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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant ☒
Filed by a Party other than the Registrant o
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
ITERIS, INC.
Filed by the Registrantý

Filed by a Party other than the Registranto

Check the appropriate box:

o


Preliminary Proxy Statement

o


Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý


Definitive Proxy Statement

o


Definitive Additional Materials

o


Soliciting Material under §240.14a-12


(Name of Registrant as Specified In Its Charter)
ITERIS, INC.

(Name of Registrant as Specified In Its Charter)


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

Payment of Filing Fee (Check the appropriate box):

ý


No fee required.

o


Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:

o


Fee paid previously with preliminary materials.

o


Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



(1)


Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:

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[MISSING IMAGE: lg_iteris-bw.jpg]
LOGO

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
OF ITERIS, INC.
TO BE HELD NOVEMBER 8, 2017
SEPTEMBER 9, 2021

To the Stockholders of Iteris, Inc.:

NOTICE IS HEREBY GIVEN that the 20172021 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”) of Iteris, Inc., a Delaware corporation, will be held on November 8, 2017September 9, 2021 at 10:2:00 a.m.p.m. Pacific Time, held exclusively online by means of a live virtual webcast at our principal executive offices located at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705,meetings.computershare.com/MVTVFVH, for the following purposes, as more fully described in the proxy statement accompanying this Notice:notice:
1.

    1.

To elect Joe Bergera, Kevin C. Daly, Ph.D., Scott E. Deeter,Anjali Joshi, Gerard M. Mooney, Laura L. Siegal, Thomas L. Thomas and Mikel H. WilliamsDennis W. Zank to the Board of Directors, each to hold such office until the next annual meeting of stockholders orand until his or her successor is elected and qualified.
2.

2.
To conduct a vote to approve the Iteris, Inc. Employee Stock Purchaseamendment and restatement of the 2016 Omnibus Incentive Plan.
3.
To conduct an advisory vote to approve the compensation of our named executive officers, as described in the proxy statement accompanying this notice.
4.
3.
To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2018.2022.
5.

4.
To transact any other business that may properly come before the Annual Meeting or any adjournment(s)adjournments or postponement(s)postponements thereof.

All stockholders are cordially invited to attend the Annual Meeting virtually this year. There will be no physical in-person meeting location for the Annual Meeting. In light of the continued public health risks posed by the coronavirus pandemic, we have determined it is appropriate to hold the Annual Meeting virtually.
All stockholders of record as of the close of business on September 11, 2017July 13, 2021 are entitled to notice of and to vote at the Annual Meeting, and at any postponement(s)and all postponements or adjournment(s)adjournments thereof. You are cordially invited toIt is important that all of our stockholders be present and to voterepresented at thisour Annual Meeting. Whether or not you plan to attend it is important that your shares be represented and voted at the Annual Meeting. You canMeeting virtually or not, we urge you to vote your shares by completing and returning the enclosedsubmitting your proxy card. Ifas soon as possible. Submitting your shares are held in "street name" (i.e., your shares are held in the name of a brokerage firm, bank or other nominee), in lieu of a proxy card you should receive from that institution an instruction form for voting by mail and you may also be eligible to vote your shares electronically over the Internet or by telephone. If you receive more than one proxy card or voting instruction form becausedoes not affect your shares are held in multiple accounts or registered in different names or addresses, please sign, date and returneach proxy card or voting instruction formright to ensure that all of your shares are voted. You may revoke your proxy at any time prior tovote during the Annual Meeting. IfMeeting if you attend the Annual Meeting and vote by ballot, any proxy that you previously submitted will be revoked automatically and only your vote at the Annual Meeting will be counted. For further information, please see the discussion of voting rights and proxies beginning on page 1 of the enclosed proxy statement.

Santa Ana, California
September 25, 2017
BY ORDER OF THE BOARD OF DIRECTORS



GRAPHIC
Joe Bergera
Chief Executive Officer

YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.


LOGO

ITERIS, INC.
1700 Carnegie Avenue, Suite 100
Santa Ana, California 92705



PROXY STATEMENT
FOR THE 2017 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 8, 2017



General

        These proxy materials and the enclosed proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors of Iteris, Inc., a Delaware corporation ("Iteris," the "Company," "we," "our" and "us"), to be voted at the 2017 Annual Meeting of Stockholders (the "Annual Meeting") to be held on November 8, 2017 and at any adjournment(s) or postponement(s) of the meeting. The Annual Meeting will be held at 10:00 a.m. Pacific Time, at our principal executive offices located at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705. These proxy materials and the form of proxy are expected to be mailed to our stockholders, who are entitled to vote at the Annual Meeting, on or about September 29, 2017.

Purpose of Meeting

        The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying Notice of the Annual Meeting of Stockholders and are described in more detail in this proxy statement.

Internet Availability of Materials

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON NOVEMBER 8, 2017: The proxy statement, proxy card, and Annual Report on Form 10-K and Form 10-K/A, as amended, for the fiscal year ended March 31, 2017 (the "Annual Report") are available at www.edocumentview.com/ITI, or at www.envisionreports.com/ITI for registered holders (Internet voting included).

Voting Rights

        The record date for determining those stockholders who are entitled to notice of, and to vote at, the Annual Meeting has been fixed as September 11, 2017. At the close of business on the record date, 32,628,528 shares of our Common Stock, par value $0.10 per share, were outstanding and no shares of our Preferred Stock were outstanding. Each stockholder is entitled to one vote for each share of Common Stock held by such stockholder as of the record date.

        The presence in person or by proxy of the holders of a majority of the outstanding shares of the Common Stock entitled to vote will constitute a quorum for the transaction of business at the Annual Meeting. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.

        In the election of directors under Proposal One, directors will be elected by a plurality of the votes cast at the Annual Meeting, unless cumulative voting is in effect. Pursuant to our bylaws, no stockholder is entitled to cumulate his or her votes for candidates other than those whose names have been placed in nomination prior to the commencement of voting and unless at least one stockholder


has given notice prior to commencement of voting of his or her intention to cumulate votes. If any stockholder has given such notice, then each stockholder may cumulate votes by multiplying the number of shares of common stock the stockholder is entitled to vote by the number of directors to be elected. The number of cumulative votes thus determined may be voted all for one candidate or distributed among several candidates, at the discretion of the stockholder. The candidates receiving the highest number of votes, up to the number of directors to be elected, will be elected. If cumulative voting is in effect, the persons named in the accompanying proxy will vote the shares of common stock covered by proxies received by them (unless authority to vote for directors is withheld) among the named candidates as they determine.

        With regard to each of the other proposals, the affirmative vote of the holders of a majority of our common stock present or represented by proxy and entitled to vote at the Annual Meeting is being sought.

        If you hold your shares in "street name" (i.e., your shares are held in the name of a brokerage firm, bank or other nominee (each, a "custodian")), your custodian is considered to be the stockholder of record for purposes of voting at the Annual Meeting. Your custodian is required to vote your shares on your behalf in accordance with your instructions. If you do not give instructions to your custodian, your custodian is permitted to vote your shares with respect to "routine" matters, such as the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm under Proposal Three. However,virtually. Also, if you do not give instructions to your custodian, your custodian will NOT be permitted to vote your shares with respect to "non-routine" matters. All other proposals described in this proxy statement are considered non-routine matters. Accordingly, if you do not give your custodian specific instructions for voting on each of the other proposals, then your shares will be treated as "broker non-votes" with respect to such proposal(s) and will not be voted on the proposal(s) for which you did not provide instructions.

        All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions, and broker non-votes. Abstentions and broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business. Abstentions will be counted towards the tabulations of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes will not be counted for purposes of determining whether a proposal has been approved.

Voting

        You may vote by one of the following ways: (i) by mail, (ii) electronically over the Internet or by telephone, or (iii) by ballot in person at the Annual Meeting. If you are a "registered holder" (i.e., your shares are registered in your own name through our transfer agent), you may vote by returning a completed proxy card in the enclosed postage-paid envelope or through the Internet at www.envisionreports.com/ITI. If your shares are held in "street name", in lieu of a proxy card you should receive a voting instruction form from that custodian by mail. The voting instruction form should indicate whether the custodian has a process for beneficial holders to vote over the Internet or by telephone. Stockholders who vote over the Internet or by telephone need not return a proxy card or voting instruction form by mail, but may incur costs, such as usage charges, from telephone companies or Internet service providers. If your voting instruction form does not reference Internet or telephone information, please complete and return the paper voting instruction form in the self-addressed, postage-paid envelope provided.

        If you are a registered holder, you may also vote your shares in person at the Annual Meeting. If your shares are held in street name and you wish to vote in person at the meeting, you must obtain a proxy issued in your name from the record holder and bring it with you to the Annual Meeting. We


recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.

Proxies

        Please use the enclosed proxy card to vote by mail. If your shares are held in street name, then in lieu of a proxy card you should receive from that custodian an instruction form for voting by mail, the Internet or by telephone. If you receive more than one proxy card or voting instruction form because your shares are held in multiple accounts or registered in different names or addresses, please be sure to complete, sign, date and returneach proxy card or voting instruction form to ensure that all of your shares will beare voted. Only proxy cards and voting instruction forms that have been signed, dated, and timely returned (or otherwise properly voted by Internet

Santa Ana, California
July 27, 2021
BY ORDER OF THE BOARD OF DIRECTORS
[MISSING IMAGE: sg_joebergera-bw.jpg]
Joe Bergera
Chief Executive Officer
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY PROXY PRIOR TO THE MEETING. IF YOU CHOOSE TO VOTE BY MAIL, PLEASE DO SO PROMPTLY TO ENSURE YOUR PROXY ARRIVES IN SUFFICIENT TIME.


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[MISSING IMAGE: lg_iteris-bw.jpg]
Proxy Statement
For telephone) will be counted in the quorum and voted. Properly executed proxies will be voted in the manner directed by the stockholders. If the proxy does not specify how the shares represented thereby are 2021 Annual Meeting of Stockholders
of Iteris, Inc. to be voted, the proxy will be voted (i) FOR the election of the directors proposed by our Held on September 9, 2021
The Board of Directors (the "Board"“Board”) under Proposal Oneof Iteris, Inc., a Delaware corporation (sometimes referred to as “Iteris,” the “Company,” “we,” “us,” or “our”), is soliciting your proxy for the Company’s 2021 Annual Meeting of Stockholders and (ii) FORany and all adjournments or postponements of such meeting (the “Annual Meeting”). Due to the approval of eachongoing concerns relating to the public health impact of the other proposals as describedcoronavirus (“COVID-19”) pandemic, for the safety of all of our people, including our stockholders, employees and their families, we have determined that the Annual Meeting will be held in a live virtual-only meeting format, via the Internet, with no physical, in-person meeting. The Annual Meeting will be held at 2:00 p.m. Pacific Time on September 9, 2021, through the virtual meeting live webcast site located at meetings.computershare.com/MVTVFVH. At our Annual Meeting, stockholders will be able to attend and vote by visiting meetings.computershare.com/MVTVFVH. Stockholders who wish to submit questions at the Annual Meeting may do so in advance or during the Annual Meeting. You will find instructions for how to submit such questions in this proxy statement. The approximate date on which this proxy statement and the accompanying notice.

        The enclosed proxy also grantsmaterials are first being released to the proxy holders discretionary authority to vote on any other business that may properly come before the Annual Meeting as well as any procedural matters. We have not been notified by any stockholder of an intent to present a stockholder proposal at the Annual Meeting.

        If your shares are held in your name, you may revoke or change your vote at any time before the Annual Meeting by filing a notice of revocation or another signed proxy card with a later date with our Secretary at ourCompany’s stockholders is July 27, 2021. Our principal executive offices. If your sharesoffices are heldlocated at 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705.

References in street name, you should contactthis proxy statement to fiscal years refer to the record holderCompany’s fiscal year ended March 31 of the referenced year. For example, “Fiscal 2020” refers to obtain instructions if you wishthe fiscal year ended March 31, 2020, “Fiscal 2021” refers to revokethe fiscal year ended March 31, 2021 and “Fiscal 2022” refers to the fiscal year ending March 31, 2022.
Important Notice Regarding the Availability of Proxy Materials
This Proxy Statement and our Annual Report on Form 10-K, as amended by the Form 10-K/A, for the fiscal year ended March 31, 2021 (the “Annual Report”) is available on the Internet by accessing www.edocumentview.com/ITI, or change your vote before the Annual Meeting. If you attend the Annual Meetingat www.envisionreports.com/ITI for registered holders. Information on this website does not constitute part of this proxy statement and vote by ballot, any proxy that you submitted previously to vote the same shares will be revoked automatically and only your vote at the Annual Meeting will be counted.Please note, however, that if your shares are held in street name, your vote in person at the Annual Meeting willshall not be effective unless you have obtaineddeemed incorporated by reference therein.
Questions and present a Answers about the Annual Meeting and Voting
Who is soliciting this proxy issued in your name fromand who will bear the record holder.cost of soliciting this Proxy Statement?
Attendance at the Annual Meeting will not, by itself, revoke a proxy.

Solicitation

The enclosed proxy is being solicited by our Board of Directors. We Iteris will bear the entire cost of proxy solicitation, including the costs of preparing, assembling, printing and mailing this proxy statement, the proxy card, and any additional material furnished to the stockholders. Copies of the solicitation materials will be furnished to brokerage houses, fiduciaries, and custodiansnominees holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for their reasonable expenses in forwarding the solicitation materials to the beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by personal contact, telephone, facsimile, e-mail or any other means by our directors, officers, or employees. No additional compensation will be paid to these individuals for any such services.

In the discretion of management, we reserve the right to retain a professional firm of proxy solicitors to assist in solicitation of proxies. Although we do not currently expect to retain such a firm, we estimate that the fees of such firm would range from $5,000 to $20,000 plus out-of-pocket expenses, all of which would be paid by us.


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Where and when will the Annual Meeting take place?
The Annual Meeting will be held virtually, on Thursday, September 9, 2021, at 2:00 p.m., Pacific Time, via the Internet at meetings.computershare.com/MVTVFVH. Online check-in will begin at 1:30 p.m., Pacific Time, to allow time for online check-in procedures.
How do I attend the virtual Annual Meeting on the Internet?
Registered StockholdersPROPOSAL ONE:. If you are a registered stockholder of record (i.e., you hold your shares directly in your name through our transfer agent, Computershare), you do not need to register to attend the virtual Annual Meeting. Please follow the instructions on the notice or proxy card that you received. You may submit any questions you would like to ask at the Annual Meeting in advance or during the Annual Meeting. You will find instructions for how to vote and submit such questions below in this proxy statement.
Beneficial Stockholders. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the virtual Annual Meeting.
To register to attend the virtual Annual Meeting you must submit proof of your proxy power (legal proxy) reflecting your Iteris holdings along with your name and email address to Computershare, by email or by mail as described below. You may need to contact your intermediary, such as your bank or broker, to obtain your legal proxy. Requests for registration must include your proof of your legal proxy, be labeled as “Legal Proxy,” and be received no later than 2:00 p.m., Pacific Time September 6, 2021.
Through the contact information you provide to Computershare, you will receive from Computershare a confirmation of your registration with a control number that will allow you to login to the virtual Annual Meeting site as a stockholder. You may submit any questions you would like to ask at the Annual Meeting in advance or during the Annual Meeting. You will find instructions for how to vote and submit such questions below in this proxy statement.
Requests for registration to attend our virtual Annual Meeting should be directed to us at the following:
By email:
Forward the email from your broker, or attach an image of your legal proxy, to:
legalproxy@computershare.com
By mail:
Computershare
ELECTIONIteris Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Stockholders will be able to attend our Annual Meeting online and vote during the Annual Meeting electronically by visiting meetings.computershare.com/MVTVFVH via the Internet. Whether or not you plan to attend the Annual Meeting, we urge you to ask questions and vote and submit your proxy in advance of the Annual Meeting by one of the methods described in this proxy statement, but there will be a question-and-answer session at the end of the Annual Meeting. You can submit questions and comments by clicking the icon (illustrated below) located on the virtual Annual Meeting center website.
[MISSING IMAGE: tm222999d1-icon_questionbw.jpg]
Guest Attendees. You are invited to attend our virtual Annual Meeting as a “guest,” but such guest attendee will only be able to listen to the Annual Meeting. A guest attendee may not ask questions or vote at the Annual Meeting. If you attend as a guest attendee, please click “I am a guest” when accessing the virtual Annual Meeting link on the Internet. Please follow the instructions at the virtual Annual Meeting site (See above question “Where and when will the Annual Meeting take place?”).

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Why a virtual Annual Meeting format?

We are utilizing the virtual meeting format to enhance stockholder access and encourage participation and communication with our management. We will continue to ensure that our stockholders are afforded the same rights and opportunities to participate as they would at an in-person meeting. We believe this format facilitates stockholder attendance and participation by enabling all stockholders to participate fully, and equally, using any internet-connected device from any location around the world at no cost. We believe a virtual meeting protects the health and safety of attendees and saves the Company’s and stockholders’ time and money.
        On February 23, 2017,What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties you may experience in accessing the virtual Annual Meeting. If you encounter any technical difficulties in accessing the virtual Annual Meeting during the check-in or meeting time, please call:
Tel # (Toll-free): 800-962-4284
Tel # (Toll line): +1 781-575-3120 (International)
Who is entitled to vote at the Annual Meeting?
You are entitled to vote your shares of our common stock at the Annual Meeting if you owned the shares as of the close of business on July 13, 2021 (the “Record Date”). As of the Record Date, there were a total of 42,281,621 shares of our common stock outstanding and entitled to vote at the Annual Meeting. No shares of our preferred stock are currently outstanding. You are entitled to one vote for each share of common stock that you own.
What matters will be voted upon at the Annual Meeting and what are the Board increasedof Director’s recommendations for the proposals?
The only matters that we currently expect will be voted on at the Annual Meeting are the following proposals, and the Board’s recommendation to you regarding such proposals is set forth opposite each proposal below:
Proposals
Board’s
Recommendation
1.
Election of the Board of Directors.
✓ FOR each nominee
2.
Approval of the amendment and restatement of the 2016 Omnibus Incentive Plan.
✓ FOR
3.
Approval, by advisory vote, of the compensation of our named executive
officers, as described in this proxy statement.
✓ FOR
4.
Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2022.
✓ FOR
The foregoing proposals are described in more detail in this proxy statement.
What if other matters come up at the Annual Meeting?
Other than the four items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If other matters are properly presented at the Annual Meeting, the persons designated in the proxy cards, Joe Bergera and Douglas L. Groves, will vote your shares in their discretion.
What constitutes a quorum for the Annual Meeting?
The presence in person or by proxy of the holders of a majority of the shares entitled to vote at the Annual Meeting shall constitute a quorum for the transaction of business at such meeting. If you sign and

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return your proxy card or authorize a proxy to vote through the Internet or by telephone, your shares will be counted to determine whether we have a quorum even if you abstain or fail to vote as indicated in the proxy materials. If a quorum is not present at the scheduled time of the Annual Meeting, the Annual Meeting may be adjourned until a quorum is present. Both abstentions and broker non-votes (as described below) are counted for the purpose of determining the presence of a quorum.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Stockholder of Record. If your shares are registered directly in your name with our transfer agent, you are considered to be the stockholder of record of such shares, and we are sending the notice and these proxy materials directly to you. If you are a stockholder of record, you should have received a proxy card with this proxy statement for you to use to vote your shares
Beneficial Owner. If your shares are held in a brokerage account or by a bank, trustee or other nominee (each a “Nominee”), you are considered the beneficial owner of shares held in street name, and the notice and proxy materials are being forwarded to you on behalf of your Nominee. As the beneficial owner, you have the right to direct your Nominee how to vote your shares. Your Nominee has enclosed a voting instruction form with this proxy statement for you to use in directing the Nominee how to vote your shares.
Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from the Nominee who holds your shares giving you the right to vote the shares at the Annual Meeting.
How do I vote my shares?
You may vote your shares prior to the Annual Meeting in any one of the following three ways: (i) by mail, (ii) electronically over the Internet or (iii) by telephone. If you are a stockholder of record, you may vote by returning a completed proxy card in the enclosed postage-paid envelope or through the Internet or by telephone as described on your proxy card. If your shares are held in street name, in lieu of a proxy card, you should receive a voting instruction form from your Nominee by mail. The voting instruction form should indicate whether the Nominee has a process for beneficial holders to vote over the Internet or by telephone. Stockholders who vote over the Internet or by telephone need not return a proxy card or voting instruction form by mail, but may incur costs, such as usage charges, from telephone companies or Internet service providers. Stockholders who do not desire to vote over the Internet or by telephone may complete and return the paper voting instruction form in the self-addressed, postage-paid envelope provided.
If you are a stockholder of record, you may also vote your shares electronically during the Annual Meeting over the Internet only. Shares held through a broker or nominee may be voted via the Internet only if you obtain a legal proxy from the broker or nominee that holds your shares giving you the right to vote the shares. Please go to meetings.computershare.com/MVTVFVH, at the time of the meeting, have your control number available (which can be found on your proxy card form) and follow the instructions to participate in the virtual meeting. Those stockholders that held their shares in street name as of the Record Date will need to register prior to the meeting (see above question — “How do I attend the virtual Annual Meeting on the Internet?”). We recommend that you vote your shares in advance as described above to ensure your vote will be counted if you later decide not to attend the Annual Meeting.
How will I be able to submit a question?
Stockholders may submit questions for the Annual Meeting in advance of and during the Annual Meeting by submitting them via the Annual Meeting center website (meetings.computershare.com/MVTVFVH) and entering your Computershare-issued control number (found on your proxy card form).
All questions submitted in advance must be sent by 5:00 p.m., Pacific Time, on September 8, 2021. Stockholders will also be able to submit questions during the Annual Meeting. During the meeting, we will answer submitted questions.
No recording of the Annual Meeting is allowed, including audio and video recording.

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Even if you plan on attending the Annual Meeting, we encourage you to vote your shares in advance using one of the methods described in this proxy statement to ensure that your vote will be represented at the Annual Meeting. We reserve the right to eject an attendee or cut off speaking privileges for behavior likely to cause disruption or annoyance or for failure to comply with reasonable requests or the rules of conduct for the Annual Meeting, including time limits applicable to attendees who are permitted to speak.
We will endeavor to answer as many questions submitted by shareholders as time permits. We reserve the right to edit profanity or other inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or Company business. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition
What are broker non-votes and how are broker non-votes treated?
Broker non-votes occur when shares held in street name by a Nominee for a beneficial owner are not voted with respect to a particular proposal because (i) the Nominee does not receive voting instructions from the beneficial owner, and (ii) the Nominee lacks discretionary authority to vote the shares.
Broker non-votes will not be treated as shares present and entitled to vote for purposes of any matter requiring the affirmative vote of a majority or other proportion of the shares present and entitled to vote (even though the same shares are considered present for quorum purposes and may be entitled to vote on other matters). Thus, a broker non-vote will not affect the outcome of the voting on a proposal for which the minimum affirmative vote required for approval of the proposal is a plurality or a majority (or some other percentage) of (i) the votes actually cast, or (ii) the shares present and entitled to vote.
A Nominee only has discretionary authority to vote shares on a proposal that is considered a “routine” matter under applicable rules and related guidance. Proposal 4 for the ratification of the appointment of our independent registered public accounting firm is considered a “routine” matter and, accordingly, a Nominee has discretionary authority to vote shares on such proposal. The other proposals included in this proxy statement are considered “non-routine” matters. As such, a Nominee does not have discretionary authority to vote shares on such proposals. Accordingly, your shares may be voted on Proposal 4 if they are held in the name of a brokerage firm even if you do not provide the brokerage firm with voting instructions. Proposals 1, 2 and 3 are considered “non-routine” matters. Therefore, if you do not provide voting instructions to your brokerage firm, no vote for your shares will be cast with respect to these proposals and a broker non-vote will result for these shares.
What vote is required to elect a director?
For Proposal 1, you may vote “FOR” or “AGAINST” any director nominee or you may abstain from voting with respect to a director nominee’s election. In an uncontested director election, a nominee must receive the affirmative vote of a majority of the votes cast with respect to that nominee to be elected. As such, the number of shares voted “FOR” a director nominee must exceed the number of votes cast as “AGAINST” that nominee’s election. In a contested director election (i.e., where the number of nominees exceeds the number of directors to be elected), then each director nominee shall be elected by a plurality of the votes of shares properly represented and entitled to vote in such election at such meeting. For purposes of the election of directors, abstentions and broker non-votes, if any, will be excluded from the vote and will not be counted in determining the outcome of a director’s election.
What happens if a majority of the votes cast are not voted in favor of a director nominee?
Pursuant to the procedures set forth in the Company’s bylaws, in the event that a nominee who is already a director of the Company does not receive a majority of the votes cast with respect to such nominee in an uncontested election of directors, such nominee is required to promptly tender his or her resignation to the Board for consideration. If a director’s resignation is not accepted, that director will continue to serve until our next annual meeting of stockholders and his or her successor is duly elected and qualified, or until his or her earlier death, resignation or removal. If the Board accepts the director’s resignation, it may, in its sole discretion, either fill the resulting vacancy or decrease the size of the Board to eliminate the vacancy.

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What is the required vote for approval of Proposals 2, 3 and 4?
For each of the other proposals, you may vote “FOR” or “AGAINST” the proposal or you may abstain from voting on the proposal. The approval of Proposals 2, 3 and 4 will require the affirmative vote of a majority of the shares represented and entitled to vote at the Annual Meeting. For purposes of Proposals 2, 3 and 4, broker non-votes will not affect the outcome of the voting on these proposals and abstentions will have the same effect as a vote against these proposals.
May I change my vote or revoke my proxy?
Yes. If you are a stockholder of record, there are several ways in which you may revoke your proxy or change your voting instructions before the time of voting at the Annual Meeting, as follows:

Vote again by telephone or at the Internet website.

Transmit a revised proxy card or voting instruction form that is dated later than the prior one.

Vote electronically during the Annual Meeting, at the Internet website.

Notify the Company’s Corporate Secretary in writing that a prior proxy is revoked.
If you are a beneficial owner of shares, your broker or Nominee should provide instructions explaining how you may change or revoke your voting instructions.
Please note that, in order to be counted, the revocation or change must be received by the Company prior to the close of the Annual Meeting on September 9, 2021. The latest-dated, timely, properly completed proxy that you submit to the Company, whether by mail, telephone or the Internet, will count as your vote. If a vote has been recorded for your shares and you subsequently submit a proxy card that is not properly signed and dated, then the previously recorded vote will stand.
Is cumulative voting permissible?
No. Cumulative voting is not permitted by our certificate of incorporation.
Will I have appraisal or similar dissenters’ rights in connection with the proposals to be voted on at the Annual Meeting?
No. You will not be entitled to appraisal or similar dissenters’ rights in connection with the proposals to be voted on at the Annual Meeting.
How will my shares be voted?
Any proxy that you submit and that is not revoked will be voted as you direct. If you are a stockholder of record and you indicate when voting through the Internet or by telephone that you wish to vote as recommended by our Board, or if you sign and return a proxy card without giving specific voting instructions, then the persons designated as proxy holders in the accompanying proxy cards will vote your shares as follows:

“FOR” the election of each of the persons nominated by the Board in Proposal 1.

“FOR” the approval of the amendment and restatement of the 2016 Omnibus Incentive Plan.

“FOR” the approval, by advisory vote, of the compensation of our named executive officers, as described in this proxy statement.

“FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accountants for the fiscal year ending March 31, 2022.
If you are a beneficial owner of shares of our common stock and your Nominee does not receive instructions from you about how your shares are to be voted, then your Nominee will have the discretion to vote your shares on the “routine” matter being considered at the Annual Meeting, but will not be able to vote your shares on the “non-routine” matters being considered at the Annual Meeting, meaning that broker non-votes will result for these matters.

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In the event any director nominee declines or is unable to serve as a director at the time of the Annual Meeting (which is not anticipated), the persons named in the enclosed proxy card will vote for the election of such person or persons as may be designated by the present Board. The enclosed proxy grants the proxy holders discretionary authority to vote on any other business that may properly come before the Annual Meeting, as well as any procedural matters. We have not been notified by any stockholder of any intention to present a stockholder proposal at the Annual Meeting.
I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
If you share an address with another stockholder, you may receive only one set of proxy materials unless you have provided instructions to the contrary. If you wish to receive a separate set of proxy materials now, please send your request to: Iteris, Inc., 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705, Attention: Corporate Secretary. A separate set of proxy materials will be sent promptly following receipt of your request. You may also contact us if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
Who will count the votes?
The inspector of election for the Annual Meeting, who is appointed by the Board, will count the votes. It is expected that a representative of our transfer agent will serve as the inspector of election.

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Proposal 1: Election of Directors
In July 2021, the Board unanimously approved a decrease in the number of directors from sixseven to seven and appointed Scott E. Deeter to fill the vacancy created by the increase. Pursuant to a letter agreement dated August 16, 2017 between the Company and D. Kyle Cerminara (the "Agreement"), Mr. Cerminara agreed not to stand for re-election at the Annual Meeting. As a result of the decision set forth in the Agreement, on August 21, 2017, the Board adopted a resolution to set the number of directors on the Board at six, (6), effective upon the Annual Meeting.

The Board may later increase the Board size to comply with the provisions of the California Board Gender Diversity Mandate that will become effective on December 31, 2021.

Six persons have been nominated for election at the Annual Meeting. All directors are elected annually and hold office until the next annual meeting of stockholders, and until their successors are duly elected and qualified, or until their earlier death, resignation or removal. On the recommendation of the Nominating and Corporate Governance Committee (the "NCG Committee"“NCG Committee”), our Board of Directors selected and approved the following persons as nominees for election at the Annual Meeting: (1) Joe Bergera, (2) Kevin C. Daly, Ph.D., (3) Scott E. Deeter, (4)Anjali Joshi, Gerard M. Mooney, (5)Laura L. Siegal, Thomas L. Thomas and (6) Mikel H. Williams.Dennis W. Zank. Each nominee is currently a member of our Board of Directors and has agreed to serve if elected.

Unless otherwise instructed, the proxy holders will vote the proxies received by them FOR each of the nominees named above.

We have no reason to believe that any of the director nominees will be unavailable to serve. In the event any of the director nominees named herein is unable to serve or declines to serve at the time of the Annual Meeting, the personsproxy holders named in the enclosed proxy will exercise discretionary authority to vote for substitutes. Unless otherwise instructed,
Voting Requirements
In May 2018, our Board approved an amendment to the proxy holdersCompany’s bylaws to implement a majority voting requirement for uncontested elections of directors. As a result, in such elections, a nominee must receive the affirmative vote of a majority of the votes cast with respect to that nominee. This means that the number of shares voted “FOR” a director nominee must exceed the number of votes cast as “AGAINST” that nominee’s election. In a contested election of directors (i.e., where the number of nominees exceeds the number of directors to be elected), then each director nominee shall be elected by a plurality of the votes of shares properly represented and entitled to vote in such election at such meeting. If the plurality voting standard applies, the available director seats will votebe filled with the proxies received by them FOR the nominees named above.

Stockholder Approval

        The six candidates receiving the highest number of votes cast at such meeting.

Any director may resign at any time upon providing notice to the Annual MeetingCompany. Our Board has adopted a resignation policy, which requires that any incumbent director nominee who fails to receive the requisite majority vote in an uncontested election must tender to the Board for its consideration his or her resignation from the Board and from all of the Board committees on which he or she serves. The Board will be electedthen assess the appropriateness of such nominee continuing to serve as our directors. However, if cumulative voting isa director. In its discretion, the Board will decide whether or not to accept or reject the resignation. The policy also provides that any director who tenders his or her resignation will not participate in effect, the proxy holders will haveBoard action regarding the right to cumulate and allocate votes among those nominees standing for election asconsideration of such proxy holders in their discretion elect (as described above).

resignation.

Recommendation of the Board of Directors

Our Board of Directors recommends a vote "FOR"“FOR” each of the director nominees listed above.above and below.

Director Nominees

The table and narrative below set forth information as of September 11, 2017July 13, 2021 regarding each director nominee, including the year they first became directors of Iteris, their business experience during at least the past five years, the public company boards on which they currently serve on or have served on during the past five years, and certain other biographical information and attributes that the NCG Committee determined qualify them to serve as directors.information. The NCG Committee believes that these persons have the following other key attributesqualifications, competencies, expertise and diversity that are important to an effective board of directors: integritydirectors, as further detailed in “Director Qualifications Matrix” under Corporate Governance, Board Meetings and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion; diversity of experience

Committees below.

and thought; and the commitment to devote significant time and energy to service on the Board and its committees.

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NameAge
Name
AgeCurrent Position(s) with Iteris

J. Joseph ("Joe")Joe Bergera

5357Chief Executive Officer, President and Director

Kevin C. Daly, Ph.D.(1)(2)Anjali Joshi(3)(4)

7361Director

Scott E. Deeter

54Director

Gerard M. Mooney(1)Mooney(1)(3)(4)

6467Director

Thomas L. Thomas(2)Thomas(2)(3)(4)

6872Chairman of the Board
Laura L. Siegal(1)(2)58Director

Mikel H. Williams(1)(3)Dennis W. Zank

(1)
6066Director

(1)

Current member of the Audit Committee
(2)

(2)
Current member of the Compensation Committee
(3)

(3)
Current member of the Nominating and Corporate Governance Committee
(4)

(4)
Current
Our bylaws provide that our Chairman of the Board is also an ex-officio member of the Finance and Strategy Committeeeach of our Board committees.

Joe Bergera has served as our President and Chief Executive Officer and as a director since September 2015. Prior to joining us, Mr. Bergera served as Group Vice President, Software of Roper Technologies, Inc. (formerly, Roper Industries) since September 2011 and as President of iTradeNetwork, a Roper subsidiary, since August 2013. He was the Executive Vice President and General Manager, Tax Solutions at CCH Wolters Kluwer from March 2011 to September 2011 and served in senior executive positions with Sage Software from 2004 to March 2011, most recently as Executive Vice President, Global CRM. Prior to Sage Software, Mr. Bergera held senior roles at Infovista, Astrolink, MicroStrategy, and American Management Systems (acquired by CGI, Inc.). Mr. Bergera holds a B.A. degree in Government from Colby College, an M.B.A. from the Booth School of Business at the University of Chicago and an A.M. in Public Policy from the Harris School of Public Policy at the University of Chicago. The Board believes that Mr. Bergera has over 20 years of experience in technology-related companies and providesBergera’s extensive management and global software and servicetechnology industry knowledgeexperience qualify him to the Board.serve as a director.

Kevin C. Daly, Ph.DAnjali Joshi served as our interim Chief Executive Officer from February 2015 to September 2015. Prior to his service as our interim CEO, Dr. Daly served as the CEO of Maxxess Systems, Inc., a provider of electronic security systems, from November 2005. Between August 2007 and August 2009, Dr. Daly also served as CEO of iStor Networks, Inc., a manufacturer of IP SAN storage systems. Prior to that, he served as the CEO of several technology companies, including Avamar Technologies, Inc. and ATL Products, Inc. Dr. Daly served on the board of directors of sTec, Inc., a provider of solid state disk systems, from May 2010 until the acquisition of sTec in September 2013 by Western Digital Corporation. Dr. Daly received a B.S. degree in Electrical Engineering from the University of Notre Dame and M.S., M.A. and Ph.D degrees in Engineering from Princeton University. He has served as a director of Iteris since 1993. HavingJune 2020. Until March 2019, Ms. Joshi was Vice President of Product Management at Google, where most recently she worked on products focused on emerging markets. Earlier she led the product teams for Search, Maps, Translate, News, Finance, and Global Infrastructure. She also led early efforts for Cloud services and Fiber networks. Prior to Google, Ms. Joshi served as Executive Vice President of engineering for Covad Communications, Inc., a company providing voice and data communications products and services to consumers and businesses, from 1998 to 2003. Before that, she held positions at AT&T Bell Labs, working in the CEOareas of several technology companiesvoice and high-speed data from 1990 to 1998. Since March 2021, Ms. Joshi has served as a directorboard member of both privateAlteryx, Inc. (NYSE: AYX), an end-to-end enterprise analytics automation company. Ms. Joshi has served as a board member of Lattice Semiconductor (NASDAQ: LSCC), a provider of low power FPGA solutions since November 2019. Prior to its acquisition by Ivanti in December 2020, Ms. Joshi served on the board of MobileIron (NASDAQ: MOBL), a provider of mobile security solutions, and public companies, Dr. Daly offersearlier served on the board of The McClatchy Company (NYSE: MNI), a publisher of newspapers, until its acquisition by Chatham Asset Management, LLC in September 2020. She earned a bachelor’s degree in electrical engineering from the Indian Institute of Technology, a master’s degree in computer engineering from the State University of New York at Buffalo, New York, and a master’s degree in management science from Stanford University. The Board believes that Ms. Joshi’s extensive technical expertise and scaling global technology businesses, such as her deep combined knowledge of communications infrastructure and geospatial technologies, qualify her to the Boardserve as a wealth of management and leadership experience, as well as an understanding of issues faced by such companies.director.

Scott E. DeeterGerard M. Mooney has served as a director of Iteris since February 23, 2017.September 2013. Mr. Deeter has served as Ventria Bioscience Inc.'s President and CEO and as a director since 2002. Ventria is the first company to commercialize recombinant proteins derived from a plant-based manufacturing system. From 1999 to 2001, he served as President and CEO and as a director of CyberCrop.com Incorporated, a supply chain software company connecting producers with their markets to optimize quality, logistics and efficiency. From 1996 to 1998, Mr. Deeter served as Vice President of Agriculture of Koch Industries, Inc. Previously, Mr. Deeter held various positions at Cargill, Incorporated as well as started and led a joint venture between Cargill and F. Hoffmann-La Roche, Ltd. that commercialized pharmaceutical intermediates and functional food ingredients. Earlier in his career, Mr. Deeter was a


member of the Technology and Life Sciences Group of Salomon Brothers Inc. He received a BSc degree in Economics from the University of Kansas; an M.B.A. from the University of Chicago; and an MSc degree in Economics from the London School of Economics. Mr. Deeter is a proven leader who is widely known across entrepreneurial sectors of the agribusiness and agricultural biotech industry.

Gerard M. Mooney retired from International Business Machines Corporation ("IBM"(“IBM”) in March 2014, after serving in a number of senior positions since 2000. Most recently, he served as the Vice President Strategy for IBM'sIBM’s Public Sector from February 2012 until his retirement, as the General Manager, Global Smarter Cities for IBM from November 2011 to February 2012, and as the General Manager, Global Government and Education for IBM from 2008 to November 2011. He served as Vice President of IBM'sIBM’s Venture Capital Group from 2000 to 2008. Before joining IBM, Mr. Mooney held various management positions at Hewlett-Packard


9


Company (“HP”) for six years.years, most recently as General Manager for New Business Initiatives related to technologies developed by HP Labs. Mr. Mooney joined HP from HP’s acquisition of Edge Emitter Technology (ETT), Inc., a development stage company commercializing a solid state print head device, where Mr. Mooney served as President. Mr. Mooney has extensive operational and financial experience across a broad range of technology-based companies, from start-ups to large public companies, and has considerable experience with the major customers in the professionalintelligent transportation systems market. He previously served as a member of the board of directors of the Intelligent Transportation Society of America and is also active in the intelligent search technology, cognitive intelligence, AI, data mining and visualization tools industries. Mr. Mooney currently serves as a director of inno360 and co-foundercofounder of theinnovationexchange,Swarm Intelligence LLC (formerly theinnovationexchange), which offers SaaS cognitive platforms. He received a B.A. degree in Philosophy from Mount Saint Mary'sMary’s College, an M.S. degree in Accounting from Georgetown University and an M.B.A. from Yale University. The Board believes that Mr. MooneyMooney’s extensive management, financial and industry experience qualify him to serve as a director.
Laura L. Siegal has served as a director of Iteris since SeptemberMay 2018. Ms. Siegal is currently Partner and Chief Financial Officer at Acorn Growth Companies, a private equity firm focused on aerospace, defense, intelligence and space investments. From July 2013 to June 2019, Ms. Siegal was the Chief Financial Officer and bringsa member of the board of directors at NEOTech, a leading provider of high reliability electronic manufacturing solutions in the aerospace and defense, industrial and medical sectors. Prior to joining NEOTech, Ms. Siegal spent 13 years at Kratos Defense & Security Solutions, Inc. (NASDAQ: KTOS), which develops and fields transformative, affordable systems, platforms and products for national security and communications needs. There Ms. Siegal held a number of financial management positions including Principal Accounting Officer, Vice President and Corporate Controller and Vice President of Finance and Treasurer. Since October 2019, Ms. Siegal has served as a director of Creation Technologies Ltd, a privately held company that provides end-to-end, scalable electronic manufacturing services to original equipment manufacturers and other companies around the world. Ms. Siegal is a Certified Public Accountant and received a B.A. degree in Economics from the University of California, San Diego. The Board believes that Ms. Siegal’s extensive financial expertise, experience in technology and public agency markets, and demonstrated success with mergers and acquisitions qualify her to serve as a director.
Thomas L. Thomas has served as a director of Iteris since 1999 and as our Chairman of the Board of Directors extensive experience in setting and implementing strategy for both large and small technology organizations, deep category knowledge of the intelligent transportation market, and familiarity with many key customers for intelligent transportation solutions.

since 2016. Mr. Thomas L. Thomas is the managing partner of T2 Partners, a private management consulting and investment business which he founded in January 2011. In addition, Mr. Thomas served as the Executive Chairman and CEO of International Decision Systems, a provider of software and solutions for the equipment finance market, from September 2009 to January 2011. From 2004 to July 2008, Mr. Thomas was the President and Chief Operating Officer of Global Exchange Services, a provider of business to businessbusiness-to-business EDI and supply chain management solutions. Prior to that, Mr. Thomas served as the President and CEO at several software, analytics and technology companies, including HAHT Commerce, Ajuba Solutions, and Vantive Corporation, and as the first Chief Information Officer for Dell Computer Corporation and 3Com Corporation. Earlier in his career, Mr. Thomas also held various senior executive management positions at Kraft General Foods, Sara Lee Corporation and W. R. Grace. SinceFrom July 2017 to July 2019, Mr. Thomas has served as Chairman of the Board of Directors of VIP Software Corporation, a provider of software solutions in the insurance industry. Since 2012, Mr. Thomas has served as a director of Accurate Group, which specializes in the appraisal and title services business where technology has been instrumental in redefining the transaction model for the industry. He has also served on the board of directors of infoGroup, Inc. from January 2009 to July 2010, and served as a director on the boards of a wide range of technology companies, including ATL Products, Vantive Corporation, Interwoven, iManage, FrontRange Solutions, IDS International, and Quofore International. The Board believes that Mr. ThomasThomas’ extensive industry and Company experience, along with his financial expertise, qualify him to serve as a director.

Dennis W. Zank has served as a director of Iteris since 1999 and as our Chairman of the Board of Directors since 2016.January 2020. From January 2012 until stepping down in September 2018, Mr. Thomas offers to our Board of Directors valuable business, leadership and strategic insights obtained through his service as an executive and as a member of the board of directors in a variety of industries and businesses, including a number of leading technology companies, and his experience in working with companies through several stages of their development.

Mikel H. Williams hasZank served as the Chief ExecutiveOperating Officer and a director of Targus Cayman Holdco Limited,Raymond James Financial, Inc. (“RJF”), a leading global supplier that designs, developsdiversified financial services company, responsible for domestic private client group businesses as well as many of RJF’s corporate, administrative and sells products for the mobile worker, including laptop cases, docking stations and accessories for mobile electronic devices, since February 2016.sales support departments. Prior to that, Mr. WilliamsZank served as the Chief Executive Officer andPresident of Raymond James & Associates, a directorsubsidiary of JPS


Industries, Inc., a manufacturer of sheet and mechanically formed glass and aramid substrate materialsRJF, responsible for the electronics, aerospace, ballistics and general industrial applications,domestic employee channel private client business, from May 2013 until its sale in July 2015.October 2002 to January 2012. Prior to that, Mr. Williams was the President, Chief Executive Officer and a director of DDi Corp., a leading provider of time-critical, technologically advanced electronics manufacturing services, from November 2005 to May 2012 and a Senior Vice President and Chief Financial Officer of DDi from November 2004 to October 2005. DDi was sold in May of 2012. He has alsoZank served in variousa number of financial and operational management positions with several companiesRJF and RJF subsidiaries,


10


holding titles such as Executive Vice President of Operations and Administration, Sr. Vice President, Controller and Treasurer, since joining RJF in the technology and professional services related industries.1978. From 1996 to 2002, Mr. Williams began his career with PricewaterhouseCoopers as a certified public accountant in the State of Maryland. Mr. Williams also serves as Chairman of the board of directors of Centrus Energy Corp. (formerly USEC Inc.). He was added to USEC's board of directors in October 2013 on the recommendation of certain holders of USEC's convertible senior notes as USEC was considering a bankruptcy restructuring, which was successfully initiated and completed in 2014. Since October 2015, Mr. Williams also servesZank served on the board of directors of B. Riley Financial, Inc. He previouslyRJF. From 2000 to 2006, Mr. Zank served on the boardsboard of Lightbridge Communicationsdirectors of the Options Clearing Corporation. He also served on the board of directors of the National Securities Clearing Corporation, until it was soldfrom 1994 to 1997. Mr. Zank has been actively involved in January 2015, and Tellabs, Inc. until it was sold in December 2013.the Corporate Mentorship Program at the University of South Florida since inception over 25 years ago. Mr. Williams received his B.S.Zank holds a bachelor’s degree in Accountingaccounting from the University of MarylandSouth Florida and ana M.B.A. from the University of Georgetown.Tampa. The Board believes that Mr. Williams has servedZank’s extensive management, financial and industry experience qualify him to serve as a director of Iteris since April 2011 and provides the Board of Directors with operational and public company experience and valuable strategic insights through his many years of leadership positions in technology-related companies with international operations, as well as valuable knowledge and insights in finance and financial reporting matters.

director.

Family Relationships

There are no family relationships among any of our directors director nominees, or executive officers.


Corporate

G
overnance
CORPORATE GOVERNANCE

Code of Ethics and Business Conduct

        Our Board of Directors has adopted a Code of Ethics and Business Conduct, which applies to all directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) and employees. The full text of our Code of Ethics and Business Conduct is available on the Investor Relations section of our website at www.iteris.com. We intend to disclose future amendments to certain provisions of the Code of Ethics and Business Conduct, and any waivers of provisions of the Code of Ethics required to be disclosed under the rules of the Securities and Exchange Commission ("SEC"), at the same location on our website."Board

Meetings and Committees

Director Independence

Our policy is to have at least a majority of the directors qualify as "independent"“independent” under the standards established by The Nasdaq Stock Market ("Nasdaq"(“Nasdaq”). The Board of Directors has determined that each of Messrs. Cerminara, Daly, Deeter, Mooney, Thomas and Williams currentlyour directors, other than our Chief Executive Officer, Joe Bergera, satisfies the requirements for "independence"“independence” using the standards established by Nasdaq, except that Dr. Daly did not qualify as an independent director while he was serving as our interim Chief Executive Officer from February 2015 to September 2015.

Nasdaq.

Board Structure

The Board does not have a policy regarding the separation of the roles of the CEO and Chairman of the Board as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board from time to time. However, the Board has determined that having an independent director serve as the Chairman is currently in the best interest of our company and stockholders in recognition of the different demands and responsibilities of the roles and to emphasize the independence of the role of Chairman. The Board also meets regularly in executive sessions.

Board Meetings and Committees

We currently have several standing committees of the Board, of Directors, including the Audit Committee, the Compensation Committee, the NCG Committee, and the Finance and StrategyNCG Committee. The Audit Committee, the Compensation Committee, the NCG Committee, and the Finance and StrategyNCG Committee each has a written charter that is reviewed annually and revised as appropriate. A copy of each committee'scommittee’s charter is available on the Investor Relations section of our website at www.iteris.com.

During the fiscal year ended March 31, 2017 ("Fiscal 2017"), the Board of Directors and the various committees of2021, the Board held eighteen formal meetings, the following number of meetings:Audit Committee held five formal meetings; the Compensation Committee held eight formal meetings; and the NCG Committee met several times informally as we continued our ongoing process for Board of Directors—four; Audit Committee—five; Compensation Committee—six;refreshment and the NCG Committee—five; and Finance and Strategy Committee—five.Committee acted formally once by unanimous written consent. During Fiscal 2017,2021, no director attended fewer than 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of anythe standing committees of the Board held while he was serving on which such director served during that period. During Fiscal 2021, due to complications related to COVID-19 and in order to protect the safety of our employees and directors of the Board, or such committee.

the Board and various committees of the Board did not hold any in-person meetings.

Audit Committee. The current members of our Audit Committee are Dr. DalyMs. Siegal and Messrs. Mooney and Williams, andZank. Mr. WilliamsZank serves as the Chairman of this committee. The Board has determined that each member of the Audit Committee is "independent"“independent” under the standards established by both the Nasdaq rules and the SEC rules regarding audit committee memberships.members. The Board has identified Mr. WilliamsZank as the member of the Audit Committee who qualifies as an "audit“audit committee


financial expert"expert” under applicable SEC rules and regulations governing the composition of the Audit Committee.

The Audit Committee oversees on behalf of the Board (a) the conduct of the Company’s accounting and financial reporting processes, the audits of our financial statements and the integrity of our the Company’s

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audited financial statements and other financial reports; (b) the performance of ourthe Company’s internal accounting, internal auditing, and financial controls function; (c) the engagement, replacement, compensation, qualifications, independence and performance of our independent registered public accounting firm;auditors, and (d) the portions of theour Code of Ethics and Business Conduct and related policies regarding our accounting, internal accounting controls or auditing matters. The Audit Committee also reviews and approves or disapproves related party transactions identified in Item 404 of SEC Regulation S-K and makes recommendations to the full Board regarding the same.

The Audit Committee meets privately with our independent registered public accounting firm from time to time, and such firm has unrestricted access to, and reports directly to, the Audit Committee. The Audit Committee has selected Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 20182022 and is recommending that our stockholders ratify this appointment at the Annual Meeting.

Compensation Committee. The current members of our Compensation Committee are Dr. DalyMs. Siegal and Messrs. CerminaraMr. Thomas and Thomas,Mr. Luke Schneider, who will serve as a director and a member of the Compensation Committee until the Annual Meeting. Mr. Thomas serves as the Chairman of this committee. The Board has determined that each member of the Compensation Committee is (or was during his time of service) "independent"“independent” under the standards established by Nasdaq. We anticipate that after the Annual Meeting, Mr. Deeter will be appointed as a member
The primary purposes of the Compensation Committee.

        The Compensation Committee are to (a) evaluatesevaluate officer and director compensation policies, goals, plans and programs; (b) determinesoversee compensation programs and policies for all employees as they relate to the Company’s risk management; (c) determine the cash and non-cash compensation of our "officers"directors and “executive officers” as defined in the rules promulgated under Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”); (c) reviews(d) review, and makesmake recommendations to the Board with respect to the administration of, our equity-based and other incentive compensation plans for all employees; (d) evaluates(e) evaluate the performance of our executive officers; and (e) assists(f) assist the Board in evaluating potential candidates for executive officer positions with the Company and overseesoversee management succession planning.

planning; and (g) produce the committee report required by the applicable rules and regulations of the SEC and other regulatory bodies for inclusion in our annual proxy statements.

The Compensation Committee meets periodically to review and establish the salaries, bonuses and incentive plans for our executive officers. The Compensation Committee considers a number of factors in determining the compensation plans and elements for, and the amount of each compensation element paid to, our executive officers, including publicly available data from independent outside sources, our general business conditions and objectives, and the committee'scommittee’s subjective determination with respect to the executive's individualeach executive’s contributions to such objectives. To assist the committee in its review, our Chief Executive Officer provides to the Compensation Committee his evaluations of the other executive officers and makes recommendations with respect to executive compensation matters; however, the final decisions regarding the compensation of our executive officers are made by the Compensation Committee. Neither theThe Compensation Committee nor management engaged a compensation consultant to provide advice or recommendations on the amount or form of executive and director compensation during Fiscal 2017; however, the Compensation Committee did retainretained Frederic W. Cook & Co., Inc., an independent compensation consultant (“FW Cook”), to assistadvise on executive compensation. FW Cook did not provide any other services to us in Fiscal 2021 beyond its engagement as an advisor to the designCompensation Committee on executive compensation matters. The Compensation Committee assessed the independence of FW Cook pursuant to SEC and Nasdaq rules and concluded that no conflict of interest existed that would have prevented FW Cook from serving as an independent consultant to the Company's 2016 Omnibus Incentive Plan, which was adopted at the 2016 Annual Meeting of Stockholders

compensation committee currently or during Fiscal 2021.

Nominating and Corporate Governance Committee. The current members of the Nominating and Corporate GovernanceNCG Committee (the "NCG Committee") are Dr. DalyMs. Joshi and Messrs. Mooney and Williams.Thomas. Mr. Mooney serves as the Chairman of this committee. The Board has determined that each member of the NCG Committee is "independent"“independent” under the standards established by Nasdaq.


The primary purposes of the NCG Committee are to assist the Board in (a) identify, screenestablishing the minimum qualifications for director nominees; (b) identifying and review individuals qualified to serve as directors; (b) select or recommendevaluating director nominees; (c) recommending to the Board candidates for the Annual Meeting of Directors the selection of nominees for election at the next annual meeting of stockholders; (c) recommend to the Board of Directors candidatesStockholders or to fill any vacancies on the Board; and (d) oversee the implementationdeveloping and monitoring the effectiveness of ourassessing corporate governance policies and developing and recommendingmaking recommendations related to such policies to the Board.


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Criteria for Director Candidate Qualifications
Our NCG Committee applies the same standards in considering director candidates submitted by stockholders as it does in evaluating other candidates, including incumbent directors. The identification and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, and will be significantly influenced by the particular needs of the Board modificationsfrom time to time. As a result, there is no specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and Nasdaq listing requirements and the provisions of our Certificate of Incorporation, Bylaws and charters of the Board’s committees. However, the NCG Committee and the Board have identified the following skills and qualifications listed below as important criteria for membership on our Board:

Board Experience — Experience serving on public company boards of directors.

Data/Analytics — A demonstrated understanding of data and analytics, as well as the ability to commercialize the resulting processes, techniques and/or additionsinsights.

Diversity — Representation of gender, racial, ethnic and/or other diverse perspectives that expand the Board’s understanding of the needs and viewpoints of our customers, partners, employees, governments and other stakeholders worldwide.

Financial Sophistication — Past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

Growth/Value Creation — Demonstrated experience in entrepreneurial growth and/or other transformational operating models resulting in measurable increase in stockholder value.

Mergers and Acquisitions (M&A) — Experience evaluating and leading acquisitions and other strategic transactions, with the ability to such policies;assess “build or buy” decisions, analyze the fit of a target with our strategy and (e) review onculture, accurately value transactions, and evaluate operational integration plans.

Operating Leadership — Experience as a regular basischief executive officer, president, chief operating officer or general manager leading an organization our overall corporate governancesize or bigger.

Product/Technology — Experience working in technology, resulting in knowledge of how to anticipate technological trends, generate disruptive innovation, and recommend improvements when necessary.

        In connection with their recommendations regardingextend or create new business models.


SaaS/IaaS — Experience in software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and/or subscription-based, software-enabled service delivery models.

Sales and Marketing — Experience developing strategies to grow sales and market share, build brand awareness and equity, and enhance enterprise reputation.

Smart Mobility — Experience related to the application of cloud computing, artificial intelligence, advanced sensors, advisory services and/or managed services to the transportation sector, including mobility-as-a-service, connected and automated vehicles and/or transportation infrastructure.
Director Qualifications Matrix
The following matrix presents how the NCG Committee maps our director qualifications to the director nominees and led to each nominee’s selection as a member of the Board. The NCG Committee routinely reviews this qualification matrix, modifies the matrix to reflect adjustments to our business strategy and/or market landscape, and evaluates whether it would be prudent to make any changes to the size andor composition of our Board.

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Selection Process for Nomination of Director Candidates
The NCG Committee regularly reviews the composition of the Board, including the qualifications, expertise and characteristics that are represented in the current Board as well as the criteria it considers needed to support our long-term strategy. In its most recent search processes to add new directors to the Board, the NCG Committee reviews the appropriate qualitiesretained an independent search firm to identify and skills required of directors in the contextvet candidates. After an in-depth review of the then current make-upcandidates, the NCG Committee recommends candidates to the Board in accordance with its charter, our Certificate of Incorporation and Bylaws and our criteria for director candidate qualifications described above. After careful review and consideration, the Board will nominate candidates for election, or re-election, at our annual meeting of stockholders. The Board may appoint a director to the Board during the course of the Board and the needs of the Company. This includes an assessment of each candidate's independence, personal and professional integrity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment, and abilityyear to serve until the Company'snext meeting of stockholders.
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Director Tenure and our stockholders' long-term interests. While we do not have a formal policy with regardRefreshment
When recommending to the considerationBoard the slate of diversity in identifying director nominees for election at our annual meeting of stockholders, the NCG Committee strives to nominate directorsmaintain an appropriate balance of tenure, turnover, diversity and skills on the Board. The Board believes that refreshment is important to help ensure that Board

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composition is aligned with a variety of complementary skills and backgrounds so that, as a group, the Board will possess the appropriate talent, skills, insight and expertise to oversee our business. These factors, and others as considered useful by the NCG Committee, are reviewed in the context of an assessment of the perceived needs of the Company as our business evolves over time, and that fresh viewpoints and perspectives are regularly considered. The Board at a particular point in time. As a result, the priorities and emphasisalso believes that over time directors develop an understanding of the NCG CommitteeCompany and an ability to work effectively as a group. Because this provides significant value, a degree of continuity year-over-year is beneficial to stockholders and generally should be expected. All our directors are elected each year to hold office until the next annual meeting and until their successors are elected and qualified. Because tenure or age limits could cause the loss of experience or expertise important to the optimal operation of the Board, there are no absolute limits on the length of time that a director may change from time to time to take into account changes in business and other trends,serve.
Our director nominees have average tenure on our Board of approximately 7 years, and the portfoliofollowing table shows the range of skills and experiencetenures of current and prospective directors. The NCG Committee generally leads the search for and selects, or recommends thatour director nominees, evidencing the Board select, candidates for election to the Board. Considerationrefreshment we have undertaken in recent years:
Years of TenureDirectors
0-2 years2
2-5 years1
5+ years3
Stockholder Nomination of new director candidates typically involves a series of committee discussions, review of information concerning candidates and interviews with selected candidates.Director Candidates for nomination to our Board typically have been suggested by other members of the Board or by our executive officers; however, from time to time, the NCG Committee has, and may in the future, engage the services of a third-party search firm to identify director candidates.

The NCG Committee will consider candidates for directors recommended by our stockholders who meet the eligibility requirements for submitting stockholder proposals for inclusion in our next proxy statement. This committee will evaluate such recommendations applying its regular nominee criteria. Eligible stockholders wishing to recommend a nominee must submit such recommendation in writing to the Chair, NCG Committee Chair, care of our corporateCorporate Secretary, by the deadline for stockholder proposals set forth in our last proxy statement, specifying the following information: (a) the name and address of the nominee, (b) the name and address of the stockholder making the nomination, (c) a representation that the nominating stockholder is a stockholder of record of our stock and entitled to vote at the next annual meeting and intends to appear in person or by proxy at such meeting to nominate the person specified in the notice, (d) the nominee'snominee’s qualifications for membership on the Board, (e) a resume of the candidate's business experience and educational background as well as all of the information that would be required in a proxy statement soliciting proxies for the election of the nominee as a director, (f) a description of all direct or indirect arrangements or understandings between the nominating stockholder and the nominee and any other person or persons (naming such person or persons) pursuant to whose request the nomination is being made by the stockholder, (g) all other companies to which the nominee is being recommended as a nominee for director, and (h) a signed consent of the nominee to cooperate with reasonable background checks and personal interviews, and to serve as a director, if elected. In connection with its evaluation, the NCG Committee may request additional information from the candidate or the recommending stockholder, and may request an interview with the candidate. The NCG Committee has the discretion to decide which individuals to recommend for nomination as directors.


No candidates for director nominations were submitted to the NCG Committee by any stockholder in connection with the election of directors at the Annual Meeting.

        Finance and Strategy Committee.    The current members of the Finance and Strategy Committee are Dr. Daly and Messrs. Cerminara, Mooney and Thomas, and Dr. Daly and serves as the Chairman of this committee. The purpose of the Finance and Strategy Committee is to assist management in identifying, evaluating and negotiating financial transactions and other strategic opportunities for the Company from time to time.

Risk Oversight Role

The Board is responsible for overseeing our risk management, but its duties in this regard are supplemented by certain committees of the Board. In particular,Board, as described in the Audit Committee focuses on financial risk, including internal controls, and is responsible for discussing with management and our independent auditors policies with respect to risk assessment and risk management, including the process by which we undertake major financial and accounting risk assessment and management. Risks related to our compensation programs are reviewed by the Compensation Committee, and certain legal and regulatory compliance risks are reviewed by the NCG Committee.table below. In connection with its responsibilities relating to risk assessment, our full Board periodically engages in discussions of the most significant risks that the Company is facing (including cyber security risks); and how these risks are being managed.


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Audit Committee

Focuses on financial risk of the Company

Reviews internal controls and the Company’s financial statements with the CEO, CFO and the external and internal auditors.

Oversees risks assessment and risk management (and its applicable processes) by management and our independent auditors relating to key financial, accounting and reporting policies.

Oversees the selection, appointment, retention, compensation, evaluation and performance of the work of the Company’s independent auditors.

Meets quarterly with CEO, CFO and the Company’s external independent auditors in executive session.
Compensation Committee

Oversees risks associated with our compensation policies and programs with respect to both executive compensation and compensation for all employees generally.

Utilizes external independent compensation consultant to assist in designing and reviewing compensation policies and programs, including the potential risks created by the policies and programs.

Assists Board in overseeing the Company’s executive management succession planning.

Oversees the process for conducting the annual risk assessment of the Company’s compensation programs and policies, including retaining, from time to time, third party consultants to assess risk. See “Compensation Risk Assessment” below.
Nominating and Corporate Governance Committee

Oversees risks relating to certain legal and regulatory compliance risks with respect to the Company’s corporate governance policies and standards.

Oversees compliance and risks related to Board structure, directors and director nominations.

Oversees risks related to compliance matters by reviewing on at least an annual basis issues and developments related to corporate governance.

Oversees risks related to the Company’s compliance with the listing standards and the Sarbanes/Oxley Act.
Changes in Nominating Procedures
There have not been any material changes to the procedures by which security holders may recommend nominees to our Board that were implemented since we last disclosed such procedures.
Stockholder Communications

The Board has implemented a process by which stockholders may send written communications directly to the attention of the Board, any committee of the Board or any individual Board member, care of our corporateCorporate Secretary. The name of any specific intended Board recipient should be noted in the communication. Our corporateCorporate Secretary will be primarily responsible for collecting, organizing and monitoring communications from stockholders and, where appropriate depending on the facts and circumstances outlined in the communication, providing copies of such communications to the intended recipients. Communications will be forwarded to directors if they relate to appropriate and important substantive corporate or Board matters. Communications that are of a commercial or frivolous nature or otherwise inappropriate for the Board'sBoard’s consideration will not be forwarded to the Board. Stockholders who wish to communicate with the Board can writesubmit a written request to the Corporate Secretary at Iteris, Inc., 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705.

92705; Attention: Corporate Secretary.

Annual Meeting Attendance

We do not have a formal policy regarding attendance by members of our Board of Directors at annual meetings of our stockholders; however, directors are encouraged to attend all such meetings. For our 2016 annual meeting of stockholders, twoAll of our then-current directors attended our 2020 annual meeting of stockholders.

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Policy against Hedging and Pledging
The Company has a policy strongly recommending against hedging or pledging in our equity securities by our officers, directors or employees.
Director Compensation
Compensation of directors is determined by the Compensation Committee. The Compensation Committee has approved a compensation structure for nonemployee directors consisting of a cash retainer, an annual equity award and, for Board members serving on a committee, an additional cash retainer. Directors who are our employees are not compensated for their services as directors.
Board and Committee Retainers
For Fiscal 2021, annual cash compensation for nonemployee directors was as follows:
Position
Annual
Retainer
Chairman of the Board$65,000
Nonemployee Director (other than the Chairman)$35,000
Additional retainers for each nonemployee director who served on one or more Board committees in Fiscal 2021 were as follows:
Position
Annual
Retainer
Audit Committee
Chair$12,000
Member$6,000
Compensation Committee
Chair$9,000
Member$4,500
Nominating and Corporate Governance Committee
Chair$4,000
Member$2,000
All directors are reimbursed for their out-of-pocket expenses incurred in attending meetings of our Board and its committees, but they do not receive separate meeting fees.
Annual Equity Compensation
Nonemployee directors are also eligible to receive periodic restricted stock units (“RSUs”) under the Company’s equity incentive plan then in effect. Each nonemployee director shall be granted an annual RSU award upon approval of the grant by the Compensation Committee as soon as reasonably practicable following the annual meeting of stockholders at which such meeting.

director is re-elected. The annual RSU grant to directors shall be worth approximately $40,000 based on the closing price of the Company’s common stock on the RSU grant date. Each RSU entitles the holder to receive one share of the Company’s common stock upon vesting of such unit. Each annual RSU generally vests on the date of the first annual stockholder meeting following the date of grant. If a nonemployee director joins the Board in between annual stockholder meetings, such director will receive an RSU for a pro rata portion of the annual grant, which typically vests in full on the date of the first annual stockholder meeting following the date of grant.
2021 Director Compensation Table
The following table sets forth a summary of the compensation earned in Fiscal 2021 by each person who served as a nonemployee director during that year:

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Name
Fees Earned
or Paid in
Cash ($)(1)
Stock
Awards ($)(2)
Total ($)
Anjali Joshi(3)
28,93839,99868,936
Scott E. Deeter(4)
19,75019,750
Gerard M. Mooney46,12539,99886,123
Laura L. Siegal45,32939,99885,327
Lucas (“Luke”) P. Schneider(5)
28,12239,99868,121
Thomas L. Thomas80,47039,998120,468
Dennis W. Zank50,37039,99890,369
(1)


Represents amounts earned by the directors based on the arrangements described above, which amounts have been prorated for directors who served on Board committees for less than a full term.
(2)
The dollar amounts shown represent the grant date fair value of restricted stock unit awards granted in Fiscal 2021 determined in accordance with ASC 718. For a discussion of valuation assumptions used in the calculations, see Note 9 of Notes to Consolidated Financial Statements, included in Part II, Item 8 in the Annual Report. See also our discussion of stock-based compensation under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in Part II, Item 7 in the Annual Report.
For each director, the number of units was determined by dividing $40,000 by $4.18, the closing sales price of the Company’s common stock on the grant date. At the end of Fiscal 2021, the above-listed directors held no stock options. At the end of Fiscal 2021, the above listed directors held RSUs for the following number of shares of common stock: Ms. Joshi — 9,569; Mr. Deeter — 0; Mr. Mooney — 9,569; Ms. Siegal — 9,569; Mr. Thomas — 9,569; Mr. Schneider — 9,569; and Mr. Zank — 9,569.
(3)
Ms. Joshi joined the Board in June 2020, and accordingly, earned pro-rated Board fees in Fiscal 2021.
(4)
Mr. Deeter stepped down from the Board on July 15, 2020, concurrently with the appointment of Mr. Schneider.
(5)
Mr. Schneider joined the Board in July 2020, and accordingly, earned pro-rated Board fees in Fiscal 2021. Mr. Schneider will serve as a director until the Annual Meeting.
Stock Ownership Guidelines
Pursuant to stock ownership guidelines adopted by the Board in February 2016, each nonemployee member of the Board is required to own shares of the Company common stock having a value equal to or greater than three times the annual cash Board retainer, which is currently set at $35,000 per year. Each director has until the later of (i) February 2021 and (ii) five years from the time he or she is elected to the Board, to meet the stock ownership guidelines.
Effective September 2020, the Company adopted additional stock ownership guidelines to align the interests of management with those of stockholders of the company. Under these guidelines, the CEO will be expected to own common stock of the Company having a value equal to or greater than three times his or her base salary and the other executive officers are expected to own common stock of the Company having a value equal to or greater than one times his or her base salary. Each executive has the goal of meeting this threshold by the later of (i) September 2025 and (ii) the fifth anniversary of his or her first employment as an executive officer.
All Company shares held by the director or executive officer, his or her related trusts and immediate family members, shares underlying restricted stock units or performance stock units, and 50% of the in-the-money value of vested stock options shall be included in the calculations.
As of March 31, 2021, each of our nonemployee directors were in compliance with our stock ownership guidelines or had additional time under the terms of the guidelines within which to fulfill the requirement.

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Deferred Compensation PlanPROPOSAL TWO:
APPROVAL OF EMPLOYEE SHARE PURCHASE PLAN

        The stockholders are being asked to approve

      Effective October 1, 2020, the adoption ofCompany adopted the Iteris, Inc. Employee Stock PurchaseNon-Qualified Deferred Compensation Plan (the "“DC Plan”). The DC Plan consists of two plans, one that is intended to be an unfunded arrangement for eligible key employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and one for the benefit of nonemployee members of our Board. Under the DC Plan, our nonemployee directors may elect to defer up to 100% of any RSU awards and up to 100% of their cash compensation for service as a director. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon. For a description of the terms of the DC Plan, see “Executive Compensation and Other Information — Non-Qualified Deferred Compensation for Fiscal 2021” herein.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the Board or Compensation Committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board or Compensation Committee. No interlocking relationship exists between any member of the Board and any member of the Compensation Committee (or other committee performing equivalent functions) of any other company.

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Proposal 2: Approval of Amended and Restated
Iteris, inc. 2016 Omnibus Incentive Plan
At the Annual Meeting, stockholders will be asked to consider and approve a proposal to amend the Iteris, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”). The Board approved the amendment and restatement of the 2016 Plan on July 15, 2021, subject to stockholder approval at the Annual Meeting. The amended and restated plan is referred to herein as the “Restated Plan.”
The Restated Plan implements the following material amendments to the 2016 Plan:

Increase in Share ReservePurchase.   We are asking our stockholders to approve an increase of 3,360,000 in the number of shares available for issuance under the Restated Plan"), over the existing share reserve under which 1,000,000the 2016 Plan. Incentive compensation programs play a pivotal role in our effort to attract and retain key personnel essential to our long-term growth and financial success. For that reason, we have structured the 2016 Plan to provide flexibility in designing equity incentive programs with a broad array of equity incentives, such as stock options, stock appreciation rights, stock awards, restricted stock units, cash incentive awards, and dividend equivalents, so that we may implement competitive incentive compensation programs for our key employees and non-employee directors. As of July 13, 2021, a total of 776,492 shares of the Company's common stock remained available for future grants under the 2016 Plan (with performance awards counted at “target”). We believe that the current share reserve amount is insufficient to meet our future needs with respect to attracting, motivating and retaining key executives and employees in a competitive market for talent. If this proposal is not approved, we may be unable to continue to offer competitive equity packages to attract and retain employees and we may have to increase cash compensation to recruit, retain and motivate our employees, thereby reducing resources available to meet our business needs.

Extension of Term.   The Restated Plan will have a ten-year term ending July 15, 2031.

Limitations on Dividend Payments on Unvested Awards.   The Restated Plan prohibits the payment of dividends and dividend equivalent rights on unvested awards.

Increase in the Limit on Director Pay.   The limit on director pay, including any cash payments and the grant date fair value of equity granted to any one non-employee director during a single fiscal year, is being increased from $250,000 to $350,000.

Revise the Full-Value Award Ratio.   The fungible rate at which awards other than options or stock appreciation rights granted under the Restated Plan are counted against the shares of common stock available for future issuance under the Restated Plan is being decreased from 1.79 shares for every one share issued, to 1.52 for every one share to be issued for future award under the Restated Plan.
Current Overview of Outstanding Equity Information
The 2016 Plan became effective on December 15, 2016 upon its approval by the stockholders at the 2016 Annual Meeting (the “Original Plan Effective Date”). The 2016 Plan is the successor to our 2007 Omnibus Incentive Plan (the “Predecessor Plan”), which terminated on the Original Plan Effective Date, following which no awards may be made under the Predecessor Plan. The 2016 Plan was most recently amended and restated effective October 11, 2018, when our stockholders approved an amendment to increase the number of shares of our common stock authorized and reserved for issuance.issuance under the 2016 Plan by 2,400,000.
On December 4, 2020, our Board approved the Iteris, Inc. 2020 Employment Inducement Incentive Award Plan (the “Inducement Plan”) in conjunction with acquisition of the assets of TrafficCast International, Inc. (“TrafficCast”). The Purchaseterms of the Inducement Plan are substantially similar to the terms of the 2016 Plan with the exception that incentive stock options may not be granted under the Inducement Plan. The Inducement Plan was adopted by our Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. The Board initially reserved 300,000 shares of our common stock for issuance pursuant to awards granted under the Inducement Plan. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to an employee who has not previously been an employee or member of the Board of Directorsthe Company or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, and only

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if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary.
The 2016 Plan is the only plan under which future equity awards may be granted to our employees and other service providers. No further awards will be granted under the Inducement Plan, although the outstanding awards under the Inducement Plan remain outstanding in accordance with their terms.
When deciding on August 16, 2017,the number of shares to be available for awards under the Restated Plan, the Board considered a number of factors, including the remaining number of shares available under the 2016 Plan, the number of shares needed for future awards, a dilution analysis, the recommendation from the Compensation Committee based on input from FW Cook, its independent compensation consultant, competitive data from relevant peer companies, the current and future accounting expenses associated with our equity award practices, and input from our stockholders and stockholder advisory firms.
The Company currently has awards outstanding under the 2016 Plan, the Predecessor Plan, and Inducement Plan. The table below reflects the outstanding awards under these plans, and the shares available for issuance under such plan, in each case as of July 13, 2021. The total number of shares of the Company’s common stock outstanding as of July 13, 2021 was 42,281,621.
Plans as of July 13, 2021
Shares
Subject to
Outstanding
Stock
Options(1)
Shares
Subject to
Outstanding
Restricted
Unit Awards
Shares Subject
to Outstanding
Performance
Stock Unit
Awards(2)
Shares
Remaining
Available for
Future Grant
2016 Plan3,586,28222,960132,403776,492
Predecessor Plan1,434,500327,589
Inducement Plan(3)
95,00084,914120,086
Total (Before Restated Plan is approved)5,115,782435,463132,403896,578
Shares to be added to share reserve pursuant to Restated Plan3,360,000
Total (After Approval of Restated Plan)(4)
5,115,782435,463132,4034,136,492
(1)
As of July 13, 2021, the 5,115,782 stock options outstanding had a weighted average exercise price per share of $4.22 and a weighted average life of 6.7 years.
(2)
Consists of PSUs at “target” level of performance. The number of performance shares outstanding as of July 13, 2021, under the 2016 Plan assuming “maximum” performance is 264,806.
(3)
No further awards will be made under the Inducement Plan.
(4)
This is subject to adjustment and increase as discussed in the section titled “Securities Subject to Restated Plan” below.
Note that the 4,136,492 shares to be available for issuance under the Restated Plan excludes any remaining shares available for issuance under the Inducement Plan, and no further awards will be made under the Inducement Plan. For purposes of calculating the shares that remain available for grant under the 2016 Plan and the Restated Plan (assuming approval of this Proposal 2), each “full value” award is counted using the applicable ratio as specified in the plan and PSUs are calculated assuming “target” performance.
Based on the Company’s common stock outstanding as of July 13, 2021, the aggregate total shares issuable under the 2016 Plan, the Predecessor Plan and Inducement Plan as set forth in the table above (consisting of shares available for future issuance under such plans as of such date and shares subject to outstanding awards, with PSUs at “target” level of performance) represents an overhang of approximately 13.5% of shares. If the amendment and restatement of the 2016 Plan is approved, the additional 3,360,000 shares available for issuance would increase the overhang to approximately 18.8% if shares available for future grant are expressed in stock options, or 16.6% if shares available for future grant are expressed in full-value shares. The Company calculates “overhang” as the total of (a) shares underlying outstanding awards

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plus shares available for issuance under future equity awards, divided by (b) the total number of shares outstanding, shares underlying outstanding awards and shares available for issuance under future equity awards.
We recognize that equity awards dilute existing stockholders. In connection with our stock-based compensation programs, we are committed to using equity incentive awards prudently and within reasonable limits. Accordingly, we closely monitor our stock award “burn rate” each year. Our annual burn rate is determined by dividing the number of shares of our common stock subject to stock-based awards we grant in a fiscal year by the weighted average number of our fully-diluted shares of common stock outstanding for that fiscal year.
Fiscal Year
Stock Options
Granted
RSUs
Granted
PSUs
Granted(1)
Total
Granted
Weighted
Average
Common
Stock
Outstanding
Burn
Rate
2021830,600231,86368,2851,130,74841,599,4323%
20201,205,500373,9391,579,43939,012,3484%
20191,037,85061,8701,099,72033,266,1923%
3-Year Average1,024,650222,55722,7621,269,96937,959,3243%
(1)
Consists of performance-based restricted stock units at “target” level of performance. There were no performance-based restricted stock units earned based on performance during 2019, 2020, and 2021.
Based on our current equity award practices, the Board estimates that the authorized shares under the Restated Plan may be sufficient to provide us with an opportunity to grant equity awards for approximately two to three years, in amounts determined appropriate by the Compensation Committee or the Board, which will administer the Restated Plan (as discussed below). This is only an estimate, and circumstances could cause the share reserve to be used more quickly or more slowly. These circumstances include, but are not limited to, the future price of shares of the common stock, the mix of options and full value awards provided as long-term incentive compensation, grant amounts provided by our competitors, payout of performance-based awards in excess of target in the event of superior performance, hiring activity, and promotions during the next few years.
Highlights of the Restated Plan
The Restated Plan contains a number of provisions that we believe are consistent with best practices in equity compensation and which protect the stockholders’ interests, as described below.
Prohibition on re-pricings:   The Restated Plan prohibits the reduction of the exercise price in effect for outstanding options or stock appreciation rights, the cancellation and replacement of stock options or stock appreciation rights with a grant with a lower exercise price, or a cash buyout of an underwater option or stock appreciation right (except as permitted in a change in control or in the case of an adjustment event as described in the section titled “Changes in Capitalization” below).
No evergreen authorization:   The Restated Plan does not have an evergreen provision, which normally permits an automatic annual increase in the share pool without further stockholder approval.
Reasonable limit on full value awards:   For purposes of calculating the shares that remain available for issuance under the Restated Plan, grants of options and stock appreciation rights will be counted as the grant of one share for each one share actually granted, as described below. However, to protect stockholders from potentially greater dilutive effect of full value awards (i.e., awards other than options and stock appreciation rights), all grants of full value awards will be deducted from the Restated Plan’s share reserve as 1.52 shares for each one share actually granted (this ratio is being amended, as the ratio currently in effect under the 2016 Plan, prior to approval of the Restated Plan, is 1.79).
No automatic vesting upon a change in control:   The Restated Plan allows for an acquiring corporation to assume outstanding awards, and if awards are assumed, they will generally not accelerate on the change

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in control. If awards are not assumed, the vesting of such awards will be accelerated. The plan administrator also has the discretion to take alternative actions such as accelerating the vesting of outstanding awards or requiring that participants exchange outstanding accelerated awards for cash.
Minimum vesting periods:   Options and stock appreciation rights are subject to a minimum vesting period of at least one year from the date of grant. However, the minimum vesting requirement will not apply to (a) any awards up to 5% of the available shares of common stock authorized for issuance under the Restated Plan (the “5% Basket”), (b) any awards delivered in lieu of fully-vested cash-based awards under the Restated Plan (or other fully-vested cash awards or payments), and (c) any awards to non-employee directors for which the vesting period runs from the date of one annual meeting of the Company’s stockholders to the next annual meeting of the Company’s stockholders which is at least fifty (50) weeks after the immediately preceding year’s annual meeting. Any option or stock appreciation right granted under the Restated Plan may vest in full or in part upon death or disability of the participant, upon a participant’s termination of service, or upon a change in control, and such vesting shall not count against the 5% Basket.
No discounted stock options or stock appreciation rights:   Stock options and stock appreciation rights must have an exercise price or base price at or above fair market value on the date of grant.
Limit on director pay:   The maximum aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all awards made to a non-employee director under the Restated Plan in a single fiscal year, taken together with any cash payments (including the annual retainer and any other compensation) paid to such non-employee director in respect of such fiscal year, shall not exceed $350,000 in total value ($250,000 under the 2016 Plan, prior to approval of the Restated Plan).
No tax gross-ups:   The Restated Plan does not provide for any tax gross-ups.
No liberal change-in-control definition:   The Restated Plan defines change in control based on the consummation of the transaction rather than the announcement or stockholder approval of the Purchasetransaction.
Limitation on dividends and dividend equivalents:   Any dividends or dividend equivalents payable in connection with an award subject to vesting will be subject to the same vesting restrictions as the underlying award and will not be paid until and unless such vesting conditions are met.
Administered by an independent committee:   The Restated Plan at the Annual Meeting.

        The Purchase Plan is designed to allow eligible employeeswill be administered by our Board’s Compensation Committee, which consists entirely of independent directors. Administration of the CompanyRestated Plan may also be delegated to a secondary committee or, one or more officers or retained by the Board as described in more detail below.

Awards subject to Company’s clawback policy:   Awards granted under the Restated Plan are subject to the Company’s clawback policy, which applies to executive officers’ incentive compensation in the event of a financial restatement, and its participating subsidiaries (whether now existing or subsequently established or acquired) to purchase sharesis described in more detail elsewhere in this proxy statement.
Summary Description of common stock at designated intervals through their accumulated payroll deductions.

Restated Plan

The following is a summaryprincipal terms and provisions of the principal features of the new Purchase Plan.Restated Plan are set forth below. The summary, however, is not intended to be a complete description of all the provisionsterms of the PurchaseRestated Plan and is qualified in its entirety by reference to the complete text of the Purchase Plan.Restated Plan, is attached to this proxy statement as Appendix A, which may be accessed on the SEC’s website at www.sec.gov. Any stockholder who wishes to obtain a copy of the actual Purchaseplan document may do so upon written request to our Corporate Secretary at our principal offices at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705.
Types of Awards.   The following types of awards may be granted under the Restated Plan: options, stock appreciation rights, stock awards, performance-based restricted stock units, restricted stock units, cash incentive awards and dividend equivalent rights. The principal features of each type of award are described below.
Administration.   The Compensation Committee has the exclusive authority to administer the Restated Plan is attached as Appendix Awith respect to this Proxy Statement.

Administration

        The Purchaseawards made to our executive officers and non-employee directors and has the authority to make awards under the Restated Plan will be administered byto all other eligible individuals. However, our Board may, at any


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time appoint a secondary committee of one (1) or more Board members to have separate but concurrent authority with the Compensation Committee ofto make awards under the Restated Plan to individuals other than executive officers and non-employee directors or the Board of Directors. Such committee will, as plan administrator, have fullmay retain authority to adopt administrative rulesmake awards to such persons. To the extent permitted by law, the Board or the Compensation Committee may delegate any or all of its authority to administer the Restated Plan to one or more officers (other than with respect to grants to executive officers and proceduresnon-employee directors).
The term “plan administrator,” as used in this summary, will mean our Compensation Committee, the Board and to interpret the provisions of the Purchase Plan.

Securities Subjectany secondary committee, to the Purchase Plan

        The numberextent each such entity is acting within the scope of shares of the Company common stock reserved for issuanceits administrative authority under the Purchase Plan will initially be 1,000,000 shares. The shares issuable under the Purchase Plan may be made available from authorized but unissued shares of common stockRestated Plan.

Eligibility.   Officers and employees, non-employee directors, as well as consultants and other independent advisors, in our employ or from shares of common stock repurchased by the Company, including shares repurchased on the open market.

        In the event that any dividendservice or other distribution (whether in the form of cash, common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, reincorporation, other reorganization, split-up, spin-off, combination, repurchase, or exchange of common stock or other securities of the Company, or other change in the Company's structure affecting the common stock occurs without the Company's receipt of consideration, or should the value of shares of common stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, then the plan administrator will, in such manner as it deems equitable, adjust the maximum number of shares and class of common stock that may be issued under the Purchase Plan, the purchase price per share and the number of shares of common stock covered by each outstanding option under the Purchase Plan, and the maximum number of shares purchasable per participant during any offering period.

Offering Periods and Options

        Shares of the Company's common stock will be offered for purchase under the Purchase Plan through a series of successive offering periods which will be of such duration (not to exceed 27 months) as determined by the plan administrator. Unless otherwise specified by the plan administrator prior to the start of the applicable offering period, (i) each offering period will have a duration of six (6) months and (ii) offering periods will commence on January 1 and July 1 each year. The initial offering period under the Purchase Plan will commence on January 1, 2018.

        On the first trading day of each offering period, each participant will be granted an option to acquire shares of the Company's common stock on the last trading day of that offering period, subject to certain limitations described below.


Eligibility and Participation

        Any individual who is employed on a basis under which he or she is regularly expected to work for more than 20 hours per week for more than five months per calendar year in the employ or service of the Companyour parent or any participating subsidiary corporationcompanies (whether any such corporation is currently a subsidiarynow existing or subsequently acquired or is subsequently established at any time during the term of the Purchase Plan) will beestablished) are eligible to participate in any offering period implemented under the PurchaseRestated Plan.

        To As of July 13, 2021, we had approximately 430 employees (including 4 named executive officers), approximately 4 consultants and 6 nonemployee directors, who were eligible to participate in a particular offering period, an eligible employee must completethe Restated Plan and file the requisite enrollment forms during the enrollment period for that offering period.

        As of August 15, 2017, approximately 440 employees, including six executive officers, would have been eligible to participate in the PurchaseRestated Plan had it been in effect on such date.

Payroll Deductions and Stock PurchasesSecurities Subject to Restated Plan.

        Each participant may   The Restated Plan authorizes an increase of 3,360,000 in the number of shares available for issuance under the Restated Plan over the existing share reserve under the 2016 Plan. Accordingly, when the new share request is added to the shares previously authorized under the 2016 Plan, the Restated Plan will authorize periodic payroll deductions in any multiple of one percent up to a maximum of 15%the issuance of the cash compensation paid to the participant for the offering period.

        The accumulated contributions will automatically be applied to the acquisition of common stock at six-month intervals. Accordingly, on each such purchase date (the last trading day in July and December each year), each participant's payroll deductions accumulated for the offering period ending on that purchase date will automatically be applied to the purchase of wholesum of:


9,263,602 shares of common stock (comprised of (i) the 3,400,108 shares available on the Original Plan Effective Date (after taking into account awards granted under the Predecessor Plan after July 22, 2016 and prior to the Original Plan Effective Date); (ii) the 103,494 shares transferred to the 2016 Plan as a result of cancelled the Predecessor Plan awards since the Original Plan Effective Date, (iii) the 2,400,000-share increase approved by the shareholders on October 11, 2018, and (iv) the 3,360,000-share increase approved by the Board on July 15, 2021 pursuant to the Restated Plan, subject to stockholder approval at the purchaseAnnual Meeting); plus

For each award that is outstanding under the Predecessor Plan as of the effective date of the Restated Plan, (i) one share for each share subject to an award that is an option or stock appreciation right and (ii) 1.52 shares for each share subject to a full-value award, in each case, that subsequently becomes available for issuance under the Restated Plan pursuant to the share counting provisions described below.

No further awards will be made under the Inducement Plan.
As of July 13, 2021, awards covering a total of 3,741,645 shares were subject to outstanding awards under the 2016 Plan (with performance awards counted assuming “target” performance). Therefore, for the avoidance of doubt, the 9,263,602 shares reflected in the first bullet above includes shares subject to awards granted and settled in prior years and is not a reflection of availability for new, future awards following the effective date of the Restated Plan. A maximum of an additional 1,932,435 shares could become available for future issuance under the Restated Plan in respect of outstanding awards under the Predecessor Plan that expire or are terminated pursuant to the terms of the Restated Plan, as described below.
As of July 13, 2021, there were 776,492 shares remaining available for grant under the 2016 Plan (with each “full value” award counted using the applicable ratio as specified in the plan and PSUs calculated assuming “target” performance). Therefore, as of the date of the Company’s 2021 Annual Meeting, and subject to stockholder approval, there will be 4,136,492 shares available for the grant of new awards under the Restated Plan (the sum of 776,492 remaining shares and the requested 3,360,000 new shares), less grants made after July 13, 2021 and counted at the fungible ratio described above and subject to adjustments as described in the Restated Plan and below.
Shares subject to outstanding awards under the Restated Plan and awards granted under the Predecessor Plan that expire or otherwise terminate prior to the issuance of the shares subject to those awards will be available for subsequent issuance under the Restated Plan as follows: (a) for each share subject to an expired option or stock appreciation right, one share of common stock shall become available for subsequent

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issuance under the Restated Plan, and (b) for each share subject to an expired award other than an option or stock appreciation right, 1.52 shares shall become available for subsequent issuance under the Restated Plan.
Any unvested shares issued under the Restated Plan and the Predecessor Plan for cash consideration not less than the fair market value per share on the date of grant that are subsequently repurchased by us, at a price not greater than the original issue price paid per share, pursuant to our repurchase rights under the Restated Plan and the Predecessor Plan will be added back to the number of shares reserved for issuance under the Restated Plan and will accordingly be available for subsequent issuance.
The number of shares of common stock reserved for issuance under the Restated Plan shall be reduced on a one-for-one basis for each share subject to an option or stock appreciation right and by a fixed ratio of 1.52 shares for each share of common stock subject to an award other than an option or stock appreciation right.
In addition, the following share counting procedures will apply in determining the number of shares of common stock available from time to time for issuance under the Restated Plan:

Should the exercise price of an option or any withholding taxes incurred in connection with the exercise of an option granted under the Restated Plan or the Predecessor Plan be paid in shares of our common stock (whether through the withholding of a portion of the otherwise issuable shares or through tender of actual outstanding shares), then in each such case the number of shares so tendered or withheld will be added to the shares reserved for issuance under the Restated Plan on a one-for-one basis.

Should shares of common stock be withheld by us, or if shares are tendered by the participant, in each case in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or settlement of an award (other than an option or stock appreciation right) granted under the Restated Plan or the Predecessor Plan, then in each case the number of shares so tendered or withheld will be added to the shares of common stock available for issuance under the Restated Plan on a 1.52-for-one basis (this ratio is being amended, as the ratio currently in effect for the participant for that purchase date. The first purchase under the Purchase2016 Plan, prior to approval of the Restated Plan, is expected1.79).
Upon the exercise of any stock appreciation right granted under the Restated Plan, the share reserve will be reduced by the net number of shares subject to occurthe award.
The maximum number of shares of common stock that may be issued pursuant to options intended to qualify as incentive stock options under the federal tax laws shall be limited to 10,000,000.
The Company may grant awards in assumption of, or in substitution or exchange for, awards previously granted by a company acquired by the Company or any subsidiary. Such substitute awards will not reduce the shares of common stock authorized for issuance under the Restated Plan or the limitations on June 29, 2018.

Purchase Price

grants to a participant during a fiscal year as described above. Additionally, if the acquired company’s equity plan has shares available, such shares may be available for grant under the terms of that plan (as adjusted using the exchange ratio described above), which will not reduce the shares authorized for issuance under the Restated Plan.

The purchase priceshares of common stock issuable under the Restated Plan may be drawn from shares of our authorized but unissued common stock or from shares of our common stock that we acquire, including shares purchased on the open market.
Participant Award Limits.   The maximum number of shares of common stock which may be issued pursuant to options or stock appreciation rights that are settled in shares and granted to any person under the Restated Plan in any fiscal year shall be limited to 2,000,000 shares.
The maximum number of shares for which awards (other than options and stock appreciation rights that are settled in shares) may be granted to any person under the Restated Plan in any fiscal year shall not exceed 2,000,000 shares (which limit shall refer to the maximum amount that can be earned) in the aggregate.
During any fiscal year, no participant may be granted cash incentive awards under which a total of more than $3,000,000 may be earned for each 12 months in the performance period.

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In addition, the maximum aggregate grant date fair value (computed as of the commondate of grant in accordance with applicable financial accounting rules) of all awards made to a non-employee director under the Restated Plan in a single fiscal year, taken together with any cash payments (including the annual retainer and any other compensation) paid to such non-employee director in respect of such fiscal year, shall not exceed $350,000 in total value ($250,000 under the 2016 Plan, prior to approval of the Restated Plan).
Awards.   The plan administrator has complete discretion to determine (a) which eligible individuals are to receive awards, (b) the type, size, terms and conditions of the awards to be made, (c) the time or times when those awards are to be granted, (d) the number of shares or amount of payment subject to each such award, (e) the time when the award is to become exercisable, (f) the status of any granted option as either an incentive stock acquired on each semi-annual purchase dateoption or a non-statutory option under the federal tax laws, (g) the maximum term for which the award is to remain outstanding, (h) the vesting and issuance schedules applicable to the shares which are the subject of the award, (i) the cash consideration (if any) payable per share subject to the award and the form of payment in which the award is to be settled, (j) the vesting schedule for a cash incentive award and (k) with respect to performance-based awards, the performance objectives, the amount payable at one or more levels of attained performance and the payout schedule.
Stock Options.   Each granted option will have an exercise price per share determined by the plan administrator, but the exercise price will not be less than 85%one hundred percent (100%) of the fair market value of the option shares on the grant date. No granted option will have a term in excess of ten (10) years. The shares subject to each option will generally vest in one or more installments over a specified period of service measured from the grant date or upon the achievement of pre-established performance objectives. However, one or more options may be structured so that they will be immediately exercisable for any or all of the option shares. The shares acquired under such immediately exercisable options will be subject to repurchase by us, at the lower of the exercise price paid per share or the fair market value per share, if the optionee ceases service prior to vesting in those shares. Payment of the exercise price may be paid in one or more of the following forms as determined by the plan administrator: cash, shares of our common stock, through a cashless exercise procedure pursuant to which the optionee effects a same-day exercise of the option and sale of the purchased shares through a broker in order to cover the exercise price for the purchased shares and the applicable withholding taxes and/or through a net exercise procedure pursuant to which we withhold a number of shares otherwise issuable upon exercise of the option having a value equal to the exercise price and applicable withholding taxes.
Upon cessation of service, the optionee will have a limited period of time in which to exercise his or her outstanding options to the extent exercisable for vested shares. The plan administrator will have complete discretion to extend the period following the optionee’s cessation of service during which his or her outstanding options may be exercised, provide for continued vesting during the applicable post-service exercise period and/or accelerate the exercisability or vesting of options in whole or in part. Such discretion may be exercised at any time while the options remain outstanding.
Stock Appreciation Rights.   The Restated Plan allows the issuance of two types of stock appreciation rights:

Tandem stock appreciation rights granted in conjunction with options which provide the holders with the right to surrender the related option grant for an appreciation distribution from us in an amount equal to the excess of (i) the fair market value of the vested shares of our common stock subject to the surrendered option over (ii) the aggregate exercise price payable for those shares.

Stand-alone stock appreciation rights which allow the holders to exercise those rights as to a specific number of shares of our common stock and receive in exchange an appreciation distribution from us in an amount equal to the excess of (i) the fair market value of the shares of common stock as to which those rights are exercised over (ii) the aggregate exercise price in effect for those shares. The exercise price per share may not be less than the fair market value per share of the Company'sour common stock on the first trading daydate the stand-alone stock appreciation right is granted, and the right may not have a term in excess of ten (10) years.
The appreciation distribution on any exercised stock appreciation right will be paid in (i) cash, (ii) shares of our common stock or (iii) a combination of cash and shares of our common stock. Upon cessation of service with us, the holder of a stock appreciation right will have a limited period of time in which

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to exercise that right to the extent exercisable at that time. The plan administrator has complete discretion to extend the period following the holder’s cessation of service during which his or her outstanding stock appreciation rights may be exercised, provide for continued vesting during the applicable post-service exercise period and/or accelerate the exercisability or vesting of stock appreciation rights in whole or in part. Such discretion may be exercised at any time while the stock appreciation rights remain outstanding.
Repricing Prohibited.   The plan administrator may not implement any of the offering periodfollowing repricing programs (except in the case of a corporate transaction as described in the section titled “Changes in Capitalization” below, without stockholder approval): (i) the cancellation of outstanding options or stock appreciation rights in return for new options or stock appreciation rights with a lower exercise price per share, (ii) the fair market value oncancellation of outstanding options or stock appreciation rights with exercise prices per share in excess of the last trading day of that offering period.

        Thethen current fair market value per share of the Company'sour common stock on any particular date underfor consideration payable in cash, other awards or our equity securities (except in the Purchase Plan will be deemed to be equal toevent of a change in control) or (iii) the closing price per share on such date on the stock exchange or national market system on which the shares are listed at that time (or if there is no closing price on such date, then the closing price per share on the last preceding date for which such quotation exists). On September 22, 2017, the fair market valuedirect reduction of the Company's common stock determined on such basis was $6.56 per share, the closingexercise price per share on that date as reported by the NASDAQ Capital Market.

Special Limitations

        The Purchase Plan imposes certain limitations upon a participant's rights to acquire common stock, including the following limitations:

    Options granted to a participant may not permit such individual to purchase more than $25,000 worth of the Company's common stock (valued at the time each option is granted)in effect for each calendar year those option are outstanding at any time.

    Options may not be granted to any individual if such individual would, immediately after the grant, own or hold outstanding options or other rightsstock appreciation rights.
Stock Awards and Restricted Stock Units.   Shares of our common stock may be issued under the Restated Plan subject to purchase, stock possessing five percent (5%)performance or moreservice vesting requirements established by the plan administrator or as a fully-vested bonus for past services without any cash outlay required of the total combined voting powerrecipient. Shares of our common stock may also be issued under the Restated Plan pursuant to restricted stock units which entitle the recipients to receive those shares upon the attainment of designated performance goals or valuethe completion of all classesa prescribed service period or upon the expiration of a designated time period following the vesting of those units, including (without limitation), a deferred distribution date following the termination of the Company's outstandingrecipient’s service with us. Any dividends or dividend equivalents payable in connection with a stock award or restricted stock unit award subject to vesting will be subject to the outstanding stock of any ofsame vesting restrictions as the Company's affiliates.underlying award and will not be paid until and unless such vesting conditions are met.

The plan administrator will have the discretionary authority to increasestructure one or decreasemore such awards so that the per participant limitationshares of common stock subject to those awards (or cash, as applicable) will vest only upon the achievement of certain pre-established corporate performance goals, which may be based on one or more of the startfollowing criteria: (i) cash flow; (ii) earnings (including earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) invested capital, required rate of return on capital or return on invested capital; (xi) revenue, growth in revenue or return on sales; (xii) income or net income; (xiii) operating income, net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin or gross margin; (xvi) return on operating revenue or return on operating profit; (xvii) market share, (xviii) market capitalization, (xix) application approvals, (xx) litigation and regulatory resolution goals, (xxi) implementation, completion or attainment of key projects, product sales or milestones, (xxii) budget comparisons, (xxiii) growth in stockholder value relative to the growth of a peer group or index; (xxiv) development and implementation of strategic plans and/or organizational restructuring goals; (xxv) development and implementation of risk and crisis management programs; (xxvi) improvement in workforce diversity; (xxvii) compliance requirements and compliance relief; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); (xxxi) recruiting and maintaining personnel, employee retention, measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Company’s revenue or profitability or enhance its customer base; and (xxxiii) merger and acquisitions. In addition, such performance criteria may be based upon the attainment of specified levels of the Company’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Company’s business units or divisions or any parent or subsidiary. Each applicable performance goal may include a minimum threshold level of performance below which no award will be earned, levels of performance at which specified portions of an award will be earned and a maximum level of performance at which an award will be fully earned.


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Each applicable performance goal may be structured at the time of the award to provide for appropriate adjustment, which may be based on one or more of the following items: (A) asset impairments or write-downs; (B) litigation or claim judgments or settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) the operations of any business acquired by the Company; (F) the divestiture of one or more business operations or the assets thereof; (G) the effects of any corporate transaction, such as a merger, consolidation, separation (including spin-off or other distributions of stock or property by the Company) or reorganization; (H) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events; (I) acquisitions or divestitures; (J) change in the corporate structure or capital structure of the Company; (K) an event either not directly related to the operations of the Company, parent, subsidiary, division, business segment or business unit or not within the reasonable control of management; (L) foreign exchange gains and losses; (M) a change in the fiscal year of the Company; (N) the refinancing or repurchase of bank loans or debt securities; (O) unbudgeted capital expenditures; (P) the issuance or repurchase of equity securities and other changes in the number of outstanding shares; (Q) conversion of some or all of convertible securities to common stock; (R) any business interruption event; (S) the cumulative effects of tax or accounting changes in accordance with GAAP; (T) the effect of changes in other laws or regulatory rules affecting reported results; and (U) any other adjustment consistent with the operation of the Restated Plan. The plan administrator may also grant awards that are subject to vesting based on performance goals other than those set forth above.
Cash Incentive Awards.   The plan administrator may grant cash incentive awards, which need not relate to the value of shares of common stock. The terms and conditions for cash incentive awards will be determined by the plan administrator. Cash incentive awards may vest in one or more installments over a specified period of service or upon the achievement of specified performance objectives. Payment of cash incentive awards may be deferred for a period specified by the plan administrator. Upon cessation of service, the cash incentive award will automatically terminate without any payment if the designated service or performance goals have not been satisfied. However, the plan administrator has complete discretion to make a payment under one or more outstanding cash incentive awards as to which the service or performance goals have not been satisfied.
Dividend Equivalent Rights.   Dividend equivalent rights may be issued as stand-alone awards or in tandem with other awards made under the Restated Plan, except that dividend equivalents may not be granted in connection with an option, stock appreciation right or cash incentive award. Each dividend equivalent right award will represent the right to receive the economic equivalent of each dividend or distribution, whether in cash, securities or other property (other than shares of our common stock) which is made per issued and outstanding share of common stock during the term the dividend equivalent right remains outstanding. Payment of the amounts attributable to such dividend equivalent rights may be made either concurrently with the actual dividend or distribution made per issued and outstanding share of our common stock or may be deferred to a later date. Payment may be made in cash or shares of our common stock, or a combination of cash and shares, as determined by the plan administrator. Any dividends or dividend equivalents payable in connection with an award subject to vesting will be subject to the same vesting restrictions as the underlying award and will not be paid until and unless such vesting conditions are met.
Clawback Policy.   Awards granted under the Restated Plan are subject to any clawback or recoupment policy that may be adopted by the Company and amended from time to time, including the current clawback policy maintained by the Company. The Company’s clawback policy is described in the “Executive Compensation and Other Information” section of this proxy statement and covers executive officer incentive compensation in the event of a financial restatement.
General Provisions
Minimum Vesting.   Options and stock appreciation rights are subject to a minimum vesting period of at least one year from the date of grant. However, the minimum vesting requirement will not apply to (a) any new offering periodawards up to the 5% Basket, (b) any awards delivered in lieu of fully-vested cash-based awards under the PurchaseRestated Plan with(or other fully-vested cash awards or payments), and (c) any awards to non-employee directors for which the new limitvesting period runs from the date of one annual meeting of the Company’s stockholders to

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the next annual meeting of the Company’s stockholders which is at least fifty (50) weeks after the immediately preceding year’s annual meeting. Any option or stock appreciation right granted under the Restated Plan may vest in full or in part upon death or disability of the participant, upon a participant’s termination of service, or upon a change in control, and such vesting shall not count against the 5% Basket.
Vesting Acceleration.   In the event we should experience a change in control, the following provisions will be in effect for all outstanding awards under the Restated Plan, unless provided otherwise in an award agreement entered into with the participant:

Each outstanding award may be assumed, substituted, replaced with a cash retention program that offering period.

Terminationpreserves the intrinsic value of Option

        The participant may withdraw from the Purchase Plan at any time up to a number of days prioraward and provides for subsequent payout in accordance with the same vesting schedule applicable to the next scheduled purchase date (as specifiedaward or otherwise continued in effect by the successor corporation.


To the extent an award is not so assumed, substituted, replaced or continued, the award generally will automatically accelerate in full (with performance-based award vesting to be determined with reference to actual performance attained as of the change in control).

The plan administrator),administrator has complete discretion to grant one or more awards which will vest upon a change in control, whether or not such award is to be assumed or otherwise continued, or in the event the individual’s service with us or the successor entity is terminated within a designated period following a change in control transaction in which those awards are assumed or otherwise continued in effect.

Unless the plan administrator establishes a different definition for one or more awards, a change in control will be deemed to occur for purposes of the Restated Plan in the event (a) we are acquired by merger or asset sale or (b) there occurs any transaction (or series of related transactions within the twelve (12)-month period ending with the most recent acquisition) pursuant to which any person or group of related persons becomes directly or indirectly the beneficial owner of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of our outstanding securities or (c) there is a change in the majority of the board effected through one or more contested elections for board membership.
Changes in Capitalization.   In the event any change is made to the outstanding shares of our common stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change in corporate structure effected without our receipt of consideration or should the value of our outstanding shares of common stock be substantially reduced by reason of a spin-off transaction or extraordinary dividend or distribution or should there occur any merger, consolidation, reincorporation or other reorganization, equitable adjustments will be made to: (i) the maximum number and/or class of securities issuable under the Restated Plan; (ii) the maximum number and/or class of securities for which incentive stock options may be granted under the Restated Plan; (iii) the maximum number and/or class of securities for which any one (1) person may be granted common stock-denominated awards under the Restated Plan per calendar year; (iv) the number and/or class of securities and his the exercise price per share in effect for outstanding options and stock appreciation rights; (v) the number and/or her accumulated payroll deductionsclass of securities subject to each outstanding stock award, restricted stock unit, dividend equivalent right and any other award denominated in shares of our common stock and the consideration (if any) payable per share; and the number and/or class of securities subject to repurchase rights and the repurchase price payment per share. Such adjustments will be made in such manner as the plan administrator deems appropriate.
Valuation.   The fair market value per share of our common stock on any relevant date under the Restated Plan is deemed to be equal to the closing selling price per share on that date as determined by the NASDAQ Capital Market. As of July 13, 2021, the fair market value of our common stock determined on such basis was $6.19 per share.
Stockholder Rights and Transferability.   No optionee has any stockholder rights with respect to the option shares until such optionee has exercised the option and paid the exercise price for the offering period in which that withdrawal occurspurchased shares. The holder of a stock appreciation right will be refunded promptly.

        The participant's option will immediately terminate upon his or her cessation of employment or loss of eligible employee status. Any payroll deductions which the participant may have made for the offering period in which such cessation of employment or loss of eligibility occurs will be refunded or used to purchase shares on the purchase date for that offering period (depending on when such termination or loss of status occurs).

Stockholder Rights

        No participant willnot have any stockholder rights with respect to the shares covered by his or her optionssubject to that right unless and until such person exercises the shares are actually purchased onright and becomes the participant's behalf and the participant has become a holder of record of the purchased shares. No adjustment will be made for dividends, distributions or other rights for which the record date is prior to the date


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any shares of our common stock distributed upon such purchase.

Assignability

        No options will beexercise. Options are not assignable or transferable other than by will or the laws of inheritance following optionee’s death, and during the optionee’s lifetime, the option may only be exercised by the participant, and the options will be exercisable only by the participant.

Corporate Transaction

        In the event of a corporate transaction,optionee. However, the plan administrator may providestructure one or more non-statutory options under the Restated Plan so that all outstandingthose options (i) maywill be assumedtransferable during optionee’s lifetime to one or substituted bymore members of the successor corporation, (ii) will automatically be exercised immediately prioroptionee’s family or to a trust established for the optionee and/or one or more such family members or to the effective date ofoptionee’s former spouse, to the extent such changetransfer is in controlconnection with the optionee’s estate plan or (iii)pursuant to a domestic relations order. Standalone stock appreciation rights will be terminated and accumulated payroll deductions be refunded. The purchase price forsubject to the same transferability restrictions applicable to non-statutory options.

A participant will have full stockholder rights with respect to any abbreviated offering period will be based on the purchase price formula in effect for the offering period in which such change in control occurs. A corporate transaction means a merger, consolidation, acquisition of property or stock, separation, reorganization or other corporate event described in Section 424 of the Code (defined below).

Share Pro-Ration

        Should the total number of shares of common stock issued to him or her under the Restated Plan, whether or not his or her interest in those shares is vested. A participant will not have any stockholder rights with respect to the shares of common stock subject to restricted stock units until that award vests and the shares of common stock are actually issued thereunder. However, dividend-equivalent units may be paid or credited, either in cash or in actual or phantom shares of common stock, on outstanding restricted stock units, subject to such terms and conditions as the plan administrator may deem appropriate. Notwithstanding the foregoing, any dividends or dividend equivalents payable in connection with an unvested award will be subject to the same restrictions as the underlying award and will not be paid until and unless such award vests.

Special Tax Election.   The plan administrator may provide one or more holders of awards under the Restated Plan with the right to have us withhold a portion of the shares otherwise issuable to such individuals in satisfaction of the withholding taxes to which they become subject in connection with the issuance, exercise or settlement of those awards. Alternatively, the plan administrator may allow such individuals to deliver previously acquired shares of our common stock in payment of such withholding tax liability.
Deferral Programs.   The plan administrator may structure one or more awards (other than options and stock appreciation rights) so that the participants may be provided with an election to defer the compensation associated with those awards for federal income tax purposes.
The plan administrator may also implement a non-employee director retainer fee deferral program that allows the non-employee directors the opportunity to elect to convert the Board and Board committee retainer fees to be purchasedearned for a fiscal year into restricted stock units that defer the issuance of the shares of common stock that vest under those units until a permissible date or event under Internal Revenue Code Section 409A.
To the extent we maintain one or more separate non-qualified deferred compensation arrangements which allow the participants the opportunity to make notional investments of their deferred account balances in shares of common stock, the plan administrator may authorize the share reserve under the Plan to serve as the source of any shares of common stock that become payable under those deferred compensation arrangements.
Amendment and Termination.   Our Board may amend or modify the Restated Plan at any time subject to stockholder approval to the extent required under applicable law or regulation or pursuant to outstanding optionsthe listing standards of the stock exchange on any particularwhich our common stock is at the time primarily traded. Unless sooner terminated by our Board, the Restated Plan will terminate on the earliest of (i) the tenth anniversary of the date exceedour Board approved the number ofRestated Plan, (ii) the date on which all shares then available for issuance under the PurchaseRestated Plan thenhave been issued as fully-vested shares, (ii) the plan administrator will make a pro-rata allocationtermination of the available shares on a uniform and nondiscriminatory basis, and the payroll deductions of each participant, to the extentall outstanding awards in excess of the aggregate purchase price payable for the common stock pro-rated to such individual, will be refunded.

Amendment and Termination

        The Purchase Plan will terminate on December 31, 2027, unless terminated earlier by the plan administrator.


        The plan administrator may alter or amend the Purchase Plan at any time. In no event may the plan administrator effect either of the following amendments or revisions to the Purchase Plan without the approval of the stockholders: (i) increase the number of shares of the Company's common stock issuable under the Purchase Plan, except for permissible adjustments in the event ofconnection with certain changes in control or ownership, or (iii) the Company's capitalization or (ii) materially modifytermination of the eligibility requirements for participation inRestated Plan by the Purchase Plan.

NewBoard. No incentive stock options may be issued under the Restated Plan Benefits

        The Purchaseafter the tenth anniversary of the date the Restated Plan will not become effective unless it iswas approved by the stockholders at the annual meeting and no options have been granted under the Purchase Plan.

our Board.

Summary of Federal Income Tax Consequences

The following is a summary of the Federal income taxation treatment applicable to us and the participants who receive awards under the Restated Plan.
Option Grants.   The PurchaseOptions granted under the Restated Plan is intended tomay be an "employeeeither incentive stock purchase plan" withinoptions which satisfy the meaningrequirements of Section 423422 of the Internal Revenue Code or non-statutory options which are not intended to meet such requirements. The federal income tax treatment for the two types of options differs as amended (the "follows:

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Incentive OptionsCode."). Under a plan which so qualifies,   No taxable income is recognized by the optionee at the time of the option grant, and no taxable income is recognized for ordinary income tax purposes at the time the option is exercised, although taxable income may arise at that time for alternative minimum tax purposes. The optionee will be recognized byrecognize taxable income in the year in which the purchased shares are sold or otherwise made the subject of certain other dispositions. For Federal tax purposes, dispositions are divided into two categories: (i) qualifying, and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two (2) years after the date the option for the shares involved in such sale or disposition is granted and more than one (1) year after the date the option is exercised for those shares. If the sale or disposition occurs before these two periods are satisfied, then a participant, and no deductionsdisqualifying disposition will be allowableresult.
Upon a qualifying disposition, the optionee will recognize long-term capital gain in an amount equal to the Company,excess of (i) the amount realized upon either the grant or the exercise of the options. Taxable income will not be recognized until there is a sale or other disposition of the purchased shares acquired underover (ii) the Purchase Plan or inexercise price paid for the event the participant should die while still owning the purchased shares.

If the participant sells or otherwise disposesthere is a disqualifying disposition of the purchased shares within two years after the start date of the offering period in which such shares were acquired or within one year after the purchase date of those shares, then the participant will recognize ordinary income in the yearexcess of sale or disposition equal to the amount by which(i) the fair market value of thethose shares on the purchaseexercise date exceededor (if less) the purchaseamount realized upon such sale or disposition over (ii) the exercise price paid for thosethe shares andwill be taxable as ordinary income to the Companyoptionee. Any additional gain or loss recognized upon the disposition will be a capital gain or loss.

If the optionee makes a disqualifying disposition of the purchased shares, then we will be entitled to an income tax deduction, for the taxable year in which such sale or disposition occurs, equal to the amount of ordinary income recognized by the optionee as a result of the disposition. We will not be entitled to any income tax deduction if the optionee makes a qualifying disposition of the shares.
Non-Statutory Options.   No taxable income is recognized by an optionee upon the grant of a non-statutory option. The optionee will in amountgeneral recognize ordinary income, in the year in which the option is exercised, equal to such excess.

        If the participant sells or disposesexcess of the fair market value of the purchased shares more than two years afteron the startexercise date over the exercise price paid for the shares, and the optionee will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the offering periodoptionee with respect to the exercised non-statutory option. The deduction will in general be allowed for our taxable year in which such ordinary income is recognized by the shares were acquired and more than one year after the purchase dateoptionee.

Stock Appreciation Rights.   No taxable income is recognized upon receipt of those shares, then the participanta stock appreciation right. The holder will recognize ordinary income in the year of sale or dispositionin which the stock appreciation right is exercised, in an amount equal to the lesserexcess of (i)the fair market value of the underlying shares of common stock on the exercise date over the base price in effect for the exercised right, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder in connection with the exercise of the stock appreciation right. The deduction will be allowed for the taxable year in which such ordinary income is recognized.
Stock Awards.   The recipient of unvested shares of common stock issued under the Restated Plan will not recognize any taxable income at the time those shares are issued but will have to report as ordinary income, as and when those shares subsequently vest, an amount equal to the excess of (i) the fair market value of the shares on the sale or dispositionvesting date exceededover (ii) the purchase pricecash consideration (if any) paid for thosethe shares. The recipient may, however, elect under Section 83(b) of the Internal Revenue Code to include as ordinary income in the year the unvested shares or (ii) fifteen percent (15%)are issued an amount equal to the excess of (i) the fair market value of thethose shares on the startissue date of that offering period, andover (ii) the cash consideration (if any) paid for such shares. If the Section 83(b) election is made, the recipient will not recognize any additional gain uponincome as and when the dispositionshares subsequently vest. We will be taxed as a long-term capital gain. The Company will not be entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient with respect to the unvested shares. The deduction will in general be allowed for our taxable year in which such sale or disposition.

        Ifordinary income is recognized by the participant still owns the purchased shares at the timerecipient.

Restricted Stock Units (and Performance Based Restricted Stock Units).   No taxable income is recognized upon receipt of death, then the participantrestricted stock units. The holder will recognize ordinary income at such timein the year in which the shares subject to the units are actually issued to the holder. The amount of that income will be equal to the lesser of (i) the amount by which the fair market value of the shares on the date of death exceedsissuance, and the purchase priceholder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal

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to the amount of ordinary income recognized by the holder at the time the shares are issued. The deduction will be allowed for the taxable year in which such ordinary income is recognized.
Cash Incentive Awards.   In general, no taxable income is recognized upon receipt of cash incentive awards. The holder will recognize ordinary income in the year in which the cash incentive awards are actually paid to the participant, and the participant will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time of payment. The deduction will be allowed for the taxable year in which such ordinary income is recognized.
Dividend Equivalent Rights.   No taxable income is recognized upon receipt of a dividend equivalent right award. The holder will recognize ordinary income in the year in which a dividend or (ii) fifteen percent (15%)distribution, whether in cash, securities or other property, is paid to the holder. The amount of that income will be equal to the fair market value of the sharescash, securities or other property received, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of the ordinary income recognized by the holder of the dividend equivalent right award at the time the dividend or distribution is paid to such holder. That deduction will be allowed for the taxable year in which such ordinary income is recognized.
Section 162(m) of the Code.   Section 162(m) of the Code imposes a $1 million limit on the start dateamount a public company may deduct for compensation paid to a company’s chief executive officer or any of the offering period in which those shares were acquired.

Summary of Accounting Treatment

        Pursuant to Accounting Standards Codification Topic 718company’s three other most highly compensated executive officers who are employed as of the Financial Accounting Standards Board,end of the Company's contribution amount willyear. While deductibility of executive compensation for federal income tax purposes is among the factors the Compensation Committee considers when structuring our executive compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize compensation that may not be chargeddeductible if we believe it is in the best interests of the Company.

New Plan Benefits
No awards have been granted under the Restated Plan. Any awards following approval of this proposal shall be at the discretion of the plan administrator. Accordingly, the benefits or amounts that may be received by or allocated to each of (i) the officers listed in the Summary Compensation Table, (ii) each of the nominees for election as a direct compensation expensedirector, (iii) all non-employee directors as a group, (iv) all of our present executive officers as a group, and (v) all of our employees, including all other current officers, as a group, under the Restated Plan are not determinable at this time.
Plan Benefits
The following table represents all awards granted under the 2016 Plan that remain outstanding as of July 13, 2022 to its reported earnings inour named executive officers and the period that the contribution is made.

other individuals and groups indicated below.

Name and Position
Number of
Shares
Subject to
Options
Number of
Shares Subject
to RSU
Awards
Number of
Shares
Subject to
PSU Awards
at “Target”
Named Executive Officers
Joe Bergera
Chief Executive Officer, President and Director
1,012,50038,40872,646
Douglas L. Groves
Chief Financial Officer, Senior Vice President of Finance and Secretary
250,00012,44924,899
Todd Kreter
Senior Vice President & General Manager, Advanced Sensors Technologies
315,0008,71417,429
Ramin Massoumi
Senior Vice President & General Manager,
Consulting Solutions
315,0008,71417,429

Vote Required32

        Approval


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Name and Position
Number of
Shares
Subject to
Options
Number of
Shares Subject
to RSU
Awards
Number of
Shares
Subject to
PSU Awards
at “Target”
All current executive officers as a group
(4 persons)
1,892,50068,285132,403
Nonemployee Directors
Anjali Joshi9,569
Gerard M. Mooney9,569
Luke Schneider9,569
Laura L. Siegal9,569
Thomas L. Thomas9,569
Dennis Zank9,569
All current nonemployee directors as a group (6 persons)57,414
All employees, excluding current executive officers as a group
(430 persons)
573,100106,164
(1)
All of the Purchasenon-employee members of our Board will, upon re-election to the Board at the Annual Meeting, receive an award of restricted stock units under the Restated Plan, requiresas described above under “Director Compensation.” All future grants under the Restated Plan are within the discretion of the plan administrator and the benefits of such grants are, therefore, not determinable.
Required Vote
Provided a quorum is present, the affirmative vote of (i)the holders of a majority of the shares of common stock present in person or represented by proxy and voting at the annual meeting and (ii) a


majorityon this Proposal 2 is required for approval of the shares of common stock required to constitute a quorum. IfRestated Plan. Should such stockholder approval not be obtained, then the PurchaseRestated Plan will not become effective.

be effective, the 2016 Plan will remain in effect in accordance with its terms, and awards may continue to be granted under the 2016 Plan, subject to its previously authorized share limits.

We are required to obtain stockholder approval for the Restated Plan under the rules of The Nasdaq Stock Market. Such approval is also necessary to permit us to grant incentive stock options to employees under Section 422 of the Internal Revenue Code.
The Board believes that the Restated Plan is necessary for us to be able to attract and retain the services of individuals essential to our long-term growth and success.
Recommendation of the Board of Directors

The Board believes that Proposal 2 is in our best interests and in the best interests of our stockholders and recommends a vote “FOR” the approval of the amendment and restatement of the 2016 Omnibus Incentive Plan.

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Proposal 3: Advisory Vote Regarding Executive Compensation
In accordance with Section 14A of the Exchange Act, stockholders have the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers. Commonly known as a “say-on-pay” vote, this proposal gives our stockholders the opportunity to express their views on our executive compensation policies and programs and the compensation paid to the named executive officers.
We are asking our stockholders to indicate their support of the compensation of our named executive officers, as described in this proxy statement by approving the following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2021 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion, is hereby approved.”
The Board of Directors recommends that the stockholdersa vote FOR the approval of the implementation of the Purchase Plan. The Board of Directorsadvisory resolution because it believes that it isthe Company’s executive compensation policies and practices are effective in achieving the best interestsCompany’s goals of attracting, retaining, and motivating highly talented executives, rewarding sustained financial and operating performance, and aligning the Company to provide our employees with the opportunity to acquire an ownership interest in the Company through their participation in the Purchase Plan and thereby encourage them to remain in the Company's employ and more closely align theirexecutives’ interests with those of the stockholders.



PROPOSAL THREE:
RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The accounting firm of Deloitte & Touche LLP was engaged to serve as our independent registered public accounting firm for Fiscal 2017. The Audit Committee ofvote on this proposal is advisory and therefore not binding on the Company, the Board of Directors has selected that firm to continue in this capacity foror the fiscal year ending March 31, 2018. We are asking our stockholders to ratifyCompensation Committee. Although the selection byvote is non-binding, the Audit CommitteeBoard of Deloitte & Touche LLP as our independent registered public accounting firm to audit our consolidated financial statements forDirectors and the fiscal year ending March 31, 2018 and to perform other appropriate services. Stockholder ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm is not required by our bylaws or otherwise. In the event that the stockholders fail to ratify the appointment, the AuditCompensation Committee will reconsider its selection. Even ifreview and consider the selection is ratified, the Audit Committee,voting results in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the committee feels that such a change would be in the best interests of us and our stockholders.

        A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting, and that representative will have the opportunity to make a brief presentation to the stockholders if he or she so desires and is expected to be available to respond to appropriate questions from stockholders.

future decisions regarding executive compensation.

Stockholder Approval

The affirmative vote of a majority of the common stock, present or represented by proxy and entitled to vote at the Annual Meeting, will be required for ratificationapproval of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2018.

this proposal.

Recommendation of the Board of Directors

The Board of Directors recommends that the stockholders vote "FOR"“FOR” the ratification and approval ofadvisory resolution approving the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2018.


FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Fees

        Deloitte & Touche LLP was engaged by us as our principal accountant in October 2015, and rendered the audit opinion on our consolidated financial statements for Fiscal 2017.

        The audit fees billed by Deloitte & Touche LLP were $905,000 and $525,000 for Fiscal 2017 and Fiscal 2016, respectively. Audit fees consist of fees for professional services rendered in connection with the auditcompensation of our annual consolidated financial statements for the applicable fiscal year and review of the consolidated financial statements included in our quarterly reports on Form 10-Q and other regulatory filings for such fiscal year. There were no other fees billed to us by Deloitte & Touche LLP for Fiscal 2017 or Fiscal 2016.

Audit Committee Pre-Approval Policies and Procedures

        All engagements for services by Deloitte & Touche LLP or other independent registered public accountants are subject to prior approval by the Audit Committee; however,de minimis non-audit services may instead be approved in accordance with applicable SEC rules. The prior approval of the Audit Committee was obtained for all services provided by Deloitte & Touche LLP for Fiscal 2017.



AUDIT COMMITTEE REPORT

        The following is the report of the Audit Committee with respect to the audited consolidated financial statements for the fiscal year ended March 31, 2017 of Iteris, Inc. included in its Annual Report on Form 10-K andnamed executive officers as amended on Form 10-K/A for that year.

Review with Management

        The Audit Committee has reviewed and discussed the audited consolidated financial statements with the Company's management.

Review and Discussions with Independent Registered Public Accounting Firm

        The Audit Committee has discussed with the Company's independent registered public accounting firm, Deloitte & Touche LLP, the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, and Auditing Standard No. 1301, each as adopted by the Public Company Accounting Oversight Board ("PCAOB"), which includes, among other items, matters related to the conduct of the audit of the Company's consolidated financial statements.

        The Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the PCAOB regarding the independent accountant's communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP its independence from the Company.

Conclusion

        Based on the review and discussions referred to abovedisclosed in this report, the Audit Committee recommended to the Company's Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K as amended on Form 10-K/A for the year ended March 31, 2017 for filing with the SEC.

proxy statement.

Submitted by the Audit Committee
of the Board of Directors:

Kevin C. Daly, Ph.D.
Gerard M. Mooney
Mikel H. Williams

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Executive

O
fficers
EXECUTIVE COMPENSATION AND OTHER INFORMATION

Executive Officers

The table below sets forth certain information, as of September 11, 2017,July 13, 2021, regarding our executive officers.

NameAge
Name
AgeCapacities in Which Served

J. Joseph ("Joe")Joe Bergera

5357Chief Executive Officer, President and Director

Andrew Schmidt

Douglas L. Groves
5659Chief Financial Officer, Senior Vice President of Finance and Secretary

Thomas N. Blair

53Chief Technology Officer, Agriculture and Weather Analytics

Joseph Boissy

Todd Kreter
5361Chief Marketing Officer

James Chambers

51Senior Vice President and& General Manager, Agriculture and Weather AnalyticsAdvanced Sensors Technologies

Todd Kreter

Ramin Massoumi
5748Senior Vice President and& General Manager, Roadway Sensors

Ramin Massoumi

Consulting Solutions
45Senior Vice President and General Manager, Transportation Systems

The following is a brief description of the capacities in which the above persons have served the Company and their business experience during at least the past five years. The biography of Mr. Bergera appears earlier in this proxy statement. See Proposal One: "Election“Proposal 1: Election of Directors."

Andrew SchmidtDouglas L. Groves has served as ourSenior Vice President and Chief Financial Officer since he joined on December 4, 2019. Mr. Groves has more than 30 years of Finance,unique and highly valuable experience. Most recently, he served as Vice President, Chief Financial Officer and Secretary since March 2015.Treasurer of Ducommun, Inc., through June 2019, having joined the company in January 2013. Through December 2012, he held the position of Corporate Vice President and Chief Information Officer at Beckman Coulter, following a series of financial roles at the company beginning in January 1998. Beckman Coulter was acquired by Danaher Corporation in February 2011. Prior to joining us,Beckman Coulter, Mr. Schmidt served as the Chief Financial OfficerGroves was corporate controller of a privately held civil engineering firm and Corporate Secretary of Smith Micro Software, Inc., a publicly-held provider of wirelesssenior auditor and mobility software solutions from 2005 to May 2014. Prior to joining Smith Micro,consultant at Deloitte & Touche. Mr. Schmidt held CFO roles for several other public companies, including Genius Products,Groves holds an entertainment company, and Mad Catz Interactive, a provider of console video game accessories. He also served as Vice President (Finance) of Peregrine Systems, a publicly-held provider of enterprise level software. Mr. Schmidt holds a B.B.A. degree in FinanceM.B.A. from the University of TexasSouthern California and an M.S.a B.S. degree in Accountancy from San DiegoCalifornia State University.University, Long Beach.

Thomas N. BlairTodd Kreter has served asled our Chief Technology Officer, Agriculture and Weather Analytics since August 2017 and prior to that served as our Senior Vice President, Agriculture and Weather Analytics since July 2012. Prior to that, Mr. Blair served as General Manager for Trimble Navigation Limited, a provider of integrated positioning, wireless, and software technology solutions, from 2007 to August 2011, and as Vice President for New Business development at @Road, Inc., a leading provider of mobile resource management solutions, from 2006 to 2007. He also worked as Director of Business and Corporate Development at iAnywhere Solutions, a Sybase company, from 2003 to 2006. Mr. Blair holds a B.S. degree in Management Information Systems from DeVry Institute of Technology and an M.S. degree in Computer Science from Rochester Institute of Technology.

Joseph Boissy has served as our Chief Marketing Officer since January 2017. Prior to that, Mr. Boissy served as Chief Marketing Officer of Vendavo, Inc. (acquired by Francisco Partners in October 2014), a provider of margin and profit optimization solutions, from September 2013 to November 2016. Prior to that, he served as the Chief Marketing Officer at 3VR Inc., a video intelligence solutions provider, from October 2011 to September 2013. From February 2002 to October 2011, he served in various management positions at ILOG, Inc. (acquired by IBM in July 2008), a providersensors line of business rule management systems, most recently as Vice President ILOG Worldwide Marketing, then Program Director, Go-to-Market Strategy and Industry Marketing IBM WebSphere. Mr. Boissy was Vice President Program Management, Credient at SunGard Trading & Risk Systems Inc., a providersince May 2014. He held the title of financial software solutions and services, from 2000 to 2002, and from 1997 to 2000, he served in management positions in product development, support and product management, most recently as the Vice President Product Marketing, with Infinity Financial Technology, Inc., a


financial trading and risk management software solutions provider that was acquired by SunGard in October 1997. Prior to Infinity, Mr. Boissy was Director Product Development at Diagram Financial Software, Inc. (now part of Thomson Reuters) from 1993 to 1997. Mr. Boissy holds a B.S. degree in Electrical Engineering from the Lebanese University (Lebanon) and a M.S. degree in Computer Science and Data Analytics from the University of Paris XI (France).

James Chambers has served as our Senior Vice President and General Manager, Agriculture and Weather Analytics since August 2017. Prior to that, Mr. Chambers served as Chief Executive Officer of Observant, Inc. (acquired by Jain Irrigation, Inc. in February 2017), a provider of agricultural in-field hardware and cloud based applications for precision farm water management, from February 2016 to February 2017. From June 2013 to February 2016, he served as Director of Marketing at Bayer CropScience, a company specialized in agriculture, and lifesciences. Prior to that, Mr. Chambers served in various key management positions at divisions of Deere & Company, including John Deere Water (acquired by FIMI Opportunity Funds in June 2014), a provider of integrated Ag water management solutions, most recently as Director of Global Product Management and Marketing and then as the Director of Global Technology Solutions, from August 2010 to May 2013, and John Deere Agri Services, Inc. (acquired by Constellation Software, Inc. in January 2011), a provider of software solutions for the agricultural supply chain, most recently as the General Manager for the Specialty Crop Business Unit and then as the Director of Marketing, from June 2006 to August 2010. From January 2003 to June 2006, he was Global Business Manager at Valent BioSciences Corporation, a provider of technologies and products for the agricultural, public health, forestry and household markets, and from March 2001 to January 2003, he was Director of Global Sales and Marketing with AgraQuest (acquired by Bayer CropScience in July 2012), a supplier of biological pest management solutions. From 1989 to 2001, Mr. Chambers served in various management positions at Monsanto Company, a provider of agriculture products for farmers, most recently as Business Development Manager and Financial Analyst, then as Marketing Manager Animal Productivity and Market and Sales Manager. Mr. Chambers holds a B.S. degree in Agriculture Business Management and Economics from The Ohio State University.

Todd Kreter has served as our Senior Vice President and General Manager, Roadway Sensors sincefrom May 2014.2014 until March 31, 2021. Following a reorganization on April 1, 2021, Mr. Kreter assumed the title of Senior Vice President & General Manager, Advance Sensors Technologies. Mr. Kreter served as our Senior Vice President, Sensors Development and Operations from May 2009 to May 2014 and as Vice President of Engineering from November 2007 to May 2009. Prior to joining us, Mr. Kreter served in a number of executive positions at Quantum Corporation, most recently as the VP Global Services from 2004 to January 2007, where he managed the company'scompany’s worldwide customer service organization. Mr. Kreter holds a B.S. degree in Mechanical Engineering from California State University, Fullerton.

Ramin Massoumi has served asled our traffic engineering, systems integration, and business process outsourcing lines of business since March 2015. Held the title of Senior Vice President and General Manager, Transportation Systems sincefrom March 2015.2015 until March 31, 2021. Following a reorganization on April 1, 2021, Mr. Massoumi assumed the title of Senior Vice President & General Manager, Consulting Solutions. Mr. Massoumi joined Iteris in 1998 and served in a number of executive and managerial positions prior to the promotion to his current position, most recently as our Vice President of Business Development from June 2011 to March 2015. Throughout his career, his focus has been in the application of advanced technologies in the traffic management market, and has led projects throughout the United States and the Middle East. Mr. Massoumi also serves as a director of the Intelligent Transportation Society of America’s National and California State Chapter Boards of Directors and as a lecturer of upper division courses on transportation engineering, ITS and multi-modal operation at University of California, at Irvine. Mr. Massoumi holds a B.S. degree in Civil Engineering from the University of California, Irvine, and an M.S. degree in Engineering from the University of California, Berkeley, and an M.B.A. from the University of Southern California.


35


Executive Compensation and Other Information
Executive Compensation
The following is a summary of the compensation policies, plans and arrangements for our executive officers. This summary should be read in conjunction with the Summary Compensation DiscussionTable and Analysis

related disclosures set forth below. We are eligible to, and have chosen to, comply with the executive compensation disclosure rules applicable to a “smaller reporting company,” as defined in the applicable SEC rules, but we have also voluntarily included additional disclosure about our executive compensation program to help our stockholders understand our executive compensation program. This section discusses the principles underlying our compensation policies for our executive officers who are named in the Summary“Summary Compensation TableTable” below, who we refer to as our "named“named executive officers"officers” or "NEOs"“NEOs” for Fiscal 2017 and who include the following executive officers:2021:


Joe Bergera, our Chief Executive Officer, President and Director;


Andrew Schmidt,
Douglas L. Groves, our Chief Financial Officer, Senior Vice President of Finance and Secretary;


Thomas N. Blair, our Senior Vice President, Agriculture and Weather Analytics;

Todd Kreter, our Senior Vice President and& General Manager, Roadway Sensors;Advanced Sensors Technologies; and


Ramin Massoumi, our Senior Vice President and& General Manager, Consulting Solutions.
Fiscal 2021 Business Results Summary
We are a provider of smart mobility infrastructure management solutions. Municipalities, government agencies, and other transportation infrastructure providers use our solutions to monitor, visualize, and optimize mobility infrastructure to help ensure roads are safe, travel is efficient, and communities thrive. Until March 31, 2021, our reportable segments consisted of: Roadway Sensors, Transportation Systems.

Systems, and, prior to May 5, 2020, Agriculture and Weather Analytics (“AWA”). During Fiscal 2021, we made significant progress across a range of financial and strategic dimensions, including the highlights below.


Reported Fiscal 2021 total revenue of $117.1 million, up 9% year over year;

Reported net income from continuing operations of $0.5 million, or $0.01 per share, a $2.2 million, or $0.05 per share, improvement year over year;

Adjusted EBITDA(1) of $7.5 million, a $3.3 million, or 79%, increase year over year;

Recorded total net bookings for Fiscal 2021 of $121.8 million, up 6% year over year(2);

Completed the transaction to sell the Company’s AWA segment to DTN, LLC (“DTN”), which closed on May 5, 2020, for a total purchase price of $12.0 million. DTN is an operating company of TBG AG, a Swiss-based holding company;

On April 30, 2020, in connection with the sale of the AWA segment, the Company restructured to better position itself for increased profitability and growth, incurring approximately $1.5 million in expenses; and

Completed the acquisition of TrafficCast, which closed on December 7, 2020. Iteris purchased substantially all of TrafficCast’s assets, composed of its travel information technology, applications and content (“Business”), and assumed certain specified liabilities of the Business in exchange for a total purchase price of up to $17,000,000, with $15,000,000 paid in cash on the closing date, $1,000,000 held back as security for certain post-closing adjustments and post-closing indemnity
(1)
Adjusted EBITDA is adjusted income (loss) from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, acquisition costs, non-recurring executive severance and transition costs, and fair value adjustment related to TrafficCast’s opening balance inventory. For more information, refer to Non-GAAP Financial Measures, to the Consolidated Financial Statements, included on page 25 in Part II, Item 7 of the Company’s Annual Report.
(2)
Net bookings is an operational measure representing the total dollar value of all definitive contracts executed during the relevant period, net of cancellations of previously authorized contract funding.

36


obligations of TrafficCast, and a $1,000,000 earn out, that if earned, will be paid over two years based on the Business’ achievement of certain revenue targets.
Impacts of COVID-19 on Iteris
The COVID-19 pandemic has had an unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions, quarantines and “stay-at-home” orders. In turn, the uncertainties caused by these events and actions created various disruptions to our vendors, our employees and customers and negatively affected customer sentiment in general. While there has been no material impact to the Company, nor any facility closures during Fiscal 2021, we did experience some work and supply delays due to the COVID-19 pandemic. Should such delays become protracted or worsen the impacts of the COVID-19 pandemic could impact our business, results of operations and financial condition. Given the uncertainties of the COVID-19 pandemic, the Company has taken certain actions to preserve its liquidity, manage cash flow and strengthen its financial flexibility. Such actions include, but are not limited to, reducing our discretionary spending, reducing capital expenditures, implementing restructuring activities, and reducing payroll costs, including employee furloughs, pay freezes and pay cuts.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in the United States. The CARES Act provides relief to U.S. corporations through financial assistance programs and modifications to certain income tax provisions. The Company is applying certain beneficial provisions of the CARES Act, including the payroll tax deferral and the alternative minimum tax acceleration. For more information, refer to Note 6, Income Taxes, to the Consolidated Financial Statements, included in Part II, Item 8 of the Company’s Annual Report.
Fiscal 2021 Executive Compensation Results Overview
The Compensation Committee made significant changes to the named executive compensation program for Fiscal 2021, particularly with respect to long-term incentives. Prior to implementing these changes, our Compensation Committee solicited input from a representative set of our larger stockholders. The named executive compensation plan is composed of three elements: base salary, short-term annual incentive, and long-term equity incentives. The base salaries reflect the market for similar roles at similar companies. The short-term incentives program has specific targets tied to the company’s annual financial performance. The long-term incentives consist of a mix between stock options, restricted stock units (“RSUs”), and performance stock units (“PSUs”). The inclusion of RSUs and PSUs in our long-term incentive program is new for Fiscal 2021, as the Company granted only stock options in Fiscal 2020.
Below is a summary of the results of our executive compensation program for Fiscal 2021:

Base Salaries.   In the first half of Fiscal 2021, after reviewing pay governance guidelines, receiving guidance from the Compensation Committee’s compensation consultant, FW Cook, reviewing prevailing compensation practices, evaluating recent Company performance, and given the economic uncertainty resulting from the COVID-19 pandemic, the Compensation Committee determined not to increase the base salaries for the named executive officers for Fiscal 2021.

Annual Incentives.   Our named executive officers’ target bonuses for Fiscal 2021 remained generally unchanged from the target bonus levels in place during Fiscal 2020. Messrs. Bergera and Groves’ annual bonus targets were Iteris revenue and Iteris Adjusted EBITDA. Because Messrs. Kreter and Massoumi lead a business unit, Mr. Kreter for the Roadway Sensors and Mr. Massoumi for Transportation Systems, each had four targets, including Iteris revenue, Iteris Adjusted EBITDA, their respective business segment revenue and business segment contribution margin. The annual cash performance bonuses for the named executive officers in Fiscal 2021 were earned at 139% of target for Mr. Bergera; 140% for Mr. Groves; 146% for Mr. Kreter; and 97% for Mr. Massoumi. The corporate bonus objectives for Messrs. Bergera and Groves paid out at target on the Iteris revenue target and paid out at the maximum on the Adjusted EBITDA target. Mr. Kreter’s bonus paid out above target on both Roadway Sensors revenue and Roadway Sensors contribution margin targets (in addition to performance against the Iteris revenue and Adjusted EBITDA). Mr. Massoumi’s bonus paid out below target on both Transportation Systems revenue and Transportation Systems contribution margin targets (in addition to performance against the Iteris revenue and Adjusted EBITDA). Individual

37


performance against management performance objectives is also considered in determining the final annual bonus payouts. See “Fiscal 2021 Cash-Based Bonus Plan” table below for further details about results of our annual cash-based bonus program for Fiscal 2021.

Long-Term Incentives.   Commencing in Fiscal 2021, in response to stockholder feedback, the Company updated its long-term incentive compensation program to incorporate the use of PSUs for 25% of the long-term opportunity. The remaining portion consisted of 50% in stock options and 25% in RSUs. PSUs are earned based on the Company’s average revenues per share and cash flow from operations performance, as well as the Company’s total stockholder return (“rTSR”) relative to the Russell 2000. See “Fiscal 2021 Long-Term Incentive Compensation Updates” below for further details about updates to the executive compensation plan for Fiscal 2022.
Characteristics of our Executive Compensation Programs
Our executive compensation programs include a number of practices intended to align the interests of management and our stockholders.
What We HaveWhat We Do Not Have
+
We have approximately 68% of target direct compensation for the chief executive officer (and 53% of the other named executive officers) that is performance-based or is at-risk
+
We have a performance-based long term incentive plan that utilizes PSUs, RSUs, and stock options
+
We have a clawback policy for incentive compensation
+
We have stock ownership guidelines for executive officers and directors
+
We have an independent compensation consultant to advise our Compensation Committee
+
We make ongoing stockholder outreach efforts to obtain input on our compensation practices

We do not provide 280G excise tax gross-ups

We do not provide any pension or supplemental retirement benefits

We do not provide for any “single trigger” equity vesting for equity awards

We prohibit repricing options without shareholder approval

We prohibit granting stock options with an exercise price below 100% of fair market value

We do not provide any significant perquisites
Impact of 2020 Say-on-Pay Vote
The most recent stockholder advisory vote on named executive officer compensation required under the SEC rules was held on September 10, 2020. Approximately 94.6% of the total votes cast on such proposal (which excluded broker non-votes) were in favor of the compensation of our named executive officers. Based on the Board’s commitment to continue to strengthen the compensation plan for the Company’s named executive officers, the Compensation Committee evaluated and modified elements of the Company’s compensation plan to better align management’s long-term incentive compensation with stockholder interests. Specifically, the Company determined that, commencing in Fiscal 2021, a portion of long-term incentive compensation will be granted in the form of PSUs, earned based on the achievement of certain financial performance and total stockholder return metrics. Prior to implementing these changes to our long-term incentive compensation, the Company invited several of our largest stockholders to provide comments on the proposed changes and accordingly made adjustments to the original proposal to reflect investor feedback prior to finalizing the plan structure.
As the Company continues to grow and mature, the Compensation Committee will continue to make appropriate adjustments to our management team’s long-term incentive compensation. Currently, based on the voting preference of the Company’s stockholders, advisory votes on executive officer compensation will be conducted every year. The Compensation Committee will continue to take into account each such

38


advisory vote in order to determine whether any subsequent changes to the Company’s executive compensation programs and policies would be warranted to reflect any stockholder concerns reflected in those advisory votes.
Compensation Philosophy and Objectives

Our executive compensation plans and arrangements are overseen and administered by our Compensation Committee, which is comprised entirely of independent directors as determined in accordance with applicable Nasdaq and SEC rules. Our philosophy is to provide our named executive officers with compensation that will motivate and retain them, provide them with meaningful incentives to achieve and exceed short-term and long-term corporate objectives set by our Compensation Committee, and align their long-term interests with those of our stockholders. Based on this philosophy, the compensation programs for our named executive officers are designed to achieve the following primary objectives:


establish a compensation structure that is competitive enough to attract, retain and motivate outstanding executive talent;


ensure that any cash incentive compensation programs for our named executive officers are aligned with our corporate strategies and business objectives by tying the potential payouts under such programs to the achievement of key strategic, financial and operational goals; and


utilize long-term equity awards to align interests between our named executive officers and stockholders.

Impact of 2016 Say-on-Pay Vote

        The most recent stockholder advisory vote on executive officer compensation required under the federal securities laws was held on December 15, 2016. Approximately 81.5% of the total votes cast on such proposal (which excluded broker non-votes) were in favor of the compensation of the named executive officers, as that compensation was disclosed in the various compensation tables and narrative that appeared in the Company's proxy statement dated November 21, 2016. Based on that high level of stockholder approval, the Compensation Committee decided not to make any material changes to the Company's compensation philosophies, policies and practices for the 2017 fiscal year compensation of the named executive officers. Based on the voting preference of the Company's stockholders, advisory votes on executive officer compensation will be conducted every three years; accordingly, the next advisory vote will be conducted at the 2019 Annual Meeting of Stockholders. The Compensation Committee will continue to take into account each such advisory vote in order to determine whether any subsequent changes to the Company's executive compensation programs and policies would be warranted to reflect any stockholder concerns reflected in those advisory votes.

Annual Review of Cash and Equity Compensation; Role of Compensation Consultant

We conduct an annual review of the aggregate level of our executive compensation, as well as the mix of elements used to compensate our executive officers to ensure that compensation is structured appropriately to achieve our objectives. We review each component of compensation as related but distinct. Although the Compensation Committee reviews total compensation, it has not adopted any formal guidelines for allocating total compensation between cash and equity compensation. We


determine the appropriate level of each compensation component based in part, but not exclusively, on our retention goals and short-term and long-term objectives.

This review generally occurs in the first quarter of each fiscal year at which time the Compensation Committee establishes executive officer base salaries for the following fiscal year, reviews and approves any bonus awards and programs, establishes the performance objectives for our cash based bonus plan, and may grant of equity compensation to the executive officers to ensure their interests are aligned with our stockholders and for retention.
In Fiscal 2016,2021, the Compensation Committee engaged Frederic W. Cook & Co., Inc.,retained the services of an independent compensation consultant,consulting firm, FW Cook, to assist in the review of itsadvise on executive compensation policies and procedures with respect to our Fiscal 2016 executive officer compensation. This consultantFW Cook provided the Compensation Committee with market data and analysis of our total direct compensation for eachsuch executive officer positionpositions as compared with the competitive market and also provided market data for director compensation. The Company did not use a compensation consultantmarket. FW Cook reports only to establish executive officer or director compensation in Fiscal 2017; however, Frederic W. Cook & Co., Inc. did assist the Company in the design of the Company's 2016 Plan, which was approved by the stockholders at the 2016 Annual Meeting of Stockholders.

        In setting executive compensation, the Compensation Committee takes into account a number of factors, includingand did not perform any other work for the nature andCompany during Fiscal 2021 beyond its services related to executive compensation. As provided in its charter, the Compensation Committee has the authority to determine the scope of the named executive officer's responsibilities, his or her individual performance levelFW Cook’s services and contribution to the achievement of our corporate objectives, the experience level of the executive, the recommendations of our Chief Executive Officer for each individual's compensation package (other than his own) and the compensation trends in the industry.

may terminate their engagement at any time.

As part of the review process, our Chief Executive Officer provides our Compensation Committee with his recommendations as to the base salary, cash bonus potential and long-term equity incentive awardawards for each of our named executive officers other than himself based on that officer'sofficer’s level of responsibility, individual performance and contribution to the attainment of our strategic corporate objectives and market data. Our Compensation Committee takes the Chief Executive Officer'sOfficer’s recommendations into consideration in setting named executive officer compensation, but retains complete discretionary authority to make all compensation-related decisions for our named executive officers. Our Compensation Committee makes its compensation decisions with respect to the Chief Executive Officer on the basis of relevant market data furnished by a variety of sources and its subjective assessment of his individual performance and contributions to our overall corporate performance. Any decisions regarding our Chief Executive Officer'sOfficer’s compensation are made without himsuch officer present.


39


Benchmarking and Peer Groups
The Compensation Committee benchmarks our compensation programs to a peer group, which consists of publicly-traded technology companies in the applications software, systems software, and technology hardware industry categories, that are similar in size, as measured by revenues and market capitalization.
As of June 1, 2020, when the peer group was last assessed for Fiscal 2021, the peer revenues ranged from $44 million to $281 million, with a median of $139 million, which compared to Iteris’ revenues of $114 million. Market capitalization on June 1, 2020 for the peers ranged from $16 million to $1.1 billion, with a median of $191 million, which compared to Iteris’ market capitalization of $198 million.
The Fiscal 2021 peer group consisted of the following companies:

Agilysys, Inc.

AutoWeb, Inc.

Clearfield, Inc.

Digi International Inc.

Digital Turbine, Inc.

EMCORE Corporation

Intevac, Inc.

IntriCon Corporation

KVH Industries, Inc.

Majesco

MobileIron, Inc.

Napco Security Technologies, Inc.

OneSpan Inc.

PCTEL, Inc.

Perceptron, Inc.

RealNetworks, Inc.

SeaChange International, Inc.

Telenav, Inc.

TransAct Technologies Incorporated

Upland Software, Inc.

Zix Corporation
The Compensation Committee evaluates our compensation program versus that of the peer companies with respect to both individual pay levels as well as the structure of the program. The Compensation Committee uses this data primarily to ensure that our executive compensation program as a whole is competitive. Market data is one of several factors that is used to evaluate compensation levels. Other factors may include individual and company performance, experience in the role, responsibility level, and internal equity.

40


Compensation Components and Structure

We utilize three main components in structuring compensation programs for our named executive officers:

    Base salary, which is the only
Pay ComponentRationale and Value to Stockholders
Base Salary

Only fixed compensation element in the executive compensation program

Recruit and retain executive talent and provide an element of economic security from year to year

Reflects competitive market conditions
Performance-Based Cash Bonus
(Short-Term Incentive Program)

Motivates achievement of strategic priorities for the fiscal year as measured by financial and operational metrics

Diversified group of metrics to drive growth and stockholder value
Equity Incentive Awards
(Options, RSUs and PSUs)(1)

Encourages focus on long-term stockholder value creation (and PSUs link compensation to achievement of specified corporate financial performance objectives)

Aligns with stockholders’ interests

Provides long-term retention incentive of our executive talent
(1)
Historically, the long-term incentive compensation for our named executive officers was largely in the form of stock options. Commencing in Fiscal 2021, the long-term incentive compensation component for our named executive officers consist of stock options, RSUs and PSUs. See “Fiscal 2021 Long-Term Incentive Compensation Updates” below for further details about updates to the executive compensation program and is primarily used to recruit and retain executive talent and provide an element of economic security from year to year;

Performance-based cash bonuses that are primarily designed to reward achievement of financial and operational goals; and

Equity incentive awards designed to ensure long-term retention of our executive talent and align their interests with those of our stockholders.

        We view each component of compensation as related but distinct. plan for Fiscal 2021.

It is the practice of our Compensation Committee to allocate a substantial portion of each named executive officer'sofficer’s total compensation to performance and long-term incentive compensation as a result of the philosophy described above. While the Compensation Committee does establish specific performance criteria for


its cash-based bonus plan each year, there is no formal pre-established policy for the allocation of compensation between cash and non-cash components or between short-term and long-term components, and there are no pre-established ratios between the compensation of our Chief Executive Officer and that of the other named executive officers. Instead, our Compensation Committee determines the compensation of each named executive officer annually based on its review of the market data, its subjective analysis of that individual'sindividual’s performance and contribution to our financial performance and the other factors identified in the Compensation Decision-Making Process“Annual Review of Cash and Equity Compensation” section above to determine the appropriate level and balance of total compensation. We believe that this approach allows us to tailor compensation for each named executive officer to attract, retain and motivate that executive officer within the parameters of our compensation philosophy.

Base Salaries.   Base salaries are set at levels that are intended to recognize the experience, skills, knowledge and responsibilities required of all of our named executive officers. Each named executive officer'sofficer’s base salary level is typically reviewed on an annual basis and adjustments may be made to the individual'sindividual’s base salary on the basis of his or her level of performance, the overall performance of the Company and the various compensation trends in our industry.

In June 2016,2020, the Compensation Committee reviewed the base salaries of the named executive officers and established thedetermined not to provide increases for Fiscal 2021. The base salaries for Fiscal 20172021 for such officers as isare set forth below.

below:

Named Executive Officer
 Fiscal 2017
Annual Base Salary
 

Joe Bergera

 $385,000 

Andrew Schmidt

  336,500 

Thomas N. Blair

  259,000 

Todd Kreter

  265,000 

Ramin Massoumi

  239,200 
41



Named Executive Officer
Fiscal 2021
Annual Base
Salary
Joe Bergera$430,000
Douglas L. Groves400,000
Todd Kreter290,000
Ramin Massoumi280,000
Fiscal 20172021 Cash-Based Bonus Plan ("2007(“2021 Bonus Plan"Plan”).   Our named executive officers are eligible to receive an annual cash-based bonus under our 20172021 Bonus Plan. Each year, our Compensation Committee establishes the performance objectives to be attained and the target bonuses payable based on the level of attainment of the specified goals, which generally include the Company'sCompany’s revenues and operating incomeAdjusted EBITDA for the fiscal year, the revenues and contribution margin of such officer'sofficer’s business unit, and personal objectives set for each officer ("MBOs"(“MBOs”). We define "contribution margin"“contribution margin” as the business unit'sunit’s adjusted operating income without corporate expense allocations. The adjusted operating income of each business unit is calculated on a non-GAAP basis to exclude amortization, depreciation, stock-based compensation, goodwill impairment charge, if any. For Fiscal 2021 the Compensation Committee typically meets duringapproved using Adjusted EBITDA as a corporate performance objective, which is adjusted income (loss) from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, acquisition costs, non-recurring executive severance and transition costs, and fair value adjustment related to TrafficCast’s opening balance inventory. For more information, refer to Non-GAAP Financial Measures, to the first fiscal quarterConsolidated Financial Statements, included on page 25 in Part II, Item 7 of each year to evaluation the NEO's achievement of such performance objectives and annual bonuses are typically paid out as soon as practicable thereafter.Company’s Annual Report.”


The corporate and business unit performance targets and the actual achievement of such objectives for Fiscal 20172021 were as follows (dollarsfollows:

Performance ComponentsThresholdTargetMaximumActual
% of Target
Payout
Attained
Corporate Revenue$93,806$117,258$140,710$117,138100.0%
Corporate Adjusted EBITDA2,8634,4067,9307,450169.0
Roadway Sensors Revenue42,20652,75863,30956,548107.0
Roadway Sensors Contribution Margin7,0228,77810,53411,554132.0
Transportation Systems Revenue51,60064,50077,40060,59094.0
Transportation Systems Contribution Margin8,4427,43812,6648,96485.0
Under the Fiscal 2021 plan, if performance is below the “Threshold” goal amounts shown above, no bonus would be payable for that particular objective. If performance exceeds the “Maximum” goal amounts above, the NEOs could earn up to a maximum of 200% of their target opportunity for that particular objective. The combined maximum potential payout of the defined bonus elements is 160%. When combined with the 20% for personal objectives, the total maximum payouts for NEOs are 180%. Payouts in thousands):

between the Threshold and Maximum levels above would be determined using linear interpolation.
Mr. Bergera’s Fiscal 2021 MBOs included, among other things, achieving certain divesture and post-divesture integration objectives, and executing on other strategic transformation activities. The Compensation Committee determined Mr. Bergera successfully executed on his MBOs, resulting in a 95% payout of the MBO’s portion of his Fiscal 2021 annual bonus.
Mr. Groves’ Fiscal 2021 MBOs included certain strategic transformation initiatives, enhancing our investor communication, building capabilities in the accounting organization, attainment of certain expense reductions, and certain contributions to strategic financial planning for the Company. The Compensation Committee determined Mr. Groves successfully executed on his MBOs, and determined Mr. Groves earned 100% of the MBOs portion of his Fiscal 2021 annual bonus.
Mr. Kreter’s Fiscal 2021 MBOs included the development and enhancement of certain solutions, achievement of new customer and market development activities in the Roadway Sensors business segment,
Performance Components
 No Bonuses
At or Below
 Target Maximum Actual %
Attained
 

Corporate Revenue

 $75,101 $93,876 $112,651 $95,982  102.2%

Corporate Operating Income

  (4,174) (3,478) (2,782) (3,069)(1) 113.3 

Roadway Sensors Revenue

  35,021  43,776  52,531  42,270  96.3 

Roadway Sensors Contribution Margin

  7,037  8,796  10,555  9,799  111.4 

Transportation Systems Revenue

  35,543  44,429  53,315  49,270  110.9 

Transportation Systems Contribution Margin

  5,164  6,455  7,746  8,482  131.4 

Agriculture and Weather Analytics Revenue

  4,538  5,672  6,806  4,542  0.0 

Agriculture and Weather Analytics Contribution Margin

  (8,346) (6,955) (5,564) (7,389)(1) 94.1 

42

(1)
Actual results exclude a $2.2 million goodwill impairment charge.

        If our performance for Fiscal 2017 exceeded the Company


and business unit performance targets set for bonus purposes, the named executive officers could have earnedachievement of certain bookings targets. The Compensation Committee determined Mr. Kreter successfully executed on his MBOs, resulting in an additional bonus of up to 50%85% payout of the target bonus award that was not based upon achieving individual objectives.MBOs portion of his Fiscal 2021 annual bonus.
Mr. Massoumi’s Fiscal 2021 MBOs included the development and enhancement of certain solutions, achievement of new customer and market development activities in the Transportation Systems business segment, and achievement of certain bookings targets. The full 50% additional bonus would have been earned by the NEOs if the Company had achieved the performance goals set forth under the "Maximum" column above. If the Company had achieved performance that was less than the goals set forth under the "Maximum" column but more than the amounts set forth under the "Target" column, the additional bonus payable would have been proportional, or basedCompensation Committee determined Mr. Massoumi successfully executed on the levelhis MBOs, resulting in a 98% payout of the Maximum goal achieved when measured fromMBOs portion of his Fiscal 2021 annual bonus.
The Compensation Committee typically meets near the Target amount. For example, if the performance had exceeded the Target goal by 25%end of the difference between the Maximumfirst fiscal quarter of each year to evaluate each NEO’s achievement of their respective MBOs and Target amounts, then 25% of the 50% additional bonus relating to such performance goal would have been payable.

annual bonuses are typically paid out as soon as practicable thereafter.

The performance objectives, target bonus and actual bonus for each of our named executive officers for Fiscal 2017 is2021 were as follows:

Named Executive Officer
Performance
Objectives
Allocation (%)
2021 Target
Bonus ($)
2021 Actual
Bonus ($)
% of Target
Awarded (%)
Joe Bergera$322,500$448,275139%
Corporate Revenue40%
Corporate Adjusted EBITDA40
MBOs20
Douglas L. Groves$200,000$280,000140%
Corporate Revenue40
Corporate Adjusted EBITDA40
MBOs20
Todd Kreter$159,500$232,462146%
Roadway Sensors Revenue25
Roadway Sensors Contribution Margin25
Corporate Revenue15
Corporate Adjusted EBITDA15
MBOs20
Ramin Massoumi$154,000$149,95997%
Transportation Systems Revenue25
Transportation Systems Contribution Margin25
Corporate Revenue15
Corporate Adjusted EBITDA15
MBOs20
Named Executive Officer
 Performance
Objectives
Allocation
(%)
 2017 Target
Bonus
 2017 Actual
Bonus
 % of Target
Awarded
 

Joe Bergera

    $300,000 $354,000  118%

Corporate Revenue

  40%         

Corporate Operating Income

  40%         

MBOs

  20%         

Andrew Schmidt

    $134,600 $161,970  120%

Corporate Revenue

  40%         

Corporate Operating Income

  40%         

MBOs

  20%         

Thomas N. Blair

    $142,321 $91,598  64%

Ag & Weather Analytics Revenue

  30%         

Ag & Weather Analytics Contribution Margin

  20%         

Corporate Revenue

  15%         

Corporate Operating Income

  15%         

MBOs

  20%         

Todd Kreter

    $145,757  154,692  106%

Roadway Sensors Revenue

  25%         

Roadway Sensors Contribution Margin

  25%         

Corporate Revenue

  15%         

Corporate Operating Income

  15%         

MBOs

             

Ramin Massoumi

    $131,583 $159,234  121%

Transportation Systems Revenue

  25%         

Transportation Systems Contribution Margin

  25%         

Corporate Revenue

  15%         

Corporate Operating Income

  15%         

MBOs

  20%         

        See 2017 Grant of Plan-Based Awards below for additional information on Fiscal 2017 cash bonuses.

Equity Compensation.   Our equity award program is the primary vehicleone of our vehicles for offering long-term incentives to our named executive officers and providing an inducement for long-term retention. Our equity component also aligns the interests of our named executive officers with those of our stockholders and focuses their attention on the creation of stockholder value in the form of stock price appreciation. The Compensation Committee uses both stock options and restricted stock units as part of the Company's long-term incentive program for named executive officers, and the relative allocation of such instruments may vary from time to time. The Company believes that there are several advantages of using restricted stock units including ongoing concerns over the dilutive effect of option grants on the Company's outstanding shares, the Company's desire to have a more direct correlation between the compensation expense it must record for financial accounting purposes and the actual value delivered to executive officers, and the fact that the incentive and retention value of a restricted stock unit award is less affected by market volatility than stock options. We believe that the equity-based compensation provides our named executive officers with a direct interest in our long-term performance and creates an ownership culture that establishes a mutuality of interests between our named executive officers and our stockholders. We have had no program, plan or practice pertaining to the timing of equity awards to named executive officers coinciding with the release of material non-public information.

Historically, to reward and retain our named executive officers in a manner that best aligns employees’ interests with stockholders’ interests, we have used stock options as the primary incentive vehicles for

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long-term compensation. We believe that stock options are an effective tool for meeting our compensation goal of increasing long-term stockholder value by tying the value of the stock options to our future performance. Because executives are able to profit from stock options only if our stock price increases relative to the stock option’s exercise price, we believe stock options provide meaningful incentives to employees to achieve increases in the value of our stock over time. The exercise price of each stock option grant is the fair market value of our common stock on the grant date, as determined under our equity plan. Stock option awards generally vest in four equal annual installments over a four-year period, subject to continuous service through each vesting date. From time to time, our Compensation Committee may, however, determine that a different vesting schedule is appropriate.
Fiscal 2021 Long-Term Incentive Awards.   Commencing with Fiscal 2021, in response to stockholder feedback and consultation with FW Cook, the Compensation Committee decided to rebalance management’s long-term incentive compensation to include a mix of stock options (50%), RSUs (25%), and PSUs (25%) (with percentages measured based on the awards’ grant date values, assuming target level achievement of applicable performance goals in the case of PSUs), as follows:

50% of the long-term incentive compensation for our named executive officers were granted in the form of stock options, which will vest in accordance with the standard four-year vesting schedule described above.

25% of the long-term incentive compensation for our named executive officers were granted in the form of RSUs, which will vest over three years, with 50% of such RSUs vesting on the second anniversary of the grant date and 50% of such RSUs vesting on the third anniversary of the grant date. Each RSU represents a contingent right to receive one share of the Company’s common stock if vesting is satisfied.

25% of the long-term compensation for our named executive officers were granted in the form of PSUs. Each PSU represents a contingent right to receive one share of the Company’s common stock if vesting is satisfied. The number of PSUs that vest at the end of each three-year performance period will depend, in part, on the Company’s average revenues per share and cash flow from operations performance during the three-year performance period and, in part, on the Company’s total stockholder return (“rTSR”) relative to the Russell 2000 over the three-year performance period. Executives will receive payment with respect to the PSUs, in the form of shares of the Company’s common stock, at the conclusion of the performance period, upon establishment of final performance results.

Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. In addition, the final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs.
For purposes of the PSUs granted in Fiscal 2021, the performance targets for Fiscal 2021, the first year in the three-year performance period, were as follows: cash flow from operations — threshold, $3,520,000; target, $4,400,000; and maximum, $5,280,000, and revenues per share — threshold, $2.53; target, $2.81; and maximum, $3.09; Our actual performance for Fiscal 2021 for cash flow from operations was $8,888,000, resulting in a 160% achievement compared to the target. Our actual performance for Fiscal 2021 for revenues per share was $2.82, resulting in a 102% achievement compared to the target. These achievement levels for Fiscal 2021 will be used to determine our average performance for the three-year performance period ending March 31, 2023 for purposes of determining the final vesting of the PSUs.
Typically, the Compensation Committee provides grant guidelines to our Chief Executive Officer, who in turn will make recommendations back to the Compensation Committee regarding the number of optionsshares to be granted to our executive officers.officers (other than himself). See 2017“Fiscal 2021 Grant of Plan-Based AwardsAwards” table below for the Fiscal 20172021 awards made to our named executive officers.

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Benefit Plans
Section 401(k) Plan.   We make available a tax-qualified retirement plan that provides eligible employees, including our executive officers, with an opportunity to save for retirement on a tax-advantaged basis. Participants are able to defer a portion of their eligible compensation, subject to applicable annual limits under the Internal Revenue Code of 1986, as amended (the “Code”). Pre-tax contributions are allocated to each participant’s individual account and may be invested in selected alternative investments according to the participant’s direction. We do currently make a matching contribution under the 401(k) plan up to a maximum of 4% of the employee’s base salary. Such matching contribution is at the discretion of the Board and is typically evaluated on an annual basis.
Health and Welfare Benefits.   Our named executive officers are eligible to participate in all our employee benefit plans, including our medical, dental, vision, group life and disability insurance plans, in each case on the same basis as other employees. We believe that these health and welfare benefits help ensure that we have a productive and focused workforce through reliable and competitive health and other benefits.
Perquisites.   We do not provide significant perquisites or personal benefits to our named executive officers.
Post-Employment Compensation
For a summary of the material terms and conditions of our post-employment compensation arrangements, see “— Potential Payments upon Termination or Change in Control” below.
Incentive Compensation Clawback Policy
In July 2020, the Board adopted a Clawback Policy (the “Clawback Policy”) to create and maintain a culture that emphasizes integrity and accountability, and that reinforces the Company’s pay-for-performance compensation philosophy. Under the Clawback Policy, the Compensation Committee may direct the Company to seek to recover incentive compensation awarded or paid to an executive officer or other employee of the Company deemed subject to the Clawback Policy (“covered persons”) for a fiscal period if the Company must subsequently restate its financial statements.
The Clawback Policy is in addition to any recovery rights provided under applicable law. The Board continues to monitor regulatory developments and intends to further review and revise the Clawback Policy, if necessary, to comply with any final regulations issued for the purpose of implementing the requirements of the Dodd-Frank Act.
Stock Ownership Guidelines
The Board has adopted stock ownership guidelines for the Company’s non-employee directors and executive officers. Please see “Director Compensation” above for a description of these guidelines.
Compensation Risk Assessment
The Compensation Committee has evaluated our compensation programs and policies as generally applicable to our employees to ascertain any potential material risks that may be created by the compensation programs. The Compensation Committee concluded that our compensation policies and practices, taken as a whole, are not reasonably likely to have a material adverse impact on our business or our financial condition. The following compensation design features help minimize the incentives for excessive risk-taking and keeps our named executive officers focused on the creation of long-term, sustainable value for our stockholders:

Our base pay programs consist of generally competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks;

To further ensure that the interests of our named executive officers are aligned with those of our stockholders, commencing with Fiscal 2021, a portion of executive officer long-term incentive

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compensation was awarded as equity subject to performance- and time-based vesting requirements. RSUs and PSUs will vest and settle over a three-year period, as applicable — in the case of RSUs, 50% vesting after two years and remaining vesting after completion of three years, and in the case of PSUs, cliff-vesting based on achievement of applicable performance goals at the end of a three-year performance period.

A portion of each executive’s incentive compensation opportunity is tied to long-term incentive compensation that emphasizes sustained performance over time. This reduces any incentive to take risks that might increase short-term compensation at the expense of longer term results;

Annual equity awards have multi-year vesting which aligns the long-term interests of our executives with those of our stockholders and, again, discourages the taking of short-term risk at the expense of long-term performance; and

Each officer has multiple performance objectives, some of which relate to the Company as a whole, which is more difficult for an officer to manipulate.
Tax Deductibility of Executive Compensation
The Compensation Committee considers the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to our executive officers. Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year for “covered employees.” While we consider the tax deductibility of each element of executive compensation as a factor in our overall compensation program, the compensation committee, however, retains the discretion to approve compensation that may not qualify for the compensation deduction if, considering all applicable circumstances, it would be in our best interest for such compensation to be paid without regard to whether it may be tax deductible.
Accounting for Stock-Based Compensation
Under FASB ASC 718, we are required to estimate the grant date “fair value” for each grant of equity award using various assumptions. This calculation is performed for accounting purposes and reported in the compensation tables in this proxy statement, even though recipients may never realize any value from their awards.

ASC 718 also requires us to recognize the compensation cost of stock-based awards in our income statements over the period that an employee is required to render service in exchange for the award.

Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the discussion and analysis of the compensation of our named executive officers as disclosed in this proxy statement under the heading “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report and this proxy statement.
Thomas L. Thomas (Chairman)
Luke P. Scheider
Laura L. Siegal

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Executive Compensation Tables
Summary Compensation Table

The following table shows information regarding the compensation earned for the fiscal years ended March 31, 2017, 20162021, 2020 and 20152019 by (i) our Chief Executive Officer and (ii) our Chief Financial Officer and (iii) our three other most highly compensated executive officers (other than our Chief Executive and Financial Officers)Officer) who were serving as executive officers as of March 31, 2017.2021. The titles for Messrs. Todd Kreter and Ramin Massoumi were held by them up through March 31, 2021. Following April 1, 2021, Messrs. Kreter and Massoumi assumed new titles as further described above under “Executive Officers.” The officers listed below are collectively referred to as the "named“named executive officers"officers” or "NEOs"“NEOs” in this report.

proxy statement.
Name and Principal Position
Fiscal
Year
Salary
Stock
Awards(1)
Option
Awards(1)
Non-Equity
Incentive Plan
Compensation(2)
All Other
Compensation(3)
Total
Joe Bergera
Chief Executive Officer
and President
2021$432,030$254,388$323,125$448,275$11,200$1,469,018
2020430,314634,300180,15511,3511,256,120
2019412,894421,425137,28017,118988,716
Douglas L. Groves
Chief Financial Officer,
Senior Vice President of
Finance and Secretary
2021401,94782,723117,500280,00011,200893,370
2020121,617(4)489,54037,3334,800653,290
Todd Kreter
Senior Vice President
and General Manager,
Roadway Sensors
2021291,69057,71582,250232,46211,200675,317
2020295,890177,604103,89511,187588,576
2019282,734112,38049,28615,353459,753
Ramin Massoumi
Senior Vice President
and General Manager,
Transportation Systems
2021280,78557,71582,250149,95911,200581,909
2020279,688177,604136,53110,262604,084
2019268,306112,38070,16611,440462,292
Name and Principal Position
 Fiscal
Year
 Salary Bonus Stock
Awards(1)
 Non-Equity
Incentive Plan
Compensation(2)
 All Other
Compensation(3)
 Total 

Joe Bergera(4)

  2017 $399,816 $ $328,362 $354,000 $3,594 $1,085,772 

Chief Executive Officer

  2016  197,502  150,000(5) 1,659,150  63,080  7,610  2,077,342 

and President

  2015             

Andrew Schmidt

  
2017
  
346,790
  
  
164,181
  
161,970
  
8,118
  
681,059
 

Chief Financial Officer

  2016  325,000  32,500(6) 91,950  40,369  9,750  499,569 

Vice President of

  2015  18,750    101,821      120,571 

Finance and Secretary

                      

Thomas N. Blair

  
2017
  
266,705
  
  
422,949

(7)
 
91,598
  
8,009
  
789,261
 

Senior Vice President,

  2016  250,016    91,950  72,977  7,650  422,593 

Agriculture and Weather

  2015  250,549    53,715  47,364  7,812  359,440 

Analytics

                      

Todd Kreter

  
2017
  
271,745
  
  
164,181
  
154,691
  
8,060
  
598,677
 

Senior Vice President

  2016  250,016    91,950  85,296  7,650  434,912 

and GM, Roadway

  2015  250,982    53,715  105,000  7,949  417,646 

Sensors

                      

Ramin Massoumi

  
2017
  
241,522
  
  
164,181
  
159,234
  
7,365
  
569,302
 

Senior Vice President

  2016  209,248    24,520  35,592  6,441  275,801 

and GM, Transportation

  2015  188,655    19,940  29,580  5,237  243,412 

Systems

                      

(1)
(1)
The dollar amounts shown represent the grant date fair value of equity awards, including RSUs, PSUs, and stock options granted during the applicable fiscal year determined in accordance with ASC 718. Under ASC 718, the grant date fair value of the stock options is determined pursuant to the Black-Scholes-Merton option pricing formula. The grant date fair value of the RSUs is based on the closing price per share of our common stock on the date of grant. The fair value of our performance stock unit awards is estimated on the grant date using a Monte Carlo simulation model.
With respect to the PSUs granted during Fiscal 2021, the number of PSUs that are eligible to vest will be determined, in part, based on average annual achievement relative to revenues per share and cash flow from operations objectives for each one-year period of the PSU awards’ three-year performance period, ending March 31, 2023. These revenues per share and cash flow from operations objectives will be set annually for each one-year performance period. The number of PSUs that vest at the end of the three-year performance period ending March 31, 2023 will also depend, in part, on the Company’s total stockholder return (“rTSR”) relative to the Russell 2000 over the three-year performance period. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. The final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs.
In accordance with SEC rules and ASC 718, due to the annual setting of performance goals under the PSUs granted during Fiscal 2021, ASC 718 requires the grant date value to be calculated with respect to one-third of the total PSUs in each year of the three-year performance period. SEC rules require presentation that is consistent with ASC 718, and so the grant date fair value of the PSUs included in

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this column for Fiscal 2021 represents the grant date fair value for one-third of the PSU award eligible to vest based on Fiscal 2022 performance. In accordance with ASC Topic 718, the grant date fair value of the PSUs was calculated using the Monte Carlo simulation which utilizes the stock volatility, dividend yield and market correlation of the Company and the Company’s peer group. For the PSU awards granted during Fiscal 2021, such inputs consisted of: (a) an expected term that was based on the actual three-year term of the award; (b) a risk-free interest rate of 0.17% derived from the yield on U.S. government bonds of appropriate term from the U.S. Department of Treasury; (c) a dividend yield of 0.00% because we do not currently issue a dividend; (d) stock price volatility for Iteris of 55.48% based on an analysis of the historical stock price volatility of the Company and stock price volatility of 59.87% for the Russell 2000 Index based on the 2.75 years preceding the date of grant to conform to the term of the awards; and (e) initial TSR performance of 38.11% based on the actual historical TSR performance for the Company and the Russell 2000 Index. The valuation method resulted in each PSU being valued at $5.47 on June 30, 2020, the date of the grant, or 115.04% of the stock price on such date. The grant date fair values reflected in the table above for the NEOs reflect the one-third of the PSU award eligible to vest based on Fiscal 2021 performance, calculated by multiplying the $5.47 per share by one-third of the “target” number of PSUs. Assuming performance at the maximum level, the “maximum” grant date fair value of the one-third of the PSU award eligible to vest based on Fiscal 2021 performance, calculated by multiplying the $5.47 per share by one-third of the “maximum” number of PSUs, is as follows: $140,061 for Mr. Joe Bergera; $45,397 for Mr. Douglas Groves; $31,777 for Mr. Todd Kreter; and $31,777 for Mr. Ramin Massoumi. For a discussion of valuation assumptions used in the calculations, see Note 118 of Notes to our consolidated financial statementsConsolidated Financial Statements, included in Part II, Item 8 in the Annual Report. See also our discussion of stock-based compensation under "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operations — Critical Accounting Policies and Estimates"Estimates” on page 28 in Part II, Item 7 in the Annual Report. The options have an exercise price equal to the closing sales price of our common stock as of the grant date and vest in equal annual installments over four years and are not exercisable until vested.
(2)

(2)
The amounts shown in this column constitute the cash bonuses paid to each named executive officer based on the attainment of certain pre-established criteria.management objectives. These awards are discussed in further detail under "Plan-Based Bonuses" below.“Fiscal 2021 Cash-Based Bonus Plan” above.
(3)

(3)
Except as otherwise noted, represents
Represents Section 401(k) plan employer contributions paid by us.
(4)

(4)
Mr. BergeraGroves was hired effective September 23, 2015December 4, 2019 at an annual salary of $385,000.$400,000. The Fiscal 20162020 salary represents the amount earned by Mr. BergeraGroves from his hire date tothrough the end of that fiscal year.

(5)
Pursuant to his employment agreement, Mr. Bergera was eligible for a bonus of up to $300,000 for Fiscal 2016, of which $150,000 was a signing bonus payable on January 31, 2016, provided that Mr. Bergera was employed by the Company as of such date, and the remaining $150,000 was payable based on his attainment of certain pre-established criteria, as discussed in further detail under "Plan-Based Bonuses" below.2020.

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(6)
Discretionary cash bonus.

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(7)
The Stock Awards for Mr. Blair in
Fiscal 2017 include restricted stock units totaling $258,768.

20172021 Grant of Plan-Based Awards Table

The table below sets forth information with respect to awards granted to the named executive officers under our annual non-equity incentive compensation plan and our 2016 Omnibus Incentive Plan in Fiscal 2017,2021, which constitute all of the plan-based awards granted to our named executive officers in Fiscal 2017.

2021.
NameGrant DateDescription
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
All Other
Stock
Awards
Number
of Shares
of Stock
or
Units(#)
All
Other
Stock
Awards:
Number of
Securities
Underlying
Options(#)(4)
Exercise
or Base
Price of
Option or
Awards
($/share)
Grant
Date
Fair Value
of Stock
and
Option
Awards
($)(5)
Threshold/
Minimum
($)
Target
($)
Maximum
($)
Threshold/
Minimum
(#)
Target
(#)
Maximum
(#)
Joe Bergera06/22/2020Cash Bonus$0$322,500$580,500
06/30/2020PSU012,80325,605$$70,030
11/16/2020RSU38,408(3)184,358
11/16/2020Options137,500(4)137,5004.80323,125
Douglas L. Groves06/22/2020Cash Bonus0200,000360,000
06/30/2020PSU04,1508,29922,968
11/16/2020RSU12,449(3)59,755
11/16/2020Options50,000(4)50,0004.80117,500
Todd Kreter06/22/2020Cash Bonus0159,500287,100
06/30/2020PSU02,9055,809���15,888
11/16/2020RSU8,714(3)41,827
11/16/2020Options35,000(4)35,0004.8082,250
Ramin MassoumiCash Bonus0154,000277,200
06/30/2020PSU02,9055,80915,888
11/16/2020RSU8,714(3)41,827
11/16/2020Options35,0004)35,0004.8082,250
 
  
 Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards
  
  
  
 
 
  
 Number of
Securities
Underlying
Options or
Stock Units (#)
 Per Share
Exercise Price
of Option
Awards
($/share)
  
 
 
  
 Grant Date
Fair Value of
Awards
($)(2)
 
Name
 Grant Date Threshold
($)
 Target
($)(1)
 Maximum
($)(1)
 

Joe Bergera

  03/03/2017 $ $300,000 $420,000  150,000 $4.91 $328,362 

Andrew Schmidt

  03/03/2017    134,600  188,440  75,000  4.91  164,181 

Thomas N. Blair

  03/03/2017    142,321  199,249  75,000  4.91  164,181 

  03/22/2017           51,140    258,768(3)

Todd Kreter

  03/03/2017    145,757  204,060  75,000  4.91  164,181 

Ramin Massoumi

  03/03/2017    131,583  184,216  75,000  4.91  164,181 

(1)

Reflects the potential amount payable (not the actual amount payable) upon achievement of the management objectives describesdescribed under the heading "Plan-Based Bonuses"“Fiscal 2021 Cash-Based Bonus Plan” above.
(2)
These PSUs were granted under the 2016 Omnibus Incentive Plan. The number of PSUs that are eligible to vest will be determined, in part, based on average annual achievement relative to revenues per share and cash flow from operations objectives for each one-year period of the PSU awards’ three-year performance period ending March 31, 2023. These revenues per share and cash flow from operations objectives will be set annually for each one-year performance period. The number of PSUs that vest at the end of the three-year performance period ending March 31, 2023 will also depend, in part, on the Company’s total stockholder return (“rTSR”) relative to the Russell 2000 over the three-year performance period. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. The final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs. In accordance with SEC rules and ASC 718, due to the annual setting of performance goals under the PSUs granted during Fiscal 2021, ASC 718 requires the grant date value to be calculated with respect to one-third of the total PSUs in each year of the three-year performance period. SEC rules require presentation that is consistent with ASC 718, and amounts shown at “target” represent one-third of the total “target” number of PSUs granted during fiscal 2021 at “target” levels. Named executive officers will receive payment with respect to the PSUs, in the form of shares of the Company’s common stock, at the conclusion of the performance period, upon establishment of final performance results. The vesting of equity awards held by the named executive officers is subject to

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each named executive officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below.
(3)
These RSUs were granted under the 2016 Omnibus Incentive Plan and vest fifty-percent (50%) after two (2) years from the vesting commencement date, and fifty-percent (50%) after the third (3rd) year from the vesting commencement date, upon named executive officer’s completion of each year of continued service with the Company. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below.
(4)
(2)
All options vest in four equal installments following the date of grant. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below.
(5)
The dollar amounts shown represent the grant date fair value of stock optionsequity awards granted during the applicable fiscal year determined pursuantin accordance with ASC 718. With respect to the Black-Scholes-Merton option pricing formula.PSUs granted during Fiscal 2021, the number of PSUs that are eligible to vest will be determined based on average annual achievement relative to revenues per share and cash flow from operations objectives for each one-year period of the PSU awards’ three-year performance period. These revenues per share and cash flow from operations objectives will be set annually for each one-year performance period. In accordance with SEC rules and ASC 718, due to the annual setting of performance goals under the PSUs granted during Fiscal 2021, ASC 718 requires the grant date value to be calculated with respect to one-third of the total PSUs in each year of the three-year performance period. SEC rules require presentation that is consistent with ASC 718, and so the grant date fair value of the PSUs included in this column for Fiscal 2021 represents the grant date fair value for one-third of the PSU award eligible to vest based on fiscal 2022 performance. For a discussion of valuation assumptions used in the calculations, see footnote (1) to the Summary Compensation Table and Note 118 of Notes to our consolidated financial statementsConsolidated Financial Statements, included in Part II, Item 8 in the Annual Report. See also our discussion of stock-based compensation under "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Operations — Critical Accounting Policies and Estimates"Estimates” on page 28 in Part II, Item 7 in the Annual Report.

(3)
The March 22, 2017 grant for Mr. Blair is a grant of restricted stock units. The dollar amounts shown as the grant date fair value represents the grant date fair value determined based on the closing market price of our common stock on the grant date.

50

TABLE OF CONTENTS


Outstanding Equity Awards at 2021 Fiscal Year End

The following table sets forth the outstanding equity awards held by each named executive officer as of March 31, 2017.

2021.
Name
Option Awards(1)
Stock Awards
Number of
Securities
Underlying
Outstanding
Options (#)
Exercisable
Number of
Securities
Underlying
Outstanding
Options (#)
Unexercisable
Option
Exercise
Price ($)
Option
Grant
Date
Option
Expiration
Date
Number
of Shares
or Units
of Stock
That have
not
Vested
Market Value
of Shares
or Units
of Stock
That Have
Not Vested(4)
Equity
Incentive
Plan Awards:
Number of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested
Equity
Incentive
Plan Awards:
Market or
Payout
Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
Joe Bergera1,350,000$2.3809/23/1509/22/25
150,0004.9103/03/1703/02/27
187,50062,5005.5202/16/1802/15/28
112,500112,5004.1612/10/1812/09/28
62,500187,5005.1012/09/1912/08/29
137,5004.8011/16/2011/15/30
38,408(2)$236,977(4)
38,408(3)236,977(4)
Douglas L. Groves50,000150,0004.9212/04/1912/04/29
50,0004.8011/16/2011/15/30
12,449(2)76,810(4)
12,449(3)76,810(4)
Todd Kreter12,5001.8711/18/1411/17/24
75,0002.3711/02/1511/01/25
75,0004.9103/03/1703/02/27
56,25018,7505.5202/16/1802/15/28
30,00030,0004.1612/10/1803/02/27
17,50052,5005.1012/09/1902/15/28
35,0004.8011/16/2011/15/30
8,714(2)51,933(4)
8,714(3)51,933(4)
Ramin Massoumi75,0004.9103/03/1703/02/27
56,25018,7505.5202/16/1802/15/28
30,00030,0004.1612/10/1812/09/28
17,50052,5005.1012/09/1912/08/29
35,0004.8011/16/2011/15/30
8,714(2)51,933(4)
8,714(3)51,933(4)
 
 Option Awards
Name
 Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
 Option
Exercise
Price ($)
 Option
Grant
Date(1)
 Option
Expiration
Date

Joe Bergera

  337,500  1,012,500 $2.38 09/23/15 09/22/25

Chief Executive Officer

    150,000  4.91 03/03/17 03/02/27

Andrew Schmidt

  50,000  50,000  1.79 03/16/15 03/15/25

Chief Financial Officer, Vice President of

  18,750  56,250  2.37 11/02/15 11/01/25

Finance, and Secretary

    75,000  4.91 03/03/17 03/02/27

Tom Blair

  25,000  25,000  1.87 11/18/14 11/17/24

Senior Vice President,

  18,750  56,250  2.37 11/02/15 11/01/25

Agriculture and Weather Analytics                   

    75,000  4.91 03/03/17 03/02/27

Todd Kreter

  25,000    2.46 02/21/08 02/20/18

Senior Vice President and

  25,000    1.41 05/27/09 05/26/19

GM, Roadway Systems

  30,000    1.10 08/10/11 08/09/21

  20,000  20,000  1.81 07/29/13 07/28/23

  12,500  37,500  1.87 11/18/14 11/17/24

    75,000  2.37 11/02/15 11/01/25

Ramin Massoumi

  22,500  7,500  1.81 07/29/13 07/28/23

Senior Vice President and

  10,000  10,000  1.87 11/18/14 11/17/24

GM, Transportation Systems

  5,000  15,000  2.37 11/02/15 11/01/25

    75,000  4.91 03/03/17 03/02/27
(1)
All options vest in four equal annual installments following the date of grant. The vesting of equity awards held by the named executive officers is subject to each officers continued service with the

51

(1)
Mr. Blair was also

Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Change in Control” below.
(2)
Each RSU represents the right to receive one share of our common stock if vesting is satisfied. These RSUs were granted 51,140 RSUsunder the 2016 Omnibus Incentive Plan and vest fifty-percent (50%) after two (2) years from the vesting commencement date, and fifty-percent (50%) after the third (3rd) year from the vesting commencement date, upon named executive officer’s completion of each year of continued service with the Company. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below. Vested shares are issued as soon as practicable after the applicable vesting date.
(3)
Each PSU represents the right to receive one share of our common stock if vesting is satisfied. The number of PSUs that vest at the end of the three-year performance period ending March 31, 2023 will depend, in part, on March 22, 2017the Company’s average revenues per share and cash flow from operations performance during the three-year performance period and, in additionpart, on the Company’s total stockholder return (“rTSR”) relative to the Russell 2000 over the three-year performance period. Executives will receive payment with respect to the PSUs, in the form of shares of the Company’s common stock, options reported above.
at the conclusion of the performance period, upon establishment of final performance results. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. In addition, the final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs. The PSUs are reflected in the table above at “target” performance levels. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below.

2017(4)
The dollar value is based on the closing sales price of our common stock on the last business day of Fiscal 2021, $6.17.
Fiscal 2021 Option Exercises and Stock Vesting Table

The following table provides information regarding option exercises and vesting of awards held by the named executive officers during Fiscal 2017.

2021.
NameOption Awards
Number of
Shares
Acquired on
Exercise
(#)
Value
Realized on
Exercise
($)(1)
Joe Bergera$
Douglas L. Groves$
Todd Kreter$
Ramin Massoumi27,996$200,400
 
 Option Awards Stock Awards 
Name
 Number of Shares
Acquired on Exercise
(#)
 Value
Realized on
Exercise
($)(1)
 Number of Shares
Acquired on Vesting
(#)
 Value
Realized on
Vesting
($)(2)
 

Joe Bergera

   $   $ 

Andrew Schmidt

         

Thomas N. Blair

  100,000  351,000  12,500  41,875 

Todd Kreter

  50,000  165,250     

Ramin Massoumi

  20,000  76,000     

(1)
(1)
Value realized is determined by multiplying (i) the amount by which the market price of a common share on the date of exercise exceeded the exercise price by (ii) the number of shares for which the options were exercised.
Non-Qualified Deferred Compensation for Fiscal 2021
Deferred Compensation Plan.   Effective October 1, 2020, the Company adopted the Iteris, Inc. Non-Qualified Deferred Compensation Plan (the “DC Plan”). The DC Plan consists of two plans, one that

52

(2)
Value realized

is determined by multiplying (i) the market priceintended to be an unfunded arrangement for eligible key employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and one for the benefit of nonemployee members of our Board of Directors. Key employees, including our executive officers, and our nonemployee directors who are notified regarding their eligibility to participate and delivered the DC Plan enrollment materials are eligible to participate in the DC Plan. Under the DC Plan, we will provide participants with the opportunity to make annual elections to defer up to 75% of their base salary, up to 100% of their annual bonus, and up to 100% of any RSU or PSU awards. Our nonemployee directors may elect to defer up to 100% of their eligible cash compensation and equity awards. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon.
Elective deferrals of equity awards are credited to a bookkeeping account established in the name of the participant with respect to an equivalent number of shares of our common sharestock, and such credited shares are subject to the same vesting conditions as are applicable to the equity award subject to the election. The Company established a rabbi trust to finance our obligations under the DC Plan with corporate-owned life insurance policies on participants, and the assets held within this trust are subject to the claims of the Company’s creditors.
Under the DC Plan, we will be obligated to deliver on a future date deferred cash compensation credited to the participant’s account, adjusted for any positive or negative investment results from the investment alternatives selected by the participant under the DC Plan, or with respect to deferrals of equity awards, an issuance of shares of our common stock. These obligations are unfunded, unsecured general obligations of the Company and rank in parity with other unsecured and unsubordinated indebtedness of us, subject to the claims of our general creditors. However, deferrals of equity awards under the DC Plan are deemed rights to receive an issuance of our common stock and may not be deemed allocated to any investment fund.
A participant’s rights under the Plan are not transferable except upon death of the participant.
With respect to the portion of the bookkeeping account allocated to an investment fund, each account will be payable in cash. The portion of the bookkeeping account allocated to deferrals of equity awards will be payable in an issuance of shares of our common stock.
Payments will be distributed in connection with either the participant’s separation of service or a selected specified distribution date or dates, depending upon the distribution election made by the participant at the time of deferral. However, if a participant’s service with us terminates prior to the selected specified distribution date or dates, payment will instead be made or commence in connection with such separation from service. A participant’s account balance may be distributed in a lump sum or, if elected by a participant, in up to 15 substantially equal installments (up to 5 annual installments for any distributions in respect of equity award accounts); however, any distribution upon a separation from service prior to attaining age 55 will be paid in a lump sum, regardless of the payment timing elected. If a participant’s service terminates with us due to death, all of a participant’s accounts will become immediately payable in a single lump sum. In addition, participants may be entitled to receive payments through certain unforeseeable emergency withdrawals. Payments scheduled to be made under the Plan may be otherwise delayed or accelerated only upon the occurrence of certain specified events that comply with the requirements of Section 409A of the Code.
A committee appointed by our board of directors administers the Plan. We can amend or terminate the Plan at any time, but no such action shall unilaterally reduce a participant’s account balance without his or her consent prior to the date of vesting by (ii)such action. However, we may adopt any amendments to the numberPlan that we deem necessary or appropriate to preserve the intended tax treatment of sharesthe Plan benefits or to otherwise comply with the requirements of Section 409A of the Code and related guidance.
The following table shows the non-qualified deferred compensation activity for each named executive officer during Fiscal 2021.

53


Name
Executive
Contributions
in Last
Fiscal Year
($)(1)
Aggregate
Earnings
in Last
Fiscal
Year(2)
Aggregate
Withdrawals /
Distributions
($)
Aggregate
Balance at Last
Fiscal Year End
($)
Joe Bergera$$$$
Douglas L. Groves43,07740243,479
Todd Kreter
Ramin Massoumi
(1)
Amounts included in the Summary Compensation Table in the “Salary” and “Non-Equity Incentive Plan Compensation” columns for Fiscal 2021.
(2)
No above market or preferential earnings are provided under the DC Plan because the investment choices available under such plans are identical to the investment choices available in the 401(k) Plan, which vested.is a qualified plan. Consequently, none of the earnings reported in this table are included in the Summary Compensation Table set forth above.

The DC Plan provides investment options amongst which participants make investment allocations that provide the basis on which gains and losses are attributed to account balances under the plan, and such options may change from time to time. The investment options under the DC Plan and their rates of return for the period from January 1, 2021 through March 31, 2021, which represents the period of time during which cash deferrals were first deferred under the DC Plan.
Name of Investment OptionRate of Return (%)
AB Discovery Growth Fund I1.57%
AB Large Cap Growth Fund Class Z1.13%
American Balanced Fund Class R63.82%
American Century Midcap Val I���12.09%
American EuroPacific Growth R6-0.43%
American New Perspective2.26%
Dodge & Cox Stock Fund15.86%
Invesco Developing Markets Fund R60.86%
Janus Henderson Triton Fund I0.52%
JP Morgan Mid Cap Val Fund R615.55%
Principal Real Estate SEC Fund I6.98%
T. Rowe Price 2005 Retirement I1.96%
T. Rowe Price 2010 Retirement I2.21%
T. Rowe Price 2015 Retirement I2.60%
T. Rowe Price 2020 Retirement I2.97%
T. Rowe Price 2025 Retirement I3.64%
T. Rowe Price 2030 Retirement I4.26%
T. Rowe Price 2035 Retirement I4.95%
T. Rowe Price 2040 Retirement I5.54%
T. Rowe Price 2045 Retirement I5.98%
T. Rowe Price 2050 Retirement I6.00%
T. Rowe Price 2055 Retirement I6.00%
T. Rowe Price 2060 Retirement I6.02%
T. Rowe Price Retirement Bal I2.26%
Vanguard 500 Index Fund6.18%

Employment Contracts;54


Name of Investment OptionRate of Return (%)
Vanguard Grow And Inc Fund6.92%
Vanguard Small Cap Index Fund10.22%
Vanguard Total Int Stock Index3.94%
Victory Sycamore Small Comp R615.80%
Fidelity Advisor Gov’t Income M-3.52%
Loomis Sayles Core Plus Cl N-3.07%
PIMCO Real Return Fund Cl Inst-1.33%
Templeton Global Bond Fund R6-2.73%
Goldman Sachs Stable Value Ct0.35%
Potential Payments upon Termination of Employment and Change ofin Control Arrangements

        We do

The Company does not currently have any employment contractsagreements or change in control arrangements in effect with any of our named executive officers other than the agreements described below. We provide incentives suchIn addition, our NEOs may be eligible for certain payments upon a termination or a change in control under the DC Plan, as salary, benefits, option grants and RSUs to attract and retain executive officers and other key employees. further described above under “Non-Qualified Deferred Compensation for Fiscal 2021.”
Equity Award Vesting
The plan administrator of the 2007 Omnibus Incentive Plan and 2016 Omnibus Incentive Plan has the discretion to determine whether outstanding equity awards held by our NEOs are to vest upon a qualifying termination of employment following certain changes in control of the Company, or upon sucha change in control, but weour equity plans do not provide for any automatic "single trigger"“single trigger” acceleration of equity awards upon a change in control.
Options granted to our named executive officers are eligible for accelerated vesting under certain circumstances. In the event of an executive’s termination due to death or permanent disability, a pro-rata portion of the options shall vest on the date of such termination. In addition, if an executive’s employment is terminated by us other than for misconduct or the executive resigns for good reason (each such term as defined in the 2016 Omnibus Incentive Plan), in each case within eighteen (18) months following the effective date of a change in control, (otherthen such additional number of options shall vest as of the date of termination as is equal to the number of options as would have vested during the two (2) year period following the date of termination had the executive remained employed by us or our successor during such period.
RSUs granted to our named executive officers are eligible for accelerated vesting under certain circumstances. In the event of an executive’s termination due to death or permanent disability, a pro-rata portion of the RSUs shall vest on the date of such termination. In addition, if an executive’s employment is terminated by us other than for misconduct or the option grant receivedexecutive resigns for good reason (each such term as defined in the 2016 Omnibus Incentive Plan), in each case within eighteen (18) months following the effective date of a change in control, then such additional number of RSUs shall vest as of the date of termination as is equal to the number of RSUs as would have vested during the two (2) year period following the date of termination had the executive remained employed by Dr. Dalyus or our successor during such period.
PSUs granted to our named executive officers are also eligible for accelerated vesting under certain circumstances. In the event of an executive’s termination due to death or permanent disability prior to a change in control, a pro-rata portion of the PSUs shall vest on the date of such termination based on our actual performance relative to the performance metrics applicable to the PSUs through such date. Upon a change in control, a number of PSUs will remain eligible to vest on the last day of the three-year performance period as is determined based on our actual performance relative to the performance metrics applicable to the PSUs through the date of such change in control, subject to the executive’s continued employment through such date. However, if an executive’s employment is terminated by us other than for misconduct or the executive resigns for good reason (each such term as defined in the 2016 Omnibus Incentive Plan), or in the event of an executive’s termination due to death or permanent disability in each case within eighteen (18) months following the effective date of the change in control, then such additional number of PSUs shall vest

55


as of the date of termination as is equal to the number of PSUs as would have vested during the two (2) year period following the date of termination had the executive remained employed by us or our successor during such period.
Iteris, Inc. Executive Severance Plan
The Iteris, Inc. Executive Severance Plan (the “Severance Plan”) was adopted on February 5, 2018 and amended and restated effective June 4, 2019. Each individual employed by the Company or its subsidiary, who is an officer subject to Section 16 of the Exchange, and who is not otherwise covered by an employment agreement that includes severance terms (the “Eligible Employees”), is eligible to receive severance payments under the Severance Plan upon certain qualifying terminations of employment.
The Severance Plan provides Eligible Employees with severance payments in the event that an Eligible Employee’s employment with the Company or its subsidiaries is terminated either (a) by the Company without Cause not in connection with his service as a non-employee director). Other than as notedChange in this section, there is no agreementControl (“Non-CIC Qualifying Termination”) or policy(b) if in connection with or within 12 months following a Change in Control, which, would automatically entitle any named executive officerfor Eligible Employees employed by that business, includes a divestiture of a material business, by the Eligible Employee for Good Reason (as such terms are defined in the Severance Plan) or by the Company without Cause (a “CIC Qualifying Termination”).
Non-CIC Qualifying Termination.   Upon a Non-CIC Qualifying Termination, an Eligible Employee will receive the following:

A cash payment equal to the Eligible Employee’s annual base salary, payable in substantially equal installment payments over the one-year period following termination, in accordance with the Company’s normal payroll practices; and

Reimbursement for the Eligible Employee’s monthly COBRA premiums for the 12-month period following termination or until the Eligible Employee receives substantially similar medical coverage from another employer.
CIC Qualifying Termination.   Upon a CIC Qualifying Termination, an Eligible Employee will receive the following:

A cash payment equal to the Eligible Employee’s annual base salary, payable in a lump sum on the next payroll date after the 61st day following termination; and

Reimbursement for the Eligible Employee’s monthly COBRA premiums for the 12-month period following termination, or until the Eligible Employee receives substantially similar medical coverage from another employer.
The severance payments are subject to the Eligible Employee’s execution of a severance agreement within 60 days following termination that includes a release of claims and certain non-solicitation, confidentiality, and non-disparagement restrictions.
The Company may amend or terminate the Severance Plan at any other compensation astime by providing at least 90-day advance written notice to each Eligible Employee, provided that no such amendment or termination that has the effect of reducing or diminishing the right of any Eligible Employee will be effective unless one year’s advance written notice is provided to Eligible Employees, and such amendment or termination will not be effective if a result of such officer's termination.

    Change in Control occurs during the one-year notice period.

Agreement with Joe Bergera

In connection with his hiring, we entered into an employment agreement with Joe Bergera, our Chief Executive Officer, dated September 8, 2015, pursuant to which Mr. Bergera will receive an annual base salary of $385,000, which may be increased from time to time at the discretion of the Compensation Committee. Mr. Bergera will also be eligible to participate in our executive bonus plan as then in effect and his potential bonus for each year will be established annually by the Board or a committee of the Board, provided that the bonus potential for Fiscal 2016 will be $300,000, of which $150,000 was a signing bonus payable on January 31, 2016 provided that Mr. Bergera was employed by the Company as of such date.Board. The agreement is for an initial term of three years and will renewrenews for successive one yearone-year periods until September 2025 unless either we or Mr. Bergera providesprovide written notice of non-renewal at least 30 days prior to the end of the initial term or renewal term, as applicable.


        Pursuant to the agreement,56


If Mr. Bergera also received an option grant under our 2007 Omnibus Incentive Plan to purchase up to 1,350,000 shares of our common stock (the "Option"). The Option will vest in equal annual installments over four years and has an exercise price equal to the closing sales price of our common stock on the date of grant of the Option.

        If during the initial term of the agreement or any renewal term, Mr. Bergera'sBergera’s employment with the Company is terminated without Cause (as such term is defined in the agreement), during the term of the agreement, Mr. Bergera will be entitled to receive (i) salary continuation payments for 12 months following his termination, (ii) a lump sum payment equal to the pro-rated portion of his target bonus established by the Compensation Committee for the fiscal year in which his employment is terminated, and (iii) reimbursement for the cost of COBRA coverage for a period of up to 12 months following the termination. If Mr. Bergera is terminated without Cause or resigns for Good Reason within 12 months following a Change in Control (as such terms are defined in the agreement) (such termination or resignation, a "CIC Termination"“CIC Termination”), Mr. Bergera will be entitled to receive (i) a lump sum payment equal to 125% of his base salary as then in effect, (ii) a lump sum payment equal to the pro-rated portion of his target bonus established by the Compensation Committee for the fiscal year in which the CIC Termination occurs, and (iii) reimbursement for the cost of COBRA coverage for a period of up to 12 months following the CIC Termination, and (iv) acceleration of the vesting of the Option.Termination. In addition, upon termination of his employment due to death, Mr. Bergera'sBergera’s estate or beneficiaries will be entitled to receive salary continuation paymentsa lump sum payment in the aggregate equal to 50% of his then current base salary.

Potential Payments upon Termination of Employment and Change in Control Table


    Agreement with Andrew Schmidt

The following table illustrates an estimated amount of compensation or other benefits potentially payable to each of our named executive officers as of March 31, 2021 that could be triggered upon termination of such named executive officer’s employment under various scenarios. We entered into an employment agreement dated March 9, 2015 with Andrew Schmidt, our Chief Financial Officer, in connection with his hiring. Pursuant tohave assumed that all salary payments or any expenses the agreement, Mr. Schmidt will receive an annual base salary of $325,000, whichexecutive may be increased from time to time atdue have been paid currently. The amounts shown assume that such termination (and in the discretioncase of a change in control, the change in control) was effective as of March 31, 2021, and, therefore, are estimates of the Board or the Compensation Committee. He will also be eligibleamounts that would have been paid to participate in oursuch named executive bonus plan as then in effect and his potential bonus for each year will be established annually by the Board or the Compensation Committee, provided that the bonus potential for Fiscal 2016 was to be $125,000.officers upon their termination. The agreement will have an initial termvalue of two years and will renew for successive one year periods until March 2025 unless either the Company or Mr. Schmidt provides written notice of non-renewal at least 30 days prior to the end of the initial term or renewal term, as applicable. The agreement was amended on June 12, 2017 and provides that if Mr. Schmidt's employment with the Company is terminated without Cause or in connection with a Change of Control (as such terms are definedequity award acceleration reflected in the agreement), Mr. Schmidt will be entitled to salary continuation payments for twelve months following his termination of his annual base salary as then in effect. In addition, Mr. Schmidt will be entitled to receive reimbursement for the cost of COBRA coverage for a period of up to twelve months following such termination.

Director Compensation

        Compensation of directors is determined by the Compensation Committee. The Compensation Committee has approved a compensation structure for non-employee directors consisting of a cash retainer, an annual equity award and, for Board members serving on a committee, an additional cash retainer. Directors who are our employees are not compensated for their services as directors.

Board and Committee Retainers

        For Fiscal 2017, annual cash compensation for non-employee directorstable below was as follows:

Position
 Annual
Retainer
 

Chairman of the Board

 $65,000 

Non-Employee Director (other than the Chairman)

 $35,000 

        Additional retainers for each non-employee director who served on one or more Board committees in Fiscal 2017 were as follows:

Position
 Annual
Retainer
 

Audit Committee

    

Chair

 $12,000 

Member

 $6,000 

Compensation Committee

    

Chair

 $9,000 

Member

 $4,500 

Nominating and Corporate Governance Committee

    

Chair

 $4,000 

Member

 $2,000 

Finance Committee

    

Chair

 $9,000 

Member

 $4,500 

        All directors are reimbursed for their out-of-pocket expenses incurred in attending meetings of our Board of Directors and its committees, but they do not receive separate meeting fees.


Annual Equity Compensation

        Non-employee directors are also eligible to receive periodic restricted stock units ("RSUs") under the Company's equity incentive plan then in effect. Each non-employee director shall be granted an annual RSU upon approval of the grant by the Compensation Committee as soon as reasonably practicable following the annual meeting of stockholders at which such director is re-elected. The annual RSU grant shall be worth $40,000 based oncalculated using the closing price of the Company's$6.17 per share of our common stock on March 31, 2021. The value for option awards is calculated as the RSU grant date. Each RSU entitles the holder to receive shares of the Company's common stock upon vesting of those units. Each annual RSU vests in full upon the director's completion of one year of service measured from the date of the annual stockholders meeting to which the RSU relates. If a non-employee director joins the Board indifference between annual stockholder meetings, such director would receive an RSU for a pro rata portion of the annual grant, which RSU vests in full on the day before the next annual stockholders meeting.

2017 Director Compensation Table

        The following table sets forth a summary of the compensation earned in Fiscal 2017 by each non-employee director during that year:

Name
 Fees Earned
or Paid in
Cash ($)(1)
 Restricted
Stock Units
($)(2)
 Total ($) 

D. Kyle Cerminara

 $25,927 $49,531 $75,458 

Richard Char(3)

  27,750    27,750 

Kevin C. Daly, Ph.D

  49,250  39,997  89,247 

Scott E. Deeter

  3,548  39,997  43,545 

Gregory A. Miner(3)

  60,000    60,000 

Gerard M. Mooney

  45,438  39,997  85,435 

Thomas L. Thomas

  64,208  39,997  104,205 

Mikel H. Williams

  50,958  39,997  90,955 

(1)
Represents amounts earned by the directors based on the arrangement described above.

(2)
The dollar amounts shown represent the grant date fair value of restricted stock unit awards granted in Fiscal 2017 determined based on the closing market price of our common stock of $6.17 on March 31, 2021 and the grant date. Atexercise price per share of the end of Fiscal 2017,award multiplied by the above-listed directors held options for the following number of shares vesting. Actual amounts to be paid can only be determined at the time of common stock: Kevin C. Daly—70,000; Gregory A. Miner—70,000; Gerard M. Mooney—40,000;such named executive officer’s termination from the Company. These benefits do not include any amounts with respect to fully vested benefits under the DC Plan, which are described above under “Non-Qualified Deferred Compensation for Fiscal 2021” or our 401(k) Plan.
No Change in ControlChange in Control
Termination
Without
Cause or for
Good Reason
($)
Death
($)(1)
Disability
($)(2)
Termination
Without
Cause or for
Good Reason
($)
Death
($)(1)
Disability
($)(2)
Joe Bergera
Cash Severance(3)
$752,500$215,000$143,333$860,000$215,000$107,500
Medical Benefits(4)
13,04813,0484,34913,04813,0484,349
Equity Award Acceleration(5)
$62,712$62,7126,850,080449,654449,654
Estimated Total$765,548$290,760$210,394$7,723,128$677,702$561,503
Douglas L. Groves
Cash Severance(3)
$400,000$400,000
Medical Benefits(4)
13,04813,048
Equity Award Acceleration(5)
20,84820,848472,121149,468149,468
Estimated Total$413,048$20,848$20,848$885,169$149,468$149,468
Todd Kreter
Cash Severance(3)
$290,000$290,000
Medical Benefits(4)
7,7617,761
Equity Award Acceleration(5)
14,77714,777832,981104,398104,398

57


No Change in ControlChange in Control
Termination
Without
Cause or for
Good Reason
($)
Death
($)(1)
Disability
($)(2)
Termination
Without
Cause or for
Good Reason
($)
Death
($)(1)
Disability
($)(2)
Estimated Total$297,761$14,777$14,777$1,130,742$104,398$104,398
Ramin Massoumi
Cash Severance(3)
$280,000$280,000
Medical Benefits(4)
13,04813,048
Equity Award Acceleration(5)
14,77714,777494,249104,398104,398
Estimated Total$293,048$14,777$14,777$787,297$104,398$104,398
(1)
Only Mr. Bergera is entitled to cash termination benefits upon death. Amount includes Mr. Bergera’s 50% of Mr. Bergera’s annual base salary payable under his employment agreement. Each named executive officer is also eligible for certain accelerated vesting of outstanding equity awards in the event of death or permanent disability, as described in the narrative preceding this table.
(2)
Only Mr. Bergera is entitled to cash termination benefits upon Disability (as defined in Mr. Bergera’s employment agreement). Amounts assume continuation of base salary and Mikel H. Williams—60,000. At the endbenefit continuation coverage by Mr. Bergera for a total of Fiscal 2017, the above-listed directors held RSUsone hundred twenty (120) days.
(3)
Calculation of cash severance benefits for the following numbervarious termination scenarios is described in the narrative preceding this table. Only Mr. Bergera is entitled to a pro-rated portion of shares of common stock: Kyle Cerminara—8,146; Kevin C. Daly—8,146; Scott E. Deeter—6,606; Gerard M. Mooney—8,146; Thomas L. Thomas—8,146; and Mikel H. Williams—8,146.his target bonus established by the Compensation Committee.
(4)

(3)
No longer
Calculated based on the Boardpremiums payable to elect benefit continuation coverage by the named executive officer pursuant to COBRA for twelve (12) months and for the actual level of group medical, dental and vision coverage in effect as of December 16, 2016.March 31, 2021.

Compensation Committee Interlocks and Insider Participation(5)

        None

Each named executive officer is also eligible for certain accelerated vesting of outstanding equity awards in the event of a termination without cause or resignation for good reason within 18 months following a change in control as described in the narrative preceding this table. The acceleration of outstanding PSUs held by our named executive officers serves as a memberwas assumed to be at “target” levels for purposes of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee. No interlocking relationship exists between any member of the Board of Directors and any member of the compensation committee (or other committee performing equivalent functions) of any other company.

foregoing tables.

        Kevin C. Daly, Ph.D, a member of our compensation committee, previously served as our interim Chief Executive Officer from February 2015 to September 2015.

Indemnification of Directors and Officers

Under Section 145 of the Delaware General Corporation Law, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended.Act. Our certificate of incorporation and bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by law, and our bylaws require us to advance litigation expenses upon receipt of an undertaking by the director or officer to repay such advances ifofficer. If it is ultimately determined that the director or officer is not entitled to indemnification.indemnification, the director or officer is required to repay such advances. The bylaws further provide that rights conferred under such bylaws do not exclude any other right such persons may have or acquire under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors'directors’ fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director'sdirector’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director'sdirector’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.


58


We have entered into agreements to indemnify certain of our directors and officers in addition to the indemnification provided for in theour certificate of incorporation and bylaws. These agreements, among other things, indemnify such directors and officers for certain expenses (including attorneys'attorneys’ fees), judgments, fines and settlement amounts incurred by such person in any action or proceeding, including any action by or in the right of the Company, on account of services as a director or officer of Iteris, or as a director or officer of any other company or enterprise to which the person provides services at our request.

Compensation Risk AssessmentEquity

Compensation Plan Information

The Compensation Committee has evaluatedfollowing table summarizes information as of March 31, 2021 regarding shares of our compensation programs and policies as generally applicable to our employees to ascertain any potential material riskscommon stock that may be createdissued under our equity compensation plans, including the 2007 Omnibus Incentive Plan, the 2016 Omnibus Incentive Plan, ESPP and the Inducement Plan. Other than the Inducement Plan, each of these plans has been approved by our stockholders.
Plan Category
(a)
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(b)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(c)
Number of Securities
Remaining Available
for Future Issuance
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
Equity compensation plans approved by
security holders
5,527,483(1)$3.761,315,079(2)
Equity compensation plans not approved
by security holders(3)
179,914$2.98120,086
(1)
Includes 5,527,483 shares subject to outstanding stock option awards, 401,455 shares subject to outstanding RSU awards and 68,285 shares subject to outstanding PSUs (at “target” performance levels), as of March 31, 2021.
(2)
Includes 720,079 shares remaining available for issuance under the ESPP as of March 31, 2021, of which 720,079 shares were eligible to be purchased pursuant to the offering period in effect on such date.
(3)
On December 4, 2020, the Board of Directors approved the Inducement Plan in conjunction with the TrafficCast acquisition. The terms of the Inducement Plan are substantially similar to the terms of the Company’s 2016 Omnibus Incentive Plan with the exception that incentive stock options may not be granted under the Inducement Plan. The Inducement Plan was adopted by the compensation programs. Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.
The CompensationBoard initially reserved 300,000 shares of the Company’s common stock for issuance pursuant to awards granted under the Inducement Plan. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to an employee who has not previously been an employee or member of the Board or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, and only if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. No future awards will be issued under the Inducement Plan.

59


Proposal 4: Ratification of Selection Of Independent Registered Public Accounting Firm
The accounting firm of Deloitte & Touche LLP (“Deloitte”) has been engaged by our Audit Committee concludedto serve as our independent registered public accounting firm for the fiscal year ending March 31, 2022. Deloitte has been our principal independent registered public accounting firm since October 2015. Information regarding the services provided to us by Deloitte during Fiscal 2021 and Fiscal 2020 is set forth below under the heading entitled “Matters Related to Independent Registered Public Accounting Firm.”
We are asking our stockholders to ratify the selection by the Audit Committee of Deloitte as our independent registered public accounting firm to audit our consolidated financial statements for Fiscal 2022 and to perform other appropriate services. Although stockholder ratification of the selection of Deloitte as our independent registered public accounting firm is not required by our bylaws or otherwise, we are submitting the appointment of Deloitte to our stockholders for ratification at the Annual Meeting as a matter of good corporate governance and to provide a means by which our stockholders may communicate their opinion to the Audit Committee. In the event that the stockholders fail to ratify the appointment, the Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the committee feels that such a change would be in the best interests of the Company and our compensationstockholders.
A representative of Deloitte is expected to be present at the Annual Meeting, and that representative will have the opportunity to make a brief presentation to the stockholders if he or she so desires and is expected to be available to respond to appropriate questions from stockholders.
Vote Required
The affirmative vote of a majority of the common stock, present or represented by proxy and entitled to vote at the Annual Meeting, will be required for ratification of the selection of Deloitte as our independent registered public accounting firm for Fiscal 2022.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote “FOR” the ratification and approval of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for Fiscal 2022.

60


Matters Related To Independent Registered Public Accounting Firm
Fees Paid to Independent Registered Public Accounting Firm
The following table sets forth the fees we have paid to Deloitte in the following categories and amounts during Fiscal 2021 and Fiscal 2020:
Fee CategoryYear Ended March 31,
20212020
Audit fees$1,010,220$990,000
Audit related fees91,895107,000
Tax fees
All other fees
Total fees$1,102,115$1,097,000
Audit Fees.    Audit fees consist of fees billed for professional services rendered in connection with the audit of our overhead rate and the audit of our annual consolidated financial statements for the applicable fiscal year and review of our consolidated financial statements included in our quarterly reports on Form 10-Q, annual report on Form 10-K (and 10-K/A) and other regulatory filings for such fiscal year.
Audit Related Fees.   Audit related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements but are not reporting under “Audit Fees.” Audit related fees for Fiscal 2021 were related to the TrafficCast acquisition and the review of our registration statements on Form S-8 and Form S-3 and a subscription to Deloitte’s Accounting Research Tool. Audit related fees for Fiscal 2020 were related to the review of registration statements on Form S-3 and Form S-3/A, comfort letter services, and review of the transaction to sell the Company’s AWA segment to DTN.
Tax Fees.   Tax fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. There were no tax fees billed by Deloitte for Fiscal 2021 or Fiscal 2020.
All Other Fees.   There were no fees were billed by Deloitte in Fiscal 2021 or Fiscal 2020 for any other services.
Audit Committee Pre-Approval Policies and Procedures
All engagements for services by Deloitte or other independent registered public accountants are subject to prior approval by the Audit Committee; however, de minimis, non-audit services may instead be approved in accordance with applicable SEC rules. The prior approval of the Audit Committee was obtained for all services provided by Deloitte for Fiscal 2021 and Fiscal 2020.
The Audit Committee reviewed and discussed the services rendered by Deloitte during Fiscal 2021, as well as the fees paid for such services, and has determined that the provision of such services by Deloitte, and the fees paid for such services, were compatible with maintaining Deloitte’s independence.
Audit Committee Report
The following is the report of the Audit Committee with respect to the audited consolidated financial statements for the fiscal year ended March 31, 2021 included in the Annual Report.
Our management is responsible for the Company’s financial reporting process, including its systems of internal control over financial reporting, and for the preparation of its financial statements in accordance with generally accepted accounting principles. Our independent registered public accounting firm, Deloitte, is responsible for performing an independent audit of our consolidated financial statements and issuing opinions on the conformity of those audited financial statements with United States generally accepted accounting principles (“GAAP”) and the effectiveness of our internal control over financial reporting. The role and responsibility of the Committee is to monitor and oversee these financial processes on behalf of the Board.

61


The members of the Audit Committee are not employees of Iteris and are not, nor do they represent themselves to be, accountants or auditors by profession, and they do not undertake to conduct auditing or accounting reviews or procedures. Therefore, in performing the Audit Committee’s oversight role, the Audit Committee necessarily must rely on management’s representations that it has maintained appropriate accounting and financial reporting principles and policies, and practices, taken as a whole, are not reasonably likelyappropriate internal control over financial reporting and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations, and that the Company’s financial statements have a material adverse impact on our business or our financial condition. The following compensation design features help minimize the incentives for excessive risk-taking:

    Our base pay programs consist of generally competitive salary rates that represent a reasonable portion of total compensationbeen prepared with integrity and provide a reliable level of income on a regular basis, which decreases incentiveobjectivity and in conformity with GAAP, and on the partrepresentations of our executives to take unnecessary or imprudent risks;

    A portion of each executive's incentive compensation opportunity is tied to long-term incentive compensation that emphasizes sustained performance over time. This reduces any incentive to take risks that might increase short-term compensation atindependent registered public accounting firm included in its reports on the expense of longer term results; and
Company’s financial statements.

    Annual equity awards have multi-year vesting which alignsIn this context, the long-term interests of our executives with those of our stockholders and, again, discourages the taking of short-term risk at the expense of long-term performance.

    Each officer has multiple performance objectives, some of which relate to the CompanyAudit Committee hereby reports as a whole, which is more difficult for an officer to manipulate.

Compensation Committee Report

follows:

1.   The CompensationAudit Committee has reviewed and discussed our consolidated audited financial statements with managementour management.
2.   The Audit Committee has discussed with the discussion and analysisindependent registered public accounting firm the matters required to be discussed by the applicable requirements of the compensationPublic Company Accounting Oversight Board (the “PCAOB”) and SEC.
3.   The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of our named executive officers as disclosed under the heading "Compensation DiscussionPCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and Analysis."the Audit Committee has discussed with the independent registered public accounting firm its independence.
4.   Based on thisthe review and discussion,discussions referred to above in this report, the CompensationAudit Committee has recommended to the Company’s Board, of Directorsand the Board approved, that the Compensation Discussion and Analysisconsolidated audited financial statements be included in this Proxy Statementour Annual Report on Form 10-K for the 2017 Annual Meeting.

year ended March 31, 2021 for filing with the SEC.
      The information contained in the foregoing Audit Committee Report is not “soliciting material” and is not deemed filed with the SEC. Such report is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof, and irrespective of any general incorporation language in any such filing.
Submitted by the Audit Committee
of the Board of Directors:
Gerard M. Mooney
Laura L. Siegal
Dennis W. Zank (Chairman)
D. Kyle Cerminara
Kevin C. Daly, Ph.D
Thomas L. Thomas (Chairman)

62



Stock OPRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
wnership of

Certain Beneficial Owners and Management

The following table sets forth, as of September 11, 2017,July 13, 2021, the number and percentage ownership of our common stock by (i) all persons known to us to beneficially own more than 5% of the outstanding common stock, (ii) each of the named executive officers, (iii) each of our directors, and (iv) all of our executive officers and directors as a group. To our knowledge, except as otherwise indicated, each of the persons named in this table has sole voting and investment power with respect to the common stock shown as beneficially owned, subject to community property and similar laws, where applicable.

Name and Address of Beneficial Owner(1)
Common Stock
Amount and Nature
of Beneficial
Ownership(2)
Percent of
Class(2)
Black Rock, Inc.(3)
3,073,1017.3%
Royce & Associates, LP(4)
2,734,3316.5
The Vanguard Group(5)
2,308,8135.5
Cowen Prime Advisors(6)
2,140,0925.06
Joe Bergera(7)
1,755,2164.25
Douglas L. Groves(8)
65,555*
Todd Kreter(9)
262,190*
Ramin Massoumi(10)
240,921*
Anjali Joshi(11)
11,750*
Gerard M. Mooney(12)
47,557*
Luke P. Schneider(13)
10,878*
Laura L. Siegal(14)
42,416*
Thomas L. Thomas(15)
175,417*
Dennis W. Zank(16)
14,424*
All executive officers and directors as a group (10 persons)(17)
2,385,4035.64%
 
 Common Stock 
Name and Address of Beneficial Owner(1)
 Amount and
Nature of
Beneficial
Ownership(2)
 Percent of
Class(2)
 

Lloyd I. Miller, III(3)

  4,980,759  15.3%

Fundamental Global Investors, LLC and RELM Wireless Corporation(4)

  2,126,948  6.5 

Joe Bergera(14)

  
337,500
  
1.0
 

Andrew Schmidt(5)

  87,500  * 

Thomas N. Blair(9)

  68,750  * 

Todd Kreter(6)

  141,111  * 

Ramin Massoumi(7)

  64,175  * 

D. Kyle Cerminara(4)

  2,137,669  6.6 

Kevin C. Daly, Ph.D(8)

  483,232  1.5 

Scott E. Deeter

     

Gerard M. Mooney(10)

  40,000  * 

Thomas L. Thomas(11)

  124,000  * 

Mikel H. Williams(12)

  70,000  * 

All executive officers and directors as a group (13 persons)(13)

  
1,427,019
  
4.3

%

*
*
Less than 1%.
(1)

(1)
The address of each of the directors and officers is 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705.
(2)

(2)
Based on 32,566,21042,281,621 shares of common stock outstanding as of September 11, 2017.July 13, 2021. Shares of common stock subject to options or warrants which are exercisable within 60 days of July 15, 2017 are13, 2021 deemed to be beneficially owned by the person holding such options or warrants for the purpose of computing the percentage of ownership of such person but are not treated as outstanding for the purpose of computing the percentage of any other person. Other than as described in the preceding sentence, shares issuable upon exercise of outstanding options and warrants are not deemed to be outstanding for purposes of this calculation. In addition to the shares held in the individual'sindividual’s name, the number of shares indicated also includes shares held for the benefit of the named person under our 401(k) plan.
(3)

(3)
Pursuant to an amendment to a Schedule 13G/A filed on January 30, 201729, 2021 with the SEC, Mr. MillerBlackRock, Inc. reported that asthrough the following subsidiaries, it has sole dispositive power with respect to 3,102,725 shares and sole voting power with respect to 3,073,101 shares: BlackRock Advisors, LLC, BlackRock Fund Advisors; BlackRock Institutional Trust Company, National Association; BlackRock Financial Management, Inc. and BlackRock Investment Management, LLC. The address for BlackRock Inc. is 55 East 52nd Street, New York, NY 10005.
(4)
Pursuant to a Schedule 13G filed on January 27, 2021 with the SEC, Royce & Associates, LP reported through one or more investment companies or other managed accounts that are investment management clients of December 31, 2016, he hadRoyce & Associates, LP, an indirect majority owned subsidiary of Franklin Resources, Inc.,

63


it has sole dispositive and voting power with respect to 4,827,822 shares as (i) the manager of a limited liability company that2,734,331 shares. The address for Royce & Associates, LP is the general partner of certain limited partnerships, (ii) the manager of a limited liability company that is the adviser to certain trusts, (iii) the manager of a limited liability company, (iv) trustee745 Fifth Avenue, New York, NY 10151.
(5)
Pursuant to a certain grantor retained annuity trustSchedule 13G filed on February 10, 2021 with the SEC, The Vanguard Group, Inc. reported that it directly and (v) an individual. As of such date, Mr. Miller also hadthrough its wholly-owned subsidiary, Vanguard Fiduciary Trust Company, has shared dispositive and voting power with respect to 152,93780,065 shares, as (x) an advisor to the trustee of a certain trust and (y) an agent under a general durablesole dispositive power of attorney with respect to 2,213,988 shares

    held in a trust account. and shared dispositive power with respect to 94,825 shares. The address for Mr. MillerThe Vanguard Group, Inc. is 3300 South Dixie Highway, Suite 1-365, West Palm Beach, Florida 33405.

(4)
100 Vanguard Boulevard, Malvern, PA 19355.
(6)
Pursuant to a Schedule 13D13G filed on February 4, 2020 with the SEC, on February 26, 2016, as amended on July 5, 2016, July 8, 2016, August 3, 2016, June 20, 2017 and August 22, 2017 (i) Fundamental Global Partners, LP,Cowen Prime Advisors, a Delaware limited partnership ("FGPP"); (ii) Fundamental Global Partners Master Fund, LP, a Cayman Islands exempted limited partnership ("FGPM"); (iii) Fundamental Global Investors,division of Cowen Prime Services LLC, a North Carolina limited liability company ("FGI"); (iv) FGI Funds Management, LLC, a Florida limited liability company; (v) Joseph H. Moglia; (vi) D. Kyle Cerminara; (vii) Lewis M. Johnson; (viii) RELM Wireless Corporation, a Nevada corporation ("RELM"); and (ix) Tactical Capital Investments LLC, a Delaware limited liability company and a wholly-owned subsidiary of RELM, reported that, asthrough its various clients, it has shared dispositive power with respect to 2,140,092 shares. The address for Cowen Prime Advisors is 599 Lexington Avenue, Floor 21, New York, NY 10022.
(7)
Consists of August 22, 2017, they beneficially owned in the aggregate 2,126,948(i) 92,716 shares of Iteris' common stock, of which 261,231, 250,789, and 1,614,928 shares are held directly by FGPP, FGPMMr. Bergera and RELM, respectively. Of the shares attributed to RELM, 100 shares are held by RELM of record; the remaining shares held by RELM are in an account that is managed by CWA Asset Management Group, LLC (doing business as "Capital Wealth Advisors"). Share purchases by RELM were made through Tactical Capital Investments LLC. In addition, as reported in its Schedule 13-D, CWA Asset Management Group, LLC, which is 50% owned by FGI, held 99,578 shares for account of individual investors. Mr. Cerminara directly held 2,605 shares and 8,146 RSUs (all of which will accelerate and become vested at the Annual Meeting).

FGI may be deemed to beneficially own the shares of common stock disclosed as directly owned by FGPP and FGPM. As principals of FGI, Messrs. Cerminara, Johnson and Moglia may be deemed to beneficially own the shares of common stock disclosed as directly owned by FGPP and FGPM. FGI Funds Management, LLC, as the investment manager to FGPP and FGPM as the relying manager to FGI, may be deemed to beneficially own the shares of common stock disclosed as directly owned by FGPP and FGPM. As principals of FGI Funds Management, LLC, Messrs. Cerminara and Johnson may be deemed to beneficially own the shares of common stock disclosed as directly owned by FGPP and FGPM. FGI and its affiliates, as the largest stockholder of RELM, may be deemed to beneficially own the shares of common stock disclosed as directly owned by RELM. As principals of FGI and directors of RELM, Messrs. Cerminara and Johnson may be deemed to beneficially own the shares of common stock disclosed as directly owned by RELM. Messrs. Cerminara, Johnson and Moglia expressly disclaim such beneficial ownership. FGI expressly disclaims beneficial ownership of the shares of common stock held by RELM.

Each of FGPP and FGPM beneficially owns, and has the shared power to direct the voting and disposition of, the shares of common stock disclosed as beneficially owned by it. FGI has the shared power to direct the voting and disposition of the shares of common stock held by FGPP and FGPM. FGI Funds Management, LLC, as the investment manager of FGPP and FGPM as the relying manager to FGI, has the shared power to direct the voting and disposition of the shares of common stock held by FGPP and FGPM. Messrs. Cerminara and Johnson, as principals of FGI Funds Management, LLC, may be deemed to have the shared power to direct the voting and disposition of the shares of common stock held by FGPP and FGPM. Messrs. Cerminara, Johnson and Moglia, as principals of FGI, may be deemed to have the shared power to direct the voting and disposition of the shares of common stock held by FGPP and FGPM. RELM beneficially owns, and has the shared power to direct the voting and disposition of, the shares of common stock disclosed as beneficially owned by it. As principal of FGI and directors of RELM, Messrs. Cerminara and Johnson, and FGI may be deemed to have the shared power to direct the voting and disposition of the shares of common stock held by RELM.

The principal business addresses of the various entities and persons are as follows: (i) RELM and Tactical Capital Investments LLC: 7100 Technology Drive, West Melbourne, Florida 32904;


    (ii) FGPP, FGI and Mr. Moglia: 4201 Congress Street, Suite 140, Charlotte, North Carolina 28209; (iii) FGPM: c/o Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104 Cayman Islands; (iv) FGI Funds Management, LLC: 9130 Galleria Court, Third Floor, Naples, Florida 34109; (v) Mr. Cerminara: c/o Fundamental Global Investors, LLC, 4201 Congress Street, Suite 140, Charlotte, North Carolina 28209; c/o Ballantyne Strong, Inc., 11422 Miracle Hills Drive, Suite 300, Omaha, Nebraska 68154; and 131 Plantation Ridge Dr., Suite 100, Mooresville, North Carolina 28117; and (vi) Mr. Johnson: c/o CWA Asset Management Group, LLC, 9130 Galleria Court, Third Floor, Naples, Florida 34109, and c/o Fundamental Global Investors, LLC, 4201 Congress Street, Suite 140, Charlotte, North Carolina 28209.

(5)
Consists of 87,5001,662,500 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after September 11, 2017.July 13, 2021.
(8)

(6)
Includes 92,500
Consists of (i) 10,000 shares issuable upon exerciseheld in a trust, of options that are currently exercisable or will become exercisable within 60 days after September 11, 2017.

(7)
Includeswhich Mr. Groves is a trustee, (ii) 5,555 shares held in the ESPP, and (iii) 50,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after September 11, 2017.July 13, 2021.
(9)

(8)
Consists of (i) 412,01983,132 shares held directly by the Daly Family Trust, of which Dr. Daly is a trustee,Mr. Kreter, (ii) 6,113308 shares held in an individual retirement account by Dr. Daly's IRA,Mr. Kreter, and (iii) 100 shares held by Dr. Daly's spouse; and (iv) 65,000178,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after September 11, 2017.July 13, 2021.
(10)

(9)
Includes 18,750
Consists of (i) 27,996 shares held directly by Mr. Massoumi, (ii) 31,624 shares held in a trust, of which Mr. Massoumi is a trustee, (iii) 2,551 shares are held in Mr. Massoumi’s 401(k) plan, and (iv) 178,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after September 11, 2017.July 13, 2021.
(11)

(10)
Consists of 40,000(i) 2,181 shares held directly by Ms. Joshi and (ii) 9,569 shares subject to RSUs that vest within 60 days after July 13, 2021.
(12)
Consists of (i) 37,988 shares held directly by Mr. Mooney and (ii) 9,569 shares subject to RSUs that vest within 60 days after July 13, 2021.
(13)
Consists of (i) 1,309 shares held directly by Mr. Schneider and (ii) 9,569 shares subject to RSUs that vest within 60 days after July 13, 2021.
(14)
Consists of (i) 32,847 shares held directly by Ms. Siegal and (ii) 9,569 shares subject to RSUs that vest within 60 days after July 13, 2021.
(15)
Consists of (i) 48,702 shares held directly by Mr. Thomas, (ii) 117,146 shares held by Mr. Thomas’s Trust, and (iii) 9,569 shares subject to RSUs that vest within 60 days after July 13, 2021.
(16)
Consists of (i) 4,855 shares held directly by Mr. Zank and (ii) 9,569 shares subject to RSUs that vest within 60 days after July 13, 2021.
(17)
Includes (i) 2,070,000 shares issuable upon exercise of options held by the executive officers and directors as a group that are currently exercisable or will become exercisable within 60 days after September 11, 2017.

(11)
Consists of (i) 15,000 shares held directly by Mr. ThomasJuly 13, 2021 and (ii) 109,00047,845 shares subject to RSUs held by Mr. Thomas's IRA.

(12)
Includes 60,000 shares issuable upon exercise of optionsthe executive officers and directors as a group that are currently exercisable or will become exercisablevest within 60 days after September 11, 2017.of July 13, 2021.

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(13)
Includes 759,396 shares issuable


Environmental, Social, Governance and Related Matters
We believe that leadership in ethical, environmental, social and governance practices and related matters will have a positive impact on our business, employees, customers and communities we serve. Accordingly, we adopted policies and practices that help us to implement these standards.
Code of Ethics and Business Conduct
Our Board has adopted a Code of Ethics and Business Conduct (“Code of Ethics”), which applies to all directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) and employees. The full text of our Code of Ethics is available under the “Corporate Governance” heading on the Investor Relations section of our website at www.iteris.com. We will also provide an electronic or paper copy of the Code of Ethics, free of charge, upon exerciserequest made to our Corporate Secretary. If any substantive amendments are made to our Code of optionsEthics, or if any waiver (including any implicit waiver) of any provision of the Code of Ethics is granted that is required to be disclosed under the rules of the SEC, such amendment or waiver will be disclosed at the same location on our website, or, if required, in a current report on Form 8-K.
Environmental, Social and Governance Practices
Environmental, social and governance (“ESG”) practices are currently exercisablebecoming increasingly important to our stockholders, customers, and employees and our Board supports Iteris in pursuing thriving communities. In June 2020, our Board adopted an Environmental Policy and Human Rights Policy to further our commitment to continually improve how Iteris operates. In November 2020, our Board ratified our Occupational Health and Safety Policy Statement to support safety practices and maintaining a healthy work environment. In December 2020, our Board ratified our Policy Statement Against Trafficking in Persons and Slavery to instill a climate of full compliance with laws concerning prohibitions of trafficking in persons, including implementing a standard annual mandatory training program on anti-slavery and human trafficking to employees. The full text of our Environmental Policy, Human Rights Policy, Occupational Health and Safety Policy, and Statement Against Trafficking in Persons and Slavery are available under the “Corporate Governance” heading on the Investor Relations section of our website at www.iteris.com.
Supply Chain Responsibility
We are committed to advancing supply chain responsibility by reducing risk, improving product quality, and raising overall performance of our suppliers. In furtherance of this commitment, in December 2020 our Board ratified our Conflict Minerals Policy Statement to support preventing profits from the sale of tantalum, tin, tungsten, and gold from funding conflict in the Democratic Republic of the Congo and adjoining countries. The full text of our Conflict Minerals Policy Statement is available under the “Corporate Governance” heading on the Investor Relations section of our website at www.iteris.com.
Diversity and Inclusion
Consistent with our core values, we promote diversity and inclusion in every aspect of our business. We are an equal opportunity employer and make employment decisions on the basis of merit. We administer all phases of our employment practices without regard to race, religious creed, color, national origin, ancestry, disability, sex, gender, gender identity, gender expression, sexual orientation, transgender identity, age, military or will become exercisable within 60 days after September 11, 2017.

(14)
Includes 337,500 shares issuable upon exerciseveteran status, or any other consideration made unlawful by law. Additionally, as a contractor for the United States Government, we develop and implement an affirmative action plan to (1) assess our inclusion of options thatwomen, members of minority groups, protected veterans, and individuals with disabilities into our workforce, (2) establish goals for increased inclusion and (3) implement strategies to reach those goals. In furtherance of these values, our Board has adopted the Diversity and Inclusion Policy to promote encouragement to develop our employees to their full potential and utilize their unique talents. The full text of our Diversity and Inclusion Policy is available under the “Corporate Governance” heading on the Investor Relations section of our website at www.iteris.com.

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Investment in our Employees
There are currently exercisable or will become exercisable within 60 days after September 11, 2017.

Equity Compensation Plans

        The following tableseveral programs we implemented and maintain for the financial and educational well-being of our employees and their families. For example, we have an Employee Stock Purchase Plan (“ESPP”), which provides information asemployees with the opportunity to share in the ownership of March 31, 2017 with respect toIteris and its performance through the purchase of shares of our common stock that may be issued under existing equity compensation plans.

Plan Category
 Number of
Securities to
be Issued Upon
Exercise of
Outstanding
Options
 Weighted Average
Exercise Price of
Outstanding
Options
 Number of Securities
Remaining Available For
Future Issuance under
Equity Compensation
Plans (excluding some
securities reflected
in first column)
 

Equity Compensation Plans Approved by Security Holders

          

2007 Omnibus Incentive Plan                        

  3,035,125(1)$2.15(2)  

2016 Omnibus Incentive Plan          

  972,976(3)$4.92(4) 2,443,382 

Equity Compensation Plans Not Approved by Security Holders

          

None

          

Total

  4,008,101(1)(3)$2.76(2)(4) 2,443,382 

(1)
Includes 93,125the Company’s stock. ESPP allows eligible employees to accumulate contributions through after-tax payroll deductions to purchase shares of our commonIteris stock subject to RSUs that entitleat a 5% discount. Our 401(k) plan has an 91.4% participation rate among eligible employees, with annual training and monthly educational sessions held at each holder to one shareIteris location. Finally, we have developed and implemented the Iteris leadership development program which is facilitated by an independent management consulting firm. In Fiscal 2021, there were 15 graduates from the program and we anticipate a similar number of common stock for each such unit, which vests over the holder's period of continued service.

(2)
Calculated without taking into account the 93,125 shares of common stock subject to outstanding RSUs that become issuable as those units vest, without the payment of any additional consideration or exercise price.

(3)
Includes 138,476 shares of our common stock subject to RSUs that entitle each holder to one share of common stock for each such unit, which vests over the holder's period of continued service.

(4)
Calculated without taking into account the 138,476 shares of common stock subject to outstanding RSUs that become issuable as those units vest, without the payment of any additional consideration or exercise price.
graduates in Fiscal 2022.

Additional Matters


Certain Transactions with Related Persons
CERTAIN TRANSACTIONS

Since April 1, 2014,2020, other than the agreements and transactions described in "Item 11. Executive Compensation"“Executive Compensation and the transactions described below,Other Matters” above, there has not been, nor is there any proposed transaction, where we (or any of our subsidiaries) were or will be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two fiscal years and in which any director, director nominee, executive officer, holder of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.

        We previously subleased office space to Maxxess Systems, Inc. ("Annual ReportMaxxess"), one of our former subsidiaries that we sold in September 2003 and is currently owned by an investor group that includes one of our directors, who is also a director of Maxxess and previously served as its CEO. The sublease terminated in September 2007, at which time Maxxess owed us an aggregate of $274,000. Maxxess executed a promissory note for such amount, which was subsequently amended and restated on July 23, 2013. The amended and restated note bears interest at a rate of 6% per annum, compounded annually, with accrued interest payable quarterly on the first business day of each calendar quarter. Maxxess continues to pay down the balance of this note by providing consulting services to Iteris, although we have previously fully reserved for amounts owed to us by Maxxess and the outstanding principal balance remains fully reserved. As of March 31, 2017, approximately $146,000 of the original principal balance was outstanding and payable to Iteris.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of a registered class of our securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Based solely on a review of copies of such forms received with respect to Fiscal 2017 and the written representations received from certain reporting persons that no other reports were required, we believe that all directors, officers and persons who own more than 10% of our Common Stock have complied with the reporting requirements of Section 16(a), except that the following two Form 4 reports were filed late during Fiscal 2017: (i) Mr. Kreter sold 28,252 shares on March 16, 2017 and the Form 4 was filed on April 5, 2017; and (ii) Mr. Massoumi sold 2,000 shares on February 22, 2017 and the Form 4 was filed on February 27, 2017.


ANNUAL REPORT

A copy of our Annual Report (excluding the exhibits thereto) accompanies the proxy materials being mailed to all stockholders. The Annual Report is not incorporated into this proxy statement and is not considered proxy solicitation material. Stockholders may obtain a copy of the Annual Report and any of our other filings with the SEC, without charge, by writing to Investor Relations, Iteris, Inc., 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705. The Annual Report (including the exhibits thereto) is also available on the SEC'sSEC’s website at www.sec.gov.


Delivery of Documents to Stockholders Sharing an Address
Some street name holders of our common stock may be “householding” our proxy statements and annual reports, which means that we will deliver only one copy of our proxy statement and annual report to multiple stockholders who share the same address (if they appear to be members of the same family), unless we have received instructions to the contrary. This procedure reduces our printing and mailing costs and related fees. Upon request, we will promptly deliver a separate copy of either document to you if you write us at our corporate offices at Iteris, Inc., 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705, Attention: Corporate Secretary, Telephone: (949) 270-9400. You may also contact us or your Nominee if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Deadline for Receipt of Stockholder Proposals

Stockholders may present proposals for action at a future meeting or nominate persons for the election of directors only if they comply with the requirements of the proxy rules established by the SEC and our bylaws. Pursuant to Rule 14a-8 of the Exchange Act, some stockholdersstockholder proposals may be eligible for inclusion in our proxy statement for the 20182022 Annual Meeting of Stockholders (the "2018“2022 Annual Meeting"Meeting”). Stockholder proposals that are intended to be presented at our 20182022 Annual Meeting and included in the proxy statement, form of proxy and other proxy solicitation materials related to that meeting must be received by us not later than June 1, 2018.

March 31, 2022.

If a stockholder wishes to submit a proposal which is not intended to be included in our proxy statement under Rule 14a-8 of the Exchange Act, or wishes to nominate a person as a candidate for election to the Board, the proposal or nomination must be received by us on or between JulyMay 12, 2022 and June 11, 2018, 2018 and August 10, 2018.


66


2022. If the date of the 20182022 Annual Meeting of Stockholders is called for a date that is not within 30 days before or after the anniversary date of the 20172021 Annual Meeting of Stockholders, (a situation that we do not anticipate), then the stockholder must submit any such proposal or nomination not later than the close of business of the 10th day following the earlier of (i) the day on which the notice of the meeting was mailed or (ii) public disclosure of the date of such meeting is first made. Stockholders are advised to review our bylaws which contain these advance notice requirements with respect to advance notice of stockholder proposals and director nominations.

In addition, with respect to any proposal that a stockholder presents at the 20182022 Annual Meeting that is not submitted for inclusion in our proxy materials pursuant to Rule 14a-8 under the Exchange Act, the proxy solicited by the Board of Directors for such annual meeting will confer discretionary voting authority to vote on such stockholder proposal to the extent permitted under Rule 14a-4 under the Exchange Act.

Stockholder proposals must be in writing and should be addressed to our corporateCorporate Secretary, at our principal executive offices at 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705. It is recommended that stockholders submitting proposals direct them to our corporateCorporate Secretary and utilize certified mail, return receipt requested in order to provide proof of timely receipt. The presiding officer of the 20182021 Annual Meeting reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements, including conditions set forth in our bylaws and conditions established by the SEC.


Other Matters
OTHER BUSINESS

The Board of Directors is not aware of any other matter which will be presented for action at the Annual Meeting other than the matters set forth in this proxy statement. If any other matter requiring a vote of the stockholders arise, it is intended that the proxy holders will vote the shares they represent as the Board of Directors may recommend. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy card.

THE BOARD OF DIRECTORS OF
ITERIS, INC.
Santa Ana, California
July 27, 2021

Santa Ana, California
September 25, 2017


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Appendix

A

Iteris, Inc.
2016 Omnibus Incentive Plan
(Amended and RAppendix estated Effective September 9, 2021)
Article 1
General Provisions
1.1
ITERIS, INC. EMPLOYEE STOCK PURCHASE
PURPOSE OF THE PLAN

        1.    Purpose.This Iteris, Inc. ("Company") Employee Stock Purchase2016 Omnibus Incentive Plan (the "Plan"Plan) is intended to provide employeespromote the interests of Iteris, Inc., a Delaware corporation, by providing eligible persons in the Company and its Participating SubsidiariesCorporation’s service with anthe opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the CompanyCorporation as an incentive for them to remain in such service.
The Plan serves as the successor to the Corporation’s 2007 Omnibus Incentive Plan (the “Predecessor Plan”), and no further awards shall be made under the Predecessor Plan on or after the Original Plan Effective Date. All awards outstanding under the Predecessor Plan on the Original Plan Effective Date shall remain outstanding under the Predecessor Plan and shall be governed solely by the terms of the documents evidencing such award, and no provision of the Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such awards.
Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.
1.2
TYPES OF AWARDS
Awards may be made under the Plan in the form of (i) options, (ii) stock appreciation rights, (iii) stock awards, (iv) restricted stock units, (v) cash incentive awards and (vi) dividend equivalent rights.
1.3
ADMINISTRATION OF THE PLAN
(a)   The Compensation Committee shall have sole and exclusive authority to administer the Plan with respect to Section 16 Insiders. Administration of the Plan with respect to all other persons eligible to participate in the Plan may, at the Board’s discretion, be vested in the Compensation Committee or a Secondary Board Committee, or the Board may retain the power to administer those programs with respect to such persons. To the extent permitted by law, the Board or the Compensation Committee may delegate any or all of its authority to administer the Plan with respect to one or more classes of eligible persons (other than Section 16 Insiders) to one or more officers of the Corporation.
(b)   Members of the Compensation Committee or any Secondary Board Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Board Committee and reassume all powers and authority previously delegated to such committee.
(c)   Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full authority to determine (i) which eligible persons are to receive Awards under the Plan, (ii) the type, size, terms and conditions of the Awards to be made to each Participant, (iii) the time or times when those Awards are to be made, (iv) the number of shares or amount of payment to be covered by each such Award, (v) the time or times when the Award is to become exercisable, (vi) the status of an option for federal tax purposes, (vii) the maximum term for which an Award is to remain outstanding, (viii) the vesting and issuance schedules applicable to the shares which are the subject of the Award, (ix) the cash consideration (if any) payable for those shares and the form (cash or shares of Common Stock) in which the Award is to be settled, (x) the vesting schedule for a cash incentive award, and (xi) with respect to performance-based Awards, the performance objectives for each such Award, the amounts payable at designated levels of attained performance, any applicable service vesting requirements, and the payout schedule for each such Award.
(d)   Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations

A-1


as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the provisions of the Plan and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Plan under its jurisdiction or any Award thereunder.
(e)   Service as a Plan Administrator by the members of the Compensation Committee or the Secondary Board Committee shall constitute service as Board members, and the members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Compensation Committee or the Secondary Board Committee shall be liable for any act or omission made in good faith with respect to the Plan or any Award thereunder.
1.4
ELIGIBILITY
(a)   The persons eligible to participate in the Plan are as follows:
(i)   Employees,
(ii)   Non-Employee Directors and non-employee members of the board of any Parent or Subsidiary, and
(iii)   consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary) who can be granted an Award that is eligible to be registered on a Form S-8 Registration Statement.
1.5
STOCK SUBJECT TO THE PLAN
(a)   The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. Subject to the add back provisions of Section 1.5(h) and adjustment pursuant to Section 1.5(j), the number of shares reserved for issuance under the Plan shall be 9,263,602. The share reserve is comprised of (i) 3,400,108 shares, representing the share reserve available on the Original Plan Effective Date (after taking into account Awards granted under the Predecessor Plan after July 22, 2016 and prior to the Original Plan Effective Date), (ii) the 103,494 shares added to the Plan as a result of the expiration, cancellation, forfeiture or termination of Awards under the Predecessor Plan after the Original Plan Effective Date; (iii) the 2,400,000-share increase approved by the Board on August 6, 2018 and by the Company’s stockholders on October 11, 2018 at the 2018 Annual Stockholders Meeting; and (iv) the 3,360,000-share increase approved by the Board on July 15, 2021, subject to stockholder approval at the 2021 Annual Stockholders Meeting.
(b)   Subject to adjustment pursuant to Section 1.5(j), the maximum number of shares of Common Stock that may be issued pursuant to Incentive Options granted under the Plan shall be 10,000,000.
(c)   The maximum number of shares of Common Stock for which options and stock appreciation rights that are settled in shares may be granted to any person under the Plan in any fiscal year shall not exceed 2,000,000 shares of Common Stock in the aggregate.
(d)   The maximum number of shares of Common Stock for which Awards (other than options and stock appreciation rights that are settled in shares) may be granted to any person under the Plan in any fiscal year shall not exceed 2,000,000 shares of Common Stock (which limit shall refer to the maximum amount that can be earned) in the aggregate.
(e)   During any fiscal year no Participant may be granted cash incentive awards under which a total of more than $3,000,000 may be earned for each twelve (12) months in the performance period.
(f)   The maximum aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards made to any Non-Employee Director under the Plan in any fiscal year, taken together with any cash payments (including the annual retainer and any other compensation) paid to such Non-Employee Director in respect of such fiscal year, shall not exceed $350,000 in total value.

A-2


(g)   The number of shares of Common Stock reserved for award and issuance under this Plan pursuant to Section 1.5(a) shall be reduced on a one-for-one basis for each share of Common Stock subject to an option or stock appreciation right and by a fixed ratio of 1.52 shares of Common Stock for each share of Common Stock subject to a Full Value Award.
(h)   Shares of Common Stock subject to outstanding Awards or awards granted under the Predecessor Plan that are outstanding s of the Restated Plan Effective Date shall be available for subsequent award and issuance under the Plan to the extent those Awards or Predecessor Plan awards expire, are forfeited or cancelled or terminate for any reason prior to the issuance of the shares of Common Stock subject to those Awards or Predecessor Plan awards. Any shares that again become available for Awards under the Plan pursuant to this Section shall be added as (i) one (1) share for every one (1) share subject to options or stock appreciation rights granted under the Plan and the Predecessor Plan, (ii) as 1.52 shares for every one (1) share subject to Awards other than options or stock appreciation rights granted under the Plan and the Predecessor Plan, and (iii) for each unvested share issued under the Plan and the Predecessor Plan for cash consideration not less than the Fair Market Value per share of Common Stock on the date of grant and subsequently repurchased by the Corporation, at a price per share not greater than the original issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan and Predecessor Plan, as applicable, one share shall become available for subsequent award and issuance under the Plan.
(i)   Should the exercise price of an option or any withholding taxes incurred in connection with the exercise of an option under the Plan (or any options granted under the Predecessor Plan) be paid with shares of Common Stock (whether through the purchasewithholding of a portion of the otherwise issuable shares or through the tender of actual outstanding shares), then in each such case, the shares so tendered or withheld shall be added to the shares of Common Stock available for grant under the Plan on a one-for-one basis. Upon the exercise of any stock appreciation right under the Plan, the share reserve shall be reduced only by the net number of shares issued upon such exercise and not by the gross number of shares as to which such right is exercised. If shares of Common Stock are withheld by the Corporation, or if shares of Common Stock are tendered by the Participant, in either case, in satisfaction of the withholding taxes incurred in connection with the vesting or settlement of a Full Value Award (or an award other than a stock option or stock appreciation right that was granted under the Predecessor Plan), then in each such case the shares of Common Stock so tendered or withheld shall be added to the shares of Common Stock available for issuance under the Plan in accordance with the ratio described in Sections 1.5(h) above.
(j)   Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation, reincorporation or other reorganization, then equitable adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one person may be granted options and stock appreciation rights that are settled in shares under the Plan in any fiscal year, (iii) the maximum number and/or class of securities for which any one person may be granted Awards (other than options and stock appreciation rights that are settled in shares) under the Plan in any fiscal year, (iv) the maximum number and/or class of securities that may be issued pursuant to Incentive Options, (v) the number and/or class of securities and the exercise or base price per share in effect under each outstanding Award under the Plan and the consideration (if any) payable per share, and (vi) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. The adjustments shall be made in such manner as the Plan Administrator deems appropriate and such adjustments shall be final, binding and conclusive. In addition, in the event of a Change in Control, the provisions of Section 2.7 shall apply.
(k)   Outstanding Awards granted pursuant to the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
(l)   Substitute Awards shall not reduce the shares authorized for issuance under the Plan or the limitations on grants to a Participant under Section 1.5(c) or 1.5(d), nor shall shares subject to a terminated,

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cancelled or forfeited Substitute Award be added to the shares available for issuance under the Plan as provided above. Additionally, in the event that a company acquired by the Company or any Subsidiary (or Parent) or with which the Company or any Subsidiary (or Parent) combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares authorized for issuance under the Plan (and shares subject to such Awards shall not be added to the shares available for issuance under the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Non-Employee Directors prior to such acquisition or combination. For purposes of this section, “Substitute Awards” shall mean Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary (or Parent) or with which the Company or any Subsidiary (or Parent) combines.
Article 2
Awards
2.1
OPTIONS
(a)   Authority.   The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant Incentive Options and Non-Statutory Options evidenced by an Award Agreement in the form approved by the Plan Administrator; provided, however, that the terms of each such agreement shall not be inconsistent with the terms specified below. Each agreement evidencing an Incentive Option shall, in addition, be subject to the provisions of Section 2.1(f) below.
(b)   Exercise Price.
(i)   The exercise price per share shall be fixed by the Plan Administrator; provided, however, that such exercise price shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the grant date.
(ii)   The exercise price shall be payable in one or more of the following forms as determined by the Plan Administrator and specified in the Award Agreement:
(A)   cash or check made payable to the Corporation,
(B)   shares of Common Stock (whether delivered in the form of actual stock certificates or through attestation of ownership) held for the requisite period (if any) necessary to avoid any resulting charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date,
(C)   shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the exercise date, or
(D)   to the extent the option is exercised for vested shares of Common Stock, through a special sale and remittance procedure pursuant to which the Participant shall concurrently provide instructions to (a) a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in compliance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date in order to complete the sale.

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Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.
(c)   Exercise and Term of Options.   Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the Award Agreement evidencing the option, subject to Section 2.9. However, no option shall have a term in excess of ten (10) years measured from the option grant date.
(d)   Effect of Termination of Service.
(i)   The following provisions shall govern the exercise of any options that are outstanding at the time of the Participant’s cessation of Service or death:
(A)   Any option outstanding at the time of the Participant’s cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term.
(B)   Any option held by the Participant at the time of the Participant’s death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Participant’s estate or by the person or persons to whom the option is transferred pursuant to the Participant’s will or the laws of inheritance or by the Participant’s designated beneficiary or beneficiaries of that option.
(C)   Should the Participant’s Service be terminated for Misconduct or should the Participant otherwise engage in Misconduct while holding one or more outstanding options, then all of those options shall terminate immediately and cease to be outstanding.
(D)   During the applicable post-Service exercise period, the option may not be exercised for more than the number of vested shares for which the option is at the time exercisable. No additional shares shall vest under the option following the Participant’s cessation of Service except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any shares for which the option has not been exercised.
(ii)   The Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:
(A)   extend the period of time for which the option is to remain exercisable following the Participant’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term;
(B)   include an automatic extension provision whereby the specified post-Service exercise period in effect for any option shall automatically be extended by an additional period of time equal in duration to any interval within the specified post-Service exercise period during which the exercise of that option or the immediate sale of the shares acquired under such option could not be effected in compliance with applicable federal and state securities laws, but in no event shall such an extension result in the continuation of such option beyond the expiration date of the term of that option; and/or
(C)   permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Participant’s cessation of Service but also with respect to one or more additional installments in which the Participant would have vested had the Participant continued in Service.
(e)   Repurchase Rights.   The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Participant exercise an option for unvested

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shares and subsequently cease Service while such shares are unvested, the Corporation shall have the right to repurchase any or all of those unvested shares at a price per share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per share of Common Stock at the time of repurchase. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.
(f)   Incentive Options.   The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section 2.1(f), all the provisions of the Plan shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section 2.1(f).
(i)   Eligibility.   Incentive Options may only be granted to Employees.
(ii)   Dollar Limitation.   The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, then for purposes of the foregoing limitations on the exercisability of those options as Incentive Options, such options shall be deemed to become first exercisable in that calendar year on the basis of the chronological order in which they were granted, except to the extent otherwise provided under applicable law or regulation.
(iii)   10% Stockholder.   If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.
2.2
STOCK APPRECIATION RIGHTS
(a)   Authority.   The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights evidenced by an Award Agreement in the form approved by the Plan Administrator; provided, however, that the terms of each such agreement shall not be inconsistent with the terms specified below.
(b)   Types.   Two types of stock appreciation rights shall be authorized for issuance under this Section 2.2: (i) tandem stock appreciation rights (“Tandem Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone Rights”).
(c)   Tandem Rights.   The following terms and conditions shall govern the grant and exercise of Tandem Rights.
(i)   One or more Participants may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, subject to Section 2.9, to elect between the exercise of the underlying option for shares of Common Stock or the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Participant is at the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares.
(ii)   Any distribution to which the Participant becomes entitled upon the exercise of a Tandem Right may be made in (i) shares of Common Stock valued at Fair Market Value on the option surrender date, (ii) cash or (iii) a combination of cash and shares of Common Stock, as specified in the applicable Award Agreement.
(d)   Stand-Alone Rights.   The following terms and conditions shall govern the grant and exercise of Stand-alone Rights:

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(i)   One or more Participants may be granted a Stand-alone Right not tied to any underlying option. The Stand-alone Right shall relate to a specified number of shares of Common Stock and shall be exercisable upon such terms and conditions as the Plan Administrator may establish, subject to Section 2.9. In no event, however, may the Stand-alone Right have a maximum term in excess of ten (10) years measured from the grant date.
(ii)   Upon exercise of the Stand-alone Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate Fair Market Value (on the exercise date) of the shares of Common Stock underlying the exercised right over (ii) the aggregate base price in effect for those shares.
(iii)   The number of shares of Common Stock underlying each Stand-alone Right and the base price in effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the Stand-alone Right is granted. In no event, however, may the base price per share be less than the Fair Market Value per underlying share of Common Stock on the grant date.
(iv)   The distribution with respect to an exercised Stand-alone Right may be made in (i) shares of Common Stock valued at Fair Market Value on the exercise date, (ii) cash or (iii) a combination of cash and shares of Common Stock, as specified in the applicable Award agreement.
(v)   The holder of a Stand-alone Right shall have no stockholder rights with respect to the shares subject to the Stand-alone Right unless and until such person shall have exercised the Stand-alone Right and become a holder of record of the shares of Common Stock issued upon the exercise of such Stand-alone Right.
(e)   Exercise or Base Price.   The exercise or base price per share shall be fixed by the Plan Administrator; provided, however, that such exercise or base price shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the grant date.
(f)   Post-Service Exercise.   The provisions governing the exercise of Tandem and Stand-alone Rights following the cessation of the Participant’s Service shall be substantially the same as those set forth in Section 2.1(d) for the options granted under the Plan, and the Plan Administrator’s discretionary authority under Section 2.1(d)(ii) shall also extend to any outstanding Tandem or Stand-alone Appreciation Rights.
2.3
STOCK AWARDS
(a)   Authority.   The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock awards either as vested or unvested shares of Common Stock, through direct and immediate issuances. Each stock award shall be evidenced by an Award Agreement in the form approved by the Plan Administrator; provided, however, that the terms of each such agreement shall not be inconsistent with the terms specified below.
(b)   Consideration.   Shares of Common Stock may be issued under a stock award for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:
(i)   cash or check made payable to the Corporation,
(ii)   past services rendered to the Corporation (or any Parent or Subsidiary); or
(iii)   any other valid consideration under the State in which the Corporation is at the time incorporated.
(c)   Vesting Provisions.
(i)   Stock awards may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance as a bonus for Service rendered or may vest in one or more installments over the Participant’s period of Service and/or upon the attainment of specified performance objectives. The elements of the vesting schedule applicable to any stock award shall be determined by the Plan Administrator and incorporated into the Award Agreement.

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(ii)   The Plan Administrator shall also have the discretionary authority to structure one or more stock awards so that the shares of Common Stock subject to those Awards shall vest upon the achievement of pre-established performance objectives based on one or more Performance Goals and measured over the performance period specified by the Plan Administrator at the time of the grant of the Award.
(iii)   Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under a stock award or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent, the Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares or (ii) the Fair Market Value of those shares at the time of cancellation.
(iv)   The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares. Any such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies.
(v)   Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. For the avoidance of doubt, cash dividends, stock and any other property (other than cash) distributed as a dividend or otherwise with respect to any stock Award that is subject to vesting shall be accumulated, subject to restrictions and risk of forfeiture to the same extent as the underlying Award, and shall be paid at the time such restrictions and risk of forfeiture lapse. Equitable adjustments to reflect each such transaction shall also be made by the Plan Administrator to the repurchase price payable per share by the Corporation for any unvested securities subject to its existing repurchase rights under the Plan; provided the aggregate repurchase price shall in each instance remain the same.
2.4
RESTRICTED STOCK UNITS
(a)   Authority.   The Plan Administrator shall have the full power and authority, exercisable in its sole discretion, to grant restricted stock units evidenced by an Award Agreement in the form approved by the Plan Administrator; provided, however, that the terms of each such agreement shall not be inconsistent with the terms specified below.
(b)   Terms.   Each restricted stock unit award shall entitle the Participant to receive the shares underlying that Award (or an amount based on the value of the shares) upon vesting or upon the expiration of a designated time period following the vesting of those Awards. Payment of shares underlying a restricted stock unit Award may be deferred for a period specified by the Plan Administrator at the time the restricted stock unit is initially granted or (to the extent permitted by the Plan Administrator) designated by the Participant pursuant to a timely deferral election made in accordance with the requirements of Code Section 409A. Restricted stock units subject to performance vesting may also be structured so that the underlying shares are convertible into shares of Common Stock (or a payment based on the value of the shares), but the rate at which each share is to so convert shall be based on the attained level of performance for each applicable performance objective.
(c)   Vesting Provisions.
(i)   Restricted stock units may, in the discretion of the Plan Administrator, vest in one or more installments over the Participant’s period of Service or upon the attainment of specified performance objectives.

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(ii)   The Plan Administrator shall also have the discretionary authority to structure one or more restricted stock unit awards so that the shares of Common Stock subject to those Awards shall vest (or vest and become issuable) upon the achievement of pre-established performance objectives based on one or more Performance Goals and measured over the performance period specified by the Plan Administrator at the time of the grant of the Award.
(iii)   Outstanding restricted stock units shall automatically terminate without any payment if the designated Performance Goals or Service requirements established for those Awards are not attained or satisfied. The Plan Administrator, however, shall have the discretionary authority to make a payment under one or more outstanding Awards of restricted stock units as to which the designated Performance Goals or Service requirements have not been attained or satisfied.
(d)   Payment.   Restricted stock units that vest may be settled in (i) cash, (ii) shares of Common stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock, as determined by the Plan Administrator in its sole discretion.
2.5
CASH INCENTIVE AWARDS
(a)   The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant cash incentive awards. The Plan Administrator shall determine the terms and conditions applicable to cash incentive awards, including the criteria for the vesting and payment of cash incentive awards. Cash incentive awards shall be based on such measures as the Plan Administrator deems appropriate and need not relate to the value of shares of Common Stock. Cash incentive awards may, in the discretion of the Plan Administrator, vest in one or more installments over the Participant’s period of Service or upon the attainment of specified performance objectives. Payment of cash incentive awards may be deferred for a period specified by the Plan Administrator at the time the Award is initially granted or (to the extent permitted by the Plan Administrator) designated by the Participant pursuant to a timely deferral election made in accordance with the requirements of Code Section 409A.
(b)   The Company intendsPlan Administrator shall also have the discretionary authority to structure one or more cash incentive awards so that the awards shall vest upon the achievement of pre-established performance objectives based on one or more Performance Goals and measured over the performance period specified by the Plan qualifyAdministrator at the time of the grant of the Award.
(c)   Outstanding cash incentive awards units shall automatically terminate without any payment if the designated Performance Goals or Service requirements established for those Awards are not attained or satisfied. The Plan Administrator, however, shall have the discretionary authority to make a payment under one or more outstanding cash incentive awards as to which the designated Performance Goals or Service requirements have not been attained or satisfied.
2.6   DIVIDEND EQUIVALENT RIGHTS
(a)   Authority.   The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant dividend equivalent rights evidenced by an Award Agreement in the form approved by the Plan Administrator; provided however, that the terms of each such agreement shall not be inconsistent with the terms specified below.
(b)   Terms.   The dividend equivalent rights may be granted as stand-alone awards or in tandem with other Awards made under the Plan, except dividend equivalent rights shall not be granted in connection with an option, stock appreciation right or cash incentive award. The term of each dividend equivalent right award shall be established by the Plan Administrator at the time of grant, but no such award shall have a term in excess of ten (10) years.
(c)   Entitlement.   Each dividend equivalent right shall represent the right to receive the economic equivalent of each dividend or distribution, whether in cash, securities or other property (other than shares of Common Stock), which is made per issued and outstanding share of Common Stock during the term the dividend equivalent right remains outstanding. A special account on the books of the Corporation shall be maintained for each Participant to whom a dividend equivalent right is granted, and that account shall

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be credited per dividend equivalent right with each such dividend or distribution made per issued and outstanding share of Common Stock during the term of that dividend equivalent right remains outstanding.
(d)   Timing of Payment.   Payment of the amounts credited to such book account may be made to the Participant either concurrently with the actual dividend or distribution made per issued and outstanding share of Common Stock or may be deferred for a period specified by the Plan Administrator at the time the dividend equivalent right is initially granted or (to the extent permitted by the Plan Administrator) designated by the Participant pursuant to a timely deferral election made in accordance with the requirements of Code Section 409A. In no event, however, shall any dividend equivalent right award made with respect to an Award subject to vesting conditions vest or become payable prior to the vesting of that Award (or the portion thereof to which the dividend equivalent right award relates) and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying Award.
(e)   Form of Payment.   Payment of the amounts due with respect to dividend equivalent rights may be made in (i) cash, (ii) shares of Common Stock or (iii) a combination of cash and shares of Common Stock, as determined by the Plan Administrator in its sole discretion and set forth in the Award Agreement. If payment is to be made in the form of Common Stock, the number of shares of Common Stock into which the cash dividend or distribution amounts are to be converted for purposes of the Participant’s book account may be based on the Fair Market Value per share of Common Stock on the date of conversion, a prior date or an average of the Fair Market Value per share of Common Stock over a designated period, as determined by the Plan Administrator in its sole discretion.
2.7
EFFECT OF CHANGE IN CONTROL
Unless otherwise provided in an Award Agreement, the following provisions shall apply with respect to Awards in the event of a Change in Control:
(a)   In the event of a Change in Control, each outstanding Award, as determined by the Plan Administrator in its sole discretion, may be (i) assumed by the successor corporation (or parent thereof), (ii) canceled and substituted with an Award granted by the successor corporation (or parent thereof), (iii) otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction, or (iv) replaced with a cash retention program of the Corporation or any successor corporation (or parent thereof) which preserves the spread existing on the unvested Award shares subject to the Award at the time of the Change in Control (the excess of the Fair Market Value of those shares over the aggregate purchase price payable for such shares) and, subject to Section 2.7(c) below, provides for subsequent payout of that spread in accordance with the same exercise/vesting schedule applicable to those unvested Award shares, but only if such replacement cash program would not result in the treatment of the Award as an "employee stock purchase plan" underitem of deferred compensation subject to Code Section 423409A.
(b)   To the extent an outstanding Award is not assumed, substituted, continued or replaced in accordance with Section 2.7(a), such Award shall automatically vest in full immediately prior to the effective date of the Change in Control, unless the acceleration of such Award is subject to other limitations imposed by the Plan Administrator at the time of the grant of the Award. The Plan Administrator in its sole discretion shall have the authority to provide that to the extent any such Award, as so accelerated, remains unexercised and outstanding on the effective date of the Change in Control, such Award shall terminate and cease to be outstanding. The holder of such Award shall become entitled to receive, upon consummation of the Change in Control and subject to Section 2.7(c), a lump sum cash payment in an amount equal to the product of (i) number of shares of Common Stock subject to such Award and (ii) the excess of (a) the Fair Market Value per share of Common Stock on the date of the Change in Control over (b) the per share exercise price or purchase price in effect for such Award. However, any such Award shall be subject to cancellation and termination, without cash payment or other consideration due the Award holder, if the Fair Market Value per share of Common Stock on the date of such Change in Control is less than the per share exercise price or purchase price in effect for such Award. Notwithstanding the foregoing, if any Award is subject to a performance-vesting condition tied to the attainment of one or more specified Performance Goals, and such Award is not to be so assumed, substituted, continued, or replaced, that Award shall vest immediately prior to the effective date of the actual Change in Control transaction, based on actual performance as of the Change in Control, and the shares of Common Stock underlying the portion of the

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Award that vests on such accelerated basis (if any) shall be issued in accordance with the applicable Award Agreement, unless such accelerated vesting is precluded by other limitations imposed in the Award Agreement.
(c)   The Plan Administrator shall have the authority to provide that any escrow, holdback, earn-out or similar provisions in the definitive agreement effecting the Change in Control shall apply to any cash payment made pursuant to Section 2.7(a) or Section 2.7(b) to the same extent and in the same manner as such provisions apply to a holder of a share of Common Stock.
(d)   Immediately following the consummation of the Change in Control, all outstanding Awards shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction.
(e)   In the event of any Change in Control, the Plan Administrator in its sole discretion may determine that all outstanding repurchase rights (i) are to be assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) are to be terminated and the shares of Common Stock subject to those terminated rights are to immediately vest in full, unless such accelerated vesting is precluded by limitations imposed by the Plan Administrator at the time the repurchase right is issued.
(f)   Each Award which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities into which the shares of Common Stock subject to that Award would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time. Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise or base price or cash consideration payable per share in effect under each outstanding Award, provided the aggregate exercise or base price or cash consideration in effect for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, (iii) the maximum number and/or class of securities for which Incentive Options may be granted under the Plan, (iv) the maximum number and/or class of securities for which any one person may be granted Awards under the Plan per calendar year and (v) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding Awards under the Plan and subject to the Plan Administrator’s approval, substitute, for the securities underlying those assumed Awards, one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction, provided such common stock is readily traded on an established U.S. securities exchange or market.
(g)   The Plan Administrator shall have the discretion, exercisable either at the time an Award is granted or at any time while an Award remains outstanding, to structure such Award so that (i) it shall automatically accelerate and vest in full (and any repurchase rights of the Corporation with respect to the unvested shares subject to that Award shall immediately terminate) upon the occurrence of a Change in Control, whether or not such Award is to be assumed in the Change in Control or otherwise continued in effect or (ii) the shares subject to such Award will automatically vest on an accelerated basis should the Participant’s Service terminate by reason of an Involuntary Termination within a designated period following the effective date of any Change in Control in which the Award is assumed or otherwise continued in effect and the repurchase rights applicable to those shares do not otherwise terminate.
(h)   The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.
2.8
REPRICING PROGRAMS
The Plan Administrator shall not have the discretionary authority, except pursuant to Section 1.5(j), to (i) implement cancellation/regrant programs pursuant to which outstanding options or stock appreciation

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rights under the Plan are cancelled and new options or stock appreciation rights are granted in replacement with a lower exercise or base price per share, (ii) cancel outstanding options or stock appreciation rights under the Plan with exercise or base prices per share in excess of the then current Fair Market Value per share of Common Stock for consideration payable in cash, other Awards, or in equity securities of the Corporation (except in the event of a Change in Control) or (iii) reduce the exercise or base price in effect for outstanding options or stock appreciation rights under the Plan, in any case without stockholder approval.
2.9
MINIMUM VESTING
Notwithstanding any other provision of the Plan to the contrary, but subject to Section 1.5(j), Section 2.7 and the last sentence of this Section 2.9, no option or stock appreciation right may vest over a period of less than one year from the date of grant of the award. Notwithstanding the foregoing, the minimum vesting requirement of this Section 2.9 shall not apply to (a) any Awards that result in the issuance of up to 5% of the available shares of Common Stock authorized for issuance under the Plan (the “5% Basket”), (b) any Awards delivered in lieu of fully-vested cash-based awards under the Plan (or other fully-vested cash awards or payments), and (c) any awards to Non-Employee Directors for which the vesting period runs from the date of one annual meeting of the Company’s stockholders to the next annual meeting of the Company’s stockholders which is at least fifty (50) weeks after the immediately preceding year’s annual meeting. Nothing in this Section 2.9 precludes any Plan Administrator from taking action, in its sole discretion, to accelerate the vesting of any award in full or in part upon death or disability of the Participant, upon a Change in Control or upon a Participant’s termination of Service, and such vesting shall not count against the 5% Basket.
Article 3
Miscellaneous
3.1
DEFERRED COMPENSATION
(a)   The Plan Administrator may, in its sole discretion, structure one or more Awards (other than options and stock appreciation rights) so that the Participants may be provided with an election to defer the compensation associated with those Awards for federal income tax purposes. Any such deferral opportunity shall comply with all applicable requirements of Code Section 409A.
(b)   The Plan Administrator may implement a non-employee Board member retainer fee deferral program under the Plan so as to allow the non-employee Board members the opportunity to elect, prior to the start of each calendar year, to convert the Board and Board committee retainer fees to be earned for such year into restricted stock units under the Plan that will defer the issuance of the shares of Common Stock that vest under those restricted stock units until a permissible date or event under Code Section 409A. If such program is implemented, the Plan Administrator shall have the authority to establish such rules and procedures as it deems appropriate for the filing of such deferral elections and the designation of the permissible distribution events under Code Section 409A.
(c)   To the extent the Corporation maintains one or more separate non-qualified deferred compensation arrangements which allow the Participants the opportunity to make notional investments of their deferred account balances in shares of Common Stock, the Plan Administrator may authorize the share reserve under the Plan to serve as the source of any shares of Common Stock that become payable under those deferred compensation arrangements. In such event, the share reserve under the Plan shall be interpretedreduced on a share-for-share basis for each share of Common Stock issued under the Plan in settlement of the deferred compensation owed under those separate arrangements.
3.2   TRANSFERABILITY OF AWARDS
The transferability of Awards granted under the Plan shall be governed by the following provisions:
(a)   Incentive Options.   During the lifetime of the Participant, Incentive Options shall be exercisable only by the Participant and shall not be assignable or transferable other than by will or the laws of inheritance following the Participant’s death.

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(b)   Other Awards.   All other Awards shall be subject to the same limitation on transfer as Incentive Options, except that the Plan Administrator may structure one or more such Awards so that the Award may be assigned in whole or in part during the Participant’s lifetime to one or more Family Members of the Participant or to a mannertrust established exclusively for the Participant and/or such Family Members, to the extent such assignment is in connection with the Participant’s estate plan or pursuant to a domestic relations order. The assigned portion of an Award may only be exercised (if applicable) by the person or persons who acquire a proprietary interest in the Award pursuant to the assignment. The terms applicable to the assigned portion of the Award shall be the same as those in effect for the Award immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.
(c)   Beneficiary Designation.   Notwithstanding the foregoing, a Participant may, to the extent permitted by the Plan Administrator, designate one or more persons as the beneficiary or beneficiaries of some or all of his or her outstanding Awards, and those Awards shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Participant’s death while holding those Awards. Such beneficiary or beneficiaries shall take the transferred Awards subject to all the terms and conditions of the applicable agreement evidencing each such transferred Award, including (without limitation) the limited time period during which the Award may be exercised (if applicable) following the Participant’s death.
3.3
STOCKHOLDER RIGHTS
A Participant shall not have any of the rights of a stockholder with respect to shares of Common Stock covered by an Award until the Participant becomes the holder of record of such shares. However, a Participant may be granted the right to receive dividend equivalents under Section 2.6 with respect to one or more outstanding Awards.
3.4
TAX WITHHOLDING
(a)   The Corporation’s obligation to deliver shares of Common Stock upon the exercise, issuance or vesting of an Award under the Plan shall be subject to the satisfaction of all applicable tax withholding requirements.
(b)   The Plan Administrator may, in its discretion, provide Participants to whom Awards are made under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such holders may become subject in connection with the issuance, exercise, vesting or settlement of those Awards or the issuance of shares of Common Stock thereunder. Such right may be provided to any such holder in either or both of the following formats:
(i)   Stock Withholding:   The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the issuance, exercise, vesting or settlement of such Award or the issuance of shares of Common Stock thereunder, a portion of those shares with an aggregate Fair Market Value at the time of delivery equal to the percentage of the Withholding Taxes based on the minimum required tax withholding rate for the Participant, or such other rate as determined by the Plan Administrator (provided, however, that in no event shall the withholding rate exceed the maximum individual statutory tax rate in the applicable jurisdiction at the time of such Withholding Taxes (or such other rate as may be required to avoid the liability classification of the Award under generally accepted accounting principles in the United States of America); provided, further, that the number of shares of Common Stock withheld by the Corporation under this method shall be rounded up to the nearest whole Share to the extent rounding up to the nearest whole Share does not result in the liability classification of the Award under generally accepted accounting principles in the United States of America).
(ii)   Stock Delivery: The election to deliver to the Corporation, at the time of the issuance, exercise, vesting or settlement of such Award, one or more shares of Common Stock previously acquired by such individual (other than in connection with the exercise, share issuance or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the individual

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(provided, however, that in no event shall the withholding rate exceed the maximum individual statutory tax rate in the applicable jurisdiction at the time of such Withholding Taxes (or such other rate as may be required to avoid the liability classification of the Award under generally accepted accounting principles in the United States of America); provided, further, that the number of shares of Common Stock withheld by the Corporation under this method shall be rounded up to the nearest whole Share to the extent rounding up to the nearest whole Share does not result in the liability classification of the Award under generally accepted accounting principles in the United States of America).
3.5
SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.
3.6
EFFECTIVE DATE AND TERM OF THE PLAN
(a)   The Plan originally became effective on the Original Plan Effective Date. This Plan is consistentan amendment and restatement of the amended and restated Plan approved by the Board on August 6, 2018 and by the Company’s stockholders on October 11, 2018 at the 2018 Annual Stockholders Meeting (the “Existing Plan”).
(b)   This amended and restated Plan was approved by the Board on July 15, 2021, subject to stockholder approval at the 2021 Annual Stockholder Meeting, and shall be effective as of the Restated Plan Effective Date. If this amended and restated Plan is not approved by the Company’s stockholders within twelve (12) months following the Board’s adoption of this amended and restated Plan, this amended and restated Plan will not become effective and the Existing Plan will continue in full force and effect in accordance with its terms. In no event shall any changes made pursuant to this amendment and restatement apply to any Award that intent.was outstanding on November 2, 2017 and intended to qualify as performance — based compensation under Section 162(m) of the Code to the extent such change would constitute a material modification of the Award.
(c)   The Plan shall terminate upon the

earliest 2.to occur of (i) the tenth anniversary of the date on which the Board approved this amended and restated Plan, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully vested shares, (iii) the termination of all outstanding Awards in connection with a Change in Control, or (iv) the termination of the Plan by the Board. Should the Plan terminate under subsection (iv) above, then all Awards outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing those Awards.

(d)   No Awards may be granted or awarded during any period of suspension or after termination of this Plan, and in no event may any Incentive Option be granted under this Plan after the tenth anniversary of the date on which the Board approved this amended and restated Plan.
    Definitions.3.7


        "AMENDMENT OF THE PLAN
(a)   The Board or Boardthe Compensation Committee shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects, subject to stockholder approval to the extent required under applicable law or regulation or pursuant to the listing standards of Directorsthe Stock Exchange on which the Common Stock is at the time primarily traded. However, no such amendment or modification shall adversely affect the rights and obligations with respect to Awards at the time outstanding under the Plan unless the Participant consents to such amendment or modification.
(b)   The Compensation Committee shall have the discretionary authority to adopt and implement from time to time such addenda or subplans to the Plan as it may deem necessary in order to bring the Plan into compliance with applicable laws and regulations of any foreign jurisdictions in which Awards are to be made under the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions for the individuals to whom the Awards are made.
(c)   Awards may be made under the Plan that involve shares of Common Stock in excess of the number of shares then available for issuance under the Plan, provided no shares shall actually be issued

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pursuant to those Awards until the number of shares of Common Stock available for issuance under the Plan is sufficiently increased by stockholder approval of an amendment of the Plan authorizing such increase. If such stockholder approval is not obtained within twelve (12) months after the date the first excess Award is made, then all Awards granted on the basis of such excess shares shall terminate and cease to be outstanding.
" means3.8
USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.
3.9
REGULATORY APPROVALS
(a)   The implementation of the Plan, the granting of any Award under the Plan and the issuance of any shares of Common Stock in connection with the issuance, exercise, vesting or settlement of any Award under the Plan shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the shares of Common Stock issuable pursuant to those Awards.
(b)   No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws, and all applicable listing requirements of any Stock Exchange on which Common Stock is then listed for trading.
3.10
NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.
3.11
RECOUPMENT
Participants shall be subject to any clawback, recoupment or other similar policy required by law or regulations or adopted by the Board as in effect from time to time and Awards and any cash, shares of DirectorsCommon Stock or other property or amounts due, paid or issued to a Participant shall be subject to the terms of such policy, as in effect from time to time.

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Appendix
The following definitions shall be in effect under the Plan:
(a)   Award shall mean any of the Company,following awards authorized for issuance or grant under the Plan: options, stock appreciation rights, stock awards, restricted stock units, cash incentive awards and dividend equivalents.
(b)   Award Agreement shall mean the written agreement(s) (which may be in electronic form) between the Corporation and the Participant evidencing a particular Award made to that individual under the Plan, as constitutedsuch agreement(s) may be in effect from time to time.

(c)   Board "shall mean the Corporation’s Board of Directors.
(d)   Change in Control shall, with respect to each Award made under the Plan, be defined in accordance with the following provisions:
(i)   Change in Control shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.
(ii)   In the absence of any other Change in Control definition in the Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:
(A)   consummation of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing at least fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,
(B)   a sale, transfer or other disposition of all or substantially all of the Corporation’s assets,
(C)   the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or
(D)   a change in the composition of the Board over a period of twenty-four (24) consecutive months or less such that a majority of the Board members ceases to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period (“Incumbent Directors”) or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Incumbent Directors who were still in office at the time the Board approved such election or nomination; provided that any individual who becomes a Board member subsequent to the beginning of such period and whose election or nomination was approved by two-thirds of the Board members then comprising the Incumbent Directors will be considered an Incumbent Director.
(e)   Code" means shall mean the U.S. Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section ofamended.

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(f)   Common Stock shall mean the CodeCorporation’s Common Stock.
(g)   Compensation Committee shall be deemed to include a reference to any regulations promulgated thereunder.

        "Committee" meansmean the Compensation Committee of the Board comprised of two (2) or other committee appointedmore non-employee Board members, each of whom is intended to qualify as a “non-employee director” ​(as defined in Rule 16b-3 under the Exchange Act) and an “independent director” under the rules of any securities exchange or automated quotation system on which the Common Stock is then listed, quoted or traded; provided that any action taken by the Board to administer the Plan.

        "Common Stock" means the common stockCompensation Committee shall be valid and effective, whether or not one or more members of the Company, par value $0.10 per share.Compensation Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this definition or otherwise provided in the charter of the Compensation Committee.

(h)   Corporation "Company" meansshall mean Iteris, Inc., a Delaware corporation, includingand any corporate successor thereto.

        "Compensation" means the fixed salaryto all or base wage paid by the Company or a Participating Subsidiary to a Participant as reported by the Company or a Participating Subsidiary, as applicable, to the United States government for income tax purposes, including bonuses and commissions and an Employee's portion of salary deferral contributions pursuant to Section 401(k)substantially all of the Code and any amount excludable pursuant to Section 125assets or voting stock of Iteris, Inc.

(i)   Employee shall mean an individual who is in the employ of the Code, overtime, vacation pay, holiday pay, jury duty pay and funeral leave pay, but excluding educationCorporation (or any Parent or tuition reimbursements, imputed income arising under any group insuranceSubsidiary, whether now existing or benefit program, travel expenses, business and relocation expenses, and income received in connection with stock options or other equity-based awards.

        "Corporate Transaction" means a merger, consolidation, acquisition of property or stock, separation, reorganization or other corporate event described in Section 424 of the Code.

        "Designated Broker" means the financial services firm or other agent designated by the Company to maintain ESPP Share Accounts on behalf of Participants who have purchased shares of Common Stock under the Plan.

        "Effective Date" means January 1, 2018,subsequently established), subject to the Plan obtaining stockholder approval in accordance with Section 19.11 hereof.

        "Employee" means any person who renders services to the Company or a Participating Subsidiary as an employee pursuant to an employment relationship with such employer. For purposescontrol and direction of the Plan,employer entity as to both the employment relationship shallwork to be treated as continuing intact while the individual is on military leave, sick leave or other leave of absence approved by the Company or a Participating Subsidiary that meets the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three (3) months, or such other period of time specified in Treasury Regulation Section 1.421-1(h)(2),performed and the individual's right to re-employment is not guaranteed by statute or contract,manner and method of performance.

(j)   Exercise Date shall mean the employment relationshipdate on which the Corporation shall be deemed to have terminated on the first day immediately following such three-month period, or such other period specified in Treasury Regulation Section 1.421-1(h)(2).

        "Eligible Employee" means an Employee who is customarily employed (and regularly scheduled) for at least twenty (20) hours per week and more than five (5) months in any calendar year.


Notwithstanding the foregoing, the Committee may exclude from participation in the Plan or any Offering Employees who are "highly compensated employees"received written notice of the Company or a Participating Subsidiary (within the meaning of Section 414(q) of the Code) or a sub-set of such highly compensated employees.

option exercise.

        "Enrollment Form" means an agreement pursuant to which an Eligible Employee may elect to enroll in the Plan, to authorize a new level of payroll deductions, or to stop payroll deductions and withdraw from an Offering Period.

        "ESPP Share Account" means an account into which Common Stock purchased with accumulated payroll deductions at the end of an Offering Period are held on behalf of a Participant.

        "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.

        "(k)   Fair Market Value" means, as of any date, the value of the shares per share of Common Stock ason any relevant date shall be determined below.in accordance with the following provisions:

(i)   If the shares are listedCommon stock is at the time traded on any established stock exchange or a national market system, including, without limitation, the NASDAQ Stock Market,Exchange, then the Fair Market Value shall be the closing selling price per share of a share (or if no sales were reported, the closing price on the date immediately preceding such date)Common Stock at the close of regular hours trading (i.e., before after-hours trading begins) as quoted on such exchange or systemdate in question on the day of determination,Stock Exchange serving as the primary market for the Common Stock, as such price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Common Stock is then primarily traded. In the absence of an established marketIf there is no closing selling price for the shares,Common Stock on the date in question, then the Fair Market Value shall be determined in good faith by the Committee and such determination shall be conclusive and bindingclosing selling price on all persons.

        "Offering Date" means the first Trading Day of each Offering Period as designated by the Committee.

        "Offering" or"Offering Period" means a period of six months beginning each January 1st and July 1st of each year; provided, that, pursuant to Section 5, the Committee may change the duration of future Offering Periods (subject to a maximum Offering Period of twenty-seven (27) months) and/or the start and end dates of future Offering Periods.

        "Participant" means an Eligible Employee who is actively participating in the Plan.

        "Participating Subsidiaries" means the Subsidiaries that have been designated as eligible to participate in the Plan, and such other Subsidiaries that may be designated by the Committee from time to time in its sole discretion.

        "Plan" means this Iteris, Inc. Employee Stock Purchase Plan, as set forth herein, and as amended from time to time.

        "Purchase Date" means the last Trading Day of each Offering Period.

        "Purchase Price" means an amount equal topreceding date for which such quotation exists.

(ii)   If the lesser of (1) eighty-five percent (85%) (or such greater percentage asCommon Stock is at the time quoted on a national or regional securities exchange or market system (including over-the-counter markets and the Nasdaq Capital Market) determined by the Committee)Plan Administrator to be the primary market for the Common Stock, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is officially reported by such exchange or market system. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price of a share of Common Stock on the last preceding date for which such quotation exists.
(l)   Family Member shall mean, with respect to a particular Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.
(m)   Full Value Award means an Award other than an option or stock appreciation right with a per share purchase price lower than one hundred percent (100%) of Fair Market Value on the Offering Date or (2) eighty-five percent (85%) (or such greater percentage as determineddate of grant and that is settled by the Committee)issuance of the Fair Market Value on the Purchase Date; provided, that, the Purchase Price per shareshares of Common Stock will in no eventStock.
(n)   Good Reason shall, with respect to each Award made under the Plan, be less than the par value of the Common Stock.

        "Securities Act" means the Securities Act of 1933, as amended.

        "Subsidiary" means any domestic corporation, of which not less than 50% of the combined voting power is held by the Company or a Subsidiary, whether or not such corporation exists now or is hereafter organized or acquired by the Company or a Subsidiary. In all cases, the determination of whether an entity is a Subsidiary shall be madedefined in accordance with Section 424(f) of the Code.following provisions:


        "Trading Day" means any day on which the national stock exchange upon which the Common Stock is listed is open for trading or, if the Common Stock is not listed on an established stock exchange or national market system, a business day, as determined by the Committee in good faith.

        3.    Administration.    The Plan shall be administered by the Committee, which(i)   Good Reason shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.

(ii)   In the absence of any other Good Reason definition in the Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), Good Reason shall mean an individual’s voluntary resignation following one or more of the following without the individual’s consent;

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(A) a change in his or her position with the Corporation (or any Parent or Subsidiary) which materially reduces his or her duties, responsibilities or authority, (B) a material diminution in the duties, responsibilities or authority of the person to construewhom such individual reports, (C) a material reduction in such individual’s level of base compensation, with a reduction of more than fifteen percent (15%) to be deemed material for such purpose, or (D) a material relocation of such individual’s place of employment, with a relocation of more than fifty (50) miles to be deemed material for such purpose, provided, however, that a resignation for Good Reason may be effected only after (i) the individual provides written notice to the Corporation of the event or transaction constituting grounds for such resignation within sixty (60) days after the occurrence of that event or transaction, (ii) the Corporation fails to take the requisite remedial action with respect to such event or transaction within thirty (30) days after receipt of such notice, and interpret(iii) the individual resigns within thirty (30) days after the expiration of the Corporation’s cure period set forth in subsection (ii).
(o)   Incentive Option shall mean an option which satisfies the requirements of Code Section 422.
(p)   Involuntary Termination shall, with respect to each Award made under the Plan, prescribe, amend and rescind rules relating tobe defined in accordance with the Plan's administration and take any other actions necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency or ambiguity in the Plan. The Committeefollowing provisions:
(i)   Involuntary Termination shall have the authority and discretionmeaning assigned to changesuch term in the Purchase Price withinAward Agreement for the parameters set forth above, and ifparticular Award or in any other agreement incorporated by reference into the Committee changesAward Agreement for purposes of defining such term.
(ii)   In the Purchase Price from one Offering Period to another, the Company will notify Participantsabsence of any changeother Involuntary Termination definition in Purchase Price at least fifteen (15) days priorthe Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), Involuntary Termination shall mean such individual’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or such individual’s voluntary resignation for Good Reason.
(q)   Misconduct shall, with respect to the beginning of the next Offering Period to which the changed Purchase Price applies. The decisions of the Committee shall be final and binding on all persons. All expenses of administeringeach Award made under the Plan, be defined in accordance with the following provisions:
(i)   Misconduct shall be bornehave the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Company.

        4.    Eligibility.    Unless otherwise determined byAward Agreement for purposes of defining such term.

(ii)   In the Committeeabsence of any other Misconduct definition in a manner that is consistent with Section 423 of the Code, any individual who is an Eligible Employee as of the Offering DateAward Agreement for a particular Offering PeriodAward (or in any other agreement incorporated by reference into the Award Agreement), Misconduct shall be eligible to participate inmean the commission of any act of fraud, embezzlement or dishonesty by the Participant, any unauthorized use or disclosure by such Offering Period, subject to the requirementsperson of Section 423confidential information or trade secrets of the Code.

        NotwithstandingCorporation (or any provisionParent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

(r)   1934 Act shall mean the contrary, no Eligible EmployeeSecurities Exchange Act of 1934, as amended.
(s)   Non-Employee Director shall be grantedmean a non-Employee member of the Board.
(t)   Non-Statutory Option shall mean an option undernot an Incentive Option.
(u)   Original Plan Effective Date shall mean December 15, 2016, which is the date upon which the Plan if (i) immediately afterwas first approved by the grantCorporation’s stockholders.
(v)   Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the option, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or hold outstanding options to purchasedetermination, stock possessing 5%fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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(w)   Participant shall mean any eligible person who is granted an Award under the Plan.
(x)   Permanent Disability shall mean the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.
(y)   Performance Goals shall mean, without limitation, any of the following performance criteria upon which the vesting of one or more Awards under the Plan may be based: (i) cash flow; (ii) earnings (including earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity; (vii) total stockholder return or growth in total stockholder return either directly or in relation to a comparative group; (viii) return on capital; (ix) return on assets or net assets; (x) invested capital, required rate of return on capital or return on invested capital; (xi) revenue, growth in revenue or return on sales; (xii) income or net income; (xiii) operating income, net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin or gross margin; (xvi) return on operating revenue or return on operating profit; (xvii) market share, (xviii) market capitalization, (xix) application approvals, (xx) litigation and regulatory resolution goals, (xxi) implementation, completion or attainment of key projects, product sales or milestones, (xxii) budget comparisons, (xxiii) growth in stockholder value relative to the growth of a peer group or index; (xxiv) development and implementation of strategic plans and/or organizational restructuring goals; (xxv) development and implementation of risk and crisis management programs; (xxvi) improvement in workforce diversity; (xxvii) compliance requirements and compliance relief; (xxviii) productivity goals; (xxix) workforce management and succession planning goals; (xxx) economic value added (including typical adjustments consistently applied from generally accepted accounting principles required to determine economic value added performance measures); (xxxi) recruiting and maintaining personnel, employee retention, measures of customer satisfaction, employee satisfaction or staff development; (xxxii) development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Corporation’s revenue or profitability or enhance its customer base; and (xxxiii) merger and acquisitions. In addition, such performance criteria may be based upon the attainment of specified levels of the Corporation’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Corporation’s business units or divisions or any Parent or Subsidiary. Any performance goals that are financial metrics, may be determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), in accordance with accounting principles established by the International Accounting Standards Board (“IASB Principles”), or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP or under IASB Principles. Each applicable Performance Goal may include a minimum threshold level of performance below which no Award will be earned, levels of performance at which specified portions of an Award will be earned and a maximum level of performance at which an Award will be fully earned. Each applicable Performance Goal may be structured at the time of the Award to provide for appropriate adjustment, which may be based on one or more of the following items: (A) asset impairments or write-downs; (B) litigation or claim judgments or settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) the operations of any business acquired by the Corporation; (F) the divestiture of one or more business operations or the assets thereof; (G) the effects of any corporate transaction, such as a merger, consolidation, separation (including spin-off or other distributions of stock or property by the Corporation) or reorganization; (H) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events; (I) acquisitions or divestitures; (J) change in the corporate structure or capital structure of the Corporation; (K) an event either not directly related to the operations of the Corporation, Parent, Subsidiary, division, business segment or business unit or not within the reasonable control of management; (L) foreign exchange gains and losses; (M) a change in the fiscal year of the Corporation; (N) the refinancing or repurchase of bank loans or debt securities; (O) unbudgeted capital expenditures; (P) the issuance or repurchase of equity securities and other changes in the number of outstanding shares; (Q) conversion of some or all of convertible securities to common stock; (R) any business interruption event; (S) the cumulative effects of tax or accounting changes in accordance with GAAP; (T) the effect of changes in other laws or regulatory rules affecting reported results; and (U) any other adjustment consistent with the operation of the Plan.

A-19


(z)   Plan shall mean the Corporation’s amended and restated 2016 Equity Omnibus Plan, as set forth in this document.
(aa)   Plan Administrator shall mean the particular entity, whether the Compensation Committee, the Board, the Secondary Board Committee or any delegate of the Board or the Compensation Committee authorized to administer the Plan with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under the Plan with respect to the persons under its jurisdiction.
(bb)   Predecessor Plan shall mean the Corporation’s 2007 Omnibus Incentive Plan.
(cc)   Restated Plan Effective Date shall mean September 9, 2021, which is the date upon which this amended and restated Plan was approved by the Corporation’s stockholders.
(dd)   Secondary Board Committee shall mean a committee of one or more Board members appointed by the Board to administer the Plan with respect to eligible persons other than Section 16 Insiders.
(ee)   Section 16 Insider shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.
(ff)   Service shall, with respect to each Award made under the Plan, be defined in accordance with the following provisions:
(i)   Service shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.
(ii)   In the absence of any other definition of Service in the Award Agreement for a particular Award (or in any other agreement incorporated by reference into the Award Agreement), Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a Non-Employee Director or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the Award. For purposes of this particular definition of Service, a Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Participant no longer performs services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Participant is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Participant may subsequently continue to perform services for that entity.
(iii)   Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that should such leave of absence exceed three (3) months, then for purposes of determining the period within which an Incentive Option may be exercised as such under the federal tax laws, the Participant’s Service shall be deemed to cease on the first day immediately following the expiration of such three (3)-month period, unless Participant is provided with the right to return to Service following such leave either by statute or by written contract. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Participant is on a leave of absence.
(gg)   Stand-alone Rights shall have the meaning set forth in Section 2.2.
(hh)   Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.
(ii)   Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
(jj)   Tandem Rights shall have the meaning set forth in Section 2.2.

A-20


(kk)   10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the CompanyCorporation (or any Parent or any Subsidiary or (ii) such option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that exceeds $25,000 of the Fair Market Value of such stock (determined at the time the option is granted) for each calendar year in which such option is outstanding at any time.

Subsidiary).

        5.(ll)       Offering Periods.Withholding Taxes The Plan shall be implemented by a series of Offering Periods, each of which shall be six (6) months in duration, with new Offering Periods commencing on or about January 1 and July 1 of each year (or such other times as determined by the Committee). The Committee shall have the authority to change the duration, frequency, start and end dates of Offering Periods.

        6.    Participation.

            6.1    Enrollment; Payroll Deductions.    An Eligible Employee may elect to participate in the Plan by properly completing an Enrollment Form, which may be electronic, and submitting it to the Company, in accordance with the enrollment procedures established by the Committee. Participation in the Plan is entirely voluntary. By submitting an Enrollment Form, the Eligible Employee authorizes payroll deductions from his or her pay check in an amount equal to at least 1%, but not more than 15% of his or her Compensation on each pay day occurring during an Offering Period (or such other maximum percentage as the Committee may establish from time to time before an Offering Period begins). Payroll deductions shall commence on the first payroll date following the Offering Date and end on the last payroll date on or before the Purchase Date. The Company shall maintain records of all payroll deductions but shall have no obligation to pay interest on payroll deductions or to hold such amounts in a trust or in any segregated account.

            6.2    Election Changes.    During an Offering Period, a Participant may decrease or increase his or her rate of payroll deductions applicable to such Offering Period only once. To make such a change, the Participant must submit a new Enrollment Form authorizing the new rate of payroll


    deductions and any change shall become effective on the next payroll period that begins no earlier than five (5) business days after the Company's receipt of a new Enrollment Form or such other notice period as may be established by the Compensation Committee from time to time in its sole discretion (to the extent practical under the Company's payroll practices) following delivery of a new Enrollment Form. A Participant may decrease or increase his or her rate of payroll deductions for future Offering Periods by submitting a new Enrollment Form authorizing the new rate of payroll deductions at least fifteen days before the start of the next Offering Period.

            6.3    Automatic Re-enrollment.    The deduction rate selected in the Enrollment Form shall remain in effect for subsequent Offering Periods unless the Participant (a) submits a new Enrollment Form authorizing a new level of payroll deductions in accordance with Section 6.2, (b) withdraws from the Plan in accordance with Section 10, or (c) terminates employment or otherwise becomes ineligible to participate in the Plan.

        7.    Grant of Option.    On each Offering Date, each Participant inmean the applicable Offering Period shall be granted an optionfederal, state and foreign income and employment withholding taxes and other payments to purchase, on the Purchase Date, a number of shares of Common Stock determined by dividing the Participant's accumulated payroll deductions by the applicable Purchase Price; provided, however, that in no event shall any Participant purchase more than 5,000 shares of Common Stock during an Offering Period (subject to adjustment in accordance with Section 18 and the limitations set forth in Section 13 of the Plan).

        8.    Exercise of Option/Purchase of Shares.    A Participant's option to purchase shares of Common Stock will be exercised automatically on the Purchase Date of each Offering Period. The Participant's accumulated payroll deductions will be used to purchase the maximum number of whole shares that can be purchased with the amounts in the Participant's notional account. No fractional shares may be purchased but any remaining funds that are not used to purchase Common Stock will carry forward to the next Offering Period, subject to earlier withdrawal by the Participant in accordance with Section 10 or termination of employment in accordance with Section 11.

        9.    Transfer of Shares.    As soon as reasonably practicable after each Purchase Date, the Company will arrange for the delivery to each Participant of the shares of Common Stock purchased upon exercise of his or her option. The Committee may permit or require that the shares be deposited directly into an ESPP Share Account established in the name of the Participant with a Designated Broker and may require that the shares of Common Stock be retained with such Designated Broker for a specified period of time. Participants will not have any voting, dividend or other rights of a shareholder with respect to the shares of Common Stock subject to any option granted hereunder until such shares have been delivered pursuant to this Section 9.

        10.    Withdrawal.

            10.1    Withdrawal Procedure.    A Participant may withdraw from an Offering by submitting to the Company a revised Enrollment Form indicating his or her election to withdraw at any time before the Purchase Date, provided that such revised Enrollment Form is received at least ten (10) business days prior to the Purchase Date (or such other period as may be established by the Compensation Committee from time to time in its sole discretion). The accumulated payroll deductions held on behalf of a Participant in his or her notional account (that have not been used to purchase shares of Common Stock) shall be paid to the Participant promptly following receipt of the Participant's Enrollment Form indicating his or her election to withdraw and the Participant's option shall be automatically terminated. If a Participant withdraws from an Offering Period, no payroll deductions will be made during any succeeding Offering Period, unless the Participant re-enrolls in accordance with Section 6.1 of the Plan.

            10.2    Effect on Succeeding Offering Periods.    A Participant's election to withdraw from an Offering Period will not have any effect upon his or her eligibility to participate in succeeding


    Offering Periods that commence following the completion of the Offering Period from which the Participant withdraws, provided the Participant submits a new Enrollment Form in accordance with this Plan.

        11.    Terminationholder of Employment; Change in Employment Status.    Upon termination of a Participant's employment for any reason, including death, disability or retirement, or a change in the Participant's employment status following which the Participant is no longer an Eligible Employee, which in either case occurs at least fifteen days (or such other period as may be established by the Compensation Committee from time to time in its sole discretion) before the Purchase Date, the Participant will be deemed to have withdrawn from the Plan and the payroll deductions in the Participant's notional account (that have not been used to purchase shares of Common Stock) shall be returned to the Participant, or in the case of the Participant's death, to the person(s) entitled to such amounts under Section 17, and the Participant's option shall be automatically terminated. If the Participant's termination of employment or change in status occurs within fifteen days (or such other period as may be established by the Compensation Committee from time to time in its sole discretion) before a Purchase Date, the accumulated payroll deductions shall be used to purchase shares on the Purchase Date.

        12.    Interest.    No interest shall accrue on or be payable with respect to the payroll deductions of a Participant in the Plan.

        13.    Shares Reserved for Plan.

            13.1    Number of Shares.    A total of One Million (1,000,000) shares of Common Stock have been reserved as authorized for the grant of options under the Plan. The shares of Common Stock may be newly issued shares, treasury shares or shares acquired on the open market.

            13.2    Over-subscribed Offerings.    The number of shares of Common Stock which a Participant may purchase in an OfferingAward under the Plan may be reduced if the Offering is over-subscribed. No option granted under the Plan shall permit a Participant to purchase shares of Common Stock which, if added together with the total number of shares of Common Stock purchased by all other Participants in such Offering would exceed the total number of shares of Common Stock remaining available under the Plan. If the Committee determines that, on a particular Purchase Date, the number of shares of Common Stock with respect to which options are to be exercised exceeds the number of shares of Common Stock then available under the Plan, the Company shall make a pro rata allocation of the shares of Common Stock remaining available for purchase in as uniform a manner as practicable and as the Committee determines to be equitable.

        14.    Transferability.��   No payroll deductions credited to a Participant, nor any rights with respect to the exercise of an option or any rights to receive Common Stock hereunder may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 17 hereof) by the Participant. Any attempt to assign, transfer, pledge or otherwise dispose of such rights or amounts shall be without effect.

        15.    Application of Funds.    All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose to the extent permitted by applicable law, and the Company shall not be required to segregate such payroll deductions or contributions.

        16.    Statements.    Participants will be provided with statements at least annually which shall set forth the contributions made by the Participant to the Plan, the Purchase Price of any shares of Common Stock purchased with accumulated funds, the number of shares of Common Stock purchased, and any payroll deduction amounts remaining in the Participant's notional account.

        17.    Designation of Beneficiary.    A Participant may file, on forms supplied by the Company, a written designation of beneficiary who is to receive any shares of Common Stock and cash in respect of


any fractional shares of Common Stock, if any, from the Participant's ESPP Share Account under the Plan in the event of such Participant's death. In addition, a Participant may file a written designation of beneficiary who is to receive any cash withheld through payroll deductions and credited to the Participant's notional account in the event of the Participant's death prior to the Purchase Date of an Offering Period.

        18.    Adjustments Upon Changes in Capitalization; Dissolution or Liquidation; Corporate Transactions.

            18.1    Adjustments.    In the event that any dividend or other distribution (whether in the form of cash, Common Stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, reincorporation, other reorganization, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the Company's structure affecting the Common Stock occurs without the Company's receipt of consideration, or should the value of shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, the Committee will, in such manner as it deems equitable, adjust the number of shares and class of Common Stock that may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each outstanding option under the Plan, and the numerical limits of Section 7 and Section 13.

            18.2    Dissolution or Liquidation.    Unless otherwise determined by the Committee, in the event of a proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a new Purchase Date and the Offering Period will end immediately prior to the proposed dissolution or liquidation. The new Purchase Date will be before the date of the Company's proposed dissolution or liquidation. Before the new Purchase Date, the Committee will provide each Participant with written notice, which may be electronic, of the new Purchase Date and that the Participant's option will be exercised automatically on such date, unless before such time, the Participant has withdrawn from the Offering in accordance with Section 10.

            18.3    Corporate Transaction.    In the event of a Corporate Transaction, the Committee may cause each outstanding option to be assumed or an equivalent option substituted by the successor corporation or a parent or Subsidiary of such successor corporation. If the successor corporation does not assume or substitute the option, the Committee may either: (a) shorten the Offering Period with respect to which the option relates and set a new Purchase Date on which the Offering Period will end. The new Purchase Date will occur before the date of the Corporate Transaction. Prior to the new Purchase Date, the Committee will provide each Participant with written notice, which may be electronic, of the new Purchase Date and that the Participant's option will be exercised automatically on such date, unless before such time, the Participant has withdrawn from the Offering in accordance with Section 10; or (b) terminate the Offering Period and refund all accumulated payroll deductions to the Participants.

        19.    General Provisions.

            19.1    Equal Rights and Privileges.    Notwithstanding any provision of the Plan to the contrary and in accordance with Section 423 of the Code, all Eligible Employees who are granted options under the Plan shall have the same rights and privileges.

            19.2    No Right to Continued Service.    Neither the Plan nor any compensation paid hereunder will confer on any Participant the right to continue as an Employee or in any other capacity.

            19.3    Rights as Stockholder.    A Participant will become a stockholder with respect to the shares of Common Stock that are purchased pursuant to options granted under the Plan when the shares are transferred to the Participant's ESPP Share Account. A Participant will have no rights


    as a stockholder with respect to shares of Common Stock for which an election to participate in an Offering Period has been made until such Participant becomes a stockholder as provided above.

            19.4    Successors and Assigns.    The Plan shall be binding on the Company and its successors and assigns.

            19.5    Entire Plan.    This Plan constitutes the entire plan with respect to the subject matter hereof and supersedes all prior plans with respect to the subject matter hereof.

            19.6    Compliance with Law.    The obligations of the Company with respect to payments under the Plan are subject to compliance with all applicable laws and regulations. Common Stock shall not be issued with respect to an option granted under the Plan unless the exercise of such option and the issuance and delivery of the shares of Common Stock pursuant thereto shall comply with all applicable provisions of law, including, without limitation, the Securities Act, the Exchange Act, and the requirements of any stock exchange upon which the shares may then be listed.

            19.7    Notice of Disqualifying Dispositions.    Each Participant shall give the Company prompt written notice of any disposition or other transfer of shares of Common Stock acquired pursuant to the exercise of an option acquired under the Plan, if such disposition or transfer is made within two years after the Offering Date or within one year after the Purchase Date.

            19.8    Term of Plan.    The Plan shall become effective on the Effective Date and, unless terminated earlier pursuant to Section 19.9, shall have a term of ten years.

            19.9    Amendment or Termination.    The Committee may, in its sole discretion, amend, suspend or terminate the Plan at any time and for any reason, provided, however, that in no event may the Committee effect any of the following amendments or revisions to the Plan without the approval of the Company's shareholders: (i) increase the number of shares of Common Stock issuable under the Plan (other than adjustments pursuant to Section 19.1) or (ii) materially modify the requirements for eligibility to participate in the Plan. If the Plan is terminated, the Committee may elect to terminate all outstanding Offering Periods either immediately or once shares of Common Stock have been purchased on the next Purchase Date (which may, in the discretion of the Committee, be accelerated) or permit Offering Periods to expire in accordance with their terms (and subject to any adjustment in accordance with Section 18). If any Offering Period is terminated before its scheduled expiration, all amounts that have not been used to purchase shares of Common Stock will be returned to Participants (without interest, except as otherwise required by law) as soon as administratively practicable.

            19.10    Applicable Law.    The laws of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of the Plan, without regard to such state's conflict of law rules.

            19.11    Stockholder Approval.    The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted by the Board.

            19.12    Section 423.    The Plan is intended to qualify as an "employee stock purchase plan" under Section 423 of the Code. Any provision of the Plan that is inconsistent with Section 423 of the Code shall be reformed to comply with Section 423 of the Code.

            19.13    Withholding.    To the extent required by applicable Federal, state or local law, a Participant must make arrangements satisfactory to the Company for the payment of any withholding or similar tax obligations that arise in connection with the Plan.issuance, exercise, vesting or settlement of that Award.


        19.14A-21

[MISSING IMAGE: tm2122999d1-px_1iteris4c.jpg]
    Severability.    If any provisionMMMMMMMMMMMM MMMMMMMMMMMMMM C123456789 000004ENDORSEMENT_LINE______________ SACKPACK_____________ 000000000.000000 ext000000000.000000 ext000000000.000000 ext 000000000.000000 ext000000000.000000 ext000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) ADD 1ADD 2ADD 3ADD 4ADD 5ADD 6Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Your vote matters – here’s how to vote!You may vote online or by phone instead of mailing this card.OnlineGo to www.envisionreports.com/ITI or scan the QR code — login details are located in the shaded bar below.PhoneCall toll free 1-800-652-VOTE (8683) within the USA, US territories and CanadaSave paper, time and money! Sign up for electronic delivery at www.envisionreports.com/ITI 1.Election of Directors: q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qForAgainst AbstainForAgainst AbstainForAgainst Abstain+ 01- Joe Bergera 02- Anjali Joshi 03- Gerard M. Mooney ForAgainst AbstainForAgainst AbstainForAgainst Abstain 04- Laura L. Siegal 05- Thomas L. Thomas 06- Dennis W. Zank 2.To approve the amendment and restatement of the Plan shall2016 Omnibus Incentive Plan. ForAgainst Abstain 3.To approve, by advisory vote, the compensation of our named executive officers. ForAgainst Abstain 4.To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for any reasonthe fiscal year ending March 31, 2022. ForAgainst Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.Date (mm/dd/yyyy) — Please print date below.Signature 1 — Please keep signature within the box.Signature 2 — Please keep signature within the box. C 1234567890J N T1 U P X5 0 4 8 5 0 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 03HUQB

[MISSING IMAGE: tm2122999d1-px_2iteris4c.jpg]
The 2021 Annual Meeting of Stockholders of Iteris, Inc. will be held onThursday, September 9, 2021, at 2:00 p.m. Pacific Time virtually via the internet at meetings.computershare.com/MVTVFVH.To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form or you may attend as a guest to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, andlisten to the Plan shall be construed as if such invalid or unenforceable provision were omitted.

        19.15    Headings.    The headingsAnnual Meeting.Important notice regarding the Internet availability of sections herein are included solelyproxy materials for convenience and shall not affect the meaningAnnual Meeting of anyStockholders.The material is available at: www.envisionreports.com/ITIq IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q+Notice of the provisions2021 Annual Meeting of the Plan.


PROXY

ITERIS, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

TheStockholdersProxy Solicited by Board of Directors for Annual Meeting — September 9, 2021The undersigned stockholder of ITERIS, INC. (“Iteris” or the “Company”) hereby appoints JOE BERGERA and ANDREW SCHMIDT,DOUG GROVES, and each of them, proxies of the undersigned, each with full power to act without the other and with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Iteristhe Company to be held virtually via the internet at the Company’s principal executive offices located at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA, 92705, on November 8, 2017 at 10:00 a.m. Pacific Time,meetings.computershare.com/MVTVFVH, and at any adjournments or postponements thereof, (the “Annual Meeting”), and to vote all shares of common stock of Iteristhe Company held of record by the undersigned as of the close of

business on September 11, 2017,July 13, 2021, with all the powers the undersigned would possess if personally present, in accordance with the instructions on this proxy.

Theproxy.The undersigned hereby revokes any other proxy to vote at such Annual Meeting of Stockholders and hereby ratifies and confirms all that said proxies, and each of them, may lawfully do by virtue hereof.

THIShereof.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED OR, IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL ONE,1 AND “FOR” EACH OF THE OTHER PROPOSALS 2, 3, AND 4, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.THEREOF.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items to be voted appear on reverse side)Change of Address — Please print new address below.Comments — Please print your comments below. +

PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

C.

Non-Voting Items

Change of Address - Please print new address below

MARK HERE IF YOU PLAN TO ATTEND THE MEETING

o



A.    Proposals  - The Board of Directors recommends a vote FOR all of the nominees listed below, and FOR Proposals 2 and 3.

x Please mark votes as in this example.

1.

Election of Directors:  To elect Joe Bergera, Kevin C. Daly, Ph.D., Scott E. Deeter, Gerard M. Mooney, Thomas L. Thomas and Mikel H. Williams to the Board of Directors, each to hold such office until the next annual meeting of stockholders or until his successor is elected and qualified.

o Mark here to vote FOR all nominees

o Mark here to WITHHOLD vote from all nominees

o For All EXCEPT - To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below.

2.

Approval of the Iteris, Inc. Employee Stock Purchase Plan.

o FOR

o AGAINST

o ABSTAIN

3.

Ratification of Deloitte & Touche LLP as the independent registered public accounting firm of Iteris for the fiscal year ending March 31, 2018.

o FOR

o AGAINST

o ABSTAIN

B.

Authorized Signature - This section must be completed for your vote to be counted.

Date and Sign below. This Proxy must be signed exactly as your name appears hereon.  Executors, administrators, trustees, etc., should give full title as such.  If the stockholder is a corporation, a duly authorized officer should sign on behalf of the corporation and should indicate his or her title.

Date (mm/dd/yyyy) – Please print date below.

Signature 1 – Please keep signature within the box.

Signature 2 – Please keep signature within the box.

       /       /

IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A, B and C
ON BOTH SIDES OF THIS CARD.




QuickLinks

PROPOSAL ONE: ELECTION OF DIRECTORS
CORPORATE GOVERNANCE
PROPOSAL TWO: APPROVAL OF EMPLOYEE SHARE PURCHASE PLAN
PROPOSAL THREE: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AUDIT COMMITTEE REPORT
EXECUTIVE COMPENSATION AND OTHER INFORMATION
PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN TRANSACTIONS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
ANNUAL REPORT
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
OTHER BUSINESS
Appendix A ITERIS, INC. EMPLOYEE STOCK PURCHASE PLAN