• | Business Driven: Compensation should be aligned to our performance by linking rewards directly to the achievement of specific and challenging financial, operational, and strategic objectives that are expected to lead to increased stockholder value and executive retention and engagement. Performance Differentiated: Compensation should be structured to create an effective link between pay and performance at both the corporate and individual level so that the contributions of our Executive Officers are valued and rewarded.
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Market Competitive: Compensation should be competitive to attract, retain, and motivate Executive Officers needed to achieve our core strategic vision.
Our overall amount of equity awards should be related to our company performance: We believe that our use of equity awards must be sensitive to the dilutive impact that such equity compensation will have on our stockholders.
• | Performance Differentiated: Compensation should be structured to create an effective link between pay and performance at both the corporate and individual level so that the contributions of our Executive Officers are valued and rewarded. |
• | Market Competitive: Compensation should be competitive to attract, retain, and motivate Executive Officers needed to achieve our core strategic vision. |
• | No Excessive Dilution: We believe that our overall reliance on equity awards should be related to our performance, and that the use of equity awards must be sensitive to the dilutive impact that such equity compensation will have on our stockholders. |
We also maintain a strong focus on leadership development and retention, and as such, our executive compensation program is designed to ensure that we attract and retain the talent required to execute our business strategy. The compensation actions and decisions for our Named Executive Officers support our talent retention objectives by considering individual contributions to our performance, long-term potential and holding power, and organizational succession plans. We regularly assess and adjust our executive compensation program, policies, and practices in light of these overarching principles and, in doing so, consider feedback obtained through our stockholder engagement efforts. TABLE OF CONTENTS Compensation-Setting Process Role of Compensation Committee The Compensation Committee, which is composed entirely of independent directors, is responsible for reviewing and approving the compensation of our Named Executive Officers, other than for our President and CEO. The independent members of our Board review and approve the recommendations of the Compensation Committee with respect to the compensation offor our President and CEO. The Compensation Committee’s decisions are subject to any approval of our Board that the Compensation Committee or legal counsel determines to be desirable or is required by applicable law or Nasdaq rules. Specifically, the Compensation Committee oversees our executive compensation plans,program, administers our equity compensation plans, and reviews and approves the compensation of our Executive Officers. With respect to the compensation ofOfficers (other than our President and CEO, the Compensation Committee recommends such compensation to the independent directors of the Board, who also separately approve it.CEO). The Compensation Committee operates under a written charter adopted by our Board. A copy of the charter is posted on the investor relations section of our website located at https://investor.ni.com/corporate-governance. As described in greater detail in the next section, the Compensation Committee considers both ourCompany performance and individual performance when determining the overall compensation levels for our Named Executive Officers, as well as the individual elements of compensation. For example, our EIP cash incentive program is designed to incentincentivize our Executive Officers to achieve identified companypre-established Company key objectives, which are financial and operational metrics, and ensure that our company’s performance impacts the amounts payable to participants. The Compensation Committee believes that the various elements of executive compensation should work together to promote our objective that total compensation be related both to companyCompany and individual performance. Setting Total Direct Compensation The Compensation Committee (and(or, in the case of our President and CEO, the independent members of our Board, upon the recommendation of the Compensation Committee) does not establish a specific target for the total direct compensation opportunity of our Named Executive Officers. In making decisions about the compensation of our Named Executive Officers, the Compensation Committee (and(or in the case of our President and CEO, the independent members of our Board, upon the recommendation of the Compensation Committee) relies primarily on the general business acumen and experience of its members and subjective consideration of various factors, including the following: our executive compensation program objectives; our performance against the financial, operational, and strategic objectives established by the Compensation Committee and our Board; each individual Named Executive Officer’s knowledge, skills, experience, qualifications, and tenure relative to other similarly-situatedsimilarly situated executives at the companies in our compensation peer group and/or selected broad-based compensation surveys; TABLE OF CONTENTS
the scope of each Named Executive Officer’s role and responsibilities compared to other similarly-situatedsimilarly situated executives at the companies in our compensation peer group and/or selected broad-based compensation surveys; the prior performance of each individual Named Executive Officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values; the potential of each individual Named Executive Officer to contribute to our long-term financial, operational, and strategic objectives; the business risk presented to us in the event the Named Executive Officer were to leave our employ; our President and CEO’s compensation relative to that of our Named Executive Officers, and compensation parity among our Named Executive Officers; general compensation trends and practices in the technology industry;industry and broader U.S. market; TABLE OF CONTENTS the compensation practices of comparable companies, including our compensation peer group and the positioning of each Named Executive Officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data conducted by the Compensation Committee’s independent compensation consultant as well as our in-house compensation experts; and the recommendations of our President and CEO with respect to the compensation of our Named Executive Officers (other than his own compensation). These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each Named Executive Officer. No single factor is determinative in setting compensation levels, nor is the impact of any individualsingle factor on the determination of pay levels objectively quantifiable. The Compensation Committee does not weigh these factors in any predetermined manner, nor does it apply any formulas in developing its compensation decisions. The members of the Compensation Committee consider all of this informationfactors in light of their individual experience, knowledge of NI,the Company, knowledge of the competitive market, knowledge of each Named Executive Officer, and business judgment in making these decisions. Role of Management In establishing our executive compensation program, the Compensation Committee worksworked closely with our senior management, including our President and CEO and our Senior Vice President and Chief People Officer. In 2020,2022, the Compensation Committee obtained input from our President and CEO when discussing the performance of, and compensation levels for, our Named Executive Officers (other than himself). The Compensation Committee also worked closely with our President and CEO and our Senior Vice President and Chief People Officer and others, as required, in evaluating the financial, accounting, tax, talent management/succession planning, and retention implications of our executive compensation program and its various elements. Neither our President and CEO nor any of our other Named Executive Officers arewas present when theirhis or her own compensation iswas being discussed by the Compensation Committee. Role of Compensation Consultant The Compensation Committee has engaged Compensia, a national compensation consulting firm, as its independent compensation consultant to advise on executive compensation matters. In 2020,2022, at the direction of the Compensation Committee, Compensia conducted various projects, including performing a comprehensive review of our executive compensation program, performing a review of the compensation program for our Board on behalf of the Nomination &and Governance Committee, assisting the Compensation Committee in updating our compensation peer group and preparing an analysis of the compensation of our Executive Officers, and assisting in the preparation of the executive compensation disclosure for our 20202022 proxy statement. Compensia did not provide any other services for us in 2020.2022. The Compensation Committee has evaluated its relationshipannually reviews Compensia’s performance. As part of the review process, the Compensation Committee considers the independence of Compensia in accordance with Compensia to ensure that it believes that such firm is independent from management.SEC and Nasdaq listing rules. This review process included a review of the services that such compensation consultant provided, the quality of those services, and the fees associated with the services provided during 2020.2022. TABLE OF CONTENTS
Based on this review, as well as consideration of the factors affecting independence set forth in the listing standards ofSEC and Nasdaq and the relevant SEClisting rules, the Compensation Committee has determined that no conflict of interest was raised by Compensia'sCompensia’s work and that Compensia met the independence requirements of such rules. Competitive Positioning In making its compensation decisions for 2020,2022, the Compensation Committee reviewed a competitive market analysis based on a compensation peer group, including (1) compensation data collected from publicly available information contained in the SEC filings from 1619 selected peer group companies, and (2) data from a customized cut of the Radford Global Technology Survey, which included 1415 of the 1619 peer companies. Where insufficient data was available for a specific position for our peer group, the Compensation Committee looked at data from the general Radford Global Technology survey focusing on publicly traded technology companies with annual revenues ranging from $1 billion to $3 billion. TABLE OF CONTENTS Based on the recommendation of its independent compensation consultant, the Compensation Committee adjusted ourmade the following changes to the peer group companies for 20202022 (as compared to the peer group for 2021): (1) removed Nuance Communications due to its pending acquisition and determinedSynopsys due to (1) remove MTS Systems from the list of peers because its large market capitalization, was no longer comparable(2) added Advanced Energy Industries and FormFactor as they fit our traditional business model, and (3) added Altair Engineering and Alteryx to NI’s and (2) add Novanta and Viavi Solutionsreflect our transition to the list of peers as these companies have comparable revenue and market capitalization to NI’s.a software-oriented business model. The compensation peer group dataapproved by the Compensation Committee reviewed are as follows:for 2022 consisted of the following companies: | Company Name | | Annual
Revenue
(in millions)
Last Four Quarters | | Market
Capitalization
(in millions) | | Company Name | | Annual
Revenue
(in millions)
(last four quarters) | | Market
Capitalization (1)
(in millions) | | | ANSYS | | $1,328 | | $16,636 | | Advanced Energy Industries | | $1,452 | | $3,846 | | | Cadence Design Systems | | 2,197 | | 19,556 | | Altair Engineering | | 489 | | 4,902 | | | Cirrus Logic | | 1,186 | | 2,449 | | Alteryx | | 505 | | 5,314 | | | Cognex | | 810 | | 7,641 | | ANSYS | | 1,740 | | 28,929 | | | Cypress Semiconductor | | 2,441 | | 8,002 | | Cadence Design Systems | | 2,801 | | 35,182 | | | Keysight Technologies | | 4,147 | | 16,022 | | Cirrus Logic | | 1,369 | | 4,434 | | | MKS Instruments | | 1,984 | | 4,096 | | Cognex | | 883 | | 13,721 | | | Novanta | | 625 | | 3,075 | | Citrix Systems | | 3,152 | | 14,505 | | | OSI Systems | | 1,161 | | 2,026 | | FormFactor | | 719 | | 2,659 | | | PTC | | 1,262 | | 10,389 | | Keysight Technologies | | 4,632 | | 26,507 | | | Silicon Laboratories | | 851 | | 4,311 | | MKS Instruments | | 2,488 | | 9,944 | | | Synopsys | | 3,231 | | 19,050 | | Novanta | | 598 | | 4,783 | | | Teledyne Technologies | | 2,951 | | 9,447 | | OSI Systems | | 1,092 | | 1,740 | | | Teradyne | | 2,107 | | 7,867 | | PTC | | 1,634 | | 15,442 | | | Trimble | | 3,168 | | 10,904 | | Silicon Laboratories | | 927 | | 5,988 | | | Viavi Solutions | | 1,106 | | 3,042 | | Teledyne Technologies | | 3,107 | | 19,237 | | | | Teradyne | | 3,199 | | 21,022 | | | | Trimble | | 3,242 | | 19,471 | | | | Viavi Solutions | | 1,155 | | 3,913 | |
Financial data per S&P Capital IQ as of 7/11/2019June 22, 2021. The Compensation Committee used the specific compensation data described above to assess the reasonableness and competitiveness of the compensation packages as a whole for our Named Executive Officers but exercised its judgment in allocating compensation among our Named Executive Officers and among the various elements of each individual Named Executive Officer’s total compensation package. The Compensation Committee believes that total compensation and each element of compensation at or around the 50th50th percentile of the competitive market (based on the compensation data evaluated), in each case, is the appropriate reference when determining the compensation of our Named Executive Officers. Though the Compensation Committee uses such 50ththe 50th percentile as a reference point, it does not target a specific percentile in the range of comparative information for each individual Named Executive TABLE OF CONTENTS
Officer or for each element of compensation. Instead, the Compensation Committee structures the total compensation package for each Named Executive Officer after consideration of the comparative market data and the other factors described above in this Compensation Discussion and Analysis, under the heading “Compensation-Setting Process” and sub-heading “Setting Total Direct Compensation.” Elements of Executive Compensation The principal elements of our executive compensation program for 20202022 were as follows: Base salary; EIP for cash incentive bonus opportunities; and Long-term incentive compensation in the form of equity awards. TABLE OF CONTENTS Base Salary Base salary represents the fixed portion of the compensation of our Named Executive Officers and is an important element of compensation intended to attract and retain highly-talentedhighly talented individuals. We use base salary to provide each Named Executive Officer with a competitive level of cash compensation during the year with the expectation that he or she will perform his or her responsibilities to the best of his or her ability and in our best interests. Generally, we establish the initial base salaries of our Named Executive Officers at the time we hire or promote the individual Named Executive Officer, taking into account his or her position, qualifications, experience, salary expectations, external market data, and the base salaries of our other Executive Officers. Thereafter, the Compensation Committee reviews the base salaries of our Executive Officers annually, with input from our President and CEO (except with respect to his own base salary) and makes adjustments as it determines to be reasonable and necessary to reflect the scope of an Executive Officer’s performance, individual contributions and responsibilities, position in the case of a promotion, and market conditions. The Compensation Committee does not use a specific formula, but instead the committee members exercise their judgment in view of our compensation philosophy and objectives. In February 2020,January 2022, the Compensation Committee reviewed the base salaries of our Named Executive Officers, other than Mr. Starkloff or Mr. Davern, taking into consideration a competitive market analysis prepared by Compensia and the recommendations of our President and CEO (other than with respect to his own salary), as well as the other factors set forth above and described in the Compensation“Compensation Discussion and Analysis under the heading– “Compensation-Setting Process” and sub-heading– “Setting Total Direct Compensation.” In connection with his appointment as President and CEO and pursuant to the Starkloff Executive Employment Agreement, Mr. Starkloff received an increase in his annual base salary effective February 1, 2020, which was approved by the Compensation Committee and the independent members of our Board in October 2019. Base salary increases that took effect in 2020as of January 1, 2022 for certain of our Named Executive Officers are as follows: | Named Executive Officer (1) | | 2019 Base
Salary | | 2020 Base
Salary (4) | | Percentage
Adjustment | | Named Executive Officer | | 2021
Annual Base
Salary | | 2022
Annual Base
Salary | | Percentage
Adjustment | | | Eric H. Starkloff (2) | | $551,250 | | $700,000 | | 27% | | Eric H. Starkloff | | $735,000 | | $735,000 | | —% | | | Karen M. Rapp | | 413,438 | | 458,916 | | 11% | | Karen M. Rapp | | 480,000 | | 500,000 | | 4.2% | | | Scott A. Rust | | 385,000 | | 400,400 | | 4% | | Scott A. Rust | | 425,000(1) | | 425,000 | | —% | | | Alexander M. Davern (3) | | 775,754 | | 775,754 | | 0% | | Jason E. Green | | 575,000 | | 595,000 | | 3.5% | | | | Ritu Favre | | 425,000 | | 450,000 | | 5.9% | |
(1)
| Mr. Green and Ms. Pineyro Sublett became Named Executive Officers in January 2020 and are therefore excluded from the above table. |
(2)
| Mr. Starkloff’sRust’s base salary was increased from $412,500 to $700,000 upon$425,000 in connection with his appointment as our CEO,promotion to Executive Vice President, Platform & Product, pursuant to his employment agreement with the Company, effective as of FebruaryOctober 1, 2020.2021. |
(3)
| Mr. Davern ceased to be our CEO effective as of January 31, 2020 and continues to serve on our Board. |
(4)
| Reflects the annual salary approved by the Compensation Committee and, as applicable, the independent members of our Board. In 2020, Mr. Starkloff, our President and CEO, in response to the economic impact of the COVID-19 pandemic on our business, voluntarily reduced his base salary by 20% and our other Named Executive Officers voluntarily reduced their base salaries by 10%. These voluntary reductions were in effect for the period of May 1, 2020 through September 30, 2020, and are reflected in the “Summary Compensation Table,” below. None of these voluntary actions were at the request of the Compensation Committee. |
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The Compensation Committee increased the base salary for Ms. Favre to bring her base salary closer to the 50th percentile of the peer group. The actual base salaries paid to our Named Executive Officers in 20202022 are set forth in the “2020“2022 Summary Compensation Table” below. Executive Incentive Program (“EIP”) In 2020, the Compensation Committee adopted the EIP to replace our prior cash bonus programs for our Executive Officers, the Annual Incentive Program and the Annual Company Performance Bonus Program. The EIP is intended to promote companyCompany performance (and, thereby, increase stockholder value) by providing our Named Executive Officers with the opportunity to earn cash payouts based on their level of attainment of three key pre-established corporate financial and operational objectives. Every calendar year, the Compensation Committee sets key corporate financial and operational objectives that it considers critical to our performance during such calendar year. For 2020,2022, these key corporate financial and operational objectives, which were set during the first quarter of the year, were:
non-GAAP organic revenue growth (excluding (i) any acquisitions by the Company other than N H Research, LLC or (ii) any dispositions by NI)the Company) (“Revenue Growth”); non-GAAP operating margin levels based on organic results (“Operating Margin”); and key employee retention (that is, retentionrecurring billed value of 95%all termed software subscription license agreements and perpetual maintenance agreements normalized to a one-year period (“Software Annual Recurring Revenue”).
Refer to Annex I for a reconciliation of high performance/high impact identified employees from a talent review data file at December 31, 2020).the non-GAAP financial measures to our results as reported under GAAP. TABLE OF CONTENTS After selecting these key corporate financial and operational objectives, except as noted below, the Compensation Committee, andor, in the case of Mr. Starkloff,our President and CEO, the independent members of our Board, based on the recommendations of the Compensation Committee, set: (1) the weighting of the key corporate financial and operational objectives for each Named Executive Officer, (2) the “target”target cash incentive bonus opportunity for each Named Executive Officer, expressed as a percentage of his or her base salary, and (3) the different EIP payout levels based on our actual performance for each key corporate financial and operational objective, expressed as a percentage of payout which increased or decreased with companyCompany performance. For each of Mr. Starkloff, Ms. Rapp, Mr. Rust, and Ms. Pineyro Sublett, theThe key corporate financial and operational objectives were weighted as follows: 50% of any payout was dependent on achieving the pre-established Revenue Growth 40% of any payout was dependent on achieving pre-established Operating Margin, and 10% of any payout was dependent on achieving our key employee retention figures. For Mr. Green, the key corporate financial and operational objectives were weighted as follows: 60% of any payout was dependent on achieving pre-established Revenue Growth,target level, 30% of any payout was dependent on achieving the pre-established Operating Margin target level, and 10%20% of any such payout was dependent on achieving our key employee retention figures.the Software Annual Recurring Revenue target level.
After the end of the year, the payout amount for the actual level of achievement of each key corporate financial and operational objectiveobjectives was determined by the Compensation Committee. The Operating Margin payout was approved by the Compensation Committee based on our performance after adjusting the Operating Margin for each Executive Officer.actual annual cash incentive compensation expenses and associated payroll taxes versus related estimated expenses and taxes used when establishing the EIP payout slope. The Compensation Committee then approved the EIP payout amount for each Named Executive Officer, other than our President and CEO, and provided a recommendation to the independent members of our Board onwith respect to the EIP payout amount for our President and CEO for their consideration and approval. The 2020Compensation Committee set the 2022 EIP payout levels were initially set from 0% to 200% (based on company performance). However, due to the economic impact of the COVID-19 pandemic on our business thesewith a linear payout slope. EIP payout levels were revised in July by the Compensation Committee after consultation with its independent compensation consultant. The Compensation Committee added two lower payout levels of 25% and 40%, while reducingare capped at the maximum of 200% and can be as low as zero. The weighting and payout level to 150% (thereby eliminating the payout levelspercentages for each of 175% and 200%). The Compensation Committee determined that these revisions were necessary to ensure that if we were able to achieve meaningful financial and operational results for the year, we would be able to reward our top leaders for their significant efforts to manage the unprecedented disruption to our business caused by the COVID-19 pandemic. While the EIP gave the Compensation Committee the discretion to add or eliminate the range of payout levels as previously described, it did not give either the Compensation Committee, or the independent members of our Board, the discretion to modify the bonus payment amount an Executive Officer would receive upon achieving a particular company performance level for any of the key corporate financial and operational objectives (e.g., 4%in 2022, to be paid linearly between payout levels, were as follows:
| Revenue Growth ($ in millions) (1) | | | 50% | | | <0% | | | $1,619 10% | | | $1,766 20% | | | $1,913 30% | | | $2.060 40% | | | $1,633 | | | 54.8% | | | Operating Margin (%) (1) | | | 30% | | | <20.5% | | | 20.5% | | | 20.8% | | | 23.3% | | | 25.5% | | | 19.9% | | | 0 % | | | Software Annual Recurring Revenue ($ in millions) | | | 20% | | | <$208 | | | $229 | | | $250 | | | $271 | | | $292 | | | $232 | | | 57.1% | |
(1)
| Refer to Annex I for a reconciliation of non-GAAP financial measures to our results as reported under GAAP. |
The table above sets forth the 2022 actual objective results and the related objective payout percentages. For 2022, Company performance corresponded to a payout percentage of 54.8% for the Revenue Growth equals 50% payoutobjective, 0% for meeting this key objective). That is, once anthe Operating Margin objective, was attainedand 57.1% for a specific level of company performance, the corresponding payout level was to be made at that specified percentage.Software Annual Recurring Revenue objective. TABLE OF CONTENTS The weighting and payout level percentages for each of these key corporate financial and operational objectives in 2020, prior to the modification made due to the economic impact of the COVID-19 pandemic on our business, were as follows: | Non-GAAP Revenue Growth | | | 50% other than
Mr. Green, which
was 60% | | | <4.0% | | | 4.0% | | | 5.0% | | | 6.0% | | | 7.0% | | | 8.0% | | | 9.0% | | | 10.0% | | | Non-GAAP Operating Margin | | | 40%, other than
Mr. Green, which
was 30% | | | <16.6% | | | 16.6% | | | 17.1% | | | 17.6% | | | 17.8% | | | 18.0% | | | 18.3% | | | 18.5% | | | Key Employee Retention | | | 10% | | | <94% | | | 94% | | | 94.5% | | | 95% | | | 95.5% | | | 96% | | | 96.5% | | | 97% | |
The weighting and payout level percentages for each of these key corporate financial and operational objectives in 2020, as modified due to the economic impact of the COVID-19 pandemic on our business, were as follows:
| Non-GAAP Revenue Growth | | | 50% other
than
Mr. Green,
which was
60% | | | <-6.0% | | | -6.0% | | | 0% | | | 4.0% | | | 5.0% | | | 6.0% | | | 7.0% | | | 8.0% | | | -6.0% | | | 25% | | | Non-GAAP Operating Margin | | | 40%, other than
Mr. Green,
which was 30% | | | <15.0% | | | 15.0% | | | 15.8% | | | 16.6% | | | 17.1% | | | 17.6% | | | 17.8% | | �� | 18.0% | | | 15.8% | | | 40% | | | Key Employee Retention | | | 10% | | | — | | | — | | | — | | | 94% | | | 94.5% | | | 95% | | | 95.5% | | | 96% | | | 96% | | | 150% | |
The table above sets forth the 2020 actual results and the 2020 objective payout. For 2020, Company performance corresponded to a payout percentage of 25% for the Revenue Growth objective, 40% for the Operating Margin objective, and 150% for the key employee retention objective.
The actual EIP bonus paid to each of our Named Executive Officers (other than Mr. Green) was calculated by multiplying (i) the aggregate weighted 20202022 EIP attainment percentage below(as noted in the table below) by (ii) the 20202022 EIP target amount (which is equal to the Named Executive Officer’s annual base salary multiplied by the EIP Target Percentage)target percentage). Company performance for all key objectives resulted in 2020a 2022 weighted EIP attainment percentages of 43.5%38.8% for each of Mr. Starkloff, Ms. Rapp, and Mr. Rust, and 42% for Mr. Green.our Named Executive Officers. For 2020,2022, the EIP bonus paid to each of our Named Executive Officers was as follows:
| Eric H. Starkloff | | | 135% | | | $992,250 | | | 38.8% | | | $385,191 | | | Karen M. Rapp | | | 100% | | | 500,000 | | | 38.8% | | | 194,100 | | | Jason E. Green (1) | | | 100% | | | 595,000 | | | — | | | — | | | Scott A. Rust | | | 100% | | | 425,000 | | | 38.8% | | | 164,985 | | | Ritu Favre | | | 100% | | | 450,000 | | | 38.8% | | | 174,690 | |
(1)
| Mr. Green departed from the Company effective December 31, 2022. Pursuant to the Transition Agreement and Release (the “Transition Agreement”) and the Separation Agreement and Release (the “Separation Agreement,” and together with the Transition Agreement, the “Green Transition and Separation Agreement”), Mr. Green received a lump sum payment in the amount of $595,000, which is the equivalent to 100% of his 2022 target cash incentive bonus opportunity (which was established at 100% of his annual base salary), paid at the same time the EIP bonus was paid to other Executive Officers of the Company. |
The actual bonuses paid to our Named Executive Officers for 2022 are set forth in the table“2022 Summary Compensation Table” below. | Eric H. Starkloff | | | 135% | | | $945,000 | | | 43.5% | | | $411,075 | | | Karen M. Rapp | | | 80% | | | 367,133 | | | 43.5% | | | 159,703 | | | Jason E. Green | | | 80% | | | 460,000 | | | 42% | | | 193,200 | | | Scott A. Rust | | | 65% | | | 260,260 | | | 43.5% | | | 113,213 | | | Carla Pineyro Sublett (1) | | | 72.5% | | | 312,903 | | | 43.5% | | | — | | | Alexander M. Davern (2) | | | — | | | — | | | — | | | — | |
(1)
| Ms. Pineyro Sublett resigned effective February 1, 2021, and was not eligible to receive a bonus under the EIP. Ms. Pineyro Sublett’s 2020 EIP target percentage was based on a 65% EIP target percentage for the first half of 2020 and an 80% EIP target percentage for the second half of 2020, due to increased responsibilities and a title change for the latter half of 2020. Ms. Pineyro Sublett’s 2020 EIP Target Amount is the result of the prorated bonus amount and salary amount for the first and second half of 2020. |
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(2)
| Mr. Davern ceased to be our CEO, effective as of January 31, 2020, and did not participate in the EIP or any other Executive Officer bonus program for 2020. |
Long-Term Incentive Compensation We believe that long-term incentive compensation in the form of equity awards is a critical element of our executive compensation program. The equity awards provide strong alignment between the interests of our Named Executive Officers and our stockholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our Named Executive Officers to create value for our stockholders. Equity awards also help us retain qualified Named Executive Officers in a competitive market. Long-term incentive compensation opportunities in the form of equity awards are granted pursuant to the applicable equity incentive plan by the Compensation Committee, typically at a meeting of the Compensation Committee held during the first quarter of the year. In 2020,2022, awards granted prior to our 2020 Annual Meeting of Stockholders and were granted from the 20152020 Equity Incentive Plan. The amount and forms of such equity awards are determined by the Compensation Committee after considering an analysis prepared by its independent compensation consultant, the factors described in “Compensation Discussion and Analysis — Compensation-Setting Process” above and the retention power on each Named Executive Officer as determined by his or her current unvested equity holdings. The amounts of the equity awards are also intended to provide competitively-sized awards and resultingcompetitive value that results in target total direct compensation opportunities within a competitive range of the market mediandata relative to our compensation peer group and Radford survey data for similar roles and positions for each of our Executive Officers, taking into considerationOfficers. The values are also determined by other considerations such as business results, total and equity compensation relative to other peer-group executives, experience, and individual performance. TABLE OF CONTENTS Based on our own due diligence through reviewing the competitive market and our increase in response to feedback received from our stockholders,emphasis on granting performance-based long term incentive compensation, in 2022, the Compensation Committee began grantinggranted PRSUs representing 50%60% of the equity award value under our long-term incentive program forto our Named Executive Officers, while the other 40% of the equity award value consisted of time-based RSUs. The mix is aligned with the practices of our peer group. From 2019 to 2021, the Compensation Committee previously granted PRSUs representing 50% of the equity award value to our Named Executive Officers (other than our President and CEO), while the other 50% of the equity award value consisted of RSUs. We believe that our use of performance-based long term incentive compensation is important to strengthening the alignment between our Named Executive Officers’ compensation and creation of stockholder value, while also driving the achievement of our financial and operational goals. The following table shows the target number of shares of our common stockunits pursuant to PRSU awards granted to each of our Named Executive Officers in 2020:January 2022. Each unit granted pursuant to the PRSU awards represented a contingent right to receive one share of our common stock for each unit earned for the Performance Period | Named Executive Officer | | Target PRSUs | | Target Grant Date
Fair Value(1) | | Named Executive Officer | | Target PRSUs | | Target Grant Date
Fair Value (1) | | | Eric H. Starkloff (2) | | 100,471 | | $6,067,439 | | Eric H. Starkloff | | 84,526 | | $4,976,891 | | | Karen M. Rapp (3) | | 15,657 | | 976,997 | | Karen M. Rapp | | 21,136 | | 1,277,883 | | | Jason E. Green (3) | | 11,184 | | 697,882 | | Jason E. Green (2) | | 23,954 | | 1,448,259 | | | Scott A. Rust (3) | | 8,947 | | 558,293 | | Scott A. Rust | | 15,500 | | 937,130 | | | Carla Pineyro Sublett (3) | | 8,388 | | 523,411 | | Ritu Favre | | 19,727 | | 1,192,694 | | | Alexander M. Davern (4) | | — | | — | | |
(1)
| The fair valuesvalue of the PRSUs werewas estimated using a Monte Carlo simulation model. The determination of fair value of the PRSUs is affected by our stock price and a number of assumptions including the expected volatility, expected dividend yield, and the risk-free interest rate. Our expected volatility at the date of grant was based on the historical volatilities of our common stock and the companies included in the Russell 2000 Index (the “Index”) over the three-year performance period. |
(2)
| Mr. Starkloff’s PRSU awards were made pursuant to the Starkloff Executive Employment Agreement, dated October 28, 2019,period that commenced on January 1, 2022 and include a one-time promotional award of 75,000 PRSUs grantedwill end on February 1, 2020 with an aggregate grant date fair value of $4,671,750, and an award of 25,471 PRSUs granted on April 29, 2020 with an aggregate grant date fair value of $1,395,689. |
(3)
| December 31, 2024 (the “Performance Period”). Grant date fair value is based on the grant date of FebruaryJanuary 18, 2022 (for the awards granted to Ms. Rapp, Mr. Green, Mr. Rust and Ms. Favre) and January 19, 2020.2022 (for the award granted to our President and CEO). |
(4) (2)
| Mr. Davern ceasedGreen departed from the Company effective December 31, 2022. Pursuant to the Green Transition and Separation Agreement, any PRSUs that were to be our CEO, effective asearned and unvested after his date of January 31, 2020,termination would not vest and did not participatewill be forfeited. Thus, Mr. Green’s 2022 PRSUs were forfeited in any long-term incentive program for our Executive Officers in 2020.connection with his departure. |
The 2020 PRSUs were granted on February 1, 2020 and April 29, 2020 for Mr. Starkloff, pursuant to the Starkloff Executive Employment Agreement, and on February 19, 2020 for our other Named Executive Officers. At the end of the performance period, the 20202022 PRSUs may be earned and eligible for vesting based on our TSR compared to the TSR of the Index over a three-year performance period that commenced on January 1, 2020 and will end on December 31, 2022the Performance Period of three years (using the average daily closing price of our common stock over a 30-day lookback period in each TABLE OF CONTENTS
case). A linear calculation is performed between the stated percentiles to determine actual vestingnumber of PRSUs earned at the end of the performance period.Performance Period. The Compensation Committee set the target at the 55th percentile of the Index to incentivize above-median performance. The number of shares of our common stockunits subject to the 2022 PRSU awards will be earned from 0% to 200% of the target number of sharesunits based on our TSR compared to the Index as follows: | Maximum | | | ≥80th Percentile | | | 200% | | | Stretch | | | 65th Percentile | | | 150% | | | Target | | | 55th Percentile | | | 100% | | | Threshold | | | 25th Percentile | | | 50% | | | None | | | <25th Percentile | | | 0% | |
Each unit granted pursuant to the PRSU awards represented a contingent right to receive one share of our common stock for each unit earned for the performance period. TABLE OF CONTENTS The following table shows the number of shares of our common stockunits pursuant to time-based RSU awards granted to each of our Named Executive Officers in 2020:January 2022: | Named Executive Officer | | RSUs
(number of shares) | | Grant
Date Fair Value (1) | | Named Executive Officer | | RSUs
(Number of Shares) | | Grant
Date Fair Value (1) | | | Eric H. Starkloff (2) | | 100,471 | | $4,347,241 | | Eric H. Starkloff | | 56,351 | | $2,289,541 | | | Karen M. Rapp | | 15,657 | | 700,024 | | Karen M. Rapp | | 14,091 | | 587,877 | | | Jason E. Green | | 11,184 | | 500,037 | | Jason E. Green (2) | | 15,969 | | 666,227 | | | Scott A. Rust | | 8,947 | | 400,020 | | Scott A. Rust | | 10,333 | | 431,093 | | | Carla Pineyro Sublett | | 8,388 | | 375,027 | | Ritu Favre | | 13,151 | | 548,660 | | | Alexander M. Davern (3) | | 3,556 | | 131,252 | | |
(1)
| The fair valuesvalue of RSUs arewas estimated using the closing price of our common stock for the day immediately prior to the date of grant. The 2022 RSUs were granted to each of Ms. Rapp, Mr. Green, Mr. Rust and Ms. Favre on January 18, 2022 and to our President and CEO on January 19, 2022. |
(2)
| Mr. Starkloff’sGreen departed from the Company effective December 31, 2022. Pursuant to the Green Transition and Separation Agreement, the portion of his 2022 RSU awardsaward that would have vested had Mr. Green remained employed through December 31, 2023 (representing 5,323 units) were madeaccelerated and vested upon his departure on December 31, 2022. Each unit that was accelerated pursuant to the Starkloff Executive Employment Agreement, dated October 28, 2019, and includeRSU award represented a one-time promotional award of 75,000 RSUs granted on February 1, 2020, with a grant date fair value of $3,347,250, calculated by using the closing pricecontingent right to receive one share of our common stock for the day immediately prior to the dateeach unit that vested. The remaining portion of grant, which was $44.63 per share, and anhis 2022 RSU award of 25,471 RSUs grantedwith vesting dates after December 31, 2023 were forfeited upon his departure on April 29, 2020, with a grant date fair value of $999,991, calculated by using the closing price of our common stock for the day immediately prior to the date of grant, which was $39.26 per share. |
(3)
| Mr. Davern ceased to be our CEO, effective as of JanuaryDecember 31, 2020, and did not participate in the Executive Officer long-term incentive program for 2020. Amounts above include the number of RSUs he received for his service on the Board.2022. |
The 20202022 RSUs vest in equal annual installments over a three-year period, with the first installment vesting on May 1, 2021,2023, contingent upon the Named Executive Officer remaining continuously employed by us through each applicable vesting date. The overall value of the long-term incentive equity award value for our President and CEO and our other Named Executive Officers was determined after consideration of multiple factors as described in the “Compensation Discussion and Analysis — Compensation–Setting Process” section of this Proxy Statement.above. Such factors include a competitive market analysis prepared by the Compensation Committee’s independent compensation consultant as well as the current retention incentive for each Named Executive Officer as determined by his or her current unvested equity holdings. Of note, with respect to the PRSU awards previously granted in 2019 to our Named Executive Officers, these awards are being measured against the Index and their performance period ends on December 31, 2021.
The equity awards granted to our Named Executive Officers in 20202022 are set forth in the 2020 “Summary“2022 Summary Compensation Table” and the 2020 “Grants“2022 Grants of Plan-Based Awards” table below. The PRSU awards previously granted in 2020 and 2021 to our Named Executive Officers were also measured against the Index. The performance period for the PRSU awards granted in 2020 began on January 1, 2020 and ended on December 31, 2022 (the “2020 Performance Period”). The performance period for the PRSU awards granted in 2021 began on January 1, 2021 and will end on December 31, 2023 (the “2021 Performance Period”). For the 2020 Performance Period, our TSR ranked in the 48.54 percentile as compared to the Index, such that 89% of the PRSUs granted in 2020 were earned and vested as of December 31, 2022. The following table shows the total number PRSUs granted to our Named Executive Officers in January or February 2020, the vesting percentage and the number of vested PRSUs as of December 31, 2022. | Eric H. Starkloff (2) | | | 100,471 | | | 89% | | | 89,419 | | | Karen M. Rapp | | | 15,657 | | | 89% | | | 13,934 | | | Jason E. Green (3) | | | 11,184 | | | 89% | | | 9,953 | | | Scott A. Rust | | | 8,947 | | | 89% | | | 7,962 | |
(1)
| Ms. Favre was not eligible for a PRSU award in 2020 because she was not an Executive Officer. |
(2)
| Mr. Starkloff’s PRSU awards were made pursuant to the Executive Employment Agreement, dated October 28, 2019, and include a one-time promotional award of 75,000 PRSUs granted on February 1, 2020 and a supplemental award of 25,471 PRSUs granted on April 29, 2020. |
(3)
| Pursuant to the Green Transition and Separation Agreement, the PRSUs granted to Mr. Green in 2020 vested at the end of the 2020 Performance Period. Each unit granted pursuant to the 2020 PRSU awards represented a contingent right to receive one share of our common stock for each unit earned for the 2020 Performance Period. |
TABLE OF CONTENTS Health and Other Benefits Our Named Executive Officers are eligible to receive an annual executive physical as well as the sameother employee benefits that are generally available to all our full-time employees, subject to the satisfaction of certain eligibility requirements. These benefits include flexible spending accounts, medical, dental and vision benefits, business travel insurance, TABLE OF CONTENTS
employee assistance program, basic life insurance benefits, accidental death and dismemberment insurance policies, short-term and long-term disability insurance, and commuter benefits. In structuring these programs, we seek to provide an aggregate level of benefits that are comparable to those provided by similar companies, compliant with applicable laws and affordable to employees. We maintain a tax-qualified Section 401(k) retirement savings plan (the “Section 401(k) Plan”) that provides eligible employees, including our Named Executive Officers, with an opportunity to save for retirement on a tax-advantaged basis. In 2020,2022, we made matching contributions under the Section 401(k) Plan in an amount equal to 50% of the amount of the participant’s contribution up to 8% of the participant’s eligible compensation, after the employee's first year of service. All participants’ interests in the matching contributions vest immediately from the time of contribution. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The Section 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”). As a tax-qualified retirement plan, contributions to the Section 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the Section 401(k) Plan, and all contributions are deductible by us when made. The Section 401(k) Plan does not provide for purchases of NI commonour stock. We also maintain an employee stock purchase planthe 1994 Employee Stock Purchase Plan (the “ESPP”). The ESPP is generally intended to qualify as a tax-favored employee stock purchase plan under Section 423 of the Code. The ESPP permits eligible employees to purchaseacquire shares of our common stock at a 15% discount topurchase price of 85% of the lower of the market price.price at the beginning or the end of the purchase period. Under this plan, a participant can invest a maximum amount equal to 15% of eligible compensation, provided that such amount cannot exceed $25,000 in any year. In structuring these benefit programs, we seek to provide an aggregate level of benefits that are comparable to those provided by similar companies. Perquisites and Other Personal Benefits We do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our Named Executive Officers. During 2020,2022, none of our Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, valued at $10,000 or more for each individual. In the future, we may provide perquisites or other personal benefits in limited circumstances. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee. Employment Arrangements and Post-Employment Compensation In 2020, we had aWe have written employment agreement with our President and CEO and compensation arrangements with certain of our other Named Executive Officers. In 2021 we entered into executive employment agreements with each of Ms. Rapp and Mr. Green.our Named Executive Officers. In filling each of our executive positions, we recognized the need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, in formulating these compensation packages, we were sensitive to the need to integrate new Executive Officers into the executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations. These arrangements provide for “at will” employment.
On February 1, 2020, Mr. Starkloff, our then President and Chief Operating Officer, became our President and Chief Executive Officer. The terms of Mr. Starkloff’s employment as President and Chief Operating Officer were governed by an offer letter, dated October 23, 2018. On October 28, 2019, in connection with Mr. Starkloff’s appointment as CEO, we entered into the Starkloff Executive Employment Agreement, which provided that Mr. Starkloff’s duties and compensation were to be effective February 1, 2020. On February 3, 2020, the Starkloff Executive Employment Agreement was amended to reflect the implementation of the Company’s EIP. The terms and conditions of employment of Mr. Starkloff as set forth in the Starkloffeach of our Named Executive Employment AgreementOfficers contain post-employment compensation arrangements that provide Mr. Starkloff with certain protection in the event of his termination of employment in specified circumstances such as involuntarily termination without Cause or for resignation for Good Reason, including following a Change in Control (each as defined in the Starkloff Executive Employment Agreement). The Starkloff Executive Employment Agreement provides that in the event of a Change in Control, and if Mr. Starkloff’s employment is terminated other than for Cause or he resigns for Good Reason within 18 months after the Change in Control, Mr. Starkloff would be entitled to certain severance payments and benefits.
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Mr. Starkloff’s Executive Employment Agreement provides for “double-trigger” payments and benefits which means that payments and benefits will not become payable unless both events occur. See “Potential Payments Upon Termination or Change of Control” below for a further description.
On January 25, 2019, we entered into an offer letter with Carla Pineyro Sublett (the “Sublett Offer Letter”). Pursuant to the Sublett Offer Letter, in the event that we terminate her employment for any reason other than Cause or her death or Disability, or if she voluntarily resigns her employment for Good Reason (each as defined therein), and subject to the terms and conditions contained in the Sublett Offer Letter, Ms. Pineyro Sublett will receive certain severance payments and benefits including a lump-sum payment equal to 12 months of her base salary and on target earnings bonus in effect on the termination date; and health continuation coverage costs until the earliest of (i) the date that is 12 months following her termination date, (ii) the date when she is offered substantially equivalent health insurance coverage in connection with new employment, or (iii) the date upon which she ceases to be eligible for coverage under COBRA or other applicable law or policy governing such coverage.
In 2020, we did not have specific post-employment compensation arrangements in place with any of our otherthese Named Executive Officers. However, the terms of Mr. Rust’s employment (the “Rust Agreement”) provide for acceleration of certain restricted stock unit awards in the event of termination of his service by NI without Cause or termination by him for Good Reason (each as defined in the Rust Agreement). Each of our Named Executive Officers have PRSU awards granted under our 2015 Incentive Plan with special vesting terms upon a change in control of NI as further described below.
On February 22, 2021, we entered into a written executive employment agreement with each of Karen Rapp and Jason Green (the “2021 Executive Employment Agreements”). The terms and conditions of employment of Ms. Rapp and Mr. Green as set forth in the 2021 Executive Employment Agreements contain post-employment compensation arrangements that provide these Executive Officers with certain protection in the event of their termination of employment in specified circumstances such as involuntarily termination without Cause or for resignation for Good Reason, including followingwithin a Change in Control (each as defined in the 2021 Executive Employment Agreements). Each of the Executive Officer’s 2021 Executive Employment Agreements provide that in the event of a Change in Control, and if the Executive Officers’their employment is terminated other than for Cause or if the Executive Officer resigns for Good Reason within 12 months after the Change in Control, each of these Executive Officers would be entitled to certain severance payments and benefits. The 2021 Executive Employment Agreements provide for “double-trigger” payments and benefits which means that payments and benefits will not become payable unless both events occur. See “Potential Payments Upon Termination or Change of Control” below for a further description.
For detailed descriptions of the employment arrangements we maintained with our Named Executive Officers for 2020 and an analysis of the 2021 Executive Employment Agreements as well as an estimate of the potential payments and benefits payable under these arrangements, see “Potential Payments Upon Termination or Change of Control” below.agreements).
We believe that these protections were necessary to inducethe employment arrangements with our existing Named Executive Officers incentivized these individuals to accept and retain their positions. We also believe that thesethe employment arrangements help maintain their TABLE OF CONTENTS continued focus and dedication to their assigned duties to maximize stockholder value. OurThe Compensation Committee (and, with respect to Mr. Starkloff, our Board consideredPresident and CEO, the recommendationindependent members of the Compensation Committee and)our Board) reviewed the proposed terms of these arrangements and deemed it to be in our best interests and the best interests of NI and itsour stockholders to approve the terms of such arrangements. We do not use excise tax payments (or “gross-ups”) relating to a change in control of NIthe Company and have no such obligations in place with respect to any of our Named Executive Officers. For (i) detailed descriptions of the employment arrangements we maintain with our Named Executive Officers, (ii) an estimate of the potential payments and benefits payable under these arrangements to the Named Executive Officers (other than Mr. Green) as of December 31, 2022 and (iii) a detailed description of the severance payments and benefits paid to Mr. Green in connection with his departure at the end of 2022, see “Potential Payments Upon Termination or Change in Control” below. Equity Compensation Plans Terms In addition, our equity compensation plans provide for the acceleration of vesting of outstanding and unvested equity awards in certain circumstances. Specifically, the 2005 Incentive Plan and the 2010 Incentive Plan provide thatSee “Potential Payments Upon Termination or Change in the event ofControl” below for a change of control of NI, all outstanding and unvested restricted stock unit awards held by our employees, including our Named Executive Officers, will immediately vest in full. Further, under the 2015 Incentive Plan and the 2020 Incentive Plan, in the event of a change in control of NI, all outstanding and unvested equity awards will be treated as determined by the plan administrator, including that each award be assumed or substituted by the successor corporation; provided, however, that, in the event the successor corporation does not assume or substitute for the awards, the restriction period of any award of restricted stock or restricted stock unit award will immediately be accelerated and the restrictions will expire, and, with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. The number of PRSUs so determined will be scheduled to vest in equal monthly installments following the change of control over the remainder of the original performance period. TABLE OF CONTENTS
Following any assumption or substitution of such awards, if the employment of an employee is terminated without Cause (as defined in the 2015 Incentive Plan or 2020 Incentive Plan) within 24 months following the change in control of NI, then the vesting of such employee’s award will immediately accelerate and the restricted stock, RSU and PRSU awards will immediately become fully vested.further description.
Other Compensation Policies Equity Award Grant Policy We do not have any program, plan or practice to time the grant of equity awards in coordination with the release of material non-public information. In addition, we do not time, nor do we plan to time, the release of material non-public information for the purposes of affecting the value of our executive compensation. Stock Ownership Policy We encourage our Executive Officers and members of our Board to hold a significant equity interest in NI. To that end, our Board initially adoptedhave a Stock Ownership Policy effective December 31, 2017 (the “2017 Policy”) to further align the interests offor our President and CEO, other Executive Officers, and the non-employee members of our Board, which is intended to further align the interests of such individuals with the interests of our stockholders and to promote our commitment to good corporate governance. On October 23, 2019, our Board determined to increase the stock ownership thresholds of our CEO and non-employee members of our Board and adopted a newOur Stock Ownership Policy, effective December 31, 2019 (the “2019 Policy”). The guidelines established under our stock ownership policies are intended to take into account an individual’s needs for portfolio diversification, while maintaining an ownership interest at levels sufficient to assure our stockholders of leadership’s commitment to long-term value creation. Our 2017 Policy requires that:
our President and CEO hold shares of NIour common stock having a value equal to at least threesix times his annual base salary; our other Executive Officers hold shares of NIour common stock having a value equal to at least two times his or her annual base salary; and the non-employee members of our Board hold shares of NI common stock having a value equal to at least three times the amount of the annual retainer paid to such director for his or her service on our Board. Our 2019 Policy requires that:
our CEO hold shares of NI common stock having a value equal to at least six times his annual base salary;
our other Executive Officers hold shares of NI common stock having a value equal to at least two times his or her annual base salary; and
the non-employee members of our Board hold shares of NI common stock having a value equal to at least six times the amount of the annual retainer paid to such director for his or her service on our Board.
EachUnder our Stock Ownership Policy, eligible stock ownership includes: (i) shares owned directly by the Executive Officer or non-employee member of our stock ownership policies requireBoard or his or her immediate family members residing in the same household, and (ii) shares held in trust for the benefit of the Executive Officer or non-employee member of our Board or his or her family. The value of each share is measured on the last day of the fiscal year as the greater of (i) the closing price on the date of calculation and (ii) the purchase price actually paid by the person for such share.
The Stock Ownership Policy requires that our President and CEO, our other Executive Officers, and the non-employee members of our Board achieve the applicable levels of ownership within five years after the later of (i) the effective date of the applicable policy, or (ii) the date of his or her appointment. The 2017 Policy continues to apply for those Executive Officers and non-employee members of our Board who were subject to the 2017 Policy as of December 31, 2019, and such Executive Officers and non-employee members of our Board will continue to be required to achieve the applicable level of ownership set forth in the 2017 Policy in addition to the 2019 Policy. Stock ownership which qualifies under either the 2017 Policy or 2019 Policy will also qualify in determining stock ownership for the other policy. Compensation Clawback Policy Currently, weWe have not implemented a policy regarding retroactive adjustmentsClawback Policy applicable to any cashcurrent and former Executive Officers. Pursuant to the Clawback Policy, if an Executive Officer engages in fraud, intentional misconduct or equity-based incentive compensation paidgross negligence that causes or partially causes the restatement of our financial statements due to our Namedmaterial noncompliance with financial reporting requirements, the Compensation Committee may require such Executive OfficersOfficer to reimburse or other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject offorfeit all or a financial restatement. We intend to adopt a clawback policy once the SEC adopts final rules implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.portion
TABLE OF CONTENTS of any excess incentive compensation (cash or equity-based compensation) that is paid to, awarded to, or received by such Executive Officer based on the achievement of financial or stock performance metrics, and which was awarded on or after January 1, 2022 and paid in the preceding three-year period from the time we determine that we must restate our financial statements. We intend to adopt a general compensation recovery policy (or modify our existing Clawback Policy) covering our short-term and long-term incentive award plans and arrangements once Nasdaq has adopted an SEC-approved listing standard that complies with Exchange Act Rule 10D-1. Derivative Trading, Short Sales, Margin Accounts and Hedging Our Insider Trading Policy applies to all directors,members of our Board, our officers, employees, consultants, contractors, agents or other service providers of NI.to us. Pursuant to our Insider Trading Policy, we do not permit short sales of our securities, or trading in publicly-traded options, such as puts and calls, and other derivative securities with respect to our securities (other than stock options, restricted stock units and other compensatory awards issued by us) or purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities either granted by NIus as part of compensation, or held, directly or indirectly by an individual. In addition, we prohibit those persons subject to our quarterly blackout periods from holding our securities in a margin account or pledging our securities as collateral for any loan or as part of any other pledging transaction. Persons subject to our quarterly blackout periods include our executive leadership team and their direct reports, certain members of the accounting and finance departments identified by their respective executive leadership team member as having specialized knowledge, certain members of the sales department identified by their respective executive leadership team member as having specialized knowledge, all members of the legal department, persons who receive or have access to certain reports or systems, or otherwise have access to companywide monthly, quarterly, or annual financial results, and, if applicable, any additional employee otherwise notified in writing by the legal department. Tax and Accounting Considerations In designing our executive compensation program, the Compensation Committee considers the anticipated tax and accounting implications to NIus and our Executive Officers. While the Compensation Committee considers the applicable tax and accounting treatment of the elements of our executive compensation program, these factors are not dispositive in its decision making. Deductibility of Executive Compensation Section 162(m) of the Code imposes a limit on the deductibility for federal income tax purposes of any remuneration in excess of $1 million paid to our CEO, Chief Financial Officer,CFO, and eachcertain of the next three most highly-compensatedour other executive officers of the company. The Tax Cuts and Jobs Act eliminated the exemption for the chief financial officer and for “performance-based compensation” beginning January 1, 2018. As a result, subject to certain limited exceptions arrangements that qualify as written binding contracts that were in effect on November 2, 2017 and which have not been subsequently materially modified, weofficers. We expect that compensation paid to our Named Executive Officers in excess of $1 million generally will not be deductible. While the Compensation Committee has taken steps in the past to preserve tax deductibility under Section 162(m), it has retained and will continue to retain authority to approve compensation arrangements that may not be fully tax deductible by reason of Section 162(m). Accounting for Stock-Based Compensation The Compensation Committee takes accounting considerations into account in designing compensation plans and arrangements for our Executive Officers and other employees including Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718,718”), the standard which governs the accounting treatment of certain stock-based compensation. Among other things, FASB ASC Topic 718 requires us to record a compensation expense in our income statement for all equity awards granted to our Executive Officers and other employees. This compensation expense is based on the grant date “fair value”fair value of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the Summary Compensation Table, even though recipients may never realize any value from their equity awards. TABLE OF CONTENTS The grant date fair valuesvalue of PRSUs arewas estimated using a Monte Carlo simulation model. The determination of fair value of the PRSU is affected by our stock price and a number of assumptions including the expected volatility, expected dividend yield, and the risk-free interest rate. Our expected volatility at the date of grant was based on the historical volatilities of our common stock and the companies included in the Index over the performance period. Compensation Committee Report The Compensation Committee has reviewed and discussed with management the disclosures contained in the “Compensation Discussion and Analysis.” Based upon such review and discussion, the Compensation Committee recommended to our Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting. Respectfully Submitted, Duy-Loan T. Le, Chair
James E. Cashman, III
Gayla J. Delly
Dr. Gerhard P. Fettweis TABLE OF CONTENTS Executive Compensation Committee Report*Tables The Compensation Committee of NI has reviewed and discussed the Compensation Discussion and Analysis required by Regulation S-K Item 402(b) with management and based upon such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Respectfully Submitted,
Duy-Loan T. Le, Chair
Dr. Gerhard P. Fettweis
Liam K. Griffin
Charles J. Roesslein
*
| The foregoing Report of the Compensation Committee is not to be deemed to be “soliciting material” or to be “filed” with the Securities Exchange Commission or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent we specifically request that such information be treated as soliciting material or we specifically incorporate it by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
2022 SUMMARY COMPENSATION TABLE OF CONTENTS 2020 Summary Compensation Table
The following table shows the total compensation earned by our Named Executive Officers during the years ended December 31, 2020,2022, December 31, 2019,2021, and December 31, 2018:2020. Information is not included for Ms. Favre for the year ended December 31, 2020 as she was not a Named Executive Officer in such year: | Name and
Principal Position | | Year | | Salary | | Bonus
(1) | | Stock
Awards
(2) | | Non-Equity
Incentive Plan
Compensation
(3) | | All Other
Compensation
(4) | | Total | | Name
and Principal Position | | Year | | Salary
($) | | Bonus
($)(1) | | Stock
Awards
($)(2) | | Non-Equity
Incentive Plan
Compensation
($)(3) | | All Other
Compensation
($)(4) | | Total ($) | | | Eric H. Starkloff (5),(6)
President and CEO | | | 2020 | | $629,271 | | $— | | td0,414,680 | | $411,075 | | td0,608 | | td1,465,634 | | Eric H. Starkloff
President and CEO | | | 2022 | | 735,000 | | — | | 7,266,432 | | 385,191 | | 11,881 | | 8,398,504 | | | 2019 | | 551,250 | | — | | 1,737,863 | | 106,116 | | 50,645 | | 2,445,874 | | | 2021 | | 735,000 | | — | | 6,659,514 | | 785,763 | | 10,108 | | 8,190,385 | | | 2018 | | 437,500 | | — | | 2,156,673 | | 228,813 | | 19,343 | | 2,842,329 | | | 2020 | | 629,271 | | — | | 10,414,680 | | 411,075 | | 10,608 | | 11,465,634 | | | Karen M. Rapp
Executive Vice President
and Chief Financial Officer | | | 2020 | | 439,795 | | — | | 1,677,021 | | 159,703 | | 8,093 | | 2,284,612 | | Karen M. Rapp*
Former Executive Vice President
and Chief Financial Officer | | | 2022 | | 500,000 | | 100,000 | | 1,865,759 | | 194,100 | | 7,860 | | 2,667,719 | | | 2019 | | 413,438 | | — | | 1,359,557 | | 77,520 | | 10,448 | | 1,860,964 | | | 2021 | | 480,000 | | — | | 3,580,931 | | 380,112 | | 8,260 | | 4,449,303 | | | 2018 | | 393,750 | | — | | 983,600 | | 176,006 | | 5,002 | | 1,558,358 | | | 2020 | | 439,795 | | — | | 1,677,021 | | 159,703 | | 8,093 | | 2,284,612 | | | Jason E. Green*
EVP & GM, Portfolio BU
and Chief Revenue
Officer | | 2020 | | 551,042 | | 100,284 | | 1,197,918 | | 193,200 | | 10,110 | | 2,052,554 | | Jason E. Green*
Former Chief Revenue Officer
and Executive Vice President | | | 2022 | | 595,000 | | — | | 2,114,486 | | — | | 1,476,812 | | 4,186,298 | | | Scott A. Rust
Senior Vice President,
Global Product
Research and
Development | | | 2020 | | 383,717 | | 1,000 | | 958,313 | | 113,213 | | 11,760 | | 1,468,003 | | | 2021 | | 575,000 | | 200,000 | | 2,088,851 | | 364,274 | | 10,110 | | 3,238,235 | | | 2019 | | 385,000 | | — | | 886,650 | | 42,350 | | 11,160 | | 1,325,160 | | | 2020 | | 551,042 | | 100,284 | | 1,197,918 | | 193,200 | | 10,110 | | 2,052,554 | | | 2018 | | 370,620 | | — | | 801,880 | | 165,668 | | 10,588 | | 1,348,756 | | Scott A. Rust
Executive Vice President,
Global Operations | | | 2022 | | 425,000 | | — | | 1,368,223 | | 164,985 | | 15,423 | | 1,973,631 | | | Carla Pineyro Sublett *
Senior Vice President
and General Manager,
Portfolio Business Unit
and Chief Marketing
Officer | | 2020 | | 412,479 | | 150,000 | | 898,439 | | 100,000 | | 8,860 | | 1,569,778 | | | 2021 | | 415,625 | | — | | 979,152 | | 243,386 | | 13,485 | | 1,651,648 | | | Alexander M. Davern ** (7),(8),(9)
Former Chief Executive
Officer | | | 2020 | | 306,767 | | — | | 131,252 | | — | | 23,749 | | 461,768 | | | 2020 | | 383,717 | | 1,000 | | 958,313 | | 113,213 | | 11,760 | | 1,468,003 | | | 2019 | | 775,754 | | 1,000 | | 7,474,792 | | 213,332 | | 23,096 | | 8,487,974 | | Ritu Favre
Executive Vice President & GM,
Business Units | | | 2022 | | 450,000 | | — | | 1,741,354 | | 174,690 | | 13,860 | | 2,415,377 | | | 2018 | | 725,004 | | — | | 2,213,100 | | 599,584 | | 11,208 | | 3,548,896 | | | 2021 | | 425,000 | | — | | 1,566,666 | | 336,558 | | 11,760 | | 2,339,984 | |
*
| Mr. Rapp resigned as our Executive Vice President and Chief Executive Officer, effective January 9, 2023. Mr. Green departed from the Company as our Chief Revenue Officer and Ms. Pineyro Sublett became Named Executive Officers in January 2020. |
**
| Mr. Davern ceased to be our CEO,Vice President, effective as of JanuaryDecember 31, 2020, and continues to serve on our Board. For 2020, Mr. Davern’s compensation set forth above includes any amounts he received for his service as a director.2022. |
(1)
| In 2020, Mr. Green2022, Ms. Rapp received a service award of $284 and a $100,000 transition payment as the Compensation Committee approved transferring Mr. Green from a sales-based incentive compensation plan to the EIP. This payment was intended to compensate Mr. Green for the short-term negative impact on his compensation caused by his being transferred to the EIP. In 2020, Mr. Rust received a service award of $1,000. All employees, including executives, are eligible under NI’s service award program pursuant to which employees may receive awards based on the number of years of continued employment with NI. Awards under the service award program have historically beenretention cash bonus paid in the range of $100 to $1,000 per award, with employees receiving $100 in cash at their 5th anniversary of service with NI and $1,000 in cash at their 10th, 15th, 20th and 25th anniversaries of service with NI. In 2020, Ms. Pineyro Sublett received $150,000 as a signing bonus pursuant to the Sublett Offer Letter. In 2019, Mr. Davern received a service award of $1,000.four quarterly installments during 2022. |
In 2021, Mr. Green received a $200,000 performance bonus based on the Portfolio BU’s performance during that year. In 2020, Mr. Green received a service award of $284 and a $100,000 transition payment as the Compensation Committee approved transferring Mr. Green from a sales-based incentive compensation plan to the EIP. The transition payment was intended to compensate Mr. Green for the short-term negative impact on his compensation caused by his being transferred to the EIP. In 2020, Mr. Rust received a service award of $1,000. All employees, including executives, are eligible under our service award program pursuant to which employees may receive awards based on the number of years of continued employment with us. Awards under the service award program have historically been in the range of $100 to $1,000 per award, with employees receiving $100 in cash at their 5th anniversary of service with us and $1,000 in cash at their 10th, 15th, 20th and 25th anniversaries of service with us. (2)
| The amounts included in the table for stock awards represent the aggregate grant date fair value of awards madegranted in each fiscal year, as computed in accordance with FASB ASC 718. The grant date fair value for time-based RSUs is measured in accordance with FASB ASC 718 and based on the closing price of NI’sour common stock on the date preceding the date of grant. The grant date fair value for PRSUs is calculated using a Monte-Carlo model for each award on the date of grant, as determined under FASB ASC 718, based on the probable outcome of the performance condition as of the grant date. The fair value for each award may differ based on the applicable data, assumptions, and estimates used in the model. Our expected volatility at the date of grant was based on the historical volatilities of our common stock and the companies included in the Index over the performance period. Although the assumed probable outcome as of the grant date was achievement at the target level, the terms of the awards for |
TABLE OF CONTENTS
PRSUs also provide for achievement of up to 200% of the target amount (the “maximum”). See Note 9 below for additional information regarding Mr. Davern's equity awards for 2019. (3)
| Other than for Ms. Pineyro Sublett, these amounts reflect the sum of the amounts earned by Named Executives Officers pursuant to the EIP for 2020, and for 2019 and 2018, these amounts reflect the sumtarget amount (the “maximum”). The value of the amounts earned by Named Executives Officers pursuant to our previous cash bonus programs, the Annual Company Performance Bonus Program and the Annual Incentive Program. In 2020, Ms. Pineyro Sublett was not eligible to receive a bonus under the EIP; however, Ms. Pineyro Sublett received a $100,000 performance bonus, which wasPRSU awards granted in 2022, assuming achievement of the maximum amount attainable for achieving a predetermined target related to revenue resultsperformance level of our portfolio business unit.200%, would have been: Mr. Starkloff: $9,953,782; Ms. Pineyro Sublett’s goal for that business unit was set in proportion to the company-level goal for revenue. The revenue goal for the business unit was designed to be challenging to meet at targeted performance, with the maximum amount attainable only under circumstances indicating extraordinary performance. |
(4)
| These amounts represent NI contributions to the Section 401(k) Plan on behalf of the Named Executive Officers, the full dollar value of premiums paid by NI for term life insurance on behalf of the Named Executive Officers for 2020, 2019,Rapp: $2,555,765; Mr. Green: $2,896,518; Mr. Rust: $1,874,260; and 2018, and certain other payments in the amounts shown below: |
| Eric H. Starkloff | | | 2020 | | | $8,748 | | | $360 | | | $1,500 | | | $10,608 | | | 2019 | | | 8,748 | | | 360 | | | 41,537 | | | 50,645 | | | 2018 | | | 8,748 | | | 408 | | | 10,187 | | | 19,343 | | | Karen M. Rapp | | | 2020 | | | 7,733 | | | 360 | | | — | | | 8,093 | | | 2019 | | | 10,088 | | | 360 | | | — | | | 10,448 | | | 2018 | | | 4,594 | | | 408 | | | — | | | 5,002 | | | Jason E. Green | | | 2020 | | | 9,750 | | | 360 | | | — | | | 10,110 | | | Scott A. Rust | | | 2020 | | | 11,400 | | | 360 | | | — | | | 11,760 | | | 2019 | | | 10,800 | | | 360 | | | — | | | 11,160 | | | 2018 | | | 10,180 | | | 408 | | | — | | | 10,588 | | | Carla Pineyro Sublett | | | 2020 | | | 8,500 | | | 360 | | | — | | | 8,860 | | | Alexander M. Davern | | | 2020 | | | 10,701 | | | 360 | | | 12,688 | | | 23,749 | | | 2019 | | | 10,800 | | | 360 | | | 11,936 | | | 23,096 | | | 2018 | | | 10,800 | | | 408 | | | — | | | 11,208 | |
*
| For 2020, the dollar amounts listed in “Other” reflect fees and expenses paid related to contributions by NI to Mr. Starkloff’s health spending account and for Mr. Davern it includes payments for health insurance pursuant to his Separation Agreement. For 2019, the dollar amounts listed in “Other” reflect fees and expenses paid related to the negotiation of Mr. Davern's Transition Agreement and Mr. Starkloff's Executive Employment Agreement and amounts paid in connection with Mr. Starkloff’s participation in an incentive award trip. For 2018, the dollar amounts listed in “Other” reflect amounts paid in connection with Mr. Starkloff’s participation in an incentive award trip. Other than the foregoing, for 2020, 2019, and 2018, NI did not provide its Named Executive Officers with any form of compensation that would be reportable under Item 402(c)(2)(ix) of Regulation S-K. NI does not pay or accrue cash dividends on unvested RSUs. |
(5)
| For Mr. Starkloff, pursuant to the Starkloff Executive Employment Agreement, Mr. Starkloff was appointed as our CEO, effective February 1, 2020, and continues to serve as our President. Mr. Starkloff's base salary increased to $700,000 at that time. In October 2018, Mr. Starkloff was promoted to President and Chief Operating Officer and received a base salary increase at that time. Mr. Starkloff’s base salary shown for 2020 and 2018 above is pro-rated based upon the number of days during the year the respective base salary increase was in effect. |
(6)
| For Mr. Starkloff, the amount reflected in the “Stock Awards” column above for 2020 includes a one-time promotional grant of 75,000 PRSUs and 75,000 RSUs, granted pursuant to the Starkloff Executive Employment Agreement, upon Mr. Starkloff becoming our CEO.Ms. Favre: $2,385,389. |
TABLE OF CONTENTS For Mr. Starkloff, the amount reflected in the “Stock Awards” column above for 2020 includes a one-time promotional grant of 75,000 PRSUs and 75,000 RSUs, granted pursuant to the Starkloff Executive Employment Agreement, in connection with appointment of Mr. Starkloff as our President and CEO. For Mr. Rapp, the amount reflected in the “Stock Awards” column above for 2021 includes a one-time retention award of 27,700 RSUs granted on April 20, 2021, with a grant date fair value of $1,230,988. (7) (3)
| For Mr. Davern,The amounts represent the amount reflected incash bonus earned by Named Executive Officers pursuant to the “Salary” column aboveEIP for 2020 reflects $267,536 from Mr. Davern’s service as our Chief Executive Officer2022, 2021, and service in his strategic advisory role until May 5, 2020, and $39,231 of such amount reflects fees earned or paid for service as director during 2020. |
(8) (4)
| For Mr. Davern in 2020,The amounts represent Company contributions to the amountSection 401(k) Plan on behalf of $131,252the Named Executive Officers, the full dollar value of premiums paid by us for term life insurance on behalf of the Named Executive Officers and certain other payments in the “Stock Awards” column relatesamounts shown below: |
| Eric H. Starkloff | | | 2022 | | | 9,958 | | | 360 | | | 1,563 | | | 11,881 | | | 2021 | | | 8,748 | | | 360 | | | 1,000 | | | 10,108 | | | 2020 | | | 8,748 | | | 360 | | | 1,500 | | | 10,608 | | | Karen M. Rapp | | | 2022 | | | 7,500 | | | 360 | | | — | | | 7,860 | | | 2021 | | | 7,900 | | | 360 | | | — | | | 8,260 | | | 2020 | | | 7,733 | | | 360 | | | — | | | 8,093 | | | Jason E. Green | | | 2022 | | | 13,500 | | | 360 | | | 1,462,952 | | | 1,476,812 | | | 2021 | | | 9,750 | | | 360 | | | — | | | 10,110 | | | 2020 | | | 9,750 | | | 360 | | | — | | | 10,110 | | | Scott A. Rust | | | 2022 | | | 13,500 | | | 360 | | | 1,563 | | | 15,423 | | | 2021 | | | 11,625 | | | 360 | | | 1,500 | | | 13,485 | | | 2020 | | | 11,400 | | | 360 | | | — | | | 11,760 | | | Ritu Favre | | | 2022 | | | 13,500 | | | 360 | | | — | | | 13,860 | | | 2021 | | | 11,400 | | | 360 | | | — | | | 11,760 | |
*
| The dollar amounts listed in “Other” for Mr. Starkloff reflect fees and expenses paid related to stock awards granted for service as a member of our Board duringcontributions by us to Mr. Starkloff’s health spending account paid in 2022, 2021 and 2020. |
(9)
| The disclosed number in the “Stock Awards” column for 2019 for Mr. Davern reflects a calculation made pursuant to FASB ASC Topic 718, which requires disclosure of the combined value of Mr. Davern's Original Grant Value (defined below) and the incremental fair value of the unvested RSUs described below. Mr. Davern, our Chief Executive Officer during 2019 and the first month of 2020, was granted 53,000 RSUs and 53,000 PRSUs in February 2019 with an aggregate grant date fair value of $5,340,969 (“Original Grant Value”). On October 29, 2019, we announced that Mr. Davern would remain as CEO until January 31, 2020, and then transition from his service as CEO into a strategic advisory role until May 5, 2020. Pursuant to Mr. Davern’s Transition Agreement, all of Mr. Davern’s PRSUs were forfeited and Mr. Davern received upon signing of his Separation Agreement in May 2020, accelerated vesting of all outstanding equity awards subject solely to service-based vesting that would have vested from October 29, 2019 through May 5, 2021. All of Mr. Davern’s unvested RSUs subject to outstanding equity awards other than those subject to such accelerated vesting were forfeited as of his termination date pursuant to the Transition Agreement. The amount included in the table for Mr. Davern’s stock awards in 2019 reflects the incremental fair value, computed in accordance with FASB ASC Topic 718, associated with the acceleration of such RSUs of $2,133,823, plus the Original Grant Value. Such amount does not deduct a value for RSUs or PRSUs forfeited by Mr. Davern upon signing of the Separation Agreement. The total aggregate grant date fair value of the forfeited RSUs and PRSUs is $5,161,310. Had the total aggregate fair value of the forfeited RSUs and PRSUs been deducted, the amount included in the table for stock awards would have been $2,313,482. |
The dollar amounts listed in “Other” for Mr. Green reflect: the payments and benefits provided to Mr. Green in connection with his departure from the Company effective December 31, 2022 as required by the terms of the Green Transition and Separation Agreement, consisting of: (i) the payment of $10,000 for executive transition services; (ii) a lump sum payment in the amount of $595,000, which is the equivalent to 100% of his 2022 target cash incentive bonus opportunity (which was established at 100% of his annual base salary), paid at the same time as the other executive officers, (iii) the reimbursement, or payment directly on his behalf, for the premiums for COBRA through December 31, 2023, or the date that he becomes eligible for coverage under a subsequent employer’s plan (estimated at $24,676) and (iv) $833,276, representing the value of the portion of Mr. Green’s outstanding time-based RSU awards that were accelerated as of his date of termination. For more information about Mr. Green’s severance payments and benefits, see “Potential Payments Upon Termination or Change in Control” below. The dollar amounts listed in “Other” for Mr. Rust reflect Mr. Rust’s health spending account for 2022 and 2021. The dollar amounts listed in “Other” for Ms. Favre reflect amount paid by NI in connection with Ms. Favre’s participation in an incentive award trip. Other than the foregoing, NI did not provide its Named Executive Officers with any form of compensation that would be reportable under Item 402(c)(2)(ix) of Regulation S-K for the years reported in the table. NI does not pay or accrue cash dividends on unvested RSUs. TABLE OF CONTENTS GRANTS OF PLAN-BASED AWARDS TABLE
FOR FISCAL YEAR ENDED DECEMBER 31, 20202022 | Name | | Grant
Date (1) | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under
Equity Incentive Plan Awards | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (3) | | Aggregate
Grant Date
Fair Value of
Stock
Awards | | Named Executive Officer(1) | | Grant
Date | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards (2) | | Estimated Future Payouts Under
Equity Incentive Plan Awards: Number
of Shares of Stock or Stock Units | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#) (3) | | Aggregate
Grant Date
Fair Value
of Stock
Awards (#) | | | Threshold (2) | | Target | | Maximum | | Threshold | | Target | | Maximum | | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | | Eric H. Starkloff | | | | | | | | | | | | | | | | | | | | Eric H. Starkloff
| | | | | | | | | | | | | | | | | | | Executive Incentive Program (EIP) | | | | $259,875 | | $945,000 | | $1,417,500 | | $— | | $— | | $— | | — | | $— | | Executive Incentive Program (EIP) | | | | $992,250 | | $1,984,5000 | | — | | — | | — | | — | | — | | | 2015 Incentive Plan - Promotional RSUs | | 2/01/2020 | | — | | — | | — | | — | | — | | — | | 75,000 | | 3,347,250 | | 2020 Incentive Plan - RSUs | | 1/19/2022 | | — | | — | | — | | — | | — | | 56,351 | | $2,289,541 | | | 2015 Incentive Plan - Promotional PRSUs | | 2/01/2020 | | — | | — | | — | | 37,500 | | 75,000 | | 150,000 | | — | | 4,671,750 | | 2020 Incentive Plan - PRSUs | | 1/19/2022 | | — | | — | | 42,263 | | 84,526 | | 169,052 | | — | | 4,976,891 | | | 2015 Incentive Plan - RSUs | | 4/29/2020 | | — | | — | | — | | — | | — | | — | | 25,471 | | 999,991 | | Karen M. Rapp
| | | | | | | | | | | | | | | | | | | 2015 Incentive Plan - PRSUs | | 4/29/2020 | | — | | — | | — | | 12,736 | | 25,471 | | 50,942 | | — | | 1,395,689 | | Executive Incentive Program (EIP) | | | | $500,000 | | $1,000,000 | | — | | — | | — | | — | | — | | | Karen M. Rapp | | | | | | | | | | | | | | | | | | | | 2020 Incentive Plan - RSUs | | 1/18/2022 | | — | | — | | — | | — | | — | | 14,091 | | 587,877 | | | Executive Incentive Program (EIP) | | | | 100,962 | | 367,133 | | 550,699 | | — | | — | | — | | — | | — | | 2020 Incentive Plan - PRSUs | | 1/18/2022 | | — | | — | | 10,568 | | 21,136 | | 42,272 | | — | | 1,277,883 | | | 2015 Incentive Plan - RSUs | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 15,657 | | 700,024 | | Jason E. Green
| | | | | | | | | | | | | | | | | | | 2015 Incentive Plan - PRSUs | | 2/19/2020 | | — | | — | | — | | 7,829 | | 15,657 | | 31,314 | | — | | 976,997 | | Executive Incentive Program (EIP) (4) | | | | $595,000 | | $1,190,000 | | — | | — | | — | | — | | — | | | Jason E. Green | | | | | | | | | | | | | | | | | | | | 2020 Incentive Plan – RSUs (5) | | 1/18/2022 | | — | | — | | — | | — | | — | | 15,969 | | 666,227 | | | Executive Incentive Program (EIP) | | | | 126,500 | | 460,000 | | 690,000 | | — | | — | | — | | — | | — | | 2020 Incentive Plan – PRSUs (5) | | 1/18/2022 | | — | | — | | 11,977 | | 23,954 | | 47,908 | | — | | 1,448,259 | | | 2015 Incentive Plan - RSUs | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 11,184 | | 500,037 | | Scott A. Rust
| | | | | | | | | | | | | | | | | | | 2015 Incentive Plan - PRSUs | | 2/19/2020 | | — | | — | | — | | 5,592 | | 11,184 | | 22,368 | | — | | 697,882 | | Executive Incentive Program (EIP) | | | | $425,000 | | $850,000 | | — | | — | | — | | — | | — | | | Scott A. Rust | | | | | | | | | | | | | | | | | | | | 2020 Incentive Plan - RSUs | | 1/18/2022 | | — | | — | | — | | — | | — | | 10,333 | | 431,093 | | | Executive Incentive Program (EIP) | | | | 71,572 | | 260,260 | | 390,390 | | — | | — | | — | | — | | — | | 2020 Incentive Plan - PRSUs | | 1/18/2022 | | — | | — | | 7,750 | | 15,500 | | 31,000 | | — | | 937,130 | | | 2015 Incentive Plan - RSUs | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 8,947 | | 400,020 | | Ritu Favre
| | | | | | | | | | | | | | | | | | | 2015 Incentive Plan - PRSUs | | 2/19/2020 | | | | | | | | 4,474 | | 8,947 | | 17,894 | | — | | 558,293 | | Executive Incentive Program (EIP) | | | | $450,000 | | $900,000 | | — | | — | | — | | — | | — | | | Carla Pineyro Sublett | | | | | | | | | | | | | | | | | | | | 2020 Incentive Plan - RSUs | | 1/18/2022 | | — | | — | | — | | — | | — | | 13,151 | | 548,660 | | | Executive Incentive Program (EIP) | | | | 86,048 | | 312,903 | | 469,354 | | — | | — | | — | | — | | — | | 2020 Incentive Plan - PRSUs | | 1/18/2022 | | — | | — | | 9,864 | | 19,727 | | 39,454 | | — | | 1,192,694 | | | 2015 Incentive Plan - RSUs | | 2/19/2020 | | — | | — | | — | | — | | — | | — | | 8,388 | | 375,027 | | | | 2015 Incentive Plan - PRSUs | | 2/19/2020 | | — | | — | | — | | 4,194 | | 8,388 | | 16,776 | | — | | 523,411 | | | | Alexander M. Davern (4) | | | | | | | | | | | | | | | | | | | | | | Executive Incentive Program (EIP) | | | | — | | — | | — | | — | | — | | — | | — | | — | | | | 2020 Incentive Plan - Director RSU Grant | | — | | — | | — | | — | | — | | — | | — | | 3,556 | | 131,252 | | |
(1)
| In accordance with Item 402(d)(2)(ii) of Regulation S-K, only grant datesThe table shows information regarding the incentive compensation awards granted to the Named Executive Officers for equity-based awards are reported in this table.2022 |
(2)
| TheRepresents the range of possible cash payouts under the EIP. Cash payouts are on a linear slope. Cash payouts are capped at the maximum of 200% and can be as low as zero. Actual cash payouts are based on attainment of pre-established corporate financial and operational objectives, as described under “Compensation Discussion and Analysis – Executive Compensation Committee set an originalProgram” above. There is no threshold amountlevel of 50% at a 4% Revenue Growth, 50% at a 16.6% Operating Margin, and 50% for key employee retentionperformance for the EIP. However,The amounts shown in the Compensation Committee modified this threshold amount mid-year due“maximum” column are payouts at 200%, which is the maximum possible payout. The actual amounts awarded to our NEOs under the economic impactEIP for 2022 are included in the “Non-Equity Incentive Plan Compensation” column of the COVID-19 pandemic on our business, after consultation with its independent compensation consultant, and revised the threshold amount to 25% at a -6% Revenue Growth and 15% Operating Margin, while continuing the 50% threshold amountExecutive Compensation – Summary Compensation Table for key employee retention, resulting in a 27.5% threshold as a percent of target for the EIP. See “Compensation Discussion and Analysis” for a more detailed description of the EIP and modifications related to the economic impact of the COVID-19 pandemic on our business.Fiscal Year 2022. |
(3)
| For 2020,2022, the RSU awards granted to the Named Executive Officer RSU awards hadOfficers have three-year annual vesting with a vesting commencement date of May 1, 2020.2022. |
(4)
| Mr. Davern ceasedGreen departed from the Company effective December 31, 2022. Pursuant to be our CEO, effective as of January 31, 2020,the Green Transition and did not participate in any Executive Officer long-term incentive program for 2020.Separation Agreement, Mr. DavernGreen received a grantlump sum payment in the amount of 3,556 RSUs$595,000, representing his target EIP award, less applicable withholdings, paid at the same time the EIP bonus was paid to other senior executives of the Company. |
(5)
| Pursuant to the Green Transition and Separation Agreement, the portion of the 2022 RSU award that would have vested had Mr. Green remained employed through December 31, 2023 (representing 5,323 units) were accelerated and vested upon his departure on July 29, 2020, which vest over a one-year periodDecember 31, 2022. The remaining portions of the 2022 RSU with a vesting commencement date of May 1, 2020, fordates after December 31, 2023 (representing 10,646 units) were forfeited upon his service as a member of our Board.departure on December 31, 2022. Additionally, Mr. Green’s 2022 PRSU award (representing 23,954 units) was forfeited upon his departure on December 31, 2022. |
Summary Compensation Table and Grants of Plan-Based Awards Table Discussion The terms of each Named Executive Officer’s employment include severance payments and benefits and payments and benefits that may be triggered by a change in control of the Company. See the “Employment Arrangements and Post-Employment Compensation” above and “Potential Payments Upon Termination or Change in Control” below for more detailed discussion of such arrangements. We have not repriced or made any material modifications to any equity-based awards to our Named Executive Officers. TABLE OF CONTENTS Summary Compensation Table and Grants of Plan-Based Awards Table DiscussionThe level of salary, bonus, and non-equity incentive plan compensation in proportion to total compensation ranged from approximately 9.1% to 42.2% for each of the Named Executive Officers in 2020.
The terms of Mr. Starkloff’s employment include severance payments and payments that may be triggered by a change in control of NI. The terms of Ms. Pineyro Sublett’s offer letter include severance payments. During 2020, none of NI’s other employees had employment agreements, severance payment arrangements or other payment arrangements that would be triggered by a merger or other change in control of NI. However, the terms of Mr. Rust’s employment provide for the acceleration of certain restricted stock unit awards in the event of his termination under certain circumstances. On February 22, 2021, Ms. Rapp and Mr. Green entered into executive employment agreements with NI which provide for severance payment arrangements that would be triggered by a merger or other change in control of NI. See “Potential Payments Upon Termination or Change of Control” for a more detailed discussion of such arrangements.
NI has not repriced or made any material modifications to any equity-based awards to its Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL 20202022 YEAR-END TABLETABLE* The following table provides information regarding stock and equity incentive plan awards for each Named Executive Officer that, as of December 31, 2022, had not vested: | Named Executive Officer | | | Stock Awards | | Named Executive Officer | | | Stock Awards | | | Number of
Shares or
Units of
Stock That
Have Not
Vested (#) (1) | | Market Value
of Shares or
Units of Stock
That
Have Not
Vested ($) (2) | | Equity
Incentive Plan
Awards;
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#) (3) | | Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested ($) (4) | | | Type of
Award (1) | | Grant
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested (#) | | Market Value
of Shares or
Units of Stock
That
Have Not
Vested ($) (2) | | Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#) (3) | | Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested ($) (2) | | | Eric H. Starkloff | | 162,917 | | $7,158,573 | | 117,096 | | $5,145,198 | | Eric H. Starkloff | | | RSU | | 1/19/22 | | 56,351 | | 2,079,352 | | — | | — | | | Karen M. Rapp | | 39,327 | | 1,728,028 | | 28,663 | | 1,259,452 | | | RSU | | 2/17/21 | | 29,982 | | 1,106,336 | | — | | — | | | Jason E. Green | | 47,509 | | 2,087,545 | | 11,184 | | 491,425 | | | RSU | | 4/29/2020 | | 8,490 | | 313,281 | | — | | — | | | Scott A. Rust | | 47,232 | | 2,075,374 | | 17,429 | | 765,830 | | | RSU | | 2/1/2020 | | 25,000 | | 922,500 | | — | | — | | | Carla Pineyro Sublett | | 30,888 | | 1,357,219 | | 8,388 | | 368,569 | | | RSU | | 4/26/2016 | | 7,031 | | 259,444 | | — | | — | | | Alexander M. Davern | | 3,556 | | 156,251 | | — | | — | | | RSU | | 4/21/2015 | | 6,015 | | 221,954 | | — | | — | | | | | RSU | | 4/22/2014 | | 1,919 | | 70,811 | | — | | — | | | | RSU | | 4/23/2013 | | 192 | | 7,085 | | — | | — | | | | PRSU | | 1/19/2022 | | — | | — | | 84,526 | | 3,119,009 | | | | PRSU | | 2/17/2021 | | — | | — | | 67,461 | | 2,489,311 | | | Karen M. Rapp | | | RSU | | 1/18/2022 | | 14,091 | | 519,958 | | — | | — | | | | RSU | | 4/20/2021 | | 13,850 | | 511,065 | | — | | — | | | | RSU | | 1/19/2021 | | 14,028 | | 517,633 | | — | | — | | | | RSU | | 2/19/2020 | | 5,219 | | 192,581 | | — | | — | | | | PRSU | | 1/18/2022 | | — | | — | | 21,136 | | 779,918 | | | | PRSU | | 1/19/2021 | | — | | — | | 21,043 | | 776,487 | | | | Scott A. Rust | | | RSU | | 1/18/2022 | | 10,333 | | 381,288 | | — | | — | | | | RSU | | 1/19/2021 | | 5,845 | | 215,681 | | — | | — | | | | RSU | | 2/19/2020 | | 2,982 | | 110,036 | | — | | — | | | | RSU | | 4/26/2016 | | 4,217 | | 155,607 | | — | | — | | | | RSU | | 4/21/2015 | | 3,610 | | 133,209 | | — | | — | | | | RSU | | 4/22/2014 | | 640 | | 23,616 | | — | | — | | | | RSU | | 4/23/2013 | | 116 | | 4,280 | | — | | — | | | | PRSU | | 1/18/2022 | | — | | — | | 15,500 | | 571,950 | | | | PRSU | | 1/19/2021 | | — | | — | | 8,768 | | 323,539 | | | | Ritu Favre | | | RSU | | 1/18/2022 | | 13,151 | | 485,272 | | — | | — | | | | RSU | | 1/19/2021 | | 9,352 | | 345,089 | | — | | — | | | | RSU | | 4/28/2020 | | 6,398 | | 236,086 | | — | | — | | | | RSU | | 10/22/2019 | | 3,000 | | 110,700 | | — | | — | | | | PRSU | | 1/18/2022 | | — | | — | | 19,727 | | 727,926 | | | | PRSU | | 1/19/2021 | | — | | — | | 14,029 | | 517,670 | |
*
| Information regarding the PRSUs granted to Mr. Starkloff, Ms. Rapp, and Mr. Rust on January 1, 2020, which vested on December 31, 2022, is not included in the table. |
Information regarding the RSUs and PRSUs previously granted to Mr. Green was not included in the table. As previously noted, pursuant to the Green Transition and Separation Agreement, the portion of the RSU awards that would have vested had Mr. Green remained employed through December 31, 2023, (representing 22,582 units), were accelerated and vested upon his departure on December 31, 2022. The remaining portion of the RSU awards granted to Mr. Green with vesting dates after December 31, 2023 (representing 20,941 units) were forfeited upon his departure on December 31, 2022. Additionally, the PRSUs granted to Mr. Green that were scheduled to vest after December 31, 2022 (such as the PRSUs granted in 2021 and 2022) (representing 42,659 units), were forfeited upon his departure. (1)
| Reflects RSUs granted. RSUs were granted under the 2010 Incentive Plan, 2015 Incentive Plan, and 2020 Incentive Plan for Mr. Davern.Plan. RSUs granted under the 2010 Incentive Plan and 2015 Incentive Plan prior to April 2016 vest as to 1/10th of the RSUs on each anniversary of the vesting commencement date, subject to acceleration of vesting in the event that NI achieveswe achieve certain financial performance goals. The maximum amount of vesting acceleration is an additional 10% of the award per year. For grants made pursuant to the 2010 Incentive Plan, the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which we attain a 40% year over year Revenue Growth and 18% non-GAAP operating profit as a percentage of revenue. Specifically, if we achieve a 40% year over year Revenue Growth and a 18% non-GAAP operating profit as a percentage of revenue, then 10% of the total number of RSUs subject to the award will accelerate. For grants made pursuant to the 2015 Incentive Plan prior to April 2016, the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which we attain 20% year over year Revenue Growth and 18% non-GAAP operating profit as a percentage of revenue. Specifically, if we achieve a 20% year-over-year Revenue Growth and a 18% non-GAAP operating profit as a percentage of revenue, then 10% of the total number of RSUs subject to the award accelerates. The earliest an award eligible for acceleration may fully vest is in five years. RSUs granted under the 2010 Incentive Plan and 2015 Incentive Plan prior to April 2016 have a vesting term of ten years. RSUs granted pursuant to the 2015 Incentive Plan from April 2016 to April 2018 vest as to 25% of the RSUs on each anniversary of the vesting commencement date. In October 2018, Mr. Starkloff received a 25,000 RSU award that vested 100% on May 1, 2020. In 2019, RSUs for Named Executive Officers at that time were granted under the 2015 Incentive Plan and vest as to 1/3rd of the RSUs on each anniversary of the vesting commencement date. For Mr. Green and Ms. Pineyro Sublett RSUs granted in 2019 were granted under the 2015 Incentive Plan and vest as to 1/4th of the RSUs on each anniversary of the vesting commencement date. For RSUs granted in 2020, other than Mr. Davern’s grant for his service on the Board, these awards were granted pursuant to the 2015 Equity Incentive Plan and vest as to 1/3rd of the RSUs on each anniversary of the vesting commencement date. Upon becoming a non-employee member of our Board, Mr. Davern’s RSUs were granted |
TABLE OF CONTENTS award per year. For awards granted pursuant to the 2010 Incentive Plan prior to April 2016, the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which we attain a 40% year over year Revenue Growth and 18% non-GAAP operating profit as a percentage of revenue. Specifically, if we achieve a 40% year over year Revenue Growth and a 18% non-GAAP operating profit as a percentage of revenue, then 10% of the total number of RSUs subject to the award will accelerate. For awards granted pursuant to the 2015 Incentive Plan prior to April 2016, the number of RSUs that can have vesting acceleration each year is determined based upon the extent to which we attain 20% year over year Revenue Growth and 18% non-GAAP operating profit as a percentage of revenue. Specifically, if we achieve a 20% year-over-year Revenue Growth and a 18% non-GAAP operating profit as a percentage of revenue, then 10% of the total number of RSUs subject to the award accelerates. The earliest an award eligible for acceleration may fully vest is in five years. RSUs granted under our 2020the 2010 Incentive Plan and 2015 Incentive Plan prior to April 2016 have a vesting term of ten years. RSUs granted pursuant to the 2015 Incentive Plan from April 2016 to April 2018 vest 100%as to 25% of the units subject to the RSUs on the one-yeareach anniversary of the vesting commencement date. TheseIn 2019, RSUs for our Named Executive Officers at that time were granted under the 2015 Incentive Plan and vest as to 1/3rd of the units subject to the RSUs on each anniversary of the vesting commencement date. For Mr. Green, RSUs granted in 2019 were granted under the 2015 Incentive Plan and vest as to 1/4th of the units subject to the RSUs on each anniversary of the vesting commencement date. RSUs granted in 2020 were granted pursuant to the 2015 Equity Incentive Plan and vest as to 1/3rd of the units subject to the RSUs on each anniversary of the vesting commencement date. RSUs granted in 2021 (other than the Rapp April 2021 Award) were granted pursuant to the 2020 Equity Incentive Plan and vest as to 1/3rd of the units subject to the RSUs on each anniversary of the vesting commencement date. In April 2021, Ms. Rapp received 27,700 RSUs granted under the 2020 Incentive Plan, which vest as to 1/2 of the RSUs on each anniversary of the vesting commencement date. RSUs granted in 2022 were granted pursuant to the 2020 Equity Incentive Plan and vest as to 1/3rd of the RSUs on each anniversary of the vesting commencement date. RSUs are subject to the continued service of the Named Executive Officer on each such vesting date. The vesting commencement dates for these awards are set forth PRSUs granted in 2021 and 2022 were granted under the table below. | Eric H. Starkloff
| | | 25,471
| | | 4/29/2020 Incentive Plan, while PRSUs granted in 2020
| | | 5/1/2020
| | | 75,000
| | | 2/1/2020
| | | 2/1/2020
| | | 11,083
| | | 1/22/2019
| | | 5/1/2019
| | | 10,870
| | | 4/25/2018
| | | 5/1/2018
| | | 6,250
| | | 4/25/2017
| | | 5/1/2017
| | | 13,795
| | | 4/26/2016
| | | 5/1/2016
| | | 11,897
| | | 4/21/2015
| | | 5/1/2015
| | | 5,488
| | | 4/22/2014
| | | 5/1/2014
| | | 1,957
| | | 4/23/2013
| | | 5/1/2013
| | | 1,088
| | | 4/18/2012
| | | 5/1/2012
| | | 58
| | | 4/20/2011
| | | 5/1/2011
| | | Karen M. Rapp
| | | 15,657
| | | 2/19/2020
| | | 5/1/2020
| | | 8,670
| | | 1/22/2019
| | | 5/1/2019
| | | 10,000
| | | 4/25/2018
| | | 5/1/2018
| | | 5,000
| | | 7/25/2017
| | | 5/1/2017
| | | Jason E. Green
| | | 11,184
| | | 2/19/2020
| | | 5/1/2020
| | | 6,888
| | | 2/20/2019
| | | 5/1/2019
| | | 4,348
| | | 4/25/2018
| | | 5/1/2018
| | | 2,500
| | | 4/25/2017
| | | 5/1/2017
| | | 22,589
| | | 9/17/2015
| | | 5/1/2015
| | | Scott A. Rust
| | | 8,947
| | | 2/19/2020
| | | 5/1/2020
| | | 5,654
| | | 1/22/2019
| | | 5/1/2019
| | | 8,152
| | | 4/25/2018
| | | 5/1/2018
| | | 5,000
| | | 4/25/2017
| | | 5/1/2017
| | | 8,276
| | | 4/26/2016
| | | 5/1/2016
| | | 7,139
| | | 4/21/2015
| | | 5/1/2015
| | | 1,816
| | | 4/22/2014
| | | 5/1/2014
| | | 1,175
| | | 4/23/2013
| | | 5/1/2013
| | | 1,015
| | | 4/18/2012
| | | 5/1/2012
| | | 58
| | | 4/20/2011
| | | 5/1/2011
| | | Carla Pineyro Sublett
| | | 8,388
| | | 2/19/2020
| | | 5/1/2020
| | | 15,000
| | | 4/23/2020
| | | 5/1/2019
| | | 7,500
| | | 2/20/2019
| | | 5/1/2019
| | | Alexander M. Davern*
| | | 3,556
| | | 7/29/2020
| | | 5/1/2020
| |
*
| Mr. Davern’s award was granted for his service as a member of our Board. |
(2)
| Calculated by multiplying the number of shares of RSUs by $43.94, the closing market price of our common stock on December 31, 2020. |
(3)
| Reflects PRSUs granted at target. PRSUs were granted under the 2015 Incentive Plan. For 2020 and 2019, our Named Executive Officers received the number of PRSU awards set forth below. Outstanding PRSU awards may be earned and eligible for vesting in a single installment following the end of the applicable three-year performance period from the beginning of the performance period starting on January 1.TABLE OF CONTENTS The following table (part of note 1), sets forth the grant date and vesting commencement date or performance period commencement date for the unvested stock awards listed in the table above. | Eric H. Starkloff | | | 56,351 | | | 1/19/22 | | | 5/2/2022 | | | 29,982 | | | 2/17/2021 | | | 5/1/2021 | | | 8,490 | | | 4/29/2020 | | | 5/1/2020 | | | 25,000 | | | 2/1/2020 | | | 2/1/2020 | | | 7,031 | | | 4/26/2016 | | | 5/1/2016 | | | 6,015 | | | 4/21/2015 | | �� | 5/1/2015 | | | 1,919 | | | 4/22/2014 | | | 5/1/2014 | | | 192 | | | 4/23/2013 | | | 5/1/2013 | | | 84,526 | | | 1/19/2022 | | | 1/1/2022 | | | 67,461 | | | 2/17/2021 | | | 1/1/2021 | | | Karen M. Rapp | | | 14,091 | | | 1/18/2022 | | | 5/2/2022 | | | 13,850 | | | 4/20/2021 | | | 2/28/2021 | | | 14,028 | | | 1/19/2021 | | | 5/1/2021 | | | 5,219 | | | 2/19/2020 | | | 5/1/2020 | | | 21,136 | | | 1/18/2022 | | | 1/1/2022 | | | 21,043 | | | 1/19/2021 | | | 1/1/2021 | | | Scott A. Rust | | | 10,333 | | | 1/18/2022 | | | 5/2/2022 | | | 5,845 | | | 1/19/2021 | | | 5/1/2021 | | | 2,982 | | | 2/19/2020 | | | 5/1/2020 | | | 4,217 | | | 4/26/2016 | | | 5/1/2016 | | | 3,610 | | | 4/21/2015 | | | 5/1/2015 | | | 640 | | | 4/22/2014 | | | 5/1/2014 | | | 116 | | | 4/23/2013 | | | 5/1/2013 | | | 15,500 | | | 1/18/2022 | | | 1/1/2022 | | | 8,768 | | | 1/19/2021 | | | 1/1/2021 | | | Ritu Favre | | | 13,151 | | | 1/18/2022 | | | 5/2/2022 | | | 9,352 | | | 1/19/2021 | | | 5/1/2021 | | | 6,398 | | | 4/28/2020 | | | 5/1/2020 | | | 3,000 | | | 10/22/2019 | | | 5/1/2019 | | | 19,727 | | | 1/18/2022 | | | 1/1/2022 | | | 14,029 | | | 1/19/2021 | | | 1/1/2021 | |
(2)
| Calculated by multiplying the number of units subject to the RSUs by $36.90, the closing market price of our common stock on December 31, 2022. |
(3)
| Reflects PRSUs granted at target performance level. The PRSUs are reported at the target level because we are required by SEC rules to compare our performance through 20202022 under the PRSU grantawards against the threshold, target and maximum performance levels for the grant and report the applicable potential share number. If the performance is between levels, we are required to report the potential payout at the next highest level. For example, if performance through the previous year exceeded target, even by only a modest amount, and even if it is unlikely that we will achieve the results that would dictate the payment of the maximum amount, we are required by SEC rules to report the maximum potential payouts. For the first year of the 2020-2022 performance period2022-2024 and the first two years of the 2019-20212021-2023 performance period, we tracked between the threshold and target levels of performance against the PRSU performance goals on a combined basis and have accordingly reported the PRSUs at the target award levels. |
TABLE OF CONTENTS
threshold and target levels of performance against the PRSU performance goals on a combined basis and have accordingly reported the PRSUs at the target award levels.
| Eric H. Starkloff
| | | 25,471
| | | 4/29/2020
| | | 1/1/2020
| | | | | | 75,000
| | | 2/1/2020
| | | 1/1/2020
| | | | | | 16,625
| | | 1/22/2019
| | | 1/1/2019
| | | Karen M. Rapp
| | | 15,657
| | | 2/19/2020
| | | 1/1/2020
| | | | | | 13,006
| | | 1/22/2019
| | | 1/1/2019
| | | Jason E. Green
| | | 11,184
| | | 2/19/2020
| | | 1/1/2020
| | | Scott A. Rust
| | | 8,947
| | | 2/19/2020
| | | 1/1/2020
| | | | | | 8,482
| | | 1/22/2019
| | | 1/1/2019
| | | Carla Pineyro Sublett
| | | 8,388
| | | 2/19/2020
| | | 1/1/2020
| |
(4)
| Calculated by multiplying the number of shares of PRSUs by $43.94, the closing market price of our common stock on December 31, 2020. |
STOCK VESTED
FOR FISCAL YEAR ENDED DECEMBER 31, 2020 TABLE
| Eric H. Starkloff
| | | 50,977
| | | $1,958,536 (1)
| | | Karen M. Rapp
| | | 14,336
| | | 550,789 (1)
| | | Jason E. Green
| | | 11,970
| | | 459,887 (1)
| | | Scott A. Rust
| | | 17,304
| | | 664,820 (1)
| | | Carla Pineyro Sublett
| | | 7,500
| | | 288,150 (1)
| | | Alexander M. Davern
| | | 54,417
| | | 2,090,701 (1)
| | | | | | 52,108
| | | 1,919,659 (2)
| |
(1)
| Calculated by using the closing price of our common stock for the day immediately preceding the vesting date of May 1, 2020, which was $38.42 per share. |
(2)
| Calculated by using the closing price of our common stock for the day immediately preceding the vesting date of May 13, 2020, which was $36.84 per share. |
Pension Benefits and Nonqualified Deferred CompensationNI does not have any pension plans, non-qualified defined contribution plans or non-qualified deferred compensation plans.
Potential Payments Upon Termination or Change in ControlOur employment arrangements with each of Mr. Starkloff and Ms. Pineyro Sublett, summarized below, include severance or other payment arrangements that would be triggered by a termination of employment, merger or other change in control of NI. In addition, on February 22, 2021, we signed executive employment agreements with Ms. Rapp and Mr. Green which include severance or other payment arrangements that would be triggered by a termination of employment, merger or other change in control of NI.
TABLE OF CONTENTS STOCK VESTED
FOR FISCAL YEAR ENDED DECEMBER 31, 2022 TABLE* | Eric H. Starkloff | | | 25,000 | | | $1,030,500 (1) | | | 45,487 | | | 1,643,900 (2) | | | 89,419 | | | 3,299,561 (5) | | | Karen M. Rapp | | | 21,569 | | | 779,504 (2) | | | 13,850 | | | 556,632 (3) | | | 13,934 | | | 514,165 (5) | | | Jason E. Green | | | 22,962 | | | 829,847 (2) | | | 9,953 | | | 367,266 (5) | | | 22,582 | | | 833,276 (6) | | | Scott A. Rust | | | 18,996 | | | 686,515 (2) | | | 7,962 | | | 293,798 (5) | | | Ritu Favre | | | 10,876 | | | 393,059 (2) | | | 2,860 | | | 109,195 (4) | |
*
| Includes PRSUs granted to Mr. Starkloff, Ms. Rapp, Mr. Green and Mr. Rust in January or February 2020, all of which vested on December 31, 2022. We do not grant stock options. |
(1)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of February 1, 2022, which was $41.22 per share. |
(2)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of May 2, 2022, which was $36.14 per share. |
(3)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of February 28, 2022, which was $40.19 per share. |
(4)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of November 1, 2022, which was $38.18 per share. |
(5)
| The value of the PRSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of December 31, 2022, which was $36.90 per share. |
(6)
| The value of the RSUs was calculated by using the closing price of our common stock for the day immediately preceding the vesting date of December 31, 2022, which was $36.90 per share. |
Pension Benefits and Nonqualified Deferred Compensation We do not maintain any pension plans, non-qualified defined contribution plans, or non-qualified deferred compensation plans. Potential Payments Upon Termination or Change in Control Termination and Change in Control Severance Arrangements with our Named Executive Officers Our employment arrangements with each of Mr. Starkloff, Ms. Rapp, Mr. Green, Ms. Favre, and Mr. Rust, summarized below, include severance or other payment arrangements that would be triggered by a termination of employment or change in control of the Company on December 31, 2022. TABLE OF CONTENTS Arrangements with Mr. Starkloff: On October 28, 2019, we entered into the Starkloff Executive Employment Agreement with Mr. Starkloff, pursuant to which Mr. Starkloff was appointed as our President and Chief Executive Officer, effective February 1, 2020. On February 3, 2020 the Starkloff(the “Starkloff Executive Employment Agreement was amended to reflect the implementation of the Company’s EIP. Pursuant to the amendment, in lieu of Mr. Starkloff’s participation in the Company’s prior bonus programs, Mr. Starkloff’s 2020 annual EIP target incentive bonus opportunity was 135% of his base salary.Agreement”). In the event of an involuntary termination of Mr. Starkloff’s employment is terminated either by usthe Company or a successor without Cause or Mr. Starkloff resignsresignation for Good Reason (as such terms are defined in the Starkloff Executive Employment Agreement), subject to him executing and not revoking a release of claims in favor of NIthe Company and meeting other requirements in the Starkloff Executive Employment Agreement, Mr. Starkloff willwould be entitled to receive the following (the “Starkloff Employment Agreement Severance Payment”Entitlements”): (i)
| continuing severance pay at a rate equal to 100% of his annual base salary, as then in effect, (less applicable withholding), for a period of 18 months from the date of such termination of employment, paid in accordance with NI’sour normal payroll practices;practices (but if such a termination occurs within the period beginning three months prior to a Change in Control (as defined in the Starkloff Executive Employment Agreement) and ending 12 months following a Change in Control, then he would be entitled to receive the severance amount in a lump sum on the 60th day following the termination date); |
(ii)
| to the extent not already earned and accrued, a lump sum equivalent to 100% of his EIP bonus as in effect at the time of the applicable termination or resignation, less applicable withholding, which amount shall be paid at such time annual bonuses are paid to our other senior executives (for avoidance of doubt in no case would Mr. Starkloff be entitled to more than one EIP bonus payment);executives; |
(iii)
| accelerated vesting of Mr. Starkloff’s outstanding time-based RSUs that would have vested had he remained employed by NIthe Company or a successor for 12 months following the termination date, and subject to any required approval by theour Board; and |
(iv)
| provided he timely elects healthcare continuation coverage under COBRA, reimbursement of Mr. Starkloff for, or direct payment of, his COBRA premiums (at the coverage level in effect immediately prior to his termination) until the earlier of 18 months following the termination date or the date Mr. Starkloff becomes covered under similar plans. If NI determines,we determine, in itsour sole discretion, that itwe cannot provide the foregoing benefit related to COBRA premiums without potentially violating or being subject to an excise tax under applicable law, we willwould instead provide a taxable monthly payment of an equivalent amount, which willwould be made regardless of whether Mr. Starkloff elects COBRA, and continue until the earlier of 18 months following termination or the date Mr. Starkloff becomes covered under similar plans. |
If theMr. Starkloff’s employment of Mr. Starkloff had been terminated by the Company or a successor without Cause or Mr. Starkloff resigned for Good Reason, in either case on December 31, 2020, pursuant to the Starkloff Executive Employment Agreement,2022, the Starkloff Employment Agreement Severance PaymentEntitlements would have been $4,605,991 (including thehad an estimated value of $4,352,305 (including $2,831,854, which is the estimated value of accelerated time-based RSUs based upon the closing market price of NI’sour common stock aton December 31, 2020,2022, which was $43.94$36.90 per share (the “Applicable Price”). Notwithstanding any contrary provision, if a termination of employment described in the Starkloff Executive Employment Agreement occurs within the period beginning three months prior to a Change in Control (as such term is defined in the Starkloff Executive Employment Agreement, as amended) and ending 12 months following a Change in Control, then Mr. Starkloff will be entitled to receive the same severance described in the preceding paragraphs except the severance amount set forth in (i) above will be paid in a lump-sum on the 60th day following the termination date.
For avoidance of doubt, Mr. Starkloff’s equity awards will remain subject to the Change in Control vesting or other treatment as provided for pursuant to the terms of NI’sour equity plan and his equity award agreements, as applicable, notwithstanding his eligibility to receive vesting acceleration set forth in (iii) above. These entitlements are described below under “—Equity Awards of Named Executive Officers.” If a Change in Control had occurred as of December 31, 2020,2022, in connection with a termination of employment that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $12,303,771.$10,589,082. Arrangements with Ms. Pineyro SublettRapp: On January 25, 2019,February 22, 2021, we entered into the Sublett Offer LetterExecutive Employment Agreement with Ms. Pineyro SublettRapp (the “Sublett Offer Letter”“Rapp Executive Employment Agreement”). who resigned as our Executive Vice President and Chief Financial Officer in January 2023 and transitioned to a strategic advisor role. Pursuant to the Sublett Offer Letter,Rapp Executive Employment Agreement, in the event that we terminated herof involuntary termination of Ms. Rapp’s employment for any reason other thanby the Company or a successor without Cause (defined therein) or her death or Disability (defined therein), or if she voluntarily resigned her employment for Good Reason (defined therein), and subject to the terms and conditions contained in the Sublett Offer Letter, Ms. Pineyro Sublett would receive the following severance benefits (the “Sublett TABLE OF CONTENTS resignation for Good Reason (as such terms are defined in the Rapp Executive Employment Agreement), subject to her executing and not revoking a release of claims in favor of the Company and meeting other requirements in the Rapp Executive Employment Agreement, Ms. Rapp would have been entitled to receive the following (the “Rapp Employment Agreement Severance Benefits”Entitlements”): (i) a lump-sum payment equal to 12 months of her base salary and on target earnings bonus in effect (i)
| continuing severance pay at a rate equal to 100% of her annual base salary for a period of 12 months from the date of termination of employment (but if such a termination occurs within the period beginning three months prior to a Change in Control (as defined in the Rapp Executive Employment Agreement) and ending 12 months following a Change in Control, then she would have been entitled to receive the severance amount in a lump sum on the 60th day following the termination date); |
(ii)
| to the extent not already earned and accrued, a lump sum equivalent to 100% of her EIP bonus as in effect at the time of the applicable termination or resignation, paid at such time annual bonuses are paid to our other senior executives; |
(iii)
| accelerated vesting of her outstanding time-based RSUs that would have vested had she remained employed by the Company or a successor for 12 months following the termination date, and subject to any required approval by the Compensation Committee; and |
(iv)
| provided she timely elected healthcare continuation coverage under COBRA, we would have reimbursed her for, or direct payment of, her COBRA premiums (at the coverage level in effect immediately prior to her termination) until the earlier of 12 months following the termination date or the date she becomes covered under similar plans. If we determined in our sole discretion, that we could not provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we instead would have provided a taxable monthly payment of an equivalent amount, which would be made regardless of whether she elected COBRA and would continue until the earlier of 12 months following termination or the date she becomes covered under similar plans. |
If Ms. Rapp’s employment had been terminated by the termination date; and (ii) payment of monthly premiums for continued medical, dental and vision insurance coverage under COBRA (if she timely elects COBRA coverage)Company or a taxable monthly payment of an equivalent amount in the event providing such payment would violate any applicable lawsuccessor without Cause or result in an excise tax to us,Ms. Rapp resigned for Good Reason, in either case, until the earliest of (i) the date that is 12 months following her termination date, (ii) the date when she is offered substantially equivalent health insurance coverage in connection with new employment, or (iii) the date upon which she ceases to be eligible for coverage under COBRA or other applicable law or policy governing such coverage. If the employment of Ms. Pineyro Sublett had been terminated on December 31, 2020, pursuant to2022, the Sublett Offer Letter, the SublettRapp Employment Agreement Severance BenefitsEntitlements would have been $760,476. had an estimated value of $1,840,544 (including $1,135,782, which is the estimated value of accelerated time-based RSUs at the Applicable Price).
If a Change in Control had occurred as of December 31, 2020,2022 in connection with a termination of employment that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $1,725,787.have been $3,297,642. In connection with Ms. Rapp’s resignation as our Executive Vice President and Chief Financial Officer, we entered into the Rapp Offer Letter, which superseded and replaced the Rapp Executive Employment Agreement. Ms. Rapp did not receive any severance payments or benefits in connection with her resignation. Arrangements with Ms. Rapp: Favre: On February 22, 2021, we entered into a written executive employment agreementthe Executive Employment Agreement with Ms. RappFavre (the “Rapp“Favre Executive Employment Agreement”). In the event of involuntary termination of Ms. Rapp’sFavre’s employment by usthe Company or a successor without Cause or resignation for Good Reason (as such terms are defined in the RappFavre Executive Employment Agreement),Agreement ), subject to her executing and not revoking a release of claims in favor of NIthe Company and meeting other requirements in the RappFavre Executive Employment Agreement, Ms. Rapp willFavre would be entitled to receive the following (the “Rapp“Favre Employment Agreement Severance Payment”Entitlements”): (i) continuing severance pay at a rate equal to 100% of her annual base salary (less applicable withholding), for a period of 12 months from the date of termination of employment (but if such a termination occurs in awithin the period beginning 3three months prior to a Change in Control (as defined in the RappFavre Executive Employment Agreement) and ending 12 months following a Change in Control, then she willwould be entitled to receive the severance amount in a lump sum in 60 days)on the 60th day following the termination date); (ii) to the extent not already earned and accrued, a lump sum equivalent to 100% of her EIP bonus as in effect at the time of the applicable termination or resignation, less applicable withholding;which amount would be paid at such time annual bonuses are paid TABLE OF CONTENTS to our other senior executives of the Company; (iii) accelerated vesting of her outstanding service-basedtime-based RSUs that would have vested had she remained employed by NIthe Company or a successor for 12 months following the termination date, and subject to any required approval by the Compensation Committee; and (iv) provided she timely elects healthcare continuation coverage under COBRA, NI willwe would reimburse her for, or direct payment of, her COBRA premiums (at the coverage level in effect immediately prior to her termination) until the earlier of 12 months following the termination date or the date she becomes covered under similar plans. If we determine in our sole discretion, that we cannot provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we willwould instead provide a taxable monthly payment of an equivalent amount, which willwould be made regardless of whether she elects COBRA and continue until the earlier of 12 months following termination or the date she becomes covered under similar plans. If theMs. Favre’s employment of Ms. Rapp had been terminated by the Company or a successor without Cause or Ms. Favre resigned for Good Reason, in either case on December 31, 2020,2022, pursuant to the RappFavre Executive Employment Agreement, the RappFavre Employment Agreement Severance PaymentEntitlements would have been $1,694,417 (including thehad an estimated value of $1,200,440 (including $563,057, which is the estimated value of accelerated time-based RSUs at the Applicable Price). If a Change in Control had occurred as of December 31, 20202022 in connection with a termination of employment that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $2,422,743. Arrangements with Mr. Rust: On December 15, 2022, we entered into the Rust Executive Employment Agreement with Mr. Rust in connection with his new role of Executive Vice President, Global Operations of the Company, effective December 15, 2022. The Rust Executive Employment Agreement replaced and superseded Mr. Rust’s prior Executive Employment Agreement dated September 28, 2021, effective October 1, 2021. In the event of involuntary termination of Mr. Rust’s employment by the Company or a successor without Cause or resignation for Good Reason (as such terms are defined in the Rust Executive Employment Agreement ), subject to his executing and not revoking a release of claims in favor of the Company and meeting other requirements in the Rust Executive Employment Agreement, Mr. Rust would be entitled to receive the following (the “Rust Employment Agreement Severance Entitlements”): (i) continuing severance pay at a rate equal to 100% of his annual base salary for a period of 12 months from the date of termination of employment (but if such a termination occurs within the period beginning three months prior to a Change in Control (as defined in the Rust Executive Employment Agreement) and ending 12 months following a Change in Control, then he would be entitled to receive the severance amount in a lump sum on the 60th day following the termination date); (ii) to the extent not already earned and accrued, a lump sum equivalent to 100% of his EIP bonus as in effect at the time of the applicable termination or resignation, which amount would be paid at such time annual bonuses are paid to other senior executives of the Company; (iii) accelerated vesting of his outstanding time-based RSUs that would have vested had he remained employed by the Company or a successor for 12 months following the termination date, and subject to any required approval by the Compensation Committee; and (iv) provided he timely elects healthcare continuation coverage under COBRA, we would reimburse him for, or direct payment of, his COBRA premiums (at the coverage level in effect immediately prior to his termination) until the earlier of 12 months following the termination date or the date he becomes covered under similar plans. If we determine in our sole discretion, that we cannot provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we would instead provide a taxable monthly payment of an equivalent amount, which would be made regardless of whether he elects COBRA and continue until the earlier of 12 months following termination or the date he becomes covered under similar plans. If Mr. Rust’s employment had been terminated by the Company or a successor without Cause or Mr. Rust resigned for Good Reason, in either case on December 31, 2022, the Rust Employment Agreement Severance Entitlements would have had an estimated value of $1,140,034 (including $536,046, which is the estimated value of accelerated time-based RSUs at the Applicable Price). If a Change in Control had occurred as of December 31, 2022 in connection with a termination that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $2,987,481.$1,919,206. TABLE OF CONTENTS Arrangements with Mr. Green: Green: On February 22, 2021, we entered into a written executive employment agreementthe Executive Employment Agreement with Mr. Green (the “Green Executive Employment Agreement”). In who departed, by mutual agreement of Mr. Green and the Company, as the Company’s Chief Revenue Officer and Executive Vice President, effective December 31, 2022. Pursuant to the Green Executive Employment Agreement, in the event of involuntary termination of Mr. Green’s employment by usthe Company or a successor without Cause or resignation for Good Reason (as such terms are defined in the Green Executive Employment Agreement ), subject to his executing and not revoking a release of claims in favor of NI and meeting other requirements in the Green Executive Employment Agreement, Mr. Green will bewould have been entitled to receive the following (the “Green Employment Agreement Severance Payment”Entitlements”): (i) continuing severance pay at a rate equal to 100% of his base salary, (less applicable withholding),as then in effect, for a period of 12 months from the date of termination (but if such a termination occurs in a period beginning 3 months prior to a Change in Control (as defined in his employment agreement) and ending 12 months following a Change in Control, then he willwould be entitled to receive the severance amount in a lump sum in 60 days); (ii) to the extent not already earned and accrued, 100% of his EIP bonus as in effect at the time of the applicable termination or resignation, less applicable withholding;resignation; (iii) accelerated vesting of his outstanding service-based RSUs that would have vested had he remained employed by NI for 12 months following the termination date, and subject to any required approval by the Compensation Committee; and (iv) provided he timely elects healthcare continuation coverage under COBRA, we will reimburse him for, or direct payment of, his COBRA premiums (at the coverage level TABLE OF CONTENTS
in effect immediately prior to his termination) until the earlier of 12 months following the termination date or the date he becomes covered under similar plans. If we determinedetermined in our sole discretion, that we cannot provide the foregoing benefit related to COBRA premiums without potentially violating, or being subject to an excise tax under, applicable law, we willwould have instead provideprovided a taxable monthly payment of an equivalent amount, which willwould be made regardless of whether he elects COBRA and continue until the earlier of 12 months following termination or the date the executive becomes covered under similar plans. IfIn connection with Mr. Green’s departure from the employment ofCompany as our Chief Revenue Officer and Executive Vice President, effective December 31, 2022, we entered into (i) the Transition Agreement and Release with Mr. Green had been terminatedon November 14, 2022, which became effective on November 22, 2022 (the “Transition Agreement”), and (ii) the Separation Agreement and Release with Mr. Green, attached as an exhibit to the Transition Agreement, on December 23, 2022, which became effective on December 31, 2020, pursuant to2022 (the “Separation Agreement,” and together with the Transition Agreement, the “Green Transition and Separation Agreement”). The Green Transition and Separation Agreement superseded and replaced the Green Executive Employment Agreement as of November 22, 2022.
Pursuant to the Separation Agreement, Mr. Green received (i) the Green Employment Agreement Severance Payment would have been $1,744,265 (including the value of accelerated RSUs at the Applicable Price). If a Change in Control had occurred as of December 31, 2020 in connection with a termination that resulted in acceleration under the terms of our equity incentive plans and equity award agreements of all unvested equity awards outstanding as of such date, instead of the value of the equity awards included in the termination benefits above, the value of equity awards at the Applicable Price included with such termination benefits would be $2,578,970.
Other arrangements: None of our other Named Executive Officers have employment agreements, severance payment arrangementsEntitlements to which he was entitled pursuant to Section 6(a) (Termination Without Cause or other payment arrangements that would be triggered by a termination of employment, merger or other change of control of NI. However, the terms of Mr. Rust’s employment provideResignation for acceleration of certain restricted stock units in the eventGood Reason) of his termination of employment under certain circumstances pursuant to the Rust Agreement. The Rustexisting Green Executive Employment Agreement provides for the immediate vesting of all of Mr. Rust’s then outstanding restricted stock units in the event his employment is terminated without Cause or he resigns for Good Reason (as each is defined in the Rust Agreement),(effective February 22, 2021) subject to him executing and not revokingMr. Green agreeing to a release of claims in favor of NIthe Company and meeting other requirementsreaffirming his commitment to comply with his existing non-compete and no solicitation covenants and confidentiality obligations and (ii) a Company-owned laptop. Pursuant to the Transition Agreement, Mr. Green received a lump sum payment of $10,000 for executive transition services (paid in December 2022) subject to Mr. Green agreeing to a release of claims in favor of the Rust Agreement. If a termination event had occurred on December 31, 2020,Company and reaffirming his commitment to comply with his existing non-compete and no solicitation covenants and confidentiality obligations. See the valuesection entitled “Payments and Benefits Provided to Mr. Green In Connection with his Departure” below for more information about his severance payments and benefits received in connection with his departure.
Equity Awards of such accelerated restricted stock units would have been $2,841,204, based upon the Applicable Price.Named Executive Officers In addition, ourOur Named Executive Officers may benefit along with non-executive employees from acceleration provisions under the terms of our 20202010 Incentive Plan, 2015 Incentive Plan, 2020 Incentive Plan and 20102022 Incentive Plan that are applicable to all participating employees. Further, each of our Named Executive Officers also have PRSUs under our 2015 Incentive Plan, 2020 Incentive Plan, and 2022 Incentive Plan with special vesting terms upon a change of control of NI,the Company, as further described below.
The 2010 Incentive Plan provides for acceleration of all unvested restricted stock units in the event of a change of control of NI or the award recipient’s death or disability (each, an “acceleration event”).Company. A change of control under the 2010 Incentive Plan means any of the following events: any person becomes the beneficial owner of 50% or more of the total voting power represented by our outstanding voting securities; existing members of our Board cease to constitute at least a majority of the Board; TABLE OF CONTENTS a public announcement is made of a tender or exchange offer for 50% or more of the outstanding voting securities and it is not opposed by our Board; our stockholders approve a merger or consolidation with any other corporation or partnership, unless our stockholders prior to such transaction will hold a majority of the voting power of the surviving or acquiring entity; or our stockholders approve a plan of complete liquidation or an agreement for the sale or disposition of all or substantially all of our assets. In the case of unvested restricted stock units under the 2010 Incentive Plan, 100% of the restricted stock units that have not vested as of the date of death or disability will immediately vest.vest (provided that such death or disability occurs prior to the 15th anniversary of the vesting commencement date). Pursuant to the 2015 Incentive Plan, 2020 Incentive Plan and 20202022 Incentive Plan, in the event of a change in control of NI,the Company, awards will be treated as determined by the administrator, including that each award be assumed or substituted by the successor corporation; provided that, in the event the successor corporation does not assume or substitute awards, the restriction period of any award of restricted stock or restricted stock units will immediately be accelerated, and the restrictions will expire, and, with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. TheWith the exception of the two forms of award agreement under the 2015 Incentive Plan, the PRSU award agreements under the 2015 Incentive Plan, 2020 Incentive Plan and 2022 Incentive Plan provide that the number of PRSUs so determinedeligible to vest at 100% of target levels will be scheduled to vest in equal monthly installments following the change of control over the remainder TABLE OF CONTENTS
of the original performance period.period, except that they will immediately vest if the PRSUs are not assumed or substituted in connection with the change in control. Following any such assumption or substitution of awards in connection with a change in control, if an employee is terminated without Cause (as defined in the applicable plan) within 24 months following the change in control, of NI, then the vestingrestriction period of such employee’s awards will accelerate, and theany award of restricted stock or restricted stock units will immediately become fully vested.be accelerated, and the restrictions will expire, and, with respect to the respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. In the event of a change in control involves a restructuring (as such term is defined in the plans) or occurs in connection with a series of related transactions involving a restructuring, and if the Company is not the surviving entity, and as a part of the restructuring stock, other securities, cash, or property are exchanged for shares of Company stock, then the award recipient shall be entitled to purchase or receive, as appropriate for the form of award, the number of shares, other securities, cash, or property to which that number of shares of Company stock would have been entitled in connection with such restructuring. Additionally, award agreements under the 2015 Incentive Plan, 2020 Incentive Plan and 2022 Incentive Plan provide for acceleration of all unvested time-based RSUs in the event of the award recipient’s death or disability (provided that such death or disability occurs prior the 15th anniversary of the vesting commencement date), except that both time-based RSUs and PRSUs vest under one of the 2015 Incentive Plan forms of award agreement. A change in control under the 2015 Incentive Plan, 2020 Incentive Plan and 20202022 Incentive Plan means any of the following events: any person becomes the beneficial owner of fifty percent (50%)50% or more of the total voting power represented by our outstanding voting securities; the sale or disposition by us of all or substantially all of our assets; existing members of our Board cease to constitute at least a majority of the Board; or the consummation of a merger or consolidation of us with any other corporation, unless our stockholders prior to such transaction will hold at least 50% of the voting power of the surviving or acquiring entity. TABLE OF CONTENTS Estimated Values of Termination and Change in Control Severance Payments to Named Executive Officers The following table, footnotes and narrative set forth our payment obligations pursuant to the compensation arrangements of our NEOs, under the circumstances described below, assuming their employment was terminated on December 31, 2022. Because Mr. Green’s employment terminated on December 31, 2022, his arrangements are not discussed in this section. Mr. Green’s severance package is described below under “Payments and Benefits Provided to Mr. Green in Connection with His Departure.” Ms. Rapp did not receive any severance payments or benefits in connection with her resignation. | Eric H. Starkloff | | | — | | | 10,589,082 | | | 4,352,305 | | | 12,109,533 | | | 10,589,082 | | | Karen M. Rapp | | | — | | | 3,297,642 | | | 1,840,544 | | | 4,002,404 | | | 3,297,642 | | | Ritu Favre | | | — | | | 2,422,743 | | | 1,200,440 | | | 3,060,126 | | | 2,523,194 | | | Scott A. Rust | | | — | | | 1,919,206 | | | 1,140,034 | | | 2,523,194 | | | 1,919,206 | |
(1)
| Voluntary Termination. The Company does not pay severance benefits upon voluntary termination. |
(2)
| Change in Control. The Company has not entered into any arrangements with any of its executive officers to provide “single trigger” severance payments upon a change in control. The Company’s equity incentive plans generally provide for the acceleration of vesting of awards granted under the plans upon a change in control only if the successor entity does not agree to assume or substitute for the awards. These provisions generally apply to all holders of awards under the equity incentive plans. |
The amounts in this column represent the aggregate value of accelerated vesting in respect of unvested time-based RSUs and unvested PRSUs held by the NEOs (other than Mr. Green), calculated based on the Applicable Price assuming that (i) a change in control transaction had occurred as of December 31, 2022, and (ii) the successor entity did not assume or substitute for the NEOs’ outstanding equity awards and their respective unvested and outstanding awards fully accelerated upon such change in control, and, with respect to awards with performance-based vesting, all performance goals or other vesting criteria were deemed achieved at one hundred percent (100%) of target levels. | Eric H. Starkloff | | | $4,980,762 | | | $5,608,320 | | | Karen M. Rapp | | | 1,741,237 | | | 1,556,405 | | | Ritu Favre | | | 1,177,147 | | | 1,245,596 | | | Scott A. Rust | | | 1,023,717 | | | 895,489 | |
(3)
| Involuntary Termination Outside of a Change in Control. We have entered into certain termination severance arrangements with our NEOs as described above under “—Termination and Change in Control Severance Arrangements with our Named Executive Officers.” The following table shows a breakdown of payments that would have been due to our NEOs (other than Mr. Green) if an involuntary termination outside of a change of control had occurred as of December 31, 2022. |
| Eric H. Starkloff | | | 1,102,500 | | | 385,191 | | | 32,760 | | | 2,831,854 | | | 4,352,305 | | | Karen M. Rapp | | | 500,000 | | | 194,100 | | | 10,662 | | | 1,135,782 | | | 1,840,544 | | | Ritu Favre | | | 450,000 | | | 174,690 | | | 12,693 | | | 563,057 | | | 1,200,440 | | | Scott A. Rust | | | 425,000 | | | 164,985 | | | 14,003 | | | 536,046 | | | 1,140,034 | |
The amounts in the table above in the column entitled “Accelerated RSUs” represent the aggregate value of accelerated vesting in respect of outstanding time-based RSUs held by the NEOs (other than Mr. Green). (4)
| Involuntary Termination in Connection with a Change in Control. |
The following table shows a breakdown of payments that would have been due to our NEOs (other than Mr. Green) if an involuntary termination in connection with a change of control had occurred as of December 31, 2020 that resulted TABLE OF CONTENTS 2022, assuming (i) the successor entity had not assumed or substituted for outstanding equity awards in the acceleration under the termsconnection with such change in control transaction and (ii) an involuntary termination in connection with a change of our equity incentive plans and equity award agreements of all unvested awards outstandingcontrol had occurred as of such date,December 31, 2022. | Eric H. Starkloff | | | 1,102,500 | | | 385,191 | | | 32,760 | | | 4,980,762 | | | 5,608,320 | | | 12,109,533 | | | Karen M. Rapp | | | 500,000 | | | 194,100 | | | 10,662 | | | 1,741,237 | | | 1,556,405 | | | 4,002,404 | | | Ritu Favre | | | 450,000 | | | 174,690 | | | 12,693 | | | 1,177,147 | | | 1,245,596 | | | 3,060,126 | | | Scott A. Rust | | | 425,000 | | | 164,985 | | | 14,003 | | | 1,023,717 | | | 895,489 | | | 2,523,194 | |
The following table shows a breakdown of the aggregate value of such accelerated awardsvesting in respect of unvested RSUs and unvested PRSUs held by our NEOs (other than Mr. Green) that were executive officers of the Company as of December 31, 2022, calculated based on the Applicable Price, assuming (i) the successor entity had assumed or substituted for outstanding equity awards in connection with such change in control transaction and (ii) an involuntary termination in connection with a change of control had occurred as of December 31, 2022. | Eric H. Starkloff | | | $1,909,354 | | | $— | | | Karen M. Rapp | | | 1,135,782 | | | — | | | Ritu Favre | | | 563,057 | | | — | | | Scott A. Rust | | | 536,046 | | | — | |
(5)
| Death or Disability. The Company has not entered into any arrangements with any of its executive officers to provide severance payments upon a death or disability. The 2010 Incentive Plan provides for acceleration of all unvested restricted stock units in the event of the award recipient’s death or disability. The 2022 Incentive Plan provides that vesting and other restrictions may be accelerated in the event of the award recipient’s death or disability at the plan administrator’s sole discretion. The NEO’s time-vesting RSUs provide for accelerated vesting if a termination due to death or disability occurs prior to the 15th anniversary of the vesting commencement date. |
The amounts in this column represent the aggregate value of accelerated vesting in respect of unvested equity awards held by the NEOs (other than Mr. Green), calculated based on the Applicable Price assuming that a death or disability had occurred as of December 31, 2022 and the plan administrator elected to accelerate vesting of the NEOs’ awards. Payments and Benefits Provided to Mr. Green In Connection with his Departure Mr. Green, our Namedformer Chief Revenue Officer and Executive OfficersVice President, Portfolio Business Unit, departed from the Company, effective December 31, 2022, by mutual agreement of Mr. Green and the Company. In connection with his departure from the Company, we entered into the Green Transition and Separation Agreement, which superseded and replaced the Green Executive Employment Agreement. Pursuant to the Separation Agreement, Mr. Green received the following: The Green Employment Agreement Severance Entitlements to which he was entitled pursuant to Section 6(a) (Termination Without Cause or Resignation for Good Reason) of his existing Green Executive Employment Agreement consisting of the following: ○ | payments of $595,000, less applicable withholding, representing 12 months of his annual base salary (paid in the form of salary continuation from December 31, 2022 to December 31, 2023); |
○ | a lump sum payment in the amount of $595,000, representing 100% of his annual cash incentive bonus payment, which was paid in March 2023 at the same time the EIP bonus was paid to other senior executives of the Company; and |
○ | reimbursement, or payment directly on his behalf, of COBRA premiums through December 31, 2023, or the date that he becomes eligible for coverage under a subsequent employer’s plan; and |
A Company-owned laptop. TABLE OF CONTENTS Pursuant to the Transition Agreement, Mr. Green received the payment of $10,000 for executive transition services (paid as a lump sum in December 2022) as well as continued employment from November 15, 2022 to December 31, 2022. In addition, pursuant to Separation Agreement, the portion of Mr. Green’s outstanding time-based RSU awards that would have beenvested had Mr. Green remained employed through December 31, 2023 (representing 22,582 units, which would have had a value of $833,276 at the Applicable Price) were accelerated and vested upon his departure on December 31, 2022. The remaining portions of his time-based RSU awards with vesting dates after December 31, 2023 were forfeited upon his departure on December 31, 2022. Additionally, the PRSUs that were scheduled to vest after December 31, 2022 (such as set forththe PRSUs granted in the table below:2021 and 2022) were forfeited. Potential Value of Equity Awards Upon a Change of Control
| Eric H. Starkloff | | | $ 7,158,573 | | | $ 5,145,198 | | | Karen M. Rapp | | | 1,728,028 | | | 1,259,452 | | | Jason E. Green | | | 2,087,545 | | | 491,425 | | | Scott A. Rust | | | 2,075,374 | | | 765,830 | | | Carla Pineyro Sublett | | | 1,357,219 | | | 368,569 | | | Alexander M. Davern | | | 156,251 | | | — | |
(1)
| No PRSUs were awarded prior to 2019. | | 53 | | | |
TABLE OF CONTENTS As required by Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of all our employees (other than our President and CEO) and the annual total compensation of our President and CEO, for the majority of 2020, Eric H. Starkloff, who was serving in that position aton December 31, 2020, and whose total compensation is annualized for purposes of this disclosure.2022. To determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments, and estimates that we used were as follows: We selected December 31, 2020, the date of the most recent and validated global employee data file, as the date upon which we identified the median employee. We used the same median employee as used in our disclosure for fiscal year 2020 and 2021 because during fiscal year 2022 there was no change in our employee population or employee compensation arrangements that we reasonably believe would significantly impact our pay ratio disclosure. We identified the “median employee” by taking all employees, excluding our President and CEO and the other excluded groups described below, and ranking them based on annualized U.S. dollar equivalent direct compensation, including the value of stock awards, and converting the base salary and bonus payouts in local currency utilizing the latest exchange rate table provided by our finance team. In performing our analysis, we excluded those individuals that perform work for us but are paid by a third-party. The total number of U.S. and non-U.S. employees used for our de minimis calculation was 7,035. We then excluded employees in those countries that had less than 75 employees. The total number of employees subject to this exclusion equaled 4.5% of our total global population, as permitted by the applicable SEC de minimis rule. The jurisdictions from which those employees are being excluded, and the approximate number of employees excluded from each jurisdiction, are as follows: Singapore, 51; Italy, 50; Mexico, 39; Ireland, 25; Belgium, 22; Brazil, 21; Philippines, 20; Russian Federation, 18; Canada, 10; Sweden, 9; Netherlands, 8; Switzerland, 7; Austria, 5; Lebanon, 5; Colombia, 4; Czech Republic, 4; Hong Kong, 4; Thailand, 4; Denmark, 3; Poland, 3; Spain, 2; Vietnam, 2; Finland, 1; and Indonesia, 1. TABLE OF CONTENTS
We have estimated the median of the annual total compensation of all employees of our Company (other than our President and CEO) was $51,375 (using a consistently applied compensation measure of base salary, plus bonus, target commission, and the value of stock awards, as applicable). We then calculated all the elements of such median employee’s compensation for fiscal year 20202022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $53,966,$63,362, which includes the median employee’s total compensation as previously calculated and including additional elements such as term life insurance premiums paid by the Company overtime and a service award.overtime. In determining our calculation, the annual total compensation of our President and CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $11,465,634, inclusive of the one-time promotional PRSU and RSU awards.$8,398,504. Based on this information, for fiscal year 2020,2022, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was 212133 to 1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. TABLE OF CONTENTS PAY VERSUS PERFORMANCE
As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between the compensation actually paid to our named executive officers and the financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” 2022 Pay Versus Performance Table | 2022 | | | $8,398,504 | | | $5,219,573 | | | — | | | — | | | $2,765,286 | | | $1,846,979 | | | $87 | | | $80 | | | $139.6 | | | 11.0% | | | 2021 | | | $8,190,385 | | | $5,028,215 | | | — | | | — | | | $2,919,793 | | | $2,434,470 | | | $102 | | | $115 | | | $89.3 | | | 13.4% | | | 2020 | | | $11,465,634 | | | $11,818,530 | | | $461,768 | | | $(4,713,424) | | | $1,843,737 | | | $1,839,488 | | | $107 | | | $120 | | | $143.7 | | | -6.0% | |
1
| The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Starkloff (our President and CEO) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.” |
2
| The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Starkloff, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Starkloff during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Starkloff’s total compensation as reported in the Summary Compensation Table for each year to determine the compensation actually paid: |
| 2022 | | | $8,398,504 | | | ($7,266,432) | | | $4,087,501 | | | $5,219,573 | | | 2021 | | | $8,190,385 | | | ($6,659,514) | | | $3,497,344 | | | $5,028,215 | | | 2020 | | | $11,465,634 | | | ($10,414,680) | | | $10,767,576 | | | $11,818,530 | |
(a)
| The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
TABLE OF CONTENTS (b)
| The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair value did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
| 2022 | | | $6,816,189 | | | $(1,488,915) | | | $— | | | $(889,312) | | | $(350,460) | | | $— | | | $4,087,501 | | | 2021 | | | $5,883,499 | | | $(1,884,822) | | | $— | | | $(196,363) | | | $(304,970) | | | $— | | | $3,497,344 | | | 2020 | | | $10,639,879 | | | $327,527 | | | $— | | | $(199,830) | | | $— | | | $— | | | $10,767,576 | |
3
| Mr. Davern ceased to be our CEO, effective January 31, 2020, and continued to serve on our Board. The dollar amount reported in column (d) is the amount of total compensation reported for Mr. Davern for 2020 in the “Total” column of the 2020 Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table” in our proxy statement for our 2021 Annual Meeting of Stockholders. As Mr. Davern was not a Named Executive Officer for 2021 and 2022, we did not provide compensation information for such years. |
4
| The dollar amount reported in column (e) represents the amount of “compensation actually paid” to Mr. Davern in 2020, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amount does not reflect the actual amount of compensation earned by or paid to Mr. Davern during 2020. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Davern’s total compensation as reported in the Summary Compensation Table compensation for 2020 to determine the compensation actually paid in 2020: |
| 2020 | | | $461,768 | | | ($131,252) | | | $(5,043,940) | | | $(4,713,424) | |
(a)
| The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for 2020. |
(b)
| The equity award adjustments for 2020 include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in 2020 that are outstanding and unvested as of December 31, 2020; (ii) the amount of change as of December 31, 2020 (from the end of December 31, 2019) in fair value of any awards granted in prior years that are outstanding and unvested as of December 31, 2020; (iii) for awards that are granted and vest in 2020, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in 2020, the amount equal to the change as of the vesting date (from the end of the December 31, 2019) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during 2020, a deduction for the amount equal to the fair value at the end of December 31, 2019; and (vi) the dollar value of any dividends or other earnings paid on stock awards in 2020 prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other |
TABLE OF CONTENTS component of total compensation for 2020. The valuation assumptions used to calculate fair value did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: | 2020 | | | $156,251 | | | $— | | | $— | | | $(499,909) | | | $(4,700,282) | | | $— | | | $(5,043,940) | |
5
| The dollar amounts reported in column (f) represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. Starkloff who has served as our President and CEO since February 2020 and Mr. Davern who served as our CEO through January 2020) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Starkloff and Mr. Davern, as applicable) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022 and 2021, Karen Rapp, Jason Green, Scott Rust and Ritu Favre and (ii) for 2020, Karen Rapp, Jason Green, Scott Rust and Carla Pineyro Sublett. |
6
| The dollar amounts reported in column (g) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Starkloff and Mr. Davern), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Starkloff and Mr. Davern) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation as reported in the Summary Compensation Table compensation for the NEOs as a group (excluding Mr. Starkloff and Mr. Davern) for each year to determine the compensation actually paid, using the same methodology described above in Footnote 2: |
| 2022 | | | $2,765,286 | | | $(1,772,455) | | | $854,148 | | | $1,846,979 | | | 2021 | | | $2,919,793 | | | $(2,053,900) | | | $1,568,578 | | | $2,434,470 | | | 2020 | | | $1,843,737 | | | $(1,182,923) | | | $1,178,674 | | | $1,839,488 | |
(a)
| The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
| 2022 | | | $1,619,185 | | | $ (272,630) | | | $— | | | $(280,159) | | | $(212,248) | | | $— | | | $854,148 | | | 2021 | | | $1,893,716 | | | $(171,934) | | | $— | | | $(54,649) | | | $(98,555) | | | $— | | | $1,568,578 | | | 2020 | | | $1,158,516 | | | $70,246 | | | $— | | | (50,088)
| | | $— | | | $— | | | $1,178,674 | |
7
| Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
8
| The peer group used for this purpose is the following published industry index: Russell 2000 Index. |
TABLE OF CONTENTS 9
| The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
10
| Non-GAAP organic revenue growth (“Revenue Growth”) is defined as GAAP revenue (excluding (i) any acquisitions by the Company other than N H Research, LLC or (ii) any dispositions by the Company). While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Revenue Growth is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. |
Tabular List of Financial Performance Measures
As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The performance measures that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows: Revenue Growth
Non-GAAP operating margin levels based on organic results (“Operating Margin”) Recurring billed value of all termed software subscription license agreements and perpetual maintenance agreements normalized to a one-year period (“Software Annual Recurring Revenue”). Analysis of the Information Presented in the Pay versus Performance Table
As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable “pay-for-performance” philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance Table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance Table. TABLE OF CONTENTS Compensation Actually Paid and Cumulative TSR
As demonstrated by the following graph, the amount of compensation actually paid to our principal executive officer (or, in 2020, paid to both Mr. Starkloff and Mr. Davern) and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Starkloff and Mr. Davern) is aligned with the Company’s cumulative TSR over the three years presented in the table. The alignment of compensation actually paid with the Company’s cumulative TSR over the period presented is because a significant portion of the compensation actually paid to Ms. Starkloff and to the other NEOs is comprised of equity awards. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” in 2022, the Company targeted that approximately 78% of the value of the total compensation awarded to our President and CEO and 60% of the value of the total compensation awarded to our other NEOs was to be comprised of equity awards, including RSUs and PRSUs. TABLE OF CONTENTS Compensation Actually Paid and Net Income
As demonstrated by the following graph, the amount of compensation actually paid to our principal executive officer (or, in 2020, paid to both Mr. Starkloff and Mr. Davern) and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Starkloff and Mr. Davern) is generally aligned with the Company’s net income over the three years presented in the table. While the Company does not use net income as a performance measure in the overall executive compensation program, the measure of net income is correlated with the measure Revenue Growth. As discussed earlier, EIP payout to NEOs is determined based on the attainment of key corporate financial and operational objectives, including Revenue Growth. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the Company targets that approximately 22% of the value of total compensation awarded to our principal executive officer consists of amounts determined under the Company short-term incentive compensation program and approximately 40% of the average value of total compensation awarded to our other NEOs consists of amounts determined under the Company short-term incentive compensation program.
TABLE OF CONTENTS Compensation Actually Paid and Revenue Growth
As demonstrated by the following graph, the amount of compensation actually paid to our principal executive officer (or, in 2020, paid to both Mr. Starkloff and Mr. Davern) and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Starkloff and Mr. Davern) is generally aligned with the Company’s Revenue Growth over the three years presented in the table. As described above, Revenue Growth is defined as non-GAAP organic revenue growth (excluding any acquisitions or dispositions by the Company). While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Revenue Growth is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. The Company utilizes Revenue Growth when determining the EIP payout to our NEOs. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” in 2022, the Company targets that approximately 22% of the value of total compensation awarded to our principal executive officer consists of amounts determined under the Company short-term incentive compensation program and approximately 40% of the average value of total compensation awarded to our other NEOs consists of amounts determined under the Company short-term incentive compensation program. Additionally, in 2022, the Company targeted that approximately 78% of the value of the total compensation awarded to our President and CEO and 60% of the value of the total compensation awarded to our other NEOs was to be comprised of equity awards, including RSUs and PRSUs.
TABLE OF CONTENTS Cumulative TSR of the Company and Cumulative TSR of the Peer Group
As demonstrated by the following graph, the Company’s cumulative TSR over the three-year period presented in the table was -13%, while the cumulative TSR of the peer group presented for this purpose, the Russell 2000, was -21% over the three years presented in the table. The Company’s cumulative TSR remained relatively steady compared to the Russell 2000 during the three years presented in the table, including in fiscal 2022 despite a challenging geopolitical and macroeconomic environment, including global supply chain disruptions, inflationary pressure and ongoing impacts from the COVID-19 pandemic, representing the Company’s resilient performance as compared to the companies comprising the Russell 2000 peer group. For more information regarding the Company’s performance and the companies that the Compensation Committee considers when determining executive compensation, please see the section entitled “Executive Compensation – Compensation Discussion and Analysis.”
DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors and 10% stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, we believe that, during the fiscal year ended December 31, 2022, all Section 16(a) filing requirements applicable to our officers, directors and 10% stockholders were satisfied. EQUITY COMPENSATION PLAN INFORMATION The number of shares issuable upon exercise of outstanding restricted stock unit awards (RSUs and PRSUs) granted to employees and non-employee directors, as well as the number of shares remaining available for future issuance, under our equity compensation plans as of December 31, 2020,2022, are summarized in the table below. We had no outstanding options, warrants or other rights under equity compensation plans that have not been approved by stockholders as of such date. | Plan category | | Number of
shares to
be issued
upon
vesting of
outstanding
options, warrants
and rights (1) | | Weighted-
average
exercise
price of
outstanding
options, warrants
and rights (2) | | Number of
shares
remaining for
future
issuance
under equity
compensation
plans (3) | | Plan category | | Number of
shares to
be issued
upon
vesting of
outstanding
options, warrants
and rights (1) | | Weighted-
average
exercise
price of
outstanding
options, warrants
and rights (2) | | Number of
shares
remaining for
future
issuance
under equity
compensation
plans (3) | | | Equity compensation plans approved by stockholders | | 4,041,262 | | — | | 7,621,918 | | Equity compensation plans approved by stockholders | | 4,020,452 | | — | | 10,249,246 | | | Equity compensation plans not approved by stockholders | | — | | — | | — | | Equity compensation plans not approved by stockholders | | — | | — | | — | | | Total | | 4,041,262 | | — | | 7,621,918 | | Total | | 4,020,452 | | — | | 10,249,246 | |
(1)
| Includes 4,041,2624,020,452 shares to be issued upon the vesting of outstanding restricted stock units. |
(2)
| All awards were restricted stock units which do not have an exercise price. |
(3)
| Includes 4,562,7266,176,156 shares available for future issuance under the 20202022 Incentive Plan and 3,059,1924,073,090 shares available for future issuance under the ESPP. |
TABLE OF CONTENTS REPORT OF THE AUDIT COMMITTEE*COMMITTEEThe Audit Committee operates under a written charter adopted by the Board of Directors. The members of the Audit Committee are CharlesGayla J. Roesslein,Delly, James E. Cashman, III, Gayla J. Delly, Dr. Gerhard P. Fettweis and Michael E. McGrath. All members of the Audit Committee meet the independence requirements of the Nasdaq listing standards. Management is responsible for NI’s internal controls and the financial reporting process. NI’s independent registered public accounting firm is responsible for performing an independent audit of NI’s consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) and for issuing opinions on the conformity of those audited financial statements with U.S. generally accepted accounting principles and the effectiveness of NI’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes. The Audit Committee schedules its meetings and conference calls with a view to ensuring it devotes appropriate attention to all of its tasks. The Audit Committee met five5 times during fiscal 20202022 to carry out its responsibilities. The Audit Committee regularly meets privately with NI’s independent registered public accounting firm, internal audit personnel, and management, each of whom has unrestricted access to the Audit Committee. The Audit Committee evaluated the performance of the items enumerated in the Audit Committee Charter, which includes oversight of NI’s internal audit function. As part of its oversight of NI’s financial statements, the Audit Committee reviewed and discussed with both management and the independent registered public accounting firm NI’s quarterly and audited fiscal year financial statements, including a review of NI’s Annual Report on Form 10-K. The Audit Committee also reviewed and approved the independent registered public accounting firm’s work plan, audit fees, and all non-audit services performed by the independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm any matters required to be discussed by Auditing Standard No. 1301, Communication with Audit Committees, as amended. The Audit Committee has also received the written disclosures from Ernst & Young LLP required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and the Audit Committee has discussed the independence of Ernst & Young LLP with that firm. The Audit Committee has implemented a procedure to monitor the independence of NI’s independent registered public accounting firm. Based upon the Audit Committee’s discussions with management and Ernst & Young LLP and the report of Ernst & Young LLP to the Audit Committee, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in NI’s Annual Report on Form 10-K for the year ended December 31, 2020,2022, which has been filed with the SEC. AUDIT COMMITTEE CharlesGayla J. Roesslein,Delly, Chair
James E. Cashman, III
Gayla J. Delly
Dr. Gerhard P. Fettweis
Michael E. McGrath *
| The foregoing Report of the Audit Committee is not to be deemed to be “soliciting material” or to be “filed” with the Securities Exchange Commission or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent we specifically request that such information be treated as soliciting material or we specifically incorporate it by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
TABLE OF CONTENTS PROPOSAL TWO: APPROVAL OF EXECUTIVE COMPENSATION The Dodd-Frank Act enables our stockholders to vote to approve, on an advisory (non-binding) basis, pursuant toIn accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders have the opportunity to cast an annual advisory vote to approve the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance withpursuant to the SEC’s compensation disclosure rules (commonly referred to as a “Say-on-Pay”).
As described under the heading “Executive Compensation — Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, retain and motivate our Named Executive Officers, who are critical to our success. We believe that the various elements of our executive compensation program work together to promote our goal of ensuring that total compensation should be related to both NI’s performance and individual performance. Stockholders are urged to read the “Executive Compensation — Compensation Discussion and Analysis” section of this Proxy Statement, which discusses how our executive compensation policies implement our compensation philosophy, and the “Executive Compensation — Summary Compensation Table” section of this Proxy Statement, which contains tabular information and narrative discussion about the compensation of our Named Executive Officers and additional details about our executive compensation programs, including information about fiscal year 20202022 compensation of our Named Executive Officers. The Compensation Committee and our Board believe that these policies are effective in implementing our compensation philosophy and in achieving its goals. We are asking our stockholders to indicate their support for our executive compensation as described in this Proxy Statement. This Say-on-Pay proposal gives our stockholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure. The Say-on-Pay vote is advisory, and therefore not binding on NI, the Compensation Committee, or our Board. However, our Board and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the Named Executive Officer compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. The Say-on-Pay vote is conducted annually, and the next such vote will occur at the 20222024 annual meeting of stockholders. Vote Required; Recommendation of the Board of Directors Approval of NI’s executive compensation program requires the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote who are present, in person or by proxy, on the proposal. The Board of Directors unanimously recommends a vote “FOR” the approval of National Instruments Corporation's Executive Compensation Program, as described in this Proxy Statement. TABLE OF CONTENTS PROPOSAL THREE: APPROVAL OF
FREQUENCY OF STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION As described in Proposal Two above, our stockholders have the opportunity to cast an advisory vote to approve the compensation of our Named Executive Officers. In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, this Proposal Three affords stockholders the opportunity to cast an advisory vote on how often we should include a Say-on-Pay proposal in our proxy materials for future annual stockholder meetings or any special stockholder meeting for which we must include executive compensation information in the proxy statement for that meeting. Under this Proposal Three, stockholders may vote to have the Say-on-Pay vote every year, every two years, or every three years. Our stockholders voted on a similar proposal in 2017 with most stockholders voting to hold the Say-on-Pay vote every year. Our Board and Compensation Committee continue to believe that Say-on-Pay advisory votes should be conducted each year so that our stockholders may express their views on our executive compensation program and the Compensation Committee can consider such views in its compensation planning for the fiscal year following the Say-on-Pay advisory vote. Stockholders may cast their advisory vote to conduct advisory votes on executive compensation every “1 Year,” “2 Years,” or “3 Years,” or “Abstain.” It is expected that the next Say-on-Pay frequency vote will occur at the 2029 annual meeting of stockholders. Vote Required; Recommendation of the Board of Directors The selection regarding the frequency of the stockholder vote on executive compensation receiving the highest number of “FOR” votes shall be considered the frequency of the stockholder vote on executive compensation that is preferred by our stockholders. As an advisory vote, this proposal is not binding on NI, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by stockholders and will consider the outcome of the vote when making a decision regarding the frequency of conducting a Say-on-Pay vote. The Board recommends that on Proposal Three you vote for future advisory votes on executive compensation to occur every “1 Year.” TABLE OF CONTENTS PROPOSAL FOUR: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The charter of our Audit Committee provides that the Audit Committee shall appoint, compensate, retain and oversee NI’s independent registered public accounting firm. The Audit Committee has selected Ernst & Young LLP (“E&Y”) as NI’s independent registered public accounting firm for the fiscal year ending December 31, 2021.2023. The Board is asking the stockholders to ratify this appointment of E&Y, which has served as NI’s independent registered public accounting firm since June 2005. In the event the stockholders fail to ratify the appointment, our Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of NI and NI’s stockholders. A representative of E&Y is expected to be available at the Annual Meeting to make a statement if such representative desires to do so and to respond to appropriate questions. Audit Fees The aggregate fees billed for professional services rendered for the integrated audits of NI’s annual financial statements for the fiscal years ended December 31, 20202022 and 2019,2021, for the reviews of the financial statements included in NI’s Quarterly Reports on Form 10-Q for those fiscal years, for the audit of NI’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 for those fiscal years, and for statutory audits in various countries were approximately $1,892,000$2,971,000 and $1,675,000,$1,954,000, respectively. Audit-Related Fees Audit-related fees for 2020each of 2022 and 20192021 were $0 and $5,000, respectively.$0. The services rendered related to professional services that are reasonably related to the performance of the world-wide audit or review of NI's financial statements. Tax Fees The aggregate fees billed for professional tax services rendered for 20202022 and 20192021 were approximately $1,003,000$757,000 and $490,000,$458,000, respectively. Included in the foregoing tax fees are such services as tax compliance, tax advice and tax planning. All Other Fees There were no fees billed for other services in 20202022 or 2019.2021. Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors The Audit Committee’s policy is to pre-approve all services provided by NI’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis. The independent registered public accounting firm is required to periodically report to the Audit Committee regarding the extent of services provided by such firm in accordance with such pre-approval. The Audit Committee may also delegate pre-approval authority to one of its members. Such member(s) must report any decisions to the Audit Committee at the next scheduled meeting. During 20202022 and 2019,2021, the Audit Committee approved in advance all audit, audit-related, and tax services to be provided by E&Y. E&Y has not performed any “prohibited activities” as such term is defined in Section 201 of the Sarbanes Oxley Act of 2002. TABLE OF CONTENTS Vote Required; Recommendation of the Board of Directors Ratification of the appointment of E&Y as National Instruments Corporation’s independent registered public accounting firm requires the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote who are present in personat the meeting (electronically) or by proxy, on the proposal. Upon the recommendation of the Audit Committee, the Board of Directors unanimously recommends a vote “FOR” the ratification of the Appointment of E&Y as National Instruments Corporation's Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2021.2023. TABLE OF CONTENTS In February 2012, ourOur Board adopted a Code of Ethics that applies to all directors and employees, including NI’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics incorporated several corporate policies which had been in effect since 1994.
The Code of Ethics is available on NI’s website at www.ni.com/nati/corporategovernance/code_of_ethics.htm. The Code of Ethics and its incorporated corporate policies are updated from time to time and were most recently updated in July 2020. NI intends to disclose future material amendmentsany changes to provisions of the Code of Ethics, or waivers of such provisions grantedfrom this code by posting to executive officers, on NI’sour website within four business days following the date of such amendmentif disclosure is required by SEC or waiver.Nasdaq rules.
NI knows of no other matters to be submitted at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed proxy to vote the shares they represent as the Board may recommend. BY ORDER OF THE BOARD OF DIRECTORS R. Eddie Dixon, Jr.
Chief Legal Officer, Senior Vice President & Secretary Austin, Texas
March 29, 202127, 2023 TABLE OF CONTENTS Forward Looking Statements This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act that are subject to risks and uncertainties. Any statements contained herein regarding our future financial performance, operations, strategy and goals relating to Engineering Hope and our corporate impact strategy or other matters (including, without limitation, statements regarding being confident in the strength of our operating model and remaining optimistic about our position to capture long-term growth opportunities as we continue to enhance our offerings in key focus areas; this year having been a stress test of our strategy, and it proved resilient; standing out in the market and stronger positioning of our software differentiation in areas of data analytics, cloud and the use of artificial intelligence to modernize our category; seeing momentum build; our ability to sustainably grow and generate profit delivering value to our customers, employees, stockholders, and community; customers, employees, community and stockholders benefitting, including stockholders benefitting from receiving a solid return on the investment they make in us; statements to the effect that we “believe,” “expect,” “plan,” “may,” “could,” “will,” “intend to,” “project,” “predict,” “anticipate,” “continue,” “seek to,” “commit“strive to,” “endeavor to,” “are committed to,” “remain committed to,” “focus on,” “are encouraged by,” “remain cautious,” “remain optimistic” or “estimate”; statements of “goals,” “initiatives,” “commitments,” “strategy” (including our “Corporate Impact Strategy”), “focus” or “visions”; or other variations thereof or comparable terminology or the negative thereof) should be considered forward-looking statements. All forward-looking statements are based on current expectations and projections of future events. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not guarantees of performance and actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors which could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements, including risksstatements. Risks and uncertainties related toinclude without limitation: the global shortage of key components; effect of the global economic and geopolitical conditions; our international operations and foreign economies; adverse public health matters, including epidemics and pandemics such as the COVID-19 viruspandemic; our ability to effectively manage our partners and further economicdistribution channels; interruptions in our technology systems or cyber-attacks on our systems; the dependency of our product revenue on certain industries and market disruptions resulting from COVID-19; further adverse changes or fluctuationsthe risk of contractions in such industries; concentration of credit risk and uncertain conditions in the global economy; further adverse fluctuationsfinancial markets; our ability to compete in markets that are highly competitive; our ability to release successful new products or achieve expected returns; the risk that our manufacturing capacity and a substantial majority of our warehousing and distribution capacity are located outside of the U.S.; our dependence on key suppliers and distributors; longer delivery lead times from our suppliers; risk of product liability claims; dependence on our proprietary rights and risks of intellectual property litigation; the continued service of key management, technical personnel and operational employees; our ability to comply with environmental laws and associated costs; our ability to maintain our website; the risks of bugs, vulnerabilities, errors or design flaws in our industry; foreign exchange fluctuations; changes in the current global trade regulatory environment; fluctuations in customer demands and markets; fluctuations in demand forproducts; our products including orders fromrestructuring activities; our exposure to large customers; component shortages; delays in the release of new products;orders; our shift to more system orders; our ability to effectively manage our operating expenses; manufacturing inefficienciesexpenses and meet budget; fluctuations in our quarterly results due to factors outside of our control; our outstanding debt; the level of capacity utilization; the impact of any recent or future acquisitions or divestitures by NI (including the ability to successfully operate or integrate the acquired company’s business into NI, the ability to retain and integrate the acquired company’s employees into NI, and the ability to realize the expected benefits of the acquisition);interest rate risk associated with our variable rate indebtedness; seasonal variation in our revenues; our ability to achieve the benefits of employee restructuring planscomply with laws and possibleregulations; changes in tax rates and exposure to additional tax liabilities; our ability to make certain acquisitions or dispositions, integrate the sizecompanies we acquire or separate the companies we sold and/or enter into strategic relationships; risks related to currency fluctuations; provisions in charter documents and timing of theDelaware law that delay or prevent our acquisition; and risks related charges; cyber-attacks; expense overruns; and adverse effects of price changes or effective tax rates.to our strategic review process. We direct readers to our Form 10-K for the year ended December 31, 20202022 and the other documents we file with the SEC for other risks associated with our future performance. Actual results could differ materially from those stated or implied by our forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. TABLE OF CONTENTS ANNEX I
NON-GAAP FINANCIAL MEASURES Below is a reconciliation of certain non-GAAP financial measures discussed in our 2022 Proxy Statement. Non-GAAP Organic Revenue | Revenue, as reported | | | 1,656,975 | | | Impact of acquisition related fair value adjustments | | | 956 | | | Non-GAAP revenue | | | 1,657,931 | | | Acquisitions/divestitures (other than the acquisition of N H Research, LLC) | | | (24,439) | | | Organic revenue | | | 1,633,492 | |
Non-GAAP Operating Margin | Operating margin, as reported | | | 11.6% | | | Stock-based compensation | | | 4.7% | | | Amortization of acquisition-related intangibles and fair value adjustments | | | 2.8% | | | Acquisition transaction and integration costs, restructuring charges and other | | | 0.5% | | | Net amortization of internally developed software costs | | | 0.3% | | | Non-GAAP operating margin | | | 19.9% | | | Acquisitions/divestitures | | | 0.5% | | | Organic operating margin | | | 20.4% | |
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