UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.)

 

Filed by the Registrant ☒

☑

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

☐

Preliminary Proxy Statement

☐

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒

☑

Definitive Proxy Statement

☐

Definitive Additional Materials

☐

Soliciting Material Pursuant to §240.14a-12

 

RigNet, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

☒

☑

No fee required.

☐

Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

☐

Fee paid previously with preliminary materials.

☐

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

 

(RIGNET)

NOTICE OF

20172020 ANNUAL MEETING

OF STOCKHOLDERS

Time and Date: 9:00 a.m. Central Daylight Time, May 6, 2020

Time and Date:10:00 a.m. Central Daylight Time, May 3, 2017
Location:Houston Marriot Energy Corridor – Reata Ballroom
16011 Katy Freeway, Houston, Texas 77094

Location: RigNet, Inc., 15115 Park Row Boulevard, Suite 300

Houston, Texas 770841

 

April 3, 20178, 2020

 

Dear Stockholder:

 

You are cordially invited to attend the 20172020 Annual Meeting of Stockholders of RigNet, Inc. (the “Company” or “RigNet”), which will be held at 10:9:00 a.m., Central Daylight Time, on Wednesday, May 3, 20176, 2020 at the Houston Marriot Energy Corridor – Reata Ballroom, 16011 Katy Freeway,RigNet’s headquarters located at 15115 Park Row Boulevard, Suite 300, Houston, Texas 77094.770841. Following a report onRigNet’sbusiness operations, stockholdersStockholders will vote to:

 

(LOGO)

Elect the nine directors named in our proxy statement to serve until the 20182021 Annual Meeting of Stockholders or until their respective successors have been elected and qualified;qualified or until the earliest of their removal, resignation or death;

(LOGO)

Ratify the selection of Deloitte & Touche LLP as our independent auditors for 2017;2020;

(LOGO)

Advise on

Approve an Amendment to the frequencyRigNet, Inc. 2019 Omnibus Plan to increase the number of voting on our named executive officers’ compensation asshares available under the plan; and    

Approve a non-binding advisory vote; andresolution on RigNet’s executive compensation.

(LOGO)Approve our named executive officers’ compensation as a non-binding advisory vote.

 

Stockholders will also consider any other business as may properly come before the Annual Meeting.

 

You are eligible to vote if you were a stockholder of record at the close of business on March 6, 2017.9, 2020.  Please ensure that your shares are represented at the meeting by promptly voting and submitting your proxy on the Internet or by completing, signing, dating and returning your proxy card in the enclosed envelope.  If you decide to attend the meeting and vote, you may withdraw your proxy at that time.

 

To assistWe are providing you in voting your shares, in additionaccess to our proxy materials by sending you this Noticefull set of Annual Meeting, you will find enclosed the 2017 Proxy Statementproxy materials, including our proxy statement, a proxy card and our 20162019 Annual Report to Stockholders, which includes the Company’s audited financial statements.  We anticipate that we will begin distributing proxy materials to stockholders on or about April 6, 2020.

 

On behalf of the Board of Directors and employees of RigNet, we thank you for your continued interest in and support of the Company.

 

Sincerely,

/s/

 /s/ James H. Browning

/s/ William D. Sutton

James H. Browning

William D. Sutton
Chairman

Chair of the Board

Senior

/s/ Shelly Buchman                        

Shelly Buchman

Vice President andGlobal Human Resources,

Associate General Counsel

Houston, Texas and Corporate Secretary

Houston, Texas

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF STOCKHOLDERS

Our Proxy Statement and Annual Report to Stockholders are available at “https:https://materials.proxyvote.com/766582”

766582

Your vote is important.  Please vote promptly.

1

We continue to monitor developments regarding the coronavirus (COVID-19).  In the interest of health and well-being of our stockholders, we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication.  If we make this change, we will announce the decision to do so in advance and provide details on how to participate at https://investor.rig.net/.

i

PROXY SUMMARYSUMMARY

 

This summary highlights information contained elsewhere in the proxy statement.  This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

 

RIGNET 20172020 ANNUAL MEETING OF STOCKHOLDERS

Time and Date: 9:00 a.m. Central Daylight Time, May 6, 2020

Time and Date:10:00 a.m. Central Daylight Time, May 3, 2017
Location:Houston Marriot Energy Corridor – Reata Ballroom
16011 Katy Freeway, Houston, Texas 77094

Location: RigNet, Inc., 15115 Park Row Boulevard, Suite 300

Houston, Texas 77084

 

Voting. Stockholders as of the record date, March 6, 2017,9, 2020, are entitled to vote.  Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals on which to be voted.

 

Each stockholder’s vote is important.  Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible by:

    

(LOGO)

using the Internet at

“https://materials.proxyvote.com/766582”

(LOGO)

mailing your signed proxy or voting

instruction form

using the Internet at

https://materials.proxyvote.com/766582

mailing your signed proxy card or voting

instruction form

 

Attendance. RigNet stockholders as of the record date or holders of their valid proxies are entitled to attend the Annual Meeting.

 

MEETING AGENDA AND VOTING RECOMMENDATIONS

 

Page Reference
for More
Information

Vote

Recommendation

Election of 9 directors

 4

5 and 4238

For

each director nominee

Management proposal:proposals:

Ratify Deloitte & Touche LLP as our independent auditors for 20172020

42

38

For

Approve an amendment to the RigNet, Inc. 2019 Omnibus Incentive Plan

39

For

Stockholder advisory vote:

Advise on the frequency ofadvisory voting on our named executive officers’ compensation43One

Approve our named executive officers’officers' compensation

43

42

For

Transact other business that properly comes before the meeting

 

BOARD NOMINEES

Name

 

Director Since

Position with Our Company

Inde-pendent

Committee Membership

Other Board Service

Experience

Age

AC

CC

CGN

Steven E. Pickett

56

2016

Chief Executive Officer and President

 

 

 

 

X

James H. Browning

70

2010

Board Chair, Independent Director

X

X/F

 

 

X

Mattia Caprioli

46

2013

Independent Director

 X

 

 

 

X

Ditlef de Vibe

65

2011

Independent Director

X

 

X

 

 

Kevin Mulloy

61

2012

Independent Director

X

X

 

 X

 

Kevin J. O'Hara

59

2010

Independent Director

X

 

C

 

X

Keith Olsen

63

2010

Independent Director

X

 

 

C

X

Gail P. Smith

60

2018

Independent Director

X

X

 

 X

X

Brent K. Whittington

49

2010

Independent Director

X

C/F

 X

 

 

2019 Meetings

 

 

 

 

5

  8

4

 

 

  Director   Committee MembershipOther Board Service
NameAgeSincePosition with Our CompanyIndependentACCCCGNCDCExperience
Steven E. Pickett532016Chief Executive Officer and President     X
James H. Browning672010Chairman, Independent DirectorXX/FX  X* X
Mattia Caprioli432013Independent DirectorX  X  XX
Charles L. Davis512005Independent DirectorXX     X 
Ditlef de Vibe622011Independent DirectorX X   X 
Kevin Mulloy582012Independent DirectorXX    C 
Kevin J. O’Hara562010Independent DirectorX XC X
Keith Olsen602010Independent DirectorX CX X
Brent K. Whittington462010Independent DirectorXC/F  X 
2016 Meetings    4643 

ACAudit CommitteeCChair
CCCompensation CommitteeFFinancial Expert
CGNCorporate Governance and Nominating Committee*Served as Chair of the Committee from January 7,
CDCCorporate Development Committee2016 through December 31, 2016 when Mr. O’Hara  
resumed as committee chairman

 

iiAC  Audit Committee

CC  Compensation Committee

CGN  Corporate Governance and Nominating Committee

 

      C   Chair

F   Audit Committee Financial Expert

 

Attendance:Director Elections:
In 2016, each of our current directors attended at least 75% of the meetings of the Board and committees on which the member served during the year.Each director is elected annually by a plurality of votes cast.

 

 

2016ii

Attendance:

In 2019, each of our current directors attended at least 75% of the meetings of the Board and committees on which the member served during the year.

Director Elections:

Directors are elected annually to serve until the next annual meeting of stockholders. In uncontested elections of directors, where the number of candidates does not exceed the number of open board positions, directors are elected by a majority of votes cast. In contested elections, where the number of candidates exceeds the number of open board positions, directors are elected by a plurality of votes cast.

2019 PERFORMANCE AND COMPENSATION HIGHLIGHTS

RigNet performance. The Board of Directors believes changes made to During 2019, our executive leadership team focused on operating performance and execution of the Company’s strategy resulting in 2016 will position the Company for continued growth in the oildramatic operating performance improvement throughout 2019, with revenue, EBITDA and gas sector and accelerate our strategic expansion into adjacent remote communications markets.Adjusted EBITDA increasing quarter over quarter.  The Chief Executive Officer (“CEO”) and otherexecutive leadership team ended the year with:

fourth quarter revenue 11% greater than first quarter;

fourth quarter EBITDA more than 10 times that of first quarter; and

fourth quarter Adjusted EBITDA 42% greater than first quarter.

Despite operational improvements, our executives’ total compensation benchmarked at less than half the median compensation of our 2018 and 2019 peer groups.  In engagements with several of our larger shareholders, we also heard concerns about the low equity ownership of our executives, resulting in part from previous incentive programs that required large acquisitions to meet the performance targets.  No deals were consummated meaning the large majority of previous performance unit grants expired with no value realized by our executives.  In addition, our executives have all been appointed within the last three years, further limiting the opportunities to build their equity position.

Fresh Look at Executive Compensation. In the second half 2019, our Compensation Committee took a fresh look at compensation across our organization to better promote retention and reward achievement of our long-term repositioning from a provider of remote communications to the offshore drilling industry to a digitization partner for multiple industries.  We addressed concerns related to many of our executive officers being compensated at or below the 25th percentile of our peer group and for the CEO at less than half the median compensation compared to our peer group.  Additionally, we took steps to address shareholder concerns about the low equity ownership of our executive officers.  As a result, the Board approved a new compensation program incorporating the following recommended changes during 2019:

Peer group changes to reflect the customer base and transformation to a digitization partner for multiple industries;

Equity award vesting modified to three years consistent with our peer companies;

Instituted a new Long-Term Incentive Plan (“LTIP”) and made awards in November 2019 in lieu of March 2020 awards;

Changed performance unit (“PUs”) equity award metrics to Total Shareholder Return and Adjusted EBITDA;

Modified PUs to enable early vesting upon achievement of target or maximum performance; and

Subject to approval of proposal three in this proxy statement, increased maximum payout for outperformance of the PUs from 250% to 500% of the target value.

We believe our new compensation program allows our executives to earn total compensation near the median of our peer group for outperformance, encourages retention, and better aligns the incentives of our named executives responded to 2016’s continued challenging economic market conditions by reallocating resources and restructuring personnel to reduce operating costs forwith the long-term financial stability.interests of our shareholders.  

 

Compensation decisions reflect a balanced and responsible pay approach.The Compensation Committee has responsibility for oversight of RigNet’s executive compensation framework and, withinframework.  Within that framework, and working with senior management, aligningthe Compensation Committee works to align pay with performance and creatingto create incentives that reward responsible risk-taking while also consideringgiven RigNet’s business environment.

 

The Compensation Committee targets executive base compensation to be between the 25th percentile and the median for our peer group. Our pay-for-performance philosophy is incorporated into our Short-term Incentive Plan (“STIP”), which compensates our executives with short-term incentives for meeting and exceeding corporate goals and objectives, which may be paid in either cash or equity as determined annually by our Board. We target cash and short-term incentive compensation to be at the median for our peer group for target performance and reward above target performance with above median compensation. Our performance during 2016 did not achieve2019 resulted in 104.3% achievement of the minimum 90% thresholdManagement EBITDA target and 96.8% of the Consolidated Revenue target, exceeding thresholds of our performance goals under the Short-Term Incentive Plan (“STIP”).  Our Compensation Committee elected to reduce STIP payouts by approximately 35% (i) to conserve shares available under our 2019 Omnibus Incentive Plan and as such noour cash and (ii) to better align pay with our stock performance.  STIP bonuses were funded.funded to participants through cash bonuses to middle and lower level employees totaling approximately $900,000 payable in April 2020.  In addition, senior level employees, including our executives, received shares of stock equivalent to $1.0 million on the date of issuance.  

iii

 

For 2019, our Compensation Committee set the base salary of our CEO, Mr. Pickett, joinedat $507,831 and target award opportunities for him under the Company on May 31, 2016 as our CEO. Until then, Mr. Jimmerson led the Company as interim CEO from January 7, 2016 through May 31, 2016 due to Mr. Slaughter’s employment with the Company ending effective January 7, 2016. Mr. Pickett’s2019 STIP and LTIP each at 100% of base salary, and target long-term incentive compensation percentage for 2016 were set at $485,000 and 100%, respectively,providing a 2.7% increase to his base salary based on peer compensation data obtained from our compensation consultant and negotiation results during the recruitmentconsultant.  We paid Mr. Pickett’s STIP for 2019 in shares of our CEO and President. Mr. Pickett received a guaranteed 2016 cash bonus as well as reimbursementcommon stock to further align his interests with those of certain relocation related costs and will begin participating in the STIP in 2017, as agreed to in his employment agreement.

Compensation during 2016 for our interim CEO, Mr. Jimmerson and former CEO, Mr. Slaughter’s base salaries and target bonus percentages were set at $415,000 and 100%, respectively, which represents unchanged compensation levels from 2015 for the CEO and President position.stockholders.  The Compensation Committee believes that its recommendations on our CEOs’CEO’s total pay reflectopportunity reflects the required leadership skills and level of responsibility givencommensurate with our current size and market conditions. For Messrs. Ahlstrom and Eastman base salary for 2019 was increased at 3.0% and target award opportunities under the 2019 STIP and LTIP remained unchanged.  The Compensation Committee believes its decisions on our CEO’s pay to be consistent with prior years and represents a balanced and responsible pay-for-performance approach to compensation.

During 2016, base compensation and target bonus percentages for Messrs. Schneider, Sutton, Maytorena and Hansen remained unchanged from 2015 reflecting the continued industry market challenges. Totaltotal compensation for theseall named executives reflects a balanced and responsible pay-for-performance approach to compensation.

 

Equity compensation.Through equity compensation, our executives have a significant portion of compensation “at risk” and accordingly have the potential for earning aboveat the median of our peer group.  “At risk” means executives will not realize increased value asunless they manage and operate themeet minimum performance goals, which are tied to Company to achieve financial, operational and strategic goals, which we believe closely correlate to long-term stockholder value creation. RigNet grantscreation, but can realize increased value if they exceed the target level of those performance goals,  

During November 2019, to implement our new executive compensation program and drive on-going retention, achievement of our long-term repositioning as a digitization partner for multiple industries and motivate future outperformance of financial targets, our executives were granted LTIP awards consistent with incentive targets for 2020. As in the past two years, the new LTIP awards included restricted stock units to named executives annually, which typically vest over 4 years through continued employment. RigNet also grants performance units, which vest based on specific annual performance resultswith payoutgenerallyupon completionfor 40% of each executive’s target LTIP value, options at 10% of their target value, and PUs for the remaining 50% of the three-yeartarget LTIP value.  The new executive compensation program will provide:

more equity at risk compensation as desired by our investors;

better alignment with our peers when pre-established performance period.In 2016, the Compensation Committee also awarded stock optionsobjectives are achieved and surpassed; and

increased incentive to named executive officers joining RigNet during the year, including our CEO, which vest over four years through continued employment and granted restricted stock units and performance units to incentivizeencourage retention of other keyour executives.

We designed the Fall 2019 PU awards to reward future growth in Adjusted EBITDA and Total Shareholder Return and drive outperformance by increasing the maximum payout for outperformance of the PUs from 250% of target value to 500% of target value.  We believe that Adjusted EBITDA reflects the best measure of the underlying business performance and is how our lenders and large investors evaluate our business.  We include Total Shareholder Return as a metric to make sure that our executives are aligned with the long-term interests of our shareholders.  If stockholders do not approve proposal three in this proxy, we intend to reconsider executive officers. compensation in 2020 as we will not have sufficient shares to meet the obligations of all of our PUs.

Pursuant to the Securities and Exchange Commission (“SEC”) rules, all equity awards issued in 2019, even those only rewarding 2020 and future performance, are reported in full for 2016 in the respective columns in the following Summary Compensation Table.

 

iii 

20162019 Summary Compensation

 

 SalaryBonusStock
Awards		Option
Awards		Non-Equity
Incentive
Plan		All Other
Comp.
Total
Steven Pickett (1)  $ 285,404$ 282,917$ 253,943  $ 646,000$             —  $ 32,590 $ 1,500,854
Chief Executive Officer and President       
Charles Schneider325,000— 604,176——480929,656

Senior Vice President and

Chief Financial Officer

       
William Sutton 262,000 — 515,760——480 778,240

Senior Vice President and

General Counsel

       
       
Jay Hilbert42,308— 165,075——68207,451
Senior Vice President, Sales       
Edward Traupman37,008 — 88,040——59 125,107
Vice President, System Integration &
Automation		       
Martin Jimmerson (2) 167,596            —600,000—              —18,556  785,952
Former Interim CEO and President and
Former Chief Financial Officer		       
Mark Slaughter (2)  33,519—  —  — —  1,813,692 1,847,211  

Former Chief Executive Officer

and President

       
Hector Maytorena (2) 230,539—575,134——545,356 1,351,029

Former Group Vice President,

Managed Services

       
       
Morten Hagland Hansen (2)123,846—399,554——261,297784,697
Former Senior Vice President and
Chief Technology Officer		       
       

 

 

Salary

  Bonus

Stock
   Awards (1)

Option
  Awards (1)

Non-Equity Incentive Plan(2)

All Other Comp.


Total

Steven Pickett

$ 504,852

$             -

$ 861,355

101,034

  $ 389,341

$  3,805

$  1,860,387

Chief Executive Officer and President

 

 

 

 

 

 

 

Lee Ahlstrom

358,077

-

709,750

71,606

220,984

13,769

1,374,186

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

Brad Eastman

306,923  

-

523,348  

61,374

108,205

11,802  

1,011,652  

Senior Vice President and General

Counsel

 

 

 

 

 

 

 

 

(1)

Mr. Pickett joined RigNet

Stock and option awards reflect the March 2019 LTIP awards as well as LTIP awards granted in November 2019 to implement our new executive compensation program in lieu of 2020 LTIP incentive awards to drive retention and continued focus on May 31, 2016. The amounts represent Mr. Pickett’s compensation provided for in his employment agreement.performance.

(2)

These executives’ employment

Reflects approved STIP incentive amounts after the Compensation Committee reduced computed amounts by approximately 35% (i) to conserve shares available under our 2019 Omnibus Incentive Plan and our cash and (ii) to better align pay with RigNet ended during 2016. Their compensation included separation benefits provided for in their respective employee agreements.our stock performance.

 

For more information on total compensation as calculated under SEC rules, see the narrative and notes accompanying the 20162019 Summary Compensation Table, on page 26.28.

We believe that our new incentive plan will allow our executives to earn total compensation near the median of our peer group, for outperformance.  We also believe that our new compensation program encourages retention because of the payout

iv

potential for performance.  Finally, we believe that our LTIP aligns the incentives of our executives with the long-term interests of our shareholders by focusing on Total Shareholder Return and growth in Adjusted EBITDA.  

Given the recent decline in our share price largely driven by macro concerns over activity in the oil and gas markets and the decline in satellite bandwidth prices, we do not have sufficient shares in our 2019 Omnibus Incentive Plan to meet the obligations of our new incentive plan design.  In this proxy statement, we are requesting stockholders approve additional shares for our 2019 Omnibus Incentive Plan in proposal three.  If this proposal does not pass, we will have to reconsider our compensation philosophy and design new awards working within the existing liquidity and share constraints.  We will also incur additional retention risk for key executive, technical and sales employees or need to use cash resources to achieve compensation objectives.  If sufficient cash resources are not available, we will not be able to offer a STIP and we could experience heightened turnover throughout the organization, seriously jeopardizing the progress we have made in growing and diversifying RigNet in spite of anemic industry conditions.

 

EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS

 

KeyBest-Practice Compensation Governance Features

Our executive compensation program is grounded in the following policies and practices, which promote sound compensation:

●

What We Do

Clawback of incentive

What We Don’t Do

✔Place a heavy emphasis on variable compensation and equity compensation,

✖   Provide “single trigger” change in the event ofcontrol benefits on options or RSUs

✔Require significant stock ownership

✖    Offer perquisites, other than relocation assistance

✔Maintain a financial restatement

●clawback policy

No

✖   Allow excise tax gross-upsgross up upon a change in control

✔Conduct annual compensation risk assessments

✖   Permit hedging or short selling of Company stock

✔Use an independent compensation consultant

✖    Re-price options and other equity incentives

●Executive share ownership requirements and restrictions, including an anti-hedging and anti-pledging policy

 

2019 Elements

 

Type

Form

Terms

Equity

Stock Options

●

Options generally vest 25%33.3% per year while employedsubject to continued employment

●

No automatic accelerated option vesting upon a change of control

Restricted Stock Units

●

Unit awards generally vest 25%33.3% per year while employedsubject to continued employment

Restricted Stock Units

●

No automatic accelerated stockunit award vesting upon a change of control

Performance Units

●

Unit awards generally vest based on achievement of performance measures over a multiple-year period

●Awards vest at target for periods following a change in control

Cash or Equity

STIP Bonus●

STIP

●Based on achievement of quantitativeobjective performance criteria and qualitative goals

- Funding level based on revenue and Adjusted EBITDA results

- Awards based on achievement of specific goals

Cash

Salary

●Reviewed annually by the Compensation Committee

Generally eligible for annual increase

Retirement

●4% match of voluntary 401(k) contributions vest immediately

iv 

 

GOVERNANCE HIGHLIGHTS

 

v

Board Leadership

We have an independent director who is elected by the independent directors to serve as the chairman of the Board Chair, with broad authority and responsibility over Board governance and its operations. As a result of 2016’s leadership changes, we named an independent director to serve as the Vice Chairman of the Board from January 7, 2016 through December 31, 2016, who actively collaborated with the interim CEO and executive team. See “Board Leadership Structure and Role in Risk Oversight” on page 8 for more information.

Director Independence

All of our non-executive director nominees are independent. An independent director chairs each Board committee. We believe our Board should consist primarily of independent directors. See “Director Independence” on page 9 for more information.

Board Risk Oversight

Our Board has oversight for risk management with a focus on the most significant risks facing the Company, including strategic, operational, financial, legal and compliance risks.  See “Board Leadership Structure and Role in Risk Oversight” on page 89 for more information.

Director Independence

With the exception of Mr. Pickett, our CEO, all of our director nominees are independent.  An independent director chairs each Board committee.  See “Director Independence” on page 10 for more information.

 

CorporateBoard Development

Our Board’s diversity of experience, technical and industry knowledge brings value by providing management oversight and guidance related to evaluating corporate development opportunities and managing risks from merger and acquisition initiatives.a variety of perspectives.  See “Corporate Development CommitteePolicy on Director Qualifications and Nominations” on page 1210 for more information.



v 

 

 

0

CONTENTS

NOTICE OF THE 2017 ANNUAL MEETING OF STOCKHOLDERS

 

Page

PROXY SUMMARY

ii

PROXY STATEMENT

2

GOVERNANCE

4

5

Director Nominees

4

5

Corporate Governance

8

9

Board Leadership Structure and Role in Risk Oversight

8

9

Director Independence

9

10

Policy Governing Director Qualifications and Nominations

9

10

Communications to Our Board of Directors

10

12

Meetings of Our Board of Directors and Attendance at Annual Meetings

11

12

Committees of Our Board of Directors

11

12

Report of the Audit Committee

13

14

DIRECTOR COMPENSATION

14

15

EXECUTIVE COMPENSATION

16

Our Executive Officers

16

Compensation Discussion and Analysis

17

Summary Compensation Table

26

28

2016 Grants of Plan-Based Awards31

Outstanding Equity Awards at December 31, 20162019

32

30

Option Exercises and Vesting of Restricted Stock33
Pension Benefits33
Non-Qualified Deferred Compensation33

Potential Payments Upon Termination or Change of Control

34

30

Compensation Committee Report

35

31

SECURITY OWNERSHIP

36

32

Security Ownership of Certain Beneficial Owners and Management

36

32

Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports

37

33

Securities Authorized for Issuance Under Equity Compensation Plans

37

34

Certain Relationships and Related Transactions

37

34

ADDITIONAL INFORMATION

39

35

Stockholder Proposals and Nominations for the 20182021 Annual Meeting

39

35

Other Matters for the 20172020 Annual Meeting

41

37

PROPOSALS

42

38

Proposal One:  Election of Directors

42

38

Proposal Two:  Ratification of Independent Auditors

 42

38

Proposal Three:  Advisory Vote on Frequency of Advisory Voting on our Named Executive Officers’ CompensationApprove An Amendment to the RigNet, Inc. 2019 Omnibus Incentive Plan

43

39

Proposal Four:  Advisory Vote onto Approve Compensation of Named Executive Officers

42

APPENDICES

43

44

A - Non-GAAP Measure Reconciliation of Management EBITDA

44

B – Annex A – First Amendment to the RigNet, Inc. 2019 Omnibus Incentive Plan

45

 

Your vote is important.  Please complete, sign, date and return your proxy or voting instruction form, or

submit your vote and proxy on the Internet.  Our Proxy Statement and Annual Report to Stockholders

are available at “https:https://materials.proxyvote.com/766582”766582.

1

 1

PROXY STATEMENTSTATEMENT

RIGNET, INC.

15115 Park Row Boulevard, Suite 300

Houston, Texas 77084-4947

 

We are furnishing this proxy statement to stockholders in connection with RigNet’s solicitation of proxies on behalf of the Board of Directors for the 20172020 Annual Meeting of Stockholders.  Distribution of this proxy statement and proxy card to stockholders is scheduled to begin on or about April 3, 2017.6, 2020.

 

Date, Time and Place of Meeting

Our Board of Directors (“the Board”(the “Board”) is asking for your proxy for use at the RigNet, Inc. 20172020 Annual Meeting of Stockholders (the “Annual Meeting”) or at any adjournments or postponements thereof.  The Annual Meeting will be held on Wednesday, May 3, 2017,6, 2020, at 10:9:00 a.m., Central Daylight Time Houston Marriot Energy Corridor – Reata Ballroom, 16011 Katy Freeway,at RigNet’s headquarters located at 15115 Park Row Boulevard, Suite 300, Houston, Texas 77094.

77084.  We continue to monitor developments regarding the coronavirus (COVID-19).  In the interest of the health and well-being of our stockholders, we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication.  If we make this change, we will announce the decision to do so in advance and provide details on how to participate at Proposalshttps://investor.rig.net/.

 

Proposals

At our 20172020 Annual Meeting, of Stockholders, we are asking our stockholders to consider and act upon proposals to: (1) elect nine directors to serve until our 20182021 Annual Meeting;Meeting or until their respective successors have been elected and qualified or until the earliest of their removal, resignation or death; (2) ratify the appointment of Deloitte & Touche LLP as our independent auditor for the fiscal year ending December 31, 2017;2020; (3) vote, asapprove an amendment to the RigNet, Inc. 2019 Omnibus Incentive Plan to increase the available number of shares under the plan; and (4) approve a non-binding advisory vote,resolution on RigNet’s executive compensation.

Who Can Attend the frequencyAnnual Meeting

Only stockholders of future advisory votesrecord as of the close of business on March 9, 2020 or the holders of their valid proxies may attend the Annual Meeting. A list of our stockholders will be available for review at our executive compensation and (4) approve,offices in Houston, Texas, during ordinary business hours for a period of 10 days prior to the meeting. Each person attending the Annual Meeting may be asked to present a photo ID, such as a non-binding advisory vote,driver’s license, before being admitted to the compensationmeeting. In addition, stockholders who hold their shares through a broker or nominee (i.e., in street name) should provide proof of our named executive officers.their beneficial ownership as of March 9, 2020, such as a brokerage statement showing their ownership of shares as of that date.

 

Record Date, Outstanding Shares and Quorum

Only stockholders of record at the close of business on March 6, 20179, 2020 (the “Record Date”) are entitled to notice of, and to vote at the Annual Meeting.  As of the Record Date, there were 18,029,01319,982,473 shares of common stock outstanding sharesand entitled to vote at the Annual Meeting.  The presence, in person or by proxy, of the holders as of the Record Date of a majority of our outstanding shares of common stock is necessary to constitute a quorum for purposes of voting on the proposals at the Annual Meeting.  AbstainingAbstentions and withheld votesbroker non-votes will count as present for purposes of establishing a quorum on the proposals.

 

If by the date of the Annual Meeting we do not receive sufficient shares to constitute a quorum or to approve one or more of the proposals, the Chair of the Annual Meeting, or the persons named as proxies, may propose one or more adjournments of the Annual Meeting to permit further solicitation of proxies.  The persons named as proxies would typically exercise their authority to vote in favor of adjournment.

 

Broker Non-Votes

Under New York Stock Exchange Rule 452, which governs all brokers (including those holding NASDAQ-listed securities), brokers are entitled to vote shares held by them for their customers on matters deemed “routine” under applicable rules, even though the brokers have not received voting instructions from their customers.

Brokers, however, may not vote on “non-routine” matters on behalf of their clients in the absence of specific voting instructions. A broker “non-vote” occurs when a broker’s customer does not provide the broker with voting instructions on “non-routine” matters for shares owned by the customer but held in the name of the broker. In those instances, the broker cannot vote the uninstructed shares and reports the number of such shares as “non-votes.”

2

VotingProposal 1 (election of directors), Proposal 3 (approval of an amendment to the RigNet, Inc. 2019 Omnibus Plan), and Proposal 5 (the non-binding advisory vote on the compensation of our named executive officers) are each considered “non-routine” matters. Accordingly, a broker may not vote on those proposals without instructions from its customer, and broker “non-votes” may occur with respect to those proposals. Proposal 2 (ratification of the appointment of the Company’s independent registered public accounting firm) qualifies as a “routine” matter. Your broker, therefore, may vote your shares in its discretion if you do not provide instructions on how to vote on this “routine” matter.

 

Voting

If you are a record holder of our common stock, you are entitled to one vote at the Annual Meeting for each share that you held as of the Record Date. Cumulative voting for directors is not permitted.  The Inspector of Elections appointed for the Annual Meeting will tabulate all votes.

 

You may vote in person at the Annual Meeting or by proxy.  Even if you plan to attend the Annual Meeting, we encourage you to vote your proxy card in advance of the Annual Meeting.  If you plan to attend the Annual Meeting and wish to vote in person, we will give you a ballot at the meeting.  However, please note that if your shares are held in “street name” (in the name of a broker or by a bank or other nominee), you are considered the beneficial owner of these shares and proxy materials are being forwarded to you by your broker or nominee, which is considered, with respect to these shares, the stockholder of record.  As the beneficial owner, you have the right to direct your broker how to vote; however, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a proxy from your brokerage firm an account statement, letter or other evidence satisfactory to us of your beneficial ownershipthe record holder of the shares.  Please vote your proxy by mailor return voting instructions to your broker as soon as possible so that your shares may be represented at the Annual Meeting.

 

Revoking Your ProxyVoting Standards

If you submit yourWith respect to Proposal 1 (election of directors), being an uncontested election, our bylaws require that the director nominees be elected by a majority of the votes cast at the Annual Meeting (the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee). Abstentions and broker non-votes will not be counted and will have no effect on the outcome of this proposal. With respect to Proposal 2 (ratification of the appointment of the Company’s independent registered public accounting firm) and Proposal 3 (approval of an amendment to the RigNet, Inc. 2019 Omnibus Incentive Plan), our bylaws require the approval of a majority of the votes cast on these proposals. Abstentions and broker non-votes will have no effect on the outcome of this proposal.  With respect to Proposal 4 (the non-binding advisory vote on the compensation of our named executive officers), our bylaws require approval by the affirmative vote of a majority of the shares present in person or represented by proxy by mail, you may still revoke it at any time before voting takes place at the Annual Meeting. If you areAbstentions and broker non-votes will have the record holdereffect of your shares and wish to revoke your proxy, you may revoke it as follows: (i) by delivering, before or at the

 2

Annual Meeting, a new proxy with a later date; (ii) by delivering, on or before the business day prior to the Annual Meeting, a notice of revocation to our Corporate Secretary at the address set forth in the notice of the Annual Meeting; (iii) by attending the Annual Meeting and voting, although your attendance at the Annual Meeting, without actually voting, will not by itself revoke a previously granted proxy; or (iv) if you have instructed a broker to vote your shares, you must follow the directions received from your broker to change those instructions.against this proposal.

 

If you sign and return your proxy card but do not give any voting instructions, your shares will be voted in favor of the election of each of the director nominees listed in Proposal One, in favor of Proposal Two, “One” for Proposal Three and in favor of ProposalProposals Two, Three and Four.  As far asof the date of this proxy statement we know, noare unaware of any other matters willproposal or item of business to be presented at the Annual Meeting.  However, if any other matters of business are properly presented, the proxy holders named on the proxy card are authorized to vote the shares represented by proxies according to their judgment.

 

Revoking Your Proxy

If you submit your proxy by mail or Internet, you may still revoke it at any time before voting takes place at the Annual Meeting.  A stockholder of record may revoke a proxy prior to the completion of voting at the Annual Meeting by giving written notice to our Secretary at 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084, delivering a later-dated proxy in the manner provided on the proxy card (via the Internet or by written proxy card), or voting in person at the Annual Meeting.  Please note, however, that only your last-dated proxy will count—any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this proxy statement. Your attendance at the Annual Meeting, without actually voting, will not by itself revoke a previously granted proxy.  If you have instructed a broker to vote your shares, you must follow the directions received from your broker to change those instructions.   

Soliciting Proxies

RigNet will pay all expenses of soliciting proxies to be voted at the Annual Meeting.  After the proxies are initially distributed, RigNet and its officers, directors and employees (who will not receive any additional compensation for any solicitation of proxies) may also solicit proxies by mail, electronic mail, telephone or in person.  We will ask brokers, custodians, nominees and other record holders to forward copies of the proxy materials to beneficial owners for whom they hold shares.

 

3

Annual Report on Form 10-K and Additional Materials

The Notice of Annual Meeting, this proxy statement, proxy card and our Annual Report on Form 10-K for the year ended December 31, 20162019 have been made available to all stockholders entitled to vote at the Annual Meeting.  These materials may also be viewed at “https:https://materials.proxyvote.com/766582”.766582.

 

Unless the context requires otherwise, the terms “RigNet,” the “Company,” “our,” “we,” “us” and similar terms refer to RigNet, Inc., together with its consolidated subsidiaries.


 3

4

GOVERNANCE

 

GOVERNANCE

 

Our Board currently consists of nine directors, each of whom has a term that expires at the Annual Meeting.  Each of our current Board members has been nominated to stand for re-election at the Annual Meeting. Each director elected at the Annual Meeting to our Board will serve in such capacity until his or her term expires at our next Annual Meeting or his or her successor has been duly elected and qualified, subject to their earlier death, resignation or removal.  All non-employee directors meet the independence requirements under the listing standards of the NASDAQ.NASDAQ Stock Market (“NASDAQ”).  Steven Pickett our CEO who joined our Board on June 2, 2016 is not considered independent by virtue of his role as CEO and President of ourthe Company. There are no family relationships among any of our directors or executive officers.

 

At the Annual Meeting, our stockholders will consider and act upon a proposal to elect nine directors to our Board to serve until the 2018 Annual Meeting of Stockholders. Each of the director nominees has consented to serve as a director of the Company if so elected.  The persons named as proxies in the accompanying proxy card, who have been designated by our Board, intend to voteFOR the election of the director nominees unless otherwise instructed by a stockholder in a proxy card.  Each director nominee has submitted a resignation that is effective if that nominee does not receive a majority of votes cast at the Annual Meeting and if, the Board of Directors accepts the resignation.  The Board of Directors must publicly disclose its decision regarding the tendered resignation within 90 days from the date of the certification of the election results.  If these nominees become unable for any reason to stand for election as a director, the persons named as proxies in the accompanying proxy card will vote for the election of such other person or persons as our Board may recommend and propose to replace such nominee or nominees.

 

DIRECTOR NOMINEES

 

Information concerning the nine director nominees is set forth below.

 

Name Age Position with Our Company Director Since

 

Age

 

Position with Our Company

 

Director Since

Steven E. Pickett 53 Chief Executive Officer and President 2016

 

56

 

Chief Executive Officer and President

 

2016

James H. Browning 67 Chairman, Independent Director 2010

 

70

 

Board Chair, Independent Director

 

2010

Mattia Caprioli 43 Independent Director 2013

 

46

 

Independent Director

 

2013

Charles L. Davis 51 Independent Director 2005
Ditlef de Vibe 62 Independent Director 2011

 

65

 

Independent Director

 

2011

Kevin Mulloy 58 Independent Director 2012

 

61

 

Independent Director

 

2012

Kevin J. O’Hara 56 Independent Director 2010

Kevin J. O'Hara

 

59

 

Independent Director

 

2010

Keith Olsen 60 Independent Director 2010

 

63

 

Independent Director

 

2010

Gail P. Smith

 

60    

 

Independent Director

 

2018

Brent K. Whittington 46 Independent Director 2010

 

49

 

Independent Director

 

2010

Steven E. Pickett

 

(GRAPHIC) 

Steven E. Pickett

DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Industry Knowledge and Experience –

-

Current Chief Executive Officer and President of RigNet

-

Former CEO of 21st Century Towers, WestTowerWesTower Communications and Telmar Network Technology

 

●

Leadership and Global Experience – CEO and president positions for over eighttwelve years



Mr. Pickett has served as the CEO and President since joining ourthe Company onin May 31, 2016 and on our Boardas a director since June 2, 2016. Before joining RigNet, from March 2015 through May 2016, Mr. Pickett was the CEO and President of 21st Century Towers, a new entrant in the wireless infrastructure market.  From December 2013 through February 2015, Mr. Pickett served as the CEO of WesTower Communications, Inc., North America’s second largest tower construction and maintenance company until its acquisition by MasTec.acquisition.  Prior to WesTower, he was the CEO and President of Telmar Network Technology, Inc. from July 2008 until December 2013.  Mr. Pickett’s other prior leadership roles include Senior Vice President/General Manager of Alcatel-Lucent’s Optical Network Division and Vice President of Sales at Alcatel.  Mr. Pickett earned a Bachelor of Science in electrical engineering from Tufts University and a Master of Business Administration degree from The Kellogg Graduate School of Management at Northwestern University.  He also currently serves on the board of QuEST Forum, a global association in the information and communication technologies industry. Mr. Pickett brings a wealth of experience in the communications industry to our Board and Company as well as experience running a growing company.

5


(GRAPHIC)

James H. Browning

 

DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

  ●

Finance Experience–Retired KPMG LLP partner, served as KPMG’s Southwest Area Professional Practice Partner and SEC Reviewing Partner

●

  ●

Leadership and Board Experience –Service on public company boards of Texas Capital Bancshares, Inc. and Herc Holdings, Inc. and previously Endeavor International Corp.



Mr. Browning has served on our Board since December 2010, and he has served as the ChairmanChair of our Board since May 16, 2012 and Co-Chairman of our Board from March 7, 2012 to May 16, 2012.  Mr. Browning previously served as a partner at KPMG LLP, an international accounting firm, from July 1980 until his retirement in September 2009.  During Mr. Browning began hisBrowning’s thirty-eight year career at KPMG LLP in 1971, becoming a partner in 1980. Mr. Browning most recently servedhis leadership roles included serving as KPMG’s Southwest Area Professional Practice Partner, in Houston. Mr. Browning has also served as an SEC Reviewing Partner and as Partner in Charge of KPMG LLP’s New Orleans audit practice.  Mr. Browning received a B.S. degree in Business Administration from Louisiana State University and is a retired Certified Public Accountant.  He currently serves on the boards of Texas Capital Bancshares, Inc., a publicly traded financial holding company and Herc Holdings, Inc., a publicly traded full service equipment rental company.  He previously served on the board of Endeavour International Corporation, a publicly traded international oil and gas exploration and production company.  Mr. Browning brings a wealth of knowledge dealing with financial and accounting matters to our Board as well as extensive knowledge of the role of public company boards of directors.

 

 (GRAPHIC)


Mattia Caprioli

 

DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Global Experience–

-  KKR’s, Co-Head of European Private Equity  

Leads KKR’s Business Services industry team in Europe

-

Mergers, acquisitions and financing experience with Goldman Sachs in London

●

  ●

Leadership and Board Experience – Serves on the Board of PortAventura and SBB Telemach



Mattia Caprioli has served on our Board since October 2013.  Mr. Caprioli is a member of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) responsible for its Business Services industry team in Europe.where he serves as Co-Head of European Private Equity.  Mr. Caprioli has held leadership roles in many KKR investments including Legrand, Toys ‘R’ Us, Alliance Boots, Inaer and Bond (now Avincis) since 2001.  He also currently serves on the Boards of PortAventura and SBB SBB/Telemach Group and previously served on the Board of Legrand.  Prior to joining KKR, Mr. Caprioli was with Goldman Sachs International in London, where he was involved in a broad array of mergers, acquisitions and financings across a variety of industries.  He holds a Master of Science degree from L. Bocconi University, Milan, Italy.  Mr. Caprioli brings a diverse international background with extensive business services expertise to the Board.

 

(GRAPHIC) 

Charles L. Davis

  DIRECTOR QUALIFICATIONS
 ●Industry Knowledge and Experience –Partner in Houston Ventures, an investment firm funding companies that apply technology solutions in the energy industry
 ●Finance Experience– Experience infinance, accounting and investment banking


Charles L. Davis has served as a member of our Board of Directors since June 2005. Mr. Davis has been a partner in Houston Ventures, formerly known as SMH Private Equity Group, a United States-based investment firm that funds companies that apply technology solutions in the energy sector, since December 2004. Mr. Davis received a Bachelor’s degree in Business from Washington and Lee University and is a Certified Public Accountant in the Commonwealth of Virginia. Mr. Davis brings experience in finance, accounting and investment banking to our Board as well as a wealth of experience in the energy industry.


(GRAPHIC) 

Ditlef de Vibe

 

  DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Leadership and Global Experience – Former Managing Partner ofKistefos Venture Capital, a venture capital firm investing in the IT and telecommunications industries

●

Technology Knowledge and Experience –

  -  Former CEO ofGlobal IP Solutions

  -  Various Director roles with IBM



Ditlef de Vibe has served on our Board since May 2011.  From 2001 to 2011, Mr. de Vibe served as managing partner of Kistefos Venture Capital, a venture capital firm that primarily invests in the IT and telecommunications industries.  Since leaving Kistefos Venture Capital, Mr. de Vibe’s principal occupation is as an independent investor and board member for several private Norwegian companies.  From 2007 to 2008, Mr. de Vibe also served as Chief Executive Officer of Global IP Solutions (GIPS) Holdings AB, a company that was publicly traded in Norway until its sale to Google, Inc.  From 1996Prior to 2001,that, Mr. de Vibe served in various capacities with IBM, including IBM’s Director of Network Outsourcing EMEA, from 1999 to 2001, Director of Network Service Sales EMEA, from 1998 to 1999, and Director of Network Outsourcing Services EMEA from 1996 to 1998.EMEA.  He holds a Master of Science degree from the University of Oslo.  Mr. de Vibe brings a wealth of experience in IT and telecommunications along with extensive operational and commercial competencies.

6

(GRAPHIC) 

Kevin Mulloy

 

  DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Leadership and Global Experience –

  -  Partner with a consulting firm that advises on business growth and revenue issues

  -  FormerPresident of Presidio Managed Networks

  -   FormerPresident of & Intelsat Global Service Corporation

●

Technology Experience –Served as Executive Vice President of Corporate Development at an advanced information technology professional and managed service company



Kevin Mulloy has served on our Board since March 2012.  Since February 2017, Mr. Mulloy joinedserves as a consulting partner with Blue Ridge Partners,a consulting firm servingadvising private equity clients and general businesses on growth and revenue issuesin February 2017 as a consulting partner..  Mr. Mulloy haspreviously served as Executive Vice President of Corporate Development at Presidio, Inc., an advanced information technology professional and managed services company, from July 2011 to May 2013.  Prior to that, Mr. Mulloy served as President of Presidio Managed Networks, the managed services business at Presidio, from June 2008 to July 2011, and from September 2007 to June 2008 he served as the Executive Vice President of Operational Strategy for Presidio.  For the five years priorPrior to joining Presidio, Mr. Mulloy held leadership roles with Intelsat S.A., a provider of satellite services worldwide, including President of Intelsat Global Service Corporation from January 2003 to February 2006 and Senior Vice President of Strategy, Business Development and M&A from January 2001 to January 2003.&A.  Mr. Mulloy’s experience also includes ten years with McKinsey & Company, a management consulting firm; three years with Gould Inc., an aerospace and defense company; and more than five years in the United States Navy, serving in the Surface Nuclear Propulsion branch of the Navy.  Mr. Mulloy has a BSME from the US Naval Academy and an MBA from Wharton, University of Pennsylvania.  Mr. Mulloy brings extensive operational satellite, telecommunications and information technology infrastructure experience to the Board.

 

(GRAPHIC) 

Kevin J. O’Hara

 

  DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Industry Knowledge and Technology Experience –

  -  FormerPresident, CEO and& Director of Integra, a communications provider

  -  Co-founder of Level 3 Communications, Inc., a provider of IP-based communications

●

Leadership Experience –

-Executive Chair of a technology engineering and Board Experience –construction services company

  -  Former CEO and Chairman of the Board of Integra

  -  CEO-CEO and president positions for over 20 years



Kevin J. O’Hara has served on our Board since December 2010 and2010.  In 2016, Mr. O’Hara served as our Vice ChairmanChair of the Board, from January 7, 2016 through December 31, 2016.primarily to assist with our CEO transition.  Mr. O’Hara most recentlyjoined Congruex, LLC, a provider of technology engineering and underground construction services, as the Executive Chairman in November 2017.  Prior to that he served as President, Chief Executive Officer and Director of Integra Telecom Holdings, Inc., a communications provider.  He served on itsIntegra’s Board sincebeginning in December 2009, was appointed Chairman of the Board in March 2011 and was named CEO in December 2011.  Mr. O’Hara left Integra in September 2014.  Prior to joining Integra, he was a co-founder and Chairman of the Board of Troppus Software Corporation, an early stage software company providing technical solutions to service providers that support home technology and networks, from March 2009 until a major service provider acquired it in January 2011.  Mr. O’Hara also served on the Board of Directors of Elemental Technologies, Inc., a leading provider of video processing solutions for broadcast and on-line video customers from January 2011 until October 2016, serving as Chairman from August 2011 until October 2016.  Prior to that, Mr. O’Hara was a co-founder of Level 3 Communications, Inc., a provider of IP-based communications services to enterprise, content, government and wholesale customers, and served as itsin various leadership roles including President, from July 2000 to March 2008 and as the Chief Operating Officer of Level 3 Communications, Inc. from March 1998 to March 2008. From August 1997 to July 2000, Mr. O’Hara served asand Executive Vice President of Level 3 Communications, Inc.President.  Prior to that, Mr. O’Hara served as President and Chief Executive Officer of MFS Global Network Services, Inc. from 1995 to 1997, and as, Senior Vice President of MFS, and President of MFS Development, Inc. from October 1992 to August 1995. From 1990 to 1992, he was a, and Vice President of MFS Telecom, Inc.  Mr. O’Hara has a Master of Business Administration from the University of Chicago and a Bachelor of Science in Electrical Engineering from Drexel University.  Mr. O’Hara brings a wealth of experience in the communications industry to our Board as well as experience running a public company.


(GRAPHIC) 7

Keith Olsen

 

  DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Industry Knowledge and Technology Experience –

  -  CEO-CEO and Director of a data center services company

  -  Former-Former CEO, President and Director of aprovider of network-neutral data center

●

Leadership and Global Experience –

  -  International-International business development with international carriers and service providers

  -  Former-Former Public Company CEO



Mr. Olsen has served on our Board since December 2010 when we completed our initial public offering (“IPO”).2010. Since June 2013, Mr. Olsen currently serveshas served as Chairman and Chief Executive Officer of vXchnge Holdings LLC, a private company offering data center services.  Mr. Olsen previously served as Chief Executive Officer, President and Director of Switch and Data Facilities Company, Inc., a NASDAQ listed company, which provided network-neutral data centers that house, power and interconnect the Internet, from February 2004 to May 2010, when Switch and Data Facilities Company, Inc. was acquired by Equinix, Inc.  Prior to that, Mr. Olsen served as a Vice President of AT&T, where he was responsible for indirect sales and global sales channel management from May 1993 to February 2004. From 1986 to 1993, Mr. Olsen servedand as Vice President of Graphnet, Inc., a provider of integrated data messaging technology and services.  Mr. Olsen has a Bachelor’sBachelor degree from the State University of New York, Geneseo.  Mr. Olsen brings experience in running a public company to our Board as well as a wealth of experience in the communications industry.

 

Gail P. Smith

DIRECTOR QUALIFICATIONS

●

Industry and Technology Experience –

-Founder and Director of a mobility and cloud research and consulting firm

-Expertise in cyber security and the General Data Protection Regulation

●

Leadership and Global Experience –

-Former Corporate Group Vice President of a communications company

-Managed multinational operations in telecommunications and internet services

(GRAPHIC) 

Gail P. Smith joined our Board on January 17, 2018. Ms. Smith founded the Cavell Group, a convergence, mobility and cloud research and consulting firm, in 2002 and continues to serve as a director. Prior to that, Ms. Smith served as Corporate Group Vice President and President, Europe of Level 3 Communications, Inc. and held product marketing and strategy roles at MFS International. Ms. Smith has worked and managed operations in both the U.S. and Europe.  Ms. Smith is  a director of Zenitel BV, a telecommunications equipment company traded on the Euronext Stock Exchange.  She holds a Master degree in International Business from Tufts University and a Bachelor degree in Economics and Political Science from Claremont McKenna College. Ms. Smith brings extensive technical, operational and strategic leadership experience to the Board.

Brent K. Whittington

  DIRECTOR QUALIFICATIONS

DIRECTOR QUALIFICATIONS

●

Finance Experience –—

-   FormerCFO of Windstream Corporation and its predecessor, Alltel Holding CorpCorp.

-   Arthur Andersen LLP experience for over eight years

●

Leadership and Industry Experience – Former COO of acommunications company providing phone, high-speed Internet and high-definition digital TV services



Mr. Whittington has served on our Board since December 2010 when we completed our IPO.2010.  Mr. Whittington haspreviously served as the Chief Operating Officer of Windstream Corporation, a publicly traded communications company providing phone, high-speed Internet and high-definition digital TV services, from August 2009 to September 2014.  Prior to that, Mr. Whittington served as the Executive Vice

8

President and Chief Financial Officer of Windstream Corporation from July 2006 to August 2009. From December 2005 to July 2006, Mr. Whittington servedWhittington’s prior experience also includes serving as Executive Vice President and Chief Financial Officer of Windstream Corporation’s predecessor, Alltel Holding Corp. From 2002 to August 2005, Mr. Whittington served as, Vice


President of Finance and Accounting of Alltel Corporation, parent company of Alltel Holding Corp and from August 2005 to December 2005, Mr. Whittington also served as the Senior Vice President-Operations Support of Alltel Corporation.  Prior to joining Alltel, Mr. Whittington was with Arthur Andersen LLP for over eight years.  Mr. Whittington has a degree in accounting from the University of Arkansas at Little Rock. Mr. Whittington brings experience in finance and accounting to our Board as well as a wealth of experience in the communications industry.

 

CORPORATE GOVERNANCE

 

The Board and the Company annually review RigNet’s governance documents, which are available on our website.  These governance materials include, but are not limited to, our Code of Ethics and Business Conduct, Policy Governing Director Qualifications and Nominations, Policy Governing Related Person Transactions and Board committee charters.  The Board regularly reviews corporate governance developments and, when appropriate, modifies its governance policies, committee charters and key practices.

 

Code of Ethics

and Business Conduct

We have a Code of Ethics and Business Conduct applicable to our principal executive, financial and accounting officers and all persons performing similar functions.  A copy of that code is available on our corporate website at the following link

“http:https://investor.rig.net/corporate-governance.cfm”www.rig.net/wp-content/uploads/2020/01/Code-of-Conduct.pdf.

 

Composition of the Board of Directors

Our Board currently consists of nine members, eight of whom are non-employee members.  Mr. Pickett, who serves as theour CEO and President, also serves as a director.director of the Company.  Each director holds office until the election and qualification of his or her successor, or his or her earlier death, resignation or removal.  Our by-lawsbylaws permit our Board to establish by resolution the authorized number of directors.

 

With respect to the Annual Meeting, we have nine nominees and nine available board seats. Currently,As this election will involve an uncontested election of directors, in order to be elected to the board at the Annual Meeting, each nominee must receive a boardmajority of the votes cast. Any current director who does not receive a majority of “For” votes at the Annual Meeting must tender his or her resignation to the Board in accordance with the Board’s majority vote resignation policy, which is described in our bylaws.  A Board member may be removed outside of the normal election process by the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of our directors. The nine nominees receiving the most votes cast at the Annual Meeting will be elected to our Board.

 

BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

 

Currently, we separate the role of ChairmanChair and Chief Executive Officer. In addition, each Board committee is presently comprised solely of independent directors. The Chief Executive Officer is responsible for setting the strategic direction for the Company, with the advice of the Board, and the day-to-day leadership and performance of the Company, while the ChairmanCompany.  The Chair of the Board operates as lead independent director and provides guidance to the Chief Executive Officer, approves the agenda for Board meetings, and presides over meetings of the full Board.  The independent members of the Board also regularly meet in executive session without management present.  The Board believes this separation allows our CEO to focus on running the Company and our Chair to focus on running the Board, which is appropriate at this time because of the brief tenure of most of our public status.senior management.  Our Board does not have a policy on whether or not the roles of ChairmanChair of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the ChairmanChair of the Board should be selected from the non-employee directors or be an employee or former employee.  The Board believes that it should be free to make a choice from time to time in any manner that it believes is in the best interests of our Company and our stockholders at that time.

From January 7, 2016 through December 31, 2016, we also had an independent director serving as the Vice Chairman of the Board to lead our efforts in the search and selection of a new, permanent Chief Executive Officer and President and actively collaborate with the former interim CEO and executive team to support our next phase of development both in merger and acquisition activities and other initiatives to expand our products and solutions.  The Board actively oversees management, particularly through regular conferences between the Chief Executive Officer and the Chairman.Chair.  The Board reviews the ChairmanChair of the Board position annually after the Annual Meeting of Stockholders.

 

Risk Oversight

Risk is an inherent part of RigNet’s business activities and successful management of that risk is critical to the Company’s growth and success.  The Board seeks to assess major risks facing ourthe Company and options for their mitigation in order to promote our stockholders’ and other stakeholders’ long-term interests.  We reward our executives for taking responsible risks in line with the Company’s strategic objectives and overall risk appetite.  Depending on the nature of the risk involved and the particular business function involved, we use a wide variety of risk mitigation strategies, including delegation of authorities, standardized processes, strategic planning, operating reviews and insurance.

 

9

 8

The Board has oversight for risk management and actively reviews risk management practices through continuous dialoguesdialogue and receipt of management reports.  The Board and its committees collectively oversee risk by actively reviewing material management decisions throughout the year in the areas that risk responsibility has been delegated.

The Board has delegated responsibility for the oversight of specific risks to the Board committees as follows:

 

Corporate
Governance and
Nominating

●

Confirms the existence and capability of risk management systems and controls specific to operational, technological, compliance, reputational and political risks

●

Reviews assessments and implementation of risk-based controls for our business activities

●

Oversees risk related to the Company’sCompany's governance structure and processes including risks arising from related person transactions

●

Monitors cybersecurity programs as well as environment, social and governance (ESG) risks

Audit

●

Audit

●

Oversees policies and processes related to the financial statements, financial reporting process, compliance and auditing

●

Monitors ongoing compliance issues and matters and meets with our independent accounting firm

●

Reviews risk management practices and performance related to credit, liquidity and compliance risks

Compensation

●

Oversees the risk management associated with management resources, structure and succession planning and supports the selection process

●

Evaluates the effect theand monitors our compensation structure may have on risk decisionspolicies and programs

Corporate
Development

Non-Standing

Committees

●

Provides guidance related to corporate development opportunitiesspecific focus areas or risks

●

Reviews risk mitigation strategies in connection with merger and acquisition initiatives

The “Corporate Responsibility link on our main website contains important information about our risk management framework and our Environmental, Social and Governance (ESG) initiatives including relevant information on policies, safety performance, and employee statistics, as well as our commitment to following good corporate governance practices.  The information found on our website is not “soliciting material” and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent of the Board’s oversight function has the effect of solidifying the Board’s leadership structureCompany specifically incorporates such content by providing knowledgereference, and input into material risk decisions.shall not otherwise be deemed filed under such Acts..

 

DIRECTOR INDEPENDENCE

Our Board has reviewed the independence of each director nominee and considered whether any directornominee had or has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities.  As a result of this review, our Board has determined that Ms. Smith and Messrs. Browning, Caprioli, Davis, de Vibe, Mulloy, O’Hara, Olsen, and Whittington qualify as “independent” in accordance with the published listing standards of the NASDAQ.  Mr. Pickett is not considered independent by virtue of his role as CEO and President of ourthe Company.

 

In addition, the members of the Audit Committee of our Board each qualify as “independent” under standards established by the SEC and NASDAQ for members of audit committees, and the Audit Committee includes at least one member who is determined by our Board to meet the qualifications of an “audit committee financial expert” in accordance with SEC rules.  Messrs. Browning and Whittington are independent directors who have been determined to be audit committee financial experts.  Stockholders should understand that this designation is a disclosure requirement of the SEC related to Messrs. Browning and Whittington’s experience and understanding with respect to certain accounting and auditing matters.  The designation does not impose on them any duties, obligations or liability that are greater than arethose generally imposed on them as members of the Audit Committee and Board, and their designation as audit committee financial experts pursuant to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or Board.

 

In addition, the members of the Compensation Committee of our Board each qualify as “independent” under standards established by the SEC and NASDAQ for members of compensation committees.

 

POLICY GOVERNING DIRECTOR QUALIFICATIONS AND NOMINATIONS

OurThe Company seeks directors who possess, at a minimum, the qualifications and skills described below and as set forth in our Policy Governing Director Qualifications and Nominations. Nominations found on our website at http://investor.rig.net/policy-governing-director-qualifications-and-nomination.

10

Our Company considers diversity in its nomination of directors, and in its assessment of the effectiveness of the Board and its committees.  In considering diversity, we evaluate each director candidate in the context of the overall composition and needs of our Board, with the objective of recommending a group that can best manage the business and affairs of the Company and represent stockholder interests using itstheir combined diversity of experience.  Our Corporate Governance and Nominating Committee will consider these and other qualifications, skills and attributes when recommending candidates to our Board.

 

 9

At a minimum, our Corporate Governance and Nominating Committee must be satisfied that each Committee-recommended nomineeperson that it nominates meets the following minimum qualifications:

 

●The candidate shall exhibit high standards of integrity, commitment and independence of thought and judgment.

The candidate shall exhibit high standards of integrity, commitment and independence of thought and judgment.

●The candidate shall be committed to representing the long-term interests of our Company’s stockholders.

The candidate shall be committed to representing the long-term interests of the Company’s stockholders.

●The candidate shall have sufficient time and availability to devote to the affairs of our Company, particularly in light of the number of boards on which the nominee may serve.

The candidate shall have sufficient time and availability to devote to the affairs of the Company, particularly in light of the number of boards on which the nominee may serve.

●To the extent the candidate serves or has previously served on other boards, the candidate shall have a demonstrated history of contributing at board meetings.

To the extent the candidate serves or has previously served on other boards, the candidate shall have a demonstrated history of contributing at board meetings.

●The candidate shall meet any other minimum qualifications and other criteria for Board membership approved by our Board from time to time.

The candidate shall meet any other minimum qualifications and other criteria for Board membership approved by our Board from time to time.

 

In addition to the minimum qualifications for each candidate set forth above, our Corporate Governance and Nominating Committee shall recommendrecommends that our Board select persons for nomination to help ensure that:

 

●A majority of the Board is “independent” in accordance with the standards, if any, promulgated by the SEC, any exchange upon which securities of our Company are traded and any governmental or regulatory body exercising authority over our Company.

A majority of the Board is “independent” in accordance with the standards, if any, promulgated by the SEC, any exchange upon which securities of the Company are traded and any governmental or regulatory body exercising authority over the Company.

●Each of our Audit, Compensation and Corporate Governance and Nominating Committees are comprised entirely of independent directors.

Each of our Audit, Compensation and Corporate Governance and Nominating Committees are composed entirely of independent directors.

●At least one member of our Audit Committee shall have such experience, education and other qualifications necessary to qualify as an “audit committee financial expert” as defined by the rules of the SEC.

At least one member of our Audit Committee shall have such experience, education and other qualifications necessary to qualify as an “audit committee financial expert” as defined by the rules of the SEC.

 

In addition, forFor the overall structure and composition of our Board, the Corporate Governance and Nominating Committee seeks directors with the following types of experienceexperience:

 

Leadership experience.We believe that directors who have held significant leadership positions, especially CEO positions, over an extended period, provide the Company with unique insights.  These peopleindividuals generally possess extraordinary leadership qualities and the ability to identify and develop those qualities in others.  They demonstrate a practical understanding of organizations, processes, strategy and risk management, and know how to drive change and growth.

 

Global experience.  RigNet’s continued success depends, in part, on its success in continuing to grow its businesses outside the United States.  For example, in 2019, approximately 56.3% of RigNet’s revenues came from outside the United States.

Technology experience.As a technology-based communication company, we seek directors with backgrounds in technology and a deep understanding of technology risks because our success depends on the reliability of our technology, investments in new technologies and access to new ideas.

 

Global experience.RigNet’s continued success depends, in part, on its success in continuing to grow its businesses outside the United States. For example, in 2016, approximately 70% of RigNet’s revenues came from outside the United States.

Finance experience.We believe that an understanding of finance and financial reporting processes is important for our directors as RigNet measures its operating and strategic performance by reference to financial goals.  In addition, accurate financial reporting and robust auditing are critical to RigNet’s success.  We seek to have directors who qualify as audit committee financial experts, and we expect all of our directors to be financially knowledgeable.  As part of this qualification, we also seek directors who have relevant risk management experience.

 

Industry experience.We seek to have directors with experience as executives, or directors or in other leadership positions in the industries in which we participate.participate and target for growth.  For example, we seek directors with experience in the communications and oil and gas industries, since many of our customers operate in the oil and gas industry.technology industries.

 

Marketing experience.Board Tenure.  RigNet seeks to grow organically by identifyinghave directors with a variety of tenure on the Board, providing an influx of new ideas while ensuring stable and developing new markets for its products as well as by acquisition. Therefore, marketing expertise, especially oncontinuous oversight.  Our director tenure currently ranges from 2 to 10 years with an international basis, is important to us.average of 7.8 years.  



11

COMMUNICATIONS TO OUR BOARD OF DIRECTORS

Our Board has a process in place for communications with stockholders.  Stockholders should initiate any communications with our Board in writing and send them to our Board, c/o William Sutton, SeniorShelly Buchman, Vice President andGlobal Human Resources, Associate General Counsel and Corporate Secretary, RigNet, Inc., 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084-4947.  All such communications will be forwarded to the appropriate directors.  This centralized process will assist our Board in reviewing and responding to stockholder communications in an appropriate manner.  If a stockholder wishes for a particular director or directors to receive any such

 10

communications, the stockholder must specify the name or names of any specific Board recipient or recipients in the communications.  Communications to our Board must include the number of shares owned by the stockholder as well as the stockholder’sstockholder's name, address, telephone number and e-mail address, if any.

 

MEETINGS OF OUR BOARD OF DIRECTORS AND ATTENDANCE AT ANNUAL MEETINGS

During 2016,2019, our Board held tennine meetings.  The standing Committees of our Board held an aggregate of 17 meetings during this period.  Each director attended at least 75% of the aggregate number of meetings of the Board and Committees on which they served.  Each member of our Board is expected to attend our annual meetings of stockholders.stockholders, either in person or via teleconference.  Each person who was a director at the time of our 20162019 Annual Meeting of Stockholders attended such meeting.

 

COMMITTEES OF OUR BOARD OF DIRECTORS

Our Board currently has standing Audit, Compensation and Corporate Governance and Nominating and Corporate Development Committees.  Each member of the Audit, Compensation and Corporate Governance and Nominating and Corporate Development Committees is an independent director in accordance with the NASDAQ listing standards described above and applicable SEC regulations.  Our Board has adopted a written charter for each of these Committees,committees, each of which sets forth each Committee’sthe applicable committee's purposes, responsibilities and authority.  These committee charters are available on our website at “http:https://investor.rig.net/corporate-governance.cfm”.governance through links to each respective committee.

 

Audit Committee

Audit Committee

●

Select and oversee the independent accounting firm

Number of Meetings in 2016:2019:

●

Oversee the quality and integrity of our financial reporting

4

5

●

Review the organization and scope of our internal audit function and our
disclosure and internal controls

Committee Members:

●

Oversee the Company’s legal

Review and regulatory complianceapprove any proposed related-person transactions

 

Whittington (C, F, I)

Browning (F, I)

DavisMulloy (I)

MulloySmith (I)

●

Approve audit and non-audit services provided by our independent auditors

●

Oversee investigations of any allegations of policy or compliance violations

●

Monitor financial reporting activities and the accounting standards and

principles followed

   C

C

Chair of the Committee

   F

F

Audit Committee Financial Expert as defined under SEC rules

   I

I

Satisfies standards established by the SEC and NASDAQ to be designated as an independent director

PDid not serve on the committee while serving as the Board Vice Chair from January 7, 2016 through December 31, 2016
TCommittee Chair from January 7, 2016 through December 31, 2016, while Mr. O’Hara served as Vice Chair of the Board

 

The report of our Audit Committee appears under the heading “Report of the Audit Committee” below.

 

Compensation Committee

Compensation Committee

 

Compensation Committee

●

Review and recommend for Board approval the compensation of the CEO

Number of Meetings in 2016:2019:

●

Review and recommend for Board approval the compensation of the Board

6

8

●

Make recommendations to the Board with respect to our non-CEO
executive officers,
other than the CEO

Committee Members:

●

Administer and implement Board approved compensation plans, policies, and programs, including short and long-term incentive plans

Olsen

O’Hara (C, I)
Browning (F, I)

de Vibe (I)

O’Hara (P, I)Whittington (I)

●

Review succession planning for our executive officers

 

12

All Compensation Committee members are also “non-employee directors” as defined by Rule 16b-3 under the Securities Exchange Act of 1934, as amended (“Exchange Act”).  The report of our Compensation Committee appears under the heading “Compensation Committee Report” below.

 

 11

Procedures and Processes for Determining Compensation –- Please refer to “Compensation Discussion and Analysis, The Compensation Committee,” below for a discussion of the Compensation Committee’sCommittee's procedures and processes for making compensation determinations.

 

Compensation Committee Interlocks and Insider Participation –- No member of the Compensation Committee has any relationship with our Company requiring disclosure in any of the reports that we file with the SEC, other than service on our Board.  None of our named executive officers serves as a member of the Board or compensation committee of any entity that has one or more of its executive officers serving as a member of our Board or Compensation Committee.

 

Corporate Governance and Nominating Committee

Corporate Governance and Nominating Committee

●

Identify and recommend nominees for the Board

Number of Meetings in 2016:2019:

●

Monitor and develop our corporate governance practices, guidelines, code of ethics and business conduct and compliance mechanisms

4

Committee Members:

Olsen (C, I)
Mulloy (I)

Smith (I)

●

Review risk performance and enterprise risk exposure across operational, technological, compliance, reputational and political areas

Committee Members:
●Oversees the Company’s legal and regulatory compliance

O’Hara (C, I, P)

Browning (T, F, I)
Caprioli (I)
Olsen (I)

●

Monitor the existence and capability of risk management systems and control

in all critical business activities and enterprise risk categories

 

The Committee will evaluateevaluates each director nominee based upon a consideration of a nominee’sthe nominee's qualification as independent as well as their diversity, skills and experience in the context of the needs of the Board as described in our Corporate Governance Guidelines.  The Corporate Governance and Nominating Committee may rely on various sources to identify director nominees.  These include input from directors, management, professional search firms and other sources that the Committee feels are reliable.

 

Stockholders may recommend director candidates for consideration by the Corporate Governance and Nominating Committee, which will consider such suggestions made by stockholders in the same manner as other candidates.  Any such suggestions should be submitted to the ChairmanChair of the Corporate Governance and Nominating Committee, c/o William Sutton, SeniorShelly Buchman, Vice President andGlobal Human Resources, Associate General Counsel and Corporate Secretary, RigNet, Inc. 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084-4947.  The written request must include the candidate’scandidate's name, contact information, biographical information and qualifications.  The request must also include the potential candidate’scandidate's written consent to being named as a nominee and to serving as a director if nominated and elected.  The Committee may request additional information from time to time from the nominee or the stockholder or group of stockholders.nominating stockholder(s).  Stockholder nominations that seek to bypass the consideration of the Corporate Governance and Nominating Committee must follow the procedures set forth in our bylaws, which are summarized below inunder the Section entitledheading “Stockholder Proposals and Nominations for the 20182021 Annual Meeting.”

 

The Corporate DevelopmentGovernance and Nominating Committee also focuses on our overall corporate responsibility and related environmental, social and corporate governance.  RigNet is committed to sustainability and with our highly-reliable network and machine learning solutions, we will lead digital transformation that enables a more sustainable energy industry responding to high priority issues faster, with more efficiency and with more information.  Our commitment is reinforced through established policies driving corporate governance, diversity, inclusion and safety and extends to the communities in which we live and the employees that are our greatest asset.

 

Corporate Development Committee
●Provide oversight and guidance for the evaluation of corporate  development opportunitiesNumber of Meetings in 2016:
3
●

Provide oversight and guidance over the strategies and processes regarding merger and acquisition initiatives

Committee Members:

Mulloy (C, I)

Caprioli (I)

Davis (I)

de Vibe (I)

Whittington (F, I)


During 2019, the Board dissolved the Corporate Development Committee. Prior to its dissolution, the committee held one meeting.  In addition to the standing committees above, our Board establishes temporary committees as needed to oversee certain matters.  

 

 12

13

REPORT OF THE AUDITAUDIT COMMITTEE

The Audit Committee oversees the financial reporting process of the Company on behalf of itsthe Board.  Management has the primary responsibility for the preparation of the financial statements and the reporting process, including the systems of internal control.

 

With respect to the financial statements for the year ended December 31, 2016,2019, the Audit Committee reviewed and discussed the financial statements of RigNet, Inc. and the quality of financial reporting with management, the internal auditor and the independent auditor.  The Audit Committee has discussed with the independent auditor the matters required to be discussed by Auditing Standard No. 1301 (Communications with Audit Committees). The Audit Committee received the written disclosure and the letter from the independent auditor required under applicable rules of the Public Company Accounting Oversight Board.Board regarding the independent auditor’s communications with the Audit Committee concerning independence.  Additionally, the Audit Committee has discussed with the independent auditor their independence with respect to the Company.  The Audit Committee determined that the non-audit services provided to RigNet by the independent auditor (discussed below under “Proposal Two: Ratification of Independent Public Accountants”) are compatible with maintaining the independence of the independent auditor.

 

Based on the reviews and discussions described above, the Audit Committee recommended to our Board that the audited financial statements of RigNet, Inc. be included in the Annual Report on Form 10-K for the year ended December 31, 20162019 for filing with the SEC.

 

Submitted By:



 


Audit Committee


 


 

 

Brent K. Whittington, ChairmanChair

James H. Browning

Charles L. Davis

Kevin Mulloy

Gail P. Smith

This Report of the Audit Committee is not “soliciting material” and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.


14

 13

DIRECTOR COMPENSATIONCOMPENSATION

 

 

The following summarizes the compensation of each non-employee member of our Board for the fiscal year ended December 31, 2016. Since June 2, 2016, our CEO2019.  Because Mr. Pickett is also a board member. Our former CEO served as a board member until his resignation on January 31, 2016. Since our CEOs were employeesan employee of the Company, they didhe does not receive additional compensation specifically related to his service on our Board.Board of Directors.  In addition, Mr. Caprioli does not receive any compensation from us for his role as a member of our Board due to his affiliation with KKR, a holder of over 25% of our outstanding shares of common stock.

 

Our Board has implemented a compensation policy applicable to our non-employee directors based on the anticipated service commitment and analysis of our peer companies based onusing data obtained from our compensation consultant, which provides thoseconsultant.  We provide our non-employee directors the following compensation for Board and committee services:

 

●a cash retainer paid quarterly for non-chairman board membership and service;
●cash retainer for non-executive board chairman;
●annual equity awards of restricted non-voting units in an amount to be approved by the Board, which are issuable at one share per unit upon vesting, or at the option of our Company, an equivalent payment in cash;
●a cash fee for each Board meeting where overseas travel is required for attendance; and
●a cash retainer for committee membership or committee chairmanship based on the relative service commitment for each committee.

a cash retainer paid quarterly for board membership and service;

an additional cash retainer for our non-executive board chair;

an annual award of RSUs, in an amount to be approved by the Board, subject to a one year vesting requirement and settled in cash or shares of common stock upon vesting at the option of the Company;

a cash fee for each Board meeting where overseas travel is required for attendance; and

an additional cash retainer for committee membership or committee chair service based on the relative commitment for each committee.

 

Director compensation is paid at the end of each quarter on a pro rata basis for any partial service periods.  Director compensation during 2019 included quarterly cash retainers for: independent directors at $12,500; board chair additional retainer at $14,750; meeting fees requiring overseas travel at $3,000; non-chair committee members ranging from $1,250 to $1,500 based on the service commitment required by each standing committee; the Audit Committee chair at $5,750, the Compensation Committee chair at $4,000, and the Corporate Governance and Nominating Committee chair at $3,750.

 

TheAnnually, the Board determines the form and amount of director compensation after its review of recommendations made by the Compensation Committee. In January 2016, the Board elected Mr. O’Hara to serve as Vice Chairman of our Board to lead the search and selection of a new, permanent Chief Executive Officer and President. He was also tasked with taking an active role in the Board’s oversight of management’s 2016 and mid-term business plan during the transition. This role included leading Board oversight of the former interim CEO and executive team’s implementation of strategy for the next phase of development both in merger and acquisition activities and other initiatives to expand our products and solutions. Due to the significant service demand, the Board approved an increase in Mr. O’Hara’s quarterly cash board retainer to $62,500 for his service as Vice Chairman of the Board, until September 30, 2016 upon the successful CEO leadership transition to Mr. Pickett.

In June 2016, the Board approved non-executive director compensation changes effective July 1, 2016 including: the elimination of board and committee meeting fees not requiring overseas travel; an increase to the quarterly cash retainer for independent directors from $9,000 to $12,500; the reduction in meeting fees requiring overseas travel from $4,500 to $3,000; the establishment of committee member quarterly cash retainers ranging from $1,000 to $1,500 per quarter based on the service commitment required by each committee; an increase in the quarterly cash retainers for the Audit Committee chairman from $3,750 to $5,750, the Compensation Committee chairman from $2,500 to $4,000 and the Corporate Governance and Nomination Committee chairman from $2,500 to $3,750. The Corporate Development Committee chairman quarterly cash retainer remained unchanged at $2,500. The Compensation Committee recommended the changes in board compensation after reviewingreviews peer company market data supplied by the Compensation Committee’sits independent consultant, data obtained through the National Association of Corporate Directors and by considering the relative service demands of each service role.role on an annual basis and, in 2019, recommended no changes in board compensation.

 

The following table summarizes the compensation of each non-employee member of our Board in 2016:2019:

 

Name (1) Earned or Paid
in Cash (2)		 Stock
Awards (3)		 Total
James H. Browning $ 133,000  $ 100,000  $ 233,000 
Mattia Caprioli (4) —  —  — 
Charles L. Davis 60,000  100,000  160,000 
Ditlef de Vibe 72,500  100,000  172,500 
Kevin Mulloy 68,000  100,000  168,000 
Kevin J. O’Hara 209,000  249,995  458,995 
Keith Olsen 73,500  100,000  173,500 
Brent K. Whittington 76,000  100,000  176,000 


Name (1)

Earned or Paid

in Cash (2)

 

Stock
Awards (3)

 

Total

James H. Browning

$ 117,117

 

        $ 120,737

 

         $ 237,854

Mattia Caprioli (4)

-

 

             -

 

              -

Ditlef de Vibe

60,411

 

120,737

 

181,148

Kevin Mulloy

62,764

 

120,737

 

183,501

Kevin J. O’Hara

67,764

 

120,737

 

188,501

Keith Olsen

67,117

 

120,737

 

187,854

Gail P. Smith

73,000

 

120,737

 

193,737

Brent K. Whittington

78,294

 

120,737

 

199,031

 

 

 

 

 

 

(1)

(1)Each

The non-employee directordirectors listed above served as a directordirectors for all of 2016. 2019.  Our current and former CEOs areCEO is excluded from this table, as theyhe received no compensation specifically related to theirhis service on our Board and their respectiveBoard.  His compensation as an employee is reflected in the Summary Compensation Table.

(2)

(2)

Amounts reflect quarterly retainers and fees for Board and committee service earned by the directors during 2016.

2019.

(3)

(3)

Reflects the aggregate grant date fair value for restricted units granted to each independent director in 20162019 computed in accordance with FASB ASC Topic 718. Each independent director received an equity award in 2016 and the grant date fair value is reflected in the table above. Information about the assumptions used to value these awards can be found in Note 10 to the consolidated financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2019.  As of December 31, 2016,2019, each listed independent director, except Mr. Caprioli had 7,65712,396 restricted unit awards outstanding. Mr. Caprioli had no outstanding except for Mr. O’Hara who had 19,142 unit awards outstanding.

awards.

(4)

(4)

Mr. Caprioli received no compensation from RigNet for his Board service bypursuant to an agreement between the Company and KKR, our stockholder for whichstockholder. Mr. Caprioli has been a member of KKR since 2001.

The table above reflects all compensation received by our independent directors during 2016.2019.  The Company does not provide a pension plan for non-employee directors.


15

EXECUTIVE COMPENSATIONCOMPENSATION

 

OUR EXECUTIVE OFFICERS

 

The following table provides information regarding our current executive officers.

 

Name

Age

Position with Our Company

Steven Pickett

53

56

Chief Executive Officer and President

Charles Schneider

Lee Ahlstrom

52

Senior Vice President and Chief Financial Officer

William Sutton

Errol Olivier

62

57

Senior Vice President and Chief Operating Officer

Brad Eastman

52

Senior Vice President and General Counsel

Jay Hilbert

Brendan Sullivan

57

46

Chief Technology/Information Officer

James Barnett, Jr.

66

Senior Vice President Salesof Government Services

Edward Traupman

Egbert Clarke

66

59

Senior Vice President, Systems Integration & AutomationGlobal Operations

Edward Traupman

69

Senior Vice President and General Manager, Products and Services

Steven Picketthas served as our Chief Executive Officer and President since May 31, 2016. See his biographical summary presented earlier in this proxy statement under the heading “Our Board of Directors and Nominees“Governance – Director Nominees.”

 

Charles SchneiderMr. Lee Ahlstrom has served as our Senior Vice President and Chief Financial Officer since December 8, 2015.August 20, 2018. Prior to that,joining the Company, Mr. SchneiderAhlstrom served in various financial leadership roles at KBR, Inc. includingas the Senior Vice President and Chief Financial Officer for the Engineeringof Paragon Offshore, Ltd, a spin-off from Noble Corporation, from November 2016 to March 2018, and Construction, Americas division from January 2015 to December 2015;as Senior Vice President Financeof Investor Relations and TreasurerPlanning from February 2010August 2014 to December 2014;October 2016. Mr. Ahlstrom served as Noble Drilling’s Senior Vice President Corporateof Strategic Development from December 2008May 2011 to February 2010;July 2014 and interimas the Vice President Investor Relations and Planning from May 2006 to July 2014. Mr. Ahlstrom received a Master and Bachelor degree from the University of Delaware. Mr. Ahlstrom served on the Board of the National Investors Relations Institute (NIRI) from 2014 until 2019 and holds the NIRI investor relations charter credential.

Errol Olivier has served as our Senior Vice President and Chief FinancialOperating Officer since January, 2020.  Prior to that, Mr. Olivier was self-employed as a consultant providing strategic advisory services since July 2015.  He served as President and Chief Executive Officer of MTN Satellite Communications, the leading global provider of communications, connectivity and content services to cruise line, maritime, super yacht and government services industries around the world from May 2011 until July 2015; and President, Chief Executive Officer, and Chairman of Broadpoint from March 2008 tountil June 2008. In addition, his professional career includes experience2010.  Over a seventeen year tenure Mr. Olivier served in commercial banking, project finance, corporate financea number of roles at CapRock Communications, with the last five years as the President and M&A.Chief Operating Officer.  He also served as Chairman of VISTA ViaSat Users Group and member of the board of trustees of IWL Communications.  Mr. SchneiderOlivier received a B.B.A.an associate equivalent  degree in finance and a MBAindustrial electronics from University of Texas at Austin, McCombs School of Business.the Louisiana Technical College (formerly known as T.H. Harris).

 

William SuttonBrad Eastman has served as our Senior Vice President and General Counsel since February 2014.October 30, 2017.  Prior to that, Mr. SuttonEastman served as ourGeneral Counsel of the Cameron Group of Schlumberger Limited following Schlumberger's acquisition of Cameron International in April 2016 until October 2017. Prior to the acquisition, Mr. Eastman served in various positions in the Cameron legal department, most recently as Vice President and Deputy General Counsel of Cameron International from June 2011 until April 2016.  Mr. Eastman also held leadership positions of Vice President, General Counsel and Corporate Secretary from May 2009 through January 2014of Input/Output, Inc. and Vice President, Secretary and General Counsel from March 2008 through May 2009.of Quanta Services. Mr. Sutton served as Chairman for Sweeten & Sutton Brokerage, Inc. from March 2007 to February 2008 and President and Chief Executive Officer for Abbey SA, LP from April 2004 to October 2006. He has attended Stanford Law School’s Directors’ College. Mr. SuttonEastman received a Bachelor of Business Administration degree from the University of Texas at Austin and a Juris Doctorate from the University of Houston. Harvard University.

 

Jay HilbertBrendan Sullivan has served as our Chief Technology/Information Officer since May 30, 2017.  Prior to that, Mr. Sullivan served as the Executive Vice President of Global Technology and Operations for Vubiquity from September 2013 until October 2016, the Senior Vice President of IT, Engineering and Network for Digital Generation, Inc. from May 2009 until September 2013, and the Senior Director of Content Markets Application Development for Level 3 Communications from 2000 until 2009.  Mr. Sullivan also worked at Andersen Consulting. He received a Bachelor degree from Brown University.

James Barnett, Jr. has served as our Senior Vice President, SalesGovernment Services since Novemberjoining RigNet on January 7, 2016.2019. Prior to joining the Company, Mr. Barnett served as the Chairman of the telecommunications group and Partner in the cybersecurity practice of Venable LLP from February 2013 to January 2019. Prior to that, Mr. Hilbert served asBarnett was the Senior Vice President for National Security Policy at the Potomac Institute for Policy Studies from May 2012 until February 2013. From July 2009 until April 2012, Mr. Barnett served as Chief of Business Developmentthe Public Safety and Sales - Airvana Business Unit for CommScope Holding Company, Inc.,Homeland Security Bureau of the Federal Communications Commission (the “FCC”).  Mr. Barnett served as a global providersurface warfare officer in the United States Navy, most recently as Deputy

16

Commander of wireless solutionsthe Naval Expeditionary Combat Command and retired as a Rear Admiral. Mr. Barnett holds a Bachelor degree and a Juris Doctorate from January 2015 until November 2016;the University of Mississippi.

Egbert Clarke has served as our Senior Vice President, Global Operations since October 2019 and our Vice President of Global SalesSupply Chain from September 2017 through October 2019.  Prior to joining RigNet, Mr. Clarke served as the leader of Global Business Development for Cambium NetworksCTDI from January 2012 through December 2014;August 2013 until August 2017; and Seniorthe Vice President of Sales and MarketingInternational Business for Telmar Network Technology from 2007 through 2011.April 2010 until June 2013.  Mr. Hilbert also served in sales leadership positions for Spirent Communications and Somera Communications. Mr. HilbertClarke received a BachelorMaster’s of Science degree in Engineering ManagementBusiness Administration from the University of North Dakota.Carolina and a Bachelor degree from Cornwall College.

 

Edward Traupmanhas served as our Senior Vice President and General Manager, Products and Services since April 2018 and our Vice President, Systems Integration & Automation since joining RigNet onin November 7, 2016.2016 to April 2018.  Prior to that, he served as the Vice President and General Manager for Telmar Network Technology from January 2007 through February 2016.  Mr. Traupman has also served in various management positions with companies such as Carrius Technologies, Rapid5 Networks and DSC Communications.  He received a Master of Science degree in Computer Science and a Bachelor degree in Mathematics from the Southern Methodist University.

 


COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion & Analysis (“CD&A”) outlines RigNet’s executive compensation philosophy, objectives and processes and explains how the Compensation Committee of the Board (the “Compensation Committee” or “Committee”) made executive compensation recommendations to the Board in fiscal year 20162019 for the named executive officers (“NEOs”) listed below:

 

Name

Position with Our Company

Steven Pickett

Chief Executive Officer and President

Charles Schneider

Lee Ahlstrom

Senior Vice President and Chief Financial Officer

William Sutton

Brad Eastman

Senior Vice President and General Counsel

Jay HilbertSenior Vice President, Sales
Edward TraupmanVice President, Systems Integration & Automation
Martin JimmersonFormer Interim Chief Executive Officer and President and Former
Senior Vice President and Chief Financial Officer
Mark SlaughterFormer Chief Executive Officer and President
Hector MaytorenaFormer Group Vice President, Managed Services
Morten Hagland HansenFormer Senior Vice President and Chief Technology Officer

 

EXECUTIVE SUMMARY

During 2019, our Compensation Committee took a fresh look at compensation across our organization.  In reassessing our executive compensation, our objectives were to:

Promote retention and reward achievement of long-term goals;

Address concerns that our NEOs are compensated at less than median compensation of our peers;

Address shareholder concerns regarding the low equity ownership of our executive officers;

Align the peer group to our customer base and strategy as a digitization partner for multiple industries;

Align performance metrics to Total Shareholder Return and Adjusted EBITDA results; and

Motivate early achievement and outperformance of performance goals.

In designing our executive compensation program our Compensation Committee also considered our business environment, long-term strategic plan, operational challenges to reposition from a provider of remote communications to the offshore drilling industry to a digitization partner for multiple industries, financial goals and potential for business acquisitions.  

 

2016Although we did not consummate any acquisitions as originally anticipated, our operating performance dramatically improved throughout 2019, with revenue, EBITDA and Adjusted EBITDA improving every quarter.  

We ended the year with:

fourth quarter revenue 11% greater than first quarter;

fourth quarter EBITDA more than 10 times that of  first quarter; and

fourth quarter Adjusted EBITDA 42% greater than first quarter.

Despite these operational improvements, our officers were compensated below the first quartile in total compensation of our 2018 and 2019 peer groups.  Our CEO was compensated at less than half the median compensation of our 2018 and 2019 peer groups.  In engagements with several of our larger shareholders, we also heard concerns about the low equity ownership of our executives, resulting in part from previous incentive programs that required large acquisitions to meet the performance targets.  Acquisitions were not consummated; meaning a large majority of previous performance-based, at-risk grants expired with no value realized by our executives.  In addition, many of our executives are new to RigNet, with the NEO’s having an average tenure of under three years.

17

To better promote retention and continued focus on the long-term repositioning of the Company from a provider of remote communications to the offshore drilling industry to a digitization partner for multiple industries, we decided to institute a new LTIP in the fall of 2019, even though we had issued LTIP awards under our previous philosophy in March 2019.  The November 2019 LTIP awards will be in lieu of any March 2020 LTIP awards.  Additionally, we evaluated our peer group and made changes that we think better reflects our oil and gas customer base and our transformation into a digitization partner for multiple industries.  The new peer group used resulted in an approximate 18% decline in the median total direct compensation for the 2019 peer group versus the 2018 peer group.

Consistent with the past two years, the new LTIP plan included awards of RSUs for 40% of each officer’s target LTIP value, options for 10% of each officer’s restricted target LTIP, and PUs for the remaining 50% of the target LTIP value.  These PU awards are paid at the end of a three-year performance period upon achievement of performance goals and incorporate changes pursuant to the new compensation program including changing (1) the performance metrics to AEBITDA  and Total Shareholder Return, (2) subject to shareholder approval of Proposal three in this proxy, increased maximum payout for outperformance of the PUs from 250% to 500% of the target value, and (3) the potential for early vesting (but not payment) in the performance period based on early achievement of target or maximum performance.  The increased multiple in the PUs for performance between target and maximum was designed to generate a total compensation reward at slightly above the 75th percentile for maximum achievement of long-term goals.  Achievement at target for the PUs results in total compensation slightly above the first quartile.  We believe these payouts demonstrate our commitment to pay for performance since target performance results in total compensation below the median for our peer group.

We designed the November 2019 PU awards to reward growth in Adjusted EBITDA and Total Shareholder Return.  We believe that Adjusted EBITDA reflects the best measure of the underlying business performance and is how our lenders and large investors evaluate our business.  We include Total Shareholder Return as a metric to make sure that our executives are aligned with the long-term interests of our shareholders.

At the same time that we adopted the new LTIP in the Fall of 2019, we adopted our STIP for 2020.  Consistent with historical practices, the 2020 STIP awards revenue growth and Adjusted EBITDA performance based on our one-year operating plan approved by our Board of Directors in November 2019.  There were no changes in STIP target payouts for our named executives.  In order to focus our management on free cash flow generation, we added a supplemental STIP cash payout opportunity above the target payouts based on Free Cash Flow Less Debt Payments, which we define as Adjusted EBITDA, less capital expenditures, less any adjustments deducted from Net Income to determine Adjusted EBITDA that are actually paid in cash, less principal payments on our indebtedness.  Our STIP participants will share 20% of our Free Cash Flow Less Debt Payments above our budgeted goal for 2020.  The payments will be paid pro-rata to our STIP participants based on their STIP amount.  No supplemental payments will be earned if we do not achieve our 2020 STIP revenue and Adjusted EBITDA goals.

We believe that our new incentive plan will allow our executives to earn compensation near the median of our peer group, for outperformance.  We also believe that our new compensation program encourages retention because of the large payout potential.  Finally, we believe that our LTIP aligns the incentives of our executives with the long-term interests of our shareholders by focusing on Total Shareholder Return and growth in Adjusted EBITDA.  We do not have sufficient shares in the RigNet, Inc. 2019 Omnibus Incentive Plan to meet the obligations of our new incentive plan design.  We are requesting that stockholders approve additional shares for our 2019 Omnibus Incentive Plan in proposal three.  If this proposal does not pass, we will have to reconsider our compensation philosophy and redesign compensation program and potentially utilize cash to achieve compensation objectives.  If sufficient cash resources are not available, we will not be able to offer a STIP or LTIP and we could experience heightened turnover throughout the organization, seriously jeopardizing the progress we have made in growing and diversifying RigNet in spite of anemic industry conditions.

2019 Business Overview and Compensation Outcomes

The BoardRigNet executed on its long-term strategic plan repositioning from a provider of Directors believe recent executive leadership changes will positionremote communications to the offshore drilling industry to a digitization partner for multiple industries.  While we did not consummate any business acquisitions, the Company fordemonstrated continued revenue and EBITDA growth inthrough the oil and gas sector and accelerateintroduction of new products to further diversify our strategic expansionbusiness into adjacent remote communications markets.communication markets and verticals.  The CEO and other NEOs responded to 2016’s continued challenging economic market conditions with reduced oil and gas industry activity by reallocating resources and restructuring personnel to reduceleadership resulted in quarter over quarter growth while maintaining positive cash flow from operating costs for long-term financial stability.activities.  

 

On anWhen making annual basis,compensation decisions, our Compensation Committee takes into consideration the impact ofour business environment, the results of our operations and the competitive market for talent when making its decisions about compensation.talent.  It also must taketakes into account the way in which the plans in our executive compensation program areis designed.  It is in this context that the Compensation Committee made the following key compensation decisions for 2016:2019:

 

18

●

•

None of the NEOs received

Increased base salary increases;salaries between 2.5% and 3.0 % for our NEOs;

●None of the NEOs received bonus payments from the STIP, since performance results were below threshold; and
●All of the NEOs received their target annual long-term incentive award grant, which consists of equity in the forms of performance units and time-based restricted stock units.

Reduced the maximum potential payout under the LTIP to 200.0% from 250.0%

Split annual long-term incentive award grants for all NEOs between performance units (50%), time-based restricted stock units (40%) and stock options (10%); and

Designed a new executive compensation program that was implemented in the Fall of 2019.

 

Specifically,In summary, 2019 base salaries, STIP bonus resultstargets and long-term incentivepayouts (after a 35% reduction in achieved amounts) LTIP targets are summarizedand grant date fair values were as follows:

 

  Base Salary STIP Bonus Long-term Incentive Plan Retention 
Name 2016  2015  Target  Amount Target  Grant Date  Equity 
  Value  Awards 
Steve Pickett (1) $  485,000   n/a   100.0%  $—   100.0%  $899,943  $— 
Charles Schneider  325,000  $  325,000   70.0%   —   140.0%   456,816   147,360 
William Sutton  262,000   262,000   65.0%   —   140.0%   368,400   147,360 
Jay Hilbert (2)  275,000    n/a   40.0%   —   90.0%   165,075   — 
Edward Traupman (2)  240,000    n/a   40.0%   —   70.0%   88,040   — 
Martin Jimmerson (3)  415,000   288,600   n/a   —   n/a   600,000   — 
Mark Slaughter (3)  415,000   415,000   n/a   —   n/a   —   — 
Hector Maytorena (3)  270,000   270,000   70.0%   —   140.0%   402,784   196,480 
Morten Hagland Hansen (3)  230,000   230,000   60.0%   —   120.0%   276,754   122,800 

 

 

Name

  Base Salary  

 

 

2019 STIP

 

 

2019 LTIP

 

2019

 

2018

Target

  Computed Amount  

Paid
Amount

   Shares
Issued

  Target  

Grant Date Value

Steven Pickett

   $507,831

     494,700

 

100%

       $601,339

      $389,341

      108,452

 

100%

      $424,997

Lee Ahlstrom

       360,500

        350,000

 

85%

        341,309

        220,984

           61,555

 

100%

        399,866

Brad Eastman

        309,000

        300,000

 

50%

        167,124

        108,205

           30,141

 

100%

        257,731

 

(1)Mr. Pickett joined RigNet on May 31, 2016. The amounts represent Mr. Pickett’s compensation provided for in his employment agreement; however, his participation in the STIP begins in 2017.
(2)Messrs. Hilbert and Traupman joined RigNet on November 7, 2016; neither are eligible to participate in the 2016 STIP since they joined RigNet after September 30, 2016. The amounts represent his respective compensation provided for in his employment agreement.
(3)These executives’ employment with RigNet ended during 2016. Mr. Jimmerson’s employment terminated on December 31, 2015 until he was rehired as our interim CEO from January 7 through June 1, 2016.

During November 2019, to implement our new compensation program, we awarded the following LTIP grants related to our executive’s 2020 compensation:

 


 

RSUs

 

Options

 

Performance Units

 

Name

Shares

Grant Date Value

 

Shares

Grant Date Value

 

     Shares

Target

Value

 

Steven Pickett

37,224

$   216,271

16,871

$   50,782

46,530

$   270,339

 

Lee Ahlstrom

26,425

153,529

11,977

36,051

33,031

191,910

 

Brad Eastman

22,650

131,597

10,266

30,901

28,312

164,493

 

 

Influence of Say on Pay Results and Engagement on Executive Compensation Decisions

We and our Compensation Committee are attentive to the outcome of the stockholder “Say on Pay” vote.  At the Company’s 20162019 annual stockholder meeting, 99.2%over 92% of the total votes cast supported the executive compensation program. The Committee considered this a strong endorsement of its decisions and policies, as well as the overall design of RigNet’s current executive compensation program.  As such, whileOur management reached out to holders of 86.85% of the outstanding shares and engaged with holders of 51.20% of the outstanding shares to solicit feedback on our executive compensation.  While the Committee did not make any substantive changes to its executive compensation philosophy or the target percentages for cash and incentive compensation based on these inputs, we implemented arefined our long-term equity program to further align executive interests with our stockholders’ interests to grow long-term value, see “Long-Term Incentive Compensation” below.

Best-Practice Compensation Governance Features

Our executive compensation program is grounded in the following policies and practices, which promote sound compensation: 

What We Do What We Don’t Do
√Place a heavy emphasis on variable compensation

x

Provide “single trigger” change in control severance benefits
√Require significant stock ownershipx

Offer significant perquisites
√Enforce a clawback policyx

Allow excise tax gross up upon a change in control
√Conduct annual compensation risk assessmentsx

Permit hedging or short selling of Company stock
√Use an independent compensation consultantx

Enable CEO to provide input regarding his compensation

 

WHAT GUIDES OUR EXECUTIVE COMPENSATION PROGRAM

Our Decision MakingDecision-Making Process

The “Compensation Committee”Compensation Committee oversees the executive compensation program for our NEOs. The Committee is comprised of independent, non-employee members of the Board. The Committee works closely with its independent compensation consultant and executive management to examine the effectiveness of the Company’s executive compensation program throughout the year. Details of the Committee’s authority and responsibilities are specified in the Committee’s charter, which may be accessed aton our website, “http:http://investor.rig.net/corporate-governance.cfm”.committee-details/compensation-committee.

 

The Compensation Committee

The Compensation Committee assists the Board in fulfilling its duties relating to compensation matters. The fundamental responsibilities of the Committee are to:

 

develop RigNet’s compensation objectives and philosophy;

review and oversee the incentive compensation and equity plans;

review performance goals, objectives and policies relevant to CEO executive compensation;

make recommendations for Board approval of non-CEO executive officer compensation levels;

evaluate executive performance in light of established goals to recommend executive compensation levels;

review and make recommendations for Board compensation levels;

19

●

•

develop RigNet’s compensation objectives and philosophy;
●review and oversee the incentive compensation and equity plans;
●review performance goals, objectives and policies relevant to CEO executive compensation;
●review performance goals, objectives and policies relevant to Board compensation;
●evaluate executive performance in light of those goals to recommend executive compensation levels;
●review and make recommendations for Board compensation levels;
●

review and recommend compensation levels and awards under incentive compensation plans that are consistent with our compensation philosophy based on Company performance and the performance of our Company, its senior management, employees and the Board;individual contribution;

●administer the stock ownership policy;
●review and approve disclosures relating to compensation; and
●oversee succession planning for the CEO and our NEOs.

administer the stock ownership policy;

review and approve disclosures relating to compensation; and

oversee succession planning for the CEO and our NEOs.

 

The Compensation Committee may form and delegate its authority to one or more subcommittees as it deems necessary or advisable from time to time, provided, that any such subcommittee must report any actions taken by it to the full Compensation Committee at its next regularly scheduled meeting.

The Board approves all compensation plans and compensation arrangements for our NEOs based upon Compensation Committee recommendations.

 

The Compensation Setting Process

Our Compensation Committee holds regularly scheduled meetings, which coincide with our Board meetings.  It also holds additional meetings as required to carry out its duties.  The Committee ChairmanChair works with our management to establish each meeting agenda.


At its meetings, the Committee:

 

updates the Company’s compensation strategy and objectives;

considers changes in compensation elements for the upcoming year;

reviews and considers the composition of our peer companies and peer compensation study data;

reviews actual results compared to the pre-established performance metrics for the current year to determine annual STIP incentive awards for our NEOs and total awards authorized;

reviews equity awards;

●

•

updates the Company’s compensation strategy and objectives;
●considers changes in compensation elements for the upcoming year;
●reviews and considers the composition of our peer companies and peer compensation study data;
●reviews actual results compared to the pre-established performance metrics for the current year to determine annual STIP incentive awards for our NEOs and total awards authorized;
●reviews equity awards, either in the form of restricted stock grants or stock option awards or both;
●

reviews Company performance metrics under our incentive compensation plans for the upcoming year;

●reviews Board performance and evaluates the compensation paid to our independent directors and makes recommendations for adjustments, if any, to the Board; and
●reviews the performance of our CEO.

reviews Board performance and evaluates the compensation paid to our independent directors and makes recommendations for adjustments, if any, to the Board; and

reviews the performance of our CEO.

 

Role of Compensation Consultant

The Committee has the sole and direct authority to retain and terminate compensation advisors and to approve their fees.  All such advisors report directly to the Compensation Committee.  Pearl Meyer & Partners (“Pearl Meyer”) serves as the Committee’sCommittee's independent compensation consultant to assist the Committee in assessing and determining competitive compensation packages for our NEOs and directors.  

 

In this capacity, Pearl Meyer has assembled information and recommendations regarding:

identification of an updated peer group of companies;

●identification of an updated peer group of companies;
●compensation trends in the telecommunication and oil and gas service industries;
●use and structure of performance-based equity awards;
●relative compensation for similarly-situated NEOs within peer group companies or other companies with revenues, transactions or growth trends comparable to our Company; and
●relative compensation for similarly situated independent board directors of the peer group companies or other companies with revenues, transactions or growth trends comparable to our Company.

compensation trends in the telecommunication and oil and gas service industries;

use and structure of performance-based equity awards;

relative compensation for similarly-situated NEOs within peer group companies or other companies with revenues, transactions or growth trends comparable to the Company;

development of a new LTIP to implement our current compensation strategy of lower-than-market base pay and base plus bonus (total cash), with a more competitive package for superior performance in accordance with our pay for performance philosophy; and

relative compensation for similarly situated independent board directors of the peer group companies or other companies with revenues, transactions or growth trends comparable to our Company.

 

While the Committee relies on data provided by our independent compensation consultant or obtained through a subscription with Equilar, Inc., a provider of executive compensation information based on publicly available information contained in SEC filings, it also considers a number ofseveral other factors including:

performance of the executive;

●performance of the executive;
●historical compensation levels;
●specific role the executive plays within our Company; and
●changes in scope, roles and responsibilities.

historical compensation levels;

specific role the executive plays within our Company; and

changes in scope, roles and responsibilities.

 

The Role of the Peer Group, Benchmarking Data and Competitive Positioning

The Committee compares our executive compensation program to a group of companies that are comparable in terms of size and competitive industry –― including companies that are structured similarly and serve our same industry clientcustomer base.  The overall purpose of this peer group is to provide a market frame of reference for evaluating our compensation arrangements (current or proposed), understanding compensation trends among comparable companies, and reviewing other compensation

20

and governance-related topics that may arise during the course of the year. The Committee reviews this data to help ensure we are providing competitive performance-based compensation.

 

With the assistance of our independent compensation consultant, we refined our compensationPearl Meyer, the Committee established the following peer group during 2016 and 2015 tofor purposes of setting compensation levels for 2019 that reflect changes in our global company, the industrystrategy, customer base, industries served, and our size as a public company to include the seventeen companies listed in the table below. We selected these companies because they were public companies of similar size and scope, and they serve the geographies and customer bases in which we operate and compete for senior management personnel.company.

 

2019 Peer Companies

Aligned to the services we provide

Aligned to our customer base

Calix

Aerohive Networks, Inc.

Dawson Geophysical Company

Bristow Group, Inc.

Cogent Communications GroupHoldings, Inc.

Forbes Energy Services

Flotek Industries, Inc..

8X8 Inc.

Forum Energy Technologies, Inc.

Five9, Inc.

ION Geophysical Corporation

Iridum Communications

Helix Energy Solutions Group

inContact

Kratos Defense & Security Solutions, Inc.

Hornbeck Offshore Services

Parker Drilling Company, Inc.

Iridum Communications

KvH Industries, Inc.

TETRA Technologies Inc.

Q2 Holdings, Inc.

Unit Corporation

Sonus Networks, Inc.

SPS Commerce, Inc.

During 2019, Pearl Meyer also consulted with the Committee on the design of our new executive compensation program and related structure of performance-based awards.  They also assisted in developing a new group of peer companies considering our business environment, long-term strategic plan, operational challenges to reposition from a provider of remote communications to the offshore drilling industry to a digitization partner for multiple industries, and size.  The Company did not pay Pearl Meyer for any other services consistent with the Compensation Committee’s policy that the compensation consultant should not perform any services for us other than services as a consultant to the Compensation Committee.  Pearl Meyer provided our Compensation Committee with a letter certifying their independence.

The following peer companies were utilized in November 2019 during implementation of our new executive compensation program.

Fall 2019 Peer Companies

8X8 Inc.  

CalAmp Corp.

Carbonite, Inc.

CARBO Ceramics, Inc.

CSG Systems International Inc

Flotek Industries, Inc.

Gulf Island Fabrication, Inc.

Inseego Corp.

ION Geophysical Corporation

KvH Industries,

GulfMark Offshore Inc.

ORBCOMM

Nine Energy Service, Inc.

Rex Energy Corporation

Ooma, Inc.

Shoretel

ORBCOMM, Inc.

Tesco Corporation

Perficient, Inc.

TETRA

Spok Holdings, Inc.

Synchronoss Technologies, Inc.

US Well Services, Inc.


Pearl Meyer provided specific input on peer group cash and equity compensation levels and ranges. This data was used to establish 2016 compensation for the NEOs. 

 

When setting target direct compensation (base salary and target short and long-term incentive opportunities), the Committee aims to approximateconsiders the median of compensation paid to similarly situated executives of the companies comprising our peer group, as well as survey sources in Pearl Meyer’s database. Specifically, base salaries are generally established between the 25th percentile and the median for our peer group, adjusted for each individual’s education, experience, performance and potential.database, without benchmarking against a specific percentile.  In addition, our NEOs can earn short-term or annual incentive bonus compensation based upon pre-established earnings and growth criteria, which are aligned withindicative of our pay-for performancepay-for-performance philosophy.  Through the short-term incentive program,STIP, as well as our long-term equity compensation program,incentive plan, our NEOs have a significant portion of compensation “at risk” and accordingly have the potential for earning above the median of our peer group. “At risk” means, for the performance-based compensation programs, NEOs will not realize value unless they meet minimum performance goals, the majority of which are tied to Company financial, operational and strategic goals, which we believe closely correlate to long-term stockholder value creation.creation, but can realize increased value if they exceed the target level of those performance goals.

 

Role of Chief Executive Officer in Executive Compensation Decisions

 

Our Compensation Committee seeks input from the CEO when discussing the performance and compensation levels of our NEOs other than himself.  Our CEO works with other senior executives to recommend changes to our compensation programs, prepare peer analyses, and suggest performance targets under those programs for our employees, including our NEOs, to assist the Compensation Committee in making and implementing its compensation decisions.  During 2016,2019, our former interim CEO provided recommendations to the Compensation Committee in connection with key employee (below officer level) retention and our incentive compensation programs based on key historical and planned Company performance.  The Compensation Committee reviewed management’smanagement's recommendations and considered peer data, as well as the Company’s operating plan and budget, to

21

recommend the specific performance goals and measures established within our 20162019 and 2020 incentive compensation programs and awards, which were approved by the Board.   

 

Our Executive Compensation Program

 

Our Compensation Philosophy

Our executive compensation program is designed to encourage our NEOs to focus on building long-term stockholder value, maximizing growth consistent with our strategic plan and delivering strong financial results.

Our compensation philosophy is grounded in the following guiding principles:

 

Pay for Performance

A significant portion of a NEO’s total compensation should be variable (“at risk”) and dependent upon the attainment of certain specific and measurable annual-annual and long-term business performance objectives.

Shareholder Alignment

NEOs should be compensated through pay elements (base salaries, annual and long-term incentives) designed to create long-term value for our stockholders, as well as foster a culture of ownership.

Competitiveness

Target compensation should be set at the median of market to ensure that compensation isopportunities are at a level that is competitive with that being offered to individuals holding comparable positions at other companies with which we compete for business and leadership talent.

Attraction and Retention

The executive compensation program should enable the Company to attract and retain highly talented people with exceptional leadership capabilities and retain high-caliber talent.

capabilities.

Elements of Compensation

Our compensation philosophy is supported by the following principal pay elements:

 

Base Salary

Cash

(Fixed)

Allows us to attract and retain qualified candidates in a highly competitive market

(Fixed)

Short-Term
Incentive Plan
(“STIP”)

Cash or Equity

(Variable)

Provides additional compensation designed to support our pay-for-performance philosophy based on achievement of annual financial results and specific individual personal goals

Long-Term
Incentives Incentive Plan (“LTIP”)

Equity

(Variable)

Rewards executives for equity value growth

Performance and time-based awards link compensation to achievement of multi-year financial goals, incentivize retention and align executive interests with our stockholders’ interests to grow long-term valueof growth and incentivize retention

total shareholder return


The charts below show the target total direct compensation (“TDC”) of our CEO and our other NEOs for fiscal 2016. These charts illustrate that a majority of NEO TDC is variable, 61.3% for our CEO and an average of 73.1% for our other NEOs. 

(GRAPHIC) 

 

Determining the Amount of Each Element of Compensation for 2016

2019

Base Salary

On March 10, 2016 after considering relevant materials provided by our compensation consultant during 2015, current economic market conditions, and the published survey for average annual market increases, our Compensation Committee recommended, and our Board approved, no changes to base compensation levels or short-term and long-term incentive compensation targets effective April 1, 2016 for Messrs. Schneider, Sutton, Slaughter, Maytorena, and Hansen. Mr. Pickett’s base compensation was set at $485,000 in connection with his recruitment as our CEO and President. Mr. Jimmerson’s base compensation, upon his hiring as our interim CEO and President, was set at $415,000, which is the same base compensation amount as our former CEO. The Compensation Committee believes that the 2016 base compensation levels achieved our target of the 25th percentile of our peer group while recognizing each officer’s level of responsibility, current workload and past experience performing their duties.

For Mr. Pickett, who joined RigNet during the year as our CEO and President, we evaluated his base compensation compared to other officer level personnel, considering his prior experience, and our compensation consultant’s materials obtained during 2015. We approved his starting base compensation of $485,000 along with a 2017 STIP target of 100.0% and 2016 long-term incentive target of 100.0% to incentivize achievement of both financial and individual goals. Similarly, for Mr. Hilbert and Mr. Traupman, who joined RigNet during the year, we evaluated each officer’s base compensation compared to other officer level personnel, considering their prior experience, and our compensation consultant’s materials obtained during 2015.

Our Compensation Committee reviews our executives’ base salaries on an annual basis taking into consideration any changes in position or responsibilities.  We utilize base salary as the primary means of compensation for performing the essential elements of an executive’s job.  Base salaries are set at levels between the 25th percentile andapproximate the median for our peer group, adjusted for each individual’s role, experience, proven skill sets, performance and potential, which allowenabling us to attract and retain executives in competitive markets. For 2016, our Compensation Committee approved the following base salaries:

 

  Base Salary  
Name 2016  2015  % Change 
Steven Pickett (1) $  485,000  n/a  — 
Charles Schneider 325,000  $  325,000  — 
William Sutton 265,000  265,000  — 
Jay Hilbert (2) 275,000   n/a  — 
Ed Traupman (2) 240,000  n/a  — 
Martin Jimmerson (2) 415,000  288,600  n/a 
Mark Slaughter 415,000  415,000  — 
Hector Maytorena 270,000  270,000  — 
Morten Hagland Hansen 230,000  230,000  — 

Mr. Pickett’s base compensation was increased by 2.7% to $507,831 over his 2018 base compensation. We evaluated his base compensation compared to other officer level personnel, considering his prior experience, and our compensation consultant’s materials obtained during 2019.  The increase recognized his service since joining the Company and provided a cost of living adjustment.  Messrs. Ahlstrom and  Eastman received base compensation increases of 3.0% during 2019.  The 2019 base compensation levels in place reflect market-based compensation and recognize each officer’s level of responsibility, current workload and past experience performing their duties.  

22

Our NEOs’ annual base salaries at the end of 2019 and 2018 were as follows:

 


 

Name

Base Salary

 

Change

2019

2018

Steven Pickett

$ 507,831

$ 494,700

2.7%

Lee Ahlstrom

360,500

350,000

3.0%

Brad Eastman

309,000

300,000

3.0%

 

(1)Mr. Pickett joined RigNet on May 31, 2016.
(2)Mr. Hilbert and Mr. Traupman both joined RigNet on November 7, 2016.
(3)Mr. Jimmerson’s employment ended on December 31, 2015, until he was rehired as our interim CEO on January 7, 2016.

 

Short-Term Incentive Compensation

Our NEOs are eligible for annual bonuses in the form of an annual incentive awardbonuses through our STIP.STIP.  Awards have historically beenmay be paid in stock or cash during the first calendar quarter of the next year after determination of whether financial goals have been achieved.  For 2016, our Compensation Committee recommended and our Board approved that NEO2019, we paid out STIP bonuses would be paid withperformance awards in 2020 in the form of RigNet stock based on the five-day average closing price prior to the meeting during which the determination of financial goal achievement is reported to the Compensation Committee.common stock.

 

BonusAward Opportunities. Under the STIP, each NEO is assigned a target opportunity expressed as a percentage of his base salary.  We believe theThe STIP targets,target award opportunities, when considered in connection with the established financial performance goals that must be achieved in order to earn the incentive compensation, providesprovide our executive officers the potential to realize at or above median compensation when compared to our peer group.additional compensation.  The threshold, target and maximum bonusaward opportunities for each of our NEOs for 2016, who remained eligible for STIP bonus or employed through December 31, 2016,2019 is set forth below:

 

Name Target STIP Bonus Opportunity
(as a % of Base Salary)		 Maximum Bonus Opportunity
(as a % of Base Salary)
Steven Pickett (1) —  — 
Charles Schneider 70.0%  175.0% 
William Sutton 65.0%  163.0% 
Jay Hilbert (2) —  — 
Ed Traupman (2) —  — 

 

STIP Award Opportunity  

(as a % of Current Base Salary)

Name

Threshold

Target

Maximum

Steven Pickett

25.0%

100.0%

250.0%

Lee Ahlstrom

21.3%

85.0%

212.5%

Brad Eastman

12.5%

50.0%

125.0%

 

(1)Mr. Pickett joined the Company on May 31, 2016 and will begin participating in the STIP in 2017 with a target opportunity of 100.0%For 2019, there were two categories of performance goals under the STIP:  (i) pre-determined Company-wide financial results   performance measures (50% weighting) and (ii) pre-established key personal and team objectives (50% weighting), based on STIP funding, which cannot exceed an annual STIP funding maximum for all employees as a group.
(2)Due to Messrs. Hilbert and Traupman joining RigNet on November 7, 2016, they are not eligible to participate in the STIP for 2016. Their respective offer letters provide an annual STIP target opportunity of 40.0%.

 

Financial Performance Metrics and Weightings. Short-term incentive compensationSTIP funding is determined based on performance achieved against the following financial metrics:

 

Metrics

    Weight

Threshold (1)

Definition

Management EBITDA(2)

(a non-U.S. GAAP measure)

50.0%

90.0%

Adjusted EBITDA further adjusted based on budgeted exchange rates and other exceptional items, as approved by the Board.

Consolidated Revenue

50.0%

80.0%

Gross revenue, less credits and uncollectible billings, as reported in accordance with U.S. GAAP.

Metrics

(1)

WeightingDefinition

As a percentage of target

(2)

A reconciliation of Management EBITDA

(a non-U.S. GAAP measure)

60.0%Adjusted EBITDA1 further adjusted based on budgeted exchange rates, the final STIP compensation accrual, and other exceptional items such as acquisitions, as approved by the Board.
Revenue40.0%Gross revenue less credits and uncollectible billings, as reportedto Net Income is presented in accordance with U.S. GAAP.Appendix A to this proxy statement.

 

Total STIP funding is based on actual consolidated performance against the annual AdjustedManagement EBITDA and Consolidated Revenue goals.  No STIP compensation is paid if the Company does not achieve the minimum threshold performance levels for both AdjustedManagement EBITDA and Revenue. The following presentsConsolidated Revenue and the maximum compensation that may be earned is 2.5 times target opportunities. However, individual payouts under the STIP cannot exceed an annual STIP funding multipliermaximum for each achievement levelall employees as a percentage of the target, which is the same for Adjusted EBITDA and Revenue.

 Resulting 
Level of Achievement as a % of TargetSTIP Multiplier 
Maximum:125.0%3.00 
 120.0%2.60 
 115.0%2.20 
 110.0%1.80 
 105.0%1.40 
Target:100.0%1.00 
 95.0%0.63 
Threshold:90.0%0.25 
Below Threshold:Less than 90.0%  — 

Note that if the results are between two levels the multiplier will be interpolated on a straight-line basis between those levels.group.

 

For our executives, short-term incentive compensation is based on the achievement of financial targets and further adjusted based on the achievement of personal objectives for each individual. This table summarizes the 20162019 financial targets and actual results for all of the NEOs.



1We define Adjusted EBITDA as net income (loss) plus: interest expense, income tax expense (benefit), depreciation and amortization, impairment of goodwill, (gain) loss on retirement of property and equipment, change (dollars in fair value of derivatives, stock-based compensation and IPO or merger/acquisition costs and related bonuses. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income (loss) or any other measure of financial performance calculated or presented in accordance with generally accepted accounting principles (GAAP)millions).

 


 

Objective

Threshold (1) (90% / 80%)

 

Target (2)

(100%)

 

Maximum (3)

(125%)

 

Actual

Result

 

Percentage of Target

 

 

Payout

Management EBITDA

$   36.0

 

$   40.0

 

$   50.0

 

$  41.7

 

104.3%

 

126.1%

Consolidated Revenue

   200.7

 

250.9

 

313.6

 

242.9

 

96.8%

 

88.1%

(1)

Below the threshold of 80% for consolidated revenue or 90% for Management EBITDA, no STIP will be earned.

(2)

Performance at target results in the targeted STIP bonus being earned with proportional adjustment for performance between threshold and target results and proportional adjustment for performance between target and maximum results.

(3)

Performance is capped at a maximum achievement of 125.0% of the target, which would provide 2.5 times the target STIP bonus payout.

 

Name Target
(In Millions)		 Actual
(In Millions)		 Percentage
of Target		 Resulting Multiplier 
Consolidated Management EBITDA (1) $   44.3 $   37.2 83.9% —%
Consolidated Revenue (1) 239.5 220.6 92.1% —%
Managed Services EBITDA (2) 76.3 57.8 75.8% —%
Managed Services Revenue (2) 219.8 199.0 90.6% —%

23

(1)Consolidated measures also serve as the business unit measures for Messrs. Schneider, Sutton and Hansen.
(2)Managed services measures are the business unit measures for Mr. Maytorena.

Individual Performance. Each NEO has key personal and team objectives, the achievement of which, determines 50.0% of their STIP, with the remaining 50.0% based on the Company wide and business unit financial results, based on computed STIP funding. An NEO’s bonus may be increased or decreased up to 25.0% based on the achievement of specific individual objectives and input from the CEO.

For the CEO’s bonus, the Board has discretion to increase or decrease the bonus up to 100%. For all other executives, the CEO has discretion to increase or decrease the bonus up to 25%, using his judgment of the NEO’s relative contribution to results, subject to Compensation Committee and Board approval. Individual payouts under the STIP cannot exceed 2.5 times target payout.

20162019 Payout Results.  The 20162019 STIP bonusaward formula would multiplymultiplies 50.0% of an executive officer’s potential target bonusaward as a percentage of their current base salary, adjusted for partial-year employment, by the sum of (i) 60.0%50.0% of the consolidated Management EBITDA multiplier plus (ii) 40.0%50.0% of the consolidated revenue multipliermultiplier; and add to that sum the computed STIP bonusaward determined under individual performance.  However, sinceResults between threshold and target or target and maximum are interpolated on a straight-line basis between those levels.

For 2019, the 2016Board approved STIP thresholds were not achieved, there are no short-term incentive compensation payments (inresults and calculated payouts for NEOs.  The Board reduced these calculated amounts by approximately 35% (i) to conserve shares available under our 2019 Omnibus Incentive Plan and our cash or equity) or discretionary adjustments asand (ii) to better align pay with our stock performance  The actual payout of STIP is reported in the “Non-Equity Incentive Plan Compensation” and the “Bonus” columns for 20162019 in the Summary Compensation Table.  For 2019, STIP performance awards were paid out in 2020 in the form of RigNet stock.

 

 

 

Name

 

Company

Achievement

Individual

& Team

Achievement

 

Computed

   Payout

 

  Actual

   Payout

 

Shares

Issued

Steven Pickett

107.1%

121%

$ 601,339

       $ 389,341

108,452

Lee Ahlstrom

107.1%

108%

341,309

        220,984

61,555

Brad Eastman

107.1%

102%

167,124

        108,205

30,141

Long-term Incentive Compensation

Long-term incentive compensation is intended to enhance our ability to retain executive talent over a longer period of time, reward long-term efforts that enhance future value of the Company and provide executives with a form of reward that aligns their interests with those of our stockholders.  Our executives maygenerally receive long-term incentive awards annually as the Compensation Committee determines consistent with the objectives described above.

 

Our 20102019 Omnibus Incentive Plan permits the award of (i) incentive and non-qualified stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance stock, (vi) performance units, (vii) director awards (viii) annual cash incentive awards, (ix) cash-based awards, (x) substitution awards or (xi) other stock-based awards, as approved by the Board or its designated committee.  No further awards can be made under our 2006previous plans.  

During 2019, the Committee issued performance units, time-based restricted stock units and 2001 Plans.stock options to our executive officers.  The Committee believes these award types strike an appropriate balance between long-term stock price appreciation, mid-term operating results and retentionleadership stability and best align our executives’ interests with those of our stockholders, as follows:

 

Objective

Award Type

Incentive for Compensation

Long-term stock appreciation

Stock Option

Stock price appreciation over ten-yearsseven years

Mid-term operating results

Performance Unit (“PU”)

Specific performance achievement over three years

Retention

Leadership Stability

Restricted Stock Unit (“RSU”)

Continued employment over fourthree years

In 2016,2019, the Compensation Committee established long-term incentive compensation targets as a percentage of base compensationsalary for each of our NEOs.  This target wasThese targets were used to determine the value of the long-term incentive awards made to each executive.  In establishing each of the targets, the Compensation Committee considered, among other things, the data obtained from the compensation peer group study, that was adjusted for market increases,recent negotiations related to changes in our leadership team, the role and responsibility of each executive, competitive factors, individual performance, the amount of stock-based equity compensation already held bypreviously awarded to the executive, the non-equity compensation received by the executive, the total number of stock and option awards to be granted to all participants during the year and the discretion and judgment of the Compensation Committee.  Outstanding RSU and Option awards have provisions that accelerate vesting upon termination following a change of control.  

Generally, time-based restricted stock unit and option awards will vest over four years, with 25.0% of the shares vesting on each of the first, second, third and fourth year anniversary of the grant date or other date specified in the grant award assuming continued employment, and options expire on the tenth anniversary date of the applicable award agreement, unless terminated earlier.


Long-term incentive compensation has typically been in the form of equity awards allocated 30.0% to restricted stock awards and 70.0% to stock options. During 2016 we determined annual equity awards to senior leaders should include a balance of restricted stock units (“RSUs”) and performance units (“PUs”) to create a shared incentive structure that drives achievement of specific strategic corporate initiatives. PUs vest based on achievement of three defined performance goals over a three-year period.
Each performance goal for the PUs has a specific threshold, target and maximum performance level resulting in payouts of 30.0%80.0%, 100.0% and 300.0%200.0%, respectively, with proportional adjustment for performance between each level.  Performance results are measured and generallyat the end of a three-year performance period.  The PUs vest each annual performance period with payout upon completion of the three-year performance period, or sooner if an individual’s employment ceases due to retirement, death, or disability or following a change of control.

 

Grants were made on March 10, 2016, as part24

The PU components of our normal annual review of equity awards2019 LTIP grants are designed to incentivize growth and annual compensation. During 2016, the Compensation Committee initiated an equity award program using long-term PUs with formulaic payouts based on specific multiple-yearfinancial performance metrics. For 2016, long-term incentive equity awards were allocated 70.0% to RSUs and 30.0% to PUs for our NEOs, except for Mr. Jimmerson, who received equity awards allocated 50.0% to each RSUs and PUs, due to his interim role with our Company. Mr. Pickett was awarded stock options asover a signing bonus upon joining the Company. He was also awarded long-term incentive equity awards allocated 70.0%, to RSUs and 30.0% to PUs, as agreed to in his employment agreement and in alignment with his prorated long-term incentive compensation target as our CEO and President. These equity awards should enhance our ability to retain executives and align individual performance with the objectives of our stockholders.

three-year period.  The PUs granted in 2016March 2019 to our NEOs, except for Mr. Jimmerson, are contingent upon the achievement of specified performance metrics as shown below.  These awards generally become payable in 20192022 based on achievement of the three, weighted performance metrics shown below, with payment amounts prorated for performance between the established levels.

 

Performance Goals Measures Performance
Period		 Threshold
(1)		 Target
(2)		 Maximum
(3)		 Weight Actual
Results		 Resulting
Multiplier		 
Consolidated Revenue
Overall revenue growth		 2016  $ 203.2  $ 239.0  $ 274.9 10.0% $ 220.6 0.486 
 2017  208.2  245.0  281.8 10.0% n/a n/a 
 2018  238.8  281.0  323.2 20.0% n/a n/a 
Addressable Rigs Service Level
Market share		 2016 31% 33% 38%   7.5% 26.8%— 
 2017 32% 34% 39%   7.5%  n/a  n/a 
 2018 33% 35% 40% 15.0%  n/a n/a 
Maritime Initiative and Reseller Initiative Revenue
Strategic Initiative performance		 2016  $ 12.5  $ 16.5  $ 20.5   7.5% $ 10.1 — 
 2017  20.0  25.0  30.0   7.5% n/a  n/a 
 2018  40.0  48.0  56.0 15.0%  n/a n/a 

 

March 2019 PU Award Measures

Funding Metric

Threshold (1)

Target (2)

Maximum (3)

Total Revenue CAGR

4.0%

6.0%

8.0%

Average 3-year AEBITDA Margin

14.0%

16.0%

18.0%

Apps & IOT Revenue CAGR

17.0%

21.0%

25.0%

Performance Factor

80.0%

100.0%

200.0%

 

(1)

Below the threshold, no units will be earned.

(2)

Performance at target results in the targeted units being earned with proportional adjustment for performance between threshold and target results and proportional adjustment for performance between target and maximum results.

(3)

Performance is capped at the maximum and achievement of the maximum would result in threetwo times the target units being earned.

 

Mr. Jimmerson was also granted aThe  performance factors for PU award on March 10, 2016 for the one-yearincentivize total revenue growth, profitability and growth in our Apps & IOT segment.  We believe these performance periodmeasures incentivize continued profitable growth of 2016 to incentivize his performance and retention asRigNet, particularly in our interim CEO and president. However, due to his employment ending on May 31, 2016, units vesting under the award were based on the number of days he worked as a percentage of the total number of days during the performance award period.newer digitization efforts, at profitable margins.  

 

In addition,For 2019, the Board approved the following performance achievement results and earned shares for the NEO’s outstanding PU awards.

Name

PU Target Shares

 

Performance Achievement

 

2019 Award

2018 Award

2017 Award

 

2019 Award (1)

2018 Award

2017 Award

Earned

Shares

Steven Pickett

n/a

3,389

3,720

 

n/a

0%

0%

-

Lee Ahlstrom

n/a

n/a

n/a

 

n/a

n/a

n/a

n/a

Brad Eastman

n/a

2,096

n/a

 

n/a

0%

n/a

-

(1)

2019 PU achievement can only be computed at the end of the three-year performance cycle ending on December 31, 2021.

2019 Fall Awards

During 2019, Pearl Meyer assisted the Committee in developing a new peer group for purposes of setting compensation levels for 2020, reflecting changes in our strategy, the industry, and our size as a public company. The peer companies listed on March 10, 2016,page 21 were selected because they are companies similar in orderfinancial and human capital size, and serve the geographies and customer bases in which we operate and compete.  

During November 2019 in connection with the implementation of our new incentive plan, our NEOs were granted RSU, option and PU awards designed to incentivize retentionperformance during 2020 and beyond.  The PUs will be paid at the end of Messrs. Schneider, Sutton, Maytorena,a three-year performance period payable in 2023 based on achievement of metrics including Adjusted EBITDA and Hansen, we awarded time-based RSUs that vestTotal Shareholder Return.  If the Company achieves Target or Maximum performance in fullany year, then the shares are vested, but not paid until the end of the performance period.   The performance criteria for these awards are set forth below:


25

 

November 2019 PU Award Measures

(In Millions, except per share amounts)

Funding Metric

Threshold (1)

Target (2)

Maximum (3)(4)

Stock Price Target (5)

$8.19

$10.91

$21.83

AEBITBA for 2020 Performance Period

n/a

$42.2

$50.6

AEBITBA for 2021 Performance Period

n/a

$52.6

n/a

Aggregate AEBITDA for Performance Periods 2020-2021

n/a

n/a

$113.8

AEBITDA for 2022 Performance Period

n/a

$60.2

n/a

Aggregate AEBITDA for Performance Periods 2020-2021

$139.5

$155.0

$186.0

(1)

Below the threshold, no units will be earned.

(2)

Performance at target results in the targeted units being earned with proportional adjustment for performance between threshold and target results and proportional adjustment for performance between target and maximum results.

(3)

Performance is capped at the maximum and achievement of the maximum would result in five times the target units being earned.

(4)

Share awards above target level are conditional on stockholder approval of proposal three below.

(5)

Stock price achievement is measured as average price for the thirty (30) trading days ending on November 15 in each year in the performance period.

No additional equity awards were granted in March 19, 2019, assuming continued employment. The retention awards2020.  For 2020, the STIP and LTIP target percentages for Messrs. Maytorena and Hansen were forfeited and cancelled when their respective employment ended during 2016.our NEOs remained unchanged compared to 2019.

 

Nondiscriminatory Health and Welfare Benefits

Our benefits, such as our basic health benefits, short-term and long-term disability, life insurance, and accidental death and dismemberment insurance are intended to provide a stable array of support to executives and their families throughout various stages of their careers, and these core benefits are provided to all employees based on the regional programs regardless of their individual performance levels.  All U.S. employees have the option to participate in the 401(k) plan, which allows participants to defer up to 100.0% of their annual compensation, subject to the cap set by the Internal Revenue Code. As of January 2016, theplan.  The Company is no longer matchingmatches employee contributions in the 401(k) plan. However, in 2015, our 401(k) plan provided all eligible employees the Company’s matching contribution based on 100.0% of the first 2.0%3.0% and 50.0% of the next 4.0%2% of eligible employee contributions.an employee’s contributions, up to the maximum permitted by law.  Employee elective deferrals and employee matching contributions are immediately vested and non-forfeitable upon contribution to the 401(k) plan.

 


Perquisites

Perquisites

We believe in a simple, straight-forward compensation program. Consistent with the Committee’sCompensation Committee's strategy, no perquisites or other personal benefits are expected to exceed $10,000 annually for any of our named executive officers, except with regard to relocation expense reimbursement.officers.  

 

Tax and Accounting Implications

In the review and establishment of our compensation programs, we consider the anticipated accounting and tax implications to us and our executives.  While we consider the applicable accounting and tax treatment of alternative forms of equity compensation, these factors alone are not dispositive, and we also consider the cash and non-cash impact of the programs and whether a program is consistent with our overall compensation philosophy and objectives.

 

Deductibility of Compensation and Tax Obligations

Our Compensation Committee does not have any policies concerning the payment of tax obligations on behalf of our employees.  We are required by law to withhold a portion of every compensation payment we make to our employees. In the case of noncash compensation, that means either (i) we withhold a portion of the noncash compensation payment and pay cash to the appropriate tax authorities, or (ii) the employees make a cash payment directly to us in lieu of our withholding a portion of the noncash compensation.compensation or (iii) we withhold a portion of cash compensation payments equal to the tax owed and pay cash to the appropriate tax authorities.  All payments to or on behalf of our employees, including tax payments, are considered compensation and are evaluated by our Compensation Committee as part of our overall compensation packages.

 

As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation. Section 162(m)However, under the Tax Cuts and Jobs Act of 2017, the Internal Revenue Code imposesexemption for qualifying performance-based compensation was repealed for taxable years beginning after December 31, 2018.  As a limit onresult, compensation paid to our executive officers in excess of $1 million may not be deductible unless it qualifies for certain transition relief.  While the amount ofCompany will monitor guidance and developments in this area, the Compensation Committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive talent necessary for our success. Consequently, the Compensation Committee may pay or provide, and has paid or provided, compensation that we may deduct in any one year with respectis not tax deductible or is otherwise limited as to the CEO and each of our next three most highly compensated NEOs, unless specific and detailed criteria are satisfied. Performance-based compensation, as defined in the Internal Revenue Code, is fully deductible if the programs are approved by stockholders and meet other requirements. We believe that grants of equity awards under our existing stock plans qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting us to receive a federal income tax deduction in connection with such awards. In general, we have determined that we will not seek to limit executive compensation so that it is deductible under Section 162(m). However, from time to time, we monitor whether it might be in our interests to structure our compensation programs to satisfy the requirements of Section 162(m). We seek to maintain flexibility in compensating our executives in a manner designed to promote our corporate goals and therefore our Compensation Committee has not adopted a policy requiring all compensation to be deductible. Our Compensation Committee will continue to assess the impact of Section 162(m) on our compensation practices and determine what further action, if any, is appropriate.deductibility.

26

 

Accounting for Stock-Based Compensation

We account for stock-based payments for all awards under our 2019 Omnibus Incentive, 2010 Omnibus Incentive and the 2006 Long-Term Incentive and the 2001 Performance Stock Option Plans in accordance with the requirements of ASC Topic 718, subtopic 10, section 10,Stock Compensation.  The Compensation Committee reviews stock compensation grant date value in connection with granting equity awards.

 

Risk Assessment of Compensation Programs

We review our compensation programs company-wide to assess whether they encourage our employees to take unnecessary or excessive risks that could have a material adverse effect on our business.  We have concluded that our programs are appropriately tailored to encourage employees to grow our business, but not to incentincentivize them to do so in a way that poses unnecessary or excessive material risk to us.  For example, the STIP and our long-term incentive compensation,LTIP, which are our two primary performance-based compensation programs, balance each other by providing compensation that rewards short-term and long-term performance.  The STIP balances risk by considering a mix of performance goals, capping the maximum payout a participant can receive and allowsallowing the Compensation Committee to approve the final amount of all bonuses,payments, while the long-term incentive awards include both (i) time-based equity awards that have four-year vesting schedules to encourage a focus on long-term growth and that support management retention and (ii) performance-based awards to incentivize and reward long-term performance.  In addition, we have various policies, such as our clawback, anti-hedging and executive equity ownership policies that are designed to discourage undue risk-taking or manipulation of results.  In addition, the portion of the executives’ compensation comprised of STIP and long-term performance awards is sized to encourage appropriate risk-taking that is aligned with the long-term health of the Company.

 

Clawback Policy

In March 2015, the Compensation Committee recommended and the Board unanimously approved the adoption ofThe Company has a clawback policy (the “Policy”) for the recoupment of incentive-based compensation from its current or former executive officers and such other senior executives and employees (“Covered Executives”) under certain circumstances.circumstances following a restatement of the Company’s financial statements. Under the Policy,clawback policy, the Company may at the Board’s discretion, recover from Covered Executives short and long-term cash incentives, stock options, stock


appreciation rights, restricted stock, restricted stock units, performance shares, and/or performance units (“Incentive Compensation”incentive compensation”). The clawback will include all incentive compensation in excess of the Incentive Compensationamounts or shares that would have been paid or distributed according to the financial statements, as restated.  The Company may also require,requires, as a condition to the grant of any incentive compensation, a Covered Executive to agree in writing to abide by the terms of the Policy. clawback policy.

 

Policy Against Hedging

We prohibit our executive officers and directors from engaging in short-term or speculative transactions involving companyCompany securities, including activities involving short selling our securities, hedging their ownership in our securities by the purchase or sale of options of any kind, whether puts, calls or other derivative securities, purchasing of companyCompany securities in the open market on margin or pledging securities against loans or similar arrangements.

 

Executive EquityStock Ownership

Policy

We encouragerequire our executives to hold a significant equity interest in the Company through our Company. In 2015, we adopted a new stock ownership policy, which superseded and replaced the former stock ownership guidelines adopted in 2013 by the Company. The new policy requires certain executives and directors to hold shares with a value (at the greater of cost or market) equal to a multiple of their base salary.salary or annual retainers.  Our CEO is required to hold equity shares of our Company with a multiple ofminimum aggregate value equal to four (4) times annual base salary and our CFO isand all other executive officers are required to hold equity shares of our Company with a minimum aggregate value equal to two (2) times their respective annual base salary.  All other executive officersNon-employee Board members are required to hold two (2) times and non-employee Board membersequity shares of our Company with a minimum aggregate value equal to three (3) times their annual base salary and annual retainers, respectively.Board retainer.  Each executive officer and director must attain the applicable stock ownership level within five (5) years ofby November 3, 2015, the effective date of the policy,2021, or the fifth anniversary of his or her becoming subject to the policy, whichever shall be the later to occur.  To ensure covered individuals make continuous progress towards their respective stock ownership levels, they must own 25% of their total applicable stock ownership level by the end of the second fiscal year after becoming subject to the policy, 50% by the end of the third fiscal year, 75% by the end of the fourth fiscal year and 100% by the end of the fifth fiscal year.

 

27

SUMMARY COMPENSATIONCOMPENSATION TABLE

 

The following table sets forth certain information with respect to the compensation paid to our Chief Executive Officers (including our former CEO and former interim CEO both of whom served during some portion of 2016),Officer, our Chief Financial Officer,  and our three other most highly compensated executive officers and two additional former named executive officers who served during 2016General Counsel for the years ended December 31, 2016, 20152019 and 2014.

Name and Principal Position Year  Salary Bonus
(1)		 Stock
Awards
(2)		 Option
Awards
(2)		 Non-Equity Incentive Plan Compensation
(3)		 All Other
Compensation
(4)		 Total 
Steven Pickett (5)  2016  $285,404 $282,917 $253,943 $646,000 $—   $32,590 $1,500,854 
Chief Executive Officer and                          
President                          
Charles Schneider (6)  2016   325,000  —  604,176  —  —  480  929,656 
Senior Vice President and  2015   22,500  125,000  97,596  227,265  —  —  472,361 
Chief Financial Officer                          
William Sutton  2016   262,000  —  515,760  —  —  480  778,240 
Senior Vice President and  2015   262,000  —  100,168  241,257  —  10,960  614,385 
General Counsel  2014   259,000  —  114,343  253,874  190,736  360  818,313 
Jay Hilbert (7)  2016   42,308  —  165,075  —  —  68  207,451 
Senior Vice President, Sales                          
Edward Traupman (8)  2016   37,008  —  88,040  —  —  59  125,107 
Vice President, Systems Integration & Automation                          
Martin Jimmerson (9)  2016   167,596  —  600,000  —  —  18,356  785,952 
Former Interim Chief Executive Officer and President &  2015   288,600  —  74,836  176,196  —  1,010,960  1,550,592 
Former Chief Financial Officer  2014   287,125  —  129,349  287,078  226,262  360  930,174 
Mark Slaughter (10)  2016   33,519  —  —  —  —  1,813,692  1,847,211 
Former Chief Executive Officer  2015   415,000  —  224,558  540,499  —  10,960  1,191,017 
and President  2014   404,723  46,480  244,359  542,393  464,800  360  1,703,115 
Hector Maytorena (10)  2016   230,539  —  575,134  —  —  545,356  1,351,029 
Former Group Vice President,  2015   264,230  —  79,492  191,450  —  37,610  572,782 
Managed Services   2014   235,250  25,578  67,321  149,421  170,520  360  648,450 
Morten Hagland Hansen (10)  2016   123,846  —  399,554  —  —  261,297  784,697 
Former Senior Vice President  2015   230,000  —  74,643  179,719  —  52,251  536,613 
and Chief Technology Officer                          

2018.

 


Name and Principal Position

Year

Salary

Bonus

Stock Awards
(1)

Option Awards
(1)

Non-Equity Incentive Plan Compensation
(2)

All Other    Compensation
(3)

Total

  Steven Pickett

2019

$ 504,852

$             -

$ 861,355

101,034

  $ 389,341

$  3,805

$  1,860,387

 

Chief Executive Officer and

2018

492,275

             -

440,769

59,912

   711,548

261,933

1,966,437

 

President

 

 

  

 

            

  

 

  

  Lee Ahlstrom (4)

2019

358,077

-

709,750

71,606

220,984

13,769

1,374,186

 

Senior Vice President & Chief

2018

127,885

-

-

-

170,200

-

298,085

 

Financial Officer

 

 

 

 

 

 

 

 

Brad Eastman

2019

306,923

-

523,348

61,375

108,205

11,802  

1,011,652  

 

Senior Vice President &

2018

300,000

-

272,643

37,057

204,723

11,654  

826,077  

 

General Counsel

 

 

 

 

 

 

 

 

(1)

(1)Bonuses represent discretionary 2014 STIP cash bonuses based on individual performance and in 2016, Mr. Schneider’s 2016 sign-on bonus and in 2017 Mr. Pickett’s guaranteed cash bonus.

(2)

Reflects the aggregate grant date fair value for stock and option awards computed in accordance with FASB ASC Topic 718.  Assumptions used in the determination of these amounts which represent grant date fair value are included in Note 10, Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.

(2)

(3)

Non-equity incentive plan compensation reflects the Board approved cash bonusesSTIP payout amounts as reviewed by the Compensation Committee based on the achievement of performance metrics under our 2014 STIP program for the year.  These bonusesamounts are paid in the month of Marchyear following the year in which they were earned. The Board determines annually if these bonuses are to be settled in cash or shares of stock.  For 2018 and 2019, the amounts were settled in immediately vested stock awards – see the table on page 24 under “2019 Payout Results”.

(3)

(4)

Other compensation represents compensation benefits provided for in employment agreements and other company-wide benefit programs.  Benefits during 2016in 2019 for all NEOs includes life insurance coverage equalinclude 401(k) match on employee contributions limited to two times annual base pay not to exceed $500,000 as well as for Mr. Pickett4.0%, if the employee contributes at least 5.0%. Other compensation also includes relocation and related costs in 2018 for Mr. Pickett of $32,310, and for Messrs. Slaughter, Jimmerson, Maytorena and Hansen include separation benefits in connection with the termination of their respective employment (see note 10 below). In 2015, other compensation includes maximum 401K match benefits of $10,600, Mr. Jimmerson’s separation pay under his agreement to separate as our Chief Financial Officer effective December 31, 2015, and tuition reimbursement for Messrs. Maytorena and Hansen of $37,250 and $41,291, respectively, as well as life insurance coverage equal to two times annual base pay not to exceed $500,000. Other than the relocation assistance and tuition reimbursement amounts reflected above, we did not provide perquisites and other personal benefits exceeding a value of $10,000 to our NEOs.$255,288.

(4)

(5)

Mr. PickettAhlstrom joined the Company on May 31, 2016August 20, 2018 and will participatebegan participating in the Company’s STIP plan beginning in 2017. Mr. Pickett’s agreement provides for additional 2016 cash compensation of seven-twelfths of his base compensation, which was paid in January 2017.2018, on a prorated basis.

 

(6)Mr. Schneider joined the Company on December 8, 2015 and began participation in the Company’s incentive plans beginning in 2016. Mr. Schneider’s agreement provides for a sign-on bonus of $455,000 of which $125,000 was paid in cash in January 2016 and the balance was provided through his December 2016 equity awards.

(7)Mr. Hilbert joined the Company on November 7, 2016. His agreement provides for sign-on equity awards of 7,500 stock options and 7,500 restricted stock units, which were awarded on November 7, 2016.

(8)Mr. Traupman joined the Company on November 7, 2016. His agreement provides for sign-on equity awards of 4,000 stock options and 4,000 restricted stock units, which were awarded on November 7, 2016.

(9)Mr. Jimmerson’s employment as our Senior Vice President and Chief Financial Officer ended with the Company on December 31, 2015 for which he was paid a separation payment, which is included in All Other Compensation above. He was reemployed as our interim CEO and President from January 7, 2016 through June 1, 2016 and was paid $18,356 for unused vacation at June 1, 2016.

(10)The employment of Messrs. Slaughter, Maytorena, and Hansen ended with the Company during 2016. Each was paid a separation payment pursuant to his employment contract as described below, which is included in All Other Compensation above at $1,813,692 $544,916 and $261,039 for Messrs. Slaughter, Maytorena, and Hansen, respectively.

Employment Agreements

 

On March 15, 2017, consistent with our market-based pay philosophy and as discussed above under “The Compensation Setting Process – Role of Compensation Consultant”, our Compensation Committee considered the current economic market conditions, compensation data obtained in 2016 and each executive’s responsibility related to the current size of our Company. Effective April 1, 2017, no changes to our NEO’s base compensation or the STIP target levels were approved by the Board.

Employment Agreements

Mr. Pickett

The Company has an agreement to employ Mr. Pickett as a Chief Executive Officer and President.  His initial annual base salary was set at $485,000.$485,000, subject to increases from time to time.  Under the agreement, pursuant toif the Company terminates Mr. Pickett’s termination of employment without “cause” (other than for death or shoulddisability), the Company, or its successor, terminates Mr. Pickett terminateon or within two years after a “change of control event,” as defined in the Treasury Regulations issued under Section 409A of the Code, or Mr. Pickett terminates his employment for “good reason” within two years of a “change of control” as defined in Section 409A of the Internal Revenue Code,, he is entitled to receive i) a lump sum cash severance in an amount equal to two times his then annual base salary and target bonus for the period in which the termination occurs; ii) COBRA premiums for up to 18 months, with such premiums paid to Mr. Pickett on a fully grossed-up after-tax basis, if necessary, for Mr. Pickett not to be subject to tax under Section 105 of the Internal Revenue Code.Code; and iii) the immediate vesting of the Signing Bonus stock options (as defined in the agreement).  In addition, if Mr. Pickett’s employment terminates without “cause”, for “good reason”, within two years of a “change of control” or due to death or disability, all outstanding unvested equity awards other than performance units shall automatically vest in full not withstanding anything in the award to the contrary and shall remain exercisable for the full term of the applicable award.  If, after a change of control, the successor does not assume or continue such equity award, such award shall automatically vest in full on the date of the change of control.

 

If Mr. Pickett’s termination is due to death or disability or he resigns without good reason, he would be entitled to, in addition to vesting of equity awards as discussed above, all unpaid salary, unused vacation, and certain business expenses.  In addition, upon his employment ceasing due to death or disability, all equity awards outstanding as of the effective date of his agreement shall automatically vest in full and shall remain exercisable for the term specified in the applicable award agreement.

 


In addition, Mr. Pickett is subject to restrictive covenants of noncompetition and non-solicitation for a period of 24 months from his termination date.

 

Under the agreement, “cause” is defined as any of the following: (i) Mr. Pickett’s plea of guilty or nolo contendre, or conviction of a felony or a misdemeanor involving moral turpitude; (ii) any act by Mr. Pickett’sPickett of fraud or dishonesty with respect to any aspect of our business including, but not limited to, falsification of our records; (iii) intentional misconduct by Mr. Pickett that is materially injurious to us (monetarily or otherwise); (iv) Mr. Pickett’s breach of any confidentiality, noncompetition or non-solicitation obligations to the Company; (v) commencement by Mr. Pickett of employment with an unrelated employer; (vi) material violation by Mr. Pickett of any of our written policies, including but not limited to any harassment and/or non-discrimination policies; and (vii) Mr. Pickett’s gross negligence in the performance of his duties.  Mr. Pickett would not be deemed to have been terminated for cause under clauses (ii) through (vii) above unless the determination of whether cause

28

exists is made by a resolution duly adopted by the affirmative vote of not less than three-fourths of the entire membership of the Board (excluding Mr. Pickett, if a member) at a meeting of the Board that was called for the purpose of considering such termination (after 15 days’ notice to Mr. Pickett and an opportunity for Mr. Pickett, together with Mr. Pickett’s counsel, to be heard before the Board and, if reasonably possible, to cure the breach that is the alleged basis for cause) finding that, in the good faith opinion of the Board, Mr. Pickett was guilty of conduct constituting cause and specifying the particulars thereof in detail.

 

Under the agreement, “good reason” means (i) a material adverse change in Mr. Pickett’s position, authority, duties or responsibilities, (ii) a reduction in Mr. Pickett’s base salary or the taking of any action by us that would materially diminish the annual bonus opportunities of Mr. Pickett, (iii) the relocation of the our principal executive offices by more than 50 miles from where such offices are located on the first day of employment or Mr. Pickett being based at any office other than our principal or hemisphere management executive offices, except for travel reasonably required in the performance of Mr. Pickett’s duties, (iv) a material breach of the agreement by us, or (v) the failure of a successor to us to assume the agreement.

 

If Mr. Pickett terminates employment for “good reason”, he shall provide written notice within 45 days of the occurrence of any such reduction, failure, change or breach upon which Mr. Pickett intends to base his resignation, and we shall have 45 days to remedy the reduction, failure, change or breach.  If such reduction, failure, change or breach is not remedied, Mr. Pickett must terminate his employment within 120 days of occurrence of the condition for the termination to be considered “good reason”.

 

A “Change of Control”control” shall have the same meaning as defined in Section 409A of the Internal Revenue Code.  Under the agreement, “disability” means Mr. Pickett is (i) unable to perform substantially his duties for us with or without reasonable accommodation as a result of physical or mental impairment that is reasonably expected to last twelve months, as supported by a written opinion from Mr. Pickett’s physician and is (ii) receiving long-term disability benefits from our insured long-term disability plan.

 

Mr. SchneiderAhlstrom

The CompanyWe entered into an offer letter agreement with Mr. Schneider effective November 23, 2015 as a Senior Vice President and Chief Financial Officer. His initial annual base salary was set at $325,000, and on April 22, 2016 his agreement was amended to modify certain terms related to termination payments. Mr. Schneider, under the amended agreement, pursuant to Mr. Schneider’s termination of employment without “cause” or should Mr. Schneider terminate his employment for “good reason” within two years of a “change of control” as defined in Section 409A of the Internal Revenue Code, he is entitled to receive (i) a lump sum cash severance in an amount equal to one and a half times his then annual base salary and target bonus for the period in which the termination occurs; (ii) immediate vesting of all unvested equity awards, (iii) COBRA premiums for up to 12 months, and (iv) outplacement services not to exceed $20,000. In addition, he is subject to restrictive covenants of noncompetition and non-solicitation for a period of 12 months from his termination date. 

Under the agreement, “cause” is defined as any of the following: (i) Mr. Schneider plea of guilty or nolo contendre, or conviction of a felony or a misdemeanor involving moral turpitude; (ii) any act by Mr. Schneider’s of fraud or dishonesty with respect to any aspect of our business including, but not limited to, falsification of our records; (iii) Mr. Schneider’s failure to perform his duties (other than by reason of an illness or a disability); (iv) engagement in misconduct by Mr. Schneider that is materially injurious to us (monetarily or otherwise); (v) Mr. Schneider’s breach of any confidentiality, noncompetition or non-solicitation obligations to the Company; (vi) commencement by Mr. Schneider of employment with an unrelated employer; (vii) material violation by Mr. Schneider of any of our written policies, including but not limited to any harassment and/or non-discrimination policies; and (viii) Mr. Schneider’s gross negligence in the performance of his duties. The terms of “good reason” and “Change of Control” are defined consistently with the definitions of those same terms described under Mr. Pickett’s agreement above.


Mr. Sutton

We entered into an employment agreement with Mr. Sutton,Ahlstrom, effective on March 14, 2012.August 20, 2018.  In that agreement, we agreed to employ Mr. Sutton as the Vice President and General Counsel. Mr. Sutton’s initial annual base salary was set at $235,000, subject to increase from time to time, and his annual target bonus potential is at least 60.0% of his base salary. 

If Mr. Sutton’s employment is terminated for cause, he is entitled to (i) any earned but unpaid base salary, (ii) any accrued but unused current year vacation up to a maximum of four weeks, plus up to the maximum unused carry-over of vacation provided in our written vacation policy then in effect and (iii) all reasonable, well documented, unreimbursed business expenses incurred by Mr. Sutton.

Under the agreement, if we terminate Mr. Sutton’s employment without “cause” and other than for death or disability or Mr. Sutton terminates his employment with us for “good reason”, he is entitled to (i) a lump sum cash severance in an amount equal to the sum of his then annual base salary and target bonus for the bonus period in which the termination occurs; (ii) COBRA premiums for up to 18 months, with such premiums paid to Mr. Sutton on a fully grossed-up after-tax basis, if necessary, for Mr. Sutton not to be subject to tax under Section 105 of the Internal Revenue Code; (iii) a pro-rated amount equal to the annual bonus that would have been paid to Mr. Sutton had he remained employed through the end of the calendar year in which his employment terminates, to be calculated based on the level of achievement of our financial targets under the STIP at the end of the calendar year; provided that (a) any such determination shall be made without application of any modifier that is based on individual performance, and (b) such bonus amount achieved, if any, shall be prorated based on a fraction, the numerator of which is the number of days of Mr. Sutton’s employment during the applicable calendar year and the denominator of which is 365 (such prorated amount shall be paid during the immediately following calendar year, and not later than when the STIP participants are paid); (iv) if applicable, an amount equal to the unpaid annual bonus for the preceding calendar year that would have been paid to executive had he remained employed through the date of the bonus payments under the STIP for the prior calendar year, which payment shall be made without application of any modifier that is based on individual performance; and (v) outplacement services not to exceed $20,000.

If Mr. Sutton’s termination is due to death or disability, he is entitled to (i) a pro-rated amount equal to the annual bonus that would have been paid to Mr. Sutton had he remained employed through the end of the calendar year in which his employment terminates, to be calculated based on the level of achievement of our financial targets under the STIP at the end of the calendar year; provided that (a) any such determination shall be made without application of any modifier that is based on individual performance, and (b) such bonus amount achieved, if any, shall be prorated based on a fraction, the numerator of which is the number of days of Mr. Sutton’s employment during the applicable calendar year and the denominator of which is 365. Such prorated amount shall be paid during the immediately following calendar year, and not later than, when the STIP participants are paid and (ii) if applicable, an amount equal to the unpaid annual bonus for the preceding calendar year that would have been paid to executive had he remained employed through the date of the bonus payments under the STIP for the prior calendar year, which payment shall be made without application of any modifier that is based on individual performance. In addition, all equity awards shall automatically vest in full and shall remain exercisable for the term specified in the applicable award agreement.

If Mr. Sutton terminates his employment for “good reason” or his employment is terminated by us for any reason other than for cause and such termination occurs within two years on or after a “change of control” as defined in Section 409A of the Internal Revenue Code (a “Change of Control”), all equity awards outstanding at the date of the agreement shall automatically vest in full and shall remain exercisable for the term specified in the applicable award agreement. In addition, if any such equity award is not assumed or continued by our successor after a Change of Control, such award shall automatically vest and become exercisable and/or payable on the date of the Change of Control.

Under the agreement, “cause” and “good reason” are defined consistently with the definitions of the same terms included in Mr. Pickett’s agreement above. Mr. Sutton is subject to restrictive covenants of noncompetition and non-solicitation for a period of 12 months from his termination date. The agreement also provides for ongoing confidentiality and non-disparagement obligations.

Mr. Hilbert

We also entered into an offer letter agreement with Mr. Hilbert, effective on November 7, 2016. In that agreement, we agreed to employ Mr. HilbertAhlstrom as a Senior Vice President, SalesChief Financial Officer with a starting salary of $275,000,$350,000, subject to increase from time to time, and annual short-term and long-term incentive target bonuses of 40.0%85.0% and 90.0%100.0% of base salary, respectively. Under the agreement,respectively. During 2019, Mr. Ahlstrom’s severance benefits were changed that if we terminate Mr. Hilbert’s employmentAhlstrom were being terminated without “cause” or Mr. Hilbertthe employee terminates his employment with us for “good reason” within two years on or after a “Change of Control”, he is entitled to (i) a lump sum cash severance in an amount equal to his then annual base salary;twelve months of salary continuation; (ii) COBRA coverage for up to 12 months, with Mr. Hilbert responsible for the employee portion of premiums; and (iii) a pro-rated amount equal to the annual bonus at target that would have been paid to Mr. Hilbert had hethe employee remained employed through the end of the calendar year in which his employment terminates. terminates; and (iii) COBRA coverage for up to 12 months with the employee responsible for the employee portion of such coverage.

The terms of “cause”,


“good reason” and “Change“change of Control”control” are defined consistently with the same definition of those same terms described under Mr. Schneider’s agreementPickett’s section above. "Good reason" is defined as any of the following: (i) a material adverse change in the executive’s position, authority, duties or responsibilities, (ii) a reduction in the executive’s base salary or the taking of any action by us that would materially diminish the annual bonus opportunities of the executive, (iii) the relocation of our principal executive offices by more than 50 miles from where such offices are located on the first day of employment or the executive being based at any office other than our principal or hemisphere management executive offices, except for travel reasonably required in the performance of the executive’s duties, or (iv) the failure of a successor to us to assume the agreement.  Mr. Ahlstrom would also receive “change of control” benefits in connection with outstanding equity awards pursuant to the provisions within our 2019 and 2010 Omnibus Incentive Plans, as amended.  In addition, he is subject to restrictive covenants of noncompetition and non-solicitation for a period of 12 months from his termination date.

 

Mr. Traupman

Eastman

We also entered into an offer letter agreement with Mr. TraupmanEastman, effective November 3, 2016.on September 11, 2017.  In that agreement we agreed to employ Mr. TraupmanEastman as aour Senior Vice President Systems Integration & AutomationGeneral Counsel, with a starting salary of $240,000,$300,000, subject to increase from time to time, and annual short-term and long-term incentive target bonuses of 40.0%50% and 70.0%100% of base salary, respectively.  Under the agreement,During 2019, Mr. Eastman’s severance benefits were changed that if we terminate Mr. Traupman’s employmentEastman were being terminated without “cause” or Mr. Traupmanthe employee terminates his employment with us for “good reason” within two years on or after a “Change of Control”, he is entitled to (i) a lump sum cash severance in an amount equal to his then annual base salary;twelve months of salary continuation; (ii) COBRA coverage for up to 12 months, with Mr. Traupman responsible for the employee portion of premiums; and (iii) a pro-rated amount equal to the annual bonus at target that would have been paid to Mr. Traupman had hethe employee remained employed through the end of the calendar year in which his employment terminates.terminates; and (iii) COBRA coverage for up to 12 months with the employee responsible for the employee portion of such coverage. The terms of “cause”,“cause,” “good reason” and “Change“change of Control”control” are defined consistently with the same definition of those same terms described under Mr. Schneider’s agreementAhlstrom’s section above.  Mr. Eastman would also receive “change of control” benefits in connection with outstanding equity awards pursuant to the provisions within our 2019 and 2010 Omnibus Incentive Plans, as amended.  In addition, he is subject to restrictive covenants of noncompetition and non-solicitation for a period of 12 months from his termination date.

29

Mr. JimmersonOUTSTANDING EQUITY AWAR

As previously reported, Mr. Jimmerson was employed as our interim CEO and President from January 7, 2016 through June 1, 2016. We agreed to employ Mr. Jimmerson’s as our Interim CEO and President and reinstated and amended his prior employment agreement effective January 7, 2016 to revise his duties and to remove severance compensation, with the exception of the payment of COBRA premiums for up to 18 months, with such premiums paid to Mr. Jimmerson on a fully grossed-up after-tax basis, if necessary, for Mr. Jimmerson not to be subject to tax under Section 105 of the Internal Revenue Code. Mr. Jimmerson’s agreement set his annual base salary at $415,000 along with the potential to earn a cash performance bonus equal to 100% of his annual base salary. He also was granted equity incentive awards including a non-performance based restricted stock unit award of $300,000 which vests on May 19, 2017 and a $300,000 performance unit award with a one-year vesting period had the potential 2 times multiplier, if the Company exceeded performance targets that were unspecified at the time of the agreement. Upon separation from employment on June 1, 2016, 14,218 shares (58.2%) of the performance unit award were forfeited based on the remaining days of the performance period; the remaining shares vest and are payable in January 2017. If Mr. Jimmerson’s employment had ended prior to completion of a new permanent CEO and President being recruited, he would have forfeited the cash and restricted stock unit award performance incentives.

Mr. Jimmerson’s previous employment agreement was effective from March 14, 2012 through DecemberDS AT DECEMBER 31, 2015 when he ceased to be an employee, until his appointment as interim CEO and President. The 2012 agreement was amended on July 1, 2015, under which he agreed to remain employed as our Chief Financial Officer until the new Chief Financial Officer was hired and supported through transition or until December 31, 2015, and was further amended on January 7, 2016, as discussed above. In connection with him ceasing to be the Chief Financial Officer, Mr. Jimmerson agreed to a cash severance amount of $1,000,000, which was deemed incentive compensation for purposes of our clawback policy. Mr. Jimmerson is subject to restrictive covenants of noncompetition and non-solicitation for a period of 18 months from his termination date. The agreement provides for ongoing confidentiality and non-disparagement obligations. 

Mr. Slaughter

As previously reported, Mr. Slaughter’s employment with us ended effective January 7, 2016. Prior to his departure, the Company had an agreement to employMr. Slaughter as the CEO and President until he or we decided to terminate his position for any reason. Under the agreement, pursuant to Mr. Slaughter’s termination of employment without “cause”, he received (i) any earned but unpaid base salary; (ii) any accrued but unused current year vacation up to a maximum of four weeks, plus up to the maximum unused carry-over of vacation provided in our written vacation policy then in effect (iii) all unreimbursed business expenses he incurred; (iv) a lump sum cash severance in an amount equal to twice the sum of his then annual base salary and target bonus for the bonus period in which the termination occurs; (v) COBRA premiums for up to 18 months, with such premiums paid to Mr. Slaughter on a fully grossed-up after-tax basis, if necessary, for Mr. Slaughter not to be subject to tax under Section 105 of the Internal Revenue Code; (vi) a pro-rated amount equal to the annual bonus that would have been paid to Mr. Slaughter had he remained employed through the end of the calendar year in which his employment terminates, to be calculated based on the level of achievement of our financial targets under the STIP at the end of the calendar year; (vii) if applicable, an amount equal to the unpaid annual bonus for the preceding calendar year that would have been paid to Mr. Slaughter had he remained employed through the date of the bonus payments under the STIP for the prior calendar year; and (viii) outplacement services not to exceed $20,000. In connection with his departure and pursuant to his severance agreement, he also received an additional $100,000 cash separation benefit. Mr. Slaughter was not provided a gross-up payment related to any excise taxes under Section 4999 of the Internal Revenue Code.2019

 


 

 

 

 

 

Name

Option Awards

 

Stock and Unit Awards

Number of
Securities
Underlying
Unexercised
Options -
Exercisable
(1)

Number of
Securities
Underlying
Unexercised
Options -
Unexercisable

Option
Exercise
Price

Option
Expiration
Date

Number of
Securities
that have
not Vested
(1)

 

Market
Value of
Securities
that have
not Vested
(2)

Incentive Unit Awards

 

Number of
Securities
that have
not Vested
(3)

Market
Value of
Securities
that have
not Vested
(2)

Steven Pickett

75,000

25,000

(4)

$ 12.60

5/27/26

 

3,930

(4)

$  25,935

7,269

 

$ 47,975

 

2,097

6,294

(6)

$ 13.50

3/7/25

 

6,202

(5)

40,933

15,607

 

  103,006

 

-

6,329

(7)

$15.06

3/20/26

 

10,168

(6)

67,107

13,210

 

  87,186

 

-

16,871

(8)

$ 5.77

11/25/26

 

16,508

(7)

108,952

46,530

 

307,098

 

 

 

 

 

 

 

37,224

(8)

245,678

 

 

 

Lee Ahlstrom

-

4,478

(7)

$15.06

3/20/26

 

11,680

(7)

77,088

9,346

 

61,684

 

-

11,977

(8)

$ 5.77

11/25/26

 

26,425

(8)

174,405

33,031

 

218,005

 

 

 

 

 

 

 

10,309

(9)

68,039

 

 

 

Brad Eastman

1,297

3,893

(6)

$ 13.50

3/7/25

 

6,290

(6)

    41,514

9,653

 

63,710

 

-

3,838

(7)

$15.06

3/20/26

 

10,011

(7)

66,073

8,011

 

52,873

 

-

10,266

(8)

$ 5.77

11/25/26

 

22,650

(8)

149,490

28,312

 

186,859

The terms of “cause”, “good reason” and “Change of Control” are defined consistently with those same terms as described under Mr. Pickett’s agreement above. Mr. Slaughter is subject to restrictive covenants of noncompetition and non-solicitation for a period of 24 months from his termination date. The agreement also provides for ongoing confidentiality and non-disparagement obligations.

Mr. Maytorena

As previously reported, Mr. Maytorena’s employment with us ended effective November 7, 2016. Prior to his departure, we entered into an employment agreement in which we agreed to employ Mr. Maytorena as a Vice President and General Manager until he or we decided to terminate his position for any reason. Under the agreement, pursuant to Mr. Maytorena’s termination of employment without “cause”, he received a lump sum cash severance in an amount equal to the sum of his then annual base salary and target bonus, thirty days’ notice pay, COBRA premiums for twelve months, and $15,000 in outplacement services. In addition, he is subject to restrictive covenants of noncompetition and non-solicitation for a period of 12 months from his termination date.

Mr. Hansen

As previously reported, Mr. Hansen’s employment with us ended effective July 15, 2016. Prior to his departure, we had an offer letter agreement in which we agreed to employ Mr. Hansen until he or we decided to terminate his position for any reason. Under the agreement, pursuant to Mr. Hansen’s termination of employment without “cause”, he received a lump sum cash severance in an amount equal to the sum of his then annual base salary and target bonus, and COBRA premiums for twelve months. In addition, he is subject to restrictive covenants of noncompetition and non-solicitation for a period of 24 months from his termination date.

2016 GRANTS OF PLAN-BASED AWARDS

   Estimated Future PayoutsAll Other Stock
Awards:  Number
of Securities
Underlying Stock
/Unit Awards		Option AwardsGrant Date
Fair Value of
Stock Unit and
Option Awards
(4)
   

Under Equity Incentive Plan Awards

(1) (2)

Number of Securities Underlying OptionsExercise 
Price Per
Share (3)
 Grant 
Date		 
  Threshold		TargetMaximum
Name 
Steven Pickett6/2/16 ——— 15,717—— $ 177,759
 6/2/16 ———— 100,000$12.60 646,000
 6/2/16(1) 2,021 6,736 20,208——— 76,184
Charles Schneider3/10/16 ——— 26,000—— 319,280
 3/10/16 ——— 12,000—— 147,360
 3/10/16(1) 3,36011,200 33,600——— 137,536
  (2)  $34,125$227,500$568,750——— —
William Sutton3/10/16 ——— 21,000—— 257,880
3/10/16 ——— 12,000—— 147,360
 3/10/16(1) 2,700 9,000 27,000——— 110,520
  (2)$25,545$170,300$425,750——— —
Jay Hilbert11/7/16 ——— 7,500—— 109,125
 11/7/16 ——— —7,500— 55,950
Edward Traupman11/7/16 ———4,000—— 58,200
 11/7/16 ——— —4,000— 29,840
Martin Jimmerson3/10/16 ——— 24,430—— 300,000
 3/10/16(1) 7,32924,430 48,860——— 300,000
Mark Slaughter (5)——— ——— —
Hector Maytorena3/10/16 ——— 21,600—— 265,248
 3/10/16 ——— 16,000—— 196,480
 3/10/16(1)2,7719,235 27,705——— 137,536
  (2) $44,949$299,663$749,158——— —
Morten Hagland Hansen3/10/16 ——— 15,800—— 194,024
3/10/16 ——— 10,000—— 122,800
 3/10/16(1) 2,023 6,743 20,229——— 82,730
  (2) $20,700$138,000345,000——— —
          

(1)The threshold, target and maximum percentages related to PU awards are 30.0%, 100.0% and 300.0%, respectively. For a discussion of the performance stock unit thresholds and measurement criteria see “Determining the Amount of Each Element of Compensation for 2016 – Long-Term Incentive Compensation “ above. These awards generally vest each annual performance period or sooner if an individual’s employment ceases due to retirement, death, disability or change of control, and are payable on July 1, 2019.

(2)The threshold, target and maximum percentages related to 2016 STIP compensation are 90.0%, 100.0% and 250.0%, respectively. The STIP provides incentive compensation based on achievement of Adjusted EBITDA and Revenue financial metrics, subject to plan limitations, as discussed above under see “Determining the Amount of Each Element of Compensation for 2016 − Short-term Incentive Compensation” and is payable in stock for our NEOs. Due to the STIP threshold metrics not being achieved, there were no STIP payouts in 2016.

(3)For a discussion of our methodology in determining the fair value of our common stock see Note 10, Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.

 31

(1)

(4)Reflects the aggregate grant date fair value for restricted stock granted in 2016 computed in accordance with FASB ASC Topic 718. Assumptions used in the determination of these amounts which represent grant date fair value are included in Note 10, Stock-Based Compensation, to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.

(5)Mr. Slaughter was granted no awards during 2016.

On March 15, 2017, the Committee recommended and the Board approved RSU and PU awards to our NEOs, as part of our normal annual review of equity awards to incentivize our executives for the long-term success of our Company and to provide critical retention incentives.

 

Name

 Number of Securities
Underlying Unit Awards (1)		 Long-term Performance
Awards (2)
Steven Pickett12,404 12,404
Charles Schneider11,637 11,637
William Sutton9,381 9,381
Jay Hilbert6,330 6,330
Edward Traupman4,297 4,297

(1)The unit awards vest equally over four years beginning March 19 2018.
(2)This represents units to be awarded for the achievement of target performance thresholds over a three-year period and vest on July 1, 2020, with a potential for a three times performance multiplier.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2016

 Option Awards Stock and Unit Awards
 Number of        Incentive Unit Awards
NameSecurities
Underlying
Unexercised
Options -
Exercisable
(1)		Number of
Securities
Underlying
Unexercised
Options -
Unexercisable		Option
Exercise
Price		Option
Expiration
Date		 Number of
Securities
that have
not Vested
(1)		Market
Value of
Securities
that have not
Vested
(2)		Number of Securities
that have
not
Vested (3)		Market
Value of
Securities
that have
not Vested
(2)
Steven Pickett—100,000(4) $ 12.605/27/26  15,717(4) $ 363,849 6,736 $ 155,938
Charles Schneider— 20,850(5)  22.0912/8/25  4,481(5)  103,735 11,200  259,280
  — —  ——  26,000(6)  601,900 — —
  — —  ——  12,000(7)  277,800 — —
William Sutton 5,700 —(8)  9.641/1/18  1,273(12)    29,470 9,000 208,350
  5,750 —(10)  8.481/1/20  1,113(14)    25,766 — —
  22,696 —(11)  18.003/22/21  1,740(16)    40,281 ——
  24,978 —(12)  17.083/7/22  768(17)    17,779 ——
  17,352 5,785(13)  19.963/6/23  21,000(6)  486,150 ——
  4,931 4,932(15)  47.173/5/24  12,000(7)  277,800 ——
  3,078 9,236(17)  33.203/4/25  —  — ——
  1,359 4,079(18)  33.2011/3/25  —  — ——
Jay Hilbert — 7,500(19)  14.5511/7/26  7,500(19)    173,625 ——
Edward Traupman—4,000(19)14.5511/7/65  4,000 (19)    92,600——
Martin Jimmerson————  24,430 (20)  565,555 ——
 ————  10,212 (21)  236,408 ——
Mark Slaughter———— — ———
Hector Maytorena 6,250 —(22)  11.0011/5/17 —  — — —
  6,250 —(8)  9.641/1/18 —  — — —
  6,250 —(9)  5.321/1/19 —  — — —
  6,250 —(10)  8.481/1/20 —  — — —
  12,604 —(11)  18.003/22/21 —  — — —
  13,685 —(12)  17.083/7/22 —  — — —
  10,244 —(13)  19.963/6/23 —  — — —
  2,902—(15)  47.173/5/24 —  — — —
  2,467 —(17)  33.203/4/25 —  — — —
  1,057 —(18)  33.2011/3/25 —  — — —
Morten Hagland Hansen                  —— —— 907 (20)20,997——
            

(1)The option and stock awards prior to 2019 reflected in the table above generally vest as to one-fourth of the total number of shares on the first, second, third, and fourth year anniversary of the date of award or first vesting date specified in the award agreement, except foragreement.  Awards issued in 2019 vest as to one-third of the awards notedtotal number of shares on the first, second, and third year anniversary of the date of award or first vesting date specified in (7) and (20) below which vest in full on a specific future date and (21) which vests based on achievement of performance measures over three years.the award agreement

(2)

(2)

Based on the closing price of our common stock on December 31, 20162019 of $23.15.

$6.60.

 32

(3)

(3)

Incentive unit awards represent the target units to be awarded for the achievement of target performance thresholds over a three-year period, generally vest each annualand are payable on July 1st following the final performance period, or sooner if an individual’s employment ceases due to retirement, death, disability or change of control,control.  Awards have maximum potential payout of 300%, 250% or 500% for 2018, March 2019 and are payable on July 1,Fall 2019 with a potential for a three times performance multiplier.  awards, respectively.

(4)

(4)

The date of the award was June 2, 2016, with the initial one-fourth vesting on May 31, 20172018 and one-fourth annually thereafter.

(5)

(5)The date of the award was December 5, 2015, with the initial one-fourth vesting on May 15, 2017 and one-fourth annually thereafter.
(6)

The date of the award was March 10, 2016,15, 2017, with the initial one-fourth vesting on March 19, 20172018 and one-fourth annually thereafter.

(6)

(7)The date of the award was March 10, 2016, with the full vesting on March 19, 2019.
(8)The date of the award was January 1, 2008.
(9)The date of the award was January 1, 2009.

(10) The date of the award was January 1, 2010. 

(11)The date of the award was March 22, 2011.
(12)The date of the award was March 7, 2012.2018, with the initial one-fourth vesting on March 7, 2019 and one-fourth annually thereafter.

(7)

(13)

The date of the award was March 6, 2013.

(14)The date of the award was March 6, 2013,20, 2019, with the initial one-fourthone-third vesting on May 1, 2014March 20, 2020 and one-fourthone-third annually thereafter.

(8)

(15)The date of the award was March 5, 2014.
(16)The date of the award was March 5, 2014, with the initial one-fourth vesting on May 15, 2016 and one-fourth annually thereafter.
(17)The date of the award was March 4, 2015, with the initial one-fourth vesting on May 15, 2016 and one-fourth annually thereafter. 
(18)

The date of the award was November 3, 2015,25, 2019, with the initial one-fourthone-third vesting on May 15, 2016November 25, 2020 and one-fourthone-third annually thereafter.

(9)

(19)

The date of the award was NovemberMay 7, 2016,2019, with full vesting on November 7, 2020.

(20)The date of the award was March 10, 2016, with fullinitial one-third vesting on May 15, 2017.
(21)The date of the award was March 10, 2016 with performance measures; these shares were earned due to employment ending for other than cause7, 2020 and vested in January 2017.
(22)The date of the award was November 5, 2007.

one-third annually thereafter.

OPTION EXERCISES AND VESTING OF RESTRICTED STOCK

The following table contains information about the exercise of stock options by, and vesting of restricted stock for our NEOs during 2016.

 Option Awards Stock Awards
NameNumber of Shares
Acquired on
Exercise		Value Realized on
Exercise (1)		 Number of Shares
Acquired on
Vesting		Value Realized on
Vesting (2)
Steven Pickett—— ——
Charles Schneider ——  ——
William Sutton — — 4,110—
Jay Hilbert — — ——
Edward Traupman —— ——
Martin Jimmerson57,875$ 299,191 — —
Mark Slaughter135,125 608,218  — —
Hector Maytorena — — 2,532 $ 35,968
Morten Hagland Hansen9,485   57,553 2,848  41,070
      

(1)Value realized on exercise represents the difference between the sales price obtained on the sale of shares and the exercise price per share, multiplied by the number of shares sold in each exercise transaction.
(2)Value represents the closing price per share of our stock on the vesting date, multiplied by the gross number of shares vested.

PENSION BENEFITS

We do not provide pension benefits for our NEOs or other employees. Retirement benefits are provided through the Savings Plan discussed below.

NON-QUALIFIED DEFERRED COMPENSATION

We do not have a non-qualified deferred compensation plan. As such, no compensation has been deferred by our NEOs or our other employees. The Savings Plan is a 401(k) deferred compensation arrangement and a qualified plan under section 401(a) of the Internal Revenue Code (the “Code”) (“The Savings Plan”).

 33

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

 

Payments Made Upon Termination

Regardless of the manner in which an executive officer’sofficer's employment terminates, the executive will be entitled to receive amounts earned (but unpaid) during his or her term of employment. Such amounts include:

 

●earned, but unpaid base salary;
●target non-equity incentive compensation earned during the fiscal year;
●unpaid non-equity compensation for the preceding year;
●unused vacation pay; and
●amounts contributed and vested through our Savings Plan.

earned, but unpaid base salary;

unused vacation pay; and

amounts contributed and vested through our 401(k) plan (including any Company matching contributions).

 

If provided for in the executive’s employment agreement and their separation is the result of death or “Disability”,disability, the executive or his or her estate shall receive the above benefits, any long-term disability benefits and certain unvested equity awards shall immediately vest and become exercisable.

 

The employment agreements with each of our executives also provide certain benefits if their employment is terminated under various circumstances.  See above under “Employment Agreements” for a description of those circumstances and the benefits to which the NEOs are entitled.

 

Excise Taxes

For all NEOs if any benefits payable or otherwise provided under each named executive officer’sofficer's employment agreement would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), we will not pay or otherwise reimburse the executive for such Excise Tax and any related taxes, fees or penalties thereon.

 

30

Quantification of Payments on Termination

The chart below reflects the amount of compensation payable to each of our NEOs in the event of termination of such executive’sexecutive's employment pursuant to his employment agreement and our stock compensation plans.  The amount of compensation payable to each executive officer upon voluntary termination with “Good Reason,” involuntary termination other than for “Cause,” termination following a “Change of Control” and the occurrence of the “Disability” or death of the executive is shown below.  The amounts shown are calculated assuming that such termination was effective as of December 31, 2016,2019, and thus include amounts earned through such time (other than amounts payable pursuant to our Savings Plan)401(k) plan) and are estimates of the amounts, which would be paid out to the executives upon their termination.  The actual amounts to be paid out may only be determined at the time of the executive’s actual separation from us.

 

During 2019, the Board approved changes to NEO severance benefits as discussed above under “Employment Agreements”.

 34

 

Post EmploymentPost-Employment Compensation Table

 

NameSeverance
Payment		Early Vesting
of Equity
Awards (1)		 Health &
Welfare
Benefits (2)		 Total Benefit
Steven Pickett    
 Change of Control$ 1,940,000$ 1,465,630$ 40,232$ 3,445,862
 Other than Cause or for Good Reason (3) 1,940,0001,465,630 40,2323,445,862
 Disability or Death—1,465,630—1,465,630
Charles Schneider    
 Change of Control 489,8951,264,81633,4881,788,199
 Other than Cause or for Good Reason (3) 489,8951,264,816 33,4881,788,199
 Disability or Death2,3951,264,816—1,267,211
William Sutton    
 Change of Control 448,927895,700 33,4881,378,115
 Other than Cause or for Good Reason (3)448,92762,50533,488 544,920
 Disability or Death 16,627895,700—912,327
Jay Hilbert    
 Change of Control 275,000—18,298293,298
 Other than Cause or for Good Reason (3) 275,000— 18,298293,298
 Disability or Death————
Edward Traupman    
 Change of Control 240,000— 18,298258,298
 Other than Cause or for Good Reason (3)240,000—18,298 258,298
 Disability or Death————
Martin Jimmerson    
 Other than Cause or for Good Reason (4)18,356—20,232 38,588
Mark Slaughter    
 Other than Cause or for Good Reason (4) 1,805,126— 34,018 1,839,144
Hector Maytorena    
 Other than Cause or for Good Reason (4) 499,997— 45,349 545,356
Morten Hagland Hansen    
 Other than Cause or for Good Reason (4) 242,999— 18,298 261,297
      
(1)See the table Outstanding Equity Awards as of December 31, 2016 presented earlier in this section of this proxy statement.
(2)This column includes any applicable Cobra premiums paid for the executive and agreed upon outplacement services.
(3)Termination assumes there has not been a change of control event within the prior two years.
(4)Messrs. Jimmerson, Slaughter, Maytorena and Hansen had their employment terminated during 2016 for other than cause. These amounts were the severance payments and benefits received under their respective employment agreements, which are described above under “Employment Agreements”.

Name

Severance Payment

Early Vesting of Equity Awards (1)

Health & Welfare Benefits (2)

Total Benefit

Steven Pickett

 

 

 

 

 

Change of Control

$ 2,080,188

$ 615,106

$ 61,538

$ 2,756,833

 

Other than Cause or for Good Reason (3)

2,080,188

615.106

61,538

2,756,833

 

Disability or Death

48,864

615,106

-

663,936

Lee Ahlstrom

 

 

 

 

 

Change of Control

365,873

196,683

6,426

580,791

 

Other than Cause or for Good Reason (3)

365,873

12,337

6,426

396,445

 

Disability or Death

29,519

-

-

17,710

Brad Eastman

 

 

 

 

 

Change of Control

323,262

197,702

6,245

512,947

 

Other than Cause or for Good Reason (3)

323.262

39,691

6,245

354,936

 

Disability or Death

39,691

-

-

39,691

 

(1)See the table of Outstanding Equity Awards as of December 31, 2019 presented earlier in this section of this proxy statement.

(2)This column includes any applicable COBRA premiums paid for the executive and agreed upon outplacement services.

(3)Termination assumes there has not been a change of control event within the prior two years.

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

Submitted By:
Compensation Committee
Keith Olsen, Chairman
James H. Browning
Kevin O’Hara
Ditlef de Vibe

Submitted By:

Compensation Committee


Kevin O’Hara, Chair

Ditlef de Vibe

Brent Whittington

 

This Report of the Compensation Committee is not “soliciting material” and shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this report by reference, and shall not otherwise be deemed filed under such Acts.



31

SECURITY OWNERSHIPOWNERSHIP

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth as of March 6, 2017,9, 2020, the number of shares beneficially owned by: (i) each person who is known to us to beneficially own more than 5.0% of a class of shares;the Company’s common stock; (ii) the current directors and nominees of our Board; (iii) each named executive officer included in the Summary Compensation Table; and (iv) all current directors and executive officers as a group.  As noted in the footnotes to the table below, we obtained certain information in the table from filings made with the SEC.  Unless otherwise noted in the footnotes to the table below, to our knowledge each beneficial owner has sole voting power and sole investment power, subject to community property laws for individuals that may apply to create shared voting and investment power.  Unless indicated in the footnotes below, the address of each beneficial owner is c/o RigNet, Inc., 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084-4947.

 

Except as otherwise noted in the table below, we calculated the percentage of shares outstanding based on 18,029,013 19,982,473 shares of common stock outstanding on March 6, 2017.9, 2020.  In accordance with SEC regulations, we also include (i) shares subject to options that are currently exercisable or will become exercisable within 60 days of March 6, 2017,9, 2020, and ii)(ii) shares issuable upon settlement of restricted stock units that are vested, or will become vested within 60 days of March 6, 2017.9, 2020.  Those shares are deemed to be outstanding and beneficially owned by the person holding such option or restricted stock unit for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

32

 

Security Ownership Table

Directors / NomineesStock Total%     Named Executive OfficersStock Total%
James H. Browning 18,973 Ŧ 18,973* Steven Pickett   — Λ —*
Mattia Caprioli — Ŧ—* Charles Schneider (1)— Λ 4,481*
Charles L. Davis 38,906 Ŧ 38,906* William Sutton (2)13,412 Λ 104,150*
Ditlef de Vibe10,763 Ŧ 10,763* Jay Hilbert     — Λ —*
Kevin Mulloy   52 Λ52* Edward Traupman       1,000 Λ 1,000*
Kevin O’Hara   15,973 Λ15,973* Martin Jimmerson (3)   34,642    34,642*
Keith Olsen   8,732 Ŧ8,732* Mark Slaughter (3)166,752    167,002*
Brent K. Whittington 21,373 Ŧ21,373* Hector Maytorena (3)    7,528    7,528*
     Hagland Morten Hansen (3)      21,978   21,978        *
         
5% Beneficial OwnersStock Total%         
Kohlberg Kravis Roberts & Co (5)4,750,0004,750,00026.3%     
Arrowpoint Asset Management (6) 2,802,2282,802,22815.5% All Current Directors and   
FMR LLC (7)2,145,1322,145,13211.9% Officers as a group (13 persons)129,184   224,4031.2%

Directors / Nominees

Stock

Total

   %

 

All Executive Officers

    Stock

     Total

   %

James H. Browning (1)

38,055 Ŧ

50,451

*

 

Steven Pickett (2)

63,200 Λ

222,445

1.1%

Mattia Caprioli

- Ŧ  

-  

*

 

Lee Ahlstrom (3)

6,639 Λ  

51,483

*

Ditlef de Vibe (1)

29,845 Ŧ

42,241

*

 

Brad Eastman (4)

15,012 Λ

46,201

*

Kevin Mulloy (1)

12,804 Λ

25,200

*

 

Brendan Sullivan (5)

11,837 Λ

37,954

*

Kevin O’Hara (1)

46,540 Ŧ

58,936

*

 

Edward Traupman (6)

17,349 Λ

40,314

*

Keith Olsen (1)

25,114 Λ

37,510

*

 

James A. Barnett Jr (7)

1,481 Λ

14,647

*

Gail P. Smith (1)

8,417 Λ  

20,813  

*

 

Egbert Carver Clarke (8)

8,090 Λ

25,054

*

Brent K. Whittington (1)

40,455 Ŧ

52,851

*

 

 

 

 

 

 

 

 

 

 

All Directors and Executives

    Stock

      Total

     %

5% Beneficial Owners

   Stock

Total

   %

 

As a group (15 persons)

  324,838

725,100

3.5%

Digital Oilfield Investments LP (9)  

5,000,254

5,000,254

25.0%

 

Ŧ  Meets or exceeds executive equity ownership requirements

FMR LLC (10)

2,947,753

2,947,753

14.8%

 

Λ  Within transition period for equity ownership requirements

ArrowMark Colorado Holdings LLC (11)

  2,828,399

2,828,399

14.2%

 

*       Less than 1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*

(1)

Less than 1.0%

Includes 12,396 restricted stock units, which are exercisable or vest within 60 days of classMarch 9, 2020.

Ŧ

(2)

Meets or exceeds executive equity ownership requirements
ΛWithin transition period

Includes 108,452 shares issued March 11, 2020 for equity ownership requirements

(1)Includes 4,481the 2019 STIP payout, less 42,503 shares of restricted stock.

(2)Includes 85,844withheld for taxes; 81,304 shares of stock subject to options and 11,992 restricted stock units, which are exercisable or will vest within 60 days of March 6, 2017, and 4,8949, 2020.  

(3)

Includes 61,555 shares of restricted stock.

(3)Represents our latest available data, which does not reflect ownership transactions subsequent to his separation of employment as no additional information has been voluntarily reported to us. Mr. Slaughter’s ownership also includes 125issued March 11, 2020 for the 2019 STIP payout, less 24,673 shares withheld for taxes; 1,492 shares of stock owned by Kristen Slaughter, who is Mr. Slaughter’s daughter,subject to options and 1256,470 restricted stock units, which are exercisable or will vest within 60 days of March 9, 2020.

(4)

Includes 30,141 shares issued March 11, 2020 for the 2019 STIP payout, less 8,260 shares withheld for taxes; 3,874 shares of stock owned by Leslie Slaughter, who is Mr. Slaughter’s daughter. Mr. Slaughter disclaims beneficial ownershipsubject to options and 5,434 restricted stock units, which are exercisable or will vest within 60 days of the shares owned by Kristen Slaughter and Leslie Slaughter.March 9, 2020.

(4)

(5)

Includes 29,750 shares issued March 11, 2020 for the 2019 STIP payout, less 8,332 shares withheld for taxes; 1,949 shares of stock subject to options and 2,750 restricted stock units, which are exercisable or will vest within 60 days of March 9, 2020.

(6)

Includes 17,949 shares issued March 11, 2020 for the 2019 STIP payout, less 5,322 shares withheld for taxes; 5,184 shares of stock subject to options and 4,154 restricted stock units, which are exercisable or will vest within 60 days of March 9, 2020.

(7)

Includes 17,763 shares issued March 11, 2020 for the 2019 STIP payout, less 6,289 shares withheld for taxes; 469 shares of stock subject to options and 1,223 restricted stock units, which are exercisable or will vest within 60 days of March 9, 2020.

(8)

Includes 19,055 shares issued March 11, 2020 for the 2019 STIP payout, less 5,650 shares withheld for taxes; 1,472 shares of stock subject to options and 2,087 restricted stock units, which are exercisable or will vest within 60 days of March 9, 2020.

(9)

Based on Amendment No. 1 to Schedule 13DForm 4 filed with the SEC on September 26, 2013,August 31, 2018, the 4,750,0005,000,254 shares of Common Stockcommon stock are held directly by Digital Oilfield Investments LP.,LP, a wholly owned subsidiary of Kohlberg Kravis Roberts & Co.  As disclosed, each of Digital Oilfield Investments GP Limited, KKR European Fund III Limited Partnership, KKR Associates Europe III Limited Partnership, KKR Europe III Limited, KKR Fund Holdings L.P., KKR Group Holdings Corp., KKR Fund Holdings GP Limited, KKR Group Holdings L.P., KKR Group Holdings GP Limited, KKR & Co. L.P., KKR Management LLC, KKR & Co, Inc., Henry R. Kravis and George R. Roberts hashave voting and dispositive power over all the securities held directly by Digital Investments LP and may be deemed to be the beneficial owner of the securities held directly by Digital Oilfield Investments LP, and each disclaims beneficial ownership of the securities.  The address of each such beneficial owner (except Mr. Roberts) is c/o Kohlberg Kravis Roberts & Co. L. P., 9 West 57th57th Street, Suite 4200, New York, NY 10019.  The address of Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P.L. P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA  94025.


(5)

(10)

Based on Amendment No. 34 to Schedule 13G filed with the SEC on February 13, 2017, Arrowpoint Asset Management,7, 2020, FMR LLC reported that they have sole dispositive and voting power as to all such shares. The Schedule 13G also reported that Meridian Growth Fund is the beneficial owner of 786,525 shares, which per the Schedule 13G constitutes 4.4% of the common stock. We have assumed that these 786,525 shares over which Meridian has voting power are included in the 2,802,228 shares over which Arrowpoint Asset Management has voting power; however, the 13G is unclear on this point and is unclear as to the relationship between Arrowpoint Asset Management and Meridian. The address for each such beneficial owner is 100 Fillmore Street, Suite 325, Denver, Colorado 80206.

(6)Based on Amendment No. 1 to Schedule 13G filed with the SEC on February 14, 2017, FMR LLC. (“FMR”) reported that it, Abigail P. Johnson and Select Energy Service Portfolio reported that theymembers of the Johnson family have sole dispositivevoting power over 134,600 shares, shared power to vote and votingdispose of none of the shares, and sole dispositive power as to 2,145,1322,947,753 shares.  Abigail P. Johnson is a director, the Chairman,Chair, and the Chief Executive Officer of FMR.  Members of the Johnson family, including Abigail P. Johnson, directly or through trusts represent 49.0% of the voting power of FMR, and have entered into a voting agreement with other shareholders forming a controlling group with respect to FMR, LLC. The Schedule 13G further states neither FMR nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under or advised by Fidelity Management & Research Company (FMR Co), a wholly owned subsidiary of FMR.  The address for each such beneficial owner is 245 Summer Street, Boston, Massachusetts 02210.

(11)

Based on Amendment No. 5 to Schedule 13G filed with the SEC on February 14, 2019, ArrowMark Colorado Holdings LLC, formerly Asset Management, LLC reported that it has sole dispositive and voting power as to all such shares. The address for ArrowMark Colorado Holdings LLC is 100 Fillmore Street, Suite 325, Denver, Colorado 80206.

 

DELIQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS

 

Section 16(a) of the Exchange Act requires our NEOs and directors and persons who beneficially own more than ten percent of our common stock to file reports of ownership and changes in ownership concerning our common stock with the SEC and to furnish us with copies of all Section 16(a) forms they file.  Based solely upon our review of the Section 16(a) filings that have been received by us and representations made to us by our executive officers and directors, we believe that all filings required to be made under Section 16(a) during 20162019 were made timely, except for reporting a share award for Mr. Jimmerson filed two days late; share awards for Messrs. Schneider, Sutton, Maytorena, and Hansen each filed one day late; and two share transactions for Mr. Davis, one filed two hundred twenty days and one filed nine days late.timely.

33

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 

The table below sets forth the following information as of the end of December 31, 20162019 for (i) all compensation plans previously approved by our stockholders and (ii) all compensation plans not previously approved by our stockholders.

 

Plan categoryNumber of securities to
be issued upon exercise
of outstanding options
(a)		 Weighted-average
exercise price of
such outstanding
options		 Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a) (1))

Number of securities to be issued upon exercise of outstanding options (a)

 

Weighted-average exercise price of outstanding options

 

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (1)

Equity compensation plans
approved by security holders		498,694  $ 20.77 2,600,159

239,247

  

$ 22.09

  

579,593

Equity compensation plans not
approved by security holders		—   —   —

Equity compensation plans not
approved by security holders

-

 

-

  

-

 

 
Total 498,694  $ 20.77 2,600,159

Total

239,247

 

$ 22.09

 

579,593

 

 

 

 

 

 

(1)

Represents shares available under the 2010RigNet, Inc. 2019 Omnibus Incentive Plan, as amended. amended.  No additional shares will be awarded under the RigNet, Inc.2010 Omnibus Incentive Plan, as amended or the 2006 Long-Term Incentive Plan or the RigNet Inc. 2001 Performance Stock Option Plan.

 

In addition to our 20102019 Omnibus Incentive Plan, we maintain the RigNet, Inc. 2006 Long-Term2010 Omnibus Incentive Plan and the RigNet Inc. 2001 Performance Stock Option2006 Long-Term Incentive Plan, both of which were approved by our stockholders in connection with their adoption prior to our IPO.stockholders.  We do not maintain any equity compensation plans that have not been approved by our stockholders.

 

CERTAIN RELATIONSHIPS ANDAND RELATED TRANSACTIONS

 

Kohlberg Kravis Roberts & Co. L.P.

A vendor who provides dedicated consultingThe Company has a reseller arrangement with Darktrace, which is an artificial intelligence company in cybersecurity that is partially owned by Kohlberg Kravis Roberts & Co. L.P. (KKR). KKR is a significant stockholder of the Company. Under the arrangement, the Company will sell Darktrace’s cybersecurity audit services to KKRwith the Company’s cybersecurity offerings.  In the years ended December 31, 2019 and its affiliated funds’ portfolio companies, was used by RigNet for business consulting services2018, the Company purchased $0.1million and $0.1 million, respectively from Darktrace in the ordinary course of business totaling zero, $0.3 millionbusiness.

Vissim AS

Vissim AS is now a vendor following a competitive request for quote from RigNet in the ordinary course of business. A customer specified Vissim AS by name as a provider for an SI project. Vissim AS is 24% owned by AVANT Venture Capital AS. AVANT Venture Capital is owned by and $0.5 million duringhas as its chairman of its board one of our board members. In the years ended December 31, 2016, 20152019 and 2014, respectively. Neither KKR, a significant stockholder2018, the Company purchased $0.8 million and none, respectively from Vissim AS in the ordinary course of RigNet, nor any entity affiliated with KKR own any equity in this vendor. business.”

Review and Approval of Related Party Transactions

Under our Policy Governing Related Person Transactions, our employees, officers and directors are discouraged from entering into any transaction that may cause a conflict of interest for us.  In addition, they must report any potential conflict of interest, including related party transactions, to their managers or our general counsel, who then reviews and summarizes the proposed transaction for our Audit Committee.  Pursuant to its charter, our Audit Committee must then approve any related-party transactions, including those transactions involving our directors.  In approving or rejecting such proposed transactions, the


Audit Committee considers the relevant facts and circumstances available and deemed relevant to theAudit Committee, including the material terms of the transactions, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence.  Our Audit Committee will determine whether to approve only those transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our Audit Committee determines in the good faith exercise of its discretion.  A copy of our Code of Ethics and Business Conduct and Ethics and Audit Committee charter may be found through links at our corporate website“http:https://investor.rig.net/corporate-governance.cfm”governance.



34

ADDITIONAL INFORMATION

 

Stockholder Proposals and Nominations for the 20182021 Annual Meeting

 

Any stockholder who intends to present a proposal for inclusion in our 20182021 proxy statement and form of proxy must submit the proposal, in writing, so that our Corporate Secretary receives it at our principal executive offices, located at 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084-4947, by December 4, 2017,8, 2020, which is 120 days prior to the one-year anniversary of the date this proxy statement is being sent to our stockholders.  Any stockholder who wishes to bring a proposal or nominate a person for election to our Board at the 20182021 Annual Meeting of Stockholders must provide written notice of the proposal or nomination to our Corporate Secretary, at our principal executive offices, between January 3, 20187, 2021 and February 2, 2018,5, 2021, which is 90 to 120 days prior to the one-year anniversary of the upcoming annual meeting.  In addition, our stockholders must comply with the requirements of the SEC related to nominations and stockholder proposals and the procedural requirements in our bylaws, which stockholders can obtain from us upon request and which are also on file with the SEC or available on our website at “http:http://investor.rig.net/corporate-governance.cfm”.amended-and-restated-bylaws-0.

 

Our bylaws provide that if a stockholder wishes to nominate a person for election as director (which is separate from simply recommending someone to be considered by our Corporate Governance and Nominating Committee for inclusion on the Company’s slate of directors) or to propose other business to be considered at one of our annual meetings of stockholders, that stockholder must follow the procedures contained in our bylaws and satisfy the requirements of Regulation 14A of the Securities Exchange Act of 1934.Act.  The stockholder proposing such business or making such nomination must be a stockholder of record of our Company on the date the nomination is delivered to our Corporate Secretary and at the time of our annual meeting and be entitled to vote at the annual meeting.  The proposal or nomination must be received by our Corporate Secretary at our principal executive offices not less than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, except that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder must be delivered not earlier than the close of business 120 days prior to the annual meeting and no later than 90 days prior to such annual meeting or 10 days following our first public announcement of the date of the annual meeting.  In addition, if the number of directors to be elected to our Board at an annual meeting is increased and there is no public announcement by us naming all of the nominees for director or specifying the size of the increased Board at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s nomination shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our Corporate Secretary at our principal executive offices not later than the close of business on the 10th day following the day on which we first make such public announcement.  These time periods are designed to allow us time to adequately consider all proposals and nominees.

 

To be considered, each nomination must include the following information:

 

all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected;

a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the nominating stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert with them, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert with him or her, on the other hand, including, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any of their respective affiliates or associates or persons acting in concert with any such person, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant;

a written questionnaire with respect to the background and qualification of the nominee and the background of any other person or entity on whose behalf the nomination is being made, the form of which questionnaire will be provided by our Corporate Secretary upon written request; and

●all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

 

●

•

the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected;

●a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the nominating stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert with them, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert with him, on the other hand, including, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any of their respective affiliates or associates or persons acting in concert with any such person, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant;

●a written questionnaire with respect to the background and qualification of the nominee and the background of any other person or entity on whose behalf the nomination is being made, the form of which questionnaire will be provided by our Corporate Secretary upon written request; and

●

a written representation and agreement, in the form provided by our Corporate Secretary upon written request, that the nominee is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the nominee, if elected as a director, will act


or vote on any issue or question that has not been disclosed to us or that could limit or interfere with the nominee’s ability to comply, if elected as a director, with the nominee’s fiduciary duties under applicable law, is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than us with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as our director that has not been disclosed to us, and in the nominee’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would

35

be in compliance, if elected as our director, and will comply with all of our applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock trading policies and guidelines.

The proposing stockholder must also include such other information as we may reasonably require or that is otherwise reasonably necessary to determine the eligibility of such proposed nominee to serve as a director of the Company, to determine whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any of our publicly-disclosed corporate governance guidelines or committee charters; including our Policy Governing Director Qualifications and Nominations, and that could be material to a reasonable stockholder’s understanding of the independence and qualifications, or lack thereof, of such nominee

 

To be considered, proposals for business to be considered by our stockholders at an annual meeting, other than the nomination of persons for election as directors, must include the following information:

 

a brief description of the business desired to be brought before the annual meeting;

the reasons for conducting such business at the annual meeting;

the text of the proposal or business, including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend our bylaws, the language of the proposed amendment;

any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made;

a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons, including their names, in connection with the proposal of such business by such stockholder; and

as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:

●a brief description of the business desired to be brought before the annual meeting;

 

●

—

the reasons for conducting such business at the annual meeting;

●the text of the proposal or business, including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend our Bylaws, the language of the proposed amendment;

●any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made;

●a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons, including their names, in connection with the proposal of such business by such stockholder; and

●as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made:

—the name and address of such stockholder, as they appear on our books, and of such beneficial owner, if any,

 

—

the class or series and number of shares of our capital stock that are, directly or indirectly, owned beneficially and of record by such stockholder and by such beneficial owner,

 

—

any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of our capital stock, whether or not such instrument or right shall be subject to settlement in the underlying class or series of our capital or otherwise directly or indirectly owned beneficially by such stockholder and by such beneficial owner, if any,

 

—

any other direct or indirect opportunity held or owned beneficially by such stockholder and by such beneficial owner, if any, to profit or share in any profit derived from any increase or decrease in the value of our shares,

 

—

any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or beneficial owner, if any, has a right to vote any shares of any of our securities,

 

—

any short interest in any of our securities,

 

—

any right to dividends on our shares of capital stock owned beneficially by such stockholder or such beneficial owner, if any, which right is separated or separable from the underlying shares,

 

—

any proportionate interest in shares of our capital stock or derivative instrument held, directly or indirectly, by a general or limited partnership in which such stockholder or such beneficial owner, if any, is a general partner or with respect to which such stockholder or such beneficial owner, if any, directly or indirectly, beneficially owns an interest in a general partner, and

 

—

any performance-related fees, other than an asset-based fee, to which such stockholder or such beneficial owner, if any, is entitled to based on any increase or decrease in the value of our shares or derivative instruments, if any, in each case with respect to the information required to be included in the notice.

 

Such information must include any such interests held by members of such stockholder’s or such beneficial owner’s immediate family sharing the same household.  All such information must be supplemented by such stockholder and such beneficial owner, if any, not later than 10 days after the record date for the Annual Meeting to disclose such ownership as of the record date, 10 days before the Annual Meeting date, and immediately prior to the commencement of the Annual Meeting, by delivery of such supplemented information to our Corporate Secretary.  Such information shall also include any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitation of proxies for election of directors in a contested


election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, a representation that the stockholder is a holder of record of our stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group that intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to approve or adopt the proposal or elect the nominee or otherwise to solicit proxies from stockholders in support of such proposal or nomination.

 

The proposing stockholder must also include such other information as we may reasonably require or that is otherwise reasonably necessary to determine the eligibility of such proposed nominee to serve as a director of our Company, to determine whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any of our publicly-disclosed corporate governance guidelines or committee charters; including our Policy Governing Director Qualifications and Nominations, and that could be material to a reasonable stockholder’s understanding of the independence and qualifications, or lack thereof, of such nominee.36

Where You May Find More Information About Us

 

We file annual, quarterly and current reports and proxy statements with the SEC.  Our SEC filings are available to the public over the Internet at the SEC’sSEC's website at “www.sec.gov”www.sec.gov. You may also read and copy any document that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You can call the SEC at 1-800-SEC-0330 for further information on the public reference room and its copy charges.  We maintain a website at “http:http://investor.rig.net/sec.cfm”,financial-information/sec-filings, where we post our SEC filings.  All references to websites included herein are inactive textual references and nothing contained on any such websites shall be deemed incorporated by reference into this proxy statement.

 

You may request copies of our filings, including any documents incorporated by reference in this proxy statement as described below, without charge, by calling our Investor Relations representative at (281) 674-0100281-674-0100 or write to Investor Relations, 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084-4947.

 

If you would like to request documents from us, please do so at least five business days before the date of the Annual Meeting in order to receive timely delivery of the documents before the Annual Meeting.  If you request any incorporated documents from us, we will mail them to you by first class mail or other equally prompt means within one business day of receipt of your request, provided that we will not mail any exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into the information that this proxy statement incorporates.

 

You should rely only on the information contained or incorporated by reference in this proxy statement to vote your shares at the Annual Meeting.  We have not authorized anyone to provide you with information that is different from what is contained or incorporated by reference in this proxy statement.

 

The information contained in this document or any document incorporated by reference herein speaks only as of the date indicated on the cover of this document or the document incorporated by reference unless the information specifically indicates that another date applies.

 

Householding

SEC rules allow us, subject to certain conditions, to send only one proxy statement and annual report or notice to two or more shareholders who share the same last name and address. This “householding” rule provides greater convenience for our shareholders and cost savings for us by reducing the number of duplicate documents that households receive. Also, this allows us to be more environmentally friendly by reducing the unnecessary use of materials. Please note that each shareholder will continue to receive a separate proxy card, which will allow each individual to vote independently. If you wish to receive an additional copy of our annual report or proxy statement this year, you may obtain one by calling RigNet Investor Relations at 281-674-0100 or by writing to our Corporate Secretary at RigNet, Inc., 15115 Park Row Boulevard, Suite 300, Houston, Texas 77084-4947 and the Company shall promptly deliver our annual report or proxy statement to you.  A shareholder may also request that only a single copy be sent to a household by the same method.  

Shareholders who wish to revoke consent to householding so each shareholder at their address can receive an individual copy of our proxy statement and annual report in the future may call Broadridge Investor Communication Services toll free at 1-866-540-7095 or write to Broadridge Investor Communication Services, Householding Department, 51 Mercedes Way Edgewood, New York 11717.

OTHER MATTERS FOR 20172020 ANNUAL MEETING

 

As of the date of this proxy statement, our Board knows of no matters to be acted upon at the Annual Meeting other than the proposals included in the accompanying notice and described in this proxy statement.  If any other matter requiring a vote of stockholders arises, including a question of adjourning the Annual Meeting, the persons named as proxies in the accompanying proxy card will have the discretion to vote thereon according to their best judgment of what they consider to be in the best interests of our Company.  The accompanying proxy card confers discretionary authority to take action with respect to any additional matters that may come before the Annual Meeting or any adjournment or postponement thereof.



37

PROPOSALSPROPOSALS

 

PROPOSAL ONE: ELECTION OF DIRECTORS

 

Members of our Board are elected each year at the annual meeting of stockholders.  AllEach of our current Board members havehas been nominated to stand for re-election at the Annual Meeting. Our Corporate Governance and Nominating Committee, consisting solely of independent directors, as determined by our Board recommended the directors for nomination by our full Board.  Based on that recommendation, our Board has nominated nine directors for election at the Annual Meeting.

 

Nominees

The following nine directors have all been nominated to serve on our Board until the 20182021 Annual Meeting of Stockholders:  James H. Browning, Mattia Caprioli, Charles L. Davis, Ditlef de Vibe, Kevin Mulloy, Kevin J. O’Hara, Keith Olsen, Steven E. Pickett, Gail P. Smith and Brent K. Whittington.  Each of the nominees has consented to serve as a director if so elected.  Each nominee who is elected to our Board will serve in such capacity until his or her term expires or his successor has been duly elected and qualified or, if earlier, until such director dies, resigns or is removed.

 

Directors will be elected by a pluralitymajority of the votes cast by the share of common stock present in person or represented by proxy at the Annual Meeting.  AsAny current director who does not receive a result,majority of “For” votes at the nine nomineesAnnual Meeting must tender his or her resignation to the Board in accordance with the most votesBoard’s majority vote resignation policy, which is described in our bylaws.  Abstentions and broker non-votes with respect to the election of each of the director nominees, will not be elected. Broker non-votescounted and will have no effect on the outcome of the election of directors.this proposal.

 

Our Board recommends that you vote

“FOR” the election of each of the nominated directors.

 

PROPOSAL TWO: RATIFICATION OF INDEPENDENT AUDITORS

 

The Audit Committee has selected Deloitte & Touche LLP, an independent registered public accounting firm, to audit our consolidated financial statements for fiscal year 2017.2020. Deloitte & Touche LLP has served as our independent auditors since 2007.  We are asking the stockholders to ratify the appointment of Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 31, 2017.2020. The Audit Committee selected Deloitte & Touche LLP in accordance with its charter.

 

The submission of this matter for ratification by stockholders is not legally required; however, the Audit Committee and Board believe that such submission is consistent with best practices in corporate governance and is an opportunity for stockholders to provide direct feedback on an important issue of corporate governance.  If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm.  The Audit Committee continually monitors the services and fees of the independent auditors and even if the selection is ratified, the Audit Committee in its discretion may select different auditors at any time during the year if it determines that such a change would be in the best interests of our Company and our stockholders.

 

The Audit Committee has approved all services provided by Deloitte & Touche LLP. A representative of Deloitte & Touche LLP is expected to be present (either in person or via teleconference) at the Annual Meeting, will have the opportunity to make a statement, and is expected to be available to respond to appropriate questions you may ask.

 


38

Fees Paid to Independent Auditors

The following table reflects fees for professional audit services rendered by Deloitte & Touche LLP for (i) the audit of our financial statements for the years ended December 31, 20162019 and 2015;2018 and (ii) fees billed for other services.

 

  2016  2015 
Audit Fees (1) $1,516,000  $1,486,000 
Audit Related Fees (2)  10,000   117,000 
Tax Fees (3)  355,000   780,000 
All Other Fees (4)  13,000   2,000 
Total $1,894,000  $2,385,000 

 

 

2019

 

2018

Audit Fees (1)

 

$ 1,614,700

 

$ 1,637,000

Audit Related Fees (2)

 

82,800

 

77,000

Tax Fees (3)

 

255,700

 

462,000

All Other Fees (4)

 

  2,100

 

  2,000

Total

 

$ 1,955,300

 

$ 2,178,000

(1)

(1)

Audit Fees consist of professional services and related expenses for the review of interim financial statements, the audit of our annual financial statements and statutory financial audits outside of our annual financial statements.

(2)

(2)

Audit related fees include professional services and related expenses for services in connection with merger and acquisition activity.

(3)

(3)

Tax Fees include professional services for tax return preparation, tax advisory services and income tax audit support.

(4)

(4)

Fees include subscription costs.


Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services

Pursuant to its charter, the Audit Committee of our Board is responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement between the Company and its independent auditors.  Deloitte & Touche LLP’s engagement to conduct the audit of RigNet, Inc. for fiscal 20162019 was approved in advance by the Audit Committee on August 2, 2016.July 30, 2019.  All (100.0%) of the services covered in the table above were approved by the Audit Committee and none were provided under thede minimis exception of Section 10A of the Securities Exchange Act of 1934, as amended.Act.

 

We have been advised by Deloitte & Touche LLP that substantially all of the work done in conjunction with its 2016 audit of the Company’s financial statements for the most recently completed fiscal year was performed by full-time employees and partners of Deloitte & Touche LLP.  The Audit Committee has determined that the provisionsprovision of services rendered for all other fees, as described above, is compatible with maintaining independence of Deloitte & Touche LLP.

 

Proposal No. 2 must be approved by a majority of the votes cast on the proposal.  As approval of auditors is a routine matter on which brokers may vote without instructions, broker non-votes will not affect the outcome of the vote on this proposal as none are expected to occur and abstentions will have no effect on this proposal under Delaware law as they are not votes cast. If the selection of Deloitte & Touche LLP is not ratified accordingly, our Board will consider whether we should select another independent registered public accounting firm as our auditors.

 

Our Board recommends that you vote

“FOR” the ratification of Independent Public AccountantsAccountants.

 

PROPOSAL THREE: ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTING ON COMPENSATION OF NAMED EXECUTIVE OFFICERSAPPROVE AN AMENDMENT TO THE RIGNET, INC. 2019 OMNIBUS INCENTIVE PLAN

At out 2019 Annual Meeting, we asked stockholders to approve our 2019 Omnibus Incentive Plan.  At that time, we did not ask stockholders to increase the shares available for issuance for equity compensation.  We merely included the shares remaining under our 2016 plan in the new plan.  We are now requesting stockholders approve an amendment to the 2019 Incentive Plan, which would increase the number of shares available for issuance as compensation by 2,800,000 shares, representing approximately 14% of our outstanding shares as of the record date, which shall be used for the number of “authorized shares” for all purposes as provided in Sections 4.1(a), (b) and (c) of the new plan.  We believe stockholders should vote for this amendment for the following reasons:

We have not requested an increase in the number of shares available for equity incentives since the 2016 Annual Meeting of stockholders;

We pay our Short-Term Incentive Payments to senior officers and employees in shares of stock under the 2019 Incentive Plan rather than cash to (i) further align our officers and employees’ interests with those of stockholders and (ii) to conserve cash as we continue to recover from the sharp drop in oil and gas activity, particularly offshore;

The dramatic decline in share prices for oil field services companies and for managed satellite communications companies, regardless of company performance, has disproven the assumptions we used in predicting share usage when we asked stockholders to approve the 2019 Omnibus Incentive plan;

39

•

We must attract, motivate and retain individuals of high ability.  The ability to issue equity is fundamental to our compensation strategy.  Our success is dependent, in large part, on our ability to use equity compensation to attract, motivate and retain experienced and highly capable people.

Without equity compensation, we could lose employees or be forced to pay more compensation in cash.  If equity compensation is not available, we could face the choice of losing our most valuable technical, sales and executive employees or using cash-based long-term incentives to compensate employees, which would not be the best use of our liquidity during this difficult market period and could result in a misalignment of the interests of our employees and shareholders, as well as impact our covenants under our credit facility.

We use equity compensation to align employee and shareholder interests.  Equity compensation is a critical means of aligning the interests of our employees with those of our shareholders and provides a strong pay-for-performance link between the compensation provided to our employees and our performance.

Purpose of the 2019 Plan

As discussed in the Compensation Discussion and Analysis, annual and long-term incentive compensation plays an important part in our pay-for-performance philosophy.  Incentive awards also help us remain competitive in retaining and attracting highly qualified employees upon whom, in large measure, depend the future growth and success of RigNet.  In 2019, we granted equity compensation to approximately 13% of our employees throughout RigNet.

 

The Dodd-Frank Act provides thatpurposes of the Company’s stockholders have2019 Plan are:

to optimize the opportunity to indicate how frequently the Company should seek an advisory vote onprofitability and growth of RigNet through annual and long-term incentives which are consistent with our goals and which link all or a portion of the compensation of the Company’s NEOs, as disclosed pursuantemployees and directors to the Securitiesvalue of our common stock

to align the interests of employees and Exchange Commission’sdirectors more closely with those of our stockholders;

to provide employees and directors with an incentive for excellence in individual performance; and

to promote teamwork among our employees and directors.

The 2019 Plan is further intended to provide flexibility to RigNet in its ability to motivate, attract and retain the services of employees and directors who make significant contributions to our success and to allow our employees and directors to share in the success of RigNet and to reward employees for the creation of shareholder value through the grant of stock-based and performance-based awards, including “at-risk” awards.

In 2019, equity compensation disclosure rules. By votingawards to employees consisted of, approximately 231,300 fully vested STIP shares, restricted stock units representing 983,800 shares, options on this proposal, stockholders may indicate whether they would prefer that the advisory vote on the compensation of the Company’s NEOs occur once every one, two or three years.

After careful consideration106,400 shares, and performance share units representing 273,900 shares at Target performance.  In addition, awards were made to certain officers, subject to stockholder approval of this Proposal the Board has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternativeThree, of performance share units representing up to 825,100 shares for outperformance of our Total Shareholder Return and revenue goals for the Company,three year period 2020-2022, which awards will be forfeited if this proposal three is not approved to increase the number of shares authorized under the 2019 Plan.  If an increase in the number of shares in the RigNet, Inc. 2019 Omnibus Plan is not approved by shareholders, we may be unable to provide equity compensation to our employees in the next annual granting cycle and thereforebeyond.

Highlights of Key Corporate Governance Practices and Provisions under the Board recommends2019 Plan

We believe that the 2019 Plan will promote the interests of our stockholders voteand is consistent with the principles of good corporate governance.  The 2019 Plan includes the following practices and provisions.

Administered by an independent committee.  Awards to executive officers will be administered by our Compensation Committee, which is composed entirely of independent directors who meet the SEC and NASDAQ standards for independence.

No “liberal” change in control definition.  The change in control definition in the 2019 Plan is not “liberal” and, for example, would not occur merely upon stockholder approval of a transaction.  A change in control must actually occur in order for the change in control provisions of the 2019 Plan to be triggered.  The 2019 Plan provides for no automatic vesting on a change of control and the treatment of awards in a change of control are addressed in the award grants.  

•

No “liberal” share counting with respect to all awards.  The 2019 Plan prohibits the reuse of shares withheld or delivered to satisfy the exercise price of an option or stock appreciation right or to satisfy tax-withholding requirements of any award. Additionally, settlement of SARs in shares of stock will result in a reduction in shares available under the 2019 Plan in an

40

amount equal to the number of shares subject to the SAR, regardless of the number of shares ultimately issued to settle the SAR upon exercise.

Cap on Compensation Paid to Non-Employee Directors.  With respect to any single fiscal year, the aggregate dollar value of shares that may be granted or awarded to a single non-employee director may not exceed $300,000, with a limited exception for a one-year interval fornon-executive chair or vice-chair of the advisory voteBoard.

No discounted stock options or SARs.  All stock option and SAR awards under the 2019 Plan must have an exercise or base price that is not less than the fair market value of the underlying common stock on the compensationdate of grant.

No repricing of stock options or SARs.  The 2019 Plan prohibits any repricing of stock options or SARs for shares or cash.

No tax gross ups.  The 2019 Plan does not include any tax gross up provisions.

Shares Available for Issuance under the Company’s NEOs.2019 Plan

Subject to the approval of stockholders, the aggregate number of shares of common stock which would be available for awards under the 2019 Omnibus Incentive Plan will not exceed 4,975,000 shares (which includes the shares previously approved by stockholders, most of which have already been awarded), subject to any adjustment due to recapitalization or reorganization permitted under the 2019 Omnibus Incentive Plan.  Each share or share-based award under the 2019 Omnibus Incentive Plan will reduce the shares available for grant under the 2019 Omnibus Incentive Plan by one share.

 

You may cast your vote on your preferred voting frequency by choosingIf any award granted under the option of one year, two years, three years2019 Plan is forfeited or abstain from voting when you vote in response to this proposal. The option of one year, two yearsotherwise expires, terminates or three years that receivesis cancelled without the highest number of votes cast by the stockholders will be the frequency for the advisory vote on executive compensation that has been recommended by the stockholders. However, because this vote is advisory and not binding on the Board or the Company, the Board may decide that it is in the best interests of the Company and its stockholders to hold an advisory vote on executive compensation that differs from the option that received the highest number of votes from the Company’s stockholders.

This proposal must be approved by the affirmative vote of a majorityissuance of the shares present in personfull, the shares covered by such awards (or the forfeited portion thereof) again will be available for future grant under the 2019 Plan.  For the avoidance of doubt, the following shares will count against the shares remaining available for use under the 2019 Plan: (i) shares withheld from an award granted under the 2019 Plan to satisfy tax withholding requirements; (ii) the full number of shares subject to an option granted under the 2019 Plan, even if the exercise price is satisfied through net-settlement or represented by proxydelivering shares to RigNet; and (iii) the full number of shares subject to a stock appreciation right granted under the 2019 Plan (rather than the net number of shares actually delivered upon exercise).

Determination of Number of Shares for the 2019 Plan

The Board and the Compensation Committee considered various factors, including potential burn rate, potential dilution or overhang and historical grant practices, in determining the number of shares to be available for issuance under the 2019 Plan.

We actively manage our long-term dilution by limiting the number of shares subject to equity awards that we grant annually, commonly expressed as a percentage of total shares outstanding and referred to as “burn rate.”  Burn rate is a key measure of dilution that shows how rapidly a company is depleting its shares reserved for equity compensation plans, and differs from annual dilution because it does not take into account cancellations and other shares returned to the reserve.  In order to calculate burn rate, we include the number of stock options granted in any given period, plus the number of full value shares earned during the period and divide the total by the weighted average common shares outstanding.  In calculating burn rate, we do not include shares of stock used to pay STIP, as STIP represents an annual incentive payment that is typically paid in cash.

We have calculated the burn rate under our 2019 and 2010 Plans for the past three years, as set forth in the following table (share numbers rounded and reported in thousands):

Year

Options Granted

Earned Full Value Shares

Total

Weighted Average Common Shares Outstanding

Burn Rate

2019

106

332

438

19,832

2.21%

2018

60

337

397

18,713

2.12%

2017

-

110

110

18,009

0.61%

An additional metric that we use to measure the cumulative impact of our equity program is potential dilution or overhang.  We calculate this as (A) the number of shares subject to equity awards outstanding but not exercised or settled, plus (B) the number of shares available for future grant, divided by (C) the total common shares outstanding at the Annual Meeting and entitled to vote at the meeting. This means that abstentions will have the same effect as votes against allend of the proposed frequencies, butyear plus (A) and (B).  Our potential dilution or overhang as of December 31, 2019 was 12.9% and our three-year average potential dilution or overhang for the three most recently completed years was 15.0%.  

The following are the factors that were material to the evaluation by the Board and Compensation Committee in determining acceptable and targeted levels of dilution: competitive data from relevant peer companies, the current and future accounting expense associated with our equity award practices, stockholder feedback and the influence of certain proxy advisory firms.  Our equity

41

programs are revisited at least annually and assessed against these and other factors.

We estimate based on historical grant information that the availability of an additional 2,800,000 shares (subject to adjustment as described herein) under the 2019 Plan would provide a sufficient number of shares to enable us to continue to make awards at historical average annual rates for approximately three years. Please note, however, that these estimates were made before the impacts of coronavirus and the oil price war on our share price were fully known.  In approving the Share Reserve under the 2019 Plan, the Compensation Committee determined that reserving shares sufficient for three years of new awards at historical grant rates is in line with the practice of our peer companies.

Key Data on Outstanding Equity Awards and Shares Available for Future Awards

The following table summarizes the actual shares outstanding and shares remaining under the 2019 Plan (share numbers rounded) as of December 31, 2019 without giving effect to this Proposal 3.  Our incentive compensation program grants are generally awarded in the first quarter of each year. The closing price of our common stock on December 31, 2019 was $6.60.  As of December 31, 2019, there were 19,979,284 shares of our common stock issued and outstanding.

 

Outstanding

Weighted Average Term (in years)

Weighted Average Exercise Price

Outstanding stock options as of December 31, 2019

410,000

5.22

$ 17.12

Outstanding full value awards as of December 31, 2019

1,537,000

 

 

Other outstanding equity awards as of December 31, 2019

-

 

 

Shares remaining available for future grant as of

   December 31, 2019 under the 2010 Plan

-

 

 

Proposed shares available for future awards under 2019 Plan (inclusive of shares available under the 2010 Plan)

580,000

 

 

The table below shows the performance shares that will have no effect on which frequency is preferred by stockholders. Broker non–votes will have no effect on the outcomebe allocated to each of the vote.following upon approval of this proposal three.  The performance shares below will only be earned if during the performance period 2020-2023, actual performance of either Total Stockholder Return or Adjusted EBITDA is greater than the targets set forth above on page 26, with the full amount of shares below earned only if either Total Stockholder Return or Adjusted EBITDA is greater than the maximum attainment threshold shown on that page.

 

2019 Omnibus Incentive Plan

Name and Position

Maximum Performance Share Award

Steven Pickett, Chief Executive Officer and President

232,652

Lee Ahlstrom, Senior Vice President and Chief Financial Officer

165,155

Brad Eastman, Senior Vice President and General Counsel

141,561

Executive Group

825,066

Non-Executive Director Group

-

Non-Executive Officer Employee Group

181,815

Our Board recommends that you vote

To conduct an advisory vote on RigNet’s named

executive officer compensation in “ONE” year intervals.“FOR” approval of the Amendment to the RigNet, Inc. 2019 Omnibus Incentive Plan.

 

PROPOSAL FOUR: ADVISORY VOTE ONTO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS

 

At the Annual Meeting, the stockholders will vote on a non-binding, advisory resolution regardingapproving the compensation of the Company’s NEOs as required pursuant to the Dodd-Frank Act.

 

We believe that our compensation policies and procedures are competitive, focused on pay-for-performance and strongly aligned with the long-term interests of our stockholders.  This advisory stockholder vote, commonly known as “Say-On-Pay,”


gives you as a stockholder the opportunity to express approval or withhold approval of the compensation we pay our NEOs through voting for or against the following resolution:

 

“Resolved, “Resolved, that the stockholders approve the compensation of the Company’s NEOs as disclosed in the Company’s 20172020 proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, which includes the

42

Compensation Discussion and Analysis, the Summary Compensation Table and the other executive compensation tables and related discussion.”

 

The Company and the Compensation Committee remain committed to the compensation philosophy, policies and objectives outlined under the heading “Compensation Discussion and Analysis” in this proxy statement.  As always, theThe Compensation Committee will continue to review all elements of the executive compensation program and take any steps it deems necessary to continue to fulfill the objectives of the program.

 

Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement for a detailed discussion of the Company’s executive compensation program.

Because your vote is advisory, it will not be binding upon the Company or the Board.  However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.  We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote at our 20182021 Annual Meeting of Stockholders.

 

This proposaladvisory resolution must be approved by the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote at the meeting.Meeting.  Abstentions and broker non-votes with respect to the approval of this proposal will have the effect of a vote against this proposal.

 

Our Board recommends that you vote

“FOR” the resolution to approve on a non-binding advisory basis

the compensation of RigNet’s named executive officers.


43

APPENDICES


 

A.  NON-GAAP MEASURE RECONCILIATION OF MANAGEMENT EBITDA

We define Management EBITDA as Adjusted EBITDA as reported in our financial reports, further adjusted based on budgeted exchange rates and other exceptional items, as approved by the Board. Both Management EBITDA and Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income (loss) or any other measure of financial performance calculated or presented in accordance with generally accepted accounting principles (GAAP).

The following table presents a reconciliation of our net income (loss) to Management EBITDA for the year ended December 31, 2019 (in thousands):

Adjusted EBITDA Reconciliation as disclosed in RigNet’s Form 10-K:

Net loss

(LOGO) 

RIGNET, INC.
C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS
PO BOX 1342
BRENTWOOD, NY 11717

VOTE BY INTERNET -www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

VOTE BY MAIL

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













TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E25184-P87860KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THIS PORTION ONLY
RIGNET, INC.For
All		Withhold
All		For All
Except		To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
The Board of Directors recommends you vote “FOR” the following:

 

$     (18,786)

1.Election of Directors☐☐☐
Nominees:
01)     James H. Browning06)     Keith Olsen
02)     Mattia Caprioli07)     Brent K. Whittington
03)     Charles L. Davis08)     Ditlef de Vibe
04)     Kevin Mulloy    09)     Steven E. Pickett
05)     Kevin J. O’Hara
The Board of Directors recommends you vote “FOR” the following proposal:ForAgainstAbstain
2.To ratify the selection of Deloitte &Touche LLP as theCompany’s IndependentRegistered Public Accounting Firm for the fiscal year ending December 31, 2017.☐☐☐
The Board of Directors recommends you vote “1 YEAR” for the following proposal:1 Year2 Years3 YearsAbstain
3.To indicate, on a non-binding advisory basis, the preferred frequency of future advisory votes on the compensation of our named executive officers. ☐☐☐☐
The Board of Directors recommends you vote “FOR” the following proposal:ForAgainstAbstain
4.Approve named executive officers’ compensation as a non-binding advisory vote.☐☐☐
NOTE: In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the annual meeting or any postponementsor adjournments thereof or other matters permitted by Rule 14a -4(c)under the Exchange Act.
 YesNo
Please indicate if you plan to attend this meeting.☐☐
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Interest expense

 

5,958

Depreciation and amortization

 

31,129

(Gain) on sales of property, plant and equipment, net of retirements

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

(4,240)

Stock-based compensation

8,621

Restructuring

731

Change in fair value of earn-out/contingent consideration

2,499

Acquisition costs

497

GX dispute Phase II costs

3,946

Income tax expense (benefit)

10,745

Adjusted EBITDA (non-GAAP measure)

41,100

V.1.1Further Adjustments to Compute Management EBITDA:

Foreign currency adjustment approved by the Board

649  

Management EBITDA (non-GAAP measure)

$   41,749


The Board, its Compensation Committee and management use Management EBITDA to assess performance in determining certain components of our executive compensation.

 

 

 

 

 

 

 

 


44

B.  ANNEX A

 

first AMENDMENT TO THE
RIGNET, INC. 2019 OMNIBUS INCENTIVE PLAN

THIS FIRST AMENDMENT is made by RigNet, Inc. (the “Sponsor”),

 

WITNESSETH:

WHEREASImportant Notice Regarding, the AvailabilitySponsor adopted on May 8, 2019, and continues to sponsor and maintain the plan known as the “RigNet, Inc. 2019 Omnibus Incentive Plan” (the “Plan”); and

WHEREAS, the Board of Directors of the Sponsor (the “Board”) retained the right in Section 16.1 of the Plan to amend the Plan from time to time; and

WHEREAS, the Board of Directors of the Sponsor approved resolutions on March 11, 2020 to amend the Plan as set forth below;

NOW, THEREFORE, the Sponsor agrees that, effective as set forth below, the Plan is amended as set forth below:

1.  

Amendment to Sections 4.1(a), (b) and (c) of the Plan.  Sections 4.1(a), (b) and (c) of the Plan are hereby amended and restated in their entirety to read as follows:

(a) The aggregate number of shares of Stock with respect to which Awards may be granted under the Plan is 4,975,000 (the “Authorized Shares”).

(b) The aggregate number of shares of Stock with respect to which ISOs may be granted under the Plan is equal to the Authorized Shares.

(c) The maximum number of shares of Stock with respect to which ISOs may be granted to an Employee during a Fiscal Year is equal to the Authorized Shares. The maximum number of shares of Stock with respect to which NQSOs may be granted to an Employee during a Fiscal Year is equal to the Authorized Shares. The maximum number of shares of Stock with respect to which SARs may be granted to an Employee during a Fiscal Year is equal to the Authorized Shares. The maximum number of shares of Stock with respect to which Performance Stock Awards may be granted to an Employee during a Fiscal Year is equal to the Authorized Shares. The maximum number of shares of Stock with respect to which Performance Unit Awards payable in shares of Stock may be granted to an Employee during a Fiscal Year is equal to the Authorized Shares. The maximum value of cash with respect to which Performance Unit Awards payable in cash may be granted to an Employee during a Fiscal Year, determined as of the dates of grants of the Performance Unit Awards, is $3,000,000. The maximum amount that may be paid under Annual Cash Incentive Award(s) granted to an Employee during a Fiscal Year is $3,000,000.

2.Effectiveness.  In accordance with Section 16.1 of the Plan, the effectiveness of this First Amendment to RigNet, Inc. 2019 Omnibus Incentive Plan (this “Amendment”) is subject to the approval of the Sponsor’s stockholders at the Sponsor’s 2020 annual general meeting of stockholders.  For the avoidance of doubt, if stockholder approval is not obtained, this Amendment shall be void and of no force and effect.

3.Effect on the Plan.  This Amendment shall not constitute a waiver, amendment or modification of any provision of the Plan not expressly referred to herein.  Except as expressly amended or modified herein, the provisions of the Plan are and shall remain in full force and effect and are hereby ratified and confirmed.

45

ANNUAL MEETING OF RIGNET, INC. Annual Meeting of RigNet, Inc.  Date: May 6, 2020 to be held on Wednesday, May 06, 2020    Time: 9:00 a.m. (Central Daylight Time)  Place: 15115 Park Row Boulevard, Suite 300, for Holders as of March 09, 2020  Houston, Texas 770841 This proxy is being solicited on behalf of the Board of Directors   Please make your marks like this:    Use dark black pencil or pen only  VOTED BY:    Board of Directors Recommends a Vote FOR proposals 1, 2, 3, and 4    TELEPHONE Call  Please separate carefully at the per  foration and return just this portion in the envelope provided.   INTERNET    Go To   www.proxypush.com/RNET   • Cast your vote online.  OR  866-390-5402    • Use any touch-tone telephone.  • Have your Proxy MaterialsCard/Voting Instruction Form ready.  1: Election of Directors  Directors  Recommend  For Against Abstain    • View Meeting Documents. 01 James H. Browning    For   • Follow the simple recorded instructions. MAIL   02 Mattia Caprioli    For   03 Kevin Mulloy    For    04 Kevin J. O’Hara    For    • Mark, sign and date your Proxy Card/Voting Instruction Form.  OR    • Detach your Proxy Card/Voting Instruction Form.  • Return your Proxy Card/Voting Instruction Form in the  postage-paid envelope provided.   We continue to monitor developments regarding the coronavirus (COVID-19). In the interest of the health and   well-being of our stockholders, we are planning for the possibility that the Annual Meeting:Meeting may be held solely by   means of remote communication. If we make this change, we will announce the decision to do so in advance and   provide details on how to participate at https://investor.rig.net/   The undersigned hereby appoints Lee Ahlstrom and Brad Eastman, and each or either of them, as the true and lawful   attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them,   to vote all the shares of capital stock of RigNet, Inc. which the undersigned is entitled to vote at said meeting and any   adjournment thereof upon the matters specified and upon such other matters as may be properly brought before   the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their   discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.   THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION   IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1 AND FOR THE   PROPOSALS IN ITEMS 2, 3 AND 4 AND AUTHORITY WILL BE DEEMED GRANTED UNDER ITEM 5.   PROXY TABULATOR FOR   RIGNET, INC    05 Keith Olsen   For   06 Brent K. Whittington   For   For  07 Ditlef de Vibe   08 Steven E. Pickett   For   09 Gail P. Smith    For    For  2: To ratify the selection of the Deloitte &  Touche LLP as the Company’s Independent Registered Public    Accounting Firm for the fiscal year ending   December 31, 2020.   For  3: Approve an Amendment to the RigNet, Inc.  2019 Omnibus Plan   For  4: Approve named executive officers’ compensation as a non-binding advisory vote   5:  To consider and act upon any other matters  which may properly come before the meetingor any adjournment thereof.  P.O. BOX 8016  CARY, NC 27512-9903  Authorized Signatures - This section must be  completed for your Instructions to be executed.   EVENT #   Please Sign Here Please Date Above   CLIENT #   Please Sign Here Please Date Above   OFFICE #  Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all  persons should sign. Trustees, administrators, etc., should include title and authority. Corporations  should provide full name of corporation and title of authorized officer signing the proxy.

46

Please separate carefully at the perforation and return just this portion in the envelope provided.    Proxy — RigNet, Inc.  Annual Meeting of Stockholders  May 06, 2020, 9:00 a.m. (Central Daylight Time)  This Proxy is Solicited on Behalf of the Board of Directors    The Noticeundersigned appoints Lee Ahlstrom and Brad Eastman (the “Named Proxies”)  and each of them as proxies for the undersigned, with full power of substitution,  to vote the shares of common stock of RigNet, Inc. a Delaware corporation  (“the Company”), the undersigned is entitled to vote at the Annual Meeting of  Stockholders of the Company to be held at 15115 Park Row Boulevard, Suite 300,  Houston, Texas 770841, on Wednesday, May 06, 2020 at 9:00 a.m. CDT and all  adjournments thereof.   The purpose of the Annual Meeting is to take action on the following:   1.  Election of Directors  2.  Ratify the selection of Deloitte & Touche LLP as our independent auditors  for 20..0  3.  Approve an amendment to the RigNet, Inc. 2019 Omnibus Plan  4.  Approve a non-binding advisory resolution on RigNet’s executive  compensation and  5.  Transact such other business as may properly come before the Annual Meeting  or any adjournment of postponement of the Annual Meeting.  The Board of Directors of the Company recommends a vote “FOR” all  nominees for director and “FOR” each proposal.   This proxy, when properly executed, will be voted in the manner directed  herein. If no direction is made, this proxy will be voted “FOR” all nominees  for director and “FOR” each proposal. In their discretion, the Named Proxies  are authorized to vote upon such other matters that may properly come  before the Annual Meeting or any adjournment or postponement thereof.   You are encouraged to specify your choice by marking the appropriate box  (SEE REVERSE SIDE) but you need not mark any box if you wish to vote  in accordance with the Board of Directors’ recommendation. The Named  Proxies cannot vote your shares unless you sign and return this card.   To attend the meeting and vote your shares  in person, please mark this box.    

Please separate carefully at the perforation and return just this portion in the envelope provided.    Proxy Statement— RigNet, Inc.  Annual Meeting of Stockholders  May 06, 2020, 9:00 a.m. (Central Daylight Time)  This Proxy is Solicited on Behalf of the Board of Directors    The undersigned appoints Lee Ahlstrom and Brad Eastman (the “Named Proxies”)  and each of them as proxies for the undersigned, with full power of substitution,  to vote the shares of common stock of RigNet, Inc. a Delaware corporation  (“the Company”), the undersigned is entitled to vote at the Annual Report WrapperMeeting of  Stockholders of the Company to be held at 15115 Park Row Boulevard, Suite 300,  Houston, Texas 770841, on Wednesday, May 06, 2020 at 9:00 a.m. CDT and all  adjournments thereof.   The purpose of the Annual Meeting is to take action on the following:   1.  Election of Directors  2.  Ratify the selection of Deloitte & Touche LLP as our independent auditors  for 200  3.  Approve an amendment to the RigNet, Inc. 2019 Omnibus Plan  4.  Approve a non-binding advisory resolution on RigNet’s executive  compensation and  5.  Transact such other business as may properly come before the Annual Meeting  or any adjournment of postponement of the Annual Meeting.  The Board of Directors of the Company recommends a vote “FOR” all  nominees for director and “FOR” each proposal.   This proxy, when properly executed, will be voted in the manner directed  herein. If no direction is made, this proxy will be voted “FOR” all nominees  for director and “FOR” each proposal. In their discretion, the Named Proxies  are available at www.proxyvote.com.authorized to vote upon such other matters that may properly come  before the Annual Meeting or any adjournment or postponement thereof.   You are encouraged to specify your choice by marking the appropriate box  (SEE REVERSE SIDE) but you need not mark any box if you wish to vote  in accordance with the Board of Directors’ recommendation. The Named  Proxies cannot vote your shares unless you sign and return this card.   To attend the meeting and vote your shares  in person, please mark this box.    

47

E25185-P87860

RIGNET, INC.

Annual Meeting of Stockholders
May 3, 2017 10:00 AM (Central Daylight Time)
This proxy is solicited by the Board of Directors

The undersigned hereby appoints Steven E. Pickett, Charles Schneider and William Sutton, jointly and severally, as the undersigned’s proxy or proxies, each with full power of substitution and to act without the other, to vote in the manner directed herein all shares of common stock of RigNet, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at the Houston Marriot Energy Corridor- Reata Ballroom, 16011 Katy Freeway, Houston, Texas 77094 and any postponements or adjournments thereof, as fully as the undersigned could if personally present, revoking any proxy or proxies heretofore given. 

The Board of Directors of the Company recommends a vote "FOR" all nominees for director, "1 YEAR" intervals as the frequency of future advisory votes on executive compensation and "FOR" all other proposals.
This proxy is solicited on behalf of the Board of Directors. This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted "FOR" all nominees for director, "1 YEAR" as the frequency of advisory votes on executive compensation and "FOR" all other proposals. In their discretion, the proxies named above are authorized to vote upon such other matters that may properly come before the Annual Meeting, or any adjournment or postponement thereof and other matters permitted by Rule 14a-4(c) under the Exchange Act of 1934, as amended.

You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors' recommendation. The Named Proxies cannot vote your shares unless you sign and return this card. 

Continued and to be signed on reverse side

V.1.1