| | | | liquidation, the holders of our founder shares, our Sponsor, will not receive any monies held in the Trust Account as a result of its ownership of the founder shares. | |
| Q.
If the Extension Amendment Proposal and the Trust Amendment Proposal are approved, what happens next?
| | | A.
We will continue our efforts to consummate the VG Business Combination.
Upon approval of the Extension Amendment Proposal and the Trust Amendment Proposal by the requisite number of votes, the amendments to our Articles that are set forth in Annex A hereto will become effective. We will remain a reporting companyRule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), specific to Audit Committee members. All members of our Audit Committee meet the requirements for financial literacy under the applicable NYSE rules. In addition, the Board has determined that Ms. Jonas and Mr. Kreeger qualify as an “Audit Committee financial expert,” as such term is defined in Item 407(d) (5) of Regulation S-K.
|
24 | Virgin Galactic Holdings, Inc. |
Table of Contents
Corporate Governance
Compensation Committee 2022 MEMBERS:
Wanda Austin (Chair)
Adam Bain
George Mattson MEETINGS HELD IN 2021:
5 
| Our Compensation Committee is responsible for, among other things: ●reviewing and approving corporate goals and objectives with respect to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of these goals and objectives and setting the Chief Executive Officer’s compensation; ●reviewing and setting or making recommendations to our Board of Directors regarding the compensation of our other executive officers and, from time to time, other members of our leadership team; ●reviewing and making recommendations to our Board of Directors regarding director compensation; ●implementing and administering our incentive compensation and equity-based plans and arrangements; and ●retaining or obtaining advice from any compensation consultants. Our Compensation Committee consists of Dr. Austin and Messrs. Bain and Mattson, with Dr. Austin serving as chair. We have affirmatively determined that each member of the Compensation Committee qualifies as independent under NYSE rules, including the additional independence standards for members of a Compensation Committee, and that each qualifies as a “non-employee director” as defined in Rule 16b-3 of the Exchange Act. The Compensation Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time as further described in its charter. The Compensation Committee may also delegate to one or more executive officers the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity plans. Compensation Consultants
The Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable. In accordance with this authority, in 2021, the Compensation Committee engaged the services of Meridian Compensation Partners, LLC (“Meridian”) to assist the committee in its evaluation of the compensation provided to our executive officers. Other than advising the Compensation Committee, neither Meridian nor any of its affiliates maintain any other direct or indirect business relationships with us or any of our subsidiaries. The Compensation Committee has considered the independence of Meridian, consistent with the requirements of the NYSE, and has determined that Meridian is independent. Further, pursuant to SEC rules, the Compensation Committee conducted a conflicts of interest assessment and determined there is no conflict of interest resulting from retaining Meridian in the year 2021. Additionally, during 2021, Meridian did not provide any services to us other than executive and director compensation and broad-based plans that do not discriminate in scope, terms, or operation, in favor of our executive officers or directors, and that are available generally to all salaried employees. Compensation Committee Interlocks and Insider Participation
During 2021, the members of our Compensation Committee were Dr. Austin and Messrs. Bain and Mattson, none of whom was during fiscal year 2021 an officer or employee of the Company or was formerly an officer of the Company. Related person transactions pursuant to Item 404(a) of Regulation S-K involving those who served on the Compensation Committee during 2021 are described in “Certain Transactions with Related Persons.” During 2021, none of our executive officers served as a member of the board of directors or Compensation Committee (or other committee performing equivalent functions) of any entity that had one or more executive officers serving on our Board of Directors or Compensation Committee. |
Table of Contents
Corporate Governance
Nominating & Corporate Governance Committee 2022 MEMBERS:
Adam Bain (Chair)
Tina Jonas
George Mattson MEETINGS HELD IN 2021:
4 
| Our Nominating and Corporate Governance Committee is responsible for, among other things: ●assisting our Board of Directors in identifying individuals qualified to become members of our Board of Directors, consistent with criteria set forth in our governance guidelines; ●recommending director nominees for election to our Board of Directors; ●reviewing the appropriate composition of our Board of Directors and its committees; ●developing and recommending to our Board of Directors a set of corporate governance guidelines and principles; and ●participating in succession planning for our Chief Executive Officer and others serving in key management positions. Our Nominating and Corporate Governance Committee consists of Messrs. Bain and Mattson and Ms. Jonas, with Mr. Bain serving as chair. We have affirmatively determined that each member of the Nominating and Corporate Governance Committee qualifies as independent under NYSE rules. |
| 26 | Virgin Galactic Holdings, Inc. |
Table of Contents
Corporate Governance
Safety Committee 2022 MEMBERS:
Craig Kreeger (Chair)
Wanda Austin
Evan Lovell
Wanda Sigur
W. Gilbert West MEETINGS HELD IN 2021:
11 
| Our Safety Committee is responsible for, among other things: ●reviewing our safety performance, including processes to ensure compliance with internal policies and goals and applicable laws and regulations; ●providing input on the management of current and emerging safety issues; ●assisting our Board of Directors with oversight of our risk management and security processes; ●reviewing safety audit findings and resulting action plans; and ●periodically visiting our facilities and reviewing any safety issues. Our Safety Committee consists of Dr. Austin, Ms. Sigur and Messrs. Kreeger, Lovell, and West, with Mr. Kreeger serving as chair. |
Board Oversight Responsibilities
Board and Board Committee Meetings, Attendance, Executive Sessions and Attendance at Annual Meeting of Stockholders
We expect all directors to attend all meetings of the Board and the committees of the Board of which they are members. During the year ended December 31, 2021, the Board met nine times, the Audit Committee met eleven times, the Compensation Committee met five times, the Nominating and Corporate Governance Committee met four times and the Safety Committee met eleven times. Each of our incumbent directors attended at least 75% of the total meetings of the Board and committees thereof held during 2021 during the time that such director served on the Board or such committee in 2021.
Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled throughout the year. In addition, at least once a year, the independent directors meet in a private session that excludes management and any non-independent directors. The independent Chair of the Board presides at each of these meetings and, in his absence, the non-management and independent directors in attendance, as applicable, determine which member will preside at such session.
We do not have a formal policy regarding the attendance of our Board members at our annual meetings of stockholders, but we expect all directors to make every effort to attend any meeting of stockholders. All of our then-serving Board members attended our 2021 annual meeting of stockholders.
Table of Contents
Corporate Governance
Board’s Role in Strategy and Risk Oversight
The involvement of the Board of Directors in reviewing our business strategy is an integral aspect of the Board’s assessment of management’s tolerance for risk and its determination of what constitutes an appropriate level of risk for the Company. The Board of Directors has overall responsibility for risk oversight, including, as part of regular Board and committee meetings, general oversight of executives’ management of risks relevant to the Company. A fundamental part of risk oversight is not only understanding the material risks a company faces and the steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. While the full Board has overall responsibility for risk oversight and is currently overseeing the Company’s business continuity risks, such as risks relating to the COVID-19 pandemic, it is supported in this function by its Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Safety Committee. Each of the committees regularly reports to the Board. In addition, our Board and its committees receive periodic detailed operating performance reviews from members of management.
Audit
Committee | | The Audit Committee assists the Board in fulfilling its risk oversight responsibilities by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls, our compliance with legal and regulatory requirements, our enterprise risk management program and our units, public sharescyber and warrants will remain publicly traded. Ifdata security risk management. Through its regular meetings with management, including the Extension Amendment Proposalfinance, legal, internal audit, tax, compliance and information technology functions, the Audit Committee reviews and discusses significant areas of our business and summarizes for the Board areas of risk and the Trust Amendment Proposal are approved,appropriate mitigating factors.
|
| | |
Compensation Committee | | The Compensation Committee assists the removal ofBoard by overseeing and evaluating risks related to the Withdrawal Amount fromCompany’s compensation structure and compensation programs, including the Trust Account will reduceformulation, administration and regulatory compliance with respect to compensation matters. |
| | |
Nominating and Corporate Governance Committee | | The Nominating and Corporate Governance Committee assists the amount remainingBoard by overseeing and evaluating programs and risks associated with Board organization, membership and structure and corporate governance. |
| | |
Safety Committee | | The Safety Committee assists the Board in the Trust Account and increase the percentage interest of our ordinary shares held by our Sponsor, our directors and our officersmatters related to safety arising as a result of the Company’s business and operations and the processes used to mitigate key safety risks. Through its regular meetings with management and other advisers, its review of the Company’s policies and safety audits and results and on-site visits to the Company’s facilities and other oversight responsibilities, the Safety Committee oversees key safety risks. |
| 28 | Virgin Galactic Holdings, Inc. |
Table of Contents
Corporate Governance
Board Role in ESG Oversight
Our Board of Directors evaluates ESG-related risks and opportunities as part of its strategic oversight role, with support from its committees. In 2021, as set forth in its charter, primary oversight of the Company’s ESG strategy, initiatives and policies was delegated to the Nominating and Corporate Governance Committee. Such oversight will transition to the Audit Committee in 2022. The Nominating and Corporate Governance Committee, and thereafter the Audit Committee, periodically review ESG matters and report progress to the Board. Other Board committees support our ESG priorities in connection with their specific areas of oversight.
Our ESG Executive Committee is a cross-functional committee of senior leaders responsible for developing our ESG strategy and leading our company-wide commitment to good corporate citizenship and responsible business practices. This committee consists of members from our human resources, sustainability and leadership development, and legal teams, and provides quarterly updates to the Board.
BOARD OF DIRECTORS
Oversight of strategy, including ESG risks and opportunities |
|
Audit Committee Oversees ESG strategy, policies and initiatives, including our environmental programs, as well as ERM, data security and ethics/ compliance | Compensation Committee Oversees human capital and culture, including diversity and inclusion | Nominating and Corporate Governance Oversees governance matters | Safety Committee Oversees health and safety |
|
| MANAGEMENT |
ESG Executive Committee Primary responsibility for developing and implementing ESG strategy, initiatives and policies |
Table of Contents
Corporate Governance
Other Governance Practices and Policies
Stockholder Engagement
In the beginning of 2022, our management team developed a stockholder outreach program to: (1) discuss our business, including company operational strategy and performance, (2) review our executive compensation program, and (3) gather feedback on the Company’s executive compensation program.
We proactively contacted
26 stockholders
representing approximately 17% of our outstanding shares
(as of November 15, 2021) | �� | We had discussions with
5 stockholders
representing approximately 12% of outstanding shares |
We also met with the proxy advisory firms to understand their proxy voting guidelines and their perspectives about our executive compensation program. In order to continue to understand institutional investors’ perspectives on our executive compensation program, management intends to continue its efforts on stockholder engagement throughout 2022.
Committee Charters and Corporate Governance Guidelines
Our Corporate Governance Guidelines, charters of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Safety Committee and other corporate governance information are available under the Governance section of the Investor Information page of our website at www.virgingalactic.com, or by writing to our Corporate Secretary at our offices at 1700 Flight Way, Tustin, California 92782.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics (the “Code of Conduct”) that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. A copy of our Code of Business Conduct and Ethics is available under the under the Governance section of the Investor Information page of our website at www.virgingalactic.com, or by writing to our Corporate Secretary at our offices at 1700 Flight Way, Tustin, California 92782. We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website rather than by filing a Current Report on Form 8-K.
Communications with the Board
Any stockholder or any other interested party who desires to communicate with our Board of Directors, our non-management directors or any specified individual director, may do so by directing such correspondence to the attention of the Corporate Secretary at our offices at 1700 Flight Way, Tustin, California 92782. The Corporate Secretary will forward the communication to the appropriate director or directors as appropriate.
| 30 | Virgin Galactic Holdings, Inc. |
Table of Contents
Director Compensation
In 2021, we maintained a compensation program that consists of annual cash retainer fees and long-term equity awards for our non-employee directors who are not affiliated with us and/or the Virgin Group and the Sponsor. The eligible directors in 2021 were Dr. Austin, Ms. Jonas and Messrs. Ryans, Kreeger, Mattson and West. The 2021 Director Compensation Program consisted of the components described below. Effective as of April 1, 2021, the 2021 Director Compensation Program was amended such that the annual cash retainer fee for the Audit Committee chair decreased from $40,000 to $25,000, and the annual cash retainer fee for Audit Committee members decreased from $20,000 to $10,000. | |  |
Cash Compensation
Annual Retainer: $125,000
| | Annual Committee
Chair Retainer
($) | | Annual Committee
Member (Non-Chair)
Retainer
($) |
| Audit | | 25,000 | | 10,000 |
| Compensation | | 15,000 | | 7,500 |
| Nominating and Corporate Governance | | 15,000 | | 7,500 |
| Safety | | 15,000 | | 7,500 |
The annual cash retainer is paid in quarterly installments in arrears. Annual cash retainers are pro-rated for any partial calendar quarter of service.
Equity Compensation
| ● | Initial Grant to each eligible director who is initially elected or appointed to serve on our Board of Directors: An RSU award with an aggregate value of $150,000, which will vest as to one-third of the shares subject to the award on each anniversary of the grant date, subject to continued service. |
| ● | Annual Grant to each eligible director who is serving on our Board of Directors as of the date of the annual stockholders’ meeting: An RSU award with an aggregate value of $125,000, which will vest in full on the earlier of the one-year anniversary of the grant date or the date of the next annual meeting following the grant date, subject to continued service. |
In addition, each equity award granted to the eligible directors under the 2021 Director Compensation Program will vest in full immediately prior to the occurrence of a change in control (as defined in the 2019 Incentive Award Plan (the “2019 Plan”)).
| The Board believes that director compensation should fairly pay directors for work required and that compensation should align directors’ interests with the long-term interests of stockholders. The Compensation Committee reviews and makes recommendations to the Board regarding non-employee director compensation. In making such recommendations, the Compensation Committee took into consideration a market review completed by Meridian in early 2021. |
Compensation under the 2021 Director Compensation Program is subject to the annual limits on non-employee director compensation set forth in the 2019 Plan.
Table of Contents
Director Compensation
Director Compensation Table for Fiscal Year 2021
The following table contains information concerning the compensation of our non-employee directors in fiscal year 2021.
| Name | | Fees Earned or
Paid in Cash
($) | | Stock Award
($)(1) | | All Other
Compensation
($) | | Total
($) |
| Wanda Austin | | 157,500 | | 125,000 | | — | | 282,500 |
| Craig Kreeger | | 152,500 | | 125,000 | | — | | 277,500 |
| Tina Jonas | | 80,913 | | 275,000 | | — | | 355,913 |
| George Mattson | | 159,048 | | 125,000 | | — | | 284,048 |
| James Ryans | | 25,670 | | — | | — | | 25,670 |
| Wanda Sigur | | 33,125 | | 150,000 | | — | | 183,125 |
| W. Gilbert West | | 115,283 | | 275,000 | | — | | 390,283 |
| (1) | Amounts reflect the full grant-date fair value of RSU awards granted during 2021 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all stock awards made to our directors in Note 14 in our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 10-K”). The table below shows the aggregate numbers of RSU awards outstanding as of December 31, 2021 by each director. |
| Name | | Restricted Stock Units
Outstanding at Fiscal Year End |
| Wanda Austin | | 13,241 |
| Craig Kreeger | | 13,241 |
| George Mattson | | 13,241 |
| James Ryans | | — |
| Tina Jonas | | 8,996 |
| Wanda Sigur | | 10,768 |
| W. Gilbert West | | 8,157 |
| 32 | Virgin Galactic Holdings, Inc. |
Table of Contents
Proposal No. 2:
Ratification of Appointment of Independent Registered Public Accounting Firm
Appointment of Independent Registered Public Accounting Firm
The Audit Committee appoints our independent registered public accounting firm. In this regard, the Audit Committee evaluates the qualifications, performance and independence of our independent registered public accounting firm and determines whether to re-engage our current firm. As part of its evaluation, the Audit Committee considers, among other factors, the quality and efficiency of the services provided by the firm, including the performance, technical expertise, industry knowledge and experience of the lead audit partner and the audit team assigned to our account; the overall strength and reputation of the firm; the firm’s global capabilities relative to our business; and the firm’s knowledge of our operations. KPMG LLP (“KPMG”) has served as our independent registered public accounting firm since 2019. Neither the accounting firm nor any of its members has any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors and providing audit and permissible non-audit related services. Upon consideration of these and other factors, the Audit Committee has appointed KPMG to serve as our independent registered public accounting firm for the year ending December 31, 2022.
Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of KPMG to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm and it is a good corporate governance practice. If our stockholders do not ratify the selection, it will be considered as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Representatives of KPMG are expected to attend the Annual Meeting and to have an opportunity to make a statement and be available to respond to appropriate questions from stockholders.
Audit, Audit-Related, Tax and All Other Fees
The following reflects KPMG fees for the audit of our financial statements for the years ended December 31, 2021 and 2020, and fees billed for other services rendered by KPMG during those periods.
| | 2021 | | 2020 |
| Audit Fees(1) | | 1,867,014 | | 1,963,668 |
| Audit Related Fees | | — | | — |
| Tax Fees | | — | | — |
| All Other Fees | | — | | — |
| Total | | 1,867,014 | | 1,963,668 |
| (1) | Audit fees include fees for services performed to comply with the standards established by the Public Company Accounting Oversight Board, including the audit of our consolidated financial statements for fiscal year 2021. This category also includes fees for audits provided in connection with statutory filings or services that generally only the principal independent auditor reasonably can provide, such as consent and assistance with and review of our SEC filings including registration statements |
Table of Contents
Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm
Pre-Approval Policies and Practices
The formal written charter for our Audit Committee requires that the Audit Committee pre-approve all audit services to be provided to us, whether provided by our principal auditor or other firms, and all other services (review, attest and non-audit) to be provided to us by our independent registered public accounting firm, other than de minimis non-audit services approved in accordance with applicable SEC rules.
The Audit Committee has adopted a pre-approval policy that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by our independent registered public accounting firm may be pre-approved. This pre-approval policy generally provides that the Audit Committee will not engage an independent registered public accounting firm to render any audit, audit related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee or (ii) entered into pursuant to the pre-approval policies and procedures described in the pre-approval policy. Unless a type of service to be provided by our independent registered public accounting firm has received this latter general pre-approval under the pre-approval policy, it requires specific pre-approval by the Audit Committee.
On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may be provided by the Company’s independent registered public accounting firm without first obtaining specific pre-approval from the Audit Committee. The Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. Any member of the Audit Committee to whom the committee delegates authority to make pre-approval decisions must report any such pre-approval decisions to the Audit Committee at its next scheduled meeting. If circumstances arise where it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories or above the pre-approved amounts, the Audit Committee requires pre-approval for such additional services or such additional amounts.
All of the services listed in the table above were pre-approved by our Audit Committee.
Board Recommendation
The Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2022. |
| 34 | Virgin Galactic Holdings, Inc. |
Table of Contents
Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm
Audit Committee Report
The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee. Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under the discussion of “Corporate Governance—Audit Committee.” Under the Audit Committee charter, management is responsible for the preparation, presentation and integrity of the Company’s financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States.
In the performance of its oversight function, the Audit Committee reviewed and discussed with management and KPMG LLP, as the Company’s independent registered public accounting firm, the Company’s audited financial statements for the fiscal year ended December 31, 2021. The Audit Committee also discussed with the Company’s independent registered public accounting firm the matters required to be discussed by applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. In addition, the Audit Committee received and reviewed the written disclosures and the letters from the Company’s independent registered public accounting firm required by applicable requirements of the PCAOB, regarding such independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with the Company’s independent registered public accounting firm their independence from the Company.
Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC.
Submitted by the Audit Committee of the Company’s Board of Directors:
Tina Jonas(Chair)
Craig Kreeger
W. Gilbert West
Table of Contents
Executive Officers
The table below identifies and sets forth certain biographical and other information regarding our executive officers as of April 27, 2022. There are no family relationships among any of our executive officers or directors.
| Executive Officer | Age | Position |
| Michael Colglazier | 55 | Chief Executive Officer, President and Director |
| Doug Ahrens | 55 | Executive Vice President, Chief Financial Officer and Treasurer |
| Michelle Kley | 50 | Executive Vice President, Chief Legal Officer and Secretary |
See page 15of this Proxy Statement for Michael Colglazier’s biography.
Executive Vice
President, Chief
Financial Officer
and Treasurer | Mr. Ahrens has served as our Executive Vice President, Chief Financial Officer and Treasurer since March 2021. He has over 20 years of operational and strategic finance experience from multinational companies and most recently served as the Chief Financial Officer of Mellanox Technologies, Ltd. (Nasdaq: MLNX) from 2019 to 2020, until its acquisition by NVIDIA Corporation. Prior to this, from September 2015 to December 2018, Mr. Ahrens served as Chief Financial Officer of GlobalLogic Inc., a private software engineering firm. From October 2013 to September 2015, Mr. Ahrens served as Chief Financial Officer of Applied Micro Circuits Corporation (now MACOM Technology Solutions), while it was then-publicly traded fabless semiconductor manufacturer. Prior to October 2013, Mr. Ahrens held various finance roles at Maxim Integrated Products, Inc. and Intel. Mr. Ahrens holds a Bachelor of Science in Mechanical Engineering from the University of California, San Diego and a Master of Business Administration from Harvard Business School. |
Executive Vice
President, Chief
Legal Officer and Secretary | Ms. Kley has served as our Executive Vice President, Chief Legal Officer and Secretary since March 2022 and served as our General Counsel from December 2019 to March 2022. Ms. Kley is responsible for overseeing all legal affairs, including corporate governance, securities law and NYSE compliance, M&A activity and strategic transactions. She also acts as Secretary and advises the Board of Directors. Prior to joining the Company, from 2016 to 2019, Ms. Kley was the Senior Vice President, Chief Legal and Compliance Officer and Secretary of Maxar Technologies Inc. (“Maxar”), and from 2012 to 2016, she served as Associate General Counsel and Vice President of Legal of Space Systems/Loral, LLC, a subsidiary of Maxar. Prior to joining Maxar, from 2011 to 2012, Ms. Kley was a corporate associate at Morrison & Foerster LLP. From 2010 to 2011, Ms. Kley served as legal counsel for Beazley Group. From 2003 to 2009, Ms. Kley was a corporate associate at Wilson Sonsini Goodrich & Rosati P.C. She is a member of the International Institute of Space Law and serves on the board of directors of its U.S. affiliate, the U.S. Center for Space Law. Ms. Kley also serves on the board of directors of the non-profit Community Anti-Drug Coalitions of America (CADCA). Ms. Kley holds a Juris Doctorate from University of California Berkeley Law School (Boalt Hall) and Bachelor of Arts degree in Psychology from Sonoma State University. |
| 36 | Virgin Galactic Holdings, Inc. |
Table of Contents
Proposal No. 3:
Approval, on an Advisory (Non-Binding) Basis, of the Compensation of our Named Executive Officers
As required by Section 14A(a)(1) of the Exchange Act, the below resolution enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this Proxy Statement. This proposal (the “Say-on-Pay Vote”), and commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. The Say-on-Pay 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.
We encourage our stockholders to review the “Executive Compensation” section of this Proxy Statement for more information.
As an advisory approval, this proposal is not binding upon us or our Board of Directors. However, the Compensation Committee, which is responsible for the design and administration of our executive compensation program, values the opinions of our stockholders expressed through your vote on this proposal. The Board and Compensation Committee will consider the outcome of this vote in making future compensation decisions for our named executive officers. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders of Virgin Galactic Holdings, Inc. approve, on an advisory basis, the fiscal year 2021 compensation of Virgin Galactic Holdings, Inc.’s named executive officers as described in the Compensation Discussion and Analysis and disclosed in the Summary Compensation Table and related compensation tables and narrative disclosure set forth in Virgin Galactic Holdings, Inc.’s Proxy Statement for the 2022 Annual Meeting of Stockholders.”
Board Recommendation
Our Board of Directors unanimously recommends you vote “FOR” the resolution to approve, on an advisory (non-binding) basis, the compensation of our named executive officers, as disclosed in the “Executive Compensation” section, the accompanying compensation tables and related narrative disclosure of this Proxy Statement. |
Table of Contents
Executive Compensation
Compensation Discussion and Analysis
Introduction
This Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, how each element of our executive compensation program is designed to satisfy those objectives, and the policies underlying our 2021 executive compensation program and the compensation awarded to our named executive officers for 2021. The following discussion and analysis of compensation arrangements for our named executive officers should be read together with the compensation tables and related disclosures.
Our named executive officers for fiscal year 2021 were:
| ● | Michael Colglazier, Chief Executive Officer and President |
| ● | Doug Ahrens, Executive Vice President, Chief Financial Officer and Treasurer |
| ● | Mike Moses, President, Space Missions & Safety |
| ● | Swami Iyer, President, Aerospace Systems |
| ● | Michelle Kley, Executive Vice President, General Counsel and Secretary |
| ● | Jonathan Campagna, our former Chief Financial Officer |
Effective March 1, 2021, Mr. Campagna ceased serving as our Chief Financial Officer and Mr. Ahrens was appointed as our Chief Financial Officer on that same day. Mr. Ahrens has over 25 years of operational and strategic finance experience at multinational corporations. Mr. Ahrens has led global teams at rapidly growing public and privately held companies in complex technology and manufacturing environments.
Effective March 22, 2021, Mr. Iyer joined Virgin Galactic as our President, Aerospace Systems. Mr. Iyer is responsible for leading the manufacturing, engineering, and program management teams, processes, and facilities to support the design and build of our current and future fleet of vehicles. Mr. Iyer has over 20 years of experience in commercial and highly classified aerospace, defense and cyber industries.
Executive Summary
Fiscal 2021 Performance Highlights
We believe the exploration of space and the cultivation and monetization of space-related capabilities offer immense potential to create economic value and future growth. The Company is at the forefront of these industry trends and is well-positioned to capitalize on them by bringing human spaceflight to a broad global population that dreams of traveling to space. 2021 was an incredibly important year for Virgin Galactic that laid an essential foundation for becoming a scaled, commercial operation. We continued to progress through our test program schedule and our fleet expansion efforts during 2021, despite challenges and the macroenvironment caused by the COVID-19 pandemic and actions taken in response to the COVID-19 pandemic.
| 38 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
| Some key 2021 business milestones are highlighted below: |
●Opened ticket sales at a new price point of USD $450,000 for private astronauts during Q3 2021 ●In July 2021, raised approximately $500 million through the sale of common stock in order to strengthen the balance sheet and position the Company to meet its strategic long-term objectives, with a priority on fleet expansion. | | ●In July 2021, successfully completed first fully crewed spaceflight, Unity 22, which fulfilled test objectives including evaluating the cabin and customer experience. ●In June 2021, received approval from the Federal Aviation Administration for a full commercial launch license, marking the first time that the agency licensed a company to fly customers to space. | | ●In May 2021, successfully completed the first spaceflight, Unity 21, from Spaceport America, New Mexico. During this flight, we fulfilled various test objectives and carried revenue-generating scientific research experiments. ●Introduced VSS Imagine, the second spaceship in the current fleet. |
The market for commercial human spaceflight for private individuals continues to be a new and emerging industry. As of December 31, 2021, approximately 600 humans have traveled above the Earth’s atmosphere into space to become officially recognized as astronauts, cosmonauts or taikonauts. We believe this market opportunity outstrips demand for the foreseeable future. As of April 27, 2022, Virgin Galactic has signed up approximately 800 customers for future spaceflights.
2021 Pay Mix
Our executive compensation program utilizes annual and long-term incentive awards, including awards, that are contingent on Company performance relative to our key performance metrics. The majority of the total compensation opportunity for our named executive officers in 2021 was “at risk” compensation, as illustrated in the charts below. The pay mix for our CEO provides for 86% of variable compensation and, on average, 84% of variable compensation for the other NEOs, which is tied to company performance and stockholder value creation.
2021 Total Direct Compensation (at target)
| CEO TARGET PAY MIX | | | AVERAGE TARGET PAY MIX FOR OTHER NEOs | |
 | |  |
Table of Contents
Executive Compensation
Key Elements and Objectives of Our Executive Compensation Program
In 2021, our executive compensation program consists of fixed and variable pay, including cash and non-cash components. The key elements of our 2021 executive compensation program are as follows:
| | Base Salary | | Cash-Based Incentive Compensation | | Equity Based Compensation |
| Description | | ●Cash compensation to reflect individuals’ skills, experience, and overall responsibilities of the executive’s position | | ●Earned based on achievement of financial, strategic and safety performance metrics, as well as individual performance which are approved by our Compensation Committee | | ●Time-vested RSUs ●PSUs |
| Key Objectives | | ●Attracts and retains talent by providing a stable and reliable source of income ●Provide base salaries consistent with each executive’s responsibilities so that they are not motivated to take excessive risks to achieve financial results | | ●Rewards the achievement of corporate objectives and overall contributions towards achieving those objectives over a 12-month period | | ●Incentivizes our executives to create long-term stockholder value and focus on sustained share price appreciation ●Aligns our executive’s strategic objectives with those of our stockholders’ interests over the long-term ●Promotes retention and executive stock ownership |
Listening to Our Stockholders
Say-on-Pay
In 2021, 79% of votes cast were voted in favor of our fiscal year 2021 say-on-pay proposal. While a significant majority of our stockholders supported our executive compensation program, the Compensation Committee and management are continuously reviewing our executive compensation program and made changes to better align our executives’ compensation to the Company’s short and long-term objectives.
Additionally, in the beginning of 2022, our management team developed a stockholder outreach program to: (1) discuss our business, including company operational strategy and performance and (2) review and gather feedback on our executive compensation program. While we have a large retail stockholder base comprised of individual investors, we proactively contacted 26 stockholders, representing approximately 17% of our outstanding shares (as of November 15, 2021), and had discussions with 5 stockholders representing approximately 12% of outstanding shares. We also met with representatives from the proxy advisory firms to understand their proxy voting guidelines and their perspectives about our executive compensation program.
| 40 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
Through these meetings, we received valuable input regarding the Company’s executive compensation program, as well as suggestions for potential adjustments to consider moving forward. A summary of stockholder and proxy advisor feedback is as follows:
What We Heard from
Stockholders/Proxy Advisors | Our Response |
●Increase incentive plan disclosure on goals and provide more transparency on the approach used to determine payouts. | ●We expanded the disclosure in this Proxy Statement to include details regarding the incentive compensation program design, performance metrics and goals, and payouts corresponding with the attainment of such performance metrics and goals, in order to help our stockholders better understand these programs and to further advance our intent to promote a pay for performance philosophy. |
●Provide more information on how the compensation peer group was determined. | ●We expanded the disclosure in this Proxy Statement to describe how our peer group was selected. |
●Incorporate performance-based awards in the long-term incentive program. | ●In 2021, we introduced a performance-based equity incentive program for our senior executive team which constitutes 25% of each executive officer’s aggregate 2021 equity incentive compensation opportunity. |
●Provide disclosure on ESG/sustainability considerations. | ●As a relatively new public company, we are actively developing our ESG strategy and will provide disclosures in the near future. |
●Adopt executive compensation governance best practices that meet the expectations of external stakeholders. | ●We adopted a clawback policy for our officers and stock ownership guidelines for our officers and non-employee directors. |
In order to continue to understand investors’ perspectives on our executive compensation program, our management team intends to continue its efforts on stockholder engagement throughout 2022.
Compensation Governance and Best Practices
| What We Do: | | | What We Do Not Do: |
✓Pay for performance; pay is not guaranteed ✓Annual say-on-pay vote ✓Clawback policy ✓Capped incentive awards ✓Stock ownership guidelines ✓Limited perquisites ✓Engagement with stockholders ✓Independent compensation and legal consultants | | | ✕No single-trigger change-in-control severance arrangements ✕No hedging of Virgin Galactic securities by our executive officers ✕No pledging, absent authorization given in limited circumstances, of Virgin Galactic securities |
Table of Contents
Executive Compensation
Our Executive Compensation Program
The main objectives of the Company’s executive compensation program are to:
| ● | Attract, motivate, and retain highly qualified executives who are committed to the Company’s mission, performance, and culture, by paying them competitively; |
| ● | Create a fair, reasonable, and balanced compensation program that rewards executives’ performance and contributions to the Company’s short- and long-term business results, while closely aligning the interests of the executives with those of stockholders; and |
| ● | Emphasize pay for performance, with a program that aligns financial and operational achievements. |
Additional objectives of our executive compensation program include:
| ● | Market Competitive. The Compensation Committee aims to set executive compensation at competitive levels to attract, motivate, engage and retain executive officers. We consider practices of peer companies as reference points for comparative purposes, but do not set specific pay percentile objectives. |
| ● | Internally Fair and Equitable. The Compensation Committee considers business and individual performance to evaluate internal fairness of compensation and monitors the internal compensation relationships among our executive officers. |
| ● | Strong Standards for Compensation Governance and Risk Management. The Compensation Committee has a comprehensive charter that provides for oversight of our executive compensation program and annually reviews the executive officer pay levels and annual and long-term incentive plan designs, and engages its compensation consultant to conduct a compensation risk assessment to ensure our programs do not incent unintended behaviors. See the discussion of our risk-assessment process under the section “Compensation Risk Assessment” on page 51 for more details on our compensation-related corporate governance practices. |
We also have competitive health, welfare and retirement benefits that are generally structured in the same manner for all U.S. employees. A summary of these and several other benefits begins on page 47.
2021 Base Salaries
The base salaries of our named executive officers are an important part of their total compensation package and are intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.
The following table sets forth the annual base salaries for each of our named executive officers that were approved for 2021:
| Named Executive Officer(1) | | 2020 | | 2021 | | % Change |
| Michael Colglazier | | $ | 1,000,000 | | $ | 1,000,000 | | 0% |
| Doug Ahrens(2) | | | N/A | | $ | 525,000 | | 0% |
| Mike Moses | | $ | 350,000 | | $ | 425,000 | | 21% |
| Swami Iyer(2) | | | N/A | | $ | 525,000 | | 0% |
| Michelle Kley | | $ | 350,000 | | $ | 375,000 | | 7% |
| (1) | The table does not include Mr. Campagna due to his departure from the Company in March 2021. His annual base salary prior to his departure was $350,000. |
| (2) | Represents the executive’s annual base salary; Messrs. Ahrens and Iyer each received prorated base salaries in 2021 for their partial year of service. |
| 42 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
Cash-Based Incentive Compensation
2021 Executive Annual Cash Incentive Program
Each of our named executive officers (other than Mr. Campagna) participated in our 2021 Executive Annual Cash Incentive Program (the “Program”), which is focused on rewarding our executive officers for annual operating performance that meets or exceeds pre-established goals. For fiscal 2021, the Compensation Committee determined that annual cash compensation under the Program would be based on the achievement of financial, strategic and safety goals, as well as individual contributions to delivering on our strategic plan. The 2021 pre-established goals were reviewed and approved by the Compensation Committee at the beginning of the performance year. Each named executive officer is eligible to receive an annual performance-based cash bonus based on a specified target annual bonus award amount, expressed as a percentage of the named executive officer’s base salary. The performance cash bonus for 2021 was calculated based on the target bonus percentage opportunity multiplied by the aggregate achievement of the Company performance goals, and then multiplied by each officer’s individual management by objectives (“MBO”) modifier, as illustrated below.
| | | | | | |
| Individual Opportunity | | Company Performance | | | | |
Base Salary
×
Target Bonus % | × | Financial
(20%) | Strategic
(60%) | Safety
(20%) | × | Individual MBOs
(+/- 20% Modifier) | = | Individual
Bonus Payout |
The funding payout range is zero to 200% of an executive officer’s target bonus opportunity and encompasses both upside reward and downside incentive opportunity if minimum levels of threshold performance are not achieved. The 2021 target bonus opportunities for the named executive officers are as follows:
| Named Executive Officer | 2021 Target Bonus as
a % of Base Salary |
| Michael Colglazier | 100% |
| Doug Ahrens | 100% |
| Mike Moses | 100% |
| Swami Iyer | 100% |
| Michelle Kley | 80% |
Each executive officer’s bonus target is determined by the Compensation Committee based on practices of our peer companies and individual considerations. In 2021, Ms. Kley’s bonus target increased from 50% to 80% and Mr. Moses’ bonus target increased from 50% to 100% to reflect their scope of their roles and align with internal equity pay levels. All the other officers’ target bonuses remained unchanged.
In March 2022, the Compensation Committee assessed the Company’s 2021 achievement of the corporate performance objectives and the Program payouts recommended by the Chief Executive Officer (other than his own bonus payout). Based on the achievement of defined performance goals, management assessed a short-term incentive payout at 75%. Based on a recommendation from the CEO and the Committee’s own discussion and determination, the Committee increased the achievement to 80% of target under the 2021 annual short-term incentive plan. This decision took into account the totality of the year, including the safety choices made, the fiscal discipline exercised to manage cash flow, and consideration of retention and employee morale in the midst of a hyper competitive market.
Table of Contents
Executive Compensation
The following table provides additional detail about each components of the corporate performance categories, the performance goal weightings, threshold, target and maximum goal for the financial category, and our achievement of the performance metrics in 2021.
| Performance Category | | Weight | | Threshold | | Target | | Maximum | | Payout as
% of Target |
Financials
Annual Spending | |  | |  | | 0% |
Strategic Objectives
Operational/ strategic goals related to fleet readiness, fleet expansion, and astronaut & consumer experience | |  | |  | | 63% |
Safety
Flight and workplace safety goals that include Total Recorded Incident reporting compared to industry standards | |  | |  | | 183% |
| Total | | 100% | | 25% Payout | | 100% Payout | | 200% Payout | | 75% |
The Compensation Committee also acknowledged individual contributions in determining the final bonus payouts for 2021 performance and determined to award an individual modifier of 110%, 112%, 100%, 112%, and 100% for Mr. Colglazier, Mr. Ahrens, Mr. Moses, Mr. Iyer and Ms. Kley, respectively.
Mr. Colglazier. The Compensation Committee adjusted Mr. Colglazier’s performance modification factor to reflect the two successful and highly publicized flights, the reopening of ticket sales, and establishing safety as the overarching guiding principal in all operations. Further, Mr. Colglazier evolved our consumer brand in preparation of consumer service and built out his leadership team with diverse and highly experienced executives.
Mr. Ahrens. The Compensation Committee adjusted Mr. Ahrens’ performance modification factor to reflect the planning and well-managed execution of the successful capital raises, in addition to his work on the transformation of planning, budgeting, and controls within the organization.
Mr. Iyer.The Compensation Committee adjusted Mr. Iyer’s performance modification factor to reflect the successful flights and extensive work performed during the modification period to ensure fleet readiness and scalability in our manufacturing operations as we move toward commercial service.
Mr. Moses. The Compensation Committee determined that Mr. Moses’s performance warranted the full 100% performance factor based on the two successful flights, becoming the first in the industry to obtain an FAA license for commercial space flights, and advancement of our safety culture.
Ms. Kley. The Compensation Committee determined that Ms. Kley’s performance warranted the full 100% performance factor in her role as General Counsel and Corporate Secretary, particularly for her work on the capital fund raises and the Company integration efforts.
| 44 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
Based on the Company’s achievement of the goals under the financial, strategic and safety components of the Program, the executive officers’ applicable target bonus opportunity was multiplied by 80%. The Program also provided for an individual MBO modifier of up to 20% based on the Compensation Committee’s assessment of each executive’s individual performance in 2021 (the “Individual Performance Modifier”). The table below provides information about the executives’ bonus opportunity, company performance payout, individual performance modifier and final bonus payout.
| Named Executive Officer | | 2021 Target
Bonus | | Company
Performance | | Company
Performance
Bonus Payout | | Individual
Performance
Modifier | | Actual
2021 Bonus
Payout(1)(2) |
| Michael Colglazier | | $ | 1,000,000 | | 80 | % | | $ | 800,000 | | 110 | % | | $ | 880,000 |
| Doug Ahrens | | $ | 525,000 | | 80 | % | | $ | 420,000 | | 112 | % | | $ | 392,000 |
| Mike Moses | | $ | 425,000 | | 80 | % | | $ | 340,000 | | 100 | % | | $ | 340,000 |
| Swami Iyer | | $ | 525,000 | | 80 | % | | $ | 420,000 | | 112 | % | | $ | 352,800 |
| Michelle Kley | | $ | 300,000 | | 80 | % | | $ | 240,000 | | 100 | % | | $ | 240,000 |
| (1) | The 2021 bonus payouts for Messrs. Ahrens and Iyer were prorated due to their March 2021 hire date. |
| (2) | The participating executives’ 2021 annual bonuses are set forth in this column are included in the “Non-Equity Incentive Plan Compensation” in the “Summary Compensation Table” below. |
Milestone-Based Cash Incentive Plan
In addition to the Program, we maintain a milestone-based cash incentive plan (the “Milestone-Based Cash Incentive Plan”) which we adopted in 2017 in which Messrs. Moses and Campagna participated during 2022. Under the Milestone-Based Cash Incentive Plan, certain executive officers are eligible to earn a bonus upon the Company’s achievement of three specified performance objectives (each such objective a “Qualifying Milestone”). Payment of bonuses pursuant to the Milestone-Based Cash Incentive Plan, if any, are contingent upon the applicable named executive officer’s continued employment through the applicable payment date.
The first Qualifying Milestone was not achieved under the Milestone-Based Cash Incentive Plan. The second Qualifying Milestone was achieved, and related bonuses were paid out, in 2019. The third Qualifying Milestone was amended in 2019 to include the achievement of a cash flow goal prior to, or as of, the end of calendar year 2027, subject to the executive’s continued employment through the date of payment.
Mr. Moses is eligible to earn a bonus in the amount of $1,000,000 in connection with the achievement of the third Qualifying Milestone. Due to his 2021 separation, Mr. Campagna is no longer eligible to receive a bonus under the Milestone-Based Cash Incentive Plan. No other named executive officers are eligible to participate in the Milestone-Based Cash Incentive Plan.
Sign-On Bonuses
In connection with joining our Company in July 2020, Mr. Colglazier received a one-time cash bonus equal to $1,000,000, one-half of which was paid upon commencing employment, and one-half of which was paid following the first anniversary of his employment start date, or in July 2021.
In connection with joining our Company in March 2021, Mr. Iyer received a one-time cash bonus equal to $150,000, which was tax equalized and paid upon joining our Company.
The one-time cash bonuses paid to Messrs. Colglazier and Iyer were to encourage them to join our Company and provide leadership experience and expertise in the Company’s strategy, specifically in commercial branding and manufacturing operations.
Table of Contents
Executive Compensation
Equity Compensation
We maintain the 2019 Plan, under which we may grant cash and equity incentive awards to directors, employees and consultants of our Company and our affiliates, to enable us to attract and retain services, skills and experience of these individuals, which we believe are essential to our long-term success.
Introduction of PSUs in 2021
In effort with our ongoing commitment to strong performance an ongoing commitment to good corporate governance principles and strong performance orientation in our compensation program by proactively reviewing our policies and program design. In 2021, this included an evaluation of our incentive compensation program. With respect to our long-term equity incentive program, we adjusted the mix of equity for our annual awards to include performance-based equity awards.
In March 2021, to strengthen the alignment between pay and performance, awards granted to our named executive officers under the 2019 Plan were divided between PSUs, which represents 25% of each executive’s aggregate 2021 equity-based incentive compensation opportunity, and RSUs, which represents 75% of each executive’s aggregate equity-based incentive compensation opportunity. The PSUs have a performance metric related to the sales of Company spaceflights. The Compensation Committee believed this metric incentivizes the pursuit of our strategic goal of expanding the market for commercial human spaceflights for private individuals.
March 2021 Awards
RSUs.RSUs represent the right to receive one share of our common stock for each unit awarded, based on continued employment through the vesting date. We continued to use RSUs as part of the annual equity awards for our executive officers in order to support ownership accumulation and employment retention objectives. The RSUs have a 4-year vesting schedule: 25% vest on the one year anniversary of the grant date, and the remaining 75% vest in substantially equal quarterly installments of the following 12 quarters.
PSUs.The PSUs allow recipients to earn a variable number of shares of our common stock over a three-year period (fiscal 2021-2023) based on ticket sales over a 2-year performance period, followed by a 1-year additional time-based vesting period. No shares will be earned if ticket sales are not met. As of the end of 2021, the performance goals had not yet been achieved.
Ahrens and Iyer Sign-On RSU Awards and Initial RSU Awards
In connection with joining the Company, we granted Messrs. Ahrens and Iyer equity awards that were meant to align their interests immediately with our stockholders’ interests, and retain them over a period of time. The total value of the equity awards granted to Mr. Iyer was intended to induce him to join our Company by ensuring that his compensation opportunity at Virgin Galactic reflected his lost compensation opportunity from his prior employer. On or shortly following the applicable executive’s employment start date, we granted to Messrs. Ahrens and Iyer an award of RSUs (together, the “Sign-On RSU Awards”) which vested as to half of the underlying RSUs on the six-month anniversary of the applicable executive’s employment start date and will vest as to the remaining half of the underlying RSUs on the one-year anniversary of such date, in each case, subject to continued service through the applicable vesting date. At around the same time, we granted to Messrs. Ahrens and Iyer an additional award of RSUs (together, the “Initial RSU Awards”) which are scheduled to vest as to 25% of the underlying RSUs on the one-year anniversary of the applicable executive’s employment start date and as to the remaining 75% in substantially equal quarterly installments over the following 12 quarters. The vesting of each of the executives’ awards are subject to his continued service. The dollar-denominated value of each of the Sign-On RSU Awards and Initial RSU Awards are set forth in the table below.
| 46 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
The following table contains a summary of grants of RSUs and PSUs to our named executive officers in 2021:
| Named Executive Officer | | 2021 RSUs | | 2021 PSUs | | Total 2021 Equity Value |
| Michael Colglazier | | $ | 3,750,000 | | | $ | 1,250,000 | | $ | 5,000,000 |
| Doug Ahrens | | $ | 3,500,000 | (1) | | | N/A | | $ | 3,500,000 |
| Mike Moses | | $ | 1,875,000 | | | $ | 625,000 | | $ | 2,500,000 |
| Swami Iyer | | $ | 3,300,000 | (2) | | | N/A | | $ | 3,300,000 |
| Michelle Kley | | $ | 750,000 | | | $ | 250,000 | | $ | 1,000,000 |
| (1) | Amount includes the grant date fair value of Mr. Ahrens’ Sign-On RSU Award ($1,000,000) and Initial RSU Award ($2,500,000), as approved by the Compensation Committee during the recruitment process to attract Mr. Ahrens to join the Company. |
| (2) | Amount includes the grant date fair value of Mr. Iyer’s Sign-On RSU Award ($800,000) and Initial RSU Award ($2,500,000), as approved by the Compensation Committee during the recruitment process to attract Mr. Iyer to join the Company. |
Employee Benefits and Perquisites
Health/Welfare Plans.In 2021, the named executive officers had the opportunity to participate in same health and welfare plans and retirement plan as provided by the Company to other executive officers.
Retirement Plans. In 2021, the named executive officers participated in our 401(k) retirement savings plan (the “401(k) Plan”). The Internal Revenue Code of 1986, as amended (the “Code”), allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) Plan. In 2021, contributions made by participants in the 401(k) Plan were matched up to a specified percentage of the employee contributions on behalf of the named executive officers. These matching contributions are fully vested as of the date on which the contribution is made.
Perquisites. We offer financial and tax planning for our executive officers to address the complex tax and financial situations that may exist. It is paid by the Company, treated as imputed income to the executive, and does not receive tax assistance.
Process and Rationale for Executive Compensation Decisions
The Compensation Committee considers several factors in determining the compensation of our named executive officers. The Compensation Committee does not have a predefined framework for prioritizing or weighting these factors, and the emphasis placed on specific factors may vary among our executive officers. Ultimately, it is the Compensation Committee’s judgment about these factors that forms the basis for determining our named executive officers’ compensation.
In the first quarter of each year, the Compensation Committee sets our executive officers’ salaries and cash-based incentive targets for the fiscal year and grants annual equity awards for the nearly completed fiscal year. Granting annual equity awards at the beginning of the fiscal year allows the Compensation Committee to consider anticipated company and individual performance for the previous year.
In executive session without our Chief Executive Officer or other executive officers present, the Compensation Committee approved the fiscal 2021 equity awards, the fiscal 2021 cash-based incentive program earned amounts and any adjustments to base salaries and bonus targets for fiscal 2021. In making these decisions and determining the amounts and mix of executive compensation, the Compensation Committee considered the following factors, among others:
| ● | Labor market conditions, competitive compensation for comparable positions and threats to our business due to retention-related risks; |
| ● | Business performance, including operational management such as project milestones, process improvements and expense management; |
| ● | Feedback from our Chief Executive Officer regarding the performance of our business, his performance and his evaluation of and compensation recommendations for the other executive officers; |
| ● | The executive officers’ individual performance and contributions to financial and strategic objectives, including expertise, skills, tenure in position and potential to assume increased responsibilities; |
Table of Contents
Executive Compensation
| ● | Internal working and reporting relationships and teamwork among our executive officers (for example, using the same cash-based incentive metrics and objectives for all executive officers promotes teamwork and collaboration and our executive officers’ contribution to Company-wide initiatives) |
| ● | The Compensation Committee’s intention for compensation to be internally fair and equitable relative to roles, responsibilities and relationships, in addition to being competitively reasonable; |
| ● | Leadership actions that support our ethical standards, compliance culture and ESG initiatives; and |
| ● | Developing and motivating employees (such as establishing processes for identifying and assessing high potential employees) and attracting and retaining employees (such as initiatives to increase the pipeline of women in leadership roles). |
Role of the Compensation Committee in Determining Executive Compensation
Engagement of Independent Advisors
The Compensation Committee has the authority to engage an independent compensation consultant, in addition to assistance needed from external legal, finance and other special advisors. In 2021, the Compensation Committee engaged Meridian, an independent executive compensation consulting firm, to advise on all executive compensation matters under their oversight. The Compensation Committee’s engagement of Meridian did not raise any conflicts of interest. Pursuant to the engagement, Meridian:
| ● | Provided information, insights and advice regarding compensation philosophy, objectives and strategy; |
| ● | Recommended peer group selection criteria and identified and recommended potential peer companies; |
| ● | Provided analyses of competitive compensation practices for executive officers and non-employee directors; |
| ● | Provided analyses of potential risks arising from executive and non-executive compensation programs; |
| ● | Reviewed and commented on recommendations regarding executive officer compensation amounts; |
| ● | Advised the Compensation Committee on specific issues as they arose; and |
| ● | Kept the Compensation Committee informed of executive compensation trends and regulatory and governance considerations related to executive compensation. |
Review of Peer Group Data
There are no direct public company peers available for benchmarking purposes. Regardless, the Compensation Committee recognizes the need to assess comparable pay practices to understand the market in which the Company competes to attract and retain a highly-skilled executive team. The Compensation Committee identified peer companies to use for competitive analyses, based on recommendations made by Meridian. The peer companies were identified based on the following criteria that help capture the scope and complexity of Virgin Galactic:
| ● | Industries and characteristics:companies operating in similar or comparable industries and representing characteristics of Virgin Galactic, including aerospace & defense, luxury travel, leisure, entertainment, high growth and entrepreneurial companies with B2C focus, recent IPO, and/or West Coast headquarters. |
| ● | Size: companies of comparable size, with market capitalization and enterprise value generally within 1/4x to 4x that of Virgin Galactic, and revenue generally below $3B. |
| ● | The Compensation Committee used market capitalization as a quantitative criterion because market capitalization, a key component of which is stock price, is the key driver of equity compensation grant value, and equity compensation grant value is the single largest component of executive compensation. Further, market capitalization is directly related to stockholder benefit. |
| ● | The Compensation Committee also included revenues as a quantitative criterion because revenues are commonly used as a selection criterion by our peer companies, third-party compensation survey providers and proxy advisory firms. |
| 48 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
The peer group for 2021 consisted of the following 18 companies, with Virgin Galactic positioned at approximately the median in terms of market capitalization at the time the group was reviewed and approved (December 2020):
| VIRGIN GALACTIC 2021 EXECUTIVE COMPENSATION PEER GROUP | |
●Aerojet Rocketdyne ●Brunswick ●Curtiss-Wright ●Draftkings ●Fisker ●Hyliion Holdings | | ●Kratos Defense & Security Solutions ●Lordstown Motors ●Lyft ●Maxar Technologies ●Mercury Systems ●Moog | | ●Nikola ●Peloton Interactive ●Sunrun ●Vail Resorts ●Velodyne Lidar ●Wynn Resorts |
Meridian provides analyses of peer company competitive practices to the Compensation Committee. The Compensation Committee considers these peer company competitive practices, along with the other factors described in this section, when determining the salaries, bonus targets and equity awards for our CEO and other executive officers.
Severance and Change in Control-Based Compensation
We have entered into employment agreements with each of our named executive officers that provides for severance upon a termination of employment without cause or for good reason. We believe that job security and terminations of employment, both within and outside of the change of control context, are causes of significant concern and uncertainty for our executive officers and that providing protections to our executive officers in these contexts is therefore appropriate in order to alleviate these concerns and allow the executives to remain focused on their duties and responsibilities to our Company in all situations. These are described and quantified below under “Potential Payments Upon Termination or Change in Control.”
In connection with Mr. Campagna’s departure in March 2021, Mr. Campagna was entitled to receive a cash amount equal to 0.5 multiplied by the sum of his annual base salary as of the date of his departure and target bonus amount, payable over six months, and was entitled to continue to participate in our group health plan at the level at which he participated immediately prior to his departure for six months following the date of his qualifying termination. All equity awards held by Mr. Campagna which were outstanding and unvested as of the date of his qualifying termination were forfeited without consideration.
The severance entitlements under Mr. Campagna’s employment agreements are described and quantified further below under “Potential Payments Upon Termination or Change in Control.”
Executive Compensation Governance Components
Stock Ownership Guidelines
In March 2022, the Compensation Committee adopted stock ownership guidelines for our executive officers at the level of Executive Vice President and above and non-employee directors. Our executive officers and non-employee directors are expected to acquire and hold shares of our common stock with a market value equal to a multiple of their base salary (or annual retainer, for non-employee directors), as indicated in the table below, within 5 years of service in their position. Our stock ownership policy more closely aligns the interests of our executive officers and non-employee directors with the interests of our stockholders and exposes our executive officers and non-employee directors to downside equity performance risk. Our Compensation Committee will review compliance with our stock ownership policy at least once a year during its first quarterly meeting.
Shares counted towards compliance include actual shares owned and unvested RSUs. Shares subject to outstanding and unexercised stock options or warrants, performance-based equity incentive awards and all other derivative securities do not count toward compliance.
| Position | | Salary/Cash Retainer Multiple Threshold ($) |
| CEO | | 5x |
| Presidents and Executive Vice Presidents | | 3x |
| Non-Employee Board of Directors | | 5x |
Table of Contents
Executive Compensation
Clawback Policy
In March 2022, the Compensation Committee adopted a clawback policy. The clawback policy applies to equity awards and other incentive compensation awarded to executive officers granted after the effective date of the clawback policy. The Compensation Committee has discretion to apply the clawback policy to recover covered incentive compensation in all of the events described below.
| Events that Trigger Action | | Covered Compensation |
| Misconduct resulting in a material accounting restatement. | | Excess amount of incentive award paid within three years before restatement date. |
| Intentional misconduct resulting in the miscalculation and/or misrepresentation of the achievement of non-financial performance objectives. | | Excess amount of incentive award paid within three years before achievement of performance objectives is re-determined. |
| Material misconduct which results or could result in reputational harm or financial loss to the Company. | | Awards paid within three years before or after the misconduct event. |
Anti-Hedging/Pledging Policy
Our Board of Directors has adopted an Insider Trading Compliance Policy, which applies to all of our directors, officers and employees. The policy prohibits our directors, officers and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts; short sales; and transactions in publicly traded options, such as puts, calls and other derivatives involving our equity securities. The policy also prohibits, absent authorization given in limited circumstances, pledging our securities to secure margin or other loans.
Tax and Accounting Considerations
As a general matter, our Board of Directors and the Compensation Committee review and consider the various tax and accounting implications of compensation programs we utilize.
Code Section 409A
Section 409A of the Code, or Section 409A, requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A.
Code Section 280G
Section 280G of the Code, or “Section 280G”, disallows a tax deduction with respect to excess parachute payments to certain executives of companies which undergo a change of control. In addition, Section 4999 of the Code imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are compensation linked to or triggered by a change of control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans, including stock options, restricted stock and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G based on the executive’s prior compensation. In approving the compensation arrangements for our named executive officers, our Board of Directors or Compensation Committee considers all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G. However, our Board of Directors or Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G and the imposition of excise taxes under Section 4999 when it believes that such arrangements are appropriate to attract and retain executive talent.
| 50 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
Accounting for Stock-Based Compensation
We follow the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or “ASC Topic 718”, for our stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date fair value of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of stock options, RSUs and PSUs under our 2019 Plan are accounted for under ASC Topic 718. Our Board of Directors or Compensation Committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plan and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Compensation Risk Assessment
In November 2021, the Compensation Committee completed a compensation risk assessment to assess whether the Company’s executive compensation program might encourage aggressive risk taking. The assessment indicated that the Company’s executive and overall compensation pay practices do not encourage excessive or inappropriate risk taking and the Compensation Committee determined such policies or practices are not reasonably likely to have a material adverse effect on our business.
Compensation Committee Report
The Compensation Committee has discussed and reviewed the following Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors:
Dr. Wanda Austin (Chair)
Adam Bain
George Mattson
Table of Contents
Executive Compensation
Executive Compensation Tables
Summary Compensation Table
The following table sets forth information concerning the compensation of the named executive officers for the years ended December 31, 2021, 2020 and 2019.
| Name and Principal Positions | | Year | | Salary
($) | | Bonus
($)(1) | | Stock
Awards
($)(2) | | Option
Awards
($)(3) | | Non-Equity
Incentive Plan
Compensation
($)(4) | | All Other
Compensation
($)(5) | |
Total
($) |
Michael Colglazier
Chief Executive Officer
and President | | 2021 | | 1,000,000 | | 500,000 | | 5,000,000 | | — | | 880,000 | | 25,794 | | 7,405,794 |
| 2020 | | 442,308 | | 500,000 | | 13,098,600 | | 7,540,000 | | 452,055 | | 22,637 | | 22,055,600 |
Doug Ahrens
Executive Vice President, Chief
Financial Officer and Treasurer(6) | | 2021 | | 433,125 | | — | | 3,500,000 | | — | | 392,000 | | 45,909 | | 4,371,034 |
Michelle Kley
Executive Vice President,
General Counsel and Secretary | | 2021 | | 368,462 | | — | | 1,000,000 | | — | | 240,000 | | 38,554 | | 1,647,016 |
| 2020 | | 358,481 | | — | | — | | — | | 135,000 | | 17,892 | | 511,373 |
Mike Moses
President, Space Missions
and Safety | | 2021 | | 423,846 | | — | | 2,500,000 | | — | | 340,000 | | 22,554 | | 3,286,400 |
| 2020 | | 358,615 | | — | | 5,963,711 | | 2,837,149 | | 165,000 | | 18,504 | | 9,342,979 |
| 2019 | | 308,899 | | — | | 989,009 | | 3,563,216 | | 1,074,382 | | 65,566 | | 6,001,072 |
Swami Iyer(7)
President, Aerospace Systems | | 2021 | | 403,846 | | 150,000 | | 3,300,000 | | — | | 352,800 | | 290,240 | | 4,496,887 |
Jonathan Campagna(8)
Former Chief Financial Officer | | 2021 | | 74,038 | | — | | — | | — | | — | | 322,868 | | 396,906 |
| 2020 | | 501,050 | | — | | 6,717,211 | | 4,213,766 | | 78,000 | | 24,968 | | 11,534,995 |
| 2019 | | 312,625 | | — | | 989,009 | | 3,563,213 | | 809,786 | | 20,391 | | 5,695,024 |
| (1) | With respect to 2021, the amount for Mr. Colglazier reflects the remaining one-half of the sign-on cash bonus payable to Mr. Colglazier pursuant to his employment agreement, which was paid in 2021, and the amount for Mr. Iyer reflects a one-time cash bonus paid in 2021. Refer to the section titled “Cash-Based Incentive Compensation – Sign-On Bonuses” above for further detail related to such one-time cash bonuses. |
| (2) | The amounts shown in this column represent the grant date fair value RSUs and PSUs awarded to the named executive officers in the applicable year, computed in accordance with the requirements of FASB ASC Topic 718, but excluding any impact of forfeitures as required by SEC regulations. We provide information regarding the assumptions used to calculate the value of all option and RSU awards made to executives in Note 14 to our financial statements included in ourAnnual Report on Form 10-K for the fiscal year ended December 31, 2021 2021 10-K. As required pursuant to SEC disclosure rules, the grant-date fair values of the PSUs awarded to Messrs. Colglazier and Moses and Ms. Kley were computed based on the probable outcomes of the performance conditions as of the grant date. Assuming maximum achievement of the performance conditions, the value of the PSUs as of the grant date is $2,500,000 for Mr. Colglazier, $1,250,000 for Mr. Moses, and $500,000 for Ms. Kley. |
| (3) | The amounts shown in this column represent the grant date fair value stock options awarded to the named executive officers in the applicable year, computed in accordance with the requirements of FASB ASC Topic 718, but excluding any impact of forfeitures as required by SEC regulations. We provide information regarding the assumptions used to calculate the value of all option and RSU awards made to executives in Note 14 to our financial statements included in ourAnnual Report on Form 10-K for the fiscal year ended December 31, 2021 2021 10-K. |
| (4) | The amounts shown represent the aggregate annual performance-based cash incentives earned in the applicable year, based upon the achievement of certain Company metrics. The fiscal 2021 cash achievement for each named executive officer is described above in the section titled “Cash-Based Incentive Compensation – 2021 Executive AnnualPerformance Bonus Cash Incentive Program.” |
| (5) | For 2021, amounts in this column include the amounts set forth in the table below: |
| Named Executive Officer | | 401(k) Plan
Contribution
($)(a) | | AD&D
Premium
($) | | Group Term
Life Premium
($) | | Tax
Equalization
($)(b) | | Legal Fee
Reimbursement
($) | | Financial
Services
($) | | Other
($)(c) |
| Michael Colglazier | | 17,400 | | 252 | | 8,142 | | | | | | | | |
| Doug Ahrens | | 16,928 | | 189 | | 6,240 | | | | 4,820 | | 13,414 | | 4,317 |
| Michelle Kley | | 17,400 | | 252 | | 4,902 | | | | | | 16,000 | | |
| Mike Moses | | 17,400 | | 252 | | 4,902 | | | | | | | | |
| Swami Iyer | | 16,584 | | 189 | | 2,658 | | 178,634 | | | | | | 92,176 |
| Jonathan Campagna | | 12,335 | | 63 | | 855 | | | | | | | | 309,615 |
| (a) | Amounts include 401(k) safe harbor and employer matching contributions made in 2021. |
| (b) | The amount shown for Mr. Iyer represents the aggregate amount of tax equalization payments made to Mr. Iyer in respect of federal, state and local taxes incurred by him as a result of the one-time cash bonus awarded to Mr. Iyer in 2021. Refer to the section titled “General Description of Employment Agreements” below for further detail related to such payment. |
| (c) | Amounts include relocation expense reimbursement payments made to Messrs. Ahern and Iyer, as well as amounts paid to Mr. Campagna in connection with the termination of his employment. Refer to the section titled “Severance and Change in Control-Based Compensation” below for further detail related to Mr. Campagna’s severance payments and benefits. |
| 52 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
| (6) | Mr. Ahrens was hired as our Chief Financial Officer in March 2021, and his base salary was pro-rated to reflect the portion of Fiscal 2021 during which he was employed with the Company. |
| (7) | Mr. Iyer was hired as our President, Aerospace Systems in March 2021, and his base salary was pro-rated to reflect the portion of Fiscal 2021 during which he was employed with the Company. Bonus amount reflects the $150,000 sign-on award noted in his employment agreement, plus applicable tax equalization. |
| (8) | Mr. Campagna ceased to serve as our Chief Financial Officer in March 2021. |
Grants of Plan-Based Awards in Fiscal 2021
| | | | | | | | | | All Other
Stock
Awards
Number of
Shares of
Stock
(#) | | All Other
Stock
Awards
Number of
Securities
Underlying
Options
($) | | Exercise or
Base Price
of Option
Awards
($)/Sh | | Grant Date
Fair Value
of Stock and
Option
Awards
($)(3) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | |
Estimated Future Payout Under
Non-Equity Incentive Plan
Awards(1) | | Estimated Future Payout Under
Equity Incentive Plan Awards(2) | | | | |
| Name | | Award Type | | Grant
Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | | |
Michael
Colglazier | | Annual RSU | | 3/24/21 | | — | | — | | — | | | | | | | | 130,208 | | | | | | 3,750,000 |
| Annual PSU | | 3/24/21 | | | | | | | | 10,851 | | 43,403 | | 86,806 | | | | | | | | 1,250,000 |
| Annual cash | | 3/24/21 | | 250,000 | | 1,000,000 | | 2,000,000 | | | | | | | | | | | | | | |
Douglas
Ahrens | | Sign on RSU | | 3/1/21 | | | | | | | | | | | | | | 69,804 | | | | | | 3,500,000 |
| Annual cash | | 3/23/21 | | 131,250 | | 525,000 | | 1,050,000 | | | | | | | | | | | | | | |
Michelle
Kley | | Annual RSU | | 3/23/21 | | | | | | | | | | | | | | 24,248 | | | | | | 750,000 |
| Annual PSU | | 3/23/21 | | | | | | | | 2,021 | | 8,083 | | 16,166 | | | | | | | | 250,000 |
| Annual cash | | 3/23/21 | | 75,000 | | 300,000 | | 600,000 | | | | | | | | | | | | | | |
Mike
Moses | | Annual RSU | | 3/23/21 | | — | | — | | — | | | | | | | | 60,621 | | | | | | 1,875,000 |
| Annual PSU | | 3/23/21 | | | | | | | | 5,052 | | 20,207 | | 40,414 | | | | | | | | 625,000 |
| Annual cash | | 3/23/21 | | 53,125 | | 212,500 | | 425,000 | | | | | | | | | | | | | | |
Swami
Iyer | | Sign on RSU | | 3/23/21 | | | | | | | | | | | | | | 96,335 | | | | | | 3,300,000 |
| Annual cash | | 3/23/21 | | 131,250 | | 525,000 | | 1,050,000 | | | | | | | | | | | | | | |
| (1) | Amounts shown in this column represent payouts for fiscal year 2021 to our named executive officers under the 2021 Executive Annual Cash Incentive Program. The target amount is based on a percentage of the individual’s fiscal year 2021 base salary. For further discussion of the 2021 annual bonuses, see the section titled “Cash-Based Incentive Compensation – 2021 Executive Annual Performance Bonus Cash Incentive Program” above. |
| (2) | PSUs are eligible to vest based on the achievement of certain sales-based goals over an initial three-year period ending in fiscal year 2024. |
| (3) | Amounts shown in this column represent the grant date fair value of RSUs and PSUs awarded to the named executive officers in fiscal year 2021, computed in accordance with the requirements of FASB ASC Topic 718, but excluding any impact of forfeitures as required by SEC regulations. We provide information regarding the assumptions used to calculate the value of all option and RSU awards made to executives in Note 14 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 2021 10-K. As required pursuant to SEC disclosure rules, the grant-date fair values of the PSUs awarded to Messrs. Colglazier and Moses and Ms. Kley were computed based on the probable outcomes of the performance conditions as of the grant date. |
Table of Contents
Executive Compensation
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
The following is a description of the employment agreements we have entered into with our named executive officers.
General Description of Employment Agreements
Each agreement will continue until terminated in accordance with its terms, and provides for an annual base salary, target annual bonus and eligibility to participate in customary health, welfare and fringe benefit plans, provided by the Company to its executive officers. In connection with Mr. Campagna’s departure from the Company in March 2021, his employment agreement terminated.
Pursuant to the employment agreements, each of Messrs. Campagna and Moses were entitled, in connection with the Virgin Galactic Business Combination, to receive stock options to purchase shares of the Company’s common stock and an RSU award covering shares of the Company’s common stock. The RSUs were granted in connection with the Closing, and were effective as of the date of the filing of the Form S-8 for the 2019 Plan. Half of the stock options were granted to the executives at the Closing and half were granted on the first anniversary of the Closing; however, as described above, the second half was granted in the form of both stock options and RSU awards.
Awards granted in connection with the Closing vested as to 25% of the shares subject to the award on the one year anniversary of the Closing and vest as to the remaining 75% in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. Awards granted on the first anniversary of the Closing vest along the same schedule, except the vesting dates will be keyed off of the grant date (rather than the Closing).
The employment agreements also contain customary confidentiality and non-solicitation provisions, and also includes a “best pay” provision under Section 280G of the Code, pursuant to which any “parachute payments” that become payable to the executive will either be paid in full or reduced, so that such payments are not subject to the excise tax under Section 4999 of the Code, whichever results in the better after-tax treatment to the executive.
Michael Colglazier Employment Agreement
On July 10, 2020, we entered into an employment agreement with Mr. Colglazier. Mr. Colglazier’s service pursuant to the employment agreement will continue for a period of five years, unless earlier terminated in accordance with its terms. Pursuant to his employment agreement, Mr. Colglazier serves as the Chief Executive Officer and President of the Company and reports directly to the Company’s Board of Directors. During the employment period, the Company is obligated to cause Mr. Colglazier to be nominated to stand for election to the Board of Directors, unless an event constituting “cause” has occurred and not been cured or Mr. Colglazier has issued a termination notice.
Under the employment agreement, Mr. Colglazier is entitled to receive an initial annual base salary of $1,000,000, subject to annual review by the Board of Directors or a subcommittee thereof and to increase in its discretion, and is eligible to receive an annual performance bonus targeted at 100% of his then-current annual base salary, ranging from a minimum threshold of 50% to a maximum of 150% based on whether performance objectives are achieved (respectively). The actual amount of any annual bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Board of Directors or a subcommittee thereof.
Mr. Colglazier also received a one-time cash bonus equal to $1,000,000, one-half paid following his employment start date and one-half paid following the first anniversary of his employment start date. In addition, Mr. Colglazier (i) was entitled to receive reimbursement of (or Company-paid) legal fees of $15,000 in connection with the negotiation of his employment agreement and (ii) subject to availability, will be entitled to join a spaceflight in connection with the performance of his duties (on a tax grossed-up basis to him) and may invite three guests to join a spaceflight.
In connection with joining our Company, effective as of Mr. Colglazier’s employment start date we granted to Mr. Colglazier a stock option to purchase 500,000 shares, an award of RSUs covering 70,000 shares (the “Signing RSU Award”) and an additional award of RSUs covering 500,000 shares (the “Additional RSU Award”).
| 54 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
Mr. Colglazier’s stock option is scheduled to vest and become exercisable in substantially equal monthly installments over the 60 months following his employment start date. Half of the Signing RSU Award was vested as of Mr. Colglazier’s employment start date and half vested on the one year anniversary of such date. The Additional RSU Award vested as to 25% of the RSUs subject to the award on the one year anniversary of his employment start date and is scheduled to vest as to the remaining 75% in substantially equal quarterly installments over the following 12 quarters. The vesting of each of Mr. Colglazier’s awards are subject to his continued service.
Doug Ahrens Employment Agreement
On February 22, 2021, we entered into an employment agreement with Mr. Ahrens. Pursuant to his employment agreement, beginning on March 1, 2021, Mr. Ahrens serves as Executive Vice President, Chief Financial Officer and Treasurer of the Company and reports directly to the Chief Executive Officer of the Company. Mr. Ahrens’ service pursuant to the employment agreement will continue until terminated in accordance with its terms.
Under the employment agreement, Mr. Ahrens is entitled to receive an initial annual base salary of $525,000, subject to increase by the Board or a subcommittee thereof in its discretion, and is eligible to receive an annual performance bonus targeted at 100% of his then-current annual base salary. The actual amount of any annual bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Board or a subcommittee thereof. Mr. Ahrens is was entitled to receive reimbursement for expenses incurred in connection with his relocation to Tustin, California, on or prior to July 1, 2022, and for up to $10,000 for legal fees incurred in connection with the negotiation of the employment agreement.
In connection with joining our Company, we granted to Mr. Ahrens an award of RSUs with a dollar-denominated value of $1,000,000 (the “Ahrens Sign-On RSU Award”), as well as an additional award of RSUs with a dollar-denominated value of $2,500,000 (the “Ahrens Initial RSU Award”). The Ahrens Sign-On RSU Award vested with respect to 50% of the RSUs subject to the award as of the six-month anniversary of Mr. Ahrens’s employment start date, and is scheduled to vest with respect to the remaining 50% of the RSUs subject to the award on the 12-month anniversary of such date. The Ahrens Initial RSU Award vested as to 25% of the RSUs subject to the award on the 12-month anniversary of Mr. Ahrens’s employment start date and is scheduled to vest as to the remaining 75% in substantially equal quarterly installments over the following 12 quarters. The vesting of each of Mr. Ahrens’s awards are subject to his continued service through the applicable vesting date.
Jonathan Campagna Employment Agreement
Prior to his departure in March 2021, we were party to an employment agreement with Mr. Campagna, dated as of October 25, 2019. Pursuant to his employment agreement, Mr. Campagna served as the Chief Financial Officer of the Company and reported directly to our Chief Executive Officer. Under the employment agreement, Mr. Campagna was entitled to receive an initial annual base salary of $350,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and was eligible to receive an annual performance bonus targeted at 50% of Mr. Campagna’s then-current annual base salary. The actual amount of any such bonus would be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Company’s Board of Directors or a subcommittee thereof.
Swami B. Iyer Employment Agreement
On February 22, 2021, we entered into an employment agreement with Mr. Iyer. Pursuant to his employment agreement, beginning on March 22, 2021, Mr. Iyer serves as President, Aerospace Systems for Galactic Co., a wholly-owned subsidiary of the Company, and reports directly to the Chief Executive Officer of the Company. Mr. Iyer’s service pursuant to the employment agreement will continue until terminated in accordance with its terms.
Under the employment agreement, Mr. Iyer is entitled to receive an initial annual base salary of $525,000, subject to increase by the Board or a subcommittee thereof in its discretion, and is eligible to receive an annual performance bonus targeted at 100% of his then-current annual base salary. The actual amount of any annual bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Board or a subcommittee thereof.
Table of Contents
Executive Compensation
Mr. Iyer also received a one-time cash bonus equal to $150,000. Mr. Iyer was entitled to receive a gross-up payment in an amount equal to the aggregate federal, state and local taxes actually imposed on Mr. Iyer for his one-time cash bonus (calculated at Mr. Iyer’s then-applicable marginal tax rate), (ii) reimbursement for relocation expenses incurred in connection with Mr. Iyer’s relocation to Mojave, California on or prior to July 1, 2022 and (iii) reimbursement for up to $10,000 for legal fees incurred in connection with the negotiation of the employment agreement and (iv) subject to availability, will be considered to join a spaceflight in connection with the performance of his duties and may in any event purchase two seats on a future spaceflight at the price of $250,000 per seat.
In connection with joining our Company, we granted to Mr. Iyer an award of RSUs with a dollar-denominated value of $800,000 (the “Iyer Sign-On RSU Award”), as well as an additional award of RSUs with a dollar-denominated value of $2,500,000 (the “Iyer Initial RSU Award”). The Iyer Sign-On RSU Award vested with respect to 50% of the RSUs subject to the award on the six-month anniversary of Mr. Iyer’s employment start date, and is scheduled to vest with respect to the remaining 50% of the RSUs subject to the award on the 12-month anniversary of Mr. Iyer’s employment start date. The Iyer Initial RSU Award vested as to 25% of the RSUs subject to the award on the 12-month anniversary of Mr. Iyer’s employment start date and is scheduled to vest as to the remaining 75% of the RSUs subject to the award in substantially equal quarterly installments over the following 12 quarters. The vesting of each of Mr. Iyer’s awards are subject to his continued service through the applicable vesting date.
Michelle Kley Employment Agreement
On December 2, 2019, we entered into an employment agreement with Ms. Kley. Pursuant to her employment agreement, Ms. Kley serves as the Executive Vice President, General Counsel and Secretary and reports directly to our Chief Executive Officer. Under the employment agreement, Ms. Kley is entitled to receive an initial annual base salary of $350,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and is eligible to receive an annual performance bonus targeted at 50% of Ms. Kley’s then-current annual base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Company’s Board of Directors or a subcommittee thereof. In addition, pursuant to her employment agreement, Ms. Kley received an award of stock options to purchase 300,000 shares of the Company’s common stock that vest with respect to 25% of the shares subject to the award on the one year anniversary of her employment start date and as to the remaining 75% of the shares in substantially equal monthly installments over the following 36 months, subject to continued service as of the applicable vesting date.
Mike Moses Employment Agreement
On October 25, 2019, we entered into an employment agreement with Mr. Moses. Pursuant to his employment agreement, Mr. Moses serves as the President, Space Missions and Safety, of Galactic Enterprises and reports directly to our Chief Executive Officer. Under the employment agreement in 2020, Mr. Moses is entitled to receive an initial annual base salary of $350,000, subject to increase at the discretion of the Company’s Board of Directors or a subcommittee thereof and is eligible to receive an annual performance bonus targeted at 50% of Mr. Moses then- current annual base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable Company and/or individual performance objectives, as determined by the Company’s Board of Directors or a subcommittee thereof.
| 56 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2021.
| | Option Awards | | Stock Awards |
| Name | |
Numbers of
Securities
Underlying
Unexercised
Options
($) Exercisable | | Number of
Securities
Underlying
Unexercised
Options
($) Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of
Shares or Units
of Stock That
Have Not Vested
($) | | Market Value of
Shares or Units
of Stock That
Have Not Vested
($)(1) | | Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#)(2) | | Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested ($)(1) |
| Michael Colglazier | | 141,666 | | 358,334(3) | | 22.98 | | 7/20/30 | | | | | | | | |
| | | | | | | | | | 343,750(4) | | 4,599,375 | | | | |
| | | | | | | | | | 130,208(5) | | 1,742,183 | | | | |
| | | | | | | | | | | | | | 43,403 | | 580,732 |
| Douglas Ahrens | | | | | | | | | | 49,860(6) | | 667,127 | | | | |
| | | | | | | | | | 9,972(7) | | 133,425 | | | | |
| Michelle Kley | | 125,000 | | 150,000(8) | | 7.46 | | 12/02/29 | | 24,248(9) | | 324,438 | | | | |
| | | | | | | | | | | | | | 8,083 | | 108,151 |
| Mike Moses | | 248,269 | | 210,074(10) | | 11.79 | | 10/25/29 | | | | | | | | |
| | | | | | | | | | 63,788(11) | | 853,483 | | | | |
| | 66,841 | | 162,331(12) | | 19.14 | | 10/25/30 | | | | | | | | |
| | | | | | | | | | 162,330(13) | | 2,171,975 | | | | |
| | | | | | | | | | 60,621(14) | | 811,109 | | | | |
| | | | | | | | | | | | | | 20,207 | | 270,370 |
| Swami Iyer | | | | | | | | | | 11,677(15) | | 156,238 | | | | |
| | | | | | | | | | 72,981(16) | | 976,486 | | | | |
| (1) | The market value of shares of our common stock that have not vested is calculated based on the closing trading price of our common stock ($13.38) as reported on the NYSE on December 31, 2021. |
| (2) | The PSUs vest upon the achievement of specified sales goals over a three-year period from the date of grant. For additional information about the PSUs, see the section titled “Equity Compensation” above. |
| (3) | This stock option vests and becomes exercisable in substantially equal monthly installments over the 60-month period following Mr. Colglazier’s employment commencement date, July 20, 2020, subject to continued service through the applicable vesting date. |
| (4) | This RSU award vests as to 25% of the RSUs on July 20, 2021 and in substantially equal quarterly installments over the following 12 quarters, subject to continued service through the applicable vesting date. |
| (5) | This RSU award vests as to 25% of the RSUs on March 24, 2022 and in substantially equal quarterly installments over the following 12 quarters, subject to continued service through the applicable vesting date. |
| (6) | This RSU award vests as to 25% of the RSUs on March 1, 2022 and in substantially equal quarterly installments over the following 12 quarters, subject to continued service through the applicable vesting date. |
| (7) | This RSU award vested as to 50% on September 1, 2021, and the remaining 50% is scheduled to vest on March 1, 2022 |
| (8) | This stock option will vest and become exercisable with respect to 25% of the shares underlying the option on the first anniversary of the grant date, December 2, 2019 and as to the remaining 75% of the underlying shares, in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. |
| (9) | This RSU award vests as to 25% of the RSUs on March 23, 2022 and in substantially equal quarterly installments over the following 12 quarters, subject to continued service through the applicable vesting date. |
| (10) | This stock option has vested as to 25% of the shares underlying the option on October 25, 2020, and the remaining 75% of the underlying shares will vest in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. |
| (11) | This RSU award vested as to 25% of the RSUs on October 25, 2020, and as to the remaining 75% of the underlying shares in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. |
| (12) | This stock option will vest and become exercisable with respect to 25% of the shares underlying the option on October 25, 2021, and as to the remaining 75% of the underlying shares will vest in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. |
| (13) | This RSU award vested as to 25% of the RSUs on October 25, 2021, and as to the remaining 75% of the underlying shares in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. |
| (14) | This RSU award vests as to 25% of the RSUs on March 23, 2022 and in substantially equal quarterly installments over the following 12 quarters, subject to continued service through the applicable vesting date. |
| (15) | This RSU award vested as to 50% on September 22, 2021, and the remaining 50% is scheduled to vest on March 22, 2022. |
| (16) | This RSU award vests as to 25% of the RSUs on March 22, 2022 and in substantially equal quarterly installments over the following 12 quarters, subject to continued service through the applicable vesting date. |
Table of Contents
Executive Compensation
2021 Option Exercises and Stock Vested
The following table shows the number of shares of common stock acquired by each named executive officer during 2021 upon the exercise of stock options and the vesting of RSUs during 2021.
| Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized on
Exercised
($)(1) | | Number of Shares
Acquired on Vesting
(#) | | Value Realized
on Vesting
($)(2) |
| Michael Colglazier | | — | | — | | 191,250 | | 5,754,488 |
| Douglas Ahrens | | — | | — | | 9,972 | | 267,150 |
| Michelle Kley | | 25,000 | | 568,500 | | — | | — |
| Mike Moses | | — | | — | | 101,635 | | 2,296,140 |
| Swami Iyer | | | | | | 11,677 | | 298,114 |
| Jonathan Campagna | | 101,854 | | 2,196,419 | | 3,866 | | 151,238 |
| (1) | Amounts are calculated by multiplying the number of shares as to which the option was exercised by the market price of the shares on the exercise date, net of exercise price. |
| (2) | Amounts are calculated by multiplying the number of shares vested by our closing stock price on the vesting date. |
Potential Payments upon Termination or Change in Control
In accordance with SEC rules, the following table summarizes the payments that would be made to certain of our named executive officers upon the occurrence of certain qualifying terminations of employment, assuming such named executive officer’s termination of employment with the Company occurred on December 31, 2021 and, where relevant, that a change of control of the Company occurred on December 31, 2021. Amounts shown in the table below do not include (1) accrued but unpaid salary and (2) other benefits earned or accrued by the named executive officers during his employment that are available to all salaried employees, such as accrued vacation.
We have entered into certain agreements with each of our named executive officers that provide our named executive officers with severance protections. The employment agreements provide that the named executive officers will be eligible for severance benefits in certain circumstances following a termination of employment without cause or with good reason, whether or not in connection with a change in control. In connection with Mr. Campagna’s departure from the Company in March 2021, his employment agreement terminated.
Under his employment agreement, if Mr. Colglazier experiences a “qualifying termination” of employment, then, in addition to any accrued amounts, he will be entitled to receive the following severance payments and benefits:
| ● | A cash severance amount equal to the sum of (i) his annual base salary then in effect and (ii) his target annual bonus, multiplied by (A) 1.0 if the termination date occurs after the second anniversary of the employment start date or (B) 2.0 if the termination date occurs on or before the second anniversary of the employment start date.; |
| ● | Pro-rated annual bonus for the year of termination; |
| ● | Company-subsidized healthcare coverage for 12 months after the termination date (or 18 months if the termination occurs on or before the second anniversary of the employment start date); |
| 58 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
| Name | | Benefit | | Qualifying
Termination
($) | | Change in
Control with
Qualifying
Termination
($) |
| Michael Colglazier | | Cash Payment | | 4,880,000 | | 4,880,000 |
| Vesting of Equity Awards | | 4,542,751 | | 6,341,558 |
| Value of Benefits | | 43,138 | | 43,138 |
| Total(1) | | 9,465,889 | | 11,264,696 |
| Doug Ahrens | | Cash Payment | | 1,967,000 | | 1,442,000 |
| Vesting of Equity Awards | | 508,681 | | 800,552 |
| Value of Benefits | | 43,277 | | 43,277 |
| Total | | 2,518,958 | | 2,285,829 |
| Michelle Kley | | Cash Payment | | 337,500 | | 675,000 |
| Vesting of Equity Awards | | — | | 1,212,438 |
| Value of Benefits | | 4,748 | | 9,496 |
| Total | | 342,248 | | 1,896,934 |
| Mike Moses | | Cash Payment | | 425,000 | | 850,000 |
| Vesting of Equity Awards | | — | | 4,170,585 |
| Value of Benefits | | 14,426 | | 28,852 |
| Total | | 333,176 | | 4,836,937 |
| Swami Iyer | | Cash Payment | | 1,927,800 | | 1,402,800 |
| Vesting of Equity Awards | | 705,514 | | 1,132,724 |
| Value of Benefits | | 2,936 | | 2,936 |
| Total | | 2,636,250 | | 2,538,460 |
| Jonathan Campagna | | Cash Payment | | — | | — |
| Vesting of Equity Awards | | — | | — |
| Value of Benefits | | — | | — |
| Total | | — | | — |
| (1) | Mr. Colgazier’s total does not include the value of the spaceflight opportunity. |
| |
| ● | Accelerated vesting of any then-outstanding Company equity awards that vest based solely on the passage of time. The accelerated vesting will cover the number of shares or RSUs that would have vested during period the 12-month period following the termination date (or, if the termination occurs on or before the second anniversary of the employment start date, the 24-month period); and |
| ● | Continued opportunity to receive the spaceflight described above (but not if his employment terminates due to his death or disability). |
However, if a qualifying termination of Mr. Colglazier’s employment occurs on or within 24 months following a “change in control” (as defined in the 2019 Plan), then Mr. Colglazier instead will be entitled to receive the following severance payments and benefits:
| ● | an amount equal to 2.0 times the sum of (a) Mr. Colglazier’s annual base salary then in effect and (b) his target annual bonus amount; |
| ● | continued healthcare coverage for 18 months after the termination date; and |
| ● | full accelerated vesting of all outstanding and unvested time-based vesting equity awards. |
As defined in Mr. Colglazier’s employment agreement, a “qualifying termination” includes a termination of Mr. Colglazier’s employment (i) by the Company without “cause,” (ii) by Mr. Colglazier for “good reason” (as defined in the employment agreement), (iii) due to Mr. Colglazier’s death or disability or (iv) by reason of the Company’s non-renewal of the employment agreement at the end of its term.
Table of Contents
Executive Compensation
Under the employment agreements for Messrs. Ahrens and Iyer, if the executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason” (each, as defined in the employment agreement, and referred to herein as a qualifying termination) then the executive will be entitled to receive the following severance payments and benefits:
| ● | A cash severance amount equal to the sum of (i) the executive’s annual base salary then in effect and (ii) his target annual bonus amount, multiplied by (A) 1.0 if the termination date occurs after the second anniversary of the employment start date or (B) 1.5 if the termination date occurs on or before the second anniversary of the employment start date; |
| ● | Pro-rated annual bonus for the year of termination |
| ● | continued healthcare coverage for 12 months after the termination date (or 18 months if the termination occurs on or before the second anniversary of the employment start date); and |
| ● | Accelerated vesting of any then-outstanding Company equity awards that vest based solely on the passage of time. The accelerated vesting will cover the number of shares or RSUs that would have vested during the 12-month period following the termination date (or, if the termination occurs on or before the second anniversary of the employment start date, the 18-month period). |
However, if either such termination of employment occurs on or within 24 months following a change in control, then the executive instead will be entitled to receive the following severance payments and benefits:
| ● | an amount equal to 1.0 times the sum of (a) the executive’s annual base salary then in effect and (b) his target annual bonus amount; |
| ● | continued healthcare coverage for 18 months after the termination date; and |
| ● | full accelerated vesting of all outstanding and unvested time-based vesting equity awards. |
Under the employment agreements for Messrs. Campagna and Moses and Ms. Kley, if the executive’s employment is terminated by the Company without “cause,” or by the executive for “good reason” (each, as defined in the employment agreement, and referred to herein as a qualifying termination) then the executive will be entitled to receive the following severance payments and benefits:
| ● | an amount equal to 0.5 times the sum of (a) the executive’s annual base salary then in effect and (b) his target annual bonus amount; and |
| ● | continued healthcare coverage for 6 months after the termination date. |
However, if either such termination of employment occurs on or within 24 months following a change in control, then the executive instead will be entitled to receive the following severance payments and benefits:
| ● | an amount equal to 1.0 times the sum of (a) the executive’s annual base salary then in effect and (b) his target annual bonus amount; |
| ● | continued healthcare coverage for 12 months after the termination date; and |
| ● | full accelerated vesting of all outstanding and unvested time-based vesting equity awards. |
Mr. Campagna’s employment was terminated without “cause” in March 2021. As a result, he was entitled to receive a cash amount equal to 0.5 multiplied by the sum of his annual base salary and target bonus amount, payable over six months. In addition, Mr. Campagna was entitled to continue to participate in our group health plan at the level at which he participated immediately prior to his departure for six months following the date of his qualifying termination. All equity awards held by Mr. Campagna which were outstanding and unvested as of the date of his termination were forfeited without consideration. In connection with Mr. Campagna’s termination, in addition to the severance payments described in this paragraph, our Board of Directors decided to pay him the full amount of his actual bonus for 2020. The quantified amount payable to Mr. Campagna in connection with his termination is shown in the section titled “Severance and Change in Control-Based Compensation.”
The severance payments and benefits described above are subject to the executive’s execution and non-revocation of a general release of claims in favor of the Company and continued compliance with customary confidentiality and non-solicitation requirements, then, in addition to any accrued amounts.
| 60 | Virgin Galactic Holdings, Inc. |
Table of Contents
Executive Compensation
CEO Pay Ratio
Under the Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation of our median compensated employee to the annual total compensation of Michael Colglazier, our Chief Executive Officer. We consider the pay ratio specified below to be a reasonable estimate, calculated in a manner that is intended to be consistent with the requirements of Item 402(u) of Regulation S-K.
For 2021, our last completed fiscal year:
| ● | the annual total compensation of the employee who represents our median compensated employee (other than our Chief Executive Officer) was $107,145; and |
| ● | the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table included above, was $7,404,615. |
Based on this information, for 2021, our Chief Executive Officer’s ratio of annual total compensation to the median of the annual total compensation of all of our employees (other than the Chief Executive Officer) was 69 to 1.
We determined that, as of December 31, 2021, our employee population excluding our Chief Executive Officer consisted of 803 full-time employees. To identify the median employee from our employee population, we reviewed the annual total compensation of each of our employees in the same manner as calculated for the annual total compensation of our Chief Executive Officer.
With respect to the annual total compensation of the median employee, we identified and calculated the elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $107,145. With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of our 2021 Summary Compensation Table included in this Proxy Statement.
Table of Contents
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to the beneficial ownership of our common stock as of April 14, 2022 for:
| ● | each person who is known to be the beneficial owner of more than 5% of shares of our outstanding common stock; |
| ● | each of our current named executive officers and directors; and |
| ● | all of our executive officers and directors as a group. |
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. The beneficial ownership of our voting securities is based on 258,521,776 shares of our common stock issued and outstanding as of April 14, 2022. Each share of our common stock is entitled to one vote on any matter presented to stockholders. Unless otherwise indicated, the Company believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them.
| Name of Beneficial Owner(1) | | Shares Beneficially Owned |
| Holders of More Than 5% | | Shares | | % of Ownership |
| Virgin Investments Limited(2) | | 30,745,494 | | 11.9% |
| The Vanguard Group(3) | | 16,961,503 | | 6.6% |
| Directors and Named Executive Officers | | | | |
| Evan Lovell | | — | | — |
| Wanda Austin(4) | | 29,625 | | * |
| Adam Bain(5) | | 1,200,000 | | * |
| Tina Jonas(6) | | 6,173 | | * |
| Craig Kreeger(7) | | 29,625 | | * |
| George Mattson(8) | | 29,625 | | * |
| Wanda Sigur | | — | | — |
| W. Gilbert West(9) | | 5,893 | | * |
| Michael Colglazier(10) | | 366,100 | | * |
| Doug Ahrens(11) | | 17,387 | | * |
| Jonathan Campagna(12) | | 223,942 | | * |
| Swami Iyer | | 27,114 | | * |
| Michelle Kley(13) | | 166,584 | | * |
| Mike Moses(14) | | 516,319 | | * |
| All Directors and Executive Officers as a Group (11 individuals)(15) | | 1,851,012 | | * |
| * | Less than one percent |
| (1) | Unless otherwise noted, the business address of each of those listed in the table above is 1700 Flight Way, Tustin, California 92782. |
| (2) | VIL is a company limited by shares under the laws of the British Virgin Islands. VIL is wholly owned by Virgin Group Investments LLC, whose sole managing member is Corvina Holdings Limited, which is wholly owned by Virgin Group Holdings. Virgin Group Holdings is owned by Sir Richard Branson, and he has the ability to appoint and remove the management of Virgin Group Holdings and, as such, may indirectly control the decisions of Virgin Group Holdings regarding the voting and disposition of securities held by Virgin Group Holdings. Therefore, Sir Richard Branson may be deemed to have indirect beneficial ownership of the founder shares.If the Extension Amendment Proposalshares held by Virgin Group Holdings. The address of VIL, Virgin Group Holdings Limited, and the Trust Amendment Proposal are approved but we do not complete our initial business combinationCorvina Holdings Limited is Craigmuir Chambers, Road Town, Tortola, VG1110, British Virgin Islands. The address of Sir Richard Branson is Branson Villa (Necker Beach Estate), Necker Island, VG 1150, British Virgin Islands.
|
| (3) | The information is based solely on a Schedule 13G filed by the Extended Date (or, if such date is further extended at a duly called extraordinary general meeting, such later date), we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equalThe Vanguard Group on February 9, 2022 (the “Vanguard 13G”). According to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.There will be no redemption rights or liquidating distributionsVanguard 13G, includes sole voting power with respect to our warrants, which0 shares, shared voting power with respect to 105,483 shares, sole dispositive power with respect to 16,693,882 shares, and shared dispositive power with respect to 267,621 shares
|
| 62 | Virgin Galactic Holdings, Inc. |
Table of Contents
Security Ownership of Certain Beneficial Owners and Management
| (4) | Includes 24,865 shares of common stock held directly by Dr. Austin. Includes 4,760 shares of common stock that will expire worthlessbe issued upon vesting of RSUs within 60 days of April 14, 2022 |
| (5) | Mr. Bain has pledged, hypothecated or granted security interests in all of the eventshares of our winding up.common stock held by him (but not those shares held by the Sponsor) pursuant to a margin loan agreement with customary default provisions. In the event of a liquidation,default under the holdersmargin loan agreement, the secured parties may foreclose upon any and all shares of our foundercommon stock pledged to them and may seek recourse against the borrower. |
| (6) | Includes 6,173 shares our Sponsor, will not receive any monies held in the Trust Account as a result of its ownership of the founder shares.Notwithstanding the foregoing, we will not proceed with the Extension if redemptions of our public shares would cause us to have less than $5,000,001 of net tangible assets following
| |
