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.             )

 

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Soliciting Material under §240.14a-12

VASCO Data Security International,OneSpan Inc.

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121 West Wacker Drive Suite 2050

Chicago, Illinois 60601

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 13, 2018

To be held on June 8, 2022

 

To the Stockholders of

VASCO Data Security International, Inc.:TO THE STOCKHOLDERS:

 

The Notice is hereby given that the 2022 annual meeting of stockholders (including any adjournments, postponements or continuations thereof, the “Annual Meeting”) of Stockholders of VASCO Data Security International,OneSpan Inc., a Delaware corporation (“Company”(the “Company”), will be held on Wednesday, June 13, 2018, commencing8, 2022 at 10:00 a.m., local time, at 121 West Wacker Drive, Suite 2400 Chicago, IL 60601 Central Daylight Time for the following purposes:

 

1.To elect seven directors to serve on our board of directors (our “Board”) until the 2023 annual meeting of stockholders, until their successors are duly elected and qualified or until their earlier death, resignation or removal;

1. To elect seven directors to serve on the Board of Directors;

2.To approve, on an advisory (non-binding) basis, our named executive officer compensation; and

3.To ratify, on an advisory (non-binding) basis, the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2022.

 

2. To ratifyThese items of business are more fully described in the appointment by the Audit Committee of the Board of Directors of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018; and

3. To transact such other business as may properly come before the meeting.

The Board of Directors has no knowledge at this time of any other business to be presented or transacted at the meeting.

The Board of Directors recommends that you vote FOR each proposal set forth inproxy statement accompanying this Notice of Annual Meeting of Stockholders. We also will transact any other business that may properly come before the Annual Meeting, but we are not aware of any such additional matters.

As we have done for previous meetings, this year’s Annual Stockholders Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting in person.

You may register for and Proxy Statement. Stockholdersattend the webcast of recordthe meeting via the Internet at www.virtualshareholdermeeting.com/OSPN2022 when you enter your 16-digit control number included with the Notice of Internet Availability or proxy card. Instructions on how to attend and participate in the Annual Meeting via the webcast are posted at www.virtualshareholdermeeting.com/OSPN2022. You will be able to vote your shares while attending the Annual Meeting by following the instructions on the website. You may revoke your proxy via the methods described in the accompanying proxy statement.

Our Board has fixed the close of business on April 16, 2018 are11, 2022 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting. Further informationAnnual Meeting. Such stockholders are urged to vote, even if their shares were sold after such date.

YOUR VOTE IS VERY IMPORTANT. It is important that your voice be heard and your shares be represented at the Annual Meeting whether or not you are able to attend. We urge you to vote TODAY by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed proxy card or Notice of Internet Availability to vote via the Internet or by telephone. Please submit a proxy as soon as possible, so that your shares can be voted at the Annual Meeting in accordance with your instructions. Please refer to “Questions and Answers Regarding Voting Procedures and Other Information” on page 9 of the accompanying proxy statement and the instructions on the proxy card or Notice of Internet Availability. Additionally, we hope that you can attend the Annual Meeting. If you are the beneficial owner of your shares (that is, you hold your shares in “street name” through an intermediary such as a broker, bank or other nominee), you will receive instructions from your broker, bank or other nominee as to how to vote your shares or submit a proxy to have your shares voted. We urge you to instruct your broker, bank or other nominee to vote your shares “FOR” each of the matters to be considered and acted upon can be found in the accompanying Proxy Statement.proposals listed above.

 

By Order of the Board of Directors,

(GRAPHIC) 

 

Matthew Moynahan

President and Chief Executive Officer

April 29, 2022 

Steven R. Worth

TABLE OF CONTENTS

OneSpan at a Glance1
PROXY STATEMENT SUMMARY3
QUESTIONS AND ANSWERS REGARDING VOTING PROCEDURES AND OTHER INFORMATION9
INFORMATION REGARDING OUR BOARD OF DIRECTORS17
 Director Information17
 Director Skills, Qualifications and Characteristics18
 Board Diversity and Inclusion19
 Ongoing Board Refreshment20
 Board Independence21
 Board Leadership Structure21
 Lead Independent Director21
 Meetings of Our Board and Executive Sessions21
 Committees of Our Board22
 Director Selection Process24
 Board Evaluation Process25
 Our Board’s Role in Risk Oversight26
 Communications with Directors27
PROPOSAL 1: ELECTION OF DIRECTORS28
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION37
PROPOSAL 3: ADVISORY VOTE ON RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT39
DELINQUENT SECTION 16(A) REPORTS41
EQUITY COMPENSATION PLAN INFORMATION41
REPORT OF THE AUDIT COMMITTEE42
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021 AND 202043
INFORMATION ABOUT OUR EXECUTIVE OFFICERS44
EXECUTIVE COMPENSATION45
 Compensation Committee Report45
 Compensation Discussion and Analysis45
 2021 Summary Compensation Table63
 2021 Grants of Plan-Based Awards Table64
 Outstanding Equity Awards at 2021 Fiscal Year-End Table65
 2021 Stock Vested Table66
 Potential Payments Upon Termination or Change-in-Control66
 CEO Pay Ratio69
DIRECTOR COMPENSATION70
 Compensation of Directors70
 2021 Director Compensation Table71
 Director Stock Ownership Policy72
 Director Stock Trading Policy72
Transactions With Related Persons72
OTHER MATTERS73
 Costs of Solicitation73
 Stockholder Proposals for Our 2023 Proxy Materials73

Secretary

 Director Nominations by Stockholders and Stockholder Proposals of Other Business74
 Annual Report74
 Cautionary Note Regarding Forward-Looking Statements74
 Incorporation by Reference75
 Other Matters75

 

Chicago, Illinois

April 27, 2018

 

You are cordially invited and urged to attend the Annual Meeting in person. To assure your representation at the Annual Meeting, please sign, date and return the enclosed proxy card, whether or not you expect to attend in person. You may revoke your proxy at any time before it is voted at the Annual Meeting.


PROXY STATEMENT


FOR


ANNUAL MEETING OF STOCKHOLDERS


TO BE HELD JUNE 13, 20188, 2022

 

This proxy statement (this “Proxy Statement”) is furnished by the Board of Directors of VASCO Data Security International, Inc. (“Company, “VASCO,” “we,” “us” or “our”), in connection with the solicitation of proxies by the board of directors (our “Board”) of OneSpan Inc., a Delaware corporation (the “Company,” “OneSpan,” “we,” “us” or “our”), for use at the Annual Meetingour annual meeting of Stockholdersstockholders to be held on Wednesday, June 13, 2018, commencing8, 2022 at 10:00 a.m. Central Daylight Time (including any adjournments, postponements or continuations thereof, the “Annual Meeting”), local time, at our principal executive offices located at 121 West Wacker Drive, Suite 2400, Chicago, IL 60601, and at any postponement or adjournment thereof. Directions maywhich will be obtainedheld in a virtual meeting format only, via a live webcast that can be accessed by calling (312) 766-4001.visiting www.virtualshareholdermeeting.com/OSPN2022. Holders of record of shares of ourOneSpan common stock, par value $0.001 per share (our “Common Stock” or “Company common stock”), at the close of business on April 16, 2018,11, 2022 will be entitled to vote on all matters to properly come before the Annual Meeting. Each share of common stock that you own entitles youour Common Stock is entitled to one vote.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON Important Notice Regarding the Availability of Proxy Materials for the Annual StockholderJune

8, 2022: THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY ARE FIRST BEING SENT OR GIVEN TO THE COMPANY’S SECURITY HOLDERS ON OR ABOUT Meeting To Be Held on June 13, 2018:April 29, 2022.

 

ONESPAN AT A GLANCE

OneSpan specializes in digital identity and anti-fraud solutions that protect and facilitate electronic transactions to create exceptional and secure experiences for our customers. Whether through automating agreements, detecting fraud or securing financial transactions, OneSpan helps reduce costs and accelerate customer acquisition while improving the user experience.

OneSpan’s trusted identity security solutions significantly reduce digital transaction fraud and enable regulatory compliance for thousands of customers, including over half of the top 100 global banks.

The Company’sOur Mission

OneSpan’s mission is to accelerate our customers’ digital transformations by enabling secure, compliant and refreshingly easy digital customer agreements and transactions.

We are a global company that focuses on developing and maintaining a world class innovative workforce through collaboration, accountability, diversity, inclusion and transparency.

1 

Our Strategy

Our primary growth strategy is to leverage our identity and security solutions to deliver the optimal level of security, user experience and human touch in digital interactions and agreements. Our key growth objectives include:

●Expanding our portfolio of solutions that enable institutions to mitigate fraud, reduce operational costs, comply with regulations, easily on-board customers and adaptively authenticate transactions;

●Automating and securing digital customer journeys to remotely verify identities, mitigate application fraud and secure account openings and transactions;

●Increasing sales to existing customers and acquiring new customers;

●Driving increased demand for our products in new applications, markets and geographies;

●Expanding our channel partner ecosystem; and

●Acquiring companies that support our strategic objectives, expand our technology portfolio or customer base and increase our recurring revenue.

2 

PROXY STATEMENT SUMMARY

This summary is included to provide an introduction and overview of the information contained in this Proxy Statement. This is a summary only and does not contain all of the information we have included in this Proxy Statement. You should refer to the full Proxy Statement for more information about us and the proposals you are being asked to consider. For more complete information regarding our 2021 performance, please review our Annual Report on Form 10-K are available at: http://www.vasco.com/investors.

If you received a notice of internet availability of proxy materials (“E-Proxy Notice”) by mail or electronically, you will not receive a printed copy of the Proxy Statement or Annual Report unless you specifically request one. Instead, the E-Proxy Notice provides instructions on how you may access and review our proxy materials. The E-Proxy Notice also instructs you on how you may submit your proxy via the Internet. If you received the E-Proxy Notice and would still like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the E-Proxy Notice. On or about April 30, 2018, we will begin mailing printed copies of our proxy materials to certain of our stockholders and the E-Proxy Notice to all other stockholders.

ANNUAL REPORT

Our Annual Report on Form 10-K to Stockholders for the fiscal year ended December 31, 2017,2021 (our “Annual Report”) on our website at www.investors.onespan.com or on the SEC’s website at www.sec.gov.

THE ANNUAL MEETING

Information About the Annual Meeting of Stockholders

Time and Date10:00 a.m. Central Daylight Time, on June 8, 2022

Access*The Annual Meeting can be accessed virtually at www.virtualshareholdermeeting.com/OSPN2022

Record DateThe close of business on April 11, 2022

VotingEach share of our Common Stock is entitled to one vote at the Annual Meeting (including one vote for each seat up for election at the Annual Meeting with respect to Proposal 1 – Election of Directors). Cumulative voting is not permitted in the election of directors.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we encourage you to vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed proxy card or Notice of Internet Availability (as described below) to vote via the Internet or by telephone. Returning your proxy card will not prevent you from voting at the Annual Meeting but will ensure that your vote is counted if you are unable to attend.

As we have done for previous meetings, this year’s Annual Stockholders Meeting will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting in-person. If you plan to participate in the virtual meeting, please see “Questions and Answers regarding Voting Procedures and Other Information” on page 9. Stockholders will be able to attend, vote and submit questions (both before, and for a portion of, the meeting) from any location via the Internet.

3 

Proposals and Board Recommendations for Voting

Proposals:Unanimous Board
Recommendation:		For more
detail, see page:
Proposal 1 – Election of 7 directors“FOR” EACH OF OUR BOARD’S NOMINEES28
Proposal 2 – Approval, on an advisory (non-binding) basis, of our named executive officer (“NEO”) compensationFOR37
Proposal 3 – Ratification, on an advisory (non-binding) basis, of the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for fiscal year 2022FOR38

PROPOSAL 1—ELECTION OF DIRECTORS

Our Board is currently comprised of the following eight directors: Marc D. Boroditsky, Garry L. Capers, Sarika Garg, Jean K. Holley, Marianne Johnson, Michael McConnell, Alfred Nietzel and Marc Zenner. All but Ms. Holley have been nominated for re-election at the Annual Meeting (collectively, our “Board’s Nominees”). As previously announced, Ms. Holley is not standing for re-election at the Annual Meeting pursuant to the Cooperation Agreement by and among the Company, on the one hand, and Legion Partners Asset Management, LLC, a Delaware limited liability company, Legion Partners, L.P. I, a Delaware limited partnership, Legion Partners, L.P. II, a Delaware limited partnership, Legion Partners Offshore I SP I, a Delaware segregated portfolio company of Legion Partners Offshore Opportunities SPC I, a company organized under the laws of the Cayman Islands, Legion Partners, LLC, a Delaware limited liability company, Legion Partners Holdings, LLC, a Delaware limited liability company, Christopher S. Kiper, an individual, and Raymond T. White, an individual, on the other hand (the “Cooperation Agreement”). As of the Annual Meeting, the size of our Board will be reduced from eight members to seven members. Proxies cannot be voted for a greater number of persons than the number of Board’s Nominees. You are being asked to elect the seven nominees of the Board to serve on our Board until our 2023 annual meeting of stockholders (the “2023 Annual Meeting”), until their successors are duly elected and qualified or until their earlier death, resignation or removal.

Information regarding our Board’s Nominees is set forth below. For additional information concerning this proposal and our Board’s Nominees, see “Proposal 1—Election of Directors” on page 27, and for additional information regarding our directors, see “Information Regarding our Board of Directors” on page 17.

OUR BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF OUR BOARD’S NOMINEES.


    Board Committees
Name(1)AgeDirector
Since		Principal OccupationAudit

MDCC

(2)

CGN (3)

F&S (4)

 

Marc Boroditsky592019Chief Revenue Officer of Twilio Inc. X  
Garry L. Capers452021Division President of Cloud Solutions of Deluxe Corporation X XX

Sarika Garg

 

462021Co-founder and Chief Executive Officer at Cacheflow Inc.X X 
Marianne Johnson562020Executive Vice President and Chief Product Officer of Cox Automotive, Inc.X  X
Michael McConnell562021Private Investor X

 X

 (Chair) 

 X
Alfred Nietzel, Chair of our Board602020Retired Chief Financial Officer of CDK, Global, Inc.   X
Marc Zenner592019Chief Financial Officer of Persefoni

X

(Chair)

  

X

(Chair) 

(1)All directors are independent in accordance with The Nasdaq Stock Market LLC (“Nasdaq”) listing rules. This table does not include Ms. Holley, who will not be standing for re-election at the Annual Meeting. Ms. Holley is currently the Chair of the Corporate Governance and Nominating Committee and a member of the Management Development and Compensation Committee. All Committee membership is as of April 11, 2022, with the exception of the Finance and Strategy Committee, which is as of July 30, 2021, the date it was disbanded.
(2)Represents the Management Development and Compensation Committee.
(3)Represents the Corporate Governance and Nominating Committee. Ms. Holley is the current Chair of the Corporate Governance and Nominating Committee.
(4)Represents the Finance and Strategy Committee. The Finance and Strategy Committee was disbanded on July 30, 2021.

PROPOSAL 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are asking you to approve, on an advisory (non-binding) basis, our NEO compensation for 2021, as disclosed in “Compensation Discussion and Analysis” and the accompanying compensation tables and related narrative discussion beginning on page 45. We believe that our NEO compensation program described throughout our “Compensation Discussion and Analysis” reflects an overall pay-for-performance culture that aligns the interests of our executives with those of our stockholders. Our compensation programs are designed to provide a competitive level of compensation to attract, motivate and retain talented and experienced executives and to reward our NEOs for the achievement of short- and long-term strategic and operational goals and increased total stockholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. In addition, we have implemented a number of executive compensation best practices and policies that we believe reflect sound governance and promote the long-term interests of our stockholders.

For additional information concerning this proposal, see “Proposal 2—Advisory Vote on Executive Compensation” beginning on page 37. In addition, please see the information set forth in “Compensation Discussion and Analysis” and the accompanying compensation tables and related narrative discussion beginning on page 45, including the highlights of our 2021 executive compensation information included under “Executive Summary.”

PROPOSAL 3—AUDITOR RATIFICATION

We are asking you to ratify, on an advisory (non-binding) basis, the appointment of KPMG as our independent registered public accounting firm for fiscal year 2022. Although a stockholder vote for this appointment is not required by law and is not binding on us, our Audit Committee will take your vote on this proposal into consideration when appointing or making changes to our independent registered public accounting firm in the future.

For additional information concerning this proposal, see “Proposal 3—Advisory Vote on Ratification of Independent Registered Public Accounting Firm” on page 38, and for information concerning the fees we paid to KPMG during 2021 and 2020, see “Fees Paid to Independent Registered Public Accounting Firm for 2021 and 2020” on page 43.

6 

Corporate Governance Highlights

We are committed to effective corporate governance and high ethical standards. We believe that strong corporate governance policies and practices strengthen the accountability of our Board and management, lead to better business performance and align the long-term interests of our management team with our stakeholders, including our stockholders, our customers and our employees. For additional information regarding our Board’s policies and practices and the composition of our Board, see “Information Regarding Our Board of Directors” on page 17 and “Compensation of Directors” on page 70. Highlights of our current corporate governance policies and practices and features of our Board include:

Board Composition

✓All eight current directors are independent✓Continued board refreshment over the last three years
✓Declassified Board✓Average tenure of our Board’s Nominees of approximately less than two years
✓Disclosure of Board skills, qualifications and characteristics matrix✓One-third of our Board’s Nominees are female or diverse  
✓Separate Chair and CEO, with independent Chair✓Two female directors (excluding Ms. Holley, who is not standing for re-election)

Board Governance

✓Majority vote standard for uncontested director elections✓Regular executive sessions of the independent directors
✓All standing Board committees comprised solely of independent directors✓Board oversight of CEO succession planning
✓Annual Board self-evaluation and assessment of Board composition✓Particular key risk management functions designated to Board committees
✓Annual Board review of overall risk management program✓Executive officers and directors prohibited from hedging and pledging OneSpan securities
✓Prohibition on any director sales of OneSpan securities through August 2022✓Code of Ethics and Conduct administered by management under the supervision of our Board
✓Sufficient stock ownership requirements for directors and executive officers✓Active stockholder outreach program with continued focus on disclosure and governance

7 

Director Skills, Qualifications and Characteristics

The Corporate Governance and Nominating Committee regularly evaluates the skills, qualifications and characteristics identified as important for directors to provide effective oversight to our Company. See “Information Regarding Our Board of Directors—Director Skills, Qualifications and Characteristics” on page 18 for additional information.

STOCKHOLDER ENGAGEMENT

The Company proactively and regularly engages with its stockholders. In 2021, the Company directly engaged with 13 of its top 15 stockholders (other than index funds, exchange traded funds and quantitative funds) through in-person meetings, virtual meetings or telephone calls.

The Company has taken the following specific actions in response to its stockholder engagement efforts:

●Provided new software and recurring revenue disclosures and longer-term financial targets;

●Added directors to our Board with skills and experience that reflect input received from investors on Board composition;

●Adopted a $50 million share repurchase program; and

●Performed a complete business review and began activities to enhance the Company operating model and streamline its business including cost reduction actions.

2021 CORPORATE RESPONSIBILITY HIGHLIGHTS

OneSpan secures our customers’ digital journeys from first engagement through the transaction lifecycle with our suite of verified identity, intelligent fraud detection and secure account opening products and services. As a global corporate citizen with operations and suppliers in many countries, we are committed to sustainability, diversity, inclusion and good governance. We also believe that our commitment to corporate social responsibility is valued by our customers, our employees and our stockholders.

ENVIRONMENT

●

●

●

●

Continued monitoring of our product manufacturing suppliers’ compliance with ISO 14001, the international standard that specifies requirements for an effective environmental management system

Began investigating use of recyclable materials in product manufacturing

Hosting our SaaS services primarily with Amazon Web Services, which has made environmental and sustainability commitments, engaging in efforts to consolidate environments

Continuing reduction of office footprint 

SOCIAL

● 

●

●

●

Through the OneSpan Acts program, OneSpan donated money and/or our employees have donated their time to organizations globally such as YourPassion1st, Canadian UNICEF #GiveAVax campaign, Volkshilfe in Austria and Digital For Youth in Belgium

Fostering a dynamic and engaged workforce through the values of collaboration, accountability, transparency and speed, as well as respect for human rights

Developed a hybrid work model to allow employees flexibility to be where they work best 

GOVERNANCE

●

●

●

●

●

Board led by an independent Chair and consisting of majority independent directors

Active Board refreshment program with increased diverse representation

Active stockholder outreach program with continued focus on disclosure and governance

Annual Board self-evaluation and assessment of Board composition

See other governance practices in “Corporate Governance Highlights” above 


QUESTIONS AND ANSWERS REGARDING VOTING PROCEDURES AND OTHER INFORMATION

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND VOTING

1.

If I received a Notice of Internet Availability, how may I receive proxy materials?

We use the “e-proxy” rules of the SEC, which allow companies to furnish their proxy materials over the Internet instead of mailing printed copies of the proxy materials to each stockholder. As a result, we are mailing to most of our stockholders a notice about the Internet availability of the proxy materials (the “Notice of Internet Availability”), which contains instructions on how to access this Proxy Statement, the accompanying Notice of 2022 Annual Meeting of Stockholders and the Annual Report online.

If you received the Notice of Internet Availability by mail, you will not automatically receive a printed copy of the proxy materials in the mail. Instead, the Notice of Internet Availability instructs you on how to access and review all of the important information contained in the proxy materials and how you may submit your proxy. The Notice of Internet Availability also contains information about how stockholders may, if desired, request a printed copy of these proxy materials.

Stockholders who do not receive the Notice of Internet Availability will receive a printed copy of these proxy materials by mail unless they have previously requested electronic delivery. We are providing notice of the availability of those materials by e-mail to those stockholders who have previously elected to receive the proxy materials electronically. The e-mail contains a link to the website where those materials are available as well as a link to the proxy voting website.

2.Who can vote at the Annual Meeting?

All stockholders who owned shares of our Common Stock as of the close of business on April 11, 2022 (the “Record Date”) are entitled to receive notice of the Annual Meeting and to vote the shares they owned as of the close of business on the Record Date.

As of the close of business on the Record Date, 40,630,593 shares of our Common Stock were outstanding and entitled to vote, and we had 149 stockholders of record. The number of stockholders of record does not include beneficial owners of our Common Stock who hold their shares in “street name.”

3.How many votes do I have?

Each stockholder is entitled to one vote for each share of Common Stock owned as of the close of business on the Record Date for each matter presented at the Annual Meeting (including one vote for each seat up for election at the Annual Meeting with respect to Proposal 1—Election of Directors). Cumulative voting is not permitted in the election of directors. 


4.How can I vote my shares?

Stockholders of record. Stockholders of record as of the Record Date may vote their shares or submit a proxy to have their shares voted by one of the following methods:

●By Internet – You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card or Notice of Internet Availability.

●By Telephone – You may submit your proxy by touch-tone telephone by calling the toll-free number on the enclosed proxy card or Notice of Internet Availability.

●By Mail – If you received your proxy materials by mail, you may submit your proxy by signing, dating and returning your proxy card in the postage-paid envelope provided.

●At the Virtual Meeting – Stockholders who attend the Annual Meeting should follow the instructions at www.virtualshareholdermeeting.com/OSPN2022 to vote during the meeting.

The Company is incorporated under Delaware law, which specifically permits electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the inspector of election can determine that such proxy was authorized by the stockholder. The electronic voting procedures provided for the Annual Meeting are designed to authenticate each stockholder by the use of a control number to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.

Beneficial Owners. If you were the beneficial owner of shares (that is, you held your shares in “street name” through an intermediary such as a broker, bank or other nominee) as of the Record Date, you will receive instructions from your broker, bank or other nominee as to how to vote your shares or submit a proxy to have your shares voted. In most cases, you will be able to do this by mail, via the Internet or by telephone. Alternatively, you may obtain a “legal proxy” from your broker, bank or other nominee and register to attend the Annual Meeting at www.virtualshareholdermeeting.com/OSPN2022 by following the instructions described below.

As discussed below, your broker, bank or other nominee may not be able to vote your shares on any matters at the Annual Meeting unless you provide instructions on how to vote your shares. You should instruct your broker, bank or other nominee how to vote your shares by following the directions provided by your broker, bank or other nominee. 

5.What is the difference between holding shares as a “stockholder of record” and as a “beneficial owner”?

If your shares are registered directly in your name with our transfer agent, Broadridge Financial Solutions, Inc. (which may be referred to as “Broadridge” in the materials you receive), you are considered the “stockholder of record” with respect to those shares, and we have sent this Proxy Statement directly to you or made this Proxy Statement available directly to you.

If you hold your shares in an account with a broker, bank or other nominee, rather than of record directly in your own name, then the broker, bank or other nominee is considered the record holder of that stock. You are considered the beneficial owner of that stock, and your stock is held in “street name.” This Proxy Statement has been includedforwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote your shares, and you are also invited to attend the Annual Meeting.

If you hold shares at a broker, bank or other nominee, it is important that you instruct your broker on how your shares should be voted. Your broker, bank or other nominee has enclosed a voting instruction form for you to use in directing your broker, bank or other nominee as to how to vote your shares. You must follow these instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions. We urge you to instruct your broker, bank or other nominee, by following the instructions on the enclosed voting instruction form, to vote your shares in line with our Board’s recommendations on the voting instruction form.


6.What is a proxy?

A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. Our Board has designated Matthew Moynahan and MJ Capodanno as the Company’s proxies for the Annual Meeting.

7.How can I revoke my proxy or change my vote?

You can revoke your proxy or change your vote at any time prior to the Annual Meeting. Only your latest dated proxy will count.

If you are a stockholder of record who has properly executed and delivered a proxy, you may revoke your proxy at any time prior to the Annual Meeting by any of the following means:

●dating, signing and submitting a new proxy card bearing a later date;
●voting at a later time via the Internet or by telephone as instructed above (only your latest Internet or telephone proxy will be counted);
●delivering a written notice to the Office of the Corporate Secretary prior to the Annual Meeting by any means, including facsimile, stating that your proxy is revoked; or
●attending the virtual Annual Meeting and voting during the meeting (as described below).

Your attendance at the Annual Meeting will not revoke your proxy unless you specifically request it or you vote at the Annual Meeting. If your shares are held in “street name,” your broker, bank or other nominee should provide instructions explaining how you may change or revoke your voting instructions. In general, “street name” holders may change their vote at any time prior to 5:00 p.m. Eastern Daylight Time on the day before the Annual Meeting date. In the absence of a revocation, shares represented by proxies will be voted at the Annual Meeting.

Whether or not you plan to attend the Annual Meeting, we urge you to sign, date and return the enclosed proxy card in the mailingpostage-paid envelope provided, or vote via the Internet or by telephone as instructed on the proxy card or Notice of Internet Availability.

8.What if I receive more than one Notice of Internet Availability, proxy card or voting instruction form?

It generally means your shares are registered differently or are in more than one account. Please provide voting instructions for each proxy card or, if you vote via the Internet or by telephone, vote once for each Notice of Internet Availability or proxy card you receive so as to ensure that all of your shares are voted.

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9.Will my shares be voted if I do nothing, or if I do not vote for some of the proposals?

If your shares are registered in your name, you must sign and return a proxy card, vote via the Internet or by telephone, or attend and vote at the Annual Meeting in order for your shares to be voted. If you provide specific voting instructions, your shares will be voted as you have instructed. If you validly execute and date the proxy card and do not indicate how your shares should be voted on any matter, your shares will be voted in accordance with our Board’s recommendations on that matter. We urge you to sign, date and return the enclosed proxy card in the postage-paid envelope provided, or vote via the Internet or by telephone as instructed on the proxy card or Notice of Internet Availability, whether or not you plan to attend the Annual Meeting.

Our Board is not aware of any matters that are expected to come before the Annual Meeting other than those described in this Proxy Statement. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all proxies received by the Company will be voted with respect thereto at the discretion of the persons named as proxies.

If your shares are held in “street name” (that is, held for your account by a broker, bank or other nominee), you will receive voting instructions from your broker, bank or other nominee. You must follow these instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions. If you do not instruct your broker, bank or other nominee how to vote your shares, then, your broker, bank or other nominee will not be able to vote your shares with respect to Proposal 1 or Proposal 2, but will be able to vote your shares with respect to Proposal 3. We urge you to instruct your broker, bank or other nominee, by following the instructions on the enclosed voting instruction form, to vote your shares in accordance with our Board’s recommendations on the voting instruction form, whether or not you plan to attend the Annual Meeting. 

10.What constitutes a quorum?

A quorum must be present in order for business to be conducted at the Annual Meeting. For purposes of the Annual Meeting, the presence by means of remote communication or by proxy of the holders of a majority in voting power of the outstanding shares of our Common Stock entitled to vote at the meeting shall constitute a quorum. In the absence of a quorum, the chair of the meeting or the stockholders so present (by a majority in voting power thereof) may adjourn the Annual Meeting without further notice. Abstentions and broker non-votes (if any) will be counted for purposes of determining whether a quorum is present at the Annual Meeting.

11.Is my vote confidential?

Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed within the Company or to other third parties, except: (i) as necessary to meet applicable legal requirements, (ii) to allow for the tabulation and certification of votes and (iii) to facilitate a proxy solicitation.

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QUESTIONS AND ANSWERS ABOUT THE ITEMS TO BE VOTED ON AT THE ANNUAL MEETING

12.What proposals will be voted on at the Annual Meeting?
OneSpan Board’s
Recommendation		More Information
(Page No.)
Proposal 1Election of 7 directorsFOR EACH OF OUR BOARD’S NOMINEES28
Proposal 2Approval, on an advisory (non-binding) basis, of our NEO compensationFOR37
Proposal 3Ratification, on an advisory (non-binding) basis, of the appointment of KPMG as our independent registered public accounting firm for fiscal year 2022FOR38

OUR BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF OUR BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3.

13.What vote is required to approve each of the proposals to be voted on at the Annual Meeting, and what is the effect of abstentions, withhold votes and broker non-votes on each of the proposals?

Vote Required for ApprovalEffect of Abstentions and Broker Non-Votes

Proposal 1:

Election of 7 directors

Each director will be elected by a majority of votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present.Abstentions have no effect on the outcome of the election of directors. Broker discretionary voting is not permitted, and broker non-votes have no effect on the outcome of this proposal.

Proposal 2:

Approval, on an advisory (non-binding) basis, of our NEO compensation

The affirmative vote of a majority of the votes cast is required to approve this proposal.Abstentions have no effect on the outcome of this proposal. Broker discretionary voting is not permitted, and broker non-votes have no effect on the outcome of this proposal.

Proposal 3:

Ratification, on an advisory (non-binding) basis, of the appointment of KPMG as our independent registered public accounting firm for fiscal year 2022

The affirmative vote of a majority of the votes cast is required to approve this proposal.Abstentions have no effect on the outcome of this proposal. Broker discretionary voting is permitted.

14.What is a broker non-vote, and will there be any broker non-votes at the Annual Meeting?

Broker non-votes occur when brokers do not have discretionary voting authority to vote certain shares held in “street name” on particular non-routine proposals and the beneficial owner of those shares has not instructed the broker to vote on those proposals. The ratification of the appointment of registered public accounting firm is considered a routine proposal, and brokers have discretion to vote on that matter even if no instructions are received from the “street name” holder. Broker non-votes are not counted in the tabulations of the votes cast at the Annual Meeting and therefore will have no effect on the outcome of the proposals.

QUESTIONS AND ANSWERS ABOUT ATTENDING THE ANNUAL MEETING

15.How do I attend the Annual Meeting?

This year’s annual meeting will be held entirely in a virtual meeting format only. You will not be able to attend the Annual Meeting in person. As described above, you are entitled to participate in the Annual Meeting if you were a stockholder of record as of the close of business on the Record Date or hold a legal proxy for the meeting provided by your broker, bank or other nominee.

Registering to Attend the Annual Meeting—Stockholders of Record. If you were a stockholder of record as of the close of business on the Record Date, you may register to attend the Annual Meeting by accessing www.virtualshareholdermeeting.com/OSPN2022 and entering the 16-digit control number provided on your proxy card or Notice of Internet Availability.

Although the meeting webcast will begin at 10:00 a.m. Central Daylight Time on June 8, 2022, we encourage you to access the meeting site prior to the start time to allow ample time to log into the meeting webcast and test your computer system. Accordingly, the Annual Meeting site will first be accessible to registered stockholders beginning at 9:45 a.m. Central Daylight Time on the day of the meeting. If you encounter difficulties accessing the virtual meeting or during the meeting time, please call 844-986-0822 (US) or 303-562-9302 (International). In the event of any technical disruptions that prevent the chair from hosting the Annual Meeting within 30 minutes of the date and time set forth above, the meeting may be adjourned or postponed.

Whether or not you plan to attend the Annual Meeting, we urge you to sign, date and return the enclosed proxy card in the postage-paid envelope provided, or vote via the Internet or by telephone as instructed on the proxy card or Notice of Internet Availability. Additional information and our proxy materials can also be found at www.virtualshareholdermeeting.com/OSPN2022.


16.Can I ask questions at the Annual Meeting?

Stockholders as of the close of business on the Record Date who register, attend and participate in the Annual Meeting will have an opportunity to submit questions live via the Internet during a designated portion of the meeting. You must have your control number provided on your proxy card or Notice of Internet Availability.

Questions and Answers about Miscellaneous Matters

17.Who will count the votes and serve as inspector of election?

We have retained Broadridge Financial Solutions, Inc. to assist as master tabulator and Mr. Peter Sablich to serve as an independent inspector of election. In such capacity, Broadridge Financial Solutions, Inc. and Mr. Sablich will count and certify votes at the Annual Meeting.

18.How do I find out the results of the vote?

We expect to report preliminary results on a Form 8-K within four business days after the Annual Meeting. We will report final results as certified by the independent inspector of elections as soon as practicable on a Form 8-K. You can access both Form 8-Ks and our other reports we file with the Securities and Exchange Commission (the “SEC”) on our website at www.investors.onespan.com or on the SEC’s website at www.sec.gov. The information provided on these websites is for informational purposes only and is not incorporated by reference into this Proxy Statement.

19.Is a list of registered stockholders available?

The Company’s list of stockholders as of the close of business on the Record Date will be available for inspection by the Company’s stockholders for at least ten days prior to the Annual Meeting for any purpose germane to the Annual Meeting. If you want to inspect the stockholder list, please call the office of the Corporate Secretary at (312) 766-4001 to schedule an appointment during ordinary business hours. The stockholder list will also be open to the examination of any stockholder during the Annual Meeting at www.virtualshareholdermeeting.com/OSPN2022, accessible using the Stockholder List link located in the footer of the meeting page. An attestation of ownership is required to access the list.


20.Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Annual Meeting?

No. Delaware law does not provide stockholders any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual Meeting.

21.What is “householding” and how does it affect me?

The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy materials, will receive only one set of the proxy materials, unless one or more of these stockholders notifies the Company that they wish to receive individual copies. We believe this will provide greater convenience for stockholders, as well as cost savings for the Company by reducing the number of duplicate documents that are mailed. We also believe householding reduces the environmental impact of the Annual Meeting by reducing the number of duplicate documents that are printed. Stockholders who participate in householding will continue to receive separate proxy cards, if you receive your proxy materials by mail. Stockholders who receive the Notice of Internet Availability will receive instructions on how to vote their shares via the Internet. Householding will not in any way affect your rights as a stockholder.

You may revoke your consent to householding at any time by sending your name, the name of your brokerage firm and your account number to Householding Department, 51 Mercedes Way, Edgewood, New York 11717 (telephone number: 1-800-542-1061). The revocation of your consent to householding will be effective 30 days following its receipt. In any event, if you did not receive an individual copy of this Proxy Statement and our E-Proxy Notice provides instructions to accessor our Annual Report, through the internet. We recommend that you review it for financial and other information. It is not intended to be a part of the proxy soliciting material. You can review and downloadwe will send a copy of VASCO’s Annual Report on Form 10-K by accessing our website, www.vasco.com/investors,to you if you address your written request to or you can request paper copies, without charge, by writing to VASCO Data Security International,call OneSpan Inc., 121 West Wacker Drive, Ste. 2050,20th Floor, Chicago, IL 60601, Attention: Secretary.Corporate Secretary (telephone number: 312-766-4001).

If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of our proxy materials, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact the Company if you hold your stock directly by mail at OneSpan Inc., 121 West Wacker Drive, 20th Floor, Chicago, IL 60601, Attention: Corporate Secretary, by phone at (312) 766-4001 or by email at legal@onespan.com. Alternatively, if you hold your stock in a brokerage account, please contact your broker. If you participate in householding and wish to receive a separate copy of our proxy materials, or if you do not wish to participate in householding and prefer to receive separate copies of these documents in the future, please contact the Company or your broker.

We hereby undertake to deliver promptly, upon written or oral request, a copy of the proxy materials to a stockholder at a shared address to which a single copy of the proxy materials was delivered. Street name holders can request information about householding from their brokers, banks or other stockholders of record.


INFORMATION REGARDING OUR BOARD OF DIRECTORS

 

1


THE ANNUAL MEETINGDirector Information

 

Matters to be Considered

The Annual Meeting has been called to:

1.                        To elect seven directors to serve on theOur Board is currently comprised of Directors (Proposal 1);

2.                        To ratify the appointmenteight members who are all independent directors. Ms. Holley is currently a member of KPMG LLP as the Company’s independent registered public accounting firmour Board but is not standing for the fiscal year ending December 31, 2018 (Proposal 2); and

3.                        To transact such other business as may properly come before the meeting.

Voting at the Annual Meeting

A majority of the votes entitled to be cast on matters to be considered at the Annual Meeting will constitute a quorum for the transaction of business. If a share is represented for any purpose at the meeting, it is deemed to be present for all other matters. Holders of record of outstanding shares of common stock at the close of business on April 16, 2018, are entitled to notice of and to votere-election at the Annual Meeting. AsOur Board’s committee structure currently consists of April 16, 2018, there were 40,197,960 sharesthree(1) principal committees that are all comprised of common stock outstandingindependent directors: the Audit Committee, the Management Development and entitledCompensation Committee and the Corporate Governance and Nominating Committee. Our Board may also establish other ad hoc or sub-committees, the composition, number and membership of which our Board may revise from time to vote. Each share of common stock is entitled to cast one vote on any matter submitted to the stockholders for approval.time, as appropriate.

 

AssumingThe following table lists each of our current directors and sets forth the presence of a quorum, the affirmative vote of a pluralityinformation about each of the votes castcommittees of our Board:

DIRECTORS AND BOARD COMMITTEES AS OF APRIL 11, 2022

(M = Committee Member; C = Committee Chair)

Director NameAudit
Committee(2)		Management
Development
and
Compensation
Committee(3)		Corporate
Governance
and Nominating
Committee(4)
Independent Directors
Marc D. BoroditskyM
Garry L. CapersM M
Sarika GargMM 
Jean K. Holley MC
Marianne JohnsonM
Michael McConnellMC
Alfred Nietzel, Chair of our Board(2)
Marc ZennerC
(1)On July 30, 2021, the Board disbanded the Finance and Strategy Committee.    

(2)Mr. Nietzel served as the Chair of the Audit Committee until July 30, 2021, when he was appointed Chair of our Board. The other members of the Audit Committee from June 9, 2021 to July 30, 2021 were Mr. Zenner, Ms. Holley, and Ms. Johnson.
(3)Mr. John N. Fox was the Chair of the Management Development and Compensation Committee until July 30, 2021, when he was succeeded in that role by Mr. McConnell.  Mr. Fox retired from the Board on August 4, 2021. The other members of the Management Development and Compensation Committee from June 9, 2021 to July 30, 2021 were Mr. Boroditsky and Mr. Fox.
(4)In addition to Ms. Holley, who has continued to serve as Chair of the Corporate Governance and Nominating Committee, the other members of the Corporate Governance and Nominating Committee from June 9, 2021 to July 30, 2021 were Mr. Boroditsky, Mr. Capers, Mr. Fox and Ms. Garg.  

Director Skills, Qualifications and entitled to vote will be required for Proposal 1,Characteristics and the affirmative vote of a majority of the votes cast and entitled to vote thereon will be required for Proposal 2. There is no cumulative voting in the election of directors.

 

Stockholders may voteWe believe the following skills, qualifications and characteristics are essential in favorcomprising a board equipped to serve the best interests of or withhold authorityour stockholders. This table does not include Ms. Holley, who will not be standing for re-election at the Annual Meeting:

The following matrix illustrates the specific skills, qualifications and characteristics of our Board that the Corporate Governance and Nominating Committee consider important to vote forour long-term strategy. Further information on the nominees for electionqualifications and relevant experience of each of our Board’s Nominees is provided in the individual biographies contained in “Proposal 1—Election of Directors.”

BoroditskyCapersGargJohnsonMcConnellNietzelZenner
Technology/Software/SaaS Industry Experience✔✔✔✔✔✔✔
Financial Technology Platforms/R&D/ Innovation✔✔✔
Operational/Change Management Experience✔✔✔✔
Product Management/Strategy Experience✔✔✔✔
Audit Committee Financial Expert✔✔
Capital Allocation/M&A Experience✔✔✔✔
Financial Institutions/Target Market Executive Roles/Banking Industry Experience✔✔✔
International/Global Business Experience✔✔✔✔
Outside Public Company Board Service✔✔✔

Board Diversity and Inclusion

Our Board does not have a formal policy with respect to director diversity. However, our Board believes that it is essential that members of our Board represent diverse viewpoints, with a broad array of business experiences, professions, skills and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to allow our Board to best fulfill its responsibilities to the long-term interests of our stockholders. The ongoing Board refreshment process described below has provided opportunities to enhance the diversity of our Board.

Board Diversity Matrix (As of April 11, 2022)
Total Number of Directors8
 FemaleMaleNon-BinaryDid Not Disclose Gender
Part I: Gender Identity
Directors34—1
Part II: Demographic Background
African American or Black—1——
Alaskan Native or Native American————
Asian1———
Hispanic or Latinx————
Native Hawaiian or Pacific Islander————
White23——
Two or More Races or Ethnicities————
LGBTQ+—
Did Not Disclose Demographic Background1

Ongoing Board Refreshment

Since 2019, our Board has actively assessed itself against the Company’s current and expected future needs by seeking the advice of outside experts and large stockholders. This resulted in the addition of eight total new directors listed under Proposal 1. Stockholders may vote for or against, or abstainsince 2019. In 2019, our Board added two new directors, Marc D. Boroditsky and Marc Zenner, augmenting our Board’s skills and experience primarily in the areas of SaaS software, recurring revenue business models, capital allocation, mergers and acquisitions and financing.

In 2020, our Board appointed three additional directors (Naureen Hassan, Marianne Johnson and Al Nietzel). These directors added skills and experience in the financial services industry, financial technology platforms, innovation, R&D, recurring revenue business models, the software industry, capital allocation, executive oversight of operations and change management and financial expertise. This also increased our gender diversity, bringing the total number of women on our Board at the time from voting on, Proposal 2. Abstentions and withheld votes will be countedone to three.

In 2021, due to a vacancy created by the election inspectordeparture of Ms. Hassan for a role with the federal government, the Board appointed Garry L. Capers. Mr. Capers was identified by the Corporate Governance and Nominating Committee in determining whetherconnection with a quorum is present.thorough search that began with 15 candidates. Mr. Capers brings expertise, including leading cloud-based software businesses and developing strategies, managing go-to-market approaches and leading client delivery and services.

 

With respect to Proposal 1, each nominee must receive a plurality of the votes cast and entitled to vote, and any director nominee who receives a greater number of withhold votes than affirmative votesAlso in an uncontested election is expected to tender to the Board his or her resignation promptly following the certification of election results2021, pursuant to the Company’s majority vote policy, more fully described in Proposal No. 1, below. UnderCooperation Agreement, Sarika Garg and Michael McConnell joined the majority vote policy, abstentionsBoard. Ms. Garg brings significant software operational; sales, technology and broker non-votes will not have an impact onM&A leadership, and Mr. McConnell, as a former chief executive officer, adds extensive public and private international board experience and leadership insight from various technology and software-oriented companies. In connection with the election of directors.

With respect to Proposal 2, it requires the approval of a majority of the votes castCooperation Agreement, Messrs. Michael Cullinane and entitled to vote thereon, abstentions will have the same effect as voting against such proposal.

Broker non-votes will also be counted by the election inspector in determining whether a quorum is present. Broker non-votes are proxies received from brokers when the broker has neither received voting instructionsMatthew Moog retired from the beneficial owner nor has discretionary power to voteBoard on a particular proposal. Broker non-votes,

2


because they areJune 9, 2021, Mr. Fox retired from the Board on August 4, 2021, and Ms. Holley is not considered “votes cast,” are not counted in the vote totals and will have no effect on the election of directors or the approval of any proposal consideredstanding for re-election at the Annual Meeting. Brokers are subject

Our Board is committed to continuing this process as it balances the rulesknowledge and experience of our longer-tenured directors, the benefits of the New York Stock Exchange (“NYSE”),fresh perspectives of new directors and the NYSE rules provideevolving needs of the Company and the input of our stockholders. The average tenure of our directors is now less than two years.

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Board Independence

Our Board conducts an annual review as to whether each of our directors meets the independence standards of the listing standards of Nasdaq. Our Board has determined that brokers only possess discretionary powereach of the current directors and each of Messrs. Moog, Fox and Cullinane and Ms. Hassan (each of whom served on our Board during a portion 2021) has no material relationship with OneSpan other than as a director and is independent within the listing standards of Nasdaq. In making its independence determinations, our Board has broadly considered all relevant facts and circumstances and has concluded that there are no transactions or relationships that would impair the independence of any of the current directors or any former directors listed in the prior sentence. In conducting its evaluation of Ms. Johnson, our Board considered her affiliation with Cox Automotive, Inc., which purchases certain of our eSignature and secure agreement automation services, and in conducting its evaluations of Messrs. Boroditsky and Moog, our Board considered their respective affiliations with Twilio Inc., from which the Company purchases certain SMS services, and Built In Chicago, with which the Company partners to votepromote job openings. Our Board ultimately determined that the transactions considered were routine and normal and that no director derived a material benefit from the transactions. Accordingly, none of these transactions was considered a material relationship that impacted a director’s independence. Finally, Mr. Scott M. Clements, our former President and Chief Executive Officer and a member of our Board during a portion of 2021, was not deemed to be independent.

Board Leadership Structure

The current leadership structure of the Company provides for the separation of the roles of the CEO and the Chair of our Board. As of July 26, 2021, Mr. Nietzel serves as our independent Chair of our Board. Until that time, Mr. John N Fox was the Chair of our Board and also an independent director. Mr. Moynahan serves as our President and CEO and is not a director. At this time, in light of the Company’s size and the nature of our business, our Board believes that the separation of these roles serves the best interests of OneSpan and our stockholders.

Lead Independent Director

In 2017, our Board adopted a lead independent director policy. In the absence of an independent director holding the position of Chair, our Board will appoint a Lead Independent Director. Given that the Chair of the Board, Mr. Nietzel, is independent, we do not currently have a Lead Independent Director.

Our independent directors regularly meet alone in executive session. In addition, each of our three standing Board committees is comprised solely of independent directors. Our Board regularly reviews the Company’s leadership structure and reserves the right to alter the structure as it deems appropriate.

Meetings of Our Board and Executive Sessions

Our Board met nine times during 2021. Each director who served on mattersour Board in 2021 attended more than 97% of the meetings of our Board and the meetings held by all committees on which they served, during their time of service, in 2021. As part of their duties, the directors are expected to attend the annual meetings of stockholders. Each of the then-serving directors attended last year’s annual meeting of stockholders.

The independent members of our Board met regularly in executive session with the Chair of our Board, or the applicable chair of a Board committee, presiding over these executive sessions. For additional information about the number of meetings held by each Board committee in 2021, see “Committees of Our Board.”


Committees of Our Board

Our Board’s committee structure currently consists of three principal committees: the Audit Committee, the Corporate Governance and Nominating Committee and the Management Development and Compensation Committee. In July of 2021, the Board determined to disband the Finance and Strategy Committee. Our Board has adopted a written charter for each of its committees. A copy of each committee’s charter is available on our website, investors.onespan.com, in the governance section of our investor relations webpage. A brief description of the composition and the primary responsibilities of our committees is set forth in the following sections.

AUDIT COMMITTEE
MembersKey Duties and ResponsibilitiesMeetings in
2021: 12

Marc Zenner
(Chair) 

Sarika Garg 

Marianne Johnson 

Michael McConnell 

●Reviewing and discussing with the Company’s management and its registered public accounting firm the Company’s annual audited and quarterly financial statements
●Appointing, compensating, evaluating and, when appropriate, terminating the engagement of the Company’s registered public accounting firm
●Evaluating the independence of the Company’s registered public accounting firm
●Inquiring of the Company’s management and its registered public accounting firm about significant risks or exposures and reviewing the steps management has taken to monitor and minimize any such risks, including the Company’s risk assessment and risk management policies
●Reviewing and monitoring the Company’s legal compliance
●Reviewing management’s assessment of internal controls over financial reporting and the related reports of the CEO and CFO
●Reviewing and pre-approving all related party transactions

The Audit Committee of our Board must be composed of three or more independent directors, as required by the listing standards of Nasdaq, who also meet the additional independence standards required for audit committee members. The Audit Committee is responsible for overseeing the financial reporting process on behalf of our Board. Our Board has determined that are considered routine, suchMr. McConnell and Dr. Zenner qualify as audit committee financial experts and has designated them as such. Each year, the ratificationAudit Committee recommends the selection of the independent registered public accounting firm described in Proposal 2. In contrast, brokers do not have discretionaryto our Board.

The Audit Committee has authority to vote shares helddelegate to subcommittees subject to applicable rules and regulations. In its sole discretion, the Audit Committee may retain, and will be directly responsible for the oversight of, such independent counsel, other advisors or consultants as it deems necessary or appropriate to discharge its duties and responsibilities.


CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
MembersKey Duties and ResponsibilitiesMeetings in
2021: 5

Jean K. Holley (Chair)

Garry L. Capers

Sarika Garg 

●Reviewing and evaluating the leadership structure of the Board
●Reviewing and assessing the Company’s Corporate Governance Guidelines and recommending changes to the Board as deemed appropriate
●Reviewing and recommending to the Board guidelines and procedures to be used by the Corporate Governance and Nominating Committee in evaluating the Board’s performance and the performance of the various committees of the Board
●Reviewing annually all committees of the Board and recommending changes in the number, function or membership of any such committees as appropriate
●Identifying and recommending to the Board individuals to be nominated as a director, including the consideration of director candidates nominated by stockholders and whether members of the Board should stand for re-election
●Establishing, reviewing and periodically updating the Company’s Code of Conduct and Ethics
●Annually reviewing and making recommendations regarding the Company’s Corporate Social Responsibility program

The Corporate Governance and Nominating Committee of our Board must be composed of three or more independent directors, as required by the listing standards of Nasdaq. The Committee has authority to delegate to subcommittees subject to applicable rules and regulations. In its sole discretion, the Committee may retain, and will be directly responsible for the oversight of, such independent counsel, other advisors or consultants as it deems necessary or appropriate to discharge its duties and responsibilities.

MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
MembersKey Duties and ResponsibilitiesMeetings in
2021: 6

Michael McConnell. (Chair)

Marc D. Boroditsky

Garry L. Capers

Jean K. Holley

●Reviewing, from time to time, the Company’s compensation strategy to ensure that the Company’s compensation programs and plans allow the Management Development and Compensation Committee to structure the compensation of the Chief Executive Officer and other executive officers in a manner consistent with the Company’s goals and stockholders’ interests
●Reviewing and approving annually the Company’s goals and objectives relevant to the compensation of the Chief Executive Officer and other executive officers, evaluating the Chief Executive Officer’s and other executive officers’ performance against those goals and objectives and setting the Chief Executive Officer’s and other executive officers’ compensation based on this evaluation
●Reviewing and, as appropriate, discussing with the Chief Executive Officer and the other executive officers the Company’s compensation policies and practices for non-executive employees of the Company
●Exercising all rights, authority and functions of the Board under the Company’s equity-based compensation plans
●Reviewing and periodically making recommendations to the Board with respect to non-employee director compensation (including compensation for members of committees of the Board)
●Reviewing and providing oversight of the Company’s management development, succession planning and diversity and inclusion efforts
●Reviewing the Company’s assessment as to any material risks of the Company that result from the Company’s compensation policies and practices (including how such policies and practices relate to risk management and risk-taking incentives)

The Management Development and Compensation Committee of our Board must be composed of three or more independent directors, as required by the listing standards of Nasdaq. The members of the Management Development and Compensation Committee must also qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), be “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986 (the “Code”) and satisfy any other necessary standards of independence under the federal securities and tax laws. The Management Development and Compensation Committee has authority to delegate to subcommittees subject to applicable rules and regulations. In its sole discretion, the Committee may retain, and will be directly responsible for the oversight of, such independent counsel, other advisors or consultants as it deems necessary or appropriate to discharge its duties and responsibilities.

FINANCE AND STRATEGY COMMITTEE

(disbanded July 30, 2021)

MembersKey Duties and ResponsibilitiesMeetings in
2021: 4

Marc Zenner (Chair)

Garry L. Capers

Sarika Garg

Marianne Johnson

Michael McConnell

Alfred Nietzel 

●Providing recommendations impacting the financial structure and strategic direction of the Company (including the Company’s long-term capital plan, product pipeline, capital structure, research and development programs, and strategic initiatives)
●Reviewing and monitoring current and long-range financial policies and business strategies
●Reviewing issuances of corporate equity, debt and other material financing arrangements
●Reviewing potential merger, acquisition and divestiture activities
●Assisting the Board with its oversight responsibility for enterprise risk management in areas affecting the Company’s technology, capital allocation and product strategy

In 2020, our Board established the Finance and Strategy Committee, to be composed of three or more independent directors. The Committee has authority to delegate to subcommittees subject to applicable rules and regulations. In its sole discretion, the Committee may retain, and will be directly responsible for the oversight of, such independent counsel, other advisors or consultants as it deems necessary or appropriate to discharge its duties and responsibilities. On July 30, 2021, the Board disbanded the Finance and Strategy Committee.

Director Selection Process

The Corporate Governance and Nominating Committee will consider director candidates who have relevant business experience, are accomplished in street nametheir respective fields and possess the skills and expertise to make a significant contribution to our Board, the Company and our stockholders. Director nominees should have executive-level leadership business experience, knowledge about issues affecting the Company and the ability and willingness to apply sound and independent business judgment. As part of our Board’s annual evaluation process, our Board discusses and compiles a matrix of key areas of experience, skills and other qualifications relating to Board composition. Each member of our Board evaluates himself or herself against the criteria, and the Board reviews and discusses the collective results to perform a gap analysis for purposes of succession planning and evaluating the overall skills and experience needed in future director candidates. All potential director candidates are evaluated in light of this gap analysis to identify the appropriate candidates to proceed to the interview phase. Then, as part of the Corporate Governance and Nominating Committee’s interview process, the Committee ranks a candidate’s relevant experience, on non-routine matters. Undera scale from zero (no direct experience) to three (a qualified authority on the NYSE rules,topic) across 30 core competencies in the electionareas of strategy; business operations; sales, marketing and customer success; technology and product; accounting and finance; investor relations and public relations; and board development/experience.

The Corporate Governance and Nominating Committee generally re-nominates incumbent directors is not considered a routine matter. As a result,who continue to satisfy the Corporate Governance and Nominating Committee’s criteria for membership on our Board, continue to make important contributions to our Board and consent to continue their service on our Board. However, the Corporate Governance and Nominating Committee regularly considers the needs of the Company and our Board with respect to Proposal 1, shares helddirectors and, if appropriate, the Committee will nominate new directors who best fit those needs. From time to time, the Corporate Governance and Nominating Committee engages a search firm to assist in street nameidentifying potential Board candidates.


The Corporate Governance and Nominating Committee will consider candidates for election to our Board who are recommended by stockholders, provided that a complete description of the nominees’ qualifications, experience and background, together with a statement signed by each candidate in which he or she consents to act as a director, if elected, accompany the recommendations. Such recommendations should be submitted in writing to the attention of the Corporate Governance and Nominating Committee, c/o OneSpan Inc., 121 W. Wacker Drive., 20th Floor, Chicago, Illinois 60601 and should not be voted unlessinclude self-nominations. The Corporate Governance and Nominating Committee applies the broker is given voting instructionssame criteria described above to candidates recommended by the beneficial owner. With respect to Proposal 2, brokers have the discretionary authority to vote shares held in street name even if they dostockholders. The Corporate Governance and Nominating Committee did not receive voting instructions from the beneficial owner.

If a properly executed, unrevoked proxy does not specifically direct the voting of the shares covered by such proxy, the proxy will be voted:

1.            FOR the election of all nomineesany recommendations for election as director as listed herein;

2.FOR the ratification of KPMG LLP as the Company’s independent registered public accounting firmcandidates for the fiscal year ending December 31, 2018, and

3.                                    In accordance with the judgment of the persons named in the proxy as to such other matters as may properly come before the Annual Meeting.Meeting from any stockholder.

 

Any stockholder executingmay nominate candidates for election as directors by following the procedures set forth in the OneSpan Inc. By-laws, as amended and restated on April 6, 2021 (our “By-laws”), including the applicable notice, information and consent provisions. For further information regarding these procedures, see “Other Matters—Director Nominations by Stockholders and Stockholder Proposals of Other Business.” A copy of our By-laws is available on our corporate website at investors.onespan.com in the governance section of our investor relations webpage at www.investors.onespan.com.

Board Evaluation Process

Our Board recognizes that a proxy hasrigorous evaluation process is an essential component of strong corporate governance practices and promoting ongoing Board effectiveness. Consistent with best practice, our Corporate Governance Guidelines and each of the powercommittees’ charters, the Corporate Governance and Nominating Committee oversees the annual evaluation of the performance of our Board and the committees, with the independent Chair maintaining a substantial role in facilitating discussion among our Board and the committees.

As part of our Board evaluation process, our Board reviews the following:

●Performance of our Board, including areas where our Board feels it functions effectively and areas where our Board believes it can improve;

●Overall composition of our Board, including director tenure, Board leadership, diversity and individual skill sets;

●General Board best practices, including oversight responsibilities;

●Culture to promote candid discussion within our Board and with senior management;

●Focus on change management and strategic matters, including evaluation of transactions, emerging technologies and challenges created thereby, business transformation, regulatory and legal developments, market factors and risks facing the Company; and

●Ability to ensure the Company is positioned for future success and serves the best interests of our stockholders.

Additionally, our Board reviews matters including its relationship with management, its meeting schedule and the structure, compensation, culture and roles and responsibilities of our Board. The committees are evaluated on matters including their meeting schedule, membership composition, culture, relationship with management and advisors and roles and responsibilities. Our Board and committee evaluation framework and process is conducted and reviewed annually and provides valuable insight as our Board and Corporate Governance and Nominating Committee evaluate the director selection process and succession planning, including the identification and optimization of current directors’ (or potential directors’) skills and experiences that would enable our Board to revoke it atenhance its effectiveness.


In connection with its 2021 evaluation, our Board conducted an assessment of whether our Board had an appropriate committee composition and appropriate delegation to fulfill responsibilities efficiently, as well as an evaluation of our Board’s interactions with and succession plans for the CEO and senior executives across the organization. The 2021 evaluation process further informed our Board regarding succession planning and Board and committee composition, including enhancement of director skills, experience and qualifications through director education and Board and committee appointments to meet the current and anticipated needs of the business.

Our Board’s Role in Risk Oversight

Our Board is primarily responsible for overseeing the assessment and management of the Company’s risk exposure, including the balance between risk and opportunity and the totality of risk exposure across the organization. Our Board does so directly and through each of its committees. Our Board and each of its committees regularly discuss with management the Company’s major risk exposures, their likelihood, the potential financial impact such risks may have on the Company and the steps the Company takes to manage any time before it has been votedsuch risks. The Audit Committee oversees the Company’s risks and exposures regarding financial reporting and legal compliance. The Management Development and Compensation Committee oversees risks relating to our overall incentive compensation programs and succession planning, including those for senior management. The Corporate Governance and Nominating Committee oversees risks related to compliance with our Corporate Governance Guidelines and Code of Conduct and Ethics.

In addition, in the coming year, our Board, led by delivering written noticethe Corporate Governance and Nominating Committee in connection with its annual review of our Corporate Social Responsibility (“CSR”) program, plans to look into our Company’s environmental and social risks and their direct impacts on the Company and its stakeholders. We plan on introducing an updated governance process for identifying and managing these risks. Due to the Secretarysize of the Company and the nature of our business, we have not yet incurred any significant impacts, expenditures or obligations related to environmental compliance issues. We recognize parts of our business have an environment impact and with the recommendations of the Corporate Governance and Nominating Committee we plan to develop a framework to measure and reduce this impact. The Corporate Governance and Nominating Committee has received quarterly updates from management on the Company’s efforts in its CSR program.

In addition and as necessary or appropriate, our Board and its committees may also retain outside legal, financial or other advisors. Our Board reviews the Company’s overall risk management program at least annually, including the corporate insurance program. Throughout the year, management updates our Board and relevant committees about factors that affect areas of potential significant risk. In addition, our internal audit director is involved with our enterprise risk management process along with our information security team and reports directly to our Audit Committee on all matters, without other members of management present. We believe that this is an effective approach for addressing the risks faced by executingOneSpan and that our Board’s leadership structure also supports this approach by providing additional independent risk oversight.

Further Information on Information Security at OneSpan

Optimizing security efforts and resources to properly protect OneSpan’s information systems and information assets requires a later-dated proxystructured approach to identify the various assets needing to be protected, their relative importance to OneSpan and the risks faced by such assets. At least annually, we identify the security measures already in place, assess their effectiveness to help measure the residual risk and prioritize any changes that would be required to lower the risk to an acceptable level for OneSpan.

Governance. OneSpan’s Information Security Risk Management Policy formalizes everyone’s responsibility, from senior managers to individual users, in limiting information security risks. The policy is approved by the Information Security Steering Committee, is reviewed on a yearly basis to account for changes in OneSpan’s risk environment and describes a formal process to identify, assess, and track key information security risks. Whenever required, a risk treatment plan is implemented to bring risk levels below acceptable risk tolerance.

OneSpan’s Information Security Steering Committee is composed of key senior leaders who operate under a formal charter. Their role is to oversee the corporate information security program and OneSpan’s security posture. Their role also includes tracking progress over information security risks and approving and tracking risk-reduction initiatives. This committee conducts regular meetings, at least quarterly, with OneSpan’s Chief Information Security Officer.


Our Board also oversees the progress of the information security program and the variation of information security risks through quarterly information security briefings, at a minimum. The Audit Committee, comprised solely of independent directors, has the primary responsibility for this oversight. Our Board also includes many individuals with information security experience, such as a chief product officer at a software company, a former chief financial officer with information security oversight responsibilities, a former chief information officer who was responsible for this area and an individual with former senior responsibilities in authentication and fraud prevention solutions. Five of seven of our Board’s nominees have information security information experience.

Security Incidents. In the last four years, we have not experienced any material information security breaches.

Insurance. OneSpan maintains a cybersecurity risk insurance policy and utilizes the services of an independent insurance advisor.

Reviews and Certifications. For internal OneSpan information systems and information assets, we conduct regular internal reviews and employ continuous security monitoring. In order to provide additional assurance, OneSpan has conducted periodic independent reviews of the key components of its security program. These reviews are carried out by individuals independent of the area under review. Areas for review and the schedule for such reviews is determined based on their criticality.

For customer-facing products and services, in addition to internal reviews and testing, we undergo various external reviews and certifications. Some of our products are certified under specific technical standards or industry guidelines, such as European banking regulations referred to as PSD2. In addition, our cloud platforms for SaaS solutions are audited annually by votingexternal independent auditors. The auditors review our platforms against the Service Organization Controls (SOC) 2 and ISO 27001, 27017 and 27018 standards. We receive annual certifications under these audits.

In addition, we conduct self-certification activities for those standards or regulations that are not covered by the external auditors, such as the General Data Protection Regulation in personEurope and Health Insurance Portability and Accountability Act regulations in the United States.

Training. In order to reduce the likelihood and impact of security incidents, OneSpan has implemented a global security awareness training program that includes mandatory security and privacy awareness training for all personnel at hire time and yearly thereafter. Additional training is made available to personnel as required based on their role. This includes secure development training for developers, in support of OneSpan’s secure development lifecycle, as well as incident response training.

In response to the various phishing attacks that often are at the Annual Meeting. Any written noticeroot of revocation or subsequent proxy should be delivered priormany security breaches, and in addition to June 13, 2018 to:the various technical controls that are in place, OneSpan has implemented recurring phishing campaigns that target its employees at a minimum on a weekly basis to improve their ability to recognize and report phishing messages. Employees who respond inappropriately to internal phishing campaigns receive additional remedial training.

 

VASCO Data Security International, Inc.Communications with Directors

Stockholders may send communications to our Board at the Company’s address, 121 West Wacker Drive, Suite 2050

20th Floor, Chicago, Illinois 60601

Attention: Secretary

Alternatively, handIL 60601. Any such communication addressed to a specific Board member and designated as “Confidential” will be delivered unopened to the specific Board member. If a communication is addressed to our Board as a whole and designated as “Confidential,” the communication will be delivered to the Secretary beforeChair of our Board. Any communication not designated as “Confidential” will be reviewed by management and brought to the closingattention of our Board at its next regularly scheduled meeting.

27 

PROPOSAL 1

ELECTION OF DIRECTORS

Introduction

With the pollsexception of Ms. Holley, who is not standing for re-election at the Annual Meeting.Meeting, each other member of our Board is up for election at the Annual Meeting and, if elected, will hold office for a one-year term expiring at the next annual meeting. Each director holds office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. If a director retires, resigns or is otherwise unable to serve before the end of his or her one-year term, our Board may appoint a director to fill the remainder of such term, reduce the size of our Board or leave the position vacant.

 

3


PROPOSAL 1OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” OUR BOARD’S NOMINEES.

 

ELECTION OF DIRECTORSOur Board’s Nominees and Their Qualifications

 

Stockholders are being asked to electAll seven directors. All of the director nominees will be electedour Board’s Nominees have been nominated by our Board, at the Annual Meeting. Each director will serve until the annual meeting in 2019, until a qualified successor director has been elected, or until he or she resigns, dies or is removed.

The Board of Directors, upon the recommendation of the Corporate Governance and Nominating Committee, has nominated the following individuals for election as directors at the Annual Meeting: Scott M. Clements, Michael P. Cullinane, John N. Fox, Jr., Art Gilliland, Jean K. Holley, T. Kendall HuntMeeting to serve for a one-year term ending at our 2023 Annual Meeting and Matthew Moog, alluntil their successors are duly elected and qualified, or until their earlier death, resignation or removal. All of whom are current directorsthe Board’s Nominees have consented to serving as a nominee, being named in the Proxy Statement and serving as a director if elected. The Corporate Governance and Nominating Committee and our Board believe that each of our Board’s Nominees brings a strong and distinct set of perspectives, experiences and skills to OneSpan. The Corporate Governance and Nominating Committee and our Board believe that if our Board is comprised of these nominees, our Board will be effective and well-functioning and have agreedan optimal balance of experience, leadership, competencies, qualifications and skills in areas of importance to serve if elected.OneSpan and our stockholders.

Our Board has affirmatively determined that each of our Board’s Nominees qualifies as an independent director under Nasdaq listing rules. Other than the inclusion of Mr. McConnell and Ms. Garg as nominees pursuant to the Cooperation Agreement, none of our Board’s Nominees is being elected pursuant to any arrangement or understanding between any of the Board’s Nominees and any other person or persons. For further information on the process for director nominations and criteria for selection of Board nominees, see “Information Regarding Our Board of Directors—Director Selection Process” beginning on page 24.

OUR BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF OUR BOARD’S NOMINEES.

NameAgeDirector
Since		Position(s) with OneSpan
Marc D. Boroditsky592019Director
Garry L. Capers452021Director
Sarika Garg462021Director
Marianne Johnson562020Director
Michael McConnell562021Director
Alfred Nietzel602020Chair of our Board
Marc Zenner592019Director

Alfred Nietzel, Chair of Our Board

Retired Chief Financial Officer, CDK Global, Inc.

Director Since: 2020

Age: 60

Independent: Yes

Outside Public Company Directorships:

Cerence Inc. (2019 – Present)

Executive Experience:
Mr. Nietzel has been a director since November 2020 and Chair of our Board since July 2021. Mr. Nietzel is a board member of Cerence Inc. (NASDAQ: CRNC), a global cloud software company that provides AI-powered assistants and innovations for connected and autonomous vehicles, where he also serves on the audit and nominating and governance committees.  He also serves as a director at Baxter Credit Union, one of the largest credit unions in the United States. He has served in executive finance roles for 16 years including most recently as Chief Financial Officer of CDK Global, Inc. (NASDAQ: CDK), the largest global provider of integrated technology and digital marketing solutions for the automotive retail and vehicle manufacturing industry, from 2014 to 2017. Prior to that, he was with ADP (NASDAQ: ADP), the leading global provider of cloud-based human capital management technology and services, since 2001, and led the financial and administrative execution of the spin-off of ADP’s Dealer Services Division to create CDK Global, Inc.  Mr. Nietzel served as Chief Financial Officer for ADP’s Dealer Services Division, Chief Financial Officer for the Employer Services Division and ADP’s Corporate Controller, leading the financial and business integration processes for multiple large acquisitions and divestitures during his time at ADP.  Prior to joining ADP, Mr. Nietzel served for 17 years with Proctor & Gamble Inc. (NYSE: PG), a multinational consumer goods company, in numerous operational finance, sales/marketing and audit roles. Mr. Nietzel holds a B.S. in Accounting and Finance from Eastern Illinois University. 
Relevant Skills and Qualifications:

✔ Technology / Software / SaaS Industry Experience

✔ Operational / Change Management Experience

✔ Capital Allocation / M&A Experience

✔ International / Global Business Experience

✔ Outside Public Company Board Service

Mr. Nietzel is a global finance executive who has over 20 years of demonstrated finance experience across consumer products and B2B services and has operated as a CFO of a public company of scale. He has recent experience as both a public, and privately held, company Board member. His earlier career experience at Procter & Gamble included multiple expatriate assignments requiring long-term relocation to both Europe and Australia. 


Marc D. Boroditsky

Chief Revenue Officer, Twilio Inc.

Director Since: 2019

Age: 59

Independent: Yes

Standing Board Committees:

Management Development and Compensation

Outside Public Company Directorships:

 None

Executive Experience:

Mr. Boroditsky has been a director since June 2019. He is a member of the Management Development and Compensation Committee. He has served as the Chief Revenue Officer at Twilio Inc. (NYSE: TWLO), a cloud communications platform as a service company, since July 2020. Prior to that, he served as Twilio’s Senior Vice President of Sales from May 2017 to July 2020 and as Vice President and General Manager of Authentication Solutions from February 2015 to May 2017. Before joining Twilio, Mr. Boroditsky was President and COO of Authy, a software authentication company, from September 2014 until it was acquired by Twilio in February 2015. Prior to Authy, Mr. Boroditsky was VP of Identity and Access Management at Oracle Corporation (NYSE: ORCL), a computer technology corporation. Mr. Boroditsky has more than 30 years of experience with technology companies. He has founded and financed four software companies in electronic medical records, authentication and identity management. He successfully sold Authy to Twilio and Passlogix to Oracle Corporation.

Relevant Skills and Qualifications:

✔ Technology / Software / SaaS Industry Experience

✔ Financial Technology Platforms / R&D / Innovation

✔ Operational / Change Management Experience

✔ Product Management / Strategy Experience

✔ Financial Institutions / Target Market Executive Roles / Banking Industry Experience

Mr. Boroditsky has an extensive security software, sales, finance, product management and operations background, having served in executive roles at numerous technology companies, both private and publicly traded. He provides the Board with unique insights into the Company’s growth strategies, software solutions including SaaS, software company operations and our target markets.


Garry L. Capers

Division President, Cloud Solutions, Deluxe Corporation

Director Since: 2021

Age: 45

Independent: Yes

Standing Board Committees:

 Corporate Governance and Nominating Committee

 Management Development and Compensation Committee 

Outside Public Company Directorships:

 None

Executive Experience:

Mr. Capers has been a director since April 2021. He is a member of the Corporate Governance and Nominating Committee and Management Development and Compensation Committee. Mr. Capers joined Deluxe Corporation (NYSE: DLX), a financial services company, in September 2019, where he serves as Division President, Cloud Solutions and is a member of the executive leadership team. At Deluxe Corporation, Mr. Capers has full financial and operational responsibility for the Cloud Solutions portfolio, including marketing data and analytics, website design and hosting and SaaS-based applications primarily targeted at end markets in the financial services industry, providing business intelligence and reporting for small banks and business incorporation services for small businesses. From January 2017 to September 2019, Mr. Capers held multiple executive leadership roles at Automatic Data Processing, Inc. (NASDAQ: ADP), the leading global provider of cloud-based human capital management technology and services, including Senior Vice President, NA Comprehensive Outsourcing Services from January 2018 to September 2019 and Division Vice President, NAS Southeast Region from January 2018 to January 2018. From December 2007 through January 2017, Mr. Capers held various roles at Equifax Inc. (NYSE: EFX), a credit agency, overseeing business-to-business marketing units that focused on marketing data services for corporations, small businesses and consumers, including serving as General Manager – Equifax Marketing Services from April 2016 to January 2017. While at Equifax Inc., Mr. Capers also led the formation of a new business unit within the fraud and identity management space. Prior to Equifax, Mr. Capers was a management consultant with Bain & Company, departing as a manager with focus in the retail and financial services sectors. Mr. Capers holds a B.A. in Business Administration from Morehouse College and an MBA in Marketing from The Wharton School at the University of Pennsylvania.

Relevant Skills and Qualifications:

✔ Technology / Software / SaaS Industry Experience

✔ Operational / Change Management Experience

✔ Product Management / Strategy Experience

✔ Financial Institutions / Target Market Executive Roles / Banking Industry Experience

Mr. Capers brings a wealth of strategic and operational experience in the markets the Company serves to the Board. With 15 years in the financial technology field including years of experience in management consulting, he contributes to the continued development of OneSpan’s growth driven value creation strategy.  


Sarika Garg

Co-founder and Chief Executive Officer at Cacheflow Inc

Director Since: 2021

Age: 46

Independent: Yes

Standing Board Committees:

 Audit Committee

 Corporate Governance and Nominating Committee

Outside Public Company Directorships:

 None

Executive Experience:

Ms. Garg has been a director since June 2021. She is a member of the Audit and Corporate Governance and Nominating Committees. Ms. Garg serves as Co-founder and Chief Executive Officer at Cacheflow Inc., a B2B SaaS company. She was previously Chief Strategy Officer responsible for product and go-to-market at Tradeshift. Tradeshift is a cloud network and platform for supply chain payments, marketplaces, and apps. During her tenure from 2015 through 2020, she helped Tradeshift grow from a small 100-person startup to a valuation of approximately $2.7 billion by 2020. Before joining Tradeshift, Ms. Garg led product management for Ariba Network, following its acquisition by SAP SE. Ms. Garg started her career at SAP SE, a multinational software corporation, where she spent over 10 years. She has been recognized as one of the Top 50 Women Leaders in SaaS by The Software Report in both 2018 and 2019 and is a member of the Forbes Business Development Council.

Relevant Skills and Qualifications

✔ Technology / Software / SaaS Industry Experience

✔ Financial Technology Platforms / R&D / Innovation

✔ Product Management / Strategy Experience

✔ Capital Allocation / M&A Experience

✔ International / Global Business Experience

Ms. Garg brings significant software operational, sales, technology and M&A leadership experience to the Board. She has over 20 years of experience in building and taking to market enterprise solutions globally at SAP SE, Ariba Network and Tradeshift Inc., including strategic M&A. Ms. Garg also possesses experience with both perpetual license and SaaS license solutions and organizational setup. In addition, she is an expert in SaaS operations, sales and architectures, particularly in the financial technology space.

32 

Marianne Johnson

Executive Vice President and Chief Product Officer, Cox Automotive, Inc.

Director Since: 2020

Age: 56

Independent: Yes

Standing Board Committees:

 Audit Committee

Outside Public Company Directorships:

None

Executive Experience:

Ms. Johnson has been a director since March 2020. She is a member of the Audit Committee. She has been the Executive Vice President and Chief Product Officer at Cox Automotive, Inc. (“Cox”), one of the largest automotive services companies in the world providing cloud-based technology and other solutions for the automotive wholesale and retail marketplace, since June 2018. She leads Cox’s product, engineering and data science teams, as well as the product innovation discipline to integrate and transform the company’s comprehensive suite of software and services. In mid-2018, Ms. Johnson began the work of standardizing and improving product and engineering practices by modernizing both disciplines at Cox. She launched a unique product innovation framework, which transformed the speed and relevancy of products for Cox’s customers. Before joining Cox Automotive, Ms. Johnson was at First Data Corporation (now Fiserv, Inc. (NASDAQ: FISV)), a global leader in payments and financial technology, where she was head of product innovation and technology for the network and security solutions line of business and senior vice president of enterprise commercialization from May 2015 to May 2018. She has been named one of the top Women Worth Watching® by Profiles in Diversity Journal ® and Woman of the Year by The Technology Association of Georgia.

Relevant Skills and Qualifications:

✔ Technology / Software / SaaS Industry Experience

✔ Financial Technology Platforms / R&D / Innovation

✔ Product Management / Strategy Experience

✔ International / Global Business Experience

Ms. Johnson has decades of experience in the financial technology field, having served in senior roles focusing on product innovation, operational excellence and growth. She also brings to our Board experience in product innovation, cloud-based software development, research and design, data science and executive management.


Michael McConnell

Private Investor

Director Since: 2021

Age: 56

Independent: Yes

Standing Board Committees:

 Audit Committee

 Management Development and Compensation Committee (Chair)

Outside Public Company Directorships:

 Adacel Technologies Limited

 Vonage Holdings Corp.

 SPS Commerce, Inc. (2018 – 2019)

 Spark Networks SE (2014 – 2017)

 Redflex Holdings Ltd. (2011 – 2014)

 Guidance Software, Inc. (2016 – 2017)

Executive Experience:
Mr. McConnell has been a director since June 2021. He is the chair of the Management Development and Compensation Committee and a member of the Audit Committee. Mr. McConnell currently serves on the board of Vonage Holdings Corp. (Nasdaq: VG), a cloud communications provider, where he has served since 2019. He also serves as Chairman of the Board of Adacel Technologies Limited (ASX: ADA), a developer of air traffic management systems and technology, and previously served as a member of its board of directors beginning in 2017. Mr. McConnell’s prior board experience also includes serving on the board of SPS Commerce, Inc. (Nasdaq: SPSC), a provider of cloud-based supply chain management services, from 2018 through 2019, and Spark Networks SE (NYSE: LOV), a leader in affinity-based online subscription dating networks, from 2014 until the company was sold in 2017. He also served as Spark Network’s interim executive chairman and chief executive officer during 2014, and he previously served as a non-executive director and as executive chairman of Redflex Holdings Ltd. (ASX: RDF), a provider of intelligent transport system solutions and services. Mr. McConnell also previously served on the board of Guidance Software, Inc. (Nasdaq: GUID), a global provider of forensic security solutions, from 2016 until the company was sold in 2017. He has also served on numerous other public and private company boards in the United States, Australia, New Zealand and Ireland. He is the former Managing Director of Shamrock Capital Advisors, a private investment company.
Relevant Skills and Qualifications:

✔ Technology / Software / SaaS Industry Experience

✔ Operational / Change Management Experience

✔ Audit Committee Financial Expert

✔ Capital Allocation / M&A Experience

✔ International / Global Business Experience

✔ Outside Public Company Board Service

Mr. McConnell has extensive operating and financial experience as an executive officer at various technology companies. He brings over two decades of investment, operational and public board experience to OneSpan. Mr. McConnell’s skills and experiences provide a valuable asset to the Board in developing strategic alternatives to drive stockholder value.  


Marc Zenner

Chief Financial Officer of Persefoni

Director Since: 2019

Age: 58

Independent: Yes

Standing Board Committees:

 Audit Committee (Chair)

Outside Public Company Directorships:

 Sentinel Energy Services Inc. (2017 – 2020)

 Innerworkings, Inc. (2019 – 2020)

Executive Experience:

Dr. Zenner has been a director since June 2019. He is the Chair of the Audit Committee. Since August 2021, Mr. Zenner serves as the Chief Financial Officer of Persefoni, a climate management and accounting platform. He also has served as an Executive in Residence at the University of Miami Herbert Business School since March 2021. He retired from investment banking in September 2017 after having spent 10 years at J.P. Morgan & Co. (NYSE: JPM), a leading financial services firm, and over six years at Citigroup, Inc. (NYSE: C). At J.P. Morgan, Dr. Zenner was a Managing Director and Global Co-Head of Corporate Finance Advisory from 2007 to 2017. At Citigroup, he was a Managing Director and Global Head of the Financial Strategy Group from 2000 to 2007. Prior to his career in investment banking, Dr. Zenner had a distinguished career as a professor at the University of North Carolina Chapel Hill Business School where he was a professor and the finance area chair. Dr. Zenner received numerous awards for his teaching and is the author of a wealth of academic and practitioner articles. Dr. Zenner previously served on the board of directors of Sentinel Energy Services Inc. (NASDAQ: STNL), a special purpose acquisition company that focuses on the oil field services sector, where he was the chairman of the Audit Committee and a member of the Nominating and Corporate Governance Committee, as well as on the board of Innerworkings, Inc. (former NASDAQ: INWK), a marketing execution company that was acquired in the summer of 2020, where he was a member of the Audit Committee. In addition, Dr. Zenner is a senior advisor for three enterprise and smart data technology startups (Radar, Persefoni and verseAI) and serves as a valuation, corporate finance and investment banking expert. Additionally, Dr. Zenner is a Chartered Financial Analyst. Dr. Zenner is originally from Belgium where he received an undergraduate degree in business engineering from K.U. Leuven. He then received an MBA from City University in London, U.K. and a Ph.D. in Financial Economics from Purdue University, where he was a Fulbright Scholar.

Relevant Skills and Qualifications:

✔ Technology / Software / SaaS Industry Experience

✔ Audit Committee Financial Expert

✔ Capital Allocation / M&A Experience

✔ Financial Institutions / Target Market Executive Roles / Banking Industry Experience

✔ Outside Public Company Board Service

Dr. Zenner has extensive finance, investment banking, capital markets, mergers and acquisitions and capital allocation experience, having advised many global corporations on these issues. He provides our Board with deep insights into the Company’s capital structure, business configuration, capital allocation and mergers and acquisitions strategy. He is also an experienced director at public and private companies.

35 

Additional Information

 

While theour Board of Directors does not contemplate that any nominee for election as a directorof our Board’s Nominees will not be able to serve as directors, if unforeseen circumstances (for example, death or disability) make it necessary for theour Board of Directors to substitute another person for any of the nominees,our Board’s Nominees, the persons listed in the enclosed proxy will vote your proxy, if properly executed and returned and unrevoked, for such other person or persons, or theour Board may, in its discretion, reduce the number of directors to be elected.

Vote Required

Directors will be elected by a majority of votes cast, meaning that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election).

Our Board unanimously recommends voting “FOR” the election of each of our Board’s Nominees.


PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

What You Are Being Asked to Approve

We hold advisory (non-binding) votes on the compensation of our NEOs, which are commonly referred to as “say-on-pay” votes, at every annual meeting of stockholders. Our Board values the opinions of our stockholders and believes an annual advisory (non-binding) vote allows our stockholders to provide us with their input on our executive compensation program. We conducted an advisory vote on the frequency of the say-on-pay vote at our 2020 annual meeting of stockholders. Following the recommendation of our stockholders, we will continue to hold our say-on-pay vote on an annual basis. We received strong approval of our say-on-pay vote at our 2021 annual meeting of stockholders, with 86% of our stockholders who voted at the meeting voting for the approval of our compensation framework for our NEOs.

Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking you to approve, on an advisory (non-binding) basis, our NEO compensation for 2021, as disclosed in the “Compensation Discussion and Analysis” section beginning on page 45 and the accompanying compensation tables and related narrative discussion. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the compensation philosophy, policies and practices described in this Proxy Statement. The next stockholder advisory vote to approve executive compensation will be held at our 2023 Annual Meeting.

Our Compensation ProgramS

We believe that our NEO compensation programs described throughout the “Compensation Discussion and Analysis” section on page 45 of this Proxy Statement are aligned with our strategic objectives and address evolving concerns in the very competitive technology industry. Most importantly, we believe that our executive compensation programs appropriately link pay to performance and are well aligned with the long-term interests of our stockholders.

Resolution for Advisory Vote to Approve Executive Compensation

Our Board and its committees value the opinions of our stockholders and will carefully consider the voting results when evaluating our executive compensation programs. However, because this vote is advisory, it is not binding on our Board or its committees. Our Board recommends that our stockholders vote “FOR” the following non-binding resolution at the Annual Meeting:

RESOLVED, that the compensation of the named executive officers of OneSpan Inc., as disclosed in the proxy statement for the 2022 annual meeting of stockholders pursuant to Item 402 of Regulation S-K (which includes the Compensation Discussion and Analysis, the compensation tables and related narrative discussion), is hereby APPROVED on an advisory basis.

Vote Required

The affirmative vote of a pluralitymajority of the votes cast and entitled to vote at the Annual Meeting is required forto approve this proposal. Abstentions have no effect on the electionoutcome of directors but under the majoritythis proposal. Broker discretionary voting policy in the VASCO Corporate Governance Guidelines, any director nominee who receives a greater number of withhold votes than affirmative votes in an uncontested election is expected to tender to the Board his or her resignation promptly following the certification of election results. Under the plurality voting standard and our majority voting policy, abstentionsnot permitted, and broker non-votes will not have an impactno effect on the electionoutcome of directors.this proposal.

Our Board unanimously recommends voting “FOR” the approval, on an advisory (non-binding basis) of our NEO Compensation.

37 

PROPOSAL 3

 

The Board of Directors recommends that the stockholders vote “FOR” each of the nominees listed herein.

4


PROPOSAL 2

ADVISORY VOTE ON RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of theour Board of Directors has appointed KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2018.2022. Stockholder ratification of the appointment of KPMG is not required by our By-laws or other applicable legal requirements. However, our Board considers it desirable for stockholders to pass upon the selection of auditors as a matter of good corporate practice. We are submitting this proposal to our stockholders on an advisory (non-binding) basis, and the outcome of the vote will not be binding on the Company.

 

If our stockholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.

 

KPMG LLP served as our independent registered public accounting firm for the fiscal year ended December 31, 2017,2021 and has acted as independent registered public accounting firm for the Company and its predecessor, VASCO Corp., since 1996. Representatives of KPMG LLP are expected to be present at the Annual Meeting, and such representatives will have an opportunity to make a statement, if they desire to do so, and are expected to be available to respond to appropriate questions.

 

The Board of Directors recommends that the stockholders vote “FOR” the appointment of KPMG LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2018.Vote Required

 

5The affirmative vote of a majority of votes cast is required to approve the proposal. Abstentions have no effect on the outcome of this proposal. Broker discretionary voting is permitted and your broker, bank or other nominee will be able to vote your shares with respect to this proposal.

Our Board and the Audit Committee unanimously recommend voting “FOR” the ratification, on an advisory (non-binding) basis, of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2022.

38 


 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL


OWNERS, DIRECTORS AND MANAGEMENT

 

Except as otherwise indicated below, theThe table below sets forth certain information with respect to the beneficial ownership of our common stockCommon Stock, as of March 31, 2018,April 11, 2022, unless otherwise indicated, for (i) each of our directors, (ii) each of our named executive officers, (iii) all directors and executive officers as a group, and (iv) each person or entity known by VASCOus to beneficially own more than 5% of the outstanding shares of common stock. The persons named inour Common Stock, (ii) each of our directors and our Board’s Nominees, (iii) each of our NEOs and (iv) all of our current directors and executive officers as a group. Unless otherwise indicated below, and subject to applicable community property laws, we believe based on the table haveinformation provided to us that each beneficial owner has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them unlessour Common Stock listed below. Unless otherwise indicated. For purposesindicated, the address of each beneficial owner in the table a person or group of personsbelow is deemed to have beneficial ownership of any shares as of a given date that such person has the right to acquire within 60 days after such date.c/o OneSpan Inc., 121 West Wacker Drive, 20th Floor, Chicago, Illinois 60601.

Name of beneficial owner

 

Amount and nature of beneficial
ownership (1)

 

Percent of class

 

Executive Officers and Directors

 

 

 

 

 

T. Kendall Hunt

 

8,237,261

(2)

20.44

%

Scott Clements

 

245,120

 

*

 

Mark S. Hoyt

 

121,573

 

*

 

Michael P. Cullinane

 

184,954

 

*

 

John N. Fox, Jr.

 

104,454

 

*

 

Jean Holley

 

108,669

 

*

 

Matthew Moog

 

48,260

 

*

 

Arthur W. Gilliland

 

6,994

 

*

 

All Executive Officers and Directors as a group (8 persons)

 

9,057,285

 

22.48

%

5% Stockholders

 

 

 

 

 

BlackRock, Inc.

 

3,896,183

(3)

9.67

%

      
  Amount and Nature of   
  Beneficial   
Name and Address of Beneficial Owner Ownership (1) Percent of Class 
5% Stockholders     

BlackRock, Inc.

55 East 52nd Street, New York, NY 10055 

 5,742,480(2)  14.2%  

T. Kendall Hunt

110 N. Wacker Drive, Mail Code: IL 4-110-17-00, Chicago, IL 60606 

 3,953,168(3)  10.0%

The Vanguard Group

100 Vanguard Boulevard. Malvern, PA 19355 

 2,379,725(4)  5.9%

Legion Partners Asset Management, LLC

12121 Wilshire Boulevard, Suite 1240, Los Angeles, CA 90025 

 2,168,979(5)  5.3%

Legal & General Investment Management Limited

One Coleman Street, London, EC2R 5AA, UK 

 2,306,411(6) 5.7%
Directors and Our Board’s Nominees     
Marc D. Boroditsky 20,718 * 
Garry Capers 3,539 * 
Sarika Garg 8,275 * 
Jean K. Holley 126,856 * 
Marianne Johnson 13,059 * 
Michael McConnell 20,000 * 
Alfred Nietzel 15,833   
Marc Zenner 30,218 * 
Named Executive Officers     
Matthew Moynahan — * 
Jan Kees van Gaalen — * 
Steven R. Worth 55,083 * 
Scott M. Clements 92,654 * 
Mark S. Hoyt 31,174 * 
John Bosshart 3,104 * 
All Executive Officers and Directors as a group (11 persons) 293,581 *
       

*

Ownership is less than 1%.

of the outstanding shares of our Common Stock.

(1)

(1)

TheBeneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by each director and executive officer is determined under rules promulgated by the SEC,a person and the information is not necessarily indicativepercentage ownership of beneficial ownership for any other purpose. Underthat person, shares of Common Stock subject to options held by such rules, beneficial ownership includes any shares as to which the individual has soleperson that are currently exercisable or shared voting power or investment power and any shares that the individual has the right to acquirewill become exercisable within 60 days after March 31, 2018, including throughApril 11, 2022, if any, or RSUs held by such person that vest within 60 days of April 11, 2022, if any, are deemed to be beneficially owned and outstanding for purposes of calculating such person’s beneficial ownership but are not deemed outstanding for purposes of computing the exercisepercentage ownership of any stock optionother person. None of the members of our Board or other right. The inclusion hereinour NEOs own any options exercisable within 60 days after April 11, 2022 or any RSUs that vest within 60 days after April 11, 2022, except for Ms. Garg and Mr. McConnell who each have 2,408 RSUs vesting on June 9, 2022. As of suchApril 11, 2022, there were 40,630,593 shares however, does not constitute an admission that the named stockholder isof Common Stock outstanding.

39 

(2)Based solely on information contained in a direct or indirectSchedule 13G/A filed on January 27, 2022 by BlackRock, Inc. (“BlackRock”), providing information with respect to its beneficial ownerownership as of such shares. Unless otherwise indicated, each person or entity named in the table hasDecember 31, 2021. BlackRock reported it had sole voting power as to 5,697,518 shares, shared voting power over no shares, sole dispositive power as to 5,742,480 shares and investmentshared dispositive power (or shares such power with his or her spouse) with respect to all shares of capital stock listed as owned by such person or entity. As of March 31, 2018, there were 40,160,900 shares of common stock outstanding.

over no shares.

(3)

(2)

Includes 1,011,300730,413 shares held in the Barbara J. Hunt Marital Trust. The amount alsoAlso includes 200,000161,255 shares held by T. KendallMr. Hunt’s spouse as to which shares Mr. Hunt disclaims beneficial ownership. Further, the amount includes 100,000 shares held in the T. Kendall Hunt and Barbara J. Hunt Charitable Remainder Trust as to which Mr. Hunt disclaims beneficial ownership to the extent he does not have a pecuniary interest. The address of T. Kendall Hunt is 121 West Wacker Drive, Suite 2050, Chicago, IL 60601.

ownership.

(4)

(3)

Based solely on a Schedule 13G/A filed on January 23, 2018,February 10, 2022 by thisThe Vanguard Group (“Vanguard"), providing information with respect to its beneficial owner.ownership as of December 31, 2021. Vanguard reported that it had sole voting power as to no shares, shared voting power as to 64,975 shares, sole dispositive power as to 2,290,516 shares and shared dispositive power as to 89,209 shares.

(5)Based solely on a Schedule 13D/A filed on June 1, 2021 by Legion Partners, L.P. I (“Legion”), providing information with respect to its beneficial ownership as of that date. Legion reported that it had sole voting power as to no shares, shared voting power as to 2,168,979 shares, sole dispositive power as to 0 shares and shared dispositive power as to 2,168,979 shares.
(6)Based solely on a Schedule 13G filed on February 14, 2022, by Legal & General Investment Management Limited (“Legal & General”), providing information with respect to its beneficial ownership as of December 31, 2021. Legal & General is a discretionary investment manager authorized and regulated by the UK financial conduct authority. GO UCITS ETF Solutions Plc (the “GO Company”) is organized as an open-ended investment company with variable capital structured as an umbrella fund and comprised of separate sub-funds. GO ETF Solutions LLP has been appointed as the investment manager for each of such finds. Each of Legal & General and GO Company reported that it had shared voting power as to 2,306,411 shares, shared dispositive power as to no shares and sole voting power as to no shares. GO Company reported that it had sole dispositive power as to no shares, and Legal & General closed that it had sole dispositive power over 2,306,411 shares. The address of BlackRock, Inc.the principal office of Legal & General is 55 East 52ndOne Coleman Street, New York, New York, 10022.

London, EC2R 5AA, UK, and the address of the principal office of GO Company is 2 Grand Canal Square, Dublin 2, Ireland.

40 

 

6DELINQUENT SECTION 16(a) REPORTS


Section 16(a) of the Exchange Act requires directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Directors, executive officers and beneficial owners of more than 10% of the outstanding shares of our Common Stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. Based solely on review of the copies of such forms or written representations that no reports under Section 16(a) were required, we believe that, for the year ended December 31, 2021, all of the Company’s directors, executive officers and greater than 10% beneficial owners complied with Section 16(a) filing requirements applicable to them, except for the following: (i) each of Messrs. Boroditsky, Cullinane, Moog and Zenner and Ms. Holley had one report related to the annual vesting of deferred RSUs (as defined below) on January 15, 2021 that was inadvertently filed late on April 2, 2021; (ii) each of Messrs. Clements and Hoyt had one report related to the semi-annual vesting of RSUs on January 4, 2021 that was inadvertently filed late on January 19, 2021; (iii) Mr. Hunt had one report related to the sale of securities on March 26, 2021 that was inadvertently filed late on April 9, 2021, and three transactions related to the charitable donations of securities on September 7, 2021, October 1, 2021 and December 29, 2021 that were inadvertently filed late in a Form 5 for the year ended December 31, 2021 on February 22, 2022; (iv) Mr. Bosshart had two reports related to share sales on June 9, 2021 and December 1, 2021 that were inadvertently filed late on September 1, 2021 and December 7, 2021, respectively; (v) Mr. Capers had one report related to an RSU grant on January 5, 2022 and the vesting of RSUs on April 6, 2022 that was inadvertently filed late on April 11, 2022 and (vi) the following individuals disclosed initial equity grants upon appointment on Form 3 rather than Form 4: during 2021: Mr. Worth had one Form 3 filed with respect to equity grant disclosures on March 2, 2021; Mr. Capers had two Form 3s filed with respect to equity grant disclosures on April 12, 2021 and August 11, 2021, respectively; each of Messrs. McConnell and Garg had two Form 3s filed with respect to equity grant disclosures on June 22, 2021 and August 11, 2021, respectively; Mr. Bosshart had one Form 3 filed with respect to equity grant disclosures on August 11, 2021; and Mr. Moynahan had one Form 3 filed with respect to equity grant disclosures on December 13, 2021. All late filings were the result of administrative errors.

Equity Compensation Plan Information

 

The following table sets forth information regarding shares of our common stockCommon Stock that were authorized tomay be issued under our equity compensation plans as of December 31, 2017, under the Company’s 2009 Equity Incentive Plan.2021.

        
       

(c)

Number of

       securities
  (a)  (b) remaining
  Number of Weighted available for future
  securities to be average exercise issuance under
  issued upon price of equity
  exercise of outstanding compensation
  outstanding options, plans (excluding
  options, warrants warrants securities reflected
Plan Category and rights and rights (1) in column (a)) 
Equity compensation plans approved by security holders (2)  964,069(3) $ — 3,553,630
Equity compensation plans not approved by security holders not applicable  not applicable not applicable
Total 964,069 $ —  3,553,630

(1)RSUs and PSUs do not have an exercise price, and the Company does not have any outstanding options.

 

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

 

Number of 
securities 
remaining 
available for future 
issuance under 
equity 
compensation 
plans (excluding 

securities reflected 
in column (a) (1)

 

 

 

(a)

 

(b)

 

(c)

 

Equity compensation plans approved by security holders

 

0

 

$

0.00

 

6,113,030

 

Equity compensation plans not approved by security holders

 

not applicable

 

not applicable

 

not applicable

 

Total

 

0

 

$

0.00

 

6,113,030

 

(1)

(2)

Subject to adjustment for stock dividends, stock splits and other similar events, a maximumThe Company has one active incentive plan that has been approved by our stockholders, the OneSpan Inc. 2019 Omnibus Incentive Plan (the “2019 Omnibus Incentive Plan”). As of 6,113,030December 31, 2021, we also had outstanding equity awards that may be settled for shares of common stock was available for issuanceour Common Stock under another plan approved by our stockholders, the VASCO Data Security International, Inc. 2009 Equity Incentive Plan. Pursuant to the 2019 Omnibus Incentive Plan, shares of our Common Stock that are subject to outstanding awards under the 2009 EquityPlan that subsequently are cancelled, forfeited, lapsed or are otherwise terminated or settled without a distribution of shares become available for awards under the 2019 Omnibus Incentive PlanPlan.

(3)Comprised of 560,122 shares of our Common Stock subject to outstanding RSU awards and 403,947 shares of our Common Stock subject to outstanding PSU awards. The number of shares of our Common Stock subject to outstanding PSU awards reflects the target amount awarded for awards outstanding as of December 31, 2017.

2021.

 


7


DIRECTORS AND EXECUTIVE OFFICERS

The names of and certain information regarding our current directors who are nominated for election and our executive officers appear below.

T. KENDALL “KEN” HUNT—Mr. Hunt is our founder, and Chairman of the Board. Mr. Hunt has served as Chairman of the Board since the Company’s incorporation in 1997, and currently serves a one-year term. He was our Chief Executive Officer from 1997 through 1999 and returned as CEO in November 2002 through 2017. He served as a member of the Board of Directors of Global Med Technologies, Inc. from March 2006 until April 2010 and RedRoller Holdings, Inc. from December 2007 until December 2008. He holds an MBA from Pepperdine University, Malibu, California, and a B.B.A. from the University of Miami, Florida. Mr. Hunt is 74 years old.

Mr. Hunt has extensive experience in international business, internet and network security, and the acquisition and development of businesses in the United States and Europe. His leadership, as Chief Executive Officer of VASCO, provided him with intimate knowledge of our operations and corporate strategy.

MICHAEL P. CULLINANE—Mr. Cullinane has been a director since April 1998 and currently serves a one-year term. He is the Chairman of our Audit Committee and a member of our Compensation Committee and our Corporate Governance and Nominating Committee. From May 2008 through September 2013, Mr. Cullinane served as Executive Vice President and Chief Financial Officer of SilkRoad, Inc., a cloud-based software company in the human capital management space. Mr. Cullinane served as the Executive Vice President and Chief Financial Officer of Lakeview Technology Inc. from January 2005 to July 2007. Mr. Cullinane served as the Executive Vice President and Chief Financial Officer and a director of Divine, Inc. from July 1999 to May 2003. He served as Executive Vice President, Chief Financial Officer and a director of PLATINUM Technology International, Inc. from 1988 to June 1999. Mr. Cullinane received a BBA from the University of Notre Dame, South Bend,��Indiana. Mr. Cullinane is 68 years old.

Mr. Cullinane has an extensive finance, accounting and technology background, having served as chief financial officer of four technology companies, two of which were publicly traded. He provides the Board with unique insights into the Company’s growth strategies, global financial and accounting matters, and operations.

JOHN N. FOX, JR.—Mr. Fox has been a director since April 2005 and currently serves a one-year term. He is Chairman of our Compensation Committee and is a member of our Audit Committee and our Corporate Governance and Nominating Committee. From 1998 to 2003, Mr. Fox served as a Vice Chairman of Deloitte & Touche and the Global Director, Strategic Clients for Deloitte Consulting. He held various other positions with Deloitte Consulting from 1968 to 2003, and served on the board of Deloitte Touche Tohmatsu from 1998 to 2003. Since 2007, Mr. Fox has been a director of Cognizant Technology Solutions Corporation where he serves as the Chairman of the Compensation Committee and is a member of the Nominating and Governance Committee. Mr. Fox received his BA degree from Wabash College and his MBA from the University of Michigan. Mr. Fox is 75 years old.

Mr. Fox has extensive global business experience having served as vice chairman and global director of an internationally prominent consulting firm. He has over 34 years of experience advising clients on large scale, complex transactions, including strategic initiatives, new business models, reengineered business processes, merger integration and organizational change. He provides the Board with the perspective of an executive with direct project management, staffing, compensation and organizational process experience.

8


ARTHUR GILLILAND - Mr. Arthur Gilliland has been a director since December 2017 and currently serves until the June 2018 shareholder meeting. He is a member of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee. Mr. Gilliland is a senior enterprise software executive. His experience leading both mature and high-growth emerging technology companies complements VASCO’s increased focus on its rapidly growing software business. Art is currently CEO of Skyport Systems where he led all aspects of the company from pre-product start-up to first customer shipment, and to significant growth within its Fortune 500 target customer base. Mr. Gilliland earned a Bachelor’s degree in Economics from Carleton College and a Master’s of Business Administration from the Harvard Business School. Recognized as an information security expert, he also holds several key patents in security and is a Certified Information Systems Security Professional (CISSP). Mr. Gilliland is 47 years old.

Prior to Skyport Systems, Art was Hewlett Packard’s SVP and General Manager, Enterprise Security Products. In this role, he was responsible for all aspects of the company’s security software business that drove its global P&L, including sales, marketing, product development, operations and support. Prior to HP, Art was SVP of Symantec Corporation’s Information Security Group where he led engineering, product development, industry relations and operations for the company’s Data Loss Prevention, Encryption, Compliance, Trust Services, User Authentication, Security Incident Management, Security Intelligence and Managed Security Services solutions. Mr. Gilliland brings to the Board the perspective of a technology executive, including as CEO, with experience across all functional areas, and in particular he brings industry experience relevant to the Company including security, SaaS, identity and access management, and data management.

JEAN K. HOLLEY— Ms. Holley has been a director since August 2006 and currently serves a one-year term. She is Chair of the Corporate Governance and Nominating Committee and a member of the Audit Committee and Compensation Committee. Ms. Holley served as Group Senior Vice President and Chief Information Officer for Brambles Limited, the global leader in supply chain and logistic solutions, from September 2011 until her retirement in July 2017. From April 2004 until August 2011, Ms. Holley served as the Executive Vice President and Chief Information Officer for Tellabs, Inc., a company that designs, develops, deploys and supports telecommunications networking products around the world. Ms. Holley previously served as the Vice President and Chief Information Officer for USG Corporation from 1999 to 2003. Prior to that, she served as Senior IT Director for Waste Management, Inc. Since August 2017, Ms. Holley has been a director of Herc Holdings Inc., and serves on the Audit and Financing Committees. Ms. Holley holds a B.S. in Computer Science/Electrical Engineering from Missouri University Science & Technology, and a M.S. in Computer Science/Engineering from Illinois Institute of Technology in Chicago. Ms. Holley is 59 years old.

Ms. Holley has an extensive background in information technology (IT) and engineering, global operations and manufacturing, corporate strategy and product development, having served as the chief information officer of two public companies. She brings to the Board the perspective of a technology executive with many years of experience in operations, communications strategy planning, product development, IT capabilities and data security.

MATTHEW MOOG—Mr. Moog has been a director since December 2012 and currently serves a one-year term. He is a member of the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee. Mr. Moog is CEO of Power Reviews, Inc., a leading consumer ratings and reviews service. In this role, Mr. Moog is responsible for leading the company to create innovative products and services that help consumers make smart decisions and help businesses gain valuable feedback. In addition, Mr. Moog is Founder of Built In, a network of regional online communities that connect, educate, and promote digital entrepreneurs and innovators. Mr. Moog is also the founder of the FireStarter Fund, an early stage investment fund focused on digital technology companies, and chaired the project to launch 1871, a 50,000 square foot co-working center for technology startups in Chicago. Mr. Moog holds a BA in Political Science from the George Washington University. Mr. Moog is 48 years old.

Previously, Mr. Moog served as President and CEO of publicly traded Q Interactive, EVP Sales and Marketing at CoolSavings, Inc. the predecessor to Q Interactive and Business Development Manager at Microsoft. Mr. Moog brings to the Board the perspective of a technology executive with many years of experience in sales, business development, product development, cloud computing, capital allocation and executive management.

9


Executive Officers

SCOTT M. CLEMENTS—Mr. Clements is our President and Chief Executive Officer and has held this position since July 2017. He served as President and Chief Operating Officer from November 2016 through July 2017. Mr. Clements joined the Company in 2015 as Executive Vice President and Chief Strategy Officer. Prior to joining VASCO, Mr. Clements spent 11 years at Tyco International and was most recently Corporate Senior Vice President, Business Development focused on technology acquisitions in 2015. Mr. Clements served as President of Tyco Retail Solutions from 2007 to 2014 and as Tyco’s Chief Technology Officer from 2012 to 2014. Before joining Tyco, Mr. Clements spent a decade at Honeywell International in domestic and international financial and operational leadership roles. Mr. Clements received a BS in Chemical Engineering and Advanced Process Control from The Ohio State University and an MBA in Finance and Corporate Strategy from the University of Michigan in Ann Arbor. Mr. Clements is 55 years old.

MARK S. HOYT—In November 2015, the Board of Directors appointed Mr. Hoyt to the positions of Chief Financial Officer and Treasurer. In March 2018, the Board also appointed Mr. Hoyt an Executive Vice President. Mr. Hoyt joined the Company in October 2015. Prior to joining the Company, Mr. Hoyt was the Chief Financial Officer of Groupon, Inc. operations in Europe, Middle East and Africa, based in Switzerland from 2012 to 2015, and from 2010 to 2012, he was Vice President of International Financial Operations of Groupon, Inc. based in Chicago. Mr. Hoyt is a CPA and began his career at PricewaterhouseCoopers, followed by international positions at Motorola, Inc. and CareerBuilder. Mr. Hoyt holds an MBA from the University of Chicago Booth School of Business and a BS in Accountancy from Miami University. Mr. Hoyt is 50 years old.

10


Meetings of the Board of Directors

The Board of Directors met 8 times during 2017. Each incumbent director attended at least 96% of the meetings of the Board and the meetings held by all committees on which he or she served in 2017, in the aggregate. As part of their duties, the directors are expected to attend the annual meetings of stockholders. Each of the directors attended last year’s annual meeting.

The Board of Directors presently has three standing committees, the Corporate Governance and Nominating Committee, the Audit Committee and the Compensation Committee, each of which is described more fully below.

Board Independence

Our Board of Directors conducts an annual review as to whether each of our directors meets the applicable standards of the NASDAQ Stock Market Rules. Our Board of Directors has determined that each of the current directors and director nominees, other than T. Kendall Hunt and Scott M. Clements, has no material relationship with VASCO other than as a director and is independent within the listing standards of NASDAQ. In making its independence determinations, the Board of Directors has broadly considered all relevant facts and circumstances and has concluded that there are no transactions or relationships that would impair the independence of any of the directors or director nominees, other than T. Kendall Hunt and Scott M. Clements.

Board Leadership Structure

The current leadership structure of the Company provides for the separation of the roles of the Chief Executive Officer and the Chairman of the Board of Directors. T. Kendall Hunt, the founder of VASCO, serves as our Chairman of the Board and Scott M. Clements, also a director, serves as our President and Chief Executive Officer. At this time, the Board believes that in light of the Company’s size, the nature of our business, the separation of these roles serves the best interests of VASCO and our stockholders. As the founder of VASCO, Mr. Hunt is uniquely qualified to guide our Board and to ensure that critical business issues are brought before the Board. Mr. Hunt also retained the Chairman role following his resignation as CEO in 2017 which allowed Mr. Clements to transition to CEO without the additional Chairman responsibilities.

11


Lead Independent Director

Although the current Board leadership structure includes the separation of the roles of CEO and Chairman, our Chairman, Mr. Hunt, is not considered “independent” under the listings standards of NASDAQ. In 2017, the Board adopted a lead independent director policy and designated a lead independent director, Mr. John Fox. Such policy may be found in the Investor Relations section of our website www.vasco.com. The duties of the lead independent director include:

Executive Sessions

·           Preside at all meetings of the Board of Directors at which the Chairman is not present, including executive sessions of the independent Directors. Provide a report to the CEO on all relevant matters arising from those sessions, and invites the CEO to join those sessions for further discussion as appropriate.

Call Meetings of Independent Directors

·           Has the authority to call meetings of the independent Directors. Provide a report to the CEO on all relevant matters arising from those sessions, and invites the CEO to join those sessions for further discussion as appropriate.

Board Information, Agendas and Schedules

·           Provide input on the quality, quantity, appropriateness and timeliness of information supplied by management to the Board with the objective of obtaining information sufficient for the Board to make informed decisions.

·           Collaborate with the CEO, Chairman and management on setting the agenda for each Board meeting.

·           Provide input on the frequency of Board meetings and meeting schedules, assuring there is sufficient time for discussion of all agenda items.

Our independent directors regularly meet alone in executive session. In addition, the Audit, Compensation and Corporate Governance and Nominating Committees are comprised solely of independent directors. The Board regularly reviews the Company’s leadership structure and reserves the right to alter the structure as it deems appropriate.

The Board’s Role in Risk Oversight

The Board of Directors is primarily responsible for overseeing the assessment and management of the Company’s risk exposure and does so directly and through each of its committees. The Board of Directors and each of its committees regularly discuss with management the Company’s major risk exposures, their likelihood, the potential financial impact such risks may have on the Company, and the steps the Company takes to manage any such risks. The Audit Committee oversees the Company’s risks and exposures regarding financial reporting and legal compliance. The Compensation Committee oversees risk management relating to our overall incentive compensation programs, including those for senior management. The Corporate Governance and Nominating Committee oversees risks related to succession planning and compliance with our Corporate Governance Guidelines and Code of Conduct and Ethics. As necessary or appropriate, the Board and its committees may also retain outside legal, financial or other advisors. The Board reviews the Company’s overall risk management program at least annually. Throughout the year, management updates the Board and relevant committees about factors that affect areas of potential significant risk. We believe that this is an effective approach for addressing the risks faced by VASCO and that our Board’s leadership structure, with a Lead Independent Director, also supports this approach by providing additional insights and experience with risk oversight.

12


Communications with Directors

Stockholders may send communications to the Board of Directors at the Company’s address, 121 West Wacker Drive, Suite 2050, Chicago, IL 60601. Any such communication addressed to a specific Board member and designated as “Confidential” will be delivered unopened to the specific Board member. If a communication is addressed to the Board as a whole and designated as “Confidential,” the communication will be delivered to the Chairman of the Corporate Governance and Nominating Committee. Any communication not designated as “Confidential” will be reviewed by management and brought to the attention of the Board at its next regularly scheduled meeting.

Corporate Governance and Nominating Committee

The Board of Directors constituted and established the Corporate Governance and Nominating Committee with authority, responsibility, and specific duties as described in the Corporate Governance and Nominating Committee Charter. A copy of the charter is available on our website,  www.vasco.com/investors  in the corporate governance section of our investor relations webpage. The primary function of this committee is to assist the Board in:

·                                 Determining the appropriate structure of the Board, including committees;

·                                 Evaluating the performance of the Board and management;

·                                Identifying and recommending to the Board individuals to be nominated as a director, including the consideration of director candidates recommended by stockholders;

·                                 Providing oversight of management succession plans;

·                                 Providing oversight of the Corporate Governance Guidelines; and

·                                 Providing oversight of the Code of Conduct and Ethics.

The Corporate Governance and Nominating Committee will consider director candidates who have relevant business experience, are accomplished in their respective fields, and who possess the skills and expertise to make a significant contribution to the Board of Directors, the Company and its stockholders. Director nominees should have high-leadership business experience, knowledge about issues affecting the Company and the ability and willingness to apply sound and independent business judgment. VASCO does not have a formal policy with respect to diversity. However, the Board believes that it is essential that VASCO’s Board members represent diverse viewpoints, with a broad array of business experiences, professions, skills and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of our stockholders.

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The Corporate Governance and Nominating Committee will consider nominees for election to the Board of Directors that are recommended by stockholders, provided that a complete description of the nominees’ qualifications, experience and background, together with a statement signed by each nominee in which he or she consents to act as such, accompany the recommendations. Such recommendations should be submitted in writing to the attention of the Corporate Governance and Nominating Committee, c/o VASCO Data Security International, Inc., 121 W. Wacker Drive., Suite. 2050, Chicago, IL 60601 not less than 60 nor more than 90 days prior to the date of the Annual Meeting of Stockholders at which the nomination is to be made and should not include self-nominations. The committee applies the same criteria described above to nominees recommended by stockholders.

The Corporate Governance and Nominating Committee is comprised of three or more directors, each of whom must be an independent director, as defined by the NASDAQ Stock Market Rules. The members of the committee are elected by the Board at its annual organizational meeting and serve at the pleasure of the Board until their successors are duly elected and qualified. The members of the Corporate Governance and Nominating Committee are Jean K. Holley (Chair), Michael P. Cullinane, Art Gilliland, John N. Fox, Jr., and Matthew Moog. The Corporate Governance and Nominating Committee met four times during 2017.

Compensation Committee

The Compensation Committee of VASCO’s Board of Directors is composed of three or more independent directors as determined in accordance with applicable rules of the Nasdaq Stock Market and the SEC and applicable rules under the Code. The Compensation Committee operates under a written charter adopted by the Board of Directors. A copy of the charter is available on our website,  www.vasco.com/investors  in the corporate governance section of our investor relations webpage. The Compensation Committee acts on behalf of our Board of Directors to establish the compensation of VASCO’s named executive officers and makes recommendations to the Board regarding compensation of our non-employee directors. The Compensation Committee oversees risk management relating to our overall incentive compensation programs, including those for senior management. The Compensation Committee administers the Company’s 2009 Equity Incentive Plan and the VASCO Data Security International, Inc. Executive Incentive Compensation Plan (the “Executive Incentive Compensation Plan”). The members of the Compensation Committee are John N. Fox, Jr. (Chairman), Michael P. Cullinane, Art Gilliland, Jean K. Holley, and Matthew Moog. The Compensation Committee met six times during 2017.

Audit Committee

The Audit Committee of the Board of Directors, as established in accordance with Section 3(a)(58)(A) of the Exchange Act, is composed of three or more independent directors, as required by the NASDAQ Stock Market Rules, who also meet the additional independence standards required for audit committee members. The Audit Committee operates under a written charter adopted by the Board of Directors and is responsible for overseeing the financial reporting process on behalf of the Board. A copy of the charter is available on our website, www.vasco.com/investors in the corporate governance section of our investor relations webpage. The members of the Audit Committee are Michael P. Cullinane (Chairman), John N. Fox, Jr., Art Gilliland, Jean K. Holley, and Matthew Moog. The Board of Directors has determined that Messrs. Cullinane and Moog qualify as audit committee financial experts and has designated them as such. Each year, the Audit Committee recommends the selection of the independent registered public accounting firm to the Board of Directors. We are not required under our charter or Bylaws to submit the selection of the independent registered public accounting firm to a vote of the stockholders. The Audit Committee met 10 times during 2017.

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REPORT OF THE AUDIT COMMITTEE

 

Management is responsible for the Company’s financial statements and the financial reporting process, including internal controls. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with auditing standards generally accepted inof the United StatesPublic Company Accounting Oversight Board (United States) (the “PCAOB”) and the applicable requirements of the Securities and Exchange Commission (the “SEC”) and for issuing a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.

 

In this context, the Audit Committee held discussions with management and KPMG LLP. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee reviewed and discussed the consolidated financial statements with management and KPMG LLP. The Audit Committee discussed with KPMG LLP the matters required to be discussed by Auditing Standard 1301, as amended, (Communications with Audit Committees) as adopted by the Public Company Accounting Oversight Board.applicable requirements of the PCAOB and the SEC. These matters included a discussion of KPMG LLP’s judgments about the quality (not just the acceptability) of the Company’s accounting principles as applied to financial reporting and their evaluation of the Company’s internal control over financial reporting.

 

The Audit Committee also received the written disclosures and the letter from KPMG LLP required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding KPMG LLP’s communicationcommunications with the Audit Committee concerning independence and has discussed with KPMG LLP its independence. The Audit Committee further considered whether the provision by KPMG LLP of the non-audit services described below is compatible with maintaining the independent registered public accounting firm’s independence.

 

Based upon the Audit Committee’s discussion with management and the independent registered public accounting firmKPMG LLP and the Audit Committee’s review of the representation of management and the disclosures by the independent registered public accounting firmKPMG LLP to the Audit Committee, the Audit Committee recommended to the Company’s Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,2021, for filing with the Securities and Exchange Commission.SEC.

 

Respectfully submitted,

Michael P. Cullinane, Chairman

John N. Fox, Jr.

Art Gilliland

Jean K. Holley

Matthew Moog

 

15Marc Zenner (Chair)

Sarika Garg

Marianne Johnson

Michael McConnell

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FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FEESFOR 2021 AND OTHER MATTERS2020

 

The Audit Committee has implemented policies and procedures for the pre-approval of all audit, audit-related, tax and permitted non-audit services rendered by KPMG, LLP, VASCO’sour independent registered public accounting firm. It is currently the policy of the Audit Committee to pre-approve all audit services rendered by KPMG, and the Chair of the Audit Committee has been delegated the authority to pre-approve permissible non-audit services rendered by KPMG. Those policies and procedures include a review of the independent registered public accounting firm’s audit plan and fee schedule for the period under review. If such audit plan and fee schedule are approved by the Audit Committee, the independent registered public accounting firm provides an engagement letter in advance of the start of the audit work to the Audit Committee outlining the scope of the audit and related audit fees. Our senior management will also recommend,recommends, from time to time, to the Audit Committee that it approve non-audit services that would be provided by the independent registered public accounting firm. Our senior management and the independent registered public accounting firm willthen each confirm to the Audit Committee that each non-audit service is permissible under all applicable legal requirements. A budget, estimating the cost of the non-audit services, will beis provided to the Audit Committee along with the request. The Audit Committee must approve both permissible non-audit services and the budget for such services. The Audit Committee will beis informed routinely as to the non-audit services actually provided by the independent registered public accounting firm pursuant to this pre-approval process. The Audit Committee has also delegated to its ChairmanChair the authority to pre-approve KPMG permissible non-audit services, with the ChairmanChair of the Audit Committee and KPMG required to summarize any such approvals at the subsequent Audit Committee meeting.

 

The following sets forth the amount of fees paid to our independent registered public accounting firm, KPMG, LLP, for services rendered in 20172021 and 2016:2020:

 2021 2020
Audit Fees$1,830,305  $2,349,590 
Tax Fees—  23,277 
Audit-Related Fees 90,000   66,000 
All Other Fees —     —   
TOTAL$1,920,305  $2,438,867 

 

Audit Fees: FeesThe aggregate. For 2021 and 2020, audit fees consisted of fees billed by KPMG LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements, the reviews of the consolidated financial statements included in the Company’s quarterly reports on Form 10-Q and services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings were $1,744,762 for the fiscal year ended 2017 and $1,495,914 for the fiscal year ended 2016.filings.

 

Tax Fees: FeesThe aggregate. For 2020, tax fees billed by KPMG LLPconsist of fees for tax compliance and tax advice were $76,826 in 2017 and $9,334 in 2016. The 2017 fees represent permissible foreign subsidiary tax compliance services and permissible tax consulting services in the U.S. The 2016 fees relate to permissible foreign subsidiary tax compliance services.

 

All Other Fees:Audit-Related Fees There were $68,507 of. For 2021 and 2020, other fees billed by KPMG in 2017 and $52,254 in 2016,were fees associated with the performance of permissible attestation services.

 

It is currently the policy of theThe Audit Committee, including through authority delegated to pre-approve all services rendered by KPMG LLP. The Committee is authorized by its Charter to review and pre-approve the audit plan and all other audit and permitted non-audit services, and related fees or other compensation to be paid to KPMG LLP. The Audit CommitteeChair, has pre-approved all of the above fees for both 20172021 and 2016.2020.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS

 

16Executive Officers

Executive officers are elected annually by our Board, to hold office until their successors are elected and qualified or until their earlier resignation or removal.

Matthew Moynahan
President and Chief Executive Officer
Mr. Moynahan has served as OneSpan’s President and Chief Executive Officer since November 2021. He most recently served as the Chief Executive Officer of Forcepoint LLC, a global provider of commercial and government cybersecurity solutions and a subsidiary of Raytheon Technologies Corporation, from May 2016 until its acquisition by Francisco Partners in January 2021. Prior to that, Mr. Moynahan served as President of Arbor Networks, a network security and monitoring software company and a subsidiary of Danaher Corporation (NYSE: DHR), from January 2012 through May 2016, where he was responsible for building a large commercial cloud DDoS platform and network-based advanced threat protection systems, and as President and Chief Executive Officer of Veracode, Inc., a SaaS pioneer of cloud-based software security testing platforms, from April 2006 through May 2011. He also served as Vice President of Symantec’s enterprise product management group, as well as Vice President and General Manager of its consumer division. Mr. Moynahan holds a Bachelor of Arts in History and Economics from Williams College and a Master of Business Administration from the Harvard Business School. Mr. Moynahan is 50 years old.
Jan Kees van Gaalen
Interim Chief Financial Officer and Treasurer
Mr. van Gaalen has served as OneSpan’s Interim Chief Financial Officer since October 2021. From December 2019 through October 2021, prior to joining OneSpan, he was a consultant to technology companies involved in SaaS, Big Data, AI, IT consulting and outsourced services. Prior to this, he served in chief financial officer roles at C&J Energy Services Inc., an oil and gas field exploration services company, from September 2018 through December 2019, at Kennametal Inc. (NYSE: KMT), an American supplier of tooling and industrial materials, from September 2015 to September 2018, and at Dresser-Rand Group Inc., an American engineering and manufacturing company owned by Siemens Energy AG (OTCMKTS: SMNEY), from April 2013 to July 2015. Earlier in his career, Jan Kees held various internationally based CFO and other finance executive roles since 1994. Mr. van Gaalen has a master’s degree in business administration from HEC Management School (formerly Institut des Affaires – ISA), Jouy en Josas, France and a bachelor’s degree in economics from Erasmus University, Rotterdam, Netherlands.  Mr. van Gaalen is 65 years old.
Steven R. Worth

Former General Counsel, Chief Compliance Officer and Corporate Secretary April 2016 through April 8, 2022

Former Interim Chief Financial Officer and Treasurer June 10, 2021 through August 2, 2021

Former Interim President and Chief Executive Officer August 2, 2021 through November 28, 2021

Steven R. Worth was OneSpan’s General Counsel, Chief Compliance Officer and Corporate Secretary from April 2016 to April 8, 2022. Mr. Worth also served as the Interim Chief Financial Officer and Treasurer from June 2021 to August 2021 and the Interim President and Chief Executive Officer from August 2021 to November 2021. He had executive responsibility for corporate information security, legal, compliance and intellectual property matters. Mr. Worth brought more than 25 years of experience across software, technology, consulting and legal industries. Prior to joining OneSpan, he was an Executive Vice President at SilkRoad Inc., a cloud-based provider of human capital management software, from 2011 to 2016. Prior to that, Mr. Worth served as Vice President, General Counsel and Corporate Secretary of Diamond Management and Technology Consultants (formerly NASDAQ: DTPI), an international publicly traded technology services firm, from 2005 to 2010.  Before his corporate roles, Mr. Worth practiced law with a large international firm. He holds an MBA and JD from the University of Wisconsin-Madison, and he has a BS in Industrial and Labor Relations from Cornell University.  Mr. Worth is 52 years old.

44 


 

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

 

The Management Development and Compensation Committee has reviewed and discussed with management the section of this Proxy Statement entitled “Compensation Discussion and Analysis,” and, based on such review and discussions,discussion, the Management Development and Compensation Committee recommended to our Board of Directors that the “Compensation Discussion and Analysis” section be included in this Proxy Statement. The Board approved our recommendation.Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

 

Respectfully submitted,

 

John N. Fox, Jr., ChairmanMichael McConnell (Chair)

Michael P. Cullinane

Art GillilandMarc Boroditsky

Garry L. Capers

Jean K. Holley

Matthew Moog

 

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

 

This Compensation Discussion and Analysis (“CD&A”) describes the, the material components of 2021 compensation and discusses the compensation decisions for our named executive officersNEOs listed in the “2021 Summary Compensation Table below.Table.” Since January 1, 2021, we have experienced a number of changes at the senior leadership level. Mr. Mark Hoyt resigned as Chief Financial Officer and Treasurer on June 9, 2021, and Mr. Scott Clements resigned as President and Chief Executive Officer on August 2, 2021. Mr. Steven Worth served as Interim Chief Financial Officer and Treasurer from June 10, 2021 to August 2, 2021, and as Interim President and Chief Executive Officer from August 2, 2021 to November 28, 2021. Mr. John Bosshart, Chief Accounting Officer, served as Interim Chief Financial Officer and Treasurer from August 3, 2021 to October 4, 2021. Mr. Jan Kees van Gaalen joined the Company as Interim Chief Financial Officer in October 2021. Finally, Mr. Worth separated from the Company on April 8, 2022.

As of December 31, 2021, the following individuals served as an executive officer and are NEOs under applicable SEC executive compensation disclosure rules. The 2021 NEOs are as follows:

 

●President and Chief Executive Officer – Matthew Moynahan;
●Interim Chief Financial Officer – Jan Kees van Gaalen;
●

Former General Counsel, Chief Compliance Officer, and Corporate Secretary, Former President and Chief Executive Officer and Former Interim Treasurer and Chief Financial Officer – Steven R. Worth; 

●Former President and Chief Executive Officer—Scott M. Clements;
●Former Executive Vice President, Treasurer and Chief Financial Officer—Mark S. Hoyt.
●Former Interim Treasurer and Chief Financial Officer – John Bosshart

·                    President

While Messrs. Van Gaalen and Chief Bosshart are NEOs under SEC disclosure rules, they did not participate in the Company’s standard NEO compensation program. Please see the section in this CD&A entitled “Management Transition” for a summary of the compensation decisions made with respect to Messrs. Van Gaalen and Bosshart as well as other compensation decisions made in connection with these management transitions.


Executive Officer — Scott M. Clements (CEO);Summary

 

·                    Executive Vice President and Chief Financial Officer — Mark S. Hoyt (CFO); and

·                    Chairman and former Chief Executive Officer — T. Kendall Hunt (former CEO or Chairman).

Mr. Clements became a named executive officer in November 2016 when he was appointed President and Chief Operating Officer. In July 2017, Mr. Clements succeeded Mr. Hunt as CEO. Because Mr. Hunt was a named executive officer from January to July of 2017, he is included in this section as a named executive officer.

2017 SAY-ON-PAY AND SAY-ON-PAY FREQUENCY VOTES

At our 2017 annual meeting, 96% of the votes cast by our stockholders approved our Say-on-Pay proposal. We meet with key investors throughout the year to understand the topics that matter most to them, including any that relate to executive compensation. We consider any such stockholder input, and evolving practices in the market, to strive for alignment in our executive pay programs.

Consistent with the recommendation of the Board, at our 2017 annual meeting, 53% of the votes cast by our stockholders approved our proposal to hold Say-on-Pay votes every three years. Therefore, at this time we will continue to hold such vote every three years.

17


EXECUTIVE SUMMARY

Our Company StrategyEvolution

 

We have been engaged in a detailed corporate strategic planning process in 2016 and developed a process for updating our strategic plan at least annually. In 2017, we delivered on executing that plan. Our senior management team was responsible for numerous goals in 2017, including:

1.              Return to growth after a 20% decline in revenue in 2016 while maintaining positive cash flow

2.              Grow software and services revenue while sustaining our profitable hardware business

3.              Execute on our Trusted Identity technology strategy

4.              Effectively execute our succession planning followingdriving an evolution of the retirementCompany across multiple dimensions over the last severalfive years. For over 20 years prior to this, the Company derived the vast majority of its revenue from the sale of hardware authentication tokens and associated services. Hardware revenue now comprises less than half of our top three executives who had been with the companytotal revenue, and we expect continued growth of software sales to accelerate this evolution. Some specific goals for many years2021 included:

 

●Continued software and services revenue growth;

5.              Fill out a strong management team able to execute on our strategic plan in the years to come

●Adjusted Annual Contract Value (“AACV”) from software and services growth (as defined below);

●Adjusted EBITDA growth (as defined below);

●Executing on certain strategic and human capital objectives, such as improving employee engagement and ensuring the health and safety of our employees during the global pandemic; and

●Focusing the Company on annual recurring revenue (“ARR”) and other software company performance metrics internally while also expanding external disclosure to investors as the Company’s transition continues. “ARR” is defined as the annualized value of our customer recurring contracts with a term of at least one-year, as of the measuring date. These include subscription, term-based license, and maintenance contracts and exclude one-time fees. To the extent that we are negotiating a renewal with a customer after the expiration of a recurring contract, we continue to include that revenue in ARR if we are actively in discussion with the customer for a new recurring contract or renewal, or until such customer notifies us that it is not renewing its recurring contract.

 

6.              Build new capabilities in sales, marketing, product management, and software development

7.              Strengthen our internal business processes and systems

8.              Expand our investor outreach

9.              Exit non-core businesses; restructure where needed

10.       Establish and execute an active and disciplined M&A/strategic partner plan focused on strategically aligned and economically attractive businesses

A number ofWe believe that these goals reflect a fundamental evolution of the Company that is underway. We are experiencinghave experienced a transition across numerous parameters. We believe the following revenue metrics demonstrate the magnitude of this evolution:

 201520182021
Hardware revenue (as a percentage of total revenue)78%50%37%
Non-hardware revenue (as a percentage of total revenue)22%50%63%
Recurring software and services revenue (as a percentage of total software and services revenue)<50%<60%56%

In addition to the above revenue metrics, as our transition has progressed and also based on feedback from investors, we disclosed additional financial metrics starting in leadership, in geographies that2020 (e.g., ARR and dollar-based net expansion (“DBNE”)). For the year, we serve, in revenue source asachieved 20% growth in our hardware market dissipates, andARR; over 32% growth in the technology needssubscriptions and term licenses components of our customers. We have many strengths that are helping us navigate this evolution including strong leadership, strong customer relationships, compelling new product announcements that address urgent business needs, a growing market for our overall solutions, a sound strategy, a healthy business that has delivered positive results for more than a decadeARR; and a strong balance sheet.DBNE rate of 115% (the year-over-year growth in ARR from the same set of customers at the end of the prior year period).

 

Although our hardware device sales have been declining over time as we transition to a software and services-driven company, hardware still plays an important role in our delivery of an advanced authentication and transaction signing solution. Our 2017 PerformanceDIGIPASS® devices are today an important backup and/or alternative for situations or business use cases where smart phone solutions (such as apps or text messages) are not possible or preferred due to the specific needs of the customer. This is related to the customer’s end users, needed functionalities or security requirements. Among our global banking customers, a large portion of them purchase both our mobile products as well as our DIGIPASS® hardware products.

46 

Guide to Compensation Discussion & Analysis

 

Company Financial ResultsOur 2021 Performance

 

Company Financial Results

·                  VASCO’s revenue from continuing operations for 2017 increased by 1% to $193.3 million from $192.3 million in 2016, after a 20% decline from 2015 to 2016

●FY Total revenue declined 1% year-over-year to $214.5 million

·                  Gross profit was 70% revenue for 2017, in an increase from 68% of revenue in 2016

●FY Recurring revenue grew 18% year-over-year to $119.8 million

·                  The Company continued to be cash flow positive and brought its cash balance to $158.4 million at December 31, 2017, with no debt

●FY GAAP net loss of $30.6 million
●FY Adjusted EBITDA of $(5.1) million
●FY GAAP loss per diluted share of $0.77

·                  The Company increased its revenue from non-hardware software and services by 29% in 2017 to 46% of revenue, up from 36% of revenue in 2016

Key Metrics Under Incentive Programs for 2021

●Year-over-year ARR growth was 20% compared to a target of 25%

●Total revenue was $214 million compared to a target of $220 million

●Adjusted EBITDA was $(5.1) million compared to a target of $0 million (2)

(1) ARR is calculated as the annualized value of our customer recurring contracts with a term of at least one-year, as of the measuring date.

(2) Adjusted EBITDA is defined as net income before interest, taxes, depreciation and amortization, long-term incentive compensation and certain non-recurring items, including acquisition-related costs, lease exit costs, rebranding costs and accruals for legal contingencies. For a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, see Annex A to this Proxy Statement. 

47 

Company Strategic Goals

 

Our results for 2017 metConsistent with our pay-for-performance philosophy, the performance targets established by the Compensation Committee at the beginning of 2017 for annual cash bonuses. For long-term performance based equity incentive compensation, which was measured on a three-year performance period from 2015 — 2017, the performance targets were not met. As a result, our named executive officers did receive a cash bonus for 2017 but did not earn their three-year performance based equity issued in 2015. The long-term performance based equity compensation issued at the beginning of 2017 will be measured on three-year performance from 2017-2019. The “Summary Compensation Table” below reflects the total compensation earned by our named executive officers for 2017.

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Company Strategic Results

While the first two goals above under “Our Company Strategy” may be measured quantitatively, the remaining eight goals are more qualitative in nature. And some are multi-year projects. In 2017, with respect to these eight goals, we either successfully achieved them or made substantial progress toward achieving multi-year goals. While theManagement Development and Compensation Committee chose to focus primarily on quantitative goals for setting long-term compensation and annual bonus targets in 2017, performance2021. Performance against these qualitative goals was also considered generally and with respect to setting 20182021 compensation amounts.amounts, including a 10% allocation of the annual bonus to qualitative strategic goals.

 

Summary 2017 Compensation Results

Summary 2021 Compensation Results

 

The annual cash bonus opportunity for the named executive officersNEOs for 20172021 was based on the achievement of one-year targets: 90% financial targets and 10% strategic targets. Our financial results for 2021 fell short of the financial performance targets established by the Management Development and Compensation Committee at the beginning of 2021 for annual cash bonuses, although above threshold achievement for the revenue and Adjusted EBITDA goals. As discussed more fully below, VASCO’s results in 2017 exceeded thea result, our NEOs received a cash bonus targetsfor 2021 at 60% of the target amount (after an adjustment by the Management Development and Compensation Committee to adjust for extraordinary events, as described below) and earned their 2019-2021 performance-based equity awards at 66% of the named executive officers received cash bonusestarget award. For 2021, as in 2018 at 118.6% of target. The2020, long-term equity incentive awards for 2017 were solely equity-based, with 60% vesting based 60% on the achievement of three-year financial targets and 40% time based vesting.subject to time-based vesting conditions. If the three-year target istargets are achieved, the performance sharesperformance-based restricted stock units (“PSUs”) will cliff vest immediately after the close of 2019. Time based shares2023. Time-based restricted stock units (“RSUs”) vest semi-annually over four years.years, subject to the NEO’s continued employment through the applicable payment date. The three-year performance based stock awards granted“2021 Summary Compensation Table” reflects the total compensation, calculated in 2015 for 2015-2017 performance were notaccordance with SEC executive compensation disclosure rules, consisting of earned salary and were forfeited ascash bonuses and the grant date fair value of the close2021 – 2023 PSUs and 2021 RSUs for our NEOs for 2021.

Say-on-Pay Results

In its compensation review process, the Management Development and Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of 2017.the Company’s stockholders. The Committee values continuing and constructive feedback from our stockholders on compensation, and we engage with investors on a regular basis to understand the topics that matter most to them, including corporate governance and executive compensation. The Committee will continue to monitor our executive compensation program and, as it deems appropriate, engage with our stockholders and take into account stockholder input as it deems appropriate. As part of that review, the Compensation Committee considered the approval by approximately 86% of the votes cast for the Company’s say-on-pay vote at our 2021 annual meeting of stockholders. For 2021, the Management Development and Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate considering the transition of the management team and development of a new multi-year strategic plan. Going forward, we expect that our executive compensation philosophy and program will continue to evolve and mature to align with our new company strategy and remain competitive in the global technology industry.

 

COMPENSATION OVERVIEW AND APPROACHCompensation Overview and Approach

 

We operate in the very competitive global technology industry, specializing in cybersecurity, identity verification, fraud management, e-signatureeSignature and related hardware and software solutions, which are subject to constant change and require market-leading innovation and management. To succeed in this environment, VASCOOneSpan is required to attract, motivate, reward and retain highly talented and experienced executives and key employees.

 

Accordingly, the Management Development and Compensation Committee is guided by the following principles:

 

·                                          Compensation should be based on the level of job responsibility, individual performance and Company performance. The greater the level of responsibility, the greater the proportion of compensation that should be linked to Company performance and stockholder returns, because of a greater ability to affect Company results.

●Compensation should be based on the level of job responsibility, individual performance and Company performance. The greater the level of responsibility, the greater the proportion of compensation that should be linked to Company performance and stockholder returns, because of a greater ability to affect Company results.

●Compensation should be aligned with the value of the job in the marketplace and should be designed to allow OneSpan to attract, motivate and retain the caliber of executive talent that we require to succeed in our industry.

 

·                                          Compensation should be aligned with the value of the job in the marketplace and should be designed to allow VASCO to attract, motivate and retain the caliber of executive talent that we require to succeed in our industry.

●Compensation should reward performance, both annual and long-term. Accordingly, the Management Development and Compensation Committee believes that a substantial portion of an executive officer’s compensation should be subject to achieving measurable performance criteria that are linked directly to the Company’s strategy and to stockholder value and that a substantial portion of that performance-based compensation should be paid in the form of equity.

 

19


●Exceptional performance, both for the individual and for OneSpan, should be rewarded with a high level of performance-based compensation; likewise, when performance fails to meet expectations or lags benchmarks set by the Management Development and Compensation Committee, the result should be reduced compensation

 

·                                          Compensation should reward performance, both annual and long-term. Accordingly, the Compensation Committee believes that a substantial portion of an executive officer’s compensation should be subject to achieving measurable performance criteria that are linked directly to the Company’s strategy and to stockholder value, and that a substantial portion of that performance-based compensation should be paid in the form of equity.

●Performance-based compensation should be based on measures that are simple to understand and that are aligned with the Company’s long-term strategies and operational goals.

 

·                                          Exceptional performance, both for the individual and for VASCO, should be rewarded with a high level of performance-based compensation; likewise, when performance fails to meet expectations or lags benchmarks set by the Compensation Committee, the result should be compensation at a lower level.

·                                          Performance-based compensation should be based on measures that are simple to understand and that are directly tied to the Company’s long-term strategies and operational goals.

·                                          The objectives of pay-for-performance must be balanced with retention of key employees whose knowledge and experience are important to our long-term strategies and success. Even in periods of temporary downturns in Company performance or during periods of transition, the level of compensation should ensure that our executives would remain motivated and committed to VASCO and the execution of our long-term strategies.

●The objectives of pay-for-performance are balanced with retention of key employees whose knowledge and experience are important to our long-term strategies and success. Even in periods of temporary downturns in Company performance or during periods of transition, the level of compensation supports our ability to motivate and retain our NEOs and the execution of our long-term strategies.

 

We use compensation data for a peer group of companies as one of several inputs and, specifically, as a reasonableness standard in determining the types and amounts of compensation we believe are appropriate for our named executive officers.NEOs. We do not target a percentile range within the peer group. The total targeted compensation of our CEO, former CEO and former CFO respectively, were innear the second quartile, third quartile, and third quartilemedian of the peer group for 2017. Upon his promotion to CEO in July 2017, Mr. Clements’ annual base salary2021 when their compensation was increased by $50,000 to reflect his new role. Mr. Clements’established at the start of 2021. The total targeted compensation at July 2017 remainedof our former General Counsel was slightly above the median based on the seven peers disclosing General Counsel data in the second quartile for CEO’s for 2017.their annual proxy statements.

 

We believe that our approach to setting targets with multiple performance measurement metrics assists in mitigating excessive risk-taking that could harm VASCO’sOneSpan’s value or reward poor judgment by our executives. We have allocated compensation among base salary and shortshort- and long-term compensation opportunities in such a way as to not encourage excessive risk taking,risk-taking, but to reward meeting strategic companyCompany goals that should enhance shareholderwe believe support stockholder value creation over time. In addition, we believe that the mix of equity awards granted under our long-term incentive program, which includes awards with multi-year vesting, as well as the significant equity holdings of our named executive officers,NEOs, also mitigates against risk that would not be justified by a longer-term investment horizon.

 

We do not consider the realized value of past awards when determining current compensation. Rather, our responsibility in setting compensation is to ensure that the expected values of the equity grants at the time they are made are reasonable and competitive.

 

20What We Do

●Reward performance, both annual and long-term, through incentive compensation.

●Balance between short-term and long-term compensation to discourage short-term risk taking at the expense of long-term results.

●Utilize performance-based equity to align the long-term interests of our participating NEOs with those of our stockholders.

●Encourage significant stock holdings by NEOs covered by our stock ownership guidelines.


●Have clawback provisions under plans and grant agreements.

●Provide for multi-year vesting of equity awards.

●Require a double trigger for change of control payments.

●Retain an independent external consultant to assist our Management Development and Compensation Committee from time to time.

 

WHAT WE DOWhat We Do Not Do

 

●No excessive perquisites for our NEOs.

·Reward performance, both annual and long-term, through incentive compensation.

●No special executive retirement programs that are specific to our NEOs.

●No hedging transactions or short sales allowed for NEOs, directors or employees.

●No pledging, buying put or call options, or otherwise allowing our NEOs or directors to engage in speculative transactions with respect to our stock.

●No tax gross-ups on severance payments.

 

·Balance between short-termThe Management Development and long-term compensation to discourage short-term risk taking at the expense of long-term results.

·Utilize performance-based equity to align the long-term interests with those of our shareholders.

·Have significant stock holdings by named executive officers.

·Clawbacks under plans and grant agreements.

·Multi-year vesting of equity awards.

WHAT WE DO NOT DO

·No excessive perquisites for our named executive officers.

·No special executive retirement programs that are specific to our named executive officers.

·No hedging transactions or short sales allowed.

The Compensation Committee’s Processes and Practices

 

The Management Development and Compensation Committee of our Board of Directors makes all determinations regarding the compensation of VASCO’s named executive officersour NEOs, including the evaluation and approval of compensation plans, policies and programs offered to our named executed officers. TheNEOs. In the case of the interim NEOs, the Management Development and Compensation Committee operates under a writtenreviewed current compensation and made recommendations to the Board with respect to any agreement or interim compensation and incentives. Under its charter, adopted by our Board of Directorsthe Management Development and is comprised entirely of independent, non-employee directors as determined in accordance with various NASDAQ, SEC and Internal Revenue Code rules. The Compensation Committee has the authority to engage its own independent advisor to assist in carrying out its responsibilities under its charter.responsibilities.

 

The Management Development and Compensation Committee designed 20172021 total compensation potential for our named executive officersthen-serving NEOs based largely on at-risk incentive compensation. Compensation is designed to create incentives for strong financial and operational performance and for the long-term growth and value of the Company, thereby closely aligning the interests of management with the interests of our shareholders.stockholders.

 

TheIn general, the majority of our named executive officers’NEOs’ 2021 target compensation was at riskat-risk in the form of a performance-based cash bonus, PSUs and three-year performance based equity awards.RSUs. Performance targets for the 20172021 annual cash bonus were based on VASCO’sOneSpan’s annual budget, and performance targets for the equity incentivesPSUs were based on three-year financial targets.forecasts. Failure to meet the targets would result in reduced or no payment of a cash bonus, or theand no issuance of shares.shares with respect to the PSUs. Overachievement of targets would result in the payment of cash or the issuance of stock above the targeted amounts, subject to maximums.maximum payout caps. In addition, RSU awards are considered at-risk as the value of such awards fluctuates based on the performance of our stock price. 

 

21


Consideration of Company and Industry Performance

Consideration of Company and Industry Performance

 

The Management Development and Compensation Committee took into account the Company’s performance during 2017,2021, its 20172021 budget and long-term strategy as well as an analysis of itsinformation about our peer group in its compensation decisions, as described below:

 

●Assessment of OneSpan’s Performance. In 2021, we provided incentive compensation designed to compensate the participating NEOs based on the performance of OneSpan’s business. Our annual cash bonus targets were based on ARR growth, total revenue and Adjusted EBITDA (weighted 30%, 40% and 20%, respectively). Of the total long-term equity incentive component, 60% was delivered in the form of PSUs and the remaining 40% was granted as time-based RSUs vesting over four years. For the PSUs, we used subscription plus term license revenue (50% weighting), Adjusted EBITDA (25% weighting) and total stockholder return (“TSR”) (25% weighting). The RSUs are designed to support stockholder value creation as the value of the award fluctuates based on our stock price performance.

●Annual Performance Goals and Annual Assessments of Individual Performance. At the beginning of each fiscal year, the then-serving NEOs proposes, for consideration by the Management Development and Compensation Committee, annual goals (both individual and Company objectives) to be accomplished in the year. These goals are aligned with key Company strategic initiatives and the financial plan for the year. The proposed goals of each then-serving NEO, other than our CEO, are reviewed and discussed by the individual and our CEO before they are presented to the Management Development and Compensation Committee. The Management Development and Compensation Committee may solicit input from our NEOs regarding goal setting and their performance if it believes such input to be appropriate and helpful to its review and decisions. The Management Development and Compensation Committee often seeks further input from our CEO in establishing the annual performance goals for other NEOs. The proposed annual goals are reviewed, adjusted as the Management Development and Compensation Committee considers appropriate and approved by the Management Development and Compensation Committee. Progress against the established goals is reviewed during the “performance year,” including a year-end performance review. The conclusions that result from the year-end review are used as one of the factors considered in determining an executive’s base salary for the following year.

·Assessment of VASCO’s Performance. In 2017, we provided incentive compensation that would compensate the named executive officers for overall growth in VASCO’s business. We provided annual performance-based incentive cash compensation measured against the growth of our overall business in all sectors. Our annual cash bonus targets were based on total revenue, non-hardware revenue and EBITDA. For the named executive officers’ performance-based equity compensation, we used a three-year revenue performance target that will be measured at December 31, 2019, split equally between hardware and non-hardware revenue targets. Of the total equity award component, 60% is based on the three-year targets and the remaining 40% was granted as time based restricted stock vesting over four years.

Peer Analysis

 

·Annual Performance Goals and Annual Assessments of Individual Performance. During February of each year, each of the named executive officers proposes for consideration by the Compensation Committee, annual goals (both individual and Company objectives) to be accomplished in the year. These goals are aligned with key Company strategic initiatives for the year. The proposed goals of each named executive officer, other than our CEO, are reviewed and discussed by the individual and our CEO before they are presented to the Compensation Committee. The Compensation Committee may solicit input from our named executive officers regarding goal setting and their performance if it believes such input to be appropriate and helpful to its review and decisions. The Compensation Committee often seeks further input from our CEO in establishing the annual performance goals for the other named executive officers. The proposed annual goals are reviewed, adjusted as the Compensation Committee considers appropriate and approved by the Compensation Committee. Progress is reviewed during the “performance year,” including a year-end performance review. The conclusions that result from the year-end review are used as one of the factors considered in determining an executive’s base salary for the following year.

·Peer Analysis. In making compensation decisions, as one of several inputs, the Management Development and Compensation Committee reviewsreviewed targeted total compensation for our named executive officersformer CEO, former CFO, and former General Counsel. against the total compensation paid by a peer group of publicly traded technology companies.companies (1). This peer group, which is reviewed and updated by the Management Development and Compensation Committee annually, consists of companies against whom VASCO competesviewed as competitors for customers, talent and stockholder investment. The

There were 16 companies that were included in this peer group for purposes of determining 2017 compensation were determined by the Compensation Committee. The Compensation Committee has also consulted with Meridian Compensation Partners, LLC (“Meridian”) regarding the peer group inreviewed by the past, with consideration givenManagement Development and Compensation Committee as part of establishing 2021 compensation levels for the NEOs, which was the same peer group used to matters such asevaluate 2020 compensation decisions. The 2021 peer group consisted of the relative size and stage of our development compared to others with whom we compete and the availability of compensation information for potential peer companies.following companies:

●     A10 Networks, Inc.

●     American Software, Inc.

●     Blackline, Inc.

●     Cerence Inc.

●     Digital Turbine, Inc.

●     Forescout Technologies, Inc.

●     MobileIron, Inc.

●     PROS Holding, Inc. 

●     QAD Inc.

●     Qualys, Inc.

●     Rapid7, Inc.

●     SailPoint Technologies Inc.

●     SecureWorks Corp

●     Tenable Holdings

●     Varonis Systems, Inc.

●     Zix Corporation 

 

The peer group may change from year to year because compensation information at a potential peer company becomes available or unavailable (for example, information previously not available would become available once a company begins public filings, or information previously available could become unavailable if a company has been acquiredManagement Development and is no longer required to report such information publicly), because of a change in size of a potential peer company such that the Compensation Committee no longer considers it appropriate to consider the other company as a peer, or for other reasons determined appropriate by the Compensation Committee in its subjective judgment as it reviews potential peer companies. The Compensation Committee gatheredreviewed information regarding the salary levels, bonus amounts, targeted bonus amounts and long-term equity award levels and types for executives at the peer group companies in positions comparable to those of the Company’s named executive officers.former CEO, former CFO and former General Counsel. The data gatheredreviewed was derived from information madein publicly available proxy filings in 20162020 regarding compensation paid by the peer group companies in 2015 (20162019 (2020 compensation data was utilized to the extent available at the time of the Management Development and Compensation Committee’s information was gatheredreview in late 2016)2020 and early 2021).

22


There were 18 companies in the peer group reviewed by the Compensation Committee as part of establishing 2017 compensation levels for the named executive officers:

 

American Software, Inc.

(1)

Aspen Technology, Inc.

Bottomline Technologies, Inc.

Broadsoft, Inc.

Callidus Software, Inc.

Ellie Mae, Inc.

Ebix Inc.

Guidance Software, Inc.

Imperva, Inc.

Monotype Imaging Holding, Inc.

Progress Software, Inc.

PROS Holdings, Inc.

QAD Inc.

Rapid 7, Inc.

Radware Ltd.

Seachange International Inc.

Interactive Intelligence Group Inc.

Telenav, Inc.

Of the peer group companies, seven disclosed General Counsel pay data in their annual proxy statements.


Although the Management Development and Compensation Committee reviews the compensation practices of the companies in the peer group, the Management Development and Compensation Committee does not adhere to strict formulastargets or survey dataformulas to determine the mix or absolute value of compensation components. Instead, the Management Development and Compensation Committee considers various factors in exercising its discretion to determine compensation for our NEOs, including the experience, responsibilities and performance of each named executive officerthe NEO, as well as the Company’s overall financial and competitive performance. The Management Development and Compensation Committee believes that this flexibility is particularly important in designing compensation arrangements to attract and retain executives in a highly competitive and rapidly changing market.

 

Compensation Committee Meetings. The Compensation Committee meets several times each year (six times in 2017). Committee agendas are established by the Compensation Committee Chairman in consultation with the other Compensation Committee members and the Secretary.

Independent Committee Members. All the members of the Compensation Committee are outside directors and are independent.

Role of the Independent Consultant. The Management Development and Compensation Committee retains an independent consulting firm from time to time as the Management Development and Compensation Committee believes itdetermines is warranted.appropriate. The Management Development and Compensation Committee’s Chartercharter requires the Management Development and Compensation Committee to assess various independence factors to better understand the level of independence of the consulting firm. The Management Development and Compensation Committee did not engage an outside consulting firmengaged Pay Governance to advise on 2021 compensation matters. Pay Governance consulted with respect to 2017 compensation.

The usethe Management Development and Compensation Committee on the 2021 program including benchmarking of an independent consultant provides additional assurance that VASCO’s executive compensation is reasonable and consistent with our objectivesNEO target pay and the Compensation Committee’s guiding principles. Atweighting of strategic goals. Pay Governance interacts with management as directed by the end of 2017, theManagement Development and Compensation Committee, re-engaged Meridian with respect to 2018 compensation.but the firm does not perform any other services for the Company. The consultant reports directly to theManagement Development and Compensation Committee reviewed the independence of Pay Governance under Nasdaq and doesSEC rules and concluded that the work of Pay Governance has not provideraised any services to management.conflict of interest.

 

Role of Management.  The Management Development and Compensation Committee makes all determinations regarding the compensation of the named executive officers.NEOs. The officers are asked to propose goals howeverfor the incentive programs for consideration by the Management Development and Compensation Committee. However, they are subject to any modifications thatapproval and modification by the Compensation Committee considers appropriate,Management Development and approved by the Compensation Committee. Our Chief Executive OfficerCEO evaluates the performance of his direct reports and other key employees of the other named executive officersCompany as part of the interim progress reviews during the year and as part of the year-end performance review. The Management Development and Compensation Committee considers the CEO’s evaluations and recommendations in setting compensation levels for the other named executive officers.NEOs. The Management Development and Compensation Committee may solicit input from our named executive officersNEOs regarding goal setting and their performance if it believes such input to be appropriate and helpful to its review and decisions. The Management Development and Compensation Committee reviews the CEO’s performance as compared to his performance goals at the same time as the performance of the other named executive officers is being reviewed, but without any recommendations by the CEO concerning his own performance.goals. If it considers it appropriate to do so, the Management Development and Compensation Committee may confer with other members of management or athe Committee’s compensation consultant in connection with the year-end performance reviews and the setting of compensation levels (both total compensation and individual components thereof) for the succeeding year. In 2021, the Management Development and Compensation Committee reviewed the goals set by the former CEO taking into consideration the management transition and performance of interim NEOs, and the Company performance overall.

 

23


Other Compensation Matters

 

·Evaluation of “Say on Pay” Advisory Votes. Our first advisory “say on pay” vote in 2011 resulted in over 94% of votes cast approving our compensation program for named executive officers, and our second advisory “say on pay” vote in 2014 resulted in almost 95% of votes cast approving our compensation program for named executive officers. Our most recent advisory “say on pay” note was in 2017 where 96% of votes cast approved our compensation program. In addition, consistent with the recommendation of management, stockholders voted for advisory “say on pay” voting every three years, and we have implemented that recommendation, which is evidenced by the occurrence of our “say on pay” votes in 2014 and 2017. In addition, the advisory “say on pay frequency” vote from 2011 was affirmed in 2017 with 53% of the votes cast approving a three year cycle. We evaluated the results of the 2017 “say on pay” vote as part of the annual overall assessment of our compensation program for our named executive officers. Noting the strong support from stockholders for our program, we determined that it continues to satisfy our objectives and to remain consistent with our compensation philosophy. Accordingly, the Compensation Committee did not make any material changes in the overall compensation program for the named executive officers based on the 2017 vote. However, we did modify our compensation program based on the judgment of the Compensation Committee, including eliminating a one year performance period for equity awards and using solely a three year period instead, and introducing time based restricted stock as a portion of the equity component.

●Clawback Provisions. The Company’s equity incentive plan, standard equity grant agreements and cash incentive compensation plan provide that if the Company determines that the grantee’s “wrongful act” (as defined in each plan) was a significant contributing factor to the Company or a subsidiary having to restate all or a portion of its financial statements, the Management Development and Compensation Committee may determine that such grantee will forfeit and must repay to the Company any shares of our Common Stock, cash or other property paid in respect of any amount awarded during the period beginning on the date the financial statements requiring restatement were originally released to the public or submitted to the SEC (whichever is earlier) and ending on the date the restated financial statements are filed with the SEC.

 

●·Claw Backs. The Company’s equity incentive plan, standard equity grant agreements and cash incentive compensation plan provide that if the Company determines that the grantee’s Wrongful Act (as defined in each plan) was a significant contributing factor to the Company or a subsidiary having to restate all or a portion of its financial statements, the Compensation Committee may determine that such grantee will forfeit and must repay to the Company any Common Stock, cash or other property paid in respect of any awarded share during the period beginning on the date the financial statements requiring restatement were originally released to the public or submitted to the Securities and Exchange Commission (whichever is earlier) and ending on the date the restated financial statements are filed with the Securities and Exchange Commission.

·Executive Stock Ownership.  The Management Development and Compensation Committee reviews from time to time, whether athe stock ownership policy for VASCO’s executives is needed.OneSpan’s executives. In 2016, the Management Development and Compensation Committee adopted an executive stock ownership policy requiring executive officers to hold equity at least equal to a multiple of theirthe current base salaries of each of the CEO and CFO of 300% and 150%, respectively, within three years of appointment. Shares of our Common Stock that have been granted but are subject to additional time-based vesting are counted toward this requirement. At December 31, 2017, and asAs of the date ofRecord Date, only our CEO was subject to these guidelines and is within the three-year transition period.  As an independent contractor hired for the interim CFO role, this proxy statement, all of our named executive officers comply with this policy.

policy did not apply to Mr. van Gaalen.


●·No hedging or pledging.The Company’s Officer and Director stock trading policyStock Trading Policy prohibits executive officers, directors and other employees from the following trading activities in VASCOOneSpan securities: short selling; buying or selling put options, call options or other derivative securities relating to the Company; engaging in hedging transactions, such as “costless collars” and forward sale contracts for VASCOOneSpan securities; purchasing VASCOOneSpan securities on margin; borrowing against Company securities in a margin account; or pledging VASCOOneSpan securities.

 

24


●·No Excise Tax Gross-ups. The Company does not provide any excise tax gross-up for any payment to an executive officer that would be an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code.

 

●·No Repricing of Stock Options.Our 2009 Equity Incentive Plan prohibitsequity plans prohibit repricing stock options or paying cash for underwater stock options.

 

●·Executive Management Succession Plan. During 2016, the Company formalized its approach to executive management succession planning and adopted a written policy.policy that was approved by our Board and is periodically evaluated. The Company followed this approach as we replaced our CFO and our CEO during 20162021, and 2017the Management Development and Compensation Committee continues to oversee succession planning as our President and Chief Operating Officer retired in 2016 and was succeeded in an orderly fashion by Mr. Clements, and in 2017 when Mr. Clements succeeded Mr. Hunt as CEO.

ELEMENTSOF COMPENSATION

The principal componentspart of compensation for the named executive officersits duties.

Elements of Compensation

The principal components of our NEO compensation program consist of base salary, annual cash incentive compensation and long-term incentive compensation.

NEO Compensation for 2021

Compensation ElementDescriptionCashEquity
Base SalaryFixed annual cash pay based on scope of responsibilities and individual performance

✓

Annual Cash BonusVariable annual cash bonus tied to achievement of designated annual targets

✓

Long-Term Incentive—40% RSUs with four-year vesting every six-monthsTime-based stock program, which encourages and rewards continued four-year service with the Company and long-term performance of our Common Stock

✓

Long-Term Incentive—60% PSUs with vesting at the end of the three-year performance period, if earnedVariable performance-based stock program based on achievement of three-year financial targets, which encourages and rewards continued service with the Company and long-term performance of our Common Stock

✓

Base Salary

Base salary is the fixed element of the NEOs’ annual cash compensation. The value of base salary recognizes the executive’s long-term performance, scope of responsibilities, capabilities and the market value of those capabilities. Salary increases are generally effective January 1 of each year.


In establishing the base salaries for 2021, the Management Development and Compensation Committee considered OneSpan’s peer group data, Company performance and each then-serving NEO’s accomplishment of his annual personal goals that had been established for the preceding year, as well as the Management Development and Compensation Committee’s own subjective assessment of each individual’s performance. In addition, in the case of new hires, the Management Development and Compensation Committee consider the compensation received by the NEO at the NEO’s prior date. Based on the foregoing factors, the base salaries of our NEOs were as follows for 2021: 

     
Name and Principal Position

2021

Base Salary 

2020

Base Salary 

Percentage
Change

Matthew Moynahan

President and Chief Executive Officer

$500,000 $N/AN/A

Jan Kees van Gaalen

Interim Chief Financial Officer 

$(1)  N/AN/A

Steven R. Worth (2)

Former Treasurer and Chief Financial Officer

Former President and Chief Executive Officer

General Counsel, Chief Compliance Officer and Corporate Secretary

$526,091 $366,01143.7%
Scott M. Clements (3)
Former President and Chief Executive Officer		$480,000 $480,0000.0%
Mark S. Hoyt (3)
Former Executive Vice President, Treasurer and Chief Financial Officer		$380,000 $380,0000.0%

John Bosshart

Former Chief Financial Officer 

$340,000 $340,0000.0%

(1)Mr. van Gaalen has a separate independent contractor agreement where he receives a fixed fee of $60,000 monthly fee.

(2)The amount reported in the 2021 base salary column for Mr. Worth reflects his base salary as General Counsel and additional cash monthly fees for the periods he served as Interim Chief Financial Officer and Interim Chief Executive Officer as described in the “Management Transition” section on page 61.

(3)The amount reported in the 2021 base salary column for Messrs. Clements and Hoyt reflect their base salary levels in effect at the time of their departures.

Annual Cash Bonus

For 2021, each of the NEOs (other than Messrs. Moynahan and van Gaalen) was eligible to receive an annual cash bonus based on the Company’s achievement of annual financial metrics, for the Company as a whole, that had been established by the Management Development and Compensation Committee. The Management Development and Compensation Committee, after reviewing several inputs, including the estimated compensation for officers in comparable positions at peer group companies, established the 2021 annual cash bonus targets as follows:

       
 

 

Bonus at the

Target

 

Percentage

of

 Bonus
Name and Principal Position Level Base Salary Actually Earned

Matthew Moynahan (1)

President and Chief Executive Officer 

 

$N/A $N/A $N/A

Jan Kees van Gaalen (1)

Interim Chief Financial Officer 

 

$N/A $N/A $N/A

Steven R. Worth (2)

General Counsel, Chief Compliance Officer and Corporate Secretary 

 

$400,000  60% $240,000
Scott M. Clements (3)
President and Chief Executive Officer		 $480,000  100% $0
Mark S. Hoyt (3)
Executive Vice President, Treasurer and Chief Financial Officer		 $285,000  75% $0

John Bosshart

Former Chief Financial Officer 

 $170,000  50% $136,000

(1)Messrs. Moynahan and van Gaalen did not participate in the 2021 annual bonus program.


(2)The Board agreed to base Mr. Worth’s 2021 bonus target on $400,000 to adjust for the amounts he received for serving in interim roles as described in the “Management Transition” section on page 61.

(3)Neither Mr. Clements nor Mr. Hoyt received a 2021 bonus in light of their 2021 separations.

For 2021, the Management Development and Compensation Committee determined that the annual cash bonus could be earned, in whole or in part, based on the Company’s achievement of the following metrics:

GoalWeighting
YoY ARR Growth50%
Total Revenue Component20%
Annual Adjusted EBITDA Component20%
Strategic Objectives Component10%

Each of the ARR growth target, annual software and services revenue target and annual Adjusted EBITDA target was derived from OneSpan’s operating budget for 2021 and was approved by the Management Development and Compensation Committee in February 2021. As the Company has transitioned from reporting ACV to ARR, the goals were updated from previous years to reflect this change and connect management performance to the new reported metrics. In each case, if the participating NEOs were to fail to successfully execute or manage the key actions assumed in the operating budget, the target likely would not be achieved. The strategic objectives covered a range of goals including mobile security modernization, cloud platform management, increasing software customers, improving employee engagement in a remote work environment and further developing the middle management cohort at the Company.


Annual Recuring Revenue Growth Component

Fifty percent of the possible total target annual cash bonus award was based on achievement of ARR Growth at a target of 25% that was determined by the Management Development and Compensation Committee to be a challenging but achievable goal with strong execution against the Company’s operating plan. The Management Development and Compensation Committee established the following performance payout curve for performance at levels lower or higher than the ARR Growth target.

Performance Level (2021 ARR Growth)Level of Payout as a Percent of Target
Less than 21.25%0%
21.25%50%
25%100%
28.75% or higher200%
  

Payment for performance between stated levels would be interpolated. In addition, the Management Development and Compensation Committee retained discretion to adjust for changes in accounting rules and extraordinary events.

In February 2022, the Management Development and Compensation Committee determined that the Company’s ARR Growth in 2021 was 20.3%, which was below the threshold performance goal.

Total Revenue Component

Twenty percent of the possible total target annual cash bonus award was based on achievement of total revenue at a target of $220.6 million. The performance goals required meaningful growth from $215.7 million in 2020 despite an expected decrease in hardware sales and lower upfront revenue due to a shift from perpetual to term based license sales. The Management Development and Compensation Committee established the following payout curve for performance at levels lower or higher than the total revenue target, with a maximum payout of 200% of target if 2021 total revenue was $253.7 million or more:

Performance Level
(2020 Total Revenue)Level of Payout as a Percent of Target
Less than $187.5 million0%
$187.5 million50%
$220.6 million 100%
$253.7 million or higher 200%

Payment for performance between stated levels would be interpolated. In addition, the Management Development and Compensation Committee retained discretion to adjust the revenue amount for changes in accounting rules and extraordinary events.

In February 2022, the Management Development and Compensation Committee reviewed the total revenue for the year ended December 31, 2021, which was $214.5 million, in excess of the threshold goal. Accordingly, the Management Development and Compensation Committee determined, for the total revenue component, that achievement was at 91% of target.


Annual Adjusted EBITDA Component

Twenty percent of the possible total target annual cash bonus award was based on achievement of annual Adjusted EBITDA at a target of $0. Due to the initial efforts of the internal action plan to streamline the business, we projected slower growth and approximated breakeven Adjusted EBITDA for 2021. The target achievement level was determined based on the Company’s 2021 operating plan, including projected cash flow and expected investments for growth. The Management Development and Compensation Committee established the following payout curve for performance at levels lower or higher than the annual Adjusted EBITDA target, with a maximum payout of 200% of target if 2021 annual Adjusted EBITDA was $5.0 million or more:

Performance Level
(2021 annual Adjusted EBITDA)Level of Payout as a Percent of Target
Less than ($5.0 million)0%
($5.0 million)50%
$0.0 million100%
$5.0 million or higher200%

Payment for performance between stated levels would be interpolated. In addition, the Management Development and Compensation Committee retained discretion to adjust the Adjusted EBITDA amount for changes in accounting rules and extraordinary events.

In February 2022, the Management Development and Compensation Committee reviewed the annual Adjusted EBITDA for the year ended December 31, 2021, which was ($5.1) million, which was below the threshold performance goal.

Strategic Objectives

The strategic objectives component was derived from OneSpan’s priorities and market conditions for 2021 as described above. The discretionary strategic objectives component, with a weighting of 10%, was approved by the Management Development and Compensation Committee. The Management Development and Compensation Committee reviewed various performance indicators and projects completed in 2021 related to the strategic objectives. In February 2022, the Management Development and Compensation Committee also reviewed the management changes that occurred in 2021 and efforts put forth by the remaining eligible employees for a 2021 bonus and concluded that full achievement of the target was earned.

Final Annual Cash Bonus Decisions

When the full year achievement results were aggregated, the overall cash bonus award payout would have been 41% of target based on the results and weightings of the measures discussed above. However, the Management Development and Compensation Committee analyzed the financial metrics for 2021 and considered the continued impact of the COVID-19 pandemic, the number of key personnel changes at the leadership level during the year, our evolving corporate strategy, and the focus on repositioning the business. With this, the Management Development and Compensation Committee considered its ability to adjust performance targets for the impact of extraordinary items or events.

Following such review the Management Development and Compensation Committee considered the extenuating circumstances occurring during the 2021 fiscal year including the transitions in management, labor costs in light of inflation, increasing competition for talent, supply chain interruptions, focus on retaining personnel important to the Company’s restructuring plan and the need to retain critical talent and determined that an increase from the goal attainment was important to the Company’s ongoing plans. The Management Development and Compensation Committee therefore increased the payout from 41% to 60% of target for participating NEOs and other management team members and 80% of target for the rest of the plan participants, including Mr. Bosshart, who represent middle managers and material individual contributors that are viewed as having a significant impact on the day-to-day operations of the Company. The increased payout from 41% to 60% for executives and to 80% for all other plan participants, led to a total increase in payments of $389,452 for executive officer participants and $817,080 for all other plan participants.


Long-Term Equity Compensation

Long-term incentive awards for 2021 were granted in February 2021 pursuant to our 2019 Omnibus Incentive Plan. The plan was designed to serve as a performance incentive to encourage our executives, key employees and others to acquire or increase a proprietary interest in OneSpan’s success. These incentives promote a long-term perspective that the Management Development and Compensation Committee believes is critical to the continued success of our business and are designed to align the interests of recipients with our stockholders. The Management Development and Compensation Committee believes that, over a period of time, our stock performance will, to a significant extent, be a direct result of our executives’ and key employees’ performance. The 2019 Omnibus Incentive Plan provides that awards of stock-based compensation, including RSUs and PSUs, may be granted at the discretion of the Management Development and Compensation Committee, in such amounts and subject to such conditions as the Management Development and Compensation Committee may determine in accordance with the plan.

In determining awards for 2021, the Management Development and Compensation Committee reviewed long-term incentive compensation as part of total compensation based on comparisons with the peer companies, market conditions and other factors. Based on a review of market data and other factors, the Management Development and Compensation Committee determined to freeze NEO long-term incentive compensation for 2021 for Mr. Clements and Mr. Hoyt. In 2021, Mr. Worth was granted additional incentive compensation upon taking on interim roles. As well, in 2021, Mr. Bosshart received additional equity compensation as a retention incentive equal to $150,000 in value. As an independent contractor, Mr. van Gaalen is not eligible for long term equity compensation. The Management Development and Compensation Committee determined the target economic value of the long-term compensation award for each then-serving NEO as a percentage of his base salary, as follows:

●Mr. Clements—$3,040,000 or 633% of base salary

●Mr. Hoyt—$1,285,000 or 338% of base salary

●Mr. Worth—$750,000 or 205% of base salary

●Mr. Bosshart—$320,000 or 94% of base salary

On the grant date, the economic value of the long-term incentive awards was converted into the equivalent number of PSUs and RSUs by dividing the target economic value by the closing price of our Common Stock on the grant date, with PSUs weighted 60% and RSUs weighted 40%. The RSUs vest based on continued service over the four-year vesting period, while the PSUs vest based on performance over a three-year performance period, as discussed further below.

The Management Development and Compensation Committee believes performance-based long-term incentives based on three-year performance measures, and four-year time-based vesting, enhances the link between the creation of stockholder value and long-term executive compensation, provides increased equity ownership by the NEOs and enables competitive levels of total compensation with an emphasis on payment for results. The Management Development and Compensation Committee believes that the mix of a performance-based award and time-based award appropriately aligned the NEOs’ interests with those of our stockholders. In addition, the multi-year performance and vesting periods are designed to mitigate risk and properly adjust for the time horizon of risk, as these awards require an individual to remain in employment with OneSpan for multiple years before an award is fully vested.


2021 - 2023 PSUs

Sixty percent of the target economic value was granted as performance-based equity dependent on three-year performance targets. The three-year PSUs will vest, if at all, based on 2021 - 2023 performance against pre-established performance goals. The Management Development and Compensation Committee established the annual targets for the three-year PSUs, which it believed, were aligned with the strategic plan and the Company’s 2021 - 2023 budget. The targets are based upon total revenue (weighted 25%), Adjusted EBITDA (weighted 25%) and 3-year relative TSR performance (weighted 25%). For the relative TSR performance goal, our TSR will be measured against the TSR of a peer group of 77 companies, as recommended by Pay Governance, with performance levels based on our percentile rank ranging from 30 to 80 or higher and a target payout for median of performance. These metrics were viewed as key indicators of the Company’s success in executing against its operating plan. In recognition of the Company’s use of revenue and Adjusted EBITDA components in both the annual and long-term incentive programs, the Management Development and Compensation Committee supplemented the performance measures under the annual and long-term incentive programs with additional performance measures in order to strike an appropriate balance with respect to incentivizing top-line growth, profitability, non-financial business imperatives and stockholder returns over both the short- and long-term horizons. These targets were designed to be challenging but achievable based on the Company’s execution against its operating plan. If the NEOs were to fail to successfully execute or manage the key actions assumed in the operating budget and the strategic plan, the targets likely would not be achieved.

2019–2021 PSUs 

In February 2022, the Management Development and Compensation Committee determined that the three-year PSUs granted in 2019 would vest based on Company performance for the period of 2019 - 2021. The following table sets forth the performance goals and the Company’s results with respect to the 2019 - 2021 performance period:

Performance Level

Performance Level

(2019 - 2021 Hardware Revenue)

Level of Payout as a Percentage of Target
Below ThresholdLess than $244 million0%
Threshold$244 million50%
Target$271 million100%
Maximum$298 million or higher 150%
Actual Results$288million132%

Performance Level

Performance Level

(2019-2021 Non-Hardware Revenue)

Level of Payout as a Percentage of Target
Below ThresholdLess than $464 million0%
Threshold$464 million50%
Target$515 million100%
Maximum$567 million150%
Actual Results$396million0%

Based on the performance above, the attainment was determined to be 66% and the then-serving NEOs earned the following shares.

   
NEO2019 - 2021 Target Shares2019 - 2021 Earned Shares
Matthew Moynahan (1)N/AN/A
Jan Kees van Gaalen (1)N/AN/A
Steven R. Worth21,91414,463
Scott M. Clements (2)81,0050
Mark S. Hoyt (2)37,2460
John Bosshart (1)N/AN/A

(1)Messrs. Moynahan, van Gaalen and Bosshart did not participate in the 2019-2021 PSU program.

(2)Due to their departures, Messrs. Clements and Hoyt forfeited the 2019-2021 PSUs.

Additional Compensation Elements

Other Benefits

Our NEOs participate in our corporate-wide benefit programs. Our NEOs are offered benefits that generally are commensurate with the benefits provided to all of our full-time employees, which includes participation in our qualified defined contribution plan. During 2021, we did not provide our NEOs with nonqualified retirement programs or perquisites that are often provided at other companies.

Change of Control and Severance Benefits

The Management Development and Compensation Committee believes the severance and change in control benefit plans for our NEOs are comparable with those benefits offered by our competitors and necessary to retain a talented executive team. The NEOs’ possible severance and change in control benefits are described below under “Management Transition” and under “Potential Payments Upon Termination or Change-in-Control.” All stock awards require a “double trigger” for vesting to accelerate (both a change in control and a qualifying termination of employment).


Management Transition

As noted above, since January 1, 2021, we experienced a number of senior leadership changes. The following summarizes the compensation decisions made with respect to those changes:

Scott M. Clements. On August 4, 2021, the Company announced that, Mr. Clements left the Company (including the Board) effective August 2, 2021. Mr. Clements’ employment agreement with the Company dated December 1, 2015, as amended effective November 15, 2016 and July 28, 2017, provided that he would receive certain severance payments in connection with a termination without cause (as defined therein), subject to his execution of a customary release in form and substance reasonably acceptable to the Company. See the Potential Payments Upon a Termination or a Change in Control for a summary of the amounts paid to Mr. Clements.

Mark S. Hoyt. Mr. Mark Hoyt resigned as Chief Financial Officer and Treasurer on June 9, 2021. Mr. Hoyt did not receive any severance in connection with his departure.

Steven R. Worth. On June 9, 2021, Mr. Worth was appointed to the position of Interim Chief Financial Officer and Treasurer, which roles were in addition to his existing executive responsibility for corporate information security, legal, compliance and intellectual property matters. In connection with Mr. Worth’s appointment, the Company and Mr. Worth entered into an amendment (the “Worth Amendment”) to Mr. Worth’s employment agreement with the Company, dated April 18, 2016 (the “Worth Employment Agreement”). Pursuant to the Worth Amendment, (i) Mr. Worth’s base salary was restated at its current amount of $366,011; (ii) Mr. Worth became entitled to a monthly fee of $10,000 per month for service as Interim Chief Financial Officer; (iii) from calendar year 2021, Mr. Worth’s target bonus under the annual bonus plan was to be equal to at least $250,000; (iv) from calendar year 2021, Mr. Worth’s award under the long-term equity incentive award was to be equal to at least $750,000; and (v) the severance benefits payable to Mr. Worth upon a termination without cause or due to good reason (each as defined in the Worth Employment Agreement) was increased from six months of Mr. Worth’s annual base salary and fifty percent (50%) of his target bonus under the annual bonus plan to twelve (12) months of Mr. Worth’s annual base salary and one hundred percent (100%) of his target bonus under the annual bonus plan.

On August 4, 2021, the Company announced the appointment of Mr. Worth as Interim President and Chief Executive Officer, following Mr. Clements departure. In connection with Mr. Worth’s appointment as Interim President and Chief Executive Officer, the Board approved the following changes to Mr. Worth’s compensation arrangements: (a) during each month, or portion thereof, of service as Interim President and Chief Executive Officer, Mr. Worth received an additional fee of $20,000 per month (prorated for partial months of service and retroactive to August 2, 2021); (b) the additional fee was increased from $20,000 per month to $50,000 per month effective October 1, 2021; and (c) the grant of 15,000 PSUs, which vested on December 31, 2021, subject to the achievement of strategic performance goals relating to product strategy development, identification of cost savings and Mr. Worth’s continued service. The Management Development and Compensation Committee after review of Mr. Worth’s performance determined these objectives where achieved.

The terms of Mr. Worth’s compensation for his role as Interim Chief Financial Officer and his role as Interim Chief Executive Officer was determined based on a review of market data, the Company’s historical compensation practices and benchmarking data provided by Pay Governance.

On April 4, 2022, the Company and Mr. Worth reached an agreement regarding Mr. Worth’s departure from the Company after six years of service. Mr. Worth’s last day of employment was April 8, 2022. In connection with his departure, Mr. Worth is eligible to receive the following severance benefits, subject to the execution and non-revocation of a general release and waiver of claims: (a) an amount equal to (i) one year of Mr. Worth’s current base salary and (ii) 100% of Mr. Worth’s current annual incentive compensation target, together totaling $616,011, less applicable taxes and withholding deductions, and (b) subject to Mr. Worth’s timely election for COBRA continuation coverage, continued participation by Mr. Worth and his eligible dependents in the Company’s group health plans at the same rates as active employees for 12 months. Mr. Worth’s severance was based on his performance in serving as Interim Chief Financial Officer and Interim Chief Executive Officer and his efforts in initiating the strategic business and operational review.

John W. Bosshart. On August 4, 2021, in connection with Mr. Worth’s appointment as Interim President and Chief Executive Officer, the Company announced the appointment of John W. Bosshart as Interim Chief Financial Officer and Treasurer, effective August 2, 2021.

Jan Kees van Gaalen. Effective October 5, 2021, the Board appointed Mr. van Gaalen to assume the roles of Interim Chief Financial Officer and Treasurer. In connection with Mr. van Gaalen’s appointment as Interim Chief Financial Officer and Treasurer, he has entered into an interim services agreement (the “Services Agreement”) with the Company. The Services Agreement provides that, for the duration of Mr. van Gaalen’s tenure as Interim Chief Financial Officer and Treasurer, Mr. van Gaalen will be entitled to compensation at a rate of $60,000 per month.  The terms of Mr. van Gaalen’s compensation for his role as Interim Chief Financial Officer was determined based on a review of market data, the Company’s historical compensation practices and benchmarking data provided by Pay Governance.


Matthew Moynahan. On November 15, 2021, the Company announced that on November 11, 2021, the Board appointed Mr. Moynahan as the Company’s President and Chief Executive Officer, effective November 29, 2021. In connection with his appointment as President and Chief Executive Officer, Mr. Moynahan entered into an employment agreement (the “Moynahan Employment Agreement”) memorializing the terms of his employment. The Moynahan Employment Agreement provides that Mr. Moynahan will receive an annual base salary of $500,000 and will be eligible to participate in the Company’s annual cash bonus plan with an annual target bonus amount equal to $500,000. The Moynahan Employment Agreement also provides that Mr. Moynahan will be eligible to participate in the Company’s long-term equity incentive plan, and commencing in 2022, he will be entitled to receive an annual long-term equity incentive grant with a value of at least $2,500,000. For 2022, the Moynahan Employment Agreement provides that Mr. Moynahan’s annual long-term equity incentive grant will consist 50% of time-based RSUs, vesting semi-annually over three years, and 50% of PSUs, vesting annually over three years subject to the achievement of applicable performance measures.

In addition, the Moynahan Employment Agreement provided that Mr. Moynahan would receive a special one-time long-term equity incentive grant in connection with his commencing employment with the Company, consisting of 250,000 RSUs (the “Special RSU Grant”) and 250,000 PSUs (the “Special PSU Grant”). The Special RSU Grant will vest in equal annual installments over four years, subject generally to Mr. Moynahan’s continued employment with the Company. The Special PSU Grant will vest upon the Company’s common stock attaining a specified 45-trading day average closing price (“Average Closing Price”) during a four-year measurement period (the “Performance Period”), as follows: 45% of the Special PSU Grant (the “First PSU Tranche”) will vest upon the Company’s common stock attaining an Average Closing Price of at least $30.00 per share, and the remaining 55% of the Special PSU Grant (the “Second PSU Tranche”) will vest upon the Company’s common stock attaining an Average Closing Price of at least $40.00 per share or higher. If, at the time of the expiration of the Performance Period, the First PSU Tranche has vested but the Second PSU Tranche has not vested (i.e., due to the Company’s common stock not attaining an Average Closing Price of at least $40.00 per share), Mr. Moynahan will be entitled to a portion of the Second PSU Tranche based on a linear interpolation between $30.00 and $40.00 for the highest Average Closing Price achieved during the Performance Period. In addition, the Employment Agreement provides that if Mr. Moynahan’s employment with the Company terminates prior to the end of the Performance Period due to a termination by the Company without “cause” or a resignation by Mr. Moynahan for “good reason” (as each such term is defined in the Moynahan Employment Agreement) (a “Qualifying Termination”) and the Special PSU Grant has not yet fully vested, there will be an additional 18-month vesting period extension during which the Special PSU Grant would continue to be eligible to vest upon achievement of the Average Closing Price goals (but subject to proration based on the period of time that Mr. Moynahan is employed during the Performance Period).

Pursuant to the Moynahan Employment Agreement, in the event of a “Change in Control” (as such term is defined in the 2019 Omnibus Incentive Plan) during the Performance Period, then subject generally to Mr. Moynahan’s remaining continuously employed through the date of such Change in Control: (i) if the applicable per share consideration for the Company’s common stock in such Change in Control is less than $30.00, the First PSU Tranche will vest in full; (ii) if the applicable per share consideration for the Company’s common stock in such Change in Control is between $30.00 and $40.00, the First PSU Tranche will vest in full, and Mr. Moynahan will be entitled to a portion of the Second PSU Tranche based on the application of linear interpolation between $30.00 and $40.00; and (iii) if the applicable per share consideration for the Company’s common stock in such Change in Control is $40.00 or greater, both the First PSU Tranche and the Second PSU Tranche will vest in full. Any PSU from the Special PSU Grant that does not vest in connection with a Change in Control as described in the prior sentence will be forfeited.

The Employment Agreement further provides that in the event of a Qualifying Termination, Mr. Moynahan would be eligible to receive the following severance benefits, subject to the execution and non-revocation of a general release and waiver of claims: (i) an amount equal to 12 months of Mr. Moynahan’s then-current base salary; (ii) an amount equal to Mr. Moynahan’s then-current annual incentive compensation target; and (iii) subject to Mr. Moynahan’s timely election for COBRA continuation coverage, continued participation by Mr. Moynahan and his eligible dependents in the Company’s group health plans at the same rates as active employees for 12 months. In addition, the Employment Agreement includes customary confidentiality obligations and customary non-competition, non-solicitation and business non-interference covenants that will continue in effect for 12 months following a termination of employment for any reason.

The terms of Mr. Moynahan’s compensation for his role as Chief Executive Officer was determined based on a review of market data, the Company’s historical compensation practices and input from Pay Governance.

62 

2021 SUMMARY COMPENSATION TABLE

The following table provides selected information concerning compensation during the fiscal year ended December 31, 2021 and, to the extent required by SEC disclosure rules, the fiscal years ended December 31, 2020 and 2019 for services in all capacities to OneSpan by the NEOs.

              
           
Name and Principal PositionYearSalary (1)

Bonus

 

Stock
Awards (2) 		 Non-Equity
Incentive Plan
Compensation (3)		All Other
Compensation (4)		Total
Matthew Moynahan (5)             
President and Chief Executive Officer2021$45,513$0$8,400,000(6)$0$69$8,445,582
              
Jan Kees van Gaalen (5)             
Interim Chief Financial Officer2021 $180,000$0$0$0$0$180,000
              
              
              
Steven R. Worth (5)             
General Counsel2021$526,091$

0 

$1,137,000$

240,000 

$10,527$1,913,618
              
Scott M. Clements             
Former President and Chief Executive Officer2021$480,000$ 0$3,040,000$0$971,559$4,491,559
 2020$480,000$ 0$3,040,000$235,200$11,007$3,766,207
 2019$465,000$ 0$1,990,000$567,300$10,832$3,033,132
Mark S. Hoyt         
Former Executive Vice President, Treasurer and Chief Financial Officer2021$380,000$

0

$1,285,000$0$11,079$1,676,079
 2020$380,000$0$1,285,000$139,650$10,527$1,815,177
 2019$370,000$0$915,000$335,500$10,352$1,630,852
              
John Bosshart (5)             
Former Chief Financial Officer2021$340,000$0$320,000$136,000$10,527$806,527
              
(1)Salary represents base salary earned in the fiscal year indicated. With respect to Mr. van Gaalen, the salary represents the monthly payment of $60,000 for his service during the year as Interim Chief Financial Officer.
(2)The amounts reflected represent the aggregate grant date fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”) and based on the probable outcome of the performance conditions with respect to PSUs. Assuming the highest level of performance is achieved for the 2021 PSUs, the maximum value of the 2021 PSUs would be as follows: Mr. Worth - $900,046; Mr. Clements – $3,648,063; and Mr. Hoyt – $1,542,070. For Mr. Moynahan’s PSUs, under FASB ASC Topic 718, the vesting condition related to his PSUs is considered a market condition and not a performance condition. Accordingly, there is no grant date fair value below or in excess of the amount reflected in the table above for Mr. Moynahan that could be calculated and disclosed based on achievement of the underlying market condition.   See footnote 14 to the financial statements in our Annual Report for a discussion of the relevant assumptions used in calculating these amounts.
(3)Amounts reported in this column for 2021 represent annual bonuses paid to Messrs. Worth and Bosshart with respect to the fiscal year ended December 31, 2021, as described in the “Annual Cash Bonus” section on page 54.  None of our other NEOs received an annual bonus for 2021.
(4)The NEOs’ “All Other Compensation” for 2021 consisted of:

●

Mr. Moynahan received no matching 401K contributions in 2021 and $69 in imputed income from life insurance premiums made by the Company. 

● Mr. Clements—Company matching 401(k) contributions of $10,527 and imputed income from life insurance premiums made by the Company of $1,032. Upon his separation, Mr. Clements received a severance payment of $960,000. 
●Mr. Hoyt—Company matching 401(k) contributions of $10,527 and imputed income from life insurance premiums made by the Company of $552. Mr. Hoyt resigned from his position on June 9, 2021 and forfeited any additional compensation.
●Mr.  Worth—Company matching 401(k) contributions of $9,975 and imputed income from life insurance made by the Company of $552.
●Mr.  Bosshart—Company matching 401(k) contributions of $9,975 and imputed income from life insurance premiums made by the Company of $552.

(5)

This NEO was not a NEO prior to 2021. 

(6)

Amounts reported in this column represent the value of awards related to long-term equity, the Special PSU Grant and the Special RSU Grant as described in Mr. Moynahan’s agreement. The agreement provides that Mr. Moynahan will be eligible to participate in the Company’s long-term equity incentive plan, and commencing in 2022, he will be entitled to receive an annual long-term equity incentive grant with a value of at least $2,500,000. For 2022, the provides that Mr. Moynahan’s annual long-term equity incentive grant will consist 50% of time-based RSUs, vesting semi-annually over three years, and 50% of PSUs, vesting annually over three years subject to the achievement of applicable performance measures. In addition, the agreement provided that Mr. Moynahan would receive a special one-time long-term equity incentive grant in connection with his commencing employment with the Company, consisting of 250,000 RSUs (the “Special RSU Grant”) and 250,000 PSUs (the “Special PSU Grant”). The Special RSU Grant will vest in equal annual installments over four years, subject generally to Mr. Moynahan’s continued employment with the Company. The Special PSU Grant will vest upon the Company’s common stock attaining a specified 45-trading day average closing price during a four-year measurement period. For further details, see the full description of Mr. Moynahan’s agreement in the Management Transition section above. 


2021 Grants of Plan-Based Awards

The following table sets forth all plan-based awards granted to the NEOs during 2021

                      
                  All  Grant
            Estimated Future Payouts Other Date
   Estimated Future Payouts Under Under Equity Incentive Plan Stock Fair
   Non-Equity Incentive Plan Awards (2) Awards (3) Awards: Value of
 Grant Threshold Target Maximum Threshold Target Maximum Units Stock
Name (1)Date ($) ($) ($) (#) (#) (#) (#) (4) Units (5)
Matthew P. Moynahan                     
                        
 11/29/21  —  — —  — 112,500 250,000 —  $4,200,000
 11/29/21  —  —  — — — — 250,000  $4,200,000
                      
Steven R. Worth
      

                     
   $200,000 $400,000 $800,000 — — — —  —
 2/18/21  —  —  — 9,349 17,436 34,872 —  $450,000
 8/25/21  —  —  —   15,000   —  $387,000
 2/18/21  —  —  — — — — 11,624  $300,000
                      
Scott M. Clements                     
   $240,000 $480,000 $960,000      —      —      — —       —
2/18/21       —       —       — 35,339 70,671 141,343 — $1,824,000
2/18/21       —       —       —      —      —      — 47,114 $1,216,000
Mark S. Hoyt                     
   $142,500 $285,000 $570,000 — — — —  —
2/18/21       —       —       — 14,939 29,873 59,747 — $771,000
2/18/21       —       —       — —      —      — 19,915 $514,000
                     
                     
                     
John Bosshart  $85,000 $170,000 $340,000 — — — —  —

Former Interim Chief Financial Officer

  6/1/21     —  —  — — —  —  5,691 $150,000
   6/1/21     —  —  — — —  —  2,580 $68,000
   6/1/21     —  —  — 1,935 3,870  7,740  — $102,000
                      
                      
                               
(1)

As an independent contractor, Mr. van Gaalen does not receive plan-based awards.

(2)Represents the threshold, target and maximum award amounts that could have been paid out as a cash bonus award under OneSpan’s annual cash incentive award program for performance in 2021 upon achievement of certain target financial levels for the year. The target award amounts are based on percentages of each NEO’s base salary at the beginning of the year.  Messrs. Clements and Hoyt forfeited their bonuses in connection with their departures.  Mr. Moynahan did not participate in the 2021 annual bonus program in light of the timing of his commencement of employment. Additional information regarding the annual cash incentive compensation and long-term incentive compensation.

NEO Compensation for 2017

Compensation Element

Description

Cash

Equity

Base Salary

Fixed annual cash pay based on scope of responsibilities and individual performance

Annual Cash Bonus

Variable annual cash bonus tied to achievement of designated annual targets

Long-Term Incentive — 40% Time-Based Restricted Stock with four year vesting, 25% per year, semi-annually

Time-based stock program which encourages and rewards continued four year service with the Company and long-term performance of our common stock

Long-Term Incentive —60% Performance Based Restricted Stock with vesting at the end of the three year performance period, if earned

Variable performance-based stock program based on achievement of three-year financial targets, which encourages and rewards continued service with the Company and long-term performance of our common stock

the applicable metrics is provided above in “Compensation Discussion and Analysis” in the section entitled “Annual Cash Bonus” on page 54.  

25


(3)Base Salary

Base salary is the fixed element of the named executive officers’ annual cash compensation. The value of base salary recognizes the executive’s long-term performance, scope of responsibilities, capabilities and the market value of those capabilities. Salary increases are effective January 1 of each year.

In establishing the base salaries for 2017, the Compensation Committee considered VASCO’s peer group data, company performance and each individual’s accomplishment of his annual personal goals that had been established for the preceding year, and its own subjective assessment of each individual’s performance. Based on the foregoing factors, the base salaries of our named executives were as follows for 2017:

Name and Principal Position

 

Base Salary

 

Scott M. Clements

President and Chief Executive Officer

 

$

450,000

 

Mark S. Hoyt

Executive Vice President and Chief Financial Officer

 

$

350,000

 

T. Kendall Hunt

Chairman and former Chief Executive Officer

 

$

450,000

 

These base salaries reflect an increase of $50,000 for Mr. Clements in connection with his elevation to CEO in July 2017 and a $20,000 base salary increase for Mr. Hoyt. Mr. Hunt’s base salary was unchanged for 2017.

Annual Cash Bonus

For 2017, each of the named executive officers were eligible to receive an annual cash bonusRepresents PSU grants based on the Company’s achievement of annual financial metrics forperformance goals. With respect to the Company as a whole, that had been established byFebruary 2021 PSU grants, if the Compensation Committee. TheManagement Development and Compensation Committee determines that the financial targets are met, then the stock vests in its subjective judgment after reviewing estimated compensation for officers in comparable positionsfull at peer group companies, established the 2017 annual cash bonus targets as follows (Mr. Clements’ bonus target was not changed when his base salary was increased in July 2017):

26


Name and Principal Position

 

Bonus at the Target
Level

 

Percentage of Base Salary

 

Bonus Actually Earned  (118.6)%

 

Scott M. Clements

President and Chief Executive Officer

 

$

400,000

 

100

%

$

474,255

 

Mark S. Hoyt

Executive Vice President and Chief Financial Officer

 

$

262,000

 

75

%

$

310,637

 

T. Kendall Hunt

Chairman and former Chief Executive Officer

 

$

450,000

 

100

%

$

533,537

 

For 2017,end of 2023.  With aspect to Mr. Moynahan’s PSU grant, if the Management Development and Compensation Committee in its subjective judgment, determineddetermines that the annual cash bonus could be earnedstock price targets are met, then the stock vests in whole orfull following the fourth anniversary of the grant date.  In the case of Mr. Worth’s August 2021 grant, these PSUs were scheduled to cliff vest on December 31, 2021, subject to the achievement of strategic performance goals relating to product strategy, diagnostic work and cost savings and Mr. Worth’s continued service.  Additional information regarding the three-year performance-based stock grants and the applicable metrics is provided above in part,“Compensation Discussion and Analysis” in the section entitled “Long-Term Equity Compensation” and “Management Transition.” The PSUs for Scott Clements and Mark Hoyt were forfeited upon separation from the Company.

(4)Represents RSU grants that vest semi-annually over four years, subject to the NEO’s continued employment through the applicable vesting date. The RSUs for Scott Clements and Mark Hoyt were forfeited upon separation from the Company.
(5)The grant date fair value is computed in accordance with FASB ASC Topic 718 and reflects the value of the RSUs and PSUs on the date the award was granted and, in the case of the PSUs, based on the Company’sprobable achievement of the followingperformance conditions at the time of grant. See footnote 14 to the financial metrics.statements in our Annual Report for a discussion of the relevant assumptions used in calculating these amounts.


OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END

 

·

Annual Revenue Component: 50% of the target award would be based on achievement of the annual revenue target;

·

Annual Non-hardware Revenue Component: 25% of the target award would be based on achievement non-hardware revenue target; and

·

Annual EBITDA Component: the remaining 25% of the target award would be based on achievement of the annual EBITDA target (earnings before interest, taxes, depreciation and amortization).

The following table sets forth the aggregate number of outstanding equity awards held by the NEOs as of December 31, 2021. There were no stock option awards outstanding as of such date.

               
   

Stock Awards

 
    Number of Shares  Market Value of Equity Incentive Plan Awards: Number of Unearned Shares Equity Incentive Plan Awards: Market Value of Unearned Shares 
    That Have Not  Shares That That Have Not That Have Not 
    Vested  Have Not Vested Vested Vested 
Name Grant Date (#)  ($)(1) (#) ($)(1) 
Matthew P. Moynahan             
              
  11/29/2021(2)250,000 $4,232,500  —   — 
  11/29/2021(3) — $ —  112,500  $1,904,625 
Jan Kees van Gaalen (4)              
  —  —   —  —   — 
Steven R. Worth              
  1/4/2018(5)1,487  $25,175 —   — 
  6/12/2019(6)5,479  $92,759 —  $— 
  8/1/2019(7) 21,914  $358,814 —  $— 
  5/1/2020(8)11,778  $199,402 — $— 
  6/1/2020(9) —    — 14,134 $239,289 
  2/18/2021(10)10,171  $172,195 —  — 
  2/18/2021(11)—  $— 17,436 $295,191 
               
                
Scott M. Clements (12)               
    ——   — —   — 
                
                
                
Mark S. Hoyt (12)    ——   — —   — 
                
                
John Bosshart 11/23/2020(13)—5,269  $89,204 —   — 
  6/1/2021(14)—4,269  $72,274 —   — 
  6/1/2021(15)—2,258  $38,228 —   — 
  6/1/2021(16)— —  $ — 1,290 $ 21,840 
                
(1)Market value calculated based on the closing stock price of $16.93 as of December 31, 2021.

(2)With respect to these RSUs awarded on November 29, 2021, the unvested portion will vest in substantially equal installments on each November 29 through and including November 29, 2025, subject to the NEO’s continued employment through each applicable vesting date
(3)Annual Revenue ComponentPSUs that would be earned and vest upon achievement of financial targets for the four-year period ending November 29, 2025.


In accordance with the SEC’s executive compensation disclosure rules, the amounts reported with respect to these awards are based
on achieving threshold performance.

(4)As an interim executive, Jan Kees van Gaalen received no equity compensation for his service during the year ended December 31, 2021.
(5)With respect to these RSAs awarded on January 4, 2018, the award fully vested on January 4, 2022.
(6)With respect to these RSUs awarded on June 12, 2019, the unvested portion will vest in substantially equal semi-annual installments on each June 12 and December 12 through and including December 12, 2023, subject to the NEO’s continued employment through each applicable vesting date. The annual revenue target was related to VASCO’s operating budget for 2017 and was approved by the Compensation Committee in February 2017. If the named executive officers failed to successfully execute or manage the key actions assume in the operating budget, the target revenue likely would not be achieved. Fifty percentunvested portion of the possible total target annual cash bonus award was forfeited upon Mr. Worth’s April 2022 separation from the Company.
(7)PSUs that would be earned and vest upon achievement of financial targets for the three-year period ending December 31, 2021. In accordance with the SEC’s executive compensation disclosure rules, the amounts reported with respect to these awards are based on achievementachieving target performance. In the first quarter of an overall revenue target of $200,000,000 that was determined by the Compensation Committee in its subjective judgment. The following performance payout curve also was established by the Compensation Committee, in its subjective judgment, for performance at levels lower or higher than the revenue target, with a maximum payout if 2017 revenue was $210,000,000 or more:

Performance Level (2017 Revenue)

Level of Payout as a Percent of Target

Less than $180.0 million

0%

$180.0 million

80%

$200.0 million

100%

$210.0 million or higher

150%

Payment for performance between stated levels would be interpolated. In addition, the Compensation Committee retained discretion to adjust the revenue amount for changes in accounting rules and extraordinary events.

In February 2018,2022, the Compensation Committee determined that the Company’s annual revenueperformance criteria were partially met, with 66% of the target shares earned.

(8)

With respect to these RSUs awarded on May 1, 2020, the unvested portion will vest in 2017substantially equal semi-annual installments on each May 1 and November 1 through and including May 1, 2024, subject to the NEO’s continued employment through each applicable vesting date. The unvested portion of the award was $193.3 millionforfeited upon Mr. Worth’s April 2022 separation from the Company.

(9)PSUs that would be earned and accordingly, each namedvest upon achievement of financial targets for the three-year period ending December 31, 2022. In accordance with the SEC’s executive officer received a cash bonus awardcompensation disclosure rules, the amounts reported with respect to the annual revenue component at 93.3% of target for that component.

27


Annual Non-Hardware Revenue Component

The annual non-hardware revenue component was also derived from VASCO’s operating budget for 2017. The annual non-hardware revenue target of $85,900,000these awards are based on that budget,achieving threshold performance. The unvested portion of the award was approved byforfeited upon Mr. Worth’s April 2022 separation from the Compensation CommitteeCompany.

(10)With respect to these RSUs awarded on February 18, 2021, the unvested portion will vest in its subjective judgment duringsubstantially equal semi-annual installments on each February 2017. If18 and August 18 through and including February 18, 2025, subject to the executive officers failed to successfully execute or manageNEO’s continued employment through each applicable vesting date. The unvested portion of the key actions assumed inaward was forfeited upon Mr. Worth’s April 2022 separation from the operating budget, the targeted annual non-hardware revenue component likely would not be achieved.

The Compensation Committee, in its subjective judgment, established the following payout curve for performance at levels lower or higher than the annual non-hardware revenue target, with a maximum payout if 2017 annual non-hardware revenue was $94,000,000 or more.

Performance Level
(2017 annual non-hardware revenue)

Level of Payout as a Percent of Target

Less than $77.0 million

0%

$77.0 million

50%

$85.9 million

100%

$94.0 million or higher

150%

Company.

Payment for performance between stated levels

(11)PSUs that would be interpolated.earned and vest upon achievement of financial targets for the three-year period ending December 31, 2023. In addition,accordance with the Compensation Committee retained discretionSEC’s executive compensation disclosure rules, the amounts reported with respect to adjust the revenue amount for changes in accounting rulesthese awards are based on achieving threshold performance.
(12)Scott M. Clements and extraordinary events.

In February 2018, the Compensation Committee reviewed the annual non-hardware revenue forMark S. Hoyt forfeited all outstanding equity awards upon their respective employment terminations during the year ended December 31, 2017, which was $92.0 million. Accordingly, the Compensation Committee determined, for the annual non-hardware revenue component, each named executive officer received a cash bonus award with2021.

(13)With respect to these RSUs awarded on November 23, 2020, the annual non-hardware revenue component at 137.7% of target forunvested portion will vest in substantially equal installments on each May 23, 2022 and November 23, 2022, subject to Mr. Bosshart’s continued employment through each applicable vesting date.
(14)With respect to these RSUs awarded on June 1, 2021, the unvested portion will vest in substantially equal installments on each March 1, June 1, and September 1 through and including June 1, 2023, subject to Mr. Bosshart’s continued employment through each applicable vesting date.
(15)With respect to these RSUs awarded on June 1, 2021, the unvested portion will vest in substantially equal installments on each June 1, and December 1 through and including June 1, 2025, subject to Mr. Bosshart’s continued employment through each applicable vesting date.
(16)PSUs that component.

Annual EBITDA Component

The annual EBITDA component was derived from VASCO’s operating budget for 2017. The annual EBITDA target of $11,100,000 based on that budget, was approved by the Compensation Committee in its subjective judgment during February 2017. If the executive officers failed to successfully execute or manage the key actions assumed in the operating budget, the targeted annual EBITDA component likely would not be achieved.

The Compensation Committee, in its subjective judgment, established the following payout curve for performance at levels lower or higher than the annual EBITDA target, with a maximum payout if 2017 annual EBITDA was $12,000,000 or more.

Performance Level
(2017 annual EBITDA)

Level of Payout as a Percent of Target

Less than $11.1 million

0%

$11.1 million

100%

$12.0 million or higher

150%

Payment for performance between stated levels would be interpolated. In addition, the Compensation Committee retained discretion to adjust the EBITDA amount for changes in accounting rulesearned and extraordinary events.

In February 2018, the Compensation Committee reviewed the annual EBITDA for the year ended December 31, 2017, which was $17.6 million. Accordingly, the Compensation Committee determined, for the annual EBITDA component, each named executive officer received a cash bonus award with respect to such component at 150%vest upon achievement of target for that component.

28


Long-Term Equity Compensation

Long-term incentive awards for 2017 were granted in January 2017 pursuant to our 2009 Equity Incentive Plan. The plan was designed to serve as a performance incentive to encourage our executives, key employees and others to acquire or increase a proprietary interest in VASCO’s success. These incentives promote a long-term perspective critical to continued success in our business. They also ensure that our leaders are focused on stockholder value. The Compensation Committee believes that, over a period of time, our stock performance will, to a significant extent, be a direct result of our executives’ and key employees’ performance. The 2009 Equity Incentive Plan provides that awards of stock-based compensation, including restricted stock and performance shares, may be granted at the discretion of the Compensation Committee, in such amounts and subject to such conditions as the Compensation Committee may determine in accordance with the plan.

In determining awards for 2017, the Compensation Committee reviewed long-term incentive compensation as part of total compensation based on comparisons with the peer companies, market conditions and other factors. The Compensation Committee, in its subjective judgment, determined the target economic value of the long-term compensation award for each named executive officer as a percentage of the named executive officer’s base salary, as follows:

·

Mr. Clements—$1,200,000 or 300% of base salary (as set at the beginning of 2017)

·

Mr. Hoyt—$525,000 or 150% of base salary

·

Mr. Hunt—$1,350,500 or 350% of base salary

2017-2019 Three-Year Performance Based Shares

Sixty percent of the target economic value was granted as performance-based equity dependent on three-year performance targets. The three-year performance shares based on 2017 through 2019 metrics are vested if, and when, earned at the close of 2019. The Compensation Committee, in its subjective judgment, established the annualfinancial targets for the three-year performance shares, which it believed, were alignedperiod ending December 31, 2023. In accordance with the strategic plan andSEC’s executive compensation disclosure rules, the Company’s 2017-2019 budget. The targetsamounts reported with respect to these awards are based upon hardware revenue and non-hardware revenue.  If the named executive officers fail to successfully execute or manage the key actions assumed in the operating budget and the strategic plan, the target revenue likely would not be achieved.

2017 Time-Based Shares

Forty percent of the target economic value of the total long-term equity compensation was granted in the form of time-based restricted stock dependent on continued employment for the four-year vesting period.

The Compensation Committee believes performance-based long-term incentives based on three-year performance measures, and four year time-based vesting, enhances the link between the creation of stockholder value and long-term executive compensation, provides increased equity ownership by the named executive officers and enables competitive levels of total compensation with an emphasis on payment for results. The Compensation Committee believes that the mix of a performance based award and time-based award appropriately aligned the named executive officers’ interests with those of our stockholders. The Compensation Committee also believes that the multi-year vesting mitigates risk and properly adjusts for the time horizon of risk, as these awards require an individual to remain in employment with VASCO for multiple years before an award is fully vested.

On the grant date, the economic value of the long-term incentive awards was converted into the equivalent number of shares by dividing the target economic value by the closing price of VASCO’s common stock on the grant date.

The unvested portions of share awards granted in 2017 are subject to forfeiture upon the recipient’s cessation of service with VASCO. Upon a change in control of VASCO, (1) performance shares for which the performance period has not been completed will vest at the target (100%) level pro-rata based on the number of days elapsed in the performance period, and (2) restricted stock awards will vest in full if (a) they are not converted, assumed or replaced by the successor company, or (b) upon a termination of employment under certain circumstances within one year after the change in control.

29


2015-2017 Three-Year Performance Shares

In February 2018, the Compensation Committee determined that the three-year performance shares granted in 2015 would not vest based on Company performance for the period of 2015-2017 and as such those shares were forfeited.

Additional Compensation Elements

Retirement Plans

VASCO does not provide retirement plans or pension plans specifically for the named executive officers.

Perquisites and Other Personal Benefits

VASCO does not provide special executive perquisites or other personal benefits.

Expatriate Expenses

VASCO maintains its international headquarters in Zurich, Switzerland and derives the majority of its revenues outside of North America. As a result, the Company has a practice of locating certain senior management employees in Zurich, including expatriates. The Board of Directors asked Mr. Hunt to spend a substantial portion of his working time in Zurich starting in 2011. Pursuant to the Swiss Assignment (as described further below under “Employment Agreements”), Mr. Hunt was provided certain allowances for himself and his spouse, including a monthly cost-of-living allowance for costs of housing, utilities, transportation and goods and services, certain relocation expenses, reimbursement for up to four home leave trips each twelve months, medical coverage, tax return preparation and advisory services, tax equalization for income taxes, and a Medicare tax gross-up, in connection with his relocation and current part-year assignment to VASCO’s international headquarters in Zurich, Switzerland. To the extent these expatriate amounts were included in Mr. Hunt’s compensation, they are reflected in the “All Other Compensation” column of the “Summary Compensation Table” below. This expatriate expense arrangement with Mr. Hunt expired at December 31, 2017.

Mr. Clements was also assigned to VASCO’s Zurich, Switzerland office during 2016 and part of 2017, and he received a monthly lump sum cost of living allowance. Mr. Clements’ allowances are included in the “All Other Compensation” column of the “Summary Compensation Table” below. Upon Mr. Clements’ move to our Chicago office in 2017 his expatriate allowance terminated.

Change of Control and Severance Benefits

The Compensation Committee believes the severance and change in control benefits that our named executive officers receive are comparable with those benefits offered by our competitors and necessary to retain a talented executive team. The named executive officers’ possible severance and change in control benefits are described below under “Employment Agreements” and under “Potential Payments Upon Termination or Change-in-Control.” All stock awards require a “double trigger” for vesting to accelerate (both a change in control and a qualifying termination of employment), unless the successor does not assume or continue the awards or provide substitute awards.

30


Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s chief executive officer or any of the company’s three other most highly compensated executive officers (other than the chief financial officer) who are employed as of the end of the year. An exception to this regulation is for performance-based compensation that meets certain requirements of the Internal Revenue Code. Certain awards made under the 2009 Equity Incentive Plan and our annual cash bonus may qualify as performance-based compensation under Section 162(m). However, not all grants that may be made under these plans will meet, and not all grants that have been made under these plans in the past meet, all the requirements for deductibility under Section 162(m) of the Internal Revenue Code. For example, in 2017 we utilized time-based restrictive stock as part of our compensation program that does not have a company performance metric associated with it.

The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017. As a result, compensation paid to our NEO’s after December 31, 2017 in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain binding contracts in place as of November 2, 2017 and which were not materially modified after that date. We do not view our performance-based stock awards as having a discretionary component and will seek to qualify such 2016 and 2017 grants as covered by the transition relief. Until there is further guidance, there is no assurance that we will be successful. The Compensation Committee retains discretion to make awards or modify awards in such a way that treatment under Section 162(m) may change or render the awards ineligible for a tax deduction. The Compensation Committee believes that our overall compensation philosophy and objectives should be balanced against any individual consideration such as tax deductibility. At this time, we do not expect the potential loss of tax deductions to be a significant item, however we continue to monitor the issue.

2018 Compensation Decisions

The Compensation Committee engaged Meridian, the independent compensation consultant, in the latter part of 2017 to assess the peer group and provide data on such group for 2018 compensation planning purposes. That project resulted in the Compensation Committee making adjustments to the peer group for 2018.

The Compensation Committee approved the following 2018 base salaries based on market rates along with other factors such as the executive’s performance and scope of responsibility: Mr. Clements- $450,000; Mr. Hoyt- $360,000. Mr. Hunt is no longer a named executive officer for 2018. The Board approved a flat fee of $450,000 for Mr. Hunt for his role as Founder and Chairman. He no longer participates in Company bonus or equity plans. Amounts paid to Mr. Hunt in 2018 will be reflected as Director Compensation in the 2018 proxy.

There were no material changes to our annual cash bonus nor our long-term equity incentive programs for 2018. The Compensation Committee chose to retain the current elements and the same categories of metrics.

31


Summary Compensation Table

The following table provides selected information concerning compensation during the three fiscal years ended December 31, 2017 for services in all capacities to VASCO, by (1) the principal executive officer, (2) the principal financial officer, and (3) VASCO’s other executive officer(s) who served in positions other than principal executive officer or principal financial officer at the end of 2017 (collectively, the “named executive officers”).

SUMMARY COMPENSATION TABLE

Name and Principal Position

 

Year

 

Salary (1)

 

Stock 
Awards (2)

 

Non-Equity 
Incentive Plan 
Compensation(3)

 

All Other 
Annual 
Compensation(4)

 

Total

 

Scott M. Clements

President and Chief Executive Officer

 

2017

 

$

424,000

 

$

1,200,011

 

$

474,255

 

$

166,139

 

$

2,265,405

 

 

 

2016

 

$

365,000

 

$

729,997

 

$

0

 

$

192,807

 

$

1,287,804

 

Mark S. Hoyt

Executive Vice President and Chief Financial Officer

 

2017

 

$

350,000

 

$

525,012

 

$

310,637

 

$

23,246

 

$

1,208,895

 

 

 

2016

 

$

330,000

 

$

330,138

 

$

0

 

$

17,203

 

$

677,341

 

 

 

2015

 

$

80,173

 

$

600,126

 

53,000

 

$

2,397

 

$

735,696

 

T. Kendall Hunt

Chairman and former Chief Executive Officer

 

2017

 

$

450,000

 

$

1,350,027

 

$

533,537

 

$

566,447

 

$

2,900,011

 

 

 

2016

 

$

450,000

 

$

1,462,656

 

$

0

 

$

436,930

 

$

2,349,586

 

 

 

2015

 

$

450,000

 

$

1,462,850

 

$

617,655

 

$

547,112

 

$

3,077,617

 

(1)

Salary represents base salary earned in the fiscal year indicated.

(2)

The amounts reflected represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718. Awards were granted under VASCO’s 2009 Equity Incentive Plan. Further information regarding the awards is presented below in the Grants of Plan-Based Awards Table and Outstanding Equity Awards at Fiscal Year-End Table.

(3)

Represents the annual cash bonus paid for performance relative to revenue and operating income targets as further described in the “Compensation Discussion and Analysis” above, except for Mr. Hoyt’s 2015 bonus provided for his first partial year of employment pursuant to his employment agreement.

(4)

The named executive officers’ “All Other Annual Compensation” for 2016 consisted of:

·

Mr. Clements—Company matching 401(k) contributions of $10,388, imputed income from employee benefit insurance premiums made by the Company of $14,841, and a housing allowance totaling $140,910 in connection with his assignment to VASCO’s office in Zurich, Switzerland. For more information about Mr. Clements’ Swiss assignment, please see “Employment Agreements” below.

·

Mr. Hoyt—Company matching 401(k) contributions of $8,500 and imputed income from employee benefit insurance premiums made by the Company of $14,746.

·

Mr. Hunt—Company matching 401(k) contributions of $4,331; imputed income from employee benefit insurance premiums made by the Company of $14,916; and allowances totaling $547,200 in connection with his assignment to oversee VASCO’s international headquarters in Zurich, Switzerland (consisting of $284,393 housing, transportation and cost-of-living allowances, travel expenses of $7,798, Swiss tax payments of $242,150, and a Medicare tax gross up of $12,859 with respect to these allowances). For more information about Mr. Hunt’s Swiss assignment, please see “Employment Agreements” below.

32


Grants of Plan-Based Awards

The following table sets forth all plan-based awards granted to the named executive officers during 2017.

 

 

 

 

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)

 

Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)

 

All Other 
Stock 
Awards: 
Stock or

 

Grant 
Date 
Fair 
Value of

 

Name 

 

Grant 
Date

 

Threshold
($)

 

Target
($)

 

Maximum
($)

 

Threshold
(#)

 

Target 
(#)

 

Maximum 
(#)

 

Units 
(#)(3)

 

Stock 
Awards(4)

 

Scott M. Clements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/5/17

 

$

200,000

 

$

400,000

 

$

600,000

 

 

 

 

 

 

 

 

 

 

 

 

 

1/5/17

 

 

 

 

 

 

 

24,574

 

49,147

 

73,721

 

 

 

$

720,004

 

 

 

1/5/17

 

 

 

 

 

 

 

 

 

 

 

 

 

32,765

 

$

480,007

 

Mark S. Hoyt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/5/17

 

$

131,250

 

$

262,500

 

$

393,750

 

 

 

 

 

 

 

 

 

 

 

 

 

1/5/17

 

 

 

 

 

 

 

10,751

 

21,502

 

32,253

 

 

 

$

315,004

 

 

 

1/5/17

 

 

 

 

 

 

 

 

 

 

 

 

 

14,335

 

$

210,008

 

T. Kendall Hunt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman and former Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/5/17

 

$

225,000

 

$

450,000

 

$

675,000

 

 

 

 

 

 

 

 

 

 

 

 

 

1/5/17

 

 

 

 

 

 

 

27,646

 

55,291

 

82,937

 

 

 

$

810,013

 

 

 

1/5/17

 

 

 

 

 

 

 

 

 

 

 

 

 

36,861

 

$

540,014

 

(1)

Represents the threshold, target and maximum award amounts that could have been paid out as a cash bonus award under VASCO’s annual cash incentive award program for performance in 2017 upon achievement of certain target financial levels for the year. The target award amounts are based on percentages of each named executive officer’s base salary at the beginning of the year. Additional information regarding the annual cash incentive compensation and the applicable metrics is provided above in “Compensation Discussion and Analysis” in the section entitled “Annual Cash Bonus.”

achieving threshold performance.

 

(2)

65 

2021 Stock Vested

The following table sets forth stock awards vested in the year ended December 31, 2021 held by the NEOs. None of our NEOs held options during 2021. 

     
 

Stock Awards

 

 Number of   
 Shares Value
 Acquired on Realized on
NameVesting Vesting
Matthew Moynahan

— $—
Jan Kees van Gaalen

— $—
Steven Worth    
 48,692 $895,440

Scott Clements

 

43,121 $1,009,543

Mark S. Hoyt

 

15,954 $369,801

John Bosshart

 

7,013 $142,555

Potential Payments Upon Termination or Change-in-Control

During 2021, our NEOs other than Mr. Bosshart were subject to employment agreements governing the terms of their employment and severance rights. Mr. Bosshart was an at-will employee and not a party to an employment agreement as of December 31, 2021.

Represents performance based restricted stock grants based on the achievement of financial targets for the period 2017-2019. If the Compensation Committee determines that the financial targets are met, then the stock vests in full at the close of 2019. The target award amounts are based on percentages of each named executive officer’s base salary at the beginning of the year. Additional information regarding the three-year performance based stock grants and the applicable metrics is provided above in “Compensation Discussion and Analysis” in the section entitled “Long-Term Incentive Compensation.”

Matthew Moynahan

 

(3)

Represents time based restricted stock grants that vest semi-annually over four years.

(4)

The grant date fair value is computed in accordance with FASB ASC Topic 718 and reflects the value of the restricted stock on the date the award was granted.

33


Employment Agreements

Each of our named executive officers is party to an employment agreement with VASCO. Each agreement provides for base salary, incentive compensation and severance compensation.

Scott M. Clements

Mr. Clements’sMoynahan’s employment agreement was entered into effective December 1, 2015 and was amended on November 15, 2016 and on July 28, 2017.29, 2021. Under the terms of his employment agreement, in the event Mr. ClementsMoynahan is terminated without cause or quitsterminates his employment for good reason, he will continue to receive his base salary over a 12 month12-month period and his target cash bonus amount for such year (and the bonus amount for the prior year if earned but not paid at the time of termination). If such a termination occurs within eighteen12 months following a change in control of VASCO,OneSpan, then he will receive the amounts described in the preceding sentence in a lump sum payment. If Mr. ClementsMoynahan is terminated for cause or quitsterminates his employment without good reason, he will not be entitled to any severance compensation. Mr. Moynahan has agreed to abide by several non-competition and non-solicitation restrictions following the termination of his employment for a period of 12 months. 

Scott M. Clements

Mr. Clements’ separated from the company on August 2, 2021. Under the terms of his separation agreement and in exchange for signing the separation agreement and releasing claims against the Company, Mr. Clements received a separation payment in the gross amount of $960,000, payable in equal installments over a 12-month period after August 2, 2021. As stated in his employment agreement entered into effective December 1, 2015, and was amended on November 15, 2016 and on July 28, 2017, Mr. Clements has agreed to abide by several non-competition and non-solicitation restrictions following the termination of his employment for a period of 12 months. Mr. Clements did not receive any accelerated vesting, nor did he opt for subsided COBRA.

Mark S. Hoyt

Mr. Hoyt’s resigned from his role as Chief Financial Officer effective June 9, 2021. As Mr. Hoyt voluntarily resigned from his position, he was not entitled to any severance compensation. Mr. Hoyt has agreed to abide by several non-competition restrictions following the termination of his employment for a period of 12 months.

Steven R. Worth

Mr. Worth’s employment agreement was entered into effective April 18, 2016 and was amended on June 9, 2021 and on August 2, 2021. Under the terms of his employment agreement, in the event Mr. Worth was terminated without cause or resigned for good reason, he would continue to receive his base salary over a 12-month period and his target cash bonus amount for such year (and the bonus amount for the prior year if earned but not paid at the time of termination). If such a termination occurred within eighteen months following a change in control of OneSpan, then he would receive the amounts described in the preceding sentence in a lump sum payment. If Mr. Worth was terminated for cause or resigned without good reason, he would not be entitled to any severance compensation. Mr. Worth has agreed to abide by several non-compete and non-solicit restrictions following the termination of his employment for a period of twelve months.


Mark S. HoytAs compensation for serving as Interim Chief Financial Officer for the period of June 9, 2021 through August 2, 2021, Mr. Worth received and additional fee of $20,000 per month for the term he held the Interim Chief Financial Officer position. This additional fee was increased to $50,000 per month for the period of August 3, 2021 through November 29, 2021, as compensation for serving as Interim Chief Executive Officer.

 

Mr. Hoyt’s employment agreement was entered into effective October 5, 2015.Worth’s separated from the company on April 8, 2022. Under the terms of his employmentseparation agreement, Mr. Worth received a separation payment in the event Mr. Hoyt is terminated without cause or quits for good reason, he will continue to receive his base salarygross amount of $616,011 which shall be paid in equal installments over a 12-month period. If such a termination occurs within eighteen months following a change in control of VASCO, then he will receive a lump sum paymentperiod after April 8, 2022 and an amount equal to his base salary and any applicable incentive compensation attarget bonus plan under the rate thenCompany’s 2022 annual bonus plan of $250,000. Mr. Worth forfeited all outstanding equity as of the date of his separation. As stated in effect. Ifhis employment agreement, Mr. Hoyt is terminated for cause or quits without good reason, he will not be entitled to any severance compensation. Mr. HoytWorth has agreed to abide by several non-competenon-competition and non-solicitation restrictions following the termination of his employment. The restrictedemployment for a period will be either six or twelve months, depending on the nature of the termination.12 months. 

Jan Kees van Gaalen

T. Kendall Hunt

In December 2010, Mr. Hunt’s Employment Agreement withvan Gaalen joined the Company was amended and restated in its entiretyunder a Consulting Agreement effective asOctober 5, 2021. Under the terms of January 1, 2011 (the “Amended and Restated Employment Agreement”). The Amended and Restated Employment Agreement has been amended five times, most recently effective July 28, 2017. It had a term until January 1, 2018 and, among other things, provided for:

·                              Mr. Hunt to serve as VASCO’s Chairman and CEO, and from July 28, 2017, as its Chairman and Founder with his offices at VASCO’s Zurich, Switzerland international office and the global headquarters in Chicago;

·                              A minimum annual base salary of $270,000this agreement, in the U.S. and an additional salaryevent of 180,000 Swiss Francs related to his role at our Swiss office as more fully described belowany termination, all payments under the “Swiss Assignment”;

·                              Mr. Hunt to participate inagreement will continue through the VASCO Executive Incentive Plan, the VASCO 2009 Equity Incentive Plan and other employee benefit plans on the same basis as other senior executive officers;

·                              At least four weeksdate of vacation per year, in accordance with VASCO’s vacation policy;

·                              Payment of his base salary for 24 months, in addition to any amounts that may be payable to him under the Executive Incentive Plan, the 2009 Equity Incentive Plan, and any other employee benefit plan maintained by the Company, if Mr. Hunt’s employment with VASCO is terminated by the Company without cause (as defined in the Amended and Restated Employment Agreement) or if he resigns for good reason (as defined in the Amended and Restated Employment Agreement) and there has not been a change of control (as defined in the 2009 Equity Incentive Plan). If such a termination of employment occurs within 18 months after a change of control, he will also receive an additional amount equal to two times the amount payable to him under the Executive Incentive Plan in connection with a change in control and the payments will be made in a lump sum within 10 days after his termination of employment, rather than over 24 months. The severance payments described in this paragraph are conditioned upon Mr. Hunt’s execution and delivery of a separation agreement and release to the Company that complies with certain provisions of the Amended and Restated Employment Agreement;

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·                              Payment of his base salary through his termination date in addition to any amounts that may be payable to him under the Executive Incentive Plan, the 2009 Equity Incentive Plan, and any other employee benefit plan maintained by the Company, if Mr. Hunt’s employment with VASCO is terminated by VASCO for cause or on account of his disability, or if he were to resign without good reason or die;

·                              No excise tax gross-up for any payment that would be an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code;

·                              Noncompetition, non-solicitation and non-interference with VASCO business relationships by Mr. Hunt during the 24-month period after his termination of employment for any reason; and

·                              All payments to be made in compliance with Internal Revenue Code Section 409A.

On April 24, 2014, the Company and Mr. Hunt entered into the First Amendment to the Amended and Restated Employment Agreement (the “First Amendment”), which extends the term of the Amended and Restated Employment Agreement effective January 1, 2011 to January 1, 2015.

On November 24, 2014, the Company and Mr. Hunt entered into the Second Amendment to the Amended and Restated Employment Agreement, which extends the term of the Amended and Restated Employment Agreement to January 1, 2016.

On November 20, 2015, the Company and Mr. Hunt entered into the Third Amendment to the Amended and Restated Employment Agreement, which extends the term of the Amended and Restated Employment Agreement to January 1, 2017.

On September 24, 2016, the Company and Mr. Hunt entered into the Fourth Amendment to the Amended and Restated Employment Agreement, which extends the term of the Amended and Restated Employment Agreement to January 1, 2018 and splits his base salary between our U.S. legal entity (60%) and our Swiss legal entity (40%).

On July 28, 2017, the Company and Mr. Hunt entered into the Fifth Amendment to the Amended and Restated Employment Agreement, which changed Mr. Hunt’s role to Chairman and Founder in connection with his resignation as CEO and an executive officer.

On February 15, 2011, the Company and Mr. Hunt entered into a letter agreement (the “Assignment Letter”) that outlines the terms and conditions of Mr. Hunt’s part year assignment (the “Swiss Assignment”) to the international headquarters office of VASCO Data Security International, GmbH in Zurich, Switzerland effective October 1, 2011. Mr. Hunt continued to serve as Chairman and Chief Executive Officer of VASCO while he was located part time in Switzerland until July 28, 2017, at which time he continued to perform duties in Switzerland as Chairman and Founder for the balance of 2017. The Swiss Assignment expired January 1, 2018 concurrently with the end of the executive officer employment period under the Amended and Restated Employment Agreement. The Assignment Letter provided for certain additional payments, benefits and reimbursements to be provided to Mr. Hunt and his spouse in connection with his relocation to Switzerland and repatriation at the end of the Swiss Assignment including, among other things:

·

Reimbursement for actual and reasonable expenses incurred in connection with the relocation to Switzerland and repatriation to the U.S. at the end of the Swiss Assignment;

·

An allowance to cover furniture and home location costs at the beginning of the Swiss Assignment;

·

Reimbursement for up to four home leave trips each 12 months during the Swiss Assignment;

·

A monthly cost-of-living allowance for costs of housing, utilities, transportation and goods and services, which is to be reviewed annually;

·

Medical coverage in Switzerland; and

·

Tax return preparation and advisory services, and tax equalization.termination. 

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2017 Awards

The terms of the award of annual cash incentive bonuses, restricted stock and performance shares are described above under “Compensation Discussion and Analysis” and in the footnotes to the “Grants of Plan-Based Awards” table and the “Outstanding Equity Awards at Fiscal Year-End” table.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth the aggregate number of outstanding equity awards held by the named executive officers as of December 31, 2017. There were no stock option awards outstanding.

 

 

Stock Awards

 

Name

 

Earned Shares 
That Have Not 
Vested 
(#)

 

Market Value of
Earned Shares That 
Have Not Vested
($)

 

Unearned Shares 
That Have Not 
Vested 
(#)

 

Market Value of 
Unearned Shares 
That Have Not 
Vested 
($)

 

Scott Clements

 

 

 

 

 

 

 

 

 

Award Dated:

 

 

 

 

 

 

 

 

 

12/1/2015(8)

 

15,625

 

217,188

 

—

 

—

 

1/4/2016(3)

 

—

 

—

 

21,935

 

304,897

 

1/5/2017(9)

 

28,669

 

398,499

 

—

 

—

 

1/5/2017(5)

 

—

 

—

 

49,147

 

683,143

 

Mark S. Hoyt

 

 

 

 

 

 

 

 

 

Award Dated:

 

 

 

 

 

 

 

 

 

10/5/2015(6)

 

17,244

 

239,692

 

—

 

—

 

1/4/2016(3)

 

—

 

—

 

9,920

 

137,888

 

1/5/2017(7)

 

12,542

 

174,334

 

—

 

—

 

1/5/2017(5)

 

—

 

—

 

21,502

 

298,878

 

T. Kendall Hunt

 

 

 

 

 

 

 

 

 

Award Dated:

 

 

 

 

 

 

 

 

 

1/6/2014(1)

 

15,702

 

218,258

 

—

 

—

 

1/5/2015(2)

 

17,929

 

249,213

 

—

 

—

 

1/4/2016(3)

 

—

 

—

 

43,950

 

610,905

 

1/5/2017(4)

 

32,253

 

448,317

 

—

 

—

 

1/5/2017(5)

 

—

 

—

 

55,290

 

768,531

 

(1)

With respect to Mr. Hunt’s unvested performance shares earned for the year ending December 31, 2014, 15,702 shares vested on January 6, 2018.

(2)

With respect to Mr. Hunt’s unvested performance shares earned for the year ending

The following paragraphs and tables describe the potential payments and benefits to which the NEOs would be entitled from the Company pursuant to their employment agreements in effect on December 31, 2021 and the Company’s compensation and benefit plans upon termination of employment, if such termination had occurred as of December 31, 2021, or upon a change in control of the Company, if such change in control had occurred as of December 31, 2015, 8,965 shares will vest on January 5, 2018 and 8,964 shares will vest on January 5, 2019

(3)

Performance shares that would be earned and vest upon achievement of financial targets for the three-year period ending December 31, 2018.

(4)

With respect to Mr. Hunt’s unvested time-based restricted shares awarded on January 5, 2017, 9,215 shares will vest in 2018, 9,215 shares will vest in 2019, 9,215 shares will vest in 2020, and 4,608 shares will vest on January 5, 2021.

(5)

Performance shares that would be earned and vest upon achievement of financial targets for the three-year period ending December 31, 2019.

(6)

With respect to Mr. Hoyt’s unvested time-based restricted shares granted on October 5, 2015, 8,622 shares will vest in 2018 and 2019, respectively.

(7)

With respect to Mr. Hoyt’s unvested time-based restricted shares awarded on January 5, 2017, 3,584 shares will vest in 2018, 3,584 shares will vest in 2019, 3,583 shares will vest in 2020, and 1,791 shares will vest on January 5, 2021.

(8)

With respect to Mr. Clements’ unvested time-based restricted shares awarded on December 1, 2015, 7,813 shares will vest in 2018 and 7,812 shares will vest in 2019.

(9)

With respect to Mr. Clements’ unvested time-based restricted shares awarded on January 5, 2017, 8,192 shares will vest in 2018, 8,191 shares will vest in 2019, 8,191 shares will vest in 2020, and 4,095 shares will vest on January 5, 2021.

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Stock Vested

The following table sets forth stock awards vested in the year ended December 31, 2017 held by the named executive officers.

  

 

Stock Awards

 

Name

 

Number of 
Shares 
Acquired on 
Vesting

 

Value 
Realized on 
Vesting

 

Scott M. Clements

 

11,909

 

$

164,215

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Mark S. Hoyt

 

10,415

 

$

135,085

 

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

T. Kendall Hunt

 

37,769

 

$

553,431

 

Chairman and former Chief Executive Officer

 

 

 

 

 

Potential Payments Upon Termination or Change-in-Control

The following paragraphs and tables describe the potential payments and benefits to which the named executive officers would be entitled from the Company pursuant to their employment agreements in effect on December 31, 2017 and the Company’s compensation and benefit plans upon termination of employment, if such termination had occurred as of December 31, 2017, or upon a change in control of the Company, if such change in control had occurred as of December 31, 2017.

 

For purposes of the following table, and its footnotes, all terms used with respect to events of termination or change in control shall have the following meanings unless otherwise indicated:

 

●·“Cause”                                         “Cause” under Mr. Hunt’s, Mr. Clements’ and Mr. Hoyt’sMoynahan’s employment agreements in effect on December 31, 20172021 means: (i) he materially breaches his obligations under the employment agreement, VASCO’sOneSpan’s Code of Conduct and Ethics or an established policy of the Company; (ii) he engages in conduct prohibited by law (other than minor violations), commits an act of dishonesty, fraud or serious or willful misconduct in connection with his job duties, or engages in unethical or immoral conduct that, in the reasonable judgment of the Management Development and Compensation Committee, could injure the integrity, character or reputation of the Company; (iii) he fails or refuses to perform or habitually neglects, his duties and responsibilities under the agreement (other than on account of disability) and continues such failure, refusal or neglect after having been given written notice by the Company that specifies what duties he failed to perform and an opportunity to cure of 10 days; (iv) he uses or discloses confidential information or trade secrets other than in the furtherance of the Company’s business interests, or other violation of a fiduciary duty to the Company; or (v) he fails to reasonably cooperate with any audit or investigation involving the Company or its business practices after having been given written notice by the Company that specifies his failure to cooperate and an opportunity to cure of five days.
●“Good Reason” under Mr. Moynahan’s employment agreements in effect on December 31, 2021 means:  

(i)failure to provide the compensation and benefits required by the Agreements;

(ii)a reduction in the NEO’s base salary below the base salary in effect during the immediately preceding year, unless such reduction is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company (not to exceed 20%) or agreed to in writing by the NEO;

(iii)any material diminution of the NEO’s authority, duties or responsibilities; or

(v)a material breach by the Company of any of its material obligations under the agreement.

●“Cause” under Messrs. Clements’, Hoyt’s and Worth’s employment agreements in effect on December 31, 2021 means: (i) he materially breaches his obligations under the employment agreement, OneSpan’s Code of Conduct and Ethics or an established policy of the Company; (ii) he engages in conduct prohibited by law (other than minor violations), commits an act of dishonesty, fraud or serious or willful misconduct in connection with his job duties, or engages in unethical or immoral conduct that, in the reasonable judgment of the Management Development and Compensation Committee, could injure the integrity, character or reputation of the Company; (iii) he fails or refuses to perform or habitually neglects, his duties and responsibilities under the agreement (other than on account of disability) and continues such failure, refusal or neglect after having been given written notice by the Company that specifies what duties he failed to perform and an opportunity to cure of 30 days; (iv) he uses or discloses confidential information or trade secrets other than in the furtherance of the Company’s business interests, or other violation of a fiduciary duty to the Company; or (v) he fails to reasonably cooperate with any audit or investigation involving the Company or its business practices after having been given written notice by the Company that specifies his failure to cooperate and an opportunity to cure of 10 days.

 

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●·                                          “Good Reason”“Good Reason” under Mr. Hunt’s employment agreement in effect on December 31, 2017 means:

(i)                                     a failure to provide the compensation and benefits required by this Agreement, including a reduction in his base salary below the base salary in effect during the immediately preceding year, unless such reduction is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company;

(ii)                                  a failure to appoint or elect him as Chairman of the Board or a member of the Board during the employment period;

(iii)                               any material diminution of his authority, duties or responsibilities; or

(iv)                              the Company requiring him to be based at any office or location other than the office occupied by him in Chicago, Illinois or a reasonably comparable office located within a 40-mile radius of such current office (the Swiss Assignment Letter provides for his part-year relocation to Zurich, Switzerland).

(v)                                 the assignment to him of any duties inconsistent in any respect with his position, authority, duties or responsibilities or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by him;

(vi)                              any failure by the Company to comply with any provision of any employment agreement entered into between the him and the Company (or any direct or indirect subsidiary thereof) other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by him; or

(vii)                           any failure by the Company to continue at least its customary base compensation payments to him.

·                                          “Good Reason” under Mr.Messrs. Clements’, Hoyt’s and Mr. Clements’Worth’s employment agreements in effect on December 31, 20172021 means:

 

(i)failure to provide the compensation and benefits required by the Agreements;

 

(ii)a reduction in Executive’s Base Salarythe NEO’s base salary below the Base Salarybase salary in effect during the immediately preceding year, unless such reduction is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company or agreed to in writing by Executive;

the NEO;

 

(iii)failure to appoint or elect Executivethe NEO as an officer according to theirhis title (and director in the case of Mr. Clements);


(iv)any material diminution of Executive’sthe NEO’s authority, duties or responsibilities (and no longer reporting to the Board in the case of Mr. Clements); or

 

(v)the Company requiring Executivethe NEO to be based at any office or location other than the office occupied by Executivethe NEO in Chicago, Illinois as of the Effective Dateeffective date or a reasonably comparable office located within a 40-mile radius of such current office (with such provision applying to Mr. Clements upon his relocation to such office from Zurich, Switzerland).

office.

 

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●·                                          “Change“Change in Control”Control” under Mr. Hunt’s, Mr.Messrs. Moynahan’s, Clements’, Hoyts’ and Mr. Hoyt’sWorth’s employment agreements in effect on December 31, 20172021 and the 2009 Equity2019 Omnibus Incentive Plan and the Executive Incentive Plangenerally means the occurrence of any of the following events:

(i)                                     An acquisition by any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, (a “Person”) certain acquisitions of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 40% of either (1)(x) the then outstanding shares of our Common Stock of the Company (the “Outstanding Common Stock”) or (2)(y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following (A) any acquisition directly from the Company, other than an acquisition by virtue of the exercise, exchange or conversion of any Convertible Securities unless such securities were themselves acquired directly from the Company, (B) any acquisition by the Company, (C) any acquisition by T. Kendall Hunt or any of his affiliates, or (D) any acquisition by any Person pursuant to which (y) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such transaction will beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding voting securities entitled to vote generallydirectors; (ii) certain changes in the electionmajority composition of directors, as the case may be, of the entirety resulting from such transaction (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, and (z) individuals who were members of theour Board immediately prior to the approval by the stockholders of the Company of such transaction will constitute at least a majority of the members of the board of directors of the entity resulting from such transaction; or

(ii) within any period of 12 consecutive months, a change in the composition of the Board such that the individuals who, immediately prior to such period, constituted the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) ceases for any reason to constitute at least a majority of the Board; provided, however, for purposes hereof, that any individual who becomes a member of the Board during such period, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

months; (iii) the consummation of (1) a reorganizationcertain reorganizations or consolidationconsolidations of the Company or (2) the sale or other disposition of all or substantially all of the assets of the Company and its direct and indirect subsidiaries taken as a whole to a Personwhole; or Persons who are not “related persons” as defined in Treasury Regulation § 1.409A-3(i)(5)(vii)(B); except in each a case a transaction pursuant to which (A) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such transaction will beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entirety resulting from such transaction (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, and (B) individuals who were members of the Board immediately prior to(iv) the approval by the stockholders of the Company of such transaction will constitute at least a majoritycertain liquidations or dissolutions of the membersCompany.

The amounts in the table below as of December 31, 2021 do not include payments and benefits to the extent that they are provided on a nondiscriminatory basis to full-time salaried employees generally upon termination of employment. Such payments and benefits include accrued salary and vacation pay and distributions of plan balances under the Company’s 401(k) plan.

       
  Termination by company Termination by company
  without Cause or by named without Cause or by named
  executive officer for Good executive officer for Good
  Reason, without a Change Reason, following a
  in Control Change in Control
Matthew Moynahan      
President and Chief Executive Officer      
Base salary (1) $500,000 $500,000
Annual cash bonus (2)  500,000  500,000
Restricted stock and restricted stock units (3)  4,097,500  4,097,500
Performance awards (4)  4,097,500  4,097,500
Total $9,195,000 $9,195,000
       
Jan Kees van Gaalen      
Interim Chief Financial Officer      
Base salary (5) $0 $0
Annual cash bonus (5)  0  0
Restricted stock and restricted stock units (5)  0  0
Performance awards (5)  0  0
Total $0 $0
       
Steven R. Worth      
 Former Chief Financial Officer and Treasurer      
Former Interim President and Chief President Officer      
Former General Counsel, Chief Compliance Officer and Corporate Secretary      
Base salary (1) $366,011 $366,011
Annual cash bonus (2)  250,000  250,000
Restricted stock and restricted stock units (6)  --  1,137,000 
Performance awards (7)  --  404,122
Total $616,011 $2,157,133
       

(1)In the case of Mr. Moynahan and Mr. Worth, pursuant to their employment agreements, the NEO will continue to receive regular payments of his base salary, at the rate in effect at the time of termination, for 12 months. In the case of Mr. Worth, when termination results from a termination without Cause or a termination for Good Reason by the NEO within 18 months following a Change in Control, the NEO instead will receive a lump sum payment of the boardseverance amount. Each NEO is subject to certain non-competition and non-solicitation restrictions for a fixed period following his termination.


(2)Upon a termination of directorsMr. Worth employment without Cause or a termination for Good Reason by Mr. Worth, he will receive an amount equal to his annual cash bonus target amount.

(3)Represents the value of 250,000 shares of restricted stock and RSUs held by Mr. Moynahan on December 31, 2021, based on the entity resulting from such transaction; or

(iv)closing price of our Common Stock listed on The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company (other than to an entity pursuant to a transaction which would comply with (A) and (B) of proviso (iii) above), assuming for this purpose that such transaction would otherwise beNasdaq Capital Market on December 31, 2021 ($16.93 per share). Upon a Change in Control and a termination of employment under certain circumstances within one year after the Change in Control, pursuantrestricted stock and RSUs will vest in full.

(4)Represents the value attributable to (iii) above.

For purposesthe accelerated vesting of the definition of “Change of Control” above, a series of transactions undertaken with a common purpose shall be treated as a single transaction that beginsperformance awards held by Mr. Moynahan on December 31, 2021, based on the consummationclosing price of our Common Stock listed on The Nasdaq Capital Market on December 31, 2021 ($16.93 per share). Upon a Change in Control and a termination of employment under certain circumstances within one year after a Change in Control, performance awards will vest in full.

(5)

As an independent contractor, Mr. van Gaalen is in illegible for any to severance compensation. 

(6)

Represents the first transactionvalue of 30,469 shares of restricted stock and RSUs held by Mr. Worth on December 31, 2021, based on the closing price of our Common Stock listed on The Nasdaq Capital Market on December 31, 2021 ($16.93 per share). Upon a Change in Control and a termination of employment under certain circumstances within one year after the Change in Control, restricted stock and RSUs awards will vest in full. 

(7)Represents the value attributable to the accelerated vesting of performance awards held by Mr. Worth on December 31, 2021, based on the closing price of our Common Stock listed on The Nasdaq Capital Market on December 31, 2021 ($16.93 per share). Upon a Change in Control and a termination of employment under certain circumstances within one year after a Change in Control, performance awards for which the performance period has not been completed will vest at the target (100%) level, pro-rated based on the number of days elapsed in the series and ends at the consummation of the last transaction in the series.

39


The amounts in the table below as of December 31, 2017 do not include payments and benefits to the extent they are provided on a nondiscriminatory basis to full-time salaried employees generally upon termination of employment. Such payments and benefits include accrued salary and vacation pay and distributions of plan balances under the Company’s 401(k) plan.

 

 

Termination by company
without Cause or by named
executive officer for Good
Reason, without a Change
in Control

 

Termination by company
without Cause or by named
executive officer for Good
Reason, following a
Change in Control

 

Change in control

 

Scott M. Clements,
President and Chief Executive Officer

 

 

 

 

 

 

 

Base salary(1)

 

$

450,000

 

$

450,000

 

$

—

 

Annual cash bonus(3)

 

400,000

 

400,000

 

—

 

Restricted stock(4)

 

 

 

615,686

 

615,686

 

Performance shares(5)

 

 

 

683,143

 

683,143

 

Total

 

$

850,000

 

$

2,148,829

 

$

1,298,829

 

 

 

 

 

 

 

 

 

Mark S. Hoyt,
Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

Base salary(1)

 

$

350,000

 

$

350,000

 

$

—

 

Annual cash bonus(3)

 

 

 

262,000

 

—

 

Restricted stock(6)

 

 

 

414,039

 

414,039

 

Performance shares (7)

 

 

 

298,877

 

298,887

 

Total

 

$

350,000

 

$

1,324,916

 

$

712,916

 

 

 

 

 

 

 

 

 

T. Kendall Hunt,
Chairman and former Chief Executive Officer

 

 

 

 

 

 

 

Base salary(1)

 

$

900,000

 

$

900,000

 

$

—

 

Annual cash bonus(2)

 

—

 

900,000

 

—

 

Restricted stock(8)

 

—

 

448,316

 

448,316

 

Performance shares(9)

 

—

 

1,236,015

 

1,236,015

 

Total

 

$

900,000

 

$

3,484,331

 

$

1,684,331

 

40


(1)

Upon a termination of Mr. Hunt’s employment without Cause or a termination for Good Reason by Mr. Hunt, he will receive an amount equal to two years of his then current base salary payable in monthly installments over two years. When a termination results from a termination without Cause or a termination for Good Reason by Mr. Hunt within 18 months following a Change in Control, Mr. Hunt instead will receive a lump sum payment equal to two times his annual base salary. In the case of Mr. Hoyt and Mr. Clements, pursuant to their employment agreements, the named executive officer will continue to receive regular payments of his base salary at the rate in effect at the time of termination, for his 12 months. In the case of Mr. Clements and Mr. Hoyt, when termination results from a termination without Cause or a termination for Good Reason by the named executive officer within eighteen months following a Change in Control, the named executive officer instead will receive a lump sum payment of the severance amount. Each named executive officer is subject to certain non-competition and non-solicitation restrictions for a fixed period following his termination.

performance period.  

(2)

Upon a termination of Mr. Hunt’s employment without Cause or a termination for Good Reason by Mr. Hunt, he will receive an amount equal to the cash bonus amount earned but unpaid (if any). When a termination results from a termination without Cause or a termination for Good Reason by Mr. Hunt within 18 months following a Change of Control, Mr. Hunt will receive an amount equal to two times the cash bonus target amount.

(3)

Upon a termination of Mr. Clements’ employment without Cause or a termination for Good Reason by Mr. Clements, he will receive an amount equal to his annual cash bonus target amount. Upon a termination of Mr. Hoyt’s employment without Cause or a termination for Good Reason by Mr. Hoyt, he will receive an amount equal to the cash bonus amount earned but unpaid (if any). When a termination results from a termination without Cause or a termination for Good Reason by Mr. Hoyt within 18 months following a Change of Control, Mr. Hoyt will receive an amount equal to the cash bonus target amount.

(4)

Represents the value of 44,294 shares of restricted stock held by Mr. Clements on December 31, 2017, based on the closing price of our common stock listed on The NASDAQ Capital Market on December 31, 2017 ($13.90 per share).

(5)

Represents the value of 49,147 shares of performance stock held by Mr. Clements on December 31, 2017, based on the closing price of our common stock listed on The NASDAQ Capital Market on December 31, 2017 ($13.90 per share).

(6)

Represents the value of 29,787 shares of restricted stock held by Mr. Hoyt on December 31, 2017, based on the closing price of our common stock listed on The NASDAQ Capital Market on December 31, 2017 ($13.90 per share).

(7)

Represents the value of 21,502 shares of performance stock held by Mr. Hoyt on December 31, 2017, based on the closing price of our common stock listed on The NASDAQ Capital Market on December 31, 2017 ($13.90 per share).

(8)

Represents the value of 32,253 shares of restricted stock held by Mr. Hunt on December 31, 2017, based on the closing price of our common stock listed on The NASDAQ Capital Market on December 31, 2017 ($13.90 per share).

(9)

Represents the value of 88,922 shares of performance stock held by Mr. Hunt on December 31, 2017, based on the closing price of our common stock listed on The NASDAQ Capital Market on December 31, 2017 ($13.90 per share).

41


CEO PAY RATIO

Beginning in 2018, we must disclose annually in our proxy statement the median of the annual total compensation of all employees (excluding the CEO), the annual total compensation of our CEO, and the ratio of the CEO compensation to the employee median compensation. We employ people in many countries in many different roles. We included all employees in our calculations.

The annual total compensation of the median employee was determined in the same manner as the total compensation for our CEO in the “Summary

Compensation Risk Assessment

We conducted an assessment of the risks associated with our compensation practices and policies and determined that risks arising from such policies and practices are not reasonably likely to have a material adverse effect on the Company. In conducting the assessment, we undertook a review of our compensation philosophies, our compensation governance structure and the design and oversight of our compensation programs. Overall, we believe that our programs include an appropriate mix of fixed and variable features, and short- and long-term incentives with compensation-based goals aligning with corporate goals. Centralized oversight helps ensure compensation programs align with the Company’s goals and compensation philosophies and, along with other factors, operate to mitigate against the risk that such programs would encourage excessive risk-taking.

CEO PAY RATIO

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we must disclose annually in our proxy statement the median of the annual total compensation of all employees (excluding the CEO), the annual total compensation of our CEO and the ratio of the CEO compensation to the employee median compensation. We employ people in many countries in many different roles. We included all employees employed by us on December 1, 2021 in our calculations.

The annual total compensation of the median employee was determined in the same manner as the total compensation for our CEO in the “2021 Summary Compensation Table” above. We determined the required pay ratio as follows:

 

·
●Calculating the total annual cash compensation (base salary and cash bonus long term cash incentive paid in 2017)2021) of all employees except the CEO, and then sorting those employees from highest to lowest;

 

·
●Determining the median employee from that list; and

·


●Calculating the total annual compensation of our CEO and of the median employee using the same methodology required for the 2021 Summary Compensation Table.

The total annual compensation forTable, but in the case of our CEO, for 2017 was $2,265,405. The total annual compensation for the median employee was $98,907, which includes anyannualizing his base salary bonus, long-term cash incentive awarded, overtime, contributions to pension plans, company contributions to defined contribution plans, company paid car and imputed income from employee benefit insurance premiums made by the Company. The resulting ratioin light of CEO pay to the pay of the Company’s median employee for 2017 is 23 to one.

42


Compensation of Directorshis mid-year hire date.

For the purposes of the calculation, Mr. Moynahan’s annualized salary and annualized life insurance premiums were used as the total CEO compensation. The total annual compensation for our CEO for 2021, as annualized as described above, was $8,900,118. The total annual compensation for the median employee was $90,900, which includes any base salary, bonus, equity awards, long-term cash incentive awarded, overtime, contributions to pension plans, Company contributions to defined contribution plans, Company paid car and imputed income from employee benefit insurance premiums made by the Company. The resulting ratio of CEO pay to the pay of the Company’s median employee for 2021 is 98 to one.

director compensation

COMPENSATION OF DIRECTORS

 

We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on our Board. In determining director compensation for 2021, our Management Development and Compensation Committee sought to provide our directors with a total economic value that adequately compensates them for the time and effort expended in serving on our Board. In determining director compensation for 2017, our Compensation Committee sought to provide our directors with a total economic value that adequately compensates them for the time and efforts expended in serving on the Board and committees of our Board and that aligns director compensation with the interests of our stockholders. The Management Development and Compensation Committee requested Pay Governance analyze the market competitiveness of the director compensation program to the peer group. As a result of the analysis, the Committee made recommendations to the board as follows: (a) to further tie compensation Company performance, the Board approved increasing the annual non-cash equity grant by $20,000 and decreasing the annual cash retainer by the same amount, and (b) to make certain increases to the chair and membership fees in order to better align director compensation with the peer group. Our Board approved the following compensation for non-employee directors effective April 1, 2021:

    
Director annual retainer: $40,000
Lead Director (if occupied) fee: $10,000
Chair (if occupied) fee: $ 50,000
Audit Committee chair fee: $20,000
Audit Committee membership fee: $10,000
Finance and Strategy Committee chair fee: $10,000
Finance and Strategy Committee membership fee: $3,000
Management Development and Compensation Committee chair fee: $12,000
Management Development and Compensation Committee membership fee: $5,000
Corporation Governance and Nominating Committee chair fee: $7,500
Corporation Governance and Nominating Committee membership fee: $4,000
Annual non-cash equity grant (aggregate grant date fair value): $125,000

We do not pay separate director fees for meeting attendance. For 2021, the cash fees and annual retainers were paid on a quarterly basis in cash and, if applicable, were prorated based upon Board or chair service during the calendar year.

On January 4, 2021, the Company’s then-serving non-employee directors Messrs. Boroditsky, Cullinane, and Moog, Dr. Zenner and Mses. Holley, Johnson and Hassan each were awarded 5,833 deferred RSUs, except for Mr. Fox. Mr. Fox chose to receive $35,000 of the chair fee in equity and was awarded 7,000 deferred RSUs. The awards vested on January 4, 2022, the first anniversary of the grant date, except for Messrs. Cullinane and Moog’s and Mr. Fox’s awards, which vested upon their respective retirements from our Board effective June 9, 2021, for Messrs. Cullinane and Moog, and August 4, 2021, for Mr. Fox, pursuant to approval of our Board. The expense for each of the awards was accelerated and recognized in the quarterly period in which the vest occurred. Ms. Hassan forfeited her award upon her resignation from the Board on March 1, 2021. On April 6, 2021, following election to our Board, Mr. Capers was awarded a pro-rated equity grant of 6,726 deferred RSUs. The award vested on April 6, 2022, the first anniversary of the grant date. On June 9, 2021, following appointment to our Board, Ms. Garg and Mr. McConnell were each awarded a pro-rated equity grant of 2,408 deferred RSUs. The awards will vest on June 9, 2022, the first anniversary date.

All equity awards granted to non-employee directors, including deferred RSUs, are subject to accelerated vesting upon death, disability or change in control for all awards to the Company’s non-employee directors. Payment of each director’s equity award(s) is deferred until the earlier of the director’s cessation of service or a change in control.

70 

2021 DIRECTOR COMPENSATION TABLE

The table below sets forth the fees earned by each non-employee director in 2021. While serving as the Chief Executive Officer and President of the Company, neither Mr. Moynahan nor Mr. Clements received any additional compensation for his service on our Board during a portion of 2021. Please see the 2021 Summary Compensation Table for the compensation received by Messrs. Moynahan and Clements with respect to 2021. 

          
  Fees Earned     
  or Paid Stock   
Name in Cash Awards (7) Total
Marc D. Boroditsky (1) $47,313 $105,000 $152,313
Garry L. Capers (2) $37,500 $93,750 $131,250
Michael P. Cullinane (1)(3) $30,000 $ 105,000 $135,000
John N. Fox, Jr. (1)(6) $41,416 $105,000 $146,416
Sarika Garg (5) $23,000 $62,500 $85,500
Naureen Hassan (1) (4) $8,333 $— $8,333
Jean K. Holley (1) $55,416 $105,000 $160,416
Marianne Johnson (1) $52,916 $105,000 $157,916
Michael McConnell (5) $31,750 $62,500 $94,250
Matthew Moog (1) (3) $24,500 $ 105,000 $129,500
Alfred Nietzel (1) $72,916 $105,000 $ 177,916
Marc Zenner (1) $61,166 $105,000 $166,166

(1)On January 4, 2021, the Company’s then-serving non-employee directors – Messrs. Boroditsky, Cullinane, Moog, Nietzel, Dr. Zenner and Mses. Holley, Hassan and Johnson – each were awarded 5,833 deferred RSUs, except for Mr. Fox.  Mr. Fox voluntarily chose to convert his $35,000 of the Chair from cash to equity and therefore he was awarded 7,000 deferred RSUs. The awards were granted under our 2019 Omnibus Incentive Plan and vested on January 4, 2022, the first anniversary of the grant date, except for Messrs. Cullinane, Moog and Fox’s awards, which vested upon their resignations from our Board pursuant to the unanimous consent of our Board. Mr. Moog did not stand for re-election at the 2021 Annual Meeting, and Mr. Cullinane announced his resignation at the 2021 Annual Meeting. Mr. Fox resigned from the Board on August 4, 2021. Ms. Hassan forfeited her award upon her resignation on March 1, 2021. Upon their respective retirements from our Board, effective June 9, 2021, for Messrs. Cullinane and Moog, and August 4, 2021, for Mr. Fox, their awards vested in full, upon approval by our Board. The expense for each of the awards was accelerated and recognized in the quarterly period in which the vesting occurred.

(2)Mr. Capers joined the Board effective April 6, 2021.

(3)Mr. Cullinane and Mr. Moog stepped down from the Board at the 2021 Annual Meeting of Stockholders.

(4)Ms. Hassan stepped down from the Board on March 1, 2021.

(5)Ms. Garg and Mr. McConnell joined the Board on June 9, 2021.

(6)Mr. Fox stepped down from the Board on August 4, 2021.

(7)The aggregate number of unvested stock awards outstanding on December 31, 2021, for the non-employee directors was as follows: for each of Messrs. Boroditsky and Nietzel, Dr. Zenner and Mses. Holley and Johnson – 5,833 RSUs; for Mr. Capers – 3,539 RSUs; and for Ms. Garg and Mr. McConnell – 2,408 RSUs. Messrs. Cullinane, Fox and Moog and Ms. Hassan had no outstanding awards as of December 31. 2021 due to their respective retirements and resignation.

71 

DIRECTOR STOCK OWNERSHIP POLICY

Excluding amounts payable for serving as a chair or member of a committee, approximately 75% of the directors’ fees are payable in equity. Our Board has adopted a stock ownership policy for directors that directors are required to satisfy within three years after first becoming subject to the guidelines. The policy provides that a director’s fees shall be paid in part in deferred equity equal in value to at least 50% of such director’s aggregate fees (excluding amounts payable for serving as a chair or member of a committee) until the director holds stock valued at more than three times our Board’s aggregate annual director fees (excluding amounts payable for serving as a chair or member of a committee). As of April 11, 2022, all of our non-employee directors were in compliance with this policy or were within the transition period. 

DIRECTOR STOCK TRADING POLICY

The Company’s Officer and Director stock trading policy prohibits directors, executive officers and other employees from the following trading activities in OneSpan securities: short selling; buying or selling put options, call options or other derivative securities relating to the Company; engaging in hedging transactions, such as “costless collars” and forward sales contracts for OneSpan securities; purchasing OneSpan securities on margin; borrowing against OneSpan securities in a margin account; or pledging OneSpan securities.

In 2020, our Board approved a supplement to the stock trading policy prohibiting each director and his or her immediate family members and affiliates from selling, transferring or otherwise disposing of any securities issued by or related to the Company while such director is serving on our Board or within 10 days after such director ceases to serve on our Board (other than due to such director’s death, disability or failure to be re-elected by the Company’s stockholders). The supplement is in effect until August 19, 2022.

TRANSACTIONS WITH RELATED PERSONS

In 2020, our Board adopted a formal written policy for the review and, where appropriate, approval and ratification, of related person transactions (the “Related Person Transaction Policy”). For purposes of the Related Person Transaction Policy, related person transactions include any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which: (i) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, (ii) the Company or any of its consolidated subsidiaries is or will be a participant and (iii) an executive officer, director, director nominee or a beneficial owner of 5% or more of any class of voting securities of the Company, or an immediate family member of any of them, has or will have a direct or indirect material interest (including any indebtedness or guarantee of indebtedness), subject to certain exceptions identified in the Related Person Transaction Policy. Each related person transaction must be approved or ratified in accordance with the guidelines set forth in the Related Person Transaction Policy by the Audit Committee or the disinterested members of our Board.

The Audit Committee or other reviewing directors, in the course of their review and approval or ratification of a related person transaction under the Related Person Transaction Policy consider, among other things:

●the size of the transaction and the amount payable to a related person;

●the nature of the interest of the related person in the transaction;

●whether the transaction may involve a conflict of interest;

●whether the transaction was undertaken in the ordinary course of business of the Company;

●whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unaffiliated third parties; and

●any other information regarding the related person transaction or related person that would be material to investors in light of the circumstances of the transaction.

The Audit Committee or other reviewing directors may only approve a related person transaction if they determine in good faith that, based on all of the relevant information available to them, the transaction is in the best interests of the Company and its stockholders.


In addition to the Related Person Transaction Policy, all directors and employees certify their compliance with the Company’s Code of Ethics and Conduct on an annual basis, and each director and executive officer of the Company responds annually to a list of questions in connection with the preparation of our Annual Report and proxy materials for our annual meeting of stockholders. These questions include inquiries with respect to related person transactions reportable pursuant Item 404(a) of Regulation S-K. Each director and executive officer is obligated to notify OneSpan immediately of any subsequent changes to the information. Should a related person transaction be identified through any of the aforementioned means, the Audit Committee or other reviewing directors would review the transaction in accordance with the Related Person Transaction Policy.

Since January 1, 2021, there were no related party transactions between us and any of our executive officers, directors, director nominees or beneficial owners of 5% or more of our Common Stock, or an immediate family member of any of them, that require disclosure under Item 404 of Regulation S-K.

OTHER MATTERS

COSTS OF SOLICITATION

We are required by law to convene an annual meeting of our stockholders at which directors are elected. Because our shares are widely held, it would be impractical for our stockholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our stockholders. The Company will bear the expenses of calling and holding the Annual Meeting and the solicitation of proxies therefor. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. In addition to soliciting proxies by mail, directors and officers may solicit proxies on behalf of our Board, without additional compensation, personally, by telephone, via the Internet or via email. We may also solicit proxies by email from stockholders who are our employees or who previously requested to receive proxy materials electronically.

STOCKHOLDER PROPOSALS FOR OUR 2023 PROXY MATERIALS

Any stockholder proposal intended to be included in our proxy materials for our 2023 annual meeting of stockholders (the “2023 Annual Meeting”) pursuant to Rule 14a-8 of the Exchange Act must be received by the Company at 121 West Wacker Drive, 20th Floor, Chicago, Illinois 60601, Attention: Corporate Secretary, by no later than December 30, 2022, being 120 days prior to the first anniversary of the date that this Proxy Statement was released to stockholders in connection with the Annual Meeting, and must otherwise be in compliance with applicable SEC rules. However, if the date of the 2023 Annual Meeting has been changed by more than 30 days from the date of the Annual Meeting, then a stockholder proposal submitted for inclusion in our proxy statement must be received by us a reasonable time before we begin to print and mail our proxy materials for the 2023 Annual Meeting. The submission of a stockholder proposal pursuant to Rule 14a-8 does not guarantee that it will be included in our proxy materials.


DIRECTOR NOMINATIONS BY STOCKHOLDERS AND

STOCKHOLDER PROPOSALS OF OTHER BUSINESS

Any stockholder nomination of a candidate for election to our Board and any stockholder proposal of other business intended to be presented for consideration at the 2023 Annual Meeting (but that will not be included in the Company’s proxy statement pursuant to Rule 14a-8 of the Exchange Act) must be received by us in a timely manner and otherwise in accordance with our By-laws not later than 5:00 p.m. Central Time on the 90th day, nor earlier than 5:00 p.m. Central Time on the 120th day, prior to the first anniversary of the Annual Meeting (June 8, 2023). However, if the date of the 2023 Annual Meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder must be received not later than 5:00 p.m. Central Time on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company.

In addition to satisfying the foregoing requirements under our By-laws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 9, 2023.

The written notice must include the information required by our By-laws. The Company reserves the right to disregard any stockholder nomination of a candidate for election to our Board or stockholder proposal of other business that does not comply with the requirements of our By-laws or any applicable laws or regulations. A copy of our By-laws is available on our website, investors.onespan.com, in the governance section of our investor relations webpage.

ANNUAL REPORT

Our Annual Report is being furnished together with this Proxy Statement. You can review and download a copy of our Annual Report by accessing our website, https://investors.onespan.com, or stockholders may request paper copies, without charge, by writing to OneSpan Inc., 121 West Wacker Drive, 20th Floor, Chicago, IL 60601, Attention: Corporate Secretary. The Company’s filings with the SEC also are available to the public at the SEC’s website at www.sec.gov. The information on the Company’s website and the SEC’s website are not part of this Proxy Statement.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Proxy Statement contains forward-looking statements within the meaning of applicable U.S. securities laws, including statements regarding our expectations, beliefs, plans, operations and strategies relating to our business, the future of our business and planned investor updates. Forward-looking statements may be identified by words such as “seek”, “believe”, “plan”, “estimate”, “anticipate”, “expect”, “intend”, “continue”, “outlook”, “may”, “will”, “should”, “could”, or “might”, and other similar expressions. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward looking statements. Factors that could materially affect our business and financial results include, but are not limited to: the impact of the COVID-19 pandemic and actions taken to contain it; the potential effects on sales caused by a limited customer base; the impact of a multi-year business transformation, including the replacement of multiple senior executives; the potential return of a worldwide recession and/or regional economic downturns; disruptions in markets or the European Union that may adversely affect the Company’s liquidity and capital resources; accounting-related costs resulting from ineffective maintenance over the financial reporting systems; modest profit accumulations over the Company’s long operating history; the Company derives revenue from a limited number of products; substantial expenses caused by a long sales cycle for the Company’s products and technology; reliance on a limited number of suppliers; losses incurred due to inventory-related issues; establishment and maintenance of strategic relationships with companies; inability to maintain effective product distribution channels; reliance on key personnel to maintain the success of the business; failure to attract and retain qualified personnel; the operational and financial effects caused by a change in the effective tax rate, worldwide income tax provisions, changes in global tax laws or other tax accruals; the operational and financial risks caused by acquisitions, divestures and other strategic transactions; fluctuations in revenue caused by interpretation or application of accounting rules; the risks associated with the development of business and market strategies to evolve the business; changes in the market share due to significant competition; potential decreases of average selling prices; reliance on capital to grow the business; variations in quarterly operating results caused by seasonality; effects of the stock repurchase program on the price of stock; substantial ownership of common stock by a small group of persons; difficulties in effectuating a takeover due to provisions in the Company’s charter and Delaware laws; reduction in voting power of common stock caused by future issuances of blank check preferred stock; actions of activist stockholders; the potential effects of technological changes; he increasing frequency and sophistication of cybersecurity attacks; reliance on Amazon Web Services; use of third-party, open-source software; necessity to attract and retain highly skilled technical personnel for research and development; uncertainty surrounding the success of research and development; failure to effectively manage the Company’s product and service lifestyles; SaaS offerings; dependence on proprietary technology and intellectual property; lack of competitive advantages provided by the Company’s patents; warranty and product liability risks; impacts of government regulation on technology imports and exports; use of cryptographic technology in the authentication of products; risk associated with international operations; issues caused by fluctuations to foreign currency exchange rate; operational effects caused by changes in the regulatory environment in Europe or Asia regarding privacy and data protection regulations; compliance with governmental regulations setting environmental standards; the departure of the United Kingdom from the European Union; actions by China in Hong Kong; impacts of climate change regulations; impacts of conflict mineral regulations; investor difficulties associated with making breach claims with employees located outside of the United States; heightened risk associated with doing business in countries with a history of corruption; and delays in global transportation and disruptions in supply chains, as well as those factors described in the “Risk Factors” section of our Annual Report. Our filings with the Securities and Exchange Commission (the “SEC”) and other important information can be found in the Investor Relations section of our website at investors.onespan.com. We do not have any intent, and disclaim any obligation, to update the forward-looking information to reflect events that occur, circumstances that exist or changes in our expectations after the date the Proxy Statement, except as required by law.

Unless otherwise noted, references in this Proxy Statement to “OneSpan”, “Company”, “we”, “our”, and “us” refer to OneSpan Inc. and its subsidiaries.

74 

INCORPORATION BY REFERENCE

To the extent that this Proxy Statement is incorporated by reference into any other filing by us under the Securities Act of 1933, as amended, or the Exchange Act, the sections of this Proxy Statement entitled “Compensation Committee Report” and “Report of the Audit Committee” will not be deemed incorporated unless specifically provided otherwise in such filing, to the extent permitted by the rules of the SEC. Such sections shall also not be deemed to be “soliciting material” or to be “filed” with the SEC. Information contained on or connected to our website is not incorporated by reference into this Proxy Statement and should not be considered part of this Proxy Statement or any other filing that we make with the SEC.

OTHER MATTERS

Management does not intend to present and does not have any reason to believe that others will present, any item of business at the Annual Meeting other than those specifically set forth in the Notice of Annual Meeting. If other matters are properly presented for a vote, however, the persons named in the enclosed proxy and acting thereunder will have discretion to vote on those matters in accordance with their judgment to the same extent as the person who signed the proxy would be entitled to vote.

* * * * *

YOUR VOTE IS VERY IMPORTANT. It is important that your voice be heard and your shares be represented at the Annual Meeting whether or not you are able to attend. We urge you to vote TODAY by completing, signing and dating the enclosed proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed proxy card or Notice of Internet Availability to vote via the Internet or by telephone. Please submit a proxy as soon as possible, so that your shares can be voted at the Annual Meeting in accordance with your instructions.

By Order of the Board and that aligns director compensation with the interests of the Company’s stockholders. The Board approved the following compensation for non-employee directors for 2017:Directors,

(GRAPHIC) 

 

Director annual retainer:

 

$

60,000

 

Audit Committee chairman fee:

 

$

12,500

 

Audit Committee membership fee:

 

$

4,000

 

Compensation Committee chairman fee:

 

$

10,000

 

Compensation Committee membership fee:

 

$

3,000

 

Corporation Governance and Nominating Committee chairman fee:

 

$

7,500

 

Corporation Governance and Nominating Committee membership fee:

 

$

3,000

 

Non-cash equity component:

 

$

100,000

 

Matthew Moynahan

President and Chief Executive Officer

We do not pay separate director fees for meeting attendance. For 2017, the chairman fees, committee membership fees and annual retainers were paid on a quarterly basis in cash.

The non-cash equity component was granted on January 5, 2017 to each of the non-employee directors in the form of 6,826 shares of deferred common stock. The awards vested and became non-forfeitable on January 5, 2018, on the first anniversary date of the grant. Vesting is accelerated upon death, disability or change in control. Payment of each director’s equity award(s) are deferred until the earlier of the director’s cessation of service or a change in control.

Director Stock Ownership Policy

Approximately 60% of the directors’ fees are payable in deferred common stock. All of the directors, except for Mr. Gilliland who joined the Board in December 2017, have over 40,000 shares of vested deferred common stock. The Board has adopted a stock ownership policy. The policy provides that a Director’s annual retainer shall be paid in part in deferred stock equal in value to at least 50% of such Director’s aggregate annual retainer (excluding amounts payable for Committee Chair or membership) until the Director holds stock valued at no more than three times the Board’s aggregate annual retainer (excluding amounts payable for Committee Chair or membership).

Director Stock Trading Policy

The Company’s Officer and Director stock trading policy prohibits officers from the following trading activities in VASCO securities: short selling; buying or selling put options, call options, or other derivative securities relating to the Company; engaging in hedging transactions, such as “costless collars” and forward sales contracts for VASCO securities; purchasing VASCO securities on margin; borrowing against Company securities in a margin account; or pledging VASCO securities.

43


Director Compensation Table

The table below sets forth the fees earned by each non-employee director in 2017.

Name(1)

 

Fees Earned 
or Paid 
in Cash (2)

 

Stock 
Awards 
(3)(4)

 

Total

 

Michael Cullinane

 

$

78,500

 

$

100,000

 

$

178,500

 

John Fox

 

$

77,000

 

$

100,000

 

$

177,000

 

Art Gilliland

 

$

14,166

 

—

 

$

14,166

 

Jean Holley

 

$

74,500

 

$

100,000

 

$

174,500

 

Matthew Moog

 

$

70,000

 

$

100,000

 

$

170,000

 

(1)

The aggregate number of unvested stock awards outstanding on December 31, 2017 for each of the Company’s non-employee directors was 6,826 deferred shares. The deferred shares are discussed further in “Compensation of Directors,” above, and in footnotes 3 and 4, below.April 29, 2022 

 

(2)

Includes annual retainer and fees for committee memberships and chairs. Mr. Gilliland received a pro-rated amount following his appointment to the Board in December 2017.

75 

 

(3)

The amounts reflected represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718.

 

(4)

On January 5, 2017, each of the Company’s non-employee directors, Messrs. Cullinane, Fox, and Moog and Ms. Holley, each were awarded 6,826 shares of deferred common stock, as described above under “Compensation of Directors.” The grant date value of each director’s award calculated in accordance with FASB ASC Topic 718 was $100,000. All awards were granted under VASCO’s 2009 Equity Incentive Plan.

ANNEX A 

NON-GAAP RECONCILIATION

Below is a reconciliation of the non-GAAP financial measure set forth in this Proxy Statement under “Executive Summary” of the CD&A on page 46.

We report financial results in accordance with GAAP. We also evaluate our performance using certain non-GAAP operating metrics, namely Adjusted EBITDA. Our management believes that this measure provides useful supplemental information regarding the performance of our business and facilitates a comparison to our historical operating results.

This non-GAAP financial measure is not a measure of performance under GAAP and should not be considered in isolation or as an alternative or substitute for the most directly comparable financial measure calculated in accordance with GAAP. While we believe that this non-GAAP financial measure is useful within the context described below, it is incomplete and is not a measure that should be used to evaluate our full performance or our prospects. Such an evaluation needs to consider all of the complexities associated with our business including, but not limited to, how past actions are affecting current results and how they may affect future results, how we have chosen to finance the business and how taxes affect the final amounts that are or will be available to stockholders as a return on their investment. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure is found below.

Adjusted EBITDA

We define Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, long-term incentive compensation and certain non-recurring items, including acquisition-related costs, lease exit costs, rebranding costs and accruals for legal contingencies. We use Adjusted EBITDA as a simplified measure of performance for communicating our performance to investors and analysts and for comparisons to other companies within our industry. As a performance measure, we believe that Adjusted EBITDA presents a view of our operating results that is most closely related to serving our customers. By excluding interest, taxes, depreciation, amortization, long-term incentive compensation and certain non-recurring items, we are able to evaluate performance without considering decisions that, in most cases, are not directly related to meeting our customers’ requirements and were either made in prior periods (e.g., depreciation, amortization, long-term incentive compensation, lease exit costs and reversal of a prior period legal contingency accrual), deal with the structure or financing of the business (e.g., interest, acquisition-related costs and rebranding costs) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). Similarly, we find that our comparison of our results to those of our competitors is facilitated when we do not consider the impact of these items.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands, unaudited)

  Twelve Months Ended
December 31,		 
  2021  2020 
Net loss $(30,584) $(5,455)
Interest income (expense), net  1   (404)
Provision (benefit) for income taxes  4,441   2,035 
Depreciation and amortization of intangible assets  8,926   12,003 
Long-term incentive compensation  5,202   6,001 
Non-recurring items (1)  6,951   — 
Adjusted EBITDA $(5,063) $14,180 


 

 

Compensation Committee Interlocks and Insider Participation

The current members of our Compensation Committee are Mr. Cullinane, Mr. Fox, Mr. Gilliland, Ms. Holley and Mr. Moog. None of these individuals was at any time during fiscal year 2017 or was formerly an officer or employee of VASCO. In addition, none of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

44


PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS

Pursuant

ONESPAN INC
121 WEST WACKER DRIVE, STE 2050
CHICAGO,   ILLINOIS 60601
ATTN: SUZANNE MASO

VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for consideration attransmit your voting instructions and for inclusionelectronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in our proxy statement relatinghand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

During The Meeting - Go to www.virtualshareholdermeeting.com/OSPN2022 You may attend the next annual meeting of stockholders by submitting their proposals tovia the Company in a timely manner. In order to be considered for inclusionInternet and vote during the meeting. Have the information that is printed in the proxy statement relating to our 2019 annual meeting of stockholders, stockholder proposals must be receivedbox marked by the Company at our principal executive offices not less than 120 days prior to May 1, 2019arrow available and must otherwise comply withfollow the requirements of Rule 14a-8 and of the Company’s By-laws. For business to be properly brought before a stockholder meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, such notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the meeting; the written notice must include the information required by Article I, Section 10 of the Company’s By-laws. A copy of the Company’s By-laws is available on our website,  www.vasco.com/investors  in the corporate governance section of our investor relations webpage.instructions.

VOTE BY PHONE - 1-800-690-6903

PROXY SOLICITATION

The Company will solicit proxies by mail. Proxies may also be solicited by directors, officers or regular employees personally or by mail, telephone or telegraph, but such individuals will not be specially compensated for these services. Brokers, custodians, nominees and fiduciaries will be requested to forward the soliciting material to the beneficial owners of common stock, and the Company will reimburse them for their expenses in doing so. The full cost of the preparation and mailing of the Proxy Statement and accompanying materials and the related proxy solicitations will be borne by the Company.

TRANSACTIONS WITH RELATED PERSONS

We have not established a formal policy for the review of related person transactions because such transactions are generally prohibited under our Code of Ethics and Conduct, which is applicable to all of our directors and employees. A copy of the Code of Ethics and Conduct is available on our website, www.vasco.com/investors in the corporate governance section of our investor relations webpage.

In addition to having all directors and employees certify their compliance with the Code of Ethics and Conduct on an annual basis, each director and executive officer of the Company responds annually to a list of questions in connection with the preparation of our Proxy Statement and our Annual Report on Form 10-K. These questions include inquiries with respect to related person transactions reportable pursuant Item 404(a) of Regulation S-K. Each director and executive officer is obligated to notify VASCO immediately of any subsequent changes to the information provided in his or her responses to the question.

Should a related person transaction be identified through any of the aforementioned means, the Board of Directors or a committee of independent directors, as appropriate, would review the transaction.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Directors, executive officers and beneficial owners of more than 10% of the outstanding shares of common stock are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) forms that they file. Based solely on review of the copies of such forms or written representations that no reports under Section 16(a) were required, we believe that, for the year ended December 31, 2017, all of the Company’s directors, executive officers and greater than 10% beneficial owners complied with Section 16(a) filing requirements applicable to them.

45


OTHER MATTERS

Management does not intend to present, and does not have any reason to believe that others will present, any item of business at the Annual Meeting other than those specifically set forth in the Notice of Annual Meeting. If other matters are properly presented for a vote, however, the persons named in the enclosed proxy and acting thereunder will have discretion to vote on those matters in accordance with their judgment to the same extent as the person who signed the proxy would be entitled to vote.

If you and other residents at your mailing address own common stock in street name, your broker or bank may have sent you a notice that your household will receive only one annual report and proxy statement for each company in which you hold shares through that broker or bank. This practice of sending only one copy of proxy materials is known as householding. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the process. If the foregoing procedures apply to you, your broker has sent one copy of our Annual Report and Proxy Statement to your address. You may revoke your consent to householding at any time by sending your name, the name of your brokerage firm, and your account number to Householding Department, 51 Mercedes Way, Edgewood, New York 11717 (telephone number: 1-800-542-1061). The revocation of your consent to householding will be effective 30 days following its receipt. In any event, if you did not receive an individual copy of this proxy statement or our annual report, we will send a copy to you if you address your written request to or call VASCO Data Security International, Inc., 121 West Wacker Drive, Suite 2050, Chicago, IL 60601, Attention: Secretary (telephone number: 312-766-4001). If you are receiving multiple copies of our Annual Report and Proxy Statement, you can request householding by contacting our Secretary in the same manner.

By Order of the Board of Directors,

Steven R. Worth

Secretary

April 27, 2018

46


If you would like to reduce the costs incurred by our company in mailing proxy materials, Use any touch-tone telephone to transmit your voting instructions. Vote byinstructions up until 11:59 P.M. ET p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, 123,456,789,012.12345 NY 11717.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the
The Board of Directors recommends you vote FOR the following: nominee(s)
1.To elect seven directors to serve on the line below. 0 0 0 1. ElectionBoard of Directors Directors;
Nominees 01 T. Kendall Hunt 06 Art Gilliland 02
ForAgainstAbstain
1a.

Marc Boroditsky

☐☐☐
1b.

Garry L. Capers

☐☐☐
1c.Sarika Garg☐☐☐
1d.Marianne Johnson☐☐☐
1e.Michael P. Cullinane 07 Scott M. Clements 03 John N. Fox, Jr. 04 Jean K. Holley 05 Matthew Moog McConnell☐☐☐
1f.Alfred Nietzel☐☐☐
1g. Marc Zenner☐☐☐
The Board of Directors recommends you vote FOR the following proposal: 2. Ratification of the appointment of KPMG LLP as the Company's registered public accounting firm for the fiscal year ending December 31, 2018. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. ForAgainst Abstain 0 0 0 John Sample attorney, executor, administrator, or other fiduciary, please give full ANY CITY, ON A1A 1A1 partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1proposals 2 0000378934_1 R1.0.1.17 and 3.ForAgainstAbstain
2.To hold an advisory vote on executive compensation; and☐☐☐

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 1234 ANYWHERE STREET SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Usepartnership name by authorized officer.

ForAgainstAbstain
3.To ratify the Internet to transmit your voting instructions andappointment of KPMG LLP as the Company's independent registered public accounting firm for electronic delivery of information. Vote by 11:59 P.M. ET on 06/12/2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 on 06/12/2018. Have your proxy card in hand when you call and then follow the instructions. John Sample 234567VOTE BY MAIL 1234567 1234567NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 Vasco Data Security International, Inc. 121 West Wacker Drive, Suite 2050 Chicago, IL 60601 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567fiscal year 2022.☐☐☐

Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)Date

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com

ONESPAN INC

Annual Meeting of Stockholders

June 8, 2022 10:00 AM Central Time

This proxy is solicited by the Board of Directors

The stockholder(s) hereby appoint(s) Matthew Moynahan and MJ Capodanno, or either of them, as proxies, each with the power to appoint their substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of ONESPAN INC that the stockholder(s) is/ are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 AM, Central Time on June 8, 2022, at www.virtualshareholdermeeting.com/OSPN2022, and any adjournment or postponement thereof.

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations.

Continued and to be signed on reverse side

 


Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement are available at www.proxyvote.com VASCO DATA SECURITY INTERNATIONAL, INC. Annual Meeting of Stockholders June 13, 2018 10:00 AM This proxy is solicited by the Board of Directors The stockholder(s) hereby appoints Scott M. Clements and Steven Worth, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of VASCO DATA SECURITY INTERNATIONAL, INC., a Delaware corporation, that the stockholder(s) is/are entitled to vote at the Annual Meeting of stockholders to be held at 10:00 AM, CDT on June 13, 2018, at 121 West Wacker Drive, Suite 2400, Chicago, IL 60601, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted FOR the election of directors of the nominees named in Proposal 1, and FOR the approval of Proposal 2, in accordance with the Board of Directors' recommendations. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. At this time, management knows of no such other business. Continued and to be signed on reverse side 0000378934_2 R1.0.1.17