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
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Filed by the Registrant x |
Filed by a Party other than the Registrant o |
| Check the appropriate box: |
| o | Preliminary Proxy Statement |
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| o | Definitive Additional Materials |
| o | Soliciting Material under §240.14a-12 |
LUMINAR TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
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| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
| Payment of Filing Fee (Check all boxes that apply): |
| x | No fee required. |
| o | Fee paid previously with preliminary materials. |
| o | Fee computed on table required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Notice of 2023 Annual Meeting
and Proxy Statement
Luminar Technologies, Inc.
June 7, 2023, 11:00 a.m. Eastern Time
May 6, 2022
To Our Stockholders:
You are cordially invited to attend the 20222023 Annual Meeting of Stockholders or the Annual Meeting,(the “Annual Meeting”) of Luminar Technologies, Inc., on Tuesday,Wednesday, June 7, 20222023 at 1:11:00 p.m.a.m. Eastern Time/10:8:00 a.m. Pacific Time. In order to support the health and well-being of our stockholders, business partners, employees and board of directors during the coronavirus (COVID-19) pandemic, expand access, facilitate stockholder attendance and participation and reduce costs, theThe Annual Meeting will be a completely virtual meeting, conducted only via live webcast on the internet at www.virtualshareholdermeeting.com/LAZR2022.LAZR2023. There will be no physical location for the Annual Meeting. You will be able to attend and participate in the Annual Meeting online, submit questions during and prior to the meeting and vote your shares electronically. In addition, although the live webcast is available only to stockholders at the time of the meeting, following completion of the Annual Meeting, a webcast replay will be posted to the Investor Relations section of our website at https://investors.luminartech.com.
The matters expected to be acted upon at the Annual Meeting are described in the Notice of Annual Meeting of Stockholders and the proxy statement. The Annual Meeting materials include the notice,Notice of Annual Meeting of Stockholders, the proxy statement, our annual report and the proxy card, each of which is enclosed.card.
Please use this opportunity to take part in our affairs by voting on the business to come before the Annual Meeting.You will receive a Notice of Internet Availability of Proxy Materials, or the Notice, which we expect to mail on or about April 28, 2023, unless you have previously requested to receive our proxy materials in paper form. Only stockholders of record at the close of business on April 13, 202210, 2023 may vote at the Annual Meeting and any postponements or adjournments of the meeting. All stockholders are cordially invited to participate in the Annual Meeting and any postponements or adjournments of the meeting. However, to ensure your representation at the Annual Meeting, please vote as soon as possible by using the internet or telephone, as instructed in the Notice. Alternatively, you may follow the procedures outlined in the Notice to request a paper proxy card.card to submit your vote by mail. Returning the paper proxy card or voting electronically does NOT deprive you of your right to participate in the virtual meeting and to vote your shares for the matters acted upon at the meeting.
Your vote is important. Whether or not you expect to attend and participate in the Annual Meeting, we encourage you to vote in advance of the Annual Meeting.
Sincerely,
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| /s/ Austin Russell |
| Austin Russell |
| Chairperson of the Board, President and Chief Executive Officer |
| April 28, 2023 |
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 7, 2022: THE PROXY MATERIALS, INCLUDING2023: THE PROXY STATEMENT AND ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 ARE AVAILABLE FREE OF CHARGE AT www.proxyvote.com. |
LUMINAR TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 6, 2022
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Time and Date: | June 7, 20222023 at 1:11:00 p.m.a.m. Eastern Time/10:8:00 a.m. Pacific Time. |
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Place: | Via live webcast on the internet at www.virtualshareholdermeeting.com/LAZR2022.LAZR2023. |
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Items of Business: | 1. | Election of two Class IIIII directors. |
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| 2. | Ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of Luminar Technologies, Inc. (the “Company”) for the fiscal year ending December 31, 2022.2023. |
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| 3. | Advisory (non-binding) vote to approve the compensation of our named executive officers. |
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| 4. | Advisory (non-binding) vote onApproval of an amendment to the frequencySecond Amended and Restated Certificate of future advisory votes on executive compensation.Incorporation of the Company to reflect Delaware law provisions allowing officer exculpation. |
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| 5. | Approve the amendment and restatement of the Luminar Technologies, Inc. 2020 Equity Incentive Plan to increase the authorized share reserve and add an automatic annual share reserve increase provision. |
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| 6. | Transact any other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. |
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Record Date: | Only stockholders of record at the close of business on April 13, 202210, 2023 are entitled to notice of, and to vote at, the Annual Meeting and any adjournments thereof. |
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Proxy Voting: | Holders of our Class A common stock are entitled to one vote for each share held as of the above record date. Holders of our Class B common stock are entitled to ten votes for each share held as of the above record date. Holders of our Class A common stock and Class B common stock will vote together as a single class on all matters described in this proxy statement. Our Class A common stock and Class B common stock are sometimes collectively referred to in this proxy statement as our “common stock.” |
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| For questions regarding your stock ownership, you may contact us through our Investor Relations section of our website at https://investors.luminartech.com/ir-resources/contact-ir or, if you are a registered holder, contact our transfer agent, American Stock Transfer & Trust Company, LLC, through its website at https://www.astfinancial.com/ www.astfinancial.comor by phone at (800) 937-5449 or (718) 921-8124. |
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| By Order of the Board of Directors, |
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| /s/ Austin Russell |
| Austin Russell Chairperson of the Board, President and Chief Executive Officer |
| April 28, 2023 |
LUMINAR TECHNOLOGIES, INC.
PROXY STATEMENT FOR THE 20222023 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY,WEDNESDAY, JUNE 7, 20222023
May 6, 2022April 28, 2023
INFORMATION ABOUT SOLICITATION AND VOTING
A proxy is solicited on behalf of our board of directors of Luminar Technologies, Inc. (“Luminar”), for use at Luminar’s 20222023 Annual Meeting of Stockholders (the "Annual Meeting" or “meeting”) to be held on Tuesday,Wednesday, June 7, 20222023 at 1:11:00 p.m.a.m. Eastern Time/10:8:00 a.m. Pacific Time via live webcast on the internet at www.virtualshareholdermeeting.com/LAZR2022.LAZR2023. References in this proxy statement (the “Proxy Statement”) to “we,” “us,” “our,” “the Company” or “Luminar” refer to Luminar Technologies, Inc.
IMPORTANT NOTICE REGARDING THEINTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
We have elected to make our proxy materials available to our stockholders over the internet rather than mailing paper copies of those materials to each stockholder. We mailed, on or about May 6, 2022, copiesApril 28, 2023, a Notice of the proxy materials, which include thisInternet Availability of Proxy Statement, a proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021Materials (the “2021 Annual Report”“Notice”), to a majority of our stockholders of record and beneficial owners as ofat the close of business on April 13, 2022.10, 2023.
The Notice directs stockholders to a website where the proxy materials, including the Proxy Statement and the 2021 Annual Report, are available freeavailable; the date and the time of chargethe Annual Meeting and information on how to participate in and vote at www.proxyvote.com.the meeting; the matters to be acted upon at the meeting and our board of directors’ recommendations with regard to each matter; instructions on how to vote; and information on how stockholders can request a paper or e-mail copy of the Proxy Statement.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q: What is the purpose of the meeting?
A: At the meeting, stockholders will act upon the proposals described in this Proxy Statement. In addition, following the formal portion of the meeting, management will be available to respond to questions from stockholders.
Q: What proposals are scheduled to be voted on at the meeting?
A: Stockholders will be asked to vote on the following proposals at the meeting:
1.To elect Alec E. GoresMary Lou Jepsen, PhD and Matthew J. SimonciniAustin Russell as Class IIIII directors to serve for a term of three years or until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal (“Proposal One”);
2.To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20222023 (“Proposal Two”);
3.To vote on a non-binding advisory resolution to approve the compensation of our named executive officers (“Proposal Three”); and
4.To vote on a non-binding advisory resolutionapprove an amendment to approve the frequencyour Second Amended and Restated Certificate of future advisory votes on executive compensationIncorporation to reflect Delaware law provisions allowing officer exculpation (“Proposal Four”); and
5.To approve the amendment and restatement of the Luminar Technologies, Inc. 2020 Equity Incentive Plan to increase the authorized share reserve and add an automatic annual share reserve increase provision (“Proposal Five”).
Q: Could matters other than Proposal One, Two, Three Four and FiveFour be decided at the meeting?
A: Our bylaws require that we receive advance notice of any proposal to be brought before the meeting by stockholders of Luminar, and we have not received notice of any such proposals. If any other matter were to come before the meeting, the proxy holders appointed by our board of directors will have the discretion to vote on those matters for you.
Q: How does the board of directors recommend I vote on these proposals?
A: Our board of directors recommends that you vote your shares:
•“FOR ALL” the nominees to the board of directors (Proposal One);
•“FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20222023 (Proposal Two);
•“FOR” the approval of the compensation of our named executive officers (Proposal Three); and
•“ONE YEAR” for the frequency of future advisory votes on executive compensation (Proposal Four); and
•“FOR” the approval of an amendment to the amendmentSecond Amended and restatementRestated Certificate of Incorporation of the Luminar Technologies, Inc. 2020 Equity Incentive PlanCompany to increase the authorized share reserve and add an automatic annual share reserve increase provisionreflect Delaware law provisions allowing officer exculpation (Proposal Five)Four).
Q: Who may vote at the Annual Meeting?
A: Stockholders of record as of the close of business on April 13, 2022,10, 2023, or the Record Date, are entitled to receive notice of, to attend and participate, and to vote at the Annual Meeting. At the close of business on the Record Date, there were 254,411,153280,469,629 shares of Class A common stock and 97,088,670 shares of Class B common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the stockholder of record with respect to those shares, and the Notice or proxy materials were sent directly to you.
Beneficial Owner of Shares Held in Street Name: Shares Registered in the Name of a Broker or Nominee
If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the “beneficial owner” of shares held in “street name,” and the Notice or these proxy materials were forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. Because you are not the stockholder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid proxy from the organization that holds your shares giving you the right to vote the shares at the Annual Meeting. Beneficial owners must obtain a valid proxy from the organization that holds their shares and present it to American Stock
Transfer & Trust Company, LLC, at least three business (3) days in advance of the Annual Meeting.
Q: How do I vote?
A. You may vote by mail or follow any alternative voting procedure (such as telephone or internet, voting) described onor by returning your proxy card.card by mail. You may also vote in person at the virtual Annual Meeting. To use an alternative voting procedure,vote, follow the instructions on theeach Notice and/or proxy card that you receive. The procedures for voting are as follows:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may:
•Vote by telephone or through the internet - in order to do so, please follow the instructions shown on your Notice or proxy card;
•Vote by mail - if you request or receive a paper proxy card and voting instructions by mail, simply complete, sign and date the enclosed proxy card and return it before the meeting in the pre-paid envelope provided; or
•Vote in person at the virtual Annual Meeting - you may virtually attend and participate in the Annual Meeting online at www.virtualshareholdermeeting.com/LAZR2022LAZR2023 and vote your shares electronically before the polls close during the Annual Meeting. To participate and vote in the Annual Meeting, you will need the control number included onin your Notice or proxy card.
Votes submitted by telephone or through the internet must be received by 11:59 p.m. Eastern Time, on June 6, 2022.2023. Submitting your proxy, whether by telephone, through the internet, or by mail if you request or received a paper proxy card, will not affect your right to vote in person should you decide to attend and participate in the meeting virtually.
Beneficial Owner: Shares Registered in the Name of a Broker or Other Nominee
If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct it how to vote your shares. Your vote is important. To ensure that your vote is counted, complete and mail the voting instruction card provided by your brokerage firm, bank, or other nominee as directed by your nominee. To electronically vote in person at the meeting online, you must obtain a legal proxy from your nominee. Follow the instructions from your nominee included with our proxy materials or contact your nominee to request a proxy form.
Your vote is important. Whether or not you plan to participate in the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted.
Q: How do I vote by internet or telephone?
A. If you wish to vote by internet or telephone, you may do so by following the voting instructions included on your Notice or proxy card. Please have theeach Notice or proxy card you received in hand when you vote over the internet or by telephone as you will need information specified therein to submit your vote. The giving of such a telephonic or internet proxy will not affect your right to vote in person (as detailed above) should you decide to attend the meeting.
The telephone and internet voting procedures are designed to authenticate stockholders' identities, to allow stockholders to give their voting instructions and to confirm that stockholders' instructions have been recorded properly.
Q: What shares can I vote?
A: Each share of Class A common stock and Class B common stock issued and outstanding as of the close of business on April 13, 202210, 2023 is entitled to vote on all items being voted on at the meeting. You may vote all shares owned by you as of April 13, 2022,10, 2023, including (1) shares held directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee.
Q: How many votes am I entitled to per share?
A: Each holder of shares of (i) Class A common stock is entitled to one vote for each share of Class A common stock held as the Record Date and (ii) Class B common stock is entitled to ten votes for each share of Class B common stock held as of the Record Date.
Q: What is the quorum requirement for the meeting?
A: The holders of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) entitled to vote at the Annual Meeting as of the Record Date must be present in person or represented by proxy at the Annual Meeting in order to hold the Annual Meeting and conduct business. This presence is called a quorum. Your shares are counted as present at the Annual Meeting if you are present and vote in person at the Annual Meeting or if you have properly submitted a proxy.
Q: How are abstentions and broker non-votes treated?
A: Abstentions (i.e., shares present at the Annual Meeting and marked “abstain”) are deemed to be shares present or represented by proxy and entitled to vote, and are counted for purposes of determining whether a quorum is present. Abstentions have no effect on Proposal One, Two Three, Four or Five.Three.
A broker non-vote occurs when the beneficial owner of shares fails to provide the broker, bank or other nominee that holds the shares with specific instructions on how to vote on any "non-routine" matters brought to a vote at the stockholders meeting. In this situation, the broker, bank or other nominee will not vote on the “non-routine” matter. Broker non-votes are counted for purposes of determining whether a quorum is present and have no effect on the outcome of Proposals One, Two or Three.
With respect to Proposal Four, the matters voted upon.affirmative vote of a majority of the voting power of the shares of Class A common stock and Class B common stock (voting together as a single class) outstanding as of the Record Date is required for the proposal to be approved. Accordingly, with respect to Proposal Four, abstentions and broker non-votes will have the same effect as votes against the proposal.
Note that if you are a beneficial holder, brokers and other nominees will be entitled to vote your shares on “routine” matters without instructions from you. The only proposal that would be considered “routine” in such event is the proposal for the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20222023 (Proposal Two). A broker or other nominee will not be entitled to vote your shares on any “non-routine” matters, absent instructions from you. This year, “non-routine” matters include all proposals other than Proposal Two, including the election of directors Accordingly, we encourage you to provide voting instructions to your broker or other nominee whether or not you plan to attend the meeting.
Q: What is the vote required for each proposal?
A: The votes required to approve each proposal are as follows:
•Proposal One: Each director elected shall be elected by a plurality of the votes of the shares of our Class A common stock and Class B common stock (voting together as a single class) present in person or represented by proxy at the meeting and entitled to vote on the election of directors, meaning that the two individuals nominated for election to our board of directors at the Annual Meeting receiving the highest number of “FOR” votes will be elected.
•Proposal Two: Approval will be obtained if the proposal receives the affirmative vote of a majority of the number of votes cast “FOR” and “AGAINST” the proposal.
•Proposal Three: Approval will be obtained if the proposal receives the affirmative vote of oura majority of the number of votes cast “FOR” and “AGAINST” the proposal.
•Proposal Four: Approval will be obtained if a majority of the voting power of the shares of Class A common stock and Class B common stock (voting together as a single class) castoutstanding as of the Record Date votes “FOR” the proposal at the Annual Meeting exceeds the number of votes “AGAINST” the proposal.
•Proposal Three: Approval will be obtained if the number of votes of our Class A common stock and Class B common stock (voting together as a single class) cast “FOR” the proposal at the Annual Meeting exceeds the number of votes “AGAINST” the proposal.
•Proposal Four: The frequency receiving the votes of the holders of a majority of the voting power of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting voting for or against the choices will be deemed to be the frequency preferred by the stockholders. In the event that no option receives a majority of the votes as described in the immediately preceding sentence, the Company will consider the option that receives the most votes cast to be the frequency preferred by our stockholders.
•Proposal Five: Approval will be obtained if the number of votes of our Class A common stock and Class B common stock (voting together as a single class) cast “FOR” the proposal at the Annual Meeting exceeds the number of votes “AGAINST” the proposal.
Q: If I submit a proxy, how will it be voted?
A: When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, the shares will be voted in accordance with the recommendations of our board of directors as described above. If any matters not described in the Proxy Statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is postponed or adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have revoked your proxy instructions, as described below under “Can I change my vote or revoke my proxy?”
Q: What should I do if I get more than one proxy or voting instruction card?
A: Stockholders may receive more than one set of voting materials, including multiple copies of the proxy materials and multiple Notices, proxy cards or voting instruction cards. For example, stockholders who hold shares in more than one brokerage account may receive separate sets of proxy materials or one Notice for each brokerage account in which shares are held. Stockholders of record whose shares are registered in more than one name will receive more than one set of proxy materials. You should vote in accordance with all of the proxy cards and voting instruction cards you receive relating to our Annual Meeting to ensure that all of your shares are voted and counted.
Q: Can I change my vote or revoke my proxy?
A: You may change your vote or revoke your proxy at any time prior to the taking of the vote or the polls closing at the Annual Meeting.
If you are the stockholder of record, you may change your vote by:
•granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method);
•providing a written notice of revocation to Luminar’s Secretary at Luminar Technologies, Inc., 2603 Discovery Drive, Suite 100, Orlando, Florida 32826, prior to your shares being voted; or
•participating in the Annual Meeting and voting electronically online at www.virtualshareholdermeeting.com/LAZR2022.LAZR2023. Participation alone at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically vote during the meeting online at www.virtualshareholdermeeting.com/LAZR2022.LAZR2023.
Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to revoke a proxy, you must contact that firm to revoke any prior voting instructions.
Q: How can I attend the Annual Meeting in person?
A: There is no physical location for the Annual Meeting. You are invited to attend the Annual Meeting by participating online if you are a stockholder of record or a street name stockholder as of April 13, 2022,10, 2023, the Record Date. See, “How can I participate in the Annual Meeting?” below for more details. Please be aware that participating in the Annual Meeting will not, by itself, revoke a proxy. See, “Can I change my vote or revoke my proxy?” above for more details.
Q. How can I participate in the Annual Meeting?
A: The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend and participate in the Annual Meeting online and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/LAZR2022.LAZR2023. You will also be able to vote your shares electronically at the Annual Meeting. To participate and vote in the Annual Meeting, you will need the control number included on your Notice or proxy card.
The meeting webcast will begin promptly at 11:00 a.m. Eastern Time/8:00 a.m. Pacific Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 10:45 a.m. Eastern Time/7:45 a.m. Pacific Time, and you should allow ample time for the check-in procedures. We plan to have a webcast replay which will be posted to the Investor Relations section of our website, which is located at https://investors.luminartech.com.
Q: Can I submit questions prior to the meeting?
A: Yes, following the meeting, there will be an informal Question and Answer period as time permits. As a stockholder, you may submit questions to the Company in writing by visiting the website www.proxyvote.com, and following the instructions provided. Stockholders may also submit questions live during the meeting on www.virtualshareholdermeeting.com/LAZR2022.LAZR2023.
Q:What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
A: If you encounter any technical difficulties accessing the virtual meeting during the check in or meeting time, please call the technical support number posted at www.virtualshareholdermeeting.com/LAZR2022.LAZR2023. Technical support will be available starting at 12:10:45 p.m.a.m. Eastern Time/9:7:45 a.m., Pacific Time on June 7, 2022.2023.
Q: Why is the Annual Meeting being held only online?
A: We believe that hosting a virtual meeting will not only support the health and well-being of our stockholders, business partners, employees and board of directors during the coronavirus (COVID-19) pandemic, but it will also expand access, facilitate stockholder attendance and participation and reduce costs. We have designed the virtual annual meeting to provide the same rights and opportunities to participate as stockholders would have at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform.
Q. How can I get electronic access to the proxy materials?
A: This Proxy StatementThe Notice will provide you with instructions regarding how to:
•view our proxy materials for the meeting through the internet; and our 2021 Annual Report are available at www.proxyvote.com. To
•instruct us to send our future proxy materials to you electronically by email, please go to www.proxyvote.com.email.
If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Q: Is there a list of stockholders entitled to vote at the Annual Meeting?
A: The names of stockholders of record entitled to vote will be available for inspection by stockholders of record for 10 days prior to the meeting. If you are a stockholder of record and want to inspect the stockholder list, please send a written request to our Secretary at Luminar Technologies, Inc., 2603 Discovery Drive, Suite 100, Orlando, Florida 32826 or by e-mail at investors@luminartech.com to arrange for access to the stockholder list. During the Annual Meeting, any stockholder attending the meeting may access the names of stockholders of record entitled to vote at the Annual Meeting at www.virtualshareholdermeeting.com/LAZR2022.
Q: Who will tabulate the votes?
A: A representative of Broadridge Financial Solutions, Inc. will serve as the Inspector of Elections and will tabulate the votes at the Annual Meeting.
Q: Where can I find the voting results of the Annual Meeting?
A: We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting.
Q: I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
A: The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more
stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process is commonly referred to as “householding.”
Brokers with account holders who are Luminar stockholders may be householding our proxy materials. A single set of proxy materials may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you notify your broker or Luminar that you no longer wish to participate in householding.
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, you may (1) notify your broker, (2) direct your written request to: Investor Relations, Luminar Technologies, Inc., 2603 Discovery Drive, Suite 100, Orlando, Florida 32826 or (3) contact our Investor Relations department by email at investors@luminartech.com. Stockholders who receive multiple copies of the proxy statement or annual report at their address and would like to request householding of their communications should contact their broker. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the annual report and proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.
Q: What if I have questions about my Luminar shares or need to change my mailing address?
A: If you are a stockholder of record, you may contact our transfer agent, American Stock Transfer & Trust Company, LLC, by telephone at (800) 937-5449 or (718) 921-8124, or through its website at https://www.astfinancial.com/www.astfinancial.com or by U.S. mail at 6201 15th Ave, Brooklyn, NY 11219, if you have questions about your Luminar shares or need to change your mailing address.
Q: Who is soliciting my proxy and paying for the expense of solicitation?
A: The proxy for the Annual Meeting is being solicited on behalf of our board of directors. We will pay the cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. We may, on request, reimburse brokerage firms and other nominees for their expenses in forwarding proxy materials to beneficial owners. In addition to soliciting proxies by mail, we expect that our directors, officers and employees may solicit proxies in person or by telephone or facsimile. None of these individuals will receive any additional or special compensation for doing this, although we may reimburse these individuals for their reasonable out-of-pocket expenses. We do not expect to, but have the option to, retain a proxy solicitor. If you choose to access the proxy materials or vote via the Internetinternet or by phone, you are responsible for any Internetinternet access or phone charges you may incur.
Q: What are the requirements to propose actions to be included in our proxy materials for next year’s annual meeting of stockholders, or our 20232024 Annual Meeting, or for consideration at our 20232024 Annual Meeting?
A: Requirements for Stockholder Proposals to be considered for inclusion in our proxy materials for our 20232024 Annual Meeting:
Our amended and restated bylaws provide that stockholders may present proposals for inclusion in our proxy statement by submitting their proposals in writing to the attention of our Secretary at our principal executive office. Our current principal executive office is located at 2603 Discovery Drive, Suite 100, Orlando, Florida 32826. In addition, stockholder proposals must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and related SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. In order to be included in the proxy
statement for our 20232024 Annual Meeting, stockholder proposals must be received by our Secretary no later than December 29, 202230, 2023 and must otherwise comply with the requirements of Rule 14a-8 of the Exchange Act.
Requirements for Stockholder Nomination of Director Candidates and Stockholder Proposals to be presented at our 20232024 Annual Meeting:
Our amended and restated bylaws provide that stockholders may nominate persons for election to the Board and present proposals to be considered at an annual meeting by providing timely
notice to our Secretary at our principal executive office. To be timely for our 20232024 Annual Meeting, our Secretary must receive the written notice at our principal executive office:
•not earlier than the close of business on February 7, 2023,8, 2024, and
•not later than the close of business on March 9, 2023.2024.
If we hold our 20232024 annual meeting of stockholders more than 30 days before or more than 60 days after June 7, 20232024 (the one-year anniversary date of the Annual Meeting), then notice of a nomination or stockholder proposal that is not intended to be included in our proxy statement must be received by our Secretary at our principal executive office:
•not earlier than the close of business on the 120th day prior to such annual meeting, and
•not later than the close of business on the later of (i) the 90th day prior to such annual meeting, or (ii) the tenth day following the day on which public announcement of the date of such annual meeting is first made.
A stockholder’s notice to the Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by our amended and restated bylaws. If a stockholder who has notified Luminar of such stockholder’s intention to present a proposal at an annual meeting does not appear to present such stockholder’s proposal at such meeting, Luminar does not need to present the proposal for vote at such meeting.
In addition, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must comply with the additional requirements of Rule 14a-19(b).
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our board of directors currently consists of seveneight directors and is divided into three classes, with staggered three-year terms, pursuant to our amended and restated certificate of incorporation and our amended and restated bylaws. Our board of directors consists of three Class I directors, Dr. Maguire, Mr. Heng, and Ms. Martin, twothree Class II directors, Messrs. Gores, Simoncini and Simoncini,Tempesta, and two Class III directors, Dr. Jepsen and Mr. Russell.
We have a strong commitment to good corporate governance practices. These practices provide an important framework within which our board of directors, its committees and our management can pursue our strategic objectives in order to promote the interests of our stockholders.
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| Director Name | | Class | | Election Year | | Age(1) | | Position(s) | | Director Since |
| Austin Russell | | III | | 2023 | | 28 | | Chairperson, President, and CEO | | 2020 |
| Mary Lou Jepsen, PhD | | III | | 2023 | | 58 | | Director | | 2021 |
| Alec E. Gores | | II | | 2025 | | 70 | | Director | | 2020 |
| Matthew J. Simoncini | | II | | 2025 | | 62 | | Director | | 2020 |
| Daniel D. Tempesta | | II | | 2025 | | 52 | | Director | | 2022 |
| Jun Hong Heng | | I | | 2024 | | 42 | | Director | | 2021 |
| Shaun Maguire, PhD | | I | | 2024 | | 37 | | Director | | 2021 |
| Katharine A. Martin | | I | | 2024 | | 60 | | Director | | 2021 |
(1) As of April 10, 2023.
Corporate Governance Guidelines
Our board of directors has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions and other policies for the governance of our Company. Our Corporate Governance Guidelines are available on the Investor Relations section of our website, which is located at https://investors.luminartech.com by clicking on “Governance Documents” in the “Governance” section of our website. Our Corporate Governance Guidelines are subject to modification from time to time by our board of directors pursuant to the recommendations of our nominating and& ESG committee.
The board of directors is committed to governance practices that promote long-term stockholder value and strengthen board and management accountability to our stockholders, clients and other stakeholders. The following table highlights many of our key governance practices.
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•Six of our seven directors are independent
| | •Strong focus on pay-for-performance |
| Corporate Governance Highlights | |
•Seven of our eight directors are independent •Independent standing board committees | | •Clawback policy on executive compensation |
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•Annual board and committee self-assessment process
| • | Regular meetings of our independent directors without management present •Strong focus on pay-for-performance •Clawback policy on executive compensation •Programs, policies and practices relating to environmental and social issues and impacts are overseen by the nominating and& ESG committee |
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•Regular meetings of our independent directors without management present | | •Two of our seven directorsBoard Commitment to Diversity: The board is committed to actively seeking highly qualified women and individuals from underrepresented groups to include in the pool from which new candidates are femaleselected
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Board Leadership Structure
Our board is led by Mr. Russell, who serves as the Company’s Chairperson of the Board, President and Chief Executive Officer. The board of directors does not anticipate having a policy requiring the positions of the Chairperson of the Board and Chief Executive Officer to be separate or held by the same individual. The board of directors believes that this determination should be based on circumstances existing from time to time, based on criteria that are in Luminar’s best interests and the best interests of its stockholders, including the composition, skills and experience of the board of directors and its members, specific challenges faced by Luminar or the industry in which it operates and governance efficiency.
We adopted Corporate Governance Guidelines, effective as of the consummation of our business combination pursuant to that certain Agreement and Plan of Merger dated August 24, 2020 with the pre-Business Combination Luminar Technologies, Inc. (“Legacy Luminar”) (the “Business Combination”), which provide for the appointment of a lead independent director at any time when the Chairperson is not independent. The board of directors elected Mr. Russell as Chairperson of the board because it believes that Mr. Russell’s strategic vision for the business, his in-depth knowledge of the Company’s operations, and his
experience serving as the Chief Executive Officer since Legacy Luminar’s inception make him well qualified to serve as both Chairperson of the board and Chief Executive Officer. The board of directors has considered whether to select a lead independent director to help reinforce the independence of the board as a whole, and at this time has determined the Company has sufficient governance without having a lead independent director.
There are no family relationships among any of our directors or executive officers.
Our Board of Directors’ Role in Risk Oversight
OneManagement continually monitors the material risks we face, including financial risk, strategic risk, enterprise and operational risk and legal and compliance risk, and one of the key functions of the board of directors is informed oversight of our risk management process. The board of directors does not have a standing risk management committee, but rather administers this oversight function directly through the board as a whole, as well as through various
standing committees of the board of directors that address risks inherent in their respective areas of oversight. In particular, the board of directors is responsible for monitoring and assessing strategic risk exposure and our audit committee has the responsibility to consider and discuss our major financial risk exposures, operational risk management, and the steps our management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee also monitors compliance with legal and regulatory requirements and risks related to cybersecurity. The compensation & human capital management committee also assesses and monitors whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements. The nominating and ESG committee monitors the effectiveness of our governance guidelines and oversees programs, policies and practices relating to environmental and social issues and impacts to support the sustainable growth of the company’s businesses.
We believe this division of responsibilities is an effective approach for addressing the risks we face and that our board leadership structure supports this approach.
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| The Board |
| Our board, as a whole, is responsible risk oversight, and for monitoring and assessing strategic risk exposure. At its regularly scheduled meetings, the board receives management updates and Committee reports regarding business operations, financial results, Committee activities, strategy, and discusses risks related to the business. |
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| Compensation & Human Capital Management Committee | | Audit Committee |
| The compensation & human capital management committee assesses and monitors whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements. | | Our audit committee has the responsibility to consider and discuss our major financial risk exposures, operational risk management, and the steps our management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee also monitors compliance with legal and regulatory requirements. |
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| Nominating and ESG Committee | | |
| The nominating & ESG committee monitors the effectiveness of our governance guidelines and oversees programs, policies and practices relating to environmental and social issues and impacts to support the sustainable growth of the company’s businesses and also monitors risks related to cybersecurity. | | |
Independence of Directors; Controlled Company Exemption
Our board of directors has determined that none of the members of our board of directors other than Austin Russell has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of Matthew J. Simoncini, Jun Hong Heng, Shaun Maguire, PhD, Katharine A. Martin, Mary Lou Jepsen, PhD, and Alec E. Gores and Daniel D. Tempesta is “independent” as that term is defined under the rules of the Nasdaq Stock Market, or Nasdaq. Our board of directors has also determined that all members of our audit committee, compensation & human capital management committee and nominating & ESG committee are independent and satisfy the relevant SEC and Nasdaq independence requirements for such committees. In making this determination, our board of directors considered that the law firm of Wilson Sonsini Goodrich & Rosati PC (“WSGR”), of which Ms. Martin is the Chairperson, had provided minimal legal services to us and Austin Russell, which ceased before Ms. Martin joined the board of directors in 2021. All services by WSGR terminated prior to Ms. Martin joining the board of directors and will not continue.
Austin Russell controls a majority of the voting power of our outstanding capital stock. As a result, we are a “controlled company” under Nasdaq rules. As a controlled company, we are exempt from certain
Nasdaq corporate governance requirements, including those that would otherwise require the board of directors to have a majority of independent directors and require that we establish a compensation committee comprised entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees for directors are determined or recommended to the board of directors by the independent members of the board of directors. While we do not currently intend to rely on any of these exemptions, we will be entitled to do so for as long as we are considered a “controlled company,” and to the extent we rely on one or more of these exemptions, holders of our capital stock will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.
In addition, audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in such member’s capacity as a
member of the audit committee, the board of directors or any other board committee (i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or (ii) be an affiliated person of the listed company or any of its subsidiaries. Based on information requested from and provided by each director concerning his or her background, employment and affiliations, our Board has determined that each member of our audit committee satisfies the independence requirements of the SEC rules.
In order to be considered independent for purposes of Rule 5605(d)(2)(A) of the Nasdaq Rules, a member of a compensation committee of a listed company may not, other than in his or her capacity as a member of the compensation committee, the board or any other board committee: (1) accept any consulting, advisory, or other compensatory fee from the listed company, other than for board service; or (2) be an affiliated person of the listed company. Based on information requested from and provided by each director concerning his or her background, employment and affiliations, our Board has determined that each member of our compensation & human capital management committee satisfies the independence requirements of the Nasdaq Rules.
Committees of Our Board of Directors
Our board of directors has established an audit committee, a compensation & human capital management committee and a nominating and& ESG committee. The composition and responsibilities of each committee are described below. Each of these committees has a written charter approved by our board of directors. Copies of the charters for each committee are available on the Investor Relations section of our website, which is located at https://investors.luminartech.com by clicking on “Governance Documents” in the “Governance” section of our website. Members serve on these committees until (i) they resign from their respective committee, (ii) they no longer serve as a director or (iii) as otherwise determined by our board of directors.
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| INDEPENDENT DIRECTORS | | | | Audit
Committee | | Compensation
& Human
Capital Management
Committee | | Nominating &
ESG Committee |
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| Alec E. Gores | | | | | | | | |
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| Jun Hong Heng | | | | | | | | |
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| Mary Lou Jepsen, PhD | | | | | | | | |
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| Shaun Maguire, PhD | | | | | | | | |
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| Katharine A. Martin | | | | | | | | |
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| Matthew J. Simoncini | | | | | | | | |
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| Daniel D. Tempesta | | | | | | | | |
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| NON-INDEPENDENT DIRECTOR | | | | | | | | |
| Austin Russell | | | | | | | | |
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| Chairperson of the Board | | | | Financial Expert |
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| Committee Chairperson | | | | Committee Member |
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Audit Committee
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Current Members: Matthew J. Simoncini* (chair) Jun Hong Heng Daniel D. Tempesta*
*Audit Financial Expert | | Responsibilities: Pursuant to its charter, our Audit Committee, is responsible for: •Selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; •Helping to ensure the independence and overseeing the performance of the independent registered public accounting firm; •Reviewing and discussing the results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results; •Reviewing our financial statements and critical accounting policies and estimates; •Reviewing the adequacy and effectiveness of our internal controls; •Developing procedures for employees to submit concerns anonymously about questionable accounting, internal accounting controls, or audit matters; •Overseeing and reviewing our policies on risk assessment and risk management; •Overseeing compliance with our Code of Business Conduct and Ethics; •Reviewing related party transactions; •Unless delegated to a separate committee of the board: (i) periodically receiving reports from management to help fulfill the committee’s duties to oversee the principal risk exposures facing the company and the company’s mitigation efforts in respect of such risks; and (ii) reviewing the company’s risk management framework and programs, the company’s adherence to risk limits and its established risk appetite, and the framework by which management discusses the company’s risk profile and risk exposures with the board and its committees and annually recommending to the board the articulation and establishment of the company’s risk appetite; and •Overseeing our business continuity and disaster preparedness planning; and approving or, as permitted, pre-approving all audit and all permissible non-audit services to be performed by the independent registered public accounting firm. |
Independence: The composition of our Audit Committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.
The board of directors determined that each of Messrs. Simoncini, Heng and Tempesta meets the requirements for independence and financial sophistication under the current Nasdaq listing standards and SEC rules and regulations, including Rule 10A-3.
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Meetings: 9 meetings during 2022. | |
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Our audit committee currently consistsoperates under a written charter, which satisfies the applicable rules of Matthew J. Simoncini, Jun Hong Hengthe SEC and Shaun Maguire, PhD. The board of directors determined that each of Messrs. Simoncini, Heng and Dr. Maguire meets the requirements for independence and financial literacy under the current Nasdaq listing standards of Nasdaq, and SEC ruleswhich is available on our website. All audit services
provided to us and regulations, including Rule 10A-3.all permissible non-audit services, provided to us by our independent registered public accounting firm are approved in advance by the audit committee.
Each of Mr. Simoncini will continue to serve as the chair of the audit committee. In addition,and Mr. SimonciniTempesta is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K promulgated under the Securities Act. This designation does not impose any duties, obligations, or liabilities that are greater than are generally imposed on members of the audit committee and the board of directors. The audit committee is responsible for, among other things:
•selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;
•helping to ensure the independence and overseeing the performance of the independent registered public accounting firm;
•reviewing and discussing the results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results;
•reviewing our financial statements and critical accounting policies and estimates;
•reviewing the adequacy and effectiveness of our internal controls;
•developing procedures for employees to submit concerns anonymously about questionable accounting, internal accounting controls, or audit matters;
•overseeing and reviewing our policies on risk assessment and risk management;
•overseeing compliance with our code of business conduct and ethics;
•reviewing related party transactions;
•overseeing cybersecurity, data privacy and other risks relevant to the our computerized information system controls and security, the steps we have taken to monitor or mitigate such exposures, and our information governance policies and programs;
•unless delegated to a separate committee of the board: (i) periodically receiving reports from management to help fulfill the committee’s duties to oversee the principal risk exposures facing the company and the company’s mitigation efforts in respect of such risks; and (ii) reviewing the company’s risk management framework and programs, the company’s adherence to risk limits and its established risk appetite, and the framework by which management discusses the company’s risk profile and risk exposures with the board and its committees and annually recommending to the board the articulation and establishment of the company’s risk appetite;
•overseeing our business continuity and disaster preparedness planning;and
•approving or, as permitted, pre-approving all audit and all permissible non-audit services to be performed by the independent registered public accounting firm.
The audit committee operates under a written charter, which satisfies the applicable rules of the SEC and the listing standards of Nasdaq, and which is available on our website. All audit services provided to us and all permissible non-audit services, provided to us by our independent registered public accounting firm are approved in advance by the audit committee.
Compensation & Human Capital Management Committee
Our compensation committee & human capital management committee, or compensation committee, consists of Katharine A. Martin, Mary Lou Jepsen, PhD and Matthew J. Simoncini, with Ms. Martin serving as the chair of the compensation committee. Mr. Simoncini previously served as the chair of the compensation committee from December 2, 2020 to February 8, 2021. The board of directors has determined that each of Ms. Martin, Dr. Jepsen and Mr. Simoncini meets the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations. Each member of the compensation committee is a non-employee director, as defined in Rule16b-3 promulgated under the Exchange Act. The compensation committee is responsible for, among other things:
•reviewing, approving and determining, or making recommendations to the board of directors regarding, the compensation of our executive officers, including the Chief Executive Officer;
•making recommendations regarding non-employee director compensation to our board of directors;
•administering our equity compensation plans and agreements with our executive officers;
•reviewing, approving and administering incentive compensation and equity compensation plans;
•reviewing with management annually risks arising from the company’s compensation policies and practices applicable to employees;
•overseeing the development, implementation and effectiveness of the company’s practices, policies and strategies relating to human capital; and
•reviewing and approving our overall compensation philosophy. | | | | | | | | |
Current Members: Katharine A. Martin (chair) Jun Hong Heng Mary Lou Jepsen, PhD Matthew J. Simoncini | | Responsibilities: Pursuant to its charter, our Compensation & Human Capital Management Committee, is responsible for: •Reviewing, approving and determining, or making recommendations to the board of directors regarding, the compensation of our executive officers, including the CEO; •Making recommendations regarding non-employee director compensation to our board of directors; •Administering our equity compensation plans and agreements with our executive officers; •Reviewing, approving and administering incentive compensation and equity compensation plans; •Reviewing with management annually risks arising from the company’s compensation policies and practices applicable to employees; •Overseeing the Company’s risks, opportunities, programs, practices, policies, strategies, measures, objectives and performance relating to recruiting, talent development and retention, culture, diversity, equity and inclusion and human health and safety; and •Reviewing and approving our overall compensation philosophy.
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Independence: The composition of our Compensation & Human Capital Management Committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.
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Meetings: 6 meetings during 2022. | |
The compensation committee operates under a written charter, which satisfies the applicable rules of the SEC and Nasdaq listing standards, and is available on our website. The charter allows the compensation committee to delegate its responsibilities to a subcommittee of the compensation committee, as may be necessary or appropriate, and within certain limits. In addition, to the extent permitted by applicable law, the compensation committee may delegate to one or more officers of the Company (or other appropriate supervisory personnel) the authority to grant stock options and other stock awards to employees (who are not executive officers or members of the Board) of the Company or of any subsidiary of the Company.
Nominating and& ESG Committee
Our nominating and ESG committee consists of Mary Lou Jepsen, PhD, Jun Hong Heng and Katharine A. Martin. Dr. Jepsen serves as the chair of the nominating and ESG committee. The Board has determined that Dr. Jepsen, Mr. Heng and Ms. Martin meet the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations. The nominating and ESG committee is responsible for, among other things:
•recommending to the board for determination the desired qualifications, expertise and characteristics of Board members, with the goal of developing a diverse, experienced and highly qualified board;
•identifying, evaluating and individuals qualified to serve as members of the board, consistent with criteria approved by the board, and making recommendations to the board of directors regarding nominees for election to the board and its committees;
•considering and making recommendations to the board of directors regarding the composition of the board and its committees;
•overseeing corporate governance and related matters;
•developing and making recommendations to the board of directors regarding corporate governance guidelines and ESG matters;
•overseeing the company’s ESG programs, policies and practices;
•overseeing an annual evaluation of the board and its committees;
•reviewing and monitoring key public policy trends, issues, regulatory matters and other concerns that may affect our business, strategies, operations, performance or reputation, and overseeing our engagement in the public policy process; and
•contributing to succession planning. | | | | | | | | |
Current Members: Mary Lou Jepsen, PhD (chair) Shaun Maguire, PhD Katharine A. Martin
| | Responsibilities: Pursuant to its charter, our Nominating & ESG Committee, is responsible for: •Recommending to the board for determination the desired qualifications, expertise and characteristics of Board members, with the goal of developing a diverse, experienced and highly qualified board; •Identifying and evaluating individuals qualified to serve as members of the board, consistent with criteria approved by the board, and making recommendations to the board of directors regarding nominees for election to the board and its committees; •Considering and making recommendations to the board of directors regarding the composition of the board and its committees; •Overseeing corporate governance and related matters; •Overseeing cybersecurity, data privacy and other risks relevant to our computerized information system controls and security, the steps we have taken to monitor or mitigate such exposures, and our information governance policies and programs; •Developing and making recommendations to the board of directors regarding corporate governance guidelines and ESG matters; •Overseeing the Company’s ESG risks, opportunities, programs, policies, practices, measures, objectives and performance; •Reviewing any proposals properly submitted by stockholders for action at the annual meeting of stockholders and making recommendations to the board regarding action to be taken in response to each such proposal; •Overseeing an annual evaluation of the board and its committees; •Reviewing and monitoring key public policy trends, issues, regulatory matters and other concerns that may affect our business, strategies, operations, performance or reputation, and overseeing our engagement in the public policy process; and •Contributing to succession planning. |
Independence: The composition of our Nominating & ESG Committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.
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Meetings: 3 meetings during 2022. | |
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The nominating and& ESG committee operates under a written charter, which satisfies the applicable rules of the SEC and the Nasdaq listing standards and is available on our website.
Board Assessment
Our Corporate Governance Guidelines provide that the nominating and& ESG committee is responsible for overseeing an annual self-evaluation of the board of directors as a whole and its committees. Such evaluations were conducted in 2022 by2023 to assess the performance of the board and each of the committees.committees in 2022.
The evaluation topics for 2021the assessment included (i) the composition and board and committee composition and structure, (ii) access to and review of information from management and (iii) culture with respect to promoting candid communication and rigorous decision making.
Our board and committee evaluation process for 2021 included the following steps: | | | | | |
Board
Evaluation | Our Boardboard responded to tailored questionnaires, meant to enhance the Board’sboard’s overall effectiveness by identifying the best practices of a highly effective board and identifying suggested ways to implement these best practices. |
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Committee
Evaluations | The directors also responded to a tailored set of questions for each of their committee assignments and identified committee strengths and accomplishments in 20212022 together with recommended changes in committee practices for 2022.2023. |
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Independent Third-Party
Facilitator Report | To protect anonymity and the integrity of our Boardboard and Committee evaluation process, the company’sCompany’s outside counsel compiled responses to Boardboard and Committee evaluations into a report for the Boardboard of Directors.directors. |
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Discussion
of Results | The results of the Boardboard and Committeecommittee evaluations process were presented to the Boardboard of Directorsdirectors which discussed the evaluations and determined if any follow-up actions were appropriate. |
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee is or has been at any time one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board or compensation committee (or other board of directors committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of
any entity that has one or more executive officers serving as a member of the board or compensation committee.
Board and Committee Meetings and Attendance
Our board of directors and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. The board of directors met 11four times during the fiscal year ended December 31, 2021.2022. The audit committee met 13nine times during the fiscal year ended December 31, 20212022 and the compensation & human capital management committee met 8six times during the fiscal year
ended December 31, 2021.2022. The nominating and& ESG committee met 5three times during the year ended December 31, 2021.2022.
During 2021,2022, each member of our board of directors attended at least 75% of the aggregate of all meetings of our board of directors and of all meetings of committees of our board of directors on which such member served that were held during the period in which such director served.
Board Attendance at Annual Meeting of Stockholders
Our policy is to invite and encourage each member of our board of directors to be present at our annual meetings of stockholders. All five continuingof the directors then in office attended the last annual meeting of stockholders of the Company. Mr. Tempesta was appointed to the board in August 2022.
Communication with Directors
Stockholders and interested parties who wish to communicate with our board of directors, non-management members of our board of directors as a group, a committee of our board of directors or a specific member of our board of directors (including our Chairperson) may do so by letters addressed to the attention of our Chief Financial Officer.
All communications are reviewed by the Chief Financial officerOfficer and provided to the members of our board of directors as appropriate. Unsolicited items, sales materials, abusive, threatening or otherwise inappropriate materials and other routine items and items unrelated to the duties and responsibilities of our board of directors will not be provided to directors.
The address for these communications is:
Luminar Technologies, Inc.
2603 Discovery Drive, Suite 100
Orlando, Florida 32826
Attn: Chief Financial Officer
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of the members of our board of directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Code of Business Conduct and Ethics is posted on the Investor Relations section of our website, which is located at https://investors.luminartech.com by clicking on “Governance Documents” in the “Governance” section of our website. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding
amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the location specified above.
Policy Against Hedging
We have adopted a policy that prohibits members of our Boardboard and all employees, including “officers” under Section 16 of the Exchange Act, from purchasing any financial instruments (such as prepaid variable forward contracts, equity swaps, collars or exchange funds) or otherwise engaging in any transactions that hedge the risk of Company stock ownership.
Director Compensation
In March 2021, theWe maintain a non-employee director compensation & human capital management committee, comprised solelyprogram which is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of independent directors, recommended to the board for approval aour stockholders.
Our non-employee director compensation policy for non-employee directors (the “Director Compensation Policy”) after consideration of market data and based, provides that each non-employee director will receive the following compensation for service on the recommendation of its independent compensation consultant. Our Board approved the Director Compensation Policy. The Director Compensation Policy consists of the following:our board.
Cash Compensation. Each of our non-employee directors with the exception of Mr. Russell, will receive $12,500 per quarter to serve as a member of our board, and any future lead independent director of our board will receive an additional $7,500 per quarter to serve in such capacity. Our non-employee directors do not receive per meeting fees.
In addition, each chair of our audit committee, compensation & human capital management committee, and nominating and& ESG committee, will receive $6,250, $5,000, and $2,500 per quarter, respectively, for serving as chair of these committees. The members of our audit committee, compensation & human capital management committee, and nominating and& ESG committee who are not the chair of the respective committee, will receive $3,125, $2,500, and $1,250 per quarter, respectively, to serve on these committees.
Non-employee directors are reimbursed for all reasonable travel and related expenses incurred in connection with attending board and committee meetings.
Equity AwardsCompensation. Additionally, non-employee directors who are not our employees each receive equity compensation. On the date of each annual meeting of our stockholders, each new and continuing non-employee director is granted restricted stock units, or RSUs, under our Amended and Restated 2020 Equity Incentive Plan, or the 2020 Equity Incentive Plan, covering shares having a value of $200,000.Each annual RSU award shall vest in full on the first to occur of (i) the one-year anniversary of the grant date or (ii) the date of the next annual meeting, subject to the applicable director’s continued service as a member of the board through such vesting date.
In addition, each person who is elected or appointed for the first time to be a director will in each case automatically, upon the first practicable date following their initial election or appointment to be a director, be granted RSUs under the 2020 Equity Incentive Plan covering shares having a value of $400,000. Each initial RSU award shall vest in equal annual installments over the three-year period following the grant date, subject to the applicable director’s continued service as a member of the board through each such vesting date.
For each non-employee director who remains in continuous service as a member of the board until immediately prior to the closing of a “Change in Control” (as defined in the 2020 Equity Incentive Plan), any unvested portion of any RSU award granted in consideration of such director’s service as a member of the board shall vest in full immediately prior to, and contingent upon, the consummation of the Change in Control.
The following table sets forth information concerning the compensation of our non-employee directors during the year ended December 31, 2021.2022.
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees
Earned or
Paid in
Cash
($)(1) | | Stock Awards ($)(2) | | Total
($) |
| Alec Gores | | $ | 54,056 | | | $ | 222,460 | | (6) | | $ | 276,516 | |
| Matthew Simoncini | | 65,639 | | | 222,460 | | (6) | | 288,099 | |
| Dr. Mary Lou Jepsen (3) | | 42,472 | | | 578,042 | | (7) | | 620,514 | |
| Katharine A. Martin (3) | | 57,917 | | | 578,042 | | (7) | | 635,959 | |
| Jun Hong Heng (4) | | 35,027 | | | 430,687 | | (8) | | 465,714 | |
| Dr. Shaun Maguire (4) | | 35,027 | | | 430,687 | | (8) | | 465,714 | |
| Scott A. McGregor (5) | | 13,236 | | | — | | | | 13,236 | |
| Benjamin J. Kortlang (5) | | 13,236 | | | — | | | | 13,236 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees
Earned or
Paid in
Cash
($) | | Stock Awards ($)(2)(3) | | Total
($) |
| Alec E. Gores | | $ | 53,000 | | | $ | 182,427 | | (4) | | $ | 235,427 | |
| Matthew J. Simoncini | | 85,000 | | | 182,427 | | (4) | | 267,427 | |
| Mary Lou Jepsen, PhD | | 67,361 | | | 182,427 | | (4) | | 249,788 | |
| Katharine A. Martin | | 75,000 | | | 182,427 | | (4) | | 257,427 | |
| Jun Hong Heng | | 67,167 | | | 182,427 | | (4) | | 249,594 | |
| Shaun Maguire, PhD | | 61,563 | | | 182,427 | | (4) | | 243,990 | |
| Daniel D. Tempesta (1) | | 22,928 | | | 499,710 | | (5) | | 522,638 | |
(1)Mr. Tempesta commenced service on August 19, 2022.
(2)The following directors elected to receive paymentamount reported in stock in lieu of cash pursuant tothis column reflects the Director Compensation Policy: Mr. Gores (3,586 shares), Mr. Simoncini (4,355 shares), Ms. Martin (3,843 shares), Dr. Jepsen (2,818 shares), and Dr. Maguire (2,324 shares). With respect to each such director, the underlying shares were issued based on the closing price of our common stock on the Nasdaq on December 15, 2021 ($15.07).
(2)Stock awards and option awards are reported at aggregate grant date fair value infor financial statement reporting purposes of RSUs granted during the fiscal year granted,ended December 31, 2022, as determined in accordance with the provisions of FASB ASCFinancial Accounting Standards Board’s Accounting Standards Codification Topic 718. This amount reflects our accounting expense for these RSUs and does not represent the actual economic value that may be realized by the director. There can be no assurance that the amount will ever be realized. For the assumptions used in valuing these awards for purposes of computing this expense,the award, please see Note 1412 of the Company’s consolidated financial statements for the year ended December 31, 2021.2022.
(3)Commenced serviceOur non-employee directors who served in 2022 held the following number of unexercised stock options and outstanding unvested RSUs as a Director on February 8, 2021.of December 31, 2022:
(4)Commenced service as a Director on June 9, 2021. | | | | | | | | | | | | | | |
| Name | | Stock Options | | RSUs |
| Alec E. Gores | | — | | | 18,924 | |
| Matthew J. Simoncini | | 340,773 | | | 18,924 | |
| Mary Lou Jepsen, PhD | | — | | | 23,800 | |
| Katharine A. Martin | | — | | | 23,800 | |
| Jun Hong Heng | | — | | | 31,080 | |
| Shaun Maguire, PhD | | — | | | 31,080 | |
| Daniel D. Tempesta | | — | | | 52,601 | |
(5)Ceased service as a Director on June 9, 2021.
(6)(4)Represents 9,10618,924 RSUs granted on June 9, 2021,7, 2022 and scheduled to vest on the earlier of June 9, 20227, 2023 or the date of our 20222023 Annual Meeting of Stockholders, subject to the continuous service of the RSU holder on the vesting date. As of December 31, 2021, each of Messrs. Gores and Simoncini held 9,106 RSUs with an aggregate value of $153,982, based on the closing price of our common stock on the Nasdaq on December 31, 2021 ($16.91), and Mr. Simoncini held an aggregate 340,773 stock options in the Company, of which 134,889 were vested as of December 31, 2021.
(7)(5)Represents (i) 14,62752,601 RSUs granted on March 31, 2021,August 19, 2022, and scheduled to vest in three equal annual installments on the first, second and third anniversaries of February 8, 2021,August 19, 2022, subject to the RSU holder’sMr. Tempesta’s continued service as a member of the board of directors through each vesting date; and (ii) 9,106 RSUs granted on June 9, 2021, and scheduled to vest on the earlier of June 9, 2022 or the date of our 2022 Annual Meeting of Stockholders, subject to the continuous service of Dr. Jepsen and Ms. Martin on the vesting date. As of December 31, 2021, each of Dr. Jepsen and Ms. Martin held 23,733 RSUs with an aggregate value of $401,325, based on the closing price of our common stock on the Nasdaq on December 31, 2021 ($16.91).
(8)Represents 18,234 RSUs granted on June 10, 2021, and scheduled to vest in three equal annual installments on the first, second and third anniversaries of June 10, 2021, subject to the RSU holder’s continued service as a member of the board of directors through each vesting date. As of December 31, 2021, each of Mr. Heng and Dr. Maguire held 18,234 RSUs with an aggregate value of $308,337, based on the closing price of our common stock on the Nasdaq on December 31, 2021 ($16.91).
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
Nomination to the Board of Directors
Candidates for nomination to our board of directors are selected by our board of directors based on the recommendation of our nominating and& ESG committee in accordance with its charter, our amended and restated certificate of incorporation and amended and restated bylaws, our Corporate Governance Guidelines and the criteria approved by our board regarding director candidate qualifications. In recommending candidates for nomination, our nominating and& ESG committee considers candidates recommended by directors, officers, employees, stockholders and others, using the same criteria to evaluate all candidates.
Additional information regarding the process for properly submitting stockholder nominations for candidates for nomination to our board of directors is set forth above under “Requirements for Stockholder Proposals to be considered for inclusion in our proxy materials for our 20232024 Annual Meeting” and “Requirements for Stockholder Proposals to be presented at our 20232024 Annual Meeting.”
Director Qualifications
With the goal of developing a diverse, experienced and highly qualified board of directors, our nominating and& ESG committee is responsible for developing and recommending to our board the desired qualifications, expertise and characteristics of members of our board, including any specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on our board and any specific qualities or skills that the committee believes are necessary for one or more of the members of our board to possess.
Because the identification, evaluation and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, and will be significantly influenced by the particular needs of our board of directors from time to time, our board has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and Nasdaq listing requirements and the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, our Corporate Governance Guidelines and the charters of the committees of our board of directors. When considering nominees, our nominating and& ESG committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, skills, financial and other expertise, breadth of experience, knowledge about our business or industry, willingness and ability to devote adequate time and effort to board responsibilities in the context of the existing composition, other areas that are expected to contribute to the board’s overall effectiveness and needs of the board and its committees.
Our board of directors affirms the value placed on diversity within our company.Company. Through the nomination process, our nominating and& ESG committee seeks to promote board membership that reflects a diversity of talents, skills, background, including with respect to age, gender, national origin, sexual orientation and identification, race, ethnicity and culture and expertise necessary to provide sound and prudent oversight with respect to the operations and interests of the business and has approved a requirement to have diverse candidates in its candidate pool of nominees. Further, our board of directors is committed to actively seeking highly qualified women and individuals from minorityunderrepresented groups to include in the pool from which new candidates are selected. The brief biographical description of each director set forth in “Proposal One: Election of Directors” below includes the primary individual experience, qualifications, attributes and skills of each of our directors that led to the conclusion that each director should serve as a member of our board of directors at this time.
The following table provides information on the diversity of the current members of our board of directors as of April 13, 2022.10, 2023.
Board Diversity
| | | | | | | | | | | | | | | | | | | | |
| Board Diversity Matrix (As of April 13, 2022) |
| Total Number of Directors | | 7 |
| | Female | | Male | | Did Not Disclose Gender |
| Part I: Gender Identity | | | | | | |
| Directors | | 2 | | 3 | | 2 |
| Part II: Demographic Background | | | | | | |
| African American or Black | | -- | | -- | | -- |
| Alaskan Native or Native American | | -- | -- | | -- |
| Asian | | -- | | 1 | | -- |
| Hispanic or Latino | | -- | | -- | | -- |
| Native Hawaiian or Pacific Islander | | -- | | -- | | -- |
| White | | 2 | | 2 | | -- |
| Two or More Races or Ethnicities | | -- | | -- | | -- |
| LGBTQ+ | -- |
| Did Not Disclose Demographic Background | 2 |
Our board of directors is committed to actively seeking highly qualified women and individuals from underrepresented groups to include in the pool from which new candidates are selected.
| | | | | | | | | | | | | | | | | | | | |
| Board Diversity Matrix (As of April 10, 2023) |
| Total Number of Directors | | 8 |
| | Female | | Male | | Did Not Disclose Gender |
| Part I: Gender Identity | | | | | | |
| Directors | | 2 | | 4 | | 2 |
| Part II: Demographic Background | | | | | | |
| African American or Black | | -- | | -- | | -- |
| Alaskan Native or Native American | | -- | -- | | -- |
| Asian | | -- | | 1 | | -- |
| Hispanic or Latino | | -- | | -- | | -- |
| Native Hawaiian or Pacific Islander | | -- | | -- | | -- |
| White | | 2 | | 3 | | -- |
| Two or More Races or Ethnicities | | -- | | -- | | -- |
| LGBTQ+ | -- |
| Did Not Disclose Demographic Background | 2 |
PROPOSAL ONE: ELECTION OF CLASS IIIII DIRECTORS
The current Class I and Class IIIII directors will serve until our annual meetings of stockholders to be held in 2024 and 2023,2025, respectively, or until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal.
Upon the recommendation of the nominating and& ESG committee, our board of directors has nominated Messrs. GoresDr. Jepsen and SimonciniMr. Russell to be elected as Class IIIII directors at the Annual Meeting, each to serve a three-year term expiring at our annual meeting of stockholders to be held in 20252026 or until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Messrs. GoresDr. Jepsen and SimonciniMr. Russell who are both current Class IIIII directors are standing for re-election at the Annual Meeting.
Shares represented by proxies will be voted “FOR” the election of each of the two nominees named below, unless the proxy is marked to withhold authority to so vote. If any nominee for any reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected. Proxies may not be voted for more than two directors. Stockholders may not cumulate votes for the election of directors.
Nominees to Our Board of Directors
The nominees and their ages, occupations and lengths of service on our board of directors as of April 13, 202210, 2023 are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
Alec E. GoresMr. Austin Russell | | 6828 | | Director nominee, Chairperson of the Board, President and Chief Executive Officer |
Matthew J. SimonciniMary Lou Jepsen, PhD (1)(2)
| | 6158 | | Director nominee |
____________
(1)Member of the Compensation & Human Capital Management Committee and Chairperson of the Nominating & ESG Committee.
Austin Russell has served as our President and Chief Executive Officer and as Chairperson and member of our board of directors since December 2020 and prior to this, served as President and Chief Executive Officer of Legacy Luminar and as a member of its board of directors since founding Legacy Luminar. Mr. Russell developed his first visioning system at age eleven by building prototype supercomputers and optoelectronic systems with real-world applications in mind. He wrote his first patent application at 12, and over the next four years worked on a host of photonics and imaging related technologies before he later became an independent researcher at the Beckman Laser Institute. After being recruited to Stanford for Applied Physics, he was awarded the Thiel Fellowship at 17 to pursue Legacy Luminar full-time with a vision to develop a new kind of sensing technology to make autonomous vehicles both safe and ubiquitous.
We believe that Mr. Russell is qualified to serve on our board of directors because he is our founder, our largest stockholder and has the long-term vision for Luminar and due to his operational and historical expertise gained from serving as Legacy Luminar’s President and Chief Executive Officer since Legacy Luminar’s inception.
Mary Lou Jepsen, PhD has served as a member of our board of directors since February 2021. Dr. Jepsen has served as the CEO, Founder and Chairperson of the board of directors of Openwater, a San Francisco based medical diagnostics and therapeutic wearable device technology company, since August 2016. Previously, Dr. Jepsen served as the Executive Director of Engineering at Facebook, Inc.
and Head of Display Technologies at Oculus from January 2015 to August 2016, and before that served a similar role at Google, Inc. and X (formerly Google X) from 2012 to 2015. She also co-founded and served as the Chief Technology Officer of One Laptop per Child, a nonprofit organization, of which she was the lead architect designing $100 laptops that were shipped to millions of children in the developing world. Dr. Jepsen has served on the board of directors of Lear Corporation (“Lear”), a leading, global tier-1 automotive components supplier, since March 2016. Dr. Jepsen holds a Ph.D. degree from Brown University in Optical Sciences, an M.S. from Massachusetts Institute of Technology in Visual Studies and a Sc.B. from Brown University in Electrical Engineering and Studio Art.
We believe Dr. Jepsen is qualified to serve on our board of directors based on her exceptional track record of leadership and innovation including her senior management experience in the technology industry and as a board member of a publicly traded company.
Continuing Directors
The directors who are serving for terms that end following the Annual Meeting and their ages, occupations and lengths of service on our board of directors as of April 10, 2023 are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
| Alec E. Gores | | 70 | | Director |
Jun Hong Heng (1) (2)* | | 42 | | Director |
Shaun Maguire, PhD (3)** | | 37 | | Director |
Katharine A. Martin (2)(3) | | 60 | | Director |
Matthew J. Simoncini (1)(2) | | 62 | | Director |
Daniel D. Tempesta (1) | | 52 | | Director |
___________
(1) Member of the audit committee.
(2) Member of the compensation & human capital management committee.
(3) Member of the nominating & ESG committee.
*On November 16, 2022, Mr. Heng resigned from the nominating & ESG committee and joined the compensation & human capital management committee.
**On November 16, 2022, Dr. Maguire resigned from the audit committee and joined the nominating & ESG committee.
Alec E. Gores, has served as a member of our board of directors since December 2020. Mr. Gores is the Founder, Chairman and Chief Executive Officer of The Gores Group, a global investment firm focused on acquiring businesses that can benefit from the firm’s operating expertise. Mr. Gores implemented an operational approach to private equity investing when he founded The Gores Group in 1987 by operating businesses alongside management, or in some cases in lieu of management, to build value in those entities. Since then, the firm has acquired more than 120 businesses including a current portfolio of more 8 active companies worldwide. Mr. Gores began his career as a self-made entrepreneur and operating executive. In 1978, he self-funded and founded Executive Business Systems (EBS), a developer and distributor of vertical business software systems. Within seven years, EBS had become a leading value-added reseller in Michigan and employed over 200 people. In 1986, CONTEL purchased EBS, and Mr. Gores subsequently began acquiring and operating non-core businesses from major corporations and building value in those entities, a decision that ultimately led to the founding of what has evolved into The Gores Group today. Under his leadership, The Gores Group has continued to acquire businesses in need of operational and financial resources, while creating value and working with management teams to establish an entrepreneurial environment as a foundation for sustainable growth. This philosophy has served the firm well. Mr. Gores served as the Chairman of the Board of Directors of Gores Holdings I from its inception in June 2015 until completion of the Hostess acquisition in November
2016, as the Chairman of the Board of Directors of Gores Holdings II since its inception in August 2016 until completion of the Verra acquisition in October 2018 and as the Chairman of the Board of Directors of
Gores Holdings III since its inception in October 2017 until the completion of the PAE acquisition in February 2020, as the Chairman of the Board of Directors of Gores Holdings IV from June 2019 until the completion of the UWM acquisition in January 2021, as the Chairman of the Board of Directors of Gores Holdings V from June 2020 until the completion of the AMP acquisition in August 2021, as the Chairman of the Board of Directors of Gores Holdings VI from June 2020 until the completion of the Matterport acquisition in July 2021.2021, and as Chairman of the Board of Directors of Gores Guggenheim from December 2020 until the completion of the Polestar acquisition in July 2022. Mr. Gores hasserved as the Chief Executive Officer and a Director of Gores Metropoulos II from July 2020 until the completion of the Sonder acquisition in January 2022. Mr. Gores served as the Chairman of the board of directors of Gores Holdings VII sincefrom September 2020, Gores Holdings VIII sincefrom September 2020, Gores Technology sincefrom December 2020, and Gores Technology II sincefrom December 2020, until their respective terminations in December 2022. Mr. Gores Guggenheim since December 2020 andhas served as the Chairman of the Board of Directors of Gores Holdings IX since January 2021 and Gores Holdings X since January 2021. Mr. Gores has also served as the Chief Executive Officer and a director of Gores Metropoulos II since July 2020. Mr. Gores holds a degree in Computer Science from Western Michigan University. Mr. Gores’ significant investment and financial expertise make him well qualified to serve as a member of our board of directors.
We believe Mr. Gores is qualified to serve on our board of directors based on his significant investment and financial expertise.
Matthew J. Simoncini has served as a member of our board of directors since December 2020 and previously served on Legacy Luminar’s board of directors since June 2020. Mr. Simoncini has served on the board of directors of Kensington Capital Acquisition Corp., a special purpose acquisition company focused on companies in the automotive sector, since June 2020. He previously served on the board of directors of Cooper-Standard Holdings Inc., a leading global supplier of systems and components for the automotive industry, from August 2018 to May 2020. From September 2011 until his retirement in February 2018, Mr. Simoncini served as President and Chief Executive Officer and as a member of the board of directors of Lear Corporation (“Lear”), a global automotive technology company, and he served as Chief Financial Officer of Lear from September 2007 to September 2011. Mr. Simoncini joined Lear in May 1999 after Lear acquired UT Automotive, a supplier of electronic and interior products for the auto industry, where he served as Director of Global Financial Planning & Analysis from April 1996 to May 1999. Mr. Simoncini holds a B.A. in business administration and an Honorary Doctorate of Law from Wayne State University.
We believe Mr. Simoncini is qualified to serve on our board of directors based on his extensive executive leadership and management experience and his significant strategic and financial expertise in the automotive and automotive-related industries.
Continuing Directors
The directors who are serving for terms that end following the Annual Meeting and their ages, occupations and lengths of service on our board of directors as of April 13, 2022 are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
| | | | | | | | | | | | | | |
Name | | Age | | Position |
Austin Russell | | 27 | | Chairperson, Director, President and Chief Executive Officer |
Jun Hong Heng(1) (3)
| | 40 | | Director |
Mary Lou Jepsen, PhD(2)(3)
| | 57 | | Director |
Shaun Maguire, PhD(1)
| | 36 | | Director |
Katharine A. Martin (2)(3)
| | 59 | | Director |
___________
(1) Member of the audit committee.
(2) Member of the compensation & human capital management committee.
(3) Member of the nominating and ESG committee.
Austin Russell has served as our President and Chief Executive Officer and as Chairperson and member of our board of directors since December 2020 and prior to this, served as President and Chief Executive Officer of Legacy Luminar and as a member of its board of directors since founding Legacy Luminar. Mr. Russell developed his first visioning system at age eleven by building prototype supercomputers and optoelectronic systems with real-world applications in mind. He wrote his first patent application at 12, and over the next four years worked on a host of photonics and imaging related technologies before he later became an independent researcher at the Beckman Laser Institute. After being recruited to Stanford for Applied Physics, he was awarded the Thiel Fellowship at 17 to pursue Legacy Luminar full-time with a vision to develop a new kind of sensing technology to make autonomous vehicles both safe and ubiquitous.
We believe that Mr. Russell is qualified to serve on our board of directors because he is our founder, our largest stockholder and has the long-term vision for Luminar and due to his operational and historical expertise gained from serving as Legacy Luminar’s President and Chief Executive Officer since Legacy Luminar’s inception.
Jun Hong Heng has served as a member of our board of directors since June 2021 and is the Founder and the Chief Investment Officer of Crescent Cove Advisors, LP (“Crescent Cove”) since August 2018. Since Feb 2021, Mr. Heng is also the Chairman and Chief Executive Officer of COVA Acquisition Corp. Mr. Heng is also the Founder of Crescent Cove Capital Management LLC and has served as its Chief Investment Officer since February 2016. Prior to Crescent Cove Capital Management LLC, Mr. Heng served as Principal of Myriad Asset Management, an investment firm, from August 2011 to January 2015, where he focused on Asian credit and equity, including special situations. From June 2008 to June 2011, he served as Vice President of Argyle Street Management, a spin-off from Goldman Sachs Asian Special Situations Group. Previously, Mr. Heng served as an analyst at Morgan Stanley, where he focused on Asia, and as an analyst at Bear, Stearns & Co., where he served in a multi-disciplinary role across technology, media and telecommunications, mergers and acquisitions, and equity and debt capital markets. Mr. Heng holds a B.B.A. in Finance and Accounting from the Stephen M. Ross School of Business at the University of Michigan. Mr. Heng also serves as an independent director on the board of ECARX.
We believe Mr. Heng is qualified to serve as a director based on his extensive investment and financial expertise.
Mary Lou Jepsen, PhD has served as a member of our board of directors since February 2021. Dr. Jepsen is the CEO, Founder and Chairperson of the board of directors of Openwater, a San Francisco-based medical laser imaging device technology company. Previously, Dr. Jepsen served as the Executive Director of Engineering at Facebook, Inc. and Head of Display Technologies at Oculus, and before that served a similar role at Google, Inc. and X (formerly Google X). She also co-founded and served as the Chief Technology Officer of One Laptop per Child, a nonprofit organization, of which she was the lead architect designing $100 laptops that were shipped to millions of children in the developing world. Dr. Jepsen has served on the board of directors of Lear Corporation (“Lear”), a leading, global tier-1 automotive components supplier, since March 2016. Dr. Jepsen holds a Ph.D. degree from Brown University in Optical Sciences, an M.S. from Massachusetts Institute of Technology in Visual Studies and a Sc.B. from Brown University in Electrical Engineering and Studio Art.
We believe Dr. Jepsen is qualified to serve on our board of directors based on her exceptional track record of leadership and innovation including her senior management experience in the technology industry and as a board member of a publicly traded company.
Shaun Maguire, PhD has served as a member of our board of directors since June 2021 and is currently a General Partner at Sequoia Capital. Prior to joining Sequoia Capital in 2019, Dr. Maguire served as Co-Founder and Chairman of Expanse (formerly known as Qadium) from May 2012 to December 2020, when Expanse was acquired by Palo Alto Networks. Dr. Maguire also served as Partner of GV from 2016 to 2019, Co-Founder of Escape Dynamics, Inc. from 2010 to 2015, Consultant at the
Defense Advanced Research Projects Agency from 2011 to 2012 and a member of the Algorithmic Trading Group at the DRW Trading Group in 2008. Dr. Maguire serves on the boards of Vise, AMP Robotics, Gather.town and Knowde. Dr. Maguire received his Ph.D. in Physics from the California Institute of Technology, M.S. in Control and Dynamical Systems from the California Institute of Technology, M.S. in Statistics from Stanford University and B.A. in Mathematics from the University of Southern California.
We believe that Dr. Maguire is qualified to serve as a director because of his significant investment, cybersecurity and technology expertise, which enables him to bring to the board of directors unique perspectives as well as valuable insights and experience.
Katharine A. Martin has served as a member of our board of directors since February 2021. Ms. Martin is the Chairperson of the board of directors of Wilson Sonsini Goodrich & Rosati and a partner of such firm. Prior thereto, Ms. Martin was a partner of Pillsbury Madison & Sutro LLP. Ms. Martin also serves on the board of directors of WildAid, a nonprofit organization, and YMCA of Silicon Valley, a nonprofit organization. She previously served on the board of directors of Nuance Communications, a technology pioneer and market leader in conversational artificial intelligence and ambient clinical intelligence, from 1999 to 2018. Ms. Martin has over thirtythirty-five years’ experience practicing corporate and securities law, and has extensive experience representing public companies. Ms. Martin holds a J.D. from McGeorge School of Law and an undergraduate degree in Anthropology from the University of California, Berkeley.
We believe Ms. Martin is qualified to serve on our board of directors based on her legal and business background including her senior management experience.
There are no family relationships among anyMatthew J. Simoncini has served as a member of our board of directors orsince December 2020 and previously served on Legacy Luminar’s board of directors since June 2020. Mr. Simoncini previously served on the boards of directors of Cooper-Standard Holdings Inc., a leading global supplier of systems and components for the automotive industry, from August 2018 to May 2020, and Kensington Capital Acquisition Corp., a special purpose acquisition company focused on companies in the automotive sector, from June 2020 to December 2022. From September 2011 until his retirement in February 2018, Mr. Simoncini served as President and Chief Executive Officer and as a member of the board of directors of Lear Corporation (“Lear”), a global automotive technology company, and he served as Chief Financial Officer of Lear from September 2007 to September 2011. Mr. Simoncini joined Lear in May 1999 after Lear acquired UT Automotive, a supplier of electronic and interior products for the auto industry, where he served as Director of Global Financial Planning & Analysis from April 1996 to May 1999. Mr. Simoncini holds a B.A. in business administration and an Honorary Doctorate of Law from Wayne State University.
We believe Mr. Simoncini is qualified to serve on our board of directors based on his extensive executive officers.leadership and management experience and his significant strategic and financial expertise in the automotive and automotive-related industries.
Daniel D. Tempesta has served as a member of our board of directors since August 2022. Mr. Tempesta is executive vice president and chief financial officer of Nuance Communications, Inc., a technology pioneer with market leadership in conversational AI and ambient intelligence. His responsibilities include oversight of Nuance’s finance and accounting operations, as well as tax, treasury, investor relations, order management, and procurement. Nuance was acquired by Microsoft Corporation in March 2022. Prior to joining Nuance in 2008, Mr. Tempesta was the corporate controller and chief accounting officer at Teradyne, Inc. He began his career with PricewaterhouseCoopers LLP, where he held a number of roles in the assurance practice serving technology clients.
We believe Mr. Tempesta is qualified to serve on our board of directors due to his extensive financial expertise and executive leadership experience.
Required Vote; Recommendation of the Board
Each director elected shall be elected by a plurality of the votes of the shares of our Class A common stock and Class B common stock (voting together as a single class) present in person or represented by proxy at the meeting and entitled to vote on the election of directors, meaning that the two individuals nominated for election to our board of directors at the Annual Meeting receiving the highest number of “FOR” votes will be elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR ALL” NOMINEES FOR THE ELECTION OF THE TWO CLASS IIIII DIRECTORS SET FORTH IN THIS PROPOSAL ONE.
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has selected Deloitte & Touche LLP as our independent registered public accounting firm to perform the audit of our consolidated financial statements for the fiscal year ending December 31, 20222023 and recommends that our stockholders vote for the ratification of such selection. The ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20222023 requires the affirmative vote of a majority of the number of votes cast “FOR” to exceed the number of votes castand “AGAINST” the proposal. In the event that Deloitte & Touche LLP is not ratified by our stockholders, the audit committee will review its future selection of Deloitte & Touche LLP as our independent registered public accounting firm.
Deloitte & Touche LLP audited our financial statements for the fiscal year ended December 31, 2021.2022. Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting and they will be given an opportunity to make a statement at the Annual Meeting if they desire to do so, and will be available to respond to appropriate questions.
Appointment of Deloitte & Touche LLP
In connection with the consummation of the Business Combination (the “Closing”) on December 2, 2020, the board of directors approved the appointment of Deloitte & Touche LLP as our independent registered accounting firm. Deloitte & Touche LLP served as the independent registered accounting firm for Legacy Luminar.
During the period from August 28, 2018 (inception) through December 31, 2019, and through December 2, 2020, neither the Company nor anyone on the Company’s behalf consulted with Deloitte regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by Deloitte that Deloitte concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
Independent Registered Public Accounting Firm Fees and Services
Deloitte & Touche LLP was appointed as our independent registered accounting firm in December 2020, upon the dismissal of KPMG. Deloitte & Touche LLP has audited the financial statements of Legacy Luminar since 2018.
The following tables presenttable presents the aggregate fees billed by Deloitte & Touche LLP and KPMG to us (including Legacy Luminar, in the case of Deloitte & Touche LLP) for the years ended December 31, 20212022 and 20202021 (in thousands):
| | | Year Ended December 31, | | Year Ended December 31, |
| | 2021 | | 2020(2) | | 2020(3) | | 2022 | | 2021 | |
Audit Fees(1) | Audit Fees(1) | $ | 1,930 | | | $ | 1,625 | | | $ | 95 | | Audit Fees(1) | $ | 2,842 | | | $ | 1,930 | | |
Audit-Related Fees | Audit-Related Fees | 200 | | | — | | | — | | Audit-Related Fees | 125 | | | 200 | | |
| Tax Fees | Tax Fees | — | | | — | | | — | | Tax Fees | — | | | — | | |
All Other Fees | All Other Fees | 2 | | | — | | | 552 | | All Other Fees | 2 | | | 2 | | |
| Total | Total | $ | 2,132 | | | $ | 1,625 | | | $ | 647 | | Total | $ | 2,969 | | | $ | 2,132 | | |
(1)Audit fees includeRepresents fees for services performed to comply with the standards established by the Public Company Accounting Oversight Board, including the audit of our consolidated financialfinancials statements. This category also includes fees for audits provided in connection with statutory filings or services that generally only the principal independent auditor reasonably can provide, such as consent and assistance with andthe review of our SEC filings.
(2)Includes $1.1 million for auditRepresents fees billed forand expenses related to work performed in connection with registration statements, including the annual auditissuance of the Company’s 2019 consolidated financial statements included in the Registration Statement on Form S-4 and our Annual Report on Form 10-K for the year ended December 31, 2020, consents and reviewa comfort letter.
(3)All Other Fees consist of other documents filed with the SEC.
(3)Represent fees billed for services for the period from January 1, 2020 through December 2, 2020 prior to the Business Combination. Audit Fees includes $82,000 for reviewing the Company’s three Quarterly Reports on Form 10-Q and proxy statement filed with the SEC.accounting research tool subscription fees.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
Our audit committee’s policy is to pre‑approve all audit and permissible non‑non audit services provided by our independent registered public accounting firm, the scope of services provided by our independent registered public accounting firm and the fees for the services to be performed. These services may include audit services, audit‑audit related services, tax services and other services. Pre‑approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent registered public accounting firm and management are required to periodically report to
the audit committee regarding the extent of services provided by our independent registered public accounting firm in accordance with this pre‑approval, and the fees for the services performed to date.
Prior to the Business Combination, all of the services listed in the table above provided by KPMG, LLP were approved by Gores in accordance with its policies then in effect. Following the Business Combination, allAll of the services listed in the table above provided by Deloitte were pre-approved by our board of directors.audit committee.
Required Vote; Recommendation of the Board
Approval will be obtained if the numberproposal receives the affirmative vote of votesa majority of our Class A common stock and Class B common stock (voting together as a single class) cast “FOR” the proposal at the Annual Meeting exceeds the number of votes cast “FOR” and “AGAINST” the proposal.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL TWO.
REPORT OF THE AUDIT COMMITTEE
The information contained in the following report of our audit committee is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by us under the Exchange Act or the Securities Act unless and only to the extent that we specifically incorporate it by reference.
Our audit committee has reviewed and discussed with our management and Deloitte & Touche LLP, our audited consolidated financial statements for the fiscal year ended December 31, 2021.2022. Our audit committee has also discussed with Deloitte & Touche LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission (the “SEC”).
Our audit committee has received and reviewed the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with our audit committee concerning independence, and has discussed with Deloitte & Touche LLP its independence from us.
Based on the review and discussions referred to above, our audit committee recommended to our board of directors that the audited consolidated financial statements be included in our annual report on Form 10-K for the fiscal year ended December 31, 20212022 for filing with the SEC.
Submitted by the Audit Committee
Matthew J. Simoncini Chair(Chair)
Jun Hong Heng
Shaun Maguire, PhDDaniel D. Tempesta
EXECUTIVE OFFICERS
Our executive officers and their ages as of April 13, 202210, 2023 and positions with Luminar are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
| Austin Russell | | 2728 | | Chairperson, Director, President and Chief Executive Officer |
| Thomas J. Fennimore | | 4647 | | Chief Financial Officer |
| Alan Prescott | | 4445 | | Chief Legal Officer and Corporate Secretary |
Executive Officers
Our board of directors chooses our executive officers, who then serve at the discretion of our board of directors. There is no family relationship between any of the directors or executive officers and any of our other directors or executive officers.
Austin Russell. For a brief biography of Mr. Russell, please see “Proposal One: Election of Directors–Continuing Directors.”
Thomas J. Fennimorehas served as our Chief Financial Officer since December 2020 and prior to this, held the same position with Legacy Luminar since July 2020. Prior to joining Luminar, Mr. Fennimore served as the Global Head of Automotive and the Co-Head of the Industrials Group at Jefferies Group, LLC from September 2014 to May 2020. From July 1997 to September 2014, Mr. Fennimore worked at Goldman Sachs, in a variety of roles with increasing responsibility, most notably as Global Head of Automotive and Co-Head of the Asia Industrials Group. Mr. Fennimore holds a B.A. in mathematics and a B.S. in engineering from Swarthmore College.
Alan Prescotthas served as our Chief Legal Officer and Corporate Secretary since April 2021 and is an automotive and autonomous industry legal expert, engineer, and 20-year veteran from top OEM and technology companies. Mr. Prescott joined Luminar from Tesla, where he spent four years acting most recently as General Counsel. Prior to Tesla, he led Uber’s Advanced Technology Group’s legal team as senior counsel overseeing commercial, regulatory, litigation, privacy, and cybersecurity. Mr. Prescott’s career began at Ford Motor Company as a safety engineer before receiving his law degree from Georgetown University, after which he spent over ten years leading various legal operations within the automaker, concentrating on product development and manufacturing, as well as several years as Special Counsel to the General Counsel.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) provides an overview of our overall executive compensation program, including the philosophy and goals, main components of pay and the decision makingdecision-making process with respect to each of our named executive officers for 2021.2022. We believe our compensation programs reflect our commitment to adhere to best practices and only reward positive performance.
For 20212022, our named executive officers were:
•Austin Russell, President and Chief Executive Officer
•Thomas J. Fennimore, Chief Financial Officer
•Alan Prescott, Chief Legal Officer and Secretary
•Jason Eichenholz, PhD, Chief Technology OfficerExecutive Summary
•M. Scott Faris, former ChiefFiscal 2022 Financial and Business OfficerHighlights
Luminar is a global automotive technology company ushering a new era of vehicle safety and autonomy. We are enabling solutions for series production passenger cars and commercial trucks as well as other targeted markets. We have built a new type of lidar sensor which we believe meets the demanding performance, safety, and cost requirements for autonomous vehicles in production, while also enabling Advanced Driving Assistance Systems (“ADAS”). Our lidar hardware and software products help set the standard for safety in the industry and are designed to enable accurate and reliable detections of some of the most challenging “edge cases” autonomous vehicles can encounter on a regular basis. This is achieved by advancing existing lidar range and resolution to new levels, ensuring hard-to-see objects like a tire on the road ahead or a child that runs into the street are not missed, as well as by developing our software to interpret the data needed to inform autonomous and assisted driving decisions.
Key highlights for 2022 include:
•Achieved or exceeded all four key company-level milestones including:
◦Launched our Iris lidar sensor into series production at China’s largest automaker.
◦Continued strong progress to improve and refine critical components of our software stack, including the on-road performance of Proactive Safety™ and highway autonomy features.
◦Exceeded previously raised 60% year-over-year growth target for major commercial program “wins.”
◦Exceeded previously raised 60% year-over-year growth target for forward-looking order book.
•Full-year revenue of $40.7 million, which was at the lower end of guidance range primarily due to timing of program and service revenue recognition.
•GAAP net loss was $445.9 million, or $(1.25) per share; non-GAAP net loss was $279.3 million, or $(0.78) per share.(1)
_________
(1)Reconciliation to GAAP net loss is available at https://investors.luminartech.com in the earnings release for fiscal 2022 under Financial Information.
We expect to continue to invest in our product and software development as well as incur efforts to build customer relations and markets. Further, we expect to invest in developing advanced manufacturing capabilities, both, internally as well as with our contract manufacturing partners. We believe that we will continue to incur operating and net losses each quarter until at least the time we begin commercial deliveries of our lidar-based products, which are not expected to begin until late 2023 and may occur later or not at all.
Listening to Stockholders
Our compensation committee is very interested in the ideas and any concerns of our stockholders regarding executive compensation. We value the opinions of our stockholders and will consider the outcome of “say-on-pay votes,” as well as any feedback received throughout the year, when making compensation decisions for our executive officers.
At our 2022 annual meeting of stockholders, which took place in June 2022, we requested that stockholders cast a say-on-pay vote. This proposal passed with approximately 99.7% of the votes cast (for or against). In evaluating our compensation practices in 2022, the compensation committee was mindful of the support our stockholders expressed for our philosophy of linking compensation to financial objectives and the enhancement of stockholder value.
Overall Compensation Philosophy and Objectives
We believeOur ability to compete and succeed in the highly competitive and rapidly evolving lidar industry is directly correlated to our ability to recruit, incentivize, and retain talented individuals in the areas of product development, and general and administrative functions. The market for skilled personnel in the autonomous vehicle and technology industries is very competitive. Our compensation programs serve three primary purposes:
•Tocommittee believes that the most effective compensation program is designed to attract retain, and motivatereward talented individuals who possess the skills necessary to support our employees, which is critical to successfully executing our organizational strategy.
•To align the interests of management withbusiness objectives and create long-term value for our stockholders, throughexpand our business, and assist in the use of incentive compensation the value of which is tied to company performance.
•To hold our executive officers accountable for company performance over the long-term by relying to a large extent on equity-based awards that vest over 4-6 years, weighted toward the end of that vesting period.
What We Do
•Pay-for-Performance Philosophy: A significant portionachievement of our named executive officers’ target compensation is issued in RSUs that are by their nature tied to stock performance.
•Emphasize Long-Term Performance:strategic goals. Our compensation program focuses on achieving long-term strategic objectives, with RSU vesting typically occurring over a 4-6 year period.
•Provide Limited Perquisites: Our named executive officers receive perquisites consistent with or below industry practices and participate in the same plans generally at the same level and offering made available to other employees.
•Mitigate Risk: The compensation & human capital management committee or the compensation committee,annually reviews our compensation programs annually and makes revisionsprogram design to mitigate undue risk and align with market best practices.
•Clawback Policy: All awards granted under our 2020 Equity Incentive Plan are subject to recoupment in accordance with any clawback policyensure that the companyit is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable laws. In addition, the board may impose such other clawback, recovery or recoupment provisions in an award agreement as the board determines necessary or appropriate, including but not limited to a reacquisition right in respect of
previously acquired shares or other cash or property upon the occurrence of an event constituting cause.
What We Don’t Do
•No Tax Gross-Ups: We do not provide any tax gross-ups on perquisites or benefits.
•Reprice or buyout of underwater stock options: We do not allow the repricing of stock options without stockholder approval.
We believe these practices, along with our pay-for-performance philosophy, combine to create a compensation program aligned with the interests of our stockholders.stockholders and our business goals, and that the total compensation paid to our employees and directors is fair, reasonable and competitive.
Our compensation committee believes executive compensation packages provided to our named executive officers should achieve the following goals:
•Attract and Retain: Recruit, motivate and retain highly qualified executive officers who possess the skills and leadership necessary to grow our long-term stockholder value; offer a total compensation program that flexibly adapts to changing economic, regulatory and organizational conditions, and takes into consideration the compensation practices of peer companies.
•Align Executive Interests with our Stockholders: Align the interests of our executives with our stockholders by tying a significant portion of total compensation to our overall financial and operating performance and the creation of long-term stockholder value.
•Pay for Performance: Provide a significant portion of compensation through variable, performance-based components that are at-risk and based on satisfaction of designated financial and strategic objectives.
•Reward Actual Achievement:Compensate for achievement of short-term and long-term company financial and operating goals and refrain from providing special benefits, “golden parachute” excise tax gross-ups, or accelerated equity vesting except in limited circumstances.
Compensation Governance Highlights
| | | | | | | | | | | | | | |
| WHAT WE DO | | WHAT WE DO NOT DO |
| ☑ | Link Pay for Performance: A significant portion of our named executive officers’ target compensation is issued in restricted stock units (“RSUs”) that are by their nature tied to stock performance. | | ☑ | Executive Perquisites: Our named executive officers receive perquisites consistent with or below industry practices and participate in the same plans generally at the same level and offering made available to other employees. |
| | | | |
| ☑ | Incentivize a Strong Ownership Mentality and Emphasize Long-Term Performance: Our compensation program focuses on achieving long-term strategic objectives, with performance-based restricted stock units (“PRSUs”) that are eligible to vest, if at all, only upon the collective achievement of aggressive stock price milestones (requiring a nearly eight times increase in stock price) among other conditions. These equity awards are used to strongly align the interests of our executives with those of our stockholders. | | ☑ | Tax Gross-Ups: We do not provide tax gross-ups for “excess parachute payments” or any other executive benefits. |
| | | | |
| ☑ | Corporate Strategy Alignment: Our compensation committee establishes incentive compensation programs based on metrics that are aligned with our corporate strategy and designed to grow stockholder value. | | ☑ | Excessive Executive Retirement Benefits: We do not maintain an executive pension plan or supplemental retirement plan. |
| | | | |
| ☑ | Use an Independent Compensation Consultant: Our compensation committee retains an independent compensation consultant. | | ☑ | Excessive or Inappropriate Risk-Taking: Our compensation programs are balanced in order to mitigate undue risks in our programs. |
| | | | |
| ☑ | Prohibit the Hedging of Our Common Stock: Our Insider Trading Policy strictly prohibits hedging activities by executive officers, employees, and directors. | | ☑ | Excessive Cash Severance: Our offer letters containing severance provisions do not provide for excessive cash severance in the event of termination. |
| | | | |
| ☑ | Conduct Compensation Risk Assessments: Our compensation committee annually assesses the risk associated with our compensation policies and practices to ensure they are not reasonably likely to have a material adverse effect on the company. | | ☑ | Repricing: We prohibit repricing of underwater stock options without prior stockholder approval. |
| | | | |
| ☑ | Say-on-Pay Vote: We hold an annual advisory vote on executive compensation. | | ☑ | Fixed Employment Terms or Salary Increases: We do not enter into employment agreements that provide for fixed terms, automatic compensation increases or equity grants. |
| | | | |
| ☑ | Clawback Policy: All cash awards and equity awards granted under our Amended and Restated 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”), are subject to recoupment in accordance with our compensation clawback policy, which gives us discretion to require our named executive officers to repay certain recoverable incentive-based compensation (including cash and equity awards, whether time or performance-based, and salary increases) in the event of a restatement. | | | |
| | | | |
Executive Compensation Overview
The following table provides information regarding the elements of our executive compensation program.
| | | | | | | | | | | | | | | | | | | | |
| ELEMENT | | FORM | | DESCRIPTION | | OBJECTIVE AND BASIS |
| Base Salary | | Cash | | Base salary for each named executive officer is set at a level that is below market average considering the executive’s duties and authority, contributions, prior experience and sustained performance, in order that pay is primarily achieved through other compensation that is aligned with long-term company and stockholder value. | | Attract and retain highly qualified executives. Determined based on skills, experience, contribution, external benchmarking and performance when reviewed on an annual basis (except that Mr. Russell has voluntarily chosen to receive a base salary well below industry practice). |
| Cash Bonuses | | Cash | | The actual annual cash bonus awarded to each of Messrs. Fennimore and Prescott for 2022 performance is set forth in the Summary Compensation Table in the column titled “Bonus.” Mr. Russell did not receive a cash bonus for fiscal year 2022. Except with respect to the offer letters as described below, we do not have any formal arrangements with our named executive officers providing for annual cash bonus awards. | | Linked to the company’s annual financial and strategic performance, as well as contributions made by the recipient. |
Long-Term Incentive (2020 Equity Incentive Plan) | | RSUs and PRSUs | | In 2022, we granted time-based RSUs to each of our named executive officers (other than Mr. Russell) and PRSUs to each of our named executive officers, under the 2020 Equity Incentive Plan, in each case as described below under “—2022 Grants of Plan-Based Awards.” | | Align the interests of our named executive officers with those of our stockholders; motivate our named executive officers to create value in the company over a longer term. |
| | | | | | | | | | | | | | | | | | | | |
Long-Term Incentive (Management Longer Term Equity Incentive Plan) | | Stock
Awards | | Employees, directors and independent contractors are eligible to participate in this stockholder-approved plan. Permits the grant of stock awards related to the achievement of certain underlying triggering events. One-sixth (1/6) of the share pool under this plan becomes available for issuance based on (including prior to but contingent upon) the occurrence of each of six distinct triggering events, which occur if the price of our common stock is greater than $31, $34, $37, $40, $43 and $46, respectively. No awards have been granted under this plan to date. | | Attract and retain highly qualified executives. Align the interests of our named executive officers with those of our stockholders. |
Benefits and Perquisites | | Varies | | We provide benefits to our named executive officers on the same basis as provided to all of our employees, including health, dental and vision insurance; life insurance; accidental death and dismemberment insurance; critical illness; short- and long-term disability insurance; a health reimbursement account; a health savings account; a flexible spending account; and a tax-qualified Section 401(k) plan for which an employer match is provided. | | We do not maintain any executive-specific benefit or perquisite programs. |
How We Determine Executive Compensation
| | | | | | | | |
| Role of Compensation Committee | | The compensation committee oversees and approves key aspects of executive compensation, including salary, annual bonuses (if any), long-term incentives, and benefits, with input from our board of directors and its independent compensation consultant, Compensia. The decisions of the compensation committee are based on a careful review of performance as well as the competitive market environment. |
| Role of Management | | The President and Chief Executive Officer and the Chief Legal Officer work closely with the compensation committee in managing the executive compensation program, providing input and attending meetings of the compensation committee as appropriate. The President and Chief Executive Officer and the Chief Legal Officer make recommendations to the compensation committee regarding compensation for each executive officer (other than his own). |
| Role of Independent Compensation Consultant | | Since 2021, the compensation committee has retained the services of Compensia as its independent, external compensation consultant.
Compensia, provides research survey information and analysis, incentive design expertise and other analyses related to compensation levels and design. Compensia also updates the compensation committee on trends and developments related to executive compensation design and provides its views to the compensation committee on best practices, including competitiveness when evaluating executive pay programs and policies. Compensia assists the compensation committee in its review of executive and director compensation practices, including the market competitiveness of compensation, executive compensation design, benchmarking with industry peers and other technical considerations including tax and accounting considerations.
For 2022 compensation matters, Compensia advised and assisted with the following: (i) executive and director market pay analysis; (ii) reviewing and suggesting changes to the compensation peer group; and (iii) review and input of the disclosure under the “Compensation Discussion and Analysis” and other proxy statement disclosures.
The compensation committee evaluates the services Compensia provides and has final authority to engage and terminate their services. Compensia has been retained by and reports directly to the compensation committee and does not have any other consulting engagements with management or the company. Our compensation committee has assessed Compensia’s independence consistent with Nasdaq listing standards and has concluded that the engagement of Compensia does not raise any conflict of interest. |
Distribution of Compensation
We weight a significant proportion of total compensation toward long-term compensation, which can reinforce management’s commitment to enhancing profitability and stockholder value over the long-term more meaningfully than cash compensation.In 2022, approximately 90% of the compensation paid to our named executive officers was issued in the form of stock awards, ensuring that management is highly committed to enhancing profitability and stockholder value over the long-term.
Pay Positioning and Compensation Peer Group
In setting compensation, the compensation committee compares base salaries, annual incentive opportunities and long-term compensation for the named executive officers to executive compensation for a peer group of similarly sized companies. A key objective of our executive compensation program is to ensure that the overall compensation packages we offer our executives are competitive with the packages offered by companies with which we compete for executive talent. The compensation
committee consults with Compensia, its independent compensation consultant, to develop a peer group of companies to serve as the basis for comparing our executive compensation program to the market.
When setting fiscal 2022 compensation, our compensation committee considered competitive market practices with respect to total pay levels. However, competitive market data is only one of several resources made available to the compensation committee to assist it in setting executive compensation levels. While referencing peer group compensation levels is helpful in determining market-competitive compensation for our named executive officers, our compensation committee does not directly tie any specific pay elements to particular benchmarks within the peer group. Rather, peer data is one consideration, along with employee skills and experience, individual performance, scope of responsibilities, and other factors. The compensation committee does not use a formula to determine compensation. The compensation committee reviews the peer group annually using best practice parameters as part of its duties.
In developing our peer group, which was approved in March 2021, the compensation committee considered the following key qualitative and quantitative considerations: (i) industry (including application software, auto parts and equipment, and automobile manufacturers, among others), (ii) business focus, (iii) market capitalization, and (iv) market capitalization to revenue multiple. The peer group reflects a reasonable blend of comparable companies relative to industry. Luminar was positioned at the 36th percentile in market cap at the time of approval in March 2021.
Following this analysis, the compensation committee identified the following 20 companies as our peer group. The compensation committee used the 2021 compensation peer group below as a reference for its executive compensation decisions for fiscal year 2022.
| | | | | | | | | | | | | | |
| Allegro MicroSystems | | Cloudflare | | MongoDB |
| Ambarella | | Coupa Software | | QuantumScape |
| Appian | | Datadog | | Unity Software |
| Bill.com Holdings | | Fisker | | Virgin Galactic Holdings |
| C3.ai | | Gentex | | Wolfspeed (formerly Cree) |
| Canoo | | JFrog | | Zscaler |
| Cerence | | Lyft | | |
In June 2022, the compensation committee approved a proposal from Compensia to revise the peer group to include companies more closely aligned with our industry and financials (including revenue and market capitalization). Specifically, the following companies were removed from the peer group: Cloudflare, Datadog, MongoDB, Unity Software, and Zscaler. In addition, the following companies were added to the peer group: Aurora Innovation, Embark Technology, Solid Power, TuSimple Holdings, and Virgin Orbit Holdings.
At the time the peer group was selected in June 2022, the median number of peer group employees was 1,192. The peer group had a median peer group revenue of $229 million over the last 12 months, one-year revenue growth of 35%, a market cap of $3.265 billion, and market cap as a multiple of revenue of 9.8x. In contrast, Luminar at the time had a median revenue of $33 million over the last 12 months, one-year revenue growth of 118%, a market cap of $4.412 billion and market cap as a multiple of revenue of 131.8x.
Elements of Executive Compensation
The compensation committee has developed an executive compensation program that consists of the following table provides information regardingprimary elements:
•base salary;
•cash bonuses; and
•long-term incentives in the elementsform of equity-based compensation.
The relative mix of these components is generally weighted more towards incentive rather than fixed compensation and towards long-term incentive compensation compared to short-term incentive compensation. We believe this relative weighting ensures that the interests of our executives are aligned with those of our stockholders.
Base Salary
| | | | | | | | |
| 2022 BASE SALARY |
| | |
| Philosophy | | Considerations |
| | |
| Attract and retain. | | Salary reviewed and set annually. |
| | |
| Provide fixed compensation to attract, retain and motivate highly talented executives. | | Historically, we have not applied specific formulas to determine changes in base salary. Instead, when setting base salaries, the compensation committee employs a holistic review of numerous factors using its professional judgment and experience, emphasizing the following: individual contribution; roles and responsibilities; expected future contributions; peer and market salary data of similarly situated executives; and other business priorities of our company. |
| | |
Base salary for each named executive officer is set at a level that is below market average considering the executive’s duties and authority, contributions, prior experience and sustained performance, so that pay is primarily achieved through other compensation that is aligned with long-term company and stockholder value. Historically, at Legacy Luminar, and currently, Mr. Russell has voluntarily chosen to receive a base salary far below industry practice.
Annual Cash Incentive Bonus
| | | | | | | | |
| 2022 ANNUAL CASH INCENTIVE AWARDS |
| | |
| Philosophy | | Considerations |
| | |
| Pay for Performance. | | While the company does not have an annual bonus plan, certain executives have bonuses that have been negotiated into their offer letters. |
| | |
| Reward Achievement. | | Bonuses have historically been awarded, if at all, at the discretion of the board of directors, with input from our Chief Executive Officer. |
| | |
| Align the interests of executives with those of our stockholders. | | We use bonuses to reward corporate and individual performance. |
| | |
| Attract and Retain Executives. Remain competitive with our peer companies, which generally offer an annual incentive opportunity as an element of compensation. | | Bonus payments are linked to company’s annual financial and strategic performance as well as contributions made by the recipient. |
| | |
| Cash bonuses are designed to incentivize our named executive officers at a variable level of compensation that is “at risk,” based on our performance and the performance of such individual. | | The bonus amount is payable in a lump sum cash amount, and the payment with respect to any bonus amount is subject to the executive’s continued employment through the payment date. |
| | |
Pursuant to the terms of his offer letter, Mr. Fennimore is eligible to receive an annual discretionary performance-based cash bonus of up to $200,000, which is linked to mutually agreed upon stretch goals and job performance, with the actual amount of the bonus, if any, determined by the company in its discretion taking into account factors such as job performance and the company’s financial performance. Pursuant to his offer letter, Mr. Prescott is entitled to receive a $50,000 annual bonus based on satisfactory performance goals. The actual annual cash bonus awarded to each of Messrs. Fennimore and Prescott for 2022 performance is set forth in the Summary Compensation Table in the column titled “Bonus.”
Mr. Russell did not receive a cash bonus for fiscal year 2022.
Except with respect to the offer letters as described below, we do not have any formal arrangements with our named executive officers providing for annual cash bonus awards. Commencing in 2023, we expect our compensation committee to decide whether the cash bonus will continue to be paid pursuant to the terms of individual offer letters as described above or pursuant to a formal bonus program.
Long-Term Equity Incentive Compensation
In furtherance of our pay for performance philosophy and culture, we generally grant equity awards to our named executive officers on an annual basis. In 2022, each of our named executive officers received PRSUs under the 2020 Equity Incentive Plan. In addition, in 2022, each of Messrs. Fennimore and Prescott received time-based RSUs under the 2020 Equity Incentive Plan. The PRSU and RSU awards are discussed in detail below and are also described in the section titled “—2022 Grants of Plan-Based Awards.”
For 2022, 48% of each of Messrs. Fennimore and Prescott’s equity award value was in the form of PRSUs and 52% in the form of time-based RSUs. As described below, in light of the aggressive stock price milestones of the PRSUs, this long-term performance-based equity compensation for our Chief Financial Officer and Chief Legal Officer requires a nearly eight times increase in stock price from the closing stock price on the grant date to fully vest, among other conditions. The compensation committee believed that this mix of PRSUs and RSUs provided an appropriate ratio of performance-based and retention-oriented incentives that was aligned with the interests of our stockholders.
2022 PRSUs
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| 2022 PRSU GRANTS |
| | | | |
ELEMENTPhilosophy | | FORMConsiderations for Grant | | DESCRIPTIONVesting Provisions |
| | OBJECTIVE AND BASIS |
Base Salary | | Cash | | Base salary for each named executive officer is set at a level that is below market average considering the executive’s duties and authority, contributions, prior experience and sustained performance, in order that pay is primarily achieved through other compensation that is aligned with long-term Company and stockholder value. | | Attract and retain highly qualified executives. Determined based on skills, experience, contribution, external benchmarking and performance when reviewed on an annual basis (except that historically, and at Legacy Luminar, Mr. Russell had voluntarily chosen to receive a base salary below industry practice). |
Discretionary•Pay for Performance: Establish appropriate performance conditions that the compensation committee believes will drive our future growth and profitability.
Cash Bonuses
| | Cash | | The actual annual cash bonuses awarded•Reward Achievement: Provide meaningful and appropriate incentives for achieving company-based goals tied to each named executive officerstock price and operational achievements that the compensation committee believes are important for 2021 performance are set forth in the Summary Compensation Table in the column titled “Bonus.” Exceptour short- and long-term success.•Align Interests with respect to the offer letters as described below, we do not have any formal arrangements with our named executive officers providing for annual cash bonus awards. | | Linked to the company’s annual financial and strategic performance, as well as contributions made by the recipient. |
Long-Term
Incentive (2020
Equity
Incentive Plan)
| | RSUs | | In 2021, each of our named executive officers (other than Mr. Russell) received time-based RSUs under the 2020 Equity Incentive Plan, in each case as described below under “-2021 Grants of Plan-Based Awards.” | | Stockholders: Align the interests of our named executive officersexecutives with those of stockholders by issuing equity awards for which the value is correlated to our stockholders; motivatestock price.•Attract and Retain Executives: Designed to retain our executive officers and align their long-term interests with the creation of long-term value for our stockholders. By having a percentage of our executive officers’ total direct compensation payable in the form of equity that vests over a number of years and, thus, subject to higher risk and longer vesting than cash compensation, our executive officers are motivated to remain employed with us and take actions that will benefit the company and its stockholders over the long term. | | •Factors used to determine the size of grants included: (i) the responsibilities, past performance, and anticipated future contributions of the named executive officersofficer; (ii) the competitiveness of the named executive officer's overall compensation package with reference to create value incompetitive market data; (iii) the company over a longer term (generally over a 4-6 year vesting period). |
Long-Termnamed executive officer's existing equity holdings;(iv) the extent to which these holdings are vested; (v) the recommendations of our Chief Executive Officer (other than with respect to his own grant); (vi) our “burn rate” relative to our industry burn rate guidelines, per certain stockholder and proxy advisor methodology; and (vii) the competitive hiring landscape.
Incentive
(Management
Longer Term
Equity
Incentive Plan)•Balancing retention while maintaining alignment to stock price and stockholder interests.
| | Stock
Awards | | Permits•PRSUs are subject to all of the grant of stock awards related tofollowing vesting conditions: a public market condition (based on the achievement of certain underlying triggering events.aggressive stock price milestones), a service condition (approximately seven years of vesting), and a performance condition (based on start of production). |
| | Attract and retain highly qualified executives. Align the interests of our named executive officers with those of our stockholders. |
Benefits and
Perquisites
| | Varies | | We provide benefits to our named executive officers on the same basis as provided to all of our employees, including health, dental and vision insurance; life insurance; accidental death and dismemberment insurance; critical illness; short- and long-term disability insurance; a health reimbursement account; a health savings account; a flexible spending account; and a tax-qualified Section 401(k) plan for which no employer match is provided. | | We do not maintain any executive-specific benefit or perquisite programs. |
BasedPRSU Grant to Mr. Russell
On May 2, 2022, a Special Committee (the “Special Committee”) of our board of directors comprised of independent directors and our compensation committee approved the grant of 10,800,000 performance share units to Mr. Russell, which are eligible to vest, if at all, only upon the achievement of certain significant and extremely challenging stock price milestones as well as time-based and operational milestones. The Special Committee and the compensation committee approved Mr. Russell’s equity award after numerous discussions and meetings and after consulting with Compensia, the board’s compensation consultant.
The Special Committee and compensation committee considered the importance of incentivizing a strong long-term perspective on data providedoperational performance, Mr. Russell’s service, and goal alignment with the company’s stockholders. Mr. Russell earns nothing without extraordinary success for the company and our stockholders. To reach the first tranche of compensation for Mr. Russell, the company’s stock price will need to increase at least 400% from the closing stock price on the grant date.
In deliberations, the Special Committee and compensation committee also took into account Mr. Russell’s strong performance indication in his evaluation by the board of directors, in addition to vision and leadership. Finally, the Special Committee and compensation committee noted that Mr. Russell’s compensation has consisted primarily of base salary in amounts far below industry practices since 2015, with no equity-based awards or annual cash bonuses issued or paid during the past seven years.
The operational milestone will be satisfied upon the company’s achievement of the start of production (SOP) of one (1) series production program (the “Operational Milestone”). The Operational Milestone must be achieved in order for any PRSUs to vest.
The stock price requirement will be satisfied as to a particular tranche of PRSUs set forth in the Stock Price Milestone Table below when the corresponding Stock Price Milestone (as defined and described below) as to such tranche of PRSUs is achieved as of a particular date:
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| Tranche | Stock Price Milestone | PRSU Vesting |
| 1 | Stock Price of $50 or more | 3,600,000 |
| 2 | Stock Price of $60 or more | 3,600,000 |
| 3 | Stock Price of $70 or more | 3,600,000 |
The service requirement (the “Service Requirement”) will be satisfied as to the following percentages of the Total Number of PRSUs on each of the first seven (7) anniversaries of the Vesting Commencement Date:
| | | | | | | | |
Anniversary of Vesting
Commencement Date | % of Total PRSUs Service-
Based Vesting | Cumulative % of PRSUs
Service-Based Vesting |
| 0 | 0% | 0% |
| 1 | 10% | 10% |
| 2 | 10% | 20% |
| 3 | 10% | 30% |
| 4 | 15% | 45% |
| 5 | 15% | 60% |
| 6 | 20% | 80% |
| 7 | 20% | 100% |
A “Stock Price Milestone” is achieved when the volume-weighted average price per share of Class A common stock (each, a “Share”) for the preceding ninety (90) consecutive trading days (the “90 Day VWAP”) equals or exceeds the milestone’s stock price. The achievement of a Stock Price Milestone
will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Once a Stock Price Milestone has been achieved, it is forever deemed achieved (i.e., if the stock price declines following satisfaction of a Stock Price Milestone, such Stock Price Milestone will still be deemed achieved) and cannot be achieved again.
The Operational Milestone and the Stock Price Milestones must be achieved by the seven (7) year anniversary of the Vesting Commencement Date (the “Final Vesting Date”). Any unvested PRSUs remaining as of the day immediately following the Final Vesting Date will be cancelled and forfeited without consideration.
If Mr. Russell ceases to be a Service Provider (as defined in the 2020 Plan) due to his death or disability, the Service Requirement will be deemed to be satisfied as of the termination date for that number of additional PRSUs that would have service-based vested had Mr. Russell continued to be a Service Provider through the 18 month anniversary of the termination date (provided that any requisite Stock Price Milestone or Operational Milestone must have been satisfied prior to Mr. Russell’s actual termination date without regard to any achievement thereof in the 18 months following such termination date).
If Mr. Russell has been continuously a Service Provider through the date of a Change in Control (as defined in the 2020 Plan), (i) the Service Requirement and Operational Milestone, to the extent not then achieved, will both be deemed achieved on the date of such Change in Control, and (ii) the greater of (1) the fair market value per Share of the consideration received by the common stockholders of the company in the Change in Control or (2) the most recent closing price per Share immediately prior to the consummation of the Change in Control, may additionally be used to satisfy a Stock Price Milestone (e.g., if the per Share consideration received by the stockholders of the company in the Change in Control is $70, the tranche 3 $70 Stock Price Milestone would be satisfied) (the greater of (i) or (ii), the “Per Share CIC Price”). In addition, in the event of a Change in Control, if the per Share stock price using either the 90 Day VWAP or the per share Change In Control price falls between two Stock Price Milestones (e.g., $65, but not, for avoidance of doubt, below the lowest Stock Price Milestone), straight line linear interpolation between two tranches may be used to satisfy the Stock Price Requirement for a partial tranche of Performance Share Units (e.g., if the Per Share CIC Price is $65 and the tranche 3 Stock Price Milestone has not yet been achieved, then the Stock Price Requirement would be satisfied as to 1,800,000 additional PRSUs) The satisfaction of the Stock Price Requirement upon a Change in Control will be deemed to occur immediately prior to the consummation of the Change in Control; and after giving effect to the foregoing provisions, any portion of the PRSU award that has not become vested in a Change in Control due to the Stock Price Milestone not being met as of the date of such Change in Control will be cancelled for no consideration.
Mr. Russell’s equity award also contains a clawback provision that states that if the company undertakes a restatement due to misconduct (including fraud) by company management, then the board may recover all or any portion of the award or any consideration issued thereunder paid to or earned by Mr. Russell during the three-year period preceding the date on which the company is required to prepare the restatement.
PRSU Grants to Messrs. Fennimore and Prescott
On August 19, 2022, the board of directors granted 500,000 PRSUs to each of Mr. Fennimore and Mr. Prescott. The grant date fair value per share was $6.12 per share.
The vesting terms and all other terms of the PRSU’s (other than the number of PRSUs) granted to each of Messrs. Fennimore and Prescott are exactly identical to the vesting and other terms of the PRSU’s granted to Mr. Russell as described above.
As stated above, the PRSUs are eligible to vest, if at all, only upon the collective achievement of aggressive stock price milestones (requiring a nearly eight times increase in stock price), as well as a seven-year service condition and start of production requirement. We believe that such goals are set at challenging levels and are fully aligned with the rigorous expectations and long-term interests of our
stockholders. The PRSU awards establish appropriate performance conditions that the compensation committee believes will drive our future growth and profitability, and were granted in an effort to further motivate our executive team to achieve meaningful growth in our public market performance over the next seven years. These awards reward achievement by our independent compensation consultant, Compensia, ourexecutives and provide meaningful and appropriate incentives for achieving company goals that the compensation committee generally seeksbelieves are important for our long-term success. By tying the payout of stock awards to target total cash compensation atour public market performance and our start of production, the 50th percentilePRSU awards are intended to align the interests of peer companies, and long-time incentive compensation at the 75th percentileexecutives with those of peer companies.our stockholders. Moreover, the seven-year long-term vesting requirement (in addition to the achievement of the performance conditions) further encourages retention of our executives.
Our Executive Compensation Process2022 Time-Based RSUs
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Compensation Committee | | The compensation committee oversees and approves key aspects of executive compensation, including salary, annual bonuses (if any), long-term incentives, and benefits, with input from our board of directors and its independent compensation consultant, Compensia. | | | |
Management2022 TIME-BASED RSU GRANTS |
| | The President | | |
| Philosophy | | Considerations for Grant | | Vesting Provisions |
| | | | |
•Align Interests with Stockholders: Align the interests of executives with those of stockholders by issuing equity awards for which the value is correlated to our stock price. •Attract and Retain Executives: Promote retention of our executives through a two-year service vesting period. | | • Factors used to determine the size of grants included: (i) the responsibilities, past performance, and anticipated future contributions of the named executive officer; (ii) the competitiveness of the named executive officer's overall compensation package with reference to competitive market data; (iii) the named executive officer's existing equity holdings;(iv) the extent to which these holdings are vested; (v) the recommendations of our Chief Executive Officer works closely(other than with respect to his own grant); (vi) our “burn rate” relative to our industry burn rate guidelines, per certain stockholder and proxy advisor methodology; and (vii) the compensation committee in managing the executive compensation program, providing inputcompetitive hiring landscape. •Balancing retention while maintaining alignment to stock price and attending meetingsstockholder interests. | | •30% of the compensation committee as appropriate. The PresidentRSUs vested on September 5, 2022, and Chief Executive Officer makes recommendations10% vest each quarter thereafter until June 5, 2024, subject to the compensation committee regarding compensation forexecutive’s continued service on each executive officer (other than his own).such date. |
Independent Compensation Consultant | | Compensia, provides research survey information and analysis, incentive design expertise and other analyses related to compensation levels and design. Compensia also updates the compensation committee on trends and developments related to executive compensation design and provides its views to the compensation committee on best practices, including competitiveness when evaluating executive pay programs and policies. Compensia has been retained by and reports directly to the compensation committee and does not have any other consulting engagements with management or the company. | | |
Distribution
RSU Grants to Messrs. Fennimore and Prescott
In addition to the PRSUs described above, on August 19, 2022, Messrs. Fennimore and Prescott were each granted 350,000 time-based RSUs.
The time-based RSU awards are intended to promote retention of Compensation
We weight a significant proportion of total compensation toward long-term compensation, which can reinforce management’s commitment to enhancing profitability and stockholder value over the long-term more meaningfully than cash compensation.In 2021, 98% of the compensation paid to our named executive officers was issued in the form of stock awards, ensuring that management is highly committedthrough a two-year service vesting period. The compensation committee intended these RSUs to enhancing profitability and stockholder value over the long-term.
Description of Employment Agreements
Thomas J. Fennimore Offer Letter
On April 3, 2020, Legacy Luminar and Mr. Fennimore entered into an offer letter. Pursuant to this agreement, Mr. Fennimore is entitled to a base salary of $300,000 per year and is eligible to participate in our employee benefits plans. The agreement also provides for a cash bonus of $200,000, payable in four equal installments on the first pay period following the end of Q2 2020, Q3 2020, Q4 2020 and Q1 2021, subject to his employment through the payment date of each such bonus. Beginning in Q2 2021, Mr. Fennimore became eligible to receive an annual discretionary performance-based cash bonus of up to $200,000, payable on a quarterly basis and subject to his full-time employment through the payment date of each such bonus. In addition, Mr. Fennimore is also entitled to (i) $50,000 to assist with miscellaneous relocation expenses, and (ii) up to $50,000 to cover any net loss resulting from the sale of his primary residence, provided that the sales price of his residence is less than the original purchase price. In the event that Mr. Fennimore is terminated by the Company due to no fault of his own, he will be entitled to receive, as severance benefits, an amount equal to six months of his annual base salary, subject to his execution (without revocation) of a general release of claims in favor of Luminar.
On May 11, 2020, Legacy Luminar and Mr. Fennimore entered into an offer letter to provide for (i) payment of an hourly wage at the rate of $150 per hour and (ii) the grant of the option referenced in the April 3, 2020 offer letter, in each case, during Mr. Fennimore’s part-time employment with Legacy Luminar prior to his commencement of full-time employment. Upon Mr. Fennimore’s transition to full-time
employment with Legacy Luminar, which commenced on July 10, 2020, he became eligibleretentive in nature for the benefits, including base salary, set forthnear-term in his April 3, 2020 offer letter.
Alan Prescott Offer Letter
On March 25, 2021, we and Mr. Prescott entered into an offer letter,light of the smaller amount of near-term vesting to occur from prior grants. In addition, these awards align the interests of the executives with those of stockholders by issuing equity awards for which was amended by an employment agreement on November 11, 2021. Pursuant to this agreement, as amended, Mr. Prescottthe value is entitled to a base salary of $300,000 per year and is eligible for a $50,000 annual bonus based on satisfactory achievementour stock price.
The RSUs vest as follows: 30% of performance goalsthe RSUs vested on September 5, 2022, and to participate in our employee benefit plans. Mr. Prescott’s employment is “at-will” and is terminable by either party at any time. Among other equity-based incentives in his employment agreement, Mr. Prescott was awarded 353,000 RSUs, scheduled to10% vest over four years from his start date,each quarter thereafter until June 5, 2024, subject to histhe executive’s continued service on each vesting date, providedsuch date.
Compensation Risk Assessment
Our compensation committee aims to establish company-wide compensation policies and practices that reward contributions to long-term stockholder value and do not promote unnecessary or excessive risk-taking. In furtherance of this objective, in May 2022, our compensation committee conducted an assessment of our company-wide compensation arrangements. The assessment process included, among other things, a review of:
•Our compensation philosophy;
•Compensation at peer group companies;
•Our core compensation element mix; and
•The terms and payments under our cash and equity incentive arrangements.
As part of that review, our compensation committee asked Compensia, its independent compensation consultant, to perform a detailed review of our cash and equity compensation plans in comparison to market practices to determine if there were any areas of risk and recommend appropriate remediation policies (if necessary).
The compensation committee considered the eventfollowing, among other factors, when determining the level of risk:
•Reasonable mix of cash and equity compensation;
•Balanced short-term incentive plan design that Mr. Prescott is terminated, resigns for good cause, or we experience a change of control, he will be entitled to the immediate vestingemphasizes top and bottom-line performance;
•Reasonableness of the remaining unvested sharesequity program, taken as a whole;
•Formal policies for equity administration;
•Comprehensive insider trading policy prohibiting hedging of such RSU grant. Mr. Prescott’s employment agreement-related RSUscompany stock;
•Succession plan for key executives;
•Market-aligned stock ownership guidelines are discussed in greater detail under “–Outstanding Equity Awards at December 31, 2021 Fiscal Year-End” below.place and reviewed periodically;
M. Scott Faris Offer Letter•Formal review and evaluation process for gender pay parity; and
On February 22, 2017, Legacy Luminar•Independent Compensation Committee oversight.
Based upon this assessment, our compensation committee believes that our company-wide compensation policies and Mr. Faris entered into an offer letter. Pursuant to this agreement, Mr. Faris was entitled to a base salary of $300,000 per yearpractices are reasonable and was eligible to participate in our employee benefits plans. Mr. Faris’s employment was “at-will” and was terminable by either party at any time,encourage appropriate behaviors without the payment of severance in excess of then-accrued compensation. Mr. Faris left the Company on November 9, 2021.
Jason Eichenholz, PhD, Offer Letter
On May 4, 2020, Legacy Luminar and Dr. Eichenholz entered into an offer letter, which formalized an employment agreement made in 2019. Pursuant to this agreement, Dr. Eichenholz is entitled to a base salary of $300,000 per year, continued eligibility for annual bonuses in a minimum amount of $20,000 per year and, subject to the approval of the board of directors, a stock option to purchase 100,000 shares of Class A common stock. Dr. Eichenholz’s employment is “at-will” and may be terminated by either party at any time, without the payment of severance in excess of then-accrued compensation. Dr. Eichenholz ceased serving as an executive officer of the Company on June 9, 2021.
Description of Management Longer Term Equity Incentive Plan
In December 2020, our board adopted and our stockholders approved the Management Longer Term Equity Incentive Plan. The Management Longer Term Equity Incentive Plan became effective on the six-month anniversary of the Closing.
Purpose
The Management Longer Term Equity Incentive Plan is intended to (i) attract and retain the best available personnel to ensure our success and accomplish our goals; (ii) incentivize employees, directors and independent contractors with long-term equity-based compensation to align their interests with our stockholders; and (iii) promote the success of our business.
Types of Stock Awards
The Management Longer Term Equity Incentive Plan permits the grant of stock awards related to the achievement of certain underlying triggering events (“Incentive Shares” or “shares”).
Share Reserve
Number of Incentive Shares
Subject to adjustments as set forth in the Management Longer Term Equity Incentive Plan, the maximum aggregate number of shares of Class A Stockcreating risks that may be issued under the Management Longer Term Equity Incentive Plan is 25,818,749 shares. The shares may be authorized, but unissued, or reacquired Class A Stock. One-sixth (1/6) of the share pool becomes available for issuance based on (including prior to but contingent upon) the occurrence of each of six distinct triggering events, which occur if the Common Share Price (as defined in the Management Longer Term Equity Incentive Plan) is greater than $31, $34, $37, $40, $43 and $46, respectively.
Lapsed Awards
If a participant receives Incentive Shares (as defined in the Management Longer Term Equity Incentive Plan) prior to the triggering event to which such shares relate, and forfeits his or her Incentive Shares prior to such triggering event, then such forfeited Incentive Shares shall again become available for issuance under the Management Longer Term Equity Incentive Plan.
Eligibility
Employees, directors and independent contractors of us or our affiliates are all eligible to participate in the Management Longer Term Equity Incentive Plan.
Administration
The Management Longer Term Equity Incentive Plan is administered by the board of directors or a committee thereof, which committee will be constituted to satisfy applicable laws (the “Administrator”). To the extent desirable to qualify transactions under the Management Longer Term Equity Incentive Plan as exempt under Rule 16b-3 of the Exchange Act, the transactions contemplated under the Management Longer Term Equity Incentive Plan will be structured to satisfy the requirements for exemption under Rule 16b-3.
Subject to the terms of the Management Longer Term Equity Incentive Plan, the Administrator has the authority, in its discretion, to (i) determine the fair market value in accordance with the Management Longer Term Equity Incentive Plan; (ii) select the service providers to whom Incentive Shares may be granted under the Management Longer Term Equity Incentive Plan; (iii) determine the number of Incentive Shares to be covered by each stock award granted under the Management Longer Term Equity Incentive Plan; (iv) approve forms of stock award agreements for use under the Management Longer Term Equity Incentive Plan; (v) construe and interpret the terms of the Management Longer Term Equity Incentive Plan and stock awards granted pursuant to the Management Longer Term Equity Incentive Plan; (vi) prescribe, amend and rescind rules and regulations relating to the Management Longer Term Equity Incentive Plan; (vii) modify or amend each stock award (subject to the terms of the Management Longer Term Equity Incentive Plan); (viii) allow participants to satisfy tax withholding obligations in such manner as prescribed in the Management Longer Term Equity Incentive Plan; (ix) authorize any person to execute on our behalf any instrument required to effect the grant of a stock award previously granted by the Administrator; and (x) make all other determinations deemed necessary or advisable for administering the Management Longer Term Equity Incentive Plan.
To the extent permitted by applicable law, the Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Management Longer Term Equity Incentive Plan to one or more of our directors or officers.
Nontransferability of Stock Awards
Unless determined otherwise by the Administrator, a stock award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes a stock award transferable, such stock award will contain such additional terms and conditions as the Administrator deems appropriate.
Recoupment Policy
All stock awards granted under the Management Longer Term Equity Incentive Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the board may impose such other clawback, recovery or recoupment provisions in a stock award agreement as the board determines necessary or appropriate. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with us.
Effect of a Change in Control
Upon any of the following events (each a Change in Control under the Management Longer Term Equity Incentive Plan):
•a transfer of all or substantially all of the Company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the Company;
and such Change in Control that will result in the holders of Class A Stock receiving a per share price equal to or in excess of the applicable Common Share Price required in connection with any triggering event under the Management Longer Term Equity Incentive Plan, then immediately prior to the consummation of such Change in Control (i) any such triggering event that has not previously occurred shall be deemedreasonably likely to have occurred and (ii) the Company may issue the applicable Incentive Shares to participants (in accordance with the terms of the Management Longer Term Equity Incentive Plan), and the participants shall be eligible to participate in such Change in Control.
Amendment, Termination and Duration of the Management Longer Term Equity Incentive Plan
The Management Longer Term Equity Incentive Plan will continue in effect for a term of 5 years measured from the six-month anniversary of the Closing, unless terminated earlier under the terms of the Management Longer Term Equity Incentive Plan. The Administrator may at any time amend (subject to the terms of the Management Longer Term Equity Incentive Plan), suspend or terminate the Management Longer Term Equity Incentive Plan pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as otherwise required by applicable law.
Description of 2020 Equity Incentive Plan
In December 2020, our board adopted and our stockholders approved the 2020 Equity Incentive Plan (the “Equity Incentive Plan”). The Equity Incentive Plan became effective upon the Closing.
Purpose
The Equity Incentive Plan is intended to (i) attract and retain the best available personnel to ensure our success and accomplish our goals; (ii) incentivize employees, directors and independent contractors with long-term equity-based compensation to align their interests with our stockholders; and (iii) promote the success of our business. The Equity Incentive Plan is a successor to the Legacy Luminar Stock Plan.
Types of Stock Awards
The Equity Incentive Plan permits the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, SARs, performance units and performance shares (all such types of awards, collectively, “stock awards”).
Share Reserve
Number of Shares
Subject to adjustments as set forth in the Equity Incentive Plan, the maximum aggregate number of shares of Class A Stock that may be issued under the Equity Incentive Plan is 36,588,278 shares. The shares may be authorized, but unissued, or reacquired Class A Stock. Furthermore, subject to adjustments as set forth in the Equity Incentive Plan, in no event shall the maximum aggregate number of shares that may be issued under the Equity Incentive Plan pursuant to incentive stock options exceed the number set forth above plus, to the extent allowable under Section 422 of the U.S. Tax Code and the regulations promulgated thereunder, any shares that again become available for issuance pursuant to the Equity Incentive Plan.
Lapsed Awards
To the extent a stock award expires or is forfeited or becomes unexercisable for any reason without having been exercised in full, the unissued shares that were subject thereto shall continue to be available under the Equity Incentive Plan for issuance pursuant to future stock awards. Shares issued under the Equity Incentive Plan and later forfeited to us due to the failure to vest or repurchased by us at the original purchase price paid to us for the shares (including without limitation upon forfeiture to or repurchase by us in connection with a participant ceasing to be a service provider) shall again be available for future grant under the Equity Incentive Plan. The following shares shall not be added to the shares authorized for grant under the Equity Incentive Plan and shall not be available for future grants of awards: (i) shares tendered or withheld in payment of the exercise price of an option or to satisfy any tax withholding obligation; (ii) shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right; and (iii) shares purchased on the open market with the cash proceeds from the exercise of options.
Eligibility
Employees, directors and independent contractors of us or our affiliates are all eligible to participate in the Equity Incentive Plan. Incentive stock options may only be granted to employees.
Administration
The Equity Incentive Plan is administered by the board of directors or a committee thereof, which committee will be constituted to satisfy applicable laws (the “Administrator”). To the extent desirable to qualify transactions under the Equity Incentive Plan as exempt under Rule 16b-3 of the Exchange Act, the transactions contemplated under the Equity Incentive Plan will be structured to satisfy the requirements for exemption under Rule 16b-3.
Subject to the terms of the Equity Incentive Plan, the Administrator has the authority, in its discretion, to (i) determine the fair market value in accordance with the Equity Incentive Plan; (ii) select the service providers to whom stock awards may be granted under the Equity Incentive Plan; (iii) determine the number of shares to be covered by each stock award granted under the Equity Incentive Plan; (iv) approve forms of stock award agreements for use under the Equity Incentive Plan; (v) determine the terms and conditions, not inconsistent with the terms of the Equity Incentive Plan, of any stock award granted thereunder; (vi) institute and determine the terms and conditions of an exchange program under the terms of the Equity Incentive Plan (subject to stockholder approval); (vii) construe and interpret the terms of the Equity Incentive Plan and stock awards granted pursuant to the Equity Incentive Plan; (viii) prescribe, amend and rescind rules and regulations relating to the Equity Incentive Plan; (ix) modify or amend each stock award (subject to the terms of the Equity Incentive Plan); (x) allow participants to satisfy tax withholding obligations in such manner as prescribed in the Equity Incentive Plan; (xi) authorize any person to execute on our behalf any instrument required to effect the grant of a stock award previously granted by the Administrator; (xii) allow a participant to defer the receipt of the payment of cash or the delivery of shares that would otherwise be due to such participant under a stock award; and (xiii) make all other determinations deemed necessary or advisable for administering the Equity Incentive Plan.
To the extent permitted by applicable law, the Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Equity Incentive Plan to one or more of our directors or officers.
Stock Options
Each stock option will be designated in the stock award agreement as either an incentive stock option (which is entitled to favorable tax treatment) or a nonstatutory stock option. However, notwithstanding such designation, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the participant during any calendar year exceeds $100,000, such stock options will be treated as nonstatutory stock options. Incentive stock options may only be granted to our or our subsidiaries’ employees.
The term of each stock option will be stated in the stock award agreement. In the case of an incentive stock option, the term will be 10 years from the date of grant or such shorter term as may be provided in the stock award agreement. Moreover, in the case of an incentive stock option granted to a participant who owns stock representing more than 10% of the total combined voting power of all classes of our stock or the stock of any subsidiary, the term of the incentive stock option will be five years from the date of grant or such shorter term as may be provided in the stock award agreement.
The per share exercise price for the shares to be issued pursuant to exercise of a stock option will be determined by the Administrator, subject to the following: in the case of an incentive stock option (i) granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of our stock or the stock of any subsidiary, the per share exercise price will be no less than 110% of the fair market value per share on the date of grant; and (ii) granted to any other employee, the per share exercise price will be no less than 100% of the fair market value per share on the date of grant. In the case of a nonstatutory stock option, the per share exercise price will be no less than 100% of the fair market value per share on the date of grant. Notwithstanding the foregoing, stock options may be granted with a per share exercise price of less than 100% of the fair market value per share on the date of grant pursuant to a corporate reorganization, liquidation, etc., described in the U.S. Tax Code Section 424(a).
At the time a stock option is granted, the Administrator will fix the period within which the stock option may be exercised and will determine any conditions that must be satisfied before the stock option may be exercised. The Administrator will also determine the acceptable form of consideration for exercising a stock option, including the method of payment.
If a participant ceases to be a service provider other than for “Cause,” as defined in the Equity Incentive Plan, the participant may exercise his or her stock option within such period of time as is specified in the stock award agreement to the extent that the stock option is vested on the date of termination (but in no event later than the expiration of the term of such stock option). In the absence of a specified time in the stock award agreement, to the extent vested as of a participant’s termination, the stock option will remain exercisable for 12 months following a termination for death or disability, and 3 months following a termination for any other reason other than Cause. Any outstanding stock option (including any vested portion thereof) held by a participant shall immediately terminate in its entirety upon the participant being first notified of his or her termination for Cause.
Stock Appreciation Rights (SARs)
The Administrator will determine the terms and conditions of each SAR, except that the exercise price for each SAR cannot be less than 100% of the fair market value of the underlying shares of Class A Stock on the date of grant. Upon exercise of a SAR, a participant will receive payment from us in an amount determined by multiplying the difference between the fair market value of a share on the date of exercise over the exercise price by the number of shares with respect to which the SAR is exercised. SARs may be paid in cash or shares of our Class A Stock, as determined by the Administrator. SARs are exercisable at the times and on the terms established by the Administrator.
Restricted Stock and RSUs
Restricted stock awards are grants of shares of Class A Stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares will lapse in accordance with terms and conditions established by the Administrator. Each RSU is a bookkeeping entry representing an amount equal to the fair market value of one share of our Class A Stock.
In determining whether restricted stock or RSUs should be granted, and/or the vesting schedule for such a stock award, the Administrator may impose whatever conditions on vesting as it determines to be appropriate. For example, the Administrator may determine to grant restricted stock or RSUs only if performance goals established by the Administrator are satisfied. Any performance goals may be applied on a Company-wide or an individual business unit basis, as determined by the Administrator. Please refer to the discussion below under “-Performance Goals” for more information.
During the period of restriction, participants holding restricted stock may exercise full voting rights and will be entitled to receive all dividends and other distributions paid. Any dividends or distributions paid with respect to such shares will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the restricted stock with respect to which they were paid.
During the vesting period, participants holding RSUs will hold no voting rights by virtue of such RSUs. The Administrator may, in its sole discretion, award dividend equivalents in connection with the grant of RSUs that may be settled in cash, in shares of equivalent value, or in some combination thereof. Any dividend equivalents awarded with respect to such RSUs will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the RSUs with respect to which they were awarded.
Performance Units and Performance Shares
Performance units and performance shares are stock awards that will result in a payment to a participant only if the performance goals that the Administrator establishes are satisfied. The Administrator will determine the applicable performance goals. Please refer to the discussion below under “-Performance Goals” for more information. After the applicable performance period has ended, the participant will be entitled to receive a payout of the number of performance units or shares earned during the performance period, depending upon the extent to which the applicable performance objectives have been achieved.
Performance Goals
The Administrator in its discretion may make performance goals applicable to a participant with respect to a stock award. In the Administrator’s discretion, one or more of the following performance goals may apply: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense management; (16) return on assets, return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash flow, cash flow return on investment, net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share; (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria; (24) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects; and (27) enterprise resource planning. Stock awards issued to participants may take into account other criteria (including subjective criteria).
Outside Director Limitations
No non-employee director (“Outside Director”) may receive awards under the Equity Incentive Plan with a total grant date fair value that, when combined with cash compensation received for service as an Outside Director, exceeds $750,000 in a calendar year, increased to $1,000,000 in the calendar year of his or her initial services as an Outside Director. Stock awards granted to an individual while he or she was serving in the capacity as an employee or while he or she was an independent contractor but not an Outside Director will not count for purposes of these limitations.
Leaves of Absence / Transfer Between Locations
The Administrator has the discretion to determine at any time whether and to what extent the vesting of stock awards shall be suspended during any leave of absence. A participant will not cease to be an employee in the case of (i) any leave of absence approved by the participant’s employer or (ii) transfers between our locations or between us and any subsidiary. If an employee holds an incentive stock option and such leave exceeds 3 months then, for purposes of incentive stock option status only, such employee’s service as an employee shall be deemed terminated on the first day following such 3 month period and the incentive stock option shall thereafter automatically treated for tax purposes as a nonstatutory stock option in accordance with applicable laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written policy of the Company.
Nontransferability of Stock Awards
Unless determined otherwise by the Administrator, a stock award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes a stock award transferable, such stock award will contain such additional terms and conditions as the Administrator deems appropriate.
Recoupment Policy
All stock awards granted under the Equity Incentive Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the board may impose such other clawback, recovery or recoupment provisions in a stock award agreement as the board determines necessary or appropriate. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with us.
Effect of a Change in Control
Upon any of the following events (each a Change in Control under the Equity Incentive Plan):
•a transfer of all or substantially all of the Company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the Company;
except as set forth in a stock award agreement, each outstanding stock award (vested or unvested) will be treated as the Administrator determines, which may include (a) our continuation of such outstanding stock awards (if we are the surviving corporation); (b) the assumption of such outstanding stock awards by the surviving corporation or its parent; (c) the substitution by the surviving corporation or its parent of new stock options or other equity awards for such stock awards; (d) the cancellation of such stock awards in exchange for a payment to the participants equal to the excess of (i) the fair market value of the shares subject to such stock awards as of the closing date of such Change in Control over (ii) the exercise price or purchase price paid or to be paid (if any) for the shares subject to the stock awards (which payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with the transaction, subject to applicable law); or (e) the opportunity for participants to exercise the stock options prior to the occurrence of the Change in Control and the termination (for no consideration) upon the consummation of such Change in Control of any stock options not exercised prior thereto.
Amendment, Termination and Duration of the Equity Incentive Plan
The Equity Incentive Plan will continue in effect for a term of 10 years measured from board approval date, unless terminated earlier under the terms of the Equity Incentive Plan. The Administrator may at any time amend, alter, suspend or terminate the Equity Incentive Plan pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as otherwise required by applicable law.
Description of Legacy Luminar’s Amended and Restated 2015 Stock Plan
General
Legacy Luminar’s board of directors originally adopted, and the Legacy Luminar stockholders approved, the Legacy Luminar Stock Plan, each on June 26, 2015. The Legacy Luminar Stock Plan was last amended on January 24, 2020. The Legacy Luminar Stock Plan provides for the grant of Legacy Luminar Stock Options to Legacy Luminar employees (and employees of any parent or subsidiary of Legacy Luminar), and for the grant of non-statutory Legacy Luminar Stock Options and Legacy Luminar restricted stock to Legacy Luminar employees, directors and consultants (and employees and consultants
of any parent, subsidiary or affiliate of Legacy Luminar). We assumed the Legacy Luminar Stock Plan upon the Closing. The Legacy Luminar Stock Plan has been terminated except that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the Closing) until terminated pursuant to the terms thereof.
Plan Administration
The board of directors administers the Legacy Luminar Stock Plan.
Types of Awards
The Legacy Luminar Stock Plan provides for the grant of stock options and restricted stock.
Stock Options
Legacy Luminar’s board of directors granted Legacy Luminar Stock Options under the Legacy Luminar Stock Plan, which we assumed in the Closing. The exercise price per share applicable to such options was equal to at least the fair market value per share of Legacy Luminar stock on the date of grant. The term of options granted under the Legacy Luminar Stock Plan did not exceed 10 years; provided, however, that any Legacy Luminar Stock Options granted to a participant who owned more than 10% of the total combined voting power of all classes of Legacy Luminar stock, or of certain of Legacy Luminar’s subsidiary corporations, did not have a term in excess of 5 years and had an exercise price per share of at least 110% of the fair market value per share of Legacy Luminar stock on the grant date. Subject to the provisions of the Legacy Luminar Stock Plan, Legacy Luminar’s board of directors determined the remaining terms of the Legacy Luminar Stock Options (e.g., vesting). After the termination of service of an employee, director or consultant, the participant may exercise his or her option, to the extent vested, for the period of time stated in his or her option agreement. If termination is due to death, then 100% of the then unvested shares shall immediately vest and become exercisable as of date of such termination. If termination is due to death or disability, the option will remain exercisable for 12 months. For certain options and so long as the applicable employees that have completed at least two years of continuous service, the option will remain exercisable until the earliest of (a) 10 years from the date of the option grant; or (b) the later of (i) one year after termination (in the event such termination occurs after going public) and (ii) one year after going public. In all other cases except for a termination for cause, the Legacy Luminar Stock Options will generally remain exercisable for three months following the termination of service. In the event of a termination for cause, the Legacy Luminar Stock Options will immediately terminate. However, in no event may an option be exercised later than the expiration of its term.
Non-transferability of Awards
Unless the board provides otherwise, the Legacy Luminar Stock Plan generally does not allow for the transfer of awards or shares acquired pursuant to an award and only the recipient of an option may exercise such an award during his or her lifetime.
Certain Adjustments
In the event of certain corporate events or changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the Legacy Luminar Stock Plan, the board will make adjustments to one or more of the number, kind and class of securities that may be delivered under the Legacy Luminar Stock Plan and/or the number, kind, class and price of securities covered by each outstanding award.
Dissolution or liquidation
In the event of our dissolution or liquidation, each Legacy Luminar stock option and stock purchase right will terminate immediately prior to the consummation of such action, unless otherwise determined by the board.
Corporate Transactions
The Legacy Luminar Stock Plan, as assumed by us, provides that in the event of certain significant corporate transactions, including: (i) a transfer of all or substantially all of our assets, (ii) a merger, consolidation or other capital, reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any person becomes the beneficial owner, directly or indirectly, of more than 50% of our then outstanding capital stock, each outstanding award will be treated as the board determines.
Amendment or Termination
Our board has terminated the Legacy Luminar Stock Plan, provided that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the Closing).
Description of Employee Stock Purchase Plan
In December 2020, our board adopted and our stockholders approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective upon the Closing.
Purpose
The ESPP provides a means by which eligible employees and/or eligible service providers of either the Company or an affiliate may be given an opportunity to purchase shares of Class A Stock. The ESPP permits us to grant a series of purchase rights to eligible employees and/or eligible service providers. By means of the ESPP, we seek to retain and assist our affiliates in retaining the services of such eligible employees and eligible service providers, to secure and retain the services of new eligible employees and eligible service providers and to provide incentives for such persons to exert maximum efforts for our success and that of our affiliates.
The ESPP includes two components: a “423 Component” and a “Non-423 Component.” We intend the 423 Component to qualify as an employee stock purchase plan pursuant to Section 423 of the U.S. Tax Code. The provisions of the 423 Component will be construed in a manner that is consistent with the requirements of Section 423 of the U.S. Tax Code, including without limitation to extend and limit ESPP participation in a uniform and non-discriminating basis. In addition, the ESPP authorizes grants of purchase rights under the Non-423 Component that do not meet the requirements of an employee stock purchase plan under Section 423 of the Code. Except as otherwise provided in the ESPP or determined by the board, the Non-423 Component will operate and be administered in the same manner as the 423 Component. Eligible employees will be able to participate in the 423 Component or Non-423 Component of the ESPP. Eligible service providers (who may or may not be eligible employees) will only be able to participate in the Non-423 Component of the ESPP.
Administration
The board administers the ESPP and will have the final power to construe and interpret both the ESPP and the rights granted under it. Further, the board has the power, subject to the provisions of the ESPP, to determine when and how rights to purchase Class A Stock will be granted, the provisions of
each offering of such rights (which need not be identical), and whether any employee or other service provider will be eligible to participate in the ESPP.
The board has the power to delegate administration of the ESPP to a committee composed of one or more members of the board. As used herein with respect to the ESPP, the term “board” refers to any committee the board appoints, and to the board. Whether or not the board has delegated administration of the ESPP to a committee, the board will have the final power to determine all questions of policy and expediency that may arise in the administration of the ESPP.
Stock Subject to the ESPP
Subject to adjustments as provided in the ESPP, the maximum number of shares of Class A Stock that may be issued under the ESPP will not exceed 7,317,655 shares of Class A Stock. If any purchase right granted under the ESPP terminates without having been exercised in full, the shares of Class A Stock not purchased under such purchase right will again become available for issuance under the ESPP.
Offerings
The ESPP is implemented by offerings of rights to all eligible employees and eligible service providers from time to time. Offerings may comprise one or more purchase periods. The maximum length for an offering under the ESPP is 27 months. The provisions of separate offerings need not be identical. When a participant elects to join an offering, he or she is granted a purchase right to acquire shares of Class A Stock on each purchase date within the offering, each corresponding to the end of a purchase period within such offering. On each purchase date, all payroll deductions collected from the participant during such purchase period are automatically applied to the purchase of Class A Stock, subject to certain limitations.
Eligibility
Purchase rights may be granted only to our employees, employees of qualifying related corporations or, solely with respect to the Non-423 Component, employees of an affiliate (other than a qualifying related corporation) or eligible service providers. The board may provide that employees will not be eligible to be granted purchase rights under the ESPP if, on the offering date, the employee (i) has not completed at least 2 years of service since the employee’s last hire date (or such lesser period as the board may determine), (ii) customarily works not more than 20 hours per week (or such lesser period as the board may determine), (iii) customarily works not more than 5 months per calendar year (or such lesser period as the board may determine), (iv) is an officer within the meaning of Section 16 of the Exchange Act, (v) is a highly compensated employee within the meaning of the U.S. Tax Code, or (vi) has not satisfied such other criteria as the board may determine consistent with Section 423 of the U.S. Tax Code. Unless otherwise determined by the board for any offering, an employee will not be eligible to be granted purchase rights unless, on the offering date, the employee customarily works more than 20 hours per week and more than 5 months per calendar year, and has been employed by us or a related corporation or affiliate for at least 3 continuous months preceding such offering date.
No employee will be eligible for the grant of any purchase rights if, immediately thereafter, such employee owns stock possessing 5% or more of the total combined voting power or value of all classes of our stock or the stock of any related corporation. An eligible employee may be granted purchase rights only if such purchase rights, together with any other rights granted under all our and any related corporations’ employee stock purchase plan, do not permit such eligible employee’s rights to purchase stock in excess of $25,000 worth of stock in any calendar year.
Participation in the ESPP
On each offering date, each eligible employee or eligible service provider, pursuant to an offering made under the ESPP, will be granted a purchase right to purchase up to that number of shares of Class A Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the board; provided however, that in the case of eligible employees, such percentage or maximum dollar amount will in either case not exceed 15% of such employee’s earnings during the period that begins on the offering date (or such later date as the board determines for a particular offering) and ends on the date stated in the offering, which date will be no later than the end of the offering, unless otherwise provided for in an offering.
Purchase Price
The purchase price of shares of Class A Stock acquired pursuant to purchase rights will be not less than the lesser of (i) 85% of the fair market value of the shares of Class A Stock on the offering date; or (ii) 85% of the fair market value of the shares of Class A Stock on the applicable purchase date (i.e., the last day of the applicable purchase period).
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions over the offering. To the extent permitted in the offering document, a participant may increase, reduce or terminate his or her payroll deductions. All payroll deductions made on behalf of a participant are credited to his or her account under the ESPP and deposited with our general funds. No interest will accrue on such payroll deductions. To the extent permitted in the offering document, a participant may make additional payments into such account. If required under applicable laws or regulations or if specifically provided in the offering, in addition to or instead of making contributions by payroll deductions, a participant may make contributions through a payment by cash, check, or wire transfer prior to a purchase date, in a manner we direct.
Purchase of Stock
The board will establish one or more purchase dates during an offering on which purchase rights granted for that offering will be exercised and shares of Class A Stock will be purchased in accordance with such offering. In connection with each offering, the board may specify a maximum number of shares of Class A Stock that may be purchased by any participant or all participants. If the aggregate purchase of shares of Class A Stock issuable on exercise of purchase rights granted under the offering would exceed any such maximum aggregate number, then, in the absence of any board action otherwise, a pro rata (based on each participant’s accumulated contributions) allocation of the shares of Class A Stock available will be made in as nearly a uniform manner as will be practicable and equitable.
Withdrawal
During an offering, a participant may cease making contributions and withdraw from the offering by delivering a withdrawal form. We may impose a deadline before a purchase date for withdrawing. On such withdrawal, such participant’s purchase right in that offering will immediately terminate and we will distribute as soon as practicable to such participant all of his or her accumulated but unused contributions without interest and such participant’s purchase right in that offering will then terminate. A participant’s withdrawal from that offering will have nomaterial adverse effect on his or her eligibility to participate in any other offerings under the ESPP, but such participant will be required to deliver a new enrollment form to participate in subsequent offerings.us.
Termination of Employment
Purchase rights granted pursuant to any offering under the ESPP will terminate immediately if the participant either (i) is no longer an eligible employee or eligible service provider for any reason or for no reason, or (ii) is otherwise no longer eligible to participate. We shall have the exclusive discretion to determine when a participant is no longer actively providing services and the date of the termination of employment or service for purposes of the ESPP. As soon as practicable, we will distribute to such individual all of his or her accumulated but unused contributions without interest.
Restrictions on Transfer
During a participant’s lifetime, purchase rights will be exercisable only by such participant. Purchase rights are not transferable by a participant, except by will, by the laws of descent and distribution, or, if we so permit, by a beneficiary designation.
Exercise of Purchase Rights
On each purchase date, each participant’s accumulated contributions will be applied to the purchase of shares of Class A Stock, up to the maximum number of shares of Class A Stock permitted by the ESPP and the applicable offering, at the purchase price specified in the offering. Unless otherwise specified in the ESPP, no fractional shares will be issued and, if any amount of accumulated contributions remains in a participant’s account after the purchase of shares of Class A Stock on the final purchase date in an offering, such remaining amount will roll over to the next offering.
No purchase rights may be exercised to any extent unless and until the shares of Class A Stock to be issued on such exercise under the ESPP are covered by an effective registration statement pursuant to the Securities Act, and the ESPP is in material compliance with all applicable U.S. federal and state, foreign and other securities, exchange control, and other laws applicable to the ESPP. If, on the purchase date, as delayed to the maximum extent permissible, the shares of Class A Stock are not registered and the ESPP is not in material compliance with all applicable laws or regulations, no purchase rights will be exercised and all accumulated but unused contributions will be distributed as soon as practicable to the participants without interest.
Capitalization Adjustments
In the event of a capitalization adjustment, the board will appropriately and proportionately adjust: (i) the classes and maximum number of securities subject to the ESPP, (ii) the classes and maximum number of securities by which the share reserve is to increase automatically each year pursuant to the ESPP, (iii) the classes and number of securities subject to, and the purchase price applicable to outstanding offerings and purchase rights, and (iv) the classes and number of securities that are the subject of the purchase limits under each ongoing offering.
Dissolution or Liquidation
In the event of the Company’s dissolution or liquidation, the board will shorten any offering then in progress by setting a new purchase date prior to the consummation of such proposed dissolution or liquidation. The board will notify each participant in writing, prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date, unless prior to such date the participant has withdrawn from the offering.
Effect of a Change in Control:
Upon any of the following events (each a Change in Control under the ESPP):
•a transfer of all or substantially all of the Company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the Company;
any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding purchase rights or may substitute similar rights for outstanding purchase rights, or, if any surviving or acquiring corporation (or its parent company) does not assume or continue such purchase rights or does not substitute similar rights for such purchase rights, then the participants’ accumulated contributions will be used to purchase shares of Class A Stock prior to the Change in Control under the outstanding purchase rights, and the purchase rights will terminate immediately after such purchase. The board will notify each participant in writing prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date unless prior to such date the participant has withdrawn from the offering.
Amendment, Termination or Suspension of the ESPP
The Board may amend the ESPP at any time in any respect the board deems necessary or advisable. However, except with respect to capitalization adjustments described above, stockholder approval will be required for any amendment of the ESPP for which stockholder approval is required by applicable laws, regulations or listing requirements, including any amendment that either (i) increases the number of shares of Class A Stock available for issuance under the ESPP, (ii) expands the class of individuals eligible to become participants and receive purchase rights, (iii) materially increases the benefits accruing to participants under the ESPP or reduces the price at which shares of Class A Stock may be purchased under the ESPP, (iv) extends the term of the ESPP, or (v) expands the types of awards available for issuance under the ESPP, but in each case only to the extent stockholder approval is required by applicable laws, regulations, or listing requirements.
The board may suspend or terminate the ESPP at any time. No purchase rights may be granted under the ESPP while the ESPP is suspended or after it is terminated.
Any benefits, privileges, entitlements, and obligations under any outstanding purchase rights granted before an amendment, suspension, or termination of the ESPP will not be materially impaired by any such amendment, suspension, or termination except (i) with the consent of the person to whom such purchase rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations, or (iii) as necessary to obtain or maintain any special tax, listing, or regulatory treatment.
Tax Considerations
Prior to its amendment by the Tax Cuts and Jobs Act (“Tax Legislation”), which was enacted December 22, 2017,While Section 162(m) of the Internal Revenue Code disallowedof 1986, as amended (the “U.S. Tax Code”), places a tax deduction to public companies for compensation paid in excesslimit of $1 million to “covered employees” (generally, such company’s chief executive officer and its three other highest paid executive officers other than its chief financial officer). Prior toon the Tax Legislation, there was an exception to this $1 million limitation for performance-basedamount of compensation if certain requirements were met.The Tax Legislation generally amended Section 162(m) to eliminate the exception for performance-based compensation and to expand
the $1 million compensation limit to apply tothat we may deduct as a public company’s chief financial officer and to certain individuals who were covered employeesbusiness expense in years other than the then-current taxableany year subject to certain “grandfathering” rules.The company will continue to take into account the tax and accounting implications (including with respect to certain of our executive officers, except with respect to certain grandfathered “performance-based” arrangements, the expected lack of deductibility undercompensation committee retains the revised Section 162(m)) when makingdiscretion to award compensation decisions, but reserves its right to continue to make compensation decisions based on other factors ifthat is not deductible as it determinesbelieves that it is in the best interests of the company and itsour stockholders to do so.maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives.
COMPENSATION COMMITTEE REPORT
Compensation Committee Report
The compensation committee has reviewed and discussed ourthe Compensation Discussion and Analysis section with management and, based on the review and discussions, recommended to the board that the Compensation Discussion and Analysis section be included in this Proxy Statement.
Submitted by the Compensation & Human Capital Management Committee
Katharine A. Martin (Chair)
Jun Hong Heng
Mary Lou Jepsen, PhD
Matthew Simoncini
The foregoing report of the compensation committee is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any filing of the Companycompany under the Securities Act or the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in such filing.
48Executive Compensation Tables
EXECUTIVE COMPENSATION TABLES
20212022 Summary Compensation Table
The following table sets forth information concerning the compensation of our officers who served as named executive officers during the year ended December 31, 2021.2022.
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| Name and Principal Position | | Fiscal
Year | | Salary
($)(2) | | Bonus
($)(3) | | Stock
Awards
($)(4) | | Option Awards
($)(4) | | All Other Compensation
($)(5) | | Total
($) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Austin Russell | | 2021 | | $ | 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1 | | | | | | | | | |
| President and Chief Executive Officer | | 2020 | | 300,000 | | | — | | | — | | | — | | | 30,841 | | | 330,841 | | | | | | | | | |
| | 2019 | | 175,000 | | | — | | | — | | | — | | | — | | | 175,000 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Thomas J. Fennimore | | 2021 | | 300,000 | | | 200,000 | | | 7,987,242 | | | — | | | — | | | 8,487,242 | | | | | | | | | |
| Chief Financial Officer | | 2020 | | 142,046 | | | 150,000 | | | — | | | 2,093,115 | | | 100,473 | | | 2,485,634 | | | | | | | | | |
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| Alan Prescott (6) | | 2021 | | 205,682 | | | — | | | 29,507,831 | | | — | | | — | | | 29,713,513 | | | | | | | | | |
| Chief Legal Officer | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| M. Scott Faris (7) | | 2021 | | 262,500 | | | 125,000 | | | 3,594,262 | | | — | | | 6,030 | | | 3,987,792 | | | | | | | | | |
| Former Chief | | 2020 | | 300,000 | | | — | | | — | | | 661,581 | | | 167 | | | 961,748 | | | | | | | | | |
| Business Officer | | 2019 | | 300,000 | | | — | | | — | | | — | | | — | | | 300,000 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Jason Eichenholz, PhD (1) | | 2021 | | 300,000 | | | 100,000 | | | 30,173,431 | | | — | | | — | | | 30,573,431 | | | | | | | | | |
| Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | |
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| Name and Principal Position | | Fiscal
Year | | Salary
($)(2) | | Bonus
($)(3) | | Stock
Awards
($)(1) | | Option Awards
($) | | All Other Compensation
($) | | Total
($) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Austin Russell | | 2022 | | 1 | | | $ | — | | | $ | 93,915,468 | | | $ | — | | | $ | — | | | $ | 93,915,469 | | | | | | | | | |
| President and Chief Executive Officer | | 2021 | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | |
| | 2020 | | 300,000 | | | — | | | — | | | — | | | 30,841 | | | 330,841 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Thomas J. Fennimore | | 2022 | | 300,000 | | | 150,000 | | | 6,384,751 | | | — | | | — | | | 6,834,751 | | | | | | | | | |
| Chief Financial Officer | | 2021 | | 300,000 | | | 200,000 | | | 7,987,242 | | | — | | | — | | | 8,487,242 | | | | | | | | | |
| | 2020 | | 142,046 | | | 150,000 | | | — | | | 2,093,115 | | | 100,473 | | | 2,485,634 | | | | | | | | | |
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| Alan Prescott | | 2022 | | 300,000 | | | 50,000 | | | 6,384,751 | | | — | | | — | | | 6,734,751 | | | | | | | | | |
| Chief Legal Officer and Secretary | | 2021 | | 205,682 | | | — | | | 29,507,831 | | | — | | | — | | | 29,713,513 | | | | | | | | | |
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(1)Dr. EichenholzThis amount reflects our aggregate accounting expense for these restricted stock units and Legacy Luminar negotiated a multi-year equity award in 2019 with adoes not represent the actual economic value of approximately $1 million based onthat may be realized by the then-409A price of the Company stock. The agreement was formalized and signed on May 4, 2020 innamed executive officer, which will take at least several years. There can be no assurance that the amount of 100,000 stock options, subject towill ever be realized. The amount reported in this column reflects the approval of the Compensation Committee, which was not consummated due to the pending Business Combination, and ultimately approved by the Company’s Compensation Committee on July 23, 2021. The RSU award of 1,264,891 shares was based on an estimated equivalent value of the original award which would have substantially increased in value. Dr. Eichenholz ceased serving as an executive officer of the Company on June 9, 2021 and remains employed as Chief Technology Officer.
(2)Amounts reflect salary earned during the applicable calendar year.
(3)Amounts reflect discretionary cash bonuses earned by the applicable named executive officers in the applicable years.
(4)Stock awards and option awards are reported at aggregate grant date fair value infor financial statement reporting purposes of restricted stock units granted during the year granted,ended December 31, 2022, as determined in accordance with the provisions of FASB Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC Topic 718.718”). For the assumptions used in valuing these awards for purposes of computing this expense,the award, please see Note 1412 of the Company’scompany’s consolidated financial statements for the year ended December 31, 2021.2022.
(5)Represents,The table below sets forth the grant date fair value for the PRSUs awarded during the year ended December 31, 2022, which will take up to seven years to fully vest, if at all, based upon (i) the probable outcome of the performance conditions used for financial reporting purposes in accordance with respect to Mr. Faris, taxable reimbursements related to cellular charges.
(6)Mr. Prescott joinedASC 718 as of the Company on April 26, 2021.
(7) Mr. Faris leftgrant date, and (ii) the Company on November 9, 2021.
maximum outcome of performance conditions under the performance-related component as of the grant date:
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| Name | | Year | | Grant Date | | Probable Outcome of Performance Conditions Grant Date Fair Value ($) | | Maximum Outcome of Performance Conditions Grant Date Fair Value ($) | | Grant Date Fair Value ($) |
| Austin Russell | | 2022 | | 5/2/2022 | | $ | 93,915,468 | | | $ | 136,188,000 | | | $ | 93,915,468 | |
| Thomas J. Fennimore | | 2022 | | 8/19/2022 | | 3,059,751 | | | 4,750,000 | | | 3,059,751 | |
| Alan Prescott | | 2022 | | 8/19/2022 | | 3,059,751 | | | 4,750,000 | | | 3,059,751 | |
(2)Amounts reflect salary earned during the applicable year.
(3)Amounts reflect cash bonuses earned by the applicable named executive officer in the applicable years.
Narrative Disclosure to Summary Compensation Table
For 2021,Description of Employment Agreements
Thomas J. Fennimore Offer Letter
On April 3, 2020, and 2019, the compensation program for named executive officers consisted of base salary and certain standard employee benefits.
Base Salary
Base salary for each named executive officer is set at a level that is below market average considering the executive’s duties and authorities, contributions, prior experience and sustained performance, in order that pay is primarily achieved through other compensation that is aligned with long-term Company and stockholder value; in particular historically, and at Legacy Luminar and Mr. Russell had voluntarily chosenFennimore entered into an offer letter. Mr. Fennimore’s employment is “at-will” and is terminable by either party at any time. Pursuant to receivethis agreement, Mr. Fennimore is entitled to a base salary far below industry practice.of $300,000 per year and is eligible to participate in our employee benefits plans. The agreement also provides for a cash bonus of $200,000, payable in four equal installments on the first pay period following the end of Q2 2020, Q3 2020, Q4 2020 and Q1 2021, subject to his employment through the payment date of each such bonus. Beginning in Q2 2021, Mr. Fennimore became eligible to receive an annual discretionary performance-based cash bonus of up to $200,000, payable on a quarterly basis and subject to his full-time employment through the payment date of each such bonus. In addition, Mr. Fennimore is also entitled to (i) $50,000 to assist with miscellaneous relocation expenses, and (ii) up to $50,000 to cover any net loss resulting from the sale of his primary residence, provided that the sales price of his residence is less than the original purchase price. In the event that Mr. Fennimore is terminated by the company due to no fault of his own, he will be entitled to receive, as severance benefits, an amount equal to six months of his annual base salary, subject to his execution (without revocation) of a general release of claims in favor of Luminar.
Cash BonusOn May 11, 2020, Legacy Luminar and Mr. Fennimore entered into an offer letter to provide for (i) payment of an hourly wage at the rate of $150 per hour and (ii) the grant of the option referenced in the April 3, 2020 offer letter, in each case, during Mr. Fennimore’s part-time employment with Legacy Luminar prior to his commencement of full-time employment. Upon Mr. Fennimore’s transition to full-time employment with Legacy Luminar, which commenced on July 10, 2020, he became eligible for the benefits, including base salary, set forth in his April 3, 2020 offer letter.
Alan Prescott Offer Letter
On March 25, 2021, we entered into an offer letter with Mr. Prescott, which was amended by an employment agreement on November 11, 2021. Pursuant to this agreement, as amended, Mr. Prescott is entitled to a base salary of $300,000 per year and is eligible for a $50,000 annual bonus based on satisfactory achievement of performance goals and to participate in our employee benefit plans. Mr. Prescott’s employment is “at-will” and is terminable by either party at any time. Among other equity-based incentives in his employment agreement, Mr. Prescott was awarded 353,000 RSUs, scheduled to vest over four years from his start date, subject to his continued service on each vesting date, provided that in the event that Mr. Prescott is terminated, resigns for good cause, or we experience a change in control, he will be entitled to the immediate vesting of the remaining unvested shares of such RSU grant. Mr.
Prescott’s employment agreement-related RSUs are discussed in greater detail under “—Outstanding Equity Awards at December 31, 2022 Fiscal Year-End” below.
Description of Management Longer Term Equity Incentive Plan
In December 2020, our board adopted and our stockholders approved the Management Longer Term Equity Incentive Plan. The Management Longer Term Equity Incentive Plan became effective on June 2, 2021.
Purpose
The actual annual cash bonuses awardedManagement Longer Term Equity Incentive Plan is intended to each named executive officer for 2021 performance are(i) attract and retain the best available personnel to ensure our success and accomplish our goals; (ii) incentivize employees, directors and independent contractors with long-term equity-based compensation to align their interests with our stockholders; and (iii) promote the success of our business.
Types of Stock Awards
The Management Longer Term Equity Incentive Plan permits the grant of stock awards related to the achievement of certain underlying triggering events (“Incentive Shares” or “shares”).
Share Reserve
Number of Incentive Shares
Subject to adjustments as set forth above in the Summary Compensation TableManagement Longer Term Equity Incentive Plan, the maximum aggregate number of shares of Class A Stock that may be issued under the Management Longer Term Equity Incentive Plan is 25,818,749 shares. The shares may be authorized, but unissued, or reacquired Class A Stock. One-sixth (1/6) of the share pool becomes available for issuance based on (including prior to but contingent upon) the occurrence of each of six distinct triggering events, which occur if the Common Share Price (as defined in the column titled “Bonus.” Except with respectManagement Longer Term Equity Incentive Plan) is greater than $31, $34, $37, $40, $43 and $46, respectively.
Lapsed Awards
If a participant receives Incentive Shares (as defined in the Management Longer Term Equity Incentive Plan) prior to the offer letterstriggering event to which such shares relate, and forfeits his or her Incentive Shares prior to such triggering event, then such forfeited Incentive Shares shall again become available for issuance under the Management Longer Term Equity Incentive Plan.
Eligibility
Employees, directors and independent contractors of us or our affiliates are all eligible to participate in the Management Longer Term Equity Incentive Plan.
Administration
The Management Longer Term Equity Incentive Plan is administered by the board of directors or a committee thereof, which committee will be constituted to satisfy applicable laws (the “Administrator”). To the extent desirable to qualify transactions under the Management Longer Term Equity Incentive Plan as described below,exempt under Rule 16b-3 of the Exchange Act, the transactions contemplated under the Management Longer Term Equity Incentive Plan will be structured to satisfy the requirements for exemption under Rule 16b-3.
Subject to the terms of the Management Longer Term Equity Incentive Plan, the Administrator has the authority, in its discretion, to (i) determine the fair market value in accordance with the Management Longer Term Equity Incentive Plan; (ii) select the service providers to whom Incentive Shares may be granted under the Management Longer Term Equity Incentive Plan; (iii) determine the number of Incentive Shares to be covered by each stock award granted under the Management Longer Term Equity Incentive Plan; (iv) approve forms of stock award agreements for use under the Management Longer Term Equity Incentive Plan; (v) construe and interpret the terms of the Management Longer Term Equity Incentive Plan and stock awards granted pursuant to the Management Longer Term Equity Incentive Plan; (vi) prescribe, amend and rescind rules and regulations relating to the Management Longer Term Equity Incentive Plan; (vii) modify or amend each stock award (subject to the terms of the Management Longer Term Equity Incentive Plan); (viii) allow participants to satisfy tax withholding obligations in such manner as prescribed in the Management Longer Term Equity Incentive Plan; (ix) authorize any person to execute on our behalf any instrument required to effect the grant of a stock award previously granted by the Administrator; and (x) make all other determinations deemed necessary or advisable for administering the Management Longer Term Equity Incentive Plan.
To the extent permitted by applicable law, the Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Management Longer Term Equity Incentive Plan to one or more of our directors or officers.
Nontransferability of Stock Awards
Unless determined otherwise by the Administrator, a stock award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes a stock award transferable, such stock award will contain such additional terms and conditions as the Administrator deems appropriate.
Recoupment Policy
All stock awards granted under the Management Longer Term Equity Incentive Plan will be subject to recoupment in accordance with the Luminar Technologies, Inc. Clawback Policy and any other clawback policy that we doare required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with us.
Effect of a Change in Control
Upon any of the following events (each a Change in Control under the Management Longer Term Equity Incentive Plan):
•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
and such Change in Control that will result in the holders of Class A Stock receiving a per share price equal to or in excess of the applicable Common Share Price required in connection with any triggering event under the Management Longer Term Equity Incentive Plan, then immediately prior to the consummation of such Change in Control (i) any such triggering event that has not previously occurred
shall be deemed to have occurred and (ii) the company may issue the applicable Incentive Shares to participants (in accordance with the terms of the Management Longer Term Equity Incentive Plan), and the participants shall be eligible to participate in such Change in Control.
Amendment, Termination and Duration of the Management Longer Term Equity Incentive Plan
The Management Longer Term Equity Incentive Plan will continue in effect for a term of five years measured from the six-month anniversary of the closing of the Business Combination, unless terminated earlier under the terms of the Management Longer Term Equity Incentive Plan. The Administrator may at any formal arrangementstime amend (subject to the terms of the Management Longer Term Equity Incentive Plan), suspend or terminate the Management Longer Term Equity Incentive Plan pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as otherwise required by applicable law.
Description of Amended and Restated 2020 Equity Incentive Plan
In December 2020, our board adopted and our stockholders approved the 2020 Equity Incentive Plan. The 2020 Equity Incentive Plan became effective upon the closing of the Business Combination.
In June 2022, the Company’s stockholders approved the amendment and restatement of the Incentive Plan to increase the authorized share reserve and add an automatic annual share reserve increase provision.
Purpose
The 2020 Equity Incentive Plan is intended to (i) attract and retain the best available personnel to ensure our success and accomplish our goals; (ii) incentivize employees, directors and independent contractors with long-term equity-based compensation to align their interests with our named executive officers providing for annual cash bonus awards.stockholders; and (iii) promote the success of our business. The 2020 Equity Incentive Plan is a successor to the Legacy Luminar Stock Plan.
2021 EquityTypes of Stock Awards
In 2021, eachThe 2020 Equity Incentive Plan permits the grant of our named executive officers (other than Mr. Russell) received time-basedincentive stock options, nonstatutory stock options, restricted stock, restricted stock units, (“RSUs”SARs, performance units and performance shares (all such types of awards, collectively, “stock awards”).
Share Reserve
Number of Shares
Subject to adjustments as set forth in the 2020 Equity Incentive Plan, the maximum aggregate number of shares of Class A Stock that may be issued under the 2020 Equity Incentive Plan is90,946,643 shares. The shares may be authorized, but unissued, or reacquired Class A Stock. Furthermore, subject to adjustments as set forth in the 2020 Equity Incentive Plan, in no event shall the maximum aggregate number of shares that may be issued under the 2020 Equity Incentive Plan pursuant to incentive stock options exceed the number set forth above plus, to the extent allowable under Section 422 of the U.S. Tax Code and the regulations promulgated thereunder, any shares that again become available for issuance pursuant to the 2020 Equity Incentive Plan.
In addition, pursuant to an evergreen provision, the number of shares of Class A common stock available for issuance under the 2020 Equity Incentive Plan will be increased on the first day of each fiscal year of the Company beginning with the 2023 fiscal year and ending on (and including) the first day of the 2030 fiscal year, in an amount equal to the lesser of (i) 5% of the outstanding shares of common
stock on the last day of the immediately preceding fiscal year, (ii) 40,000,000 shares or (iii) such number of Shares determined by the Board.Pursuant to the evergreen provision, 18,358,365 additional shares of Class A common stock were added to the 2020 Equity Incentive Plan on January 1, 2023.
Lapsed Awards
To the extent a stock award expires or is forfeited or becomes unexercisable for any reason without having been exercised in full, the unissued shares that were subject thereto shall continue to be available under the 2020 Equity Incentive Plan for issuance pursuant to future stock awards. Shares issued under the 2020 Equity Incentive Plan and later forfeited to us due to the failure to vest or repurchased by us at the original purchase price paid to us for the shares (including without limitation upon forfeiture to or repurchase by us in connection with a participant ceasing to be a service provider) shall again be available for future grant under the 2020 Equity Incentive Plan. The following shares shall not be added to the shares authorized for grant under the 2020 Equity Incentive Plan and shall not be available for future grants of awards: (i) shares tendered or withheld in payment of the exercise price of an option or to satisfy any tax withholding obligation; (ii) shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right; and (iii) shares purchased on the open market with the cash proceeds from the exercise of options.
Eligibility
Employees, directors and independent contractors of us or our affiliates are all eligible to participate in the 2020 Equity Incentive Plan. Incentive stock options may only be granted to employees.
Administration
The 2020 Equity Incentive Plan is administered by the board of directors or a committee thereof, which committee will be constituted to satisfy applicable laws (the “Administrator”). To the extent desirable to qualify transactions under the 2020 Equity Incentive Plan as exempt under Rule 16b-3 of the Exchange Act, the transactions contemplated under the 2020 Equity Incentive Plan will be structured to satisfy the requirements for exemption under Rule 16b-3.
Subject to the terms of the 2020 Equity Incentive Plan, the Administrator has the authority, in its discretion, to (i) determine the fair market value in accordance with the 2020 Equity Incentive Plan; (ii) select the service providers to whom stock awards may be granted under the 2020 Equity Incentive Plan; (iii) determine the number of shares to be covered by each stock award granted under the 2020 Equity Incentive Plan; (iv) approve forms of stock award agreements for use under the 2020 Equity Incentive Plan; (v) determine the terms and conditions, not inconsistent with the terms of the 2020 Equity Incentive Plan, of any stock award granted thereunder; (vi) institute and determine the terms and conditions of an exchange program under the terms of the 2020 Equity Incentive Plan (subject to stockholder approval); (vii) construe and interpret the terms of the 2020 Equity Incentive Plan and stock awards granted pursuant to the 2020 Equity Incentive Plan; (viii) prescribe, amend and rescind rules and regulations relating to the 2020 Equity Incentive Plan; (ix) modify or amend each stock award (subject to the terms of the 2020 Equity Incentive Plan); (x) allow participants to satisfy tax withholding obligations in such manner as prescribed in the 2020 Equity Incentive Plan; (xi) authorize any person to execute on our behalf any instrument required to effect the grant of a stock award previously granted by the Administrator; (xii) allow a participant to defer the receipt of the payment of cash or the delivery of shares that would otherwise be due to such participant under a stock award; and (xiii) make all other determinations deemed necessary or advisable for administering the 2020 Equity Incentive Plan.
To the extent permitted by applicable law, the Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the 2020 Equity Incentive Plan to one or more of our directors or officers.
Stock Options
Each stock option will be designated in the stock award agreement as either an incentive stock option (which is entitled to favorable tax treatment) or a nonstatutory stock option. However, notwithstanding such designation, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the participant during any calendar year exceeds $100,000, such stock options will be treated as nonstatutory stock options. Incentive stock options may only be granted to our or our subsidiaries’ employees.
The term of each stock option will be stated in the stock award agreement. In the case of an incentive stock option, the term will be 10 years from the date of grant or such shorter term as may be provided in the stock award agreement. Moreover, in the case of an incentive stock option granted to a participant who owns stock representing more than 10% of the total combined voting power of all classes of our stock or the stock of any subsidiary, the term of the incentive stock option will be five years from the date of grant or such shorter term as may be provided in the stock award agreement.
The per share exercise price for the shares to be issued pursuant to exercise of a stock option will be determined by the Administrator, subject to the following: in the case of an incentive stock option (i) granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of our stock or the stock of any subsidiary, the per share exercise price will be no less than 110% of the fair market value per share on the date of grant; and (ii) granted to any other employee, the per share exercise price will be no less than 100% of the fair market value per share on the date of grant. In the case of a nonstatutory stock option, the per share exercise price will be no less than 100% of the fair market value per share on the date of grant. Notwithstanding the foregoing, stock options may be granted with a per share exercise price of less than 100% of the fair market value per share on the date of grant pursuant to a corporate reorganization, liquidation, etc., described in the U.S. Tax Code Section 424(a).
At the time a stock option is granted, the Administrator will fix the period within which the stock option may be exercised and will determine any conditions that must be satisfied before the stock option may be exercised. The Administrator will also determine the acceptable form of consideration for exercising a stock option, including the method of payment.
If a participant ceases to be a service provider other than for “Cause,” as defined in the 2020 Equity Incentive Plan, the participant may exercise his or her stock option within such period of time as is specified in the stock award agreement to the extent that the stock option is vested on the date of termination (but in no event later than the expiration of the term of such stock option). In the absence of a specified time in the stock award agreement, to the extent vested as of a participant’s termination, the stock option will remain exercisable for 12 months following a termination for death or disability, and three months following a termination for any other reason other than Cause. Any outstanding stock option (including any vested portion thereof) held by a participant shall immediately terminate in its entirety upon the participant being first notified of his or her termination for Cause.
Stock Appreciation Rights (SARs)
The Administrator will determine the terms and conditions of each SAR, except that the exercise price for each SAR cannot be less than 100% of the fair market value of the underlying shares of Class A Stock on the date of grant. Upon exercise of a SAR, a participant will receive payment from us in an amount determined by multiplying the difference between the fair market value of a share on the date of exercise over the exercise price by the number of shares with respect to which the SAR is exercised. SARs may be paid in cash or shares of our Class A Stock, as determined by the Administrator. SARs are exercisable at the times and on the terms established by the Administrator.
Restricted Stock and RSUs
Restricted stock awards are grants of shares of Class A Stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares will lapse in accordance with terms and conditions established by the Administrator. Each RSU is a bookkeeping entry representing an amount equal to the fair market value of one share of our Class A Stock.
In determining whether restricted stock or RSUs should be granted, and/or the vesting schedule for such a stock award, the Administrator may impose whatever conditions on vesting as it determines to be appropriate. For example, the Administrator may determine to grant restricted stock or RSUs only if performance goals established by the Administrator are satisfied. Any performance goals may be applied on a Company-wide or an individual business unit basis, as determined by the Administrator. Please refer to the discussion below under “—Performance Goals” for more information.
During the period of restriction, participants holding restricted stock may exercise full voting rights and will be entitled to receive all dividends and other distributions paid. Any dividends or distributions paid with respect to such shares will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the restricted stock with respect to which they were paid.
During the vesting period, participants holding RSUs will hold no voting rights by virtue of such RSUs. The Administrator may, in its sole discretion, award dividend equivalents in connection with the grant of RSUs that may be settled in cash, in shares of equivalent value, or in some combination thereof. Any dividend equivalents awarded with respect to such RSUs will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the RSUs with respect to which they were awarded.
Performance Units and Performance Shares
Performance units and performance shares are stock awards that will result in a payment to a participant only if the performance goals that the Administrator establishes are satisfied. The Administrator will determine the applicable performance goals. Please refer to the discussion below under “— Performance Goals” for more information. After the applicable performance period has ended, the participant will be entitled to receive a payout of the number of performance units or shares earned during the performance period, depending upon the extent to which the applicable performance objectives have been achieved.
Performance Goals
The Administrator in its discretion may make performance goals applicable to a participant with respect to a stock award. In the Administrator’s discretion, one or more of the following performance goals may apply: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense management; (16) return on assets, return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash flow, cash flow return on investment, net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share; (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria; (24) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25)
objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects; and (27) enterprise resource planning. Stock awards issued to participants may take into account other criteria (including subjective criteria).
Outside Director Limitations
No non-employee director (“Outside Director”) may receive awards under the 2020 Equity Incentive Plan with a total grant date fair value that, when combined with cash compensation received for service as an Outside Director, exceeds $750,000 in a calendar year, increased to $1,000,000 in the calendar year of his or her initial service as an Outside Director. Stock awards granted to an individual while he or she was serving in the capacity as an employee or while he or she was an independent contractor but not an Outside Director will not count for purposes of these limitations.
Leaves of Absence / Transfer Between Locations
The Administrator has the discretion to determine at any time whether and to what extent the vesting of stock awards shall be suspended during any leave of absence. A participant will not cease to be an employee in the case of (i) any leave of absence approved by the participant’s employer or (ii) transfers between our locations or between us and any subsidiary. If an employee holds an incentive stock option and such leave exceeds three months then, for purposes of incentive stock option status only, such employee’s service as an employee shall be deemed terminated on the first day following such three-month period and the incentive stock option shall thereafter automatically treated for tax purposes as a nonstatutory stock option in accordance with applicable laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written policy of the company.
Nontransferability of Stock Awards
Unless determined otherwise by the Administrator, a stock award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes a stock award transferable, such stock award will contain such additional terms and conditions as the Administrator deems appropriate.
Recoupment Policy
All stock awards granted under the 2020 Equity Incentive Plan will be subject to recoupment in accordance with the Luminar Technologies, Inc. Clawback Policy and any other clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with us.
Effect of a Change in Control
Upon any of the following events (each a “Change in Control” under the 2020 Equity Incentive Plan):
•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
except as set forth in a stock award agreement, each outstanding stock award (vested or unvested) will be treated as the Administrator determines, which may include (a) our continuation of such outstanding stock awards (if we are the surviving corporation); (b) the assumption of such outstanding stock awards by the surviving corporation or its parent; (c) the substitution by the surviving corporation or its parent of new stock options or other equity awards for such stock awards; (d) the cancellation of such stock awards in exchange for a payment to the participants equal to the excess of (i) the fair market value of the shares subject to such stock awards as of the closing date of such Change in Control over (ii) the exercise price or purchase price paid or to be paid (if any) for the shares subject to the stock awards (which payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with the transaction, subject to applicable law); or (e) the opportunity for participants to exercise the stock options prior to the occurrence of the Change in Control and the termination (for no consideration) upon the consummation of such Change in Control of any stock options not exercised prior thereto.
Amendment, Termination and Duration of the 2020 Equity Incentive Plan
The 2020 Equity Incentive Plan will continue in effect for a term of 10 years measured from May 5, 2022, the board approval date, unless terminated earlier under the terms of the 2020 Equity Incentive Plan. The Administrator may at any time amend, alter, suspend or terminate the 2020 Equity Incentive Plan pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as otherwise required by applicable law.
Description of Legacy Luminar’s Amended and Restated 2015 Stock Plan
General
Legacy Luminar’s board of directors originally adopted, and the Legacy Luminar stockholders approved, the Legacy Luminar Stock Plan, each on June 26, 2015. The Legacy Luminar Stock Plan was last amended on January 24, 2020. The Legacy Luminar Stock Plan provides for the grant of Legacy Luminar Stock Options to Legacy Luminar employees (and employees of any parent or subsidiary of Legacy Luminar), and for the grant of non-statutory Legacy Luminar Stock Options and Legacy Luminar restricted stock to Legacy Luminar employees, directors and consultants (and employees and consultants of any parent, subsidiary or affiliate of Legacy Luminar). We assumed the Legacy Luminar Stock Plan upon the closing of the Business Combination. The Legacy Luminar Stock Plan has been terminated except that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the closing of the Business Combination) until terminated pursuant to the terms thereof.
Plan Administration
The board of directors administers the Legacy Luminar Stock Plan.
Types of Awards
The Legacy Luminar Stock Plan provides for the grant of stock options and restricted stock.
Stock Options
Legacy Luminar’s board of directors granted Legacy Luminar Stock Options under the Legacy Luminar Stock Plan, which we assumed in the closing of the Business Combination. The exercise price per share applicable to such options was equal to at least the fair market value per share of Legacy Luminar stock on the date of grant. The term of options granted under the Legacy Luminar Stock Plan did not exceed 10 years; provided, however, that any Legacy Luminar Stock Options granted to a participant who owned more than 10% of the total combined voting power of all classes of Legacy Luminar stock, or of certain of Legacy Luminar’s subsidiary corporations, did not have a term in excess of five years and had an exercise price per share of at least 110% of the fair market value per share of Legacy Luminar stock on the grant date. Subject to the provisions of the Legacy Luminar Stock Plan, Legacy Luminar’s board of directors determined the remaining terms of the Legacy Luminar Stock Options (e.g., vesting). After the termination of service of an employee, director or consultant, the participant may exercise his or her option, to the extent vested, for the period of time stated in his or her option agreement. If termination is due to death, then 100% of the then unvested shares shall immediately vest and become exercisable as of date of such termination. If termination is due to death or disability, the option will remain exercisable for 12 months. For certain options and so long as the applicable employees that have completed at least two years of continuous service, the option will remain exercisable until the earliest of (a) 10 years from the date of the option grant; or (b) the later of (i) one year after termination (in the event such termination occurs after going public) and (ii) one year after going public. In all other cases except for a termination for cause, the Legacy Luminar Stock Options will generally remain exercisable for three months following the termination of service. In the event of a termination for cause, the Legacy Luminar Stock Options will immediately terminate. However, in no event may an option be exercised later than the expiration of its term.
Non-transferability of Awards
Unless the board provides otherwise, the Legacy Luminar Stock Plan generally does not allow for the transfer of awards or shares acquired pursuant to an award and only the recipient of an option may exercise such an award during his or her lifetime.
Certain Adjustments
In the event of certain corporate events or changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the Legacy Luminar Stock Plan, the board will make adjustments to one or more of the number, kind and class of securities that may be delivered under the Legacy Luminar Stock Plan and/or the number, kind, class and price of securities covered by each outstanding award.
Dissolution or liquidation
In the event of our dissolution or liquidation, each Legacy Luminar stock option and stock purchase right will terminate immediately prior to the consummation of such action, unless otherwise determined by the board.
Corporate Transactions
The Legacy Luminar Stock Plan, as assumed by us, provides that in the event of certain significant corporate transactions, including: (i) a transfer of all or substantially all of our assets, (ii) a merger, consolidation or other capital, reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any person becomes the beneficial owner, directly or indirectly, of more than 50% of our then outstanding capital stock, each outstanding award will be treated as the board determines.
Amendment or Termination
Our board has terminated the Legacy Luminar Stock Plan, provided that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the closing of the Business Combination).
Description of Employee Stock Purchase Plan
In December 2020, our board adopted and our stockholders approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective upon the closing of the Business Combination.
Purpose
The ESPP provides a means by which eligible employees and/or eligible service providers of either the company or an affiliate may be given an opportunity to purchase shares of Class A Stock of the company. The ESPP permits us to grant a series of purchase rights to eligible employees and/or eligible service providers. By means of the ESPP, we seek to retain and assist our affiliates in retaining the services of such eligible employees and eligible service providers, to secure and retain the services of new eligible employees and eligible service providers and to provide incentives for such persons to exert maximum efforts for our success and that of our affiliates.
The ESPP includes two components: a “423 Component” and a “Non-423 Component.” We intend the 423 Component to qualify as an employee stock purchase plan pursuant to Section 423 of the U.S. Tax Code. The provisions of the 423 Component will be construed in a manner that is consistent with the requirements of Section 423 of the U.S. Tax Code, including without limitation to extend and limit ESPP participation in a uniform and non-discriminating basis. In addition, the ESPP authorizes grants of purchase rights under the Non-423 Component that do not meet the requirements of an employee stock purchase plan under Section 423 of the Code. Except as otherwise provided in the ESPP or determined by the board, the Non-423 Component will operate and be administered in the same manner as the 423 Component. Eligible employees will be able to participate in the 423 Component or Non-423 Component of the ESPP. Eligible service providers (who may or may not be eligible employees) will only be able to participate in the Non-423 Component of the ESPP.
Administration
The board administers the ESPP and will have the final power to construe and interpret both the ESPP and the rights granted under it. Further, the board has the power, subject to the provisions of the ESPP, to determine when and how rights to purchase Class A Stock will be granted, the provisions of each offering of such rights (which need not be identical), and whether any employee or other service provider will be eligible to participate in the ESPP.
The board has the power to delegate administration of the ESPP to a committee composed of one or more members of the board. As used herein with respect to the ESPP, the term “board” refers to any committee the board appoints, and to the board. Whether or not the board has delegated administration of the ESPP to a committee, the board will have the final power to determine all questions of policy and expediency that may arise in the administration of the ESPP.
Stock Subject to the ESPP
Subject to adjustments as provided in the ESPP, the maximum number of shares of Class A Stock that may be issued under the ESPP will not exceed 7,317,655 shares of Class A Stock. If any purchase right granted under the ESPP terminates without having been exercised in full, the shares of Class A Stock not purchased under such purchase right will again become available for issuance under the ESPP.
Offerings
The ESPP is implemented by offerings of rights to all eligible employees and eligible service providers from time to time. Offerings may comprise one or more purchase periods. The maximum length for an offering under the ESPP is 27 months. The provisions of separate offerings need not be identical. When a participant elects to join an offering, he or she is granted a purchase right to acquire shares of Class A Stock on each purchase date within the offering, each corresponding to the end of a purchase period within such offering. On each purchase date, all payroll deductions collected from the participant during such purchase period are automatically applied to the purchase of Class A Stock, subject to certain limitations.
Eligibility
Purchase rights may be granted only to our employees, employees of qualifying related corporations or, solely with respect to the Non-423 Component, employees of an affiliate (other than a qualifying related corporation) or eligible service providers. The board may provide that employees will not be eligible to be granted purchase rights under the ESPP if, on the offering date, the employee (i) has not completed at least two years of service since the employee’s last hire date (or such lesser period as the board may determine), (ii) customarily works not more than 20 hours per week (or such lesser period as the board may determine), (iii) customarily works not more than five months per calendar year (or such lesser period as the board may determine), (iv) is an officer within the meaning of Section 16 of the Exchange Act, (v) is a highly compensated employee within the meaning of the U.S. Tax Code, or (vi) has not satisfied such other criteria as the board may determine consistent with Section 423 of the U.S. Tax Code. Unless otherwise determined by the board for any offering, an employee will not be eligible to be granted purchase rights unless, on the offering date, the employee customarily works more than 20 hours per week and more than five months per calendar year, and has been employed by us or a related corporation or affiliate for at least three continuous months preceding such offering date.
No employee will be eligible for the grant of any purchase rights if, immediately thereafter, such employee owns stock possessing 5% or more of the total combined voting power or value of all classes of our stock or the stock of any related corporation. An eligible employee may be granted purchase rights only if such purchase rights, together with any other rights granted under all our and any related corporations’ employee stock purchase plan, do not permit such eligible employee’s rights to purchase stock in excess of $25,000 worth of stock in any calendar year.
Participation in the ESPP
On each offering date, each eligible employee or eligible service provider, pursuant to an offering made under the ESPP, will be granted a purchase right to purchase up to that number of shares of Class A Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the board; provided however, that in the case of eligible employees, such percentage or maximum dollar amount will in either case not exceed 15% of such employee’s earnings during the period that begins on the offering date (or such later date as the board determines for a particular offering) and ends on the date stated in the offering, which date will be no later than the end of the offering, unless otherwise provided for in an offering.
Purchase Price
The purchase price of shares of Class A Stock acquired pursuant to purchase rights will be not less than the lesser of (i) 85% of the fair market value of the shares of Class A Stock on the offering date; or (ii) 85% of the fair market value of the shares of Class A Stock on the applicable purchase date (i.e., the last day of the applicable purchase period).
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions over the offering. To the extent permitted in the offering document, a participant may increase, reduce or terminate his or her payroll deductions. All payroll deductions made on behalf of a participant are credited to his or her account under the ESPP and deposited with our general funds. No interest will accrue on such payroll deductions. To the extent permitted in the offering document, a participant may make additional payments into such account. If required under applicable laws or regulations or if specifically provided in the offering, in addition to or instead of making contributions by payroll deductions, a participant may make contributions through a payment by cash, check, or wire transfer prior to a purchase date, in a manner we direct.
Purchase of Stock
The board will establish one or more purchase dates during an offering on which purchase rights granted for that offering will be exercised and shares of Class A Stock will be purchased in accordance with such offering. In connection with each offering, the board may specify a maximum number of shares of Class A Stock that may be purchased by any participant or all participants. If the aggregate purchase of shares of Class A Stock issuable on exercise of purchase rights granted under the offering would exceed any such maximum aggregate number, then, in the absence of any board action otherwise, a pro rata (based on each participant’s accumulated contributions) allocation of the shares of Class A Stock available will be made in as nearly a uniform manner as will be practicable and equitable.
Withdrawal
During an offering, a participant may cease making contributions and withdraw from the offering by delivering a withdrawal form. We may impose a deadline before a purchase date for withdrawing. On such withdrawal, such participant’s purchase right in that offering will immediately terminate and we will distribute as soon as practicable to such participant all of his or her accumulated but unused contributions without interest and such participant’s purchase right in that offering will then terminate. A participant’s withdrawal from that offering will have no effect on his or her eligibility to participate in any other offerings under the ESPP, but such participant will be required to deliver a new enrollment form to participate in subsequent offerings.
Termination of Employment
Purchase rights granted pursuant to any offering under the ESPP will terminate immediately if the participant either (i) is no longer an eligible employee or eligible service provider for any reason or for no reason, or (ii) is otherwise no longer eligible to participate. We shall have the exclusive discretion to determine when a participant is no longer actively providing services and the date of the termination of employment or service for purposes of the ESPP. As soon as practicable, we will distribute to such individual all of his or her accumulated but unused contributions without interest.
Restrictions on Transfer
During a participant’s lifetime, purchase rights will be exercisable only by such participant. Purchase rights are not transferable by a participant, except by will, by the laws of descent and distribution, or, if we so permit, by a beneficiary designation.
Exercise of Purchase Rights
On each purchase date, each participant’s accumulated contributions will be applied to the purchase of shares of Class A Stock, up to the maximum number of shares of Class A Stock permitted by the ESPP and the applicable offering, at the purchase price specified in the offering. Unless otherwise
specified in the ESPP, no fractional shares will be issued and, if any amount of accumulated contributions remains in a participant’s account after the purchase of shares of Class A Stock on the final purchase date in an offering, such remaining amount will roll over to the next offering.
No purchase rights may be exercised to any extent unless and until the shares of Class A Stock to be issued on such exercise under the ESPP are covered by an effective registration statement pursuant to the Securities Act, and the ESPP is in material compliance with all applicable U.S. federal and state, foreign and other securities, exchange control, and other laws applicable to the ESPP. If, on the purchase date, as delayed to the maximum extent permissible, the shares of Class A Stock are not registered and the ESPP is not in material compliance with all applicable laws or regulations, no purchase rights will be exercised and all accumulated but unused contributions will be distributed as soon as practicable to the participants without interest.
Capitalization Adjustments
In the event of a capitalization adjustment, the board will appropriately and proportionately adjust: (i) the classes and maximum number of securities subject to the ESPP, (ii) the classes and maximum number of securities by which the share reserve is to increase automatically each year pursuant to the ESPP, (iii) the classes and number of securities subject to, and the purchase price applicable to outstanding offerings and purchase rights, and (iv) the classes and number of securities that are the subject of the purchase limits under each ongoing offering.
Dissolution or Liquidation
In the event of the company’s dissolution or liquidation, the board will shorten any offering then in progress by setting a new purchase date prior to the consummation of such proposed dissolution or liquidation. The board will notify each participant in writing, prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date, unless prior to such date the participant has withdrawn from the offering.
Effect of a Change in Control:
Upon any of the following events (each a Change in Control under the ESPP):
•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding purchase rights or may substitute similar rights for outstanding purchase rights, or, if any surviving or acquiring corporation (or its parent company) does not assume or continue such purchase rights or does not substitute similar rights for such purchase rights, then the participants’ accumulated contributions will be used to purchase shares of Class A Stock prior to the Change in Control under the outstanding purchase rights, and the purchase rights will terminate immediately after such purchase. The board will notify each participant in writing prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date unless prior to such date the participant has withdrawn from the offering.
Amendment, Termination or Suspension of the ESPP
The board may amend the ESPP at any time in any respect the board deems necessary or advisable. However, except with respect to capitalization adjustments described above, stockholder approval will be required for any amendment of the ESPP for which stockholder approval is required by applicable laws, regulations or listing requirements, including any amendment that either (i) increases the number of shares of Class A Stock available for issuance under the ESPP, (ii) expands the class of individuals eligible to become participants and receive purchase rights, (iii) materially increases the benefits accruing to participants under the ESPP or reduces the price at which shares of Class A Stock may be purchased under the ESPP, (iv) extends the term of the ESPP, or (v) expands the types of awards available for issuance under the ESPP, but in each case only to the extent stockholder approval is required by applicable laws, regulations, or listing requirements.
The board may suspend or terminate the ESPP at any time. No purchase rights may be granted under the ESPP while the ESPP is suspended or after it is terminated.
Any benefits, privileges, entitlements, and obligations under any outstanding purchase rights granted before an amendment, suspension, or termination of the ESPP will not be materially impaired by any such amendment, suspension, or termination except (i) with the consent of the person to whom such purchase rights were granted, (ii) as described below under “–2021 Grantsnecessary to comply with any laws, listing requirements, or governmental regulations, or (iii) as necessary to obtain or maintain any special tax, listing, or regulatory treatment.
Other Compensation Policies and Practices
Compensation Clawback Policy
On June 7, 2022, theboard of Plan-Based Awards.”directors adopted the Luminar Technologies, Inc. Clawback Policy. Pursuant to this policy, if the company is required to undertake a restatement due to improper conduct (defined as misconduct, including without limitation fraud, by company management), then our board of directors may, in its sole discretion, recover all or any portion of the incentive-based compensation (including cash and equity awards, whether time or performance-based, and salary increases) granted or paid to or earned by an employee during the three-year period preceding the date on which the company is required to prepare the restatement, that the board determines, in its sole discretion, to be appropriate in light of the scope and nature of the improper conduct.
In addition, the board may, in its sole discretion and in the reasonable exercise of its business judgment, determine whether and to what extent additional action is appropriate to address the circumstances surrounding such restatement to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate. Misconduct by a specific employee is not required for such employee’s recoverable compensation to be recovered pursuant to the policy. The board has full authority to administer the policy, and the board may amend or terminate the policy at any time.
Benefits and Perquisites
We provide benefits to our named executive officers on the same basis as provided to all of our employees, including health, dental and vision insurance; life insurance; accidental death and dismemberment insurance; critical illness; short- and long-term disability insurance; a health reimbursement account; a health savings account; a flexible spending account; and a tax-qualified Section 401(k) plan for which noan employer match is provided. We do not maintain any executive-specific benefit or perquisite programs.
20212022 Grants of Plan-Based Awards
The following table sets forth information regarding the incentive awards granted to the named executive officers for 2021,2022, none of which were non-equity incentive plan awards.
| | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards | | All Other
Stock Awards: Number of shares of
stock or Units
(#) | | Grant Date Fair Value of Stock awards ($) (1) |
| Name | Name | | Grant Date | | Type of Award | | All Other Stock Awards: Number of shares of stock or Units
(#) | | Grant Date Fair Value of Stock awards ($) (1) | Name | | Award Type | | Grant
Date | | Threshold
(#) | | Target
(#) | | Maximum
(#) | |
| Austin Russell | Austin Russell | | — | | | — | | | — | | | — | | Austin Russell | | PRSUs(2) | | 5/2/2022 | | — | | | 10,800,000 | | | — | | | — | | | $ | 93,915,468 | |
| | Thomas J. Fennimore | Thomas J. Fennimore | | 7/23/2021 | | Time-Base RSU | | 455,373 | | | 7,987,242 | | Thomas J. Fennimore | | PRSUs(2) | | 8/19/2022 | | — | | | 500,000 | | | — | | | — | | | 3,059,751 | |
| | | Time-Based RSUs(3) | | 8/19/2022 | | — | | | — | | | — | | | 350,000 | | | 3,325,000 | |
| | | — | | |
| Alan Prescott | Alan Prescott | | 5/27/2021 | | Time-Base RSU | | 712,487 | | | 15,040,601 | | Alan Prescott | | PRSUs(2) | | 8/19/2022 | | — | | | 500,000 | | | — | | | — | | | 3,059,751 | |
| | 11/11/2021 | | Time-Base RSU | | 353,000 | | | 7,063,530 | | | Time-Based RSUs(3) | | 8/19/2022 | | — | | | — | | | — | | | 350,000 | | | 3,325,000 | |
| | 11/11/2021 | | Time-Base RSU | | 370,000 | | | 7,403,700 | | |
| | M. Scott Faris (2) | | 7/23/2021 | | Time-Base RSU | | 204,918 | | | 3,594,262 | | |
| | Jason Eichenholz, PhD | | 7/23/2021 | | Time-Base RSU | | 1,264,891 | | | 22,186,188 | | |
| | 7/23/2021 | | Time-Base RSU | | 455,373 | | | 7,987,243 | | |
|
(1)Stock awards areThe amount reported atin this column reflects the aggregate grant date fair value infor financial statement reporting purposes of PRSUs and time-based RSUs granted during the year granted,ended December 31, 2022, as determined in accordance with ASC 718. This amount reflects our accounting expense for these restricted stock units and does not represent the provisions of FASB ASC Topic 718.actual economic value that may be realized by the named executive officer. There can be no assurance that the amount will ever be realized. For the assumptions used in valuing these awards for purposes of computing this expense,the award, please see Note 1412 of the Company’scompany’s consolidated financial statements for the year ended December 31, 2021.2022.
(2)AllThe PRSUs were granted under our 2020 Equity Incentive Plan. See “Compensation Discussion and Analysis—Elements of Mr. Faris’s RSUs wereExecutive Compensation—Long-Term Equity Incentive Compensation— 2022 PRSUs” for a discussion of the material features of these awards, which are completely at-risk. Subject to the achievement of the Operational Milestone, the PRSUs will vest only to the extent both of the following criteria are satisfied: (i) the Service Requirement and (ii) the Stock Price Milestone, subject in each case to the executive’s continued service with the company through each vesting date (except in certain cases of death or disability), as follows:
Service Requirement: The service-based requirement will be satisfied as to the following percentages of the total number of PRSUs granted on each of the first seven anniversaries of the vesting commencement date: (a) 10% will vest on each of the first, second, and third anniversary, (b) 15% will vest on each of the fourth and fifth anniversaries, and (c) 20% will vest on each of the sixth and seventh anniversaries.
Stock Price Milestone: The stock price requirement will be satisfied as to a particular tranche of PRSUs upon certification that the corresponding Stock Price Milestone as to such tranche of PRSUs is achieved as of a particular date: 1/3rd of PRSUs will vest upon achievement of $50 or more, 1/3rd of PRSUs will vest upon achievement of $60 or more, and 1/3rd of PRSUs will vest upon achievement of $70 or more. The achievement of a Stock Price Milestone will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Stock price will be measured based on the 90 Day VWAP; and
Operational Milestone: Successful achievement of start of production for at least one major program. The Operational Milestone and the Stock Price Milestones described above must be achieved by the seven-year anniversary of the vesting commencement date, and any unvested PRSUs remaining as of the day immediately following such date shall be cancelled upon his departure from the Company.and forfeited without consideration.
(3)The time-based RSUs vest as follows: 30% of the RSUs vested on September 5, 2022, and 10% vest each quarter thereafter until June 5, 2024, subject to the executive’s continued service on each such date.
Outstanding Equity Awards at December 31, 20212022 Fiscal Year-End
The following table sets forth information regarding each Luminar stock option and unvested Luminar RSU held by each of our named executive officers as of December 31, 2021.2022.
| | | Option Awards (1) | | Stock Awards (2) | | Option Awards (1) | | Stock Awards (2) |
| Name | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#) | | Market
Value of Shares
or Units
of Stock
That Have
Not
Vested
($) | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#) | | Market
Value of Shares
or Units
of Stock
That Have
Not
Vested
($) | | Equity
Incentive
Plan
Awards:
Number of
Shares,
Units of
Stock, or
Other
Rights
That Have
Not Vested
(#) | | Equity
Incentive
Plan
Awards:
Number of
Shares,
Units of
Stock, or
Other
Rights
That Have
Not Vested
(#) |
| Austin Russell | Austin Russell | | — | | | | — | | | — | | | $ | — | | | — | | — | | | $ | — | | Austin Russell | | 5/2/2022 | (3) | | — | | | — | | | $ | — | | | — | | — | | | $ | — | | | 10,800,000 | | | $ | 53,460,000 | |
| | Thomas J. Fennimore | Thomas J. Fennimore | | 5/14/2020 | (3) | | 728,403 | | | 1,111,773 | | | 1.67 | | | 5/13/2030 | | — | | | — | | Thomas J. Fennimore | | 5/14/2020 | (4) | | 1,188,447 | | | 651,729 | | | 1.67 | | | 5/13/2030 | | — | | | — | | | — | | | — | |
| | 7/23/2021 | (4) | | — | | | — | | | — | | | — | | 455,373 | | | 7,700,357 | | | 7/23/2021 | (5) | | — | | | — | | | — | | | — | | 364,299 | | | 1,803,280 | | | — | | | — | |
| | — | | | | 8/19/2022 | (3) | | — | | | — | | | — | | | — | | — | | | — | | | 500,000 | | | 2,475,000 | |
| | | 8/19/2022 | (6) | | — | | | — | | | — | | | — | | 210,000 | | | 1,039,500 | | | — | | | — | |
| | Alan Prescott | Alan Prescott | | 5/27/2021 | (5) | | — | | | — | | | — | | | — | | 712,487 | | | 12,048,155 | | Alan Prescott | | 5/27/2021 | (7) | | — | | | — | | | — | | | — | | 400,775 | | | 1,983,836 | | | — | | | — | |
| | 11/11/2021 | (6) | | — | | | — | | | — | | | — | | 353,000 | | | 5,969,230 | | | 11/11/2021 | (8) | | — | | | — | | | — | | | — | | 198,563 | | | 982,887 | | | — | | | — | |
| | 11/11/2021 | (7) | | — | | | — | | | — | | | — | | 370,000 | | | 6,256,700 | | | 11/11/2021 | (9) | | — | | | — | | | — | | | — | | 333,000 | | | 1,648,350 | | | — | | | — | |
| | | 8/19/2022 | (3) | | — | | | — | | | — | | | — | | — | | | — | | | 500,000 | | | 2,475,000 | |
| M. Scott Faris | | 1/24/2020 | (8) | | 374,850 | | | — | | | 1.67 | | | 1/23/2030 | | — | | | — | | |
| | | 8/19/2022 | (6) | | — | | | — | | | — | | | — | | 210,000 | | | 1,039,500 | | | — | | | — | |
| Jason Eichenholz,PhD | | 7/23/2021 | (9) | | — | | | — | | | — | | | — | | 474,334 | | | 8,020,988 | | |
| | 7/23/2021 | (4) | | — | | | — | | | — | | | — | | 455,373 | | | 7,700,357 | | |
|
(1)Certain stock options originally covered shares of Legacy Luminar Class A common stock, as granted pursuant to Legacy Luminar Stock Plan, and were assumed by Luminar in the Business Combination. All stock options are set forth above on an as-converted basis (as to both number of underlying shares and option exercise price).
(2)ValuesMarket values are based on the closing price of our common stock on the Nasdaq on December 31, 202130, 2022 ($16.91)4.95).
(3)Represents a PRSU award. Subject to the achievement of the Operational Milestone, the PRSUs will vest only to the extent both of the following criteria are satisfied: (i) the Service Requirement and (ii) the Stock Price Milestone, subject in each case to the executive’s continued service with the company through each vesting date (except in certain cases of death or disability), as follows:
Service Requirement: The service-based requirement will be satisfied as to the following percentages of the total number of PRSUs granted on each of the first seven anniversaries of the vesting commencement date: (a) 10% will vest on each of the first, second, and third anniversary, (b) 15% will vest on each of the fourth and fifth anniversaries, and (c) 20% will vest on each of the sixth and seventh anniversaries.
Stock Price Milestone: The stock price requirement will be satisfied as to a particular tranche of PRSUs upon certification that the corresponding Stock Price Milestone as to such tranche of PRSUs is achieved as of a particular date: 1/3rd of PRSUs will vest upon achievement of $50 or more, 1/3rd of PRSUs will vest upon achievement of $60 or more, and 1/3rd of PRSUs will vest upon achievement of $70 or more. The achievement of a Stock Price Milestone will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Stock price will be measured based on the 90 Day VWAP; and
Operational Milestone: Successful achievement of start of production for at least one major program. The Operational Milestone and the Stock Price Milestones described above must be achieved by the seven-year anniversary of the vesting commencement date, and any unvested PRSUs remaining as of the day immediately following such date shall be cancelled and forfeited without consideration.
(4)The option grant is subject to a 4-year vesting schedule, with 25% of the shares having vested on May 11, 2021 and 1/48th of the shares vesting monthly thereafter, subject to the option holder’s continuous service through each vesting date; provided that if the optionee dies, then 100% of the shares subject to the option grant will immediately vest.
(4)(5)Represents an RSU.RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 10% of the RSU award will vest on January 1 of each of 2022 and 2023, respectively; an additional 15% of the RSU award will vest on January 1 of each of 2024 and 2025, respectively; an additional 20% of the RSU award will vest on January 1, 2026; and the remaining 30% of the RSU award will vest on January 1, 2027.
(5)(6)Represents an RSU.RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 25%30% of the RSU award vested on September 5, 2022, and 10% will vest on April 26, 2022, and 1/16 will vest on each quarterly anniversaryquarter thereafter for 2 years.until June 5, 2024.
(6)(7)Represents an RSU.RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 25% of the RSU award vested April 26, 2022, and 1/16 will vest on each quarterly anniversary thereafter for two years.
(8)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 3/16th of the RSU will vestaward vested on January 26, 2022, and thereafter, 1/16th of the RSU award will vest on each quarterly anniversary thereof until the RSU award is fully vested; provided that in the event Mr. Prescott is terminated, resigns for good cause, or we experience a
change ofin control (including a sale of substantially all of our assets or change of at least 50% of the Boardboard of Directors)directors), 100% of unvested shares subject to the RSU award shall immediately vest.
(7)(9)Represents an RSU.RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 10% of the RSU award will vest on November 11 of each of 2022 and 2023, respectively; an additional 15% of the RSU award will vest on November 11 of each of 2024 and 2025, respectively; an additional 20% of the RSU award will vest on November 11, 2026; and the remaining 30% of the RSU award will vest on November 11, 2027.
(8)The option grant is subject to a 4-year vesting schedule, with 25% of the shares having vested on January 1, 2021 and 1/48th of the shares vesting (or scheduled to vest) monthly thereafter, subject to the option holder’s continuous service through each vesting date; provided that if the optionee dies, then 100% of the shares subject to the option grant will immediately vest. Mr. Faris departed the Company on November 9, 2021. As of such date, all unvested shares underlying the option were cancelled.
(9)Represents an RSU. Subject to the continuous service of the RSU holder on each vesting date, the RSU vested as to 50% on June 18, 2021, and the RSU will vest as to 1/16 each quarter thereafter over 2 years.
Option ExercisesPlan Administration
The board of directors administers the Legacy Luminar Stock Plan.
Types of Awards
The Legacy Luminar Stock Plan provides for the grant of stock options and restricted stock.
Stock VestedOptions
Legacy Luminar’s board of directors granted Legacy Luminar Stock Options under the Legacy Luminar Stock Plan, which we assumed in the closing of the Business Combination. The exercise price per share applicable to such options was equal to at least the fair market value per share of Legacy Luminar stock on the date of grant. The term of options granted under the Legacy Luminar Stock Plan did not exceed 10 years; provided, however, that any Legacy Luminar Stock Options granted to a participant who owned more than 10% of the total combined voting power of all classes of Legacy Luminar stock, or of certain of Legacy Luminar’s subsidiary corporations, did not have a term in excess of five years and had an exercise price per share of at least 110% of the fair market value per share of Legacy Luminar stock on the grant date. Subject to the provisions of the Legacy Luminar Stock Plan, Legacy Luminar’s board of directors determined the remaining terms of the Legacy Luminar Stock Options (e.g., vesting). After the termination of service of an employee, director or consultant, the participant may exercise his or her option, to the extent vested, for the period of time stated in his or her option agreement. If termination is due to death, then 100% of the then unvested shares shall immediately vest and become exercisable as of date of such termination. If termination is due to death or disability, the option will remain exercisable for 12 months. For certain options and so long as the applicable employees that have completed at least two years of continuous service, the option will remain exercisable until the earliest of (a) 10 years from the date of the option grant; or (b) the later of (i) one year after termination (in the event such termination occurs after going public) and (ii) one year after going public. In all other cases except for a termination for cause, the Legacy Luminar Stock Options will generally remain exercisable for three months following the termination of service. In the event of a termination for cause, the Legacy Luminar Stock Options will immediately terminate. However, in no event may an option be exercised later than the expiration of its term.
Non-transferability of Awards
Unless the board provides otherwise, the Legacy Luminar Stock Plan generally does not allow for the transfer of awards or shares acquired pursuant to an award and only the recipient of an option may exercise such an award during his or her lifetime.
Certain Adjustments
In the event of certain corporate events or changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the Legacy Luminar Stock Plan, the board will make adjustments to one or more of the number, kind and class of securities that may be delivered under the Legacy Luminar Stock Plan and/or the number, kind, class and price of securities covered by each outstanding award.
Dissolution or liquidation
In the event of our dissolution or liquidation, each Legacy Luminar stock option and stock purchase right will terminate immediately prior to the consummation of such action, unless otherwise determined by the board.
Corporate Transactions
The Legacy Luminar Stock Plan, as assumed by us, provides that in the event of certain significant corporate transactions, including: (i) a transfer of all or substantially all of our assets, (ii) a merger, consolidation or other capital, reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any person becomes the beneficial owner, directly or indirectly, of more than 50% of our then outstanding capital stock, each outstanding award will be treated as the board determines.
Amendment or Termination
Our board has terminated the Legacy Luminar Stock Plan, provided that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the closing of the Business Combination).
Description of Employee Stock Purchase Plan
In December 2020, our board adopted and our stockholders approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective upon the closing of the Business Combination.
Purpose
The ESPP provides a means by which eligible employees and/or eligible service providers of either the company or an affiliate may be given an opportunity to purchase shares of Class A Stock of the company. The ESPP permits us to grant a series of purchase rights to eligible employees and/or eligible service providers. By means of the ESPP, we seek to retain and assist our affiliates in retaining the services of such eligible employees and eligible service providers, to secure and retain the services of new eligible employees and eligible service providers and to provide incentives for such persons to exert maximum efforts for our success and that of our affiliates.
The ESPP includes two components: a “423 Component” and a “Non-423 Component.” We intend the 423 Component to qualify as an employee stock purchase plan pursuant to Section 423 of the U.S. Tax Code. The provisions of the 423 Component will be construed in a manner that is consistent with the requirements of Section 423 of the U.S. Tax Code, including without limitation to extend and limit ESPP participation in a uniform and non-discriminating basis. In addition, the ESPP authorizes grants of purchase rights under the Non-423 Component that do not meet the requirements of an employee stock purchase plan under Section 423 of the Code. Except as otherwise provided in the ESPP or determined by the board, the Non-423 Component will operate and be administered in the same manner as the 423 Component. Eligible employees will be able to participate in the 423 Component or Non-423 Component of the ESPP. Eligible service providers (who may or may not be eligible employees) will only be able to participate in the Non-423 Component of the ESPP.
Administration
The board administers the ESPP and will have the final power to construe and interpret both the ESPP and the rights granted under it. Further, the board has the power, subject to the provisions of the ESPP, to determine when and how rights to purchase Class A Stock will be granted, the provisions of each offering of such rights (which need not be identical), and whether any employee or other service provider will be eligible to participate in the ESPP.
The board has the power to delegate administration of the ESPP to a committee composed of one or more members of the board. As used herein with respect to the ESPP, the term “board” refers to any committee the board appoints, and to the board. Whether or not the board has delegated administration of the ESPP to a committee, the board will have the final power to determine all questions of policy and expediency that may arise in the administration of the ESPP.
Stock Subject to the ESPP
Subject to adjustments as provided in the ESPP, the maximum number of shares of Class A Stock that may be issued under the ESPP will not exceed 7,317,655 shares of Class A Stock. If any purchase right granted under the ESPP terminates without having been exercised in full, the shares of Class A Stock not purchased under such purchase right will again become available for issuance under the ESPP.
Offerings
The ESPP is implemented by offerings of rights to all eligible employees and eligible service providers from time to time. Offerings may comprise one or more purchase periods. The maximum length for an offering under the ESPP is 27 months. The provisions of separate offerings need not be identical. When a participant elects to join an offering, he or she is granted a purchase right to acquire shares of Class A Stock on each purchase date within the offering, each corresponding to the end of a purchase period within such offering. On each purchase date, all payroll deductions collected from the participant during such purchase period are automatically applied to the purchase of Class A Stock, subject to certain limitations.
Eligibility
Purchase rights may be granted only to our employees, employees of qualifying related corporations or, solely with respect to the Non-423 Component, employees of an affiliate (other than a qualifying related corporation) or eligible service providers. The board may provide that employees will not be eligible to be granted purchase rights under the ESPP if, on the offering date, the employee (i) has not completed at least two years of service since the employee’s last hire date (or such lesser period as the board may determine), (ii) customarily works not more than 20 hours per week (or such lesser period as the board may determine), (iii) customarily works not more than five months per calendar year (or such lesser period as the board may determine), (iv) is an officer within the meaning of Section 16 of the Exchange Act, (v) is a highly compensated employee within the meaning of the U.S. Tax Code, or (vi) has not satisfied such other criteria as the board may determine consistent with Section 423 of the U.S. Tax Code. Unless otherwise determined by the board for any offering, an employee will not be eligible to be granted purchase rights unless, on the offering date, the employee customarily works more than 20 hours per week and more than five months per calendar year, and has been employed by us or a related corporation or affiliate for at least three continuous months preceding such offering date.
No employee will be eligible for the grant of any purchase rights if, immediately thereafter, such employee owns stock possessing 5% or more of the total combined voting power or value of all classes of our stock or the stock of any related corporation. An eligible employee may be granted purchase rights only if such purchase rights, together with any other rights granted under all our and any related corporations’ employee stock purchase plan, do not permit such eligible employee’s rights to purchase stock in excess of $25,000 worth of stock in any calendar year.
Participation in the ESPP
On each offering date, each eligible employee or eligible service provider, pursuant to an offering made under the ESPP, will be granted a purchase right to purchase up to that number of shares of Class A Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the board; provided however, that in the case of eligible employees, such percentage or maximum dollar amount will in either case not exceed 15% of such employee’s earnings during the period that begins on the offering date (or such later date as the board determines for a particular offering) and ends on the date stated in the offering, which date will be no later than the end of the offering, unless otherwise provided for in an offering.
Purchase Price
The purchase price of shares of Class A Stock acquired pursuant to purchase rights will be not less than the lesser of (i) 85% of the fair market value of the shares of Class A Stock on the offering date; or (ii) 85% of the fair market value of the shares of Class A Stock on the applicable purchase date (i.e., the last day of the applicable purchase period).
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions over the offering. To the extent permitted in the offering document, a participant may increase, reduce or terminate his or her payroll deductions. All payroll deductions made on behalf of a participant are credited to his or her account under the ESPP and deposited with our general funds. No interest will accrue on such payroll deductions. To the extent permitted in the offering document, a participant may make additional payments into such account. If required under applicable laws or regulations or if specifically provided in the offering, in addition to or instead of making contributions by payroll deductions, a participant may make contributions through a payment by cash, check, or wire transfer prior to a purchase date, in a manner we direct.
Purchase of Stock
The board will establish one or more purchase dates during an offering on which purchase rights granted for that offering will be exercised and shares of Class A Stock will be purchased in accordance with such offering. In connection with each offering, the board may specify a maximum number of shares of Class A Stock that may be purchased by any participant or all participants. If the aggregate purchase of shares of Class A Stock issuable on exercise of purchase rights granted under the offering would exceed any such maximum aggregate number, then, in the absence of any board action otherwise, a pro rata (based on each participant’s accumulated contributions) allocation of the shares of Class A Stock available will be made in as nearly a uniform manner as will be practicable and equitable.
Withdrawal
During an offering, a participant may cease making contributions and withdraw from the offering by delivering a withdrawal form. We may impose a deadline before a purchase date for withdrawing. On such withdrawal, such participant’s purchase right in that offering will immediately terminate and we will distribute as soon as practicable to such participant all of his or her accumulated but unused contributions without interest and such participant’s purchase right in that offering will then terminate. A participant’s withdrawal from that offering will have no effect on his or her eligibility to participate in any other offerings under the ESPP, but such participant will be required to deliver a new enrollment form to participate in subsequent offerings.
Termination of Employment
Purchase rights granted pursuant to any offering under the ESPP will terminate immediately if the participant either (i) is no longer an eligible employee or eligible service provider for any reason or for no reason, or (ii) is otherwise no longer eligible to participate. We shall have the exclusive discretion to determine when a participant is no longer actively providing services and the date of the termination of employment or service for purposes of the ESPP. As soon as practicable, we will distribute to such individual all of his or her accumulated but unused contributions without interest.
Restrictions on Transfer
During a participant’s lifetime, purchase rights will be exercisable only by such participant. Purchase rights are not transferable by a participant, except by will, by the laws of descent and distribution, or, if we so permit, by a beneficiary designation.
Exercise of Purchase Rights
On each purchase date, each participant’s accumulated contributions will be applied to the purchase of shares of Class A Stock, up to the maximum number of shares of Class A Stock permitted by the ESPP and the applicable offering, at the purchase price specified in the offering. Unless otherwise
specified in the ESPP, no fractional shares will be issued and, if any amount of accumulated contributions remains in a participant’s account after the purchase of shares of Class A Stock on the final purchase date in an offering, such remaining amount will roll over to the next offering.
No purchase rights may be exercised to any extent unless and until the shares of Class A Stock to be issued on such exercise under the ESPP are covered by an effective registration statement pursuant to the Securities Act, and the ESPP is in material compliance with all applicable U.S. federal and state, foreign and other securities, exchange control, and other laws applicable to the ESPP. If, on the purchase date, as delayed to the maximum extent permissible, the shares of Class A Stock are not registered and the ESPP is not in material compliance with all applicable laws or regulations, no purchase rights will be exercised and all accumulated but unused contributions will be distributed as soon as practicable to the participants without interest.
Capitalization Adjustments
In the event of a capitalization adjustment, the board will appropriately and proportionately adjust: (i) the classes and maximum number of securities subject to the ESPP, (ii) the classes and maximum number of securities by which the share reserve is to increase automatically each year pursuant to the ESPP, (iii) the classes and number of securities subject to, and the purchase price applicable to outstanding offerings and purchase rights, and (iv) the classes and number of securities that are the subject of the purchase limits under each ongoing offering.
Dissolution or Liquidation
In the event of the company’s dissolution or liquidation, the board will shorten any offering then in progress by setting a new purchase date prior to the consummation of such proposed dissolution or liquidation. The board will notify each participant in writing, prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date, unless prior to such date the participant has withdrawn from the offering.
Effect of a Change in Control:
Upon any of the following events (each a Change in Control under the ESPP):
•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding purchase rights or may substitute similar rights for outstanding purchase rights, or, if any surviving or acquiring corporation (or its parent company) does not assume or continue such purchase rights or does not substitute similar rights for such purchase rights, then the participants’ accumulated contributions will be used to purchase shares of Class A Stock prior to the Change in Control under the outstanding purchase rights, and the purchase rights will terminate immediately after such purchase. The board will notify each participant in writing prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date unless prior to such date the participant has withdrawn from the offering.
Amendment, Termination or Suspension of the ESPP
The board may amend the ESPP at any time in any respect the board deems necessary or advisable. However, except with respect to capitalization adjustments described above, stockholder approval will be required for any amendment of the ESPP for which stockholder approval is required by applicable laws, regulations or listing requirements, including any amendment that either (i) increases the number of shares of Class A Stock available for issuance under the ESPP, (ii) expands the class of individuals eligible to become participants and receive purchase rights, (iii) materially increases the benefits accruing to participants under the ESPP or reduces the price at which shares of Class A Stock may be purchased under the ESPP, (iv) extends the term of the ESPP, or (v) expands the types of awards available for issuance under the ESPP, but in each case only to the extent stockholder approval is required by applicable laws, regulations, or listing requirements.
The board may suspend or terminate the ESPP at any time. No purchase rights may be granted under the ESPP while the ESPP is suspended or after it is terminated.
Any benefits, privileges, entitlements, and obligations under any outstanding purchase rights granted before an amendment, suspension, or termination of the ESPP will not be materially impaired by any such amendment, suspension, or termination except (i) with the consent of the person to whom such purchase rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations, or (iii) as necessary to obtain or maintain any special tax, listing, or regulatory treatment.
Other Compensation Policies and Practices
Compensation Clawback Policy
On June 7, 2022, theboard of directors adopted the Luminar Technologies, Inc. Clawback Policy. Pursuant to this policy, if the company is required to undertake a restatement due to improper conduct (defined as misconduct, including without limitation fraud, by company management), then our board of directors may, in its sole discretion, recover all or any portion of the incentive-based compensation (including cash and equity awards, whether time or performance-based, and salary increases) granted or paid to or earned by an employee during the three-year period preceding the date on which the company is required to prepare the restatement, that the board determines, in its sole discretion, to be appropriate in light of the scope and nature of the improper conduct.
In addition, the board may, in its sole discretion and in the reasonable exercise of its business judgment, determine whether and to what extent additional action is appropriate to address the circumstances surrounding such restatement to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate. Misconduct by a specific employee is not required for such employee’s recoverable compensation to be recovered pursuant to the policy. The board has full authority to administer the policy, and the board may amend or terminate the policy at any time.
Benefits and Perquisites
We provide benefits to our named executive officers on the same basis as provided to all of our employees, including health, dental and vision insurance; life insurance; accidental death and dismemberment insurance; critical illness; short- and long-term disability insurance; a health reimbursement account; a health savings account; a flexible spending account; and a tax-qualified Section 401(k) plan for which an employer match is provided. We do not maintain any executive-specific benefit or perquisite programs.
2022 Grants of Plan-Based Awards
The following table presentssets forth information concerning option exercises and vested RSUregarding the incentive awards that vested for ourgranted to the named executive officers for 2022, none of which were non-equity incentive plan awards.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards | | All Other
Stock Awards: Number of shares of
stock or Units
(#) | | Grant Date Fair Value of Stock awards ($) (1) |
| Name | | Award Type | | Grant
Date | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | |
| Austin Russell | | PRSUs(2) | | 5/2/2022 | | — | | | 10,800,000 | | | — | | | — | | | $ | 93,915,468 | |
| | | | | | | | | | | | | | |
| Thomas J. Fennimore | | PRSUs(2) | | 8/19/2022 | | — | | | 500,000 | | | — | | | — | | | 3,059,751 | |
| | Time-Based RSUs(3) | | 8/19/2022 | | — | | | — | | | — | | | 350,000 | | | 3,325,000 | |
| | | | | | | | — | | | | | | | |
| Alan Prescott | | PRSUs(2) | | 8/19/2022 | | — | | | 500,000 | | | — | | | — | | | 3,059,751 | |
| | Time-Based RSUs(3) | | 8/19/2022 | | — | | | — | | | — | | | 350,000 | | | 3,325,000 | |
| | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
(1)The amount reported in this column reflects the aggregate grant date fair value for financial statement reporting purposes of PRSUs and time-based RSUs granted during the year ended December 31, 2021.2022, as determined in accordance with ASC 718. This amount reflects our accounting expense for these restricted stock units and does not represent the actual economic value that may be realized by the named executive officer. There can be no assurance that the amount will ever be realized. For the assumptions used in valuing the award, please see Note 12 of the company’s consolidated financial statements for the year ended December 31, 2022.
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| | Option Awards | | Stock Awards |
| Name | | Number of
Shares
Acquired on
Exercise
(#) | | Value
Realized
on
Exercise
($) | | Number of
Shares
Acquired on
Vesting
(#) | | | Value
Realized
on
Vesting
($) | |
| Austin Russell | | — | | | $ | — | | | — | | | | $ | — | | |
| Thomas J. Fennimore | | — | | | — | | | — | | | | — | | |
| Alan Prescott | | — | | | — | | | — | | | | — | | |
| M. Scott Faris | | — | | | — | | | — | | | | — | | |
| Jason Eichenholz, PhD | | — | | | — | | | 790,557 | | (1) | | 13,083,701 | | (2) |
(1)Represents partialService Requirement: The service-based requirement will be satisfied as to the following percentages of the total number of PRSUs granted on each of the first seven anniversaries of the vesting with respectcommencement date: (a) 10% will vest on each of the first, second, and third anniversary, (b) 15% will vest on each of the fourth and fifth anniversaries, and (c) 20% will vest on each of the sixth and seventh anniversaries.
Stock Price Milestone: The stock price requirement will be satisfied as to an awarda particular tranche of 1,264,891PRSUs upon certification that the corresponding Stock Price Milestone as to such tranche of PRSUs is achieved as of a particular date: 1/3rd of PRSUs will vest upon achievement of $50 or more, 1/3rd of PRSUs will vest upon achievement of $60 or more, and 1/3rd of PRSUs will vest upon achievement of $70 or more. The achievement of a Stock Price Milestone will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Stock price will be measured based on the 90 Day VWAP; and
Operational Milestone: Successful achievement of start of production for at least one major program. The Operational Milestone and the Stock Price Milestones described above must be achieved by the seven-year anniversary of the vesting commencement date, and any unvested PRSUs remaining as of the day immediately following such date shall be cancelled and forfeited without consideration.
(3)The time-based RSUs granted July 23, 2021,vest as follows: 30% of which 632,445the RSUs vested on September 8, 2021, 79,055 RSUs vested5, 2022, and 10% vest each quarter thereafter until June 5, 2024, subject to the executive’s continued service on September 18, 2021,each such date.
Outstanding Equity Awards at December 31, 2022 Fiscal Year-End
The following table sets forth information regarding each Luminar stock option and 79,056 RSUs vestedunvested Luminar RSU held by each of our named executive officers as of December 31, 2022.
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| | Option Awards (1) | | Stock Awards (2) |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#) | | Market
Value of Shares
or Units
of Stock
That Have
Not
Vested
($) | | Equity
Incentive
Plan
Awards:
Number of
Shares,
Units of
Stock, or
Other
Rights
That Have
Not Vested
(#) | | Equity
Incentive
Plan
Awards:
Number of
Shares,
Units of
Stock, or
Other
Rights
That Have
Not Vested
(#) |
| Austin Russell | | 5/2/2022 | (3) | | — | | | — | | | $ | — | | | — | | — | | | $ | — | | | 10,800,000 | | | $ | 53,460,000 | |
| | | | | | | | | | | | | | | | | | | |
| Thomas J. Fennimore | | 5/14/2020 | (4) | | 1,188,447 | | | 651,729 | | | 1.67 | | | 5/13/2030 | | — | | | — | | | — | | | — | |
| | 7/23/2021 | (5) | | — | | | — | | | — | | | — | | 364,299 | | | 1,803,280 | | | — | | | — | |
| | 8/19/2022 | (3) | | — | | | — | | | — | | | — | | — | | | — | | | 500,000 | | | 2,475,000 | |
| | 8/19/2022 | (6) | | — | | | — | | | — | | | — | | 210,000 | | | 1,039,500 | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Alan Prescott | | 5/27/2021 | (7) | | — | | | — | | | — | | | — | | 400,775 | | | 1,983,836 | | | — | | | — | |
| | 11/11/2021 | (8) | | — | | | — | | | — | | | — | | 198,563 | | | 982,887 | | | — | | | — | |
| | 11/11/2021 | (9) | | — | | | — | | | — | | | — | | 333,000 | | | 1,648,350 | | | — | | | — | |
| | 8/19/2022 | (3) | | — | | | — | | | — | | | — | | — | | | — | | | 500,000 | | | 2,475,000 | |
| | 8/19/2022 | (6) | | — | | | — | | | — | | | — | | 210,000 | | | 1,039,500 | | | — | | | — | |
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(1)Certain stock options originally covered shares of Legacy Luminar Class A common stock, as granted pursuant to Legacy Luminar Stock Plan, and were assumed by Luminar in the Business Combination. All stock options are set forth above on December 18, 2021.an as-converted basis (as to both number of underlying shares and option exercise price).
(2)Calculated with respect toMarket values are based on the closing price of our common stock on the Nasdaq on (orDecember 30, 2022 ($4.95).
(3)Represents a PRSU award. Subject to the achievement of the Operational Milestone, the PRSUs will vest only to the extent both of the following criteria are satisfied: (i) the Service Requirement and (ii) the Stock Price Milestone, subject in each case to the executive’s continued service with the company through each vesting date (except in certain cases of death or disability), as follows:
Service Requirement: The service-based requirement will be satisfied as to the following percentages of the total number of PRSUs granted on each of the last trading date prior to): September 8, 2021 ($16.53), September 18, 2021 ($17.09),first seven anniversaries of the vesting commencement date: (a) 10% will vest on each of the first, second, and December 18, 2021 ($16.17).third anniversary, (b) 15% will vest on each of the fourth and fifth anniversaries, and (c) 20% will vest on each of the sixth and seventh anniversaries.
Estimated Potential Payments Upon TerminationStock Price Milestone: The stock price requirement will be satisfied as to a particular tranche of PRSUs upon certification that the corresponding Stock Price Milestone as to such tranche of PRSUs is achieved as of a particular date: 1/3rd of PRSUs will vest upon achievement of $50 or Change-in-Controlmore, 1/3rd of PRSUs will vest upon achievement of $60 or more, and 1/3rd of PRSUs will vest upon achievement of $70 or more. The achievement of a Stock Price Milestone will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Stock price will be measured based on the 90 Day VWAP; and
Operational Milestone: Successful achievement of start of production for at least one major program. The Operational Milestone and the Stock Price Milestones described above must be achieved by the seven-year anniversary of the vesting commencement date, and any unvested PRSUs remaining as of the day immediately following table sets forth an estimatesuch date shall be cancelled and forfeited without consideration.
(4)The option grant is subject to a 4-year vesting schedule, with respect to each named executive officer’s potential incremental payments upon a termination25% of employment or a change in controlthe shares having vested on May 11, 2021 and 1/48th of Luminar, in each case assuming such event occurred December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | |
| Name | | Potential Severance
Payments Upon an
Involuntary
Termination
($)(1) | | Potential Stock
Option Vesting
Acceleration
Upon Death
(#) (2) | | Estimated
Value of
RSUs Vesting Upon a Termination,
Resignation for
Good Reason, of
Change-in-Control
($)(3) | |
| Austin Russell | | $ | — | | | — | | | $ | — | | |
| Thomas J. Fennimore | | 150,000 | | | 1,111,773 | | | — | | |
| Alan Prescott | | — | | | — | | | 5,969,230 | | |
| M. Scott Faris (4) | | — | | | — | | | — | | |
| Jason Eichenholz, PhD (5) | | — | | | — | | | — | | |
(1)Pursuantthe shares vesting monthly thereafter, subject to the terms of Mr. Fennimore’s offer letter, inoption holder’s continuous service through each vesting date; provided that if the event that Mr. Fennimore is terminated by the company due to no fault of his own, he will be entitled to receive, as severance benefits, an amount equal to six months of his annual base salary, subject to his execution (without revocation) of a general release of claims in favor of Luminar. This potential severance payment is “single-trigger.”
(2)Represents unvested stock options with a $1.67 exercise price. In the event Mr. Fennimoreoptionee dies, while employed, then 100% of the shares subject to the option grant will immediately vest. This potential acceleration
(5)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 10% of the RSU award will vest on January 1 of each of 2022 and 2023, respectively; an additional 15% of the RSU award will vest on January 1 of each of 2024 and 2025, respectively; an additional 20% of the RSU award will vest on January 1, 2026; and the remaining 30% of the RSU award will vest on January 1, 2027.
(6)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 30% of the RSU award vested on September 5, 2022, and 10% will vest each quarter thereafter until June 5, 2024.
(7)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 25% of the RSU award vested April 26, 2022, and 1/16 will vest on each quarterly anniversary thereafter for two years.
(8)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 3/16th of the RSU award vested on January 26, 2022, and thereafter, 1/16th of the RSU award will vest on each quarterly anniversary thereof until the RSU award is “single-trigger.”
(3)Represents 353,000 RSUs subject to vesting. Infully vested; provided that in the event Mr. Prescott is terminated, resigns for good cause, or we experience a change ofin control (including a sale of substantially all of our assets or change of at least 50% of the Boardboard of Directors)directors), 100% of unvested shares subject to the RSU award shall immediately vest. Value is based
(9)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the closing priceRSU award will vest as follows: 10% of our common stock on the Nasdaq on December 31, 2021 ($16.91). This potential acceleration is “single-trigger.”
(4)Mr. Faris left the CompanyRSU award will vest on November 9, 202111 of each of 2022 and received no separation pay in connection with his departure.
(5)Dr. Eichenholz ceased serving as2023, respectively; an executive officeradditional 15% of the CompanyRSU award will vest on June 9, 2021.
PROPOSAL THREE: ADVISORY (NON-BINDING) VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
Pursuant to the Dodd-Frank Wall Street ReformNovember 11 of each of 2024 and Consumer Protection Act (the “Dodd-Frank Act”) and corresponding proxy rules under the Exchange Act, the Company is presenting its stockholders with2025, respectively; an advisory (non-binding) vote on the executive compensation programs for the Company’s named executive officers (sometimes referred to as “Say on Pay”).
The advisory vote on executive compensation is a non-binding vote on the compensationadditional 20% of the Company’s named executive officers as described in the section titled “Executive Compensation,” including the tabular disclosure regarding such compensation,RSU award will vest on November 11, 2026; and the accompanying narrative disclosure, in this Proxy Statement. Please read the Executive Compensation section starting on page 30 for a discussion about the Company’s executive compensation programs, including information about compensationremaining 30% of the Company’s named executive officers for the fiscal year ended December 31, 2021.
The advisory voteRSU award will vest on executive compensation is not a vote on the Company’s general compensation policies, the compensation of the Company’s board of directors, or the Company’s compensation policies as they may relate to risk management.November 11, 2027.
The compensation committee oversees and administers the Company’s executive compensation program, including the determination and implementation of the Company’s compensation philosophy, policies, and objectives. The compensation committee has designed the executive compensation program to align executive compensation with the achievement of the Company’s business goals and strategies, both short- and long-term. The compensation committee also seeks to provide executive compensation at levels that will allow the Company to continue to be able to attract and retain the best possible executive candidates.
The Company believes that the most significant components of its executive compensation program reflect sound governance practices and are consistent with industry standards. The board of directors believes that executive compensation is appropriately allocated between base salary and equity compensation opportunities so as to encourage strong short- and long-term performance, create clear alignment with stockholders and discourage excessive risk-taking. Accordingly, we are asking stockholders to vote for the following resolution:
“RESOLVED, that the compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2022 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion contained under “Executive Compensation” is hereby APPROVED”.
The vote solicited by this Proposal Three is advisory, and therefore is not binding on the Company, the Company’s board of directors or the compensation committee. The outcome of the vote will not require the Company, the board of directors or the compensation committee to take any action, and will not be construed as overruling any decision by the board of directors or the compensation committee. However, the board and compensation committee value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.
Required Vote; Recommendation of the Board
Approval will be obtained if the number of votes of our Class A common stock and Class B common stock (voting together as a single class) cast “FOR” the proposal at the Annual Meeting exceeds the number of votes “AGAINST” the proposal.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL THREE.
PROPOSAL FOUR: ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
In addition to providing our stockholders with the opportunity to cast an advisory vote on the compensation of our named executive officers (see Proposal Three), we also are seeking a non-binding, advisory vote on how frequently such say-on-pay vote should be presented to our stockholders. At the Annual Meeting, our stockholders will be given the opportunity to vote on whether they prefer to have future say-on-pay votes occur:
•every year;
•every two years; or
•every three years
or alternatively, stockholders may abstain from casting a vote.
In accordance with SEC rules, our stockholders will have the opportunity at least every six years to recommend the frequency of future say-on-pay votes.
The board of directors believes that future say-on-pay votes should occur every year in order to allow our stockholders the ability to provide timely, direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year.
Because the vote on this proposal is advisory in nature, it will not be binding on the board of directors. However, the board of directors will consider the outcome of the vote along with other factors when making its decision about the frequency of future “say-on-pay” votes. We will disclose the decision of the board of directors with respect to the frequency of future “say-on-pay” votes in a Current Report on Form 8-K to be filed in relation to the Annual Meeting.
Required Vote; Recommendation of the Board
For the advisory (non-binding) vote on the frequency of future stockholder advisory votes to approve the compensation paid to the company’s named executive officers, the option among the choices that receives the votes of the holders of a majority of the voting power of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting voting for or against the choices will be deemed to be the frequency preferred by the stockholders. In the event that no option receives a majority of the votes as described in the immediately preceding sentence, the Company will consider the option that receives the most votes cast to be the frequency preferred by our stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR “ONE YEAR” AS THE PREFERRED FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
PROPOSAL FIVE: APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE LUMINAR TECHNOLOGIES, INC. 2020 EQUITY INCENTIVE PLAN TO INCREASE THE AUTHORIZED SHARE RESERVE AND ADD AN AUTOMATIC ANNUAL SHARE RESERVE INCREASE PROVISION.
This is a proposal to approve the amendment and restatement of the Luminar Technologies, Inc. 2020 Equity Incentive Plan, or Plan, to increase the shares issuable under the Plan by 36,000,000 shares and add an evergreen provision, as described below (the Plan, as amended and restated, the “Amended Plan”). If the stockholders approve amending and restating the Plan, the Amended Plan will replace the current version of the Plan and become effective upon the date of the 2022 Annual Meeting (i.e., June 7, 2022).
Summary of Material Changes Being Made to the Current Plan
The Amended Plan will make the following material changes to the Plan:
| | | | | | | | |
Increase in Authorized Shares | | Increase the number of shares authorized for issuance under the Plan by 36,000,000 additional shares. |
Add Evergreen Provision | | Provide that the number of shares of Class A common stock available for issuance under the Plan will be increased on the first day of each fiscal year of the Company beginning with the 2023 fiscal year and ending on (and including) the first day of the 2030 fiscal year, in an amount equal to the lesser of (i) 5% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, (ii) 40,000,000 shares or (iii) such number of Shares determined by the Board.
|
Purpose of Share Reserve IncreaseAs of March 31, 2022, a total of 18,785,420 shares of our Class A common stock remained available for future grants under the Plan. We believe that the current share reserve amount is insufficient to meet our future needs with respect to attracting, motivating and retaining key executives and employees in a competitive market for talent, after taking into account recent grants to Mr. Russell and annual equity refresher grants to our employees, discussed under the heading “Historical Plan Benefits” below, which reduced our available share reserve. We consider the Plan to be a vital element of our employee compensation program and believe that the continued ability to grant stock awards at competitive levels is in the best interest of the company and our stockholders. Based on our expected future share usage, we estimate that the addition of 36,000,000 shares will provide us with a sufficient reserve for the next three years of grants of stock awards.
As of March 31, 2022, 14,590,828 stock awards were outstanding under the Plan, all issued as restricted stock units. As of May 5, 2022 the closing sale price of a share of the Company’s Class A common stock on The Nasdaq Global Select Market was $11.17.
Burn Rate and Equity Overhang
The Compensation Committee regularly reviews our burn rate and equity overhang activity in order to thoughtfully manage our long-term stockholder dilution. The table below shows our burn rate and equity overhang activity relating to equity grants under the Plan since the Plan’s adoption.
| | | | | | | | | | | | |
| | 2021 | | | | |
(a) Granted in 2021 | | 14,130,298 | | | | | |
(b) Common Shares Outstanding as of December 31, 2021 | | 347,901,434 | | | | | |
Burn Rate (a / b) | | 4.1% | | | | |
(c) RSUs Outstanding and Shares Available for Future Awards as of December 31, 2021 | | 34,871,180 | | | | | |
(d) Common Shares Outstanding as of December 31, 2021 | | 347,901,434 | | | | | |
Overhang (c / d) | | 10.0% | | | | |
Note Regarding Forecasts and Forward-Looking Statements
We do not as a matter of course make public forecasts as to our total shares outstanding and utilization of various equity awards due to the unpredictability of the underlying assumptions and estimates. In particular, the forecasts set forth in this Proposal Five include embedded assumptions which are highly dependent on the public trading price of our Class A common stock and other factors, which we do not control and, as a result, we do not as a matter of practice provide forecasts. These forecasts reflect various assumptions regarding our future operations. The inclusion of the forecasts set forth above should not be regarded as an indication that these forecasts will be predictive of actual future outcomes, and the forecasts should not be relied upon as such.
Best Practices
We have designed the Amended Plan to include a number of provisions that we believe promote best practices by reinforcing the alignment between equity compensation arrangements for non-employee directors, officers, employees and other service providers and stockholders’ interests. These provisions include, but are not limited to, the following:
•No Discounted Options or Discounted Stock Appreciation Rights. Stock options and stock appreciation rights may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.
•No Repricing Without Stockholder Approval. The Company cannot, without stockholder approval, reduce the exercise price of a stock option or SAR, and at any time when the exercise price of a stock option or SAR is above the market value of the Company’s Class A common stock, the Company cannot, without stockholder approval, cancel and re-grant or exchange such stock option or SAR for cash, other awards or a new stock option or SAR at a lower exercise price.
•No Liberal Share Recycling. Shares retained by or delivered to the Company to pay the exercise price of an award, shares delivered to or withheld by the Company to pay withholding taxes related to an award, unissued shares resulting from the settlement of stock appreciation rights in stock, and shares withheld by the Company to pay the exercise price of any award or satisfy any tax withholding obligation do not become available for issuance as future awards under the Amended Plan.
•No Dividends on Unvested Awards. The Amended Plan provides that any dividends, distributions or dividend equivalents paid with respect to shares of common stock subject to the unvested
portion of a restricted stock award or RSU will be subject to the same restrictions as the shares to which such dividends, distributions or dividend equivalents relate.
•No Transferability. In general, no right or interest in any incentive award may be assigned or transferred by a participant, except by will or the laws of descent and distribution, or subjected to any lien or otherwise encumbered.
•No Automatic Grants. The Amended Plan does not provide for “reload” or other automatic grants to participants.
•No Tax Gross-ups. The Amended Plan does not provide for any tax gross-ups.
Board Approval of the Amended Plan
On May 5, 2022, our Board approved the Amended Plan, subject to approval from our stockholders at the 2022 Annual Meeting. Our named executive officers and directors have an interest in this proposal because they are eligible to receive plan awards.
Summary of the Amended Plan
The following provides a summary of the material features of the Amended Plan and its operation. This summary does not purport to be a complete description of all of the provisions of the Amended Plan and is qualified in its entirety by the draft of the Amended Plan attached as Appendix A.
Types of Awards Available under the Amended Plan
We may grant the following types of incentive awards under the Amended Plan: (i) stock options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock units; (v) performance units; and (vi) performance shares.
Plan AdministrationPerformance Units and Performance Shares
Performance units and performance shares are stock awards that will result in a payment to a participant only if the performance goals that the Administrator establishes are satisfied. The Administrator will determine the applicable performance goals. Please refer to the discussion below under “— Performance Goals” for more information. After the applicable performance period has ended, the participant will be entitled to receive a payout of the number of performance units or shares earned during the performance period, depending upon the extent to which the applicable performance objectives have been achieved.
Performance Goals
The Amended Plan will continueAdministrator in its discretion may make performance goals applicable to be administered by the Board or by a committee of the Board (the “Administrator”). Any such committee will consist of at least two members of the Board, all of whom are “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and “independent directors” within the meaning of the Listing Rules of The NASDAQ Stock Market. The Company expects the Compensation Committee of the Board will continue to administer the plan. The Administrator may delegate its duties, power and authority under the plan to any of the Company’s officers to the extent consistent with applicable Delaware corporate law, exceptparticipant with respect to participants subject to Section 16a stock award. In the Administrator’s discretion, one or more of the Exchange Act.following performance goals may apply: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense management; (16) return on assets, return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash flow, cash flow return on investment, net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share; (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria; (24) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25)
objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects; and (27) enterprise resource planning. Stock awards issued to participants may take into account other criteria (including subjective criteria).
Outside Director Limitations
No non-employee director (“Outside Director”) may receive awards under the 2020 Equity Incentive Plan with a total grant date fair value that, when combined with cash compensation received for service as an Outside Director, exceeds $750,000 in a calendar year, increased to $1,000,000 in the calendar year of his or her initial service as an Outside Director. Stock awards granted to an individual while he or she was serving in the capacity as an employee or while he or she was an independent contractor but not an Outside Director will not count for purposes of these limitations.
Leaves of Absence / Transfer Between Locations
The Administrator has the authoritydiscretion to determine all provisionsat any time whether and to what extent the vesting of stock awards shall be suspended during any leave of absence. A participant will not cease to be an employee in the case of (i) any leave of absence approved by the participant’s employer or (ii) transfers between our locations or between us and any subsidiary. If an employee holds an incentive stock option and such leave exceeds three months then, for purposes of incentive awards consistent with terms of the Amended Plan, including the eligible recipients who willstock option status only, such employee’s service as an employee shall be granted one or more incentive awards under the Amended Plan, the nature and extent of the incentive awards to be made to each participant, the time or times when incentive awards will be granted, the duration of each incentive award, and the restrictions and other conditions to which the payment or vesting of incentive awards may be subject. The Administrator has the authority to pay the economic value of any incentive award in the form of cash, the Company’s Class A common stock or any combination of both, and may amend or modify the terms of outstanding incentive awards (except for any prohibited “repricing” of options, discussed below) so long as the amended or modified terms are permitted under the Amended Plan and any adversely affected participant has consented to the amendment or modification.
Except in connection with certain specified changes in the Company’s corporate structure or shares, the Administrator may not, without prior approval of the Company’s stockholders, institute a
program under which outstanding awards are amended to provide for a lower exercise price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different type of award under a different equity incentive plan, (iii) cash, or (iv) a combination of (i), (ii) and/or (iii).
Shares Available for Issuance under the Amended Plan; Evergreen Provision
The maximum number of shares of the Company’s Class A common stock reserved for issuance under the Amended Plan will be 72,588,278, plus the number of shares of common stock subject to incentive awards outstanding under any prior restatement of the Amended Plan, but only to the extent that such outstanding awards are forfeited, expire or otherwise terminate without the issuance of such shares.
Under the Amended Plan, the number of Class A common stock shares available for issuance under the Plan will be increaseddeemed terminated on the first day following such three-month period and the incentive stock option shall thereafter automatically treated for tax purposes as a nonstatutory stock option in accordance with applicable laws, unless reemployment upon the expiration of each fiscal yearsuch leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written policy of the Company beginningcompany.
Nontransferability of Stock Awards
Unless determined otherwise by the Administrator, a stock award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes a stock award transferable, such stock award will contain such additional terms and conditions as the Administrator deems appropriate.
Recoupment Policy
All stock awards granted under the 2020 Equity Incentive Plan will be subject to recoupment in accordance with the 2023 fiscal yearLuminar Technologies, Inc. Clawback Policy and endingany other clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on (and including)which our securities are listed or as is otherwise required by the first dayU.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with us.
Effect of a Change in Control
Upon any of the 2030 fiscal year,following events (each a “Change in an amountControl” under the 2020 Equity Incentive Plan):
•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
except as set forth in a stock award agreement, each outstanding stock award (vested or unvested) will be treated as the Administrator determines, which may include (a) our continuation of such outstanding stock awards (if we are the surviving corporation); (b) the assumption of such outstanding stock awards by the surviving corporation or its parent; (c) the substitution by the surviving corporation or its parent of new stock options or other equity awards for such stock awards; (d) the cancellation of such stock awards in exchange for a payment to the participants equal to the lesserexcess of (i) 5% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, (ii) 40,000,000 Shares or (iii) such number of Shares determined by the Board.
Shares of the Company’s Class A common stock that are issued under the Amended Plan or that potentially are issuable pursuant to outstanding incentive awards reduce the number of shares remaining available. To the extent an award should expire or be forfeited or become unexercisable for any reason without having been exercised in full, the unissued shares that were subject thereto shall, unless the Amended Plan shall have been terminated, continue to be available under the Amended Plan for issuance pursuant to future awards. Shares issued under the Amended Plan and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original purchase price paid to the Company for the shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with a participant ceasing to be a service provider) shall again be available for future grant under the Amended Plan. Notwithstanding anything to the contrary contained herein, the following shares shall not be added to the shares authorized for grant under the Amended Plan and shall not be available for future grants of awards: (i) shares tendered by a participant or withheld by the Company in payment of the exercise price of an option; (ii) shares tendered by a participant or withheld by the Company to satisfy any tax withholding obligation with respect to an award; (iii) shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right on exercise thereof; and (iv) shares purchased on the open market with the cash proceeds from the exercise of options.
Eligibility to Receive Awards
The Administrator selects the employees, consultants and non-employee directors who will be granted awards under the Amended Plan. The actual number of employees, consultants and non-employee directors who will receive an award under the Amended Plan cannot be determined in advance because the Administrator has the discretion to select the participants. As of March 31, 2021 approximately 500 employees, 100 consultants and 6 non-employee directors were eligible to participate in the Amended Plan.
Stock Options
A stock option is the right to acquire shares of our Class A common stock at a fixed exercise price for a fixed period of time. Under the Amended Plan, the Administrator may grant nonqualified stock options and incentive stock options, subject to the share limitations described above.
Exercise Price of an Option
The exercise price to be paid by a participant at the time an option is exercised may not be less than 100 percent of the fair market value of one sharethe shares subject to such stock awards as of the Company’s Class A common stock on the
closing date of grant (or 110 percent of the fair market value of one share of the Company’s Class A common stock on the date of grant of an incentive stock option if the participant owns, directly or indirectly, more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary). However,such Change in the event options are granted as a result of the Company’s assumption or substitution of options in a merger or acquisition,Control over (ii) the exercise price willor purchase price paid or to be paid (if any) for the price determined by the Administrator pursuantshares subject to the conversion terms applicable to the transaction. At any time while the Company’s Class A common stock is listed on The NASDAQ Global Select Market, “fair market value” under the plan means the closing sale price of a share at the end of the regular trading session on the date of grant as reported by The NASDAQ Global Select Market as of the date in question (or, if no shares were traded on such date, the next preceding day on which there was such a trade). As of May 5, the closing sale price of a share of the Company’s Class A common stock on The NASDAQ Global Select Market was $11.17.
Payment for the Exercise Price of an Option
The total purchase price of the shares to be purchased upon exercise of an option will be paid in such manner as authorized by the Administrator and permitted by the award agreement and the Amended Plan.
Option Exercises
Options may be exercised in whole or in installments, as determined by the Administrator, and the Administrator may impose conditions or restrictions to the exercisability of an option, including that the participant remain continuously employed by the Company for a certain period or that the participant or the Company (or any subsidiary, division or other subunit of the Company) satisfy certain specified performance objectives. An option may not become exercisable, nor remain exercisable after 10 years from its date of grant (five years from its date of grant in the case of an incentive stock option if the participant owns, directly or indirectly, more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary).
Stock Appreciation Rights
A stock appreciation right is the right to receive a payment from the Company, in the form of shares of the Company’s Class A common stock, cash or a combination of both, equal to the difference between the fair market value of one or more shares of the Company’s Class A common stock and a specified exercise price of such shares. Stock appreciation rights will be subject to such terms and conditions, if any, consistent with the other provisions of the Amended Plan, as may be determined by the Administrator. At the discretion of the Administrator, the payment upon stock appreciation right exercise may be in cash, in shares of equivalent value, or in some combination thereof.
The exercise price of a stock appreciation right will be determined by the Administrator, in its discretion, at the date of grant but may not be less than 100 percent of the fair market value of one share of the Company’s Class A common stock on the date of grant. However, in the event that stock appreciation rights are granted as a result of the Company’s assumption or substitution of stock appreciation rights in a merger or acquisition, the exercise price will be the price determined by the Administrator pursuant to the conversion terms applicable to the transaction. A stock appreciation right will become exercisable at such time and in such installments as may be determined by the Administrator in its sole discretion at the time of grant; provided, however, that no stock appreciation right may be exercisable after 10 years from its date of grant.
Restricted Stock Awards
A restricted stock award is an award of the Company’s Class A common stock that vests at such times and in such installments as may be determined by the Administrator and, until it vests, is subject to
restrictions on transferability and/or the possibility of forfeiture. The Administrator may impose such restrictions or conditions to the vesting of restricted stock awards as it deems appropriate, including that the participant remain continuously employed by the Company for a certain period or that the participant or the Company (or any subsidiary, division or other subunit of the Company) satisfy specified performance objectives.
During the period of restriction, service providers holding shares of restricted stock granted hereunder(which payment may exercise full voting rights with respect to those shares, unless the Administrator determines otherwise, and any dividends or distributions paid with respect to shares of restricted stock will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the shares of restricted stock with respect to which they were paid.
Restricted Stock Units
A restricted stock unit is a right to receive the fair market value of one or more shares of the Company’s Class A common stock, payable in cash, shares of the Company’s Class A common stock, or a combination of both, the payment, issuance, retention and/or vesting of which is subjectconditions that apply to the satisfaction of specified conditions, which may include achievement of specified performance objectives. Restricted stock unitsconsideration that will be subjectpaid to such terms and conditions, if any, consistent with the other provisionsholders of the Amended Plan, as may be determined by the Administrator.
The Administrator may, in its sole discretion, award dividend equivalentsshares in connection with the transaction, subject to applicable law); or (e) the opportunity for participants to exercise the stock options prior to the occurrence of the Change in Control and the termination (for no consideration) upon the consummation of such Change in Control of any stock options not exercised prior thereto.
Amendment, Termination and Duration of the 2020 Equity Incentive Plan
The 2020 Equity Incentive Plan will continue in effect for a term of 10 years measured from May 5, 2022, the board approval date, unless terminated earlier under the terms of the 2020 Equity Incentive Plan. The Administrator may at any time amend, alter, suspend or terminate the 2020 Equity Incentive Plan pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as otherwise required by applicable law.
Description of Legacy Luminar’s Amended and Restated 2015 Stock Plan
General
Legacy Luminar’s board of directors originally adopted, and the Legacy Luminar stockholders approved, the Legacy Luminar Stock Plan, each on June 26, 2015. The Legacy Luminar Stock Plan was last amended on January 24, 2020. The Legacy Luminar Stock Plan provides for the grant of Legacy Luminar Stock Options to Legacy Luminar employees (and employees of any parent or subsidiary of Legacy Luminar), and for the grant of non-statutory Legacy Luminar Stock Options and Legacy Luminar restricted stock unitsto Legacy Luminar employees, directors and consultants (and employees and consultants of any parent, subsidiary or affiliate of Legacy Luminar). We assumed the Legacy Luminar Stock Plan upon the closing of the Business Combination. The Legacy Luminar Stock Plan has been terminated except that may be settled in cash, in sharesthe outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of equivalent value,Class A Stock or in some combination thereof. Any such dividend equivalents awarded with respect to restricted stock units will be subjectoptions for Class A Stock upon the closing of the Business Combination) until terminated pursuant to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the restricted stock units with respect to which they were paid.terms thereof.
Performance Units and Performance Shares
APerformance units and performance shares are stock awards that will result in a payment to a participant mayonly if the performance goals that the Administrator establishes are satisfied. The Administrator will determine the applicable performance goals. Please refer to the discussion below under “— Performance Goals” for more information. After the applicable performance period has ended, the participant will be granted one or moreentitled to receive a payout of the number of performance units or shares earned during the performance shares underperiod, depending upon the Amended Plan, and suchextent to which the applicable performance units or performance shares will be subject to such terms and conditions, if any, consistent with the other provisions of the Amended Plan, as may be determined by theobjectives have been achieved.
Performance Goals
The Administrator in its sole discretion including, but not limitedmay make performance goals applicable to the achievement of one or more specified performance objectives.
Consequences of Changes in our Capital Structure
a participant with respect to a stock award. In the event of a stock split, reverse stock split, stock dividend, combination, consolidation, recapitalization (including a recapitalization through a large nonrecurring cash dividend) or reclassification of shares, subdivision of shares, a rights offering, a reorganization, merger, spin-off, split-up, repurchase, or exchange of common stock or other securities of the Company or other significant corporate transaction, or other change affecting the common stock occurs, the Administrator, in order to prevent dilution, diminution or enlargement of the benefits or potential benefits intended to be made available under the Amended Plan, will, in such manner as it may deem equitable, adjust the number, kind and class of securities that may be delivered under the amended Plan and/or the number, class, kind and price of securities covered by each outstanding award. This authority does not, however, permit the Administrator to take any action:
•To reserve shares or grant incentive awards in excess of the limitations provided in the Amended Plan;
•To effect any repricing of options, as discussed below;
•To grant options or stock appreciation rights having an exercise price less than 100 percent of the “fair market value” (as defined below) of one share of the Company’s common stock on the date of grant; or
•For which stockholder approval would then be required pursuant to Section 422 of the Code, the Listing Rules of Nasdaq or other applicable market or exchange.
Consequences of a Merger or Similar Transaction
In the event of a Change in Control (as defined in the Plan), each outstanding award (vested or unvested) will be treated as the Administrator determines, which determination may be made without the consent of any participant and need not treat all outstanding awards (or portion thereof) in an identical manner. Such determination, without the consent of any participant, may provide (without limitation) forAdministrator’s discretion, one or more of the following inperformance goals may apply: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the event of a Change in Control: (A) the continuation of such outstanding awards by the Company (if the Company is the surviving corporation); (B) the assumption of such outstanding awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parentadoption of new optionsaccounting pronouncements; (10) raising of financing or other equity awards for such awards; (D) the cancellation of such awardsfundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense management; (16) return on assets, return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash flow, cash flow return on investment, net cash provided by operations, or cash flow in exchange for a payment to the participants equal to the excess of (1) the fair market valuecost of the shares subject to such awards as of the closing date of such Change in Control over (2) the exercisecapital; (18) performance warranty and/or guarantee claims; (19) stock price or purchase price paidtotal stockholder return; (20) earnings or book value per share; (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria; (24) objective goals relating to be paid (if any) for the shares subject to the awards; provided that at the discretion of the Administrator, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with the transaction; provided, however, that any payout in connection with a terminated award shall comply with Section 409A of the Internal Revenue of 1986, as amended (the “Code”) to the extent necessary to avoid taxation thereunder; or (E) the opportunity for participants to exercise the options prior to the occurrence of the Change in Controldivestitures, joint ventures, mergers, acquisitions and the termination (for no consideration) upon the consummation of such Change in Control of any options not exercised prior thereto. An award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the award agreement for such award or as may be provided in any other written agreement between the Company or any affiliate and the participant.
•For purposes of the Amended Plan, a “Change in Control” of the Company occurs upon:
•The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if the Company’s stockholders immediately prior to such merger, consolidation or reorganization cease to directly or indirectly own immediately after such merger, consolidation or reorganization at least a majority of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or reorganization;
•The consummation of the sale, transfer or other disposition of all or substantially all of the Company’s assets (other than (x) to a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company, (y) to a corporation or other entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of common stock or (z) to a continuing or surviving entity described in the bullet above in connection with a merger, consolidation or reorganization which does not result in a Change in Control under described in the bullet above;
•A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or
•The consummation of any transaction as a result of which any Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities. For purposes of this Section 2(h), the term “Person” shall have the same meaning as when used in Sections 13(d) and 14(d) of thesimilar transactions; (25)
Exchange Act but shall exclude:objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects; and (27) enterprise resource planning. Stock awards issued to participants may take into account other criteria (including subjective criteria).
Outside Director Limitations
No non-employee director (“Outside Director”) may receive awards under the 2020 Equity Incentive Plan with a trusteetotal grant date fair value that, when combined with cash compensation received for service as an Outside Director, exceeds $750,000 in a calendar year, increased to $1,000,000 in the calendar year of his or other fiduciary holding securities underher initial service as an Outside Director. Stock awards granted to an individual while he or she was serving in the capacity as an employee benefit planor while he or she was an independent contractor but not an Outside Director will not count for purposes of these limitations.
Leaves of Absence / Transfer Between Locations
The Administrator has the discretion to determine at any time whether and to what extent the vesting of stock awards shall be suspended during any leave of absence. A participant will not cease to be an employee in the case of (i) any leave of absence approved by the participant’s employer or (ii) transfers between our locations or between us and any subsidiary. If an employee holds an incentive stock option and such leave exceeds three months then, for purposes of incentive stock option status only, such employee’s service as an employee shall be deemed terminated on the first day following such three-month period and the incentive stock option shall thereafter automatically treated for tax purposes as a nonstatutory stock option in accordance with applicable laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written policy of the Company or an affiliatecompany.
Nontransferability of the Company; a corporation or other entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of common stock; the Company; and a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company.
•A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transactions. In addition, if any Person (as defined above) is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered to cause a Change in Control. If required for compliance with Code Section 409A, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
Transferability ofStock Awards
Unless determined otherwise by the Administrator, ana stock award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the Administrator makes ana stock award transferable, such stock award will contain such additional terms and conditions as the Administrator deems appropriate.
Effect of Termination of Employment or Other Services
If a participant ceases to be employed by, or perform other services for the Company, all incentive awards held by the participant will be treated as set forth below unless provided otherwise in the agreement evidencing the incentive award or modified by the Administrator in its discretion as set forth below. Upon termination due to death or disability, all outstanding, exercisable options and stock appreciation rights then held by the participant will remain exercisable for a period of twelve (12) months thereafter (but in no event after the expiration date of any such option or stock appreciation rights), and all unvested restricted stock awards, all outstanding stock unit awards or restricted stock units, performance awards or units and stock bonuses then held by the participant will be terminated and forfeited. Upon termination for a reason other than death or disability, which is not also for “cause” (as defined in the Amended Plan), all outstanding options and stock appreciation rights then held by the participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of three (3) months after such termination (but in no event after the expiration date of any such option or stock appreciation right). Also, upon such termination all options and stock appreciation rights that are not exercisable, all unvested restricted stock awards, and all outstanding stock unit awards or restricted stock units, performance awards or units and stock bonuses then held by the participant will be terminated and forfeited. Upon termination for “cause,” all rights of the participant under the Amended Plan and any award agreements evidencing an incentive award then held by the participant shall terminate and be forfeited without notice of any kind.
Clawback / RecoveryRecoupment Policy
All stock awards granted under the Amended2020 Equity Incentive Plan will be subject to recoupment in accordance with the Luminar Technologies, Inc. Clawback Policy and any other clawback policy that the Company iswe are required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’sour securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable laws. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an award agreement as the Board determines necessary or appropriate, including but not limited to a
reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of an event constituting “cause.”law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.us.
Amendment and TerminationEffect of a Change in Control
Unless terminated earlier, the Amended Plan will terminate on October 28, 2030. Incentive awards outstanding at the time the Amended Plan is terminated may continue to be exercised, earned or become free of restriction, according to their terms. The Board may suspend or terminate the Amended Plan orUpon any portion of the Amended Planfollowing events (each a “Change in Control” under the 2020 Equity Incentive Plan):
•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at any time. In additionleast 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
except as set forth in a stock award agreement, each outstanding stock award (vested or unvested) will be treated as the Administrator determines, which may include (a) our continuation of such outstanding stock awards (if we are the surviving corporation); (b) the assumption of such outstanding stock awards by the surviving corporation or its parent; (c) the substitution by the surviving corporation or its parent of new stock options or other equity awards for such stock awards; (d) the cancellation of such stock awards in exchange for a payment to the Administrator’s authority to amend the Amended Plan with respect to participants resident outside of the United States or employed by a non-U.S. subsidiary, the Board may amend the Amended Plan from time to time in order that incentive awards under the Amended Plan will conform to any change in applicable laws or regulations or in any other respect that the Board may deem to be in the Company’s best interests; provided, however, that no amendments to the Amended Plan will be effective without stockholder approval, if it is required under Section 422 of the Code or the Listing Rules of The NASDAQ Stock Market, or if the amendment seeks to increase the number of shares reserved for issuance under the Amended Plan (other than as a result of a permitted adjustment upon certain corporate events, such as stock splits) or to modify the prohibitions on underwater option re-pricing discussed above. Termination, suspension or amendment of the Amended Plan will not adversely affect any outstanding incentive award without the consent of the affected participant, except for adjustments in the event of changes in the Company’s capitalization or a “change in control” of the Company.
Federal Tax Consequences to Participants as a Result of Receiving an Award under the Amended Plan
The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers resulting from awards granted under the Amended Plan based on federal income tax laws in effect on the date of this Proxy Statement.
This summary is not intended to be exhaustive and does not address all matters that may be relevant to a particular participant based on his or her specific circumstances. The summary expressly does not discuss the income tax laws of any state, municipality, or non-U.S. taxing jurisdiction, or the gift, estate, excise (including the rules applicable to deferred compensation under Code Section 409A), or other tax laws other than federal income tax law. The following is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Because individual circumstances may vary, the Company advises all participants to consult their own tax advisors concerning the tax implications of awards granted under the Amended Plan.
Nonqualified Stock Options
No taxable income generally is reportable when a nonqualified stock option is granted to a participant. Upon exercise, the participant generally will recognize ordinary income in an amount equal to the difference between the fair market valueexcess of the purchased shares on the exercise date and the exercise price of the option. Any additional gain or loss recognized upon any later disposition of the shares would be a capital gain or loss.
Incentive Stock Options
No taxable income is reportable when an incentive stock option is granted or exercised, unless the alternative minimum tax, or AMT, rules apply, in which case AMT taxation will occur in the year of exercise. If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference
between the sale price and the exercise price will be taxed as a capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, the participant generally will have ordinary income at the time of the sale equal to the difference between(i) the fair market value of the shares onsubject to such stock awards as of the exerciseclosing date or the sale price, if less, andof such Change in Control over (ii) the exercise price or purchase price paid or to be paid (if any) for the shares subject to the stock awards (which payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with the transaction, subject to applicable law); or (e) the opportunity for participants to exercise the stock options prior to the occurrence of the option. Any additional gainChange in Control and the termination (for no consideration) upon the consummation of such Change in Control of any stock options not exercised prior thereto.
Amendment, Termination and Duration of the 2020 Equity Incentive Plan
The 2020 Equity Incentive Plan will continue in effect for a term of 10 years measured from May 5, 2022, the board approval date, unless terminated earlier under the terms of the 2020 Equity Incentive Plan. The Administrator may at any time amend, alter, suspend or loss generally will be taxable at long-termterminate the 2020 Equity Incentive Plan pursuant to the listing standards of any national securities exchange or short-term capital gain rates, dependingassociation on whetherwhich our securities are listed or as otherwise required by applicable law.
Description of Legacy Luminar’s Amended and Restated 2015 Stock Plan
General
Legacy Luminar’s board of directors originally adopted, and the participant has heldLegacy Luminar stockholders approved, the sharesLegacy Luminar Stock Plan, each on June 26, 2015. The Legacy Luminar Stock Plan was last amended on January 24, 2020. The Legacy Luminar Stock Plan provides for more than one year.
Restricted Stock
A participant will not recognize taxable income upon the grant of Legacy Luminar Stock Options to Legacy Luminar employees (and employees of any parent or subsidiary of Legacy Luminar), and for the grant of non-statutory Legacy Luminar Stock Options and Legacy Luminar restricted stock to Legacy Luminar employees, directors and consultants (and employees and consultants of any parent, subsidiary or affiliate of Legacy Luminar). We assumed the Legacy Luminar Stock Plan upon the closing of the Business Combination. The Legacy Luminar Stock Plan has been terminated except that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the closing of the Business Combination) until terminated pursuant to the terms thereof.
Plan Administration
The board of directors administers the Legacy Luminar Stock Plan.
Types of Awards
The Legacy Luminar Stock Plan provides for the grant of stock options and restricted stock.
Stock Options
Legacy Luminar’s board of directors granted Legacy Luminar Stock Options under the Legacy Luminar Stock Plan, which we assumed in the closing of the Business Combination. The exercise price per share applicable to such options was equal to at least the fair market value per share of Legacy Luminar stock on the date of grant. The term of options granted under the Legacy Luminar Stock Plan did not exceed 10 years; provided, however, that any Legacy Luminar Stock Options granted to a participant who owned more than 10% of the total combined voting power of all classes of Legacy Luminar stock, or of certain of Legacy Luminar’s subsidiary corporations, did not have a term in excess of five years and had an exercise price per share of at least 110% of the fair market value per share of Legacy Luminar stock on the grant date. Subject to the provisions of the Legacy Luminar Stock Plan, Legacy Luminar’s board of directors determined the remaining terms of the Legacy Luminar Stock Options (e.g., vesting). After the termination of service of an employee, director or consultant, the participant may exercise his or her option, to the extent vested, for the period of time stated in his or her option agreement. If termination is due to death, then 100% of the then unvested shares shall immediately vest and become exercisable as of date of such termination. If termination is due to death or disability, the option will remain exercisable for 12 months. For certain options and so long as the applicable employees that have completed at least two years of continuous service, the option will remain exercisable until the earliest of (a) 10 years from the date of the option grant; or (b) the later of (i) one year after termination (in the event such termination occurs after going public) and (ii) one year after going public. In all other cases except for a termination for cause, the Legacy Luminar Stock Options will generally remain exercisable for three months following the termination of service. In the event of a termination for cause, the Legacy Luminar Stock Options will immediately terminate. However, in no event may an option be exercised later than the expiration of its term.
Non-transferability of Awards
Unless the board provides otherwise, the Legacy Luminar Stock Plan generally does not allow for the transfer of awards or shares acquired pursuant to an award and only the recipient of an option may exercise such an award during his or her lifetime.
Certain Adjustments
In the event of certain corporate events or changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the Legacy Luminar Stock Plan, the board will make adjustments to one or more of the number, kind and class of securities that may be delivered under the Legacy Luminar Stock Plan and/or the number, kind, class and price of securities covered by each outstanding award.
Dissolution or liquidation
In the event of our dissolution or liquidation, each Legacy Luminar stock option and stock purchase right will terminate immediately prior to the consummation of such action, unless otherwise determined by the board.
Corporate Transactions
The Legacy Luminar Stock Plan, as assumed by us, provides that in the event of certain significant corporate transactions, including: (i) a transfer of all or substantially all of our assets, (ii) a merger, consolidation or other capital, reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any person becomes the beneficial owner, directly or indirectly, of more than 50% of our then outstanding capital stock, each outstanding award will be treated as the board determines.
Amendment or Termination
Our board has terminated the Legacy Luminar Stock Plan, provided that the outstanding awards previously granted under the Legacy Luminar Stock Plan continue to remain outstanding under the Legacy Luminar Stock Plan (except that such awards converted into awards of Class A Stock or options for Class A Stock upon the closing of the Business Combination).
Description of Employee Stock Purchase Plan
In December 2020, our board adopted and our stockholders approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective upon the closing of the Business Combination.
Purpose
The ESPP provides a means by which eligible employees and/or eligible service providers of either the company or an affiliate may be given an opportunity to purchase shares of Class A Stock of the company. The ESPP permits us to grant a series of purchase rights to eligible employees and/or eligible service providers. By means of the ESPP, we seek to retain and assist our affiliates in retaining the services of such eligible employees and eligible service providers, to secure and retain the services of new eligible employees and eligible service providers and to provide incentives for such persons to exert maximum efforts for our success and that of our affiliates.
The ESPP includes two components: a “423 Component” and a “Non-423 Component.” We intend the 423 Component to qualify as an employee stock purchase plan pursuant to Section 423 of the U.S. Tax Code. The provisions of the 423 Component will be construed in a manner that is consistent with the requirements of Section 423 of the U.S. Tax Code, including without limitation to extend and limit ESPP participation in a uniform and non-discriminating basis. In addition, the ESPP authorizes grants of purchase rights under the Non-423 Component that do not meet the requirements of an employee stock purchase plan under Section 423 of the Code. Except as otherwise provided in the ESPP or determined by the board, the Non-423 Component will operate and be administered in the same manner as the 423 Component. Eligible employees will be able to participate in the 423 Component or Non-423 Component of the ESPP. Eligible service providers (who may or may not be eligible employees) will only be able to participate in the Non-423 Component of the ESPP.
Administration
The board administers the ESPP and will have the final power to construe and interpret both the ESPP and the rights granted under it. Further, the board has the power, subject to the provisions of the ESPP, to determine when and how rights to purchase Class A Stock will be granted, the provisions of each offering of such rights (which need not be identical), and whether any employee or other service provider will be eligible to participate in the ESPP.
The board has the power to delegate administration of the ESPP to a committee composed of one or more members of the board. As used herein with respect to the ESPP, the term “board” refers to any committee the board appoints, and to the board. Whether or not the board has delegated administration of the ESPP to a committee, the board will have the final power to determine all questions of policy and expediency that may arise in the administration of the ESPP.
Stock Subject to the ESPP
Subject to adjustments as provided in the ESPP, the maximum number of shares of Class A Stock that may be issued under the ESPP will not exceed 7,317,655 shares of Class A Stock. If any purchase right granted under the ESPP terminates without having been exercised in full, the shares of Class A Stock not purchased under such purchase right will again become available for issuance under the ESPP.
Offerings
The ESPP is implemented by offerings of rights to all eligible employees and eligible service providers from time to time. Offerings may comprise one or more purchase periods. The maximum length for an offering under the ESPP is 27 months. The provisions of separate offerings need not be identical. When a participant elects to be taxed at that time. Instead,join an offering, he or she is granted a participant generally will recognize ordinary income atpurchase right to acquire shares of Class A Stock on each purchase date within the time of vesting equaloffering, each corresponding to the difference betweenend of a purchase period within such offering. On each purchase date, all payroll deductions collected from the participant during such purchase period are automatically applied to the purchase of Class A Stock, subject to certain limitations.
Eligibility
Purchase rights may be granted only to our employees, employees of qualifying related corporations or, solely with respect to the Non-423 Component, employees of an affiliate (other than a qualifying related corporation) or eligible service providers. The board may provide that employees will not be eligible to be granted purchase rights under the ESPP if, on the offering date, the employee (i) has not completed at least two years of service since the employee’s last hire date (or such lesser period as the board may determine), (ii) customarily works not more than 20 hours per week (or such lesser period as the board may determine), (iii) customarily works not more than five months per calendar year (or such lesser period as the board may determine), (iv) is an officer within the meaning of Section 16 of the Exchange Act, (v) is a highly compensated employee within the meaning of the U.S. Tax Code, or (vi) has not satisfied such other criteria as the board may determine consistent with Section 423 of the U.S. Tax Code. Unless otherwise determined by the board for any offering, an employee will not be eligible to be granted purchase rights unless, on the offering date, the employee customarily works more than 20 hours per week and more than five months per calendar year, and has been employed by us or a related corporation or affiliate for at least three continuous months preceding such offering date.
No employee will be eligible for the grant of any purchase rights if, immediately thereafter, such employee owns stock possessing 5% or more of the total combined voting power or value of all classes of our stock or the stock of any related corporation. An eligible employee may be granted purchase rights only if such purchase rights, together with any other rights granted under all our and any related corporations’ employee stock purchase plan, do not permit such eligible employee’s rights to purchase stock in excess of $25,000 worth of stock in any calendar year.
Participation in the ESPP
On each offering date, each eligible employee or eligible service provider, pursuant to an offering made under the ESPP, will be granted a purchase right to purchase up to that number of shares of Class A Stock purchasable either with a percentage or with a maximum dollar amount, as designated by the board; provided however, that in the case of eligible employees, such percentage or maximum dollar amount will in either case not exceed 15% of such employee’s earnings during the period that begins on the offering date (or such later date as the board determines for a particular offering) and ends on the date stated in the offering, which date will be no later than the end of the offering, unless otherwise provided for in an offering.
Purchase Price
The purchase price of shares of Class A Stock acquired pursuant to purchase rights will be not less than the lesser of (i) 85% of the fair market value of the shares of Class A Stock on the vesting date and the amount, if any, paid for the shares. However, the recipientoffering date; or (ii) 85% of a restricted stock award may elect, through a filing with the Internal Revenue Service, to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares)of Class A Stock on the applicable purchase date (i.e., the award is granted.last day of the applicable purchase period).
Restricted Stock Units58
A participant generally will not recognize taxable income upon grant
Payment of restricted stock units. Instead, the participant generally will recognize ordinary income at the time the restricted stock units are settled equal to the fair market valuePurchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions over the offering. To the extent permitted in the offering document, a participant may increase, reduce or terminate his or her payroll deductions. All payroll deductions made on the settlement date less the amount, if any, paid for the shares.
Stock Appreciation Rights
A participant generally will not recognize taxable income upon the grantbehalf of a stock appreciation right. Uponparticipant are credited to his or her account under the ESPP and deposited with our general funds. No interest will accrue on such payroll deductions. To the extent permitted in the offering document, a participant may make additional payments into such account. If required under applicable laws or regulations or if specifically provided in the offering, in addition to or instead of making contributions by payroll deductions, a participant may make contributions through a payment by cash, check, or wire transfer prior to a purchase date, in a manner we direct.
Purchase of Stock
The board will establish one or more purchase dates during an offering on which purchase rights granted for that offering will be exercised and shares of Class A Stock will be purchased in accordance with such offering. In connection with each offering, the board may specify a maximum number of shares of Class A Stock that may be purchased by any participant or all participants. If the aggregate purchase of shares of Class A Stock issuable on exercise of purchase rights granted under the participant generally will recognize ordinary incomeoffering would exceed any such maximum aggregate number, then, in an amount equal to the difference between the fair market valueabsence of the exercised sharesany board action otherwise, a pro rata (based on the exercise date and the corresponding exercise price of the stock appreciation right. Any additional gain or loss recognized upon any later dispositioneach participant’s accumulated contributions) allocation of the shares wouldof Class A Stock available will be made in as nearly a capital gainuniform manner as will be practicable and equitable.
Withdrawal
During an offering, a participant may cease making contributions and withdraw from the offering by delivering a withdrawal form. We may impose a deadline before a purchase date for withdrawing. On such withdrawal, such participant’s purchase right in that offering will immediately terminate and we will distribute as soon as practicable to such participant all of his or loss.her accumulated but unused contributions without interest and such participant’s purchase right in that offering will then terminate. A participant’s withdrawal from that offering will have no effect on his or her eligibility to participate in any other offerings under the ESPP, but such participant will be required to deliver a new enrollment form to participate in subsequent offerings.
Dividend EquivalentsTermination of Employment
Purchase rights granted pursuant to any offering under the ESPP will terminate immediately if the participant either (i) is no longer an eligible employee or eligible service provider for any reason or for no reason, or (ii) is otherwise no longer eligible to participate. We shall have the exclusive discretion to determine when a participant is no longer actively providing services and the date of the termination of employment or service for purposes of the ESPP. As soon as practicable, we will distribute to such individual all of his or her accumulated but unused contributions without interest.
Restrictions on Transfer
During a participant’s lifetime, purchase rights will be exercisable only by such participant. Purchase rights are not transferable by a participant, except by will, by the laws of descent and distribution, or, if we so permit, by a beneficiary designation.
Exercise of Purchase Rights
On each purchase date, each participant’s accumulated contributions will be applied to the purchase of shares of Class A participant generallyStock, up to the maximum number of shares of Class A Stock permitted by the ESPP and the applicable offering, at the purchase price specified in the offering. Unless otherwise
specified in the ESPP, no fractional shares will recognize ordinary income each timebe issued and, if any amount of accumulated contributions remains in a payment is made orparticipant’s account after the purchase of shares of Class A Stock on the final purchase date in an offering, such remaining amount will roll over to the next offering.
No purchase rights may be exercised to any extent unless and until the shares of Class A Stock to be issued on such exercise under the ESPP are receivedcovered by an effective registration statement pursuant to the dividend equivalent equalSecurities Act, and the ESPP is in material compliance with all applicable U.S. federal and state, foreign and other securities, exchange control, and other laws applicable to the fair market valueESPP. If, on the purchase date, as delayed to the maximum extent permissible, the shares of Class A Stock are not registered and the ESPP is not in material compliance with all applicable laws or regulations, no purchase rights will be exercised and all accumulated but unused contributions will be distributed as soon as practicable to the participants without interest.
Capitalization Adjustments
In the event of a capitalization adjustment, the board will appropriately and proportionately adjust: (i) the classes and maximum number of securities subject to the ESPP, (ii) the classes and maximum number of securities by which the share reserve is to increase automatically each year pursuant to the ESPP, (iii) the classes and number of securities subject to, and the purchase price applicable to outstanding offerings and purchase rights, and (iv) the classes and number of securities that are the subject of the payment madepurchase limits under each ongoing offering.
Dissolution or shares received.Liquidation
Tax Effects asIn the event of the company’s dissolution or liquidation, the board will shorten any offering then in progress by setting a Resultnew purchase date prior to the consummation of Grantssuch proposed dissolution or liquidation. The board will notify each participant in writing, prior to the new purchase date that the purchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date, unless prior to such date the participant has withdrawn from the offering.
Effect of Awardsa Change in Control:
Upon any of the following events (each a Change in Control under the PlanESPP):
We generally•a transfer of all or substantially all of the company’s assets;
•a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person;
•the consummation of a transaction in which any person becomes the beneficial owner, directly or indirectly, of at least 50% of our then outstanding capital stock; or
•a change in the effective control of the company;
any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding purchase rights or may substitute similar rights for outstanding purchase rights, or, if any surviving or acquiring corporation (or its parent company) does not assume or continue such purchase rights or does not substitute similar rights for such purchase rights, then the participants’ accumulated contributions will be entitledused to a tax deductionpurchase shares of Class A Stock prior to the Change in connection with the vesting, settlement or exercise of an awardControl under the Amended Planoutstanding purchase rights, and the purchase rights will terminate immediately after such purchase. The board will notify each participant in an amount equalwriting prior to the ordinary income realized by a participant atnew purchase date that the timepurchase date for the participant’s purchase rights has been changed to the new purchase date and that such purchase rights will be automatically exercised on the new purchase date unless prior to such date the participant recognizes such income, such as when a participant exercises a nonqualified stock option. Special rules limithas withdrawn from the deductibility of compensation paid to our certain executive officers. In addition, Section 162(m)offering.
Amendment, Termination or Suspension of the Code places a limit of $1 million onESPP
The board may amend the amount of compensation that we may deduct as a business expenseESPP at any time in any yearrespect the board deems necessary or advisable. However, except with respect to certaincapitalization adjustments described above, stockholder approval will be required for any amendment of the ESPP for which stockholder approval is required by applicable laws, regulations or listing requirements, including any amendment that either (i) increases the number of shares of Class A Stock available for issuance under the ESPP, (ii) expands the class of individuals eligible to become participants and receive purchase rights, (iii) materially increases the benefits accruing to participants under the ESPP or reduces the price at which shares of Class A Stock may be purchased under the ESPP, (iv) extends the term of the ESPP, or (v) expands the types of awards available for issuance under the ESPP, but in each case only to the extent stockholder approval is required by applicable laws, regulations, or listing requirements.
The board may suspend or terminate the ESPP at any time. No purchase rights may be granted under the ESPP while the ESPP is suspended or after it is terminated.
Any benefits, privileges, entitlements, and obligations under any outstanding purchase rights granted before an amendment, suspension, or termination of the ESPP will not be materially impaired by any such amendment, suspension, or termination except (i) with the consent of the person to whom such purchase rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations, or (iii) as necessary to obtain or maintain any special tax, listing, or regulatory treatment.
Other Compensation Policies and Practices
Compensation Clawback Policy
On June 7, 2022, theboard of directors adopted the Luminar Technologies, Inc. Clawback Policy. Pursuant to this policy, if the company is required to undertake a restatement due to improper conduct (defined as misconduct, including without limitation fraud, by company management), then our board of directors may, in its sole discretion, recover all or any portion of the incentive-based compensation (including cash and equity awards, whether time or performance-based, and salary increases) granted or paid to or earned by an employee during the three-year period preceding the date on which the company is required to prepare the restatement, that the board determines, in its sole discretion, to be appropriate in light of the scope and nature of the improper conduct.
In addition, the board may, in its sole discretion and in the reasonable exercise of its business judgment, determine whether and to what extent additional action is appropriate to address the circumstances surrounding such restatement to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate. Misconduct by a specific employee is not required for such employee’s recoverable compensation to be recovered pursuant to the policy. The board has full authority to administer the policy, and the board may amend or terminate the policy at any time.
Benefits and Perquisites
We provide benefits to our named executive officers on the same basis as provided to all of our most highly paid executive officers. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to awardemployees, including health, dental and pay compensation thatvision insurance; life insurance; accidental death and dismemberment insurance; critical illness; short- and long-term disability insurance; a health reimbursement account; a health savings account; a flexible spending account; and a tax-qualified Section 401(k) plan for which an employer match is provided. We do not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be the most effective in attracting, motivating and retaining key employees.any executive-specific benefit or perquisite programs.
New Plan Benefits
No awards have been granted under the Amended Plan. All future awards to directors, executive officers, employees and consultants2022 Grants of the company under the Amended Plan are discretionary and cannot be determined at this time.
Historical Plan BenefitsPlan-Based Awards
The following table sets forth information regarding the incentive awards granted to the named executive officers for each2022, none of which were non-equity incentive plan awards.
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| | | | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards | | All Other
Stock Awards: Number of shares of
stock or Units
(#) | | Grant Date Fair Value of Stock awards ($) (1) |
| Name | | Award Type | | Grant
Date | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | |
| Austin Russell | | PRSUs(2) | | 5/2/2022 | | — | | | 10,800,000 | | | — | | | — | | | $ | 93,915,468 | |
| | | | | | | | | | | | | | |
| Thomas J. Fennimore | | PRSUs(2) | | 8/19/2022 | | — | | | 500,000 | | | — | | | — | | | 3,059,751 | |
| | Time-Based RSUs(3) | | 8/19/2022 | | — | | | — | | | — | | | 350,000 | | | 3,325,000 | |
| | | | | | | | — | | | | | | | |
| Alan Prescott | | PRSUs(2) | | 8/19/2022 | | — | | | 500,000 | | | — | | | — | | | 3,059,751 | |
| | Time-Based RSUs(3) | | 8/19/2022 | | — | | | — | | | — | | | 350,000 | | | 3,325,000 | |
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(1)The amount reported in this column reflects the aggregate grant date fair value for financial statement reporting purposes of PRSUs and time-based RSUs granted during the year ended December 31, 2022, as determined in accordance with ASC 718. This amount reflects our accounting expense for these restricted stock units and does not represent the actual economic value that may be realized by the named executive officer. There can be no assurance that the amount will ever be realized. For the assumptions used in valuing the award, please see Note 12 of the individualscompany’s consolidated financial statements for the year ended December 31, 2022.
(2)The PRSUs were granted under our 2020 Equity Incentive Plan. See “Compensation Discussion and groups indicated,Analysis—Elements of Executive Compensation—Long-Term Equity Incentive Compensation— 2022 PRSUs” for a discussion of the material features of these awards, which are completely at-risk. Subject to the achievement of the Operational Milestone, the PRSUs will vest only to the extent both of the following criteria are satisfied: (i) the Service Requirement and (ii) the Stock Price Milestone, subject in each case to the executive’s continued service with the company through each vesting date (except in certain cases of death or disability), as follows:
Service Requirement: The service-based requirement will be satisfied as to the following percentages of the total number of shares of our common stock subject to stock awards that have beenPRSUs granted (even if not currently outstanding) under the Plan, since it originally became effective through May 5, 2022.
| | | | | | | | |
Name and position | | Number of shares subject to stock awards (5) |
Austin Russell | | 10,800,000 | |
President and Chief Executive Officer | | |
Thomas J. Fennimore | | 455,373 | |
Chief Financial Officer | | |
Alan Prescott(1) | | 1,435,487 | |
Chief Legal Officer | | |
M. Scott Faris(2) | | 204,918 | |
Former Chief Business Officer | | |
Jason Eichenholz, PhD(3) | | 1,720,264 | |
Chief Technology Officer | | |
All current executive officers as a group (3 persons) | | 12,690,860 | |
All current directors who are not executive officers as a group (6 persons) | | 102,146 | |
All employees, including all current officers who are not executive officers, as a group | | 19,294,881 | |
(1)Mr. Prescott joined the Company on April 26, 2021.
(2)Mr. Faris left the Company on November 9, 2021.
(3)Dr. Eichenholz ceased serving as an executive officereach of the Companyfirst seven anniversaries of the vesting commencement date: (a) 10% will vest on June 9, 2021.
(4)The total numbereach of shares subject to stock awards that have been granted to each director on an individual basis are as follows: Alec Gores: 9,106; Matthew Simoncini: 9,106; Dr. Mary Lou Jepsen: 23,733; Katharine A. Martin: 23,733; Jun Hong Heng: 18,234; and Dr. Shaun Maguire: 18,234.
(5)These stock awards consist of restricted stock units.
Austin Russell Equity Award
On May 2, 2022, a Special Committee (the “Special Committee”) of our Board comprised of independent directors and our Compensation & Human Capital Management Committee approved the grant of 10,800,000 performance share units to Mr. Russell, which are eligible to vest, if at all, only upon the achievement of certain significant and extremely challenging stock price milestones as well as time-based and operational milestones. The Special Committee and the Compensation & Human Capital Management Committee approved Mr. Russell’s equity award after numerous discussions and meetings and after consulting with Compensia, the Board’s compensation consultant.
The Committees considered the importance of incentivizing a strong long-term perspective on operational performance, Mr. Russell’s service, and goal alignment with the Company’s stockholders. Mr.
Russell earns nothing without extraordinary success for the Company and our stockholders. To reach the first, tranche of compensation for Mr. Russell, the Company’s market valuesecond, and third anniversary, (b) 15% will need to increase at least 400% of its current value.
In deliberations, the Committees also took into account Mr. Russell’s strong performance indication in his evaluation by the Board of Directors, in addition to vision and leadership. Finally, the Committees noted that Mr. Russell’s compensation has consisted primarily of base salary in amounts far below industry practices since 2015, with no equity-based awards or annual cash bonuses issued or paid during the past seven years.
The operational milestone will be satisfied upon the Company’s achievementvest on each of the startfourth and fifth anniversaries, and (c) 20% will vest on each of production (SOP) of one (1) series production program (the “Operational Milestone”). The Operational Milestone must be achieved in order for any performance share units (“PSUs”) to vest.the sixth and seventh anniversaries.
Stock Price Milestone: The stock price requirement will be satisfied as to a particular tranche of PSUs set forth in the Stock Price Milestone Table below whenPRSUs upon certification that the corresponding Stock Price Milestone (as defined and described below) as to such tranche of PSUsPRSUs is achieved as of a particular date:
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| Tranche | Stock Price Milestone | PSUs Vesting |
| 1 | Stock Price of $50 or more | 3,600,000 |
| 2 | Stock Price of $60 or more | 3,600,000 |
| 3 | Stock Price of $70 or more | 3,600,000 |
The service requirement 1/3rd of PRSUs will be satisfied as to the following percentagesvest upon achievement of the Total Number$50 or more, 1/3rd of PSUs on eachPRSUs will vest upon achievement of the first seven (7) anniversaries$60 or more, and 1/3rd of the Vesting Commencement Date:
| | | | | | | | |
| Anniversary of Vesting Commencement Date | % of Total PSUs Service-Based Vesting | Cumulative % of PSUs Service-Based Vesting |
| 0 | 0% | 0% |
| 1 | 10% | 10% |
| 2 | 10% | 20% |
| 3 | 10% | 30% |
| 4 | 15% | 45% |
| 5 | 15% | 60% |
| 6 | 20% | 80% |
| 7 | 20% | 100% |
A “Stock Price Milestone” is achieved when the volume-weighted average price per sharePRSUs will vest upon achievement of Class A common stock (each, a “Share”) for the preceding ninety (90) consecutive trading days (the “90 Day VWAP”) equals$70 or exceeds the milestone’s stock price.more. The achievement of a Stock Price Milestone will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Once a Stock Price Milestone has been achieved, it is forever deemed achieved (i.e., ifprice will be measured based on the stock price declines following satisfaction90 Day VWAP; and
Operational Milestone: Successful achievement of a Stock Price Milestone, such Stock Price Milestone will still be deemed achieved) and cannot be achieved again.
start of production for at least one major program. The Operational Milestone and the Stock Price Milestones described above must be achieved by the seven (7) yearseven-year anniversary of the Vesting Commencement Date (the “Final Vesting Date”). Anyvesting commencement date, and any unvested PSUsPRSUs remaining as of the day immediately following the Final Vesting Date willsuch date shall be cancelled and forfeited without consideration.
If(3)The time-based RSUs vest as follows: 30% of the RSUs vested on September 5, 2022, and 10% vest each quarter thereafter until June 5, 2024, subject to the executive’s continued service on each such date.
Outstanding Equity Awards at December 31, 2022 Fiscal Year-End
The following table sets forth information regarding each Luminar stock option and unvested Luminar RSU held by each of our named executive officers as of December 31, 2022.
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| | Option Awards (1) | | Stock Awards (2) |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#) | | Market
Value of Shares
or Units
of Stock
That Have
Not
Vested
($) | | Equity
Incentive
Plan
Awards:
Number of
Shares,
Units of
Stock, or
Other
Rights
That Have
Not Vested
(#) | | Equity
Incentive
Plan
Awards:
Number of
Shares,
Units of
Stock, or
Other
Rights
That Have
Not Vested
(#) |
| Austin Russell | | 5/2/2022 | (3) | | — | | | — | | | $ | — | | | — | | — | | | $ | — | | | 10,800,000 | | | $ | 53,460,000 | |
| | | | | | | | | | | | | | | | | | | |
| Thomas J. Fennimore | | 5/14/2020 | (4) | | 1,188,447 | | | 651,729 | | | 1.67 | | | 5/13/2030 | | — | | | — | | | — | | | — | |
| | 7/23/2021 | (5) | | — | | | — | | | — | | | — | | 364,299 | | | 1,803,280 | | | — | | | — | |
| | 8/19/2022 | (3) | | — | | | — | | | — | | | — | | — | | | — | | | 500,000 | | | 2,475,000 | |
| | 8/19/2022 | (6) | | — | | | — | | | — | | | — | | 210,000 | | | 1,039,500 | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Alan Prescott | | 5/27/2021 | (7) | | — | | | — | | | — | | | — | | 400,775 | | | 1,983,836 | | | — | | | — | |
| | 11/11/2021 | (8) | | — | | | — | | | — | | | — | | 198,563 | | | 982,887 | | | — | | | — | |
| | 11/11/2021 | (9) | | — | | | — | | | — | | | — | | 333,000 | | | 1,648,350 | | | — | | | — | |
| | 8/19/2022 | (3) | | — | | | — | | | — | | | — | | — | | | — | | | 500,000 | | | 2,475,000 | |
| | 8/19/2022 | (6) | | — | | | — | | | — | | | — | | 210,000 | | | 1,039,500 | | | — | | | — | |
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(1)Certain stock options originally covered shares of Legacy Luminar Class A common stock, as granted pursuant to Legacy Luminar Stock Plan, and were assumed by Luminar in the Business Combination. All stock options are set forth above on an as-converted basis (as to both number of underlying shares and option exercise price).
(2)Market values are based on the closing price of our common stock on the Nasdaq on December 30, 2022 ($4.95).
(3)Represents a PRSU award. Subject to the achievement of the Operational Milestone, the PRSUs will vest only to the extent both of the following criteria are satisfied: (i) the Service Requirement and (ii) the Stock Price Milestone, subject in each case to the executive’s continued service with the company through each vesting date (except in certain cases of death or disability), as follows:
Service Requirement: The service-based requirement will be satisfied as to the following percentages of the total number of PRSUs granted on each of the first seven anniversaries of the vesting commencement date: (a) 10% will vest on each of the first, second, and third anniversary, (b) 15% will vest on each of the fourth and fifth anniversaries, and (c) 20% will vest on each of the sixth and seventh anniversaries.
Stock Price Milestone: The stock price requirement will be satisfied as to a particular tranche of PRSUs upon certification that the corresponding Stock Price Milestone as to such tranche of PRSUs is achieved as of a particular date: 1/3rd of PRSUs will vest upon achievement of $50 or more, 1/3rd of PRSUs will vest upon achievement of $60 or more, and 1/3rd of PRSUs will vest upon achievement of $70 or more. The achievement of a Stock Price Milestone will also satisfy the achievement of any unachieved Stock Price Milestone for a lower-numbered tranche. Stock price will be measured based on the 90 Day VWAP; and
Operational Milestone: Successful achievement of start of production for at least one major program. The Operational Milestone and the Stock Price Milestones described above must be achieved by the seven-year anniversary of the vesting commencement date, and any unvested PRSUs remaining as of the day immediately following such date shall be cancelled and forfeited without consideration.
(4)The option grant is subject to a 4-year vesting schedule, with 25% of the shares having vested on May 11, 2021 and 1/48th of the shares vesting monthly thereafter, subject to the option holder’s continuous service through each vesting date; provided that if the optionee dies, then 100% of the shares subject to the option grant will immediately vest.
(5)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 10% of the RSU award will vest on January 1 of each of 2022 and 2023, respectively; an additional 15% of the RSU award will vest on January 1 of each of 2024 and 2025, respectively; an additional 20% of the RSU award will vest on January 1, 2026; and the remaining 30% of the RSU award will vest on January 1, 2027.
(6)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 30% of the RSU award vested on September 5, 2022, and 10% will vest each quarter thereafter until June 5, 2024.
(7)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 25% of the RSU award vested April 26, 2022, and 1/16 will vest on each quarterly anniversary thereafter for two years.
(8)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 3/16th of the RSU award vested on January 26, 2022, and thereafter, 1/16th of the RSU award will vest on each quarterly anniversary thereof until the RSU award is fully vested; provided that in the event Mr. Prescott is terminated, resigns for good cause, or we experience a change in control (including a sale of substantially all of our assets or change of at least 50% of the board of directors), the RSU award shall immediately vest.
(9)Represents an RSU award. Subject to the continuous service of the RSU holder on each vesting date, the RSU award will vest as follows: 10% of the RSU award will vest on November 11 of each of 2022 and 2023, respectively; an additional 15% of the RSU award will vest on November 11 of each of 2024 and 2025, respectively; an additional 20% of the RSU award will vest on November 11, 2026; and the remaining 30% of the RSU award will vest on November 11, 2027.
Option Exercises and Stock Vested
The following table presents information concerning RSUs that vested for our named executive officers during the year ended December 31, 2022. Stock awards value realized is calculated by multiplying the number of shares shown in the table by the closing price of our stock on the date the stock awards vested. None of our named executive officers exercised stock options during 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of
Shares
Acquired on
Exercise
(#) | | Value
Realized
on
Exercise
($) | | Number of
Shares
Acquired on
Vesting
(#) | | | Value
Realized
on
Vesting
($) | |
| Austin Russell | | — | | | $ | — | | | — | | | | $ | — | | |
| Thomas J. Fennimore | | — | | | — | | | 231,074 | | (1) | | 2,259,362 | | (2) |
| Alan Prescott | | — | | | — | | | 643,149 | | (3) | | 6,421,669 | | (4) |
| | | | | | | | | | |
| | | | | | | | | | |
(1)Represents partial vesting with respect to an award of (i) 455,373 RSUs granted on July 23, 2021, of which 45,537 RSUs vested on January 1, 2022, and 45,537 RSUs vested on December 5, 2022; and (ii) 350,000 RSUs granted on August 19, 2022, of which 105,000 RSUs vested on September 5, 2022, and 35,000 RSUs vested on December 5, 2022.
(2)Calculated with respect to the closing price of our common stock on the Nasdaq on (or on the last trading date prior to) the vesting dates associated with the RSU awards granted to Mr. Fennimore: January 1, 2022 ($16.91), September 5, 2022 ($8.14), and December 5, 2022 ($7.88).
(3)Represents partial vesting with respect to an award of (i) 370,000 RSUs granted on November 11, 2021, of which 37,000 RSUs vested on November 5, 2022; (ii) 353,000 RSUs granted on November 11, 2021, of which 66,187 RSUs vested on January 26, 2022, and 22,063 RSUs vested on each of April 26, 2022, July 5, 2022, October 5, 2022 and December 5, 2022; (iii) 712,487 RSUs granted on May 27, 2022, of which 178,121 RSUs vested on April 26, 2022, and 44,530 RSUs vested on each of July 5, 2022, October 5, 2022, and December 5, 2022; and (iv) 350,000 RSUs granted on August 19, 2022, of which 105,000 RSUs vested on September 5, 2022, and 35,000 RSUs vested on December 5, 2022.
(4)Calculated with respect to the closing price of our common stock on the Nasdaq Global Select Market on (or on the last trading date prior to) the vesting dates associated with the RSU awards granted to Mr. Prescott: January 26, 2022 ($13.50), April 26, 2022 ($13.07), July 5, 2022 ($6.08), September 5, 2022 ($8.14), October 5, 2022 ($8.41), November 5, 2022 ($7.88), and December 5, 2022 ($7.88).
Estimated Potential Payments Upon Termination or Change-in-Control
The following table sets forth an estimate with respect to each named executive officer’s potential incremental payments upon a termination of employment or a change in control of Luminar, in each case assuming such event occurred December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Severance
Payments
Upon
Involuntary
Termination
($) | | Acceleration
Value of Stock
Option Upon Death
($) | | Acceleration Value of RSUs upon Termination, Resignation for Good Reason, or Change in Control ($) | | Acceleration Value of PRSUs upon Change in Control
($) | | Total
($) | |
| Austin Russell | | $ | — | | | | $ | — | | | | $ | — | | | | $ | 53,460,000 | | (4) | | $ | — | | |
| Thomas J. Fennimore | | 150,000 | | (1) | | 2,137,671 | | (2) | | — | | | | 2,475,000 | | (4) | | 2,287,671 | | |
| Alan Prescott | | — | | | | — | | | | 982,887 | | (3) | | 2,475,000 | | (4) | | 982,887 | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
(1)Pursuant to the terms of Mr. Fennimore’s offer letter, in the event that Mr. Fennimore is terminated by the company due to no fault of his own, he will be entitled to receive, as severance benefits, an amount equal to six months of his annual base salary, subject to his execution (without revocation) of a general release of claims in favor of Luminar. This potential severance payment is “single-trigger.”
(2)Pursuant to the terms of the option award granted to Mr. Fennimore on May 14, 2020, 100% of unvested shares subject to the option will become immediately vested upon termination of his employment due to death. The acceleration value was calculated by multiplying (i) 651,729 unvested shares subject to the option as of December 31, 2022, by (ii) the difference between the closing price of our common stock on the Nasdaq on December 30, 2022 ($4.95) and the exercise price of the option ($1.67). This potential acceleration is “single-trigger.”
(3)Pursuant to the terms of the RSU award granted to Mr. Prescott on November 11, 2021, 100% of unvested RSUs will become immediately vested in the event Mr. Prescott is terminated, resigns for good cause, or we experience a change in control (including a sale of substantially all of our assets or change of at least 50% of the board of directors). The acceleration value was calculated by multiplying (i) 198,563 unvested RSUs subject to the award as of December 31, 2022, by (ii) the closing price of our common stock on the Nasdaq on December 30, 2022 ($4.95). This potential acceleration is “single-trigger.”
(4)A PRSU award was granted to Mr. Russell ceaseson May 2, 2022 and to beMessrs. Fennimore and Prescott on August 19, 2022. Subject to the achievement of the Operational Milestone, the PRSUs will vest only to the extent both of the following criteria are satisfied: (i) the Service Requirement and (ii) the Stock Price Milestone, subject in each case to the executive’s continued service with the company through each vesting date (except in certain cases of death or disability). The PRSU award provides that, subject to the executive’s continuous service with the company through the date of a Service Provider“Change in Control” (as defined in the 2020 Equity Incentive Plan) due to his death or disability, the Service Requirement will be deemed to be satisfied as of the termination date for that number of additional PSUs that would have service-based vested had Mr. Russell continued to be a Service Provider through the 18 month anniversary of the termination date (provided that any requisite Stock Price Milestone or Operational Milestone must have been satisfied prior to Mr. Russell’s actual termination date without regard to any achievement thereof in the 18 months following such termination date).
If Mr. Russell has been continuously a Service Provider through the date of a Change in Control (as defined in the 2020 Plan),: (i) the Service Requirement and Operational Milestone, to the extent not then achieved, will both be deemed achieved on the date of such Change in Control, and (ii) the greater of (1) the fair market value per Shareshare of the consideration received by the common stockholders of the Companycompany in the Change in Control or (2) the most recent closing price per Shareshare of the company’s common stock immediately prior to the consummation of the Change in Control, may additionally be used to satisfy a Stock Price Milestone (e.g., if the per Share consideration received by the stockholders of the Company in the Change of Control is $70, the tranche 3 $70 Stock Price Milestone would be satisfied) (the greater of (i) or (ii), the “Per Share CIC Price”). In addition, in the event of a Change in Control, if the per Share stock price using either the 90 Day VWAP or the per share Change In Control price falls between two Stock Price Milestones (e.g., $65, but not, for avoidance of doubt, below the lowest Stock Price Milestone), straight line linear interpolation between two tranches may be used to satisfy the Stock Price Requirement for a partial tranche of Performance Share Units (e.g., if the Per Share CIC Price is $65 and the tranche 3 Stock Price Milestone has not yet been achieved, then the Stock Price Requirement would be satisfied as to 1,800,000 additional PSUs) The satisfaction of the Stock Price Requirement upon a Change in Control will be deemed to occur immediately prior to the consummation of the Change in Control; and afterMilestone. After giving effect to the foregoing provisions, any portion of the PSUPRSU award that has not become vested in a Change ofin Control due to the Stock Price Milestone not being met as of the date of such Change in Control willshall be cancelled for no consideration. The acceleration value was calculated by multiplying: (i) the number of unvested PRSUs subject to the award as of December 31, 2022 (10,800,000 PRSUs for Mr. Russell and 500,000 PRSUs for each of Messrs. Fennimore and Prescott), by (ii) the closing price of our common stock on the Nasdaq on December 30, 2022 ($4.95). The acceleration value for each executive assumes the following: (i) a Change in Control occurred on December 31, 2022, and accordingly, the Service Requirement and Operational Milestone were both deemed achieved on such date; and (ii) the per share consideration received by the common stockholders of the company in the Change in Control was $70, and accordingly, the tranche 3 $70 Stock Price Milestone was satisfied.
CEO Pay Ratio
Pursuant to SEC rules adopted according to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the ratio of the annual total compensation of our principal executive officer to our median employee’s annual total compensation.
Our current principal executive officer is Austin Russell, President and Chief Executive Officer. For our 2022 fiscal year, the median of the annual total compensation of all employees of our company (other than our Chief Executive Officer), was $211,736; and the annual total compensation of our Chief Executive Officer was $93,915,469, as reflected in the “Total” column for 2022 in the Summary Compensation Table above. Based on this information, for 2022 the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees was 443 to 1.
As noted above, Mr. Russell’s sole compensation for 2022 consisted of a salary of $1.00 and performance-based restricted stock units that are eligible to vest, if at all, only upon the achievement of aggressive stock price milestones (requiring a nearly eight times increase in stock price), among other conditions. As of December 31, 2022, none of these PRSUs had vested. The amount of compensation disclosed in the Summary Compensation Table above reflects our aggregate accounting expense for these PRSUs and does not represent the actual economic value that has been, or may ultimately be, realized by Mr. Russell.
Employees Included. December 31, 2022 was used to determine the median employee (the “determination date”). At the determination date, our employee population consisted of 635 employees worldwide. In identifying the worldwide median employee, we included all our employees (except for our Chief Executive Officer).
Selecting Median Employee. Compensation for purposes of identifying the median employee included the following: (i) base salary and wages, bonus and all other cash compensation paid in fiscal year 2022; and (ii) the grant date fair value of equity award also contains a clawback provision that states that ifawards granted in fiscal year 2022, calculated using the Company undertakes a restatement duesame methodology we use for our named executive officers in our Summary Compensation Table, which reflects all new hire and annual equity awards granted in 2022 to misconduct (including fraud) by Company management, then the Board may recover all or any portionour employees who were employed as of the awardemployee population determination date. No adjustments were made for cost of living or low compensation standards in any consideration issued thereunder paidcountries. Pay for non-U.S. employees was converted to or earnedU.S. dollars using currency exchange rates as of the determination date. Using this methodology, we determined that the “median employee” was a full-time, salaried employee located in the United States. After identifying the median employee based on the methodology above, we calculated the annual total compensation for such median employee using the same methodology we use to calculate the amount reported for our named executive officers in the “Total” column of the Summary Compensation Table.
We believe that the pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC’s rules for identifying the median compensated employee and calculating the CEO pay ratio allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by Mr. Russell duringother companies may not be comparable to the three-year period preceding the date on which the Company is required to prepare the restatement.
pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Equity Compensation Plan Information
We currently maintain the following equity compensation plans that provide for the issuance of shares of our Class A common stock to our officers and other employees, directors and consultants, each of which has been approved by our stockholders: our Management Longer Term Equity Incentive Plan, our 2020 Equity Incentive Plan or the 2020 Plan, and our 2020 Employee Stock Purchase Plan, or the ESPP.
The following table presents information as of December 31, 20212022 with respect to compensation plans under which shares of our common stock may be issued. The table does not include information with respect to shares subject to outstanding awards granted under the Legacy Luminar’s Amended and Restated 2015Luminar Stock Plan, or the 2015 Plan,which was assumed by us in connection with the Business Combination.
| | | (a) | | (b) | | (c) | | | (a) | | (b) | | (c) | |
| Plan Category | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and vesting of RSAs and RSUs | | Weighted‑average exercise price of outstanding options and warrants ($) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) | | Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and vesting of RSAs and RSUs | | Weighted‑average exercise price of outstanding options and warrants ($) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) | |
| Equity compensation plans approved by security holders | Equity compensation plans approved by security holders | | 11,983,032 | | | — | | (3) | | 56,024,552 | | (1) | Equity compensation plans approved by security holders | | 25,594,035 | | | — | | (2) | | 72,612,561 | | (3) |
| Equity compensation plans not approved by security holders | Equity compensation plans not approved by security holders | | — | | (2) | — | | | — | | | Equity compensation plans not approved by security holders | | — | | (1) | — | | | — | | |
| Total | Total | | 11,983,032 | | | — | | | 56,024,552 | | | Total | | 25,594,035 | | | — | | | 72,612,561 | | |
(1)Includes 25,818,749 shares available for issuance under the Management Longer Term Equity Incentive Plan, 22,888,148 shares available for issuance under the Equity Incentive Plan and 7,317,655 shares available for issuance under the ESPP.
(2)Excludes outstanding options to acquire 11,507,6438,162,850 shares of Class A common stock with weighted average exercise price of $1.72$1.74 and 666,29864,486 restricted stock awards that were assumed by us in connection with the Business Combination. For more information regarding the 2015Legacy Luminar Stock Plan, please see, “Note 14.12. Stock-based Compensation” in the Notes to Consolidated Financial Statements in our financial statements for the year ended December 31, 20212022 in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2021.February 28, 2023.
(3)(2)Outstanding awards of restricted stock units have no exercise price.
Considerations(3)Includes 25,818,749 shares available for issuance under the Management Longer Term Equity Incentive Plan, 39,644,304 shares available for issuance under the 2020 Equity Incentive Plan and 7,149,508 shares available for issuance under the ESPP. The number of shares available for issuance under the Management Longer Term Equity Incentive Plan will automatically increase in one-sixth increments upon the occurrence of each of six distinct triggering events, which occur if the Common Share Price (as defined in the Management Longer Term Equity Incentive Plan) is greater than $31, $34, $37, $40, $43 and $46, respectively. The number of shares available for issuance under the 2020 Equity Incentive Plan will automatically increase on the first day of each fiscal year in an amount equal to the lesser of (i) 5% of the Boardoutstanding shares of common stock on the last day of the immediately preceding fiscal year, (ii) 40,000,000 shares or (iii) such number of shares determined by the board of directors.
We believe
OTHER COMPENSATION INFORMATION
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the company. For further information concerning the company’s variable pay-for-performance philosophy and how the company aligns executive compensation with the company’s performance, refer to “Compensation Discussion and Analysis.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | Summary
Compensation
Table
Total for
PEO | | Compensation
Actually
Paid to
PEO | | Average
Summary
Compensation
Table Total
for
Non-PEO
NEOs | | Average
Summary
Compensation
Actually Paid
to
Non-PEO
NEOs | | Value of Initial Fixed $100 Investment Based On: | | Net Loss
(millions) | | Stock Price
(90-Day
VWAP) |
| | | | | Total
Shareholder
Return | | Peer Group
Total
Shareholder
Return | | |
| | (1) | | (2) | | (3) | | (4) | | (5) | | (6) | | (7) | | (8) |
| 2022 | | $ | 93,915,469 | | | $ | 28,958,401 | | | $ | 6,784,751 | | | $ | (10,947,549) | | | $ | 21.54 | | | $ | 95.27 | | | $ | (445.9) | | | $ | 7.62 | |
| 2021 | | 1 | | | 1 | | | 18,190,495 | | | 2,505,975 | | | 75.15 | | | 121.64 | | | (238.0) | | | 17.59 | |
| 2020 | | 330,841 | | | 330,841 | | | 1,723,691 | | | 43,387,280 | | | 147.95 | | | 106.82 | | | (369.1) | | | 33.12 | |
1 Summary Compensation Table Total for PEO: The dollar amounts reported in column (1) are the amounts of total compensation reported for Mr. Russell (our Founder, President and Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table.
2 Compensation Actually Paid to PEO: The dollar amounts reported in column (2) represent the amount of “compensation actually paid” to Mr. Russell, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Russell during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Russell’s total compensation for each year to determine the compensation actually paid:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | Reported
Summary
Compensation
Table Total for
PEO | | Reported
Value of Equity
Awards | | Equity
Award
Adjustments | | Compensation
Actually Paid to
PEO |
| 2022 | | $ | 93,915,469 | | | $ | (93,915,468) | | | $ | 28,958,400 | | | $ | 28,958,401 | |
| 2021 | | 1 | | | — | | | — | | | 1 | |
| 2020 | | 330,841 | | | — | | | — | | | 330,841 | |
a.The grant date fair value of equity awards represents the total of any amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year.
b.The equity award adjustments for each applicable fiscal year include the addition (or subtraction, as applicable) of the following:
(i) the year-end fair value (computed consistent with the methodology used for share-based payments under U.S. GAAP) of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year;
(ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year;
(iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date;
(iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value;
(v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and
(vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year.
The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | (i)
Year End
Fair Value
of Equity
Awards | | (ii)
Year over Year
Change in Fair
Value of
Outstanding
and Unvested
Equity Awards | | (iii)
Fair
Value as
of Vesting
Date of
Equity
Awards
Granted
and
Vested in
the Year | | (iv)
Year over
Year Change
in Fair Value
of Equity
Awards
Granted in
Prior Years
that Vested
in the Year | | (v)
Fair Value at
the End of the
Prior Year of
Equity
Awards that
Failed to Meet
Vesting
Conditions in
the Year | | (vi)
Value of Dividends
or other Earnings
Paid on Stock or
Option Awards not
Otherwise
Reflected in Fair
Value or Total
Compensation | | Total
Equity
Award
Adjustments |
| 2022 | | $ | 28,958,400 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 28,958,400 | |
| 2021 | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| 2020 | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
3 Average Summary Compensation Table Total for Non-PEO NEOs:The dollar amounts reported in column (3) represent the average of the amounts reported for the company’s named executive officers as a group (excluding Mr. Russell, who has served as our Chief Executive Officer since founding the company in 2012) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the named executive officers (excluding Mr. Russell) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Thomas J. Fennimore and Alan Prescott; (ii) for 2021, Thomas J. Fennimore, Alan Prescott, M. Scott Faris, and Jason Eichenholz; and (iii) for 2020, Thomas J. Fennimore and M. Scott Faris.
4Average Compensation Actually Paid to Non-PEO NEOs: The dollar amounts reported in column (4) represent the average amount of “compensation actually paid” to the named executive officers as a group (excluding Mr. Russell), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the named executive officers as a group (excluding Mr. Russell) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the named executive officers as a group (excluding Mr. Russell) for each year to determine the compensation actually paid, using the same methodology described above in Note 2:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | Average
Reported Summary
Compensation
Table Total for
Non-PEO NEOs | | Average
Reported
Value of Equity
Awards | | Average
Equity
Award
Adjustments | | Average Compensation Actually Paid to
Non-PEO NEOs |
| 2022 | | $ | 6,784,751 | | | $ | (6,384,751) | | | $ | (11,347,549) | | | $ | (10,947,549) | |
| 2021 | | 18,190,495 | | | (17,815,692) | | | 2,131,172 | | | 2,505,975 | |
| 2020 | | 1,723,691 | | | (1,377,348) | | | 43,040,937 | | | 43,387,280 | |
a.The amounts deducted or added in calculating the total average equity award adjustments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | (i)
Average
Year End
Fair Value
of Equity
Awards | | (ii)
Year over Year
Average Change
in Fair Value of
Outstanding and
Unvested
Equity Awards | | (iii)
Average
Fair
Value as
of Vesting
Date of
Equity
Awards
Granted
and
Vested in
the Year | | (iv)
Year over
Year
Average
Change in
Fair Value
of Equity
Awards
Granted in
Prior Years
that Vested
in the Year | | (v)
Average Fair
Value at the End
of the
Prior Year of
Equity
Awards that
Failed to Meet
Vesting
Conditions in
the Year | | (vi)
Average Value of Dividends
or other Earnings
Paid on Stock or
Option Awards not
Otherwise
Reflected in Fair
Value or Total
Compensation | | Total
Average
Equity
Award
Adjustments |
| 2022 | | $ | 2,380,167 | | | $ | (11,542,105) | | | $ | 1,130,500 | | | $ | (3,316,111) | | | $ | — | | | $ | — | | | $ | (11,347,549) | |
| 2021 | | 15,641,925 | | | (10,558,034) | | | 17,434,923 | | | (6,042,370) | | | (14,345,272) | | | — | | | 2,131,172 | |
| 2020 | | 43,040,937 | | | — | | | — | | | — | | | — | | | — | | | 43,040,937 | |
5Total Shareholder Return: Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the company’s share price at the end and the beginning of the measurement period by the company’s share price at the beginning of the measurement period. The measurement period commences on December 3, 2020, the date our common stock commenced trading on the Nasdaq Global Select Market, and ends on December 31, 2022.
6Peer Group Total Shareholder Return: Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: Russell 2000 Index.
7 Net Loss: The dollar amounts reported represent the amount of net loss reflected in the company’s audited financial statements for the applicable year.
8Stock Price: Stock Price is based on the volume-weighted average price per share for the preceding 90 consecutive trading days (the “90 Day VWAP”). In 2022, we used Stock Price to set goals with respect to the vesting of PRSUs that were granted to our named executive officers. The company has determined that Stock Price, measured based on the 90 Day VWAP, is the financial performance measure that, in the company’s assessment, represents the most important performance measure used by the company to link compensation actually paid to the company’s named executive officers, for the most recently completed fiscal year, to company performance.
Tabular List of Financial Performance Measures
As described in greater detail in “Compensation Discussion and Analysis,” the company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Amended Plancompany uses for both our incentive awards are selected based on an objective of incentivizing our named executive officers to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the company to link executive compensation actually paid to the company’s named executive officers, for the most recently completed fiscal year, to the company’s performance are as follows:
•Stock Price (90 Day VWAP)
•Start of Production (SOP)
Analysis of the Information Presented in the Pay versus Performance Table
As described in more detail in the section “Compensation Discussion and Analysis,” the company’s executive compensation program reflects a variable pay-for-performance philosophy. While the company utilizes various performance measures to align executive compensation with company performance, all of those company measures are not presented in the Pay versus Performance table. Moreover, the company generally seeks to incentivize long-term performance, and therefore does not
specifically align the company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid and Cumulative TSR
The following table demonstrates the relationship of the amount of compensation actually paid to Mr. Russell and the approvalaverage amount of its material termscompensation actually paid to the named executive officers as a group (excluding Mr. Russell) with the company’s cumulative TSR over the three years presented in the table.
Compensation Actually Paid and Net Loss
The following table demonstrates the relationship of the amount of compensation actually paid to Mr. Russell and the average amount of compensation actually paid to the named executive officers as a group (excluding Mr. Russell) with the company’s net losses over the three years presented in the table.
Compensation Actually Paid and Stock Price
The following table demonstrates the relationship of the amount of compensation actually paid to Mr. Russell and the average amount of compensation actually paid to the named executive officers as a group (excluding Mr. Russell) with the company’s Stock Price over the three years presented in the table.
As discussed in the “Compensation Discussion and Analysis,” Mr. Russell’s sole compensation for 2022 consisted of performance-based restricted stock units that are essentialeligible to vest, if at all, only upon the achievement of aggressive Stock Price milestones (requiring a nearly eight times increase in Stock Price), among other conditions. Mr. Russell’s compensation has consisted primarily of base salary in amounts far below industry practices since 2015, with no equity-based awards or annual cash bonuses issued or paid during the seven-year period preceding this PRSU grant. In 2022, our other named executive officers, Messrs. Fennimore and Prescott, were also granted PRSUs subject to the same vesting conditions as those granted to Mr. Russell. As of December 31, 2022, none of these PRSUs held by our named executive officers had vested. The amount of “compensation actually paid” to each named executive officer, as set forth in the table, was computed in accordance with Item 402(v) of Regulation S-K and does not represent the actual economic value that has been, or may ultimately be, realized by each named executive officer with respect to the PRSUs.
The compensation committee believes in the importance of long-term incentives tied to market performance milestones. In 2022, approximately 90% of the compensation paid to our continued success.Our employeesnamed executive officers was issued in the form of stock awards, a substantial portion of which will vest (if at all) only upon the achievement of Stock Price milestones as noted above, ensuring that management is highly committed to enhancing profitability and consultants arestockholder value over the long-term. Given the importance of Stock Price to our executive compensation program, the company has determined that Stock Price is the financial performance measure that, in the company’s assessment, represents the most valuable asset.Equity awards such as those providedimportant performance measure used by the company to link compensation actually paid to the named executive officers, for the most recently completed fiscal year, to company performance.
Cumulative TSR of the Company and Cumulative TSR of the Peer Group
The following table compares the company’s cumulative TSR with the cumulative TSR of the companies comprising the Russell 2000 Index peer group over the three-year period presented in the table.
PROPOSAL THREE: ADVISORY (NON-BINDING) VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and corresponding proxy rules under the Amended PlanExchange Act, the Company is presenting its stockholders with an advisory (non-binding) vote on the executive compensation programs for the Company’s named executive officers (sometimes referred to as “Say on Pay”).
The advisory vote on executive compensation is a non-binding vote on the compensation of the Company’s named executive officers as described in the section titled “Executive Compensation,” including the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, in this Proxy Statement. Please read the Executive Compensation section starting on page 32 for a discussion about the Company’s executive compensation programs, including information about compensation of the Company’s named executive officers for the fiscal year ended December 31, 2022.
The advisory vote on executive compensation is not a vote on the Company’s general compensation policies, the compensation of the Company’s board of directors, or the Company’s compensation policies as they may relate to risk management.
The compensation committee oversees and administers the Company’s executive compensation program, including the determination and implementation of the Company’s compensation philosophy, policies, and objectives. The compensation committee has designed the executive compensation program to align executive compensation with the achievement of the Company’s business goals and strategies, both short- and long-term. The compensation committee also seeks to provide executive compensation at levels that will substantially assist us in continuingallow the Company to continue to be able to attract and retain employees, consultantsthe best possible executive candidates.
The Company believes that the most significant components of its executive compensation program reflect sound governance practices and non-employeeare consistent with industry standards. The board of directors believes that executive compensation is appropriately allocated between base salary and equity compensation opportunities so as to encourage strong short- and long-term performance, create clear alignment with stockholders and discourage excessive risk-taking. Accordingly, we are asking stockholders to vote for the following resolution:
“RESOLVED, that the compensation of the Company’s named executive officers, as disclosed in the extremely competitive labor markets in which we compete.Such awards also are crucialCompany’s proxy statement for the 2023 Annual Meeting of Stockholders pursuant to our ability to motivate employeesthe compensation disclosure rules of the Securities and consultants to achieve our goals.We will benefit from increased stock ownershipExchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion contained under “Executive Compensation” is hereby APPROVED”.
The vote solicited by selected executives, other employees, consultants and non-employee directors. The increase in the reserve of common stock available under the Amended Plan will enable us to continue to grant such awards to executives, other eligible employees, our consultants and non-employee directors. If our stockholders do not approve this Proposal Five,Three is advisory, and therefore is not binding on the Amended Plan, then neitherCompany, the share increase described above norCompany’s board of directors or the evergreen provisioncompensation committee. The outcome of the vote will become effective.
not require the Company, the board of directors or the compensation committee to take any action, and will not be construed as overruling any decision by the board of directors or the compensation committee. However, the board and compensation committee value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.Required Vote; Recommendation of the Board
Approval will be obtained if the proposal receives the affirmative vote of a majority of the number of votes cast “FOR” and “AGAINST” the proposal.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL THREE.
PROPOSAL FOUR: AMENDMENT TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY TO REFLECT DELAWARE LAW PROVISIONS ALLOWING OFFICER EXCULPATION
Background
In August 2022, the State of Delaware, which is the Company’s state of incorporation, enacted legislation that enables Delaware corporations to limit the liability of certain of their officers in limited circumstances under Section 102(b)(7) of the Delaware General Corporation Law. Prior to such legislation, Delaware law permitted Delaware corporations to exculpate directors from personal liability for monetary damages associated with breaches of the duty of care, but that protection did not extend to a Delaware corporation’s officers. In light of this update, we are proposing to amend the Company’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to add a provision exculpating certain of the Company’s officers from liability in specific circumstances, as permitted by Delaware law.
As amended, Section 102(b)(7) of the DGCL authorizes corporations to provide for exculpation of the following officers: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer, (ii) individuals identified in the corporation’s SEC filings as one of the most highly compensated officers of the corporation, and (iii) individuals who, by written agreement with the corporation, have consented to be identified as officers of the corporation for purposes of Delaware’s long-arm jurisdiction statute. The amended section also permits exculpation only for direct claims for breach of an officer’s fiduciary duty of care, including class actions, but does not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by or in right of the corporation, such as derivative claims. Furthermore, the limitation on liability does not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit.
Overview of the Proposed Amendment
As discussed above, Article VII in our Certificate of Incorporation currently provides for the exculpation of directors. This Proposal No. 4 requests that stockholders approve an amendment to Article VII to extend the exculpation provision to certain of our officers as permitted by amended DGCL Section 102(b)(7) as described above (the “Amendment”).
The proposed Amendment would allow for the exculpation of the officers described above, as permitted by DGCL Section 102(b)(7), only in connection with direct claims, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by or in right of the corporation, such as derivative claims. The proposed Amendment would not limit the liability of officers for: any breach of the duty of loyalty to the corporation or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, or any transaction from which the officer derived an improper personal benefit. In addition, the proposed Amendment would not be retroactive, and will not apply to any act or omission occurring prior to the effectiveness thereof.
The proposed Certificate of Amendment to the Certificate of Incorporation (“Certificate of Amendment”) reflecting the addition of officer exculpation as permitted by DGCL Section 102(b)(7) is attached as Exhibit A to this proxy statement.
On March 29, 2023, the Delaware Chancery Court ruled in favor of the defendants Fox Corp. and Snap Inc. in coordinated cases filed by shareholders challenging an amendment to the companies’ respective charters allowing officer exculpation.The suits alleged that the stockholder vote to approve the charter amendment in each case violated DGCL Section 242 because the amendment was not approved by the requisite vote of the holders of each class of stock, voting separately. The Delaware Chancery Court held that no separate class vote was required, pursuant to DGCL Section 242, to adopt
the charter amendments allowing for officer exculpation (the “Chancery Court’s Decision”).Although the plaintiffs may appeal the ruling, pursuant to the Chancery Court’s Decision, the approval of Proposal Four in this proxy statement to allow officer exculpation as permitted by DGCL Section 102(b)(7) will not require separate class votes of the holders of Class A common stock and the Class B common stock under DGCL Section 242.Nonetheless, even if the proposed Amendment is approved by the affirmative vote of a majority of the voting power of the shares of our Class A common stock and Class B common stock, voting together as a single class, which are outstanding on the Record Date, Luminar will file the Certificate of Amendment with the Delaware Secretary of State only if the Chancery Court’s Decision is affirmed on appeal by the Supreme Court of the State of Delaware or if no appeal is timely filed.
Reasons for the Proposed Amendment
The Company’s board of directors desires to amend the Certificate of Incorporation to maintain provisions consistent with the governing statutes contained in the Delaware law and believes that amending the Certificate of Incorporation to add the authorized liability protection for certain officers of the Company, consistent with the protection in the Certificate of Incorporation currently afforded directors of the Company, is necessary in order to attract and retain experienced and qualified officers, would potentially reduce the Company’s insurance premium costs, and would potentially reduce litigation costs associated with frivolous lawsuits. The nature of the role of directors and officers often requires them to make decisions on crucial matters. Frequently, directors and officers must make decisions in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. The Company believes that adopting the proposed Amendment would better position the Company to attract top officer candidates and retain our current officers and enable the officers to exercise their business judgment in furtherance of the interests of the stockholders without the potential for distraction posed by the risk of personal liability.
For the reasons stated above, the Company’s board of directors unanimously declared that the proposed Amendment is advisable and in the best interest of the Company and its stockholders and authorized, approved and adopted the proposed Amendment and directed that it be considered at the Annual Meeting. The Company’s board of directors recommends that the stockholders approve the proposed Amendment.
Required Vote; Recommendation of the Board
To be approved, this proposal requires the affirmative vote of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) cast “FOR”outstanding on the proposalRecord Date. Abstentions and broker non-votes will have the same effect as votes against this proposal. If the proposed Amendment is approved by our stockholders, as noted above, we will file a Certificate of Amendment setting forth such Amendment with the Secretary of State of the State of Delaware only if the Chancery Court’s Decision is affirmed on appeal or if no appeal is timely filed. If the proposed Amendment is not approved by our stockholders, our Certificate of Incorporation would remain unchanged. In addition, the board of directors retains the discretion to abandon the proposed Amendment and not implement it at the Annual Meeting exceeds the number of votes “AGAINST” the proposal.any time before it becomes effective.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL FIVE.FOUR.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information as to the beneficial ownership of our common stock as of March 31, 2022February 28, 2023 by:
•each stockholder known by us to be the beneficial owner of more than 5% of our Class A common stock or Class B common stock;
•each of our directors and director nominees named in this proxy statement;
•each of our named executive officers; and
•all of our directors and executive officers as a group.
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership, we deemed outstanding shares of our common stock subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of March 31, 2022.February 28, 2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
The beneficial ownership percentages set forth in the table below are based on 349,120,897369,555,542 shares of common stock outstanding, comprised of 252,032,227272,466,872 shares of Class A common stock and 97,088,670 shares of Class B common stock outstanding as of March 31, 2022.February 28, 2023.
Unless otherwise indicated and subject to applicable community property laws, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
Unless otherwise indicated below, the address of each beneficial owner listed in the table below is c/o Luminar Technologies, Inc., 2603 Discovery Drive, Suite 100, Orlando, FL 32826.
| | | Class A | | Class B | % of Total Voting Power** | | Class A | | Class B | | % of Total Voting Power** |
| Name and Address of Beneficial Owners | Name and Address of Beneficial Owners | | Number of Shares | % | | Number of Shares | % | Name and Address of Beneficial Owners | | Number of Shares | % | | Number of Shares | % | |
| Five Percent Holders | Five Percent Holders | | | | | Five Percent Holders | | | | | | |
The Vanguard Group(1) | The Vanguard Group(1) | | 18,914,450 | | 7.5 | % | | — | | — | | 1.5 | % | The Vanguard Group(1) | | 21,618,862 | | 7.9 | % | | — | | — | | | 1.7 | % |
GVA Auto, LLC(2) | GVA Auto, LLC(2) | | 19,226,359 | | 7.6 | % | | — | | — | | 1.6 | % | GVA Auto, LLC(2) | | 19,226,359 | | 7.1 | % | | — | | — | | | 1.5 | % |
BlackRock, Inc.(3) | | BlackRock, Inc.(3) | | 18,111,970 | | 6.6 | % | | — | | — | | | 1.5 | % |
| Current Directors, Nominees and Named Executive Officers | Current Directors, Nominees and Named Executive Officers | | Current Directors, Nominees and Named Executive Officers | |
| Austin Russell | Austin Russell | | 140,000 | | * | | 97,088,670 | | 100 | % | 79.4 | % | Austin Russell | | 1,030,000 | | * | | 97,088,670 | | 100 | % | | 78.2 | % |
Thomas J. Fennimore(3) | | 965,385 | | * | | — | | — | | * | |
Alan Prescott(4) | | 249,803 | | * | | — | | — | | * | |
| Jason Eichenholz, PhD | | 3,093,535 | | 1.2 | % | | — | | — | | * | |
M. Scott Faris(5) | | 374,850 | | * | | — | | — | | * | |
Thomas J. Fennimore(4) | | Thomas J. Fennimore(4) | | 1,480,681 | | * | | — | | — | | | * |
Alan Prescott(5) | | Alan Prescott(5) | | 502,722 | | * | | — | | — | | | * |
Alec E. Gores(6) | Alec E. Gores(6) | | 10,708,940 | | 4.2 | % | | — | | — | | * | Alec E. Gores(6) | | 5,155,719 | | 1.9 | % | | — | | — | | | * |
Matthew J. Simoncini(7) | | 207,468 | | * | | — | | — | | * | |
Jun Hong Heng(7) | | Jun Hong Heng(7) | | 2,434,188 | | * | | — | | — | | | * |
| Mary Lou Jepsen, PhD | | Mary Lou Jepsen, PhD | | 31,784 | | * | | — | | — | | | * |
| Shaun Maguire, PhD | | Shaun Maguire, PhD | | 16,560 | | * | | — | | — | | | * |
| Katharine A. Martin | Katharine A. Martin | | 8,718 | | * | | — | | — | | * | Katharine A. Martin | | 32,675 | | * | | — | | — | | | * |
| Mary Lou Jepsen, PhD | | 7,693 | | * | | — | | — | | * | |
Jun Hong Heng(8) | | 3,557,637 | | 1.4 | % | | — | | — | | * | |
| Shaun Maguire, PhD | | 2,324 | | * | | — | | — | | * | |
| All Directors and Executive Officers as a Group (9 Individuals) | | 15,847,968 | | 6.2 | % | | 97,088,670 | | 100 | % | 80.5 | % | |
Matthew J. Simoncini(8) | | Matthew J. Simoncini(8) | | 306,126 | | * | | — | | — | | | * |
| Daniel D. Tempesta | | Daniel D. Tempesta | | 63,320 | | * | | — | | — | | | * |
| All Directors and Executive Officers as a Group (10 Individuals) | | All Directors and Executive Officers as a Group (10 Individuals) | | 11,053,775 | | 4.0 | % | | 97,088,670 | | 100 | % | | 78.9 | % |
*Less than one percent.
** Percentage of total voting power represents voting power with respect to all shares of Class A common stock and Class B common stock, as a single class. Each share of Class B common stock is entitled to ten votes per share and each share of Class A common stock is entitled to one vote per share.
(1)Based on information set forth in a Schedule 13G/A filed with the SEC on February 9, 2023. Represents shares of Class A common stock held by The Vanguard Group. The Vanguard Group Inc.'shas (i) shared voting power with regard to 419,245 shares of the Class A common stock, (ii) sole dispositive power with regard to 20,988,796 shares of the Class A common stock, and (iii) shared dispositive power with regard to 630,066 shares of the Class A common stock. The Vanguard Group's clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities reported herein. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(2)Represents shares of Class A common stock held by GVA Auto, LLC. Pavel Cherkashin is the Managing Partner of GVA Capital, which is the Manager of GVA Auto, LLC, and therefore, may be deemed to hold voting and dispositive power over the shares held by GVA Auto, LLC. The address of GVA Auto, LLC is 908 Broadway, San Francisco, CA 94133.
(3)Based on information set forth in a Schedule 13G filed with the SEC on February 3, 2023. Represents shares of Class A common stock held by BlackRock, Inc. The BlackRock, Inc. has (i) sole voting power with regard to 17,835,798 shares of the Class A common stock and (ii) sole dispositive power with regard to 18,111,970 shares of the Class A common stock. The address of BlackRock, Inc. is BlackRock, Inc. 55 East 52nd Street New York, NY 10055.
(4)Includes 920,0881,341,795 and 35,000 shares of Class A common stock subject to Mr. Fennimore’s outstanding stock options and restricted stock units, which isare the portionportions of such awards that are exercisable or which vest within 60 days of March 31, 2022.February 28, 2023.
(4)(5)Includes 200,184101,593 shares of Class A common stock subject to Mr. Prescott’s outstanding restricted stock units which vest within 60 days of March 31, 2022.February 28, 2023.
(5)Includes 374,850 shares of Class A common stock subject to Mr. Faris’ outstanding stock options which are exercisable within 60 days of March 31, 2022. Mr. Faris is the Company’s former Chief Business Officer and left the Company on November 9, 2021.
(6)Consists of (i) 10,154,6754,584,395 shares of Class A common stock held by AEG Holdings, LLC, (ii) 152,534 shares held by NBI Irrevocable Trust No. 4, a trust of which the beneficiary is one of the children of Mr. Gores who is a member of his household.,household, (iii) 248,145 shares held by NBI Irrevocable Trust No. 5,No.5, a trust of which the beneficiary is one of the children of Mr. Gores who is a member of his household, (iv) 150,000 shares held by NBI Irrevocable Trust No. 6, a trust of which the beneficiary is one of the children of Mr. Gores who is a member of his household and (v) 3,586 20,645
shares directly held. Alec E. Gores is the managing member of AEG Holdings, LLC. As such, Alec Gores may be deemed to have beneficial ownership of the securities beneficially owned by AEG. The address for AEG Holdings, LLC is 6260 Lookout Road, Boulder, CO 80301.
(7)Consists Mr. Gore has pledged 4,736,929 shares of (i) 37,082 shares ofhis Class A common stock held by Mr. Simoncini and 170,386 shares of Class A common stock subjectpursuant to Mr. Simoncini’s outstanding stock option, which is the portion of such option that is exercisable within 60 days of March 31, 2022.a credit line with a third party.
(8)(7)Represents shares of Class A common stock held by (i) Crescent Cove Capital II, LP, (ii) Crescent Cove Opportunity Fund LP, (iii) Crescent Cove Opportunity Foreign Intermediary, LLC (collectively, the “Crescent Cove entities”) (iv) shares held by Mr. Jun in his Roth IRA account, (v) shares held by the Heng Zhao JT Revocable Trust and (vi) shares held by Press Room LLC. Crescent Cove Capital II GP, LLC is the general partner of and Crescent Cove Capital Management, LLC is the investment manager of Crescent Cove Capital II LP. Crescent Cove Opportunity GP, LP is the general partner of and Crescent Cove Advisors, LP is the investment manager of each of Crescent Cove Opportunity Fund LP and Crescent Cove Opportunity Foreign Intermediary, LLC. Mr. Heng is the managing member of each of such general partners and investment managers, and therefore, may be deemed to hold voting and dispositive power over the shares held by Crescent Cove Capital II LP, Crescent Cove Opportunity Fund LP and Crescent Cove Opportunity Foreign Intermediary, LLC. Mr. Heng is co-trustee of the Heng Zhao JT Revocable Trust. Press Room LLC is an entity managed by Mr. Heng and Mr. Heng may be deemed to hold voting and dispositive power over the shares held by Press Room LLC. The address for these entities is c/o Crescent Cove Capital Management, LLC, 530 Bush Street, Suite 703, San Francisco, CA 94108.
(8)Consists of (i) 57,646 shares of Class A common stock held by Mr. Simoncini and 248,480 shares of Class A common stock subject to Mr. Simoncini’s outstanding stock option, which is the portion of such option that is exercisable within 60 days of February 28, 2023.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the executive officer and director compensation arrangements discussed above under “Executive Compensation” and “Proposal One: Election of Directors–Director Compensation,” respectively, since January 1, 2021,2022, the following is a description of each transaction since January 1, 20212022 and each currently proposed transaction in which:
•we, have been or are to be a participant;
•the amounts involved exceeded or exceeds $120,000; and
•any of our directors, executive officers or holders of more than 5% of our outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest.
In February 2021,June 2022, we invested $15.0approximately $17.8 million into COVA Acquisition Corp.in securities of a special purpose acquisition company, Gores Guggenheim, Inc. (“GGI”), of which Jun Hong Heng is the Chairman, Chief Executive Officer and a principal shareholder. Mr. Heng became one of our directors in June 2021. The terms of such investmentthrough open market purchases that were no less favorable to us than to other third partythird-party investors. One of our directors, Alec E. Gores, was the Chairman, Chief Executive Officer and a principal shareholder of GGI at the time of this investment. GGI subsequently merged with Polestar Automotive Holdings UK PLC, and Mr. Gores continues to serve as a director of the merged company. During 2021,2022, we sold $2.9 millionsubstantially all of this investment, and had a remainingthe balance of $12.1 million as of December 31, 2021.
In August 2021, we invested $1.4 million in a special purpose acquisition company, of which Matthew J. Simoncini is a director. Mr. Simoncini has been one of our directors since December 2020. The terms of such investment were no less favorable to us than to other third party investors. During 2021, we sold this investment in its entirety.2022 was not material.
Related Party Transactions Policy
Our board of directors has adopted a written related party transactions policy. The policy provides that officers, directors, holders of more than 5% of any class of the Company’s voting securities, and any member of the immediate family of and any entity affiliated with any of the foregoing persons, will not be permitted to enter into a related-party transaction with the Company without the prior consent of the audit committee, or other independent members of the Board in the event it is inappropriate for the audit committee to review such transaction due to a conflict of interest. Any request for the Company to enter into a transaction with an executive officer, director, principal stockholder, or any of their immediate family members or affiliates, in which the amount involved exceeds $120,000, must first be presented to the audit committee for review, consideration, and approval. In approving or rejecting the proposed transactions, the audit committee will take into account all of the relevant facts and circumstances available.
ADDITIONAL INFORMATION
We will mail, without charge, upon written request, a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2022, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to:
Luminar Technologies, Inc.
2603 Discovery Drive
Orlando, Florida 32826
Attn: Investor Relations
Our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 is also available at https://investors.luminartech.com under the “SEC Filings” in the “Financials & Filing” section of our investor website.
OTHER MATTERS
Our board of directors does not presently intend to bring any other business before the Annual Meeting and, so far as is known to our board of directors, no matters are to be brought before the Annual Meeting except as specified in the Notice of Annual Meeting of Stockholders. As to any business that may arise and properly come before the Annual Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.
By Order of the Board of Directors,
| | | |
| /s/ Austin Russell |
| Austin Russell |
| Chairperson of the Board, President and Chief Executive Officer |
| Orlando, Florida |
| May 6, 2022April 28, 2023 |
APPENDIX
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
LUMINAR TECHNOLOGIES, INC.
AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN
The undersigned, Austin Russell, hereby certifies that:
1.PurposesHe is the duly elected and acting President and Chief Executive Officer of Luminar Technologies, Inc., a Delaware corporation (the “Corporation”).
2.The name of the Plan.Corporation is Luminar Technologies, Inc. The purposesCorporation’s original Certificate of this Plan are (a) to attract and retain the best available personnel to ensure the Company’s success and accomplish the Company’s goals; (b) to incentivize Employees, Directors and Independent Contractors with long-term equity-based compensation to align their interestsIncorporation was filed with the Company’s stockholders, and (c) to promote the successSecretary of State of the Company’s business. This Plan,State of Delaware on August 28, 2018 under the name Gores Metropoulos, Inc. The Amended and Restated Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware on January 31, 2019. The Second Amended and Restated Certificate of Incorporation of the Corporation (the “Second Amended and Restated Certificate of Incorporation”) was originally filed with the Secretary of State of the State of Delaware on December 2, 2020.
3.Pursuant to Section 242 of the General Corporation Law of the State of Delaware, this Certificate of Amendment (“Certificate of Amendment”) amends and restates Article VII of the Second Amended and Restated Certificate of Incorporation to read in its entirety as follows:
“ARTICLE VII
Section 1. To the fullest extent permitted by law, no director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended and restated, was approvedto authorize corporate action further limiting or eliminating the personal liability of directors or officers, then the liability of the directors or officers of the Corporation shall be eliminated or limited to the fullest extent permitted by the Board on May 5, 2022 and approved by the stockholders of the Company on _________.
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
2. Definitions. As used herein, the following definitions will apply:
(a) “Administrator” means the Board or any of its CommitteesGeneral Corporation Law, as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “Affiliate” means (i) an entity other than a Subsidiary which, together with the Company, is under common control of a third person or entity and (ii) an entity other than a Subsidiary in which the Company and/or one or more Subsidiaries own a controlling interest.
(c) “Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal or state laws, rules and regulations, the rules and regulations of any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable laws, rules and regulations of any other country or jurisdiction where Awards are, or will be, granted under the Plan or Participants reside or provide services to the Company or any Parent or Subsidiary of the Company, as such laws, rules, and regulations shall be in effectso amended from time to time.
(d) “Award” means, individuallySection 2. Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Second Amended and Restated Certificate inconsistent with this Article VII, shall adversely affect any right or collectively,protection of a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Unitsdirector or Performance Shares.
(e) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditionsofficer of the Plan.Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision with respect to acts or omissions occurring prior to such amendment or repeal or adoption of such inconsistent provision.”
(f) “Board” means4. This Certificate of Amendment was duly adopted by the Board of Directors of the Company.
(g) “Cause” means, with respect toCorporation and by the termination of a Participant’s status as a Service Provider, except as otherwise defined in an Award Agreement, (i) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliatestockholders of the Company andCorporation in accordance with the Participant at the timeapplicable provisions of Section 242 of the grantGeneral Corporation Law of the Award (or where there is such an agreement but it does not define “cause” (or wordsState of like import) or where it only applies uponDelaware.
IN WITNESS WHEREOF, the occurrenceCorporation has caused this Certificate of a change in controlAmendment of the Second Amended and one has not yet taken place): (A) any material breachRestated Certificate of Incorporation to be signed by Participant of any material written agreement between Participantits President and the Company; (B) any failure by Participant to comply with the Company’s material written policies or rules as they may be in effect from time to time; (C) neglect or persistent unsatisfactory performance of Participant’s duties; (D) Participant’s repeated failure to follow reasonable and lawful instructions from the Board or Chief Executive Officer; (E) Participant’s indictment for, convictionOfficer this ____ day of or plea of guilty or nolo contendre to, any felony or crime that results in, or is
reasonably expected to result in, a material adverse effect on the business or reputation of the Company; (F) Participant’s commission of or participation in an act of fraud against the Company; (G) Participant’s intentional material damage to the Company’s business, property or reputation; or (H) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (ii) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. For purposes of clarity, a termination without “Cause” does not include any termination that occurs solely as a result of Participant’s death or Disability. The determination as to whether a Participant’s status as a Service Provider for purposes of the Plan has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability (or that of any Parent or Subsidiary or any successor thereto, as appropriate) to terminate a Participant’s employment or consulting relationship at any time, subject to Applicable Laws.
(h) “Change in Control” except as may otherwise be provided in an Award Agreement or other applicable agreement, means the occurrence of any of the following:
(i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if the Company’s stockholders immediately prior to such merger, consolidation or reorganization cease to directly or indirectly own immediately after such merger, consolidation or reorganization at least a majority of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or reorganization;
(ii) The consummation of the sale, transfer or other disposition of all or substantially all of the Company’s assets (other than (x) to a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company, (y) to a corporation or other entity owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of Common Stock or (z) to a continuing or surviving entity described in Section 2(h)(i) in connection with a merger, consolidation or reorganization which does not result in a Change in Control under Section 2(h)(i));
(iii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or
(iv) The consummation of any transaction as a result of which any Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities. For purposes of this Section 2(h), the term “Person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude:
(1) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or an affiliate of the Company;
(2) a corporation or other entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock;
(3) the Company; and
(4) a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transactions. In addition, if any Person (as defined above) is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered to cause a Change in Control. If required for compliance with Code Section 409A, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
(i) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(j) “Code Section 409A” means Code Section 409A, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto.
(k) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.
(l) “Common Stock” means the Class A common stock of the Company.
(m) “Company” means Luminar Technologies, Inc., a Delaware corporation, or any successor thereto.
(n) “Director” means a member of the Board.
(o) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.
(p) “Effective Date” means December 2, 2020.
(q) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(r) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(s) “Exchange Program” means a program under which outstanding Awards are amended to provide for a lower exercise price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different type of Award or awards under a different equity incentive plan, (iii) cash, or (iv) a combination of (i), (ii) and/or (iii). Notwithstanding the preceding, the term Exchange Program does not include (A) any action described in Section 14 or any action taken in connection with a Change in Control transaction nor (B) any transfer or other disposition permitted under Section 13. For the purpose of clarity, each of the actions described in the prior sentence, none of which constitute an Exchange Program, may be
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undertaken (or authorized) by the Administrator in its sole discretion without approval by the Company’s stockholders.
(t) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, its Fair Market Value will be the closing sales price for such stock as quoted on such exchange or system on the day of determination, as reported in such source as the Administrator deems reliable (or the closing price on the most recent prior trading day, if no sales were reported on the day of determination);
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in such source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator in compliance with Applicable Laws and regulations and in a manner that complies with Code Section 409A.
(u) “Fiscal Year” means the fiscal year of the Company.
(v) “Incentive Stock Option” means an Option that by its terms qualifies and is intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(w) “Independent Contractor” means any person, including an advisor, consultant or agent, engaged by the Company or a Parent or Subsidiary to render services to such entity or who renders, or has rendered, services to the Company, or any Parent, Subsidiary or Affiliate and is compensated for such services, in each case, other than an Employee.
(x) “Inside Director” means a Director who is an Employee.
(y) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
(z) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(aa) “Option” means a stock option granted pursuant to the Plan.
(bb) “Outside Director” means a Director who is not an Employee.
(cc) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
(dd) “Participant” means the holder of an outstanding Award.
(ee) “Performance Goal” means a formula or standard determined by the Administrator with respect to each Performance Period based on one or more of the following criteria and any adjustment(s)
thereto established by the Administrator: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense management; (16) return on assets (gross or net), return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share (basic or diluted); (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share, completion of strategic agreements such as licenses, joint ventures, acquisitions, and the like, geographic business expansion, objective customer satisfaction or information technology goals, intellectual property asset metrics; (24) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects, including project completion, timing and/or achievement of milestones, project budget, technical progress against work plans; and (27) enterprise resource planning. Awards issued to Participants may take into account other criteria (including subjective criteria). Performance Goals may differ from Participant to Participant, Performance Period to Performance Period and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, any increase (or decrease) over the passage of time and/or any measurement against other companies or financial or business or stock index metrics particular to the Company), (iii) on a per share and/or share per capita basis, (iv) against the performance of the Company as a whole or against any affiliate(s), or a particular segment(s), a business unit(s) or a product(s) of the Company or individual project company, (v) on a pre-tax or after-tax basis, and/or (vi) using an actual foreign exchange rate or on a foreign exchange neutral basis.
(ff) “Performance Period” means the time period during which the Performance Goals or other vesting provisions must be satisfied for Performance Shares or Performance Units.
(gg) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 10.
(hh) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10.
(ii) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
(jj) “Plan” means this Amended and Restated 2020 Equity Incentive Plan.
(kk) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan.
(ll) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.
(mm) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(nn) “Section 16(b)” means Section 16(b) of the Exchange Act.
(oo) “Service Provider” means an Employee, Director or Independent Contractor.
(pp) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.
(qq) “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a Stock Appreciation Right.
(rr) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
(ss) “Tax-Related Items” means income tax, social insurance or other social contributions, national insurance, social security, payroll tax, fringe benefits tax, payment on account or other tax-related items.
3. Stock Subject to the Plan.
(a) Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan shall be 72,588,278 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing, subject to the provisions of Section 14 below, in no event shall the maximum aggregate number of Shares that may be issued under the Plan pursuant to Incentive Stock Options exceed the number set forth in this Section 3(a) plus, to the extent allowable under Section 422 of the Code and the regulations promulgated thereunder, any Shares that again become available for issuance pursuant to Sections 3(b) and 3(c).
(b) Automatic Share Reserve Increase. The number of Shares available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning with the 2023 Fiscal Year and ending on (and including) the first day of the 2030 Fiscal Year, in an amount equal to the lesser of (i) 5% of the outstanding shares of Company common stock on the last day of the immediately preceding Fiscal Year, (ii) 40,000,000 Shares or (iii) such number of Shares determined by the Board.
(c) Lapsed Awards. To the extent an Award should expire or be forfeited or become unexercisable for any reason without having been exercised in full, the unissued Shares that were subject thereto shall, unless the Plan shall have been terminated, continue to be available under the Plan for issuance pursuant to future Awards. Shares issued under the Plan and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original purchase price paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with a Participant ceasing to be a Service Provider) shall again be available for future grant under the Plan. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 3(a) and shall not be available for future grants of Awards: (i) Shares tendered by a Participant or withheld by the Company in payment of the exercise price of an Option;
(ii) Shares tendered by a Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan, as may be determined from time to time by the Board.
(ii) Rule 16b-3. To the extent determined desirable by the Board to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.
(iii) Other Administration. Other than as provided above, the Plan will be administered by the Board or, to the extent determined by the Board, a Committee, which committee will be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan, the Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value in accordance with Section 2(c);
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder; such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to institute and determine the terms and conditions of an Exchange Program; provided, however, that the Administrator shall not implement an Exchange Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled to vote at any annual or special meeting of Company’s stockholders;
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations established for the purpose of satisfying applicable non-U.S. laws, for qualifying for favorable tax treatment under applicable non-U.S. laws or facilitating compliance with non-U.S. laws (sub-plans may be created for any of these purposes);
(ix) to modify or amend each Award (subject to Section 21 of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards, to accelerate vesting and to extend the maximum term of an Option (subject to Section 6(b) of the Plan regarding Incentive Stock Options);
(x) to allow Participants to satisfy tax withholding obligations in such manner as prescribed in Section 15 of the Plan;
(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; and
(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.
(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.
(d) Delegation by the Administrator. To the extent permitted by Applicable Laws, the Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Company.
5. Award Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
6. Stock Options.
(a) Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the date the Option with respect to such Shares is granted. With respect to the Committee’s authority in Section 4(b)(ix), if, at the time of any such extension, the exercise price per Share of the Option is less than the Fair Market Value of a Share, the extension shall, unless otherwise determined by the Committee, be limited to the earlier of (1) the maximum term of the Option as set by its original terms, or (2) ten (10) years from the grant date. Unless otherwise determined by the Committee, any extension of the term of an Option pursuant to Section 4(b)(ix) shall comply with Code Section 409A to the extent necessary to avoid taxation thereunder.
(b) Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(c) Option Exercise Price and Consideration.
(i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:
(1) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.
(iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration for both types of Options may consist entirely of: (1) cash; (2) check; (3) promissory note (to the extent permitted by Applicable Laws and the Administrator); (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.
(d) Exercise of Option.
(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with full payment of any applicable taxes or other amounts required to be withheld or deducted with respect to the Option). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an
Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.
(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death, Disability or Cause, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination as a result of the Participant’s Disability. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s death. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.
(v) Termination for Cause. If a Participant ceases to be a Service Provider as a result of being terminated for Cause, any outstanding Option (including any vested portion thereof) held by such Participant shall immediately terminate in its entirety upon the Participant being first notified of his or her termination for Cause and the Participant will be prohibited from exercising his or her Option from and after the date of such termination. All the Participant’s rights under any Option, including the right to exercise the Option, may be suspended pending an investigation of whether Participant will be terminated for Cause.
7. Restricted Stock.
(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.
(c) Transferability. Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.
(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
(e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.
(f) Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.
(g) Dividends and Other Distributions. During the Period of Restriction, any dividends or distributions paid with respect to Shares of Restricted Stock will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the Shares of Restricted Stock with respect to which they were paid.
(h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will be cancelled and returned as unissued shares to the Company and again will become available for grant under the Plan.
8. Restricted Stock Units.
(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions (if any) related to the grant, including the number of Restricted Stock Units.
(b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis (including the passage of time) determined by the Administrator in its discretion.
(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
(d) Dividend Equivalents. The Administrator may, in its sole discretion, award dividend equivalents in connection with the grant of Restricted Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination thereof. Any such dividend equivalents awarded with respect to Restricted Stock Units will be subject to the same restrictions, including without limitation restrictions on transferability and forfeitability, as the Restricted Stock Units with respect to which they were paid.
(e) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made upon the date(s) determined by the Administrator and set forth in the Award Agreement, which shall specify whether earned Restricted Stock Units may be settled in cash, Shares, or a combination of both.
(f) Cancellation. On the date set forth in the Award Agreement, all Shares underlying any unvested, unlapsed unearned Restricted Stock Units will be forfeited to the Company for future issuance.
9. Stock Appreciation Rights.
(a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.
(b) Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider.
(c) Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.
(d) Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(b) relating to the maximum term and Section 6(d) relating to exercise also will apply to Stock Appreciation Rights.
(f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:
(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.
At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.
10. Performance Units and Performance Shares.
(a) Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.
(b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
(c) Performance Goals and Other Terms. The Administrator will set Performance Goals or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Without limiting the foregoing, the Administrator shall adjust any Performance Goals or other feature of an Award that relates to or is wholly or partially based on the number of, or the value of, any stock of the Company, to reflect any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares or other similar changes in such stock.
(d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any Performance Goals or other vesting provisions for such Performance Unit/Share.
(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made upon the time set forth in the applicable Award Agreement. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.
(f) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.
11. Outside Director Limitations. No Outside Director may receive Awards under the Plan with a total grant date fair value that, when combined with cash compensation received for service as an Outside Director, exceeds $750,000 in a calendar year, increased to $1,000,000 in the calendar year of his or her initial services as an Outside Director. Grant date fair value for purposes of Awards to Outside Directors under the Plan will be determined as follows: (a) for Options and Stock Appreciation Rights, grant date fair value will be calculated using the Black-Scholes valuation methodology on the date of grant of such Option or Stock Appreciation Right and (b) for all other Awards other than Options and Stock Appreciation Rights, grant date fair value will be determined by either (i) calculating the product of the Fair Market Value per Share on the date of grant and the aggregate number of Shares subject to the Award or (ii) calculating the product using an average of the Fair Market Value over a number of trading days and the aggregate number of Shares subject to the Award. Awards granted to an individual while he or she was serving in the capacity as an Employee or while he or she was an Independent Contractor but not an Outside Director will not count for purposes of the limitations set forth in this Section 11.
12. Leaves of Absence/Transfer Between Locations. The Administrator shall have the discretion to determine at any time whether and to what extent the vesting of Awards shall be suspended
during any leave of absence; provided, however, that in the absence of such determination, vesting of Awards shall continue during any paid leave and shall be suspended during any unpaid leave (unless otherwise required by Applicable Laws). A Participant will not cease to be an Employee in the case of (a) any leave of absence approved by the Participant’s employer or (b) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. If an Employee is holding an Incentive Stock Option and such leave exceeds three (3) months then, for purposes of Incentive Stock Option status only, such Employee’s service as an Employee shall be deemed terminated on the first (1st) day following such three (3) month period and the Incentive Stock Option shall thereafter automatically treated for tax purposes as a Nonstatutory Stock Option in accordance with Applicable Laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written Company policy.
13. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
14. Adjustments; Dissolution or Liquidation; Merger or Change in Control.
(a) Adjustments. In the event of a stock split, reverse stock split, stock dividend, combination, consolidation, recapitalization (including a recapitalization through a large nonrecurring cash dividend) or reclassification of the Shares, subdivision of the Shares, a rights offering, a reorganization, merger, spin-off, split-up, repurchase, or exchange of Common Stock or other securities of the Company or other significant corporate transaction, or other change affecting the Common Stock occurs, the Administrator, in order to prevent dilution, diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number, kind and class of securities that may be delivered under the Plan and/or the number, class, kind and price of securities covered by each outstanding Award. Notwithstanding the forgoing, all adjustments under this Section 14 shall be made in a manner that does not result in taxation under Code Section 409A.
(b) Dissolution or Liquidation. In the event of the proposed winding up, dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised or settled, an Award will terminate immediately prior to the consummation of such proposed action.
(c) Change in Control. In the event of a Change in Control, each outstanding Award (vested or unvested) will be treated as the Administrator determines, which determination may be made without the consent of any Participant and need not treat all outstanding Awards (or portion thereof) in an identical manner. Such determination, without the consent of any Participant, may provide (without limitation) for one or more of the following in the event of a Change in Control: (A) the continuation of such outstanding Awards by the Company (if the Company is the surviving corporation); (B) the assumption of such outstanding Awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parent of new options or other equity awards for such Awards; (D) the cancellation of such Awards in exchange for a payment to the Participants equal to the excess of (1) the Fair Market Value of the Shares subject to such Awards as of the closing date of such Change in Control over (2) the exercise price or purchase price paid or to be paid (if any) for the Shares subject to the Awards; provided that at the discretion of the Administrator, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of Shares in connection with the transaction; provided, however, that any payout in connection with a terminated award shall comply with Code Section 409A to the extent necessary to avoid taxation thereunder; or (E) the opportunity for Participants to exercise the Options prior to the occurrence of the Change in Control and the termination (for no consideration) upon the consummation of such Change in Control of any Options not exercised prior thereto. An Award may be subject to additional acceleration of vesting and exercisability
upon or after a Change in Control as may be provided in the Award Agreement for such Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant.
15. Tax.
(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or prior to any time the Award or Shares are subject to taxation or other Tax-Related Items, the Company and/or the Participant’s employer will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any Tax-Related Items or other items that are required to be withheld or deducted or otherwise applicable with respect to such Award.
(b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such withholding or deduction obligations or any other Tax-Related Items, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares, or (iii) delivering to the Company already-owned Shares; provided that, unless specifically permitted by the Company, any proceeds derived from a cashless exercise must be an approved broker-assisted cashless exercise or the cash or Shares withheld or delivered must be limited to avoid financial accounting charges under applicable accounting guidance or Shares must have been previously held for the minimum duration required to avoid financial accounting charges under applicable accounting guidance. Except as otherwise determined by the Administrator, the Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the amounts are required to be withheld or deducted.
(c) Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A (or an exemption therefrom) and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A (or an exemption therefrom), such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. In no event will the Company be responsible for or reimburse a Participant for any taxes or other penalties incurred as a result of the application of Code Section 409A.
16. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company or any Subsidiary or Affiliate, nor will they interfere in any way with the Participant’s right or the Company’s or any Subsidiary or Affiliate’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
17. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
18. Corporate Records Control. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.
19. Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired Shares or other cash or property upon the occurrence of an event constituting Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.
20. Term of Plan. Subject to Section 24 of the Plan, this Plan will become effective as of the Effective Date. The Plan will continue in effect for a term of ten (10) years measured from the earlier of the date the Board approves this Plan or the approval of this Plan by the Company’s stockholders, unless terminated earlier under Section 21 of the Plan.
21. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
22. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares will not be issued pursuant to the exercise or vesting (as applicable) of an Award unless the exercise or vesting of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
23. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.
24. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
25. Governing Law. The Plan and all Awards hereunder shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions.
