Director and Management Stock Ownership Guidelines
Pursuant to stock ownership guidelines adopted by the Board in February 2016, with a five-year phase-in period, non-employee memberseach nonemployee member of the Board areis required to own shares of Companythe Company's common stock having a value equal to or greater than three times theirthe annual cash Board retainer, which is currently set at $35,000$40,000 per year. Unexercised stock options do not count toward fulfillment of this ownership requirement. Each director will havehas until the later of (i) February 2021 and (ii) five years from the time he or she is elected to the Board, to meet the stock ownership guidelines.
Effective September 2020, the Company adopted additional stock ownership guidelines to align the interests of management with those of stockholders of the company. Under these guidelines, the CEO will be expected to own common stock of the Company having a value equal to or greater than three times his or her base salary and the other executive officers are expected to own common stock of the Company having a value equal to or greater than one times his or her base salary. Each executive has the goal of meeting this threshold by the later of (i) September 2025 and (ii) the fifth anniversary of his or her first employment as an executive officer.
All Company shares held by the director or executive officer, his or her related trusts and immediate family members, shares underlying restricted stock units or performance stock units, and 50% of the in-the- money value of vested stock options shall be included in the calculations.
As of March 31, 2022, each of our nonemployee directors were in compliance with our stock ownership guidelines or had additional time under the terms of the guidelines within which to fulfill the requirement.
Deferred Compensation Plan
Effective October 1, 2020, the Company adopted the Iteris, Inc. Non-Qualified Deferred Compensation Plan (the “DC Plan”). The DC Plan consists of two plans, one that is intended to be an unfunded arrangement for eligible key employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act, or ERISA, and one for the benefit of nonemployee members of our Board. Under the DC Plan, our nonemployee directors may elect to defer up to 100% of any RSU awards and up
to 100% of their cash compensation for service as a director. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon. For a description of the terms of the DC Plan, see “Executive Compensation and Other Information — Non-Qualified Deferred Compensation for Fiscal 2022” herein.
Compensation Committee Interlocks and Insider Participation
None of our executive officers serves as a member of the Board or Compensation Committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board or Compensation Committee. No interlocking relationship exists between any member of the Board and any member of the Compensation Committee (or other committee performing equivalent functions) of any other company.
ProposalROPOSAL 2: 2: AdvisoryDVISORY VoteOTE RegardingEGARDING ExecutiveXECUTIVE CompensationOMPENSATION
In accordance with Section 14A of the Exchange Act, stockholders have the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers. Commonly known as a “say-on-pay”“say-on-pay” vote, this proposal gives our stockholders the opportunity to express their views on our executive compensation policies and programs and the compensation paid to the named executive officers.
We are asking our stockholders to indicate their support of the compensation of our named executive officers, as described in this proxy statement by approving the following resolution at the Annual Meeting:Meeting:
““RESOLVED, that the compensation paid to the Company’sCompany’s named executive officers, as disclosed in the Company’sCompany’s proxy statement for the 20202022 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion, is hereby approved.””
The Board of Directors recommends a vote FOR approval of the advisory resolution because it believes that the Company’sCompany’s executive compensation policies and practices are effective in achieving the Company’sCompany’s goals of attracting, retaining, and motivating highly talented executives, rewarding sustained financial and operating performance, and aligning the executives’executives’ interests with those of the stockholders.
The vote on this proposal is advisory and therefore not binding on the Company, the Board of Directors or the Compensation Committee. Although the vote is non-binding, the Board of Directors and the Compensation Committee will review and consider the voting results in future decisions regarding executive compensation.
Stockholder Approval
The affirmative vote of a majority of the common stock, present or represented by proxy and entitled to vote at the Annual Meeting, will be required for approval of this proposal.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote “FOR”“FOR” the advisory resolution approving the compensation of our named executive officers as disclosed in this proxy statement.
ExecutiveXECUTIVE OfficersFFICERS
The table below sets forth certain information, as of July 24, 2020,12, 2022, regarding our executive officers.
Name | | | Age | | | | | | | | | | | |
Name | | Age | | Capacities in Which Served | |
J. Joseph (“Joe”)Joe Bergera | | 58 | 56 | | | Chief Executive Officer, President and Director | |
Douglas L. Groves | | 60 | 58 | | | Chief Financial Officer, Senior Vice President of Finance and Secretary | |
Todd Kreter | | 62 | 60 | | | Senior Vice President and General Manager, Roadway Sensors | |
Ramin Massoumi | | | 47 | | | Senior Vice President and General Manager, Transportation Systems | Chief Technology Officer |
The following is a brief description of the capacities in which the above persons have served the Company and their business experience during at least the past five years. The biography of Mr. Bergera appears earlier in this proxy statement. See “Proposal 1:“Proposal 1: Election of Directors.””
Douglas L. Groveshas served as our Senior Vice President and Chief Financial Officer since he joined on December 4, 2019. Mr. Groves has more than 30 years of unique and highly valuable experience. Most recently, he served as Vice President, Chief Financial Officer and Treasurer of Ducommun, Inc., through June 2019, having joined the company in January 2013. Through December 2012, he held the position of Corporate Vice President and Chief Information Officer at Beckman Coulter, following a series of financial roles at the company beginning in January 1998. Beckman Coulter was acquired by Danaher Corporation in February 2011. Prior to joining Beckman Coulter, Mr. Groves was corporate controller of a privately held civil engineering firm and senior auditor and consultant at Deloitte && Touche. Mr. Groves holds an M.B.A. from the University of Southern California and a B.S. degree in Accountancy from California State University, Long Beach.
Todd Kreter haswas appointed Senior Vice President and Chief Technology Officer on June 1, 2022. Prior to that, Mr. Kreter served as ourSenior Vice President and General Manager, Advanced Sensors Technologies. From May 2014 until May 31, 2022, he held the title of Senior Vice President and General Manager, Roadway Sensors since May 2014.Sensors. Mr. Kreter served as our Senior Vice President, Sensors Development and Operations from May 2009 to May 2014 and as Vice President of Engineering from November 2007 to May 2009. Prior to joining us, Mr. Kreter served in a number of executive positions at Quantum Corporation, most recently as the VP Global Services from 2004 to January 2007, where he managed the company’scompany’s worldwide customer service organization. Mr. Kreter holds a B.S. degree in Mechanical Engineering from California State University, Fullerton.
Ramin Massoumi
has served as our Senior Vice President and General Manager, Transportation Systems since March 2015. Mr. Massoumi joined Iteris in 1998 and served in a number of executive and managerial positions prior to the promotion to his current position, most recently as our Vice President of Business Development from June 2011 to March 2015. Mr. Massoumi also serves as a director of the Intelligent Transportation Society of America’s National and California State Chapter Boards of Directors and as a lecturer of upper division courses on transportation engineering, ITS and multi-modal operation at University of California, Irvine. Mr. Massoumi holds a B.S. degree in Civil Engineering from the University of California, Irvine, and an M.S. degree in Engineering from the University of California, Berkeley, and an M.B.A. from the University of Southern California.
ExecutiveXECUTIVE COMPENSATION Compensation andAND OtherTHER InformationNFORMATION
Executive Compensation
The following is a summary of the compensation policies, plans and arrangements for our executive officers. This summary should be read in conjunction with the Summary Compensation Table and related disclosures set forth below. We are eligible to, and have chosen to, comply with the executive compensation disclosure rules applicable to a “smaller“smaller reporting company,”” as defined in the applicable SEC rules, but we have also voluntarily included additional disclosure about our executive compensation program to help our stockholders understand our executive compensation program. This section discusses the principles underlying our compensation policies for ourthe officers who are named in the “Summary“Summary Compensation Table” below, who weTable” below. We refer to these individuals as our “named“named executive officers”officers” or “NEOs”“NEOs” for Fiscal 2020:2022:
••
J. Joseph (“Joe”)Joe Bergera, our Chief Executive Officer, President and Director;
Director;
••
Douglas L. Groves, our Chief Financial Officer, Senior Vice President of Finance and Secretary; and
Secretary;
••
Todd Kreter, currently our Senior Vice President and Chief Technology Officer, who served as our Senior Vice President & General Manager, Advanced Sensors Technologies during Fiscal 2022s; and
•Ramin Massoumi, our Senior Vice President and& General Manager, Transportation Systems.Consulting Solutions, who served as such until December 31, 2021.
•
Andrew Schmidt, our former Chief Financial Officer, Vice President of Finance and Secretary.
Fiscal 20202022 Business Results Summary
We are a provider of smart mobility infrastructure management solutions. Municipalities, government agencies, and other transportation infrastructure providers use our solutions to monitor, visualize, and optimize mobility infrastructure to help ensure roads are safe, travel is efficient, and communities thrive. Our reportable segments consist of: Roadway Sensors, Transportation Systems,During another year of navigating the COVID-19 pandemic and priorthe challenges it has brought to May 5, 2020, Agriculture and Weather Analytics (“AWA”). During Fiscal 2020,our everyday lives, we made significant progress across a range of financial and strategic dimensions including the highlights below.in Fiscal 2022, despite significant global supply chain disruptions and associated materials price variances. Key financial results include:
••
Reported Fiscal 20202022 total revenue of $114.1$133.6 million, representingup 14% year over year;
•Net loss from continuing operations of $6.9 million, or $(0.16) per share due to a 15% increasesecond quarter noncash project write-off and increased costs related to global supply chain disruptions;
•Adjusted EBITDA(1) of $4.5 million, a $3.0 million decrease year over the $99.1 million that we reported in Fiscal 2019;
year due to global supply chain disruptions and associated increased costs; and
••
Recorded totalTotal net bookings for Fiscal 20202022 of $121.0$155.4 million, up 15%28% year over year(1)(2);.
•_______________________
Completed a subscribed public offering of 6,182,797 shares of our common stock in June 2019 that resulted in net proceeds of $26.8 million;
•
Completed the acquisition of Albeck Gerken, Inc. which enhanced our presence in Florida, a strategic geography, and contributed approximately $6.4 million of service revenue and approximately $1.7 million of net income;
•
Prepared for the transaction to sell the Company’s AWA business segment to DTN, LLC (“DTN”), which was closed on May 5, 2020 for a total purchase price of $12.0 million. DTN is an operating company of TBG AG, a Swiss-based holding company; and
•
Negotiated certain ancillary agreements with DTN that will provide us with ongoing access to weather and pavement data that it integrates into our transportation software products, and a joint development agreement under which the parties agreed to pursue future joint opportunities in the global transportation market.
(1)
Adjusted EBITDA is adjusted income (loss) from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, project loss reserves, and executive severance and transition costs. For more information, refer to Non-GAAP Financial Measures and to the Consolidated Financial Statements, included on page 28 in Part II, Item 7 of the Company’s Annual Report on Form 10-K for Fiscal 2022.
(2)Net bookings is an operational measure representing the total dollar value of all definitive contracts executed during the relevant period, net of cancellations of previously authorized contract funding.
Impacts of COVID-19 on Iteris
The COVID-19 pandemic has had an unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions, quarantines and “stay-at-home” orders. In turn, the uncertainties caused by these events and actions created various disruptions to our vendors, our employees and customers and negatively affected customer sentiment in general. We did not experience any facility closures in Fiscal 2022, but we did experience supply chain disruptions and work delays on certain projects. Should such delays become protracted or worsen, the impacts of the COVID-19 pandemic could further impact our business, results of operations and financial condition. Given the uncertainties of the COVID-19 pandemic, the Company has taken certain actions to preserve its liquidity, manage cash flow and strengthen its financial flexibility. Such actions include, but are not limited to, reducing our discretionary spending, reducing capital expenditures, implementing restructuring activities, and reducing payroll costs, including employee furloughs, pay freezes and pay cuts.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in the United States. The CARES Act provides relief to U.S. corporations through financial assistance programs and modifications to certain income tax provisions. The Company is applying certain beneficial provisions of the CARES Act, including the payroll tax deferral and the alternative minimum tax acceleration. For more information, refer to Note 6, Income Taxes, to the Consolidated Financial Statements, included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for Fiscal 2022.
Fiscal 20202022 Executive Compensation Results Overview
The Compensation Committee did not make any material changes to the named executive compensation program for Fiscal 2020 as compared to Fiscal 2019. As previously stated, the named executiveofficer compensation plan is composed of three elements;elements: base salary, short-term annual incentive, and long-term equity incentive.incentives. The base salaries reflect the market for similar roles at similar companies. The short-term incentives have
program has specific targets tied to the company’sCompany’s annual financial performance. The long-term incentives consist of a mix between stock options, restricted stock units (“RSUs”), and performance stock units (“PSUs”). The inclusion of RSUs and PSUs in our long-term incentive program was new for Fiscal 2021, as the Company granted only stock options prior to Fiscal 2021.
Below is a summary of the results of our executive compensation program for Fiscal 2020:2022:
••
Base Salaries. In the first half of Fiscal 2020,2022, after reviewing pay governance guidelines, receiving guidance from the Compensation Committee’sCommittee’s compensation consultant, FW Cook, reviewing prevailing compensation practices, and evaluating recent Company performance, comparison to prior years’ payouts, and impacts of the COVID-19 pandemic, the Compensation Committee approved the base salary increases for the named executive officers.officers for Fiscal 2022. These increases averaged 3.4%3.2% for our named executive officers.
••
Annual Incentives. Our named executive officers’officers’ target bonuses for Fiscal 20202022 remained generally unchanged from the target bonus levels in place during Fiscal 2019.2021. Messrs. Bergera and Groves’Groves’ annual bonus targetsperformance metrics were Iteris revenue and Iteris adjusted operating income.Adjusted EBITDA. Because Messrs. Kreter and Massoumi led a business unit, Mr. Kreter for Advanced Sensors Technologies and Mr. Massoumi leads the Transportation Systems business unit, hefor Consulting Solutions, each had four targets,metrics, including Iteris revenue, Iteris adjusted operating income, Transportation SystemsAdjusted EBITDA, their respective business unit revenue and Transportation Systemsbusiness unit contribution margin. The annual cash performance bonuses for the named executive officers in Fiscal 20202022 were earned at 56% of target for Messrs.Mr. Bergera and Groves, and 89% of target; 56% for Mr. Massoumi.Groves; and 67% for Mr. Kreter. Mr. Massoumi ceased to serve as our Senior Vice President and General Manager, Consulting Solutions on December 31, 2021 and therefore was not eligible for a bonus for Fiscal 2022. The corporate bonus objectives for Messrs. Bergera and Groves paid out below target on both the Iteris revenue target but missedand the minimum threshold on the Iteris adjusted operating income target.Adjusted EBITDA metric. Mr. Massoumi’sKreter’s bonus paid out below target on both Transportation SystemsAdvanced Sensors Technologies revenue and Transportation SystemsAdvanced Sensors Technologies contribution margin targetsmetric (in addition to under performance against the Iteris revenue)revenue and Adjusted EBITDA). Individual performance against management performance objectives is also considered in determining the final annual bonus payouts. See “Fiscal 2020“Fiscal 2022 Cash-Based Bonus Plan”Plan” table below for further details about results of our annual cash-based bonus program for Fiscal 2020.
2022.
••
The long-term incentive compensation program for named executive officers for Fiscal 2020 consisted of stock options that vest over four years at a rate of 25% per year, which was consistent with typical peer practices.
•Long-Term Incentives
. Commencing in Fiscal 2021, in response to stockholder feedback, the Company updated its long-term incentive compensation program to incorporate the use of performance-based restricted stock units (“PSUs”).
•
Commencing with Fiscal Year 2021,PSUs for 25% of the Company has rebalanced management’s long-term incentive compensation to include a mixopportunity. The remaining portion consisted of 50% in stock options (50%), restricted stock units (“RSUs”) (25%), and 25% in RSUs. PSUs (25%) (with percentages measuredare earned based on the awards’ grant date values, assuming target level achievement of applicableCompany’s average revenues per share and cash flow from operations performance, goals inas well as the case of PSUs).See “Fiscal 2021Company’s total stockholder return (“rTSR”) relative to the Russell 2000. See “Fiscal 2022 Long-Term Incentive Compensation Updates”Awards” below for further details about updates to the executive compensation plan for Fiscal 2021.2022.
Characteristics of our Executive Compensation Programs
Our executive compensation programs include a number of practices intended to align the interests of management and our stockholders.
| | | | | | | | |
What We Have | | | What We Do Not Have | |
| +Ø
We have approximately 68% of target direct compensation for the chief executive officer (and 53% of the other named executive officers) that is performance-based or is at-risk
+Ø
We have a performance-based long-termlong term incentive plan commencing in Fiscal 2021 that utilizes PSUs, RSUs, and stock options
+Ø
We have a clawback policy in place for our annual and long-term incentive plans compensation
+Ø
We have stock ownership guidelines in place for executive officers and directors
+Ø
We have an independent compensation consultant to advise our Compensation Committee
+Ø
We havemake ongoing stockholder outreach efforts to obtain input on our compensation practices
| | | ✓ü
We do not provide 280G excise tax gross-ups
✓ü
We do not provide any pension or supplemental retirement benefits
✓ü
We do not provide for any “single trigger”“single trigger” equity vesting for equity awards
✓ü
We prohibit repricing options without shareholder approval
✓ü
We prohibit granting stock options with an exercise price below 100% of fair market value
✓ü
We do not provide any perquisites
| |
Impact of 20192021 Say-on-Pay Vote
The most recent stockholder advisory vote on named executive officer compensation required under the SEC rules was held on September 12, 2019.9, 2021. Approximately 72.4%87.4% of the total votes cast on such proposal (which excluded broker non-votes) were in favor of the compensation of our named executive officers. Based both on this result and the Board’sBoard’s commitment to continue to strengthen the compensation plan for the Company’sCompany’s named executive officers, the Compensation Committee evaluated and modified elements of the Company’sCompany’s compensation plan to better align management’smanagement’s long-term incentive compensation with stockholder interests. Specifically, the Company determined that, commencing in Fiscal 2020,2021, a portion of long-term incentive compensation will be granted in the form of performance stock units (“PSUs”), which may bePSUs, earned based on the achievement of certain financial performance and total stockholder return metrics. Prior to implementing these changes to our long-term incentive compensation, the Company invited several of ourits largest stockholders to provide comments on the proposed changes and accordingly made adjustments to the original proposal to reflect investor feedback prior to finalizingultimately finalized the plan structure.structure taking into account investor feedback.
As the Company continues to grow and mature, the Compensation Committee will continue to make appropriate adjustments to our management team’steam’s long-term incentive compensation. Currently, based on the voting preference of the Company’sCompany’s stockholders, advisory votes on executive officer compensation will be conducted every year. The Compensation Committee will continue to take into account each such advisory vote in order to determine whether any subsequent changes to the Company’sCompany’s executive compensation programs and policies would be warranted to reflect any stockholder concerns reflected in those advisory votes.
Compensation Philosophy and Objectives
Our executive compensation plans and arrangements are overseen and administered by our Compensation Committee, which is comprised entirely of independent directors as determined in accordance with applicable Nasdaq and SEC rules. Our philosophy is to provide our named executive officers with compensation that will motivate and retain them, provide them with meaningful incentives to achieve and exceed short-term and long-term corporate objectives set by our Compensation Committee, and align their long-term interests with those of our stockholders. Based on this philosophy, the compensation programs for our named executive officers are designed to achieve the following primary objectives:objectives:
••
establish a compensation structure that is competitive enough to attract, retain and motivate outstanding executive talent;
talent;
••
ensure that any cash incentive compensation programs for our named executive officers are aligned with our corporate strategies and business objectives by tying the potential payouts under such programs to the achievement of key strategic, financial and operational goals;goals; and
••
utilize long-term equity awards to align interests between our named executive officers and stockholders.
Annual Review of Cash and Equity Compensation;Compensation; Role of Compensation Consultant
We conduct an annual review of the aggregate level of our executive compensation, as well as the mix of elements used to compensate our executive officers to ensure that compensation is structured appropriately to achieve our objectives. We review
each component of compensation as related but distinct. Although the Compensation Committee reviews total compensation, it has not adopted any formal guidelines for allocating total compensation between cash and equity compensation. We determine the appropriate level of each compensation component based in part, but not exclusively, on our retention goals and short-term and long-term objectives.
This review generally occurs in the first quarter of each fiscal year at which time the Compensation Committee establishes executive officer base salaries for the following fiscal year, reviews and approves any bonus awards and programs, establishes the performance objectives for our cash based bonus plan, and may grant equity compensation to the executive officers to ensure their interests are aligned with our stockholders and for retention.
In Fiscal 2020,2022, the Compensation Committee retained the services of an independent compensation consulting firm, FW Cook, to advise on directors and named executive officer compensation. FW Cook provided the Compensation Committee with market data and analysis of our total direct compensation for such directors and named executive officer positions as compared with the competitive market. FW Cook reports only to the Compensation Committee and did not performedperform any other work for the Company during Fiscal 20202022 beyond its services related to director and named executive officer compensation. As provided in its charter, the Compensation Committee has the authority to determine the scope of FW Cook’sCook’s services and may terminate their engagement at any time.
As part of the review process, our Chief Executive Officer provides our Compensation Committee with recommendations as to the base salary, cash bonus potential and long-term equity incentive awards for each of our executive officers other than himself based on that officer’sofficer’s level of responsibility, individual performance and contribution to the attainment of our strategic corporate objectives and market data. Our Compensation Committee takes the Chief Executive Officer’sOfficer’s recommendations into consideration in setting named executive officer compensation, but retains complete discretionary authority to make all compensation-related decisions for our named executive officers. Our Compensation Committee makes its compensation decisions with respect to the Chief Executive Officer on the basis of relevant market data furnished by a variety of sources and its subjective assessment of individual performance and contributions to our overall corporate performance. Any decisions regarding our Chief Executive Officer’sOfficer’s compensation are made without such officer present.
Peer Groups
The Compensation Committee benchmarks our compensation programs to a peer group, which consists of publicly-traded technology companies in the applications software, systems software, and technology hardware industry categories, that are similar in size, as measured by revenues and market capitalization.
As of OctoberJune 1, 2019,2020, when competitive analyses were conductedthe peer group was last assessed for Fiscal 2020,2022, the peer revenues ranged from $55$44 million to $254$281 million, with a median of $104$139 million, which compared to Iteris’Iteris’ revenues of $99$114 million. Market capitalization on OctoberJuly 1, 20192020 for the peers ranged from $41$16 million to $936 million,$1.1 billion, with a median of $180$191 million, which compared to Iteris’Iteris’ market capitalization of $219$198 million.
The Fiscal 20202022 peer group consisted of the following companies(1)::
| | | | | | | | |
| ••
Agilysys, Inc.
••
AutoWeb, Inc.
••
Clearfield, Inc.
••
Digi International Inc.
••
Digital Turbine, Inc.
••
EMCORE Corporation
••
Intevac, Inc.
••
IntriCon Corporation
••
KVH Industries, Inc.
••
Majesco
••
MobileIron, Inc.
| | | ••
Napco Security Technologies, Inc.
••
OneSpan Inc.
••
PCTEL, Inc.
••
Perceptron, Inc.
••
RealNetworks, Inc.
••
SeaChange International, Inc.
••
Telenav, Inc.
••
TransAct Technologies Incorporated
••
Upland Software, Inc.
••
Zix Corporation
| |
_______________________
(1)
Three companies were acquired from the Fiscal 2019 peer group and thus were removed for Fiscal 2020. These companies were Aerohive Networks, Inc., Maxwell Technologies, Inc., and Quantenna Communications, Inc.
The Compensation Committee evaluates our compensation program versus that of the peer companies with respect to both individual pay levels as well as the structure of the program. The Compensation Committee uses this data primarily to ensure that our executive compensation program as a whole is competitive. Market data is one of several factors that is used to evaluate compensation levels. Other factors may include individual and company performance, experience in the role, responsibility level, and internal equity.
Compensation Components and Structure
We utilize fourthree main components in structuring compensation programs for our named executive officers:officers:
| | | | | |
Pay Component | | | | Rationale and Value to Stockholders | | |
| | Base Salary | | | | ••
Only fixed compensation element in the executive compensation program
••
Recruit and retain executive talent and provide an element of economic security from year-to-year
••
Reflects competitive market conditions
| | |
| | Performance-Based Cash Bonus
(Short-Term Incentive Program) | | | | ••
Motivates achievement of strategic priorities for the fiscal year as measured by financial and operational metrics
••
Diversified group of metrics to drive growth and stockholder value
| | |
| | Equity Incentive Awards (Options,
(Options, RSUs and PSUs)(1) | | | | ••
Encourages focus on long-term stockholder value creation (and PSUs link compensation to achievement of specified corporate financial performance objectives)
••
Aligns to stockholdersstockholders' interests
••
Provides long-term retention incentive of our executive talent
| | |
(1)
Historically, the long-term incentive compensation for our named executive officers was largely in the form of stock options. Commencing in Fiscal 2020,2021, the long-term incentive compensation component for our named executive officers will consist of stock options, RSUs and PSUs. For See “Fiscal 2020, the Company updated its long-term incentive compensation program to incorporate the use of performance-based PSUs. See “Fiscal 20212022 Long-Term Incentive Compensation Updates”Awards” below for further details about updates to the executive compensation plan for Fiscal 2021.2022.
We view each component of compensation as related but distinct. It is the practice of ourOur Compensation Committee to allocateallocates a substantial portion of each named executive officer’sofficer’s total compensation to performance and long-term incentive compensation as a result of the philosophy described above. While the Compensation Committee does establish specific performance criteria for its cash-based bonus plan each year, there is no formal pre-established policy for the allocation of compensation between cash and non-cash components or between short-term and long-term components, and there are no pre-established ratios between the compensation of our Chief Executive Officer and that of the other named executive officers. Instead, our Compensation Committee determines the compensation of each named executive officer annually based on its review of the market data, its subjective analysis of that individual’sindividual’s performance and contribution to our financial performance and the other factors identified in the “Annual“Annual Review of Cash and Equity Compensation”Compensation” section above to determine the appropriate level and balance of total compensation. We believe that this approach allows us to tailor compensation for each named executive officer to attract, retain and motivate that executive officer within the parameters of our compensation philosophy.
Base Salaries.Base salaries are set at levels that are intended to recognize the experience, skills, knowledge and responsibilities required of all of our named executive officers. Each named executive officer’sofficer’s base salary level is typically reviewed on an annual basis and adjustments may be made to the individual’sindividual’s base salary on the basis of his or her level of performance, the overall performance of the Company and the various compensation trends in our industry.
In May 2019,June 2021, the Compensation Committee reviewed the base salaries of the named executive officers and established the base salaries for Fiscal 2020 for such officers for Fiscal 2022 as set forth below:below:
Named Executive Officer | | | Fiscal 2020 Annual Base Salary | |
J. Joseph (“Joe”) Bergera | | | | $ | 430,000 | | |
Douglas L. Groves(1) | | | | | 400,000 | | |
Andrew Schmidt(2) | | | | | 373,375 | | |
Ramin Massoumi | | | | | 280,000 | | |
| | | | | | | | |
Named Executive Officer | | Fiscal 2022 Annual Base Salary |
Joe Bergera | | $445,000 |
Douglas L. Groves | | 412,500 |
Todd Kreter | | 300,000 |
Ramin Massoumi(1) | | 287,500 |
_______________________(1)
Mr. Groves was hired December 4, 2019, and his Fiscal 2020 base salary was set by the Compensation Committee with his commencement of employment.
(2)
Mr. SchmidtMassoumi ceased to serve as our Chief Financal Officer,Senior Vice President of Finance and SecretaryGeneral Manager, Consulting Solutions on December 4, 2019.
31, 2021.
Fiscal 20202022 Cash-Based Bonus Plan (“2020(“2022 Bonus Plan”Plan”).Our named executive officers are eligible to receive an annual cash-based bonus under our 20202022 Bonus Plan. Each year, our Compensation Committee establishes the performance objectives to be attained and the target bonuses payable based on the level of attainment of the specified goals, which generally include the Company’sCompany’s revenues and adjusted operating incomeAdjusted EBITDA for the fiscal year, the revenues and contribution margin of such officer’sofficer’s business unit, and personal objectives set for each officer (“MBOs”(“MBOs”). We define “contribution margin”“contribution margin” as the business unit’sunit’s adjusted operating income without corporate expense allocations. Corporate adjusted operating income and theThe adjusted operating income of each business unit is calculated on a non-GAAP basis to exclude amortization, depreciation, stock-based compensation, and goodwill impairment charge, if any, and such other non-cash items thatany. For Fiscal 2022 the Compensation Committee approved using Adjusted EBITDA as a corporate performance objective, which is adjusted income (loss) from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, executive severance and transition costs, and fair value adjustment related to TrafficCast’s opening balance inventory. For more information, refer to Non-GAAP Financial Measures and to the Consolidated Financial Statements, included on page 28 in its sole discretion, believes are not directly indicativePart II, Item 7 of the Company’s Annual Report on Form 10-K for Fiscal 2022.”
The corporate and business unit performance targets and the actual achievement of such objectives for Fiscal 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Components | | Threshold | | Target | | Maximum | | Actual | | % Attained |
Corporate Revenue | | $108,411 | | | $135,514 | | | $162,617 | | | $133,572 | | | 99 | % |
Corporate Adjusted EBITDA | | 7,566 | | | 9,457 | | | 11,348 | | | 4,469 | | | 47 | % |
Advanced Sensors Technologies Revenue | | 52,493 | | | 65,616 | | | 78,739 | | | 64,070 | | | 98 | % |
Advanced Sensors Technologies Contribution Margin | | 20,071 | | | 25,089 | | | 30,106 | | | 21,250 | | | 85 | % |
_______________________
Under the Fiscal 2022 plan, if performance is below the “Threshold” goal amounts shown above, no bonus would be payable for that particular objective. If performance exceeds the “Maximum” goal amounts above, the NEOs could earn up to a maximum of 200% of their target opportunity for that particular objective. The combined maximum potential payout of the Companydefined bonus elements is 160%. When combined with the 20% for personal objectives, the total maximum payouts for NEOs are 180%. Payouts in between the Threshold and the business units.Maximum levels above would be determined using linear interpolation.
Mr. Bergera’sBergera’s Fiscal 2020 annual bonus was based 20% on achievement of his2022 MBOs includingincluded, among other things, achieving certain acquisitiondivestiture and post-acquisitionpost-divestiture integration objectives, and executing on other strategic transformation activities. The Compensation Committee determined Mr. Bergera successfully executed on his MBOs, resulting in a 99%90% payout of the MBOsMBO’s portion of his fiscal 2020Fiscal 2022 annual bonus.
Mr. Groves’Groves’ Fiscal 2020 annual bonus was based 20% on achievement of his2022 MBOs includingincluded certain strategic transformation initiatives, talent recruitment and development, succession planning,enhancing our investor communication, building capabilities in the accounting organization, attainment of certain expense reductions, and certain contributions to strategic financial planning for the Company. The Compensation Committee determined Mr. Groves successfully executed on his MBOs, and determined Mr. Groves earned 100%91.2% of the MBOs portion of his fiscal 2020Fiscal 2022 annual bonus.
Mr. Massoumi’sKreter’s Fiscal 2020 annual bonus was based 20% on achievement of his2022 MBOs includingincluded the development and enhancement of certain solutions, achievement of new customer and market development activities in the Transportation SystemsAdvanced Sensors Technologies business segment,unit, and achievement of certain
bookings targets. The Compensation Committee determined Mr. MassoumiKreter successfully executed on his MBOs, resulting in a 98%an 84.4% payout of the MBOs portion of his Fiscal 20202022 annual bonus.
The corporate and business unit performance targets and the actual achievement of such objectives for Fiscal 2020 were as follows:
Performance Components | | | No Bonuses At or Below | | | Target | | | Maximum | | | Actual(1) | | | % Attained | |
Corporate Revenue | | | | $ | 87,560 | | | | | $ | 109,450 | | | | | $ | 136,813 | | | | | $ | 107,672 | | | | | | 98.4% | | |
Corporate Adjusted Operating Income | | | | | 120 | | | | | | 150 | | | | | | 180 | | | | | | (919) | | | | | | 0.0 | | |
Transportation Systems Revenue | | | | | 43,400 | | | | | | 54,250 | | | | | | 67,813 | | | | | | 51,588 | | | | | | 95.1 | | |
Transportation Systems Contribution Margin | | | | | 5,950 | | | | | | 7,438 | | | | | | 9,298 | | | | | | 8,836 | | | | | | 118.8 | | |
(1)Mr. Massoumi ceased to serve as our Senior Vice President and General Manager, Consulting Solutions on December 31, 2021 and did not receive any bonus under our 2022 Bonus Plan.
The 2020 Bonus Plan excluded results from the AGI acquisition.
If our performance for Fiscal 2020 exceeded the Company and business unit performance targets set for bonus purposes, the NEOs could have earned an additional bonus of up to 50% of the target bonus award that was not based upon achieving individual objectives. The full 50% additional bonus would have been earned by the NEOs if the Company had achieved the performance goals set forth under the “Maximum” column above. If the Company had achieved performance that was less than the goals set forth under the “Maximum” column but more than the amounts set forth under the “Target” column, the additional bonus payable would have been proportional, or based on the level of the Maximum goal achieved when measured from the Target amount. For example, if the performance had exceeded the Target goal by 25% of the difference between the Maximum and Target amounts, then 25% of the 50% additional bonus relating to such performance goal would have been payable.
The Compensation Committee typically meets near the end of the first fiscal quarter of each year to evaluate each NEO’sNEO’s achievement of their respective MBOs and annual bonuses are typically paid out as soon as practicable thereafter.
The performance objectives, target bonus and actual bonus for each of our named executive officers for Fiscal 20202022 were as follows:follows:
Named Executive Officer | | | Performance Objectives Allocation (%) | | | 2020 Target Bonus ($) | | | 2020 Actual Bonus ($) | | | % of Target Awarded (%) | |
Joe Bergera | | | | | | | | | | $ | 322,500 | | | | | $ | 180,155 | | | | | | 56% | | |
Corporate Revenue | | | | | 40% | | | | | | | | | | | | | | | | | | | | |
Corporate Adjusted Operating Income | | | | | 40 | | | | | | | | | | | | | | | | | | | | |
MBOs | | | | | 20 | | | | | | | | | | | | | | | | | | | | |
Douglas L. Groves(1) | | | | | | | | | | | 66,667 | | | | | | 37,334 | | | | | | 56 | | |
Corporate Revenue | | | | | 40 | | | | | | | | | | | | | | | | | | | | |
Corporate Adjusted Operating Income | | | | | 40 | | | | | | | | | | | | | | | | | | | | |
MBOs | | | | | 20 | | | | | | | | | | | | | | | | | | | | |
Ramin Massoumi | | | | | | | | | | | 154,000 | | | | | | 136,531 | | | | | | 89 | | |
Transportation Systems Revenue | | | | | 25 | | | | | | | | | | | | | | | | | | | | |
Transportation Systems Contribution Margin | | | | | 25 | | | | | | | | | | | | | | | | | | | | |
Corporate Revenue | | | | | 15 | | | | | | | | | | | | | | | | | | | | |
Corporate Adjusted Operating Income | | | | | 15 | | | | | | | | | | | | | | | | | | | | |
MBOs | | | | | 20 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Named Executive Officer | | Performance Objectives Allocation (%) | | 2022 Target Bonus ($) | | 2022 Actual Bonus ($) | | % of Target Awarded (%) |
Joe Bergera | | | | $333,750 | | | $186,900 | | | 56 | % |
Corporate Revenue | | 40 | | | | | | |
Corporate Adjusted EBITDA | | 40 | | | | | | |
MBOs | | 20 | | | | | | |
Douglas L. Groves | | | | 206,250 | | | 116,013 | | | 56 | % |
Corporate Revenue | | 40 | | | | | | |
Corporate Adjusted EBITDA | | 40 | | | | | | |
MBOs | | 20 | | | | | | |
Todd Kreter | | | | 165,000 | | | 110,413 | | | 67 | % |
Advanced Sensors Technologies Revenue | | 25 | | | | | | |
Advanced Sensors Technologies Contribution Margin | | 25 | | | | | | |
Corporate Revenue | | 15 | | | | | | |
Corporate Adjusted EBITDA | | 15 | | | | | | |
MBOs | | 15 | | | | | | |
Cross Sell | | 5 | | | | | | |
(1)_______________________
Mr. Groves was hired December 4, 2019 and his Fiscal 2020 bonus was pro-rated to reflect the portion of Fiscal 2020 during which he was employed with the Company.
Equity Compensation.Our equity award program is one of our vehicles for offering long-term incentives to our named executive officers and providing an inducement for long-term retention. Our equity component also aligns the interests of our named executive officers with those of our stockholders and focuses their attention on the creation of stockholder value in the form of stock price appreciation. We believe that the equity-based compensation provides our named executive officers with a direct interest in our long-term performance and creates an ownership culture that establishes a mutuality of interests between our named executive officers and our stockholders. We have had no program, plan or practice pertaining to the timing of stock option grantsequity awards to named executive officers coinciding with the release of material non-public information.
ToHistorically, to reward and retain our named executive officers in a manner that best aligns employees’employees’ interests with stockholders’stockholders’ interests, we have historically used stock options as the primary incentive vehicles for long-term compensation. We believe that stock options are an effective tool for meeting our compensation goal of increasing long-term stockholder value by tying the value of the stock options to our future performance. Because executives are able to profit from stock options only if our stock price increases relative to the stock option’soption’s exercise price, we believe stock options provide meaningful incentives to employees to achieve increases in the value of our stock over time. The exercise price of each stock option grant is the fair market value of our common stock on the grant date, as determined under our equity plan. Stock option awards generally vest in four equal annual installments over a four-year period, subject to continuous service through each vesting date. From time to time, our Compensation Committee may, however, determine that a different vesting schedule is appropriate.
We have also, from time to time, awarded RSUs to our named executive officers, which vest over a three-year period, but no RSUs were granted to our named executive officers during Fiscal 2020.
Typically, the Compensation Committee provides grant guidelines to our Chief Executive Officer, who in turn will make recommendations back to the Compensation Committee regarding the number of options to be granted to our executive officers (other than himself). See “Fiscal 2020 Grant of Plan-Based Awards” table below for the Fiscal 2020 awards made to our named executive officers, all of which were granted in the form of stock options.
Fiscal 20212022 Long-Term Incentive Compensation UpdatesAwards. Commencing with Fiscal Year 2021, in response to stockholder feedback and consultation with FW Cook, the Compensation Committee determineddecided to rebalance management’smanagement’s long-term incentive compensation to include a mix of stock options (50%), restricted stock units (RSUs)RSUs (25%), and performance stock units (PSUs)PSUs (25%) (with percentages measured based on the awards’awards’ grant date values, assuming target level achievement of applicable performance goals in the case of PSUs), as follows:follows:
••
50% of the long-term incentive compensation for our named executive officers will bewas granted in the form of stock options, which will vest in accordance with the standard four-year vesting schedule described above.
••
25% of the long-term incentive compensation for our named executive officers will bewas granted in the form of RSUs, which will vest over three years, with 50% of such RSUs vesting on the second anniversary of the grant date and 50% of such
RSUs vesting on the third anniversary of the grant date. Each RSU represents a contingent right to receive one share of the Company’sCompany’s common stock if vesting is satisfied.
••
25% of the long-term compensation for our named executive officers will bewas granted in the form of PSUs. Each PSU represents a contingent right to receive one share of the Company’sCompany’s common stock if vesting is satisfied. The number of PSUs that vest at the end of each three-year performance period will depend, in part, on the Company’sCompany’s average revenues per share and cash flow from operations performance during the three-year performance period and, in part, on the Company’s total stockholder return (“rTSR”)Company’s rTSR relative to the Russell 2000 over the three-year performance period. Executives will receive payment with respect to the PSUs, in the form of shares of the Company’sCompany’s common stock, at the conclusion of the performance period, upon establishment of final performance results.
••
Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. In addition, the final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’sCompany’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target”“target” number of PSUs.
For purposes of the PSUs granted in Fiscal 2022, the performance metrics for Fiscal 2022, the first year in the three-year performance period, were as follows: cash flow from operations — threshold, $5,840,000; target, $7,300,000; and maximum, $8,760,000, and revenues per share — threshold, $2.91; target, $3.23; and maximum, $3.55; Our actual performance for Fiscal 2022 for cash flow used in operations was $5,593,000, resulting in a 0% achievement compared to the target. Our actual performance for Fiscal 2022 for revenues per share was $3.16, resulting in a 98% achievement compared to the target. These achievement levels for Fiscal 2022 will be used to determine our average performance for the three-year performance period ending March 31, 2023 for purposes of determining the final vesting of the PSUs.
Typically, the Compensation Committee provides grant guidelines to our Chief Executive Officer, who in turn will make recommendations back to the Compensation Committee regarding the number of shares to be granted to our executive officers (other than himself). See “Fiscal 2022 Grant of Plan-Based Awards” table below for the Fiscal 2022 awards made to our named executive officers.
Benefit Plans
Section 401(k) Plan.We make available a tax-qualified retirement plan that provides eligible employees, including our executive officers, with an opportunity to save for retirement on a tax-advantaged basis. Participants are able to defer a portion of their eligible compensation, subject to applicable annual limits under the Internal Revenue Code of 1986, as amended (the “Code”“Code”). Pre-tax contributions are allocated to each participant’sparticipant’s individual account and may be invested in selected alternative investments according to the participant’sparticipant’s direction. We do currently make a matching contribution under the 401(k) plan up to a maximum of 4% of the employee’semployee’s base salary. Such matching contribution is at the discretion of the Board and is typically evaluated on an annual basis.
Employee Stock Purchase Plan. We maintain an employee stock purchase plan (the “ESPP”), which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code, to promote stock ownership by our employees. The ESPP was approved by our stockholders in November 2017, and 1,000,000 shares of common stock have been reserved for issuance under the ESPP. Under the ESPP, eligible employees are able to acquire, at a price equal to 95% of the lower of the fair market price at the beginning or end of the 6-month purchase period, shares of our common stock by accumulating funds through payroll deductions.
Health and Welfare Benefits.Our named executive officers are eligible to participate in all our employee benefit plans, including our medical, dental, vision, group life and disability insurance plans, in each case on the same basis as other employees. We believe that these health and welfare benefits help ensure that we have a productive and focused workforce through reliable and competitive health and other benefits.
Perquisites.We do not provide significant perquisites or personal benefits to our named executive officers.
Post-Employment Compensation
For a summary of the material terms and conditions of our post-employment compensation arrangements, see “—“— Potential Payments upon Termination or Change in Control”Control” below.
Incentive Compensation Clawback Policy
In July 2020, the Board adopted a Clawback Policy (the “Clawback Policy”“Clawback Policy”) to create and maintain a culture that emphasizes integrity and accountability, and that reinforces the Company’sCompany’s pay-for-performance compensation philosophy. Under the Clawback Policy, the Compensation Committee may direct the Company to seek to recover incentive compensation awarded or paid to an executive officer or other employee of the Company deemed subject to the Clawback Policy (“(“covered persons”persons”) for a fiscal period if the Company must subsequently restate its financial statements.
The Clawback Policy is in addition to any recovery rights provided under applicable law. The Board continues to monitor regulatory developments and intends to further review and revise the Clawback Policy, if necessary, to comply with any final regulations issued for the purpose of implementing the requirements of the Dodd-Frank Act.
Policy against HedgingStock Ownership Guidelines
The Board has adopted stock ownership guidelines for the Company’s non-employee directors and Pledgingexecutive officers. See “Director Compensation” above for a description of these guidelines.
The Company does not currently have a policy against hedging or pledging in our equity securities by our executive officers, directors or employees.
Compensation Risk Assessment
The Compensation Committee has evaluated our compensation programs and policies as generally applicable to our employees to ascertain any potential material risks that may be created by the compensation programs. The Compensation Committee concluded that our compensation policies and practices, taken as a whole, are not reasonably likely to have a material adverse impact on our business or our financial condition. The following compensation design features help minimize the incentives for excessive risk-taking and keeps our named executive officers focused on the creation of long-term, sustainable value for our stockholders:stockholders:
••
Our base pay programs consist of generally competitive salary rates that represent a reasonable portion of total compensation and provide a reliable level of income on a regular basis, which decreases incentive on the part of our executives to take unnecessary or imprudent risks;
risks;
••
To further ensure that the interests of our named executive officers are aligned with those of our stockholders, commencing with Fiscal 2021, a portion of executive officer long-term incentive compensation will bewas awarded as equity subject to performance- and time-based vesting requirements. RSUs and PSUs will vest and settle over a three-year period, as applicable —— in the case of RSUs, 50% vesting after two years and remaining vesting after completion of three years, and in the case of PSUs, cliff-vesting based on achievement of applicable performance goals at the end of a three-year performance period.
••
A portion of each executive’sexecutive’s incentive compensation opportunity is tied to long-term incentive compensation that emphasizes sustained performance over time. This reduces any incentive to take risks that might increase short-term compensation at the expense of longer term results;
results;
••
Annual equity awards have multi-year vesting which aligns the long-term interests of our executives with those of our stockholders and, again, discourages the taking of short-term risk at the expense of long-term performance;performance; and
••
Each officer has multiple performance objectives, some of which relate to the Company as a whole, which is more difficult for an officer to manipulate.
Tax Deductibility of Executive Compensation
The Compensation Committee considers the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to our executive officers. Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year for “covered“covered employees.”” While we consider the tax deductibility of each element of executive compensation as a factor in our overall compensation program, the compensation committee, however, retains the discretion to approve compensation that may not qualify for the compensation deduction if, considering all applicable circumstances, it would be in our best interest for such compensation to be paid without regard to whether it may be tax deductible.
Accounting for Stock-Based Compensation
Under FASB ASC 718, we are required to estimate the grant date “fair value”“fair value” for each grant of equity award using various assumptions. This calculation is performed for accounting purposes and reported in the compensation tables in this proxy statement, even though recipients may never realize any value from their awards. ASC 718 also requires us to recognize the compensation cost of stock-based awards in our income statements over the period that an employee is required to render service in exchange for the award.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the discussion and analysis of the compensation of our named executive officers as disclosed in this proxy statement under the heading “Compensation Discussion and Analysis.”statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussiondiscussion and Analysisanalysis be included in the Annual Report and this proxy statement.
Luke P. Schneider
Laura L. Siegal
Thomas L. Thomas (Chairman)28
| | |
Thomas L. Thomas (Chairman) Laura L. Siegal Dennis W. Zank |
Executive Compensation Tables
Summary Compensation Table
The following table shows information regarding the compensation earned for the fiscal years ended March 31, 2020, 20192022, 2021 and 20182020 by (i) our Chief Executive Officer, and (ii) our two other most highly compensated executive officers (other than our Chief Executive Officer) who were serving as executive officers as of March 31, 2020, and (iii) one other individual who would have been an executive officer described in clause (ii) but for the fact he is no longer serving as an executive officer as of March 31, 2020.2022. The officers listed below are collectively referred to as the “named“named executive officers”officers” or “NEOs”“NEOs” in this proxy statement.
Name and Principal Position | | | Fiscal Year | | | Salary | | | Bonus | | | Option Awards(1) | | | Non-Equity Incentive Plan Compensation(2) | | | All Other Compensation(3) | | | Total | |
J. Joseph (“Joe”) Bergera Chief Executive Officer and President | | | | | 2020 | | | | | $ | 430,314 | | | | | $ | — | | | | | $ | 634,300 | | | | | $ | 180,155 | | | | | $ | 11,351 | | | | | $ | 1,256,120 | | |
| | | 2019 | | | | | | 412,894 | | | | | | — | | | | | | 421,425 | | | | | | 137,280 | | | | | | 17,118 | | | | | | 988,716 | | |
| | | 2018 | | | | | | 396,648 | | | | | | — | | | | | | 649,328 | | | | | | 180,000 | | | | | | 8,848 | | | | | | 1,234,825 | | |
Douglas L. Groves Chief Financial Officer, Senior Vice President of Finance and Secretary | | | | | 2020 | | | | | | 121,617(4) | | | | | | — | | | | | | 489,540 | | | | | | 37,333 | | | | | | 4,800 | | | | | | 653,290 | | |
Andrew Schmidt(5) Former Chief Financial Officer, Vice President of Finance and Secretary | | | | | 2020 | | | | | | 307,587 | | | | | | — | | | | | | — | | | | | | — | | | | | | 431,435(6) | | | | | | 738,022 | | |
| | | 2019 | | | | | | 358,670 | | | | | | — | | | | | | 159,205 | | | | | | 71,775 | | | | | | 12,792 | | | | | | 602,442 | | |
| | | 2018 | | | | | | 346,138 | | | | | | 15,000(7) | | | | | | 259,731 | | | | | | 94,035 | | | | | | 8,683 | | | | | | 723,587 | | |
Ramin Massoumi Senior Vice President and General Manager, Roadway Sensors | | | | | 2020 | | | | | | 279,688 | | | | | | — | | | | | | 177,604 | | | | | | 136,531 | | | | | | 10,262 | | | | | | 604,084 | | |
| | | 2019 | | | | | | 268,306 | | | | | | — | | | | | | 112,380 | | | | | | 70,166 | | | | | | 11,440 | | | | | | 462,293 | | |
| | | 2018 | | | | | | 254,932 | | | | | | — | | | | | | 194,799 | | | | | | 127,925 | | | | | | 5,641 | | | | | | 583,297 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | Salary(1) | | | Stock Awards(2) | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | All Other Compensation(4) | | Total |
Joe Bergera Chief Executive Officer and President | | 2022 | | $443,706 | | | $373,068 | | $260,000 | | $186,900 | | $20,846 | | $1,284,520 |
| 2021 | | 432,030 | | | 254,388 | | 323,125 | | 448,275 | | 11,200 | | 1,469,018 |
| 2020 | | 430,314 | | | — | | 634,300 | | 180,155 | | 11,351 | | 1,256,120 |
Douglas L. Groves Chief Financial Officer, Senior Vice President of Finance and Secretary | | 2022 | | 411,586 | | | 152,637 | | 130,000 | | 116,013 | | 13,846 | | 824,082 |
| 2021 | | 401,947 | | | 82,723 | | 117,500 | | 280,000 | | 11,200 | | 893,370 |
| 2020 | | 121,617 | (5) | | — | | 489,540 | | 37,333 | | 4,800 | | 653,290 |
Todd Kreter Senior Vice President and General Manager, Advanced Sensors | | 2022 | | 300,154 | | | 113,071 | | 97,500 | | 110,413 | | 15,168 | | 636,306 |
| 2021 | | 291,690 | | | 57,715 | | 82,250 | | 232,462 | | 11,200 | | 675,317 |
| 2020 | | 295,890 | | | — | | 177,604 | | 103,895 | | 11,187 | | 588,576 |
Ramin Massoumi(6) Senior Vice President and General Manager, Roadway Sensors | | 2022 | | 210,809 | | | 63,271 | | — | | — | | 136,861 | (7) | 410,941 |
| 2021 | | 280,785 | | | 57,715 | | 82,250 | | 149,959 | | 11,200 | | 581,909 |
| 2020 | | 279,688 | | | — | | 177,604 | | 136,531 | | 10,262 | | 604,084 |
_______________________(1)
For Fiscal 2021, Mr. Groves deferred a portion of his salary under the Company’s Non-Qualified Deferred Compensation Plan. For Fiscal 2022, Messrs. Bergera, Groves and Massoumi, each deferred a portion of their salaries under the Company’s Non-Qualified Deferred Compensation Plan. These amounts for Fiscal 2022 are reflected in the Non-Qualified Deferred Compensation Table and in the Salary column.
(2)The dollar amounts shown represent the grant date fair value of equity awards, including RSUs, PSUs, and stock options granted during the applicable fiscal year determined in accordance with ASC 718.
Under ASC 718, the grant date fair value of the stock options is determined pursuant to the Black-Scholes-Merton option pricing formula. The grant date fair value of the RSUs is based on the closing price per share of our common stock on the date of grant. The fair value of our performance stock unit awards is estimated on the grant date using a Monte Carlo simulation model.
With respect to the PSUs granted during Fiscal 2021 and Fiscal 2022, the number of PSUs that are eligible to vest will be determined, in part, based on average annual achievement relative to revenues per share and cash flow from operations objectives for each one-year period of the PSU awards’ three-year performance period, ending March 31, 2023 and 2024, respectively. These revenues per share and cash flow from operations objectives will be set annually for each one-year performance period. The number of PSUs that vest at the end of the three-year performance period ending March 31, 2023 will also depend, in part, on the Company’s rTSR relative to the Russell 2000 over the three-year performance period. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. The final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs. In accordance with SEC rules and ASC 718, due to the annual setting of performance goals under the PSUs granted during Fiscal 2021 and Fiscal 2022, ASC 718 requires the grant date value to be calculated with respect to one-third of the total PSUs in each year of the three-year performance period. SEC rules require presentation that is consistent with ASC 718, and so the grant date fair value of the PSUs included in this column for Fiscal 2021 and Fiscal 2022 each represent the grant date fair value for one-third of the PSU award eligible to vest based on Fiscal 2023 performance. In accordance with ASC Topic 718, the grant date fair value of the PSUs was calculated using the Monte Carlo simulation which utilizes the stock volatility, dividend yield and market correlation of the Company and the Company’s peer group. For the PSU awards granted during Fiscal 2021, such inputs consisted of:
(a) an expected term that was based on the actual three-year term of the award; (b) a risk-free interest rate of 0.17% derived from the yield on U.S. government bonds of appropriate term from the U.S. Department of Treasury; (c) a dividend yield of 0.00% because we do not currently issue a dividend; (d) stock price volatility for Iteris of 55.48% based on an analysis of the historical stock price volatility of the Company and stock price volatility of 59.87% for the Russell 2000 Index based on the 2.75 years preceding the date of grant to conform to the term of the awards; and (e) initial TSR performance of 38.11% based on the actual historical TSR performance for the Company and the Russell 2000 Index. The valuation method resulted in each PSU being valued at $5.47 on June 30, 2020, the date of the grant, or 115.04% of the stock price on such date. The grant date fair values reflected in the table above for the NEOs reflect the one-third of the PSU award eligible to vest based on Fiscal 2021 performance, calculated by multiplying the $5.47 per share by one-third of the “target” number of PSUs. Assuming performance at the maximum level, the “maximum” grant date fair value of the one-third of the PSU award eligible to vest based on Fiscal 2021 performance, calculated by multiplying the $5.47 per share by one-third of the “maximum” number of PSUs, is as follows: $140,061 for Mr. Bergera; $45,397 for Mr. Groves; $31,777 for Mr. Kreter; and $31,777 for Mr. Massoumi. For the PSU awards granted during Fiscal 2022, such inputs consisted of: (a) an expected term that was based on the actual three-year term of the award; (b) a risk-free interest rate of 0.27% derived from the yield on U.S. government bonds of appropriate term from the U.S. Department of Treasury; (c) a dividend yield of 0.00% because we do not currently issue a dividend; (d) stock price volatility for Iteris of 56.82% based on an analysis of the historical stock price volatility of the Company and stock price volatility of 62.12% for the Russell 2000 Index based on the 2.81 years preceding the date of grant to conform to the term of the awards; and (e) initial TSR performance of 3.13% based on the actual historical TSR performance for the Company and the Russell 2000 Index. The valuation method resulted in each PSU being valued at $7.26 on June 10, 2021, the date of the grant, or 111.69% of the stock price on such date. The grant date fair values reflected in the table above for the NEOs reflect the one-third of the PSU award eligible to vest based on Fiscal 2022 performance, calculated by multiplying the $7.26 per share by one-third of the “target” number of PSUs. Assuming performance at the maximum level, the “maximum” grant date fair value of the one-third of the PSU award eligible to vest based on Fiscal 2022 performance, calculated by multiplying the $7.26 per share by one-third of the “maximum” number of PSUs, is as follows: $165,712 for Mr. Bergera; $60,258 for Mr. Groves; $42,181 for Mr. Kreter; and $42,181 for Mr. Massoumi.
For a discussion of valuation assumptions used in the calculations, see Note 810 of Notes to Consolidated Financial Statements, included in Part II, Item 8 in the Annual Report.Report on Form 10-K for Fiscal 2022. See also our discussion of stock-based compensation under “Management’s Discussion and Analysisin Note 1 of Notes to Consolidated Financial Condition and Results of Operations — Critical Accounting Policies and Estimates”Statements on page 52 in Part II, Item 78 in the Annual Report. The options have an exercise price equal to the closing sales price of our common stock as of the grant date and vest in equal annual installments over four years and are not exercisable until vested.
Report on Form 10-K for Fiscal 2022.
(2)(3)
The amounts shown in this column constitute the cash bonuses paid to each named executive officer based on the attainment of certain pre-established management objectives. These awards are discussed in further detail under “Fiscal 2020“Fiscal 2022 Cash-Based Bonus Plan”Plan” above.
(3)(4)
Except as otherwise noted, represents SectionConsists of 401(k) plan employer contributions paid by us.
(4)(5)
Mr. Groves was hired December 4, 2019 at an annual salary of $400,000. The Fiscal 2020 salary represents the amount earned by Mr. Groves from his hire date through the end of Fiscal 2020.
(5)(6)
Mr. SchmidtMassoumi ceased to serve as our Chief Financial Officer,Senior Vice President of Finance and SecretaryGeneral Manager, Consulting Solutions on December 4, 2019.
31, 2021.
(6)(7)
Consists of 401(k) plan employer contributions paid by us, as well as amounts paid pursuant to hisMr. Massoumi's Severance Agreement (defined below), consisting of base salary of $388,589$70,770, COBRA reimbursement of $3,465, outplacement services of $2,500, and COBRA reimbursement.accrued paid time off of $46,777. See “Agreements"Severance Agreement with Andrew Schmidt”Ramin Massoumi" under “Potential"Potential Payments upon Termination of Employment and Change in Control”Control" below.
(7)
Represents a discretionary cash bonus.
Fiscal 20202022 Grant of Plan-Based Awards Table
The table below sets forth information with respect to awards granted to the named executive officers under our annual non-equity incentive compensation plan and our 2016 Omnibus Incentive Plan in Fiscal 2020,2022, which constitute all of the plan-based awards granted to our named executive officers in Fiscal 2020.2022.
Name | | | Grant Date | | | Compensation Committee Action Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All Other Option Awards: Number of Securities Underlying Options (#)(2) | | | Exercise or Base Price of Option Awards ($/share) | | | Grant Date Fair Value of Stock and Option Awards ($)(3) | |
| Threshold ($) | | | Target ($)(1) | | | Maximum ($)(1) | |
Joe Bergera | | | | | — | | | | | | 12/09/2019 | | | | | $ | — | | | | | $ | 322,500 | | | | | $ | 483,750 | | | | | | 250,000 | | | | | $ | 5.10 | | | | | $ | 634,300 | | |
Douglas L. Groves | | | | | 12/04/2019 | | | | | | 11/14/2019 | | | | | | — | | | | | | 66,667 | | | | | | 100,000 | | | | | | 200,000 | | | | | | 4.92 | | | | | | 489,540 | | |
Ramin Massoumi | | | | | — | | | | | | 12/09/2019 | | | | | | — | | | | | | 154,000 | | | | | | 231,000 | | | | | | 70,000 | | | | | | 5.10 | | | | | | 177,604 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant Date | Description | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other Option Awards: Number of Securities Underlying Options (#)(4) | | Exercise or Base Price of Option Awards ($/share) | | Grant Date Fair Value of Stock and Option Awards ($)(5) |
| Threshold ($) | | Target ($) | | Maximum ($) | | Threshold ($) | | Target ($) | | Maximum ($) | | | | |
Joe Bergera | | 7/8/2022 | Cash Bonus | | $ | — | | | $333,750 | | | $600,750 | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | |
| | 6/10/2021 | PSU | | — | | | — | | | — | | | — | | | 11,413 | | | 22,826 | | | — | | | — | | | — | | | 82,858 | |
| | 11/18/2021 | RSU | | — | | | — | | | — | | | — | | | — | | | — | | | 24,900 | | (3) | — | | | — | | | 124,500 | |
| | 11/18/2021 | Options | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 100,000 | | | 5.00 | | | 260,320 | |
Douglas L. Groves | | 7/8/2022 | Cash Bonus | | — | | | 206,250 | | | 371,250 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 6/10/2021 | PSU | | — | | | — | | | — | | | — | | | 4,150 | | | 8,300 | | | — | | | — | | | — | | | 30,129 | |
| | 11/18/2021 | RSU | | — | | | — | | | — | | | — | | | — | | | — | | | 12,450 | | (3) | — | | | — | | | 62,250 | |
| | 11/18/2021 | Options | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 50,000 | | | 5.00 | | | 130,160 | |
Todd Kreter | | 7/8/2022 | Cash Bonus | | | | 165,000 | | | 297,000 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 6/10/2021 | PSU | | — | | | — | | | — | | | — | | | 2,905 | | | 5,810 | | | — | | | — | | | — | | | 21,090 | |
| | 11/18/2021 | RSU | | — | | | — | | | — | | | — | | | — | | | — | | | 9,960 | | (3) | — | | | — | | | 49,800 | |
| | 11/18/2021 | Options | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 37,500 | | | 5.00 | | | 97,620 | |
Ramin Massoumi(6) | | 6/10/2021 | PSU | | — | | | — | | | — | | | — | | | 2,905 | | | 5,810 | | | — | | | — | | | — | | | 21,090 | |
_______________________
(1)
Reflects the potential amount payable (not the actual amount payable) upon achievement of the management objectives described under the heading “Fiscal 2020“Fiscal 2022 Cash-Based Bonus Plan”Plan” above.
(2)
These PSUs were granted under the 2016 Omnibus Incentive Plan. The number of PSUs that are eligible to vest will be determined, in part, based on average annual achievement relative to revenues per share and cash flow from operations objectives for each one-year period of the PSU awards’ three- year performance period ending March 31, 2023. These revenues per share and cash flow from operations objectives will be set annually for each one-year performance period. The number of PSUs that vest at the end of the three-year performance period ending March 31, 2023 will also depend, in part, on the Company’s rTSR relative to the Russell 2000 over the three-year performance period. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cashflow from operations objectives to be established by the Compensation Committee at the beginning of each year. The final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs. In accordance with SEC rules and ASC 718, due to the annual setting of performance goals under the PSUs granted during Fiscal 2022, ASC 718 requires the grant date value to be calculated with respect to one-third of the total PSUs in each year of the three-year performance period. SEC rules require presentation that is consistent with ASC 718, and amounts shown at “target” represent one-third of the total “target” number of PSUs granted during Fiscal 2022 at “target” levels. Named executive officers will receive payment with respect to the PSUs, in the form of shares of the Company’s common stock, at the conclusion of the performance period, upon establishment of final performance results. The vesting of equity awards held by the named executive officers is subject to each named executive officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below.
(3)These RSUs were granted under the 2016 Omnibus Incentive Plan and vest fifty-percent (50%) after two (2) years from the vesting commencement date, and fifty-percent (50%) after the third (3rd) year from the vesting commencement date, upon named executive officer’s completion of each year of continued service with the Company. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below.
(4)All options vest in four equal installments following the date of grant. The vesting of equity awards held by the named executive officers is subject to each officersofficer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential“Potential Payments upon Termination of Employment and ChangingChange in Control”Control” below.
(3)(5)
The dollar amounts shown represent the grant date fair value of stock optionsequity awards granted during the applicable fiscal year determined in accordance with ASC 718. UnderWith respect to the PSUs granted during Fiscal 2021 and Fiscal 2022, the number of PSUs that are eligible to vest will be determined based on average annual achievement relative to revenues per share and cash flow from operations objectives for each one-year period of the PSU awards’ three-year performance period. These revenues per share and cash flow from operations objectives will be set annually for each one-year performance period. In accordance with SEC rules and ASC 718, due to the annual setting of performance goals under the PSUs granted during Fiscal 2022, ASC 718 requires the grant date value to be calculated with respect to one-third of the total PSUs in each year of the three-year performance period. SEC rules require presentation that is consistent with ASC 718, and so the grant date fair value of the stock options is determined pursuantPSUs included in this column for Fiscal 2021 and Fiscal 2022 each represent the grant date fair value for one-third of the PSU award eligible to the Black-Scholes-Merton option pricing formula.vest based on Fiscal 2021 performance and Fiscal 2022 performance, respectively. For a discussion of valuation assumptions used in the calculations, see footnote (1) to the Summary Compensation Table and Note 810 of Notes to Consolidated Financial Statements, included in Part II, Item 8 ofin the Company's Annual Report.Report on Form 10-K for Fiscal 2022. See also our discussion of stock-based compensation under “Management’s Discussion and Analysisin Note 1 of Notes to Consolidated Financial Condition and Results of Operations — Critical Accounting Policies and Estimates”Statements on page 52 in Part II, Item 78 in the Company's Annual Report on Form 10-K for Fiscal 2022.
(6)Mr. Massoumi ceased to serve as our Senior Vice President and General Manager, Consulting Solutions on December 31, 2021. Mr. Massoumi's PSUs were forfeited due to Mr. Massoumi's ceasing to serve as an employee of the Annual Report.Company.
Outstanding Equity Awards at 20202022 Fiscal Year End
The following table sets forth the outstanding equity awards held by each named executive officer as of March 31, 2020. None of the NEOs held outstanding RSUs at the end of Fiscal 2020.2022.
| | | Option Awards(1) | |
Name | | | Number of Securities Underlying Outstanding Options (#) Exercisable | | | Number of Securities Underlying Outstanding Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Grant Date | | | Option Expiration Date | |
J. Joseph (“Joe”) Bergera Chief Executive Officer, President and Director | | �� | | | 1,350,000 | | | | | | — | | | | | $ | 2.38 | | | | | | 09/23/15 | | | | | | 09/22/25 | | |
| | | 112,500 | | | | | | 37,500 | | | | | | 4.91 | | | | | | 03/03/17 | | | | | | 03/02/27 | | |
| | | 125,000 | | | | | | 125,000 | | | | | | 5.52 | | | | | | 02/16/18 | | | | | | 02/15/28 | | |
| | | 56,250 | | | | | | 168,750 | | | | | | 4.16 | | | | | | 12/10/18 | | | | | | 12/09/28 | | |
| | | — | | | | | | 250,000 | | | | | | 5.10 | | | | | | 12/09/19 | | | | | | 12/08/29 | | |
Douglas L. Groves Chief Financial Officer, Senior Vice President of Finance and Secretary | | | | | — | | | | | | 200,000 | | | | | | 4.92 | | | | | | 12/04/19 | | | | | | 12/03/29 | | |
Andrew Schmidt(2) Former Chief Financial Officer, Vice President of Finance and Secretary | | | | | 100,000 | | | | | | — | | | | | | 1.79 | | | | | | 03/16/15 | | | | | | 03/15/25 | | |
| | | 75,000 | | | | | | — | | | | | | 2.37 | | | | | | 11/02/15 | | | | | | 11/01/25 | | |
| | | 56,250 | | | | | | 18,750 | | | | | | 4.91 | | | | | | 03/03/17 | | | | | | 03/02/27 | | |
| | | 50,000 | | | | | | 50,000 | | | | | | 5.52 | | | | | | 02/16/18 | | | | | | 02/15/28 | | |
| | | 21,250 | | | | | | 63,750 | | | | | | 4.16 | | | | | | 12/10/18 | | | | | | 12/09/28 | | |
Ramin Massoumi Senior Vice President and General Manager, Transportation Systems | | | | | 20,000 | | | | | | — | | | | | | 1.87 | | | | | | 11/18/14 | | | | | | 11/17/24 | | |
| | | 20,000 | | | | | | — | | | | | | 2.37 | | | | | | 11/02/15 | | | | | | 11/01/25 | | |
| | | 56,250 | | | | | | 18,750 | | | | | | 4.91 | | | | | | 03/03/17 | | | | | | 03/02/27 | | |
| | | 37,500 | | | | | | 37,500 | | | | | | 5.52 | | | | | | 02/16/18 | | | | | | 02/15/28 | | |
| | | 15,000 | | | | | | 45,000 | | | | | | 4.16 | | | | | | 12/10/18 | | | | | | 12/09/28 | | |
| | | — | | | | | | 70,000 | | | | | | 5.10 | | | | | | 12/09/19 | | | | | | 12/08/29 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards(1) | | Stock Awards |
Name | | Number of Securities Underlying Outstanding Options (#) Exercisable | | Number of Securities Underlying Outstanding Options (#) Unexercisable | | Option Exercise Price ($) | | Option Grant Date | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested (4) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
J. Joseph (“Joe”) Bergera Chief Executive Officer, President and Director | | 1,150,000 | | | — | | | $2.38 | | | 09/23/15 | | 09/22/25 | | | | | | | | |
| 150,000 | | | — | | | 4.91 | | | 03/03/17 | | 03/02/27 | | | | | | | | |
| 250,000 | | | — | | | 5.52 | | | 02/16/18 | | 02/15/28 | | | | | | | | |
| 168,750 | | | 56,250 | | | 4.16 | | | 12/10/18 | | 12/09/28 | | | | | | | | |
| 125,000 | | | 125,000 | | | 5.10 | | | 12/09/19 | | 12/08/29 | | | | | | | | |
| 34,375 | | | 103,125 | | | 4.80 | | | 11/16/20 | | 11/15/30 | | | | | | | | |
| — | | | 100,000 | | | 5.00 | | | 11/18/21 | | 11/17/31 | | | | | | | | |
| | | | | | | | | | | 63,308(2) | | 188,658(4) | | | | |
| | | | | | | | | | | | | | | 72,646(3) | | 216,485(4) |
| | | | | | | | | | | | | | | | | | |
Douglas L. Groves Chief Financial Officer, Senior Vice President of Finance and Secretary | | 100,000 | | | 100,000 | | | 4.92 | | | 12/04/19 | | 12/03/29 | | | | | | | | |
| 12,500 | | | 37,500 | | | 4.80 | | | 11/16/20 | | 11/15/30 | | | | | | | | |
| — | | | 50,000 | | | 5.00 | | | 11/18/21 | | 11/17/31 | | | | | | | | |
| | | | | | | | | | | 24,899(2) | | 74,199(4) | | | | |
| | | | | | | | | | | | | | | 24,899(3) | | 74,199(4) |
| | | | | | | | | | | | | | | | | | |
Todd Kreter(2) Senior Vice President and General Manager of Advanced Sensor Technologies | | 75,000 | | | — | | | 4.91 | | | 03/03/17 | | 03/02/27 | | | | | | | | |
| 75,000 | | | — | | | 5.52 | | | 02/16/18 | | 02/15/28 | | | | | | | | |
| 45,000 | | | 15,000 | | | 4.16 | | | 12/10/18 | | 12/09/28 | | | | | | | | |
| 35,000 | | | 35,000 | | | 5.10 | | | 12/09/19 | | 12/08/29 | | | | | | | | |
| 8,750 | | | 26,250 | | | 4.80 | | | 11/16/20 | | 11/15/30 | | | | | | | | |
| — | | | 37,500 | | | 5.00 | | | 11/18/21 | | 11/17/31 | | | | | | | | |
| | | | | | | | | | | 18,674(2) | | 55,649(4) | | | | |
| | | | | | | | | | | | | | | 17,429(3) | | 51,938(4) |
| | | | | | | | | | | | | | | | | | |
Ramin Massoumi(5) Senior Vice President and General Manager, Consulting Solutions | | 75,000 | | | — | | | 4.91 | | | 03/03/17 | | 03/02/27 | | | | | | | | |
| 75,000 | | | — | | | 5.52 | | | 02/16/18 | | 02/15/28 | | | | | | | | |
| 44,999 | | | 15,001 | | | 4.16 | | | 12/10/18 | | 12/09/28 | | | | | | | | |
| 35,000 | | | 17,500 | | | 5.10 | | | 12/09/19 | | 12/08/29 | | | | | | | | |
| 8,750 | | | 8,750 | | | 4.80 | | | 11/16/20 | | 11/15/30 | | | | | | | | |
| | | | | | | | | | | 4,357(2) | | 12,984(4) | | | | |
_______________________(1)
All options vest in four equal annual installments following the date of grant. The vesting of equity awards held by the named executive officers is subject to each officers continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential“Potential Payments upon Termination of Employment and Change in Control”Control” below.
(2)
Each RSU represents the right to receive one share of our common stock if vesting is satisfied. These RSUs were granted under the 2016 Omnibus Incentive Plan and vest fifty-percent (50%) after two (2) years from the vesting commencement date, and fifty-percent (50%) after the third (3rd) year from the vesting commencement date, upon named executive officer’s completion of each year of continued service with the Company. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Changing in Control” below. Vested shares are issued as soon as practicable after the applicable vesting date.
(3)Each PSU represents the right to receive one share of our common stock if vesting is satisfied. The number of PSUs that vest at the end of the three-year performance period ending March 31, 2023 will depend, in part, on the Company’s average revenues per share and cash flow from operations performance during the three-year performance period and, in part, on the Company’s rTSR relative to the Russell 2000 over the three-year performance period. Executives will receive payment with respect to the PSUs, in the form of shares of the Company’s common stock, at the conclusion of the performance period, upon establishment of final performance results. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. In addition, the final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company’s rTSR relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the “target” number of PSUs. The PSUs are reflected in the table above at “target” performance levels. The vesting of equity awards held by the named executive officers is subject to each officer’s continued service with the Company, and is subject to acceleration under certain circumstances as discussed under the heading “Potential Payments upon Termination of Employment and Change in Control” below.
(4)The dollar value is based on the closing sales price of our common stock on the last business day of Fiscal 2022, $2.98.
(5)Mr. SchmidtMassoumi ceased to serve as our Chief Financial Officer,Senior Vice President of Finance and SecretaryGeneral Manager, Consulting Solutions on December 4, 2019. In accordance with31, 2021. Pursuant to his Severance Agreement (defined below), all of Mr. Schmidt’sMassoumi's outstanding options will continue vesting offor up to twelve (12) months from the date he ceased his employment with the Company in consideration of serving as a senior advisor to assistmaking himself available for consulting services during such period. See "Iteris, Inc. Executive Severance Plan" under "Potential Payments upon Termination of Employment and Change in the transition of his Chief Financial Officer duties.Control" below.
Fiscal 20202022 Option Exercises and Stock Vesting Table
NoThe following table provides information regarding option exercises of awards held by the named executive officers during Fiscal 2022.
| | | | | | | | | | | |
| Option Awards |
Name | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) |
Joe Bergera | 84,915 | $393,306 |
Douglas L. Groves | — | — |
Todd Kreter | 49,829 | 229,184 |
Ramin Massoumi(2) | | — | — |
(1) Value realized is determined by multiplying (i) the amount by which the market price of a common share on the date of exercise exceeded the exercise price by (ii) the number of shares for which the options were exercised byexercised.
(2) Mr. Massoumi ceased to serve as our Senior Vice President and General Manager, Consulting Solutions on December 31, 2021.
Non-Qualified Deferred Compensation for Fiscal 2022
Deferred Compensation Plan. Effective October 1, 2020, the NEOsCompany adopted the Iteris, Inc. Non-Qualified Deferred Compensation Plan (the “DC Plan”). The DC Plan consists of two plans, one that is intended to be an unfunded arrangement for eligible key employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and no stock awards vested during Fiscal 2020.
401(a)(1) of ERISA, and one for the benefit of nonemployee members of our Board of Directors. Key employees, including our executive officers, and our nonemployee directors who are notified regarding their eligibility to participate and delivered the DC Plan enrollment materials are eligible to participate in the DC Plan. Under the DC Plan, we will provide participants with the opportunity to make annual elections to defer up to 75% of their base salary, up to
100% of their annual bonus, and up to 100% of any RSU or PSU awards. Our nonemployee directors may elect to defer up to 100% of their eligible cash compensation and equity awards. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon.
Elective deferrals of equity awards are credited to a bookkeeping account established in the name of the participant with respect to an equivalent number of shares of our common stock, and such credited shares are subject to the same vesting conditions as are applicable to the equity award subject to the election. The Company established a rabbi trust to finance our obligations under the DC Plan with corporate-owned life insurance policies on participants, and the assets held within this trust are subject to the claims of the Company’s creditors.
Under the DC Plan, we will be obligated to deliver on a future date deferred cash compensation credited to the participant’s account, adjusted for any positive or negative investment results from the investment alternatives selected by the participant under the DC Plan, or with respect to deferrals of equity awards, an issuance of shares of our common stock. These obligations are unfunded, unsecured general obligations of the Company and rank in parity with other unsecured and unsubordinated indebtedness of us, subject to the claims of our general creditors. However, deferrals of equity awards under the DC Plan are deemed rights to receive an issuance of our common stock and may not be deemed allocated to any investment fund.
A participant’s rights under the Plan are not transferable except upon death of the participant.
With respect to the portion of the bookkeeping account allocated to an investment fund, each account will be payable in cash. The portion of the bookkeeping account allocated to deferrals of equity awards will be payable in an issuance of shares of our common stock.
Payments will be distributed in connection with either the participant’s separation of service or a selected specified distribution date or dates, depending upon the distribution election made by the participant at the time of deferral. However, if a participant’s service with us terminates prior to the selected specified distribution date or dates, payment will instead be made or commence in connection with such separation from service. A participant’s account balance may be distributed in a lump sum or, if elected by a participant, in up to 15 substantially equal installments (up to 5 annual installments for any distributions in respect of equity award accounts); however, any distribution upon a separation from service prior to attaining age 55 will be paid in a lump sum, regardless of the payment timing elected. If a participant’s service terminates with us due to death, all of a participant’s accounts will become immediately payable in a single lump sum. In addition, participants may be entitled to receive payments through certain unforeseeable emergency withdrawals. Payments scheduled to be made under the Plan may be otherwise delayed or accelerated only upon the occurrence of certain specified events that comply with the requirements of Section 409A of the Code.
A committee appointed by our board of directors administers the Plan. We can amend or terminate the Plan at any time, but no such action shall unilaterally reduce a participant’s account balance without his or her consent prior to the date of such action. However, we may adopt any amendments to the Plan that we deem necessary or appropriate to preserve the intended tax treatment of the Plan benefits or to otherwise comply with the requirements of Section 409A of the Code and related guidance.
The following table shows the non-qualified deferred compensation activity for each named executive officer during Fiscal 2022.
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Name | | Executive Contributions in Last Fiscal Year ($) (1) | | Aggregate Earnings in Last Fiscal Year (2) | | Aggregate Withdrawals /Distributions ($) | | Aggregate Balance at Last Fiscal Year End ($) |
Joe Bergera | $89,655 | | $(534) | | $— | | $89,121 |
Douglas L. Groves | 426,995 | | (303) | | — | | 426,692 |
Todd Kreter | — | | — | | — | | — |
Ramin Massoumi (3) | 37,490 | | (540) | | — | | 36,950 |
1.Amounts included in the Summary Compensation Table in the “Salary” and “Non-Equity Incentive Plan Compensation” columns for Fiscal 2022.
2.No above market or preferential earnings are provided under the DC Plan because the investment choices available under such plans are identical to the investment choices available in the 401(k) Plan, which is a qualified plan. Consequently, none of the earnings reported in this table are included in the Summary Compensation Table set forth above.
3.Massoumi ceased to serve as our Senior Vice President and General Manager, Consulting Solutions on December 31, 2021.
The DC Plan provides investment options amongst which participants make investment allocations that provide the basis on which gains and losses are attributed to account balances under the plan, and such options may change from time to time. The investment options under the DC Plan and their rates of return for the period from April 1, 2021 through March 31, 2022, which represents the period of time during which cash deferrals were first deferred under the DC Plan.
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Name of Investment Option | | Rate of Return (%) |
AB Discovery Growth Fund I | | | (18.19) | % |
AB Large Cap Growth Fund Class Z | | | (12.59) | % |
American Balanced Fund Class R6 | | | (3.94) | % |
American Century Midcap Val I | | | 2.39 | % |
American EuroPacific Growth R6 | | | (12.24) | % |
American New Perspective | | | (9.96) | % |
Dodge & Cox Stock Fund | | | 1.01 | % |
Invesco Developing Markets Fund R6 | | | (15.68) | % |
Janus Henderson Triton Fund I | | | (9.47) | % |
JP Morgan Mid Cap Val Fund R6 | | | (0.96) | % |
Principal Real Estate SEC Fund I | | | (5.19) | % |
T. Rowe Price 2005 Retirement I | | | (4.53) | % |
T. Rowe Price 2010 Retirement I | | | (4.75) | % |
T. Rowe Price 2015 Retirement I | | | (4.82) | % |
T. Rowe Price 2020 Retirement I | | | (4.98) | % |
T. Rowe Price 2025 Retirement I | | | (5.37) | % |
T. Rowe Price 2030 Retirement I | | | (5.92) | % |
T. Rowe Price 2035 Retirement I | | | (6.28) | % |
T. Rowe Price 2040 Retirement I | | | (6.60) | % |
T. Rowe Price 2045 Retirement I | | | (6.75) | % |
T. Rowe Price 2050 Retirement I | | | (6.76) | % |
T. Rowe Price 2055 Retirement I | | | (6.74) | % |
T. Rowe Price 2060 Retirement I | | | (6.74) | % |
T. Rowe Price Retirement Bal I | | | (4.28) | % |
Vanguard 500 Index Fund | | | (4.61) | % |
Vanguard Grow And Inc Fund | | | (3.90) | % |
Vanguard Small Cap Index Fund | | | (5.74) | % |
Vanguard Total Int Stock Index | | | (6.08) | % |
Victory Sycamore Small Comp R6 | | | (4.77) | % |
Fidelity Advisor Gov't Income M | | | (5.51) | % |
Loomis Sayles Core Plus Cl N | | | (5.36) | % |
PIMCO Real Return Fund Cl Inst | | | (3.03) | % |
Templeton Global Bond Fund R6 | | | 1.14 | % |
Goldman Sachs Stable Value Ct | | | 0.31 | % |
Potential Payments upon Termination of Employment and Change in Control
We doThe Company does not currently have any employment contractsagreements or change in control arrangements in effect with any of our named executive officers other than the agreements described below. We provide incentives suchIn addition, our NEOs may be eligible for certain payments upon a
termination or a change in control under the DC Plan, as salary, benefits, option grants and RSUs, to attract and retain executive officers and other key associates. further described above under “Non-Qualified Deferred Compensation for Fiscal 2022.”
Equity Award Vesting
The plan administrator of the 2007 Omnibus Incentive Plan and 2016 Omnibus Incentive Plan has the discretion to determine whether outstanding equity awards held by our NEOs are to vest upon a qualifying termination of employment following certain changes in control of the Company, or upon sucha change in control, but our equity plans do not provide for any automatic “single trigger”“single trigger” acceleration of equity awards upon a change in control.
Options granted to our named executive officers are eligible for accelerated vesting under certain circumstances. In the event of an executive’s termination due to death or permanent disability, a pro-rata portion of the options shall vest on the date of such termination. In addition, if an executive’s employment is terminated by us other than for misconduct or the executive resigns for good reason (each such term as defined in the 2016 Omnibus Incentive Plan), in each case within eighteen (18) months following the effective date of a change in control, then such additional number of options shall vest as of the date of termination as is equal to the number of options as would have vested during the two (2) year period following the date of termination had the executive remained employed by us or our successor during such period.
RSUs granted to our named executive officers are eligible for accelerated vesting under certain circumstances. In the event of an executive’s termination due to death or permanent disability, a pro-rata portion of the RSUs shall vest on the date of such termination. In addition, if an executive’s employment is terminated by us other than for misconduct or the executive resigns for good reason (each such term as defined in the 2016 Omnibus Incentive Plan), in each case within eighteen (18) months following the effective date of a change in control, then such additional number of RSUs shall vest as of the date of termination as is equal to the number of RSUs as would have vested during the two (2) year period following the date of termination had the executive remained employed by us or our successor during such period.
PSUs granted to our named executive officers are also eligible for accelerated vesting under certain circumstances. In the event of an executive’s termination due to death or permanent disability prior to a change in control, a pro-rata portion of the PSUs shall vest on the date of such termination based on our actual performance relative to the performance metrics applicable to the PSUs through such date. Upon a change in control, a number of PSUs will remain eligible to vest on the last day of the three-year performance period as is determined based on our actual performance relative to the performance metrics applicable to the PSUs through the date of such change in control, subject to the executive’s continued employment through such date. However, if an executive’s employment is terminated by us other than for misconduct or the executive resigns for good reason (each such term as defined in the 2016 Omnibus Incentive Plan), or in the event of an executive’s termination due to death or permanent disability in each case within eighteen (18) months following the effective date of the change in control, then such additional number of PSUs shall vest as of the date of termination as is equal to the number of PSUs as would have vested during the two-year period following the date of termination had the executive remained employed by us or our successor during such period.
Iteris, Inc. Executive Severance Plan
The Iteris, Inc. Executive Severance Plan (the “Severance Plan”) was adopted on February 5, 2018 and amended and restated effective on June 4, 2019 (the “Severance Plan”). Each individual employed by the Company or its subsidiary, who is an officer subject to Section 16 of the Exchange Act, and who is not otherwise covered by an employment agreement that includes severance terms (the “Eligible Employees”), is eligible to receive severance payments under the Severance Plan upon certain qualifying terminations of employment.
The Severance Plan provides Eligible Employees with severance payments in the event that an Eligible Employee’s employment with the Company or its subsidiaries is terminated either (a) by the Company without Cause not in connection with a Change in Control (“Non-CIC Qualifying Termination”) or (b) if in connection with or within 12 months following a Change in Control, which, for Eligible Employees employed by that business, includes a divestiture of a material business, by the Eligible Employee for Good Reason (as such terms are defined in the Severance Plan) or by the Company without Cause (a “CIC Qualifying Termination”).
Non-CIC Qualifying Termination. Upon a Non-CIC Qualifying Termination, an Eligible Employee will receive the following:
•A cash payment equal to the Eligible Employee’s annual base salary, payable in substantially equal installment payments over the one-year period following termination, in accordance with the Company’s normal payroll practices; and
•Reimbursement for the Eligible Employee’s monthly COBRA premiums for the 12-month period following termination or until the Eligible Employee receives substantially similar medical coverage from another employer.
•CIC Qualifying Termination.Upon a CIC Qualifying Termination, an Eligible Employee will receive the following:
•A cash payment equal to the Eligible Employee’s annual base salary, payable in a lump sum on the next payroll date after the 61st day following termination; and
•Reimbursement for the Eligible Employee’s monthly COBRA premiums for the 12-month period following termination, or until the Eligible Employee receives substantially similar medical coverage from another employer.
The severance payments are subject to the Eligible Employee’s execution of a severance agreement within 60 days following termination that includes a release of claims and certain non-solicitation, confidentiality, and non-disparagement restrictions.
The Company may amend or terminate the Severance Plan at any time by providing at least 90 days’ advance written notice to each Eligible Employee, provided that no such amendment or termination that has the effect of reducing or diminishing the right of any Eligible Employee will be effective unless one year’s advance written notice is provided to Eligible Employees, and such amendment or termination will not be effective if a Change in Control occurs during the one-year notice period.
Agreement with Joe Bergera
In connection with his hiring, we entered into an employment agreement with Joe Bergera, our Chief Executive Officer, dated September 8, 2015, pursuant to which Mr. Bergera will receive an annual base salary of $385,000, which may be increased from time to time at the discretion of the Compensation Committee. Mr. Bergera will also be eligible to participate in our executive bonus plan as then in effect and his potential bonus for each year will be established annually by the Board or a committee of the Board, provided that the bonus potential for Fiscal 2016 was $300,000, of which $150,000 was a signing bonus payable on January 31, 2016 provided that Mr. Bergera was employed by the Company as of such date.Board. The agreement is for an initial term of three years and will renewrenews for successive one yearone-year periods until September 2025 unless either we or Mr. Bergera provide written notice of non-renewal at least 30 days prior to the end of the initial term or renewal term, as applicable.
If during the term of the agreement, Mr. Bergera’sBergera’s employment with the Company is terminated without Cause (as such term is defined in the agreement), during the term of the agreement, Mr. Bergera will be entitled to receive (i) salary continuation payments for 12 months following his termination, (ii) a lump sum payment equal to the pro-rated portion of his target bonus established by the Compensation Committee for the fiscal year in which his employment is terminated, and (iii) reimbursement for the cost of COBRA coverage for a period of up to 12 months following the termination. If Mr. Bergera is terminated without Cause or resigns for Good Reason within 12 months following a Change in Control (as such terms are defined in the agreement) (such termination or resignation, a “CIC Termination”“CIC Termination”), Mr. Bergera will be entitled to receive (i) a lump sum payment equal to 125% of his base salary as then in effect, (ii) a lump sum payment equal to the pro-rated portion of his target bonus established by the Compensation Committee for the fiscal year in which the CIC Termination occurs, and (iii) reimbursement for the cost of COBRA coverage for a period of up to 12 months following the CIC Termination, and (iv) acceleration of the vesting of the Option.Termination. In addition, upon termination of his employment due to death, Mr. Bergera’sBergera’s estate or beneficiaries will be entitled to receive a lump sum payment in the aggregate equal to 50% of his then current base salary.
Severance Agreement with Andrew SchmidtRamin Massoumi
On December 9, 2019,30, 2021, in connection with Mr. Schmidt’sMassoumi’s departure, the Company and Mr. SchmidtMassoumi entered into a severance and release agreement (the “Severance Agreement”“Severance Agreement”).Pursuant to the Severance Agreement, the Company agreed to pay to Mr. SchmidtMassoumi a severance package consisting of the following (i) Mr. Schmidt’sMassoumi’s base salary of currently approximately $388,589,$287,500, less applicable taxes and withholding, paid in equal installments for a 12 month12-month period in accordance with the Company’sCompany’s normal payroll practices, (ii) COBRA premiums reimbursement for up to a 12 month12-month period, and (iii) continued vesting of all outstanding Company equity awards for up to 12 months in consideration of serving as a senior advisor to assist in the transition of his Chief Financial Officer duties.making himself available for consulting services during such period.