares(2) | |||||||||||||||||||||||||||
David A. Neumann | 12 months | Pro-Rata | (3) | Up to 12 months | 100% | 100% | 2.25x | Up to 12 months | 100 | % | 100 | % | ||||||||||||||||||||||||
Rishi Bharadwaj | 12 months | — | Up to 12 months | 12 months | 12 months | 2x | Up to 12 months | 100 | % | 100 | % | |||||||||||||||||||||||||
Arnt Arvik | 12 months | — | Up to 12 months | 12 months | 12 months | 2x | Up to 12 months | 100 | % | 100 | % |
(1) | The occurrence of an involuntary termination (other than for cause, death or disability) or a Voluntary Termination for Good Reason (as defined in the severance benefits letter) of an NEO (other than the CEO) in 2020 would have resulted in service-based restricted shares partially accelerating as if the NEO had continued to be employed for 12 months. The occurrence of an involuntary termination (other than for cause) |
(2) | Upon the occurrence of a Change of Control, performance-based equity awards will automatically convert into service-based equity awards with no performance contingencies but with monthly vesting over the |
(3) | Under his employment agreement, Mr. |
6.Other Benefits. No material changes have been made
HOUSEHOLDING OF ANNUAL PROXY MATERIALS
SEC rules allow us to deliver a single copy of an annual report and proxy statement to any household at which two or more shareholders reside. We believe this rule benefits everyone. It eliminates duplicate mailings that shareholders living at the medical benefitssame address receive, and it reduces our printing and mailing costs. This rule applies to any annual reports, proxy statements, proxy statements combined with a prospectus and information statements.
If your household would like to receive single rather than duplicate mailings in the future, please write to Broadridge Investor Communications Solutions, Householding Department, 51 Mercedes Way, Edgewood, New York 11717, or call 1-866-540-7095. Each shareholder will continue to receive a separate proxy card or Notice of Internet Availability of Proxy Materials. If a broker or other standard benefitsnominee holds your shares, you may continue to receive some duplicate mailings. Certain brokers will eliminate duplicate account mailings by allowing shareholders to consent to such elimination, or through implied consent if a shareholder does not request continuation of duplicate mailings. Since not all brokers and nominees offer shareholders the opportunity to eliminate duplicate mailings, you may need to contact your broker or nominee directly to discontinue duplicate mailings from your broker to your household.
Your household may have received by NEOsa single set of proxy materials this year. If you would like to date in 2016. See “Summaryreceive another copy of Principal Elements of Executive Compensation—Medical and Other Standard Benefits” for additional information.
CEO Total Direct Compensation
Mr. Singer’s total target compensation for 2016 (consisting solely of salary, target award underthis year’s proxy materials, please (i) visit www.proxyvote.com, (ii) call 1-800-579-1639, or (iii) send an email to sendmaterial@proxyvote.com. If sending an email, please include the 2016 STIP and target award under the 2016 LTIP) equates to $648,203, representing a decrease from 2015 target total compensation of $843,700 and an increase from actual total compensation of $559,293 received in 2015 as salary and short-term and long-term incentives. In addition to the compensation referenced in the preceding sentence, the CEO received an additional equity grant in 2015, as described in “Summary of 2015 Company Financial Performance and Equity Compensation—Other Equity Awards”. The CEO’s total target compensation for 2016 (inclusive of the elements listed above) if the Company achieves the financial plan targets for revenue and non-GAAP earnings per share is below the 25th percentile of comparable companies based16-digit control number indicated on the market consensus data gathered by the Independent Compensation Consultant from surveyNotice of Availability.
Our 2021 Annual Report to Stockholders, which includes our annual report on Form 10-K and peer group executive compensation information. If the Company
exceeds the target growth in revenue and non-GAAP earnings per share, then as a result of the sliding scale of the 2016 STIP (as described in “2016 Implementation of the Principal Elements of Executive Compensation—2016 Short-Term Incentive Plan”), the CEO could achieve total compensation above the median. The Committee believes that Mr. Singer’s total direct target compensationconsolidated financial statements for 2016 is appropriate.
General Terms of Equity Grants
Stock Plan. All equity issued by the Company (whether as restricted stock or stock options, and whether granted under the Short-Term Incentive Plan, the Long-Term Incentive Plan or otherwise) is issued under the Stock Plan. The Stock Plan was originally approved by the stockholders in 1997 as the “1997 Stock Plan,” and was amended and restated in 2010 to replace the then current 1997 Stock Plan and the 1998 Director Stock Option Plan. It was further amended and restated at the 2015 annual meeting and was renamed as the “Stock Plan”.
Material Terms of Stock Option Grants. Stock options are granted to non-executive new hires from time to time. The Compensation Committee has never re-priced previously granted stock options where the trading price of the Company’s stock is less than the exercise price of the stock options, and the Stock Plan expressly prohibits such re-pricing of previously granted stock options.
Administrative Protocols in Stock Option and Restricted Stock Grants. The Company adopted a Statement of Administrative Policy in November 2006, codifying approved procedures in respect of award grants under the Stock Plan. This policy is administered by the Compensation Committee and will also be applicable to the Stock Plan. The key elements of the policy are as follows:
Stock Ownership Guidelines
In order to align further the interests of the Company’s NEOs with the interests of the stockholders, the Board of Directors adopted a policy that prescribes ownership levels of PCTEL common stock. The CEO is required to maintain PCTEL common stock with a value equal to twice his annual salary and each other NEO is required to maintain PCTEL common stock with a value equal to his annual salary. All of the NEOs are in compliance with the Stock Ownership Guidelines.
Section 162(m) of the Internal Revenue Code
Under Section 162(m) of the Code, the Company is able for federal tax purposes to deduct compensation paid to the NEOs only if the compensation for each such executive officer is less than $1 million during the fiscal year or is “performance-based” as defined under Section 162(m). Although it is the objective of the Compensation Committee to seek to qualify all executive compensation as deductible, in order to provide flexibility and to ensure that the executive compensation programs remain competitive, the Compensation Committee has not adopted a policy with this objective. In June 2015, the Board of Directors adopted and the stockholders approved an Amended and Restated Stock Plan governing the equity awards granted thereunder for purposes of Section 162(m) of the Code. In 2015, all compensation paid to the NEOs of the Company was below $1 million threshold under Section 162(m) for purposes of corporate tax deductibility.
Adjustment of Awards
The Company’s financial statements and the related financial performance goals and measures used by the Compensation Committee as the basis for executive compensation have not been subject to subsequent revision or restatement. As a result, the Compensation Committee has never been required to consider an adjustment of an award. However, if such a circumstance were to occur, the Compensation Committee and the Board of Directors would consider all appropriate remedial measures, which may include the recovery of amounts that were inappropriately awarded to an individual executive officer or key manager.
COMPENSATION COMMITTEE REPORT
The following report shall not be deemed incorporated by reference in any filing under the federal securities laws by virtue of any general incorporation of this proxy statement by reference and shall not otherwise be treated as filed under the federal securities laws.
The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K under the Securities Exchange Act of 1934, as amended, and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s 2015 Annual Report on Form 10-K.
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EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table presents the compensation of the NEOs for the fiscal years ended December 31, 2015, 2014 and 2013:
Summary Compensation Table
Name | Year | Salary(1) ($) | Bonus ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | ||||||||
Martin H. Singer | 2015 | 478,500 | — | 1,512,793 | — | — | 38,446 | 2,029,739 | ||||||||
2014 | 491,500 | — | 223,826 | — | 28,958 | 27,924 | 772,208 | |||||||||
2013 | 478,250 | — | — | 252,737 | 368,428 | 36,704 | 1,136,119 | |||||||||
John W. Schoen | 2015 | 280,333 | — | 179,559 | — | — | 27,644 | 487,536 | ||||||||
2014 | 290,000 | — | 111,913 | — | 12,398 | 27,205 | 441,516 | |||||||||
2013 | 273,750 | — | 43,300 | 122,689 | 159,933 | 27,236 | 626,908 | |||||||||
Rishi Bharadwaj(6) | 2015 | 224,233 | — | 519,261 | — | — | 26,245 | 769,739 | ||||||||
Jeffrey A. Miller | 2015 | 297,000 | — | 146,898 | — | — | 31,540 | 475,438 | ||||||||
2014 | 300,000 | — | 143,886 | — | 5,940 | 31,276 | 481,102 | |||||||||
2013 | 300,000 | — | — | 153,360 | 193,023 | 31,605 | 677,988 | |||||||||
David A. Neumann | 2015 | 252,667 | — | 602,798 | — | — | 29,239 | 884,704 | ||||||||
2014 | 247,000 | — | 183,852 | — | 49,359 | 29,063 | 509,274 | |||||||||
2013 | 235,000 | — | 23,520 | 115,019 | 115,201 | 27,252 | 515,992 | |||||||||
Jigar Thakkar(6) | 2015 | 149,177 | — | 846,099 | — | — | 36,186 | 1,031,462 |
The stock awards include: (i) restricted stock granted concurrently with the reduction in each NEO’s salary in August 2015, as described in footnote (1) of each of the tables under “Compensation Discussion and Analysis — 2016 Implementation of the Principal Elements of Executive Compensation —Annual Salaries in 2016” above; (ii) restricted stock granted as set forth in “Compensation Discussion and Analysis – Summary of 2015 Company Financial Performance and Equity Compensation –Other Equity Granted” above, (iii) restricted stock granted pursuant to the Long-Term Incentive Plan in effect for the year indicated; and (iv) with respect to Mr. Thakkar, 100,000 restricted shares granted in connection with his employment with the Company following the acquisition of Nexgen Wireless, Inc. The actual value that may be realized from the restricted stock awards described in subsections (i) through (iv) is contingent upon the NEO remaining an employee of the Company on the vesting date. The actual value that may be realized from the restricted stock awards under each of the 2015 Long-Term Incentive Plan (“2015 LTIP”) and the 2014 Long-Term Incentive Plan (“2014 LTIP”), as mentioned in subsection (iii), is also contingent upon satisfaction of the conditions to vesting in that award. The amounts shown in the table below include the value of performance-based restricted shares granted under the 2015 LTIP in 2015 and under the 2014 LTIP in 2014. The table indicates various values of the performance shares at different levels of achievement (i.e., at threshold and target) using the price on the grant date, as well as the estimated value of the share grants based upon performance conditions. The amounts reflected are not indicative of the compensation actually received in such years:
Name | Year | Threshold in Shares # | Value @ Threshold ($) | Target in Shares # | Value @ Target ($) | Estimated Value as of 12/31/2015 ($) | ||||||
Martin H. Singer | 2015 | 9,375 | 82,500 | 25,000 | 220,000 | — | ||||||
2014 | 10,500 | 88,935 | 28,000 | 237,160 | — | |||||||
John W. Schoen | 2015 | 5,625 | 49,500 | 15,000 | 132,000 | — | ||||||
2014 | 5,250 | 44,468 | 14,000 | 118,580 | — | |||||||
Rishi Bharadwaj | 2015 | 5,625 | 49,500 | 15,000 | 132,000 | — | ||||||
Jeffrey A. Miller | 2015 | 5,625 | 49,500 | 15,000 | 132,000 | — | ||||||
2014 | 6,750 | 57,173 | 18,000 | 152,460 | — | |||||||
David A. Neumann | 2015 | 7,500 | 66,000 | 20,000 | 176,000 | — | ||||||
2014 | 8,625 | 73,054 | 23,000 | 194,810 | — | |||||||
Jigar Thakkar | 2015 | — | — | — | — | — | ||||||
Name | Year | Service Based Options # | Value $ | Performance Based Options @ Target # | Value @ Target ($) | Additional Value @ Maximum Payout ($) | ||||||
Martin H. Singer | 2013 | — | — | 80,000 | 222,568 | 55,642 | ||||||
John W. Schoen | 2013 | 20,000 | 57,451 | 20,000 | 57,451 | 14,363 | ||||||
Jeffrey A. Miller | 2013 | 25,000 | 71,814 | 25,000 | 71,814 | 17,953 | ||||||
David A. Neumann | 2013 | 18,750 | 53,860 | 18,750 | 53,860 | 13,467 |
The following table provides information on equity awards granted in fiscal 2015 to each of the NEOs:
Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2015
All Other Stock; Number of Shares of Stock or Units # | Exercise or Base Price of Option Awards ($) | Grant Date Fair Value of Stock and Option Awards ($) $ | |||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | ||||||||||||||||||||
Name | Grant Date(3) | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||
Martin H. Singer | 3/19/2015 | 11,583 | 115,830 | 579,150 | — | — | — | — | — | — | |||||||||||
3/19/2015 | — | — | — | 82,500 | 220,000 | 220,000 | — | — | — | ||||||||||||
9/1/2015 | — | — | — | — | — | — | 14,100 | — | 80,793 | ||||||||||||
9/10/2015 | — | — | — | — | — | — | 200,000 | — | 1,212,000 | ||||||||||||
John W. Schoen | 3/19/2015 | 5,220 | 52,200 | 261,000 | — | — | — | — | — | — | |||||||||||
3/19/2015 | — | — | — | 49,500 | 132,000 | 132,000 | — | — | — | ||||||||||||
9/1/2015 | — | — | — | — | — | — | 8,300 | — | 47,559 | ||||||||||||
Rishi Bharadwaj | 3/19/2015 | 1,230 | 40,986 | 204,930 | — | — | — | — | — | — | |||||||||||
3/19/2015 | — | — | — | 49,500 | 132,000 | 132,000 | — | — | — | ||||||||||||
9/1/2015 | — | — | — | — | — | — | 700 | — | 4,011 | ||||||||||||
11/19/2015 | — | — | — | — | — | — | 75,000 | — | 383,250 | ||||||||||||
Jeffrey A. Miller | 3/19/2015 | 1,746 | 58,200 | 291,000 | — | — | — | — | — | — | |||||||||||
3/19/2015 | — | — | — | 49,500 | 132,000 | 132,000 | — | — | — | ||||||||||||
9/1/2015 | — | — | — | — | — | — | 2,600 | — | 14,898 | ||||||||||||
David A. Neumann | 3/19/2015 | 1,506 | 47,700 | 238,500 | — | — | — | — | — | — | |||||||||||
3/19/2015 | — | — | — | 66,000 | 176,000 | 176,000 | — | — | — | ||||||||||||
9/1/2015 | — | — | — | — | — | — | 7,600 | — | 43,548 | ||||||||||||
11/19/2015 | — | — | — | — | — | — | 75,000 | — | 383,250 | ||||||||||||
Jigar Thakkar(4) | 2/27/2015 | — | — | — | — | — | — | 100,000 | — | 810,000 | |||||||||||
3/19/2015 | 950 | 31,680 | 158,400 | — | — | — | — | — | — | ||||||||||||
9/1/2015 | — | — | — | — | — | — | 6,300 | 36,099 |
Outstanding Equity Awards at Fiscal Year End December 31, 2015
Option Awards | Stock Awards | |||||||||||||||||||
Equity | ||||||||||||||||||||
Incentive | ||||||||||||||||||||
Plan | ||||||||||||||||||||
Equity | Awards: | |||||||||||||||||||
Incentive | Market | |||||||||||||||||||
Plan | or Payout | |||||||||||||||||||
Equity | Awards: | Value of | ||||||||||||||||||
Incentive | Market | Unearned | Unearned | |||||||||||||||||
Plan Awards: | Number | Value of | Shares | Shares, | ||||||||||||||||
Number of | Number of | Number of | of Shares | Shares | Units or | Units or | ||||||||||||||
Securities | Securities | Securities | or Units | or Units | Other | Other | ||||||||||||||
Underlying | Underlying | Underlying | of Stock | of Stock | Rights | Rights | ||||||||||||||
Unexercised | Unexercised | Unexercised | Option | That | That | That That | That | |||||||||||||
Options | Options | Unearned | Exercise | Option | Have Not | Have Not | Have Not | Have Not | ||||||||||||
(Exercisable) | (Unexercisable) | Grant | Options | Price | Expiration | Vested(1) | Vested(2) | Vested(3) | Vested(2) | |||||||||||
Name | (#) | (#) | Date | (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||
Martin H. Singer | 90,844 | — | 4/9/2013 | — | 7.16 | 4/9/2020 | — | — | — | — | ||||||||||
30,000 | — | 5/1/2006 | — | 10.56 | 5/1/2016 | — | — | — | — | |||||||||||
132,000 | — | 8/1/2006 | — | 9.16 | 8/1/2016 | — | — | — | — | |||||||||||
— | 214,100 | 974,155 | 53,000 | 241,150 | ||||||||||||||||
John W. Schoen | 32,033 | 10,678 | 4/9/2013 | — | 7.16 | 4/9/2020 | — | — | — | — | ||||||||||
— | 27,957 | 125,839 | 29,000 | 131,950 | ||||||||||||||||
Rishi Bharadwaj | 27,000 | 9,000 | 4/9/2013 | — | 7.16 | 4/9/2020 | — | — | — | — | ||||||||||
— | 75,700 | 344,435 | 30,000 | 136,500 | ||||||||||||||||
Jeffrey A. Miller | 40,041 | 13,347 | 4/9/2013 | — | 7.16 | 4/9/2020 | — | — | — | — | ||||||||||
— | 19,757 | 89,894 | 33,000 | 150,150 | ||||||||||||||||
David A. Neumann | 30,031 | 10,010 | 4/9/2013 | — | 7.16 | 4/9/2020 | — | — | — | — | ||||||||||
84,100 | 382,655 | 43,000 | 195,650 | |||||||||||||||||
Jigar Thakkar(4) | — | — | — | — | — | — | — | — |
The table below shows the number of shares of PCTEL common stock acquired during fiscal 2015 by the NEOs upon the exercise of stock options or the vesting of stock awards:
Option Exercises and Stock Vested at Fiscal Year End December 31, 2015
Option Awards | Stock Awards | |||||||
Number of | Number of | |||||||
Shares Acquired | Value Realized | Shares Acquired | Value Realized | |||||
on Exercise | on Exercise | on Vesting | on Vesting(1) | |||||
Name | (#) | ($) | (#) | ($) | ||||
Martin H. Singer | — | — | — | — | ||||
John W. Schoen | — | — | 5,984 | 45,542 | ||||
Rishi Bharadwaj | — | — | 6,959 | 55,811 | ||||
Jeffrey A. Miller | — | — | 4,734 | 37,967 | ||||
David A. Neumann | — | — | 5,597 | 44,415 | ||||
Jigar Thakkar | — | — | — | — |
Nonqualified Deferred Compensation for the Fiscal Year Ended December 31, 2015
Aggregate | ||||||||||
Executive | Company | Withdrawals/ | Aggregate Balance | |||||||
Contributions | Contributions | Aggregate Earnings | Distributions | as of | ||||||
in 2015 | in 2015 | in 2015 | in 2015 | December 31, 2015 | ||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||
Martin H. Singer | — | — | (7,960) | 764,723 | — | |||||
John W. Schoen | — | — | — | 31,896 | — | |||||
Rishi Bharadwaj | — | — | — | — | — | |||||
Jeffrey A. Miller | — | — | (785) | 41,132 | — | |||||
David A. Neumann | — | — | (2,389) | 126,307 | — | |||||
Jigar Thakkar | — | — | — | — | — |
The Executive Deferred Compensation Plan terminated in December 2013 and was liquidated in January 2015.
Potential Payments Upon Terminationas of December 31, 2015
The following table estimates amounts payable to the NEOs as if an involuntary termination had occurred on December 31, 2015:
Severance Benefits(1)(6) (i.e., Involuntary Termination Not Related to a Change of Control or Occurring More Than 12 Months After a Change of Control) | ||||||||||||
Salary(3) | Short Term Incentive Plan(3) | Healthcare(4) | Option Acceleration | Restricted Shares Acceleration(5) | Total | |||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ||||||
Martin H. Singer(2) | 445,500 | 579,150 | 23,535 | — | 64,155 | 1,112,340 | ||||||
John W. Schoen | 261,000 | — | 10,992 | — | 43,453 | 315,445 | ||||||
Rishi Bhardawaj | 227,700 | — | 14,820 | — | 3,185 | 245,705 | ||||||
Jeffrey A. Miller | 291,000 | — | 15,690 | — | 11,830 | 318,520 | ||||||
David A. Neumann | 238,500 | — | 15,690 | — | 37,993 | 292,183 | ||||||
Jigar Thakkar(7) | NA | NA | NA | NA | NA | NA |
Potential Payments Upon Change of Controlas of December 31, 2015
The following table estimates amounts payable to the NEOs as if a Change of Control had occurred on December 31, 2015:
Change Of Control Benefits(1)(5) (i.e., Involuntary Termination Within 12 Months of a Change of Control) | ||||||||||
Salary(2) | Healthcare(3) | Option Acceleration | Restricted Shares Acceleration(4) | Total | ||||||
Name | ($) | ($) | ($) | ($) | ($) | |||||
Martin H. Singer | 1,225,125 | 15,690 | — | 1,151,605 | 2,392,420 | |||||
John W. Schoen | 522,000 | 10,992 | — | 227,304 | 760,296 | |||||
Rishi Bharadwaj | 455,400 | 14,820 | — | 446,810 | 917,030 | |||||
Jeffrey A. Miller | 582,000 | 15,690 | — | 199,094 | 796,784 | |||||
David A. Neumann | 477,000 | 15,690 | — | 525,980 | 1,018,670 | |||||
Jigar Thakkar(6) | NA | NA | NA | NA | NA |
Equity Compensation Plan Information
The following table provides information as of December 31, 2015 about PCTEL common stock that may be issued upon the exercise of options and rights under all of the former and existing equity compensation plans, including the Stock Plan, 1997 Stock Plan, 1998 Director Stock Option Plan, Employee Stock Purchase Plan and the 2001 Stock Plan:
Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) | ||||
(#) | ($) | (#) | ||||
Plan Category | ||||||
Equity compensation plans approved by stockholders(1) | 1,192,637(3) | $7.61(3) | 4,179,822 | |||
Equity compensation plans not approved by stockholders(2) | 50,530 | $9.42 | — | |||
Total | 1,243,167 | $7.68 | 4,179,822 |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Since January 1, 2015, the Company has not entered into any transaction, and is not aware of any currently proposed transaction, in which the amount involved exceeds $120,000, and in which any director, NEO, nominee for election as a director, holder of more than 5% of PCTEL common stock, or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
Policy Regarding Related Party Transactions
The Company’s Audit Committee adopted a written policy which governs the review and approval of related party transactions in which (i) the aggregate amount of such transaction involves $120,000 or more, (ii) the Company is a party, and (iii) any related person is a party. Related persons include directors, NEOs, stockholders holding in excess of 5% of PCTEL common stock, or any such individual’s immediate family members. Under the policy, all proposed related party transactions involving one or more of the Company’s non-officer employees must be reviewed and approved by the Audit Committee, and all proposed related party transactions involving one or more of the related persons listed above must be reviewed and approved by the Board of Directors. If a proposed related party transaction involves a member of the Board of Directors, such related party transaction must be reviewed and approved by all disinterested members of the Board of Directors.
The Company properly and accurately reports all material related party transactions in accordance with applicable accounting rules, federal securities law, SEC rules and regulations and securities market rules. In determining the materiality of related party transactions, the Audit Committee or Board of Directors primarily considers the significance of the information regarding such related party transactions to the stockholders. All related party transactions involving one of the related persons listed above are presumed material, unless:
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors, and greater than 10% stockholders are also required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on the Company’s review of the copies of such forms received from, and/or written representations from, such reporting persons, the Company believes that during fiscal year 2015 all of the Company’s officers, directors and greater than 10% stockholders complied with all applicable filing requirements, except that one Form 4 reporting one transaction by Mr. Singer was due on September 14, 2015 and was filed on September 15, 2015.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, this report of the Audit Committee of the Board of Directors shall not be deemed “filed” with the SEC or “soliciting material” under the Exchange Act, and shall not be incorporated by reference into any such filings.
The Audit Committee of our Board of Directors currently consists of Mr. Thomsen, Mr. Marini and Mr. Sinder, each of whom meets the NASDAQ independence and experience requirements. The Audit Committee operates under a written charter. Upon the recommendation of the Audit Committee, the Board of Directors adopted the original charter for the Audit Committee in August 1999, and last amended the charter for the Audit Committee on September 21, 2010. A current version of the Audit Committee charter2020, is available on our website at http:https://investor.pctel.com/documentdisplay.cfm.
The Audit Committee reviews the procedures of management for the design, implementationannual-meeting. You may send a written request to PCTEL, Inc., 471 Brighton Drive, Bloomingdale, Illinois 60108, Attention: Shelley J. Bacastow, Company Secretary or to company.secretary@pctel.com, and maintenance of a comprehensive system of disclosure controls and procedures focused on the accuracycopy of our financial statements and the integrity of our financial reporting systems and disclosures contained in our periodic reports. As part of this review, the Audit Committee discusses with management and our independent auditors their evaluation of the effectiveness of our internal control over financial reporting, including improvements to our internal control that may be warranted. The Audit Committee provides our Board of Directors with the results of the Committee’s examinations and recommendations and reports to the Board of Directors as the Committee may deem necessary to make the Board of Directors aware of significant financial matters that require the Board of Directors’ attention.
The Audit Committee does not conduct auditing reviews or audit procedures. The Audit Committee relies on management’s representation that our financial statements have been prepared accurately and in conformity with United States generally accepted accounting principles and on the representations of the independent auditors included in their report on our financial statements and on the effectiveness of our internal control over financial reporting. The Audit Committee has also adopted a written policy that is intended to encourage our employees to bring to the attention of management and Audit Committee any complaints regarding the integrity of our internal financial controls or the accuracy or completeness of financial or other information related to our financial statements.
The Audit Committee reviews reports and provides guidance to our independent registered public accounting firm with respect to their annual audit and approves in advance all audit and non-audit services provided by our independent registered public accounting firm in accordance with applicable regulatory requirements. The Audit Committee also considers, in advance of the provision of any non-audit services by our independent registered public accounting firm, whether the provision of such services is compatible with maintaining the independence of the external auditors.
In accordance with its responsibilities, the Audit Committee has reviewed and discussed with management the audited financial statements for the year ended December 31, 2015 and the process designed to achieve compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The Audit Committee has also discussed with Grant Thornton LLP the matters required to be discussed by Public Company Accounting Oversight Board Standard 16, Communications with Audit Committees (AS16). The Audit Committee has received the written disclosures and the letter from Grant Thornton LLP required by Rule 3526, Communication with Audit Committees Concerning Independence, required by the Public Company Accounting Oversight Board and has discussed with Grant Thornton LLP its independence.
Based on these reviews and discussions, the Audit Committee recommended to our Board of Directors that our audited financial statements for the year ended December 31, 2015 be included in our2021 Annual Report on Form 10-K. will be sent to you without charge.
We know of no further matters to be submitted at the meeting. If any other mattersmatter is properly come beforepresented for a vote at the annual meeting, it isproxies will be voted in the intentionsole discretion of the persons named in the enclosed form of proxy to vote the shares they represent as the Board of Directors may recommend. holders.
THE BOARD OF DIRECTORS |
Dated: May 4, 2016April 12, 2021
VOTE BY INTERNET - www.proxyvote.com
Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up untilinformation. Vote by 11:59 P.M. Eastern Time the day before the cut-off or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like PCTEL, INC. During The Meeting - Go to reducewww.virtualshareholdermeeting.com/PCTI2021 471 BRIGHTON DRIVE BLOOMINGDALE, IL 60108 You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.
the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up untilinstructions. Vote by 11:59 P.M. Eastern Time the day before the cut-off or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and Annual Report is/on Form 10-K are available atwww.proxyvote.com . PCTEL, INC. Annual Meeting of Stockholders May 26, 2021 at 11:00 AM Central Time This proxy is solicited by the Board of Directors The stockholders hereby appoint David A. Neumann and Kevin J. McGowan, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of PCTEL, INC. that the stockholders are entitled to vote at the Annual Meeting of Stockholders to be held at 11:00 AM Central Time on May 26, 2021, via live audiocast at www.virtualshareholdermeeting.com/PCTI2021, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. R1.0.0.177 _ 2 0000504570 Continued and to be signed on reverse side
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