UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
NETLIST, INC.
111 Academy Drive, #100175 Technology Suite 150
Irvine, California 9261892617
(949) 435-0025
June 24, 2020
92617.
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9261720202022 ANNUAL MEETING OF STOCKHOLDERSFriday,7, 202016, 2022
10:00 a.m., Pacific TimeToppan Merrill Corporation2603 Main Street Suite 6105301 California
Olive Room
Irvine, California, 926142020;amendment toadvisory basis, the compensation of our Restated Certificate of Incorporation; and9, 2020.21, 2022. Only stockholders of record at the close of business on the record date are entitled to receive notice of, and to vote at, the Annual Meeting.
Executive Vice President, Chief Financial Officer and Corporate Secretary
July 1, 2022
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Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on Friday, August 7, 2020
Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended December 28, 2019 are available atwww.edocumentview.com/NLST. These proxy materials were first sent or made available to stockholders on June 26, 2020.
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Important Information About the Annual Meeting and Voting
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Security Ownership of Certain Beneficial Owners and Management
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Management and Corporate Governance
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Executive Officers
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Friday,
Toppan Merrill Corporation
92617
No | | | Proposal | | | Vote Required | | | Routine vs. Non- Routine Matter | | | Effect of Abstentions | | | Effect of Broker Non-Votes | |
1 | | | Election of Director | | | Plurality of Votes Cast | | | Non-Routine | | | No effect | | | No effect | |
2 | | | Ratification of Auditor | | | Majority of Votes Cast | | | Routine | | | No effect | | | None expected | |
3 | | | Approve Named Officer Compensation | | | Majority of Votes Cast | | | Non-Routine | | | No effect | | | None expected | |
Name of Beneficial Owner | | | Shares Beneficially Owned | | | Percent of Class(1) | | ||||||
Chun K. Hong(2) | | | | | 7,157,346 | | | | | | 3.1% | | |
Gail Sasaki(3) | | | | | 157,773 | | | | | | * | | |
All executive officers and directors as a group (2 persons)(4) | | | | | 7,315,119 | | | | | | 3.1% | | |
Our Board of Directors held four meetings in Fiscal 2019, and each director attended at least 75% of all meetings of the Board and each committee on which he served in Fiscal 2019 that was held during the period in which the director served. We do not have a policy requiring that directors attend our annual meetings of stockholders, and none of our independent directors attended our 2019 Annual Meeting of Stockholders.
Director Independence
Our common stock was listed on The Nasdaq Capital Market ("Nasdaq") until September 27, 2018. On September 27, 2018, our common stock began trading on the OTCQX® Best Market. OTCQX® Best Market does not require that a majority of the board of directors be independent. Nevertheless, our Board has historically considered the independence of our directors under the listing standards of Nasdaq.
Our Board has determined that each of our directors serving at any time in Fiscal 2019, other than our President and Chief Executive Officer, Chun K. Hong, is an independent director within the meaning of applicable Nasdaq rules. In addition, our Board has determined that each director serving at any time in Fiscal 2019 as a member of our Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee, at all times of such service, satisfied or satisfies all independence standards and financial expertise requirements applicable to members of each such committee under, and taking into account the factors set forth in, Nasdaq and SEC rules, and also constitutes a non-employee director, as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an outside director, as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). In making these determinations, the Board reviewed and discussed information provided by the directors and management regarding each director's business and personal activities as they may relate to our company.
Proposed Changes to Board and Committee Structure
our independent registered public accounting firm.
above, effective immediately after the Annual Meeting, we intend to reduce the number of directors serving on the Board to one director and dissolve all committees of the Board.
Name | Audit | Compensation | Nominating and Corporate Governance | |||
---|---|---|---|---|---|---|
Jun S. Cho | · | · | ||||
Kiho Choi | Chair | · | ||||
Blake A. Welcher | · | Chair | Chair | |||
Number of Meetings Held in Fiscal 2019 | 4 | 2 | 0* |
Audit Committee
The primary functions of our Audit Committee have been, among other things, to:
After the dissolution of the committee, these functions will be filled by our sole director.
matters;
The primary functions of our Compensation Committee have been, among other things, to:
Pursuant to its charter, the Compensation Committee may select, retain and terminate such legal counsel, compensation consultants and other experts or advisors as it deems necessary or appropriate in its sole discretion, and has the authority to approve the fees and retention terms relating to any such consultants or advisors. Pursuant to its charter and in accordance with applicable Nasdaq and SEC rules, the Compensation Committee assessed the independence of any such consultants or advisors, including the existence of any conflicts of interest, before any engagement. In Fiscal 2019, no such consultants or advisors were retained to assist in determining or recommending the amount or form of executive and director compensation.
The Compensation Committee charter permits the Compensation Committee to form and delegate any of its responsibility to subcommittees as it deems necessary or appropriate in its sole discretion, and the terms of the Netlist, Inc. Amended and Restated 2006 Equity Incentive Plan (the "Equity Plan") permit the Compensation Committee, as the administrator of such plan, to delegate to management the authority to grant awards under such plan of up to 25,000 shares of our common stock.
Pursuant to its charter, the Compensation Committee may invite any director, officer or other employee of the Company to be present at meetings of the Compensation Committee, subject to maintenance of the confidentiality of compensation discussions. Our Chief Executive Officer and our Chief Financial Officer have generally participated in meetings of the Compensation Committee at the committee's request in order to, among other things, make presentations regarding the Company and individual performance goals for our executives and other senior employees, which are typically discussed on a semi-annual basis, cash bonus and equity award levels for our executives and other senior employees based on achievement of such performance goals, and changes to base salaries for our executives or other senior employees, as applicable. The Compensation Committee reviews and considers these recommendations, but makes all compensation decisions for our executive officers based on its own judgment and discretion and factors it deems relevant. Our Chief Executive Officer has not historically been involved in discussions about or the determination of any aspect of his own compensation.
After the dissolution of the committee, these functions will be filled by our sole director.
plans;
The primary functions of our Nominating and Corporate Governance Committee have been, among other things, to:
After the dissolution of the committee, these functions will be filled by our sole director.
Our Nominating and Corporate Governance Committee has been responsible for identifying qualified individuals to become members of our Board of Directors and recommending to the Board proposed nominees for Board membership. In identifying and recommending qualified director candidates, the Nominating and Corporate Governance Committee reviewed and evaluated each proposed individual's skills, expertise, industry and other knowledge and business and other experience that may be useful to the effective oversight of the Company's business. In evaluating continuing directors, the Board also considered an individual's past contributions to the Board and the tenure of the continuing director. Under the Nominating and Corporate Governance Committee charter, the qualifications to be considered in the selection of director candidates, among others as the committee deems relevant, are broad experience in business, finance or administration; familiarity with the Company's industry; and prominence and reputation. Additionally, since prominence and reputation in a particular profession or field of endeavor are what brings most prospective director candidates to the Board's attention, the Nominating and Corporate Governance Committee also considers whether a prospective candidate has the time available to devote to the work of the Board and one or more of its committees. The Committee also reviewed the activities and associations of each prospective director candidate to ensure that there was no legal impediment, conflict of interest, or other consideration that might hinder or prevent service on the Board.
After the dissolution of the committee, these functions will be filled by our sole director.
Identification and Evaluation of Director Nominees
The Nominating and Corporate Governance Committee has had the discretion to consider and evaluate potential director candidates at any point during our fiscal year. In addition, in connection with each annual meeting of our stockholders, the Nominating and Corporate Governance Committee has recommended to our Board certain director nominees for election at the annual meeting by our stockholders, and the Board then selects its slate of director nominees based on its determination, using the recommendation and other information provided by the Nominating and Corporate Governance Committee as it deems appropriate, of the suitability of all potential director candidates, individually and in the aggregate, to serve as directors of our Company.
Stockholder Recommendations of Director Candidates
Our Nominating and Corporate Governance Committee has considered director candidates recommended by our stockholders. Effective immediately after the Annual Meeting, the Nominating and Corporate Governance Committee will be dissolved and any
Our Board of Directors has adopted a set of Corporate Governance Guidelines to assist the Board and its committees in fulfilling their respective responsibilities. Our Board of Directors has also adopted a Code of Business Conduct and Ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions, as well as all of our other executive officers and employees and all of our directors, which satisfies applicable requirements of the Sarbanes-Oxley Act of 2002 and SEC rules. Our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website,www.netlist.com. We intend to disclose on our website any amendments to or waivers from our Code of Business Conduct and Ethics, to the extent required by applicable law or SEC rules. We are withdrawingwithdrew our Corporate Governance Guidelines effective as of the 2020 Annual Meeting.Meeting of Stockholders. We do not have a hedging policy for our employees, officers and directors at this time.
Company.
Name | | | Age | | | Position(s) | |
Chun K. Hong | | | 61 | | | President, Chief Executive Officer and Sole Director | |
Gail Sasaki | | | 65 | | | Executive Vice President, Chief Financial Officer and Secretary | |
Name | | | Fiscal Year 2021 Base Salary ($) | | |||
Chun K. Hong | | | | | 450,000 | | |
Gail Sasaki | | | | | 275,000 | | |
Name and Principal Position | Fiscal Year | Salary($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total($) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Chun K. Hong | 2019 | 323,000 | 408,004 | 51,486 | 782,490 | |||||||||||
President and Chief Executive Officer | 2018 | 323,000 | 75,780 | 47,328 | 446,108 | |||||||||||
Gail Sasaki | 2019 | 200,000 | 223,992 | — | 423,992 | |||||||||||
Vice President, Chief Financial Officer and | 2018 | 200,000 | 18,945 | 1,385 | 220,330 | |||||||||||
Secretary |
Name and Principal Position | | | Year | | | Base Salary($) | | | Bonus($) | | | Stock Awards($)(1) | | | Option Awards($)(2) | | | All Other Compensation($)(3) | | | Total($) | | |||||||||||||||||||||
Chun K. Hong(4) President, Chief Executive Officer and Sole Director | | | | | 2021 | | | | | | 450,000 | | | | | | 665,000 | | | | | | — | | | | | | 627,060 | | | | | | 58,215 | | | | | | 1,800,275 | | |
| | | 2020 | | | | | | 467,308 | | | | | | 180,000 | | | | | | 94,290 | | | | | | — | | | | | | 62,092 | | | | | | 803,690 | | | ||
| | | 2019 | | | | | | 323,000 | | | | | | — | | | | | | 408,004 | | | | | | — | | | | | | 51,486 | | | | | | 782,490 | | | ||
Gail Sasaki Executive Vice President, Chief Financial Officer and Secretary | | | | | 2021 | | | | | | 275,000 | | | | | | 205,000 | | | | | | 72,400 | | | | | | — | | | | | | 22,007 | | | | | | 574,407 | | |
| | | 2020 | | | | | | 285,577 | | | | | | 103,125 | | | | | | 23,573 | | | | | | — | | | | | | 22,254 | | | | | | 434,529 | | | ||
| | | 2019 | | | | | | 200,000 | | | | | | — | | | | | | 223,992 | | | | | | — | | | | | | — | | | | | | 423,992 | | |
Name | | | Award Type | | | Grant Date | | | Estimated future payouts under non-equity incentive plan awards | | | All other stock awards: number of shares of stock or units (#)(4) | | | All other option awards: number of securities underlying options (#) | | | Exercise or base price of option awards ($/sh) | | | Grant date fair value of stock and option awards | | ||||||||||||||||||||||||||||||
| Threshold ($) | | | Target ($) | | | Maximum ($) | | ||||||||||||||||||||||||||||||||||||||||||||
Chun K. Hong | | | Cash Incentive(1) | | | | | — | | | | | | — | | | | | | 665,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Stock Options(2) | | | | | 1/13/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,000,000 | | | | | | 0.72 | | | | | | 627,060 | | | ||
Gail Sasaki | | | Cash Incentive(1) | | | | | — | | | | | | — | | | | | | 205,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Time-Based RSUs(3) | | | | | 1/13/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | 100,000 | | | | | | — | | | | | | — | | | | | | 72,400 | | |
would be entitled to receive continued payments of his base salary for one year, reimbursement of medical insurance premiums during that period unless he becomes employed elsewhere, a pro-rated portion of his annual performance bonus, and, if any severance payment is deemed to be an "excess“excess parachute payment"payment” within the meaning of Section 280G of the Code, an amount equal to any excise tax imposed under Section 4999 of the Code. In addition, upon any such termination or resignation, any unvested stock options held by Mr. Hong would immediately become fully vested and exercisable as of the effective date of the termination or resignation. If Mr. Hong'sHong’s employment is terminated due to death or disability, he or his estate would receive a lump-sum payment equal to half of his annual base salary and any stock options held by Mr. Hong would vest to the same extent
our assets, other than a sale or disposition of all or substantially all of our assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by our stockholders in substantially the same proportions as their ownership of our Company immediately prior to such sale.
We have not entered into an employment agreement with Ms. Sasaki, our Vice President, Chief Financial Officer and Secretary.
period.
No cash bonuses were paid to either Mr. Hong or Ms. Sasaki for Fiscal 2019 and Fiscal 2018.
Retirement Benefits
Outstanding Equity Awards at Fiscal Year End
| | | | | | | | | Option Awards | | | Stock Awards | | ||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Securities Underlying Unexercised Options Exercisable(#)(1) | | | Number of Securities Underlying Unexercised Options Unexercisable(#)(1) | | | Option Exercise Price($) | | | Option Expiration Date | | | Number of Shares That Have Not Vested(#)(2) | | | Market Value of Shares That Have Not Vested($)(2) | | |||||||||||||||||||||
Chun K. Hong | | | | | 2/11/2013 | | | | | | 300,000 | | | | | | — | | | | | | 0.71 | | | | | | 2/11/2023 | | | | | | — | | | | | | — | | |
| | | 2/21/2014 | | | | | | 300,000 | | | | | | — | | | | | | 2.05 | | | | | | 2/21/2024 | | | | | | — | | | | | | — | | | ||
| | | 1/6/2015 | | | | | | 300,000 | | | | | | — | | | | | | 0.84 | | | | | | 1/6/2025 | | | | | | — | | | | | | — | | | ||
| | | 1/18/2016 | | | | | | 300,000 | | | | | | — | | | | | | 0.70 | | | | | | 1/18/2026 | | | | | | — | | | | | | — | | | ||
| | | 2/14/2017 | | | | | | 300,000 | | | | | | — | | | | | | 1.02 | | | | | | 2/14/2027 | | | | | | — | | | | | | — | | | ||
| | | 1/13/2021 | | | | | | 187,500 | | | | | | 812,500 | | | | | | 0.72 | | | | | | 1/13/2031 | | | | | | — | | | | | | — | | | ||
| | | 3/7/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 278,436 | | | | | | 1,795,912 | | | ||
| | | 3/6/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 187,500 | | | | | | 1,209,375 | | | ||
Gail Sasaki | | | | | 3/18/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 154,405 | | | | | | 995,912 | | |
| | | 3/6/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 46,875 | | | | | | 302,344 | | | ||
| | | 1/13/2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 87,500 | | | | | | 564,375 | | |
| | Option Awards | Stock Awards | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable(#)(1) | Number of Securities Underlying Unexercised Options Unexercisable(#)(1) | Option Exercise Price($) | Option Expiration Date | Number of Shares That Have Not Vested(#)(2) | Market Value of Shares That Have Not Vested($)(2) | |||||||||||||||
Chun K. Hong | 3/17/2011 | 300,000 | — | 2.21 | 3/17/2021 | — | — | |||||||||||||||
2/27/2012 | 300,000 | — | 3.59 | 2/27/2022 | — | — | ||||||||||||||||
2/11/2013 | 300,000 | — | 0.71 | 2/11/2023 | — | — | ||||||||||||||||
2/21/2014 | 300,000 | — | 2.05 | 2/21/2024 | — | — | ||||||||||||||||
1/6/2015 | 300,000 | — | 0.84 | 1/6/2025 | — | — | ||||||||||||||||
1/8/2016 | 281,250 | 18,750 | 0.70 | 1/18/2026 | — | — | ||||||||||||||||
2/14/2017 | 131,250 | 93,750 | 1.02 | 2/14/2027 | — | — | ||||||||||||||||
4/13/2018 | — | — | — | — | 150,000 | 47,820 | ||||||||||||||||
3/7/2019 | — | — | — | — | 649,687 | 207,120 | ||||||||||||||||
Gail Sasaki | 3/17/2011 | 75,000 | — | 2.21 | 3/17/2021 | — | — | |||||||||||||||
2/27/2012 | 75,000 | — | 3.59 | 2/27/2022 | — | — | ||||||||||||||||
2/11/2013 | 75,000 | — | 0.71 | 2/11/2023 | — | — | ||||||||||||||||
2/21/2014 | 75,000 | — | 2.05 | 2/21/2024 | — | — | ||||||||||||||||
1/6/2015 | 75,000 | — | 0.84 | 1/6/2025 | — | — | ||||||||||||||||
1/18/2016 | 70,312 | 4,688 | 0.70 | 1/18/2026 | — | — | ||||||||||||||||
2/14/2017 | 51,562 | 23,438 | 1.02 | 2/14/2027 | — | — | ||||||||||||||||
4/13/2018 | — | — | — | — | 37,500 | 11,955 | ||||||||||||||||
3/18/2019 | — | — | — | — | 360,281 | 114,858 |
On March 6, 2020,Table”). We then applied this measure to our Compensation Committee approved compensation forglobal employee population as of January 1, 2022 (the last day of our two named executive officers beginning calendar year 2020. The Compensation Committee approved a base salary2021 fiscal year). For the calculation, approximately 49% of $450,000 per annum for Chun K. Hong, our Chief Executive Officer, and $275,000 per annum for Gail Sasaki, our Chief Financial Officer. In making this determination, the Compensation Committee considered that both officers had held their positions since our initial public offering in 2006 and that Mr. Hong had not received an increase in his base salary for 13 years and Ms. Sasaki had not received any increase in her base salary for 10 years. In its deliberations regarding the adjustments to base salary, the Compensation Committee considered the cost of living increasesglobal employee population was based in the United States California and Orange County, California51% was based in our Suzhou, China factory.
Name | | | Option Awards | | | Stock Awards | | ||||||||||||||||||
| Number of Shares Acquired on Exercise(#) | | | Value Realized on Exercise($)(1) | | | Number of Shares Acquired on Vesting(#) | | | Value Realized on Vesting($)(2) | | ||||||||||||||
Chun K. Hong | | | | | 300,000 | | | | | | 1,106,687 | | | | | | 260,625 | | | | | | 1,021,648 | | |
Gail Sasaki | | | | | 450,000 | | | | | | 2,099,092 | | | | | | 134,188 | | | | | | 513,070 | | |
DIRECTOR COMPENSATION
Non-Employee Director Compensation
Our non-employee directors receive annual cash compensation of $30,000, which is paid in four equal quarterly installments, and additional cash payments of $1,000 for each regularly scheduled Board meeting and each Board committee meeting not held on the same day as a Board meeting that is attendedexercised option multiplied by the director. The Lead Independent Director anddifference between the Chair of our Audit Committee each receive additional cash compensation of $5,000 per year. All of our directors, including our non-employee directors, are also reimbursed for their reasonable out-of-pocket expenses incurred in attending Board and Board committee meetings.
In addition, each of our non-employee directors is granted a stock option award to purchase up to 25,000 sharesmarket price of our common stock upon his or her initial appointment or election toat the Board,time of exercise on the exercise date and a stockthe exercise price of the option award to purchase up to 20,000
Directors who are our employees receive no additional compensation for their service as directors.
Director Compensation Table
The following table shows the compensation of our non-employee directors for Fiscal 2019. Mr. Hong, our President and Chief Executive Officer, is not included in this table because he is an employee of our Company and receives no additional compensation for his service as a director. The compensation received by Mr. Hong as an employee of our Company is described in "Executive Compensation."
Name | Fees Earned or Paid in Cash($) | Stock Awards($)(1) | Total($)(2) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Jun S. Cho | 43,004 | 59,840 | 102,844 | |||||||
Kiho Choi | 45,004 | 54,400 | 99,404 | |||||||
Blake A. Welcher | 40.000 | 70,720 | 110,720 |
Plan Category | | | Equity Compensation Plan Information | | |||||||||||||||
| Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights($)(1) | | | Number of securities remaining available for future equity compensation plans | | |||||||||||
Equity compensation plans approved by security holders | | | | | 8,126,728(2) | | | | | | 0.88 | | | | | | 1,726,990(3) | | |
Equity compensation plans not approved by security holders | | | | | 450,000(4) | | | | | | 0.77 | | | | | | — | | |
Total | | | | | 8,576,728 | | | | | | 0.88 | | | | | | 1,726,990 | | |
Plan: 5,898,926 shares subject to outstanding stock options and 2,227,802 shares subject to outstanding RSUs.
sole Director.
Equity Plan typically vest over four years in either 16 equal quarterly installments or one installment of 25% of the shares subject to the award on the one-year anniversary of the grant date and 12 equal quarterly installments thereafter, subject to continued service on each vesting date.
RSUs granted for employees and consultants under the Equity Plan typically vest semi-annually from the grant date over a four-year term, subject to continued service on each vesting date.
is the lesser of (i) the difference between the amount realized on the disposition and the exercise price or (ii) the difference between the fair market value of the stock on the exercise date and the exercise price. Any gain in excess of the amount taxed as ordinary income will be treated as a long or short-term capital gain, depending on whether the stock was held for more than one year. The Company, in the year of the disqualifying disposition, is entitled to a deduction equal to the amount of ordinary income recognized by the option holder, subject to possible limitations imposed by Section 162(m) of the Code and so long as the option holder'sholder’s total compensation is deemed reasonable in amount.
The following table provides information as” since December 30, 2018, there has not been, nor is there currently proposed, any transaction or series of December 28, 2019 about compensation plans undertransactions in which our equity securities are authorized for issuance:
| Equity Compensation Plan Information | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights($)(1) | Number of securities remaining available for future equity compensation plans | |||||||
Equity compensation plans approved by security holders | 10,422,437 | (2) | 1.17 | 1,101,572 | (3) | |||||
Equity compensation plans not approved by security holders | 800,000 | (4) | 0.22 | — | ||||||
| | | | | | | | | | |
Total | 11,222,437 | 1.10 | 1,101,572 | |||||||
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PROPOSAL No. 1—ELECTION OF DIRECTOR
The Nominating and Corporate Governance CommitteeWe have entered into indemnification agreements with each of our Boarddirectors and executive officers. In general, these agreements require us to indemnify each such individual to the fullest extent permitted under Delaware law against certain liabilities that may arise by reason of Directors has recommended,their service for us, and to advance expenses incurred as a result of any such proceeding as to which any such individual could be indemnified.
PROPOSAL No. 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit CommitteeAppointment of our Board of DirectorsIndependent Registered Public Accounting Firm
2022.
| | | Fiscal 2021($) | | | Fiscal 2020($) | | ||||||
Audit Fees(1) | | | | $ | 202,650 | | | | | $ | 118,550 | | |
Audit-Related Fees(2) | | | | | — | | | | | | — | | |
Tax Fees(2) | | | | | — | | | | | | — | | |
All Other Fees(2) | | | | | — | | | | | | — | | |
Total Fees | | | | $ | 202,650 | | | | | $ | 118,550 | | |
| Fiscal 2019($) | Fiscal 2018($) | |||||
---|---|---|---|---|---|---|---|
Audit Fees(1) | 126,800 | 137,600 | |||||
Audit-Related Fees(2) | — | — | |||||
Tax Fees(2) | — | — | |||||
All Other Fees(2) | — | — | |||||
| | | | | | | |
Total Fees | 126,800 | 137,600 | |||||
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The
Sole Director
.PROPOSAL No. 3—APPROVAL OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF OUR COMMON STOCK
Our Restated Certificate currently authorizes the issuanceSecurities Exchange Act of 300,000,000 shares1934, as amended, on the approval of the compensation of our common stock, par value $0.001 per share. named executive officers as described in the Compensation Discussion and Analysis, the compensation tables and related material contained in this proxy statement. Because your vote is advisory, it will not be binding on our Compensation committee or our Board of Directors. However, the Compensation committee and our board of directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. We have determined to hold an advisory vote to approve the compensation of our named executive officers every three years, and the next such advisory vote will occur at the 2025 Annual Meeting of Stockholders.
Background: Our Current Capitalization
As of June 9, 2020, with respect to our common stock, there were:
Based on the above capitalization information, only 28,466,935 shares of our currently authorized common stock remained unissued and unreserved and available for future issuance as of June 9, 2020.
Reasons for the Proposed Increase to Our Authorized Shares of Common Stock
The Board has determined, in its business judgment, that an increase to the authorized shares of our common stock by approximately 50%, from 300,000,000 shares to 450,000,000 shares, is in the best interests of the Company and our stockholders, and as a result the Board has unanimously approved such an increase, subject to stockholder approval, and has unanimously recommended that our stockholders approve such an increase by voting in favor of this Proposal No. 3. In making this determination and approval, the Board considered, among other things: our historical share issuance purposes and rates, as described below; our anticipated future share requirements; guidelines and potential voting recommendations of third-party proxy advisory services, including Institutional Shareholder Services ("ISS"); recent practices at other public companies; and a recommendation from our management.
The Board believes the proposed increase to the authorized shares of our common stock is desirable, and is requesting that our stockholders approve the increase, for the following reasons:
We currently have no specific commitments, oral or written, which would require us to issue a material amount of new shares of our common stock, except with respect to the issuance of shares of our common stock (1) upon the exercise or conversion of outstanding securities, and (2) in connection with the Equity Plan and awards granted thereunder.
Possible Adverse Effects if this Proposal No. 3 Is Approved
If this Proposal No. 3 is approved by our stockholders, the Board would generally be able to issue the additional authorized shares in its discretion from time to time without further action by or approval of our stockholders, subject to and as limited by the rules and listing requirements of the OTCQX or any other then applicable securities exchange and the requirements of all applicable law.
Approval of this Proposal No. 3 could have the following adverse effects:
have agreements or other firm commitments for any such issuance, it is impossible to predict at this time the dilutive impact of any future share issuance. The level of any potential dilution would depend on a number of factors, including the price of our common stock at the time of any future issuance and the number of shares of our common stock then outstanding.
Except as described above, we do not presently have any plans, intentions or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences, and the Board is not presently aware of any attempt, or contemplated attempt, to acquire control of our Company. Further, this Proposal No. 3 is not being presented with the design or intent that it be used to prevent or discourage a change in control or management or an acquisition attempt; however, stockholders should be aware that nothing would prevent the Board from taking any such actions that it deems consistent with its fiduciary duties.
Possible Adverse Effects if this Proposal No. 3 Is Not Approved
If this Proposal No. 3 is not approved by our stockholders, the number of shares of our common stock we would be authorized to issue would remain at its current level of 300,000,000 shares, and we would have only 28,466,935 shares of our common stock available for future issuance (based on our capitalization as of June 9, 2020, as described above, which does not take into account additional issuances of shares of our common stock in our ongoing "at-the-market" common stock offering program or for other reasons after that date).
A failure to obtain the approval of our stockholders of this Proposal No. 3 could have the following adverse effects:
remain on-going. Our capital requirements to support our existing operations, satisfy our commitments and pursue future growth depend on many factors, and we may need to raise additional funding through the issuance of equity or convertible debt securities in the future. If this Proposal No. 3 is not approved by our stockholders, then we may not have sufficient authorized and unreserved shares of our common stock to pursue such capital-raising transactions if and when market conditions and other factors make these funds available, in which case we may not be able to execute our business plans or take advantage of future opportunities, and we may be forced to modify our business model, implement cost-cutting measures, delay, scale back or eliminate some or all of our ongoing and planned investments and initiatives, or reduce or cease our operations entirely. Any of these outcomes could have a material adverse effect on our business, performance and prospects.
Rights of Additional Authorized Shares of Common Stock
The additional authorized shares of our common stock, if and when issued, would be part of our existing class of common stock and would have the same rights, preferences and privileges as the shares of common stock that are currently issued and outstanding.
Text and Effectiveness of the Increase to Our Authorized Shares of Common Stock
We propose to effect the increase to the authorized shares of our common stock by amending the first two sentences of Article IV(A) of our Restated Certificate to read in their entirety as follows:
"The corporation is authorized to issue two classes of stock to be designated, respectively, "Serial Preferred Stock" and "Common Stock." The total number of shares of stock which the corporation is authorized to issue is Four Hundred Sixty Million (460,000,000) shares consisting of Ten Million (10,000,000) shares of Serial Preferred Stock, with a par value of $0.001 per share, and Four Hundred Fifty Million (450,000,000) shares of Common Stock, with a par value of $0.001 per share."
The only change to the language of Article IV(A) being voted on in this Proposal No. 3 is to increase the total number of shares of our common stock we may issue by approximately 50%, from 300,000,000 shares to 450,000,000 shares, and consequently the total number of shares of stock we may issue by the same amount. Other than as set forth above, our Restated Certificate as currently in effect would remain unchanged by the amendment to effect the authorized share increase contemplated by this Proposal No. 3.
If this Proposal No. 3 is approved and adopted by our stockholders at the Annual Meeting, the increase to our authorized shares contemplated hereby would become effective upon our filing of a Certificate of Amendment to our Restated Certificate with the Secretary of State of the State of Delaware reflecting the amendments to Article IV(A) thereof as set forth above, or at such other date and time as may be specified in the Certificate of Amendment. Subject to the discretion of the Board to abandon the authorized share increase contemplated by this Proposal No. 3, as described below, we
expect to file such an amendment with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval.
Board Discretion to Abandon the Increase to Our Authorized Shares of Common Stock
Even if this Proposal No. 3 is approved by our stockholders, the Board retains the discretion to abandon the increase to the authorized shares of our common stock as contemplated hereby, if it determines such an abandonment to be in the best interests of the Company and our stockholders.
No Appraisal Rights
Under applicable Delaware law, our stockholders are not entitled to appraisal rights with respect to the proposed amendment to our Restated Certificate to increase the number of authorized shares of our common stock we are authorized to issue.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"“FOR” THE APPROVAL OF AN AMENDMENT TO OUR RESTATED CERTIFICATE TO INCREASE THE AUTHORIZED SHARESCOMPENSATION OF OUR COMMON STOCK.
This report has been reviewed and approved by the members of the Audit Committee of the Board of Directors. Each such member is an independent director within the meaning of applicable SEC rules. The Audit Committee has the duties and powers described in its written charter adopted by the Board. A copy of the charter is available on our website,www.netlist.com.
The purpose of the Audit Committee is to assist the Board in overseeing the integrity of Company's financial reporting process and financial statements, the Company's compliance with legal and regulatory requirements, and the performance, qualifications and independence of our independent registered public accounting firm. Management is responsible for the Company's financial reporting process and for designing and monitoring internal control systems. Our independent registered public accounting firm, KMJ, is responsible for performing an independent audit of the Company's consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB").
In fulfilling its responsibilities, the Audit Committee has reviewed and discussed, with management and KMJ, our annual audited consolidated financial statements for our fiscal year ended December 28, 2019. The Audit Committee has also discussed with KMJ the matters required to be discussed by Auditing Standard No. 1301, "Communications with Audit Committees." In addition, the Audit Committee has received the written disclosures and the letter from KMJ required by applicable requirements of the PCAOB regarding KMJ's communications with the Audit Committee concerning independence and has discussed with KMJ its independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the financial statements referred to above be included in our annual report on Form 10-K for our fiscal year ended December 28, 2019 for filing with the SEC.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information regarding the ownership of our common stock, as of June 9, 2020 (the "Table Date") unless otherwise indicated in the footnotes to the table, by (i) all persons known by us to beneficially own more than 5% of our common stock, (ii) each of our current directors, (iii) each of our named executive officers, and (iv) all of our directors and executive officers as a group. We know of no agreements among our stockholders that relate to voting or investment power over our common stock or any arrangement the operation of which may at a subsequent date result in a change of control of our Company. Beneficial ownership is determined in accordance with applicable SEC rules and generally reflects sole and shared voting or investment power over securities. Under these rules, a person is deemed to be the beneficial owner of securities the person has the right to acquire as of or within 60 days after the Table Date, upon the exercise of outstanding stock options or warrants, the conversion of outstanding convertible notes, or the exercise or conversion of any other derivative securities affording the person the right to acquire shares of our common stock. As a result, each person's percentage ownership set forth in the table below is determined by assuming that all outstanding stock options, warrants or other derivative securities held by such person that are exercisable or convertible as of or within 60 days after the Table Date have been exercised or converted. Except in cases where community property laws apply or as indicated in the footnotes to the table, we believe each person named below possesses sole voting and investment power over all shares of common stock shown as beneficially owned by such person. Unless otherwise indicated, the address for each person named below is c/o Netlist, Inc., 175 Technology Drive, Suite 150, Irvine, CA 92618.
Name of Beneficial Owner | Shares Beneficially Owned | Percent of Class(1) | |||
---|---|---|---|---|---|
Chun K. Hong(2) | 10,892,932 | 6.1% | |||
Gail Sasaki(3) | 701,670 | * | |||
Jun S. Cho(4) | 410,500 | * | |||
Kiho Choi(5) | 145,000 | * | |||
Blake A. Welcher(6) | 255,000 | * | |||
All executive officers and directors as a group (5 persons)(7) | 12,405,102 | 6.9% |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions
Except as described below and except for employment arrangements and compensation for Board service, which are described in "Director Compensation," since December 31, 2017, there has not been, nor is there currently proposed, any transaction or series of transactions in which our Company was or is to be a participant, in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for our last two completed fiscal years, and in which any director, officer or beneficial owner of more than 5% of our common stock, or member of any such person's immediate family, had or will have a direct or indirect material interest.
On May 17, 2018, we entered into a Share Purchase Agreement with a trust controlled by Mr. Hong, our President, Chief Executive Officer and Chairman of the Board, pursuant to which we issued and sold to Mr. Hong's trust 5,405,405 shares of our common stock at a price per share of $0.148 and for aggregate gross proceeds of approximately $800,000. The closing of such purchase and sale occurred on May 21, 2018. See "Security Ownership of Certain Beneficial Owners and Management" for more information about Mr. Hong's beneficial ownership of our securities.
Our Vice President of Netlist Base and Commodity Sales (formally, our Vice President of Operations), Paik K. Hong, is the brother of Chun K. Hong, our President, Chief Executive Officer and Chairman of the Board. For 2019, Mr. P. K. Hong earned cash salary of $225,001, cash bonus of $112,500 and was granted 411,750 shares of restricted stock units with grant-date fair value of $223,992 measured in accordance with ASC 718. For Fiscal 2018, Mr. Paik K. Hong earned cash salary of $200,000 and was granted 75,000 shares of restricted stock awards with grant date fair value of $18,945 measured in accordance with ASC 718. The grant-date fair value was determined using the fair value of the underlying shares of our common stock. In March 2020, our Audit Committee approved the increase in his annual base salary to $250,000.
We have entered into indemnification agreements with each of our directors and executive officers. In general, these agreements require us to indemnify each such individual to the fullest extent permitted under Delaware law against certain liabilities that may arise by reason of their service for us, and to advance expenses incurred as a result of any such proceeding as to which any such individual could be indemnified.
Policies and Procedures for Review and Approval of Related Party Transactions
The sole director will be responsible for reviewing and approving in advance any transactions with a related party. To the extent any such transactions arise between the sole director and our company we will seek stockholder approval.
GENERAL INFORMATION
2020 Annual Meeting of Stockholders
Friday, August 7, 202010:00 a.m., Pacific Time
Toppan Merrill Corporation2603 Main Street, Suite 610,Irvine, California 92614
The Record Date for the Annual Meeting is June 9, 2020. Only stockholders of record at the close of business on this date are entitled to vote at the Annual Meeting and any adjournment or postponement thereof.
You are invited to vote on the proposals described in this Proxy Statement because you were a Netlist shareholder on the Record Date.
Netlist is soliciting proxies for use at the Annual Meeting, including any postponements or adjournments.
Attending and Voting at the Annual Meeting
If you plan to attend the Annual Meeting and wish to vote in person, you will be given a ballot for voting at the Annual Meeting. If you elect to attend the Annual Meeting, you may be asked to present valid picture identification, such as a driver's license or passport, to gain admission. Additionally, if you hold your shares in street name and you decide to attend and vote at the Annual Meeting in person, you will need to bring a copy of a brokerage statement reflecting your ownership of our common stock as of the Record Date, as well as a legal proxy issued in your name from your broker or other nominee that holds your shares on your behalf. Contact your broker or other nominee to obtain these items.
We encourage you to submit your proxy or voting instructions in advance of the Annual Meeting to ensure that your vote will be counted. Submitting your proxy before the Annual Meeting will not affect your right to vote in person if you decide to attend the Annual Meeting, but your presence at the Annual Meeting will not in itself revoke a submitted proxy. In order to do so, you must cast a written ballot at the Annual Meeting and your proxy will be revoked as to the matters on which the ballot is cast.
Proxy Materials
These materials were first sent or made available to stockholders on June 26, 2020, and include:
If you requested printed versions by mail, these printed proxy materials also include the proxy card or voting instruction form for the Annual Meeting. If you would like to receive our proxy materials for future annual meetings of our stockholders by e-mail or by mail, you may submit such consent by writing to the attention of our Corporate Secretary at the address of our principal executive offices or by following the instructions on the proxy card.
Eliminating Duplicate Mailings
We have adopted a procedure called "householding." Under this procedure, we may deliver one copy of the Notice of Internet Availability of Proxy Materials, this Proxy Statement and the Annual Report to stockholders residing at the same address, unless stockholders have notified us of their desire
to receive multiple copies. This procedure reduces the environmental impact of our annual meetings and reduces our printing and mailing costs.
Once you have received notice from your broker or other nominee that it will be householding communications to your address, householding will continue until you are notified otherwise or until you provide contrary instructions. If you are a stockholder residing at the same address to which one copy of the Notice of Internet Availability of Proxy Materials, this Proxy Statement and the Annual Report was delivered, upon receipt of a written or oral request submitted to us, by writing to our Corporate Secretary at the address of our principal executive offices or by calling Investor Relations at (212) 739-6740, we will deliver promptly, at no charge, a separate copy of all or any such materials.
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate copy of the Notice of Internet Availability of Proxy Materials, our Proxy Statement and the Annual Report, please notify your broker or other nominee or direct your written or oral request to us as described above. Additionally, stockholders who receive multiple copies of the Notice of Internet Availability of Proxy Materials, this Proxy Statement and the Annual Report at their shared address and would like to request householding of these materials for future annual meetings of our stockholders should contact their brokers or other nominees or direct a written or oral request to us as described above.
Quorum for the Annual Meeting
Holders of a majority of the shares entitled to vote at the Annual Meeting must be present at the Annual Meeting in person or by proxy for the transaction of business. This is called a quorum. Abstentions and broker non-votes, which are explained under "Effect of Not Providing Voting Instructions; Broker Non-Votes" below, as well as shares as to which authority to vote on any proposal is withheld, are each counted as present at the Annual Meeting for purposes of determining a quorum.
Proxy Solicitation Costs
We will pay the costs of preparing, assembling, printing and mailing to our stockholders this Proxy Statement and our other proxy materials for the Annual Meeting, as well as all other costs of soliciting proxies for the Annual Meeting. We may request brokers or other nominees to solicit their customers who beneficially own shares of our common stock that are held of record by the broker or other nominee, and we will reimburse these brokers or other nominees for their reasonable out-of-pocket expenses in making these solicitations. Solicitations will be made primarily through the delivery of this Proxy Statement and our other proxy materials for the Annual Meeting to our stockholders and the availability of these materials on the Internet, and may be supplemented by telephone, facsimile, e-mail and personal solicitation by our directors, officers and other employees. No additional compensation will be paid to our directors, officers or other employees for these activities, and we have not engaged special employees for the specific purpose of undertaking these activities.
Netlist's Fiscal Year
Netlist's fiscal year is the 52- or 53-week period that ends on the Saturday closest to December 31. Netlist's 2019 and 2018 fiscal years ended on December 28, 2019 and December 29, 2018, respectively, and consisted of 52 weeks. Information presented in this Proxy Statement is based on Netlist's fiscal calendar.
Voting Matters
Each share of our common stock has one vote on each matter. Only "stockholders of record" as of the close of business on the Record Date are entitled to vote at the Annual Meeting. At the close of business on June 9, 2020, there were 176,481,802 outstanding shares of our common stock. In addition
to shareholders of record of our common stock, "beneficial owners of shares held in street name" as of the Record Date can vote using the methods described below.
How to Cast or Revoke Your Vote
Stockholders of Record
If you are a stockholder of record, meaning that at the close of business on the Record Date your shares were registered directly in your name with Computershare Trust Company, N.A., our transfer agent, then you may vote your shares either by taking any one of the following actions:
Votes cast in person or by a mailed proxy must be received no later than the close of voting at the Annual Meeting to be counted, and votes cast by telephone or the Internet must be received by 1:00 a.m., Pacific Time, on August 7, 2020 to be counted. If the Annual Meeting is postponed or adjourned, a properly submitted proxy will remain valid and will be voted at the postponed or adjourned meeting unless it is revoked before it is actually voted, as described below.
If you are a stockholder of record and submit your proxy, you may revoke it at any time before it is used by taking any of the following actions (any of which will automatically revoke an earlier-provided proxy):
To be effective, any later-dated proxy must be received by the applicable deadline for the voting method used, and any written notice of revocation must be received no later than the close of voting at the Annual Meeting. Only your latest-dated vote that is received by the deadline applicable to the voting method used will be counted.
Beneficial Owners of Shares Held in Street Name
If you are a beneficial owner of shares of our common stock that are held in street name, then you will receive a notice from your broker or other nominee that includes instructions on how to vote your shares. Your broker or other nominee may allow you to deliver your vote via the Internet or by telephone. In addition, if you are a beneficial owner, you will receive instructions from your broker or other nominee regarding how to revoke a previously submitted proxy or otherwise change your voting instructions. As a result, beneficial owners should follow the instructions provided by their brokers or other nominees in order to vote their shares at the Annual Meeting.
If you hold your shares in street name and you wish to attend or vote in person at the Annual Meeting, then you must bring certain items with you in order to gain admission to and vote at the Annual Meeting, as described under "Attending and Voting at the Annual Meeting" above.
Effect of Not Providing Voting Instructions; Broker Non-Votes
Stockholders of Record. You are a "stockholder of record" if your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent. If you were a stockholder of record at the close of business on the Record Date and you submit a valid proxy that does not provide
voting instructions with respect to your shares, all shares represented by your proxy will be voted in accordance with the recommendation of our Board on each proposal to be presented at the Annual Meeting, as described in this Proxy Statement.
Beneficial Owners of Shares Held in Street Name. You are a beneficial owner of shares held in "street name" if your shares are not held of record in your name but are held by a broker or other nominee on your behalf as the beneficial owner. If your shares were held in street name at the close of business on the Record Date, it is critical that you provide voting instructions to your broker or other nominee if you want your vote to count on the election of directors (Proposal No. 1). This proposal constitutes a "non-routine" matter on which a broker or other nominee is not entitled to vote shares held for a beneficial owner without receiving specific voting instructions from the beneficial owner. As a result, if you hold your shares in street name and you do not instruct your broker or other nominee on how to vote on Proposal No. 1, then no vote would be cast on this proposal on your behalf and a "broker non-vote" would occur. Your broker or other nominee will, however, have discretion to vote uninstructed shares on the ratification of the appointment of KMJ as our independent registered public accounting firm (Proposal No. 2) and the approval of an amendment to our Restated Certificate to increase the number of authorized shares of our common stock (Proposal No. 3), because these proposals constitute "routine" matters on which a broker or other nominee is entitled to vote shares held on behalf of a beneficial owner even without receiving voting instructions from the beneficial owner. Generally, brokers and other nominees will vote any such uninstructed shares in accordance with the recommendation of the Board for the applicable proposal. As a result, broker non-votes are not expected to occur in the vote on Proposal No. 2 and 3, and any uninstructed shares held in street name are expected to be voted on each such proposal in accordance with the recommendation of our Board as described in this Proxy Statement.
Voting Requirements
The vote required to approve Proposals No. 1 to 3 is as follows:
Below is a summary of the voting requirements for each proposal to be voted on at the Annual Meeting:
Tabulation of Votes
The inspector of elections of the Annual Meeting will tabulate the votes of our stockholders at the Annual Meeting. All shares of our common stock represented by proxy at the Annual Meeting will be voted in accordance with the voting instructions given on the proxy, as long as the proxy is properly submitted and unrevoked and is received by the applicable deadline, all as described under "How to Cast or Revoke Your Vote" below. If the Annual Meeting is adjourned or postponed, properly submitted and unrevoked proxies will remain effective and will be voted at the adjourned or postponed Annual Meeting, and stockholders will retain the right to revoke any such proxy until it is actually voted at the adjourned or postponed Annual Meeting.
executive offices and must contain all of the information required by our Bylaws. We will not entertain any director nominations or other proposal at the Annual Meeting or at our 20212023 Annual Meeting of Stockholders that do not meet the requirements set forth in our Bylaws. Please refer to the full text of our Bylaws for additional information about these requirements. A copy of our Bylaws may be obtained by writing to our Corporate Secretary at the address of our principal executive offices or may be accessed on our website,www.netlist.com or through our SEC filings available atwww.sec.gov. Further, if we comply and the stockholder does not comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our best judgment on any such stockholder proposal or nomination.
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MMMMMMMMMMMM Netlist, Inc. C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ Your vote matters –— here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by 1:00am, Pacific Time, on August 7, 2020.16, 2022. Online GIof ntoo welwewct.rinovneicstvoortviontge,.com/Go to www.investorvote.com/NLST delete QR code and control # or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/NLST Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q +A Proposals — The Board of Directors recommend a vote FOR the nominee listed in Proposal 1 and FOR Proposals 2 and 3. 1. Election of Directors: 01 -— Chun K. Hong For Withhold For Against Abstain For Against Abstain+ 2. Ratification of the appointment of KMJ Corbin & Company LLP as Netlist’s independentIndependent registered public accounting firm for fiscal 2020.2022. For Against Abstain 3. Approval of, on an advisory basis, the amendmentcompensation of Netlist’s named executive officers. For Against Abstain B Authorized Signatures — This section must be completed for your vote to Restated Certificate of Incorporation to increase the number of shares of common stock authorized to be issued by approximately 50%.count. Please date and sign below. 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 1234567890 J N T 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 +03NS5A 1 U P X 4 6 3 0 4 5 03A40A MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. A Proposals — The Board of Directors recommend a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2 and 3. Annual Meeting Proxy Card1234 5678 9012 345+